Document:

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                                                                    EXHIBIT 10.1

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                           EIGHTH AMENDED AND RESTATED

                        AGREEMENT OF LIMITED PARTNERSHIP

                                       OF

                              AMB PROPERTY II, L.P.

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                                TABLE OF CONTENTS

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ARTICLE 1. DEFINED TERMS AND RULES OF CONSTRUCTION................................................................2

   Section 1.1.   Definitions.....................................................................................2

ARTICLE 2. ORGANIZATIONAL MATTERS................................................................................21

   Section 2.1.      Organization................................................................................21
   Section 2.2.      Name........................................................................................22
   Section 2.3.      Resident Agent; Principal Office............................................................22
   Section 2.4.      Power of Attorney...........................................................................22
   Section 2.5.      Term........................................................................................23
   Section 2.6.      Number of Partners..........................................................................23

ARTICLE 3. PURPOSE...............................................................................................24

   Section 3.1.      Purpose and Business........................................................................24
   Section 3.2.      Powers......................................................................................24
   Section 3.3.      Partnership Only for Purposes Specified.....................................................25
   Section 3.4.      Representations and Warranties by the Parties...............................................25
   Section 3.5.      Certain ERISA Matters.......................................................................27

ARTICLE 4. CAPITAL CONTRIBUTIONS.................................................................................27

   Section 4.1.      Capital Contributions of the Partners.......................................................27
   Section 4.2.      Loans.......................................................................................27
   Section 4.3.      Additional Funding and Capital Contributions................................................28
   Section 4.4.      No Preemptive Rights........................................................................28
   Section 4.5.      Other Contribution Provisions...............................................................29

ARTICLE 5. DISTRIBUTIONS.........................................................................................29

   Section 5.1.      Requirement and Characterization of Distributions...........................................29
   Section 5.2.      Distributions in Kind.......................................................................30
   Section 5.3.      Distributions Upon Liquidation..............................................................30
   Section 5.4.      Distributions to Reflect Issuance of Additional Partnership Interests.......................30

ARTICLE 6. ALLOCATIONS...........................................................................................30

   Section 6.1.      Timing and Amount of Allocations of Net Income and Net Loss.................................30
   Section 6.2.      General Allocations.........................................................................31
   Section 6.3.      Additional Allocation Provisions............................................................32
   Section 6.4.      Tax Allocations.............................................................................35

ARTICLE 7. MANAGEMENT AND OPERATIONS OF BUSINESS.................................................................35

   Section 7.1.      Management..................................................................................35
   Section 7.2.      Certificate of Limited Partnership..........................................................39
   Section 7.3.      Restrictions on General Partner's Authority.................................................39
   Section 7.4.      Reimbursement of the General Partner........................................................42
   Section 7.5.      Outside Activities of the General Partner...................................................42
   Section 7.6.      Employee Benefit Plans......................................................................43
   Section 7.7.      Indemnification.............................................................................43
   Section 7.8.      Liability of the General Partner............................................................45
   Section 7.9.      Other Matters Concerning the General Partner................................................45
   Section 7.10.     Title to Partnership Assets.................................................................46
   Section 7.11.     Reliance by Third Parties...................................................................47
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ARTICLE 8. RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS............................................................47

   Section 8.1.      Limitation of Liability.....................................................................47
   Section 8.2.      Management of Business......................................................................47
   Section 8.3.      Outside Activities of Limited Partners......................................................48
   Section 8.4.      Return of Capital...........................................................................48
   Section 8.5.      Rights of Limited Partners Relating to the Partnership......................................48

ARTICLE 9. BOOKS, RECORDS, ACCOUNTING AND REPORTS................................................................49

   Section 9.1.      Records and Accounting......................................................................49
   Section 9.2.      Fiscal Year.................................................................................49
   Section 9.3.      Reports.....................................................................................50
   Section 9.4.      Nondisclosure of Certain Information........................................................50

ARTICLE 10. TAX MATTERS..........................................................................................50

   Section 10.1.     Preparation of Tax Returns..................................................................50
   Section 10.2.     Tax Elections...............................................................................51
   Section 10.3.     Tax Matters Partner.........................................................................51
   Section 10.4.     Organizational Expenses.....................................................................52
   Section 10.5.     Withholding.................................................................................52

ARTICLE 11. TRANSFERS AND WITHDRAWALS............................................................................53

   Section 11.1.     Transfer....................................................................................53
   Section 11.2.     Transfer of General Partner's and Common Limited Partner's Partnership Interest.............54
   Section 11.3.     Preferred Limited Partners' Rights to Transfer..............................................54
   Section 11.4.     Substituted Limited Partners................................................................56
   Section 11.5.     Assignees...................................................................................56
   Section 11.6.     General Provisions..........................................................................57

ARTICLE 12. ADMISSION OF PARTNERS................................................................................59

   Section 12.1.     Admission of Successor General Partner......................................................59
   Section 12.2.     Admission of Additional Limited Partners....................................................60
   Section 12.3.     Amendment of Agreement and Certificate of Limited Partnership...............................60

ARTICLE 13. DISSOLUTION AND LIQUIDATION..........................................................................61

   Section 13.1.     Dissolution.................................................................................61
   Section 13.2.     Winding Up..................................................................................61
   Section 13.3.     Compliance with Timing Requirements of Regulations..........................................63
   Section 13.4.     Deemed Distribution and Recontribution......................................................63
   Section 13.5.     Rights of Limited Partners..................................................................64
   Section 13.6.     Notice of Dissolution.......................................................................64
   Section 13.7.     Cancellation of Certificate of Limited Partnership..........................................64
   Section 13.8.     Reasonable Time for Winding-Up..............................................................64
   Section 13.9.     Waiver of Partition.........................................................................64

ARTICLE 14. AMENDMENT OF PARTNERSHIP AGREEMENT; CONSENTS.........................................................64

   Section 14.1.     Amendments..................................................................................64
   Section 14.2.     Action by the Partners......................................................................65

ARTICLE 15. GENERAL PROVISIONS...................................................................................66

   Section 15.1.     Addresses and Notice........................................................................66
   Section 15.2.     Titles and Captions.........................................................................66
   Section 15.3.     Pronouns and Plurals........................................................................66
   Section 15.4.     Further Action..............................................................................66
   Section 15.5.     Binding Effect..............................................................................66
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   Section 15.6.     Creditors...................................................................................66
   Section 15.7.     Waiver......................................................................................67
   Section 15.8.     Counterparts................................................................................67
   Section 15.9.     Applicable Law..............................................................................67
   Section 15.10.    Invalidity of Provisions....................................................................67
   Section 15.11.    Entire Agreement............................................................................67
   Section 15.12.    No Rights as Stockholders...................................................................67

ARTICLE 16. SERIES C PREFERRED UNITS.............................................................................68

   Section 16.1.     Designation and Number......................................................................68
   Section 16.2.     Ranking.....................................................................................68
   Section 16.3.     Distributions...............................................................................68
   Section 16.4.     Liquidation Proceeds........................................................................70
   Section 16.5.     Series C Redemption.........................................................................70
   Section 16.6.     Voting Rights...............................................................................72
   Section 16.7.     Transfer Restrictions.......................................................................73
   Section 16.8.     Exchange Rights.............................................................................73
   Section 16.9.     No Conversion Rights........................................................................78
   Section 16.10.    No Sinking Fund.............................................................................78

ARTICLE 17. SERIES D PREFERRED UNITS.............................................................................78

   Section 17.1.     Designation and Number......................................................................78
   Section 17.2.     Ranking.....................................................................................78
   Section 17.3.     Distributions...............................................................................79
   Section 17.4.     Liquidation Proceeds........................................................................80
   Section 17.5.     Series D Redemption.........................................................................81
   Section 17.6.     Voting and Certain Management Rights........................................................82
   Section 17.7.     Transfer Restrictions.......................................................................85
   Section 17.8.     Exchange Rights.............................................................................85
   Section 17.9.     No Conversion Rights........................................................................89
   Section 17.10.    No Sinking Fund.............................................................................89

ARTICLE 18. SERIES E PREFERRED UNITS.............................................................................90

   Section 18.1.     Designation and Number......................................................................90
   Section 18.2.     Ranking.....................................................................................90
   Section 18.3.     Distributions...............................................................................90
   Section 18.4.     Liquidation Proceeds........................................................................92
   Section 18.5.     Series E Redemption.........................................................................92
   Section 18.6.     Voting and Certain Management Rights........................................................94
   Section 18.7.     Transfer Restrictions.......................................................................96
   Section 18.8.     Exchange Rights.............................................................................96
   Section 18.9.     No Conversion Rights.......................................................................101
   Section 18.10.    No Sinking Fund............................................................................101

ARTICLE 19. SERIES F PREFERRED UNITS............................................................................101

   Section 19.1.     Designation and Number.....................................................................101
   Section 19.2.     Ranking....................................................................................101
   Section 19.3.     Distributions..............................................................................101
   Section 19.4.     Liquidation Proceeds.......................................................................103
   Section 19.5.     Series F Redemption........................................................................103
   Section 19.6.     Voting and Certain Management Rights.......................................................105
   Section 19.7.     Transfer Restrictions......................................................................107
   Section 19.8.     Exchange Rights............................................................................108
   Section 19.9.     No Conversion Rights.......................................................................113
   Section 19.10.    No Sinking Fund............................................................................113
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ARTICLE 20. SERIES G PREFERRED UNITS............................................................................113

   Section 20.1.     Designation and Number.....................................................................113
   Section 20.2.     Ranking....................................................................................113
   Section 20.3.     Distributions..............................................................................113
   Section 20.4.     Liquidation Proceeds.......................................................................115
   Section 20.5.     Series G Redemption........................................................................115
   Section 20.6.     Voting and Certain Management Rights.......................................................117
   Section 20.7.     Transfer Restrictions......................................................................119
   Section 20.8.     Exchange Rights............................................................................120
   Section 20.9.     No Conversion Rights.......................................................................125
   Section 20.10.    No Sinking Fund............................................................................125

ARTICLE 21. SERIES H PREFERRED UNITS............................................................................125

   Section 21.1.     Designation and Number.....................................................................125
   Section 21.2.     Ranking....................................................................................125
   Section 21.3.     Distributions..............................................................................125
   Section 21.4.     Liquidation Proceeds.......................................................................127
   Section 21.5.     Series H Redemption........................................................................128
   Section 21.6.     Voting and Certain Management Rights.......................................................129
   Section 21.7.     Transfer Restrictions......................................................................132
   Section 21.8.     Exchange Rights............................................................................132
   Section 21.9.     No Conversion Rights.......................................................................136
   Section 21.10.    No Sinking Fund............................................................................137
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                           EIGHTH AMENDED AND RESTATED

                        AGREEMENT OF LIMITED PARTNERSHIP

                                       OF

                              AMB PROPERTY II, L.P.

                THIS EIGHTH AMENDED AND RESTATED AGREEMENT OF LIMITED
PARTNERSHIP, dated as of September 1, 2000, is entered into by and among AMB
Property Holding Corporation, a Maryland corporation (the "Company"), as the
General Partner, and the Persons whose names are set forth on Exhibit A attached
hereto, as the Limited Partners (the "Existing Limited Partners"), together with
any other Persons who become Partners in the Partnership as provided herein.

                WHEREAS, the General Partner and the Existing Limited Partners
are parties to that certain Seventh Amended and Restated Agreement of Limited
Partnership, dated August 29, 2000, as amended;

                WHEREAS, on November 24, 1998, Belcrest Realty Corporation, a
Delaware corporation and Belair Real Estate Corporation, a Delaware corporation
(each a "Contributor" and, together the "Contributors") made an aggregate
Capital Contribution of $110,000,000, in cash, to the Partnership in exchange
for which the Contributors received an aggregate of 2,200,000 Series C Preferred
Units in the Partnership;

                WHEREAS, on May 5, 1999, J.P. Morgan Mosaic Fund, LLC, a
Delaware limited liability company (the "Series D Contributor") made a Capital
Contribution of $79,766,850, in cash, to the Partnership in exchange for which
the Series D Contributor received 1,595,337 Series D Preferred Units in the
Partnership;

                WHEREAS, on August 31, 1999, Fifth Third Equity Exchange Fund
1999, LLC, a Delaware limited liability company (the "Series E Contributor")
made a Capital Contribution of $11,022,000, in cash, to the Partnership in
exchange for which the Series E Contributor received 220,440 Series E Preferred
Units in the Partnership;

                WHEREAS, on March 22, 2000, Bailard, Biehl & Kaiser Technology
Exchange Fund, LLC, a Delaware limited liability company (the "Series F
Contributor") made a Capital Contribution of $19,871,950, in cash, to the
Partnership in exchange for which the Series F Contributor received 397,439
Series F Preferred Units in the Partnership;

                WHEREAS, on August 29, 2000, Bailard, Biehl & Kaiser Technology
Exchange Fund, LLC, a Delaware limited liability company (the "Series G
Contributor") made a Capital Contribution of $1,000,000, in cash, to the
Partnership in exchange for which the Series G Contributor received 20,000
Series G Preferred Units in the Partnership;

                WHEREAS, pursuant to Section 4.3.B of the Partnership Agreement,
the General Partner may, in its sole and absolute discretion subject to Delaware
law, in connection with any

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Capital Contribution, issue additional Partnership Interests in one or more
classes, or one or more series of any such classes, with such designations,
preferences and relative, participating, optional or other special rights,
powers, and duties, including rights, powers, and duties senior to then existing
Limited Partnership Interests;

                WHEREAS, on the date hereof, J.P. Morgan Mosaic Fund IV, LLC, a
Delaware limited liability company (the "Series H Contributor") has made a
Capital Contribution of $42,000,000, in cash, to the Partnership in exchange for
which the Series H Contributor is entitled to receive an aggregate of 840,000
Series H Preferred Units in the Partnership with the rights, preferences,
exchange and other rights, voting powers and restrictions, limitations as to
distributions, qualifications and terms and conditions as set forth herein;

                WHEREAS, pursuant to the authority granted to the General
Partner under the Partnership Agreement, the General Partner desires to amend
and restate the Partnership Agreement to reflect (i) the issuance of the Series
H Preferred Units, (ii) the admission of the Series H Contributor as an
Additional Limited Partner and a holder of a certain number of Series H
Preferred Units and (iii) certain other matters described herein;

                WHEREAS, the Series H Contributor desires to become a party to
the Partnership Agreement as a Limited Partner and to be bound by all terms,
conditions and other provisions of the Partnership Agreement; and

                WHEREAS, by virtue of the execution of this Agreement by the
Company in its capacity as General Partner of the Partnership, the General
Partner hereby consents to the amendment and restatement of the Seventh Amended
and Restated Agreement of Limited Partnership.

                NOW, THEREFORE, for good and adequate consideration, the receipt
of which is hereby acknowledged, the parties hereto agree as follows:

                                   ARTICLE 1.
                     DEFINED TERMS AND RULES OF CONSTRUCTION

                Section 1.1. Definitions

                The following definitions shall be for all purposes, unless
otherwise clearly indicated to the contrary, applied to the terms used in this
Agreement.

                "Act" means the Delaware Revised Uniform Limited Partnership
Act, as it may be amended from time to time, and any successor to such statute.

                "Additional Funds" shall have the meaning set forth in Section
4.3.A.

                "Additional Limited Partner" means a Person admitted to the
Partnership as a Limited Partner pursuant to Section 12.2 and who is shown as
such on the books and records of the Partnership.

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                "Adjusted Capital Account Deficit" means, with respect to any
Partner, the deficit balance, if any, in such Partner's Capital Account as of
the end of the relevant fiscal year, after giving effect to the following
adjustments:

                (i)     decrease such deficit by any amounts which such Partner
                        is obligated to restore pursuant to this Agreement or is
                        deemed to be obligated to restore pursuant to
                        Regulations Section 1.704-1(b)(2)(ii)(c) or the
                        penultimate sentence of each of Regulations Sections
                        1.704-2(i)(5) and 1.704-2(g); and

                (ii)    increase such deficit by the items described in
                        Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) and
                        (6).

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

                "Adjustment Date" shall have the meaning set forth in Section
4.3.D.

                "Affiliate" means, with respect to any Person, any Person
directly or indirectly controlling, controlled by or under common control with
such Person.

                "Agreed Value" means (i) in the case of any Contributed Property
set forth in Exhibit A and as of the time of its contribution to the
Partnership, the Agreed Value of such property as set forth in Exhibit A; (ii)
in the case of any Contributed Property not set forth in Exhibit A and as of the
time of its contribution to the Partnership, the fair market value of such
property or other consideration as determined by the General Partner, reduced by
any liabilities either assumed by the Partnership upon such contribution or to
which such property is subject when contributed; and (iii) in the case of any
property distributed to a Partner by the Partnership, the fair market value of
such property as determined by the General Partner at the time such property is
distributed, reduced by any indebtedness either assumed by such Partner upon
such distribution or to which such property is subject at the time of the
distribution as determined under Section 752 of the Code and the Regulations
thereunder.

                "Agreement" means this Eighth Amended and Restated Agreement of
Limited Partnership, as it may be amended, modified, supplemented or restated
from time to time.

                "AMB" means AMB Property Corporation, a Maryland corporation, in
its capacity as the owner of 100% of the common stock of the General Partner and
as the sole general partner of the Operating Partnership.

                "Appraisal" means with respect to any assets, the opinion of an
independent third party experienced in the valuation of similar assets, selected
by the General Partner in good faith; such opinion may be in the form of an
opinion by such independent third party that the value for such asset as set by
the General Partner is fair, from a financial point of view, to the Partnership.

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                "Assignee" means a Person to whom one or more Partnership Units
have been transferred in a manner permitted under this Agreement, but who has
not become a Substituted Limited Partner, and who has the rights set forth in
Section 11.5.

                "Available Cash" means, with respect to any period for which
such calculation is being made, (i) the sum of:

                        (a) the Partnership's Net Income or Net Loss (as the
                case may be) for such period,

                        (b) Depreciation and all other noncash charges deducted
                in determining Net Income or Net Loss for such period,

                        (c) the amount of any reduction in reserves of the
                Partnership referred to in clause (ii)(f) below (including,
                without limitation, reductions resulting because the General
                Partner determines such amounts are no longer necessary),

                        (d) the excess of the net proceeds from the sale,
                exchange, disposition, or refinancing of Partnership property
                for such period over the gain (or loss, as the case may be)
                recognized from any such sale, exchange, disposition, or
                refinancing during such period, and

                        (e) all other cash received by the Partnership for such
                period that was not included in determining Net Income or Net
                Loss for such period;

                (ii) less the sum of:

                        (a) all principal debt payments made during such period
                by the Partnership,

                        (b) capital expenditures made by the Partnership during
                such period,

                        (c) investments in any entity (including loans made
                thereto) to the extent that such investments are not otherwise
                described in clauses (ii)(a) or (b),

                        (d) all other expenditures and payments not deducted in
                determining Net Income or Net Loss for such period,

                        (e) any amount included in determining Net Income or Net
                Loss for such period that was not received by the Partnership
                during such period,

                        (f) the amount of any increase in reserves established
                during such period which the General Partner determines are
                necessary or appropriate in its sole and absolute discretion,
                and

                        (g) the amount of any working capital accounts and other
                cash or similar balances which the General Partner determines to
                be necessary or appropriate in its sole and absolute discretion.

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                Notwithstanding the foregoing, Available Cash shall not include
any cash received or reductions in reserves, or take into account any
disbursements made or reserves established, after commencement of the
dissolution and liquidation of the Partnership.

                "Board of Directors" means the Board of Directors of AMB.

                "Business Day" means each day, other than a Saturday or a
Sunday, which is not a day on which banking institutions in Los Angeles,
California or New York, New York are authorized or required by law, regulation
or executive order to close.

                "Capital Account" means, with respect to any Partner, the
Capital Account maintained for such Partner in accordance with the following
provisions:

                (i) To each Partner's Capital Account there shall be added such
Partner's Capital Contributions, such Partner's share of Net Income and any
items in the nature of income or gain which are specially allocated pursuant to
Section 6.3, and the amount of any Partnership liabilities assumed by such
Partner or which are secured by any property distributed to such Partner.

                (ii) From each Partner's Capital Account there shall be
subtracted the amount of cash and the Gross Asset Value of any property
distributed to such Partner pursuant to any provision of this Agreement, such
Partner's distributive share of Net Losses and any items in the nature of
expenses or losses which are specially allocated pursuant to Section 6.3 hereof,
and the amount of any liabilities of such Partner assumed by the Partnership or
which are secured by any property contributed by such Partner to the
Partnership.

                (iii) In the event any interest in the Partnership is
transferred in accordance with the terms of this Agreement, the transferee shall
succeed to the Capital Account of the transferor to the extent it relates to the
transferred interest.

                (iv) In determining the amount of any liability for purposes of
subsections (i) and (ii) hereof, there shall be taken into account Code Section
752(c) and any other applicable provisions of the Code and Regulations.

                (v) The foregoing provisions and the other provisions of this
Agreement relating to the maintenance of Capital Accounts are intended to comply
with Regulations Sections 1.704-1(b) and 1.704-2, and shall be interpreted and
applied in a manner consistent with such Regulations. In the event the General
Partner shall determine that it is prudent to modify the manner in which the
Capital Accounts, or any debits or credits thereto (including, without
limitation, debits or credits relating to liabilities which are secured by
contributed or distributed property or which are assumed by the Partnership, the
General Partner, or the Limited Partners) are computed in order to comply with
such Regulations, the General Partner may make such modification; provided that,
it is not likely to have a material effect on the amounts distributable to any
Person pursuant to Article 13 of this Agreement upon the dissolution of the
Partnership. The General Partner also shall (a) make any adjustments that are
necessary or appropriate to maintain equality between the Capital Accounts of
the Partners and the amount of Partnership capital reflected on the
Partnership's balance sheet, as computed for book purposes, in

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<PAGE>   11

accordance with Regulations Section 1.704-1(b)(2)(iv)(q) and (b) make any
appropriate modifications in the event unanticipated events might otherwise
cause this Agreement not to comply with Regulations Section 1.704-1(b) or
Section 1.704-2.

                "Capital Contribution" means, with respect to any Partner, the
amount of money and the initial Gross Asset Value of any property (other than
money) contributed to the Partnership by such Partner.

                "Certificate" means the Certificate of Limited Partnership
relating to the Partnership filed in the office of the Secretary of State of
Delaware, as amended from time to time in accordance with the terms hereof and
the Act.

                "Charter" means the Company's Articles of Incorporation, as
filed with the Maryland Department of Assessments and Taxation on November 24,
1997.

                "Code" means the Internal Revenue Code of 1986, as amended from
time to time or any successor statute thereto, as interpreted by the applicable
regulations thereunder. Any reference herein to a specific section or sections
of the Code shall be deemed to include a reference to any corresponding
provision of future law.

                "Common Unit" means each Partnership Unit that is not entitled
to any preference with respect to any other Partnership Unit as to distribution
or voluntary or involuntary liquidation, dissolution or winding up of the
Partnership.

                "Common Limited Partner" means any Person holding Common Units,
and named as a Common Limited Partner in Exhibit A attached hereto, as such
Exhibit may be amended from time to time, or any Substituted Limited Partner or
Additional Limited Partner, in such Person's capacity as a Common Limited
Partner in the Partnership.

                "Consent" means the consent to, approval of, or vote on a
proposed action by a Partner given in accordance with Article 14 hereof.

                "Consent of the Limited Partners" means the Consent of a
Majority in Interest of the Limited Partners, other than the Preferred Limited
Partners, which Consent shall be obtained prior to the taking of any action for
which it is required by this Agreement and may be given or withheld by a
Majority in Interest of the Limited Partners, unless otherwise expressly
provided herein, in their sole and absolute discretion.

                "Consent of the Partners" means the Consent of Partners, other
than the Preferred Limited Partners, holding Percentage Interests that in the
aggregate are equal to or greater than a majority of the aggregate Percentage
Interests of all Partners, other than the Preferred Limited Partners, which
Consent shall be obtained prior to the taking of any action for which it is
required by this Agreement and may be given or withheld by such Partners, in
their sole and absolute discretion.

                "Constructively Own" means ownership under the constructive
ownership rules described in Exhibit C.

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                "Contributed Property" means each property or other asset, in
such form as may be permitted by the Act, but excluding cash, contributed or
deemed contributed to the Partnership (or, to the extent provided in applicable
regulations, deemed contributed by the Partnership on termination and
reconstitution thereof pursuant to Section 708 of the Code).

                "Contributor" shall have the meaning given to such term in the
recitals hereto.

                "Debt" means, as to any Person, as of any date of determination:
(i) all indebtedness of such Person for borrowed money or for the deferred
purchase price of property or services; (ii) all amounts owed by such Person to
banks or other Persons in respect of reimbursement obligations under letters of
credit, surety bonds and other similar instruments guaranteeing payment or other
performance of obligations by such Person; (iii) all indebtedness for borrowed
money or for the deferred purchase price of property or services secured by any
lien on any property owned by such Person, to the extent attributable to such
Person's interest in such property, even though such Person has not assumed or
become liable for the payment thereof; and (iv) lease obligations of such Person
which, in accordance with generally accepted accounting principles, should be
capitalized.

                "Depreciation" means, for each fiscal year or other period, an
amount equal to the depreciation, amortization or other cost recovery deduction
allowable with respect to an asset for such year or other period, except that if
the Gross Asset Value of an asset differs from its adjusted basis for Federal
income tax purposes at the beginning of such year or other period, Depreciation
shall be an amount which bears the same ratio to such beginning Gross Asset
Value as the Federal income tax depreciation, amortization or other cost
recovery deduction for such year or other period bears to such beginning
adjusted tax basis; provided, however, that if the Federal income tax
depreciation, amortization or other cost recovery deduction for such year is
zero, Depreciation shall be determined with reference to such beginning Gross
Asset Value using any reasonable method selected by the General Partner.

                "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.

                "Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Securities and Exchange Commission
promulgated thereunder.

                "Funding Debt" means the incurrence of any Debt by or on behalf
of the General Partner for the purpose of providing funds to the Partnership.

                "Future Parity Preferred Capital" means, with respect to any
series of Parity Preferred Units issued to Future Parity Preferred Unitholders
following the date hereof, the product of (i) the number of Parity Preferred
Units within such series then held by Preferred Limited Partners (other than the
General Partner and the Operating Partnership) and (ii) the sum of the amount
contributed to the Partnership per such Parity Preferred Unit by Preferred
Limited Partners and the Preferred Distribution Shortfall with respect to each
such Parity Preferred Unit, if any.

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                "Future Parity Preferred Unitholders" shall have the meaning set
forth in Section 17.6.D.

                "General Partner" means the Company or its successors as general
partner of the Partnership.

                "General Partner Interest" means a Partnership Interest held by
the General Partner. A General Partner Interest may be expressed as a number of
Partnership Units.

                "Gross Asset Value" means, with respect to any asset, the
asset's adjusted basis for Federal income tax purposes, except as follows:

                (i) The initial Gross Asset Value of any asset contributed by a
Partner to the Partnership shall be the gross fair market value of such asset,
as determined by the contributing Partner and the General Partner (as set forth
on Exhibit A attached hereto, as such Exhibit may be amended from time to time);
provided, that if the contributing Partner is the General Partner then, except
with respect to the General Partner's initial Capital Contribution which shall
be determined as set forth on Exhibit A, or capital contributions of cash, the
determination of the fair market value of the contributed asset shall be
determined by (a) the price paid by the General Partner if the asset is acquired
by the General Partner contemporaneously with its contribution to the
Partnership or (b) by Appraisal if otherwise acquired by the General Partner.

                (ii) Immediately prior to the times listed below, the Gross
Asset Values of all Partnership assets shall be adjusted to equal their
respective gross fair market values, as determined by the General Partner using
such reasonable method of valuation as it may adopt:

                (a)     the acquisition of an additional interest in the
                        Partnership by a new or existing Partner in exchange for
                        more than a de minimis Capital Contribution, if the
                        General Partner reasonably determines that such
                        adjustment is necessary or appropriate to reflect the
                        relative economic interests of the Partners in the
                        Partnership;

                (b)     the distribution by the Partnership to a Partner of more
                        than a de minimis amount of Partnership property as
                        consideration for an interest in the Partnership if the
                        General Partner reasonably determines that such
                        adjustment is necessary or appropriate to reflect the
                        relative economic interests of the Partners in the
                        Partnership;

                (c)     the liquidation of the Partnership within the meaning of
                        Regulations Section 1.704-1(b)(2)(ii)(g); and

                (d)     at such other times as the General Partner shall
                        reasonably determine necessary or advisable in order to
                        comply with Regulations Sections 1.704-1(b) and 1.704-2.

                (iii) The Gross Asset Value of any Partnership asset distributed
to a Partner shall be the gross fair market value of such asset on the date of
distribution as determined by the

                                       8
<PAGE>   14

distributee and the General Partner; provided, that if the distributee is the
General Partner, or if the distributee and the General Partner cannot agree on
such a determination, by Appraisal.

                (iv) The Gross Asset Values of Partnership assets shall be
increased (or decreased) to reflect any adjustments to the adjusted basis of
such assets pursuant to Code Section 734(b) or Code Section 743(b), but only to
the extent that such adjustments are taken into account in determining Capital
Accounts pursuant to Regulations Section 1.704-1(b)(2)(iv)(m); provided,
however, that Gross Asset Values shall not be adjusted pursuant to this
subparagraph (iv) to the extent that the General Partner reasonably determines
that an adjustment pursuant to subparagraph (ii) is necessary or appropriate in
connection with a transaction that would otherwise result in an adjustment
pursuant to this subparagraph (iv).

                (v) If the Gross Asset Value of a Partnership asset has been
determined or adjusted pursuant to subparagraph (i), (ii) or (iv), such Gross
Asset Value shall thereafter be adjusted by the Depreciation taken into account
with respect to such asset for purposes of computing Net Income and Net Losses.

                "Holder" means either the Partner or Assignee owning a
Partnership Unit.

                "Immediate Family" means, with respect to any natural Person,
such natural Person's estate or heirs or current spouse or former spouse,
parents, parents-in-law, children, siblings and grandchildren and any trust or
estate, all of the beneficiaries of which consist of such Person or such
Person's spouse, former spouse, parents, parents-in-law, children, siblings or
grandchildren.

                "Incapacity" or "Incapacitated" means: (i) as to any individual
Partner, death, total physical disability or entry by a court of competent
jurisdiction adjudicating him or her incompetent to manage his or her Person or
his or her estate; (ii) as to any corporation which is a Partner, the filing of
a certificate of dissolution, or its equivalent, for the corporation or the
revocation of its charter; (iii) as to any partnership which is a Partner, the
dissolution and commencement of winding up of the partnership; (iv) as to any
estate which is a Partner, the distribution by the fiduciary of the estate's
entire interest in the Partnership; (v) as to any trustee of a trust which is a
Partner, the termination of the trust (but not the substitution of a new
trustee); or (vi) as to any Partner, the bankruptcy of such Partner. For
purposes of this definition, bankruptcy of a Partner shall be deemed to have
occurred when (a) the Partner commences a voluntary proceeding seeking
liquidation, reorganization or other relief under any bankruptcy, insolvency or
other similar law now or hereafter in effect, (b) the Partner is adjudged as
bankrupt or insolvent, or a final and nonappealable order for relief under any
bankruptcy, insolvency or similar law now or hereafter in effect has been
entered against the Partner, (c) the Partner executes and delivers a general
assignment for the benefit of the Partner's creditors, (d) the Partner files an
answer or other pleading admitting or failing to contest the material
allegations of a petition filed against the Partner in any proceeding of the
nature described in clause (b) above, (e) the Partner seeks, consents to or
acquiesces in the appointment of a trustee, receiver or liquidator for the
Partner or for all or any substantial part of the Partner's properties, (f) any
proceeding seeking liquidation, reorganization or other relief under any
bankruptcy, insolvency or other similar law now or hereafter in effect has not
been dismissed within one hundred and

                                       9
<PAGE>   15

twenty (120) days after the commencement thereof, (g) the appointment without
the Partner's consent or acquiescence of a trustee, receiver or liquidator has
not been vacated or stayed within ninety (90) days of such appointment or (h) an
appointment referred to in clause (g) is not vacated within ninety (90) days
after the expiration of any such stay.

                "Indemnitee" means (i) any Person subject to a claim or demand
or made or threatened to be made a party to, or involved or threatened to be
involved in, an action, suit or proceeding by reason of his or her status as (a)
the General Partner or (b) a director, officer, employee or agent of the
Partnership or the General Partner and (ii) such other Persons (including
Affiliates of the General Partner or the Partnership) as the General Partner may
designate from time to time, in its sole and absolute discretion.

                "IRS" means the Internal Revenue Service, which administers the
internal revenue laws of the United States.

                "Junior Stock" means shares of capital stock of AMB representing
any class or series of equity interest ranking, as to distributions and
voluntary or involuntary liquidation, dissolution or winding up of AMB, junior
to the Series C Preferred Shares, the Series D Preferred Shares, the Series E
Preferred Shares, the Series F Preferred Shares, the Series G Preferred Shares
and the Series H Preferred Shares.

                "Junior Units" means Partnership Units representing any class or
series of Partnership Interest ranking, as to distributions and voluntary or
involuntary liquidation, dissolution or winding up of the Partnership, junior to
the Series C Preferred Units, the Series D Preferred Units, the Series E
Preferred Units, the Series F Preferred Units, the Series G Preferred Units and
the Series H Preferred Units.

                "Limited Partner" means any Person named as a Limited Partner in
Exhibit A attached hereto, as such Exhibit may be amended from time to time, any
Substituted Limited Partner or Additional Limited Partner, in such Person's
capacity as a Limited Partner in the Partnership.

                "Limited Partnership Interest" means a Partnership Interest of a
Limited Partner representing a fractional part of the Partnership Interests of
all Limited Partners and includes any and all benefits to which the holder of
such a Partnership Interest may be entitled as provided in this Agreement,
together with all obligations of such Person to comply with the terms and
provisions of this Agreement. A Limited Partnership Interest may be expressed as
a number of Partnership Units.

                "Liquidating Events" shall have the meaning set forth in Section
13.1.

                "Liquidator" shall have the meaning set forth in Section 13.2.A.

                "Majority in Interest of the Limited Partners" means Limited
Partners (other than any Preferred Limited Partner) holding Percentage Interests
that in the aggregate are greater than fifty percent (50%) of the aggregate
Percentage Interests of all Limited Partners (other than any Preferred Limited
Partner).

                                       10
<PAGE>   16

                "Majority in Interest of Partners" means Partners (other than
Preferred Limited Partners) holding Percentage Interests that are greater than
fifty percent (50%) of the aggregate Percentage Interests of all Partners (other
than Preferred Limited Partners).

                "Net Income" or "Net Loss" means for each fiscal year of the
Partnership, an amount equal to the Partnership's taxable income or loss for
such fiscal year, determined in accordance with Code Section 703(a) (for this
purpose, all items of income, gain, loss or deduction required to be stated
separately pursuant to Code Section 703(a)(1) shall be included in taxable
income or loss), with the following adjustments:

                (i) Any income of the Partnership that is exempt from Federal
income tax and not otherwise taken into account in computing Net Income or Net
Loss pursuant to this definition of Net Income or Net Loss shall be added to
such taxable income or loss;

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

                (iii) In the event the Gross Asset Value of any Partnership
asset is adjusted pursuant to subparagraph (ii) or (iii) of the definition of
Gross Asset Value, the amount of such adjustment shall be taken into account as
gain or loss from the disposition of such asset for purposes of computing Net
Income or Net Loss;

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

                (v) In lieu of the depreciation, amortization, and other cost
recovery deductions taken into account in computing such taxable income or loss,
there shall be taken into account Depreciation for such fiscal year;

                (vi) To the extent an adjustment to the adjusted tax basis of
any Partnership asset pursuant to Code Section 734(b) or Code Section 743(b) is
required pursuant to Regulations Section 1.704-1(b)(2)(iv)(m)(4) to be taken
into account in determining Capital Accounts as a result of a distribution other
than in liquidation of a Partner's interest in the Partnership, the amount of
such adjustment shall be treated as an item of gain (if the adjustment increases
the basis of the asset) or loss (if the adjustment decreases the basis of the
asset) from the disposition of the asset and shall be taken into account for
purposes of computing Net Income or Net Loss; and

                (vii) Notwithstanding any other provision of this definition of
Net Income or Net Loss, any items which are specially allocated pursuant to
Section 6.3 shall not be taken into account in computing Net Income or Net Loss.
The amounts of the items of Partnership income, gain, loss, or deduction
available to be specially allocated pursuant to Section 6.3 shall be

                                       11
<PAGE>   17

determined by applying rules analogous to those set forth in this definition of
Net Income or Net Loss.

                Solely for purposes of allocating Net Income or Net Loss in any
Fiscal Year to the Holders of the Series C Preferred Units, the Series D
Preferred Units, the Series E Preferred Units, the Series F Preferred Units, the
Series G Preferred Units and the Series H Preferred Units pursuant to Sections
6.2.B.1(c) and (e), and Section 6.2.B.2(b), items of Net Income and Net Loss, as
the case may be, shall not include Depreciation with respect to properties that
are "ceiling limited" in respect of Preferred Limited Partners. For purposes of
the preceding sentence, Partnership property shall be considered ceiling limited
in respect of a Preferred Limited Partner if Depreciation attributable to such
Partnership property which would otherwise be allocable to such Partner, without
regard to this paragraph, exceeded depreciation determined for federal income
tax purposes attributable to such Partnership property which would otherwise be
allocable to such Partner by more than 5%.

                "Nonrecourse Deductions" shall have the meaning set forth in
Regulations Section 1.704-2(b)(1), and the amount of Nonrecourse Deductions for
a Partnership Year shall be determined in accordance with the rules of
Regulations Section 1.704-2(c).

                "Nonrecourse Liability" shall have the meaning set forth in
Regulations Section 1.752-1(a)(2).

                "Notice of Redemption" means the Notice of Redemption
substantially in the form of Exhibit B to this Agreement.

                "Operating Partnership" means AMB Property, L.P., a Delaware
limited partnership.

                "Parity Preferred Capital" means the sum of (i) the aggregate
Series C Preferred Capital for all Holders of Series C Preferred Units (other
than the General Partner and the Operating Partnership), (ii) the aggregate
Series D Preferred Capital for all Holders of Series D Preferred Units (other
than the General Partner and the Operating Partnership), (iii) the aggregate
Series E Preferred Capital for all Holders of Series E Preferred Units (other
than the General Partner and the Operating Partnership), (iv) the aggregate
Series F Preferred Capital for all Holders of Series F Preferred Units (other
than the General Partner and the Operating Partnership), (v) the aggregate
Series G Preferred Capital for all Holders of Series G Preferred Units (other
than the General Partner and the Operating Partnership), (vi) the aggregate
Series H Preferred Capital for all Holders of Series H Preferred Units (other
than the General Partner and the Operating Partnership) and (vii) the aggregate
Future Parity Preferred Capital for each series of Preferred Units issued
following the date hereof.

                "Parity Preferred Stock" means any class or series of equity
interest of AMB now or hereafter authorized, issued or outstanding expressly
designated by AMB to rank on a parity with the Series C Preferred Shares, the
Series D Preferred Shares, the Series E Preferred Shares, the Series F Preferred
Shares, the Series G Preferred Shares and the Series H Preferred Shares with
respect to distributions and rights upon voluntary or involuntary liquidation,
winding up or dissolution of AMB.

                                       12
<PAGE>   18

                "Parity Preferred Unit" means any class or series of Partnership
Interests of the Partnership now or hereafter authorized, issued or outstanding
expressly designated by the Partnership to rank on a parity with the Series C
Preferred Units, the Series D Preferred Units, the Series E Preferred Units, the
Series F Preferred Units, the Series G Preferred Units and the Series H
Preferred Units with respect to distributions and rights upon voluntary or
involuntary liquidation, winding up or dissolution of the Partnership.

                "Partner" means a General Partner or a Limited Partner, and
"Partners" means the General Partner and the Limited Partners.

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

                "Partner Nonrecourse Debt" shall have the meaning set forth in
Regulations Section 1.704-2(b)(4).

                "Partner Nonrecourse Deductions" shall have the meaning set
forth in Regulations Section 1.704-2(i)(2), and the amount of Partner
Nonrecourse Deductions with respect to a Partner Nonrecourse Debt for a
Partnership Year shall be determined in accordance with the rules of Regulations
Section 1.704-2(i)(2).

                "Partnership" means the limited partnership formed under the Act
and pursuant to this Agreement, and any successor thereto.

                "Partnership Interest" means an ownership interest in the
Partnership of either a Limited Partner or the General Partner and includes any
and all benefits to which the holder of such a Partnership Interest may be
entitled as provided in this Agreement, together with all obligations of such
Person to comply with the terms and provisions of this Agreement. There may be
one or more classes of Partnership Interests as provided in Section 4.3. A
Partnership Interest may be expressed as a number of Partnership Units. Unless
otherwise expressly provided for by the General Partner at the time of the
original issuance of any Partnership Interests, all Partnership Interests
(whether of a Limited Partner or a General Partner) shall be of the same class.
The Partnership Interests represented by the Common Units, the Series C
Preferred Units, the Series D Preferred Units, the Series E Preferred Units, the
Series F Preferred Units, the Series G Preferred Units and the Series H
Preferred Units are the only Partnership Interests and each such type of unit is
a separate class of Partnership Interest for all purposes of this Agreement.

                "Partnership Minimum Gain" shall have the meaning set forth in
Regulations Section 1.704-2(b)(2), and the amount of Partnership Minimum Gain,
as well as any net increase or decrease in Partnership Minimum Gain, for a
Partnership Year shall be determined in accordance with the rules of Regulations
Section 1.704-2(d).

                "Partnership Record Date" means the record date established by
the General Partner for the distribution of Available Cash with respect to
Common Units pursuant to Section

                                       13
<PAGE>   19

5.1 which record date shall be the same as the record date established by AMB
for a distribution to its stockholders of some or all of its portion of such
distribution.

                "Partnership Unit" means, with respect to any class of
Partnership Interest, a fractional, undivided share of such class of Partnership
Interest issued pursuant to Sections 4.1 and 4.3. The ownership of Partnership
Units may be evidenced by a certificate for units substantially in the form of
Exhibit D-1 hereto or as the General Partner may determine with respect to any
class of Partnership Units issued from time to time under Sections 4.1 and 4.3.

                "Partnership Year" means the fiscal year of the Partnership,
which shall be the calendar year.

                "Percentage Interest" means, as to a Partner holding a class of
Partnership Interests, its interest in the Partnership as determined by dividing
the Partnership Units of such class owned by such Partner by the total number of
Partnership Units of such class then outstanding as specified in Exhibit A
attached hereto, as such Exhibit may be amended from time to time. If the
Partnership issues more than one class of Partnership Interest, the interest in
the Partnership among the classes of Partnership Interests shall be determined
as set forth in the amendment to the Partnership Agreement setting forth the
rights and privileges of such additional classes of Partnership Interest, if
any, as contemplated by Section 4.3.B.

                "Person" means an individual or a corporation, partnership,
limited liability company, trust, unincorporated organization, association or
other entity.

                "Plan Asset Regulation" means the regulations promulgated by the
United States Department of Labor in Title 29, Code of Federal Regulations, Part
2510, Section 101-3, and any successor regulations thereto.

                "Pledge" shall have the meaning set forth in Section 11.3.A.

                "Preferred Distribution Shortfall" shall have the meaning given
to such term in Section 5.1 hereof.

                "Preferred Limited Partner" means any Person holding a Preferred
Unit, and named as a Preferred Limited Partner in Exhibit A attached hereto, as
such Exhibit may be amended from time to time, or any Substitute Limited Partner
or Additional Limited Partner, in such Person's capacity as a Preferred Limited
Partner in the Partnership.

                "Preferred Share" means a share of AMB preferred stock, par
value $.01 per share, with such rights, priorities and preferences as shall be
designated by the Board of Directors in accordance with the REIT Charter.

                "Preferred Unit" means a Partnership Unit representing a Limited
Partnership Interest, with such preferential rights and priorities as shall be
designated by the General Partner pursuant to Section 4.3.C hereof including,
without limitation, the Series C Preferred Units, the Series D Preferred Units,
the Series E Preferred Units, the Series F Preferred Units, the Series G
Preferred Units and the Series H Preferred Units.

                                       14
<PAGE>   20

                "Priority Return" means with respect to (i) the Series C
Preferred Units, the Series C Priority Return, (ii) the Series D Preferred
Units, the Series D Priority Return, (iii) the Series E Preferred Units, the
Series E Priority Return, (iv) the Series F Preferred Units, the Series F
Priority Return, (v) the Series G Preferred Units, the Series G Priority Return
and (vi) the Series H Preferred Units, the Series H Priority Return.

                "Properties" means such interests in real property and personal
property including without limitation, fee interests, interests in ground
leases, interests in joint ventures, interests in mortgages, and Debt
instruments as the Partnership may hold from time to time.

                "PTP" shall have the meaning set forth in Section 16.7.

                "Qualified REIT Subsidiary" means any Subsidiary of AMB that is
a "qualified REIT subsidiary" within the meaning of Section 856(i) of the Code.

                "Qualified Transferee" means an "Accredited Investor" as defined
in Rule 501 promulgated under the Securities Act.

                "Regulations" means the Income Tax Regulations promulgated under
the Code, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).

                "Regulatory Allocations" shall have the meaning set forth in
Section 6.3.A(viii).

                "REIT" means a real estate investment trust under Sections 856
through 860 of the Code.

                "REIT Charter" means the Articles of Incorporation of AMB as of
November 24, 1997, as amended by the Articles Supplementary filed with the
Maryland Department of Assessments and Taxation on July 23, 1998 designating the
8_% Series A Cumulative Redeemable Preferred Stock, the Articles Supplementary
filed with the Maryland Department of Assessments and Taxation on November 12,
1998 designating the 8M% Series B Cumulative Redeemable Preferred Stock, the
Articles Supplementary filed with the Maryland Department of Assessments and
Taxation on November 24, 1998 designating the 8_% Series C Cumulative Redeemable
Preferred Stock, the Articles Supplementary filed with the Maryland Department
of Assessments and Taxation on May 5, 1999 designating the 7.75% Series D
Cumulative Redeemable Preferred Stock, the Articles Supplementary filed with the
Maryland Department of Assessments and Taxation on August 31, 1999 designating
the 7.75% Series E Cumulative Redeemable Preferred Stock, the Articles
Supplementary filed with the Maryland Department of Assessments and Taxation on
March 23, 2000 designating the 7.95% Series F Cumulative Redeemable Preferred
Stock, the Articles Supplementary filed with the Maryland Department of
Assessments and Taxation on August 30, 2000 designating the 7.95% Series G
Cumulative Redeemable Preferred Stock and the Articles Supplementary filed with
the Maryland Department of Assessments and Taxation on September 1, 2000
designating the 8.125% Series H Cumulative Redeemable Preferred Stock and as
further amended or restated from time to time.

                "REIT Requirements" shall have the meaning set forth in Section
5.1.

                                       15
<PAGE>   21

                "REIT Share" means a share of common stock, par value $.01 per
share, of AMB.

                "Securities Act" means the Securities Act of 1933, as amended,
and the rules and regulations of the Securities and Exchange Commission
promulgated thereunder.

                "Series B Preferred Units" shall have the meaning set forth in
Section 16.8.C.

                "Series C Articles Supplementary" means the Articles
Supplementary of AMB in connection with its Series C Preferred Shares, as filed
with the Maryland Department of Assessments and Taxation on November 24, 1998.

                "Series C Limited Partner" means any Person holding Series C
Preferred Units and named as a Series C Limited Partner in Exhibit A attached
hereto, as such Exhibit may be amended from time to time, or any Substitute
Limited Partner, in such Person's capacity as a Limited Partner in the
Partnership.

                "Series C Preferred Capital" means a Capital Account balance
equal to the product of (i) the number of Series C Preferred Units then held by
the Series C Limited Partner (including the General Partner and the Operating
Partnership to the extent either of them holds Series C Preferred Units)
multiplied by (ii) the sum of $50 and any Preferred Distribution Shortfall per
Series C Preferred Unit.

                "Series C Preferred Share" means a share of 8_% Series C
Cumulative Redeemable Preferred Stock, par value $.01 per share, liquidation
preference $50 per share, of AMB.

                "Series C Preferred Units" means the Partnership's 8_% Series C
Cumulative Redeemable Partnership Units.

                "Series C Preferred Unit Distribution Payment Date" shall have
the meaning set forth in Section 16.3.A hereof.

                "Series C Priority Return" shall mean an amount equal to 8_% per
annum on an amount equal to $50 per Series C Preferred Unit then outstanding
(equivalent to $4.375 per annum). Such amount shall be determined on a daily
basis computed on the basis of a 360-day year of twelve 30-day months (or actual
days for any month which is shorter than a full monthly period), cumulative from
November 24, 1998 to the extent not distributed for any given distribution
period pursuant to Sections 5.1 and 16.3 hereof. Notwithstanding the foregoing,
distributions on the Series C Preferred Units will accrue whether or not the
terms and provisions of any agreement of the Partnership at any time prohibit
the current payment of distributions, whether or not the Partnership has
earnings, whether or not there are funds legally available for the payment of
such distributions and whether or not such distributions are authorized. Accrued
but unpaid distributions on the Series C Preferred Units will accumulate as of
the Series C Preferred Unit Distribution Payment Date on which they first become
payable.

                "Series C Redemption" shall have the meaning set forth in
Section 16.5.A.

                                       16
<PAGE>   22

                "Series D Articles Supplementary" means the Articles
Supplementary of AMB in connection with its Series D Preferred Shares, as filed
with the Maryland Department of Assessments and Taxation on May 5, 1999.

                "Series D Limited Partner" means any Person holding Series D
Preferred Units and named as a Series D Limited Partner in Exhibit A attached
hereto, as such Exhibit may be amended from time to time, or any Substitute
Limited Partner, in such Person's capacity as a Limited Partner in the
Partnership.

                "Series D Preferred Capital" means a Capital Account balance
equal to the product of (i) the number of Series D Preferred Units then held by
the Series D Limited Partner (including the General Partner and the Operating
Partnership to the extent either of them holds Series C Preferred Units)
multiplied by (ii) the sum of $50 and any Preferred Distribution Shortfall per
Series D Preferred Unit.

                "Series D Preferred Share" means a share of 7.75% Series D
Cumulative Redeemable Preferred Stock, par value $.01 per share, liquidation
preference $50 per share, of AMB.

                "Series D Preferred Units" means the Partnership's 7.75% Series
D Cumulative Redeemable Membership Units.

                "Series D Preferred Unit Distribution Payment Date" shall have
the meaning set forth in Section 17.3.A hereof.

                "Series D Priority Return" shall mean an amount equal to 7.75%
per annum on an amount equal to $50 per Series D Preferred Unit then outstanding
(equivalent to $3.875 per annum). Such amount shall be determined on a daily
basis computed on the basis of a 360-day year of twelve 30-day months (or actual
days for any month which is shorter than a full monthly period), cumulative from
May 5, 1999 to the extent not distributed for any given distribution period
pursuant to Sections 5.1 and 17.3 hereof. Notwithstanding the foregoing,
distributions on the Series D Preferred Units will accrue whether or not the
terms and provisions of any agreement of the Partnership at any time prohibit
the current payment of distributions, whether or not the Partnership has
earnings, whether or not there are funds legally available for the payment of
such distributions and whether or not such distributions are authorized. Accrued
but unpaid distributions on the Series D Preferred Units will accumulate as of
the Series D Preferred Unit Distribution Payment Date on which they first become
payable.

                "Series D Redemption" shall have the meaning set forth in
Section 17.5.A.

                "Series E Articles Supplementary" means the Articles
Supplementary of AMB in connection with its Series E Preferred Shares, as filed
with the Maryland Department of Assessments and Taxation on August 31, 1999.

                "Series E Limited Partner" means any Person holding Series E
Preferred Units and named as a Series E Limited Partner in Exhibit A attached
hereto, as such Exhibit may be

                                       17
<PAGE>   23

amended from time to time, or any Substitute Limited Partner, in such Person's
capacity as a Limited Partner in the Partnership.

                "Series E Preferred Capital" means a Capital Account balance
equal to the product of (i) the number of Series E Preferred Units then held by
the Holder (including the General Partner and the Operating Partnership to the
extent either of them holds Series E Preferred Units) multiplied by (ii) the sum
of $50 and any Preferred Distribution Shortfall per Series E Preferred Unit.

                "Series E Preferred Share" means a share of 7.75% Series E
Cumulative Redeemable Preferred Stock, par value $.01 per share, liquidation
preference $50.00 per share, of AMB.

                "Series E Preferred Units" means the Partnership's 7.75% Series
E Cumulative Redeemable Partnership Units.

                "Series E Preferred Unit Distribution Payment Date" shall have
the meaning set forth in Section 18.3.A hereof.

                "Series E Priority Return" shall mean an amount equal to 7.75%
per annum on an amount equal to $50.00 per Series E Preferred Unit then
outstanding (equivalent to $3.875 per annum). Such amount shall be determined on
a daily basis computed on the basis of a 360-day year of twelve 30-day months
(or actual days for any month which is shorter than a full monthly period),
cumulative from August 31, 1999 to the extent not distributed for any given
distribution period pursuant to Sections 5.1 and 18.3 hereof. Notwithstanding
the foregoing, distributions on the Series E Preferred Units will accrue whether
or not the terms and provisions of any agreement of the Partnership at any time
prohibit the current payment of distributions, whether or not the Partnership
has earnings, whether or not there are funds legally available for the payment
of such distributions and whether or not such distributions are authorized.
Accrued but unpaid distributions on the Series E Preferred Units will accumulate
as of the Series E Preferred Unit Distribution Payment Date on which they first
become payable.

                "Series E Redemption" shall have the meaning set forth in
Section 18.5.A.

                "Series F Articles Supplementary" means the Articles
Supplementary of AMB in connection with its Series F Preferred Shares, as filed
with the Maryland Department of Assessments and Taxation on March 23, 2000.

                "Series F Limited Partner" means any Person holding Series F
Preferred Units and named as a Series F Limited Partner in Exhibit A attached
hereto, as such Exhibit may be amended from time to time, or any Substitute
Limited Partner, in such Person's capacity as a Limited Partner in the
Partnership.

                "Series F Preferred Capital" means a Capital Account balance
equal to the product of (i) the number of Series F Preferred Units then held by
the Holder (including the General Partner and the Operating Partnership to the
extent either of them holds Series F Preferred Units)

                                       18
<PAGE>   24

multiplied by (ii) the sum of $50 and any Preferred Distribution Shortfall per
Series F Preferred Unit.

                "Series F Preferred Share" means a share of 7.95% Series F
Cumulative Redeemable Preferred Stock, par value $.01 per share, liquidation
preference $50.00 per share, of AMB.

                "Series F Preferred Units" means the Partnership's 7.95% Series
F Cumulative Redeemable Partnership Units.

                "Series F Preferred Unit Distribution Payment Date" shall have
the meaning set forth in Section 19.3.A hereof.

                "Series F Priority Return" shall mean an amount equal to 7.95%
per annum on an amount equal to $50.00 per Series F Preferred Unit then
outstanding (equivalent to $3.975 per annum). Such amount shall be determined on
a daily basis computed on the basis of a 360-day year of twelve 30-day months
(or actual days for any month which is shorter than a full monthly period),
cumulative from March 22, 2000 to the extent not distributed for any given
distribution period pursuant to Sections 5.1 and 19.3 hereof. Notwithstanding
the foregoing, distributions on the Series F Preferred Units will accrue whether
or not the terms and provisions of any agreement of the Partnership at any time
prohibit the current payment of distributions, whether or not the Partnership
has earnings, whether or not there are funds legally available for the payment
of such distributions and whether or not such distributions are authorized.
Accrued but unpaid distributions on the Series F Preferred Units will accumulate
as of the Series F Preferred Unit Distribution Payment Date on which they first
become payable.

                "Series F Redemption" shall have the meaning set forth in
Section 19.5.A.

                "Series G Articles Supplementary" means the Articles
Supplementary of AMB in connection with its Series G Preferred Shares, as filed
with the Maryland Department of Assessments and Taxation on August 29, 2000.

                "Series G Limited Partner" means any Person holding Series G
Preferred Units and named as a Series G Limited Partner in Exhibit A attached
hereto, as such Exhibit may be amended from time to time, or any Substitute
Limited Partner, in such Person's capacity as a Limited Partner in the
Partnership.

                "Series G Preferred Capital" means a Capital Account balance
equal to the product of (i) the number of Series G Preferred Units then held by
the Holder (including the General Partner and the Operating Partnership to the
extent either of them holds Series G Preferred Units) multiplied by (ii) the sum
of $50 and any Preferred Distribution Shortfall per Series G Preferred Unit.

                "Series G Preferred Share" means a share of 7.95% Series G
Cumulative Redeemable Preferred Stock, par value $.01 per share, liquidation
preference $50.00 per share, of AMB.

                                       19
<PAGE>   25

                "Series G Preferred Units" means the Partnership's 7.95% Series
G Cumulative Redeemable Partnership Units.

                "Series G Preferred Unit Distribution Payment Date" shall have
the meaning set forth in Section 20.3.A hereof.

                "Series G Priority Return" shall mean an amount equal to 7.95%
per annum on an amount equal to $50.00 per Series G Preferred Unit then
outstanding (equivalent to $3.975 per annum). Such amount shall be determined on
a daily basis computed on the basis of a 360-day year of twelve 30-day months
(or actual days for any month which is shorter than a full monthly period),
cumulative from August 29, 2000 to the extent not distributed for any given
distribution period pursuant to Sections 5.1 and 20.3 hereof. Notwithstanding
the foregoing, distributions on the Series G Preferred Units will accrue whether
or not the terms and provisions of any agreement of the Partnership at any time
prohibit the current payment of distributions, whether or not the Partnership
has earnings, whether or not there are funds legally available for the payment
of such distributions and whether or not such distributions are authorized.
Accrued but unpaid distributions on the Series G Preferred Units will accumulate
as of the Series G Preferred Unit Distribution Payment Date on which they first
become payable.

                "Series G Redemption" shall have the meaning set forth in
Section 20.5.A.

                "Series H Articles Supplementary" means the Articles
Supplementary of AMB in connection with its Series H Preferred Shares, as filed
with the Maryland Department of Assessments and Taxation on September 1, 2000.

                "Series H Limited Partner" means any Person holding Series H
Preferred Units and named as a Series H Limited Partner in Exhibit A attached
hereto, as such Exhibit may be amended from time to time, or any Substitute
Limited Partner, in such Person's capacity as a Limited Partner in the
Partnership.

                "Series H Preferred Capital" means a Capital Account balance
equal to the product of (i) the number of Series H Preferred Units then held by
the Holder (including the General Partner and the Operating Partnership to the
extent either of them holds Series H Preferred Units) multiplied by (ii) the sum
of $50 and any Preferred Distribution Shortfall per Series H Preferred Unit.

                "Series H Preferred Share" means a share of 8.125% Series H
Cumulative Redeemable Preferred Stock, par value $.01 per share, liquidation
preference $50.00 per share, of AMB.

                "Series H Preferred Units" means the Partnership's 8.125% Series
H Cumulative Redeemable Partnership Units.

                "Series H Preferred Unit Distribution Payment Date" shall have
the meaning set forth in Section 21.3.A hereof.

                                       20
<PAGE>   26

                "Series H Priority Return" shall mean an amount equal to 8.125%
per annum on an amount equal to $50.00 per Series H Preferred Unit then
outstanding (equivalent to $4.0625 per annum). Such amount shall be determined
on a daily basis computed on the basis of a 360-day year of twelve 30-day months
(or actual days for any month which is shorter than a full monthly period),
cumulative from September 1, 2000 to the extent not distributed for any given
distribution period pursuant to Sections 5.1 and 21.3 hereof. Notwithstanding
the foregoing, distributions on the Series H Preferred Units will accrue whether
or not the terms and provisions of any agreement of the Partnership at any time
prohibit the current payment of distributions, whether or not the Partnership
has earnings, whether or not there are funds legally available for the payment
of such distributions and whether or not such distributions are authorized.
Accrued but unpaid distributions on the Series H Preferred Units will accumulate
as of the Series H Preferred Unit Distribution Payment Date on which they first
become payable.

                "Series H Redemption" shall have the meaning set forth in
Section 21.5.A.

                "Specified Redemption Date" means the day of receipt by the
General Partner of a Notice of Redemption.

                "Subsidiary" shall mean, with respect to any person, any
corporation, partnership, limited liability company, joint venture or other
entity of which a majority of (i) the voting power of the voting equity
securities or (ii) the outstanding equity interests, is owned, directly or
indirectly, by such person.

                "Subsidiary Partnership" means any partnership or limited
liability company that is a Subsidiary of the Partnership or the Operating
Partnership.

                "Substituted Limited Partner" means a Person who is admitted as
a Limited Partner to the Partnership pursuant to Section 11.4.

                "Tax Items" shall have the meaning set forth in Section 6.4.A.

                "Tenant" means any tenant from which AMB derives rent either
directly or indirectly through partnerships, including the Partnership.

                                   ARTICLE 2.
                             ORGANIZATIONAL MATTERS

                Section 2.1. Organization

                The Partnership is a limited partnership formed pursuant to the
provisions of the Act and upon the terms and conditions set forth in this
Agreement. Except as expressly provided herein, the rights and obligations of
the Partners and the administration and termination of the Partnership shall be
governed by the Act. The Partnership Interest of each Partner shall be personal
property for all purposes.

                                       21
<PAGE>   27

                Section 2.2. Name

                The name of the Partnership is AMB Property II, L.P. The
Partnership's business may be conducted under any other name or names deemed
advisable by the General Partner, including the name of the General Partner or
any Affiliate thereof. The words "Limited Partnership," "L.P.," "Ltd." or
similar words or letters shall be included in the Partnership's name where
necessary for the purposes of complying with the laws of any jurisdiction that
so requires. The General Partner in its sole and absolute discretion may change
the name of the Partnership at any time and from time to time and shall notify
the Limited Partners of such change in the next regular communication to the
Limited Partners.

                Section 2.3. Resident Agent; Principal Office

                The name and address of the resident agent of the Partnership in
the State of Delaware is The Corporation Trust Company, 1209 Orange Street,
Wilmington, Delaware 19801. The address of the principal office of the
Partnership in the State of Delaware is The Corporation Trust Company, 1209
Orange Street, Wilmington, Delaware 19801 at such address. The principal office
of the Partnership is located at 505 Montgomery Street, San Francisco,
California 94111, or such other place as the General Partner may from time to
time designate by notice to the Limited Partners. The Partnership may maintain
offices at such other place or places within or outside the State of Delaware as
the General Partner deems advisable.

                Section 2.4. Power of Attorney

                A. Each Limited Partner and each Assignee constitutes and
appoints the General Partner, any Liquidator, and authorized officers and
attorneys-in-fact of each, and each of those acting singly, in each case with
full power of substitution, as its true and lawful agent and attorney-in-fact,
with full power and authority in its name, place and stead to:

                (i)     execute, swear to, acknowledge, deliver, file and record
                        in the appropriate public offices: (a) all certificates,
                        documents and other instruments (including, without
                        limitation, this Agreement and the Certificate and all
                        amendments or restatements thereof) that the General
                        Partner or the Liquidator deems appropriate or necessary
                        to form, qualify or continue the existence or
                        qualification of the Partnership as a limited
                        partnership (or a partnership in which the Limited
                        Partners have limited liability) in the State of
                        Delaware and in all other jurisdictions in which the
                        Partnership may conduct business or own property; (b)
                        all instruments that the General Partner or any
                        Liquidator deems appropriate or necessary to reflect any
                        amendment, change, modification or restatement of this
                        Agreement in accordance with its terms; (c) all
                        conveyances and other instruments or documents that the
                        General Partner or any Liquidator deems appropriate or
                        necessary to reflect the dissolution and liquidation of
                        the Partnership pursuant to the terms of this Agreement,
                        including, without limitation, a certificate of
                        cancellation; (d) all instruments relating to the
                        admission, withdrawal, removal or substitution of any
                        Partner pursuant to, or other events described in,
                        Articles 11, 12 and 13 or the Capital Contribution of

                                       22
<PAGE>   28

                        any Partner; and (e) all certificates, documents and
                        other instruments relating to the determination of the
                        rights, preferences and privileges of Partnership
                        Interests; and

                (ii)    execute, swear to, acknowledge and file all ballots,
                        consents, approvals, waivers, certificates and other
                        instruments appropriate or necessary, in the sole and
                        absolute discretion of the General Partner or any
                        Liquidator, to make, evidence, give, confirm or ratify
                        any vote, consent, approval, agreement or other action
                        which is made or given by the Partners hereunder or is
                        consistent with the terms of this Agreement or
                        appropriate or necessary, in the sole discretion of the
                        General Partner or any Liquidator, to effectuate the
                        terms or intent of this Agreement.

Nothing contained herein shall be construed as authorizing the General Partner
or any Liquidator to amend this Agreement except in accordance with Article 14
or as may be otherwise expressly provided for in this Agreement.

                B. The foregoing power of attorney is hereby declared to be
irrevocable and a power coupled with an interest, in recognition of the fact
that each of the Partners will be relying upon the power of the General Partner
and any Liquidator to act as contemplated by this Agreement in any filing or
other action by it on behalf of the Partnership, and it shall survive and not be
affected by the subsequent Incapacity of any Limited Partner or Assignee and the
transfer of all or any portion of such Limited Partner's or Assignee's
Partnership Units and shall extend to such Limited Partner's or Assignee's
heirs, successors, assigns and personal representatives. Each such Limited
Partner or Assignee hereby agrees to be bound by any representation made by the
General Partner or any Liquidator, acting in good faith pursuant to such power
of attorney; and each such Limited Partner or Assignee hereby waives any and all
defenses which may be available to contest, negate or disaffirm the action of
the General Partner or any Liquidator, taken in good faith under such power of
attorney. Each Limited Partner or Assignee shall execute and deliver to the
General Partner or any Liquidator, within fifteen (15) days after receipt of the
General Partner's or Liquidator's request therefor, such further designation,
powers of attorney and other instruments as the General Partner or the
Liquidator, as the case may be, deems necessary to effectuate this Agreement and
the purposes of the Partnership.

                Section 2.5. Term

                The term of the Partnership commenced on October 15, 1997 and
shall continue until October 15, 2096 unless it is dissolved sooner pursuant to
the provisions of Article 13 or as otherwise provided by law.

                Section 2.6. Number of Partners

                Without the consent of the General Partner which may be given or
withheld in its sole discretion, the Partnership shall not at any time have more
than one hundred (100) partners (including as partners those persons indirectly
owning an interest in the Partnership through a partnership, limited liability
company, S corporation or grantor trust (such entity, a "flow through entity"),
but only if substantially all of the value of such person's interest in the flow

                                       23
<PAGE>   29

through entity is attributable to the flow through entity's interest (direct or
indirect) in the Partnership).

                                   ARTICLE 3.
                                     PURPOSE

                Section 3.1. Purpose and Business

                The purpose and nature of the business to be conducted by the
Partnership is (i) to conduct any business that may be lawfully conducted by a
limited partnership organized pursuant to the Act; provided, however, that such
business shall be limited to and conducted in such a manner as to permit AMB, in
its capacity as the owner of 100% of the Common Stock of the General Partner and
as the sole General Partner of the Operating Partnership, at all times to be
classified as a REIT for Federal income tax purposes, unless AMB ceases to
qualify as a REIT for reasons other than the conduct of the business of the
Partnership, (ii) to enter into any partnership, joint venture or other similar
arrangement to engage in any of the foregoing or to own interests in any entity
engaged, directly or indirectly, in any of the foregoing and (iii) to do
anything necessary or incidental to the foregoing. In connection with the
foregoing, and without limiting AMB's right in its sole discretion to cease
qualifying as a REIT, the Partners acknowledge that AMB's current status as a
REIT inures to the benefit of all the Partners and not solely the General
Partner.

                Section 3.2. Powers

                The Partnership is empowered to do any and all acts and things
necessary, appropriate, proper, advisable, incidental to or convenient for the
furtherance and accomplishment of the purposes and business described herein and
for the protection and benefit of the Partnership, including, without
limitation, full power and authority, directly or through its ownership interest
in other entities, to enter into, perform and carry out contracts of any kind,
borrow money and issue evidences of indebtedness, whether or not secured by
mortgage, deed of trust, pledge or other lien, acquire and develop real
property, and manage, lease, sell, transfer and dispose of real property;
provided, however, not withstanding anything to the contrary in this Agreement,
the Partnership shall not take, or refrain from taking, any action which, in the
judgment of AMB, in its sole and absolute discretion, (i) could adversely affect
the ability of AMB, in its capacity as the owner of 100% of the Common Stock of
the General Partner and as the sole general partner of the Operating
Partnership, to continue to qualify as a REIT, (ii) absent the consent of the
General Partner, which may be given or withheld in its sole and absolute
discretion, and except with respect to the distribution of Available Cash to the
Series C Limited Partners, the Series D Limited Partners, the Series E Limited
Partners, the Series F Limited Partners, the Series G Limited Partners and the
Series H Limited Partners in accordance with Sections 16.3, 17.3, 18.3, 19.3,
20.3 and 21.3, respectively, could subject AMB to any taxes under Section 857 or
Section 4981 of the Code, or (iii) could violate any law or regulation of any
governmental body or agency having jurisdiction over AMB or its securities,
unless any such action (or inaction) under the foregoing clauses (i), (ii) or
(iii) shall have been specifically consented to by AMB in writing.

                                       24
<PAGE>   30

                Section 3.3. Partnership Only for Purposes Specified

                The Partnership shall be a partnership only for the purposes
specified in Section 3.1, and this Agreement shall not be deemed to create a
partnership among the Partners with respect to any activities whatsoever other
than the activities within the purposes of the Partnership as specified in
Section 3.1. Except as otherwise provided in this Agreement, no Partner shall
have any authority to act for, bind, commit or assume any obligation or
responsibility on behalf of the Partnership, its properties or any other
Partner. No Partner, in its capacity as a Partner under this Agreement, shall be
responsible or liable for any indebtedness or obligation of another Partner, nor
shall the Partnership be responsible or liable for any indebtedness or
obligation of any Partner, incurred either before or after the execution and
delivery of this Agreement by such Partner, except as to those responsibilities,
liabilities, indebtedness or obligations incurred pursuant to and as limited by
the terms of this Agreement and the Act.

                Section 3.4. Representations and Warranties by the Parties

                A. Each Partner that is an individual represents and warrants to
each other Partner that (i) such Partner has in the case of any Person other
than an individual, the power and authority, and in the case of an individual,
the legal capacity, to enter into this Agreement and perform such Partner's
obligations hereunder, (ii) the consummation of the transactions contemplated by
this Agreement to be performed by such Partner will not result in a breach or
violation of, or a default under, any agreement by which such Partner or any of
such Partner's property is or are bound, or any statute, regulation, order or
other law to which such Partner is subject, (iii) such Partner is neither a
"foreign person" within the meaning of Section 1445(f) of the Code nor a
"foreign partner" within the meaning of Section 1446(e) of the Code and (iv)
this Agreement has been duly executed and delivered by such Partner and is
binding upon, and enforceable against, such Partner in accordance with its
terms.

                B. Each Partner that is not an individual represents and
warrants to each other Partner that (i) its execution and delivery of this
Agreement and all transactions contemplated by this Agreement to be performed by
it have been duly authorized by all necessary action, including without
limitation, that of its general partner(s), committee(s), trustee(s),
beneficiaries, directors and/or stockholder(s), as the case may be, as required,
(ii) the consummation of such transactions shall not result in a breach or
violation of, or a default under, its certificate of limited partnership,
partnership agreement, trust agreement, limited liability company operating
agreement, charter or by-laws, as the case may be, any agreement by which such
Partner or any of such Partner's properties or any of its partners,
beneficiaries, trustees or stockholders, as the case may be, is or are bound, or
any statute, regulation, order or other law to which such Partner or any of its
partners, trustees, beneficiaries or stockholders, as the case may be, is or are
subject, (iii) such Partner is neither a "foreign person" within the meaning of
Section 1445(f) of the Code nor a "foreign partner" within the meaning of
Section 1446(e) of the Code and (iv) this Agreement has been duly executed and
delivered by such Partner and is binding upon, and enforceable against, such
Partner in accordance with its terms.

                                       25
<PAGE>   31

                C. Each Partner represents, warrants and agrees that it has
acquired and continues to hold its interest in the Partnership for its own
account for investment only and not for the purpose of, or with a view toward,
the resale or distribution of all or any part thereof, nor with a view toward
selling or otherwise distributing such interest or any part thereof at any
particular time or under any predetermined circumstances. Each Partner further
represents and warrants that it is a sophisticated investor, able and accustomed
to handling sophisticated financial matters for itself, particularly real estate
investments, and that it has a sufficiently high net worth that it does not
anticipate a need for the funds it has invested in the Partnership in what it
understands to be a highly speculative and illiquid investment.

                D. Each Partner further represents, warrants and agrees as
follows:

                        (i) Except as provided in Exhibit E, at any time such
        Partner actually or Constructively owns a 25% or greater capital
        interest or profits interest in the Partnership, it does not and will
        not, without the prior written consent of the General Partner, actually
        own or Constructively Own (a) with respect to any Tenant that is a
        corporation, any stock of such Tenant and (b) with respect to any Tenant
        that is not a corporation, any interests in either the assets or net
        profits of such Tenant.

                        (ii) Except as provided in Exhibit F, at any time such
        Partner actually or Constructively owns a 25% or greater capital
        interest or profits interest in the Partnership, it does not, and agrees
        that it will not without the prior written consent of the General
        Partner, actually own or Constructively Own, any stock in AMB, other
        than any shares of capital stock of AMB that such Partner may acquire
        pursuant to Sections 16.8, 17.8, 18.8, 19.8, 20.8 or 21.8, subject to
        the ownership limitations set forth in the REIT Charter.

                        (iii) Upon request of the General Partner, it will
        disclose to the General Partner the amount of shares of capital stock of
        AMB that it actually owns or Constructively Owns.

                        (iv) It understands that if, for any reason, (a) the
        representations, warranties or agreements set forth in Section 3.4.D(i)
        or (ii) are violated or (b) the Partnership's actual or Constructive
        Ownership of the REIT Shares or other shares of capital stock of AMB
        violates the limitations set forth in the REIT Charter, then (x) some or
        all of the Series C Redemption rights or rights to exchange Partnership
        Interests for Series C Preferred Shares, some or all of the Series D
        Redemption rights or rights to exchange Partnership Interests for Series
        D Preferred Shares, some or all of the Series E Redemption rights or
        rights to exchange Partnership Interests for Series E Preferred Shares,
        some or all of the Series F Redemption rights or rights to exchange
        Partnership Interests for Series F Preferred Shares, some or all of the
        Series G Redemption rights or rights to exchange Partnership Interests
        for Series G Preferred Shares or some or all of the Series H Redemption
        rights or rights to exchange Partnership Interests for Series H
        Preferred Shares of the Limited Partners may become non-exercisable, and
        (y) some or all of such shares owned by the Partners and/or some or all
        of the Partnership Interests owned by the Limited Partners may be
        automatically transferred to a trust for the benefit

                                       26
<PAGE>   32

        of a charitable beneficiary, as provided in the REIT Charter and Exhibit
        I of this Agreement, respectively.

                E. The representations and warranties contained in Sections
3.4.A, 3.4.B, 3.4.C and 3.4.D shall survive the execution and delivery of this
Agreement by each Partner and the dissolution and winding up of the Partnership.

                F. Each Partner hereby acknowledges that no representations as
to potential profit, cash flows, funds from operations or yield, if any, in
respect of the Partnership or the General Partner have been made by any Partner
or any employee or representative or Affiliate of any Partner, and that
projections and any other information, including, without limitation, financial
and descriptive information and documentation, which may have been in any manner
submitted to such Partner shall not constitute any representation or warranty of
any kind or nature, express or implied.

                Section 3.5. Certain ERISA Matters

                Each Partner acknowledges that the Partnership is intended to
qualify as a "real estate operating company" (as such term is defined in the
Plan Asset Regulation). The General Partner will use its reasonable best efforts
to structure the investments in, relationships with and conduct with respect to
Properties and any other assets of the Partnership so that the Partnership will
be a "real estate operating company" (as such term is defined in the Plan Asset
Regulation).

                                   ARTICLE 4.
                              CAPITAL CONTRIBUTIONS

                Section 4.1. Capital Contributions of the Partners

                At the time of their respective execution of this Agreement, the
Partners shall make or shall have made Capital Contributions as set forth in
Exhibit A to this Agreement. The Partners shall own Partnership Units of the
class and in the amounts set forth in Exhibit A and shall have a Percentage
Interest in the Partnership as set forth in Exhibit A, which Percentage Interest
shall be adjusted in Exhibit A from time to time by the General Partner to the
extent necessary to accurately reflect exchanges, redemptions, Capital
Contributions, the issuance of additional Partnership Units or similar events
having an effect on a Partner's Percentage Interest. Except as required by law
or as otherwise provided in Sections 4.3 and 10.5, no Partner shall be required
or permitted to make any additional Capital Contributions or loans to the
Partnership.

                Section 4.2. Loans

                Subject to Section 4.3, the Partnership may incur Debt, or enter
into other similar credit, guarantee, financing or refinancing arrangements for
any purpose (including, without limitation, in connection with any further
acquisition of Properties) with any Person, including the General Partner, the
Operating Partnership and their affiliates, upon such terms as the General
Partner determines appropriate; provided, that the Partnership shall not incur
any Debt that is recourse to the General Partner, except to the extent otherwise
agreed to by the General Partner in its sole discretion.

                                       27
<PAGE>   33

                Section 4.3. Additional Funding and Capital Contributions

                A. General. The General Partner may, at any time and from time
to time, determine that the Partnership requires additional funds ("Additional
Funds") for the acquisition of additional Properties or for such other
Partnership purposes as the General Partner may determine. Additional Funds may
be raised by the Partnership, at the election of the General Partner, in any
manner provided in, and in accordance with, the terms of this Section 4.3. No
Person shall have any preemptive, preferential or similar right or rights to
subscribe for or acquire any Partnership Interest.

                B. Issuance of Additional Partnership Interests. The General
Partner may raise all or any portion of the Additional Funds by accepting
additional Capital Contributions of cash. The General Partner may also accept
additional Capital Contributions of real property or other non-cash assets. In
connection with any such additional Capital Contributions (of cash or property),
and subject to Sections 16.6, 17.6, 18.6, 19.6, 20.6 and 21.6 hereof, the
General Partner is hereby authorized to cause the Partnership from time to time
to issue to Partners (including the General Partner) or other Persons
(including, without limitation, in connection with the contribution of property
to the Partnership) additional Partnership Units or other Partnership Interests
in one or more classes, or one or more series of any of such classes, with such
designations, preferences and relative, participating, optional or other special
rights, powers, and duties, including rights, powers, and duties senior to then
existing Limited Partnership Interests, all as shall be determined by the
General Partner in its sole and absolute discretion subject to Delaware law, and
as set forth by amendment to this Agreement, including without limitation: (i)
the allocations of items of Partnership income, gain, loss, deduction, and
credit to such class or series of Partnership Interests; (ii) the right of each
such class or series of Partnership Interests to share in Partnership
distributions; (iii) the rights of each such class or series of Partnership
Interests upon dissolution and liquidation of the Partnership; and (iv) the
right to vote. In the event that the Partnership issues additional Partnership
Interests pursuant to this Section 4.3.B, the General Partner shall make such
revisions to this Agreement (including but not limited to the revisions
described in Sections 5.4 and 6.2.C) as it determines are necessary to reflect
the issuance of such additional Partnership Interests.

                C. Percentage Interest Adjustments in the Case of Capital
Contributions for Partnership Units. Upon the acceptance of additional Capital
Contributions in exchange for Partnership Units, the Percentage Interest related
thereto, and the Percentage Interest of each other Partner, shall be equal to
the amounts agreed to by the Partnership and the contributors.

                D. AMB agrees to comply with Section 4.3.D of the Third Amended
and Restated Agreement of Limited Partnership of the Operating Partnership, as
amended or waived from time to time.

                Section 4.4. No Preemptive Rights

                Except to the extent expressly granted by the Partnership
pursuant to another agreement, no Person shall have any preemptive, preferential
or other similar right with respect to (i) making additional Capital
Contributions or loans to the Partnership or (ii) issuance or sale of any
Partnership Units or other Partnership Interests.

                                       28
<PAGE>   34

                Section 4.5. Other Contribution Provisions

                In the event that any Partner is admitted to the Partnership and
is given (or is treated as having received) a Capital Account in exchange for
services rendered to the Partnership, such transaction shall be treated by the
Partnership and the affected Partner as if the Partnership had compensated such
Partner in cash, and the Partner had contributed such cash to the capital of the
Partnership. In addition, with the consent of the General Partner, in its sole
discretion, one or more Limited Partners may enter into contribution agreements
with the Partnership which have the effect of providing a guarantee of certain
obligations of the Partnership.

                                   ARTICLE 5.
                                  DISTRIBUTIONS

                Section 5.1. Requirement and Characterization of Distributions

                The General Partner shall cause the Partnership to distribute
all, or such portion as the General Partner may in its discretion determine,
Available Cash generated by the Partnership (i) first, to the extent that the
amount of cash distributed with respect to any Partnership Interests that are
entitled to any preference in distribution for any prior distribution period was
less than the required distribution for such outstanding Partnership Interests
for such prior distribution period, and to the extent such deficiency has not
been subsequently distributed pursuant to this Section 5.1 (a "Preferred
Distribution Shortfall"), in accordance with the rights of such class of
Partnership Interests (and within such class, pro rata in proportion to the
respective Percentage Interests on the applicable record date) and to the
Partners who are Partners on the applicable record date with respect to such
distribution, (ii) second, with respect to any Partnership Interests that are
entitled to any preference in distribution, in accordance with the rights of
such class of Partnership Interests (and within such class, pro rata in
proportion to the respective Percentage Interests on the applicable record date)
and (iii) third, with respect to Partnership Interests that are not entitled to
any preference in distribution, pro rata to each such class on a quarterly basis
and in accordance with the terms of such class to Partners who are Partners of
such class on the Partnership Record Date with respect to such distribution (and
within each such class, pro rata in proportion with the respective Percentage
Interests on such Partnership Record Date). Except as expressly provided for in
Article 16 with respect to the Series C Preferred Units, in Article 17 with
respect to the Series D Preferred Units, in Article 18 with respect to the
Series E Preferred Units, in Article 19 with respect to the Series F Preferred
Units, in Article 20 with respect to the Series G Preferred Units, in Article 21
with respect to the Series H Preferred Units and in an agreement, if any,
entered into in connection with the creation of a new class of Partnership
Interests in accordance with Article 4, no Partnership Interest shall be
entitled to a distribution in preference to any other Partnership Interest. The
General Partner shall take such reasonable efforts, as determined by it in its
sole and absolute discretion and consistent with AMB's qualification as a REIT,
to cause the Partnership to distribute sufficient amounts to enable AMB, in its
capacity of general partner of the Operating Partnership, and the sole
stockholder of the General Partner, to pay stockholder dividends that will, so
long as AMB has determined to qualify as a REIT (a) satisfy the requirements for
qualifying as a REIT under the Code and Regulations ("REIT Requirements") and
(b) except to the extent otherwise determined by the

                                       29
<PAGE>   35

General Partner, avoid any Federal income or excise tax liability of the AMB,
except to the extent that a distribution pursuant to clause (b) would prevent
the Partnership from making a distribution to the holders of Series C Preferred
Units, Series D Preferred Units, Series E Preferred Units, Series F Preferred
Units, Series G Preferred Units or Series H Preferred Units in accordance with
Sections 16.3, 17.3, 18.3, 19.3, 20.3 and 21.3, respectively.

                Section 5.2. Distributions in Kind

                No right is given to any Partner to demand and receive property
other than cash. The General Partner may determine, in its sole and absolute
discretion, to make a distribution in kind to the Partners of Partnership
assets, and such assets shall be distributed in such a fashion as to ensure that
the fair market value is distributed and allocated in accordance with Articles
5, 6 and 10; provided, however, that, in such case, the General Partners shall
distribute only cash to the Series C Limited Partners, the Series D Limited
Partners, the Series E Limited Partners, the Series F Limited Partners, the
Series G Limited Partners and Series H Limited Partners.

                Section 5.3. Distributions Upon Liquidation

                Proceeds from a Liquidating Event shall be distributed to the
Partners in accordance with Section 13.2.

                Section 5.4. Distributions to Reflect Issuance of Additional
Partnership Interests

                In the event that the Partnership issues additional Partnership
Interests to the General Partner or any Additional Limited Partner pursuant to
Section 4.3.B or 4.4, the General Partner shall make such revisions to this
Article 5 as it determines are necessary to reflect the issuance of such
additional Partnership Interests. In the absence of any agreement to the
contrary, an Additional Limited Partner shall be entitled to the distributions
set forth in Section 5.1 (without regard to this Section 5.4) with respect to
the quarter during which the closing of its contribution to the Partnership
occurs, multiplied by a fraction the numerator of which is the number of days
from and after the date of such closing through the end of the applicable
quarter, and the denominator of which is the total number of days in such
quarter.

                                   ARTICLE 6.
                                   ALLOCATIONS

                Section 6.1. Timing and Amount of Allocations of Net Income and
Net Loss

                Net Income and Net Loss of the Partnership shall be determined
and allocated with respect to each fiscal year of the Partnership as of the end
of each such year. Subject to the other provisions of this Article 6, an
allocation to a Holder of a share of Net Income or Net Loss shall be treated as
an allocation of the same share of each item of income, gain, loss or deduction
that is taken into account in computing Net Income or Net Loss.

                                       30
<PAGE>   36

                Section 6.2. General Allocations

                A. In General. Except as otherwise provided in this Article 6,
Net Income and Net Loss allocable with respect to a class of Partnership
Interests, shall be allocated to each of the Holders holding such class of
Partnership Interests in accordance with their respective Percentage Interest of
such class.

                B. B.1. Net Income. Except as provided in Section 6.3, Net
Income for any Partnership Year shall be allocated in the following manner and
order of priority:

                (a)     First, 100% to the General Partner in an amount equal to
                        the remainder, if any, of the cumulative Net Losses
                        allocated to the General Partner pursuant to Section
                        6.2.B.2(d) for all prior Partnership Years minus the
                        cumulative Net Income allocated to the General Partner
                        pursuant to this Section 6.2.B.1(a) for all prior
                        Partnership Years;

                (b)     Second, 100% to each Holder of Partnership Interests in
                        an amount equal to the remainder, if any, of the
                        cumulative Net Losses allocated to each such Holder
                        pursuant to Section 6.2.B.2(c) for all prior Partnership
                        Years minus the cumulative Net Income allocated to such
                        Holder pursuant to this Section 6.2.B.1(b) for all prior
                        Partnership Years;

                (c)     Third, 100% to the Holders of Preferred Units in an
                        amount equal to the remainder, if any, of the cumulative
                        Net Losses allocated to such Holders pursuant to Section
                        6.2.B.2(b) for all prior Partnership Years minus the
                        cumulative Net Income allocated to such Holders pursuant
                        to this Section 6.2.B.1(c) for all prior Partnership
                        Years;

                (d)     Fourth, 100% to the Holders of Common Units in an amount
                        equal to the remainder, if any, of the cumulative Net
                        Losses allocated to each such Holder pursuant to Section
                        6.2.B.2(a) for all prior Partnership Years minus the
                        cumulative Net Income allocated to each Holder pursuant
                        to this Section 6.2.B.1(d) for all prior Partnership
                        Years;

                (e)     Fifth, 100% to the Holders of Preferred Units, with
                        respect to each series of Preferred Units, in an amount
                        equal to the excess of (i) the cumulative Priority
                        Return to the last day of the current Partnership Year
                        or to the date of redemption of such Preferred Units, to
                        the extent such Preferred Units are redeemed during such
                        year, over (ii) the cumulative Net Income allocated to
                        the Holders of such Preferred Units, pursuant to this
                        Section 6.2.B.1(e) for all prior Partnership Years; and

                (f)     Sixth, 100% to the Holders of Common Units in accordance
                        with their respective Percentage Interests in the Common
                        Units.

                To the extent the allocations of Net Income set forth above in
any paragraph of this Section 6.2.B.1 are not sufficient to entirely satisfy the
allocation set forth in such paragraph,

                                       31
<PAGE>   37

such allocation shall be made in proportion to the total amount that would have
been allocated pursuant to such paragraph without regard to such shortfall.

                B.2. Net Losses. Except as provided in Section 6.3, Net Losses
for any Partnership Year shall be allocated in the following manner and order of
priority:

                (a)     First, 100% to the Holders of Common Units in accordance
                        with their respective Percentage Interests in the Common
                        Units (to the extent consistent with this Section
                        6.2.B.2(a)) until the Adjusted Capital Account (ignoring
                        for this purpose any amounts a Holder is obligated to
                        contribute to the capital of the Partnership or is
                        deemed obligated to contribute pursuant to Regulations
                        Section 1.704-1(b)(2)(ii)(c)(2) and ignoring the
                        Holder's Series C Preferred Capital, Series D Preferred
                        Capital, Series E Preferred Capital, Series F Preferred
                        Capital, Series G Preferred Capital and Series G
                        Preferred Capital) of each such Holder is zero;

                (b)     Second, 100% to the Holders of Preferred Units, pro rata
                        to each such Holder's Adjusted Capital Account (ignoring
                        for this purpose any amounts a Holder is obligated to
                        contribute to the capital of the Partnership or is
                        deemed obligated to contribute pursuant to Regulations
                        Section 1.704-1(b)(2)(ii)(c)(2)), until the Adjusted
                        Capital Account (as so modified) of each such Holder is
                        zero;

                (c)     Third, 100% to the Holders of Partnership Interests to
                        the extent of, and in proportion to, the positive
                        balance (if any) in their Adjusted Capital Accounts; and

                (d)     Fourth, 100% to the General Partner.

                C. Allocations to Reflect Issuance of Additional Partnership
Interests. In the event that the Partnership issues additional Partnership
Interests to the General Partner or any Additional Limited Partner pursuant to
Section 4.3 or 4.4, the General Partner shall make such revisions to this
Section 6.2 or to Section 12.2.B as it determines are necessary to reflect the
terms of the issuance of such additional Partnership Interests, including making
preferential allocations to certain classes of Partnership Interests, subject to
the terms of the Series C Preferred Units, the Series D Preferred Units, the
Series E Preferred Units, the Series F Preferred Units, the Series G Preferred
Units and Series H Preferred Units.

                Section 6.3. Additional Allocation Provisions

                Notwithstanding the foregoing provisions of this Article 6:

                A. Regulatory Allocations.

                        (i) Minimum Gain Chargeback. Except as otherwise
        provided in Regulations Section 1.704-2(f), notwithstanding the
        provisions of Section 6.2, or any other provision of this Article 6, if
        there is a net decrease in Partnership Minimum Gain during any fiscal
        year, each Holder shall be specially allocated items of Partnership

                                       32
<PAGE>   38

        income and gain for such year (and, if necessary, subsequent years) in
        an amount equal to such Holder's share of the net decrease in
        Partnership Minimum Gain, as determined under Regulations Section
        1.704-2(g). Allocations pursuant to the previous sentence shall be made
        in proportion to the respective amounts required to be allocated to each
        Holder pursuant thereto. The items to be allocated shall be determined
        in accordance with Regulations Sections 1.704-2(f)(6) and 1.704-2(j)(2).
        This Section 6.3.A(i) is intended to qualify as a "minimum gain
        chargeback" within the meaning of Regulation Section 1.704-2(f) which
        shall be controlling in the event of a conflict between such Regulation
        and this Section 6.3.A(i).

                        (ii) Partner Minimum Gain Chargeback. Except as
        otherwise provided in Regulations Section 1.704-2(i)(4), and
        notwithstanding the provisions of Section 6.2, or any other provision of
        this Article 6 (except Section 6.3.A(i)), if there is a net decrease in
        Partner Minimum Gain attributable to a Partner Nonrecourse Debt during
        any fiscal year, each Holder who has a share of the Partner Minimum Gain
        attributable to such Partner Nonrecourse Debt, determined in accordance
        with Regulations Section 1.704-2(i)(5), shall be specially allocated
        items of Partnership income and gain for such year (and, if necessary,
        subsequent years) in an amount equal to such Holder's share of the net
        decrease in Partner Minimum Gain attributable to such Partner
        Nonrecourse Debt, determined in accordance with Regulations Section
        1.704-2(i)(4). Allocations pursuant to the previous sentence shall be
        made in proportion to the respective amounts required to be allocated to
        each Holder pursuant thereto. The items to be so allocated shall be
        determined in accordance with Regulations Sections 1.704-2(i)(4) and
        1.704-2(j)(2). This Section 6.3.A(ii) is intended to qualify as a
        "chargeback of partner nonrecourse debt minimum gain" within the meaning
        of Regulation Section 1.704-2(i) which shall be controlling in the event
        of a conflict between such Regulation and this Section 6.3.A(ii).

                        (iii) Nonrecourse Deductions and Partner Nonrecourse
        Deductions. Any Nonrecourse Deductions for any fiscal year shall be
        specially allocated to the Holders in accordance with their respective
        Percentage Interest in Common Units. Any Partner Nonrecourse Deductions
        for any fiscal year shall be specially allocated to the Holder(s) who
        bears the economic risk of loss with respect to the Partner Nonrecourse
        Debt to which such Partner Nonrecourse Deductions are attributable, in
        accordance with Regulations Sections 1.704-2(b)(4) and 1.704-2(i).

                        (iv) Qualified Income Offset. If any Holder unexpectedly
        receives an adjustment, allocation or distribution described in
        Regulations Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of
        Partnership income and gain shall be allocated, in accordance with
        Regulations Section 1.704-1(b)(2)(ii)(d), to the Holder in an amount and
        manner sufficient to eliminate, to the extent required by such
        Regulations, the Adjusted Capital Account Deficit of the Holder as
        quickly as possible provided that an allocation pursuant to this Section
        6.3.A(iv) shall be made if and only to the extent that such Holder would
        have an Adjusted Capital Account Deficit after all other allocations
        provided in this Article 6 have been tentatively made as if this Section
        6.3.A(iv) were not in the Agreement. It is intended that this Section
        6.3.A(iv) qualify and be construed as a "qualified income offset" within
        the meaning of Regulations 1.704-1(b)(2)(ii)(d), which

                                       33
<PAGE>   39

        shall be controlling in the event of a conflict between such Regulations
        and this Section 6.3.A(iv).

                        (v) Gross Income Allocation. In the event any Holder has
        a deficit Capital Account at the end of any fiscal year which is in
        excess of the sum of (a) the amount (if any) such Holder is obligated to
        restore to the Partnership and (b) the amount such Holder is deemed to
        be obligated to restore pursuant to Regulations Section
        1.704-1(b)(2)(ii)(c) or the penultimate sentences of Regulations
        Sections 1.704-2(g)(1) and 1.704-2(i)(5), each such Holder shall be
        specially allocated items of Partnership income and gain in the amount
        of such excess as quickly as possible; provided, that an allocation
        pursuant to this Section 6.3.A(v) shall be made if and only to the
        extent that such Holder would have a deficit Capital Account in excess
        of such sum after all other allocations provided in this Article 6 have
        been tentatively made as if this Section 6.3.A(v) and Section 6.3.A(iv)
        were not in the Agreement.

                        (vi) Limitation on Allocation of Net Loss. To the extent
        any allocation of Net Loss would cause or increase an Adjusted Capital
        Account Deficit as to any Holder, such allocation of Net Loss shall be
        reallocated among the other Holders in accordance with their respective
        Percentage Interests in Common Units, subject to the limitations of this
        Section 6.3.A(vi).

                        (vii) Section 754 Adjustment. To the extent an
        adjustment to the adjusted tax basis of any Partnership asset pursuant
        to Code Section 734(b) or Code Section 743(b) is required, pursuant to
        Regulations Section 1.704-1(b)(2)(iv)(m)(2) or Regulations Section
        1.704-1(b)(2)(iv)(m)(4), to be taken into account in determining Capital
        Accounts as the result of a distribution to a Holder in complete
        liquidation of his interest in the Partnership, the amount of such
        adjustment to the Capital Accounts shall be treated as an item of gain
        (if the adjustment increases the basis of the asset) or loss (if the
        adjustment decreases such basis) and such gain or loss shall be
        specially allocated to the Holders in accordance with their interests in
        the Partnership in the event that Regulations Section
        1.704-1(b)(2)(iv)(m)(2) applies, or to the Holders to whom such
        distribution was made in the event that Regulations Section
        1.704-1(b)(2)(iv)(m)(4) applies.

                        (viii) Curative Allocation. The allocations set forth in
        Sections 6.3.A(i), (ii), (iii), (iv), (v), (vi), and (vii) (the
        "Regulatory Allocations") are intended to comply with certain regulatory
        requirements, including the requirements of Regulations Sections
        1.704-1(b) and 1.704-2. Notwithstanding the provisions of Sections 6.1
        and 6.2, the Regulatory Allocations shall be taken into account in
        allocating other items of income, gain, loss and deduction among the
        Holders so that, to the extent possible, the net amount of such
        allocations of other items and the Regulatory Allocations to each Holder
        shall be equal to the net amount that would have been allocated to each
        such Holder if the Regulatory Allocations had not occurred.

                B. For purposes of determining a Holder's proportional share of
the "excess nonrecourse liabilities" of the Partnership within the meaning of
Regulations Section 1.752-

                                       34
<PAGE>   40

3(a)(3), each Holder's interest in Partnership profits shall be such Holder's
Percentage Interest in Common Units.

                Section 6.4. Tax Allocations

                A. In General. Except as otherwise provided in this Section 6.4,
for income tax purposes each item of income, gain, loss and deduction
(collectively, "Tax Items") shall be allocated among the Holders in the same
manner as its correlative item of "book" income, gain, loss or deduction is
allocated pursuant to Sections 6.2 and 6.3.

                B. Allocations Respecting Section 704(c) Revaluations.
Notwithstanding Section 6.4.A, Tax Items with respect to Partnership property
that is contributed to the Partnership by a Partner shall be shared among the
Holders for income tax purposes pursuant to Regulations promulgated under
Section 704(c) of the Code, so as to take into account the variation, if any,
between the basis of the property to the Partnership and its initial Gross Asset
Value. With respect to Partnership property that is initially contributed to the
Partnership upon its formation pursuant to Section 4.1, such variation between
basis and initial Gross Asset Value shall be taken into account under the
"traditional method" as described in Regulations Section 1.704-3(b). With
respect to properties subsequently contributed to the Partnership, the
Partnership shall account for such variation under any method approved under
Section 704(c) of the Code and the applicable regulations as chosen by the
General Partner. In the event the Gross Asset Value of any Partnership asset is
adjusted pursuant to subparagraph (ii) of the definition of Gross Asset Value
(provided in Article 1), subsequent allocations of Tax Items with respect to
such asset shall take account of the variation, if any, between the adjusted
basis of such asset and its Gross Asset Value in the same manner as under
Section 704(c) of the Code and the applicable regulations consistent with the
requirements of Regulations Section 1.704-1(b)(2)(iv)(g) using any method
approved under 704(c) of the Code and the applicable regulations as chosen by
the General Partner.

                                   ARTICLE 7.
                      MANAGEMENT AND OPERATIONS OF BUSINESS

                Section 7.1. Management

                A. Except as otherwise expressly provided in this Agreement, all
management powers over the business and affairs of the Partnership are
exclusively vested in the General Partner, and no Limited Partner shall have any
right to participate in or exercise control or management power over the
business and affairs of the Partnership; provided, however, that the General
Partner may be removed by the Majority in Interest of the Limited Partners, with
or without cause, such removal effective upon the delivery of written notice
thereof by the Limited Partners to the General Partner. In addition to the
powers now or hereafter granted a general partner of a limited partnership under
the Act and other applicable law or which are granted to the General Partner
under any other provision of this Agreement, the General Partner, subject to the
other provisions hereof including Section 7.3, shall have full power and
authority to do all things deemed necessary or desirable by it to conduct the
business of the Partnership, to exercise all powers set forth in Section 3.2 and
to effectuate the purposes set forth in Section 3.1, including, without
limitation:

                                       35
<PAGE>   41

                (i)     the making of any expenditures, the lending or borrowing
                        of money (including, without limitation, making
                        prepayments on loans and borrowing money to permit the
                        Partnership to make distributions to its Partners in
                        such amounts as will permit AMB, in its capacity as the
                        sole general partner of the Operating Partnership and as
                        sole stockholder of the General Partner (for so long as
                        AMB has determined to qualify as a REIT), to avoid the
                        payment of any Federal income tax (including, for this
                        purpose, any excise tax pursuant to Section 4981 of the
                        Code) and to make distributions to its stockholders
                        sufficient to permit AMB to maintain REIT status), the
                        assumption or guarantee of, or other contracting for,
                        indebtedness and other liabilities, the issuance of
                        evidences of indebtedness (including the securing of
                        same by mortgage, deed of trust or other lien or
                        encumbrance on all or any of the Partnership's assets)
                        and the incurring of any obligations it deems necessary
                        for the conduct of the activities of the Partnership;

                (ii)    the making of tax, regulatory and other filings, or
                        rendering of periodic or other reports to governmental
                        or other agencies having jurisdiction over the business
                        or assets of the Partnership;

                (iii)   subject to the provisions of Section 7.3.D, the
                        acquisition, disposition, mortgage, pledge, encumbrance,
                        hypothecation or exchange of any assets of the
                        Partnership or the merger or other combination of the
                        Partnership with or into another entity;

                (iv)    the mortgage, pledge, encumbrance or hypothecation of
                        all or any assets of the Partnership, and the use of the
                        assets of the Partnership (including, without
                        limitation, cash on hand) for any purpose consistent
                        with the terms of this Agreement and on any terms it
                        sees fit, including, without limitation, the financing
                        of the conduct or the operations of the General Partner
                        or the Partnership, the lending of funds to other
                        Persons (including, without limitation, the General
                        Partner (if necessary to permit the financing or
                        capitalization of a subsidiary of the General Partner or
                        the Partnership) and any Subsidiaries of the
                        Partnership) and the repayment of obligations of the
                        Partnership, any of its Subsidiaries and any other
                        Person in which it has an equity investment;

                (v)     the negotiation, execution, and performance of any
                        contracts, leases, conveyances or other instruments that
                        the General Partner considers useful or necessary to the
                        conduct of the Partnership's operations or the
                        implementation of the General Partner's powers under
                        this Agreement;

                (vi)    the distribution of Partnership cash or other
                        Partnership assets in accordance with this Agreement;

                (vii)   the selection and dismissal of employees of the
                        Partnership (including, without limitation, employees
                        having titles such as "president," "vice

                                       36
<PAGE>   42

                        president," "secretary" and "treasurer"), and agents,
                        outside attorneys, accountants, consultants and
                        contractors of the Partnership, the determination of
                        their compensation and other terms of employment or
                        hiring, including waivers of conflicts of interest and
                        the payment of their expenses and compensation out of
                        the Partnership's assets;

                (viii)  the maintenance of such insurance for the benefit of the
                        Partnership and the Partners as it deems necessary or
                        appropriate;

                (ix)    the formation of, or acquisition of an interest in, and
                        the contribution of property to, any further limited or
                        general partnerships, joint ventures or other
                        relationships that it deems desirable (including,
                        without limitation, the acquisition of interests in, and
                        the contributions of property to any Subsidiary and any
                        other Person in which it has an equity investment from
                        time to time); provided that as long as AMB, in its
                        capacity as the sole stockholder of the General Partner
                        and as the sole general partner of the Operating
                        Partnership, has determined to continue to qualify as a
                        REIT, the Partnership may not engage in any such
                        formation, acquisition or contribution that would cause
                        AMB to fail to qualify as a REIT;

                (x)     the control of any matters affecting the rights and
                        obligations of the Partnership, including the conduct of
                        litigation and the incurring of legal expense and the
                        settlement of claims and litigation, and the
                        indemnification of any Person against liabilities and
                        contingencies to the extent permitted by law;

                (xi)    the undertaking of any action in connection with the
                        Partnership's direct or indirect investment in any
                        Person (including, without limitation, contributing or
                        loaning Partnership funds to, incurring indebtedness on
                        behalf of, or guarantying the obligations of any such
                        Persons);

                (xii)   subject to the other provisions in this Agreement, the
                        determination of the fair market value of any
                        Partnership property distributed in kind using such
                        reasonable method of valuation as it may adopt; provided
                        that, such methods are otherwise consistent with
                        requirements of this Agreement;

                (xiii)  the management, operation, leasing, landscaping, repair,
                        alteration, demolition or improvement of any real
                        property or improvements owned by the Partnership or any
                        Subsidiary of the Partnership or any Person in which the
                        Partnership has made a direct or indirect equity
                        investment;

                (xiv)   holding, managing, investing and reinvesting cash and
                        other assets of the Partnership;

                (xv)    the collection and receipt of revenues and income of the
                        Partnership;

                                       37
<PAGE>   43

                (xvi)   the exercise, directly or indirectly through any
                        attorney-in-fact acting under a general or limited power
                        of attorney, of any right, including the right to vote,
                        appurtenant to any asset or investment held by the
                        Partnership;

                (xvii)  the exercise of any of the powers of the General Partner
                        enumerated in this Agreement on behalf of or in
                        connection with any Subsidiary of the Partnership or any
                        other Person in which the Partnership has a direct or
                        indirect interest, or jointly with any such Subsidiary
                        or other Person;

                (xviii) the exercise of any of the powers of the General Partner
                        enumerated in this Agreement on behalf of any Person in
                        which the Partnership does not have an interest,
                        pursuant to contractual or other arrangements with such
                        Person;

                (xix)   the making, execution and delivery of any and all deeds,
                        leases, notes, deeds to secure debt, mortgages, deeds of
                        trust, security agreements, conveyances, contracts,
                        guarantees, warranties, indemnities, waivers, releases
                        or legal instruments or other agreements in writing
                        necessary or appropriate in the judgment of the General
                        Partner for the accomplishment of any of the powers of
                        the General Partner enumerated in this Agreement; and

                (xx)    the making of loans by the Partnership to its Partners,
                        for any purpose, provided that such loans be upon
                        arm's-length terms.

                B. Each of the Limited Partners agrees that the General Partner
is authorized to execute, deliver and perform the above-mentioned agreements and
transactions on behalf of the Partnership without any further act, approval or
vote of the Partners, notwithstanding any other provisions of this Agreement
(except as provided in Section 7.3), the Act or any applicable law, rule or
regulation. The execution, delivery or performance by the General Partner or the
Partnership of any agreement authorized or permitted under this Agreement shall
not constitute a breach by the General Partner of any duty that the General
Partner may owe the Partnership or the Limited Partners or any other Persons
under this Agreement or of any duty stated or implied by law or equity.

                C. At all times from and after the date hereof, the General
Partner may cause the Partnership to obtain and maintain (i) casualty, liability
and other insurance (including, without limitation, earthquake insurance) on the
properties of the Partnership and (ii) liability insurance for the Indemnities
hereunder.

                D. At all times from and after the date hereof, the General
Partner may cause the Partnership to establish and maintain working capital and
other reserves in such amounts as the General Partner, in its sole and absolute
discretion, deems appropriate and reasonable from time to time.

                                       38
<PAGE>   44

                E. In exercising its authority under this Agreement, the General
Partner may, but other than as set forth in the following sentence and as
expressly set forth in the agreements listed on Exhibit H hereto, shall be under
no obligation to, take into account the tax consequences to any Partner
(including the General Partner) of any action taken by the General Partner. The
General Partner and the Partnership shall not have liability to a Limited
Partner under any circumstances as a result of an income tax liability incurred
by such Limited Partner as a result of an action (or inaction) by the General
Partner pursuant to its authority under this Agreement.

                F. Except as otherwise provided herein, to the extent the duties
of the General Partner require expenditures of funds to be paid to third
parties, the General Partner shall not have any obligations hereunder except to
the extent that Partnership funds are reasonably available to it for the
performance of such duties, and nothing herein contained shall be deemed to
authorize or require the General Partner, in its capacity as such, to expend its
individual funds for payment to third parties or to undertake any individual
liability or obligation on behalf of the Partnership.

                Section 7.2. Certificate of Limited Partnership

                To the extent that such action is determined by the General
Partner to be reasonable and necessary or appropriate, the General Partner shall
file amendments to and restatements of the Certificate and do all the things to
maintain the Partnership as a limited partnership (or a partnership in which the
limited partners have limited liability) under the laws of the State of Delaware
and to maintain the Partnership's qualification to do business as a foreign
limited partnership in each other state, the District of Columbia or other
jurisdiction, in which the Partnership may elect to do business or own property.
Subject to the terms of Section 8.5.A(iv), the General Partner shall not be
required, before or after filing, to deliver or mail a copy of the Certificate
or any amendment thereto to any Limited Partner. The General Partner shall use
all reasonable efforts to cause to be filed such other certificates or documents
as may be reasonable and necessary or appropriate for the formation,
continuation, qualification and operation of a limited partnership (or a
partnership in which the limited partners have limited liability) in the State
of Delaware, and any other state, or the District of Columbia or other
jurisdiction, in which the Partnership may elect to do business or own property.

                Section 7.3. Restrictions on General Partner's Authority

                A. The General Partner may not take any action in contravention
of this Agreement, including, without limitation:

                (i)     take any action that would make it impossible to carry
                        on the ordinary business of the Partnership, except as
                        otherwise provided in this Agreement;

                (ii)    possess Partnership property, or assign any rights in
                        specific Partnership property, for other than a
                        Partnership purpose except as otherwise provided in this
                        Agreement;

                                       39
<PAGE>   45

                (iii)   admit a Person as a Partner, except as otherwise
                        provided in this Agreement;

                (iv)    perform any act that would subject a Limited Partner to
                        liability as a general partner in any jurisdiction or
                        any other liability except as provided herein or under
                        the Act; or

                (v)     perform any act that would subject the Partnership to
                        regulation as an "investment company" as such term is
                        defined under the Investment Company Act of 1940, as
                        amended.

                B. The General Partner shall not, without the prior Consent of
the Partners (in addition to any Consent of the Limited Partners required by any
other provision hereof), undertake, on behalf of the Partnership, any of the
following actions or enter into any transaction which would have the effect of
such transactions:

                (i)     except as provided in Section 7.3.D below, amend, modify
                        or terminate this Agreement other than to reflect the
                        admission, substitution, termination or withdrawal of
                        partners pursuant to Article 12;

                (ii)    make a general assignment for the benefit of creditors
                        or appoint or acquiesce in the appointment of a
                        custodian, receiver or trustee for all or any part of
                        the assets of the Partnership;

                (iii)   institute any proceeding for bankruptcy on behalf of the
                        Partnership;

                (iv)    confess a judgment against the Partnership; or

                (v)     enter into a merger (including a triangular merger),
                        consolidation or other combination of the Partnership
                        with or into another entity.

                C. Except in the case of a Liquidating Event pursuant to Section
13.1 (other than Section 13.1.F), the General Partner shall not, without the
prior Consent of the Limited Partners, undertake, on behalf of the Partnership,
any actions or enter into any transaction which would have the effect of a
dissolution of the Partnership, including a sale, exchange, transfer or other
disposition of all or substantially all of the Partnership's assets in a single
transaction or a series of related transactions.

                D. Notwithstanding Sections 7.3.B and 7.3.C, but subject to
Section 7.3.E, the General Partner shall have the power, without the Consent of
the Partners, to amend this Agreement as may be required to facilitate or
implement any of the following purposes:

                (i)     to add to the obligations of the General Partner or
                        surrender any right or power granted to the General
                        Partner or any Affiliate of the General Partner for the
                        benefit of the Limited Partners;

                (ii)    to reflect the issuance of additional Partnership
                        Interests pursuant to Section 4.3.B, or the admission,
                        substitution, termination, reduction in

                                       40
<PAGE>   46

                        Partnership Units or withdrawal of Partners in
                        accordance with this Agreement (which may be effected
                        through the replacement of Exhibit A with an amended
                        Exhibit A);

                (iii)   to set forth or amend the designations, rights, powers,
                        duties, and preferences of the holders of any additional
                        Partnership Interests issued pursuant to Article 4;

                (iv)    to reflect a change that is of an inconsequential nature
                        and does not adversely affect the Limited Partners in
                        any material respect, or to cure any ambiguity in,
                        correct or supplement any provision, or make other
                        changes with respect to matters arising under, this
                        Agreement that will not be inconsistent with law or with
                        the provisions of this Agreement;

                (v)     to satisfy any requirements, conditions, or guidelines
                        contained in any order, directive, opinion, ruling or
                        regulation of a Federal, state of local agency or
                        contained in Federal, state or local law.

                (vi)    to reflect such changes as are reasonably necessary for
                        AMB, in its capacity as the sole stockholder of the
                        General Partner and as the sole general partner of the
                        Operating Partnership, to maintain its status as a REIT,
                        including changes which may be necessitated due to a
                        change in applicable law (or an authoritative
                        interpretation thereof) or a ruling of the IRS; and

                (vii)   to modify, as set forth in the definition of "Capital
                        Account," the manner in which Capital Accounts are
                        computed.

The General Partner will provide notice to the Limited Partners when any action
under this Section 7.3.D is taken.

                E. Notwithstanding Sections 7.3.B, 7.3.C and 7.3.D, this
Agreement shall not be amended, and no action may be taken by the General
Partner, including in either case through merger or sale of assets of the
Partnership or otherwise, without the Consent of each Common Limited Partner or
Preferred Limited Partner adversely affected if such amendment or action would
(i) convert a Limited Partner's interest in the Partnership into a general
partner's interest (except as the result of the General Partner acquiring such
interest), (ii) modify the limited liability of a Limited Partner, (iii) alter
rights of the Partner to receive distributions pursuant to Article 5 or Section
13.2.A(4) or Articles 16, 17, 18, 19 or 20 or the allocations specified in
Article 6 (except as permitted pursuant to Sections 4.3 and 7.3.D), (iv) alter
the Series C Redemption or exchange rights as set forth in Sections 16.5 and
16.8, respectively, the Series D Redemption or exchange rights as set forth in
Sections 17.5 and 17.8, respectively, the Series E Redemption or exchange rights
as set forth in Sections 18.5 and 18.8, respectively, the Series F Redemption or
exchange rights as set forth in Sections 19.5 and 19.8, respectively, the Series
G Redemption or exchange rights as set forth in Sections 20.5 and 20.8,
respectively, or the Series H Redemption or exchange rights as set forth in
Sections 21.5 and 21.8, respectively, or (v) amend this Section 7.3.E. Further,
no amendment may alter the restrictions on the General

                                       41
<PAGE>   47
Partner's authority set forth elsewhere in this Section 7.3 without the Consent
specified in such section.

                F. The General Partner shall not undertake to dispose of any
Partnership Property specified in the agreements listed in Exhibit G in a
taxable sale or taxable exchange prior to the dates specified in such agreements
without the prior consent of each Limited Partner which contributed all or any
portion of an interest in such Property to the Partnership, as set forth in such
agreements.

                Section 7.4. Reimbursement of the General Partner

                A. Except as provided in this Section 7.4 and elsewhere in this
Agreement (including the provisions of Articles 5 and 6 regarding distributions,
payments and allocations to which it may be entitled), the General Partner shall
not be compensated for its services as general partner of the Partnership.

                B. The General Partner shall be reimbursed on a monthly basis,
or such other basis as the General Partner may determine in its sole and
absolute discretion, for all expenses it incurs relating to the ownership of
interests in and operation of, or for the benefit of, the Partnership. Such
reimbursements shall be in addition to any reimbursement to the General Partner
as a result of indemnification pursuant to Section 7.7.

                C. If and to the extent any reimbursements to the General
Partner pursuant to this Section 7.4 constitute gross income of the General
Partner (as opposed to the repayment of advances made by the General Partner on
behalf of the Partnership), such amounts shall constitute guaranteed payments
within the meaning of Section 707(c) of the Code, shall be treated consistently
therewith by the Partnership and all Partners, and shall not be treated as
distributions for purposes of computing the Partners' Capital Accounts.

                Section 7.5. Outside Activities of the General Partner

                Without the Consent of the Limited Partners, the General Partner
shall not, directly or indirectly, enter into or conduct any business, other
than in connection with the ownership, acquisition and disposition of
Partnership Interests as a General Partner and the management of the business of
the Partnership and such activities as are incidental to the same and activities
incidental to the ownership of interests permitted by the next succeeding
sentence. Without the Consent of the Limited Partners, the General Partner shall
not, directly or indirectly, participate in or otherwise acquire any interest in
any real or personal property, except its General Partner Interest, its interest
in any Subsidiary Partnership(s) (held directly or indirectly through a
Qualified REIT Subsidiary) that the General Partner holds in order to maintain
such Subsidiary Partnership's status as a partnership, and such bank accounts,
similar instruments or other short-term investments as it deems necessary to
carry out its responsibilities contemplated under this Agreement and the REIT
Charter. The General Partner's General Partner Interest in the Partnership, and
interests in such short-term liquid investments, bank accounts or similar
instruments as the General Partner deems necessary to carry out its
responsibilities contemplated under this Agreement and the Charter are interests
which the General Partner is permitted to acquire and hold for purposes of this
Section 7.5.

                                       42
<PAGE>   48

                Section 7.6. Employee Benefit Plans

                The General Partner, in its sole and absolute discretion and
without the approval of the Limited Partners, may propose and adopt on behalf of
the Partnership employee benefit plans funded by the Partnership for the benefit
of employees of the General Partner, the Partnership, Subsidiaries of the
Partnership or any Affiliate of any of them in respect of services performed,
directly or indirectly, for the benefit of the Partnership, the General Partner,
or any of the Partnership's Subsidiaries.

                Section 7.7. Indemnification

                A. The Partnership shall indemnify an Indemnitee from and
against any and all losses, claims, damages, liabilities, joint or several,
expenses (including legal fees and expenses), judgments, fines, settlements, and
other amounts arising from any and all claims, demands, actions, suits or
proceedings, civil, criminal, administrative or investigative, that relate to
the operations of the Partnership as set forth in this Agreement in which any
Indemnitee may be involved, or is threatened to be involved, as a party or
otherwise, unless it is established that: (i) the act or omission of the
Indemnitee was material to the matter giving rise to the proceeding and either
was committed in bad faith or was the result of active and deliberate
dishonesty; (ii) the Indemnitee actually received an improper personal benefit
in money, property or services; or (iii) in the case of any criminal proceeding,
the Indemnitee had reasonable cause to believe that the act or omission was
unlawful. Without limitation, the foregoing indemnity shall extend to any
liability of any Indemnitee, pursuant to a loan guaranty or otherwise, for any
indebtedness of the Partnership or any Subsidiary of the Partnership (including,
without limitation, any indebtedness which the Partnership or any Subsidiary of
the Partnership has assumed or taken subject to), and the General Partner is
hereby authorized and empowered, on behalf of the Partnership, to enter into one
or more indemnity agreements consistent with the provisions of this Section 7.7
in favor of any Indemnitee having or potentially having liability for any such
indebtedness. The termination of any proceeding by judgment, order or settlement
does not create a presumption that the Indemnitee did not meet the requisite
standard of conduct set forth in this Section 7.7.A. The termination of any
proceeding by conviction or upon a plea of nolo contendere or its equivalent, or
any entry of an order of probation prior to judgment, creates a rebuttable
presumption that the Indemnitee acted in a manner contrary to that specified in
this Section 7.7.A. Any indemnification pursuant to this Section 7.7 shall be
made only out of the assets of the Partnership, and any insurance proceeds from
the liability policy covering the General Partner and any Indemnitee, and
neither the General Partner nor any Limited Partner shall have any obligation to
contribute to the capital of the Partnership or otherwise provide funds to
enable the Partnership to fund its obligations under this Section 7.7.

                B. Reasonable expenses incurred by an Indemnitee who is a party
to a proceeding may be paid or reimbursed by the Partnership in advance of the
final disposition of the proceeding upon receipt by the Partnership of (i) a
written affirmation by the Indemnitee of the Indemnitee's good faith belief that
the standard of conduct necessary for indemnification by the Partnership as
authorized in Section 7.7.A has been met and (ii) a written undertaking by or on
behalf of the Indemnitee to repay the amount if it shall ultimately be
determined that the standard of conduct has not been met.

                                       43
<PAGE>   49

                C. The indemnification provided by this Section 7.7 shall be in
addition to any other rights to which an Indemnitee or any other Person may be
entitled under any agreement, pursuant to any vote of the Partners, as a matter
of law or otherwise, and shall continue as to an Indemnitee who has ceased to
serve in such capacity.

                D. The Partnership may purchase and maintain insurance, on
behalf of the Indemnitees and such other Persons as the General Partner shall
determine, against any liability that may be asserted against or expenses that
may be incurred by any such Person in connection with the Partnership's
activities, regardless of whether the Partnership would have the power to
indemnify such Person against such liability under the provisions of this
Agreement.

                E. For purposes of this Section 7.7, the Partnership shall be
deemed to have requested an Indemnitee to serve as fiduciary of an employee
benefit plan whenever the performance by it of its duties to the Partnership
also imposes duties on, or otherwise involves services by, it to the plan or
participants or beneficiaries of the plan; excise taxes assessed on an
Indemnitee with respect to an employee benefit plan pursuant to applicable law
shall constitute fines within the meaning of Section 7.7; and actions taken or
omitted by the Indemnitee with respect to an employee benefit plan in the
performance of its duties for a purpose reasonably believed by it to be in the
interest of the participants and beneficiaries of the plan shall be deemed to be
for a purpose which is not opposed to the best interests of the Partnership.

                F. In no event may an Indemnitee subject the Limited Partners to
personal liability by reason of the indemnification provisions set forth in this
Agreement.

                G. An Indemnitee shall not be denied indemnification in whole or
in part under this Section 7.7 because the Indemnitee had an interest in the
transaction with respect to which the indemnification applies if the transaction
was otherwise permitted by the terms of this Agreement.

                H. The provisions of this Section 7.7 are for the benefit of the
Indemnitees, their heirs, successors, assigns and administrators and shall not
be deemed to create any rights for the benefit of any other Persons. Any
amendment, modification or repeal of this Section 7.7 or any provision hereof
shall be prospective only and shall not in any way affect the limitations on the
Partnership's liability to any Indemnitee under this Section 7.7 as in effect
immediately prior to such amendment, modification or repeal with respect to
claims arising from or relating to matters occurring, in whole or in part, prior
to such amendment, modification or repeal, regardless of when such claims may
arise or be asserted.

                I. If and to the extent any reimbursements to the General
Partner pursuant to this Section 7.7 constitute gross income of the General
Partner (as opposed to the repayment of advances made by the General Partner on
behalf of the Partnership) such amounts shall constitute guaranteed payments
within the meaning of Section 707(c) of the Code, shall be treated consistently
therewith by the Partnership and all Partners, and shall not be treated as
distributions for purposes of computing the Partners' Capital Accounts.

                J. Any indemnification hereunder is subject to, and limited by,
the provisions of Section 17-108 of the Act.

                                       44
<PAGE>   50

                K. In the event the Partnership is made a party to any
litigation or otherwise incurs any loss or expense as a result of or in
connection with any Partner's personal obligations or liabilities unrelated to
Partnership business, such Partner shall indemnify and reimburse the Partnership
for all such loss and expense incurred, including legal fees, and the
Partnership Interest of such Partner may be charged therefor. The liability of a
Partner under this Section 7.7.K shall not be limited to such Partner's
Partnership Interest, but shall be enforceable against such Partner personally.

                Section 7.8. Liability of the General Partner

                A. Notwithstanding anything to the contrary set forth in this
Agreement, none of the General Partner and any of its officers, directors,
agents and employees shall be liable or accountable in damages or otherwise to
the Partnership, any Partners or any Assignees, or their successors or assigns,
for losses sustained, liabilities incurred or benefits not derived as a result
of errors in judgment or mistakes of fact or law or any act or omission if the
General Partner acted in good faith.

                B. The Limited Partners expressly acknowledge that the General
Partner is acting for the benefit of the Partnership, the Limited Partners and
the General Partner's stockholders collectively, that the General Partner is
under no obligation to give priority to the separate interests of the Limited
Partners or the General Partner's stockholders (including, without limitation,
the tax consequences to Limited Partners or Assignees or to stockholders) in
deciding whether to cause the Partnership to take (or decline to take) any
actions and that the General Partner shall not be liable to the Partnership or
to any Limited Partner for monetary damages for losses sustained, liabilities
incurred, or benefits not derived by Limited Partners in connection with such
decisions; provided, that the General Partner has acted in good faith.

                C. Subject to its obligations and duties as General Partner set
forth in Section 7.1.A, the General Partner may exercise any of the powers
granted to it by this Agreement and perform any of the duties imposed upon it
hereunder either directly or by or through its agents. The General Partner shall
not be responsible for any misconduct or negligence on the part of any such
agent appointed by it in good faith.

                D. Any amendment, modification or repeal of this Section 7.8 or
any provision hereof shall be prospective only and shall not in any way affect
the limitations on the liability of the General Partner and any of its officers,
directors, agents and employees to the Partnership and the Limited Partners
under this Section 7.8 as in effect immediately prior to such amendment,
modification or repeal with respect to claims arising from or relating to
matters occurring, in whole or in part, prior to such amendment, modification or
repeal, regardless of when such claims may arise or be asserted.

                Section 7.9. Other Matters Concerning the General Partner

                A. The General Partner may rely and shall be protected in acting
or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, bond, debenture,
or other paper or document believed by it to be genuine and to have been signed
or presented by the proper party or parties.

                                       45
<PAGE>   51

                B. The General Partner may consult with legal counsel,
accountants, appraisers, management consultants, investment bankers and other
consultants and advisers selected by it, and any act taken or omitted to be
taken in reliance upon the opinion of such Persons as to matters which such
General Partner reasonably believes to be within such Person's professional or
expert competence shall be conclusively presumed to have been done or omitted in
good faith and in accordance with such opinion.

                C. The General Partner shall have the right, in respect of any
of its powers or obligations hereunder, to act through any of its duly
authorized officers and a duly appointed attorney or attorneys-in-fact. Each
such attorney shall, to the extent provided by the General Partner in the power
of attorney, have full power and authority to do and perform all and every act
and duty which is permitted or required to be done by the General Partner
hereunder.

                D. Notwithstanding any other provisions of this Agreement or any
non-mandatory provision of the Act, any action of the General Partner on behalf
of the Partnership or any decision of the General Partner to refrain from acting
on behalf of the Partnership, undertaken in the good faith belief that such
action or omission is necessary or advisable in order to protect the ability of
AMB, in its capacity as the sole stockholder of the General Partner and as the
sole general partner of the Operating Partnership, for so long as AMB has
determined to qualify as a REIT, to (i) continue to qualify as a REIT or (ii)
except with respect to the distribution of Available Cash to the Series C
Limited Partners, the Series D Limited Partners, the Series E Limited Partners,
the Series F Limited Partners, the Series G Limited Partners and the Series H
Limited Partners in accordance in accordance with Sections 16.3, 17.3, 18.3,
19.3, 20.3 and 21.3, respectively, avoid AMB incurring any taxes under Section
857 or Section 4981 of the Code, is expressly authorized under this Agreement
and is deemed approved by all of the Limited Partners.

                E. So long as the General Partner holds any interest in the
Partnership (as either a General Partner or Limited Partner), the General
Partner shall have "management rights" (as such term is defined in the Plan
Asset Regulation) with respect to the Partnership and its Properties to the
extent necessary to qualify AMB as a "venture capital operating company" (as
such term is defined in the Plan Asset Regulation).

                Section 7.10. Title to Partnership Assets

                Title to Partnership assets, whether real, personal or mixed and
whether tangible or intangible, shall be deemed to be owned by the Partnership
as an entity, and no Partners, individually or collectively, shall have any
ownership interest in such Partnership assets or any portion thereof. Title to
any or all of the Partnership assets may be held in the name of the Partnership,
the General Partner or one or more nominees, as the General Partner may
determine, including Affiliates of the General Partner. The General Partner
hereby declares and warrants that any Partnership assets for which legal title
is held in the name of the General Partner or any nominee or Affiliate of the
General Partner shall be deemed held by the General Partner or such nominee or
Affiliate for the use and benefit of the Partnership in accordance with the
provisions of this Agreement; provided, however, that the General Partner shall
use its best efforts to cause beneficial and record title to such assets to be
vested in the Partnership as soon as reasonably

                                       46
<PAGE>   52

practicable. All Partnership assets shall be recorded as the property of the
Partnership in its books and records, irrespective of the name in which legal
title to such Partnership assets is held.

                Section 7.11. Reliance by Third Parties

                Notwithstanding anything to the contrary in this Agreement, any
Person dealing with the Partnership shall be entitled to assume that the General
Partner has full power and authority to encumber, sell or otherwise use in any
manner any and all assets of the Partnership and to enter into any contracts on
behalf of the Partnership, and such Person shall be entitled to deal with the
General Partner as if it were the Partnership's sole party in interest, both
legally and beneficially. Each Limited Partner hereby waives any and all
defenses or other remedies which may be available against such Person to
contest, negate or disaffirm any action of the General Partner in connection
with any such dealing. In no event shall any Person dealing with the General
Partner or its representatives be obligated to ascertain that the terms of this
Agreement have been complied with or to inquire into the necessity or expedience
of any act or action of the General Partner or its representatives. Each and
every certificate, document or other instrument executed on behalf of the
Partnership by the General Partner or its representatives shall be conclusive
evidence in favor of any and every Person relying thereon or claiming thereunder
that (i) at the time of the execution and delivery of such certificate, document
or instrument, this Agreement was in full force and effect, (ii) the Person
executing and delivering such certificate, document or instrument was duly
authorized and empowered to do so for and on behalf of the Partnership and (iii)
such certificate, document or instrument was duly executed and delivered in
accordance with the terms and provisions of this Agreement and is binding upon
the Partnership.

                                   ARTICLE 8.
                   RIGHTS AND OBLIGATIONS OF LIMITED PARTNERS

                Section 8.1. Limitation of Liability

                The Limited Partners shall have no liability under this
Agreement except as expressly provided in this Agreement or under the Act.

                Section 8.2. Management of Business

                No Limited Partner or Assignee (other than the General Partner,
any of its Affiliates or any officer, director, employee, general partner, agent
or trustee of the General Partner, the Partnership or any of their Affiliates,
in their capacity as such) shall take part in the operations, management or
control (within the meaning of the Act) of the Partnership's business, transact
any business in the Partnership's name or have the power to sign documents for
or otherwise bind the Partnership. Notwithstanding the foregoing, the General
Partner may be removed by the Limited Partners, pursuant to and in accordance
with Section 7.1. Upon the removal of the General Partner, the Common Limited
Partners shall select a successor General Partner, who shall upon the acceptance
of such selection be admitted as a successor General Partner pursuant to Section
12.1 hereof. The transaction of any such business by the General Partner, any of
its Affiliates or any officer, director, employee, general partner, agent or
trustee of the General Partner, the Partnership or any of their Affiliates, in
their capacity as such, shall

                                       47
<PAGE>   53

not affect, impair or eliminate the limitations on the liability of the Limited
Partners or Assignees under this Agreement.

                Section 8.3. Outside Activities of Limited Partners

                Subject to any agreements entered into by a Limited Partner or
its Affiliates with the General Partner, Partnership or a Subsidiary, any
Limited Partner and any officer, director, employee, agent, trustee, Affiliate
or stockholder of any Limited Partner shall be entitled to and may have business
interests and engage in business activities in addition to those relating to the
Partnership, including business interests and activities in direct competition
with the Partnership or that are enhanced by the activities of the Partnership.
Neither the Partnership nor any Partners shall have any rights by virtue of this
Agreement in any business ventures of any Limited Partner or Assignee. Subject
to such agreements, none of the Limited Partners nor any other Person shall have
any rights by virtue of this Agreement or the partnership relationship
established hereby in any business ventures of any other Person, other than the
Limited Partners benefiting from the business conducted by the General Partner,
and such other Person shall have no obligation pursuant to this Agreement to
offer any interest in any such business ventures to the Partnership, any Limited
Partner or any such other Person, even if such opportunity is of a character
which, if presented to the Partnership, any Limited Partner or such other
Person, could be taken by such other Person.

                Section 8.4. Return of Capital

                Except pursuant to the Series C Redemption and exchange rights
set forth in Sections 16.5 and 16.8, the Series D Redemption and exchange rights
set forth in Sections 17.5 and 17.8, the Series E Redemption and exchange rights
set forth in Sections 18.5 and 18.8, the Series F Redemption and exchange rights
set forth in Sections 19.5 and 19.8, the Series G Redemption and exchange rights
set forth in Sections 20.5 and 20.8, and the Series H Redemption and exchange
rights set forth in Sections 21.5 and 21.8, no Limited Partner shall be entitled
to the withdrawal or return of his or her Capital Contribution, except to the
extent of distributions made pursuant to this Agreement or upon termination of
the Partnership as provided herein. Except as expressly set forth herein with
respect to the rights, priorities and preferences of the Preferred Limited
Partners holding any series of Preferred Units, no Limited Partner or Assignee
shall have priority over any other Limited Partner or Assignee either as to the
return of Capital Contributions, or as otherwise expressly provided in this
Agreement, as to profits, losses, distributions or credits.

                Section 8.5. Rights of Limited Partners Relating to the
Partnership

                A. In addition to other rights provided by this Agreement or by
the Act, and except as limited by Section 8.5.B, each Limited Partner shall have
the right, for a purpose reasonably related to such Limited Partner's interest
as a limited partner in the Partnership, upon written demand with a statement of
the purpose of such demand and at the Partnership's expense:

                (i)     to obtain a copy of the most recent annual and quarterly
                        reports filed with the Securities and Exchange
                        Commission by AMB pursuant to the Exchange Act, and each
                        communication sent to the stockholders of AMB;

                                       48
<PAGE>   54

                (ii)    to obtain a copy of the Partnership's Federal, state and
                        local income tax returns for each Partnership Year;

                (iii)   to obtain a current list of the name and last known
                        business, residence or mailing address of each Partner;

                (iv)    to obtain a copy of this Agreement and the Certificate
                        and all amendments thereto, together with executed
                        copies of all powers of attorney pursuant to which this
                        Agreement, the Certificate and all amendments thereto
                        have been executed; and

                (v)     to obtain true and full information regarding the amount
                        of cash and a description and statement of any other
                        property or services contributed by each Partner and
                        which each Partner has agreed to contribute in the
                        future, and the date on which each became a Partner.

                B. Notwithstanding any other provision of this Section 8.5, the
General Partner may keep confidential from the Limited Partners, for such period
of time as the General Partner determines in its sole and absolute discretion to
be reasonable, any information that (i) the General Partner believes to be in
the nature of trade secrets or other information the disclosure of which the
General Partner in good faith believes is not in the best interests of the
Partnership or (ii) the Partnership or the General Partner is required by law or
by agreements with unaffiliated third parties to keep confidential.

                                   ARTICLE 9.
                     BOOKS, RECORDS, ACCOUNTING AND REPORTS

                Section 9.1. Records and Accounting

                The General Partner shall keep or cause to be kept at the
principal office of the Partnership appropriate books and records with respect
to the Partnership's business, including without limitation, all books and
records necessary to provide to the Limited Partners any information, lists and
copies of documents required to be provided pursuant to Section 9.3. Any records
maintained by or on behalf of the Partnership in the regular course of its
business may be kept on, or be in the form of, punch cards, magnetic tape,
photographs, micrographics or any other information storage device; provided,
that the records so maintained are convertible into clearly legible written form
within a reasonable period of time. The books of the Partnership shall be
maintained, for financial and tax reporting purposes, on an accrual basis in
accordance with generally accepted accounting principles.

                Section 9.2. Fiscal Year

                The fiscal year of the Partnership shall be the calendar year.

                                       49
<PAGE>   55

                Section 9.3. Reports

                A. (1) As soon as practicable, but in no event later than the
earlier to occur of (a) 105 days after the close of each Partnership Year and
(b) five (5) business days following the date on which Company files its annual
report in respect of a fiscal year on Form 10-K, or such other applicable form
("Form 10-K"), with the Securities and Exchange Commission (the "Commission"), a
complete copy of AMB's audited financial statements for such fiscal year
including a balance sheet, income statement and cash flow statement for such
fiscal year prepared and audited by an independent nationally recognized firm of
certified public accountants in accordance with GAAP and (2) not later than
fifteen (15) days after the date documents are delivered in clause (A)(1) above,
the consolidating balance sheet, cash flow statement and income statement of the
Operating Partnership for such fiscal year, prepared by AMB; and

                B. (1) As soon as practicable, but in no event later than five
(5) business days following the date on which AMB files its quarterly report in
respect of a fiscal quarter on Form 10-Q, or such other applicable form ("Form
10-Q"), with the Commission, a complete copy of AMB's unaudited quarterly
financial statements for such fiscal quarter including a balance sheet, income
statement and cash flow statement for such fiscal quarter prepared in accordance
with GAAP and (2) not later than fifteen (15) days after the date documents are
delivered in clause (B)(1) above, the consolidating balance sheet, cash flow
statement and income statement of the Operating Partnership for such fiscal
quarter, prepared and certified by AMB.

                Section 9.4. Nondisclosure of Certain Information

                Notwithstanding the provisions of Sections 9.1 and 9.3, the
General Partner may keep confidential from the Limited Partners any information
that the General Partner believes to be in the nature of trade secrets or other
information the disclosure of which the General Partner in good faith believes
is not in the best interests of the Partnership or which the Partnership is
required by law or by agreements with unaffiliated third parties to keep
confidential.

                                   ARTICLE 10.
                                   TAX MATTERS

                Section 10.1. Preparation of Tax Returns

                The General Partner shall arrange for the preparation and timely
filing of all returns of Partnership income, gains, deductions, losses and other
items required of the Partnership for Federal and state income tax purposes and
shall use all reasonable efforts to furnish, within ninety (90) days of the
close of each taxable year, the tax information reasonably required by Limited
Partners for Federal and state income tax reporting purposes. Each Limited
Partner shall promptly provide the General Partner with such information
relating to any Contributed Property contributed by such Limited Partner to the
Partnership.

                                       50
<PAGE>   56

                Section 10.2. Tax Elections

                Except as otherwise provided herein, the General Partner shall,
in its sole and absolute discretion, determine whether to make any available
election pursuant to the Code, including the election under Section 754 of the
Code. The General Partner shall have the right to seek to revoke any such
election (including without limitation, any election under Section 754 of the
Code) upon the General Partner's determination in its sole and absolute
discretion that such revocation is the best interests of the Partners.

                Section 10.3. Tax Matters Partner

                A. The General Partner shall be the "tax matters partner" of the
Partnership for Federal income tax purposes. Pursuant to Section 6223(c) of the
Code, upon receipt of notice from the IRS of the beginning of an administrative
proceeding with respect to the Partnership, the tax matters partner shall
furnish the IRS with the name, address and profit interest of each of the
Limited Partners and Assignees; provided, however, that such information is
provided to the Partnership by the Limited Partners and Assignees.

                B. The tax matters partner is authorized, but not required:

                (i)     to enter into any settlement with the IRS with respect
                        to any administrative or judicial proceedings for the
                        adjustment of Partnership items required to be taken
                        into account by a Partner for income tax purposes (such
                        administrative proceedings being referred to as a "tax
                        audit" and such judicial proceedings being referred to
                        as "judicial review"), and in the settlement agreement
                        the tax matters partner may expressly state that such
                        agreement shall bind all Partners, except that such
                        settlement agreement shall not bind any Partner (a) who
                        (within the time prescribed pursuant to the Code and
                        Regulations) files a statement with the IRS providing
                        that the tax matters partner shall not have the
                        authority to enter into a settlement agreement on behalf
                        of such Partner or (b) who is a "notice partner" (as
                        defined in Section 6231 of the Code) or a member of a
                        "notice group" (as defined in Section 6223(b)(2) of the
                        Code);

                (ii)    in the event that a notice of a final administrative
                        adjustment at the Partnership level of any item required
                        to be taken into account by a Partner for tax purposes
                        (a "final adjustment") is mailed to the tax matters
                        partner, to seek judicial review of such final
                        adjustment, including the filing of a petition for
                        readjustment with the Tax Court or the United States
                        Claims Court, or the filing of a complaint for refund
                        with the District Court of the United States for the
                        district in which the Partnership's principal place of
                        business is located;

                (iii)   to intervene in any action brought by any other Partner
                        for judicial review of a final adjustment;

                                       51
<PAGE>   57

                (iv)    to file a request for an administrative adjustment with
                        the IRS at any time and, if any part of such request is
                        not allowed by the IRS, to file an appropriate pleading
                        (petition or complaint) for judicial review with respect
                        to such request;

                (v)     to enter into an agreement with the IRS to extend the
                        period for assessing any tax which is attributable to
                        any item required to be taken into account by a Partner
                        for tax purposes, or an item affected by such item; and

                (vi)    to take any other action on behalf of the Partners of
                        the Partnership in connection with any tax audit or
                        judicial review proceeding to the extent permitted by
                        applicable law or regulations.

                The taking of any action and the incurring of any expense by the
tax matters partner in connection with any such proceeding, except to the extent
required by law, is a matter in the sole and absolute discretion of the tax
matters partner and the provisions relating to indemnification of the General
Partner set forth in Section 7.7 shall be fully applicable to the tax matters
partner in its capacity as such.

                C. The tax matters partner shall receive no compensation for its
services. All third party costs and expenses incurred by the tax matters partner
in performing its duties as such (including legal and accounting fees) shall be
borne by the Partnership. Nothing herein shall be construed to restrict the
Partnership from engaging an accounting firm to assist the tax matters partner
in discharging its duties hereunder, so long as the compensation paid by the
Partnership for such services is reasonable.

                Section 10.4. Organizational Expenses

                The Partnership shall elect to deduct expenses, if any, incurred
by it in organizing the Partnership ratably over a sixty (60) month period as
provided in Section 709 of the Code.

                Section 10.5. Withholding

                Each Limited Partner hereby authorizes the Partnership to
withhold from or pay on behalf of or with respect to such Limited Partner any
amount of Federal, state, local, or foreign taxes that the General Partner
determines that the Partnership is required to withhold or pay with respect to
any amount distributable or allocable to such Limited Partner pursuant to this
Agreement, including, without limitation, any taxes required to be withheld or
paid by the Partnership pursuant to Sections 1441, 1442, 1445 or 1446 of the
Code. Any amount paid on behalf of or with respect to a Limited Partner shall
constitute a loan by the Partnership to such Limited Partner, which loan shall
be repaid by such Limited Partner within fifteen (15) days after notice from the
General Partner that such payment must be made unless (i) the Partnership
withholds such payment from a distribution which would otherwise be made to the
Limited Partner or (ii) the General Partner determines, in its sole and absolute
discretion, that such payment may be satisfied out of the available funds of the
Partnership which would, but for such payment, be distributed to the Limited
Partner. Any amounts withheld pursuant to the foregoing clauses (i) or (ii)
shall be treated as having been distributed to such Limited Partner. Each

                                       52
<PAGE>   58

Limited Partner hereby unconditionally and irrevocably grants to the Partnership
a security interest in such Limited Partner's Partnership Interest to secure
such Limited Partner's obligation to pay to the Partnership any amounts required
to be paid pursuant to this Section 10.5. In the event that a Limited Partner
fails to pay any amounts owed to the Partnership pursuant to this Section 10.5
when due, the General Partner may, in its sole and absolute discretion, elect to
make the payment to the Partnership on behalf of such defaulting Limited
Partner, and in such event shall be deemed to have loaned such amount to such
defaulting Limited Partner and shall succeed to all rights and remedies of the
Partnership as against such defaulting Limited Partner (including, without
limitation, the right to receive distributions and the holding of a security
interest in such Limited Partner's Partnership Interest). Any amounts payable by
a Limited Partner hereunder shall bear interest at the base rate on corporate
loans at large United States money center commercial banks, as published from
time to time in the Wall Street Journal, plus two percentage points (but not
higher than the maximum lawful rate) from the date such amount is due (i.e., 15
days after demand) until such amount is paid in full. Each Limited Partner shall
take such actions as the Partnership or the General Partner shall request in
order to perfect or enforce the security interest created hereunder.

                                   ARTICLE 11.
                            TRANSFERS AND WITHDRAWALS

                Section 11.1. Transfer

                A. The term "transfer," when used in this Article 11 with
respect to a Partnership Interest, shall be deemed to refer to a transaction by
which the General Partner purports to assign its General Partner Interest to
another Person or by which a Limited Partner purports to assign its Limited
Partnership Interest to another Person, and includes a sale, assignment, gift
(outright or in trust), pledge, encumbrance, hypothecation, mortgage, exchange
or any other disposition by law or otherwise. Except to the extent otherwise
specified, the term "transfer" when used in this Article 11 does not include any
exchange for Series C Preferred Shares pursuant to Section 16.8, any exchange
for Series D Preferred Shares pursuant to Section 17.8, any exchange for Series
E Preferred Shares pursuant to Section 18.8, any exchange for Series F Preferred
Shares pursuant to Section 19.8, any exchange for Series G Preferred Shares
pursuant to Section 20.8, or any exchange for Series H Preferred Shares pursuant
to Section 21.8. No part of the interest of a Limited Partner shall be subject
to the claims of any creditor, any spouse for alimony or support, or to legal
process, and may not be voluntarily or involuntarily alienated or encumbered,
except as may be specifically provided for in this Agreement.

                B. No Partnership Interest shall be transferred, in whole or in
part, except in accordance with the terms and conditions set forth in this
Article 11. Any transfer or purported transfer of a Partnership Interest not
made in accordance with this Article 11 shall be null and void ab initio unless
otherwise consented by the General Partner in its sole and absolute discretion.

                                       53
<PAGE>   59

                Section 11.2. Transfer of General Partner's and Common Limited
Partner's Partnership Interest

                A. The General Partner shall not withdraw from the Partnership
and shall not transfer all or any portion of its interest in the Partnership
(whether by sale, statutory merger, consolidation, liquidation or otherwise).
Any attempted transfer of the General Partner Interest shall be void ab initio.
To the extent the prior sentence does not have the effect of preventing any such
proposed transfer, the transfer shall cause the dissolution of the Partnership.

                B. Except as otherwise provided in this Section 11.2.B, no
Common Limited Partner shall withdraw from or transfer all or any portion of its
interest in the Partnership (whether by sale, statutory merger, consolidation,
liquidation or otherwise). Any attempted transfer of a Common Limited Partner
Interest contrary to this Section 11.2.B shall be void ab initio. To the extent
the prior sentence does not have the effect of preventing any such proposed
transfer, the transfer shall cause the dissolution of the Partnership.

                C. Notwithstanding Section 11.2.B, any Common Limited Partner
other than the Operating Partnership shall be permitted to transfer, with the
consent of the General Partner (which consent may be given or withheld in the
General Partner's sole and absolute discretion), all or any portion of its
Partnership Interest to the Operating Partnership.

                Section 11.3. Preferred Limited Partners' Rights to Transfer

                A. Any Preferred Limited Partner may, at any time without the
consent of the General Partner, (i) transfer all or any portion of its
Partnership Interest to the General Partner, (ii) transfer all or any portion of
its Partnership Interest to an Affiliate controlled thereby or to an Immediate
Family member, subject to the provisions of Section 11.6, (iii) transfer all or
any portion of its Partnership Interest to a trust for the benefit of a
charitable beneficiary or to a charitable foundation, subject to the provisions
of Section 11.6 and (iv) subject to the provisions of Section 11.6, (a) pledge
(a "Pledge") all or any portion of its Partnership Interest to a lending
institution, which is not an Affiliate of such Preferred Limited Partner, as
collateral or security for a bona fide loan or other extension of credit, or (b)
transfer such pledged Partnership Interest to such lending institution in
connection with the exercise of remedies under such loan or extension of credit.
In addition, each Preferred Limited Partner or Assignee (resulting from a
transfer made pursuant to clauses (i)-(iv) of the preceding sentence) shall have
the right to transfer all or any portion of its Partnership Interest, subject to
the provisions of Section 11.6, provided that any transfer of a Partnership
Interest shall be made only to Qualified Transferees.

                It is a condition to any transfer otherwise permitted hereunder
that the transferee assumes by operation of law or express agreement all of the
obligations of the transferor Preferred Limited Partner under this Agreement
with respect to such transferred Partnership Interest and no such transfer
(other than pursuant to a statutory merger or consolidation wherein all
obligations and liabilities of the transferor Partner are assumed by a successor
corporation by operation of law) shall relieve the transferor Partner of its
obligations under this Agreement without the approval of the General Partner, in
its reasonable discretion. Notwithstanding the foregoing, any transferee of any
transferred Partnership Interest shall be subject to any and all ownership
limitations contained in the REIT Charter, which may limit or restrict such

                                       54
<PAGE>   60

transferee's ability to exercise its Series C Redemption rights or the exchange
rights set forth in Sections 16.5 or 16.8, respectively, its Series D Redemption
rights or the exchange rights set forth in Sections 17.5 or 17.8, respectively,
its Series E Redemption rights or the exchange rights set forth in Sections 18.5
or 18.8, respectively, its Series F Redemption rights or the exchange rights set
forth in Sections 19.5 or 19.8, respectively, its Series G Redemption rights or
the exchange rights set forth in Sections 20.5 or 20.8, respectively, or its
Series H Redemption rights or the exchange rights set forth in Sections 21.5 or
21.8, respectively, and to the representations set forth in Section 3.4.D. Any
transferee, whether or not admitted as a Substituted Limited Partner, shall take
subject to the obligations of the transferor hereunder. Unless admitted as a
Substituted Limited Partner, no transferee, whether by a voluntary transfer, by
operation of law or otherwise, shall have any rights hereunder, other than the
rights of an Assignee as provided in Section 11.5.

                B. If a Preferred Limited Partner is subject to Incapacity, the
executor, administrator, trustee, committee, guardian, conservator, or receiver
of such Limited Partner's estate shall have all the rights of a Preferred
Limited Partner, but not more rights than those enjoyed by other Preferred
Limited Partners, for the purpose of settling or managing the estate, and such
power as the Incapacitated Preferred Limited Partner possessed to transfer all
or any part of his or its interest in the Partnership. The Incapacity of a
Limited Partner, in and of itself, shall not dissolve or terminate the
Partnership.

                C. The General Partner may prohibit any transfer otherwise
permitted under this Section 11.3 by a Preferred Limited Partner of his or her
Partnership Units if, in the opinion of legal counsel to the Partnership, such
transfer would require the filing of a registration statement under the
Securities Act by the Partnership or would otherwise violate any Federal or
state securities laws or regulations applicable to the Partnership or the
Partnership Unit.

                D. No transfer by a Preferred Limited Partner of his or her
Partnership Units (including any Series C Redemption or exchange rights set
forth in Sections 16.5 and 16.8, respectively, any Series D Redemption or
exchange rights set forth in Sections 17.5 and 17.8, respectively, any Series E
Redemption or exchange rights set forth in Sections 18.5 and 18.8, respectively,
any Series F Redemption or exchange rights set forth in Sections 19.5 and 19.8,
respectively, any Series G Redemption or exchange rights set forth in Sections
20.5 and 20.8, respectively, any Series H Redemption or exchange rights set
forth in Sections 21.5 and 21.8, respectively, or any other acquisition of
Common Units, Series C Preferred Units, Series D Preferred Units, Series E
Preferred Units, Series F Preferred Units, Series G Preferred Units or Series H
Preferred Units by the General Partner, AMB or the Partnership) may be made to
any person if (i) in the opinion of legal counsel for the Partnership, it could
result in the Partnership being treated as an association taxable as a
corporation or (ii) absent the consent of the General Partner, which may be
given or withheld in its sole and absolute discretion, such transfer could be
treated as effectuated through an "established securities market" or a
"secondary market (or the substantial equivalent thereof)" within the meaning of
Section 7704 of the Code.

                E. No transfer of any Preferred Partnership Units may be made to
a lender to the Partnership or any Person who is related (within the meaning of
Section 1.752-4(b) of the Regulations) to any lender to the Partnership whose
loan constitutes a Nonrecourse Liability,

                                       55
<PAGE>   61

without the consent of the General Partner, in its sole and absolute discretion;
provided, that as a condition to such consent, the lender will be required to
enter into an arrangement with the Partnership and the General Partner to redeem
or exchange for the specified amount of Series C Preferred Shares, Series D
Preferred Shares, Series E Preferred Shares, Series F Preferred Shares, Series G
Preferred Shares and/or Series H Preferred Shares (as the case may be) any
Partnership Units in which a security interest is held simultaneously with the
time at which such lender would be deemed to be a partner in the Partnership for
purposes of allocating liabilities to such lender under Section 752 of the Code.

                F. No Preferred Limited Partner may withdraw from the
Partnership except as a result of transfer, Series C Redemption, Series D
Redemption, Series E Redemption, Series F Redemption, Series G Redemption,
Series H Redemption or exchange of all of its Partnership Units pursuant hereto.

                Section 11.4. Substituted Limited Partners

                A. Any Preferred Limited Partner shall have the right to
substitute a transferee permitted by this Agreement as a Limited Partner in his
or her place. The General Partner shall have the right to consent to the
admission of a permitted transferee of the interest of any other Limited
Partner, as a Substituted Limited Partner, pursuant to this Section 11.4, which
consent may be given or withheld by the General Partner in its sole and absolute
discretion. The General Partner's failure or refusal to permit a transferee of
any such interests to become a Substituted Limited Partner shall not give rise
to any cause of action against the Partnership or any Partner.

                B. A transferee who has been admitted as a Substituted Limited
Partner in accordance with this Article 11 shall have all the rights and powers
and be subject to all the restrictions and liabilities of a Limited Partner
under this Agreement. The admission of any transferee as a Substituted Limited
Partner shall be subject to the transferee executing and delivering to the
Partnership an acceptance of all of the terms and conditions of this Agreement
(including, without limitation, the provisions of Section 2.4 and such other
documents or instruments as may be required to effect the admission, each in
form and substance satisfactory to the General Partner) and the acknowledgment
by such transferee that each of the representations and warranties set forth in
Section 3.4 are true and correct with respect to such transferee as of the date
of the transfer of the Partnership Interest to such transferee and will continue
to be true to the extent required by such representations and warranties.

                C. Upon the admission of a Substituted Limited Partner, the
General Partner shall amend Exhibit A to reflect the name, address, number of
Partnership Units, and Percentage Interest of such Substituted Limited Partner
and to eliminate or adjust, if necessary, the name, address and interest of the
predecessor of such Substituted Limited Partner.

                Section 11.5. Assignees

                If the General Partner, with respect to a transferee requiring
the General Partner's consent, does not consent, in its sole and absolute
discretion, to the admission of any permitted transferee under Section 11.3 as a
Substituted Limited Partner, as described in Section 11.4, such

                                       56
<PAGE>   62

transferee shall be considered an Assignee for purposes of this Agreement. An
Assignee shall be entitled to all the rights of an assignee of a limited
partnership interest under the Act, including the right to receive distributions
from the Partnership and the share of Net Income, Net Losses, gain and loss
attributable to the Partnership Units assigned to such transferee, the rights to
transfer the Partnership Units provided in this Article 11, the right of
exchange for Series C Preferred Shares set forth in Section 16.8, the right of
exchange for Series D Preferred Shares set forth in Section 17.8, the right of
exchange for Series E Preferred Shares set forth in Section 18.8, the right of
exchange for Series F Preferred Shares set forth in Section 19.8, the right of
exchange for Series G Preferred Shares set forth in Section 20.8, and the right
of exchange for Series H Preferred Shares set forth in Section 21.8, but shall
not be deemed to be a holder of Partnership Units for any other purpose under
this Agreement, and shall not be entitled to effect a Consent with respect to
such Partnership Units on any matter presented to the Limited Partners for
approval (such Consent remaining with the transferor Limited Partner). In the
event any such transferee desires to make a further assignment of any such
Partnership Units, such transferee shall be subject to all the provisions of
this Article 11 to the same extent and in the same manner as any Limited Partner
desiring to make an assignment of Partnership Units. Notwithstanding anything
contained in this Agreement to the contrary, as a condition to becoming an
Assignee, any prospective Assignee must first execute and deliver to the
Partnership an acknowledgment that each of the representations and warranties
set forth in Section 3.4 hereof are true and correct with respect to such
prospective Assignee as of the date of the prospective assignment of the
Partnership Interest to such prospective Assignee and will continue to be true
to the extent required by such representations or warranties.

                Section 11.6. General Provisions

                A. No Limited Partner may withdraw from the Partnership other
than as a result of (i) a transfer of all of such Limited Partner's Partnership
Units as permitted in accordance with this Article 11 and the transferee(s) of
such Units being admitted to the Partnership as a Substituted Limited
Partner(s), (ii) pursuant to the Series C Redemption or exchange of all of such
Limited Partner's Series C Preferred Units pursuant to Section 16.8, (iii)
pursuant to the Series D Redemption or exchange of all of such Limited Partner's
Series D Preferred Units pursuant to Section 17.8, (iv) pursuant to the Series E
Redemption or exchange of all of such Limited Partner's Series E Preferred Units
pursuant to Section 18.8, (v) pursuant to the Series F Redemption or exchange of
all such Limited Partner's Series F Preferred Units pursuant to Section 19.8,
(vi) pursuant to the Series G Redemption or exchange of all such Limited
Partner's Series G Preferred Units pursuant to Section 20.8 or (vii) pursuant to
the Series H Redemption or exchange of all such Limited Partner's Series H
Preferred Units pursuant to Section 21.8.

                B. Any Limited Partner who shall transfer all of such Limited
Partner's Partnership Units in a transfer permitted pursuant to this Article 11
where such transferee was admitted as a Substituted Limited Partner or pursuant
to the exercise of its rights of Series C Redemption or exchange of all of such
Limited Partner's Series C Preferred Units pursuant to Section 16.8, pursuant to
the exercise of its rights of Series D Redemption or exchange of all of such
Limited Partner's Series D Preferred Units pursuant to Section 17.8, pursuant to
the exercise of its rights of Series E Redemption or exchange of all of such
Limited Partner's Series

                                       57
<PAGE>   63

E Preferred Units pursuant to Section 18.8, pursuant to the exercise of its
rights of Series F Redemption or exchange of all of such Limited Partner's
Series F Preferred Units pursuant to Section 19.8, pursuant to the exercise of
its rights of Series G Redemption or exchange of all of such Limited Partner's
Series G Preferred Units pursuant to Section 20.8, or pursuant to the exercise
of its rights of Series H Redemption or exchange of all of such Limited
Partner's Series H Preferred Units pursuant to Section 21.8, shall cease to be a
Limited Partner.

                C. Transfers pursuant to this Article 11 may only be made
effective on the last day of the month set forth on the written instrument of
transfer, unless the General Partner otherwise agrees.

                D. If any Partnership Interest is transferred, assigned or
redeemed during any quarterly segment of the Partnership's fiscal year in
compliance with the provisions of this Article 11 or transferred or redeemed
pursuant to Sections 16.5, 17.5, 18.5, 19.5, 20.5 or 21.5, on any day other than
the first day of a Partnership Year, then Net Income, Net Losses, each item
thereof and all other items attributable to such Partnership Interest for such
fiscal year shall be divided and allocated between the transferor Partner and
the transferee Partner by taking into account their varying interests during the
fiscal year in accordance with Section 706(d) of the Code, using the interim
closing of the books method. Except as otherwise required by Section 706(d) of
the Code or as otherwise specified in this Agreement or as otherwise determined
by the General Partner (to the extent consistent with Section 706(d) of the
Code), solely for purposes of making such allocations, each of such items for
the calendar month in which the transfer, assignment or redemption occurs shall
be allocated among all the Partners and Assignees in a manner determined by the
General Partner in its sole discretion.

                E. In addition to any other restrictions on transfer herein
contained, including without limitation the provisions of this Article 11 and
Section 2.6, in no event may any transfer or assignment of a Partnership
Interest by any Partner (including by way of a Series C Redemption or exchange
for Series C Preferred Shares, a Series D Redemption or exchange for Series D
Preferred Shares, a Series E Redemption or exchange for Series E Preferred
Shares, a Series F Redemption or exchange for Series F Preferred Shares, a
Series G Redemption or exchange for Series G Preferred Shares, a Series H
Redemption or exchange for Series H Preferred Shares or any other acquisition of
Common Units, Series C Preferred Units, Series D Preferred Units, Series E
Preferred Units, Series F Preferred Units, Series G Preferred Units or Series H
Preferred Units by the Partnership, AMB or the General Partner) be made (i) to
any person or entity who lacks the legal right, power or capacity to own a
Partnership Interest; (ii) in violation of applicable law; (iii) except with the
consent of the General Partner, which may be given or withheld in its sole and
absolute discretion, of any component portion of a Partnership Interest, such as
the Capital Account, or rights to distributions, separate and apart from all
other components of a Partnership Interest; (iv) except with the consent of the
General Partner, which may be given or withheld in its sole and absolute
discretion, if in the opinion of legal counsel to the Partnership such transfer
would cause a termination of the Partnership for Federal or state income tax
purposes; (v) if in the opinion of counsel to the Partnership such transfer
would cause the Partnership to cease to be classified as a partnership for
Federal or state income tax purposes; (vi) if such transfer would cause the
Partnership to become, with respect to any employee benefit plan subject to
Title I of ERISA, a "party-in-interest" (as defined in Section 3(14) of ERISA)
or a

                                       58
<PAGE>   64

"disqualified person" (as defined in Section 4975(c) of the Code); (vii) if such
transfer would, in the opinion of counsel to the Partnership, cause any portion
of the assets of the Partnership to constitute assets of any employee benefit
plan pursuant to Department of Labor Regulations Section 2510.2-101; (viii) if
such transfer requires the registration of such Partnership Interest or requires
the registration of the exchange of such Partnership Interests for any capital
stock pursuant to any applicable Federal or state securities laws; (ix) except
with the consent of the General Partner, which may be given or withheld in its
sole and absolute discretion, if such transfer is effectuated through an
"established securities market" or a "secondary market" (or the substantial
equivalent thereof) within the meaning of Section 7704 of the Code or such
transfer causes the Partnership to become a "Publicly Traded Partnership," as
such term is defined in Sections 469(k)(2) or 7704(b) of the Code; (x) if such
transfer subjects the Partnership to be regulated under the Investment Company
Act of 1940, the Investment Advisors Act of 1940 or the Employee Retirement
Income Security Act of 1974, each as amended; (xi) if the transferee or assignee
of such Partnership Interest is unable to make the representations set forth in
Section 3.4.D or such transfer could otherwise adversely affect the ability of
AMB, in its capacity as the sole stockholder of General Partner and the sole
general partner of the Operating Partnership, to remain qualified as a REIT; or
(xii) if, except with the consent of the General Partner, which may be given or
withheld in its sole and absolute discretion, such transfer would subject AMB to
any additional taxes under Section 857 or Section 4981 of the Code.

                F. The General Partner shall monitor the transfers of interests
in the Partnership (including any acquisition of Series C Preferred Units,
Series D Preferred Units, Series E Preferred Units, Series F Preferred Units,
Series G Preferred Units or Series H Preferred Units by the Partnership, AMB or
the General Partner) to determine (i) if such interests are being traded on an
"established securities market" or a "secondary market (or the substantial
equivalent thereof)" within the meaning of Section 7704 of the Code and (ii)
whether such transfers of interests would result in the Partnership being unable
to qualify for at least one of the "safe harbors" set forth in Regulations
Section 1.7704-1 (or such other applicable guidance subsequently published by
the IRS setting forth safe harbors under which interests will not be treated as
"readily tradable on a secondary market (or the substantial equivalent thereof)"
within the meaning of Section 7704 of the Code) (the "Safe Harbors"). The
General Partner shall have authority (but shall not be required to) to take any
steps it determines are necessary or appropriate in its sole and absolute
discretion to prevent any trading of interests which could cause the Partnership
to become a "publicly traded partnership," or any recognition by the Partnership
of such transfers, or to insure that at least one of the Safe Harbors is met.

                                   ARTICLE 12.
                              ADMISSION OF PARTNERS

                Section 12.1. Admission of Successor General Partner

                A successor to all of the General Partner's General Partner
Interest pursuant to Section 11.2 who is proposed to be admitted as a successor
General Partner shall be admitted to the Partnership as the General Partner,
effective upon such transfer. Any such transferee shall carry on the business of
the Partnership without dissolution. In each case, the admission shall be
subject to the successor General Partner executing and delivering to the
Partnership an

                                       59
<PAGE>   65

acceptance of all of the terms and conditions of this Agreement and such other
documents or instruments as may be required to effect the admission. In the case
of such admission on any day other than the first day of a Partnership Year, all
items attributable to the General Partner Interest for such Partnership Year
shall be allocated between the transferring General Partner and such successor
as provided in Article 11.

                Section 12.2. Admission of Additional Limited Partners

                A. A Person who makes a Capital Contribution to the Partnership
in accordance with this Agreement shall be admitted to the Partnership as an
Additional Limited Partner only upon furnishing to the General Partner (i)
evidence of acceptance in form satisfactory to the General Partner of all of the
terms and conditions of this Agreement, including, without limitation, the power
of attorney granted in Section 2.4 and (ii) such other documents or instruments
as may be required in the discretion of the General Partner in order to effect
such Person's admission as an Additional Limited Partner.

                B. Notwithstanding anything to the contrary in this Section
12.2, no Person shall be admitted as an Additional Limited Partner without the
consent of the General Partner, which consent may be given or withheld in the
General Partner's sole and absolute discretion. The admission of any Person as
an Additional Limited Partner shall become effective on the date upon which the
name of such Person is recorded on the books and records of the Partnership,
following the receipt of the Capital Contribution in respect of such Limited
Partner, the documents set forth in this Section 12.2.A and the consent of the
General Partner to such admission. If any Additional Limited Partner is admitted
to the Partnership on any day other than the first day of a Partnership Year,
then Net Income, Net Losses, each item thereof and all other items allocable
among Partners and Assignees for such Partnership Year shall be allocated among
such Limited Partner and all other Partners and Assignees by taking into account
their varying interests during the Partnership Year in accordance with Section
706(d) of the Code, using the interim closing of the books method. Solely for
purposes of making such allocations, each of such items for the calendar month
in which an admission of an Additional Limited Partner occurs shall be allocated
among all the Partners and Assignees, including such Additional Limited Partner,
in a manner determined by the General Partner in its sole discretion.

                Section 12.3. Amendment of Agreement and Certificate of Limited
Partnership

                For the admission to the Partnership of any Partner, the General
Partner shall take all steps necessary and appropriate under the Act to amend
the records of the Partnership and, if necessary, to prepare as soon as
practical an amendment of this Agreement (including an amendment of Exhibit A)
and, if required by law, shall prepare and file an amendment to the Certificate
and may for this purpose exercise the power of attorney granted pursuant to
Section 2.4.

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                                   ARTICLE 13.
                           DISSOLUTION AND LIQUIDATION

                Section 13.1. Dissolution

                The Partnership shall not be dissolved by the admission of
Substituted Limited Partners or Additional Limited Partners or by the admission
of a successor General Partner in accordance with the terms of this Agreement.
Upon the withdrawal of the General Partner, any successor General Partner
(selected as described in Section 13.1.B below) shall continue the business of
the Partnership. The Partnership shall dissolve, and its affairs shall be wound
up, upon the first to occur of any of the following ("Liquidating Events"):

                A. the expiration of its term as provided in Section 2.5;

                B. an event of withdrawal of the General Partner, as defined in
the Act, unless, within ninety (90) days after the withdrawal, all of the
remaining Common Limited Partners agree in writing, in their sole and absolute
discretion, to continue the business of the Partnership and to the appointment,
effective as of the date of withdrawal, of a substitute General Partner;

                C. prior to October 15, 2096, an election to dissolve the
Partnership made by the General Partner with the consent of Limited Partners who
hold ninety percent (90%) of the outstanding Units held by Limited Partners;

                D. subject to the provisions of Section 7.3.C, an election to
dissolve the Partnership made by the General Partner in its sole and absolute
discretion;

                E. entry of a decree of judicial dissolution of the Partnership
pursuant to the provisions of the Act;

                F. the sale or disposition of all or substantially all of the
assets and properties of the Partnership;

                G. a final and non-appealable judgment is entered by a court of
competent jurisdiction ruling that the General Partner is bankrupt or insolvent,
or a final and non-appealable order for relief is entered by a court with
appropriate jurisdiction against the General Partner, in each case under any
Federal or state bankruptcy or insolvency laws as now or hereafter in effect,
unless prior to or at the time of the entry of such order or judgment a Majority
in Interest of the Limited Partners remaining consent in writing to continue the
business of the Partnership and to the appointment, effective as of a date prior
to the date of such order or judgment, of a substitute General Partner.

                Section 13.2. Winding Up

                A. Upon the occurrence of a Liquidating Event, the Partnership
shall continue solely for the purposes of winding up its affairs in an orderly
manner, liquidating its assets, and satisfying the claims of its creditors and
Partners. No Partner shall take any action that is

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<PAGE>   67

inconsistent with, or not necessary to or appropriate for, the winding up of the
Partnership's business and affairs. The General Partner (or, in the event there
is no remaining General Partner, any Person elected by a Majority in Interest of
the Limited Partners (the "Liquidator")) shall be responsible for overseeing the
winding up and dissolution of the Partnership and shall take full account of the
Partnership's liabilities and assets and the Partnership property shall be
liquidated as promptly as is consistent with obtaining the fair value thereof,
and the proceeds therefrom (which may, to the extent determined by the General
Partner, include shares of stock of the General Partner) shall be applied and
distributed in the following order:

                (i)     First, to the payment and discharge of all of the
                        Partnership's debts and liabilities to creditors other
                        than the Partners;

                (ii)    Second, to the payment and discharge of all of the
                        Partnership's debts and liabilities to the General
                        Partner;

                (iii)   Third, to the payment and discharge of all of the
                        Partnership's debts and liabilities to the other
                        Partners; and

                (iv)    The balance, if any, to the Partners in accordance with
                        their Capital Account balances determined after giving
                        effect to all contributions and distributions for all
                        periods, and after taking into account all Capital
                        Account adjustments for the Partnership taxable year
                        during which the liquidation occurs (other than those
                        made as a result of the liquidating distribution set
                        forth in this Section 13.2.A(iv)).

The General Partner shall not receive any additional compensation for any
services performed pursuant to this Article 13 other than reimbursement of its
expenses as provided in Section 7.4.

                B. Notwithstanding the provisions of Section 13.2.A which
require liquidation of the assets of the Partnership, but subject to the order
of priorities set forth therein, if prior to or upon dissolution of the
Partnership the Liquidator determines that an immediate sale of part or all of
the Partnership's assets would be impractical or would cause undue loss to the
Partners, the Liquidator may, in its sole and absolute discretion, defer for a
reasonable time the liquidation of any assets except those necessary to satisfy
liabilities of the Partnership (including to those Partners as creditors) and/or
distribute to the Partners, in lieu of cash, as tenants in common and in
accordance with the provisions of Section 13.2.A, undivided interests in such
Partnership assets as the Liquidator deems not suitable for liquidation. Any
such distributions in kind shall be made only if, in the good faith judgment of
the Liquidator, such distributions in kind are in the best interest of the
Partners, and shall be subject to such conditions relating to the disposition
and management of such properties as the Liquidator deems reasonable and
equitable and to any agreements governing the operation of such properties at
such time. The Liquidator shall determine the fair market value of any property
distributed in kind using such reasonable method of valuation as it may adopt.

                C. The Partnership shall be terminated when any notes received
in connection with any such sale or disposition referenced in Section 13.1.E
above, or in connection with the liquidation of the Partnership have been paid
and all of the cash or property available for

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<PAGE>   68

application and distribution under this Agreement have been applied and
distributed in accordance with this Agreement.

                Section 13.3. Compliance with Timing Requirements of Regulations

                In the event the Partnership is "liquidated" within the meaning
of Regulations Section 1.704-1(b)(2)(ii)(g), distributions shall be made
pursuant to this Article 13 to the General Partner and Limited Partners who have
positive Capital Accounts in compliance with Regulations Section
1.704-1(b)(2)(ii)(b)(2). If any Partner has a deficit balance in his or her
Capital Account (after giving effect to all contributions, distributions and
allocations for the taxable years, including the year during which such
liquidation occurs), such Partner shall have no obligation to make any
contribution to the capital of the Partnership with respect to such deficit, and
such deficit shall not be considered a debt owed to the Partnership or to any
other Person for any purpose whatsoever, except to the extent otherwise agreed
to by such Partner and the General Partner. In the discretion of the Liquidator
or the General Partner, a pro rata portion of the distributions that would
otherwise be made to the General Partner and Limited Partners pursuant to this
Article 13 may be:

                A. distributed to a trust established for the benefit of the
General Partner and Limited Partners for the purposes of liquidating Partnership
assets, collecting amounts owed to the Partnership, and paying any contingent or
unforeseen liabilities or obligations of the Partnership or of the General
Partner arising out of or in connection with the Partnership. The assets of any
such trust shall be distributed to the General Partner and Limited Partners from
time to time, in the reasonable discretion of the Liquidator or the General
Partner, in the same proportions and the amount distributed to such trust by the
Partnership would otherwise have been distributed to the General Partner and
Limited Partners pursuant to this Agreement; or

                B. withheld to establish any reserves deemed necessary or
appropriate for any contingent or unforeseen liabilities or obligations of the
Partnership; and to reflect the unrealized portion of any installment
obligations owed to the Partnership; provided that, such withheld amounts shall
be distributed to the General Partner and Limited Partners as soon as
practicable.

                Section 13.4. Deemed Distribution and Recontribution

                Notwithstanding any other provision of this Article 13, in the
event the Partnership is liquidated within the meaning of Regulations Section
1.704-1(b)(2)(ii)(g) but no Liquidating Event has occurred, the Partnership's
property shall not be liquidated, the Partnership's liabilities shall not be
paid or discharged, and the Partnership's affairs shall not be wound up.
Instead, the Partnership shall be deemed to have distributed the Partnership
property in kind to the General Partner and Limited Partners, who shall be
deemed to have assumed and taken such property subject to all Partnership
liabilities, all in accordance with their respective Capital Accounts.
Immediately thereafter, the General Partner and Limited Partners shall be deemed
to have recontributed the Partnership property in kind to the Partnership, which
shall be deemed to have assumed and taken such property subject to all such
liabilities.

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                Section 13.5. Rights of Limited Partners

                Except as otherwise provided in this Agreement, each Limited
Partner shall look solely to the assets of the Partnership for the return of his
Capital Contribution and shall have no right or power to demand or receive
property from the General Partner. Except as expressly set forth herein with
respect to the rights, priorities and preferences of the Preferred Limited
Partners holding any series of Preferred Units, no Limited Partner shall have
priority over any other Limited Partner as to the return of his Capital
Contributions, distributions or allocations.

                Section 13.6. Notice of Dissolution

                In the event a Liquidating Event occurs or an event occurs that
would, but for provisions of Section 13.1, result in a dissolution of the
Partnership, the General Partner shall, within thirty (30) days thereafter,
provide written notice thereof to each of the Partners and to all other parties
with whom the Partnership regularly conducts business (as determined in the
discretion of the General Partner) and shall publish notice thereof in a
newspaper of general circulation in each place in which the Partnership
regularly conducts business (as determined in the discretion of the General
Partner).

                Section 13.7. Cancellation of Certificate of Limited Partnership

                Upon the completion of the liquidation of the Partnership cash
and property as provided in Section 13.2, the Partnership shall be terminated
and the Certificate and all qualifications of the Partnership as a foreign
limited partnership in jurisdictions other than the State of Delaware shall be
canceled and such other actions as may be necessary to terminate the Partnership
shall be taken.

                Section 13.8. Reasonable Time for Winding-Up

                A reasonable time shall be allowed for the orderly winding-up of
the business and affairs of the Partnership and the liquidation of its assets
pursuant to Section 13.2, in order to minimize any losses otherwise attendant
upon such winding-up, and the provisions of this Agreement shall remain in
effect between the Partners during the period of liquidation.

                Section 13.9. Waiver of Partition

                Each Partner hereby waives any right to partition of the
Partnership property.

                                   ARTICLE 14.
                  AMENDMENT OF PARTNERSHIP AGREEMENT; CONSENTS

                Section 14.1. Amendments

                A. The actions requiring consent or approval of the Partners or
of the Limited Partners pursuant to this Agreement, including Sections 7.3,
16.6, 17.6, 18.6, 19.6, 20.6 and 21.6, or otherwise pursuant to applicable law,
are subject to the procedures in this Article 14.

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<PAGE>   70

                B. Amendments to this Agreement requiring the consent or
approval of Limited Partners may be proposed by the General Partner or by
Limited Partners holding twenty-five percent (25%) or more of the Partnership
Interests held by Limited Partners entitled to consent to or approve such
matter. Following such proposal, the General Partner shall submit any proposed
amendment to the Partners or to the Limited Partners entitled to consent to or
approve such amendment, as applicable. The General Partner shall seek the
written consent or approval of the Partners or the Limited Partners entitled to
consent to or approve the proposed amendment or shall call a meeting to vote
thereon and to transact any other business that it may deem appropriate. For
purposes of obtaining a written consent, the General Partner may require a
response within a reasonable specified time, but not less than fifteen (15)
days, and failure to respond in such time period shall constitute a consent
which is consistent with the General Partner's recommendation (if so
recommended); provided that, an action shall become effective at such time as
requisite consents are received even if prior to such specified time.

                Section 14.2. Action by the Partners

                A. Meetings of the Partners may be called by the General Partner
and shall be called upon the receipt by the General Partner of a written request
by Limited Partners holding twenty-five percent (25%) or more of the Partnership
Interests held by the Limited Partners that are entitled to vote on the matters
proposed to be voted on at such meeting. The call shall state the nature of the
business to be transacted. Notice of any such meeting shall be given to all
Partners not less than seven days nor more than thirty (30) days prior to the
date of such meeting. Partners may vote in person or by proxy at such meeting.
Whenever the vote of the Percentage Interests of the Partners, or the Consent of
the Partners or Consent of the Limited Partners is permitted or required under
this Agreement, such vote or Consent may be given at a meeting of Partners or
may be given in accordance with the procedure prescribed in Section 14.1.

                B. Any action required or permitted to be taken at a meeting of
the Partners may be taken without a meeting if a written consent setting forth
the action so taken is signed by the Percentage Interests as is expressly
required by this Agreement for the action in question. Such consent may be in
one instrument or in several instruments, and shall have the same force and
effect as a vote of the Percentage Interests of the Partners (expressly required
by this Agreement). Such consent shall be filed with the General Partner. An
action so taken shall be deemed to have been taken at a meeting held on the
effective date so certified.

                C. Each Limited Partner may authorize any Person or Persons to
act for him by proxy on all matters in which a Limited Partner is entitled to
participate, including waiving notice of any meeting, or voting or participating
at a meeting. Every proxy must be signed by the Limited Partner or his
attorney-in-fact. No proxy shall be valid after the expiration of eleven (11)
months from the date thereof unless otherwise provided in the proxy. Every proxy
shall be revocable at the pleasure of the Limited Partner executing it.

                D. Each meeting of Partners shall be conducted by the General
Partner or such other Person as the General Partner may appoint pursuant to such
rules for the conduct of the meeting as the General Partner or such other Person
deems appropriate.

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                E. Except as otherwise expressly provided, on matters on which
Limited Partners are entitled to vote, each Limited Partner shall have a vote
equal to the number of Partnership Units held.

                                   ARTICLE 15.
                               GENERAL PROVISIONS

                Section 15.1. Addresses and Notice

                Any notice, demand, request or report required or permitted to
be given or made to a Partner or Assignee under this Agreement shall be in
writing and shall be deemed given or made when delivered in person or when sent
by certified first class United States mail, nationally recognized overnight
delivery service or facsimile transmission to the Partner or Assignee at the
address set forth in Exhibit A or such other address as the Partners shall
notify the General Partner in writing.

                Section 15.2. Titles and Captions

                All article or section titles or captions in this Agreement are
for convenience only. They shall not be deemed part of this Agreement and in no
way define, limit, extend or describe the scope or intent of any provisions
hereof. Except as specifically provided otherwise, references to "Articles" and
"Sections" are to Articles and Sections of this Agreement.

                Section 15.3. Pronouns and Plurals

                Whenever the context may require, any pronoun used in this
Agreement shall include the corresponding masculine, feminine or neuter forms,
and the singular form of nouns, pronouns and verbs shall include the plural and
vice versa.

                Section 15.4. Further Action

                The parties shall execute and deliver all documents, provide all
information and take or refrain from taking action as may be necessary or
appropriate to achieve the purposes of this Agreement.

                Section 15.5. Binding Effect

                This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their heirs, executors, administrators, successors, legal
representatives and permitted assigns.

                Section 15.6. Creditors

                Other than as expressly set forth herein with respect to
Indemnitees, none of the provisions of this Agreement shall be for the benefit
of, or shall be enforceable by, any creditor of the Partnership.

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<PAGE>   72

                Section 15.7. Waiver

                No failure or delay by any party to insist upon the strict
performance of any covenant, duty, agreement or condition of this Agreement or
to exercise any right or remedy consequent upon any breach thereof shall
constitute waiver of any such breach or any other covenant, duty, agreement or
condition.

                Section 15.8. Counterparts

                This Agreement may be executed in counterparts, all of which
together shall constitute one agreement binding on all the parties hereto,
notwithstanding that all such parties are not signatories to the original or the
same counterpart. Each party shall become bound by this Agreement immediately
upon affixing its signature hereto.

                Section 15.9. Applicable Law

                This Agreement shall be construed in accordance with and
governed by the laws of the State of Delaware, without regard to the principles
of conflicts of law.

                Section 15.10. Invalidity of Provisions

                If any provision of this Agreement is or becomes invalid,
illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein shall not be
affected thereby.

                Section 15.11. Entire Agreement

                This Agreement (together with the agreements listed on Exhibit H
hereto as to rights and obligations in respect of the Units held by the Limited
Partners who are parties thereto, or their permitted transferees) contains the
entire understanding and agreement among the Partners with respect to the
subject matter hereof and supersedes any other prior written or oral
understandings or agreements among them with respect thereto.

                Section 15.12. No Rights as Stockholders

                Nothing contained in this Agreement shall be construed as
conferring upon the holders of Partnership Units any rights whatsoever as
stockholders of the General Partner, including without limitation any right to
receive dividends or other distributions made to stockholders of the General
Partner or to vote or to consent or to receive notice as stockholders in respect
of any meeting of stockholders for the election of directors of the General
Partner or any other matter.

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                                   ARTICLE 16.
                            SERIES C PREFERRED UNITS

                Section 16.1. Designation and Number

                A series of Partnership Units in the Partnership designated as
the 8 3/4% Series C Cumulative Redeemable Preferred Units (the "Series C
Preferred Units") is hereby established. The number of Series C Preferred Units
shall be 2,200,000.

                Section 16.2. Ranking

                The Series C Preferred Units shall, with respect to distribution
rights and rights upon voluntary or involuntary liquidation, winding up or
dissolution of the Partnership, rank (i) senior to the Common Units and to all
Partnership Units the terms of which provide that such Partnership Units shall
rank junior to the Series C Preferred Units; (ii) on a parity with all other
Parity Preferred Units; and (iii) junior to all Partnership Units which rank
senior to the Series C Preferred Units.

                Section 16.3. Distributions

                A. Payment of Distributions. Subject to the rights of holders of
Parity Preferred Units as to the payment of distributions (including pursuant to
Section 5.1, 17.3A, 18.3A, 19.3A, 20.3A and 21.3A hereof), holders of Series C
Preferred Units will be entitled to receive, when, as and if declared by the
Partnership acting through the General Partner, out of Available Cash,
cumulative preferential cash distributions in an amount equal to the Series C
Priority Return. Such distributions will be payable (A) quarterly (such
quarterly periods for purposes of payment and accrual will be the quarterly
periods ending on the dates specified in this sentence and not calendar year
quarters) in arrears, on the 15th day of January, April, July and October of
each year and (B) in the event of (i) an exchange of Series C Preferred Units
into Series C Preferred Shares, or (ii) a redemption of Series C Preferred
Units, on the exchange date or redemption date, as applicable (each a "Series C
Preferred Unit Distribution Payment Date"), commencing on the first of such
payment dates to occur following their original date of issuance. If any date on
which distributions are to be made on the Series C Preferred Units is not a
Business Day, then payment of the distribution to be made on such date will be
made on the next succeeding day that is a Business Day (and without any interest
or other payment in respect of any such delay) except that, if such Business Day
is in the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case with the same force and effect
as if made on such date. Distributions on the Series C Preferred Units will be
made to the holders of record of the Series C Preferred Units on the relevant
record dates, which will be fifteen (15) days prior to the relevant Series C
Preferred Unit Distribution Payment Date (the "Series C Preferred Unit
Partnership Record Date").

                B. Distributions Cumulative. Notwithstanding the foregoing,
distributions on the Series C Preferred Units will accrue whether or not the
terms and provisions of any agreement of the Partnership at any time prohibit
the current payment of distributions, whether or not the Partnership has
earnings, whether or not there are funds legally available for the payment

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<PAGE>   74

of such of such distributions and whether or not such distributions are
authorized. Accrued but unpaid distributions on the Series C Preferred Units
will accumulate as of the Preferred Unit Distribution Payment Date on which they
first become payable.

                C. Priority as to Distributions. (i) So long as any Series C
Preferred Units are outstanding, no distribution of cash or other property shall
be authorized, declared, paid or set apart for payment on or with respect to any
class or series of Partnership Interest represented by Junior Units, nor shall
any Junior Units or Parity Preferred Units be redeemed, purchased or otherwise
acquired for any consideration (or any monies be paid to or made available for a
sinking fund for the redemption of any such Junior Units or Parity Preferred
Units) by the Partnership (except by conversion into or exchange for other
Junior Units or Parity Preferred Units, as the case may be) unless, in each
case, full cumulative distributions have been or contemporaneously are
authorized and paid or authorized and a sum sufficient for the payment thereof
set apart for such payment on the Series C Preferred Units and all classes and
series of outstanding Parity Preferred Units for all distribution periods. The
foregoing sentence will not prohibit (a) distributions payable solely in Junior
Units, (b) the exchange of Junior Units or Parity Preferred Units into
Partnership Interests of the Partnership ranking junior to the Series C
Preferred Units as to distributions and upon voluntary and involuntary
liquidation, dissolution or winding up of the Partnership, or (c) distributions
necessary to enable the Operating Partnership to redeem partnership interests
corresponding to Series C Preferred Shares and any Parity Preferred Stock with
respect to distributions or Junior Stock to be purchased by AMB pursuant to the
REIT Charter to preserve AMB's status as a REIT, provided that such redemption
shall be upon the same terms as the corresponding stock purchase pursuant to the
REIT Charter.

                (ii) So long as distributions have not been paid in full (or a
sum sufficient for such full payment is not so set apart) upon the Series C
Preferred Units and any other Parity Preferred Units, all distributions
authorized and declared on the Series C Preferred Units and all classes or
series of outstanding Parity Preferred Units shall be authorized and declared
pro rata so that the amount of distributions authorized and declared per Series
C Preferred Unit and such other classes or series of Parity Preferred Units
shall in all cases bear to each other the same ratio that accrued distributions
per Series C Preferred Unit and such other classes or series of Parity Preferred
Units (which shall not include any accumulation in respect of unpaid
distributions for prior distribution periods if such class or series of Parity
Preferred Units do not have cumulative distribution rights) bear to each other.
No interest, or sum of money in lieu of interest, shall be payable in respect of
any distributions or payments on Series C Preferred Units which may be in
arrears.

                (iii) Notwithstanding anything to the contrary set forth herein,
distributions on Partnership Interests held by either (a) the General Partner,
(b) the Operating Partnership or (c) any other holder of Partnership Interests
in the Partnership, in each case ranking junior to or on parity with the Series
C Preferred Units may be made, without preserving the priority of distributions
described in Sections 16.3.C(i) and (ii), but only to the extent such
distributions are required to preserve the REIT status of AMB, in its capacity
as sole general partner of the Operating Partnership and as sole stockholder of
the General Partner, and in the case of any holder other than the General
Partner only to the extent required by the Partnership Agreement;

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<PAGE>   75

provided, that the Partnership shall not be disproportionately burdened by this
provision relative to the cash flow generated by other assets owned directly or
indirectly by AMB.

                D. No Further Rights. Holders of Series C Preferred Units shall
not be entitled to any distributions, whether payable in cash, other property or
otherwise, in excess of the full cumulative distributions described herein.

                Section 16.4. Liquidation Proceeds

                A. Distributions. Upon voluntary or involuntary liquidation,
dissolution or winding-up of the Partnership, distributions on the Series C
Preferred Units shall be made in accordance with Article 13 of this Agreement.

                B. Notice. Written notice of any such voluntary or involuntary
liquidation, dissolution or winding-up of the Partnership, stating the payment
date or dates when, and the place or places where, the amounts distributable in
such circumstances shall be payable, shall be given by the General Partner
pursuant to Section 13.6 hereof.

                C. No Further Rights. After payment of the full amount of the
liquidating distributions to which they are entitled, Holders of Series C
Preferred Units will have no right or claim to any of the remaining assets of
the Partnership.

                D. Consolidation, Merger or Certain Other Transactions. None of
a consolidation or merger of the Partnership with or into another entity, a
merger of another entity with or into the Partnership, or a sale, lease,
transfer or conveyance of all or substantially all of the Partnership's property
or business shall be considered a liquidation, dissolution or winding up of the
Partnership.

                Section 16.5. Series C Redemption

                A. Series C Redemption. The Series C Preferred Units may not be
redeemed prior to November 24, 2003. On or after such date, the Partnership
shall have the right to redeem the Series C Preferred Units, in whole or in
part, at any time or from time to time, upon not less than 30 nor more than 60
days' written notice, at a redemption price, payable in cash (a "Series C
Redemption"), equal to the Capital Account balance of the holder of Series C
Preferred Units (the "Series C Redemption Price"); provided, however, that no
redemption pursuant to this Section 16.5 will be permitted if the Series C
Redemption Price does not equal or exceed the original Capital Contribution of
such holder plus the cumulative Series C Priority Return to the redemption date
to the extent not previously distributed. If fewer than all of the outstanding
Series C Preferred Units are to be redeemed, the Series C Preferred Units to be
redeemed shall be selected pro rata (as nearly as practicable without creating
fractional units).

                B. Limitation on Redemption. (i) The Series C Redemption Price
of the Series C Preferred Units (other than the portion thereof consisting of
accumulated but unpaid distributions) is payable solely out of the sale proceeds
of capital stock of AMB which will be contributed by AMB to the Operating
Partnership and the General Partner, and which in turn will be contributed by
the Operating Partnership and the General Partner to the Partnership as an

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additional capital contribution, or out of the sale of limited partner interests
in the Partnership or the Operating Partnership and from no other source. For
purposes of the preceding sentence, "capital stock" means any equity securities
(including Common Stock and Preferred Stock (as such terms are defined in the
REIT Charter)), depository shares, interests, participation or other ownership
interests (however designated) and any rights (other than debt securities
convertible into or exchangeable for equity securities) or options to purchase
any of the foregoing.

                (ii) The Partnership may not redeem fewer than all of the
outstanding Series C Preferred Units unless all accumulated and unpaid
distributions have been paid on all Series C Preferred Units for all quarterly
distribution periods terminating on or prior to the date of redemption.

                C. Procedures for Redemption. (i) Notice of redemption will be
(i) faxed, and (ii) mailed by the Partnership, by certified mail, postage
prepaid, not less than 30 nor more than 60 days prior to the redemption date,
addressed to the respective holders of record of the Series C Preferred Units at
their respective addresses as they appear on the records of the Partnership. No
failure to give or defect in such notice shall affect the validity of the
proceedings for the redemption of any Series C Preferred Units except as to the
holder to whom such notice was defective or not given. In addition to any
information required by law, each such notice shall state: (a) the redemption
date, (b) the Series C Redemption Price, (c) the aggregate number of Series C
Preferred Units to be redeemed and if fewer than all of the outstanding Series C
Preferred Units are to be redeemed, the number of Series C Preferred Units to be
redeemed held by such holder, which number shall equal such holder's pro rata
share (based on the percentage of the aggregate number of outstanding Series C
Preferred Units that the total number of Series C Preferred Units held by such
holder represents) of the aggregate number of Series C Preferred Units to be
redeemed, (d) the place or places where such Series C Preferred Units are to be
surrendered for payment of the Series C Redemption Price, (e) that distributions
on the Series C Preferred Units to be redeemed will cease to accumulate on such
redemption date and (f) that payment of the Series C Redemption Price will be
made upon presentation and surrender of such Series C Preferred Units.

                (ii) If the Partnership gives a notice of redemption in respect
of Series C Preferred Units (which notice will be irrevocable) then, by 12:00
noon, New York City time, on the redemption date, the Partnership will deposit
irrevocably in trust for the benefit of the Series C Preferred Units being
redeemed funds sufficient to pay the applicable Series C Redemption Price and
will give irrevocable instructions and authority to pay such Series C Redemption
Price to the holders of the Series C Preferred Units upon surrender of the
Series C Preferred Units by such holders at the place designated in the notice
of redemption. On and after the date of redemption, distributions will cease to
accumulate on the Series C Preferred Units or portions thereof called for
redemption, unless the Partnership defaults in the payment thereof. If any date
fixed for redemption of Series C Preferred Units is not a Business Day, then
payment of the Series C Redemption Price payable on such date will be made on
the next succeeding day that is a Business Day (and without any interest or
other payment in respect of any such delay) except that, if such Business Day
falls in the next calendar year, such payment will be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date fixed for redemption. If payment of the Series C Redemption Price
is improperly

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<PAGE>   77

withheld or refused and not paid by the Partnership, distributions on such
Series C Preferred Units will continue to accumulate from the original
redemption date to the date of payment, in which case the actual payment date
will be considered the date fixed for redemption for purposes of calculating the
applicable Series C Redemption Price.

                Section 16.6. Voting Rights

                A. General. Holders of the Series C Preferred Units will not
have any voting rights or right to consent to any matter requiring the consent
or approval of the Limited Partners, except as set forth below and in Section
7.3.E.

                B. Certain Voting Rights. So long as any Series C Preferred
Units remains outstanding, the Partnership shall not, without the affirmative
vote of the holders of at least two-thirds of the Series C Preferred Units
outstanding at the time (i) authorize or create, or increase the authorized or
issued amount of, any class or series of Partnership Interests ranking prior to
the Series C Preferred Units with respect to payment of distributions or rights
upon liquidation, dissolution or winding-up or reclassify any Partnership
Interests of the Partnership into any such Partnership Interest, or create,
authorize or issue any obligations or security convertible into or evidencing
the right to purchase any such Partnership Interests, (ii) authorize or create,
or increase the authorized or issued amount of any Parity Preferred Units or
reclassify any Partnership Interest of the Partnership into any such Partnership
Interest or create, authorize or issue any obligations or security convertible
into or evidencing the right to purchase any such Partnership Interests but only
to the extent such Parity Preferred Units are issued to an affiliate of the
Partnership, other than AMB or the Operating Partnership to the extent the
issuance of such interests was to allow AMB or the Operating Partnership to
issue corresponding preferred stock or preferred interests to persons who are
not affiliates of the Partnership (other than AMB to the extent AMB issues
corresponding preferred stock to persons who are not affiliates of the
Partnership or the Operating Partnership) or (iii) either consolidate, merge
into or with, or convey, transfer or lease its assets substantially as an
entirety to, any corporation or other entity or amend, alter or repeal the
provisions of the Partnership Agreement (including, without limitation, this
Article 16 and Section 11.2), whether by merger, consolidation or otherwise, in
each case in a manner that would materially and adversely affect the powers,
special rights, preferences, privileges or voting power of the Series C
Preferred Units or the holders thereof; provided, however, that with respect to
the occurrence of any event set forth in (iii) above, so long as (a) the
Partnership is the surviving entity and the Series C Preferred Units remain
outstanding with the terms thereof unchanged, or (b) the resulting, surviving or
transferee entity is a partnership, limited liability company or other
pass-through entity organized under the laws of any state and substitutes the
Series C Preferred Units for other interests in such entity having substantially
the same terms and rights as the Series C Preferred Units, including with
respect to distributions, voting rights and rights upon liquidation, dissolution
or winding-up, then the occurrence of any such event shall not be deemed to
materially and adversely affect such rights, privileges or voting powers of the
holders of the Series C Preferred Units; and provided further, that any increase
in the amount of Partnership Interests or the creation or issuance of any other
class or series of Partnership Interests represented by Junior Units or Parity
Preferred Units that are not issued to an affiliate of the Partnership, other
than the General Partner or the Operating Partnership to the extent the issuance
of such interests was to allow the General Partner or the

                                       72
<PAGE>   78

Operating Partnership to issue corresponding preferred stock or preferred
interests to persons who are not affiliates of the Partnership (other than AMB
to the extent AMB issues corresponding preferred stock or preferred interests to
persons who are not affiliates of the Partnership or the Operating Partnership),
shall not be deemed to materially and adversely affect such rights, preferences,
privileges or voting powers.

                C. So long as any Series C Preferred Units remain outstanding,
the Operating Partnership shall not, without the affirmative vote of the holders
of at least two-thirds of the Series C Preferred Units outstanding at the time,
take any action which would result in the termination of the right of the
holders of such units to effect an exchange pursuant to Section 16.8; provided
however, no such vote shall be required so long as the Series C Preferred Units
(or any interests substituted therefore pursuant to Section 16.6.B) remain
outstanding and are exchangeable for Series C Preferred Shares or stock in
another entity having substantially the same terms and rights as the Series C
Preferred Shares.

                Section 16.7. Transfer Restrictions

                The Series C Preferred Units shall be subject to the provisions
of Article 11 hereof. No transfer of Series C Preferred Units, or other action
by the holder or holders of such Units, is permitted, without the consent of the
General Partner which consent may be given or withheld in its sole and absolute
discretion, if such transfer or other action would result in more than four
partners holding all outstanding Series C Preferred Units within the meaning of
Treasury Regulation Section 1.7704-1(h)(3)(i); provided, however, that the
General Partner's consent may not be unreasonably withheld if (a) such transfer
or other action would not result in more than ten partners holding all
outstanding Series C Preferred Units within the meaning of Treasury Regulation
Section 1.7704-1(h)(3)(i) and (b) the General Partner is relying on a provision
other than Treasury Regulation Section 1.7704-1(h) to avoid classification of
Operating Partnership as a "publicly traded partnership" within the meaning of
Code Section 7704 (a "PTP"). In addition, no transfer may be made to any person
if such transfer would cause the exchange of the Series C Preferred Units for
Series C Preferred Shares, as provided herein, to be required to be registered
under the Securities Act of 1933, as amended, or any state securities laws.

                Section 16.8. Exchange Rights

                A. Right to Exchange.

                (i) Series C Preferred Units will be exchangeable in whole but
not in part unless expressly otherwise provided herein at anytime on or after
November 24, 2008, at the option of 51% of the holders of all outstanding Series
C Preferred Units, for authorized but previously unissued Series C Preferred
Shares at an exchange rate of one Series C Preferred Share from AMB for one
Series C Preferred Unit, subject to adjustment as described below (the "Series C
Exchange Price"), provided that the Series C Preferred Units will become
exchangeable at any time, in whole but not in part unless expressly otherwise
provided herein, at the option of 51% of the holders of all outstanding Series C
Preferred Units for Series C Preferred Shares if (y) at any time full
distributions shall not have been timely made on any Series C Preferred Unit
with respect to six (6) prior quarterly distribution periods, whether or not
consecutive, provided,

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<PAGE>   79

however, that a distribution in respect of Series C Preferred Units shall be
considered timely made if made within two (2) Business Days after the applicable
Preferred Unit Distribution Payment Date if at the time of such late payment
there shall not be any prior quarterly distribution periods in respect of which
full distributions were not timely made or (z) upon receipt by a holder or
holders of Series C Preferred Units of (A) notice from the General Partner that
the General Partner or a Subsidiary of the General Partner has taken the
position that the Partnership is, or upon the consummation of an identified
event in the immediate future will be, a PTP and (B) an opinion rendered by
independent counsel familiar with such matters addressed to a holder or holders
of Series C Preferred Units, that the Partnership is or likely is, or upon the
occurrence of a defined event in the immediate future will be or likely will be,
a PTP. In addition, the Series C Preferred Units may be exchanged for Series C
Preferred Shares, in whole but not in part unless expressly otherwise provided
herein, at the option of 51% of the holders of all outstanding Series C
Preferred Units after November 24, 2001 and prior to November 24, 2008 if such
holders of a Series C Preferred Units shall deliver to the General Partner
either (i) a private letter ruling addressed to such holder of Series C
Preferred Units or (ii) an opinion of independent counsel reasonably acceptable
to the General Partner based on the enactment of temporary or final Treasury
Regulations or the publication of a Revenue Ruling, in either case to the effect
that an exchange of the Series C Preferred Units at such earlier time would not
cause the Series C Preferred Units to be considered "stock and securities"
within the meaning of Section 351(e) of the Code for purposes of determining
whether the holder of such Series C Preferred Units is an "investment company"
under Section 721(b) of the Code if an exchange is permitted at such earlier
date. Furthermore, the Series C Preferred Units, if Series C Contributors
holding 51% of all outstanding Series C Preferred Units determine, may be
exchanged in whole but not in part (regardless of whether held by Series C
Contributors) for Series C Preferred Shares (but only if the exchange in whole
may be accomplished consistently with the ownership limitations set forth under
the Series C Articles Supplementary (as defined herein), taking into account
exceptions thereto) if at any time, excluding the effect of the Loan (as defined
below) for purposes of the 5% test of Section 856(c)(4)(B) of the Code, (i) the
Partnership reasonably determines that the assets and income of the Partnership
for a taxable year after 1998 would not satisfy the income and assets tests of
Section 856 of the Code for such taxable year if the Partnership were a real
estate investment trust within the meaning of the Code or (ii) any holder of
Series C Preferred Units shall deliver to the Partnership and the Company an
opinion of independent counsel reasonably acceptable to the Company to the
effect that, based on the assets and income of the Partnership for a taxable
year after 1998, the Partnership would not satisfy the income and assets tests
of Section 856 of the Code for such taxable year if the Partnership were a real
estate investment trust within the meaning of the Code and that such failure
would create a meaningful risk that a holder of the Series C Preferred Units
would fail to maintain qualification as a real estate investment trust. For
purposes of this Section 16.8.A(i), the term "Loan" means the loan made on
November 24, 1998 by the Partnership to the Operating Partnership in the
aggregate principal amount of $107,102,375.00.

                (ii) Notwithstanding anything to the contrary set forth in
Section 16.8.A(i), if a Series C Exchange Notice (as defined herein) has been
delivered to AMB and the General Partner, then the General Partner may, at its
option, within ten (10) Business Days after receipt of the Series C Exchange
Notice, elect to cause the Partnership to redeem all or a portion of the
outstanding Series C Preferred Units for cash in an amount equal to the original
Capital

                                       74
<PAGE>   80

Contribution per Series C Preferred Unit and all accrued and unpaid
distributions thereon to the date of redemption. If the General Partner elects
to redeem fewer than all of the outstanding Series C Preferred Units, the number
of Series C Preferred Units held by each holder to be redeemed shall equal such
holder's pro rata share (based on the percentage of the aggregate number of
outstanding Series C Preferred Units that the total number of Series C Preferred
Units held by such holder represents) of the aggregate number of Series C
Preferred Units being redeemed.

                (iii) In the event an exchange of all Series C Preferred Units
pursuant to Section 16.8.A would violate the provisions on ownership limitation
of AMB set forth in Section 7 of Article Third of the Articles Supplementary to
the REIT Charter with respect to Series C Preferred Shares (the "Series C
Articles Supplementary"), each holder of Series C Preferred Units shall be
entitled to exchange, pursuant to the provisions of Section 16.8.B, a number of
Series C Preferred Units which would comply with the provisions on the ownership
limitation of AMB set forth in such Section 7 of Article Third of the Series C
Articles Supplementary, with respect to such holder, and any Series C Preferred
Units not so exchanged (the "Series C Excess Units") shall be redeemed by the
Partnership for cash in an amount equal to the original Capital Contribution per
Excess Unit, plus any accrued and unpaid distributions thereon to the date of
redemption subject to any restriction thereon contained in any debt instrument
or agreement of the Partnership. In the event an exchange would result in Excess
Units, as a condition to such exchange, each holder of such units agrees to
provide representations and covenants reasonably requested by AMB relating to
(i) the widely held nature of the interests in such holder, sufficient to assure
AMB that the Holder's ownership of stock of AMB (without regard to the limits
described above) will not cause any individual to own in excess of 9.0% of the
stock of AMB; and (ii) to the extent such Holder can so represent and covenant
without obtaining information from its owners (other than one or more direct or
indirect parent corporations, limited liability companies or partnerships and
not the holders of any interests in any such parent), the Holder's ownership of
tenants of the Partnership and its affiliates. For purposes of determining the
number of Excess Units under this Section 16.8.A(iii), the "Ownership Limit" set
forth in the Series C Articles Supplementary shall be deemed to be 9.0%. To the
extent the Partnership would not be able to pay the cash set forth above in
exchange for the Excess Units, and to the extent consistent with the REIT
Charter, AMB agrees that it will grant to the holders of the Series C Preferred
Units exceptions to the Ownership Limit set forth in the Series C Articles
Supplementary sufficient to allow such Holders to exchange all of their Series C
Preferred Units for Series C Preferred Shares, provided such holders furnish to
AMB representations acceptable to AMB in its sole and absolute discretion which
assure AMB that such exceptions will not jeopardize AMB's tax status as a REIT
for purposes of federal and applicable state law. Notwithstanding any provision
of this Agreement to the contrary, no Series C Limited Partner shall be entitled
to effect an exchange of Series C Preferred Units for Series C Preferred Shares
to the extent that ownership or right to acquire such shares would cause the
Partner or any other Person or, in the opinion of counsel selected by AMB, may
cause the Partner or any other Person, to violate the restrictions on ownership
and transfer of Series C Preferred Shares set forth in the REIT Charter. To the
extent any such attempted exchange for Series C Preferred Shares would be in
violation of the previous sentence, it shall be void ab initio and such Series C
Limited Partner shall not acquire any rights or economic interest in the Series
C Preferred Shares otherwise issuable upon such exchange.

                                       75
<PAGE>   81

                (iv) The redemption of Series C Preferred Units described in
Section 16.8.A(ii) and (iii) shall be subject to the provisions of Section
16.5.B(i) and Section 16.5.C(ii); provided, however, that the term "Redemption
Price" in such Sections 16.5.B(i) and 16.5.C(ii) shall be read to mean the
original Capital Contribution per Series C Preferred Unit being redeemed as set
forth on Exhibit A plus all accrued and unpaid distributions to the redemption
date.

                B. Procedure for Exchange and/or Redemption of Series C
Preferred Units.

                (i) Any exchange shall be exercised pursuant to a notice of
exchange (the "Series C Exchange Notice") delivered to AMB and the General
Partner by the Partners representing at least 51% of the outstanding Series C
Preferred Units (or by Contributors in the case of an exchange pursuant to the
last sentence of Section 16.8.A.(i) hereof) by (a) fax and (b) by certified mail
postage prepaid. AMB may effect any exchange of Series C Preferred Units, or the
General Partner may exercise its option to cause the Partnership to redeem any
portion of the Series C Preferred Units for cash pursuant to Section 16.8.A(ii)
or redeem Excess Units pursuant to Section 16.8.A(iii), by delivering to each
holder of record of Series C Preferred Units, within ten (10) Business Days
following receipt of the Series C Exchange Notice, (a) if the General Partner
elects to cause the Partnership to acquire any of the Series C Preferred Units
then outstanding, (1) certificates representing the Series C Preferred Shares
being issued in exchange for the Series C Preferred Units of such holder being
exchanged and (2) a written notice (a "Series C Redemption Notice") stating (A)
the redemption date, which may be the date of such Series C Redemption Notice or
any other date which is not later than sixty (60) days following the receipt of
the Series C Exchange Notice, (B) the redemption price, (C) the place or places
where the Series C Preferred Units are to be surrendered and (D) that
distributions on the Series C Preferred Units will cease to accrue on such
redemption date, or (b) if the General Partner elects to cause the Partnership
to redeem all of the Series C Preferred Units then outstanding in exchange for
cash, a Series C Redemption Notice. Series C Preferred Units which are redeemed
shall be deemed canceled (and any corresponding Partnership Interest represented
thereby deemed terminated) on the redemption date. Holders of Series C Preferred
Units shall deliver any canceled certificates representing Series C Preferred
Units which have been exchanged or redeemed to the office of General Partner
(which currently is located at 505 Montgomery Street, San Francisco, California
94111) within ten (10) Business Days of the exchange or redemption with respect
thereto. Notwithstanding anything to the contrary contained herein, any and all
Series C Preferred Units to be exchanged for Series C Preferred Stock pursuant
to this Section 16.8 shall be so exchanged in a single transaction at one time.
As a condition to exchange, AMB may require the holders of Series C Preferred
Units to make such representations as may be reasonably necessary for the
General Partner to establish that the issuance of Series C Preferred Shares
pursuant to the exchange shall not be required to be registered under the
Securities Act or any state securities laws. Any Series C Preferred Shares
issued pursuant to this Section 16.8 shall be delivered as shares which are duly
authorized, validly issued, fully paid and nonassessable, free of any pledge,
lien, encumbrance or restriction other than those provided in the REIT Charter,
the Bylaws of AMB, the Securities Act and relevant state securities or blue sky
laws.

                The certificates representing the Series C Preferred Shares
issued upon exchange of the Series C Preferred Units shall contain the following
legend:

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<PAGE>   82
                THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT
                BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED,
                HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT
                (A) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
                UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
                "ACT"), AND STATE SECURITIES LAWS OR (B) IF THE
                CORPORATION HAS BEEN FURNISHED WITH A SATISFACTORY
                OPINION OF COUNSEL FOR THE HOLDER OF THE SHARES
                REPRESENTED HEREBY, OR OTHER EVIDENCE SATISFACTORY
                TO THE CORPORATION, THAT SUCH TRANSFER, SALE,
                ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER
                DISPOSITION IS EXEMPT FROM THE PROVISIONS OF
                SECTION 5 OF THE ACT AND STATE SECURITIES LAWS AND
                THE RULES AND REGULATIONS THEREUNDER.

                (ii) In the event of an exchange of Series C Preferred Units for
Series C Preferred Shares, an amount equal to the accrued and unpaid
distributions to the date of exchange on any Series C Preferred Units tendered
for exchange shall (i) accrue on the Series C Preferred Shares into which such
Series C Preferred Units are exchanged, and (ii) continue to accrue on such
Series C Preferred Units, which shall remain outstanding following such
exchange, with the General Partner as the holder of such REIT Series C Preferred
Units. Notwithstanding anything to the contrary set forth herein, in no event
shall a Holder of a Series C Preferred Unit that was validly exchanged for
Series C Preferred Shares pursuant to this Section (other than the General
Partner holding such Series C Preferred Unit following any such exchange),
receive a distribution out of Available Cash of the Partnership, if such Holder,
after exchange, is entitled to receive a distribution with respect to the Series
C Preferred Shares for which such Series C Preferred Unit was exchanged or
redeemed. Further for purposes of the foregoing, in the event of an exchange of
Series C Preferred Units for Series C Preferred Shares, if the accrued and
unpaid distributions per Series C Preferred Unit is not the same for each Series
C Preferred Unit, the accrued and unpaid distributions per Series C Preferred
Unit for each such Series C Preferred Unit shall be equal to the greatest amount
of such accrued and unpaid distributions per Series C Preferred Unit on any such
unit.

                (iii) Fractional Series C Preferred Shares are not to be issued
upon exchange but, in lieu thereof, the General Partner will pay a cash
adjustment based upon the fair market value of the Series C Preferred Shares on
the day prior to the exchange date as determined in good faith by the board of
directors of the General Partner.

                C. Adjustment of Exchange Price. In case AMB shall be a party to
any transaction (including, without limitation, a merger, consolidation,
statutory share exchange, tender offer for all or substantially all of AMB's
capital stock or sale of all or substantially all of AMB's assets), in each case
as a result of which the Series C Preferred Shares will be converted into the
right to receive shares of capital stock, other securities or other property
(including cash or any combination thereof), each Series C Preferred Unit will
thereafter be exchangeable into the kind and amount of shares of capital stock
and other securities and property receivable

                                       77
<PAGE>   83

(including cash or any combination thereof) upon the consummation of such
transaction by a holder of that number of Series C Preferred Shares or fraction
thereof into which one Series C Preferred Unit was exchangeable immediately
prior to such transaction. AMB may not become a party to any such transaction
unless the terms thereof are consistent with the foregoing. AMB and the
Operating Partnership further agree that, notwithstanding any transaction to
which either may be a party (including, without limitation, any merger,
consolidation, statutory share exchange, tender offer for all or substantially
all of such entity's capital stock or partnership interests or sale of all or
substantially all of such entity's assets), immediately following any such
transaction, the issuer or issuers of any shares of capital stock and other
securities into which the Series C Preferred Units shall be exchangeable
pursuant to this Section 16.8 shall be the same issuer or issuers of shares of
capital stock and other securities into which the 8 3/4% Series B Cumulative
Redeemable Partnership Units of the Operating Partnership (the "Series B
Preferred Units") are then exchangeable (or, if the Series B Preferred Units
have previously been redeemed in full, would have been then exchangeable if then
still outstanding).

                Section 16.9. No Conversion Rights

                The Series C Preferred Units shall not be convertible into any
other class or series of interest in the Partnership.

                Section 16.10. No Sinking Fund

                No sinking fund shall be established for the retirement or
redemption of Series C Preferred Units.

                                   ARTICLE 17.
                            SERIES D PREFERRED UNITS

                Section 17.1. Designation and Number

                A series of Partnership Units in the Partnership designated as
the 7.75% Series D Cumulative Redeemable Preferred Units (the "Series D
Preferred Units") is hereby established. The number of Series D Preferred Units
shall be 1,595,337.

                Section 17.2. Ranking

                The Series D Preferred Units shall, with respect to distribution
rights and rights upon voluntary or involuntary liquidation, winding up or
dissolution of the Partnership, rank (i) senior to the Common Units and to all
Partnership Units the terms of which provide that such Partnership Units shall
rank junior to the Series D Preferred Units; (ii) on a parity with the Series C
Preferred Units and all other Parity Preferred Units; and (iii) junior to all
Partnership Units which rank senior to the Series D Preferred Units.

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<PAGE>   84

                Section 17.3. Distributions

                A. Payment of Distributions. Subject to the rights of holders of
Parity Preferred Units as to the payment of distributions (including pursuant to
Sections 5.1, 16.3.A, 18.3A, 19.3A, 20.3A and 21.3A hereof), holders of Series D
Preferred Units will be entitled to receive, when, as and if declared by the
Partnership acting through the General Partner, out of Available Cash,
cumulative preferential cash distributions in an amount equal to the Series D
Priority Return. Such distributions will be payable (A) quarterly (such
quarterly periods for purposes of payment and accrual will be the quarterly
periods ending on the dates specified in this sentence and not calendar year
quarters) in arrears, on the 25th day of March, June, September and December of
each year and (B) in the event of (i) an exchange of Series D Preferred Units
into Series D Preferred Shares, or (ii) a redemption of Series D Preferred
Units, on the exchange date or redemption date, as applicable (each a "Series D
Preferred Unit Distribution Payment Date"), commencing on the first of such
payment dates to occur following their original date of issuance. If any date on
which distributions are to be made on the Series D Preferred Units is not a
Business Day, then payment of the distribution to be made on such date will be
made on the next succeeding day that is a Business Day (and without any interest
or other payment in respect of any such delay) except that, if such Business Day
is in the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case with the same force and effect
as if made on such date. Distributions on the Series D Preferred Units will be
made to the holders of record of the Series D Preferred Units on the relevant
record dates, which will be fifteen (15) days prior to the relevant Series D
Preferred Unit Distribution Payment Date (the "Series D Preferred Unit
Partnership Record Date").

                B. Distributions Cumulative. Notwithstanding the foregoing,
distributions on the Series D Preferred Units will accrue whether or not the
terms and provisions of any agreement of the Partnership at any time prohibit
the current payment of distributions, whether or not the Partnership has
earnings, whether or not there are funds legally available for the payment of
such of such distributions and whether or not such distributions are authorized.
Accrued but unpaid distributions on the Series D Preferred Units will accumulate
as of the Preferred Unit Distribution Payment Date on which they first become
payable.

                C. Priority as to Distributions. (i) So long as any Series D
Preferred Units are outstanding, no distribution of cash or other property shall
be authorized, declared, paid or set apart for payment on or with respect to any
class or series of Partnership Interest represented by Junior Units, nor shall
any Junior Units or Parity Preferred Units be redeemed, purchased or otherwise
acquired for any consideration (or any monies be paid to or made available for a
sinking fund for the redemption of any such Junior Units or Parity Preferred
Units) by the Partnership (except by conversion into or exchange for other
Junior Units or Parity Preferred Units, as the case may be) unless, in each
case, full cumulative distributions have been or contemporaneously are
authorized and paid or authorized and a sum sufficient for the payment thereof
set apart for such payment on the Series D Preferred Units and all classes and
series of outstanding Parity Preferred Units for all distribution periods. The
foregoing sentence will not prohibit (a) distributions payable solely in Junior
Units, (b) the exchange of Junior Units or Parity Preferred Units into
Partnership Interests of the Partnership ranking junior to the Series D
Preferred Units as to distributions and upon voluntary and involuntary
liquidation, dissolution or

                                       79
<PAGE>   85

winding up of the Partnership, or (c) distributions necessary to enable the
Operating Partnership to redeem partnership interests corresponding to Series D
Preferred Shares and any Parity Preferred Stock with respect to distributions or
Junior Stock to be purchased by AMB pursuant to the REIT Charter to preserve
AMB's status as a REIT; provided that such redemption shall be upon the same
terms as the corresponding stock purchase pursuant to the REIT Charter.

                (ii) So long as distributions have not been paid in full (or a
sum sufficient for such full payment is not so set apart) upon the Series D
Preferred Units and any other Parity Preferred Units, all distributions
authorized and declared on the Series D Preferred Units and all classes or
series of outstanding Parity Preferred Units shall be authorized and declared
pro rata so that the amount of distributions authorized and declared per Series
D Preferred Unit and such other classes or series of Parity Preferred Units
shall in all cases bear to each other the same ratio that accrued distributions
per Series D Preferred Unit and such other classes or series of Parity Preferred
Units (which shall not include any accumulation in respect of unpaid
distributions for prior distribution periods if such class or series of Parity
Preferred Units do not have cumulative distribution rights) bear to each other.
No interest, or sum of money in lieu of interest, shall be payable in respect of
any distributions or payments on Series D Preferred Units which may be in
arrears.

                (iii) Notwithstanding anything to the contrary set forth herein,
distributions on Partnership Interests held by either (a) the General Partner,
(b) the Operating Partnership or any other holder of Partnership Interests in
the Partnership, in each case ranking junior to or on parity with the Series D
Preferred Units may be made, without preserving the priority of distributions
described in Sections 17.3.C(i) and (ii), but only to the extent such
distributions are required to preserve the REIT status of AMB, in its capacity
as sole general partner of the Operating Partnership and as sole stockholder of
the General Partner, and in the case of any holder other than the General
Partner only to the extent required by the Partnership Agreement; provided, that
the Partnership shall not be disproportionately burdened by this provision
relative to the cash flow generated by other assets owned directly or indirectly
by AMB.

                D. No Further Rights. Holders of Series D Preferred Units shall
not be entitled to any distributions, whether payable in cash, other property or
otherwise, in excess of the full cumulative distributions described herein.

                Section 17.4. Liquidation Proceeds

                A. Distributions. Upon voluntary or involuntary liquidation,
dissolution or winding-up of the Partnership, distributions on the Series D
Preferred Units shall be made in accordance with Article 13 of this Agreement.

                B. Notice. Written notice of any such voluntary or involuntary
liquidation, dissolution or winding-up of the Partnership, stating the payment
date or dates when, and the place or places where, the amounts distributable in
such circumstances shall be payable, shall be given by the General Partner
pursuant to Section 13.6 hereof.

                                       80
<PAGE>   86

                C. No Further Rights. After payment of the full amount of the
liquidating distributions to which they are entitled, Holders of Series D
Preferred Units will have no right or claim to any of the remaining assets of
the Partnership.

                D. Consolidation, Merger or Certain Other Transactions. None of
a consolidation or merger of the Partnership with or into another entity, a
merger of another entity with or into the Partnership, or a sale, lease,
transfer or conveyance of all or substantially all of the Partnership's property
or business shall be considered a liquidation, dissolution or winding up of the
Partnership.

                Section 17.5. Series D Redemption

                A. Series D Redemption. The Series D Preferred Units may not be
redeemed prior to May 5, 2004. On or after such date, the Partnership shall have
the right to redeem the Series D Preferred Units, in whole or in part, at any
time or from time to time, upon not less than 30 nor more than 60 days' written
notice, at a redemption price, payable in cash (a "Series D Redemption"), equal
to the Capital Account balance of the holder of Series D Preferred Units (the
"Series D Redemption Price"); provided, however, that no redemption pursuant to
this Section 17.5 will be permitted if the Series D Redemption Price does not
equal or exceed the original Capital Contribution of such holder plus the
cumulative Series D Priority Return to the redemption date to the extent not
previously distributed. If fewer than all of the outstanding Series D Preferred
Units are to be redeemed, the Series D Preferred Units to be redeemed shall be
selected pro rata (as nearly as practicable without creating fractional units).

                B. Limitation on Series D Redemption. (i) The Series D
Redemption Price of the Series D Preferred Units (other than the portion thereof
consisting of accumulated but unpaid distributions) is payable solely out of the
sale proceeds of capital stock of AMB, which will be contributed by AMB to the
General Partner or the Operating Partnership and which in turn will be
contributed by the General Partner or the Operating Partnership to the
Partnership as an additional capital contribution, or out of the sale of limited
partner interests in the Partnership or the Operating Partnership and from no
other source. For purposes of the preceding sentence, "capital stock" means any
equity securities (including Common Stock and Preferred Stock (as such terms are
defined in the REIT Charter)), depository shares, interests, participation or
other ownership interests (however designated) and any rights (other than debt
securities convertible into or exchangeable for equity securities) or options to
purchase any of the foregoing.

                (ii) The Partnership may not redeem fewer than all of the
outstanding Series D Preferred Units unless all accumulated and unpaid
distributions have been paid on all Series D Preferred Units for all quarterly
distribution periods terminating on or prior to the date of redemption.

                C. Procedures for Series D Redemption. (i) Notice of redemption
will be (i) faxed, and (ii) mailed by the Partnership, by certified mail,
postage prepaid, not less than 30 nor more than 60 days prior to the redemption
date, addressed to the respective holders of record of the Series D Preferred
Units at their respective addresses as they appear on the records of the
Partnership. No failure to give or defect in such notice shall affect the
validity of the proceedings for the redemption of any Series D Preferred Units
except as to the holder to whom such notice

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<PAGE>   87

was defective or not given. In addition to any information required by law, each
such notice shall state: (a) the redemption date, (b) the Series D Redemption
Price, (c) the aggregate number of Series D Preferred Units to be redeemed and
if fewer than all of the outstanding Series D Preferred Units are to be
redeemed, the number of Series D Preferred Units to be redeemed held by such
holder, which number shall equal such holder's pro rata share (based on the
percentage of the aggregate number of outstanding Series D Preferred Units that
the total number of Series D Preferred Units held by such holder represents) of
the aggregate number of Series D Preferred Units to be redeemed, (d) the place
or places where such Series D Preferred Units are to be surrendered for payment
of the Series D Redemption Price, (e) that distributions on the Series D
Preferred Units to be redeemed will cease to accumulate on such redemption date
and (f) that payment of the Series D Redemption Price will be made upon
presentation and surrender of such Series D Preferred Units.

                (ii) If the Partnership gives a notice of redemption in respect
of Series D Preferred Units (which notice will be irrevocable) then, by 12:00
noon, New York City time, on the redemption date, the Partnership will deposit
irrevocably in trust for the benefit of the Series D Preferred Units being
redeemed funds sufficient to pay the applicable Series D Redemption Price and
will give irrevocable instructions and authority to pay such Series D Redemption
Price to the holders of the Series D Preferred Units upon surrender of the
Series D Preferred Units by such holders at the place designated in the notice
of redemption. On and after the date of redemption, distributions will cease to
accumulate on the Series D Preferred Units or portions thereof called for
redemption, unless the Partnership defaults in the payment thereof. If any date
fixed for redemption of Series D Preferred Units is not a Business Day, then
payment of the Series D Redemption Price payable on such date will be made on
the next succeeding day that is a Business Day (and without any interest or
other payment in respect of any such delay) except that, if such Business Day
falls in the next calendar year, such payment will be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date fixed for redemption. If payment of the Series D Redemption Price
is improperly withheld or refused and not paid by the Partnership, distributions
on such Series D Preferred Units will continue to accumulate from the original
redemption date to the date of payment, in which case the actual payment date
will be considered the date fixed for redemption for purposes of calculating the
applicable Series D Redemption Price.

                Section 17.6. Voting and Certain Management Rights

                A. General. Holders of the Series D Preferred Units will not
have any voting rights or right to consent to any matter requiring the consent
or approval of the Limited Partners, except as set forth below and in Section
7.3.E.

                B. Certain Voting Rights. So long as any Series D Preferred
Units remains outstanding, the Partnership shall not, without the affirmative
vote of the holders of at least two-thirds of the Series D Preferred Units
outstanding at the time (i) authorize or create, or increase the authorized or
issued amount of, any class or series of Partnership Interests ranking prior to
the Series D Preferred Units with respect to payment of distributions or rights
upon liquidation, dissolution or winding-up or reclassify any Partnership
Interests of the Partnership into any such Partnership Interest, or create,
authorize or issue any obligations or security convertible into or

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evidencing the right to purchase any such Partnership Interests, (ii) authorize
or create, or increase the authorized or issued amount of any Parity Preferred
Units or reclassify any Partnership Interest of the Partnership into any such
Partnership Interest or create, authorize or issue any obligations or security
convertible into or evidencing the right to purchase any such Partnership
Interests but only to the extent such Parity Preferred Units are issued to an
affiliate of the Partnership, other than AMB or the Operating Partnership to the
extent the issuance of such interests was to allow AMB or the Operating
Partnership to issue corresponding preferred stock or preferred interests to
persons who are not affiliates of the Partnership (other than AMB to the extent
AMB issues corresponding preferred stock to persons who are not affiliates of
the Partnership or the Operating Partnership) or (iii) either consolidate, merge
into or with, or convey, transfer or lease its assets substantially as an
entirety to, any corporation or other entity or amend, alter or repeal the
provisions of the Partnership Agreement (including, without limitation, this
Article 17 and Section 11.2), whether by merger, consolidation or otherwise, in
each case in a manner that would materially and adversely affect the powers,
special rights, preferences, privileges or voting power of the Series D
Preferred Units or the holders thereof; provided, however, that with respect to
the occurrence of any event set forth in (iii) above, so long as (a) the
Partnership is the surviving entity and the Series D Preferred Units remain
outstanding with the terms thereof unchanged, or (b) the resulting, surviving or
transferee entity is a partnership, limited liability company or other
pass-through entity organized under the laws of any state and substitutes the
Series D Preferred Units for other interests in such entity having substantially
the same terms and rights as the Series D Preferred Units, including with
respect to distributions, voting rights and rights upon liquidation, dissolution
or winding-up, then the occurrence of any such event shall not be deemed to
materially and adversely affect such rights, privileges or voting powers of the
holders of the Series D Preferred Units; and provided further, that any increase
in the amount of Partnership Interests or the creation or issuance of any other
class or series of Partnership Interests represented by Junior Units or Parity
Preferred Units that are not issued to an affiliate of the Partnership, other
than the General Partner or the Operating Partnership to the extent the issuance
of such interests was to allow the General Partner or the Operating Partnership
to issue corresponding preferred stock or preferred interests to persons who are
not affiliates of the Partnership (other than AMB to the extent AMB issues
corresponding preferred stock or preferred interests to persons who are not
affiliates of the Partnership or the Operating Partnership), shall not be deemed
to materially and adversely affect such rights, preferences, privileges or
voting powers.

                C. So long as any Series D Preferred Units remain outstanding,
the General Partner shall not, without the affirmative vote of the holders of at
least two-thirds of the Series D Preferred Units outstanding at the time, take
any action which would result in the termination of the right of the holders of
such units to effect an exchange pursuant to Section 17.8; provided however, no
such vote shall be required so long as the Series D Preferred Units (or any
interests substituted therefore pursuant to Section 17.6.B) remain outstanding
and are exchangeable for Series D Preferred Shares or stock in another entity
having substantially the same terms and rights as the Series D Preferred Shares.

                D. Notwithstanding anything to the contrary contained in this
Agreement, including, without limitation, the provisions of Article 7 regarding
the management rights and responsibilities of the General Partner, whenever
distributions on any Series D Preferred Units

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<PAGE>   89

shall remain unpaid for six or more quarterly periods (i.e., the quarterly
periods ending on the 25th day of each March, June, September and December, or,
if not a business day, the next succeeding business day, beginning with the
quarterly period ending June 25, 1999) (whether or not consecutive), the holders
of 51% of either (i) such Series D Preferred Units, in the event that the
holders of the Series E Preferred Units are not entitled to exercise management
rights pursuant to Section 18.6.D, the holders of the Series F Preferred Units
are not entitled to exercise management rights pursuant to Section 19.6D, the
holders of the Series G Preferred Units are not entitled to exercise management
rights pursuant to Section 20.6D and the holders of the Series H Preferred Units
are not entitled to exercise management rights pursuant to Section 21.6D and
that no Future Parity Preferred Unitholders (as defined below) are entitled to
exercise management rights similar to those to which the holders of Series D
Preferred Units, Series E Preferred Units, Series F Preferred Units, Series G
Preferred Units and Series H Preferred Units are entitled to exercise pursuant
to this Section 17.6.D, Section 18.6.D, Section 19.6D, Section 20.6D and Section
21.6D, respectively, or (ii) the Parity Preferred Capital, in the event that
holders of the Series E Preferred Units, Series F Preferred Units, Series G
Preferred Units or Series H Preferred Units are entitled to exercise management
rights pursuant to Section 18.6.D, Section 19.6D, Section 20.6D or Section
21.6D, respectively, or Future Parity Preferred Unitholders are entitled to
exercise management rights similar to those to which the holders of Series D
Preferred Units, Series E Preferred Units, Series F Preferred Units, Series G
Preferred Units and Series H Preferred Units are entitled to exercise pursuant
to this Section 17.6.D, Section 18.6.D, Section 19.6D, Section 20.6D and Section
21.6D, respectively, shall be entitled to assume rights to manage the
Partnership and perform actions related thereto for the sole purpose of
enforcing the Partnership's rights and remedies as against obligees of the
Partnership or other Persons from whom the Partnership may be entitled to
receive cash or other assets, until all distributions accumulated on the Series
D Preferred Units for all past quarterly periods and the distribution for the
then-current quarterly period shall have been fully-paid or declared and a sum
sufficient for the payment thereof irrevocably set aside in trust for payment in
full; provided, however, that no such holder or holders of Series D Preferred
Units may at any time take any action (or fail to take any action) if the
consequence of such action (or inaction) would be (i) to cause AMB to fail to
qualify as a REIT for federal or applicable state income tax purposes or (ii) to
cause the Partnership or the Operating Partnership to fail to qualify as a
partnership for federal or applicable state income tax purposes, or (iii) to
cause the Partnership, the Operating Partnership, the General Partner, or AMB to
be considered an "investment company" as defined in, or otherwise be subject to
regulation under, the Investment Company Act of 1940, as amended; and provided,
further, that solely for purposes of exercising the management rights set forth
in this Section 17.6.D, each holder of Series D Preferred Units shall be deemed
an Indemnitee, and shall be entitled to the benefits of the indemnification
provisions of Section 7.7 with respect to any and all action(s) taken (or
failure(s) to act) by a holder of Series D Preferred Units in the exercise of
(or failure(s) to exercise) the management rights described in this Section
17.6.D, including, without limitation, alleged breaches of the General Partner's
fiduciary duty to the Partners; and provided further, that the holders of the
Series D Preferred Units acknowledge and agree that the General Partner and the
Partnership shall be entitled to provide similar management rights to holders of
Parity Preferred Units that are issued by the Partnership following the date
hereof ("Future Parity Preferred Unitholders").

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<PAGE>   90

                Section 17.7. Transfer Restrictions

                The Series D Preferred Units shall be subject to the provisions
of Article 11 hereof. Notwithstanding any provision to the contrary herein, no
transfer of Series D Preferred Units, or other action by the holder or holders
of such Units, is permitted, without the consent of the General Partner which
consent may be given or withheld in its sole and absolute discretion, if such
transfer or other action would result in more than four partners holding all
outstanding Series D Preferred Units within the meaning of Treasury Regulation
Section 1.7704-1(h)(1)(ii) (without regard to Treasury Regulation Section
1.7704-1(h)(3)(ii)); provided, however, that the General Partner's consent may
not be unreasonably withheld if (a) such transfer or other action would not
result in more than ten partners holding all outstanding Series D Preferred
Units within the meaning of Treasury Regulation Section 1.7704-1(h)(1)(ii)
(without regard to Treasury Regulation Section 1.7704-1(h)(3)(ii)) and (b) the
General Partner cannot rely on Treasury Regulation Section 1.7704-1(h). In
addition, no transfer may be made to any person if such transfer would cause the
exchange of the Series D Preferred Units for Series D Preferred Shares, as
provided herein, to be required to be registered under the Securities Act of
1933, as amended, or any state securities laws.

                Section 17.8. Exchange Rights

                A. Right to Exchange. (i) Series D Preferred Units will be
exchangeable in whole but not in part unless expressly otherwise provided herein
at anytime on or after May 5, 2009, at the option of 51% of the holders of all
outstanding Series D Preferred Units, for authorized but previously unissued
Series D Preferred Shares at an exchange rate of one Series D Preferred Share
from AMB for one Series D Preferred Unit, subject to adjustment as described
below (the "Series D Exchange Price"); provided that the Series D Preferred
Units will become exchangeable at any time, in whole but not in part unless
expressly otherwise provided herein, at the option of 51% of the holders of all
outstanding Series D Preferred Units for Series D Preferred Shares if (y) at any
time full distributions shall not have been timely made on any Series D
Preferred Unit with respect to six (6) prior quarterly distribution periods,
whether or not consecutive; provided, however, that a distribution in respect of
Series D Preferred Units shall be considered timely made if made within two (2)
Business Days after the applicable Series D Preferred Unit Distribution Payment
Date if at the time of such late payment there shall not be any prior quarterly
distribution periods in respect of which full distributions were not timely made
or (z) upon receipt by a holder or holders of Series D Preferred Units of (A)
notice from the General Partner that the General Partner or a Subsidiary of the
General Partner has taken the position that the Partnership is, or upon the
consummation of an identified event in the immediate future will be, a PTP and
(B) an opinion rendered by independent counsel familiar with such matters
addressed to a holder or holders of Series D Preferred Units, that the
Partnership is or likely is, or upon the occurrence of a defined event in the
immediate future will be or likely will be, a PTP. In addition, the Series D
Preferred Units may be exchanged for Series D Preferred Shares, in whole but not
in part unless expressly otherwise provided herein, at the option of 51% of the
holders of all outstanding Series D Preferred Units after May 5, 2002 and prior
to May 5, 2009 if such holders of a Series D Preferred Units shall deliver to
the General Partner either (i) a private letter ruling addressed to such holder
of Series D Preferred Units or (ii) an opinion of independent counsel reasonably
acceptable to the General Partner based on a

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<PAGE>   91

change in statute, the enactment of temporary or final Treasury Regulations or
the publication of a Revenue Ruling or any other IRS release, in either case to
the effect that an exchange of the Series D Preferred Units at such earlier time
would not cause the Series D Preferred Units to be considered "stock and
securities" within the meaning of Section 351(e) of the Code for purposes of
determining whether the holder of such Series D Preferred Units is an
"investment company" under Section 721(b) of the Code if an exchange is
permitted at such earlier date.

                (ii) Notwithstanding anything to the contrary set forth in
Section 17.8.A(i), if a Series D Exchange Notice (as defined herein) has been
delivered to AMB and the General Partner, then the General Partner may, at its
option, within ten (10) Business Days after receipt of the Series D Exchange
Notice, elect to cause the Partnership to redeem all or a portion of the
outstanding Series D Preferred Units for cash in an amount equal to the original
Capital Contribution per Series D Preferred Unit and all accrued and unpaid
distributions thereon to the date of redemption. If the General Partner elects
to redeem fewer than all of the outstanding Series D Preferred Units, the number
of Series D Preferred Units held by each holder to be redeemed shall equal such
holder's pro rata share (based on the percentage of the aggregate number of
outstanding Series D Preferred Units that the total number of Series D Preferred
Units held by such holder represents) of the aggregate number of Series D
Preferred Units being redeemed.

                (iii) In the event an exchange of all Series D Preferred Units
pursuant to Section 17.8.A would violate the provisions on ownership limitation
of AMB set forth in Section 7 of Article Third of the Series D Articles
Supplementary, each holder of Series D Preferred Units shall be entitled to
exchange, pursuant to the provisions of Section 17.8.B, a number of Series D
Preferred Units which would comply with the provisions on the ownership
limitation of AMB set forth in such Section 7 of Article Third of the Series D
Articles Supplementary, with respect to such holder, and any Series D Preferred
Units not so exchanged (the "Series D Excess Units") shall be redeemed by the
Partnership for cash in an amount equal to the original Capital Contribution per
Series D Excess Unit, plus any accrued and unpaid distributions thereon to the
date of redemption subject to any restriction thereon contained in any debt
instrument or agreement of the Partnership. In the event an exchange would
result in Series D Excess Units, as a condition to such exchange, each holder of
such units agrees to provide representations and covenants reasonably requested
by AMB relating to (i) the widely held nature of the interests in such holder,
sufficient to assure AMB that the holder's ownership of stock of AMB (without
regard to the limits described above) will not cause any individual to own in
excess of 9.0% of the stock of AMB; and (ii) to the extent such Holder can so
represent and covenant without obtaining information from its owners (other than
one or more direct or indirect parent corporations, limited liability companies
or partnerships and not the holders of any interests in any such parent), the
Holder's ownership of tenants of the Partnership and its affiliates. For
purposes of determining the number of Series D Excess Units under this Section
17.8.A(iii), the "Ownership Limit" set forth in the Series D Articles
Supplementary shall be deemed to be 9.0%. To the extent the Partnership would
not be able to pay the cash set forth above in exchange for the Series D Excess
Units, and to the extent consistent with the REIT Charter, AMB agrees that it
will grant to the holders of the Series D Preferred Units exceptions to the
Ownership Limit set forth in the Series D Articles Supplementary sufficient to
allow such Holders to exchange all of their Series D Preferred Units for Series
D Preferred Shares; provided such holders furnish to

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<PAGE>   92

AMB representations acceptable to AMB in its sole and absolute discretion which
assure AMB that such exceptions will not jeopardize AMB's tax status as a REIT
for purposes of federal and applicable state law. Notwithstanding any provision
of this Agreement to the contrary, no Series D Limited Partner shall be entitled
to effect an exchange of Series D Preferred Units for Series D Preferred Shares
to the extent that ownership or right to acquire such shares would cause the
Partner or any other Person or, in the opinion of counsel selected by AMB, may
cause the Partner or any other Person, to violate the restrictions on ownership
and transfer of Series D Preferred Shares set forth in the REIT Charter. To the
extent any such attempted exchange for Series D Preferred Shares would be in
violation of the previous sentence, it shall be void ab initio and such Series D
Limited Partner shall not acquire any rights or economic interest in the Series
D Preferred Shares otherwise issuable upon such exchange.

                (iv) The redemption of Series D Preferred Units described in
Section 17.8.A(ii) and (iii) shall be subject to the provisions of Section
17.5.B(i) and Section 17.5.C(ii); provided, however, that the term "Series D
Redemption Price" in such Sections 17.5.B(i) and 17.5.C(ii) shall be read to
mean the original Capital Contribution per Series D Preferred Unit being
redeemed as set forth on Exhibit A plus all accrued and unpaid distributions to
the redemption date.

                B. Procedure for Exchange of Series D Preferred Units and/or
Series D Redemption.

                (i) Any exchange shall be exercised pursuant to a notice of
exchange (the "Series D Exchange Notice") delivered to AMB and the General
Partner by the Partners representing at least 51% of the outstanding Series D
Preferred Units (or by the Series D Contributor in the case of an exchange
pursuant to the last sentence of Section 17.8.A.(i) hereof) by (a) fax and (b)
by certified mail postage prepaid. AMB may effect any exchange of Series D
Preferred Units, or the General Partner may exercise its option to cause the
Partnership to redeem any portion of the Series D Preferred Units for cash
pursuant to Section 17.8.A(ii) or redeem Series D Excess Units pursuant to
Section 17.8.A(iii), by delivering to each holder of record of Series D
Preferred Units, within ten (10) Business Days following receipt of the Series D
Exchange Notice, (a) if the General Partner elects to cause the Partnership to
acquire any of the Series D Preferred Units then outstanding, (1) certificates
representing the Series D Preferred Shares being issued in exchange for the
Series D Preferred Units of such holder being exchanged and (2) a written notice
(a "Series D Redemption Notice") stating (A) the redemption date, which may be
the date of such Series D Redemption Notice or any other date which is not later
than sixty (60) days following the receipt of the Series D Exchange Notice, (B)
the redemption price, (C) the place or places where the Series D Preferred Units
are to be surrendered and (D) that distributions on the Series D Preferred Units
will cease to accrue on such redemption date, or (b) if the General Partner
elects to cause the Partnership to redeem all of the Series D Preferred Units
then outstanding in exchange for cash, a Series D Redemption Notice. Series D
Preferred Units which are redeemed shall be deemed canceled (and any
corresponding Partnership Interest represented thereby deemed terminated) on the
redemption date. Holders of Series D Preferred Units shall deliver any canceled
certificates representing Series D Preferred Units which have been exchanged or
redeemed to the office of General Partner (which currently is located at 505
Montgomery Street, San Francisco, California 94111) within ten (10) Business
Days of the

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exchange or redemption with respect thereto. Notwithstanding anything to the
contrary contained herein, any and all Series D Preferred Units to be exchanged
for Series D Preferred Shares pursuant to this Section 17.8 shall be so
exchanged in a single transaction at one time. As a condition to exchange, AMB
may require the holders of Series D Preferred Units to make such representations
as may be reasonably necessary for the General Partner to establish that the
issuance of Series D Preferred Shares pursuant to the exchange shall not be
required to be registered under the Securities Act or any state securities laws.
Any Series D Preferred Shares issued pursuant to this Section 17.8 shall be
delivered as shares which are duly authorized, validly issued, fully paid and
nonassessable, free of any pledge, lien, encumbrance or restriction other than
those provided in the REIT Charter, the Bylaws of AMB, the Securities Act and
relevant state securities or blue sky laws.

                The certificates representing the Series D Preferred Shares
issued upon exchange of the Series D Preferred Units shall contain the following
legend:

                THE SHARES REPRESENTED BY THIS CERTIFICATE MAY
                NOT BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED,
                HYPOTHECATED OR OTHERWISE DISPOSED OF EXCEPT (A)
                PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
                UNDER THE SECURITIES ACT OF 1933, AS AMENDED
                (THE "ACT"), AND STATE SECURITIES LAWS OR (B) IF
                THE CORPORATION HAS BEEN FURNISHED WITH A
                SATISFACTORY OPINION OF COUNSEL FOR THE HOLDER
                OF THE SHARES REPRESENTED HEREBY, OR OTHER
                EVIDENCE SATISFACTORY TO THE CORPORATION, THAT
                SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE,
                HYPOTHECATION OR OTHER DISPOSITION IS EXEMPT
                FROM THE PROVISIONS OF SECTION 5 OF THE ACT AND
                STATE SECURITIES LAWS AND THE RULES AND
                REGULATIONS THEREUNDER.

                (ii) In the event of an exchange of Series D Preferred Units for
Series D Preferred Shares, an amount equal to the accrued and unpaid
distributions to the date of exchange on any Series D Preferred Units tendered
for exchange shall (i) accrue on the Series D Preferred Shares into which such
Series D Preferred Units are exchanged, and (ii) continue to accrue on such
Series D Preferred Units, which shall remain outstanding following such
exchange, with the General Partner as the holder of such Series D Preferred
Units. Notwithstanding anything to the contrary set forth herein, in no event
shall a Holder of a Series D Preferred Unit that was validly exchanged for
Series D Preferred Shares pursuant to this Section (other than the General
Partner holding such Series D Preferred Unit following any such exchange),
receive a distribution out of Available Cash of the Partnership, if such Holder,
after exchange, is entitled to receive a distribution with respect to the Series
D Preferred Shares for which such Series D Preferred Unit was exchanged or
redeemed. Further for purposes of the foregoing, in the event of an exchange of
Series D Preferred Units for Series D Preferred Shares, if the accrued and
unpaid distributions per Series D Preferred Unit is not the same for each Series
D Preferred Unit, the accrued and unpaid distributions per Series D Preferred
Unit for each such Series D Preferred Unit shall be

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<PAGE>   94

equal to the greatest amount of such accrued and unpaid distributions per Series
D Preferred Unit on any such unit.

                (iii) Fractional Series D Preferred Shares are not to be issued
upon exchange but, in lieu thereof, the General Partner will pay a cash
adjustment based upon the fair market value of the Series D Preferred Shares on
the day prior to the exchange date as determined in good faith by the board of
directors of the General Partner.

                C. Adjustment of Series D Exchange Price. In case AMB shall be a
party to any transaction (including, without limitation, a merger,
consolidation, statutory share exchange, tender offer for all or substantially
all of AMB's capital stock or sale of all or substantially all of AMB's assets),
in each case as a result of which the Series D Preferred Shares will be
converted into the right to receive shares of capital stock, other securities or
other property (including cash or any combination thereof), each Series D
Preferred Unit will thereafter be exchangeable into the kind and amount of
shares of capital stock and other securities and property receivable (including
cash or any combination thereof) upon the consummation of such transaction by a
holder of that number of Series D Preferred Shares or fraction thereof into
which one Series D Preferred Unit was exchangeable immediately prior to such
transaction. AMB may not become a party to any such transaction unless the terms
thereof are consistent with the foregoing. AMB and the Operating Partnership
further agree that, notwithstanding any transaction to which either may be a
party (including, without limitation, any merger, consolidation, statutory share
exchange, tender offer for all or substantially all of such entity's capital
stock or partnership interests or sale of all or substantially all of such
entity's assets), immediately following any such transaction, the issuer or
issuers of any shares of capital stock and other securities into which the
Series D Preferred Units shall be exchangeable pursuant to this Section 17.8
shall be the same issuer or issuers of shares of capital stock and other
securities into which both (i) the Series B Preferred Units are then
exchangeable (or, if the Series B Preferred Units have previously been redeemed
in full, would have been then exchangeable if then still outstanding) and (ii)
the Series C Preferred Units are then exchangeable (or, if the Series C
Preferred Units have previously been redeemed in full, would have been then
exchangeable if then still outstanding).

                Section 17.9. No Conversion Rights

                The Series D Preferred Units shall not be convertible into any
other class or series of interest in the Partnership.

                Section 17.10. No Sinking Fund

                No sinking fund shall be established for the retirement or
redemption of Series D Preferred Units.

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                                   ARTICLE 18.
                            SERIES E PREFERRED UNITS

                Section 18.1. Designation and Number

                A series of Partnership Units in the Partnership designated as
the 7.75% Series E Cumulative Redeemable Preferred Units (the "Series E
Preferred Units") is hereby established. The number of Series E Preferred Units
shall be 220,440.

                Section 18.2. Ranking

                The Series E Preferred Units shall, with respect to distribution
rights and rights upon voluntary or involuntary liquidation, winding up or
dissolution of the Partnership, rank (i) senior to the Common Units and to all
Partnership Units the terms of which provide that such Partnership Units shall
rank junior to the Series E Preferred Units; (ii) on a parity with the Series C
Preferred Units, the Series D Preferred Units and all other Parity Preferred
Units; and (iii) junior to all Partnership Units which rank senior to the Series
E Preferred Units.

                Section 18.3. Distributions

                A. Payment of Distributions. Subject to the rights of holders of
Parity Preferred Units as to the payment of distributions (including pursuant to
Sections 5.1, 16.3.A, 17.3A, 19.3A, 20.3A and 21.3A hereof), holders of Series E
Preferred Units will be entitled to receive, when, as and if declared by the
Partnership acting through the General Partner, out of Available Cash,
cumulative preferential cash distributions in an amount equal to the Series E
Priority Return. Such distributions will be payable (A) quarterly (such
quarterly periods for purposes of payment and accrual will be the quarterly
periods ending on the dates specified in this sentence and not calendar year
quarters) in arrears, on the 15th day of January, April, July and October of
each year and (B) in the event of (i) an exchange of Series E Preferred Units
into Series E Preferred Shares, or (ii) a redemption of Series E Preferred
Units, on the exchange date or redemption date, as applicable (each a "Series E
Preferred Unit Distribution Payment Date"), commencing on the first of such
payment dates to occur following their original date of issuance. If any date on
which distributions are to be made on the Series E Preferred Units is not a
Business Day, then payment of the distribution to be made on such date will be
made on the next succeeding day that is a Business Day (and without any interest
or other payment in respect of any such delay) except that, if such Business Day
is in the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case with the same force and effect
as if made on such date. Distributions on the Series E Preferred Units will be
made to the holders of record of the Series E Preferred Units on the relevant
record dates, which will be fifteen (15) days prior to the relevant Series E
Preferred Unit Distribution Payment Date (the "Series E Preferred Unit
Partnership Record Date").

                B. Distributions Cumulative. Notwithstanding the foregoing,
distributions on the Series E Preferred Units will accrue whether or not the
terms and provisions of any agreement of the Partnership at any time prohibit
the current payment of distributions, whether or not the Partnership has
earnings, whether or not there are funds legally available for the payment

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of such of such distributions and whether or not such distributions are
authorized. Accrued but unpaid distributions on the Series E Preferred Units
will accumulate as of the Preferred Unit Distribution Payment Date on which they
first become payable.

                C. Priority as to Distributions. (i) So long as any Series E
Preferred Units are outstanding, no distribution of cash or other property shall
be authorized, declared, paid or set apart for payment on or with respect to any
class or series of Partnership Interest represented by Junior Units, nor shall
any Junior Units or Parity Preferred Units be redeemed, purchased or otherwise
acquired for any consideration (or any monies be paid to or made available for a
sinking fund for the redemption of any such Junior Units or Parity Preferred
Units) by the Partnership (except by conversion into or exchange for other
Junior Units or Parity Preferred Units, as the case may be) unless, in each
case, full cumulative distributions have been or contemporaneously are
authorized and paid or authorized and a sum sufficient for the payment thereof
set apart for such payment on the Series E Preferred Units and all classes and
series of outstanding Parity Preferred Units for all distribution periods. The
foregoing sentence will not prohibit (a) distributions payable solely in Junior
Units, (b) the exchange of Junior Units or Parity Preferred Units into
Partnership Interests of the Partnership ranking junior to the Series E
Preferred Units as to distributions and upon voluntary and involuntary
liquidation, dissolution or winding up of the Partnership, or (c) distributions
necessary to enable the Operating Partnership to redeem partnership interests
corresponding to Series E Preferred Shares and any Parity Preferred Stock with
respect to distributions or Junior Stock to be purchased by AMB pursuant to the
REIT Charter to preserve AMB's status as a REIT; provided that such redemption
shall be upon the same terms as the corresponding stock purchase pursuant to the
REIT Charter.

                (ii) So long as distributions have not been paid in full (or a
sum sufficient for such full payment is not so set apart) upon the Series E
Preferred Units and any other Parity Preferred Units, all distributions
authorized and declared on the Series E Preferred Units and all classes or
series of outstanding Parity Preferred Units shall be authorized and declared
pro rata so that the amount of distributions authorized and declared per Series
E Preferred Unit and such other classes or series of Parity Preferred Units
shall in all cases bear to each other the same ratio that accrued distributions
per Series E Preferred Unit and such other classes or series of Parity Preferred
Units (which shall not include any accumulation in respect of unpaid
distributions for prior distribution periods if such class or series of Parity
Preferred Units do not have cumulative distribution rights) bear to each other.
No interest, or sum of money in lieu of interest, shall be payable in respect of
any distributions or payments on Series E Preferred Units which may be in
arrears.

                (iii) Notwithstanding anything to the contrary set forth herein,
distributions on Partnership Interests held by either (a) the General Partner,
(b) the Operating Partnership or (c) any other holder of Partnership Interests
in the Partnership, in each case ranking junior to or on parity with the Series
E Preferred Units may be made, without preserving the priority of distributions
described in Sections 18.3.C(i) and (ii), but only to the extent such
distributions are required to preserve the REIT status of AMB, in its capacity
as sole general partner of the Operating Partnership and as sole stockholder of
the General Partner, and in the case of any holder other than the General
Partner only to the extent required by the Partnership Agreement;

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provided, that the Partnership shall not be disproportionately burdened by this
provision relative to the cash flow generated by other assets owned directly or
indirectly by AMB.

                D. No Further Rights. Holders of Series E Preferred Units shall
not be entitled to any distributions, whether payable in cash, other property or
otherwise, in excess of the full cumulative distributions described herein.

                Section 18.4. Liquidation Proceeds

                A. Distributions. Upon voluntary or involuntary liquidation,
dissolution or winding-up of the Partnership, distributions on the Series E
Preferred Units shall be made in accordance with Article 13 of this Agreement.

                B. Notice. Written notice of any such voluntary or involuntary
liquidation, dissolution or winding-up of the Partnership, stating the payment
date or dates when, and the place or places where, the amounts distributable in
such circumstances shall be payable, shall be given by the General Partner
pursuant to Section 13.6 hereof.

                C. No Further Rights. After payment of the full amount of the
liquidating distributions to which they are entitled, Holders of Series E
Preferred Units will have no right or claim to any of the remaining assets of
the Partnership.

                D. Consolidation, Merger or Certain Other Transactions. None of
a consolidation or merger of the Partnership with or into another entity, a
merger of another entity with or into the Partnership, or a sale, lease,
transfer or conveyance of all or substantially all of the Partnership's property
or business shall be considered a liquidation, dissolution or winding up of the
Partnership.

                Section 18.5. Series E Redemption

                A. Series E Redemption. The Series E Preferred Units may not be
redeemed prior to August 31, 2004. On or after such date, the Partnership shall
have the right to redeem the Series E Preferred Units, in whole or in part, at
any time or from time to time, upon not less than 30 nor more than 60 days'
written notice, at a redemption price, payable in cash (a "Series E
Redemption"), equal to the Capital Account balance of the holder of Series E
Preferred Units (the "Series E Redemption Price"); provided, however, that no
redemption pursuant to this Section 18.5 will be permitted if the Series E
Redemption Price does not equal or exceed the original Capital Contribution of
such holder plus the cumulative Series E Priority Return to the redemption date
to the extent not previously distributed. If fewer than all of the outstanding
Series E Preferred Units are to be redeemed, the Series E Preferred Units to be
redeemed shall be selected pro rata (as nearly as practicable without creating
fractional units).

                B. Limitation on Series E Redemption. (i) The Series E
Redemption Price of the Series E Preferred Units (other than the portion thereof
consisting of accumulated but unpaid distributions) is payable solely out of the
sale proceeds of capital stock of AMB, which will be contributed by AMB to the
General Partner or the Operating Partnership and which in turn will be
contributed by the General Partner or the Operating Partnership to the
Partnership as an

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additional capital contribution, or out of the sale of limited partner interests
in the Partnership or the Operating Partnership and from no other source. For
purposes of the preceding sentence, "capital stock" means any equity securities
(including Common Stock and Preferred Stock (as such terms are defined in the
REIT Charter), depository shares, interests, participation or other ownership
interests (however designated) and any rights (other than debt securities
convertible into or exchangeable for equity securities) or options to purchase
any of the foregoing.

                (ii) The Partnership may not redeem fewer than all of the
outstanding Series E Preferred Units unless all accumulated and unpaid
distributions have been paid on all Series E Preferred Units for all quarterly
distribution periods terminating on or prior to the date of redemption.

                C. Procedures for Series E Redemption. (i) Notice of redemption
will be (i) faxed, and (ii) mailed by the Partnership, by certified mail,
postage prepaid, not less than 30 nor more than 60 days prior to the redemption
date, addressed to the respective holders of record of the Series E Preferred
Units at their respective addresses as they appear on the records of the
Partnership. No failure to give or defect in such notice shall affect the
validity of the proceedings for the redemption of any Series E Preferred Units
except as to the holder to whom such notice was defective or not given. In
addition to any information required by law, each such notice shall state: (a)
the redemption date, (b) the Series E Redemption Price, (c) the aggregate number
of Series E Preferred Units to be redeemed and if fewer than all of the
outstanding Series E Preferred Units are to be redeemed, the number of Series E
Preferred Units to be redeemed held by such holder, which number shall equal
such holder's pro rata share (based on the percentage of the aggregate number of
outstanding Series E Preferred Units that the total number of Series E Preferred
Units held by such holder represents) of the aggregate number of Series E
Preferred Units to be redeemed, (d) the place or places where such Series E
Preferred Units are to be surrendered for payment of the Series E Redemption
Price, (e) that distributions on the Series E Preferred Units to be redeemed
will cease to accumulate on such redemption date and (f) that payment of the
Series E Redemption Price will be made upon presentation and surrender of such
Series E Preferred Units.

                (ii) If the Partnership gives a notice of redemption in respect
of Series E Preferred Units (which notice will be irrevocable) then, by 12:00
noon, New York City time, on the redemption date, the Partnership will deposit
irrevocably in trust for the benefit of the Series E Preferred Units being
redeemed funds sufficient to pay the applicable Series E Redemption Price and
will give irrevocable instructions and authority to pay such Series E Redemption
Price to the holders of the Series E Preferred Units upon surrender of the
Series E Preferred Units by such holders at the place designated in the notice
of redemption. On and after the date of redemption, distributions will cease to
accumulate on the Series E Preferred Units or portions thereof called for
redemption, unless the Partnership defaults in the payment thereof. If any date
fixed for redemption of Series E Preferred Units is not a Business Day, then
payment of the Series E Redemption Price payable on such date will be made on
the next succeeding day that is a Business Day (and without any interest or
other payment in respect of any such delay) except that, if such Business Day
falls in the next calendar year, such payment will be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date fixed for redemption. If payment of the Series E Redemption Price
is improperly

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withheld or refused and not paid by the Partnership, distributions on such
Series E Preferred Units will continue to accumulate from the original
redemption date to the date of payment, in which case the actual payment date
will be considered the date fixed for redemption for purposes of calculating the
applicable Series E Redemption Price.

                Section 18.6. Voting and Certain Management Rights

                A. General. Holders of the Series E Preferred Units will not
have any voting rights or right to consent to any matter requiring the consent
or approval of the Limited Partners, except as set forth below and in Section
7.3.E.

                B. Certain Voting Rights. So long as any Series E Preferred
Units remains outstanding, the Partnership shall not, without the affirmative
vote of the holders of at least two-thirds of the Series E Preferred Units
outstanding at the time (i) authorize or create, or increase the authorized or
issued amount of, any class or series of Partnership Interests ranking prior to
the Series E Preferred Units with respect to payment of distributions or rights
upon liquidation, dissolution or winding-up or reclassify any Partnership
Interests of the Partnership into any such Partnership Interest, or create,
authorize or issue any obligations or security convertible into or evidencing
the right to purchase any such Partnership Interests, (ii) authorize or create,
or increase the authorized or issued amount of any Parity Preferred Units or
reclassify any Partnership Interest of the Partnership into any such Partnership
Interest or create, authorize or issue any obligations or security convertible
into or evidencing the right to purchase any such Partnership Interests but only
to the extent such Parity Preferred Units are issued to an affiliate of the
Partnership, other than AMB or the Operating Partnership to the extent the
issuance of such interests was to allow AMB or the Operating Partnership to
issue corresponding preferred stock or preferred interests to persons who are
not affiliates of the Partnership (other than AMB to the extent AMB issues
corresponding preferred stock to persons who are not affiliates of the
Partnership or the Operating Partnership) or (iii) either consolidate, merge
into or with, or convey, transfer or lease its assets substantially as an
entirety to, any corporation or other entity or amend, alter or repeal the
provisions of the Partnership Agreement (including, without limitation, this
Article 18 and Section 11.2), whether by merger, consolidation or otherwise, in
each case in a manner that would materially and adversely affect the powers,
special rights, preferences, privileges or voting power of the Series E
Preferred Units or the holders thereof; provided, however, that with respect to
the occurrence of any event set forth in (iii) above, so long as (a) the
Partnership is the surviving entity and the Series E Preferred Units remain
outstanding with the terms thereof unchanged, or (b) the resulting, surviving or
transferee entity is a partnership, limited liability company or other
pass-through entity organized under the laws of any state and substitutes the
Series E Preferred Units for other interests in such entity having substantially
the same terms and rights as the Series E Preferred Units, including with
respect to distributions, voting rights and rights upon liquidation, dissolution
or winding-up, then the occurrence of any such event shall not be deemed to
materially and adversely affect such rights, privileges or voting powers of the
holders of the Series E Preferred Units; and provided further, that any increase
in the amount of Partnership Interests or the creation or issuance of any other
class or series of Partnership Interests represented by Junior Units or Parity
Preferred Units that are not issued to an affiliate of the Partnership, other
than the General Partner or the Operating Partnership to the extent the issuance
of such interests was to allow the General Partner or the

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Operating Partnership to issue corresponding preferred stock or preferred
interests to persons who are not affiliates of the Partnership (other than AMB
to the extent AMB issues corresponding preferred stock or preferred interests to
persons who are not affiliates of the Partnership or the Operating Partnership),
shall not be deemed to materially and adversely affect such rights, preferences,
privileges or voting powers.

                        C. So long as any Series E Preferred Units remain
outstanding, the General Partner shall not, without the affirmative vote of the
holders of at least two-thirds of the Series E Preferred Units outstanding at
the time, take any action which would result in the termination of the right of
the holders of such units to effect an exchange pursuant to Section 18.8;
provided however, no such vote shall be required so long as the Series E
Preferred Units (or any interests substituted therefore pursuant to Section
18.6.B) remain outstanding and are exchangeable for Series E Preferred Shares or
stock in another entity having substantially the same terms and rights as the
Series E Preferred Shares.

                        D. Notwithstanding anything to the contrary contained in
this Agreement, including, without limitation, the provisions of Article 7
regarding the management rights and responsibilities of the General Partner,
whenever distributions on any Series E Preferred Units shall remain unpaid for
six or more quarterly periods (i.e., the quarterly periods ending on the 15th
day of each January, April, July and October, or, if not a business day, the
next succeeding business day, beginning with the quarterly period ending October
15, 1999) (whether or not consecutive), the holders of 51% of either (i) such
Series E Preferred Units, in the event that the holders of the Series D
Preferred Units, Series F Preferred Units, Series G Preferred Units and Series H
Preferred Units are not entitled to exercise management rights pursuant to
Section 17.6.D, Section 19.6.D, Section 20.6.D, and Section 21.6.D,
respectively, and that no Future Parity Preferred Unitholders are entitled to
exercise management rights similar to those to which the holders of Series D
Preferred Units, Series E Preferred Units, Series F Preferred Units, Series G
Preferred Units and Series H Preferred Units are entitled to exercise pursuant
to Section 17.6.D, this Section 18.6.D, Section 19.6.D, Section 20.6.D and
Section 21.6.D, respectively, or (ii) the Parity Preferred Capital, in the event
that holders of Series D Preferred Units, Series F Preferred Units, Series G
Preferred Units or Series H Preferred Units are entitled to exercise management
rights pursuant to Section 17.6.D, Section 19.6.D, Section 20.6.D or Section
21.6.D, respectively, or Future Parity Preferred Unitholders are entitled to
exercise management rights similar to those to which the holders of Series D
Preferred Units, Series E Preferred Units, Series F Preferred Units, Series G
Preferred Units and Series H Preferred Units are entitled to exercise pursuant
to Section 17.6.D, this Section 18.6.D, Section 19.6.D, Section 20.6.D and
Section 21.6.D, respectively, shall be entitled to assume rights to manage the
Partnership and perform actions related thereto for the sole purpose of
enforcing the Partnership's rights and remedies as against obligees of the
Partnership or other Persons from whom the Partnership may be entitled to
receive cash or other assets, until all distributions accumulated on the Series
E Preferred Units for all past quarterly periods and the distribution for the
then-current quarterly period shall have been fully-paid or declared and a sum
sufficient for the payment thereof irrevocably set aside in trust for payment in
full; provided, however, that no such holder or holders of Series E Preferred
Units may at any time take any action (or fail to take any action) if the
consequence of such action (or inaction) would be (i) to cause AMB to fail to
qualify as a REIT for federal or applicable state income tax purposes or (ii) to
cause the Partnership or the

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Operating Partnership to fail to qualify as a partnership for federal or
applicable state income tax purposes, or (iii) to cause the Partnership, the
Operating Partnership, the General Partner, or AMB to be considered an
"investment company" as defined in, or otherwise be subject to regulation under,
the Investment Company Act of 1940, as amended; and provided, further, that
solely for purposes of exercising the management rights set forth in this
Section 18.6.D, each holder of Series E Preferred Units shall be deemed an
Indemnitee, and shall be entitled to the benefits of the indemnification
provisions of Section 7.7 with respect to any and all action(s) taken (or
failure(s) to act) by a holder of Series E Preferred Units in the exercise of
(or failure(s) to exercise) the management rights described in this Section
18.6.D, including, without limitation, alleged breaches of the General Partner's
fiduciary duty to the Partners; and provided further, that the holders of the
Series E Preferred Units acknowledge and agree that the General Partner and the
Partnership has provided similar management rights to the holders of the Series
D Preferred Units and shall be entitled to provide similar management rights to
Future Parity Preferred Unitholders.

                Section 18.7. Transfer Restrictions

                The Series E Preferred Units shall be subject to the provisions
of Article 11 hereof. Notwithstanding any provision to the contrary herein, no
transfer of Series E Preferred Units, or other action by the holder or holders
of such Units, is permitted without the consent of the General Partner which
consent may be given or withheld in its sole and absolute discretion, if such
transfer or other action would result in more than four partners holding all
outstanding Series E Preferred Units within the meaning of Treasury Regulation
Section 1.7704-1(h)(1)(ii) (without regard to Treasury Regulation Section
1.7704-1(h)(3)(ii)); provided, however, that the General Partner's consent may
not be unreasonably withheld if (a) such transfer or other action would not
result in more than ten partners holding all outstanding Series E Preferred
Units within the meaning of Treasury Regulation Section 1.7704-1(h)(1)(ii)
(without regard to Treasury Regulation Section 1.7704-1(h)(3)(ii)) and (b) the
General Partner cannot rely on Treasury Regulation Section 1.7704-1(h). In
addition, no transfer may be made to any person if such transfer would cause the
exchange of the Series E Preferred Units for Series E Preferred Shares, as
provided herein, to be required to be registered under the Securities Act of
1933, as amended, or any state securities laws.

                Section 18.8. Exchange Rights

                A. Right to Exchange. (i) Series E Preferred Units will be
exchangeable in whole but not in part unless expressly otherwise provided herein
at anytime on or after August 31, 2009, at the option of 51% of the holders of
all outstanding Series E Preferred Units, for authorized but previously unissued
Series E Preferred Shares at an exchange rate of one Series E Preferred Share
from AMB for one Series E Preferred Unit, subject to adjustment as described
below (the "Series E Exchange Price"); provided that the Series E Preferred
Units will become exchangeable at any time, in whole but not in part unless
expressly otherwise provided herein, at the option of 51% of the holders of all
outstanding Series E Preferred Units for Series E Preferred Shares if (y) at any
time full distributions shall not have been timely made on any Series E
Preferred Unit with respect to six (6) prior quarterly distribution periods,
whether or not consecutive; provided, however, that a distribution in respect of
Series E Preferred Units shall be

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considered timely made if made within two (2) Business Days after the applicable
Series E Preferred Unit Distribution Payment Date if at the time of such late
payment there shall not be any prior quarterly distribution periods in respect
of which full distributions were not timely made or (z) upon receipt by a holder
or holders of Series E Preferred Units of (A) notice from the General Partner
that the General Partner or a Subsidiary of the General Partner has taken the
position that the Partnership is, or upon the consummation of an identified
event in the immediate future will be, a PTP and (B) an opinion rendered by
independent counsel familiar with such matters addressed to a holder or holders
of Series E Preferred Units, that the Partnership is or likely is, or upon the
occurrence of a defined event in the immediate future will be or likely will be,
a PTP. In addition, the Series E Preferred Units may be exchanged for Series E
Preferred Shares, in whole but not in part unless expressly otherwise provided
herein, at the option of 51% of the holders of all outstanding Series E
Preferred Units after August 31, 2002 and prior to August 31, 2009 if such
holders of a Series E Preferred Units shall deliver to the General Partner
either (i) a private letter ruling addressed to such holder of Series E
Preferred Units or (ii) an opinion of independent counsel reasonably acceptable
to the General Partner based on a change in statute, the enactment of temporary
or final Treasury Regulations or the publication of a Revenue Ruling or any
other IRS release, in either case to the effect that an exchange of the Series E
Preferred Units at such earlier time would not cause the Series E Preferred
Units to be considered "stock and securities" within the meaning of Section
351(e) of the Code for purposes of determining whether the holder of such Series
E Preferred Units is an "investment company" under Section 721(b) of the Code if
an exchange is permitted at such earlier date.

                (ii) Notwithstanding anything to the contrary set forth in
Section 18.8.A(i), if a Series E Exchange Notice (as defined herein) has been
delivered to AMB and the General Partner, then the General Partner may, at its
option, within ten (10) Business Days after receipt of the Series E Exchange
Notice, elect to cause the Partnership to redeem all or a portion of the
outstanding Series E Preferred Units for cash in an amount equal to the original
Capital Contribution per Series E Preferred Unit and all accrued and unpaid
distributions thereon to the date of redemption. If the General Partner elects
to redeem fewer than all of the outstanding Series E Preferred Units, the number
of Series E Preferred Units held by each holder to be redeemed shall equal such
holder's pro rata share (based on the percentage of the aggregate number of
outstanding Series E Preferred Units that the total number of Series E Preferred
Units held by such holder represents) of the aggregate number of Series E
Preferred Units being redeemed.

                (iii) In the event an exchange of all Series E Preferred Units
pursuant to Section 18.8.A would violate the provisions on ownership limitation
of AMB set forth in Section 7 of Article Third of the Series E Articles
Supplementary, each holder of Series E Preferred Units shall be entitled to
exchange, pursuant to the provisions of Section 18.8.B, a number of Series E
Preferred Units which would comply with the provisions on the ownership
limitation of AMB set forth in such Section 7 of Article Third of the Series E
Articles Supplementary, with respect to such holder, and any Series E Preferred
Units not so exchanged (the "Series E Excess Units") shall be redeemed by the
Partnership for cash in an amount equal to the original Capital Contribution per
Series E Excess Unit, plus any accrued and unpaid distributions thereon to the
date of redemption subject to any restriction thereon contained in any debt
instrument or

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agreement of the Partnership. In the event an exchange would result in Series E
Excess Units, as a condition to such exchange, each holder of such units agrees
to provide representations and covenants reasonably requested by AMB relating to
(i) the widely held nature of the interests in such holder, sufficient to assure
AMB that the holder's ownership of stock of AMB (without regard to the limits
described above) will not cause any individual to own in excess of 9.0% of the
stock of AMB; and (ii) to the extent such Holder can so represent and covenant
without obtaining information from its owners (other than one or more direct or
indirect parent corporations, limited liability companies or partnerships and
not the holders of any interests in any such parent), the Holder's ownership of
tenants of the Partnership and its affiliates. For purposes of determining the
number of Series E Excess Units under this Section 18.8.A(iii), the "Ownership
Limit" set forth in the Series E Articles Supplementary shall be deemed to be
9.0%. To the extent the Partnership would not be able to pay the cash set forth
above in exchange for the Series E Excess Units, and to the extent consistent
with the REIT Charter, AMB agrees that it will grant to the holders of the
Series E Preferred Units exceptions to the Ownership Limit set forth in the
Series E Articles Supplementary sufficient to allow such Holders to exchange all
of their Series E Preferred Units for Series E Preferred Shares; provided such
holders furnish to AMB representations acceptable to AMB in its sole and
absolute discretion which assure AMB that such exceptions will not jeopardize
AMB's tax status as a REIT for purposes of federal and applicable state law.
Notwithstanding any provision of this Agreement to the contrary, no Series E
Limited Partner shall be entitled to effect an exchange of Series E Preferred
Units for Series E Preferred Shares to the extent that ownership or right to
acquire such shares would cause the Partner or any other Person or, in the
opinion of counsel selected by AMB, may cause the Partner or any other Person,
to violate the restrictions on ownership and transfer of Series E Preferred
Shares set forth in the REIT Charter. To the extent any such attempted exchange
for Series E Preferred Shares would be in violation of the previous sentence, it
shall be void ab initio and such Series E Limited Partner shall not acquire any
rights or economic interest in the Series E Preferred Shares otherwise issuable
upon such exchange.

                (iv) The redemption of Series E Preferred Units described in
Section 18.8.A(ii) and (iii) shall be subject to the provisions of Section
18.5.B(i) and Section 18.5.C(ii); provided, however, that the term "Series E
Redemption Price" in such Sections 18.5.B(i) and 18.5.C(ii) shall be read to
mean the original Capital Contribution per Series E Preferred Unit being
redeemed as set forth on Exhibit A plus all accrued and unpaid distributions to
the redemption date.

                B. Procedure for Exchange of Series E Preferred Units and/or
Series E Redemption.

                (i) Any exchange shall be exercised pursuant to a notice of
exchange (the "Series E Exchange Notice") delivered to AMB and the General
Partner by the Partners representing at least 51% of the outstanding Series E
Preferred Units (or by the Series E Contributor in the case of an exchange
pursuant to the last sentence of Section 18.8.A.(i) hereof) by (a) fax and (b)
by certified mail postage prepaid. AMB may effect any exchange of Series E
Preferred Units, or the General Partner may exercise its option to cause the
Partnership to redeem any portion of the Series E Preferred Units for cash
pursuant to Section 18.8.A(ii) or redeem Series E Excess Units pursuant to
Section 18.8.A(iii), by delivering to each holder of record of Series E
Preferred

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Units, within ten (10) Business Days following receipt of the Series E Exchange
Notice, (a) if the General Partner elects to cause the Partnership to acquire
any of the Series E Preferred Units then outstanding, (1) certificates
representing the Series E Preferred Shares being issued in exchange for the
Series E Preferred Units of such holder being exchanged and (2) a written notice
(a "Series E Redemption Notice") stating (A) the redemption date, which may be
the date of such Series E Redemption Notice or any other date which is not later
than sixty (60) days following the receipt of the Series E Exchange Notice, (B)
the redemption price, (C) the place or places where the Series E Preferred Units
are to be surrendered and (D) that distributions on the Series E Preferred Units
will cease to accrue on such redemption date, or (b) if the General Partner
elects to cause the Partnership to redeem all of the Series E Preferred Units
then outstanding in exchange for cash, a Series E Redemption Notice. Series E
Preferred Units which are redeemed shall be deemed canceled (and any
corresponding Partnership Interest represented thereby deemed terminated) on the
redemption date. Holders of Series E Preferred Units shall deliver any canceled
certificates representing Series E Preferred Units which have been exchanged or
redeemed to the office of the General Partner (which currently is located at 505
Montgomery Street, San Francisco, California 94111) within ten (10) Business
Days of the exchange or redemption with respect thereto. Notwithstanding
anything to the contrary contained herein, any and all Series E Preferred Units
to be exchanged for Series E Preferred Shares pursuant to this Section 18.8
shall be so exchanged in a single transaction at one time. As a condition to
exchange, AMB may require the holders of Series E Preferred Units to make such
representations as may be reasonably necessary for the General Partner to
establish that the issuance of Series E Preferred Shares pursuant to the
exchange shall not be required to be registered under the Securities Act or any
state securities laws. Any Series E Preferred Shares issued pursuant to this
Section 18.8 shall be delivered as shares which are duly authorized, validly
issued, fully paid and nonassessable, free of any pledge, lien, encumbrance or
restriction other than those provided in the REIT Charter, the Bylaws of AMB,
the Securities Act and relevant state securities or blue sky laws.

                The certificates representing the Series E Preferred Shares
issued upon exchange of the Series E Preferred Units shall contain the following
legend:

                THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE
                TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE
                DISPOSED OF EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION
                STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
                "ACT"), AND STATE SECURITIES LAWS OR (B) IF THE CORPORATION HAS
                BEEN FURNISHED WITH A SATISFACTORY OPINION OF COUNSEL FOR THE
                HOLDER OF THE SHARES REPRESENTED HEREBY, OR OTHER EVIDENCE
                SATISFACTORY TO THE CORPORATION, THAT SUCH TRANSFER, SALE,
                ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION IS EXEMPT
                FROM THE PROVISIONS OF SECTION 5 OF THE ACT AND STATE SECURITIES
                LAWS AND THE RULES AND REGULATIONS THEREUNDER.

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                (ii) In the event of an exchange of Series E Preferred Units for
Series E Preferred Shares, an amount equal to the accrued and unpaid
distributions to the date of exchange on any Series E Preferred Units tendered
for exchange shall (i) accrue on the Series E Preferred Shares into which such
Series E Preferred Units are exchanged, and (ii) continue to accrue on such
Series E Preferred Units, which shall remain outstanding following such
exchange, with the General Partner as the holder of such Series E Preferred
Units. Notwithstanding anything to the contrary set forth herein, in no event
shall a Holder of a Series E Preferred Unit that was validly exchanged for
Series E Preferred Shares pursuant to this Section (other than the General
Partner holding such Series E Preferred Unit following any such exchange),
receive a distribution out of Available Cash of the Partnership, if such Holder,
after exchange, is entitled to receive a distribution with respect to the Series
E Preferred Shares for which such Series E Preferred Unit was exchanged or
redeemed. Further, for purposes of the foregoing, in the event of an exchange of
Series E Preferred Units for Series E Preferred Shares, if the accrued and
unpaid distributions per Series E Preferred Unit is not the same for each Series
E Preferred Unit, the accrued and unpaid distributions per Series E Preferred
Unit for each such Series E Preferred Unit shall be equal to the greatest amount
of such accrued and unpaid distributions per Series E Preferred Unit on any such
unit.

                (iii) Fractional Series E Preferred Shares are not to be issued
upon exchange but, in lieu thereof, the General Partner will pay a cash
adjustment based upon the fair market value of the Series E Preferred Shares on
the day prior to the exchange date as determined in good faith by the board of
directors of the General Partner.

                C. Adjustment of Series E Exchange Price. In case AMB shall be a
party to any transaction (including, without limitation, a merger,
consolidation, statutory share exchange, tender offer for all or substantially
all of AMB's capital stock or sale of all or substantially all of AMB's assets),
in each case as a result of which the Series E Preferred Shares will be
converted into the right to receive shares of capital stock, other securities or
other property (including cash or any combination thereof), each Series E
Preferred Unit will thereafter be exchangeable into the kind and amount of
shares of capital stock and other securities and property receivable (including
cash or any combination thereof) upon the consummation of such transaction by a
holder of that number of Series E Preferred Shares or fraction thereof into
which one Series E Preferred Unit was exchangeable immediately prior to such
transaction. AMB may not become a party to any such transaction unless the terms
thereof are consistent with the foregoing. AMB and the Operating Partnership
further agree that, notwithstanding any transaction to which either may be a
party (including, without limitation, any merger, consolidation, statutory share
exchange, tender offer for all or substantially all of such entity's capital
stock or partnership interests or sale of all or substantially all of such
entity's assets), immediately following any such transaction, the issuer or
issuers of any shares of capital stock and other securities into which the
Series E Preferred Units shall be exchangeable pursuant to this Section 18.8
shall be the same issuer or issuers of shares of capital stock and other
securities into which (i) the Series B Preferred Units are then exchangeable
(or, if the Series B Preferred Units have previously been redeemed in full,
would have been then exchangeable if then still outstanding), (ii) the Series C
Preferred Units are then exchangeable (or, if the Series C Preferred Units have
previously been redeemed in full, would have been then exchangeable if then
still outstanding) and (iii) the Series

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D Preferred Units are then exchangeable (or, if the Series D Preferred Units
have previously been redeemed in full, would have been then exchangeable if then
still outstanding).

                Section 18.9. No Conversion Rights

                The Series E Preferred Units shall not be convertible into any
other class or series of interest in the Partnership.

                Section 18.10. No Sinking Fund

                No sinking fund shall be established for the retirement or
redemption of Series E Preferred Units.

                                   ARTICLE 19.
                            SERIES F PREFERRED UNITS

                Section 19.1. Designation and Number

                A series of Partnership Units in the Partnership designated as
the 7.95% Series F Cumulative Redeemable Preferred Units (the "Series F
Preferred Units") is hereby established. The number of Series F Preferred Units
shall be 397,439.

                Section 19.2. Ranking

                The Series F Preferred Units shall, with respect to distribution
rights and rights upon voluntary or involuntary liquidation, winding up or
dissolution of the Partnership, rank (i) senior to the Common Units and to all
Partnership Units the terms of which provide that such Partnership Units shall
rank junior to the Series F Preferred Units; (ii) on a parity with the Series C
Preferred Units, the Series D Preferred Units, the Series E Preferred Units and
all other Parity Preferred Units; and (iii) junior to all Partnership Units
which rank senior to the Series F Preferred Units.

                Section 19.3. Distributions

                A. Payment of Distributions. Subject to the rights of holders of
Parity Preferred Units as to the payment of distributions (including pursuant to
Sections 5.1, 16.3.A, 17.3A, 18.3A, 20.3A and 21.3A hereof), holders of Series F
Preferred Units will be entitled to receive, when, as and if declared by the
Partnership acting through the General Partner, out of Available Cash,
cumulative preferential cash distributions in an amount equal to the Series F
Priority Return. Such distributions will be payable (A) quarterly (such
quarterly periods for purposes of payment and accrual will be the quarterly
periods ending on the dates specified in this sentence and not calendar year
quarters) in arrears, on the 15th day of January, April, July and October of
each year and (B) in the event of (i) an exchange of Series F Preferred Units
into Series F Preferred Shares, or (ii) a redemption of Series F Preferred
Units, on the exchange date or redemption date, as applicable (each a "Series F
Preferred Unit Distribution Payment Date"), commencing on the first of such
payment dates to occur following their original date of issuance.

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If any date on which distributions are to be made on the Series F Preferred
Units is not a Business Day, then payment of the distribution to be made on such
date will be made on the next succeeding day that is a Business Day (and without
any interest or other payment in respect of any such delay) except that, if such
Business Day is in the next succeeding calendar year, such payment shall be made
on the immediately preceding Business Day, in each case with the same force and
effect as if made on such date. Distributions on the Series F Preferred Units
will be made to the holders of record of the Series F Preferred Units on the
relevant record dates, which will be fifteen (15) days prior to the relevant
Series F Preferred Unit Distribution Payment Date (the "Series F Preferred Unit
Partnership Record Date").

                B. Distributions Cumulative. Notwithstanding the foregoing,
distributions on the Series F Preferred Units will accrue whether or not the
terms and provisions of any agreement of the Partnership at any time prohibit
the current payment of distributions, whether or not the Partnership has
earnings, whether or not there are funds legally available for the payment of
such of such distributions and whether or not such distributions are authorized.
Accrued but unpaid distributions on the Series F Preferred Units will accumulate
as of the Preferred Unit Distribution Payment Date on which they first become
payable.

                C. Priority as to Distributions. (i) So long as any Series F
Preferred Units are outstanding, no distribution of cash or other property shall
be authorized, declared, paid or set apart for payment on or with respect to any
class or series of Partnership Interest represented by Junior Units, nor shall
any Junior Units or Parity Preferred Units be redeemed, purchased or otherwise
acquired for any consideration (or any monies be paid to or made available for a
sinking fund for the redemption of any such Junior Units or Parity Preferred
Units) by the Partnership (except by conversion into or exchange for other
Junior Units or Parity Preferred Units, as the case may be) unless, in each
case, full cumulative distributions have been or contemporaneously are
authorized and paid or authorized and a sum sufficient for the payment thereof
set apart for such payment on the Series F Preferred Units and all classes and
series of outstanding Parity Preferred Units for all distribution periods. The
foregoing sentence will not prohibit (a) distributions payable solely in Junior
Units, (b) the exchange of Junior Units or Parity Preferred Units into
Partnership Interests of the Partnership ranking junior to the Series F
Preferred Units as to distributions and upon voluntary and involuntary
liquidation, dissolution or winding up of the Partnership, or (c) distributions
necessary to enable the Operating Partnership to redeem partnership interests
corresponding to Series F Preferred Shares and any Parity Preferred Stock with
respect to distributions or Junior Stock to be purchased by AMB pursuant to the
REIT Charter to preserve AMB's status as a REIT; provided that such redemption
shall be upon the same terms as the corresponding stock purchase pursuant to the
REIT Charter.

                (ii) So long as distributions have not been paid in full (or a
sum sufficient for such full payment is not so set apart) upon the Series F
Preferred Units and any other Parity Preferred Units, all distributions
authorized and declared on the Series F Preferred Units and all classes or
series of outstanding Parity Preferred Units shall be authorized and declared
pro rata so that the amount of distributions authorized and declared per Series
F Preferred Unit and such other classes or series of Parity Preferred Units
shall in all cases bear to each other the same ratio that accrued distributions
per Series F Preferred Unit and such other classes or series of Parity Preferred
Units (which shall not include any accumulation in respect of unpaid
distributions for

                                      102
<PAGE>   108

prior distribution periods if such class or series of Parity Preferred Units do
not have cumulative distribution rights) bear to each other. No interest, or sum
of money in lieu of interest, shall be payable in respect of any distributions
or payments on Series F Preferred Units which may be in arrears.

                (iii) Notwithstanding anything to the contrary set forth herein,
distributions on Partnership Interests held by either (a) the General Partner,
(b) the Operating Partnership or (c) any other holder of Partnership Interests
in the Partnership, in each case ranking junior to or on parity with the Series
F Preferred Units may be made, without preserving the priority of distributions
described in Sections 19.3.C(i) and (ii), but only to the extent such
distributions are required to preserve the REIT status of AMB, in its capacity
as sole general partner of the Operating Partnership and as sole stockholder of
the General Partner, and in the case of any holder other than the General
Partner only to the extent required by the Partnership Agreement; provided, that
the Partnership shall not be disproportionately burdened by this provision
relative to the cash flow generated by other assets owned directly or indirectly
by AMB.

                D. No Further Rights. Holders of Series F Preferred Units shall
not be entitled to any distributions, whether payable in cash, other property or
otherwise, in excess of the full cumulative distributions described herein.

                Section 19.4. Liquidation Proceeds

                A. Distributions. Upon voluntary or involuntary liquidation,
dissolution or winding-up of the Partnership, distributions on the Series F
Preferred Units shall be made in accordance with Article 13 of this Agreement.

                B. Notice. Written notice of any such voluntary or involuntary
liquidation, dissolution or winding-up of the Partnership, stating the payment
date or dates when, and the place or places where, the amounts distributable in
such circumstances shall be payable, shall be given by the General Partner
pursuant to Section 13.6 hereof.

                C. No Further Rights. After payment of the full amount of the
liquidating distributions to which they are entitled, Holders of Series F
Preferred Units will have no right or claim to any of the remaining assets of
the Partnership.

                D. Consolidation, Merger or Certain Other Transactions. None of
a consolidation or merger of the Partnership with or into another entity, a
merger of another entity with or into the Partnership, or a sale, lease,
transfer or conveyance of all or substantially all of the Partnership's property
or business shall be considered a liquidation, dissolution or winding up of the
Partnership.

                Section 19.5. Series F Redemption

                A. Series F Redemption. The Series F Preferred Units may not be
redeemed prior to March 22, 2005. On or after such date, the Partnership shall
have the right to redeem the Series F Preferred Units, in whole or in part, at
any time or from time to time, upon not less than 30 nor more than 60 days'
written notice, at a redemption price, payable in cash (a "Series F

                                      103
<PAGE>   109

Redemption"), equal to the Capital Account balance of the holder of Series F
Preferred Units (the "Series F Redemption Price"); provided, however, that no
redemption pursuant to this Section 19.5 will be permitted if the Series F
Redemption Price does not equal or exceed the original Capital Contribution of
such holder plus the cumulative Series F Priority Return to the redemption date
to the extent not previously distributed. If fewer than all of the outstanding
Series F Preferred Units are to be redeemed, the Series F Preferred Units to be
redeemed shall be selected pro rata (as nearly as practicable without creating
fractional units).

                B. Limitation on Series F Redemption. (i) The Series F
Redemption Price of the Series F Preferred Units (other than the portion thereof
consisting of accumulated but unpaid distributions) is payable solely out of the
sale proceeds of capital stock of AMB, which will be contributed by AMB to the
General Partner or the Operating Partnership and which in turn will be
contributed by the General Partner or the Operating Partnership to the
Partnership as an additional capital contribution, or out of the sale of limited
partner interests in the Partnership or the Operating Partnership and from no
other source. For purposes of the preceding sentence, "capital stock" means any
equity securities (including Common Stock and Preferred Stock (as such terms are
defined in the REIT Charter), depository shares, interests, participation or
other ownership interests (however designated) and any rights (other than debt
securities convertible into or exchangeable for equity securities) or options to
purchase any of the foregoing.

                (ii) The Partnership may not redeem fewer than all of the
outstanding Series F Preferred Units unless all accumulated and unpaid
distributions have been paid on all Series F Preferred Units for all quarterly
distribution periods terminating on or prior to the date of redemption.

                C. Procedures for Series F Redemption. (i) Notice of redemption
will be (i) faxed, and (ii) mailed by the Partnership, by certified mail,
postage prepaid, not less than 30 nor more than 60 days prior to the redemption
date, addressed to the respective holders of record of the Series F Preferred
Units at their respective addresses as they appear on the records of the
Partnership. No failure to give or defect in such notice shall affect the
validity of the proceedings for the redemption of any Series F Preferred Units
except as to the holder to whom such notice was defective or not given. In
addition to any information required by law, each such notice shall state: (a)
the redemption date, (b) the Series F Redemption Price, (c) the aggregate number
of Series F Preferred Units to be redeemed and if fewer than all of the
outstanding Series F Preferred Units are to be redeemed, the number of Series F
Preferred Units to be redeemed held by such holder, which number shall equal
such holder's pro rata share (based on the percentage of the aggregate number of
outstanding Series F Preferred Units that the total number of Series F Preferred
Units held by such holder represents) of the aggregate number of Series F
Preferred Units to be redeemed, (d) the place or places where such Series F
Preferred Units are to be surrendered for payment of the Series F Redemption
Price, (e) that distributions on the Series F Preferred Units to be redeemed
will cease to accumulate on such redemption date and (f) that payment of the
Series F Redemption Price will be made upon presentation and surrender of such
Series F Preferred Units.

                (ii) If the Partnership gives a notice of redemption in respect
of Series F Preferred Units (which notice will be irrevocable) then, by 12:00
noon, New York City time, on

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<PAGE>   110

the redemption date, the Partnership will deposit irrevocably in trust for the
benefit of the Series F Preferred Units being redeemed funds sufficient to pay
the applicable Series F Redemption Price and will give irrevocable instructions
and authority to pay such Series F Redemption Price to the holders of the Series
F Preferred Units upon surrender of the Series F Preferred Units by such holders
at the place designated in the notice of redemption. On and after the date of
redemption, distributions will cease to accumulate on the Series F Preferred
Units or portions thereof called for redemption, unless the Partnership defaults
in the payment thereof. If any date fixed for redemption of Series F Preferred
Units is not a Business Day, then payment of the Series F Redemption Price
payable on such date will be made on the next succeeding day that is a Business
Day (and without any interest or other payment in respect of any such delay)
except that, if such Business Day falls in the next calendar year, such payment
will be made on the immediately preceding Business Day, in each case with the
same force and effect as if made on such date fixed for redemption. If payment
of the Series F Redemption Price is improperly withheld or refused and not paid
by the Partnership, distributions on such Series F Preferred Units will continue
to accumulate from the original redemption date to the date of payment, in which
case the actual payment date will be considered the date fixed for redemption
for purposes of calculating the applicable Series F Redemption Price.

                Section 19.6. Voting and Certain Management Rights

                A. General. Holders of the Series F Preferred Units will not
have any voting rights or right to consent to any matter requiring the consent
or approval of the Limited Partners, except as set forth below and in Section
7.3.E.

                B. Certain Voting Rights. So long as any Series F Preferred
Units remains outstanding, the Partnership shall not, without the affirmative
vote of the holders of at least two-thirds of the Series F Preferred Units
outstanding at the time (i) authorize or create, or increase the authorized or
issued amount of, any class or series of Partnership Interests ranking prior to
the Series F Preferred Units with respect to payment of distributions or rights
upon liquidation, dissolution or winding-up or reclassify any Partnership
Interests of the Partnership into any such Partnership Interest, or create,
authorize or issue any obligations or security convertible into or evidencing
the right to purchase any such Partnership Interests, (ii) authorize or create,
or increase the authorized or issued amount of any Parity Preferred Units or
reclassify any Partnership Interest of the Partnership into any such Partnership
Interest or create, authorize or issue any obligations or security convertible
into or evidencing the right to purchase any such Partnership Interests but only
to the extent such Parity Preferred Units are issued to an affiliate of the
Partnership, other than AMB or the Operating Partnership to the extent the
issuance of such interests was to allow AMB or the Operating Partnership to
issue corresponding preferred stock or preferred interests to persons who are
not affiliates of the Partnership (other than AMB to the extent AMB issues
corresponding preferred stock to persons who are not affiliates of the
Partnership or the Operating Partnership) or (iii) either consolidate, merge
into or with, or convey, transfer or lease its assets substantially as an
entirety to, any corporation or other entity or amend, alter or repeal the
provisions of the Partnership Agreement (including, without limitation, this
Article 19 and Section 11.2), whether by merger, consolidation or otherwise, in
each case in a manner that would materially and adversely affect the powers,
special rights, preferences, privileges or voting power of the Series F
Preferred Units or the holders thereof;

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provided, however, that with respect to the occurrence of any event set forth in
(iii) above, so long as (a) the Partnership is the surviving entity and the
Series F Preferred Units remain outstanding with the terms thereof unchanged, or
(b) the resulting, surviving or transferee entity is a partnership, limited
liability company or other pass-through entity organized under the laws of any
state and substitutes the Series F Preferred Units for other interests in such
entity having substantially the same terms and rights as the Series F Preferred
Units, including with respect to distributions, voting rights and rights upon
liquidation, dissolution or winding-up, then the occurrence of any such event
shall not be deemed to materially and adversely affect such rights, privileges
or voting powers of the holders of the Series F Preferred Units; and provided
further, that any increase in the amount of Partnership Interests or the
creation or issuance of any other class or series of Partnership Interests
represented by Junior Units or Parity Preferred Units that are not issued to an
affiliate of the Partnership, other than the General Partner or the Operating
Partnership to the extent the issuance of such interests was to allow the
General Partner or the Operating Partnership to issue corresponding preferred
stock or preferred interests to persons who are not affiliates of the
Partnership (other than AMB to the extent AMB issues corresponding preferred
stock or preferred interests to persons who are not affiliates of the
Partnership or the Operating Partnership), shall not be deemed to materially and
adversely affect such rights, preferences, privileges or voting powers.

                C. So long as any Series F Preferred Units remain outstanding,
the General Partner shall not, without the affirmative vote of the holders of at
least two-thirds of the Series F Preferred Units outstanding at the time, take
any action which would result in the termination of the right of the holders of
such units to effect an exchange pursuant to Section 19.8; provided however, no
such vote shall be required so long as the Series F Preferred Units (or any
interests substituted therefore pursuant to Section 19.6.B) remain outstanding
and are exchangeable for Series F Preferred Shares or stock in another entity
having substantially the same terms and rights as the Series F Preferred Shares.

                D. Notwithstanding anything to the contrary contained in this
Agreement, including, without limitation, the provisions of Article 7 regarding
the management rights and responsibilities of the General Partner, whenever
distributions on any Series F Preferred Units shall remain unpaid for six or
more quarterly periods (i.e., the quarterly periods ending on the 15th day of
each January, April, July and October, or, if not a business day, the next
succeeding business day, beginning with the quarterly period ending April 15,
2000) (whether or not consecutive), the holders of 51% of either (i) such Series
F Preferred Units, in the event that the holders of the Series D Preferred
Units, Series E Preferred Units, Series G Preferred Units and Series H Preferred
Units are not entitled to exercise management rights pursuant to Section 17.6D,
Section 18.6.D, Section 20.6.D and Section 21.6.D, respectively, and that no
Future Parity Preferred Unitholders are entitled to exercise management rights
similar to those to which the holders of Series D Preferred Units, Series E
Preferred Units, Series F Preferred Units, Series G Preferred Units and Series H
Preferred Units are entitled to exercise pursuant to Section 17.6D, Section
18.6.D, this Section 19.6.D, Section 20.6.D and Section 21.6.D, respectively, or
(ii) the Parity Preferred Capital, in the event that holders of Series D
Preferred Units, Series E Preferred Units, Series G Preferred Units and Series H
Preferred Units are entitled to exercise management rights pursuant to Section
17.6D, Section 18.6.D, Section 20.6.D, or Section 21.6.D, respectively, or
Future Parity Preferred Unitholders are entitled to exercise management rights

                                      106
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similar to those to which the holders of Series D Preferred Units, Series E
Preferred Units, Series F Preferred Units, Series G Preferred Units and Series H
Preferred Units are entitled to exercise pursuant to Section 17.6.D, Section
18.6.D, this Section 19.6.D, Section 20.6.D and Section 21.6.D, respectively,
shall be entitled to assume rights to manage the Partnership and perform actions
related thereto for the sole purpose of enforcing the Partnership's rights and
remedies as against obligees of the Partnership or other Persons from whom the
Partnership may be entitled to receive cash or other assets, until all
distributions accumulated on the Series F Preferred Units for all past quarterly
periods and the distribution for the then-current quarterly period shall have
been fully-paid or declared and a sum sufficient for the payment thereof
irrevocably set aside in trust for payment in full; provided, however, that no
such holder or holders of Series F Preferred Units may at any time take any
action (or fail to take any action) if the consequence of such action (or
inaction) would be (i) to cause AMB to fail to qualify as a REIT for federal or
applicable state income tax purposes or (ii) to cause the Partnership or the
Operating Partnership to fail to qualify as a partnership for federal or
applicable state income tax purposes, or (iii) to cause the Partnership, the
Operating Partnership, the General Partner, or AMB to be considered an
"investment company" as defined in, or otherwise be subject to regulation under,
the Investment Company Act of 1940, as amended; and provided, further, that
solely for purposes of exercising the management rights set forth in this
Section 19.6.D, each holder of Series F Preferred Units shall be deemed an
Indemnitee, and shall be entitled to the benefits of the indemnification
provisions of Section 7.7 with respect to any and all action(s) taken (or
failure(s) to act) by a holder of Series F Preferred Units in the exercise of
(or failure(s) to exercise) the management rights described in this Section
19.6.D, including, without limitation, alleged breaches of the General Partner's
fiduciary duty to the Partners; and provided further, that the holders of the
Series F Preferred Units acknowledge and agree that the General Partner and the
Partnership have provided similar management rights to the holders of the Series
D Preferred Units and the Series E Preferred Units and shall be entitled to
provide similar management rights to Future Parity Preferred Unitholders.

                Section 19.7. Transfer Restrictions

                The Series F Preferred Units shall be subject to the provisions
of Article 11 hereof. Notwithstanding any provision to the contrary herein, no
transfer of Series F Preferred Units, or other action by the holder or holders
of such Units, is permitted without the consent of the General Partner which
consent may be given or withheld in its sole and absolute discretion, if such
transfer or other action would result in more than four partners holding all
outstanding Series F Preferred Units within the meaning of Treasury Regulation
Section 1.7704-1(h)(1)(ii) (without regard to Treasury Regulation Section
1.7704-1(h)(3)(ii)); provided, however, that the General Partner's consent may
not be unreasonably withheld if (a) such transfer or other action would not
result in more than ten partners holding all outstanding Series F Preferred
Units within the meaning of Treasury Regulation Section 1.7704-1(h)(1)(ii)
(without regard to Treasury Regulation Section 1.7704-1(h)(3)(ii)) and (b) the
General Partner cannot rely on Treasury Regulation Section 1.7704-1(h). In
addition, no transfer may be made to any person if such transfer would cause the
exchange of the Series F Preferred Units for Series F Preferred Shares, as
provided herein, to be required to be registered under the Securities Act of
1933, as amended, or any state securities laws.

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                Section 19.8. Exchange Rights

                A. Right to Exchange. (i) Series F Preferred Units will be
exchangeable in whole but not in part unless expressly otherwise provided herein
at anytime on or after March 22, 2010, at the option of 51% of the holders of
all outstanding Series F Preferred Units, for authorized but previously unissued
Series F Preferred Shares at an exchange rate of one Series F Preferred Share
from AMB for one Series F Preferred Unit, subject to adjustment as described
below (the "Series F Exchange Price"); provided that the Series F Preferred
Units will become exchangeable at any time, in whole but not in part unless
expressly otherwise provided herein, at the option of 51% of the holders of all
outstanding Series F Preferred Units for Series F Preferred Shares if (y) at any
time full distributions shall not have been timely made on any Series F
Preferred Unit with respect to six (6) prior quarterly distribution periods,
whether or not consecutive; provided, however, that a distribution in respect of
Series F Preferred Units shall be considered timely made if made within two (2)
Business Days after the applicable Series F Preferred Unit Distribution Payment
Date if at the time of such late payment there shall not be any prior quarterly
distribution periods in respect of which full distributions were not timely made
or (z) upon receipt by a holder or holders of Series F Preferred Units of (A)
notice from the General Partner that the General Partner or a Subsidiary of the
General Partner has taken the position that the Partnership is, or upon the
consummation of an identified event in the immediate future will be, a PTP and
(B) an opinion rendered by independent counsel familiar with such matters
addressed to a holder or holders of Series F Preferred Units, that the
Partnership is or likely is, or upon the occurrence of a defined event in the
immediate future will be or likely will be, a PTP.

                In addition, the Series F Preferred Units may be exchanged for
Series F Preferred Shares, in whole but not in part unless expressly otherwise
provided herein, at the option of 51% of the holders of all outstanding Series F
Preferred Units after March 22, 2003 and prior to March 22, 2010 if such holders
of a Series F Preferred Units shall deliver to the General Partner either (i) a
private letter ruling addressed to such holder of Series F Preferred Units or
(ii) an opinion of independent counsel reasonably acceptable to the General
Partner based on a change in statute, the enactment of temporary or final
Treasury Regulations or the publication of a Revenue Ruling or any other IRS
release, in either case to the effect that an exchange of the Series F Preferred
Units at such earlier time would not cause the Series F Preferred Units to be
considered "stock and securities" within the meaning of Section 351(e) of the
Code for purposes of determining whether the holder of such Series F Preferred
Units is an "investment company" under Section 721(b) of the Code if an exchange
is permitted at such earlier date.

                In addition, Series F Preferred Units will become exchangeable
in whole but not in part unless expressly otherwise provided herein, at the
option of 51% of the holders of all outstanding Series F Preferred Units for
Series F Preferred Shares at an exchange rate of one Series F Preferred Share
from AMB for one Series F Preferred Unit if, (i) at any time such holders
conclude based on results or projected results that there exists (in the
reasonable judgment of such holders) an imminent and substantial risk that such
holders' interest in the Partnership represents or will represent more than
19.0% of the total profits of or capital interests in the Partnership for a
taxable year, (ii) such holders deliver to the General Partner an opinion of
independent counsel, reasonably acceptable to the General Partner to the effect
that there is a

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substantial risk that their interest in the Partnership does not or will not
satisfy the 19.0% limit and (iii) the General Partner agrees with the
conclusions referred to in clauses (i) and (ii) of this sentence, such agreement
not to be unreasonably withheld.

                Furthermore, Series F Preferred Units will become exchangeable
in whole but not in part unless expressly otherwise provided herein, at the
option of 51% of the holders of all outstanding Series F Preferred Units for
Series F Preferred Shares at an exchange rate of one Series F Preferred Share
from AMB for one Series F Preferred Unit if (i) the Series F Preferred Units are
held by a REIT and (ii) excluding the effect of any loans and advances, from
time to time, from the Partnership to the Operating Partnership or any other
affiliate or related entity not exceeding 15% of the Partnership's total assets,
for purposes of the 5% test of Section 856(c)(4)(B) of the Code, either (A) the
Partnership is advised by independent counsel that, based on the assets and
income of the Partnership for a taxable year after 1998, the Partnership would
not satisfy the income and assets tests of Section 856 of the Code for such
taxable year if the Partnership were a real estate investment trust within the
meaning of the Code; or (B) the holder of the Series F Preferred Units shall
deliver to the General Partner an opinion of independent counsel reasonably
acceptable to the General Partner to the effect that, based on the assets and
income of the Partnership for a taxable year after 1999, the Partnership would
not satisfy the income and assets tests of Section 856 of the Code for such
taxable year if the Partnership were a real estate investment trust within the
meaning of the Code and that such failure would create a meaningful risk that
the holder of the Series F Preferred Units would fail to maintain its
qualification as a real estate investment trust.

                (ii) Notwithstanding anything to the contrary set forth in
Section 19.8.A(i), if a Series F Exchange Notice (as defined herein) has been
delivered to AMB and the General Partner, then the General Partner may, at its
option, within ten (10) Business Days after receipt of the Series F Exchange
Notice, elect to cause the Partnership to redeem all or a portion of the
outstanding Series F Preferred Units for cash in an amount equal to the original
Capital Contribution per Series F Preferred Unit and all accrued and unpaid
distributions thereon to the date of redemption. If the General Partner elects
to redeem fewer than all of the outstanding Series F Preferred Units, the number
of Series F Preferred Units held by each holder to be redeemed shall equal such
holder's pro rata share (based on the percentage of the aggregate number of
outstanding Series F Preferred Units that the total number of Series F Preferred
Units held by such holder represents) of the aggregate number of Series F
Preferred Units being redeemed.

                (iii) In the event an exchange of all Series F Preferred Units
pursuant to Section 19.8.A would violate the provisions on ownership limitation
of AMB set forth in Section 7 of Article Third of the Series F Articles
Supplementary, each holder of Series F Preferred Units shall be entitled to
exchange, pursuant to the provisions of Section 19.8.B, a number of Series F
Preferred Units which would comply with the provisions on the ownership
limitation of AMB set forth in such Section 7 of Article Third of the Series F
Articles Supplementary, with respect to such holder, and any Series F Preferred
Units not so exchanged (the "Series F Excess Units") shall be redeemed by the
Partnership for cash in an amount equal to the original Capital Contribution per
Series F Excess Unit, plus any accrued and unpaid distributions thereon to the
date of redemption subject to any restriction thereon contained in any debt
instrument or

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agreement of the Partnership. In the event an exchange would result in Series F
Excess Units, as a condition to such exchange, each holder of such units agrees
to provide representations and covenants reasonably requested by AMB relating to
(i) the widely held nature of the interests in such holder, sufficient to assure
AMB that the holder's ownership of stock of AMB (without regard to the limits
described above) will not cause any individual to own in excess of 9.0% of the
stock of AMB; and (ii) to the extent such Holder can so represent and covenant
without obtaining information from its owners (other than one or more direct or
indirect parent corporations, limited liability companies or partnerships and
not the holders of any interests in any such parent), the Holder's ownership of
tenants of the Partnership and its affiliates. For purposes of determining the
number of Series F Excess Units under this Section 19.8.A(iii), the "Ownership
Limit" set forth in the Series F Articles Supplementary shall be deemed to be
9.0%. To the extent the Partnership would not be able to pay the cash set forth
above in exchange for the Series F Excess Units, and to the extent consistent
with the REIT Charter, AMB agrees that it will grant to the holders of the
Series F Preferred Units exceptions to the Ownership Limit set forth in the
Series F Articles Supplementary sufficient to allow such Holders to exchange all
of their Series F Preferred Units for Series F Preferred Shares; provided such
holders furnish to AMB representations acceptable to AMB in its sole and
absolute discretion which assure AMB that such exceptions will not jeopardize
AMB's tax status as a REIT for purposes of federal and applicable state law.
Notwithstanding any provision of this Agreement to the contrary, no Series F
Limited Partner shall be entitled to effect an exchange of Series F Preferred
Units for Series F Preferred Shares to the extent that ownership or right to
acquire such shares would cause the Partner or any other Person or, in the
opinion of counsel selected by AMB, may cause the Partner or any other Person,
to violate the restrictions on ownership and transfer of Series F Preferred
Shares set forth in the REIT Charter. To the extent any such attempted exchange
for Series F Preferred Shares would be in violation of the previous sentence, it
shall be void ab initio and such Series F Limited Partner shall not acquire any
rights or economic interest in the Series F Preferred Shares otherwise issuable
upon such exchange.

                (iv) The redemption of Series F Preferred Units described in
Section 19.8.A(ii) and (iii) shall be subject to the provisions of Section
19.5.B(i) and Section 19.5.C(ii); provided, however, that the term "Series F
Redemption Price" in such Sections 19.5.B(i) and 19.5.C(ii) shall be read to
mean the original Capital Contribution per Series F Preferred Unit being
redeemed as set forth on Exhibit A plus all accrued and unpaid distributions to
the redemption date.

                B. Procedure for Exchange of Series F Preferred Units and/or
Series F Redemption.

                (i) Any exchange shall be exercised pursuant to a notice of
exchange (the "Series F Exchange Notice") delivered to AMB and the General
Partner by the Partners representing at least 51% of the outstanding Series F
Preferred Units (or by the Series F Contributor in the case of an exchange
pursuant to the last sentence of Section 19.8.A.(i) hereof) by (a) fax and (b)
by certified mail postage prepaid. AMB may effect any exchange of Series F
Preferred Units, or the General Partner may exercise its option to cause the
Partnership to redeem any portion of the Series F Preferred Units for cash
pursuant to Section 19.8.A(ii) or redeem Series F Excess Units pursuant to
Section 19.8.A(iii), by delivering to each holder of record of Series F
Preferred Units,

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within ten (10) Business Days following receipt of the Series F Exchange Notice,
(a) if the General Partner elects to cause the Partnership to acquire any of the
Series F Preferred Units then outstanding, (1) certificates representing the
Series F Preferred Shares being issued in exchange for the Series F Preferred
Units of such holder being exchanged and (2) a written notice (a "Series F
Redemption Notice") stating (A) the redemption date, which may be the date of
such Series F Redemption Notice or any other date which is not later than sixty
(60) days following the receipt of the Series F Exchange Notice, (B) the
redemption price, (C) the place or places where the Series F Preferred Units are
to be surrendered and (D) that distributions on the Series F Preferred Units
will cease to accrue on such redemption date, or (b) if the General Partner
elects to cause the Partnership to redeem all of the Series F Preferred Units
then outstanding in exchange for cash, a Series F Redemption Notice. Series F
Preferred Units which are redeemed shall be deemed canceled (and any
corresponding Partnership Interest represented thereby deemed terminated) on the
redemption date. Holders of Series F Preferred Units shall deliver any canceled
certificates representing Series F Preferred Units which have been exchanged or
redeemed to the office of the General Partner (which currently is located at 505
Montgomery Street, San Francisco, California 94111) within ten (10) Business
Days of the exchange or redemption with respect thereto. Notwithstanding
anything to the contrary contained herein, any and all Series F Preferred Units
to be exchanged for Series F Preferred Shares pursuant to this Section 19.8
shall be so exchanged in a single transaction at one time. As a condition to
exchange, AMB may require the holders of Series F Preferred Units to make such
representations as may be reasonably necessary for the General Partner to
establish that the issuance of Series F Preferred Shares pursuant to the
exchange shall not be required to be registered under the Securities Act or any
state securities laws. Any Series F Preferred Shares issued pursuant to this
Section 19.8 shall be delivered as shares which are duly authorized, validly
issued, fully paid and nonassessable, free of any pledge, lien, encumbrance or
restriction other than those provided in the REIT Charter, the Bylaws of AMB,
the Securities Act and relevant state securities or blue sky laws.

                The certificates representing the Series F Preferred Shares
issued upon exchange of the Series F Preferred Units shall contain the following
legend:

                THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE
                TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE
                DISPOSED OF EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION
                STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
                "ACT"), AND STATE SECURITIES LAWS OR (B) IF THE CORPORATION HAS
                BEEN FURNISHED WITH A SATISFACTORY OPINION OF COUNSEL FOR THE
                HOLDER OF THE SHARES REPRESENTED HEREBY, OR OTHER EVIDENCE
                SATISFACTORY TO THE CORPORATION, THAT SUCH TRANSFER, SALE,
                ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION IS EXEMPT
                FROM THE PROVISIONS OF SECTION 5 OF THE ACT AND STATE SECURITIES
                LAWS AND THE RULES AND REGULATIONS THEREUNDER.

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                (ii) In the event of an exchange of Series F Preferred Units for
Series F Preferred Shares, an amount equal to the accrued and unpaid
distributions to the date of exchange on any Series F Preferred Units tendered
for exchange shall (i) accrue on the Series F Preferred Shares into which such
Series F Preferred Units are exchanged, and (ii) continue to accrue on such
Series F Preferred Units, which shall remain outstanding following such
exchange, with the General Partner as the holder of such Series F Preferred
Units. Notwithstanding anything to the contrary set forth herein, in no event
shall a Holder of a Series F Preferred Unit that was validly exchanged for
Series F Preferred Shares pursuant to this Section (other than the General
Partner holding such Series F Preferred Unit following any such exchange),
receive a distribution out of Available Cash of the Partnership, if such Holder,
after exchange, is entitled to receive a distribution with respect to the Series
F Preferred Shares for which such Series F Preferred Unit was exchanged or
redeemed. Further, for purposes of the foregoing, in the event of an exchange of
Series F Preferred Units for Series F Preferred Shares, if the accrued and
unpaid distributions per Series F Preferred Unit is not the same for each Series
F Preferred Unit, the accrued and unpaid distributions per Series F Preferred
Unit for each such Series F Preferred Unit shall be equal to the greatest amount
of such accrued and unpaid distributions per Series F Preferred Unit on any such
unit.

                (iii) Fractional Series F Preferred Shares are not to be issued
upon exchange but, in lieu thereof, the General Partner will pay a cash
adjustment based upon the fair market value of the Series F Preferred Shares on
the day prior to the exchange date as determined in good faith by the board of
directors of the General Partner.

                C. Adjustment of Series F Exchange Price. In case AMB shall be a
party to any transaction (including, without limitation, a merger,
consolidation, statutory share exchange, tender offer for all or substantially
all of AMB's capital stock or sale of all or substantially all of AMB's assets),
in each case as a result of which the Series F Preferred Shares will be
converted into the right to receive shares of capital stock, other securities or
other property (including cash or any combination thereof), each Series F
Preferred Unit will thereafter be exchangeable into the kind and amount of
shares of capital stock and other securities and property receivable (including
cash or any combination thereof) upon the consummation of such transaction by a
holder of that number of Series F Preferred Shares or fraction thereof into
which one Series F Preferred Unit was exchangeable immediately prior to such
transaction. AMB may not become a party to any such transaction unless the terms
thereof are consistent with the foregoing. AMB and the Operating Partnership
further agree that, notwithstanding any transaction to which either may be a
party (including, without limitation, any merger, consolidation, statutory share
exchange, tender offer for all or substantially all of such entity's capital
stock or partnership interests or sale of all or substantially all of such
entity's assets), immediately following any such transaction, the issuer or
issuers of any shares of capital stock and other securities into which the
Series F Preferred Units shall be exchangeable pursuant to this Section 19.8
shall be the same issuer or issuers of shares of capital stock and other
securities into which (i) the Series B Preferred Units are then exchangeable
(or, if the Series B Preferred Units have previously been redeemed in full,
would have been then exchangeable if then still outstanding), (ii) the Series C
Preferred Units are then exchangeable (or, if the Series C Preferred Units have
previously been redeemed in full, would have been then exchangeable if then
still outstanding), (iii) the Series D Preferred Units are then exchangeable
(or, if the Series D Preferred Units have previously been redeemed in full,

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would have been then exchangeable if then still outstanding) and (iv) the Series
E Preferred Units are then exchangeable (or, if the Series E Preferred Units
have previously been redeemed in full, would have been then exchangeable if then
still outstanding).

                Section 19.9. No Conversion Rights

                The Series F Preferred Units shall not be convertible into any
other class or series of interest in the Partnership.

                Section 19.10. No Sinking Fund

                No sinking fund shall be established for the retirement or
redemption of Series F Preferred Units.

                                   ARTICLE 20.
                            SERIES G PREFERRED UNITS

                Section 20.1. Designation and Number

                A series of Partnership Units in the Partnership designated as
the 7.95% Series G Cumulative Redeemable Preferred Units (the "Series G
Preferred Units") is hereby established. The number of Series G Preferred Units
shall be 20,000.

                Section 20.2. Ranking

                The Series G Preferred Units shall, with respect to distribution
rights and rights upon voluntary or involuntary liquidation, winding up or
dissolution of the Partnership, rank (i) senior to the Common Units and to all
Partnership Units the terms of which provide that such Partnership Units shall
rank junior to the Series G Preferred Units; (ii) on a parity with the Series C
Preferred Units, the Series D Preferred Units, the Series E Preferred Units, the
Series F Preferred Units and all other Parity Preferred Units; and (iii) junior
to all Partnership Units which rank senior to the Series G Preferred Units.

                Section 20.3. Distributions

                A. Payment of Distributions. Subject to the rights of holders of
Parity Preferred Units as to the payment of distributions (including pursuant to
Sections 5.1, 16.3.A, 17.3A, 18.3A, 19.3A and 21.3A hereof), holders of Series G
Preferred Units will be entitled to receive, when, as and if declared by the
Partnership acting through the General Partner, out of Available Cash,
cumulative preferential cash distributions in an amount equal to the Series G
Priority Return. Such distributions will be payable (A) quarterly (such
quarterly periods for purposes of payment and accrual will be the quarterly
periods ending on the dates specified in this sentence and not calendar year
quarters) in arrears, on the 15th day of January, April, July and October of
each year and (B) in the event of (i) an exchange of Series G Preferred Units
into Series G Preferred Shares, or (ii) a redemption of Series G Preferred
Units, on the exchange date or redemption date, as applicable (each a "Series G
Preferred Unit Distribution Payment Date"),

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commencing on the first of such payment dates to occur following their original
date of issuance. If any date on which distributions are to be made on the
Series G Preferred Units is not a Business Day, then payment of the distribution
to be made on such date will be made on the next succeeding day that is a
Business Day (and without any interest or other payment in respect of any such
delay) except that, if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on such date. Distributions
on the Series G Preferred Units will be made to the holders of record of the
Series G Preferred Units on the relevant record dates, which will be fifteen
(15) days prior to the relevant Series G Preferred Unit Distribution Payment
Date (the "Series G Preferred Unit Partnership Record Date").

                B. Distributions Cumulative. Notwithstanding the foregoing,
distributions on the Series G Preferred Units will accrue whether or not the
terms and provisions of any agreement of the Partnership at any time prohibit
the current payment of distributions, whether or not the Partnership has
earnings, whether or not there are funds legally available for the payment of
such of such distributions and whether or not such distributions are authorized.
Accrued but unpaid distributions on the Series G Preferred Units will accumulate
as of the Preferred Unit Distribution Payment Date on which they first become
payable.

                C. Priority as to Distributions. (i) So long as any Series G
Preferred Units are outstanding, no distribution of cash or other property shall
be authorized, declared, paid or set apart for payment on or with respect to any
class or series of Partnership Interest represented by Junior Units, nor shall
any Junior Units or Parity Preferred Units be redeemed, purchased or otherwise
acquired for any consideration (or any monies be paid to or made available for a
sinking fund for the redemption of any such Junior Units or Parity Preferred
Units) by the Partnership (except by conversion into or exchange for other
Junior Units or Parity Preferred Units, as the case may be) unless, in each
case, full cumulative distributions have been or contemporaneously are
authorized and paid or authorized and a sum sufficient for the payment thereof
set apart for such payment on the Series G Preferred Units and all classes and
series of outstanding Parity Preferred Units for all distribution periods. The
foregoing sentence will not prohibit (a) distributions payable solely in Junior
Units, (b) the exchange of Junior Units or Parity Preferred Units into
Partnership Interests of the Partnership ranking junior to the Series G
Preferred Units as to distributions and upon voluntary and involuntary
liquidation, dissolution or winding up of the Partnership, or (c) distributions
necessary to enable the Operating Partnership to redeem partnership interests
corresponding to Series G Preferred Shares and any Parity Preferred Stock with
respect to distributions or Junior Stock to be purchased by AMB pursuant to the
REIT Charter to preserve AMB's status as a REIT; provided that such redemption
shall be upon the same terms as the corresponding stock purchase pursuant to the
REIT Charter.

                (ii) So long as distributions have not been paid in full (or a
sum sufficient for such full payment is not so set apart) upon the Series G
Preferred Units and any other Parity Preferred Units, all distributions
authorized and declared on the Series G Preferred Units and all classes or
series of outstanding Parity Preferred Units shall be authorized and declared
pro rata so that the amount of distributions authorized and declared per Series
G Preferred Unit and such other classes or series of Parity Preferred Units
shall in all cases bear to each other the same ratio that accrued distributions
per Series G Preferred Unit and such other classes or series of Parity

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Preferred Units (which shall not include any accumulation in respect of unpaid
distributions for prior distribution periods if such class or series of Parity
Preferred Units do not have cumulative distribution rights) bear to each other.
No interest, or sum of money in lieu of interest, shall be payable in respect of
any distributions or payments on Series G Preferred Units which may be in
arrears.

                (iii) Notwithstanding anything to the contrary set forth herein,
distributions on Partnership Interests held by either (a) the General Partner,
(b) the Operating Partnership or (c) any other holder of Partnership Interests
in the Partnership, in each case ranking junior to or on parity with the Series
G Preferred Units may be made, without preserving the priority of distributions
described in Sections 20.3.C(i) and (ii), but only to the extent such
distributions are required to preserve the REIT status of AMB, in its capacity
as sole general partner of the Operating Partnership and as sole stockholder of
the General Partner, and in the case of any holder other than the General
Partner only to the extent required by the Partnership Agreement; provided, that
the Partnership shall not be disproportionately burdened by this provision
relative to the cash flow generated by other assets owned directly or indirectly
by AMB.

                D. No Further Rights. Holders of Series G Preferred Units shall
not be entitled to any distributions, whether payable in cash, other property or
otherwise, in excess of the full cumulative distributions described herein.

                Section 20.4. Liquidation Proceeds

                A. Distributions. Upon voluntary or involuntary liquidation,
dissolution or winding-up of the Partnership, distributions on the Series G
Preferred Units shall be made in accordance with Article 13 of this Agreement.

                B. Notice. Written notice of any such voluntary or involuntary
liquidation, dissolution or winding-up of the Partnership, stating the payment
date or dates when, and the place or places where, the amounts distributable in
such circumstances shall be payable, shall be given by the General Partner
pursuant to Section 13.6 hereof.

                C. No Further Rights. After payment of the full amount of the
liquidating distributions to which they are entitled, Holders of Series G
Preferred Units will have no right or claim to any of the remaining assets of
the Partnership.

                D. Consolidation, Merger or Certain Other Transactions. None of
a consolidation or merger of the Partnership with or into another entity, a
merger of another entity with or into the Partnership, or a sale, lease,
transfer or conveyance of all or substantially all of the Partnership's property
or business shall be considered a liquidation, dissolution or winding up of the
Partnership.

                Section 20.5. Series G Redemption

                A. Series G Redemption. The Series G Preferred Units may not be
redeemed prior to September 1, 2005. On or after such date, the Partnership
shall have the right to redeem the Series G Preferred Units, in whole or in
part, at any time or from time to time, upon not less

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than 30 nor more than 60 days' written notice, at a redemption price, payable in
cash (a "Series G Redemption"), equal to the Capital Account balance of the
holder of Series G Preferred Units (the "Series G Redemption Price"); provided,
however, that no redemption pursuant to this Section 20.5 will be permitted if
the Series G Redemption Price does not equal or exceed the original Capital
Contribution of such holder plus the cumulative Series G Priority Return to the
redemption date to the extent not previously distributed. If fewer than all of
the outstanding Series G Preferred Units are to be redeemed, the Series G
Preferred Units to be redeemed shall be selected pro rata (as nearly as
practicable without creating fractional units).

                B. Limitation on Series G Redemption. (i) The Series G
Redemption Price of the Series G Preferred Units (other than the portion thereof
consisting of accumulated but unpaid distributions) is payable solely out of the
sale proceeds of capital stock of AMB, which will be contributed by AMB to the
General Partner or the Operating Partnership and which in turn will be
contributed by the General Partner or the Operating Partnership to the
Partnership as an additional capital contribution, or out of the sale of limited
partner interests in the Partnership or the Operating Partnership and from no
other source. For purposes of the preceding sentence, "capital stock" means any
equity securities (including Common Stock and Preferred Stock (as such terms are
defined in the REIT Charter), depository shares, interests, participation or
other ownership interests (however designated) and any rights (other than debt
securities convertible into or exchangeable for equity securities) or options to
purchase any of the foregoing.

                (ii) The Partnership may not redeem fewer than all of the
outstanding Series G Preferred Units unless all accumulated and unpaid
distributions have been paid on all Series G Preferred Units for all quarterly
distribution periods terminating on or prior to the date of redemption.

                C. Procedures for Series G Redemption. (i) Notice of redemption
will be (i) faxed, and (ii) mailed by the Partnership, by certified mail,
postage prepaid, not less than 30 nor more than 60 days prior to the redemption
date, addressed to the respective holders of record of the Series G Preferred
Units at their respective addresses as they appear on the records of the
Partnership. No failure to give or defect in such notice shall affect the
validity of the proceedings for the redemption of any Series G Preferred Units
except as to the holder to whom such notice was defective or not given. In
addition to any information required by law, each such notice shall state: (a)
the redemption date, (b) the Series G Redemption Price, (c) the aggregate number
of Series G Preferred Units to be redeemed and if fewer than all of the
outstanding Series G Preferred Units are to be redeemed, the number of Series G
Preferred Units to be redeemed held by such holder, which number shall equal
such holder's pro rata share (based on the percentage of the aggregate number of
outstanding Series G Preferred Units that the total number of Series G Preferred
Units held by such holder represents) of the aggregate number of Series G
Preferred Units to be redeemed, (d) the place or places where such Series G
Preferred Units are to be surrendered for payment of the Series G Redemption
Price, (e) that distributions on the Series G Preferred Units to be redeemed
will cease to accumulate on such redemption date and (f) that payment of the
Series G Redemption Price will be made upon presentation and surrender of such
Series G Preferred Units.

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                (ii) If the Partnership gives a notice of redemption in respect
of Series G Preferred Units (which notice will be irrevocable) then, by 12:00
noon, New York City time, on the redemption date, the Partnership will deposit
irrevocably in trust for the benefit of the Series G Preferred Units being
redeemed funds sufficient to pay the applicable Series G Redemption Price and
will give irrevocable instructions and authority to pay such Series G Redemption
Price to the holders of the Series G Preferred Units upon surrender of the
Series G Preferred Units by such holders at the place designated in the notice
of redemption. On and after the date of redemption, distributions will cease to
accumulate on the Series G Preferred Units or portions thereof called for
redemption, unless the Partnership defaults in the payment thereof. If any date
fixed for redemption of Series G Preferred Units is not a Business Day, then
payment of the Series G Redemption Price payable on such date will be made on
the next succeeding day that is a Business Day (and without any interest or
other payment in respect of any such delay) except that, if such Business Day
falls in the next calendar year, such payment will be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date fixed for redemption. If payment of the Series G Redemption Price
is improperly withheld or refused and not paid by the Partnership, distributions
on such Series G Preferred Units will continue to accumulate from the original
redemption date to the date of payment, in which case the actual payment date
will be considered the date fixed for redemption for purposes of calculating the
applicable Series G Redemption Price.

                Section 20.6. Voting and Certain Management Rights

                A. General. Holders of the Series G Preferred Units will not
have any voting rights or right to consent to any matter requiring the consent
or approval of the Limited Partners, except as set forth below and in Section
7.3.E.

                B. Certain Voting Rights. So long as any Series G Preferred
Units remains outstanding, the Partnership shall not, without the affirmative
vote of the holders of at least two-thirds of the Series G Preferred Units
outstanding at the time (i) authorize or create, or increase the authorized or
issued amount of, any class or series of Partnership Interests ranking prior to
the Series G Preferred Units with respect to payment of distributions or rights
upon liquidation, dissolution or winding-up or reclassify any Partnership
Interests of the Partnership into any such Partnership Interest, or create,
authorize or issue any obligations or security convertible into or evidencing
the right to purchase any such Partnership Interests, (ii) authorize or create,
or increase the authorized or issued amount of any Parity Preferred Units or
reclassify any Partnership Interest of the Partnership into any such Partnership
Interest or create, authorize or issue any obligations or security convertible
into or evidencing the right to purchase any such Partnership Interests but only
to the extent such Parity Preferred Units are issued to an affiliate of the
Partnership, other than AMB or the Operating Partnership to the extent the
issuance of such interests was to allow AMB or the Operating Partnership to
issue corresponding preferred stock or preferred interests to persons who are
not affiliates of the Partnership (other than AMB to the extent AMB issues
corresponding preferred stock to persons who are not affiliates of the
Partnership or the Operating Partnership) or (iii) either consolidate, merge
into or with, or convey, transfer or lease its assets substantially as an
entirety to, any corporation or other entity or amend, alter or repeal the
provisions of the Partnership Agreement (including, without limitation, this
Article 20 and Section 11.2), whether by merger, consolidation or otherwise, in

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each case in a manner that would materially and adversely affect the powers,
special rights, preferences, privileges or voting power of the Series G
Preferred Units or the holders thereof; provided, however, that with respect to
the occurrence of any event set forth in (iii) above, so long as (a) the
Partnership is the surviving entity and the Series G Preferred Units remain
outstanding with the terms thereof unchanged, or (b) the resulting, surviving or
transferee entity is a partnership, limited liability company or other
pass-through entity organized under the laws of any state and substitutes the
Series G Preferred Units for other interests in such entity having substantially
the same terms and rights as the Series G Preferred Units, including with
respect to distributions, voting rights and rights upon liquidation, dissolution
or winding-up, then the occurrence of any such event shall not be deemed to
materially and adversely affect such rights, privileges or voting powers of the
holders of the Series G Preferred Units; and provided further, that any increase
in the amount of Partnership Interests or the creation or issuance of any other
class or series of Partnership Interests represented by Junior Units or Parity
Preferred Units that are not issued to an affiliate of the Partnership, other
than the General Partner or the Operating Partnership to the extent the issuance
of such interests was to allow the General Partner or the Operating Partnership
to issue corresponding preferred stock or preferred interests to persons who are
not affiliates of the Partnership (other than AMB to the extent AMB issues
corresponding preferred stock or preferred interests to persons who are not
affiliates of the Partnership or the Operating Partnership), shall not be deemed
to materially and adversely affect such rights, preferences, privileges or
voting powers.

                C. So long as any Series G Preferred Units remain outstanding,
the General Partner shall not, without the affirmative vote of the holders of at
least two-thirds of the Series G Preferred Units outstanding at the time, take
any action which would result in the termination of the right of the holders of
such units to effect an exchange pursuant to Section 20.8; provided however, no
such vote shall be required so long as the Series G Preferred Units (or any
interests substituted therefore pursuant to Section 20.6.B) remain outstanding
and are exchangeable for Series G Preferred Shares or stock in another entity
having substantially the same terms and rights as the Series G Preferred Shares.

                D. Notwithstanding anything to the contrary contained in this
Agreement, including, without limitation, the provisions of Article 7 regarding
the management rights and responsibilities of the General Partner, whenever
distributions on any Series G Preferred Units shall remain unpaid for six or
more quarterly periods (i.e., the quarterly periods ending on the 15th day of
each January, April, July and October, or, if not a business day, the next
succeeding business day, beginning with the quarterly period ending October 15,
2000) (whether or not consecutive), the holders of 51% of either (i) such Series
G Preferred Units, in the event that the holders of the Series D Preferred
Units, Series E Preferred Units, Series F Preferred Units and Series H Preferred
Units are not entitled to exercise management rights pursuant to Section 17.6D,
Section 18.6.D, Section 19.6.D and Section 21.6.D, respectively, and that no
Future Parity Preferred Unitholders are entitled to exercise management rights
similar to those to which the holders of Series D Preferred Units, Series E
Preferred Units, Series F Preferred Units, Series G Preferred Units and Series H
Preferred Units are entitled to exercise pursuant to Section 17.6D, Section
18.6.D, Section 19.6.D, this Section 20.6.D and Section 21.6.D, respectively, or
(ii) the Parity Preferred Capital, in the event that holders of Series D
Preferred Units, Series E Preferred Units, Series F Preferred Units or Series H
Preferred Units are entitled to exercise management

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rights pursuant to Section 17.6D, Section 18.6.D, Section 19.6.D or Series
21.6.D, respectively, or Future Parity Preferred Unitholders are entitled to
exercise management rights similar to those to which the holders of Series D
Preferred Units, Series E Preferred Units, Series F Preferred Units, Series G
Preferred Units and Series H Preferred Units are entitled to exercise pursuant
to Section 17.6D, Section 18.6.D, Section 19.6.D, this Section 20.6.D and
Section 21.6.D, respectively, shall be entitled to assume rights to manage the
Partnership and perform actions related thereto for the sole purpose of
enforcing the Partnership's rights and remedies as against obligees of the
Partnership or other Persons from whom the Partnership may be entitled to
receive cash or other assets, until all distributions accumulated on the Series
G Preferred Units for all past quarterly periods and the distribution for the
then-current quarterly period shall have been fully-paid or declared and a sum
sufficient for the payment thereof irrevocably set aside in trust for payment in
full; provided, however, that no such holder or holders of Series G Preferred
Units may at any time take any action (or fail to take any action) if the
consequence of such action (or inaction) would be (i) to cause AMB to fail to
qualify as a REIT for federal or applicable state income tax purposes or (ii) to
cause the Partnership or the Operating Partnership to fail to qualify as a
partnership for federal or applicable state income tax purposes, or (iii) to
cause the Partnership, the Operating Partnership, the General Partner, or AMB to
be considered an "investment company" as defined in, or otherwise be subject to
regulation under, the Investment Company Act of 1940, as amended; and provided,
further, that solely for purposes of exercising the management rights set forth
in this Section 20.6.D, each holder of Series G Preferred Units shall be deemed
an Indemnitee, and shall be entitled to the benefits of the indemnification
provisions of Section 7.7 with respect to any and all action(s) taken (or
failure(s) to act) by a holder of Series G Preferred Units in the exercise of
(or failure(s) to exercise) the management rights described in this Section
20.6.D, including, without limitation, alleged breaches of the General Partner's
fiduciary duty to the Partners; and provided further, that the holders of the
Series G Preferred Units acknowledge and agree that the General Partner and the
Partnership have provided similar management rights to the holders of the Series
D Preferred Units, the Series E Preferred Units and the Series F Preferred Units
and shall be entitled to provide similar management rights to Future Parity
Preferred Unitholders.

                Section 20.7. Transfer Restrictions

                The Series G Preferred Units shall be subject to the provisions
of Article 11 hereof. Notwithstanding any provision to the contrary herein, no
transfer of Series G Preferred Units, or other action by the holder or holders
of such Units, is permitted without the consent of the General Partner which
consent may be given or withheld in its sole and absolute discretion, if such
transfer or other action would result in more than four partners holding all
outstanding Series F Preferred Units and Series G Preferred Units within the
meaning of Treasury Regulation Section 1.7704-1(h)(1)(ii) (without regard to
Treasury Regulation Section 1.7704-1(h)(3)(ii)); provided, however, that the
General Partner's consent may not be unreasonably withheld if (a) such transfer
or other action would not result in more than ten partners holding all
outstanding Series F Preferred Units and Series G Preferred Units within the
meaning of Treasury Regulation Section 1.7704-1(h)(1)(ii) (without regard to
Treasury Regulation Section 1.7704-1(h)(3)(ii)) and (b) the General Partner
cannot rely on Treasury Regulation Section 1.7704-1(h). In addition, no transfer
may be made to any person if such transfer would cause the exchange of the
Series G

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Preferred Units for Series G Preferred Shares, as provided herein, to be
required to be registered under the Securities Act of 1933, as amended, or any
state securities laws.

                Section 20.8. Exchange Rights

                A. Right to Exchange. (i) Series G Preferred Units will be
exchangeable in whole but not in part unless expressly otherwise provided herein
at anytime on or after August 29, 2010, at the option of 51% of the holders of
all outstanding Series G Preferred Units, for authorized but previously unissued
Series G Preferred Shares at an exchange rate of one Series G Preferred Share
from AMB for one Series G Preferred Unit, subject to adjustment as described
below (the "Series G Exchange Price"); provided that the Series G Preferred
Units will become exchangeable at any time, in whole but not in part unless
expressly otherwise provided herein, at the option of 51% of the holders of all
outstanding Series G Preferred Units for Series G Preferred Shares if (y) at any
time full distributions shall not have been timely made on any Series G
Preferred Unit with respect to six (6) prior quarterly distribution periods,
whether or not consecutive; provided, however, that a distribution in respect of
Series G Preferred Units shall be considered timely made if made within two (2)
Business Days after the applicable Series G Preferred Unit Distribution Payment
Date if at the time of such late payment there shall not be any prior quarterly
distribution periods in respect of which full distributions were not timely made
or (z) upon receipt by a holder or holders of Series G Preferred Units of (A)
notice from the General Partner that the General Partner or a Subsidiary of the
General Partner has taken the position that the Partnership is, or upon the
consummation of an identified event in the immediate future will be, a PTP and
(B) an opinion rendered by independent counsel familiar with such matters
addressed to a holder or holders of Series G Preferred Units, that the
Partnership is or likely is, or upon the occurrence of a defined event in the
immediate future will be or likely will be, a PTP.

                In addition, the Series G Preferred Units may be exchanged for
Series G Preferred Shares, in whole but not in part unless expressly otherwise
provided herein, at the option of 51% of the holders of all outstanding Series G
Preferred Units after August 29, 2003 and prior to August 29, 2010 if such
holders of a Series G Preferred Units shall deliver to the General Partner
either (i) a private letter ruling addressed to such holder of Series G
Preferred Units or (ii) an opinion of independent counsel reasonably acceptable
to the General Partner based on a change in statute, the enactment of temporary
or final Treasury Regulations or the publication of a Revenue Ruling or any
other IRS release, in either case to the effect that an exchange of the Series G
Preferred Units at such earlier time would not cause the Series G Preferred
Units to be considered "stock and securities" within the meaning of Section
351(e) of the Code for purposes of determining whether the holder of such Series
G Preferred Units is an "investment company" under Section 721(b) of the Code if
an exchange is permitted at such earlier date.

                In addition, Series G Preferred Units will become exchangeable
in whole but not in part unless expressly otherwise provided herein, at the
option of 51% of the holders of all outstanding Series G Preferred Units for
Series G Preferred Shares at an exchange rate of one Series G Preferred Share
from AMB for one Series G Preferred Unit if, (i) at any time such holders
conclude based on results or projected results that there exists (in the
reasonable judgment of such holders) an imminent and substantial risk that such
holders' interest in the

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Partnership represents or will represent more than 19.0% of the total profits of
or capital interests in the Partnership for a taxable year, (ii) such holders
deliver to the General Partner an opinion of independent counsel, reasonably
acceptable to the General Partner to the effect that there is a substantial risk
that their interest in the Partnership does not or will not satisfy the 19.0%
limit and (iii) the General Partner agrees with the conclusions referred to in
clauses (i) and (ii) of this sentence, such agreement not to be unreasonably
withheld.

                Furthermore, Series G Preferred Units will become exchangeable
in whole but not in part unless expressly otherwise provided herein, at the
option of 51% of the holders of all outstanding Series G Preferred Units for
Series G Preferred Shares at an exchange rate of one Series G Preferred Share
from AMB for one Series G Preferred Unit if (i) the Series G Preferred Units are
held by a REIT and (ii) excluding the effect of any loans and advances, from
time to time, from the Partnership to the Operating Partnership or any other
affiliate or related entity not exceeding 15% of the Partnership's total assets,
for purposes of the 5% test of Section 856(c)(4)(B) of the Code, either (A) the
Partnership is advised by independent counsel that, based on the assets and
income of the Partnership for a taxable year after 1999, the Partnership would
not satisfy the income and assets tests of Section 856 of the Code for such
taxable year if the Partnership were a real estate investment trust within the
meaning of the Code; or (B) the holder of the Series G Preferred Units shall
deliver to the General Partner an opinion of independent counsel reasonably
acceptable to the General Partner to the effect that, based on the assets and
income of the Partnership for a taxable year after 1999, the Partnership would
not satisfy the income and assets tests of Section 856 of the Code for such
taxable year if the Partnership were a real estate investment trust within the
meaning of the Code and that such failure would create a meaningful risk that
the holder of the Series G Preferred Units would fail to maintain its
qualification as a real estate investment trust.

                (ii) Notwithstanding anything to the contrary set forth in
Section 20.8.A(i), if a Series G Exchange Notice (as defined herein) has been
delivered to AMB and the General Partner, then the General Partner may, at its
option, within ten (10) Business Days after receipt of the Series G Exchange
Notice, elect to cause the Partnership to redeem all or a portion of the
outstanding Series G Preferred Units for cash in an amount equal to the original
Capital Contribution per Series G Preferred Unit and all accrued and unpaid
distributions thereon to the date of redemption. If the General Partner elects
to redeem fewer than all of the outstanding Series G Preferred Units, the number
of Series G Preferred Units held by each holder to be redeemed shall equal such
holder's pro rata share (based on the percentage of the aggregate number of
outstanding Series G Preferred Units that the total number of Series G Preferred
Units held by such holder represents) of the aggregate number of Series G
Preferred Units being redeemed.

                (iii) In the event an exchange of all Series G Preferred Units
pursuant to Section 20.8.A would violate the provisions on ownership limitation
of AMB set forth in Section 7 of Article Third of the Series G Articles
Supplementary, each holder of Series G Preferred Units shall be entitled to
exchange, pursuant to the provisions of Section 20.8.B, a number of Series G
Preferred Units which would comply with the provisions on the ownership
limitation of AMB set forth in such Section 7 of Article Third of the Series G
Articles Supplementary, with respect to such holder, and any Series G Preferred
Units not so exchanged (the "Series G Excess

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Units") shall be redeemed by the Partnership for cash in an amount equal to the
original Capital Contribution per Series G Excess Unit, plus any accrued and
unpaid distributions thereon to the date of redemption subject to any
restriction thereon contained in any debt instrument or agreement of the
Partnership. In the event an exchange would result in Series G Excess Units, as
a condition to such exchange, each holder of such units agrees to provide
representations and covenants reasonably requested by AMB relating to (i) the
widely held nature of the interests in such holder, sufficient to assure AMB
that the holder's ownership of stock of AMB (without regard to the limits
described above) will not cause any individual to own in excess of 9.0% of the
stock of AMB; and (ii) to the extent such Holder can so represent and covenant
without obtaining information from its owners (other than one or more direct or
indirect parent corporations, limited liability companies or partnerships and
not the holders of any interests in any such parent), the Holder's ownership of
tenants of the Partnership and its affiliates. For purposes of determining the
number of Series G Excess Units under this Section 20.8.A(iii), the "Ownership
Limit" set forth in the Series G Articles Supplementary shall be deemed to be
9.0%. To the extent the Partnership would not be able to pay the cash set forth
above in exchange for the Series G Excess Units, and to the extent consistent
with the REIT Charter, AMB agrees that it will grant to the holders of the
Series G Preferred Units exceptions to the Ownership Limit set forth in the
Series G Articles Supplementary sufficient to allow such Holders to exchange all
of their Series G Preferred Units for Series G Preferred Shares; provided such
holders furnish to AMB representations acceptable to AMB in its sole and
absolute discretion which assure AMB that such exceptions will not jeopardize
AMB's tax status as a REIT for purposes of federal and applicable state law.
Notwithstanding any provision of this Agreement to the contrary, no Series G
Limited Partner shall be entitled to effect an exchange of Series G Preferred
Units for Series G Preferred Shares to the extent that ownership or right to
acquire such shares would cause the Partner or any other Person or, in the
opinion of counsel selected by AMB, may cause the Partner or any other Person,
to violate the restrictions on ownership and transfer of Series G Preferred
Shares set forth in the REIT Charter. To the extent any such attempted exchange
for Series G Preferred Shares would be in violation of the previous sentence, it
shall be void ab initio and such Series G Limited Partner shall not acquire any
rights or economic interest in the Series G Preferred Shares otherwise issuable
upon such exchange.

                (iv) The redemption of Series G Preferred Units described in
Section 20.8.A(ii) and (iii) shall be subject to the provisions of Section
20.5.B(i) and Section 20.5.C(ii); provided, however, that the term "Series G
Redemption Price" in such Sections 20.5.B(i) and 20.5.C(ii) shall be read to
mean the original Capital Contribution per Series G Preferred Unit being
redeemed as set forth on Exhibit A plus all accrued and unpaid distributions to
the redemption date.

                B. Procedure for Exchange of Series G Preferred Units and/or
Series G Redemption.

                (i) Any exchange shall be exercised pursuant to a notice of
exchange (the "Series G Exchange Notice") delivered to AMB and the General
Partner by the Partners representing at least 51% of the outstanding Series G
Preferred Units (or by the Series G Contributor in the case of an exchange
pursuant to the last sentence of Section 20.8.A.(i) hereof) by (a) fax and (b)
by certified mail postage prepaid. AMB may effect any exchange of Series G
Preferred Units, or

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the General Partner may exercise its option to cause the Partnership to redeem
any portion of the Series G Preferred Units for cash pursuant to Section
20.8.A(ii) or redeem Series G Excess Units pursuant to Section 20.8.A(iii), by
delivering to each holder of record of Series G Preferred Units, within ten (10)
Business Days following receipt of the Series G Exchange Notice, (a) if the
General Partner elects to cause the Partnership to acquire any of the Series G
Preferred Units then outstanding, (1) certificates representing the Series G
Preferred Shares being issued in exchange for the Series G Preferred Units of
such holder being exchanged and (2) a written notice (a "Series G Redemption
Notice") stating (A) the redemption date, which may be the date of such Series G
Redemption Notice or any other date which is not later than sixty (60) days
following the receipt of the Series G Exchange Notice, (B) the redemption price,
(C) the place or places where the Series G Preferred Units are to be surrendered
and (D) that distributions on the Series G Preferred Units will cease to accrue
on such redemption date, or (b) if the General Partner elects to cause the
Partnership to redeem all of the Series G Preferred Units then outstanding in
exchange for cash, a Series G Redemption Notice. Series G Preferred Units which
are redeemed shall be deemed canceled (and any corresponding Partnership
Interest represented thereby deemed terminated) on the redemption date. Holders
of Series G Preferred Units shall deliver any canceled certificates representing
Series G Preferred Units which have been exchanged or redeemed to the office of
the General Partner (which currently is located at 505 Montgomery Street, San
Francisco, California 94111) within ten (10) Business Days of the exchange or
redemption with respect thereto. Notwithstanding anything to the contrary
contained herein, any and all Series G Preferred Units to be exchanged for
Series G Preferred Shares pursuant to this Section 20.8 shall be so exchanged in
a single transaction at one time. As a condition to exchange, AMB may require
the holders of Series G Preferred Units to make such representations as may be
reasonably necessary for the General Partner to establish that the issuance of
Series G Preferred Shares pursuant to the exchange shall not be required to be
registered under the Securities Act or any state securities laws. Any Series G
Preferred Shares issued pursuant to this Section 20.8 shall be delivered as
shares which are duly authorized, validly issued, fully paid and nonassessable,
free of any pledge, lien, encumbrance or restriction other than those provided
in the REIT Charter, the Bylaws of AMB, the Securities Act and relevant state
securities or blue sky laws.

                The certificates representing the Series G Preferred Shares
issued upon exchange of the Series G Preferred Units shall contain the following
legend:

                THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE
                TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE
                DISPOSED OF EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION
                STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
                "ACT"), AND STATE SECURITIES LAWS OR (B) IF THE CORPORATION HAS
                BEEN FURNISHED WITH A SATISFACTORY OPINION OF COUNSEL FOR THE
                HOLDER OF THE SHARES REPRESENTED HEREBY, OR OTHER EVIDENCE
                SATISFACTORY TO THE CORPORATION, THAT SUCH TRANSFER, SALE,
                ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER

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                DISPOSITION IS EXEMPT FROM THE PROVISIONS OF SECTION 5 OF THE
                ACT AND STATE SECURITIES LAWS AND THE RULES AND REGULATIONS
                THEREUNDER.

                (ii) In the event of an exchange of Series G Preferred Units for
Series G Preferred Shares, an amount equal to the accrued and unpaid
distributions to the date of exchange on any Series G Preferred Units tendered
for exchange shall (i) accrue on the Series G Preferred Shares into which such
Series G Preferred Units are exchanged, and (ii) continue to accrue on such
Series G Preferred Units, which shall remain outstanding following such
exchange, with the General Partner as the holder of such Series G Preferred
Units. Notwithstanding anything to the contrary set forth herein, in no event
shall a Holder of a Series G Preferred Unit that was validly exchanged for
Series G Preferred Shares pursuant to this Section (other than the General
Partner holding such Series G Preferred Unit following any such exchange),
receive a distribution out of Available Cash of the Partnership, if such Holder,
after exchange, is entitled to receive a distribution with respect to the Series
G Preferred Shares for which such Series G Preferred Unit was exchanged or
redeemed. Further, for purposes of the foregoing, in the event of an exchange of
Series G Preferred Units for Series G Preferred Shares, if the accrued and
unpaid distributions per Series G Preferred Unit is not the same for each Series
G Preferred Unit, the accrued and unpaid distributions per Series G Preferred
Unit for each such Series G Preferred Unit shall be equal to the greatest amount
of such accrued and unpaid distributions per Series G Preferred Unit on any such
unit.

                (iii) Fractional Series G Preferred Shares are not to be issued
upon exchange but, in lieu thereof, the General Partner will pay a cash
adjustment based upon the fair market value of the Series G Preferred Shares on
the day prior to the exchange date as determined in good faith by the board of
directors of the General Partner.

                C. Adjustment of Series G Exchange Price. In case AMB shall be a
party to any transaction (including, without limitation, a merger,
consolidation, statutory share exchange, tender offer for all or substantially
all of AMB's capital stock or sale of all or substantially all of AMB's assets),
in each case as a result of which the Series G Preferred Shares will be
converted into the right to receive shares of capital stock, other securities or
other property (including cash or any combination thereof), each Series G
Preferred Unit will thereafter be exchangeable into the kind and amount of
shares of capital stock and other securities and property receivable (including
cash or any combination thereof) upon the consummation of such transaction by a
holder of that number of Series G Preferred Shares or fraction thereof into
which one Series G Preferred Unit was exchangeable immediately prior to such
transaction. AMB may not become a party to any such transaction unless the terms
thereof are consistent with the foregoing. AMB and the Operating Partnership
further agree that, notwithstanding any transaction to which either may be a
party (including, without limitation, any merger, consolidation, statutory share
exchange, tender offer for all or substantially all of such entity's capital
stock or partnership interests or sale of all or substantially all of such
entity's assets), immediately following any such transaction, the issuer or
issuers of any shares of capital stock and other securities into which the
Series G Preferred Units shall be exchangeable pursuant to this Section 20.8
shall be the same issuer or issuers of shares of capital stock and other
securities into which (i) the Series B Preferred Units are then exchangeable
(or, if the Series B Preferred Units have previously been

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redeemed in full, would have been then exchangeable if then still outstanding),
(ii) the Series C Preferred Units are then exchangeable (or, if the Series C
Preferred Units have previously been redeemed in full, would have been then
exchangeable if then still outstanding), (iii) the Series D Preferred Units are
then exchangeable (or, if the Series D Preferred Units have previously been
redeemed in full, would have been then exchangeable if then still outstanding),
(iv) the Series E Preferred Units are then exchangeable (or, if the Series E
Preferred Units have previously been redeemed in full, would have been then
exchangeable if then still outstanding) and (v) the Series F Preferred Units are
then exchangeable (or, if the Series F Preferred Units have previously been
redeemed in full, would have been then exchangeable if then still outstanding).

                Section 20.9. No Conversion Rights

                The Series G Preferred Units shall not be convertible into any
other class or series of interest in the Partnership.

                Section 20.10. No Sinking Fund

                No sinking fund shall be established for the retirement or
redemption of Series G Preferred Units.

                                   ARTICLE 21.
                            SERIES H PREFERRED UNITS

                Section 21.1. Designation and Number

                A series of Partnership Units in the Partnership designated as
the 8.125% Series H Cumulative Redeemable Preferred Units (the "Series H
Preferred Units") is hereby established. The number of Series H Preferred Units
shall be 840,000.

                Section 21.2. Ranking

                The Series H Preferred Units shall, with respect to distribution
rights and rights upon voluntary or involuntary liquidation, winding up or
dissolution of the Partnership, rank (i) senior to the Common Units and to all
Partnership Units the terms of which provide that such Partnership Units shall
rank junior to the Series H Preferred Units; (ii) on a parity with the Series C
Preferred Units, the Series D Preferred Units, the Series E Preferred Units, the
Series F Preferred Units, the Series G Preferred Units, and all other Parity
Preferred Units; and (iii) junior to all Partnership Units which rank senior to
the Series H Preferred Units.

                Section 21.3. Distributions

                A. Payment of Distributions. Subject to the rights of holders of
Parity Preferred Units as to the payment of distributions (including pursuant to
Sections 5.1, 16.3.A, 17.3A, 18.3A, 19.3A and 20.3A hereof), holders of Series H
Preferred Units will be entitled to receive, when, as and if declared by the
Partnership acting through the General Partner, out of Available Cash,
cumulative preferential cash distributions in an amount equal to the Series H

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Priority Return. Such distributions will be payable (A) quarterly (such
quarterly periods for purposes of payment and accrual will be the quarterly
periods ending on the dates specified in this sentence and not calendar year
quarters) in arrears, on the 25th day of March, June, September and December of
each year and (B) in the event of (i) an exchange of Series H Preferred Units
into Series H Preferred Shares, or (ii) a redemption of Series H Preferred
Units, on the exchange date or redemption date, as applicable (each a "Series H
Preferred Unit Distribution Payment Date"), commencing on the first of such
payment dates to occur following their original date of issuance. If any date on
which distributions are to be made on the Series H Preferred Units is not a
Business Day, then payment of the distribution to be made on such date will be
made on the next succeeding day that is a Business Day (and without any interest
or other payment in respect of any such delay) except that, if such Business Day
is in the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day, in each case with the same force and effect
as if made on such date. Distributions on the Series H Preferred Units will be
made to the holders of record of the Series H Preferred Units on the relevant
record dates, which will be fifteen (15) days prior to the relevant Series H
Preferred Unit Distribution Payment Date (the "Series H Preferred Unit
Partnership Record Date"). For purposes of clarifying the relative distribution
priority rights among the Series H Preferred Units, the Series G Preferred
Units, the Series F Preferred Units, the Series E Preferred Units, the Series D
Preferred Units and the Series C Preferred Units, the payment of distributions
with respect to a series of such Preferred Units prior to the payment of
distributions with respect to another such series of Preferred Units, solely as
a result of the distribution payment dates with respect to a series of Preferred
Units occurring on a different date from another series of Preferred Units,
shall not be deemed to create a priority in favor of one series of Preferred
Units over any other series of Preferred Units.

                B. Distributions Cumulative. Notwithstanding the foregoing,
distributions on the Series H Preferred Units will accrue whether or not the
terms and provisions of any agreement of the Partnership at any time prohibit
the current payment of distributions, whether or not the Partnership has
earnings, whether or not there are funds legally available for the payment of
such of such distributions and whether or not such distributions are authorized.
Accrued but unpaid distributions on the Series H Preferred Units will accumulate
as of the Preferred Unit Distribution Payment Date on which they first become
payable.

                C. Priority as to Distributions. (i) So long as any Series H
Preferred Units are outstanding, no distribution of cash or other property shall
be authorized, declared, paid or set apart for payment on or with respect to any
class or series of Partnership Interest represented by Junior Units, nor shall
any Junior Units or Parity Preferred Units be redeemed, purchased or otherwise
acquired for any consideration (or any monies be paid to or made available for a
sinking fund for the redemption of any such Junior Units or Parity Preferred
Units) by the Partnership (except by conversion into or exchange for other
Junior Units or Parity Preferred Units, as the case may be) unless, in each
case, full cumulative distributions have been or contemporaneously are
authorized and paid or authorized and a sum sufficient for the payment thereof
set apart for such payment on the Series H Preferred Units and all classes and
series of outstanding Parity Preferred Units for all distribution periods. The
foregoing sentence will not prohibit (a) distributions payable solely in Junior
Units, (b) the exchange of Junior Units or Parity Preferred Units into
Partnership Interests of the Partnership ranking junior to the Series H

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Preferred Units as to distributions and upon voluntary and involuntary
liquidation, dissolution or winding up of the Partnership, or (c) distributions
necessary to enable the Operating Partnership to redeem partnership interests
corresponding to Series H Preferred Shares and any Parity Preferred Stock with
respect to distributions or Junior Stock to be purchased by AMB pursuant to the
REIT Charter to preserve AMB's status as a REIT; provided that such redemption
shall be upon the same terms as the corresponding stock purchase pursuant to the
REIT Charter.

                (ii) So long as distributions have not been paid in full (or a
sum sufficient for such full payment is not so set apart) upon the Series H
Preferred Units and any other Parity Preferred Units, all distributions
authorized and declared on the Series H Preferred Units and all classes or
series of outstanding Parity Preferred Units shall be authorized and declared
pro rata so that the amount of distributions authorized and declared per Series
H Preferred Unit and such other classes or series of Parity Preferred Units
shall in all cases bear to each other the same ratio that accrued distributions
per Series H Preferred Unit and such other classes or series of Parity Preferred
Units (which shall not include any accumulation in respect of unpaid
distributions for prior distribution periods if such class or series of Parity
Preferred Units do not have cumulative distribution rights) bear to each other.
No interest, or sum of money in lieu of interest, shall be payable in respect of
any distributions or payments on Series H Preferred Units which may be in
arrears.

                (iii) Notwithstanding anything to the contrary set forth herein,
distributions on Partnership Interests held by either (a) the General Partner,
(b) the Operating Partnership or (c) any other holder of Partnership Interests
in the Partnership, in each case ranking junior to or on parity with the Series
H Preferred Units may be made, without preserving the priority of distributions
described in Sections 21.3.C(i) and (ii), but only to the extent such
distributions are required to preserve the REIT status of AMB, in its capacity
as sole general partner of the Operating Partnership and as sole stockholder of
the General Partner, and in the case of any holder other than the General
Partner only to the extent required by the Partnership Agreement; provided, that
the Partnership shall not be disproportionately burdened by this provision
relative to the cash flow generated by other assets owned directly or indirectly
by AMB.

                D. No Further Rights. Holders of Series H Preferred Units shall
not be entitled to any distributions, whether payable in cash, other property or
otherwise, in excess of the full cumulative distributions described herein.

                Section 21.4. Liquidation Proceeds

                A. Distributions. Upon voluntary or involuntary liquidation,
dissolution or winding-up of the Partnership, distributions on the Series H
Preferred Units shall be made in accordance with Article 13 of this Agreement.

                B. Notice. Written notice of any such voluntary or involuntary
liquidation, dissolution or winding-up of the Partnership, stating the payment
date or dates when, and the place or places where, the amounts distributable in
such circumstances shall be payable, shall be given by the General Partner
pursuant to Section 13.6 hereof.

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                C. No Further Rights. After payment of the full amount of the
liquidating distributions to which they are entitled, Holders of Series H
Preferred Units will have no right or claim to any of the remaining assets of
the Partnership.

                D. Consolidation, Merger or Certain Other Transactions. None of
a consolidation or merger of the Partnership with or into another entity, a
merger of another entity with or into the Partnership, or a sale, lease,
transfer or conveyance of all or substantially all of the Partnership's property
or business shall be considered a liquidation, dissolution or winding up of the
Partnership.

                Section 21.5. Series H Redemption

                A. Series H Redemption. The Series H Preferred Units may not be
redeemed prior to September 1, 2005. On or after such date, the Partnership
shall have the right to redeem the Series H Preferred Units, in whole or in
part, at any time or from time to time, upon not less than 30 nor more than 60
days' written notice, at a redemption price, payable in cash (a "Series H
Redemption"), equal to the Capital Account balance of the holder of Series H
Preferred Units (the "Series H Redemption Price"); provided, however, that no
redemption pursuant to this Section 21.5 will be permitted if the Series H
Redemption Price does not equal or exceed the original Capital Contribution of
such holder plus the cumulative Series H Priority Return to the redemption date
to the extent not previously distributed. If fewer than all of the outstanding
Series H Preferred Units are to be redeemed, the Series H Preferred Units to be
redeemed shall be selected pro rata (as nearly as practicable without creating
fractional units).

                B. Limitation on Series H Redemption. (i) The Series H
Redemption Price of the Series H Preferred Units (other than the portion thereof
consisting of accumulated but unpaid distributions) is payable solely out of the
sale proceeds of capital stock of AMB, which will be contributed by AMB to the
General Partner or the Operating Partnership and which in turn will be
contributed by the General Partner or the Operating Partnership to the
Partnership as an additional capital contribution, or out of the sale of limited
partner interests in the Partnership or the Operating Partnership and from no
other source. For purposes of the preceding sentence, "capital stock" means any
equity securities (including Common Stock and Preferred Stock (as such terms are
defined in the REIT Charter), depository shares, interests, participation or
other ownership interests (however designated) and any rights (other than debt
securities convertible into or exchangeable for equity securities) or options to
purchase any of the foregoing.

                (ii) The Partnership may not redeem fewer than all of the
outstanding Series H Preferred Units unless all accumulated and unpaid
distributions have been paid on all Series H Preferred Units for all quarterly
distribution periods terminating on or prior to the date of redemption.

                C. Procedures for Series H Redemption. (i) Notice of redemption
will be (i) faxed, and (ii) mailed by the Partnership, by certified mail,
postage prepaid, not less than 30 nor more than 60 days prior to the redemption
date, addressed to the respective holders of record of the Series H Preferred
Units at their respective addresses as they appear on the records of the
Partnership. No failure to give or defect in such notice shall affect the
validity of the proceedings for the redemption of any Series H Preferred Units
except as to the holder to whom such notice

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was defective or not given. In addition to any information required by law, each
such notice shall state: (a) the redemption date, (b) the Series H Redemption
Price, (c) the aggregate number of Series H Preferred Units to be redeemed and
if fewer than all of the outstanding Series H Preferred Units are to be
redeemed, the number of Series H Preferred Units to be redeemed held by such
holder, which number shall equal such holder's pro rata share (based on the
percentage of the aggregate number of outstanding Series H Preferred Units that
the total number of Series H Preferred Units held by such holder represents) of
the aggregate number of Series H Preferred Units to be redeemed, (d) the place
or places where such Series H Preferred Units are to be surrendered for payment
of the Series H Redemption Price, (e) that distributions on the Series H
Preferred Units to be redeemed will cease to accumulate on such redemption date
and (f) that payment of the Series H Redemption Price will be made upon
presentation and surrender of such Series H Preferred Units.

                (ii) If the Partnership gives a notice of redemption in respect
of Series H Preferred Units (which notice will be irrevocable) then, by 12:00
noon, New York City time, on the redemption date, the Partnership will deposit
irrevocably in trust for the benefit of the Series H Preferred Units being
redeemed funds sufficient to pay the applicable Series H Redemption Price and
will give irrevocable instructions and authority to pay such Series H Redemption
Price to the holders of the Series H Preferred Units upon surrender of the
Series H Preferred Units by such holders at the place designated in the notice
of redemption. On and after the date of redemption, distributions will cease to
accumulate on the Series H Preferred Units or portions thereof called for
redemption, unless the Partnership defaults in the payment thereof. If any date
fixed for redemption of Series H Preferred Units is not a Business Day, then
payment of the Series H Redemption Price payable on such date will be made on
the next succeeding day that is a Business Day (and without any interest or
other payment in respect of any such delay) except that, if such Business Day
falls in the next calendar year, such payment will be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date fixed for redemption. If payment of the Series H Redemption Price
is improperly withheld or refused and not paid by the Partnership, distributions
on such Series H Preferred Units will continue to accumulate from the original
redemption date to the date of payment, in which case the actual payment date
will be considered the date fixed for redemption for purposes of calculating the
applicable Series H Redemption Price.

                Section 21.6. Voting and Certain Management Rights

                A. General. Holders of the Series H Preferred Units will not
have any voting rights or right to consent to any matter requiring the consent
or approval of the Limited Partners, except as set forth below and in Section
7.3.E.

                B. Certain Voting Rights. So long as any Series H Preferred
Units remains outstanding, the Partnership shall not, without the affirmative
vote of the holders of at least two-thirds of the Series H Preferred Units
outstanding at the time (i) authorize or create, or increase the authorized or
issued amount of, any class or series of Partnership Interests ranking prior to
the Series H Preferred Units with respect to payment of distributions or rights
upon liquidation, dissolution or winding-up or reclassify any Partnership
Interests of the Partnership into any such Partnership Interest, or create,
authorize or issue any obligations or security convertible into or

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evidencing the right to purchase any such Partnership Interests, (ii) authorize
or create, or increase the authorized or issued amount of any Parity Preferred
Units or reclassify any Partnership Interest of the Partnership into any such
Partnership Interest or create, authorize or issue any obligations or security
convertible into or evidencing the right to purchase any such Partnership
Interests but only to the extent such Parity Preferred Units are issued to an
affiliate of the Partnership, other than AMB or the Operating Partnership to the
extent the issuance of such interests was to allow AMB or the Operating
Partnership to issue corresponding preferred stock or preferred interests to
persons who are not affiliates of the Partnership (other than AMB to the extent
AMB issues corresponding preferred stock to persons who are not affiliates of
the Partnership or the Operating Partnership) or (iii) either consolidate, merge
into or with, or convey, transfer or lease its assets substantially as an
entirety to, any corporation or other entity or amend, alter or repeal the
provisions of the Partnership Agreement (including, without limitation, this
Article 21 and Section 11.2), whether by merger, consolidation or otherwise, in
each case in a manner that would materially and adversely affect the powers,
special rights, preferences, privileges or voting power of the Series H
Preferred Units or the holders thereof; provided, however, that with respect to
the occurrence of any event set forth in (iii) above, so long as (a) the
Partnership is the surviving entity and the Series H Preferred Units remain
outstanding with the terms thereof unchanged, or (b) the resulting, surviving or
transferee entity is a partnership, limited liability company or other
pass-through entity organized under the laws of any state and substitutes the
Series H Preferred Units for other interests in such entity having substantially
the same terms and rights as the Series H Preferred Units, including with
respect to distributions, voting rights and rights upon liquidation, dissolution
or winding-up, then the occurrence of any such event shall not be deemed to
materially and adversely affect such rights, privileges or voting powers of the
holders of the Series H Preferred Units; and provided further, that any increase
in the amount of Partnership Interests or the creation or issuance of any other
class or series of Partnership Interests represented by Junior Units or Parity
Preferred Units that are not issued to an affiliate of the Partnership, other
than the General Partner or the Operating Partnership to the extent the issuance
of such interests was to allow the General Partner or the Operating Partnership
to issue corresponding preferred stock or preferred interests to persons who are
not affiliates of the Partnership (other than AMB to the extent AMB issues
corresponding preferred stock or preferred interests to persons who are not
affiliates of the Partnership or the Operating Partnership), shall not be deemed
to materially and adversely affect such rights, preferences, privileges or
voting powers.

                C. So long as any Series H Preferred Units remain outstanding,
the General Partner shall not, without the affirmative vote of the holders of at
least two-thirds of the Series H Preferred Units outstanding at the time, take
any action which would result in the termination of the right of the holders of
such units to effect an exchange pursuant to Section 21.8; provided however, no
such vote shall be required so long as the Series H Preferred Units (or any
interests substituted therefore pursuant to Section 21.6.B) remain outstanding
and are exchangeable for Series H Preferred Shares or stock in another entity
having substantially the same terms and rights as the Series H Preferred Shares.

                D. Notwithstanding anything to the contrary contained in this
Agreement, including, without limitation, the provisions of Article 7 regarding
the management rights and responsibilities of the General Partner, whenever
distributions on any Series H Preferred Units

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shall remain unpaid for six or more quarterly periods (i.e., the quarterly
periods ending on the 25th day of each March, June, September and December, or,
if not a business day, the next succeeding business day, beginning with the
quarterly period ending September 25, 2000) (whether or not consecutive), the
holders of 51% of either (i) such Series H Preferred Units, in the event that
the holders of the Series D Preferred Units, Series E Preferred Units, Series F
Preferred Units and Series G Preferred Units are not entitled to exercise
management rights pursuant to Section 17.6D, Section 18.6.D, Section 19.6.D and
Section 20.6.D, respectively, and that no Future Parity Preferred Unitholders
are entitled to exercise management rights similar to those to which the holders
of Series D Preferred Units, Series E Preferred Units, Series F Preferred Units,
Series G Preferred Units and Series H Preferred Units are entitled to exercise
pursuant to Section 17.6D, Section 18.6.D, Section 19.6.D, Section 20.6.D and
this Section 21.6.D, respectively, or (ii) the Parity Preferred Capital, in the
event that holders of Series D Preferred Units, Series E Preferred Units, Series
F Preferred Units or Series G Preferred Units are entitled to exercise
management rights pursuant to Section 17.6D, Section 18.6.D, Section 19.6.D or
Section 20.6.D, respectively, or Future Parity Preferred Unitholders are
entitled to exercise management rights similar to those to which the holders of
Series D Preferred Units, Series E Preferred Units, Series F Preferred Units,
Series G Preferred Units and Series H Preferred Units are entitled to exercise
pursuant to Section 17.6D, Section 18.6.D, Section 19.6.D, this Section 20.6.D
and this Section 21.6.D, respectively, shall be entitled to assume rights to
manage the Partnership and perform actions related thereto for the sole purpose
of enforcing the Partnership's rights and remedies as against obligees of the
Partnership or other Persons from whom the Partnership may be entitled to
receive cash or other assets, until all distributions accumulated on the Series
H Preferred Units for all past quarterly periods and the distribution for the
then-current quarterly period shall have been fully-paid or declared and a sum
sufficient for the payment thereof irrevocably set aside in trust for payment in
full; provided, however, that no such holder or holders of Series H Preferred
Units may at any time take any action (or fail to take any action) if the
consequence of such action (or inaction) would be (i) to cause AMB to fail to
qualify as a REIT for federal or applicable state income tax purposes or (ii) to
cause the Partnership or the Operating Partnership to fail to qualify as a
partnership for federal or applicable state income tax purposes, or (iii) to
cause the Partnership, the Operating Partnership, the General Partner, or AMB to
be considered an "investment company" as defined in, or otherwise be subject to
regulation under, the Investment Company Act of 1940, as amended; and provided,
further, that solely for purposes of exercising the management rights set forth
in this Section 21.6.D, each holder of Series H Preferred Units shall be deemed
an Indemnitee, and shall be entitled to the benefits of the indemnification
provisions of Section 7.7 with respect to any and all action(s) taken (or
failure(s) to act) by a holder of Series H Preferred Units in the exercise of
(or failure(s) to exercise) the management rights described in this Section
21.6.D, including, without limitation, alleged breaches of the General Partner's
fiduciary duty to the Partners; and provided further, that the holders of the
Series H Preferred Units acknowledge and agree that the General Partner and the
Partnership have provided similar management rights to the holders of the Series
D Preferred Units, the Series E Preferred Units, the Series F Preferred Units
and Series G Preferred Units and shall be entitled to provide similar management
rights to Future Parity Preferred Unitholders.

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                Section 21.7. Transfer Restrictions

                The Series H Preferred Units shall be subject to the provisions
of Article 11 hereof. Notwithstanding any provision to the contrary herein, no
transfer of Series H Preferred Units, or other action by the holder or holders
of such Units, is permitted without the consent of the General Partner which
consent may be given or withheld in its sole and absolute discretion, if such
transfer or other action would result in more than four partners holding all
outstanding Series H Preferred Units within the meaning of Treasury Regulation
Section 1.7704-1(h)(1)(ii) (without regard to Treasury Regulation Section
1.7704-1(h)(3)(ii)); provided, however, that the General Partner's consent may
not be unreasonably withheld if (a) such transfer or other action would not
result in more than ten partners holding all outstanding Series H Preferred
Units within the meaning of Treasury Regulation Section 1.7704-1(h)(1)(ii)
(without regard to Treasury Regulation Section 1.7704-1(h)(3)(ii)) and (b) the
General Partner cannot rely on Treasury Regulation Section 1.7704-1(h). In
addition, no transfer may be made to any person if such transfer would cause the
exchange of the Series H Preferred Units for Series H Preferred Shares, as
provided herein, to be required to be registered under the Securities Act of
1933, as amended, or any state securities laws.

                Section 21.8. Exchange Rights

                A. Right to Exchange. (i) Series H Preferred Units will be
exchangeable in whole but not in part unless expressly otherwise provided herein
at anytime on or after September 1, 2010, at the option of 51% of the holders of
all outstanding Series H Preferred Units, for authorized but previously unissued
Series H Preferred Shares at an exchange rate of one Series H Preferred Share
from AMB for one Series H Preferred Unit, subject to adjustment as described
below (the "Series H Exchange Price"); provided that the Series H Preferred
Units will become exchangeable at any time, in whole but not in part unless
expressly otherwise provided herein, at the option of 51% of the holders of all
outstanding Series H Preferred Units for Series H Preferred Shares if (y) at any
time full distributions shall not have been timely made on any Series H
Preferred Unit with respect to six (6) prior quarterly distribution periods,
whether or not consecutive; provided, however, that a distribution in respect of
Series H Preferred Units shall be considered timely made if made within two (2)
Business Days after the applicable Series H Preferred Unit Distribution Payment
Date if at the time of such late payment there shall not be any prior quarterly
distribution periods in respect of which full distributions were not timely made
or (z) upon receipt by a holder or holders of Series H Preferred Units of (A)
notice from the General Partner that the General Partner or a Subsidiary of the
General Partner has taken the position that the Partnership is, or upon the
consummation of an identified event in the immediate future will be, a PTP and
(B) an opinion rendered by independent counsel familiar with such matters
addressed to a holder or holders of Series H Preferred Units, that the
Partnership is or likely is, or upon the occurrence of a defined event in the
immediate future will be or likely will be, a PTP.

                In addition, the Series H Preferred Units may be exchanged for
Series H Preferred Shares, in whole but not in part unless expressly otherwise
provided herein, at the option of 51% of the holders of all outstanding Series H
Preferred Units after September 1, 2003 and prior to September 1, 2010 if such
holders of a Series H Preferred Units shall deliver to the General

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Partner either (i) a private letter ruling addressed to such holder of Series H
Preferred Units or (ii) an opinion of independent counsel reasonably acceptable
to the General Partner based on a change in statute, the enactment of temporary
or final Treasury Regulations or the publication of a Revenue Ruling or any
other IRS release, in either case to the effect that an exchange of the Series H
Preferred Units at such earlier time would not cause the Series H Preferred
Units to be considered "stock and securities" within the meaning of Section
351(e) of the Code for purposes of determining whether the holder of such Series
H Preferred Units is an "investment company" under Section 721(b) of the Code if
an exchange is permitted at such earlier date.

                (ii) Notwithstanding anything to the contrary set forth in
Section 21.8.A(i), if a Series H Exchange Notice (as defined herein) has been
delivered to AMB and the General Partner, then the General Partner may, at its
option, within ten (10) Business Days after receipt of the Series H Exchange
Notice, elect to cause the Partnership to redeem all or a portion of the
outstanding Series H Preferred Units for cash in an amount equal to the original
Capital Contribution per Series H Preferred Unit and all accrued and unpaid
distributions thereon to the date of redemption. If the General Partner elects
to redeem fewer than all of the outstanding Series H Preferred Units, the number
of Series H Preferred Units held by each holder to be redeemed shall equal such
holder's pro rata share (based on the percentage of the aggregate number of
outstanding Series H Preferred Units that the total number of Series H Preferred
Units held by such holder represents) of the aggregate number of Series H
Preferred Units being redeemed.

                (iii) In the event an exchange of all Series H Preferred Units
pursuant to Section 21.8.A would violate the provisions on ownership limitation
of AMB set forth in Section 7 of Article Third of the Series H Articles
Supplementary, each holder of Series H Preferred Units shall be entitled to
exchange, pursuant to the provisions of Section 21.8.B, a number of Series H
Preferred Units which would comply with the provisions on the ownership
limitation of AMB set forth in such Section 7 of Article Third of the Series H
Articles Supplementary, with respect to such holder, and any Series H Preferred
Units not so exchanged (the "Series H Excess Units") shall be redeemed by the
Partnership for cash in an amount equal to the original Capital Contribution per
Series H Excess Unit, plus any accrued and unpaid distributions thereon to the
date of redemption subject to any restriction thereon contained in any debt
instrument or agreement of the Partnership. In the event an exchange would
result in Series H Excess Units, as a condition to such exchange, each holder of
such units agrees to provide representations and covenants reasonably requested
by AMB relating to (i) the widely held nature of the interests in such holder,
sufficient to assure AMB that the holder's ownership of stock of AMB (without
regard to the limits described above) will not cause any individual to own in
excess of 9.0% of the stock of AMB; and (ii) to the extent such Holder can so
represent and covenant without obtaining information from its owners (other than
one or more direct or indirect parent corporations, limited liability companies
or partnerships and not the holders of any interests in any such parent), the
Holder's ownership of tenants of the Partnership and its affiliates. For
purposes of determining the number of Series H Excess Units under this Section
21.8.A(iii), the "Ownership Limit" set forth in the Series H Articles
Supplementary shall be deemed to be 9.0%. To the extent the Partnership would
not be able to pay the cash set forth above in exchange for the Series H Excess
Units, and to the extent consistent with the REIT Charter, AMB agrees that it
will grant to the holders of the Series H Preferred Units exceptions to the
Ownership Limit set

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forth in the Series H Articles Supplementary sufficient to allow such Holders to
exchange all of their Series H Preferred Units for Series H Preferred Shares;
provided such holders furnish to AMB representations acceptable to AMB in its
sole and absolute discretion which assure AMB that such exceptions will not
jeopardize AMB's tax status as a REIT for purposes of federal and applicable
state law. Notwithstanding any provision of this Agreement to the contrary, no
Series H Limited Partner shall be entitled to effect an exchange of Series H
Preferred Units for Series H Preferred Shares to the extent that ownership or
right to acquire such shares would cause the Partner or any other Person or, in
the opinion of counsel selected by AMB, may cause the Partner or any other
Person, to violate the restrictions on ownership and transfer of Series H
Preferred Shares set forth in the REIT Charter. To the extent any such attempted
exchange for Series H Preferred Shares would be in violation of the previous
sentence, it shall be void ab initio and such Series H Limited Partner shall not
acquire any rights or economic interest in the Series H Preferred Shares
otherwise issuable upon such exchange.

                (iv) The redemption of Series H Preferred Units described in
Section 20.8.A(ii) and (iii) shall be subject to the provisions of Section
21.5.B(i) and Section 21.5.C(ii); provided, however, that the term "Series H
Redemption Price" in such Sections 21.5.B(i) and 21.5.C(ii) shall be read to
mean the original Capital Contribution per Series H Preferred Unit being
redeemed as set forth on Exhibit A plus all accrued and unpaid distributions to
the redemption date.

                B. Procedure for Exchange of Series H Preferred Units and/or
Series H Redemption.

                (i) Any exchange shall be exercised pursuant to a notice of
exchange (the "Series H Exchange Notice") delivered to AMB and the General
Partner by the Partners representing at least 51% of the outstanding Series H
Preferred Units (or by the Series H Contributor in the case of an exchange
pursuant to the last sentence of Section 21.8.A.(i) hereof) by (a) fax and (b)
by certified mail postage prepaid. AMB may effect any exchange of Series H
Preferred Units, or the General Partner may exercise its option to cause the
Partnership to redeem any portion of the Series H Preferred Units for cash
pursuant to Section 21.8.A(ii) or redeem Series H Excess Units pursuant to
Section 21.8.A(iii), by delivering to each holder of record of Series H
Preferred Units, within ten (10) Business Days following receipt of the Series H
Exchange Notice, (a) if the General Partner elects to cause the Partnership to
acquire any of the Series H Preferred Units then outstanding, (1) certificates
representing the Series H Preferred Shares being issued in exchange for the
Series H Preferred Units of such holder being exchanged and (2) a written notice
(a "Series H Redemption Notice") stating (A) the redemption date, which may be
the date of such Series H Redemption Notice or any other date which is not later
than sixty (60) days following the receipt of the Series H Exchange Notice, (B)
the redemption price, (C) the place or places where the Series H Preferred Units
are to be surrendered and (D) that distributions on the Series H Preferred Units
will cease to accrue on such redemption date, or (b) if the General Partner
elects to cause the Partnership to redeem all of the Series H Preferred Units
then outstanding in exchange for cash, a Series H Redemption Notice. Series H
Preferred Units which are redeemed shall be deemed canceled (and any
corresponding Partnership Interest represented thereby deemed terminated) on the
redemption date. Holders of Series H Preferred Units shall deliver any canceled
certificates representing Series H Preferred Units which have

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been exchanged or redeemed to the office of the General Partner (which currently
is located at 505 Montgomery Street, San Francisco, California 94111) within ten
(10) Business Days of the exchange or redemption with respect thereto.
Notwithstanding anything to the contrary contained herein, any and all Series H
Preferred Units to be exchanged for Series H Preferred Shares pursuant to this
Section 21.8 shall be so exchanged in a single transaction at one time. As a
condition to exchange, AMB may require the holders of Series H Preferred Units
to make such representations as may be reasonably necessary for the General
Partner to establish that the issuance of Series H Preferred Shares pursuant to
the exchange shall not be required to be registered under the Securities Act or
any state securities laws. Any Series H Preferred Shares issued pursuant to this
Section 21.8 shall be delivered as shares which are duly authorized, validly
issued, fully paid and nonassessable, free of any pledge, lien, encumbrance or
restriction other than those provided in the REIT Charter, the Bylaws of AMB,
the Securities Act and relevant state securities or blue sky laws.

                The certificates representing the Series H Preferred Shares
issued upon exchange of the Series H Preferred Units shall contain the following
legend:

                THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE
                TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE
                DISPOSED OF EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION
                STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
                "ACT"), AND STATE SECURITIES LAWS OR (B) IF THE CORPORATION HAS
                BEEN FURNISHED WITH A SATISFACTORY OPINION OF COUNSEL FOR THE
                HOLDER OF THE SHARES REPRESENTED HEREBY, OR OTHER EVIDENCE
                SATISFACTORY TO THE CORPORATION, THAT SUCH TRANSFER, SALE,
                ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION IS EXEMPT
                FROM THE PROVISIONS OF SECTION 5 OF THE ACT AND STATE SECURITIES
                LAWS AND THE RULES AND REGULATIONS THEREUNDER.

                (ii) In the event of an exchange of Series H Preferred Units for
Series H Preferred Shares, an amount equal to the accrued and unpaid
distributions to the date of exchange on any Series H Preferred Units tendered
for exchange shall (i) accrue on the Series H Preferred Shares into which such
Series H Preferred Units are exchanged, and (ii) continue to accrue on such
Series H Preferred Units, which shall remain outstanding following such
exchange, with the General Partner as the holder of such Series H Preferred
Units. Notwithstanding anything to the contrary set forth herein, in no event
shall a Holder of a Series H Preferred Unit that was validly exchanged for
Series H Preferred Shares pursuant to this Section (other than the General
Partner holding such Series H Preferred Unit following any such exchange),
receive a distribution out of Available Cash of the Partnership, if such Holder,
after exchange, is entitled to receive a distribution with respect to the Series
H Preferred Shares for which such Series H Preferred Unit was exchanged or
redeemed. Further, for purposes of the foregoing, in the event of an exchange of
Series H Preferred Units for Series H Preferred Shares, if the accrued and
unpaid distributions

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per Series H Preferred Unit is not the same for each Series H Preferred Unit,
the accrued and unpaid distributions per Series H Preferred Unit for each such
Series H Preferred Unit shall be equal to the greatest amount of such accrued
and unpaid distributions per Series H Preferred Unit on any such unit.

                (iii) Fractional Series H Preferred Shares are not to be issued
upon exchange but, in lieu thereof, the General Partner will pay a cash
adjustment based upon the fair market value of the Series H Preferred Shares on
the day prior to the exchange date as determined in good faith by the board of
directors of the General Partner.

                C. Adjustment of Series H Exchange Price. In case AMB shall be a
party to any transaction (including, without limitation, a merger,
consolidation, statutory share exchange, tender offer for all or substantially
all of AMB's capital stock or sale of all or substantially all of AMB's assets),
in each case as a result of which the Series H Preferred Shares will be
converted into the right to receive shares of capital stock, other securities or
other property (including cash or any combination thereof), each Series H
Preferred Unit will thereafter be exchangeable into the kind and amount of
shares of capital stock and other securities and property receivable (including
cash or any combination thereof) upon the consummation of such transaction by a
holder of that number of Series H Preferred Shares or fraction thereof into
which one Series H Preferred Unit was exchangeable immediately prior to such
transaction. AMB may not become a party to any such transaction unless the terms
thereof are consistent with the foregoing. AMB and the Operating Partnership
further agree that, notwithstanding any transaction to which either may be a
party (including, without limitation, any merger, consolidation, statutory share
exchange, tender offer for all or substantially all of such entity's capital
stock or partnership interests or sale of all or substantially all of such
entity's assets), immediately following any such transaction, the issuer or
issuers of any shares of capital stock and other securities into which the
Series H Preferred Units shall be exchangeable pursuant to this Section 21.8
shall be the same issuer or issuers of shares of capital stock and other
securities into which (i) the Series B Preferred Units are then exchangeable
(or, if the Series B Preferred Units have previously been redeemed in full,
would have been then exchangeable if then still outstanding), (ii) the Series C
Preferred Units are then exchangeable (or, if the Series C Preferred Units have
previously been redeemed in full, would have been then exchangeable if then
still outstanding), (iii) the Series D Preferred Units are then exchangeable
(or, if the Series D Preferred Units have previously been redeemed in full,
would have been then exchangeable if then still outstanding), (iv) the Series E
Preferred Units are then exchangeable (or, if the Series E Preferred Units have
previously been redeemed in full, would have been then exchangeable if then
still outstanding), (v) the Series F Preferred Units are then exchangeable (or,
if the Series F Preferred Units have previously been redeemed in full, would
have been then exchangeable if then still outstanding), and (vi) the Series G
Preferred Units are then exchangeable (or, if the Series G Preferred Units have
previously been redeemed in full, would have been then exchangeable if then
still outstanding).

                Section 21.9. No Conversion Rights

                The Series H Preferred Units shall not be convertible into any
other class or series of interest in the Partnership.

                                      136
<PAGE>   142

                Section 21.10. No Sinking Fund

                No sinking fund shall be established for the retirement or
redemption of Series H Preferred Units.

                            (Signature Pages Follow)

                                      137
<PAGE>   143

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

                                       GENERAL PARTNER:

                                       AMB PROPERTY HOLDING CORPORATION,
                                       a Maryland corporation

                                       By: /s/ W. Blake Baird
                                          ------------------------------------
                                           Name:  W. Blake Baird
                                           Title:  President

                                       COMMON LIMITED PARTNER:

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

                                       By:    AMB Property Corporation,
                                              its general partner

                                       By: /s/ W. Blake Baird
                                          ------------------------------------
                                           Name:  W. Blake Baird
                                           Title:  President

                                       GENERAL PARTNER OF COMMON LIMITED
                                       PARTNER:

                                       AMB PROPERTY CORPORATION,
                                       a Maryland corporation

                                       By: /s/ W. Blake Baird
                                          ------------------------------------
                                           Name:  W. Blake Baird
                                           Title:  President

                                      S-1
<PAGE>   144

                                       SERIES G LIMITED PARTNER:

                                       J.P. MORGAN MOSAIC FUND IV, LLC

                                       By: J.P. Morgan Private Investments Inc.,
                                           as manager of J.P. Morgan Mosaic Fund
                                           IV, LLC

                                       By: /s/ Patrick DeGraca
                                          ------------------------------------
                                           Name: Patrick DeGraca
                                           Title:  Vice President

                                      S-2
<PAGE>   145

                                    EXHIBIT A

               PARTNERS, CONTRIBUTIONS, AND PARTNERSHIP INTERESTS

I. COMMON UNITS

<TABLE>
<CAPTION>
                                                                    Agreed Value
                                      Contribution      Cash       of Contributed        Total         Partnership     Percentage
Name of Partner                          Date       Contributions     Property       Contributions        Units         Interest
------------------------------------  ------------  -------------  ----------------  ---------------  --------------  --------------
<S>                                   <C>           <C>            <C>               <C>              <C>             <C>
GENERAL PARTNER:
AMB Property Holding Corporation         11/26/97            --     $   3,626,023        $3,626,023         172,668         .99725%

LIMITED PARTNERS:
AMB Property, L.P.                       11/26/97            --     $ 358,976,301      $358,976,301      17,094,110       98.72782%
                                         06/30/98            --     $   1,161,489        $1,161,489          47,602         .27493%
                                                    -------------  ----------------  ---------------  --------------  --------------

     TOTAL COMMON UNITS                                      --     $ 363,763,813      $363,763,813      17,314,380       100.0000%
                                                    -------------  ----------------  ---------------  --------------  --------------
</TABLE>

                                      A-1
<PAGE>   146

                                    EXHIBIT A

               PARTNERS, CONTRIBUTIONS, AND PARTNERSHIP INTERESTS

II. SERIES C PREFERRED UNITS

<TABLE>
<CAPTION>
                                                                   Agreed Value                          Series C
                                   Contribution       Cash        of Contributed      Total           Partnership     Percentage
Name of Partner                        Date       Contributions      Property     Contributions          Units         Interest
---------------------------------  -------------  --------------  --------------  -----------------  --------------  --------------
<S>                                <C>            <C>             <C>             <C>                <C>             <C>
LIMITED PARTNER:
Belcrest Realty Corporation         11/24/98       $ 24,000,000            --     $  24,000,000          480,000        21.81818%
Belair Real Estate Corporation      11/24/98       $ 86,000,000            --     $  86,000,000        1,720,000        78.18182%
Belcrest Realty Corporation          2/23/99                 --            --                --          381,000        17.31818%
Belair Real Estate Corporation       2/23/99                 --            --                --         (381,000)      (17.31818%)
Belcrest Realty Corporation          4/29/99                 --            --                --          239,000        10.86364%
Belair Real Estate Corporation       4/29/99                 --            --                --         (239,000)      (10.86364%)
Argosy Realty Corporation             7/9/99                 --            --                --           32,506         1.47755%
Belmar Realty Corporation             7/9/99                 --            --                --           32,506         1.47755%
Belport Realty Corporation            7/9/99                 --            --                --           32,506         1.47755%
Belrieve Realty Corporation           7/9/99                 --            --                --           32,506         1.47755%
Belair Real Estate Corporation        7/9/99                 --            --                --         (130,024)       (5.91018%)
Belcrest Realty Corporation          7/28/99                 --            --                --          300,000        13.63636%
Belair Real Estate Corporation       7/28/99                 --            --                --         (300,000)      (13.63636%)
Belmar Realty Corporation            2/17/00                 --            --                --          (32,506)       (1.47755%)
Belcrest Realty Corporation          2/17/00                 --            --                --         (250,000)      (11.36364%)
Belair Real Estate Corporation       2/17/00                 --            --                --          282,506        12.84118%
                                                  --------------  --------------  -----------------  --------------  --------------
     TOTAL SERIES C PREFERRED UNITS               $ 110,000,000            --     $ 110,000,000        2,200,000        100.0000%
                                                  ==============  ==============  =================  ==============  ==============
</TABLE>

III. SERIES D PREFERRED UNITS

<TABLE>
<CAPTION>
                                                                   Agreed Value                        Series D
                                   Contribution       Cash        of Contributed      Total           Partnership     Percentage
Name of Partner                        Date       Contributions      Property     Contributions          Units         Interest
---------------------------------  -------------  --------------  --------------  -----------------  --------------  --------------
<S>                                <C>            <C>             <C>             <C>                <C>             <C>
LIMITED PARTNER:
J.P. Morgan Mosaic Fund, LLC          5/5/99      $  79,766,850            --     $  79,766,850        1,595,337        100.0000%

                                                  -------------   --------------  ----------------    -------------   -------------
     TOTAL SERIES D PREFERRED UNITS               $  79,766,850            --     $  79,766,850        1,595,337        100.0000%
                                                  ==============  ==============  =================  ==============  ==============
</TABLE>

IV. SERIES E PREFERRED UNITS

<TABLE>
<CAPTION>
                                                                   Agreed Value                        Series E
                                   Contribution       Cash        of Contributed      Total           Partnership     Percentage
Name of Partner                        Date       Contributions      Property     Contributions          Units         Interest
---------------------------------  -------------  --------------  --------------  -----------------  --------------  --------------
<S>                                <C>            <C>             <C>             <C>                <C>             <C>
LIMITED PARTNER:
Fifth Third Equity Exchange          8/31/99      $  11,022,000            --     $  11,022,000         220,440         100.0000%
Fund 1999, LLC

                                                  --------------  --------------  -----------------  --------------   -------------
     TOTAL SERIES E PREFERRED UNITS               $  11,022,000            --     $  11,022,000         220,440         100.0000%
                                                  ==============  ==============  =================  ==============  ==============
</TABLE>

V. SERIES F PREFERRED UNITS

<TABLE>
<CAPTION>
                                                                   Agreed Value                        Series E
                                   Contribution       Cash        of Contributed      Total           Partnership     Percentage
Name of Partner                        Date       Contributions      Property     Contributions          Units         Interest
---------------------------------  -------------  --------------  --------------  -----------------  --------------  --------------
<S>                                <C>            <C>             <C>             <C>                <C>             <C>
LIMITED PARTNER:
Bailard, Biehl & Kaiser              3/22/00      $  19,871,950            --     $  19,871,950         397,439         100.0000%
Technology Exchange Fund, LLC

                                                  --------------  --------------  -----------------  --------------  --------------
     TOTAL SERIES F PREFERRED UNITS               $  19,871,950            --     $  19,871,950         397,439         100.0000%
                                                  ==============  ==============  =================  ==============  ==============
</TABLE>

                                      A-2
<PAGE>   147

VI. SERIES G PREFERRED UNITS

<TABLE>
<CAPTION>
                                                                   Agreed Value                        Series E
                                   Contribution       Cash        of Contributed      Total           Partnership     Percentage
Name of Partner                        Date       Contributions      Property     Contributions          Units         Interest
---------------------------------  -------------  --------------  --------------  -----------------  --------------  --------------
<S>                                <C>            <C>             <C>             <C>                <C>             <C>
LIMITED PARTNER:
Bailard, Biehl & Kaiser              8/29/00      $   1,000,000            --     $   1,000,000           20,000         100.0000%
Technology Exchange Fund, LLC

                                                  --------------  --------------  -----------------  --------------  --------------
     TOTAL SERIES G PREFERRED UNITS               $   1,000,000            --     $   1,000,000           20,000         100.0000%
                                                  ==============  ==============  =================  ==============  ==============
</TABLE>

VII. SERIES H PREFERRED UNITS

<TABLE>
<CAPTION>
                                                                   Agreed Value                        Series E
                                   Contribution       Cash        of Contributed      Total           Partnership     Percentage
Name of Partner                        Date       Contributions      Property     Contributions          Units         Interest
---------------------------------  -------------  --------------  --------------  -----------------  --------------  --------------
<S>                                <C>            <C>             <C>             <C>                <C>             <C>
LIMITED PARTNER:
J.P. Morgan Mosaic Fund IV, LLC       9/1/00      $  42,000,000            --     $  42,000,000         840,000         100.0000%

                                                  --------------  --------------  -----------------  --------------  --------------
     TOTAL SERIES G PREFERRED UNITS               $  42,000,000            --     $  42,000,000         840,000         100.0000%
                                                  ==============  ==============  =================  ==============  ==============
</TABLE>

                                      A-2
<PAGE>   148

                                    EXHIBIT B

                              NOTICE OF REDEMPTION

             The undersigned hereby irrevocably (i) exchanges ____________
Limited Partnership Units in AMB Property II, L.P. in accordance with the terms
of the Limited Partnership Agreement of AMB Property II, L.P. dated as of
_________________, as amended, and the rights of Series G Redemption referred to
therein, (ii) surrenders such Limited Partnership Units and all right, title and
interest therein and (iii) directs that the cash (or, if applicable, Preferred
Stock) deliverable upon Series H Redemption or exchange be delivered to the
address specified below, and if applicable, that such Preferred Stock be
registered or placed in the name(s) and at the address(es) specified below.

Dated:  ________________________
        Name of Limited Partner:

                                       ---------------------------------
                                       (Signature of Limited Partner)

                                       ---------------------------------
                                       (Street Address)

                                       ---------------------------------
                                       (City) (State) (Zip Code)

                                       Signature Guaranteed by:

                                       ---------------------------------

Issue Shares in the name of:

Please insert social security or identifying number:

Address (if different than above):

                                      B-1
<PAGE>   149

                                    EXHIBIT C

                        CONSTRUCTIVE OWNERSHIP DEFINITION

             The term "Constructively Owns" means ownership determined through
the application of the constructive ownership rules of Section 318 of the Code,
as modified by Section 856(d)(5) of the Code. Generally, these rules provide the
following:

        a. an individual is considered as owning the Ownership Interest that is
owned, actually or constructively, by or for his spouse, his children, his
grandchildren, and his parents;

        b. an Ownership Interest that is owned, actually or constructively, by
or for a partnership, limited liability company or estate is considered as owned
proportionately by its partners, members or beneficiaries;

        c. an Ownership Interest that is owned, actually or constructively, by
or for a trust is considered as owned by its beneficiaries in proportion to the
actuarial interest of such beneficiaries (provided, however, that in the case of
a "grantor trust" the Ownership Interest will be considered as owned by the
grantors);

        d. if ten percent (10%) or more in value of the stock in a corporation
is owned, actually or constructively, by or for any person, such person shall be
considered as owning the Ownership Interest that is owned, actually or
constructively, by or for such corporation in that proportion which the value of
the stock which such person so owns bears to the value of all the stock in such
corporation;

        e. an Ownership Interest that is owned, actually or constructively, by
or for a partner or member which actually or constructively owns a 25% or
greater capital interest or profits interest in a partnership or limited
liability company, or by or for a beneficiary of an estate or trust, shall be
considered as owned by the partnership, limited liability company, estate, or
trust (or, in the case of a grantor trust, the grantors);

        f. if ten percent (10%) or more in value of the stock in a corporation
is owned, actually or constructively, by or for any person, such corporation
shall be considered as owning the Ownership Interest that is owned, actually or
constructively, by or for such person;

        g. if any person has an option to acquire an Ownership Interest
(including an option to acquire an option or any one of a series of such
options), such Ownership Interest shall be considered as owned by such person;

        h. an Ownership Interest that is constructively owned by a person by
reason of the application of the rules described in paragraphs (a) through (g)
above shall, for purposes of applying paragraphs (a) through (g), be considered
as actually owned by such person provided, however, that (i) an Ownership
Interest constructively owned by an individual by reason of paragraph (a) shall
not be considered as owned by him for purposes of again applying paragraph (a)
in order to make another the constructive owner of such Ownership Interest, (ii)
an Ownership Interest constructively owned by a partnership, estate, trust, or
corporation by reason of the application of paragraphs (e) or (f) shall not be
considered as owned by it for purposes of applying paragraphs (b), (c), or (d)
in order to make another the constructive owner of such Ownership Interest,
(iii) if an Ownership Interest may be considered as owned by an individual under
paragraphs (a) or (g), it shall be considered as owned by him under paragraph
(g) and (iv) for purposes of the above described rules, an S corporation shall
be treated as a partnership and any stockholder of the S corporation shall be
treated as a partner of such partnership except that this rule shall not apply
for purposes of determining whether stock in the S corporation is constructively
owned by any person.

        i. For purposes of the above summary of the constructive ownership
rules, the term "Ownership Interest" means the ownership of stock with respect
to a corporation and, with respect to any other type of entity, the ownership of
an interest in either its assets or net profits.

                                      C-1
<PAGE>   150

                                   EXHIBIT D-1

                      FORM OF PARTNERSHIP UNIT CERTIFICATE

                      CERTIFICATE FOR PARTNERSHIP UNITS OF

                              AMB PROPERTY II, L.P.

No. _______________                                           ____________ UNITS

             AMB Property Holding Corporation as the General Partner of AMB
Property II, L.P., a Delaware limited partnership (the "Operating Partnership"),
hereby certifies that is a Limited Partner of the Operating Partnership whose
Partnership Interests therein, as set forth in the Agreement of Limited
Partnership of AMB Property II, L.P., dated as of ______________, 2000 (as it
may be amended, modified or supplemented from time to time in accordance with
its terms, (the "Partnership Agreement"), under which the Operating Partnership
is existing and as filed in the office of the Delaware [State Department of
Assessments and Taxation] (copies of which are on file at the Operating
Partnership's principal office at
__________________________________________________, represent units of limited
partnership interest in the Operating Partnership (the "Partnership Units").

             THE PARTNERSHIP UNITS REPRESENTED BY THIS CERTIFICATE OR INSTRUMENT
MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE
DISPOSED OF UNLESS SUCH TRANSFER, SALE, ASSIGNMENT, PLEDGE, HYPOTHECATION OR
OTHER DISPOSITION COMPLIES WITH THE PROVISIONS OF THE PARTNERSHIP AGREEMENT (A
COPY OF WHICH IS ON FILE WITH THE OPERATING PARTNERSHIP). EXCEPT AS OTHERWISE
PROVIDED IN THE PARTNERSHIP AGREEMENT, NO TRANSFER, SALE, ASSIGNMENT, PLEDGE,
HYPOTHECATION OR OTHER DISPOSITION OF THE PARTNERSHIP UNITS REPRESENTED BY THIS
CERTIFICATE MAY BE MADE EXCEPT (A) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR (B) IF
THE OPERATING PARTNERSHIP HAS BEEN FURNISHED WITH A SATISFACTORY OPINION OF
COUNSEL FOR THE HOLDER OF THE PARTNERSHIP UNITS REPRESENTED BY THIS CERTIFICATE
THAT SUCH TRANSFER, SALE ASSIGNMENT, PLEDGE, HYPOTHECATION OR OTHER DISPOSITION
IS EXEMPT FROM THE PROVISIONS OF SECTION 5 OF THE ACT AND THE RULES AND
REGULATIONS IN EFFECT THEREUNDER.

DATED:___________________, 2000.

                                       AMB PROPERTY HOLDING CORPORATION

                                       General Partner of AMB
                                       Property II, L.P.

ATTEST:

By:                                    By:
   --------------------------------       --------------------------------------

                                      D-2
<PAGE>   151

                                    EXHIBIT E

                         SCHEDULE OF PARTNERS' OWNERSHIP

                             WITH RESPECT TO TENANTS

                                      None

                                       E-1
<PAGE>   152

                                    EXHIBIT F

                             SCHEDULE OF REIT SHARES

            ACTUALLY OR CONSTRUCTIVELY OWNED BY 25% LIMITED PARTNERS

                OTHER THAN THOSE ACQUIRED PURSUANT TO AN EXCHANGE

                                      None

                                      F-1
<PAGE>   153

                                    EXHIBIT G

                   SCHEDULE OF CERTAIN AGREEMENTS RELATING TO

                   PROPERTIES WITH RESTRICTIONS ON DISPOSITION

                            PURSUANT TO SECTION 7.3.F

1.      APLP II Contribution Agreement dated as of May 21, 1998, by and between
        Hayes Realty Company, an Illinois general partnership and AMB Property
        II, L.P., a Delaware limited partnership.

                                      G-1
<PAGE>   154

                                    EXHIBIT H

                    SCHEDULE OF CERTAIN AGREEMENTS CONTAINING

                LIMITATIONS ON GENERAL PARTNERS GENERAL AUTHORITY

1.      APLP II Contribution Agreement dated as of May 21, 1998, by and between
        Hayes Realty Company, an Illinois general partnership and AMB Property
        II, L.P., a Delaware limited partnership.

                                      H-1
<PAGE>   155

                                    EXHIBIT I

         RESTRICTIONS ON OWNERSHIP AND TRANSFER TO PRESERVE TAX BENEFIT

        (a) Definitions. for the purposes of this Exhibit I, the following terms
shall have the following meanings:

             "Charitable Beneficiary" shall mean one or more beneficiaries of a
        Trust, as determined pursuant to subsection (c)(vi), each of which shall
        be an organization described in Sections 170(b)(1)(A), 170(c)(2) and
        501(c)(3) of the Code.

             "Code" shall mean the Internal Revenue Code of 1986, as amended.

             "Constructive Ownership" shall mean ownership of Partnership Units
        by a Person who is or would be treated as an owner of such Partnership
        Units either actually or constructively through the application of
        Section 318 of the Code, as modified by Section 856(d)(5) of the Code.
        The terms "Constructive Owner," "Constructively Owns" and
        "Constructively Owned" shall have the correlative meanings.

             "Exempted Person" shall mean any Person exempted from time to time
        by the General Partner in its sole and absolute discretion. The
        Operating Partnership shall be considered an Exempted Person.

             "Market Price" shall mean the market price of the Partnership Units
        on the relevant date as determined in good faith by the General Partner;
        provided, however, if AMB has outstanding shares of capital stock which
        correspond to such Partnership Units (i.e., the Series C Preferred
        Shares), the Market Price of each such Partnership Unit shall be equal
        to the Value of a share of such capital stock, subject to adjustment if
        the right to exchange such Partnership Units for such stock is other
        than one to one.

             "Ownership Limit" shall mean 24.9% of the capital or profits
        interests of the Partnership.

             "Person" shall mean an individual, corporation, partnership,
        limited liability company, estate, trust (including a trust qualified
        under Section 401(a) or 501(c)(17) of the Code), a portion of a trust
        permanently set aside for or to be used exclusively for the purposes
        described in Section 642(c) of the Code, association, private foundation
        within the meaning of Section 509(a) of the Code, joint stock company or
        other entity.

                                      I-1
<PAGE>   156

             "Purported Beneficial Transferee" shall mean, with respect to any
        purported Transfer (or other event) which results in a transfer to a
        Trust, as provided in subsection (b)(ii), the Purported Record
        Transferee, unless the Purported Record Transferee would have acquired
        or owned Partnership Units for another Person who is the beneficial
        transferee or owner of such Partnership Units, in which case the
        Purported Beneficial Transferee shall be such Person.

             "Purported Record Transferee" shall mean, with respect to any
        purported Transfer (or other event) which results in a transfer to a
        Trust, as provided in subsection (b)(ii), the holder of the Partnership
        Units as set forth or to be set forth in Exhibit A to the Partnership
        Agreement, and any Assignee of such Partnership Units, if such Transfer
        or ownership had been valid under subsection (b)(i).

             "Restriction Termination Date" shall mean the first day after the
        date hereof on which the General Partner determines, in its sole and
        absolute discretion, that compliance with subsection (b)(i) is no longer
        necessary or advisable.

             "Transfer" shall mean any sale, transfer, gift, assignment, devise
        or other disposition of Partnership Units, (including (i) the granting
        of any option or entering into any agreement for the sale, transfer or
        other disposition of Partnership Units or (ii) the sale, transfer,
        assignment or other disposition of any securities (or rights convertible
        into or exchangeable for Partnership Units)), whether voluntary or
        involuntary, whether such transfer has occurred of record or
        beneficially or Constructively (including but not limited to transfers
        of interests in other entities which results in changes in Constructive
        Ownership of Partnership Units), and whether such transfer has occurred
        by operation of law or otherwise.

             "Trust" shall mean each of the trusts provided for in subsection
        (c).

             "Trustee" shall mean any Person unaffiliated with the Partnership,
        or a Purported Beneficial Transferee, or a Purported Record Transferee,
        that is appointed by the Partnership to serve as trustee of a Trust.

Capitalized terms used and not defined herein shall have the meanings ascribed
to them in the Third Amended and Restated Agreement of Limited Partnership of
AMB Property II, L.P. (the "Partnership Agreement"), as such agreement may be
amended from time to time. All references to "Section" refer to the Partnership
Agreement.

        (b) Restriction on Ownership and Transfers.

             (i) Prior to the Restriction Termination Date, no Person, other
than an Exempted Person, shall at any time Constructively Own Partnership Units
in excess of the

                                      I-2
<PAGE>   157

Ownership Limit if the representations contained in Section 3.4.D are not at
such time true and correct.

             (ii) If, prior to the Restriction Termination Date, any Transfer or
other event occurs that, if effective, would result in any Person Constructively
Owning Partnership Units in violation of subsection (b)(i), (1) then that number
of Partnership Units that otherwise would cause such Person to violate
subsection (b)(i) (rounded up to the nearest whole Partnership Unit) shall be
automatically transferred (provided such Transfer is not in violation of the
restrictions on transfer set forth in the Partnership Agreement, except to the
extent the General Partner waives such restrictions) to a Trust for the benefit
of a Charitable Beneficiary, as described in subsection (c), effective as of the
close of business on the business day prior to the date of such Transfer or
other event, and such Purported Beneficial Transferee shall thereafter have no
rights in such Partnership Units or (2) if, for any reason, the transfer to the
Trust described in clause (1) of this sentence is not automatically effective as
provided therein to prevent any Person from Constructively Owning Partnership
Units in violation of subsection (b)(i), then the Transfer of that number of
Partnership Units that otherwise would cause any Person to violate subsection
(b)(i) shall be void ab initio, and the Purported Beneficial Transferee shall
have no rights in such Partnership Units.

        (c) Transfers of Partnership Units in Trust.

             (i) Upon any purported Transfer or other event described in
subsection (b)(ii), such Partnership Units shall be deemed to have been
transferred to the Trustee in his capacity as trustee of a Trust for the
exclusive benefit of one or more Charitable Beneficiaries. Such transfer to the
Trustee shall be deemed to be effective as of the close of business on the
business day prior to the purported Transfer or other event that results in a
transfer to the Trust pursuant to subsection (b)(ii). The Trustee shall be
appointed by the Partnership and shall be a Person unaffiliated with the
Partnership, any Purported Beneficial Transferee, or any Purported Record
Transferee. Each Charitable Beneficiary shall be designated by the Partnership
as provided in subsection (c)(vi).

             (ii) Partnership Units held by the Trustee shall be issued and
outstanding Partnership Units of the Partnership. The Purported Beneficial
Transferee or Purported Record Transferee shall have no rights in the
Partnership Units held by the Trustee. The Purported Beneficial Transferee or
Purported Record Transferee shall not benefit economically from ownership of any
Partnership Units held in trust by the Trustee, shall have no rights to
distributions or allocations with respect to Partnership Units held in the Trust
and shall not possess any rights to vote or other rights attributable to the
Partnership Units held in the Trust.

             (iii) The Trustee shall have all voting rights and rights to
distributions and allocations with respect to Partnership Units held in the
Trust, which rights shall be exercised for the exclusive benefit of the
Charitable Beneficiary. Any distribution paid prior to the discovery by the
Partnership that Partnership Units have been transferred to the Trustee shall be
paid to the Trustee upon demand, and any distribution with respect to such
Partnership Units shall be paid

                                      I-3
<PAGE>   158

when due to the Trustee. Any distributions so paid over to the Trustee shall be
held in trust for the Charitable Beneficiary.

        The Purported Record Transferee and Purported Beneficial Transferee
shall have no voting rights with respect to the Partnership Units held in the
Trust and, subject to Delaware law, effective as of the date the Partnership
Units has been transferred to the Trustee, the Trustee shall have the authority
(at the Trustee's sole discretion) (i) to rescind as void any vote cast by a
Purported Record Transferee with respect to such Partnership Units prior to the
discovery by the Partnership that the Partnership Units has been transferred to
the Trustee and (ii) to recast such vote in accordance with the desires of the
Trustee acting for the benefit of the Charitable Beneficiary; provided, however,
that if the Partnership has already taken irreversible action, then the Trustee
shall not have the authority to rescind and recast such vote. Notwithstanding
any other provision of this Exhibit I to the contrary, until the Partnership has
received notification that the Partnership Units have been transferred into a
Trust, the Partnership shall be entitled to rely on its Partnership Unit
transfer and other unitholder records for purposes of preparing Exhibit A to the
Partnership Agreement, lists of unitholders entitled to vote at meetings, and
otherwise conducting votes of Partners.

        (iv) Within 20 days of receiving notice from the Partnership that
Partnership Units have been transferred to the Trust, the Trustee of the Trust
shall, in accordance with the terms of (and subject to the limitations contained
in) the Partnership Agreement, sell the Partnership Units held in the Trust to a
Person, designated by the Trustee, whose ownership of the Partnership Units will
not violate the ownership limitations set forth in subsection (b)(i). Upon such
sale, the interest of the Charitable Beneficiary in the Partnership Units sold
shall terminate and the Trustee shall distribute the net proceeds of the sale to
the Purported Record Transferee and to the Charitable Beneficiary as provided in
this subsection (c)(iv). The Purported Record Transferee shall receive the
lesser of (1) the price paid by the Purported Record Transferee for the
Partnership Units in the transaction that resulted in such transfer to the Trust
(or, if the event which resulted in the transfer to the Trust did not involve a
purchase of such Partnership Units at Market Price, the Market Price of such
Partnership Units on the day of the event which resulted in the transfer of such
Partnership Units to the Trust) and (2) the price per Partnership Unit received
by the Trustee (net of any commissions and other expenses of sale) from the sale
or other disposition of the Partnership Units held in the Trust. Any net sales
proceeds in excess of the amount payable to the Purported Record Transferee
shall be immediately paid to the Charitable Beneficiary together with any
distributions thereon. If, prior to the discovery by the Partnership that
Partnership Units have been transferred to the Trustee, such Partnership Units
are sold by a Purported Record Transferee then (i) such Partnership Units shall
be deemed to have been sold on behalf of the Trust and (ii) to the extent that
the Purported Record Transferee received an amount for such Partnership Units
that exceeds the amount that such Purported Record Transferee was entitled to
receive pursuant to this subsection (c)(iv), such excess shall be paid to the
Trustee upon demand. The expenses described in item (2) above shall include any
expenses of administering the Trust, any transfer of Partnership Units

                                      I-4
<PAGE>   159

thereto or disposition of Partnership Units thereby, which shall be allocated
equitably among the Partnership Units which are transferred to the Trust.

             (v) Partnership Units transferred to the Trustee shall be deemed to
have been offered for sale to the Partnership, or its designee, at a price per
Partnership Unit equal to the lesser of (i) the price paid by the Purported
Record Transferee for the Partnership Units in the transaction that resulted in
such transfer to the Trust (or, if the event which resulted in the transfer to
the Trust did not involve a purchase of such Partnership Units at Market Price,
the Market Price of such Partnership Units on the day of the event which
resulted in the transfer of such Partnership Units to the Trust) and (ii) the
Market Price on the date the Partnership, or its designee, accepts such offer.
The Partnership shall have the right to accept such offer until the Trustee has
sold the Partnership Units held in the Trust pursuant to subsection (c)(iv).
Upon such a sale to the Partnership, the interest of the Charitable Beneficiary
in the Partnership Units sold shall terminate and the Trustee shall distribute
the net proceeds of the sale to the Purported Record Transferee and any
distributions held by the Trustee with respect to such Partnership Units shall
thereupon be paid to the Charitable Beneficiary.

             (vi) By written notice to the Trustee, the Partnership shall
designate one or more nonprofit organizations to be the Charitable Beneficiary
of the interest in the Trust such that the Partnership Units held in the Trust
would not violate the restrictions set forth in subsection (b)(i) in the hands
of such Charitable Beneficiary.

        (d) Remedies For Breach. If the General Partner shall at any time
determine in good faith that a Transfer or other event has taken place in
violation of subsection (b) or that a Person intends to acquire, has attempted
to acquire or may acquire beneficial ownership (determined without reference to
any rules of attribution) or Constructive Ownership of any Partnership Units of
the Partnership in violation of subsection (b), the General Partner shall take
such action as it deems advisable to refuse to give effect or to prevent such
Transfer, including, but not limited to, causing the Partnership to redeem
Partnership Units, refusing to give effect to such Transfer on the books of the
Partnership or instituting proceedings to enjoin such Transfer; provided,
however, that any Transfers (or, in the case of events other than a Transfer,
ownership or Constructive Ownership) in violation of subsection (b)(i), shall
automatically result in the transfer to a Trust as described in subsection
(b)(ii).

        (e) Notice of Restricted Transfer. Any Person who acquires or attempts
to acquire or own Partnership Units in violation of subsection (b), or any
Person who is a Purported Beneficial Transferee such that an automatic transfer
to a Trust results under subsection (b)(ii), shall immediately give written
notice to the Partnership of such event and shall provide to the Partnership
such other information as the Partnership may request in order to determine the
effect, if any, of such Transfer or attempted Transfer on such Person's
compliance with subsection (b)(i).

                                      I-5
<PAGE>   160

        (f) Owners Required To Provide Information. Prior to the Restriction
Termination Date each Person who is a beneficial owner or Constructive Owner of
Partnership Units and each Person who is holding Partnership Units for a
beneficial owner or Constructive Owner shall provide to the Partnership such
information that the Partnership may request, in good faith, in order to
determine the Partnership's status as a partnership (as opposed to a
corporation) or AMB's status as a REIT for federal income tax purposes.

        (g) Remedies Not Limited. Nothing contained in this Exhibit I shall
limit the authority of the General Partner to take such other action as it deems
necessary or advisable to protect the Partnership and the interests of its
Partners by preservation of the Partnership's status as a partnership (as
opposed to a corporation) or AMB's status as a REIT for federal income tax
purposes.

        (h) Ambiguity. In the case of an ambiguity in the application of any of
the provisions of this Exhibit I, including any definition contained in
subsection (a), the General Partner shall have the power to determine the
application of the provisions of this Exhibit I with respect to any situation
based on the facts known to it. In the event that a provision of this Exhibit I
requires an action by the General Partner and Exhibit I fails to provide
specific guidance with respect to such action, the General Partner shall have
the power to determine the action to be taken so long as such action is not
contrary to the provisions of Exhibit I. Absent a decision to the contrary by
the General Partner (which the General Partner may make in its sole and absolute
discretion), if a Person would have (but for the remedies set forth in
subsection (b)) acquired Constructive Ownership of Partnership Units in
violation of subsection (b)(i), such remedies (as applicable) shall apply first
to the Partnership Units which, but for such remedies, would have been actually
owned by such Person, and second to Partnership Units which, but for such
remedies, would have been Constructively Owned (but not actually owned) by such
Person, pro rata among the Persons who actually own such Partnership Units based
upon the relative number of the Partnership Units held by each such Person.

                                      I-6<PAGE>   1

                                                                   Exhibit 10.21

                                MERGER AGREEMENT

                                      AMONG

                                KAREN C. DORSETT,
                               PRESTON H. DORSETT,
                                 RONALD W. KIM,
                               ROBERT F. NAEGELE,
                              VIRAL ANTIGENS, INC.,
                           MERIDIAN DIAGNOSTICS, INC.

                                       AND

                          MERIDIAN ACQUISITION COMPANY

                         DATED AS OF SEPTEMBER 13, 2000

<PAGE>   2

<TABLE>
<CAPTION>

                                TABLE OF CONTENTS
                                -----------------

                                                                               Page
                                                                               ----

<S>      <C>                                                                    <C>
1. Definitions...................................................................1
2. Basic Transaction.............................................................3
         2.1 The Merger..........................................................3
         2.2 The Closing.........................................................4
         2.3 Actions at the Closing..............................................4
         2.4 Effect of Merger ...................................................4
         2.5 Procedure for Payment...............................................5
3. Representations and Warranties of Viral and the Viral Stockholders............5
         3.1 Organization, Qualification, and Corporate Power....................5
         3.2 Capitalization......................................................6
         3.3 Authorization of Transaction........................................6
         3.4 Noncontravention....................................................7
         3.5 Financial Statements................................................7
         3.6 Events After October 31, 1999.......................................7
         3.7 Undisclosed Liabilities.............................................8
         3.8 Brokers' Fees.......................................................8
         3.9 Insurance...........................................................9
         3.10 Litigation.........................................................9
         3.11 Product Warranty..................................................10
         3.12 Product Liability.................................................10
         3.13 Employees.........................................................10
         3.14 Employee Benefits ................................................10
         3.15 Guaranties........................................................12
         3.16 Environment, Health and Safety....................................13
         3.17 Intellectual Property.............................................15
         3.18 Products, Inventories and Operations..............................17
         3.19 Formulae, Etc., for Products......................................18
         3.20 Expiration Dates..................................................19
         3.21 Subsidiaries and Other Capital Stock..............................19
         3.22 Real Property.....................................................19
         3.23 Equipment.........................................................20
         3.24 Contracts and Agreements..........................................20
         3.25 Accounts Receivable...............................................21
         3.26 Licenses and Permits..............................................21
         3.27 Taxes and Tax Returns.............................................21
         3.28 Transactions With Affiliates......................................22
         3.29 Compliance with Applicable Law....................................22
         3.30 General Disclosure Matters........................................22
4. Representations and Warranties of Meridian and the Transitory Subsidiary.....23
         4.1 Organization.......................................................23
         4.2 Authorization of Transaction.......................................23

</TABLE>

<PAGE>   3
<TABLE>

<S>      <C>                                                                   <C>
         4.3 Noncontravention...................................................24
         4.4 Brokers' Fees......................................................24
         4.5 Litigation.........................................................24
         4.6 Available Funds....................................................24
5. Representations and Warranties of the Viral Stockholders.....................24
         5.1 Authorization of Transaction.......................................25
         5.2 Brokers' Fees......................................................25
         5.3 Transactions with Viral............................................25
6. Covenants....................................................................25
         6.1 General............................................................25
         6.2 Notices and Consents...............................................25
         6.3 Regulatory Matters and Approvals...................................26
         6.4 Operation of Business..............................................26
         6.5 Continuance of Operations..........................................27
         6.6 Due Diligence......................................................27
         6.7 Notice of Developments.............................................27
         6.8 Exclusivity........................................................27
         6.9 Closing Balance Sheet..............................................28
7. Indemnification; Transition..................................................28
         7.1 Indemnification for Shareholder Actions............................28
         7.2 Indemnification by the Viral Stockholders..........................30
         7.3 Guarantees by Meridian.............................................31
         7.4 Transition.........................................................31
         7.5 Confidentiality....................................................32
         7.6 Voting of Shares...................................................32
8. Conditions to Obligations to Close...........................................32
         8.1 Conditions to Each Party's Obligation to Effect the Merger.........32
         8.2 Conditions to Obligation of Meridian and the Transitory
             Subsidiary.........................................................33
         8.3 Conditions to Obligation of Viral and The Viral Stockholders.......34
9. Termination..................................................................35
         9.1 Termination of Agreement...........................................35
         9.2 Effect of Termination..............................................35
10. Miscellaneous...............................................................35
         10.1 Survival..........................................................35
         10.2 Press Releases and Public Announcements...........................36
         10.3 No Third Party Beneficiaries......................................36
         10.4 Entire Agreement..................................................36
         10.5 Successors and Assignment.........................................36
         10.6 Counterparts......................................................36
         10.7 Headings..........................................................37
         10.8 Notices...........................................................37
         10.9 Governing Law.....................................................37
         10.10 Amendments and Waivers...........................................38

</TABLE>
<PAGE>   4
<TABLE>
<S>      <C>                                                                   <C>
         10.11 Severability.....................................................38
         10.12 Expenses.........................................................38
         10.13 Construction.....................................................38
         10.14 Incorporation of Exhibits and Schedules..........................38
         10.15 Specific Enforcement.............................................39
         10.16 Jurisdiction.....................................................39
</TABLE>

LIST OF EXHIBITS
----------------

Exhibit A - Articles of Merger
Exhibit B - Earnout Agreement
Exhibit C - Legal Opinion of Counsel to Viral
Exhibit D - Legal Opinion of Counsel to Meridian

<PAGE>   5
                                MERGER AGREEMENT

         THIS MERGER AGREEMENT ("Agreement") is entered into as of September 13,
2000 among KAREN C. DORSETT, PRESTON H. DORSETT, RONALD W. KIM, ROBERT F.
NAEGELE (Karen C. Dorsett, Preston H. Dorsett, Ronald W. Kim, and Robert F.
Naegele collectively, the "Viral Stockholders"), VIRAL ANTIGENS, INC., a
Tennessee corporation ("Viral"), MERIDIAN DIAGNOSTICS, INC., an Ohio corporation
("Meridian") and MERIDIAN ACQUISITION COMPANY, a Tennessee corporation
wholly-owned by Meridian ("Transitory Subsidiary"). The Viral Stockholders,
Viral, Meridian and Transitory Subsidiary are sometimes collectively referred to
as the "Parties;" individually as a "Party."

                                R E C I T A L S:
                                 ---------------

         This Agreement contemplates a transaction in which Meridian will
acquire Viral for cash through a merger of the Transitory Subsidiary into Viral.

         Now, therefore, in consideration of the premises and the mutual
covenants and undertakings contained hereinafter, the Parties agree as follows.

         1. Definitions.

         Unless the context otherwise requires, capitalized terms used in this
Agreement shall have the respective meanings ascribed to them in this sec. 1.

         "Actual Knowledge" or "to the Actual Knowledge of" means, in the case
of Viral, the knowledge, after due inquiry, of any of Preston H. Dorsett, Karen
C. Dorsett, Ronald W. Kim, or Robert F. Naegele.

         "Actual Knowledge of Meridian" means, the knowledge, after due inquiry,
of any of William J. Motto, John A. Kraeutler or Melissa Lueke.

         "Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act of 1934, as amended.

         "Cash Consideration" has the meaning set forth in sec.  2.4.4.

         "Closing Date" has the meaning set forth in sec.  2.2.

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

         "Confidential Information" means any information concerning the
businesses and affairs of Viral or its Subsidiaries that is not already
available to the public or generally known in the businesses in which Viral and
its Subsidiaries are engaged.

         "Controlled Group of Corporations" has the meaning set forth in sec.
1563 of the Code.

<PAGE>   6
                                      -2-

         "Disclosure Schedule" means the schedule that is referred to in sec. 3.
Information set forth in any section of the Disclosure Schedule shall be deemed
to qualify each section of this Agreement without the necessity of expressed
reference to such section.

         "Earnout Agreement" has the meaning set forth in sec. 2.5.2.

         "Earnout Consideration" has the meaning set forth in sec. 2.4.4.

         "Effective Time" has the meaning set forth in sec. 2.4.1.

         "Employee Benefit Plan" means any (a) nonqualified deferred
compensation or retirement plan or arrangement which is an Employee Pension
Benefit Plan, (b) qualified defined contribution retirement plan or arrangement
which is an Employee Pension Benefit Plan, (c) qualified defined benefit
retirement plan or arrangement which is an Employee Pension Benefit Plan
(including any multiemployer plan), or (d) Employee Welfare Benefit Plan or
material fringe benefit plan or program.

         "Employee Pension Benefit Plan" has the meaning set forth in ERISA sec.
3(2).

         "Employee Welfare Benefit Plan" has the meaning set forth in ERISA sec.
3(1).

         "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.

         "FDA" has the meaning set forth in sec. 3.18.1.

         "GAAP" means United States generally accepted accounting principles as
in effect from time to time.

         "GMP Requirements" has the meaning set forth in sec. 3.18.1

         "Intellectual Property Assets" has the meaning set forth in sec. 3.17.

         "Meridian" has the meaning set forth in the preface.

         "Merger" has the meaning set forth in sec. 2.1.

         "1999 Financial Statements" has the meaning set forth in sec. 3.5.

         "Ordinary Course of Business" means the ordinary course of business
consistent with past custom and practice (including with respect to quantity and
frequency).

<PAGE>   7
                                      -3-

         "Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization or a governmental entity (or any
department, agency or political subdivision thereof).

         "Products" means all of the products manufactured or produced by Viral,
including, without limitation, the products identified in the Disclosure
Schedule.

         "Security Interest" means any mortgage, pledge, lien, encumbrance,
charge or other security interest, excepting only (a) mechanic's, materialman's
and similar liens relating to obligations that are not yet due or payable, (b)
liens for taxes not yet due and payable or for taxes that the taxpayer is
contesting in good faith through appropriate proceedings, (c) purchase money
liens securing rental payments under capital lease arrangements, and (d) other
liens arising in the Ordinary Course of Business and not incurred in connection
with the borrowing of money.

         "Subsidiary" means any corporation or other entity with respect to
which a specified Person (or a Subsidiary thereof) owns a majority of the common
stock or other voting equity securities or has the power to vote or direct the
voting of securities entitled to vote generally in the election of directors (or
other governing body members) sufficient to elect a majority of the directors
(or other governing body members).

         "Third Party Offer" has the meaning set forth in sec. 6.8.

         "Transitory Subsidiary" has the meaning set forth in the preface.

         "2000 Interim Financial Statements" has the meaning set forth in sec.
3.5.

         "USDA" has the meaning set forth in sec. 3.18.1.

         "Viral" has the meaning set forth in the preface and includes its
Subsidiaries unless the context requires otherwise.

         "Viral Material Adverse Effect" has the meaning set forth in sec. 3.1.

         "Viral Material Adverse Change" has the meaning set forth in sec.
3.6.1.

         "Viral Share" means a share of the Class A Common Stock, no par value
per share, of Viral.

         "Viral Stockholders" mean Ronald W. Kim, Karen C. Dorsett, Preston H.
Dorsett and Robert F. Naegele.

         2. Basic Transaction.

         2.1 The Merger.
<PAGE>   8
                                      -4-

         Subject to the terms and conditions of this Agreement, the Transitory
Subsidiary shall merge into Viral at the Effective Time (the "Merger"). Viral
shall be the corporation surviving the Merger.

         2.2 The Closing.

         The closing of the Merger shall take place at the offices of Keating,
Muething & Klekamp, P.L.L., 1400 Provident Tower, One East Fourth Street,
Cincinnati, Ohio 45202, commencing at 9:00 a.m. Eastern time on the second
business day following the satisfaction or waiver of all conditions set forth in
sec. 8 (other than conditions with respect to actions the respective Parties
will take at the closing itself) or such other date and place as the Parties may
mutually determine in writing, but in no event later than September 30, 2000
(the "Closing Date").

         2.3 Actions at the Closing.

         At the closing, Viral will deliver to Meridian and the Transitory
Subsidiary the certificates, instruments and documents referred to in sec. 8.2.
At the closing, Meridian and the Transitory Subsidiary will deliver to Viral the
certificates, instruments and documents referred to in sec. 8.3. On the Closing
Date, Viral and the Transitory Subsidiary will file with the Tennessee Secretary
of State the Articles of Merger in the form attached hereto as EXHIBIT A, and
Meridian will deliver the Merger consideration in the manner provided in this
sec. 2.

         2.4 Effect of Merger.

               2.4.1 General. The Merger shall become effective at the time
          Viral and the Transitory Subsidiary file the properly executed and
          certified Articles of Merger with the Tennessee Secretary of State, or
          at such later time as the parties shall agree and specify in the
          Articles of Merger (the "Effective Time"). The Merger shall have the
          effects set forth in the Tennessee Business Corporation Act. From and
          after the Effective Time, Viral, as the surviving corporation in the
          Merger (in this capacity, the "Surviving Corporation"), shall possess
          all of the rights, privileges, powers and franchises of a public as
          well as a private nature, and be subject to all of the restrictions,
          disabilities and duties of each of Viral and the Transitory
          Subsidiary, as the constituent corporations in the Merger, all as set
          forth in the Tennessee Business Corporation Act.

               2.4.2 Viral Corporate Documents. The Charter and Bylaws of the
          Surviving Corporation, as set forth in the Articles of Merger, shall
          be the Charter and Bylaws of the Transitory Subsidiary as in effect
          immediately prior to the Effective Time.

               2.4.3 Directors and Officers. The directors of the Transitory
          Subsidiary immediately prior to the Effective Time shall become the
          directors of the Surviving Corporation at the Effective Time.

<PAGE>   9
                                      -5-

               2.4.4 Conversion of Viral Shares. At the Effective Time, by
          virtue of the Merger and without any further action by Viral,
          Meridian, the Transitory Subsidiary or the Viral Stockholders, each
          Viral Share then issued and outstanding shall be converted into the
          right to receive One Hundred One and 21/100 Dollars ($101.21) in cash
          without interest amounting to an aggregate cash purchase price of $9
          million (the "Cash Consideration"), plus the contingent right to
          receive, over a period through September 30, 2006, aggregate
          additional consideration of up to Eight Million Two Hundred Fifty
          Thousand Dollars ($8,250,000) (the "Earnout Consideration"), payable
          in accordance with the terms of sec. 2.5.2. At the Effective Time, by
          virtue of the Merger and without any further action by Viral,
          Meridian, the Transitory Subsidiary or the Viral Stockholders, each
          Viral Share held in Viral's treasury or beneficially owned by Meridian
          shall be canceled. After the Effective Time, no Viral Share shall be
          deemed to be outstanding or to have any rights other than those set
          forth in this Section.

               2.4.5 Viral Stockholder Payment. At or prior to the Effective
          Time, the Viral Stockholders will provide checks or immediately
          available funds payable to Viral in the amount(s) set forth on
          Schedule 3.28 in order to provide full payment for all outstanding
          note obligations that Viral Stockholders owe to Viral.

               2.4.6 Conversion of Capital Stock of the Transitory Subsidiary.
          At the Effective Time, by virtue of the Merger and without any further
          action by Viral, Meridian, the Transitory Subsidiary or by the holders
          of the Common Stock of the Transitory Subsidiary, each share of Common
          Stock of the Transitory Subsidiary shall be converted into one share
          of Common Stock of the Surviving Corporation.

          2.5 Procedure for Payment.

               2.5.1 Immediately after the Effective Time, Meridian will pay the
          cash portion of the Merger consideration in immediately available
          funds to the Viral Stockholders in the denominations set forth on
          Schedule 2.5.

               2.5.2 The Earnout Consideration, if any, shall be earned by and
          paid to the Viral Stockholders in accordance with the terms of the
          earnout agreement attached hereto as EXHIBIT B (the "Earnout
          Agreement").

          3. Representations and Warranties of Viral and the Viral Stockholders.

         Each of Viral and the Viral Stockholders, jointly and severally,
represents and warrants to Meridian and the Transitory Subsidiary that the
statements contained in this sec. 3 and the accompanying Disclosure Schedule are
correct and complete as of the date of this Agreement and will be correct and
complete as of the Closing Date as though made then and as though the Closing
Date were substituted for the date of this Agreement throughout this Section.

          3.1 Organization, Qualification, and Corporate Power.
<PAGE>   10
                                      -6-

         Viral and each of its Subsidiaries is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation or organization. Viral and each of its Subsidiaries is duly
authorized to conduct business and is in good standing under the laws of each
jurisdiction where such qualification is required except where the lack of such
qualification would not have a material adverse effect on the business, assets,
liabilities, financial condition, operations, results of operations or prospects
of Viral and its Subsidiaries, taken as a whole ("Viral Material Adverse
Effect"), or on the ability of the parties to consummate the transactions
contemplated by this Agreement. Viral and each of its Subsidiaries has full
corporate power and authority to carry on the businesses in which it is engaged
and to own and use the properties owned and used by it. The minute books
containing records of meetings of Viral Stockholders, Viral directors and
committees of Viral directors, Viral stock certificate books and stock records
are each correct and complete. Neither Viral nor any of its Subsidiaries is in
default under or in violation of any provision of its Charter or Bylaws.

         3.2 Capitalization.

         The entire authorized capital stock of Viral consists of 100,000 Viral
Shares, no par value per share, which includes 90,000 shares of Class A Common
Stock, no par value per share, and 10,000 shares of Class B Common Stock, no par
value per share. As of the date hereof, 88,920 Viral Shares are issued and
outstanding and are held of record and beneficially by the Viral Stockholders in
the quantities set forth on sec. 3.2 of the Disclosure Schedule. As of the date
hereof, 1080 shares of Class A Common Stock of Viral are held in treasury. As of
the date hereof, no shares of Class B Common Stock and no shares of Viral
Preferred Stock are outstanding. All of the issued and outstanding Viral Shares
have been duly authorized and are validly issued, fully paid and non-assessable.
Each issued and outstanding Viral Share was issued in compliance with all
federal and applicable state securities laws and regulations. Except as set
forth in the Disclosure Schedule, there are no outstanding or authorized
options, warrants, purchase rights, subscription rights, conversion rights,
exchange rights, or other contracts or commitments that could require Viral or
any of its Subsidiaries to issue, sell, or otherwise cause to become outstanding
any of its capital stock. There are no stock appreciation, phantom stock, profit
participation, or similar plans or rights outstanding or authorized with respect
to Viral or any of its Subsidiaries.

         3.3 Authorization of Transaction.

         The Board of Directors of Viral has duly adopted resolutions approving
this Agreement and the Merger, determining that the terms of the Merger are fair
to, and in the best interests of, the Viral Stockholders and recommending that
the Viral Stockholders approve and adopt this Agreement and the Merger. The
Viral Stockholders also have approved and adopted this Agreement and the Merger.
Viral has full power and authority to execute and deliver this Agreement and to
perform its obligations hereunder. The execution, delivery and performance of
this Agreement and the consummation by Viral of the Merger and of the other
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of Viral and no other corporate proceedings on the
part of Viral are necessary to authorize this

<PAGE>   11
                                      -7-

Agreement or to consummate the transactions so contemplated. This Agreement has
been duly executed and delivered by Viral and, assuming this Agreement
constitutes a valid and binding obligation of Meridian and the Transitory
Subsidiary, constitutes a valid and binding obligation of Viral enforceable
against Viral in accordance with its terms, subject to applicable bankruptcy,
insolvency, moratorium or other similar laws relating to creditors' rights
generally and to general principles of equity.

         3.4 Noncontravention.

         Except as set forth in the Disclosure Schedule and, except for the
filing of Articles of Merger with the Tennessee Secretary of State, neither the
execution and the delivery of this Agreement nor the consummation of the
transactions contemplated hereby, will violate any constitution, statute,
regulation, rule, injunction, judgment, order, decree, ruling, charge, or other
restriction of any government, governmental agency, or court to which any of
Viral or its Subsidiaries is subject or any provision of the Charter or Bylaws
of any of Viral and its Subsidiaries or conflict with, result in a breach of,
constitute a default under, result in the acceleration of, create in any party
the right to accelerate, terminate, modify, or cancel, or require any notice
under any agreement, contract, lease, license, instrument, or other arrangement
to which any of Viral and its Subsidiaries is a party or by which it is bound or
to which any of its assets is subject or result in the imposition of any
Security Interest upon any of its assets, except where the violation, conflict,
breach, default, acceleration, termination, modification, cancellation, failure
to give notice, or Security Interest would not have a Viral Material Adverse
Effect or a material adverse effect on the ability of the Parties to consummate
the transactions contemplated by this Agreement.

         3.5 Financial Statements.

         Viral has delivered to Meridian and the Transitory Subsidiary audited
consolidated financial statements (including the related notes and any
schedules) for Viral as of October 31, 1999 (the "1999 Financial Statements")
and unaudited interim consolidated financial statements as of July 31, 2000 (the
"2000 Interim Financial Statements"). The 1999 Financial Statements have been
prepared in accordance with GAAP applied on a consistent basis throughout the
periods covered thereby, and present fairly the financial condition of Viral and
its Subsidiaries as of the indicated dates and the results of operations and
cash flows of Viral and its Subsidiaries for the indicated periods. The 2000
Interim Financial Statements have been prepared on a basis consistent with the
1999 Financial Statements, and present fairly the financial condition of Viral
and its Subsidiaries as of the indicated dates and the results of operations and
cash flows of Viral and its Subsidiaries for the indicated periods.

         3.6 Events After October 31, 1999.

               3.6.1 Except as disclosed in the Disclosure Schedule, since
         October 31, 1999 there has not occurred any material adverse change in
         the business, assets, liabilities, financial condition, operations,
         results of operations or prospects of Viral and its

<PAGE>   12
                                      -8-

          Subsidiaries, taken as a whole ("Viral Material Adverse Change") or
          any event or condition that, with the passage of time, is likely to
          result in a Viral Material Adverse Change.

               3.6.2 Except as set forth in the Disclosure Schedule, since
          October 31, 1999 neither Viral nor any of its Subsidiaries:

                    3.6.2.1 has transferred or encumbered assets or entered into
               any agreement outside the Ordinary Course of Business or granted
               any license or sublicense of any rights with respect to any
               Intellectual Property Assets; or

                    3.6.2.2 granted any Security Interest or made any loan or
               entered into any other transaction with any directors, officers
               or employees outside the Ordinary Course of Business; or

                    3.6.2.3 entered into any employment agreement or modified
               the terms of any existing employment agreement; or

                    3.6.2.4 other than in the Ordinary Course of Business,
               granted any increase in base compensation to any director,
               officer or employee; or

                    3.6.2.5 adopted, amended or modified any Employee Benefit
               Plan; or

                    3.6.2.6 made any capital expenditures or committed to make
               such expenditures in excess of $25,000, individually or in the
               aggregate; or

                    3.6.2.7 reduced or limited the insurance coverages
               maintained on its behalf or the manner in which it uses, operates
               or maintains its property; or

                    3.6.2.8 made any investments or contributions to any other
               Person in excess of $25,000, individually or in the aggregate.

         3.7 Undisclosed Liabilities.

         Except as set forth in the Disclosure Schedule or on the face of the
1999 Financial Statements, none of Viral and its Subsidiaries has any material
liability, whether asserted or unasserted, whether absolute or contingent,
whether accrued or unaccrued, whether liquidated or unliquidated and whether due
or to become due, including any material liability for taxes.

         3.8 Brokers' Fees.

         Except as set forth in the Disclosure Schedule, none of Viral and its
Subsidiaries has any liability or obligation to pay any fees or commissions to
any broker, finder or agent with respect to the transactions contemplated by
this Agreement. The parties hereto acknowledge that Viral

<PAGE>   13
                                      -9-

shall pay the broker fees set forth in the Disclosure Schedule out of Viral's
available cash prior to the Effective Time.

         3.9 Insurance.

         The Disclosure Schedule sets forth the following information with
respect to each insurance policy, including policies providing property,
casualty, liability and workers' compensation coverage and bond and surety
arrangements, to which any of Viral and its Subsidiaries is a party, a named
insured or otherwise the beneficiary of coverage:

                  3.9.1 the name, address and telephone number of the agent;

                  3.9.2 the name of the insurer, the name of the policyholder
         and the name of each covered insured;

                  3.9.3 the policy number and the period of coverage;

                  3.9.4 the scope, including an indication of whether the
         coverage was on a claims made, occurrence or other basis, and amount,
         including a description of how deductibles and ceilings are calculated
         and operate, of coverage; and

                  3.9.5 a description of any retroactive premium adjustments or
         other loss-sharing arrangements.

With respect to each such insurance policy, to Viral's and Viral Stockholders'
Actual Knowledge: (a) the policy is legal, valid, binding, enforceable and in
full force and effect; (b) the policy will continue to be legal, valid, binding,
enforceable and in full force and effect on identical terms following the
consummation of the Merger; (c) none of Viral and its Subsidiaries nor any other
party to the policy is in material breach or default (including with respect to
the payment of premiums or the giving of notices) and no event has occurred
which, with notice or the lapse of time, would constitute such a breach or
default, or permit termination, modification or acceleration, under the policy;
and (d) no party to the policy has repudiated any provision thereof. Each of
Viral and its Subsidiaries has been covered since January 1, 1995 by insurance
in scope and amount customary and reasonable for the businesses in which it has
engaged during the aforementioned period. The Disclosure Schedule describes any
self-insurance arrangements affecting any of Viral and its Subsidiaries. The
Disclosure Schedule also sets forth any arrangements for the cancellation and
payments of cash values under any life insurance policies maintained by the
Company for the Viral Stockholders or any other employees of Viral.

         3.10 Litigation.

         The Disclosure Schedule sets forth each instance in which any of Viral
and its Subsidiaries is subject to any outstanding injunction, judgment, order,
decree, ruling or charge or is a party or, to Viral's Actual Knowledge, is
threatened in writing to be made a party to any

<PAGE>   14
                                      -10-

action, suit, proceeding, hearing or investigation of, in, or before any court
or quasi-judicial or administrative agency of any federal, state, local or
foreign jurisdiction or before any arbitrator, an adverse determination of which
could reasonably be expected to result in a Viral Material Adverse Change.

         3.11 Product Warranty.

         Except as set forth in the Disclosure Schedule which is accurate as of
the date of this Agreement, to Viral's Actual Knowledge, each product
manufactured, sold, leased or distributed by Viral or any of its Subsidiaries
was or is in conformity in all material respects with all applicable contractual
commitments and all expressed and implied warranties. Except as set forth in the
Disclosure Schedule, none of Viral and its Subsidiaries has any material
liabilities in excess of the liabilities set forth on the face of the 1999
Financial Statements for any guaranty, warranty or other indemnity arising from
products manufactured, sold, leased or distributed by any of Viral and its
Subsidiaries.

         3.12 Product Liability.

         Except as set forth in the Disclosure Schedule or on the face of the
1999 Financial Statements, to Viral's Actual Knowledge, none of Viral and its
Subsidiaries has any material liability arising out of any injury to any Person
or property as a result of the ownership, possession or use of any product
manufactured, sold, leased or delivered by any of Viral and its Subsidiaries.

         3.13 Employees.

         Except as set forth in the Disclosure Schedule, to Viral's Actual
Knowledge, no executive, key employee or group of employees has any plans to
terminate employment with any of Viral and its Subsidiaries other than routine
terminations which are not reasonably expected to result in a Viral Material
Adverse Change. None of the employees of Viral or its Subsidiaries are subject
to any collective bargaining agreement. Since January 1, 1995, none of Viral or
its Subsidiaries have committed an unfair labor practice, as such term is
defined in federal labor law, or experienced any strikes, charges of unfair
labor practices or other collective bargaining disputes, except for any such
practices, strikes, claims or disputes which are not reasonably expected to
result in a Viral Material Adverse Change. Viral has no Actual Knowledge of any
organizational effort presently being made or threatened by or on behalf of any
labor union with respect to employees of any of Viral and its Subsidiaries.

         3.14 Employee Benefits .

                  3.14.1 The Disclosure Schedule lists each Employee Benefit
         Plan that any of Viral and its Subsidiaries maintains or to which any
         of Viral and its Subsidiaries contributes.

<PAGE>   15
                                      -11-

                           3.14.1.1 Each such Employee Benefit Plan (and each
                  related trust, insurance contract or fund) subject to ERISA
                  complies in form and in operation in accordance with its terms
                  and in all material respects with the applicable requirements
                  of ERISA, the Code and other applicable laws.

                           3.14.1.2 All required reports and descriptions,
                  including Form 5500 Annual Reports, Summary Annual Reports,
                  PBGC-1s and Summary Plan Descriptions, have been filed or
                  distributed appropriately with respect to each Employee
                  Benefit Plan subject to Title I of ERISA. The requirements of
                  Part 6 of Subtitle B of Title 1 of ERISA and of Code sec.
                  4980B have materially been met with respect to each such
                  Employee Benefit Plan which is an Employee Welfare Benefit
                  Plan.

                           3.14.1.3 All contributions, including all employer
                  contributions and employee salary reduction contributions,
                  which are due prior to the date of this Agreement have been
                  paid to each such Employee Benefit Plan which is an Employee
                  Pension Benefit Plan and all contributions which are due for
                  any period ending on or before the Closing Date will have been
                  paid on or before the Closing Date to each such Employee
                  Pension Benefit Plan or will have been accrued in accordance
                  with the past custom and practice of Viral and its
                  Subsidiaries. All premiums or other payments which are due for
                  all periods ending on or before the Closing Date will have
                  been paid on or before the Closing Date with respect to each
                  such Employee Benefit Plan which is an Employee Welfare
                  Benefit Plan.

                           3.14.1.4 Each such Employee Benefit Plan which is an
                  Employee Pension Benefit Plan covering employees in the United
                  States which is intended to be a "qualified plan" under Code
                  sec. 401(a) substantially meets the requirements of Code sec.
                  401(a) and has received a favorable determination letter form
                  the Internal Revenue Service or has pending an application for
                  a determination letter which was timely filed.

                           3.14.1.5 The market value of assets under each such
                  Employee Benefit Plan which is an Employee Pension Benefit
                  Plan covering employees in the United States, other than any
                  multiemployer plan, equals or exceeds the present value of all
                  vested and nonvested liabilities thereunder determined in
                  accordance with PBGC methods, factors and assumptions
                  applicable to an Employee Pension Benefit Plan terminating on
                  the date for determination.

                           3.14.1.6 Viral has delivered to Meridian correct and
                  complete copies of the plan documents (including amendments)
                  and summary plan description, the most recent determination
                  letter received from the Internal Revenue Service (for each
                  Employee Pension Benefit Plan), the most recent Form 5500
                  Annual Report, if applicable, and all related trust
                  agreements, insurance contracts and other

<PAGE>   16
                                      -12-

                  funding agreements or other documents which implement each
                  Employee Benefit Plan.

                           3.14.1.7 Viral and/or its Subsidiaries have the right
                  to amend or terminate, without the consent of any other
                  person, any Employee Benefit Plan it maintains, except as
                  proscribed by law.

                  3.14.2 With respect to each Employee Benefit Plan that any of
         Viral, its Subsidiaries and the Controlled Group of Corporations which
         includes Viral and its Subsidiaries maintains or ever has maintained,
         within the seven years ending on the Closing Date, or to which any of
         them contributes, contributed within the seven years ending on the
         Closing Date, or ever has been required to contribute, within the seven
         years ending on the Closing Date:

                           3.14.2.1 No such Employee Benefit Plan is an Employee
                  Pension Benefit Plan that is subject to Title IV of ERISA.

                           3.14.2.2 To Viral's Actual Knowledge, there have been
                  no prohibited transactions (as defined in ERISA sec. 406 and
                  Code sec. 4975) with respect to any such Employee Benefit Plan
                  subject to Title I of ERISA. No Fiduciary (as defined in ERISA
                  sec. 3(21)) has any liability for breach of fiduciary duty or
                  any other failure to act or comply in connection with the
                  administration or investment of the assets of any such
                  Employee Benefit Plan. No action, suit, proceeding, hearing or
                  investigation relating to any such Employee Benefit Plan
                  (other than routine claims for benefits) is pending or, to
                  Viral's Actual Knowledge, threatened. Viral has no Actual
                  Knowledge of any basis for any such action, suit, proceeding,
                  hearing or investigation.

                  3.14.3 None of Viral, its Subsidiaries and the other members
         of the Controlled Group of Corporations that includes Viral and its
         Subsidiaries contributes to, has, within the seven years ending on the
         Closing Date, contributed to, or been required to contribute to any
         multiemployer plan or has any liability, including withdrawal
         liability, under any multiemployer plan as defined in sec. 4001(a)(3)
         of ERISA.

                  3.14.4 None of Viral and its Subsidiaries contributes or is
         required to contribute to any Employee Welfare Benefit Plan providing
         medical, health or life insurance or other welfare-type benefits for
         current or future retired or terminated employees, their spouses or
         their dependents, other than in accordance with Code sec. 4980B.

                  3.14.5 The consummation of the Merger and the performance of
         each of the respective obligations of Meridian and Viral hereunder do
         not cause or trigger the obligation to make any severance payment or
         other payments to any officer, director or employee of Viral.

         3.15 Guaranties.

<PAGE>   17
                                      -13-

         Except as set forth in the Disclosure Schedule, none of Viral and its
Subsidiaries is a guarantor or otherwise is liable as a guarantor for any
material liability or obligation, including indebtedness for borrowed money, of
any other Person.

         3.16 Environment, Health and Safety.

                  3.16.1 Except as set forth in the Disclosure Schedule, to the
         Actual Knowledge of Viral, all real property formerly or presently
         owned, leased or controlled by Viral and the improvements thereon and
         the soil and groundwater thereunder ("Properties"): (a) do not contain
         and are not contaminated by any Hazardous Substance; (b) do not contain
         and have not previously contained underground storage tanks owned or
         operated by Viral; (c) have not been used by Viral for the generation,
         treatment, storage or disposal of any Hazardous Substance (other than
         routine storage, use and sale of Hazardous Substances from time to time
         in the Ordinary Course of Business and in compliance with
         Environmental, Health and Safety Laws), or for mining, landfilling,
         dumping, gasoline station, dry cleaning, or commercial petroleum
         product storage purposes; (d) during Viral's ownership or use of the
         Properties have not been the subject of any activities representing a
         violation or alleged violation of, and have not and are not currently
         under any pending or threatened investigation, pursuant to any
         Environmental, Health or Safety Laws, or under any obligation to report
         to or subject to any action by a governmental authority, pursuant to
         any Environmental, Health or Safety Laws, and have no liability or
         potential liability under and are in compliance with all Environmental,
         Health or Safety Laws; (e) during Viral's ownership or use of the
         Properties have not been subject to any release or threatened release
         of any Hazardous Substance caused by Viral or its Subsidiaries, agents,
         contractors or invitees; (f) during Viral's ownership or use of the
         Properties have not been the subject of any environmental audit,
         environmental assessment or similar environmental investigation, or any
         remedial action, or any lien or encumbrance for an environmental
         problem; and (g) do not contain asbestos, polychlorinated biphenyls
         (PCBs), or nuclear fuels or wastes.

                  3.16.2 Viral: (a) has no liability or potential liability
         under and, to its Actual Knowledge, has been in compliance in all
         material respects with all applicable Environmental, Health or Safety
         Laws; (b) has not caused or permitted the release, discharge or
         disposal of any Hazardous Substance into the environment except in
         compliance with applicable Environmental Health and Safety Laws; (c)
         has not received any notices, demand letters, or requests for
         information from any governmental entity or any third party that assert
         Viral may be in violation of, liable or potentially liable under, any
         Environmental, Health or Safety Laws; (d) is not subject to any notice,
         order or decree of any court, or governmental entity arising under any
         Environmental, Health or Safety Laws, except for such matters as do
         not, individually or in the aggregate, have a material adverse effect
         on Viral, its business, or its Properties; (e) has not transported or
         arranged for the transportation of any Hazardous Substances to any site
         listed on EPA's National Priorities List of Hazardous Substance Sites,
         CERCLIS or comparable state Hazardous Substance Site List; and (f) is
         not liable for any Hazardous Substance

<PAGE>   18
                                      -14-

         contamination at any other site or location under any Environmental,
         Health and Safety Laws. Schedule 3.16 contains the names and locations
         of all treatment sites, landfills, facilities, disposal sites and other
         similar sites known to Viral where Hazardous Substances generated,
         produced or related to Viral's or any Viral Subsidiary's business have
         been treated, placed or disposed. To its Actual Knowledge, Viral has
         timely and accurately filed every report or notification required to be
         filed, and has acquired, maintained and timely submitted renewal
         applications for all necessary certificates, approvals, or
         authorizations, and permits and has and is in compliance with such
         certificates, approvals, or authorizations and permits (all of which
         are listed in the Disclosure Schedule), and has generated and
         maintained all data, documentation and records required under all
         Environmental, Health or Safety Laws. All such certificates, permits,
         approvals or authorizations are valid, in full force and effect and are
         not subject to challenge, and all fees relating to same have been paid.
         Viral has not breached any provision of, nor is in default in any
         respect under the terms of, or has engaged in any activity which would
         cause any revocation or suspension of any such certificates,
         authorizations or permits. No action, proceeding, or investigation
         contemplating the suspension or revoking or suspending any such
         certificates, permits, authorizations, or permits is pending,
         threatened, or likely to be instituted, and Viral has no knowledge of
         any reason why any such certificate, appeal, authorization or permit
         would not be renewed. Copies of all documents received by Viral from,
         or submitted by Viral to, any governmental authority, court, or third
         party concerning any matters arising under any Environmental, Health
         and Safety Laws, and all reviews, audits, assessments, analyses or
         other documents pertaining to liability under or compliance with
         Environmental, Health and Safety Laws, have been furnished by Viral to
         Meridian.

                  3.16.3 Except as set forth in the Disclosure Schedule, there
         are not now pending or, to Viral's Actual Knowledge, threatened, and
         during the preceding five (5) years, there have not occurred any
         Occupational Safety and Health Act ("OSHA") inspections, complaints
         and/or citations relating to Viral's business operations or the places
         where it conducts its business operations. To Viral's Actual Knowledge,
         no modifications or changes in or to any of the Properties or the
         manner in which Viral or any Viral Subsidiary conducts its business are
         necessary to continue operations in accordance with applicable OSHA
         requirements.

                  3.16.4 Definitions.

                           3.16.4.1 "ENVIRONMENTAL, HEALTH AND SAFETY LAWS"
                  means all foreign, federal, state and local laws, statutes,
                  codes, ordinances, regulations, rules, policies, consent
                  decrees, judicial or administrative orders, permits,
                  approvals, or other requirements relating to the protection of
                  human health or the environment, all as amended or modified
                  from time to time, including without limitation, the
                  Comprehensive Environmental Response, Compensation, and
                  Liability Act of 1980, as amended (42 U.S.C. sec. 9601, ET
                  SEQ.), the Solid Waste Disposal Act, as amended (42 U.S.C.
                  sec. 6901, ET SEQ.), the Hazardous Waste

<PAGE>   19
                                      -15-

                  Materials Transportation Act, as amended (49 U.S.C. sec. 1801,
                  ET SEQ.), the Clean Air Act, as amended (42 U.S.C. sec. 7401,
                  ET SEQ.), the Federal Water Pollution Control Act, as amended
                  (33 U.S.C. sec. 1251, ET SEQ.), the Toxic Substances Control
                  Act, as amended (15 U.S.C. sec. 2601, ET SEQ.), the Safe
                  Drinking Water Act, as amended (42 U.S.C. sec. 300f, et seq.),
                  the Atomic Energy Act, as amended (42 U.S.C. sec. 2014, ET
                  SEQ.), the Federal Insecticide Fungicide and Rodenticide Act,
                  as amended (7 U.S.C. sec. 136, ET SEQ.), the Oil Pollution Act
                  of 1990, as amended (33 U.S.C. sec. 2701, ET SEQ.), the
                  Emergency Planning and Community Right-to-Know Act of 1986, as
                  amended (42 U.S.C. sec. 11001, ET SEQ.), the Occupational
                  Safety and Health Act, as amended (29 U.S.C. sec. 651, ET
                  SEQ.), and the regulations adopted and publications
                  promulgated pursuant thereto, and shall also include any
                  common law theory based on nuisance, trespass, negligence or
                  other tortious conduct.

                           3.16.4.2 "HAZARDOUS SUBSTANCE" means any substance,
                  material or waste: (a) the presence of which requires
                  investigation or remediation under any Environmental, Health
                  and Safety Laws; or (b) which is defined, characterized,
                  identified, or listed as a hazardous waste, hazardous
                  substance, toxic substance, infectious waste, solid waste,
                  industrial waste, mixed (hazardous and radioactive) waste,
                  pollutant, contaminant or similar term under any
                  Environmental, Health and Safety Laws; or (c) which is toxic,
                  explosive, corrosive, reactive, ignitable, flammable,
                  infectious, radioactive, toxic, carcinogenic, mutagenic, or
                  otherwise hazardous and is or becomes regulated by any
                  governmental authority as a threat to human health or safety
                  or the environment; or (d) the presence of which on the
                  property causes or threatens to cause a nuisance upon the
                  property or to adjacent property or poses or threatens to pose
                  a hazard to the health or safety of persons on or about the
                  property; or (e) the release of which on adjacent properties
                  could constitute a trespass; or (f) which is asbestos or
                  asbestos-containing materials; or (g) which is polychlorinated
                  biphenyls; or (h) which contains petroleum or any
                  petroleum-derived products or fractions thereof; or (i) which
                  is dioxin; or (j) which may give rise to liability or is
                  otherwise regulated under any Environmental, Health and Safety
                  Laws.

         3.17 Intellectual Property.

                  3.17.1 For purposes of this sec. 3.17, the following terms
         shall have the following meanings:

                           3.17.1.1 "Marks" means names "Viral Antigens, Inc.
                  (unregistered)", "Autolex(R)", "BRU RAP (unregistered)", and
                  all fictional business names, trading names, registered and
                  unregistered trademarks, service marks and applications used
                  in the business or owned, used or licensed by Viral;

<PAGE>   20
                                      -16-

                           3.17.1.2 "Patents" means the patents, patent
                  applications, and inventions and discoveries that may be
                  patentable that are used in the business and are owned, used
                  or licensed by Viral;

                           3.17.1.3 "Copyrights" means all copyrights in both
                  published works and unpublished works owned, used or licensed
                  by Viral or any Viral Subsidiary;

                           3.17.1.4 "Trade Secrets" means all know-how, trade
                  secrets, confidential information, customer lists, internally
                  derived or custom software, technical information, data,
                  process technology, plans, drawings, and blue prints owned,
                  used, or licensed by Viral or any Viral Subsidiary as licensee
                  or licensor;

                           3.17.1.5 "Software" means the computer software and
                  all computer software code documentation commentaries, owned,
                  licensed or used by Viral or any Viral Subsidiary in the
                  conduct of the business; and

                           3.17.1.6 "Intellectual Property Assets" means
                  collectively the Marks, Patents, Copyrights, Trade Secrets and
                  Software.

                  3.17.2 The Disclosure Schedule contains a complete  and
         accurate list and summary description, including any royalties paid or
         received by Viral, of all agreements relating to its Intellectual
         Property Assets to which Viral is a party or by which Viral is bound
         except for any license applied by the sale of a product and perpetual,
         paid-up licenses for commonly available software programs with a value
         of less than $2,000 under which Viral is a licensee. There are no
         outstanding and, to Viral's Actual Knowledge, no threatened disputes or
         disagreements with respect to any such agreement.

                  3.17.3 The Disclosure Schedule contains a complete and
         accurate list and summary description of all Marks. Except as set forth
         in the Disclosure Schedule, all Marks that have been registered with
         the applicable Trademark Office are valid and enforceable, and are not
         subject to any maintenance fees or taxes or actions falling due within
         90 days after the Closing Date. Except as set forth in the Disclosure
         Schedule, Viral has taken all necessary and desirable action in
         accordance with applicable law to maintain and protect each Mark.
         Except as set for in the Disclosure Schedule, no Mark has been or is
         now involved in any opposition, invalidation, or cancellation and, to
         Viral's Actual Knowledge, no such action is threatened with respect to
         any of the Marks, nor is there any potentially interfering trademark or
         trademark application of any third party.

                  3.17.4 With respect to the Trade Secrets, taken as a whole,
         the documentation relating to such Trade Secret is current, accurate,
         and sufficient in detail and content to identify and explain it and to
         allow its full and proper use without reliance on the Actual Knowledge
         or memory of any individual. Viral has taken all reasonable precautions
         to protect the secrecy, confidentiality and value of its Trade Secrets.

<PAGE>   21
                                      -17-

                  3.17.5 Except as listed on the Disclosure Schedule, no action
         is pending or, to the Actual Knowledge of Viral, threatened with
         respect to Viral's ownership of, or potential infringements of or any
         other claims of any nature relating to or arising from its Intellectual
         Property Assets or the current products of Viral. None of Viral's
         Intellectual Property Assets, including current products manufactured
         by Viral, infringe, violate or constitute a misappropriation, or to the
         Actual Knowledge of Viral in the past infringed, violated or
         constituted a misappropriation, of any intellectual property rights of
         any other Person or entity. Neither Viral Stockholders nor Viral has
         received any complaint, claim or notice and to Viral's Actual
         Knowledge, there is no basis for any such complaint claim or notice.
         Viral has taken all reasonable measures to protect the proprietary
         nature and value of each of the Intellectual Property Assets, and to
         maintain in confidence all Trade Secrets that it owns or uses. No other
         Person or entity has any rights to any of the Intellectual Property
         Assets owned or used by Viral (except for licensors of Intellectual
         Property Assets to Viral), and to Viral's Actual Knowledge, no other
         Person or entity is infringing, violating or misappropriating any of
         the Intellectual Property Assets of Viral.

                  3.17.6 Except as set forth in the Disclosure Schedule, Viral
         does not own or operate any Software developed by it or proprietary to
         Viral, that was developed by any third party or entity for Viral.

                  3.17.7 The Software included in the Intellectual Property
         Assets performs in accordance with the documentation and other written
         materials used in connection with the Software. Viral has delivered to
         Meridian complete and correct copies of all user and technical
         documentation related to the Software.

         3.18 Products, Inventories and Operations.

                  3.18.1 Except as set forth in the Disclosure Schedule, Viral
         manufactures and has at all times manufactured the Products in
         compliance in all material respects with (i) all rules and regulations
         with respect to Good Manufacturing Practices as such may be determined
         by the Federal Food and Drug Administration ("FDA") ("GMP
         Requirements") and in compliance in all material respects with all
         representations made in any submissions to the FDA concerning or
         relating to the Products, including submissions to obtain marketing
         approval, and (ii) all relevant rules and regulations as promulgated by
         the United States Department of Agriculture ("USDA"). Viral has
         maintained its registration of its manufacturing facilities with FDA
         and USDA at all times.

                  3.18.2 Except as set forth in the Disclosure Schedule, the
         finished goods inventories, net of reserves for excess and obsolete
         inventories, of the Products at the closing are in good, usable and
         salable condition, free from any defect, whether latent or patent, and
         currently of a quality, strength and purity which is in conformity with
         applicable FDA and USDA regulations. Except as set forth in the
         Disclosure Schedule, no article in such inventories is adulterated or
         misbranded within the meaning of the

<PAGE>   22
                                      -18-

         Federal Food, Drug and Cosmetic Act nor is any finished article
         contained in such inventories an article which may not, under the
         provisions of Sections 404 or 505 of the said Act, be introduced into
         interstate commerce for the uses thereof previously made by Viral or in
         violation with any rules and regulations of the USDA. The inventories
         of finished goods of the Products are packaged for resale in customary
         packaging used for those products by Viral.

                  3.18.3 Except as set forth in the Disclosure Schedule, the
         manufacture, use and sale by Viral of the Products are in accordance in
         all material respects with the provisions of the applicable
         authorizations, comply in all material respects with all applicable
         laws and regulations and do not interfere with the rights of any Person
         to know-how or to any property right the existence of which would
         materially adversely affect the value of the Products.

                  3.18.4 Except as set forth in the Disclosure Schedule, since
         January 1, 1995, Viral has not failed to file any report, data, or
         other information with respect to the Products, the materials or the
         operation of Viral's plants where the Products are manufactured that is
         required to be filed with the FDA, USDA, or any other federal, state or
         local government agency or other governmental agency, which failure to
         file would materially adversely affect the Products, the materials or
         the operations of Viral's plants where the Products are manufactured.
         Except as disclosed in the Disclosure Schedule, Viral is in all
         material respects in compliance with current federal, state, state
         agency and local government and other governmental reporting
         requirements, if any, relating to the Products, the materials and the
         plant operation where the Products are manufactured.

                  3.18.5 All information concerning the Products, the materials
         and the operation of Viral's plants where the Products are
         manufactured, including published and unpublished data, relating to the
         safety and efficacy of the Products, coming to the attention of Viral
         within four years prior to the Closing Date not already listed on other
         Disclosure Schedules will be promptly disclosed to Meridian prior to
         Closing. Viral Stockholders will transmit to Meridian any adverse
         reaction, adverse experience or quality complaints pertaining to the
         Products coming to Viral Stockholders' attention after the Closing Date
         addressed to Meridian at the address set forth hereafter.

         3.19 Formulae, Etc., for Products

                  3.19.1 The Disclosure Schedule contains a true and correct
         list of the Products currently in inventory, currently being
         manufactured and products or technology related to the Products.

                  3.19.2 Except as set forth in the Disclosure Schedule with
         respect to the Products currently being manufactured, Viral has a
         sufficient combination of manufacturing and testing instructions,
         formulae and other documentation. Viral shall preserve all such
         manufacturing instructions, formulae and other documentation and all
         available

<PAGE>   23
                                      -19-

         information concerning the Products under development and shall
         disclose to Meridian all manufacturing processes and Trade Secrets
         possessed by Viral relating to the Products.

         3.20 Expiration Dates.

         Except as set forth in the Disclosure Schedule, all of the Products
bear an expiration date suitable for sale of the Products in the normal course
which is based upon Viral's available data, a copy of which has been provided to
Meridian.

         3.21 Subsidiaries and Other Capital Stock.

         Each of Viral's Subsidiaries is listed in the Disclosure Schedule.
Except as set forth in the Disclosure Schedule, Viral owns of record and
beneficially all issued and outstanding shares of capital stock and other
securities of each of the Subsidiaries. All of such shares of capital stock are
duly authorized, validly issued fully-paid and non-assessable shares of capital
stock. No Subsidiary has outstanding or authorized options, warrants, purchase
rights, subscription rights, conversion rights, exchange rights or other
contracts or commitments that could require such Subsidiary to issue, sell, or
otherwise cause to become outstanding any of its capital stock.

         3.22 Real Property.

         The Disclosure Schedule sets forth a description of all real property
of Viral owned, leased or subject to a purchase contract or lease commitment,
detailing which properties are owned and which are leased, with a brief
description of all buildings and structures thereon (sometimes collectively, the
"Real Property"). A copy of any such deed, purchase contract or lease (with
amendments) is attached to the Disclosure Schedule. With respect to the Real
Property that is owned by Viral and identified on the Disclosure Schedule, title
to such Real Property is, and at the Effective Time shall be, except to the
extent identified in the Disclosure Schedule, good and marketable, fee simple,
free and clear of all liens, encumbrances, adverse claims and other matters
affecting Viral's title to or possession of such Real Property, including, but
not limited to, all encroachments, boundary disputes, covenants, restrictions,
easements, rights of way, mortgages, security interests, leases, encumbrances
and title objections, excepting only (i) liens for real estate taxes not yet due
and payable and (ii) such easements, restrictions and covenants presently of
record which will not, in Meridian's sole judgment (which judgment will be
exercised prior to closing to the extent such easements, restrictions and
covenants have been disclosed in the Disclosure Schedule), interfere with or
impair Meridian's intended use of any of the Real Property or reduce the value
of any of the Real Property, which easements, restrictions and covenants are
listed on the Disclosure Schedule in a manner so that the Real Property to which
they relate is readily identifiable (collectively, the "Permitted
Encumbrances"). At closing, title to the Real Property owned by Viral shall be
insurable by Meridian by a title insurance company reasonably satisfactory to
Meridian, at such company's regular rates pursuant to an ALTA 1987 owner's form
of policy, free of all exceptions except the aforesaid easements, restrictions
and covenants to the extent not objectionable to Meridian. Copies of any
existing

<PAGE>   24
                                      -20-

title insurance policies shall be delivered to Meridian upon execution of this
Agreement. Except as set forth in the Disclosure Schedule, all real estate and
the buildings located thereon are in compliance in all material respects with
applicable zoning laws and regulations. All buildings and structures owned or
leased by Viral, and the mechanical components (including HVAC systems), roofs,
fixtures and equipment located therein or thereon, are now, and at the Closing
Date will be, in good operating condition and repair, subject only to normal
maintenance and repair, fit for the uses for which they are intended, and no
material repairs will need to be made as of the Closing Date to continue the use
of such buildings and structures as presently used.

         3.23 Equipment.

         Viral shall deliver to Meridian prior to closing a computer generated
asset register which will list all material items of machinery, equipment and
similar property, including vehicles, owned by Viral on the Closing Date. All
such machinery, equipment and similar property, including vehicles, shall be in
good working order on the Closing Date. All equipment owned by Viral and placed
with customers has been validated for the specific Viral tests that run on that
equipment.

         3.24 Contracts and Agreements.

         The Disclosure Schedule sets forth a description of all contracts and
agreements, whether written or oral, and all amendments thereto or modifications
thereof to which Viral is a party or by which it is bound, which involve future
payments by or to Viral of $25,000 or more, other than contracts which are
terminable by Viral upon thirty (30) days or less notice without cost or expense
to Viral, and all notes, mortgages, pledges, deeds of trust, security, loan or
credit agreements and similar instruments or arrangements to which Viral is a
party or by which it is bound and all amendments or modifications thereof
(collectively, the "Contracts"), together in each case with copies of all such
agreements, contracts and other instruments as Meridian may reasonably request.
Except as set forth in the Disclosure Schedule:

                  3.24.1 Each Contract is a valid and binding agreement of Viral
         and, to the best of Viral's Actual Knowledge, is a valid and binding
         agreement of the other parties thereto;

                  3.24.2 Viral has fulfilled all obligations required pursuant
         to each Contract to have been performed by Viral on its part prior to
         the date hereof, and Viral has no reason to believe that it will not be
         able to fulfill, when due, all of Viral's obligations under the
         Contracts that remain to be performed after the date hereof; and,

                  3.24.3 There has not occurred any default under any Contract
         on the part of Viral; Viral does not have any Actual Knowledge that any
         default under any Contract on the part of the other parties thereto has
         occurred; and Viral does not have any Actual Knowledge that any event
         has occurred which with the giving of notice or the lapse of time, or
         both, would constitute any default under any of the Contracts.

<PAGE>   25
                                      -21-

         3.25 Accounts Receivable.

         All accounts receivable of Viral that are reflected in the 1999
Financial Statements or that have arisen after October 31, 1999 in the conduct
of Viral's business are valid obligations arising from sales actually made or
services actually performed in the Ordinary Course of Business. Except as set
forth on the Disclosure Schedule, there is no contest, claim or right of
set-off, other than returns in the Ordinary Course of Business, under any
contract or arrangement with any obligor of an accounts receivable relating to
the amount or validity of such accounts receivable.

         3.26 Licenses and Permits.

         The Disclosure Schedule sets forth a list of, and Viral is in
possession of, all licenses and/or permits or other approval for the development
and marketing of products pursuant to such licenses and permits of Viral, other
than any permit, the absence of which does not have a Viral Material Adverse
Effect. Each such Permit is valid and in full force and effect and all renewals
for which have been timely applied for. Except as set forth in the Disclosure
Schedule, Viral is in compliance in all material respects with all conditions or
requirements imposed by or in connection with the Permits and with respect to
the conduct of its business. Viral has received no notice of and there is not,
to the Actual Knowledge of Viral, any reason to believe that any authority
intends to cancel, terminate or modify any of the permits or adopt or modify
rules and regulations which would adversely affect the permits.

         3.27 Taxes and Tax Returns.

         Viral will, between the date hereof and the Closing Date, and through
the date of this Agreement has, duly and timely filed all federal, state and
local (United States and all foreign jurisdictions) tax returns required to be
filed by it (unless a valid extension therefore has been granted), and all such
returns are, or will be when filed, true, complete and correct in all material
respects. Viral has, or will have prior to the Closing Date, duly and timely
paid or made adequate provision for the payment of all taxes, assessments and
other governmental charges which have been incurred as set forth in the
aforementioned tax returns or are otherwise due and payable with respect to
periods ending on or prior to the Closing Date. All sales taxes required through
the date of this Agreement to be collected and remitted by Viral have been
properly collected and remitted. All sales taxes will continue to be properly
collected and remitted to the extent required, up to and through the Closing
Date. All necessary sales tax exemption certificates have been obtained by Viral
and all such certificates have been properly completed and maintained. No tax
return, except as set forth in the Disclosure Schedule, filed by Viral is under
audit or examination by any taxing authority and there are no applications or
agreements for the extension of the time for the filing of any tax return or for
the assessment of any amounts of tax nor any consent to an extension of the
period of limitations applicable to such assessment or to the collection of any
tax. No issues have been raised in connection with any prior or pending inquiry
into, or audit of, any tax filings of Viral which may be expected to be raised
in the future by such taxing authorities and no facts exist or have existed
which would constitute

<PAGE>   26
                                      -22-

grounds for the assessment of any further tax liabilities, which, individually
or in the aggregate, are material with respect to the periods which have not
been examined by the taxing authority of the relevant jurisdiction. Viral has
made available to Meridian true and complete copies of all federal, state and
local (United States and foreign) income tax returns which it has filed for each
of the past three years as set forth in the Disclosure Schedule together with
copies of all schedules, work papers, elections, tax depreciation schedules and
other documents which were used in the preparation of each such tax return.
There are no liens for taxes upon the assets of Viral except for liens for taxes
not yet due. As used in this sec. 3.27, "taxes" mean all net income, gross
income, gross receipts, value added, sales, use, transfer, franchise, profits,
withholding, payroll, employment, excise, severance, property or windfall
profits taxes, or other taxes of any kind whatsoever, together with any interest
and any penalties, additions to tax or additional amounts imposed by any taxing
authority (domestic or foreign) upon Viral with respect to all periods or
portions thereof ending on or before the Effective Time and/or any liability of
Viral for the payment of any amounts of the type described in the immediately
preceding clause as a result of being a member of an affiliated or combined
group.

         3.28 Transactions With Affiliates.

         Except as set forth in the Disclosure Schedule and except for
compensation or other customary employee benefits provided in the Ordinary
Course of Business, since October 31, 1999, Viral has not entered into, or been
a party to, any transaction with a value in excess of $5,000 which provided for
payment to or from, or the transfer of, any property of Viral to or from any
Viral Stockholders, any director, officer or other employee of Viral, to any
member of the family of any such Person or to any corporation, partnership,
trust or other entity in which any such Person has an ownership interest or is
an officer, director, partner or trustee.

         3.29 Compliance with Applicable Law.

         Except as set forth in the Disclosure Schedule, Viral is conducting and
has conducted its business so as to comply, in all material respects with all
applicable laws, ordinances, regulations, decrees and orders, of any
governmental entity, including without limitation compliance with the National
Labor Relations Act, as amended, the Welfare and Pension Plans Disclosure Act,
the Fair Labor Standards Act and Equal Pay Act, Title 7 of the Civil Rights Act
of 1964, the Age Discrimination in Employment Act of 1967, Environmental, Health
and Safety Laws, and any other law, ordinance, regulation, decree or order,
except, in each case, for any failure to comply which is not reasonably likely
to have a material adverse effect on the financial condition, business,
properties, reputation, results of operations or prospects of Viral, Meridian
and the Transitory Subsidiary.

         3.30 General Disclosure Matters.

         No representation or warranty by Viral or the Viral Stockholders
contained in this Agreement, the Disclosure Schedule attached hereto or in any
statement or certification furnished or to be furnished to Meridian pursuant
hereto or in connection with the transactions contemplated

<PAGE>   27
                                      -23-

hereby, contains or will contain any untrue statement of a material fact or
omits or will omit to state a material fact necessary to make the statements
contained herein or therein not misleading.

         4. Representations and Warranties of Meridian and the Transitory
Subsidiary.

         Each of Meridian and the Transitory Subsidiary represents and warrants
to Viral and the Viral Stockholders that the statements contained in this
Section are correct and complete as of the date of this Agreement and will be
correct and complete as of the Closing Date as though made then and as though
the Closing Date were substituted for the date of this Agreement throughout this
Section.

         4.1 Organization.

         Meridian and the Transitory Subsidiary are corporations each duly
organized, validly existing, and in good standing under the laws of Ohio and
Tennessee, respectively. The Transitory Subsidiary was formed solely for the
purpose of engaging in the transactions contemplated hereby, has engaged in no
other business activities and has conducted its operations only as contemplated
hereby. Meridian has full corporate power and authority to carry on the business
in which it is engaged and to own and use the properties owned and used by it.

         4.2 Authorization of Transaction.

         Each of Meridian and the Transitory Subsidiary has full power and
authority to execute and deliver this Agreement and to perform its obligations
hereunder. The execution, delivery and performance of this Agreement by Meridian
and the Transitory Subsidiary and the consummation by Meridian and the
Transitory Subsidiary of the Merger and of the other transactions contemplated
hereby have been duly authorized by all necessary corporate action on the part
of Meridian and the Transitory Subsidiary and no other corporate proceedings on
the part of Meridian and the Transitory Subsidiary are necessary to authorize
this Agreement or to consummate the transactions so contemplated. No filings
with the Antitrust Division of the Department of Justice or the Federal Trade
Commission pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended are required. No vote of Meridian's stockholders is required to
approve this Agreement or the transactions contemplated hereby. This Agreement
has been duly executed and delivered by Meridian and the Transitory Subsidiary
and, assuming this Agreement constitutes a valid and binding obligation of Viral
and the Viral Stockholders, constitutes a valid and binding obligation of each
of Meridian and the Transitory Subsidiary enforceable against Meridian and the
Transitory Subsidiary in accordance with its terms, subject to applicable
bankruptcy, insolvency, moratorium or other similar laws relating to creditors'
rights generally and to general principles of equity.

<PAGE>   28
                                      -24-

         4.3 Noncontravention.

         Except for the filing of Articles of Merger with the Tennessee
Secretary of State, neither the execution and the delivery of this Agreement,
nor the consummation of the transactions contemplated hereby, will violate any
constitution, statute, regulation, rule, injunction, judgment, order, decree,
ruling, charge, or other restriction of any government, governmental agency, or
court to which either Meridian or the Transitory Subsidiary is subject or any
provision of the Articles of Incorporation or Bylaws of either Meridian or the
Transitory Subsidiary or conflict with, result in a breach of, constitute a
default under, result in the acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any notice under any
agreement, contract, lease, license, instrument or other arrangement to which
either Meridian or the Transitory Subsidiary is a party or by which it is bound
or to which any of its assets is subject, except where the violation, conflict,
breach, default, acceleration, termination, modification, cancellation, or
failure to give notice would not have a material adverse effect on the ability
of the Parties to consummate the transactions contemplated by this Agreement.

         4.4 Brokers' Fees.

         Neither Meridian nor the Transitory Subsidiary has any liability or
obligation to pay any fees or commissions to any broker, finder or agent with
respect to the transactions contemplated by this Agreement for which any of
Viral, the Viral Stockholders or their Subsidiaries could become liable or
obligated.

         4.5 Litigation.

         As of the date of this Agreement, there is no suit, claim, action,
proceeding or investigation pending or, to the Knowledge of Meridian and the
Transitory Subsidiary, threatened against Meridian or any of its Subsidiaries
that could reasonably be expected to prevent or materially delay the
consummation of the Merger. As of the date of this Agreement, neither Meridian
nor any of its Subsidiaries is subject to any outstanding order, writ,
injunction or decree that could reasonably be expected to prevent or materially
delay the consummation of the Merger.

         4.6 Available Funds.

         Meridian has the funds presently available to it sufficient to pay the
Merger consideration and to fulfill and satisfy its other obligations to the
Viral Stockholders under this Agreement.

         5. Representations and Warranties of the Viral Stockholders.

         The Viral Stockholders represent and warrant to Viral and Meridian that
the statements contained in this Section are correct and complete as of the date
of this Agreement and will be correct and complete as of the Closing Date as
though made then and as though the Closing Date were substituted for the date of
this Agreement throughout this Section.

<PAGE>   29
                                      -25-

         5.1 Authorization of Transaction.

         Each of the Viral Stockholders has full power and authority to execute
and deliver this Agreement and to perform his obligations hereunder. This
Agreement has been duly executed and delivered by each of the Viral Stockholders
and, assuming this Agreement constitutes a valid and binding obligation of Viral
and Meridian, constitutes a valid and binding obligation of each of the Viral
Stockholders enforceable against them in accordance with its terms, subject to
applicable bankruptcy, insolvency, moratorium or other similar laws relating to
creditors' rights generally and to general principles of equity.

         5.2 Brokers' Fees.

         None of the Viral Stockholders has any liability or obligation to pay
any fees or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement for which any of Viral and its
Subsidiaries could become liable or obligated, except for the provisions of
sec. 3.8 or the Disclosure Schedule.

         5.3 Transactions with Viral.

         The Disclosure Schedule sets forth all material business arrangements
or relationships that any of the Viral Stockholders or any of their Affiliates
have had with Viral or any of its Subsidiaries since October 31, 1999. Except as
set forth in the Disclosure Schedule, none of the Viral Stockholders nor any of
their Affiliates owns any asset used in the business of Viral and its
Subsidiaries.

         6. Covenants.

         The Parties agree as follows with respect to the period from and after
July 31, 2000 and through the Effective Time.

         6.1 General.

         Each Party will use its reasonable best efforts to take all action and
to do all things necessary, proper, or advisable in order to consummate and make
effective the transactions contemplated by this Agreement including
satisfaction, but not waiver, of the closing conditions set forth in sec. 8.

         6.2 Notices and Consents.

         Viral will give any notices, and will cause each of its Subsidiaries to
give any notices, to third parties and will use its reasonable best efforts to
obtain, and will cause each of its Subsidiaries to use its reasonable best
efforts to obtain, any third party consents, that Meridian reasonably may
request in connection with the matters referred to in sec. 3.4.

<PAGE>   30
                                      -26-

         6.3 Regulatory Matters and Approvals.

         Each of the Parties will, and Viral will cause each of its Subsidiaries
to, give any notices to, make any filings with, and use its reasonable best
efforts to obtain any authorizations, consents, and approvals of governments and
governmental agencies in connection with the matters referred to in secs. 3.4
and 4.3.

         6.4 Operation of Business.

         Viral will, and will cause its Subsidiaries to, engage only in
practices, and only take actions, or enter into transactions in the Ordinary
Course of Business. In addition, during the period from the date of this
Agreement through the Effective Time, Viral will not and will not cause or
permit any of its Subsidiaries to do any of the following without, in each
instance, the prior written consent of Meridian, which consent shall not be
withheld unreasonably:

                  6.4.1 none of Viral and its Subsidiaries will authorize or
         effect any change in its Charter or Bylaws;

                  6.4.2 none of Viral and its Subsidiaries will grant any
         options, warrants, or other rights to purchase or obtain any of its
         capital stock or issue, sell, or otherwise dispose of any of its
         capital stock except upon the exercise of options, warrants, and other
         rights currently outstanding;

                  6.4.3 none of Viral and its Subsidiaries will declare, set
         aside, or pay any dividend or distribution with respect to its capital
         stock, whether in cash or in kind, or redeem, repurchase, or otherwise
         acquire any of its capital stock;

                  6.4.4 none of Viral and its Subsidiaries will issue any note,
         bond, or other debt security or, other than in the Ordinary Course of
         Business, create, incur, assume or guarantee any indebtedness for
         borrowed money or capitalized lease obligation;

                  6.4.5 none of Viral and its Subsidiaries will impose or permit
         or cause to be imposed any Security Interest upon any of its assets
         outside the Ordinary Course of Business;

                  6.4.6 other than purchases of inventory in the Ordinary Course
         of Business, none of Viral and its Subsidiaries will make any capital
         investment in, make any loan to, or acquire the securities or assets of
         any other Person in amounts exceeding $5,000 in any one or related
         group of transactions;

                  6.4.7 none of Viral and its Subsidiaries will make any change
         in employment terms, policies or practices for any of its directors or
         officers or make any change in employment terms, policies or practices
         for its non-officer employees outside the Ordinary Course of Business;
         and

<PAGE>   31
                                      -27-

                  6.4.8 none of Viral and its Subsidiaries will commit to do any
         of the foregoing.

         6.5 Continuance of Operations.

         Viral will, and will cause each of its Subsidiaries to, use its
reasonable efforts to keep its business and property substantially intact,
including its present operations, its physical facilities, working conditions
and relationships with lessors, licensors, suppliers, customers and employees
and operate so as to maintain the levels of finished and raw goods inventory and
sales activity consistent with its practices during the preceding twelve months.

         6.6 Due Diligence.

         The Viral Stockholders and Viral will each, and will cause Viral's
Subsidiaries to, permit representatives of Meridian to have reasonable access at
reasonable times upon reasonable notice to all premises, properties, personnel,
books, records including tax records, contracts, and documents of or pertaining
to each of Viral and its Subsidiaries. Such parties will also furnish Meridian
and its representatives with copies of all such information and data concerning
the affairs of Viral as Meridian reasonably may request for the purpose of
verifying the representations and warranties made herein and further
investigating the business and affairs of Viral. In furtherance therefore, Viral
will permit Meridian, in a manner approved by Viral, to make contact with all
members of management of Viral and its Subsidiaries, with their customers and
with such other Persons with which Viral has been conducting business. The
performance of this due diligence on the part of Meridian or the acquisition of
information by Meridian shall not relieve Viral or the Viral Stockholders from
any representation, warranty or covenant made by either of them in this
Agreement. The Viral Stockholders or Viral will provide Meridian with the
appropriate occupancy upon commercially reasonable terms in the facilities of
Viral until the closing. All information obtained by Meridian or the Transitory
Subsidiary pursuant to this Agreement shall be kept confidential in accordance
with the Confidentiality Agreement dated October 5, 1999 between Viral and
Meridian (the "Confidentiality Agreement"). Each of Viral, Meridian and the
Transitory Subsidiary hereby expressly affirms the terms of, and acknowledges
that it is bound by, such Confidentiality Agreement and agrees and acknowledges
that such terms and the Confidentiality Agreement shall survive the termination
of this Agreement.

         6.7 Notice of Developments.

         Each Party will give prompt written notice to the others of any
material adverse development causing or that may cause a breach of any of its
own representations and warranties. No disclosure by any Party pursuant to this
Section, however, shall be deemed to amend or supplement the Disclosure Schedule
or to prevent or cure any misrepresentation, breach of warranty, or breach of
covenant unless the Party closes the transaction after receipt of such written
disclosure.

         6.8 Exclusivity.

<PAGE>   32
                                      -28-

         None of the Viral Stockholders and Viral will or will cause or permit
any of its employees or agents to solicit, initiate, or encourage the submission
of any proposal or offer from any Person relating to a tender or exchange offer,
a merger, consolidation or other business combination involving Viral or any of
its Subsidiaries or any proposal to acquire in any manner a substantial equity
interest in, or substantial portion of the assets of, Viral or any of its
Subsidiaries.

         6.9 Closing Balance Sheet.

         As of the Effective Date of the Merger, Viral will prepare a closing
balance sheet as of the Closing Date in accordance with GAAP, applied on a
consistent basis, which will be audited, at Meridian's expense, by Arthur
Andersen LLP in accordance with generally accepted auditing standards.

         7. Indemnification; Transition.

         7.1 Indemnification for Shareholder Actions.

         The Viral Stockholders will indemnify and hold harmless Meridian and
Viral, and their officers, directors, employees, agents and Subsidiaries from
and against any and all claims and demands brought with respect to the matters
contemplated by this Agreement, including, without limitation, matters occurring
prior to the closing (excluding Meridian's closing expenses) other than amounts
paid by Meridian or Viral to dissenting Viral Stockholders and expenses incurred
in related appraisal proceedings. Meridian will indemnify and hold harmless the
Viral Stockholders and Viral, and their officers, directors, employees, agents
and Subsidiaries from and against any and all claims and demands brought by
Meridian shareholders against any of them with respect to the matters
contemplated by this Agreement.

                  7.1.1 Promptly after receipt by an indemnified party of
         written notice of the commencement of any action or proceeding
         threatened or initiated with respect to which a claim for
         indemnification is to be made pursuant to this Section, the indemnified
         party will give written notice to the indemnitor of the commencement of
         such action; provided the failure to give notice shall not relieve the
         indemnitor of its obligations hereunder except to the extent that the
         indemnitor is actually prejudiced by such failure to give notice.
         Unless in the indemnified party's reasonable judgment a conflict of
         interest between the Persons indemnified and the indemnitor may exist
         in respect of the claim, the indemnitor shall be entitled to
         participate and to assume the defense of such claim, jointly with any
         other such claim to the extent that it may desire with counsel
         reasonably satisfactory to the indemnified party as the case may be.
         After notice from the indemnitor of its election to assume the defense
         thereof, the indemnitor will not be liable to the Persons indemnified
         for any legal or other expenses subsequently incurred by them in
         connection with the defense thereof. The indemnitor will not consent to
         the entry of any judgment or enter into any settlement which does not
         include as an unconditional term given by the claimant or plaintiff to
         the Persons indemnified, a release from all

<PAGE>   33
                                      -29-

         liability with respect to such claim or litigation. The indemnitor
         shall not be liable for any settlement of any such claim or action
         effected without its written consent.

                  7.1.2 If the matters giving rise to indemnification stated
         above become subject to a final judgment of a court of competent
         jurisdiction which allocates the relative liability for payment of any
         such claims or demands to the Viral Stockholders, Viral or Meridian,
         the liability that would otherwise be that of an indemnitor shall
         instead be allocated among the Viral Stockholders, Viral or Meridian.
         The allocation will be in such proportions as is appropriate to reflect
         the relative fault of the particular parties in connection with the
         statements or omissions or actions or inactions which resulted in such
         claims or damages of third parties, as determined in such final
         judgment.

<PAGE>   34
                                      -30-

         7.2 Indemnification by the Viral Stockholders.

         The Viral Stockholders, jointly and severally, shall indemnify Meridian
with respect to and hold Meridian harmless from any liability, cost or expense
which Viral or Meridian may directly or indirectly incur or suffer by reason of,
or which results from, arises out of or is based upon: (i) the inaccuracy of any
representation or warranty or failure to comply with any covenant made by the
Viral Stockholders or Viral herein; or (ii) any claim by any Person relating to
the execution or delivery of this Agreement by Viral or the Viral Stockholders
or the consummation of the transactions contemplated hereby which is based on
fraud or non-disclosure of material information. To the extent, and only to the
extent, that indemnification obligations under this Section 7.2 arise out of or
are based upon the inaccuracy of any representation or warranty qualified by the
Actual Knowledge of Viral and/or the Viral Stockholders, such indemnification
obligations shall be applicable only to matters relating to the Actual Knowledge
of Viral and/or the Viral Stockholders.

                  7.2.1 No claim for indemnification pursuant to sec. 7.2 may be
         made until the aggregate of all such claims exceeds $50,000. While the
         indemnification liability for the Viral Stockholders shall be joint and
         several, none of the Viral Stockholders in his or her respective
         individual capacity shall incur indemnification liability greater than
         the amount of payment to which each of the respective Viral
         Stockholders is entitled under sec. 2 herein pursuant to the aggregate
         of the Cash Consideration and the Earnout Consideration. The amount of
         any recovery by Meridian pursuant to this Section shall be reduced by
         reductions in the amounts owed the Viral Stockholders by Viral
         determined in accordance with sec. 2.4.4 and 2.5.

                  7.2.2 Meridian shall notify the Viral Stockholders of any such
         liability specifying the nature of the liability and the amount or the
         estimated amount thereof to the extent then feasible to estimate but an
         estimate shall not be conclusive of the final amount of any such
         liability. The Viral Stockholders shall have 10 days from receipt of
         such notice to notify Meridian whether or not the Viral Stockholders
         dispute their obligation to indemnify Meridian with respect to such
         liability. If such notice is not given by the Viral Stockholders, the
         Viral Stockholders shall pay the amount claimed promptly. Upon the
         payment in full of any indemnity obligation, the Viral Stockholders
         shall be subrogated to any rights of Meridian, by it against any Person
         with respect to the liability or impairment of which the indemnity
         obligation is based.

                  7.2.3 Nothing shall prevent Meridian from making a claim with
         respect to a potential or contingent liability or impairment except
         with respect to claims for which Viral has set forth specifically the
         monetary risks and magnitude in the Disclosures Schedules provided
         Meridian's notice sets forth a specific basis for any such potential or
         contingent liability or impairment and the estimated amount thereto the
         extent then feasible and Meridian has reasonable grounds to believe
         that such a liability or impairment will be incurred or suffered.

<PAGE>   35
                                      -31-

                  7.2.4 Meridian and the Viral Stockholders shall attempt in
         good faith to resolve any dispute between them with respect to the
         matters covered by this Section promptly by negotiations between
         executives that have the authority to settle the dispute. Either party
         may give the other written notice of any dispute not resolved in the
         normal course. Within 10 business days following delivery of any such
         notice, executives of both parties shall meet at a mutually acceptable
         time and place thereafter for as long as they deem necessary to
         exchange relevant information and to attempt to resolve the dispute. If
         the matter has not been resolved within 20 business days following
         delivery of such notice or if the parties fail to meet within 10
         business days, either party may initiate mediation of the dispute.
         Mediation shall take place under the then current model procedure for
         mediation of business disputes at the American Arbitration Association.
         A neutral third party will be selected from the Association's panel.
         The place of mediation shall be Cincinnati, Ohio.

                  Any dispute not resolved by mediation within 45 days after the
         initiation shall be settled by arbitration conducted expeditiously in
         accordance with the rules for arbitration of business disputes
         conducted by the American Arbitration Association by a sole arbitrator.
         If one party has requested to the other to participate in the
         procedures outlined above and the other has failed, the other may
         initiate arbitration before expiration of the 45 day period.
         Arbitration shall be governed by the United States Arbitration Act and
         judgment upon the award rendered by the arbitrator may be entered by
         any court having jurisdiction.

         7.3 Guarantees by Meridian.

         Meridian guarantees the payment of the following Viral debt
instruments:

                  7.3.1 Revolving line of credit with AmSouth Bank - $480,000
         outstanding on September 7, 2000;

                  7.3.2 Construction loan - $1,210,020.11 outstanding on
         September 7, 2000;

                  7.3.3 Equipment loan - $205,830.32 outstanding on September 7,
         2000.

         7.4 Transition.

         Neither the Viral Stockholders nor Viral will take any action to
discourage any lessor, licensor, customer, supplier, or other business associate
of any of Viral and its Subsidiaries from maintaining the same business
relationships with Viral and its Subsidiaries after the Closing Date as it
maintained with them prior to the Closing Date. The Viral Stockholders will
refer all customer inquiries relating to the businesses of Viral and its
Subsidiaries to Meridian from and

<PAGE>   36
                                      -32-

after the Closing Date. The Viral Stockholders will perform in all material
respects all agreements now in force between it and Viral or any of its
Subsidiaries until and after the Closing Date in accordance with the terms of
any such agreements.

         7.5 Confidentiality.

         Until closing, Meridian will treat and hold as such all of the
Confidential Information, refrain from using any of the Confidential Information
except in connection with this Agreement, and deliver promptly to Viral or
destroy, at the request of Viral, all tangible embodiments of the Confidential
Information which are in its possession. If Meridian is requested or required to
disclose any Confidential Information, Meridian will notify Viral promptly at
the request or requirement so that Viral may seek an appropriate protective
order or waive compliance with the provisions of this Section. If, in the
absence of a protective order or the receipt of a waiver hereunder, Meridian is,
on the advice of counsel, compelled to disclose any Confidential Information to
any tribunal, Meridian may disclose the Confidential Information; provided,
however, that Meridian shall use its reasonable efforts to obtain, at the
reasonable request of Viral, an order or other assurance that confidential
treatment will be accorded to such portion of the Confidential Information
required to be disclosed as Viral shall designate. The foregoing provisions
shall not apply to any Confidential Information which is generally available to
the public immediately prior to the time of disclosure.

         7.6 Voting of Shares.

         The Viral Stockholders have voted all of the Viral Shares owned by them
in favor of the Merger.

         8. Conditions to Obligations to Close.

         8.1 Conditions to Each Party's Obligation to Effect the Merger.

         The respective obligation of each Party to effect the Merger shall be
subject to the satisfaction of the following conditions:

                  8.1.1 No statute, rule, regulation, executive order, decree,
         temporary restraining order, preliminary or permanent injunction or
         other order issued by any court of competent jurisdiction or other
         governmental entity or other legal restraint or prohibition preventing
         the consummation of the Merger shall be in effect; provided, however,
         that each of the Parties shall have used reasonable efforts to prevent
         the entry of any such injunction or other order and to appeal as
         promptly as possible any injunction or other order that may be entered;
         and

                  8.1.2 There shall not have been instituted or be pending, or
         threatened, any suit, action, proceeding, legislation or rule making by
         any Person or entity which, if such Person or entity were to prevail,
         and no circumstance shall exist or be threatened, which

<PAGE>   37
                                      -33-

         would reasonably be expected to prevent the consummation of the Merger
         or have a material adverse effect on the business, assets, liabilities,
         financial condition, results of operations or prospects of Viral or
         Meridian and each of their respective Subsidiaries, taken as a whole.

         8.2 Conditions to Obligation of Meridian and the Transitory Subsidiary.

         The obligation of each of Meridian and the Transitory Subsidiary to
consummate the Merger is subject to satisfaction of the following conditions:

                  8.2.1 Viral and its Subsidiaries shall have procured all of
         the third party consents specified on the date of this Agreement
         pursuant to sec. 6.2;

                  8.2.2 The representations and warranties set forth in secs. 3
         and 5 shall be true and correct in all material respects at and as of
         the Closing Date other than to the extent that any such representation
         and warranty is, by its terms, expressly limited to a specific date, in
         which case such representation and warranty shall be true and correct
         as of such date;

                  8.2.3 Viral and the Viral Stockholders shall each have
         performed and complied with all of its covenants hereunder required to
         be performed or complied with on or prior to the Closing Date in all
         material respects.

                  8.2.4 Since the date of this Agreement, there shall not have
         been or occurred any material adverse change in the business, financial
         condition, results of operations or prospects [for the manufacture and
         sale of Products and products in development] of Viral and its
         Subsidiaries, taken as a whole, other than changes relating to Viral's
         industry or the economy in general and not specifically related to
         Viral and its Subsidiaries;

                  8.2.5 Viral shall have delivered to Meridian a certificate to
         the effect that each of the conditions specified in secs. 8.2.1-8.2.4
         is satisfied in all respects;

                  8.2.6 Meridian shall have received from counsel to Viral and
         the Viral Stockholders opinions in form and substance substantially as
         set forth in EXHIBIT C attached hereto, addressed to Meridian and the
         Transitory Subsidiary, and dated as of the Closing Date;

                  8.2.7 All outstanding options to purchase Viral Shares shall
         have been canceled on terms satisfactory to Meridian;

                  8.2.8 Viral and the Viral Stockholders shall have furnished to
         Meridian and the Transitory Subsidiary such other customary documents,
         certificates or instruments as Meridian may reasonably request
         evidencing compliance by Viral with the terms of this Agreement;

<PAGE>   38
                                      -34-

                  8.2.9 Meridian shall have entered into employment agreements
         with Preston H. Dorsett and Robert F. Naegele providing for their
         employment for a term of at six (6) years after the closing, containing
         confidentiality and two (2) year noncompetition provisions following
         termination of employment and otherwise on terms reasonably
         satisfactory to Meridian. Viral shall have entered into a consulting
         agreement with Ronald W. Kim providing for a term of at least three (3)
         years of consultation after the closing, containing confidentiality and
         two (2) year noncompetition provisions following termination of the
         consulting relationship and otherwise on terms reasonably satisfactory
         to Meridian;

                  8.2.10 The Viral Stockholders shall have each executed and
         delivered the Earnout Agreement; and

                  8.2.11 The due diligence of Meridian contemplated in sec. 6.6
         shall have been completed to the reasonable satisfaction of Meridian as
         to the assets, liabilities, business, operations, prospects and
         financial condition of Viral.

                  Meridian may waive any condition specified in writing so
         stating at or prior to the Closing.

         8.3 Conditions to Obligation of Viral and The Viral Stockholders.

         The obligations of Viral and The Viral Stockholders to consummate the
Merger are subject to satisfaction of the following conditions:

                  8.3.1 The representations and warranties set forth in sec. 4
         shall be true and correct in all material respects, at and as of the
         Closing Date other than to the extent that any such representation and
         warranty is, by its terms, expressly limited to a specific date, in
         which case such representation and warranty shall be true and correct
         as of such date;

                  8.3.2 Each of Meridian and the Transitory Subsidiary shall
         have performed and complied with all of its covenants hereunder
         required to be performed or complied with on or prior to the Closing
         Date in all material respects through the closing;

                  8.3.3 Each of Meridian and the Transitory Subsidiary shall
         have delivered to Viral and the Viral Stockholders a certificate to the
         effect that each of the conditions specified in sec. 8.3 is satisfied
         in all respects;

                  8.3.4 Viral and the Viral Stockholders shall have received
         from counsel to Meridian and the Transitory Subsidiary an opinion in
         form and substance substantially as set forth in EXHIBIT D attached
         hereto, addressed to each of them;

                  8.3.5 Meridian and the Transitory Subsidiary shall have
         furnished to Viral and the Viral Stockholders such other customary
         documents, certificates or instruments as

<PAGE>   39
                                      -35-

         Viral may reasonably request evidencing compliance by Meridian and the
         Transitory Subsidiary with the terms of this Agreement; and

                  8.3.6 Meridian shall have executed and delivered the Earnout
         Agreement.

                  Viral and the Viral Stockholders may waive any condition
         specified in a writing so stating at or prior to the closing.

         9. Termination.

         9.1 Termination of Agreement.

         This Agreement may be terminated at any time prior to the Effective
Time by:

                  9.1.1 The Parties by mutual written consent;

                  9.1.2 Meridian and the Transitory Subsidiary by giving written
         notice to Viral and the Viral Stockholders if the conditions set forth
         in secs. 8.1 or 8.2.11 have not been met or if the Viral Stockholders
         or Viral has breached any representation, warranty, or covenant
         contained in this Agreement in any material respect, Meridian or the
         Transitory Subsidiary has notified the Viral Stockholders or Viral of
         the breach, and the breach has continued without cure for a period of
         30 days after the notice of breach or if the closing shall not have
         occurred on or before September ____, 2000, unless the failure to close
         results from Meridian's failure to satisfy conditions set forth in
         secs. 8.2.2 and 8.2.3;

                  9.1.3 Viral by giving written notice to Meridian and the
         Transitory Subsidiary if Meridian or the Transitory Subsidiary has
         breached any representation, warranty, or covenant contained in this
         Agreement in any material respect, Viral has notified Meridian and the
         Transitory Subsidiary of the breach, and the breach has continued
         without cure for a period of 30 days after the notice of breach or if
         the closing shall not have occurred on or before September ____, 2000,
         unless the failure to close results from the failure of Viral or the
         Viral Stockholders to satisfy the conditions set forth in secs. 8.3.1
         and 8.3.2;

         9.2 Effect of Termination.

         If any Party terminates this Agreement pursuant to sec. 9.1, all rights
and obligations of the Parties hereunder shall terminate without any liability
of any Party to any other Party except for any liability of any Party then in
breach or as set forth in sec. 9.1; provided, however, that secs. 3.8, 4.4 and
5.2, the confidentiality provisions contained in sec. 6.6, this sec. 9.2 and
sec. 10 shall survive any such termination.

         10. Miscellaneous.

         10.1 Survival.

<PAGE>   40
                                      -36-

         The representations, warranties and covenants of the Parties will
survive the closing of the Merger for a period of two years after the Closing
Date except that the period of survival shall be seven years after the Closing
Date for matters contemplated by sec. 3.16 - "Environment, Health and Safety",
four years after the Closing Date for matters contemplated by sec. 3.18 -
"Products, Inventories and Operations" and for as long as any applicable
statutes of limitations apply for matters contemplated by sec. 3.27 - "Taxes and
Tax Returns".

         10.2 Press Releases and Public Announcements.

         No Party shall issue any press release or make any public announcement
relating to the subject matter of this Agreement without the prior written
approval of the other Parties; provided, however, that any Party may make any
public disclosure it believes in good faith is required by applicable law or by
any listing or trading agreement concerning its publicly-traded securities in
which case the disclosing Party will use its reasonable best efforts to advise
the other Party prior to making the disclosure.

         10.3 No Third Party Beneficiaries.

         This Agreement shall not confer any rights or remedies upon any Person
other than the Parties and their respective successors and permitted assigns;
provided, however, that the provisions in sec. 2 concerning payment of the
Merger consideration are intended for the benefit of, and shall be enforceable
by the Viral Stockholders, their heirs and their respective legal
representatives.

         10.4 Entire Agreement.

         This Agreement including the Exhibits and Schedules identified herein
and the other documents referred to herein, constitutes the entire agreement
among the parties and supersedes any prior or contemporaneous understandings,
agreements or representations by or among the parties, written or oral, to the
extent they related in any way to the subject matter hereof.

         10.5 Successors and Assignment.

         This Agreement shall be binding upon and inure to the benefit of the
Parties named herein and their respective successors and permitted assigns. No
Party may assign either this Agreement or any of its rights, interests, or
obligations hereunder without the prior written approval of the other Parties;
provided, however, that Meridian may assign its rights hereunder to an
affiliated entity without the prior written consent of Viral and the Viral
Stockholders provided Meridian executes a written guarantee of the obligations
of any such assignee in a form reasonably acceptable to Viral and the Viral
Stockholders. The assignment rights in the Earnout Agreement shall be governed
by the Earnout Agreement.

         10.6 Counterparts.

<PAGE>   41
                                      -37-

         This Agreement may be executed in counterparts, each of which shall be
deemed an original but all of which together shall constitute one and the same
instrument.

         10.7 Headings.

         The section headings contained in this Agreement are inserted for
convenience only and shall not affect in any way the meaning or interpretation
of this Agreement.

         10.8 Notices.

         All notices, requests, demands, claims and other communications
hereunder will be in writing. Any notice, request, demand, claim or other
communication hereunder shall be addressed to the intended recipient as set
forth:

                  If to Viral:              VIRAL ANTIGENS, INC.
                                            5171 Wilfong Road
                                            Memphis, Tennessee 38134-5611
                                            Attention:  Preston H. Dorsett
                                            Fax: 910-382-0027

                  If to Meridian            MERIDIAN DIAGNOSTICS, INC.
                  or the Transitory         3471 River Hills Drive
                  Subsidiary:               Cincinnati, Ohio  45244
                                            Attention:  Mr. John A. Kraeutler
                                            Fax:  513-271-3762

                  With a required:          KEATING, MUETHING & KLEKAMP, PLL
                  copy (which shall         1400 Provident Tower
                  not constitute            One East Fourth Street
                  notice) to:               Cincinnati, Ohio  45202
                                            Attention:  Gary P. Kreider, Esq.
                                            Fax:  513-579-6956

         Any Party may send any notice, request, demand, claim, or other
communication hereunder to the intended recipient at the address set forth above
by any commercially reasonable means, but no such notice, request, demand,
claim, or other communication shall be deemed to have been duly given unless and
until it actually is received by the intended recipient. Any Party may change
the address to which notices, requests, demands, claims, and other
communications hereunder are to be delivered by giving the other Parties notice
in the manner provided herein.

         10.9 Governing Law.

<PAGE>   42
                                      -38-

         This Agreement shall be governed by and construed in accordance with
the internal substantive laws of Ohio without giving effect to any choice or
conflict of law provision or rule, whether of Ohio or any other jurisdiction,
that would cause or result in the application of the laws of any jurisdiction
other than Ohio. The Earnout Agreement shall be governed by the laws as provided
for therein.

         10.10 Amendments and Waivers.

         The Parties may mutually amend any provision of this Agreement at any
time prior to the Effective Time with the prior authorization of their
respective Boards of Directors; provided, however, that any amendment effected
after obtaining the approval of Viral Stockholders will be subject to the
restrictions contained in the Tennessee Business Corporation Act. No amendment
of any provision of this Agreement shall be valid unless it is in writing and
signed by all of the Parties. No waiver by any Party of any default,
misrepresentation or breach of warranty or covenant hereunder, whether
intentional or not, shall be deemed to extend to any prior or subsequent
default, misrepresentation or breach of warranty or covenant hereunder or affect
in any way any rights arising by virtue of any prior or subsequent such
occurrence.

         10.11 Severability.

         Any term or provision of this Agreement that is invalid or
unenforceable in any situation in any jurisdiction shall not affect the validity
or enforceability of the remaining terms and provisions hereof or the validity
or enforceability of the offending term or provision in any other situation or
in any other jurisdiction.

         10.12 Expenses.

         Each of the Parties will bear its own costs and expenses, including
legal fees and expenses, incurred in connection with this Agreement and the
transactions contemplated hereby.

         10.13 Construction.

         The Parties have participated jointly in the negotiation and drafting
of this Agreement. In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the Parties and no presumption or burden of proof shall arise favoring or
disfavoring any Party by virtue of the authorship of any of the provisions of
this Agreement. Any reference to any federal, state, local, or foreign statute
or law shall be deemed also to refer to all rules and regulations promulgated
thereunder, unless the context otherwise requires. The word "including" shall
mean including without limitation.

         10.14 Incorporation of Exhibits and Schedules.

         The Exhibits and Schedules identified in this Agreement and the
Disclosure Schedule are incorporated herein by reference and made a part hereof.

<PAGE>   43
                                      -39-

         10.15 Specific Enforcement.

         The parties agree that irreparable damage would occur if any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent material
breaches of this Agreement and in lieu of and as an alternative to any and all
monetary damages, the parties shall be entitled to a court order to enforce
specifically, by means of a mandatory injunction or otherwise, the terms and
provisions of this Agreement. Without limiting the generality of the foregoing,
the parties agree that Viral is a unique asset and that Meridian would be
irreparably injured in a manner not adequately compensated by money damages if
Viral and the Viral Stockholders refused to consummate the Merger without legal
justification under this Agreement and Viral and the Viral Stockholders would be
irreparably injured in a manner not adequately compensated if Meridian refused
to consummate the Merger without legal justification under this Agreement. The
parties hereto hereby waive to the maximum extent permitted by applicable law
all legal and equitable defenses to a motion or other proceeding by Viral and
the Viral Stockholders or Meridian, as the case may be, for specific performance
of the Merger and the other transactions contemplated by this Agreement as a
remedy in the event that one or more of Meridian or Viral or the Viral
Stockholders, as the case may be, refuses to consummate the Merger without legal
justification under this Agreement.

         10.16 Jurisdiction.

         Any lawsuit to enforce or interpret this Agreement (including an action
for specific performance under sec. 10.15) shall be brought and maintained only
in the Court of Common Pleas of Hamilton County, Ohio or the U.S. District Court
for the Southern District of Ohio at Cincinnati. The Parties hereby irrevocably
consent to the exclusive jurisdiction of such courts over any such lawsuits and
agree that they shall not object to the venue of any such lawsuit in such courts
on forum non conveniens or any other ground. Jurisdiction matters relating to
the Earnout Agreement shall be governed by the Earnout Agreement.

         (Remainder of page intentionally blank; signature page follows)

<PAGE>   44
                                      -40-

         IN WITNESS WHEREOF, the Parties hereto have executed this Merger
Agreement on September 13, 2000

                                    VIRAL ANTIGENS, INC.

                                    By: /s/ Preston H. Dorsett
                                      ----------------------------------
                                       Name:  Preston H. Dorsett
                                       Title: President

                                     /s/ Ronald W. Kim
                                    ------------------------------------
                                    RONALD W. KIM

                                     /s/ Karen C. Dorsett
                                    ------------------------------------
                                    KAREN C. DORSETT

                                    /s/ Preston H. Dorsett
                                    ------------------------------------
                                    PRESTON H. DORSETT

                                    /s/ Robert F. Naegele
                                    ------------------------------------
                                    ROBERT F. NAEGELE

                                    MERIDIAN DIAGNOSTICS, INC.

                                    By: /s/ William J. Motto
                                       ------------------------------------
                                       Name:   William J. Motto
                                       Title:  Chairman and Chief Executive
                                               Officer

                                    MERIDIAN ACQUISITION COMPANY

                                    By: /s/ John A. Kraeutler
                                       ---------------------------------
                                       Name:  John A. Kraeutler
                                       Title: President

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