
<PAGE>
 

                                                                   Exhibit 99.21

                           OPTION AND PUT AGREEMENT


          THIS OPTION AND PUT AGREEMENT (this "AGREEMENT") is entered into as of
November 12, 1998, by and between THREE EMBARCADERO CENTER VENTURE, a California
general partnership ("OPTIONOR"), and THE PRUDENTIAL INSURANCE COMPANY OF
AMERICA, a New Jersey corporation ("PRUDENTIAL" and together with any permitted
assignee or designee hereunder hereinafter sometimes referred to as "OPTIONEE").

                                   RECITALS
                                   --------

          A.   Optionor is the "holder" of and "payee" under those certain
Senior Notes of even date herewith, executed and delivered by Prudential Realty
Securities, Inc., a Delaware corporation ("INVESTMENT LOAN BORROWER"), in the
aggregate principal amount of Seventy-Six Million Eight Hundred Ninety-Seven
Thousand and No/100 Dollars ($76,897,000.00) (the "INVESTMENT LOAN"), copies of
which notes are attached hereto as Exhibit A (the "INVESTMENT NOTES").  The
                                   ---------                               
Investment Notes were made pursuant to the Note Purchase Agreement of even date
herewith, by and between Optionor and Investment Loan Borrower (the "INVESTMENT
LOAN NOTE PURCHASE AGREEMENT").

          B.   Pursuant to that certain Redemption Agreement of even date
herewith, by and among Optionor, Prudential, Boston Properties LLC and BP EC3
Holdings LLC (the "REDEMPTION AGREEMENT"), the Investment Notes (or certain of
the Investment Notes or portions thereof as provided in accordance with the
terms and provisions of the Redemption Agreement) may be distributed (together
with cash, if necessary pursuant to the Redemption Agreement) to Prudential in
full redemption of its partnership interest in Optionor.  The date on which such
Investment Notes (or portions thereof) are distributed to Prudential and
Prudential's partnership interest in the Optionor is fully redeemed (such that
Prudential is no longer a partner or constituent of Optionor) pursuant to the
Redemption Agreement shall be referred to in this Agreement as the "REDEMPTION
DATE".

          C.   Pursuant to certain terms, provisions and conditions of the
Redemption Agreement, less than the entire principal face amount of all
Investment Notes may be distributed to Prudential on the Redemption Date.  In
such event, the Optionor may retain, as payee, a portion of the aggregate
principal amount of all Investment Notes (the "REMAINDER") after the Redemption
Date, which Remainder will be evidenced by one or more of the Investment Notes
that are retained by Optionor pursuant to the Redemption Agreement and, if
applicable pursuant to the terms and provisions of the Redemption Agreement and
the Investment Loan Note Purchase Agreement, a new promissory note issued by the
Investment Loan Borrower in accordance with Section 2 of the Redemption
Agreement, all of which notes shall have an aggregate principal amount equal to
the Remainder (collectively, the "REMAINDER NOTES").  All documents and
instruments evidencing, securing or relating to the Investment Notes or
Remainder Notes (including, without limitation, 

                                       1
<PAGE>
 
the Investment Loan Note Purchase Agreement) shall be herein referred to as the
"INVESTMENT LOAN DOCUMENTS".

          D.   Optionee desires to acquire an option to purchase and acquire
Optionor's entire interest in, to and under any such Remainder Notes and
Optionor is willing to grant such option, and Optionor desires to acquire a put
right to cause Optionee to purchase and acquire Optionor's entire interest in,
to and under any such Remainder Notes and Optionee is willing to grant such put
right to Optionor, all upon the terms and conditions hereinafter set forth.

                                   AGREEMENT
                                   ---------

          NOW, THEREFORE, in consideration of the benefits accruing to the
parties hereto, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by Optionor and Optionee, Optionor
and Optionee hereby agree as follows:

          1.   OPTION.
               ------ 

          (A)  Grant of Option.  Optionor hereby unconditionally and irrevocably
               ---------------                                                  
grants, conveys, transfers and assigns to Optionee (or its designee) the
exclusive option and right to, subject to the terms and provisions of this
Agreement, acquire Optionor's entire right, title and interest in, to and under
all Remainder Notes in accordance with and subject to the terms and conditions
of this Agreement; provided that, Optionee shall assume all of Optionor's
                   -------- ----                                         
duties, obligations and liabilities arising under the Remainder Notes and the
Investment Loan Documents (but only to the extent the same relate to the
Remainder Notes) accruing from and after the Closing Date (the "OPTION").

          (B)  Term and Exercise of Option.  Optionee may exercise the Option at
               ---------------------------                                      
any time from and after the Redemption Date and on or before 6:00 p.m pacific
coast time on the earlier of (x) the date which is one hundred and sixty-five
(165) days after the Redemption Date and (y) August 31, 2002 (the "OPTION
ELECTION PERIOD") by giving Optionor no less than ten (10) business days'
written notice of exercise (the "OPTION ELECTION NOTICE"); provided that,
                                                           -------- ---- 
notwithstanding the foregoing, Optionee's right to give an Option Election
Notice and to purchase the Remainder Notes pursuant to its option shall be
suspended during any period of time while there exists an "Investment Loan
Borrower Credit Event" (as defined in Exhibit B attached hereto).  The Option
                                      ---------                              
Election Notice shall include (i) the proposed closing date, which shall not be
less than ten (10) business days after the delivery thereof nor more than twenty
(20) business days after the delivery thereof, and (ii) the Optionee's
calculation of the Fair Market Value (as defined in Section 3 below) of the
                                                    ---------              
Remainder Notes based on the proposed closing date.  In the event that the
Option is not exercised on or before the expiration of the Option Election
Period, or the transaction has not closed within twenty (20) business days after
the expiration of the Option Election Period for any reason other than the
default of the Optionor, then the Option shall become null and void and of no
further force or effect, and the parties hereto shall be released from all
further liabilities and obligations hereunder with respect to the Option (except
as otherwise expressly provided herein).

                                       2
<PAGE>
 
          (C)  Option Fee.  No later than three (3) calendar days after the
               ----------                                                  
execution of this Agreement by Optionor and Optionee, Optionee shall pay to
Optionor the sum of One Hundred Dollars ($100) (the "OPTION FEE").  The Option
Fee is non-refundable (except as otherwise expressly provided in this
Agreement); provided that, the Option Fee shall be credited against the Purchase
            -------- ----                                                       
Price (as defined in Section 3 below) payable at Closing (as defined in Section
                     ---------                                          -------
4(a) below).
----        

          2.   PUT.
               --- 

          (A)  Grant of Put.  Optionee hereby unconditionally and irrevocably
               ------------                                                  
grants, conveys, transfers and assigns to Optionor the exclusive right to,
subject to the terms and provisions of this Agreement, put and sell to Optionee
Optionor's entire right, title and interest in, to and under all Remainder Notes
in accordance with and subject to the terms and conditions of this Agreement
(the "PUT").  Optionee shall be obligated to acquire such Remainder Notes upon
the exercise of Optionor's Put and to assume all of Optionor's duties,
obligations and liabilities arising under the Remainder Notes and the Investment
Loan Documents (but only to the extent the same relate to the Remainder Notes)
accruing from and after the Closing Date.  In the event that Optionor exercises
its Put, the Option Fee shall be credited against the Purchase Price payable at
Closing.

          (B)  Term and Exercise of Put.  Optionor may exercise the Put at any
               ------------------------                                       
time during the Put Period (defined immediately below) by giving Optionee no
less than ten (10) business days' written notice of exercise (the "PUT ELECTION
NOTICE") at any time prior to the expiration of the Put Period; provided that,
                                                                -------- ---- 
notwithstanding the foregoing, Optionor's right to give a Put Election Notice
and to put the Remainder Notes to Optionee pursuant to this Agreement shall be
suspended during any period of time while the Remainder Notes have been
accelerated and such acceleration has not been rescinded by the holders of the
Remainder Notes.  The Put Election Notice shall include (i) the proposed closing
date, which shall not be less than ten (10) business days after the delivery
thereof nor more than twenty (20) business days after the delivery thereof, and
(ii) the Optionor's calculation of the Fair Market Value of the Remainder Notes
based on the proposed closing date.  In the event that the Put is not exercised
prior to the expiration of the Put Period, and the transaction has not closed on
or before the date which is twenty (20) business days after the expiration of
the Put Period for any reason other than the default of the Optionee, then the
Put shall become null and void and of no further force or effect, and the
parties hereto shall be released from all further liabilities and obligations
hereunder with respect to the Put (except as otherwise expressly provided
herein).  As used herein, the "PUT PERIOD" shall mean the period of time
commencing on the thirty-first (31st) day after the expiration of the Option
Election Period and expiring at 6:00 p.m. pacific coast time on the thirtieth
(30th) day thereafter.

          3.   PURCHASE PRICE.  The total purchase price ("PURCHASE PRICE")
               --------------                                              
which Optionee shall pay to Optionor for the Remainder Notes upon the exercise
of the Option or Put shall be the Fair Market Value of such Remainder Notes on
the date of Closing.  At Closing, Optionee shall pay to Optionor the entire
balance of the Purchase Price, over and above the Option 

                                       3
<PAGE>
 
Fee previously paid to Optionor and credited to the Purchase Price in accordance
with the terms and provisions of Sections 1(c) and 2(a) above (provided that the
                                 -------------     ----
parties acknowledge and agree that no interest or other income earned by
Optionor on the Option Fee shall be credited against the Purchase Price), by
wire transfer of immediately available funds. The "FAIR MARKET VALUE" of the
Remainder Notes shall be calculated and determined as of the Closing Date as
provided in Exhibit B attached hereto.
            ------- -
                 

          4.   CLOSING.
               ------- 

          (A)  Closing.  Upon exercise of the Option or Put as provided in (and
               -------                                                         
in accordance with) any of Sections 1 or 2 above, the purchase and sale of the
                           ----------    -                                    
Remainder Notes shall close on the closing date specified in the Option Election
Notice or Put Election Notice, as applicable, in accordance with the terms of
Sections 1(b) and 2(b), respectively (the "CLOSING DATE").  As used herein, the
-------------     ----                                                         
term "CLOSING" means the date and time that the Purchase Price due under Section
                                                                         -------
3 above is paid to Optionor for the Remainder Notes, and the Remainder Notes are
-                                                                               
endorsed to the order of Optionee and all other documents and instruments of
transfer and assumption are executed and delivered by the parties in accordance
with the terms and provisions of subsection (b) below.
                                 --------------       

          (B)  Closing Procedure.  The sale of the Remainder Notes shall be
               -----------------                                           
consummated on the Closing Date as follows:

               (I)   On or before the Closing Date, Optionor shall execute and
     deliver to Optionee (A) an Allonge to each Remainder Note in the form of
     Exhibit C attached hereto (the "ALLONGE"); (B) counterpart originals of an
     ---------                                                                 
     Assignment and Assumption of Loan in the form of Exhibit D attached hereto
                                                      ---------                
     (the "ASSIGNMENT"), executed by Optionor; and (C) the original Remainder
     Notes and originals or copies of all other Investment Loan Documents in
     Optionor's possession or within its control.

               (II)  On or before the Closing Date, Optionee shall deliver to
     Optionor, (A) in immediately available funds the Purchase Price (less the
     Option Fee) and such additional amounts as may be required to satisfy
     Optionee's share of any Closing costs; and (B) counterpart originals of the
     Assignment, executed by Optionee.

               (III) All reasonable Closing and escrow fees and costs incurred
     in connection with the transactions described in this Agreement shall be
     paid fifty percent (50%) by Optionor and fifty percent (50%) by Optionee;
     provided that, each party hereto shall bear the expense of its own counsel.
     -------- ----                                                              

          5.   OPTIONOR'S REPRESENTATIONS AND WARRANTIES.  Optionor hereby
               -----------------------------------------                  
represents and warrants to Optionee as of the date hereof and as of the Closing
Date as follows:

                                       4
<PAGE>
 
          (A)  Subject to the rights of Prudential under the Redemption
Agreement, Optionor is the sole owner of the Investment Notes on the date
hereof, and on the Closing Date, Optionor shall be the sole owner of the
Remainder Notes.  Further, the Investment Notes are free and clear of all liens
and third party interests on the date hereof (other than the interests and
rights in favor of Prudential under the Redemption Agreement and any pledge of
the Investment Notes securing the Equity Redemption Loan (as defined in the
Redemption Agreement)), and on the Closing Date, the Remainder Notes shall be
free and clear of all liens and third party interests of any kind or nature,
except as created by this Agreement.  Optionor has not amended, modified,
terminated or otherwise by written agreement altered the Investment Notes or
other Investment Loan Documents except as specifically disclosed to Optionee in
writing prior to the date hereof, and on the Closing Date, except as otherwise
amended, modified or altered in connection with the transactions contemplated in
the Redemption Agreement, Optionor shall not have amended, modified, terminated
or otherwise altered the Investment Notes, Remainder Notes or other Investment
Loan Documents without Optionee's written consent obtained in accordance with
Section 7 hereof.
---------        

          (B)  As of the date hereof, Optionor has not assigned or transferred
the Investment Notes or any of the other Investment Loan Documents (except for
any pledge of the Investment Notes securing the Equity Redemption Loan), nor are
there any agreements to assign or convey any portion of such Investment Loan
Documents to any person other than Optionee and Prudential in accordance with
this Agreement and the Redemption Agreement, respectively.  On the Closing Date,
Optionor shall not have assigned or transferred the Remainder Notes or any of
the other Investment Loan Documents (except for such portion of the Investment
Notes transferred to Prudential in accordance with the Redemption Agreement),
nor shall there be any agreements to assign or convey the Remainder Notes or any
portion of such Investment Loan Documents to any person other than Optionee
(except with respect to Prudential's rights under the Redemption Agreement).

          (C)  To Optionor's knowledge, Optionor has all requisite power and
authority to execute and deliver, and to perform all of its obligations under,
this Agreement and all instruments and other documents to be executed and
delivered to Optionee in connection with the transactions described herein.

          (D)  To Optionor's knowledge, Optionor is a duly formed general
partnership under the laws of the State of California, and this Agreement, and
all the instruments and documents to be executed and delivered by Optionor in
connection herewith, are legal, valid and binding obligations of Optionor
enforceable against it in accordance with their respective terms, except to the
extent that enforcement may be limited by applicable bankruptcy, insolvency,
moratorium and other principles relating to or limiting the rights of
contracting parties generally.

          (E)  To Optionor's knowledge, the execution of this Agreement and the
performance of Optionor's obligations hereunder will not conflict with or result
in a breach of any statute, rule, regulation, judgment, decree or order of any
court, board, committee or governmental agency to 

                                       5
<PAGE>
 
which Optionor is subject, nor violate any agreement or contract to which
Optionor is a party or by which Optionor is bound. To Optionor's knowledge, no
consent, approval, authorization or order of any court or governmental agency or
body is required for the execution, delivery and performance by Optionor of, or
compliance by Optionor with, this Agreement or the consummation of the
transactions contemplated by it, except for such consents, approvals,
authorizations or orders, if any, that have been obtained.

Each of the foregoing representations and warranties shall survive the Closing
for a period of twelve (12) months immediately thereafter.

          6.   OPTIONEE'S REPRESENTATIONS, WARRANTIES AND ACKNOWLEDGMENTS.
               ---------------------------------------------------------- 
Optionee hereby represents, warrants and acknowledges to Optionor as of the date
hereof and as of the Closing Date as follows:

          (A)  Optionee is a corporation duly organized, validly existing and in
good standing under the laws of the State of New Jersey.  Optionee has all
requisite power and authority to execute and deliver, and to perform all of its
obligations under, this Agreement and all instruments and other documents
executed and delivered by Optionee in connection with the transactions
contemplated herein.  This Agreement, and all the instruments and documents to
be executed and delivered by Optionee in connection herewith, are legal, valid
and binding obligations of Optionee enforceable against it in accordance with
their respective terms, except to the extent that enforcement may be limited by
applicable bankruptcy, insolvency, moratorium and other principles relating to
or limiting the rights of contracting parties generally.

          (B)  The execution, delivery and performance of this Agreement has
been duly authorized by all necessary action on the part of Optionee and does
not require any consent or approval of any party that has not been obtained.

          (C)  The execution of this Agreement and the performance of Optionee's
obligations hereunder will not conflict with or result in a breach of any
statute, rule, regulation, judgment, decree or order of any court, board,
committee or governmental agency to which Optionee is subject, nor violate any
agreement or contract to which Optionee is a party or by which Optionee is
bound.  No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by Optionee of, or compliance by Optionee with, this Agreement or
the consummation of the transactions contemplated by it, except for such
consents, approvals, authorizations or orders, if any, that have been obtained.

          (D)  Optionee has made, and will make, prior to the Closing, such
examination, review and investigation of the facts and circumstances as
necessary to evaluate the Remainder Notes.  Optionee further acknowledges that
in acquiring the Remainder Notes, Optionee is assuming the risk of full or
partial loss which is inherent with the credit, collateral and collectibility
risks associated with the quality and character of the loan evidenced by the
Remainder Notes.

                                       6
<PAGE>
 
          (E)  Optionee is an "accredited investor" as defined in Regulation D
under the Securities Act of 1933, as amended.  The Remainder Notes will be
acquired by Optionee for its own account for investment only and not with a view
to, or with any intention of, a distribution or resale thereof, in whole or in
part.

          (F)  Optionee has not relied upon any representations, warranties or
statements of any kind made by, or on behalf of, Optionor, except as
specifically set forth in this Agreement. Optionee acknowledges that, except for
the express representations and warranties by Optionor set forth in, or to be
made in instruments delivered pursuant to, this Agreement, Optionor negates and
disclaims all representations, warranties and statements of every kind or type
(express or implied) and, except for the Optionor's representations and
warranties set forth herein, the Remainder Notes are being acquired "as is" with
no recourse to Optionor for any default thereunder or diminution in value with
respect thereto.

Each of the foregoing representations and warranties shall survive the Closing
for a period of twelve (12) months immediately thereafter.

          7.   COVENANTS.  Optionor hereby covenants and agrees that, from and
               ---------                                                      
after the date hereof, except as otherwise contemplated in and permitted by the
Redemption Agreement, Optionor will not, without Optionee's prior written
consent, (a) amend, modify, cancel or terminate, any of the Investment Notes,
Remainder Notes or Investment Loan Documents in any manner which will adversely
affect or impact the interest of the "payee" under the Remainder Notes and
Investment Loan Documents if and when such Remainder Notes are transferred to
Optionee, (b) waive, relinquish or allow to lapse any right of Optionor as
"lender/payee" under the Investment Notes, Remainder Notes or Investment Loan
Documents which will in any manner adversely affect or impact the interest of
the "payee" under the Remainder Notes and other Investment Loan Documents if and
when such Remainder Notes are transferred to Optionee, or (c) agree or consent
to any agreements or understandings that will impact the Remainder Notes if and
when such Remainder Notes are transferred to Optionee.  In furtherance of the
foregoing, except for the transfer of Investment Notes to Prudential pursuant to
the Redemption Agreement and any pledge of the Investment Notes to secure the
Equity Redemption Loan, Optionor shall not sell, assign or otherwise transfer
any of the Investment Notes or Remainder Notes prior to the expiration of the
Option Election Period; provided that, (i) Optionor shall be permitted to
                        -------- ----                                    
transfer any Remainder Notes after the "Redemption Distribution" under the
Redemption Agreement subject to this Agreement, and (ii) all restrictions on the
transferability of the Investment Notes and Remainder Notes shall cease upon the
expiration of the Option Election Period and Optionor shall thereafter be
permitted to freely transfer the Investment Notes and/or Remainder Notes without
restriction.  Upon written request by either party at or prior to the Closing,
the other party shall give to the requesting party written notice of any newly
discovered information that causes any of the representations or warranties of
such responding party made in this Agreement to be materially untrue or
incorrect, or of the occurrence of any event or circumstance that would
materially modify or affect the substance of such representations and
warranties.

                                       7
<PAGE>
 
          8.   CONFIDENTIALITY; PRESS RELEASES.  Each party hereto hereby agrees
               -------------------------------                                  
that, except as required by law or the regulations of an exchange on which
securities of such party are listed or unless compelled by an order of a court,
and except for such disclosures to each party's lenders, consultants, attorneys,
prospective investors, agents, assignees, partners, officers, directors,
employees and advisors as may be necessary or advisable in connection with the
consummation of the transactions contemplated herein (provided each such person
is instructed to comply with the terms of this confidentiality provision), it
shall keep the contents of this Agreement and the transactions contemplated
hereby confidential and further agrees to refrain from generating or
participating in any publicity statement, press release, or other public notice
regarding this Agreement or the transactions contemplated hereby, without the
prior written consent of the other party, which consent shall not be
unreasonably withheld.  The terms and provisions of this Section 8 shall survive
                                                         ---------              
the Closing or any termination of this Agreement and shall not be merged into
any instrument or conveyance delivered at the Closing.

          9.   COMMISSIONS.  Optionor and Optionee each agrees to indemnify,
               -----------                                                  
defend, protect and hold the other harmless from and against any and all
commissions, finder's and/or similar fees or compensation claimed by any broker
or finder in connection with Optionee's purchase of the Remainder Notes based on
claimed contacts with, or other acts or omissions of, such indemnifying party.
The terms and provisions of this Section 9 shall survive the Closing or
                                 ---------                             
termination of this Agreement.

          10.  REMEDIES.  In the event of any material breach by either party to
               --------                                                         
this Agreement, the remedy at law in favor of the other party may be inadequate
and such other party, in addition to all other rights and remedies which may be
available to it at law or in equity, shall have the right of specific
performance in the event of any material breach, or injunction in the event of
an anticipatory material breach, of this Agreement by the other party.
Furthermore, upon the material breach of this Agreement by any party, the other
party shall have the right to terminate this Agreement and to recover its
damages, and, upon a material breach by Optionor, Optionee shall also have the
right to receive a refund of the Option Fee.  Such refund of the Option Fee
shall be in addition to, and not in lieu of, any other remedies which Optionee
may have against Optionor at law or in equity arising from Optionor's breach.

          11.  INDEMNIFICATION.  Optionor hereby agrees to indemnify, protect,
               ---------------                                                
defend, save and hold harmless Optionee, and Optionee's trustees, officers,
directors, shareholders, beneficiaries, members, partners, agents, employees,
investment advisors and independent contractors from and against any and all
duties, obligations, liabilities, suits, claims, demands, causes of action,
costs and expenses (including, without limitation, reasonable attorneys' fees
and costs), arising out of a breach by the Optionor of any of its
representations and warranties made in Section 5.  Optionee hereby agrees to
                                       ---------                            
indemnify, protect, defend, save and hold harmless Optionor, and Optionor's
trustees, officers, directors, shareholders, beneficiaries, members, partners,
agents, employees, investment advisors and independent contractors from and
against any and all duties, obligations, liabilities, suits, claims, demands,
causes of action, costs and expenses (including, without limitation, reasonable
attorneys' fees and costs), arising out of a 

                                       8
<PAGE>
 
breach by the Optionee of any of its representations and warranties made in
Section 6. The terms and provisions of this Section 11 shall survive the Closing
---------                                   ----------
or the termination of this Agreement for a period of twelve (12) months
immediately thereafter.

          12.  ESCROW INSTRUCTIONS.  Upon the request of either Optionor or
               -------------------                                         
Optionee, the parties hereto shall execute and deliver any and all escrow
documents reasonably approved by such party and perform any and all acts
reasonably necessary or appropriate to open and enter into an escrow in order to
consummate the transactions contemplated herein.  Such agreements may include,
without limitation, customary escrow instructions (including, without
limitation, standard general terms and conditions to the extent the appointed
escrow agent demands such provisions in order to serve as escrow agent), as may
be reasonably necessary or desirable in order to enable the escrow agent to
comply with the terms of this Agreement.  The escrow agent shall be selected by
the party making the request for an escrow (and shall not be affiliated with
such party), but shall be subject to the written approval of the other party,
which approval shall not be unreasonably withheld or delayed.  The parties shall
share equally the costs and expenses of the escrow and escrow agent.

          13.  MISCELLANEOUS.
               ------------- 

          (A)  Authority.  Each individual and entity executing this Agreement
               ---------                                                      
represents and warrants that he, she or it has the capacity set forth on the
signature pages hereof with full power and authority to bind the party on whose
behalf he, she or it is executing this Agreement to the terms hereof.

          (B)  Further Assurances.  Optionor and Optionee shall each execute and
               ------------------                                               
deliver to the other such further documents and instruments as may be reasonably
requested by either of them in order to effectuate the intent of this Agreement
and to obtain the full benefit of this Agreement.  Any request by either party
under this Section 13(b) shall be accompanied by the document proposed for
           -------------                                                  
signature by the party requesting it, in form and substance satisfactory to the
party of whom the request is made and its attorneys.  The party making the
request shall bear and discharge any fees or expenses incident to the
preparation, filing or recording of the document requested pursuant to this
Section 13(b).
------------- 

          (C)  Time of the Essence.  Time is of the essence in the performance
               -------------------
of and compliance with each of the provisions of this Agreement.

          (D)  Governing Law.  This Agreement shall be governed by and
               -------------                                          
interpreted in accordance with the laws of the State of California, without
reference to California's conflicts or choice of law principles.

          (E)  Entire Agreement.  THIS AGREEMENT, THE MASTER TRANSACTION
               ----------------                                         
AGREEMENT OF EVEN DATE HEREWITH, BY AND AMONG PRUDENTIAL, PIC REALTY
CORPORATION, CERTAIN PERSONS LISTED ON EXHIBIT A THERETO, 

                                       9
<PAGE>
 
FEDMARK CORPORATION, EMBARCADERO CENTER INVESTORS PARTNERSHIP, PACIFIC PROPERTY
SERVICES, L.P., BOSTON PROPERTIES LIMITED PARTNERSHIP AND BOSTON PROPERTIES,
INC. AND ALL TRANSACTION DOCUMENTS DESCRIBED THEREIN (COLLECTIVELY, THE
"TRANSACTION DOCUMENTS") REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND
MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENT OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES. The parties make no representations or warranties to each other, except
as specifically contained in this Agreement or in the accompanying exhibits or
the certificates or other closing documents delivered according to this
Agreement or in the other Transaction Documents. All prior agreements and
understanding between the parties hereto with respect to the transactions
contemplated hereby, whether verbal or in writing, are superseded by, and are
deemed to have been merged into, this Agreement and all other Transaction
Documents. Any waiver, modification, consent or acquiescence with respect to any
provision of this Agreement shall be set forth in writing and duly executed by
or in behalf of the party to be bound thereby. No waiver by any party of any
breach hereunder shall be deemed a waiver of any other or subsequent breach.

          (F)  Modifications.  This Agreement may not be changed, waived,
               -------------                                             
discharged or terminated orally, but only by an instrument in writing signed by
the party against which enforcement of such change, waiver, discharge or
termination is sought.

          (G)  Severability.  If any provision of this Agreement shall be
               ------------                                              
determined to be invalid, illegal or unenforceable, the balance of this
Agreement shall remain in full force and effect and if any provision is
inapplicable to any person or circumstance, it shall nevertheless remain
applicable to all other persons and circumstances.

          (H)  Assignee; Designee.  Optionee may assign this Agreement or
               ------------------                                        
designate a designee to acquire Optionor's entire right, title and interest in
and to the Remainder Notes at any time prior to the Closing; provided that, in
                                                             -------- ----    
no event shall Prudential be released from any of the obligations or liabilities
of the "Optionee" hereunder without the prior written consent of Optionor.  This
Agreement may not otherwise be assigned, nor may any interest herein be
assigned, by Optionee without Optionor's prior written consent.

          (I)  Notices.  All notices, elections, consents, approvals, demands,
               -------                                                        
objections, requests or other communications which any party hereto may be
required or desire to give to the other party hereto must be in writing and sent
by (i) first class U.S. certified or registered mail, return receipt requested,
with postage prepaid, (ii) telecopy or facsimile (with a copy sent by first
class U.S. certified or registered mail, return receipt requested, with postage
prepaid), or (iii) express mail or a nationally recognized courier (for next
business day delivery).  A notice or other communication sent in compliance with
the provisions of this Section 13(i) shall be deemed given and received on (a)
                       -------------                                          
the third (3rd) day following the date it is deposited in the U.S. mail, (b) the
date of confirmed dispatch if sent by facsimile or telecopy (provided that a
copy thereof is sent by 

                                       10
<PAGE>
 
mail in the manner provided in clause (i) above), or (c) the date it is
                               ----------               
delivered to the other party if sent by express mail or courier. The addresses
for the parties are as follows:

          All notices and other communications to Optionor shall be given to it
at:

          c/o Boston Properties, Inc.
          8 Arlington Street
          Boston, Massachusetts 02116-3495
          Attention:  General Counsel
          Facsimile No.:  (617) 421-1555

          with a copy to:

          Goulston & Storrs, P.C.
          400 Atlantic Avenue
          Boston, Massachusetts 02110-3333
          Attention:  Eli Rubenstein, Esq.
          Facsimile No.:  (617) 574-4112

          All notices and other communications to Optionee shall be given to it
at:

          The Prudential Insurance Company of America
          Prudential Realty Group
          8 Campus Drive, 4th Floor
          Arbor Circle South
          Parsippany, New Jersey 07054
          Attention:  John R. Triece
          Facsimile No.:  (201) 734-1472

          with a copy to:

          The Prudential Insurance Company of America
          Prudential Capital Group
          Four Embarcadero Center
          Suite 2700
          San Francisco, California 94111
          Attention:  Harry N. Mixon, Esq.
          Facsimile No.:  (415) 956-2197

          and a copy to:

          O'Melveny & Myers LLP
          Embarcadero Center West

                                       11
<PAGE>
 
          275 Battery Street
          Suite 2600
          San Francisco, California 94111
          Attention:   Stephen A. Cowan, Esq.
          Facsimile No.:   (415) 984-8701

Any party may designate another addressee or change its address for notices and
other communications hereunder by a notice given to the other parties in the
manner provided in this Section 13(i).
                        ------------- 

          (J)  Attorneys' Fees.  If any action is brought by either party
               ---------------
against the other party relating to or arising out of this Agreement, the
transactions described herein or the enforcement hereof, the prevailing party
shall be entitled to recover from the other party reasonable attorneys' fees and
costs incurred in connection with the prosecution or defense of such action. For
purposes of this Agreement, the term "ATTORNEYS' FEES" or "ATTORNEYS' FEES AND
COSTS" shall mean the fees and expenses of counsel to the parties hereto, which
may include printing, photostating, duplicating and other expenses, air freight
charges, and fees billed for law clerks, paralegals and other persons not
admitted to the bar but performing services under the supervision of an
attorney, and the costs and fees incurred in connection with the enforcement or
collection of any judgment obtained in any such proceeding.

          (K)  Counterparts.  This Agreement may be executed in one or more
               ------------                                                
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute only one instrument.  The signature page of any
counterpart may be detached therefrom without impairing the legal effect of the
signature(s) thereon provided such signature page is attached to any other
counterpart identical thereto except having additional signature pages executed
by other parties to this Agreement attached thereto.

          (L)  Successors and Assigns.  This Agreement shall be binding upon and
               ----------------------                                           
inure to the benefit of each of the parties hereto and to their respective
permitted transferees, successors and assigns.

          (M)  Exhibits.  All Exhibits attached hereto are hereby incorporated
               --------                                                       
herein.

          (N)  No Third Party Beneficiaries.  Persons who are not parties to
               ----------------------------
this Agreement shall have no rights or privileges (whether as a third party
beneficiary or otherwise) under or by virtue of this Agreement.

          (O)  Business Days.  In the event that any of the dates specified in
               -------------                                                  
this Agreement shall fall on a Saturday, Sunday, or a holiday recognized by the
State of California or the Commonwealth of Massachusetts, then the date of such
action shall be deemed to be extended to the next business day.

                                       12
<PAGE>
 
          (P)  Consent to Jurisdiction and Service of Process.  ALL JUDICIAL
               ----------------------------------------------               
PROCEEDINGS BROUGHT AGAINST ANY PERSON ARISING OUT OF OR RELATING TO THIS
AGREEMENT MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION
IN THE STATE OF CALIFORNIA, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT EACH
PARTY HERETO ACCEPTS FOR ITSELF, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE
JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON
CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY
IN CONNECTION WITH THIS AGREEMENT.  Each party hereby agrees that service of all
process in any such proceeding in any such court may be made by registered or
certified mail, return receipt requested, to any other party hereto, at its
address provided in this Agreement, such service being hereby acknowledged by
each party to be sufficient for personal jurisdiction in any action against such
party in any such court and to be otherwise effective and binding service in
every respect.  Nothing herein shall affect the right to serve process in any
other manner permitted by law.

          (Q)  Waiver of Jury Trial.  EACH OF THE PARTIES TO THIS AGREEMENT
               --------------------                                        
HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS
RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT. The scope of this waiver is
intended to be all-encompassing of any and all disputes that may be filed in any
court and that relate to the subject matter of this transaction, including,
without limitation, contract claims, tort claims, breach of duty claims and all
common law and statutory rights.  Each party hereto acknowledges that this
waiver is a material inducement to enter into a business relationship, that each
has already relied on this waiver in entering into this Agreement, and that each
shall continue to rely on this waiver in their related future dealings.  Each
party hereto further warrants and represents that it has reviewed this waiver
with its legal counsel and that it knowingly and voluntarily waives its jury
trial rights following consultation with such legal counsel.  THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING,
AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS
OR MODIFICATIONS OF THIS AGREEMENT.  In the event of litigation, this Agreement
may be filed as a written consent to a trial by the court.



                           [SIGNATURES ON NEXT PAGE]

                                       13
<PAGE>
 
          IN WITNESS WHEREOF, the undersigned have duly executed this Agreement
as of the date first above written.

                              "OPTIONOR"

                              THREE EMBARCADERO CENTER VENTURE,
                              a California General Partnership

                              By:   BOSTON PROPERTIES LLC,
                                    a Delaware limited liability company,
                                    as Managing General Partner

                                    By:  BOSTON PROPERTIES LIMITED
                                         PARTNERSHIP, a Delaware limited
                                         partnership, as Manager

                                         By:  BOSTON PROPERTIES,
                                              INC., a Delaware corporation,
                                              as General Partner



                                              By: /s/ Thomas J. O'Connor
                                                 -------------------------
                                              Name: Thomas J. O'Connor
                                              Title: Vice President


                              "OPTIONEE"

                              THE PRUDENTIAL INSURANCE COMPANY
                              OF AMERICA, a New Jersey corporation


                              By: /s/ Gary L. Frazier
                                 -----------------------------------------
                              Name: ________________________________
                              Title: _______________________________

                                      S-1
<PAGE>
 
                                    JOINDER


          The undersigned, as maker of the Remainder Notes, agrees that on the
Closing Date, at the request of Optionor, it will execute the Joinder and
Release on the Assignment and Assumption of Loan in the form attached hereto as
Exhibit D, which will be executed at such Closing.
---------                                         


                              PRUDENTIAL REALTY SECURITIES, INC.,
                              a Delaware corporation



                              By: /s/ Paul D. Egan
                                 ---------------------------------------
                              Name: Paul D. Egan
                              Title: Vice President

                                      S-2
<PAGE>
 
                                   EXHIBIT A

                               INVESTMENT NOTES
                               ----------------

                                      A-1
<PAGE>
 
                                   EXHIBIT B

                                CALCULATION OF
                               FAIR MARKET VALUE
                               -----------------


     The Fair Market Value of the Remainder Notes shall equal the aggregate
Remaining Cash Flow for all Remainder Notes discounted from each respective
scheduled payment due date to the Closing Date at a discount factor equal to the
Discount Rate for each such Remainder Note. Notwithstanding the foregoing, if on
the Determination Date an Investment Loan Borrower Credit Event exists, then
Optionor shall appoint an investment banking firm of national recognition (which
will be satisfactory to Optionee in its reasonable discretion) to determine the
change in the Fair Market Value of the Remainder Notes for purposes of this
Agreement.  In the event that an investment banking firm is appointed to
determine the change in the Fair Market Value of any Remainder Note as of the
Determination Date pursuant to the preceding sentence, such investment banking
firm shall be instructed to determine the change in the Fair Market Value of
such Remainder Note based on the following four factors: (i) changes in market
interest rates since the date of funding of the Remainder Note, (ii) the time
period remaining from the Determination Date until the earlier of the next Rate
Reset Date of such Remainder Note and the maturity of the Remainder Note, (iii)
the Remaining Cash Flow (as defined below) of the Remainder Note, and (iv)
changes in the credit quality of the Remainder Note since the date of funding
thereof.  The parties agree that an acceptable investment banking firm would be
Goldman Sachs or Merrill Lynch.  As used herein, the term "INVESTMENT LOAN
BORROWER CREDIT EVENT" shall mean any of the following events: (x) the credit
rating of the Remainder Notes has been downgraded from the credit rating of the
Remainder Notes on the date hereof by both of the Rating Agencies, or (y) in the
reasonable discretion of the managing general partner of Optionor, there has
been, as compared to the date hereof, a material diminution or degradation in
the value of the assets of the Investment Loan Borrower or the ability of the
Investment Loan Borrower to pay its outstanding obligations as they become due
from the date hereof.


                                 Defined Terms
                                 -------------

     As used herein, the following terms shall have the following meanings:

     "DETERMINATION DATE" shall mean the date upon which the Fair Market Value
of the Remainder Notes is determined and shall occur at 10:00 a.m. (New York
City time) on the date that the Option Election Notice or Put Election Notice,
as the case may be, is received by the addressee thereof.

     "DISCOUNT RATE" shall mean the Reinvestment Rate plus the Margin.

                                      B-1
<PAGE>
 
     "MARGIN" shall mean, with respect to any Remainder Note, the Margin (as
defined in the Investment Loan Note Purchase Agreement) of such Remainder Note.

     "RATING AGENCIES" shall mean Fitch IBCA, Inc. and Standard and Poor's
Corporation.

     "REINVESTMENT RATE" shall mean, with respect to any Remainder Note, the
offered-side yield to maturity as of the Determination Date of the U.S. Treasury
security that was used to determine the then Treasury (as defined in the
Investment Loan Note Purchase Agreement) of such Investment Note.

     "REMAINING CASH FLOW" shall mean, for any Remainder Note, the aggregate
amount of all accrued and unpaid interest, principal and other payments under
such Remainder Note on the Closing Date and all principal, interest and other
payments that will become due and owing under such Remainder Note from time to
time from and after the Closing Date through (x) the next Rate Reset Date of
such Remainder Note (the "Next Reset Date"), if the Fair Market Value is
determined prior to such Rate Reset Date, or (y) the maturity of such Remainder
Note (including, without limitation, any balloon or other principal payments due
and owing on said maturity date), if the Fair Market Value is determined after
all Rate Reset Dates provided in such Remainder Note, as each such payment would
become due and payable pursuant to the terms of the applicable Remainder Note
and the Investment Loan Documents ( but assuming, if clause (x) above applies,
                                                     ----------
that any interest that is scheduled to be accrued but unpaid as of the Next
Reset Date (i.e., because the interest payment date with respect thereto will
            ---- 
not have occurred), and any outstanding principal and any other amounts under
the Investment Note on such Next Reset Date, will be repaid in full on the Next
Reset Date; and further assuming, for purposes of calculating all future
interest payments due under such Remainder Note, that the interest rate in
effect with respect to the Remainder Note on the Closing Date will remain
constant for purposes of determining the Fair Market Value of such Remainder
Note).

                                      B-2
<PAGE>
 
                                   EXHIBIT C

                      FORM OF ALLONGE TO REMAINDER NOTES
                      ----------------------------------


Date of Note:  ____________________
Maker:  Prudential Realty Securities, Inc.
Face Amount:   $__________________


PAY TO THE ORDER OF __________________________________, WITHOUT RECOURSE,
REPRESENTATION OR WARRANTY, EXCEPT AS SPECIFICALLY PROVIDED IN THAT CERTAIN
OPTION AND PUT AGREEMENT DATED AS OF NOVEMBER ___, 1998, BY AND AMONG THREE
EMBARCADERO CENTER VENTURE, AS OPTIONOR, AND THE PRUDENTIAL INSURANCE COMPANY OF
AMERICA, AS OPTIONEE.

Dated:  ______________, 199__



                         THREE EMBARCADERO CENTER VENTURE,
                         a California general partnership

                         By:  BOSTON PROPERTIES LLC,
                              a Delaware limited liability company,
                              its Managing General Partner

                              By:   BOSTON PROPERTIES LIMITED
                                    PARTNERSHIP, a Delaware limited
                                    partnership, as Manager

                                    By:  BOSTON PROPERTIES, INC.
                                         a Delaware Corporation,
                                         as General Partner


                                         By:  __________________________________
                                         Name: _________________________________
                                         Title:   ______________________________

                                      C-1
<PAGE>
 
                                   EXHIBIT D

                       FORM OF ASSIGNMENT AND ASSUMPTION
                       ---------------------------------
                                    OF LOAN
                                    -------


                           ASSIGNMENT AND ASSUMPTION
                                    OF LOAN


          FOR VALUE RECEIVED, the receipt and sufficiency of which are hereby
acknowledged, THREE EMBARCADERO CENTER VENTURE, a California general partnership
("ASSIGNOR"), hereby sells, grants, assigns and transfers to __________________
("ASSIGNEE"), without recourse, representation or warranty (except as expressly
set forth in that certain Option and Put Agreement dated as of ________, 1998,
by and between Assignor and The Prudential Insurance Company of America), and
Assignee hereby purchases and assumes from Assignor, (i) all right, title and
interest of Assignor under and in connection with those certain promissory notes
evidencing the principal amount of _________________________ Dollars
($_______________), executed and delivered by Prudential Realty Securities,
Inc., as "maker" (the "REMAINDER NOTES"), and (ii) the rights of Assignor in, to
and under all documents and instruments listed on Exhibit A attached hereto and
                                                  ---------                    
incorporated herein by this reference, which documents and instruments further
evidence, secure and/or govern the Remainder Notes; but only to the extent that
such documents and instruments relate to the Remainder Notes (it being
acknowledged and agreed that the Remainder Notes are a portion of a
$_____________ loan and that the principal balance of such loan that is not
evidenced by the Remainder Notes (and all documents and instruments relating to
such principal balance) has been transferred to The Prudential Insurance Company
of America).  The Remainder Notes and all other documents listed on Exhibit A
                                                                    ---------
attached hereto to the extent they relate to the Remainder Notes shall sometimes
hereinafter be collectively referred to as the "INVESTMENT LOAN DOCUMENTS".

          Assignee hereby accepts the foregoing assignment and agrees to assume,
pay, perform and discharge, as and when due, all of the agreements, obligations
and liabilities of Assignor under or arising from or out of the Remainder Notes
and the Investment Loan Documents (but only to the extent relating to the
Remainder Notes) to be paid, performed or discharged on and after the date
hereof and agrees to be bound by all of the terms and conditions of the
Investment Loan Documents to be performed on and after the date hereof (but only
to the extent relating to the Remainder Notes) (all such items, collectively,
the "POST-CLOSING OBLIGATIONS").

                                      D-1
<PAGE>
 
          This Assignment shall be binding upon and inure to the benefit of
Assignor and Assignee, and their respective successors and assigns.

                         "ASSIGNOR"

                         THREE EMBARCADERO CENTER VENTURE, a
                         California General Partnership

                         By:  BOSTON PROPERTIES LLC,
                              a Delaware limited liability company,
                              as Managing General Partner

                              By:   BOSTON PROPERTIES LIMITED
                                    PARTNERSHIP, a Delaware limited
                                    partnership, as Manager

                                    By:  BOSTON PROPERTIES, INC.,
                                         a Delaware corporation,
                                         as General Partner



                                         By:_______________________
                                         Name:_____________________
                                         Title:____________________


                              "ASSIGNEE"

                              [INSERT ASSIGNEE SIGNATURE BLOCK]

                                      D-2
<PAGE>
 
                              JOINDER AND RELEASE
                              -------------------

          The undersigned, as maker of the Remainder Notes, hereby agrees to
release the Assignor from all Post-Closing Obligations and shall look only to
Assignee for satisfaction of the same.

                              PRUDENTIAL REALTY SECURITIES, INC.,
                              a Delaware corporation



                              By: _________________________________
                              Name: _______________________________
                              Title: ______________________________

                                      D-3
