PS BUSINESS PARKS, INC.

Exhibit 10:

MATERIAL CONTRACTS

OFFER LETTER/EMPLOYMENT AGREEMENT

The following Offer Letter/Employment Agreement is to used for all offers
extended for employment. The appropriate offer and hire information is to be
entered into the sections provided. Delete sections that do not apply to the new
employee. Specifically, if stock options are not granted as part of the
compensation package this section should be deleted in it entirety. The
agreement is only effective once the employee has returned the document, signed,
to the hiring manager.

The title of the document is derived because the letter does service as a
documented offer to the employee. However, once the document is signed the Offer
Letter becomes an employment agreement.

September 6, 2002
Mr. Joseph D. Russell, Jr.
1920 Lyans Drive
La Canada, CA 91011

Re: Offer Letter/Employment Agreement

Dear Mr. Russell:

It is my pleasure to offer you an executive management position with PS Business
Parks, Inc. (PSBP) effective on a mutually agreed upon date, currently
anticipated to be September 23, 2002, but no later than September 30, 2002. This
offer is for the position of President located in our Glendale, California
office. We think it is essential that the terms and conditions of your
employment be set forth clearly and completely in one place. That is the purpose
of this letter.

POSITION:

You will work as President. In this position, you will initially report to Ron
Havner, Chairman of the Board of Directors and CEO. Your responsibilities, to
which you will devote your full-time efforts, will include the oversight of the
Company’s property operations, assist in the formulation of operational
strategy, capital allocation and risk management strategies and be primarily
responsible for their execution in a timely manner that enhances shareholder
value. PSBP may change these responsibilities at any time during your employment
by creating new responsibilities and/or removing certain responsibilities.

COMPENSATION:

You will be paid twice monthly on the 15th and last day of the month, at a rate
of $250,000 per year while actively employed by PSBP. Commencing January 1, 2003
of your employment, you will be eligible to participate in the PSBP Performance
Bonus Plan. For the calendar year 2003 the current Bonus Plan for your position
contemplates a “target bonus” of $250,000. For the period January 1, 2003
through December 31, 2003, should you remain continuously actively employed for
that calendar year, you will be paid a minimum of 75% of your target bonus
potential no later than January 31, 2004. Payment of all or part of the
remaining 25% of the target bonus will be solely within the discretion of PSBP.
Should you cease employment prior to December 31, 2003 for reasons other than
“cause” or become disabled for longer than 30 days, your bonus will be prorated
for the period of your active employment from January 1, 2003 through December
31, 2003. Should you cease employment prior to December 31, 2003 for “cause,”
you will receive no bonus. Starting in 2004, your bonus, if any, will be subject
to the Company’s regular bonus plan provisions in effect at that time, which
include no minimum payment, payment within sixty days of the subsequent calendar
year and a requirement to be employed continuously during the year and at the
time of payment.

INTERIM BONUS:

During the period between your start date and December 31, 2002, you will be
entitled to a maximum bonus of 2,000 shares of PSBP common stock, to be issued
solely within the discretion of PSBP. Such interim bonus, if awarded, will be
issued no later than January 31, 2003.

VACATION:

You will be entitled to three (3) weeks annual paid vacation, earned and accrued
on a pay period basis and prorated over the course of your employment during the
year. Restrictions on the accrual of vacation benefits are more fully set forth
in the Employee Handbook.

OTHER BENEFITS:

PS Business Parks offers a comprehensive benefits package to its employees. A
summary of the benefits package has already been given to you.

MILEAGE REIMBURSEMENT:

You will be reimbursed for your business mileage at $0.365 per mile (the current
IRS guidelines). You will be required to track your mileage and provide records
for reimbursement monthly.

EMPLOYEE RETENTION AND REWARDS:

As we discussed with you, our goal is to hire, retain and reward employees who
exceed expectations, contribute to the growth and development of our employees
and contribute to the growth and profitability of the Company. Accordingly, on a
subjective basis the Company periodically awards stock options and restricted
stock to certain employees, which include a variety of vesting periods. You will
be awarded a total of 100,000 stock options, which vest at the rate of 20% on
each anniversary date of your employment with PSBP for a five-year period. On
the one year anniversary of your employment with PSBP, you will also be eligible
to participate in PSBP’s Restricted Stock Grant Program. All awards of stock
options and restricted stock are subject to PSBP’s plan prospectus, which has
been previously given to you.

TRADE SECRETS AND CONFIDENTIAL INFORMATION:

Our competitive success depends on the proper safeguarding of trade secrets and
confidential information developed within PSBP or entrusted to us by our
customers. Some of the information we receive also touches on the privacy
interests of individuals and must be safeguarded for that reason as well. You
promise to preserve the confidentiality of PSBP’s trade secrets and commercially
useful confidential information learned through your employment at PSBP and to
use all such information only as necessary and appropriate for PSBP’s legitimate
business purposes. You promise to safeguard against disclosure without the
consent of affected persons all information touching on the privacy interests of
employees of PSBP or customers or employees of customers. Such trade secrets and
commercially useful confidential information include without limitation
information about benefit plan or program designs, financial information about
PSBP or customers, the identity of PSBP’s present or potential customers,
communications between PSBP and its present or potential customers, and the
contents of PSBP’s business plans, its products or its proposals to present or
potential customers.

RELOCATION PAYMENT:

As part of your employment, PS Business Parks agrees to reimburse you for up to
$100,000 of moving and relocation expenses. Such reimbursement is predicted on
proper support (in the form of receipts or invoices) provided by you in
connection with your relocation and shall be adjusted for any adverse personal
income tax consequences to you. Such reimbursement will expire within one year
after this date of this letter. Such reimbursement will be made at least monthly
by the Company upon submission of invoices or other documentation.

EXTRAORDINARY EVENT PAYMENT:

In the event of a sale, merger or liquidation of the Company or such other
similar extraordinary event resulting in the payment of severance or other
termination pay to all or substantially all other Senior Officers (persons which
are deemed executive officers for purposes of SEC reporting requirements, other
than the Chairman and CEO) of equal or lower rank than President, then employee
will be paid no less than the highest amount paid to such other Senior Officer
of equal or lower rank, exclusive of stock options or restricted stock.

EMPLOYMENT TERMINATION:

You and we agree that your employment is “at will.” Either you or PSBP may
terminate your employment at any time with cause or without cause, for any
reason or no reason, for your convenience or for PSBP’s convenience and without
prior notice.

In the event that either you or PSBP terminates your employment, your
compensation and any other payments under this Agreement shall end as of the day
following such employment termination, and your entitlement to employee
benefits, if any, shall be as exclusively provided in written benefit plan
documents.

Subject to the foregoing, if your employment is terminated prior to December 31,
2003 for any reason other than “cause,” you will be entitled to one-year’s
salary up to a maximum of $250,000 and your pro rata share of your bonus target
up through the date of termination, up to a maximum of $187,500.

Termination for “cause” may be based upon any of the following, as determined by
PSBP in its reasonable discretion:

    (i)        Any act of fraud, dishonesty, embezzlement, defalcation or theft.

    (ii)        Conviction of, or a plea of nolo contendre to, any felony or any
misdemeanor involving moral turpitude;

    (iii)        Any act of gross negligence in the performance of your
responsibilities, any material breach of the policies and procedures of PSBP or
an act or conduct which negatively affects the profitability or morale of PSBP,
which is not cured within fifteen days after notice to cure;

    (iv)        An inexcusable repeated or prolonged absence from work other
than as a result of illness or a disability;

    (v)        Any unethical or improper conduct that exposes PSBP to
significant claims or other liability; or

    (vi)        Your voluntary resignation from employment with PSBP.

In the event that your employment is terminated for cause, PSBP shall pay to you
any unpaid salary and benefits earned pursuant to this agreement through the
last day of actual employment by PSBP. Additionally, PSBP will reimburse to you
reasonable and documented expenses. PSBP shall have no further obligations to
you, and you shall have no further rights, including, without limitation, rights
to any bonus, unvested stock options, other compensation or benefits whatsoever
under this Agreement.

NOTICES

Any notices to be given hereunder by either party to the other may be effected
either by personal delivery in writing or by registered or certified mail,
postage prepaid with return receipt requested, by nationally recognized
overnight courier or by confirmed facsimile at the following number:

If to Employee:
Mr. Joseph D. Russell, Jr.
1920 Lyans Drive
La Canada, CA 91011

If to PSBP:
PS Business Parks, Inc.
701 Western Avenue Glendale, CA 91201
Facsimiles: (818) 242-0566
Attn: Ronald L. Havner, Jr.

Notices delivered personally shall be deemed communicated upon actual receipt;
mailed notices shall be deemed communicated upon receipt of the mailing; notices
sent by overnight courier shall be deemed communicated and received as of one
(1) business day after delivery to the overnight courier; and notices sent by
facsimile shall be deemed communicated and received as of the time the sender
receives written confirmation of the sending of the facsimile.

PARTIAL INVALIDITY:

If any provision of this Agreement is held by a court of competent jurisdiction
to be invalid, void or unenforceable, the remaining provisions shall
nevertheless continue in full force without being impaired or invalidated.

APPLICABLE LAW:

This Agreement shall be governed by and construed in accordance with the laws of
the State of California.

CONSTRUCTION OF TERMS:

The terms and provisions of this Agreement, which are freely negotiated as
between the parties, shall not be construed either in favor of or against either
party in the event of any ambiguity or uncertainty.

MODIFICATIONS:

Any modification of this Agreement will be effective only if it is in writing
and signed by all parties to be charged.

WAIVER:

A waiver of any of the terms and conditions hereof shall not be construed as a
general waiver of the same or any other term or condition hereof of any
subsequent breach thereof.

ARBITRATION:

Employee, on the one hand, and the Company on the other hand, agree to submit to
final and binding arbitration, and not to any other forum, any claim by Employee
or Company under state, federal or local law which arises out of or relates to
Employee’s employment with Company, including without limitation claims for
sexual harassment, discrimination, wrongful termination, breach of contract,
invasion of privacy and defamation.

This Agreement excludes employment-related claims that cannot be required to be
submitted to arbitration under applicable law, such as claims for workers’
compensation or unemployment insurance benefits. The Agreement also excludes
from arbitration any claims by Employee or Company as to whether Employee has a
right to occupy living quarters furnished by Company, except where the loss of
use of such living quarters is an element of damages recoverable under a claim
subject to arbitration under this Agreement. Notwithstanding any other
provisions of this Agreement, Employee and Company agree that breaches of either
Employee’s or the Company’s obligations concerning trade secrets and/or
confidential information cannot adequately be remedied at law or in arbitration,
and we agree that either Employee or Company may seek and upon proper proof
obtain, from a court with proper jurisdiction, injunctive relief and damages.
Any such injunctive proceeding shall be without prejudice to Employee’s or the
Company’s rights under this Agreement to obtain other relief in arbitration with
respect to such matters.

Arbitration under this Agreement, including the selection of a single
arbitrator, shall be governed by the most recent version of the National Rules
for the Resolution of Employment Disputes (the “Rules”) of the American
Arbitration Association (“AAA”), except to the extent inconsistent with specific
provisions of this Agreement. State law provisions governing arbitrations in the
state where Employee is employed, such as provisions for temporary restraining
orders and preliminary injunctions, shall also apply unless inconsistent with
the AAA Rules or this Agreement.

In order to initiate a claim for arbitration, the party seeking arbitration must
deliver to the local AAA office, and send to the other party a written request
for arbitration within the time period required by the statute of limitation
applicable to the party’s claim (the time within which the party’s claim must be
filed according to law). Contact information for the nearest AAA office and a
copy of the AAA Rules may be obtained from Company’s Human Resources Department.
Arbitration proceedings shall be held before a single arbitrator in or near the
city or town where Employee’s employment services were performed, at a location
mutually agreed upon by Employee and Company or a location otherwise determined
by the AAA or the arbitrator.

Each party shall pay his/her or its own attorneys’ fees if the party chooses to
be represented by an attorney, except where the arbitrator orders that the
prevailing party recover attorneys’ fees from the other party under applicable
law. In no case, however, shall the Employee bear any cost or expense as a
result of arbitration that the Employee would not be required to pay if the
claim had been brought in court.

The parties hereto shall be permitted to conduct discovery as is appropriate to
the nature of the claim and necessary to its full and fair determination in
arbitration, including at a minimum access to essential documents and witnesses.
The arbitrator shall have the authority to order any appropriate legal and
equitable relief consistent with that available to parties in civil actions
filed in court.

The decision of the arbitrator shall be in writing, and shall reflect the
arbitrator’s essential findings and conclusions upon which the award is based.
Such decision shall be final and binding subject to review only as provided by
the law of the state in which the arbitration took place governing review of
arbitration awards. If no state law on the subject exists, the award shall be
subject to the standard of review provided in the Federal Arbitration Act, 9
U.S.C. section 10. The award shall be enforceable in any court of competent
jurisdiction. Employee and Company agree that if a court of competent
jurisdiction declares that any part of this Agreement is illegal, invalid or
unenforceable, this declaration will not affect the legality, validity or
enforceability of the remaining parts of the Agreement, and the illegal, invalid
or unenforceable part will no longer be part of this Agreement.

Employee and Company agree that arbitration under this Agreement shall be the
exclusive means of resolving any claims or disputes arising out of or related to
the Employee’s employment with Company, which are not resolved through the
Company’s internal grievance processes or through proceedings before the United
States Equal Employment Opportunity Commission (or the state agency processing
charges of discrimination), and are not excluded from this Agreement as
referenced in the second paragraph above. Both parties further agree that no
proceedings will be brought by Employee or Company in any court or other forum
as to any claims covered by this Agreement, except to enforce this Agreement or
review the decision of the arbitrator as provided above. No claim shall be
arbitrated that otherwise would be barred by the statute of limitations in a
judicial proceeding.

THIS AGREEMENT IS A WAIVER OF ALL RIGHTS TO A CIVIL COURT ACTION FOR A CLAIM
ARISING OUT OF OR RELATED TO EMPLOYEE’S EMPLOYMENT WITH COMPANY, ONLY THE
ARBITRATOR, AND NOT A JUDGE OR JURY, WILL DECIDE THE CLAIM OR DISPUTE.

INTEGRATED COMPLETE AGREEMENT:

This Agreement integrates and supersedes all other prior and contemporaneous
written and oral agreements and understandings of every character between you
and PSBP and comprises the entire agreement between you and PSBP. Understand
that this Agreement may be amended only by a further express written agreement
between us, and cannot be amended by informal discussions or written
communications from any party. No waiver of any rights or obligations under this
Agreement shall be deemed to have occurred unless in writing signed by the party
against whom such waiver is asserted and no waiver shall be deemed a waiver of
any other or subsequent rights or obligations.

We are very excited about the possibility of you joining us and look forward to
hearing from you. If you should have any questions, please call me.

Sincerely,

/s/ Ronald L. Havner, Jr.
Ronald L. Havner, Jr.
Chairman of the Board of Directors
President and Chief Executive Officer