Exhibit 10.1

PS BUSINESS PARKS, L.P.

AMENDMENT TO AGREEMENT OF LIMITED

PARTNERSHIP RELATING TO

6.00% SERIES T CUMULATIVE REDEEMABLE

PREFERRED UNITS

This Amendment to the Agreement of Limited Partnership of PS Business Parks,
L.P., a California limited partnership (the “Partnership”), dated as of May 14,
2012 (this “Amendment”), amends the Agreement of Limited Partnership of the
Partnership, dated as of March 17, 1998, as amended, by and among PS Business
Parks, Inc. (the “General Partner”) and each of the limited partners described
on Exhibit A to that partnership agreement (the “Partnership Agreement”).
Section references are (unless otherwise specified) references to sections in
this Amendment.

WHEREAS, the General Partner agreed to issue up to 16,100,000 Depositary Shares
each representing 1/1000th of a share of the General Partner’s preferred stock
designated as the “6.00% Cumulative Preferred Stock, Series T” (the “Depositary
Shares”) for a price of $25.00 per Depositary Share;

WHEREAS, Section 4.1(b)(2) of the Partnership Agreement requires the General
Partner to contribute to the Partnership the funds raised through the issuance
of additional shares of the General Partner in return for additional Partnership
Units, and provides that the General Partner’s capital contribution shall be
deemed to equal the amount of the gross proceeds of that share issuance (i.e.,
the net proceeds actually contributed, plus any underwriter’s discount or other
expenses incurred, with any such discount or expense deemed to have been
incurred on behalf of the Partnership);

WHEREAS, Section 4.2(a) of the Partnership Agreement provides generally for the
creation and issuance of Partnership Units with such designations, preferences
and relative, participating, optional or other special rights, powers and
duties, including rights, powers and duties senior to other Partnership
Interests, all as shall be determined by the General Partner, without the
consent of the Limited Partners, and Section 4.2(b) of the Partnership Agreement
specifically contemplates the issuance of Units to the General Partner having
designations, preferences and other rights, all such that the economic interests
are substantially similar to the designations, preferences and other rights of
shares issued by the General Partner, such as the Depositary Shares;

WHEREAS, the General Partner desires to cause the Partnership to issue
additional Units of a new class and series, with the designations, preferences
and relative, participating, optional or other special rights, powers and duties
set forth herein; and

WHEREAS, the General Partner desires by this Amendment to so amend the
Partnership Agreement as of the date first set forth above to provide for the
designation and issuance of such new class and series of Units.

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NOW, THEREFORE, the Partnership Agreement is hereby amended by establishing and
fixing the rights, limitations and preferences of a new class and series of
Units as follows:

Section 1. Definitions. Capitalized terms not otherwise defined herein shall
have their respective meanings set forth in the Partnership Agreement.
Capitalized terms that are used in this Amendment shall have the meanings set
forth below:

(a) “Liquidation Preference” means, with respect to the Series T Preferred Units
(as defined below), $25.00 per Series T Preferred Unit, plus the amount of any
accumulated and unpaid Priority Return (as defined below) with respect to such
Series T Preferred Unit, whether or not declared, minus any distributions in
excess of the Priority Return that has accrued with respect to such Series T
Preferred Units, to the date of payment.

(b) “Parity Preferred Units” means any class or series of Partnership Interests
(as such term is defined in the Partnership Agreement) of the Partnership now or
hereafter authorized, issued or outstanding and expressly designated by the
Partnership to rank on a parity with the Series T Preferred Units with respect
to distributions and rights upon voluntary or involuntary liquidation,
winding-up or dissolution of the Partnership, including the 7.000% Series H
Cumulative Redeemable Preferred Units (the “Series H Preferred Units”), the
6.875% Series I Cumulative Redeemable Preferred Units (the “Series I Preferred
Units”), the 6.700% Series P Cumulative Redeemable Preferred Units (the “Series
P Preferred Units”), the 6.875% Series R Cumulative Redeemable Preferred Units
(the “Series R Preferred Units”), and the 6.45% Series S Cumulative Redeemable
Preferred Units (the “Series S Preferred Units”). Notwithstanding the differing
allocation rights set forth in Section 4 below that apply to the Series H, I, P,
R, S and T Preferred Units.

(c) “Priority Return” means an amount equal to 6.00% per annum, of the
Liquidation Preference per Series T Preferred Unit, commencing on the date of
issuance of such Series T Preferred Unit, determined on the basis of a 360-day
year (and twelve 30-day months), cumulative to the extent not distributed on any
Series T Preferred Unit Distribution Payment Date (as defined below).

Section 2. Creation of Series T Preferred Units. (a) Designation and Number.
Pursuant to Section 4.2(a) of the Partnership Agreement, a series of Partnership
Units (as such term is defined in the Partnership Agreement) in the Partnership
designated as the “6.00% Series T Cumulative Redeemable Preferred Units” (the
“Series T Preferred Units”) is hereby established effective as of May 14, 2012.
The number of Series T Preferred Units shall be 16,100,000. The Holders of
Series T Preferred Units shall not have any Percentage Interest (as such term is
defined in the Partnership Agreement) in the Partnership.

(b) Capital Contribution. In return for the issuance to the General Partner of
the Series T Preferred Units set forth on Exhibit C to this Amendment, the
General Partner has contributed to the Partnership the funds raised through the
General Partner’s issuance of the Depositary Shares (the General Partner’s
capital contribution shall be deemed to equal the amount of the gross proceeds
of that share issuance, i.e., the net proceeds actually contributed, plus any
underwriter’s discount or other expenses incurred, with any such discount or
expense deemed to have been incurred by the General Partner on behalf of the
Partnership).

 

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(c) Construction. The Series T Preferred Units have been created and are being
issued in conjunction with the General Partner’s issuance of the Depositary
Shares relating to the General Partner’s 6.00% Cumulative Preferred Stock,
Series T, and as such, the Series T Preferred Units are intended to have
designations, preferences and other rights, all such that the economic interests
are substantially similar to the designations, preferences and other rights of
the Depositary Shares, and the terms of this Amendment shall be interpreted in a
fashion consistent with this intent.

Section 3. Distributions. (a) Payment of Distributions. Subject to the rights of
holders of Parity Preferred Units as to the payment of distributions, pursuant
to Section 5.1 of the Partnership Agreement, holders of Series T Preferred Units
shall be entitled to receive, when, as and if declared by the Partnership acting
through the General Partner, the Priority Return. Such distributions shall be
cumulative, shall accrue from the original date of issuance of the Series T
Preferred Units and, notwithstanding Section 5.1 of the Partnership Agreement,
will be payable (i) quarterly in arrears on March 31, June 30, September 30 and
December 31 of each year commencing on March 31, 2012 and (ii) in the event of a
redemption of Series T Preferred Units (each a “Series T Preferred Unit
Distribution Payment Date”). If any date on which distributions are to be made
on the Series T Preferred Units is not a Business Day (as defined below), then
payment of the distribution to be made on such date will be made on the Business
Day immediately preceding such date with the same force and effect as if made on
such date. Distributions on the Series T Preferred Units will be made to the
holders of record of the Series T Preferred Units on the relevant record dates
to be fixed by the Partnership acting through the General Partner, which record
dates shall in no event exceed fifteen (15) Business Days prior to the relevant
Series T Preferred Unit Distribution Payment Date. Business Day shall be any day
other than a Saturday, Sunday or day on which banking institutions in the State
of New York or the State of California are authorized or obligated by law to
close, or a day which is or is declared a national or a New York or California
state holiday.

(b) Prohibition on Distribution. No distributions on Series T Preferred Units
shall be authorized by the General Partner or paid or set apart for payment by
the Partnership at any such time as the terms and provisions of any agreement of
the Partnership or the General Partner, including any agreement relating to
their indebtedness, prohibits such authorization, payment or setting apart for
payment or provides that such authorization, payment or setting apart for
payment would constitute a breach thereof or a default thereunder, or to the
extent that such authorization or payment shall be restricted or prohibited by
law.

(c) Distributions Cumulative. Distributions on the Series T Preferred Units will
accrue whether or not the terms and provisions of any agreement of the
Partnership, including any agreement relating to its indebtedness, 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 T Preferred Units will accumulate
as of the Series T Preferred Unit Distribution Payment Date on which they first
become payable. Distributions on account of arrears for any past distribution
periods may be declared and paid at any time, without reference to a regular
Series T Preferred Unit Distribution Payment Date, to holders of record of the
Series T Preferred Units on the record date fixed by the Partnership acting
through the General Partner which date shall not exceed fifteen (15) Business
Days prior to the payment date. Accumulated and unpaid distributions will not
bear interest.

 

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(d) Priority as to Distributions. Subject to the provisions of Article 13 of the
Partnership Agreement:

(i) So long as any Series T 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 Interests
ranking junior as to the payment of distributions or rights upon a voluntary or
involuntary liquidation, dissolution or winding-up of the Partnership to the
Series T Preferred Units (collectively, “Junior Units”), nor shall any cash or
other property be set aside for or applied to the purchase, redemption or other
acquisition for consideration of any Series T Preferred Units, any Parity
Preferred Units or any Junior Units, unless, in each case, all distributions
accumulated on all Series T Preferred Units and all classes and series of
outstanding Parity Preferred Units have been paid in full. The foregoing
sentence shall not prohibit (x) distributions payable solely in Junior Units, or
(y) the conversion of Junior Units or Parity Preferred Units into Partnership
Interests ranking junior to the Series T Preferred Units.

(ii) So long as distributions have not been paid in full (or a sum sufficient
for such full payment is not irrevocably deposited in trust for payment) upon
the Series T Preferred Units, all distributions authorized and declared on the
Series T Preferred Units and all classes or series of outstanding Parity
Preferred Units shall be authorized and declared so that the amount of
distributions authorized and declared per Series T 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 T 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.

(e) No Further Rights. Holders of Series T 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 4. Allocations. Section 6.1(a)(ii) of the Partnership Agreement is
amended to read, in its entirety, as follows:

“(ii) (A) Notwithstanding anything to the contrary contained in this Agreement,
in any taxable year: (1) the holders of Series H, I, P, R, S and T Preferred
Units shall first allocated an amount of gross income equal to the Priority
Return distributed to such holders in such taxable year.

(B) After the Capital Account balances of all Partners other than holders of any
series of Preferred Units have been reduced to zero, Losses of the Partnership
that otherwise would be allocated so as to cause deficit Capital Account
balances for those other Partners shall be allocated to the holders of the
Series H, I, P, R, S and T Preferred Units in proportion to the positive
balances of their Capital Accounts until those Capital Account balances have
been reduced to zero. If Losses have been allocated to the holders of the Series
H, I, P, R, S and T Preferred Units pursuant to the preceding sentence, the
first subsequent Profits shall be allocated to those preferred partners so as to
recoup, in reverse order, the effects of the loss allocations.

 

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(C) Upon liquidation of the Partnership or the interest of the holders of Series
H, I, P, R, S and T Preferred Units in the Partnership items of gross income or
deduction shall be allocated to the holders of Series H, I, P, R, S and T
Preferred Units in a manner such that, immediately prior to such liquidation,
the Capital Account balances of such holders shall equal the amount of their
Liquidation Preferences.

Section 5. Optional Redemption. The Series T Preferred Units shall be redeemed
at the same time, to the same extent, and applying, except as set forth below,
similar procedures, as any redemption by the General Partner of the Depositary
Shares. The redemption price, payable in cash, shall equal the Liquidation
Preference (the “Series T Redemption Price”). The Partnership will deliver into
escrow with an escrow agent acceptable to the Partnership and the holders of the
Series T Preferred Units being redeemed (the “Escrow Agent”) the Series T
Redemption Price and an executed Redemption Agreement, in substantially the form
attached as Exhibit A (the “Redemption Agreement”), and an Amendment to the
Agreement of Limited Partnership evidencing the Redemption, in substantially the
form attached as Exhibit B. The holders of the Series T Preferred Units to be
redeemed will also deliver into escrow with the Escrow Agent an executed
Redemption Agreement and an executed Amendment to the Agreement of Limited
Partnership evidencing the redemption. Upon delivery of all of the
above-described items by both parties, on the redemption date the Escrow Agent
shall release the Series T Redemption Price to the holders of the Series T
Preferred Units and the fully-executed Redemption Agreement and Amendment to
Agreement of Limited Partnership to both parties. On and after the date of
redemption, distributions will cease to accumulate on the Series T Preferred
Units called for redemption, unless the Partnership defaults in the payment of
the Series T Redemption Price. The Redemption Right (as such term is defined in
the Partnership Agreement) given to Limited Partners (as such term is defined in
the Partnership Agreement) in Section 8.6 of the Partnership Agreement shall not
be available to the holders of the Series T Preferred Units and all references
to Limited Partners in said Section 8.6 (and related provisions of the
Partnership Agreement) shall not include holders of the Series T Preferred
Units.

Section 6. Voting Rights. Holders of the Series T 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 in Section 14.1 of the
Partnership Agreement and in this Section 6. Solely for purposes of Section 14.1
of the Partnership Agreement, each Series T Preferred Unit shall be treated as
one Partnership Unit.

Section 7. Transfer Restrictions. The holders of Series T Preferred Units shall
be subject to all of the provisions of Section 11 of the Partnership Agreement.

 

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Section 8. No Conversion Rights. The holders of the Series T Preferred Units
shall not have any rights to convert such units into shares of any other class
or series of stock or into any other securities of, or interest in, the
Partnership.

Section 9. No Sinking Fund. No sinking fund shall be established for the
retirement or redemption of Series T Preferred Units.

Section 10. Exhibit A to Partnership Agreement. In order to duly reflect the
issuance of the Series T Preferred Units provided for herein, the Partnership
Agreement is hereby further amended pursuant to Section 12.3 of the Partnership
Agreement by replacing the current form of Exhibit A to the Partnership
Agreement with the form of Exhibit A that is attached to this Amendment as
Exhibit C.

Section 11. Inconsistent Provisions. Nothing to the contrary contained in the
Partnership Agreement shall limit any of the rights or obligations set forth in
this Amendment.

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IN WITNESS WHEREOF, this Amendment has been executed as of the date first above
written.

 

PS BUSINESS PARKS, INC. By:  

/s/ Joseph D. Russell, Jr.

  Name:   Joseph D. Russell, Jr.   Title:   President and Chief Executive Office

 

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