Exhibit 10.3
CONTRIBUTION AGREEMENT
By and Among
GOLDMAN SACHS 2006 EXCHANGE PLACE FUND, L.P.,
GSEP 2006 REALTY CORP.,
PS BUSINESS PARKS, L.P.,
and
PS BUSINESS PARKS, INC.
Dated: As of March 12, 2007

 

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CONTRIBUTION AGREEMENT
     Contribution Agreement (this “Agreement”) made as of the 12th day of
March 2007 (“Agreement Date”), by and among Goldman Sachs 2006 Exchange Place
Fund, L.P., a Delaware limited partnership (“Parent”), GSEP 2006 Realty Corp., a
Delaware corporation (“Contributor”), PS Business Parks, L.P., a California
limited partnership (“Operating Partnership”), and PS Business Parks, Inc., a
California corporation (“Company”).
WITNESSETH:
     WHEREAS, Contributor desires to contribute to Operating Partnership cash in
return for Series Q Preferred Units (as defined below) in Operating Partnership
on the terms and conditions herein set forth.
     NOW, THEREFORE, in consideration of the mutual covenants contained herein
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereby agree as follows:
1. Definitions. For purposes of this Agreement, the following terms shall have
the meanings set forth below:
     “Agreement” has the meaning set forth in the initial paragraph hereof.
     “Agreement Date” has the meaning set forth in the initial paragraph hereof.
     “Amendment” means the Amendment to the Partnership Agreement, substantially
in the form attached as Exhibit A hereto.
     “Broker” has the meaning set forth in Paragraph 10.
     “Bylaws” means the Bylaws of the Company, as amended from time to time.
     “Certificate of Determination” means the Certificate of Determination of
Preferences of Series Q Cumulative Redeemable Preferred Stock of the Company
substantially in the form attached hereto as Exhibit B.
     “Charter” means the Restated Articles of Incorporation of Company, as
amended and restated from time to time including, as supplemented by the
Certificate of Determination.
     “Closing” has the meaning set forth in Paragraph 6(a).
     “Code” means the Internal Revenue Code of 1986, as amended.
     “Company” has the meaning set forth in the initial paragraph hereof.
     “Contribution Amount” means 12 million and No/100 Dollars ($12,000,000).

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     “Contributor” has the meaning set forth in the initial paragraph hereof.
     “Contributor’s Closing Documents” has the meaning set forth in
Paragraph 6(c).
     “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended.
     “Exchange Act” means the Securities Exchange Act of 1934, as amended.
     “Exchange Date” means, with respect to any Series Q Preferred Unit, the
date on which the exchange of such Series Q Preferred Unit for a Series Q
Preferred Share shall occur in accordance with the Partnership Agreement.
     “GAAP” means generally accepted accounting principles consistently applied
as in effect as of the date of the financial statements to which such principles
are applied.
     “Governing Documents” means, with respect to (i) a limited partnership,
such limited partnership’s certificate of limited partnership and the agreement
of limited partnership, and any amendments or modifications of any of the
foregoing; (ii) a corporation, such corporation’s articles or certificate of
incorporation, by-laws and any applicable authorizing resolutions, and any
amendments or modifications of any of the foregoing; (iii) a limited liability
company, such limited liability company’s articles or certificate of
organization, by-laws and operating agreement or agreement of limited liability
company, and any amendments or modifications of any of the foregoing; and (iv) a
trust, such trust’s declaration of trust and bylaws and any amendments or
modifications of any of the foregoing.
     “Operating Partnership” has the meaning set forth in the initial paragraph
hereof.
     “Operating Partnership’s Closing Documents” has the meaning set forth in
Paragraph 6(b).
     “Partner” has the meaning ascribed to such term in the Partnership
Agreement.
     “Partnership Agreement” means the Agreement of Limited Partnership of
Operating Partnership, dated as of March 17, 1998 as amended from time to time,
including as amended by the Amendment.
     “Person” means a natural person, partnership (whether general or limited),
trust, estate, association, corporation, limited liability company,
unincorporated organization, custodian, nominee or any other individual or
entity in its own or representative capacity.
     “PTP” means a “publicly traded partnership” within the meaning of
Section 7704 of the Code.
     “Securities Act” means the Securities Act of 1933, as amended.
     “Series G Preferred Shares” has the meaning set forth in Paragraph 8(l).
     “Series G Preferred Units” has the meaning set forth in Paragraph 8(l).

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     “Series J Preferred Shares” has the meaning set forth in Paragraph 8(l).
     “Series J Preferred Units” has the meaning set forth in Paragraph 8(l).
     “Series N Preferred Shares” has the meaning set forth in Paragraph 8(l).
     “Series N Preferred Units” has the meaning set forth in Paragraph 8(l).
     “Series Q Preferred Shares” means shares of Company’s 6.55% Series Q
Cumulative Redeemable Preferred Stock, par value $.01 per share, with the terms
and provisions set forth in the Certificate of Determination.
     “Series Q Preferred Units” means Series Q Preferred Units as such term is
defined in the Amendment.
     “Subsidiary” means with respect to any Person, any corporation,
partnership, limited liability company, joint venture or other entity (a) of
which a majority of (i) voting power of the voting equity securities or (ii) the
outstanding equity interests, is held or owned, directly or indirectly, by such
Person, or (b) of which such Person is a general partner or managing member.
2. Contribution of Cash. Subject to the terms and provisions of this Agreement,
Contributor hereby agrees to contribute to Operating Partnership the
Contribution Amount on the date of the Closing in consideration for 480,000
Series Q Preferred Units in Operating Partnership. Subject to the terms and
provisions of this Agreement, Operating Partnership hereby agrees to accept the
Contribution Amount and to issue to Contributor 480,000 Series Q Preferred Units
in exchange therefor on the date of the Closing.
3. Conditions to Closing.
     (a) Conditions to Operating Partnership’s and Company’s Obligations.
Operating Partnership’s and Company’s obligations under this Agreement to accept
the Contribution Amount, provide Contributor with Series Q Preferred Units and
otherwise consummate the transactions contemplated herein are subject to the
satisfaction (or waiver in writing by Operating Partnership and Company) of the
following conditions on or before the Closing:
     (i) No Injunction. No temporary restraining order or preliminary or
permanent injunction of any court or administrative agency of competent
jurisdiction prohibiting the consummation of the transactions contemplated
herein shall be in effect.
     (ii) Accuracy of Representations and Warranties. The representations and
warranties of Contributor contained in this Agreement shall be true and correct
in all material respects on the date of the Closing with the same effect as
though made on the date of the Closing.
     (iii) Performance of Agreement. Contributor shall have performed, in all
material respects, all of its covenants, agreements and obligations required by
this Agreement to be performed or complied with by it prior to or at the
Closing, including, without limitation, delivery of the Contribution Amount.

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     (iv) Delivery of Closing Documents. Operating Partnership and Company shall
have received the Contributor’s Closing Documents.
     If for any reason any of the conditions set forth in this Paragraph 3(a) or
elsewhere in this Agreement are not satisfied or waived by Operating Partnership
and Company at or prior to the Closing, at Operating Partnership’s or Company’s
option, this Agreement shall be terminated and Operating Partnership, Company,
Parent and Contributor shall be released from their obligations under this
Agreement and none of Operating Partnership, Company, Parent or Contributor
shall have any further liability hereunder.
     (b) Conditions to Contributor’s and Parent’s Obligations. Contributor’s and
Parent’s obligations under this Agreement to deliver the Contribution Amount and
otherwise consummate the transactions contemplated herein are subject to the
satisfaction (or waiver in writing by Contributor and Parent) of the following
conditions on or before the Closing:
     (i) Pending Litigation. Contributor and Parent shall have determined in
Contributor’s and Parent’s sole judgment that there is no temporary restraining
order or preliminary or permanent injunction of any court or administrative
agency of competent jurisdiction and no pending litigation or like proceeding
with respect to Operating Partnership or Company which, if successfully pursued,
would prevent the consummation of the transactions contemplated herein.
     (ii) Accuracy of Representations and Warranties. The representations and
warranties of Operating Partnership and Company contained in this Agreement
shall be true and correct in all material respects on the date of the Closing
with the same effect as though made on the date of the Closing.
     (iii) Performance of Agreement. Operating Partnership and Company shall
have performed, in all material respects, all of their respective covenants,
agreements and obligations required by this Agreement to be performed or
complied with by it prior to or at the Closing.
     (iv) Delivery of Closing Documents. Contributor and Parent shall have
received the Operating Partnership’s Closing Documents.
     If for any reason any of the conditions set forth in this Paragraph 3(b) or
elsewhere in this Agreement are not satisfied or waived by Contributor and
Parent at or prior to the Closing, at Contributor’s or Parent’s option, this
Agreement shall be terminated and Contributor, Operating Partnership, Parent and
Company shall be released from their obligations under this Agreement and none
of Contributor, Operating Partnership, Parent or Company shall have any further
liability hereunder.
4. Covenants.
     (a) On the Exchange Date, Company shall issue Series Q Preferred Shares in
a number equal to the number of Series Q Preferred Shares into which the
Series Q Preferred Units are exchangeable pursuant to the terms of the
Partnership Agreement. Upon consummation of such exchange in accordance with the
terms of the Partnership Agreement, and issuance in

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accordance with the Charter, the Series Q Preferred Shares shall be validly
issued, fully paid and non-assessable pursuant to the Certificate of
Determination.
     (b) Provided that all other conditions to Operating Partnership’s and
Company’s obligations set forth in this Agreement have been satisfied or
properly waived, Operating Partnership covenants that it shall record the
Contributor as the holder of the Series Q Preferred Units on its books and
records and shall admit Contributor as a limited partner to Operating
Partnership on the date of the Closing in accordance with the Partnership
Agreement.
     (c) Operating Partnership shall not issue any Series Q Preferred Units to
any Person other than Contributor and the Company shall not issue any Series Q
Preferred Shares to any Person other than a holder of Series Q Preferred Units
upon exchange of such Series Q Preferred Units.
     (d) Through December 31, 2008, Operating Partnership shall notify holders
of Series Q Preferred Units promptly if Company or Operating Partnership
anticipates or realizes either that (i) the value of Operating Partnership’s
assets constituting “stock and securities” within the meaning of
Section 351(e)(1) of the Code will equal 17% or more of Operating Partnership’s
total assets, or (ii) there is a material increase in the percentage of
Operating Partnership’s assets constituting “stock and securities” (based on
value) if immediately preceding such material increase the percentage of
Operating Partnership’s assets constituting “stock and securities” is equal to
15% or more of the Operating Partnership’s total assets.
     (e) Operating Partnership shall notify holders of Series Q Preferred Units
promptly if Company or Operating Partnership anticipates or realizes that the
Series Q Preferred Units will represent more than 19.5% of the total profits or
capital interest in the Operating Partnership. For purposes of this Agreement,
profits will be treated as including special allocations of gross income and
capital will be determined based upon the estimated proceeds distributable upon
a hypothetical current liquidation of the Operating Partnership.
     (f) Through December 31, 2007, Operating Partnership (i) shall take all
actions reasonably available to it under the Partnership Agreement to satisfy
the private placement safe harbor of Treasury Regulation Section 1.7704-1(h)(1)
(taking into account any person treated as a partner under Treasury
Regulation Section 1.7704-1(h)(3) and treating Contributor for this purpose as
one partner) and (ii) shall not issue, or enter into binding agreements to
issue, any Operating Partnership units to the extent such issuance would cause
it to fail to satisfy the private placement safe harbor of Treasury
Regulation Section 1.7704-1(h)(1) immediately after such issuance (taking into
account any person treated as a partner under Treasury Regulation Section
1.7704-1(h)(3) and treating Contributor for this purpose as one partner) and
substituting “90” for “100.” Through March 31, 2008, Operating Partnership shall
take all actions reasonably available to it under the Partnership Agreement to
avoid treatment as a PTP.
     (g) Operating Partnership shall notify holders of the Series Q Preferred
Units promptly in the event that Company or Operating Partnership (i) becomes
aware of any facts that will or likely will cause Operating Partnership to
become a PTP or (ii) takes the position that Operating Partnership is, or upon
consummation of an identified event in the immediate future will be, a PTP.

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     (h) Operating Partnership shall promptly provide notice to the holders of
the Series Q Preferred Units in the event Company or Operating Partnership
anticipates or realizes that, if Operating Partnership were taxable as a real
estate investment trust, Operating Partnership would fail to satisfy the income
and asset requirements under Sections 856(c)(2), (3) and (4) of the Code.
     (i) Operating Partnership shall notify any holder of the Series Q Preferred
Units promptly in the event that Operating Partnership or Company anticipates or
realizes that such holder’s interest in the Series Q Preferred Units will
represent 10% or more of the total capital interests in Operating Partnership or
5% or more of the value of the Operating Partnership’s total assets are
represented by securities of a taxable REIT subsidiary. Operating Partnership
shall use its best efforts to permit such a holder to make a taxable REIT
subsidiary election with respect to any corporation (other than a corporation
taxable as a real estate investment trust) for which the holder, solely as a
result of its ownership of Series Q Preferred Units, would be deemed to own (for
purposes of Section 856(c)(4) of the Code) securities of such corporation
(i) with a value equal to more than 5% of the Contributor’s total assets,
(ii) possessing more than 10% of the total voting power of such corporation, or
(iii) having a value of more than 10% of the total value of, the outstanding
securities of such corporation. Operating Partnership shall use its best efforts
to cause each corporation referred to in the preceding sentence to jointly make
a taxable REIT subsidiary election with such holder.
     (j) Operating Partnership and Company will not take any position
inconsistent with the form of the transaction set forth in the Operating
Partnership’s Closing Documents, including without limitation, any position that
Operating Partnership is not a partnership for federal income tax purposes or
that Contributor is not a partner of Operating Partnership for federal income
tax purposes.
     (k) Through December 31, 2008, Operating Partnership will not make an
election under Treas. Reg. Section 301.7701-3 to be classified as an
association.
     (l) Operating Partnership covenants that it shall use reasonable efforts to
deliver to holders of Series Q Preferred Units the following information to the
extent provided to all other holders of the Company’s Common Shares, par value
$0.01 per share (the “Common Shares”), and/or Partners of the Operating
Partnership:
     (i) as soon as reasonably practicable, a complete copy of Company’s annual
report on Form 10-K, or such other applicable form (“Form 10-K”), filed in
respect of a fiscal year with the Securities and Exchange Commission (the
“Commission”) (or, if Operating Partnership is required under rules and
regulations promulgated by the Commission to file with the Commission a Form
10-K separate from Company’s Form 10-K, a complete copy of Operating
Partnership’ s Form 10-K);
     (ii) as soon as reasonably practicable, a complete copy of the Company’s
quarterly report on Form 10-Q, or such other applicable form (“Form 10-Q”),
filed in respect of a fiscal quarter with the Commission (or, if Operating
Partnership is required under rules and regulations promulgated by the
Commission to file with the Commission

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a Form 10-Q separate from Company’s Form 10-Q, a complete copy of Operating
Partnership’s 10-Q);
     (iii) as soon as reasonably practicable, copies of all other communications
of the Company or Operating Partnership, but only if provided to all the holders
of the Company’s Common Shares and/or Partners; and
     (iv) upon the request of a holder of Series Q Preferred Units, a copy of
the most recent annual tax return for the Operating Partnership.
     (m) Operating Partnership covenants that it shall use reasonable efforts to
deliver to holders of Series Q Preferred Units the following information,
whether or not provided to all other holders of the Company’s Common Shares:
(x) the percentage of total profits and capital interests represented by the
Series Q Preferred Units and (y) the percentage of the value of the Operating
Partnership’s assets which consist of “stock and securities” within the meaning
of Section 351(e)(1) of the Code. The information in clause (x) shall be
provided to the holders of Series Q Preferred Units on an annual basis at the
time a Schedule K-1 is issued to each holder of Series Q Preferred Units. The
information in clause (y) shall be provided to the holders of Series Q Preferred
Units at the time Schedule K-1’s are issued to each holder of Series Q Preferred
Units for the tax years ending December 31, 2007 and December 31, 2008.
     (n) Upon request of Contributor, but not more frequently than once per year
(excluding the certificate contemplated by Paragraph 4(s)), Operating
Partnership and Company agree to deliver a certificate to Contributor or any of
its permitted transferees, including Parent, bringing down the representations
and warranties made by Operating Partnership and Company in Paragraphs 8(d),
(e), (f), (g), (i), (j), (p), (q), (u), (v) and (w) to a date requested by
Contributor, Parent or such transferee, if and to the extent, after due inquiry,
Operating Partnership and Company can make such representations and warranties
as of such date; provided, however, Operating Partnership and Company shall not
be required to deliver such certificate with respect to any matter described in
Paragraph 8(d) after December 31, 2008.
     (o) The Company shall not modify, rescind or revoke the waiver by the Board
of Directors of the “Ownership Limit” (set forth in Section 4.01(a) of the
Company’s Charter) pursuant to resolutions of the Board of Directors, dated
February 23, 2007 and of the Special Committee of the Board of Directors, having
an effective date of March 12, 2007 with respect to the Contributor’s ownership
of the Series Q Preferred Shares. The Company agrees not to withhold the waiver
of such Ownership Limit in favor of any transferees of Contributor (or
subsequent transferees) if such transferees (or subsequent transferees) provide
to the Company a representation that, “to the best of such transferee’s
knowledge, applying the REIT stock ownership rules of Section 856(h) of the Code
and the applicable regulations, if at the time of such transfer all outstanding
Series Q Preferred Units had been exchanged for Series Q Preferred Shares, no
‘individual’ would be treated as owning more than 9.9% of the outstanding shares
of Series Q Preferred Shares (except potentially two individuals who would each
be treated as owning less than 15% of the outstanding shares of Series Q
Preferred Shares, provided that neither such individual would be treated as
owning more than 9.9% of the combined number of Series Q Preferred Shares,
Series N Preferred Shares, Series J Preferred Shares and Series G

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Preferred Shares that are or would be outstanding, treating all such shares that
may be issued in exchange for corresponding Series Q Preferred Units, Series N
Preferred Units, Series J Preferred Units and Series G Preferred Units as if
then outstanding, whether or not the exchange is then permitted).” The Company
agrees not to unreasonably withhold the waiver of such Ownership Limit in favor
of any transferee of Contributor (or subsequent transferee) if such transferee
provides to the Company reasonable representations and undertakings appropriate
to establish that the ownership by the transferee will not adversely affect the
Company’s status as a REIT (defined in Paragraph 8(j)).
     (p) After any exchange of Series Q Preferred Units under Section 8 of the
Amendment, the Company shall at all times ensure that the number of members of
the Company’s Board of Directors permitted pursuant to the Charter, the Bylaws
and the California Corporations Code, as amended, is sufficient to allow the
Board of Directors to increase by two the number of members of the Board of
Directors, without shareholder approval, in order to permit the holders of
Series Q Preferred Shares (and shares on parity therewith) to elect two
additional Directors upon the occurrence of a Dividend Default (as that term is
defined in the Certificate of Determination attached hereto as Exhibit B) and in
accordance with the provisions of such Certificate of Determination.
     (q) Operating Partnership and Company hereby consent to any pledge and
release of such pledge of the Series Q Preferred Units, and to any pledge and
release of such pledge of any Series Q Preferred Shares into which such Series Q
Preferred Units are exchanged, to secure the obligations of Contributor and/or
Parent; so long as the pledge and exercise of remedies thereunder shall be
subject in all respects to the provisions of the Partnership Agreement and the
Charter and such pledge is to a bona fide financial institution; provided that
for purposes of this Paragraph 4(q), Parent and Goldman Sachs & Co. and its
affiliates shall be deemed to be bona fide financial institutions.
     (r) Company covenants that it shall file the Certificate of Determination
with the Secretary of State of the State of California promptly following
Closing and shall deliver to the Contributor a certified copy of such filing
promptly upon receipt thereof by the Company.
     (s) At any time and from time to time after the Closing (but in no event
more than five (5) times, excluding the certificate contemplated by
Paragraph 4(n)) and prior to December 31, 2007, upon request of the Contributor,
Operating Partnership and Company agree to deliver an additional certificate to
Contributor and Parent bringing down the representations and warranties made by
Operating Partnership and Company in Article 8 to a date requested by
Contributor (if and to the extent, after due inquiry, such representations and
warranties are true and correct as of such date), provided that such certificate
is requested by Contributor in connection with the contribution of additional
capital to Parent. Contributor shall provide at least five (5) business days
written notice of any request for a certificate hereunder.
     The covenants set forth in this Paragraph 4 shall survive the Closing for
the period set forth in this Paragraph 4. If no time period is set forth in this
Paragraph 4, the covenants shall survive for so long as the Series Q Preferred
Units and/or Series Q Preferred Shares are outstanding.

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5. Transaction Costs. Each of the parties hereto shall bear its own costs and
expenses with respect to the transactions contemplated hereby.
6. Closing.
     (a) The closing of the transactions contemplated by this Agreement shall be
consummated on March 12, 2007 or on such other date as the parties may mutually
agree (the “Closing”).
     (b) At the Closing, Operating Partnership and Company shall deliver to
Contributor the following documents and the following other items (the documents
and other items described in this Paragraph 6(b) being collectively referred to
herein as the “Operating Partnership’s Closing Documents”):
     (i) This Agreement duly executed by Operating Partnership and Company;
     (ii) The Amendment, duly executed by all persons necessary to make such
amendment binding on and enforceable against all Partners in Operating
Partnership;
     (iii) Certificate of Determination of Company duly executed and delivered
by Company;
     (iv) The Registration Rights Agreement, substantially in the form set forth
on Exhibit C, duly executed and delivered by Company;
     (v) A Certificate of the Secretary of Company, substantially in the form
set forth on Exhibit D together with completed exhibits attached thereto,
executed by the Secretary of Company and dated as of the date of the Closing;
     (vi) Opinions of counsel or counsels to Company and Operating Partnership
substantially in the form set forth on Exhibit E;
     (vii) A Cross-Receipt, substantially in the form set forth on Exhibit F;
     (viii) Evidence of the written waiver of the ownership limitation contained
in the Charter with respect to the Series Q Preferred Shares; and
     (ix) Those other closing documents required to be executed by it or as may
be otherwise reasonably necessary or appropriate to consummate the transactions
contemplated herein.
     (c) At the Closing, Contributor and/or Parent shall deliver to Operating
Partnership and Company the following documents and the following other items
(the documents and other items described in this Paragraph 6(c) being
collectively referred to herein as the “Contributor’s Closing Documents”):
     (i) Counterparts of documents listed in Paragraphs 6(b)(i), (iv) and (vii),
duly executed by Contributor and/or Parent; and

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     (ii) Those other closing documents required to be executed by it or as may
be otherwise reasonably necessary or appropriate to consummate the transaction
contemplated herein.
7. Representations and Warranties of Parent. Parent makes the following
representations and warranties to Operating Partnership and Company, all of
which (except as otherwise designated) are true and correct in all material
respects on the Agreement Date and shall be true and correct in all material
respects as of the date of the Closing:
     (a) Parent is duly organized and validly existing under the laws of the
state of Delaware and has been duly authorized by all necessary and appropriate
action to enter into this Agreement and to consummate the transactions
contemplated herein. This Agreement is a valid and binding obligation of Parent,
enforceable against Parent in accordance with its terms, except insofar as such
enforceability may be affected by bankruptcy, insolvency or similar laws
affecting creditor’s rights generally and the availability of any particular
equitable remedy.
     (b) Neither the execution nor the delivery of this Agreement nor the
consummation of the transactions contemplated herein nor fulfillment of or
compliance with the terms and conditions hereof (a) conflict with or will result
in a breach of any of the terms, conditions or provisions of (i) the Governing
Documents of Parent or (ii) any agreement, order, judgment, decree, arbitration
award, statute, law, rule, regulation or instrument to which Parent is a party
or by which it or its assets are bound, or (b) constitutes or will constitute
(with or without due notice or lapse of time or both) a breach, violation or
default (or give rise to any right of termination, cancellation or acceleration)
under any of the foregoing, or result in the creation of any lien, charge or
encumbrance pursuant to any of the foregoing. No consent or approval,
authorization, order, regulation or qualification of any governmental entity or
any third-party is required for the execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby by Parent.
     (c) Parent acknowledges that the Series Q Preferred Units have not been and
will not be registered or qualified under the Securities Act or any state
securities laws and are offered in reliance upon an exemption from registration
under Section 4(2) of the Securities Act and similar state law exceptions.
Parent hereby acknowledges receipt of a copy of the Partnership Agreement and
represents that it has reviewed same and understands the provisions thereof
which have a bearing on the representations made in this Paragraph 7(c).
     (d) Parent has no contract, understanding, agreement or arrangement with
any Person or entity to sell, transfer or grant a participation to such Person
or entity or any other Person or entity, with respect to any or all of the
Series Q Preferred Units Contributor will receive in accordance with the
provisions hereof or any Series Q Preferred Shares to be acquired in exchange
therefor.
     (e) Parent is not an employee benefit plan subject to ERISA or Section 4975
of the Code.
     (f) To the best of Parent’s knowledge, applying the REIT stock ownership
rules described below, if the Series Q Preferred Shares were issued to
Contributor at the time of (and

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instead of) the issuance of the Series Q Preferred Units, and to no other
Person, no “individual” would be treated as owning more than 9.9% of the
outstanding shares of the Series Q Preferred Shares (except potentially two
individuals who would each be treated as owning less than 15% of the outstanding
shares of the Series Q Preferred Shares, provided that neither such individual
would be treated as owning more than 9.9% of the combined number of outstanding
shares of the Series Q Preferred Shares, the Series N Preferred Shares, the
Series J Preferred Shares and the Series G Preferred Shares, also evaluating the
Series N Preferred Units, the Series J Preferred Units and the Series G
Preferred Units as if each such outstanding unit had been exchanged for a
corresponding Series N Preferred Share, Series J Preferred Share or Series G
Preferred Share, as applicable). For this purpose, ownership shall be determined
under Section 856(h) of the Code and the applicable regulations, which apply
Code Sections 542(a)(2) and 544, as modified.
7A. Representations and Warranties of Contributor. Contributor and Parent make
the following representations and warranties to Operating Partnership and
Company, all of which (except as otherwise designated) are true and correct in
all material respects on the Agreement Date and shall be true and correct in all
material respects as of the date of the Closing:
     (a) Contributor is duly organized and validly existing under the laws of
the state of Delaware and has been duly authorized by all necessary and
appropriate action to enter into this Agreement and to consummate the
transactions contemplated herein. This Agreement is a valid and binding
obligation of Contributor, enforceable against Contributor in accordance with
its terms, except insofar as such enforceability may be affected by bankruptcy,
insolvency or similar laws affecting creditor’s rights generally and the
availability of any particular equitable remedy.
     (b) Neither the execution nor the delivery of this Agreement nor the
consummation of the transactions contemplated herein nor fulfillment of or
compliance with the terms and conditions hereof (a) conflict with or will result
in a breach of any of the terms, conditions or provisions of (i) the Governing
Documents of Contributor or (ii) any agreement, order, judgment, decree,
arbitration award, statute, law, rule, regulation or instrument to which
Contributor is a party or by which it or its assets are bound, or
(b) constitutes or will constitute (with or without due notice or lapse of time
or both) a breach, violation or default (or give rise to any right of
termination, cancellation or acceleration) under any of the foregoing, or result
in the creation of any lien, charge or encumbrance pursuant to any of the
foregoing. No consent or approval, authorization, order, regulation or
qualification of any governmental entity or any third-party is required for the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby by Contributor.
     (c) Contributor acknowledges that the Series Q Preferred Units have not
been and will not be registered or qualified under the Securities Act or any
state securities laws and are offered in reliance upon an exemption from
registration under Section 4(2) of the Securities Act and similar state law
exceptions. The Series Q Preferred Units to be received by Contributor hereunder
and any Series Q Preferred Shares acquired in exchange therefor shall be held by
Contributor for investment purposes only for its own account, and not with a
view to or for sale in connection with any distribution of the Series Q
Preferred Units or such Series Q Preferred Shares, and Contributor acknowledges
that the Series Q Preferred Units and Series Q Preferred Shares cannot be sold
or otherwise disposed of by the holders thereof unless they are subsequently
registered under the Securities Act or sold or otherwise disposed of pursuant to
an

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exemption therefrom; and the Series Q Preferred Units may not be sold, assigned
or otherwise transferred except in compliance with the Partnership Agreement.
Contributor hereby acknowledges receipt of a copy of the Partnership Agreement
and represents that it has reviewed same and understands the provisions thereof
which have a bearing on the representations made in this Paragraph 7A(c).
     (d) Contributor has no contract, understanding, agreement or arrangement
with any Person or entity to sell, transfer or grant a participation to such
Person or entity or any other Person or entity, with respect to any or all of
the Series Q Preferred Units it will receive in accordance with the provisions
hereof or any Series Q Preferred Shares to be acquired in exchange therefor.
     (e) Contributor is an “accredited investor” within the meaning of
Regulation D under the Securities Act and has knowledge and experience in
financial and business matters such that it is capable of evaluating the merits
and risks of receiving and owning the Series Q Preferred Units and Contributor
is able to bear the economic risk of such ownership.
     (f) Contributor is not an employee benefit plan subject to ERISA or
Section 4975 of the Code.
     (g) In making this investment, Contributor is relying upon the advice of
its own personal, legal and tax advisors with respect to the tax and other
aspects of an investment in Operating Partnership.
     (h) To the best of Contributor’s and Parent’s knowledge, applying the REIT
stock ownership rules described below, if the Series Q Preferred Shares were
issued to Contributor at the time of (and instead of) the issuance of the
Series Q Preferred Units, and to no other Person, no “individual” would be
treated as owning more than 9.9% of the outstanding shares of the Series Q
Preferred Shares (except potentially two individuals who would each be treated
as owning less than 15% of the outstanding shares of the Series Q Preferred
Shares, provided that neither such individual would be treated as owning more
than 9.9% of the combined number of outstanding shares of the Series Q Preferred
Shares, the Series N Preferred Shares, the Series J Preferred Shares and the
Series G Preferred Shares, also evaluating the Series N Preferred Units, the
Series J Preferred Units and the Series G Preferred Units as if each such
outstanding unit had been exchanged for a corresponding Series N Preferred
Share, Series J Preferred Share or Series G Preferred Share, as applicable). For
this purpose, ownership shall be determined under Section 856(h) of the Code and
the applicable regulations, which apply Code Sections 542(a)(2) and 544, as
modified.
8. Representations and Warranties of Operating Partnership and Company.
Operating Partnership and Company make the following representations and
warranties to Contributor and Parent, all of which (except as otherwise
designated) are true and correct in all material respects on the Agreement Date
and shall be true and correct in all material respects as of the date of the
Closing:
     (a) Operating Partnership is duly organized and validly existing under the
laws of the state of California and is duly registered and qualified to do
business in each jurisdiction where

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such registration or qualification is material to the transactions contemplated
herein or to the conduct of its business and has been duly authorized by all
necessary and appropriate action to enter into this Agreement, the Amendment and
the Registration Rights Agreement (each a “Transaction Document” and,
collectively, the “Transaction Documents”), to issue, sell and deliver the
Series Q Preferred Units and to consummate the transactions contemplated by the
Transaction Documents, and the individuals executing each of the Transaction
Documents on behalf of Operating Partnership have been duly authorized by all
necessary and appropriate action on behalf of Operating Partnership and no other
proceedings on the part of the Operating Partnership are necessary to authorize
this Agreement or the other Transaction Documents or to consummate the
transactions contemplated hereby and, except as contemplated by the applicable
Transaction Document, thereby. This Agreement and each other Transaction
Document to which it is a party is a valid and binding obligation of Operating
Partnership, enforceable against Operating Partnership in accordance with its
terms, except insofar as such enforceability may be affected by bankruptcy,
insolvency or similar laws affecting creditor’s rights generally and the
availability of any particular equitable remedy.
     (b) Company is duly organized and validly existing under the laws of the
state of California and is duly registered and qualified to do business in each
jurisdiction where such registration or qualification is material to the
transactions contemplated herein or to the conduct of its business and has been
duly authorized by all necessary and appropriate action to enter into this
Agreement, the Certificate of Determination and each of the other Transaction
Documents, to issue and deliver, upon exchange of the Series Q Preferred Units,
in accordance with the Amendment, the Series Q Preferred Shares and to
consummate the transactions contemplated by the Transaction Documents and the
Certificate of Determination, and the individuals executing the Certificate of
Determination and each of the Transaction Documents on behalf of Company have
been duly authorized by all necessary and appropriate action on behalf of
Company, except for the filing of the Certificate of Determination with the
Secretary of State of the State of California, and no other proceedings on the
part of the Company are necessary to authorize this Agreement, the Certificate
of Determination or the other Transaction Documents or to consummate the
transactions contemplated hereby and, except as contemplated by the Certificate
of Determination or other applicable Transaction Document, thereby. This
Agreement, the Certificate of Determination and each other Transaction Document
to which it is a party is a valid and binding obligation of Company, enforceable
against Company in accordance with its terms, except insofar as such
enforceability may be affected by bankruptcy, insolvency or similar laws
affecting creditor’s rights generally and the availability of any particular
equitable remedy.
     (c) Neither the execution nor the delivery of this Agreement, the other
Transaction Documents and the Certificate of Determination nor the consummation
of the transactions contemplated herein or therein nor fulfillment of or
compliance with the terms and conditions hereof or thereof (a) conflict with or
will result in a breach of any of the terms, conditions or provisions of (i) the
Governing Documents of Company or Operating Partnership or any of its general
partners or (ii) any agreement, order, judgment, decree, arbitration award,
statute, law, rule, regulation or instrument to which Company or Operating
Partnership is a party or by which it or its assets are bound, or (b)
constitutes or will constitute (with or without due notice or lapse of time or
both) a breach, violation or default (or give rise to any right of termination,
cancellation or acceleration) under any of the foregoing, or result in the
creation of any lien, charge or encumbrance pursuant to any of the foregoing.
Except for the filing of the Certificate

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of Determination with the Secretary of State of the State of California, no
consent or approval, authorization, order, registration or qualification of any
governmental entity or any third-party is required for the execution and
delivery of this Agreement, the other Transaction Documents and the Certificate
of Determination and the consummation of the transactions contemplated herein or
therein by Operating Partnership or Company, as the case may be.
     (d) Immediately following the issuance of the Series Q Preferred Units
pursuant to this Agreement, less than 15% of Operating Partnership’s assets
(giving effect to Contributor’s investment in Operating Partnership) will
consist of “stock and securities” within the meaning of Section 351(e)(1) of the
Code, and Operating Partnership and Company have no plan or intention to acquire
or dispose of assets that would increase the amount of its assets constituting
“stock and securities” to an amount equal to or greater than 17%.
     (e) Operating Partnership is classified as a partnership for U. S. federal
income tax purposes and is not taxable as a corporation under the Code.
Operating Partnership has not been since its organization and is not presently a
PTP, and neither Operating Partnership nor Company has reported or taken a
position with the Internal Revenue Service or its partners that Operating
Partnership is a PTP. Operating Partnership will treat the Series Q Preferred
Units as equity for U.S. federal income tax purposes. The Series Q Preferred
Units are not convertible or exchangeable into any other asset except as
provided in the Partnership Agreement.
     (f) Neither Company nor Operating Partnership has any present plan or
intention, and neither Company nor Operating Partnership has any actual
knowledge of any present plan or intention of any partner in Operating
Partnership, to take any action or actions that would or likely would result in
Operating Partnership (i) failing to qualify for the private placement safe
harbor of Treasury Regulation Section 1.7704-(h)(1) or (ii) becoming classified
as a corporation under the Code or a PTP in the foreseeable future. Neither
Company nor Operating Partnership has actual knowledge of facts that reasonably
would cause it to expect that Operating Partnership would or likely would (i)
fail to qualify for the private placement safe harbor of Treasury
Regulation Section 1.7704-(h)(1) or (ii) become classified as a corporation
under the Code or a PTP in the foreseeable future.
     (g) Equity interests in the Operating Partnership are not traded on an
“established securities market” as defined in Treas. Reg. Section 1.7704-1(b).
     (h) [Intentionally Omitted]
     (i) All interests in Operating Partnership were issued in a transaction (or
transactions) that was not required to be registered under the Securities Act or
that would not have been required to be registered if interests had been offered
and sold in the United States, and during the current tax year of Operating
Partnership, Operating Partnership has not had at any time more than 90 partners
(including the Contributor, which for the purposes hereof, is being counted as
one partner) within the meaning of Treas. Reg. Section 1.7704-1(h).
     (j) The Company has properly elected to be taxed as a real estate
investment trust (“REIT”) in accordance with Sections 856 to 860 of the Code,
currently qualifies for taxation as

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a REIT and has no plan or intention or knowledge of facts that likely would
cause it to fail to qualify for taxation as a REIT in the foreseeable future.
     (k) The Series Q Preferred Units have been duly authorized and upon
contribution of the Contribution Amount to the Operating Partnership will be
validly issued, fully paid and, to the extent permitted by the California
Revised Limited Partnership Act, as amended, non- assessable, and free and clear
of all liens, claims, charges, security interests, options, or any other
encumbrances. Attached as an exhibit to the Secretary’s Certificate, which is
attached hereto as Exhibit D, is a true and complete copy of the Partnership
Agreement of Operating Partnership dated as of March 17, 1998, as amended to
date, including the Amendment. Except as set forth on Exhibit D, the Partnership
Agreement has not been amended, superseded or revoked and is in full force and
effect on the date hereof.
     (l) As of the date hereof, the entire authorized capital stock of the
Company consists of 50,000,000 shares of preferred stock, of which 22,900 shares
were issued and outstanding (represented by 22,900,000 depositary shares),
100,000,000 shares of equity stock, of which no shares were outstanding, and
100,000,000 shares of common stock. As of the date hereof, approximately
21,318,363 shares of the Company’s common stock were issued and outstanding.
Except as described in the Company’s annual report on Form 10-K for the year
ended December 31, 2006 and except for options and restricted shares to acquire
shares of the Company’s common stock under the Company’s employee stock option
and incentive plan granted since December 31, 2006 (no such options or
restricted shares have been granted since December 31, 2006), there are no
outstanding or authorized options, warrants, rights, contracts, rights to
subscribe, conversion rights or other agreements or commitments to which the
Company is a party or which were binding upon the Company as of the date hereof
providing for the issuance or acquisition of any of the Company’s capital stock
and no options, warrants, rights, contracts, rights to subscribe, conversion
rights or other such agreements or commitments have been issued since
December 31, 2006. Except as described in the Company’s annual report on Form
10-K for the year ended December 31, 2006, there are no outstanding or
authorized stock appreciation, phantom stock or similar rights with respect to
the Company. The Series Q Preferred Shares rank on a parity with the 7.95%
Series G Cumulative Redeemable Preferred Stock (the “Series G Preferred
Shares”), the 7.000% Cumulative Preferred Stock, Series H, the 6.875% Cumulative
Preferred Stock, Series I, the 7.50% Series J Cumulative Redeemable Preferred
Stock (the “Series J Preferred Shares”), the 7.950% Cumulative Preferred Stock,
Series K, the 7.60% Cumulative Preferred Stock, Series L, the 7.20% Cumulative
Preferred Stock, Series M, the 7?% Cumulative Preferred Stock, Series N, the
7.375% Cumulative Preferred Stock, Series O, and the 6.70% Cumulative Preferred
Stock, Series P with respect to distributions and rights upon voluntary or
involuntary liquidation, winding-up or dissolution of Company. No outstanding
class or series of equity securities of Company ranks senior to the Series Q
Preferred Shares with respect to distributions and rights upon voluntary or
involuntary liquidation, winding-up or dissolution of Company. Operating
Partnership has not issued any preferred units to any Person except for the
91/4% Series A Cumulative Redeemable Preferred Units (which were redeemed by
Operating Partnership in April 2004), the 8?% Series B Cumulative Redeemable
Preferred Units (which were redeemed by Operating Partnership in April 2004),
the 83/4% Series C Cumulative Redeemable Preferred Units (which were redeemed by
Operating Partnership in September 2004), the 91/2 Series D Cumulative
Redeemable Preferred Units (which were redeemed by the Operating Partnership in
May 2006), the 91/4 Series E Cumulative Redeemable

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Preferred Units (which were redeemed by the Operating Partnership in
September 2006), the 83/4% Series F Cumulative Redeemable Preferred Units (which
were redeemed by the Operating Partnership in January 2007), the 7.95% Series G
Cumulative Redeemable Preferred Units (the “Series G Preferred Units”), the
7.000% Series H Cumulative Redeemable Preferred Units, the 6.875% Series I
Cumulative Redeemable Preferred Units, the 7.50% Series J Cumulative Redeemable
Preferred Units (the “Series J Preferred Units”), the 7.950% Series K Cumulative
Redeemable Preferred Units, the 7.60% Series L Cumulative Redeemable Preferred
Units and the 7.20% Series M Cumulative Redeemable Preferred Units, the 7?%
Series N Cumulative Redeemable Preferred Units, the 7.375% Series O Cumulative
Redeemable Preferred Units, the 6.70% Series P Cumulative Redeemable Preferred
Units, the 8?% Series X Cumulative Redeemable Preferred Units (which were
redeemed by Operating Partnership in September 2004) and the 8?% Series Y
Cumulative Redeemable Preferred Units (which were redeemed by Operating
Partnership in July 2005). The Series Q Preferred Units rank on a parity with
the 7.95% Series G Cumulative Redeemable Preferred Units, the 7.000% Series H
Cumulative Redeemable Preferred Units, the 6.875% Series I Cumulative Redeemable
Preferred Units, the 7.50% Series J Cumulative Redeemable Preferred Units, the
7.950% Series K Cumulative Redeemable Preferred Units, the 7.60% Series L
Cumulative Redeemable Preferred Units, the 7.20% Series M Cumulative Redeemable
Preferred Units, the 7?% Series N Cumulative Redeemable Preferred Units, the
7.375% Series O Cumulative Redeemable Preferred Units and the 6.70% Series P
Cumulative Redeemable Preferred Units with respect to distributions and rights
upon voluntary or involuntary liquidation, winding-up or dissolution of
Operating Partnership. Subject to the differing allocation rights of the
Cumulative Redeemable Preferred Units referred to in the previous sentence,
which such allocation rights are set forth in Section 4 of the Amendment, no
outstanding class or series of Partnership Interests (as defined in the
Partnership Agreement of Operating Partnership) of Operating Partnership ranks
senior to the Series Q Preferred Units with respect to distributions and rights
upon voluntary or involuntary liquidation, winding-up or dissolution of
Operating Partnership. Company has not issued any preferred shares to any Person
except for the 91/4% Cumulative Preferred Stock, Series A (which were redeemed
by Company in April 2004), the 9.500% Cumulative Preferred Stock, Series D
(which were redeemed by the Company in May 2006), the 8.750% Cumulative
Preferred Stock, Series F (which were redeemed by the Company in January 2007),
the 7.000% Cumulative Preferred Stock, Series H, the 6.875% Cumulative Preferred
Stock, Series I, the 7.950% Cumulative Preferred Stock, Series K, the 7.60%
Cumulative Preferred Stock, Series L, the 7.20% Cumulative Preferred Stock,
Series M, the 7.375% Cumulative Preferred Stock, Series O and the 6.70%
Cumulative Preferred Stock, Series P.
     (m) The Series Q Preferred Shares issuable upon exchange of the Series Q
Preferred Units in accordance with the Partnership Agreement have been duly and
validly reserved for issuance, and upon issuance in accordance with this
Agreement, the Partnership Agreement and the Charter, shall be duly and validly
issued, fully paid and non-assessable, and free and clear of all liens, claims,
charges, security interests, options or any other encumbrances.
     (n) Neither the issuance, sale or delivery of the Series Q Preferred Units
nor, upon exchange, the issuance and delivery of the Series Q Preferred Shares,
is subject to any preemptive right of any Partner of Operating Partnership
arising under law or the Partnership Agreement or any stockholder of Company
arising under applicable law or the Charter or Bylaws of Company, or to any
contractual right of first refusal or other right in favor of any

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Person. With the exception of the Charter, the Partnership Agreement, and the
Registration Rights Agreement, there are no agreements or understandings in
effect restricting the voting rights, the distribution rights or any other
rights of the holders of the Series Q Preferred Units, or upon exchange, the
Series Q Preferred Shares.
     (o) There is no action, suit, claim, proceeding or investigation pending
or, to Operating Partnership’s or Company’s knowledge, currently threatened
against Operating Partnership or Company that questions the validity of the
Certificate of Determination or any of the Transaction Documents or the right of
Operating Partnership or Company to enter into the Certificate of Determination
or any of the Transaction Documents, to consummate the transactions contemplated
by the Certificate or Determination or any of the Transaction Documents, or that
would reasonably be expected to, either individually or in the aggregate, have a
material adverse affect on the business, operations, properties or condition
(financially or otherwise) of Operating Partnership or Company, or result in any
change in the current equity ownership of Operating Partnership or Company, nor
is Company or Operating Partnership aware that there is any basis for the
foregoing.
     (p) Immediately after the consummation of the transactions contemplated by
this Agreement, Contributor shall own less than 13% of the total profits and
capital interest of Operating Partnership. Operating Partnership and Company
have no present plan or intention that will have the effect of causing
Contributor to own 13% or more of the total profits and capital interest of
Operating Partnership. Operating Partnership and Company have no present plan or
intention to cause Operating Partnership to liquidate or sell substantially all
of Operating Partnership’s assets.
     (q) Nothing has come to the attention of Operating Partnership and Company
to cause it to believe and Operating Partnership and Company do not believe that
(i) Operating Partnership will fail to have sufficient cash flow to satisfy the
payment of the return on the Series Q Preferred Units (and hence cause the
exchange right contained in the Partnership Agreement relating to the failure to
pay full distributions in six (6) quarterly distribution periods to be
exercisable) and (ii) Operating Partnership’s income will fall to a level that
would cause the exchange right contained in the Partnership Agreement relating
to an imminent and substantial risk that the Contributor’s interest in Operating
Partnership represents or will represent 19.5% of the total profits or capital
interests of the Operating Partnership to be exercisable.
     (r) Based on annual revenue, in excess of 85% of the business of the
Company is conducted through the Operating Partnership and its Subsidiaries. The
Company has no present plan or intention to acquire real property except through
the Operating Partnership.
     (s) Neither Operating Partnership nor Company nor any Subsidiary of either
is in default, conflict with or violation of (i) any law, rule, regulation,
order, judgment or decree applicable to it or by which any of its properties or
assets is bound or affected, or (ii) any note, bond, mortgage, indenture or
obligation to which it is a party or by which Operating Partnership or Company
or any Subsidiary of either or any property or asset of Company or Operating
Partnership or any Subsidiary of either is bound or affected, except for any
such conflicts, defaults or violations that would not reasonably be expected to,
individually or in the aggregate,

17

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have a material adverse effect on the business, operations, properties or
condition (financially or otherwise) of Operating Partnership or Company or any
Subsidiary of either.
     (t) The Company, Operating Partnership and their Subsidiaries have good and
marketable title in fee simple to all property owned by them listed in the SEC
Reports (defined below), subject only to liens, encumbrances and/or defects
which would not have a material adverse effect on the value of the Operating
Partnership taken as a whole. All filings made by the Company, Operating
Partnership and their Subsidiaries with the Commission within the last three
(3) years (“SEC Reports”) were prepared and filed in compliance in all material
respects with the Exchange Act, or the Securities Act, as applicable, and the
rules and regulations promulgated by the Commission thereunder, and did not, as
of their respective dates, contain any untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
contained therein, in light of the circumstances under which they were made, not
misleading. During the last 12 months all such filings required to be made under
the Exchange Act or Securities Act were timely made and there has been no
material adverse change in the business, assets or financial condition of the
Company, Operating Partnership or their Subsidiaries since the most recent such
filing. The consolidated financial statements and the interim consolidated
financial statements of the Company, Operating Partnership and their
Subsidiaries included in the SEC Reports were prepared in accordance with GAAP
(except as may be indicated in the notes thereto) and fairly presented the
consolidated financial condition and results of operations of the Company,
Operating Partnership and their Subsidiaries as at the dates thereof and for the
periods then ended, subject, in the case of the interim consolidated financial
statements, to normal year-end adjustments and any other adjustments described
therein.
     (u) Operating Partnership is not, and is not expected to be, treated for
U.S. income tax purposes as (i) a “regulated investment company” within the
meaning of Section 851 of the Code; (ii) a “real estate investment trust” within
the meaning of Section 856 of the Code; or (iii) a “common trust fund” within
the meaning of Section 584 of the Code.
     (v) Operating Partnership would presently satisfy, and nothing has come to
the attention of Company or Operating Partnership to cause it to believe that
the Operating Partnership will fail to satisfy, the income and asset
requirements under Sections 856(c)(2), (3) and (4) of the Code, if Operating
Partnership were otherwise taxable as a real estate investment trust under the
Code. Operating Partnership and Company expect that from and after the date
hereof Operating Partnership will satisfy the income and asset requirements
under Sections 856(c)(2), (3) and (4) of the Code, if Operating Partnership were
otherwise taxable as a real estate investment trust under the Code, and
Operating Partnership and Company do not know of any existing facts or
circumstances that would cause Operating Partnership to fail to satisfy the
income and asset requirements under Sections 856(c)(2), (3) and (4) of the Code,
if Operating Partnership were otherwise taxable as a real estate investment
trust.
     (w) Operating Partnership has no plan or intention and Company has no plan
or intention to cause Operating Partnership to elect under Treasury
Regulation Section 301.7701-3 to be classified as an association.

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     Operating Partnership and Company hereby expressly permit Fried, Frank,
Harris, Shriver & Jacobson LLP, as counsel to Contributor and Parent, to rely
upon the representations and warranties set forth in Paragraph 8 as if such
representations and warranties were made by Operating Partnership and Company
directly to Fried, Frank, Harris, Shriver & Jacobson LLP.
9. Survival of Representations and Warranties. The representations and
warranties set forth in Paragraphs 7, 7A and 8 shall survive the Closing.
10. Brokers. Each party represents and warrants to the other that such party has
dealt with no broker, finder or other person (collectively, “Broker”) with
respect to this Agreement or the transactions contemplated herein and that no
Broker is entitled to a commission as a result of this transaction except that
the Contributor has been represented by Goldman, Sachs & Co., and the parties
agree that the Operating Partnership shall pay a commission to Goldman, Sachs &
Co. on behalf of the Contributor in an amount equal to 2.5% of the Contribution
Amount. Such amount shall be paid by the Operating Partnership immediately
following the Closing by wire transfer to the account previously designated in
writing by Goldman, Sachs & Co. Each of (a) Operating Partnership and Company,
severally and not jointly, on the one hand, and (b) Contributor on the other
hand, agrees to indemnify and hold harmless the other party against any loss,
liability, damage, expense or claim incurred by reason of any brokerage
commission or finder’s fee alleged to be payable because of any act, omission or
statement of the indemnifying party. Such indemnity obligation shall be deemed
to include the payment of reasonable attorneys’ fees and court costs incurred in
defending any such claim. The provisions of this Paragraph 10 shall survive the
Closing.
11. Complete Agreement. Together with the Registration Rights Agreement, the
Amendment, the Certificate of Determination and the other documents, the form of
which are attached hereto as exhibits, this Agreement represents the entire
agreement between Parent, Contributor, Operating Partnership and Company
covering everything agreed upon or understood in this transaction and all prior
agreements, written or oral, including any prior subscription agreements or
letters, are merged into this Agreement. There are no oral promises, conditions,
representations, understandings, interpretations or terms of any kind as
conditions or inducements to the execution hereof in effect between the parties.
No change or addition shall be made to this Agreement except by a written
agreement executed by Parent, Contributor, Operating Partnership and Company.
12. Authorized Signatories. The Persons executing this Agreement for and on
behalf of Contributor, Parent, Operating Partnership and Company each represent
that they have the requisite authority to bind the entities on whose behalf they
are signing.
13. Partial Invalidity. If any term, covenant or condition of this Agreement is
held to be invalid or unenforceable in any respect, such invalidity or
unenforceability shall not affect any other provision hereof, and this Agreement
shall be construed as if such invalid or unenforceable provision had never been
contained herein.
14. Miscellaneous.

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     (a) Governing Law. This Agreement shall be interpreted and enforced
according to the internal laws of the State of California.
     (b) Headings; Sections. All headings and sections of this Agreement are
inserted for convenience only and do not form part of this Agreement or limit,
expand or otherwise alter the meaning of any provision hereof.
     (c) Counterparts. This Agreement may be executed in any number of
counterparts each of which shall be deemed to be an original and all of which
shall constitute one and the same agreement. Facsimile signatures shall be
deemed effective execution of this Agreement and may be relied upon as such by
the other party. If facsimile signatures are delivered, originals of such
signatures shall be delivered to the other party within three (3) business days
after execution, but the failure to deliver such originals within three business
days shall not affect the validity or enforceability of this Agreement.
     (d) No Benefit for Third Parties. Except as provided in the last paragraph
of Paragraph 8 hereof, the provisions of this Agreement are intended to be for
the sole benefit of the parties hereto and their respective successors and
permitted assigns, and none of the provisions of this Agreement are intended to
be, nor shall they be construed to be, for the benefit of any third party,
including any purchaser of interests in Contributor, except that the Parent
shall be entitled to rely upon all representations, warranties and agreements of
Company and Operating Partnership hereunder, as if made to it, and upon all of
Operating Partnership’s Closing Documents, as if addressed to it. In addition,
the legal opinions delivered pursuant to Paragraph 6 (b)(vi) hereof shall
acknowledge that Parent may rely on the opinions, in addition to Contributor.
None of the provisions of this Agreement are intended to be, nor shall they be
construed to be, for the benefit of any other third party.
     (e) Rights and Obligations. The rights and obligations of Contributor,
Parent, Operating Partnership and Company shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and permitted
assigns in accordance with the provisions of Article 11 of the Partnership
Agreement.
15. Notices. All notices and other communications required or permitted to be
given hereunder shall be in writing and shall be deemed to have been duly given
if personally delivered, delivered by nationally recognized overnight courier
with proof of delivery thereof, sent by United States registered or certified
mail (postage prepaid, return receipt requested) addressed as hereinafter
provided or via telephonic facsimile transmission with proof of delivery in the
form of a telecopier’s transmission confirmation report. Notice shall be sent
and deemed given (a) if personally delivered or via nationally recognized
overnight courier, then one business day following receipt by the receiving
party, or (b) if mailed, then three (3) business days after being postmarked, or
(c) if sent via telephonic facsimile transmission, then one business day
following the date of confirmed receipt set forth in the telecopier’s
transmission confirmation report.
     Any party listed below may change its address hereunder by notice to the
other party listed below. Each of Operating Partnership, Company, Parent and
Contributor may rely on the facsimile numbers set forth below for purposes of
providing notice under the Amendment and

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the Certificate of Determination (unless the applicable party provides notice of
a different fax number in accordance with the notice provisions set forth in
this Paragraph 15). Until further notice, notice and other communications
hereunder shall be addressed to the parties listed below as follows:

         
 
  If to Parent:   Goldman Sachs 2006 Exchange Place Fund, L.P.
 
      c/o Goldman Sachs & Co.
 
      85 Broad Street
 
      New York, New York 10004
 
      Attention: Mr. Eric S. Lane
 
      Fax: (212) 357-9429
 
       
 
  with a copy to:   Fried, Frank, Harris, Shriver & Jacobson LLP
 
      One New York Plaza
 
      New York, New York 10004
 
      Attention: Lawrence N. Barshay, Esq.
 
      Fax: (212) 859-8586
 
       
 
  If to Contributor:   GSEP 2006 Realty Corp.
 
      c/o Goldman Sachs & Co.
 
      85 Broad Street
 
      New York, New York 10004
 
      Attention: Mr. Eric S. Lane
 
      Fax: (212) 357-9429
 
       
 
  with a copy to:   Fried, Frank, Harris, Shriver & Jacobson LLP
 
      One New York Plaza
 
      New York, New York 10004
 
      Attention: Lawrence N. Barshay, Esq.
 
      Fax: (212) 859-8586
 
       
 
  If to Operating Partnership   c/o PS Business Parks, Inc.
 
  or Company:   701 Western Avenue
 
      Glendale, California 91201
 
      Attention: Mr. Edward A. Stokx
 
      Fax: (818) 242-0566
 
       
 
  with a copy to:   c/o PS Business Parks, Inc.
 
      701 Western Avenue
 
      Glendale, California 91201
 
      Attention: Ms. Stephanie Heim
 
      Fax: (818) 242-0566

16. Press Releases. Contributor, Operating Partnership and Company each agrees
that it will not issue any press release, advertisement or other public
communication with respect to this

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Agreement or transaction contemplated therein without the prior consent of the
other party hereto, except to the extent such communication is required by
applicable law or stock exchange rules. With respect to the initial press
release in connection with this Agreement or the transaction contemplated
herein, Operating Partnership and Company shall deliver a copy of such proposed
press release to Contributor prior to the publication thereof and shall grant
Contributor an opportunity to review the same and shall make reasonable
revisions to such proposed press release requested by Contributor.
[SIGNATURE PAGE FOLLOWS]

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     IN WITNESS WHEREOF the parties have caused this Agreement to be executed as
of the day first written above.

              PARENT:
 
            GOLDMAN SACHS 2006 EXCHANGE     PLACE FUND, L.P.
 
       
 
  By:   Goldman Sachs 2006 Exchange Fund Advisors,
 
      L.L.C., as general partner
 
       
 
  By:   /s/ Eric Lane
 
       
 
      Name: Eric Lane
 
      Title: Authorized Person
 
            CONTRIBUTOR:
 
            GSEP 2006 REALTY CORP.
 
       
 
  By:   /s/ Kristin Olson
 
            Name: Kristin Olson     Title: Authorized Person

Signature Page to Series Q Contribution Agreement

 

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              OPERATING PARTNERSHIP:
 
            PS BUSINESS PARKS, L.P.
 
       
 
  By:   PS BUSINESS PARKS, INC., its general partner
 
       
 
  By:   /s/ Joseph D. Russell, Jr.
 
       
 
      Name: Joseph D. Russell, Jr.
 
      Title: President & Chief Executive Officer
 
            COMPANY:
 
            PS BUSINESS PARKS, INC.
 
       
 
  By:   /s/Joseph D. Russell, Jr.
 
       
 
      Name: Joseph D. Russell, Jr.
 
      Title: President & Chief Executive Officer

Signature Page to Series Q Contribution Agreement