exv10w34



 






Exhibit 10.34




REGISTRATION RIGHTS AGREEMENT




     THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made and entered into as of this
30th day of October, 2002, by and between PS Business Parks, Inc., a California
corporation (the “Company”), and GSEP 2002 Realty Corp., a Delaware corporation (“Holder”).



RECITALS




     A. In connection with the offering of 800,000 “7.95% Series G Cumulative Redeemable Preferred
Units” (the “Series G Preferred Units”), Holder will contribute to PS Business Parks, L.P. (the
“Operating Partnership”) cash in return for which the Operating Partnership will issue the Series G
Preferred Units to the Holder on terms and conditions set forth in the Contribution Agreement,
dated as of October 30, 2002 (the “Contribution Agreement”), by and among the Company, the
Operating Partnership, the Holder and Goldman Sachs 2002 Exchange Place Fund, L.P. All capitalized
terms used but not defined herein have the meanings given them in the Contribution Agreement.



     B. Each of the parties hereto agree that the rights, benefits and obligations under this
Agreement shall be fully assignable to any Person to whom the Holder transfers its Series G
Preferred Units pursuant to the terms and conditions of the Partnership Agreement;



     C. Pursuant to the Partnership Agreement, the Series G Preferred Units owned by the Holder
will be redeemable for cash or exchangeable for shares of the Company’s 7.95% Series G Cumulative
Redeemable Preferred Stock (the “Preferred Stock”) upon the terms and subject to the conditions
contained therein; and



     D. To induce the Holder and the Contributor to enter into the Contribution Agreement, the
Company has agreed to provide the registration rights set forth herein to the Holder, and any
subsequent holder or holders of the Series G Preferred Units, with respect to the Holder’s
Preferred Stock and any securities of the Company that may be issued or distributed with respect
to, in exchange or substitution for, or upon conversion of such Holder’s Preferred Stock, or on
account of such Holder’s Preferred Stock as a result of any stock dividend, stock split, reverse
split or other distribution, merger, combination, consolidation, recapitalization or
reclassification or otherwise (collectively, “Registrable Securities”).



 









 





AGREEMENT




     NOW, THEREFORE, in consideration of the foregoing, the mutual covenants and agreements
hereinafter set forth, and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:



     1. Underwritten Offerings.



          1.1 Demand by Holder.




               (a) At the request of Holder, the Company shall prepare and file a “shelf” registration
statement (the “Registration Statement”) with respect to the Registrable Securities covering the
resale thereof by the Holder on an appropriate form for an offering to be made on a continuous or
delayed basis pursuant to Rule 415 within 60 days after receipt of such request (provided that the
Registrable Securities subject to such request have been issued by the Company on or before the
date of such request) and shall use its best efforts to cause such Registration Statement to be
declared effective within 120 days after the date of such request. The Company shall use its best
efforts to keep the Registration Statement continuously effective until the earliest of (A) such
time as all of the Registrable Securities have been sold pursuant to the Registration Statement or
Rule 144 of the Securities Act, (B) the date on which all of the Registrable Securities may be sold
without volume restrictions in accordance with Rule 144 of the Securities Act and (C) 24 months
following the effective date of the Registration Statement. The Company’s registration obligations
under this Section 1.1 shall include, in addition to those set forth elsewhere in this Agreement,
an obligation to effect (A) appropriate qualification under applicable blue sky or other state
securities laws in those jurisdictions selected by the managing underwriter or underwriters
designated pursuant to Section 1.2 or, if no such managing underwriter or underwriters is
designated, in those jurisdictions reasonably selected by Holder, (B) appropriate compliance with
applicable federal and state laws, requirements and regulations, and (C) such steps as are
reasonably necessary to permit or facilitate the sale and distribution of all or such portion of
such Registrable Securities as are specified in such request.



               (b) At the request of Holder, Company shall effect an underwritten offering to cover such
amount of Registrable Securities as Holder elects; provided, however, Holder shall not sell in such
underwritten offering at any one time less than an amount of Registrable Securities representing in
the aggregate the Registrable Securities issuable upon the exchange of 25% of the originally issued
Series G Preferred Units (the “Minimum Share Amount”), except in the event the balance of unsold
Registrable Securities is less than the Minimum Share Amount, in which case, Holder shall be
permitted to sell the entire remaining balance of the Registrable Securities in the underwritten
offering; provided further, however, the number of times which the Company must effect such
underwritten offerings is limited to 3 times.



               (c) In the event that all of the Series G Preferred Units have not been exchanged as of the
date of expiration of the Registration Statement filed pursuant to Section 1.1(a), the Company
shall prepare and file another Registration Statement (covering the remaining Registrable
Securities) subject to the same terms and conditions delineated in Section 1.1(a).



               (d) Notwithstanding anything to the contrary contained in this Agreement, the Holder shall not
have the right to request registration or inclusion in any registration pursuant to Section 1.1 of
this Agreement for the period during which all shares of Registrable Securities then held or
entitled to be held upon exchange of Series G Preferred Units by such Holder may immediately be
sold under Rule 144 of the Securities Act without regard to any volume limitation.



          1.2 Selection of Underwriters by Holder.




               (a) In the case of an underwritten offering requested by Holder pursuant to Section 1.1,
Holder shall have the right to approve the investment banker(s), and/or manager(s), selected by the
Company to administer the offering, which shall be a nationally recognized investment bank with
experience in underwriting securities of companies in the Company’s field. The approval by Holder
of the Company’s selection shall not unreasonably be withheld or delayed.



 









 





               (b) Such Holder(s) shall have the right to negotiate with the underwriters and to determine
the financial terms of the underwriting relating to the gross price and net price at which the
included Registrable Securities are to be sold. The Company shall (together with the Holders) enter
into an underwriting agreement in customary form with the underwriter or underwriters selected as
set forth above; provided that (i) if, in the opinion of an outside nationally recognized
independent counsel, Holder is deemed to be an underwriter, as such term is defined in the
Securities Act for purposes of a distribution effected pursuant to Section 1.1 of this Agreement,
all of the representations and warranties by the Company that are customarily made to and for the
underwriters shall also be made to and for the benefit of Holder, (ii) any or all of the conditions
precedent to the obligations of such underwriters under such underwriting agreement shall be
conditions precedent to the obligations of such Holders of Registrable Securities, and (iii) no
Holder shall be required to make any representations or warranties to or agreements with the
Company or the underwriters other than the representations, warranties or agreements regarding such
Holder, the Registrable Securities of such Holder and such Holder’s intended method of distribution
and any other representations required by law or reasonably required by the underwriter or
underwriters.



               (c) At its expense, the Company will enter into a written underwriting agreement in customary
form and substance reasonably satisfactory to the Company, the Holders and the managing underwriter
or underwriters of the public offering of such securities, if the offering is to be underwritten,
in whole or in part.



               (d) At its expense, the Company will use its commercially reasonable efforts to furnish, at
the request of any Holder requesting registration of Registrable Securities, if the method of
distribution is by means of an underwriting, on the date that the shares of Registrable Securities
are delivered to the underwriters for sale pursuant to such registration, or if such Registrable
Securities are not being sold through underwriters, on the date that the Registration Statement
becomes effective, (i) a signed opinion, dated as of such date, of the independent legal counsel
representing the Company for the purpose of such registration, addressed to the underwriters, if
any, and if such Registrable Securities are not being sold through underwriters, then to the
Holders making such request, as to such matters as such underwriters or the Holders holding a
majority of the Registrable Securities included in such registration, as the case may be, may
reasonably request and as would be customary in such a transaction; and (ii) letters dated such
date and the date the offering is completed from the independent certified public accountants of
the Company, addressed to the underwriters, if any, and if such Registrable Securities are not
being sold through underwriters, then to the Holders making such request and, if such accountants
refuse to deliver such letters to such Holders, then to the Company (A) stating that they are
independent certified public accountants within the meaning of the Securities Act and that, in the
opinion of such accountants, the financial statements and other financial data of the Company
included in the Registration Statement or the prospectus related to the Registration Statement (the
“Prospectus”), or any amendment or supplement thereto, comply as to form in all material respects
with the applicable accounting requirements of the Securities Act and (B) covering such other
financial matters (including information as to the most recently ended calendar quarter prior to
the date of such letters) with respect to the registration in respect of which letter is being
given as such underwriters or the Holders holding a majority of the Registrable Securities included
in such registration, as the case may be, may reasonably request and as would be customary in such
a transaction.



          1.3 Transfer of Registration Rights. The rights to cause the Company to register
Registrable Securities granted to Holder by the Company under Section 1.1 hereof may be assigned,
in whole or in part, by a Holder to a transferee of such Holder’s Series G Preferred Units in
accordance with the provisions of the Partnership Agreement or to a transferee of Registrable
Securities held by such Holder. Any such assignment shall be conditioned upon the transferee’s
agreeing to be bound by the provisions of this Agreement. Any such transferee shall be deemed to
be a “Holder” under this Agreement and shall be entitled to all of the rights afforded to a Holder
herein, and shall assume all obligations for which a Holder is responsible herein.




     2. Certain Registration Procedures. The following additional registration procedures
shall apply with respect to the Registration Statement or Prospectus required to be filed pursuant
to Section 1 above:



     At its expense, the Company will use its best effort to keep such registration, and any
qualification under state securities laws which the Company determines to obtain, effective through
the time provided in Section 1.1(a) above.



          2.1 Suspension of Offering.



 









 






               (a) The Company shall be entitled, from time to time, to require the Holder not to sell under
the Registration Statement if the negotiation or consummation of a transaction by the Company or
its subsidiaries is pending or circumstances have arisen, which negotiation, consummation or
circumstances would require additional disclosure by the Company in the Registration Statement of
material information which the Company has a bona fide business purpose for keeping
confidential and the nondisclosure of which in the Registration Statement might cause the
Registration Statement to fail to comply with applicable disclosure requirements; provided,
 however, that the Company may not prohibit sales for more than 120 days during any twelve
(12) month period; provided further, however, that the Company’s obligation under Section 1.1(a) or
1.1(c) to keep the Registration Statement continuously effective for the 24-month period set forth
in the second sentence of Section 1.1(a) shall be extended by an equivalent amount of time.



               (b) Subject to the limitations as to frequency and duration set forth in Section 2.1(a), upon
receipt of any notice from the Company of the happening of any event which is of a type specified
in Section 2.1(a), Holder agrees that it will immediately discontinue offers and sales of
securities under the Registration Statement until Holder receives copies of a supplemented or
amended Registration Statement which addresses the disclosure issues referred to above, after which
the Holder shall be free to resume offering and selling activities. The Company agrees to promptly
prepare any such supplemented or amended Registration Statement and to use best efforts to cause
such supplemented or amended Registration Statement to be declared effective by the Commission as
soon as practicable. If so directed by the Company, Holder will deliver to the Company all copies
of any Prospectus in its possession at the time of receipt of such notice.



          2.2 Obligations of the Company with Respect to Registration Statements. In connection
with the Registration Statement and the Registrable Securities to be sold thereunder (the “Covered
Securities”), the Company agrees to:




               (a) furnish to Holder such number of copies of the Registration Statement, each amendment,
post-effective amendment and supplement thereto (in each case including all exhibits thereto and
documents incorporated by reference therein), the Prospectus included in the Registration Statement
(including each preliminary Prospectus) in compliance with the requirements of the Securities Act,
and such other documents as Holder may reasonably request in order to facilitate the disposition of
the Covered Securities owned by Holder; the Company consents to the use of the Prospectus for the
Registration Statement, including each preliminary Prospectus, by Holder in connection with the
offering and sale of Covered Securities;



               (b) use commercially reasonable efforts to register or qualify, or obtain exemption from
registration or qualification for, such Covered Securities under such other securities or blue sky
laws of such jurisdictions as Holder reasonably requests, keep each such registration or
qualification or exemption effective during the period the Registration Statement is required to be
kept effective, and do any and all other acts and things which may be reasonably necessary or
advisable to enable Holder to consummate the disposition in such jurisdictions of the Covered
Securities, provided that the Company will not be required to (i) qualify generally to do business
in any jurisdiction where it would not otherwise be required to qualify but for this subparagraph,
(ii) subject itself to taxation in any jurisdiction where it would not otherwise be subject to
taxation but for this subparagraph, or (iii) consent to general service of process in any such
jurisdiction where it would not otherwise be subject to service of process but for this
subparagraph (except as may be required by the Securities Act);



               (c) cause all such Covered Securities to be listed and qualified for trading on each
securities exchange, or qualified for quotation on each automatic quotation system, on which
similar securities issued by the Company are then listed and qualified for trading or quotation;



               (d) provide a transfer agent and registrar for all such Covered Securities not later than the
effective date of the Registration Statement applicable thereto, and thereafter maintain such a
transfer agent and registrar; and otherwise cooperate with the sellers to facilitate the timely
preparation and delivery of certificates representing Covered Securities to be sold and not bearing
any Securities Act legends;



               (e) otherwise use its best efforts to comply with the Securities Act and all applicable rules
and regulations of the Commission, and make available to its security holders, as soon as
reasonably practicable, an earnings statement covering the period of at least twelve (12) months
beginning with the first day of



 









 







the Company’s first full calendar quarter after the effective date of the Registration
Statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities
Act and Rule 158 thereunder;



               (f) promptly notify Holder in writing (i) of the effectiveness of the Registration Statement
and of any amendments or supplements to the Registration Statement, (ii) of the issuance by the
Commission or any state securities authority of any stop order suspending the effectiveness of the
Registration Statement, or any part thereof, or of any order suspending or preventing the use of
any related Prospectus or the initiation of any proceedings for that purpose, or (iii) if the
Company receives any notification with respect to the suspension of the qualification of any
Registrable Securities for offer or sale in any jurisdiction or the initiation of any proceedings
for that purpose; in the event the Company shall give notice as to the occurrence of any event
described in this Section 2.2(f) (ii) and 2.2 (f)(iii), the Company shall extend the period during
which such Registration Statement shall be maintained effective by the number of days during the
period from and including the date of the giving of such notice to the date the Company delivers
notice that disposition may be made;



               (g) in the event of the issuance of any stop order suspending the effectiveness of the
Registration Statement, or any part thereof, or of any order suspending or preventing the use of
any related Prospectus or suspending the qualification of any Registrable Securities for sale in
any jurisdiction, the Company will use its best efforts to promptly obtain the withdrawal of such
order;



               (h) use commercially reasonable efforts to cause the Covered Securities to be registered with
or approved by such other governmental agencies or authorities, including the National Association
of Securities Dealers, as may be necessary by virtue of the business and operations of the Company
to enable the Holder to consummate the disposition of such Covered Securities;



               (i) promptly notify Holder, at any time when a Prospectus relating to Covered Securities is
required to be delivered under the Securities Act, of the happening of any event as a result of
which the Prospectus included in the Registration Statement (as then in effect) contains any untrue
statement of a material fact or omits to state a material fact necessary to make the statements
therein (in the case of the Prospectus and any preliminary Prospectus, in light of the
circumstances under which they were made) not misleading when such Prospectus was delivered; the
Company will, as soon as practicable, prepare and furnish to Holder a supplement or amendment to
such Prospectus so that, as thereafter delivered to the purchasers of such Covered Securities, such
Prospectus will not contain an untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein, in light of the circumstances under which they were
made, not misleading; in the event the Company shall give notice as to the occurrence of any event
described in this Section 2.2(i) the Company shall extend the period during which such Registration
Statement shall be maintained effective by the number of days during the period from and including
the date of the giving of such notice to the date the Company delivers notice that disposition may
be made;



               (j) prepare and file with the Commission such amendments and supplements to the Registration
Statement and the Prospectus used in connection with the Registration Statement as may be necessary
to comply with the provisions of the Securities Act with respect to the disposition of securities
covered by the Registration Statement;



               (k) to the extent permitted by the professional standards governing the accounting profession
at the time, obtain cold comfort letters and updates thereof from the independent public
accountants of the Company (and, if necessary, any other independent certified public accountants
of any subsidiary of the Company or of any business acquired by the Company for which financial
statements and financial data are, or are requested to be, included in the Registration Statement)
who have certified the Company’s financial statements included or incorporated by reference in the
Registration Statement addressed to the Holder in customary form and covering such matters of the
type customarily covered by cold comfort letters;



               (l) make available for inspection by any Holder of such Registrable Securities, any
underwriter participating in any disposition pursuant to the Registration Statement and any
attorney, accountant or other professional retained by any such Holder or underwriter
(collectively, the “Inspectors”), all financial and other records, pertinent corporate documents
and properties of the Company (collectively, the “Records”) as shall be reasonably necessary to
enable them to exercise their due diligence responsibility, and cause the Company’s officers,



 









 







directors and employees to supply all information reasonably requested by any Inspector in
connection with the Registration Statement. Records which the Company determines, in good faith,
to be confidential and which it notifies the Inspectors are confidential shall not be disclosed by
the Inspectors unless (i) the disclosure of such Records is necessary to avoid or correct a
misstatement or omission in the Registration Statement, (ii) the release of such records is ordered
pursuant to a subpoena or other order from a court of competent jurisdiction, or (iii) such Records
have been generally made available to the public. Each Holder agrees that information obtained by
it as a result of such inspections shall be deemed confidential and shall not be used by it as the
basis for any market transactions in the securities of the Company or its affiliates or otherwise
disclosed by it unless and until such is made generally available to the public. Each Holder
further agrees that it will, upon learning that disclosure of such Records is sought in a court of
competent jurisdiction, give notice to the Company, if legally permitted to do so, and allow the
Company, at its sole expense, to undertake appropriate action to prevent disclosure of the Records
that are deemed confidential, provided the same shall not subject Holder to civil or criminal
liability or penalty; and



               (m) use its best efforts to obtain CUSIP numbers for the Preferred Stock not later than the
effective date of the Registration Statement.



          2.3 Obligations of Holder with Respect to Registration Statement. Holder agrees to
provide promptly following any written request therefor, any information reasonably requested by
the Company in connection with the preparation of and for inclusion in the Registration Statement
(including, without limitation, if applicable, information regarding the proposed distribution by
Holder of the Covered Securities).




          2.4 Review of Registration Statements. No Registration Statement, Prospectus or
related materials, and no supplement or amendment to any Registration Statement, Prospectus or
related materials shall be filed unless and until all of the following conditions have been
satisfied; provided, however, that, by implementing the following conditions, Holder shall not be
deemed to have made any representation or warranty of any kind or nature whatsoever with respect to
any matter set forth, contained or addressed in the Registration Statement, Prospectus or related
materials, including but not limited to the accuracy, adequacy or completeness thereof:




               (a) A complete and accurate copy of the Registration Statement, Prospectus and all related
material, and of each proposed supplement or amendment to the Registration Statement, Prospectus or
related materials (all individually and collectively referred to herein as “Filing Material”) shall
be provided to each person or entity designated herein to receive the original or copies of notices
directed to Holder (each a “Notice Party”) sufficiently in advance of that proposed Filing Material
being filed with the Commission or any other federal or state agency having jurisdiction over
securities offerings (a “Filing”) so as to allow the Notice Parties a reasonable opportunity to
review and comment on such proposed Filing Material prior to Filing.



               (b) Promptly upon receipt of any comments or requested revisions or amendments to any Filing
Material from the Commission or any other federal or state agency (collectively “Agency Comments”),
the Company shall provide a complete and accurate copy of the Agency Comments to each Notice Party.



               (c) Promptly upon making any addition, deletion or revision to any Filing Material not
previously provided to all Notice Parties, including but not limited to any addition, deletion or
revision in response to Agency Comments, the Company shall provide each Notice Party with a
complete and accurate copy of the revised Filing Material, with the changes highlighted therein,
sufficiently in advance of Filing any such addition, deletion or revision so as to allow the Notice
Parties a reasonable opportunity to review and comment thereon prior to Filing.



               (d) Prior to each Filing the Company shall certify to Holder in writing that the Company, both
through the devotion of the necessary time and attention of capable Company personnel and Company
resources, and through the engagement of and collaboration with qualified legal, accounting,
underwriting, appraisal, environmental and other experts, exercised good faith and due care in the
preparation of the Filing Materials, both as to form and content.



     3. Term of Agreement. The Company shall be relieved of its duties under Sections 1
and 2 on the date contemplated in the second sentence of Section 1.1(a) hereof, as such date may be
extended pursuant to the terms hereof.



 









 





     4. Indemnification; Contribution.



          4.1 Indemnification by the Company. The Company agrees to indemnify, defend and hold
harmless the Holder (and each nominee or assignee of the Holder permitted pursuant to Section
6.5), any underwriter of Registrable Securities under the Registration Statement, each of their
respective officers, directors, employees and agents, and each Person, if any, who controls the
Holder or any such underwriter within the meaning of Section 15 of the Securities Act or Section 20
of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as follows:




               (a) against any and all loss, liability, claim, damage and expense whatsoever (including fees
and disbursements of counsel), arising out of or based upon any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement (or any amendment or
supplement thereto) pursuant to which securities held by Holder were registered under the
Securities Act, including all documents incorporated therein by reference, or the omission or
alleged omission therefrom of a material fact required to be stated therein or necessary to make
the statements therein not misleading, or arising out of or based upon any untrue statement or
alleged untrue statement of a material fact contained in any Prospectus (or any amendment or
supplement thereto), including all documents incorporated therein by reference, or the omission or
alleged omission therefrom of a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading (collectively a “Material
Misstatement”);



               (b) against any and all loss, liability, claim, damage and expense whatsoever (including fees
and disbursements of counsel) to the extent of the aggregate amount paid in settlement of any
litigation, or investigation or proceeding by any governmental agency or body, commenced or
threatened, or of any claim whatsoever arising out of or based upon any Material Misstatements or
alleged Material Misstatement, if such settlement is effected with the written consent of the
Company; and



               (c) against any and all loss, liability, claim, damage and expense whatsoever (including fees
and disbursements of counsel), incurred in investigating, preparing or defending against any
litigation, investigation or proceeding by any governmental agency or body, commenced or
threatened, in each case whether or not a party, or of any claim whatsoever arising out of or based
upon any Material Misstatement or alleged Material Misstatement, to the extent that any such loss,
liability, claim, damage or expense is not paid under subparagraph (a) or (b) above;


provided, however, that the indemnity provided pursuant to this Section 4.1 shall
not apply to any loss, liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance upon and in
conformity with written information furnished to the Company by Holder expressly for use in the
Registration Statement (or any amendment thereto) or the Prospectus (or any amendment or supplement
thereto).




          4.2 Indemnification by Holder. Holder agrees to indemnify, defend and hold harmless
the Company, severally and not jointly, and each of its directors, officers, employees and agents,
and each Person, if any, who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, to the same extent as the indemnity contained in
Section 4.1 hereof (except that any settlement described in Section 4.1(b) shall be effected with
the written consent of Holder), but only insofar as such loss, liability, claim, damage or expense
arises out of or is based upon any untrue statement or omission, or alleged untrue statement or
omission, of a material fact made in reliance upon and in conformity with written information
furnished to the Company by Holder expressly for use in any Registration Statement (or any
amendment or supplement thereto) or the Prospectus (or any amendment or supplement thereto)
pursuant to which securities held by Holder (or permitted assignees) were registered under the
Securities Act. In no event shall the liability of Holder hereunder (or other indemnifying party
under this Section 4.2) be greater in amount than the gross dollar amount of the proceeds received
by Holder upon the sale of the Registerable Shares giving rise to such indemnification obligation.




          4.3 Conduct of Indemnification Proceedings. The indemnified party under any indemnity
contained in this Agreement shall give reasonably prompt notice to the indemnifying party of any
action or proceeding commenced against it in respect of which indemnity may be sought hereunder,
but failure to so notify the indemnifying party (a) shall not relieve it from any liability which
it may have under the indemnity agreements


 









 







provided in this Agreement, unless and to the extent it did not otherwise learn of such action
and the lack of notice by the indemnified party results in the forfeiture by the indemnifying party
of substantial rights and defenses, and (b) shall not, in any event, relieve the indemnifying party
from any obligations to the indemnified party other than the indemnification obligations provided
under this Agreement. If the indemnifying party so elects within a reasonable time after receipt
of such notice, the indemnifying party may assume the defense of such action or proceeding with
counsel chosen by the indemnifying party and approved by the indemnified party, which approval
shall not be unreasonably withheld; provided, however, that the indemnifying party
will not settle any such action or proceeding without the written consent of the indemnified party
unless, as a condition to such settlement, the indemnifying party secures the unconditional release
of the indemnified party; and provided further, that if the defendants in any such
action or proceeding include both the indemnified party and the indemnifying party and the
indemnified party reasonably determines, upon advice of counsel, that a conflict of interest exists
or that there may be legal defenses available to it or other indemnified parties that are different
from or in addition to those available to the indemnifying party, then the indemnified party shall
be entitled to one separate counsel, the reasonable fees and expenses of which shall be paid by the
indemnifying party. If the indemnifying party does not assume the defense of such action or
proceeding, after having received the notice referred to in the first sentence of this Section 4.3,
the indemnifying party will pay the reasonable fees and expenses of counsel (which shall be limited
to a single law firm) for the indemnified party. In such event, however, the indemnifying party
will not be liable for any settlement effected without the written consent of the indemnifying
party. If an indemnifying party is entitled to assume, and assumes, the defense of such action or
proceeding in accordance with this Section, the indemnifying party shall not be liable for any fees
and expenses of counsel for the indemnified party incurred thereafter in connection with such
action or proceeding except as set forth in the second proviso in the second sentence of this
Section 4.3.




          4.4 Contribution.




               (a) In order to provide for just and equitable contribution in circumstances in which the
indemnity agreements provided for in this Agreement are for any reason held to be unenforceable by
the indemnified party in accordance with its terms, the Company and Holder shall contribute to the
aggregate losses, liabilities, claims, damages and expenses of the nature contemplated by such
indemnity agreement incurred by the Company and Holder, (a) in such proportion as is appropriate to
reflect the relative fault of the Company on the one hand and Holder on the other, in connection
with the statements or omissions which resulted in such losses, claims, damages, liabilities or
expenses, or (b) if the allocation provided by clause (a) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative fault of but also the
relative benefits to the Company on the one hand and Holder on the other, in connection with the
statements or omissions which resulted in such losses, claims, damages, liabilities or expenses, as
well as any other relevant equitable considerations. The relative benefits to the indemnifying
party and indemnified party shall be determined by reference to, among other things, the total
proceeds received by the indemnifying party and indemnified party in connection with the offering
to which such losses, claims, damages, liabilities or expenses relate. The relative fault of the
indemnifying party and indemnified party shall be determined by reference to, among other things,
whether the action in question, including any untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact, has been made by, or relates to
information supplied by, the indemnifying party or the indemnified party, and the parties’ relative
intent, knowledge, access to information and opportunity to correct or prevent such action.



               (b) The parties hereto agree that it would not be just or equitable if contribution pursuant
to this Section 4.4 were determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to in subparagraph (a) above.
Notwithstanding the provisions of this Section 4.4, Holder shall not be required to contribute any
amount in excess of the amount by which the total price at which the securities of such Holder were
offered to the public exceeds the amount of any damages which such Holder has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission or alleged
omission.



               (c) Notwithstanding subparagraphs (a) and (b) above, no Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent misrepresentation. For purposes
of this Section 4.4, each Person, if any, who controls Holder within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act shall have the same rights to contribution as
Holder, and each director of the Company, each officer of the Company who signed a Registration
Statement and each Person, if any, who controls the Company within the




 










 





meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act shall have the
same rights to contribution as the Company.




          4.5 Rule 144 Reporting. With a view to making available to the Holders the benefits
of certain rules and regulations of the Commission which may permit the sale of Registrable
Securities to the public without registration, the Company agrees to:




               (a) make and keep adequate current public information available, as those terms are understood
and defined in Rule 144 of the Securities Act; and



               (b) use its best efforts to file with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act; and



               (c) furnish to any Holder, so long as such Holder owns any Registrable Securities, forthwith
upon written request a written statement by the Company that it has complied with the reporting
requirements of said Rule 144, the Securities Act and the Exchange Act (at any time after it has
become subject to such reporting requirements), a copy of the most recent annual or quarterly
report of the Company, and such other reports and documents so filed by the Company as such Holder
may reasonably request in availing itself of any rule or regulation of the Commission permitting
Holder to sell any such securities without registration; and



               (d) take all such further actions as any Holder may reasonably request to satisfy the
requirements imposed by Rule 144, or any successor rule, on the Company from time to time to enable
resales under said Rule 144 or successor rule.



     5. Holdback Agreements.



          5.1 Holder Holdback Agreement. Upon receipt of 17-day prior written notice, Holder
shall not effect any sale or distribution of Registrable Securities or any securities convertible
into or exchangeable or exercisable for Registrable Securities, including a sale pursuant to Rule
144 of the Securities Act (or any similar provision then in force) under the Securities Act, if and
to the extent required by the managing underwriter of an underwritten offering being undertaken by
the Company; provided, however, that such restriction on sales or distributions shall not apply (a)
for a period exceeding the fourteen (14) days prior to, and the ninety (90) day period beginning
on, the effective date of the Registration Statement filed in connection with such underwritten
offering; (b) to any sale as a part of or in conjunction with such underwritten offering; or (c)
unless all officers, directors and other Persons with registration rights with respect to
securities of the Company enter into or are restricted by similar holdback agreements; and,
provided, further, however, that such restrictions shall not apply more than once in any twelve
month period; and provided, further however that the Company’s obligation under Section 1.1(a) or
1.1(c) to keep the Registration Statement continuously effective for the 24-month period set forth
in the second sentence of Section 1.1(a) shall be extended by an equivalent amount of time.




          5.2 Company Holdback Agreement. Company shall not effect any sale or distribution of
(other than in connection with Company employee, Company consultant or Company director stock
options), or assist in an underwritten offering by any other Person of, any securities of the
Company or securities convertible into or exchangeable or exercisable for securities of the
Company, if and to the extent required by the managing underwriter of the underwritten offering
contemplated herein; provided, however, that such restriction on public sales or distributions
shall not apply for a period exceeding the fourteen (14) days prior to, and the one hundred eighty
(180) day period beginning on, the effective date of the Registration Statement filed in connection
with such underwritten offering.




     6. Miscellaneous.



          6.1 Expenses of Registration. All reasonable expenses (the “Registration Expenses”)
incurred in connection with any registration, qualification or compliance obligations set forth in
Sections 1 and 2 hereof, including, without limitation, (i) all stock exchange, Commission and
state securities registration, listing and filing fees, (ii) all expenses incurred in connection
with the preparation, printing and distributing of any Registration




 








 






Statement and Prospectus (and any supplement or amendment thereto), (iii) fees and
disbursements of counsel for the Company and of the independent public accountants of the Company,
and (iv) legal fees and disbursements for one counsel for the Holders shall be borne by the
Company. Notwithstanding anything to the contrary herein, Holder shall select 3 law firms, the
names of which Holder shall provide to Company, Company, together with Holder, shall consult with
the Holder’s choices of law firms and Company shall select the law firm to be used by Holder as
counsel for the Holders. Holder shall be responsible for the payment of any underwriters’
discounts and/or commissions.




          6.2 Authorization; No Conflicts. Each party to this Agreement represents and warrants
to the other parties to this Agreement that the execution and delivery of this Agreement by such
party and the performance by such party of its covenants and agreements under this Agreement have
been, or at the time of such performance will have been, duly authorized by all necessary corporate
action on the part of such party, and all required consents to the transactions contemplated hereby
have been obtained by such party, or at the time of such performance will have been received by
such party. The execution, delivery and performance by such party of this Agreement, the
fulfillment of and compliance with the terms and provisions hereof, and the consummation by such
party of the transactions contemplated hereby, do not and will not: (a) conflict with, or violate
any provisions of, the Articles of Incorporation, Bylaws or other governing documents of such
party; (b) conflict with, or violate any provision of, any statute, law, ordinance, regulation,
rule, order, writ or injunction having applicability to such party or any of its assets; (c) result
in a breach or acceleration of the maturity of any loan or credit agreement to which such party is
a party or by which any of its assets may be affected; or (d) conflict with, result in any breach
of, or constitute a default under any agreement to which such party is a party or by which it or
any of its assets are bound.




          6.3 Integration; Amendment. This Agreement, together with its exhibits and the other
agreements referred to herein, constitutes the entire agreement among the parties hereto with
respect to the matters relating to registration rights set forth herein and supersedes and renders
of no force and effect all prior oral or written agreements, commitments and understandings among
the parties with respect to the matters relating to registration rights set forth herein. Except
as otherwise expressly provided in this Agreement, no amendment, modification or discharge of this
Agreement shall be valid or binding unless set forth in writing and duly executed by each of the
parties hereto. The parties hereto agree to amend this Agreement as necessary to provide the
parties with substantially similar (and in no event no less favorable) rights in the event of the
enactment by the SEC of changes to the rules and regulations promulgated under the Securities Act
and the Exchange Act to the extent such change modifies the current existing registration scheme;
provided that such amendment does not impose upon the Company any burdens, duties or liabilities
that are materially more substantial than those contemplated under this Agreement.




          6.4 Waivers. No waiver by a party hereto shall be effective unless made in a written
instrument duly executed by the party against whom such waiver is sought to be enforced, and only
to the extent set forth in such instrument. Neither the waiver by any of the parties hereto of a
breach or a default under any of the provisions of this Agreement, nor the failure of any of the
parties, on one or more occasions, to enforce any of the provisions of this Agreement or to
exercise any right or privilege hereunder shall thereafter be construed as a waiver of any
subsequent breach or default of a similar nature, or as a waiver of any such provisions, rights or
privileges hereunder.




          6.5 Assignment; Successors and Assigns. Holder may elect to have a nominee take title
to any or all of the Registrable Securities, in which event the benefits of this Agreement shall
run directly to such nominee. This Agreement shall be binding upon and inure to the benefit of the
Company and its successors by merger. Except as provided in this Section and as provided in
Section 1.3, no party hereto shall assign its rights and/or obligations under this Agreement, in
whole or in part, whether by operation of law or otherwise.




          6.6 Burden and Benefit. This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective heirs, executors, personal and legal representatives,
successors and, subject to Section 6.5 above, assigns.




          6.7 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 recipe requested) addressed as hereinafter provided or via
telephonic facsimile transmission with proof of delivery in the form of a telecopier’s 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 part listed below may change its address hereunder by notice to the other party listed
below. Until further notice, notice and other communications hereunder shall be addressed to the
parties listed below as follows:




	 	 	 
	If to Holder:

	 	GSEP 2002 Realty Corp.
	 

	 	c/o Goldman Sachs 2002 Exchange Place Fund, L.P.
	 

	 	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
	 

	 	One New York Plaza
	 

	 	New York, New York 10004
	 

	 	Attention: Lawrence N. Barshay, Esq.
	 

	 	Fax: (212) 859-4000
	 
	 	 
	If to Company:

	 	c/o PS Business Parks, Inc.
	 

	 	701 Western Avenue
	 

	 	Glendale, California 91201
	 

	 	Attention: Mr. Jack Corrigan
	 

	 	Fax: (818) 242-0566
	 
	 	 
	with a copy to:

	 	Hale and Dorr LLP
	 

	 	1455 Pennsylvania Avenue, N.W.
	 

	 	Washington, D.C. 20004
	 

	 	Attention: Steven S. Snider, Esq.
	 

	 	Fax: (202) 942-8484





or such other address or telephone number as any party may from time to time specify in writing to
the others; provided, however, that the foregoing addresses and numbers shall remain in effect
unless and until notice of and change is deemed to have been given in the manner required by this
Section.




          6.8 Specific Performance. The parties hereto acknowledge that the obligations
undertaken by them hereunder are unique and that there would be no adequate remedy at law if any
party fails to perform any of its obligations hereunder, and accordingly agree that each party, in
addition to any other remedy to which it may be entitled at law or in equity, shall be entitled to
(a) compel specific performance of the obligations, covenants and agreements of any other party
under this Agreement in accordance with the terms and conditions of this Agreement; and (b) obtain
preliminary injunctive relief to secure specific performance and to prevent a breach or
contemplated breach of this Agreement. Each party waives the requirement of the posting of any
bond or security in connection with any proceedings or any injunction issued in connection with
this Section.




          6.9 Governing Law. Notwithstanding that California law, with respect to choice of
law, or the Constitution, laws or treaties of the United States of America, may dictate that this
Agreement should be governed by or construed in accordance with the laws of another jurisdiction,
this Agreement, and all documents and instruments executed and delivered in connection herewith
shall be governed by and construed in accordance with the laws of the State of California.




 








 







          6.10 Enforcement. If any party hereto institutes any action or proceeding to
interpret or enforce any provision of this Agreement or for an alleged breach of any provision of
this Agreement, the prevailing party shall be entitled to recover its actual attorneys’ fees and
all fees, costs and expenses incurred in connection with such action or proceeding. Such attorneys’
fees, fees, costs and expenses shall include post judgment attorneys’ fees, fees, costs and
expenses incurred on appeal or in collection of any judgment. This provision is separate and
several and shall survive the merger of this provision into any judgment on this Agreement. No
person or entity other than the parties hereto is or shall be entitled to bring any action to
enforce any provision of this Agreement against any of the parties hereto, and the covenants and
agreements set forth in this Agreement shall be solely for the benefit of, and shall be enforceable
only by, the parties hereto or their respective successors and assigns as permitted hereunder.




          6.11 Headings. Section and subsection headings contained in this Agreement are
inserted for convenience of reference only, shall not be deemed to be a part of this Agreement for
any purpose, and shall not in any way define or affect the meaning, construction or scope of any of
the provisions hereof.




          6.12 Pronouns. All pronouns and any variations thereof shall be deemed to refer to
the masculine, feminine, neuter, singular or plural, as the identity of the person or entity may
require.




          6.13 Execution in Counterparts. To facilitate execution, this Agreement may be
executed in as many counterparts as may be required. It shall not be necessary that the signature
of or on behalf of each party appears on each counterpart, but it shall be sufficient that the
signature of or on behalf of each party appears on one or more of the counterparts. All
counterparts shall collectively constitute a single agreement. It shall not be necessary in any
proof of this Agreement to produce or account for more than a number of counterparts containing the
respective signatures of or on behalf of all of the parties.




          6.14 Severability. If fulfillment of any provision of this Agreement, at the time
such fulfillment shall be due, shall transcend the limit of validity prescribed by law, then the
obligation to be fulfilled shall be reduced to the limit of such validity; and if any clause or
provision contained in this Agreement operates or would operate to invalidate this Agreement, in
whole or in part, then such clause or provision only shall be held ineffective, as though not
herein contained, and the remainder of this Agreement shall remain operative and in full force and
effect.




          6.15 Time of the Essence. Time is of the essence in the performance of this
Agreement.




          6.16 [Intentionally Left Blank]




          6.17 Further Assurances. Each party agrees to cooperate fully with the other parties
and to prepare, execute, and deliver such further instruments of conveyance, contribution,
assignment, or transfer and shall take or cause to be taken such other or further action as either
party shall reasonably request at any time or from time to time in order to consummate the terms
and provisions and to carry into effect the intents and purposes of this Agreement.




          6.18 Legal Representation and Construction. Each party hereto has been represented by
legal counsel in connection with the negotiation and drafting of this Agreement. The parties
acknowledge that each party and its counsel have reviewed and revised this Agreement, and that the
normal rule of construction to the effect that any ambiguities are to be resolved against the
drafting party shall not be employed in the interpretation of this Agreement.




          6.19 Piggyback on Shelf Registrations. As of the date hereof, neither the Company nor
any securityholder of the Company (other than the Holder) has any right to include any securities
of the Company in any registration effected pursuant to Sections 1.1(a) or 1.1(c) hereunder. In
the event that a registration pursuant to Sections 1.1(a) or 1.1(c) involves an underwritten
offering and the managing underwriter advises the Company and the Holders in writing that, in its
opinion, the inclusion in the registration statement of some or all of the Registrable Securities
sought to be registered by such Holders creates a substantial risk that the price per share that
such Holders will derive from such registration will be materially and adversely affected or that
the offering would otherwise be




 









 






materially and adversely affected, then the Company will include in such registration
statement such number of Registrable Securities as the Company and such Holders are so advised can
be sold in such offering without such an effect (the “Demand Maximum Number”), as follows
and in the following order of priority: (i) first, the Registrable Securities of GSEP 2002 Realty
Corp., and (ii) second, if and to the extent that the number of Registrable Securities to be
registered under clause (i) is less than the Demand Maximum Number, the other securities sought to
be registered by any other Holders (other than GSEP 2002 Realty Corp., pro rata in
proportion to the number sought to be registered by each such Holder (other than GSEP 2002 Realty
Corp.) relative to the number sought to be registered by all the Holders (other than GSEP 2002
Realty Corp.); provided, however, that the Company shall be permitted to grant to any
securityholder of the Company “piggyback” registration rights with respect to any registration
other than the registrations effected pursuant to Sections 1.1(a) and 1.1(c).




 









 







     IN WITNESS WHEREOF, each of the parties hereto has caused this Registration Rights Agreement
to be duly executed on its behalf as of the date first hereinabove set forth.



	 	 	 	 	 
	 	COMPANY:



PS BUSINESS PARKS, INC.,

a California corporation

 	 
	 	By:  	/s/ Jack Corrigan
 	 
	 	 	 	 
	 	 	Jack Corrigan, Vice President

(Print Name and Title) 	 
	 



Signature Page to Series G Registration Rights Agreement




 









 







	 	 	 	 	 
	 	HOLDER:



GSEP 2002 REALTY CORP.,

a Delaware corporation

 	 
	 	By:  	/s/ Eric Lane
 	 
	 	 	 	 
	 	 	Eric Lane – President and
CEO

(Print Name and Title) 	 
	 



Signature Page to Series G Registration Rights Agreement