AMENDMENT TO AGREEMENT OF LIMITED PARTNERSHIP RELATING TO 7 1/8% SERIES N CUMULATIVE REDEEMABLE PREFERRED UNITS

Exhibit 10.1

PS BUSINESS PARKS, L.P.

AMENDMENT TO AGREEMENT OF LIMITED
PARTNERSHIP RELATING TO
7 1/8% SERIES N CUMULATIVE REDEEMABLE
PREFERRED UNITS

     This Amendment to the Agreement of Limited Partnership of PS Business Parks, L.P., a California limited partnership (the “ Partnership ”), dated as of the 12th day of December, 2005 (this “ Amendment ”) amends the Agreement of Limited Partnership of the Partnership, dated as of March 17, 1998, by and among PS Business Parks, Inc. (the “ General Partner ”) and each of the limited partners executing a signature page thereto, as amended by that certain Amendment to Agreement of Limited Partnership Relating to 8 7/8% Series B Cumulative Redeemable Preferred Units, dated as of April 23, 1999, an Amendment to Agreement of Limited Partnership Relating to 9 ¹ / 4 % Series A Cumulative Redeemable Preferred Units, dated as of April 30, 1999, an Amendment to Agreement of Limited Partnership Relating to 8 7/8% Series X Cumulative Redeemable Preferred Units, dated as of September 7, 1999, an Amendment to Agreement of Limited Partnership Relating to Additional 8 7/8% Series X Cumulative Redeemable Preferred Units, dated as of September 23, 1999, an Amendment to Agreement of Limited Partnership Relating to 8 ³ / 4 % Series C Cumulative Redeemable Preferred Units, dated as of September 3, 1999, an Amendment to Agreement of Limited Partnership Relating to 8 7/8% of Series Y Cumulative Redeemable Preferred Units, dated as of July 12, 2000, an Amendment to Agreement of Limited Partnership Relating to 9 ¹ / 2 % Series D Cumulative Redeemable Preferred Units, dated as of May 10, 2001, as amended by Amendment No. 1 to such Amendment to Agreement of Limited Partnership Relating to 9 ¹ / 2 % Series D Cumulative Redeemable Preferred Units, dated as of June 18, 2001, an Amendment to Agreement of Limited Partnership Relating to 9 ¹ / 4 % Series E Cumulative Redeemable Preferred Units, dated as of September 21, 2001, an Amendment to Agreement of Limited Partnership Relating to 8 ³ / 4 % Series F Cumulative Redeemable Preferred Units, dated as of January 28, 2002, an Amendment to Agreement of Limited Partnership Relating to 7.95% Series G Cumulative Redeemable Preferred Units, dated as of October 30, 2002, an Amendment to Agreement of Limited Partnership Relating to 7.000% Series H Cumulative Redeemable Preferred Units, dated as of January 30, 2004 as amended by that certain Amendment No. 1 to Amendment to Agreement of Limited Partnership Relating to 7.000% Series H Cumulative Redeemable Preferred Units, dated as of October 25, 2004, an Amendment to Agreement of Limited Partnership Relating to 6.875% Series I Cumulative Redeemable Preferred Units, dated as of April 21, 2004, an Amendment to Agreement of Limited Partnership Relating to 7.50% Series J Cumulative Redeemable Preferred Units, dated as of May 27, 2004 as amended by that certain Amendment No. 1 to Amendment to Agreement of Limited Partnership Relating to 7.50% Series J Cumulative Redeemable Preferred Units, dated as of June 17, 2004, an Amendment to Agreement of Limited Partnership Relating to 7.950% Series K Cumulative Redeemable Preferred Units, dated as of June 30, 2004, an Amendment to

Agreement of Limited Partnership Relating to 7.60% Series L Cumulative Redeemable Preferred Units, dated as of August 31, 2004, and an Amendment to Agreement of Limited Partnership Relating to 7.20% Series M Cumulative Redeemable Preferred Units, dated as of May 2, 2005, as amended by that certain Amendment No. 1 to Amendment to Agreement of Limited Partnership Relating to 7.20% Series M Cumulative Redeemable Preferred Units, dated as of May 9, 2005 (collectively, the “ Partnership Agreement ”). Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to such terms in the Partnership Agreement. Section references are (unless otherwise specified) references to sections in this Amendment.

     WHEREAS, pursuant to Section 4.2(a) of the Partnership Agreement, the General Partner desires to cause the Partnership to issue additional Units of a new class and series, with the designations, preferences and relative, participating, optional or other special rights, powers and duties set forth herein;

     WHEREAS, pursuant to Sections 4.2(a) and 14.1(b)(2) of the Partnership Agreement, the General Partner, without the consent of the Limited Partners, may amend the Partnership Agreement by executing a written instrument setting forth the terms of such amendment; and

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

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

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

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

     (b) “ Parity Preferred Units ” means any class or series of Partnership Interests of the Partnership now or hereafter authorized, issued or outstanding and expressly designated by the Partnership to rank on a parity with the Series N Preferred Units with respect to distributions and rights upon voluntary or involuntary liquidation, winding-up or dissolution of the Partnership, including the 9 ¹ / 2 Series D Cumulative Redeemable Preferred Units (the “ Series D Preferred Units ”), the 9 ¹ / 4 % Series E Cumulative Redeemable Preferred Units (the “ Series E Preferred

Units ”), the 8 ³ / 4 % Series F Cumulative Redeemable Preferred Units (the “ Series F Preferred Units ”), the 7.95% Series G Cumulative Redeemable Preferred Units (the “ Series G Preferred Units ”), the 7.000% Series H Cumulative Redeemable Preferred Units (the “ Series H Preferred Units ”), the 6.875% Series I Cumulative Redeemable Preferred Units (the “ Series I Preferred Units ”), the 7.50% Series J Cumulative Redeemable Preferred Units (the “ Series J Preferred Units ”), the 7.950% Series K Cumulative Redeemable Preferred Units (the “ Series K Preferred Units ”), the 7.60% Series L Cumulative Redeemable Preferred Units (the “ Series L Preferred Units ”), and the 7.20% Series M Cumulative Redeemable Preferred Units (the “ Series M Preferred Units ”). Notwithstanding the differing allocation rights set forth in Section 4 below that apply to the Series D, F, H, I, K, L and M Preferred Units (as compared to the Series E, G, J and N Preferred Units), for purposes of this Amendment, those Series D, F, H, I, K, L and M Preferred Units and any future series of preferred units that rank in parity with those series also shall be considered Parity Preferred Units to the Series E, G, J and N Preferred Units.

     (c) “ Priority Return ” means an amount equal to 7 1/8% per annum of the Liquidation Preference per Series N Preferred Unit, commencing on the date of issuance of such Series N Preferred Unit, determined on the basis of a 360-day year of twelve 30-day months, and for any period shorter than a full quarterly period for which distributions are computed, the amount of the distributions payable will be based on the ratio of the actual number of days elapsed in such period to ninety (90) days, cumulative to the extent not distributed for any given distribution period pursuant to Section 3, hereof, commencing on the date of the issuance of such Series N Preferred Unit.

     (d) “ PTP ” means a “publicly traded partnership” within the meaning of Section 7704 of the Code.

      Section 2. Designation and Number . Pursuant to Section 4.2(a) of the Partnership Agreement, a series of Partnership Units in the Partnership designated as the “7 1/8% Series N Cumulative Redeemable Preferred Units” (the “ Series N Preferred Units ”) is hereby established. The number of Series N Preferred Units shall be 800,000. The holders of Series N Preferred Units shall not have any Percentage Interest (as such term is defined in the Partnership Agreement) in the Partnership.

      Section 3. Distributions . (a) Payment of Distributions . Subject to the rights of holders of Parity Preferred Units as to the payment of distributions pursuant to Section 5.1 of the Partnership Agreement, holders of Series N Preferred Units shall be entitled to receive, when, as and if declared by the Partnership acting through the General Partner, the Priority Return. Such Priority Return shall be cumulative, shall accrue from the original date of issuance of the Series N Preferred Units and, notwithstanding Section 5.1 of the Partnership Agreement, will be payable (i) quarterly in arrears on March 31, June 30, September 30 and December 31 of each year commencing on December 31, 2005, and (ii) in the event of (A) a redemption of Series N

Preferred Units, or (B) an exchange of Series N Preferred Units into Series N Preferred Stock, on the redemption date or the exchange date, as applicable (each a “ Series N Preferred Unit Distribution Payment Date ”) . The amount of the distribution payable for any period will be computed on the basis of a 360-day year of twelve 30-day months and for any period shorter than a full quarterly period for which distributions are computed, the amount of the distribution payable will be computed based on the ratio of the actual number of days elapsed in such period to ninety (90) days. If any date on which distributions are to be made on the Series N Preferred Units is not a Business Day (as defined herein), then payment of the distribution to be made on such date will be made on the Business Day immediately preceding such date with the same force and effect as if made on such date. Distributions on the Series N Preferred Units will be made to the holders of record of the Series N Preferred Units on the relevant record dates to be fixed by the Partnership acting through the General Partner, which record dates shall in no event exceed fifteen (15) Business Days prior to the relevant Series N Preferred Unit Distribution Payment Date (the “ Series N Preferred Unit Partnership Record Date ”).

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

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

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

          (i) so long as any Series N Preferred Units are outstanding, no distribution of

cash or other property shall be authorized, declared, paid or set apart for payment on or with respect to any class or series of Partnership Interest ranking junior as to the payment of distributions or rights upon a voluntary or involuntary liquidation, dissolution or winding-up of the Partnership to the Series N Preferred Units (collectively, “ Junior Units ”), nor shall any cash or other property be set aside for or applied to the purchase, redemption or other acquisition for consideration of any Series N Preferred Units, any Parity Preferred Units or any Junior Units, unless, in each case, all distributions accumulated on all Series N Preferred Units and all classes and series of outstanding Parity Preferred Units have been paid in full. The foregoing sentence shall not prohibit (x) distributions payable solely in Junior Units, or (y) the conversion of Junior Units or Parity Preferred Units into Partnership Interests ranking junior to the Series N Preferred Units as to distributions and rights upon involuntary or voluntary liquidation, dissolution or winding up of the Partnership or (z) the redemption of Partnership Interests corresponding to Series N Preferred Stock, Parity Preferred Stock or Junior Stock to be purchased by the General Partner pursuant to the Articles of Incorporation of the General Partner with respect to the General Partner’s common stock and comparable provisions in the Articles of Incorporation with respect to other classes or series of capital stock of the General Partner to preserve the General Partner’s status as a real estate investment trust, provided that such redemption shall be upon the same terms as the corresponding purchase pursuant to the Articles of Incorporation.

          (ii) So long as distributions have not been paid in full (or a sum sufficient for such full payment is not irrevocably deposited in trust for payment) upon the Series N Preferred Units, all distributions authorized and declared on the Series N Preferred Units and all classes or series of outstanding Parity Preferred Units shall be authorized and declared so that the amount of distributions authorized and declared per Series N Preferred Unit and such other classes or series of Parity Preferred Units shall in all cases bear to each other the same ratio that accrued distributions per Series N Preferred Unit and such other classes or series of Parity Preferred Units (which shall not include any accumulation in respect of unpaid distributions for prior distribution periods if such class or series of Parity Preferred Units do not have cumulative distribution rights) bear to each other.

     (e)  No Further Rights . Holders of Series N Preferred Units shall not be entitled to any distributions, whether payable in cash, other property or otherwise, in excess of the full cumulative distributions described herein.

      Section 4. Allocations . Section 6.1(a)(ii) of the Partnership Agreement is amended to read, in its entirety, as follows:

     “(ii)(A) Notwithstanding anything to the contrary contained in this Agreement, in any taxable year: (1) the holders of Series D, F, H, I, K, L and M Preferred Units shall first be allocated an amount of gross income equal to the Priority Return distributed to such holders in such taxable year, and (2) subject to any prior allocation of Profit pursuant

to the loss chargeback set forth in Section 6.1(a)(ii)(B) below, the holders of Series E, G, J and N Preferred Units shall then be allocated an amount of Profit equal to the Priority Return distributed to such holders either in such taxable year or in prior taxable years to the extent that such distributions have not previously been matched with an allocation of Profit pursuant to this Section 6.1(a)(ii)(A)(2).

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

     (C) Upon liquidation of the Partnership or the interest of the holders of Series D, E, F, G, H, I, J, K, L, M or N Preferred Units in the Partnership: (1) items of gross income or deduction shall first be allocated to the holders of Series D, F, H, I, K, L and M Preferred Units in a manner such that, immediately prior to such liquidation, the Capital Account balances of such holders shall equal the amount of their Liquidation Preferences, and (2) an amount of Profit or Loss shall then be allocated to the holders of Series E, G, J and N Preferred Units in a manner such that, immediately prior to such liquidation, the Capital Account balances of such holders shall equal the amount of their Liquidation Preferences.”

      Section 5. Optional Redemption . (a) Right of Optional Redemption . Except as otherwise provided herein, the Series N Preferred Units may not be redeemed prior to the fifth (5th) anniversary of the issuance date. On or after such date, the Partnership shall have the right to redeem the Series N Preferred Units, in whole (and not in part), at any time, upon not less than 30 nor more than 60 days written notice, at a redemption price, payable in cash, equal to the Liquidation Preference (the “ Series N Redemption Price ”). The Redemption Right given to Limited Partners in Section 8.6 of the Partnership Agreement shall not be available to the holders of the Series N Preferred Units and all references to Limited Partners in said Section 8.6 (and related provisions of the Partnership Agreement) shall not include holders of the Series N Preferred Units.

     (b)  Procedures for Redemption . (i) Notice of redemption will be (A) faxed, and (B) mailed by the Partnership, by certified mail, postage prepaid, not less than 30 nor more than 60 days prior to the redemption date, addressed to the respective holders of record of the Series N Preferred Units at their respective addresses as they appear on the records of the Partnership. No

failure to give or defect in such notice shall affect the validity of the proceedings for the redemption of any Series N Preferred Units except as to the holder to whom such notice was defective or not given. In addition to any information required by law each such notice shall state: (m) the redemption date, (n) the Series N Redemption Price, (o) the aggregate number of Series N Preferred Units to be redeemed, (p) as provided in Section 5(b)(ii) below, the place or places where evidence of the surrender of such Series N Preferred Units shall be delivered for payment of the Series N Redemption Price, (q) that distributions on the Series N Preferred Units to be redeemed will cease to accumulate on such redemption date and (r) that payment of the Series N Redemption Price will be made upon presentation of evidence of the surrender of such Series N Preferred Units as set forth in Section 5(b)(ii) below.

          (ii) If the Partnership gives a notice of redemption in respect of Series N Preferred Units (which notice will be irrevocable) then, by 12:00 noon, New York City time, on the redemption date, the Partnership will deliver into escrow with an escrow agent acceptable to the Partnership and the holders of the Series N Preferred Units (the “ Escrow Agent ”) the Series N Redemption Price and an executed Redemption Agreement, in substantially the form attached hereto as Exhibit A (the “ Redemption Agreement ”), and an Amendment to the Agreement of Limited Partnership evidencing the redemption, in substantially the form attached hereto as Exhibit B . The holders of the Series N Preferred Units shall also, by 12:00 noon, New York City time, on the redemption date, deliver into escrow with the Escrow Agent an executed Redemption Agreement and an executed Amendment to the Agreement of Limited Partnership evidencing the redemption. Upon delivery of all of the above-described items by both parties, Escrow Agent shall release the Series N Redemption Price to the holders of the Series N Preferred Units and the fully-executed Redemption Agreement and Amendment to Agreement of Limited Partnership to both parties. On and after the date of redemption, distributions will cease to accumulate on the Series N Preferred Units called for redemption, unless the Partnership defaults in the payment thereof. If any date fixed for redemption of Series N Preferred Units is not a Business Day, then payment of the Series N Redemption Price payable on such date will be made on the next succeeding day that is a Business Day (and without any interest or other payment in respect of any such delay) except that, if such Business Day falls in the next calendar year, such payment will be made on the immediately preceding Business Day, in each case with the same force and effect as if made on such date fixed for redemption. If payment of the Series N Redemption Price is improperly withheld or refused and not paid by the Partnership, distributions on such Series N Preferred Units will continue to accumulate from the original redemption date to the date of payment, in which case the actual payment date will be considered the date fixed for redemption for purposes of calculating the applicable Series N Redemption Price.

      Section 6. Voting Rights . (a) General . Holders of the Series N Preferred Units will not have any voting rights or right to consent to any matter requiring the consent or approval of the Limited Partners, except as set forth in Section 14.1 of the Partnership Agreement and in this

Section 6. (Solely for purposes of Section 14.1 of the Partnership Agreement, each Series N Preferred Unit shall be treated as one Partnership Unit.) If and for so long as the General Partner holds any Series N Preferred Units, the General Partner shall not have any voting rights with respect to such Series N Preferred Units and such Series N Preferred Units shall not be counted in determining the number of such units outstanding for the purpose of determining whether the holders of such units have granted any approval called for hereunder.

     (b)  Certain Voting Rights . So long as any Series N Preferred Units remain outstanding, the Partnership shall not, without the affirmative vote of the holders of at least a majority of the Series N Preferred Units outstanding at the time:

          (i) authorize or create, or increase the authorized or issued amount of, any class or series of Partnershi