ex_10-2.htm

Section
    2: EX-10.2 (EXHIBIT 10.2)
    AGREEMENT
      TO RESTRUCTURE PARTNERSHIP

     

    BETWEEN

     

    WESTERN-MOUNTAIN
      VIEW II INVESTORS,

    A
      CALIFORNIA LIMITED PARTNERSHIP

     

    “PARTNERSHIP”

     

    AND

     

    ESSEX
      PORTFOLIO, L.P.,

    A
      CALIFORNIA LIMITED PARTNERSHIP

     

    “EPLP”

     

    AND

     

    ESSEX
      PROPERTY TRUST, INC.,

    A
      MARYLAND CORPORATION

     

     

    “ESSEX
      REIT”

     

    AND

     

    ESSEX
      MANAGEMENT CORPORATION,

    A
      CALIFORNIA CORPORATION

     

    “EMC”

     

    AND

     

    GENERAL
      PARTNERS OF THE PARTNERSHIP

    
      
        
        

      

      
        
          

        

      

       

    

     

    
      
        	
                TABLE
                  OF CONTENTS

              	 
                
                Page

              
	 	 	
                 

              
	
                Article
                  1 - CONSENT SOLICITATION AND CLOSING

              	
                9

              
	
                1.1

              	
                Cooperation
                  of the General Partner

              	
                9

              
	
                1.2

              	
                Consent
                  Solicitation.

              	
                9

              
	
                1.3

              	
                Requirements
                  to Obtain or Retain Units

              	
                10

              
	
                1.4

              	
                Consent
                  Solicitation Timing

              	
                11

              
	
                1.5

              	
                Results
                  of Consent Solicitation

              	
                11

              
	
                1.6

              	
                Failure
                  to Obtain Partner Consent

              	
                12

              
	
                1.7

              	
                Redemption
                  of Interests of Certain Partners at Closing

              	
                12

              
	
                1.8

              	
                Interests
                  in the Partnership Following Closing

              	
                12

              
	
                1.9

              	
                Closing
                  Mechanics and Costs

              	
                13

              
	
                1.1

              	
                Closing
                  Date

              	
                13

              
	
                1.11

              	
                Blue
                  Sky Cooperation

              	
                13

              
	
                1.12

              	
                Consent
                  of Mortgage Lender

              	
                13

              
	
                Article
                  2 - CERTAIN COVENANTS AND CONDITIONS TO CLOSING

              	
                14

              
	
                2.1

              	
                Certain
                  Covenants and Conditions to Essex’s Obligations

              	
                14

              
	
                2.2

              	
                Conditions
                  to the Obligations of the Partnership

              	
                22

              
	
                2.3

              	
                Negotiation
                  of Documents

              	
                23

              
	
                Article
                  3 - REPRESENTATIONS AND WARRANTIES

              	
                23

              
	
                3.1

              	
                Representations
                  and Warranties of the Partnership

              	
                23

              
	
                3.2

              	
                Representations
                  and Warranties of Each Existing Partner

              	
                31

              
	
                3.3

              	
                Representations
                  and Warranties of Essex

              	
                32

              
	
                3.4

              	
                Representations
                  and Warranties of the Cash Interest Holders

              	
                35

              
	
                Article
                  4 - MAINTENANCE AND OPERATION OF THE PROPERTY

              	
                36

              
	
                4.1

              	
                Maintenance
                  and Operation

              	
                36

              
	
                4.2

              	
                Insurance

              	
                36

              
	
                4.3

              	
                Personal
                  Property

              	
                36

              
	
                4.4

              	
                Leasing

              	
                36

              
	
                4.5

              	
                Operating
                  Agreements

              	
                36

              
	
                4.6

              	
                Damage
                  or Destruction; Condemnation.

              	
                37

              
	
                4.7

              	
                Tests
                  and Inspections

              	
                38

              
	
                4.8

              	
                Mortgage
                  Debt

              	
                38

              
	
                4.9

              	
                Availability
                  of Records

              	
                38

              
	
                4.1

              	
                Title
                  and Survey Defects

              	
                40

              
	
                4.11

              	
                Cooperation
                  with Essex

              	
                40

              
	
                4.12

              	
                Post-Closing
                  Property Management

              	
                40

              
	
                4.13

              	
                Notices
                  Received

              	
                40

              
	
                4.14

              	
                Cash
                  Distributions

              	
                40

              
	
                4.15

              	
                Representations
                  and Warranties

              	
                41

              
	
                Article
                  5 - CLOSING ADJUSTMENTS

              	
                41

              



        
          
            
            

          

          
            -i-

            
              

            

          

           

        

        
          	
                  5.1

                	
                  Adjustments
                    Generally

                	
                  41

                
	
                  5.2

                	
                  Taxes,
                    Assessments and Utilities

                	
                  41

                
	
                  5.3

                	
                  Rent

                	
                  41

                
	
                  5.4

                	
                  Payments
                    on Permitted Exceptions

                	
                  42

                
	
                  5.5

                	
                  Contract
                    Payments and Other Expenses

                	
                  42

                
	
                  5.6

                	
                  Partner
                    Consent

                	
                  42

                
	
                  5.7

                	
                  Adjustments
                    and Prorations Generally

                	
                  42

                
	
                  5.8

                	
                  Post-Closing
                    Audit

                	
                  42

                
	
                  Article
                    6 - DEFAULTS AND REMEDIES

                	
                  43

                
	
                  6.1

                	
                  Defaults

                	
                  43

                
	
                  6.2

                	
                  Reimbursement
                    of Loan-Related Fees Paid by Essex

                	
                  43

                
	
                  Article
                    7 - INDEMNIFICATION

                	
                  43

                
	
                  7.1

                	
                  By
                    the General Partners and the other Existing Partners

                	
                  43

                
	
                  7.2

                	
                  Indemnification
                    Procedure

                	
                  46

                
	
                  7.3

                	
                  Cooperation
                    in Defense

                	
                  47

                
	
                  7.4

                	
                  Survival

                	
                  47

                
	
                  Article
                    8 - MISCELLANEOUS

                	
                  47

                
	
                  8.1

                	
                  Brokers

                	
                  47

                
	
                  8.2

                	
                  Marketing

                	
                  48

                
	
                  8.3

                	
                  Entire
                    Agreement; No Amendment

                	
                  48

                
	
                  8.4

                	
                  Certain
                    Expenses

                	
                  48

                
	
                  8.5

                	
                  Audit

                	
                  49

                
	
                  8.6

                	
                  Notices

                	
                  49

                
	
                  8.7

                	
                  No
                    Assignment

                	
                  50

                
	
                  8.8

                	
                  Governing
                    Law

                	
                  50

                
	
                  8.9

                	
                  Multiple
                    Counterparts; Facsimile Signatures

                	
                  50

                
	
                  8.1

                	
                  Further
                    Assurances

                	
                  50

                
	
                  8.11

                	
                  Miscellaneous

                	
                  50

                
	
                  8.12

                	
                  Invalid
                    Provisions

                	
                  50

                
	
                  8.13

                	
                  Confidentiality;
                    Publicity

                	
                  51

                
	
                  8.14

                	
                  Time
                    of Essence

                	
                  51

                
	
                  8.15

                	
                  Attorneys
                    Fees

                	
                  51

                
	
                  8.16

                	
                  Essex
                    Approvals and Decisions

                	
                  51

                
	
                  The
                    following schedules and exhibits have been omitted and will be
                    furnished
                    to the SEC upon request:

                	 
	
                  EXHIBIT
                    A  LIST OF ALL EXISTING PARTNERS OF THE
                    PARTNERSHIP

                	
                  54

                
	
                  EXHIBIT
                    B  INVESTMENT REPRESENTATIONS AND WARRANT

                	
                  57

                
	
                  EXHIBIT
                    C  UCC JURISDICTIONS

                	
                  59

                
	
                  EXHIBIT
                    D  FORM OF PROSPECTIVE SUBSCRIBER QUESTIONNAIRE

                	
                  61

                


        


        
          
            -ii-

          

          
            
              

            

          

           

        

        
          	
                  EXHIBIT
                    E  MORTGAGE DEBT DOCUMENTS

                	
                  67

                
	
                  EXHIBIT
                    F  RENT ROLL

                	
                  68

                
	
                  EXHIBIT
                    G  PROPERTY INVENTORY

                	
                  69

                
	
                  EXHIBIT
                    H  LEGAL DESCRIPTION OF LAND

                	
                  71

                
	
                  EXHIBIT
                    I  INSURANCE

                	
                  72

                
	
                  EXHIBIT
                    J  FORM OF AMENDED AND RESTATED AGREEMENT OF LIMITED
                    PARTNERSHIP

                	
                  73

                
	
                  EXHIBIT
                    K  FORM OF REGISTRATION RIGHTS AGREEMENT

                	
                  74

                
	
                  EXHIBIT
                    L  LICENSES AND OTHER RIGHTS

                	
                  75

                
	
                  EXHIBIT
                    M  APPRAISAL

                	
                  77

                
	
                  EXHIBIT
                    N  FORM OF ASSIGNMENT OF INTEREST

                	
                  77

                
	
                  EXHIBIT
                    O  FORM OF PLEDGE INSTRUCTION LETTERS

                	
                  78

                
	
                  SCHEDULE
                    1  EQUITY VALUE AND REDEMPTION EQUITY VALUE FOR EACH EXISTING
                    PARTNER

                	
                  79

                
	
                  SCHEDULE
                    3.1(x)  EMPLOYEES

                	
                  80

                
	
                  SCHEDULE
                    3.1(y)  CAPITAL STRUCTURE

                	
                  81

                
	
                  SCHEDULE
                    3.2(e)  EXISTING PARTNERS MATERIAL TRANSACTIONS WITH THE
                    PARTNERSHIP

                	
                  83

                



          
            
              -iii-

            

            
              
                

              

            

             

          
Section 2: EX-10.2 (EXHIBIT
          10.2)


      

    

    AGREEMENT
      TO RESTRUCTURE PARTNERSHIP

     

    This
      AGREEMENT TO RESTRUCTURE PARTNERSHIP (this “Agreement”) is entered into
      as of this 13th day of June, 2007, by Western-Mountain View II Investors, a
      California limited partnership, having an address of 777 California Avenue,
      Palo
      Alto, California 94304 (the “Partnership”), George M. Marcus, Donald V.
      Baptist and James Fuqua, three of the four current general partners of the
      Partnership (each a “General Partner” and, collectively, the “General
      Partners”), Essex Portfolio, L.P., a California limited partnership
      (“EPLP”), having an address of 925 East Meadow Drive, Palo Alto, CA
      94303, Essex Property Trust, Inc., a Maryland corporation, having an address
      of
      925 East Meadow Drive, Palo Alto, CA 94303 (“Essex REIT”) and Essex
      Management Corporation, a California corporation, having an address of 925
      East
      Meadow Drive, Palo Alto, CA 94303 (“EMC”).  EPLP, Essex REIT
      and EMC shall collectively be known as “Essex”.

     

    RECITALS

     

    1.           The
      Partnership is a 61.83% tenant-in-common owner of the land and improvements
      consisting of a 156-unit apartment complex located at 107 S. Mary Avenue in
      the
      City of Sunnyvale, County of Santa Clara, State of California, commonly known
      as
      the “Thomas Jefferson Apartments” and the General Partners are three of the four
      current general partners of the Partnership.  Western-San Jose IV
      Investors, a California limited partnership (the “Co-Owner Partnership”),
      is a 38.17% tenant-in-common owner of such property.

     

    2.           EPLP
      and EMC each wish to acquire partnership interests in the Partnership for the
      consideration set forth in this Agreement.  In a simultaneous
      transaction, EPLP and EMC each wish to acquire partnership interests in the
      Co-Owner Partnership and restructure the Co-Owner Partnership in accordance
      with
      the terms set forth in a separate Agreement to Restructure Partnership, dated
      the date hereof, relating to the Co-Owner Partnership (the “Other
      Restructuring Agreement”).

     

    3.           The
      individuals and entities listed in Exhibit A are the general and
      limited partners of the Partnership (collectively, the “Existing
      Partners”).  The restructuring of the Partnership to admit EPLP
      and EMC and amend and restate the Partnership Agreement, as set forth in this
      Agreement, requires the written consent of 100% of the Existing Partners (the
      “Partner Consent”).  The “Partner Consent” shall include the
      written consent of the Existing Partners with respect to the Partnership’s entry
      into this Agreement.

     

    4.           The
      Partnership proposes to seek the Partner Consent and, in connection therewith,
      to offer the Existing Partners the opportunity to remain as partners of the
      Partnership (subject to Section 1.3 hereof) or receive cash in exchange for
      their interests in the Partnership (subject to Section 2.1(r) hereof) (so long
      as (i) the Existing Partners who wish to receive Units (as defined below)
      consist of Accredited Investors and (ii) the offering is conducted in all
      respects in compliance with Regulation D promulgated under the Securities
      Act (the conditions described in clauses (i) and (ii) above are
      hereafter referred to as the “Reg. D Compliance Test”). The parties
      agree and acknowledge that the Reg. D Compliance Test must be applied on an
      aggregate basis as if this transaction and the transaction contemplated by
      the
      Other Restructuring 

    
      
        
        

      

      
        -1-

        
          

        
Agreement
        were integrated pursuant to Rule 502(a) promulgated under the Securities
        Act
        (“Integrated Offerings”).

    

     

    5.           Subject
      to the satisfaction of the Reg. D Compliance Test, the receipt of the Partner
      Consent and the other conditions to closing set forth herein, the parties to
      this Agreement propose to amend and restate the limited partnership agreement
      of
      the Partnership to make EMC its sole general partner and each of the following
      limited partners, with interests in the form of units (“Units”) in the
      Partnership:  (i) EPLP; and (ii) each of the Existing
      Partners which is offered and properly accepts the opportunity to remain as
      a
      limited partner of the Partnership in accordance with Section 1.3(a) below
      (collectively, the “Continuing Partners”).

     

    6.           The
      parties propose that upon closing of the transactions contemplated hereby,
      the
      General Partners and the other Continuing Partners who hold Units in the
      Partnership shall enter into the Registration Rights Agreement (as defined
      below).

     

    7.           Each
      of the parties hereto has been advised by the other parties and acknowledges
      that the parties hereto would not be entering into this Agreement without the
      representations, warranties and covenants which are being made and agreed to
      herein by each party hereto and that each party is entering into this Agreement
      in reliance on such representations, warranties and other
      covenants.

     

    NOW,
      THEREFORE, for good and valuable consideration, the receipt and sufficiency
      of
      which are hereby acknowledged, and in reliance on all representations,
      warranties and covenants made by each of the parties hereto, the parties agree
      as follows:

     

    DEFINITIONS

     

    The
      following terms as used in this Agreement will have the meanings attributed
      to
      them as set forth below unless the context clearly requires another
      meaning.  The terms set forth below do not constitute all defined
      terms set forth in this Agreement.  Such other defined terms shall
      have the meanings ascribed to them elsewhere in this Agreement.

     

    “Accountants”
      has the meaning set forth in Section 4.9.

     

    “Accredited
      Investor” means a person who qualifies as an “accredited investor” under
      Rule 501 of the Securities Act.

     

    “Action”
      shall mean any claim, suit, litigation, labor dispute, arbitration,
      investigation or other action or proceeding.

     

    “Affiliate”
      shall mean any entity in which the Person (as defined below) in question owns
      directly or indirectly more than fifty percent (50%) of any class of securities
      or interest issued by such entity or any entity controlling, controlled by
      or
      under common control with the Person in question.

     

    “Appraised
      Value” shall mean $28,000,000.

     

    “Appurtenances”
      - See definition of “Real Property.”

    
      
        
        

      

      
        -2-

        
          

        

      

    

    “Authority”
      shall mean a governmental body or agency having jurisdiction over Essex, the
      Partnership, an Existing Partner or the Property.

     

    “Bank
      Accounts” has the meaning set forth in
      Section 2.1(a)(xvi).

     

    “Business
      Day” means any day except a Saturday, Sunday or other day on which
      commercial banks in San Francisco, California are authorized or required by
      law
      to close.

     

    “Cash
      Interest Holders” shall mean persons holding partnership interests in the
      Partnership who, pursuant to this Agreement, are to have interests redeemed
      for
      cash at or prior to the Closing, as provided in Section 1.7 hereof and subject
      to Section 2.1(r) hereof.

     

    “Claims”
      shall mean all restrictions, liens, claims, charges, pledges or encumbrances
      of
      any kind or nature whatsoever.

     

    “Closing”
      shall mean the restructuring of the Partnership as contemplated by this
      Agreement.

     

    “Closing
      Date” shall have the meaning set forth in Section 1.10.

     

    “Code”
      shall mean the Internal Revenue Code of 1986, as in effect from time to time,
      and applicable rules and regulations thereunder.  Any reference herein
      to a specific section or sections of the Code shall be deemed to include a
      reference to any corresponding provision of future law.

     

    “Commission”
      shall mean the Securities and Exchange Commission.

     

    “Consent
      Solicitation” has the meaning set forth in Section 1.2.

     

    “Consents”
      has the meaning set forth in Section 2.1(b).

     

    “Continuing
      Partners” has the meaning set forth in Paragraph 5 of the
      Recitals.

     

    “Contracts”
      shall mean, subject to the terms of this definition below, all contracts,
      undertakings, commitments, agreements, obligations, guarantees and warranties
      (i) relating to the Property, (ii) to which the Partnership is a party
      or (iii) by which the Partnership or the Property is
      bound.  “Contracts” include, without limitation, utility contracts,
      management contracts, construction contracts, maintenance and service contracts,
      parking contracts, employment contracts, equipment leases and brokerage and
      leasing agreements, but excludes the Leases (as defined below) and the Mortgage
      Instruments (as defined below).

     

    “Co-Owner
      Partnership” has the meaning set forth in Paragraph 1 of the
      Recitals.

     

    “Elections”
      has the meaning set forth in Section 2.1(b).

     

    “EMC”
      has the meaning set forth in the introductory paragraph of this
      Agreement.

     

    “EPLP”
      has the meaning set forth in the introductory paragraph of this
      Agreement.

    
      
        
        

      

      
        -3-

        
          

        

      

    

    “Equity
      Value” shall mean (i) with respect to the interest of each General Partner,
      the amount determined by multiplying such General Partner’s general partner
      percentage interest in the Partnership by the GP Net Equity Amount and (ii)
      with
      respect to the interest of each Existing Limited Partner, the amount determined
      by multiplying such Existing Limited Partner’s limited partner percentage
      interest in the Partnership by the LP Net Equity Amount.  A pro forma
      calculation of the Equity Value for each of the Existing Partners of the
      Partnership is set forth in Schedule 1.

     

    “Essex”
      has the meaning set forth in the introductory paragraph of this
      Agreement.

     

    “Essex
      Documents” has the meaning set forth in Exhibit B.

     

    “Essex
      Indemnified Parties” shall mean EMC, EPLP, Essex REIT, the Partnership and
      their respective subsidiaries, Affiliates, successors and assigns, and all
      of
      such parties’ officers, directors, shareholders, members, employees, agents,
      representatives and attorneys.

     

    “Essex
      REIT” has the meaning set forth in the introductory paragraph of this
      Agreement.

     

    “Essex
      Stock” shall mean the common stock, par value $.01 per share, of Essex
      REIT.

     

    “Exchange
      Act” shall mean the Securities Exchange Act of 1934, as in effect from time
      to time, and applicable rules and regulations thereunder.  Any
      reference herein to specific section or sections of the Exchange Act shall
      be
      deemed to include a reference to any corresponding provision of future
      law.

     

    “Existing
      Limited Partners” shall mean the Existing Partners other than the General
      Partners.

     

    “Existing
      Partners” has the meaning set forth in Paragraph 3 of Recitals.

     

    “Final
      Fiscal Year” has the meaning set forth in Section 4.9(h).

     

    “General
      Partners” has the meaning set forth in the introductory paragraph of this
      Agreement.

     

    “GP
      Net Equity Amount” shall mean 20% of the Net Equity Amount.

     

    “Improvements”
      -- See definition of “Real Property.”

     

    “Indebtedness”
      shall mean all obligations (i) for borrowed money, (ii) evidenced by
      bonds, debentures, notes or similar instruments, (iii) to pay the deferred
      purchase price of property or services (other than accrued expenses arising
      in
      the ordinary course of business), (iv) under leases that would, in
      accordance with generally accepted accounting principles, appear on the balance
      sheet of the lessee as liabilities, (v) secured by a lien, (vi) in
      respect of letters of credit, or bankers acceptances, contingent or otherwise,
      or (vii) in respect of any guaranty or endorsement or other obligations to
      be liable for the debts of another Person.

     

    “Indemnitee”
      has the meaning set forth in Section 7.2(a).

    
      
        
        

      

      
        -4-

        
          

        

      

    

    “Indemnitor”
      has the meaning set forth in Section 7.2(a).

     

    “Intangibles”
      shall mean all intangible property owned or used by the Partnership in
      connection with the ownership, use, operation or development of the Property,
      including, without limitation:  (i) the right to use the name
“Thomas Jefferson Apartments” hereto and any other trade name used in connection
      with the Property, (ii) the Partnership’s rights in, to and under the
      Contracts, (iii) the Partnership’s rights in, to and under the Leases (as
      defined below), all guaranties of the Leases, all security deposits under the
      Leases, all other security, if any, under the Leases and any rent prepaid under
      the Leases and (iv) the Partnership’s rights in, to and under all Licenses
      (as defined below) and any warranties, guaranties and other rights relating
      to
      the ownership, use, operation or development of the Property to the extent
      transferable (collectively, the “Other Rights”), including, without
      limitation, the Licenses and Other Rights listed on Exhibit L
      hereto.

     

    “Integrated
      Offerings” has the meaning set forth in Paragraph 4 of the
      Recitals.

     

    “Intellectual
      Property” shall have the meaning set forth in Section 3.1(u).

     

    “Investment
      Company Act” shall mean the Investment Company Act of 1940, as in effect
      from time to time, and applicable rules and regulations
      thereunder.  Any reference herein to a specific section or sections of
      the Investment Company Act shall be deemed to include a reference to any
      corresponding provision of future law.

     

    “Land”
      -- See definition of “Real Property.”

     

    “Law”
      or “Laws” has the meaning set forth in Section 3.1(e).

     

    “Leases”
      has the meaning set forth in Section 3.1(c).

     

    “Liabilities”
      shall mean liabilities, Indebtedness, obligations, commitments, expenses, Claims
      or guarantees of any nature (whether absolute, accrued, contingent or
      otherwise).

     

    “Licenses”
      has the meaning set forth in Section 3.1(e).

     

    “Limited
      Partnership Agreement” shall mean that certain Amended and Restated
      Agreement of Limited Partnership of Western-Mountain View II Investors, a
      California limited partnership, to be dated as of the Closing Date, in the
      form
      attached hereto as Exhibit J.

     

    “Loss”
      or “Losses” shall mean any and all claims, losses, damages, costs,
      liabilities, fines, penalties, deficiencies, diminution of value, causes of
      action and expenses, including, without limitation, attorney’s fees and
      disbursements, whether direct, contingent or consequential.

     

    “LP
      Net Equity Amount” shall mean 80% of the Net Equity Amount.

     

    “Material
      Adverse Effect” shall mean a material adverse effect on the business,
      assets, condition (financial or otherwise) or prospects of such Person or
      Persons, as the case may be.

    
      
        
        

      

      
        -5-

        
          

        

      

    

    “Major
      Casualty” has the meaning set forth in Section 4.6(a).

     

    “Major
      Condemnation” has the meaning set forth in Section 4.6(b).

     

    “Mortgage
      Debt” shall mean (i) the existing mortgage financing encumbering the
      Property as of the date of this Agreement ($14,000,000 principal balance as
      of
      the date hereof) plus (ii) an additional $6,000,000 principal in mortgage
      financing to be placed on the Property prior to Closing, each as described
      in
Exhibit E hereto, and as reduced by regularly scheduled payments of
      principal actually paid in full when due from and after the date hereof through
      the Closing Date.

     

    “Mortgage
      Debt Consent Documents” has the meaning set forth in
      Section 1.12.

     

    “Mortgage
      Debt Estoppels” has the meaning set forth in Section 1.12.

     

    “Mortgage
      Instruments” shall mean all agreements and other instruments securing or
      evidencing the Mortgage Debt or otherwise executed and delivered in connection
      therewith, as described on Exhibit E hereto.

     

    “Mortgage
      Lender” has the meaning set forth in Section 1.12.

     

    “Net
      Equity Amount” shall mean the excess of (i) the sum of (A) 61.83% of the
      Appraised Value and (B) all other assets (including cash) of the Partnership
      over (ii) the sum of (A) 61.83% of the Mortgage Debt and (B) all other
      indebtedness and liabilities of the Partnership.

     

    “New
      Matters” has the meaning set forth in Section 2.1(a).

     

    “Notice”
      has the meaning set forth in Section 7.2(a).

     

    “Old
      Bank Accounts” has the meaning set forth in Section 4.14.

     

    “Other
      Restructuring Agreement” has the meaning set forth in Paragraph 2 of the
      Recitals.

     

    “Other
      Rights” -- See definition of “Intangibles.”

     

    “Partner
      Consent” has the meaning set forth in Paragraph 3 of the
      Recitals.

     

    “Partnership”
      has the meaning set forth in the introductory paragraph to this
      Agreement.

     

    “Partnership
      Agreement” shall mean that certain Limited Partnership Agreement of the
      Partnership dated August 31, 1971, as amended, in effect on the date
      hereof.

     

    “Partnership
      Financial Statements” has the meaning set forth in Section
      2.1(a)(x).

     

    “Permitted
      Exceptions” means, with respect to the Property, those exceptions to title
      to the Property and those encumbrances on the Personal Property as are approved
      in writing by Essex on or before the date hereof.

    
      
        
        

      

      
        -6-

        
          

        

      

    

    “Person”
      shall mean any individual, corporation, partnership, joint venture, association,
      joint-stock company, business trust, limited liability company, trust,
      unincorporated organization or government or a political subdivision, agency
      or
      instrumentality thereof or other entity or organization of any
      kind.

     

    “Personal
      Property” shall mean all tangible personal property owned by the Partnership
      located on or in or used in connection with the Real Property as of the date
      of
      this Agreement or the Closing Date, including, without limitation, all
      equipment, systems and appliances relating to the Property and other items
      listed in Exhibit G hereto.

     

    “Post-Closing
      Audit” has the meaning set forth in Section 5.8.

     

    “Preliminary
      Report” has the meaning set forth in Section 2.1(a)(i).

     

    “Pricing
      Value” shall mean the weighted average (by daily trading volume) of the
      closing price of one share of Essex Stock as reported by the New York Stock
      Exchange for the thirty (30) consecutive trading days ending on the third (3rd)
      Business Day immediately preceding the Closing Date; provided, however, that
      (i)
      if such weighted average is less than $112.00 per share, then the Pricing Value
      shall be deemed equal to $112.00 per share and (ii) if such weighted average
      is
      greater than $120.00 per share, then the Pricing Value shall be deemed equal
      to
      $120.00 per share.

     

    “Property”
      shall mean, individually and collectively, all Real Property, Personal Property
      and Intangibles owned by the Partnership.  All references in this
      Agreement to the Property shall be deemed to refer to all or any portion of
      the
      Property.

     

    “Prospective
      Subscriber Questionnaire” shall mean the questionnaire in the form attached
      hereto as Exhibit D to be completed and delivered to Essex by the
      Partnership and each Existing Partner, or Affiliate or constituent owner of
      such
      Existing Partner, who will receive Units, directly or indirectly, in connection
      with the Closing or any other transaction or series of related transactions
      contemplated hereby or by the Related Agreements.

     

    “Real
      Property” shall mean, individually for each parcel and collectively for all
      parcels, the land more particularly described in Exhibit H hereto
      (the “Land”), together with all rights, licenses, privileges and
      easements appurtenant thereto, including, without limitation, all minerals,
      oil,
      gas and other hydrocarbon substances on and under and that may be produced
      from
      the Land, as well as all development rights, land use entitlements and rights
      in
      off-site facilities and amenities servicing the Land or any improvements located
      thereon, including, without limitation, building permits, licenses, permits
      and
      certificates, utilities commitments, air rights, water, water rights, riparian
      rights and water stock relating to the Land and any rights-of-way or other
      appurtenances used in connection with the beneficial use and enjoyment of the
      Land and all of the Partnership’s right, title and interest in and to all roads,
      easements, rights of way, strips or gores and alleys adjoining or servicing
      the
      Land (collectively, the “Appurtenances”) and all improvements and
      fixtures located on the Land or the Appurtenances, including, without
      limitation, the building(s) located or to be located on the Land, containing
      as
      of the date of this Agreement an aggregate of 156 apartment units, and all
      apparatus and equipment used in connection with the operation or occupancy
      of
      the Land, such improvements or the 

    
      
        
        

      

      
        -7-

        
          

        

      

      Appurtenances,
        including, without limitation, heating and air conditioning systems and
        facilities used to provide any services on the Land or the Appurtenances
        or for
        the improvements, and all parking and related facilities and amenities
        (collectively, the “Improvements”).

    

     

    “Redemption
      Equity Value” shall mean, with respect to the interest of each Existing
      Limited Partner, such Existing Limited Partner’s limited partner percentage
      interest as set forth on Exhibit A attached hereto, multiplied by
      the LP Net Equity Amount.  A pro forma calculation of the Redemption
      Equity Value for each of the Existing Limited Partners of the Partnership is
      set
      forth in Schedule 1.

     

    “Reg.
      D Compliance Test” has the meaning set forth in Paragraph 4 in the
      Recitals.

     

    “Reference
      Rate” has the meaning set forth in Section 7.1(d).

     

    “Registration
      Rights Agreement” shall mean the Registration Rights and Lock-Up Agreement
      to be entered into among the Continuing Partners and Essex REIT in the form
      attached hereto as Exhibit K.

     

    “Related
      Agreements” means, collectively, all documents to be executed and delivered
      in connection with this Agreement, including, without limitation, the Limited
      Partnership Agreement, the Registration Rights Agreement, the election or
      subscription documents to be executed and returned by the Existing Partners,
      the
      questionnaire or other certifications to ascertain the Accredited Investor
      status of the Existing Partners and all other documents referred to in Section
      2.1(n).

     

    “Related
      Transaction Documents” has the meaning set forth in Section
      8.3.

     

    “Rent
      Roll” has the meaning set forth in Section 2.1(a)(xi).

     

    “Refinancing”
      has the meaning set forth in Section 1.12.

     

    “Schedule
      of Actions” has the meaning set forth in Section 2.1(a)(xiv).

     

    “Schedule
      of Agreements” has the meaning set forth in Section 2.1(a)(v).

     

    “Schedule
      of Partners” has the meaning set forth in Section 1.5.

     

    “Securities
      Act” shall mean the Securities Act of 1933, as in effect from time to time,
      and applicable rules and regulations thereunder.  Any reference herein
      to a specific section or sections of the Securities Act shall be deemed to
      include a reference to any corresponding provision of future law.

     

    “Securities
      Laws” has the meaning set forth in Section 2.1(c).

     

    “Survey”
      has the meaning set forth in Section 2.1(e).

     

    “Taxes”
      has the meaning set forth in Section 3.1(o)(i).

    
      
        
        

      

      
        -8-

        
          

        

      

    

    “Tenant
      Ready” shall mean that the applicable apartment unit is clean, freshly
      painted, all appliances are working and generally ready for an immediate move-in
      by a tenant.

     

    “Terminable
      Contracts” has the meaning set forth in Section 2.1(a)(v).

     

    “Title
      Company” has the meaning set forth in Section 2.1(a)(i).

     

    “Title
      Policy” has the meaning set forth in Section 2.1(d).

     

    “Transaction
      Documents” has the meaning set forth in Section 3.4(a).

     

    “Units”
      has the meaning set forth in Paragraph 5 of the Recitals.

     

    “Warranties”
      has the meaning set forth in Section 2.1(a)(iv).

     

    ARTICLE
      1 – CONSENT SOLICITATION AND CLOSING

     

    1.1  Cooperation
      of the General Partner

     

    The
      General Partners have conducted due diligence with respect to the transactions
      contemplated by this Agreement and, subject to receipt of the Partner Consent
      as
      provided herein, hereby (i) approve and consent as general partners of the
      Partnership to each of such transactions; (ii) agree to recommend (and not
      to withdraw such recommendation) to the Existing Partners that they grant the
      Partner Consent; and (iii) agree to exercise their reasonable best efforts
      to obtain the Partner Consent through the consent solicitation described in
      Section 1.2 hereof, as well as other required third party consents to the
      restructuring of the Partnership as contemplated by this
      Agreement.  Notwithstanding the foregoing, the parties agree that (i)
      the General Partners may discuss with the Limited Partners to the extent that
      the General Partners deem necessary or appropriate the information in the
      Consent Solicitation and related materials and (ii) the General Partners will
      attempt to contact by telephone all Existing Partners who do not respond to
      the
      Consent Solicitation within ten (10) business days of mailing and whenever
      practicable, to direct any questions regarding Essex to a person or persons
      to
      be designated by Essex, although in general, the parties contemplate that the
      General Partners may, at their option, address questions about Essex that are
      answered in the information provided by Essex for inclusion in the Consent
      Solicitation.

     

    1.2  Consent
      Solicitation.

     

    (a)  Promptly
      after the execution and delivery of this Agreement, the General Partners shall
      prepare a solicitation to be delivered to the Existing Partners (i) seeking
      the
      Partner Consent and setting forth the General Partners’ recommendation to the
      Existing Partners that they grant the Partner Consent; (ii) offering to the
      Existing Partners a choice between (A) remaining as limited partners in the
      Partnership after the Closing and receiving Units as provided in Sections 1.3
      and 1.8 hereof, (B) receiving cash upon redemption of their interest in the
      Partnership as provided in Section 1.7 hereof, or (C) receiving cash in
      redemption of a portion of their interest in the Partnership as provided in
      Section 1.7 hereof and receiving Units as provided in Sections 1.3 and 1.8
      hereof with respect to the balance of their interest in the Partnership; and
      (iii) setting forth such information as the General Partners and Essex, in
      consultation, deem reasonably required and material to allow the Existing
      Partners to make an informed decision, including those items as set forth
      below.  The General Partners shall consult with Essex with


    
      
        
        

      

      
        -9-

        
          

        

      

      regard
        to
        the structure, terms and form of the disclosure document or documents to
        be used
        in the solicitation, the consent, election or subscription documents to be
        executed and returned by Existing Partners, the questionnaire or other
        certification to establish Accredited Investor status and related instruments
        or
        agreements (collectively, the “Consent Solicitation”) and, if requested
        by Essex, revise such documents so as to be reasonably satisfactory to Essex
        so
        long as any such requested changes or revisions are not inconsistent with
        the
        terms of this Agreement and are reasonably acceptable the General
        Partners.  Essex and the General Partners hereby agree that the
        Consent Solicitation shall include that certain appraisal of the Property
        attached hereto as Exhibit M which has been prepared by an appraiser
        retained by the General Partners and at the Partnership’s
        expense.

    

     

    (b)  Except
      as
      provided in subsection (c) below, the General Partners shall be solely
      responsible for the compliance of the Consent Solicitation with applicable
      law
      and in particular shall ensure that the Consent Solicitation complies with
      the
      requirements of Regulation D promulgated under the Securities Act with respect
      to offers and sales of securities in reliance on Rule 506.

     

    (c)  Essex
      shall be responsible for providing in writing to the General Partners such
      accurate disclosure with regard to Essex as may be reasonably required for
      inclusion in the Consent Solicitation, shall cooperate with the General Partners
      and assist the General Partners as reasonably requested in connection with
      the
      Consent Solicitation, and shall indemnify the General Partners and the
      Partnership from and against all Losses which are incurred or suffered by them
      based upon, arising out of, or by reason of information supplied by Essex
      specifically for inclusion or incorporation by reference in the Consent
      Solicitation or contained in any document prepared or filed by Essex containing
      any untrue statement of a material fact or omitting any information necessary
      to
      make the statements contained therein not materially misleading.

     

    (d)  The
      General Partner shall exercise their reasonable best efforts to obtain the
      Partner Consent from the Existing Partners, which may include multiple attempts
      to communicate with Existing Partners as part of the Consent Solicitation
      process.

     

    (e)  Unless
      otherwise required by law, the Consent Solicitation shall be structured so
      that
      following a period of time of not more than thirty (30) days following the
      sending of the Consent Solicitation to the Existing Partners, if the Partner
      Consent is obtained in accordance with the Partnership Agreement such that
      the
      transactions contemplated hereby are allowed to proceed pursuant to the
      Partnership Agreement, then the General Partners and Essex shall determine,
      consistent with the terms of this Agreement and the election of the Existing
      Partners, whether each Existing Partner is to receive at the Closing cash as
      provided in Section 1.7 hereof or Units as provided in Section 1.3
      hereof.

     

    1.3  Requirements
      to Obtain or Retain Units

     

    (a)  If
      the Partner Consent has been obtained, the Reg. D Compliance Test is
      satisfied and all other conditions to Closing are satisfied or waived by the
      party authorized to waive such condition, then at the Closing, each Continuing
      Partner shall retain an interest in the Partnership in the form of
      Units.  100% of the total number of Units calculated pursuant to
      Section 1.8 with respect to a Continuing Partner shall be issued in the name
      of
      such Continuing Partner, and shall be delivered to such Continuing Partner
      at
      the 

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        
Closing,
        if such Continuing Partner at the Closing:  (i) executes and
        delivers to the Partnership a counterpart original signature page to the
        Limited
        Partnership Agreement, an executed copy of the Registration Rights Agreement,
        and an agreement to be bound by this Agreement, each dated as of the Closing
        Date; (ii) executes pledges, in form reasonably satisfactory to Essex, (and
        authorizes the execution and filing of related financing statements by Essex)
        confirming and perfecting the grant of a security interest in certain of
        such
        Continuing Partner’s Units to secure certain of the indemnity obligations of
        such Existing Partner pursuant to Article 7 hereof; (iii) makes such
        investment and other representations as are reasonably required by Essex,
        including, without limitation, those set forth in Exhibit B attached
        hereto; (iv) is an Accredited Investor (as demonstrated to Essex’s
        reasonable satisfaction); and (v) delivers a Prospective Subscriber
        Questionnaire and such other documents and information as are requested by
        Essex
        to enable it to conclude that the restructuring of the Partnership, including
        without limitation, the issuance of Units to Existing Partners, is exempt
        from
        registration under all applicable federal and state securities laws in reliance
        upon Rule 506 and Regulation D promulgated under the Securities
        Act.

    

     

    (b)  Any
      Existing Partner who either elects to receive cash in response to the Consent
      Solicitation or is not entitled to receive Units pursuant to this Section 1.3
      shall, prior to the Closing involving the restructuring of the Partnership,
      (i)
      deliver to the Partnership an agreement to be bound by this Agreement dated
      as
      of the Closing Date and (ii) receive cash pursuant to Section 1.7 hereof in
      the
      amount of the Redemption Equity Value of such Partner’s interest in the
      Partnership being redeemed, notwithstanding any election on the part of such
      Existing Partner to receive Units.  Each of the General Partners
      represents that he personally does now and will as of the Closing satisfy the
      requirements of Section 1.3(a) and will elect to be a Continuing Partner, and
      that he will use his reasonable best efforts to cause satisfaction of the
      requirements of Section 1.3(a) by all Continuing Partners.

     

    1.4  Consent
      Solicitation Timing

     

    The
      General Partners agree to send the Consent Solicitation to the Existing Partners
      within five (5) business days after the date hereof, and to exercise their
      reasonable best efforts to obtain the Partner Consent as promptly as
      possible.  If, within thirty (30) days following the sending of the
      Consent Solicitation, the Partnership has not obtained the Partner Consent,
      then
      each of the Partnership and Essex shall be entitled to extend the time period
      during which the Partnership shall seek to obtain the Partner Consent for a
      period of thirty (30) days.

     

    1.5  Results
      of Consent Solicitation

     

    At
      the
      request of Essex from time to time, the Partnership will advise Essex which
      of
      the Existing Partners have consented to the transactions contemplated by this
      Agreement, which have elected to receive cash for their interests in the
      Partnership, which have elected to receive Units, and such other information
      as
      Essex may reasonably request concerning the Consent Solicitation and the results
      thereof.  The Partnership will notify Essex within five (5) business
      days of the receipt of written objections from Existing Partners as to the
      terms
      and conditions of the transactions contemplated hereby and will forward to
      Essex
      copies of all correspondence or other written materials to the Existing Partners
      relating to the transactions contemplated hereby, including the Partner Consents
      for the Partnership and executed Prospective Subscriber Questionnaire consent
      and subscription documents.  The Partnership will promptly notify
      Essex in writing at such time as it has received the Partner Consent as required
      to authorize the restructuring of the Partnership contemplated by
      this

    
      
        
        

      

      
        -11-

        
          

        

      

      Agreement.  If
        the Partner Consent is obtained, then within five (5) business days after
        the
        later of the date on which the Partner Consents for the Partnership are obtained
        or the expiration of the time period for responding to the Consent Solicitation,
        the Partnership shall furnish to Essex a true and complete schedule (the
        “Schedule of Partners”) indicating (i) the name and address of each of
        the Continuing Partners, a pro forma calculation of the Equity Value of such
        Continuing Partner’s interest in the Partnership, and the number of Units to
        which such Continuing Partner will be entitled following the Closing, subject
        to
        Section 1.3 hereof and (ii) the names, addresses, telephone numbers, and
        wire
        transfer instructions of each Existing Partner to which a cash payment is
        required to be made in order to redeem its interest in the Partnership and
        to
        satisfy in full all liabilities of the Partnership other than those which
        have
        been disclosed to Essex in writing and which Essex has agreed in writing
        may
        remain outstanding.  Neither Essex nor the Partnership shall have any
        liability or responsibility for the allocation of Units and cash set forth
        in
        the Schedule of Partners, and they shall be entitled to rely on the Schedule
        of
        Partners in full and without inquiry.  The General Partners agree to
        make such allocations of Units and cash in accordance with the Partnership
        Agreement, and in accordance with other agreements and obligations binding
        on
        the Partnership.

    

     

    1.6  Failure
      to Obtain Partner Consent

     

    If
      (i)
      the Partner Consent for the Partnership has not been obtained within thirty
      (30)
      days after the sending of the Consent Solicitation (or such later date as either
      Essex or the Partnership shall have extended such date to pursuant to Section
      1.4), or (ii) if the consent of the partners of the Co-Owner Partnership to
      the
      transactions contemplated by the Other Restructuring Agreement has not been
      obtained within the time frames set forth in the Other Restructuring Agreement,
      then none of the parties to this Agreement shall be required to proceed with
      the
      restructuring of the Partnership.

     

    1.7  Redemption
      of Interests of Certain Partners at Closing

     

    If
      the
      Partner Consent has been obtained, the Reg. D Compliance Test is satisfied
      and all other conditions to Closing are satisfied or waived by the party
      authorized to waive such condition, then, subject to Section 2.1(r), at the
      Closing, each Existing Partner who has properly elected to receive cash upon
      redemption of its interest in the Partnership, or portion thereof, as described
      in Section 1.2 hereof, shall receive in redemption of such Existing Partner’s
      interest, or portion thereof, in the Partnership, cash in the amount of the
      Redemption Equity Value thereof.  Such redemptions shall be funded by
      a loan from EPLP to the Partnership.

     

    1.8  Interests
      in the Partnership Following Closing

     

    If
      the
      Partner Consent has been obtained, the Reg. D Compliance Test is satisfied
      and all other conditions to Closing are satisfied or waived by the party
      authorized to waive such condition, then at the
      Closing:  (i) EMC, EPLP and the Continuing Partners shall enter
      into the Limited Partnership Agreement, (ii) EMC shall be issued 100% of
      the general partnership interest in the Partnership in exchange for the capital
      contribution of one one-hundreth (1/100th) of the aggregate amount of the book
      capital accounts attributable to all of the Units, (iii) the interest in
      the Partnership of each Continuing Partner shall be that number of Units
      determined by dividing the Equity Value of such Continuing Partner’s interest,
      or portion thereof, in the Partnership by the Pricing Value, (iv) the book
      capital account of each Continuing Partner shall initially be set at the Equity
      Value of such Continuing Partner’s interest in the Partnership, or portion
      thereof, and (v) the book capital account of EMC and EPLP shall be set at
      the respective cash contributions made by each of them to the
      Partnership.  If EPLP contributes cash to the Partnership, then it
      will receive that number of Units determined by 

    
       

      
        -12-

        
           

          
            
              

            

          

        

      

      dividing
        the amount of cash it has contributed by the Pricing Value.  The
        initial distribution payable with regard to any Units issued at the Closing
        shall be prorated based upon the number of days remaining in the applicable
        calendar quarter in which such Units are issued and the actual number of
        days in
        such calendar quarter and the provisions of this sentence shall survive the
        Closing.

    

     

    1.9  Closing
      Mechanics and Costs

     

    Upon
      receipt of the Partner Consent, the General Partners agree to take all action
      necessary on the part of the Partnership to facilitate the prompt consummation
      of the transactions contemplated by this Agreement.  The Closing shall
      take place through escrow arrangements reasonably acceptable to the parties,
      and
      if a meeting is required, it shall take place at the offices of Essex or such
      other location as may be agreed upon by Essex and the General
      Partner.  The cost of escrow shall be paid one-half by Essex and
      one-half by the Existing Partners.  All other costs shall be paid in
      accordance with the custom in the County where the Property is
      located.

     

    1.10  Closing
      Date

     

    The
      parties shall conduct the Closing on June 30, 2007, subject to extensions as
      provided for in this Agreement (the date of such Closing, the “Closing
      Date”).  If either Essex or the Partnership extends the date for
      responding to the Consent Solicitation, the date for the Closing shall
      automatically be extended to the first business day which is at least three
      (3)
      weeks after the last date for responding to the Consent
      Solicitation.  In addition, Essex shall be entitled to extend the date
      for the Closing until the first (1st) business day which is at least ten (10)
      days, but no more than twenty (20) days, after the date on which Essex receives
      notice from the Partnership that it has obtained the Partner
      Consent.

     

    1.11  Blue
      Sky Cooperation

     

    The
      Partnership and each Continuing Partner shall cooperate and do all acts as
      may
      be reasonably required to comply with any requirement under applicable federal
      and state securities law to qualify the Units for distribution to such
      Continuing Partners, including but not limited to the making of any and all
      representations or undertakings required by applicable state securities law
      or
      state securities regulators (or deemed distribution, in the case of persons
      holding interests in the Partnership) in connection with the
      Units.  Essex shall be responsible for preparing all filings under the
      state securities laws of California and Essex and/or the Partnership
      (post-closing) shall be responsible for paying any legal and filing fees
      required in connection with Blue Sky compliance.

     

    1.12  Consent
      of Mortgage Lender

     

    The
      General Partners and Essex shall each exercise commercially reasonable efforts
      to seek the required approvals from the holder of the Mortgage Debt for the
      transactions contemplated by this Agreement, including, but not limited to,
      if
      required, obtaining consent to grant security interests pursuant to Section
      7.1(b)(ii) (and file related financing statements).  The previous
      mortgage debt on the Property was refinanced with $14,000,000 of the Mortgage
      Debt on February 9, 2007; $6,000,000 of the Mortgage Debt will be placed on
      the
      Property prior to Closing (collectively, the
“Refinancing”).  All Refinancing proceeds in excess of the
      previous mortgage debt shall be distributed to the Partners prior to the Closing
      in accordance with the terms of the Partnership Agreement.  The
      approval from the lender (the “Mortgage Lender”) under the Mortgage Debt
      for the consummation of the transactions contemplated by this Agreement shall
      be
      sought by the Partnership, and the Partnership shall use all commercially
      reasonable efforts in cooperating with Essex in the joint pursuit of such
      approval as requested by Essex, but shall not incur any costs or expenses
      without 

    
       

      
        -13-

        
           

          
            
              

            

          

        

      

      the
        prior
        written approval of Essex.  Those terms include but are not limited to
        the amendment of various provisions and the delivery of consent documentation
        (the “Mortgage Debt Consent Documents”) and estoppel certificates
        (“Mortgage Debt Estoppels”) dated as of the Closing Date, in form and
        substance reasonably satisfactory to Essex, which shall include, among other
        things, (i) the current balance of the loan, (ii) the interest rate on
        the loan, (iii) the amount of the monthly payments for the loan,
        (iv) a representation that the applicable Mortgage Instruments are all the
        documents that were executed and delivered in connection with applicable
        Mortgage Debt, and (v) a statement that no default exists under any of the
        applicable Mortgage Instruments and that no default would exist, but for
        the
        giving of notice or the passage of time, or both.  Essex shall be
        entitled to extend the Closing Date, if  necessary, for a period of up
        to thirty (30) days to obtain the Mortgage Debt Consent Documents and/or
        Mortgage Debt Estoppels.

    

     

    ARTICLE
      2 - CERTAIN COVENANTS AND CONDITIONS TO CLOSING

     

    2.1  Certain
      Covenants and Conditions to Essex’s Obligations

     

    The
      obligation of Essex to consummate the transactions contemplated hereunder shall
      be subject to the satisfaction or waiver by Essex of each of the conditions
      set
      forth below and the performance by the Partnership, the General Partners and
      each of the other Existing Partners of their respective obligations set forth
      below and elsewhere in this Agreement

     

    (a)  Due
      Diligence.  Essex has already conducted preliminary due diligence
      on the Property. Essex and its authorized representatives, agents and employees
      shall have the right, however, to continue to conduct any and all due diligence
      relative to the Property and the Partnership as may be deemed necessary or
      appropriate by Essex in its sole discretion.  It shall be a condition
      to Essex’s obligations under this Agreement that Essex shall be satisfied in its
      sole discretion with all such due diligence. Without limiting the foregoing,
      the
      Partnership shall make available to Essex for review and copying at Essex’s
      election any and all materials, files, books, records, information and documents
      relating to (i) the Property, including, without limitation, all Leases,
      management agreements, service and other contracts, financial reports, the
      Rent
      Roll, existing surveys, permits and other similar or dissimilar materials,
      and
      (ii) the Partnership, including, without limitation, all organizational
      documents, financial reports and supporting records, books, records, minutes
      and
      other similar materials.  Essex shall have the right to talk with
      third-parties selected by Essex in the performance of its due
      diligence.  The Partnership shall promptly, and in any event within
      five (5) days of Essex’s request therefor, deliver or otherwise make available
      to Essex true, correct and complete copies of any requested materials in the
      possession of the Partnership or under its control and all of the Partnership’s
      other materials, files, books, records and information relating to the Property
      and/or the Partnership.  Essex shall have the right to communicate
      with third-parties selected by Essex in the performance of its due
      diligence.  Without limiting the foregoing, the Partnership shall,
      within five (5) days of the date of this Agreement, except as otherwise
      expressly provided or except to the extent previously delivered to, or currently
      in the possession of, Essex, cause to be delivered to Essex, at the
      Partnership’s sole cost and expense, the following with respect to the Property
      and/or the Partnership to the extent same are in the possession or control
      of
      the Partnership:

     

    (i)  a
      current
      extended coverage preliminary title report on the Real Property and commitment
      to issue the Title Policy, issued by First American Title Insurance Company,
      1737 North First Street, San Jose, CA 95112, Attn:  Bill Perry (the
“Title Company”), 

    
      
        
        

      

      
        -14-

        
          

        
accompanied
        by complete copies of all documents referred to in such report (such report
        and
        documents, collectively, the “Preliminary Report”), and the
        Survey;

    

     

    (ii)  copies
      of
      any and all existing and proposed easements, covenants, restrictions, agreements
      or other documents or instruments which affect or may in the future affect
      title
      to the Property and which are not disclosed by the Preliminary
      Report;

     

    (iii)  copies
      of
      the property tax bills and assessments for the Property, as well as any other
      tax bills payable by the Partnership, for the three (3) most recent years,
      including evidence of payment of each;

     

    (iv)  all
      presently effective warranties or guaranties from any contractors,
      subcontractors, suppliers, servicemen or materialmen in connection with the
      Property, including, without limitation, any construction, renovation, repairs
      or alterations of any Improvements, any Personal Property or any tenant
      improvements, including, without limitation, all construction and building
      component labor and/or materials warranties and guarantees from contractors
      or
      subcontractors (collectively, the “Warranties”);

     

    (v)  a
      schedule (the “Schedule of Agreements”) setting forth a list of all of
      the Contracts relating to the Property, together with true, correct and complete
      copies of all of the Contracts; Essex shall have the right to designate those
      Contracts that the Partnership shall terminate prior to Closing (the
“Terminable Contracts”);

     

    (vi)  reports
      of insurance carriers insuring the Property, and each portion thereof,
      respecting the claims history of the Property, if any, certificates of insurance
      and insurance policies and insurance claims history for the three (3) most
      recent calendar years prior to Closing and, to the extent available, for the
      current year;

     

    (vii)  environmental
      reports, environmental audits, soil reports, site plans (with dimensions),
      engineering reports and plans (including, without limitation, regarding
      foundation, walls, roofs, floors, supports and mechanical systems such as HVAC
      to the extent available), reports regarding the compliance of the Property
      with
      the requirements of the Americans with Disabilities Act of 1990 (42 U.S.C.
      12181, et seq.) to the extent available, seismographic reports to the extent
      available, traffic reports, demographic information, landscape plans, structural
      calculations, floor plans (identifying tenant and vacancy locations), certified
      copies of the as-built plans and specifications, architect’s certificate
      certifying the square footage of the Improvements, if available, all items
      pertaining to any remodeling or renovation of the Property, construction
      contracts, a current inspection report by a licensed Structural Pest Control
      Operator, other reports or documents of significance to the Property, copies
      of
      the zoning description applicable to the Property, and copies of final
      certificates of occupancy for all improvements on the Land;

     

    (viii)  a
      complete inventory of all Personal Property owned by the Partnership or used
      at
      or in connection with the Property;

     

    (ix)  all
      income and expense statements, year-end financial statements, monthly operating
      statements and year-to-date statements for the three (3) most recent calendar
      

    
      
        
        

      

      
        -15-

        
          

        

      

      years
        prior to Closing (audited, if available) and, to the extent available, the
        current year, all of which shall be certified by the General Partners as
        true,
        complete and correct and accurately representing the results of operation
        of the
        Property for the relevant periods;

    

     

    (x)  balance
      sheets as of December 31, 2006, for the Partnership, together with
      statements of income and cash flows for each of the preceding three (3) calendar
      years and three-month period most recently ended, all of which financial
      statements, together with the notes thereto, and any updates thereto and interim
      financial statements provided to Essex, are collectively referred to as the
      “Partnership Financial Statements”, provided that, to the extent they are
      in the possession of the Partnership as of the date hereof, the Partnership
      shall deliver to Essex audited Partnership Financial Statements;

     

    (xi)  (A)  copies
      of the operating and capital budgets for the Property for the current year,
      (B) a comparison of actual to budgeted results for the current year and an
      explanation of significant variances, (C) list of all capital expenditures
      for the Property for the three (3) most recent calendar years, (D) an aged
      receivables report through the date of this Agreement, and (E) monthly
      receivables reports for the previous twenty (24) calendar months.

     

    (xii)  (A)  copies
      of all existing and pending Leases, lease files (including, without limitation,
      all guarantees, subleases and assignments) and tenant correspondence,
      (B) copies of all executed or pending letters of intent with prospective
      tenants, (C) a current leasing status report from the leasing broker(s),
      (D) a schedule of leasing commissions now or hereafter payable on a space
      by space basis, (E) a copy of the current standard lease form, (F) a
      current rent roll of the Property containing each tenant name, suite number,
      size of premises, rent, rental increases, percentage rent, pro rata share,
      caps,
      security deposit, term, commencement and expiration dates, options and other
      material provisions (the “Rent Roll”), (G) a list of all concessions
      made to tenants, including free or reduced rent, above standard tenant
      improvements, cash payments, moving allowances, or takeover of previous lease
      obligations; and (H) copies of the most recent financial statements and
      credit reports or other credit information, if any, on any tenant and of any
      guarantors of any Leases.

    (xiii)  all
      Licenses and documents evidencing Intellectual Property;

     

    (xiv)  (A)  a
      schedule (the “Schedule of Actions”) setting forth all Actions pending or
      threatened against the Partnership, any general partner of the Partnership
      or
      the Property, which (y) question or could reasonably be expected to
      question the validity or legality of the transaction contemplated hereunder
      or
      under the Related Agreements or (z) affect or could reasonably be expected
      to affect the Property or the Partnership in any adverse way, and
      (B) copies of all notices of any violations of any Law relating to the
      Property or the Partnership;

     

    (xv)  all
      Mortgage Instruments;

     

    (xvi)  upon
      written request from Essex, access to records of all bank accounts maintained
      by
      or on behalf of the Partnership (the “Bank Accounts”);

     

    (xvii)  UCC
      searches showing any and all filings against (A) the Partnership in
      California or any other jurisdictions where the filing of financing statement
      could 

    
       

      
        -16-

        
           

          
            
              

            

          

        

      

      perfect
        a
        lien against the assets of the Partnership and (B) the Existing Partners in
        the jurisdictions in which the Existing Partners reside.  The
        Partnership shall remove and release from the public records all UCC filings
        against the Partnership that pertain to the Property (other than filings
        relating to the Mortgage Debt) effective as of the Closing
        Date;

    

     

    (xviii)  true
      and
      complete copies of all of the Partnership’s organizational documents and
      certificates of limited partnership filed with any Authorities, and all material
      written communications relating to the Partnership from or to the Existing
      Partners made within the past five (5) years; and

     

    (xix)  any
      updates, modifications, amendments, substitutes, or  additional items
      relating to the categories listed in Section 2.l(a) of this Agreement and not
      previously delivered to Essex.

     

    As
      soon
      as reasonably practicable after any updated version of the items described
      in
      this Section 2.l(a) becomes available to the Partnership, (collectively, such
      updated version of the items described in Section 2.l(a) shall be referred
      to
      herein as “New Matters”), the Partnership shall provide copies of such
      New Matters to Essex.

     

    (b)  Consents.  It
      shall be a condition to Essex’s obligation to close that, not later than twenty
      (20) days prior to the Closing, the General Partners shall have obtained the
      Partner Consent and the Partnership and the Cash Interest Holders shall have
      obtained, and such parties shall use their best effort to timely obtain, all
      authorizations, consents, approvals, elections and waivers from third parties
      other than partners in the Partnership (as approved by Essex pursuant to the
      terms of this Section 2.1(b), collectively, the “Consents”), including,
      without limitation, from all applicable Authorities, necessary (i) to
      enable the redemption for cash of all of the Partnership interests that Existing
      Holders have elected to have redeemed, all in accordance with the terms of
      this
      Agreement and all other agreements by which the Partnership or the Property
      is
      bound or to which the Partnership or the Property is subject; (ii) to
      enable the Partnership, the General Partners and the other Existing Partners
      to
      perform all of their respective obligations under this Agreement and the Related
      Agreements and (iii) to consummate the transactions contemplated by this
      Agreement.  It shall be a condition to Essex’s obligation to close
      that, no later than twenty (20) days before the Closing Date, the Partnership
      and the General Partners shall have obtained, and such parties shall use their
      best efforts to timely obtain, such elections (the “Elections”) from the
      Existing Partners as are necessary to permit issuance of the Units and the
      payment of cash, if applicable, to the Cash Interest Holders and the Existing
      Partners in accordance with all applicable Securities Laws and legal
      obligations, including, without limitation, regarding distribution of disparate
      consideration by the Partnership as reasonably determined by Essex upon the
      advice of counsel, as well as an affirmation of the indemnities set forth in
      Article 7 hereof.  The Consents shall include, without
      limitation, any authorizations, consents, approvals and waivers necessary in
      connection with any Securities Laws.  The form and substance of the
      Consents and Elections shall be reasonably satisfactory to Essex and duly
      authorized, executed and delivered copies thereof in form and substance
      reasonably satisfactory to Essex shall be obtained by or delivered to Essex
      on
      or before the date which is twenty (20) days prior to the Closing.

    
      
        -17-

        
           

          
            
              

            

          

        

      

    

    (c)  Exempt
      Transactions.  It is expressly acknowledged and agreed by all
      parties hereto that it is a condition to Essex’s obligations under this
      Agreement that the issuance and distribution of each Unit to Continuing Partners
      pursuant to the terms of this Agreement be an exempt transaction under all
      applicable Securities Laws, including without limitation as
      follows:  (i) the Consent Solicitation and the offer and sale of
      Units to Existing Partners shall be exempt from the registration requirements
      of
      the Securities Act by reason of Regulation D promulgated thereunder;
      (ii) the Consent Solicitation shall comply as to form with all applicable
      federal and state securities laws, including specifically Rule 502 and 506
      promulgated under the Securities Act; and (iii) the documents delivered to
      the Existing Partners in the Consent Solicitation (other than information
      provided by Essex in writing specifically for inclusion therein) shall not
      contain any untrue statement of a material fact or omit to state a material
      fact
      necessary to make the statements made, in light of the circumstances under
      which
      they were made, not misleading.  If, upon the advice of counsel, Essex
      determines that it would be a violation of the Securities Act, the Exchange
      Act
      or any applicable state or other federal securities Law or any rule or
      regulation promulgated thereunder, including, without limitation, of any
      so-called “roll-up” laws, rules or regulations, (collectively, “Securities
      Laws”) to deliver or issue Units to the Continuing Partners, then Essex
      shall have the right to terminate this Agreement unless either (i) one (1)
      or more Existing Partners who may receive Units without violation of Securities
      Laws purchase before Closing the interest of the person who is unable to receive
      Units or (ii) the person who is unable to receive Units elects to accept
      cash for his interest in lieu of Units, which election must be made not later
      than twenty (20) days prior to Closing or ten (10) days after Essex delivers
      notice that receipt of Units is not permissible, whichever is
      later.  The Closing Date shall be extended if necessary to allow for
      an election as contemplated by clause (ii) of the preceding
      sentence.  Such termination by Essex shall be made by delivery of
      written notice thereof to the Partnership.  If a condition of this
      Section 2.l(c) is not satisfied as a result of any intentional act on the part
      of a General Partner, or as a result of an omission by a General Partner to
      take
      action which, under the terms of this Agreement, he has agreed to take, the
      Partnership shall be deemed to have breached its obligations under this
      Agreement unless such matter is cured within ten (10) days after receipt by
      a
      General Partner of written notice of such breach.

     

    (d)  Title
      Insurance.  The Partnership shall provide to Essex an original
      ALTA owner’s policy of title insurance (Form B, rev. 10/17/70) issued by the
      Title Company in an amount equal to the sum of Twenty-Eight Million Dollars
      ($28,000,000), insuring fee simple title to the Real Property in the
      Partnership, subject only to such exceptions as Essex shall have approved in
      writing, without boundary, encroachment or survey exceptions and with such
      endorsements and reinsurance as Essex shall require, and otherwise in form
      and
      substance satisfactory to Essex (the “Title Policy”).  The
      Title Policy shall also provide full coverage against mechanic’s and
      materialmen’s liens and parties in possession other than tenants under Leases as
      tenants only.

     

    (e)  Survey.  The
      Partnership shall provide to Essex within ten (10) days of the date hereof
      an
“as-built” survey of the Real Property in form and substance meeting Essex’s
      survey requirements (the “Survey”).

     

    (f)  UCC
      Search.  The Partnership shall provide to Essex the results of a
      UCC Search from the jurisdictions listed on Exhibit C, with no individual
      result dated earlier than ten 

    
      
        -18-

        
           

          
            
              

            

          

        

      

      (10)
        days
        prior to the Closing Date, showing any and all filings against the
        Partnership,  the General Partners and any Existing Partner as debtor
        or lessor, and shall remove and release from the public records all such
        filings
        with respect to the Property or the Existing Partners’ interest in the
        Partnership (other than filings in which the Partnership is the debtor and
        in
        which the holder of the Mortgage Debt is the Secured Party) effective as
        of the
        Closing Date.

    

     

    (g)  Accuracy
      of Representations and Warranties.  The representations and
      warranties of the Partnership, the General Partners and the Existing Partners
      contained herein shall be true and correct as of the date of this Agreement
      and
      as of the Closing Date, and a certificate to such effect shall be executed
      and
      delivered by the General Partners as of the Closing Date with respect to the
      representations and warranties of the General Partners and the
      Partnership.

     

    (h)  Opinion
      of Counsel.  The Partnership shall have delivered to Essex an
      opinion of its legal counsel, The Law Offices of Jesse W. Jack, dated as of
      the
      Closing Date, in form and substance satisfactory to Essex regarding the due
      organization and authority of the Partnership, the absence of conflicts, the
      due
      execution, delivery and enforceability of this Agreement and the Related
      Agreements, the power and authority of the Partnership and the General Partners
      to consummate the transactions which are the subject of this Agreement and
      the
      Related Agreements and to perform their obligations under this Agreement and
      the
      Related Agreements, that the offer and issuance of Units to the Continuing
      Partners is exempt from the registration requirements of the Securities Act,
      and
      other customary matters covered by closing opinions in similar
      transactions.

     

    (i)  Authority.  On
      or before the date hereof, the Partnership shall have delivered to Essex
      evidence of the Partnership’s and the General Partners’ authority to execute and
      deliver this Agreement and all Related Agreements and to consummate the
      transactions which are the subject of this Agreement and to perform their
      respective obligations hereunder and under the Related
      Agreements.  All such evidence shall be in form and substance
      reasonably satisfactory to Essex and shall include, without limitation,
      organization documents of the Partnership, certified by the Secretary of State
      of California, certificates of legal existence and good standing, qualifications
      to do business, if applicable, and secretary’s certificates as to resolutions
      and incumbency.

     

    (j)  Absence
      of Litigation.  No Action shall be pending or threatened against
      Essex, the Partnership, the General Partners, any of the Existing Partners
      or
      the Property, which (i) questions or could reasonably be expected to
      question the validity or legality of the transaction contemplated under this
      Agreement or the Related Agreements or (ii) affects or could reasonably be
      expected to affect the Property in any adverse way.  The Partnership
      shall certify as to the foregoing items (i) and (ii) at Closing (other
      than with respect to Essex as to which the General Partners make no
      certification).

     

    (k)  Contract
      Termination.  The Partnership shall have terminated all of the
      Terminable Contracts on or before the Closing Date.

    
      
        
        

      

      
        -19-

        
          

        

      

    

    (l)  Delivery
      of Partnership Documents.  At the Closing, the Partnership and/or
      the General Partners shall deliver to Essex, to the extent not previously
      delivered to, or in the possession of, Essex, the following, in form and
      substance satisfactory to Essex:

     

    (i)  FIRPTA
      Certificate(s).  Certification confirming that the Partnership is
      not a “foreign person” as defined in Section 1445(f)(3) of the Code, or under
      any similar sections of any similar laws of the State of California, i.e.,
      the
      Partnership is not a nonresident alien, foreign corporation, foreign
      partnership, foreign trust or foreign estate as those terms are defined in
      the
      Code and income Tax Regulations or similar laws or regulations of the State
      of
      California;

     

    (ii)  Keys.  Keys
      to all locks located at the Property;

     

    (iii)  Letters
      to Tenants.  If requested by Essex, a letter executed by a General
      Partner on behalf of the Partnership (in a form provided by Essex), addressed
      to
      all tenants of the Property, notifying all such tenants of the change in general
      partner of the Partnership and directing payment of all rents accruing after
      the
      Closing Date to be made to EPLP on behalf of the Partnership or at EPLP’s
      direction;

     

    (iv)  Letters
      to Vendors.  If requested by Essex, a letter executed by the
      Partnership (in a form provided by Essex), addressed to all vendors under the
      Contracts, notifying all such vendors of the change in the general partner
      of
      the Partnership;

     

    (v)  Original
      Documents and Files.  To the extent not previously delivered to
      Essex and in the Partnership’s possession or under its control, originals of any
      of the Contracts, Leases, Licenses, all books and records of the Partnership,
      and all other financial or other information or documents pertaining to the
      Partnership and the Property; or if the original is not in the Partnership’s
      possession or control, copies thereof;

     

    (vi)  Tax
      Bills.  Copies of the most currently available tax bills for the
      Property;

     

    (vii)  Rent
      Roll.  An updated Rent Roll for the Property dated no later than
      five (5) days prior to Closing, which updated Rent Roll will be used to identify
      all Leases of space at the Property for purposes of this Agreement as of the
      Closing Date and shall reflect no adverse changes from the Rent Roll attached
      hereto as Exhibit F. The General Partners shall specifically identify any
      changes from the Rent Roll attached hereto as Exhibit F, and shall
      deliver a certificate dated as of Closing Date certifying that such updated
      Rent
      Roll is true, complete and correct (including, without limitation, the amount
      of
      security deposits and description of uncured tenant defaults and delinquencies
      listed thereon) and stating whether there exist any events which with the
      passage of time and/or the giving of notice would constitute a tenant default
      under any Lease;

     

    (viii)  Title
      Insurance.  The Title Policy for the Property;

     

    (ix)  Survey.  A
      survey meeting the requirements of Section 2.1(e);

    
      
        
        

      

      
        -20-

        
          

        

      

    

    (x)  Consents.  All
      Consents and Elections required pursuant to Section 2.1(b);

     

    (xi)  Opinion
      of Counsel.  The opinion of counsel to the Partnership required
      pursuant to Section 2.1(h);

     

    (xii)  Consent
      of Mortgage Lender. The written consent of the Mortgage lender to the
      transactions described herein and the fully executed Mortgage Debt Consent
      Documents and Mortgage Debt Estoppels;

     

    (xiii)  Mortgage
      Instruments.  Originals of all of the Mortgage Instruments;
      and

     

    (xiv)  Other.  Such
      other documents, instruments, consents, authorizations or approvals as may
      be
      required by, and reasonably satisfactory to, Essex, its counsel or the Title
      Company and that may be reasonably necessary or desirable to consummate the
      transactions that are the subject of this Agreement and the Related Agreements
      and to otherwise effect the agreements of the parties hereto, including, without
      limitation, as required under this Section.

     

    (m)  Timing
      of Certain Document Deliveries.  At least five (5) Business Days
      prior to the Closing, the Partnership shall make, or cause to be made, all
      document deliveries required by Sections 2.1(b) through 2.1(k) and Section
      2.1(l), Items (vii), (xii) and (xiii).

     

    (n)  Delivery
      of Continuing Partner Documents.  At Closing, each of the
      Continuing Partners shall deliver to Essex the following:

     

    (i)  A
      signature page to the Limited Partnership Agreement, a signature page to the
      Registration Rights Agreement, and an agreement to be bound by this Agreement,
      each dated as of the Closing Date, duly executed and delivered;

     

    (ii)  to
      the
      extent not previously delivered to Essex, the investment representations and
      warranties contained in Exhibit B and a Prospective Subscriber
      Questionnaire;

     

    (iii)  All
      tax
      and financial information relating to the Continuing Partners’ interests in the
      Property as may be reasonably requested by Essex; and

     

    (iv)  Such
      other documents and instruments as may be reasonably necessary or desirable
      to
      consummate the transactions involving as contemplated by this Agreement and
      the
      Related Agreements.

     

    (o)  Delivery
      of the Cash Interest Holder Documents.  At Closing, each of the
      Cash Interest Holders shall deliver an assignment of the portion of its
      Partnership interest being redeemed to the Partnership to be paid for in cash,
      containing the representations and warranties set forth in Section 3.4 and
      otherwise in the form attached as Exhibit N to this
      Agreement.

    
      
        -21-

        
           

          
            
              

            

          

        

      

    

    (p)  Accuracy
      of Documents.  The General Partners shall have certified to Essex
      that to the best of their knowledge all materials delivered pursuant to Section
      2.1(a) are true, correct and complete copies of all such documents in the
      Partnership’s possession or under its control and, to the best of their
      knowledge, there are no other material agreements or documents relating to
      the
      subject matter thereof in the Partnership’s possession or under its control that
      have not been made available to Essex.

     

    (q)  Closing
      of Other Restructuring Agreement.  It shall be a condition to
      Essex’s obligation to close hereunder that all conditions to closing set forth
      in the Other Restructuring Agreement have been satisfied or waived by the party
      authorized to waive such condition.

     

    (r)  Limitation
      on Redemptions.  Existing Partners may not have elected to have,
      in the aggregate, more than 40% of all of the pre-Closing interests in the
      Partnership redeemed.

     

    (s)  Financing
      Statements.  Subject to obtaining consent from the Mortgage
      Lenders, if required, all Continuing Partners shall execute and deliver to
      Essex
      such documentation as Essex may reasonably require to confirm and perfect the
      security interest granted to Essex in Article 7 in certain of the Units,
      and proceeds thereof, to be owned by Continuing Partners after the Closing
      (and
      hereby authorizes Essex to file related financing statements in connection
      therewith).  Such security interest shall be released on the fourth
      (4th)
      anniversary of the Closing; provided, however, that the security interest
      granted and financing statements shall be extended if any unresolved claims
      are
      then outstanding as provided in Article 7 below.

     

    2.2  Conditions
      to the Obligations of the Partnership

     

    The
      obligation of the Partnership to consummate the transaction contemplated under
      this Agreement shall be subject to the satisfaction or waiver by the
      Partnership, on or before the Closing Date, of each of the conditions set forth
      below and the performance by EMC and EPLP of their respective obligations set
      forth below and elsewhere in this Agreement.

     

    (a)  Accuracy
      of Representations and Warranties.  All representations and
      warranties of Essex hereunder shall be true and correct as of the date of this
      Agreement and as of the Closing Date, and a certificate to such effect shall
      be
      executed and delivered by Essex as of the Closing Date.

     

    (b)  Absence
      of Litigation.  No Action shall be pending or threatened against
      Essex which questions or could reasonably be expected to question the validity
      or legality of the transactions contemplated under this Agreement or the Related
      Agreements.

     

    (c)  Limited
      Partnership Agreement.  EPLP and EMC shall execute and deliver the
      Limited Partnership Agreement, and the Partnership shall issue the Units to
      the
      Continuing Partners.

     

    (d)  Registration
      Rights Agreement.  Essex REIT shall execute and deliver the
      Registration Rights Agreement.

    
      
        
        

      

      
        -22-

        
          

        

      

    

    (e)  Release.  Essex
      shall use commercially reasonable efforts to have the Mortgage Lender release
      the General Partners from their pre-Closing obligations under any guaranties
      entered into in connection with obtaining the Mortgage Debt.

     

    2.3  Negotiation
      of Documents

     

    The
      parties agree that prior to Closing, they will in good faith negotiate all
      documents which are required to be executed and delivered by any party hereto
      at
      Closing and are not attached as exhibits to this Agreement, with the
      understanding that such documents will contain such customary provisions,
      representations and warranties and indemnifications as are customarily contained
      in documents designed to effect similar transactions.

     

    ARTICLE
      3 - REPRESENTATIONS AND WARRANTIES

     

    3.1  Representations
      and Warranties of the Partnership

     

    The
      Partnership and the General Partners hereby represent and warrant to Essex
      as of
      the date of this Agreement as follows, and each of the Partnership and the
      General Partners shall, as a condition to Essex’s obligations to complete the
      transactions contemplated by this Agreement, be deemed to remake the following
      representations and warranties as of the Closing Date as if fully made again
      thereon.

     

    (a)  Existence
      and Power.  The Partnership has been duly formed and is a validly
      existing limited partnership under the laws of the State of California and
      is
      duly authorized to transact business in the State of California and in all
      other
      jurisdictions where such qualification is necessary to carry on its business
      as
      now conducted.  The Partnership  has all power and authority
      under its organizational documents and applicable Laws (i) to enter into
      and deliver this Agreement and all other documents to be executed and delivered
      in connection with the transaction that is the subject of this Agreement,
      including, without limitation, all Related Agreements, to the extent they are
      to
      be executed by the Partnership, (ii) to perform its obligations under this
      Agreement and the Related Agreements executed by the Partnership, and
      (iii) to own the Property, the Personal Property and its other assets and
      conduct its business.  To the best of the General Partners’ knowledge,
      the Partnership possesses all Licenses necessary to conduct its business as
      presently carried on by it and as contemplated by it to be carried on by the
      Partnership after the Closing and the closing of the transactions contemplated
      hereby.  The Partnership has delivered to Essex recently certified
      true and complete copies of its limited partnership agreement, certificate
      of
      limited partnership, and certificate of good standing in the State of
      California.

     

    (b)  Authorization;
      No Contravention.  The execution and delivery of this Agreement
      and the Related Agreements executed by the Partnership and the performance
      by
      the Partnership of its obligations under all of the foregoing have been duly
      authorized by all requisite organizational action on the part of the
      Partnership.  Subject to obtaining the Partner Consent, this Agreement
      constitutes and, upon execution thereof, the Related Agreements executed by
      the
      Partnership will constitute, the valid, legal and binding obligations of the
      Partnership, enforceable against the Partnership.  None of this
      Agreement or the Related Agreements executed by the Partnership or the General
      Partners, nor the performance by the Partnership or the General Partners of
      their respective obligations thereunder, will (i) violate any provision of
      the Partnership Agreement or other organizational documents of the Partnership;
      (ii) violate, 

    
      
        -23-

        
           

          
            
              

            

          

        

      

      conflict
        with or result in a default under any material contract or obligation to
        which
        the Partnership is a party or by which it or its assets are bound;
        (iii) violate or result in a violation of, or constitute a default under
        any provision of any law, regulation or rule, or any order of, or any
        restriction imposed by, any Authority on the Partnership or the Property;
        (iv) require the Partnership to obtain any approval, consent or waiver of,
        or make any filing with, any Person or Authority that has not been obtained
        or
        made, except as contemplated in this Agreement, the General Partners shall
        use
        their reasonable best efforts to obtain all approvals, consents, waiver or
        filings, as applicable, prior to the Closing or, at any earlier time required
        hereunder or under applicable Law; or (v) except as provided by this
        Agreement, result in the creation or imposition of any Claim on any of the
        assets of the Partnership, or to the best of the General Partners’ knowledge on
        any of the Existing Partners’ interest in the Partnership.  There is
        no Action pending or threatened involving the Partnership which, if determined
        adversely to it or its assets, would interfere with its ability to execute
        or
        deliver, or perform its obligations under this Agreement or the Related
        Agreements executed by it or have a Material Adverse Effect on the financial
        position, operations, business or prospects of the Partnership or the
        Property.

    

     

    (c)  Descriptive
      Information; Diligence.  The General Partners and the Partnership
      have made all disclosures to Essex required under applicable Laws and under
      this
      Agreement.  All documents delivered by or on behalf of the Partnership
      to Essex, or made available to Essex for review in connection with the
      transactions contemplated by this Agreement and the Related Agreements,
      including, without limitation, all leases, tenancy and occupancy agreements
      (including, without limitation, all amendments, modifications, agreements,
      records, substantive correspondence and other documents affecting in any way
      a
      right to occupy any portion of the Land or the Improvements) affecting the
      Property (collectively, the “Leases”) and all other materials delivered
      pursuant to Section 2.1(a), are true, correct and complete copies of all such
      documents in the Partnership’s possession or control.  The documents
      described in the immediately preceding sentence have not been amended or
      modified by any oral agreements, and there are no other such agreements or
      documents in existence.  The General Partners and the Partnership have
      delivered or made available to Essex all of the Partnership’s books, records and
      files and all other materials relating to the Property or the Partnership that
      are in their possession or under their control.

     

    (d)  Defaults
      and Mortgage Debt.  The Partnership is not in monetary or material
      nonmonetary default under any of the documents, recorded or unrecorded,
      encumbering or affecting the Property, including without limitation, the
      Licenses, the Mortgage Instruments, the Leases and the Contracts, any documents
      referred to in any title commitment delivered to Essex by the Partnership,
      any
      other documents to which the Partnership is a party or by which the Partnership
      or its assets (including, without limitation, the Property) are bound, or any
      documents or instruments executed in connection with all or any of the
      foregoing.  The General Partners and the Partnership have delivered to
      Essex true, complete and accurate copies of all of the material documents
      evidencing, securing and otherwise executed in connection with all or any
      portion of its Mortgage Debt.  The Mortgage Debt (A) provides for
      interest computed on the principal amount of the loan only, without any
      participation in the income from or appreciation of the Property, and (B) is
      not
      secured by a mortgage or pledge of collateral other than a mortgage of the
      Property and related assets of the Partnership.  The outstanding
      principal balance of the Mortgage Debt as of the date hereof is $14,000,000,
      and
      all interest has been paid as of the end of the most recent calendar
      month.  An additional $6,000,000 in Mortgage Debt shall be


    
      
        
        

      

      
        -24-

        
          

        
placed
        on
        the Property prior to Closing, and all interest shall be paid in accordance
        with
        the terms thereof prior to the Closing Date.  Exhibit E
        includes a list of every Mortgage Instrument, and none of the Mortgage
        Instruments has been amended or modified in any way except as indicated on
        Exhibit E.  There exists no default under any of the
        Mortgage Instruments, nor any fact or circumstance which, with the passage
        of
        time and/or the giving of notice would constitute a default under any of
        the
        Mortgage Instruments.

    

     

    (e)  Compliance
      With Law.  There is no Action pending or threatened in which the
      Partnership is engaged in connection with the business, affairs, properties
      or
      assets of the Partnership or which might call into question the validity or
      hinder the enforceability or performance of this Agreement, or of the Related
      Agreements or any of the other agreements and transactions contemplated hereby
      and thereby.  The Partnership is, and at all times has been, in
      material compliance with all laws, rules, regulations, ordinances, codes or
      interpretations of any Authority (collectively, “Laws”), including,
      without limitation, all federal or state securities laws applicable to its
      business and affairs or to the ownership and operation of the Property or the
      assets of the Partnership.  Neither the Partnership nor any General
      Partner is in material default with respect to any judgment, order, writ,
      injunction, decree, demand or assessment issued by any court or any Authority,
      relating to any aspect of the business or affairs or properties or assets of
      the
      Partnership.  Neither the Partnership nor any General Partner is
      charged or, to the best knowledge of the Partnership, threatened with, or under
      investigation with respect to, any violation of any provision of federal, state,
      municipal or other law or any administrative rule or regulation, domestic or
      foreign, including, without limitation, any federal or state securities laws,
      affecting the Partnership or the transactions contemplated hereby.  To
      the best of the General Partners’ knowledge, the Property does not violate, and
      no state of facts with regards to the Property exists which would constitute
      a
      violation of, any Law or any requirement of any insurer or board of fire
      underwriters or similar entity.  As of the date of this Agreement, the
      Partnership has not received written notice of any special assessment not
      disclosed on the Preliminary Title Report or condemnation proceedings affecting
      the Property, and, to the best of the General Partners’ knowledge, there is no
      such special assessment or condemnation action pending or
      threatened.  To the best of General Partners’ knowledge, all licenses,
      franchises permits, approvals, variances, easements and rights of way and other
      rights, including, without limitation, proof of dedication and authorizations
      (collectively, the “Licenses”) required for the ownership, use or
      operation of the Property as presently used and operated, or required to conduct
      the Partnership’s business as presently carried on by it and as contemplated by
      it to be carried on by the Partnership after the Closing hereunder and the
      closing of the transactions contemplated hereby, have been validly issued and
      are in full force and effect, and the General Partners have not received any
      notice, and otherwise has no knowledge, of proceedings relating to the
      revocation or modification of any License.

     

    (f)  Leases.  To
      the best of the General Partners’ knowledge, the Leases are in full force and
      effect.  As of the Closing Date, all brokerage commissions or
      compensation in respect of any of the Leases shall have been paid by the
      Partnership.  True, complete and correct copies of all Leases have
      been made available to Essex.  True, complete and correct copies of
      all Leases in effect on the Closing Date shall be located at the Property on
      such date.  No person or entity has any option or right of first
      refusal or first opportunity to acquire any interest in the Property or any
      portion thereof.

    
      
        
        

      

      
        -25-

        
          

        

      

    

    (g)  Hazardous
      Materials.  To the best of the General Partners’ actual knowledge,
      the Property does not contain any hazardous or toxic materials, including,
      but
      not limited to, any chemicals or materials regulated as hazardous or toxic
      under
      any federal, state or local law, including, without limitation, petroleum,
      asbestos, or PCB’s, and does not have located under it any underground storage
      tanks.  In addition, to the General Partners’ actual knowledge, no
      such hazardous or toxic materials have ever migrated from the Property to any
      other property.  The General Partners and the Partnership agree to
      provide Essex promptly in writing any information which they have or may acquire
      regarding the presence and location of any hazardous materials or underground
      storage tanks on or about the Property.

     

    (h)  Personal
      Property.  The list of personal property for the Property attached
      hereto as Exhibit G, is an accurate and complete list of all Personal
      Property.

     

    (i)  Rent
      Roll.  Attached hereto as Exhibit F is the Rent Roll
      which is true, complete and correct as of the date of this
      Agreement.  The Rent Roll attached as Exhibit F shall be
      updated through Closing.  As of the Closing Date such updated Rent
      Roll shall be true and correct in all material respects, shall reflect no
      monetary or other material defaults under Leases by the Partnership, and shall
      reflect the existence of no Leases other than those existing as of the date
      of
      this Agreement or entered into in accordance with the terms hereof.

     

    (j)  Contracts.  True,
      complete and correct copies of all Contracts have been provided to
      Essex.  The Contracts (i) are in full force and effect and
      (ii) are terminable on not more than thirty (30) days’ prior written notice
      and without payment of any penalty.  The Partnership agrees to
      terminate prior to Closing, at its own expense, the Terminable
      Contracts.  There shall be no agreements or other obligations or
      liabilities with respect to all or any portion of the Property that are binding
      on the Partnership or the Property following Closing, other than the Leases,
      the
      Contracts (excluding the Terminable Contracts), the Permitted Exceptions, the
      Licenses required for the ownership, use or operation of the Property and other
      documents executed in connection with the foregoing.

     

    (k)  FIRPTA.  The
      Partnership is not a “foreign person” as defined in Section 1445(f)(3) of the
      Code, or under any similar sections of any similar laws of the State of
      California, i.e., the Partnership is not a nonresident alien, foreign
      corporation, foreign partnership, foreign trust or foreign estate as those
      terms
      are defined in the Code and income Tax Regulations or similar laws or
      regulations of the State of California.

     

    (l)  Disclosure.  The
      representations and warranties and the statements and information contained
      in
      this Agreement, in the Exhibits and Schedules hereto and in all of the materials
      delivered by the General Partners and the Partnership to Essex and its counsel,
      accountants, appraisers and consultants pursuant to this Agreement or in
      connection with the due diligence investigations conducted by or on behalf
      of
      Essex in connection with this Agreement do not contain any untrue statement
      of a
      material fact and, when taken together, do not omit to state a material fact
      required to be stated therein or necessary in order to make such
      representations, warranties, statements or information not misleading in light
      of the circumstances under which they were made.

    
      
        
        

      

      
        -26-

        
          

        

      

    

    (m)  Financial
      Statements.  All operating statements for the Property delivered
      to Essex by the Partnership were prepared by the Partnership in the ordinary
      course of business, are complete, accurate, true and correct in all material
      respects, and in all material respects accurately set forth the results of
      the
      operation of the Property for the periods covered.  Since the date of
      the most recent internally prepared operating statements referred to above,
      (i) there has been no material adverse change in the condition, financial
      or otherwise, of the Property or the Partnership whether or not arising in
      the
      ordinary course of business and (ii) there has been no material change in
      the ownership of the Partnership or any increase in the indebtedness of the
      Partnership (excluding account trade payables incurred in the ordinary course
      of
      business)

     

    (n)  Pending
      Actions; Labor Disputes.  There is no existing or threatened
      Action of any kind involving the Partnership or which, if determined adversely
      to it or its assets, including, without limitation, the Property would interfere
      with the ability of the Partnership to execute or deliver, or perform each
      of
      its obligations under, this Agreement, the Limited Partnership Agreement, the
      Registration Rights Agreement or the Related Agreements executed by it or have
      a
      material adverse effect on the financial position, operations, business or
      prospects of the Partnership or its assets, including, without limitation,
      the
      use, occupancy, operation or value of the Property.  To the best of
      the Partnership’s and the General Partners’ knowledge, there are no labor
      troubles or complaints of unfair labor practices pending with respect to any
      Person.

     

    (o)  Taxes.

     

    (i)  All
      tax
      or information returns required to be filed on or before the date hereof by
      or
      on behalf of the Partnership (i) have been filed through the date hereof or
      will be filed on or before the date when due in accordance with all applicable
      Laws and (ii) there is no Action pending against or with respect to the
      Partnership or the Property in respect of any tax nor is any claim for
      additional tax asserted by any Authority against the Partnership or the
      Property.  The Partnership has paid, or caused to be paid, all
      material federal, state, county, local, foreign, and other taxes, and all
      deficiencies, or other additions to tax, interest, fines and penalties
      (collectively, “Taxes”), required to be paid by it, and in accordance
      with applicable Laws, has filed all federal, state, county, local and foreign
      tax returns which are required to be filed by it, and all such returns correctly
      and accurately set forth the amount of any Taxes relating to the applicable
      period.  No taxing authority is now asserting or, to the best
      knowledge of the Partnership, threatening to assert against the Partnership,
      any
      deficiency or claim for additional Taxes.  All real estate taxes and
      assessments relating to the Property that are due and payable have been
      paid.

     

    (ii)  The
      Partnership acknowledges that none of the reconstituted Partnership, Essex,
      nor
      any Affiliate thereof, shall assume any responsibility for the tax consequences
      of the transactions contemplated by this Agreement, the Limited Partnership
      Agreement and the Related Agreements to the Partnership or the Existing
      Partners, other than to agree to report the transactions for federal and state
      tax purposes consistently with the manner agreed to by Essex and the
      Partnership.

     

    (iii)  Prior
      to
      Closing, Section 64(d) of the California Revenue and Taxation Code does not
      apply with respect to the Real Property held by the Partnership.

    
      
        
        

      

      
        -27-

        
          

        

      

    

    (iv)  The
      current assessed value of the Real Property for applicable property tax purposes
      is $8,612,682. There has been no “change in ownership” (as that term is defined
      in Section 60, et seq., of the California Revenue and Taxation Code)
      with respect to the Real Property at any time following its original acquisition
      by the Partnership.

     

    (v)  The
      co-ownership arrangement between the Partnership and the Co-Owner Partnership
      relating to the Real Property does not constitute a partnership for U.S. federal
      of California state tax purposes.

     

    (p)  Insurance.  The
      Partnership currently has in place the public liability, casualty and other
      insurance coverage with respect to the Property set forth in
Exhibit I, and each of such insurance policies is in full force and
      effect and all premiums due and payable thereunder have been fully paid when
      due.  The General Partners have delivered or made available to Essex
      all copies of all insurance policies and arrangements with respect to the
      Property.

     

    (q)  Authorizations,
      Approvals and Consents.  The Partnership has obtained all
      authorizations, approvals and consents necessary to enter into this Agreement
      and the Related Agreements, and, prior to Closing, the Partnership will have
      obtained all authorizations, approvals and consents necessary to perform all
      obligations associated with the transactions contemplated by this
      Agreement.

     

    (r)  Physical
      Condition.  The General Partners have received no written notice
      nor do they otherwise have knowledge of (i) pending or contemplated annexation
      or condemnation proceedings, or private purchase in lieu thereof, affecting
      or
      which may affect the Property or any part thereof, (ii) proposed or pending
      proceedings to change or redefine the zoning classification of all or any part
      of the Property, (iii) proposed or pending special assessments affecting the
      Property or any portion thereof, (iv) penalties or interest due with respect
      to
      real estate taxes assessed against the Property and (v) proposed changes in
      any
      road or grades with respect to the roads providing a means of ingress and egress
      to the Property.

     

    (s)  Solvency.  The
      Partnership has been and will be solvent at all times prior to the Closing
      of
      the transactions provided for in this Agreement.  There does not exist
      in effect with respect to the Partnership (i) any general assignment for the
      benefit of creditors, (ii) any voluntary petition in bankruptcy, (iii) any
      involuntary petition filed by the creditors of the Partnership, (iv) any
      appointment of a receiver to take possession of all, or substantially all,
      of
      the assets of the Partnership, (v) any attachment or other judicial seizure
      of
      all, or substantially all, of the assets of the Partnership, (vi) any admission
      in writing of the inability of the Partnership to pay its debts as they come
      due
      or (vii) any offer of settlement, extension or composition to the creditors
      generally.

     

    (t)  Title
      to Assets.  The Partnership’s Personal Property, Intangibles and
      other assets will on the Closing Date be owned by the Partnership free and
      clear
      of any Claim, conditional bill of sale, chattel mortgage, security agreement
      or
      financing statement or other security interest of any kind, other than liens
      securing the Mortgage Debt.

     

    (u)  Intellectual
      Property.  To the best knowledge of the General Partners, the
      Partnership has not infringed upon or violated any trademark, trade name,
      patent, copyright, 

    
      
        
        

      

      
        -28-

        
          

        

      

      trade
        secret or other intellectual property right or contractual relation of
        another.  The General Partners have not received any notice, claim or
        protest respecting any such infringement or violation, or given any
        indemnification to any Person for any such infringement or
        violation.  Except as shown on Schedule 3.1(u) hereto, the Partnership
        does not own any material franchises, permits, licenses, trademarks, trade
        names, patents, patent applications, copyrights, trade secrets, computer
        software, formulas, designs, inventions (together, “Intellectual
        Property”) or ideas, that are currently used or are necessary to conduct its
        business as presently conducted, and as proposed to be conducted by the
        Partnership after the Closing, without infringing on the rights of any other
        Person.  All of the Partnership’ s rights in and to such Intellectual
        Property are being transferred to the Partnership as part of the transactions
        contemplated hereby and, after the Closing, the Partnership will own all
        such
        Intellectual Property free and clear of any Claims and without infringing
        on the
        rights of any other Person.

    

     

    (v)  Insurance/Casualty
      Losses.  The Partnership has not received written notice of any
      outstanding requirements or recommendations by (i) any insurance company
      currently insuring the Property or (ii) any board of fire underwriters or other
      body exercising similar functions, which in any case require or recommend any
      repairs or work to be done on the Property of a material nature. There has
      been
      no damage to any portion of the Property caused by fire or casualty that has
      not
      been fully repaired or restored.

     

    (w)  Partnership
      Financial Statements; Absence of Undisclosed Liabilities.

     

    (i)  The
      Partnership Financial Statements provided to Essex fairly present the complete
      operating results of the Partnership in accordance with income tax method of
      accounting applied on a consistent basis. Since the date of the last Partnership
      Financial Statements, there has been no material adverse change in the
      condition, financial or otherwise, of the Partnership other than refinancing
      the
      Mortgage Debt and distributing some or all of the proceeds to the Existing
      Partners, and (ii) there has been no material change in the ownership of the
      Partnership or any increase in the Indebtedness of the Partnership (not taking
      into account trade payables incurred in the ordinary course of business and
      refinancing of the Mortgage Debt).

     

    (ii)  On
      the
      Closing Date, the Partnership will have no Liability of any type, including,
      without limitation, any Liability to the Person from whom or which the
      Partnership acquired the Property, except (v) Permitted Exceptions,
      (w) prepaid rents, (x) refundable security deposits, (y) Mortgage
      Debt and (z) current real estate taxes, the payment of which is not
      delinquent and usual and customary operating expenses, all subject to
      proration.

     

    (x)  Employees.  Except
      as listed on Schedule 3.1(x), the Partnership does not have any
      employees.

     

    (y)  Capital
      Structure.  The capital structure of the Partnership is as set
      forth on Schedule 3.1(y) hereto. All of the equity interests of the Partnership
      have been duly and validly issued. Except as set forth on Schedule 3.1(y),
      there
      are no equity interests of the Partnership issuable upon conversion or exchange
      of any security of the Partnership. Except as set forth on Schedule 3.1(y),
      no
      holder of any equity interest of the Partnership is entitled to any preemptive
      or similar right (i) to subscribe for any equity interests of the Partnership
      or
      (ii) with respect to 

    
      
        
        

      

      
        -29-

        
          

        

      

      any
        of
        the transactions contemplated hereby. Except as set forth on Schedule 3.1(y)
        or
        in this Agreement, there are no existing rights, agreements or commitments
        obligating or which might obligate the Partnership to issue, transfer, sell
        or
        redeem any equity interests of the Partnership. The Partnership does not
        own any
        equity interests in any other Person.

    

     

    (z)  Indebtedness.  Other
      than the Mortgage Debt, the Partnership has no Indebtedness other than current
      real property taxes and operating expenses subject to proration, nor is the
      Partnership a party to any agreement providing for the borrowing or lending
      of
      money.  Except for the Mortgage Debt, after giving effect to the
      transactions contemplated hereby, the Partnership will not have any
      Indebtedness, nor will it be a party to any agreement providing for the
      borrowing or lending of money.

     

    (aa)  Business.  The
      Partnership is and has, since its inception, been engaged solely in the business
      of owning, managing and developing the Property.

     

    (bb)  General
      Partner Fees and Reimbursements.  Any and all monetary fees
      payable to, or expenses or other amounts reimbursable to the General Partner
      or
      any other person engaged by the Partnership, whether payable before or after
      the
      Closing, shall be borne by the Existing Partners.

     

    (cc)  Consent
      Solicitation.  On the date the Consent Solicitation is delivered
      to the Existing Partners and on the Closing Date, none of the information
      supplied by or on behalf of the Partnership for inclusion in the Consent
      Solicitation that was not based on information about Essex supplied in writing
      by Essex will be false or misleading with respect to any material fact or will
      omit to state any material fact required to be stated therein or necessary
      in
      order to make the statements therein, in light of the circumstances under which
      they were made, not misleading or necessary to correct any statement in any
      earlier communication with respect to the subject matter thereof. The foregoing
      sentence shall not apply to information supplied in writing by Essex for
      inclusion in the Consent Solicitation.

     

    For
      purposes of this Section where the terms “to the best of the Partnership’s
      knowledge” or “to the best of the General Partners’ knowledge” or similar
      phrases are used, such terms shall mean that none of the Partnership or any
      of
      the General Partners, as the case may be, has actual knowledge of the matter
      in
      question after due inquiry as of the date with respect to which the
      representation or warranty is made.

     

    The
      representations and warranties contained in Sections 3.1(c) (second and third
      sentences only), 3.1(d) (as to Leases and Contracts, to the extent they relate
      solely to the Property and are with third parties unaffiliated with the
      Partnership or any Existing Partner, in the first sentence only), 3.1(e) (fifth,
      sixth and seventh sentences only), 3.1(f), 3.1(g), 3.1(h), 3.1(i), 3.1(j),
      3.1(m), 3.1(n) (last sentence only), 3.1(p), 3.1(r) and 3.1(v), solely to the
      extent such representations and warranties relate specifically to the Property,
      are qualified to the extent of the actual knowledge as of the date hereof,
      without any independent inquiry, of Jordan E. Ritter and Rachel Hammond;
      provided, however, that the foregoing qualification shall not apply or limit
      the
      Partnership’s, the General Partners’ and/or any of the other Existing Partners’
liability with respect to any knowledge of Jordan E. Ritter and Rachel Hammond
      regarding the 

    
      
        -30-

        
           

          
            
              

            

          

        

      

    

    presence
      of radon on or in any portion of the Property.  In no event shall such
      individuals have any personal liability under this Agreement or
      otherwise.

     

    3.2  Representations
      and Warranties of Each Existing Partner

     

    It
      shall
      be a condition to Essex’s obligation to close the transactions contemplated
      under this Agreement that each Existing Partner shall expressly make the
      following representations and warranties to Essex in connection with the Partner
      Consent and shall remake such representations and warranties as of the Closing
      Date or if made again on such date, it being understood and agreed that the
      remaking of such representations and warranties can be evidenced by a customary
      bring-down certificate executed and delivered by the General Partners as
      attorneys-in-fact pursuant to a power of attorney signed by such Existing
      Partners in connection with the Partner Consent (so long as the General Partners
      have not received written notice from an Existing Partner that any such
      representations or warranties have become not true since the date
      hereof).  All Existing Partners shall, as a condition to Essex’s
      obligations to complete the transactions contemplated by this Agreement, be
      deemed to have made the following representations and warranties as of the
      Closing Date as if fully made on such date:

     

    (a)  Existence
      and Power.  Each Existing Partner that is an entity warrants that
      it has been duly formed and is validly existing under the laws of the state
      of
      formation. Each Existing Partner that is an entity warrants that it has all
      power and authority under its organizational documents and applicable Laws
      (i)
      to enter into and deliver the Partner Consent and all other documents to be
      executed and delivered in connection with the transaction that is the subject
      of
      this Agreement, including, without limitation, all Related Agreements, to the
      extent they are to be executed by the such Existing Partner, (ii) to perform
      its
      obligations under the Partner Consent, this Agreement and the Related Agreements
      executed by such Existing Partner, and (iii) to own its interest in the
      Partnership.

     

    (b)  Authorization;
      No Contravention.  The execution and delivery of this Agreement
      and the Related Agreements executed by each Existing Partner and the performance
      by each Existing Partner of its obligations under all of the foregoing have
      been
      duly authorized by all requisite corporate, partnership, limited liability
      company or other action on the part of each such Existing Partner.

     

    (c)  Ownership;
      No Default.  Each Existing Partner owns beneficially and of record
      his, her or its partnership interest in the Partnership free and clear of any
      claim, lien, pledge, voting agreement, option charge, security interest,
      mortgage, deed of trust, encumbrance, right of assignment, purchase right or
      other right of any nature whatsoever, except such rights as are contained in
      the
      Partnership Agreement of the Partnership or as created or contemplated by this
      Agreement.  To the best of such Existing Partner’s knowledge, such
      Existing Partner’s interest was validly issued and such Existing Partner is not
      currently in default of any obligation to be performed by it under the
      Partnership Agreement, including without limitation, to fund any capital
      contribution remaining due.  The Partnership Agreement and any
      documents, subscriptions or other agreements executed in connection with the
      Partner Consent are the only agreements between such Existing Partner and the
      Partnership.

     

    (d)  Accredited
      Investors .  Each Continuing Partner warrants that he, she or it
      (A) is an Accredited Investor and (B) by reason of his, her or its business
      and
      financial 

    
      
        
          
            -31-

          

          
            
              

            

          

          experience,
            together with the business and financial experience of those persons,
            if any,
            retained by each of the undersigned to represent or advise him, her or
            it with
            respect to transactions contemplated hereby, has such knowledge, sophistication
            and experience in financial and business matters and in making investment
            decisions of this type that he, she or it (x) is capable of evaluating
            the
            merits and risks of an investment in Units and of making an informed
            investment
            decision, (y) is capable of protecting his, her or its own interest or
            has
            engaged representatives or advisors to assist him. her or it in protecting
            his,
            her or its interests and (z) is capable of bearing the economic risk
            of such
            investment.  Each Continuing Partner warrants that any securities
            acquired by such Continuing Partner will be so acquired for the Continuing
            Partner’s own account for investment only and not with a view to, or with any
            intention of, a distribution or resale thereof, in whole or in part,
            in
            violation of the Securities Act or state securities or “blue sky” laws, without
            prejudice, however, to such Continuing Partner’s rights (subject to restrictions
            contained in the Limited Partnership Agreement) at all times to sell
            or
            otherwise dispose of all or any part of the Units pursuant to an effective
            registration statement under the Securities Act or under an exemption
            from
            registration available under the Securities Act or to transfer such Units
            as
            authorized in the Limited Partnership Agreement.

        

      

    

     

    (e)  Certain
      Transactions.  No Existing Partner is presently a party to any
      material transaction with the Partnership, except as disclosed on Schedule
      3.2(e).

     

    3.3  Representations
      and Warranties of Essex

     

    Essex
      hereby represent and warrant to the Partnership as of the date of this Agreement
      as follows, and Essex shall, as a condition to the Partnership’s obligation to
      complete the transaction contemplated by this Agreement, remake the following
      representations and warranties in all material respects as of the Closing Date
      as if fully made again thereon:

     

    (a)  Essex
      REIT:

     

    (i)  Existence
      and Power.  Essex REIT has been duly formed, is validly existing
      as a Maryland corporation, is duly qualified to do business in all jurisdictions
      where such qualification is necessary to carry on its business as now
      conducted.  Essex REIT has all power and authority under its
      organizational documents and applicable Laws (i) to enter into and deliver
      this
      Agreement and all other documents to be executed and delivered in connection
      with the transaction that is the subject of this Agreement, including, without
      limitation, all Related Agreements, to the extent they are to be executed by
      Essex REIT and (ii) to perform its obligations under this Agreement and the
      Related Agreements executed by Essex REIT.

     

    (ii)  Authorization;
      No Contravention.  The execution and delivery of this Agreement,
      the Registration Rights Agreement and the Related Agreements executed by Essex
      REIT, and the performance of its obligations under all of the foregoing have
      been duly authorized by all requisite organizational action on the part of
      Essex
      REIT.  This Agreement has been, and each Related Agreement to which
      Essex REIT is a party will on the Closing Date have been, duly executed and
      delivered by Essex REIT.  None of the foregoing will (i) violate
      any provision of the charter, bylaws or other organizational documents of Essex
      REIT; (ii) violate, conflict with or result in a default under any material
      contract or obligation to which Essex REIT is a party or by which it is bound;
      (iii) violate or result in a violation of, or constitute a default under
      any provision of any law, regulation or rule, or any order of, or any
      restriction imposed by, 

    
      
        
        

      

      
        -32-

        
          

        

      

      any
        Authority on Essex REIT; or (iv) require Essex REIT to obtain any approval,
        consent or waiver of, or make any filing with, any Person or Authority that
        has
        not been obtained or made.  This Agreement constitutes and, upon the
        execution thereof, the Registration Rights Agreement and the other Related
        Agreements executed by Essex REIT will constitute the valid and binding
        obligations of Essex REIT, enforceable in accordance with their respective
        terms, subject to bankruptcy and similar laws affecting the remedies or
        resources of creditors generally and principles of equity.

    

     

    (iii)  Pending
      Actions.  There is no existing or, to the best of Essex REIT’s
      knowledge, threatened Action of any kind involving Essex REIT, any of its assets
      or the operation of any of the foregoing, which, if determined adversely to
      Essex REIT or its assets, would have a material adverse effect on the
      consolidated financial position, stockholders’ equity, results of operations or
      business of Essex REIT or its assets or which would interfere with Essex REIT’s
      ability to execute or deliver, or perform its obligations under this Agreement,
      the Registration Rights Agreement or any of the other Related Agreements
      executed by it.

     

    (iv)  Investment
      Company Act.  Essex REIT is not an “investment company” or an
      entity “controlled” by an “investment company” as such terms are defined under
      the Investment Company Act.

     

    (v)  Essex
      REIT Qualification.  Essex REIT is organized and operates, and
      intends to continue to operate, in a manner so as to qualify as a “real estate
      investment trust” under Sections 856 through 860 of the Code.

     

    (b)  EPLP:

     

    (i)  Existence
      and Power.  EPLP has been duly formed, is validly existing as a
      California limited partnership and is duly qualified to do business in all
      jurisdictions where such qualification is necessary to carry on its business
      as
      now conducted.  EPLP has all power and authority under its
      organizational documents and under applicable Laws to (i) enter into and
      deliver this Agreement and all other documents to be executed and delivered
      in
      connection with the transactions that are the subject of this Agreement,
      including, without limitation, all Related Agreements, to the extent they are
      to
      be executed by EPLP and (ii) perform its obligations under this Agreement
      and the Related Agreements executed by EPLP.  EPLP has delivered to
      the Partnership true and complete copies of its limited partnership agreement,
      certificate of limited partnership, and certificate of good standing in the
      State of California.

     

    (ii)  Authorization;
      No Contravention.  The execution and delivery of this Agreement
      and the Related Agreements executed by EPLP, and the performance of its
      obligations under all of the foregoing have been duly authorized by all
      requisite organizational action on the part of EPLP.  This Agreement
      has been, and each Related Agreement to which EPLP is a party will on the
      Closing Date have been, duly executed and delivered by EPLP.  None of
      the foregoing will (i) violate any provision of the partnership agreement
      or other organizational documents of EPLP; (ii) violate, conflict with or
      result in a default under any material contract or obligation to which EPLP
      is a
      party or by which it is bound; (iii) violate or result in a violation of,
      or constitute a default under, any provision of any law, regulation or rule,
      

    
      
        
        

      

      
        -33-

        
          

        

      

      or
        any
        order of, or any restriction imposed by, any Authority on EPLP; or
        (iv) require EPLP to obtain any approval, consent or waiver of, or make any
        filing with, any Person or Authority that has not been obtained or
        made.  This Agreement constitutes and, upon the execution of the
        Related Agreements executed by EPLP will constitute, the valid, legal and
        binding obligations of EPLP, enforceable in accordance with their respective
        terms, subject to bankruptcy and similar laws affecting the remedies or
        resources of creditors generally and principles of equity.

    

     

    (iii)  Pending
      Actions.  There is no existing or, to the best of EPLP’s
      knowledge, threatened Action involving EPLP, any of its assets or the operation
      of any of the foregoing, which, if determined adversely to EPLP or its assets,
      would have a material adverse effect on the consolidated financial position,
      partners’ equity, results of operations, business or prospects of EPLP or its
      assets or which would interfere with EPLP’s ability to execute or deliver, or
      perform its obligations under this Agreement or any of the Related Agreements
      executed by it.

     

    (c)  EMC:

     

    (i)  Existence
      and Power.  EMC has been duly formed, is validly existing as a
      California corporation and is duly qualified to do business in all jurisdictions
      where such qualification is necessary to carry on its business as now
      conducted.  EMC has all power and authority under its organizational
      documents and under applicable Laws to (i) enter into and deliver this
      Agreement and all other documents to be executed and delivered in connection
      with the transactions that are the subject of this Agreement, including, without
      limitation, all Related Agreements, to the extent they are to be executed by
      EMC
      and (ii) perform its obligations under this Agreement and the Related
      Agreements executed by EMC.

     

    (ii)  Authorization;
      No Contravention.  The execution and delivery of this Agreement
      and the Related Agreements executed by EMC, and the performance of its
      obligations under all of the foregoing have been duly authorized by all
      requisite organizational action on the part of EMC.  This Agreement
      has been, and each Related Agreement to which EMC is a party will on the Closing
      Date have been, duly executed and delivered by EMC.  None of the
      foregoing will (i) violate any provision of the charter, bylaws or other
      organizational documents of EMC; (ii) violate, conflict with or result in a
      default under any material contract or obligation to which EMC is a party or
      by
      which it is bound; (iii) violate or result in a violation of, or constitute
      a default under, any provision of any law, regulation or rule, or any order
      of,
      or any restriction imposed by, any Authority on EMC; or (iv) require EMC to
      obtain any approval, consent or waiver of, or make any filing with, any Person
      or Authority that has not been obtained or made.  This Agreement
      constitutes and, upon the execution of the Related Agreements executed by EMC
      will constitute, the valid, legal and binding obligations of EMC, enforceable
      in
      accordance with their respective terms, subject to bankruptcy and similar laws
      affecting the remedies or resources of creditors generally and principles of
      equity.

     

    (iii)  Pending
      Actions.  There is no existing or, to the best of EMC’s knowledge,
      threatened Action involving EMC, any of its assets or the operation of any
      of
      the foregoing, which, if determined adversely to EMC or its assets, would have
      a
      material adverse effect on the consolidated financial position, stockholders’
equity, results of operations, business or prospects of EMC or its assets or
      which would interfere with EMC’s ability to execute or 

    
      
        
        

      

      
        -34-

        
          

        

      

      deliver,
        or perform its obligations under this Agreement or any of the Related Agreements
        executed by it.

    

     

    For
      purposes of this Section 3.3 where the term “to Essex REIT’s knowledge”,
“to EPLP’s knowledge” or “to EMC’s knowledge” is used, such term shall mean that
      Keith Guericke and Jordan Ritter have no actual knowledge of the matter in
      question as of the date with respect to which the representation or warranty
      is
      made, without inquiry as to such matter.  In no event shall such
      individuals have any personal liability under this Agreement or
      otherwise.

     

    3.4  Representations
      and Warranties of the Cash Interest Holders

     

    It
      shall
      be a condition to Essex’s obligation to close the transactions contemplated
      under this Agreement that each Cash Interest Holder shall make the following
      representations and warranties to Essex in its Consent and its assignment of
      its
      interest in the Partnership:

     

    (a)  Existence
      and Power.  If such Cash Interest Holder is not an
      individual:  such Cash Interest Holder is a duly formed and validly
      existing entity; such Cash Interest Holder has all power and authority under
      its
      organizational documents to enter into and deliver all agreements and other
      documents to be executed and delivered in connection with the transaction that
      is the subject of this Agreement, including, without limitation, all Related
      Agreements, to the extent they are to be executed and delivered by such Cash
      Interest Holder (for such Cash Interest Holder, collectively, its “Transaction
      Documents”) and to perform its obligations under its Transaction
      Documents.

     

    (b)  Authorization;
      No Contravention.

     

    (i)  If
      such
      Cash Interest Holder is not an individual:  the execution and delivery
      of its Transaction Documents and the performance of its obligations thereunder
      have been duly authorized by all requisite organizational action.

     

    (ii)  Each
      Cash
      Interest Holder:  Its Transaction Documents, upon execution thereof,
      will constitute the valid, legal and binding obligations of such Cash Interest
      Holder; none of the Transaction Documents will violate any term of any material
      agreement, order or decree to which such Cash Interest Holder is a party or
      by
      which such Cash Interest Holder is bound; there is no pending, or to the best
      of
      such Cash Interest Holder’s knowledge, threatened Action involving such Cash
      Interest Holder which, if determined adversely to it or its assets, would
      interfere with the ability of such Cash Interest Holder to execute or deliver,
      or perform its obligations under any of its Transaction  Documents or
      have a material adverse effect on its interest in the Partnership.

     

    (c)  Cash
      Interest.  Each Cash Interest Holder:  Such Cash
      Interest Holder owns beneficially and of record, and is transferring free and
      clear of any claim, lien, pledge, voting agreement, option, charge, security
      interest, mortgage, deed of trust, encumbrance, right of assignment, purchase
      right or other right of any nature whatsoever (except such rights as are
      contained in the partnership agreement of Partnership), its interest in the
      Partnership to be redeemed.  Such Cash Interest Holder’s interest in
      the Partnership was validly issued, and such Cash Interest Holder is not
      currently in breach of any provisions of the Partnership Agreement, including,
      without limitation, to fund any capital contribution remaining
      due.  The Partnership 

    
      
        
        

      

      
        -35-

        
          

        

      

      Agreement
        and any documents, subscriptions and other agreements executed in connection
        with the Partner Consent are the only agreements between such Cash Interest
        Holder and the Partnership.  There is no agreement, instrument or
        understanding with respect to such Cash Interest Holder’s interest in the
        Partnership, except the partnership agreement of the
        Partnership.

    

     

    ARTICLE
      4 - MAINTENANCE AND OPERATION OF THE
      PROPERTY

     

    4.1  Maintenance
      and Operation

     

    Through
      the Closing, the Partnership agrees to maintain and operate the Property in
      accordance with established operating policies and procedures reasonably
      satisfactory to Essex.  Prior to the Closing Date, the Partnership
      shall perform all work and other obligations required to be performed by the
      landlord under the terms of any applicable Lease to the satisfaction of the
      tenant(s) thereunder.  On or before the Closing Date, the Partnership
      shall cause all applicable vacant units vacated more than five (5) days prior
      to
      the Closing to be made Tenant Ready and available for occupancy, or, if same
      are
      not Tenant Ready, there will be an adjustment at Closing of Five Hundred Dollars
      ($500.00) for each such vacant unit that is not Tenant Ready.  Upon
      Closing, any apartment units occupied by personnel of the Partnership, any
      Existing Partner or any related entity, if any, shall be delivered subject
      only
      to month-to-month tenancies at then current fair market rental rates for the
      Property.

     

    4.2  Insurance

     

    Through
      the Closing Date, the Partnership shall maintain at its sole cost and expense
      all insurance in effect on the date of this Agreement and otherwise consistent
      with prudent insurance maintenance practices on property of the type and in
      the
      geographical area of the Property.

     

    4.3  Personal
      Property

     

    Essex
      acknowledges that the Partnership shall have the right, from and after the
      date
      of this Agreement through the Closing with respect to the Property, to remove
      or
      replace items of its Personal Property from time to time in the normal course
      of
      operation of the Property and any items of Personal Property that are damaged
      or
      destroyed by fire or other casualty.  Essex agrees that the
      Partnership may remove items of Personal Property from the Property if such
      items are obsolete and replaced by Personal Property of equal or greater utility
      or value.  Any such Personal Property removed shall cease to
      constitute “Personal Property” for all purposes under this
      Agreement.  Any Personal Property replaced in the Property pursuant to
      this Section shall, to the extent not thereafter removed in accordance with
      the
      terms of this Section, constitute “Personal Property” for all purposes under
      this Agreement.

     

    4.4  Leasing

     

    The
      Partnership shall not execute, modify, approve and/or cancel any Leases,
      contracts or commitments of any kind affecting the Property or any interest
      therein without Essex’s prior written approval, said approval not to be
      unreasonably withheld. The Partnership shall lease space in the Property at
      rates and for terms approved by Essex pursuant to the preceding sentence and
      pursuant to the Partnership’s standard form of Lease.  All Leases
      entered into from and after the date of this Agreement in accordance with the
      terms of this Section 4.4 shall constitute Leases under this
      Agreement.  The Partnership shall comply with the terms of all
      Leases.

     

    4.5  Operating
      Agreements

     

    Except
      as
      set forth in Section 4.4, the Partnership shall not enter into any contract
      or
      other agreement affecting the Property, or any amendment of any contract or
      agreement, that will be binding on the Partnership or the Property without
      the
      prior 

    
      
        
        

      

      
        -36-

        
          

        

      

      written
        consent of Essex.  Notwithstanding the foregoing, the Partnership may
        enter into a contract or agreement which by its own terms shall terminate
        prior
        to the Closing Date and which shall not create any liability for or be binding
        on the Partnership or the Property on or after the Closing Date.  The
        Partnership shall not waive, compromise or settle any rights of the Partnership
        under any such contract or agreement, nor modify, amend or terminate any
        applicable Retained Contract or other such contract or agreement, without
        in
        each case obtaining Essex’s prior written consent thereto.

    

     

    4.6  Damage
      or Destruction; Condemnation.

     

    (a)  All
      risk
      of loss to the Property shall be borne by the Partnership until the Closing
      subject to the provisions of this Section 4.6.  The Partnership shall
      promptly deliver to Essex written notice of any casualty or taking involving
      the
      Property.  If, prior to the Closing, all or any part of the Property
      is damaged or destroyed by casualty such that the cost to repair and/or restore
      such damage and/or destruction (which cost, for purposes of this
      Section 4.6(a), shall be deemed to include reasonably anticipated
      post-Closing rental loss through completion of such repair and/or restoration)
      would exceed Three Hundred Thousand Dollars ($300,000) (a “Major
      Casualty”), then Essex shall have the right to terminate its obligation to
      consummate the transactions contemplated by this Agreement by delivery of
      written notice thereof to the Partnership within ten (10) Business Days after
      Essex’s first learning of the occurrence of such casualty and the cost of such
      repair and/or restoration.  If all or any part of the Property is
      damaged and/or destroyed by fire or other casualty prior to the Closing but
      (i) the event is not a Major Casualty or (ii) the event is a Major
      Casualty but this Agreement is not terminated pursuant to this
      Section 4.6(a) as a result thereof, then the Closing Date shall occur as
      scheduled notwithstanding such damage or destruction, and the Partnership’s
      interest in all proceeds of insurance payable by reason of such casualty shall
      be assigned to Essex as of the Closing Date or credited to Essex if previously
      received by the Partnership, and the Partnership shall be responsible for any
      cost of repair not covered by such insurance (whether by reason of insurance
      deductible, uninsured casualty or otherwise).  The Partnership’s
      obligations under this Section 4.6(a) shall survive the Closing.

     

    (b)  If,
      prior
      to Closing, an Authority commences any eminent domain or condemnation proceeding
      to take any portion of the Property or the Partnership enters into an agreement
      in lieu thereof or becomes aware that any such agreement may be offered, and
      the
      award to be paid in connection therewith is to exceed Three Hundred Thousand
      Dollars ($300,000), or any units or parking spaces are taken or to be taken
      in
      connection therewith, or any access to the Property has been or will be
      materially impaired (each, a “Major Condemnation”), Essex shall have the
      option to terminate its obligation to consummate the transactions contemplated
      by this Agreement by delivery of written notice thereof to the Partnership
      within ten (10) Business Days after Essex first learns of such commencement,
      entry or offer.  If, prior to the Closing Date, an Authority commences
      any eminent domain or condemnation proceeding to take any portion of the
      Property or the Partnership enters into an agreement in lieu thereof or becomes
      aware that any such agreement may be offered and such event does not constitute
      a Major Condemnation then the Closing Date shall occur as scheduled
      notwithstanding such proceeding, entry or offer, and the Partnership’s interest
      in all awards or payments arising out of such proceedings or agreement shall
      be
      assigned to Essex as of the 

    
      
        
        

      

      
        -37-

        
          

        

      

      Closing
        Date or credited to Essex if previously received by the
        Partnership.  The Partnership’s obligations under this Section 4.6(b)
        shall survive the Closing.

    

     

    4.7  Tests
      and Inspections

     

    The
      Partnership hereby authorizes Essex and its authorized representatives, agents
      and employees to enter upon the Property from time to time to perform such
      tests
      and inspections as Essex deems necessary or appropriate in its sole discretion,
      including, without limitation, such soil boring and compacting tests, test
      well
      and water table, soil porosity and liquid absorption tests, other environmental
      inspections and tests, and engineering tests.  Any entry by Essex onto
      the Property in connection with its due diligence shall not unreasonably
      interfere with the rights of tenants under Leases.  Essex hereby
      agrees to indemnify, protect, defend and hold the Partnership harmless from
      and
      against any and all direct, but not consequential, Losses arising on account
      of
      any test or inspection performed by Essex; provided, however, the provisions
      of
      this sentence shall not be applicable to any such Losses to the extent same
      arises out of or in connection with either (i) the mere discovery of any
      pre-existing condition at the Property, or (ii) the negligence or willful
      misconduct of the Partnership or any of the Existing Partners, or any of their
      respective employees, contractors, subcontractors, tenants or others under
      any
      of their direction or control.  The provisions of the previous
      sentence shall survive a termination of this Agreement or Closing.

     

    4.8  Mortgage
      Debt

     

    Prior
      to
      the Closing, the Partnership will keep all debt service payments and other
      payments owed in connection with its Mortgage Debt current on the Property
      and
      will not permit or suffer to exist any default under any Mortgage
      Instrument.  On or before the Closing, if required, the Partnership
      shall obtain the written consent from the holder of the Mortgage Debt to any
      deemed assumption of such Mortgage Debt by the Partnership due to a change
      in
      its general partner upon the Closing.  All costs, fees and charges
      required to be paid to the holder of the Mortgage Debt or on behalf of such
      holder in connection with such deemed assumption of the Mortgage Debt shall
      be
      paid by the Existing Partners.  Any and all debts secured by the
      Property or other liens or judgments filed against the Property (except for
      the
      respective Permitted Encumbrances and the Mortgage Debt) shall be satisfied
      and
      released of record by the Existing Partners.  Except as provided in
      this Section 4.8, the Partnership will not amend or in any way modify without
      the prior written consent of Essex any term of its Mortgage Debt or any
      documents or instruments executed in connection therewith.

     

    4.9  Availability
      of Records

     

    The
      Partnership and the General Partners agree to cooperate with Essex to obtain
      any
      information needed from or pertaining to the Partnership, the Property or the
      Existing Partners.  Upon written request of Essex, for a period of two
      (2) years after the Closing, the General Partners shall (i) make their
      records relating to the Partnership available to Essex for inspection, copying
      and audit by Essex’s designated accountants (to the extent not already in the
      possession of Essex), and (ii) cooperate with Essex to the extent
      reasonably necessary to obtain any applicable Licenses not in existence on
      the
      Closing Date and necessary for the operation of all or any portion of the
      Property.  Without limiting the foregoing and in addition thereto, for
      the period of time commencing on the date of this Agreement and continuing
      through the third (3rd) anniversary of the Closing Date, the General Partners
      shall, from time to time, upon reasonable advance notice from Essex, provide
      Essex and its representatives, agents and employees with access to all
      financial, tax and other information relating to the Partnership and the
      Property in their possession or control (to the extent not already in the
      possession of Essex) pertaining to the period of the Partnership’s ownership in
      and

    
      
        
        

      

      
        -38-

        
          

        

      

      operation
        of, as the case may be, the Property prior to the Closing Date, which
        information is relevant and reasonably necessary, in the opinion of Essex’s
        outside, third party accountants (the “Accountants”), to enable Essex and
        its Accountants to prepare financial statements in compliance with any or
        all of
        (a) Rule 3-14 of Regulation S-X of the Commission; (b) any other rule
        issued by the Commission and applicable to Essex; and (c) any registration
        statement, report or disclosure statement filed with the Commission by, or
        on
        behalf of, Essex.  In addition, during such three (3) year period, the
        General Partners shall, from time to time, upon reasonable advance notice
        from
        Essex, provide Essex and its representatives, agents and employees with access
        to current and former employees and agents of the Partnership or its General
        Partners and of any other entity who assisted in or worked on accounting
        or tax
        matters with respect to the Partnership.  The General Partners’
obligations under this Section 4.9 shall survive the Closing.  The
        General Partners acknowledge and agree that the following is a representative
        description (but not an exhaustive list) of the information and documentation
        that Essex and the Accountants may require in order to comply with (a), (b)
        and
        (c) above (to the extent not already in the possession of
        Essex):

    

     

    (a)  Rent
      Rolls for the calendar month in which the Closing occurs and the eleven (11)
      calendar months immediately preceding the calendar month in which the Closing
      occurs and all Leases, whether or not in effect as of the Closing
      Date;

     

    (b)  The
      Partnership’s internally-prepared operating statements;

     

    (c)  Access
      to
      applicable Leases;

     

    (d)  The
      Partnership’s budgeted annual and monthly income and expenses, and actual annual
      and monthly income and expenses;

     

    (e)  Access
      to
      the Partnership’s cash receipt journal(s) and bank statements for the
      Property;

     

    (f)  The
      Partnership’s general ledger with respect to the Property;

     

    (g)  The
      Partnership’s schedule of expense reimbursements required under Leases in effect
      on the Closing Date, if one exists;

     

    (h)  The
      Partnership’s schedule, if one exists, of those items of repairs and maintenance
      performed by, or at the direction of the Partnership, during the Partnership’s
      fiscal year in which the Closing occurs (the “Final Fiscal
      Year”);

     

    (i)  The
      Partnership’s schedule, if one exists, of those capital improvements and fixed
      asset additions made by, or at the direction of, the Partnership during the
      Final Fiscal Year;

     

    (j)  Access
      to
      the Partnership’s invoices with respect to expenditures made during the Final
      Fiscal Year;

     

    (k)  Access
      (during normal and customary business hours) to responsible personnel to answer
      accounting questions; and

    
      
        
        

      

      
        -39-

        
          

        

      

    

    (l)  A
      representation letter, signed by the individual(s) responsible for the
      Partnership’s financial reporting, as prescribed by generally accepted auditing
      standards promulgated by the Auditing Standards Division of the American
      Institute of Certified Public Accountants, which representation letter may
      be
      required to assist the Accountants in rendering an opinion on such financial
      statements.

     

    4.10  Title
      and Survey Defects

     

    The
      Partnership and the General Partners shall prior to Closing correct or resolve
      the following title and survey matters so as to cause them not to be listed
      as
      exceptions to title in the Title Policy:

     

    (i)  Any
      and
      all title and/or survey matters first arising from and after the date of this
      Agreement; and

     

    (ii)  Any
      and
      all title matters which can be cured by the payment of money other than Mortgage
      Instruments in connection with Mortgage Debt to be retained as provided in
      this
      Agreement.  If the Partnership and the General Partners are not able
      to correct any such matter on or before Closing, same shall be deemed to be
      a
      material default by the Partnership and the General Partners.

     

    4.11  Cooperation
      with Essex

     

    The
      Partnership and the General Partners shall cooperate and do all acts as may
      be
      reasonably required or requested by Essex with regard to the fulfillment of
      any
      condition to Essex’s obligations hereunder but the Partnership’s and the General
      Partners’ representations and warranties shall not be affected or released by
      Essex’s waiver or fulfillment of any condition.  The Partnership’s and
      the General Partners’ obligations under this Section 4.11 shall survive the
      Closing.

     

    4.12  Post-Closing
      Property Management

     

    The
      General Partners agree to cooperate with Essex and/or its designated management
      company in good faith prior to Closing with respect to the establishment of
      a
      qualified management staff for the Property.  Essex shall have the
      right to establish such management staff for the Property as it deems necessary
      or appropriate after the Closing.

     

    4.13  Notices
      Received

     

    The
      Partnership shall promptly provide copies to Essex of any written notice the
      Partnership or any of its General Partners receives on or before the Closing
      Date (i) from any Authority concerning any possible violation of applicable
      Laws or (ii) concerning any possible breach of or default under any
      Contract, Lease, Mortgage Instrument or any other document or instrument to
      which the Partnership is a party or by which the Partnership or the Property
      is
      bound.

     

    4.14  Cash
      Distributions

     

    All
      of
      the Partnership’s bank accounts as in existence immediately prior to the Closing
      and all positive prorations in favor of the Existing Partners (“Old Bank
      Accounts”) shall be held and disposed of as follows:

     

    (a)  At
      the
      Closing an amount sufficient to pay for prorated expenses hereunder shall be
      paid out of the Old Bank Accounts to Essex;

     

    (b)  All
      bills
      relating to the Partnership operations prior to the Closing Date shall be paid
      out of the Old Bank Accounts;

    
      
        
        

      

      
        -40-

        
          

        

      

    

    (c)  The
      Existing Partners shall retain $25,000 in an escrow account controlled by Essex
      for a period of at least four (4) months from the Closing to cover payment
      of
      all operating expenses related to the period prior to the Closing including
      prorations.  Following the end of such four-month period, any
      remaining amount after such payments shall be returned to James Fuqua on behalf
      of the Existing Partners.  Any cash in the Old Bank Accounts in excess
      of the amounts covered in paragraphs (a), (b) and (c) of this Section 4.14
      may
      be disposed of in such manner as the General Partner and Existing Partners
      may
      agree.

     

    4.15  Representations
      and Warranties

     

    Prior
      to
      the Closing, the General Partners shall not willfully take any action (or
      intentionally omit to act) where such action or omission would cause or
      constitute, at the time taken or omitted or at the time of the Closing, a breach
      of any of the Partnership’s or any General Partner’s representations, warranties
      or covenants contained in this Agreement.

     

    ARTICLE
      5 - CLOSING ADJUSTMENTS

     

    5.1  Adjustments
      Generally

     

    All
      amounts which this Agreement provides are to be paid by the Partnership prior
      to
      Closing or by the Existing Partners or are for the account of the Partnership
      prior to Closing or by the Existing Partners shall be adjusted in cash on or
      prior to the Closing out of funds of the Partnership which the Partnership
      is
      entitled to distribute prior to Closing pursuant to Section 4.14.

     

    5.2  Taxes,
      Assessments and Utilities

     

    All
      real
      estate taxes, charges and assessments affecting the Property and all charges
      for
      water, sewer, electricity, gas, telephone and all other utilities with respect
      to the Property, shall be apportioned on a daily basis as of midnight on the
      date preceding the Closing Date.  General real estate taxes and
      assessments payable for the fiscal year in which the Closing occurs shall be
      prorated as of midnight on the date preceding of the Closing
      Date.  The Existing Partners shall pay on or before Closing the full
      amount of any delinquent assessments against the Property for prior fiscal
      years, including, without limitation, interest payable therewith.  The
      Partnership shall cause all the applicable utility meters to be read on the
      Closing Date and the Existing Partners will be responsible for the cost of
      all
      utilities used prior to the Closing Date, except to the extent such utility
      charges are billed to and paid by tenants directly.  If any prorations
      under this Section cannot be calculated finally on the Closing Date, then they
      shall be estimated at the Closing and calculated finally as soon after the
      Closing Date as practicable.  The Existing Partners’ obligations under
      this Section shall survive the Closing.

     

    5.3  Rent

     

    Except
      for delinquent rent, all rent under the Leases and other income attributable
      to
      operation of the Property shall be apportioned and prorated in cash on a per
      diem basis as of midnight on the date immediately preceding the Closing
      Date.  Payment received from tenants who are delinquent as of the
      Closing Date shall be applied by the Partnership as follows:  if such
      delinquent rent is received by the Partnership during the month in which the
      Closing Date occurs such amount shall be prorated and applied and if such
      payments are received by the Partnership from tenants of the Property after
      the
      month in which the Closing occurs but prior to the date which is six (6) months
      after the Closing Date, such rents shall be applied first to rents then due
      for
      any period following the Closing from such tenant and any excess then delivered
      to the Existing Partners to the extent of such tenant’s delinquent rent as of


    
      
        
        

      

      
        -41-

        
          

        
the
        time
        of apportionment.  Any amounts received by the Existing Partners on
        account of rent or other income from and after the Closing Date shall be
        turned
        over to Essex for application in accordance with the terms of this
        Section 5.3.  The Existing Partners’ obligations under this
        Section shall survive the Closing.

    

     

    5.4  Payments
      on Permitted Exceptions

     

    Payments
      of interest on the Mortgage Debt and other payments owing under the Mortgage
      Instruments and any other Permitted Exceptions shall be apportioned in cash
      on a
      per diem basis as of midnight on the date immediately preceding the Closing
      Date.  Such interest and other payments accruing prior to the Closing
      Date shall be deemed to be the responsibility of the Existing Partners, and,
      subject to the terms of this Agreement, any such interest and other payments
      accruing on or after such Closing Date shall be deemed to be an expense of
      the
      Partnership.

     

    5.5  Contract
      Payments and Other Expenses

     

    Payments
      under all Contracts and for the Property’s operating  and maintenance
      expenses, including, without limitation, fuel, shall be apportioned in cash
      on a
      per diem basis as of midnight on the date immediately preceding the Closing
      Date
      to the extent possible.  All such expenses accruing prior to such
      Closing Date shall be deemed to be the responsibility of the Existing Partners
      and all such expenses accruing as of such Closing Date and thereafter shall
      be
      post closing expenses of the Partnership.  If final bills are not
      available as of Closing, amounts to be prorated under this Section shall be
      prorated in cash on the basis of the most current bills then available and
      promptly re-prorated on receipt of final bills.  All such expenses for
      the period preceding such Closing Date shall be the responsibility of the
      Existing Partners, and all such expenses commencing as of the Closing Date
      with
      respect to the Property shall be deemed to be  post closing expenses
      of the Partnership.  In addition, the parties agree that at Closing
      Essex shall be credited with the amount of any advance payment made under any
      laundry leases, cable television agreements or similar service contracts which
      are either (i) allocable to the period from and after close of escrow or
      (ii) paid in consideration for the portion of the term of any such contract
      which remains unexpired at the close of escrow.

     

    5.6  Partner
      Consent

     

    All
      costs
      and expenses associated with preparing, printing, distributing and collecting
      all Consents, including, without limitation, all Existing Partners’ consents and
      elections hereunder, shall be the responsibility of the Existing
      Partners.  All costs and expenses associated with preparing and filing
      all federal and state securities filings associated with the issuance of Units
      shall be the responsibility of Essex and/or the Partnership
      (post-closing).

     

    5.7  Adjustments
      and Prorations Generally

     

    All
      fees
      payable to, or expenses or other amounts reimbursable to, the General Partners
      or to any other Person engaged by the Partnership prior to Closing, whether
      payable before or after Closing, shall be borne by the Existing
      Partners.  All net costs, adjustments and prorations allocable to the
      Existing Partners or to the Partnership which relate to periods on or before
      the
      Closing Date under this Agreement, or which relate to any amounts referred
      to in
      the first sentence of this Section 5.7, shall be paid out of available cash
      (and, if necessary, additional capital provided by the Existing Partners) of
      the
      Partnership.

     

    5.8  Post-Closing
      Audit

     

    Within
      sixty (60) days after the Closing Date, the Partnership shall conduct a
      post-Closing audit to determine the accuracy of all prorations made under this
      

    
      
        
        

      

      
        -42-

        
          

        

      

      Article 5
        (the “Post-Closing Audit”).  Any party owing another party a sum of
        money based on post-Closing prorations required under this Article or the
        Post-Closing Audit shall promptly pay such sum to the other party, together
        with
        interest thereon at the Reference Rate from the Closing Date to the date
        of
        payment if payment is not made within ten (10) days after delivery of a bill
        therefor.  The Existing Partners shall reserve and set aside cash of
        not less than $25,000 to satisfy any obligations they may have under this
        Article 5.  The provisions of this Section 5.8 shall survive
        Closing.

    

     

    ARTICLE
      6 - DEFAULTS AND REMEDIES

     

    6.1  Defaults

     

    Subject
      to the other provisions of this Article 6, in the event of (i) a failure by
      a party to perform any of its obligations hereunder, which failure continues
      for
      more than fifteen (15) days following receipt of written notice thereof from
      the
      other party or (ii) the inaccuracy of any representation or warranty made
      by a party in this Agreement or in any document delivered pursuant to the terms
      hereof, then the other party shall have the right to terminate its obligation
      to
      consummate the transactions contemplated by this Agreement by delivery of
      written notice thereof to the other party.  Subject to Section 6.2, in
      the event of a failure of a condition to a party’s obligations under this
      Agreement which does not constitute a breach of a covenant, agreement,
      representation, warranty and/or indemnity made by such party under this
      Agreement, such party shall, as its sole and exclusive remedy, either elect
      to
      terminate its obligation to complete the transactions contemplated under this
      Agreement or to waive satisfaction of such condition, each by delivery of notice
      thereof to the other party.  In the event of a Major Casualty or Major
      Condemnation, Essex shall have the right to terminate this Agreement by delivery
      of written notice thereof to the Partnership.  Subject to the terms of
      this Article 6, upon any such termination or any termination otherwise
      permitted under this Agreement, all rights and obligations of the parties under
      this Agreement, other than those that by their terms survive termination, shall
      terminate without recourse, and this Agreement shall be of no further force
      or
      effect.

     

    6.2  Reimbursement
      of Loan-Related Fees Paid by Essex

     

            In
      the event this
      Agreement terminates for any reason whatsoever, Essex shall be
      entitled to reimbursement or repayment from the Partnership for all loan-related
      fees paid by Essex in connection with the Partnership’s obtainment of the
      Mortgage Debt to refinance the previous mortgage debt on the Property (to the
      extent the reimbursement or repayment of such fees is not covered by the
      existing management agreement between Essex and the Partnership).

     

    ARTICLE
      7 - INDEMNIFICATION

     

    7.1  By
      the
      General Partners and the other Existing Partners

     

        (a)  Partnership
      and Property Related Matters (Excluding Radon Issues).  From and
      after the Closing Date, the General Partners shall, jointly and severally,
      and
      the other Existing Partners shall, severally (to the extent of their respective
      percentage interests in the Partnership prior to the completion of the
      transactions contemplated hereby) but not jointly, indemnify, defend, protect
      and hold harmless the Essex Indemnified Parties from and against all Losses
      which are incurred or suffered by any of them (A) based upon, arising out
      of, in connection with or by reason of the breach of any of the representations
      or warranties of the 

    
      
        
        

      

      
        -43-

        
          

        

      

      Partnership,
        the General Partners or any Existing Partner contained in this Agreement,
        any
        Related Agreement or any document delivered to Essex pursuant to this Agreement,
        (B) based upon, arising out of, in connection with or by reason of any liability
        or obligation of the Property or the Partnership of any nature (absolute,
        accrued, contingent or otherwise) arising or occurring with respect to any
        period prior to Closing, including, without limitation, obligations under
        Contracts, Leases, Licenses, the Mortgage Debt and the other Permitted
        Exceptions performable prior to Closing, but excluding those matters set
        forth
        in Section 7.1(b), or (C) based upon, arising out of, in connection with
        or by
        reason of the failure of the Partnership or any Existing Partner to perform
        or
        comply, in whole or in part, with any of the covenants or agreements contained
        herein or in any Related Agreement to be performed or complied with by the
        Partnership or any Existing Partner on or prior to the
        Closing.

    

     

    (b)  Radon
      Issues.

     

    (i)  From
      and
      after the Closing Date, until the pledge of Units described in Section 7(b)(ii)
      is released in accordance therewith, the Existing Partners shall, severally
      (to
      the extent of their respective percentage interests in the Partnership prior
      to
      the completion of the transactions contemplated hereby) but not jointly,
      indemnify, defend, protect and hold harmless the Essex Indemnified Parties
      (excluding the management company for the Property) from and against all Losses
      which are incurred or suffered by any of them based upon, arising out of, in
      connection with or by reason of any liability or obligation of the Property
      or
      the Partnership of any nature (absolute, accrued, contingent or otherwise)
      arising from the presence of radon on or in any portion of the Property prior
      to
      Closing.

     

    (ii)  To
      secure
      the indemnification obligations of the Existing Partners pursuant to Section
      7(b)(i), the Continuing Partners, subject to obtaining consent, if necessary,
      from the Mortgage Lender, hereby grant to Essex, on behalf of the parties
      covered by such indemnity, a security interest in a portion of the Continuing
      Partner’s Units having an aggregate value equal to Six Hundred Eighteen Thousand
      Three Hundred Dollars ($618,300) (based on the Pricing Value, and determined
      on
      a pro rata basis based on the Continuing Partners’ respective number of Units
      immediately following the Closing), including, but not limited to, all
      distributions thereon and proceeds of all of the foregoing, and shall execute,
      and hereby authorizes Essex to file, financing statements or other evidence
      of
      perfection and take such other actions as Essex may require, including, without
      limitation, executing the Pledge Instruction Letters attached hereto as
Exhibit O.  Such security interest shall be released on the
      fourth (4th)
      anniversary of the Closing Date unless prior to such fourth (4th) anniversary
      a
      claim or written notice asserting such claim under Section 7(b)(i) has been
      made
      in accordance with this Article 7, in which event Essex may, in its sole and
      absolute discretion, release only such portion of such pledged Units as it
      reasonably determines will not be required to satisfy any such asserted claim
      or
      claims.  All distributions payable on account of such pledged Units
      shall be currently payable to the Continuing Partners, notwithstanding the
      existence of this pledge.  Notwithstanding anything contained herein
      to the contrary, (i) such Essex Indemnified Parties shall be under no
      obligation, whether pursuant to fiduciary principles or otherwise, to consider
      the interests of the Continuing Partners when exercising any of their rights
      under this Section 7.1(b)(ii), and (ii) nothing contained in the Limited
      Partnership Agreement shall be construed to limit the rights of such Essex
      Indemnified Parties under this Section 7.1(b)(ii).  This Section
      7.1(b) shall survive the Closing.

    
      
        
        

      

      
        -44-

        
          

        

      

    

    (iii)  From
      and
      after the fourth (4th) anniversary
      of
      the Closing Date and until the sixth (6th) anniversary
      of
      the Closing Date, the General Partners shall, severally (to the extent of their
      respective general partnership interests in the Partnership prior to the
      completion of the transactions contemplated hereby) but not jointly, indemnify,
      defend, protect and hold harmless the Essex Indemnified Parties (excluding
      the
      management company for the Property) from and against all Losses which are
      incurred or suffered by any of them based upon, arising out of, in connection
      with or by reason of any liability or obligation of the Property or the
      Partnership of any nature (absolute, accrued, contingent or otherwise) arising
      from the presence of radon on or in any portion of the Property prior to
      Closing.

     

    (c)  Equity
      Holder Claims.  The General Partners shall, jointly and severally,
      and the other Existing Partners shall, severally (to the extent of their
      respective percentage interests in the Partnership prior to the completion
      of
      the transactions contemplated hereby) but not jointly, indemnify, defend,
      protect and hold harmless the Essex Indemnified Parties from and against all
      Losses which are incurred or suffered by any of them based upon, arising out
      of,
      in connection with or by reason of: (i)  the breach by the
      Partnership, the General Partners or any former general partner (the “Covered
      Partner Parties”) of any of their respective fiduciary duties (including
      duties of disclosure) to the Existing Partners, any former partner or any other
      Person arising in connection with the transactions contemplated by this
      Agreement; (ii) any document signed by the General Partner, filed on behalf
      of
      any Covered Partner Party before the Closing with any Authority, or prepared
      or
      distributed by or on behalf of any Covered Partner Party before the Closing
      in
      connection with the transactions contemplated hereby, including any document
      distributed in connection with the solicitation of consents to the consummation
      by the Partnership of the transactions contemplated hereby; (iii) obligations
      or
      liabilities of the Partnership to any former partner, member, employee,
      consultant or agent on account of such Person’s present or former interest in or
      right to participate in the revenues or profits of the Partnership, whether
      resulting from the purchase, redemption or acquisition of equity interests
      in
      the Partnership or the termination of any employment or other relationship
      with
      the Partnership; (iv) the distribution of the Refinancing proceeds to the
      Existing Partners or (v) the failure of the Consent Solicitation, the Partner
      Consent or the offer and sale of Units to the Existing Partners to comply with
      all applicable Federal securities laws or California state securities laws
      (except, in the case of this clause (v) only, to the extent such Losses arise
      from the failure to properly prepare and file federal and state securities
      filings in connection with the issuance of Units).

     

    (d)  Interest.  The
      indemnity against Losses pursuant to this Section 7.1 shall also include
      interest on cash disbursements in respect thereof at an annual rate of interest
      equal to the prime lending rate of major money center banks as announced in
      the
      Wall Street Journal in effect from time to time plus two percent (2%), but
      not
      in excess of ten (10%) per annum (the “Reference Rate”), based on actual
      days elapsed from the later of the date a valid claim is made hereunder or
      the
      date of such disbursement until the date the applicable indemnified parties
      are
      fully reimbursed therefor.

     

    (e)  Limitation
      on Indemnity.  No Essex Indemnified Party shall be entitled to
      indemnification under this Section 7.1 once Essex Indemnified Parties have
      recovered from the Existing Partners under this Section 7.1, in the aggregate,
      an amount equal to Six Hundred Eighteen Thousand Three Hundred Dollars
      ($618,300) plus interest to which Essex Indemnified Parties may be entitled
      hereunder and all costs and expenses of collection.

    
      
        
        

      

      
        -45-

        
          

        

      

    

    (f)  Notwithstanding
      anything to the contrary set forth herein, nothing in this Agreement shall
      (i)
      limit the rights of an Essex Indemnified Party as an “Essex Indemnified Party”
under the Other Restructuring Agreement or (ii) limit an Existing Partner’s
      obligations (including, without limitation, indemnification and pledge
      obligations) under the other Restructuring Agreement to the extent such Existing
      Partner is also an “Existing Partner” and/or “Continuing Partner” under the
      Other Restructuring Agreement.

     

    7.2  Indemnification
      Procedure

     

    (a)  In
      the
      event that any party shall incur or suffer any Losses in respect of which
      indemnification may be sought by such party pursuant to the provisions of this
      Article 7, the party seeking to be indemnified hereunder (the “Indemnitee”)
      shall assert a claim for indemnification by written notice (a “Notice”) to the
      party from whom indemnification is sought (the “Indemnitor”) stating the nature
      and basis of such claim.  In the case of Losses arising by reason of
      any third party claim, the Notice shall be given within thirty (30) days of
      the
      filing of any such claim against the Indemnitee or the determination by
      Indemnitee that a claim will ripen into a claim for which indemnification will
      be sought, but the failure of the Indemnitee to give the Notice within such
      time
      period shall not relieve the Indemnitor of any liability that the Indemnitor
      may
      have to the Indemnitee except to the extent that the Indemnitor is prejudiced
      thereby and then only to the extent of such prejudice.

     

    (b)  The
      Indemnitee shall provide to the Indemnitor on request all information and
      documentation reasonably necessary to support and verify any Losses which the
      Indemnitee believes give rise to a claim for indemnification hereunder and
      shall
      give the Indemnitor reasonable access to all books, records and personnel in
      the
      possession or under the control of the Indemnitee which would have bearing
      on
      such claim.

     

    (c)  In
      the
      case of third party claims for which indemnification is sought, the Indemnitor
      shall have the option (x) to conduct any proceedings or negotiations in
      connection therewith, (y) to take all other steps to settle or defend any such
      claim (provided that the Indemnitor shall not, without the consent of the
      Indemnitee, settle any such claim on terms which provide for (A) a criminal
      sanction or fine, (B) injunctive relief or (C) monetary damages in excess of
      the
      amount that the Indemnitor is required to pay hereunder) and (z) to employ
      counsel, which counsel shall be reasonably acceptable to the Indemnitee, to
      contest any such claim or liability in the name of the Indemnitee or
      otherwise.  In any event, the Indemnitee shall be entitled to
      participate at its own expense and by its own counsel in any proceedings
      relating to any third party claim; provided, however, that if the
      defendants in any such action or claim include both the Indemnitee and the
      Indemnitor and the Indemnitee shall have reasonably concluded that there would
      be a conflict of interest were the same counsel to represent the Indemnitee
      and
      the Indemnitor, the Indemnitee shall be entitled to be represented by separate
      counsel at the Indemnitor’s expense; providedfurther,
however, that such action or claim shall not be settled without
      the
      Indemnitor’s consent, which shall not unreasonably be withheld or
      delayed.  The Indemnitor shall, within thirty (30) days of receipt of
      the Notice, notify the Indemnitee of its intention to assume the defense of
      such
      claim.  Until the Indemnitee has received notice of the Indemnitor’s
      election whether to defend any claim, the Indemnitee shall take reasonable
      steps
      to defend (but may not settle) such claim.  If the Indemnitor shall
      decline to assume the defense of any such claim, or shall fail to notify the
      Indemnitee within thirty (30) 

    
      
        
        

      

      
        -46-

        
          

        

      

      days
        after receipt of the Notice of the Indemnitor’s election to defend such claim,
        the Indemnitee shall defend against (and may settle) such claim.  The
        expenses of all proceedings, contests or lawsuits in respect of the claims
        described in the preceding sentence shall be borne by the
        Indemnitor.  Regardless of which party shall assume the defense of the
        claim, the parties agree to cooperate fully with one another in connection
        therewith.  In the case of a claim for indemnification made hereunder,
        (a) if (and to the extent) the Indemnitor is responsible pursuant hereto
        to
        indemnify the Indemnitee in respect of the third party claim, then within
        ten
        (10) days after the occurrence of a final non-appealable determination with
        respect to such third party claim (or sooner if required by such determination),
        the Indemnitor shall pay the Indemnitee (or sooner if required by such
        determination), in immediately available funds, the amount of any Losses
        (or
        such portion thereof as the Indemnitor shall be responsible for pursuant
        to the
        provisions hereof and (b) in the event that any Losses incurred by the
        Indemnitee do not involve payment by the Indemnitee of a third party claim,
        then, if (and to the extent) the Indemnitor is responsible pursuant hereto
        to
        indemnify the Indemnitee against such Losses, the Indemnitor shall within
        ten
        (10) days after agreement on the amount of Losses or the occurrence of a
        final
        non-appealable determination of such amount pay to the Indemnitee, in
        immediately available funds, the amount of such Losses (or such portion thereof
        as the Indemnitor shall be responsible for pursuant to the provisions
        hereof).

    

     

    7.3  Cooperation
      in Defense

     

    Each
      party indemnified under any indemnity contained in this Agreement shall
      cooperate in all reasonable respects in the defense of the third-party claim
      pursuant to which the indemnifying party is alleged to have
      liability.

     

    7.4  Survival

     

    This
      Article 7 shall survive Closing or the termination of the parties’ obligations
      to consummate the transactions contemplated by this
      Agreement.  Subject to the terms of this Section 7.4, all
      representations and warranties of the Partnership, the General Partners and
      the
      other Existing Partners contained in this Agreement (other than those contained
      in Sections 3.1(b), 3.1(g), 3.1(o), 3.1(q), 3.1(y), 3.1(bb), 3.1(cc) and 8.1,
      which shall survive Closing until the expiration of the applicable statute
      of
      limitations) shall survive Closing for a period of two (2) years and shall
      not
      be merged in any instrument of conveyance; provided that, if a written notice
      asserting a claim for breach of any such representation or warranty or a claim
      for indemnification under Section 7.2 shall have been given to the
      indemnifying party prior to the expiration of such representation or warranty
      or
      claim under Section 7.2, as the case may be, such representation and warranty
      and any right to indemnification for breach thereof, shall survive, to the
      extent of such claim only, until such claim is resolved.  No
      representation or warranty which is untrue as a result of fraud by the party
      making it shall terminate, but shall survive indefinitely.

     

    ARTICLE
      8 - MISCELLANEOUS

     

    8.1  Brokers

     

    Each
      party to this Agreement represents and warrants that neither it nor any of
      its
      Affiliates has had any contact or dealings regarding the Property, or any
      communication in connection with the subject matter of the transactions
      contemplated by this Agreement, through any real estate broker or other person
      who can claim a right to a commission or finder’s fee in connection with
      therewith.  In the event that any other broker or finder claims a
      commission or finder’s fee based upon any contact, dealings or communication,
      the party through whom or through whose Affiliate such broker or finder makes
      its claim shall be

    
      
        
        

      

      
        -47-

        
          

        

      

      responsible
        for such commission or fee and all costs and expenses (including, without
        limitation, reasonable attorneys’ fees and disbursements) incurred by the other
        party and its Affiliates in defending against the same.  The party
        through whom or through whose Affiliate such broker or finder makes a claim
        shall hold harmless, protect, indemnify and defend the other party hereto,
        its
        successors and assigns, agents, employees, officers and directors, and the
        Property from and against any and all Losses, arising out of, based on, or
        incurred as a result of such claim.  The provisions of this Section
        shall survive the Closing or termination of the parties’ obligations to
        consummate the transactions contemplated by this Agreement.

    

     

    8.2  Marketing

     

    The
      Partnership agrees not to market the Property for sale during the term of this
      Agreement or entertain or discuss any offer to purchase or acquire the Property
      with any Person other than Essex and their Affiliates.

     

    8.3  Entire
      Agreement; No Amendment

     

    This
      Agreement, including all Exhibits, the Related Agreements and documents executed
      at Closing (the “Related Transaction Documents”), represents the entire
      agreement among each of the parties hereto with respect to the subject matter
      hereof.  It is expressly understood that no representations,
      warranties, guarantees or other statements shall be valid or binding upon a
      party unless expressly set forth in the Related Transaction
      Documents.  It is further understood that any prior agreements or
      understandings between the parties with respect to the subject matter hereof
      have merged in the Related Transaction Documents, which alone fully express
      all
      agreements of the parties hereto as to the subject matter hereof and supersedes
      all such prior agreements and understandings.  The Related Transaction
      Documents may not be amended, modified or otherwise altered except by a written
      agreement signed by the party against whom enforcement is sought.  It
      is agreed that no obligation under the Related Transaction Documents which
      by
      its terms is to be performed or continue to be performed after Closing and
      no
      provision of the Related Transaction Documents which is expressly to survive
      Closing shall merge upon Closing, but shall survive Closing.

     

    8.4  Certain
      Expenses

     

    Each
      party hereto will pay all of its own expenses incurred in connection with this
      Agreement and the transactions contemplated hereby (whether or not the Closing
      shall take place), including, without limitation, all costs and expenses herein
      stated to be borne by such party and all of its respective accounting, legal,
      investigatory and appraisal fees.  The Partnership shall be
      responsible for paying on or before Closing (i) all applicable State, County
      and
      City transfer taxes and/or transfer fees due in connection with the transactions
      contemplated by this Agreement, (ii) all costs associated with obtaining
      and issuing the Title Policy, including, without limitation, examination costs,
      commitment fees and premiums; provided, however, notwithstanding the foregoing,
      Essex shall be responsible for that portion of the cost of the Title Policy
      related to extended coverage, (iii) all costs associated with obtaining
      applicable UCC searches required under Section 2.1(f) and (iv) all costs
      associated with obtaining the Partner Consent.  Essex shall be
      responsible for (i) all amounts required to be paid to the holder of the
      Mortgage Debt in connection with the deemed assumption of the Mortgage Debt,
      if
      any, and (ii) all costs associated with obtaining a survey as required under
      Section 2.1(e).  All other costs and charges in connection with the
      restructuring of the Partnership contemplated by this Agreement not otherwise
      provided for in this Agreement shall be allocated by standard accounting and
      conveyancing practices in the relevant jurisdiction where the Property is
      located.

    
      
        
        

      

      
        -48-

        
          

        

      

    

    8.5  Audit

     

    The
      Partnership acknowledges that Essex may in its discretion audit the last three
      (3) years of operations of the Property and the Partnership.  If the
      Closing occurs or if the Closing fails to occur for any reason other than a
      breach by the Partnership or an Existing Partner of their obligations hereunder,
      Essex agrees to pay the cost of said audit.  The Partnership agrees to
      fully cooperate with said audit, and to preserve and supply all books, records,
      operating statements, and other information which may be reasonably requested
      by
      Essex and within the possession or control of the Partnership or the property
      manager of the Property.  If the Closing occurs, all such materials
      will be kept by Essex; otherwise, Essex shall return all such materials to
      the
      Partnership.  The provisions of this Section 8.5 shall survive
      the Closing.

     

    8.6  Notices

     

    Any
      notice or communication required under or otherwise delivered in connection
      with
      this Agreement to any of the parties hereto shall be written and shall be
      delivered to such party at the following address:  If to
      Partnership:

     

    James
      Fuqua

    c/o
      Fuqua
      and Baptist Management

    1625
      The
      Alameda #200

    San
      Jose,
      CA  95126

    Fax:  (408)
      295-2103

    


    with
      a
      copy to:

     

    The
      Law
      Offices of Jesse W. Jack

    211
      San
      Mateo Avenue

    Los
      Gatos, CA  95030-4320

    Attention:  Jesse
      W. Jack

    Fax:  (408)
      399-3417

     

    If
      to
      Essex to:

     

    Essex
      Portfolio, L.P.

    925
      East
      Meadow Drive

    Palo
      Alto, CA  94303

    Attention:  Keith
      Guericke

    Fax:  (650)
      858-0139

     

    with
      a
      copy to:

     

    Essex
      Portfolio, L.P.

    925
      East
      Meadow Drive

    Palo
      Alto, CA  94303

    Attention:  Jordan
      Ritter

    Fax:  (650)
      858-1372

     

    with
      an
      additional copy to:

     

    Greenberg
      Traurig, LLP

    One
      International Place

    
      
        
        

      

      
        -49-

        
          

        

      

    

    Boston,
      MA  02110

    Attention:  Jennifer
      Weiss

    Fax:  (617)
      310-6001

     

    Each
      notice shall be in writing and shall be sent to the party to receive it, postage
      prepaid by certified mail, return receipt requested, or by a nationally
      recognized overnight courier service that provides tracking and proof of receipt
      or by telecopy transmission (with confirmation from sender’s telecopy machine of
      sending being adequate proof of same).  Notices shall be deemed
      delivered upon receipt.

     

    8.7  No
      Assignment

     

    Except
      as
      provided in this Section 8.7, neither this Agreement nor any of the rights
      or obligations hereunder may be assigned by any party hereto without the prior
      written consent of the other parties.  EMC and/or EPLP may, without
      such consent, (i) assign its rights hereunder to any lender as collateral
      security and/or (ii) assign its rights and obligations hereunder to an
      Affiliate provided such Affiliate assumes all obligations and liabilities of
      EMC
      and/or EPLP, as applicable, hereunder effective as of the date of any such
      assignment.

     

    8.8  Governing
      Law

     

    The
      laws
      of the State of California shall govern the validity, enforcement and
      interpretation of this Agreement, without regard to any choice of law
      principles.

     

    8.9  Multiple
      Counterparts; Facsimile Signatures

     

    This
      Agreement may be executed in multiple counterparts.  If so executed,
      all of such counterparts shall constitute but one agreement, and, in proving
      this Agreement, it shall not be necessary to produce or account for more than
      one such counterpart.  Signatures delivered by facsimile transmission
      shall be binding on the other party so signing and delivering same.

     

    8.10  Further
      Assurances

     

    From
      and
      after the date of this Agreement and after the Closing, the parties hereto
      shall
      take such further actions and execute and deliver such further documents and
      instruments as may be reasonably requested by the other party and are reasonably
      necessary to provide to the respective parties hereto the benefits intended
      to
      be afforded hereby, including, without limitation, all books and records
      relating to the Property and the addresses of all parties.

     

    8.11  Miscellaneous

     

    Whenever
      herein the singular number is used, the same shall include the plural, and
      the
      plural shall include the singular where appropriate, and words of any gender
      shall include the other gender when appropriate.  The headings of the
      Articles and the Sections contained in this Agreement are for convenience only
      and shall not be taken into account in determining the meaning of any provision
      of this Agreement.  The words “hereof” and “herein” refer to this
      entire Agreement and not merely the Section in which such words
      appear.  If the last day for performance of any obligation hereunder
      is not a Business Day, then the deadline for such performance or the expiration
      of the applicable period or date shall be extended to the next Business
      Day.

     

    8.12  Invalid
      Provisions

     

    If
      any
      provision of this Agreement is held to be illegal, invalid or unenforceable
      under present or future laws, such provision shall be fully severable, this
      Agreement shall be construed and enforced as if such illegal, invalid or
      unenforceable 

    
      
        
        

      

      
        -50-

        
          

        

      

      provision
        had never comprised a part of this Agreement, and the remaining provisions
        of
        this Agreement shall remain in full force and effect and shall not be affected
        by the illegal, invalid or unenforceable provision or by its severance from
        this
        Agreement.

    

     

    8.13  Confidentiality;
      Publicity

     

    The
      Partnership agrees to maintain in confidence through Closing, unless otherwise
      required by applicable Law to disclose, all material and information received
      from Essex or otherwise regarding the Property and the other matters which
      are
      the subject of this Agreement.  In the event this Agreement is
      terminated, each party shall promptly return to the other all materials
      delivered to such party by the other party.  The Partnership agrees
      that, prior to the Closing Date, it shall not, without the prior written consent
      of Essex, publicly or privately reveal any information relating to the existence
      or terms and conditions of the transactions contemplated
      hereby.  Notwithstanding anything to the contrary contained in this
      Agreement, Essex shall have the sole right to determine the form, timing and
      substance of, and to issue, all publicity concerning the transactions
      contemplated by this Agreement.

     

    8.14  Time
      of Essence

     

    Time
      is
      of the essence with respect to this Agreement.

     

    8.15  Attorneys
      Fees

     

    If
      this
      Agreement or the transactions contemplated herein gives rise to a lawsuit,
      arbitration or other legal proceeding between the parties hereto, the prevailing
      party shall be entitled to recover its costs and reasonable attorney fees in
      addition to any other judgment of the court or arbitrator(s).

     

    8.16  Essex
      Approvals and Decisions

     

    If
      the
      approval, consent or decision of  “Essex” is required under this
      Agreement, or is “Essex” is required to give notice under this Agreement, then
      any such approval, consent, decision or notice may be given by any of EMC,
      EPLP
      or Essex REIT.

      
         

        
          -51-

        

         

      

    

    
       

      
        
          

        

      

       

    

    IN
      WITNESS WHEREOF, the parties hereto have executed this Agreement to Restructure
      Partnership as an instrument under seal as of the date and year first above
      written.

     

    
      	
              THE
                PARTNERSHIP:

            
	
              WESTERN-MOUNTAIN
                VIEW II INVESTORS,

              a
                California limited partnership

            
	
              /s/
                GEORGE M.
                MARCUS                                                                

              George
                M. Marcus, a general partner

              /s/
                DONALD V.
                BAPTIST                                                                

              Donald
                V. Baptist, a general partner

              /s/
                JAMES
                FUQUA                                                                

              James
                Fuqua, a general partner

               

            
	
              ESSEX:

            
	
              ESSEX
                PORTFOLIO, L.P.,

              a
                California limited partnership

            
	
              By:
                Essex Property Trust, Inc, its general partner

            
	
              /s/
                JORDAN E. RITTER

              By:  Jordan
                E. Ritter

              Its:  Senior
                Vice President

            
	
              ESSEX
                REIT:

            
	
              ESSEX
                PROPERTY TRUST, INC.,

              a
                Maryland corporation

            
	
              /s/
                JORDAN E. RITTER

              By:  Jordan
                E. Ritter

              Its:  Senior
                Vice President

            
	 
	
              EMC:

            
	
              ESSEX
                MANAGEMENT CORPORATION,

              a
                California corporation

            
	
              /s/
                JORDAN E. RITTER

              By:  Jordan
                E. Ritter

              Its:  Senior
                Vice President

            


    


    
      -52-

    

    
       

      
        
          

        

      

    

    
      	
              GENERAL
                PARTNERS:

            
	
              /s/
                GEORGE M.
                MARCUS                                                                

            
	
              George
                M. Marcus

            
	
              /s/
                DONALD V.
                BAPTIST                                                                

            
	
              Donald
                V. Baptist

            
	
              /s/
                JAMES
                FUQUA                                                                

            
	
              James
                Fuqua

            


    


    
      
        -53-

      

      
        
          

        

      

    

    THE
      FOLLOWING SCHEDULES AND EXHIBITS HAVE BEEN OMITTED AND WILL BE FURNISHED TO
      THE
      SEC UPON REQUEST:

     

    


     

    EXHIBIT’S:
      A, B, C, D, E, F, G, H, I, J, K, L, M, N, O.

     

    SCHEDULE’S:
      1, 3.1(X), 3.1(Y), 3.2(E).

     

     

    
 

    
      
        -54-