ex10_1.htm



    
      

    

    Exhibit
10.1

     

    FIRST
AMENDMENT TO THE

    SECOND
AMENDED AND RESTATED

    AGREEMENT
OF LIMITED PARTNERSHIP OF

    ESSEX
PORTFOLIO, L.P.

     

    Dated as
of December 23, 2009

     

    This
First Amendment, dated as of the date shown above (this “Amendment”), to the
Second Amended and Restated Agreement of Limited Partnership of Essex Portfolio,
L.P., dated as of May 27, 2009, (as amended, the "Partnership
Agreement” or “Agreement"), is
executed by Essex Property Trust, Inc., a Maryland corporation (the "General Partner"), as
the General Partner and as attorney-in-fact for all Limited Partners of Essex
Portfolio, L.P., a California limited partnership (the "Partnership").

     

    RECITALS

     

    WHEREAS, the Partnership was
formed pursuant to the Partnership Agreement;

     

    WHEREAS, the Partnership has
issued Series Z Incentive Units and Series Z-1 Incentive Units and such units
automatically convert into common units of the Partnership upon the occurrence
of certain triggering events as set forth in the Partnership
Agreement;

     

    WHEREAS, the Partnership
desires to amend the Partnership Agreement to provide that the Compensation
Committee of the Board of Directors of the General Partner may set a different
date, than is now provided in the Partnership Agreement, for the conversion of
Series Z and Series Z-1 Incentive Units into common units of the Partnership
and, when such a different date is set, the Compensation Committee may also
change the conversion ratio of incentive units and impose restrictions on the
exchange and sale of common units and shares of common stock ultimately issued
in connection with these incentive units, provided that the holder of such
incentive units consents to such changes and restrictions;

     

    WHEREAS, the Partnership also
desires to make certain clarifying changes to the definition
of  “Series Z-1 Trigger Event”, which definition defines the events
that trigger the conversion of Series Z-1 Incentive Units into common units of
the Partnership;

     

    WHEREAS, the Partnership
desires to amend the Partnership Agreement to allow for the transfer of Series Z
and Series Z-1 Incentive Units to certain trusts; and

     

    WHEREAS, the Partnership
desires to amend the provisions in the Partnership Agreement relating to LTIP
Units to provide that Common Units, which are issued upon the conversion of LTIP
Units, may be subject to restrictions as to when such Common Units may be
exchanged or converted into shares of Common Stock.

     

    NOW THEREFORE, in
consideration of the mutual covenants and agreements herein contained and other
good and valuable consideration, the receipt, adequacy and sufficiency of which
are hereby acknowledged, the parties hereto, intending legally to be bound,
hereby amend the Partnership Agreement as follows:

     

    1.        
    Definitions.
Capitalized terms used herein, unless otherwise defined herein, shall have the
same meanings as set forth in the Partnership Agreement.

     

    2.      
      New
Definitions

     

    
      	
               
      

            	
              a.

            	
              Section 1.1 of
      the Partnership Agreement is hereby amended to add the following
      definition after the definition of  “Series Z Incentive
      Unit”:

            


    

     

    “Series Z Partner” means an
individual who was duly issued Series Z Incentive Units and continues to hold
such units, and his or her transferee, provided that such transferee qualifies
as a Series Z Partner pursuant to the provisions of Section 9.2(a).  A
Series Z Partner shall also be deemed to be an Additional Limited
Partner.


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
               
      

            	
              b.

            	
              Section 1.1 of
      the Partnership Agreement is hereby amended to add the following
      definition after the definition of  “Series Z-1 Incentive
      Unit”:

            


    

     

    “Series Z-1 Partner” means an
individual who was or is duly issued Series Z-1 Incentive Units and continues to
hold such units, and his or her transferee, provided that such transferee
qualifies as a Series Z Partner pursuant to the provisions of Section
9.2(a).  A Series Z-1 Partner shall also be deemed to be an Additional
Limited Partner.

     

    3.         
   Amended
Definitions

     

    
      	
               
      

            	
              a.

            	
              Section 1.1 of
      the Partnership Agreement is hereby amended to add the following language
      to the end of the definition of  “Conversion Ratchet
      Percentage”:

            


    

     

    In
connection with the designation by the Compensation Committee of a specific date
as the Trigger Event, pursuant to the last sentence of the definition of Trigger
Event, for a particular Series Z Incentive Unit or Units held by a Series Z
Partner, the Committee may , with respect to such unit or units and other Series
Z Incentive Units held by the same Series Z Partner, (i) change the terms of
such incentive units, including without limitation changing the existing
Conversion Ratchet Percentage and the schedule of future percentage increases in
the Conversion Ratchet Percentage, (ii) require that any or all Common Units
issued upon the conversion of such incentive units be exchanged only into shares
of Common Stock, subject to the Ownership Limit, and (iii)  provide
that any or all shares of Common Stock issued upon the exchange of Common Units,
which Common Units were issued upon the conversion of such incentive units, be
subject to sale restrictions, provided that in the case of each of the foregoing
clauses (i), (ii) and (iii), that such Series Z Partner consents to such
provisions.

     

    
      	
               
      

            	
              b.

            	
              Section
      1.1 of the Partnership Agreement is hereby amended to delete the
      definition of  “LTIP Units” in
      its entirety and to substitute the following definition of “LTIP Units” in
      its place:

            


    

     

    “LTIP Units” shall mean
Partnership Units (i) granted pursuant to that certain long-term compensation
program known as the “2007 Outperformance Plan” or pursuant to future long-term
compensation programs, and (ii) which shall have the rights, powers, privileges,
restrictions, qualifications and limitations set forth in Exhibit T
hereto.

     

    
      	
               
      

            	
              c.

            	
              Section 1.1 of
      the Partnership Agreement is hereby amended to add the following language
      to the end of the definition of “Series Z-1 Conversion
      Ratchet Percentage”:

            


    

     

    In
connection with the designation by the Compensation Committee of a specific date
as the Series Z-1 Trigger Event, pursuant to the last sentence of the definition
of Series Z-1 Trigger Event, for a particular Series Z-1 Incentive Unit or Units
held by a Series Z-1 Partner, the Committee may, with respect to such unit or
units and other Series Z-1 Incentive Units held by the same Series Z-1 Partner,
(i) change the terms of such incentive units, including without limitation
changing the existing Series Z-1 Conversion Ratchet Percentage and the
schedule of future percentage increases in the Series Z-1 Conversion Ratchet
Percentage, (ii) require that any or all Common Units issued upon the conversion
of such incentive units be exchanged only into shares of Common Stock, subject
to the Ownership Limit, and (iii)  provide that any or all shares of
Common Stock issued upon the exchange of Common Units, which Common Units were
issued upon the conversion of such incentive units, be subject to sale
restrictions, provided that in the case of each of the foregoing clauses (i),
(ii) and (iii), that such Series Z-1 Partner consents to such
provisions.


    
      
         


      

      
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              d.

            	
              Section 1.1 of
      the Partnership Agreement is hereby amended to delete the definition of
      “Series Z-1
      Trigger Event” in its entirety and to substitute the following
      definition of “Series Z-1 Trigger
      Event” in its place:

            


    

     

    “Series Z-1 Trigger Event”
shall mean the earliest to occur of any of the following
events:

     

    
      	
               
      

            	
              (i)

            	
              such
      time as a plan of dissolution or liquidation (but not including a deemed
      liquidation for tax purposes in connection with one or more transfers of
      interest in the Partnership) of the General Partner and/or the Partnership
      is duly adopted by appropriate corporate or partnership
      action;

            


    

     

    
      	
               
      

            	
              (ii)

            	
              with
      respect to any and all  Series Z-1 Incentive Units issued in a
      specific calendar year, the date on which the Series Z-1 Conversion
      Ratchet Percentage applicable to all the Series Z-1 Incentive Units issued
      in that same calendar year and held by then current employees of the
      General Partner and/or the Partnership (i.e., other than holders of Series
      Z-1 Incentive Units whose employment with the General Partner and/or the
      Partnership has terminated) reaches
100%;

            


    

     

    
      	
               
      

            	
              (iii)

            	
              the
      earliest date on which the employment of all holders of Series Z-1
      Incentive Units has been terminated;
and

            


    

     

    
      	
               
      

            	
              (iv)

            	
              fifteen
      (15) years after the date of issuance of the first Series Z-1 Incentive
      Unit, provided that, with respect to any Series Z-1 Incentive Units issued
      after December 31, 2009, such date shall be fifteen (15) years after the
      date of issuance of such Series Z-1 Incentive
  Unit.

            


    

     

    In
addition, with respect to any Series Z-1 Incentive Unit or Units, the
Compensation Committee may at any time (including at the time of issuance of
such unit or units or later) designate a specific date as the Series Z-1 Trigger
Event for such unit or units and the Committee may elect, in its sole
discretion, to have such date be subject to the consent of the holder of such
unit or units, and such date shall be deemed to be the Series Z-1 Trigger Event
for such unit or units for all purposes under this Agreement, provided that (x)
if the Committee has elected to have such date be subject to the consent of the
holder, the holder has consented to such date, or (y) if the Committee has not
elected to have such date be subject to the consent of the holder, such date is
earlier than the date of the Series Z-1 Trigger Event otherwise established
pursuant to the earlier of items (i) through (iv) above.

     

    
      	
               
      

            	
              e.

            	
              Section 1.1 of
      the Partnership Agreement is hereby amended to add the following language
      to the end of the definition of Trigger
      Event:

            


    

     

    In
addition, with respect to any Series Z Incentive Unit or Units, the Compensation
Committee may at any time (including at the time of issuance of such unit or
units or later) designate a specific date as the Trigger Event for such unit or
units and the Committee may elect, in its sole discretion, to have such date be
subject to the consent of the holder of such unit or units, and such date shall
be deemed to be the Trigger Event for such unit or units for all purposes under
this Agreement, provided that (x) if the Committee has elected to have such date
be subject to the consent of the holder, the holder has consented to such date,
or (y) if the Committee has not elected to have such date be subject to the
consent of the holder, such date is earlier than the date of the Trigger Event
otherwise established pursuant to the earlier of items (i) through (iv)
above.


    
      
         


      

      
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    4.         
   Section 9.2(a) of the Partnership Agreement is hereby deleted
in its entirety and the following is substituted in lieu thereof:

     

    9.2           Transfers
by Limited Partners.

     

    (a)  Each
Limited Partner shall, subject to the provisions of Section 9.2(b) and Section
9.3 hereof, have the right to Transfer (or convert to Common Stock and
thereafter sell such Common Stock) to any Person all or any portion of its
Partnership Interest, whether or not in connection with the exercise of such
Limited Partner’s Rights.  In addition, the Partners hereby
acknowledge and agree that neither the Series Z Incentive Units nor the Series
Z-1 Incentive Units shall be Transferred, other than (i) by operation of law to
the estate of a Series Z Partner or Series Z-1 Partner, as applicable, (ii) by
assignment to a trust of which the Series Z Partner or Series Z-1 Partner
is sole trustee or co-trustee with that Partner's spouse and which trust is for
the benefit of the Series Z Partner or Series Z-1 Partner and/or such
Partner's spouse, children, and other descendants, or residual heirs if any
of the foregoing are deceased, or (iii) to the Partnership or the General
Partner, subject in the case of clauses (i), (ii) and (iii) to the applicable
provisions of Section 9.2(b) and Section 9.3.  With respect to
transfers pursuant to the foregoing clauses (i) and (ii), if the transferee
shall qualify as a Substituted Limited Partner pursuant to the provisions of
Section 9.2(b), then such transferee shall be deemed to be a Series Z Partner or
Series Z-1 Partner, as applicable.

     

    5.          
   The Partnership Agreement is hereby amended by adding the
following language after Section 7.F. of Exhibit T to the Partnership
Agreement:

     

    G.  Restrictions on Exchange of
Common Units.   Notwithstanding anything else set forth in
the Partnership Agreement, if set forth in the applicable Vesting Agreement,
Common Units issued upon the conversion of LTIP Units may be subject to
restrictions as to when such Common Units may be exchanged or converted into
shares of Common Stock pursuant to Exhibit I to the Partnership Agreement or any
other provision of the Partnership Agreement.

     

    6.        
    Continuing Effect of
Partnership Agreement.  Except as modified herein, the
Partnership Agreement is hereby ratified and confirmed in its entirety and shall
remain and continue in full force and effect, provided, however, that to the
extent there shall be a conflict between the provisions of the Partnership
Agreement and this Amendment, the provisions in this Amendment will prevail. All
references in any document to the Partnership Agreement shall mean the
Partnership Agreement, as amended hereby.


    
      
         


      

      
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    IN WITNESS WHEREOF, this
Amendment to the Partnership Agreement is hereby entered into among the
undersigned Partners as of the date first written above.

     

    
      	 
      	
              GENERAL
      PARTNER:

            
	 	 
	 
      	
              ESSEX PROPERTY TRUST, INC.,
      a Maryland corporation as General Partner of Essex Portfolio,
      L.P. and on behalf of the existing Limited Partners

            
	 	 
	 	 
	 
      	
              By:

            	
              /s/  Michael T.
    Dance

            
	 	 	 	 
	 
      	 
      	
              Name:

            	
              Michael
      T. Dance

            
	 
      	 
      	
              Title:

            	
              Executive
      Vice President and Chief Financial
Officer

            


    

    


     

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