Document:

ex_10-2.htm

    FOURTEENTH
      AMENDMENT TO

     

    FIRST
      AMENDED AND RESTATED

     

    AGREEMENT
      OF LIMITED PARTNERSHIP OF

     

    ESSEX
      PORTFOLIO, L.P.

     

    Dated
      as of December 26, 2007

     

    This
      Fourteenth Amendment, dated as of the date shown above (the “Amendment”), is
      executed by Essex Property Trust, Inc. a Maryland Corporation (the “Company”),
      as the General Partner and as attorney in fact for all limited partners of
      Essex
      Portfolio, L.P. (the “Partnership”), for the purpose of amending the First
      Amended and Restated Agreement of Limited Partnership of Essex Portfolio, L.P.,
      dated September 30, 1997 (the “Partnership Agreement”).

     

    RECITALS

     

     

    WHEREAS,
      the Partnership desires to provide for equity incentives to certain persons
      who
      provide services for the benefit of the Partnership (the “Grantees”) in the form
      of Partnership Units which shall be designated “LTIP Units”;

     

    WHEREAS,
      pursuant to the authority granted to the General Partner under the Partnership
      Agreement, the General Partner desires to amend the Partnership Agreement to
      reflect the issuance of the LTIP Units; and

     

    WHEREAS,
      upon issuance of LTIP Units, each Grantee shall become a party to the
      Partnership Agreement as a Limited Partner and agree to be bound by all terms,
      conditions and other provisions of this Amendment and the Partnership
      Agreement.

     

    NOW
      THEREFORE, in consideration of the premises and for other good and
      valuable consideration, the receipt and sufficiency of which hereby are
      acknowledged, the General Partner hereby amends 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.  Issuance
      of LTIP Units.  Pursuant to Section 4.3 of the Partnership
      Agreement, the Partnership may from time to time issue LTIP Units to the
      Grantees.  The holder of any LTIP Units shall have the benefits and
      obligations under the Partnership Agreement to which the holder of such
      Partnership Interest may be entitled or obliged under the Partnership Agreement,
      as amended from time to time.   The admission of a Grantee as a
      Limited Partner shall become effective as of the date on which the Grantee
      is
      awarded the LTIP Units, and Exhibit A and Exhibit M to the Partnership Agreement
      will be amended to reflect such admission as of such time.

     

    3.  Admission
      of the Grantees as Limited Partners. Effective immediately prior to the
      effectiveness of the next succeeding sentence, the capital accounts of the
      Partnership shall be adjusted to reflect each Partner’s share of the net fair
      market value of the Partnership’s assets (a “book-up”). 

    
      
        
        

      

      
        1

        
          

        

      

      
        
        
Each
        of
        the Grantees is hereby admitted, as of the date on which the Grantee is awarded
        LTIP Units, as an Additional Limited Partner in accordance with Section 4.6
        of
        the Partnership Agreement holding that number of LTIP Units as is set forth
        next
        to his or her name on Exhibit U hereof. Each of the Grantees hereby agrees
        to become a party to the Partnership Agreement as a Limited Partner and to
        be
        bound by all the terms, conditions and other provisions of the Partnership
        Agreement, as amended by this Amendment. Pursuant to Section 4.6(b) of the
        Partnership Agreement, the General Partner hereby consents to the admission
        of
        each of the Grantees as an Additional Limited Partner of the Partnership.
        The
        admission of the Grantees shall become effective as of the date on which
        the
        Grantee is awarded the LTIP Units, which shall also be the date on which
        the
        name of each Grantee is recorded on the books and records of the
        Partnership.

    

     

    4.  Amendments
      to Partnership Agreement.

     

    a.           Section
      1.1 of the Partnership Agreement is hereby amended to include the following
      definition in alphabetical order:

     

    “LTIP
      Units” shall mean the Partnership Units designated as such having the
      rights, power, privileges, restrictions, qualifications and limitations set
      forth on Exhibit T hereto.

     

    b.           Section
      1.1 of the Partnership Agreement is hereby amended to delete the definition
      of
“Percentage Interest” in its entirety and to substitute the following definition
      of “Percentage Interest” in its place:

     

    “Percentage
      Interest” shall mean with respect to any Partner other than holders of
      Series B Preferred Units, Series D Preferred Units, Series Z Incentive Units
      or
      Series Z-1 Incentive Units, the undivided percentage ownership interest of
      such
      Partner in the Partnership, as determined by dividing (i) the number of
      Partnership Units owned by such Partner by (ii) the sum of (A) the total
      number of Partnership Units then outstanding (excluding the Series B Preferred
      Interest, the Series B Partnership Units, the Series D Preferred Interest,
      the
      Series D Preferred Units, the Series F Preferred Interest, Series G Preferred
      Interest, Series Z Incentive Units and the Series Z-1 Incentive Units), (B)
      the
      total number of outstanding Series Z Incentive Units multiplied by the
      Distribution Ratchet Percentage with respect to each such Series Z Incentive
      Unit, calculated on a unit-by-unit basis, and (C) the total number of
      outstanding Series Z-1 Incentive Units multiplied by the Series Z-1 Distribution
      Ratchet Percentage with respect to each such Series Z-1 Incentive Unit,
      calculated on a unit-by-unit basis. With respect to any holder of Series Z
      Incentive Units, such Partner’s Percentage Interest shall be equal to such
      Partner’s Series Z Percentage Interest. With respect to any holder of Series Z-1
      Incentive Units, such Partner’s Percentage Interest shall be equal to such
      Partner’s Series Z-1 Percentage Interest. If any Partner holds a combination of
      Common Units, LTIP Units, Series Z Incentive Units and/or Series Z-1
      Incentive Units, then such Partner’s Percentage Interest shall be equal to the
      sum of (A) the Percentage Interest as calculated pursuant to the first
      sentence of this definition (assuming for purposes of such calculation that
      such
      Partner holds only Common Units and/or LTIP Units, if any), (B) the Series
      Z Percentage Interest (assuming for purposes of such calculation that such
      Partner holds only Series Z Incentive Units, if any) and (C) the Series Z-1
      Percentage Interest (assuming for purposes of such calculation that such Partner
      holds only Series Z-1 Incentive Units, if any).

    
      
        
        

      

      
        2

        
          

        

      

    

    c.           Section
      6.2 of the Partnership Agreement is hereby amended to add the following new
      paragraph (f):

     

    “(f)           Distributions
      made pursuant to this Section 6.2 shall be adjusted as necessary to ensure
      that the amount apportioned to each LTIP Unit does not exceed the amount
      attributable to items of Partnership income or gain realized after the date
      such
      LTIP Unit was issued by the Partnership. The intent of this Section 6.2(f)
      is to ensure that any LTIP Units issued after the date of this Amendment qualify
      as “profits interests” under Revenue Procedure 93-27, 1993-2 C.B. 343
      (June 9, 1993) and Revenue Procedure 2001-43, 2001-2 C.B. 191
      (August 3, 2001), and Section 6.2 shall be interpreted and applied
      consistently therewith. The General Partner at its discretion may amend
      this Section 6.2(f) to ensure that any LTIP Units granted after the date of
      this Amendment will qualify as “profits interests” under Revenue Procedure
      93-27, 1993-2 C.B. 343 (June 9, 1993) and Revenue Procedure 2001-43, 2001-2
      C.B. 191 (August 3, 2001) (and any other similar rulings or regulations
      that may be in effect at such time).”

    

    5.  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.

     

    6.  Counterparts.  This
      Amendment may be executed in any number of counterparts, each of which shall
      be
      deemed to be an original and all of which shall constitute one and the same
      agreement.  Facsimile signatures shall be deemed effective execution
      of this Amendment and may be relied upon as such by the other
      party.  In the event facsimile signatures are delivered, originals of
      such signatures shall be delivered to the other party within three (3) business
      days after execution.

     

    

     

    [Remainder
      of Page Left Blank Intentionally]

     

    
      
        
          
          

        

        
          3

          
            

          

        

         

      

    

    IN
      WITNESS WHEREOF, the General Partner has executed this Amendment as of the
      date
      indicated 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

    

      
        
          
          

        

        
          
          

          
            

          

        

         

      

    

    EXHIBIT
      T

     

    DESIGNATION
      OF THE RIGHTS, POWERS, PRIVILEGES,

     

    RESTRICTIONS,
      QUALIFICATIONS AND LIMITATIONS

     

    OF
      THE LTIP UNITS

     

    The
      following are the terms of the LTIP Units:

     

    
      	
              1.  

            	
              Vesting.

            

    

     

    A.  Vesting,
      Generally.  LTIP Units may, in the sole discretion of the General
      Partner, be issued subject to vesting, forfeiture and additional restrictions
      on
      transfer pursuant to the terms of an award, vesting or other similar agreement
      (a “Vesting Agreement”). The terms of any Vesting Agreement may be modified
      by the General Partner from time to time in its sole discretion, subject to
      any
      restrictions on amendment imposed by the relevant Vesting Agreement or by the
      terms of any plan pursuant to which the LTIP Units are issued, if applicable.
      LTIP Units that have vested and are no longer subject to forfeiture under the
      terms of a Vesting Agreement are referred to as “Vested LTIP Units”; all other
      LTIP Units are referred to as “Unvested LTIP Units.”  Subject to the terms
      of any Vesting Agreement, a holder of LTIP Units shall be entitled to transfer
      his or her LTIP Units to the same extent, and subject to the same restrictions,
      as holders of Common Units pursuant to Article IX of the Partnership
      Agreement.

     

    B.  Forfeiture
      or Transfer of Unvested LTIP Units.  Unless otherwise specified in
      the relevant Vesting Agreement, upon the occurrence of any event specified
      in a
      Vesting Agreement as resulting in either the forfeiture of any LTIP Units,
      or
      the right of the Partnership or the General Partner to repurchase LTIP Units
      at
      a specified purchase price, then upon the occurrence of the circumstances
      resulting in such forfeiture or if the Partnership or the General Partner
      exercises such right to repurchase, then the relevant LTIP Units shall
      immediately, and without any further action, be treated as cancelled or
      transferred to the General Partner, as applicable, and no longer outstanding
      for
      any purpose. Unless otherwise specified in the Vesting Agreement, no
      consideration or other payment shall be due with respect to any LTIP Units
      that
      have been forfeited, other than any distributions declared with a record date
      prior to the effective date of the forfeiture.

     

    C.  Legend.  Any
      certificate evidencing an LTIP Unit shall bear an appropriate legend indicating
      that additional terms, conditions and restrictions on transfer, including
      without limitation any Vesting Agreement, apply to the LTIP Unit.

     

    
      	
              2.  

            	
              Distributions.

            

    

     

    A.  LTIP
      Distribution Amount.  Commencing from the Distribution
      Participation Date (as defined below) established for any LTIP Units, for any
      quarterly or other period holders of such LTIP Units shall be entitled to
      receive, if, when and as authorized by the General Partner out of funds legally
      available for the payment of distributions, regular cash distributions in an
      amount per unit equal to the distribution payable on each Common Unit for the
      corresponding quarterly or other period (the “LTIP Distribution Amount”). In
      addition, from and after the Distribution Participation Date, LTIP Units shall
      be entitled to receive, if, when and as authorized by the General Partner out
      of
      funds or other property legally available for the 

    
      
        1

      

      
        
          

        

      

      payment
        of distributions, non-liquidating special, extraordinary or other distributions
        in an amount per unit equal to the amount of any non-liquidating special,
        extraordinary or other distributions payable on the Common Units which
        may be made from time to time. LTIP Units shall also be entitled to
        receive, if, when and as authorized by the General Partner out of funds or
        other
        property legally available for the payment of distributions, distributions
        representing proceeds of a sale or other disposition of all or substantially
        all
        of the assets of the Partnership in an amount per unit equal to the amount
        of
        any such distributions payable on the Common Units, whether made prior to,
        on or
        after the Distribution Participation Date, provided that the amount of such
        distributions shall not exceed the positive balances of the Capital Accounts
        of
        the holders of such LTIP Units to the extent attributable to the ownership
        of
        such LTIP Units.  Distributions on the LTIP Units, if authorized,
        shall be payable on such dates and in such manner as may be authorized by
        the General Partner (any such date, a “Distribution Payment Date”); provided
        that the Distribution Payment Date and the record date for determining which
        holders of LTIP Units are entitled to receive a distribution shall be the
        same
        as the corresponding dates relating to the corresponding distribution on
        the
        Common Units.

    

     

    B.  Distribution
      Participation Date.  The “Distribution Participation Date” for
      each LTIP Units will be either (i) with respect to LTIP Units granted
      pursuant to the General Partner’s 2007 Outperformance Plan (the “OPP”), the
      applicable Valuation Date (as defined in the Vesting Agreement of each Person
      granted LTIP Units under the OPP) or (ii) with respect to other LTIP Units,
      such date as may be specified in the Vesting Agreement or other
      documentation pursuant to which such LTIP Units are issued.

     

    
      	
              3.  

            	
               Allocations.

            

    

     

    Commencing
      with the portion of the taxable year of the Partnership that begins on the
      Distribution Participation Date established for any LTIP Units, such LTIP Units
      shall be allocated Net Income and Net Loss in amounts per LTIP Unit equal to
      the
      amounts allocated per Common Unit pursuant to Exhibit E of the Partnership
      Agreement.  The General Partner is authorized in its discretion to
      delay or accelerate the participation of the LTIP Units in allocations of Net
      Income and Net Loss, or to adjust the allocations made after the Distribution
      Participation Date, so that the ratio of (i) the total amount of Net Income
      or Net Loss allocated with respect to each LTIP Unit in the taxable year in
      which that LTIP Unit’s Distribution Participation Date falls, to (ii) the
      total amount distributed to that LTIP Unit with respect to such period, is
      more
      nearly equal to such ratio as computed for the Common Units held by the General
      Partner.

     

    
      	
              4.  

            	
               Adjustments.

            

    

     

    The
      Partnership shall maintain at all times a one-to-one correspondence between
      LTIP
      Units and Common Units for conversion, distribution and other purposes,
      including without limitation complying with the following
      procedures.  If an Adjustment Event (as defined below) occurs, then
      the General Partner shall make a corresponding adjustment to the LTIP Units
      to
      maintain such one-for-one correspondence between Common Units and LTIP Units.
      The following shall be “Adjustment Events”:  (A) the Partnership makes
      a distribution on all outstanding Common Units in Partnership Units,
      (B) the Partnership subdivides the outstanding Common Units into a greater
      number of units or combines the outstanding Common Units into a smaller number
      of units, or (C) the Partnership issues any Partnership Units in exchange
      for its outstanding

    
      
        
        

      

      
        2

        
          

        

      

      Common
        Units by way of a reclassification or recapitalization of its Common Units.
        If
        more than one Adjustment Event occurs, the adjustment to the LTIP Units need
        be
        made only once using a single formula that takes into account each and every
        Adjustment Event as if all Adjustment Events occurred simultaneously. For
        the
        avoidance of doubt, the following shall not be Adjustment Events: (x) the
        issuance of Partnership Units in a financing, reorganization, acquisition
        or
        other similar business transaction, (y) the issuance of Partnership Units
        pursuant to any employee benefit or compensation plan or distribution
        reinvestment plan, or (z) the issuance of any Partnership Units to the General
        Partner in respect of a capital contribution to the Partnership of proceeds
        from
        the sale of securities by the General Partner. If the Partnership takes an
        action affecting the Common Units other than actions specifically described
        above as Adjustment Events and in the opinion of the General Partner such
        action
        would require an adjustment to the LTIP Units to maintain the one-to-one
        correspondence described above, the General Partner shall have the right
        to make
        such adjustment to the LTIP Units, to the extent permitted by law and by
        the
        terms of any plan pursuant to which the LTIP Units have been
        issued, in such manner and at such time as the General Partner,
        in its sole discretion, may determine to be appropriate under the
        circumstances. If an adjustment is made to the LTIP Units as herein provided
        the
        Partnership shall promptly file in the books and records of the Partnership
        an
        officer’s certificate setting forth such adjustment and a brief statement of the
        facts requiring such adjustment, which certificate shall be conclusive evidence
        of the correctness of such adjustment absent manifest error. Promptly after
        filing of such certificate, the Partnership shall mail a notice to each holder
        of LTIP Units setting forth the adjustment to his or her LTIP Units and the
        effective date of such adjustment.

    

     

    
      	
              5.  

            	
               Ranking.

            

    

     

    The
      LTIP
      Units shall rank on parity with the Common Units in all respects.

     

    
      	
              6.  

            	
               No
                Liquidation Preference.

            

    

     

    The
      LTIP
      Units shall have no liquidation preference.

     

    
      	
              7.  

            	
               Right
                to Convert LTIP Units into Common
                Units.

            

    

     

    A.  Conversion
      Right.  A holder of LTIP Units shall have the right (the
“Conversion Right”), at his or her option, at any time to convert all or a
      portion of his or her Vested LTIP Units into Common Units. Holders of LTIP
      Units
      shall not have the right to convert Unvested LTIP Units into Common Units until
      they become Vested LTIP Units; provided, however, that when a holder of LTIP
      Units is notified of the expected occurrence of an event that will cause his
      or
      her Unvested LTIP Units to become Vested LTIP Units, such Person may give
      the Partnership a Conversion Notice conditioned upon and effective as of the
      time of vesting, and such Conversion Notice, unless subsequently revoked by
      the
      holder of the LTIP Units, shall be accepted by the Partnership subject to such
      condition. The General Partner shall have the right at any time to cause a
      conversion of Vested LTIP Units into Common Units. In all cases, the conversion
      of any LTIP Units into Common Units shall be subject to the conditions and
      procedures set forth in this Section 7.

    
      
        
        

      

      
        3

        
          

        

      

    

    B.  Number
      of Units Convertible.  A holder of Vested LTIP Units
      may convert such Vested LTIP Units into an equal number of fully paid and
      non-assessable Common Units, giving effect to all adjustments (if any) made
      pursuant to Section 4.

     

    C.  Notice.  In
      order to exercise his or her Conversion Right, a holder of LTIP Units shall
      deliver a notice (a “Conversion Notice”) in the form attached as
      Attachment A to this Exhibit T to the Partnership not less than 10 nor
      more than 60 days prior to a date (the “Conversion Date”) specified in such
      Conversion Notice.  Each holder of LTIP Units covenants and agrees
      with the Partnership that all Vested LTIP Units to be converted pursuant to
      this
      Section 7 shall be free and clear of all liens.

     

    D.  Forced
      Conversion.  The Partnership, at any time at the election of the
      General Partner, may cause any number of Vested LTIP Units held by a holder
      of LTIP Units to be converted (a “Forced Conversion”) into an equal number of
      Common Units, giving effect to all adjustments (if any) made pursuant to
      Section 4; provided, that the Partnership may not cause a Forced
      Conversion of any LTIP Units that would not at the time be eligible for
      conversion at the option of the holder of such LTIP Units pursuant to
      Section 7.B above. In order to exercise its right to cause a Forced
      Conversion, the Partnership shall deliver a notice (a “Forced Conversion
      Notice”) in the form attached as Attachment B to this Exhibit T
      to the applicable holder not less than 10 nor more than 60 days prior to the
      Conversion Date specified in such Forced Conversion Notice. A Forced Conversion
      Notice shall be provided in the manner provided in Section 13.1 of the
      Partnership Agreement.

     

    E.  Conversion
      Procedures.  A conversion of Vested LTIP Units for which the
      holder thereof has given a Conversion Notice or the Partnership has given a
      Forced Conversion Notice shall occur automatically after the close of business
      on the applicable Conversion Date without any action on the part of such
      holder of LTIP Units, as of which time such holder of LTIP Units shall be
      credited on the books and records of the Partnership with the issuance as of
      the
      opening of business on the next day of the number of Common Units issuable
      upon
      such conversion. After the conversion of LTIP Units as aforesaid, the
      Partnership shall deliver to such holder of LTIP Units, upon his or her written
      request, a certificate of the General Partner certifying the number of Common
      Units and remaining LTIP Units, if any, held by such Person immediately after
      such conversion.

     

    F.  Mandatory
      Conversion in Connection with a Transaction.  If the Partnership
      or the General Partner shall be a party to any transaction (including without
      limitation a merger, consolidation, unit exchange, self tender offer for all
      or
      substantially all Common Units or other business combination or reorganization,
      or sale of all or substantially all of the Partnership’s assets, but excluding
      any transaction which constitutes an Adjustment Event), in each case as a result
      of which Common Units shall be exchanged for or converted into the right, or
      the
      holders of Common Units shall otherwise be entitled, to receive cash, securities
      or other property or any combination thereof (each of the foregoing being
      referred to herein as a “Transaction”), then the General Partner shall,
      immediately prior to the Transaction, exercise its right to cause a Forced
      Conversion with respect to the maximum number of LTIP Units then eligible for
      conversion, taking into account any allocations that occur in connection with
      the Transaction or that would occur in connection with the Transaction if the
      assets of the Partnership were sold at the Transaction price or, if applicable,
      at a value determined by the General Partner in good faith

    
      
        
        

      

      
        4

        
          

        

      

      using
        the
        value attributed to the Partnership Units in the context of the Transaction
        (in
        which case the Conversion Date shall be the effective date of the Transaction
        and the conversion shall occur immediately prior to the effectiveness of
        the
        Transaction).

    

     

    In
      anticipation of such Forced Conversion and the consummation of the Transaction,
      the Partnership shall use commercially reasonable efforts to cause each holder
      of LTIP Units to be afforded the right to receive in connection with such
      Transaction in consideration for the Common Units into which his or her LTIP
      Units will be converted the same kind and amount of cash, securities and other
      property (or any combination thereof) receivable upon the consummation of such
      Transaction by a holder of the same number of Common Units, assuming such holder
      of Common Units is not a Person with which the Partnership consolidated or
      into
      which the Partnership merged or which merged into the Partnership or to which
      such sale or transfer was made, as the case may be (a “Constituent
      Person”), or an affiliate of a Constituent Person. In the event that holders of
      Common Units have the opportunity to elect the form or type of
      consideration to be received upon consummation of the Transaction, prior to
      such
      Transaction the General Partner shall give prompt written notice to each holder
      of LTIP Units of such election, and shall use commercially reasonable efforts
      to
      afford such holders the right to elect, by written notice to the General
      Partner, the form or type of consideration to be received upon conversion
      of each LTIP Unit held by such holder into Common Units in connection with
      such
      Transaction. If a holder of LTIP Units fails to make such an election, such
      holder (and any of its transferees) shall receive upon conversion of each LTIP
      Unit held by him or her (or by any of his or her transferees) the same kind
      and
      amount of consideration that a holder of a Common Unit would receive if such
      holder of Common Units failed to make such an election.

     

    Subject
      to the rights of the Partnership and the General Partner under any Vesting
      Agreement and the terms of any plan under which LTIP Units are issued, the
      Partnership shall use commercially reasonable effort to cause the terms of
      any
      Transaction to be consistent with the provisions of this Section 7 and to
      enter into an agreement with the successor or purchasing entity, as the case
      may be, for the benefit of any holders of LTIP Units whose LTIP Units will
      not be converted into Common Units in connection with the Transaction that
      will
      (i) contain provisions enabling the holders of LTIP Units that remain
      outstanding after such Transaction to convert their LTIP Units into securities
      as comparable as reasonably possible under the circumstances to the Common
      Units
      and (ii) preserve as far as reasonably possible under the circumstances the
      distribution, special allocation, conversion, and other rights set forth in
      the
      Agreement for the benefit of the holders of LTIP Units.

     

    
      	
              8.  

            	
              Redemption
                at the Option of the
                Partnership.

            

    

     

    LTIP
      Units will not be redeemable at the option of the Partnership; provided,
      however, that the foregoing shall not prohibit the Partnership from repurchasing
      LTIP Units from the holder thereof if and to the extent such holder agrees
      to
      sell such Units.

     

    
      	
              9.  

            	
              Voting
                Rights.

            

    

     

    A.  Voting
      with Common Units.  Holders of LTIP Units shall have the right to
      vote on all matters submitted to a vote of the holders of Common Units; holders
      of LTIP Units and Common Units shall vote together as a single class, together
      with any other class or series of 

    
      
        
        

      

      
        5

        
          

        

      

      units
        of
        limited partnership interest in the Partnership upon which like voting rights
        have been conferred. In any matter in which the LTIP Units are entitled to
        vote,
        including an action by written consent, each LTIP Unit shall be entitled
        to vote
        a Percentage Interest equal on a per unit basis to the Percentage Interest
        of
        the Common Units.

    

     

    B.  Special
      Approval Rights.  In addition to, and not in limitation of, the
      provisions of Section 9.A above (and notwithstanding anything appearing to
      be contrary in the Partnership Agreement), the General Partner and/or the
      Partnership shall not, without the affirmative consent of a majority of the
      then
      outstanding LTIP Units, given in person or by proxy, either in writing or at
      a
      meeting, take any action that would materially and adversely alter, change,
      modify or amend the rights, powers or privileges of the LTIP Units; but subject
      in any event to the following provisions: (i) no consent of the holders of
      LTIP Units will be required if and to the extent that any such alteration,
      change, modification or amendment would similarly alter, change, modify or
      amend
      the rights, powers or privileges of the Common Units; (ii) with respect to
      the occurrence of any Transaction (as defined in Section 7.F of this Exhibit
      T),
      so long as the LTIP Units either (x) are all converted into Common Units
      immediately prior to the effectiveness of the Transaction, (y) remain
      outstanding with the terms thereof materially unchanged or (z) if the
      Partnership is not the surviving entity in such Transaction, are exchanged
      for a
      security of the surviving entity with terms that are materially the same with
      respect to rights to allocations, distributions, redemption, conversion and
      voting as the LTIP Units and without any income, gain or loss expected to be
      recognized by the holder upon the exchange for federal income tax purposes
      (and
      with the terms of the Common Units or such other securities into which the
      LTIP
      Units (or the substitute security therefor) are convertible materially the
      same
      with respect to rights to allocations, distributions, redemption, conversion
      and
      voting), the occurrence of any such event shall not be deemed to materially
      and
      adversely alter, change, modify or amend the rights, powers or privileges of
      the
      LTIP Units, provided further, that if some, but not all, of the LTIP Units
      are
      converted into Common Units immediately prior to the effectiveness of the
      transaction (and neither clause (y) or (z) above is applicable), then the
      consent required pursuant to this Section 9.B will be the consent of the
      holders of a majority of the LTIP Units to be outstanding following such
      conversion; (iii) any creation or issuance of any Common Units or of any
      class of series of common or preferred units of the Partnership (whether ranking
      junior to, on a parity with or senior to the LTIP Units with respect to payment
      of distributions, redemption rights and the distribution of assets upon
      liquidation, dissolution or winding up), which either (x) does not require
      the
      consent of the holders of Common Units or (y) does require such consent and
      is
      authorized by a vote of the holders of Common Units and LTIP Units voting
      together as a single class, together with any other class or series of
      units of limited partnership interest in the Partnership upon which like voting
      rights have been conferred, shall not be deemed to materially and adversely
      alter, change, modify or amend the rights, powers or privileges of the LTIP
      Units; and (iv) any waiver by the Partnership of restrictions or
      limitations applicable to any outstanding LTIP Units with respect to any holder
      or holders thereof shall not be deemed to materially and adversely alter,
      change, modify or amend the rights, powers or privileges of the LTIP Units
      with
      respect to other holders. The foregoing voting provisions will not apply if,
      as
      of or prior to the time when the action with respect to which such vote would
      otherwise be required will be taken or be effective, all outstanding LTIP Units
      shall have been converted and/or redeemed, or provision is made for such
      redemption and/or conversion to occur as of or prior to such time.

    
      
        
        

      

      
        6

        
          

        

      

       

    

    Attachment
      A to Exhibit T

     

    Notice
      of Election by Partner to Convert

     

    LTIP
      Units into Common Units

     

    The
      undersigned holder of LTIP Units hereby irrevocably elects to convert the number
      of Vested LTIP Units in Essex Portfolio, L.P. (the “Partnership”) set forth
      below into Common Units in accordance with the terms of the First Amended and
      Restated Agreement of Limited Partnership of the Partnership, as amended. The
      undersigned hereby represents, warrants, and certifies that the undersigned:
      (a) has title to such LTIP Units, free and clear of the rights or interests
      of any other person or entity other than the Partnership; (b) has the full
      right, power, and authority to cause the conversion of such LTIP Units as
      provided herein; and (c) has obtained the consent or approval of all
      persons or entities, if any, having the right to consent or approve such
      conversion.

     

    
      	
              Name
                of Holder:

            	 
	
               

            	
              (Please
                Print: Exact Name as Registered with Partnership)

            
	
               

            
	
              Number
                of LTIP Units to be Converted:

            	 
	
               

            
	
              Conversion
                Date:

            	 
	 	 	 	 	 	 	 	 

    

     

    
      	
               

            	
               

            	
               

            
	
              (Signature
                of Holder: Sign Exact Name as Registered with Partnership)

            	
               

            	
               

            
	
               

            	
               

            	
               

            
	
               

            	
               

            	
               

            	
               

            
	
              (Street
                Address)

            	
               

            	
               

            
	
               

            	
               

            	
               

            
	
               

            	
               

            	
               

            	
               

            
	
              (City)

            	
              (State)

            	
              (Zip
                Code)

            	
               

            
	
               

            
	
              Signature
                Guaranteed by:

            	
               

            	
               

            
	 	 	 	 	 	 

    

     

    
      
        
        

      

      
        7

        
          

        

      

       

    

    Attachment
      B to Exhibit T

     

    Notice
      of Election by Partnership to Force Conversion

     

    of
      LTIP Units into Common Units

     

    Essex
      Portfolio, L.P. (the “Partnership”) hereby irrevocably elects to cause the
      number of LTIP Units held by the holder of LTIP Units set forth below to be
      converted into Common Units in accordance with the terms of the First Amended
      and Restated Agreement of Limited Partnership of the Partnership, as
      amended.

     

    
      	
              Name
                of Holder:

            	 
	
               

            	
              (Please
                Print: Exact Name as Registered with Partnership)

            
	
               

            
	
              Number
                of LTIP Units to be Converted:

            	 
	
               

            
	
              Conversion
                Date:ex101to8k03725_12242007.htm

    Exhibit
      10.1

     

    
       

      
        	 	
                 

              

      

                                                                                 
EMPLOYMENT
        AGREEMENT

       

    

    EMPLOYMENT
      AGREEMENT, effective this 17th day of
      December,
      2007, by and between the LGL Group, Inc., a Delaware corporation (the
“Company”), and Harold D. Castle (the “Employee”).

    

    WITNESSETH:

    

               WHEREAS,
      the parties hereto desire to enter into this Employment Agreement to define
      and
      set forth the terms and conditions of the employment of the Employee by the
      Company;

    

    NOW,
      THEREFORE, in consideration of the mutual covenants and agreements set forth
      below, it is hereby covenanted and agreed by the Company and the Employee as
      follows:

    

    
      	
              1.

            	
              Position;
                Employment Period.

            

    

    

    The
      Company hereby employs the Employee as its Chief Financial Officer, and the
      Employee hereby agrees to serve in such capacity, for the period beginning
      the
      day of December 28, 2007 and ending on the date that the Employee’s employment
      is terminated in accordance with Paragraph 9 below (the “Employment
      Period”)

    

    
      	
              2.

            	
              Performance
                of Duties.

            

    

    

    The
      Employee agrees that during the Employment Period he shall devote his full
      business time to the business affairs of the Company and shall perform his
      duties faithfully and efficiently subject to the direction of the Board of
      Directors and Chief Executive Officer of the Company.

    

    
      	
              3.

            	
              Compensation.

            

    

    

    Subject
      to the following provisions of this Employment Agreement, during the Employment
      Period, the Employee shall be compensated for his services as
      follows:

    

    
      	
               

            	
              (a)

            	
              He
                shall receive an annual salary, payable in monthly or more frequent
                installments, in an amount which shall initially be $136,000 per
                annum,
                subject to such increases as may from time to time be determined
                by the
                Chief Executive Officer and Compensation Committee of the
                Company;

            

    

    

    
      	
               

            	
              (b)

            	
              He
                shall be eligible to participate in the Company’s Annual and Long Term
                Incentive Plan that are currently under
                development.

            

    

    

    
      	
               

            	
              (c)

            	
              He
                shall be eligible to participate in the Company’s Annual Incentive Plan
                and be eligible to receive an annual cash bonus of at least 30%
                of

            

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	
               

            	
              Base
                Salary, subject to meeting targets and thresholds established by
                the CEO
                and Board of Directors.

            

    

    

    The
      Employee shall be entitled to such other perquisites customarily granted by
      the
      Company to the employees of similar rank and position.  The Employee
      is entitled to at least three weeks paid vacation per annum during his first
      year of employment and four weeks per annum during his period of employment
      thereafter.

    

    4.           Disability.

    

    Subject
      to the provisions of Paragraph 9, if the Employee’s employment is terminated
      during the Employment Period by reason of his Disability (as defined below),
      the
      Employee shall continue to receive an annual salary and benefits in accordance
      with Paragraph 3 (a) for the 180-day period after the occurrence of such
      Disability.  For purposes of this Employment Agreement, the term
“Disability” means a physical or mental disability which was not pre-existing
      prior to the date of this agreement and which renders the Employee incapable
      of
      performing his duties under this Employment Agreement and which disability
      has
      existed for at least on month, as determined by an independent physician
      selected by the Company and agreed to by the Employee.  Any salary
      payment to the Employee shall be reduced by the amount of any benefits paid
      for
      the same period of time under the Company’s disability insurance
      programs.

    

    5.           Competing
      Businesses.

    

    During
      the period of his employment
      under this Employment Agreement, the Employee shall not be employed by or
      otherwise engage in or be interested in any business in competition with the
      Company.

    

    6.           Confidentiality.

    

    During
      and after the Employment Period,
      the Employee will not divulge or appropriate to his own use or to the use of
      others, in competition with the Company, any secret or confidential information
      or knowledge pertaining to the business of the Company, or of any of its
      subsidiaries, obtained by him in any way while he was employed by the Company
      or
      by any of its subsidiaries.

    

    
      	
              7.

            	
              Restrictive
                Covenant.

            

    

    

    In
      the
      event that the Employee’s employment is terminated for any reason, during the
      12-month period following such termination, the Employee will not directly
      or
      indirectly (as a director, officer, executive employee, manager, consultant,
      independent contractor, advisor or otherwise) engage in competition with, or
      own
      any interest in, perform any services for, participate in or be connected with
      any business or organization that engages in competition with the
      Company.

    

    
      	
              8.

            	
              Remedies.

            

    

    

    If
      at any
      time the Employee violates any of the terms or covenants set forth in Paragraphs
      5 and 6, the Company shall have the right to terminate all of its obligations
      to
      make further payments under this Employment Agreement.  The Employee
      acknowledges that the Company would be irreparably injured by a violation of
      Paragraphs 5 or 6 and agrees that the Company shall be entitled to an injunction
      restraining the Employee from any actual or threatened breach of Paragraphs
      5 or 6 or to any other appropriate equitable remedy without any bond or other
      security being required.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    9.           Termination.

    

    The
      Employee’s employment will be at
      the discretion of the Chief Executive Office and Board of Directors of the
      Company. In the event the Employee is terminated for reasons other than Cause
      he
      will be give 3 months notice and shall be paid at least three (3) months and
      no
      more than six (6) months base salary, such amount to be determined at the
      discretion of the Board of Directors. For the purposes of this Agreement “Cause”
shall mean that the Employee (a) committed an illegal act or an act intended
      to
      defraud the Company, (b) engaged in gross negligence or misconduct against
      the
      Company or another employee or carrying out his duties and responsibilities
      or
      (c) has breached any provision of this Agreement. In the event the Employee
      wishes to terminate his employment he shall give the Company at least 3 months
      notice.

    

    10.           Amendment.

    

    This
      Agreement may not be amended or
      cancelled by either party without the written consent of both parties. No
      person, other than the parties hereto, shall have any rights under or interest
      in the Employment Agreement or the subject matter hereof.

    

    11.           Notices.

    

    Any
      notice required or permitted to be
      given under this Employment Agreement shall be sufficient if in writing and
      if
      sent by registered mail to the Company at its principal executive offices or
      to
      the Employee at the last address filed by him in writing with the Company,
      as
      the case may be.

    

    12.           Non-Assignment.

    

    The
      interests of the Employee under
      this Employment Agreement are not subject to the claims of his creditors and
      may
      not be voluntarily or involuntarily assigned, alienated or
      encumbered.

    

    13.           Successors.

    

    This
      Agreement shall be binding upon,
      and inure to the benefit of, the Company and its successors and assigns and
      upon
      any person acquiring, whether by merger, consolidation, purchase of assets
      or
      otherwise, all or substantially all of the Company’s assets and
      business.

    

    14.           Applicable
      Law.

    

    The
      provisions of this Employment
      Agreement shall be construed in accordance with the laws of the State of
      Florida.

    

    15.           Counterparts.

    

    This
      Employment Agreement may be executed in two or more counterparts, any one of
      which shall be deemed the original with reference to the
      others.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

            IN
      WITNESS WHEREOF,
      the employee has hereunto set his hand, and the Company has caused these
      presents to be executed in its name and on its behalf, all effective the day
      and
      year first above written.

    
       

      
        	 	/s/
                Harold D. Castle  	 
	 	Harold
                D. Castle	 

      

    

     

    
      	 	LGL
              GROUP, INC.	 
	 	 	 	 
	
               

            	
              By:
                

            	/s/ Robert
              R. Zylstra 	 
	 	 	Name:   Robert
              R. Zylstra 	 
	 	 	Title:  President
              and Chief Executive Officer

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00134-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00134-of-00352.parquet"}]]