SIXTEENTH AMENDMENT TO FIRST AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP OF ESSEX PORTFOLIO, L.P

This Sixteenth Amendment, dated as of the date shown above (this “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., a California limited partnership (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”).

WHEREAS, Sections 2 through 7 of this Amendment are solely intended to clarify provisions in (1) Exhibit T of the Partnership Agreement, which exhibit had been added to the Partnership Agreement pursuant to that certain Fourteenth Amendment to First Amended and Restated Agreement of Limited Partnership of Essex Portfolio, L.P., dated as of December 26, 2007, and (2) Exhibit E of the Partnership Agreement, which exhibit had been restated pursuant to that certain Fifteen Amendment to First Amended and Restated Agreement of Limited Partnership of Essex Portfolio, L.P., dated as of February 26, 2008;

WHEREAS, it is necessary and desirable to impose certain restrictions on certain transfers by Limited Partners and the exercise of the redemption and sale rights granted under Article 9 of the Partnership Agreement so that the Partnership may avoid treatment as a “publicly traded partnership;”

WHEREAS, Section 13.7(b)(iv) of the Partnership Agreement allows the General Partner to make any amendment that does not adversely affect the Limited Partners in any material respect; Section 13.7(b)(vi) of the Partnership Agreement allows the General Partner to make any amendment to satisfy any “requirements, conditions or guidelines” of any regulation of any federal agency; and Section 13.7(b)(iii) of the Partnership Agreement allows the General Partner to make amendments setting forth the rights, powers and duties of holders of additional Partnership Units;

WHEREAS, the proposed changes in this Amendment that are set forth in Sections 8 and 9 herein, which relate to Article 9 of the Partnership Agreement and Exhibit I to the Partnership Agreement, respectively, incorporate “safe harbor” provisions for the Partnership to avoid status as a “publicly traded partnership,” the determination of which would cause the Partnership to cease to be qualified as a partnership for Federal income tax purposes; the “safe harbor” provisions prohibit certain transfers by Limited Partners; such “safe harbor” provisions would have been used by the General Partner to determine whether certain transfers by Limited Partners would cause a termination of the Partnership for Federal income tax purposes under existing Section 9.3(vi); and thus the explicit incorporation of the terms of such “safe harbor” provisions into Article 9 does not adversely affect the rights of the Limited Partners;

WHEREAS, in addition to incorporating the “safe harbor” provisions, the proposed changes in Section 8 of this Amendment clarify that the Partnership intends to rely on the “Private Placement Safe Harbor” until the “Private Placement Safe Harbor” becomes inapplicable, at which point (i) the Partnership intends to rely on the other safe harbors and (ii) no transfer by Limited Partners shall be permitted if such transfer does not qualify under one of the other safe harbors; and

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.             Section 1.1 of the Partnership Agreement is hereby amended to delete the definition of “LTIP Units” in its entirety and the following substituted in lieu thereof:

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

3.             Sections 1(b) and (c) of Exhibit E to the Partnership Agreement are hereby deleted in their entirety and the following substituted in lieu thereof:

“(b)          Net Income and Net Losses for a Fiscal Year shall be allocated to the Partners in a manner such that the Capital Account of each Partner, immediately after making such allocation, is, as nearly as possible, equal to (i) the distributions that would be made to such Partner pursuant to Section 6.2(a) hereof if the Partnership were dissolved pursuant to Article VIII hereof, its affairs wound up and its assets sold for cash equal to their Gross Asset Values, all Partnership liabilities were satisfied (limited with respect to each nonrecourse liability to the Gross Asset Values of the assets securing such liability) and the net assets of the Partnership were distributed in accordance with Section 6.2(a) to the Partners immediately after making such allocation, minus (ii) such Partner’s share of Partnership Minimum Gain or Partner Nonrecourse Debt Minimum Gain, computed immediately prior to the hypothetical sale of assets.

(c)           Notwithstanding anything to the contrary in this Agreement, (i) Net Income derived from operating cash flow of the Partnership shall not be allocated to a holder of LTIP Units, a holder of Series Z Incentive Units or a holder of Series Z-1 Incentive Units, unless and until the Partnership makes a distribution of such cash flow to such holders pursuant to Section 6.2(a) hereof, and (ii) Net Income from disposition gains shall be allocated to a holder of LTIP Units, a holder of Series Z Incentive Units and a holder of Series Z-1 Incentive Units only upon a sale of all or substantially all of the assets of the Partnership (including any hypothetical sale under Treasury Regulations Section 1.704-1(b)(2)(iv)(f) in connection with, but not limited to, the occurrence of the events set forth in Section 3(g) below).  In the case of Section 1(c)(ii) above, Net Income shall be allocated to a holder of LTIP Units, a holder of Series Z Incentive Units or a holder of Series Z-1 Incentive Units such that the Capital Account of such holder shall be equal to (x) the number of Common Units into which the LTIP Units, the Series Z Incentive Units or the Series Z-1 Incentive Units held by such holder could be converted if fully vested, multiplied by (y) the value of such Common Units (it being intended that the Capital Accounts of a holder of LTIP Units, Series Z Incentive Units or Series Z-1 Incentive Units will have a Capital Account equal to the Capital Account applicable to the Common Units into which they could be converted).”

4.             Section 3(g) of Exhibit E to the Partnership Agreement is hereby deleted in its entirety and the following substituted in lieu thereof:

“ Capital Account Adjustments .  The Capital Accounts of the Partnership shall be adjusted or “booked up” upon the occurrence of the following events to reflect each Partner’s share of the net fair market value of the Partnership’s assets:

(i)             the admission of additional Partners into the Partnership;

(ii)            the award or issuance by the Partnership of additional Series Z-1 Incentive Units or LTIP Units, or Partnership Units granted under other long-term incentive programs;

(iii)           the conversion by a Partner of his or her Series Z Incentive Units, Series Z-1 Incentive Units or LTIP Units into Common Units; and

(iv)          the exchange of a Partner’s Common Units for shares of Common Stock.”

5.             Paragraph B. of Section 2 of Exhibit T to the Partnership Agreement is hereby amended by deleting it in its entirety and the following substituted in lieu thereof:

“B.            Distribution Participation Date .  The “Distribution Participation Date” for each LTIP Unit will be the application Valuation Date, as defined in the Vesting Agreement of each Person granted LTIP Units.”

6.              Section 6.2 of the Partnership Agreement is hereby amended by adding a new paragraph (g) as follows:

(g)           “Limitation on Distributions.  Notwithstanding anything to the contrary in this Agreement, a holder of Series Z Incentive Units, Series Z-1 Incentive Units or LTIP Units shall receive cash distributions only to the extent that there have been allocations of Net Income to such holder pursuant to Exhibit E of this Agreement.”

7.             Section 6.2 of the Partnership Agreement is hereby amended by adding a new paragraph (h) as follows:

(h)           “Notwithstanding anything to the contrary in this Agreement, a holder of LTIP Units may convert all or a portion of his or her Vested LTIP Units into Common Units, a holder of Series Z Incentive Units may convert all or a portion of his or her vested Series Z Incentive Units into Common Units, and a holder of Series Z-1 Incentive Units may convert all or a portion of his or her vested Series Z-1 Incentive Units into Common Units, only to the extent of the balance in such holder’s Capital Account, after giving effect to any adjustments to or “book ups” of such Capital Account pursuant to Treasury Regulations Section 1.704-1(b)(2)(iv)( f ) in connection with, but not limited to, the occurrence of the events set forth in Section 3(g) of Exhibit E of this Agreement.”

8.              Amendment of Article IX of the Partnership Agreement . Article IX to the Partnership Agreement is amended and restated by replacing such Article IX with Article IX as follows:

“9.1           General Partner Transfer. The General Partner shall not withdraw from the Partnership and shall not Transfer all or any portion of its interest in the Partnership without the Consent of the Limited Partners, provided that the Consent of the Limited Partners shall not be required if the Limited Partners collectively own less than five percent (5%) of the Partnership Units at the time of such Transfer.  Upon any Transfer of all of the General Partner’s Partnership Interest in accordance with the provisions of this Section 9.1, the transferee General Partner shall become vested with the powers and rights of the transferor General Partner, and shall be liable for all obligations and responsible for all duties of the General Partner, once such transferee has executed such instruments as may be necessary to effectuate such admission and to confirm the agreement of such transferee to be bound by all the terms and provisions of this Agreement with respect to the Partnership Interest so acquired.  It is a condition to any Transfer otherwise permitted hereunder that the transferee assumes by operation of law or express agreement all of the obligations of the transferor General Partner under this Agreement with respect to such transferred Partnership Interest, and no such Transfer (other than pursuant to a statutory merger or consolidation wherein all obligations and liabilities of the transferor General Partner are assumed by a successor corporation or other Entity by operation of law) shall relieve the transferor General Partner of its obligations under this Agreement without the Consent of the Limited Partners, provided that the Consent of the Limited Partners shall not be required if the Limited Partners collectively own less than five percent (5%) of the Partnership Units at the time of such Transfer.  In the event the General Partner withdraws from the Partnership, in violation of this Agreement or otherwise, or dissolves, terminates or upon the Bankruptcy of the General Partner, a Majority-In-Interest of the Limited Partners may elect to continue the Partnership business by selecting a substitute general partner.

“9.2           Transfers by Limited Partners.   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 (a) by operation of law to the estate of a Series Z Partner or Series Z-1 Partner, as applicable, or (b) to the Partnership or the General Partner.

“(a)            (i) It is a condition to any Transfer (other than pursuant to Section 9.2(b)(ii) below) permitted under this Section 9.2 that the transferee assumes by operation of law or express agreement all of the obligations of the transferor Limited Partner under this Agreement with respect to such transferred Partnership Interest, and no such Transfer (other than pursuant to a statutory merger or consolidation wherein all obligations and liabilities of the transferor Partner are assumed by a successor corporation or other Entity by operation of law) shall relieve the transferor Partner of its obligations under this Agreement without the approval of the General Partner, in its sole and absolute discretion.  Upon such Transfer, the transferee shall be deemed to be an Assignee with respect to such Partnership Interest, but shall not become or be admitted to the Partner