8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

__________________

FORM 8-K

__________________

Current Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934

Date of Report (Date of Earliest Event Reported): December 30, 2009

ESSEX PROPERTY TRUST, INC.

(Exact Name of Registrant as Specified in its Charter)

001-13106

(Commission File Number)

Maryland	77-0369576
(State or Other Jurisdiction of Incorporation)	(I.R.S. Employer Identification No.)

925 East Meadow Drive, Palo Alto, California 94303

(Address of Principal Executive Offices) (Zip Code)

(650) 494-3700

(Registrant’s Telephone Number, Including Area Code)

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

£ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

£ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

£ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d2(b))

£ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)

Item 1.01 Entry Into a Material Definitive Agreement

On December 23, 2009, the Board of Directors (the “Board”) of Essex Property Trust, Inc. (the “Company”) approved an amendment (the “First Amendment”) to the Second Amended and Restated Agreement of Limited Partnership, as amended, (the “Partnership Agreement”) of Essex Portfolio, L.P. (the “Partnership”), as to which the Company is the general partner.

The First Amendment relates to Series Z Incentive Units and Series Z-1 Incentive Units (collectively referred to herein as “Z Units”) of the Partnership, which units have been issued to executive officers and other employees of the Company as part of the Company’s compensation program.  Such units automatically convert into common units of the Partnership upon the occurrence of certain triggering events as set forth in the Partnership Agreement.  Common units of the Partnership are exchangeable on a one-for-one basis into shares of the Company’s common stock (“Essex shares”). The First Amendment provides that the Compensation Committee of the Board may set a different date, than is now provided in the Partnership Agreement, for the conversion of Series Z 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.

The First Amendment also makes 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.  The First Amendment allows for the transfer of Series Z Units to certain trusts.   The First Amendment also makes a change relating to LTIP Units, which are another form of incentive units issued from time to time to executive officers and other employees of the Company.   The First Amendment provides that common units of the Partnership, 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 Essex shares.

The foregoing description of certain terms of the First Amendment does not purport to be complete, and is qualified in its entirety by reference to the full text of the First Amendment, which is being filed as Exhibit 10.1 to this Current Report on Form 8-K.

Pursuant to the First Amendment, the Compensation Committee has determined to allow holders of Z Units to voluntarily elect for early conversion of their units into common units of the Partnership and in turn into Essex shares. The early conversion is limited to up to the current conversion ratio (the “Conversion Ratchet Percentage” and “Series Z-1 Conversion Ratchet Percentage” as defined in the Partnership Agreement) that existed on January 1, 2009, for the Z Units. This ratio sets the number of common units into which a Z Unit is convertible. Upon issuance, the conversion ratio of Z Units is typically zero and such ratio increases generally by up to 10% each year if performance objectives are met. The Compensation Committee has provided that holders may elect to have early conversion and receive up to that number of common units into which their total holdings of Z Units would be convertible, as based on the current conversion ratio. This will be implemented as follows. Based on the number of common units a holder elects to receive, the conversion ratio of the equivalent number of Z Units will then be increased to 100% and those units will then be converted into common units on a one-for-one basis. The conversion ratio for the remaining units will be adjusted accordingly so that there is no overall change in the number of common units issued or issuable upon conversion of all the Z Units held by a holder, as based on the current conversion ratio.

As to those units for which a holder elects to have early conversion, the Compensation Committee set the date for the conversion of such units into common units to be December 31, 2009. 

With respect to the Z Units that are converted into common units on December 31, 2009, those common units in turn can only be exchanged into Essex shares. The Essex shares issued upon such exchange will be subject to limitations as to when they can be sold or otherwise transferred. All holders that elect to have a portion of their Z Units converted into Essex shares are eligible for future increases in the conversion ratio of their remaining Z Units subject to meeting the performance conditions specified by the Compensation Committee.

In the future, holders of Z Units will be allowed to elect an early conversion once a year and the conversion will be based on the conversion ratio as of January 1 of the year of the election.

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

The disclosure set forth above under item 1.01, which disclosure describes certain compensatory arrangements of executive officers and other employees of the Company, is incorporated by reference under this item.

Item 9.01 Financial Statements and Exhibits

(d)  Exhibits

10.1 First Amendment to the Second Amended and Restated Agreement of Limited Partnership of Essex Portfolio, L.P., as amended, dated December 23, 2009.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Essex Property Trust, Inc.
/s/ Michael T. Dance
Name:	Michael T. Dance
Title:	Exec. Vice President and Chief Financial Officer

Date:     December 30, 2009

EX-10.1

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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