Exhibit 10.2
Equity Office Properties Trust
2003 Share Option and Share Incentive Plan
Participant Summary and
Performance Award Agreement (LTIP)
 

     
INTRODUCTION
  Equity Office Properties Trust (“EOPT”) has established the Equity Office
Properties Trust 2003 Share Option and Share Incentive Plan, as amended (the
“Plan”). Under the Plan, certain employees, officers, trustees and consultants
may receive various rights related to common shares of beneficial interest of
EOPT (“Shares”), or a bookkeeping entry representing the equivalent of Shares
(“Share Units”), in either case subject to such performance conditions as may be
established by the Compensation Committee (the “Committee”) of EOPT’s Board of
Trustees (the “Board”)(a “Performance Award”).
 
   
 
  This Summary and Agreement is intended as a guide to the terms and conditions
of the grant of a Performance Award pursuant to the Plan. In addition, this
Summary and Agreement is intended to serve as an agreement between you (the
“Grantee”) and EOPT, governing the terms and conditions of the grant of a
Performance Award to you on[___], 200[_].
 
   
 
  This Summary and Agreement is subject to and governed by all the terms and
conditions of the Plan, which are hereby incorporated by reference. In the event
of any discrepancy between the terms and conditions of this Summary and
Agreement and those of the Plan, the terms and conditions of the Plan (including
amendments to the Plan) will control. Any other rights that may be granted to
you under the Plan or rights that may be granted to other individuals will be
described in separate documents for those individuals who are eligible to
receive them.
 
   
 
  This Summary and Agreement includes a Glossary that defines certain words and
phrases used in this Summary and Agreement.

The effective date of the agreement reflected in this document
with respect to the Performance Award is [__________], 200[_].
This document constitutes part of a prospectus covering securities that have
been registered
under the Securities Act of 1933.

 

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The date of this Prospectus is[__________], 200[_]
 

     
PLAN
ADMINISTRATION
  The Plan is administered by the Committee, which consists of at least three
non-employee members of the Board. The Board selects the Committee members and
may remove Committee members at any time.
 
   
 
  The Committee designates those individuals eligible to receive Performance
Awards under the Plan and determines the terms, conditions and restrictions
governing the Performance Awards.
 
   
 
  The Committee has the power, in connection with the administration of the
Plan, to interpret the terms, conditions and restrictions of the Plan and this
Summary and Agreement and to take any actions it deems necessary to carry out
the terms and purpose of the Plan. Any interpretation or action by the Committee
with respect to the Plan is final and binding, without right of appeal, on each
participant and his or her heirs and transferees. Members of the Committee can
be reached at the address shown below.

 

     
ADDITIONAL
INFORMATION
  If you have any questions about the Plan or if you would like to receive a
copy of the Plan, any additional information relating to the Plan or documents
that have been filed by EOPT with the Securities and Exchange Commission
(including EOPT’s latest annual report, the description of the Shares being
registered and any other reports filed by EOPT pursuant to the Securities
Exchange Act of 1934, all of which are incorporated by reference herein), which
are available without charge, upon written or oral request, you should contact
Ms. Robin Mariella in the legal department at:

Equity Office Properties Trust
Two North Riverside Plaza
Suite 1600
Chicago, IL 60606
(312) 466-3646
robin_mariella@equityoffice.com

 

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PERFORMANCE
AWARDS
  Q   What is a Performance Award?
 
       
 
  A   You have been granted a Performance Award for a target number of [___]
Shares. A Performance Award is a right to receive between 0% and 200% of the
target number of Shares, but only to the extent the performance conditions set
forth below (the “Performance Goals”) are achieved during the three calendar
years beginning January 1, 2006 and ending December 31, 2008 (the “Performance
Period”). Following the end of the Performance Period, based on the extent to
which the Performance Goals have been achieved, you will also be paid an amount
in cash equal to the cumulative amount of the dividends that would have been
paid on the number of Shares earned during the Performance Period if such Shares
had been issued and outstanding EOPT Shares. The grant of a Performance Award to
you does not create any current property rights in Shares. You will not have any
other rights as an EOPT shareholder with respect to Shares under this
Performance Award unless and until Shares are transferred to you in settlement
of the Performance Award following the end of the Performance Period, based on
the extent to which the Performance Goals have been achieved.
 
       
 
      The Committee determines the terms, conditions and restrictions that apply
to each Performance Award granted under the Plan. In no event, however, may the
terms, conditions and restrictions be inconsistent with those of the Plan.
Further, the grant of a Performance Award does not confer upon you the right to
be retained in the “Service” of EOPT. For purposes of the Plan, your Service
terminates when you no longer perform services as an employee, officer or
trustee of EOPT or any “Subsidiary” (as defined in the Plan).
 
       
 
  Q   What are the Performance Goals?
 
       
 
  A   The Performance Goals for the Performance Period are based on the relative
Total Shareholder Return (TSR) of EOPT. EOPT’s three-year TSR will be its
compound annual growth rate over the Performance Period computed as follows:
 
       
 
      ((A + B) / C)⅓-1
 
       
 
      where
 
       
 
      A equals: the average closing price of EOPT shares for the final

 

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      30 calendar days of the Performance Period (December 2, 2008 through
December 31, 2008)
 
       
 
  B equals: the amount per share of all cash distributions paid by EOPT to its
common shareholders during the Performance Period, and
 
       
 
  C equals: the average closing price of EOPT shares for the 30 calendar days
prior to the beginning of the Performance Period (December 2, 2005 through
December 31, 2005).

         
 
       
 
      EOPT’s three-year TSR will be compared to a similarly computed TSR of the
companies included in the Cohen & Steers Realty Majors Index (a group of large
REITs spanning multiple sectors) at the end of the Performance Period. If that
index is no longer available, the Committee will select another comparable
index. The actual number of Shares you earn at the end of the Performance Period
will be based on the following performance schedule:

              Percent of Target   3-Year TSR Percentile Award Earned  
Below 35th percentile
  0 %  
35th percentile
  50 %  
50th percentile
  100 %  
75th percentile and above
  200 %

         
 
      The number of Shares earned will be interpolated for performance between
the 35th and 75th percentile.
 
       
 
  Q   Will share certificates be issued in my name at the time of grant of a
Performance Award?
 
       
 
  A   No. Share certificates are not issued at the time of grant of a
Performance Award. At the time Shares are transferred to you in settlement of
the Performance Award following the end of the Performance Period, based on the
extent to which the Performance Goals have been achieved, EOPT will reflect your
ownership of such Shares by book entry through Fidelity Brokerage LLC
(“Fidelity”) or any other administrative agent chosen by EOPT. For a fee,
Fidelity will issue share certificates upon your request after the Shares are
transferred to you.
 
       
 

 

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  Q   What form of payout will I receive for the Performance Award?
 
       
 
  A   If a payout of the Performance Award is earned based on satisfaction of
the Performance Goals, payouts will be in the form of either Shares or, in the
discretion of the Chief Executive Officer and the Executive Vice President –
Human Resources of EOPT, the cash value (as of the award determination date) of
the Shares earned.
 
       
 
  Q   When will I receive my payout of the Performance Award?
 
       
 
  A   To allow time for the TSR calculation and award determination, your
Performance Award will be paid out on or about the “award determination date,”
which will be the 15th business day following the end of the Performance Period
(or the 15th business day following termination of employment due to death,
Disability, retirement at age 62 or a Change in Control).
 
       
 
  Q   Can I defer my Performance Award and dividend equivalents into the SERP?
 
       
 
  A   If you are eligible to participate in the SERP, you will have until six
months before the end of the Performance Period to make an irrevocable election
to defer receipt of any Shares (or, if applicable, cash value of Shares) and
dividend equivalents that may otherwise be transferred to you in settlement of
the Performance Award following the end of the Performance Period, by exchanging
your right to receive such Shares for Phantom Share Units under the SERP and by
exchanging your right to receive any cash or dividend equivalents for an equal
amount credited to your account under the SERP.
 
       
 
  Q   Can I transfer my Performance Award?
 
       
 
  A   You may not sell, assign or otherwise transfer this Performance Award. Any
attempt to do so will be void and without effect. However, you will have the
right to transfer any Shares that are transferred to you in settlement of the
Performance Award following the end of the Performance Period. If you are
eligible to elect to defer receipt of Shares under the SERP, transferability of
the Phantom Share Units credited to your account under the SERP will be
controlled by the SERP plan document.
 
       
 
  Q   Are there times when I cannot sell my Shares after they have been
transferred to me?
 
       
 
  A   Yes. There may be times when EOPT’s Chief Legal Counsel imposes a
“blackout period” because of the existence or potential

 

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      existence of significant non-public information, such as a large
acquisition or earnings that differ from stock market expectations, or if EOPT
conducts an additional offering to sell more Shares. During these times, you may
have to temporarily wait to sell your Shares, whether or not such information is
communicated to you.
 
           
 
      In addition, while an employee, if you are restricted to trading within
the window periods established under EOPT’s insider trading policy (as
determined by the Chief Legal Counsel), you cannot sell any Shares (or any other
holdings of EOPT shares) outside of the window periods following the release of
quarterly financial information, or otherwise in violation of any trading policy
established by EOPT’s Chief Legal Counsel and applicable to you.
 
           
 
      If you are an “affiliate” of EOPT under the federal securities laws, your
sales of Shares must comply with Rule 144. You will be advised if you are
subject to Rule 144.
 
       
VESTING
  Q   When will I become vested in my Performance Award?
 
       
 
  A   At the conclusion of the Performance Period, provided that you then are an
employee of EOPT or a Subsidiary and otherwise satisfy any conditions for
vesting set forth in the Plan, you will be 100% vested in whatever number of
Shares you earn during the Performance Period, based on the extent to which the
Performance Goals have been achieved.
 
       
 
  Q   Are there any circumstances under which I will vest in my Performance
Award before the end of the Performance Period?
 
       
 
  A   Yes. You will become immediately vested in your Performance Award if your
Service terminates:

  •   because of your death or “Disability” (as defined in the Glossary); or    
•   in connection with your retirement at or after age 62; or     •   as a
result of a Change in Control (as defined in the Plan) of EOPT.

         
 
      In the event of termination of employment as a result of death or
Disability during a Performance Period, payout of the Performance Award will be
made at 100% of the target amount

 

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      of the Performance Award. In the event of termination of employment during
a Performance Period as a result of a Change in Control of EOPT or retirement at
or after age 62, payout of the Performance Award will be made based on EOPT’s
relative TSR for the portion of the Performance Period ending on the termination
date using the same method as if you had completed the three-year Performance
Period, but appropriately adjusted to account for the shorter period. You will
also be paid a cash amount for dividend equivalents accumulated up to the
termination event based on the number of EOPT shares actually paid out.

 

         
FORFEITURE
  Q   What happens if I leave EOPT before the end of the Performance Period?
 
       
 
  A   Unless your Service terminates before the end of the Performance Period
because of death, Disability, retirement at or after age 62 or a Change in
Control, you will forfeit any rights under the Performance Award upon your
termination of Service.

 

         
TAX
CONSEQUENCES
  Q   When do I pay tax on Shares or cash transferred to me under the
Performance Award?
 
       
 
  A   At the time Shares or cash are transferred to you in settlement of the
Performance Award (the “award determination date”), you will recognize ordinary
income in an amount equal to the “Fair Market Value” (as defined in the Plan) of
the Shares and you will be subject to income taxes and FICA (Medicare and social
security taxes) on that amount.
 
       
 
      Alternatively, if you are eligible to participate in the SERP and you have
elected to defer receipt of any Shares that may otherwise be transferred to you
in settlement of the Performance Award by exchanging them for Phantom Share
Units (or, if cash is to be paid in settlement of the Performance Award, if you
elected to defer the cash), you will be required to pay FICA when the Shares or
cash would have been transferred to you if you had not made a deferral election.
EOPT or its agent will provide you with a calculation of the FICA due. You will
recognize ordinary

 

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      income (and be subject to income taxes) when you receive a distribution
from the SERP in an amount equal to the Fair Market Value of the Shares and the
amount of any cash distributed to you.
 
       
 
  Q   What is the tax treatment for dividend equivalents received with respect
to the number of Shares earned under my Performance Award?
 
       
 
  A   Any dividend equivalents received by you following the end of the
Performance Period with respect to the number of Shares earned during the
Performance Period will be treated as compensation includable in your gross
income reported on IRS Form W-2.
 
       
 
      Alternatively, if you are eligible to participate in the SERP and you have
elected to defer receipt of any dividend equivalents that may otherwise be
transferred to you upon settlement of the Performance Award by exchanging them
for an equal amount credited to your Account under the SERP, you will be
required to pay FICA when the dividend equivalents would, if you had not made a
deferral election, have been transferred to you, and EOPT or its agent will
provide you with a calculation of the FICA due. You will recognize ordinary
income (and be subject to income taxes) when amounts attributable to the
dividend equivalents are distributed to you from the SERP.
 
       

 

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  Q   How do I remit payment for any withholding taxes owed with respect to the
Performance Award?    
 
  A   Any income you recognize with respect to the Performance Award is subject
to all tax withholding requirements. Payment of part or all of the required
withholding taxes may be satisfied as follows:

  •   you may elect to sell unrestricted Shares through EOPT’s designated broker
(currently Fidelity) to satisfy all tax withholding requirements provided that
you are in compliance with EOPT’s insider trading policy. Executive officers of
EOPT subject to Section 16 of Securities Exchange Act of 1934 must obtain prior
approval from the Chief Legal Counsel to sell Shares to satisfy tax withholding
requirements.     •   EOPT may withhold from any amounts payable to you as
compensation, or otherwise, an amount necessary to satisfy all tax withholding
requirements;     •   you may elect to deliver to EOPT’s designated broker
(currently Fidelity) any unrestricted Shares having a Fair Market Value
determined as of the date of such delivery equal to the amount required to be
withheld;     •   EOPT may permit any delivery of unrestricted Shares to be made
by withholding Shares otherwise transferable to you in settlement of the
Performance Award equal to the minimum amount required to be withheld: or     •
  you may remit to EOPT’s agent for the Plan Administrator (currently Fidelity)
the amount required to be withheld.

 

         
ELIGIBILITY
  Q   Who is eligible to receive a Performance Award?
 
       
 
  A   SVPs (with the exception of SVPs – Investments), RSVPs, EVPs and the CEO
of EOPT are eligible to receive Performance Awards. The Committee designates the
individuals who receive Performance Awards under the Plan for each Performance
Period.

 

         
SHARES SUBJECT TO
THE PLAN
      The maximum aggregate number of Shares of EOPT available for issuance
under the Plan is 20,000,000. No more than 10,000,000 Shares are available for
issuance under the Plan pursuant to Awards other than options. To the extent
that Awards granted under the Plan expire unexercised or are terminated,
surrendered or canceled without the delivery of Shares, the Shares allocated to

 

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      such Awards shall again become available for future grants under the Plan,
unless the Plan has terminated.
 
           
 
      In the event of any change in the outstanding Shares due to a
reorganization, merger, or consolidation or on account of any Share dividend or
other distribution payable in Shares, Share split, reverse split,
recapitalization, reclassification, combination of Shares, exchange of Shares or
other increase or decrease in Shares effected without receipt of consideration
by EOPT, the number of Shares reserved for issuance under the Plan and Shares
subject to or covered by outstanding Awards shall be proportionately adjusted by
the Committee.
 
      The Committee may make this adjustment in any manner it deems equitable;
however, in no event shall:

  •   the aggregate exercise price payable with respect to Shares subject to an
outstanding option or SAR be changed; or     •   any fractional Shares be issued
pursuant to any such adjustment.

         
 
      If the adjustment results in fractional Shares, the fractional Shares will
be eliminated by rounding down to the nearest whole Share.

 

         
MORE INFORMATION
ABOUT SHARES
      Shares are traded on the New York Stock Exchange under the symbol “EOP.”
Like other publicly traded shares, the price for Shares will vary due to many
factors, such as:

  •   general economic and political conditions,     •   tax and interest rates,
    •   actual and expected changes in our earnings as compared to past results,
    •   comparisons with the earnings of other public companies, and     •  
other factors over which EOPT has no control.

 

         
SECTION 16
TRUSTEES &
OFFICERS OF
EOPT
      Rules promulgated under Section 16 of the Securities Exchange Act of 1934
apply to Plan transactions by executive officers and trustees of EOPT. Such
individuals must consult EOPT’s Chief Legal Counsel or his designee, prior to
selling or transferring any Shares acquired under the Plan.

 

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DURATION,
MODIFICATION &
TERMINATION OF
THE PLAN
      Unless terminated earlier, the Plan will expire on March 26, 2013 and no
Awards may be granted under the Plan after that date. Notwithstanding the
foregoing, EOPT reserves the right to amend or terminate the Plan at any time,
subject to the approval of EOPT’s shareholders as may be required by law. Any
amendment or termination of the Plan will not alter or impair any Award
previously granted to you under the Plan without your consent.
 
       

 

         
APPLICABLE LAWS
      The Plan is not subject to the Employee Retirement Income Security Act of
1974, as amended, and is not qualified under Section 401(a) of the Internal
Revenue Code of 1986, as amended.

 

         
NOTICES
      All notices under the agreement incorporated in this Summary and Agreement
shall be in writing and sent by certified mail or by a nationally recognized
overnight delivery service, postage or charges prepaid. All notices to EOPT
should be addressed to the attention of the Chief Legal Counsel and sent to the
address provided on page 2 of this Agreement. All notices to you will be sent to
your last known address on the records of EOPT. Any such written notice or
communication given by mail will be deemed to have been given two (2) business
days after the date the notice or communication was mailed; or, if sent by an
overnight delivery service, it shall be deemed to have been given one
(1) business day after the date sent.
 
       

 

         
SIGNATURES ON
AGREEMENT
      Please sign this agreement where indicated below and return the originally
signed copy to:        
 
         
 
         
 
 

         
 
       
 
      Please keep a copy of this agreement for your records.
 
           
 
      EQUITY OFFICE PROPERTIES TRUST  
 
           
 
           
 
      By:                                                               
 
     

 

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  Its:        
 
  GRANTEE    

 

 

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GLOSSARY OF TERMS
Cause means, as determined by the Committee and unless otherwise provided in an
applicable agreement with EOPT or a Subsidiary, (i) gross negligence or willful
misconduct in connection with the performance of duties; (ii) conviction of a
criminal offense (other than minor traffic offenses); or (iii) material breach
of any term of EOPT’s insider trading policy, the Code of Ethics for Certain
Officers, EOPT’s Code of Ethics, or similar policy, or of any employment,
consulting or other services, confidentiality, intellectual property or
non-competition agreements, if any, between you and EOPT or a Subsidiary.
Committee means the Compensation Committee of the Board of Trustees of EOPT.
Disability means a physical or mental condition that entitles a participant to
benefits under the employer-sponsored long-term disability plan in which he or
she participates.
EOPT means Equity Office Properties Trust, the sponsor of the Plan.
Phantom Share Unit means a bookkeeping entry representing an obligation of EOPT
to pay the value of Shares that you elected to defer receipt of by participating
in the SERP.
Plan means the Equity Office Properties Trust 2003 Share Option and Share
Incentive Plan, as amended from time to time.
Plan Administrator means the Committee.
Service means your performance of services as an employee, officer or trustee
for EOPT or any Subsidiary.
Shares means common shares of beneficial ownership of EOPT, having a par value
of $.01.