Exhibit 10.2

 

United Technologies Corporation

Long Term Incentive Plan

 

Performance Share Unit Award

 

Schedule of Terms

 

United Technologies Corporation (the “Corporation”) hereby awards to the
recipient Performance Share Units (an “Award”) pursuant to the United
Technologies Corporation 2005 Long Term Incentive Plan (the “LTIP”). This Award
is subject to this Schedule of Terms and the terms and provisions of the LTIP.

 

A Performance Share Unit (a “PSU”) is equal in value to one share of Common
Stock of the Corporation (“Common Stock”). PSUs are convertible into shares of
Common Stock if and to the extent corporate performance targets are achieved
(see “Vesting” below). The number of PSUs is set forth in the Statement of
Award. The recipient must acknowledge and accept the terms and conditions of the
PSU Award by signing and returning the appropriate portion of the Statement of
Award to the Stock Plan Administrator.

 

Vesting

 

PSUs vest only if pre-established three year performance targets are achieved.
Performance targets include: (i) diluted earnings per share; (ii) total
shareowner return; (iii) working capital and gross inventory turnover; and
(iv) revenue growth. A PSU award may be subject to a single or multiple
performance targets. The Statement of Award will specify the applicable
performance targets, the performance period and vesting date, the minimum
performance required for vesting, the range of vesting relative to measured
performance and, if multiple performance targets apply, the relative weighting
of each.

 

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No shareowner rights

 

A PSU is the right to receive a share of Common Stock in the future, subject to
continued employment and achievement of performance targets. The holder of a PSU
has no voting, dividend or other rights accorded to owners of Common Stock.

 

Conversion of PSUs to Shares

 

PSUs will be converted into shares of Common Stock, effective as of the vesting
date, when the Committee on Compensation and Executive Development of the
Corporation’s Board of Directors (the “Committee”) determines if, and to what
extent, PSUs have vested as a result of the achievement of performance targets.
PSUs that do not vest as a result of performance target achievement will be
forfeited without value except in the event of death or change in control, as
discussed below.

 

Termination of Employment

 

If an Award recipient terminates employment for any reason other than death,
disability, or retirement, or if the recipient meets the “Rule of 65” (see below
), unvested PSUs will be cancelled as of the termination date.

 

Retirement. Retirement eligibility includes:

 

(i) Attainment of age 65 as of the employment termination date; or

 

(ii) Attainment of at least age 55 with 10 or more years of service as of the
employment termination date.

 

Upon retirement, the unvested PSUs that have been held for at least one year
prior to the date of retirement will remain outstanding and eligible to vest as
scheduled, if and to the extent the Committee determines that performance
targets have been achieved.

 

Rule of 65: The Award recipient meets the “Rule of 65” if the Award recipient
terminates employment on or after age 50, but before age 55, and the sum of the
Award recipient’s age and years of service add up to 65 or more as of the
employment termination date. If the Award recipient retires under the “Rule of
65”, and if the Corporation consents to his or her retirement, PSUs held for at
least one year will not be forfeited and will remain eligible for vesting as
scheduled. Consent will be at the sole discretion of the Corporation based on
its ability to effectively transition the Award recipient’s responsibilities and
such other factors as it may deem appropriate.

 

In all cases, PSUs held for less than one year prior to retirement or
termination under the Rule of 65 will be cancelled without value.

 

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Service used to determine eligibility for retirement or the “Rule of 65” will be
based on continuous service recognized under the Award recipient’s UTC
retirement plan.

 

Disability. If employment terminates by reason of disability, unvested PSUs will
not be forfeited. As long as you remain disabled under your UTC disability plan,
PSUs not yet vested will remain eligible to vest as scheduled.

 

Death. PSUs will vest and be converted to shares of Common Stock effective as of
the date of death. The shares will be delivered to the estate of the Award
recipient as soon as administratively practicable.

 

Transfer. In the event of transfer to an Affiliate, an Award recipient shall not
be considered to have terminated employment for purposes of a PSU.

 

Rehire. If a former employee is rehired before the end of the 90 day period
immediately following the date of termination, unvested PSUs that were cancelled
because of the termination of employment will be reinstated. If a terminated
employee is rehired after the 90 day period immediately following the date of
termination, the employee will be treated as a new employee and cancelled PSUs
will not be reinstated.

 

Adjustments

 

If the Corporation effects a subdivision or consolidation of shares of Common
Stock or other capital adjustment, the number of PSUs (and the number of shares
of Common Stock that will be issued upon conversion) shall be adjusted in the
same manner and to the same extent as all other shares of Common Stock of the
Corporation. In the event of material changes in the capital structure of the
Corporation resulting from: the payment of a special dividend (other than
regular quarterly dividends) or other distributions to shareowners without
receiving consideration therefore; the spin-off of a subsidiary; the sale of a
substantial portion of the Corporation’s assets; in the event of a merger or
consolidation in which the Corporation is not the surviving entity; or other
extraordinary non-recurring events affecting the Corporation’s capital structure
and the value of Common Stock, equitable adjustments shall be made in the terms
of outstanding awards, including the number of PSUs and underlying shares of
Common Stock as the Committee, in its sole discretion, determines are necessary
or appropriate to prevent the dilution or enlargement of the rights of Award
recipients.

 

Change of Control

 

In the event of a change of control or restructuring of the Corporation, the
Committee may, in its discretion, take certain actions with respect to
outstanding Awards to assure fair and equitable treatment of LTIP participants.
Such actions may include: acceleration of the vesting date; offering to purchase
an outstanding Award from the holder for its equivalent cash value (as
determined by the Committee); or providing for other adjustments or
modifications to outstanding Awards as the Committee may deem appropriate.

 

For purposes of the Plan, a “change of control” means: (i) the acquisition of
20% of the Corporation’s outstanding voting shares by a person, entity or group
(as defined in Section 13(d)(3) of the Securities Exchange Act of 1934); (ii) a
change in the majority of the Board of Directors such that the members of the
new majority are not approved by two-thirds of the incumbent members; (iii) a
merger, reorganization, or consolidation or similar transaction resulting in a
business combination where shareowners before the transaction own less then 50%
of the new entity, or a person, entity or group owns 20% or more of the shares
of the new entity; or (iv) a dissolution or liquidation of the Corporation.

 

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Nonassignability

 

Unless otherwise prescribed by the Committee, no assignment or transfer of any
right or interest of an Award recipient in any PSU, whether voluntary or
involuntary, by operation of law or otherwise, shall be permitted except by will
or the laws of descent and distribution. Any attempt to assign such rights or
interest shall be void and without force or effect.

 

Notices

 

Every notice or other communication relating to the LTIP, the Award or this
Schedule of Terms shall be delivered electronically or mailed to or delivered to
the party for whom it is intended at such address as may from time to time be
designated by such party. Notices by the Recipient to the Corporation shall be
mailed to or delivered to the Corporation at its office at United Technologies
Building, MS504, Hartford, CT 06101, Attention: Stock Plan Administrator, or
emailed to stockoptionplans@utc.com and all notices by the Corporation to the
Recipient shall be transmitted to the Recipient’s email address or mailed to his
or her address as shown on the records of the Corporation.

 

Administration

 

Awards granted pursuant to the LTIP shall be interpreted and administered by the
Committee. The Committee shall establish such procedures as it deems necessary
and appropriate to administer Awards in a manner that is consistent with the
terms of the LTIP.

 

Pursuant to the terms of the LTIP, the Committee may delegate to employees of
the Corporation its authority and responsibility to grant, administer and
interpret PSU Awards. Subject to certain limitations, the Committee has
delegated to the Chief Executive Officer the authority to grant PSU Awards, and
has further delegated the authority to administer and interpret such Awards to
the Senior Vice President, Human Resources and Organization, and to such
subordinates as he or she may further delegate, except that Awards to employees
of the Corporation who are either reporting persons under Section 16 of the
Securities Exchange Act of 1934 (“Insiders”) or members of the Corporation’s
Executive Leadership Group will be granted, administered, and interpreted
exclusively by the Committee and awards to non-employee directors will be
granted, administered and interpreted exclusively by the Committee on
Nominations and Governance.

 

Awards Not to Affect or Be Affected by Certain Transactions

 

PSU Awards shall not in any way affect the right or power of the Corporation or
its shareowners to effect: (a) any or all adjustments, recapitalizations,
reorganizations or other changes in the Corporation’s capital structure or its
business; (b) any merger or consolidation of the Corporation; (c) any issue of
bonds, debentures, shares of stock preferred to, or otherwise affecting the
Common Stock of the Corporation or the rights of the holders of such Common
Stock; (d) the dissolution or liquidation of the Corporation; (e) any sale or
transfer of all or any part of its assets or business; or (f) any other
corporate act or proceeding.

 

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Taxes/Withholding

 

Award recipients are responsible for any income or other tax liability
attributable to any Award. The closing price of Common Stock on the New York
Stock Exchange on the vesting date will be used to calculate income realized
from the vesting of PSUs. The Corporation shall take such steps as are
appropriate to assure compliance with applicable federal, state and local tax
withholding requirements. The Corporation shall, to the extent required by law,
have the right to deduct directly from any payment or delivery of shares due to
an Award recipient or from an Award recipient’s regular compensation, all
federal, state and local taxes of any kind required by law to be withheld with
respect to the vesting of any PSU. Award recipients not based in the United
States and foreign nationals who are not permanent residents of the United
States must pay the appropriate taxes as required by any country where they are
subject to tax.

 

A discussion of U.S. Federal tax treatment of PSUs may be found in the LTIP
prospectus.

 

Deferral of Gain (U.S. based executives)

 

An award recipient who is resident in the U.S. and subject to U.S. income tax
may irrevocably elect to defer the conversion of vested PSUs into shares of
Common Stock to a date that is at least five years after the scheduled vesting
date. The election to defer the conversion of shares must be made no later than
the end of the second year of the performance measurement period, or such
earlier date as may be specified by the Committee. PSUs subject to a deferral
election will be converted to unfunded deferred share units that will convert
into shares of Common Stock on the distribution date designated in the deferral
election. Deferred share units will be credited with dividend equivalents. Under
U.S. tax law, an award recipient will generally not be taxed on PSUs subject to
a valid deferral election until the resulting deferred share units are converted
to shares of Common Stock and distributed. Deferred share units will not be
funded by the Corporation. In this regard, an Award recipient’s rights to
deferred share units are those of a general unsecured creditor of the
Corporation. Details of the deferral of PSUs into deferred share units will be
provided with the election materials. The opportunity to make such an election
is subject to changes in Federal tax law. The Committee reserves the right to
discontinue offering PSU deferral elections at any time for any reason it deems
appropriate in its sole discretion.

 

Right of Discharge Reserved

 

Nothing in the LTIP or in any PSU Award shall confer upon any Award recipient
the right to continue in the employment or service of the Corporation or any
affiliate thereof for any period of time or affect any right that the
Corporation or any subsidiary or division may have to terminate the employment
or service of such Award recipient at any time for any reason.

 

Forfeiture of Interests and Gains

 

PSUs shall be forfeited and an Award recipient will be obligated to repay the
value realized from the conversion of PSUs into shares of unrestricted Common
Stock if the recipient is terminated for “cause” or if during the twelve month
period following termination the recipient solicits any employee of the
Corporation for a position outside of the Corporation or publicly disparages the
Corporation or otherwise makes statements materially detrimental to the
interests of the Corporation. Termination for cause means criminal conduct
involving a felony in the U.S. or the equivalent of a felony under the laws of
other countries, material violations of civil law related to the recipient’s job
responsibilities, fraud, dishonesty, self-dealing, breach of the Award
recipient’s intellectual property agreement or willful misconduct that the

 

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Committee determines to be injurious to the Corporation. In the event of
termination for cause, or if, following termination, the Corporation determines
that the recipient engaged in conduct that constituted the basis for termination
for cause, or if the recipient engages in prohibited disparagement or
solicitation of employees following termination, the recipient shall be
obligated to repay all gains realized from LTIP awards during the 12 month
period preceding the earlier of the date of termination for cause, the date of
the relevant misconduct, or the date the misconduct is discovered, as
applicable.

 

Nature of Payments

 

All Awards made pursuant to the LTIP are in consideration of services performed
for the Corporation or the business unit employing the Award recipient. Any
gains realized pursuant to such Awards constitute a special incentive payment to
the Award recipient and shall not be taken into account as compensation for
purposes of any of the employee benefit plans of the Corporation or any business
unit.

 

Government Contract Compliance

 

The “UTC Policy Statement on Business Ethics and Conduct in Contracting with the
United States Government” calls for compliance with the letter and spirit of
government contracting laws and regulations. In the event of a violation of
government contracting laws or regulations, the Committee reserves the right to
revoke any outstanding Award.

 

Interpretations

 

This Schedule of Terms and each Statement of Award are subject in all respects
to the terms of the LTIP. In the event that any provision of this Schedule of
Terms or any Statement of Award is inconsistent with the terms of the LTIP, the
terms of the LTIP shall govern. Any question of administration or interpretation
arising under the Schedule of Terms or any Statement of Award shall be
determined by the Committee or its delegate, and such determination to be final
and conclusive upon all parties in interest.

 

Governing Law

 

The LTIP, this Schedule of Terms and the Statement of Award shall be governed by
and construed in accordance with the laws of the State of Delaware.

 

United Technologies Corporation

United Technologies Building

Hartford, CT 06101

 

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