Exhibit 10.2

 

United Technologies Corporation

 

Non- Qualified

Stock Option

Award

 

Schedule of Terms

 

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Non-Qualified Stock Option

 

United Technologies Corporation (the “Corporation”) hereby awards to the
recipient Non-Qualified Stock Options (an “Award”) pursuant to the United
Technologies Corporation Long Term Incentive Plan (the “LTI Plan”). An Award is
subject to this Schedule of Terms and the terms and provisions of the LTI Plan.

 

A Non-Qualified Stock Option (an “Option”) is the right to purchase, at a future
date, a specific number of shares of Common Stock of the Corporation (“Common
Stock”) at a price equal to the closing price reported on the composite tape of
the New York Stock Exchange for such shares on the date of the Option grant. The
number of shares for which the Option is awarded and the Option price per share
are set forth in the Statement of Non-Qualified Stock Option Award (the
“Statement of Award”). The recipient must acknowledge and accept the terms and
conditions of the Option Award by signing and returning the appropriate portion
of the Statement of Award to the Stock Option Program Administrator.

 

Vesting

 

The Option vesting date and expiration date are each set forth in the Statement
of Award. Options may be exercised any time on or after the vesting date until
the earlier of:

 

(i) The expiration date specified in the Statement of Award, at which time the
Options and all associated rights lapse; or

 

(ii) Termination of employment in which case the right to exercise vested
Options shall be for a specified time period following the date of termination,
as described in “Termination of Employment”.

 

Exercise and Payment of Options

 

While actively employed, Options may be exercised any time on or after the
vesting date through the expiration date. The Option to purchase shares will
expire without value on or before the expiration date. It is the responsibility
of the Award recipient, or a designated representative, to exercise Options in a
timely manner. The Corporation assumes no responsibility for and will make no
adjustments with respect to Options that expire.

 

Options may be exercised through one of two procedures set forth below. For
stock option exercises processed utilizing the procedures described in (i)
below, the value of Common Stock will be the closing price reported on the
composite tape of the New York Stock Exchange on the date of exercise. For stock
option exercises processed utilizing the procedures described in (ii) below, the
value of Common Stock will be the actual transaction price.

 

(i) Award recipients may exercise Options by completing and sending the UTC
Exercise Form to the Stock Option Program Administrator, identifying the number
of Options to be exercised and paying the required Option price in U.S. dollars
by check or bank draft or by tendering shares of Common Stock (utilizing
procedures authorized by the Program Administrator for tendering shares). The
date of exercise will be the date of postmark or delivery of a completed form
(with an original signature) and check for the cost of exercise to the Program
Administrator; or

 

An Award recipient may follow the above procedure by using a broker or other
authorized representative. As above, a completed UTC Exercise Form (with an
original signature) must be submitted with the check for the cost of exercise to
the Program Administrator.

 

(ii) Alternatively, Award recipients may utilize the “cashless” exercise method
where neither cash nor shares are tendered by the Award recipients in payment of
the exercise price. To facilitate the cashless exercise of Options, an Award
recipient must establish an account with a designated broker at one of the
security brokerage firms approved by the Corporation.

 

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Under the cashless procedure, an Award recipient notifies the designated broker
of the Award date and number of Options to be exercised. The broker provides the
Award recipient with the exercise form and notifies the Program Administrator.
The designated broker will sell shares of Common Stock sufficient to cover the
exercise price of the Options to be exercised plus required tax withholding
amounts and wire transfer the sales proceeds to the Corporation. The Corporation
will then deliver to the designated broker the number of shares equal to the
number of Options exercised. The broker retains the number of shares sold to
cover the exercise price and tax withholding. The net shares remaining will, at
the Award recipient’s election, either be placed in the Award recipient’s
account with the brokerage firm or sold on the open market with net cash
proceeds delivered to the Award recipient by the designated broker.

 

In a cashless exercise, reported taxable income will be based on the actual
transaction price as reported by the broker to the Program Administrator, rather
than the closing price reported on the composite tape of the New York Stock
Exchange on the date of exercise.

 

The cashless exercise method may not be used if the Corporation determines in
its sole discretion that the transaction may constitute a prohibited loan to the
executive or otherwise violates regulatory requirements or may cause special
reporting requirements.

 

Termination of Employment

 

If an Award recipient terminates employment for any reason other than death,
disability, or retirement, unvested Options will be canceled as of the
termination date. Vested Options may be exercised for a period of 90 calendar
days following the termination date (but not beyond the expiration date of the
Option).

 

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 Award recipient may exercise vested Options (i.e. those
held for at least three years while continuously employed) for three years
following the date of retirement or until the expiration of the Option,
whichever is earlier. Unvested Options that have been held for at least one year
prior to the date of retirement will become exercisable as of the retirement
date and the Award recipient will then have a three year period following the
retirement date to exercise these Options (but in no event beyond the Option
expiration date).

 

For Options granted after February 22, 1999: If the Award recipient is eligible
for retirement per above and the Corporation consents to the retirement, the
Award recipient may exercise vested Options for five years following the dale of
retirement or until the expiration of the Option, whichever is earlier. Unvested
Options that have been held for at least one year prior to the retirement date
will become exercisable as of the retirement date and the Award recipient will
then have a five year period following the retirement date to exercise these
Options (but in no event beyond the Option expiration date).

 

For Options granted after June 11, 2003: If the Award recipient is eligible for
retirement per above and the Corporation consents to the retirement, the Award
recipient may exercise vested Options until the expiration of the Option.
Unvested Options that have been held for at least one year prior to the
retirement date will become exercisable as of the retirement date and the Award
recipient will have the full remaining term of the Option to exercise these
Options.

 

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For Options granted after February 22, 1999 and after June 11, 2003, the
Corporation’s consent will be at the sole discretion of the Corporation based on
its ability to effectively transition the Award recipient’s responsibilities as
of the retirement date and such other factors as it may deem appropriate.

 

In all cases, options held for less than one year prior to the retirement date
will be canceled without value.

 

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. The Award recipient who meets the “Rule of 65” may
exercise vested Options for three years following the employment termination
date or until the expiration of the Option, whichever is earlier. Unvested
Options that have been held for at least one year prior to the employment
termination date will vest as of the termination date and the Award recipient
will have a three year period following the termination date to exercise these
Options (or until the expiration of the Options, if earlier).

 

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.

 

In the event of permanent and total disability, or transfer to an Affiliate, an
Award recipient shall not be considered to have terminated employment for
purposes of an Option.

 

In the event of the death of an Award recipient, the legal representative of the
estate of the Award recipient may exercise all Options outstanding as of the
date of death, whether or not vested, for a period of one year following the
date of death, regardless of the expiration date of the Option.

 

If a former employee is rehired before the end of the 90 day period immediately
following the date of termination, unexercised vested Options and unvested
Options that were cancelled because of the termination of employment will be
reinstated. Options that received accelerated vesting at termination will be
subject to the original vesting schedule upon re-hire. 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
Options will not be reinstated.

 

Nonassignability

 

Unless otherwise prescribed by the Committee, no assignment or transfer of any
right or interest of an Award recipient in any Option, 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.

 

Adjustments

 

If the Corporation effects a subdivision or consolidation of shares of Common
Stock or other capital adjustment, the number of shares of Common Stock then
remaining subject to an Award 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 shares of Common Stock subject to an Option, as the
Committee, in its sole discretion, determines are necessary or appropriate to
prevent the dilution or enlargement of the rights of Award recipients.

 

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Change of Control

 

In the event of a change of control, an event, which if consummated, would
constitute a change of control, or other significant changes pertaining to the
ownership of the Corporation or a restructuring of the Corporation, the
Committee may, in its discretion, recommend that the Board of Directors take
certain actions with respect to outstanding Awards to assure fair and equitable
treatment of Award recipients. Such actions may include: acceleration of the
Option Vesting Date; offering to purchase an outstanding Award from the Award
recipients 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 the acquisition of 20% of
the Corporation’s outstanding voting shares by a person or group (as defined in
Section 13 (d) (3) of the Securities Exchange Act of 1934) of which such person
is a member, or a change in the majority of the Board of Directors such that,
within any consecutive two-year period, the members of the new majority are not
approved by two-thirds of the members incumbent at the beginning of such
two-year period. Members approved after such date by two-thirds of such
incumbents as of the beginning of such two-year period shall be deemed
incumbents as of the beginning of such two-year period for purposes of this
computation. A merger or consolidation of the Corporation with another company
where the Corporation is not the surviving company, a sale of substantially all
of the assets of the Corporation, a dissolution or liquidation of the
Corporation or other event or transaction having similar effect also constitutes
a “change of control” for purposes of the LTI Plan.

 

Awards Not to Affect or Be Affected by Certain Transactions

 

Non-Qualified Stock Option Awards shall not in any way affect the right or power
of the Corporation or its shareowners to make or authorize: (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, preferred or prior
preference stocks holding any priority or preferred to, or otherwise affecting
in any respect 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.

 

Except as otherwise expressly provided in this Schedule of Terms, the issue by
the Corporation of shares of stock of any class, or securities convertible into
shares of stock of any class, for cash or property, or for labor or services,
either upon direct sale or upon the exercise of rights or warrants to subscribe
thereto, or upon conversion of shares or obligations of the Corporation
convertible into such shares or other securities, shall not affect and no
adjustment by reason thereof shall be made with respect to the Option price or
the number of outstanding shares subject to an Option Award.

 

Notices

 

Every notice or other communication relating to the Award and this Schedule of
Terms shall be in writing, via hard copy or electronic transmissions, and shall
he delivered to the party for whom it is intended at such address as may from
time to time be designated by such party. Unless and until some other address
has been so designated, all notices by the Award recipients to the Corporation
shall be mailed to or delivered to the Corporation at its office at United
Technologies Building, MS 504, Hartford, Connecticut 067101, Attention: Stock
Option Program Administrator or emailed to stockoptionplans@utc.com. All notices
by the Corporation to the Award recipient shall be given electronically,
personally, or by mail to the Award recipient at his or her home, office or
e-mail address as shown on the records of the Corporation.

 

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Administration

 

Option Awards 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 objectives of the
LTI Plan. Pursuant to the terms of the LTI Plan, the Committee may delegate
authority and responsibility to grant, administer and interpret Option Awards.
The Committee has delegated the authority to grant Options to the Chief
Executive Officer and has further delegated the authority to administer and
interpret Option Awards to the Senior Vice President, Human Resources and
Organization, along with the authority to sub-delegate. The Committee shall
grant, administer and interpret exclusively Options awarded to employees of the
Corporation that are either reporting persons under Section 16 of the Securities
Exchange Act of 1934 (“Insiders”) or members of the Corporation’s Executive
Leadership Group.

 

Taxes/Withholding

 

Award recipients are responsible for any income or other tax liability
attributable to any Award. The Program Administrator 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 exercise of any Option. 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.

 

Right of Discharge Reserved

 

Nothing in the LTI Plan or in any Option 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.

 

Right of Committee to Revoke Awards

 

Notwithstanding any other provision herein, the Committee reserves the right,
prior to a Change in Control of the Corporation, to cancel any outstanding
Award, whether or not vested, if the Committee determines that the Award
recipient has engaged in any act or practice with respect to the affairs of the
Corporation, whether or not employed by the Corporation at the time, that is
materially detrimental to the Corporation, provided, however, that the Committee
may not take any such action in an arbitrary or capricious manner.

 

Nature of Payments

 

All Awards made are in consideration of services performed for the Corporation
or the business unit employing the Award recipient. 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

 

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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 LTI Plan. In the event that any provision of this Schedule
of Terms or any Statement of Award is inconsistent with the terms of the LTI
Plan, the terms of the LTI Plan 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.

 

Amendment and Termination

 

The Committee reserves the right to amend, suspend or discontinue the LTI Plan
at any time.

 

Governing Law

 

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

 

United Technologies

 

United Technologies Corporation

United Technologies Building

Hartford, CT 06101

 

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United Technologies    LONG TERM INCENTIVE PLAN AWARD      Nonqualified Stock
Option Award

 

NONQUALIFIED STOCK OPTION AWARD

Date of Grant:

   Vesting Date:     

Number of Options:

   Option Price:    Termination Date:           The award shown in this
statement is nontransferable and is subject to the terms and conditions of the
United Technologies Long Term Incentive Plan.

 

PLEASE SIGN AND DATE PORTION BELOW THE PERFORATION AND RETURN IT IN ENVELOPE
PROVIDED

 

United

Technologies

  

LONG TERM INCENTIVE PLAN AWARD

Nonqualified Stock Option Award

 

NONQUALIFIED STOCK OPTION AWARD

Date of Grant:

   Vesting Date:     

Number of Options:

   Option Price:    Termination Date:

 

The award shown in this statement is nontransferable and is subject to the terms
and conditions of the United Technologies Long Term Incentive Plan.

 

Please sign this form and return it in the enclosed envelope to the:

 

PROGRAM ADMINISTRATOR—STOCK OPTIONS

UNITED TECHNOLOGIES CORPORATION

UNITED TECHNOLOGIES BUILDING, MS 504

HARTFORD, CONNECTICUT 06101

 

I acknowledge receipt of this Nonqualified Stock Option Award and the attached
Schedule of Terms describing my Award. I accept this Award subject to such
Schedule of Terms and the United Technologies Long Term Incentive Plan.

 

Signed

         

Date