--------------------------------------------------------------------------------

Exhibit 10.3

 

EXECUTION VERSION

EMPLOYEE MATTERS AGREEMENT
 
BY AND AMONG
 
UNITED TECHNOLOGIES CORPORATION,
 
CARRIER GLOBAL CORPORATION
 
AND
 
OTIS WORLDWIDE CORPORATION
 
DATED AS OF APRIL 2, 2020
 

--------------------------------------------------------------------------------

TABLE OF CONTENTS
 
ARTICLE I DEFINITIONS
2
       
Section 1.01.
Definitions
2
 
Section 1.02.
Interpretation
11
   
ARTICLE II GENERAL PRINCIPLES FOR ALLOCATION OF LIABILITIES
11
     
Section 2.01.
General Principles
11
 
Section 2.02.
Service Credit
13
 
Section 2.03.
Adoption and Transfer and Assumption of Benefit Plans
14
   
ARTICLE III ASSIGNMENT OF EMPLOYEES
16
     
Section 3.01.
Active Employees
16
 
Section 3.02.
Individual Agreements
17
 
Section 3.03.
Consultation with Labor Representatives; Labor Agreements
18
 
Section 3.04.
Non-Solicitation
19
   
ARTICLE IV EQUITY, INCENTIVE AND EXECUTIVE COMPENSATION
19
     
Section 4.01.
General Rules and Adoption of Equity Plans
19
 
Section 4.02.
Equity Incentive Awards
20
 
Section 4.03.
Cash Payment for Fractional Shares
31
 
Section 4.04.
Non-Equity Incentive Plans
31
 
Section 4.05.
Director Compensation
31
   
ARTICLE V U.S. QUALIFIED RETIREMENT PLANS
32
     
Section 5.01.
UTC Employee Retirement Plan
32
 
Section 5.02.
UTC Savings Plans
32
   
ARTICLE VI NONQUALIFIED DEFERRED COMPENSATION PLANS
34
     
Section 6.01.
UTC Retained Nonqualified Deferred Compensation Plans
34
 
Section 6.02.
UTC Bifurcated Nonqualified Deferred Compensation Plans
35
   
ARTICLE VII NON-U.S. RETIREMENT PLANS
37
     
Section 7.01.
Retention of UK Pension Scheme
37
   
ARTICLE VIII WELFARE BENEFIT PLANS
37
     
Section 8.01.
Welfare Plans
37
 
Section 8.02.
COBRA
38
 
Section 8.03.
Flexible Benefit Plans
39
 
Section 8.04.
Vacation, Holidays and Leaves of Absence
39
 
Section 8.05.
Disability Plans
40

-i-

--------------------------------------------------------------------------------

 
Section 8.06.
Life Insurance
40
 
Section 8.07.
Retiree Medical
40
 
Section 8.08.
Severance, Retention and Unemployment Compensation
40
 
Section 8.09.
Workers’ Compensation
41
 
Section 8.10.
Insurance Contracts
41
 
Section 8.11.
Third-Party Vendors
41
   
ARTICLE IX MISCELLANEOUS
41
     
Section 9.01.
Information Sharing and Access
41
 
Section 9.02.
Preservation of Rights to Amend
42
 
Section 9.03.
Fiduciary Matters
42
 
Section 9.04.
Reimbursement of Costs and Expenses
43
 
Section 9.05.
Dispute Resolution
43
 
Section 9.06.
No Third-Party Beneficiaries
43
 
Section 9.07.
Incorporation of Separation Agreement Provisions
43

-ii-

--------------------------------------------------------------------------------

EMPLOYEE MATTERS AGREEMENT
 
This EMPLOYEE MATTERS AGREEMENT, dated as of April 2, 2020 (this “Agreement”),
is by and among United Technologies Corporation, a Delaware corporation (“UTC”),
Carrier Global Corporation, a Delaware corporation (“Carrier”), and Otis
Worldwide Corporation, a Delaware corporation (“Otis”).  UTC, Otis and Carrier
are sometimes referred to herein individually as a “Party” and collectively as
the “Parties.”
 
R E C I T A L S:
 
WHEREAS, the board of directors of UTC (the “UTC Board”) has determined that it
is in the best interests of UTC and its shareowners to separate UTC into three
independent, publicly traded companies:  one that shall operate the UTC
Business, one that shall operate the Carrier Business and one that shall operate
the Otis Business;
 
WHEREAS, in furtherance of the foregoing, the UTC Board has determined that it
is appropriate and desirable to (a) separate the Carrier Business from the UTC
Business and the Otis Business (the “Carrier Separation”) and, following the
Carrier Separation, make a distribution, on a pro rata basis, to holders of UTC
Shares on the Carrier Record Date of all of the outstanding Carrier Shares owned
by UTC (the “Carrier Distribution”) and (b) separate the Otis Business from the
UTC Business and the Carrier Business (the “Otis Separation,” and the Carrier
Separation, together or as applicable, the “Separation”) and, following the Otis
Separation, make a distribution, on a pro rata basis, to holders of UTC Shares
on the Otis Record Date (which may be the same date as the Carrier Record Date)
of all of the outstanding Otis Shares owned by UTC (the “Otis Distribution,” and
together with the Carrier Distribution, the “Distributions”);
 
WHEREAS, to effectuate the Separation and Distributions, UTC, Carrier and Otis
have entered into a Separation and Distribution Agreement, dated as of April 2,
2020 (the “Separation Agreement”);
 
WHEREAS, in addition to the matters addressed by the Separation Agreement, the
Parties desire to enter into this Agreement that is an Ancillary Agreement to
set forth the terms and conditions of certain employment, compensation and
benefit matters; and
 
WHEREAS, the Parties acknowledge that this Agreement, the Separation Agreement
and the other Ancillary Agreements represent the integrated agreement of UTC,
Carrier and Otis relating to the Separation and Distributions, are being entered
into together and would not have been entered into independently.
 
NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained in this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
Parties, intending to be legally bound, hereby agree as follows:
 

--------------------------------------------------------------------------------

ARTICLE I
DEFINITIONS
 
Section 1.01.       Definitions.  Capitalized terms used herein and not
otherwise defined shall have the respective meanings assigned to them in the
Separation Agreement.  For purposes of this Agreement, the following terms shall
have the meanings set forth below.
 
“Agreement” has the meaning set forth in the Preamble to this Agreement and
shall include all amendments, modifications and changes hereto entered into
pursuant to Section 9.07.
 
“Applicable Exchange” means, as of any applicable time, the securities exchange
that is the principal market for UTC, Carrier or Otis Shares, as applicable.
 
“Benefit Plan” means any contract, agreement, policy, practice, program, plan,
trust, commitment or arrangement providing for benefits, perquisites or
compensation of any nature from an employer to any Employee or Former Employee,
or to any family member, dependent, or beneficiary of any such Employee or
Former Employee including cash or deferred arrangement plans, profit sharing
plans, post-employment programs, pension plans, thrift plans, supplemental
pension plans, welfare plans, stock option, stock purchase, stock appreciation
rights, restricted stock units, performance stock units, other equity-based
compensation and contracts, agreements, policies, practices, programs, plans,
trusts, commitments and arrangements providing for terms of employment, fringe
benefits, severance benefits, change in control protections or benefits, travel
and accident, life, accidental death and dismemberment, disability and accident
insurance, tuition reimbursement, adoption assistance, travel reimbursement,
vacation, sick, personal or bereavement days, leaves of absences and holidays;
provided, however, that the term “Benefit Plan” does not include any
government-sponsored benefits.
 
“Carrier” has the meaning set forth in the Preamble.
 
“Carrier Adjusted Stock Value” means the product of (a) the Carrier Stock Value
and (b) the Carrier Distribution Ratio.
 
“Carrier Adjustment Ratio” means the quotient, obtained by dividing (a) the UTC
Pre-Separation Stock Value by (b) the Carrier Stock Value.
 
“Carrier Awards” means Carrier DSU Awards, Carrier Option Awards, Carrier PSU
Awards, Carrier RSU Awards, Carrier SAR Awards, cash-settled Otis DSU Awards,
and cash-settled Post-Separation UTC DSU Awards held by Carrier Transferred
Directors, collectively.
 
“Carrier Benefit Plan” means any Benefit Plan established, sponsored, maintained
or contributed to by a member of the Carrier Group as of or after the Effective
Time, including any Benefit Plans retained or adopted by Carrier pursuant to
Sections 2.03(a) and 2.03(c).
 
“Carrier Board” means the Board of Directors of Carrier.
 
“Carrier Deferred Compensation Plans” means the Carrier Deferred Compensation
Plans established pursuant to Sections 2.03(a) and 6.02.
 
-2-

--------------------------------------------------------------------------------

“Carrier Distribution Ratio” means a number equal to one (1).
 
“Carrier DSU Award” means an award of deferred stock units settled in cash or in
stock relating to Carrier Shares that is assumed by the relevant Party in
accordance with Section 4.02(g).
 
“Carrier DSU Plan” means the Carrier Board of Directors Deferred Stock Unit Plan
established by Carrier as of the Effective Time pursuant to Sections 2.03(a) and
4.01(a).
 
“Carrier Flexible Benefit Plans” means the Carrier Welfare Plans that provide
dependent care and medical benefits under Section 125 of the Code.
 
“Carrier Group Employees” has the meaning set forth in Section 3.01(a)(i).
 
“Carrier Individual Agreement” means any individual (a) employment contract or
offer letter, (b) retention, severance or change in control agreement, (c)
expatriate (including any international assignee) contract or agreement
(including agreements and obligations regarding repatriation, relocation or
equalization of Taxes and living standards in the host country) or (d) other
agreement containing restrictive covenants (including confidentiality,
non-competition and non-solicitation provisions) between a member of a Group, on
the one hand, and (i) a Carrier Group Employee or (ii) a Former Carrier Group
Employee, on the other hand, in each case, as in effect immediately prior to the
Carrier Distribution Date.
 
“Carrier LTIP” means the Carrier 2020 Long-Term Incentive Plan established by
Carrier as of the Effective Time pursuant to Sections 2.03(a) and 4.01(a).
 
“Carrier Option Award” means an award of options to purchase Carrier Shares
assumed by Carrier pursuant to the Carrier LTIP in accordance with Sections
4.02(a) and 4.02(b).
 
“Carrier PSU Award” means an award of performance-based stock units relating to
Carrier Shares assumed by Carrier pursuant to the Carrier LTIP in accordance
with Section 4.02(f) or pursuant to the Carrier PSU Deferral Plan in accordance
with Section 6.02.
 
“Carrier Pension Preservation Plan (Post-2005)” means the Carrier Pension
Preservation Plan which is a Carrier Deferred Compensation Plan established
pursuant to Sections 2.03(a) and 6.02.
 
“Carrier PSU Deferral Plan” means the Carrier LTIP Performance Share Unit
Deferral Plan which is a Carrier Deferred Compensation Plan established pursuant
to Sections 2.03(a) and 6.02.
 
“Carrier RSU Award” means an award of time-based restricted stock units relating
to Carrier Shares assumed by Carrier pursuant to the Carrier LTIP in accordance
with Section 4.02(e).

“Carrier SAR Award” means an award of stock appreciation rights relating to
Carrier Shares assumed by Carrier pursuant to the Carrier LTIP in accordance
with Sections 4.02(c) and 4.02(d).
 
-3-

--------------------------------------------------------------------------------

“Carrier Savings Plan” means the Carrier Employee Savings Plan established
pursuant to Sections 2.03(a) and 5.02(b).
 
“Carrier Savings Restoration Plan” means the Carrier Savings Restoration Plan
which is a Carrier Deferred Compensation Plan established pursuant to Sections
2.03(a) and 6.02.
 
“Carrier Separation” has the meaning set forth in the Recitals.
 
“Carrier Distribution” has the meaning set forth in the Recitals.
 
“Carrier Share” means a share of the common stock, par value $0.01 per share, of
Carrier.
 
“Carrier Stock Value” means the simple average of the volume-weighted average
per share price of Carrier Shares trading on the Applicable Exchange during each
of the two (2) consecutive full Trading Sessions occurring immediately after the
third full Trading Session after the Effective Time.
 
“Carrier Transferred Director” means each Carrier director as of the Effective
Time who served on the UTC Board immediately prior to the Effective Time.
 
“Carrier Value Factor” means the quotient, rounded to four decimal places,
obtained by dividing (a) the product of (i) the Carrier Distribution Ratio and
(ii) the UTC Pre-Separation Stock Value, by (b) the sum of (i) the Carrier
Adjusted Stock Value, (ii) the Otis Adjusted Stock Value, and (iii) the UTC
Post-Separation Stock Value.
 
“Carrier Welfare Plan” means a Welfare Plan established, sponsored, maintained
or contributed to by any member of the Carrier Group for the benefit of Carrier
Group Employees and Former Carrier Group Employees, including any Welfare Plan
retained or adopted by Carrier pursuant to Sections 2.03(a), 2.03(c) and 8.01.
 
“COBRA” means the U.S. Consolidated Omnibus Budget Reconciliation Act of 1985,
as codified at Section 601 et seq. of ERISA and at Section 4980B of the Code and
any similar foreign, state or local laws.
 
“Distributions” has the meaning set forth in the Recitals.
 
“Employee” means any UTC Group Employee, Carrier Group Employee or Otis Group
Employee.
 
“ERISA” means the U.S. Employee Retirement Income Security Act of 1974, as
amended, and the regulations promulgated thereunder.
 
“Former Carrier Group Employee” means any individual (a) who, as of the
Effective Time, is a former employee of UTC or any of its Subsidiaries or former
Subsidiaries, and (b) whose most recent employment with UTC or any of its
Subsidiaries or former Subsidiaries was with a member of the Carrier Group or
the Carrier Business (and for the avoidance of doubt, without regard to any
recordkeeping conventions).
 
-4-

--------------------------------------------------------------------------------

“Former Employees” means Former UTC Group Employees, Former Carrier Group
Employees and Former Otis Group Employees.
 
“Former Otis Group Employee” means any individual (a) who, as of the Effective
Time, is a former employee of UTC or any of its Subsidiaries or former
Subsidiaries, and (b) whose most recent employment with UTC or any of its
Subsidiaries or former Subsidiaries was with a member of the Otis Group or the
Otis Business (and for the avoidance of doubt, without regard to any
recordkeeping conventions).
 
“Former UTC Group Employee” means any individual who (a) as of the Effective
Time, is a former employee of UTC or any of its Subsidiaries or former
Subsidiaries and (b) is not a Former Carrier Group Employee or a Former Otis
Group Employee (and for the avoidance of doubt, without regard to any
recordkeeping conventions).
 
“Labor Agreement” has the meaning set forth in Section 2.01.
 
“Otis” has the meaning set forth in the Preamble.
 
“Otis Adjusted Stock Value” means the product of (a) the Otis Stock Value and
(b) the Otis Distribution Ratio.
 
“Otis Adjustment Ratio” means the quotient, obtained by dividing (a) the UTC
Pre-Separation Stock Value by (b) the Otis Stock Value.
 
“Otis Awards” means Otis DSU Awards, Otis Option Awards, Otis PSU Awards, Otis
RSU Awards, Otis SAR Awards, cash-settled Carrier DSU Awards and cash-settled
Post-Separation UTC DSU Awards held by Otis Transferred Directors, collectively.
 
“Otis Benefit Plan” means any Benefit Plan established, sponsored, maintained or
contributed to by a member of the Otis Group as of or after the Effective Time,
including any Benefit Plans retained or adopted by Otis pursuant to Sections
2.03(b) and 2.03(d).
 
“Otis Board” means the Board of Directors of Otis.
 
“Otis Deferred Compensation Plans” means the Otis Deferred Compensation Plans
established pursuant to Sections 2.03(b) and 6.02.
 
“Otis Distribution” has the meaning set forth in the Recitals.
 
“Otis Distribution Ratio” means a number equal to one-half (0.5).
 
“Otis DSU Award” means an award of deferred stock units settled in cash or in
stock relating to Otis Shares that is assumed by the relevant Party in
accordance with Section 4.02(g).
 
“Otis DSU Plan” means the Otis Board of Directors Deferred Stock Unit Plan
established by Otis as of the Effective Time pursuant to Sections 2.03(b) and
4.01.
 
-5-

--------------------------------------------------------------------------------

“Otis Flexible Benefit Plans” means the Otis Welfare Benefit Plans that provide
dependent care and medical benefits under Section 125 of the Code.
 
“Otis Group Employees” has the meaning set forth in Section 3.01(a)(ii).
 
“Otis Individual Agreement” means any individual (a) employment contract or
offer letter, (b) retention, severance or change in control agreement, (c)
expatriate (including any international assignee) contract or agreement
(including agreements and obligations regarding repatriation, relocation or
equalization of Taxes and living standards in the host country) or (d) other
agreement containing restrictive covenants (including confidentiality,
non-competition and non-solicitation provisions) between a member of a Group, on
the one hand, and (i) an Otis Group Employee or (ii) a Former Otis Group
Employee, on the other hand, as in effect immediately prior to the Otis
Distribution Date.
 
“Otis LTIP” means the Otis Long-Term Incentive Plan established by Otis as of
the Effective Time pursuant to Sections 2.03(b) and 4.01.
 
“Otis Option Award” means an award of options to purchase Otis Shares assumed by
Otis pursuant to the Otis LTIP in accordance with Sections 4.02(a) and 4.02(b).
 
“Otis Pension Preservation Plan (Post-2005)” means the Otis Pension Preservation
Plan which is an Otis Deferred Compensation Plan established pursuant to
Sections 2.03(b) and 6.02.
 
“Otis PSU Award” means an award of performance-based stock units relating to
Otis Shares assumed by Otis pursuant to the Otis LTIP in accordance with Section
4.02(f) or pursuant to the Otis PSU Deferral Plan in accordance with Section
6.02.
 
“Otis PSU Deferral Plan” means the Otis LTIP Performance Share Unit Deferral
Plan which is an Otis Deferred Compensation Plan established pursuant to
Sections 2.03(b) and 6.02.
 
“Otis Puerto Rico Savings Plan” means the Otis Elevator Puerto Rico Retirement
Savings Plan established by Otis pursuant to Sections 2.03(b) and 5.02(c).
 
“Otis RSU Award” means an award of time-based restricted stock units relating to
Otis Shares assumed by Otis pursuant to the Otis LTIP in accordance with Section
4.02(e).
 
“Otis SAR Award” means an award of stock appreciation rights relating to Otis
Shares assumed by Otis pursuant to the Otis LTIP in accordance with Sections
4.02(c) and 4.02(d).
 
“Otis Savings Plan” means the Otis Savings Plan established pursuant to Sections
2.03(b) and 5.02(c).
 
“Otis Savings Plans” has the meaning set forth in Section 5.02(c).
 
“Otis Savings Restoration Plan” means the Otis Savings Restoration Plan which is
an Otis Deferred Compensation Plan established pursuant to Sections 2.03(b) and
6.02.
 
-6-

--------------------------------------------------------------------------------

“Otis Separation” has the meaning set forth in the Recitals.
 
“Otis Share” means a share of the common stock, par value $0.01 per share, of
Otis.
 
“Otis Stock Value” means the simple average of the volume-weighted average per
share price of Otis Shares trading on the Applicable Exchange during each of the
two (2) consecutive full Trading Sessions occurring immediately after the third
full Trading Session after the Effective Time.
 
“Otis Transferred Director” means each Otis director as of the Effective Time
who served on the UTC Board immediately prior to the Effective Time.
 
“Otis Value Factor” means the quotient, rounded to four decimal places, obtained
by dividing (a) the product of (i) the Otis Distribution Ratio and (ii) the UTC
Pre-Separation Stock Value, by (b) the sum of (i) the Otis Adjusted Stock Value,
(ii) the Carrier Adjusted Stock Value, and (iii) the UTC Post-Separation Stock
Value.
 
“Otis Welfare Plan” means a Welfare Plan established, sponsored, maintained or
contributed to by any member of the Otis Group for the benefit of Otis Group
Employees and Former Otis Group Employees, including any Welfare Plan retained
or adopted by Otis pursuant to Sections 2.03(b), 2.03(d) and 8.01.
 
“Party” or “Parties” has the meaning set forth in the Preamble.
 
“Post-Separation UTC Awards” means (a) Post-Separation UTC DSU Awards, (b)
Post-Separation UTC Option Awards, (c) Post-Separation UTC PSU Awards, (d)
Post-Separation UTC RSU Awards, (e) Post-Separation SAR Awards, and (f)
cash-settled Carrier DSU Awards and cash-settled Otis DSU Awards held by UTC
Non-Employee Directors who will continue to serve on the UTC Board immediately
following the Effective Time (regardless of whether such individuals are Otis
Transferred Directors or Carrier Transferred Directors immediately following the
Effective Time), collectively.
 
“Post-Separation UTC DSU Awards” means a UTC DSU Award settled in cash or in
stock relating to UTC Shares that is assumed by the relevant Party as adjusted
as of the Effective Time in accordance with Section 4.02(g).
 
“Post-Separation UTC Option Award” means a UTC Option Award adjusted as of the
Effective Time in accordance with Sections 4.02(a) and 4.02(b).
 
“Post-Separation UTC PSU Award” means a UTC PSU Award adjusted as of the
Effective Time in accordance with Section 4.02(f).
 
“Post-Separation UTC RSU Award” means a UTC RSU Award adjusted as of the
Effective Time in accordance with Section 4.02(e).
 
“Post-Separation UTC SAR Award” means a UTC SAR Award adjusted as of the
Effective Time in accordance with Sections 4.02(c) and 4.02(d).
 
-7-

--------------------------------------------------------------------------------

“Requesting Party” has the meaning set forth in Section 9.04.
 
“Restricted Employees” has the meaning set forth in Section 3.04(a).
 
“Securities Act” means the U.S. Securities Act of 1933, as amended, together
with the rules and regulations promulgated thereunder.
 
“Separation” has the meaning set forth in the Recitals.
 
“Separation Agreement” has the meaning set forth in the Recitals.
 
“Trading Session” means the period of time during any given calendar day,
commencing with the determination of the opening price on the Applicable
Exchange and ending on the determination of the closing price on the Applicable
Exchange during the regular trading session, in which trading in UTC Shares,
Carrier Shares or Otis Shares (as applicable) is permitted on the Applicable
Exchange.
 
“Transferred Account Balances” has the meaning set forth in Section 8.03.
 
“UTC” has the meaning set forth in the Preamble.
 
“UTC Adjustment Ratio” means the quotient, obtained by dividing (a) the UTC
Pre-Separation Stock Value by (b) the UTC Post-Separation Stock Value.
 
“UTC Award” means each UTC DSU Award, UTC Option Award, UTC PSU Award, UTC RSU
Award and UTC SAR Award..
 
“UTC Benefit Plan” means any Benefit Plan established, sponsored or maintained
by UTC or any of its Subsidiaries immediately prior to the Effective Time, but
excluding any (i) Carrier Benefit Plan, including any plan transferred to and
assumed by Carrier pursuant to Sections 2.03(a) and 2.03(c), and (ii) any Otis
Benefit Plan, including any plan transferred to and assumed by Otis pursuant to
Sections 2.03(b) and 2.03(d).
 
“UTC Bifurcated Deferred Compensation Plan” means each of the UTC Savings
Restoration Plan, the UTC Pension Preservation Plan (Post-2005), the UTC
Deferred Compensation Plan, the UTC Company Automatic Contribution Excess Plan,
the UTC LTIP PSU Deferral Plan, the Retirement Plan for Third Country National
Employees, and the Internationally Mobile Employee Retirement Plan.
 
“UTC Board” has the meaning set forth in the Recitals.
 
“UTC Compensation Committee” means the Compensation Committee of the UTC Board.
 
“UTC DSU Award” means an award representing a contractual right to receive UTC
Shares or the cash value thereof granted pursuant to the UTC DSU Plan that is
outstanding immediately prior to the Effective Time.
 
-8-

--------------------------------------------------------------------------------

“UTC DSU Plan” means the UTC Board of Directors Deferred Stock Unit Plan.
 
“UTC Flexible Benefit Plans” means the UTC Welfare Plans that provide dependent
care and medical benefits under Section 125 of the Code.
 
“UTC Group Employees” has the meaning set forth in Section 3.01(a)(iii).
 
“UTC Individual Agreement” means any individual (a) employment contract or offer
letter, (b) retention, severance or change in control agreement, (c) expatriate
(including any international assignee) contract or agreement (including
agreements and obligations regarding repatriation, relocation or equalization of
Taxes and living standards in the host country) or (d) other agreement
containing restrictive covenants (including confidentiality, non-competition and
non-solicitation provisions) between a member of a Group, on the one hand, and
(i) a UTC Group Employee or (ii) a Former UTC Group Employee, on the other hand,
as in effect immediately prior to the Distribution Date.
 
“UTC LTIP” means each of the United Technologies Corporation 2018 Long-Term
Incentive Plan, the United Technologies Corporation Long-Term Incentive Plan,
and the Rockwell Collins, Inc. 2015 Long-Term Incentives Plan, as assumed by
UTC.
 
“UTC Non-Employee Director” means an individual who serves or served as a
non-employee director of the UTC Board.
 
“UTC Option Award” means an award of options to purchase UTC Shares granted
pursuant to a UTC LTIP that is outstanding as of immediately prior to the
Effective Time.
 
“UTC Pension Preservation Plan (Pre-2005)” means the UTC Pension Preservation
Plan, as in effect on December 31, 2004.
 
“UTC Pension Preservation Plan (Post-2005)” means the UTC Pension Preservation
Plan, as in effect on January 1, 2005.
 
“UTC Post-Separation Stock Value” means the simple average of the
volume-weighted average per share price of UTC Shares trading on the Applicable
Exchange during each of the two (2) consecutive full Trading Sessions occurring
immediately after the third full Trading Session after the Effective Time.
 
“UTC Pre-Separation Stock Value” means the closing price per share of UTC Shares
trading “regular way with due bills” during the last full Trading Session
immediately prior to the Effective Time.
 
“UTC PSU Award” means an award of performance-based stock units relating to UTC
Shares granted pursuant to a UTC LTIP that is outstanding immediately prior to
the Effective Time.
 
“UTC Puerto Rico Savings Plan” means the United Technologies Company Puerto Rico
Savings Plan.
 
-9-

--------------------------------------------------------------------------------

“UTC Represented Savings Plan” means the United Technologies Corporation
Represented Employee Savings Plan.
 
“UTC Retained Deferred Compensation Plan” means each of the Rockwell Collins
2005 Non-Qualified Retirement Savings Plan, the Rockwell Collins Pre-2005
Non-Qualified Retirement Savings Plan, the Rockwell Collins 2005 Deferred
Compensation Plan, the Rockwell Collins 2005 Non-Qualified Pension Plan, the B/E
Aerospace 2010 Deferred Compensation Plan, the Sundstrand Corporation Deferred
Compensation Plan, the Goodrich Corp Savings Benefit Restoration Plan, the UTC
Pension Preservation Plan, As Amended and Restated Effective January 1, 1996,
the UTC Pension Preservation Plan (Pre-2005) and each other nonqualified
deferred compensation plan sponsored by a member of the UTC Group prior to the
Effective Time that is not a UTC Bifurcated Deferred Compensation Plan.
 
“UTC Retirement Plan” means the United Technologies Corporation Retirement Plan.
 
“UTC RSU Award” means an award of restricted stock units with respect to UTC
Shares granted pursuant to a UTC LTIP that is outstanding as of immediately
prior to the Effective Time.
 
“UTC SAR Award” means an award of stock appreciation rights with respect to UTC
Shares granted pursuant to a UTC LTIP that is outstanding as of immediately
prior to the Effective Time.
 
“UTC Savings Plan” means the United Technologies Corporation Employee Savings
Plan.
 
“UTC Shares” means the shares of common stock, par value $1.00 per share, of
UTC.
 
“UTC Value Factor” means the quotient, obtained by dividing (a) the UTC
Pre-Separation Stock Value, by (b) the sum of (i) the Carrier Adjusted Stock
Value, (ii) the Otis Adjusted Stock Value, and (iii) the UTC Post-Separation
Stock Value.
 
“UTC Welfare Plan” means any UTC Benefit Plan that is a Welfare Plan.
 
“Welfare Plan” means any “welfare plan” (as defined in Section 3(1) of ERISA) or
a “cafeteria plan” under Section 125 of the Code, and any benefits offered
thereunder, and any other plan offering health benefits (including medical,
prescription drug, dental, vision, mental health, substance abuse and retiree
health), disability benefits, or life, accidental death and dismemberment, and
business travel insurance, pre-Tax premium conversion benefits, dependent care
assistance programs, employee assistance programs, paid time-off programs,
contribution funding toward a health savings account, flexible spending
accounts, supplemental unemployment benefits or severance.
 
-10-

--------------------------------------------------------------------------------

Section 1.02.        Interpretation.  Section 10.15 (Interpretation) of the
Separation Agreement is hereby incorporated by reference.
 
ARTICLE II
GENERAL PRINCIPLES FOR ALLOCATION OF LIABILITIES
 
Section 2.01.     General Principles.  All provisions herein shall be subject to
the requirements of all applicable Law and any collective bargaining, works
council or similar agreement or arrangement with any labor union, works council
or other labor representative (each, a “Labor Agreement”).  Notwithstanding
anything in this Agreement to the contrary, if the terms of a Labor Agreement or
applicable Law require that any Assets or Liabilities be retained or assumed by,
or transferred to, a Party in a manner that is different than what is set forth
in this Agreement, such retention, assumption or transfer shall be made in
accordance with the terms of such Labor Agreement and applicable Law and shall
not be made as otherwise set forth in this Agreement; provided that, in such
case, the Parties shall take all necessary action to preserve the economic terms
of the allocation of Assets and Liabilities contemplated by this Agreement.  The
provisions of this Agreement shall apply in respect of all jurisdictions.
 
(a)         Acceptance and Assumption of Carrier Liabilities.  Except as
otherwise provided by this Agreement, on or prior to the Effective Time, but in
any case prior to the Carrier Distribution, Carrier and the applicable Carrier
Designees shall accept, assume and agree to faithfully perform, discharge and
fulfill all of the following Liabilities in accordance with their respective
terms (each of which shall be considered a Carrier Liability), regardless of
when or where such Liabilities arose or arise, or whether the facts on which
they are based occurred prior to or subsequent to the Effective Time, regardless
of where or against whom such Liabilities are asserted or determined (including
any such Liabilities arising out of claims made by UTC’s, Carrier’s or Otis’s
respective directors, officers, Employees, Former Employees, agents,
Subsidiaries or Affiliates against any member of the UTC Group, the Carrier
Group or the Otis Group) or whether asserted or determined prior to the date
hereof, and regardless of whether arising from or alleged to arise from
negligence, recklessness, violation of Law, fraud or misrepresentation by any
member of the UTC Group, the Carrier Group or the Otis Group, or any of their
respective directors, officers, Employees, Former Employees, agents,
Subsidiaries or Affiliates: 
 
(i)         any and all wages, salaries, incentive compensation, equity
compensation, commissions, bonuses and any other employee compensation or
benefits payable to or on behalf of any Carrier Group Employees and Former
Carrier Group Employees after the Effective Time, without regard to when such
wages, salaries, incentive compensation, equity compensation, commissions,
bonuses or other employee compensation or benefits are or may have been awarded
or earned;
 
(ii)         any and all Liabilities whatsoever with respect to claims under a
Carrier Benefit Plan, taking into account the Carrier Benefit Plan’s assumption
of Liabilities with respect to Carrier Group Employees and Former Carrier Group
Employees, that were originally the Liabilities of the corresponding UTC Benefit
Plan with respect to periods prior to the Effective Time;
 
-11-

--------------------------------------------------------------------------------

(iii)       any and all Liabilities arising out of, relating to or resulting
from the employment, or termination of employment of all Carrier Group Employees
and Former Carrier Group Employees; and
 
(iv)         any and all Liabilities expressly assumed or retained by any member
of the Carrier Group pursuant to this Agreement.
 
(b)         Acceptance and Assumption of Otis Liabilities.  Except as otherwise
provided by this Agreement, on or prior to the Effective Time, but in any case
prior to the Otis Distribution, Otis and the applicable Otis Designees shall
accept, assume and agree to faithfully perform, discharge and fulfill all of the
following Liabilities in accordance with their respective terms (each of which
shall be considered an Otis Liability), regardless of when or where such
Liabilities arose or arise, or whether the facts on which they are based
occurred prior to or subsequent to the Effective Time, regardless of where or
against whom such Liabilities are asserted or determined (including any such
Liabilities arising out of claims made by UTC’s, Carrier’s or Otis’s respective
directors, officers, Employees, Former Employees, agents, Subsidiaries or
Affiliates against any member of the UTC Group, the Carrier Group or the Otis
Group) or whether asserted or determined prior to the date hereof, and
regardless of whether arising from or alleged to arise from negligence,
recklessness, violation of Law, fraud or misrepresentation by any member of the
UTC Group, the Carrier Group or the Otis Group, or any of their respective
directors, officers, Employees, Former Employees, agents, Subsidiaries or
Affiliates:
 
(i)         any and all wages, salaries, incentive compensation, equity
compensation, commissions, bonuses and any other employee compensation or
benefits payable to or on behalf of any Otis Group Employees and Former Otis
Group Employees after the Effective Time, without regard to when such wages,
salaries, incentive compensation, equity compensation, commissions, bonuses or
other employee compensation or benefits are or may have been awarded or earned;
 
(ii)        any and all Liabilities whatsoever with respect to claims under an
Otis Benefit Plan, taking into account the Otis Benefit Plan’s assumption of
Liabilities with respect to Otis Group Employees and Former Otis Group
Employees, that were originally the Liabilities of the corresponding UTC Benefit
Plan with respect to periods prior to the Effective Time;
 
(iii)        any and all Liabilities arising out of, relating to or resulting
from the employment, or termination of employment of all Otis Group Employees
and Former Otis Group Employees; and
 
(iv)        any and all Liabilities expressly assumed or retained by any member
of the Otis Group pursuant to this Agreement.
 
(c)         Acceptance and Assumption of UTC Liabilities.  Except as otherwise
provided by this Agreement, on or prior to the Effective Time, but in any case
prior to the Distribution, UTC and certain members of the UTC Group designated
by UTC shall accept, assume and agree to faithfully perform, discharge and
fulfill all of the following Liabilities in accordance with their respective
terms (each of which shall be considered a UTC Liability), regardless of when or
where such Liabilities arose or arise, or whether the facts on which they are
 
-12-

--------------------------------------------------------------------------------

based occurred prior to or subsequent to the Effective Time, regardless of where
or against whom such Liabilities are asserted or determined (including any such
Liabilities arising out of claims made by UTC’s, Carrier’s or Otis’s respective
directors, officers, Employees, Former Employees, agents, Subsidiaries or
Affiliates against any member of the UTC Group, the Carrier Group or the Otis
Group) or whether asserted or determined prior to the date hereof, and
regardless of whether arising from or alleged to arise from negligence,
recklessness, violation of Law, fraud or misrepresentation by any member of the
UTC Group, the Carrier Group or the Otis Group, or any of their respective
directors, officers, Employees, Former Employees, agents, Subsidiaries or
Affiliates:
 
(i)         any and all wages, salaries, incentive compensation, equity
compensation, commissions, bonuses and any other employee compensation or
benefits payable to or on behalf of any UTC Group Employees and Former UTC Group
Employees after the Effective Time, without regard to when such wages, salaries,
incentive compensation, equity compensation, commissions, bonuses or other
employee compensation or benefits are or may have been awarded or earned;
 
(ii)        any and all Liabilities whatsoever with respect to claims under a
UTC Benefit Plan, taking into account a corresponding assumption of Liabilities
by the Carrier Benefit Plans and Otis Benefit Plans with respect to Carrier
Group Employees, Otis Group Employees, Former Carrier Group Employees and Former
Otis Group Employees, respectively, that were originally the Liabilities of such
UTC Benefit Plan with respect to periods prior to the Effective Time;
 
(iii)        any and all Liabilities arising out of, relating to or resulting
from the employment, or termination of employment of all UTC Group Employees and
Former UTC Group Employees; and
 
(iv)        any and all Liabilities expressly assumed or retained by any member
of the UTC Group pursuant to this Agreement.
 
(d)        Unaddressed Liabilities.  To the extent that this Agreement does not
address particular Liabilities under any Benefit Plan and the Parties later
determine that they should be allocated in connection with the Distributions,
the Parties shall agree in good faith on the allocation, taking into account the
handling of comparable Liabilities under this Agreement.
 
Section 2.02.        Service Credit.
 
(a)         As of the Effective Time, the Carrier Benefit Plans shall, and
Carrier shall cause each member of the Carrier Group to, recognize each Carrier
Group Employee’s and each Former Carrier Group Employee’s full service with UTC
or any of its Subsidiaries or predecessor entities at or before the Effective
Time, to the same extent that such service was recognized by UTC for similar
purposes prior to the Effective Time as if such full service had been performed
for a member of the Carrier Group, for purposes of eligibility, vesting and
determination of level of benefits under any Carrier Benefit Plans.
 
In addition, for any Employee who commences employment after the Effective Time
with a member of the Carrier Group, each Carrier Benefit Plan intended to be
qualified under
 
-13-

--------------------------------------------------------------------------------

Section 401(a) of the Code shall recognize for each such Employee service during
the two (2)-year period immediately following the Effective Time with any member
of the Otis Group or the UTC Group for purposes of vesting and participation (to
the extent such employee is otherwise eligible under such plan and commences
employment with a member of the Carrier Group during such two (2)-year period)
but not for purposes of benefit accrual under any Carrier Benefit Plan.
 
(b)        As of the Effective Time, the Otis Benefit Plans shall, and Otis
shall cause each member of the Otis Group to, recognize each Otis Group
Employee’s and each Former Otis Group Employee’s full service with UTC or any of
its Subsidiaries or predecessor entities at or before the Effective Time, to the
same extent that such service was recognized by UTC for similar purposes prior
to the Effective Time as if such full service had been performed for a member of
the Otis Group, for purposes of eligibility, vesting and determination of level
of benefits under any such Otis Benefit Plan.
 
In addition, for any Employee who commences employment after the Effective Time
with a member of the Otis Group, each Otis Benefit Plan intended to be qualified
under Section 401(a) of the Code shall recognize for each such Employee service
during the two (2)-year period immediately following the Effective Time with any
member of the Carrier Group or the UTC Group for purposes of vesting and
participation (to the extent such employee is otherwise eligible under such plan
and commences employment with a member of the Otis Group during such two
(2)-year period) but not for purposes of benefit accrual under any Otis Benefit
Plan.
 
(c)          For any Employee who commences employment after the Effective Time
with a member of the UTC Group, each UTC Benefit Plan intended to be qualified
under Section 401(a) of the Code shall recognize for each such Employee service
during the two (2)-year period immediately following the Effective Time with any
member of the Carrier Group or the Otis Group for purposes of vesting and
participation (to the extent such employee is otherwise eligible under such plan
and commences employment with a member of the UTC Group during such two (2)-year
period) but not for purposes of benefit accrual under any UTC Benefit Plan.
 
Section 2.03.        Adoption and Transfer and Assumption of Benefit Plans.
 
(a)         Adoption by Carrier of Benefit Plans.  As of no later than the
Effective Time, Carrier shall adopt Benefit Plans (and related trusts, if
applicable) as contemplated and in accordance with the terms of this Agreement.
 
(b)       Adoption by Otis of Benefit Plans.  As of no later than the Effective
Time, Otis shall adopt Benefit Plans (and related trusts, if applicable) as
contemplated and in accordance with the terms of this Agreement.
 
(c)        Retention by Carrier of Carrier Plans.  From and after the Effective
Time, Carrier shall retain all of the Carrier Benefits Plans, including all
related Liabilities and Assets, and any related trusts and other funding
vehicles and insurance contracts of any of such plans other than as specifically
provided in this Agreement; provided, however, that Carrier may make such
changes, modifications or amendments to such Carrier Benefit Plans as may be
required by applicable Law or to reflect the Separation Agreement, including
limiting participation in any such Carrier Benefit Plan to Carrier Group
Employees and Former Carrier Group Employees who
 
-14-

--------------------------------------------------------------------------------

participated in the corresponding UTC Benefit Plan immediately prior to the
Effective Time.  Nothing in this Agreement shall preclude Carrier, at any time
after the Effective Time, from amending, merging, modifying, terminating,
eliminating, reducing, or otherwise altering in any respect any Carrier Benefit
Plan, any benefit under any Carrier Benefit Plan or any trust, insurance policy
or funding vehicle related to any Carrier Benefit Plan, or any employment or
other service arrangement with Carrier Group Employees, independent contractors
or vendors (to the extent permitted by Law).
 
(d)        Retention by Otis of Otis Plans.  From and after the Effective Time,
Otis shall retain all of the Otis Benefits Plans, including all related
Liabilities and Assets, and any related trusts and other funding vehicles and
insurance contracts of any of such plans other than as specifically provided in
this Agreement; provided, however, that Otis may make such changes,
modifications or amendments to such Otis Benefit Plans as may be required by
applicable Law or to reflect the Separation Agreement, including limiting
participation in any such Otis Benefit Plan to Otis Group Employees and Former
Otis Group Employees who participated in the corresponding UTC Benefit Plan
immediately prior to the Effective Time.  Nothing in this Agreement shall
preclude Otis, at any time after the Effective Time, from amending, merging,
modifying, terminating, eliminating, reducing or otherwise altering in any
respect any Otis Benefit Plan, any benefit under any Otis Benefit Plan or any
trust, insurance policy or funding vehicle related to any Otis Benefit Plan, or
any employment or other service arrangement with Otis Group Employees,
independent contractors or vendors (to the extent permitted by Law).
 
(e)          Plans Not Required to Be Adopted.  With respect to any Benefit Plan
not addressed in this Agreement, the Parties shall agree in good faith on the
treatment of such plan taking into account the handling of any comparable plan
under this Agreement and, notwithstanding that neither Carrier nor Otis shall
have an obligation to continue to maintain any such plan with respect to the
provision of future benefits from and after the Effective Time, Carrier shall
remain obligated to pay or provide any previously accrued or incurred benefits
to the Carrier Group Employees and Former Carrier Group Employees consistent
with Section 2.01(a) of this Agreement and Otis shall remain obligated to pay or
provide any previously accrued or incurred benefits to the Otis Group Employees
and Former Otis Group Employees consistent with Section 2.01(b) of this
Agreement.
 
(f)        Information and Operation.  Each Party shall use its commercially
reasonable efforts to provide the other Party with information describing each
Benefit Plan election made by an Employee or Former Employee that may have
application to such Party’s Benefit Plans from and after the Effective Time, and
each Party shall use its commercially reasonable efforts to administer its
Benefit Plans using those elections.  Each Party shall, upon reasonable request,
use its commercially reasonable efforts to provide the other Party and the other
Party’s respective Affiliates, agents, and vendors all information reasonably
necessary to the other Party’s operation or administration of its Benefit Plans.
 
(g)         No Duplication or Acceleration of Benefits.  Notwithstanding
anything to the contrary in this Agreement, the Separation Agreement or any
Ancillary Agreement, no participant in any Benefit Plan shall receive service
credit or benefits to the extent that receipt of such service credit or benefits
would result in duplication of benefits provided to such participant by the
corresponding Benefit Plan or any other plan, program or arrangement sponsored
or
 
-15-

--------------------------------------------------------------------------------

maintained by a member of the Group that sponsors the corresponding Benefit
Plan.  Furthermore, unless expressly provided for in this Agreement, the
Separation Agreement, or any Ancillary Agreement, or required by applicable Law,
no provision in this Agreement shall be construed to create any right to
accelerate vesting, distributions, or entitlements under any Benefit Plan
sponsored or maintained by a member of the Carrier Group, a member of the Otis
Group or a member of the UTC Group on the part of any Employee or Former
Employee.
 
(h)        Beneficiaries; Dependents.  References in this Agreement to Carrier
Group Employees, Former Carrier Group Employees, Otis Group Employees, Former
Otis Group Employees, UTC Group Employees, Former UTC Group Employees, Carrier
Transferred Directors, Otis Transferred Directors, and UTC Non-Employee
Directors shall be deemed to refer to their beneficiaries, dependents, survivors
and alternate payees, as applicable.
 
ARTICLE III
ASSIGNMENT OF EMPLOYEES
 
Section 3.01.       Active Employees.
 
(a)         Assignment and Transfer of Employees.  Effective as of no later than
the Effective Time and except as otherwise agreed by the Parties, (i) UTC shall
have taken, or caused the applicable member of the UTC Group to take, such
actions as are necessary to ensure that each individual who is intended to be an
employee of the Carrier Group as of immediately after the Effective Time
(including any such individual who is not actively working as of the Effective
Time as a result of an illness, injury or leave of absence approved by the UTC
Human Resources department or otherwise taken in accordance with applicable Law)
(collectively, the “Carrier Group Employees”) is employed by a member of the
Carrier Group as of immediately after the Effective Time, (ii) UTC shall have
taken, or caused the applicable member of the UTC Group to take, such actions as
are necessary to ensure that each individual who is intended to be an employee
of the Otis Group as of immediately after the Effective Time (including any such
individual who is not actively working as of the Effective Time as a result of
an illness, injury or an approved leave of absence or otherwise taken in
accordance with applicable Law) (collectively, the “Otis Group Employees”) is
employed by a member of the Otis Group as of immediately after the Effective
Time, and (iii) UTC shall have taken, or caused the applicable member of the UTC
Group to take, such actions as are necessary to ensure that (A) each individual
who is intended to be an employee of the UTC Group as of immediately after the
Effective Time (including any such individual who is not actively working as of
the Effective Time as a result of an illness, injury or leave of absence
approved by the UTC Human Resources department or otherwise taken in accordance
with applicable Law) and (B) any other individual employed by the UTC Group as
of the Effective Time who is not a Carrier Group Employee or Otis Group Employee
(collectively, the “UTC Group Employees”) is employed by a member of the UTC
Group as of immediately after the Effective Time.  Each of the Parties agrees to
execute, and to seek to have the applicable Employees execute, such
documentation, if any, as may be necessary to reflect such assignment and/or
transfer.
 
(b)         At-Will Status.  Nothing in this Agreement shall create any
obligation on the part of any member of the Carrier Group, any member of the
Otis Group or any member of the UTC Group to (i) continue the employment of any
Employee or permit the return from a leave of
 
-16-

--------------------------------------------------------------------------------

absence for any period after the date of this Agreement (except as required by
applicable Law) or (ii) change the employment status of any Employee from
“at-will,” to the extent that such Employee is an “at-will” employee under
applicable Law.
 
(c)         Severance.  The Parties acknowledge and agree that the Separation,
the Distributions and the assignment, transfer or continuation of the employment
of Employees as contemplated by this Section 3.01 shall not be deemed an
involuntary termination of employment entitling any Employee to severance
payments or severance benefits.
 
(d)         Not a Change in Control.  The Parties acknowledge and agree that
neither the consummation of the Separation, the Distributions nor any
transaction contemplated by this Agreement, the Separation Agreement or any
other Ancillary Agreement shall be deemed a “change in control,” “change of
control” or term of similar import for purposes of any Benefit Plan sponsored or
maintained by any member of the UTC Group, the Carrier Group or the Otis Group.
 
(e)         Payroll and Related Taxes.  Carrier shall (i) be responsible for all
payroll obligations, Tax withholding and reporting obligations, and associated
government audit assessments; and (ii) furnish a Form W-2 or similar earnings
statement, in each case, for all Employees employed by a member of the Carrier
Group with respect to the period during which they were employed by a member of
the Carrier Group before the Distribution Date and for all Carrier Group
Employees following the Distribution Date. Otis shall (A) be responsible for all
payroll obligations, Tax withholding and reporting obligations, and associated
government audit assessments; and (B) furnish a Form W-2 or similar earnings
statement, in each case, for all Employees employed by a member of the Otis
Group with respect to the period during which they were employed by a member of
the Otis Group before Distribution Date and for all Otis Group Employees
following the Distribution Date. UTC shall (i) be responsible for all payroll
obligations, Tax withholding and reporting obligations, and associated
government audit assessments; and (ii) furnish a Form W-2 or similar earnings
statement, in each case, for all Employees employed by a member of the UTC Group
with respect to the period during which they were employed by a member of the
UTC Group before Distribution Date and for all UTC Group Employees following the
Distribution Date.
 
Section 3.02.      Individual Agreements.  Effective as of no later than the
Distribution Date, Carrier, Otis and UTC, as applicable, shall assign, or cause
an applicable member of the respective UTC Group, Carrier Group or Otis Group to
assign (i) the Carrier Individual Agreements to a member of the Carrier Group
and Carrier shall agree or cause an applicable member of the Carrier Group to
agree to accept and be bound by the provisions of the Carrier Individual
Agreements, (ii) the Otis Individual Agreements to a member of the Otis Group
and Otis shall agree or cause an applicable member of the Otis Group to agree to
accept and be bound by the provisions of the Otis Individual Agreements, and
(iii) the UTC Individual Agreements to a member of the UTC Group and UTC shall
agree or cause an applicable member of the UTC Group to accept and be bound by
the provisions of the UTC Individual Agreements; provided, however, that to the
extent that assignment of any such agreement is not permitted by the terms of
such agreement or by applicable Law, effective as of the Distribution Date, each
member of the Carrier Group (in the case of each Carrier Individual Agreement),
Otis Group (in the case of each Otis Individual Agreement) or the UTC Group (in
the case of each UTC Individual Agreement) shall be considered to be a successor
to each member of the Carrier Group, Otis Group or UTC
 
-17-

--------------------------------------------------------------------------------

Group, as applicable, for purposes of, and a third-party beneficiary with
respect to, such agreement, such that each member of the Carrier Group, Otis
Group or UTC Group, as applicable, shall enjoy all of the rights and benefits
under such agreement (including rights and benefits as a third-party
beneficiary) as well as assume the potential associated liabilities, with
respect to the business operations of the Carrier Group, Otis Group or UTC
Group, as applicable; provided, further, that in no event shall any Party be
permitted to enforce (A) any Carrier Individual Agreement (including any
agreement containing non-competition or non-solicitation covenants) against a
Carrier Group Employee for action taken in such individual’s capacity as a
Carrier Group Employee other than on behalf of the Carrier Group as requested by
the Carrier Group in its capacity as a third-party beneficiary, (B) any Otis
Individual Agreement (including any agreement containing non-competition or
non-solicitation covenants) against an Otis Group Employee for action taken in
such individual’s capacity as an Otis Group Employee other than on behalf of the
Otis Group as requested by the Otis Group in its capacity as a third-party
beneficiary and (C) any UTC Individual Agreement (including any agreement
containing non-competition or non-solicitation covenants) against a UTC Employee
for action taken in such individual’s capacity as a UTC Group Employee other
than on behalf of the UTC Group as requested by the UTC Group in its capacity as
a third-party beneficiary; provided, further, that with respect to any Carrier
Group Employee, Former Carrier Group Employee, Otis Group Employee or Former
Otis Group Employee who was employed by a member of the UTC Group within twelve
(12) months prior to the Effective Time, UTC shall retain the right to enforce,
and shall be a third-party beneficiary with respect to, any non-competition
covenant as applied to the business of the UTC Group contained in any Carrier
Individual Agreement or Otis Individual Agreement against such Carrier Group
Employee or Otis Group Employee for a period of twelve (12) months after the
Effective Time.
 
Section 3.03.      Consultation with Labor Representatives; Labor Agreements. 
The Parties shall cooperate to notify, inform and/or consult with any labor
union, works council or other labor representative regarding the Separation and
Distributions to the extent required by Law or a Labor Agreement.  No later than
as of immediately before the Effective Time, Carrier shall have taken, or caused
another member of the Carrier Group to take, all actions that are necessary (if
any) for Carrier or another member of the Carrier Group to (a) assume any Labor
Agreements in effect with respect to Carrier Group Employees and Former Carrier
Group Employees (excluding obligations thereunder with respect to any Otis Group
Employees, Former Otis Group Employees, UTC Group Employees or Former UTC Group
Employees, to the extent applicable) and (b) unless otherwise provided in this
Agreement, assume and honor any obligations of the UTC Group or Otis Group under
any Labor Agreements as such obligations relate to Carrier Group Employees and
Former Carrier Group Employees.  No later than as of immediately before the
Effective Time, Otis shall have taken, or caused another member of the Otis
Group to take, all actions that are necessary (if any) for Otis or another
member of the Otis Group to (a) assume any Labor Agreements in effect with
respect to Otis Group Employees and Former Otis Group Employees (excluding
obligations thereunder with respect to any Carrier Group Employees, Former
Carrier Group Employees, UTC Group Employees or Former UTC Group Employees, to
the extent applicable) and (b) unless otherwise provided in this Agreement,
assume and honor any obligations of the UTC Group or Carrier Group under any
Labor Agreements as such obligations relate to Otis Group Employees and Former
Otis Group Employees.  No later than as of immediately before the Effective
Time, UTC shall have taken, or caused another member of the UTC Group to take,
all actions that are necessary (if any) for UTC or another member of the UTC
 
-18-

--------------------------------------------------------------------------------

Group to (a) assume any Labor Agreements in effect with respect to UTC Employees
and Former UTC Employees (excluding obligations thereunder with respect to any
Carrier Group Employees, Former Carrier Group Employees, Otis Group Employees or
Former Otis Group Employees, to the extent applicable) and (b) assume and honor
any obligations of the Carrier Group or Otis Group under any Labor Agreements as
such obligations relate to UTC Group Employees and Former UTC Group Employees.
 
Section 3.04.        Non-Solicitation.
 
(a)         Non-Solicitation.  Each Party agrees that, for a period of eighteen
(18) months from the Effective Time, such Party shall, and shall cause each
member in its Group, to not solicit for employment any individual who is an
employee of a member of the other Groups at the level of P6/M6, P7/M7, E1, E2,
E3, E4, or E5 as of immediately prior to the Effective Time (“Restricted
Employees”); provided that the foregoing restrictions shall not apply to:  (i)
any Restricted Employee who responds to general solicitations not targeted at
the Restricted Employees, (ii) any Restricted Employee who terminates employment
at least six (6) months prior to the applicable solicitation, (iii) the
solicitation of a Restricted Employee whose employment was involuntarily
terminated by the employing Party in a severance qualifying termination before
the employment discussions with the soliciting Party commenced, and (iv) any
Restricted Employee whose prospective employment is agreed to in writing by the
soliciting Party and the employing Party, or in the case of a Restricted
Employee who is not currently employed, the Party who last employed Restricted
Employee.
 
(b)         Remedies; Enforcement.  Each Party acknowledges and agrees that (i)
injury to the employing Party from any breach by another Party of the
obligations set forth in this Section 3.04 would be irreparable and impossible
to measure and (ii) the remedies at Law for any breach or threatened breach of
this Section 3.04, including monetary damages, would therefore be inadequate
compensation for any loss and the employing Party shall have the right to
specific performance and injunctive or other equitable relief in accordance with
this Section 3.04, in addition to any and all other rights and remedies at Law
or in equity, and all such rights and remedies shall be cumulative.  Each Party
understands and acknowledges that the restrictive covenants and other agreements
contained in this Section 3.04 are an essential part of this Agreement and the
transactions contemplated hereby.  It is the intent of the Parties that the
provisions of this Section 3.04 shall be enforced to the fullest extent
permissible under applicable Law applied in each jurisdiction in which
enforcement is sought.  If any particular provision or portion of this Section
3.04 shall be adjudicated to be invalid or unenforceable, such provision or
portion thereof shall be deemed amended to the minimum extent necessary to
render such provision or portion valid and enforceable, such amendment to apply
only with respect to the operation of such provision or portion thereof in the
particular jurisdiction in which such adjudication is made.
 
ARTICLE IV
EQUITY, INCENTIVE AND EXECUTIVE COMPENSATION
 
Section 4.01.        General Rules and Adoption of Equity Plans.
 
(a)         Treatment of Equity Awards.  Each UTC Award that is outstanding as
of immediately prior to the Effective Time shall be treated as described below
in this Article IV;
 
-19-

--------------------------------------------------------------------------------

provided, however, that, prior to the Effective Time, the UTC Compensation
Committee (i) may provide for different treatment with respect to some or all of
the UTC Awards held by Employees located outside of the United States to the
extent that the UTC Compensation Committee deems such treatment necessary or
appropriate, including to avoid adverse tax consequences to such Employees, and
(ii) shall, if the Carrier Distribution and the Otis Distribution do not occur
on the same day, appropriately modify the adjustment methodology described below
in a manner that is intended to achieve the same adjustment results taking into
account the timing of the Carrier Distribution and the Otis Distribution.  Any
such adjustments made by the UTC Compensation Committee pursuant to the
foregoing sentence shall be deemed incorporated by reference herein as if fully
set forth below and shall be binding on the Parties and their respective
Affiliates.  Effective as of no later than immediately prior to the Effective
Time, Carrier shall establish the Carrier LTIP and Carrier DSU Plan and Otis
shall establish the Otis LTIP and the Otis DSU Plan, which plans shall have
substantially the same terms as those of the UTC LTIP and the UTC DSU Plan,
respectively, as of immediately prior to the Effective Time.  Carrier may make
such changes, modifications or amendments to the Carrier LTIP and the Carrier
DSU Plan and Otis may make such changes, modifications or amendments to the Otis
LTIP and the Otis DSU Plan, in each case, as may be required by applicable Law
or as are necessary and appropriate to reflect the Separation or to permit the
implementation of the provisions of Article IV or Section 6.02.
 
(b)          Assumption of DSU Plan Liabilities.  As of the Effective Time,
Carrier shall, and shall cause the Carrier DSU Plan, and Otis shall, and shall
cause the Otis DSU Plan, to assume all Liabilities under the UTC DSU Plan for
the benefits of Carrier Transferred Directors and Otis Transferred Directors who
are not otherwise UTC Non-Employee Directors, respectively, determined as of
immediately prior to the Effective Time, and the UTC Group and the UTC DSU Plan
shall be relieved of all Liabilities for those benefits.  UTC shall, or shall
cause a member of the UTC Group to, assume and retain all Liabilities under the
UTC DSU Plan for the benefits of UTC Non-Employee Directors but not with respect
to the benefits of any director who ceases as of the Effective Time to be a
director of UTC and becomes a Carrier Transferred Director or Otis Transferred
Director.  On and after the Effective Time, Carrier Transferred Directors and
Otis Transferred Directors who are not otherwise UTC Non-Employee Directors
shall cease to be participants in the UTC DSU Plan.
 
Section 4.02.        Equity Incentive Awards.
 
(a)          Vested Option Awards.  Each UTC Option Award that is outstanding
and vested as of immediately prior to the Effective Time shall be converted, as
of the Effective Time, into a Post-Separation UTC Option Award, a Carrier Option
Award and an Otis Option Award and shall, except as otherwise provided in this
Section 4.02(a), be subject to the same terms and conditions after the Effective
Time as were applicable to such UTC Option Award immediately prior to the
Effective Time; provided, however, that from and after the Effective Time:
 
(i)          the number of UTC Shares subject to such Post-Separation UTC Option
Award shall be equal to the product, rounded down to the nearest whole number of
shares, obtained by multiplying (A) the number of UTC Shares subject to the
corresponding UTC Option Award immediately prior to the Effective Time by (B)
the UTC Value Factor;
 
-20-

--------------------------------------------------------------------------------

(ii)        the number of Carrier Shares subject to such Carrier Option Award
shall be equal to the product, rounded down to the nearest whole number of
shares, obtained by multiplying (A) the number of UTC Shares subject to the
corresponding UTC Option Award immediately prior to the Effective Time by (B)
the Carrier Value Factor;
 
(iii)       the number of Otis Shares subject to such Otis Option Award shall be
equal to the product, rounded down to the nearest whole number of shares,
obtained by multiplying (A) the number of UTC Shares subject to the
corresponding UTC Option Award immediately prior to the Effective Time by (B)
the Otis Value Factor;
 
(iv)       the per share exercise price of such Post-Separation UTC Option Award
shall be equal to the quotient, rounded up to the nearest whole cent, obtained
by dividing (A) the per share exercise price of the corresponding UTC Option
Award immediately prior to the Effective Time by (B) the UTC Adjustment Ratio;
 
(v)        the per share exercise price of such Carrier Option Award shall be
equal to the quotient, rounded up to the nearest whole cent, obtained by
dividing (A) the per share exercise price of the corresponding UTC Option Award
immediately prior to the Effective Time by (B) the Carrier Adjustment Ratio; and
 
(vi)        the per share exercise price of such Otis Option Award shall be
equal to the quotient, rounded up to the nearest whole cent, obtained by
dividing (A) the per share exercise price of the corresponding UTC Option Award
immediately prior to the Effective Time by (B) the Otis Adjustment Ratio.
 
Following the Effective Time, (A) the exercise period for a Post-Separation UTC
Option held by an Carrier Group Employee or Otis Group Employee shall be the ten
(10)-year period commencing on the original grant date, regardless of
termination from post-separation employer, (B) the exercise period for an
Carrier Option held by a UTC Group Employee or Otis Group Employee, shall be the
ten (10)-year period commencing on the original grant date, regardless of
termination from post-separation employer and (C) the exercise period for a
Carrier Option held by an Otis Group Employee or UTC Group Employee shall be the
ten (10)-year period commencing on the original grant date, regardless of
termination from post-separation employer.
 
Notwithstanding anything to the contrary in this Section 4.02(a), the exercise
price of, and the number of UTC Shares, Carrier Shares, and Otis Shares subject
to, each Post-Separation UTC Option Award, Carrier Option Award, and Otis Option
Award, respectively, and the terms and conditions of exercise of such options
shall be determined in a manner consistent with the requirements of Section 409A
of the Code, as applicable.
 
(b)        Unvested Option Awards.  Each UTC Option Award that is outstanding
and unvested as of immediately prior to the Effective Time (including any UTC
Option Award that vests on or after the Distribution Date) shall be treated as
follows:
 
(i)        if the holder of such award is a UTC Group Employee, such award shall
be converted, as of the Effective Time, into a Post-Separation UTC Option Award
and shall, except as otherwise provided in this Section 4.02(b), be subject to
the same terms and conditions after the Effective Time as were applicable to
such UTC Option Award prior to the Effective Time;
 
-21-

--------------------------------------------------------------------------------

provided, however, that (A) the number of UTC Shares underlying such
Post-Separation UTC Option Award shall be equal to the product, rounded down to
the nearest whole number of shares, obtained by multiplying (1) the number of
UTC Shares subject to the corresponding UTC Option Award immediately prior to
the Effective Time by (2) the UTC Adjustment Ratio, and (B) the per share
exercise price of such Post-Separation UTC Option Award shall be equal to the
quotient, rounded up to the nearest whole cent, obtained by dividing (1) the per
share exercise price of the corresponding UTC Option Award immediately prior to
the Effective Time by (2) the UTC Adjustment Ratio;
 
(ii)        if the holder of such award is a Carrier Group Employee, such award
shall be converted, as of the Effective Time, into a Carrier Option Award and
shall, except as otherwise provided in this Section 4.02(b), be subject to the
same terms and conditions after the Effective Time as were applicable to such
UTC Option Award prior to the Effective Time; provided, however, that (A) the
number of Carrier Shares underlying such Carrier Option Award shall be equal to
the product, rounded down to the nearest whole number of shares, obtained by
multiplying (1) the number of UTC Shares subject to the corresponding UTC Option
Award immediately prior to the Effective Time by (2) the Carrier Adjustment
Ratio, and (B) the per share exercise price of such Carrier Option Award shall
be equal to the quotient, rounded up to the nearest whole cent, obtained by
dividing (1) the per share exercise price of the corresponding UTC Option Award
immediately prior to the Effective Time by (2) the Carrier Adjustment Ratio; and
 
(iii)        if the holder of such award is an Otis Group Employee, such award
shall be converted, as of the Effective Time, into an Otis Option Award and
shall, except as otherwise provided in this Section 4.02(b), be subject to the
same terms and conditions after the Effective Time as were applicable to such
UTC Option Award prior to the Effective Time; provided, however, that (A) the
number of Otis Shares underlying such Otis Option Award shall be equal to the
product, rounded down to the nearest whole number of shares, obtained by
multiplying (1) the number of UTC Shares subject to the corresponding UTC Option
Award immediately prior to the Effective Time by (2) the Otis Adjustment Ratio,
and (B) the per share exercise price of such Otis Option Award shall be equal to
the quotient, rounded up to the nearest whole cent, obtained by dividing (1) the
per share exercise price of the corresponding UTC Option Award immediately prior
to the Effective Time by (2) the Otis Adjustment Ratio.
 
Notwithstanding anything to the contrary in this Section 4.02(b), the exercise
price of, and the number of UTC Shares, Carrier Shares, and Otis Shares subject
to, each Post-Separation UTC Option Award, Carrier Option Award, and Otis Option
Award, respectively, and the terms and conditions of exercise of such options
shall be determined in a manner consistent with the requirements of Section 409A
of the Code, as applicable.
 
(c)        Vested SAR Awards.  Each UTC SAR Award that is outstanding and vested
as of immediately prior to the Effective Time shall be converted, as of the
Effective Time, into a Post-Separation UTC SAR Award, a Carrier SAR Award and an
Otis SAR Award and shall, except as otherwise provided in this Section 4.02(c),
be subject to the same terms and conditions after the Effective Time as were
applicable to such UTC SAR Award immediately prior to the Effective Time;
provided, however, that from and after the Effective Time:
 
-22-

--------------------------------------------------------------------------------

(i)          the number of UTC Shares subject to such Post-Separation UTC SAR
Award shall be equal to the product, rounded down to the nearest whole number of
shares, obtained by multiplying (A) the number of UTC Shares subject to the
corresponding UTC SAR Award immediately prior to the Effective Time by (B) the
UTC Value Factor;
 
(ii)         the number of Carrier Shares subject to such Carrier SAR Award
shall be equal to the product, rounded down to the nearest whole number of
shares, obtained by multiplying (A) the number of UTC Shares subject to the
corresponding UTC SAR Award immediately prior to the Effective Time by (B) the
Carrier Value Factor;
 
(iii)        the number of Otis Shares subject to such Otis SAR Award shall be
equal to the product, rounded down to the nearest whole number of shares,
obtained by multiplying (A) the number of UTC Shares subject to the
corresponding UTC SAR Award immediately prior to the Effective Time by (B) the
Otis Value Factor;
 
(iv)       the per share exercise price of such Post-Separation UTC SAR Award
shall be equal to the quotient, rounded up to the nearest whole cent, obtained
by dividing (A) the per share exercise price of the corresponding UTC SAR Award
immediately prior to the Effective Time by (B) the UTC Adjustment Ratio;
 
(v)         the per share exercise price of such Carrier SAR Award shall be
equal to the quotient, rounded up to the nearest whole cent, obtained by
dividing (A) the per share exercise price of the corresponding UTC SAR Award
immediately prior to the Effective Time by (B) the Carrier Adjustment Ratio; and
 
(vi)       the per share exercise price of such Otis SAR Award shall be equal to
the quotient, rounded up to the nearest whole cent, obtained by dividing (A) the
per share exercise price of the corresponding UTC SAR Award immediately prior to
the Effective Time by (B) the Otis Adjustment Ratio.
 
Following the Effective Time, (A) the exercise period for a Post-Separation UTC
SAR held by an Otis Group Employee, or Carrier Group Employee shall be the ten
(10)-year period commencing on the original grant date, regardless of
termination from post-separation employer, (B) the exercise period for an Otis
SAR held by a UTC Group Employee, or Carrier Group Employee shall be the ten
(10)-year period commencing on the original grant date, regardless of
termination from post-separation employer, and (C) the exercise period for a
Carrier SAR held by an Otis Group Employee, or UTC Group Employee shall be the
ten (10)-year period commencing on the original grant date, regardless of
termination from post-separation employer.
 
Notwithstanding anything to the contrary in this Section 4.02(c), the exercise
price of, and the number of UTC Shares, Carrier Shares, and Otis Shares subject
to, each Post-Separation UTC SAR Award, Carrier SAR Award, and Otis SAR Award,
respectively, and the terms and conditions of exercise of such SARs shall be
determined in a manner consistent with the requirements of Section 409A of the
Code, as applicable.
 
(d)       Unvested SAR Awards.  Each UTC SAR Award that is outstanding and
unvested as of immediately prior to the Effective Time (including any UTC SAR
Award that vests on or after the Distribution Date) shall be treated as follows:
 
-23-

--------------------------------------------------------------------------------

(i)        if the holder of such award is a UTC Group Employee, such award shall
be converted, as of the Effective Time, into a Post-Separation UTC SAR Award and
shall, except as otherwise provided in this Section 4.02(d), be subject to the
same terms and conditions after the Effective Time as were applicable to such
UTC SAR Award prior to the Effective Time; provided, however, that (A) the
number of UTC Shares underlying such Post-Separation UTC SAR Award shall be
equal to the product, rounded down to the nearest whole number of shares,
obtained by multiplying (1) the number of UTC Shares subject to the
corresponding UTC SAR Award immediately prior to the Effective Time by (2) the
UTC Adjustment Ratio, and (B) the per share exercise price of such
Post-Separation UTC SAR Award shall be equal to the quotient, rounded up to the
nearest whole cent, obtained by dividing (1) the per share exercise price of the
corresponding UTC SAR Award immediately prior to the Effective Time by (2) the
UTC Adjustment Ratio;
 
(ii)        if the holder of such award is a Carrier Group Employee, such award
shall be converted, as of the Effective Time, into a Carrier SAR Award and
shall, except as otherwise provided in this Section 4.02(d), be subject to the
same terms and conditions after the Effective Time as were applicable to such
UTC SAR Award prior to the Effective Time; provided, however, that (A) the
number of Carrier Shares underlying such Carrier SAR Award shall be equal to the
product, rounded down to the nearest whole number of shares, obtained by
multiplying (1) the number of UTC Shares subject to the corresponding UTC SAR
Award immediately prior to the Effective Time by (2) the Carrier Adjustment
Ratio, and (B) the per share exercise price of such Carrier SAR Award shall be
equal to the quotient, rounded up to the nearest whole cent, obtained by
dividing (1) the per share exercise price of the corresponding UTC SAR Award
immediately prior to the Effective Time by (2) the Carrier Adjustment Ratio; and
 
(iii)        if the holder of such award is an Otis Group Employee, such award
shall be converted, as of the Effective Time, into an Otis SAR Award and shall,
except as otherwise provided in this Section 4.02(d), be subject to the same
terms and conditions after the Effective Time as were applicable to such UTC SAR
Award prior to the Effective Time; provided, however, that (A) the number of
Otis Shares underlying such Otis SAR Award shall be equal to the product,
rounded down to the nearest whole number of shares, obtained by multiplying (1)
the number of UTC Shares subject to the corresponding UTC SAR Award immediately
prior to the Effective Time by (2) the Otis Adjustment Ratio, and (B) the per
share exercise price of such Otis SAR Award shall be equal to the quotient,
rounded up to the nearest whole cent, obtained by dividing (1) the per share
exercise price of the corresponding UTC SAR Award immediately prior to the
Effective Time by (2) the Otis Adjustment Ratio.
 
Notwithstanding anything to the contrary in this Section 4.02(d), the exercise
price of, and the number of UTC Shares, Carrier Shares, and Otis Shares subject
to, each Post-Separation UTC SAR Award, Carrier SAR Award, and Otis SAR Award,
respectively, and the terms and conditions of exercise of such SARs shall be
determined in a manner consistent with the requirements of Section 409A of the
Code, as applicable.
 
(e)         RSU Awards.  Each UTC RSU Award that is outstanding and unvested as
of immediately prior to the Effective Time (including any UTC RSU Awards that
vest on or after the Distribution Date) shall be treated as follows:
 
-24-

--------------------------------------------------------------------------------

(i)          if the holder of such award is a UTC Group Employee or a Former UTC
Group Employee, such award shall be converted, as of the Effective Time, into a
Post-Separation UTC RSU Award and shall, except as otherwise provided in this
Section 4.02(e), be subject to the same terms and conditions after the Effective
Time as were applicable to such UTC RSU Award prior to the Effective Time;
provided, however, that the number of UTC Shares underlying such Post-Separation
UTC RSU Award shall be equal to the product, rounded down to the nearest whole
number of shares, obtained by multiplying (A) the number of UTC Shares subject
to the corresponding UTC RSU Award immediately prior to the Effective Time by
(B) the UTC Adjustment Ratio;
 
(ii)       if the holder of such award is a Carrier Group Employee or a Former
Carrier Group Employee, such award shall be converted, as of the Effective Time,
into a Carrier RSU Award and shall, except as otherwise provided in this Section
4.02(e), be subject to the same terms and conditions after the Effective Time as
were applicable to such UTC RSU Award prior to the Effective Time; provided,
however, that the number of Carrier Shares underlying such Carrier RSU Award
shall be equal to the product, rounded down to the nearest whole number of
shares, obtained by multiplying (A) the number of UTC Shares subject to the
corresponding UTC RSU Award immediately prior to the Effective Time by (B) the
Carrier Adjustment Ratio; and
 
(iii)        if the holder of such award is an Otis Group Employee or a Former
Otis Group Employee, such award shall be converted, as of the Effective Time,
into an Otis RSU Award and shall, except as otherwise provided in this Section
4.02(e), be subject to the same terms and conditions after the Effective Time as
were applicable to such UTC RSU Award prior to the Effective Time; provided,
however, that the number of Otis Shares underlying such Otis RSU Award shall be
equal to the product, rounded down to the nearest whole number of shares,
obtained by multiplying (A) the number of UTC Shares subject to the
corresponding UTC RSU Award immediately prior to the Effective Time by (B) the
Otis Adjustment Ratio.
 
(f)        PSU Awards.  Each UTC PSU Award that is outstanding and deferred
under the PSU Deferral Plan as of immediately prior to the Effective Time shall
be treated as described in Section 6.02.  Each other UTC PSU Award that is
outstanding as of immediately prior to the Effective Time shall be treated as
follows:
 
(i)          if the holder of such award is a UTC Group Employee or a Former UTC
Group Employee, such award shall be converted, as of the Effective Time, into a
Post-Separation UTC PSU Award and shall, except as otherwise provided in this
Section 4.02(f), be subject to the same terms and conditions after the Effective
Time as were applicable to such UTC PSU Award prior to the Effective Time;
provided, however, that (A) prior to the Effective Time, the UTC Compensation
Committee shall determine the number of UTC Shares earned under such award based
on its determination as to the level of achievement of performance objectives
and (B) as of the Effective Time, the number of UTC Shares underlying such UTC
PSU Award shall be equal to the product, rounded down to the nearest whole
number of shares, obtained by multiplying (1) the number of UTC Shares subject
to the corresponding UTC PSU Award immediately prior to the Effective Time (as
determined by the UTC Compensation Committee pursuant to clause (A) hereof) and
(2) the UTC Adjustment Ratio;
 
-25-

--------------------------------------------------------------------------------

(ii)        if the holder of such award is a Carrier Group Employee or a Former
Carrier Group Employee, such award shall be converted, as of the Effective Time,
into a Carrier PSU Award and shall, except as otherwise provided in this Section
4.02(f), be subject to the same terms and conditions after the Effective Time as
were applicable to such UTC PSU Award prior to the Effective Time; provided,
however, that (A) if the performance goals applicable to such UTC PSU Award
relate to the performance of UTC, prior to the Effective Time, the UTC
Compensation Committee shall determine the number UTC Shares earned under such
award based on its determination as to the level of achievement of performance
objectives and (B) the number of Carrier Shares underlying such Carrier PSU
Award shall be equal to the product, rounded down to the nearest whole number of
shares, obtained by multiplying (1) the number of UTC Shares subject to the
corresponding UTC PSU Award immediately prior to the Effective Time (as
determined by the UTC Compensation Committee pursuant to clause (A) hereof, if
applicable) by (2) the Carrier Adjustment Ratio; and
 
(iii)        if the holder of such award is an Otis Group Employee or a Former
Otis Group Employee, such award shall be converted, as of the Effective Time,
into an Otis PSU Award and shall, except as otherwise provided in this Section
4.02(f), be subject to the same terms and conditions after the Effective Time as
were applicable to such UTC PSU Award prior to the Effective Time; provided,
however, that (A) if the performance goals applicable to such UTC PSU Award
relate to the performance of UTC, prior to the Effective Time, the UTC
Compensation Committee shall determine the number UTC Shares earned under such
award based on its determination as to the level of achievement of performance
objectives and (B) the number of Otis Shares underlying such Otis PSU Award
shall be equal to the product, rounded down to the nearest whole number of
shares, obtained by multiplying (1) the number of UTC Shares subject to the
corresponding UTC PSU Award immediately prior to the Effective Time (as
determined by the UTC Compensation Committee pursuant to clause (A) hereof, if
applicable) by (2) the Otis Adjustment Ratio.
 
Following the Effective Time, the Post-Separation UTC PSU Awards, the Carrier
PSU Awards for which the applicable performance goals related to UTC performance
prior to the Effective Time, and the Otis PSU Awards for which the applicable
performance goals related to UTC performance prior to the Effective Time, shall
be time-vesting awards for the number of shares determined under Section
4.02(f)(i), Section 4.02(f)(ii), or Section 4.02(f)(iii), as applicable, that
vest based on the otherwise applicable vesting schedule without regard to the
achievement of the performance objectives at the end of the otherwise applicable
performance measurement period.
 
(g)          DSU Awards.
 
(i)          Vested DSU Awards (Basket).  Each UTC DSU Award that is outstanding
and vested as of immediately prior to the Effective Time shall be converted, as
of the Effective Time, into a Post-Separation UTC DSU Award, a Carrier DSU Award
and an Otis DSU Award and each award shall, except as otherwise provided in this
Section 4.02(g), be subject to the same terms and conditions after the Effective
Time as were applicable to such UTC DSU Award prior to the Effective Time;
provided, however, that from and after the Effective Time (i) the number of UTC
Shares subject to the Post-Separation UTC DSU Award shall be equal to the number
of UTC Shares subject to the corresponding UTC DSU Award immediately prior to
the
 
-26-

--------------------------------------------------------------------------------

Effective Time, (ii) the number of Carrier Shares subject to the Carrier DSU
Award shall be equal to the product, rounded to three decimal places, obtained
by multiplying (A) the number of UTC Shares subject to the UTC DSU Award
immediately prior to the Effective Time by (B) the Carrier Distribution Ratio,
and (iii) the number of Otis Shares subject to the Otis DSU Award shall be equal
to the product, rounded to three decimal places, obtained by multiplying (A) the
number of UTC Shares subject to the UTC DSU Award immediately prior to the
Effective Time by (B) the Otis Distribution Ratio.
 
(ii)        Unvested DSU Awards (Concentrated).  Each UTC DSU Award that is
outstanding and unvested as of immediately prior to the Effective Time shall be
treated as follows:
 
(A)        if the holder of such award is a UTC Non-Employee Director who will
continue to serve on the UTC Board immediately following the Effective Time
(regardless of whether such individual is an Otis Transferred Director or
Carrier Transferred Director immediately following the Effective Time) or is a
former UTC Non-Employee Director who immediately following the Effective Time
does not become an Otis Transferred Director or Carrier Transferred Director,
such award shall be converted, as of the Effective Time, into a Post-Separation
UTC DSU Award and shall, except as otherwise provided in this Section 4.02(g),
be subject to the same terms and conditions after the Effective Time as were
applicable to such UTC DSU Award prior to the Effective Time; provided, however,
that the number of UTC Shares underlying such Post-Separation UTC DSU Award
shall be equal to the product, rounded to three decimal places, obtained by
multiplying (A) the number of UTC Shares subject to the corresponding UTC DSU
Award immediately prior to the Effective Time by (B) the UTC Adjustment Ratio;
 
(B)          if the holder of such award is a UTC Non-Employee Director who will
become a Carrier Transferred Director (and not continue as a UTC Non-Employee
Director) immediately following the Effective Time, such award shall be
converted, as of the Effective Time, into a Carrier DSU Award and shall, except
as otherwise provided in this Section 4.02(g), be subject to the same terms and
conditions after the Effective Time as were applicable to such UTC DSU Award
prior to the Effective Time; provided, however, that the number of Carrier
Shares underlying such Carrier DSU Award shall be equal to the product, rounded
to three decimal places, obtained by multiplying (A) the number of UTC Shares
subject to the corresponding UTC DSU Award immediately prior to the Effective
Time by (B) the Carrier Adjustment Ratio; and
 
(C)          if the holder of such award is a UTC Non-Employee Director who will
become an Otis Transferred Director (and not continue as a UTC Non-Employee
Director) immediately following the Effective Time, such award shall be
converted, as of the Effective Time, into an Otis DSU Award and shall, except as
otherwise provided in this Section 4.02(g), be subject to the same terms and
conditions after the Effective Time as were applicable to such UTC DSU Award
prior to the Effective Time; provided, however, that the number of Otis Shares
underlying such Otis DSU Award shall be equal to the product, rounded to three
decimal places, obtained by multiplying (A) the number of UTC Shares subject to
the corresponding UTC DSU Award immediately prior to the Effective Time by (B)
the Otis Adjustment Ratio.
 
-27-

--------------------------------------------------------------------------------

Following the Effective Time, (1) the UTC DSU Plan shall provide that each UTC
Non-Employee Director who continues to serve on the UTC Board immediately
following the Effective Time (regardless of whether such individual is also an
Otis Transferred Director or a Carrier Transferred Director) and each former UTC
Non-Employee Director who does not become an Otis Transferred Director or
Carrier Transferred Director immediately following the Effective Time shall
remain a participant in the UTC DSU Plan with respect to such individual’s UTC
Post-Separation DSU Awards, Carrier DSU Awards and Otis DSU Awards; provided
that, upon settlement of the Carrier DSU Awards and Otis DSU Awards, such awards
shall be paid in cash by UTC, (2) the Carrier DSU Plan shall provide that each
UTC Non-Employee Director who will become a Carrier Transferred Director (and
not also a UTC Non-Employee Director) immediately following the Effective Time
shall become a participant in the Carrier DSU Plan with respect to such
individual’s UTC Post-Separation DSU Awards, Carrier DSU Awards and Otis DSU
Awards; provided that, upon settlement of the Post-Separation UTC DSU Awards and
Otis DSU Awards, such awards shall be paid in cash by Carrier, and (3) the Otis
DSU Plan shall provide that each UTC Non-Employee Director who will become an
Otis Transferred Director (and not also a UTC Non-Employee Director) immediately
following the Effective Time shall become a participant in the Otis DSU Plan
with respect to such individual’s UTC Post-Separation DSU Awards, Carrier DSU
Awards and Otis DSU Awards; provided that, upon settlement of the
Post-Separation UTC DSU Awards and Carrier DSU Awards, such awards shall be paid
in cash by Otis.
 
(iii)        Separation of Service.  For the avoidance of doubt, the adjustments
made to UTC DSU Awards, including the adjustment of such awards into Carrier DSU
Awards or Otis DSU Awards shall not result in a separation of service entitling
a participant under the UTC DSU Plan, Carrier DSU Plan or Otis DSU Plan to a
distribution.
 
(h)          Miscellaneous Award Terms.  None of the Separation, the
Distributions or any employment transfer described in Section 3.01(a) shall
constitute a termination of employment for any Employee or non-employee director
for purposes of any Post-Separation UTC Award, Carrier Award, or any Otis
Award.  Further, a non-employee director transfer, as detailed in Section
4.02(g), shall not constitute a separation from service for any non-employee
director for purposes of any DSU Awards.
 
(i)          Settlement; Tax Withholding and Reporting.
 
(i)       Settlement.  Except as otherwise provided in Section 4.02(g), after
the Effective Time, Post-Separation UTC Awards, regardless of by whom held,
shall be settled by UTC; Carrier Awards, regardless of by whom held, shall be
settled by Carrier; and Otis Awards, regardless of by whom held, shall be
settled by Otis.
 
(ii)         Withholding.
 
(A)         Upon the vesting, payment or settlement, as applicable, of Carrier
Awards, Carrier shall be solely responsible for ensuring the satisfaction of all
applicable Tax withholding requirements on behalf of each Carrier Group Employee
or Former Carrier Group Employee and for ensuring the collection and transfer of
applicable employee withholding Taxes by the Carrier stock plan administrator
(1) to UTC or a member of the UTC Group designated by UTC with respect to each
UTC Group Employee or Former UTC Group Employee (with UTC or
 
-28-

--------------------------------------------------------------------------------

the designated member of the UTC Group being responsible for remittance of the
applicable employee Taxes and payment and remittance of the applicable employer
Taxes relating to UTC Group Employees and Former UTC Group Employees to the
applicable Governmental Authority) and (2) to Otis or a member of the Otis Group
designated by Otis with respect to each Otis Group Employee or Former Otis Group
Employee (with Otis or the designated member of the Otis Group being responsible
for remittance of the applicable employee Taxes and payment and remittance of
the applicable employer Taxes relating to Otis Group Employees and Former Otis
Group Employees to the applicable Governmental Authority).
 
(B)        Upon the vesting, payment or settlement, as applicable, of Otis
Awards, Otis shall be solely responsible for ensuring the satisfaction of all
applicable Tax withholding requirements on behalf of each Otis Group Employee or
Former Otis Group Employee and for ensuring the collection and transfer of
applicable employee withholding Taxes by the Otis stock plan administrator (1)
to UTC or a member of the UTC Group designated by UTC with respect to each UTC
Group Employee or Former UTC Group Employee (with UTC or the designated member
of the UTC Group being responsible for remittance of the applicable employee
Taxes and payment and remittance of the applicable employer Taxes relating to
UTC Group Employees and Former UTC Group Employees to the applicable
Governmental Authority) and (2) to Carrier or a member of the Carrier Group
designated by Carrier with respect to each Carrier Group Employee or Former
Carrier Group Employee (with Carrier or the designated member of the Carrier
Group being responsible for remittance of the applicable employee Taxes and
payment and remittance of the applicable employer Taxes relating to Carrier
Group Employees and Former Carrier Group Employees to the applicable
Governmental Authority).
 
(C)        Upon the vesting, payment or settlement, as applicable, of
Post-Separation UTC Awards, UTC shall be solely responsible for ensuring the
satisfaction of all applicable Tax withholding requirements on behalf of each
UTC Group Employee or Former UTC Group Employee and for ensuring the collection
and transfer of applicable employee withholding Taxes by the UTC stock plan
administrator (1) to Carrier or a member of the Carrier Group designated by
Carrier with respect to each Carrier Group Employee or Former Carrier Group
Employee (with Carrier or the designated member of the Carrier Group being
responsible for remittance of the applicable employee Taxes and payment and
remittance of the applicable employer Taxes relating to Carrier Group Employees
and Former Carrier Group Employees to the applicable Governmental Authority) and
(2) to Otis or a member of the Otis Group designated by Otis with respect to
each Otis Group Employee or Former Otis Group Employee (with Otis or the
designated member of the Otis Group being responsible for remittance of the
applicable employee Taxes and payment and remittance of the applicable employer
Taxes relating to Otis Group Employees and Former Otis Group Employees to the
applicable Governmental Authority).
 
(iii)     Reporting.  Following the Effective Time, (A) UTC shall be responsible
for all income Tax reporting in respect of Post-Separation UTC Awards, Carrier
Awards and Otis Awards held by UTC Group Employees, Former UTC Group Employees,
UTC Non-Employee Directors who will continue to serve on the UTC Board
immediately following the Effective Time (regardless of whether such individuals
are Otis Transferred Directors or Carrier Transferred Directors immediately
following the Effective Time), and each former UTC Non-Employee Director who
does not become an Otis Transferred Director or Carrier Transferred Director
immediately following the Effective Time, (B) Otis shall be responsible for all
income
 
-29-

--------------------------------------------------------------------------------

Tax reporting in respect of Post-Separation UTC Awards, Carrier Awards and Otis
Awards held by Otis Group Employees, Former Otis Group Employees, and
Transferred Otis Directors, and (C) Carrier shall be responsible for all income
Tax reporting in respect of Post-Separation UTC Awards, Carrier Awards and Otis
Awards held by Carrier Group Employees and Former Carrier Group Employees, and
Transferred Carrier Directors.
 
(iv)      Forfeitures.  Following the Effective Time, if any Post-Separation UTC
Award shall fail to become vested or fail to be exercised prior to the
applicable expiration date, such Post-Separation UTC Award shall be forfeited to
UTC, if any Carrier Award shall fail to become vested or fail to be exercised
prior to the applicable expiration date, such Carrier Award shall be forfeited
to Carrier and if any Otis Award shall fail to become vested or fail to be
exercised prior to the applicable expiration date, such Otis Award shall be
forfeited to Otis.
 
(j)         Cooperation.  Each of the Parties shall establish an appropriate
administration system to administer, in an orderly manner, (i) exercises of
Carrier Option Awards, Carrier SAR Awards, Otis Option Awards, Otis SAR Awards,
Post-Separation UTC Option Awards, and Post-Separation UTC SAR Awards, in each
case, that were vested immediately prior to the Effective Time, and (ii) the
withholding and reporting requirements with respect to all awards.  Each of the
Parties shall work together to unify and consolidate all indicative data and
payroll and employment information on regular timetables and make certain that
each applicable Person’s data and records in respect of such awards are correct
and updated on a timely basis.  The foregoing shall include information required
for Tax withholding and remittance, compliance with trading windows, and
compliance with the requirements of the Exchange Act and other applicable Laws. 
In order to facilitate the foregoing matters, each of the Parties shall
maintain, at its own expense, UBS as its stock plan administrator (or such other
party as may be agreed by Carrier, Otis and UTC) and maintain the payroll data
aggregation process established by UTC in advance of the Separation, in each
case, for the period commencing on the Distribution Date and ending no earlier
than the earlier of (i) the seventh (7th) anniversary of the Effective Time and
(ii) the date on which there no longer outstanding any Carrier Option Awards,
Carrier SAR Awards, Otis Option Awards, Otis SAR Awards, Post-Separation UTC
Option Awards, and Post-Separation UTC SAR Awards, in each case, that were
vested immediately prior to the Effective Time.  In the event that any Party,
after the Effective Time, chooses to use a different payroll data aggregation
process, the “new” process must be mutually agreed upon by the UTC, Otis and
Carrier Payroll/Tax organizations.
 
(k)         Registration and Other Regulatory Requirements.  Carrier agrees to
file a registration statement on Form S-8 (and, solely with respect to Carrier
Awards for which the underlying Carrier Shares are not eligible for registration
on Form S-8, a registration statement on Form S-3 or Form S-1) with respect to,
and to cause to be registered pursuant to the Securities Act, the Carrier Shares
authorized for issuance under the Carrier LTIP Plan, as required pursuant to the
Securities Act, not later than the Effective Time and in any event before the
date of issuance of any Carrier Shares pursuant to the Carrier LTIP Plan.  Otis
agrees to file a registration statement on Form S-8 (and, solely with respect to
Otis Awards for which the underlying Otis Shares are not eligible for
registration on Form S-8, a registration statement on Form S-3 or Form S-1) with
respect to, and to cause to be registered pursuant to the Securities Act, the
Otis Shares authorized for issuance under the Otis LTIP Plan, as required
pursuant to the Securities Act, not later than the Effective Time and in any
event before the date of issuance of any Otis Shares pursuant to the Otis
 
-30-

--------------------------------------------------------------------------------

LTIP Plan.  The Parties shall take such additional actions as are deemed
necessary or advisable to effectuate the foregoing provisions of this Section
4.02(k).
 
Section 4.03.        Cash Payment for Fractional Shares.
 
(a)          Each Employee and Former Employee holding a UTC Award immediately
prior to the Effective Time shall receive a cash payment (rounded down to the
next whole dollar) with respect to such UTC Award equal the difference between
(i) the value of such UTC Award calculated immediately prior to the Effective
Time calculated based on the UTC Pre-Separation Stock Value and (ii) the value
of the Post-Separation UTC Award, Otis Award, and/or Carrier Award actually
received by such Employee or Former Employee pursuant to Section 4.02(a) through
(f) in respect of such UTC Award calculated based on the Carrier Stock Value,
the Otis Stock Value and/or the UTC Post-Separation Stock Value, as applicable.
 
(b)          Such cash payment shall be made by UTC with respect to any UTC
Group Employee or Former UTC Group Employee, by Carrier with respect to any
Carrier Group Employee or Former Carrier Group Employer or by Otis, with respect
to any Otis Group Employee or Former Otis Group Employee.
 
(c)          Any cash payment made pursuant to this Section 4.03 shall be
subject to applicable withholding and shall be made within ninety (90) days
immediately following the Effective Time but in no event later than March 15 of
the year following the Effective Time (or at such later date as is necessary to
avoid the application of additional taxes and penalties under Section 409A of
the Code).  Any payment made under this Section 4.03 may be reduced so that such
payment does not result in any award being deemed deferred compensation subject
to, or noncompliant deferred compensation under, Section 409A of the Code.
 
Section 4.04.        Non-Equity Incentive Plans.
 
(a)          No later than immediately prior to the Effective Time, Carrier and
Otis shall each adopt, or have in place, an executive annual bonus plan,
covering Carrier Group Employees and Otis Group Employees, respectively.
 
(b)         From and following the Effective Time, the Carrier Group shall
retain pursuant to Section 2.03(b) any incentive plan for the exclusive benefit
of Carrier Group Employees and Former Carrier Group Employees and as from
January 1, 2020, shall be solely responsible for all Liabilities thereunder,
including Liabilities arising before, on or after the Distribution Date, and the
UTC Group shall have no responsibility for the Liabilities thereunder.
 
(c)         From and following the Effective Time, the Otis Group shall retain
pursuant to Section 2.03(c) any incentive plan for the exclusive benefit of Otis
Group Employees and Former Otis Group Employees and as from January 1, 2020,
shall be solely responsible for all Liabilities thereunder, including
liabilities arising before, on or after the Distribution Date and the UTC Group
shall have no responsibility for the Liabilities thereunder.
 
Section 4.05.      Director Compensation.  UTC shall be responsible for the
payment of any fees for service on the UTC Board that are payable before, at, or
after the Effective Time, and Carrier and Otis shall not have any responsibility
for any such payments, except as otherwise
 
-31-

--------------------------------------------------------------------------------

provided in Section 4.02(g) or Article VI.  With respect to any Carrier
non-employee director, Carrier shall be responsible for the payment of any fees
for service on the Carrier Board that are payable at any time after the
Effective Time and with respect to any Otis non-employee director, Otis shall be
responsible for the payment of any fees for service on the Otis Board that are
payable at any time after the Effective Time.  Notwithstanding the foregoing,
Carrier and Otis shall commence paying annual retainers to Carrier Transferred
Directors and Otis Transferred Directors, respectively, in respect of the annual
board compensation period in which the Effective Time occurs; provided that (a)
if UTC has already paid such annual retainers to UTC Non-Employee Directors
prior to the Effective Time, then within thirty (30) days after the Distribution
Date, Carrier and Otis shall each pay UTC an amount equal to the portion of such
payment that is attributable to the service of Carrier Transferred Directors and
Otis Transferred Director, respectively, after the Distribution Date (other than
any amount that is subject to a deferral election and is credited or will be
credited to any such director’s account under the Carrier DSU Plan or the Otis
DSU Plan), and (b) if UTC has not yet paid such annual retainers prior to the
Effective Time, then within thirty (30) days after the Distribution Date, UTC
shall pay Carrier and Otis an amount equal to the portion of such payment that
is attributable to service prior to the Distribution Date to UTC by Carrier
Transferred Directors and Otis Transferred Directors, respectively.

ARTICLE V
U.S. QUALIFIED RETIREMENT PLANS
 
Section 5.01.        UTC Employee Retirement Plan.
 
(a)         Retention of the UTC Retirement Plan.  Except as set forth in this
Article V, as of the day following the Effective Time, UTC shall assume and
retain the UTC Employee Retirement Plan as of the Effective Time and no member
of the Carrier Group or the Otis Group shall assume or retain any Liability with
respect to the UTC Retirement Plan.  Following the Effective Time, no Carrier
Group Employee or Otis Group Employee shall be credited with any additional
service under the UTC Retirement Plan, except as contemplated by Section
5.01(b).
 
(b)          Separation from Service; Grow-in.  UTC shall, or shall cause
another member of the UTC Group to, amend the UTC Retirement Plan to provide
that for the two (2)-year period commencing at the Effective Time, each Carrier
Group Employee and Otis Group Employee who is a participant in the UTC
Retirement Plan shall be given credit for service with members of the Carrier
Group and the Otis Group for purposes of eligibility for early retirement, the
“Rule of 65” benefits and “Rule of 100” benefits under the UTC Retirement Plan
(but not for purposes of accruing additional benefits under the UTC Retirement
Plan) and shall not be entitled to a distribution during such two (2)-year
period until such participant is no longer employed by any member of the Otis
Group, Carrier Group or UTC Group, subject to the terms of the UTC Retirement
Plan.  In no case shall Former Carrier Group Employees or Former Otis Group
Employees receive any additional credit for service pursuant to this section.
 
Section 5.02.        UTC Savings Plans.
 
(a)         UTC Savings Plans.  As of the Effective Time, UTC shall retain, and
no member of the Carrier Group or Otis Group shall assume or retain sponsorship
of, or any Assets or Liabilities with respect to, the UTC Employee Savings Plan,
the UTC Represented Employees
 
-32-

--------------------------------------------------------------------------------

Savings Plan, and the UTC Puerto Rico Savings Plan (the UTC Puerto Rico Savings
Plan, together with the UTC Represented Savings Plan and UTC Savings Plan, the
“UTC Savings Plans”), other than with respect to the rollover of account
balances described in Section 5.02(c).  Prior to the Effective Time, UTC shall,
or shall cause a member of the UTC Group to, (i) cause each Carrier Group
Employee and Otis Group Employee to be fully vested in his or her accounts, if
any, under the UTC Savings Plans as of the Effective Time and (ii) amend the UTC
Savings Plan and UTC Represented Savings Plan to provide that any Otis Group
Employee or Carrier Group Employee who becomes an employee of any member of the
UTC Group after the Effective Time shall receive credit for participation and
vesting under the UTC Savings Plans (other than the UTC Puerto Rico Savings
Plan) with respect to such employee’s service with any member of the Carrier
Group or the Otis Group during the two (2)-year period commencing on the
Effective Time (to the extent such employee is otherwise eligible and commences
employment with a member of the UTC Group within such two-year period).
 
(b)        Carrier Savings Plans.  Carrier shall, or shall cause a member of the
Carrier Group, to establish the Carrier Savings Plan, tax qualified defined
contribution plans, no later than as of the Effective Time for Carrier Group
Employees who participate in the UTC Savings Plan and UTC Represented Savings
Plan, respectively, immediately prior to the Effective Time.  Carrier shall be
responsible for taking all necessary, reasonable and appropriate action to
establish, maintain and administer the Carrier Savings Plan so that it is
qualified under Section 401(a) of the Code and that the related trust thereunder
is exempt under Section 501(a) of the Code and as soon as reasonably practicable
following the Effective Time, Carrier shall take all steps reasonably necessary
to obtain a favorable determination from the IRS or obtain an opinion as to such
qualification of such Carrier Savings Plan.  No later than immediately prior to
the Effective Time, Carrier Group Employees shall cease active participation in
the UTC Savings Plans, and no later than the Effective Time, Carrier Group
Employees shall be eligible to commence participation in the Carrier Savings
Plan.  Any minimum age or service requirements contained in the Carrier Savings
Plan with respect to eligibility to participate generally or eligibility to
share in any employer contributions under such plan shall be waived or deemed
satisfied for Carrier Group Employees to the extent waived or satisfied under
the UTC Savings Plans immediately prior to the Effective Time.  The Carrier
Savings Plan shall provide that any UTC Group Employee or Otis Group Employee
who becomes an employee of any member of the Carrier Group after the Effective
Time shall receive credit for participation and vesting under the Carrier
Savings Plan with respect to such employee’s service with any member of the UTC
Group or the Otis Group during the two (2)-year period commencing on the
Effective Time (to the extent such employee is otherwise eligible to participate
and commences employment with a member of the Carrier Group during such two year
period).
 
(c)          Otis Savings Plans.  Otis shall, or shall cause a member of the
Otis Group, to establish the Otis Savings Plan and the Otis Puerto Rico Savings
Plan (the Otis Puerto Rico Savings Plan together with the Otis Savings Plan, the
“Otis Savings Plans”), tax qualified defined contribution plans, no later than
as of the Effective Time for Otis Group Employees who participate in the UTC
Savings Plan and Otis Puerto Rico Savings Plan, respectively, immediately prior
to the Effective Time.  Otis shall be responsible for taking all necessary,
reasonable and appropriate action to establish, maintain and administer the Otis
Savings Plans so that it is qualified under Section 401(a) of the Code and that
the related trust thereunder is exempt under Section 501(a) of the Code (or
Section 1081.01(a) of the Puerto Rico Internal Revenue Code of 2011, as
applicable)
 
-33-

--------------------------------------------------------------------------------

and, as soon as reasonably practicable following the Effective Time, Otis shall
take all steps reasonably necessary to obtain a favorable determination or
obtain an opinion from the IRS or the Puerto Rico Treasury Department as to such
qualification of such Otis Savings Plans, as applicable.  No later than
immediately prior to the Effective Time, Otis Group Employees shall cease active
participation in the UTC Savings Plans, and no later than the Effective Time,
Otis Group Employees shall be eligible to commence participation in the Otis
Savings Plans.  Any minimum age or service requirements contained in the Otis
Savings Plans with respect to eligibility to participate generally or
eligibility to share in any employer contributions under such plan shall be
waived or deemed satisfied for Otis Group Employees to the extent waived or
satisfied under the UTC Savings Plans immediately prior to the Effective Time. 
The Otis Savings Plans (other than the Otis Puerto Rico Savings Plan) shall
provide that any UTC Group Employee or Carrier Group Employee who becomes an
employee of any member of the Otis Group after the Effective Time shall receive
credit for participation and vesting under the Otis Savings Plans with respect
to such employee’s employment with any member of the UTC Group or the Carrier
Group during the two (2)-year period commencing on the Effective Time (to the
extent such employee is otherwise eligible to participate and commences
employment with a member of the Otis Group during such two year period).
 
(d)         Rollover of Account Balances.  As soon as practicable after the
Effective Time, UTC, Carrier and Otis shall take any and all actions as may be
required to permit each Carrier Group Employee and Otis Group Employee to elect
to make rollover contributions of “eligible rollover distributions” (within the
meaning of Section 402(c)(4) of the Code if applicable) in cash in an amount
equal to the entire eligible rollover distribution distributable to such Carrier
Group Employee and Otis Group Employee from the UTC Savings Plans to Carrier
Savings Plan and Otis Savings Plans, respectively.
 
(e)         Plan Fiduciaries.  For all periods on and after the Effective Time,
the Parties agree that the applicable fiduciaries of each of the UTC Savings
Plans, Carrier Savings Plan and the Otis Savings Plans, respectively, shall have
the authority with respect to the UTC Savings Plans, Carrier Savings Plan and
Otis Savings Plans, respectively, to determine the investment alternatives, the
terms and conditions with respect to those investment alternatives and such
other matters as are within the scope of their duties under ERISA and the terms
of the applicable plan documents.
 
ARTICLE VI
NONQUALIFIED DEFERRED COMPENSATION PLANS
 
Section 6.01.      UTC Retained Nonqualified Deferred Compensation Plans.  As of
no later than the Effective Time, except as set forth in Sections 4.02(g) and
6.02, the UTC Group shall assume and retain, and no member of the Carrier Group
or the Otis Group shall assume or retain, sponsorship of all UTC Retained
Deferred Compensation Plans, and from and after the Effective Time, all Assets
and Liabilities thereunder shall be Assets and Liabilities of the UTC Group. 
All UTC Shares notionally credited to participants’ accounts under any of the
UTC Retained Deferred Compensation Plans immediately prior to the Effective Time
shall be adjusted from and after the Effective Time so that the number of UTC
Shares notionally credited as of the Effective Time to each participant’s
account shall be equal to the product, rounded to three decimal places, obtained
by multiplying (a) the number of UTC Shares notionally credited under such UTC
 
-34-

--------------------------------------------------------------------------------

Retained Deferred Compensation Plan to such participant immediately prior to the
Effective Time by (b) the UTC Adjustment Ratio.  Prior to the Effective Time,
UTC shall provide Carrier with a list of Carrier Group Employees and Otis with a
list of Otis Group Employees, in each case, who are participants in the UTC
Retained Deferred Compensation Plans.  If an Otis Group Employee on such list
terminates employment with the Otis Group, Otis shall, or shall cause a member
of the Otis Group to, provide written notice to UTC of such employee’s
termination of employment within twenty (20) days of such employee’s termination
of employment.  If a Carrier Group Employee on such list terminates employment
with the Carrier Group, Carrier shall, or shall cause a member of the Carrier
Group to, provide written notice to UTC of such employee’s termination of
employment within twenty (20) days of such employee’s termination of
employment.  Notwithstanding the foregoing, (i) Carrier shall be liable, and
shall reimburse UTC, for any Liabilities of UTC arising with respect to the UTC
Retained Deferred Compensation Plans as a result of any failure by a member of
the Carrier Group to provide proper notice of an employment termination that
directly results in the inability of UTC to administer the UTC Retained Deferred
Compensation Plans in compliance with Section 409A of the Code with respect to
any Carrier Group Employee who participated thereunder, and (ii) Otis shall be
liable, and shall reimburse UTC, for any Liabilities of UTC arising with respect
to the UTC Retained Deferred Compensation Plans as a result of any failure by a
member of the Otis Group to provide proper notice of an employment termination
that directly results in the inability of UTC to administer the UTC Retained
Deferred Compensation Plans in compliance with Section 409A of the Code with
respect to any Otis Group Employee who participated thereunder.
 
Section 6.02.       UTC Bifurcated Nonqualified Deferred Compensation Plans.  As
of no later than the Effective Time, Carrier shall establish the Carrier
Deferred Compensation Plans and Otis shall establish the Otis Deferred
Compensation Plans, which plans shall have substantially the same terms as of
immediately prior to the Effective Time as the UTC Bifurcated Nonqualified
Deferred Compensation Plans.  Carrier and Otis may make such changes,
modifications or amendments to the Carrier Deferred Compensation Plans and the
Otis Deferred Compensation Plans, respectively, as may be required by applicable
Law or as are necessary and appropriate to reflect the Separation, it being
understood that any such changes, modifications or amendments shall not result
in benefits that are less favorable than those provided under the UTC Bifurcated
Deferred Compensation Plans to participants in the UTC Bifurcated Deferred
Compensation Plans immediately prior to the Effective Time.
 
(a)         Assumption of Liabilities in General.  As of the Effective Time,
except as otherwise provided in Section 6.02(b), Carrier shall, and shall cause
the Carrier Deferred Compensation Plans, and Otis shall, and shall cause the
Otis Deferred Compensation Plans, to assume all Liabilities under the UTC
Bifurcated Deferred Compensation Plans for the benefits of Carrier Group
Employees and Former Carrier Group Employees and Otis Group Employees and Former
Otis Group Employees, respectively, determined as of immediately prior to the
Effective Time, and the UTC Group and the UTC Bifurcated Deferred Compensation
Plans shall be relieved of all Liabilities for those benefits.  UTC shall, or
shall cause a member of the UTC Group to, assume and retain all Liabilities
under the UTC Bifurcated Compensation Plans for the benefits of UTC Group
Employees and Former UTC Group Employees.  On and after the Effective Time,
Carrier Group Employees, Former Carrier Group Employees, Otis Group Employees,
and Former Otis Group Employees shall cease to be participants in the UTC
Bifurcated Deferred Compensation Plans.
 
-35-

--------------------------------------------------------------------------------

(b)          Assumption of Liabilities under UTC Pension Preservation Plan
(Post-2005).  As of the Effective Time, Carrier shall, and shall cause the
applicable Carrier Pension Preservation Plan (Post-2005), and Otis shall, and
shall cause the applicable Otis Pension Preservation Plan (Post-2005), to assume
all Liabilities under the UTC Pension Preservation Plan (Post-2005) for the
benefits of Carrier Group Employees and Otis Group Employees, respectively,
determined as of immediately prior to the Effective Time, and the UTC Group and
the UTC Pension Preservation Plan (Post-2005) shall be relieved of all
Liabilities for those benefits.  UTC shall, or shall cause a member of the UTC
Group to, assume and retain all Liabilities under the UTC Pension Preservation
Plan (Post-2005) for the benefits of UTC Group Employees and Former Employees,
including, for the avoidance of doubt, any benefits in pay status to Former
Employees.  On and after the Effective Time, Carrier Group Employees and Otis
Group Employees shall cease to be participants in the UTC Pension Preservation
Plan (Post-2005).
 
(c)         Adjustment of UTC Shares.  All UTC Shares notionally credited to a
participant’s accounts under any of the UTC Bifurcated Deferred Compensation
Plans immediately prior to the Effective Time (including as a UTC PSU Award
deferred under the UTC PSU LTIP Deferral Plan or a UTC deferred stock unit
credited under the UTC Savings Restoration Plan or UTC Deferred Compensation
Plan) shall be adjusted from and after the Effective Time so that with respect
to a participant in the UTC Bifurcated Deferred Compensation Plans immediately
following the Effective Time, the number of UTC Shares notionally credited as of
the Effective Time under a UTC Bifurcated Deferred Compensation Plan shall be
equal to the product, rounded  to three decimal places, obtained by multiplying
(A) the number of UTC Shares notionally credited under such UTC Bifurcated
Deferred Compensation Plan immediately prior to the Effective Time by (B) the
UTC Adjustment Ratio, (i) with respect to a participant in the Carrier Deferred
Compensation Plans immediately following the Effective Time, the number of
Carrier Shares notionally credited as of the Effective Time under a Carrier
Deferred Compensation Plan shall be equal to the product, rounded to three
decimal places, obtained by multiplying (A) the number of UTC Shares notionally
credited under such UTC Bifurcated Deferred Compensation Plan immediately prior
to the Effective Time by (B) the Carrier Adjustment Ratio and (ii) with respect
to a participant in the Otis Deferred Compensation Plans immediately following
the Effective Time, the number of Otis Shares notionally credited as of the
Effective Time under an Otis Deferred Compensation Plan shall be equal to the
product, rounded to three decimal places, obtained by multiplying (A) the number
of UTC Shares notionally credited under such UTC Deferred Compensation Plan
immediately prior to the Effective Time by (B) the Otis Adjustment Ratio.
 
(d)       Investment Alternatives.  As of no later than the Effective Time, the
Carrier Savings Restoration Plan shall provide that (i) distributions from the
Carrier stock fund shall be in cash and not in kind and (ii) an amount equal to
the value of notional Carrier Shares held in a participant’s Carrier stock fund
account may, at the election of the applicable participant, be notionally
invested in any other investment alternative available under the Carrier Savings
Restoration Plan.  As of no later than the Effective Time, the Otis Savings
Restoration Plan shall provide that (i) distributions from the Otis stock fund
shall be in cash and not in kind and (ii) an amount equal to the value of
notional Otis Shares held in a participant’s Otis stock fund account may, at the
election of the applicable participant, be notionally invested in any other
investment alternative available under the Otis Savings Restoration Plan.
 
-36-

--------------------------------------------------------------------------------

(e)          Deferred PSU Awards.  Deferred UTC PSU Awards that have been
adjusted pursuant to Section 6.02(b) into (i) deferred Carrier UTC PSU Awards
for Carrier Group Employees and Former Carrier Group Employees shall be subject
to the terms of the Carrier PSU Deferral Plan and (ii) deferred Otis UTC PSU
Awards for Otis Group Employees and Former Otis Group Employees shall be subject
to the terms of the Otis PSU Deferral Plan.
 
ARTICLE VII
NON-U.S. RETIREMENT PLANS
 
Section 7.01.       Retention of UK Pension Scheme.  UTC shall assume and retain
the UTC (UK) Pension Scheme as of the Effective Time, and no member of the
Carrier Group or the Otis Group shall assume or retain any Assets or Liabilities
with respect to the UTC (UK) Pension Scheme.  Following the Effective Time, no
Carrier Group Employees or Otis Group Employees shall be credited with any
additional service under the UTC (UK) Pension Scheme.  Carrier Group Employees
and Otis Group Employees who actively participated in the UTC Pension Scheme
immediately prior to the Effective Time shall participate in defined
contribution pension plans made available by members of the Carrier Group or
Otis Group, respectively, after the Effective Time.
 
ARTICLE VIII
WELFARE BENEFIT PLANS
 
Section 8.01.        Welfare Plans.
 
(a)          Establishment of Carrier Welfare Plans and Otis Welfare Plans. 
Except as otherwise provided in this Article VIII, as of no later than the
Effective Time, Carrier shall establish the Carrier Welfare Plans and Otis shall
establish the Otis Welfare Plans, in each case, with terms substantially similar
to the UTC Welfare Plans, and in all cases, with such changes, modifications or
amendments as may be required by applicable Law or as are necessary and
appropriate to reflect the Separation.  In addition, the Carrier Group and Otis
Group shall retain the right to modify, amend, alter or terminate the terms of
any Carrier Welfare Plans and Otis Welfare Plans, respectively, to the same
extent that the UTC Group had such rights under the corresponding UTC Welfare
Plan.
 
(b)         Allocation of Welfare Plan Assets and Liabilities.  Effective as of
the Effective Time (i) UTC shall, or shall cause a member of the UTC Group to,
retain or assume, as applicable, and be responsible for all Liabilities relating
to, arising out of or resulting from health and welfare coverage or claims
incurred by or on behalf of UTC Group Employees or Former UTC Group Employees
under the UTC Welfare Plans before, at or after the Effective Time; (ii) Carrier
shall, or shall cause a member of the Carrier Group to, retain or assume, as
applicable, and be responsible for all Liabilities relating to, arising out of
or resulting from health and welfare coverage or claims incurred by or on behalf
of Carrier Group Employees or Former Carrier Group Employees under the UTC
Welfare Plans and Carrier Welfare Plans before, at or after the Effective Time;
and (iii) the Otis Group shall retain or assume, as applicable, and be
responsible for all Liabilities relating to, arising out of or resulting from
health and welfare coverage or claims incurred by or on behalf of Otis Group
Employees or Former Otis Group Employees under UTC Welfare Plans and Otis
Welfare Plans before, at or after the Effective Time.  Any Liabilities
 
-37-

--------------------------------------------------------------------------------

incurred or paid by the UTC Group under the UTC Welfare Plans with respect to
Carrier Group Employees or Former Carrier Group Employees shall be subject to
reimbursement, if applicable, by the Carrier Group in accordance with Section
9.04.  Any Liabilities incurred or paid by the UTC Group after the Effective
Time under the UTC Welfare Plans with respect to Otis Group Employees or Former
Otis Group Employees shall be subject to reimbursement, if applicable, by the
Otis Group in accordance with Section 9.04.  Except as provided in this Article
VIII, no UTC Welfare Plan shall provide coverage to any Carrier Group Employee,
Former Carrier Group Employee, Otis Group Employee or Former Otis Group Employee
after the Effective Time.
 
(c)         Waiver of Conditions; Benefit Maximums.  Carrier shall, or shall
cause a member of the Carrier Group to, and Otis shall or shall cause a member
of the Otis Group to, use commercially reasonable efforts to cause the Carrier
Welfare Plans and Otis Welfare Plans, respectively, to:
 
(i)         with respect to initial enrollment as of the Effective Time, waive
(x) all limitations as to preexisting conditions, exclusions and service
conditions with respect to participation and coverage requirements for any
Carrier Group Employee, Former Carrier Group Employee, Otis Group Employee or
Former Otis Group Employee, as applicable, other than limitations that were in
effect with respect to such employees or former employees under the applicable
UTC Welfare Plan as of immediately prior to the Effective Time; and (y) any
waiting period limitation or evidence of insurability requirement other than
limitations or requirements that were in effect with respect to such employees
or former employees under the applicable UTC Welfare Plans as of immediately
prior to the Effective Time; and
 
(ii)       take into account (x) with respect to aggregate annual, lifetime or
similar maximum benefits available under the Carrier Welfare Plans or Otis
Welfare Plans, respectively, a Carrier Group Employee’s, Former Carrier Group
Employee’s, Otis Group Employee’s and Former Otis Group Employee’s, as
applicable, prior claim experience under the UTC Welfare Plans; and (y) any
eligible expenses incurred by a Carrier Group Employee, Former Carrier Group
Employee, Otis Group Employee or Former Otis Group Employee, as applicable,
during the portion of the plan year of the applicable UTC Welfare Plan ending as
of the Effective Time under such Carrier Welfare Plan or Otis Welfare Plan for
purposes of satisfying all deductible, coinsurance and maximum out-of-pocket
requirements applicable to such employees or former employees for the applicable
plan year to the same extent as such expenses were taken into account by UTC for
similar purposes prior to the Effective Time as if such amounts had been paid in
accordance with such Carrier Welfare Plan or Otis Welfare Plan, as applicable.
 
Section 8.02.     COBRA.  The UTC Group shall assume and retain Liability for
and be responsible for complying with, and providing coverage pursuant to, the
health care continuation requirements of COBRA, and the corresponding provisions
of the UTC Welfare Plans with respect to any UTC Group Employees and any Former
UTC Group Employees who incur a qualifying event under COBRA before, as of, or
after the Effective Time.  Effective as of the Effective Time, the Carrier Group
shall assume and retain Liabilities and be responsible for complying with, and
providing coverage pursuant to, the health care continuation requirements of
COBRA, and the corresponding provisions of the Carrier Welfare Plans with
respect to any Carrier Group Employees or Former Carrier Group Employees who
incur a qualifying event or loss of coverage under the Carrier Welfare Plans
and/or the UTC Welfare Plans before, as of, or after the
 
-38-

--------------------------------------------------------------------------------

Effective Time.  Effective as of the Effective Time, the Otis Group shall assume
and retain Liability and be responsible for complying with, and providing
coverage pursuant to, the health care continuation requirements of COBRA, and
the corresponding provisions of the Otis Welfare Plans with respect to any Otis
Group Employees or Former Otis Group Employees who incur a qualifying event or
loss of coverage under the Otis Welfare Plans and/or the UTC Welfare Plans
before, as of, or after the Effective Time.  The Parties agree that the
consummation of the transactions contemplated by the Separation Agreement shall
not constitute a COBRA qualifying event for any purpose of COBRA.
 
Section 8.03.      Flexible Benefit Plans.  The Parties shall take all steps
necessary or appropriate so that the account balances (whether positive or
negative) (the “Transferred Account Balances”) under the UTC Flexible Benefit
Plans of each Carrier Group Employee, Former Carrier Group Employee, Otis Group
Employee or Former Otis Group Employee who has elected to participate therein in
the year in which the Effective Time occurs shall be transferred, as soon as
practicable after the Effective Time, from the UTC Flexible Benefit Plans to the
corresponding Carrier Flexible Benefit Plans and Otis Flexible Benefit Plans, as
applicable.  Carrier shall, and shall cause the Carrier Flexible Benefit Plans
to, assume and retain responsibility, and the UTC Group shall be relieved of all
responsibility, as of the Effective Time for all outstanding dependent care and
medical care claims under the UTC Flexible Benefit Plans of each Carrier Group
Employee or Former Carrier Group Employee for the year in which the Effective
Time occurs and shall assume and agree to perform the obligations of the
analogous UTC Flexible Benefit Plans from and after the Effective Time.  Otis
shall, and shall cause the Otis Flexible Benefit Plans to, assume and retain
responsibility, and the UTC Group shall be relieved of all responsibility, as of
the Effective Time for all outstanding dependent care and medical care claims
under the Otis Flexible Benefit Plans of each Otis Group Employee or Former Otis
Group Employee for the year in which the Effective Time occurs and shall assume
and agree to perform the obligations of the analogous UTC Flexible Benefit Plans
from and after the Effective Time.  As soon as practicable after the Effective
Time, and in any event within thirty (30) days after the amount of the
Transferred Account Balances is determined or such later date as mutually agreed
upon by the Parties, (i) UTC shall pay Carrier the net aggregate amount of the
Transferred Account Balances for Carrier Group Employees and Former Carrier
Group Employees if such amount is positive, and Carrier shall pay UTC the net
aggregate amount of the Transferred Account Balances for Carrier Group Employees
and Former Carrier Group Employees if such amount is negative and (ii) UTC shall
pay Otis the net aggregate amount of the Transferred Account Balances for Otis
Group Employees and Former Otis Group Employees if such amount is positive, and
Otis shall pay UTC the net aggregate amount of the Transferred Account Balances
for Otis Group Employees and Former Otis Group Employees if such amount is
negative.
 
Section 8.04.       Vacation, Holidays and Leaves of Absence.  From and
following the Effective Time: (a) the Carrier Group shall assume and retain all
Liabilities with respect to vacation, holiday, annual leave or other leave of
absence, and required payments related thereto, for each Carrier Group Employee
and Former Carrier Group Employees, unless otherwise required by applicable Law;
(b) the Otis Group shall assume and retain all Liabilities with respect to
vacation, holiday, annual leave or other leave of absence, and required payments
related thereto, for each Otis Group Employee and Former Carrier Group Employee,
unless otherwise required by applicable Law; and (c) the UTC Group shall assume
and retain all Liabilities with respect to
 
-39-

--------------------------------------------------------------------------------

vacation, holiday, annual leave or other leave of absence, and required payments
related thereto, for each UTC Group Employee and Former Carrier Group Employee.

Section 8.05.       Disability Plans.  UTC shall retain all Liabilities for
long-term disability benefits with respect to any Employee or Former Employee
who is receiving or who subsequently becomes eligible to receive long-term
disability benefits under the UTC Welfare Plan that provides long-term
disability benefits but only with respect to benefits (including any group
health benefits that UTC may provide to participants receiving long-term
disability benefits) arising from long-term disability claims incurred by any
Carrier Group Employee, Former Carrier Group Employee, Otis Group Employee or
Former Otis Group Employee prior to the Effective Time (other than, in the case
of Liabilities for long-term disability benefits (including any group health
benefits that may be provided to participants receiving long-term disability
benefits) with respect to claims incurred under a Carrier Welfare Plan or Otis
Welfare Plan, that provides long-term disability benefits, which will be
retained by Carrier or Otis respectively).  For this purpose, a disability claim
shall be considered incurred on the date of the occurrence of the event or
condition giving rise to disability.
 
Section 8.06.       Life Insurance.  UTC shall retain all Liabilities under the
UTC Welfare Benefit Plan that provides life insurance benefits for covered life
insurance claims incurred prior to the Effective Time by Employees and Former
Employees, other than any Liabilities with respect to claims incurred by a
Carrier Group Employee or Former Carrier Group Employee under a life insurance
plan of Carrier or incurred by an Otis Group Employee or Former Otis Group
Employee under a life insurance plan of Otis, which Liabilities will be retained
by Carrier or Otis, respectively.  The applicable Carrier Welfare Benefit Plan
and Otis Welfare Benefit Plan shall be responsible for all Liabilities with
respect to life insurance claims incurred after the Effective Time by Carrier
Employees and Otis Employees, respectively.  For these purposes, a claim shall
be deemed to be incurred on the date of the death of the insured person.
 
Section 8.07.       Retiree Medical.  UTC shall, or shall cause a member of the
UTC Group to, assume and retain, and no member of the Carrier Group or Otis
Group shall assume or retain any Liabilities with respect to (i) the UTC
subsidized retiree medical coverage with respect to each Employee and Former
Employee who qualifies for coverage as of December 31, 2019, and (ii) access
only retiree medical coverage with respect to Former Group Employees.
 
Section 8.08.      Severance, Retention and Unemployment Compensation.  From and
following the Effective Time, (a) the Carrier Group shall assume and retain any
and all Liabilities to, or relating to, Carrier Group Employees and Former
Carrier Group Employees in respect of severance, retention and unemployment
compensation, regardless of whether the event giving rise to the Liability
occurred before, at or after the Effective Time, (b) the Otis Group shall assume
and retain any and all Liabilities to, or relating to, Otis Group Employees and
Former Otis Group Employees in respect of severance, retention and unemployment
compensation, regardless of whether the event giving rise to the Liability
occurred before, at or after the Effective Time, and (c) the UTC Group shall
assume and retain any and all Liabilities to, or relating to, UTC Group
Employees and Former UTC Group Employees in respect of severance, retention and
unemployment compensation, regardless of whether the event giving rise to the
Liability occurred before, at or after the Effective Time.
 
-40-

--------------------------------------------------------------------------------

Section 8.09.       Workers’ Compensation.  The treatment of workers’
compensation claims shall be governed by Section 5.1 of the Separation
Agreement.
 
Section 8.10.      Insurance Contracts.  To the extent that any Welfare Plan is
funded through the purchase of an insurance contract or is subject to any stop
loss contract, the Parties shall cooperate and use their commercially reasonable
efforts to replicate such insurance contracts for Carrier or Otis, as applicable
(except to the extent that changes are required under applicable Law or filings
by the respective insurers), and to maintain any pricing discounts or other
preferential terms for both Carrier or Otis for a reasonable term.  None of the
Parties shall be liable for failure to obtain such insurance contracts, pricing
discounts, or other preferential terms for any other Party.  Each Party shall be
responsible for any additional premiums, charges or administrative fees that
such Party may incur pursuant to this Section 8.10.
 
Section 8.11.       Third-Party Vendors.  Except as provided below, to the
extent that any Welfare Plan is administered by a third-party vendor, the
Parties shall cooperate and use their commercially reasonable efforts to
replicate any contract with such third-party vendor for UTC, Carrier or Otis, as
applicable, and to maintain any pricing discounts or other preferential terms
for UTC, Carrier and Otis, collectively, for a reasonable term.  None of the
Parties shall be liable for failure to obtain such pricing discounts or other
preferential terms for any other Party.  Each Party shall be responsible for any
additional premiums, charges or administrative fees that such Party may incur
pursuant to this Section 8.11.
 
ARTICLE IX
MISCELLANEOUS
 
Section 9.01.        Information Sharing and Access.
 
(a)        Sharing of Information.  Subject to any limitations imposed by
applicable Law, each of UTC, Carrier and Otis (acting directly or through
members of the UTC Group, Carrier Group or the Otis Group, respectively) shall
provide to the other Party and its authorized agents and vendors all information
necessary (including information for purposes of determining benefit
eligibility, participation, vesting, calculation of benefits) on a timely basis
under the circumstances for the Party to perform its duties under this
Agreement.  Such information shall include information relating to equity awards
under stock plans.  To the extent that such information is maintained by a
third-party vendor, each Party shall use its commercially reasonable efforts to
require the third-party vendor to provide the necessary information and assist
in resolving discrepancies or obtaining missing data.
 
(b)         Transfer of Personnel Records and Authorization.  Subject to any
limitation imposed by applicable Law and to the extent that it has not done so
before the Effective Time, UTC shall transfer to Carrier and Otis any and all
employment records (including any Form I-9, Form W-2, Form W-4 or other IRS or
state forms) with respect to Carrier Group Employees, Former Carrier Group
Employees, Otis Group Employees and Former Otis Group Employees, as applicable,
and other records reasonably required by Carrier or Otis, as applicable, to
enable Carrier or Otis, as applicable, to properly to carry out its obligations
under this Agreement.  Such transfer of records generally shall occur as soon as
administratively practicable at or after the
 
-41-

--------------------------------------------------------------------------------

Effective Time.  Each Party shall permit the other Party reasonable access to
its Employee records, to the extent reasonably necessary for such accessing
Party to carry out its obligations hereunder.
 
(c)         Access to Records.  To the extent not inconsistent with this
Agreement, the Separation Agreement or any applicable privacy protection Laws or
regulations, reasonable access to Employee-related and benefit plan related
records after the Effective Time shall be provided to members of the UTC Group,
members of the Carrier Group and members of the Otis Group pursuant to the terms
and conditions of Article VI of the Separation Agreement.
 
(d)         Maintenance of Records.  With respect to retaining, destroying,
transferring, sharing, copying and permitting access to all Employee-related
information, UTC, Carrier and Otis shall comply with all applicable Laws,
regulations and internal policies, and shall indemnify and hold harmless each
other from and against any and all Liability, Actions, and damages that arise
from a failure (by the indemnifying Party or its Subsidiaries or their
respective agents) to so comply with all applicable Laws, regulations and
internal policies applicable to such information.
 
(e)          Cooperation.  Each Party shall use commercially reasonable efforts
to cooperate and work together to unify, consolidate and share (to the extent
permissible under applicable privacy/data protection Laws) all relevant
documents, resolutions, government filings, data, payroll, employment and
benefit plan information on regular timetables and cooperate as needed with
respect to (i) any claims under or audit of or litigation with respect to any
employee benefit plan, policy or arrangement contemplated by this Agreement,
(ii) efforts to seek a determination letter, private letter ruling or advisory
opinion from the IRS or U.S. Department of Labor on behalf of any employee
benefit plan, policy or arrangement contemplated by this Agreement, (iii) any
filings that are required to be made or supplemented to the IRS, U.S. Pension
Benefit Guaranty Corporation, U.S. Department of Labor or any other Governmental
Authority, and (iv) any audits by a Governmental Authority or corrective
actions, relating to any Benefit Plan, labor or payroll practices; provided,
however, that requests for cooperation must be reasonable and not interfere with
daily business operations.
 
(f)          Confidentiality.  Notwithstanding anything in this Agreement to the
contrary, all confidential records and data relating to Employees to be shared
or transferred pursuant to this Agreement shall be subject to Section 6.9 of the
Separation Agreement and the requirements of applicable Law.
 
Section 9.02.       Preservation of Rights to Amend.  Except as set forth in
this Agreement, the rights of each member of the UTC Group, each member of the
Carrier Group and each member of the Otis Group to amend, waive, or terminate
any plan, arrangement, agreement, program, or policy referred to herein shall
not be limited in any way by this Agreement.
 
Section 9.03.      Fiduciary Matters.  UTC, Carrier and Otis each acknowledge
that actions required to be taken pursuant to this Agreement may be subject to
fiduciary duties or standards of conduct under ERISA or other applicable Law,
and no Party shall be deemed to be in violation of this Agreement if it fails to
comply with any provisions hereof based upon its good-faith determination (as
supported by advice from counsel experienced in such matters) that to do so
would violate such a fiduciary duty or standard.  Each Party shall be
responsible for taking such
 
-42-

--------------------------------------------------------------------------------

actions as are deemed necessary and appropriate to comply with its own fiduciary
responsibilities and shall fully release and indemnify the other Party for any
Liabilities caused by the failure to satisfy any such responsibility.
 
Section 9.04.      Reimbursement of Costs and Expenses.  The Parties shall
promptly reimburse one another, upon reasonable request of the Party requesting
reimbursement (the “Requesting Party”) as soon as practicable, but in any event
within thirty (30) days of receipt of an invoice detailing all costs, expenses
and other Liabilities paid or incurred by the Requesting Party (or any of its
Affiliates), and any other substantiating documentation as the other Party shall
reasonably request, that are, or have been made pursuant to this Agreement, the
responsibility of the other Party (or any of its Affiliates) including those
Liabilities, if any, under Section 8.01(b).
 
Section 9.05.       Dispute Resolution.  The dispute resolution procedures set
forth in Article VII of the Separation Agreement shall apply to any dispute,
controversy or claim arising out of or relating to this Agreement.
 
Section 9.06.       No Third-Party Beneficiaries.  The provisions of this
Agreement are solely for the benefit of the Parties and are not intended to
confer upon any other Person except the Parties any rights or remedies
hereunder.  There are no third-party beneficiaries of this Agreement, and this
Agreement shall not provide any third person with any remedy, claim, Liability,
reimbursement, claim of action or other right in excess of those existing
without reference to this Agreement.  Nothing in this Agreement is intended to
amend any employee benefit plan or affect the applicable plan sponsor’s right to
amend or terminate any employee benefit plan pursuant to the terms of such
plan.  The provisions of this Agreement are solely for the benefit of the
Parties, and no current or former Employee, officer, director, or independent
contractor or any other individual associated therewith shall be regarded for
any purpose as a third-party beneficiary of this Agreement.
 
Section 9.07.    Incorporation of Separation Agreement Provisions.  Article X of
the Separation Agreement (other than Section 10.19 (Ancillary Agreements)) is
incorporated herein by reference and shall apply to this Agreement as if set
forth herein mutatis mutandis.
 
[Remainder of page intentionally left blank]

-43-

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the Parties have caused this Employee Matters Agreement to
be executed by their duly authorized representatives as of the date first
written above.
 

 
UNITED TECHNOLOGIES CORPORATION
     
By:
/s/ Michael R. Dumais
   
Name:
Michael R. Dumais
   
Title:
Executive Vice President,

Operations & Strategy
         
OTIS WORLDWIDE CORPORATION
     
By:
/s/ Michael P. Ryan
   
Name:
Michael P. Ryan
   
Title:
Vice President, Controller
         
CARRIER GLOBAL CORPORATION
     
By:
/s/ Kyle Crockett
   
Name:
Kyle Crockett
   
Title:
Vice President, Controller

 
[Signature Page to Employee Matters Agreement]
 

 -44-

--------------------------------------------------------------------------------