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Exhibit 10.2

EXECUTION VERSION

TAX MATTERS AGREEMENT
 
BY AND AMONG

UNITED TECHNOLOGIES CORPORATION,

CARRIER GLOBAL CORPORATION
 
AND

OTIS WORLDWIDE CORPORATION
 
DATED AS OF APRIL 2, 2020
 

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TABLE OF CONTENTS
 

   
Page
     
Section 1.
Definition of Terms
2
     
Section 2.
Allocation of Tax Liabilities
15
     
Section 2.01
General Rule.
15
 
     
Section 2.02
Allocation of United States Federal Income Tax and Federal Other Tax
16
 
     
Section 2.03
Allocation of State Income and State Other Taxes
17
       
Section 2.04
Allocation of Foreign Taxes
18
       
Section 2.05
Certain Transaction and Other Taxes
19
       
Section 3.
Proration of Taxes for Straddle Periods
20
     
Section 4.
Preparation and Filing of Tax Returns.
21
     
Section 4.01
General
21
       
Section 4.02
UTC’s Responsibility
21
       
Section 4.03
Carrier’s Responsibility
21
       
Section 4.04
Otis’s Responsibility
22
       
Section 4.05
Tax Accounting Practices
22
       
Section 4.06
Consolidated or Combined Tax Returns
23
       
Section 4.07
Right to Review Tax Returns
23
       
Section 4.08
SpinCo Carrybacks and Claims for Refund
24
       
Section 4.09
Apportionment of Earnings and Profits and Tax Attributes
25        
Section 4.10
Gain Recognition Agreements
25
       
Section 4.11
Transfer Pricing
25
       
Section 5.
Tax Payments
26
     
Section 5.01
Payment of Taxes with Respect Tax Returns
26
 
     
Section 5.02
Indemnification Payments
26

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Section 6.
Tax Benefits
27
     
Section 6.01
Tax Benefits
27
       
Section 6.02
UTC, Carrier, and Otis Income Tax Deductions in Respect of Certain Equity Awards
and Incentive Compensation
29
       
Section 7.
Tax-Free Status
29
     
Section 7.01
Representations
29
      
Section 7.02
Restrictions on Carrier and Otis
30
       
Section 7.03
Restrictions on UTC
36        
Section 7.04
Procedures Regarding Opinions and Rulings
36
       
Section 7.05
Liability for Tax-Related Losses and Specified Income Taxes
37
       
Section 7.06
Section 336(e) Election
42
       
Section 7.07
Certain Assumptions
43
       
Section 8.
Assistance and Cooperation
43
     
Section 8.01
Assistance and Cooperation
43
 
     
Section 8.02
Income Tax Return Information
44
 
     
Section 8.03
Reliance by UTC
44
 
     
Section 8.04
Reliance by Carrier
44
 
     
Section 8.05
Reliance by Otis
44
 
     
Section 9.
Tax Records
45
     
Section 9.01
Retention of Tax Records
45
 
     
Section 9.02
Access to Tax Records
45
       
Section 10.
Tax Contests
45
     
Section 10.01
Notice
45
 
     
Section 10.02
Control of Tax Contests
46

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Section 11.
Effective Date; Termination of Prior Intercompany Tax Allocation Agreements
48
     
Section 12.
Survival of Obligations
49
     
Section 13.
Treatment of Payments; Tax Gross Up
49
     
Section 13.01
Treatment of Tax Indemnity and Tax Benefit Payments
49
 
     
Section 13.02
Tax Gross Up
50
 
     
Section 13.03
Interest
50
       
Section 14.
Disagreements
50
     
Section 15.
Late Payments
51      
Section 16.
Expenses
51
     
Section 17.
General Provisions
51
     
Section 17.01
Addresses and Notices
51
 
     
Section 17.02
Binding Effect
52
 
     
Section 17.03
Waiver
52
 
     
Section 17.04
Severability
52
 
     
Section 17.05
Authority
52
 
     
Section 17.06
Further Action
52
 
     
Section 17.07
Integration
52
 
     
Section 17.08
Construction
53
 
     
Section 17.09
No Double Recovery
53
 
     
Section 17.10
Counterparts
53
 
     
Section 17.11
Governing Law
53
 
     
Section 17.13
Amendment
53
 
     
Section 17.14
SpinCo Subsidiaries
54
 
     
Section 17.15
Successors
54
 
     
Section 17.16
Injunctions
54

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TAX MATTERS AGREEMENT
 
This TAX 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 and a wholly owned subsidiary
of UTC (“Carrier”) and Otis Worldwide Corporation, a Delaware corporation and a
wholly owned subsidiary of UTC (“Otis” and, together with Carrier, the “SpinCos”
and each, a “SpinCo”) (collectively, the “Companies” and each a “Company”).
 
R E C I T A L S
 
WHEREAS, UTC, Carrier, and Otis have entered into a Separation and Distribution
Agreement, dated as of April 2, 2020 (the “Separation and Distribution
Agreement”), providing for the separation of the Carrier Group from the UTC
Group and the Otis Group and the separation of the Otis Group from the UTC Group
and the Carrier Group;
 
WHEREAS, pursuant to the terms of the Separation and Distribution Agreement,
among other things, UTC has taken or will take the following actions:  (a) (i)
contribute the Carrier Assets to Carrier and cause Carrier to assume the Carrier
Liabilities, in actual or constructive exchange for (A) the issuance by Carrier
to UTC of Carrier Shares and (B) the transfer by Carrier to UTC of some or all
of the proceeds of the Carrier Financing Arrangements, in an amount
approximately equal to $11,000,000,000 (the “Carrier Debt Proceeds” and such
contribution, the “Carrier Contribution”) and (ii) transfer the Carrier Debt
Proceeds to one or more third-party creditors of UTC (the “Carrier Debt
Repayment”) in connection with the Plan of Reorganization; (b) effect the
Carrier Distribution; (c) (i) contribute the Otis Assets to Otis and cause Otis
to assume the Otis Liabilities, in actual or constructive exchange for (A) the
issuance by Otis to UTC of Otis Shares and (B) the transfer by Otis to UTC of
some or all of the proceeds of the Otis Financing Arrangements, in an amount
approximately equal to $6,300,000,000 (the “Otis Debt Proceeds” and such
contribution, the “Otis Contribution”) and (ii) transfer the Otis Debt Proceeds
to one or more third-party creditors of UTC (the “Otis Debt Repayment”) in
connection with the Plan of Reorganization; and (d) effect the Otis
Distribution;
 
WHEREAS, for Federal Income Tax purposes, it is intended that each of the
Internal Distributions, the Carrier Distribution (together with the Carrier
Contribution), and the Otis Distribution (together with the Otis Contribution)
shall qualify as a transaction that is generally tax-free pursuant to Section
355(a) (or Sections 355(a) and 368(a)(1)(D)) of the Code;
 
WHEREAS, as of the date hereof, UTC is the common parent of an affiliated group
(as defined in Section 1504 of the Code) of corporations, including Otis and
Carrier, which has elected to file consolidated Federal Income Tax Returns;
 
WHEREAS, as a result of the Carrier Distribution, Carrier and its subsidiaries
will cease to be members of the affiliated group of which UTC is the common
parent (the “Carrier Deconsolidation”);
 
WHEREAS, as a result of the Otis Distribution, Otis and its subsidiaries will
cease to be members of the affiliated group of which UTC is the common parent
(the “Otis Deconsolidation”);

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WHEREAS, the Parties desire to provide for and agree upon the allocation between
the Parties of liabilities for Taxes arising prior to, as a result of, and
subsequent to the Distributions, and to provide for and agree upon other matters
relating to Taxes;
 
NOW THEREFORE, in consideration of the mutual agreements contained herein, the
Parties hereby agree as follows:
 
Section 1.          Definition of Terms.  For purposes of this Agreement
(including the recitals hereof), the following terms have the following
meanings, and capitalized terms used but not otherwise defined herein shall have
the meaning ascribed to them in the Separation and Distribution Agreement:
 
“Action” shall have the meaning set forth in the Separation and Distribution
Agreement.
 
“Adjustment Request” shall mean any formal or informal claim or request filed
with any Tax Authority, or with any administrative agency or court, for the
adjustment, refund, or credit of Taxes, including (a) any amended Tax Return
claiming adjustment to the Taxes as reported on the Tax Return or, if
applicable, as previously adjusted, (b) any claim for equitable recoupment or
other offset, and (c) any claim for refund or credit of Taxes previously paid.
 
“Affiliate” shall mean any entity that is directly or indirectly “controlled” by
either the Person in question or an Affiliate of such Person.  “Control” shall
mean the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through ownership
of voting securities, by contract or otherwise.  The term Affiliate shall refer
to Affiliates of a Person as determined immediately after the relevant
Distribution.
 
“Agreement” shall mean this Tax Matters Agreement.
 
“business day” shall have the meaning set forth in the Separation and
Distribution Agreement.
 
“Capital Stock” shall mean all classes or series of capital stock, including (a)
common stock, (b) all options, warrants and other rights to acquire such capital
stock and (c) all instruments properly treated as stock for U.S. Federal Income
Tax purposes.
 
“Carrier” shall have the meaning provided in the first sentence of this
Agreement, and references herein to Carrier shall include any entity treated as
a successor to Carrier.
 
“Carrier Active Trade or Business” shall mean the active conduct (as defined in
Section 355(b)(2) of the Code and the Treasury Regulations thereunder) by
Carrier and its “separate affiliated group” (as defined in Section 355(b)(3)(B)
of the Code) of the trade or business(es) relied upon to satisfy Section 355(b)
of the Code with respect to the Carrier Distribution (as described in the IRS
Ruling Request and the Representation Letters), as conducted immediately prior
to the Carrier Distribution.
 
“Carrier Adjustment” shall mean any proposed adjustment by a Tax Authority or
claim for refund asserted in a Tax Contest to the extent Carrier would be
exclusively liable for any
 
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resulting Tax under this Agreement or exclusively entitled to receive any
resulting Tax Benefit under this Agreement.

“Carrier Affiliated Group” shall mean the affiliated group (as defined in
Section 1504 of the Code and the Treasury Regulations thereunder) of which
Carrier is the common parent.
 
“Carrier Business” shall have the meaning set forth in the Separation and
Distribution Agreement.
 
“Carrier Carryback” shall mean any net operating loss, net capital loss, excess
tax credit, or other similar Tax item of any member of the Carrier Group that
may or must be carried from one Tax Period to another prior Tax Period under the
Code or other applicable Tax Law.
 
“Carrier CFO Certificate” shall have the meaning set forth in Section
7.02(e)(i).
 
“Carrier Contribution” shall have the meaning provided in the Recitals.
 
“Carrier Debt Proceeds” shall have the meaning provided in the Recitals.
 
“Carrier Debt Repayment” shall have the meaning provided in the Recitals.
 
“Carrier Deconsolidation” shall have the meaning provided in the Recitals.
 
“Carrier Deconsolidation Date” shall mean the last date on which Carrier
qualifies as a member of the affiliated group (as defined in Section 1504 of the
Code) of which UTC is the common parent.
 
“Carrier Distribution” shall mean the distribution by UTC of all the Carrier
Shares pro rata to holders of UTC Shares.
 
“Carrier Distribution Date” shall have the meaning set forth in the Separation
and Distribution Agreement.
 
“Carrier Federal Consolidated Income Tax Return” shall mean any United States
Federal Income Tax Return for the affiliated group (as defined in Section 1504
of the Code) of which Carrier is the common parent.
 
“Carrier Foreign Distribution” shall have the meaning set forth on Schedule
7.02(d)(iii).
 
“Carrier Foreign SpinCo” shall have the meaning set forth on Schedule
7.02(d)(iii).
 
“Carrier Foreign SpinCo Holdings” shall have the meaning set forth on Schedule
7.02(d)(iii).
 
“Carrier Group” shall mean Carrier and its Affiliates, as determined immediately
after the Carrier Distribution.
 
“Carrier Group Employee” shall have the meaning set forth in the Employee
Matters Agreement.
 
“Carrier/Otis Filing Date” shall have the meaning set forth in Section
7.05(e)(iii)(A).
 
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“Carrier Post-Deconsolidation Period” shall mean any Post-Deconsolidation Period
determined by reference to the Carrier Deconsolidation Date.
 
“Carrier Pre-Deconsolidation Period” shall mean any Pre-Deconsolidation Period
determined by reference to the Carrier Deconsolidation Date.
 
“Carrier Proposed Acquisition Transaction” shall mean a Proposed Acquisition
Transaction with respect to Carrier.
 
“Carrier Separate Return” shall mean any Separate Return of Carrier or any
member of the Carrier Group.
 
“Carrier Shares” shall have the meaning set forth in the Separation and
Distribution Agreement.
 
“Code” shall mean the Internal Revenue Code of 1986, as amended.
 
“Companies” and “Company” shall have the meaning provided in the first sentence
of this Agreement.
 
“Compensatory Equity Interests” shall have the meaning set forth in Section
6.02(a).
 
“Contributions” shall mean the Carrier Contribution and the Otis Contribution,
taken together.
 
“Debt Reallocation” shall mean (a) (i) any actual or deemed assumption of UTC
debt by Carrier in connection with the Carrier Contribution, (ii) the receipt by
UTC of the Carrier Debt Proceeds, and (iii) the Carrier Debt Repayment, and (b)
(i) any actual or deemed assumption of UTC debt by Otis in connection with the
Otis Contribution, (ii) the receipt by UTC of the Otis Debt Proceeds, and (iii)
the Otis Debt Repayment.
 
“Deconsolidation Date” shall mean the Carrier Deconsolidation Date or the Otis
Deconsolidation Date, as the context requires.
 
“DGCL” shall mean the Delaware General Corporation Law.
 
“Distribution Date” shall have the meaning set forth in the Separation and
Distribution Agreement.
 
“Distributions” shall mean the Carrier Distribution and the Otis Distribution,
taken together.
 
“Effective Time” shall have the meaning set forth in the Separation and
Distribution Agreement.
 
“Employee Matters Agreement” shall have the meaning set forth in the Separation
and Distribution Agreement.
 
“External Separation Transaction” shall mean each of (a) the Carrier
Contribution and the Carrier Distribution, (b) the Otis Contribution and the
Otis Distribution, and (c) the Debt Reallocation.
 
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“Federal Income Tax” shall mean any Tax imposed by Subtitle A of the Code, and
any interest, penalties, additions to tax, or additional amounts in respect of
the foregoing.
 
“Federal Other Tax” shall mean any Tax imposed by the federal government of the
United States other than any Federal Income Taxes, and any interest, penalties,
additions to tax, or additional amounts in respect of the foregoing.
 
“Fifty-Percent or Greater Interest” shall have the meaning ascribed to such term
for purposes of Sections 355(d) and (e) of the Code.
 
“Final Determination” shall mean the final resolution of liability for any Tax,
which resolution may be for a specific issue or adjustment or for a Tax Period,
(a) by IRS Form 870 or 870-AD (or any successor forms thereto), on the date of
acceptance by or on behalf of the taxpayer, or by a comparable form under the
laws of a State, local, or foreign taxing jurisdiction, except that a Form 870
or 870-AD or comparable form shall not constitute a Final Determination to the
extent that it reserves (whether by its terms or by operation of law) the right
of the taxpayer to file a claim for refund or the right of the Tax Authority to
assert a further deficiency in respect of such issue or adjustment or for such
Tax Period (as the case may be); (b) by a decision, judgment, decree, or other
order by a court of competent jurisdiction, which has become final and
unappealable; (c) by a closing agreement or accepted offer in compromise under
Section 7121 or 7122 of the Code, or a comparable agreement under the laws of a
State, local, or foreign taxing jurisdiction; (d) by any allowance of a refund
or credit in respect of an overpayment of Income Tax or Other Tax, but only
after the expiration of all Tax Periods during which such refund may be
recovered (including by way of offset) by the jurisdiction imposing such Income
Tax or Other Tax; or (e) by any other final disposition, including by reason of
the expiration of the applicable statute of limitations or by mutual agreement
of the Parties.
 
“First Effective Time” shall have the meaning set forth in the Separation and
Distribution Agreement.
 
“Foreign Income Tax” shall mean any Tax imposed by any foreign country or any
possession of the United States, or by any political subdivision of any foreign
country or United States possession, which is an income tax as defined in
Treasury Regulations Section 1.901-2, and any interest, penalties, additions to
tax, or additional amounts in respect of the foregoing.
 
“Foreign Other Tax” shall mean any Tax imposed by any foreign country or any
possession of the United States, or by any political subdivision of any foreign
country or United States possession, other than any Foreign Income Taxes, and
any interest, penalties, additions to tax, or additional amounts in respect of
the foregoing.
 
“Foreign Separations” shall mean the internal restructuring transactions
intended to effect the separation of (a) the UTC Assets and UTC Liabilities from
the Carrier Assets and Carrier Liabilities and/or the Otis Assets and Otis
Liabilities, (b) the Carrier Assets and Carrier Liabilities from the UTC Assets
and UTC Liabilities and/or the Otis Assets and Otis Liabilities, and/or (c) the
Otis Assets and Otis Liabilities from the UTC Assets and UTC Liabilities and/or
the Carrier Assets and Carrier Liabilities, in each case, held by certain
subsidiaries of UTC
 
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organized in jurisdictions outside of the United States (including through the
transfer of equity interests in any such subsidiary).

“Foreign Tax” shall mean any Foreign Income Taxes or Foreign Other Taxes.
 
“Foreign Tax-Free Status” shall mean, with respect to (a) each of the Foreign
Separations, the qualification thereof for non-recognition of income or gain (or
similar treatment) for Foreign Income Tax purposes under the laws of the
relevant foreign jurisdiction and (b) any Foreign Separation that is covered by
a Tax Opinion/Ruling or other written guidance addressing the Foreign Tax
treatment thereof, the qualification of such transaction for the Foreign Tax
treatment set forth in such Tax Opinion/Ruling or other written guidance.
 
“Former Carrier Group Employee” shall have the meaning set forth in the Employee
Matters Agreement.
 
“Former Otis Group Employee” shall have the meaning set forth in the Employee
Matters Agreement.
 
“Former UTC Group Employee” shall have the meaning set forth in the Employee
Matters Agreement.
 
“Governmental Authority” shall have the meaning set forth in the Separation and
Distribution Agreement.
 
“Group” shall mean the UTC Group, the Carrier Group, the Otis Group, or any
combination thereof, as the context requires.
 
“Income Tax” shall mean any Federal Income Tax, State Income Tax or Foreign
Income Tax.
 
“Internal Distributions” shall mean the separation of (a) the UTC Assets and UTC
Liabilities from the Carrier Assets and Carrier Liabilities and/or the Otis
Assets and Otis Liabilities, (b) the Carrier Assets and Carrier Liabilities from
the UTC Assets and UTC Liabilities and/or the Otis Assets and Otis Liabilities,
and/or (c) the Otis Assets and Otis Liabilities from the UTC Assets and UTC
Liabilities and/or the Carrier Assets and Carrier Liabilities, in each case, (i)
held by certain subsidiaries of UTC and (ii) in a transaction intended to
qualify, for Federal Income Tax purposes, as a distribution that is generally
tax-free pursuant to Section 355(a) (or Sections 355(a) and 368(a)(1)(D)) of the
Code.
 
“Internal Separation Transaction” shall mean any internal restructuring
transaction, other than the Internal Distributions, that is (a) undertaken
pursuant to the Plan of Reorganization and (b) covered by a Tax Opinion/Ruling
addressing the Federal Income Tax treatment thereof.
 
“IRS” shall mean the U.S. Internal Revenue Service.
 
“IRS Ruling Request” shall mean the request for private letter rulings filed by
UTC on July 31, 2019 with the IRS (including all attachments, exhibits, and
other materials submitted with such ruling request letter) and any amendments or
supplements to such request.
 
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“Joint Adjustment” shall mean any proposed adjustment by a Tax Authority or
claim for refund asserted in a Tax Contest that is not a Carrier Adjustment, an
Otis Adjustment, or a UTC Adjustment.
 
“Joint Return” shall mean any Return of a member of the UTC Group or a SpinCo
Group that is not a Separate Return.
 
“Notified Action” shall have the meaning set forth in Section 7.04(a).
 
“Other Tax” shall mean any Federal Other Tax, State Other Tax, or Foreign Other
Tax.
 
“Otis” shall have the meaning provided in the first sentence of this Agreement,
and references herein to Otis shall include any entity treated as a successor to
Otis.
 
“Otis Active Trade or Business” shall mean the active conduct (as defined in
Section 355(b)(2) of the Code and the Treasury Regulations thereunder) by Otis
and its “separate affiliated group” (as defined in Section 355(b)(3)(B) of the
Code) of the trade or business(es) relied upon to satisfy Section 355(b) of the
Code with respect to the Otis Distribution (as described in the IRS Ruling
Request and the Representation Letters), as conducted immediately prior to the
Otis Distribution.
 
“Otis Affiliated Group” shall mean the affiliated group (as defined in Section
1504 of the Code and the Treasury Regulations thereunder) of which Otis is the
common parent.
 
“Otis Adjustment” shall mean any proposed adjustment by a Tax Authority or claim
for refund asserted in a Tax Contest to the extent Otis would be exclusively
liable for any resulting Tax under this Agreement or exclusively entitled to
receive any resulting Tax Benefit under this Agreement.
 
“Otis Business” shall have the meaning set forth in the Separation and
Distribution Agreement.
 
“Otis Carryback” shall mean any net operating loss, net capital loss, excess tax
credit, or other similar Tax item of any member of the Otis Group that may or
must be carried from one Tax Period to another prior Tax Period under the Code
or other applicable Tax Law.
 
“Otis CFO Certificate” shall have the meaning set forth in Section 7.02(e)(ii).
 
“Otis Contribution” shall have the meaning provided in the Recitals.
 
“Otis Debt Proceeds” shall have the meaning provided in the Recitals.
 
“Otis Debt Repayment” shall have the meaning provided in the Recitals.
 
“Otis Deconsolidation” shall have the meaning provided in the Recitals.
 
“Otis Deconsolidation Date” shall mean the last date on which Otis qualifies as
a member of the affiliated group (as defined in Section 1504 of the Code) of
which UTC is the common parent.
 
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“Otis Distribution” shall mean the distribution by UTC of all the Otis Shares
pro rata to holders of UTC Shares.
 
“Otis Distribution Date” shall have the meaning set forth in the Separation and
Distribution Agreement.
 
“Otis Federal Consolidated Income Tax Return” shall mean any United States
Federal Income Tax Return for the affiliated group (as defined in Section 1504
of the Code) of which Otis is the common parent.
 
“Otis Foreign Distribution” shall have the meaning set forth on Schedule
7.02(d)(iv).
 
“Otis Foreign SpinCo” shall have the meaning set forth on Schedule 7.02(d)(iv).
 
“Otis Foreign SpinCo Holdings” shall have the meaning set forth on Schedule
7.02(d)(iv).
 
“Otis Group” shall mean Otis and its Affiliates, as determined immediately after
the Otis Distribution.
 
“Otis Group Employee” shall have the meaning set forth in the Employee Matters
Agreement.
 
“Otis Post-Deconsolidation Period” shall mean any Post-Deconsolidation Period
determined by reference to the Otis Deconsolidation Date.
 
“Otis Pre-Deconsolidation Period” shall mean any Pre-Deconsolidation Period
determined by reference to the Otis Deconsolidation Date.
 
“Otis Proposed Acquisition Transaction” shall mean a Proposed Acquisition
Transaction with respect to Otis.
 
“Otis Separate Return” shall mean any Separate Return of Otis or any member of
the Otis Group.
 
“Otis Shares” shall heave the meaning set forth in the Separation and
Distribution Agreement.
 
“Parties” shall mean the parties to this Agreement.
 
“Past Practices” shall have the meaning set forth in Section 4.05(a).
 
“Payment Date” shall mean (a) with respect to any UTC Federal Consolidated
Income Tax Return, the due date for any required installment of estimated Taxes
determined under Section 6655 of the Code, the due date (determined without
regard to extensions) for filing the Tax Return determined under Section 6072 of
the Code, and the date the Tax Return is filed, and (b) with respect to any
other Tax Return, the corresponding dates determined under applicable Tax Law;
in each case, taking into account any automatic or validly elected extensions,
deferrals or postponements of the due date for payment of any such estimated
Taxes or any Tax shown on such Tax Return, as applicable.
 
“Payor” shall have the meaning set forth in Section 5.02(a).
 
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“Person” shall mean any individual, partnership, corporation, limited liability
company, association, joint stock company, trust, joint venture, unincorporated
organization or a Governmental Authority or any department, agency or political
subdivision thereof, without regard to whether any entity is treated as
disregarded for Federal Income Tax purposes.
 
“Plan of Reorganization” shall have the meaning set forth in the Separation and
Distribution Agreement.
 
“Post-Deconsolidation Period” shall mean any Tax Period beginning after the
relevant Deconsolidation Date, and, in the case of any Straddle Period, the
portion of such Straddle Period beginning the day after the relevant
Deconsolidation Date.
 
“Pre-Deconsolidation Period” shall mean any Tax Period ending on or prior to the
relevant Deconsolidation Date, and, in the case of any Straddle Period, the
portion of such Straddle Period ending on the relevant Deconsolidation Date.
 
“Prime Rate” shall have the meaning set forth in the Separation and Distribution
Agreement.
 
“Private Letter Ruling” shall mean the private letter ruling issued to UTC on
December 13, 2019 in response to the IRS Ruling Request.
 
“Privilege” shall mean any privilege that may be asserted under applicable law,
including, any privilege arising under or relating to the attorney-client
relationship (including the attorney-client and work product privileges), the
accountant-client privilege and any privilege relating to internal evaluation
processes.
 
“Proposed Acquisition Transaction” shall mean, with respect to a SpinCo, a
transaction or series of transactions (or any agreement, understanding or
arrangement, within the meaning of Section 355(e) of the Code and Treasury
Regulations Section 1.355-7, or any other Treasury Regulations promulgated
thereunder, to enter into a transaction or series of transactions), whether such
transaction is supported by the management or shareholders of such SpinCo, is a
hostile acquisition, or otherwise, as a result of which such SpinCo would merge
or consolidate with any other Person or as a result of which any Person or
Persons would (directly or indirectly) acquire, or have the right to acquire,
from such SpinCo and/or one or more holders of outstanding shares of Capital
Stock of such SpinCo, a number of shares of Capital Stock of such SpinCo that
would, when combined with any other changes in ownership of Capital Stock of
such SpinCo pertinent for purposes of Section 355(e) of the Code, comprise 45%
or more of (a) the value of all outstanding shares of stock of such SpinCo as of
the date of such transaction, or in the case of a series of transactions, the
date of the last transaction of such series, or (b) the total combined voting
power of all outstanding shares of voting stock of such SpinCo as of the date of
such transaction, or in the case of a series of transactions, the date of the
last transaction of such series.  Notwithstanding the foregoing, a Proposed
Acquisition Transaction shall not include (i) the adoption by such SpinCo of a
shareholder rights plan or (ii) issuances by such SpinCo that satisfy Safe
Harbor VIII (relating to acquisitions in connection with a person’s performance
of services) or Safe Harbor IX (relating to acquisitions by a retirement plan of
an employer) of Treasury Regulations Section 1.355-7(d).  For purposes of
determining whether a transaction constitutes an indirect acquisition, any
recapitalization resulting in a shift of voting
 
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power or any redemption of shares of stock shall be treated as an indirect
acquisition of shares of stock by the non-exchanging shareholders.  This
definition and the application thereof is intended to monitor compliance with
Section 355(e) of the Code and shall be interpreted accordingly.  Any
clarification of, or change in, the statute or Treasury Regulations promulgated
under Section 355(e) of the Code shall be incorporated into this definition and
its interpretation.
“PTEP” shall mean any earnings and profits of a foreign corporation that would
be excluded from gross income pursuant to Section 959 of the Code.
 
“Representation Letters” shall mean the representation letters and any other
materials (including, without limitation, a Ruling Request and any related
supplemental submissions to the IRS or other Tax Authority) delivered by, or on
behalf of, UTC, Carrier, Otis or others to a Tax Advisor (or a Tax Authority) in
connection with the issuance by such Tax Advisor (or Tax Authority) of a Tax
Opinion/Ruling.
 
“Required Party” shall have the meaning set forth in Section 5.02(a).
 
“Reserve” shall mean a financial statement reserve, in accordance with generally
accepted accounting principles, pursuant to ASC Topic 740, excluding, for the
avoidance of doubt, any reserve related to Taxes imposed with respect to the
Transactions.
 
“Responsible Company” shall mean, with respect to any Tax Return, the Company
having responsibility for filing such Tax Return.
 
“Responsible SpinCo(s)” shall have the meaning set forth in Section 10.02(e)(i).
 
“Restriction Period” shall mean the period beginning on the date hereof and
ending on the two-year anniversary of the Second Distribution.
 
“Retention Date” shall have the meaning set forth in Section 9.01.
 
“Ruling Request” shall mean the IRS Ruling Request and/or any other request
filed with the IRS or any other Tax Authority requesting rulings regarding the
Tax consequences of any transactions contemplated by the Plan of Reorganization
(including all attachments, exhibits, and other materials submitted with such
ruling request letter) and any amendments or supplements to such request.
 
“Second Distribution” shall have the meaning set forth in the Separation and
Distribution Agreement.
 
“Section 7.02(e) Acquisition Transaction” shall mean any transaction or series
of transactions that is not a Proposed Acquisition Transaction but would be a
Proposed Acquisition Transaction if the percentage reflected in the definition
of Proposed Acquisition Transaction were 30% instead of 45%.
 
“Section 336(e) Election” shall have the meaning set forth in Section 7.06.
 
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“Separate Return” shall mean (a) in the case of any Tax Return of any member of
a SpinCo Group (including any consolidated, combined or unitary return), any
such Tax Return that does not include any member of the UTC Group and (b) in the
case of any Tax Return of any member of the UTC Group (including any
consolidated, combined or unitary return), any such Tax Return that does not
include any member of a SpinCo Group.
 
“Separation and Distribution Agreement” shall have the meaning set forth in the
Recitals.
 
“Separation-Related Tax Contest” shall mean any Tax Contest in which the IRS,
another Tax Authority or any other Person asserts a position that could
reasonably be expected to adversely affect the (a) U.S. Tax-Free Status of any
Internal Distribution or Internal Separation Transaction or any External
Separation Transaction or (b) Foreign Tax-Free Status of any Foreign Separation.
 
“Shared Taxes” shall have the meaning set forth in Section 7.05(d).
 
“Specified Acquisition” shall have the meaning set forth on Schedule 7.07.
 
“Specified Income Taxes” shall mean (a) all Income Taxes imposed pursuant to any
settlement, Final Determination, judgment or otherwise and (b) all accounting,
legal and other professional fees, and court costs incurred in connection with
such Income Taxes, in each case, resulting from an adjustment, pursuant to a
Final Determination, with respect to any Transaction not intended to qualify for
non-recognition of income or gain (or similar treatment) for Income Tax
purposes.
 
“Specified Matter” shall have the meaning set forth on Schedule 10.02(e).
 
“Specified Percentage Interest” shall have the meaning set forth on Schedule
7.07.
 
“Specified Tax Contest” shall mean any Tax Contest in which the IRS, another Tax
Authority or any other Person asserts a position that could reasonably be
expected to increase the Specified Income Taxes imposed on any member of the UTC
Group or any member of a SpinCo Group.
 
“SpinCo” and “SpinCos” shall have the meaning provided in the first sentence of
this Agreement, and references herein to any SpinCo shall include any entity
treated as a successor to such SpinCo.
 
“SpinCo Adjustment” shall mean a Carrier Adjustment and/or an Otis Adjustment,
as the context requires.
 
“SpinCo Group” shall mean the Carrier Group and/or the Otis Group, as the
context requires.
 
“SpinCo Reserved Income Taxes” shall mean, in the case of Carrier, Income Taxes
for which Carrier is responsible pursuant to Section 2.02(a)(i), 2.03(a)(i), or
2.04(a)(i) and, in the case of Otis, Income Taxes for which Otis is responsible
pursuant to Section 2.02(a)(ii), 2.03(a)(ii), or 2.04(a)(ii).
 
“SpinCo Separate Return” shall mean a Carrier Separate Return and/or an Otis
Separate Return, as the context requires.
 
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“State Income Tax” shall mean any Tax imposed by any State of the United States
(or by any political subdivision of any such State) or the District of Columbia,
or any city or municipality located therein, which is imposed on or measured by
net income, including state and local franchise or similar Taxes measured by net
income, and any interest, penalties, additions to tax, or additional amounts in
respect of the foregoing.
 
“State Other Tax” shall mean any Tax imposed by any State of the United States
(or by any political subdivision of any such State) or the District of Columbia,
or any city or municipality located therein, other than any State Income Taxes,
and any interest, penalties, additions to tax, or additional amounts in respect
of the foregoing.
 
“Straddle Period” shall mean any Tax Period that (a) with respect to Carrier,
begins on or before and ends after the Carrier Deconsolidation Date or (b) with
respect to Otis, begins on or before and ends after the Otis Deconsolidation
Date.
 
“Tax” or “Taxes” shall mean any income, gross income, gross receipts, profits,
capital stock, franchise, withholding, payroll, social security, workers
compensation, unemployment, disability, property, ad valorem, stamp, excise,
severance, occupation, service, sales, use, license, lease, transfer, import,
export, value added, alternative minimum, estimated or other tax (including any
fee, assessment, or other charge in the nature of or in lieu of any tax) imposed
by any Governmental Authority or political subdivision thereof, and any
interest, penalties, additions to tax, or additional amounts in respect of the
foregoing.
 
“Tax Advisor” shall mean any Tax counsel or accountant of recognized national
standing in the United States (or, in the case of any Tax Opinion/Ruling that is
an opinion regarding the Foreign Tax treatment of any Foreign Separation, in the
relevant foreign jurisdiction(s)).
 
“Tax Advisor Dispute” shall have the meaning set forth in Section 14.
 
“Tax Attribute” shall mean a net operating loss, net capital loss, unused
investment credit, unused foreign tax credit, excess charitable contribution,
general business credit or any other Tax Item that could reduce a Tax.
 
“Tax Authority” shall mean, with respect to any Tax, the Governmental Authority
or political subdivision thereof that imposes such Tax, and the agency (if any)
charged with the collection of such Tax for such entity or subdivision.
 
“Tax Benefit” shall mean any reduction in liability for Tax as a result of any
loss, deduction, refund, credit, or other item reducing Taxes otherwise payable.
 
“Tax Contest” shall mean an audit, review, examination, assessment or any other
administrative or judicial proceeding with the purpose or effect of
redetermining Taxes (including any administrative or judicial review of any
claim for refund).
 
“Tax Item” shall mean, with respect to any Income Tax, any item of income, gain,
loss, deduction, or credit.
 
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“Tax Law” shall mean the law of any Governmental Authority or political
subdivision thereof relating to any Tax.
 
“Tax Opinion/Ruling” shall mean (a) each opinion of a Tax Advisor or ruling by
the IRS or another Tax Authority delivered or issued to UTC or any of its
subsidiaries in connection with, and regarding the Federal Income Tax treatment
of, (i) any External Separation Transaction, (ii) any Internal Distribution, or
(iii) any other internal restructuring transaction undertaken pursuant to the
Plan of Reorganization that is intended to qualify for non-recognition treatment
for Federal Income Tax purposes and (b) each opinion of a Tax Advisor or ruling
by a Tax Authority delivered or issued to UTC or any of its subsidiaries in
connection with, and regarding the Foreign Tax treatment of, any Foreign
Separation.
 
“Tax Period” shall mean, with respect to any Tax, the period for which the Tax
is reported as provided under the Code or other applicable Tax Law.
 
“Tax Records” shall mean any Tax Returns, Tax Return workpapers, documentation
relating to any Tax Contests, and any other books of account or records (whether
or not in written, electronic or other tangible or intangible forms and whether
or not stored on electronic or any other medium) required to be maintained under
the Code or other applicable Tax Laws or under any record retention agreement
with any Tax Authority.
 
“Tax-Related Losses” shall mean (a) all federal, state, local and foreign Taxes
imposed pursuant to any settlement, Final Determination, judgment or otherwise
(including Taxes required to be reflected on any Tax Return prepared in
accordance with Section 4.05(b)); (b) all accounting, legal and other
professional fees, and court costs incurred in connection with such Taxes; and
(c) all costs, expenses and damages associated with stockholder litigation or
controversies and any amount paid by UTC (or any UTC Affiliate) or any SpinCo
(or any SpinCo Affiliate) in respect of the liability of shareholders, whether
paid to shareholders or to the IRS or any other Tax Authority; in each case,
resulting from the failure of, (i) any External Separation Transaction, any
Internal Distribution, or any Internal Separation Transaction to have U.S.
Tax-Free Status, or (ii) any Foreign Separation to have Foreign Tax-Free Status.
 
“Tax Return” or “Return” shall mean any report of Taxes due, any claim for
refund of Taxes paid, any information return with respect to Taxes, or any other
similar report, statement, declaration, or document filed or required to be
filed under the Code or other Tax Law, including any attachments, exhibits, or
other materials submitted with any of the foregoing, and including any
amendments or supplements to any of the foregoing.
 
“Transactions” shall mean the External Separation Transactions and the other
transactions contemplated by the Separation and Distribution Agreement
(including the Internal Distributions, the Internal Separation Transactions, the
Foreign Separations, and the other transactions contemplated by the Plan of
Reorganization).
 
“Transition Services Agreement” shall have the meaning set forth in the
Separation and Distribution Agreement.
 
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“Treasury Regulations” shall mean the regulations promulgated from time to time
under the Code as in effect for the relevant Tax Period.
 
“Unqualified Tax Opinion” shall mean an unqualified opinion of a Tax Advisor on
which UTC may rely to the effect that a transaction will not (a) affect the U.S.
Tax‑Free Status of any External Separation Transaction or any Internal
Distribution or (b) adversely affect any of the conclusions set forth in any Tax
Opinion/Ruling regarding the U.S. Tax-Free Status of any External Separation
Transaction or any Internal Distribution; provided, that any Tax opinion
obtained in connection with a proposed acquisition of Capital Stock of any
SpinCo or any entity that was a “distributing corporation” or “controlled
corporation” in any Internal Distribution entered into during the Restriction
Period shall not qualify as an Unqualified Tax Opinion unless such Tax opinion
concludes that such proposed acquisition will not be treated as “part of a plan
(or series of related transactions),” within the meaning of Section 355(e) of
the Code and the Treasury Regulations promulgated thereunder, that includes (x)
the Carrier Distribution, (y) the Otis Distribution, or (z) any Internal
Distribution.  Any such opinion must assume that (i) the External Separation
Transactions and/or the Internal Distributions, as relevant, would have
qualified for U.S. Tax-Free Status if the transaction in question did not occur
and (ii) except to the extent expressly ruled otherwise by the IRS in the
Private Letter Ruling, (A) the Specified Acquisition is “part of a plan (or
series of related transactions)” with each of the Distributions for purposes of
Section 355(e) of the Code and (B) the Specified Acquisition resulted in one or
more persons acquiring directly or indirectly common stock representing no less
than the Specified Percentage Interest in each of the SpinCos and their
respective Subsidiaries for purposes of Section 355(e) of the Code.
 
“U.S. Tax-Free Status” shall mean, with respect to (a) each External Separation
Transaction and each Internal Distribution, the qualification thereof (i) as a
transaction described in Section 368(a)(1)(D) and/or Section 355(a) of the Code,
(ii) as a transaction in which the stock distributed thereby is “qualified
property” for purposes of Sections 355(c)(2) and 361(c)(2) of the Code and (iii)
as a transaction in which UTC, Carrier, Otis, and the members of their
respective Groups (as relevant) recognize no income or gain for Federal Income
Tax purposes pursuant to Sections 355, 361 and 1032 of the Code, other than (x)
income or gain recognized pursuant to Sections 367(a), 367(b) and/or 1248 of the
Code and the Treasury Regulations promulgated under such provisions (assuming,
for this purpose, that any available elections to avoid the recognition of
income or gain for Federal Income Tax purposes under such provisions have been
duly and timely made), or (y) intercompany items or excess loss accounts taken
into account pursuant to the Treasury Regulations promulgated pursuant to
Section 1502 of the Code; and (b) any Internal Separation Transaction, the
qualification of such transaction for the Federal Income Tax treatment set forth
in such Tax Opinion/Ruling.
 
“UTC” shall have the meaning provided in the first sentence of this Agreement,
and references herein to UTC shall include any entity treated as a successor to
UTC.
 
“UTC Adjustment” shall mean any proposed adjustment by a Tax Authority or claim
for refund asserted in a Tax Contest to the extent UTC would be exclusively
liable for any resulting Tax under this Agreement or exclusively entitled to
receive any resulting Tax Benefit under this Agreement.
 
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“UTC Affiliated Group” shall mean the affiliated group (as defined in Section
1504 of the Code and the Treasury Regulations thereunder) of which UTC is the
common parent.
 
“UTC/Carrier Filing Date” shall have the meaning set forth in Section
7.05(d)(ii).
 
“UTC Federal Consolidated Income Tax Return” shall mean any United States
Federal Income Tax Return for the UTC Affiliated Group.
 
“UTC Foreign Combined Income Tax Return” shall mean (a) a consolidated, combined
or unitary or other similar Foreign Income Tax Return or (b) any Foreign Income
Tax Return with respect to any profit and/or loss sharing group, group payment
or similar group or fiscal unity, in the case of each of clauses (a) and (b),
that actually includes, by election or otherwise, one or more members of the UTC
Group together with one or more members of a SpinCo Group; provided, that, for
the avoidance of doubt, in the case of a Foreign Income Tax Return of a member
of a SpinCo Group that (x) is required to be filed with respect to a Straddle
Period and (y) would otherwise (without regard to this proviso) be a UTC Foreign
Combined Income Tax Return, any portion of such Foreign Income Tax Return
reflecting Tax Items with respect to any Post-Deconsolidation Period (i) shall
in no event be a UTC Foreign Combined Income Tax Return and (ii) shall instead
be a Separate Return of such member of the relevant SpinCo Group.
 
“UTC Group” shall mean UTC and its Affiliates, excluding any entity that is a
member of a SpinCo Group.
 
“UTC Group Employee” shall have the meaning set forth in the Employee Matters
Agreement.
 
“UTC/Otis Filing Date” shall have the meaning set forth in Section 7.05(d)(i).
 
“UTC Separate Return” shall mean any Separate Return of UTC or any member of the
UTC Group.
 
“UTC Shares” shall have the meaning set forth in the Separation and Distribution
Agreement.
 
“UTC State Combined Income Tax Return” shall mean a consolidated, combined or
unitary Tax Return with respect to State Income Taxes that actually includes, by
election or otherwise, one or more members of the UTC Group and one or more
members of a SpinCo Group.
 
Section 2.           Allocation of Tax Liabilities.
 
Section 2.01          General Rule.
 
(a)    UTC Liability.  UTC shall be liable for, and shall indemnify and hold
harmless each SpinCo Group from and against any liability for, Taxes that are
allocated to UTC under this Section 2.
 
(b)    Carrier Liability.  Carrier shall be liable for, and shall indemnify and
hold harmless the UTC Group and the Otis Group from and against any liability
for, Taxes that are allocated to Carrier under this Section 2.
 
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(c)    Otis Liability.  Otis shall be liable for, and shall indemnify and hold
harmless the UTC Group and the Carrier Group from and against any liability for,
Taxes that are allocated to Otis under this Section 2.
 
Section 2.02           Allocation of United States Federal Income Tax and
Federal Other Tax.  Except as otherwise provided in Section 2.05, Federal Income
Tax and Federal Other Tax shall be allocated as follows:
 
(a)    Allocation of Tax Relating to UTC Federal Consolidated Income Tax
Returns.  With respect to any UTC Federal Consolidated Income Tax Return, UTC
shall be responsible for any and all Federal Income Taxes due or required to be
reported on any such Tax Return (including any increase in such Tax as a result
of a Final Determination); provided, that:
 
(i)            subject to Section 2.02(a)(iii), Carrier shall be responsible for
any such Federal Income Taxes with respect to any Tax Period (or portion
thereof) ending on or prior to the Carrier Distribution Date (including any
increase in such Tax as a result of a Final Determination) to the extent (x)
such Tax is imposed with respect to any matter for which UTC or any of its
Subsidiaries immediately prior to the Carrier Distribution Date (including, for
the avoidance of doubt, Carrier and its Subsidiaries) reflected a Reserve in its
financial statements immediately prior to the Carrier Distribution Date and (y)
such matter exclusively relates to the Carrier Business;
 
(ii)           subject to Section 2.02(a)(iii), Otis shall be responsible for
any such Federal Income Taxes with respect to any Tax Period (or portion
thereof) ending on or prior to the Otis Distribution Date (including any
increase in such Tax as a result of a Final Determination) to the extent (x)
such Tax is imposed with respect to any matter for which UTC or any of its
Subsidiaries immediately prior to the Otis Distribution Date (including, for the
avoidance of doubt, Otis and its Subsidiaries) reflected a Reserve in its
financial statements immediately prior to the Otis Distribution Date and (y)
such matter exclusively relates to the Otis Business; and
 
(iii)          irrespective of whether any amounts described in this clause
(iii) are attributable to any matter described in clause (i)(x) or (ii)(x) of
this Section 2.02(a), each of UTC, Carrier, and Otis shall be responsible for
any and all installment payments (and any adjustments to any prior installment
payments), in each case, that are required to be paid after the earlier to occur
of the Carrier Distribution Date or the Otis Distribution Date by UTC pursuant
to Section 965(h)(2) or (3) of the Code, in the proportions set forth on
Schedule 2.02(a)(iii)  (it being understood that (x) to the extent any such
installment payment or adjustment is required to be paid after the Carrier
Distribution Date and prior to the Otis Distribution Date, UTC shall be
responsible for the amount for which Otis would otherwise be responsible
pursuant to this Section 2.02(a)(iii) and (y) to the extent any such installment
payment or adjustment is required to be paid after the Otis Distribution Date
and prior to the Carrier Distribution Date, UTC shall be responsible for the
amount for which Carrier would otherwise be responsible pursuant to this Section
2.02(a)(iii)).
 
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(b)    Allocation of Tax Relating to Federal Separate Income Tax Returns.  (i)
UTC shall be responsible for any and all Federal Income Taxes due with respect
to or required to be reported on any UTC Separate Return; (ii) Carrier shall be
responsible for any and all Federal Income Taxes due with respect to or required
to be reported on any Carrier Separate Return; and (iii) Otis shall be
responsible for any and all Federal Income Taxes due with respect to or required
to be reported on any Otis Separate Return; in each case, including any increase
in such Tax as a result of a Final Determination.
 
(c)    Allocation of Federal Other Tax.  (i) UTC shall be responsible for any
and all Federal Other Taxes due with respect to or required to be reported on
any (A) UTC Separate Return or (B) Joint Return that UTC or any member of the
UTC Group is obligated to file under the Code; (ii) Carrier shall be responsible
for any and all Federal Other Taxes due with respect to or required to be
reported on any (A) Carrier Separate Return or (B) Joint Return that Carrier or
any member of the Carrier Group is obligated to file under the Code; and (iii)
Otis shall be responsible for any and all Federal Other Taxes due with respect
to or required to be reported on any (A) Otis Separate Return or (B) Joint
Return that Otis or any member of the Otis Group is obligated to file under the
Code; in each case, including any increase in such Tax as a result of a Final
Determination.
 
Section 2.03          Allocation of State Income and State Other Taxes.  Except
as otherwise provided in Section 2.05, State Income Tax and State Other Tax
shall be allocated as follows:
 
(a)    Allocation of Tax Relating to UTC State Combined Income Tax Returns. 
With respect to any UTC State Combined Income Tax Return, UTC shall be
responsible for any and all State Income Taxes due with respect to or required
to be reported on any such Tax Return (including any increase in such Tax as a
result of a Final Determination); provided, that:
 
(i)            Carrier shall be responsible for any such State Income Taxes with
respect to any Tax Period (or portion thereof) ending on or prior to the Carrier
Distribution Date (including any increase in such Tax as a result of a Final
Determination) to the extent (x) such Tax is imposed with respect to any matter
for which UTC or any of its Subsidiaries immediately prior to the Carrier
Distribution Date (including, for the avoidance of doubt, Carrier and its
Subsidiaries) reflected a Reserve in its financial statements immediately prior
to the Carrier Distribution Date and (y) such matter exclusively relates to the
Carrier Business; and
 
(ii)           Otis shall be responsible for any such State Income Taxes with
respect to any Tax Period (or portion thereof) ending on or prior to the Otis
Distribution Date (including any increase in such Tax as a result of a Final
Determination) to the extent (x) such Tax is imposed with respect to any matter
for which UTC or any of its Subsidiaries immediately prior to the Otis
Distribution Date (including, for the avoidance of doubt, Otis and its
Subsidiaries) reflected a Reserve in its financial statements immediately prior
to the Otis Distribution Date and (y) such matter exclusively relates to the
Otis Business.
 
(b)    Allocation of Tax Relating to State Separate Income Tax Returns.  (i) UTC
shall be responsible for any and all State Income Taxes due with respect to or
required to be reported on any UTC Separate Return; (ii) Carrier shall be
responsible for any and all State Income Taxes
 
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due with respect to or required to be reported on any Carrier Separate Return;
and (iii) Otis shall be responsible for any and all State Income Taxes due with
respect to or required to be reported on any Otis Separate Return; in each case,
including any increase in such Tax as a result of a Final Determination.

(c)    Allocation of State Other Tax.  (i) UTC shall be responsible for any and
all State Other Taxes due with respect to or required to be reported on any (A)
UTC Separate Return or (B) Joint Return that UTC or any member of the UTC Group
is obligated to file under applicable Tax Law; (ii) Carrier shall be responsible
for any and all State Other Taxes due with respect to or required to be reported
on any (A) Carrier Separate Return or (B) Joint Return that Carrier or any
member of the Carrier Group is obligated to file under applicable Tax Law; and
(iii) Otis shall be responsible for any and all State Other Taxes due with
respect to or required to be reported on any (A) Otis Separate Return or (B)
Joint Return that Otis or any member of the Otis Group is obligated to file
under applicable Tax Law; in each case, including any increase in such Tax as a
result of a Final Determination.
 
Section 2.04          Allocation of Foreign Taxes.  Except as otherwise provided
in Section 2.05, Foreign Income Tax and Foreign Other Tax shall be allocated as
follows:
 
(a)    Allocation of Tax Relating to UTC Foreign Combined Income Tax Returns. 
UTC shall be responsible for any and all Foreign Income Taxes due with respect
to or required to be reported on any UTC Foreign Combined Income Tax Return
(including any increase in such Tax as a result of a Final Determination);
provided, that:
 
(i)            Carrier shall be responsible for any such Foreign Income Taxes
with respect to any Tax Period (or portion thereof) ending on or prior to the
Carrier Distribution Date (including any increase in such Tax as a result of a
Final Determination) to the extent (x) such Tax is imposed with respect to any
matter for which UTC or any of its Subsidiaries immediately prior to the Carrier
Distribution Date (including, for the avoidance of doubt, Carrier and its
Subsidiaries) reflected a Reserve in its financial statements immediately prior
to the Carrier Distribution Date and (y) such matter exclusively relates to the
Carrier Business; and
 
(ii)           Otis shall be responsible for any such Foreign Income Taxes with
respect to any Tax Period (or portion thereof) ending on or prior to the Otis
Distribution Date (including any increase in such Tax as a result of a Final
Determination) to the extent (x) such Tax is imposed with respect to any matter
for which UTC or any of its Subsidiaries immediately prior to the Otis
Distribution Date (including, for the avoidance of doubt, Otis and its
Subsidiaries) reflected a Reserve in its financial statements immediately prior
to the Otis Distribution Date and (y) such matter exclusively relates to the
Otis Business.
 
(b)   Allocation of Tax Relating to Foreign Separate Income Tax Returns.  (i)
UTC shall be responsible for any and all Foreign Income Taxes due with respect
to or required to be reported on any UTC Separate Return; (ii) Carrier shall be
responsible for any and all Foreign Income Taxes due with respect to or required
to be reported on any Carrier Separate Return; and (iii) Otis shall be
responsible for any and all Foreign Income Taxes due with respect to or
 
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required to be reported on any Otis Separate Return; in each case, including any
increase in such Tax as a result of a Final Determination.

(c)    Allocation of Foreign Other Tax.  (i) UTC shall be responsible for any
and all Foreign Other Taxes due with respect to or required to be reported on
any (A) UTC Separate Return or (B) Joint Return that UTC or any member of the
UTC Group is obligated to file under applicable Tax Law; (ii) Carrier shall be
responsible for any and all Foreign Other Taxes due with respect to or required
to be reported on any (A) Carrier Separate Return or (B) Joint Return that
Carrier or any member of the Carrier Group is obligated to file under applicable
Tax Law; and (iii) Otis shall be responsible for any and all Foreign Other Taxes
due with respect to or required to be reported on any (A) Otis Separate Return
or (B) Joint Return that Otis or any member of the Otis Group is obligated to
file under applicable Tax Law; in each case, including any increase in such Tax
as a result of a Final Determination.
 
Section 2.05          Certain Transaction and Other Taxes.
 
(a)          Carrier Liability.  Carrier shall be liable for, and shall
indemnify and hold harmless the UTC Group and the Otis Group from and against
any liability for:
 
(i)            any stamp, sales and use, gross receipts, or other transfer Taxes
imposed by any Tax Authority on any member of the Carrier Group (if such member
is primarily liable for such Tax) on the transfers occurring pursuant to the
Transactions;
 
(ii)           any value-added or goods and services Tax imposed by any Tax
Authority on any transfer occurring pursuant to the Transactions to the extent
any member of the Carrier Group is the transferee with respect to the relevant
transfer;
 
(iii)          any Tax (other than Tax-Related Losses and Specified Income
Taxes) (A) resulting from a breach by Carrier of any covenant made by Carrier in
this Agreement, the Separation and Distribution Agreement, or any Ancillary
Agreement or (B) imposed under Section 965(l)(1) of the Code as a result of
Carrier or any member of the Carrier Group becoming an expatriated entity at any
time during the ten-year period beginning on December 22, 2017 (within the
meaning of Section 965(l) of the Code); and
 
(iv)          any Tax-Related Losses and Specified Income Taxes for which
Carrier is responsible pursuant to Section 7.05.
 
The amounts for which Carrier is liable pursuant to Section 2.05(a)(i), (ii),
and (iii) shall include all accounting, legal, and other professional fees and
court costs incurred in connection with the relevant Taxes.

(b)          Otis Liability.  Otis shall be liable for, and shall indemnify and
hold harmless the UTC Group and the Carrier Group from and against any liability
for:
 
(i)            any stamp, sales and use, gross receipts, or other transfer Taxes
imposed by any Tax Authority on any member of the Otis Group (if such member is
primarily liable for such Tax) on the transfers occurring pursuant to the
Transactions;
 
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(ii)          any value-added or goods and services Tax imposed by any Tax
Authority on any transfer occurring pursuant to the Transactions to the extent
any member of the Otis Group is the transferee with respect to the relevant
transfer;
 
(iii)          any Tax (other than Tax-Related Losses and Specified Income
Taxes) (A) resulting from a breach by Otis of any covenant made by Otis in this
Agreement, the Separation and Distribution Agreement, or any Ancillary Agreement
or (B) imposed under Section 965(l)(1) of the Code as a result of Otis or any
member of the Otis Group becoming an expatriated entity at any time during the
ten-year period beginning on December 22, 2017 (within the meaning of Section
965(l) of the Code); and
 
(iv)          any Tax-Related Losses and Specified Income Taxes for which Otis
is responsible pursuant to Section 7.05.
 
The amounts for which Otis is liable pursuant to Section 2.05(b)(i), (ii), and
(iii) shall include all accounting, legal, and other professional fees and court
costs incurred in connection with the relevant Taxes.

(c) UTC Liability.  UTC shall be liable for, and shall indemnify and hold
harmless each SpinCo Group from and against any liability for:
 
(i)          Any stamp, sales and use, gross receipts, or other transfer Taxes
imposed by any Tax Authority on any member of the UTC Group (if such member is
primarily liable for such Tax) on the transfers occurring pursuant to the
Transactions;
 
(ii)          any value-added or goods and services Tax imposed by any Tax
Authority on any transfer occurring pursuant to the Transactions to the extent
any member of the UTC Group is the transferee with respect to the relevant
transfer;
 
(iii)          any Tax (other than Tax-Related Losses and Specified Income
Taxes) (A) resulting from a breach by UTC of any covenant made by UTC in this
Agreement, the Separation and Distribution Agreement, or any Ancillary Agreement
or (B) imposed under Section 965(l)(1) of the Code as a result of UTC or any
member of the UTC Group becoming an expatriated entity at any time during the
ten-year period beginning on December 22, 2017 (within the meaning of Section
965(l) of the Code); and
 
(iv)          any Tax-Related Losses and Specified Income Taxes for which UTC is
responsible pursuant to Section 7.05.
 
The amounts for which UTC is liable pursuant to Section 2.05(c)(i), (ii), and
(iii) shall include all accounting, legal, and other professional fees and court
costs incurred in connection with the relevant Taxes.
 
Section 3.          Proration of Taxes for Straddle Periods.
 
(a)    General Method of Proration.  In the case of any Straddle Period, Tax
Items shall be apportioned between Pre-Deconsolidation Periods and
Post-Deconsolidation Periods in accordance with the principles of Treasury
Regulations Section 1.1502-76(b) as reasonably
 
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interpreted and applied by UTC.  With respect to each UTC Federal Consolidated
Income Tax Return for a taxable year that includes a Distribution, UTC may
determine in its sole discretion whether to make a ratable election under
Treasury Regulations Section 1.1502-76(b)(2)(ii) with respect to a SpinCo.  Each
SpinCo shall, and shall cause each member of such SpinCo Group to, take all
actions necessary to give effect to any such election.

(b)    Transactions Treated as Extraordinary Item.  In determining the
apportionment of Tax Items between Pre-Deconsolidation Periods and
Post-Deconsolidation Periods, any Tax Items relating to the Transactions shall
be treated as extraordinary items described in Treasury Regulations Section
1.1502-76(b)(2)(ii)(C) and shall (to the extent arising on or prior to the
relevant Deconsolidation Date) be allocated to the relevant Pre-Deconsolidation
Period(s), and any Taxes related to such items shall be treated under Treasury
Regulations Section 1.1502-76(b)(2)(iv) as relating to such extraordinary item
and shall (to the extent arising on or prior to the relevant Deconsolidation
Date) be allocated to the relevant Pre-Deconsolidation Period(s).
 
Section 4.           Preparation and Filing of Tax Returns.
 
Section 4.01          General.  Except as otherwise provided in this Section 4,
Tax Returns shall be prepared and filed when due (taking into account
extensions) by the Person obligated to file such Tax Returns under the Code or
applicable Tax Law.  The Companies shall, and shall cause their respective
Affiliates to, provide assistance and cooperation to one another in accordance
with Section 8 with respect to the preparation and filing of Tax Returns
(including by providing information required to be provided pursuant to Section
8).
 
Section 4.02          UTC’s Responsibility.  UTC has the exclusive obligation
and right to prepare and file, or to cause to be prepared and filed:
 
(a)          UTC Federal Consolidated Income Tax Returns for any Tax Periods
ending before, on or after any Deconsolidation Date;
 
(b)          UTC State Combined Income Tax Returns, UTC Foreign Combined Income
Tax Returns and any other Joint Returns that UTC reasonably determines are
required to be filed (or that UTC chooses to be filed) by UTC or any member of
the UTC Group for Tax Periods ending before, on or after any Deconsolidation
Date; and
 
(c)          UTC Separate Returns and SpinCo Separate Returns that UTC
reasonably determines are required to be filed by the Companies or any of their
Affiliates for Tax Periods ending before, on or after any Deconsolidation Date
(limited, in the case of SpinCo Separate Returns, to such Tax Returns as are
required to be filed (taking into account extensions) on or before the relevant
Deconsolidation Date).
 
Section 4.03          Carrier’s Responsibility.  Carrier shall prepare and file,
or shall cause to be prepared and filed, all Tax Returns required to be filed by
or with respect to members of the Carrier Group other than those Tax Returns
that UTC is required or entitled to prepare and file under Section 4.02.  The
Tax Returns required to be prepared and filed by Carrier under this Section 4.03
shall include (a) any Carrier Federal Consolidated Income Tax Return for Tax
 
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Periods ending after the Carrier Deconsolidation Date and (b) Carrier Separate
Returns required to be filed (taking into account extensions) after the Carrier
Deconsolidation Date.

Section 4.04          Otis’s Responsibility.  Otis shall prepare and file, or
shall cause to be prepared and filed, all Tax Returns required to be filed by or
with respect to members of the Otis Group other than those Tax Returns that UTC
is required or entitled to prepare and file under Section 4.02.  The Tax Returns
required to be prepared and filed by Otis under this Section 4.04 shall include
(a) any Otis Federal Consolidated Income Tax Return for Tax Periods ending after
the Otis Deconsolidation Date and (b) Otis Separate Returns required to be filed
(taking into account extensions) after the Otis Deconsolidation Date.
 
Section 4.05          Tax Accounting Practices.
 
(a)    General Rule.  Except as otherwise provided in Section 4.05(b), with
respect to any Tax Return that a SpinCo has the obligation and right to prepare
and file, or cause to be prepared and filed, under Section 4.03 or Section 4.04,
for any Pre-Deconsolidation Period or any Straddle Period (or any Tax Period
beginning after the relevant Deconsolidation Date to the extent items reported
on such Tax Return could reasonably be expected to affect items reported on any
Tax Return that UTC has the obligation or right to prepare and file for any
Pre-Deconsolidation Period or any Straddle Period), such Tax Return shall be
prepared in accordance with past practices, accounting methods, elections or
conventions (“Past Practices”) used with respect to the Tax Returns in question
(unless there is no reasonable basis for the use of such Past Practices), and to
the extent any items are not covered by Past Practices (or in the event that
there is no reasonable basis for the use of such Past Practices), in accordance
with reasonable Tax accounting practices selected by such SpinCo.  Except as
otherwise provided in Section 4.05(b), UTC shall prepare any Tax Return that it
has the obligation and right to prepare and file, or cause to be prepared and
filed, under Section 4.02, in accordance with reasonable Tax accounting
practices selected by UTC.
 
(b)    Reporting of Transactions. Except to the extent otherwise required (x) by
a change in applicable law or (y) as a result of a Final Determination, (i) none
of UTC, Carrier, or Otis shall (and shall not permit or cause any member of its
respective Group to) take any position that is inconsistent with the treatment
of (A) any External Separation Transaction, any Internal Distribution, or any
Internal Separation Transaction, in each case, as having U.S. Tax-Free Status
(or analogous status under state or local law) or (B) any Foreign Separation
intended to have Foreign Tax-Free Status as having such status, and (ii) no
SpinCo shall (and shall not permit or cause any member of the relevant SpinCo
Group to) take any position with respect to any material item of income,
deduction, gain, loss, or credit on a Tax Return, or otherwise treat such item
in a manner that is inconsistent with the manner such item is reported on a Tax
Return required to be prepared or filed by UTC pursuant to Section 4.02
(including, without limitation, the claiming of a deduction previously claimed
on any such Tax Return); provided, however, that, notwithstanding anything to
the contrary herein, (1) if UTC determines that (x) notwithstanding the receipt
of the Tax Opinion/Ruling with respect to the Carrier Foreign Distribution and
the Otis Foreign Distribution, either or both of the Carrier Foreign
Distribution and the Otis Foreign Distribution do not qualify for Foreign
Tax-Free Status, or (y) there has been a change in relevant facts after the
Deconsolidation Date as a result of which (I) any External Separation
Transaction, any Internal Distribution, or any Internal Separation
 
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Transaction does not qualify for U.S. Tax-Free Status or (II) any Foreign
Separation intended to have Foreign Tax-Free Status does not qualify for such
status, then (2) UTC shall promptly notify Carrier and Otis in writing and,
following such notice, each of the Parties shall report the Carrier Foreign
Distribution and/or the Otis Foreign Distribution or such External Separation
Transaction, Internal Distribution, Internal Separation Transaction, or Foreign
Separation, as applicable, in the manner set forth in such notice (and shall not
be permitted to take positions inconsistent with such notice).

Section 4.06          Consolidated or Combined Tax Returns.  Each SpinCo will
elect and join, and will cause its respective Affiliates to elect and join, in
filing any UTC State Combined Income Tax Returns and any Joint Returns that UTC
determines are required to be filed or that UTC chooses to file pursuant to
Section 4.02(b).  With respect to any Tax Return relating to any Tax Period (or
portion thereof) ending on or prior to the Carrier Distribution Date, which Tax
Return otherwise would be a Carrier Separate Return, Carrier will elect and
join, and will cause its respective Affiliates to elect and join, in filing
consolidated, unitary, combined, or other similar joint Tax Returns, to the
extent each entity is eligible to join in such Tax Returns, upon UTC’s request. 
With respect to any Tax Return relating to any Tax Period (or portion thereof)
ending on or prior to the Otis Distribution Date, which Tax Return otherwise
would be an Otis Separate Return, Otis will elect and join, and will cause its
respective Affiliates to elect and join, in filing consolidated, unitary,
combined, or other similar joint Tax Returns, to the extent each entity is
eligible to join in such Tax Returns, upon UTC’s request.  In the event that,
following the Carrier Distribution Date or the Otis Distribution Date, as
applicable, UTC or a member of the UTC Group makes a Tax election with respect
to a UTC Foreign Combined Income Tax Return and determines that the making of
such Tax election would have a material impact on the Tax liability or Tax
attributes of any member of the Carrier Group or the Otis Group, as applicable,
in a Tax Period ending after the relevant Distribution Date, UTC shall provide
written notice of such determination to the relevant SpinCo Group within a
reasonable period of time following such determination.
 
Section 4.07          Right to Review Tax Returns.
 
(a)   General.  The Company that has responsibility for preparing and filing any
material Tax Return under this Agreement shall make such Tax Return (or the
relevant portions thereof) and related workpapers available for review by the
other Company or Companies, as applicable, if requested, to the extent the
requesting party (i) is or would reasonably be expected to be liable for Taxes
reflected on such Tax Return, (ii) is or would reasonably be expected to be
liable for any additional Taxes owing as a result of adjustments to the amount
of such Taxes reported on such Tax Return, (iii) has or would reasonably be
expected to have a claim for Tax Benefits under this Agreement in respect of
items reflected on such Tax Return, or (iv) reasonably requires such documents
to confirm compliance with the terms of this Agreement; provided, however, that
notwithstanding anything in this Agreement to the contrary, UTC shall not be
required to make any UTC Federal Consolidated Income Tax Return available for
review by any other Company.  The Company that has responsibility for preparing
and filing such Tax Return under this Agreement shall use reasonable efforts to
make such Tax Return (or the relevant portions thereof) and related workpapers
available for review as required under this paragraph sufficiently in advance of
the due date for filing of such Tax Return to provide the requesting Party (or
Parties) with a meaningful opportunity to review and comment on such Tax Return
and
 
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shall consider such comments in good faith.  The relevant Companies shall
attempt in good faith to resolve any material disagreement arising out of the
review of such Tax Return and, failing such resolution, any material
disagreement shall be resolved in accordance with the provisions of Section 14
as promptly as practicable.

(b)    Execution of Returns Prepared by Other Party.  In the case of any Tax
Return that is required to be prepared by one Company under this Agreement and
that is required by law to be signed by another Company (or by its authorized
representative), the Company that is legally required to sign such Tax Return
shall not be required to sign such Tax Return under this Agreement unless there
is at least a “reasonable basis” (or comparable standard under state, local or
foreign law) for the Tax treatment of each material item reported on the Tax
Return.
 
Section 4.08          SpinCo Carrybacks and Claims for Refund.
 
(a)    Carrier hereby agrees that, unless UTC consents in writing, (i) no
Adjustment Request with respect to any Joint Return shall be filed, and (ii) any
available elections to waive the right to claim in any Carrier
Pre-Deconsolidation Period with respect to any Joint Return any Carrier
Carryback arising in a Carrier Post-Deconsolidation Period shall be made, and no
affirmative election shall be made to claim any such Carrier Carryback;
provided, however, that the Parties agree that any such Adjustment Request shall
be made with respect to any Carrier Carryback related to Federal or State Income
Taxes, upon the reasonable request of Carrier, if (x) such Carrier Carryback is
necessary to prevent the loss of the Federal and/or State Income Tax Benefit of
such Carrier Carryback (including, but not limited to, an Adjustment Request
with respect to a Carrier Carryback of a federal or state capital loss arising
in a Carrier Post-Deconsolidation Period to a Carrier Pre-Deconsolidation
Period) and (y) such Adjustment Request will cause no Tax detriment to UTC, the
UTC Group or any member of the UTC Group.  Any Adjustment Request to which UTC
consents under this Section 4.08(a) shall be prepared and filed by the
Responsible Company with respect to the Tax Return to be adjusted.
 
(b)    Otis hereby agrees that, unless UTC consents in writing, (i) no
Adjustment Request with respect to any Joint Return shall be filed, and (ii) any
available elections to waive the right to claim in any Otis Pre-Deconsolidation
Period with respect to any Joint Return any Otis Carryback arising in an Otis
Post-Deconsolidation Period shall be made, and no affirmative election shall be
made to claim any such Otis Carryback; provided, however, that the Parties agree
that any such Adjustment Request shall be made with respect to any Otis
Carryback related to Federal or State Income Taxes, upon the reasonable request
of Otis, if (x) such Otis Carryback is necessary to prevent the loss of the
Federal and/or State Income Tax Benefit of such Otis Carryback (including, but
not limited to, an Adjustment Request with respect to an Otis Carryback of a
federal or state capital loss arising in an Otis Post-Deconsolidation Period to
an Otis Pre-Deconsolidation Period) and (y) such Adjustment Request will cause
no Tax detriment to UTC, the UTC Group or any member of the UTC Group.  Any
Adjustment Request to which UTC consents under this Section 4.08(b) shall be
prepared and filed by the Responsible Company with respect to the Tax Return to
be adjusted.
 
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Section 4.09          Apportionment of Earnings and Profits and Tax Attributes.
 
(a)    If the UTC Affiliated Group has a Tax Attribute, the portion, if any, of
such Tax Attribute apportioned to a SpinCo or any member of a SpinCo Group and
treated as a carryover to the first Post-Deconsolidation Period of such SpinCo
(or such member) shall be determined by UTC in accordance with Treasury
Regulations Sections 1.1502-21, 1.1502-21T, 1.1502-22, 1.1502-79 and, if
applicable, 1.1502-79A.
 
(b)    No Tax Attribute with respect to consolidated Federal Income Tax of the
UTC Affiliated Group, other than those described in Section 4.09(a), and no Tax
Attribute with respect to any consolidated, combined or unitary State or Foreign
Income Tax, in each case, arising in respect of a Joint Return shall be
apportioned to any SpinCo or any member of any SpinCo Group, except as UTC (or
such member of the UTC Group as UTC shall designate) determines is otherwise
required under applicable law.
 
(c)    UTC shall use commercially reasonable efforts to determine or cause its
designee to determine the portion, if any, of any Tax Attribute that must
(absent a Final Determination to the contrary) be apportioned to a SpinCo or any
member of a SpinCo Group in accordance with this Section 4.09 and applicable law
and the amount of Tax basis and earnings and profits (including, for the
avoidance of doubt, PTEP) to be apportioned to a SpinCo or any member of a
SpinCo Group in accordance with this Section 4.09 and applicable law, and shall
provide written notice of the calculation thereof to such SpinCo as soon as
reasonably practicable after UTC or its designee prepares such calculation.  For
the absence of doubt, UTC shall not be liable to any SpinCo or any member of any
SpinCo Group for any failure of any determination under this Section 4.09 to be
accurate or sustained under applicable law, including as the result of any Final
Determination.
 
(d)   Any written notice delivered by UTC pursuant to Section 4.09(c) shall be
binding on the relevant SpinCo and each member of the relevant SpinCo Group and
shall not be subject to dispute resolution; provided that UTC shall consider in
good faith any reasonable comments the relevant SpinCo may timely provide with
respect to such written notice.  Except to the extent otherwise required by a
change in applicable law or pursuant to a Final Determination, no SpinCo shall
take any position (whether on a Tax Return or otherwise) that is inconsistent
with the information contained in any such written notice.
 
Section 4.10          Gain Recognition Agreements. Each SpinCo shall, and shall
cause its applicable domestic subsidiaries to, enter into a new “gain
recognition agreement” within the meaning of Treasury Regulations Section
1.367(a)-8(b)(1)(iv) and (c)(5) with respect to each of the transfers notified
in writing by UTC to such SpinCo within 180 days following the relevant
Distribution Date in order to avoid the occurrence of any “triggering event”
within the meaning of Treasury Regulations Section 1.367(a)-8(j) that would
otherwise occur as a result of the Transactions.
 
Section 4.11          Transfer Pricing.  If, as the result of any Final
Determination relating to intercompany transfer pricing with respect to any item
or items reflected on any Income Tax Return of a member of any Company Group for
a Pre-Deconsolidation Period, there is an increase in Income Taxes payable for
such Tax Period by any member of such Company Group,
 
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then, upon the reasonable written request of, and at the expense of, the
relevant Company, the other Companies, as relevant, shall (and shall cause their
respective Affiliates to) amend any Tax Returns of any member of such other
Company Group(s), as applicable, to the extent such amendment would result in a
corresponding or correlative reduction in Taxes otherwise payable by a member of
such other Company Group(s) and shall promptly pay over any Tax Benefit actually
realized in cash as a result of such amendment (determined on a “with or
without” basis); provided, however, that no Company (or any Affiliates of any
Company) shall (a) have any obligation to amend any Tax Return pursuant to this
Section 4.11 to the extent doing so would have an adverse effect on such Company
or any of its Affiliates that is material or (b) be obligated to make a payment
otherwise required pursuant to this Section 4.11 to the extent making such
payment would place such Company (or any of its Affiliates) in a less favorable
net after-Tax position than such Company (or such Affiliate) would have been in
if the relevant Tax Benefit had not been realized.  If a Company or one of its
Affiliates pays over any amount pursuant to the preceding sentence and such Tax
Benefit is subsequently disallowed or adjusted, the Parties shall promptly make
appropriate payments (including in respect of any interest paid or imposed by
any Tax Authority) to reflect such disallowance or adjustment.

Section 5.          Tax Payments.
 
Section 5.01          Payment of Taxes with Respect to Tax Returns.  Subject to
Section 5.02, (a) the Responsible Company with respect to any Tax Return shall
pay any Tax required to be paid to the applicable Tax Authority on or before the
relevant Payment Date, and (b) in the case of any adjustment pursuant to a Final
Determination with respect to any Tax Return, the Responsible Company shall pay
to the applicable Tax Authority when due (taking into account any automatic or
validly elected extensions, deferrals or postponements) any additional Tax due
with respect to such Tax Return required to be paid as a result of such
adjustment pursuant to a Final Determination.
 
Section 5.02          Indemnification Payments.
 
(a)    If any Company (the “Payor”) is required pursuant to Section 5.01 (or
otherwise under applicable Tax Law) to pay to a Tax Authority a Tax for which
another Company (the “Required Party”) is liable, in whole or in part, under
this Agreement (including, for the avoidance of doubt, any administrative or
judicial deposit required to be paid by the Payor to a Tax Authority or other
Governmental Authority to pursue any Tax Contest, to the extent the Required
Party would be liable under this Agreement for any Tax resulting from such Tax
Contest), the Required Party shall reimburse the Payor within 15 days of
delivery by the Payor to the Required Party of an invoice (which invoice shall
not be delivered prior to the due date for payment of such Tax to the applicable
Tax Authority, taking into account any automatic or validly elected extensions,
deferrals or postponements) for the amount due from the Required Party,
accompanied by evidence of payment and a statement detailing the Taxes paid and
describing in reasonable detail the particulars relating thereto.  If the amount
to be paid by the Required Party pursuant to this Section 5.02 is in respect of
any Tax in excess of $25 million required to be paid by the Payor to a single
Tax Authority on or prior to a single due date (taking into account any
automatic or validly elected extensions, deferrals or postponements), then the
Required Party shall pay the Payor such amount no later than the later of (i)
seven business days after delivery by the Payor to the Required Party of an
invoice for the amount due, accompanied
 
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by a statement detailing the Taxes required to be paid and describing in
reasonable detail the particulars relating thereto and (ii) three business days
prior to the due date for the payment of such Tax (taking into account any
automatic or validly elected extensions, deferrals or postponements).

(b)    All indemnification payments under this Agreement shall be made by UTC
directly to Carrier and/or Otis, by Carrier directly to UTC and/or Otis, and by
Otis directly to UTC and/or Carrier; provided, however, that if the Companies
mutually agree with respect to any such indemnification payment, (i) any member
of the UTC Group, on the one hand, may make such indemnification payment to any
member of the relevant SpinCo Group, on the other hand, (ii) any member of the
Carrier Group, on the one hand, may make such indemnification payment to any
member of the UTC Group or the Otis Group, as applicable, on the other hand, and
(iii) any member of the Otis Group, on the one hand, may make such
indemnification payment to any member of the UTC Group or the Carrier Group, as
applicable, on the other hand.
 
Section 6.          Tax Benefits.
 
Section 6.01          Tax Benefits.
 
(a)    Except as set forth below, (i) UTC shall be entitled to any refund (and
any interest thereon received from the applicable Tax Authority) of (A) Income
Taxes and Other Taxes for which UTC is liable hereunder and (B) Foreign Income
Taxes reported on any Tax Return for a Tax Period ending on or prior to (or
including) the relevant Deconsolidation Date to the extent such refund results
in a disallowance or adjustment of any foreign Tax credit claimed by the UTC
Group (and any interest payable to the applicable Tax Authority as a result of
such disallowance or adjustment), (ii) Carrier shall be entitled to any refund
(and any interest thereon received from the applicable Tax Authority) of Income
Taxes and Other Taxes for which Carrier is liable hereunder, (iii) Otis shall be
entitled to any refund (and any interest thereon received from the applicable
Tax Authority) of Income Taxes and Other Taxes for which Otis is liable
hereunder, and (iv) a Company receiving a refund to which another Company is
entitled hereunder in whole or in part shall pay over such refund (or portion
thereof) to such other Company within 30 days after such refund is received; it
being understood that, with respect to any refund (or any interest thereon
received from the applicable Tax Authority) of Shared Taxes or Taxes for which
more than one Company is liable under Section 2.02(a)(iii) or Section
7.05(c)(i), each Company shall be entitled to the portion of such refund (or
interest thereon) that reflects its proportionate liability for such Taxes.
 
(b)    If (i) (A) a member of the Carrier Group actually realizes in cash any
Tax Benefit as a result of an adjustment pursuant to a Final Determination or
reporting required by clause (x) or clause (y) of Section 4.05(b), in each case,
that increases Taxes for which a member of the UTC Group or Otis Group is liable
hereunder (or reduces any Tax Attribute of a member of the UTC Group or Otis
Group) and such Tax Benefit would not have arisen but for such adjustment or
reporting (determined on a “with and without” basis), (B) a member of the Otis
Group actually realizes in cash any Tax Benefit as a result of an adjustment
pursuant to a Final Determination or reporting required by clause (x) or clause
(y) of Section 4.05(b), in each case, that increases Taxes for which a member of
the UTC Group or Carrier Group is liable hereunder (or reduces any Tax Attribute
of a member of the UTC Group or Carrier Group) and such Tax Benefit would
 
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not have arisen but for such adjustment or reporting (determined on a “with and
without” basis), or (C) a member of the UTC Group actually realizes in cash any
Tax Benefit as a result of an adjustment pursuant to a Final Determination or
reporting required by clause (x) or clause (y) of Section 4.05(b), in each case,
that increases Taxes for which a member of any SpinCo Group is liable hereunder
(or reduces any Tax Attribute of a member of any SpinCo Group) and such Tax
Benefit would not have arisen but for such adjustment or reporting (determined
on a “with and without” basis), and (ii) the aggregate Tax Benefit realized or
realizable by such member of such SpinCo Group or such member of the UTC Group,
as applicable, as a result of such adjustment or reporting would reasonably be
expected to exceed $5 million, then, such SpinCo or UTC, as the case may be,
shall make a payment to UTC, Otis, or Carrier, as appropriate, within 30 days
following such actual realization of the Tax Benefit, in an amount equal to such
Tax Benefit actually realized in cash (including any Tax Benefit actually
realized as a result of the payment); provided, however, that no Company (or any
Affiliates of any Company) shall be obligated to make a payment otherwise
required pursuant to this Section 6.01(b) to the extent making such payment
would place such Company (or any of its Affiliates) in a less favorable net
after-Tax position than such Company (or such Affiliate) would have been in if
the relevant Tax Benefit had not been realized.  If a Company or one of its
Affiliates pays over any amount pursuant to the preceding sentence and such Tax
Benefit is subsequently disallowed or adjusted, the Parties shall promptly make
appropriate payments (including in respect of any interest paid or imposed by
any Tax Authority) to reflect such disallowance or adjustment.

(c)    No later than 30 days after a Tax Benefit described in Section 6.01(b) is
actually realized in cash by a member of the UTC Group or a member of a SpinCo
Group, UTC (if a member of the UTC Group actually realizes such Tax Benefit) or
such SpinCo (if a member of a SpinCo Group actually realizes such Tax Benefit)
shall provide the other Company (or Companies) with a written calculation of the
amount payable to such other Company (or Companies) by UTC or such SpinCo
pursuant to this Section 6.  In the event that UTC or any SpinCo disagrees with
any such calculation described in this Section 6.01(c), UTC or such SpinCo shall
so notify the other Company (or Companies) in writing within 30 days of
receiving the written calculation set forth above in this Section 6.01(c).  UTC,
Carrier, and/or Otis, as applicable, shall endeavor in good faith to resolve
such disagreement, and, failing that, the amount payable under this Section 6
shall be determined in accordance with the provisions of Section 14 as promptly
as practicable.
 
(d)    Carrier shall be entitled to any refund that is attributable to, and
would not have arisen but for, a Carrier Carryback pursuant to the proviso set
forth in Section 4.08(a); provided, however, that Carrier shall indemnify and
hold the members of the UTC Group harmless from and against any and all
collateral Tax consequences resulting from or caused by any such Carrier
Carryback, including (but not limited to) the loss or postponement of any
benefit from the use of Tax Attributes generated by a member of the UTC Group or
an Affiliate thereof if (x) such Tax Attributes expire unutilized, but would
have been utilized but for such Carrier Carryback, or (y) the use of such Tax
Attributes is postponed to a later Tax Period than the Tax Period in which such
Tax Attributes would have been utilized but for such Carrier Carryback.  Any
such payment of such refund made by UTC to Carrier pursuant to this Section
6.01(d) shall be recalculated in light of any Final Determination (or any other
facts that may arise or come to light after such payment is made, such as a
carryback of a UTC Group Tax Attribute to a Tax Period in respect of which such
refund is received) that would affect the amount to which Carrier
 
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is entitled, and an appropriate adjusting payment shall be made by Carrier to
UTC such that the aggregate amount paid pursuant to this Section 6.01(d) equals
such recalculated amount.

(e)    Otis shall be entitled to any refund that is attributable to, and would
not have arisen but for, an Otis Carryback pursuant to the proviso set forth in
Section 4.08(b); provided, however, that Otis shall indemnify and hold the
members of the UTC Group harmless from and against any and all collateral Tax
consequences resulting from or caused by any such Otis Carryback, including (but
not limited to) the loss or postponement of any benefit from the use of Tax
Attributes generated by a member of the UTC Group or an Affiliate thereof if (x)
such Tax Attributes expire unutilized, but would have been utilized but for such
Otis Carryback, or (y) the use of such Tax Attributes is postponed to a later
Tax Period than the Tax Period in which such Tax Attributes would have been
utilized but for such Otis Carryback.  Any such payment of such refund made by
UTC to Otis pursuant to this Section 6.01(e) shall be recalculated in light of
any Final Determination (or any other facts that may arise or come to light
after such payment is made, such as a carryback of a UTC Group Tax Attribute to
a Tax Period in respect of which such refund is received) that would affect the
amount to which Otis is entitled, and an appropriate adjusting payment shall be
made by Otis to UTC such that the aggregate amount paid pursuant to this Section
6.01(e) equals such recalculated amount.
 
Section 6.02          UTC, Carrier, and Otis Income Tax Deductions in Respect of
Certain Equity Awards and Incentive Compensation.
 
(a)   Allocation of Deductions.  To the extent permitted by applicable law,
Income Tax deductions arising by reason of exercises of options or vesting or
settlement of stock appreciation rights, restricted stock units, performance
stock units, or deferred stock units, in each case, following the relevant
Distribution, with respect to UTC stock, Carrier stock, or Otis stock (such
options, stock appreciation rights, restricted stock units, performance stock
units, and deferred stock units, collectively, “Compensatory Equity Interests”)
held by any Person shall be claimed (i) in the case of a UTC Group Employee or
Former UTC Group Employee, solely by the UTC Group, (ii) in the case of a
Carrier Group Employee or Former Carrier Group Employee, solely by the Carrier
Group, (iii) in the case of an Otis Group Employee or Former Otis Group
Employee, solely by the Otis Group, and (iv) in the case of a non-employee
director, by the Company for which the director serves as a director following
the Distributions (provided, that in the case of any director who serves on the
board of directors of two or more of UTC, Carrier, or Otis, each Company shall
be entitled only to the deductions arising in respect of its own stock or equity
awards).
 
(b)   Withholding and Reporting.  Tax reporting and withholding with respect to
Compensatory Equity Interests shall be governed by Section 4.02(i) of the
Employee Matters Agreement.
 
Section 7.           Tax-Free Status.
 
Section 7.01          Representations.
 
(a)    Each of UTC, Carrier, and Otis hereby represents and warrants that (i) it
has reviewed each Ruling Request, the Representation Letters, and the Tax
Opinions/Rulings and (ii) subject
 
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to any qualifications therein, all information, representations and covenants
contained therein that relate to such Company or any member of its Group are
true, correct and complete.

(b)    Each of Carrier and Otis hereby represents and warrants that it has no
plan or intention of taking any action, or failing to take any action (or
causing or permitting any member of its Group to take or fail to take any
action), that could reasonably be expected to cause any representation or
factual statement made in this Agreement, the Separation and Distribution
Agreement, any Representation Letters, the Ruling Request, any of the Ancillary
Agreements, or any of the Tax Opinions/Rulings to be untrue.
 
(c) Each of Carrier and Otis hereby represents and warrants (solely with respect
to itself) that, during the two-year period ending on the Carrier Distribution
Date or the Otis Distribution Date, as applicable, there was no “agreement,
understanding, arrangement, substantial negotiations or discussions” (as such
terms are defined in Treasury Regulations Section 1.355-7(h)) by any one or more
officers or directors of any member of the Carrier Group or the Otis Group, as
applicable, or by any other person or persons with the implicit or explicit
permission of one or more of such officers or directors regarding an acquisition
of all or a significant portion of the Carrier Capital Stock (or the Capital
Stock of any member of the Carrier Group that was a “distributing corporation”
or a “controlled corporation” (within the meaning of Section 355(b) of the Code)
in any Internal Distribution or any predecessor of Carrier or such member of the
Carrier Group) or the Otis Capital Stock (or the Capital Stock of any member of
the Otis Group that was a “distributing corporation” or a “controlled
corporation” (within the meaning of Section 355(b) of the Code) in any Internal
Distribution or any predecessor of Otis or such member of the Otis Group), as
applicable; provided, however, that no representation is made regarding the
absence of any “agreement, understanding, arrangement, substantial negotiations
or discussions” (as such terms are defined in Treasury Regulations 1.355-7(h))
by any one or more officers or directors of UTC (or by any other person or
persons with the implicit or explicit permission of one or more of such officers
or directors) who are not officers or directors of Carrier or Otis, as
applicable.
 
Section 7.02          Restrictions on Carrier and Otis.
 
(a)    Each of Carrier and Otis agrees that it will not take or fail to take,
and will not cause or permit any of its respective Affiliates to take or fail to
take, any action where such action or failure to act would be inconsistent with
or cause to be untrue any material, information, covenant or representation in
this Agreement, the Separation and Distribution Agreement, any of the Ancillary
Agreements, any Representation Letters, any Ruling Request, or any Tax
Opinion/Ruling.  Each of Carrier and Otis agrees that it will not take or fail
to take, and will not cause or permit any of its respective Affiliates to take
or fail to take, any action where such action or failure to act would, or could
reasonably be expected to, prevent U.S. Tax-Free Status or Foreign Tax-Free
Status.
 
(b)    Carrier agrees that, from the date hereof until the first day after the
Restriction Period, it will (and will cause its “separate affiliated group” (as
defined in Section 355(b)(3)(B) of the Code) to) (i) maintain the active conduct
(as defined in Section 355(b)(2) of the Code and the Treasury Regulations
promulgated thereunder) of the Carrier Active Trade or Business and (ii) not
engage in any transaction that would result in it ceasing to be engaged in the
Carrier Active
 
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Trade or Business for purposes of Section 355(b)(2) of the Code.  Carrier
further agrees that, from the date hereof until the first day after the
Restriction Period, it will cause each member of the Carrier Group that was a
“distributing corporation” or a “controlled corporation” (within the meaning of
Section 355(b) of the Code) in any Internal Distribution (and such member’s
“separate affiliated group” (as defined in Section 355(b)(3)(B) of the Code)) to
(x) maintain the active conduct (as defined in Section 355(b)(2) of the Code and
the Treasury Regulations promulgated thereunder) of the trade or business(es)
relied upon to satisfy Section 355(b) of the Code with respect to the relevant
Internal Distribution (as described in the IRS Ruling Request, relevant
Representation Letters, and/or relevant Tax Opinion/Ruling), as conducted
immediately prior to the relevant Internal Distribution and (y) not engage in
any transaction that would result in such member ceasing to be engaged in the
active conduct of such trade or business for purposes of Section 355(b)(2) of
the Code.

(c)    Otis agrees that, from the date hereof until the first day after the
Restriction Period, it will (and will cause its “separate affiliated group” (as
defined in Section 355(b)(3)(B) of the Code) to) (i) maintain the active conduct
(as defined in Section 355(b)(2) of the Code and the Treasury Regulations
promulgated thereunder) of the Otis Active Trade or Business and (ii) not engage
in any transaction that would result in it ceasing to be engaged in the Otis
Active Trade or Business for purposes of Section 355(b)(2) of the Code.  Otis
further agrees that, from the date hereof until the first day after the
Restriction Period, it will cause each member of the Otis Group that was a
“distributing corporation” or a “controlled corporation” (within the meaning of
Section 355(b) of the Code) in any Internal Distribution (and such member’s
“separate affiliated group” (as defined in Section 355(b)(3)(B) of the Code)) to
(x) maintain the active conduct (as defined in Section 355(b)(2) of the Code and
the Treasury Regulations promulgated thereunder) of the trade or business(es)
relied upon to satisfy Section 355(b) of the Code with respect to the relevant
Internal Distribution (as described in the IRS Ruling Request, relevant
Representation Letters, and/or relevant Tax Opinion/Ruling), as conducted
immediately prior to the relevant Internal Distribution and (y) not engage in
any transaction that would result in such member ceasing to be engaged in the
active conduct of such trade or business for purposes of Section 355(b)(2) of
the Code.
 
(d)
 
(i)            Carrier agrees that, from the date hereof until the first day
after the Restriction Period, it will not:
 
 (A) enter into any Carrier Proposed Acquisition Transaction or, to the extent
Carrier has the right to prohibit any Carrier Proposed Acquisition Transaction,
permit any Carrier Proposed Acquisition Transaction to occur (whether by (1)
redeeming rights under a shareholder rights plan, (2) finding a tender offer to
be a “permitted offer” under any such plan or otherwise causing any such plan to
be inapplicable or neutralized with respect to any Carrier Proposed Acquisition
Transaction, or (3) approving any Carrier Proposed Acquisition Transaction,
whether for purposes of Section 203 of the DGCL or any similar corporate
statute, any “fair price” or other provision of Carrier’s charter or bylaws or
otherwise),
 
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(B) merge or consolidate with any other Person or liquidate or partially
liquidate,
 
(C) in a single transaction or series of transactions (1) sell or transfer
(other than sales or transfers of inventory in the ordinary course of business)
all or substantially all of the assets that were transferred to Carrier pursuant
to the Carrier Contribution, (2) sell or transfer to any Person that is not a
member of Carrier’s “separate affiliated group” (as defined in Section
355(b)(3)(B) of the Code) 30% or more of the gross assets of the Carrier Active
Trade or Business, or (3) sell or transfer 30% or more of the consolidated gross
assets of Carrier and its Affiliates,
 
(D) redeem or otherwise repurchase (directly or through a Carrier Affiliate) any
Carrier Capital Stock, or rights to acquire Carrier Capital Stock, except to the
extent such repurchases satisfy Section 4.05(1)(b) of Revenue Procedure 96-30
(as in effect prior to the amendment by Revenue Procedure 2003-48),
 
(E)   amend its certificate of incorporation (or other organizational
documents), or take any other action, whether through a stockholder vote or
otherwise, affecting the voting rights of Carrier Capital Stock (including,
without limitation, through the conversion of one class of Carrier Capital Stock
into another class of Carrier Capital Stock),
 
(F) take any other action or actions (including any action or transaction that
would be reasonably likely to be inconsistent with any representation or
covenant made in any Representation Letters, any Ruling Request, or any Tax
Opinion/Ruling) that, in the aggregate (and taking into account any other
transactions described in this subparagraph (d)), would be reasonably likely to
have the effect of causing or permitting one or more persons to acquire,
directly or indirectly, Capital Stock representing a Fifty-Percent or Greater
Interest in Carrier or otherwise jeopardize the U.S. Tax‑Free Status of the
Carrier Distribution, the Otis Distribution, or any Internal Distribution, or
 
(G)  cause or permit any member of the Carrier Group that was a “distributing
corporation” or a “controlled corporation” (within the meaning of Section 355(b)
of the Code) in any Internal Distribution to take any action or enter into any
transaction described in the preceding clauses (B), (C), (D), (E) or (F)
(substituting references therein to “Carrier”, the “Carrier Contribution,” the
“Carrier Active Trade or Business” and “Carrier Capital Stock” with references
to the relevant corporation, the transfer of assets to such corporation pursuant
to the Transactions, the active conduct of the trade or business(es) relied upon
with respect to such Internal Distribution (as described in the IRS Ruling
Request, relevant Representation Letters, and/or relevant Tax Opinion/Ruling)
for purposes of Section 355(b)(2) of the Code, and the Capital Stock of such
corporation),
 
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unless, in each case, prior to taking any such action set forth in the foregoing
clauses (A) through (G), (x) Carrier shall have requested that UTC obtain a
private letter ruling (or, if applicable, a supplemental private letter ruling)
from the IRS and/or any other applicable Tax Authority in accordance with
Section 7.04(b) and (d) to the effect that such transaction will not affect the
U.S. Tax-Free Status of any External Separation Transaction or any Internal
Distribution, and UTC shall have received such a private letter ruling in form
and substance satisfactory to UTC in its discretion (and in determining whether
a private letter ruling is satisfactory, UTC may consider, among other factors,
the appropriateness of any underlying assumptions and management’s
representations made in connection with such private letter ruling), (y) Carrier
shall have provided UTC with an Unqualified Tax Opinion in form and substance
satisfactory to UTC in its discretion (and in determining whether an opinion is
satisfactory, UTC may consider, among other factors, the appropriateness of any
underlying assumptions and management’s representations if used as a basis for
the opinion) or (z) UTC shall have waived the requirement to obtain such private
letter ruling or Unqualified Tax Opinion.
 
(ii)          Otis agrees that, from the date hereof until the first day after
the Restriction Period, it will not:
 
(A)  enter into any Otis Proposed Acquisition Transaction or, to the extent Otis
has the right to prohibit any Otis Proposed Acquisition Transaction, permit any
Otis Proposed Acquisition Transaction to occur (whether by (1) redeeming rights
under a shareholder rights plan, (2) finding a tender offer to be a “permitted
offer” under any such plan or otherwise causing any such plan to be inapplicable
or neutralized with respect to any Otis Proposed Acquisition Transaction, or (3)
approving any Otis Proposed Acquisition Transaction, whether for purposes of
Section 203 of the DGCL or any similar corporate statute, any “fair price” or
other provision of Otis’s charter or bylaws or otherwise),
 
(B)  merge or consolidate with any other Person or liquidate or partially
liquidate,
 
(C)  in a single transaction or series of transactions (1) sell or transfer
(other than sales or transfers of inventory in the ordinary course of business)
all or substantially all of the assets that were transferred to Otis pursuant to
the Otis Contribution, (2) sell or transfer to any Person that is not a member
of Otis’s “separate affiliated group” (as defined in Section 355(b)(3)(B) of the
Code) 30% or more of the gross assets of the Otis Active Trade or Business, or
(3) sell or transfer 30% or more of the consolidated gross assets of Otis and
its Affiliates,
 
(D)  redeem or otherwise repurchase (directly or through an Otis Affiliate) any
Otis Capital Stock, or rights to acquire Otis Capital Stock, except to the
extent such repurchases satisfy Section 4.05(1)(b) of Revenue Procedure 96-30
(as in effect prior to the amendment by Revenue Procedure 2003-48),
 
(E)   amend its certificate of incorporation (or other organizational
documents), or take any other action, whether through a stockholder vote or
otherwise, affecting the voting rights of Otis Capital Stock (including, without
 
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limitation, through the conversion of one class of Otis Capital Stock into
another class of Otis Capital Stock),

(F)   take any other action or actions (including any action or transaction that
would be reasonably likely to be inconsistent with any representation or
covenant made in any Representation Letters, any Ruling Request, or any Tax
Opinion/Ruling) that, in the aggregate (and taking into account any other
transactions described in this subparagraph (d)), would be reasonably likely to
have the effect of causing or permitting one or more persons to acquire,
directly or indirectly, Capital Stock representing a Fifty-Percent or Greater
Interest in Otis or otherwise jeopardize the U.S. Tax‑Free Status of the Carrier
Distribution, the Otis Distribution, or any Internal Distribution, or
 
(G)  cause or permit any member of the Otis Group that was a “distributing
corporation” or a “controlled corporation” (within the meaning of Section 355(b)
of the Code) in any Internal Distribution to take any action or enter into any
transaction described in the preceding clauses (B), (C), (D), (E) or (F)
(substituting references therein to “Otis”, the “Otis Contribution,” the “Otis
Active Trade or Business” and “Otis Capital Stock” with references to the
relevant corporation, the transfer of assets to such corporation pursuant to the
Transactions, the active conduct of the trade or business(es) relied upon with
respect to such Internal Distribution (as described in the IRS Ruling Request,
relevant Representation Letters, and/or relevant Tax Opinion/Ruling)for purposes
of Section 355(b)(2) of the Code, and the Capital Stock of such corporation),
 
unless, in each case, prior to taking any such action set forth in the foregoing
clauses (A) through (G), (x) Otis shall have requested that UTC obtain a private
letter ruling (or, if applicable, a supplemental private letter ruling) from the
IRS and/or any other applicable Tax Authority in accordance with Section 7.04(b)
and (d) to the effect that such transaction will not affect the U.S. Tax-Free
Status of any External Separation Transaction or any Internal Distribution, and
UTC shall have received such a private letter ruling in form and substance
satisfactory to UTC in its discretion (and in determining whether a private
letter ruling is satisfactory, UTC may consider, among other factors, the
appropriateness of any underlying assumptions and management’s representations
made in connection with such private letter ruling), (y) Otis shall have
provided UTC with an Unqualified Tax Opinion in form and substance satisfactory
to UTC in its discretion (and in determining whether an opinion is satisfactory,
UTC may consider, among other factors, the appropriateness of any underlying
assumptions and management’s representations if used as a basis for the opinion)
or (z) UTC shall have waived the requirement to obtain such private letter
ruling or Unqualified Tax Opinion.
 
(iii)         Carrier agrees that, from the date hereof until the first day
after the Restriction Period, unless UTC consents in writing, it will not (and
will not cause or permit any of its Affiliates to) (A) cease to control Carrier
Foreign SpinCo or Carrier Foreign SpinCo Holdings, (B) dispose of any shares of
Carrier Foreign SpinCo or Carrier Foreign SpinCo Holdings that were held at the
time of the Carrier Foreign Distribution by Carrier or any of its Affiliates,
(C) sell, transfer, or otherwise dispose of any assets, or otherwise take any
action, in each case, that would be intended, or would reasonably be expected,
to
 
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result in the shares of either (1) Carrier Foreign SpinCo or (2) Carrier Foreign
SpinCo Holdings having a value greater than 10% of the total value of the shares
of Carrier, or (D) take any action or actions (including any action or
transaction that would be reasonably likely to be inconsistent with any
representation or covenant made in any Representation Letters, any Ruling
Request, or any Tax Opinion/Ruling) that, in the aggregate, would be reasonably
likely to jeopardize the Foreign Tax‑Free Status of the Carrier Foreign
Distribution.  For the avoidance of doubt, this Section 7.02(d)(iii) shall be
interpreted in a manner consistent with the Income Tax Act (Canada).

(iv)          Otis agrees that, from the date hereof until the first day after
the Restriction Period, unless UTC consents in writing, it will not (and will
not cause or permit any of its Affiliates to) (A) cease to control Otis Foreign
SpinCo or Otis Foreign SpinCo Holdings, (B) dispose of any shares of Otis
Foreign SpinCo or Otis Foreign SpinCo Holdings that were held at the time of the
Otis Foreign Distribution by Otis or any of its Affiliates, (C) sell, transfer,
or otherwise dispose of any assets, or otherwise take any action, in each case,
that would be intended, or would reasonably be expected, to result in the shares
of either (1) Otis Foreign SpinCo or (2) Otis Foreign SpinCo Holdings having a
value greater than 10% of the total value of the shares of Otis, or (D) take any
action or actions (including any action or transaction that would be reasonably
likely to be inconsistent with any representation or covenant made in any
Representation Letters, any Ruling Request, or any Tax Opinion/Ruling) that, in
the aggregate, would be reasonably likely to jeopardize the Foreign Tax‑Free
Status of the Otis Foreign Distribution.  For the avoidance of doubt, this
Section 7.02(d)(iv) shall be interpreted in a manner consistent with the Income
Tax Act (Canada).
 
(e)          Certain Acquisitions of Carrier Capital Stock or Otis Capital
Stock.
 
(i)            If Carrier proposes to enter into any Section 7.02(e) Acquisition
Transaction or, to the extent Carrier has the right to prohibit any Section
7.02(e) Acquisition Transaction, proposes to permit any Section 7.02(e)
Acquisition Transaction to occur, in each case, during the period from the date
hereof until the first day after the Restriction Period, Carrier shall provide
UTC, no later than ten days following the signing of any written agreement with
respect to the Section 7.02(e) Acquisition Transaction, with a written
description of such transaction (including the type and amount of Carrier
Capital Stock to be issued in such transaction) and a certificate of the Chief
Financial Officer of Carrier to the effect that the Section 7.02(e) Acquisition
Transaction is not a Carrier Proposed Acquisition Transaction or any other
transaction to which the requirements of Section 7.02(d)(i) apply (a “Carrier
CFO Certificate”).
 
(ii)           If Otis proposes to enter into any Section 7.02(e) Acquisition
Transaction or, to the extent Otis has the right to prohibit any Section 7.02(e)
Acquisition Transaction, proposes to permit any Section 7.02(e) Acquisition
Transaction to occur, in each case, during the period from the date hereof until
the first day after the Restriction Period, Otis shall provide UTC, no later
than ten days following the signing of any written agreement with respect to the
Section 7.02(e) Acquisition Transaction, with a written description of such
transaction (including the type and amount of Otis Capital Stock to be issued in
such transaction) and a certificate of the Chief Financial Officer of Otis to
the effect that the
 
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Section 7.02(e) Acquisition Transaction is not an Otis Proposed Acquisition
Transaction or any other transaction to which the requirements of Section
7.02(d)(ii) apply (an “Otis CFO Certificate”).

Section 7.03          Restrictions on UTC.  UTC agrees that it will not take or
fail to take, or cause or permit any member of the UTC Group to take or fail to
take, any action where such action or failure to act would be inconsistent with
or cause to be untrue any material, information, covenant or representation in
this Agreement, the Separation and Distribution Agreement, any of the Ancillary
Agreements, any Representation Letters, any Ruling Request, or any Tax
Opinion/Ruling.  UTC agrees that it will not take or fail to take, or cause or
permit any member of the UTC Group to take or fail to take, any action where
such action or failure to act would or could reasonably be expected to prevent
U.S. Tax-Free Status or Foreign Tax-Free Status.
 
Section 7.04          Procedures Regarding Opinions and Rulings.
 
(a)    If any SpinCo (such SpinCo, the “Requesting SpinCo”) notifies UTC that it
desires to take one of the actions described in clauses (A) through (G) of
Section 7.02(d)(i) or (ii), as applicable (a “Notified Action”), UTC and the
Requesting SpinCo shall reasonably cooperate to attempt to obtain the private
letter ruling or Unqualified Tax Opinion referred to in Section 7.02(d)(i) or
(ii), as applicable, unless UTC shall have waived the requirement to obtain such
private letter ruling or Unqualified Tax Opinion.
 
(b)    Rulings or Unqualified Tax Opinions at SpinCo’s Request.  At the
reasonable request of the Requesting SpinCo pursuant to Section 7.02(d)(i) or
(ii), as applicable, UTC shall cooperate with the Requesting SpinCo and use
commercially reasonable efforts to seek to obtain, as expeditiously as
reasonably practicable, a private letter ruling from the IRS (or if applicable,
a supplemental private letter ruling) or an Unqualified Tax Opinion for the
purpose of permitting the Requesting SpinCo to take the Notified Action. 
Further, in no event shall UTC be required to file any request for a private
letter ruling under this Section 7.04(b) unless the Requesting SpinCo represents
that (i) it has reviewed the request for such private letter ruling, and (ii)
all information and representations, if any, relating to any member of the
relevant SpinCo Group, contained in the related documents are (subject to any
qualifications therein) true, correct and complete.  The Requesting SpinCo shall
reimburse UTC for all reasonable costs and expenses incurred by the UTC Group in
obtaining a private letter ruling or Unqualified Tax Opinion requested by the
Requesting SpinCo within 15 business days after receiving an invoice from UTC
therefor.
 
(c)    Rulings or Tax Opinions at UTC’s Request.  UTC shall have the right to
seek a private letter ruling (or other ruling) from the IRS (and/or any other
applicable Tax Authority, or if applicable, a supplemental private letter ruling
or other ruling) concerning any Transaction (including the impact of any
transaction thereon) or an Unqualified Tax Opinion (or other opinion of a Tax
Advisor with respect to any of the Transactions) at any time in its sole and
absolute discretion.  If UTC determines to seek such a private letter ruling (or
other ruling) or an Unqualified Tax Opinion (or other opinion), each SpinCo
shall (and shall cause each of its Affiliates to) cooperate with UTC and take
any and all actions reasonably requested by UTC in connection with obtaining the
private letter ruling (or other ruling) or Unqualified Tax Opinion
 
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(or other opinion) (including, without limitation, by making any representation
or covenant or providing any materials or information requested by the IRS
(and/or any other applicable Tax Authority) or any Tax Advisor; provided, that
no SpinCo shall be required to make (or cause any of its Affiliate to make) any
representation or covenant that is inconsistent with historical facts or as to
future matters or events over which it has no control).  UTC, Carrier, and Otis
shall each bear its own costs and expenses in obtaining such a private letter
ruling (or other ruling) or an Unqualified Tax Opinion (or other opinion)
requested by UTC.

(d)    Ruling Process Control.  Each of Carrier and Otis hereby agrees that UTC
shall have sole and exclusive control over the process of obtaining any private
letter ruling (or other ruling), and that only UTC shall apply for such a
private letter ruling (or other ruling).  In connection with obtaining a private
letter ruling pursuant to Section 7.04(b), UTC shall (i) keep the Requesting
SpinCo informed in a timely manner of all material actions taken or proposed to
be taken by UTC in connection therewith; (ii) (A) reasonably in advance of the
submission of any related private letter ruling documents provide the Requesting
SpinCo with a draft copy thereof, (B) reasonably consider the Requesting
SpinCo’s comments on such draft copy, and (C) provide the Requesting SpinCo with
a final copy; and (iii) UTC shall provide the Requesting SpinCo with notice
reasonably in advance of, and the Requesting SpinCo shall have the right to
attend, any formally scheduled meetings with the IRS (subject to the approval of
the IRS) that relate to such private letter ruling.  None of Carrier, Otis, or
their respective directly or indirectly controlled Affiliates shall seek any
guidance from the IRS or any other Tax Authority (whether written, verbal or
otherwise) at any time concerning any Transaction that is the subject of a Tax
Opinion/Ruling (including the impact of any transaction on any of the
foregoing).
 
Section 7.05          Liability for Tax-Related Losses and Specified Income
Taxes.
 
(a)
 
(i)            Notwithstanding anything in this Agreement or the Separation and
Distribution Agreement to the contrary, subject to Section 7.05(c), Carrier
shall be responsible for, and shall indemnify and hold harmless UTC, Otis, their
respective Affiliates and each of their respective officers, directors and
employees from and against, 100% of any Tax-Related Losses that are attributable
to or result from any one or more of the following:  (A) the acquisition, after
the Carrier Effective Time, of all or a portion of Carrier’s Capital Stock
and/or its or its subsidiaries’ assets (including any Capital Stock of any
member of the Carrier Group that  was a “distributing corporation” or a
“controlled corporation” (within the meaning of Section 355(b) of the Code) in
any Internal Distribution) by any means whatsoever by any Person, (B) any
“agreement, understanding, arrangement, substantial negotiations or discussions”
(as such terms are defined in Treasury Regulations Section 1.355-7(h)) by any
one or more officers or directors of any member of the Carrier Group or by any
other person or persons with the implicit or explicit permission of one or more
of such officers or directors regarding transactions or events that cause the
Carrier Distribution or any Internal Distribution to be treated as part of a
plan pursuant to which one or more Persons acquire, directly or indirectly,
Capital Stock of Carrier or any member of the Carrier Group that was a
“distributing corporation” or a “controlled corporation” (within the meaning of
Section 355(b) of the Code) in any Internal Distribution, in each case,
representing a
 
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Fifty-Percent or Greater Interest therein, (C) any action or failure to act by
Carrier after the Carrier Distribution (including, without limitation, any
amendment to Carrier’s certificate of incorporation (or other organizational
documents), whether through a stockholder vote or otherwise) affecting the
voting rights of Carrier Capital Stock (including, without limitation, through
the conversion of one class of Carrier Capital Stock into another class of
Carrier Capital Stock), (D) any act or failure to act by Carrier or any Carrier
Affiliate described in Section 7.02 (regardless whether such act or failure to
act is covered by a private letter ruling, Unqualified Tax Opinion or waiver
described in clause (x), (y) or (z) of Section 7.02(d)(i) or in a Carrier CFO
Certificate described in Section 7.02(e)(i)), or (E) any breach by Carrier of
its agreement and representations set forth in Section 7.01 (other than Section
7.01(a)).

(ii)           Notwithstanding anything in this Agreement or the Separation and
Distribution Agreement to the contrary, subject to Section 7.05(c), Otis shall
be responsible for, and shall indemnify and hold harmless UTC, Carrier, their
respective Affiliates and each of their respective officers, directors and
employees from and against, 100% of any Tax-Related Losses that are attributable
to or result from any one or more of the following:  (A) the acquisition, after
the Otis Effective Time, of all or a portion of Otis’s Capital Stock and/or its
or its subsidiaries’ assets (including any Capital Stock of any member of the
Otis Group that  was a “distributing corporation” or a “controlled corporation”
(within the meaning of Section 355(b) of the Code) in any Internal Distribution)
by any means whatsoever by any Person, (B) any “agreement, understanding,
arrangement, substantial negotiations or discussions” (as such terms are defined
in Treasury Regulations Section 1.355-7(h)) by any one or more officers or
directors of any member of the Otis Group or by any other person or persons with
the implicit or explicit permission of one or more of such officers or directors
regarding transactions or events that cause the Otis Distribution or any
Internal Distribution to be treated as part of a plan pursuant to which one or
more Persons acquire, directly or indirectly, Capital Stock of Otis or any
member of the Otis Group that was a “distributing corporation” or a “controlled
corporation” (within the meaning of Section 355(b) of the Code) in any Internal
Distribution, in each case, representing a Fifty-Percent or Greater Interest
therein, (C) any action or failure to act by Otis after the Otis Distribution
(including, without limitation, any amendment to Otis’s certificate of
incorporation (or other organizational documents), whether through a stockholder
vote or otherwise) affecting the voting rights of Otis Capital Stock (including,
without limitation, through the conversion of one class of Otis Capital Stock
into another class of Otis Capital Stock), (D) any act or failure to act by Otis
or any Otis Affiliate described in Section 7.02 (regardless whether such act or
failure to act is covered by a private letter ruling, Unqualified Tax Opinion or
waiver described in clause (x), (y) or (z) of Section 7.02(d)(ii) or in an Otis
CFO Certificate described in Section 7.02(e)(ii)), or (E) any breach by Otis of
its agreement and representations set forth in Section 7.01 (other than Section
7.01(a)).
 
(b)          Notwithstanding anything in this Agreement or the Separation and
Distribution Agreement to the contrary, subject to Section 7.05(c), UTC shall be
responsible for, and shall indemnify and hold harmless Carrier, Otis, their
respective Affiliates and each of their respective officers, directors and
employees from and against, 100% of any Tax-Related Losses that are
 
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attributable to, or result from any one or more of the following:  (i) the
acquisition, after the relevant Effective Time, of all or a portion of UTC’s
Capital Stock and/or its or its subsidiaries’ assets (including any Capital
Stock of any member of the UTC Group that was a “distributing corporation” or a
“controlled corporation” (within the meaning of Section 355(b) of the Code) in
any Internal Distribution) by any means whatsoever by any Person, (ii) any
“agreement, understanding, arrangement, substantial negotiations or discussions”
(as such terms are defined in Treasury Regulations Section 1.355-7(h)) by any
one or more officers or directors of any member of the UTC Group or by any other
person or persons with the implicit or explicit permission of one or more of
such officers or directors regarding transactions or events that cause the
Carrier Distribution, the Otis Distribution, or any Internal Distribution to be
treated as part of a plan pursuant to which one or more Persons acquire,
directly or indirectly, Capital Stock of UTC or any member of the UTC Group that
was a “distributing corporation” or a “controlled corporation” (within the
meaning of Section 355(b) of the Code) in any Internal Distribution, in each
case, representing a Fifty-Percent or Greater Interest therein, or (iii) any act
or failure to act by UTC or a member of the UTC Group described in Section 7.03.

(c)
 
(i)           To the extent that any Tax-Related Loss is subject to indemnity
under two or more of Sections 7.05(a)(i), (a)(ii), and (b), responsibility for
such Tax-Related Loss shall be shared by Carrier, Otis, and/or UTC, as
applicable, according to relative fault.
 
(ii)           Notwithstanding anything in Section 7.05(b) or (c)(i) or any
other provision of this Agreement or the Separation and Distribution Agreement
to the contrary:
 
(A)  with respect to (1) any Tax-Related Loss resulting from the application of
Section 355(e) or Section 355(f) of the Code (other than as a result of an
acquisition of a Fifty-Percent or Greater Interest in UTC or any member of the
UTC Group that was a “distributing corporation” or a “controlled corporation”
(within the meaning of Section 355(b) of the Code) in any Internal Distribution)
and (2) any other Tax-Related Loss, in each case, resulting, in whole or in
part, from an acquisition after the Carrier Distribution of any Capital Stock or
assets of Carrier (or any Carrier Affiliate) by any means whatsoever by any
Person or any action or failure to act by Carrier affecting the voting rights of
Carrier, Carrier shall be responsible for, and shall indemnify and hold harmless
UTC, Otis, their respective Affiliates, and each of their respective officers,
directors and employees from and against, 100% of such Tax-Related Loss;
 
(B)  with respect to (1) any Tax-Related Loss resulting from the application of
Section 355(e) or Section 355(f) of the Code (other than as a result of an
acquisition of a Fifty-Percent or Greater Interest in UTC or any member of the
UTC Group that was a “distributing corporation” or a “controlled corporation”
(within the meaning of Section 355(b) of the Code) in any Internal Distribution)
and (2) any other Tax-Related Loss, in each case, resulting, in whole or in
part, from an acquisition after the Otis Distribution of any Capital Stock or
assets of Otis (or any Otis Affiliate) by any means whatsoever by any Person or
any action or failure to act by Otis affecting the voting rights of Otis, Otis
shall be
 
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responsible for, and shall indemnify and hold harmless UTC, Carrier, their
respective Affiliates, and each of their respective officers, directors and
employees from and against, 100% of such Tax-Related Loss;

(C)  for purposes of calculating the amount and timing of any Tax-Related Loss
for which Carrier is responsible under this Section 7.05, Tax-Related Losses
shall be calculated by assuming that UTC, the UTC Affiliated Group, each member
of the UTC Group, Otis, the Otis Affiliated Group, and each member of the Otis
Group (1) pay Tax at the highest marginal corporate Tax rates in effect in each
relevant Tax Period and (2) have no Tax Attributes in any relevant Tax Period;
and
 
(D)  for purposes of calculating the amount and timing of any Tax-Related Loss
for which Otis is responsible under this Section 7.05, Tax-Related Losses shall
be calculated by assuming that UTC, the UTC Affiliated Group, each member of the
UTC Group, Carrier, the Carrier Affiliated Group, and each member of the Carrier
Group (1) pay Tax at the highest marginal corporate Tax rates in effect in each
relevant Tax Period and (2) have no Tax Attributes in any relevant Tax Period.
 
(iii)          Notwithstanding anything in Section 7.05(a) or (c)(i) or any
other provision of this Agreement or the Separation and Distribution Agreement
to the contrary, with respect to (A) any Tax-Related Loss resulting from the
application of Section 355(e) or Section 355(f) of the Code (other than as a
result of an acquisition of a Fifty-Percent or Greater Interest in Carrier,
Otis, or any member of either SpinCo Group that was a “distributing corporation”
or a “controlled corporation” (within the meaning of Section 355(b) of the Code)
in any Internal Distribution) and (B) any other Tax-Related Loss, in each case,
resulting, in whole or in part, from an acquisition after the Carrier
Distribution or the Otis Distribution, as applicable, of any Capital Stock or
assets of UTC (or any UTC Affiliate) by any means whatsoever by any Person
(other than as a result of an acquisition in any Internal Distribution or
Internal Separation Transaction), UTC shall be responsible for, and shall
indemnify and hold harmless Carrier, Otis, their respective Affiliates and each
of their respective officers, directors and employees from and against, 100% of
such Tax-Related Loss.
 
(d)          Allocation of Certain Separation-Related Taxes.  Each of UTC,
Carrier, and Otis shall be liable for, and shall indemnify and hold harmless the
relevant SpinCo Group(s) and/or the UTC Group, as applicable, from and against
any liability for the following amounts in the proportions set forth on Schedule
7.05(d) (the amounts described in clauses (i) and (ii), collectively, “Shared
Taxes”):
 
(i)            Tax-Related Losses with respect to Income Taxes, except to the
extent (A) such Tax is a Tax-Related Loss for which Carrier, Otis, and/or UTC is
responsible pursuant to Section 7.05(a)(i), (a)(ii), or (b), respectively, or
(B) UTC, Carrier, or Otis would otherwise be responsible for such amounts
pursuant to Section 7.05(c); and
 
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(ii)          any Specified Income Taxes imposed on any member of the UTC Group
or any member of any SpinCo Group.
 
(e)          Notwithstanding any other provision of this Agreement or the
Separation and Distribution Agreement to the contrary:
 
(i)            Carrier shall pay UTC and/or Otis, as applicable, the amount for
which Carrier has an indemnification obligation under this Section 7.05:  (A) in
the case of (1) Tax-Related Losses described in clause (a) of the definition of
Tax-Related Losses or (2) Specified Income Taxes described in clause (a) of the
definition of Specified Income Taxes, in each case, no later than the later of
(x) seven business days after delivery by UTC and/or Otis, as applicable, to
Carrier of an invoice for the amount of such Tax-Related Losses or Specified
Income Taxes or (y) three business days prior to the date UTC or Otis, as
applicable, files, or causes to be filed, the applicable Tax Return for the year
of the relevant transaction, as applicable (the “UTC/Otis Filing Date”)
(provided, that if such Tax-Related Losses or Specified Income Taxes arise
pursuant to a Final Determination described in clause (a), (b) or (c) of the
definition of “Final Determination,” then Carrier shall pay UTC and/or Otis, as
applicable, no later than the later of (x) seven business days after delivery by
UTC and/or Otis, as applicable, to Carrier of an invoice for the amount of such
Tax-Related Losses or Specified Income Taxes or (y) three business days prior to
the date for making payment with respect to such Final Determination) and (B) in
the case of (1) Tax-Related Losses described in clause (b) or (c) of the
definition of Tax-Related Losses or (2) Specified Income Taxes described in
clause (b) of the definition of Specified Income Taxes, no later than the later
of (x) seven business days after delivery by UTC and/or Otis, as applicable, to
Carrier of an invoice for the amount of such Tax-Related Losses or Specified
Income Taxes or (y) two business days after the date UTC and/or Otis, as
applicable pays such Tax-Related Losses or Specified Income Taxes.
 
(ii)           Otis shall pay UTC and/or Carrier, as applicable, the amount for
which Otis has an indemnification obligation under this Section 7.05: (A) in the
case of (1) Tax-Related Losses described in clause (a) of the definition of
Tax-Related Losses or (2) Specified Income Taxes described in clause (a) of the
definition of Specified Income Taxes, in each case, no later than the later of
(x) seven business days after delivery by UTC and/or Carrier, as applicable, to
Otis of an invoice for the amount of such Tax-Related Losses or Specified Income
Taxes or (y) three business days prior to the date UTC or Carrier, as
applicable, files, or causes to be filed, the applicable Tax Return for the year
of the relevant transaction, as applicable (the “UTC/Carrier Filing Date”)
(provided, that if such Tax-Related Losses or Specified Income Taxes arise
pursuant to a Final Determination described in clause (a), (b) or (c) of the
definition of “Final Determination,” then Otis shall pay UTC and/or Carrier, as
applicable, no later than the later of (x) seven business days after delivery by
UTC and/or Carrier, as applicable, to Otis of an invoice for the amount of such
Tax-Related Losses or Specified Income Taxes or (y) three business days prior to
the date for making payment with respect to such Final Determination) and (B) in
the case of (1) Tax-Related Losses described in clause (b) or (c) of the
definition of Tax-Related Losses or (2) Specified Income Taxes described in
clause (b) of the definition of Specified Income Taxes, no later than the later
of (x) seven
 
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business days after delivery by UTC and/or Carrier, as applicable, to Otis of an
invoice for the amount of such Tax-Related Losses or Specified Income Taxes or
(y) two business days after the date UTC and/or Carrier, as applicable pays such
Tax-Related Losses or Specified Income Taxes.

(iii)          UTC shall pay Carrier and/or Otis, as applicable, the amount for
which UTC has an indemnification obligation under this Section 7.05:  (A) in the
case of (1) Tax-Related Losses described in clause (a) of the definition of
Tax-Related Losses or (2) Specified Income Taxes described in clause (a) of the
definition of Specified Income Taxes, in each case, no later than the later of
(x) seven business days after delivery by Carrier and/or Otis, as applicable, to
UTC of an invoice for the amount of such Tax-Related Losses or Specified Income
Taxes or (y) three business days prior to the date Carrier or Otis, as
applicable, files, or causes to be filed, the applicable Tax Return for the year
of the relevant transaction, as applicable (the “Carrier/Otis Filing Date”)
(provided, that if such Tax-Related Losses or Specified Income Taxes arise
pursuant to a Final Determination described in clause (a), (b) or (c) of the
definition of “Final Determination,” then UTC shall pay Carrier and/or Otis, as
applicable, no later than the later of (x) seven business days after delivery by
Carrier and/or Otis, as applicable, to UTC of an invoice for the amount of such
Tax-Related Losses or Specified Income Taxes or (y) than three business days
prior to the date for making payment with respect to such Final Determination);
and (B) in the case of (1) Tax-Related Losses described in clause (b) or (c) of
the definition of Tax-Related Losses or (2) Specified Income Taxes described in
clause (b) of the definition of Specified Income Taxes, no later than the later
of (x) seven business days after delivery by Carrier and/or Otis, as applicable,
to UTC of an invoice for the amount of such Tax-Related Losses or Specified
Income Taxes or (y) two business days after the date Carrier or Otis, as
applicable, pays such Tax-Related Losses or Specified Income Taxes.
 
Section 7.06          Section 336(e) Election.  If UTC determines, in its sole
discretion, that one or more protective elections under Section 336(e) of the
Code (each, a “Section 336(e) Election”) shall be made with respect to the
Carrier Distribution, the Otis Distribution, and/or any of the Internal
Distributions, the relevant SpinCo(s) shall (and shall cause any relevant member
of such SpinCo Group(s) to) join with UTC and/or any relevant member of the UTC
Group, as applicable, in the making of any such election and shall take any
action reasonably requested by UTC or that is otherwise necessary to give effect
to any such election (including making any other related election).  If a
Section 336(e) Election is made with respect to the Carrier Distribution, the
Otis Distribution, and/or any of the Internal Distributions, then this Agreement
shall be amended in such a manner as is determined by UTC in good faith to take
into account such Section 336(e) Election(s), including by requiring that, in
the event (a) any Contribution, Distribution, or Internal Distribution fails to
have U.S. Tax-Free Status and (b) a Company (or such Company’s Group) that does
not have exclusive responsibility pursuant to this Agreement for Tax-Related
Losses arising from such failure actually realizes in cash a Tax Benefit from
the step-up in Tax basis resulting from the relevant Section 336(e) Election(s),
such Company shall pay over to the Company that has exclusive responsibility
pursuant to this Agreement for such Tax-Related Losses any such Tax Benefits
realized (provided, that, if such Tax-Related Losses are Shared Taxes or Taxes
for which more than one Company is liable under Section 7.05(c)(i), the Company
that actually realizes in cash the Tax Benefit resulting from the
 
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relevant Section 336(e) Election shall pay over to each of the other Companies
responsible for such Taxes the percentage of any such Tax Benefits realized that
corresponds to each such Company’s percentage share of such Taxes).

Section 7.07          Certain Assumptions.  For purposes of this Agreement
(including the restrictions and covenants and obligations of the Parties set
forth in this Section 7, the requirements for an Unqualified Tax Opinion, and
any other provision of this Agreement or determination hereunder relating to the
U.S. Tax-Free Status of the External Separation Transactions or the Internal
Distributions (or the application of Section 355(e) of the Code thereto)), it
shall be assumed that, except to the extent expressly ruled otherwise by the IRS
in the Private Letter Ruling or in a supplemental private letter ruling, (a) the
Specified Acquisition is “part of a plan (or series of related transactions)”
with each of the Distributions for purposes of Section 355(e) of the Code, and
(b) the Specified Acquisition resulted in one or more persons acquiring directly
or indirectly common stock representing no less than the Specified Percentage
Interest in each of the SpinCos for purposes of Section 355(e) of the Code.
 
Section 8.          Assistance and Cooperation.
 
Section 8.01          Assistance and Cooperation.
 
(a)    Each of the Companies shall provide (and shall cause its Affiliates to
provide) the other Companies and their respective agents, including accounting
firms and legal counsel, with such cooperation or information as they may
reasonably request in connection with (i) preparing and filing Tax Returns, (ii)
determining the liability for and amount of any Taxes due (including estimated
Taxes) or the right to and amount of any refund of Taxes, (iii) examinations of
Tax Returns, and (iv) any administrative or judicial proceeding in respect of
Taxes assessed or proposed to be assessed.  Such cooperation shall include
making available, upon reasonable notice, all information and documents in their
possession relating to the other Companies and their respective Affiliates as
provided in Section 9.  Each of the Companies shall also make available to the
other Companies, as reasonably requested and available, personnel (including
employees and agents of the Companies or their respective Affiliates)
responsible for preparing, maintaining, and interpreting information and
documents relevant to Taxes.
 
(b)    Any information or documents provided under this Section 8 or Section 9
shall be kept confidential by the Company or Companies receiving the information
or documents, except as may otherwise be necessary in connection with the filing
of Tax Returns or in connection with any administrative or judicial proceedings
relating to Taxes.  Notwithstanding any other provision of this Agreement or any
other agreement, in no event shall any of the Companies or any of their
respective Affiliates be required to provide the other Companies or any of their
respective Affiliates or any other Person access to or copies of any information
if such action could reasonably be expected to result in the waiver of any
Privilege.  In addition, in the event that any of the Companies determine that
the provision of any information to the other Companies or their respective
Affiliates could be commercially detrimental, violate any law or agreement or
waive any Privilege, the Parties shall use reasonable best efforts to permit
compliance with their obligations under this Section 8 or Section 9 in a manner
that avoids any such harm or consequence.
 
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Section 8.02          Income Tax Return Information.  UTC, Carrier, and Otis
acknowledge that time is of the essence in relation to any request for
information, assistance or cooperation made by Carrier, Otis, or UTC pursuant to
Section 8.01 or this Section 8.02.  UTC, Carrier, and Otis acknowledge that
failure to comply with the deadlines set forth herein or reasonable deadlines
otherwise set by Carrier, Otis, or UTC could cause irreparable harm.  Each
Company shall provide to each of the other Companies information and documents
relating to its Group required by such other Company to prepare its Tax
Returns.  Any information or documents required by the Company that is
responsible to prepare such Tax Returns under this Agreement shall be provided
in such form as the preparing Company reasonably requests and in sufficient time
for such Tax Returns to be filed on a timely basis; provided, that, this Section
8.02 shall not apply to information governed by Section 4.09.  In the event
that, following the relevant Distribution Date, any SpinCo receives notice from
any Tax Authority that any Foreign Income Taxes reported on any Tax Return for a
Tax Period ending on or prior to (or including) the relevant Deconsolidation
Date may be subject to adjustment, such SpinCo shall provide written notice
thereof to UTC promptly following receipt of such notice.
 
Section 8.03          Reliance by UTC.  If any member of either SpinCo Group
supplies information to a member of the UTC Group in connection with a Tax
liability and an officer of a member of the UTC Group signs a statement or other
document under penalties of perjury in reliance upon the accuracy of such
information, then, upon the written request of UTC identifying the information
being so relied upon, the Chief Financial Officer of the relevant SpinCo (or any
officer of such SpinCo as designated by the Chief Financial Officer of such
SpinCo) shall certify in writing that to his or her knowledge (based upon
consultation with appropriate employees) the information so supplied is accurate
and complete.  Each of Carrier and Otis agrees to indemnify and hold harmless
each member of the UTC Group and its directors, officers and employees from and
against any fine, penalty, or other cost or expense of any kind attributable to
a member of the Carrier Group or the Otis Group, respectively, having supplied,
pursuant to this Section 8, a member of the UTC Group with inaccurate or
incomplete information in connection with a Tax liability.
 
Section 8.04          Reliance by Carrier.  If any member of the UTC Group or
Otis Group supplies information to a member of the Carrier Group in connection
with a Tax liability and an officer of a member of the Carrier Group signs a
statement or other document under penalties of perjury in reliance upon the
accuracy of such information, then upon the written request of Carrier
identifying the information being so relied upon, the Chief Financial Officer of
UTC or Otis, as applicable, (or any officer of UTC or Otis, as applicable, as
designated by the Chief Financial Officer of UTC or Otis, as applicable) shall
certify in writing that to his or her knowledge (based upon consultation with
appropriate employees) the information so supplied is accurate and complete. 
Each of UTC and Otis agrees to indemnify and hold harmless each member of the
Carrier Group and its directors, officers and employees from and against any
fine, penalty, or other cost or expense of any kind attributable to a member of
the UTC Group or the Otis Group, respectively, having supplied, pursuant to this
Section 8, a member of the Carrier Group with inaccurate or incomplete
information in connection with a Tax liability; provided, that, this Section
8.04 shall not apply to information governed by Section 4.09.
 
Section 8.05          Reliance by Otis.  If any member of the UTC Group or
Carrier Group supplies information to a member of the Otis Group in connection
with a Tax liability and an
 
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officer of a member of the Otis Group signs a statement or other document under
penalties of perjury in reliance upon the accuracy of such information, then
upon the written request of Otis identifying the information being so relied
upon, the Chief Financial Officer of UTC or Carrier, as applicable, (or any
officer of UTC or Carrier, as applicable, as designated by the Chief Financial
Officer of UTC or Carrier, as applicable) shall certify in writing that to his
or her knowledge (based upon consultation with appropriate employees) the
information so supplied is accurate and complete.  Each of UTC and Carrier
agrees to indemnify and hold harmless each member of the Otis Group and its
directors, officers and employees from and against any fine, penalty, or other
cost or expense of any kind attributable to a member of the UTC Group or the
Carrier Group, respectively, having supplied, pursuant to this Section 8, a
member of the Otis Group with inaccurate or incomplete information in connection
with a Tax liability; provided, that, this Section 8.05 shall not apply to
information governed by Section 4.09.

Section 9.           Tax Records.
 
Section 9.01          Retention of Tax Records.  Each Company shall preserve and
keep all Tax Records exclusively relating to the assets and activities of its
Group for the relevant Pre-Deconsolidation Period(s), and UTC shall preserve and
keep all other Tax Records relating to Taxes of the Groups for the relevant
Pre-Deconsolidation Periods, for so long as the contents thereof may become
material in the administration of any matter under the Code or other applicable
Tax Law, but in any event until the later of (a) the expiration of any
applicable statutes of limitations, or (b) seven years after the relevant
Deconsolidation Date (such later date, the “Retention Date”).  After the
Retention Date, each Company may dispose of such Tax Records upon 90 days’ prior
written notice to the other Companies.  If, prior to the Retention Date, a
Company reasonably determines that any Tax Records that it would otherwise be
required to preserve and keep under this Section 9 are no longer material in the
administration of any matter under the Code or other applicable Tax Law and the
other Companies agree, then such first Company may dispose of such Tax Records
upon 90 days’ prior notice to the other Companies.  Any notice of an intent to
dispose given pursuant to this Section 9.01 shall include a list of the Tax
Records to be disposed of describing in reasonable detail the files, books, or
other records being disposed.  The notified Companies shall have the
opportunity, at their cost and expense, to copy or remove, within such 90-day
period, all or any part of such Tax Records.
 
Section 9.02          Access to Tax Records.  The Companies and their respective
Affiliates shall make available to each other for inspection and copying during
normal business hours upon reasonable notice all Tax Records for
Pre-Deconsolidation Periods to the extent reasonably required by the other
Companies in connection with the preparation of financial accounting statements,
audits, litigation, or the resolution of items under this Agreement.
 
Section 10.         Tax Contests.
 
Section 10.01         Notice.  Each of the Companies shall provide prompt notice
to the other(s) of any written communication from a Tax Authority regarding any
pending or threatened Tax audit, assessment or proceeding or other Tax Contest
for which it may be entitled to indemnification by the other Company or
Companies hereunder.  Such notice shall include copies of the pertinent portion
of any written communication from a Tax Authority and contain factual
information (to the extent known) describing any asserted Tax liability in
reasonable
 
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detail.  The failure of one Company to notify the other(s) of such communication
in accordance with the immediately preceding sentences shall not relieve either
of the other Companies of any liability or obligation to pay such Tax or make
indemnification payments under this Agreement, except to the extent that the
failure timely to provide such notification actually prejudices the ability of
such other Company to contest such Tax liability or increases the amount of such
Tax liability.

Section 10.02          Control of Tax Contests.
 
(a)          Separate Company Taxes and Joint Returns with Respect to Other
Taxes.  In the case of any Tax Contest with respect to any (i) Separate Return
or (ii) Joint Return with respect to Other Taxes, the Company having liability
for the Tax shall have exclusive control over the Tax Contest, including
exclusive authority with respect to any settlement of such Tax liability,
subject to Section 10.02(e).
 
(b)          UTC Federal Consolidated Income Tax Return and UTC State Combined
Income Tax Return.  In the case of any Tax Contest with respect to any UTC
Federal Consolidated Income Tax Return or UTC State Combined Income Tax Return,
UTC shall have exclusive control over the Tax Contest, including exclusive
authority with respect to any settlement of such Tax liability, subject to
Section 10.02(e)(i).
 
(c)          UTC Foreign Combined Income Tax Return. In the case of any Tax
Contest with respect to any UTC Foreign Combined Income Tax Return, UTC shall
have exclusive control over the Tax Contest, including exclusive authority with
respect to any settlement of such Tax liability, subject to Section 10.02(e)(i).
 
(d)          Other Joint Returns.  In the case of any Tax Contest with respect
to any Joint Return (other than any UTC Federal Consolidated Income Tax Return,
UTC State Combined Income Tax Return, UTC Foreign Combined Income Tax Return, or
Joint Return with respect to Other Taxes), (i) UTC shall control the defense or
prosecution of the portion of the Tax Contest, if any, directly and exclusively
related to any UTC Adjustment, including settlement of any such UTC Adjustment,
(ii) Carrier shall control the defense or prosecution of the portion of the Tax
Contest, if any, directly and exclusively related to any Carrier Adjustment,
including settlement of any such Carrier Adjustment, (iii) Otis shall control
the defense or prosecution of the portion of the Tax Contest, if any, directly
and exclusively related to the Otis Adjustment, including settlement of any such
Otis Adjustment, and (iv) the relevant Companies shall jointly control the
defense or prosecution of Joint Adjustments and any and all administrative
matters not directly and exclusively related to any UTC Adjustment or SpinCo
Adjustment.  In the event of any disagreement regarding any matter described in
clause (iv), the provisions of Section 14 shall apply.
 
(e)          Separation-Related and Certain Other Tax Contests.
 
(i) In the event of any:
 
(A) (x) Separation-Related Tax Contest as a result of which Carrier and/or Otis
(the “Responsible SpinCo(s)”) could reasonably be expected to become
 
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exclusively liable for any Tax or Tax-Related Losses or (y) Tax Contest as a
result of which the Responsible SpinCo(s) could reasonably be expected to become
liable for any SpinCo Reserved Income Taxes, and, in each case, which UTC has
the right to administer and control pursuant to Section 10.02(a), (b) or (c),
(1) UTC shall consult with the Responsible SpinCo(s) reasonably in advance of
taking any significant action in connection with such Tax Contest, (2) UTC shall
offer the Responsible SpinCo(s) a reasonable opportunity to comment before
submitting any written materials prepared or furnished in connection with such
Tax Contest, (3) UTC shall defend such Tax Contest diligently and in good faith
as if it were the only party in interest in connection with such Tax Contest,
and (4) UTC shall provide the Responsible SpinCo(s) copies of any written
materials relating to such Tax Contest received from the relevant Tax Authority;
and

(B) (x) Separation-Related Tax Contest as a result of which the Responsible
SpinCo(s) could reasonably be expected to become liable for any portion of any
Tax or Tax-Related Losses pursuant to Section 7.05(c)(i) or (y) Tax Contest as a
result of which the Responsible SpinCo(s) could reasonably be expected become
liable for any Shared Taxes, and, in each case, which UTC has the right to
administer and control pursuant to Section 10.02(a), (b) or (c), (1) UTC shall
keep the Responsible SpinCo(s) reasonably informed with respect to such Tax
Contest, (2) UTC shall defend such Tax Contest diligently and in good faith as
if it were the only party in interest in connection with such Tax Contest, and
(3) UTC shall provide the Responsible SpinCo(s) copies of any written materials
relating to such Tax Contest received from the relevant Tax Authority.
 
(ii) In the event of any (x) Separation-Related Tax Contest with respect to any
Carrier Separate Return as a result of which UTC and/or Otis could reasonably be
expected to become liable for any Tax or Tax-Related Losses or (y) Specified Tax
Contest with respect to any Carrier Separate Return as a result of which UTC
and/or Otis could reasonably be expected to become liable for any Specified
Income Taxes, (A) Carrier shall consult with UTC and/or Otis, as applicable,
reasonably in advance of taking any significant action in connection with such
Tax Contest, (B) Carrier shall consult with UTC and/or Otis, as applicable, and
offer UTC and/or Otis, as applicable, a reasonable opportunity to comment before
submitting any written materials prepared or furnished in connection with such
Tax Contest, (C) Carrier shall defend such Tax Contest diligently and in good
faith as if it were the only party in interest in connection with such Tax
Contest, (D) UTC and/or Otis, as applicable, shall be entitled to participate in
such Tax Contest and receive copies of any written materials relating to such
Tax Contest received from the relevant Tax Authority, and (E) Carrier shall not
settle, compromise or abandon any such Tax Contest without obtaining the prior
written consent of UTC and/or Otis, as relevant, which consent shall not be
unreasonably withheld; provided, however, that in the case of any (1)
Separation-Related Tax Contest (I) as a result of which UTC could reasonably be
expected to become liable for any Tax or Tax-Related Losses pursuant to Section
7.05(b) or Section 7.05(c)(i) or (II) with respect to any Specified Matter, or
(2) Tax Contest as a result of which UTC could reasonably be expected become
liable for any Shared Taxes, and, in each case, which Carrier has the right to
 
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administer and control pursuant to Section 10.02(a), UTC shall have the right to
elect to assume control of such Tax Contest, in which case the provisions of
Section 10.02(e)(i)(B) shall apply.

(iii)          In the event of any (x) Separation-Related Tax Contest with
respect to any Otis Separate Return as a result of which UTC and/or Carrier
could reasonably be expected to become liable for any Tax or Tax-Related Losses
or (y) Specified Tax Contest with respect to any Otis Separate Return as a
result of which UTC and/or Carrier could reasonably be expected to become liable
for any Specified Income Taxes, (A) Otis shall consult with UTC and/or Carrier,
as applicable, reasonably in advance of taking any significant action in
connection with such Tax Contest, (B) Otis shall consult with UTC and/or
Carrier, as applicable, and offer UTC and/or Carrier, as applicable, a
reasonable opportunity to comment before submitting any written materials
prepared or furnished in connection with such Tax Contest, (C) Otis shall defend
such Tax Contest diligently and in good faith as if it were the only party in
interest in connection with such Tax Contest, (D) UTC and/or Carrier, as
applicable, shall be entitled to participate in such Tax Contest and receive
copies of any written materials relating to such Tax Contest received from the
relevant Tax Authority, and (E) Otis shall not settle, compromise or abandon any
such Tax Contest without obtaining the prior written consent of UTC and/or
Carrier, as relevant, which consent shall not be unreasonably withheld;
provided, however, that in the case of any (1) Separation-Related Tax Contest
(I) as a result of which UTC could reasonably be expected to become liable for
any portion of any Tax or Tax-Related Losses pursuant to Section 7.05(c)(i) or
(II) with respect to any Specified Matter or (2) Tax Contest as a result of
which UTC could reasonably be expected become liable for any Shared Taxes, and,
in each case, which Otis has the right to administer and control pursuant to
Section 10.02(a), UTC shall have the right to elect to assume control of such
Tax Contest, in which case the provisions of Section 10.02(e)(i)(B) shall apply.
 
(f)           Power of Attorney.  Carrier shall (and shall cause each member of
the Carrier Group to) execute and deliver to UTC (or such member of the UTC
Group as UTC shall designate) or Otis (or such member of the Otis Group as Otis
shall designate), as applicable, any power of attorney or other similar document
reasonably requested by UTC (or such designee) or Otis (or such designee),
respectively, in connection with any Tax Contest controlled by UTC or Otis,
respectively, described in this Section 10.  Otis shall (and shall cause each
member of the Otis Group to) execute and deliver to UTC (or such member of the
UTC Group as UTC shall designate) or Carrier (or such member of the Carrier
Group as Carrier shall designate), as applicable, any power of attorney or other
similar document reasonably requested by UTC (or such designee) or Carrier (or
such designee), respectively, in connection with any Tax Contest controlled by
UTC or Carrier, respectively, described in this Section 10.
 
Section 11.         Effective Date; Termination of Prior Intercompany Tax
Allocation Agreements.  This Agreement shall be effective as of the Effective
Time.
 
Section 11.01         As of the Carrier Effective Time, (a) all prior
intercompany Tax allocation agreements or arrangements solely between or among
UTC and/or any of its Subsidiaries (including for this purpose, members of the
Otis Group if the Otis Effective Time shall not yet have occurred, but excluding
members of the Carrier Group), on the one hand, and Carrier and/or
 
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members of the Carrier Group, on the other hand, shall be terminated, and (b)
amounts due under such agreements or arrangements as of the date on which the
Carrier Effective Time occurs shall be settled.  Upon such termination and
settlement, no further payments by or to UTC or such Subsidiaries or by or to
Carrier or such members of the Carrier Group, with respect to such agreements or
arrangements shall be made, and all other rights and obligations resulting from
such agreements or arrangements shall cease at such time.  Any payments pursuant
to such agreements shall be disregarded for purposes of computing amounts due
under this Agreement; provided, that to the extent appropriate, as determined by
UTC, payments made pursuant to such agreements or arrangements shall be credited
to Carrier or UTC, respectively, in computing their respective obligations
pursuant to this Agreement, in the event that such payments relate to a Tax
liability that is the subject matter of this Agreement for a Tax Period that is
the subject matter of this Agreement.

Section 11.02          As of the Otis Effective Time, (a) all prior intercompany
Tax allocation agreements or arrangements solely between or among UTC and/or any
of its Subsidiaries (including for this purpose, members of the Carrier Group if
the Carrier Effective Time shall not yet have occurred, but excluding members of
the Otis Group), on the one hand, and Otis and/or members of the Otis Group, on
the other hand, shall be terminated, and (b) amounts due under such agreements
or arrangements as of the date on which the Otis Effective Time occurs shall be
settled.  Upon such termination and settlement, no further payments by or to UTC
or such Subsidiaries or by or to Otis or such members of the Otis Group, with
respect to such agreements or arrangements shall be made, and all other rights
and obligations resulting from such agreements or arrangements shall cease at
such time.  Any payments pursuant to such agreements or arrangements shall be
disregarded for purposes of computing amounts due under this Agreement;
provided, that to the extent appropriate, as determined by UTC, payments made
pursuant to such agreements or arrangements shall be credited to Otis or UTC,
respectively, in computing their respective obligations pursuant to this
Agreement, in the event that such payments relate to a Tax liability that is the
subject matter of this Agreement for a Tax Period that is the subject matter of
this Agreement.
 
Section 12.         Survival of Obligations.  The representations, warranties,
covenants and agreements set forth in this Agreement shall be unconditional and
absolute and shall remain in effect without limitation as to time.
 
Section 13.         Treatment of Payments; Tax Gross Up.
 
Section 13.01        Treatment of Tax Indemnity and Tax Benefit Payments.  In
the absence of any change in Tax treatment under the Code or other applicable
Tax Law, for all Income Tax purposes, the Companies agree to treat, and to cause
their respective Affiliates to treat, (a) any indemnity payment required by this
Agreement or by the Separation and Distribution Agreement to be made (i) by UTC
to a SpinCo as a contribution by UTC to the relevant SpinCo and (ii) by a SpinCo
to UTC as a distribution by the relevant SpinCo to UTC, in each case, occurring
immediately prior to the relevant Distribution with respect to such SpinCo; and
(b) any payment of interest or State Income Taxes by or to a Tax Authority, as
taxable or deductible, as the case may be, to the Company entitled under this
Agreement to retain such payment or required under this Agreement to make such
payment.  The Parties shall cooperate in good faith (including, where relevant,
by using commercially reasonable efforts to establish local payment
 
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arrangements between each Party’s Subsidiaries) to minimize or eliminate, to the
extent permissible under applicable law, any Tax that would otherwise be imposed
with respect to any payment required by this Agreement or by the Separation and
Distribution Agreement (or maximize the ability to obtain a credit for, or
refund of, any such Tax).

Section 13.02         Tax Gross Up.  If notwithstanding the manner in which
payments described in Section 13.01(a) were reported, there is a Tax liability
or an adjustment to a Tax liability of a Company as a result of its receipt of a
payment pursuant to this Agreement or the Separation and Distribution Agreement,
such payment shall be appropriately adjusted so that the amount of such payment,
reduced by the amount of all Income Taxes payable with respect to the receipt
thereof (but taking into account all correlative Tax Benefits resulting from the
payment of such Income Taxes), shall equal the amount of the payment that the
Company receiving such payment would otherwise be entitled to receive.
 
Section 13.03         Interest.  Anything herein to the contrary
notwithstanding, to the extent one Company makes a payment of interest to
another Company under this Agreement with respect to the period from (a) the
date that the payor was required to make a payment to the payee to (b) the date
that the payor actually made such payment, the interest payment shall be treated
as interest expense to the payor (deductible to the extent provided by law) and
as interest income by the payee (includible in income to the extent provided by
law).  The amount of the payment shall not be adjusted to take into account any
associated Tax Benefit to the payor or increase in Tax to the payee.
 
Section 14.         Disagreements.  The Companies desire that collaboration will
continue among them.  Accordingly, they will try, and they will cause their
respective Group members to try, to resolve in good faith all disagreements
regarding their respective rights and obligations under this Agreement,
including any amendments hereto.  In furtherance thereof, in the event of any
dispute or disagreement (a “Tax Advisor Dispute”) between any member of the UTC
Group and any member of any SpinCo Group (or between any member of the Carrier
Group and any member of the Otis Group) as to the interpretation of any
provision of this Agreement or the performance of obligations hereunder,
representatives of the Tax departments of the relevant Companies shall negotiate
in good faith to resolve the Tax Advisor Dispute.  If such good faith
negotiations do not resolve the Tax Advisor Dispute, then such Tax Advisor
Dispute shall be resolved pursuant to the procedures set forth in Article VII of
the Separation and Distribution Agreement; provided, that each of the mediators
or arbitrators selected in accordance with Article VII of the Separation and
Distribution Agreement must be Tax Advisors.  Nothing in this Section 14 will
prevent any Company from seeking injunctive relief if any delay resulting from
the efforts to resolve the Tax Advisor Dispute through the procedures set forth
in Article VII of the Separation and Distribution Agreement could result in
serious and irreparable injury to such Company.  Notwithstanding anything to the
contrary in this Agreement, the Separation and Distribution Agreement or any
Ancillary Agreement, UTC, Carrier, and Otis are the only members of their
respective Groups entitled to commence a dispute resolution procedure under this
Agreement, and each of UTC, Carrier, and Otis will cause its respective Group
members not to commence any dispute resolution procedure other than through such
Party as provided in this Section 14.
 
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Section 15.         Late Payments.  Any amount owed by one Party to another
Party under this Agreement that is not paid when due shall bear interest at the
Prime Rate plus two percent, compounded semiannually, from the due date of the
payment to the date paid.
 
Section 16.         Expenses.  Except as otherwise provided in this Agreement,
each Party and its Affiliates shall bear their own expenses incurred in
connection with the preparation of Tax Returns, Tax Contests, and other matters
related to Taxes under the provisions of this Agreement.
 
Section 17.         General Provisions.
 
Section 17.01          Addresses and Notices.  All notices, requests, claims,
demands or other communications under this Agreement shall be in writing and
shall be given or made (and except as provided herein, shall be deemed to have
been duly given or made upon receipt) by delivery in person, by overnight
courier service, by certified mail, return receipt requested, or by electronic
mail (“e-mail”), so long as confirmation of receipt of such e-mail is requested
and received, to the respective Parties at the following addresses (or at such
other address for a Party as shall be specified in a notice given in accordance
with this Section 17.01):
 
If to UTC, to:

United Technologies Corporation
10 Farm Springs Road
Farmington, Connecticut 06032
Attention:  Ross Kearney, Corporate VP – Taxes
E-mail:  Ross.kearney@utc.com
with a copy to:

United Technologies Corporation
10 Farm Springs Road
Farmington, Connecticut 06032
Attention:  Sean Moylan, Corporate Vice President and Associate General Counsel
E-mail:  Sean.Moylan@utc.com
   
If to Carrier, to:
 
Carrier Global Corporation
13995 Pasteur Boulevard
Palm Beach Gardens, Florida 33418
Attention:  Michael Cenci, VP, Tax
E-mail:  Michael.Cenci@carrier.com
with a copy to:
 
Carrier Global Corporation
13995 Pasteur Boulevard
Palm Beach Gardens, Florida 33418
Attention:  General Counsel
E-mail:  Kevin.OConnor@carrier.com
   
If to Otis, to:

Otis Worldwide Corporation
One Carrier Place
Farmington, Connecticut 06032
Attention:  Gregory Marshall, VP, Tax
E-mail:  Gregory.Marshall@otis.com
with a copy to:

Otis Worldwide Corporation
One Carrier Place
Farmington, Connecticut 06032
Attention:  General Counsel
E-mail:  Nora.LaFreniere@otis.com

A Party may, by notice to the other Parties, change the address to which such
notices are to be given or made.
 
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Section 17.02        Binding Effect.  This Agreement shall be binding upon and
inure to the benefit of the Parties and their respective successors and
permitted assigns.
 
Section 17.03        Waiver.  Waiver by a Party of any default by another Party
of any provision of this Agreement shall not be deemed a waiver by the waiving
Party of any subsequent or other default, nor shall it prejudice the rights of
any other Party.  No failure or delay by a Party in exercising any right, power
or privilege under this Agreement shall operate as a waiver thereof, nor shall a
single or partial exercise thereof prejudice any other or further exercise
thereof or the exercise of any other right, power or privilege.
 
Section 17.04        Severability.  If any provision of this Agreement or the
application thereof to any Person or circumstance is determined by a court of
competent jurisdiction to be invalid, void or unenforceable, the remaining
provisions hereof, or the application of such provision to Persons or
circumstances or in jurisdictions other than those as to which it has been held
invalid or unenforceable, shall remain in full force and effect and shall in no
way be affected, impaired or invalidated thereby.  Upon such determination, the
Parties shall negotiate in good faith in an effort to agree upon such a suitable
and equitable provision to effect the original intent of the Parties.
 
Section 17.05        Authority.  UTC represents on behalf of itself and each
other member of the UTC Group, Carrier represents on behalf of itself and each
other member of the Carrier Group and Otis represents on behalf of itself and
each other member of the Otis Group, as follows:
 
(a)   each such Person has the requisite corporate or other power and authority
and has taken all corporate or other action necessary in order to execute,
deliver and perform this Agreement; and
 
(b)    this Agreement has been duly executed and delivered by it and constitutes
a valid and binding agreement of it enforceable in accordance with the terms
hereof.
 
Section 17.06        Further Action.  Prior to, on, and after the First
Effective Time, each Party hereto shall cooperate with the other Parties, at the
expense of the requesting Party, to execute and deliver, or use its reasonable
best efforts to cause to be executed and delivered, all instruments, including
the execution and delivery to the other Parties and their Affiliates and
representatives of such powers of attorney or other authorizing documentation as
is reasonably necessary or appropriate in connection with Tax Contests (or
portions thereof) under the control of such other Parties in accordance with
Section 10, and to make all filings with any Governmental Authority, and to take
all such other actions as such Party may reasonably be requested to take by the
other Parties from time to time, consistent with the terms of this Agreement, in
order to effectuate the provisions and purposes of this Agreement.
 
Section 17.07        Integration.  This Agreement, together with each of the
exhibits and schedules appended hereto, contain the entire agreement among the
Parties with respect to the subject matter hereof, supersede all previous
agreements, negotiations, discussions, writings, understandings, commitments and
conversations with respect to such subject matter, and there are no agreements
or understandings among the Parties other than those set forth herein and in
 
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the Separation and Distribution Agreement and the other Ancillary Agreements. 
This Agreement, the Separation and Distribution Agreement, and the other
Ancillary Agreements together govern the arrangements in connection with the
Separation and the Distributions and would not have been entered independently. 
In the event of any inconsistency between this Agreement and the Separation and
Distribution Agreement, or any other agreements relating to the transactions
contemplated by the Separation and Distribution Agreement, with respect to
matters addressed herein, the provisions of this Agreement shall control (it
being understood that the terms pursuant to which any transition services
related to Tax matters shall be provided under the Transition Services Agreement
shall be governed by the Transition Services Agreement).

Section 17.08        Construction.  The language in all parts of this Agreement
shall in all cases be construed according to its fair meaning and shall not be
strictly construed for or against any Party.  The captions, titles and headings
included in this Agreement are for convenience only, and do not affect this
Agreement’s construction or interpretation.  Unless otherwise indicated, all
“Section” references in this Agreement are to sections of this Agreement.
 
Section 17.09        No Double Recovery.  No provision of this Agreement shall
be construed to provide an indemnity or other recovery for any costs, damages,
or other amounts for which the damaged Party has been fully compensated under
any other provision of this Agreement or under any other agreement or action at
law or equity.  Unless expressly required in this Agreement, a Party shall not
be required to exhaust all remedies available under other agreements or at law
or equity before recovering under the remedies provided in this Agreement.
 
Section 17.10        Counterparts.  Each Party acknowledges that it and each
other Party may execute this Agreement by facsimile, stamp or mechanical
signature and that delivery of an executed counterpart of a signature page to
this Agreement (whether executed by manual, stamp or mechanical signature) by
facsimile or by e-mail in portable document format (PDF) shall be effective as
delivery of such executed counterpart of this Agreement.  Each Party expressly
adopts and confirms each such facsimile, stamp or mechanical signature
(regardless of whether delivered in person, by mail, by courier, by facsimile or
by e-mail in portable document format (PDF)) made in its respective name as if
it were a manual signature delivered in person, agrees that it will not assert
that any such signature or delivery is not adequate to bind such Party to the
same extent as if it were signed manually and delivered in person and agrees
that, at the reasonable request of the other Party at any time, it will as
promptly as reasonably practicable cause this Agreement to be manually executed
(any such execution to be as of the date of the initial date thereof) and
delivered in person, by mail or by courier.
 
Section 17.11        Governing Law.  This Agreement (and any claims or disputes
arising out of or related hereto or to the transactions contemplated hereby or
to the inducement of any Party to enter herein, whether for breach of contract,
tortious conduct or otherwise and whether predicated on common law, statute or
otherwise) shall be governed by and construed and interpreted in accordance with
the laws of the State of Delaware irrespective of the choice of laws principles
of the State of Delaware including all matters of validity, construction,
effect, enforceability, performance and remedies.
 
Section 17.12          Amendment.  No provisions of this Agreement shall be
deemed waived, amended, supplemented or modified by a Party, unless such waiver,
amendment, supplement or
 
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modification is in writing and signed by the authorized representatives of the
Parties against whom it is sought to enforce such waiver, amendment, supplement
or modification; provided, that from the First Effective Time to the Second
Effective Time, provisions of this Agreement may be waived, amended,
supplemented or modified (a) if the Carrier Distribution occurs prior to the
Otis Distribution, without the consent of Carrier, so long as such waiver,
amendment, supplement or modification does not adversely affect in any material
respect any provisions of, or obligations under, this Agreement that are for the
benefit of Carrier, or materially prejudice or otherwise adversely affect in any
material respect any rights of Carrier or any member of its Group under this
Agreement and (b) if the Otis Distribution occurs prior to the Carrier
Distribution, without the consent of Otis, so long as such waiver, amendment,
supplement or modification does not adversely affect in any material respect any
provisions of, or obligations under, this Agreement that are for the benefit of
Otis or materially prejudice or otherwise adversely affect in any material
respect any rights of Otis or any member of its Group under this Agreement.

Section 17.13        SpinCo Subsidiaries.  If, at any time, either Carrier or
Otis acquires or creates one or more subsidiaries that are includable in the
Carrier Group or the Otis Group, respectively, they shall be subject to this
Agreement and all references to the Carrier Group or the Otis Group, as
applicable, herein shall thereafter include a reference to such subsidiaries.
 
Section 17.14        Successors.  This Agreement shall be binding on and inure
to the benefit of any successor by merger, acquisition of assets, or otherwise,
to any of the Parties (including but not limited to any successor of UTC,
Carrier, or Otis succeeding to the Tax Attributes of either under Section 381 of
the Code), to the same extent as if such successor had been an original Party to
this Agreement.
 
Section 17.15         Injunctions.  Subject to the provisions of Section 14, in
the event of any actual or threatened default in, or breach of, any of the
terms, conditions and provisions of this Agreement, the Party or Parties who
are, or are to be, thereby aggrieved shall have the right to specific
performance and injunctive or other equitable relief in respect of its or their
rights under this Agreement, in addition to any and all other rights and
remedies at law or in equity, and all such rights and remedies shall be
cumulative.  The Parties agree that the remedies at law for any breach or
threatened breach, including monetary damages, are inadequate compensation for
any loss and that any defense in any Action for specific performance that a
remedy at law would be adequate is waived.  Any requirements for the securing or
posting of any bond with such remedy are waived by each of the Parties.
 
[Remainder of page intentionally left blank]
 
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IN WITNESS WHEREOF, the Parties have caused this 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
           
CARRIER GLOBAL CORPORATION
           
By:
/s/ Kyle Crockett
     
Name: Kyle Crockett
     
Title:   Vice President, Controller
           
OTIS WORLDWIDE CORPORATION
           
By:
/s/ Michael P. Ryan
     
Name: Michael P. Ryan
     
Title:    Vice President, Controller
 

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