UNITED TECHNOLOGIES CORPORATION DEFERRED COMPENSATION PLAN (As amended and restated as of December 15, 1993) ARTICLE I - PREAMBLE United Technologies Corporation established the United Technologies Deferred Compensation Plan effective April 1, 1985. Pursuant to such Plan, certain eligible executives of the Corporation were permitted to defer all or a portion of their compensation earned with respect to 1985 and 1986. No compensation earned after 1986 has been deferred under the Plan. The Corporation has determined to offer eligible executives the opportunity to defer under the Plan all or a portion of compensation earned or otherwise payable in 1994 and subsequent years. However, such deferrals will be subject to the terms and conditions set forth herein, which terms and conditions differ from those that applied to previous deferrals under the Plan. Accordingly, the Plan is hereby restated in its entirety for the purpose of facilitating future elections to defer compensation under the Plan. Any amounts previously deferred under the Plan will continue to be maintained, administered and distributed in accordance with the terms of the Plan as in effect prior to December 15, 1993. ARTICLE II - DEFINITIONS Beneficiary means the person, persons or entity designated by the Participant to receive the value of the Plan Accounts credited to such Participant in the event of the death of the Participant. If the Participant fails to designate a Beneficiary, or if the Beneficiary (and any contingent Beneficiary) does not survive the Participant, the value of all of the Participant's Plan Accounts will be paid to the estate of the Participant. Benefit Reduction means either a reduction in a Participant's (or the Participant's beneficiary's) benefit under any of the Corporation's deferred benefit pension plans, or a reduction in the value of employer matching contributions under any of the Corporation's savings plans, as a result of the reduction of such Participant's Compensation pursuant to the Plan. Class Year means each calendar year for which compensation may be deferred pursuant to the Plan. Class Year Account means the Account established for each Participant for each Class Year for which compensation is deferred pursuant to the Plan. Each Class Year Account may consist of a Credited Interest Account and a UTC Stock Unit Account credited with deferred amounts in accordance with the Participant's election. A Supplemental Account is not a Class Year Account. Committee means the United Technologies Corporation Deferred Compensation Committee, which is responsible for the administration of the Plan. Members of the Committee shall be appointed from time to time by the Corporation's Pension Administration Committee. Compensation means base salary and Incentive Compensation Payments paid to a Participant with respect to a Class Year and considered to be wages for purposes of federal income tax withholding, but before any deferral of Compensation deferred pursuant to the Plan. Compensation does not include foreign service premiums and allowances, compensation realized from Long Term Incentive Plan Awards or other types of awards. Corporation means United Technologies Corporation, its divisions, affiliates and subsidiaries. Credited Interest Account means the sub-account that is valued in the manner set forth in Section 5.2. Deferral Period means the period for which the receipt of compensation deferred under the Plan shall be deferred. Distribution Date means on or about April 1 of the year following the last year of a Deferral Period. Election Agreement means the Participation and Deferral Election Agreement provided by the Committee to Participants for the purpose of deferring compensation under the Plan. Each Participant's Election Agreement must specify the amount to be deferred, the respective amounts to be allocated to the Credited Interest and UTC Stock Unit Accounts and the Deferral Period. There will be a separate Election Agreement for each Class Year. Incentive Compensation Payment means amounts awarded to a Participant pursuant to the Corporation's Annual Executive Incentive Compensation Plan. Interim Valuation Date means the last business day of each month except December. Participant means an executive of the Corporation who files a U.S. income tax return and who elects to defer Compensation under the Plan with respect to any Class Year. Plan means the United Technologies Corporation Deferred Compensation Plan as amended and restated effective December 15, 1993, and as amended from time to time thereafter. Plan Account means the aggregate value of all Class Year Accounts, but excluding accounts under the Prior Plan. Such accounts will be valued separately in accordance with the terms and procedures in effect under the Prior Plan. Prior Plan means the United Technologies Corporation Deferred Compensation Plan, as in effect prior to December 15, 1993. All amounts deferred and credited under the Prior Plan shall continue to be subject to the terms and conditions of the Prior Plan and shall not be affected by this amendment and restatement. Retirement Date means the date a Participant terminates employment from the Corporation and qualifies for either a normal retirement benefit, early retirement benefit or rule of 65 retirement benefit under one of the Corporation's tax-qualified deferred benefit retirement plans. Supplemental Account means the Account established by the Committee for the purpose of providing the amount of any Benefit Reduction incurred by a Participant under a deferred benefit retirement plan as a result of participating in the Plan. Except where indicated otherwise, all references herein to 'Section' or Sections are to a Section or Sections of the Plan. UTC Stock Unit Account means the sub-account that is valued in the manner set forth in Section 5.3. Valuation Date means the last business day of each calendar year. UTC Common Stock means the common stock of United Technologies Corporation. ARTICLE III - ELIGIBILITY AND PARTICIPATION Section 3.1 - Eligibility Each employee of the Corporation who is classified as a UTC executive as of December 31 prior to a Class Year and who is required to file a U.S. income tax return for such Class Year will be eligible to elect to defer Compensation under the Plan for such Class Year. Section 3.2 - Participation Each eligible executive may elect to participate in the Plan with respect to any Class Year for which the Committee offers the opportunity to defer Compensation by timely filing with the Committee an Election Agreement, properly completed and signed, in accordance with Section 4.1 hereof. Participation in the Plan is entirely voluntary. ARTICLE IV - PARTICIPATION ELECTIONS Section 4.1 - Election Agreement Each eligible executive will be furnished with an Election Agreement prior to the beginning of each Class Year for which Compensation may be deferred. An eligible executive may participate by executing the Election Agreement and by designating the dollar amount (if any) of base salary that will be deferred during such Class Year, and the percentage or dollar amount (if any) of any Incentive Compensation Payment otherwise payable during such Class Year that will be deferred under the Plan. The minimum dollar amount that a Participant may defer under the Plan for any Class Year is $5,000. Any deferral election made under the Election Agreement is irrevocable and must be completed and returned to the Committee no later than the December 31 immediately preceding such Class Year or such earlier date as the Committee may specify. If an eligible executive fails to sign and return a properly completed Election Agreement by such date, the executive will be ineligible to defer compensation under the Plan for the following Class Year. Section 4.2 - Allocation of Deferred Amounts When completing the Election Agreement, the Participant must allocate the amounts to be deferred, in integral multiples of 25% between the Credited Interest Account and the UTC Stock Unit Account. Section 4.3 - Designation of Beneficiary Each Participant shall designate a Beneficiary on a form provided by the Committee. Any such designation may be changed in writing on a form acceptable to the Committee at any time by the Participant. In the event that no Beneficiary Designation Form is filed with the Committee or if the Beneficiary (and contingent beneficiary) does not survive the Participant, all amounts deferred hereunder will be paid to the estate of the Participant. If a Participant designates the Participant's spouse as the Participant's Beneficiary, that designation shall not be revoked or otherwise altered or affected by any (a) change in the marital status of the Participant and such spouse, (b) agreement between the Participant and such spouse, or (c) judicial decree (such as a divorce decree) affecting any rights that the Participant and such spouse might have as a result of their marriage, separation, or divorce, it being the intent of the Plan that any change in the designation of a Beneficiary hereunder may be made by the Participant only in accordance with the provisions of this paragraph. In the event of the death of a Participant, Class Year Accounts shall be distributed in accordance with Section 6.4. Section 4.4 - Deferral Period Each Participant shall specify on the Election Agreement the Deferral Period for amounts to be deferred in the following Class Year. The minimum Deferral Period is five (5) years following the end of Class Year in which the compensation is deferred. Participants may elect to defer compensation until their Retirement Date or until a specific year. Amounts deferred to a specific year will be distributed on the Distribution Date in that year. Section 4.5 - Distribution Schedule Each Participant shall specify on the Election Agreement whether the value of the Participant's Class Year Account shall be distributed in a single lump-sum cash payment or in a series of annual cash installment payments for a specified number of years (not to exceed 15 years) in accordance with Sections 6.2 and 6.4. If the Participant fails to make such a specification, the Participant shall be deemed to have elected to have the distribution made in a single lump-sum cash payment. ARTICLE V Section 5.1 - Accounts The Committee will establish a Class Year Account for each Participant with respect to each Class Year for which the Participant elects to defer compensation under the Plan. Class Year Accounts will be maintained separately from Class Year Accounts maintained with respect to amounts deferred during other Class Years. Deferred amounts will be allocated to a Credited Interest Account, to a UTC Stock Unit Account, or to a combination of both, which sub-accounts will be part of the Class Year Account. Credited Interest and UTC Stock Unit Accounts will be valued as set forth in Sections 5.3 and 5.4. The value of each Class Year Account will equal the sum of the values of the Credited Interest and UTC Stock Unit Accounts established with respect to such Class Year. Section 5.2 - Valuation of Credited Interest Account Amounts allocated to the Credited Interest Account will be credited with a rate of interest equal to the average interest rate on 10-Year Treasury Bonds plus 1% (ie. 100 basis points) as of the January through October Interim Valuation Dates in the year prior to the Class Year in which the deferral occurs. This rate will be credited for all amounts deferred in the Class Year and allocated to the Credited Interest Account. The amount of interest credited will be adjusted each year to equal the average 10-Year Treasury Bond rate plus 1% for the prior calendar year, determined in the same manner as described above. Section 5.3 - UTC Stock Unit Account Deferred Compensation allocated to the UTC Stock Unit Account will be converted to 'Stock Units' or fractional Stock Units. The number of Stock Units will be calculated by dividing the amount of Compensation deferred each month during the Class Year in which the deferral occurs by the closing price of UTC Common Stock on each Interim Valuation or Valuation Date. Each Stock Unit will have a value equivalent to one share of UTC Common Stock. Stock Units held in the UTC Stock Unit Account will be credited with a dividend payment equal to the Corporation's declared dividend on Common Stock (if any), as of the date such dividends are paid. Such dividend equivalent payments will be converted to additional Stock Units or fractional units on the Interim Valuation or Valuation Date of the month in which the dividend was paid, determined on the basis of the closing price of UTC Common Stock on that date. During the Deferral Period, the value of a Stock Unit will be equal to the closing price of a share of Common Stock as of the most recent Interim Valuation Date or Valuation Date, and therefore is variable. The closing price of UTC Common Stock on the last business day prior to the Distribution Date (i.e., the March Interim Valuation Date, except for hardship distributions which may be made at other times during the year where the closing price on the most recent Interim Valuation date will apply) will be used to value the Stock Units included in the distribution. Section 5.4 - Allocation to Accounts During the year of deferral, deferred amounts will be allocated to the Class Year Account as of each Interim Valuation Date (or if applicable, the Valuation Date) for the month in which the deferred amounts otherwise would have been paid. With respect to the Credited Interest Account during the initial Class Year, interest will be credited to deferred amounts for the period from the Interim Valuation Date when amounts are first allocated to the class year account until the Valuation Date for such Class Year. With respect to the UTC Stock Unit Account, Stock Units will be credited and will accumulate each month in accordance with Section 5.3. ARTICLE VI - DISTRIBUTION OF ACCOUNTS Section 6.1 - Timing of Plan Distributions Accounts will be distributed (or begin to be distributed) on or about April 1 of the year following the last year of the Deferral Period. This means that, for example, if a deferral election specifies a Deferral Period until 2005, distribution will occur on or about April 1, 2005. In the case of termination or death during the Deferral Period, amounts will be distributed on the Distribution Date next following the date of termination or the date of death. Section 6.2 - Method of Distribution Each Class Year Account will be distributed in a single lump-sum cash payment, or in a series of annual cash installment payments, in accordance with the method set forth on the Election Agreement with respect to each Class Year. In the case of an installment distribution, the balance credited to the Participant's Account during the installment period will be credited with interest at the applicable Credited Interest Account rate. Such amounts will not be subject to the UTC Stock Unit rate of return, even if such amounts had been in the UTC Stock Unit Account prior to the initial distribution date. All Stock Units will automatically be converted to their equivalent cash value as of the Interim Valuation Date preceding the initial Distribution Date, and the equivalent cash value will then be allocated to the Credited Interest Account. Section 6.3 - Termination of Employment In the event of termination of employment prior to a Participant's Retirement Date, during or after the Deferral Period with respect to any Class Year, the full value of the Participant's Plan Accounts will be distributed in a lump-sum cash payment on the Distribution Date following the year of termination, regardless of the distribution option elected. Section 6.4 - Distribution in the Event of Death In the event of the death of a Participant before the end of the Deferral Period with respect to any Class Year, the full value of the Participant's Class Year Account for that Class Year will be distributed to the designated Beneficiary or to the estate of the Participant in a lump-sum on the Distribution Date following the date of death. In the event of death after the end of a Deferral Period with respect to any Class Year (or after attaining eligibility for retirement), the full value of the Participant's Class Year Accounts for that Class Year will be distributed to the Beneficiary in accordance with the Participant's election in the Election Agreement with respect to the Class Year. Section 6.5 - Hardship Distribution The Committee may, in its sole discretion, upon finding that the Participant has suffered an unforeseen, severe and immediate financial emergency, permit such Participant to withdraw a portion of the value of the Participant's Plan Account in an amount sufficient to eliminate the hardship. Financial hardship distributions will be made only if the Committee determines that the Participant is unable to resolve the financial emergency through other means reasonably available to the Participant. Financial hardship distributions will be made following the Committee's determination of a qualifying financial emergency on the basis of the value of the Participant's Plan Account as of the most recent Interim Valuation Date. The Committee will determine from which Class Year Account and Credited Interest and UTC Stock Unit sub-accounts hardship distributions shall be made. Section 6.6 - Disability In the event of the disability of a Participant, as determined under the Corporation's Long Term Disability Plan, Class Year Accounts will be maintained and distributed in accordance with the Participant's Election Agreement. Section 6.7 - Valuation on Distribution Date All Plan Accounts will be valued on the basis of the Interim Valuation Date prior to the Distribution Date. Section 6.8 - Distribution from Supplemental Account The Committee will effect distributions from Supplemental Accounts with respect to Benefit Reductions incurred in any of the Corporation's defined benefit pension plans at the same time, in the same manner and in the required amounts such that when combined with amounts distributed from the Pension Plans in which a Participant incurred a Benefit Reduction, the total amount received by a Participant (or beneficiary) will equal the amount of pension benefit that would otherwise have been paid had the Participant not participated in this Plan. Each Class Year the Committee will determine if any Benefit Reduction has been incurred with respect to any of the Corporation's Savings Plans and will credit the amount of such Benefit Reduction to the affected Participant's Class Year Account as of the Valuation Date for such Class Year. Any such amounts will be allocated to the Participant's Credited Interest and UTC Stock Unit Accounts in accordance with the Election Agreement for such Class Year. ARTICLE VII - AMENDMENT AND TERMINATION OF PLAN Section 7.1 - Amendment The Corporation may, at any time, amend the Plan in whole or in part, provided that no amendment may decrease the balance in any Plan Account as of the date of such amendment. Section 7.2 - Plan Suspension and Termination The Corporation's Pension Administration Committee may, at any time, suspend or terminate the Plan with respect to new or existing Election Agreements if, in its sole judgment, the continuance of the Plan, the tax, accounting, or other effects thereof, or potential payments thereunder would not be in the best interests of the Corporation or for any other reason. In the event of the suspension of the Plan, no additional deferral shall be made under the Plan, but all previous deferrals shall accumulate and be distributed in accordance with the otherwise applicable provisions of the Plan and the applicable Election Agreements. In the event of the termination of the Plan, each Participant will receive, in a lump sum, the balance of all Class Year Accounts. Section 7.3 - No Consent Required The consent of any Participant, Beneficiary, or other person shall not be a requisite to such amendment, suspension, or termination of the Plan. ARTICLE VIII - GENERAL PROVISIONS Article 8.1 - Unsecured General Creditor The Corporation will not establish a trust or otherwise set aside or segregate assets from other assets of the Corporation or otherwise fund its obligations under the Plan for the benefit of Participants and Beneficiaries. The Corporation's obligations under the Plan constitute an unfunded and unsecured promise to pay money in the future. Participants' and Beneficiaries' rights under the Plan are those of a general unsecured creditor of the Corporation. Section 8.2 - Nonassignability No Participant or Beneficiary or any other person shall have right to sell, assign, transfer, pledge, or otherwise encumber any interest in the Plan. All Plan Accounts and the rights to all payments are unassignable and non-transferable. No Plan Account or payment hereunder, prior to actual payment, will be subject to attachment or seizure for the payment of any debts, judgments or other obligations. No Plan Account or other Plan benefit will be transferred by operation of law in the event of a Participant's or any Beneficiary's bankruptcy or insolvency. Section 8.3 - No Contract of Employment Participation in the Plan shall not be construed to constitute a direct or indirect contract of employment between the Corporation and the Participant. The Participants and Beneficiaries will have no rights against the Corporation resulting from participation in this Plan other than as specifically provided herein. Nothing in this Plan shall be deemed to give a Participant the right to be retained in the service of the Corporation for any length of time or to interfere with the right of the Corporation to terminate a Participant's employment prior to the end of any Deferral Period. Section 8.4 - Governing Law The provisions of this Plan will be construed and interpreted according to the Employee Retirement Income Security Act of 1974, as amended from time to time, other applicable federal laws, and to the extent not preempted by federal law, the laws of the State of Connecticut. Section 8.5 - Validity If any provision of the Plan is held to be illegal or invalid for any reason, the remaining provisions of the Plan will be construed and enforced as if such illegal and invalid provision had never been inserted herein. Section 8.6 - Notice Any notice or filing required or permitted to be given to the Committee under this Plan shall be sufficient if in writing and hand delivered, or sent by first class mail, to the United Technologies Corporation Deferred Compensation Committee, UTC Building, Hartford, Connecticut 06101, Attn: Michael D. Smith, Director, Compensation, MS-504. Any notice or filing required or permitted to be given to any Participant or Beneficiary under the Plan shall be sufficient if given in writing and hand-delivered, or, if sent by first-class mail, mailed to the address of the Participant or Beneficiary then listed on the records of the Corporation. Any such notice will be deemed given as of the date of delivery or, if delivery is made by mail, as of the date shown on the postmark. Section 8.7 - Successors The provisions of the Plan shall bind and inure to the benefit of the Corporation and its successors and assigns. The term successors as used herein shall include any corporate or other business entity which by merger, consolidation, purchase or otherwise acquires all or substantially all of the business and assets of the Corporation, and successors of any such corporation or other business entity. Section 8.8 - Incompetence If the Committee determines, upon evidence satisfactory to the Committee, that any Participant or Beneficiary to whom a benefit is payable under the Plan is unable to care for their affairs because of illness or accident, any payment due (unless prior claim therefor shall have been made by a duly authorized guardian or other legal representative, may be paid, upon appropriate indemnification of the Committee and the Corporation, to the Spouse of the Participant or other person deemed by the Committee to have incurred expenses for the benefit of and on behalf of such Participant or Beneficiary. Any such payment from a Participant's Plan Account shall be a complete discharge of any liability under the Plan with respect to the amount so paid. ARTICLE IX - ADMINISTRATION and CLAIMS 9.1 - Plan Administration The Committee shall be solely responsible for the administration and operation of the Plan. The Committee shall have full and exclusive authority and discretion to interpret the provisions of the Plan and to establish such administrative procedures as it deems necessary and appropriate to carry out the purposes of the Plan. Any person claiming a benefit, requesting an interpretation or ruling under the Plan, or requesting information under the Plan shall present the request in writing to the Committee which shall respond in writing as soon as practicable. 9.2 - Claim Procedures If a Participant or Beneficiary requests a benefit or payment under the Plan and such claim or request is denied, the Committee will provide a written notice of denial which will specify (a) the reason for denial, with specific reference to the Plan provisions on which the denial is based, and (b) a description of any additional material or information that may be required with respect to the claim and an explanation of why such information is necessary. If a claim or request is denied or if no response is received by the Participant or Beneficiary within 60 days, the Participant or Beneficiary may request review by writing to the Committee. The claim or request will be reviewed by the Committee, which may request additional information or materials which it deems appropriate to the resolution of any issues presented. The decision on review will normally be made by the Committee within 60 days of its receipt of the request for review but may be extended up to 120 days from such date. The Committee's decision will be in writing and will state the basis for its decision and shall be conclusive and binding on all parties.
Deferred Compensation Plan - United Technologies Corp.
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