Retirement Plan for Non-Employee Directors - AlliedSignal Inc.

                   Retirement Plan for Non-Employee Directors
                              of AlliedSignal Inc.
                   ------------------------------------------
                     (As Amended Effective January 1, 1997)


1.      Eligibility

        Each member of the Board of Directors (the 'Board') of AlliedSignal Inc.
(the 'Corporation') who is not an employee of the Corporation or any of its
subsidiaries and who at the time of retirement from the Board, as defined in
paragraph 6(f), shall have served five years on the Board, the Board of
Directors of Allied Corporation (the 'Allied Board'), the Board of Directors of
The Signal Companies, Inc. (the 'Signal Board') or the board of directors of any
corporation acquired by the Corporation, Allied Corporation ('Allied') or The
Signal Companies, Inc. ('Signal') if the Director was a non-employee director of
the acquired corporation at the time of acquisition (an 'Acquired Corporation
Board'), or any combination thereof, as a non-employee director and shall have
attained at least age 60 (an 'Eligible Director') shall, unless the Eligible
Director elects otherwise pursuant to paragraph 6(g), be eligible to receive a
retirement benefit under the Retirement Plan for Non-Employee Directors of
AlliedSignal Inc. (the 'Plan'). Notwithstanding the foregoing, an Eligible
Director shall not include (a) any individual who becomes a member of the Board
after December 31, 1996, or (b) any members of the Board on December 31, 1996
who waived their rights to any benefits under the Plan in exchange for the
crediting of a lump-sum amount in satisfaction thereof to their accounts under
the Deferred Compensation Plan for Non-Employee Directors of AlliedSignal Inc.,
effective January 1, 1997.

2.      Amount of Benefit

        (a) An Eligible Director who at the time of retirement from the Board
shall have attained age 70 shall be entitled to receive, for the remainder of
the Director's lifetime, a retirement benefit at an annual rate equal to the
annual Board retainer in effect for non-employee directors of the Board at the
time of such retirement.

        (b) An Eligible Director who at the time of retirement from the Board
shall have attained age 60 but not age 70 shall be entitled to receive, for a
period of time equal to the number of months such Director served as a
non-employee director on the Board, the Allied Board, the Signal Board or any
Acquired Corporation Board, or any combination thereof, a retirement benefit at
an annual rate equal to the





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annual Board retainer in effect for non-employee directors of the Board at the
time of such retirement.

3.      Time of Payment

        (a) Except as otherwise provided in paragraphs 3(b) and 3(c), the
retirement benefit determined in accordance with paragraph 2 shall be paid to an
Eligible Director commencing upon such Director's retirement from the Board (a
'Retired Director') in as nearly equal as possible quarterly installments at the
same time as quarterly installments of the annual Board retainer are paid to
non-employee directors serving on the Board at the time of the payment. If such
payments are made to current directors more frequently than quarterly, then
amounts due under the Plan shall be paid on such more frequent basis. If an
Eligible Director elects not to receive such payments or a Retired Director
elects to stop receiving such payments prior to the receipt of all payments due
under the Plan, such Director shall so advise the Corporation and may not
thereafter elect to receive or resume receipt of such payments.

        (b) Each member of the Board may irrevocably elect to receive a lump-sum
payment of the present value of the retirement benefit, as determined in
accordance with paragraphs 2 and 3(d), which remains payable, in the event the
individual becomes a Retired Director on or before the second anniversary date
of a Change in Control. Such lump-sum payment shall be made to the Retired
Director within the 90-day period following the later of the Change in Control
or such Director's retirement from the Board. Such election may be made by
filing a written notice with the Secretary of the Corporation before a Change in
Control but not after the later of September 30, 1990 or 30 days after becoming
a member of the Board.

        (c) Each Retired Director may irrevocably elect to receive a lump-sum
payment of the present value of the retirement benefit, as determined in
accordance with paragraphs 2 and 3(d), which remains payable, in the event of a
Change in Control. Such lump-sum payment shall be paid to the Retired Director
within the 90-day period following the Change in Control. A surviving spouse of
a deceased Retired Director may irrevocably elect to receive a lump-sum payment
of the amount payable to the surviving spouse pursuant to paragraph 5, in the
event of a Change in Control. Such election by a Retired Director or by the
surviving spouse of a deceased Retired Director may be made by filing a written
notice with the Secretary of the Corporation before a Change in Control but not
after September 30, 1990.





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        (d) For purposes of determining the present value of a Retired
Director's retirement benefit under paragraphs 3(b) and 3(c), and of a surviving
spouse's benefit under paragraph 5, the Pension Benefit Guaranty Corporation
immediate annuity rate and the UP 1984 mortality table in effect immediately
before the Change in Control shall be used.

        (e) For purposes of the Plan, a Change in Control is deemed to occur at
the time (i) when any entity, person or group (other than the Corporation, any
subsidiary or any savings, pension or other benefit plan for the benefit of
employees of the Corporation or its subsidiaries) which theretofore beneficially
owned less than 30% of the Corporation's Common Stock ('Common Stock') then
outstanding acquires shares of Common Stock in a transaction or series of
transactions that results in such entity, person or group directly or indirectly
owning beneficially 30% or more of the outstanding Common Stock, (ii) of the
purchase of shares of Common Stock pursuant to a tender offer or exchange offer
(other than an offer by the Corporation) for all, or any part of, the Common
Stock, (iii) of a merger in which the Corporation will not survive as an
independent, publicly owned corporation, a consolidation, or a sale, exchange or
other disposition of all or substantially all of the Corporation's assets, (iv)
of a substantial change in the composition of the Board of Directors during any
period of two consecutive years such that individuals who at the beginning of
such period were members of the Board of Directors cease for any reason to
constitute at least a majority thereof, unless the election, or the nomination
for election by the stockholders of the Corporation, of each new director was
approved by a vote of at least two-thirds of the directors then still in office
who were directors at the beginning of the period, or (v) of any transaction or
other event which the Nominating and Board Affairs Committee of the Board or any
successor thereto ('Committee'), in its discretion, determines to be a Change in
Control for purposes of the Plan.

4.      Competition

        A Retired Director who receives payment under the Plan, whether in
installments or in a lump sum, shall not engage in any activity in competition
with the Corporation's business for the applicable period with respect to which
the Retired Director receives such payment pursuant to paragraph 2.

5.      Payments on Death

        In the event of the death of a Retired Director prior to receiving
payments pursuant to paragraph 3(a) for a period equal to the lesser of (a) the
total number of





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months of such Director's service on the Board, the Allied Board, the Signal
Board or any Acquired Corporation Board, or any combination thereof, as a
non-employee director or (b) 120 months, such Retired Director's surviving
lawful spouse, if any, will be entitled to such payments for the remainder of
such lesser period or until such spouse's death, whichever occurs first. In the
event of a Change in Control, the surviving spouse of a Retired Director shall
receive a lump-sum payment of the present value of the amounts which remain
payable under the preceding sentence, provided that either (i) the surviving
spouse of a deceased Retired Director made an election pursuant to paragraph
3(c) or (ii) the Retired Director, had he survived, would have been entitled to
receive a lump-sum payment pursuant to either paragraph 3(b) or 3(c). Such
lump-sum payment shall be paid to the surviving spouse within the 90-day period
following the Change in Control. Except as set forth herein, nothing in the Plan
shall create any benefit, cause of action, right of sale, transfer, assignment,
pledge, encumbrance, or other such right in any heirs or the estate of any
Retired Director. In the event of the death of an Eligible Director prior to
such Director's retirement from the Board, no payments will be due under the
Plan.

6.      Miscellaneous

        (a) The right to receive any payment under the Plan shall not be
transferable or assignable.

        (b) The Corporation shall not be required to set aside funds for the
payment of its obligations under the Plan.

        (c) The Board may at any time amend or terminate the Plan provided that
no amendment or termination shall impair the rights of an Eligible Director to
receive upon retirement from the Board the payments which would have been made
to such Director had the Plan not been amended or terminated (based upon such
Director's service on the Board, the Allied Board, the Signal Board or any
Acquired Corporation Board, or any combination thereof, to the date of such
amendment or termination) or the rights of a Retired Director (or such
Director's surviving spouse) to receive any remaining payments due under the
Plan.

        (d) Nothing in the Plan shall be deemed to create any obligation on the
part of the Board to nominate any Director for reelection by the Corporation's
shareholders.

        (e) Prior to a Change in Control, the Committee shall interpret the Plan
and make all determinations deemed necessary or desirable for the Plan's





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implementation. The determination of the Committee shall be conclusive. The
Committee may obtain such advice or assistance as it deems appropriate from
persons not serving on the Committee. The Senior Vice President responsible for
Human Resources or other appropriate officer of the Corporation shall, prior to
any Change in Control, name as Plan Administrator any person or entity
(including, without limitation, a bank or trust company). Following a Change in
Control, the Plan Administrator shall interpret the Plan and make all
determinations deemed necessary or desirable for the Plan's implementation. The
determination of the Plan Administrator shall be conclusive. The Corporation
shall provide the Plan Administrator with such records and information as are
necessary for the proper administration of the Plan. The Plan Administrator
shall rely on such records and other information as the Plan Administrator shall
in its judgment deem necessary or appropriate in determining any Director's
eligibility for and amount of retirement benefits under the Plan.

        (f) As used in the Plan, 'retirement from the Board' shall include any
termination of service (other than by death) of an Eligible Director except any
termination which the Committee or, if applicable, the Plan Administrator
determines to have resulted from gross cause. 'Gross Cause' means fraud,
misappropriation of or intentional misconduct damaging to the property or
business of the Corporation or any of its subsidiaries, or commission of a
crime.

        (g) Payments in respect of an Eligible Director under the Plan shall be
in lieu of any payments based upon service as a non-employee director otherwise
provided in respect of such Eligible Director under any other retirement plan or
arrangement of Allied, Signal or any corporation acquired by the Corporation,
Allied or Signal unless the Eligible Director elects by written notice to the
Secretary of the Corporation to receive payments under such other plan or
arrangement in lieu of payments under the Plan.