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                                                                   EXHIBIT 10.12

                   ITT INDUSTRIES 1997 ANNUAL INCENTIVE PLAN
                   (AMENDED AND RESTATED AS OF JULY 13, 2004)

1. PURPOSE

The purpose of this ITT Industries 1997 Annual Incentive Plan (the "Incentive
Plan") is to provide incentive compensation in the form of a bonus to eligible
executives of ITT Industries, Inc. (the "Company") for achieving specific
pre-established performance objectives and to continue to motivate participating
executives to achieve their business goals, while tying a portion of their
compensation to measures affecting shareholder value. The Incentive Plan seeks
to enable the Company to continue to be competitive in its ability to attract
and retain executives of the highest caliber.

2. PLAN ADMINISTRATION

The Compensation and Personnel Committee (the "Committee") of the Board of
Directors (the "Board") of the company shall have full power and authority to
administer, construe and interpret the provisions of the Incentive Plan and to
adopt and amend administrative rules and regulations, agreements, guidelines and
instruments for the administration of the Incentive Plan and for the conduct of
its business as the Committee considers appropriate.

The Committee shall have full power, to the extent permitted by law, to delegate
its authority to any officer or employee of the Company to administer and
interpret the procedural aspects of the Incentive Plan, subject to the terms of
the Incentive Plan, including adopting and enforcing rules to decide procedural
and administrative issues.

The Committee may rely on opinions, reports or statements of officers or
employees of the Company and of counsel to the Company (inside or retained
counsel), public accountants and other professional or expert persons.

The Board reserves the right to amend or terminate the Incentive Plan in whole
or in part at any time; provided, however, that no amendments shall adversely
affect or impair the rights of any participant previously accrued thereby,
without the written consent of the participant.

No member of the Committee shall be liable for any action taken or omitted to be
taken or for any determination made by him or her in good faith with respect to
the Incentive Plan, and the Company shall indemnify and hold harmless each
member of the Committee against any cost or expense (including counsel fees) or
liability (including any sum paid in settlement of a claim with the approval of
the Committee) arising out of any act or omission in connection with the
administration or interpretation of the Incentive Plan, unless arising out of
such person's own fraud or bad faith.

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3. ELIGIBLE EXECUTIVES

Executives of the Company or its affiliates in salary grade 19 and above shall
be eligible to participate in the Incentive plan.

4. PLAN YEAR, PERFORMANCE PERIODS, PERFORMANCE MEASURES AND PERFORMANCE TARGETS

Each fiscal year of the Incentive Plan (the "Plan Year") shall begin on January
1 and end on December 31. The performance period (the "Performance Period") with
respect to which bonuses may be payable under the Incentive Plan shall be the
Plan Year unless the Committee designates one or more different Performance
Periods.

The Committee shall establish the performance measures (the "Performance
Measures") to be used which may include, but shall not be limited to, net
operating profit after tax, economic value added, earnings per share, return on
equity, return on total capital, or such other measures as determined by the
Committee. In addition, Performance Measures may be based upon other objectives
such as negotiating transactions or sales and developing long-term goals. The
Performance Measures shall be objectively determinable and, to the extent that
they are expressed in standard accounting terms, shall be according to generally
accepted accounting principles as in existence on the date on which the
applicable Performance Period is established and without regard to any changes
in such principles after such date. For purposes of the Plan, economic value
added shall mean the amount of economic profit created in excess of the amount
required to satisfy the obligations to and normal expectations of the Company's
lenders and investors.

The Committee shall establish the performance targets (the "Performance
Targets") to be achieved which shall be based on one or more Performance
Measures relating to the Company as a whole or to the specific businesses of the
Company, subsidiaries, operating companies, or operating units as determined by
the Committee and shall be expressed as an objective formula to be used in
calculating the amount of bonus award each executive shall be eligible to
receive. There may be a sliding scale of payment dependent upon the percentage
levels of achievement of Performance Targets.

The Performance Measures and Performance Targets, which may be different with
respect to each executive and each Performance Period, must be set forth in
writing by the Committee within the first ninety (90) days of the applicable
Performance Period.

5. CERTIFICATION OF PERFORMANCE TARGETS AND CALCULATION OF BONUS AWARDS

After the end of each Performance Period, and prior to the payment for such
Performance Period, the Committee must certify in writing the degree to which
the Performance Targets for the Performance Period were achieved, including the
specific target objective or objectives and the satisfaction of any other
material terms of the bonus award. The Committee shall calculate the amount of
each executive's bonus for such Performance Period based upon the Performance
Measures and Performance Targets for each executive. In establishing Performance
Targets and Performance Measures and in calculating the degree of achievement
thereof, the Committee may ignore extraordinary items, property transactions,
changes in accounting standards and losses or gains arising from discontinued
operations. The Committee shall have authority and discretion

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to increase or decrease the amount of any executive's bonus as so determined,
and may totally eliminate any bonus award if it determines in its absolute and
sole discretion that such action is appropriate in order to reflect the
executive's performance or unanticipated factors during the Performance Period.

6. PAYMENT OF AWARDS

Approved bonus awards shall be payable by the Company in cash to each executive,
or to the executive's estate in the event of the executive's death, as soon as
practicable after the end of each Performance Period. No bonuses may be paid
under the Incentive Plan until the Committee has certified in writing that the
relevant Performance Targets were achieved.

If an executive is not an employee on the last day of the Performance Period,
the Committee shall have sole discretion to determine what portion, if any, the
executive shall be entitled to receive with respect to any award for the
Performance Period. The Committee shall have the authority to adopt appropriate
rules and regulations for the administration of the Incentive Plan in such
termination cases.

The Company retains the right to deduct from any bonus awards paid under the
Incentive Plan any Federal, state, local or foreign taxes required by law to be
withheld with respect to such payment.

7. OTHER TERMS AND CONDITIONS

Any award made under this Incentive Plan shall be subject to the discretion of
the Committee. No person shall have any legal claim to be granted an award under
the Incentive Plan and the Committee shall have no obligation to treat
executives uniformly. Except as may be otherwise required by law, bonus awards
under the Incentive Plan shall not be subject in any manner to anticipation,
alienation, sale, transfer, assignment, pledge, encumbrance, charge,
garnishment, execution, or levy of any kind, either voluntary or involuntary.
Bonuses awarded under the Incentive Plan shall be payable from the general
assets of the Company, and no executive shall have any claim with respect to any
specific assets of the Company.

Nothing contained in the Incentive Plan shall give any executive the right to
continue in the employment of the Company or affect the right of the Company to
terminate an executive.

8. ACCELERATION EVENT.

      An "Acceleration Event" shall occur if (i) a report on Schedule 13D shall
be filed with the Securities and Exchange Commission pursuant to Section 13(d)
of the Securities Exchange Act of 1934 (the "Act") disclosing that any person
(within the meaning of Section 13(d) of the Act), other than ITT Industries or a
subsidiary of ITT Industries or any employee benefit plan sponsored by ITT
Industries or a subsidiary of ITT Industries, is the beneficial owner directly
or indirectly of twenty percent (20%) or more of the outstanding Common Stock $1
par value, of ITT Industries (the "Stock"): (ii) any person (within the meaning
of Section 13(d) of the Act), other than ITT Industries or a subsidiary of ITT
Industries, or any employee benefit plan sponsored by ITT Industries or a
subsidiary of ITT Industries, shall purchase shares pursuant to a tender offer
or exchange offer to acquire any Stock of ITT Industries (or securities
convertible

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into Stock) for cash, securities or any other consideration, provided that after
consummation of the offer, the person in question is the beneficial owner (as
such term is defined in Rule 13d-3 under the Act), directly or indirectly, of
twenty percent (20%) or more of the outstanding Stock of ITT Industries
(calculated as provided in paragraph (d) of Rule 13d-3 under the Act in the case
of rights to acquire Stock); (iii) the stockholders of ITT Industries shall
approve (A) any consolidation, business combination or merger involving ITT
Industries, other than a consolidation, business combination or merger involving
ITT Industries in which holders of Stock immediately prior to the consolidation,
business combination or merger (x) hold fifty percent (50%) or more of the
combined voting power of ITT Industries (or the corporation resulting from the
merger or consolidation or the parent of such corporation) after the merger and
(y) have the same proportionate ownership of common stock of ITT Industries (or
the corporation resulting from the merger or consolidation or the parent of such
corporation), relative to other holders of Stock immediately prior to the
merger, business combination or consolidation, immediately after the merger as
immediately before, or (B) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or substantially all the
assets of ITT Industries, (iv) there shall have been a change in a majority of
the members of the Board of Directors of ITT Industries within a 12-month period
unless the election or nomination for election by ITT Industries' stockholders
of each new director during such 12-month period was approved by the vote of
two-thirds of the directors then still in office who (x) were directors at the
beginning of such 12-month period or (y) whose nomination for election or
election as directors was recommended or approved by a majority of the directors
who where directors at the beginning of such 12-month period or (v) any person
(within the meaning of Section 13(d) of the Act) (other than ITT Industries or
any subsidiary of ITT Industries or any employee benefit plan (or related trust)
sponsored by ITT Industries or a subsidiary of ITT Industries) becomes the
beneficial owner (as such term is defined in Rule 13d-3 under the Act) of twenty
percent (20%) or more of the Stock.

Upon the occurrence of such Acceleration Event, the Performance Measures for
each Performance Period with respect to which bonuses may be payable under the
Incentive Plan shall be deemed to be achieved at the greater of (i) the
Performance Target established for such Performance Measures or (ii) the
Company's actual achievement of such Performance Measures as of the Acceleration
Event. Payment of the bonuses, for the full year, will be made to each
Participating Executive, in cash, within five (5) business days following such
Acceleration Event.

9. MISCELLANEOUS.

The Incentive Plan shall be effective January 1, 1997. The Plan shall remain in
effect unless/until terminated by the Board; provided, however, that if an
Acceleration Event has occurred no amendment or termination shall impair the
rights of any executive with respect to any prior award.

This Incentive Plan shall be construed and governed in accordance with the laws
of the State of New York.