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                                                                    Exhibit 10.5

                       TELEDYNE TECHNOLOGIES INCORPORATED

                               1999 INCENTIVE PLAN
                      (As amended through January 26, 2000)

                                    ARTICLE I

                        PURPOSE AND ADOPTION OF THE PLAN

         1.01. PURPOSE. The purpose of the Teledyne Technologies Incorporated
1999 Incentive Plan (hereinafter referred to as the "Plan") is to assist in
attracting and retaining highly competent employees, to act as an incentive in
motivating selected officers and other key employees of Teledyne Technologies
Incorporated and its Subsidiaries to achieve long-term corporate objectives and
to enable cash incentive awards to qualify as performance-based for purposes of
the tax deduction limitations under Section 162(m) of the Code.

         1.02. ADOPTION AND TERM. The Plan has been approved by the Board of
Directors of Teledyne Technologies Incorporated, to be effective as of the
effective date of the distribution by Allegheny Teledyne Incorporated to its
stockholders of Teledyne Technologies Incorporated Common Stock (the "Effective
Date"), but is subject to the approval of the stockholders of the Company. The
Plan shall remain in effect until terminated by action of the Board; provided,
however, that no Incentive Stock Option may be granted hereunder after the tenth
anniversary of the Effective Date and the provisions of Articles VII, VIII, IX
and X with respect to performance-based awards to "covered employees" under
Section 162(m) of the Code shall expire as of the fifth anniversary of the
Effective Date.

                                   ARTICLE II

                                   DEFINITIONS

         For the purpose of this Plan, capitalized terms shall have the
following meanings:

         2.01. AWARD means any one or a combination of Non-Qualified Stock
Options or Incentive Stock Options described in Article VI, Stock Appreciation
Rights described in Article VI, Restricted Shares described in Article VII,
Performance Awards described in Article VIII, Awards of cash or any other Award
made under the terms of the Plan.

         2.02. AWARD AGREEMENT means a written agreement between the Company and
a Participant or a written acknowledgment from the Company to a Participant
specifically setting forth the terms and conditions of an Award granted under
the Plan.

         2.03. AWARD PERIOD means, with respect to an Award, the period of time
set forth in the Award Agreement during which specified target performance goals
must be achieved or other conditions set forth in the Award Agreement must be
satisfied.


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         2.04. BENEFICIARY means an individual, trust or estate who or which, by
a written designation of the Participant filed with the Company or by operation
of law, succeeds to the rights and obligations of the Participant under the Plan
and the Award Agreement upon the Participant's death.

         2.05. BOARD means the Board of Directors of the Company.

         2.06. CHANGE IN CONTROL means, and shall be deemed to have occurred
upon the occurrence of, any one of the following events:

                  (a) The acquisition in one or more transactions, other than
from the Company, by any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Exchange Act) of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of a
number of Company Voting Securities in excess of 25% of the Company Voting
Securities unless such acquisition has been approved by the Board;

                  (b) Any election has occurred of persons to the Board that
causes two-thirds of the Board to consist of persons other than (i) persons who
were members of the Board on the Effective Date and (ii) persons who were
nominated for elections as members of the Board at a time when two-thirds of the
Board consisted of persons who were members of the Board on the Effective Date,
provided, however, that any person nominated for election by a Board at least
two-thirds of whom constituted persons described in clauses (i) and/or (ii) or
by persons who were themselves nominated by such Board shall, for this purpose,
be deemed to have been nominated by a Board composed of persons described in
clause (i);

                  (c) Approval by the stockholders of the Company of a
reorganization, merger or consolidation, unless, following such reorganization,
merger or consolidation, all or substantially all of the individuals and
entities who were the respective beneficial owners of the Outstanding Common
Stock and Company Voting Securities immediately prior to such reorganization,
merger or consolidation, following such reorganization, merger or consolidation
beneficially own, directly or indirectly, more than seventy five (75%) of,
respectively, the then outstanding shares of common stock and the combined
voting power of the then outstanding voting securities entitled to vote
generally in the election of directors or trustees, as the case may be, of the
entity resulting from such reorganization, merger or consolidation in
substantially the same proportion as their ownership of the Outstanding Common
Stock and Company Voting Securities immediately prior to such reorganization,
merger or consolidation, as the case may be; or

                  (d) Approval by the stockholders of the Company of (i) a
complete liquidation or dissolution of the Company or (ii) a sale or other
disposition of all or substantially all the assets of the Company.

         2.07. CODE means the Internal Revenue Code of 1986, as amended.
References to a section of the Code shall include that section and any
comparable section or sections of any future legislation that amends,
supplements or supersedes said section.



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         2.08. COMMITTEE means the Committee defined in Section 3.01.

         2.09. COMPANY means Teledyne Technologies Incorporated, a Delaware
corporation, and its successors.

         2.10. COMMON STOCK means Common Stock of the Company, par value $0.01
per share.

         2.11. COMPANY VOTING SECURITIES means the combined voting power of all
outstanding voting securities of the Company entitled to vote generally in the
election of directors to the Board.

         2.12. DATE OF GRANT means the date designated by the Committee as the
date as of which it grants an Award, which shall not be earlier than the date on
which the Committee approves the granting of such Award.

         2.13. EXCHANGE ACT means the Securities Exchange Act of 1934, as
amended.

         2.14. EXERCISE PRICE means, with respect to a Stock Appreciation Right,
the amount established by the Committee in the Award Agreement which is to be
subtracted from the Fair Market Value on the date of exercise in order to
determine the amount of the payment to be made to the Participant, as further
described in Section 6.02(b).

         2.15. FAIR MARKET VALUE means, on any date, the average of the high and
low quoted sales prices of a share of Common Stock, as reported on the Composite
Tape for New York Stock Exchange Listed Companies on such date or, if there were
no sales on such date, on the last date preceding such date on which a sale was
reported.

         2.16. INCENTIVE STOCK OPTION means a stock option within the meaning of
Section 422 of the Code.

         2.17. MERGER means any merger, reorganization, consolidation, exchange,
transfer of assets or other transaction having similar effect involving the
Company.

         2.18. NON-QUALIFIED STOCK OPTION means a stock option which is not an
Incentive Stock Option.

         2.19. OPTIONS means all Non-Qualified Stock Options and Incentive Stock
Options granted at any time under the Plan.

         2.20. OUTSTANDING COMMON STOCK means, at any time, the issued and
outstanding shares of Common Stock.



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         2.21. PARTICIPANT means a person designated to receive an Award under
the Plan in accordance with Section 5.01.

         2.22. PERFORMANCE AWARDS means Awards granted in accordance with
Article VIII.

         2.23. PERFORMANCE GOALS means operating income, operating profit
(earnings from continuing operations before interest and taxes), earnings per
share, return on investment or working capital, return on stockholders' equity,
economic value added (the amount, if any, by which net operating profit after
tax exceeds a reference cost of capital), reductions in inventory, inventory
turns and on-time delivery performance, any one of which may be measured with
respect to the Company or any one or more of its Subsidiaries and divisions and
either in absolute terms or as compared to another company or companies, and
quantifiable, objective measures of individual performance relevant to the
particular individual's job responsibilities.

         2.24. PLAN means the Teledyne Technologies Incorporated 1999 Incentive
Plan as described herein, as the same may be amended from time to time.

         2.25. PURCHASE PRICE, with respect to Options, shall have the meaning
set forth in Section 6.01(b).

         2.26. RESTORATION OPTION means a Non-Qualified Stock Option granted
pursuant to Section 6.01(f).

         2.27. RESTRICTED SHARES means Common Stock subject to restrictions
imposed in connection with Awards granted under Article VII.

         2.28. RETIREMENT means early or normal retirement under a pension plan
or arrangement of the Company or one of its Subsidiaries in which the
Participant participates.

         2.29. RULE 16B-3 means Rule 16b-3 promulgated by the Securities and
Exchange Commission under Section 16 of the Exchange Act, as the same may be
amended from time to time, and any successor rule.

         2.30. STOCK APPRECIATION RIGHTS means Awards granted in accordance with
Article VI.

         2.31. SUBSIDIARY means a subsidiary of the Company within the meaning
of Section 424(f) of the Code.

         2.32. TERMINATION OF EMPLOYMENT means the voluntary or involuntary
termination of a Participant's employment with the Company or a Subsidiary for
any reason, including death, disability, retirement or as the result of the
divestiture of the Participant's employer or any similar transaction in which
the Participant's employer ceases to be the Company or one of its Subsidiaries.
Whether entering military or other government service shall



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constitute Termination of Employment, or whether a Termination of Employment
shall occur as a result of disability, shall be determined in each case by the
Committee in its sole discretion.

                                   ARTICLE III

                                 ADMINISTRATION

         3.01. COMMITTEE. The Plan shall be administered by a committee of the
Board ("Committee") comprised of at least two persons. The Committee shall have
exclusive and final authority in each determination, interpretation or other
action affecting the Plan and its Participants. The Committee shall have the
sole discretionary authority to interpret the Plan, to establish and modify
administrative rules for the Plan, to impose such conditions and restrictions on
Awards as it determines appropriate, to cancel Awards (including those made
pursuant to other plans of the Company) and to substitute new Options for
previously awarded Options which, at the time of such substitution, have an
exercise price in excess of the Fair Market Value of the underlying Common Stock
(including options granted under other incentive compensation programs of the
Company) with the consent of the recipient, and to take such steps in connection
with the Plan and Awards granted hereunder as it may deem necessary or
advisable. The Committee shall not, however, have or exercise any discretion
that would disqualify amounts payable under Article X as performance-based
compensation for purposes of Section 162(m) of the Code. The Committee may
delegate such of its powers and authority under the Plan as it deems appropriate
to a subcommittee of the Committee and/or designated officers or employees of
the Company. In addition, the full Board may exercise any of the powers and
authority of the Committee under the Plan. In the event of such delegation of
authority or exercise of authority by the Board, references in the Plan to the
Committee shall be deemed to refer, as appropriate, to the delegate of the
Committee or the Board. Actions taken by the Committee or any subcommittee
thereof, and any delegation by the Committee to designated officers or
employees, under this Section 3.01 shall comply with Section 16(b) of the
Exchange Act, the performance-based provisions of Section 162(m) of the Code,
and the regulations promulgated under each of such statutory provisions, or the
respective successors to such statutory provisions or regulations, as in effect
from time to time, to the extent applicable.

                                   ARTICLE IV

                                     SHARES

         4.01. NUMBER OF SHARES ISSUABLE. The total number of shares authorized
to be issued under the Plan shall be 4,000,000 shares of Common Stock. If the
number of issued and outstanding shares of Common Stock is increased after
January 26, 2000, the total number of shares available under the Plan will be
increased by 10% of such increase. No more than 2,650,000 shares of Common Stock
may be issued under the Plan as Incentive Stock Options. The number of shares
available for issuance under the Plan shall be further subject to adjustment in
accordance with Section 11.07. The shares to be offered under the Plan shall be
authorized and unissued Common Stock or issued Common Stock which shall have
been reacquired by the Company.



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         4.02. SHARES SUBJECT TO TERMINATED AWARDS. Common Stock covered by any
unexercised portions of terminated Options (including canceled Options) granted
under Article VI, Common Stock forfeited as provided in Section 7.02(a) and
Common Stock subject to any Awards which are otherwise surrendered by the
Participant may again be subject to new Awards under the Plan. Common Stock
subject to Options, or portions thereof, which have been surrendered in
connection with the exercise of Stock Appreciation Rights shall not be available
for subsequent Awards under the Plan, but Common Stock issued in payment of such
Stock Appreciation Rights shall not be charged against the number of shares of
Common Stock available for the grant of Awards hereunder.

                                    ARTICLE V

                                  PARTICIPATION

         5.01. ELIGIBLE PARTICIPANTS. Participants in the Plan shall be such
officers and other key employees of the Company and its Subsidiaries, whether or
not members of the Board, as the Committee, in its sole discretion, may
designate from time to time. The Committee's designation of a Participant in any
year shall not require the Committee to designate such person to receive Awards
or grants in any other year. The designation of a Participant to receive awards
or grants under one portion of the Plan does not require the Committee to
include such Participant under other portions of the Plan. The Committee shall
consider such factors as it deems pertinent in selecting Participants and in
determining the type and amount of their respective Awards. Notwithstanding any
provision herein to the contrary, the Committee may grant Awards under the Plan,
other than Incentive Stock Options, to non-employees who, in the judgment of the
Committee, render significant services to the Company or any of its
Subsidiaries, on such terms and conditions as the Committee deems appropriate
and consistent with the intent of the Plan. Subject to adjustment in accordance
with Section 11.07, in any calendar year, no Participant shall be granted Awards
in respect of more than 750,000 shares of Common Stock (whether through grants
of Options or Stock Appreciation Rights or other grants of Common Stock or
rights with respect thereto) and $3 million in cash.

                                   ARTICLE VI

                   STOCK OPTIONS AND STOCK APPRECIATION RIGHTS

         6.01. OPTION AWARDS.

                  (a) GRANT OF OPTIONS. The Committee may grant, to such
Participants as the Committee may select, Options entitling the Participant to
purchase shares of Common Stock from the Company in such number, at such price,
and on such terms and subject to such conditions, not inconsistent with the
terms of this Plan, as may be established by the Committee. The terms of any
Option granted under this Plan shall be set forth in an Award Agreement.



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                  (b) PURCHASE PRICE OF OPTIONS. The Purchase Price of each
share of Common Stock which may be purchased upon exercise of any Option granted
under the Plan shall be determined by the Committee; provided, however, that the
Purchase Price of the Common Stock purchased pursuant to Options designated by
the Committee as Incentive Stock Options shall be equal to or greater than the
Fair Market Value on the Date of Grant as required under Section 422 of the
Code.

                  (c) DESIGNATION OF OPTIONS. Except as otherwise expressly
provided in the Plan, the Committee may designate, at the time of the grant of
each Option, the Option as an Incentive Stock Option or a Non-Qualified Stock
Option.

                  (d) INCENTIVE STOCK OPTION SHARE LIMITATION. No Participant
may be granted Incentive Stock Options under the Plan (or any other plans of the
Company and its Subsidiaries) which would result in shares with an aggregate
Fair Market Value (measured on the Date of Grant) of more than $100,000 first
becoming exercisable in any one calendar year.

                  (e) RIGHTS AS A STOCKHOLDER. A Participant or a transferee of
an Option pursuant to Section 11.04 shall have no rights as a stockholder with
respect to Common Stock covered by an Option until the Participant or transferee
shall have become the holder of record of any such shares, and no adjustment
shall be made for dividends in cash or other property or distributions or other
rights with respect to any such Common Stock for which the record date is prior
to the date on which the Participant or a transferee of the Option shall have
become the holder of record of any such shares covered by the Option; provided,
however, that Participants are entitled to share adjustments to reflect capital
changes under Section 11.07.

                  (f) RESTORATION OPTIONS UPON THE EXERCISE OF A NON-QUALIFIED
STOCK OPTION. In the event that any Participant delivers to the Company, or has
withheld from the shares otherwise issuable upon the exercise of a Non-Qualified
Stock Option, shares of Common Stock in payment of the Purchase Price of any
Non-Qualified Stock Option granted hereunder in accordance with Section 6.04,
the Committee shall have the authority to grant or provide for the automatic
grant of a Restoration Option to such Participant. The grant of a Restoration
Option shall be subject to the satisfaction of such conditions or criteria as
the Committee in its sole discretion shall establish from time to time. A
Restoration Option shall entitle the holder thereof to purchase a number of
shares of Common Stock equal to the number of such shares so delivered or
withheld upon exercise of the original Option and, in the discretion of the
Committee, the number of shares, if any, delivered or withheld to the
Corporation to satisfy any withholding tax liability arising in connection with
the exercise of the original Option. A Restoration Option shall have a per share
Purchase Price of not less than 100% of the per share Fair Market Value of the
Common Stock on the date of grant of such Restoration Option, a term not longer
than the remaining term of the original Option at the time of exercise thereof,
and such other terms and conditions as the Committee in its sole discretion
shall determine.



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         6.02. STOCK APPRECIATION RIGHTS.

                  (a) STOCK APPRECIATION RIGHT AWARDS. The Committee is
authorized to grant to any Participant one or more Stock Appreciation Rights.
Such Stock Appreciation Rights may be granted either independent of or in tandem
with Options granted to the same Participant. Stock Appreciation Rights granted
in tandem with Options may be granted simultaneously with, or, in the case of
Non-Qualified Stock Options, subsequent to, the grant to such Participant of the
related Option; provided however, that: (i) any Option covering any share of
Common Stock shall expire and not be exercisable upon the exercise of any Stock
Appreciation Right with respect to the same share, (ii) any Stock Appreciation
Right covering any share of Common Stock shall expire and not be exercisable
upon the exercise of any related Option with respect to the same share, and
(iii) an Option and Stock Appreciation Right covering the same share of Common
Stock may not be exercised simultaneously. Upon exercise of a Stock Appreciation
Right with respect to a share of Common Stock, the Participant shall be entitled
to receive an amount equal to the excess, if any, of (A) the Fair Market Value
of a share of Common Stock on the date of exercise over (B) the Exercise Price
of such Stock Appreciation Right established in the Award Agreement, which
amount shall be payable as provided in Section 6.02(c).

                  (b) EXERCISE PRICE. The Exercise Price established under any
Stock Appreciation Right granted under this Plan shall be determined by the
Committee, but in the case of Stock Appreciation Rights granted in tandem with
Options shall not be less than the Purchase Price of the related Option. Upon
exercise of Stock Appreciation Rights granted in tandem with options, the number
of shares subject to exercise under any related Option shall automatically be
reduced by the number of shares of Common Stock represented by the Option or
portion thereof which are surrendered as a result of the exercise of such Stock
Appreciation Rights.

                  (c) PAYMENT OF INCREMENTAL VALUE. Any payment which may become
due from the Company by reason of a Participant's exercise of a Stock
Appreciation Right may be paid to the Participant as determined by the Committee
(i) all in cash, (ii) all in Common Stock, or (iii) in any combination of cash
and Common Stock. In the event that all or a portion of the payment is made in
Common Stock, the number of shares of Common Stock delivered in satisfaction of
such payment shall be determined by dividing the amount of such payment or
portion thereof by the Fair Market Value on the Exercise Date. No fractional
share of Common Stock shall be issued to make any payment in respect of Stock
Appreciation Rights; if any fractional share would be issuable, the combination
of cash and Common Stock payable to the Participant shall be adjusted as
directed by the Committee to avoid the issuance of any fractional share.

         6.03. TERMS OF STOCK OPTIONS AND STOCK APPRECIATION RIGHTS.

                  (a) CONDITIONS ON EXERCISE. An Award Agreement with respect to
Options and/or Stock Appreciation Rights may contain such waiting periods,
exercise dates and restrictions on exercise (including, but not limited to,
periodic installments) as may be determined by the Committee at the time of
grant.



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                  (b) DURATION OF OPTIONS AND STOCK APPRECIATION RIGHTS. Options
and Stock Appreciation Rights shall terminate upon the first to occur of the
following events:

                           (i) Expiration of the Option or Stock Appreciation
Right as provided in the Award Agreement; or

                           (ii) Termination of the Award in the event of a
Participant's disability, Retirement, death or other Termination of Employment
as provided in the Award Agreement; or

                           (iii) In the case of an Incentive Stock Option, ten
years from the Date of Grant; or

                           (iv) Solely in the case of a Stock Appreciation Right
granted in tandem with an Option, upon the expiration of the related Option.

                  (c) ACCELERATION OR EXTENSION OF EXERCISE TIME. The Committee,
in its sole discretion, shall have the right (but shall not be obligated),
exercisable on or at any time after the Date of Grant, to permit the exercise of
an Option or Stock Appreciation Right (i) prior to the time such Option or Stock
Appreciation Right would become exercisable under the terms of the Award
Agreement, (ii) after the termination of the Option or Stock Appreciation Right
under the terms of the Award Agreement, or (iii) after the expiration of the
Option or Stock Appreciation Right.

         6.04. EXERCISE PROCEDURES. Each Option and Stock Appreciation Right
granted under the Plan shall be exercised by written notice to the Company which
must be received by the officer or employee of the Company designated in the
Award Agreement on or before the close of business on the expiration date of the
Award. The Purchase Price of shares purchased upon exercise of an Option granted
under the Plan shall be paid in full in cash by the Participant pursuant to the
Award Agreement; provided however, that the Committee may (but shall not be
required to) permit payment to be made by delivery to the Company of either (a)
Common Stock (which may include Restricted Shares or shares otherwise issuable
in connection with the exercise of the Option, subject to such rules as the
Committee deems appropriate) or (b) any combination of cash and Common Stock, or
(c) such other consideration as the Committee deems appropriate and in
compliance with applicable law (including payment in accordance with a cashless
exercise program under which, if so instructed by the Participant, Common Stock
may be issued directly to the Participant's broker or dealer upon receipt of an
irrevocable written notice of exercise from the Participant). In the event that
any Common Stock shall be transferred to the Company to satisfy all or any part
of the Purchase Price, the part of the Purchase Price deemed to have been
satisfied by such transfer of Common Stock shall be equal to the product derived
by multiplying the Fair Market Value as of the date of exercise times the number
of shares of Common Stock transferred to the Company. The Participant may not
transfer to the Company in satisfaction of the Purchase Price any fractional
share of Common Stock. Any part of the Purchase Price paid in cash upon the
exercise of any Option shall be added to the general



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funds of the Company and may be used for any proper corporate purpose. Unless
the Committee shall otherwise determine, any Common Stock transferred to the
Company as payment of all or part of the Purchase Price upon the exercise of any
Option shall be held as treasury shares.

         6.05. CHANGE IN CONTROL. Unless otherwise provided by the Committee in
the applicable Award Agreement, in the event of a Change in Control, all Options
outstanding on the date of such Change in Control, and all Stock Appreciation
Rights shall become immediately and fully exercisable. The provisions of this
Section 6.05 shall not be applicable to any Options or Stock Appreciation Rights
granted to a Participant if any Change in Control results from such
Participant's beneficial ownership (within the meaning of Rule 13d-3 under the
Exchange Act) of Common Stock or Company Voting Securities.

                                   ARTICLE VII

                                RESTRICTED SHARES

         7.01. RESTRICTED SHARE AWARDS. The Committee may grant to any
Participant an Award of Common Stock in such number of shares, and on such
terms, conditions and restrictions, whether based on performance standards,
periods of service, retention by the Participant of ownership of purchased or
designated shares of Common Stock or other criteria, as the Committee shall
establish. With respect to performance-based Awards of Restricted Shares to
"covered employees" (as defined in Section 162(m) of the Code), performance
targets will be limited to specified levels of one or more of the Performance
Goals. The terms of any Restricted Share Award granted under this Plan shall be
set forth in an Award Agreement which shall contain provisions determined by the
Committee and not inconsistent with this Plan.

                  (a) ISSUANCE OF RESTRICTED SHARES. As soon as practicable
after the Date of Grant of a Restricted Share Award by the Committee, the
Company shall cause to be transferred on the books of the Company, or its agent,
Common Stock, registered on behalf of the Participant, evidencing the Restricted
Shares covered by the Award, but subject to forfeiture to the Company as of the
Date of Grant if an Award Agreement with respect to the Restricted Shares
covered by the Award is not duly executed by the Participant and timely returned
to the Company. All Common Stock covered by Awards under this Article VII shall
be subject to the restrictions, terms and conditions contained in the Plan and
the Award Agreement entered into by the Participant. Until the lapse or release
of all restrictions applicable to an Award of Restricted Shares, the share
certificates representing such Restricted Shares may be held in custody by the
Company, its designee, or, if the certificates bear a restrictive legend, by the
Participant. Upon the lapse or release of all restrictions with respect to an
Award as described in Section 7.01(d), one or more share certificates,
registered in the name of the Participant, for an appropriate number of shares
as provided in Section 7.01(d), free of any restrictions set forth in the Plan
and the Award Agreement shall be delivered to the Participant.

                  (b) STOCKHOLDER RIGHTS. Beginning on the Date of Grant of the
Restricted Share Award and subject to execution of the Award Agreement as
provided in Section 7.01(a), the Participant shall become a stockholder of the
Company with respect to all shares



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subject to the Award Agreement and shall have all of the rights of a
shareholder, including, but not limited to, the right to vote such shares and
the right to receive dividends; provided, however, that any Common Stock
distributed as a dividend or otherwise with respect to any Restricted Shares as
to which the restrictions have not yet lapsed, shall be subject to the same
restrictions as such Restricted Shares and held or restricted as provided in
Section 7.01(a).

                  (c) RESTRICTION ON TRANSFERABILITY. None of the Restricted
Shares may be assigned or transferred (other than by will or the laws of descent
and distribution, or to an inter vivos trust with respect to which the
Participant is treated as the owner under Sections 671 through 677 of the Code,
except to the extent that Section 16 of the Exchange Act limits a participant's
right to make such transfers), pledged or sold prior to lapse of the
restrictions applicable thereto.

                  (d) DELIVERY OF SHARES UPON VESTING. Upon expiration or
earlier termination of the forfeiture period without a forfeiture and the
satisfaction of or release from any other conditions prescribed by the
Committee, or at such earlier time as provided under the provisions of Section
7.03, the restrictions applicable to the Restricted Shares shall lapse. As
promptly as administratively feasible thereafter, subject to the requirements of
Section 11.05, the Company shall deliver to the Participant or, in case of the
Participant's death, to the Participant's Beneficiary, one or more share
certificates for the appropriate number of shares of Common Stock, free of all
such restrictions, except for any restrictions that may be imposed by law.

         7.02. TERMS OF RESTRICTED SHARES.

                  (a) FORFEITURE OF RESTRICTED SHARES. Subject to Sections
7.02(b) and 7.03, all Restricted Shares shall be forfeited and returned to the
Company and all rights of the Participant with respect to such Restricted Shares
shall terminate unless the Participant continues in the service of the Company
or a Subsidiary as an employee until the expiration of the forfeiture period for
such Restricted Shares and satisfies any and all other conditions set forth in
the Award Agreement. The Committee shall determine the forfeiture period (which
may, but need not, lapse in installments) and any other terms and conditions
applicable with respect to any Restricted Share Award.

                  (b) WAIVER OF FORFEITURE PERIOD. Notwithstanding anything
contained in this Article VII to the contrary, the Committee may, in its sole
discretion, waive the forfeiture period and any other conditions set forth in
any Award Agreement under appropriate circumstances (including the death,
disability or Retirement of the Participant or a material change in
circumstances arising after the date of an Award) and subject to such terms and
conditions (including forfeiture of a proportionate number of the Restricted
Shares) as the Committee shall deem appropriate.

         7.03. CHANGE IN CONTROL. Unless otherwise provided by the Committee in
the applicable Award Agreement, in the event of a Change in Control, all
restrictions applicable to the Restricted Share Award shall terminate fully and
the Participant shall immediately have the



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right to the delivery of share certificate or certificates for such shares in
accordance with Section 7.01(d).

                                  ARTICLE VIII

                               PERFORMANCE AWARDS

         8.01. PERFORMANCE AWARDS.

                  (a) AWARD PERIODS AND CALCULATIONS OF POTENTIAL INCENTIVE
AMOUNTS. The Committee may grant Performance Awards to Participants. A
Performance Award shall consist of the right to receive a payment (measured by
the Fair Market Value of a specified number of shares of Common Stock, increases
in such Fair Market Value during the Award Period and/or a fixed cash amount)
contingent upon the extent to which certain predetermined performance targets
have been met during an Award Period. Performance Awards may be made in
conjunction with, or in addition to, Restricted Share Awards made under Article
VII. The Award Period shall be two or more fiscal or calendar years as
determined by the Committee. The Committee, in its discretion and under such
terms as it deems appropriate, may permit newly eligible employees, such as
those who are promoted or newly hired, to receive Performance Awards after an
Award Period has commenced.

                  (b) PERFORMANCE TARGETS. The performance targets may include
such goals related to the performance of the Company or, where relevant, any one
or more of its Subsidiaries or divisions and/or the performance of a Participant
as may be established by the Committee in its discretion. In the case of
Performance Awards to "covered employees" (as defined in Section 162(m) of the
Code), the targets will be limited to specified levels of one or more of the
Performance Goals. The performance targets established by the Committee may vary
for different Award Periods and need not be the same for each Participant
receiving a Performance Award in an Award Period. Except to the extent
inconsistent with the performance-based compensation exception under Section
162(m) of the Code, in the case of Performance Awards granted to employees to
whom such section is applicable, the Committee, in its discretion, but only
under extraordinary circumstances as determined by the Committee, may change any
prior determination of performance targets for any Award Period at any time
prior to the final determination of the Award when events or transactions occur
to cause the performance targets to be an inappropriate measure of achievement.

                  (c) EARNING PERFORMANCE AWARDS. The Committee, at or as soon
as practicable after the Date of Grant, shall prescribe a formula to determine
the percentage of the Performance Award to be earned based upon the degree of
attainment of performance targets.

                  (d) PAYMENT OF EARNED PERFORMANCE AWARDS. Subject to the
requirements of Section 11.05, payments of earned Performance Awards shall be
made in cash or Common Stock, or a combination of cash and Common Stock, in the
discretion of the Committee. The Committee, in its sole discretion, may define
such terms and conditions with respect to the payment of earned Performance
Awards as it may deem desirable.



                                       12
<PAGE>   13

         8.02. TERMS OF PERFORMANCE AWARDS.

                  (a) TERMINATION OF EMPLOYMENT. Unless otherwise provided below
or in Section 8.03, in the case of a Participant's Termination of Employment
prior to the end of an Award Period, the Participant will not have earned any
Performance Awards.

                  (b) RETIREMENT. If a Participant's Termination of Employment
is because of Retirement prior to the end of an Award Period, the Participant
will not be paid any Performance Awards, unless the Committee, in its sole and
exclusive discretion, determines that an Award should be paid. In such a case,
the Participant shall be entitled to receive a pro-rata portion of his or her
Award as determined under Subsection (d).

                  (c) DEATH OR DISABILITY. If a Participant's Termination of
Employment is due to death or disability (as determined in the sole and
exclusive discretion of the Committee) prior to the end of an Award Period, the
Participant or the Participant's personal representative shall be entitled to
receive a pro-rata share of his or her Award as determined under Subsection (d).

                  (d) PRO-RATA PAYMENT. The amount of any payment made to a
Participant whose employment is terminated by Retirement, death or disability
(under circumstances described in Subsections (b) and (c)) will be the amount
determined by multiplying the amount of the Performance Award which would have
been earned, determined at the end of the Award Period, had such employment not
been terminated, by a fraction, the numerator of which is the number of whole
months such Participant was employed during the Award Period, and the
denominator of which is the total number of months of the Award Period. Any such
payment made to a Participant whose employment is terminated prior to the end of
an Award Period under this Section 8.02 shall be made at the end of the
respective Award Period, unless otherwise determined by the Committee in its
sole discretion. Any partial payment previously made or credited to a deferred
account for the benefit of a Participant as provided under Section 8.01(d) of
the Plan shall be subtracted from the amount otherwise determined as payable as
provided in this Section.

                  (e) OTHER EVENTS. Notwithstanding anything to the contrary in
this Article VIII, the Committee may, in its sole and exclusive discretion,
determine to pay all or any portion of a Performance Award to a Participant who
has terminated employment prior to the end of an Award Period under certain
circumstances (including the death, disability or retirement of the Participant
or a material change in circumstances arising after the Date of Grant) and
subject to such terms and conditions as the Committee shall deem appropriate.

         8.03. CHANGE IN CONTROL. Unless otherwise provided by the Committee in
the applicable Award Agreement, in the event of a Change in Control, all
Performance Awards for all Award Periods shall immediately become fully payable
to all Participants and shall be paid to Participants in accordance with Section
8.02(d), within 30 days after such Change in Control.




                                       13
<PAGE>   14

                                   ARTICLE IX

                            OTHER STOCK-BASED AWARDS

         9.01. GRANT OF OTHER STOCK-BASED AWARDS. Other stock-based awards,
consisting of stock purchase rights (with or without loans to Participants by
the Company containing such terms as the Committee shall determine), Awards of
cash, Awards of Common Stock, or Awards valued in whole or in part by reference
to, or otherwise based on, Common Stock, may be granted either alone or in
addition to or in conjunction with other Awards under the Plan. Subject to the
provisions of the Plan, the Committee shall have sole and complete authority to
determine the persons to whom and the time or times at which such Awards shall
be made, the number of shares of Common Stock to be granted pursuant to such
Awards, and all other conditions of the Awards. Any such Award shall be
confirmed by an Award Agreement executed by the Committee and the Participant,
which Award Agreement shall contain such provisions as the Committee determines
to be necessary or appropriate to carry out the intent of this Plan with respect
to such Award.

         9.02. TERMS OF OTHER STOCK-BASED AWARDS. In addition to the terms and
conditions specified in the Award Agreement, Awards made pursuant to this
Article IX shall be subject to the following:

                  (a) Any Common Stock subject to Awards made under this Article
IX may not be sold, assigned, transferred, pledged or otherwise encumbered prior
to the date on which the shares are issued, or, if later, the date on which any
applicable restriction, performance or deferral period lapses; and

                  (b) If specified by the Committee in the Award Agreement, the
recipient of an Award under this Article IX shall be entitled to receive,
currently or on a deferred basis, interest or dividends or dividend equivalents
with respect to the Common Stock or other securities covered by the Award; and

                  (c) The Award Agreement with respect to any Award shall
contain provisions dealing with the disposition of such Award in the event of a
Termination of Employment prior to the exercise, realization or payment of such
Award, whether such termination occurs because of Retirement, disability, death
or other reason, with such provisions to take account of the specific nature and
purpose of the Award.

         9.03. FOREIGN QUALIFIED AWARDS. Awards under the Plan may be granted to
such employees of the Company and its Subsidiaries who are residing in foreign
jurisdictions as the Committee in its sole discretion may determine from time to
time. The Committee may adopt such supplements to the Plan as may be necessary
or appropriate to comply with the applicable laws of such foreign jurisdictions
and to afford Participants favorable treatment under such laws; provided,
however, that no Award shall be granted under any such supplement with terms or
conditions inconsistent with the provision set forth in the Plan.



                                       14
<PAGE>   15

                                    ARTICLE X

                        SHORT-TERM CASH INCENTIVE AWARDS

         10.01. ELIGIBILITY. Executive officers of the Company who are from time
to time determined by the Committee to be "covered employees" for purposes of
Section 162(m) of the Code will be eligible to receive short-term cash incentive
awards under this Article X.

         10.02. AWARDS.

                  (a) PERFORMANCE TARGETS. For each fiscal year of the Company
after fiscal year 1999, the Committee shall establish objective performance
targets based on specified levels of one or more of the Performance Goals. Such
performance targets shall be established by the Committee on a timely basis to
ensure that the targets are considered "preestablished" for purposes of Section
162(m) of the Code.

                  (b) AMOUNTS OF AWARDS. In conjunction with the establishment
of performance targets for a fiscal year, the Committee shall adopt an objective
formula (on the basis of percentages of Participants' salaries, shares in a
bonus pool or otherwise) for computing the respective amounts payable under the
Plan to Participants if and to the extent that the performance targets are
attained. Such formula shall comply with the requirements applicable to
performance-based compensation plans under Section 162(m) of the Code and, to
the extent based on percentages of a bonus pool, such percentages shall not
exceed 100% in the aggregate.

                  (c) PAYMENT OF AWARDS. Awards will be payable to Participants
in cash each year upon prior written certification by the Committee of
attainment of the specified performance targets for the preceding fiscal year.

                  (d) NEGATIVE DISCRETION. Notwithstanding the attainment by the
Company of the specified performance targets, the Committee shall have the
discretion, which need not be exercised uniformly among the Participants, to
reduce or eliminate the award that would be otherwise paid.

                  (e) GUIDELINES. The Committee shall adopt from time to time
written policies for its implementation of this Article X. Such guidelines shall
reflect the intention of the Company that all payments hereunder qualify as
performance-based compensation under Section 162(m) of the Code.

                  (f) NON-EXCLUSIVE ARRANGEMENT. The adoption and operation of
this Article X shall not preclude the Board or the Committee from approving
other short-term incentive compensation arrangements for the benefit of
individuals who are Participants hereunder as the Board or Committee, as the
case may be, deems appropriate and in the best of the Company.



                                       15
<PAGE>   16

                                   ARTICLE XI

           TERMS APPLICABLE GENERALLY TO AWARDS GRANTED UNDER THE PLAN

         11.01. PLAN PROVISIONS CONTROL AWARD TERMS. Except as provided in
Section 11.16, the terms of the Plan shall govern all Awards granted under the
Plan, and in no event shall the Committee have the power to grant any Award
under the Plan which is contrary to any of the provisions of the Plan. In the
event any provision of any Award granted under the Plan shall conflict with any
term in the Plan as constituted on the Date of Grant of such Award, the term in
the Plan as constituted on the Date of Grant of such Award shall control. Except
as provided in Section 11.03 and Section 11.07, the terms of any Award granted
under the Plan may not be changed after the Date of Grant of such Award so as to
materially decrease the value of the Award without the express written approval
of the holder.

         11.02. AWARD AGREEMENT. No person shall have any rights under any Award
granted under the Plan unless and until the Company and the Participant to whom
such Award shall have been granted shall have executed and delivered an Award
Agreement or received any other Award acknowledgment authorized by the Committee
expressly granting the Award to such person and containing provisions setting
forth the terms of the Award.

         11.03. MODIFICATION OF AWARD AFTER GRANT. No Award granted under the
Plan to a Participant may be modified (unless such modification does not
materially decrease the value of the Award) after the Date of Grant except by
express written agreement between the Company and the Participant, provided that
any such change (a) shall not be inconsistent with the terms of the Plan, and
(b) shall be approved by the Committee.

         11.04. LIMITATION ON TRANSFER. Except as provided in Section 7.01(c) in
the case of Restricted Shares, a Participant's rights and interest under the
Plan may not be assigned or transferred other than by will or the laws of
descent and distribution, and during the lifetime of a Participant, only the
Participant personally (or the Participant's personal representative) may
exercise rights under the Plan. The Participant's Beneficiary may exercise the
Participant's rights to the extent they are exercisable under the Plan following
the death of the Participant. Notwithstanding the foregoing, to the extent
permitted under Section 16(b) of the Exchange Act with respect to Participants
subject to such Section, the Committee may grant Non-Qualified Stock Options
that are transferable, without payment of consideration, to immediate family
members of the Participant or to trusts or partnerships for such family members,
and the Committee may also amend outstanding Non-Qualified Stock Options to
provide for such transferability.

         11.05. TAXES. The Company shall be entitled, if the Committee deems it
necessary or desirable, to withhold (or secure payment from the Participant in
lieu of withholding) the amount of any withholding or other tax required by law
to be withheld or paid by the Company with respect to any amount payable and/or
shares issuable under such Participant's Award, or with respect to any income
recognized upon a disqualifying disposition of shares received pursuant to the
exercise of an Incentive Stock Option, and the Company may defer payment or
issuance of




                                       16
<PAGE>   17

the cash or shares upon exercise or vesting of an Award unless indemnified to
its satisfaction against any liability for any such tax. The amount of such
withholding or tax payment shall be determined by the Committee and shall be
payable by the Participant at such time as the Committee determines in
accordance with the following rules:

                  (a) The Participant shall have the right to elect to meet his
or her withholding requirement (i) by having withheld from such Award at the
appropriate time that number of shares of Common Stock, rounded up to the next
whole share, whose Fair Market Value is equal to the amount of withholding taxes
due, (ii) by direct payment to the Company in cash of the amount of any taxes
required to be withheld with respect to such Award or (iii) by a combination of
shares and cash.

                  (b) The Committee shall have the discretion as to any Award,
to cause the Company to pay to tax authorities for the benefit of any
Participant, or to reimburse such Participant for the individual taxes which are
due on the grant, exercise or vesting of any share Award, or the lapse of any
restriction on any share Award (whether by reason of a Participant's filing of
an election under Section 83(b) of the Code or otherwise), including, but not
limited to, Federal income tax, state income tax, local income tax and excise
tax under Section 4999 of the Code, as well as for any such taxes as may be
imposed upon such tax payment or reimbursement.

                  (c) In the case of Participants who are subject to Section 16
of the Exchange Act, the Committee may impose such limitations and restrictions
as it deems necessary or appropriate with respect to the delivery or withholding
of shares of Common Stock to meet tax withholding obligations.

         11.06. SURRENDER OF AWARDS. Any Award granted under the Plan may be
surrendered to the Company for cancellation on such terms as the Committee and
the holder approve.

         11.07. ADJUSTMENTS TO REFLECT CAPITAL CHANGES.

                  (a) RECAPITALIZATION. The number and kind of shares subject to
outstanding Awards, the Purchase Price or Exercise Price for such shares, the
number and kind of shares available for Awards subsequently granted under the
Plan and the maximum number of shares in respect of which Awards can be made to
any Participant in any calendar year shall be appropriately adjusted to reflect
any stock dividend, stock split, combination or exchange of shares, merger,
consolidation or other change in capitalization with a similar substantive
effect upon the Plan or the Awards granted under the Plan. The Committee shall
have the power and sole discretion to determine the amount of the adjustment to
be made in each case.

                  (b) MERGER. After any Merger in which the Company is the
surviving corporation, each Participant shall, at no additional cost, be
entitled upon any exercise of all Options or receipt of other Award to receive
(subject to any required action by shareholders), in lieu of the number of
shares of Common Stock receivable or exercisable pursuant to such Award, the
number and class of shares or other securities to which such Participant would
have been



                                       17
<PAGE>   18

entitled pursuant to the terms of the Merger if, at the time of the Merger, such
Participant had been the holder of record of a number of shares equal to the
number of shares receivable or exercisable pursuant to such Award. Comparable
rights shall accrue to each Participant in the event of successive Mergers of
the character described above. In the event of a Merger in which the Company is
not the surviving corporation, the surviving, continuing, successor, or
purchasing corporation, as the case may be (the "Acquiring Corporation"), shall
either assume the Company's rights and obligations under outstanding Award
Agreements or substitute awards in respect of the Acquiring Corporation's stock
for such outstanding Awards. In the event the Acquiring Corporation fails to
assume or substitute for such outstanding Awards, the Board shall provide that
any unexercisable and/or unvested portion of the outstanding Awards shall be
immediately exercisable and vested as of a date prior to such Merger, as the
Board so determines. The exercise and/or vesting of any Award that was
permissible solely by reason of this Section 11.07(b) shall be conditioned upon
the consummation of the Merger. Any Options which are neither assumed by the
Acquiring Corporation nor exercised as of the date of the Merger shall terminate
effective as of the effective date of the Merger.

                  (c) OPTIONS TO PURCHASE SHARES OR STOCK OF ACQUIRED COMPANIES.
After any Merger in which the Company or a Subsidiary shall be a surviving
corporation, the Committee may grant substituted options under the provisions of
the Plan, pursuant to Section 424 of the Code, replacing old options granted
under a plan of another party to the Merger whose shares or stock subject to the
old options may no longer be issued following the Merger. The foregoing
adjustments and manner of application of the foregoing provisions shall be
determined by the Committee in its sole discretion. Any such adjustments may
provide for the elimination of any fractional shares which might otherwise
become subject to any Options.

         11.08. NO RIGHT TO EMPLOYMENT. No employee or other person shall have
any claim of right to be granted an Award under this Plan. Neither the Plan nor
any action taken hereunder shall be construed as giving any employee any right
to be retained in the employ of the Company or any of its Subsidiaries.

         11.09. AWARDS NOT INCLUDABLE FOR BENEFIT PURPOSES. Payments received by
a Participant pursuant to the provisions of the Plan shall not be included in
the determination of benefits under any pension, group insurance or other
benefit plan applicable to the Participant which is maintained by the Company or
any of its Subsidiaries, except as may be provided under the terms of such plans
or determined by the Board.

         11.10. GOVERNING LAW. All determinations made and actions taken
pursuant to the Plan shall be governed by the laws of the State of Delaware and
construed in accordance therewith.

         11.11. NO STRICT CONSTRUCTION. No rule of strict construction shall be
implied against the Company, the Committee, or any other person in the
interpretation of any of the terms of the Plan, any Award granted under the Plan
or any rule or procedure established by the Committee.



                                       18
<PAGE>   19

         11.12. COMPLIANCE WITH RULE 16b-3. It is intended that, unless the
Committee determines otherwise, Awards under the Plan be eligible for exemption
under Rule 16b-3. The Board is authorized to amend the Plan and to make any such
modifications to Award Agreements to comply with Rule 16b-3, as it may be
amended from time to time, and to make any other such amendments or
modifications as it deems necessary or appropriate to better accomplish the
purposes of the Plan in light of any amendments made to Rule 16b-3.

         11.13. CAPTIONS. The captions (i.e., all Section headings) used in the
Plan are for convenience only, do not constitute a part of the Plan, and shall
not be deemed to limit, characterize or affect in any way any provisions of the
Plan, and all provisions of the Plan shall be construed as if no captions have
been used in the Plan.

         11.14. SEVERABILITY. Whenever possible, each provision in the Plan and
every Award at any time granted under the Plan shall be interpreted in such
manner as to be effective and valid under applicable law, but if any provision
of the Plan or any Award at any time granted under the Plan shall be held to be
prohibited by or invalid under applicable law, then (a) such provision shall be
deemed amended to accomplish the objectives of the provision as originally
written to the fullest extent permitted by law and (b) all other provisions of
the Plan and every other Award at any time granted under the Plan shall remain
in full force and effect.

         11.15. AMENDMENT AND TERMINATION.

                  (a) AMENDMENT. The Board shall have complete power and
authority to amend the Plan at any time; provided, however, that the Board shall
not, without the requisite affirmative approval of shareholders of the Company,
make any amendment which requires shareholder approval under the Code or under
any other applicable law or rule of any stock exchange which lists Common Stock
or Company Voting Securities. No termination or amendment of the Plan may,
without the consent of the Participant to whom any Award shall theretofore have
been granted under the Plan, adversely affect the right of such individual under
such Award.

                  (b) TERMINATION. The Board shall have the right and the power
to terminate the Plan at any time. No Award shall be granted under the Plan
after the termination of the Plan, but the termination of the Plan shall not
have any other effect and any Award outstanding at the time of the termination
of the Plan may be exercised after termination of the Plan at any time prior to
the expiration date of such Award to the same extent such Award would have been
exercisable had the Plan not terminated.

         11.16. SPECIAL PROVISION RELATING TO CERTAIN STOCK ISSUANCES.
Notwithstanding anything to the contrary contained in this Plan, shares of
Common Stock authorized to be issued under this Plan may be issued to pay awards
originally made under and satisfy options originally granted under the Allegheny
Teledyne Incorporated 1996 Incentive Plan or any other stock option plan adopted
by ATI (an "ATI Plan"), as provided in the Employee Benefits Agreement dated as
of November 29, 1999, between the Company and



                                       19
<PAGE>   20

Allegheny Teledyne Incorporated. All shares of Common Stock issued in payment of
an award or grant shall be governed exclusively by the terms of such award or
grant under the applicable ATI Plan, and any terms of this Plan inconsistent
therewith shall be inapplicable to such shares.



                                       20