Document:

<PAGE>

                                                                    EXHIBIT 10.4

                              ITT INDUSTRIES, INC.

                           2003 EQUITY INCENTIVE PLAN
                   (AMENDED AND RESTATED AS OF JULY 13, 2004)

ARTICLE 1. ESTABLISHMENT, PURPOSE, AND DURATION

1.1 ESTABLISHMENT. ITT Industries, Inc., an Indiana corporation (hereinafter
referred to as the "Company"), establishes an incentive compensation plan to be
known as the 2003 Equity Incentive Plan (hereinafter referred to as the "Plan"),
as set forth in this document.

The Plan permits the grant of Nonqualified Stock Options, Incentive Stock
Options, Stock Appreciation Rights (SARs), Restricted Stock, and Restricted
Stock Units.

The Plan shall become effective as of May 13, 2003 (the "Effective Date") and
shall remain in effect as provided in Section 1.3 hereof.

1.2 PURPOSE OF THE PLAN. The purpose of the Plan is to promote the long-term
interests of the Company and its shareholders by strengthening the Company's
ability to attract and retain Employees of the Company and its Affiliates and
members of the Board of Directors upon whose judgment, initiative, and efforts
the financial success and growth of the business of the Company largely depend,
and to provide an additional incentive for such individuals through share
ownership and other rights that promote and recognize the financial success and
growth of the Company and create value for shareholders.

1.3 DURATION OF THE PLAN. The Plan shall commence as of the Effective Date, as
described in Section 1.1 hereof, and shall remain in effect, subject to the
right of the Committee to amend or terminate the Plan at any time pursuant to
Article 13 hereof, until all Shares subject to it shall have been purchased or
acquired according to the Plan's provisions.

ARTICLE 2. DEFINITIONS

Whenever used in the Plan, the following terms shall have the meanings set forth
below, and when the meaning is intended, the initial letter of the word shall be
capitalized.

2.1   "ACCELERATION EVENT" shall be deemed to have occurred as of the first day
      that any one or more of the following conditions have been satisfied:

      (a)   a report on Schedule 13D shall be filed with the Securities and
            Exchange Commission pursuant to Section 13(d) of the Exchange Act
            disclosing that any person (within the meaning of Section 13(d) of
            the Exchange Act), other than the Company or a Subsidiary or any
            employee benefit plan sponsored by the Company or a Subsidiary, is
            the Beneficial Owner directly or indirectly of twenty percent (20%)
            or more of the outstanding Common Stock $1 par value, of the Company
            (the "Stock");

      (b)   any person (within the meaning of Section 13(d) of the Exchange
            Act), other than the Company or a Subsidiary, or any employee
            benefit plan sponsored by the

<PAGE>

            Company or a Subsidiary, shall purchase shares pursuant to a tender
            offer or exchange offer to acquire any Stock of the Company (or
            securities convertible into Stock) for cash, securities or any other
            consideration, provided that after consummation of the offer, the
            person in question is the Beneficial Owner, directly or indirectly,
            of twenty percent (20%) or more of the outstanding Stock of the
            Company (calculated as provided in paragraph (d) of Rule 13d-3 under
            the Exchange Act in the case of rights to acquire Stock);

      (c)   the stockholders of the Company shall approve

            (i)   any consolidation, business combination or merger involving
                  the Company, other than a consolidation, business combination
                  or merger involving the Company 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 the Company (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 the Company (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

            (ii)  any sale, lease, exchange or other transfer (in one
                  transaction or a series of related transactions) of all or
                  substantially all the assets of the Company;

      (d)   there shall have been a change in a majority of the members of the
            Board within a 12-month period unless the election or nomination for
            election by the Company's 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

      (e)   any person (within the meaning of Section 13(d) of the Exchange Act)
            (other than the Company or a Subsidiary or any employee benefit plan
            (or related trust) sponsored by the Company or a Subsidiary) becomes
            the Beneficial Owner of twenty percent (20%) or more of the Stock.

2.2   "AFFILIATE" shall mean any Subsidiary and any other Person that directly,
      or indirectly through one or more intermediaries, controls, or is
      controlled by, or is under common control with, the Person specified.

2.3   "AWARD" means, individually or collectively, a grant under this Plan of
      Nonqualified Stock Options, Incentive Stock Options, SARs, Restricted
      Stock, and Restricted Stock Units.

                                       2
<PAGE>

2.4   "AWARD AGREEMENT" means either (i) an agreement entered into by the
      Company and a Participant setting forth the terms and provisions
      applicable to Awards granted under this Plan, or (ii) a statement issued
      by the Company to a Participant describing the terms and conditions of
      such Award.

2.5   "BENEFICIAL OWNER" or "BENEFICIAL OWNERSHIP" shall have the meaning
      ascribed to such term in Rule 13d-3 of the General Rules and Regulations
      under the Exchange Act.

2.6   "BOARD" OR "BOARD OF DIRECTORS" means the Board of Directors of the
      Company.

2.7   "CODE" means the U.S. Internal Revenue Code of 1986, as amended from time
      to time.

2.8   "COMMITTEE" means the Compensation and Personnel Committee of the Board.

2.9   "COMPANY" means ITT Industries, Inc., an Indiana corporation, and any
      successor thereto as provided in Article 15 herein.

2.10  "COVERED EMPLOYEE" means a Participant who is a "Covered Employee," as
      defined in Code Section 162(m) and the regulations promulgated under Code
      Section 162(m), or any successor statute.

2.11  "DIRECTOR" means any individual who is a member of the Board of Directors.

2.12  "EMPLOYEE" means any employee of the Company or its Affiliates.

2.13  "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended from
      time to time, or any successor act thereto.

2.14  "FAIR MARKET VALUE" means a price that is based on the opening, closing,
      actual, high, low, or average selling prices of a Share on the New York
      Stock Exchange ("NYSE") or other established stock exchange (or exchanges)
      on the applicable date, the preceding trading day, the next succeeding
      trading day, or an average of trading days, as determined by the Committee
      in its discretion.

      Such definition of Fair Market Value shall be specified in the Award
      Agreement and may differ depending on whether Fair Market Value is in
      reference to the grant, exercise, vesting, or settlement or payout of an
      Award. If, however, the accounting standards used to account for equity
      awards granted to Participants are substantially modified subsequent to
      the Effective Date of the Plan, the Committee shall have the ability to
      determine an Award's Fair Market Value based on the relevant facts and
      circumstances. If Shares are not traded on an established stock exchange,
      Fair Market Value shall be determined by the Committee based on objective
      criteria.

2.15  "FREESTANDING SAR" means a SAR that is granted independently of any
      Options, as described in Article 7 herein.

                                       3
<PAGE>

2.16  "GRANT PRICE" means the amount to which the Fair Market Value of a Share
      is compared pursuant to Section 7.6 to determine the amount of payment
      that should be made upon exercise of a SAR

2.17  "INCENTIVE STOCK OPTION" or "ISO" means an Option that meets the
      requirements of Code Section 422, or any successor provision, and that is
      not designated as a Nonqualified Stock Option.

2.18  "INSIDER" shall mean an individual who is, on the relevant date, an
      officer, Director, or more than ten percent (10%) Beneficial Owner of any
      class of the Company's equity securities that is registered pursuant to
      Section 12 of the Exchange Act, as determined by the Board or the
      Committee in accordance with Section 16 of the Exchange Act.

2.19  "NONQUALIFIED STOCK OPTION" OR "NQSO" means an Option that is not intended
      to meet the requirements of Code Section 422, or that otherwise does not
      meet such requirements.

2.20  "OPTION" means an Incentive Stock Option or a Nonqualified Stock Option to
      purchase Shares, as described in Article 6 herein.

2.21  "OPTION PRICE" means the price at which a Share may be purchased by a
      Participant pursuant to an Option.

2.22  "PARTICIPANT" means an Employee or Director who has been selected to
      receive an Award or who has an outstanding Award granted under the Plan.

2.23  "PERFORMANCE-BASED COMPENSATION" means an Award that is qualified as
      Performance-Based Compensation under Code Section 162(m).

2.24  "PERFORMANCE MEASURES" means measures as described in Article 9, the
      attainment of which may determine the amount of payout and/or vesting with
      respect to Awards.

2.25  "PERFORMANCE PERIOD" means the period of time during which the performance
      goals must be met in order to determine the amount of payout and/or
      vesting with respect to an Award.

2.26  "PERIOD OF RESTRICTION" means the period when Restricted Stock or
      Restricted Stock Units are subject to a substantial risk of forfeiture
      (based on the passage of time, the achievement of performance goals, or
      upon the occurrence of other events as determined by the Committee, at its
      discretion) and transfer restrictions, as provided in Article 8 herein.

2.27  "PERSON" shall have the meaning given in Section 3(a) (9) of the Exchange
      Act, as modified and used in Sections 13(d) and 14(d) thereof.

2.28  "PLAN YEAR" means the fiscal year.

2.29  "RESTRICTED STOCK" means an Award granted to a Participant pursuant to
      Article 8 herein.

                                       4
<PAGE>

2.30  "RESTRICTED STOCK UNIT" means an Award granted to a Participant pursuant
      to Article 8 herein.

2.31  "SHARE" means a share of common stock of the Company, $ 1.00 par value per
      share.

2.32  "STOCK APPRECIATION RIGHT" or "SAR" means an Award granted to a
      Participant pursuant to Article 7 herein.

2.33  "SUBSIDIARY" means any corporation, partnership, joint venture, limited
      liability company, or other entity (other than the Company) in an unbroken
      chain of entities beginning with the Company if each of the entities other
      than the last entity in the unbroken chain owns at least fifty percent
      (50%) of the total combined voting power in one of the other entities in
      such chain.

2.34  "TANDEM SAR" means a SAR that is granted in connection with a related
      Option pursuant to Article 7.

ARTICLE 3. ADMINISTRATION

3.1 GENERAL. The Committee shall be responsible for administering the Plan. The
Committee may employ attorneys, consultants, accountants, and other persons, and
the Committee, the Company, and its officers and Directors shall be entitled to
rely upon the advice, opinions, or valuations of any such persons. All actions
taken and all interpretations and determinations made by the Committee shall be
final and binding upon the Participants, the Company, and all other interested
persons.

3.2 AUTHORITY OF THE COMMITTEE. The Committee shall have full and exclusive
discretionary power to interpret the terms and the intent of the Plan and to
determine eligibility for Awards and to adopt such rules, regulations, and
guidelines for administering the Plan as the Committee may deem necessary or
proper. Such authority shall include, but not be limited to, selecting Award
recipients, establishing all Award terms and conditions and, subject to Article
13, adopting modifications and amendments to the Plan or any Award Agreement,
including without limitation, any that are necessary to comply with the laws of
the countries in which the Company and its Affiliates operate.

3.3 DELEGATION. The Committee may delegate to one or more of its members or to
one or more agents or advisors such administrative duties as it may deem
advisable, and the Committee or any person to whom it has delegated duties as
aforesaid may employ one or more persons to render advice with respect to any
responsibility the Committee or such person may have under the Plan. The
Committee may, by resolution, authorize one or more officers of the Company to
do one or both of the following: (a) designate Employees and Directors to be
recipients of Awards; and (b) determine the size of the Award; provided,
however, the Committee shall not delegate such responsibilities to any such
officer for Awards granted to an Employee that is considered an elected officer
of the Company, or to the extent it would unintentionally cause
Performance-Based Compensation to lose its status as such.

                                       5
<PAGE>

ARTICLE 4. SHARES SUBJECT TO THE PLAN AND MAXIMUM AWARDS

4.1 NUMBER OF SHARES AVAILABLE FOR AWARDS. Subject to adjustment as provided in
Section 4.2 herein, the number of Shares hereby reserved for issuance to
Participants under the Plan shall be six million one hundred thousand
(6,100,000).

The number of Shares that may be issued under the Plan for Awards other than
Options granted with an Option Price equal to at least Fair Market Value on the
date of grant or SARs with a Grant Price equal to at least Fair Market Value on
the date of grant shall not exceed one million (1,000,000).

All of the reserved Shares may be used as ISOs.

Any Shares related to Awards which terminate by expiration, forfeiture,
cancellation, or otherwise without the issuance of such Shares, are settled in
cash in lieu of Shares, or are exchanged with the Committee's permission for
Awards not involving Shares, shall be available again for grant under the Plan.
Moreover, if the Option Price of an NQSO under the Plan or the tax withholding
requirements with respect to any Award (other than an ISO) granted under the
Plan are satisfied by tendering Shares to the Company (by either actual delivery
or by attestation), or if a SAR is exercised, only the number of Shares issued,
net of the Shares tendered, if any, will be deemed delivered for purposes of
determining the maximum number of Shares available for delivery under the Plan.
The maximum number of Shares available for issuance under the Plan shall not be
reduced to reflect any dividends or dividend equivalents that are reinvested
into additional Shares or credited as additional Restricted Stock, or Restricted
Stock Units. In addition, the Committee, in its discretion, may establish any
other appropriate methodology for calculating the number of Shares issued
pursuant to the Plan. The Shares available for issuance under the Plan may be
authorized and unissued Shares or treasury Shares.

The following limits ("Award Limits") shall apply to Awards:

      (a)   OPTIONS: The maximum aggregate number of Shares that may be granted
            in the form of Options, pursuant to any Award granted in any one
            Plan Year to any one Participant shall be three hundred thousand
            (300,000).

      (b)   SARS: The maximum number of Shares that may be granted in the form
            of Stock Appreciation Rights, pursuant to any Award granted in any
            one Fiscal Year to any one Participant shall be three hundred
            thousand (300,000).

      (c)   RESTRICTED STOCK OR RESTRICTED STOCK UNITS: The maximum aggregate
            grant with respect to Awards of Restricted Stock or Restricted Stock
            Units granted in any one Plan Year to any one Participant shall be
            one hundred fifty thousand (150,000).

4.2 ADJUSTMENTS IN AUTHORIZED SHARES. In the event of any corporate event or
transaction (including, but not limited to, a change in the shares of the
Company or the capitalization of the Company) such as a merger, consolidation,
reorganization, recapitalization, separation, stock dividend, stock split,
reverse stock split, split up, spin-off, or other distribution of stock or

                                       6
<PAGE>

property of the Company, combination of shares, exchange of shares, dividend in
kind, or other like change in capital structure or distribution (other than
normal cash dividends) to shareholders of the Company, or any similar corporate
event or transaction, the Committee, in its sole discretion, in order to prevent
dilution or enlargement of Participants' rights under the Plan, shall substitute
or adjust, in an equitable manner, as applicable, the number and nature of
Shares that may be issued under the Plan, the number and nature of Shares
subject to outstanding Awards, the Option Price and the Grant Price applicable
to outstanding Awards, the Award Limits, and other value determinations
applicable to outstanding Awards.

Except to the extent it would unintentionally cause Performance Based
Compensation to fail to qualify for the performance based exception to Code
Section 162(m), appropriate adjustments may also be made by the Committee in the
terms of any Awards under the Plan to reflect such changes or distributions and
to modify any other terms of outstanding Awards on an equitable basis, including
modifications of performance goals and changes in the length of Performance
Periods. The determination of the Committee as to the foregoing adjustments, if
any, shall be conclusive and binding on Participants under the Plan.

Subject to the provisions of Article 12, without affecting the number of Shares
reserved or available hereunder, the Committee may authorize the issuance or
assumption of benefits under this Plan in connection with any merger,
consolidation, acquisition of property or stock, share exchange, amalgamation,
reorganization or similar transaction upon such terms and conditions as it may
deem appropriate; provided, however, that no such issuance or assumption shall
be made without affecting the number of Shares reserved or available hereunder
if it would prevent the granting of ISOs under the Plan.

ARTICLE 5. ELIGIBILITY AND PARTICIPATION

5.1 ELIGIBILITY. Individuals eligible to participate in this Plan include all
Employees and Directors.

5.2 ACTUAL PARTICIPATION. Subject to the provisions of the Plan, the Committee
may, from time to time, select from all eligible individuals, those to whom
Awards shall be granted and shall determine the form and amount of each Award.

ARTICLE 6. STOCK OPTIONS

6.1 GRANT OF OPTIONS. Subject to the terms and provisions of the Plan, Options
may be granted to Participants in such number, and upon such terms, and at any
time and from time to time as shall be determined by the Committee.

ISOs may not be granted following the ten-year (10) anniversary of the Effective
Date. ISOs may be granted only to Employees.

6.2 AWARD AGREEMENT. Each Option grant shall be evidenced by an Award Agreement
that shall specify the Option Price, the duration of the Option, the number of
Shares to which the Option pertains, the conditions upon which an Option shall
become vested and exercisable, and such other provisions as the Committee shall
determine which are not inconsistent with the

                                       7
<PAGE>

terms of the Plan. The Award Agreement also shall specify whether the Option is
intended to be an ISO or an NQSO.

6.3 OPTION PRICE. Subject to the following sentence, the Option Price for each
grant of an Option under this Plan shall be as determined by the Committee;
provided, however, the Option Price shall not be less than one hundred percent
(100%) of the Fair Market Value of a Share on the date the Option is granted.
For Options granted to Participants outside the United States, the Committee, in
order to comply with local tax laws and regulations, has the authority to grant
Options at a price that is less than the Fair Market Value of a Share on the
date of grant.

6.4 DURATION OF OPTIONS. Each Option granted to a Participant shall expire at
such time as the Committee shall determine at the time of grant; provided,
however, no Option shall be exercisable later than the tenth (10th) anniversary
of its grant.

6.5 EXERCISE OF OPTIONS. Options granted under this Article 6 shall be
exercisable at such times and be subject to such terms and conditions as the
Committee shall in each instance approve, which need not be the same for each
grant or for each Participant.

6.6 PAYMENT. Options granted under this Article 6 shall be exercised by the
delivery of notice of exercise to an agent designated by the Company or by
complying with any alternative procedures which may be authorized by the
Committee, setting forth the number of Shares with respect to which the Option
is to be exercised.

A condition of the issuance of the Shares as to which an Option shall be
exercised shall be the payment of the Option Price. The Option Price of any
Option shall be payable to the Company in full either: (a) in cash or its
equivalent, (b) by tendering (either by actual delivery or attestation)
previously acquired Shares having an aggregate Fair Market Value at the time of
exercise equal to the Option Price (provided the Shares tendered must have been
held by the Participant for at least six (6) months prior to their tender to
satisfy the Option Price or have been purchased on the open market), (c) by a
combination of (a) and (b), or (d) any other method approved by the Committee in
its sole discretion. The Committee shall determine acceptable methods for
tendering Shares as payment upon exercise of an Option and may impose such
limitations and prohibitions on the use of Shares to exercise an Option as it
deems appropriate.

Subject to any governing rules or regulations, as soon as practicable after
receipt of written notification of exercise and full payment (including
satisfaction of any applicable tax withholding), the Company shall deliver to
the Participant evidence of book entry Shares, or upon the Participant's
request, Share certificates in an appropriate amount based upon the number of
Shares purchased under the Option(s).

Unless otherwise determined by the Committee, all payments under all of the
methods indicated above shall be paid in United States dollars.

6.7 RESTRICTIONS ON SHARE TRANSFERABILITY. The Committee may impose such
restrictions on any Shares acquired pursuant to the exercise of an Option
granted under this Article 6 as it may deem advisable, including, without
limitation, restrictions under applicable federal securities

                                       8
<PAGE>

laws, under the requirements of any stock exchange or market upon which such
Shares are then listed and/or traded, and under any blue sky or state securities
laws applicable to such Shares.

6.8 TERMINATION OF EMPLOYMENT. The impact of a termination of a Participant's
employment or service as a Director on an Option's vesting and exercise period
shall be determined by the Committee, in its sole discretion, in the
Participant's Award Agreement, and need not be uniform among Option grants or
Participants.

6.9 TRANSFERABILITY OF OPTIONS. During his or her lifetime, only the Participant
shall have the right to exercise the Options. After the Participant's death, the
Participant's estate or beneficiary shall have the right to exercise such
Options.

      (a)   INCENTIVE STOCK OPTIONS. No ISO granted under the Plan may be sold,
            transferred, pledged, assigned, or otherwise alienated or
            hypothecated, other than by will or by the laws of descent and
            distribution.

      (b)   NONQUALIFIED STOCK OPTIONS. Except as otherwise provided in a
            Participant's Award Agreement, no NQSO granted under this Article 6
            may be sold, transferred, pledged, assigned, or otherwise alienated
            or hypothecated, other than by will or by the laws of descent and
            distribution.

6.10 NOTIFICATION OF DISQUALIFYING DISPOSITION. If any Participant shall make
any disposition of Shares issued pursuant to the exercise of an ISO under the
circumstances described in Section 421(b) of the Code (relating to certain
disqualifying dispositions), such Participant shall notify the Company of such
disposition within ten (10) days thereof.

ARTICLE 7. STOCK APPRECIATION RIGHTS

7.1 GRANT OF SARS. Subject to the terms and conditions of the Plan, SARs may be
granted to Participants at any time and from time to time as shall be determined
by the Committee. The Committee may grant Freestanding SARs, Tandem SARs, or any
combination of these forms of SARs.

Subject to the terms and conditions of the Plan, the Committee shall have
complete discretion in determining the number of SARs granted to each
Participant and, consistent with the provisions of the Plan, in determining the
terms and conditions pertaining to such SARs.

The SAR Grant Price for each grant of a Freestanding SAR shall be determined by
the Committee and shall be specified in the Award Agreement. The SAR Grant Price
may include (but shall not be limited to) a Grant Price based on one hundred
percent (100%) of the Fair Market Value of the Shares on the date of grant, a
Grant Price that is either set at a discount or premium to the Fair Market Value
of the Shares on the date of grant, or is indexed to the Fair Market Value of
the Shares, with the index determined by the Committee, in its discretion. The
Grant Price of Tandem SARs shall be equal to the Option Price of the related
Option.

7.2 SAR AGREEMENT. Each SAR Award shall be evidenced by an Award Agreement that
shall specify the Grant Price, the term of the SAR, and such other provisions as
the Committee shall determine.

                                       9
<PAGE>

7.3 TERM OF SAR. Subject to the following sentence, the term of a SAR granted
under the Plan shall be determined by the Committee, in its sole discretion,
provided that, except as determined otherwise by the Committee and specified in
the SAR Award Agreement, no SAR shall be exercisable later than the tenth (10th)
anniversary of its grant. For SARs granted to Participants outside the United
States, the Committee has the authority to grant SARs that have a term greater
than ten (10) years.

7.4 EXERCISE OF FREESTANDING SARS. Freestanding SARs may be exercised upon
whatever terms and conditions the Committee, in its sole discretion, imposes
upon them.

7.5 EXERCISE OF TANDEM SARS. Tandem SARs may be exercised for all or part of the
Shares subject to the related Option upon the surrender of the right to exercise
the equivalent portion of the related Option. A Tandem SAR may be exercised only
with respect to the Shares for which its related Option is then exercisable.

Notwithstanding any other provision of this Plan to the contrary, with respect
to a Tandem SAR granted in connection with an ISO: (a) the Tandem SAR will
expire no later than the expiration of the underlying ISO; (b) the value of the
payout with respect to the Tandem SAR may be for no more than one hundred
percent (100%) of the difference between the Option Price of the underlying ISO
and the Fair Market Value of the Shares subject to the underlying ISO at the
time the Tandem SAR is exercised; and (c) the Tandem SAR may be exercised only
when the Fair Market Value of the Shares subject to the ISO exceeds the Option
Price of the ISO.

7.6 PAYMENT OF SAR AMOUNT. Upon the exercise of a SAR, a Participant shall be
entitled to receive payment from the Company in an amount determined by
multiplying:

      (a)   The difference between the Fair Market Value of a Share on the date
            of exercise over the Grant Price; by

      (b)   The number of Shares with respect to which the SAR is exercised.

At the discretion of the Committee, the payment upon SAR exercise may be in
cash, in Shares of equivalent value, in some combination thereof, or in any
other manner approved by the Committee at its sole discretion. The Committee's
determination regarding the form of SAR payout shall be set forth in the Award
Agreement pertaining to the grant of the SAR.

7.7 TERMINATION OF EMPLOYMENT. The impact of a termination of a Participant's
employment or service as a Director on a SAR's vesting and exercise period shall
be determined by the Committee, in its sole discretion, in the Participant's
Award Agreement, and need not be uniform among SAR grants or Participants.

7.8 NONTRANSFERABILITY OF SARS. Except as otherwise provided in a Participant's
Award Agreement, no SAR granted under the Plan may be sold, transferred,
pledged, assigned, or otherwise alienated or hypothecated, other than by will or
by the laws of descent and distribution. Further, except as otherwise provided
in a Participant's Award Agreement, all SARs granted to a Participant under the
Plan shall be exercisable during his or her lifetime only by such Participant.

                                       10
<PAGE>

7.9 OTHER RESTRICTIONS. The Committee shall impose such other conditions and/or
restrictions on any Shares received upon exercise of a SAR granted pursuant to
the Plan as it may deem advisable. This includes, but is not limited to,
requiring the Participant to hold the Shares received upon exercise of a SAR for
a specified period of time.

ARTICLE 8. RESTRICTED STOCK AND RESTRICTED STOCK UNITS

8.1 GRANT OF RESTRICTED STOCK OR RESTRICTED STOCK UNITS. Subject to the terms
and conditions of the Plan, the Committee, at any time and from time to time,
may grant Shares of Restricted Stock and/or Restricted Stock Units to
Participants in such amounts as the Committee shall determine. Restricted Stock
Units shall be similar to Restricted Stock except that no Shares are actually
awarded to the Participant on the date of grant.

8.2 RESTRICTED STOCK OR RESTRICTED STOCK UNIT AGREEMENT. Each Restricted Stock
and/or Restricted Stock Unit grant shall be evidenced by an Award Agreement that
shall specify the Period(s) of Restriction, the number of Shares of Restricted
Stock or the number of Restricted Stock Units granted, and such other provisions
as the Committee shall determine.

8.3 TRANSFERABILITY. Except as provided in this Article 8, the Shares of
Restricted Stock and/or Restricted Stock Units granted herein may not be sold,
transferred, pledged, assigned, or otherwise alienated or hypothecated until the
end of the applicable Period of Restriction established by the Committee and
specified in the Award Agreement (and in the case of Restricted Stock Units
until the date of delivery or other payment), or upon earlier satisfaction of
any other conditions, as specified by the Committee, in its sole discretion, and
set forth in the Award Agreement.

8.4 OTHER RESTRICTIONS. The Committee shall impose such other conditions and/or
restrictions on any Shares of Restricted Stock or Restricted Stock Units granted
pursuant to the Plan as it may deem advisable including, without limitation, a
requirement that Participants pay a stipulated purchase price for each Share of
Restricted Stock or each Restricted Stock Unit, restrictions based upon the
achievement of specific performance goals, time-based restrictions on vesting
following the attainment of the performance goals, time-based restrictions,
and/or restrictions under applicable federal or state securities laws.

To the extent deemed appropriate by the Committee, the Company may retain the
certificates representing Shares of Restricted Stock in the Company's possession
until such time as all conditions and/or restrictions applicable to such Shares
have been satisfied or lapse.

Except as otherwise provided in this Article 8, Shares of Restricted Stock
covered by each Restricted Stock Award shall become freely transferable by the
Participant after all conditions and restrictions applicable to such Shares have
been satisfied or lapse (including satisfaction of any applicable tax
withholding obligations), and Restricted Stock Units shall be paid in cash,
Shares, or a combination of cash and Shares as the Committee, in its sole
discretion shall determine.

8.5 VOTING RIGHTS. To the extent permitted or required by law, as determined by
the Committee, Participants holding Shares of Restricted Stock granted hereunder
may be granted

                                       11
<PAGE>

the right to exercise full voting rights with respect to those Shares during the
Period of Restriction. A Participant shall have no voting rights with respect to
any Restricted Stock Units granted hereunder.

8.6 DIVIDENDS AND OTHER DISTRIBUTIONS. During the Period of Restriction,
Participants holding Shares of Restricted Stock or Restricted Stock Units
granted hereunder may, if the Committee so determines, be credited with
dividends paid with respect to the underlying Shares or dividend equivalents
while they are so held in a manner determined by the Committee in its sole
discretion. The Committee may apply any restrictions to the dividends or
dividend equivalents that the Committee deems appropriate. The Committee, in its
sole discretion, may determine the form of payment of dividends or dividend
equivalents, including cash, Shares, Restricted Stock, or Restricted Stock
Units.

8.7 TERMINATION OF EMPLOYMENT. The impact of a termination of a Participant's
employment or service as a Director on Restricted Stock or Restricted Stock Unit
vesting and payment shall be determined by the Committee, in its sole
discretion, in the Participant's Award Agreement, and need not be uniform among
Award grants or Participants.

8.8 SECTION 83(b) ELECTION. The Committee may provide in an Award Agreement that
the Award of Restricted Stock is conditioned upon the Participant making or
refraining from making an election with respect to the Award under Section 83(b)
of the Code. If a Participant makes an election pursuant to Section 83(b) of the
Code concerning a Restricted Stock Award, the Participant shall be required to
file promptly a copy of such election with the Company.

ARTICLE 9. PERFORMANCE MEASURES

Unless and until the Committee proposes for shareholder vote and the
shareholders approve a change in the general Performance Measures set forth in
this Article 9, the performance goals upon which the payment or vesting of an
Award to a Covered Employee that is intended to qualify as Performance-Based
Compensation shall be limited to the following Performance Measures:

      (a)   Net earnings;

      (b)   Earnings per share;

      (c)   Net sales growth;

      (d)   Net income (before or after taxes);

      (e)   Net operating profit;

      (f)   Return measures (including, but not limited to, return on assets,
            capital, equity, or sales);

      (g)   Cash flow (including, but not limited to, operating cash flow and
            free cash flow);

      (h)   Cash flow return on capital;

                                       12
<PAGE>

      (i)   Earnings before or after taxes, interest, depreciation, and/or
            amortization;

      (j)   Gross or operating margins;

      (k)   Productivity ratios;

      (1)   Share price (including, but not limited to, growth measures and
            total shareholder return);

      (m)   Expense targets;

      (n)   Margins;

      (o)   Operating efficiency;

      (p)   Customer satisfaction;

      (q)   Employee satisfaction metrics;

      (r)   Human resources metrics;

      (s)   Working capital targets; and

      (t)   EVA(R).

Any Performance Measure(s) may be used to measure the performance of the Company
or an Affiliate as a whole or any business unit of the Company or an Affiliate
or any combination thereof, as the Committee may deem appropriate, or any of the
above Performance Measures as compared to the performance of a group of
comparator companies, or published or special index that the Committee, in its
sole discretion, deems appropriate, or the Company may select Performance
Measure (1) above as compared to various stock market indices. The Committee
also has the authority to provide for accelerated vesting of any Award based on
the achievement of performance goals pursuant to the Performance Measures
specified in this Article 9.

The Committee may provide in any such Award that any evaluation of performance
may include or exclude any of the following events that occurs during a
Performance Period: (a) asset write-downs, (b) litigation or claim judgments or
settlements, (c) the effect of changes in tax laws, accounting principles, or
other laws or provisions affecting reported results, (d) any reorganization and
restructuring programs, (e) extraordinary nonrecurring items as described in
Accounting Principles Board Opinion No. 30 and/or in management's discussion and
analysis of financial condition and results of operations appearing in the
Company's annual report to shareholders for the applicable year, (f)
acquisitions or divestitures, and (g) foreign exchange gains and losses. To the
extent such inclusions or exclusions affect Awards to

Covered Employees, they shall be prescribed in a form that meets the
requirements of Code Section 162(m) for deductibility.

                                       13
<PAGE>

Awards that are designed to qualify as Performance-Based Compensation, and that
are held by Covered Employees, may not be adjusted upward. The Committee shall
retain the discretion to adjust such Awards downward.

In the event that applicable tax and/or securities laws change to permit
Committee discretion to alter the governing Performance Measures without
obtaining shareholder approval of such changes, the Committee shall have sole
discretion to make such changes without obtaining shareholder approval.

ARTICLE 10. BENEFICIARY DESIGNATION

Each Participant under the Plan may, from time to time, name any beneficiary or
beneficiaries (who may be named contingently or successively) to whom any
benefit under the Plan is to be paid in case of his or her death before he or
she receives any or all of such benefit. Each such designation shall revoke all
prior designations by the same Participant, shall be in a form prescribed by the
Committee, and will be effective only when filed by the Participant in writing
with the Company during the Participant's lifetime. In the absence of any such
designation, benefits remaining unpaid at the Participant's death shall be paid
to the Participant's estate.

ARTICLE 11. RIGHTS OF PARTICIPANTS

11.1 EMPLOYMENT. Nothing in the Plan or an Award Agreement shall interfere with
or limit in any way the right of the Company and/or its Affiliates to terminate
any Participant's employment or service on the Board at any time or for any
reason not prohibited by law, nor confer upon any Participant any right to
continue his or her employment or service as a director for any specified period
of time.

Neither an Award nor any benefits arising under this Plan shall constitute an
employment contract with the Company and, accordingly, subject to Article 3 and
Section 13.1, this Plan and the benefits hereunder may be terminated at any time
in the sole and exclusive discretion of the Committee without giving rise to any
liability on the part of the Company, its Affiliates, and/or its Subsidiaries.

11.2 PARTICIPATION. No individual shall have the right to be selected to receive
an Award under this Plan, or, having been so selected, to be selected to receive
a future Award.

11.3 RIGHTS AS A SHAREHOLDER. Except as otherwise provided in Section 8 of the
Plan or in an Award Agreement, a Participant shall have none of the rights of a
shareholder with respect to Shares covered by any Award until the Participant
becomes the record holder of such Shares.

ARTICLE 12. ACCELERATION EVENT

The Compensation Committee shall specify in each Participant's Award Agreement
the treatment of outstanding Awards upon an Acceleration Event.

                                       14
<PAGE>

ARTICLE 13. AMENDMENT, MODIFICATION, SUSPENSION, AND TERMINATION

13.1 AMENDMENT, MODIFICATION, SUSPENSION, AND TERMINATION. Subject to Section
13.3, the Committee may, at any time and from time to time, alter, amend,
modify, suspend, or terminate the Plan and any Award Agreement in whole or in
part; provided, however, that, without the prior approval of the Company's
shareholders, Options issued under the Plan will not be repriced, replaced, or
regranted through cancellation, or by lowering the Option Price of a previously
granted Option, and no amendment of the Plan shall be made without shareholder
approval if shareholder approval is required by law, regulation, or stock
exchange rule.

13.2 ADJUSTMENT OF AWARDS UPON THE OCCURRENCE OF CERTAIN UNUSUAL OR NONRECURRING
EVENTS. The Committee may make adjustments in the terms and conditions of, and
the criteria included in, Awards in recognition of unusual or nonrecurring
events (including, without limitation, the events described in Section 4.2
hereof) affecting the Company or the financial statements of the Company or of
changes in applicable laws, regulations, or accounting principles, whenever the
Committee determines that such adjustments are appropriate in order to prevent
unintended dilution or enlargement of the benefits or potential benefits
intended to be made available under the Plan. The determination of the Committee
as to the foregoing adjustments, if any, shall be conclusive and binding on
Participants under the Plan.

13.3 AWARDS PREVIOUSLY GRANTED. Notwithstanding any other provision of the Plan
to the contrary, no termination, amendment, suspension, or modification of the
Plan or an Award Agreement shall adversely affect in any material way any Award
previously granted under the Plan, without the written consent of the
Participant holding such Award.

ARTICLE 14. WITHHOLDING

14.1 TAX WITHHOLDING. The Company shall have the power and the right to deduct
or withhold, or require a Participant to remit to the Company, the minimum
statutory amount to satisfy federal, state, and local taxes, domestic or
foreign, required by law or regulation to be withheld with respect to any
taxable event arising as a result of this Plan.

14.2 SHARE WITHHOLDING. With respect to withholding required upon the exercise
of Options, or SARs, upon the lapse of restrictions on Restricted Stock and
Restricted Stock Units, or any other taxable event arising as a result of Awards
granted hereunder, Participants may elect, subject to the approval of the
Committee, to satisfy the withholding requirement, in whole or in part, by
having the Company withhold Shares having a Fair Market Value on the date the
tax is to be determined equal to the minimum statutory total tax that could be
imposed on the transaction. All such elections shall be irrevocable, made in
writing, and signed by the Participant, and shall be subject to any restrictions
or limitations that the Committee, in its sole discretion, deems appropriate.

ARTICLE 15. SUCCESSORS

All obligations of the Company under the Plan with respect to Awards granted
hereunder shall be binding on any successor to the Company, whether the
existence of such successor is the result

                                       15
<PAGE>

of a direct or indirect purchase, merger, consolidation, or otherwise, of all or
substantially all of the business and/or assets of the Company.

ARTICLE 16. GENERAL PROVISIONS

16.1 FORFEITURE EVENTS. The Committee may specify in an Award Agreement that the
Participant's rights, payments, and benefits with respect to an Award shall be
subject to reduction, cancellation, forfeiture, or recoupment upon the
occurrence of certain specified events, in addition to any otherwise applicable
vesting or performance conditions of an Award. Such events shall include, but
shall not be limited to, termination of employment for cause, violation of
material Company and/or Affiliate policies, breach of noncompetition,
confidentiality, or other restrictive covenants that may apply to the
Participant, or other conduct by the Participant that is detrimental to the
business or reputation of the Company and/or its Affiliates.

16.2 LEGEND. The certificates for Shares may include any legend which the
Committee deems appropriate to reflect any restrictions on transfer of such
Shares.

16.3 GENDER AND NUMBER. Except where otherwise indicated by the context, any
masculine term used herein also shall include the feminine, the plural shall
include the singular, and the singular shall include the plural.

16.4 SEVERABILITY. In the event any provision of the Plan shall be held illegal
or invalid for any reason, the illegality or invalidity shall not affect the
remaining parts of the Plan, and the Plan shall be construed and enforced as if
the illegal or invalid provision had not been included.

16.5 REQUIREMENTS OF LAW. The granting of Awards and the issuance of Shares
under the Plan shall be subject to all applicable laws, rules, and regulations,
and to such approvals by any governmental agencies or national securities
exchanges as may be required.

16.6 SECURITIES LAW COMPLIANCE. With respect to Insiders, transactions under
this Plan are intended to comply with all applicable conditions of Rule 16b-3 or
its successor under the Exchange Act. To the extent any provision of the Plan or
action by the Committee fails to so comply, it shall be deemed null and void, to
the extent permitted by law and deemed advisable by the Committee.

16.7 REGISTRATION AND LISTING. The Company may use reasonable endeavors to
register Shares allotted pursuant to the exercise of an Award with the United
States Securities and Exchange Commission or to effect compliance with the
registration, qualification, and listing requirements of any national securities
laws, stock exchange, or automated quotation system.

16.8 DELIVERY OF TITLE. The Company shall have no obligation to issue or deliver
evidence of title for Shares issued under the Plan prior to:

      (a)   Obtaining any approvals from governmental agencies that the Company
            determines are necessary or advisable; and

                                       16
<PAGE>

      (b)   Completion of any registration or other qualification of the Shares
            under any applicable national or foreign law or ruling of any
            governmental body that the Company determines to be necessary or
            advisable.

16.9 INABILITY TO OBTAIN AUTHORITY. The inability of the Company to obtain
authority from any regulatory body having jurisdiction, which authority is
deemed by the Company's counsel to be necessary to the lawful issuance and sale
of any Shares hereunder, shall relieve the Company of any liability in respect
of the failure to issue or sell such Shares as to which such requisite authority
shall not have been obtained.

16.10 EMPLOYEES BASED OUTSIDE OF THE UNITED STATES. Notwithstanding any
provision of the Plan to the contrary, in order to comply with the laws in other
countries in which the Company and its Affiliates operate or have Employees or
Directors, the Committee, in its sole discretion, shall have the power and
authority to:

      (a)   Determine which Affiliates shall be covered by the Plan;

      (b)   Determine which Employees and/or Directors outside the United States
            are eligible to participate in the Plan;

      (c)   Modify the administrative terms and conditions of any Award granted
            to Employees and/or Directors outside the United States to comply
            with applicable foreign laws;

      (d)   Establish subplans and modify exercise procedures and other terms
            and procedures, to the extent such actions may be necessary or
            advisable. Any subplans and modifications to Plan terms and
            procedures established under this Section 16.10 by the Committee
            shall be attached to this Plan document as appendices; and

      (e)   Take any action, before or after an Award is made, that it deems
            advisable to obtain approval or comply with any necessary local
            government regulatory exemptions or approvals.

Notwithstanding the above, the Committee may not take any actions hereunder, and
no Awards shall be granted, that would violate the Exchange Act, the Code, any
securities law, or governing statute or any other applicable law.

16.11 UNCERTIFICATED SHARES. To the extent that the Plan provides for issuance
of certificates to reflect the transfer of Shares, the transfer of such Shares
may be effected on a noncertificated basis, to the extent not prohibited by
applicable law or the rules of any stock exchange.

16.12 UNFUNDED PLAN. Participants shall have no right, title, or interest
whatsoever in or to any investments that the Company may make to aid it in
meeting its obligations under the Plan. Nothing contained in the Plan, and no
action taken pursuant to its provisions, shall create or be construed to create
a trust of any kind, or a fiduciary relationship between the Company and any
Participant, beneficiary, legal representative, or any other person. To the
extent that any person acquires a right to receive payments from the Company
under the Plan, such right shall be no

                                       17
<PAGE>

greater than the right of an unsecured general creditor of the Company. All
payments to be made hereunder shall be paid from the general funds of the
Company and no special or separate fund shall be established and no segregation
of assets shall be made to assure payment of such amounts except as expressly
set forth in the Plan. The Plan is not subject to ERISA.

16.13 NO FRACTIONAL SHARES. No fractional Shares shall be issued or delivered
pursuant to the Plan or any Award. The Committee shall determine whether cash,
Awards, or other property shall be issued or paid in lieu of fractional Shares
or whether such fractional Shares or any rights thereto shall be forfeited or
otherwise eliminated.

16.14 RETIREMENT AND WELFARE PLANS. The value of compensation paid under this
Plan will not be included as "compensation" for purposes of computing the
benefits payable to any participant under the Company's retirement plans (both
qualified and non-qualified) or welfare benefit plans unless such other plan
expressly provides that such compensation shall be taken into account in
computing a participant's benefit.

16.15 GOVERNING LAW. The Plan and each Award Agreement shall be governed by the
laws of the State of New York, excluding any conflicts or choice of law rule or
principle that might otherwise refer construction or interpretation of the Plan
to the substantive law of another jurisdiction. Unless otherwise provided in the
Award Agreement, recipients of an Award under the Plan are deemed to submit to
the exclusive jurisdiction and venue of the federal or state courts of New York,
to resolve any and all issues that may arise out of or relate to the Plan or any
related Award Agreement.

16.16 PLAN APPROVAL. This Plan shall become effective upon adoption of the Plan
by the Board or shareholder approval of such Plan, whichever occurs first.

                                       18<PAGE>

                                                                    EXHIBIT 10.5

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

1. ESTABLISHMENT AND PURPOSE

      1.1 Establishment of the Plan. ITT Industries, Inc., an Indiana
corporation, hereby establishes an incentive compensation plan to be known as
the "ITT Industries 1997 Long-Term Incentive Plan" (the Plan"), as set forth in
this document. The Plan shall become effective as of January 1 1997, subject to
approval by the requisite shareholders of the Company. The Plan shall remain in
effect until terminated by the Board.

      1.2 Purposes. The purposes of the Plan are to promote the achievement of
long-term objectives of the Company by tying Key Employees' long-term incentive
opportunities to preestablished goals; to attract and retain Key Employees of
outstanding competence, and to encourage teamwork among them; and to reward
performance based on the successful achievement of the preestablished
objectives. Awards will be made, at the discretion of the Committee, to Key
Employees (including officers and Directors who are also employees) whose
responsibilities and decisions directly affect the performance of any
Participating Company. All benefits payable under the Plan to the Company's
Chief Executive and the four other highest compensated executive officers whose
compensation is subject to disclosure in the Company's proxy statement is
intended to qualify as "performance-based compensation" for purposes of Section
162(m) of the Code and, therefore, to be deductible by the Company for income
tax purposes.

2. DEFINITIONS

      Whenever used in the Plan, the following terms shall have the meanings set
forth below:

            (a) An "Acceleration Event" shall be deemed to have occurred if the
      conditions set forth in any one or more of the following paragraphs shall
      have been satisfied:

                  (i) a report on Schedule 13D shall be filed with the
            Securities and Exchange Commission pursuant to Section 13(d) of the
            Exchange Act disclosing that any person (within the meaning of
            Section 13(d) of the Exchange Act), other than the Company or a
            Subsidiary or any employee benefit plan sponsored by the Company or
            a Subsidiary, is the Beneficial Owner directly or indirectly of
            twenty percent (20%) or more of the outstanding Common Stock $1 par
            value, of the Company (the "Stock");

                  (ii) any person (within the meaning of Section 13(d) of the
            Exchange Act), other than the Company or a Subsidiary, or any
            employee benefit plan sponsored by the Company or a Subsidiary,
            shall purchase shares pursuant to a tender offer or exchange offer
            to acquire any Stock of the Company (or securities convertible into
            Stock) for cash, securities or any other consideration, provided
            that after consummation of the offer, the person in question is the
            Beneficial Owner, directly or indirectly, of twenty percent (20%) or
            more of the outstanding

<PAGE>

            Stock of the Company (calculated as provided in paragraph (d) of
            Rule 13d-3 under the Exchange Act in the case of rights to acquire
            Stock);

                  (iii) the stockholders of the Company shall approve

                        (a) any consolidation, business combination or merger
                  involving the Company, other than a consolidation, business
                  combination or merger involving the Company 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 the Company (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 the Company (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 the Company;

                  (iv) there shall have been a change in a majority of the
            members of the Board within a 12-month period unless the election or
            nomination for election by the Company's 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
            Exchange Act) (other than the Company or a Subsidiary or any
            employee benefit plan (or related trust) sponsored by the Company or
            a Subsidiary) becomes the Beneficial Owner of twenty percent (20%)
            or more of the Stock.

            (b) "Award" means an award granted to a Key Employee in accordance
      with the provisions of the Plan and approved by the Committee.

            (c) "Award Agreement" means the written agreement evidencing an
      Award granted to a Key Employee under the Plan and approved by the
      Committee.

            (d) "Beneficial Owner" shall have the meaning ascribed to such term
      in Rule 13d-3 of the general rules and regulations under the Exchange Act.

            (e) "Board of Directors" or "Board" means the Board of Directors of
      the Company.

                                       2
<PAGE>

            (f) "Code" means the Internal Revenue Code of 1986, as now in effect
      or as hereafter amended. (All citations to sections of the Code are to
      such sections as they may from time to time be amended or renumbered.)

            (g) "Committee" means the Compensation and Personnel Committee of
      the Board or such other committee as may be designated by the Board to
      administer the Plan, all of whose members shall be "Non-Employee
      Directors" under the Exchange Act and "Outside Directors" under Section
      162(m) of the Code.

            (h) "Company" means ITT Industries, Inc., an Indiana corporation,
      and its successors and assigns.

            (i) "Director" means an individual who is a member of the Board.

            (j) "Disability" means the complete permanent inability of a Key
      Employee to perform all of his or her duties under the terms of his or her
      employment with any Participating Company, as determined by the Committee
      upon the basis of such evidence, including independent medical reports and
      data, as the Committee deems appropriate or necessary.

            (k) "Effective Date" means the date this Plan becomes effective, as
      set forth in Section 1.1 herein.

            (l) "Exchange Act" means the Securities Exchange Act of 1934, as
      amended from time to time, or any successor act thereto.

            (m) "Key Employee" means an employee (including any officer or
      Director who is also an employee) of any Participating Company whose
      responsibilities and decisions, in the judgment of the Committee, directly
      affect the performance of the Company and its Subsidiaries.

            (n) "Participating Company" means the Company or any Subsidiary or
      other affiliate of the Company or any corporation which at the time of
      award qualifies as a "subsidiary" of the Company under Section 425(f) of
      the Code.

            (o) "Participant" means an employee of a Participating Company who
      is a Key Employee and who has received an Award under the Plan.

            (p) "Performance Goal" means one or more Performance Measures
      expressed as an objective formula to be used in calculating the amount
      payable, if any, with respect to a designated Award and shall be
      established by the Committee within the first ninety (90) days of the
      applicable Performance Period. A Performance Goal may provide for various
      levels of payout depending upon the degree to which the Performance Goal
      has been achieved.

            (q) "Performance Measure" means one or more financial or other
      objectives determined by the Committee as provided in Section 3.4 herein.

                                       3
<PAGE>

            (r) "Performance Period" means the period determined by the
      Committee, which shall be in excess of one year, during which the
      Performance Goal shall be achieved.

            (s) "Retirement" means eligibility to receive immediate retirement
      benefits under a Participating Company tax-qualified defined benefit
      pension plan.

            (t) "Subsidiary" means any corporation in which the Company owns
      directly or indirectly through its Subsidiaries at least a majority of the
      total combined voting power of all classes of stock, or any other entity
      (including, but not limited to, partnerships and joint ventures) in which
      the Company or its Subsidiaries own at least a majority of the combined
      equity thereof.

3. ADMINISTRATION

      3.1 The Plan shall be administered by the Committee, the members of which
shall serve at the pleasure of the Board.

      3.2 Authority of the Committee. Subject to the provisions herein, the
Committee shall have full power to select the Key Employees to whom Awards are
granted; to determine the size and frequency of Awards (which need not be the
same for each Participant); to determine the terms and conditions of each Award;
to establish Performance Measures, Performance Goals and Performance Periods
(which need not be the same for each Participant); to set forth guidelines
governing the amounts of Awards; to revise the amounts of Awards and/or the
Performance Measures and/or Performance Goals during a Performance Period to the
extent necessary to preserve the intent thereof, and to the extent necessary to
prevent dilution of Participants' rights; to construe and interpret the Plan and
any agreement or instrument entered into under the Plan; to establish, amend,
rescind, or waive rules and regulations for the Plan's administration; and,
subject to the provisions of Article 9 herein, to amend, modify, and/or
terminate the Plan. Further, the Committee shall have the full power to make all
other determinations which may be necessary or advisable for the administration
of the Plan, to the extent consistent with the provisions of the Plan.

      As permitted by law, the Committee may delegate its authority and
responsibilities; provided, however, that the Committee may not delegate certain
of its responsibilities hereunder where such delegation may jeopardize
compliance with Section 16 of the Exchange Act or Section 162(m) of the Code,
and all rules and regulations thereunder.

      3.3 Decisions Binding. All determinations and decisions made by the
Committee pursuant to the provisions of the Plan shall be final, conclusive, and
binding on all persons, including the Company, its shareholders, employees,
Participants, and their estates and beneficiaries.

      3.4 Performance Goals and Measures. Performance Goals shall be based on
one or more Performance Measures as established by the Committee, which may
include financial measures with respect to the Company and its Subsidiaries or
with respect to a Participating Company. Performance Measures may include
factors such as the attainment of certain target

                                       4
<PAGE>

levels of or changes in (i) economic value added; (ii) after-tax profits; (iii)
operational cash flow; (iv) debt or other similar financial obligations; (v)
earnings; (vi) revenues; (vii) net income; (viii) return on capital; (ix)
shareholders' equity; (x) return on shareholders' equity; (xi) total shareholder
return (measured as a change in the market price of the common stock of the
Company plus dividend yield) relative to one or more indices such as the S&P 500
or the S&P Industrials; and (xii) such additional or other criteria as the
Committee may determine.

4. ELIGIBILITY AND PARTICIPATION

      4.1 Eligibility and Participation. Eligibility shall be limited to Key
Employees. Participation shall be at the discretion of the Committee.

5. AWARDS

      5.1 Award Timing and Frequency. The Committee shall have complete
discretion in determining the number and frequency of Awards to each
Participant. Participation in the Plan shall begin on the first day of each
Performance Period. However, the Committee, at its sole discretion, may grant an
Award to a Key Employee during any Performance Period. In such cases, the
Participant's degree of participation for such Performance Period may be pro
rated, based on whatever method the Committee shall determine.

      5.2 Award Value. Each Award shall have an initial value that is
established by the Committee at the time of Award. No single Award to any
Participant shall be for an amount that exceeds the lesser of 200% of the
Participant's annual base salary as in effect at the time of the Award or
$4,000,000.

      5.3 Achieving Award Value. The Committee shall establish Performance Goals
to be achieved during the Performance Period and the various percentage payouts,
if any, for each Award which are dependent upon the degree to which the
Performance Goals have been achieved, all as shall be referred to in the
individual Award Agreement.

      5.4 Certification of Performance Targets. 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 Goals and
Performance Measures for the Performance Period were achieved. The Committee
shall calculate the amount of each Participant's Award for such Performance
Period based upon the Performance Measures and Performance Goals for each
Participant. 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
no authority or discretion to increase the amount of any Participant's Award as
so determined, but it may reduce the amount or totally eliminate any Award if it
determines in its absolute and sole discretion that such action is appropriate
in order to reflect the Participant's performance or unanticipated factors
during the Performance Period.

      5.5 Form and Timing of Payment of Awards. Payment with respect to earned
Awards shall be made as soon as practicable following the close of the
applicable Performance Period. Payment shall be made, in whole or in part, in
the form of cash and/or common stock of the

                                       5
<PAGE>

Company at the sole discretion of the Committee. In no event will the aggregate
number of shares of common stock of the Company issued to Participants with
respect to any Performance Period exceed one percent (1%) of the total of the
issued and outstanding shares of such common stock, plus treasury stock, as
reported in the Annual Report on Form 10-K of the Company for the fiscal year
ending immediately prior to or simultaneous with such Performance Period.

      5.6 Funding of Awards. Awards need not be funded during the Performance
Period. Any obligation of the Company to make payments with respect to Awards
shall be a general obligation of the Company with Participants to whom payment
of an Award may have been earned and due being general creditors of the Company.

      5.7 Award Agreements. Each Award shall be evidenced by an Award Agreement,
which shall be approved by the Committee, signed by an officer of the Company
and by the Participant, and contain or refer to the terms and conditions that
apply to the Award, which shall include, but shall not be limited to, the amount
of the Award, the Performance Measures, the Performance Goals, the levels of
payout dependent upon the degree to which the Performance Goals have been
achieved, and the length of the Performance Period. The terms and conditions
need not be the same for each Participant, or for each Performance Period.

6. TERMINATION OF EMPLOYMENT

      6.1 Termination of Employment Due to Death, Disability, or Retirement. In
the event a Participant's employment is terminated by reason of death,
Disability or Retirement, the Participant may be entitled to a pro rata payment
with respect to Awards in accordance with such rules and regulations as the
Committee shall adopt.

      6.2 Termination for Reasons Other than Death, Disability, or Retirement.
In the event a Participant's employment is terminated for reasons other than
death, Disability, or Retirement, and other than that brought about by an
Acceleration Event, all rights to any Awards shall be forfeited, unless the
Committee determines otherwise.

7. ACCELERATION EVENT

      7.1 Upon the occurrence of an Acceleration Event, the Performance Goals
attainable under all outstanding-Awards shall be deemed to have been fully
earned at the maximum achievement level and shall be paid out in cash upon the
effective date of the Acceleration Event.

      Subject to Article 9 herein, prior to the effective date of an
Acceleration Event, the Committee shall have the authority to make any
modifications to outstanding Awards as it determines to be necessary to provide
Participants with an appropriate payout with respect to their Awards.

8. BENEFICIARY DESIGNATION

      8.1 Designation of Beneficiary. Each Participant may file with the
Participating Company a written designation of one or more persons as the
beneficiary who shall be entitled to receive payout, if any, with respect to the
Award upon his or her death. The Participant may from time to time revoke or
change his or her beneficiary designation without the consent of any

                                       6
<PAGE>

prior beneficiary by filing a new designation with the Participating Company.
The last such designation received by the Participating Company shall be
controlling; provided however, that no designation, or change or revocation
thereof, shall be effective unless received by the Participating Company prior
to the Participant's death, and in no event shall it be effective as of a date
prior to such receipt.

      8.2 Death of Beneficiary. In the event that all the beneficiaries named by
a Participant pursuant to Section 8.1 herein predecease the Participant, any
amounts that would have been paid to the Participant or the Participant's
beneficiaries under the Plan shall be paid to the Participant's estate.

9. AMENDMENT, MODIFICATION, AND TERMINATION

      9.1 Amendment, Modification, and Termination. The Board may terminate,
amend, or modify the Plan. However, no such termination, amendment or
modification may change the class of employees eligible to participate in the
Plan or materially increase the cost of the Plan or materially increase the
benefits to Participants without whatever approval of the stockholders of the
Company may be required by the Code, Section 16 of the Exchange Act, any
national securities exchange or system on which the Company's shades of common
stock are then listed or reported, or any regulatory body having jurisdiction
with respect hereto.

      9.2 Awards Previously Granted. No termination, amendment, or modification
of the Plan shall in any manner adversely affect any outstanding Award, without
the written consent of the Participant holding such Award.

10. MISCELLANEOUS PROVISIONS

      10.1 Employment. Nothing in the Plan shall interfere with or limit in any
way the right of the Company to terminate any Participant's employment at any
time, nor confer upon any Participant any right to continue in the employ of the
Company or any of its Subsidiaries.

      10.2 Nontransferability. No Award may be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated, other than by will or by the
laws of descent and distribution.

      10.3 Rights to Common Stock. Awards do not give Participants any right
whatsoever with respect to shares of the Company's common stock prior to the
time, if any, when such shares of common stock are issued to such Participant.

      10.4 Costs of the Plan. All costs of the Plan including, but not limited
to, payout of Awards and administrative expenses, shall be incurred as general
obligations of the Company.

      10.5 Tax Withholding. The Company shall have the right to require
Participants to remit to the Company an amount sufficient to satisfy applicable
Federal, state, foreign and local withholding tax requirements, or to deduct
from all payments under the Plan amounts sufficient to satisfy all such
requirements.

      10.6 Successors. All obligations of the Company under the Plan with
respect to payout of Awards shall be binding on any successor to the Company,
whether the existence of

                                       7
<PAGE>

such successor is the result of a direct or indirect purchase, merger,
consolidation, or other acquisition of all or substantially all of the business
or assets of the Company.

      10.7 Indemnification. Each person who is or shall have been a member of
the Committee or the Board shall be indemnified and held harmless by the Company
against and from any loss, cost, liability, or expense that may be imposed upon
or reasonably incurred by him or her in connection with or resulting from any
claim, action, suit, or proceeding to which he or she may be a party or in which
he or she may be involved by reason of any action taken or failure to act under
the Plan and against and from any and all amounts paid by him or her in
settlement thereof, with the Company's approval, or paid by him or her in
satisfaction of any judgment in any such action, suit, or proceeding against him
or her, provided he or she shall give the Company an opportunity, at its own
expense, to handle and defend the same before he or she undertakes to handle and
defend it on his or her own behalf. The foregoing right of indemnification shall
not be exclusive of any other rights of indemnification to which such persons
may be entitled under the Company's Articles of Incorporation, By-laws,
insurance or other agreement or otherwise.

      10.8 Notice. Any notice or filing required or permitted to be given to the
Company under the Plan shall be sufficient if in writing and hand delivered, or
sent by registered or certified mail to the Secretary of the Company. Notice to
the Secretary of the Company, if mailed, shall be addressed to the principal
executive offices of the Company. Notice mailed to a Participant shall be at
such address as is given in the records of the Company. Notices shall be deemed
given as of the date of delivery or, if delivery is made by mail, as of the date
shown on the postmark on the receipt for registration or certification.

      10.9 Severability. In the event that any provision of the Plan shall be
held illegal or invalid for any reason, the illegality or invalidity shall not
affect the remaining parts of the Plan, and the Plan shall be construed and
enforced as if the illegal or invalid provision had not been included.

      10.10 Requirements of Law. The granting and payout of Awards shall be
subject to all applicable laws, rules, and regulations and to such approvals by
any governmental agencies or national securities exchanges as may be required.

      10.11 Governing Law. To the extent not preempted by Federal law, the Plan,
and all agreements hereunder, shall be construed in accordance with and governed
by the laws of the State of New York.

                                 ADMINISTRATION

      The Plan is administered by a Committee of the Board of Directors of ITT
Industries, presently designated as the Compensation and Personnel Committee,
the members of which serve during the pleasure of the Board. The Committee is
composed of directors none of whom is an officer or employee of ITT Industries
and none of whom is eligible to receive any award under the Plan.

                             FEDERAL TAX TREATMENT

                                       8
<PAGE>

      The following is a brief summary of the current United States federal
income tax rules generally applicable to grants of Awards and payments with
respect to Awards under the Plan. As the following discussion provides only the
general rules, it is suggested that Participants consult their own tax advisors
as to the specific federal, state, local and foreign tax consequences applicable
to them.

A.    UNITED STATES CITIZENS AND/OR UNITED STATES RESIDENTS

      The grant or communication of an Award to a Participant is not a taxable
event for the Participant at that time. However, when such Awards are paid out,
whether taking the form of stock, cash or both, such amounts are compensation
income to the Participant for federal income tax purposes. As such, the total
amount to be received by the Participant, whether made in stock, cash or any
combination thereof, is subject to withholding which will be calculated on the
total final payment value and deducted from any cash portion of the Award. With
respect to the portion of the Awards paid in stock, the amount of compensation
to the Participant is the fair market value of the shares as determined at the
end of the Performance Period. This amount becomes the Participant's cost basis
in the shares. Upon any subsequent sale, the Participant would be subject to
federal income taxation only to the extent that the proceeds of sale exceed that
basis.

      ITT Industries is entitled to a federal tax deduction at the same time and
to the same extent that the Participant realizes compensation income.

B.    FOREIGN CITIZENS WHO ARE NONRESIDENTS OF THE UNITED STATES

      Since any payment with respect to Awards under the Plan is compensation
income to the Participant, whether or not a foreign nonresident Participant will
be subject to taxation by the United States will depend upon where the services
for which the Award was granted were performed. In general, if a foreign
Participant receives payment with respect to an Award for a Performance Period
in which he or she did not work in the United States, the receipt of payment
with respect to such Award will not be subject to taxation by the United States.
However, such amount will most likely be subject to taxation in his or her
country of residence. If a foreign Participant worked both within the United
States and abroad for the Performance Period to which the Award relates, the
amount of compensation subject to taxation by the United States would be that
portion allocated based upon the number of days spent working in the United
States during the Performance Period. Please be advised that most income tax
treaties with the United States address compensation issues such as these and
may modify the general rules discussed herein.

                                       9

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00073-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00073-of-00352.parquet"}]]