January 5, 2007 - revised January 8, 2007

Marcia J. Avedon, Ph.D.
xxxxxxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxxxxxxxxxxxxxxxxxxx

Dear Marcia,

I am pleased to present you with an offer for the position of Senior Vice
President, Human Resources and Communications reporting to me. This position
will be located in Montvale, NJ. You will be presented to the Board of Directors
at their first meeting following your date of hire for election as a Senior Vice
President, Officer of Ingersoll-Rand Company Limited (the “Company”) to take
effect on the date of your election. The next scheduled meeting of the Board is
February 7, 2007. We look forward to your acceptance of this offer and becoming
a part of our team, with a start date of Tuesday, February 6, 2007.

1.
Your starting base salary will be at an annual rate of $400,000 (four hundred
thousand U.S. dollars) paid monthly.

2.
This position is an “incentive eligible” position, which means you will be
eligible to participate in the Annual Incentive Matrix (AIM) Program. Your
annual opportunity is targeted at 70% of base salary. The actual award that an
individual may receive can be higher or lower than the targeted amount depending
upon individual performance and the performance of the Company. For performance
year 2007 you will be eligible for a full year consideration, i.e., unreduced
for partial year employment.

3.
You will be recommended for a sign-on award of 30,000 (thirty thousand)
non-qualified stock options. This award is subject to approval by the
Compensation Committee of the Company’s Board of Directors (the “Committee”) and
to the terms and conditions of awards made under our Incentive Stock Plan. These
options will be priced at the fair market value of Ingersoll Rand stock on the
day the Committee considers and approves awards and will vest ratably over three
years following the grant. Your award recommendation will be considered by the
Committee at their first meeting following your first day of employment. The
next scheduled meeting of the Committee is February 7, 2007.

Starting with performance year 2007 (first awardable 2008) you will be eligible
to receive stock option awards under the Incentive Stock Plan as administered by
the Compensation Committee of the Board. Your annual opportunity is targeted at
a value equal to 100% of your base salary. Annual stock option awards are
contingent on and variable with your performance and the Company’s financial
performance, specifically, earnings per share against plan. The methodology used
to determine the number of shares awarded will be consistently applied to all
program participants whose stock option targets are expressed as a percentage of
salary.
 

--------------------------------------------------------------------------------

 

Marcia J. Avedon, Ph.D.
 January 8, 2007

 
4.
You will be recommended to be a participant in the IR Performance Share Program
(PSP) with a target award level of 7,500 performance shares for 2007 (awarded
February, 2008). Awards under the IR Performance Share Program are both
contingent on and variable with achievement of specific objectives. The
objectives are established each year by the Chairman and Compensation Committee,
and include several financial performance metrics, which for 2007 are E.P.S.,
Available Cash Flow and R.O.I.C. Awards from this plan are normally distributed
in February following the Compensation Committee’s approval. In subsequent
years, you will be eligible for additional annual awards of similar value with
qualifying criteria set at the time of each award. Participation in the PSP
includes stock ownership requirements, which will be described in greater detail
upon your acceptance in the program by the Compensation Committee.

5.
Additionally, you will receive a sign-on award of 7,500 employment shares with a
3-year cliff vesting (all shares will vest in February 2010).

6.
You will be eligible to participate in the IR Executive Deferred Compensation
Plan (EDCP). The EDCP gives you the opportunity to defer your AIM award, PSP
award and up to 50% of your base salary on a pretax basis. Information regarding
the EDCP will be sent to you and a representative from our vendor, TBG
Financial, will contact you to explain this program after you begin your
employment.

7.
You will be eligible to participate in all employee benefit programs offered to
all Ingersoll Rand salaried employees in accordance with the terms and
conditions of those programs. The enclosed information summarizes these
benefits. Please note that your medical, dental and life insurance coverage with
Ingersoll Rand will commence on the first day of the month following employment.

8.
You will be eligible for four (4) weeks of paid vacation per year, which exceeds
our normal Company policy. Vacation days are earned and accrued on a monthly
basis each calendar year.

9.
You will be provided a company automobile in accordance with our Company car
policy, which in your case currently provides an executive automobile with a
purchase value of up to $60,000. A portion of the benefit will be imputed to
your statement of gross income for tax purposes.

10.
You will be eligible for the Company’s Executive Health Program, a copy of which
is enclosed.

11.
You will be recommended for participation in the Elected Officer Supplemental
Program (EOSP). The EOSP is a non-qualified defined benefit pension plan that
substantially augments IR’s qualified pension plan and, as its name denotes, is
reserved for elected officers of the company. A brief summary is enclosed. Under
this employment agreement you will earn double service credit (not vesting
credit) for each of your first five years of employment with Ingersoll Rand. The
EOSP vests at age 55 with 5 years of service.

12.
As an elected officer, you are eligible for financial and retirement counseling
services through AYCO, a division of Goldman-Sachs. This service includes
investment strategy and tax filing assistance. A portion of the cost for these
services is imputed to your annual income. A representative from AYCO will
contact you after your employment date.

 
2

--------------------------------------------------------------------------------

 

Marcia J. Avedon, Ph.D.
 January 8, 2007

 
13.
Also, as an elected officer, you will be given a Change in Control Agreement for
Senior Vice Presidents at the 2.5x level (i.e., 2.5x annual salary, AIM and
PSP), which provides economic security in the form of cash payments to the
participant and guaranteed coverage under certain benefit plans in the event of
job loss caused by the sale of all (or a substantial part of) the Company.

14.
During the term of your employment, you will be eligible for the Company’s
Relocation Program. The timing of the relocation will be at your discretion.

15.
In the unlikely event of your involuntary termination from Ingersoll Rand within
five (5) years from your date of hire for other than gross cause, as
consideration for your release of whatever claims might be made, you will
receive a) a severance payment of eighteen months base salary if termination is
within five years of your date of hire, and twelve months base salary if
termination is after such five years, plus b) a payment equal to your target
amount in the Annual Incentive Matrix (AIM) Program and c) a pro-rata payment
(prorated based on days in the year through the termination date over total days
within year) of the Performance Share (PSP) Program award that is earned as of
your termination date, to be paid according to plan provisions, up to the target
level. In addition, under such circumstances, you will have 90 days following
your termination date within which to exercise your vested options.

Marcia, we all believe that you will make a significant contribution in this new
role and look forward to your contribution to Ingersoll Rand. This offer of
employment is contingent upon the satisfaction of several items, which are
identified on the attached “Conditions of Offer” form. To accept this offer,
please sign the “Conditions of Offer” form and return it in the enclosed UPS
envelope along with the completed employment application, Background Request
form and Self-Identity form.

If you have any questions regarding your compensation and benefits, please
contact Rob Butler (201-573-3137), Connie Roseler (201-573-3052) or myself.

Sincerely,
herbert logo [herbert.jpg]
Herbert L. Henkel
Chairman, President and
Chief Executive Officer

cc:
Rob Butler 
Connie Roseler
Gillian Scholes

 

Enclosures:
Benefits Summary
Executive Health Program Write-Up
Elected Officer Supplemental Program Write-Up

 
3

--------------------------------------------------------------------------------

 

Marcia J. Avedon, Ph.D.
 January 8, 2007

 
Conditions of Offer
 
This offer is contingent upon the following:

 
1.
Verification of information signed and submitted in connection with the
Ingersoll Rand employment application and authorization for Release of Personal
Data Records Information.

 
2.
Passing the required drug and alcohol screening. All test results will be
handled in strict confidence. Attached is the substance abuse screen
requirements and release along with the control form and list of locations.

 
3.
Providing proof of identity and employment eligibility pursuant to the
Immigration Reform and Control Act of 1986 within three (3) working days after
the actual commencement of work. A copy is enclosed with instructions for
completing the form along with a list of acceptable verification documents.

 
4.
Understanding and agreement that your employment is to be “at will”. This means
that you or the Company, for any reason or no reason, may terminate employment
and that nothing in this offer is intended to create a fixed or specified term
of employment.

 
5.
Understanding, agreeing and signing and returning the Code of Conduct and
Proprietary Information forms.

 
CANDIDATE ACCEPTANCE

I accept your offer of employment with Ingersoll Rand, Corporate Center, as
Senior Vice President, Human Resources and Communications and agree to the
conditions hereon and in the offer letter.

/s/ Marcia J. Avedon, Ph.D. January 11, 2007

--------------------------------------------------------------------------------

Marcia J. Avedon, Ph.D.

--------------------------------------------------------------------------------

Date

 
4

--------------------------------------------------------------------------------