Exhibit 10.2

TRANE INC.

CORPORATE OFFICER SEVERANCE PLAN

(Restated to include all amendments through May 8, 2008)

Section I. Purpose.

The purpose of the Plan is to provide elected officers of the Company with
severance benefits should their employment with the Company terminate under the
circumstances described below. The Plan supersedes any and all previous
severance pay practices or policies of the Company, whether written or
unwritten.

Section II. Definitions.

A. Agreement and Release – means an agreement prepared by the Company under
which a Participant, in return for the benefits provided under the Plan, agrees
to release the Company and its affiliates from any and all claims which such
Participant may have against the Company at the time the agreement is executed,
and further agrees to certain other undertakings, including cooperation with the
Company in any matter which may give rise to legal claims against the Company, a
two year non-competition obligation, a two year non-solicitation obligation,
keeping confidential proprietary information of the company as well as the terms
of the Agreement and Release, settlement of any disputes concerning the
Agreement and Release through binding arbitration, and such other undertakings
as the Company may require from time to time.

B. Beneficial Owner - means any “person”, as such term is used in Section 13(d)
of the Act, who, directly or indirectly, has or shares the right to vote or
dispose of such securities or otherwise has “beneficial ownership” of such
securities (within the meaning of Rule 13d-3 and Rule 13d-5 under the Act),
including pursuant to any agreement, arrangement or understanding (whether or
not in writing).

C. Board - means the Board of Directors of the Company.

D. Cause - means a Participant’s (i) willful and continued failure substantially
to perform his or her duties with the Company or any Subsidiary (other than any
such failure resulting from incapacity due to reasonably documented physical or
mental illness), after a

 

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demand for substantial performance is delivered to such Participant by the
Chairman of the Board or officer of equivalent authority which specifically
identifies the manner in which it is believed that such Participant has not
substantially performed his or her duties, (ii) conviction of, or plea of nolo
contendere to, a felony, or (iii) the willful engaging by such Participant in
gross misconduct materially and demonstrably injurious to the Company or any
Subsidiary or to the trustworthiness or effectiveness of the Participant in the
performance of his or her duties. For purposes hereof, no act, or failure to
act, on such Participant’s part shall be considered “willful” unless done, or
omitted to be done, by him or her not in good faith and without reasonable
belief that his or her action or omission was in the best interest of the
Company or a Subsidiary. Any act, or failure to act, based upon authority given
pursuant to a resolution duly adopted by the Board or based upon the advice of
counsel for the Company shall be conclusively presumed to be done, or omitted to
be done, by such Participant in good faith and in the best interest of the
Company or such Subsidiary.

E. Change of Control - shall mean the occurrence of any of the following events:

(i) any “person”, as such term is used in Section 13(d) of the Act (other than
the Company, any Subsidiary or any employee benefit plan maintained by the
Company or any Subsidiary (or any trustee or other fiduciary thereof)) is or
becomes the Beneficial Owner, directly or indirectly, of securities of the
Company representing 20% or more of the combined voting power of the Company’s
then-outstanding securities, provided, however, that an acquisition of
securities of the Company representing less than 25% of the combined voting
power shall not constitute a Change of Control if, prior to meeting the 20%
threshold, the members of the board who are not employees of the Corporation or
a Subsidiary Company unanimously adopt a resolution consenting to such
acquisition by such Beneficial Owners;

(ii) during any consecutive 24-month period, individuals who at the beginning of
such period constitute the Board, together with those individuals who first
become directors during such period (other than by reason of an agreement with
the Company or the Board in settlement of a proxy contest for the election of
directors) and whose election or nomination for election to the

 

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Board was approved by a vote of at least two-thirds of the directors then still
in office who either were directors at the beginning of the period or whose
election or nomination for election was previously so approved (the “Continuing
Directors”), cease for any reason to constitute a majority of the Board;

(iii) the consummation of any merger, consolidation, recapitalization or
reorganization involving the Company, other than any such transaction
immediately following which the persons who were the Beneficial Owners of the
outstanding voting securities of the Company immediately prior to such
transaction are the Beneficial Owners of at least 55% of the total voting power
represented by the voting securities of the entity surviving such transaction or
the ultimate parent of such entity in substantially the same relative
proportions as their ownership of the Company’s voting securities immediately
prior to such transaction; provided that, such continuity of ownership (and
preservation of relative voting power) shall be deemed to be satisfied if the
failure to meet such threshold (or to preserve such relative voting power) is
due solely to the acquisition of voting securities by an employee benefit plan
of the Company, such surviving entity, any Subsidiary or any subsidiary of such
surviving entity;

(iv) the sale of substantially all of the assets of the Company to any person
other than any Subsidiary or any entity in which the Beneficial Owners of the
outstanding voting securities of the Company immediately prior to such sale are
the Beneficial Owners of at least 55% of the total voting power represented by
the voting securities of such entity or the ultimate parent of such entity in
substantially the same relative proportions as their ownership of the Company’s
voting securities immediately prior to such transaction; or

(v) the shareholders of the Company approve a plan of complete liquidation or
dissolution of the Company.

F. Code – means the Internal Revenue Code of 1986, as amended.

G Company - means Trane Inc., a Delaware corporation, and any successor thereto.

 

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H. Disability - means a Participant’s inability, due to reasonably documented
physical or mental illness, for more than six months to perform his or her
duties with the Company or a Subsidiary on a full time basis if, within 30 days
after written notice of termination has been given to such Participant, he or
she shall not have returned to the full time performance of his or her duties.

I. Effective Date - means April 27, 1991.

J Good Reason - means any of the following:

(i) an adverse change in a Participant’s status or position(s) as an executive
of the Company, any adverse change in a Participant’s status or position as an
executive of the Company as a result of a material diminution in his or her
duties or responsibilities or a relocation of a Participant’s principal place of
employment to a location which is at least 30 miles further from such
Participant’s principal residence than his or her current location or the
assignment to him or her of any duties or responsibilities which are
inconsistent with such status or position(s), or any removal of such Participant
from or any failure to reappoint or reelect him or her to such position(s)
(except in connection with the termination of his or her employment for Cause,
Disability or retirement or as a result of his or her death or by him or her
other than for Good Reason);

(ii) a material reduction by the Company in such Participant’s base salary;

(iii) the taking of any action by the Company or a Subsidiary (including the
elimination of a plan without providing substitutes therefor or the reduction of
his or her awards thereunder) that would substantially diminish the aggregate
projected value of such Participant’s awards under the Company’s or such
Subsidiary’s bonus and benefit plans in which he or she was participating at the
time of the taking of such action;

(iv) the taking of any action by the Company or such Subsidiary that would
substantially diminish the aggregate value of the benefits provided such
Participant under the Company’s or such Subsidiary’s medical, health, accident,
disability, life insurance, thrift and retirement plans in which he or she was
participating at the time of the taking of such action; or

 

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(v) any purported termination by the Company of such Participant’s employment
that is not effected for Cause, provided that this shall not include termination
of employment at age sixty-five pursuant to the Company’s mandatory retirement
policy for Corporate Officers.

Notwithstanding the foregoing, a termination for Good Reason shall not have
occurred (a) if the Participant consented in writing to the event giving rise to
the “Good Reason”, (b) if the Participant voluntarily terminates his or her
employment more than ninety (90) days after the occurrence of the event
constituting Good Reason, (c) unless within 60 days of the event or occurrence
constituting Good Reason, the Participant shall have given the Company advance
written notice of his intent to terminate his employment for Good Reason,
identifying such event or occurrence, and the Company shall have failed to
correct or otherwise cure such event or occurrence within 30 days of such
receipt of such notice; or (d) with regard to the occurrence of the events
described in paragraphs 4(ii), (iii) and (iv) above prior to a Change of
Control, if such reductions or actions are proportionate to the reductions or
actions applicable to other employees in similar positions pursuant to a cost
savings plan.

K. Participant - means each elected officer of the Company. Effective July 7,
2005, individuals elected to the positions of Vice President & Controller or
Vice President & Treasurer shall not be Participants, provided, however, that
any employees holding such positions as of such date shall continue to be
Participants so long as they continue in such positions and, in the event they
no longer hold such positions, for so long as the Plan Administrator determines
is appropriate. Effective October 6, 2005, individuals elected to the position
of Vice President & General Auditor shall not be Participants.

L. Plan - means the Trane Inc. Corporate Officer Severance Plan.

M. Plan Administrator - means the Management Development and Compensation
Committee of the Board (the “MDC”) or any committee or individual designated by
the MDC to perform some or all of its administrative functions hereunder.

N. Subsidiary - means any corporation or partnership in which the Company owns,
directly or indirectly, 50% or more of the total combined voting power of all
classes of stock of such corporation or of the capital interest or profits
interest of such partnership.

 

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Section III. Eligibility.

A Participant shall be eligible to receive the benefits provided under the Plan
in the event that:

 

  (i) such Participant voluntarily terminates his or her employment for Good
Reason or suffers an involuntary termination by the Company other than a
termination for Cause, provided that in either case such termination shall not
include a termination upon attainment of age sixty-five pursuant to the
Company’s mandatory retirement policy for Corporate Officers; and

 

  (ii) such Participant executes an Agreement and Release in a form acceptable
to the Company at the time of the Participant’s termination of employment.

No other individual shall be eligible for benefits under the Plan and the
payment of benefits hereunder shall not be affected by the payment of retirement
or other benefits under any other Company plan. Notwithstanding anything in the
Plan to the contrary, a termination of employment shall not be deemed to have
occurred for purposes of the Plan unless such termination is also a “separation
from service” within the meaning of Section 409A of the Code and the guidance
issued thereunder.

Section IV. Severance Payments.

A Participant who satisfies the eligibility requirements of Section III hereof
shall receive severance payments equal to the sum of the following:

A. an amount equal to two times (or in the case of the Chief Executive Officer
of the Company three times) the Participant’s annual base salary in effect on
the date the termination occurs; plus

B. the amount of the Participant’s annual incentive plan target award in effect
for the calendar year in which the termination occurs determined without regard
to whether the

 

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applicable targets are obtained, multiplied by a fraction, the numerator of
which is the number of days in the year of termination that the Participant was
an employee of the Company, and the denominator of which is 365; plus

C. the amount (or in the case of the Chief Executive Officer, two times the
amount) of the Participant’s annual incentive plan target award in effect for
the year in which the termination occurs determined without regard to whether
the applicable targets are obtained.

Section V. Certain Additional Payments by the Company.

A. Anything in this Plan to the contrary notwithstanding, in the event it shall
be determined that any payment, award, benefit or distribution (or any
acceleration of any payment, award, benefit or distribution) by the Company (or
any of its affiliated entities) or any entity which effectuates a Change of
Control (or any of its affiliated entities) to or for the benefit of a
Participant (whether pursuant to the terms of this Plan or otherwise, but
determined without regard to any additional payments required under this Section
V) (the “Payments”) would be subject to the excise tax imposed by Section 4999
of the Code. or any interest or penalties are incurred by a Participant with
respect to such excise tax (such excise tax, together with any such interest and
penalties, are hereinafter collectively referred to as the “Excise Tax”), then
the Company shall pay to such Participant (or to the Internal Revenue Service on
behalf of Participant) an additional payment (a “Gross-Up Payment”) in an amount
such that after payment by such Participant of all taxes (including any Excise
Tax) imposed upon the Gross-Up Payment, such Participant retains (or has had
paid to the Internal Revenue Service on his behalf) an amount of the Gross-Up
Payment equal to the sum of (x) the Excise Tax imposed upon the Payments and
(y) the product of any deductions disallowed because of the inclusion of the
Gross-Up Payment in such Participant’s adjusted gross income and the highest
applicable marginal rate of federal income taxation for the calendar year in
which the Gross-Up Payment is to be made. For purposes of determining the amount
of the Gross-Up Payment, a Participant shall be deemed (i) to pay federal income
taxes at the highest marginal rates of federal income taxation for the calendar
year in which the Gross-Up Payment is to be made, (ii) to pay applicable state
and local income taxes at the highest marginal rate of taxation for the calendar
year in which the Gross-Up Payment is to be made, net of the

 

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maximum reduction in federal income taxes which could be obtained from deduction
of such state and local taxes and (iii) to have otherwise allowable deductions
for federal income tax purposes at least equal to the Gross-Up Payment.

B. Subject to the provisions of Section V(a), all determinations required to be
made under this Section V, including whether and when a Gross-Up Payment is
required, the amount of such Gross-Up Payment, and the assumptions to be
utilized in arriving at such determinations, shall be made by the public
accounting firm that is retained by the Company as of the date immediately prior
to the Change of Control (the “Accounting Firm”) which shall provide detailed
supporting calculations both to the Company and the Participant within fifteen
(15) business days of the receipt of notice from the Company or Participant that
there has been a Payment, or such earlier time as is requested by the Company
(collectively, the “Determination”). In the event that the Accounting Firm is
serving as accountant or auditor for the individual, entity or group effecting
the Change of Control, the Participant may appoint another nationally recognized
public accounting firm to make the determinations required hereunder (which
accounting firm shall then be referred to as the Accounting Firm hereunder). All
fees and expenses of the Accounting Firm shall be borne solely by the Company
and the Company shall enter into any agreement reasonably requested by the
Accounting Firm in connection with the performance of the services hereunder.
The Gross-Up Payment under this Section V with respect to any Payments shall be
made no later than thirty (30) days following such Payment. If the Accounting
Firm determines that no Excise Tax is payable by the Participant, it shall
furnish the Participant with a written opinion to such effect, and to the effect
that failure to report the Excise Tax, if any, on the Participant’s applicable
federal income tax return will not result in the imposition of a negligence or
similar penalty. The Determination by the Accounting Firm shall be binding upon
the Company and Participant. As a result of the uncertainty in the application
of Section 4999 of the Code at the time of the Determination, it is possible
that Gross-Up Payments which will not have been made by the Company should have
been made (“Underpayment”) or Gross-Up Payments are made by the Company which
should not have been made (“Overpayment”), consistent with the calculations
required to be made hereunder. In the event that the Participant thereafter is
required to make payment of any Excise Tax or additional Excise Tax, the
Accounting Firm shall determine the amount of the Underpayment that has occurred
and any such Underpayment (together with interest at the

 

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rate provided in Section 1274(b)(2)(B) of the Code) shall be promptly paid by
the Company to or for the benefit of the Participant. In the event the amount of
the Gross-Up Payment exceeds the amount necessary to reimburse the Participant
for his Excise Tax, the Accounting Firm shall determine the amount of the
Overpayment that has been made and any such Overpayment (together with interest
at the rate provided in Section 1274(b)(2) of the Code) shall be promptly paid
by the Participant (to the extent he has received a refund if the applicable
Excise Tax has been paid to the Internal Revenue Service) to or for the benefit
of the Company.

Section VI. Payment of Benefits.

Effective January 1, 2005, all severance payments under Section IV shall be paid
in a single lump sum five (5) business days following the Participant’s
termination of employment, except that, if the Participant is a “key employee”
within the meaning of Section 416(i) of the Code and the severance benefits
payable to such Participant hereunder do not qualify for an exemption from the
application of such Section 409A, such lump sum payment shall be made six months
following the date of the Participant’s termination of employment.

Section VII. Continuation of Welfare Plan Coverage.

In the event of a Participant’s voluntary termination for Good Reason or his or
her involuntary termination by the Company other than a termination for Cause,
such Participant will be entitled, upon payment of any premiums or co-payments
theretofore required for such coverage, to continue all life, accident and
health coverage, on the same basis as in effect on the date he or she terminated
employment, (i) in the case of life and accident insurance, for a period of 24
months from the date of termination, and (ii) in the case of health coverage,
during the period during which the Participant would be entitled to elect
continuance of such coverage under Section 4980B of the Code (COBRA), as
permitted in accordance with Treas. Reg. §1.409A-1(b)(9)(v)(B). In addition,
during the six-month period (or, in the case of the Chief Executive Officer, the
18 month period) starting on the date that is the 18 month anniversary of the
Participant’s termination of employment, the Company shall also provide the
Participant health coverage on the same basis as in effect on the date he or she
terminated employment. Notwithstanding the foregoing, to the extent permitted by
law, (i) any such coverage (or any obligation to pay cash in lieu of such
coverage) shall be terminated in the event the Participant obtains at least
equal alternate coverage.

 

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Section VIII. Financial Planning Assistance.

The Company will reimburse a Participant for all bills which the Plan
Administrator determines are reasonably related to financial planning assistance
and tax preparation, provided that such bills are incurred and evidence of
payment by the Participant is submitted to the Plan Administrator within one
year after the date of termination; provided, however, effective January 1,
2005, in no event shall the amount of any such reimbursement exceed $5,000 (or
such other amount as shall be permitted to be paid as a de minimis miscellaneous
reimbursement without subjecting such payment to Section 409A of the Code).

Section IX. Reservation of Right to Amend and Terminate.

The Company reserves the right, whether in an individual case or more generally,
by a majority of the Continuing Directors to amend, reduce or eliminate the
Plan, in whole or in part, at any time and from time to time without notice,
provided that no amendment to this Plan which would reduce benefits hereunder
shall be effective if made within two years following or six months preceding
the occurrence of a Change of Control except to the extent a Participant
expressly agrees in writing to be bound by such amendment.

Section X. Relationship to Other Benefits.

No payment under the Plan shall be taken into account in determining any
payments, benefits, coverage levels or participation rates under any incentive
compensation plan, any pension, retirement, profit sharing, group insurance, or
other benefit plan of the Company; provided that, a Participant shall not be
entitled to receive the severance payment set forth in Section IV.B. of this
Plan if such Participant becomes entitled to receive a comparable payment under
the Company’s annual incentive program, whether pursuant to Sections 9.1 or 10.3
of the Company’s 2002 Omnibus Incentive Plan (or any successor thereto) or
pursuant to an employment agreement.

 

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Section XI. Administration.

Subject to Section V of the Plan, the Plan Administrator shall have full power
and authority to interpret and carry out the terms of the Plan, and to exercise
discretion where necessary or appropriate in the interpretation and
administration of the Plan, and prior to a Change of Control all decisions by
the Plan Administrator shall be final and binding on all affected parties. The
Plan is intended to be administered in a manner consistent with the
requirements, where applicable, of Section 409A of the Code. Where reasonably
possible and practicable, the Plan shall be administered in a manner to avoid
the imposition on Participants of immediate tax recognition and additional taxes
pursuant to such Section 409A. Notwithstanding anything else contained herein to
the contrary, neither the Plan Administrator nor the Company shall be in breach
of its obligations hereunder, nor liable for any interest or other payments, if
the Company fails to make any payments hereunder on the stated date on which
such payment is due.

Section XII. Expenses.

All expenses of administering the Plan shall be borne by the Company.

Section XIII. Withholding.

The Company may withhold from any amounts payable hereunder such Federal, state
or local taxes as may be required to be withheld pursuant to any applicable law
or regulation.

Section XIV. Governing Law.

This Plan and all rights and obligations hereunder shall be construed in
accordance with and governed by the laws of the State of Delaware, without
reference to the principles of conflict of laws.

 

Adopted pursuant to duly authorized resolution

by the Board of Directors of the Company

on May 8, 2008

 

Trane Inc.

By:   /s/ Mary Elizabeth Gustafsson   Mary Elizabeth Gustafsson  
Senior Vice President, General Counsel & Secretary

 

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