| 1. | Your                starting base salary will be at an annual rate of $400,000 (four                hundred                thousand U.S. dollars) paid monthly. |
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| 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 75% 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. If you join us by October 1, 2006, your AIM award for performance                year 2006 will be prorated at 33%. Please see the enclosed AIM brochure                for further details on this                program. |
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| 3. | Starting                with performance year 2006 (first awardable 2007) 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 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.                If                you join us by October 1, 2006, your annual stock option award opportunity                for performance year 2006 (awarded February 2007) will be paid at                target.                Please see the enclosed Stock Option brochure for further details                on this                program. |
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| 4. | You                will be recommended to be a participant in the IR Performance Share                Program (PSP) with a target award level of 8,000 performance shares                starting performance year 2007 (payable 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 distributed as cash (unless                deferred) 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. |
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| William                  Gauld | 2 | September                  5, 2006 |
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| 5. | 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. |
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| 6. | 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. |
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| 7. | You                will be eligible for paid vacation in accordance with Company policy,                which in your case is three (3) weeks. Vacation days are earned and                accrued on a monthly basis each calendar                year. |
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| 8. | You                will be provided a company automobile in accordance with our Company                car                policy, which in your case 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. |
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| 9. | You                will be eligible for the Company’s Executive Health Program, a copy of                which is enclosed. |
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| 10. | This                position is eligible 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. |
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| 11. | 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. |
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| 12. | Also,                as an elected officer, you will be given a standard Change in Control                Agreement, 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. |
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| 13. | You                will be eligible for the Company’s Relocation Program. The timing of the                relocation will be at your discretion. A representative from Prudential                Relocation will be in touch with you to explain the program and to                discuss                the timing of your relocation. |
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| 14. | In                the unlikely event of your involuntary termination from Ingersoll                Rand                within two 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) severance of one year’s base salary plus b) the pro-rata amount                of any Annual Incentive Matrix (AIM) and Performance Share (PSP)                award                that is earned as of your termination date, to be paid according                to plan                provisions. In addition, you will have 90 days following your termination                date within which to exercise your vested                options. |
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| William                Gauld | 3 | September                5, 2006 |
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| William                Gauld | 4 | September                5, 2006 |
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**Conditions      of Offer**

|   | 1. | Verification                of information signed and submitted in connection with the Ingersoll                Rand                employment application and authorization for Release of Personal                Data                Records Information. |
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|   | 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. |
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|   | 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. |
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|   | 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 contract of employment                for any period of time. |
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|   | 5. | Understanding,                agreeing and signing and returning the Code of Conduct and Proprietary                Information forms. |
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**CANDIDATE      ACCEPTANCE**

|                           |   |   |                           |
|--------------------------------|--------|--------|--------------------------------|
| /s/              William Gauld |   |   | September              8, 2006 |
| William              Gauld     |   |   | Date                           |

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