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

 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.

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.

Rob Butler 

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.

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