IR-LIMITED DIRECTOR DEFERRED COMPENSATION AND STOCK AWARD PLAN

2.1

“Account Balance ” means, for each Plan Year, a credit on the records of the Company equal to the sum of the value of a Participant’s Conversion Account, Deferral Account, Deferred IR Stock Award Account, Supplemental Contribution Account and IR Stock Account for such Plan Year. The Account Balance shall be a bookkeeping entry only and shall be utilized solely as a device for the measurement and determination of the amounts to be paid to a Participant, or to the Participant’s designated Beneficiary, pursuant to the Plan.

2.2

“Beneficiary” means the person or persons designated as such in accordance with Section 7.

2.3

“Beneficiary Designation Form” means the form established from time to time by the Company that a Participant completes and returns to the Secretary of the Company to designate one or more Beneficiaries.

2.4

“Board” means the Board of Directors of the Company.

2.5

“Conversion Account” means the sum of all of the shares of IR Stock credited to a Participant pursuant to Section 5.6.

2.6

“Deferral Account” means, for each Plan Year, (i) the sum of all of a Participant’s Deferral Amounts (other than amounts deferred pursuant to Section 5.10), plus (ii) amounts credited in accordance with all the applicable crediting provisions of the Plan that relate to the Participant’s Deferral Account, less (iii) all distributions made to the Participant or to the Participant’s Beneficiary pursuant to the Plan that relate to the Participant’s Deferral Account.

2.7

“Deferral Amount” means the amount of Fees actually deferred under the Plan by the Participant pursuant to Section 3.1 and the amount of Fees automatically deferred pursuant to Section 5.10 for any one Plan Year.

2.8

“Deferred IR Stock Award Account” means, for each Plan Year, the sum of all of a Participant’s deferred stock award amounts pursuant to Section 5.4, deferred amounts upon termination of the retirement plan pursuant to Section 5.5 and deferred amounts pursuant to Section 5.10.

2.9

“Effective Time” means the Effective Time as such term is defined in the Merger Agreement.

2.10

“Election Form” means the form or forms established from time to time by the Company that a Participant completes, signs and returns to the Secretary of the Company to make an election under the Plan. An Election Form also includes any other method approved by the Company that a Participant may use to make an election under the Plan. The terms and conditions specified in the Election Form(s) are incorporated by reference herein and form a part of the Plan. If there is a conflict between the Election Form and the Plan, the terms of the Plan shall control and govern.

2.11

“Fees” means retainer and meeting fees payable to Non-employee Directors.

2.12

“Investment Option Subaccounts” means the separate subaccounts, each of which corresponds to an investment option elected by the Participant with respect to a Participant’s Deferral Accounts.

2.13

“IR Stock ” means the Class A common shares, par value $1.00 per share, of the Company.

2.14

“IR Stock Account” means, for each Plan Year, (i) the sum of all of a Participant’s Deferral Amounts that are deemed to be invested in IR Stock, plus (ii) amounts credited in accordance with all the applicable crediting provisions of the Plan that relate to the Participant’s IR Stock Account, less (iii) all distributions made to the Participant or to the Participant’s Beneficiary pursuant to the Plan that relate to the Participant’s IR Stock Account.

2.15

“Merger Agreement” means that certain Agreement and Plan of Merger among Ingersoll-Rand Company, Ingersoll-Rand Company Limited, and IR Merger Corporation dated as of October 31, 2001, pursuant to which Ingersoll-Rand Company became an indirect wholly-owned subsidiary of Ingersoll-Rand Company Limited.

2.16

“Participant” means a Non-employee Director participating in the Plan in accordance with the provisions of Section 3.

2.17

“Plan Year” means a calendar year.

2.18

“Retirement ” means retirement in accordance with the Board’s retirement policy for Non-employee Directors.

2.19

“Return” means, for each investment option, an amount equal to the net investment return (including changes in value and distributions) for each such investment option during each business day.

2.20

“Supplemental Contribution” means an additional amount to be credited to a Participant’s Supplemental Contribution Account equal to twenty percent (20%) of the Participant’s Fees that are deferred under Section 3.1 of the Plan for a Plan Year by the Participant and is, at the time of making the deferral election, elected to be invested in the Participant’s IR Stock Account.

2.21

“Supplemental Contribution Account” means, for each Plan Year, (i) the sum of all of a Participant’s Supplemental Contributions, plus (ii) amounts credited in accordance with all the applicable crediting provisions of the Plan that relate to the Participant’s Supplemental Contribution Account, less (iii) all distributions made to the Participant or to the Participant’s Beneficiary pursuant to the Plan that relate to the Participant’s Supplemental Contribution Account.

2.22

“Trust” means the Ingersoll-Rand Company Deferred Compensation Trust Agreement, dated as of January 1, 2001 between the Company and the trustee named therein, as amended from time to time.

3.1

Participation and Deferral Election . Non-employee Directors may elect to participate in the Plan for a given Plan Year by filing a completed Election Form for the Plan Year in the manner prescribed by the Secretary of the Company. The Election Form must specify the percentage or dollar amount of any Deferral Amount otherwise payable during such Plan Year that will be deferred under the Plan. Notwithstanding anything to the contrary, at the Non-employee Director’s direction, an election to participate in the Plan for a given Plan Year may continue from Plan Year to Plan Year unless a written request to modify or terminate that election for a subsequent period is submitted to the Secretary of the Company on or before the date 15 days prior to the beginning of the subsequent Plan Year. Any election to defer a Deferral Amount is irrevocable upon the filing of the Election Form, and must be properly completed and filed no later than the November 30 immediately preceding such Plan Year, or, with respect to a new Non-employee Director, before the effective date of his or her election to the Board, or such other date as the Secretary of the Company may specify. A Non-employee Director who fails to file a properly completed Election Form by such date will be ineligible to defer a Deferral Amount under the Plan for the following Plan Year. In addition, the Company may establish from time to time such other enrollment requirements as it determines are necessary or proper.

3.2

Investment Election . In accordance with procedures established by the Company, prior to the time a Participant’s Deferral Amounts are credited to a Participant’s Deferral Account pursuant to Section 5.1, the Participant shall designate, on an Election Form, the types of investment options in which the Participant’s Deferral Amounts will be deemed to be invested for purposes of determining the amount of earnings to be credited to the Participant’s Deferral Account and, with respect to Deferral Amounts that are designated by the Participant to be deemed to be invested in IR Stock, the IR Stock Account.

4.1

Deferral Amounts . A Participant shall be fully vested in his or her Deferral Account.

4.2

Supplemental Contributions . A Participant shall vest in his or her Supplemental Contribution Account on the earliest of: (i) the fifth anniversary of the date the Supplemental Contribution is credited to the Participant’s Supplemental Contribution Account; (ii) the date of the Participant’s cessation of service on the Board by reason of Retirement or death; (iii) a Change in Control pursuant to Section 6.4; or (iv) a termination of the Plan pursuant to Section 8.2.

4.3

Conversion Account . A Participant shall be fully vested in his or her Conversion Account.

4.4

Deferred IR Stock Award Account . A Participant shall be fully vested in his or her Deferred IR Stock Award Account.

5.1

Deferral Accounts . The Company shall establish and maintain a separate Deferral Account for each Participant for each Plan Year. All Deferral Amounts, other than Deferral Amounts that are deemed, at the Participant’s election, to be invested in IR Stock shall be credited to the Participant’s Deferral Account on the date when the Deferral Amount would otherwise be paid to the Participant. All Deferral Amounts that are deemed, at the Participant’s election, to be invested in IR Stock shall be credited to the Participant’s IR Stock Account as described in Section 5.3.

5.2

Supplemental Contribution Accounts . The Company shall establish and maintain a separate Supplemental Contribution Account for each Plan Year for each Participant who receives a Supplemental Contribution for such Plan Year. All Supplemental Contributions shall be credited to the Participant’s Supplemental Contribution Account on the same date that the Participant’s Deferral Amount for which the Supplemental Contribution is being made is credited to the Participant’s Deferral Account pursuant to Section 5.1. All of a Participant’s Supplemental Contributions shall be deemed to be invested in, and shall remain deemed to be invested in, IR Stock in the Participant’s Supplemental Contribution Account until such amounts are distributed from the Plan.