EXHIBIT 10(iii)(b)
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Ingersoll-Rand Company
Directors Deferred Compensation and Stock Award Plan
ARTICLE I. Purpose
Ingersoll-Rand Company ("I-R") has established the Directors
Deferred Compensation and Stock Award Plan (the "Plan") to enable
members of the Board of Directors (the "Board") who are not then
I-R employees ("Non-employee Directors") to defer receipt of
compensation for their services as Non-employee Directors to
later years and to provide part of the compensation for their
services as Non-employee Directors in shares of I-R Common Stock
("Shares") which will be deferred.
ARTICLE II. Maintenance of Records
I-R shall maintain a Deferred Compensation Account for each Non-
employee Director, which shall be credited in accordance with the
terms of this Plan and the elections of each Non-employee
Director pursuant to this Plan.
ARTICLE III. Deferral of Stock Awards and Deferral of Fees
(A) Deferred Stock Award Amount
Each Non-employee Director shall receive an annual
award on the date of the first Board of Directors
meeting after each annual meeting of shareholders in
the form of a promise by I-R to deliver 400 Shares
("Share Units"), or such other amount as may from time
to time be established by resolution of the Board.
Annual awards of Share Units shall be credited to the
Deferred Compensation Account of each Non-employee
Director and Shares in respect of such Share Units
shall be delivered in accordance with the provisions of
Article VII hereof. The issuance and delivery of
Shares in respect of such Share Units shall be deferred
until the Non-employee Director ceases to be a member
of the Board.
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(B) Deferred Amounts Upon Termination of the Retirement Plan
The Shares in respect of Share Units credited to the
Deferred Compensation Accounts of the Non-employee
Directors pursuant to the resolutions adopted by the
Board on November 6, 1996, with respect to the
elimination of retirement payments to Non-employee
Directors shall be delivered in accordance with the
provisions of Article VII hereof. The issuance and
delivery of such Shares shall be deferred until the Non-
employee Director ceases to be a member of the Board.
(C) Election to Defer Fees in Share Units
Any Non-employee Director may elect to defer receipt of
all or any portion of the retainer and meeting fees
("Fees") to be earned by such Non-employee Director by
indicating his or her election to the Secretary of I-R
on an election form supplied by the Secretary
("Deferral Election"). The Director's election must
specify (i) the portion of such Fees to be deferred,
(ii) the period for which Fee payments are to be
deferred pursuant to such Deferral Election, up to the
date a director ceases to be a member of the Board
("Deferral Period") and (iii) the time(s) of payment
or delivery. Each Deferral Election is irrevocable
with respect to the compensation payable for the
Deferral Period to which it applies, except in the
event a director ceases to be a member of the Board.
(D) Credit for Deferred Fees and Company Supplemental
Contributions
(1) The Deferred Compensation Account will be credited
with the number of Share Units equal to the number of
Shares, including fractions, which could have been
purchased had the amount of the Fees accrued during a
Deferral Period, plus Company supplemental
contributions equal to 20 percent of the Fees accrued
during such Deferral Period, been used to purchase
Shares on the date such Fees would have been paid had
they not been deferred, at a price equal to the Share
Fair Market Value, as defined below, on such date.
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(2) "Share Fair Market Value" shall be the mean of the
high and low prices of Shares on the New York Stock
Exchange - Composite Tape on the date in question,
provided that if no sales of Shares were made on the
Exchange on that date, the mean of the high and low
prices reported for the preceding day on which sales of
Shares were made on the Exchange.
(E) Vesting of Company Matching Contributions
Company supplemental contributions shall vest upon the
earlier of either five years from the date of grant or
cessation of service on the Board by reason of normal
retirement or death.
(F) Advance Notice of Election
Any Deferral Election with respect to Fees to be earned
during a calendar year shall be delivered to the
Secretary of I-R prior to the beginning of any calendar
year or, with respect to a new Director, before the
effective date of his or her election to the Board.
Each Non-employee Director who does not provide notice
to the Secretary of a Deferral Election in accordance
with the preceding sentence will be deemed not to have
elected to defer receipt of any Fees (other than
amounts automatically deferred).
(G) Duration of Election
A Deferral Election may be made annually for the
succeeding calendar year or, at the Non-employee
Director's direction, it may continue from year to year
unless a written request to modify or terminate that
election for a subsequent period is submitted to the
Secretary of I-R on or before the date 15 days prior to
the beginning of the subsequent calendar year.
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ARTICLE IV. VOTING RIGHTS
Share Units shall not have voting rights.
ARTICLE V. Dividends, Distributions and Adjustments
Whenever a cash dividend or any other distribution is paid
with respect to Shares, the Deferred Compensation Account of
each Non-employee Director shall be credited with an
additional number of Share Units, equal to the number of
Shares, including fractional Shares, that could have been
purchased had such dividend or other distribution been paid
on each Share Unit in the Deferred Compensation Account (on
the record date for such dividend or distribution) and the
amount of such dividend or value of such other distribution
been used to acquire additional Shares at the Share Fair
Market Value on the date such dividend or other distribution
is paid. The value of any such other distribution on or
related to Shares shall, at the option of the Board (or an
authorized Committee of the Board), be either determined by
the Board or independently established.
The number of Share Units shall be fully adjusted upon the
occurrence of any stock split, stock dividend,
recapitalization, merger or similar event, and shall be
appropriately adjusted for the value (determined in the
manner provided above with respect to distributions) of any
right, privilege or opportunity provided or offered by I-R
to holders of Shares.
ARTICLE VI. Conversion of Deferred Compensation Account
Balances
A Non-employee Director's cash balance in the deferred
compensation program as of December 31, 1996 will be
transferred to an equivalent balance in the Director's
Deferred Compensation Account as of January 1, 1997. The
Deferred Compensation Account shall be credited with the
number of Share Units equal to the number of Shares,
including fractions, which could have been purchased with
such cash account balance on January 2, 1997, at Share Fair
Market Value on such date.
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ARTICLE VII. Delivery
Delivery of Shares equal to the number of Share Units
credited to the Deferred Compensation Account will be made
to a Non-employee Director in accordance with his or her
applicable Deferral Elections or, if no election applies,
promptly after the date on which the Non-employee Director
ceases to be a member of the Board.
In the case of Shares to be delivered pursuant to a Deferral
Election, Shares shall be delivered on the delivery date
specified in the Deferral Election. In the case of Shares
to be delivered promptly after the date on which a Director
ceases to be a member of the Board, Shares shall be
delivered as soon as practicable after such date. In any
case when Shares are delivered, a cash payment will be made
in lieu of delivering a fractional share.
In the event of a Non-employee Director's death, the Shares
in respect of Share Units credited to his or her Deferred
Compensation Account shall be delivered to the Non-employee
Director's estate or beneficiary, as appropriate.
ARTICLE VIII. Authorization and Source of Shares
Shares necessary to meet the obligations of the Plan have
been reserved and authorized pursuant to resolutions adopted
by the Board on November 6, 1996, and additional Shares
shall be reserved and authorized for delivery under the Plan
from time to time. These Shares may be provided from newly-
issued or treasury Shares.
ARTICLE IX. Alienability
Prior to delivery of Shares by I-R pursuant to Article VII,
no Non-employee Director shall have any right to sell,
pledge, transfer, assign or hypothecate any Share Units or
Shares, or any right to receive any Share Units or Shares,
credited to him under this Plan and such Share Units or
Shares shall not be subject to execution, attachment,
garnishment or similar process.
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ARTICLE X. Non-Employee Director's Rights Unsecured
The right of a Non-employee Director to receive any Shares
hereunder shall rank as an unsecured claim against I-R.
Assets that may be set aside for I-R's convenience with
respect to the Plan shall not in any way be held in trust
for, or be subject to any prior claim by, a Non-Employee
Director or beneficiary.
ARTICLE XI. Change of Control
(A) For purposes hereof,
(1) "Affiliate" shall mean, when used to indicate a
relationship with a specified person, a person that
directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is
under common control with, such specified person.
(2) "Associate" shall mean, when used to indicate a
relationship with a specified person, (a) any
corporation, partnership, or other organization of
which such specified person is an officer or partner,
(b) any trust or other estate in which such specified
person has a substantial beneficial interest or as to
which such specified person serves as trustee or in a
similar fiduciary capacity, (c) any relative or spouse
of such specified person, or any relative of such
spouse who has the same home as such specified person,
or who is a Director or officer of the Company or any
of its parents or subsidiaries, and (d) any person who
is a director, officer, or partner of such specified
person or of any corporation (other than the Company or
any wholly-owned subsidiary of the Company),
partnership or other entity which is an Affiliate of
such specified person.
(3) "Beneficial Owner" shall have the same meaning as
such term is defined by Rule 13d-3 under the Securities
Exchange Act of 1934 (or any successor provision at the
time in effect); provided, however, that any
individual, corporation, partnership, group,
association, or other person or entity which has the
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right to acquire any of the Company's outstanding
securities entitled to vote generally in the election
of directors at any time in the future, whether such
right is contingent or absolute, pursuant to any
agreement, arrangement, or understanding or upon
exercise of conversion rights, warrants or options, or
otherwise, shall be deemed the Beneficial Owner of such
securities.
(4) "Change in Control" shall mean the occurrence of
either of the following:
(a) any individual, corporation, partnership,
group, association or other person or entity, together
with its Affiliates and Associates (other than a
trustee or other fiduciary holding securities under an
employee benefit plan of the company), is or becomes
the Beneficial Owner of securities of the Company
representing 20 percent or more of the combined voting
power of the Company's then outstanding securities
entitled to vote generally in the election of
directors, unless a majority of the Continuing
Directors determines in their sole discretion that, for
purposes of this Plan, a Change in Control has not
occurred;
(b) the Continuing Directors shall at any time
fail to constitute a majority of the members of the
Board of Directors; or
(c) any sale, lease, exchange or other transfer
(in one transaction or a series of related
transactions) of all, or substantially all, of the
assets of the Company, other than any sale, lease,
exchange or other transfer to any person or entity
where the Company owns, directly or indirectly, at
least 80 percent of the outstanding voting securities
of such person or entity after any such transfer.
(5) "Continuing Director" shall mean a Director who
either was a member of the Board of Directors on
January 1, 1997 or who became a member of the Board of
Directors subsequent to such date and whose election,
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or nomination for election by the Company's
shareholders, was Duly Approved by the Continuing
Directors of the Board of Directors at the time of such
nomination or election, either by a specific vote or by
approval of the proxy statement issued by the Company
on behalf of the Board of Directors in which such
person is named as a nominee for Director, without due
objection to such nomination.
(6) "Duly Approved by the Continuing Directors" shall
mean an action approved by the vote of at least a
majority of the Continuing Directors then on the Board
of Directors, except, if the votes of such Continuing
Directors in favor of such action would be insufficient
to constitute an act of the Board of Directors if a
vote by all of its members were to have been taken,
then such term shall mean an action approved by the
unanimous vote of the Continuing Directors then on the
Board of Directors so long as there are at least three
Continuing Directors on the Board of Directors at the
time of such unanimous vote.
(B) Upon the occurrence of a Change of Control, all
deferrals pursuant to the Plan shall immediately
terminate and Deferred Compensation Account amounts
shall become immediately payable whether or not
otherwise vested. Each Non-employee Director's
Deferred Compensation Account shall be converted to
cash in an amount equal to the highest Fair Market
Value of one Share during the 60 days preceding the
date on which the Change in Control occurs multiplied
by the number of Share Units in the account. Deferred
Compensation Account cash amounts shall be delivered to
each director within thirty days of the Change of
Control.
ARTICLE XII. Effective Date
The Plan is effective January 1, 1997.
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ARTICLE XIII. Amendment and Termination
The Board (or an authorized Committee of the Board) may at
any time terminate, and may at any time and from time to
time and in any respect amend, the Plan for any reason
provided, however, that no amendment or termination of the
Plan shall impair the right of any Director to receive
amounts which have been credited to his or her Deferred
Compensation Account pursuant to Articles III, V and VI
prior to such amendment or termination.