EX-10.2







	 	 	 	 	 



Exhibit 10.2









May 8, 2009




Eaton Corporation

Eaton Center

1111 Superior Avenue

Cleveland, Ohio 44114




Award of Restricted Share Units Under the Eaton Corporation 2009 Stock Plan



The Compensation and Organization Committee (the “Committee”) of the Board of Directors of Eaton
Corporation (the “Company”) has awarded you a number of restricted share units effective as of May
8,2009 (the “Effective Date”) under the terms and conditions of the Company’s 2009 Stock Plan (the
“Plan”). Information concerning the number of restricted share units awarded to you (the “Award”)
is available online through the Eaton Service Center at Fidelity which may be accessed through the
Company’s website. You are required to accept the Award online at the Eaton Service Center at
Fidelity. By so accepting the Award you acknowledge and agree as follows (this “Agreement”):





     1. Acceptance. I hereby accept the Award on the terms and conditions provided in the
Plan and this Agreement.



     2. Restricted Share Units. I acknowledge that, as of the Effective Date, the
restricted share units referred to above (the “Restricted Units” or “Units”) have been awarded to
me, contingent on the continuation of my service with the Company with certain exceptions as
provided herein. Each Restricted Unit represents one (1) Common Share of the Company. Except as
otherwise expressly provided in this Agreement, the Restricted Units shall be forfeited and
immediately cancelled if my employment with the Company is terminated under any circumstances,
including without limitation dismissal, resignation, divestiture of operations, death, disability
or retirement; provided, however, that in the event of my death within 12 months prior to the
Vesting Date (as hereinafter defined), the possibility of forfeiture shall immediately lapse with
respect to 100% of the Restricted Units. The possibility of forfeiture shall also lapse and 100%
of the Restricted Units shall vest if I have been continuously employed by the Company or one of
its subsidiaries or affiliates to the date that is three (3) years after the Effective Date (the
“Vesting Date”), or upon a Change of Control of the Company (as defined in Paragraph 9). Within 30
days after the lapse of the possibility of forfeiture with respect to the Restricted Units, the
Company will issue to me Common Shares of the Company equal to the number of Restricted Units that
have so vested. Notwithstanding the foregoing, to the extent the market value of those Common
Shares on the Vesting Date exceeds the 200% of the market value of an equal number of Common Shares
on the Effective Date, the number of Restricted Units with a value equal to the excess shall be
forfeited by me, and I will not be entitled to any Common Shares or other payment with respect to
those Units.



 









 





If any Restricted Units are forfeited for any reason, I understand that I will not be entitled to
any issuance of Common Shares or other payment in respect of any Restricted Units so forfeited.
For purposes of this Agreement, market value is to be determined using the closing price of the
Company’s Common Shares on the New York Stock Exchange.



The Committee reserves the right to decide, in the exercise of its sole discretion, to what extent
my leaves of absence for government or military service, illness, temporary disability, or other
reasons shall not be deemed to be an interruption of continuous employment, and to accelerate the
vesting of any Units in its sole discretion.




     3. Non-Transferability. The Restricted Units shall be non-transferable. I agree not
to make, or attempt to make, any sale, assignment, transfer or pledge of any Restricted Units.



     4. Reorganizations, etc. In the event of a reorganization, merger, consolidation,
reclassification, recapitalization, combination or exchange of shares, stock split, stock dividend,
rights offering or other event affecting the Company’s Common Shares, the number of Restricted
Units shall be equitably adjusted by the Committee so as to reflect that change.



     5. Dividend Equivalents and Voting Rights. I acknowledge that there are no voting or
dividend rights associated with the Restricted Units such as those available to holders of Common
Shares of the Company.



     6. Tax Withholdings. I hereby authorize the Company to withhold from any Common
Shares or amounts otherwise payable to me, or any of my successors in interest, such federal,
state, local or foreign taxes as may be required by law in connection with the award to me of
Restricted Units or the lapse of the possibility of forfeiture thereof. I agree that if such
amounts are insufficient, I will pay or make arrangements satisfactory to the Company for payment
of those taxes.



     7. No Rights to Continued Employment. I acknowledge that the Award does not in any
way entitle me to continued employment with the Company for the period during which the possibility
of forfeiture continues or for any other period, and does not limit or restrict any right the
Company otherwise may have to terminate my employment.



     8. Competition by Employee. I expressly acknowledge and agree that in the event that
I voluntarily leave the employment of the Company or a subsidiary or affiliate and within one year
after the vesting of the Restricted Units enter into an activity as employee, agent, officer,
director, principal or proprietor which, in the sole judgment of the Committee, is in competition
with the Company or a subsidiary, the amount of the total fair market value of such vested
Restricted Units as of the vesting date shall inure to the benefit of the Company and I agree to
promptly pay the same to the Company, unless the Management Committee in its sole discretion shall
determine that such action by me is not inimical to the best interests of the Company or its
affiliates or subsidiaries.



     9. Change of Control. Notwithstanding anything in this Agreement to the contrary,
effective upon a Change of Control of the Company (as defined below), the Restricted Units



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shall
vest and the forfeiture restrictions referred to in Paragraph 2 hereof shall lapse. For the
purpose of this Agreement, a “Change of Control” shall mean:




	 	A.	 	The acquisition by any individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 25% or more of
either (i) the then outstanding common shares of the Company (the “Outstanding Common
Shares”) or (ii) the combined voting power of the then outstanding voting securities of
the Company entitled to vote generally in the election of directors (the “Outstanding
Company Voting Securities”); provided, however, that for purposes of this subsection,
the following acquisitions shall not constitute a Change of Control: (i) any
acquisition directly from the Company, (ii) any acquisition by the Company, or (iii)
any acquisition by any employee benefit plan (or related trust) sponsored or maintained
by the Company or any corporation controlled by the Company; or
	 
	 	B.	 	Individuals who, as of the date hereof, constitute the Board (the “Incumbent
Board”) cease for any reason to constitute at least a majority of the Board; provided,
however, that any individual becoming a director subsequent to the date hereof whose
election, or nomination for election by the Company’s shareholders, was approved by a
vote of at least two-thirds of the directors then comprising the Incumbent Board shall
be considered as though such individual were a member of the Incumbent Board, but
excluding, for this purpose, any such individual whose initial assumption of office
occurs as a result of an actual or threatened election contest with respect to the
election or removal of directors or other actual or threatened solicitation of proxies
or consents by or on behalf of a Person other than the Board; or
	 
	 	C.	 	Consummation by the Company of a reorganization, merger or consolidation or
sale or other disposition of all or substantially all of the assets of the Company or
the acquisition of assets of another corporation (a “Business Combination”), in each
case, unless, following such Business Combination, (i) all or substantially all of the
individuals and entities who were the beneficial owners, respectively, of the
Outstanding Common Shares and Outstanding Company Voting Securities immediately prior
to such Business Combination beneficially own, directly or indirectly, more than 55%
of, respectively, the then outstanding common shares and the combined voting power of
the then outstanding voting securities entitled to vote generally in the election of
directors, as the case may be, of the corporation resulting from such Business
Combination (including, without limitation, a corporation which as a result of such
transaction owns the Company or all or substantially all of the Company’s assets either
directly or through one or more subsidiaries) in substantially the same proportions as
their ownership, immediately prior to such Business Combination of the Outstanding
Common Shares and Outstanding Company Voting Securities, as the case may be, (ii) no
Person (excluding any employee benefit plan (or related trust) of the Company or such
corporation resulting from such Business Combination) beneficially owns, directly or
indirectly, 25% or more of, respectively, the then outstanding common shares of the
corporation resulting from such Business 




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	 	 	 	Combination or the combined voting power of
the then outstanding voting securities of such corporation except to the extent that
such ownership existed prior to the
Business Combination and (iii) at least a majority of the members of the board of
directors of the corporation resulting from such Business Combination were members of
the Incumbent Board at the time of the execution of the initial agreement, or of the
action of the Board, providing for such Business Combination; or






	 	D.	 	Approval by the shareholders of the Company of a complete liquidation or
dissolution of the Company.




Notwithstanding the foregoing, a “Change of Control” shall not be deemed to have occurred for the
purposes of this Agreement as a result of any transaction or series of transactions which I, or any
entity in which I am a partner, officer or more than 50% owner, initiate, if immediately following
the transaction or series of transactions that would otherwise constitute a Change of Control, I,
either alone or together with other individuals who are executive officers of the Company
immediately prior thereto, beneficially own, directly or indirectly, more than 10% of the then
outstanding common shares of the Company or the corporation resulting from the transaction or
series of transactions, as applicable, or of the combined voting power of the then outstanding
voting securities of the Company or such resulting corporation.




     10. Miscellaneous. Unless otherwise expressly provided herein, terms defined in the
Plan shall have the same meanings when used in this Agreement. The Committee shall have the right
at any time in its sole discretion to amend, alter, suspend, discontinue or terminate any
Restricted Units without my consent. Also, the Restricted Units shall be null and void to the
extent the grant of Restricted Units or the lapse of restrictions thereon is prohibited under the
laws of the country of my residence. The Committee may, in circumstances determined in its sole
discretion, provide for the lapse of the above restrictions at earlier dates. The use of the
masculine gender shall be deemed to include the feminine gender. In the event of a conflict
between this Agreement and the Plan, this Agreement shall control. This Agreement represents the
entire understanding between us on the subject hereof and shall be governed in accordance with Ohio
law, without giving effect to conflict of law principles.




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