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                                                                  Exhibit 10.7



                             COOPER INDUSTRIES, INC.

                        MANAGEMENT INCENTIVE COMPENSATION
                                  DEFERRAL PLAN



                             1. Purposes of the Plan

         The Cooper Industries, Inc. Management Incentive Compensation Deferral
Plan (the "Plan") is intended to provide a method for attracting and retaining
key employees of Cooper Industries, Inc., an Ohio corporation (the "Company")
and its subsidiaries, and to encourage them to remain with and devote their best
efforts to the business of the Company, thereby advancing the interests of the
Company and its shareholders.

                          2. Administration of the Plan

         The Plan shall be administered by a committee (the "Committee") of not
less than three directors of the Company who shall be appointed by and serve at
the pleasure of the Board of Directors of the Company. Members of the Committee
shall not be eligible, and shall not have been eligible at any time within one
year prior to their appointment to the Committee, to participate in the Plan or
in any other deferred compensation plan of the Company or any of its affiliates.
The Committee shall have sole authority from time to time to select the
employees eligible to participate in the Plan from among those within the
eligible class described in Subparagraph 3(a). The Committee is authorized to
interpret the Plan and may from time to time adopt such rules and regulations,
consistent with the provisions of the Plan, as it may deem advisable to carry
out the Plan. All decisions made by the Committee shall be final. All expenses
incurred in connection with the administration of the Plan shall be borne by the
Company.

                          3. Participation in the Plan

         (a) Eligible Class. All employees of the Company and its subsidiaries
who are eligible to earn an "Incentive Award" during a calendar year shall be
within the class of employees eligible to participate in the Plan with respect
to that Incentive Award. "Incentive Award" shall mean compensation or bonus
earned by a key employee (including officers and directors who are also key
employees) during and awarded to the employee for a calendar year (the "Award
Year") under the Cooper Industries, Inc. Annual Management Incentive Plan, which
except for participation in this Plan would become payable in one lump sum in
the calendar year next following the Award Year.




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         (b) Eligible Employees. Those employees within the eligible class
described in Subparagraph (a) above who have been selected for eligibility by
the Committee, from time to time, shall be eligible employees for purposes of
the Plan.

         (c) Election to Participate. An eligible employee may elect to become a
participant in the Plan ("Participant") with respect to the Incentive Award to
be earned by such employee during any Award Year by filing with the Committee an
election to defer the receipt of a portion or all of such employee's Incentive
Award for that Award Year. The preceding sentence to the contrary
notwithstanding, with respect to the 1980 Award Year, a Participant may not
elect to defer more than 10/12ths of such Participant's Incentive Award for that
Award Year. The election to participate in the Plan shall specify either (i) the
integral percentage (from 1% to 100%), (ii) a certain dollar amount or (iii) the
amount in excess of a certain dollar amount of the Participant's Incentive Award
for the Award Year which the Participant elects to defer in accordance with the
terms of the Plan. The amount of Incentive Award so deferred for an Award Year
is referred to herein as the "Deferred Compensation" for that Award Year.

         (d) Election of Payment of Deferred Compensation. Payment of the
Deferred Compensation for an Award Year shall be made or shall commence on March
l of the calendar year next following the Award Year (the "Designated Date") or
on an anniversary of the Designated Date (the Designated Date and any
anniversary thereof is sometimes referred to as a "Designated Date
Anniversary"). Each Participant who elects to defer an Incentive Award for an
Award Year shall also elect the calendar year in which the payment of the
Deferred Compensation for that Award Year shall be made or shall commence. Any
such calendar year so elected may be either during the Participant's active
employment or after termination of the Participant's employment for any reason
and may be elected either by specifying a particular calendar year or by
selecting a calendar year following the occurrence of a specified event, such as
termination of employment.

         The Participant shall receive his Deferred Compensation for an Award
Year either in one lump sum or in installments for a period certain on or
commencing on the Designated Date Anniversary elected by the Participant, the
determination of which shall be in the sole discretion of the Committee and may
be determined by the Committee at any time prior to such Designated Date
Anniversary.

         (e) Time of Making Elections. Any election which may be made by a
Participant under this Paragraph 3 must be made not later than December 31 of
the calendar year preceding the Award Year during which the Incentive Award to
which such election relates is earned; provided, that any election with respect
to the Incentive Award earned during the 1980 Award Year must be made not later
than February 29, 1980. All elections shall be made in the manner and form
prescribed by the Committee.

         (f) Nature of Elections. Any election which may be made by a
Participant under this Paragraph 3 with respect to the Participant's Incentive
Award for an Award Year shall be



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irrevocable once made. Plan provisions to the contrary not withstanding, any
election which may be made by a Participant under this Paragraph 3 with respect
to the Participant's Incentive Award for an Award Year, unless changed by the
Participant prior to the expiration of the time for making such election with
respect to the Participant's Incentive Awards for each subsequent Award Year,
shall be deemed to have been made with respect to the Participant's Incentive
Awards for each subsequent Award Year, respectively.

                      4. Crediting of Deferred Compensation
                                to Plan Accounts

         (a) Establishment of Plan Accounts. The Committee shall establish a
"Plan Account" for each Participant in the Plan, and on the Designated Date
following each Award Year the Committee shall credit to the Participant's Plan
Account the Participant's Deferred Compensation for that Award Year.

         (b) Crediting of Interest Equivalents. On each anniversary of the
Designated Date on which Deferred Compensation was credited to a Participant's
Plan Account, the Committee shall credit to that Participant's Plan Account as
additional Deferred Compensation a dollar amount equal to simple interest, at a
rate of interest equal to the average of the Chase Manhattan Bank Average
Quarterly Prime Rates for the preceding calendar year, on the Deferred
Compensation (including any interest previously credited pursuant to this
Paragraph) in the Participant's Plan Account on the preceding Designated Date
Anniversary.

                       5. Payment of Deferred Compensation
                                     Amounts

         (a) Payment Generally. Except as otherwise provided in this Paragraph
5, the Deferred Compensation credited to a Participant's Plan Account with
respect to an Award Year shall be paid in cash to the Participant either in one
lump sum or in installments for a period certain, as determined by the
Committee, on or commencing on the Designated Date Anniversary elected by the
Participant. In the event the Participant is to receive the Deferred
Compensation in installments, the amount of each such installment shall be equal
to a fraction of the amount of the Deferred Compensation remaining to be paid
with respect to the Deferred Compensation for that Award Year, the numerator of
which is one and the denominator of which is the number of installments of the
Deferred Compensation for that Award Year remaining to be paid. The installments
of the Deferred Compensation remaining to be paid shall continue to bear
interest with respect to Deferred Compensation as provided in Paragraph 4(b).

         (b) Payment of Simultaneous Deferred Compensation Amounts. It is
recognized that a Participant may elect to defer Incentive Awards with respect
to more than one Award Year, so that Deferred Compensation is credited to the
Participant's Plan Account with respect to more than one Award Year and the
payment of Deferred Compensation with respect to more than one


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Award Year may become payable to the Participant in the same year on different
Designated Date Anniversaries.

         (c) Termination of Employment. Regardless of the Participant's election
of the Designated Date Anniversary on which payment of the Deferred Compensation
for any Award Year is to be paid or commence, in the event a Participant's
employment with the Company and its subsidiaries terminates prior to the first
Designated Date Anniversary elected by the Participant for any reason (including
death), cash payment of that Deferred Compensation shall be accelerated by being
made on or commencing on the first Designated Date Anniversary following the
Participant's termination of employment, either in one lump sum or in
installments for a period certain, as determined by the Committee.

         (d) Hardship. Regardless of the Participant's Designated Date
Anniversary on which payment of the Deferred Compensation for any Award Year is
to be paid or commence, in the event of hardship of the Participant or his
beneficiaries, as determined in the sole discretion of the Committee, cash
payment of that Deferred Compensation shall be accelerated by being made on the
first Designated Date Anniversary following the Committee's determination of
hardship, in one lump sum. For this purpose, hardship shall mean any emergency
or necessity affecting the personal or family affairs of the Participant having
a significant financial effect.

         (e) Change in Purpose. Regardless of the Participants' Designated Date
Anniversaries on which payment of Deferred Compensation for Award Years is to be
paid or commence, in the event of a major tax law change or other reason, as
determined in the sole discretion of the Committee, which makes the continued
deferral of Incentive Awards undesirable, cash payment of all of the
Participants' Deferred Compensation shall be accelerated by being made on the
first Designated Date Anniversary following the Committee's determination to
discontinue deferrals, in one lump sum.

         (f) Merger or Liquidation. If the Company is to be merged into or
consolidated with one or more corporations and the Company will not be the
surviving corporation, if the Company is to be dissolved and liquidated or if
substantially all of the assets and business of the Company are to be sold, the
Committee or the Board of Directors of the Company may fix a date, on or prior
to the effective date of such merger, consolidation, dissolution and liquidation
or sale, on which all remaining Deferred Compensation then credited to
Participants' Plan Accounts may be paid in cash in one lump sum. For this
purpose, the Company shall not be considered to be the surviving corporation in
a merger the result of which is a change in the ownership of more than 50% of
the outstanding shares of common stock of the Company.

         (g) Death of Participant. A Participant, by written instrument filed
with the Committee in such manner and form as it may prescribe, may designate
one or more beneficiaries to receive payment of the Participant's Deferred
Compensation in the event of the death of the Participant. Any such beneficiary
designation may be changed from time to time prior to the death of the
Participant in the absence of a beneficiary designation on file with the
Committee at



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the time of the Participant's death, the Deferred Compensation remaining to be
paid to the Participant shall be paid as it becomes due under the Plan to the
executors or administrator of the Participant's estate.

         (h) No Forfeiture of Deferred Compensation. All Deferred Compensation
credited to a Participant's Plan Account shall, in all cases, be nonforfeitable.

         (i) Debiting of Plan Accounts. Once an amount of Deferred Compensation
has been paid, such amount shall be debited from the Participant's Plan Account
and shall cease to exist.

                        6. Prohibition Against Assignment
                                 or Encumbrance

         No right, title, interest or benefit hereunder shall ever be liable for
or charged with any of the torts or obligations of a Participant or any person
claiming under a Participant, or be subject to seizure by any creditor of a
Participant or any person claiming under a Participant. Except as provided in
Paragraph 5(g), no Participant or any person claiming under a Participant shall
have the power to anticipate or dispose of any right, title, interest or benefit
hereunder in any manner until the same shall have been actually distributed free
and clear of the terms of the Plan.

                              7. Nature of the Plan

         The Company at its election may fund the payment of Deferred
Compensation under the Plan by setting aside and investing, in an account on the
Company's books, such funds as the Company may from time to time determine.
Neither the establishment of the Plan, the crediting of Deferred Compensation,
nor the setting aside of any funds shall be deemed to create a trust. Legal and
equitable title to any funds set aside pursuant to the Plan shall remain in the
Company, and no Participant shall have any security or other interest in such
funds. Any funds so set aside or acquired shall remain subject to the claims of
the creditors of the Company, present and future.

                           8. Employment Relationship

         A Participant shall be considered to be in the employment of the
Company and its subsidiaries as long as he remains an employee of either the
Company, any subsidiary corporation of the Company, or any corporation to which
substantially all of the assets and business of the Company are transferred. For
this purpose, a subsidiary corporation of the Company is any corporation (other
than the Company) in an unbroken chain of corporations beginning with the
Company if, as of the date such determination is to be made, each of the
corporations other than the last corporation in the unbroken chain owns stock
possessing 50% or more of the total combined voting power of all classes of
stock in one of the other corporations in such chain. Nothing in the adoption of
this Plan nor the crediting of Deferred Compensation shall confer on any
Participant the right to continued employment by the Company or a subsidiary
corporation of the Company, or affect in any way the right of the Company or
such subsidiary to terminate his



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employment at any time. Any question as to whether and when there has been a
termination of a Participant's employment, and the cause of such termination,
shall be determined by the Committee, and its determination shall be final.

                        9. Effective Date, Amendment and
                               Termination of Plan

         The Plan shall be effective as of January l, 1980. The Committee or the
Board of Directors of the Company may terminate the Plan at any time with
respect to Deferred Compensation which has not theretofore been credited to Plan
Accounts. The Committee or the Board of Directors of the Company shall have the
right to alter or amend the Plan or any part thereof from time to time, except
that neither the Committee nor the Board of Directors of the Company shall make
any alteration or amendment which would impair the rights of a Participant with
respect to Deferred Compensation theretofore credited to that Participant's Plan
Account. If not sooner terminated under the provisions of this Paragraph 9, the
Plan shall terminate as of the date on which all Deferred Compensation
theretofore credited to Plan Accounts has been paid.

                               10. Laws Governing

         This Plan shall be construed in accordance with and governed by the
laws of the State of Texas.




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                             FIRST AMENDMENT TO THE
                        MANAGEMENT INCENTIVE COMPENSATION
                                  DEFERRAL PLAN
                        ----------------------------------

         WHEREAS, Cooper Industries, Inc. (hereinafter referred to as the
"Company") established the Management Incentive Compensation Deferral Plan
(hereinafter referred to as the "Plan") effective as of January 1, 1980 for the
purpose of providing certain executives an opportunity to defer the payment of
all or any desired portion of any bonus awarded by the Management Development
and Compensation Committee of the Board of Directors (hereinafter referred to as
the "Committee"); and

         WHEREAS, the Committee, pursuant to the provisions of Section 9 of the
Plan, has the right to alter or amend the Plan or any part thereof from time to
time, except to the extent that any alteration or amendment would impair the
rights of a Participant with respect to Deferred Compensation theretofore
credited to that Participant's Plan Account; and

         WHEREAS, the Committee desires to amend Section 5(f) of the Plan.

         NOW THEREFORE, effective as of November 1, 1988, the Plan is hereby
amended as hereinafter set forth.

         1.       Section 5(f) of the Plan is hereby amended to provide as
follows:

                  5(f)     Change in Control

                           (1)  In the case of Incentive Awards for which
elections were irrevocable as of November 1, 1988, if (i) the Company is to be
merged into or consolidated with one or more corporations and the Company will
not be the surviving corporation, (ii) the Company is to be dissolved and
liquidated, or (iii) substantially all of the assets and business of the Company
are to be sold, then the Committee or the Board of Directors of the Company may
fix a date, on or prior to the effective date of such merger, consolidation,
dissolution and liquidation or sale, on which all remaining Deferred
Compensation then credited to Participants' Plan Accounts may be paid in cash in
one lump sum. For this purpose, the Company shall not be considered to be the
surviving corporation in a merger the result of which is a change in the
ownership of more than 50% of the outstanding shares of common stock of the
Company.

                           (2) In the case of Incentive Awards for which
elections were not made or irrevocable as of November 1, 1988, if (i) the
Company is to be merged into or consolidated with one or more corporations and
the Company is not to be the surviving corporation, (ii) the Company is to be
dissolved and liquidated, (iii) substantially all of the assets and business of
the Company are to be sold, or (iv) there occurs a "change in control" of the
Company, then the Committee or the Board of Directors of the Company shall fix a
date on or prior to the effective


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date of such merger, consolidation, dissolution and liquidation, sale or change
in control, on which all remaining Deferred Compensation then credited to
Participants' Plan Accounts shall be paid in cash in one lump sum.

                           For purposes hereof, a "change in control of the
Company" shall be deemed to have occurred if (i) any "person", as such term is
used in Sections 13(d)(3) and 14(d)(2) of the Securities Exchange Act of 1934
(the "Exchange Act") is or becomes the "beneficial owner" (as such term is used
in Rule 13d-3 issued under the Exchange Act), of securities of the Company
representing 20% or more of the combined voting power of the Company's then
outstanding securities or (ii) during any period of two consecutive years,
individuals who at the beginning of such period constitute the Board of
Directors cease for any reason to constitute at least three-fourths thereof
unless the election, or the nomination for election by the Company's
shareholders, of each new director was approved by a vote of at least two-thirds
of the directors then still in office who were directors at the beginning of the
period.

                           (3) For years after 1988, if an event described in
Section 5(f)(2)(i)-(iv) occurs during a year, notwithstanding any election
previously made, no Incentive Award payable for or in that year shall be
deferred. If any amount has been deferred in that year prior to such an event
occurring, the deferral shall terminate and the amount deferred plus interest
shall be paid in cash.

         2. All other terms and conditions of the Plan shall remain in full
force and effect and are hereby preserved and ratified.

         Executed this 1st day of November, 1988.

                                         COOPER INDUSTRIES, INC.



                                         By  /s/John D. Ong
                                             -------------------------------
                                             Chairman, Management Development
                                             and Compensation Committee




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                             SECOND AMENDMENT TO THE
                        MANAGEMENT INCENTIVE COMPENSATION
                                  DEFERRAL PLAN
                        ----------------------------------


         WHEREAS, Cooper Industries, Inc. (hereinafter referred to as the
"Company") established the Management Incentive Compensation Deferral Plan
(hereinafter referred to as the "Plan") effective as of January 1, 1980, and
amended the Plan effective as of November 1, 1988, for the purpose of providing
certain executives an opportunity to defer the payment of all or any desired
portion of any bonus awarded by the Management Development and Compensation
Committee of the Board of Directors (hereinafter referred to as the
"Committee"); and

         WHEREAS, the Committee, pursuant to the provisions of Section 9 of the
Plan, has the right to alter or amend the Plan or any part thereof from time to
time, except to the extent that any alteration or amendment would impair the
rights of a Participant with respect to Deferred Compensation theretofore
credited to that Participant's Plan Account; and

         WHEREAS, the Committee desires to amend Sections 2 and 3(b) of the
Plan.

         NOW, THEREFORE, effective as of November 5th, 1990, the Plan is
hereby amended as hereinafter set forth.

         1.       Section 2 of the Plan is hereby amended to provide as follows:

                       2.      Administration of the Plan

         The Plan shall be administered by a committee (the "Committee") of not
less than three directors of the Company who shall be appointed by and serve at
the pleasure of the Board of Directors of the Company. Members of the Committee
shall not be eligible, and shall not have been eligible at any time within one
year prior to their appointment to the Committee, to participate in the Plan.
The Committee is authorized to interpret the Plan and may from time to time
adopt such rules and regulations, consistent with the provisions of the Plan, as
it may deem advisable to carry out the Plan. All decisions made by the Committee
shall be final. All expenses incurred in connection with the administration of
the Plan shall be borne by the Company.

         2.       Section 3(b) of the Plan is hereby amended to provide as
follows:

                  3(b) Participation in the Plan: Eligible Employees. Those
employees within the eligible class described in subparagraph (a) above who
either are officers of the Company or who have been selected for eligibility by
the Chief Executive Officer of the Company, from time to time, shall be eligible
employees for purposes of the Plan.



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         3. All other terms and conditions of the Plan, as amended, shall remain
in full force and effect and are hereby preserved and ratified.

         Executed this ______ day of November, 1990.


                             COOPER INDUSTRIES, INC.


                             By
                                 ------------------------------------
                                 Chairman, Management Development and
                                   Compensation Committee



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