<PAGE>
                                                                  EXHIBIT 10 (Q)

                                EATON CORPORATION
                         2007 ANNUAL REPORT ON FORM 10-K
                                   ITEM 15 (B)

                                EATON CORPORATION
                             200_ STOCK OPTION GRANT
                STOCK OPTION AGREEMENT UNDER THE 2004 STOCK PLAN
                             (NON-EMPLOYEE DIRECTOR)

Name ________________________           Date of Grant _____________

Number of Shares ____________           Option Price ______________

EATON CORPORATION, an Ohio corporation (the "Company"), hereby grants to the
Optionholder, in consideration of service by him or her to the company or a
subsidiary of the Company, the option to purchase from the Company the number of
common shares of the Company with a par value of fifty cents each (the "Common
Shares") specified above from time to time during a period which shall end at
the close of business on the tenth anniversary of the date of the granting of
this option (such period being referred to as the "fixed term of the option"),
unless sooner terminated as hereinafter provided. For purposes of the foregoing
sentence, "close of business" shall mean 4:00 p.m. Eastern Time on the day of
that tenth anniversary. However, if that day falls on a Saturday, Sunday or
other day when the principal stock exchange for the Common Shares is closed for
trading, "close of business" shall mean 4:00 p.m. Eastern Time on the nearest
preceding day when that stock exchange is open for trading. This option is
subject to, and is granted in accordance with, the 2004 Stock Plan (the "2004
Plan"), and upon the terms and conditions herein set forth.

I.  TERMS OF EXERCISE OF OPTION

     A.   By the Optionholder While Serving as a Member of the Board.

This option shall become exercisable after a period of six months following the
date of grant, provided the Optionholder remains in continuous service as a
member of the Board for that period. The Optionholder, while serving as a member
of the Board, may exercise this option at any time after this option becomes
exercisable, but not later than the end of the fixed term of the option. The
Governance Committee of the Board (the "Committee") reserves the right to decide
to what extent leaves of absence for government service, illness, temporary
disability, or other reasons shall not be deemed to be an interruption of
continuous service. Notwithstanding the foregoing provisions of this Section I
A, this option may be exercised after service on the Board ends as provided in
Section I B below.

     B.   By the Optionholder When No Longer Serving as a Member of the Board.

The Optionholder may not exercise this option after he or she ceases to serve as
a member of the Board, except that if the Optionholder ceases to serve as a
member of the Board after reaching the retirement age designated by the
then-current Board retirement policy or after at least ten years' service on the
Board, then he or she may exercise this option at any time after a period of six
months following the date of grant, but not later than the end of the fixed term
of the option.

     C.   In case of the Death of the Optionholder.

If the Optionholder is entitled to exercise this option at the date of his or
her death, then this option may be exercised during the period of 12 months
after the death of the Optionholder (but no later than the end of the fixed term
of the option) by the Optionholder's estate or by a person or persons who has
acquired the right to exercise this option by bequest or inheritance. This
option may be so exercised only as to the number of Common Shares for which it
could have been exercised at the time the Optionholder died.

<PAGE>

I.   TERMS OF EXERCISE OF OPTION (continued)

     D.   Termination.

This option shall in no event be exercisable after the expiration of 10 years
from the date of the granting of the option, notwithstanding anything to the
contrary in Sections I A, B or C above. The option hereby granted shall be
considered terminated and cancelled, in whole or in part, to the extent that it
can no longer be exercised under the terms hereof or under the terms of the 2004
Plan, for the Common Shares originally subject to this option, or in the event
the Optionholder shall fail, within 60 days after the date of the granting of
this option, to deliver to the Company an acceptance of such option executed by
him or her.

     E.   Acceleration - Change in Control.

Notwithstanding anything in Section I A or B to the contrary, this option shall
become immediately exercisable for all of the Common Shares subject to the
option upon a change in control of the Company (as defined below).

For purposes of this Agreement, a "change in control of the Company" shall be
deemed to have occurred if (i) a tender offer shall be made and consummated for
the ownership of securities of the Company representing 25% or more of the
combined voting power of the Company's then outstanding voting securities, (ii)
the Company shall be merged or consolidated with another corporation and as a
result of such merger or consolidation less than 60% of the outstanding voting
securities of the surviving or resulting corporation shall be owned in the
aggregate by the former shareholders of the Company, other than affiliates
(within the meaning of the Securities Exchange Act of 1934 (the "Exchange Act")
of any party to such merger or consolidation, as the same shall have existed
immediately prior to such merger or consolidation, (iii) the Company shall sell
substantially all of its assets to another corporation which is not a
wholly-owned subsidiary of the Company, (iv) any "person" (as such term is used
in Sections 3(a)(9) and 13(d)(3) of the Exchange Act) is or becomes the
beneficial owner, directly or indirectly, of securities of the Company
representing 25% or more of the combined voting power of the Company's then
outstanding securities; or (v) during any period of two consecutive years,
individuals who at the beginning of such period constitute the Board cease for
any reason to constitute at least a majority 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. For purposes of this
Agreement, ownership of voting securities shall take into account and include
ownership as determined by applying the provisions of Rule 13d-3(d)(1) of the
Exchange Act (as then in effect).

II.  EXERCISING OPTION - RIGHTS AS SHAREHOLDERS

     A.   Exercise and Payment

This option shall be exercised only at a time when the principal exchange for
the Common Shares is open for business. An exercise of this option will be
effective when the person or estate entitled to exercise it shall indicate the
decision to do so, as to all or any part of the Common Shares for which it may
then be exercised, by any method of communication expressly authorized by the
Company and at the same time tenders or makes available to the Company (by any
method expressly authorized by the Company) payment in full for the exercise
price in cash or by delivery to the Company of Common Shares owned by the
Optionholder, or by tender of a combination of cash and Common Shares. A partial
exercise of this option shall not affect the right to exercise it from time to
time thereafter as to the remaining Common Shares subject to the option. The
Company shall notify the Optionholder of the expiration date of the fixed term
of this option no less than 90 days, nor more than 180 days, in advance of such
expiration date.


                                        2

<PAGE>

II.  EXERCISING OPTION - RIGHTS AS SHAREHOLDERS (continued)

     B.   Shareholder Rights

No holder of this option shall have any rights as a shareholder with respect to
any Common Shares subject to the option unless and until he or she shall have
received a certificate or certificates for such Common Shares. Subject to
compliance with all the terms and conditions hereof and of the 2004 Plan,
including all rules, regulations and determinations of the Committee, the
Company shall, as promptly as possible after any exercise of this option,
deliver a certificate or certificates for an appropriate number of Common
Shares; provided, however, that no such certificate or certificates shall be so
delivered unless and until adequate provision has, in the judgment of the
Company, been made for any and all withholding taxes in respect of the exercise
of the option

III. TRANSFER OF OPTION

This option shall not be transferable otherwise than by will or the law of
descent and distribution or to the extent permitted by rules or regulations
under Section 16(b) under the Securities Exchange Act of 1934 (the "Exchange
Act") and the Committee.

IV.  COMPLIANCE WITH LAWS, REGULATIONS AND RULES

The Company will use its reasonable best efforts to comply with all federal and
state laws and regulations, and all rules for domestic stock exchanges on which
its Common Shares may be listed, which apply to the issuance of the Common
Shares subject to this option, and to obtain such consents and approvals to such
issuance which it deems advisable from federal and state bodies having
jurisdiction of such matters. However, anything herein to the contrary
notwithstanding, this option shall not be exercisable, and the Company shall not
be obligated to issue or deliver any certificate for shares subject to this
option in violation of any such laws, regulations or rules and unless and until
such consents and approvals have been obtained. Any share certificate issued to
evidence Common Shares as to which this option is exercised may bear such
legends and statements as the Committee shall deem advisable to assure
compliance with federal and state laws and regulations.

If a person or an estate purporting to acquire the rights to exercise this
option by bequest or inheritance shall attempt to exercise this option, the
Company may require reasonable evidence as to the ownership of this option and
may request such consents and releases of taxing authorities, as it deems
advisable.

V.   ADJUSTMENT UPON CHANGE OF SHARES

In the event that the outstanding Common Shares shall be changed in number or
class by reason of a reorganization, merger, consolidation, reclassification,
recapitalization, combination or exchange of shares, stock split, spin off,
stock dividend, rights offering or other event affecting Common Shares, the
number and class of Common Shares subject to this option, and the price per
share payable upon exercise of this option shall be equitably adjusted as
determined by the Committee so as to reflect such change. No adjustment provided
for in this Section V shall require the Company to sell or transfer a fractional
share.

VI.  COMPETITION BY OPTIONHOLDER

In the event that the Optionholder within one year after exercise of any portion
of this option enters 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 by which the fair
market value per share on the date of exercise of any such portion exceeds the
option price per Common Share hereunder, multiplied by the number of Common
Shares subject to such exercised portion, shall inure to the benefit of the
Company; and the Optionholder shall pay the same to the Company, unless the
Committee in its sole discretion shall determine that such action by the
Optionholder is not inimical to the best interest of the Company or its
subsidiaries.


                                        3

<PAGE>

VII. ENFORCEABILITY

This Agreement shall be binding upon and inure to the benefit of the Company,
and its successors and assigns, and upon the personal representatives,
executors, administrators, legatees and distributes of the Optionholder.

VIII. STOCK OPTION PLAN CONTROLS

The terms and conditions of the 2004 Plan, as amended from time to time in
accordance with the provisions of Section 11 thereof, shall control the terms
and conditions of this option, and anything contained in this Agreement
inconsistent with or in violation of the terms and conditions of the 2004 Plan
shall be of no force or effect and shall not be binding upon the Company or the
Optionholder. The 2004 Plan and this Agreement represent the entire agreement
and understanding between the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements, representations and understandings,
whether written or oral.

IX.  CONSTRUCTION

It is intended that acquisition of this option by the Optionholder shall qualify
for exemption from the provisions of Section 16(b) of the Exchange Act, and each
and every provision of this Agreement shall be construed, interpreted and
administered so that the grant of this option, whether made to an officer or
director of the Company or to any other employee of the Company or a subsidiary,
shall so qualify. Any provision of this Agreement that cannot be so construed
interpreted and administered shall be of no force or effect.

X.   GOVERNING LAW

This Agreement shall be construed in accordance with the laws of the State of
Ohio, except as otherwise specifically provided herein.

                                        EATON CORPORATION


                                        By
                                           -------------------------------------

                                        And by
                                               ---------------------------------


ACCEPTANCE OF OPTION BY
OPTIONHOLDER


Accepted by
            -------------------------
                  Signature

Date
     --------------------------------


                                        4