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                                                                     EXHIBIT (O)

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

                             2008 STOCK OPTION GRANT
                STOCK OPTION AGREEMENT UNDER THE 2004 STOCK PLAN

                  DATE OF GRANT: ____________________
                  DATE OF EXPIRATION: _______________

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 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, the number of common shares of the Company with a par
value of fifty cents each (the "Common Shares") specified in the Optionholder's
account available online through the Eaton Benefits Center at Fidelity, or in
other method of communication designated by the Company. For purposes of the
foregoing sentence, "close of business" shall mean 4:00 p.m. Eastern Time on the
day of the 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 an Employee of the Company or a Subsidiary

The Optionholder may exercise this option only after he or she remains in the
continuous employment of the Company for a period of one year from the date of
granting of this option and only as to the number of shares which become vested
as set forth below. Employment by a subsidiary shall be counted as employment by
the Company.

Subject to Section I. B. hereof, after one year of such continuous employment
following the date of grant of this option, the Optionholder, while still so
employed, may exercise this option as follows:

          1.   At any time after one year of such continuous employment from the
               date of grant, as to 33% of the Common Shares subject to this
               option;

          2.   At any time after two years of such continuous employment from
               the date of grant, as to an additional 33% of the Common Shares
               subject to this option; and

          3.   At any time after three years of such continuous employment from
               the date of grant, as to an additional 34% of the Common Shares
               subject to this option.

     The Compensation and Organization Committee of the Board of Directors of
     the Company (the "Committee") reserves the right to decide to what extent
     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.

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2008 STOCK OPTION AGREEMENT

I.   TERMS OF EXERCISE OF OPTION (CONTINUED)

     B. By the Optionholder When No Longer Employed by Either the Company or a
     Subsidiary

          1.   Retirement.

          If the Optionholder ceases to be an employee of the Company or a
          Subsidiary as a result of retirement on or after normal retirement age
          (age 65 for U.S. employees), or on or after age 50 with 10 years of
          service to the Company or a subsidiary (early retirement), he or she
          may exercise this option with respect to all Common Shares then
          subject to this option which are vested at the date of such retirement
          in accordance with the schedule set forth in Section I.A above, for a
          period not to exceed the shorter of the remaining term of this option
          or five years after the retirement date.

          2.   Divestiture of a Facility.

          If the Optionholder ceases to be an employee as a result of the
          divestiture of a facility where the Optionholder is employed, he or
          she may exercise this option with respect to all Common Shares then
          subject to this option, both vested and unvested, for a period not to
          exceed 90 days after the effective date of the divestiture. If the
          divestiture results in the retirement of the Optionholder (as
          described in Subsection B.1), then he or she may exercise this option
          with respect to all Common Shares then subject to this option (both
          vested and unvested) for a period not to exceed the shorter of the
          remaining term of the option or five years after the retirement date.

          3.   Other Terminations.

          If the Optionholder ceases to be an employee for any reason other than
          those described in Subsections B.1. or B.2., he or she may exercise
          this option only for the number of Common Shares which are vested at
          the time he or she ceased to be an employee, and he or she may
          exercise this option only for a period not to exceed 90 days following
          the termination of employment.

          4.   Company Discretion.

          In the case of a termination of an officer of the Company that is
          subject to Subsections B.1 or B.3, the officer may exercise this
          option for such number of Common Shares that is greater than the
          number provided by those Subsections as the Committee may authorize by
          acceleration of vesting or extension of the exercise period (but not
          beyond the ten year term of this option).

          In the case of the termination of employment of an employee who is not
          an officer of the Company that is subject to Subsections B.1 or B.2,
          the employee may exercise this option for such number of Common Shares
          greater than provided by those Subsections as the Management
          Compensation Committee ("Management Committee") may authorize by
          acceleration of vesting or extension of the exercise period (but not
          beyond the ten year term of this option).

          The Optionholder should have no expectation that the Committee or the
          Management Committee will take any discretionary action contemplated
          by this Subsection B.4.


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2008 STOCK OPTION AGREEMENT

II.  TERMS OF EXERCISE OF OPTION (CONTINUED)

     B. By the Optionholder When No Longer Employed by Either the Company or a
     Subsidiary (continued)

          5.   Incentive Stock Options

          To receive favorable tax treatment afforded Incentive Stock Options,
          the Incentive Stock Option Shares must be exercised within 90 days of
          retirement or other termination of employment or within one year of
          termination of employment due to permanent and total disability.
          Incentive Stock Option Shares that are not exercised within those
          periods will, for tax purposes, be treated the same as Non-Qualified
          Stock Options.

     C. By the Optionholder After Change in Position

If the Optionholder should be assigned to any position with the Company or its
subsidiaries which is, in the sole and absolute discretion of the Committee, of
lesser responsibility than that which is held by the Optionholder upon the date
hereof, thereafter the Optionholder may exercise this option (during the term of
the option) only for the number of Common Shares for which the option was
exercisable at the time of such assignment or such greater number of Common
Shares as determined by the Committee in the exercise of its sole and absolute
discretion.

     D. In Case of the Death of the Optionholder

Upon the death of the Optionholder, this option shall be exercisable by the
Optionholder's estate, or by a person who has acquired the right to exercise
this option by bequest or inheritance, (i) during the period of 12 months after
the date of death (but no later than the end of the fixed term of the option)
for the number of Common Shares for which the option was exercisable upon the
date of death, and (ii) during such period of time, if any (but ending no later
than the end of the fixed term of the option), which the Committee may determine
in its sole and absolute discretion, for the number of Common Shares for which
the Optionholder could have exercised this option in accordance with its terms
prior to the expiration of that period of time if the Optionholder had lived.

     E. Term and Acceptance of Option

The 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, C or D 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 being notified of the granting
of this option, to accept such option in the manner specified online through the
Eaton Benefits Center at Fidelity or in any other manner designated by the
Company and communicated to the Optionholder.

II.  EXERCISING OPTION--RIGHTS AS A SHAREHOLDER

     A. Exercise and Payment

This option shall be exercised only at a time when the principal stock 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


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2008 STOCK OPTION AGREEMENT

II.  EXERCISING OPTION--RIGHTS AS A SHAREHOLDER (CONTINUED)

     A. Exercise and Payment (continued)

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.

     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.


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2008 STOCK OPTION AGREEMENT

V.   ADJUSTMENT UPON CHANGE OF SHARES

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 Common Shares, the number and
class of Common Shares subject to this option, the price per share payable upon
exercise of this option and the conditions on which this option shall become
exercisable, shall be equitably adjusted 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.  EFFECT ON EMPLOYMENT

The granting of this option shall not give the Optionholder any right to be
retained in the employ of the Company or any subsidiary, and shall not affect
the right of the Company to terminate the employment of the Optionholder at any
time with or without assigning a reason therefore to the same extent as the
Company might have done if this option had not been granted.

VII. COMPETITION BY OPTIONHOLDER

In the event that the Optionholder voluntarily leaves employment of the Company
or a subsidiary and within one (1) 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.

VIII. CHANGE OF CONTROL

     A. Exercise of Option

Notwithstanding anything in Section I.A to the contrary, effective upon a Change
of Control of the Company (as defined below), this option shall become fully
exercisable for 100% of the Common Shares subject to this option.

     B. Definition

For the purpose of this Agreement, a "Change of Control" shall mean:

          1.   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 1, 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


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2008 STOCK OPTION AGREEMENT

VIII. CHANGE OF CONTROL (CONTINUED)

     B.  Definition (continued)

          2.   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

          3.   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

          3.   corporation resulting from such Business 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

          4.   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 as a result of any transaction or series of transactions which the
Optionholder, or any entity in which the Optionholder is a partner, officer or
more than 50% owner initiates, if immediately following the transaction or
series of transactions that would otherwise constitute a Change of Control, the
Optionholder, either alone or together with other individuals who are executive
officers of the Company immediately prior thereto, beneficially owns, 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.


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2008 STOCK OPTION AGREEMENT

IX.  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 distributees of the Optionholder.

X.   2004 PLAN CONTROLS

The terms and conditions of the 2004 Plan, as amended from time to time in
accordance with the provisions of Section 12 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.

XI.  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.

XII. GOVERNING LAW

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


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