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                                                                  EXHIBIT 10 (E)

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

                  2005 NON-EMPLOYEE DIRECTOR FEE DEFERRAL PLAN
                               (2008 RESTATEMENT)

                                   I. PURPOSE

     The 2005 Non-Employee Director Fee Deferral Plan (the "Plan") enables each
Director of Eaton Corporation ("Eaton" or the "Company") who is not employed by
the Company to defer receipt of fees that may be payable to him or her for
future services as a member of the Board of Directors of the Company (the
"Board") or as Chair or as a member of any committee of the Board. The purpose
of the Plan is to help attract and retain highly qualified individuals to serve
as members of the Company's Board of Directors and as members of committees
thereof.

                                 II. ELIGIBILITY

     All members of the Board who are not employed by the Company are eligible
to participate in the Plan with respect to amounts earned as fees for services
as a member of the Board or as Chair or a member of any committee of the Board.

                                III. DEFINITIONS

     The terms used herein shall have the following meanings:

     Account - A bookkeeping account established by Eaton for a Participant to
which may be credited Deferred Fees and earnings or losses thereon.

     Agreement - A written agreement between Eaton and a Participant deferring
the receipt of Fees and indicating the term of the deferral.

     Beneficiary - The person or entity designated in writing executed and
delivered by the Participant to the Committee. If that person or entity is not
living or in existence at the time any unpaid balance of Deferred Fees becomes
due after the death of a Participant, the term "Beneficiary" shall mean the
Participant's estate or legal representative or any person, trust or
organization designated in such Participant's will.

     Board - The Board of Directors of Eaton.

     Change in Control - Shall be deemed to have occurred upon the occurrence of
(i) a change in the ownership of Eaton, (ii) a change in effective control of
Eaton, or (iii) a change in the ownership of a substantial portion of the assets
of Eaton. For purposes of this definition, except as provided below, a change in
the ownership of a Eaton occurs on the date that any one (1) person, or more
than one (1) person acting as a group (as defined in Treasury Regulation Section
1.409A-3(i)(5)(v)(B)), acquires ownership of shares of Eaton that, together with
shares held by such person or group, constitutes more than fifty (50) percent of
the total fair market value or total voting power of the shares of Eaton.
However, if any one (1) person, or more than one (1) person acting as a group,
is considered to own more than fifty (50) percent of the total fair

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market value or total voting power of the shares of Eaton, the acquisition of
additional shares by the same person or persons is not considered to cause a
change in the ownership of Eaton (or to cause a change in the effective control
of Eaton). An increase in the percentage of shares owned by any one (1) person,
or persons acting as a group, as a result of a transaction in which Eaton
acquires its shares in exchange for property will be treated as an acquisition
of shares for purposes hereof. This shall apply only when there is a transfer of
shares of Eaton (or issuance of shares of Eaton) and shares in Eaton remain
outstanding after the transaction. A change in the effective control of Eaton
occurs only on either of the following dates: (1) the date any one (1) person,
or more than one (1) person acting as a group, acquires (or has acquired during
the 12-month period ending on the date of the most recent acquisition by such
person or persons) ownership of shares of Eaton possessing thirty (30) percent
or more of the total voting power of the shares of Eaton; or (2) the date a
majority of members of the Board is replaced during any 12-month period by
directors whose appointment or election is not endorsed by a majority of the
individuals who had comprised the Board before the date of the appointment or
election. A change in the ownership of a substantial portion of Eaton assets
occurs on the date any one (1) person, or more than one (1) person acting as a
group, acquired (or has acquired during the 12-month period ending on the date
of the most recent acquisition by such person or persons) assets from Eaton that
have a total gross fair market value equal to or more than forty (40) percent of
the total gross fair market value of all of the assets of Eaton immediately
before such acquisition or acquisitions. For this purpose, gross fair market
value means the value of the assets of Eaton, or the value of the assets being
disposed of, determined without regard to any liabilities associated with such
assets. Application of this definition shall be further subject to rules set
forth in Treasury Regulation Section 1.409A-3(i) relating to persons acting as a
group, transfers to related persons, and certain back-to-back arrangements.

     Code - Internal Revenue Code of 1986, as it may be amended from time to
time.

     Committee - The Governance Committee of the Board or such other committee
as the Board may from time to time designate for purposes of administration of
the Plan.

     Common Share Retirement Deferred Fees - Retirement Deferred Fees that are
converted into share units in accordance with Article VI.

     Deferred Fees - That portion of Fees deferred pursuant to the Plan.

     Eaton - Eaton Corporation, an Ohio corporation, and its corporate
successors.

     Eaton Common Shares - The common shares of Eaton.

     Fees - Any amount payable to a Participant for services as a member of the
Board or as Chair or a member of any committee of the Board.

     Interest Rate Retirement Deferred Fees - Retirement Deferred Fees that are
credited with Treasury Note Based Interest in accordance with Article VI.


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     Participant - A member of the Board who is not an employee of Eaton and who
elects to defer receipt of Fees under the Plan.

     Periodic Installments - Annual payments, over a period not to exceed 15
years, as elected by the Participant in accordance with the terms of the Plan,
which are substantially equal in amount, or, in the case of Common Share
Retirement Deferred Fees, substantially equal in the number of share units being
valued and paid or the number of Eaton Common Shares being distributed, except
that earnings attributable to periods following Retirement or Termination of
Service as a Director shall be included with each payment.

     Plan - This 2005 Non-Employee Director Fee Deferral Plan pursuant to which
Fees may be deferred for later payment, adopted December 8, 2004 and effective
January 1, 2005, as set forth herein.

     Retirement - The Termination of Service as a Director of a Participant who
has five (5) years of service as a member of the Board.

     Retirement Deferred Fees - That portion of Fees deferred for payment at
Retirement or in Periodic Installments commencing at Retirement, as elected by
the Participant in accordance with Article IV.

     Short-Term Deferred Fees - That portion of Fees deferred for payment as
elected by the Participant in accordance with Article V.

     Termination and Change in Control - The Termination of Service as a
Director of a Participant for any reason whatsoever prior to a Change in Control
if there is a subsequent Change in Control or the Termination of Service as a
Director of a Participant for any reason whatsoever during the two (2)-year
period immediately following a Change in Control.

     Termination of Service as a Director - The time when a Participant shall no
longer be a member of the Board, whether by reason of retirement, death,
voluntary resignation, divestiture, removal (with or without cause), or
disability.

     Treasury Bill Interest Equivalent - A rate of interest equal to the
quarterly average yield of 13-week U.S. Government Treasury Bills.

     Treasury Note Based Interest - A rate of interest equal to the average
yield of 10-year U.S. Government Treasury Notes plus 300 basis points.


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                              IV. ELECTION TO DEFER

     Section 4.01 Deferral Options. For each calendar year commencing with 2005,
a Participant may elect to defer the receipt of all or part of his or her Fees
as Short-Term Deferred Fees or Retirement Deferred Fees. Once a Participant has
made an effective election, he or she may not thereafter change that election or
change any allocation between Short-Term Deferred Fees or Retirement Deferred
Fees.

     Section 4.02 Amount Deferred. Not less than ten (10) percent of Fees
payable for any calendar year may be deferred under the Plan. If a Participant
elects to allocate a portion of Fees to both Short-Term Deferred Fees and
Retirement Deferred Fees, the amount allocated to each shall be not less than
ten (10) percent of the Fees payable for any calendar year.

     Section 4.03 Election Deadline. To be in effect for a calendar year, a
Participant's election must be completed, signed and filed with the Committee on
or before December 31 of the immediately preceding calendar year, except that in
the case of the first year in which a Participant becomes eligible to
participate in the Plan, such election may be made with respect to services
performed subsequent to the election within thirty (30) days after the date the
Participant becomes eligible to participate in the Plan.

     Section 4.04 Additional Terms. At the time the Participant elects to defer
all or part of his or her Fees for a calendar year as Short-Term Deferred
Compensation, the Participant shall also specify the year in which payment of
such amount shall commence (which shall not be prior to the second year
following the calendar year for which the Fees were deferred) and the method of
payment selected from those permitted under Article V, provided that payment
shall commence on or about March 15 of the specified year. At the time the
Participant elects to defer all or part of his or her Fees for a calendar year
as Retirement Deferred Fees, the Participant shall also specify that payment of
such amounts be made in a lump sum or in Periodic Installments, including the
term of such Periodic Installments, upon Retirement, provided that the date of
payment or commencement shall be on or about March 15 of the year following the
date of such Retirement, subject to the provisions of Section 6.06.

                           V. SHORT-TERM DEFERRED FEES

     If elected by a Participant, payment of the amount of Fees allocated to
Short-Term Deferred Fees will be deferred. Short-Term Deferred Fees shall be
credited to the Participant on the date such amount would have been distributed
to him or her if there had been no valid deferral election by establishing an
Account in the Participant's name. Treasury Bill Interest Equivalents shall be
credited quarterly to the Participant's Short-Term Deferred Fees Account until
such compensation is paid to the Participant. Short-Term Deferred Fees, together
with credited Treasury Bill Interest Equivalents, shall be paid to the
Participant in a lump sum or in not more than five annual installments, as
elected by the Participant. Upon the death of a Participant prior to payment of
such amounts, payment shall be made to his or her Beneficiary in a lump sum
within ninety (90) days of the date of such death.


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                          VI. RETIREMENT DEFERRED FEES

     Section 6.01 Duration. If elected by a Participant, payment of the amount
of Fees allocated to Retirement Deferred Fees will be deferred to Retirement.
Retirement Deferred Fees shall be credited to the Participant on the date such
amount would have been distributed to him or her if there had been no valid
deferral election by establishing an Account in the Participant's name.

     Section 6.02 Common Share Retirement Deferred Fees. Between fifty (50)
percent and one hundred (100) percent, as elected by the Participant, of the
amount allocated to Retirement Deferred Fees shall be credited to Common Share
Retirement Deferred Fees, and the balance shall be credited to Interest Rate
Retirement Deferred Fees.

     Common Share Retirement Deferred Fees shall be converted into a number of
share units based upon the average of the mean prices for Eaton Common Shares
for the twenty trading days of the New York Stock Exchange during which Eaton
Common Shares were traded immediately preceding the end of the calendar quarter
in which the Fees to be deferred were earned. For purposes of the Plan, "mean
price" shall be the mean of the highest and lowest selling prices for Eaton
Common Shares quoted on the New York Stock Exchange on the relevant trading day.
On each Eaton Common Share dividend payment date, dividend equivalents equal to
the actual Eaton Common Share dividends paid shall be credited to the share
units in the Participant's Account, and shall in turn be converted into share
units utilizing the mean price for Eaton Common Shares on the dividend payment
date.

     Upon payment of Common Share Retirement Deferred Fees in Eaton Common
Shares, the share units standing to the Participant's credit shall be converted
to the same number of Eaton Common Shares for distribution to the Participant.

     Section 6.03 Interest Rate Retirement Deferred Fees. Retirement Deferred
Fees not credited to Common Share Retirement Deferred Fees shall be credited to
Interest Rate Retirement Deferred Fees. Interest Rate Retirement Deferred Fees
shall be credited to the Interest Rate Retirement Deferred Fees Account, which
shall earn Treasury Note Based Interest, compounded quarterly, until paid.

     Section 6.04 Periodic Installments. In the event of the death of a
Participant who has commenced receiving Periodic Installments, the entire
remaining amount of his or her Retirement Deferred Fees shall be distributed to
the Participant's Beneficiary. Such distribution shall be made in a lump sum
within ninety (90) days of the date of such death.

     Section 6.05 Termination of Service as a Director. The Retirement Deferred
Fees Account of a Participant whose Termination of Service as a Director occurs
for reasons other than Retirement shall be distributed in a lump sum within
sixty (60) days following the Participant's Termination of Service as a Director
for reasons other than Retirement; subject, however, to the limitations set
forth in Section 6.06.


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     Earnings shall be credited on undistributed Retirement Deferred Fees
Accounts, and annual installment payments shall be adjusted to reflect such
additional earnings, based on the remaining number of installment payments to be
distributed and based on Treasury Note Based Interest, computed quarterly.

     Section 6.06 Limitations on Distribution. Notwithstanding any provision of
the Plan to the contrary, Fees deferred under the Plan shall not be distributed
earlier than the first to occur of the following:

     (a)  separation from service as determined by the Secretary of the
          Treasury;

     (b)  the date the Participant becomes disabled (within the meaning of
          Section 409A(a)(2)(C) of the Code);

     (c)  death of the Participant;

     (d)  a specified time (or pursuant to a fixed schedule) specified under the
          Plan at the date of the deferral of such Fees;

     (e)  to the extent provided by the Secretary of the Treasury, a change in
          the ownership or effective control of Eaton, or in the ownership of a
          substantial portion of the assets of Eaton; or

     (f)  the occurrence of an unforeseeable emergency as defined in Section
          409A(a)(2)(B)(ii) of the Code.

                         VII. AMENDMENT AND TERMINATION

     Section 7.01 Right to Amend or Terminate. Eaton fully expects to continue
the Plan but it reserves the right, except as otherwise provided herein, at any
time by action of the Committee, to modify, amend or terminate the Plan for any
reason, including adverse changes in the federal tax laws. Notwithstanding the
foregoing, upon the occurrence of a Change in Control, no amendment,
modification or termination of the Plan shall, without the consent of any
particular Participant, alter or impair any rights or obligations under the Plan
with respect to that Participant.


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     Section 7.02 American Jobs Creation Act of 2004 and Transition Rules. The
Plan is intended to provide for the deferral of compensation in accordance with
the provisions of Section 409A of the Code and Treasury Regulations and
published guidance issued pursuant thereto. Accordingly, the Plan shall be
construed in a manner consistent with those provisions and may at any time be
amended in the manner and to the extent determined necessary or desirable by
Eaton to reflect or otherwise facilitate compliance with such provisions with
respect to amounts deferred on and after January 1, 2005, including as
contemplated by Section 885(f) of the American Jobs Creation Act of 2004.
Moreover, after January 1, 2007, and on or before December 31, 2007, and to the
extent permitted by the Committee in accordance with terms set forth on an
election form provided by the Committee, a Participant may make a change in a
payment election as described in IRS Notice 2006-79, provided that with respect
to an election to change a time and form of payment made after January 1, 2007
and on or before December 31, 2007, the election may apply only to amounts that
would not otherwise be payable in 2007 and may not cause an amount to be paid in
2007 that would not otherwise be payable in 2007.

     Section 7.03 Plan Termination in Connection with Change in Control. The
Board shall have the authority, in its sole discretion, to terminate the Plan
and pay each Participant's entire Account to the Participant or, if applicable,
his or her Beneficiary, pursuant to an irrevocable action taken by the Board
within the thirty (30) days preceding a Change in Control. This Section 7.03
will only apply to a payment under the Plan if all agreements, methods,
programs, and other arrangements sponsored by the "service recipient" (as
defined under Treasury Regulation Section 1.409A-1(g)) immediately after the
time of the Change in Control event with respect to which deferrals of
compensation are treated as having been deferred under a single plan within the
meaning of Treasury Regulation Section 1.409A-1(c) (2) are terminated and
liquidated with respect to each Participant who experienced the Change in
Control event, so that under the terms of the termination and liquidation all
such Participants are required to receive all amounts of compensation deferred
under the terminated agreements, methods, programs, and other arrangements
within 12 months of the date the service recipient irrevocably takes all
necessary action to terminate and liquidate the agreements, methods, programs
and other arrangements. Solely for purposes of this Section 7.03, where the
Change in Control event results from an asset purchase transaction, the
applicable service recipient with the discretion to liquidate and terminate the
agreements, methods, programs, and other arrangements is the service recipient
that is primarily liable immediately after the transaction for the payment of
the deferred compensation.

                              VIII. ADMINISTRATION

     The Plan shall be administered by the Committee. The Committee shall
interpret the provisions of the Plan where necessary and may adopt procedures
for the administration of the Plan which are consistent with the provisions of
the Plan and any rules adopted by the Committee.

     Each Participant or Beneficiary must claim any benefit to which such
Participant or Beneficiary may be entitled under the Plan by a written
notification to the Committee. If a claim is denied, it must be denied within a
reasonable period of time in a written notice stating the


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specific reasons for the denial. The claimant may have a review of the denial by
the Committee by filing a written notice with the Committee within sixty (60)
days after the notice of the denial of his or her claim. The written decision by
the Committee with respect to the review must be given within one hundred and
twenty (120) days after receipt of the written request.

     The determinations of the Committee shall be final and conclusive.

                      IX. TERMINATION AND CHANGE IN CONTROL

     Section 9.01 Termination and Change in Control. Notwithstanding anything
herein to the contrary other than Section 6.06, upon the occurrence of a
Termination and Change in Control, the Participants shall be entitled to receive
from the Company the payments as provided in Section 9.02.

     Section 9.02 Payment Requirement. No later than the date a Participant
makes an initial election under the Plan, the Participant shall select one of
the payment alternatives set forth below with respect to the Participant's
Account. The payment alternatives are as follows:

     (a)  a Lump Sum Payment within thirty (30) days following the Termination
          and Change in Control;

     (b)  payment in semiannual or annual payments, over a period not to exceed
          15 years, as selected by the Participant at the time provided in the
          first paragraph of this Section 9.02, commencing within thirty (30)
          days following the Termination and Change in Control which are
          substantially equal in amount or in the number of share units being
          valued and paid or in the number of Eaton Common Shares being
          distributed, except that earnings attributable to periods following
          Termination and Change in Control shall be included with each payment.

Payment of such amounts shall be made to each such Participant in accordance
with his or her selected alternative as provided in Section 9.02.

                                X. MISCELLANEOUS

     Section 10.01 Adjustments. In the event of a reorganization, merger,
consolidation, reclassification, recapitalization, combination or exchange of
shares, stock split, stock dividend, rights offering or similar event affecting
shares of the Company, the Committee shall equitably adjust the number of share
units previously allocated to the Accounts of Participants as Common Share
Retirement Deferred Fees.

     Section 10.02 Designation of Beneficiaries. Each Participant shall have the
right, by written instruction to the Committee, on a form supplied by the
Committee, to designate one or more primary and contingent Beneficiaries (and
the proportion to be paid to each, if more than one is designated) to receive
his or her Account balance upon his or her death. Any such designation shall be
revocable by the Participant.


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     Section 10.03 Committee Actions. All actions of the Committee hereunder may
be taken with or without a meeting, as permitted by law and by the Company's
Amended Regulations.

     Section 10.04 Assignment. No benefit under the Plan shall be subject to
anticipation, alienation, sale, transfer or encumbrance, and any attempt to do
so shall be void. No benefit hereunder shall in any manner be liable for the
debts, contracts, or liabilities of the person entitled to such benefits. During
a Participant's lifetime, rights hereunder are exercisable only by the
Participant or the Participant's guardian or legal representative.
Notwithstanding the foregoing, nothing in this Section shall prohibit the
transfer of any benefit by will or by the laws of descent and distribution or
(if permitted by applicable regulations under Section 16(b) of the Securities
Exchange Act) pursuant to a qualified domestic relations order, as defined under
the Code and the Employee Retirement Income Security Act of 1974, as amended.

     Section 10.05 No Funding Required. The obligations of Eaton to make
payments shall be a liability of Eaton to the Participant. Eaton shall not be
required to maintain any separate fund or reserve, or purchase or acquire life
insurance on a Participant's life, or otherwise segregate assets to assure that
any particular asset of Eaton is available to make such payments by reason of
Eaton's obligations hereunder. Nothing contained in the Plan shall be construed
as creating a trust or other fiduciary relationship between Eaton and a
Participant or any other person.

     Section 10.06 No Contract for Services. The Plan shall not be deemed to
constitute a contract for services between Eaton and a Participant. Neither the
execution of the Plan nor any action taken by Eaton, the Board or the Committee
pursuant to the Plan shall confer on a Participant any legal right to be
continued as a member of the Board or in any other capacity with Eaton
whatsoever.

     Section 10.07 Governing Law. The Plan shall be construed and governed in
accordance with the law of the State of Ohio to the extent not covered by
Federal law.

     Section 10.08 Effective Date. The Plan was adopted by the Board on December
8, 2004, effective January 1, 2005, and is amended and restated effective
January 1, 2008, as set forth herein.

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                              APPROVAL AND ADOPTION

The 2005 Non-Employee Director Fee Deferral Plan, as amended and restated in the
form attached hereto, is hereby approved and adopted.


-------------------------------------       Date: October 27, 2007
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