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                                Eaton Corporation
                         2003 Annual Report on Form 10-K
                                   Item 15(c)
                                  Exhibit 10(u)

                                EATON CORPORATION
                        VEHICLE ALLOWANCE PROGRAM POLICY
                               TIER I and TIER II

Program Overview

Eaton Corporation's Vehicle Allowance Program (Program) is designed to provide
eligible senior executives with a taxable monthly allowance to assist with the
purchase or lease of a vehicle. However, participants, in their sole discretion,
may utilize the allowance for any pur-pose they deem appropriate. No
confirmation or documentation of any kind is required with respect to the
purchase or lease of a vehicle. The Program is effective January 1, 2003 and is
subject to termination or amendment at any time at the sole discretion of Eaton
Corporation.

Program Administration

The Vehicle Allowance Program will be administered by the Fleet Administration
Department at World Headquarters.

Program Structure

The Program is comprised of Tiers I, II, and III. A specified monthly allowance,
established by the Company and subject to change from time to time, shall be
provided to participants according to their designated tier.

Eligibility

The Vice President - Human Resources and the Chief Executive Officer will
determine participant eligibility and will also determine when such eligibility
ceases.

Calculation of Allowance

The amount of the monthly allowance generally will be equal to: (1) an amount
equivalent to the cost of purchasing a vehicle once every 36 months (adjusted by
tier); (2) average interest for a 36-month loan on that amount; and (3) a fixed
monthly maintenance allowance and will vary depending on the participant's
designated tier. The actual amount of the monthly allowances will be calculated
by the Vice President of Compensation & Benefits and approved by the Chief
Executive Officer for non-executive officer participants and by the Compensation
and Organization Committee for executive officer participants.

The Vice President of Compensation & Benefits will periodically review the
allowance to determine whether it is market competitive and is consistent with
similar programs offered by other premier diversified companies. If vehicle
M.S.R.P. prices have increased sufficiently in each tier to warrant an increase
in the allowance amounts, such adjustments may be recommended. It is anticipated
that adjustments shall not be made more frequently than once every three years.

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In the event that it is determined that there will be an adjustment to the
amounts of the allowances, then it is anticipated that it will be implemented at
the same time for each of the participants.

The monthly allowance is comprehensive. Therefore, participants shall assume all
costs related to the purchase or lease of a vehicle, including acquisition cost,
sales tax, luxury tax, interest charges, aftermarket-installed equipment,
maintenance and repair expenses, car washes, gasoline, and all other incidental
costs. The Company will, however, reimburse participating executives for the
cost of annual vehicle titling and registration in excess of a certain limit.

Since participants will be provided with an allowance to cover the above costs,
no other vehicle-related charges, with the exception of business-related mileage
and tolls, and vehicle titling and registration fees in excess of a certain
limit, should be submitted on an expense report for reimbursement by the
Company.

Mileage for business use of a personal vehicle, tolls, and annual titling and
registration fees in excess of a certain limit should be submitted on an expense
report and shall be reimbursed based on current Company policy for reimbursement
of business use of a personal vehicle. If the Company reimburses a participant
for annual license and titling fees, the participant must provide the Program
Administrator with documentation of the expense because it qualifies for imputed
income tax.

Transition and Enrollment Procedures

Tier I and Tier II participants in the former Executive Car Purchase Program
will be transitioned to the Vehicle Allowance Program in the month following the
final imputed charge of their current 36-month test car loan. If participants
elect to retain ownership of vehicles under the previous Program, the vehicles
will immediately be transferred from the previous Program to the Executive
Vehicle Program. Insurance coverage under the latter will continue as usual.
Vehicles under the previous Program will be eligible for maintenance
reimbursement through the last day of the month prior to the month in which the
monthly allowance begins.

Tier I and Tier II participants in the Company-Provided Leased Vehicle Program
will be transitioned to the Vehicle Allowance Program in the month following the
month in which their current company cars are disposed of, either through
purchase, resale, or reassignment. Such disposition is indicated through
completion of a "Turn-In Vehicle Final Disposition" form. If participants elect
to purchase vehicles and want to enroll them in the Executive Vehicle Program
for insurance coverage, a "Procedure for Including a Personally Owned/Leased
Vehicle on the Executive Vehicle Program" form must be completed and forwarded
to the Program Administrator (see Exhibit B of the Executive Vehicle Program
Guidelines).

The World Headquarters Compensation Department shall inform the Fleet
Administration Department when a participant becomes eligible; his or her
designated tier; and the amount of his or her monthly vehicle allowance.

Termination

The World Headquarters Compensation Department shall inform the Fleet
Administration Department if a participant's eligibility ceases and will provide
the date upon which the monthly allowance should be discontinued.

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Retirement

Participants will continue to receive the monthly allowance as long as they are
actively employed by Eaton Corporation. As is the case with other Terminations,
upon retirement, the monthly allowance shall cease. However, participants may
continue to replace executive vehicles, at their discretion, subject to the
following restrictions:

- The primary user of the replacement vehicles shall be the participant or his
or her spouse;

- The total number of replacement vehicles assigned to both the participant and
his or her spouse shall not exceed three during the life of both the participant
and his or her spouse, and two during the life of the surviving spouse;

- Eligible replacement vehicles include any vehicle (i.e., any automobile,
light-duty truck, and van) available for sale in North America; and

- Participants will have the right to retain all executive vehicles under the
Executive Vehicle Program on the date of termination of employment for as long
as they choose.

Fees; Insurance Coverage

Any vehicle purchased or leased by a participating executive will be eligible to
participate in the Company's Executive Vehicle Program insurance arrangements
and shall be subject to the program fees and insurance coverage limitations as
they may change from time to time (see Sections VII.G. and VIII. of the
Executive Vehicle Program Guidelines for details).

Responsibility

Responsibility for periodically reviewing this policy for potential changes from
time to time resides with the Vice President - Compensation & Benefits. The
Manager, Corporate Travel & Fleet will be responsible for implementing the
provisions of this policy and for providing participants with any necessary
support and explanations.