Document:

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                                                                  EXHIBIT 10 (S)

                                EATON CORPORATION

                         2007 ANNUAL REPORT ON FORM 10-K

                                   ITEM 15 (B)

                                EATON CORPORATION

                Plan for the Deferred Payment of Directors' Fees
   (originally adopted in 1985 and amended effective as of September 24, 1996,
    January 28, 1998, January 23, 2002, February 24, 2004, December 8, 2004,
               and in certain respects effective January 1, 2005)

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                                    ARTICLE I

                              ESTABLISHMENT OF PLAN

1.01 "Establishment of Plan and Effective Date": Eaton Corporation (the
     "Company") has established this Plan for the Deferred Payment of Directors'
     Fees (the "Plan") effective as of October 23, 1985. The Plan was amended
     and restated as of September 24, 1996, January 28, 1998, January 23, 2002,
     and February 24, 2004, and was further amended on December 8, 2004. The
     terms of the Plan, as amended through February 24, 2004 (the "Prior Terms")
     shall continue in effect with respect to and shall govern all benefits
     earned and vested under the Plan as of December 31, 2004. The terms of the
     Plan (not including the Prior Terms, which are not modified hereby) are
     hereby amended and restated in their entirety as set forth in this document
     effective January 1, 2005, to reflect prospective amendments made after
     February 24, 2004, and to govern all deferred compensation that was not
     earned and vested under the Plan as of December 31, 2004. Notwithstanding
     the foregoing, however, for the period prior to January 1, 2009, the Plan
     shall operate based upon Notice 2005-1, additional notices published by the
     Treasury Department and the Internal Revenue Service providing transition
     guidance, and a good faith, reasonable interpretation of Section 409A of
     the Internal Revenue Code and its purpose.

1.02 "Statement of Purpose": It is the purpose of the Plan to attract and retain
     qualified persons to serve as Directors of the Company by enabling such
     Directors to defer some or all fees which may be payable to them for future
     services as a member o the Board of Directors of the Company or as Chair or
     a member of any committee of the Board.

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                                   ARTICLE II

                                   DEFINITIONS

     When used herein the following terms shall have the meanings indicated
unless a different meaning is clearly required by the context:

2.01 "Board": The Board of Directors of Eaton Corporation.

2.02 Reserved.

2.03 "Committee": The Governance Committee of the Board, which shall have full
     power and authority to administer and interpret, in its sole discretion,
     the provisions of the Plan.

2.04 "Company": Eaton Corporation and its corporate successors.

2.05 "Compensation": The total annual fees paid to a Participant for services as
     a Director of the Company including the annual retainer fee, meeting
     attendance fees, additional annual retainer fees paid to Board Committee
     Chairs or members and any other fees paid by the Company for services as a
     Director of the Company.

2.06 Reserved.

2.07 "Deferral Account Balance": At any particular date, the total of all
     Compensation deferred under the Plan and earnings credited thereto less the
     amount of any deferred Compensation previously paid to the Participant;
     provided that separate records shall be maintained within the Deferred
     Account Balance to reflect Compensation deferred under the Plan for periods
     ending on and before December 31, 2004 and earnings credited thereto and
     Compensation deferred under the Plan for periods ending on and after
     January 1, 2005 and earnings credited thereto.

2.08 "Deferred Compensation Agreement": The written agreement between the
     Company and a Participant.

2.09 "Designated Beneficiary": One or more beneficiaries, as designated by a
     Participant in a written form filed with the Secretary of the Company and
     approved by the Committee, to whom payments otherwise due to or for the
     benefit of the Participant hereunder shall be made in the event of the
     Participant's death prior to the commencement of benefit payments hereunder
     or the complete payment of such benefit. In the event no such written
     designation is made by a Participant or if such Designated Beneficiary
     shall not be in existence at the time of the Participant's death or if such
     Designated Beneficiary predeceases the Participant, the Participant shall
     be deemed to have designated his or her estate as the Designated
     Beneficiary.

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2.10 Reserved.

2.11 Reserved.

2.12 "Lump Sum Payment": The lump sum amount which is equal to the then present
     value of the payment, in fifteen (15) annual payments commencing on the
     date of the lump sum payment, of the Participant's Deferred Account Balance
     plus a rate of return thereon equal to the rate or rates of interest
     specified in the Participant's Deferred Compensation Agreement throughout
     that fifteen year period, discounted with a rate of interest equal to
     "Moody's Corporate Bond Yield Average - Monthly (Average Corporates)" most
     recently published by Moody's Investor Services, Inc., or any successor
     thereto, at the time of the calculation.

2.13 Reserved.

2.14 "Normal Plan Participation Termination Date": The date of the Annual
     Meeting of the Company's shareholders immediately following the date a
     Participant attains the age of sixty-eight (68).

2.15 "Participant": A Director who is or hereafter becomes eligible to
     participate in the Plan and does participate by electing, in the manner
     specified herein, to defer Compensation pursuant to the Plan.

2.16 "Plan": This Plan for the Deferred Payment of Directors' Fees as contained
     herein which was originally effective as of October 23, 1985, and which has
     been amended from time to time thereafter.

2.17 "Regular Annuity Starting Date": The April 1st of the second calendar year
     following the year in which the Participant attains the age of sixty-eight
     (68).

2.18 Reserved.

2.19 Reserved.

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                                  ARTICLE III

                          ELIGIBILITY AND PARTICIPATION

3.01 "Eligibility": Any Director of the Company who is separately compensated
     for his or her services on the Board and who is first elected to the Board
     prior to 1996 shall be eligible to participate under the Plan. Directors
     who serve as either an officer or an employee of the Company, or who are
     first elected after 1995, shall not be eligible to participate under the
     Plan.

3.02 "Manner of Election":

     (a)  Any person wishing to commence participation in the Plan must file a
          signed copy of the Deferred Compensation Agreement with the Secretary
          of the Company at Eaton Center, Cleveland, Ohio 44114. If the
          Committee accepts the election, an eligible Director shall become a
          Participant in the Plan as of December 1, 1985 for an election filed
          in 1985 and as of the January 1st immediately following the date an
          election is filed in any year after 1985 if such election is filed
          prior to December 1 of such year. Upon the request of a Participant,
          for periods after 2004 the Committee may in its sole discretion
          approve the termination of future deferrals by such Participant
          effective as of the January 1st immediately following such request.

     (b)  The Committee shall be vested with the authority to deny Participants
          the opportunity, on a prospective basis beginning as of any January
          1st, to defer future Compensation pursuant to the Plan for any reason
          if such denial is applied equitably to all Participants; provided,
          however, that the foregoing authority does not apply to any
          Participant's right to continue to defer the amount constituting his
          or her then existing Deferred Account Balance and any past and future
          earnings thereon, which amounts shall continue to be deferred and/or
          paid in accordance with the other terms and conditions of this Plan.

     (c)  The Deferred Compensation Agreement electing deferral of Compensation
          for a particular calendar year must be made as described in paragraph
          (a) not later than December 31 of the preceding calendar year.
          Beginning with Compensation earned on and after January 1, 2005, the
          Deferred Compensation Agreement shall also contain the Participant's
          election with respect to the form of payment of such amounts.

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3.03 "Limits on Deferred Compensation":

     (a)  Subject to required minimum and maximum annual limitations on the
          amount of Compensation which may be deferred equal to $5,000 and
          $30,000, respectively, a Participant may defer all or any portion of
          his or her future Compensation which is earned during a period of at
          least four (4) years (16 full calendar quarters) or for the period to
          his or her Normal Plan Participation Termination Date, if earlier, or
          for any period of time longer than four years which ends prior to his
          or her Normal Plan Participation Termination Date. Nothing contained
          in the Plan shall restrict any Director of the Company from
          participating in or deferring compensation pursuant to any other
          Company plan for the deferral of Directors' fees.

     (b)  Reserved.

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                                   ARTICLE IV

                                    BENEFITS

4.01 "Normal Plan Participation Termination Benefit":

     (a)  The Normal Plan Participation Termination Benefit is a level fifteen
          (15) year annuity payable to a Participant after his or her Normal
          Plan Participation Termination Date in fifteen (15) equal annual
          installments commencing on the Participant's Regular Annuity Starting
          Date and continuing on the anniversary of that date each year
          thereafter until fifteen (15) annual payments have been made; and

     (b)  The Normal Plan Participation Termination Benefit shall be calculated
          by reference to the Participant's total Compensation deferred under
          the Plan and the rate or rates of interest specified in his or her
          Deferred Compensation Agreement; provided, however, that at the
          Participant's election, the Normal Plan Participation Termination
          Benefit shall be paid in a Lump Sum Payment on the Participant's
          Regular Annuity Starting Date.

4.02 Reserved.

4.03 Reserved.

4.04 "Limitations on Distribution": Notwithstanding any provision of the Plan to
     the contrary, Compensation 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 Internal Revenue Code of 1986, as amended
          (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 Compensation;

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

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

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                                   ARTICLE V

                                SURVIVOR BENEFIT

5.01 "Survivor Benefit": Upon the occurrence of any of the following events, the
     Company shall pay to a Participant's Designated Beneficiary a benefit as
     defined in this Article V (herein referred to as a "Survivor Benefit"):

     (a)  The death of a Participant while serving as a Director of the Company;
          or

     (b)  The death of a Participant after becoming entitled to a Normal Plan
          Participation Termination Benefit but prior to commencement of payment
          of such benefit.

5.02 "Amount of Survivor Benefit": The Survivor Benefit shall be an amount equal
     to the Participant's Deferred Account Balance at the date of his or her
     death together with interest thereon, compounded annually, from the date
     Compensation was deferred until the date it is completely paid by the
     Company (a "Deferral Period") at a rate equal to the prime rate set forth
     in The Wall Street Journal (or any successor thereto) (hereinafter referred
     to as the "Prime Rate") from time to time during the Deferral Period. The
     Survivor Benefit shall be paid in a lump sum within ninety (90) days of the
     date of death.

5.03 "Survivor Benefit After Commencement of Benefit Payments to the
     Participant": In the event a Participant who has begun to receive benefit
     installment payments under the Plan dies prior to full payment of his or
     her Normal Plan Participation Termination Benefit, all remaining payments
     due hereunder shall be made to such Participant's Designated Beneficiary in
     a lump sum within ninety (90) days of the date of death.

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                                   ARTICLE VI

                        CERTAIN PAYMENTS TO PARTICIPANTS

6.01 Reserved.

6.02 Reserved.

6.03 Reserved.

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                                  ARTICLE VII

                            AMENDMENT AND TERMINATION

7.01 "Right to Amend and Terminate the Plan": The Company fully expects to
     continue the Plan but it reserves the right, at any time or form time to
     time, by action of the Committee, to modify or amend the Plan, in whole or
     in part. In addition, the Company reserves the right by action of the
     Committee to terminate the Plan, in whole or in part, at any time and for
     any reason, including, but not limited to, adverse changes in the federal
     tax laws. Notwithstanding anything herein to the contrary, no amendment,
     modification or termination of the Plan shall, without the consent of the
     Participant, alter this provision or impair any of the Participant's rights
     under the Plan with respect to benefits accrued prior to such amendment,
     modification or termination.

7.02 Reserved.

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 (within the
     meaning of Section 409A of the Code and the regulations thereunder) of
     Eaton. 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 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 that 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 twelve (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.

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                                  ARTICLE VIII

                                  MISCELLANEOUS

8.01 "Non-Alienation of Benefits": Subject to any federal stature to the
     contrary, no right or benefit under the Plan shall be subject to
     anticipation, alienation, sale, assignment, pledge, encumbrance, or chare,
     and any attempt to anticipate, alienate, sell, assign, pledge, encumber, or
     charge any right or benefit under the Plan shall be void. No right or
     benefit hereunder shall in any manner be liable for or subject to the
     debts, contracts, liabilities, or torts of the person entitled to such
     benefits.

8.02 "No Trust Created": The obligations of the Company to make payments
     hereunder shall constitute a liability of the Company to the Participant.
     Such payments shall be made from the general funds of the Company, and the
     Company shall not be required to establish or maintain any special or
     separate fund, or purchase or acquire life insurance on a Participant's
     life, or otherwise to segregate assets to assure that such payments shall
     be made, and neither a Participant nor Designated Beneficiary shall have
     any interest in any particular asset of the Company by reason of its
     obligations hereunder. Nothing contained in the Plan shall create or be
     construed as creating a trust of any kind or any other fiduciary
     relationship between the Company and a Participant or any other person.
     8.03 "No Employment Agreement": The Plan shall not be deemed to constitute
     a contract of employment between the Company and a Participant. Neither
     shall the execution of the Plan nor any action taken by the Company
     pursuant to the Plan be held or construed to confer on a Participant any
     legal right to be continued as Director of the Company, in an executive
     position or in any other capacity with the Company whatsoever; nor shall
     any provision herein restrict the right of any Participant to resign as a
     Director.

8.04 "Binding Effect": Obligations incurred by the Company pursuant to the Plan
     shall be binding upon and inure to the benefit of the Company, its
     successors and assigns, and the Participant or his or her Designated
     Beneficiary.

8.05 "Claims for Benefits": Each Participant or Designated Beneficiary must
     claim any benefit to which he or she may be entitled under this Plan by
     filing a written notification with the Secretary of the Company. The
     Committee shall make all determinations with respect to such claims for
     benefits. If a claim is denied by the Committee, it must be denied within a
     reasonable period of time in a written notice stating the following:

     (a)  The specific reason for the denial.

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     (b)  The specific reference to the Plan provisions on which the denial is
          based.

     (c)  A description of additional information necessary for the claimant to
          present his or her claim, if any, and an explanation of why such
          information is necessary.

     (d)  An explanation of the Plan's claims review procedure.

     The claimant may have a review of the denial by the Committee by filing a
     written notice with the Secretary of the Company 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.

8.06 "Entire Plan": This document and any amendments hereto contain all the
     terms and provisions of the Plan with respect to benefits that were not
     earned and vested under the Plan on December 31, 2004.

8.07 "American Jobs Creation Act of 2004": 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 for Compensation deferred after December 31, 2004.
     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 the Company 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.

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                                   ARTICLE IX

                                  CONSTRUCTION

9.01 "Governing Law": The Plan shall be construed and governed in accordance
     with the law of the State of Ohio.

9.02 "Gender": The masculine gender, where appearing in the Plan, shall be
     deemed to include the feminine gender, and the singular may include the
     plural, unless the context clearly indicates to the contrary.

9.03 "Headings, etc.": The cover page of the Plan, the Table of Contents and all
     headings used in this Plan are for convenience of reference only and are
     not part of the substance of the Plan.

                                       14<PAGE>

                                                                     EXHIBIT (X)

                                EATON CORPORATION

                         2007 ANNUAL REPORT ON FORM 10-K

                                   ITEM 15 (B)

                                CHANGE OF CONTROL

                                    AGREEMENT

          AGREEMENT by and between Eaton Corporation, an Ohio corporation (the
"Company") and _______________________ (the "Executive"), dated as of the ____
day of _____________, 20__.

          The Board of Directors of the Company (the "Board") has determined
that it is in the best interests of the Company and its shareholders to assure
that the Company will have the continued dedication of the Executive,
notwithstanding the possibility, threat or occurrence of a Change of Control (as
defined below) of the Company. The Board believes it is imperative to diminish
the inevitable distraction of the Executive by virtue of the personal
uncertainties and risks created by a pending or threatened Change of Control and
to encourage the Executive's full attention and dedication to the Company
currently and in the event of any threatened or pending Change of Control, and
to provide the Executive with compensation and benefits arrangements upon a
Change of Control which ensure that the compensation and benefits expectations
of the Executive will be satisfied and which are competitive with those of other
corporations. Therefore, in order to accomplish these objectives, the Board has
caused the Company to enter into this Agreement.

          NOW, THEREFORE, IT IS HEREBY AGREED AS FOLLOWS:

               1. Certain Definitions.

          (a) The "Effective Date" shall mean the first date during the Change
of Control Period (as defined in Section 1(b)) on which a Change of Control (as
defined in Section 2) occurs. Anything in this Agreement to the contrary
notwithstanding, if the Executive's employment with the Company is terminated
within the 12 months prior to the date on which the Change of Control occurs,
and if it is reasonably demonstrated by the Executive that such termination of
employment (i) was at the request of a third party who has taken steps
reasonably calculated to effect a Change of Control or (ii) otherwise arose in
connection with or anticipation of

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a Change of Control (such a termination of employment, an "Anticipatory
Termination", then for all purposes of this Agreement the "Effective Date" shall
mean the date immediately prior to the date of such termination of employment.

          (b) The "Change of Control Period" shall mean the period commencing on
the date hereof and ending on the third anniversary of the date hereof;
provided, however, that commencing on the date one year after the date hereof,
and on each annual anniversary of such date (such date and each annual
anniversary thereof shall be hereinafter referred to as the "Renewal Date"),
unless previously terminated, the Change of Control Period shall be
automatically extended so as to terminate three years from such Renewal Date,
unless at least 60 days prior to the Renewal Date the Company shall give notice
to the Executive that the Change of Control Period shall not be so extended.

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

          (a) The acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934,
as amended (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
Company 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 (a), 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

          (b) 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

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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

          (c) 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 Company 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 shares of common stock 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 Company 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
shares of common stock of the 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

          (d) 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
Executive, or any entity in which the Executive 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 Executive,

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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.

          3. Employment Period. The Company hereby agrees to continue the
Executive in its employ, and the Executive hereby agrees to remain in the employ
of the Company subject to the terms and conditions of this Agreement, for the
period commencing on the Effective Date and ending on the third anniversary of
such date (the "Employment Period").

          4. Terms of Employment.

          (a) Position and Duties. (i) During the Employment Period, (A) the
Executive's position (including status, offices, titles and reporting
requirements), authority, duties and responsibilities shall be at least
commensurate in all material respects with the most significant of those held,
exercised and assigned to the Executive at any time during the 120-day period
immediately preceding the Effective Date and (B) the Executive's services shall
be performed at the location where the Executive was employed immediately
preceding the Effective Date or any office or location less than 35 miles from
such location.

          (ii) During the Employment Period, and excluding any periods of
vacation and sick leave to which the Executive is entitled, the Executive agrees
to devote reasonable attention and time during normal business hours to the
business and affairs of the Company and, to the extent necessary to discharge
the responsibilities assigned to the Executive hereunder, to use the Executive's
reasonable best efforts to perform faithfully and efficiently such
responsibilities. During the Employment Period it shall not be a violation of
this Agreement for the Executive to (A) serve on corporate, civic or charitable
boards or committees, (B) deliver lectures, fulfill speaking engagements or
teach at educational institutions and (C) manage personal investments, so long
as such activities do not significantly interfere with the performance of the
Executive's responsibilities as an employee of the Company in accordance with
this Agreement. It is expressly understood and agreed that to the extent that
any such activities have been conducted by the Executive prior to the Effective
Date, the continued conduct of such activities (or the conduct of activities
similar in nature and scope thereto) subsequent to the Effective Date shall not
thereafter

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be deemed to interfere with the performance of the Executive's responsibilities
to the Company.

          (b) Compensation.

          (i) Base Salary. During the Employment Period, the Executive shall
receive an annual base salary ("Annual Base Salary"), which shall be paid at a
monthly rate, at least equal to twelve times the highest monthly base salary
paid or payable, including any base salary which has been earned but deferred,
to the Executive by the Company and its affiliated companies in respect of the
twelve-month period immediately preceding the month in which the Effective Date
occurs. During the Employment Period, the Annual Base Salary shall be increased
no more than 12 months after the last salary increase awarded to the Executive
prior to the Effective Date, and thereafter at least annually, in each case by a
percentage not less than the average annual percentage merit increase in the
Executive's base salary during the five (5) full calendar years (or such lesser
number of years that the Executive has been employed by the Company and its
affiliated companies) immediately preceding the Effective Date. Any increase in
Annual Base Salary shall not serve to limit or reduce any other obligation to
the Executive under this Agreement. Annual Base Salary shall not be reduced
after any such increase and the term Annual Base Salary as utilized in this
Agreement shall refer to Annual Base Salary as so increased. As used in this
Agreement, the term "affiliated companies" shall include any company controlled
by, controlling or under common control with the Company.

          (ii) Annual Bonus. In addition to Annual Base Salary, the Executive
shall be awarded, for each fiscal year ending during the Employment Period, an
annual bonus (the "Annual Bonus") in cash in an amount (the "Annual Bonus
Amount") at least equal to the Executive's Incentive Potential (as defined in
the Eaton Incentive Compensation Plan or any successor plan) for the most recent
year for which an Incentive Potential was established before the Effective Date
under the Eaton Incentive Compensation Plan or any successor plan, adjusted by
the average of the Executive's individual performance rating for each of the
three most recent years ended before the Effective Date, but eliminating any
Corporate Performance Factor (as defined in the Eaton Incentive Compensation
Plan or any successor plan). Each such Annual Bonus shall be paid no later than
March 15th of the fiscal year next following the fiscal year for which the
Annual Bonus is awarded, unless the Executive shall elect to defer the receipt
of such Annual Bonus in accordance with the provisions of the Eaton Deferred
Incentive Compensation Plan II or any successor plan.

                                        5

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          (iii) Incentive, Savings and Retirement Plans. During the Employment
Period, the Executive shall be entitled to participate in all incentive, savings
and retirement plans, practices, policies and programs applicable generally to
other peer executives of the Company and its affiliated companies (including
without limitation the Company's Deferred Incentive Compensation Plan, Limited
Eaton Service Supplemental Retirement Income Plan, long-term Executive Strategic
Incentive Plan and Supplemental and/or Excess Benefits Plans, as and to the
extent those plans are in effect from time to time), but in no event shall such
plans, practices, policies and programs provide the Executive with incentive
opportunities (measured with respect to both regular and special incentive
opportunities, to the extent, if any, that such distinction is applicable),
savings opportunities and retirement benefit opportunities, in each case, less
favorable, in the aggregate, than the most favorable of those provided by the
Company and its affiliated companies for the Executive under such plans,
practices, policies and programs as in effect at any time during the 120-day
period immediately preceding the Effective Date or if more favorable to the
Executive, those provided generally at any time after the Effective Date to
other peer executives of the Company and its affiliated companies.

          (iv) Welfare Benefit Plans. During the Employment Period, the
Executive and/or the Executive's family, as the case may be, shall be eligible
for participation in and shall receive all benefits under welfare benefit plans,
practices, policies and programs provided by the Company and its affiliated
companies (including, without limitation, medical, prescription, dental,
disability, salary continuance, employee life, group life, accidental death and
travel accident insurance plans and programs) to the extent applicable generally
to other peer executives of the Company and its affiliated companies, but in no
event shall such plans, practices, policies and programs provide the Executive
with benefits which are less favorable, in the aggregate, than the most
favorable of such plans, practices, policies and programs in effect for the
Executive at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, those provided generally
at any time after the Effective Date to other peer executives of the Company and
its affiliated companies.

          (v) Expenses. During the Employment Period, the Executive shall be
entitled to receive prompt reimbursement for all reasonable expenses incurred by
the Executive in accordance with the most favorable policies, practices and
procedures of the Company and its affiliated companies in effect for the
Executive at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive, as in effect generally at
any time thereafter with respect to other peer executives of the Company and its
affiliated companies.

                                        6

<PAGE>

          (vi) Fringe Benefits. During the Employment Period, the Executive
shall be entitled to fringe benefits, including, without limitation, tax and
financial planning services, payment of club dues, and, if applicable, use of an
automobile and payment of related expenses, in accordance with the most
favorable plans, practices, programs and policies of the Company and its
affiliated companies in effect for the Executive at any time during the 120-day
period immediately preceding the Effective Date or, if more favorable to the
Executive, as in effect generally at any time thereafter with respect to other
peer executives of the Company and its affiliated companies.

          (vii) Office and Support Staff. During the Employment Period, the
Executive shall be entitled to an office or offices of a size and with
furnishings and other appointments, and to exclusive personal secretarial and
other assistance, at least equal to the most favorable of the foregoing provided
to the Executive by the Company and its affiliated companies at any time during
the 120-day period immediately preceding the Effective Date or, if more
favorable to the Executive, as provided generally at any time thereafter with
respect to other peer executives of the Company and its affiliated companies.

          (viii) Vacation. During the Employment Period, the Executive shall be
entitled to paid vacation in accordance with the most favorable plans, policies,
programs and practices of the Company and its affiliated companies as in effect
for the Executive at any time during the 120-day period immediately preceding
the Effective Date or, if more favorable to the Executive, as in effect
generally at any time thereafter with respect to other peer executives of the
Company and its affiliated companies.

          5. Termination of Employment.

          (a) Death or Disability. The Executive's employment shall terminate
automatically upon the Executive's death during the Employment Period. If the
Company determines in good faith that the Disability of the Executive has
occurred during the Employment Period (pursuant to the definition of Disability
set forth below), it may give to the Executive written notice in accordance with
Section 14(b) of this Agreement of its intention to terminate the Executive's
employment. In such event, the Executive's employment with the Company shall
terminate effective on the 30th day after receipt of such notice by the
Executive (the "Disability Effective Date"), provided that, within the 30 days
after such receipt, the Executive shall not have returned

                                        7

<PAGE>

to full-time performance of the Executive's duties. For purposes of this
Agreement, "Disability" shall mean the absence of the Executive from the
Executive's duties with the Company on a full-time basis for 180 consecutive
business days as a result of incapacity due to mental or physical illness which
is determined to be total and permanent by a physician selected by the Company
or its insurers and acceptable to the Executive or the Executive's legal
representative.

          (b) Cause. The Company may terminate the Executive's employment during
the Employment Period for Cause. For purposes of this Agreement, "Cause" shall
mean:

          (i) the willful and continued failure of the Executive to perform
substantially the Executive's duties with the Company or one of its affiliates
(other than any such failure resulting from incapacity due to physical or mental
illness), after a written demand for substantial performance is delivered to the
Executive by the Board or the Chief Executive Officer of the Company which
specifically identifies the manner in which the Board or Chief Executive Officer
believes that the Executive has not substantially performed the Executive's
duties, or

          (ii) the willful engaging by the Executive in illegal conduct or gross
misconduct which is materially and demonstrably injurious to the Company.

For purposes of this provision, no act or failure to act, on the part of the
Executive, shall be considered "willful" unless it is done, or omitted to be
done, by the Executive in bad faith or without reasonable belief that the
Executive's action or omission was in the best interests of the Company. Any
act, or failure to act, based upon authority given pursuant to a resolution duly
adopted by the Board or upon the instructions of the Chief Executive Officer or
a senior officer of the Company or based upon the advice of counsel for the
Company shall be conclusively presumed to be done, or omitted to be done, by the
Executive in good faith and in the best interests of the Company. The cessation
of employment of the Executive shall not be deemed to be for Cause unless and
until there shall have been delivered to the Executive a copy of a resolution
duly adopted by the affirmative vote of not less than three-quarters of the
entire membership of the Board at a meeting of the Board called and held for
such purpose (after reasonable notice is provided to the Executive and the
Executive is given an opportunity, together with counsel, to be heard before the
Board), finding that, in the good faith opinion of the Board, the Executive is
guilty of the conduct described in subparagraph (i) or (ii) above, and
specifying the particulars thereof in detail.

                                        8

<PAGE>

          (c) Good Reason. The Executive's employment may be terminated by the
Executive for Good Reason. For purposes of this Agreement, "Good Reason" shall
mean:

          (i) the assignment to the Executive of any duties inconsistent in any
respect with the Executive's position (including status, offices, titles and
reporting requirements), authority, duties or responsibilities as contemplated
by Section 4(a) of this Agreement, or any other action by the Company which
results in a diminution in such position, authority, duties or responsibilities,
excluding for this purpose an isolated, insubstantial and inadvertent action not
taken in bad faith and which is remedied by the Company promptly after receipt
of notice thereof given by the Executive;

          (ii) any failure by the Company to comply with any of the provisions
of Section 4(b) of this Agreement, other than an isolated, insubstantial and
inadvertent failure not occurring in bad faith and which is remedied by the
Company promptly after receipt of notice thereof given by the Executive;

          (iii) the Company's requiring the Executive to be based at any office
or location other than as provided in Section 4(a)(i)(B) hereof or the Company's
requiring the Executive to travel on Company business to a substantially greater
extent than required immediately prior to the Effective Date;

          (iv) any purported termination by the Company of the Executive's
employment otherwise than as expressly permitted by this Agreement; or

          (v) any failure by the Company to comply with and satisfy Section
12(c) of this Agreement.

For purposes of this Section 5(c), any good faith determination of "Good Reason"
made by the Executive shall be conclusive.

          (d) Notice of Termination. Any termination by the Company for Cause,
or by the Executive for Good Reason, shall be communicated by Notice of
Termination to the other party hereto given in accordance with Section 14(b) of
this Agreement. For purposes of this Agreement, a "Notice of Termination" means
a written notice which (i) indicates the specific termination provision in this
Agreement relied upon, (ii) to the extent applicable, sets forth in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
the

                                        9

<PAGE>

Executive's employment under the provision so indicated and (iii) if the Date of
Termination (as defined below) is other than the date of receipt of such notice,
specifies the termination date (which date shall be not more than thirty days
after the giving of such notice). The failure by the Executive or the Company to
set forth in the Notice of Termination any fact or circumstance which
contributes to a showing of Good Reason or Cause shall not waive any right of
the Executive or the Company, respectively, hereunder or preclude the Executive
or the Company, respectively, from asserting such fact or circumstance in
enforcing the Executive's or the Company's rights hereunder.

          (e) Date of Termination. "Date of Termination" means (i) if the
Executive's employment is terminated by the Company for Cause, or by the
Executive for Good Reason, the date of receipt of the Notice of Termination or
any later date specified therein, as the case may be, (ii) if the Executive's
employment is terminated by the Company other than for Cause or Disability, the
date on which the Company notifies the Executive of such termination and (iii)
if the Executive's employment is terminated by reason of death or Disability,
the date of death of the Executive or the Disability Effective Date, as the case
may be. The Company and the Executive shall take all steps necessary (including
with regard to any post-termination services by the Executive) to ensure that
any termination described in this Section 5 constitutes a "separation from
service" within the meaning of Section 409A of the Internal Revenue Code of
1986, as amended (the "Code"), and notwithstanding anything contained herein to
the contrary, the date on which such separation from service takes place shall
be the "Date of Termination."

          6. Obligations of the Company upon Termination.

          (a) Good Reason; Other Than for Cause, Death or Disability. If, during
the Employment Period, the Company shall terminate the Executive's employment
other than for Cause or Disability or the Executive shall terminate employment
for Good Reason:

          (i) the Company shall pay to the Executive in a lump sum in cash
within 30 days after the Date of Termination the aggregate of the following
amounts:

               A. the sum of (1) the Executive's Annual Base Salary through the
     Date of Termination, to the extent not theretofore paid to the Executive,
     (2) the amount, if any, which has been earned by the Executive with respect
     to any completed Incentive Year under the Eaton Incentive Compensation Plan
     or any successor   thereto, and any completed Award Period under the Eaton
     Executive Strategic Incentive Plan or any successor

                                       10

<PAGE>

     thereto, in each case to the extent not theretofore paid to the Executive,
     and (3) with respect to each Award Period under the Eaton Executive
     Strategic Incentive Plan or any successor thereto which begins before and
     ends after the Date of Termination, an amount equal to (x) 100% of the
     Executive's Individual Incentive Target (as defined in such plan) for such
     Award Period times (y) a fraction, the numerator of which is the number of
     days in such Award Period before the Date of Termination, and the
     denominator of which is the total number of days in such Award Period (the
     amount described in clause (3), the "Pro-Rata Bonus," and the sum of the
     amounts described in clauses (1), (2) and (3) shall be hereinafter referred
     to as the "Accrued Obligations"); and

               B. the product of (1) the Multiple (as defined below) and (2) the
     sum of (x) the Executive's Annual Base Salary and (y) the Annual Bonus
     Amount;

          (ii) for a number of years after the Executive's Date of Termination
equal to the lesser of two and the Multiple, or such longer period as may be
provided by the terms of the appropriate plan, program, practice or policy, the
Company shall continue benefits to the Executive and/or the Executive's family
at least equal to those which would have been provided to them in accordance
with the plans, programs, practices and policies described in Section 4(b)(iv)
of this Agreement if the Executive's employment had not been terminated or, if
more favorable to the Executive, as in effect generally at any time thereafter
with respect to other peer executives of the Company and its affiliated
companies and their families, provided, however, that if the Executive becomes
re-employed with another employer and is eligible to receive medical or other
welfare benefits under another employer-provided plan, the medical and other
welfare benefits described herein shall be secondary to those provided under
such other plan during such applicable period of eligibility, and for purposes
of determining eligibility (but not the time of commencement of benefits) of the
Executive for retiree benefits pursuant to such plans, practices, programs and
policies, the Executive shall be considered to have remained employed for a
number of years after the Date of Termination equal to the lesser of two and the
Multiple and to have retired on the last day of such period, and for purposes of
any reimbursement of eligible expenses to the Executive and/or the Executive's
family under the plans, programs, practices and policies described in Section
4(b)(iv) of this Agreement incurred following the first eighteen months of
continuation coverage under this Section 6(a)(ii), such reimbursement shall be
made on or before the last day of the Executive's taxable year following the
taxable year in which the expense was incurred (the amount of continued coverage
and benefits that the Company is obligated

                                       11

<PAGE>

to provide pursuant to this paragraph in any given calendar year shall not
affect the amount of continued coverage and benefits that the Company is
obligated to provide in any other calendar year, and the Executive's right to
have the Company provide such continued coverage and benefits may not be
liquidated or exchanged for any other benefit);

          (iii) to the extent not theretofore paid or provided, the Company
shall timely pay or provide to the Executive any other amounts or benefits
required to be paid or provided or which the Executive is eligible to receive
under any plan, program, policy or practice or contract or agreement of the
Company and its affiliated companies (such other amounts and benefits shall be
hereinafter referred to as the "Other Benefits"); provided, however that to the
extent that any Other Benefits are deferred compensation within the meaning of
Section 409A of the Code and the Treasury Regulations promulgated thereunder and
subject to the requirements of Section 409A of the Code, such Other Benefits
shall not be paid or provided before the first business day (the "Delayed
Payment Date") that is six months after the Date of Termination.

The "Multiple" means the lesser of (i) three and (ii) the number of years and
portions thereof (expressed as a decimal fraction) from the Date of Termination
until the Executive's 65th birthday.

Notwithstanding the foregoing, if the Executive is a "specified employee" within
the meaning of Section 409A of the Code (as determined in accordance with the
methodology established by the Company as in effect on the Date of the
Termination) (a "Specified Employee") on the Date of Termination, the Company
shall pay to the Executive the amounts described in (A)(3) and (B) in a lump sum
in cash on the Delayed Payment Date.

          (b) Death. If the Executive's employment is terminated by reason of
the Executive's death during the Employment Period, this Agreement shall
terminate without further obligations to the Executive's legal representatives
under this Agreement, other than for payment of Accrued Obligations and the
timely payment or provision of Other Benefits. Accrued Obligations shall be paid
to the Executive's estate or beneficiary, as applicable, in a lump sum in cash
within 30 days of the Date of Termination. With respect to the provision of
Other Benefits, the term Other Benefits as utilized in this Section 6(b) shall
include, without limitation, and the Executive's estate and/or beneficiaries
shall be entitled to receive, benefits at least equal to the most favorable
benefits provided by the Company and affiliated companies to the estates and
beneficiaries of peer executives of the Company and such affiliated companies
under such plans, programs, practices and policies relating to death benefits,
if any, as in effect with respect to other

                                       12

<PAGE>

peer executives and their beneficiaries at any time during the 120-day period
immediately preceding the Effective Date or, if more favorable to the
Executive's estate and/or the Executive's beneficiaries, as in effect on the
date of the Executive's death with respect to other peer executives of the
Company and its affiliated companies and their beneficiaries.

          (c) Disability. If the Executive's employment is terminated by reason
of the Executive's Disability during the Employment Period, this Agreement shall
terminate without further obligations to the Executive, other than for payment
of Accrued Obligations and the timely payment or provision of Other Benefits.
Accrued Obligations shall be paid to the Executive in a lump sum in cash within
30 days of the Date of Termination (except that in the event that the Disability
does not qualify as a disability within the meaning of Section 409A(a)(2)(C) of
the Code, the Pro-Rata Bonus shall be paid on the Delayed Payment Date). With
respect to the provision of Other Benefits, the term Other Benefits as utilized
in this Section 6(c) shall include, and the Executive shall be entitled after
the Disability Effective Date to receive, disability and other benefits at least
equal to the most favorable of those generally provided by the Company and its
affiliated companies to disabled executives and/or their families in accordance
with such plans, programs, practices and policies relating to disability, if
any, as in effect generally with respect to other peer executives and their
families at any time during the 120-day period immediately preceding the
Effective Date or, if more favorable to the Executive and/or the Executive's
family, as in effect at any time thereafter generally with respect to other peer
executives of the Company and its affiliated companies and their families;
provided, however that to the extent that any Other Benefits are deferred
compensation within the meaning of Section 409A of the Code and the Treasury
Regulations promulgated thereunder and subject to the requirements of Section
409A of the Code, if Executive is a Specified Employee, such Other Benefits
shall not be paid or provided before the Delayed Payment Date.

          (d) Cause; Other than for Good Reason. If the Executive's employment
shall be terminated for Cause during the Employment Period, this Agreement shall
terminate without further obligations to the Executive other than the obligation
to pay to the Executive (x) the Annual Base Salary through the Date of
Termination and (y) Other Benefits, in each case to the extent theretofore
unpaid. If the Executive voluntarily terminates employment during the Employment
Period, excluding a termination for Good Reason, this Agreement shall terminate
without further obligations to the Executive, other than for Accrued Obligations
and the timely payment or provision of Other Benefits. In such case, all Accrued
Obligations shall be paid to

                                       13

<PAGE>

the Executive in a lump sum in cash within 30 days after the Date of
Termination, provided, however, that if the Executive is a Specified Employee,
the Pro-Rata Bonus will be paid to the Executive on the Delayed Payment Date.
Notwithstanding the foregoing, to the extent that any Other Benefits required to
paid pursuant to this Section 6(d) are deferred compensation within the meaning
of Section 409A of the Code and the Treasury Regulations promulgated thereunder
and subject to the requirements of Section 409A of the Code, if Executive is a
Specified Employee, such Other Benefits shall not be paid or provided before the
Delayed Payment Date.

          7. Termination of Agreement in Connection With Change of Control. In
the event of a change of control as defined in Section 1.409A-3(i)(5) of the
Treasury Regulations (for purposes of this Section 7 only, a "Change of Control
Event"), the Board shall have the authority, in its sole discretion, to
terminate the Agreement pursuant to an irrevocable action taken by the Board
within the 30 days preceding the Change of Control Event, provided that this
Section 7 will only apply to a payment under the Agreement if all agreements,
methods, programs, and other arrangements sponsored by the service recipient
immediately after the time of the Change of Control Event with respect to which
deferrals of compensation are treated as having been deferred under a single
plan within the meaning of Section 1.409A-1(c)(2) of the Treasury Regulations
are terminated and liquidated with respect to the Executive, so that under the
terms of the termination and liquidation the Executive is required to receive
all amounts of compensation deferred under the terminated agreements, methods,
programs, and other arrangements within 12 months of the date the Board
irrevocably takes all necessary action to terminate and liquidate the
agreements, methods, programs and other arrangements. Solely for purposes of
this Section, where the Change of Control Event results from an asset purchase
transaction, the 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. If the Agreement is terminated
pursuant to this Section 7, the Company shall pay to the Executive in a lump sum
in cash within 12 months of the date the Board irrevocably takes all necessary
action to terminate and liquidate the agreements, methods, programs and other
arrangements, the amount that would have been payable to the Executive if during
the Employment Period the Company had terminated the Executive's employment
other than for Cause or Disability or if the Executive had terminated his
employment for Good Reason in accordance with Section 6(a) of this Agreement.

                                       14

<PAGE>

          8. Non-exclusivity of Rights. Nothing in this Agreement shall prevent
or limit the Executive's continuing or future participation in any plan,
program, policy or practice provided by the Company or any of its affiliated
companies and for which the Executive may qualify, nor, subject to the last
sentence of this Section 8 and to Section 14(f), shall anything herein limit or
otherwise affect such rights as the Executive may have under any contract or
agreement with the Company or any of its affiliated companies. Amounts which are
vested benefits or which the Executive is otherwise entitled to receive under
any plan, policy, practice or program of or any contract or agreement with the
Company or any of its affiliated companies at or subsequent to the Date of
Termination shall be payable in accordance with such plan, policy, practice or
program or contract or agreement except as explicitly modified by this
Agreement. Notwithstanding the foregoing, if the Executive becomes entitled to
receive severance benefits under Section 6(a) hereof, such severance benefits
shall be in lieu of any benefits under any severance or separation plan, program
or policy of the Company or any of its affiliated companies to which the
Executive would otherwise have been entitled.

          9. Full Settlement; Legal Fees. The Company's obligation to make the
payments provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any set-off, counterclaim, recoupment,
defense or other claim, right or action which the Company may have against the
Executive or others. In no event shall the Executive be obligated to seek other
employment or take any other action by way of mitigation of the amounts payable
to the Executive under any of the provisions of this Agreement and except as
specifically provided in Section 6(a)(ii), such amounts shall not be reduced
whether or not the Executive obtains other employment. The Company agrees to pay
as incurred, at any time from the Effective Date through the Executive's
remaining lifetime (or, if longer, through the 20th anniversary of the Effective
Date), to the full extent permitted by law, all legal fees and expenses which
the Executive may reasonably incur as a result of any contest (regardless of the
outcome thereof) by the Company, the Executive or others of the validity or
enforceability of, or liability under, any provision of this Agreement or any
guarantee of performance thereof (whether such contest is between the Company
and the Executive or between either of them and any third party, and including
as a result of any contest by the Executive about the amount of any payment
pursuant to this Agreement), plus in each case interest on any delayed payment
at the applicable Federal rate provided for in Section 7872(f)(2)(A) of the
Code. In order to comply with Section 409A of the Code, in no event shall the
payments by the Company under this Section 9 be made later than the end of the
calendar year next following the calendar year in which such fees and

                                       15

<PAGE>

expenses were incurred, provided that the Executive shall have submitted an
invoice for such fees and expenses at least 10 days before the end of the
calendar year next following the calendar year in which such fees and expenses
were incurred. The amount of such legal fees and expenses that the Company is
obligated to pay in any given calendar year shall not affect the legal fees and
expenses that the Company is obligated to pay in any other calendar year, and
the Executive's right to have the Company pay such legal fees and expenses may
not be liquidated or exchanged for any other benefit.

          10. Certain Additional Payments by the Company.

          (a) Anything in this Agreement to the contrary notwithstanding, in the
event it shall be determined that any payment or distribution by the Company to
or for the benefit of the Executive (whether paid or payable or distributed or
distributable pursuant to the terms of this Agreement or otherwise, but
determined without regard to any additional payments required under this Section
10) (a "Payment") would be subject to an excise tax imposed by Section 4999 or
to the additional income tax imposed by Section 409A(a)(1)(B) of the Code or any
interest or penalties are incurred by the Executive with respect to such tax or
taxes (such tax or taxes, together with any such interest and penalties, are
hereinafter collectively referred to as the "Excise Tax"), then the Executive
shall be entitled to receive an additional payment (a "Gross-Up Payment") in an
amount such that after payment by the Executive of all taxes (including any
interest or penalties imposed with respect to such taxes), including, without
limitation, any income taxes (and any interest and penalties imposed with
respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the Executive
retains an amount of the Gross-Up Payment equal to the Excise Tax imposed upon
the Payments.

          (b) Subject to the provisions of Section 10(c), all determinations
required to be made under this Section 10, including whether and when a Gross-Up
Payment is required and the amount of such Gross-Up Payment and the assumptions
to be utilized in arriving at such determination, shall be made by Ernst & Young
LLP or such other certified public accounting firm as may be designated by the
Executive (the "Accounting Firm"), which shall provide detailed supporting
calculations both to the Company and the Executive within 15 business days of
the receipt of notice from the Executive that there has been a Payment, or such
earlier time as is requested by the Company. In the event that the Accounting
Firm is serving as accountant or auditor for the individual, entity or group
effecting the Change of Control, the Executive shall appoint

                                       16

<PAGE>

another nationally recognized accounting firm to make the determinations
required hereunder (which accounting firm shall then be referred to as the
Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall
be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to
this Section 10, shall be paid by the Company to the Executive within five days
of the receipt of the Accounting Firm's determination which in no event will be
later than the last day of the Executive's taxable year next following the
Executive's taxable year in which the Executive remits the Excise Tax to the
United States Treasury. Any determination by the Accounting Firm shall be
binding upon the Company and the Executive. As a result of the uncertainty in
the application of Section 4999 of the Code at the time of the initial
determination by the Accounting Firm hereunder, it is possible that Gross-Up
Payments which will not have been made by the Company should have been made
("Underpayment"), consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its remedies pursuant to
Section 10(c) and the Executive thereafter is required to make a payment of any
Excise Tax, the Accounting Firm shall determine the amount of the Underpayment
that has occurred and any such Underpayment shall be promptly paid by the
Company to or for the benefit of the Executive.

          (c) The Executive shall notify the Company in writing of any claim by
the Internal Revenue Service that, if successful, would require the payment by
the Company of the Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten business days after the Executive is informed
in writing of such claim and shall apprise the Company of the nature of such
claim and the date on which such claim is requested to be paid. The Executive
shall not pay such claim prior to the expiration of the 30-day period following
the date on which he gives such notice to the Company (or such shorter period
ending on the date that any payment of taxes with respect to such claim is due).
If the Company notifies the Executive in writing prior to the expiration of such
period that it desires to contest such claim, the Executive shall:

          (i) give the Company any information reasonably requested by the
Company relating to such claim,

          (ii) take such action in connection with contesting such claim as the
Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by the Company,

                                       17

<PAGE>

          (iii) cooperate with the Company in good faith in order effectively to
contest such claim, and

          (iv) permit the Company to participate in any proceedings relating to
such claim;

provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of
this Section 10(c), the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forgo any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct the Executive to pay the tax claimed and sue for a refund or contest the
claim in any permissible manner, and the Executive agrees to prosecute such
contest to a determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the Company shall
determine; provided, however, that if the Company directs the Executive to pay
such claim and sue for a refund, the Company shall advance the amount of such
payment to the Executive, on an interest-free basis and shall indemnify and hold
the Executive harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto) imposed with respect to
such advance or with respect to any imputed income with respect to such advance;
and further provided that any extension of the statute of limitations relating
to payment of taxes for the taxable year of the Executive with respect to which
such contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company's control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder and
the Executive shall be entitled to settle or contest, as the case may be, any
other issue raised by the Internal Revenue Service or any other taxing
authority.

          (d) If, after the receipt by the Executive of an amount advanced by
the Company pursuant to Section 10(c), the Executive becomes entitled to receive
any refund with respect to such claim, the Executive shall (subject to the
Company's complying with the requirements of Section 10(c)) promptly pay to the
Company the amount of such refund (together with

                                       18

<PAGE>

any interest paid or credited thereon after taxes applicable thereto). If, after
the receipt by the Executive of an amount advanced by the Company pursuant to
Section 10(c), a determination is made that the Executive shall not be entitled
to any refund with respect to such claim and the Company does not notify the
Executive in writing of its intent to contest such denial of refund prior to the
expiration of 30 days after such determination, then such advance shall be
forgiven and shall not be required to be repaid and the amount of such advance
shall offset, to the extent thereof, the amount of Gross-Up Payment required to
be paid.

          11. Confidential Information. The Executive shall hold in a fiduciary
capacity for the benefit of the Company all secret or confidential information,
knowledge or data relating to the Company or any of its affiliated companies,
and their respective businesses, which shall have been obtained by the Executive
during the Executive's employment by the Company or any of its affiliated
companies and which shall not be or become public knowledge (other than by acts
by the Executive or representatives of the Executive in violation of this
Agreement). After termination of the Executive's employment with the Company,
the Executive shall not, without the prior written consent of the Company or as
may otherwise be required by law or legal process, communicate or divulge any
such information, knowledge or data to anyone other than the Company and those
designated by it. In no event shall an asserted violation of the provisions of
this Section 11 constitute a basis for deferring or withholding any amounts
otherwise payable to the Executive under this Agreement.

          12. Successors. (a) This Agreement is personal to the Executive and
without the prior written consent of the Company shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive's
legal representatives.

          (b) This Agreement shall inure to the benefit of and be binding upon
the Company and its successors and assigns.

          (c) The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to assume
expressly and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place. As used in this Agreement, "Company" shall mean the Company as

                                       19

<PAGE>

hereinbefore defined and any successor to its business and/or assets as
aforesaid which assumes and agrees to perform this Agreement by operation of
law, or otherwise.

          13. Trust Deposit.

          (a) Upon the occurrence of a Proposed Change of Control (as defined
below) during the Change of Control Period, the Company shall deposit in trust
or escrow with a third party cash in an amount sufficient to provide all of the
benefits and other payments to which the Executive would be entitled hereunder
if a Change of Control occurred on the date of the Proposed Change of Control
and the Executive's employment were terminated by the Executive for Good Reason
immediately thereafter. Upon such deposit, references hereunder to any payment
by the Company shall be deemed to refer to a payment from such trust or escrow;
provided, however, that nothing contained herein shall relieve the Company of
its obligation to make the payments required of it hereunder in the event any
such payment is not made from the trust or escrow.

          (b) "Proposed Change of Control" means:

          (i) the commencement of a tender or exchange offer by any third person
(other than a tender or exchange offer which, if consummated, would not result
in a Change of Control) for 25% or more of the Outstanding Company Common Shares
or combined voting power of the Outstanding Company Voting Securities;

          (ii) the execution of an agreement by the Company, the consummation of
which would result in the occurrence of a Change of Control; or

          (iii) the adoption by the Board, as a result of other circumstances,
including circumstances similar or related to the foregoing, of a resolution to
the effect that, for purposes of this Agreement, a Proposed Change of Control
has occurred.

          14. Miscellaneous.

          (a) This Agreement shall be governed by and construed in accordance
with the laws of the State of Ohio, without reference to principles of conflict
of laws. The captions of this Agreement are not part of the provisions hereof
and shall have no force or effect. This

                                       20

<PAGE>

Agreement may not be amended or modified otherwise than by a written
agreement executed by the parties hereto or their respective successors and
legal representatives.

          (b) All notices and other communications hereunder shall be in writing
and shall be given by hand delivery to the other party or by registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:

               If to the Executive:

                    --------------------------
                    Eaton Corporation
                    Eaton Center
                    Cleveland, Ohio 44114-2584

               If to the Company:

                    Eaton Corporation
                    Eaton Center
                    Cleveland, Ohio 44114-2584

                    Attention: Corporate Secretary

or to such other address as either party shall have furnished to the other in
writing in accordance herewith. Notice and communications shall be effective
when actually received by the addressee.

          (c) The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement.

          (d) The Company may withhold from any amounts payable under this
Agreement such Federal, state, local or foreign taxes as shall be required to be
withheld pursuant to any applicable law or regulation.

          (e) The Executive's or the Company's failure to insist upon strict
compliance with any provision hereof or any other provision of this Agreement or
the failure to assert any right the Executive or the Company may have hereunder,
including, without limitation, the right of the Executive to terminate
employment for Good Reason pursuant to Section 5(c)(i)-(v) of this Agreement,
shall not be deemed to be a waiver of such provision or right or any other
provision or right of this Agreement.

                                       21

<PAGE>

          (f) The Executive and the Company acknowledge that, except as may
otherwise be provided under any other written agreement between the Executive
and the Company, the employment of the Executive by the Company is "at will"
and, prior to the Effective Date, the Executive's employment may be terminated
by either the Executive or the Company at any time prior to the Effective Date,
in which case the Executive shall have no further rights under this Agreement.
In addition, this Agreement shall automatically and immediately terminate upon
any transfer of the Executive's employment, prior to the Effective Date, to any
position with the Company as to which Change of Control Agreements, in the form
of this Agreement, have not been made available by action of the Board and, in
the event of such transfer of employment, the Executive shall have no further
rights under this Agreement. As of the date hereof, this Agreement supersedes
the Change of Control Agreement between Executive and the Company date
___________. From and after the Effective Date this Agreement shall supersede
any other agreement between the parties with respect to the subject matter
hereof.

          (g) Notwithstanding any provision in this Agreement to the contrary,
in the event of an Anticipatory Termination, any payments that are deferred
compensation within the meaning of Section 409A of the Code that the Company
shall be required to pay pursuant to Section 6(a)(1) of this Agreement shall be
paid as follows: (i) if such Change of Control is a "change in control event"
within the meaning of Section 409A of the Code, (A) except as provided in clause
(i)(B), on the date of such Change of Control, or (B) if the Executive is a
"specified employee" within the meaning of Section 409A of the Code (as
determined in accordance with the methodology established by the Company as in
effect on the Date of Termination) and the Delayed Payment Date is later than
the Change of Control, on the Delayed Payment Date, and (ii) if such Change of
Control is not a "change in control event" within the meaning of Section 409A of
the Code, on the first business day following the 12-month anniversary of the
date of such Anticipatory Termination. In the event of an Anticipatory
Termination, any payments or benefits that are not deferred compensation within
the meaning of Section 409A of the Code that the Company shall be required to
pay or provide pursuant to Section 6(a) of this Agreement shall be paid or shall
commence being provided on the date of the Change of Control.

          (h) Within the time period permitted by the applicable governmental
regulations, the Company may, in consultation with the Executive, modify this
Agreement, in the least restrictive manner necessary and without any diminution
in the value of the payments to the Executive, in order to cause the provisions
of the Agreement to comply with the requirements of

                                       22

<PAGE>

Section 409A of the Code, so as to avoid the imposition of taxes and penalties
on the Executive pursuant to Section 409A of the Code.

          IN WITNESS WHEREOF, the Executive has hereunto set the Executive's
hand and, pursuant to the authorization from its Board of Directors, the Company
has caused this Agreement to be executed in its name on its behalf, all as of
the day and year first above written.

                                        ----------------------------------------
                                                    [name of Executive]

                                        EATON CORPORATION

                                        By
                                           -------------------------------------
                                           M. M. McGuire
                                           Vice President and General Counsel

                                        By
                                           -------------------------------------
                                           E. R. Franklin
                                           Vice President and Secretary

                                       23

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