Document:

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                                Eaton Corporation
                         2004 Annual Report on Form 10-K
                                   Item 15(c)
                                  Exhibit 10(w)

                  2005 NON-EMPLOYEE DIRECTOR FEE DEFERRAL PLAN

                                   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 chairman 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 chairman 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 Corporation.

     Change in Control of Eaton - A change of control as determined in
accordance the provisions of Section 409A of the Code and Treasury Regulations
and published guidance issued pursuant thereto.
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     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 subsidiaries and
successors and assigns.

     Eaton Common Shares - The common shares of Eaton Corporation with a par
value of $.50 each.

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

     Funded Amount - With respect to the Account of any Participant, the value
of any assets which have been placed in a grantor trust established by the
Company to pay benefits with respect to that Account, as determined at the time
initial payments are to be made pursuant to the selections made by the
Participants in accordance with Section 9.02.

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

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

     Periodic Installments - Annual payments, over a period not to exceed
fifteen 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, as set forth herein effective January 1,
2005, and adopted December 8, 2004.

     Retirement - The Termination of Service as a Director of a Participant who
is age 55 or older and who has at least ten years of service as a member of the
Board or who is age 70 or older.
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     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 three-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.

     Trustee - The trustee of any trust which holds assets for the payment of
the benefits provided by the Plan.

                              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 10% 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 10% 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
<PAGE>
services performed subsequent to the election within 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
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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 as
soon as practicable.

                          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 50% and 100%,
                  -------------------------------------
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
<PAGE>
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 List of Composite Transactions 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.  Upon 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 as soon as
practicable following the death.

     Section 6.05 Termination of Service as a Director.  The Retirement Deferred
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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 as soon as
practicable 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.

     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

     (a)  separation from service as determined by the Secretary of the Treasury
          (except as provided below with respect to a key employee of Eaton);

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

     (c)  death of the Participant;
<PAGE>
     (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.

     In the case of any key employee (as defined in Section 416(i) of the Code
without regard to paragraph (5) thereof) of Eaton, distributions may not be made
before the date which is six months after the date of separation from service
(or, if earlier, the date of death of the Participant).

                         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 of Eaton, 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.

     Section 7.02 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. 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, to the extent
permitted in guidance issued by the Secretary of the Treasury and in accordance
with procedures established by the Committee, a Participant may be permitted to
terminate participation in the Plan or cancel an outstanding deferral election
with regard to amounts deferred after December 31, 2004. Notwithstanding any
provisions of the Plan to the contrary, no otherwise permissible election or
distribution shall be made or given effect under the Plan that would result in
taxation of any amount under Section 409A of the Code.
<PAGE>
                              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
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 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 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 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 that portion of the
Participant's Account equal to the full amount of the Account minus the Funded
Amount, and with respect to that portion of the Account equal to the Funded
Amount. The payment alternatives selected with respect to the two portions of
the Account need not be the same. The payment alternatives are as follows:

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

     (b)  payment in monthly, quarterly, semiannual or annual payments, over a
          period not to exceed fifteen years, as selected by the Participant at
          the time provided in the first paragraph of this Section 9.02,
          commencing within 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.
<PAGE>
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.

     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. If a
Participant or Beneficiary shall become bankrupt, or attempt to anticipate,
alienate, sell, transfer or encumber any benefit hereunder, then such benefit
shall, in the discretion of the Committee, cease and terminate, and the
Committee may hold or apply the same for the benefit of the Participant or his
or her spouse, children, or other dependents, or any of them, in such manner and
in such amounts and proportions as the Committee may deem proper. 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.
<PAGE>
     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 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.<PAGE>
                                Eaton Corporation
                         2004 Annual Report on Form 10-K
                                   Item 15(c)
                                  Exhibit 10(x)

                                EATON CORPORATION
                     DEFERRED INCENTIVE COMPENSATION PLAN II

I.   PURPOSE
     -------

     The purpose of the Deferred Incentive Compensation Plan II is to promote
     the greater success of Eaton Corporation and its subsidiaries by providing
     a means to defer Incentive Compensation for key employees whose level and
     nature of position enable them to affect significantly the profitability,
     competitiveness and growth of Eaton.

II.  CONCEPT
     -------

     The Plan is based on the concept that the deferral of Incentive
     Compensation for later payment to a Participant, including the later
     payment during Retirement, will provide a benefit to each Participant and
     an incentive to improve the profitability, competitiveness and growth of
     Eaton.

III. DEFINITIONS
     -----------

     Unless otherwise required by the context, the terms used herein shall have
     the meanings as set forth below:

     ACCOUNT: The account established by Eaton for each Participant to which may
     be credited his or her Deferred Incentive Compensation, Dividend
     Equivalents, and Treasury Bill Interest Equivalents.

     BENEFICIARY: The person or entity (including a trust or the estate of the
     Participant) designated in a written document executed by the Participant
     and delivered to the Committee. If at the time when any unpaid balance of
     Deferred Incentive Compensation shall be or become due at or after the
     death of a Participant, there shall not be any living person or any entity
     in existence so designated, the term "Beneficiary" shall mean the
     Participant's estate.

     BOARD: The Board of Directors of Eaton.

     BOARD COMMITTEE: The Compensation and Organization Committee of the Board
     of Directors of Eaton.
<PAGE>
     CAUSE: For the purposes of the Plan, Eaton shall have "Cause" to terminate
     the Participant's employment hereunder upon (i) the willful and continued
     failure by the Participant to substantially perform the Participant's
     duties with Eaton (other than any such failure resulting from the
     Participant's incapacity due to physical or mental illness), after a demand
     for substantial performance is delivered to the Participant by the Board
     which specifically identifies the manner in which the Board believes that
     the Participant has not substantially performed the Participant's duties,
     or (ii) the willful engaging by the Participant in gross misconduct
     materially and demonstrably injurious to Eaton. For purposes of this
     definition, no act, or failure to act, on the Participant's part shall be
     considered "willful" unless done, or omitted to be done, by the Participant
     not in good faith and without reasonable belief that the Participant's
     action or omission was in the best interest of Eaton. Notwithstanding the
     foregoing, the Participant's employment shall not be deemed to have been
     terminated for Cause unless and until there shall have been delivered to
     the Participant 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 to the Participant and an opportunity for the Participant, together
     with the Participant's counsel, to be heard before the Board), finding that
     in the good faith opinion of the Board the Participant was guilty of
     conduct set forth above in clauses (i) or (ii) of this definition and
     specifying the particulars thereof in detail.

     CHANGE IN CONTROL OF EATON: For purposes of the Plan, a "Change in Control
     of Eaton" shall be determined in accordance the provisions of Section 409A
     of the Code and Treasury Regulations and published guidance issued pursuant
     thereto.

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

     COMMITTEE: The Corporate Compensation Committee of Eaton.

     CONTINGENT SHARE UNITS: Units credited to a Participant's Account which are
     equivalent in value to the market value of Eaton Common Shares.

     DEFERRED INCENTIVE COMPENSATION: That portion of Incentive Compensation
     which has been deferred pursuant to the Plan and any Dividend Equivalents,
     Treasury Bill Interest Equivalents, and Contingent Share Units which are
     attributable thereto.

     DEFERRED INCENTIVE COMPENSATION AGREEMENT: The written agreement between
     Eaton and a Participant pursuant to which Incentive Compensation is
     deferred under the Plan.
<PAGE>
     DISABILITY: If, as a result of the Participant's incapacity due to physical
     or mental illness, the Participant shall have been absent from the
     Participant's duties with Eaton on a full-time basis for 180 consecutive
     business days and within thirty (30) days after written Notice of
     Termination the Participant shall not have returned to the full-time
     performance of the Participant's duties, any termination of the
     Participant's employment by Eaton shall be for "Disability."

     DIVIDEND EQUIVALENT: An amount equal to the per share dividends paid on
     Eaton Common Shares.

     EATON: Eaton Corporation, an Ohio corporation, and its subsidiaries and
     successors and assigns.

     EATON COMMON SHARES: The common shares of Eaton.

     EXECUTIVE INCENTIVE COMPENSATION PLAN: An incentive compensation plan
     approved (a) by the Board for participation in the Plan and whose
     participants are designated by the Board Committee on an annual basis or
     (b) by the Committee.

     FUNDED AMOUNT: With respect to the Account of any Participant, the value of
     any assets which have been placed in a grantor trust established by the
     Company to pay benefits with respect to that Plan Account, as determined at
     the time initial payments are to be made pursuant to the selections made by
     the Participants in accordance with Section 9.02.

     GOOD REASON: For purposes of this Plan, any Termination of Employment by a
     Participant under the following circumstances shall be for "Good Reason":

     (i)  without the Participant's express written consent, the assignment to
          the Participant of any duties inconsistent with the Participant's
          positions, duties, responsibilities and status with Eaton immediately
          prior to a Change in Control of Eaton, or a change in the
          Participant's reporting responsibilities, titles or offices as in
          effect immediately prior to a Change in Control of Eaton, or any
          removal of the Participant from or any failure to re-elect the
          Participant to any of such positions, except in connection with the
          termination of the Participant's employment for Cause, Disability or
          as a result of the Participant's death;

     (ii) a reduction by Eaton in the Participant's base salary as in effect
          immediately prior to the Change in Control of Eaton or as the same may
          be increased from time to time; or the failure by Eaton to increase
          such base salary each year after a Change in Control of Eaton by an
          amount which at least equals, on a percentage basis, the average
          annual percentage merit increase in the Participant's base salary
          during the five (5) full calendar years immediately preceding a Change
          in Control of Eaton;
<PAGE>
     (iii) a failure by Eaton to continue the Participant's participation in
           Eaton's Executive Incentive Compensation Plan (the "I.C. Plan"),
           Deferred Incentive Compensation Plan II (the "Deferred I.C. Plan"),
           Limited Eaton Service Supplemental Retirement Income Plan II (the
           "Limited Service Plan"), the Executive Strategic Incentive Plan (the
           "ESIP Plan") and the Supplemental Benefit Plan II established by the
           Board as a result of the limitations on pension benefits imposed by
           Section 415 of the Internal Revenue Code (the "Supplemental Plan"),
           as each plan may be modified from time to time but substantially in
           the form presently in effect, on at least the basis as in effect
           immediately prior to the Change in Control of Eaton or to pay the
           Participant any amounts earned under such plans in accordance with
           the terms of such plans.

     (iv)  the relocation of Eaton's principal executive offices to a location
           outside Cuyahoga County, Ohio or any county adjoining Cuyahoga
           County, Ohio, or Eaton's requiring the Participant to be based
           anywhere other than Eaton's principal executive offices or the
           location where the Participant is based immediately prior to the
           Change in Control of Eaton except for required travel on Eaton's
           business to an extent substantially consistent with the Participant's
           business travel obligations in effect immediately prior to the Change
           in Control of Eaton, or, in the event the Participant consents to any
           such relocation of Eaton's principal executive offices, the failure
           by Eaton to pay (or reimburse the Participant for) all reasonable
           moving expenses incurred by the Participant relating to a change of
           the Participant's principal residence in connection with such
           relocation and to indemnify the Participant against any loss (defined
           as the difference between the actual sale price of such residence and
           the higher of (a) the Participant's aggregate investment in such
           residence or (b) the fair market value of such residence as
           determined by any real estate appraiser designated by the Participant
           and reasonably satisfactory to Eaton) realized in the sale of the
           Participant's principal residence in connection with any such change
           of residence;

     (v)   the failure by Eaton to continue to effect any benefit or
           compensation plan (including but not limited to the plans described
           under paragraph (iii) above), pension plan, life insurance plan,
           health and accident plan or disability plan in which the Participant
           is participating at the time of a Change in Control of Eaton (or
           plans providing the Participant with substantially similar benefits),
           the taking of any action by Eaton which would adversely affect the
           Participant's participation in or materially reduce the Participant's
           benefits under any of such plans or deprive the Participant of any
           material fringe or personal benefit enjoyed by the Participant at the
           time of the Change in Control of Eaton, or the failure by Eaton to
           provide the Participant with the number of paid vacation days to
           which the Participant is then entitled on the basis of years of
           service with Eaton in accordance with Eaton's normal vacation policy
           in effect immediately prior to the Change in Control of Eaton;
<PAGE>
     (vi)  the failure of Eaton to obtain the assumption of this Plan by any
           successor (whether direct or indirect, by purchase, merger,
           consolidation or otherwise) to all or substantially all of the assets
           of Eaton, by agreement in form and substance satisfactory to the
           Participant, to expressly assume this Plan and the obligations of
           Eaton hereunder; or

     (vii) any purported termination of the Participant's employment which is
           not effected pursuant to a Notice of Termination satisfying the
           requirements of a Notice of Termination as herein defined (and, if
           applicable, the definition of "Cause" as herein defined); and for
           purposes of this Plan, no such purported termination shall be
           effective.

     INCENTIVE COMPENSATION: The full amount of the annual Incentive
     Compensation awarded to a Participant under the Executive Incentive
     Compensation Plan.

     INCENTIVE YEAR: An incentive year as defined under the provisions of the
     Executive Incentive Compensation Plan.

     MEAN PRICE: The mean between the highest and lowest quoted selling price of
     an Eaton Common Share on the New York Stock Exchange List of Composite
     Transactions.

     NORMAL RETIREMENT DATE: The date a Participant attains age sixty-five (65).

     NOTICE OF TERMINATION: Any termination of the Participant's employment by
     Eaton for Cause or Disability or by the Participant for Good Reason shall
     be communicated by written Notice of Termination to the Participant or
     Eaton, respectively. For purposes of this Plan, a "Notice of Termination"
     shall mean a notice which shall indicate the specific termination provision
     in this Plan relied upon and shall set forth in reasonable detail the facts
     and circumstances claimed to provide a basis for termination of the
     Participant's employment under the provision so indicated.

     PARTICIPANT: An employee of Eaton in a key position receiving benefits
     under the Executive Incentive Compensation Plan and participating under the
     Plan.

     PERIODIC COMPENSATION: That portion of a Participant's Incentive
     Compensation which is deferred under the Plan for payment over a period not
     in excess of five (5) years.

     PERIODIC INSTALLMENTS: Equal annual payments over a period not to exceed 15
     years, as elected by the Participant in accordance with the terms of the
     Plan. Periodic Installments are paid on or about March 15 of each year,
     except as otherwise provided herein.
<PAGE>
     PLAN: The Deferred Incentive Compensation Plan pursuant to which all or a
     portion of Incentive Compensation may be deferred for later payment to a
     Participant effective January 1, 2005, and adopted December 8, 2004.

     RETIREMENT: The Termination of Employment of a Participant (i) who is age
     fifty-five (55) or older and who has at least ten (10) years of service
     with Eaton; (ii) who is age sixty-five (65) or older; or (iii) who is age
     fifty (50) or older and who has at least ten (10) years of service with
     Eaton and whose employment is terminated by Eaton action.

     RETIREMENT COMPENSATION: That portion of Incentive Compensation deferred
     under the Plan for payment to a Participant upon his or her Retirement.

     TERMINATION AND CHANGE IN CONTROL: Shall mean the termination of the
     employment of a Participant for any reason whatsoever prior to a Change in
     Control, upon a subsequent Change in Control or termination of the
     employment of a Participant for any reason whatsoever during the three-year
     period immediately following a Change in Control.

     TERMINATION OF EMPLOYMENT: The time when a Participant shall no longer be
     employed by Eaton whether by reason of Retirement, death, voluntary
     resignation (with or without Good Reason), divestiture or closing of a
     business unit, plant or facility, discharge (with or without Cause), or
     such disability that, under the then current employment practices of Eaton,
     the employment of the Participant is deemed to have been terminated.

     TREASURY BILL INTEREST EQUIVALENT: A rate of interest equal to the
     quarterly average yield of 13-week U.S. Government Treasury Bills.

     TRUSTEE: Shall mean the trustee of any trust which holds assets for the
     payment of the benefits provided by the Plan.

IV.  ELECTION TO DEFER
     -----------------

     Section 4.01.  With respect to Incentive Compensation for each Incentive
     ------------
     Year commencing in or after 2005, the Participant shall be given the
     opportunity to elect, by signing and delivering to the Committee a Deferred
     Incentive Compensation Agreement, the manner and extent to which the
     Participant's Incentive Compensation awarded in respect to such Incentive
     Year shall be deferred under the Plan and the allocation between Periodic
     Compensation and Retirement Compensation. At the time such election is made
     the Participant shall specify with respect to the deferral for such
     Incentive Year the time and form of payment for such amount as follows:
<PAGE>
     (a)  With respect to any amount allocated to Periodic Compensation, the
          Participant shall specify the year (subject to the provisions of
          Section 5.02) in which payment of such amount shall be made or
          commence in the form of Periodic Installments and the number of years,
          not to exceed five (5) over which payment shall be made.

     (b)  With respect to any amount allocated to Retirement Compensation, the
          Participant shall specify whether such amount is to be distributed as
          a lump sum or in the form of Periodic Installments over a period of
          five (5), ten (10), or fifteen (15) years, subject, however, to the
          provisions of Section 4.06.

     Section 4.02.  Not less than 10% of Incentive Compensation awarded for any
     ------------
     Incentive Year may be deferred under the Plan.

     Section 4.03.  If a Participant elects to allocate a portion of Incentive
     ------------
     Compensation to both Periodic Compensation and Retirement Compensation, the
     amount allocated to each form of Compensation shall be not less than 10% of
     the Incentive Compensation awarded for any Incentive Year.

     Section 4.04.  To be in effect for an Incentive Year, a Participant's
     ------------
     election pursuant to Section 4.01 must be completed on or before December
     31 of the immediately preceding Incentive Year. Moreover, in the case of
     the first year in which a Participant becomes eligible to participate in
     the Plan, such election shall 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 4.05.  Once a Participant has made an effective election under
     ------------
     Section 4.01 with respect to the deferral and allocation of his or her
     Incentive Compensation, he or she may not thereafter change that election
     other than as provided in Section 4.06 or change the allocation between
     Periodic Compensation and Retirement Compensation.

     Section 4.06.  A Participant who has made an effective election under
     ------------
     Section 4.01 with respect to deferral of Retirement Compensation for
     payment in a lump sum following Retirement may make a subsequent election
     to delay payment or commencement of payment of such amount for a period of
     five (5) years from the date such payment would otherwise have been made or
     change the form of a payment in accordance with the following provisions,
     subject to such administrative rules and procedures as may be established
     by the Committee:

     (a)  the subsequent election shall not take effect until 12 months after
          the date on which it is made; and

     (b)  payment in the form of Periodic Installments over a period of five
          years may be elected.
<PAGE>
V.   PERIODIC COMPENSATION
     ---------------------

     Section 5.01.  There shall be computed and credited quarterly to the
     ------------
     Participant's Account Treasury Bill Interest Equivalents on all unpaid
     Periodic Compensation.

     Section 5.02.  Commencing on or about March 15 of the year elected by the
     ------------
     Participant (but not earlier than the second year following the Incentive
     Year for which the Periodic Compensation was credited to the Participant),
     the Periodic Compensation shall be paid to the Participant in not more than
     five (5) equal annual installments, as elected by the Participant; and,
     with each such installment, there shall be paid to the Participant all
     Treasury Bill Interest Equivalents credited to the Participant and then
     unpaid.

     Section 5.03.  Upon Termination of Employment, any unpaid Periodic
     ------------
     Compensation and any unpaid Treasury Bill Interest Equivalents credited
     thereon shall be paid to the Participant, or his or her Beneficiary, as the
     case may be, in a lump sum payment as soon as practicable.

VI.  RETIREMENT COMPENSATION
     -----------------------

     Section 6.01.  The amount of Deferred Incentive Compensation allocated to
     ------------
     Retirement Compensation shall correspond with the portion of the Incentive
     Compensation award elected by the Participant pursuant to Section 4.01.
     Amounts allocated as Retirement Compensation shall be converted into a
     number of Contingent Share Units on such date or dates as shall correspond
     with the determination and transfer of Incentive Compensation (it being
     understood that such transfer will be the payment date of such Incentive
     Compensation). The amounts allocated as Retirement Compensation shall be
     converted into a number of Contingent 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 following the end of the Incentive Year in which the Incentive
     Compensation so allocated was earned.

     Section 6.02.  On each dividend payment date for Eaton Common Shares,
     ------------
     Dividend Equivalents shall be credited to the Participant's Account with
     respect to all Contingent Share Units then credited to such Account and
     shall be converted into an appropriate number of Contingent Share Units
     utilizing the procedures set forth in Section 6.01 but at the Mean Price on
     said dividend payment date.

     Section 6.03.  In determining the number of Contingent Share Units to be
     ------------
     credited to a Participant, whether by reason of the conversion of
     Retirement Compensation to Contingent Share Units or by reason of the
     conversion of Dividend Equivalents to Contingent Share Units, such number
     may be expressed in fractions of a Contingent Share Unit computed to the
     nearest tenth. The number of Contingent Share Units credited to a
     Participant shall be appropriately adjusted to reflect any change in the
     capitalization of Eaton resulting from a stock dividend, stock split,
     reorganization,
<PAGE>
     merger, consolidation, recapitalization, combination, exchange of shares or
     any other similar events.

     Section 6.04.  Upon Retirement or other Termination of Employment of the
     -------------
     Participant or upon any other distribution of Retirement Compensation, (x)
     all Contingent Share Units standing to his or her credit shall be converted
     to an equal number of Eaton Common Shares and (y) his or her account shall
     be credited with an additional amount equal to the amount, if any, by which
     the amount determined under Subsection 6.04(a) exceeds the greater of the
     amounts determined under Subsections 6.04(b) and (c):

     (a)  the total of all Incentive Compensation allocated to Retirement
          Compensation, as determined prior to conversion to Contingent Share
          Units pursuant to Section 6.01 hereof, and Treasury Bill Interest
          Equivalents, compounded quarterly, in respect to such Incentive
          Compensation for the period from the date of allocation to the date of
          such Retirement or other Termination of Employment or distribution, as
          the case may be.

     (b)  the product of the average of the Mean Prices for an Eaton Common
          Share for the twenty (20) trading days of the New York Stock Exchange
          during which Eaton Common Shares were traded immediately preceding the
          date of Retirement or other Termination of Employment or distribution
          multiplied by the number of Contingent Share Units then credited to
          the Participant's Account.

     (c)  if a Change in Control of Eaton shall have occurred at any time within
          the period of thirty-six (36) months immediately preceding the
          Participant's Retirement or other Termination of Employment or other
          distribution, the product of the highest of the following:

          (i)  the highest price paid for an Eaton Common Share in any tender
               offer in connection with the Change in Control of Eaton;

          (ii) the price received for an Eaton Common Share in any merger,
               consolidation or similar event in connection with the Change in
               Control of Eaton; or

          (iii) the highest price paid for an Eaton Common Share as reported in
               any Schedule 13D within the sixty (60) day period immediately
               preceding the Change in Control of Eaton;

          multiplied by the number of Contingent Share Units credited to the
          Participant's Account at the time of his or her Retirement or other
          Termination of Employment or distribution.
<PAGE>
     The additional amount, if any, so determined shall not be converted to
     Eaton Common Shares but shall be credited to the Participant's Account on
     the date of such determination and held for later distribution as set forth
     in Section 6.05.

     Section 6.05.  Upon Retirement or other Termination of Employment of a
     -------------
     Participant or upon any other distribution of Retirement Compensation, and
     after the conversion of Contingent Share Units to Eaton Common Shares and
     the calculation of the additional amount, if any, to be credited to the
     Participant's Account as set forth in Section 6.04, distribution of such
     Eaton Common Shares and the additional amount (distributable in cash), if
     any, for each Incentive Year shall be made or commence. Upon Retirement
     distribution shall be made in accordance with the election made by the
     Participant under the terms of the Plan with respect to method of payment,
     with distribution made or commencing on or about March 15 of the year
     following the date of such Retirement, subject to the provisions of Section
     9.03, provided that in the event the Participant has made no election for
     an Incentive Year, such amount relating to such Incentive Year shall be
     payable in a single sum payment, and provided, further, that in the event
     of the Participant's death prior to distribution of his or her entire
     Account, the remaining amount shall be distributed to the Participant's
     beneficiary in a single sum payment as soon as practicable following the
     date of death. In the event of a Participant's Termination of Employment
     other than Retirement, such amount shall be paid in a single sum payment as
     soon as practicable following the date of such Termination of Employment,
     subject to the provisions of Section 9.03.

     Section 6.06.  There shall be computed on a quarterly basis and credited to
     -------------
     the Participant's Account Dividend Equivalents on the unpaid amount of
     Retirement Compensation determined pursuant to Section 6.04 until such
     Retirement Compensation is paid by Eaton. All credited Dividend Equivalents
     shall be converted to Eaton Common Shares using the method set forth in
     Section 6.04 but based on a date which is as near to the distribution date
     as is administratively practical. There shall be computed and credited
     quarterly to the Participant's Account Treasury Bill Interest Equivalents
     on all unpaid additional amounts credited pursuant to Section 6.04.

     Section 6.07.  The Eaton Common Shares credited to the Participant's
     -------------
     Account in accordance with Section 6.04 (as well as any additional amount
     credited to the Participant's Account) shall be distributed to the
     Participant or his Beneficiary, as the case may be, in accordance with the
     schedule for distribution determined under Section 6.05, and with each
     Periodic Installment, if any, there shall be paid all Dividend Equivalents
     and Treasury Bill Interest Equivalents credited to the Participant and then
     unpaid.

VII. AMENDMENT AND TERMINATION
     -------------------------

     Section 7.01.  Eaton fully expects to continue the Plan but it reserves the
     -------------
     right, at any time or from time to time, by action of the Board Committee,
     to modify or amend the
<PAGE>
     Plan, in whole or in part, or 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.

     Section 7.02.  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 855(f)
     of the American Jobs Creation Act of 2004. Moreover, to the extent
     permitted in guidance issued by the Secretary of the Treasury and in
     accordance with procedures established by the Committee, a Participant may
     be permitted to terminate participation in the Plan or cancel an
     outstanding deferral election with regard to amounts deferred after
     December 31, 2004. Notwithstanding any provision of the Plan to the
     contrary, no otherwise permissible election or distribution shall be made
     or given effect under the Plan that would result in taxation of any amount
     under Section 409A of the Code.

VIII. ADMINISTRATION
      --------------

     Section 8.01.  The Plan shall be administered by the Committee in
     -------------
     accordance with rules of general application for the administration of the
     Plan as the Committee may, from time to time, adopt. 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 the rules adopted by the Committee.

     Section 8.02.  Each Participant or Beneficiary must claim any benefit to
     -------------
     which he or she 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 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.

IX.  PAYMENTS TO PARTICIPANTS
     ------------------------

     Section 9.01.
     -------------
<PAGE>
     Notwithstanding anything herein to the contrary other than Section 9.03,
     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.
     -------------

     No later than the date a Participant makes an initial election under the
     Plan, a Participant shall select one of the payment alternatives set forth
     below with respect to that portion of the Participant's Plan Account equal
     to the full amount of the Account minus the Funded Amount, and with respect
     to that portion of the Account equal to the Funded Amount. The payment
     alternatives selected with respect to the two portions of the Account need
     not be the same. The payment alternatives are as follows:

     (a)  a lump sum payment within 30 days following the Termination and Change
          in Control;

     (b)  payment in monthly, quarterly, semiannual or annual payments, over a
          period not to exceed fifteen years, as selected by the Participant at
          the time provided in the first paragraph of this Section 9.02,
          commencing within 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, except that earnings attributable
          to periods following Termination and Change in Control shall be
          included with each payment.

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

     Section 9.03.  Notwithstanding any provision of the Plan to the contrary,
     -------------
     Compensation deferred under the Plan shall not be distributed earlier than:

     (a)  separation from service as determined by the Secretary of the Treasury
          (except as provided below with respect to a key employee of Eaton);

     (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 Compensation;

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

     In the case of any key employee (as defined in Section 416(i) of the Code
     without regard to paragraph (5) thereof) of Eaton, distributions may not be
     made before the date which is six months after the date of separation from
     service (or, if earlier, the date of death of the Participant).

X.   MISCELLANEOUS
     -------------

     Section 10.01.  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 Deferred Incentive Compensation upon his or her death. Any such
     designation shall be revocable by the Participant.

     Section 10.02.  The Committee may, in its sole discretion, change the
     --------------
     amount of the Periodic Installments or the number of years over which the
     Periodic Installments are to be paid or permit the payment of any Deferred
     Incentive Compensation at any date or dates which may be earlier than the
     payment date or dates provided under the Plan only to the extent Treasury
     Regulations permit the exercise of such discretion as permissible within
     the restrictions of Section 409A of the Code.

     Section 10.03.  All payments under the Plan shall be subject to such taxes
     --------------
     (federal, state or local) as may be due thereon and the determination by
     the Committee as to withholding with respect thereto shall be binding upon
     the Participant and his or her Beneficiary.

     Section 10.04.  If any Participant under the Plan is a member of the
     --------------
     Committee, he or she shall not participate as a member of the Committee in
     any determination under the Plan relating to his or her Deferred Incentive
     Compensation.

     Section 10.05.  All action of the Committee hereunder may be taken with or
     --------------
     without a meeting. If taken without a meeting, the action shall be in
     writing and signed by a majority of the members of the Committee and if
     taken with a meeting, a majority of the Committee shall constitute a quorum
     for any such action.

     Section 10.06.  Subject to any federal statute to the contrary, no right or
     --------------
     benefit under the Plan shall be subject to anticipation, alienation, sale,
     assignment, pledge, encumbrance, or charge, 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
<PAGE>
     entitled to such benefits. If the Participant or Beneficiary shall become
     bankrupt, or attempt to anticipate, alienate, sell, assign, pledge,
     encumber, or charge any right hereunder, then such right or benefit shall,
     in the discretion of the Company, cease and terminate, and in such event,
     the Company may hold or apply the same or any part thereof for the benefit
     of the Participant or his or her spouse, children, or other dependents, or
     any of them, in such manner and in such amounts and proportions as the
     Company may deem proper.

     Section 10.07.  The obligations of Eaton to make payments hereunder shall
     --------------
     constitute a liability of Eaton to the Participant. Eaton may, but 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.

     Section 10.08.  The Plan shall not be deemed to constitute a contract of
     --------------
     employment between Eaton and a Participant. Neither shall the execution of
     the Plan nor any action taken by Eaton pursuant to this Plan be held or
     construed to confer on a Participant any legal right to be continued as an
     employee of Eaton, in an executive position or in any other capacity with
     Eaton whatsoever.

     Section 10.09.  Obligations incurred by Eaton pursuant to the Plan shall be
     --------------
     binding upon and inure to the benefit of Eaton, its successors and assigns,
     and the Participant or his or her Beneficiary.

     Section 10.10.  The Plan shall be construed and governed in accordance with
     --------------
     the law of the State of Ohio.

     Section 10.11.  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.

     Section 10.12.  All headings used in the Plan are for convenience of
     --------------
     reference only and are not part of the substance of the Plan.
<PAGE>
                              APPROVAL AND ADOPTION
                              ---------------------

The Eaton Corporation Deferred Incentive Compensation Plan II, in the form
attached hereto, is hereby approved and adopted.

/s/ Susan J. Cook                                        Date: December 10, 2004
-------------------------------------
Name

Vice President- Human Resource
-------------------------------------
Title

/s/ Earl R. Franklin
-------------------------------------
Name
Title Vice President andSecretary

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