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                                                                  EXHIBIT 10 (E)

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

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

                                   I. PURPOSE

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

                                 II. ELIGIBILITY

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

                                III. DEFINITIONS

     The terms used herein shall have the following meanings:

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

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

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

     Board - The Board of Directors of Eaton.

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

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

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

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

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

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

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

     Eaton Common Shares - The common shares of Eaton.

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

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

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

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

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

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

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

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

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

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

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

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

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                              IV. ELECTION TO DEFER

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

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

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

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

                           V. SHORT-TERM DEFERRED FEES

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

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                          VI. RETIREMENT DEFERRED FEES

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

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

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

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

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

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

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

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

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

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

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

     (c)  death of the Participant;

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

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

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

                         VII. AMENDMENT AND TERMINATION

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

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

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

                              VIII. ADMINISTRATION

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

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

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

     The determinations of the Committee shall be final and conclusive.

                      IX. TERMINATION AND CHANGE IN CONTROL

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

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

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

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

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

                                X. MISCELLANEOUS

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

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

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

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

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

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

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

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

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                              APPROVAL AND ADOPTION

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

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

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                                                                  EXHIBIT 10 (F)

                                EATON CORPORATION

                         2007 ANNUAL REPORT ON FORM 10-K

                                   ITEM 15 (B)

            EATON CORPORATION DEFERRED INCENTIVE COMPENSATION PLAN II

                            EFFECTIVE JANUARY 1, 2005

                                2008 RESTATEMENT

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                                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, Treasury Bill Interest Equivalents, and Treasury Note Based
     Interest.

     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.

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

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

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

     COMMITTEE: The Management Compensation Committee of Eaton.

     COMMON SHARE RETIREMENT COMPENSATION: Retirement Compensation which is
     converted into Contingent Share Units in accordance with Article VI.

     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, Contingent Share Units, and Treasury
     Note Based Interest 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.

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

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

     EATON COMMON SHARES: The common shares of Eaton.

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

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

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

     INTEREST RATE RETIREMENT COMPENSATION: Retirement Compensation which is
     credited with Treasury Note Based Interest in accordance with Article VI.

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

     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
     fifteen (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.

     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 who is age fifty
     (50) or older and has at least ten (10) years of service with Eaton. For
     this purpose, service shall be measured in the same manner as Service under
     the Pension Plan for Eaton Corporation Employees.

     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 two
     (2)-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 terminated.

                                       4

<PAGE>

     Termination of Employment shall include "separation from service" within
     the meaning of Section 409A of the Code, meaning that a Participant whose
     level of bona fide services is permanently decreased to no more than twenty
     (20) percent of the average level of bona fide services performed over the
     preceding 36-month period shall incur a separation from service for
     purposes of the Plan. Notwithstanding the foregoing, upon a sale or other
     disposition of assets of Eaton or any of its subsidiaries to an unrelated
     purchaser, Eaton reserves the right, to the extent permitted by Section
     409A of the Code, to determine whether Participants providing services to
     the purchaser after and in connection with the purchase transaction have
     experienced a separation from service.

     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.

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:

     (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 ten (10) percent 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 ten
     (10) percent 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 year immediately preceding the 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

                                       5

<PAGE>

     date the Participant becomes eligible to participate in the Plan. In the
     event that an election is made hereunder in the Participant's first year of
     eligibility with respect to compensation that is earned based on a specific
     performance period and after the beginning of that performance period, the
     election shall apply only to the compensation paid for services performed
     after the election. An election will be deemed to apply to compensation
     paid for services performed after the election if the election applies to
     no more than an amount equal to the total amount of the compensation for
     the performance period multiplied by the ratio of the number of days
     remaining in the performance period after the election over the total
     number of dates in the performance period.

     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,
     which election may include a change in the form of 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 (5)
          years may be elected.

     Any such subsequent election shall become irrevocable on the later of the
     date when made or the date which is 12 months before the date the
     Participant could first be eligible for Retirement. Notwithstanding the
     foregoing provisions of this Section 4.06, no such subsequent election
     shall be given effect unless the Participant has a Termination of
     Employment by reason of Retirement.

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 earlier 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

                                       6

<PAGE>

     Participant, or his or her Beneficiary, as the case may be, in a lump sum
     payment within sixty (60) days following such Termination of Employment,
     subject to the provisions of Section 9.03.

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.
     Retirement Compensation 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. For each award period ending after December 31, 2007, the Participant
     may elect in ten (10) percent increments, the amount, if any, of Retirement
     Compensation to be credited to Common Share Retirement Compensation, and
     the balance shall be credited to Interest Rate Retirement Compensation.

     Section 6.02. Common Share 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 (20) trading days of the New
     York Stock Exchange during which Eaton Common Shares were traded
     immediately following the end of the incentive period in which the
     Incentive Compensation to be deferred was earned. On each Eaton Common
     Share dividend payment date, Dividend Equivalents equal to the actual Eaton
     Common Share dividends paid shall be credited with respect to the
     Contingent Share Units in the Participant's Account, and shall in turn be
     converted into Contingent Share Units utilizing the Mean Price for Eaton
     Common Shares on the dividend payment date.

     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, merger,
     consolidation, recapitalization, combination, exchange of shares or any
     other similar events.

     Upon any distribution of Common Share Retirement Compensation, all
     Contingent Share Units standing to his or her credit which are to be
     distributed shall be converted to an equal number of Eaton Common Shares
     for distribution to the Participant in the form of Eaton Common Shares.

     Section 6.03. Upon Retirement or other Termination of Employment of a
     Participant or upon any other distribution of Common Share Retirement
     Compensation, and after the conversion of Contingent Share Units to Eaton
     Common Shares as set forth in Section 6.02, distribution of such Eaton
     Common Shares 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
     Sections 4.06 and 9.03 to the extent applicable, 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

                                       7

<PAGE>

     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 within ninety (90) days 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 within sixty
     (60) days following the date of such Termination of Employment, subject to
     the provisions of Section 9.03.

     There shall be computed on a quarterly basis and credited to the
     Participant's Account Dividend Equivalents on the unpaid amount of Common
     Share Retirement Compensation until such Common Share Retirement
     Compensation is paid by Eaton. All credited Dividend Equivalents shall be
     converted to Eaton Common Shares using the method set forth in Section
     6.02.

     The Eaton Common Shares credited to the Participant's Account in accordance
     with Section 6.02 shall be distributed to the Participant or his
     Beneficiary, as the case may be, in accordance with the schedule for
     distribution determined under this Section 6.03, and with each Periodic
     Installment, if any, there shall be paid all Dividend Equivalents credited
     to the Participant and then unpaid.

     Section 6.04. Retirement Compensation not credited to Common Share
     Retirement Compensation shall be credited to Interest Rate Retirement
     Compensation. Interest Rate Retirement Compensation shall be credited to
     the Interest Rate Retirement Compensation Account, which shall earn
     Treasury Note Based Interest, compounded quarterly, until paid.

     Section 6.05. Upon Retirement or other Termination of Employment of a
     Participant or upon any other distribution of Interest Rate Retirement
     Compensation, distribution 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 Sections 4.06 and 9.03 to the extent applicable, 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 within ninety (90) days 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 within sixty
     (60) days following the date of such Termination of Employment, subject to
     the provisions of Section 9.03.

     Interest Rate Retirement Compensation credited to the Participant's Account
     in accordance with Section 6.04 shall be distributed to the Participant or
     his Beneficiary, as the case may be, in accordance with the schedule for
     distribution determined under this Section 6.05, and with each Periodic
     Installment, if applicable, there shall be paid to the Participant all
     Treasury Note Based Interest credited to the Participant and then unpaid.

VII. AMENDMENT AND TERMINATION

                                       8

<PAGE>

     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 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, after January 1, 2007,
     and on or before December 31, 2007, and to the extent permitted by the
     Committee in accordance with terms set forth on an election form provided
     by Eaton, a Participant may make a change in a payment election as
     described in IRS Notice 2006-79, provided that with respect to an election
     to change a time and form of payment made after January 1, 2007 and on or
     before December 31, 2007, the election may apply only to amounts that would
     not otherwise be payable in 2007 and may not cause an amount to be paid in
     2007 that would not otherwise be payable in 2007.

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. The Board shall have the authority, in its sole discretion,
     to terminate the Plan and pay each Participant's entire benefit to the
     Participant or, if applicable, his Beneficiary, pursuant to an irrevocable
     action taken by the Board within the thirty (30) days preceding or the 12
     months following a Change in Control, provided that this Section 9.01 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

                                       9

<PAGE>

     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 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 9.01, 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.

     Section 9.02. 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 "specified 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;

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

     (g)  termination of the Plan as described in Section 7.01 or 9.01.

In the case of any Participant who is determined by Eaton to be a "specified
employee" within the meaning of Section 409A of the Code and applicable Treasury
regulations, distributions shall not in any event be made or begin until the
first business day of the month which is six (6) months after the date of his
separation from service (or, if earlier, the date of death of the Participant)
(the "permitted payment date"). In the event any payment to a specified employee
is delayed by reason of this provision, such payment (including interest or
earnings otherwise credited through the permitted payment date) shall be made on
such permitted payment date.

                                       10

<PAGE>

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 (1) 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. 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 10.03. 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 10.04. 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 10.05. 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 entitled to such benefits.

     Section 10.06. 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 10.07. In the event that it shall be determined in accordance with
     any policy, program or standard adopted by Eaton that any Incentive
     Compensation payable to a Participant which has been deferred under the
     terms of the Plan is to be restored to Eaton, the Account of such
     Participant shall be appropriately adjusted to eliminate such deferral, and
     no substitution shall be provided.

     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.

                                       11

<PAGE>

     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.

     Section 10.13. The Plan was adopted by the Board on December 8, 2004,
     effective January 1, 2005, and is amended and restated effective January 1,
     2008, as set forth herein.

                              APPROVAL AND ADOPTION

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

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

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Title

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Name

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