<PAGE>
EXHIBIT 10 (G)
EATON CORPORATION
2007 ANNUAL REPORT ON FORM 10-K
ITEM 15 (B)
EATON CORPORATION EXCESS BENEFITS PLAN II
The
Eaton Corporation Excess Benefits Plan II, an unfunded,
nonqualified
deferred compensation plan adopted December 8, 2004, is set forth
below, as
amended and restated effective January 1, 2008 and such other dates
as may be
provided herein.
1.
Purpose. The purpose of the Excess Benefits Plan is to provide
benefits
in excess of the limitations under Section 415 of the Code for
employees who
participate as salaried participants under a Pension Plan sponsored
by the
Corporation or one of its operating subsidiaries.
2.
Definitions. The following definitions are used throughout the
Plan.
(a)
"Benefits Committee" means the Pension Administration Committee
comprised of corporate officers.
(b)
"Board of Directors" means the Board of Directors of the
Corporation.
(c)
"Code" means the Internal Revenue Code of 1986, as amended and
in
effect from time to time.
(d)
"Committee" means the Compensation and Organization Committee of
the
Board of Directors.
(e)
"Corporation" means Eaton Corporation, an Ohio corporation.
(f)
"Participant" means a participant in the Pension Plan who is
eligible
to receive benefits under the Plan. The term "Participant" shall
include the
beneficiary of a deceased Participant.
<PAGE>
(g)
"Pension Plan" means the Pension Plan for Eaton Corporation
Employees
sponsored by the Corporation, which is a defined benefit plan
intended to
qualify under Section 401(a) of the Code, and each other defined
benefit plan
sponsored by a subsidiary of the Corporation that is intended to
qualify under
section 401(a) of the Code.
(h)
"Plan" or "Excess Benefits Plan II" means the Eaton Corporation
Excess
Benefits Plan II as amended from time to time.
3.
Eligibility. A Participant who is eligible to receive a benefit
under
the Pension Plan shall also be eligible to receive a benefit in an
amount
determined under Section 4.
4.
Excess Benefits. A Participant who is eligible to receive a
benefit
under the Pension Plan shall be entitled to receive a benefit under
the Plan in
an amount equal to the difference between (i) and (ii), where:
(i) equals the aggregate amount of monthly income payable to
the
Participant under the Pension Plan on the normal benefit
commencement date
specified in the Pension Plan as determined under the normal
retirement
benefit formula of the Pension Plan before applying any provision
reducing
pension benefits because of the provisions of the Code limiting the
maximum
amount of an employee's compensation which may be taken into
account for
purposes of calculating benefits under the Pension Plan and before
applying
the
maximum benefit limitations under Section 415 of the Code; and
(ii) equals the aggregate amount of monthly income determined
in
paragraph (i) after applying the maximum benefit limitations of
Section 415
of
the Code.
Notwithstanding the foregoing, a Participant's benefit under the
Plan shall
be reduced by the present value of the amount to which the
Participant would
have been entitled under the Eaton Corporation Excess Benefits Plan
("Plan I")
if the Participant had voluntarily terminated services without
cause on December
31, 2004, and received a payment of the benefits in the form with
the
-2-
<PAGE>
maximum value available from Plan I on the earliest possible date
allowed under
Plan I to receive a payment of benefits following a termination of
services
(such amount being hereinafter referred to as the "Grandfathered
Amount").
Notwithstanding the foregoing, the Grandfathered Amount may
increase to equal
the present value of the benefit the Participant actually becomes
entitled to,
in the form and at the time actually paid, determined under the
terms of Plan I
(including applicable limits under the Code), as in effect on
October 3, 2004,
without regard to any further services rendered by the Participant
after
December 31, 2004, or any other events affecting the amount of or
the
entitlement to benefits (other than a participant election with
respect to the
time or form of an available benefit). For purposes of calculating
the present
value of a benefit under this paragraph, reasonable actuarial
assumptions and
methods must be used.
5.
Vesting. Subject to the rights of general creditors as set forth
in
Section 8 and the right of the Corporation to discontinue the Plan
as provided
in Section 10(c), a Participant shall have a vested and
nonforfeitable interest
in the benefit payable under Section 4 to the same extent and in
the same manner
as the Participant's benefit is vested under the Pension Plan.
6.
Benefit Payment Date. The amount of the benefit payable to a
Participant
under Section 4 shall be calculated as of his "calculation date"
which is the
first day of the month next following (i) the date of his
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) or (ii) if later in the case of a
Participant
who was accruing a benefit under Appendix A or Appendix B of the
Pension Plan on
January 1, 2003, the date he attains age 55. Such amount shall be
credited with
interest based on the "applicable interest rate" determined under
Section 417(e)
of the Code (in the manner used under the Pension Plan) until his
benefit
payment date determined under this Section
-3-
<PAGE>
6. A Participant's benefit shall be paid on or about the first day
of the third
month next following (i) the date of his separation from service
(within the
meaning of Section 409A of the Code, as further described above) or
(ii) if
later in the case of a Participant who was accruing a benefit under
Appendix A
or Appendix B of the Pension Plan on January 1, 2003, the date he
attains age
55. Notwithstanding the foregoing, in the case of a Participant who
is
determined by the Corporation to be a "specified employee" within
the meaning of
Section 409A of the Code and applicable Treasury regulations,
payment shall not
in any event be made until the first business day of the month
which is six (6)
months after the date of his separation from service hereunder (or,
if earlier,
the date of death of the Participant). If the Participant receives
payment of
the benefit hereunder before the normal benefit commencement date
under the
Pension Plan, the benefit payable under Section 4 shall also be
reduced by
applying the same factors that would be applied for such purpose
