Exhibit 10.1 (bk)

 

SAUER-DANFOSS INC.
SUPPLEMENTAL EXECUTIVE SAVINGS & RETIREMENT PLAN

 

Effective January 1, 2004

 

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SAUER-DANFOSS INC.
SUPPLEMENTAL EXECUTIVE SAVINGS & RETIREMENT PLAN

 

I.                                         PURPOSE AND EFFECTIVE DATE.

 

1.1.                              Purpose.  The Sauer-Danfoss Inc. Supplemental
Executive Savings & Retirement Plan has been established by Sauer-Danfoss Inc.
to attract and retain certain key employees by supplementing such employee’s
retirement income, available under the Sauer-Danfoss Employees’ Retirement Plan
(the “ERP”) and the Sauer-Danfoss Employees’ Savings Plan (the “ESP”), which is
otherwise limited by Sections 415 and 401(a)(17) of the Internal Revenue Code of
1986, as amended, and the regulations issued thereunder.

 

1.2.                              Effective Date.  The Plan shall be effective
January 1, 2004 and shall remain in effect until terminated in accordance with
Article VIII.

 

II.                                     DEFINITIONS.

 

When used in the Plan and initially capitalized, the following words and phrases
shall have the meanings indicated:

 

2.1.                              “Accounts” means the recordkeeping accounts
established for each Participant in the Plan for purposes of accounting for the
amount of the Participant’s Supplemental Benefit Amounts determined and credited
in accordance with Article IV each year, if any, and all adjusted periodically
to reflect the interest earnings or hypothetical investment return on such
amounts in accordance with Article V.

 

2.2.                              “Administrator” means the Committee or such
individual or committee appointed by the Committee to administer the Plan in
accordance with Article VII.  The Committee shall take such actions it deems
necessary or desirable to ensure that such individual or committee has
sufficient and appropriate authority for carrying out the intent and purpose of
the Plan.

 

2.3.                              “Affiliate” means:

 

(a)                                  any corporation, partnership, joint
venture, trust, association or other business enterprise which is a member of
the same controlled group of corporations, trades or businesses as the Company
(within the meaning of Code Section 414), and

 

(b)                                 any other entity that is designated as an
Affiliate by the Committee.

 

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2.4.                              “Beneficiary” means the person or entity
designated by the Participant to receive the Participant’s Supplemental Benefits
Amounts in the event of the Participant’s death.  If the Participant does not
designate a Beneficiary, or if the Participant’s designated Beneficiary
predeceases the Participant, the Participant’s estate shall be the Beneficiary
under the Plan.

 

2.5.                              “Board” means the Board of Directors of the
Company.

 

2.6.                              “Cash Balance Employee” means an employee of
the Company or an Affiliate whose retirement benefit under the ERP is accrued,
on and after January 1, 2001, in whole or in part, under the Cash Balance
Formula (as defined under the terms of the ERP).

 

2.7.                              “Code” means the Internal Revenue Code of
1986, as amended.

 

2.8.                              “Committee” means the Compensation Committee
of the Board of Directors of the Company.

 

2.9.                              “Company” means Sauer-Danfoss Inc. and any
successor thereto.

 

2.10.                        “Compensation” means either:

 

(a)                                  “Compensation” as that term is specifically
defined under the ESP, or

 

(b)                                 “Pay” as that term is specifically defined
under the ERP,

 

as the case may be, depending on the context in which it is being used under
this Plan.

 

2.11.                        “Eligible Employee” means a key employee of the
Company or an Affiliate who (i) is a Cash Balance Employee, and (ii) during a
Plan Year is expected to have Compensation from the Company or any Affiliate in
excess of the Code Section 401(a)(17) limit for such Plan Year.

 

2.12.                        “ERP” means the Sauer-Danfoss Employees’ Retirement
Plan.

 

2.13.                        “ESP” means the Sauer-Danfoss Employees’ Savings
Plan.

 

2.14.                        “Investment Fund or Funds” means the investment
funds designated by the Administrator as the basis for determining the
hypothetical investment return to be credited in accordance with Article V to
Participants’ Supplemental ESP Accounts.  The Investment Funds shall mirror the
available investment funds under the ESP.

 

2.15.                        “Participant” means an Eligible Employee who has
become a participant in the Plan in accordance with Section 3.1.

 

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2.16.                        “Plan” means the Sauer-Danfoss Inc. Supplemental
Executive Savings & Retirement Plan, as set forth herein and as amended from
time to time.

 

2.17.                        “Plan Year” means each calendar year commencing on
and after January 1, 2004.

 

2.18.                        “Supplemental Benefit Amounts” means the amounts
accrued on behalf of the Participant under the Plan, if any, and represents the
sum of the Participant’s Supplemental ERP Amounts and Supplemental ESP Amounts
credited to his or her Account in accordance with Article IV.

 

2.19.                        “Supplemental ERP Account” means the bookkeeping
account established for purposes of accounting for the amount of the
Participant’s Supplemental ERP Amounts determined and credited in accordance
with Article IV each year, if any, as adjusted periodically to reflect the
interest earnings on such amounts in accordance with Article V.

 

2.20.                        “Supplemental ERP Amount” means that portion of the
Supplemental Benefit Amounts determined under Section 4.1(a) of the Plan
specifically pertaining to the ERP and credited to the Participant’s
Supplemental ERP Account in accordance with Article IV.

 

2.21.                        “Supplemental ESP Account” means the bookkeeping
account established for purposes of accounting for the amount of the
Participant’s Supplemental ESP Amounts determined and credited in accordance
with Article IV each year, if any, as adjusted periodically to reflect the
hypothetical investment return or hypothetical investment loss on such amounts
in accordance with Article V.

 

2.22.                        “Supplemental ESP Amount” means that portion of the
Supplemental Benefit Amounts determined under Section 4.1(b) of the Plan
specifically pertaining to the ESP and credited to the Participant’s
Supplemental ESP Account in accordance with Article IV.

 

2.23.                        “Valuation Date” means a date on which the
Investment Funds are valued and the Participant’s Account is adjusted for any
resulting gains or losses.   The Administrator shall determine the Valuation
Date and such date shall be at least once every calendar year.

 

III.                                 PARTICIPATION.

 

3.1.                              Participation. An Eligible Employee shall
become a Participant in the Plan when he or she has had credited to his or her
Accounts, by the Company, Supplemental Benefit Amounts in accordance with
Article IV.

 

3.2.                              ERISA Exemption.  It is the intent of the
Company that the Plan be exempt from Parts 2, 3 and 4 of Subtitle B of Title I
of the Employee Retirement Income

 

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Security Act of 1974, as amended (“ERISA”), as an unfunded plan that is
maintained by the Company primarily for the purpose of providing deferred
compensation for a select group of management and highly compensated employees
(the “ERISA Exemption”).  Notwithstanding anything to the contrary in
Section 3.1 or in any other provision of the Plan, the Administrator may, in its
sole discretion, exclude any one or more employees from eligibility to
participate or from participation in the Plan, exclude any Participant from
continued participation in the Plan, and take any further action (including the
immediate payment of the Participant’s entire interest under the Plan in a
lump-sum) it considers necessary or appropriate if the Administrator reasonably
determines in good faith that such exclusion or further action is necessary in
order for the Plan to qualify for, or to continue to qualify for, the ERISA
Exemption.

 

IV.                                SUPPLEMENTAL BENEFIT AMOUNTS.

 

4.1.                              Computation of Supplemental Benefit Amounts. 
An Eligible Employee shall be entitled to Supplemental Benefit Amounts for each
Plan Year that he or she is an Eligible Employee.  Such Supplemental Benefit
Amount shall be equal to the sum of:

 

(a)                                  Supplemental ERP Amount:  the excess, if
any, of:

 

(i)                                     the benefit the Eligible Employee
otherwise would have been entitled to have credited to his or her Cash Balance
Account (as defined under the ERP) for his or her benefit under the ERP for a
given year if such benefit was calculated without regard to the following:

 

1.                                       Code Section 415, and

 

2.                                       Code Section 401(a)(17), over

 

(ii)                                  the benefit which the Eligible Employee is
entitled to have credited to his Cash Balance Account (as defined under the ERP)
for his or her benefit for such given year under the ERP, plus

 

(b)                                 Supplemental ESP Amount:  the excess, if
any, of:

 

(i)                                     the benefit the Eligible Employee
otherwise would have been entitled to have credited to his or her Employer
Contribution Account (as defined in the ESP), if any, and his or her Matching
Contribution Account (as defined under the ESP), if any, for a given year if
such benefit(s) was calculated without regard to the following:

 

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(1)                                  Code Section 415,

 

(2)                                  Code Section 401(a)(17),

 

(3)                                  Code Section 401(m)(2), and

 

(4)                                  Code Section 402(g); over

 

(ii)                                  the actual benefit which the Eligible
Employee is entitled to have credited to a separate account for his benefit for
such given year under the ESP with respect to such Employer Contributions and
Matching Contributions.

 

Notwithstanding the foregoing, an Eligible Employee shall not be entitled to
Supplemental Benefit Amounts attributable to amounts that would have been
credited to his Matching Contribution Account for a Plan Year unless the
Eligible Employee had elected Participant Contributions (as defined in the ESP)
for such Plan Year equal to the lesser of four percent (4%) of Compensation or
the limitation in effect under Code Section 402(g) for such Plan Year.

 

4.2.                              Vesting.   A Participant’s Supplemental
Benefit Amounts calculated by the Company in accordance with Sections 4.1 above
shall vest in accordance with the same vesting schedules that may exist, from
time to time, in the ERP and the ESP, as the case may be.

 

4.3.                              Special One Time Supplemental Benefit Amounts
For Certain Participants.  Certain Eligible Employees, but for the January 1,
2004 effective date of this Plan, would have had amounts credited to their
Accounts as Supplemental Benefit Amounts for certain years prior to 2004.  To
reflect this fact, special, one-time Supplemental ERP amounts and/or
Supplemental ESP amounts will be credited to the Accounts of certain Eligible
Employees.  The eligibility for, timing and amount of such special, one-time
Supplemental Benefit amounts pursuant to this Section 4.3 are to be determined
solely at the discretion of the Administrator.

 

4.4.                              Crediting of Supplemental Benefit Amounts. 
The Supplemental Benefit Amounts computed in Section 4.1 above for each Plan
Year shall be credited by the Company to the Participant’s Accounts as soon as
reasonably practicable after the close of the Plan Year to which the Supplement
Benefit Amounts relate.

 

V.                                    ACCOUNTS AND INVESTMENTS.

 

5.1.                              Valuation of Accounts.  The Administrator
shall establish a Supplemental ERP Account and a Supplemental ESP Account for
each Participant who has been credited with a Supplemental ERP Amount or
Supplemental ESP Amount,

 

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respectively.  Such Accounts shall be credited with a Participant’s Supplemental
Benefit Amounts as set forth in Sections 4.4.  As of each Valuation Date, the
Participant’s Accounts shall be adjusted upward or downward to reflect:

 

(a)                                  the interest earnings or investment return
to be credited as of such Valuation Date pursuant to Section 5.3 below,

 

(b)                                 the amount of distributions, if any, to be
debited as of that Valuation Date under Article VI.

 

5.2.                              Earnings and Investments.

 

(a)                                  Supplemental Benefit Relating to the ERP. 
Supplemental ERP Accounts shall be credited with interest annually.  Such
interest credit shall mirror the interest credit on Cash Balance Accounts (as
defined by the terms of the ERP) under the ERP.  For each Plan Year, the amount
credited to the Eligible Employee’s Supplemental ERP Account shall be determined
by multiplying the balance of such Supplemental ERP Account on the first day of
the Plan Year by the one-year Treasury bill rate in effect as of the first
business day of such Plan Year, as published in the Wall Street Journal on such
business day.

 

(b)                                 Supplemental Benefit Relating to the ESP. 
Each Participant generally may direct the manner in which his or her
Supplemental ESP Amounts, if any, shall be deemed invested in and among the
Investment Funds; provided, however, that each investment election made by a
Participant shall, notwithstanding anything to the contrary in the Plan, be
strictly subject to the consent of the Administrator which, in its sole
discretion, may elect to honor the Participant’s request or have the Supplement
ESP Account deemed invested in another manner.  Such deemed investment election
shall be made in accordance with such procedures as the Administrator shall
establish and any such election shall be made in whole percentages.  The
investment authority shall remain at all times with the Administrator.  The
selection of Investment Funds by a Participant shall be for the sole purpose of
determining the rate of return to be credited to his or her Supplement ESP
Account and shall not be treated or interpreted in any manner whatsoever as a
requirement or direction to actually invest assets in any Investment Fund or any
other investment media.

 

5.3.                              Crediting of Interest and Investment Return.

 

(a)                                  Supplemental ERP Account. As provided for
in Section 5.2(a) above, interest shall be credited, on the last day of each
Plan Year, to the Supplemental ERP Account of each Participant who had a
Supplemental ERP Account as of the first day of such Plan Year.  A Participant’s
Supplemental ERP Account shall continue to be credited with such

 

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interest credits until the date on which the Participant’s Accounts are paid out
in accordance with Article VI.

 

If the date on which the Participant’s Accounts are paid occurs during the
applicable Plan Year, the interest credit shall be prorated on a monthly basis
for that portion of the Plan Year before such payment date.

 

(b)                                 Supplemental ESP Account.  Each
Participant’s Supplemental ESP Account shall be credited on each Valuation Date
with his or her allocable share of investment gains or losses of each Investment
Fund in which his or her Supplemental ESP Amounts, if any, are hypothetically
invested.  The Administrator shall adopt a protocol for allocating the deemed
investment gains and losses similar to that used in the ESP.

 

5.4.                              Changing Investment Fund Options for the
Supplemental ESP Account.  A Participant may, as provided by the Administrator,
make a new election with respect to the hypothetical Investments Funds in which
his or her Supplemental ESP Amounts, if any, shall be deemed invested in the
future.  Any such election shall be made in the form specified by the
Administrator.

 

VI.                                PAYMENT OF BENEFITS.

 

6.1.                              Distribution Upon Termination of Employment. 
If a Participant terminates employment with the Company and/or an Affiliate for
reasons other than death, the vested portion of the Participant’s Accounts shall
be paid in a lump sum payment as soon as practicable following the Valuation
Date coincident with or next following the date of such Participant’s
termination of employment.

 

6.2.                              Distribution of Insignificant Account
Balances.  The vested portion of the Participant’s Accounts may be paid out in a
lump sum payment at any time prior to termination of employment, if the
Administrator determines, in its sole discretion, that the balances of such
accounts are insignificant.

 

6.3.                              Distribution Upon Death.  If a Participant
dies prior to commencement of payment of his or her Accounts, the Participant’s
Beneficiary shall receive a survivor benefit in an amount equal to the vested
portion of the Participant’s Accounts to be paid in a single lump sum as soon as
practicable following the Valuation Date coincident with or next following the
date of the Participant’s death.  Notwithstanding the foregoing, a Beneficiary
may request that the Administrator approve an alternate form of payment of
survivor benefits under this Section 6.3, which request may be granted in the
sole discretion of the Administrator.

 

6.4.                              Form of Payment and Withholding.  All payments
under the Plan shall be made in cash and are subject to the withholding of all
applicable federal, state and local and foreign governmental taxes.

 

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VII.                            ADMINISTRATION.

 

7.1.                              Authority of Administrator.  The Administrator
shall have full power and authority to carry out the terms of the Plan.  The
Administrator may establish such rules and regulations as it may consider
necessary or desirable for the effective and efficient administration of the
Plan.  The Administrator’s interpretation, construction and administration of
the Plan, including any adjustment of the amount or recipient of the payments to
be made, shall be binding and conclusive on all persons for all purposes.  None
of the Company, the Administrator, the Board or the Committee, or any employee,
director or member thereof, shall be liable to any person for any action taken
or omitted in connection with the interpretation, construction and
administration of the Plan.

 

7.2.                              Participant’s Duty to Furnish Information. 
Each Participant shall furnish to the Administrator such information as it may
from time to time request for the purpose of the proper administration of this
Plan.

 

7.3.                              Interested Employee of Administrator.  If any
employee serving as Administrator is also a Participant in the Plan, he or she
may not decide or determine any matter or question concerning his or her
benefits unless such decision or determination could be made by him or her under
the Plan if he or she were not the Administrator.

 

7.4.                              Indemnification.  No person (including any
present or former employee of the Administrator, and any present or former
officer or employee of the Company or any Affiliate) shall be personally liable
for any act done or omitted to be done in good faith in the administration of
the Plan.  Each present or former officer or employee of the Company or any
Affiliate to whom the Administrator has delegated any portion of its
responsibilities under the Plan and each present or former employee serving as
Administrator shall be indemnified and saved harmless by the Company (to the
extent not indemnified or saved harmless under any liability insurance or other
indemnification arrangement with respect to the Plan) from and against any an
all claims of liability to which they are subjected by reason of any act done or
omitted to be done in good faith in connection with the administration of the
Plan, including all expenses reasonably incurred in their defense if the Company
fails to provide such defense.  No individual serving as the Administrator shall
be liable for any act or omission of any other employee serving as
Administrator, nor for any act or omission upon his or her own part, excepting
his or her own willful misconduct or gross neglect.

 

7.5.                              Claims Procedure.

 

(a)                                  Claims for benefits under the Plan shall be
made in writing to the Administrator or its duly authorized delegate.  If the
Administrator or such delegate wholly or partially denies a claim for benefits,
the Administrator or, if applicable, its delegate shall, within a reasonable
period of time, but

 

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no later than ninety (90) days after receipt of the claim, notify the claimant
in writing or electronically of the adverse benefit determination.  Notice of an
adverse benefit determination shall be written in a manner calculated to be
understood by the claimant and shall contain:

 

(i)                                     the specific reason or reasons for the
adverse benefit determination,

 

(ii)                                  a specific reference to the pertinent Plan
provisions upon which the adverse benefit determination is based,

 

(iii)                               a description of any additional material or
information necessary for the claimant to perfect the claim, together with an
explanation of why such material or information is necessary, and

 

(iv)                              an explanation of the Plan’s review procedure
and the time limits applicable to such procedure including a statement of the
claimant’s right to bring a civil action under section 502(a) of ERISA following
an adverse benefit determination.

 

If the Administrator or its delegate determines that an extension of time is
necessary for processing the claim, the Administrator or its delegate shall
notify the claimant in writing of such extension, the special circumstances
requiring the extension and the date by which the Administrator expects to
render the benefit determination.  In no event shall the extension exceed a
period of ninety (90) days from the end of the initial ninety (90) day period. 
If notice of the denial of a claim is not furnished in accordance with this
paragraph (a) within ninety (90) days after the Administrator or its duly
authorized delegate receives it (or within one hundred and eighty (180) days
after such receipt if the Administrator or its delegate determines an extension
is necessary), the claim shall be deemed denied and the claimant shall be
permitted to proceed to the review stage described in paragraph (b) below.

 

(b)                                 Within sixty (60) days after the claimant
receives the written or electronic notice of an adverse benefit determination,
or the date the claim is deemed denied pursuant to paragraph (a) above, or such
later time as shall be deemed reasonable in the sole discretion of the
Administrator taking into account the nature of the benefit subject to the claim
and other attendant circumstances, the claimant may file a written request with
the Administrator that it conduct a full and fair review of the adverse benefit
determination, including the holding of a hearing, if deemed necessary by the
Administrator.  In connection with the claimant’s appeal of the adverse benefit
determination, the claimant may review pertinent documents and may submit issues
and comments in writing.  The Administrator shall render a decision on the
appeal promptly, but not later than sixty (60) days

 

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after the receipt of the claimant’s request for review, unless special
circumstances (such as the need to hold a hearing, if necessary) require an
extension of time for processing, in which case the sixty (60) day period may be
extended to one hundred and twenty (120) days.  The Administrator shall notify
the claimant in writing of any such extension, the special circumstances
requiring the extension, and the date by which the Administrator expects to
render the determination on review.  The claimant shall be notified of the
Administrator’s decision in writing or electronically.  In the case of an
adverse determination, such notice shall:

 

(i)                                     include specific reasons for the adverse
determination,

 

(ii)                                  be written in a manner calculated to be
understood by the claimant,

 

(iii)                               contain specific references to the pertinent
Plan provisions upon which the benefit determination is based,

 

(iv)                              contain a statement that the claimant is
entitled to receive upon request and free of charge, reasonable access to, and
copies of, all documents, records, and other information relevant to the
claimant’s claim for benefits, and

 

(v)                                 contain a statement of the claimant’s right
to bring an action under section 502(a) of ERISA.

 

VIII.                        AMENDMENT AND TERMINATION.

 

The Committee may amend or terminate the Plan at any time; provided, however,
that no such amendment or termination shall have a material adverse effect on
any Participant’s rights under the Plan accrued as of the date of such amendment
or termination without such Participant’s written consent.  Upon termination of
the Plan, the Committee may make a lump-sum payment of all benefits for all
Participants at substantially the same time.

 

IX.                                MISCELLANEOUS.

 

9.1.                              No Implied Rights; Rights on Termination of
Service.  Neither the establishment of the Plan nor any amendment thereof shall
be construed as giving any Participant, Beneficiary or any other person,
individually or as a employee of a group, any legal or equitable right unless
such right shall be specifically provided for in the Plan or conferred by
specific action of the Committee or the Administrator in accordance with the
terms and provisions of the Plan.  Except as expressly provided in this Plan,
neither the Company nor any of its Affiliates shall be required or be liable to
make any payment under the Plan.

 

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9.2.                              No Employment Rights.  Nothing herein shall
constitute a contract of employment or of continuing service or in any manner
obligate the Company or any Affiliate to continue the services of any
Participant, or obligate any Participant to continue in the service of the
Company or Affiliate, or as a limitation of the right of the Company or
Affiliates to discharge any of their employees, with or without cause.

 

9.3.                              Unfunded Plan.  Nothing herein contained shall
require or be deemed to require the Company to segregate, earmark or otherwise
set aside any funds or other assets to provide for any payments made hereunder.
Benefits hereunder shall be paid from assets which shall continue, for all
purposes, to be part of the general, unrestricted assets of the Company and its
Affiliates.  The obligations of the Company hereunder shall be an unfunded and
unsecured promise to pay money in the future.  However, the Company may
establish one or more trusts to assist in meeting its obligations under the
Plan, the assets of which shall be subject to the claims of the Company’s
general creditors.  No current or former Participant, Beneficiary or other
person, individually or as a employee of a group, shall have any right, title or
interest in any account, fund, grantor trust, or any asset that may be acquired
by the Company in respect of its obligations under the Plan (other than as a
general creditor of the Company with an unsecured claim against its general
assets).

 

9.4.                              Nontransferability.  Prior to payment thereof,
no benefit under the Plan shall be assignable or subject to any manner of
alienation, sale, transfer, claims of creditors, pledge, attachment or
encumbrances of any kind.

 

9.5.                              Successors and Assigns.  The rights,
privileges, benefits and obligations under the Plan are intended to be, and
shall be treated as legal obligations of and binding upon the Company, its
successors and assigns, including successors by merger, consolidation,
reorganization or otherwise.

 

9.6.                              Payment with Respect to Incapacitated
Persons.  Any amounts payable hereunder to any person who is a minor or under a
legal disability, as determined under applicable state law, or who is unable to
manage properly his or her financial affairs may be paid (a) to the legal
representative of such person, (b) to anyone acting as the person’s agent under
a durable power of attorney, (c) to an adult relative or friend of the person or
(d) to anyone with whom the person is residing.  Any payment of a benefit made
in accordance with the provisions of this section shall be a complete discharge
of any liability for the making of such payment under the Plan.  The
Administrator’s reliance on the written power of attorney or other instrument of
agency governing a relationship between the person entitled to benefit the
person to whom the Administrator directs payment of the benefit shall be fully
protected at least to the same extent as though the Administrator had dealt
directly with the person entitled to the benefit as a fully competent person. 
In the absence of actual knowledge to the contrary, the Administrator may assume
that the instrument of agency was validly executed,

 

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that the person was competent at the time of execution and that at the time of
reliance, the agency had not been terminated or amended.

 

9.7.                              Arbitration.  Any controversy or claim arising
out of or relating to this Plan, or breach hereof, shall be settled by
arbitration in the City of Ames in accordance with the laws of the State of Iowa
with an arbitrator appointed by the Company.  The arbitration shall be conducted
in accordance with the rules of the American Arbitration Association, except
with respect to the selection of an arbitrator.  The arbitrator’s determination
shall be final and binding upon all parties and judgment upon the award rendered
by the arbitrator may be entered in any court having jurisdiction thereof.

 

9.8.                              Gender and Number.  Except when otherwise
indicated by the context, words in the masculine gender shall include the
feminine and neuter genders, the plural shall include the singular, and the
singular shall include the plural.

 

9.9.                              Headings.  The headings of the various
Articles and Sections in the Plan are solely for convenience and shall not be
relied upon in construing any provisions hereof.  Any reference to a
Section shall refer to a Section of the Plan unless specified otherwise.

 

9.10.                        Severability.  Whenever possible, each provision of
the Plan shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of the Plan is held to be invalid, illegal
or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, and the Plan shall be reformed,
construed and enforced in such jurisdiction so as to best give effect to the
intent of the Company under the Plan.

 

9.11.                        Effect on Other Employee Benefit Plans.  Any
benefit paid or payable under this Plan shall not be included in a Participant’s
compensation for purposes of computing benefits under any employee benefit plan
maintained or contributed by the Company or any Affiliate except as may
otherwise be required under the specific terms of such employee benefit plan.

 

9.12.                        Non-U.S. Participants.  With respect to any
Affiliate which employs Participants who reside outside the United States, and
notwithstanding anything herein to the contrary, the Administrator may, in its
sole discretion, amend the terms of the Plan in order to conform such terms with
the requirements of local law or to meet the objectives of the Plan, and may,
where appropriate, establish one or more sub-plans to reflect such amended
provisions.

 

9.13.                        Applicable Law.  This Plan is established under and
will be construed according to the laws of the State of Iowa, to the extent not
preempted by the laws of the United States.

 

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*                                        
*                                         *

 

IN WITNESS WHEREOF, the undersigned has caused this Plan to be executed this
 18th day of  May, 2004.

 

 

 

SAUER-DANFOSS INC.

 

 

 

 

 

 

 

By:

/s/ Ronald C. Hanson

 

Its:

VP Human Resources

 

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