10.1(ai)

AMENDMENT NUMBER ONE
TO THE JANUARY 1, 2000 RESTATEMENT OF THE
SAUER-DANFOSS EMPLOYEES' RETIREMENT PLAN

             WHEREAS, Sauer-Danfoss (US) Company (formerly known as
Sauer-Danfoss, Inc. and Sauer-Sundstrand Company) sponsors the Sauer-Danfoss
Employees' Retirement Plan (the "Plan");

             WHEREAS, Sauer-Danfoss (NA) Company (formerly known as Danfoss
Fluid Power Inc.) was acquired and became a Related Corporation under the Plan
effective May 3, 2000; and

             WHEREAS, both Sauer-Danfoss (US) Company and Sauer-Danfoss (NA)
Company desire that Sauer-Danfoss (NA) Company adopt the Plan for its employees
effective January 1, 2001.

             WHEREAS, pursuant to Section 15.1 of the Plan and appropriate
action of the Board of Directors of each of Sauer-Danfoss (US) Company and
Sauer-Danfoss (NA) Company, Sauer-Danfoss (NA) Company has adopted the Plan for
its employees, effective January 1, 2001.

             NOW, THEREFORE, pursuant to Section 16.2 of the Plan, Sauer-Danfoss
(US) Company hereby amends the Plan as follows, effective January 1, 2001,
except as otherwise provided:

1.          Section 1.10 is amended to read as follows:

                           "1.10. An "Employee" means any person employed by the
Employer, provided that such person:

(a) became an Employee under the Plan prior to January 1, 2001; or     (b) is
employed by the Employer on a regular full-time or part-time basis, (customarily
works at least 20 hours per week), provided such person will not become an
Employee until the first day of the pay period coincident with or following the
date the person completes 6 consecutive months of employment by the Employer; or
    (c) is employed by the Employer on a temporary basis, provided such person
will not become an Employee until the first day of the pay period coincident
with or following the date the person completes 12 consecutive months of
employment by the Employer with at least 1,000 Hours of Employment.    

In no event shall the word "Employee" include any person who renders service to
the Employer solely as an independent contractor or a leased employee (as
defined in Section 414(n) of the Code), nor shall it include any person covered
by a collective bargaining 414(n) of the Code), nor shall it include any person
covered by a collective bargaining agreement between employee representatives
and the Employer if retirement benefits were the subject of good faith
bargaining between such employee representatives and the Employer (unless the
resulting bargaining agreement provides for such employee's coverage under this
Plan). A "former Employee" is a person who once was but is no longer an
Employee, but did not receive and is not currently receiving retirement benefits
under this Plan. A "retired Employee" is a person who once was but is no longer
an Employee, but who received or is receiving retirement benefits under this
Plan."

 

2.          Section 2.8 is amended to add the following sentence to the end
thereof:

                           "2.8.     Predecessors.  .  .  .  Employment by
Sauer-Danfoss (NA) Company (formerly known as Danfoss Fluid Power Inc.) prior to
its May 3, 2000 date of acquisition shall be included in determining eligibility
and Years of Service, but not in determining Years of Participation."

3.          Section 3.5 is added, effective October 1, 2000, except as otherwise
provided therein, to read in its entirety as follows:

                           "3.5      Cash Balance Employees. Notwithstanding any
other provision of the Plan, except as provided in Sections 6.4 and 8.4 of the
Plan, as applicable, effective January 1, 2001, Retirement Benefits for
Employees who are described in subsections (a) and (b) of this Section 3.5 Plan
shall be accrued solely under the cash balance formula in accordance with
Appendix D.

(a) Automatic Coverage Under Cash Balance Formula. Retirement Benefits shall be
determined in accordance with the cash balance formula in Appendix D for all
Employees who are:       (i)          hired by the Employer after October 1,
2000; or   (ii)         employed at the Employer's West Branch, Iowa or Easley,
South Carolina locations; or   (iii)        employed by Sauer-Danfoss (NA)
Company (formerly known as Danfoss Fluid Power Inc.).     (b) Special Election
for Coverage Under Cash Balance Formula. Retirement Benefits shall be determined
under the cash balance formula in Appendix D for all Employees who are eligible
to elect and do elect, pursuant to a one time election made in accordance with
uniform, nondiscriminatory Plan procedures (during the fourth quarter of the
2000 Plan Year), to cease benefit accruals under the final average pay formula
effective December 31, 2000 and begin accruing benefits, if any, under the cash
balance formula in Appendix D, effective January 1, 2001. Employees eligible to
make the election described in this subsection (b) are all persons who are
Employees of the Employer on October 1, 2000, (except Employees employed at the
Employer's West Branch, Iowa or Easley, South Carolina     

 

4.          Section 6.4 is added to the end of Article VI, effective
December 31, 2000, to read in its entirety as follows:

             "6.4      December 31, 2000 Sunset With Grandfather.
Notwithstanding any other Plan provision, Article VI shall only apply to persons
who became Employees before January 1, 2001. Article VI shall continue to apply
to such Employees without regard to whether they made the election under
Section 3.5(b)."

5.          Section 7.1 is amended, effective December 31, 2000, to add the
following paragraph to the end thereof:

                           "7.1.     Available Options

                           . . .

             Notwithstanding any other provision of the Plan, Options B, C, E,
F, G and H under this Section shall not be available  to any Employee who first
becomes an Employee after December 31, 2000."

6.          Section 8.4 is added to the end of Article VIII, effective
December 31, 2000, to read in its entirety as follows:

             "8.4.     December 31, 2000 Sunset With Grandfather.
Notwithstanding any other Plan provision, Article VIII shall apply only to
persons who became Employees before January 1, 2001. Article VIII shall continue
to apply to such Employees without regard to whether they made the election
under Section 3.5(b)."

7.          Appendix D is added to the end of the Plan (after Appendix C), in
the form of the Appendix D attached to this Amendment              Number One
and made a part hereof.

             IN WITNESS WHEREOF, Sauer-Danfoss (US) Company has authorized the
execution on its behalf of this Amendment Number One this 15th day of December,
2000.

  By: /s/  Ronald C. Hanson    

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        Title: Director Global Human Resources    

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APPENDIX D TO SAUER-DANFOSS
EMPLOYEES' RETIREMENT PLAN

             This Appendix D to the Sauer-Danfoss Employees' Retirement Plan is
applicable, effective January 1, 2001, only to those Employees identified in
Section 3.5 of the Plan whose benefits are accrued in accordance with the cash
balance formula (hereinafter referred to in this Appendix D as "Cash Balance
Employees"). The provisions of the Plan shall apply to such Cash Balance
Employees with the following modifications:

             1.          Cash Balance Account. A notional account (hereinafter
referred to as the "Cash Balance Account") shall be established and maintained
for each Cash Balance Employee. The Cash Balance Account for each Cash Balance
Employee shall have an opening balance as determined under Section 2 of this
Appendix D. A Cash Balance Employee's Cash Balance Account shall be credited
with "Regular Contribution Credits", "Special Contribution Credits", if
applicable, and "Interest Credits" each as defined under Sections 3, 4 and 5 of
this Appendix D, respectively. Cash Balance Accounts shall be bookkeeping
accounts only, and neither the establishment nor maintenance thereof shall
create any right in any Cash Balance Employee to any specific assets of the
Plan. Upon a Cash Balance Employee's Annuity Starting Date his Cash Balance
Account shall cease to exist. The term "Annuity Starting Date" shall mean the
first day of the first month for which a benefit is payable as an annuity to a
Cash Balance Employee.

             2.          Opening Balance. Each Cash Balance Employee will have
an opening balance in his Cash Balance Account equal to $-0-.

             3.          Regular Contribution Credits. For each Plan Year, an
amount shall be credited to the Cash Balance Account of each Cash Balance
Employee who was employed as an Employee during such Plan Year (the "Regular
Contribution Credit"). In the case of a Cash Balance Employee who is employed on
the last day of the Plan Year, the Regular Contribution Credit shall be credited
to the Cash Balance Employee's Cash Balance Account as of the last day of such
Plan Year. In the case of a Cash Balance Employee who terminates employment
during the Plan Year, the Regular Contribution Credit shall be credited to his
Cash Balance Account as of the date of the Cash Balance Employee's termination
of employment. The Regular Contribution Credit shall be an amount equal to 2% of
the Cash Balance Employee's "Pay" received as an Employee during the Plan Year.
For purposes of this Section, "Pay" means Considered Compensation plus overtime
compensation. Notwithstanding the above, a Cash Balance Employee who is absent
from work due to a disability for which he is entitled to benefits under a
Disability Income Plan maintained by the Employer shall continue to have Regular
Contribution Credits credited to his Cash Balance Account for as long as he is
entitled to benefits under such Disability Income Plan. Such Regular
Contribution Credits shall be based on the disabled Cash Balance Employees' rate
of Considered Compensation just prior to becoming disabled.

             4.          Special Contribution Credit.  In addition to the
Regular Contribution Credit described in Section 3 of this Appendix D, the Cash
Balance Account of each Transition Employee described in Section 7 of Appendix D
shall be credited with additional contribution credits (the "Special
Contribution Credits") provided under this Section 4. For each Plan Year from
January 1, 2001 through December 31, 2010, Special Contribution Credits shall be
credited to the Cash Balance Account of each Transition Employee at the same
time and manner as provided for the Regular Contribution Credits under Section 3
of this Appendix D, but the amount of such Special Contribution Credits shall be
determined based on the following schedule:

 

Transition Employee's Age (in whole years and as of the last day of the
applicable Plan Year, even if projection is necessary because the additional
contribution credit will be credited prior to that day)   Special Contribution
Credit (as a percentage of the Transition Employee's Pay for the applicable Plan
Year)

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40 - 49   1% 50 - 59   2% 60 or more.   3%

             5.          Interest Credits.  As of the last day of each Plan
Year, interest shall be credited to the Cash Balance Account of each Cash
Balance Employee who has a Cash Balance Account as of the first day of such Plan
Year (the "Interest Credit").  A Cash Balance Employee's Cash Balance Account
shall continue to be credited with Interest Credits until (i) the Cash Balance
Employee's Annuity Starting Date (as defined in Section 417(f)(2) of the Code)
or (ii) solely in the case of a Cash Balance Employee who terminates employment
before becoming vested, the date that the Cash Balance Employee's Period of
Severance exceeds the greater  of the total Years of Service on his Severance
from Service Date, or 5 Years of Service, at which point the Cash Balance
Employee will be deemed to have received a distribution of his entire interest
in the Plan accrued as of that date.  Interest Credit added to a Cash Balance
Account for each Plan Year shall be the amount determined by multiplying the
balance of such Cash Balance 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.
Notwithstanding the prior provisions of this Section 5, if the Cash Balance
Employee's Annuity Starting Date 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 Annuity Starting Date and shall be credited to the Cash
Balance Employees' Cash Balance Account as of such Annuity Starting Date.

             6.          Retirement Benefit.  Except in the case of a Transition
Employee described in Section 7, as of any determination date, a Cash Balance
Employee's Retirement Benefit is equal to; (a) the amount of his Cash Balance
Account as of such date converted into a single life annuity on the basis of the
Actuarial Equivalent factors for lump sum distributions, and (b) the Retirement
Benefit expressed as a single life annuity that the Cash Balance  Employee
accrued under  the final average pay formula as of December 31, 2000 (including
any early retirement subsidy for which the Cash Balance Employee becomes
eligible, whether before, on, or after that date, if applicable). Transition
Employees' benefits shall be determined as provided under Section 7.

             7.          Retirement Benefit for Transition Employees. 
Transition Employees shall have their Retirement Benefits determined under this
Section 7 rather than Section 6. A "Transition Employee" is a Cash Balance
Employee who has attained age 40 and has at least 5 consecutive years of
employment with the Employer as of December 31, 2000 and made an election.  A
Cash Balance Employee's consecutive years of employment shall be measured from
his most recent employment commencement date before December 31, 2000 (without
an intervening termination date), provided that any approved leave of absence
shall be bridged.  The Retirement Benefit of a Transition Employee as of any
determination date shall be the sum of:  (a) the amount of his Cash Balance
Account as of such date converted into a single life annuity on the basis of the
Acturarial Equivalent factors for lump sum distributions; and (b) the Retirement
Benefit, expressed as a single life annuity, that the Employee had accrued under
the final average pay formula as of December 31, 2000 (including any early
retirement subsidy for which the Employee becomes eligible, whether before, on,
or after that date, if applicable), but adjusted to reflect any increases in the
Cash Balance Employee's Considered Compensation and Covered Compensation after
December 31, 2000 until the earliest of (i) December 31, 2010, (ii) the date the
Cash Balance Employee completes 30 Years of Service or (iii) the date the Cash
Balance Employee terminates employment with the Employer.

             8.          Death Before Commencement.  The Surviving Spouse of a
deceased Cash Balance Employee shall be eligible to receive a Survivor Benefit
in accordance with the provisions of Article IX of the Plan, provided that the
amount of any such Survivor Benefit shall be determined based on the methodology
set forth in Section 6 or Section 7 of this Appendix D, as applicable, for the
deceased Cash Balance Employees' Retirement Benefit.