Exhibit 10.1




 




 




 




             Date given to Employee: April 5,

2002                           Employment Base: State of Illinois




 




AMENDED AND RESTATED




SEPARATION AGREEMENT




AND




RELEASE OF ALL CLAIMS




 




This Separation Agreement and Release of All

Claims (the “Agreement”) is made and entered into as of the 24th day

of June, 2002, by and between Niels Erik Hansen (“Employee”) and

Sauer-Danfoss Inc. (“Company”).




 




Employee is employed as Executive Vice

President-Work Function and Control Products of the Company.  Employee and the Company are parties to the

Employment Agreement dated May 3, 2000 (the “Employment Agreement”).  Employee desires to resign as an officer of

the Company but to continue his employment with the Company in an executive

management position for a period of one year beginning July 1, 2002.  The Company desires to continue the

employment of Employee upon the terms and conditions set forth in this

Agreement.




 




In consideration of the promises, mutual

covenants and agreements contained in this Agreement, Employee and Company

agree as follows:




 




1.               Employee

resigns from the office of Executive Vice President-Work Function and Control

Products and from any and all other offices, committee positions and/or

directorships he holds with Company, effective as of the close of business on

June 30, 2002.  Whenever this Agreement

refers to the Employee’s employment or positions with Company, or the

termination of the Employee’s employment or resignation from positions with the

Company, the term “Company” shall include Sauer-Danfoss Inc., and any of its

subsidiaries or related or affiliated companies or joint ventures that employ

the Employee or with which the Employee holds a position.  In addition, when used in paragraphs 13, 14,

15, 17 and 18, the term “Company” shall include Sauer-Danfoss Inc. and any of

its subsidiaries or related or affiliated companies or joint ventures.




 




2.               The Employee

shall continue to be employed and carried on the regular payroll of the Company

in the position of Special Assignment to the President and Chief Executive Officer

of Company.  The Employee’s duties and

responsibilities shall be in an executive and management position as determined

from time to time by the President of Company.




 




3.               During the term

of his new position with Company, the Employee shall be compensated at the

annual rate of US$315,000 (“Base Compensation”), payable in equal periodic

payments as provided for by Company’s normal payroll distribution program, less

all federal, state, local and foreign taxes and social security taxes that are

required to be withheld by applicable laws or regulations as Company shall

determine in its sole discretion, and other ordinary and customary 




 





























 




                        payroll

deductions (“Payroll Withholdings”). 

Employee shall receive at the time of Company’s first normal payroll distribution

following June 30, 2002, a lump sum car allowance payment of US$12,000, less

Payroll Withholdings, and Employee shall apply such car allowance to expenses

incurred in discharging his new employment responsibilities with Company.  Company does hereby (i) assume liability of

Employee’s house in Denmark, and (ii) forgive the reimbursement of US $50,000

relocation term loan entered into on January 7, 2002, with the Payroll

Withholdings applicable to such loan forgiveness to be withheld from Company’s

first normal payroll distribution to Employee following June 30, 2002.  During the term of his new position,

Employee shall not be entitled to any other compensation, including, without

limitation, accrued vacation, sick leave or any other similar compensation or

fringe benefits.




 




4.               The Employment

Agreement shall terminate on July 1, 2002, and be of no further force or effect

from such date, without further action of the parties to the Agreement, and

Company shall have no further obligations whatsoever under the Employment

Agreement after July 1, 2002.




 




5.               The term of

Employee’s employment with Company shall terminate as of the close of business

on June 30, 2003, or as sooner terminated by mutual agreement of the parties to

this Agreement (the date that Employee’s employment with the Company is

terminated is sometimes referred to herein as the “Separation Date”).  In the event that Employee and Company

mutually agree to terminate the one-year period of continued employment prior

to June 30, 2003, Company shall pay to Employee in a single lump sum payment

the balance of any Base Compensation (“Balance of Compensation”) described in

paragraph 3 of this Agreement, less Payroll Withholdings.  Notwithstanding the foregoing, the Employee

and the Company may agree to an alternate method of payment of the Balance of

Compensation.




 




a.               Until the

Separation Date, Employee will continue to exert his best efforts on behalf of

Company, and will provide Company with all business-related documentation and

information in possession of Employee. Employee also will cooperate fully with

Company as to its business operations and concerns in any reasonable manner

upon Company’s request.




 




b.              Employee

further acknowledges that as of the Separation Date his employment with Company

ceases irrevocably and forever and will not be resumed again at any time in the

future, and he will not be entitled thereafter to continued employment with

Company or any Company’s parent. Employee agrees not to seek reinstatement,

reemployment, or future employment as a new employee, and Company has no

obligation, contractual or otherwise, to employ or reemploy, hire or rehire, or

recall or reinstate him in the future.




 




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6.               In connection

with his separation from employment, Employee has been advised by Company, and

he understands, that Company will pay or grant certain benefits to which

Employee is entitled without requirement that he sign this Agreement. These

benefits include: (a) his vested savings and retirement benefits, if any, (b)

the right to continue health and dental insurance benefits as required by state

or federal law; provided that Employee pays the required premiums and (c) any

earned but unused vacation to which Employee is entitled under current Company

policy.




 




7.               Employee also

has been told by Company and he understands that he may elect, at his option,

to receive additional consideration, but that his right to receive the

additional consideration described in paragraph 3 above, is in exchange for and

is expressly conditioned upon his signing this Agreement. Employee understands

that the benefits described in paragraph 3, are beyond those he could receive

without the requirement of signing a release and are being paid in

consideration for his signing this Agreement.




 




8.               Employee has

elected to receive, and he understands that Company will provide him, the

consideration set forth in paragraph 3, which is beyond that to which he is

entitled, in exchange for his execution of this Agreement.




 




9.               Employee

acknowledges that the Base Compensation and benefits specified in paragraphs 3

and 6 are in full and complete satisfaction of all of the Company’s salary and

benefit obligations under the Employment Agreement or otherwise; and that the

amounts paid are in lieu of any claim under the Employment Agreement or

otherwise for bonus; incentive pay; deferred compensation accrual account

balances; any outstanding and future business related expenses; any outstanding

and future healthcare and dental claims; holiday pay; severance pay; accrued or

unearned vacation pay; life insurance; or any claim for payment not

specifically mentioned in the Agreement. Except for vested savings and pension

benefits and for any other obligations expressly set forth in this Agreement,

Company will make no further payments to Employee, or make any payments or

contributions on behalf of Employee, for salary, insurance, savings, pension or

any other compensation or benefits.




 




10.         EMPLOYEE, ON

BEHALF OF HIMSELF, HIS AGENTS, LEGAL REPRESENTATIVES, HEIRS AND ASSIGNS AND ANY

AND ALL OTHER PARTIES CLAIMING OR WHO MIGHT HEREAFTER CLAIM ANY RIGHT THROUGH

EMPLOYEE, HEREBY RELEASES, FOREVER DISCHARGES AND COVENANTS NOT TO SUE COMPANY,

ANY PAST OR PRESENT PREDECESSOR, SUCCESSOR, JOINT VENTURER, SUBSIDIARY, PARENT,

AND RELATED OR AFFILIATED ENTITY, AND ANY AND ALL OF THEIR RESPECTIVE PAST OR

PRESENT OFFICERS, DIRECTORS, PARTNERS, AGENTS, ATTORNEYS, AND EMPLOYEES (ALL

COLLECTIVELY, THE “RELEASED PARTIES”), FROM ANY AND ALL MANNER OF ACTIONS, CAUSES

OR ACTIONS, DEMANDS, CLAIMS, 




 




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                        AGREEMENTS,

PROMISES, DEBTS, LAWSUITS, CONTROVERSIES, COSTS, EXPENSES AND FEES WHATEVER,

WHETHER ARISING IN CONTRACT, TORT OR ANY OTHER THEORY OF ACTION, WHETHER ARISING

IN LAW OR EQUITY, WHETHER KNOWN OR UNKNOWN, ASSERTED OR UNASSERTED, FROM THE

BEGINNING OF TIME UP TO THE DATE OF THIS AGREEMENT (INDIVIDUALLY, “CLAIM”;

COLLECTIVELY, “CLAIMS”), EXCEPT  FOR THOSE OBLIGATIONS CREATED BY

OR ARISING OUT OF THIS AGREEMENT AND THOSE OBLIGATIONS SPECIFICALLY EXCLUDED

UNDER THIS AGREEMENT. EMPLOYEE EXPRESSLY WAIVES THE BENEFIT OF ANY STATUTE OR

RULE OF LAW WHICH, IF APPLIED TO THIS AGREEMENT, WOULD OTHERWISE PRECLUDE FROM

ITS BINDING EFFECT ANY CLAIM AGAINST ANY RELEASED PARTY NOT KNOWN BY EMPLOYEE

TO EXIST. EXCEPT AS NECESSARY FOR EMPLOYEE TO ENFORCE THIS AGREEMENT, THIS

AGREEMENT IS INTENDED TO BE A GENERAL RELEASE AND A COVENENT NOT TO SUE THAT

EXTINGUISHES ALL CLAIMS AND PRECLUDES ANY ATTEMPT BY EMPLOYEE TO INITIATE ANY

LITIGATION AGAINST ANY RELEASED PARTY. IF EMPLOYEE COMMENCES OR CONTINUES ANY

CLAIM IN VIOLATION OF THIS AGREEMENT, THE RELEASED PARTY WILL BE ENTITLED TO

ASSERT THIS AGREEMENT AS A BAR TO SUCH ACTION OR PROCEEDING AND WILL BE

ENTITLED TO RECOVER ITS ATTORNEYS’ FEES AND COSTS OF LITIGATION FROM THE PARTY

COMMENCING OR CONTINUING THE CLAIM, INCLUDING REASONABLE COMPENSATION FOR THE

SERVICES OF THE INTERNAL PERSONNEL OF THE RELEASED PARTY.




 




11.         Without in any

way limiting the generality of the foregoing, this Agreement constitutes a full

release and disclaimer of any and all Claims arising out of or relating in any

way to Employee’s employment, continued employment, retirement, resignation, or

termination of employment with Company, whether arising under or out of a statute

including, but not limited to, Title VII of the Civil Rights Act of 1964, 42

U.S.C. §1981, the Age Discrimination in Employment Act of 1967, the Older

Workers Benefit Protection Act of 1990, the Family and Medical Leave Act, the

National Labor Relations Act, the Worker Adjustment and Retraining Notification

Act, the Employee Retirement Income Security Act of 1974, the Americans With

Disabilities Act, the Illinois Human Rights Act, any county, municipal, and any

other federal, state or local statute, ordinance or regulation, all as may be

amended from time to time, or common law claims or causes of action relating to

alleged discrimination, breach of contract or public policy, wrongful or

retaliatory discharge, tortuous action, inaction, or interference of any sort,

defamation, libel, slander, personal or business injury, including attorney’s

fees and costs, all claims for salary, bonus, vacation pay, and reimbursement

for expenses. Employee specifically waives his right to recover in his own

lawsuit as well as the right to recover in a suit brought by any other entity

on his own behalf.




 




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12.         Employee

represents that Employee has neither assigned or transferred nor purported to

assign or transfer, to any person or entity, any Claim or any portion thereof

or interest therein.




 




13.         Employee will

provide accurate information or testimony or both in connection with any legal

matters if so requested by Company, but he will not disclose or discuss with

anyone who is not directing or assisting in any Company investigation or case,

other than Company’s attorney, the fact of or the subject matter of any

investigation, except as required by law. Both Employee and Company will

reasonably accommodate their respective schedules so that Employee may assist

the Company after the Separation Date. Company will reimburse Employee for all

reasonable expenses incurred in connection with such accommodation. Employee

also will provide all business-related information and reasonable assistance to

Company following the Separation Date.




 




14.         Employee will

not disparage, publicly or privately, Company or its products, or any current

or former directors, officers, employees, attorneys or agents of Company.




 




15.         Employee will

not disclose any proprietary, non-public or otherwise confidential information

regarding Company or its operations, including, but not limited to,

confidential information regarding its product lines, prices, costs,

operational processes, strategic planning, financial data, marketing plans,

sales forecasts, customers, suppliers, personnel or compensation of its

employees.




 




16.         Employee will

notify Company upon acceptance of employment or the establishment of his own

business venture after the Separation Date.




 




17.         During the term

of this Agreement, and for the period of two (2) years after the Separation

Date, Employee will neither hire nor cause to be hired any current employee of

Company without the prior written consent of its Vice President, Human

Resources.




 




18.         During the term

of this Agreement, and for a period of eighteen (18) months after the

Separation Date (the “Restricted Period”), Employee will not, without Company’s

express, written consent, directly or indirectly, anywhere in the world, by

himself or for or on behalf of any other individual, business or entity, serve

as director, officer, manager, supervisor, or shareholder (of other than a

passive investment of less than 1% of the individual’s business or entity’s

outstanding stock), consultant, independent contractor, representative, agent

or employee for any individual, business or other entity that manufacturers,

markets, sells, supplies, or distributes product(s) which perform the same or

similar function as those manufactured, marketed, sold, supplied or distributed

by Company (“Products”) in any market in which Company currently manufactures,

markets, sells, supplies or distributes such Products. During the Restricted

Period, except as expressly authorized by Company in writing, Employee will not

solicit any




 




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                        actual or

potential customer of Company with whom Employee had any contact during his

period of employment with Company.




 




Employee acknowledges that:

(a) the services performed by him under the Employment Agreement and to be

performed by him under this Agreement, are of a special, unique, unusual,

extraordinary and intellectual character; (b) the business of the Company is

worldwide in scope and its products are marketed throughout the world; (c) the

Company competes with other businesses that are or could be located in any part

of the world; and (d) the provisions of this paragraph 18 are reasonable and

necessary to protect the business of the Company.




 




If any covenant in this paragraph 18 is held to be unreasonable,

arbitrary, or against public policy, such covenant will be considered to be

divisible with respect to scope, time and geographic area, and such lesser

scope, time or geographic area, or all of them, as a court of competent jurisdiction

may determine to be reasonable, not arbitrary, and not against public policy,

will be effective, binding and enforceable against the Employee.




 




The period of time

applicable to any covenant in this paragraph 18 will be extended by the

duration of any violation by the Employee of such covenant.




 




19.         Employee

represents that he will do the following on or before his actual Separation

Date:




 




a.               Return all

Company property, including but not limited to, keys, office passes, credit

cards, computers, computer diskettes, CDs, memoranda, manuals, customer and

price lists, marketing and sales plans, office equipment, fax machines, office

furniture, mobile telephones, sales records, strategic planning documents,

business records and any other confidential materials and information obtained

during Employee’s employment with Company.




 




b.              Submit all

outstanding expenses and clear all personal advances and loans. Employee

acknowledges that all amounts unaccounted for and due to Company will be

deducted from the payments provided for in paragraph 3.




 




20.         Employee

further understands that for a period of seven (7) days following his execution

of this Agreement, he may revoke this Agreement by delivering to Don O’Grady,

Vice President, Human Resources, Sauer-Danfoss Inc., a written statement

indicating that he wishes to revoke this Agreement. Employee and Company

understand this Agreement will not become enforceable or effective until the

revocation period has expired without revocation by Employee. Employee

expressly acknowledges and understands that Company will not be obligated to

take any of the actions described in this Agreement, unless and until this

Agreement becomes enforceable and effective because the revocation period has

expired without revocation by him, and that in the event Employee exercises




 




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                        his right to

revoke this Agreement all obligations of Company under this Agreement will

immediately cease.




 




21.         Employee and

Company acknowledge that nothing in this Agreement is meant to suggest or imply

that Company has violated any law or contract or otherwise engaged in any

wrongdoing of any kind. This Agreement is entered into merely to resolve any

differences between the parties amicably and without the necessity or expense

of litigation.




 




22.         Employee will

keep this Agreement confidential and not reveal its existence or contents to

anyone except his immediate family and his attorney(s), if any, with the

understanding that all of those individuals will also be bound by the

confidentiality obligation contained in this paragraph.




 




23.         This Agreement

will be binding upon the respective successors, heirs, assigns, administrators,

executors and legal representatives of the parties and other entities described

in this Agreement.




 




24.         The parties

acknowledge that damages incurred as a result of a breach of this Agreement

will be difficult to measure. Therefore, in addition to any other remedies,

equitable relief will be available in the case of a breach of this Agreement.

In addition to any other remedies, in the event of a breach of this Agreement

by Employee, Company may withhold and retain all or any portion of the payments

to be made under paragraph 3. Also, in the event of any breach of this

Agreement, including but not limited to Employee’s bringing any Claim released

under this Agreement against the Company, Employee will immediately repay all

or any portion of the payments made to, or loan forgiven from, Employee

pursuant to paragraph 3.




 




25.         In the event of

litigation in connection with or concerning the subject matter of this

Agreement, the prevailing party will be entitled to recover all costs and

expenses of litigation incurred by it, including such party’s reasonable

attorney’s fees and reasonable compensation for the services of its internal

personnel.




 




26.         Each of the

terms of this Agreement is deemed severable in whole or in part, and if any

term or provision, or the application thereof, in any circumstance should be

illegal, invalid or unenforceable, the remaining terms and provisions will not

be affected thereby and will remain in full force and effect.




 




27.         This Agreement

is made and entered into in the State of Illinois and in all respects the

rights and obligations of the parties will be interpreted, enforced and

governed in accordance with the laws of the State of Illinois without regard to

the principles of conflict of laws. Any and all lawsuits, legal actions or

proceedings against either party arising out of this Agreement will be brought

in Lake County, Illinois or federal court of competent jurisdiction sitting

nearest to Long Grove, Illinois, and each party hereby submits to and accepts

the exclusive jurisdiction of such court for the purpose of such suit, legal

action or proceeding. Each party hereby




 




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                        irrevocably

waives any objection it may now have or hereinafter have to this choice of

venue of any suit, legal action or proceedings in any such court and further

waives any claim that any suit, legal action or proceeding brought in any such

court has been brought in an inappropriate forum.




 




28.         The parties

will cooperate fully to execute any and all supplementary documents and to take

all additional actions that may be necessary or appropriate to give full force

to the terms and intent of this Agreement that are not inconsistent with its

terms.




 




29.         This Agreement

contains the entire agreement between Employee and Company and it fully

supersedes any and all prior agreements and understandings between Employee and

any of the Releasees, including, without limitation, the Employment Agreement.

Employee acknowledges that no representations, promises, agreements or

inducements (whether written or oral) have been made to him which are not

stated in this Agreement and that his execution of this Agreement is not based

on any representation, promise, agreement or inducement, which is not contained

in this Agreement. This Agreement will not be modified or altered except by a

subsequent written agreement signed by the parties.




 




30.       Employee has been advised by, and

consulted with, an attorney before signing this Agreement. Employee affirms

that he has carefully read and fully understands this Agreement, has had

sufficient time to consider it, has had an opportunity to ask questions and

have it explained, and is entering into this Agreement freely and voluntarily,

with an understanding that the general release will have the effect of waiving

any action or recovery he might pursue for any claims arising on or prior to the

date of the execution of this Agreement. This Agreement was given to Employee

on April 5, 2002.  Employee had until

June 24, 2002, a period in excess of twenty-one (21) days, to consider it.




 




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IN WITNESS WHEREOF, the parties have executed

this Agreement on this date or dates set forth below.




 




EMPLOYEE




 




 




	

   


  	

   


  	

  Date: 


  	

   


  
	

  Niels Erik Hansen


  	

   


  	

   


  	

   


  





 




SAUER-DANFOSS INC.




 




 




	

  By: 


  	

   


  	

   


  	

  Date: 


  	

   


  
	

   


  	

  Don O’Grady


  	

   


  	

   


  	

   


  





                Vice

President, Human Resources




 




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