Exhibit 10.2


 


Sauer-Danfoss Inc. 2006
Omnibus Incentive Plan

2007 Performance Unit


Amended and Restated
Award Agreement


 


You
have been selected to be a Participant in the Sauer-Danfoss Inc. 2006 Omnibus
Incentive Plan (the “Plan”), as specified below:


 


	
  Participant:  

  	
  Dave
  Anderson

  
	
   

  	
   

  
	
  Date of Award:  

  	
  March 20,
  2007

  
	
   

  	
   

  	
   

  
	
  Target Number of Performance Units Awarded:  

  	
  26,025

  
	
   

  	
   

  	
   

  
	
  Performance Period:  

  	
  1
  January 2007 to 31 December 2009

  
	
   

  	
   

  	
   

  
	
  Performance Measure:  

  	
  Simple
  Average Annual Return on Net Assets and Sales Growth Pursuant to Sec. 3 below

  
	
   

  	
   

  
								



 


This document constitutes part of
the prospectus covering securities that have been registered under the
Securities Act of 1933.


 


THIS
AMENDED AND RESTATED AWARD AGREEMENT, effective as of the Date of Award set
forth above, represents the award of Performance Units by Sauer-Danfoss Inc., a
Delaware U.S.A. corporation (the “Company”), to the Participant named above,
pursuant to the provisions of the Plan.


 


The
Plan provides a complete description of the terms and conditions governing
Performance Units.  If there is any
inconsistency between the terms of this Award Agreement and the terms of the
Plan, the Plan’s terms shall completely supersede and replace the conflicting
terms of this Award Agreement.  All
capitalized terms shall have the meanings ascribed to them in the Plan, unless
specifically set forth otherwise herein. 
For purposes of this Award Agreement, the term Sauer-Danfoss Group shall
mean the Company, its Subsidiaries and any Affiliate designated as such by the
Committee pursuant to Section 2.1 of the Plan.  In consideration of the mutual promises
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are acknowledged, the parties hereto agree as follows:


 


1.     Employment by the Company. 
The Performance Units granted hereunder are awarded on the condition
that the Participant remains employed by the Sauer-Danfoss Group from the Date
of Award through the end of the Performance Period, as specified above.  Notwithstanding the preceding sentence and
subject to Section 6, the Participant will not vest in the Performance Units
covered by this Award Agreement until the date of payment as provided in Section 6.  However, neither such condition regarding
further employment nor the award of the Performance 


 


1

















 


Units shall impose
upon the Sauer-Danfoss Group any obligation to retain the Participant in its
employ for any given period or upon any specific terms of employment.


 


2.     Earning Performance Units. 
Subject to the terms of the Plan and this Award Agreement, the
Participant shall be entitled to receive payment of the number and value of
Performance Units earned by the Participant over the Performance Period, where
the number of Performance Units is determined as a function of the extent to
which the corresponding performance goals have been achieved.


 


3.     Performance Measures. 
The Performance Measures under this Award Agreement shall be the Simple
Average Annual Return on Net Assets and the Simple Average Annual Sales Growth
as further defined in Exhibit A.


 


4.     Performance Goals. 
Achievement of a Simple Average Annual RoNA over the Performance Period
equal to the pre-determined performance goal target will entitle the
Participant to payment of 90% of the Target Number of Performance Units Awarded
as set forth above, subject to other provisions of the Plan and this Award
Agreement.  Achievement of a Simple
Average Annual RoNA equal to or greater than the pre-determined performance goal
maximum shall entitle the Participant to payment of 130% of the Target Number
of Performance Units Awarded. 
Achievement of a Simple Average Annual RoNA equal to the pre-determined
performance goal threshold shall entitle the Participant to payment of 46% of
the Target Number of Performance Units Awarded. 
Achievement of a Simple Average Annual RoNA between the pre-determined
performance goal threshold and the pre-determined performance goal maximum
shall entitle the Participant to payment of the number of Performance Units
interpolated according to a performance achievement function defined by the
foregoing achievement levels, and as reflected on the graph attached hereto as Exhibit B.  Achievement of a Simple Average Annual RoNA
of less than the performance goal threshold shall result in no payment of
Performance Units to the Participant under this Award Agreement.


 


The earned
performance units computed pursuant to the preceding paragraph may be
increased, depending upon the achieved, Average Annual Sales Growth.  The increase shall be in the form of a
percentage add-on, according to the table reflected on Exhibit B.


 


5.     Certification Of Achieved Performance and
Approval of Payouts.  Actual achieved
performance with respect to the Performance Measures shall be derived from the
consolidated financial statements of the Company for the Performance Period as
defined above and on Exhibit A.  The
ultimate determination of payout under this Agreement is subject to:


 


i)                 completion of the financial audits for each fiscal
year during the Performance Period;


 


ii)              certification and approval of the performance results
by the Committee; and


 


iii)           a decision as to the appropriate payout
by the Committee, in its complete and sole discretion.  In exercising such discretion, the Committee
will follow the provisions or Article 12.3 of the Plan, which specifically
prohibits the upward adjustment of any Awards intended to qualify as
Performance-Based Compensation.


 


2

















 


6.     Form and Timing of Payment of
Performance Units.  Payment of earned Performance Units shall be
made within seventy-five (75) calendar days following the close of the
applicable Performance Period.  Subject
to the Plan, the Committee has authorized that the future payment of any earned
Performance Units under this Award Agreement shall be made 100% in cash, less
applicable tax withholdings.  For
purposes of this cash payment, the value of an earned Performance Unit will be
equal to the Fair Market Value, as defined in the Plan, of a share of common
stock of the Company as of the close of the Performance Period.


 


7.     Voting Rights and Dividends. 
During the Performance Period and until the date of payment of
Performance Units as provided for in Section 6, the Participant will not
have voting rights with respect to the Performance Units.  During the Performance Period and until and
including the date of payment of Performance Units as provided in Section 6
and as approved by the Committee or the Board, the Participant shall receive
all dividends, dividend equivalents and other distributions paid with respect
to a number of shares of common stock of the Company equal to the Target Number
of Performance Units Awarded under this Award Agreement.  Any such payment of dividend, dividend
equivalent or other distribution will be made on one of the Participant’s next
two regular paydays following the specified record date.


 


Notwithstanding the previous paragraph, if the Participant is no longer
employed by the Sauer-Danfoss Group but retains a right to a pro-rated payment
under the provisions of Section 8 of this Award Agreement, the right to
receive dividends, dividend equivalents and other distributions as provided in
the previous paragraph will cease.


 


8.     Termination of Employment Due to Death,
Disability, or Retirement.  In the event the employment of
a Participant with the Sauer-Danfoss Group is terminated by reason of death,
Disability, or Retirement during the Performance Period, the Participant or the
Participant’s beneficiary or estate, as the case may be, shall be entitled to
receive a prorated payment of the Performance Units.  The prorated payment shall be determined by
the Committee, in its sole discretion, based on the number of full months of
the Participant’s employment during the Performance Period, in relation to the
total number of months in the Performance Period, and shall further be adjusted
based on the achievement of the pre-established performance goals set forth in Section 4.


 


The prorated
payment of Performance Units pursuant to this Section 8 shall be made at
the same time as payments are made to Participants who did not terminate
employment during the Performance Period as set forth in Section 6.


 


For purposes of
this Section 8, to the extent permitted by Code Section 409A,
Disability shall have the meaning ascribed to such term in the Participant’s
governing long-term disability plan, or if not so permitted, then the
definition ascribed to such term in Code Section 409A.  For purposes of this Section 8, Retirement
means a termination from employment with the Sauer-Danfoss Group on the normal
retirement date on which a Participant qualifies for full (i.e., unreduced for
early retirement or other actuarial reductions) retirement benefits under the
Participant’s governing 


 


3

















 


defined benefit
retirement plan, as identified by the Committee.


 


9.     Termination of Employment for Other Reasons. 
In the event that the Participant, prior to the payout date set forth in
Section 6, terminates employment with the Sauer-Danfoss Group for any
reason other than those reasons set forth in Section 8 or 10, or in the
event that the Sauer-Danfoss Group terminates the employment of the Participant
with cause prior to the payout date set forth in Section 6, all
Performance Units awarded to the Participant under this Award Agreement shall
be forfeited by the Participant; provided, however, that the Committee, in its
sole discretion, may waive such automatic forfeiture provision and pay out on a
pro rata basis in accordance with Section 8.  When the Committee exercises its sole
discretion regarding forfeiture, it may take into consideration any individual
facts and circumstances that it deems relevant for purposes of achieving the
desired objectives under the Plan.  Any
determination regarding forfeiture under this Section 9 for a given
Participant shall not dictate any required result for a different Participant
in a similar or different situation.


 


10.  Change in Control Event or Certain Termination
Events.  If a Change in Control (as defined in the
Plan), a termination by the Company without Cause (as defined in the
Participant’s Executive Employment Agreement) or a termination by the
Participant for Good Reason (as defined in the Participant’s Executive
Employment Agreement) occurs during the Performance Period, the Target Number
of Performance Units Awarded shall become payable in full and such payment
shall be made within seventy-five (75) calendar days following the date of
the Change in Control, termination without Cause or termination for Good
Reason, as the case may be.  The
Committee, in its sole discretion, may make such payment of the Target Number
of Performance Units Awarded in the form of cash or in Shares (or in a
combination thereof).  The number of
Shares to be issued, if any, shall be equal to the number of Performance Units
designated by the Committee to be paid in Shares.  The amount of cash to be paid if any shall be
equal to the Fair Market Value, as defined in the Plan, of a share of the
common stock of the Company as of the date of the Change in Control,
termination without Cause or termination for Good Reason, as the case may be,
multiplied by the number of Performance Units designated by the Committee to be
paid in cash.


 


11.  Nontransferability. 
Performance Units may not be sold, transferred, pledged, assigned, or
otherwise alienated or hypothecated, other than by will or by the laws of
descent and distribution.  Further,
except as otherwise determined by the Committee and provided in this Award
Agreement, a Participant’s rights under the Plan shall be exercisable during
the Participant’s lifetime only by the Participant or the Participant’s legal
representative.


 


12.  Adjustments in Authorized Shares. 
The Committee shall have the sole discretion to adjust the number of
Performance Units awarded pursuant to this Award Agreement, in accordance with Section 4.4
of the Plan.


 


13.  Tax Withholding.  The
Sauer-Danfoss Group shall have the power and the right to deduct or withhold,
or require the Participant or beneficiary to remit to the Sauer-Danfoss Group,
an amount sufficient to satisfy federal, state, and local taxes, domestic or
foreign, required by law or 


 


4

















 


regulation to be
withheld with respect to any taxable event arising as a result of this Award
Agreement.  For Awards payable in Shares,
the Sauer-Danfoss Group’s power and right to withhold includes the right to
withhold Shares with a value equivalent to the amount needed to satisfy the
minimum statutory tax withholding requirements of the Sauer-Danfoss Group in
the appropriate taxing jurisdiction.


 


14.  Share Withholding. 
With respect to withholding required upon any other taxable event
arising as a result of Awards granted hereunder, the Participant may elect,
subject to the approval of the Committee, to satisfy the withholding
requirement, in whole or in part, by having the Sauer-Danfoss Group withhold
Performance Units having a Fair Market Value on the date the tax is to be
determined equal to the minimum statutory total tax which could be withheld on
the transaction.  All such elections
shall be irrevocable, made in writing, signed by the Participant, and shall be
subject to any restrictions or limitations that the Committee, in its sole
discretion, deems appropriate.


 


15.  Covenant Not to Compete. 
Without the consent of the Company, the Participant shall not, directly
or indirectly, anywhere in the world, at any time during the Participant’s
employment with the Sauer-Danfoss Group, and for a period of eighteen (18)
months following the termination of Participant’s employment with the
Sauer-Danfoss Group for any reason, be associated or in any way connected as an
owner, investor, partner, director, officer, employee, agent, or consultant
with any business entity directly engaged in the manufacture and/or sale of
products competitive with any Material Product or Product Lines of the
Sauer-Danfoss Group; provided, however, that the Participant shall not be
deemed to have breached this undertaking if his or her sole relation with such
entity consists of his or her holding, directly or indirectly, an equity
interest in such entity not greater than two percent (2%) of such entity’s
outstanding equity interest, and the class of equity in which the Participant
holds an interest is listed and traded on a broadly recognized national or
regional securities exchange.  For
purposes hereof, the term “Material Product or Product Line of the
Sauer-Danfoss Group” shall mean any product or product line of the
Sauer-Danfoss Group, the consolidated gross sales of which during any calendar
year during the five (5) year period preceding the Participant’s
undertaking such employment were at least $10 million.


 


The Participant acknowledges that: (a) the
services to be performed by him for the Sauer-Danfoss Group are of a special,
unique, unusual, extraordinary, and intellectual character; (b) the
business of the Sauer-Danfoss Group is worldwide in scope and its products are
marketed throughout the world; (c) the Sauer-Danfoss Group competes with
other businesses that are or could be located in any part of the world; and (d) the
provisions of this Section 15 are reasonable and necessary to protect the
Sauer-Danfoss Group’s business.


 


If any covenant in this Section 15 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
Participant.


 


5

















 


The period of time applicable to any covenant in this Section 15
will be extended by the duration of any violation by the Participant of such
covenant.


 


The Participant will, while the covenants under this Section 15
are in effect, give notice to the Company, within ten days after accepting any
other employment, of the identity of the Participant’s employer.  The Company may notify such employer that the
Participant is bound by this Award Agreement and, at the Company’s election,
may furnish such employer with a copy of this Award Agreement or relevant
portions thereof.


 


Any nonenforcement of this Section 15 will not be
construed to be a waiver by the Company to enforce such provision in the
future.  If the Participant has received
a payment under this Award Agreement, the Company retains the right to demand
verification of employment and compliance with this Section 15 at any time
prior to the date that is eighteen (18) months after the end of the Performance
Period.  The Company or any member of the
Sauer-Danfoss Group may seek restitution and repayment of the total payments
made to the Participant under this Award Agreement if the Company determines
that the Participant has violated this Section 15 during the eighteen (18)
month period following the end of the Performance Period.


 


16.  Disclosure
of Confidential Information.  Without the
consent of the Company, the Participant shall not disclose to any other person
Confidential Information (as defined below) concerning the Sauer-Danfoss Group
or any of its trade secrets of which the Participant has gained knowledge
during his or her employment with the Sauer-Danfoss Group.  Any trade secrets of the Sauer-Danfoss Group
will be entitled to all of the protections and benefits under the Iowa Code
Annotated Section 550.1 through 550.8 and any other applicable law.  If any information that the Company deems to
be a trade secret is found by a court of competent jurisdiction not to be a
trade secret for purposes of this Award Agreement, such information will,
nevertheless, be considered Confidential Information for purposes of this Award
Agreement.  The Participant hereby waives
any requirement that the Company submits proof of the economic value of any
trade secret or posts a bond or other security. 
None of the foregoing obligations and restrictions apply to any part of
the Confidential Information that the Participant demonstrates was or became
generally available to the public other than as a result of a disclosure by the
Participant.


 


The Participant will not remove from the premises of
the Sauer-Danfoss Group (except to the extent such removal is for purposes of
the performance of the Participant’s duties at home or while traveling, or
except as otherwise specifically authorized by the Company), any document,
record, notebook, plan, model, component, device, or computer software or code,
whether embodied in a disk or in any other form, that contains Confidential
Information (collectively, the “Proprietary Items”).  The Participant recognizes that, as between
the Company or any member of the Sauer-Danfoss Group and the Participant, all
of the Proprietary Items, whether or not developed by the Participant, are the
exclusive property of the Company or the member of the Sauer-Danfoss Group, as
the case may be.  Upon termination of
this Award Agreement by either party, or upon the request of the Company or any
member of the Sauer-Danfoss Group during the 


 


6

















 


employment period, the Participant will return to the
Company or the Sauer-Danfoss Group member all of the Proprietary Items in the
Participant’s possession or subject to the Participant’s control, and the
Participant shall not retain any copies, abstracts, sketches, or other physical
embodiment of any of the Proprietary Items.


 


For purposes of this Award Agreement, Confidential
Information shall include any and all information concerning the business and
affairs of the Sauer-Danfoss Group, including, without limitation, product
specifications, data, know-how, formulae, compositions, processes, designs,
sketches, photographs, graphs, drawings, samples, inventions and ideas, past,
current, and planned research and development, current and planned distribution
methods and processes, customer lists, current and anticipated customer
requirements, price lists, market studies, business plans, computer software
and programs (including object code and source code), computer software and
database technologies, systems, structures, and architectures (and related
formulae, compositions, processes, improvements, devices, know-how, inventions,
discoveries, concepts, ideas, designs, methods and information), historical
financial statements, financial projections and budgets, historical and
projected sales, capital spending budgets and plans, the names and backgrounds of
key personnel, agents, personnel training and techniques and materials,
insurance products, premium structures, information relating to suppliers and
supplies, sales and marketing information and strategy, notes, analysis,
compilations, studies, summaries, and other material prepared by or for the
Sauer-Danfoss Group containing or based, in whole or in part, on any
information included in the foregoing, and any information, however documented,
that is a trade secret within the meaning of the Iowa Code Annotated Section 550.1
through 550.8.


 


Any nonenforcement of this Section 16 will not be
construed to be a waiver by the Company to enforce such provision in the
future.  If the Participant has received
a payment under this Award Agreement, the Company retains the right to demand
verification of compliance with this Section 16 at any time prior to the
date that is eighteen (18) months after the end of the Performance Period.  The Company or any member of the
Sauer-Danfoss Group may seek restitution and repayment of the total payments
made to the Participant under this Award Agreement if the Company determines
that the Participant has violated this Section 16 during the eighteen (18)
month period following the end of the Performance Period.


 


17.  Nonsolicitation. 
Without the written consent of the Company, the Participant shall not,
at any time during Employment and for a period of eighteen (18) months
following the termination of Participant’s employment with the Sauer-Danfoss
Group for any reason (a) employ or retain or arrange to have any other
person, firm, or other entity employ or retain or otherwise participate in the
employment or retention of any person who is an employee or consultant of the
Sauer-Danfoss Group; or (b) solicit or arrange to have any other person,
firm, or other entity solicit or otherwise participate in the solicitation of
business from any entity that was a customer of the Sauer-Danfoss Group during
the time of the Participant’s employment, whether or not the Participant had
personal contact with such person.


 


7

















 


Any nonenforcement of this Section 17 will not be
construed to be a waiver by the Company to enforce such provision in the
future.  If the Participant has received
a payment under this Award Agreement, the Company retains the right to demand
verification of compliance with this Section 17 at any time prior to the
date that is eighteen (18) months after the end of the Performance Period.  The Company or any member of the Sauer-Danfoss
Group may seek restitution and repayment of the total payments made to the
Participant under this Award Agreement if the Company determines that the
Participant has violated this Section 17 during the eighteen (18) month
period following the end of the Performance Period.


 


18.  Injunctive
Relief and Additional Remedy; Essential and Independent Covenants.  The
Participant acknowledges that the injury that would be suffered by the
Sauer-Danfoss Group as a result of a breach of the provisions of this Award Agreement
(including any provision of Sections 15, 16, and 17) would be irreparable and
that an award of monetary damages to the Sauer-Danfoss Group for such a breach
would be an inadequate remedy. 
Consequently, the Company or any member of the Sauer-Danfoss Group will
have the right, in addition to any other rights it may have, to obtain
injunctive relief to restrain any breach or threatened breach or otherwise to
specifically enforce any provision of this Award Agreement, and the Company or
any member of the Sauer-Danfoss Group will not be obligated to post bond or
other security in seeking such relief. 
Without limiting the Sauer-Danfoss Group’s rights under this Section 18
or any other remedies of the Sauer-Danfoss Group, if the Participant breaches
any of the provisions of Sections 15, 16, or 17, the Sauer-Danfoss Group will
have the right to cease making any payments otherwise due to the Participant
under this Award Agreement.


 


The covenants by the Participant in Sections 15, 16,
and 17 are essential elements and preconditions to this Award Agreement, and
without the Participant’s agreement to comply with such covenants, the Company
would not have entered into this Award Agreement with the Participant.  The Company and the Participant have been
afforded the opportunity to consult their respective counsel and have been
advised or had the opportunity to obtain advice, in all respects concerning the
reasonableness and propriety of such covenants (including, without limitation,
the time period of restriction and the geographical area of restriction set
forth in Section 15), with specific regard to the nature of the business
conducted by the Sauer-Danfoss Group. 
The Participant’s covenants in Sections 15, 16, and 17 are independent
covenants and the existence of any claim by the Participant against the Company
or any member of the Sauer-Danfoss Group under this Award Agreement or
otherwise, will not excuse the Participant’s breach of any covenant in Sections
15, 16, or 17.


 


If this Award Agreement or the Participant’s
employment with the Sauer-Danfoss Group is terminated, this Award Agreement
will continue in full force and effect as is necessary or appropriate to
enforce the covenants and agreements of the Participant in Sections 15, 16, 17,
and 18.


 


19.  Beneficiary Designation. 
The Participant may, from time to time, name any beneficiary or
beneficiaries (who may be named contingently or successively) to whom any
benefit under this Award Agreement is to be paid in case of his or her death
before he or she receives any or all of 


 


8

















 


such benefit. Each
such designation shall revoke all prior designations by the Participant, shall
be in a form prescribed by the Company, and will be effective only when filed
by the Participant in writing with the Vice President — Human Resources during
the Participant’s lifetime. In the absence of any such designation, benefits
remaining unpaid at the Participant’s death shall be paid to the Participant’s
estate.


 


	
  Beneficiary
  Designation (name, address, and relationship):

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  



 


20.  Administration.  This Award
Agreement and the rights of the Participant hereunder are subject to all the
terms and conditions of the Plan, as the same may be amended from time to time,
as well as to such rules and regulations as the Committee may adopt for
administration of the Plan.  It is
expressly understood that the Committee is authorized to administer, construe,
and make all determinations necessary or appropriate to the administration of
the Plan and this Award Agreement, all of which shall be binding upon the
Participant.  Any inconsistency between
the Award Agreement and the Plan shall be resolved in favor of the Plan.


 


21.  Continuation of Employment. 
This Award Agreement is not an employment agreement, it shall not confer
upon the Participant any right to continuation of employment by the
Sauer-Danfoss Group, nor shall this Award Agreement interfere in any way with
the Sauer-Danfoss Group’s right to terminate the Participant’s employment at any
time, subject to employment laws in the appropriate jurisdiction.


 


22.  No Vested Right In Future Awards. 
Participant acknowledges and agrees (by executing this Award Agreement)
that the granting of Awards under this Award Agreement are made on a fully
discretionary basis by the Committee and that this Award Agreement does not
lead to a vested right to further Awards in the future.  Further, the Awards set forth in this Award
Agreement constitute a non-recurrent benefit and the terms of this Award Agreement
are only applicable to the Awards distributed pursuant to this Award Agreement.


 


23.  Use of Personal Data. 
Participant acknowledges and agrees (by executing this Award Agreement)
to the collection, use, processing and transfer of certain personal data as
described in this Section 23.  The
Participant understands that he or she is not obliged to consent to such
collection, use, processing and transfer of personal data.  However, the Participant understands that his
or her failure to provide such consent may affect his or her ability to
participate in the Plan.  The Participant
understands that the Company may hold certain personal information about the
Participant, including his or her name, salary, nationality, job title,
position evaluation rating along with details of all past Awards and current
Awards outstanding under the Plan, for the purpose of managing and
administering the plan (the “Data”).  The
Company and other members of the Sauer-Danfoss Group will transfer Data amongst
themselves as necessary for the purpose of implementation, administration and
management of the Plan.  The Company or 


 


9

















 


another member of
the Sauer-Danfoss Group may further transfer Data to any third parties
assisting in the implementation, administration and management of the
Plan.  These various recipients of Data
may be located in Europe, or elsewhere throughout the world, including the
United States.  The Participant
authorizes these various recipients of Data to receive, possess, use, retain
and transfer the Data, in electronic or other form, for the purposes of
implementing, administering and managing the Plan, including any required
transfer of such Data as may be required for the subsequent holding of Shares
on the Participant’s behalf by a broker or other third party with whom the
Participant may elect to deposit any Shares acquired pursuant to the Plan.  The Participant understands that he or she
may, at any time, review Data with respect to the Participant and require any
necessary amendments to such Data.  The
Participant also understands that he or she may withdraw the consents to use
Data herein by notifying the Company in writing; however, the Participant
understands that by withdrawing his or her consents to use Data, the
Participant may affect his or her ability to participate in the Plan.


 


24.  Severability.  In the event
that any provision of this Award Agreement shall be held illegal or invalid for
any reason, the illegality or invalidity shall not affect the remaining parts
of this Award Agreement, and this Award Agreement shall be construed and
enforced as if the illegal or invalid provision had not been included.


 


25.  Miscellaneous.  The Committee
may terminate, amend, or modify the Plan; provided, however, that no such
termination, amendment, or modification of the Plan shall adversely affect in
any material way the Participant’s rights under this Award Agreement, without
the Participant’s written approval.


 


26.  Award Agreement.  This Award Agreement shall be subject to all
applicable laws, rules, and regulations, and to such approvals by any
governmental agencies or national securities exchanges as may be required.


 


All obligations of the Company under the Plan and this
Award Agreement, with respect to the Performance Units granted hereunder, shall
be binding (i) on the Company and on any successor to the Company, whether
the existence of such successor is the result of a direct or indirect purchase,
merger, consolidation, or otherwise, of all or substantially all of the
business and/or assets of the Company; and (ii) on the Participant and his
or her heirs and legal representatives.


 


Each of the terms of this Award 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.


 


To the extent not preempted by federal law, this Award
Agreement is deemed to have been made and entered into in the State of Iowa and
in all respects the rights and obligations of the parties will be governed by,
and construed and enforced in accordance with, the laws of the State of Iowa
without regard to the principles of conflict of laws.  Any and all lawsuits, legal actions or
proceedings against either party arising out of this Award Agreement will be
brought in Story 


 


10

















 


County, Iowa or federal court of competent jurisdiction
sitting nearest to Ames, Iowa, 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 irrevocably
waives any objection it may now have or hereinafter have to this choice of
venue of any suit, legal action or proceeding 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.


 


IN WITNESS WHEREOF, the parties have caused this
Amended and Restated Award Agreement to be executed effective as of January 2,
2008.


 


	
   

  	
  Sauer-Danfoss Inc.

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Participant

  



 


11

















 


Exhibit A


 


SAUER-DANFOSS INC.


2006 OMNIBUS INCENTIVE
PLAN


 


2007 PERFORMANCE UNIT
AWARD AGREEMENT


 


 


2007
Performance Measure:  Simple Average
Annual Return on Net Assets (RoNA)


 


Annual Return on
Net Assets (“Annual RoNA”) is defined as earnings before taxes, net interest
expense, and minority interest per the audited consolidated financial
statements of the Company for the fiscal year divided by the average Net Assets
for the four quarters in the fiscal year (i.e. the sum of Net Assets at the
beginning of the year plus Net Assets at the end of each of the next four
quarters divided by five).  Net Assets
are defined as the sum of total equity including minority interests, and all
interest bearing indebtedness shown in the consolidated balance sheet of the
Company.  The Simple Average Annual RoNA
is defined as the sum of the three Annual RoNA calculations for each of the
three fiscal years comprising the Performance Period divided by three.


 


In determining the
Net Assets for at the end of any given quarter, an amount will be added back to
reflect the cumulative reduction on Net Assets caused by the implementation of
FAS 158 in December of 2006, which required the recognition on the Company’s
balance sheet of certain unfunded pension and retiree health care liabilities.


 


2007
Performance Measure:  Simple Average
Sales Growth


 


Annual Sales
Growth is defined as the total consolidated sales for the current fiscal year
(e.g. 2007) divided by the total consolidated sales for the immediately prior
fiscal year (e.g. 2006).  The Simple
Average Sales Growth is defined as the sum of the three Annual Sales Growth
calculations for each of the three fiscal years comprising the Performance
Period, divided by three.


 


In the event that
the total consolidated sales decline from one year to the next, the Annual
Sales Growth for that fiscal year shall be a negative number, which shall work
to reduce the Simple Average Sales Growth computation.


 


12

















 


Exhibit B