Exhibit 10.1(w)


 





 


 


Employment Agreement

for Wolfgang Schramm


 


Sauer-Danfoss Inc.


December 31, 2008


 

















 


EXECUTIVE OFFICER EMPLOYMENT AGREEMENT


 


THIS EXECUTIVE OFFICER
EMPLOYMENT AGREEMENT (this “Agreement”) is made effective as of
the 31st day of December, 2008 (the “Effective Date”), by and between
Sauer-Danfoss Inc. (the “Company”) and Wolfgang Schramm (the “Executive”).  The existing Employment Agreement between the
Company and the Executive dated October 1, 2007 shall terminate by mutual
agreement as of December 30, 2008 and will be replaced, in its entirety by
this Agreement.


 


WHEREAS, the Company
desires to provide for the continued employment of the Executive on the terms
and conditions set forth herein, in the best interest of the Company and its constituencies;
and


 


WHEREAS, the Executive
desires to continue to be employed by the Company as provided herein; and


 


NOW, THEREFORE, in
consideration of the premises and the respective covenants, promises and
agreements of the parties herein contained, the parties agree as follows:


 


1.                                       Employment.  The Company agrees to continue to employ the
Executive and the Executive agrees to continue to be employed on an exclusive
and full-time basis by the Company for the period and upon the terms and
conditions specified herein.   During the
Term (set forth in Section 2 below), and consistent with the above, the
Executive agrees to serve the Company faithfully and to the best of the
Executive’s ability, to devote the Executive’s entire business time, energy and
skill to such employment, and to use the Executive’s best efforts, skill and
ability to promote the Company’s interests.


 


2.                                       Term;
Employment Period.  The term of this Agreement (the “Term”) shall
begin on the Effective Date and shall end on the earlier of:


 


(a)                                  October 1,
2009; or


 


(b)                                 such earlier
date on which the Term is terminated pursuant to Section 6;


 


provided, however, that on October 1, 2009 and upon each October 1st
thereafter, the Term shall be automatically extended for one (1) year
unless either the Company or the Executive shall have given written notice to
the other at least ninety (90) days prior thereto that the Term shall not be so
extended.  The period during which the
Executive is employed by the Company is referred to as the “Employment Period.”  The date on which the termination of the
Executive’s employment becomes effective is referred to as the “Termination
Date.”


 


3.                                       Position
and Duties.  During the
Employment Period, the Executive shall serve as Executive Vice President &
President, Control Products Division of the Company and shall have such
responsibilities, duties and authority as set forth in the Bylaws of the
Company or as otherwise are consistent with such position as well as such
additional responsibilities, duties and authority as the Company’s President
and Chief Executive Officer or the Company’s Board of Directors (the “Board”)
shall determine and assign from time to time. 
During the Employment Period, the Executive shall report to the Company’s
President and Chief Executive Officer or the Chief Executive Officer’s
designee.  The Executive shall fully
comply with the Company’s Worldwide 


 


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Code of Legal and Ethical Business Conduct as in
effect from time to time, or any successor or similar Code or Rules of
Conduct.  The Executive shall devote
substantially all his working time and efforts to the business and affairs of
the Company and shall use his best efforts to carry out his responsibilities
faithfully and efficiently in a professional and ethical manner.  Notwithstanding the foregoing, it is
understood that during the Employment Period, subject to any conflict of
interest policies of the Company and Section 9, the Executive may


 


(a)                                  serve in any
capacity with any civic, charitable, educational or professional organization
provided that such service does not materially interfere with his duties and
responsibilities to the Company;


 


(b)                                 make and manage
personal investments of his choice; and


 


(c)                                  with the prior
consent of the Company’s President and Chief Executive Officer serve on the
board of directors of one (1) for-profit business enterprise.


 


The Executive may serve from time to time as a director and /or member
of a committee of the Company and/or as a director and/or member of a committee
and/or officer of one or more subsidiaries or related or affiliated companies
or joint ventures of the Company.  The
Executive agrees to fulfill his duties as such director, member of committee or
officer without additional compensation other than the compensation provided
for in this Agreement.


 


4.                                       Place
of Assignment.  The Executive’s place of assignment shall be
the Company’s Plymouth, Minnesota plant site. 
During the Employment Period, the Executive’s place of assignment may be
at any of the Company’s plant sites and offices located in Lincolnshire, IL/USA; Plymouth, MN/USA; Nordborg, Denmark;
Neumünster, Germany; or at any other location later defined as a Sauer-Danfoss
Inc. Executive Office or Headquarters location.


 


5.                                       Compensation
and Benefits.


 


(a)                                  Salary.  During the Employment Period, the Company
shall pay to the Executive an initial annual base salary of Three Hundred
Twelve Thousand Dollars ($312,000) on an annualized basis (as the same may be
increased from time to time, the “Base Salary”), such salary to be paid in
periodic installments in accordance with the Company’s regular payroll
practices as in effect from time to time. 
The Base Salary shall be reviewed annually by the Compensation Committee
of the Board and may be increased from time to time in accordance with normal
business practices of the Company and, if so increased, shall not thereafter be
reduced.  Notwithstanding the foregoing,
the Base Salary may be reduced at any time and from time to time as part of
across-the-board reductions applied similarly to other senior executives of the
Company.   All payments of Base Salary or
other compensation hereunder shall be less such deductions or withholdings as
are required by applicable law and regulations.


 


(b)                                 Annual
Incentive.  During the Employment Period, the Executive
shall be eligible to earn an annual incentive under the Company’s 2006 Omnibus
Incentive Plan, or a successor plan thereto, as in effect from time to time,
for executives at the Executive’s level (the “Incentive Plan”), subject to
achievement of performance goals determined in accordance with the terms of the
Incentive Plan (such annual incentive referred to herein as the “Annual
Incentive”).  Except as otherwise
specifically provided in this Agreement, the 


 


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Executive shall only be
eligible to receive the Annual Incentive if the Executive is employed by the
Company through the last day of the fiscal year to which the Annual Incentive
relates.  The actual amount of any Annual
Incentive and the timing for payment shall be determined by and in accordance
with the terms of the Company’s Incentive Plan and the Executive shall have no
absolute right to an Annual Incentive in any year.


 


(c)                                  Expenses.  During the Employment Period, the Company
shall promptly reimburse the Executive for all reasonable out-of-pocket
expenses actually incurred by the Executive in connection with the business of
the Company and the performance of his duties under this Agreement in accordance
with the terms of the Company’s policies and upon presentation of expense
statements or vouchers or such other supporting information as the Company may
customarily require of its senior executives from time to time; provided,
however, in no event shall any such reimbursement be provided later than December 31
of the calendar year following the calendar year in which such business expense
was incurred.


 


(d)                                 Benefit
Plans.  During the
Employment Period, the Executive shall be entitled to participate in all of the
employee benefit plans, long term incentive plans, retirement and health plans,
programs, agreements and arrangements provided to senior executives of the
Company, as such are in effect from time to time, subject to the eligibility
requirements and terms and conditions of such plans, programs, agreements and
arrangements.  The Company reserves the
right, in its sole discretion, to adopt, modify, amend or terminate such plans,
programs, agreements and arrangements at any time.


 


(e)                                  Perquisites.  During the Employment Period, the Executive
shall be entitled to participate in those perquisites provided to senior
executives of the Company, as such are in effect from time to time, subject to
the eligibility, payment requirements and other terms and conditions of such
perquisites, as outlined in the underlying Company policy.  The Company reserves the right, in its sole
discretion, to adopt, modify, amend or terminate such perquisites at any time.


 


(f)                                    Paid
Time Off / Vacations.  During the Employment Period, the Executive
shall be entitled to paid time off, vacation time and paid holidays, in
accordance with the Company’s local policies or practice for its senior
executives, as such are in effect from time to time.  While based in the US, the Executive shall
accrue paid time off, exclusive of paid holidays, at the rate of five weeks per
calendar year.


 


6.                                       Termination
of Employment.


 


(a)                                  Termination
Events.


 


(i)                                     Immediate
Terminations.  Executive’s
employment and the Term shall terminate immediately upon the occurrence of any
of the following:


 


(A)                              Death:  the death of the Executive;


 


(B)                                Disability:  the Disability of the
Executive, where “Disability” shall mean the Executive is incapable of
performing his principal duties because of physical or mental incapacity for a
period of 180 consecutive days in any 12-month period; provided such
Termination Date 


 


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for Disability shall be set
forth in the notice of termination delivered to the Executive by the Company;


 


(C)                                Retirement:  the Retirement of the Executive, where “Retirement”
shall have that meaning as currently in effect under the Company’s defined
contribution retirement plan on the day immediately preceding such Retirement;
and


 


(D)                               For
Cause:  notice of
termination from the Company for Cause, where “Cause” shall means:


 


(I)                                    the willful
failure of the Executive to perform his material duties with the Company as
provided in this Agreement, and which failure is not cured (if capable of cure)
within 15 days after receipt by the Executive of written notice from the
Company of such failure, which notice identifies the manner in which the
Executive has willfully failed to perform;


 


(II)                                gross
negligence or willful misconduct in the performance of the Executive’s duties;


 


(III)                            the engaging by
the Executive in willful conduct which is demonstrably injurious to the
Company, monetarily or otherwise, such as actual or attempted theft or
embezzlement of Company assets;


 


(IV)                            the conviction
(treating a nolo contendere plea as a conviction) of the Executive of any crime
or offense constituting a felony (whether or not any right to appeal has been
or may be exercised);


 


(V)                                use of illegal
drugs;


 


(VI)                            commission or
an act of moral turpitude that in the judgment of the Board of Directors of the
Company can reasonably be expected to have an adverse effect on the business,
reputation or financial situation of the Company and/or the ability of the
Executive to perform the Executive’s duties;


 


(VII)                        a failure by
the Executive to comply with any material provision of this Agreement, which
failure is not cured (if capable of cure) within 15 days after receipt by
Executive of written notice from the Company of such noncompliance by the
Executive; or


 


(VIII)                    breach of fiduciary duty to
the Company.


 


Termination of the Executive
for Cause shall mean termination by action of the Company’s Board of Directors,
at a meeting duly called and held upon at least 15 days’ written notice to the
Executive specifying the particulars of the action or inaction alleged to
constitute Cause and at which meeting the 


 


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Executive and his counsel
were entitled to be present and given adequate opportunity to be heard.  For purposes of clauses (I), (II) and (III) of
the above definition, action or inaction by the Executive shall not be
considered “willful” unless done or omitted by him (1) intentionally or
not in good faith and (2) without reasonable belief that his action or
inaction was in the best interest of the Company, and shall not include failure
to act by reason of total or partial incapacity due to physical or mental
illness.


 


(ii)                                  Terminations
Requiring Notice By Either Party. 
The Executive’s employment may be terminated either by the Company or by
the Executive for any of the below reasons provided notice of termination is
delivered by one party to the other.  The
notice of termination shall set forth the applicable Termination Date; provided, however, in such event, the Term shall terminate
no earlier than thirty (30) days following the date on which such notice of
termination is delivered to the respective party.  Notwithstanding the foregoing, the Company
may require that the Executive cease performing some or all of the Executive’s
duties and/or not be present at the Company’s offices and/or other facilities.


 


(A)                              Termination
by Executive for Good Reason. 
The Executive may resign the Executive’s position for Good reason.  As used herein, “Good Reason” means, without
the Executive’s written consent:


 


(I)                                    a material
diminution in the nature or status of the Executive’s duties, responsibilities
or authority which is inconsistent with those in effect as of the Effective
Date;


 


(II)                                a failure by
the Company to pay or provide any of the compensation set forth in this
Agreement;


 


(III)                            a failure by
the Company to comply with any material provision of this Agreement; or


 


(IV)                            resignation in
compliance with applicable law or rules of professional conduct.


 


Notwithstanding the
foregoing, in order to terminate employment for Good Reason, the Executive must
provide written notice of termination within sixty (60) days of the initial
existence of the condition that he believes is providing him a Good Reason
termination, explaining in detail such condition and the date upon which it
first arose.  Continuation of employment
without written notice of termination during the sixty (60) day period
following the initial existence of the condition shall constitute such
Executive’s acceptance of any change and make null and void the Executive’s
right to terminate for Good Reason with respect to such event.  Upon receipt of a written notice of
termination for Good Reason and underlying condition therefor, the Company will
be allowed sixty (60) days to cure such condition and thereby avoid a Good
Reason termination.


 


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(B)                                Termination
by the Company Without Cause. 
The Company may terminate the Executive’s position without Cause.


 


(C)                                Termination
by Executive Without Good Reason. 
The Executive may resign the Executive’s position without Good Reason.


 


(b)                                 Payments
Upon a Termination Event.


 


(i)                                     Following
a Termination for Any Reason.  In the event of the termination of the
Executive’s employment hereunder for any reason, the Executive (or his estate
or representative, as applicable) shall be entitled to receive any:


 


(A)                              Base Salary;


 


(B)                                Annual
Incentive;


 


(C)                                paid time
off;  and


 


(D)                               expenses


 


that have in each case
accrued but are unpaid as of the Termination Date as well as any
post-termination benefits to which he may be entitled according to the Company’s
retirement, insurance and other benefit plans, programs and arrangements as in
effect immediately prior to the Termination Date, other than medical benefit
plans (the “Accrued Benefits”).  Accrued
Benefits will be paid in accordance with the underlying plan or policy.  If no underlying plan or policy exists for a
particular component of the Accrued Benefits, such component will be paid no
later than sixty (60) days following the Termination Date.


 


(ii)                                  Death.  Upon the termination of the Executive’s
employment because of his death, in addition to the Accrued Benefits set forth
in subparagraph (i) immediately above, the Executive’s estate or
representative, as the case may be, shall also be entitled to receive a lump
sum payment in cash equal to the actual annual incentive compensation such
Executive would have received, if any, under the Incentive Plan for the fiscal
year which includes his Termination Date and assuming that the Executive had
been employed through the last day of such fiscal year, multiplied
by a fraction (the numerator of which shall be the number of
whole months worked by the Executive during the Company’s fiscal year in which
the Termination Date occurs and the denominator of which shall be the number 12
(the “Pro Rata Annual Incentive”)).  The
Pro Rata Annual Incentive shall be payable in accordance with the terms of the
relevant underlying Incentive Plan and at the same time payments are made to
other Company executives pursuant to such Incentive Plan.  In addition, those immediate family members
who were participating in the Company’s medical benefit plans as of the date of
the Executive’s death shall continue to participate in the Company’s medical
benefit plans at active employee contribution rates for the one-year period
immediately following the date of the Executive’s death.  Any continuing medical coverage pursuant to this
clause is intended to be exempt from Code Section 409A to the extent
permitted under Treasury Regulation §1.409A-1(B)(9)(v)(B) or
§1.409A-3(I)(1)(iv)(B).  However, 


 


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if it is determined that the continuing medical
coverage pursuant to this clause does not qualify for exemption under Code Section 409A
the medical coverage will expire as of the date of the Employee’s death.  If the medical coverage expires early, as
provided in the previous sentence, the Company shall provide Executive’s
immediate family members with a lump sum cash payment equal to twelve (12)
times the then applicable monthly premium for the relevant medical plan which
the Executive participated in.  Such lump
sum payment amount, if any, will be paid no later than sixty (60) days after
the date on which such medical coverage expires.


 


(iii)                               Disability.  Upon the termination of the Executive’s
employment because of his Disability, in addition to the Accrued Benefits set
forth in subparagraph (i) immediately above, the Executive (or his
representative, as applicable) shall be entitled to:


 


(A)                              the Pro Rata
Annual Incentive; as defined in Section 6(b)(ii) above.  The Pro Rata Annual Incentive shall be
payable in accordance with the terms of the relevant underlying Incentive Plan
and at the same time payments are made to other Company executives pursuant to
such Incentive Plan; and


 


(B)                                the
continuation of medical benefit plans at the levels in effect as of the
Termination Date, at no additional cost to the Executive than that which was in
effect as of the Termination Date, for the one-year period immediately
following the Termination Date; provided, however,
that such medical benefits shall be reduced to the extent comparable medical
benefits are made available to the Executive from a successor employer, and the
Executive shall be obligated to report such benefits to the Company.  Any continuing medical coverage pursuant to this
clause is intended to be exempt from Code Section 409A to the extent
permitted under Treasury Regulation §1.409A-1(B)(9)(v)(B) or
§1.409A-3(I)(1)(iv)(B).  However, if it
is determined that the continuing medical coverage pursuant to this clause does
not qualify for exemption under Code Section 409A the medical coverage
will expire as of the date of the Employee’s death.  If the medical coverage expires early, as
provided in the previous sentence, the Company shall provide Executive’s
immediate family members with a lump sum cash payment equal to twelve (12)
times the then applicable monthly premium for the relevant medical plan which
the Executive participated in.  Such lump
sum payment amount, if any, will be paid no later than sixty (60) days after
the date on which such medical coverage expires.


 


It is acknowledged and
agreed by the Executive that he shall be precluded from terminating his
employment for Good Reason in the event that his employment is terminated under
this Section 6(b)(iii).


 


(iv)                              Termination
by Company For Cause OR Termination by Executive Without Good Reason.  Upon the termination of the Executive’s 


 


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employment by the Company
for Cause or by the Executive without Good Reason, Executive shall only be
entitled to the Accrued Benefits set forth in subparagraph (i) immediately
above.


 


(v)                                 Termination
by the Company Without Cause OR Termination by the Executive For Good Reason.  Upon the termination of the Executive’s
employment by the Company without Cause or by the Executive for Good Reason, in
addition to the Accrued Benefits set forth in subparagraph (i) immediately
above, the Executive (or his estate or representative, as the case may be)
shall be entitled to receive:


 


(A)                              the Pro Rata
Annual Incentive as defined in Section 6(b)(ii) above.  The Pro Rata annual Incentive shall be
payable in accordance with the terms of the relevant underlying Incentive Plan
and at the same time payments are made to other Company executives pursuant to
such Incentive Plan;


 


(B)                                a lump sum
payment in cash equal to the Executive’s Base Salary plus
Target Incentive Opportunity as in effect on the Termination Date multiplied by one and one/half (1.5)
(the “Separation Payment”).  The
Separation Payment shall be payable as follows:


 


1.               an amount equal
to the least of the following:


 


a.               the Separation
Payment amount; or


 


b.              two (2) times
the Executive’s Base Salary as in effect on the Termination Date; or


 


c.               two (2) times
the annual compensation limit under Code Section 401(a)(17) (i.e.,
$460,000 for 2008)


 


shall be paid to the
Executive in a lump sum thirty (30) days following Executive’s Termination
Date; and


 


2.               the remainder
of the Separation Payment amount, if any, shall be paid to the Executive in a
lump sum on the seventh month anniversary of the Executive’s Termination Date.


 


(C)                                In addition, an
Executive whose employment is terminated under this Section 6(b)(v) shall
be eligible for the continuation of medical plan benefits at the levels in
effect as of the Termination Date at no additional cost to the Executive than
that which was in effect as of the Termination Date for a period of one year; provided, however, that such medical benefits shall be
reduced to the extent comparable medical benefits are made available to the
Executive from a successor employer, and the Executive shall be obligated to
report such benefits to the Company.  Any continuing medical coverage pursuant
to this clause is intended to be exempt from Code 


 


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Section 409A to the extent permitted under
Treasury Regulation §1.409A-1(B)(9)(v)(B) or §1.409A-3(I)(1)(iv)(B).  However, if it is determined that the
continuing medical coverage pursuant to this clause does not qualify for
exemption under Code Section 409A the medical coverage will expire as of
the date of the Employee’s death.  If the
medical coverage expires early, as provided in the previous sentence, the
Company shall provide Executive’s immediate family members with a lump sum cash
payment equal to twelve (12) times the then applicable monthly premium for the
relevant medical plan which the Executive participated in.  Such lump sum payment amount, if any, will be
paid no later than sixty (60) days after the date on which such medical
coverage expires, and


 


(D)                               executive level
career outplacement services by a mutually agreeable outplacement firm and paid
for, as actually incurred by Executive, by the Company.  The Executive must commence the outplacement
services no later than sixty (60) days following his Termination Date and in no
event shall such services be provided beyond December 31 of the second
year following the year of termination or, if earlier, the first acceptance by
the Executive of an offer of employment.


 


(c)                                  Change
in Control Severance Provisions.  Section 7 provides for payment to the
Executive if his employment is terminated for certain reasons following a
Change of Control as defined in Section 7. 
The Executive acknowledges that in the event he becomes entitled to the
payment specified in Section 7(a), that payment will be in lieu of any
other payments to be made under the terms of this Agreement.


 


(d)                                 Release
Agreement.  Notwithstanding
anything to the contrary contained in this Section 6, the Executive shall
be required to execute the Company’s then current standard release agreement as
a condition to receiving any of the payments and benefits provided for in this Section 6
or Section 7 of this Agreement.  It
is acknowledged and agreed that the then current standard release agreement
shall not diminish or terminate the Executive’s rights under this Agreement
including, but not limited to, those specified in Sections 6(e), 8 and 22.


 


(e)                                  No
Mitigation.  Upon termination of the Executive’s employment
with the Company, subject to the Executive’s affirmative obligations under Section 6(b)(iii) and
(v), the Executive shall be under no obligation to seek other employment or
otherwise mitigate the obligations of the Company under this Agreement.


 


(f)                                    Definition
of the Company.  Whenever this Agreement refers to the
Executive’s employment with the Company, or the termination of the Executive’s
employment 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 Executive.  In
addition, when used in Sections 9, 10, 11 and 12 of this Agreement, the term “Company”
shall include Sauer-Danfoss Inc. and any of its subsidiaries or related or
affiliated companies or joint ventures.


 


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7.                                       Change
in Control.


 


(a)                                  Payments
Related to Employment Terminations After a Change in Control.  During the term of this Agreement, in the
event the Executive’s employment with the Company is terminated within two (2) years
following a Change in Control (as such term is defined in  paragraph (b) immediately below), unless such termination is:


 


(i)                                     by the Company
for Cause (as the term Cause is defined in Section 6(a)(i)(D) above);


 


(ii)                                  by reason of
death, Disability, or Retirement; or


 


(iii)                               by the
Executive without Good Reason (as the term Good Reason is defined in Section 6(ii)(A) above),


 


then in lieu of all other
benefits provided to the Executive under the provisions of this Agreement, the
Company shall pay to the Executive and provide him with the following:


 


(A)                              his Accrued
Benefits (in full satisfaction for these amounts owed to the Executive);


 


(B)                                a Pro Rata
Annual Incentive as defined in Section 6(b)(ii) above.  The Pro Rata Annual Incentive shall be
payable in accordance with the terms of the relevant underlying Incentive Plan
and at the same time payments are made to other Company executives pursuant to
such Incentive Plan.  This payment shall
be in lieu of any other payment to be made to the Executive under the Incentive
Plan for the respective plan year);


 


(C)                                a lump-sum
payment in cash equal to the Executive’s Base Salary plus
Target Incentive Opportunity in effect on the Termination Date multiplied by one and a half (1.5)
(the “CIC Separation Payment”).  The CIC
Separation Payment shall be payable as follows:; and


 


1.               an amount equal
to the least of the following:


 


d.              the CIC
Separation Payment amount; or


 


e.               two (2) times
the Executive’s Base Salary as in effect on the Termination Date; or


 


f.                 two (2) times
the annual compensation limit under Code Section 401(a)(17) (i.e.,
$460,000 for 2008)


 


shall be paid to the
Executive in a lump sum thirty (30) days following Executive’s Termination
Date; and


 


2.               the remainder
of the CIC Separation Payment amount, if any, shall be paid to the Executive in
a lump sum on the seventh month anniversary of the Executive’s Termination
Date.


 


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(D)                               a lump sum
payment in cash equal to ten percent (10%) of the Executive’s Base Salary in
effect on the Termination Date in lieu of medical plan benefits; provided, the
Executive’s participation in these and all other medical benefits shall cease
upon the termination of Executive’s employment with the Company under
circumstances which entitle the Executive to the payments set forth in this
paragraph (a).  The lump sum payment
amount under this clause will be paid no later than sixty (60) days after the date
on which such medical coverage expires. 
Any lump sum payment pursuant to this clause is intended to be exempt from Code Section 409A
to the extent permitted under Treasury Regulation §1.409A-1(B)(9)(v)(B) or
§1.409A-3(I)(1)(iv)(B).


 


The
parties agree that, in the event of the termination of Executive’s employment
with the Company under circumstances which entitle the Executive to the
payments set forth in this  paragraph
(a), such payment and benefits shall be deemed to constitute liquidated damages
payable by the Company to the Executive in full satisfaction of the Company’s
obligations hereunder or otherwise, and the Company agrees that the Executive
shall not be required to mitigate his damages by seeking other employment or
otherwise.


 


Additionally,
in the event that the Executive’s employment with the Company is terminated
under circumstances which entitle the Executive to the payments set forth in
this paragraph (a) (whether by the Company or by the Executive), the
Termination Date shall be no earlier than 30 days following the date on which a
notice of termination is delivered by one party to the other.


 


(b)                                 Definition of Change in Control.  “Change
in Control” of the Company means, and shall be deemed to have occurred upon any
of the following events:


 


(i)                                     Any person (other than those persons in
control of the Company as of the Effective Date, or other than a trustee or
other fiduciary holding securities under an employee benefit plan of the
Company, or a corporation or other entity owned directly or indirectly by the
stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company) becomes the beneficial owner, directly or
indirectly, of securities of the Company representing thirty percent (30%) or
more of the combined voting power of the Company’s then outstanding securities;
provided, however, that a Change in Control shall not result from:


 


(A)                              Danfoss A/S, as defined below, acquiring
securities of the Company from the Murmann Group, as such term is defined
below, either directly, or indirectly by acquiring voting control of Danfoss
Murmann Holding A/S or its successor; or


 


(B)                                the Murmann Group acquiring securities of the
Company from Danfoss A/S either directly, or indirectly by acquiring voting
control of Danfoss Murmann Holding A/S or its successor; or


 


(ii)                                  During any period of two (2) consecutive
years (not including any period prior to the Effective Date), individuals who
at the beginning of such period constitute the Board (and any new Director, whose
election by the Company’s 


 


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stockholders was approved by a vote of at least two-thirds (2/3) of the
Directors then still in office who either were Directors at the beginning of
the period or whose election or nomination for election was so approved), cease
for any reason to constitute a majority thereof; or


 


(iii)                               The consummation of:


 


(A)                              a plan of complete liquidation of the
Company; or


 


(B)                                the sale or disposition of all or
substantially all the Company’s assets; or


 


(C)                                a merger, consolidation, or reorganization of
the Company with or involving any other corporation, other than a merger,
consolidation, or reorganization that would result in the voting securities of
the Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities
of the surviving entity) at least fifty percent (50%) of the combined voting
power of the voting securities of the Company (or such surviving entity)
outstanding immediately after such merger, consolidation, or reorganization.


 


However,
in no event shall a “Change in Control” be deemed to have occurred with respect
to the Executive, if the Executive is part of a purchasing group which consummates
the Change in Control transaction.  The
Executive shall be deemed “part of a purchasing group” for purposes of the
preceding sentence if the Executive is an equity participant in the purchasing
company or group (except for (i) passive ownership of less than one
percent (1%) of the stock of the purchasing company; or (ii) ownership of
equity participation in the purchasing company or group which is otherwise not
significant as determined prior to the Change in Control by a majority of the
nonemployee continuing Directors).


 


For
purposes of (b)(i) of this Section 7, (A) Danfoss A/S shall be
deemed to mean any one or more of 
Danfoss A/S, any of its subsidiaries or related or affiliated companies
or joint ventures, or any successor of the foregoing; and (B) the Murmann
Group shall be deemed to mean any one or more of (i) Klaus Murmann, (ii) any
member of his immediate family, (iii) any entity a majority of the voting
interests of which are owned, directly or indirectly, by Klaus Murmann and/or
any member or members of his immediate family, or (iv) trust, a majority
of which is owned by, or a majority of the beneficiaries of which consist of,
directly or indirectly, Klaus Murmann, and/or any member or members of his
immediate family.


 


(c)                                  Excise Tax Payment.  Notwithstanding anything to the contrary
contained in this Section 7 if, after taking into account all amounts or
benefits otherwise  to be paid or payable
(whether before or after the effective date of the Change of Control), any
amount or benefit to be paid or provided under this Section 7 or any other
plan or agreement would be an “Excess Parachute Payment,” within the meaning of
Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”),
or any successor provision thereto, but for the application of this sentence,
then the payment and benefits to be so paid or provided under this Section 7
or any other plan or agreement will be reduced to the minimum extent necessary
(but in no event less than zero) so that no portion of any such payment or
benefit, as so reduced, constitutes an Excess Parachute Payment; provided, however, that the 


 


13

















 


foregoing
reduction will be made only if and to the extent that the Executive and the
Company mutually agree that such reduction would result in an increase in the
aggregate payments and benefits to be provided to the Executive, determined on
an after-tax basis (taking into account any excise tax imposed pursuant to Section 4999
of the Code, or any successor provision thereto, any tax imposed by any
comparable provision of state law, and any applicable federal, state and local
income taxes).  In the event that any
payment or benefit intended to be provided under this Section 7 or
otherwise is agreed to be reduced pursuant to this section, the Executive will
be entitled to designate the payments and/or benefits to be so reduced in order
to give effect to this section.  The
Company will provide the Executive with all information reasonably requested to
make such designation.


 


8.                                       Indemnification.  In addition to any rights to
indemnification to which the Executive is entitled under the Company’s Restated
Certificate of Incorporation or Bylaws, agreement with the Company, vote of
stockholders or disinterested directors or otherwise, the Company shall
indemnify the Executive at all times during and after the Employment Period to
the maximum extent permitted under the Delaware Business Corporation Act or any
successor provision thereof, and any and all applicable state law of the State
of Delaware, and shall pay the Executive’s expenses (including reasonable
attorneys’ fees and expenses, which shall be paid in advance by the Company as
incurred, subject to recoupment in accordance with applicable law) in defending
any civil action, suit or proceeding in advance of the final disposition of
such action, suit or proceeding to the maximum extent permitted under such
applicable state laws for the Executive’s action or inaction on behalf of the
Company under the terms of this Agreement. 
The provisions of this Section 8 shall survive the termination of
the Executive’s employment or the termination of the other provisions of this
Agreement.


 


9.                                       Covenant
Not to Compete.


 


(a)                                  Competition.  Without the consent of the
Company, the Executive shall not, directly or indirectly, anywhere in the
world, at any time during the Employment Period and for a period of eighteen
(18) months following the termination of Executive’s employment with the
Company 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 Company; provided, however, that the Executive shall not be deemed to
have breached this undertaking if his sole relation with such entity consists
of his 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 Executive 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 Company” shall mean any product or product line
of the Company, the aggregate gross sales of which during any calendar year
during the five (5) year period preceding the Executive’s undertaking such
association with such a competitor were at least $10 million.


 


(b)                                 Acknowledgement
of and Payment for Noncompete. 
The Executive acknowledges that:


 


(i)                                     the services to
be performed by him under this Agreement are of a special, unique, unusual,
extraordinary, and intellectual character;


 


14

















 


(ii)                                  the business of
the Company is worldwide in scope and its products are marketed throughout the
world;


 


(iii)                               the Company
competes with other businesses that are or could be located in any part of the
world; and


 


(iv)                              the provisions
of this Section 9 are reasonable and necessary to protect the Company’s
business.


As such, Executive
acknowledges and agrees that five percent (5%) of every payment made to him on
each payroll period of his Base Salary from the Company actually represents
consideration for agreeing to the noncompete provisions of this Section 9.


 


(c)                                  Blue
Penciling.  If any covenant
in this Section 9 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 Executive.


 


(d)                                 Automatic
Extension for Violation. 
The period of time applicable to any covenant in this Section 9
will be extended by the duration of any violation by the Executive of such
covenant.


 


(e)                                  Agreement
to Identify Subsequent Employer. 
The Executive will, while the covenants under this Section 9 are
in effect, give notice to the Company, within ten (10) days after
accepting any other employment, of the identity of the Executive’s
employer.  The Company may notify such
employer that the Executive is bound by this Agreement and, at the Company’s
election, furnish such employer with a copy of this Agreement or relevant
portions thereof.


 


(f)                                    Penalty
for Violation.  In the event it
is determined that the Executive has violated the provisions of this Section 9,
the Executive, without any further
action by the Company or Executive, shall forfeit, as of the first day of any
such violation any amount owed to Executive under Section 6(b), other than
the Accrued Benefits.  The Company shall
be entitled to reimbursement from the Executive of any fees and expenses
(including attorneys’ fees) incurred by or on behalf of the Company in
enforcing the Company’s rights under this Section 9.  By entering into this Agreement, the
Executive hereby consents to a deduction from any amounts the Company owes to
Executive from time to time (including amounts owed to the Executive as
compensation as well as any other amounts owed to Executive by the Company), to
the extent of any amounts that the Executive owes to the Company under this Section 9
as a forfeiture following a payment to the Executive under Section 6(b),
other than Accrued Benefits, to which he is no longer entitled due to such
violation.  Whether or not the Company
elects to make any set-off in whole or in part, if the Company does not recover
by means of set-off the full amount the Executive owes to the Company, the
Executive agrees to pay immediately the unpaid balance to the Company.


 


15

















 


10.                                 Disclosure of Confidential
Information.


 


(a)                                  Nondisclosure.  Without the consent of the
Company, the Executive shall not disclose to any other person Confidential
Information (as defined in paragraph (c) below) concerning the Company or
the Company’s trade secrets of which the Executive has gained knowledge during
his employment with the Company.  Any
trade secrets of the Company or any of its subsidiaries or related or
affiliated companies or joint ventures 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 Agreement, such information will, nevertheless, be considered Confidential
Information for purposes of this Agreement. 
The Executive hereby waives any requirement that the Company submit
proof of the economic value of any trade secret or post a bond or other
security.  None of the foregoing
obligations and restrictions apply to any part of the Confidential Information
that the Executive demonstrates was or became generally available to the public
other than as a result of a disclosure by the Executive.  In the event that the Executive is requested
or required to make disclosure of information subject to this Section 10
under any court order, subpoena or other judicial process, then, except as
prohibited by law, the Executive will promptly notify the Company, take all
reasonable steps requested by the Company to defend against the compulsory
disclosure and permit the Company to control with counsel of its choice any
proceeding relating to the compulsory disclosure.  The Executive acknowledges that all
information, the disclosure of which is prohibited by this section, is of a
confidential and proprietary character and of great value to the Company and
its subsidiaries and affiliates.


 


(b)                                 Safeguard
and Return of Proprietary Items. 
The Executive will not remove from the premises of the Company (except
to the extent such removal is for purposes of the performance of the Executive’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 Executive recognizes that,
as between the Company and the Executive, all of the Proprietary Items, whether
or not developed by the Executive, are the exclusive property of the
Company.  Upon termination of this
Agreement by either party, or upon the request of the Company during the
Employment Period, the Executive will return to the Company all of the
Proprietary Items in the Executive’s possession or subject to the Executive’s
control, and the Executive shall not retain any copies, abstracts, sketches, or
other physical embodiment of any of the Proprietary Items.


 


(c)                                  Definition
of Confidential Information. 
For purposes of this Agreement, “Confidential Information” shall
include any and all information concerning the business and affairs of the
Company, 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 


 


16

















 


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 Company
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.


 


(d)                                 Penalty
for Violation.  In the event it
is determined that the Executive has violated the provisions of this Section 10,
the Executive, without any further
action by the Company or Executive, shall forfeit, as of the first day of any
such violation any amount owed to Executive under Section 6(b), other than
the Accrued Benefits.  The Company shall
be entitled to reimbursement from the Executive of any fees and expenses
(including attorneys’ fees) incurred by or on behalf of the Company in
enforcing the Company’s rights under this Section 10.  By entering into this Agreement, the
Executive hereby consents to a deduction from any amounts the Company owes to
Executive from time to time (including amounts owed to the Executive as
compensation as well as any other amounts owed to Executive by the Company), to
the extent of any amounts that the Executive owes to the Company under this Section 10
as a forfeiture following a payment to the Executive under Section 6(b),
other than Accrued Benefits, to which he is no longer entitled due to such
violation.  Whether or not the Company
elects to make any set-off in whole or in part, if the Company does not recover
by means of set-off the full amount the Executive owes to the Company, the
Executive agrees to pay immediately the unpaid balance to the Company.


 


11.                                 Developments.


 


(a)                                  Agreement
to Bring All Developments to the Attention of the Company.  During the course of
employment with the Company, Executive may conceive enhancements to the
products manufactured or sold by  the
Company or may conceive new products which perform functions similar to
products manufactured or sold by the Company or may conceive other new products
related to the business of the Company or may develop ideas, plans and
opportunities.  Executive shall disclose
promptly and fully to the Company any and all ideas, business developments,
plans and opportunities, new products or systems, inventions, discoveries,
enhancements and improvements  (“Developments”),
whether or not patentable or subject to copyrights, conceived or made by
Executive during the Employment Period, during work hours or otherwise and on
the Company’s premises or otherwise. 
Employee recognizes that pursuant to this arrangement that the Company
may develop a new product that generates widespread market appeal.


 


(b)                                 Agreement
that All Developments are Property of the Company.  Executive agrees that all
Developments shall be the sole property of the Company, and Executive hereby
assigns to the Company, without further compensation, all of his right, title,
and interest in and to such Developments and any and all related patents,
patent applications, copyrights, copyright applications, trademarks, and trade
names in the United States and elsewhere. 
Executive shall assist the Company in obtaining and enforcing patent,
copyright, and any other forms of legal protection for the Developments in any
country.  Upon request, Executive will
sign all applications, assignments, instruments and papers to perform all acts
necessary or desired by the Company to assign all such Developments completely
to the Company and to enable the Company, its successors, assigns and nominees,
to secure and 


 


17

















 


enjoy the full and exclusive
benefits and advantages thereof. 
Executive will not, at any time, either during the term of this
Agreement or thereafter, disclose to others, or use for his own benefit or the
benefit of others, any of the Developments. 
Executive agrees that the enhancement and development of all
Developments capable of copyright protection is “Work For Hire” within the
meaning of the Copyright Act of 1976. 
These obligations shall continue beyond the Termination Date with
respect to Developments, whether patentable or not, conceived or made by
Executive during his employment with the Company, and shall be binding upon
Executive’s assigns, personal representatives, administrators and other legal
representatives.


 


(c)                                  Penalty
for Violation.  In the event it
is determined that the Executive has violated the provisions of this Section 11,
the Executive, without any further
action by the Company or Executive, shall forfeit, as of the first day of any
such violation any amount owed to Executive under Section 6(b), other than
the Accrued Benefits.  The Company shall
be entitled to reimbursement from the Executive of any fees and expenses
(including attorneys’ fees) incurred by or on behalf of the Company in
enforcing the Company’s rights under this Section 11.  By entering into this Agreement, the
Executive hereby consents to a deduction from any amounts the Company owes to
Executive from time to time (including amounts owed to the Executive as
compensation as well as any other amounts owed to Executive by the Company), to
the extent of any amounts that the Executive owes to the Company under this Section 11
as a forfeiture following a payment to the Executive under Section 6(b),
other than Accrued Benefits, to which he is no longer entitled due to such
violation.  Whether or not the Company
elects to make any set-off in whole or in part, if the Company does not recover
by means of set-off the full amount the Executive owes to the Company, the
Executive agrees to pay immediately the unpaid balance to the Company.


 


12.                                 Nonsolicitation.


 


(a)                                  General
Rule.  Without the
written consent of the Company, the Executive shall not at any time during the
Term and for a period of eighteen (18) months following the termination of
Executive’s employment with the Company for any reason:


 


(i)                                     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 Company; or


 


(ii)                                  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 Company at any time during the Employment Period, whether or not the
Executive had personal contact with such customer.


 


(b)                                 Penalty
for Violation.  In the event it
is determined that the Executive has violated the provisions of this Section 12,
the Executive, without any further
action by the Company or Executive, shall forfeit, as of the first day of any
such violation any amount owed to Executive under Section 6(b), other than
the Accrued Benefits.  The Company shall
be entitled to reimbursement from the Executive of any fees and expenses
(including attorneys’ fees) incurred by or on behalf of the Company in
enforcing the Company’s rights under this Section 12.  By entering into this Agreement, the
Executive hereby consents to a deduction from any amounts the Company owes to
Executive from time to time (including 


 


18

















 


amounts
owed to the Executive as compensation as well as any other amounts owed to
Executive by the Company), to the extent of any amounts that the Executive owes
to the Company under this Section 12 as a forfeiture following a payment
to the Executive under Section 6(b), other than Accrued Benefits, to which
he is no longer entitled due to such violation. 
Whether or not the Company elects to make any set-off in whole or in
part, if the Company does not recover by means of set-off the full amount the
Executive owes to the Company, the Executive agrees to pay immediately the
unpaid balance to the Company.


 


13.                                 Injunctive Relief and Additional
Remedy; Essential and Independent Covenants.


 


(a)                                  Acknowledgement by Executive. 
The Executive
acknowledges that the injury that would be suffered by the Company as a result
of a breach of the provisions of this Agreement (including, without limitation,
any provision of Sections 9, 10, 11,and 12) would be irreparable and that an
award of monetary damages to the Company for such a breach would be an
inadequate remedy.  Consequently, the
Company 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 Agreement, and the
Company will not be obligated to post bond or other security in seeking such
relief.  Without limiting the Company’s
rights under this Section 13 or any other remedies of the Company, if the
Executive breaches any of the provisions of Sections 9, 10, 11 or 12, the
Company will have the right to cease making any payments otherwise due to the
Executive under this Agreement.


 


(b)                                 Adequate Time to Consult with
Legal Counsel.  The covenants by the Executive in Sections 9, 10, 11 and 12 are
essential elements of this Agreement, and without the Executive’s agreement to
comply with such covenants, the Company would not have entered into this
Agreement with the Executive.  The
Company and the Executive 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 9), with
specific regard to the nature of the business conducted by the Company and its
subsidiaries and related or affiliated companies or joint ventures.  The Executive’s covenants in Sections 9, 10,
11 and 12 are independent covenants and the existence of any claim by the
Executive against the Company under this Agreement or otherwise, will not
excuse the Executive’s breach of any covenant in Sections 9, 10, 11 or 12.


 


14.                                 Severability.  It is the desire and intent of the parties
that this Agreement shall be enforced to the fullest extent permissible under
the laws and public policies applied in each jurisdiction in which enforcement
is sought.  Accordingly, if any
particular provision or portion of this Agreement shall be adjudicated to be
invalid or unenforceable, this Agreement shall be deemed amended to delete
therefrom the portion thus adjudicated to be invalid or unenforceable, such
deletion to apply only with respect to the operation of such provision in the
particular jurisdiction in which such adjudication is made.


 


15.                                 Withholding.  Any other provision of this
Agreement notwithstanding, the Company may withhold from amounts payable under
this Agreement:


 


19

















 


(a)                                  all federal,
state, local and foreign taxes and social security taxes that are required to
be withheld by applicable laws or regulations as the Company shall determine in
its sole discretion; and


 


(b)                                 other ordinary
and customary payroll deductions.


 


16.                                 Notices.  All notices, requests, consents and other
communications provided for in this Agreement shall be in writing and shall be
given by hand delivery or by registered or certified mail, return receipt
requested, postage prepaid, addressed as follows:


 


If
to the Company:


 


Sauer-Danfoss
Inc.


250
Parkway Drive


Lincolnshire,
Illinois 61069


Attention:  President


 


If to the Executive, to his residence address
set forth on the records of the Company, or to such other address as either
party furnishes to the other in writing in accordance with this Section 16.  All such notices shall be effective when
actually received by the addressee.


 


17.                                 Governing Law.  This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Delaware,
without regard to its conflicts of laws provisions, except to the extent that
the laws of the State of Iowa are made applicable for purposes of Section 10
of this Agreement.


 


18.                                 Assignment.  Neither this Agreement nor any rights or
duties hereunder may be assigned by the Executive without the prior written
consent of the Company.  The Company
shall have the right at any time to assign this Agreement to its successors and
assigns; provided, however, that the assignee or
transferee is the successor to all or substantially all of the business and
assets of the Company and such assignee or transferee expressly assumes all of
the obligations, duties and liabilities of the Company specified in this
Agreement.


 


19.                                 Amendments.  Any alterations or amendments to this
Agreement shall only be in writing and signed by each party to this Agreement.


 


20.                                 Binding Effect.  Except as otherwise provided, this Agreement
shall be binding upon and shall inure to the benefit of the parties and their
respective legal representatives, heirs, successors and assigns.


 


21.                                 Execution in Counterparts.  This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, but all of which
together shall constituted one and the same instrument.


 


22.                                 Arbitration.  Any dispute, controversy or question arising
under, out of, or relating to this Agreement (or the breach thereof), or, the
Executive’s employment with the Company or termination thereof, other than
those disputes relating to Executive’s alleged violations of Sections 9, 10, 11
and 12 of this Agreement, shall be referred for binding arbitration in Des
Moines, Iowa to a neutral arbitrator selected by the Executive and the Company
and this shall be the exclusive and sole means for resolving such dispute.  Such arbitration shall be conducted in
accordance with the National Rules for Resolution of Employment Disputes
of the American Arbitration Association. 



 


20

















 


The arbitrator shall have the discretion to award
reasonable attorneys’ fees, costs and expenses to the prevailing party.  Judgment upon the award rendered by the
arbitrator may be entered in any court having jurisdiction thereof.  This Section 22 does not apply to any
action by the Company to enforce Sections 9, 10, 11 and 12 of this Agreement
and does not in any way restrict the Company’s rights under Section 13 of
this Agreement.


 


23.                                 Entire Agreement.  This Agreement sets forth the entire agreement
and understanding of the parties and supersedes all prior understandings,
agreements or representations by or between the parties, whether written or
oral, which relate in any way to the subject matter hereof, except as expressly
provided in Section 8 regarding indemnification agreements.  Without limiting the generality of the
foregoing, all existing employment agreements, change in control agreements and
patent and confidential information agreements are hereby terminated and of no
further force or effect.


 


24.                                 Survivorship.  The provisions of this
Agreement necessary to carry out the intention of the parties as expressed
herein shall survive the termination or expiration of this Agreement,
including, without limitation, Sections 8, 9, 10, 11, 12 and 13.


 


25.                                 Waiver.  Except as otherwise provided under Section 6(a)(ii)(A),
the waiver by either party of the other party’s prompt and complete
performance, or breach or violation, of any provision of this Agreement shall
not operate nor be construed as a waiver of any subsequent breach or violation,
and the failure by any party hereto to exercise any right or remedy which it
may possess hereunder shall not operate nor be construed as a bar to the
exercise of such right or remedy by such party upon the occurrence of any
subsequent breach or violation.


 


26.                                 Captions.  The captions of this
Agreement are for convenience and reference only and in no way define,
describe, extend or limit the scope or intent of this Agreement or the intent
of any provision hereof.


 


27.                                 Construction.  The parties acknowledge that this Agreement is
the result of arm’s-length negotiations between sophisticated parties each
afforded representation by legal counsel. 
Each and every provision of this Agreement shall be construed as though
both parties participated equally in the drafting of same, and any rule of
construction that a document shall be construed against the drafting party
shall not be applicable to this Agreement.


 


IN WITNESS WHEREOF, the parties
have executed this Agreement as of the date first above written.


 


	
   

  	
  EXECUTIVE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Wolfgang Schramm

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SAUER-DANFOSS
  INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jim Remus

  
	
   

  	
  Name:
  Jim Remus

  
	
   

  	
  Title:
  Director – HR
  Resources

  



 


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