Exhibit 10.1(x)


 


SAUER-DANFOSS


 


Change
in Control Agreement


 


Charles
K. Hall


 

















 


Table
of Contents


 


	
  1.

  	
   

  	
  Agreement
  Period

  	
  1

  
	
  2.

  	
   

  	
  Change
  In Control

  	
  2

  
	
  3.

  	
   

  	
  Definition
  of Company

  	
  5

  
	
  4.

  	
   

  	
  Definition
  of “Cause” and “Good Reason.”

  	
  5

  
	
  5.

  	
   

  	
  Covenant
  Not to Compete

  	
  6

  
	
  6.

  	
   

  	
  Disclosure
  of Confidential Information

  	
  7

  
	
  7.

  	
   

  	
  Developments

  	
  8

  
	
  8.

  	
   

  	
  Nonsolicitation

  	
  8

  
	
  9.

  	
   

  	
  Injunctive
  Relief and Additional Remedy; Essential and Independent Covenants

  	
  9

  
	
  10.

  	
   

  	
  Severability

  	
  9

  
	
  11.

  	
   

  	
  Withholding

  	
  9

  
	
  12.

  	
   

  	
  Notices

  	
  10

  
	
  13.

  	
   

  	
  Governing
  Law

  	
  10

  
	
  14.

  	
   

  	
  Assignment

  	
  10

  
	
  15.

  	
   

  	
  Amendments

  	
  10

  
	
  16.

  	
   

  	
  Binding
  Effect

  	
  10

  
	
  17.

  	
   

  	
  Execution
  in Counterparts

  	
  10

  
	
  18.

  	
   

  	
  Arbitration

  	
  10

  
	
  19.

  	
   

  	
  Entire
  Agreement

  	
  11

  
	
  20.

  	
   

  	
  Survivorship

  	
  11

  
	
  21.

  	
   

  	
  Waiver

  	
  11

  
	
  22.

  	
   

  	
  Captions

  	
  11

  
	
  23.

  	
   

  	
  Construction

  	
  11

  
	
  24.

  	
   

  	
  Continuation
  of Employment

  	
  11

  
	
  25.

  	
   

  	
  Headings

  	
  11

  
	
  26.

  	
   

  	
  Venue

  	
  12

  



 


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Change In
Control Agreement


 


THIS CHANGE IN CONTROL AGREEMENT (the “Agreement”) has
been entered into this 8th day of March, 2004 (the “Effective Date”) between
Sauer-Danfoss (US) Company Inc. (the “Company”), and Charles K.
Hall (the “Employee”).


 


A consolidation of business entities has been taking
place on a global basis, including entities engaged in the Company’s
industry.  The Board of Directors of the
Company (the “Board”) recognizes that the possibility of a Change In Control
(as such term is defined in Section 2 herein) of the Company exists and
that such possibility, and the uncertainty and questions which it necessarily
raises among management, may result in the departure or distraction of
management personnel to the detriment of the Company and its stockholders.  Accordingly, the Board has determined to take
appropriate steps to reinforce and encourage the continued attention and
dedication of members of the Company’s management team, including the Employee,
to their assigned duties while minimizing the natural distractions presented by
the possibility of a Change In Control of the Company.


 


In order to induce the Employee to remain in the
employ of the Company, or any of its subsidiaries or affiliated or related
entities or joint ventures and in consideration of the Employee’s agreements
set forth in Sections 5, 6, 7 and 8 it is mutually agreed as follows:


 


1.                                      Agreement
Period.  The initial term of this
Agreement shall commence as of the Effective Date, and shall expire, subject to
the earlier termination of the Employee’s employment as hereinafter provided,
on December 31, 2004.  The initial
term of this Agreement automatically shall be extended for one (1) additional
year at the end of the initial term and then again after each successive year
thereafter.  However, either party may
terminate this Agreement at the end of the initial term or at the end of any
successive year thereafter by giving the other party written notice of intent
not to renew, delivered on or prior to September 30, 2004, or September 30
of any successive year.


 


In the event such notice of intent not to renew is
properly delivered by either party, this Agreement, along with all
corresponding rights, duties, and covenants, shall automatically expire at the
end of the initial term or the successive year then in progress, as the case
may be.


 


However, regardless of the above, if at any time
during the term of this Agreement, a Change In Control of the Company occurs,
then this Agreement shall be extended and become immediately irrevocable for a
period of two (2) years from the date of the Change In Control (the “Protection
Period”), except as provided in the following paragraph.


 


The foregoing notwithstanding, in the event that at
any time (including, without limitation, during the Protection Period) (a) the
Company terminates the Employee’s employment for Cause (as such term is defined
in Section 4(a) herein), or (b) the Employee terminates his employment
with the Company without Good Reason (as such term is defined in 


 

















 


Section 4(b) herein), all provisions of this
Agreement shall terminate, and, without limiting the generality of the
foregoing, the Company shall have no obligation to make the payments or provide
the benefits set forth in Section 2; provided, however, that the
provisions of Sections 5, 6, 7, 8, 9 and 18 shall survive such termination.


 


2.                                      Change
In Control.


 


(a)                                  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 or entity (other
than those persons and/or entities 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 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 stockholders of the
Company approve: (A) a plan of complete liquidation of the Company; or (B) the
sale or disposition of all or substantially all of 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.


 


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However, in no event shall a Change In Control be
deemed to have occurred, with respect to the Employee, if the Employee is part
of a purchasing group which consummates the Change In Control transaction.  The Employee shall be deemed “part of a
purchasing group” for purposes of the preceding sentence if the Employee 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 non-employee continuing Directors).


 


For purposes of (b)(i) of this Section 2, (A) Danfoss
A/S shall be deemed to mean any 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.


 


(b)                                  Employment
Terminations After a Change in Control.  During the term of this Agreement, in the
event the Employee’s employment with the Company is terminated within the
Protection Period, unless such termination is (i) by the Company for Cause
(as the term Cause is defined in Section 4(a) herein), (ii) by
reason of Death, Disability, or Retirement, or (iii) by the Employee
without Good Reason (as the term Good Reason is defined in Section 4(b) herein),
then the Company shall pay to the Employee and provide him with the following:


 


(i)                                     A lump-sum cash amount equal
to the Employee’s unpaid base salary in effect on the date of termination of
employment, accrued vacation pay, unreimbursed business expenses, and all other
items earned by and owed to the Employee through and including the date of
termination (in full satisfaction for these amounts owed to the Employee).


 


(ii)                                  A lump-sum cash amount equal
to the product of the Employee’s Target Incentive Opportunity, established
under the Annual Management Performance Incentive Plan, or a successor plan
thereto (the “Annual Incentive Plan”), for the plan year in which the Employee’s
termination occurs, multiplied by a fraction (the numerator of which shall be
the number of whole months worked by the Employee during the Company’s fiscal
year in which Employee’s employment is terminated and the denominator of which
shall be the number 12).  This payment
will be in lieu of any other payment to be made to the Employee under the
Annual Incentive Plan for the plan year in which Employee’s termination occurs.


 


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(iii)                               A lump-sum payment in cash
equal to the Employee’s annual base salary and Target Incentive Opportunity
under the Annual Incentive Plan in effect on the date of Employee’s
termination.


 


(iv)                              A lump-sum cash amount equal
to 10% of the Employee’s then current annual base salary in lieu of health,
dental, long-term disability, and life insurance continuation.  The Employee’s participation in these and all
other similar benefits shall cease upon the termination of Employee’s
employment with the Company under circumstance which entitle the Employee to
the payments set forth in this Section 2(b).


 


The parties agree that, in the event of the
termination of Employee’s employment with the Company under circumstances which
entitle the Employee to the payments set forth in this Section 2(b), such
payment and benefits (including an Excise Tax Payment provided in Section 2(c) herein)
shall be deemed to constitute liquidated damages payable by the Company to the
Employee in full satisfaction of the Company’s obligations hereunder or
otherwise, and the Company agrees that the Employee shall not be required to
mitigate his damages by seeking other employment or otherwise.


 


In the event that the Employee’s employment with the
Company is terminated under circumstances which entitle the Employee to the
payments set forth in this Section 2(b) (whether by the Company or by
the Employee), 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.


 


Notwithstanding the foregoing, the payments provided
for in this Section 2 shall be reduced by the amount of any payments to
which the Employee is otherwise entitled to receive upon termination of
employment with the Company pursuant to any employment agreement or any laws or
rules or regulations of any governmental agency.


 


The parties also agree that, in the event of a
termination of employment that obligates the Company to make the payments set
forth in this Section 2, the provisions in Sections 5, 6, 7, 8, and 18
herein shall survive such termination.


 


(c)                                  Excise
Tax Payment.  In the
event that any portion of the severance benefits or any other payment under
this Agreement or under any other agreement with or plan of the Company (in the
aggregate “Total Payments”) would constitute an “Excess Parachute Payment,”
such that an “Excise Tax” is due, the Company shall provide to the Employee, in
cash, an additional payment in an amount to cover the full cost of the excise
tax and the Employee’s state and federal income and employment taxes on this
excise tax payment (and to cover the resulting excise and income and employment
taxes resulting from such payment, and so on). 
For this purpose, the Employee shall be deemed to be in the highest
marginal tax rate.  This payment shall be
made as soon as possible following the date of the Employee’s qualifying
termination, but in no event later than thirty (30) calendar days of such date.


 


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For purposes of this Agreement, the terms “Excise Tax”
and “Excess Parachute Payment” shall have the meanings assigned to such terms
in Sections 280G and 4999 of the Internal Revenue Code of 1986, as amended.


 


(d)                                  Subsequent
Recalculation.  In the
event the Internal Revenue Service subsequently adjusts the excise tax
computation herein described, the Company shall reimburse the Employee for the
full amount necessary to make the Employee whole (less any amounts received by
the Employee that the Employee would not have received had the computations
initially been computed as substantially adjusted), including the value of any
underpaid excise tax, and any related interest and/or penalties due to the
Internal Revenue Service.


 


3.                                      Definition
of Company.  Whenever this
Agreement refers to the Employee’s employment with the Company, or the
termination of the Employee’s employment with the Company, the term “Company”
shall include any of its subsidiaries or affiliated or related entities or
joint ventures that employ the Employee. 
In addition, when used in Sections 5, 6, 7 and 8, of this Agreement, the
term “Company” shall include Sauer-Danfoss Inc. and any of its subsidiaries or
affiliated or related entities or joint ventures.


 


4.                                      Definition
of “Cause” and “Good Reason.”


 


(a)                                  For purposes of
this Agreement, “Cause” means:  (i) the
willful failure of the Employee 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 Employee of written notice from the
Company of such failure, which notice identifies the manner in which the
Employee has willfully failed to perform, (ii) the engaging by the
Employee in willful conduct which is demonstrably injurious to the Company,
monetarily or otherwise, (iii) the conviction (treating a nolo contendere
plea as a conviction) of the Employee of any crime or offense constituting a
felony (whether or not any right to appeal has been or may be exercised), or (iv) a
failure by the Employee to comply with any material provision of this
Agreement, which failure is not cured (if capable of cure) within 15 days after
receipt by Employee of written notice from the Company of such non-compliance
by the Employee.  For purposes of clauses
(i) and (ii) of this definition, action or inaction by the Employee
shall not be considered “willful” unless done or omitted by him (A) intentionally
or not in good faith and (B) 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.


 


(b)                                  For purposes of
this Agreement, “Good Reason” means without the Employee’s written
consent:  (i) a material adverse
alteration in the nature or status of the Employee’s position, duties,
responsibilities or authority which is inconsistent with those in effect as of
the Change in Control; (ii) a material reduction in the Employee’s Base
Salary or level of employee benefits in effect as of the Change of Control
(other than across-the-board reductions applied similarly to all of the Company’s
senior employees); (iii) the relocation of the Employee’s principal place
of employment more than 50 miles from its location as of the Change in Control,
without the Employee’s written consent, except for required travel on the
Company’s business; or


 


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(iv) a failure by the
Company to comply with any material provision of this Agreement, which failure
is not cured (if capable of cure) within 15 days after receipt by the Company
of written notice from the Employee of such non-compliance by the Company.


 


5.                                      Covenant
Not to Compete.  Without the
consent of the Company, the Employee shall not, directly or indirectly,
anywhere in the world, at any time during the Employee’s employment with the
Company and for a period of eighteen (18) months following the termination of
Employee’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 Employee 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 Employee 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 or any of
its subsidiaries, the consolidated gross sales of which during any calendar
year during the five (5) year period preceding the termination of
Employee’s employment with the Company were at least $10 million.


 


The Employee acknowledges that: (a) the services
performed by him for the Company are of a special, unique, unusual,
extraordinary, and intellectual character; (b) the business of the Company
is worldwide in scope and its products are marketed throughout the world; (c) the
Company competes with other businesses that are or could be located in any part
of the world; and (d) the provisions of this Section 5 are reasonable
and necessary to protect the Company’s business.


 


If any covenant in this Section 5 is held to be
unreasonable, arbitrary, or against public policy, such covenant will be
considered to be divisible with respect to scope, time, and geographic area,
and such lesser scope, time, or geographic area, or all of them, as a court of
competent jurisdiction may determine to be reasonable, not arbitrary, and not
against public policy, will be effective, binding, and enforceable against the
Employee.


 


The period of time applicable to any covenant in this Section 5
will be extended by the duration of any violation by the Employee of such
covenant.


 


The Employee will, while the covenants under this Section 5
are in effect, give notice to the Company, within ten days after accepting any
other employment, of the identity of the Employee’s employer.  The Company may notify such employer that the
Employee is bound by this Agreement and, at the Company’s election, furnish
such employer with a copy of this 
Agreement or relevant portions thereof.


 


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6.                                      Disclosure
of Confidential Information.  Without the consent of the Company, the
Employee shall not disclose to any other person Confidential Information (as
defined below) concerning the Company or the Company’s trade secrets of which
the Employee 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 Employee 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 Employee demonstrates was or became generally available to the public
other than as a result of a disclosure by the Employee.


 


The Employee will not remove from the premises of the
Company (except to the extent such removal is for purposes of the performance
of the Employee’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 Employee recognizes that, as between the Company and the Employee,
all of the Proprietary Items, whether or not developed by the Employee, 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 Employee will return to the Company
all of the Proprietary Items in the Employee’s possession or subject to the
Employee’s control, and the Employee shall not retain any copies, abstracts,
sketches, or other physical embodiment of any of the Proprietary Items.


 


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 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


 


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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.


 


7.                                      Developments.  During the course of
employment with the Company, Employee 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. 
Employee 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 Employee
during the time of the Employee’s employment, 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.


 


Employee agrees that all Developments shall be the
sole property of the Company and Employee 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.  Employee 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, Employee 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 enjoy the full and exclusive benefits and advantages thereof.  Employee 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.  Employee 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 of Employee’s employment with the Company with respect to
Developments, whether patentable or not, conceived or made by Employee during
his employment with the Company, and shall be binding upon Employee’s assigns,
personal representatives, administrators and other legal representatives.


 


8.                                      Nonsolicitation.  Without the written consent of the Company,
the Employee shall not at any time during the Employment Period and for a
period of eighteen (18) months following the termination of Employee’s
employment with the Company 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 Company; 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 Company
during the time of the Employee’s employment, whether or not the Employee had
personal contact with such customer.


 


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


 


(a)                                  The Employee
acknowledges that the injury that would be suffered by the Company as a result
of a breach of the provisions of this Agreement (including any provision of
Sections 5, 6, 7 and 8) 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 9 or any other remedies of the Company, if the Employee
breaches any of the provisions of Sections 5, 6, 7 and 8, the Company will have
the right to cease making any payments otherwise due to the Employee under this
Agreement.


 


(b)                                  The covenants
by the Employee in Sections 5, 6, 7 and 8 are essential elements of this
Agreement, and without the Employee’s agreement to comply with such covenants,
the Company would not have entered into this Agreement with the Employee.  The Company and the Employee 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 5), 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 Employee’s covenants in Sections 5, 6, 7 and 8 are independent
covenants and the existence of any claim by the Employee against the Company
under this Agreement or otherwise, will not excuse the Employee’s breach of any
covenant in Sections 5, 6, 7 and 8.


 


If this Agreement or the Employee’s employment with
the Company expires or is terminated, this Agreement will continue in full
force and effect as is necessary or appropriate to enforce the covenants and
agreements of the Employee in Sections 5, 6, 7, 8 9 and 18.


 


10.                               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 there from 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.


 


11.                               Withholding.  Any other provision of this Agreement
notwithstanding, the Company may withhold from amounts payable under this
Agreement (a) all federal, state, local and foreign taxes and social
security taxes that are required to be withheld by applicable laws or


 


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regulations as the Company
shall determine in its sole discretion, and (b) other ordinary and
customary payroll deductions.


 


12.                               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.


2800 East 13th Street


Ames, IA  50010


Attention:  Vice President-Human Resources


 


If to the Employee, 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 12.  All such notices shall be effective when
actually received by the addressee.


 


13.                               Governing
Law.  This Agreement shall be deemed
be to have been executed in Ames, Iowa and shall be governed by and construed
and enforced in accordance with the laws of the State of Iowa, without regard
to its conflicts of laws provisions.


 


14.                               Assignment.  Neither this Agreement nor any rights or
duties hereunder may be assigned by the Employee 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.


 


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


 


16.                               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.


 


17.                               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.


 


18.                               Arbitration.  Any dispute, controversy or question arising
under, out of, or relating to this Agreement (or the breach thereof), or, the
Employee’s employment with the Company or termination thereof, other than those
disputes relating to Employee’s alleged violations of Sections 5, 6, 7 and 8 of
this Agreement, shall be referred for binding arbitration in 


 


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Des Moines, Iowa to a
neutral arbitrator selected by the Employee 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. 
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 18 does not apply to any
action by the Company to enforce Sections 5, 6, 7 and 8 of this Agreement and
does not in any way restrict the Company’s rights under Section 9 of this
Agreement.


 


19.                               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.  Without limiting
the generality of the foregoing, all existing change in control agreements and
patent and confidential information agreements are hereby terminated and of no
further force or effect.


 


20.                               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
5, 6, 7, 8 and 9.


 


21.                               Waiver.  Except as provided herein, 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.


 


22.                               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.


 


23.                               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.


 


24.                               Continuation
of Employment.  This
Agreement is not an employment agreement, it shall not confer upon the Employee
any right to continuation of employment by the Company, nor shall this
Agreement interfere in any way with the Company’s right to terminate the
Employee’s employment at any time.


 


25.                               Headings.  The headings contained herein are for
reference purposes only and shall not in any way affect the meaning or
interpretation of any provision of this Agreement.


 


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26.                               Venue.  Any and all lawsuits, legal actions or proceedings
brought by the Company to enforce its rights under Sections 5, 6, 7, 8 or 9 of
this Agreement (an “Enforcement Action”) will be brought in Story 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 Enforcement Action.  Each party hereby irrevocably waives any
objection it may now have or hereinafter have to this choice of venue of any
Enforcement Action in any such court and further waives any claim that any
Enforcement Action brought in any such court has been brought in an
inappropriate forum.


 


IN WITNESS WHEREOF, the parties hereto have executed
this Agreement on the day and year first written above.


 


	
   

  	
  EMPLOYEE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Charles K. Hall

  
	
   

  	
   

  	
  Charles K. Hall

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  SAUER-DANFOSS INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  /s/ Ronald C. Hanson

  
	
   

  	
  Ronald C. Hanson

  
	
   

  	
  Vice President-Human
  Resources

  



 


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