Exhibit 10.1


 


Employment Contract


 


between


 


Sauer-Danfoss GmbH & Co. OHG,


Krokamp 35, 24539 Neumünster, Germany


 


hereinafter referred to as “Employer”


 


and


 


Mr. Sven Ruder,


Nejs Bjerg 52


DK-6310 Broager


Denmark


 


Preliminary Remarks


 


Effective January 1, 2009, Mr. Ruder’s
position will be of President and Chief Executive Officer of Sauer-Danfoss Inc.
The parties have agreed that Mr. Ruder shall be based at and work out
of  the 
Neumünster site of Sauer-Danfoss GmbH & Co. OHG, an affiliate
of Sauer-Danfoss Inc., also effective from January 1, 2009. For this
purpose the existing executive service agreement between Mr. Ruder and
Sauer-Danfoss ApS shall be cancelled and replaced by the following employment
contract entered into as of January 1, 2009 between Mr. Ruder and
Sauer-Danfoss GmbH & Co. OHG.


 


Therefore, the parties agree to the
following:


 


1) Duties and Area of Work


 


a) Mr. Ruder shall commence his
activities for the Employer on January 1, 2009. Mr. Ruder is
President and Chief Executive Officer of Sauer-Danfoss Inc. In accordance with
the Sauer-Danfoss Inc. by-laws, the Board of Directors of Sauer-Danfoss Inc.
shall control and manage the property, business and affairs of Sauer-Danfoss
Inc.  As President and Chief Executive
Officer, Mr. Ruder shall have general supervision of the business of
Sauer-Danfoss Inc., shall see that all orders and resolutions of the Board of
Directors are carried into effect subject, however, to the right of the
directors to delegate any specific powers to any other officer or officers of
Sauer-Danfoss Inc. except such as may be by statute exclusively conferred upon
the President and Chief Executive Officer. 
Mr. Ruder’s tasks, rights and duties arise from this employment
contract, the by-laws of Sauer-Danfoss Inc. and the instructions from the Board
of Directors of Sauer-Danfoss Inc. Mr. Ruder shall report to the Chairman
of Sauer-Danfoss Inc. or to the Chairman’s designee.


 


b) The principal place of work of Mr. Ruder
is the business of the Employer in Neumünster, Germany. Mr. Ruder is
willing to take business trips inside and outside Germany. Business travel is a
substantial part of the job.  By mutual
agreement, Mr. Ruder’s place of assignment may be relocated to another of
Sauer-Danfoss’ offices or plant sites, including those outside of Germany.


 

















 


c) Mr. Ruder may serve from time to time
as a director and/or member of a committee of the Employer and/or as a director
and/or member of a committee and/or officer of one or more subsidiary or
related or affiliated companies or joint ventures of Sauer-Danfoss Inc. Mr. Ruder
agrees to fulfil his duties as such director, member of a committee or officer
without additional compensation other than the compensation provided for in
this agreement.


 


d) Mr. Ruder has the function of an
executive employee for the Employer.


 


2) The Term of Contract


 


The employment contract is to continue for an
indefinite term. It can be terminated pursuant to section 11 of this contract.


 


3) Working Hours


 


Mr. Ruder undertakes to devote his
entire working capacity to the interests of the Employer and, if necessary, to
work beyond the regular working hours of the company. This shall include
working on Saturdays, Sundays and public holidays and apply to when Mr. Ruder
is travelling on business trips as well.


 


4) Remuneration


 


a) Mr. Ruder shall receive an annual
fixed salary of EUR 450,000.00 (four hundred and fifty thousand Euros) gross,
payable in 12 equal instalments at the end of each month. The salary shall be
paid in accordance with applicable statutory tax and social security and
insurance provisions into an account stipulated by Mr. Ruder. The annual
salary shall be reviewed each year and adjusted as necessary.


 


b) In addition to the fixed salary in
accordance with the above section 4 (a) Mr. Ruder shall be eligible
to earn an annual incentive under the prevailing Sauer-Danfoss Inc. Omnibus
Incentive Plan (“Incentive Plan”). The payment of an annual incentive is
subject to certain performance or profit related goals being achieved. For the
2009 and 2010 annual incentive awards, the Compensation Committee of the Board
of Directors of the Company will authorize adjustments to the performance goals
and/or achieved performance results to remove the impact of restructuring,
reorganization or similar activities that are approved by the Board of
Directors of Sauer-Danfoss Inc.  The
payment of an annual incentive is definitely subject to the employment
relationship still existing at the end of the fiscal year for which the annual
incentive is to be paid. The Incentive Plan can be amended or terminated in its
entirety with effect for the future provided there is an objective reason
therefore. The following are considered to be objective reasons for an
amendment or termination: economic reasons on a company or group level or a
basic change to the remuneration system for Sauer-Danfoss group executive
officers.


 


c) Mr. Ruder is entitled to participate
in the additional benefits generally granted to all executive employees of the
Sauer-Danfoss group, in particular the long-term incentive plan for executive
employees of the Sauer-Danfoss group under the prevailing Sauer-Danfoss Inc.
Omnibus Incentive Plan, in accordance with the prevailing provisions and
conditions of such benefits. The Employer is entitled to adjust these benefits
with effect in the future or to revoke them completely also with effect in the
future provided there are objective reasons therefore. The following are
considered to be objective reasons for an amendment or termination: economic
reasons on a company or group level or a basic change to the remuneration
system for Sauer-Danfoss group executive officers.   Except as otherwise provided for in any
award agreement, Mr. Ruder shall only receive a payout of 


 

















 


a Long-Term Incentive Award if he is employed
by the Employer or by any other company in the Sauer-Danfoss group through the
last day of the Performance Period with respect to such Long-Term Incentive
Award.  Long-Term Incentive Awards are
made on a fully discretionary basis by the Compensation Committee of the Board
of Directors of Sauer-Danfoss Inc.  The
granting of a Long-Term Incentive Award for any given period does not lead to a
vested right to further Long-Term Incentive awards in the future.


 


d) The fixed salary specified under (a) shall
cover all work performed by Mr. Ruder including any work performed outside
the regular company working hours (overtime), time spent travelling and any
work on Saturdays, Sundays and public holidays.


 


e) Mr Ruder shall be entitled to participate
in the existing pension plan afforded to the executives employed by the
Employer.


 


5) Company Car


 


The Employer shall provide Mr. Ruder
with a company car in accordance with the applicable company car regulations.
The Employer shall bear the operating, service and maintenance costs of the
car. Mr. Ruder may also use the company car for private purposes free of
charge. Any tax incurred on the non-cash benefit for private use shall be borne
by Mr. Ruder. When the employment relationship ends Mr. Ruder shall
return the company car, vehicle documents and accessories without undue delay
to the Employer. Mr. Ruder shall not have any right of retention with
regard to the company car.


 


6) Absence from Work / Sick Pay


 


a) Mr. Ruder shall inform the Employer
of any inability to work or extension of an inability to work and the expected
length of absence, irrespective of the reason and at the same time to inform
the Employer verbally of any urgent work that needs to be done.


 


b) In the event of illness, Mr. Ruder
shall submit a medical certificate stating that he is unable to work and
stating the probable length of absence at the latest by the third day of the
illness. If the inability to work lasts longer than that stated on the medical
certificate Mr. Ruder shall inform the Employer and provide a further
medical certificate without undue delay. This requirement to provide a medical
certificate also applies when the continued salary payments referred to below
come to an end.


 


c) The statutory provisions of the Act on
Continued Payment of Remuneration (Entgeltfortzahlungsgesetz) apply to the
continued payment of remuneration in the event of inability to work as a result
of illness. In so far as the inability to work lasts for more than the
statutory period for which remuneration is continued, the Employer shall pay Mr. Ruder
a discretionary payment (net of tax and social security and insurance expenses)
constituting of the difference between the net salary in accordance with
section 4 (a) of this contract received before the inability to work
commenced and the sickness benefit drawn by Mr. Ruder. This discretionary
payment shall take effect from the date of termination of the statutory period
referred to above for a period of no more than 24 weeks and not beyond the date
of the end of the employment relationship. If Mr. Ruder has private health
insurance the Employer shall pay the difference between the net salary in
accordance with section 4 (a) of this contract drawn before the inability
to work commenced and the sickness allowance provided by the insurance company,
but no more than the difference to the amount which Mr. Ruder would
receive from the statutory health insurance scheme as sickness benefit if he
were insured with a statutory health insurance scheme.


 

















 


d) If Mr. Ruder has a statutory right to
demand compensation from a third party who caused his incapacity to work, this
right shall pass to the Employer to the extent that the Employer pays Mr. Ruder
a salary and any employer contributions due thereon to the statutory social
insurance scheme. Mr. Ruder shall provide the Employer without undue delay
with whatever information is necessary to assert such claims and shall
cooperate in asserting and enforcing them.


 


7) Leave


 


a) Mr. Ruder shall have 6 weeks of leave
per calendar year.


 


b) In the event that the employment
relationship begins or ends during the course of a calendar year, the Employee
shall be entitled to leave for each full month on a pro rata basis to the
extent that this exceeds the statutory minimum.


 


c) The timing of the leave shall be
determined taking into account the business interests of the Employer in
consultation with the Mr. Ruder’s direct superior.


 


8) Confidentiality / Business Documents


 


a) Mr. Ruder shall observe
confidentiality regarding all confidential matters, operating and business
secrets and procedures which become known to him during his employment; this
shall apply during the period of the employment relationship and to a period of
18 months following the termination of this employment contract. The remuneration
agreed upon in this contract also covers this confidentiality obligation
including operating and business secrets of companies affiliated with the
Employer and customers of the Employer or of its affiliates.


 


b) Mr. Ruder shall not disclose documentation,
documents, files (irrespective of the medium on which they are saved) or items
of any type whatsoever to third parties any more than is necessary to fulfil
the duties set out in the employment contract. Any business documents
concerning the Employer and its interests are the property of the Employer
irrespective of the addressee; this also applies to any other business items.


 


c) On request, but no later than the end of
the employment relationship, Mr. Ruder shall return all items,
documentation, documents and files (irrespective of the medium on which they
are saved) and all copies thereof to the Employer’s registered office. Mr. Ruder
shall return any items, documentation, documents and files (irrespective of the
medium on which they are saved) and any copies thereof which he has received
from the Employer’s customers to the respective customers immediately on
request, but no later than the end of the employment relationship. Mr. Ruder
shall provide the Employer with a list of all passwords, write-protect codes,
access codes and similar which he has used in connection with his employment
relationship immediately on request, but no later than the day on which the
employment relationship comes to an end. Mr. Ruder shall have no retention
rights irrespective of legal grounds.


 


d) On request, but no later than at the end
of the employment relationship, Mr. Ruder shall delete any data or
information saved on private electronic data carriers concerning matters of the
Employer or any affiliated companies once he has returned these to the Employer
in accordance with 8 (c).


 

















 


9) Work Results / Copyright


 


a) Protectable inventions, know-how, software
programs, production and organizational procedures and improvements thereto and
any other results of work together with any realization rights (hereinafter
referred to as “Results of Work”) arising from the Mr. Ruder’s work for
the Employer are the property of the Employer.


 


b) On conclusion of this contract Mr. Ruder
shall transfer to the Employer all use and realization rights in copyrights and
related property rights which inure to him in connection with this employment
relationship exclusively and without restriction in content, time or territory.
Rights in “Results in Work” shall be covered by the remuneration set out in
section 4 (a); this shall also apply after this employment relationship has
ended. In addition the statutory provisions regarding employee inventions and
the implementation provisions and guidelines associated therewith shall apply
accordingly.


 


10) Secondary Activities


 


Any additional paid or unpaid work may only
be assumed by Mr. Ruder after obtaining prior written consent from the
Employer. Prior written consent shall not be required for charitable, religious
and political activities which do not impair Mr. Ruder’s activities under
this contract. In addition to service contemplated by section 1 (c) above,
prior written consent will also not be required for service on the Board of
Directors of up to a maximum of two companies outside of the Sauer-Danfoss
Group so long as these companies do not compete with Sauer-Danfoss and provided
that such service does not impair Mr. Ruder’s activities under this
contract.


 


11) End of Contract / Termination


 


a) The employment relationship may be
terminated by the Employer by observing a notice period of twenty-four (24)
months to the end of the month or by Mr. Ruder by observing a notice
period of twelve (12) months to the end of the month (ordinary termination).


 


b) The right to terminate the employment contract
for good cause by either party shall remain unaffected.


 


c) Termination must be in writing. Notice of
termination which is not in writing is legally invalid.


 


d) The employment relationship shall end
automatically at the end of the month in which the Employee reaches the regular
retirement age provided for under the state pension scheme; notice of
termination is not necessary. If Mr. Ruder becomes partly or fully unable
to work the employment relationship shall end without termination being
necessary at the end of the month in which notice from the competent pension
insurance scheme on the granting of a pension on the grounds of inability to
work (Erwerbsminderung) takes effect.


 


e) Notwithstanding any other provision of
this agreement, Mr. Ruder’s employment hereunder shall terminate without
notice upon Mr. Ruder’s death or if Mr. Ruder is declared
bankrupt.  If Mr. Ruder dies during
employment, an allowance of 6 months salary, excluding any Annual Incentive and
Long-Term Incentive, is to be paid by the Employer to his wife.  In the event that Mr. Ruder is not
survived by his wife, the above stated allowance is to be distributed among his
children.


 

















 


(6)  If the employment of Mr. Ruder
is terminated by the Employer for any reason other than breach by Mr. Ruder,
the Employer shall reimburse expenses incurred and paid by Mr. Ruder for
executive level career outplacement services by a mutually agreeable
outplacement firm.


 


(7)  If either party is in material
breach of its duties pursuant to this agreement or any relevant conditions
under which it is made, the non-breaching party shall notify the breaching part
in writing specifying the breach.  The
breaching party has 30 days to remedy such breach.  Should such breach not be remedied within 30
days of receipt of the notice, the non-breaching party may terminate this
agreement with immediate effect at any time during the 90 day period following
the end of the remedy period.  If the
non-breaching party does not terminate this agreement within such 90 day period,
the breach will be deemed to have been accepted and the contract will revert to
its original termination provisions.  If
such breach termination is a result of breach by Mr. Ruder, he is entitled
to remuneration only until the time of termination.  If such breach termination is a result of
breach by the Employer, Mr. Ruder shall be entitled to receive
remuneration as if he were receiving notice as per section 11(a) above.  Such notice period will begin on the day the
Employer receives written notice of termination as a result of breach provided
by Mr. Ruder.  The breaching party
shall be liable in damages for any loss the other party may have suffered as a
result of the breach.


 


12) Release from Duty to Work


 


a) If there are objective reasons, including
objective reasons based on operational grounds, the Employer is entitled to
release Mr. Ruder from his contractual duty to work when the employment
relationship is terminated, in particular after notice has been issued,
irrespective of who issues such notice. In such a situation Mr. Ruder
shall receive full pay as per sections 4, 5 and 16 plus any additional benefits
as specified in this contract.


 


b) The Employee may only carry out gainful
secondary employment during the period in which he is released from his work
duties subject to prior notice to and consent from the Employer.  The competition prohibition for the term of
the contract continues to apply.


 


13) Prohibition on Competition during the
Term of the Contract


 


Mr. Ruder may not engage in any activity
which competes with that of the Employer or companies related or affiliated
with the Employer during the term of this employment contract. In particular Mr. Ruder
shall not engage in any employed or freelance activity or in any other capacity
for a company which competes directly or indirectly with the Employer or
companies related or affiliated with the Employer. Likewise, Mr. Ruder is
prohibited from establishing, acquiring or participating directly or indirectly
in a competing company of this type during the term of the contract. The
acquisition of shares in listed companies is not regarded as participation
within the aforementioned meaning provided no more than 2 % of the shares are
held.


 


14) Post-contractual Prohibition on
Competition


 


For a period of 18 months after termination
of the employment contract Mr. Ruder may not become active, either on his
own account or as an employee or in any other manner, for a company which
competes, directly or indirectly, with the Employer or a company related or affiliated
with it. In the same way Mr. Ruder may not during this prohibition either
establish, acquire or participate directly or indirectly in such company. The
acquisition of shares in listed companies is not regarded as participation
within the aforementioned meaning provided no more than 2 % of the shares are
held.


 

















 


This prohibition on competition clause shall
not apply if Mr. Ruder is dismissed by the Employer without reasonable
cause or if Mr. Ruder resigns from his office as a consequence of breach
of this agreement by Sauer-Danfoss Inc. or the employer.


 


15) Prohibition on Solicitation


 


During the employment relationship resulting
from this contract and for a period of 18 months after termination of the
employment relationship Mr. Ruder may not actively solicit directly or
indirectly, in favour of a third party, an employee of the Employer or of a
company associated with the Employer or cause such employee to terminate
his/her contractual relationship with the Employer or with a company associated
with the Employer.


 


16) Outlays and Expenses


 


a) Travel costs and expenses will be
reimbursed against receipts in accordance with the Employer’s guidelines
provided that they were necessary in the interest of the Employer.  If Mr. Ruder’s spouse also participates
in the travelling at the request of the Sauer-Danfoss Inc. Board of Directors,
such expenses shall also be reimbursed.


 


b) Along with his wife and children, Mr. Ruder
shall be entitled to a round trip (Denmark – Brazil – Denmark) airfare tourist
class once a year at the expense of the Employer.  Any tax incurred on this non-cash benefit
shall be borne by Mr. Ruder.


 


c) The Employer shall pay enrolment and
tuition fees for the elementary and high school education of Mr. Ruder’s
three children.  An extension of this
clause covering the university education of Mr. Ruder’s children will be
discussed by the parties when pertinent.


 


d) If Mr. Ruder’s employment is
terminated by the Employer or by Mr. Ruder himself, Mr. Ruder shall
be reimbursed for moving expenses (from Denmark to Brazil) according to
vouchers.  Mr. Ruder shall be
reimbursed for expenses in connection with him, his wife and his children
moving to Brazil.  Any tax incurred on
this non-cash benefit shall be borne by Mr. Ruder.


 


e) Should Mr. Ruder wish to undertake a
private course in the German language the expense for this will be covered by
the Employer.


 


f) The Employer will pay for tax advice and
assistance from recognized tax advice companies for Mr. Ruder both in
Germany and in Denmark.


 


18) Consent to Data Collection and Data
Processing


 


Mr. Ruder agrees to his personal data
being collected and processed to the extent that this is required in connection
with the employment relationship (e.g. salary determination, salary statement,
leave entitlement, personnel planning and development). This consent also
applies to this data being passed on to third parties for the purposes of
further data processing within the employment relationship on the Employer’s
instructions.


 


19) Recognition of Years of Service


 


If the duration of service is of importance
for the accumulation of expectancies and rights Mr Ruder’s activities for
Danfoss A/S from March 1, 1990 to December 31, 2008 shall be taken
into account.


 

















 


20) Choice of Law, Place of Jurisdiction


 


a) The employment contract is subject to
German law.


 


b) Neumünster employment court is competent
for all legal disputes arising from the employment relationship, its
termination and settlement.


 


21) Authoritative Language


 


The agreement has been prepared in English
and is the authoritative language of the contract.


 


22) Final Provisions, Written Form Requirement,
Severability Clause


 


a) The employment relationship shall be
subject to the current version of the Employer’s rules and guidelines as
well as this employment contract, in particular the prevailing “Code of Conduct”.


 


b) Amendments and additions to or termination
of this contract shall be in writing if they are to be considered valid. This
shall also apply to any departure from or waiver of the written form
requirement itself. There are no collateral oral agreements.


 


c) If any provision of this contract should
be or become invalid in whole or in part, or should it transpire that there has
been a lacuna, this shall have no effect on the validity of the remaining
provisions. The invalid provision or lacuna shall be remedied by a suitable
provision which – as far as legally possible – most closely reflect the meaning
and purpose of the contract which the parties wanted or would have wanted had
they considered this point.


 


d) This contract shall be executed in two
originals. By placing their signature below, both parties confirm that they
have received an original copy of this contract.


 


 


	
   

  	
   

  	
  SAUER-DANFOSS GMBH & CO. OHG

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  /s/ Sven Ruder

  	
   

  	
  By:

  	
  /s/ Thomas Kittel

  
	
  Sven Ruder

  	
   

  	
   

  	
  Thomas Kittel

  
	
   

  	
   

  	
   

  	
   

  
	
  Date: January 14, 2009

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  /s/ Achim Heinzer

  
	
   

  	
   

  	
   

  	
   Achim Heinzer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Date:

  	
   January 14, 2009