Exhibit 10.2


SAUER-DANFOSS INC.

2006 OMNIBUS INCENTIVE PLAN


2007 CASH-BASED AWARD AGREEMENT


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


	
  Participant:

  	
   

  	
   

  



 


	
  Date of Award:

  	
   

  	
   

  



 


	
  Cash-Based Award Target:

  	
  xx % of Base Salary Paid During Performance Period

  	
   

  



 


	
  Performance Period:

  	
  1 January 2007 to 31 December 2007

  	
   

  



 


	
  Performance Measure:

  	
  Total Company (EBIT) Margin Pursuant to Sec. 2 below

  	
   

  



 


THIS CASH-BASED AWARD
AGREEMENT (this “Agreement”),
effective as of the Date of Award set forth above, (the “Grant Date”),
represents the grant of a Cash-Based Award by Sauer-Danfoss
Inc., a Delaware corporation (the “Company”), to the Participant
named above, pursuant to the provisions of the Plan.  Capitalized terms used in this Agreement
without definition shall have the meanings ascribed to such terms in the Plan.


1.             Grant of
Cash-Based Award.


(a)           Grant.  Subject to the provisions of this Agreement
and pursuant to the provisions of the Plan, the Company hereby grants to the
Participant as of the Grant Date a Cash-Based Award (the “Award”) with a target
value as set forth above.


(b)           Performance Period.  The Performance Period during which the
relevant performance goals (set forth in Section 2 below) must be met for the
Award under this Agreement shall begin on January 1, 2007 and end on December
31, 2007.


2.             Payout on
Performance Awards.


(a)           Performance Measures.  The Performance Measure under this Agreement
shall be Total Company EBIT Margin, as further defined on Appendix A.


(b)           Performance Goals.  Achievement of a Total Company EBIT Margin
equal to the pre-determined performance goal target will entitle the
Participant to payment of the Cash-Based Award Target set forth above.  Achievement of a Total Company EBIT Margin
equal to or greater than the pre-determined performance goal maximum will entitle
the Participant to payment of 200% of the Cash-Based Award Target set forth
above.  Achievement of a Total Company
EBIT Margin equal to the pre-determined performance goal threshold will entitle
the participant to payment of 25% of the Cash-Based Award Target set forth
above.  If the Total Company EBIT Margin
is less than the pre-determined performance threshold, no payout will be made
under this Cash-Based Award Agreement.


The Total Company EBIT Margin performance goal target, performance goal
maximum and performance goal threshold levels are set forth in the payout chart
attached as Appendix B.  Achievement of a
Total Company EBIT Margin that is between the performance threshold and
performance target levels or that is between the performance target and
performance maximum levels shall entitle the Participant to payment of an
interpolated earned Cash-Based Award, as reflected on the payout chart attached
as Exhibit B.













(c)           Actual
performance with respect to the Performance Measures shall be derived from the
consolidated financial statements of the Company for the Performance Period as
defined above and on Appendix A.  The
ultimate determination of payout under this Agreement is subject to:


(i)                                     completion of the financial audit for the
respective Performance Period;


(ii)                                  certification and approval of such financial
audit by the Committee; and


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


(d)           Form and Timing of Payout.


(i)            Form
of Payout.  Upon
completion of the Performance Period, the Participant will be entitled to
receive a cash payment of his or her earned Award for the Performance Period
determined as a function of the extent to which the corresponding performance
goals set forth in Appendix B have been achieved as established by the
Committee; provided, however, the Participant shall not vest in his or her
Award unless he or she has remained employed by the Company or any of its
Subsidiaries through the end of the Performance Period.


(ii)           Timing
of Payout.  Payment of the
earned Award shall be made within seventy-five (75) calendar days follow­ing
the close of the applicable Performance Period.


(e)           Exceptions to Completion of the
Performance Period. 
Notwithstanding the provisions of paragraph (d)(i) immediately above, a
Participant shall be entitled to the following with respect to his or her Award
in the following circumstances:


(i)            Retirement.  In the event the Participant’s employment
with the Company and/or any Subsidiary terminates by reason of Retirement,
during the Performance Period, the Participant shall be entitled to receive a
prorated payout of the Award.  The
prorated payment shall be determined by the Committee:


(A)          by taking into account what the
Participant would have been paid had he or she remained employed for the entire
Performance Period (as adjusted based on the achievement of the pre-established
Performance Goals set forth in Appendix B); multiplied by


(B)           the ratio of the number of full
months of the Participant’s employment during the Performance Period, in relation
to the total number of months in the Performance Period.


Payment of the Award shall
be made at the same time as payments are made to other participants who did not
terminate employment during the applicable Performance Period.  For purposes of this Agreement “Retirement”
means the normal retirement date on which a Participant qualifies for full
retirement benefits under the Company’s qualified retirement plan, as
identified by the Committee.


(ii)           Termination
for Any Reason Other Than Retirement.  In the event the Participant’s employment
with the Company and/or any Subsidiary terminates for any reason other than
Retirement, death or Disability, as provided for in subparagraph (i)
immediately above, during the Performance Period, the Participant’s Award shall
immediately be forfeited as of the 



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date of such termination of
employment, except as otherwise provided for in any employment agreement
between the Participant and the Company or except as otherwise prohibited by
employment laws in the Participant’s country of employment.


(iii)          Forfeiture
of the Award and Repayment. 
If the Participant’s employment relationship with the Company or any
Subsidiary is subject to any form of noncompete, nonsolicitation, and/or
confidentiality provisions, and following the close of  the Performance Period it is determined by
the Committee that the Participant violated during the Performance Period any
noncompete, nonsolicitation, and/or confidentiality provisions to which he or she
is bound, the Participant shall forfeit, as of the first day of any such
violation, all right, title and interest to the Award and any net proceeds
received by Participant pursuant to attainment of Performance Goals with
respect to the Award.  The Company
further shall be entitled to reimbursement from Participant of any fees and
expenses (including attorneys’ fees) incurred by or on behalf of the Company in
enforcing the Company’s rights under this subparagraph (iii).  By accepting the Award, Participant hereby
consents to a deduction from any amounts the Company and/or any Subsidiary owes
to Participant from time to time (including amounts owed to Participant as
wages or other compensation, fringe benefits, or vacation pay, as well as any
other amounts owed to Participant by the Company and/or any Subsidiary), to the
extent of any amounts that Participant owes to the Company and/or any
Subsidiary under this Section 2(c). 
Whether or not the Company and/or any Subsidiary  elects to make any set-off in whole or in
part, if the Company and/or any Subsidiary does not recover by means of set-off
the full amount Participant owes to the Company and/or any Subsidiary,
Participant agrees to pay immediately the unpaid balance to the Company and/or
any Subsidiary .


3.             Payment of Taxes.  The Company shall deduct and withhold any amount due on account of any
tax imposed as a result of payout of the Award. 
Such withheld amounts shall be remitted to satisfy federal, state,
local, domestic or foreign taxes required by law or regulation.


4.             Plan as
Successor to Annual Officer Performance Incentive Plan.  By executing this Agreement, the Company and
the Participant acknowledge and agree that, solely for purposes of the
Performance Period, the Plan will serve as a successor plan to the Annual
Officer Performance Incentive Plan as provided for in Section 5(b) of
the Participant’s employment agreement and the Participant’s annual incentive
will be determined solely by the Grant of Cash-Based Awards provisions of
Section 10 of the Plan. The Company and the Participant further
acknowledge and agree that, for purposes of the employment agreement, during
the Performance Period, the term Target Incentive Opportunity shall mean the
percentage of the Participant’s Base Salary as provided for in Section 1(a)
above.


5.             Miscellaneous
Provisions.


(a)           No Service or Employment Rights.  No provision of this Agreement or of the
Award granted hereunder shall give the Participant any right to continue in the
service or employ of the Company or any Subsidiary, create any inference as to
the length of employment or service of the Participant, affect the right of the
Company or any Subsidiary to terminate the employment or service of the
Participant, with or without cause, or give the Participant any right to
participate in any employee welfare or benefit plan or other program (other
than the Plan) of the Company or any Subsidiary.


(b)           Plan Document Governs.  The Award is granted pursuant to the
Plan, and the Award and this Agreement are in all respects governed by the Plan
and subject to all of the terms and provisions thereof, whether such terms and
provisions are incorporated in this Agreement by reference or are expressly
cited.  Capitalized terms used but not
defined herein shall have the meanings ascribed to such terms in the Plan.  Any inconsistency between the Agreement and
the Plan shall be resolved in favor of the Plan.  Participant hereby acknowledges receipt of a
copy of the Plan.


(c)           Governing Law.  This Agreement and the Award granted
hereunder shall be governed by, and construed and enforced in accordance with,
the laws of the State of Iowa, without giving effect to provisions thereof
regarding conflict of laws.



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


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


(f)            Use Of Personal Data.  Participant acknowledges and agrees (by
executing this Agreement) to the collection, use, processing and transfer of
certain personal data, including his or her name, salary, nationality, job
title, position evaluation rating along with details of all past Awards and
current Awards outstanding under the Plan, for the purpose of managing and
administering the plan.  The Participant
understands that he or she is not obliged to consent to such collection, use,
processing and transfer of personal data. 
However, the Participant understands that his or her failure to provide
such consent may affect his or her ability to participate in the Plan.  The Company, or its Subsidiaries, will
transfer data amongst themselves as necessary for the purpose of
implementation, administration and management of the Plan.  The Participant authorizes this use of his or
her personal data.


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


(h)           Counterparts.  This Agreement may be signed in two
counterparts, each of which shall be an original, but both of which shall
constitute but one and the same instrument.


(i)            Successors and Assigns.  This Agreement shall inure to the benefit
of and be binding upon each successor and assign of the Company.  All obligations imposed upon the Participant,
and all rights granted to the Company hereunder, shall be binding upon the
Participant’s heirs, legal representatives and successors.


IN
WITNESS WHEREOF, the
Company has caused this Agreement to be duly executed by an officer thereunto
duly authorized, and the Participant has hereunto set his or her hand, all as
of the day and year first above written.


 


	
  Sauer-Danfoss Inc.

  	
   

  	
  Participant

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
  Name:

  
	
   

  	
   

  	
   

  
	
  Title:

  	
   

  	
   

  
				



 



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APPENDIX
A


SAUER-DANFOSS INC.

2006 OMNIBUS INCENTIVE PLAN


2007 CASH-BASED AWARD AGREEMENT


2007
Performance Measures and Performance Goals


2007
Performance Measure:  Total Company EBIT
Margin


The Performance Measure under this Agreement shall be the “Total Company
EBIT Margin” as derived from the audited consolidated financial statements of
the Company for the Performance Period.  ”Total Company EBIT Margin” is
defined as earnings before taxes, net interest expense, and minority interest
per the audited consolidated financial statements of the Company for the fiscal
year divided by the total sales in the
fiscal year.  Notwithstanding the foregoing, the following items shall be
excluded from the determination of the Total Company EBIT Margin:


 



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APPENDIX
B


SAUER-DANFOSS INC.

2006 OMNIBUS INCENTIVE PLAN


2007 CASH-BASED AWARD AGREEMENT


2007
Performance Goal Achievements