Document:

EXHIBIT 10.1(bw)

 

On February 22, 2005, the Company’s Compensation Committee
approved an increase in the annual base salary for David J. Anderson, the
Company’s President and Chief Executive Officer to $550,000.  The increase was made retroactive to January 1,
2005, with the increase in monthly payments taking effect on April 1,
2005, and a one time lump sum payment was made to Mr. Anderson equal to the
monthly increase for the three months of January, February and March of
2005.Exhibit
10.1(bx)

Sauer-Danfoss
Inc. 1998 Long-Term Incentive Plan

2005 Performance Unit Award Agreement

You have been selected to be a Participant in
the Sauer-Danfoss Inc. 1998 Long-Term Incentive Plan (the “Plan”), as specified
below:

Participant:
                                                                                                             

Date of Award:
 February 22, 2005
                                                                        

Target Number of Performance
Units Awarded:                                                

Performance Period:
   1 January 2005 to 31 December 2007

Performance Measure:
Simple Average Annual Return on Net Assets Pursuant to Sec. 3 below

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

  

 

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

The Plan provides a complete description of the
terms and conditions governing Performance Units.  If there is any inconsistency between the
terms of this Award Agreement and the terms of the Plan, the Plan’s terms shall
completely supersede and replace the conflicting terms of this Award
Agreement.  All capitalized terms shall
have the meanings ascribed to them in the Plan, unless specifically set forth
otherwise herein.  In consideration of
the mutual promises contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are acknowledged, the
parties hereto agree as follows:

1.       Employment by the Company.  The Performance Units granted hereunder are
awarded on the condition that the Participant remains employed by the Company
from the Date of Award through the end of the Performance Period, as specified
above.  However, neither such condition
nor the award of the Performance Units shall impose upon the Company any
obligation to retain the Participant in its employ for any given period or upon
any specific terms of employment.

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

 

 

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

Achievement of a Simple
Average Annual RoNA over the Performance Period equal to15% will entitle the
Participant to payment of the Target Number of Performance Units Awarded as set
forth above, subject to other provisions of the Plan and this Award
Agreement.  Achievement of a Simple
Average Annual RoNA equal to 17% shall entitle the Participant to payment of
200% of the Target Number of Performance Units Awarded.  Achievement of a Simple Average Annual RoNA
of 11.0% shall entitle the Participant to payment of 50% of the Target Number
of Performance Units Awarded. 
Achievement of a Simple Average Annual RoNA between 11.0% and 17.0%
shall entitle the Participant to payment of the number of Performance Units
interpolated according to a performance achievement function defined by the
foregoing achievement levels, and as reflected on the graph attached
hereto.  Achievement of a Simple Average
Annual RoNA of less than 11.0% shall result in no payment of Performance Units
to the Participant under this Award Agreement.

 

4.       Form and Timing of Payment of Performance Units.  Payment of earned Performance Units shall be
made within seventy-five (75) calendar days follow­ing the close of the
applicable Performance Period.  Subject
to the Plan, the Committee has authorized that the future payment of any earned
Performance Units shall be made 100% in Shares.   The Company will withhold from any such
payout Shares having a value equivalent to the amount needed to satisfy the
minimum statutory tax withholding requirements of the Company or its Subsidiary
in the appropriate taxing jurisdiction.

5.       Voting Rights and Dividends.  During the Performance Period and until the
date of payment of Performance Units as provided for in Section 4, the
Participant will not have voting rights with respect to the Performance Units.  During the Performance Period and until and
including the date of payment of Performance Units as provided in Section 4,
the Participant shall receive all dividends, dividend equivalents and other
distributions paid with respect to the number of shares of Common Stock of the
Company equal to the number of Performance Units granted under this Award.  Any such payment of dividend, dividend
equivalent or other distribution will be made on one of the Participant’s next
two regular paydays following the specified record date.

6.       Termination of Employment Due to Death,
Disability, or Retirement.  In the event the employment of a Participant
is terminated by reason of death, Disability, or Retirement (as such 

 

 

terms
are defined in the Plan) during the Performance Period, the Participant or the
Participant’s beneficiary or estate, as the case may be, shall be entitled to
receive a prorated payment of the Performance Units.  The prorated payment shall be determined by
the Committee, in its sole discretion, based on the number of full months of
the Participant’s employment during the Performance Period, in relation to the
total number of months in the Performance Period, and shall further be adjusted
based on the achievement of the pre-established performance goals set forth in
Section 3. 

Payment
of Performance Units shall be made at the time specified by the Committee in
its sole discretion.  Notwithstanding the
foregoing, with respect to a Participant who retires during the Performance
Period, payments shall be made at the same time as payments are made to
Participants who did not terminate employment during the applicable Performance
Period as set forth in Section 4.

7.       Termination of Employment for Other Reasons.  In the event that the Participant terminates
employment with the Company for any reason other than those reasons set forth
in Section 6, or in the event that the Company terminates the employment of the
Participant with or without cause, all Performance Units awarded to the
Participant under this Award Agreement shall be forfeited by the Participant to
the Company; provided, however, that in the event of a termination of the
employment of the Participant by the Company with or without cause, the
Committee, in its sole discretion, may waive such automatic forfeiture
provision and pay out on a pro rata basis in accordance with Section 6.

8.       Change in Control.  In the event of a Change in Control (as
defined in the Plan) during the Performance Period, the Target Number of
Performance Units shall become payable in full and such payment shall be
made within seventy-five (75) calendar days following date of the Change
in Control.  The Committee, in its sole
discretion, may make such payment of the Target Number of Performance Units in
the form of cash or in shares (or in a combination thereof).  The number of Shares to be issued, if any,
shall be equal to the number of earned Performance Units designated by the
Committee to be paid in Shares.  The amount
of cash to be paid if any shall be equal to the Fair Market Value, as defined
in the Plan, of a share of the Common Stock of the Company as of the date of
the Change in Control multiplied by the number of Performance Units designated
by the Committee to be paid in cash.

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

10.   Adjustments in Authorized Shares.  The Committee shall have the sole discretion
to adjust the number of Performance Units awarded pursuant to this Award
Agreement, in accordance with Section 4.3 of the Plan.

 

 

11.   Tax Withholding.  The Company shall have the power and the
right to deduct or withhold, or require the Participant or beneficiary to remit
to the Company, an amount sufficient to satisfy federal, state, and local
taxes, domestic or foreign, required by law or regulation to be withheld with
respect to any taxable event arising as a result of this Award Agreement.  The Company’s power and right to withhold
includes the right to withhold Shares with a value equivalent to the amount
needed to satisfy the minimum statutory tax withholding requirements of the
Company or its Subsidiary in the appropriate taxing jurisdiction.

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

13.   Covenant Not to Compete.  Without the consent of the Company, the
Participant shall not, directly or indirectly, anywhere in the world, at any
time during the Participant’s employment with the Company or any of its
subsidiaries, and for a period of eighteen (18) months following the
termination of Participant’s employment with the Company and its subsidiaries
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 or any of its
subsidiaries; provided, however, that the Participant 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 Participant holds an interest is listed and
traded on a broadly recognized national or regional securities exchange.  For purposes hereof, the term “material product
or product line of the 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
Participant’s undertaking such employment were at least $10 million.

The
Participant acknowledges that: (a) the services to be performed by him for the
Company are of a special, unique, unusual, extraordinary, and intellectual
character; (b) the business of the Company and its subsidiaries is worldwide in
scope and its products are marketed throughout the world; (c) the Company and
its subsidiaries compete with other businesses that are or could be located in
any part of the world; and (d) the provisions of this Section 13 are reasonable
and necessary to protect the Company’s business.

 

If
any covenant in this Section 13 is held to be unreasonable, arbitrary, or
against public policy, such covenant will be considered to be divisible with
respect to scope, time, and geographic area, and such lesser scope, time, or
geographic area, or all of them, as a court of competent 

 

 

jurisdiction
may determine to be reasonable, not arbitrary, and not against public policy,
will be effective, binding, and enforceable against the Participant.

 

The
period of time applicable to any covenant in this Section 13 will be extended
by the duration of any violation by the Participant of such covenant.

 

The
Participant will, while the covenants under this Section 13 are in effect, give
notice to the Company, within ten days after accepting any other employment, of
the identity of the Participant’s employer. 
The Company may notify such employer that the Participant is bound by
this Award Agreement and, at the Company’s election, furnish such employer with
a copy of this Award Agreement or relevant portions thereof.

 

14.    Disclosure
of Confidential Information.  Without the consent of the Company, the
Participant shall not disclose to any other person Confidential Information (as
defined below) concerning the Company or any of its subsidiaries or the
Company’s or any of its subsidiaries’ trade secrets of which the Participant
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 Award Agreement, such information will,
nevertheless, be considered Confidential Information for purposes of this Award
Agreement.  The Participant hereby waives
any requirement that the Company submits proof of the economic value of any
trade secret or posts a bond or other security. 
None of the foregoing obligations and restrictions apply to any part of
the Confidential Information that the Participant demonstrates was or became generally
available to the public other than as a result of a disclosure by the
Participant.

 

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

 

For
purposes of this Award Agreement, Confidential Information shall include any
and all information concerning the business and affairs of the Company or any
of its subsidiaries, 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 and its subsidiaries 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.

 

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

 

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

The
Participant acknowledges that the injury that would be suffered by the Company
as a result of a breach of the provisions of this Award Agreement (including
any provision of Sections 13, 14, and 15) 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 Award 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 16 or any other remedies of the Company, if
the Participant breaches any of the provisions of Sections 13, 14, or 15, the
Company will have the right to cease making any payments otherwise due to the
Participant under this Award Agreement.

 

The
covenants by the Participant in Sections 13, 14, and 15 are essential elements
of this Award Agreement, and without the Participant’s agreement to comply with
such covenants, the Company would not have entered into this Award Agreement
with the Participant.  The Company and
the Participant have been afforded the opportunity to consult their respective
counsel and have been advised or had the opportunity to obtain advice, in all
respects concerning the reasonableness and propriety of such covenants
(including, without limitation, the time 

 

 

period
of restriction and the geographical area of restriction set forth in Section 13),
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 Participant’s covenants in Sections 13,
14, and 15 are independent covenants and the existence of any claim by the
Participant against the Company under this Award Agreement or otherwise, will
not excuse the Participant’s breach of any covenant in Sections 13, 14, or 15.

 

If
this Award Agreement or the Participant’s employment with the Company and its
subsidiaries expires or is terminated, this Award Agreement will continue in
full force and effect as is necessary or appropriate to enforce the covenants
and agreements of the Participant in Sections 13, 14, 15, and 16.

 

17.   Beneficiary Designation.  The Participant may, from time to time, name
any beneficiary or beneficiaries (who may be named contingently or
successively) to whom any benefit under this Award Agreement is to be paid in
case of his or her death before he or she receives any or all of such benefit.
Each such designation shall revoke all prior designations by the Participant,
shall be in a form prescribed by the Company, and will be effective only when
filed by the Participant in writing with the Secretary of the Company during
the Participant’s lifetime. In the absence of any such designation, benefits
remaining unpaid at the Participant’s death shall be paid to the Participant’s
estate.

Beneficiary Designation
(name, address, and relationship):

	
   

  
	
   

  
	
   

  

 

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

 

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

 

20.   No Vested Right In Future Awards.  Participant acknowledges and agrees (by
executing this Award Agreement) that the granting of Awards under this Award
Agreement are made on a fully discretionary basis by the Committee and that
this Award Agreement does not lead to a vested right to further Awards in the
future.  Further, the Awards set forth in
this Award 

 

 

Agreement constitute a
non-recurrent benefit and the terms of Award Agreement are only applicable to
the Awards distributed pursuant to this Award Agreement.

21.   Use Of Personal Data.  Participant acknowledges and agrees (by
executing this Award Agreement) to the collection, use, processing and transfer
of certain personal data as described in this paragraph #21.  The Participant understands that he or she is
not obliged to consent to such collection, use, processing and transfer of personal
data.  However, the Participant understands
that his or her failure to provide such consent may affect his or her ability
to participate in the Plan.  The
Participant understands that the Company may hold certain personal information
about the Participant, including his or her name, salary, nationality, job
title, position evaluation rating along with details of all past Awards and
current Awards outstanding under the Plan, for the purpose of managing and
administering the plan (the “Data”).  The
Company, or its affiliates, will transfer Data amongst themselves as necessary
for the purpose of implementation, administration and management of the
Plan.  The Company and/or any of it
affiliates may further transfer Data to any third parties assisting the Company
in the implementation, administration and management of the Plan.  These various recipients of Data may be
located in Europe, or elsewhere throughout the world, including the United
States.  The Participant authorizes these
various recipients of Data to receive, possess, use, retain and transfer the
Data, in electronic or other form, for the purposes of implementing,
administering and managing the Plan, including any required transfer of such
Data as may be required for the subsequent holding of Shares on the
Participant’s behalf by a broker or other third party with whom the Participant
may elect to deposit any Shares acquired pursuant to the Plan.  The Participant understands that he or she
may, at any time, review Data with respect to the Participant and require any
necessary amendments to such Data.  The
Participant also understands that he or she may withdraw the consents to use
Data herein by notifying the Company in writing; however, the Participant
understands that by withdrawing his or her consents to use Data, that the
Participant may affect his or her ability to participate in the Plan.

 

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

 

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

 

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

All
obligations of the Company under the Plan and this Award Agreement, with
respect to the Performance Units granted hereunder, shall be binding (i) on the
Company and on any successor to the Company, whether the existence of such
successor is the result of a direct or indirect 

 

 

purchase,
merger, consolidation, or otherwise, of all or substantially all of the
business and/or assets of the Company; and (ii) on the Participant and his or
her heirs and legal representatives.

 

Each of the terms of
this Award Agreement is deemed severable in whole or in part, and if any term
or provision, or the application thereof, in any circumstance should be
illegal, invalid or unenforceable, the remaining terms and provisions will not
be affected thereby and will remain in full force and effect.

To the extent not
preempted by federal law, this Award Agreement is deemed to have been made and
entered into in the State of Iowa and in all respects the rights and
obligations of the parties will be governed by, and construed and enforced in
accordance with, the laws of the State of Iowa without regard to the principles
of conflict of laws.  Any and all
lawsuits, legal actions or proceedings against either party arising out of this
Award Agreement will be brought in Story County, Iowa or federal court of
competent jurisdiction sitting nearest to Ames, Iowa, and each party hereby
submits to and accepts the exclusive jurisdiction of such court for the purpose
of such suit, legal action or proceeding. 
Each party irrevocably waives any objection it may now have or
hereinafter have to this choice of venue of any suit, legal action or
proceeding in any such court and further waives any claim that any suit, legal
action or proceeding brought in any such court has been brought in an
inappropriate forum.

IN
WITNESS WHEREOF, the parties have caused this Award Agreement to be executed
effective as of                                               .

	
   

  	
  Sauer-Danfoss Inc.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Participant

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