Document:

Exhibit 10.1

DIGIMARC CORPORATION 1999 STOCK INCENTIVE PLAN

1999 NON-EMPLOYEE DIRECTOR STOCK INCENTIVE PROGRAM

Amended and Restated on April 22, 2001

Amended and Restated on March 29, 2002

Amended and Restated on April 17, 2003

Amended and Restated on May 2, 2003

Amended and Restated on March 10, 2004 

Amended and Restated on May 2, 2006

Amended and Restated on March 7, 2007

ARTICLE I

ESTABLISHMENT AND PURPOSE OF THE PROGRAM

1.01                        Establishment
of Program

The 1999 Non-Employee Director Stock Incentive Program (the “Program”)
is adopted pursuant to the Digimarc Corporation 1999 Stock Incentive Plan (the
“Plan”) and, in addition to the terms and conditions set forth below, is
subject to the provisions of the Plan.

1.02                        Purpose of
Program

The purpose of the Program is to enhance the ability of the Company to
attract and retain directors who are not Employees (“Non-Employee Directors”)
through a program of automatic grants of Options or awards of other types stock
incentive compensation under the Plan (together, “Awards”).

1.03                        Effective
Date of the Program

The Program became effective as of the Registration Date on
December 1, 1999, and was first amended and restated by the Board on
April 22, 2001 to increase the number of Shares granted pursuant to
Initial Grants and Subsequent Grants (as defined below) and to change the
vesting provisions thereunder. The Program was further amended and restated by
the Board on March 29, 2002 to increase the number of Shares granted
pursuant to Initial Grants and Subsequent Grants, to award additional Option
grants to Non-Employee Directors serving on committees of the Board, and to
change the vesting provisions for all automatic Option grants. The Program was
further amended and restated by the Board on April 17, 2003 to specify that
Committee Service Grants shall be made only to Non-Employee Directors who serve
as a member of a “standing committee” of the Board. The Program was further
amended and restated by the Board on May 2, 2003 to eliminate the
requirement that a Non-Employee Director serve as a director of the Company for
at least six (6) months before receiving a Committee Service Grant. The
Program was further amended and restated by the Board on March 10, 2004 to
provide that the Board may waive the issuance of option grants under the
Program, in whole or

in part, for any particular year. The Program was further amended and
restated by the Board on May 2, 2006 to specify that the Board may elect
to make the stock compensation awards specified by the Program in a form other
than stock options, including any form of stock compensation authorized under
the Plan, in whole or in part, for any particular year.  The Program was further amended and restated
by the Board on March 7, 2006 to change the amount of the annual stock compensation
awards.

ARTICLE II

DEFINITIONS

Capitalized terms in this Program, unless otherwise defined in this
Program, have the meaning given to them in the Plan. As used in this Program,
the following definitions shall apply:

2.01                        Change in
Control

“Change
in Control” means a change in ownership or control of the Company
effected through either of the following transactions:

(a)           the direct or
indirect acquisition by any person or related group of persons (other than an
acquisition from or by the Company or by a Company-sponsored employee benefit
plan or by a person that directly or indirectly controls, is controlled by, or
is under common control with, the Company) of beneficial ownership (within the
meaning of Rule 13d-3 of the Exchange Act) of securities possessing more
than fifty percent (50%) of the total combined voting power of the Company’s
outstanding securities pursuant to a tender or exchange offer made directly to
the Company’s stockholders which a majority of the Continuing Directors who are
not Affiliates or Associates of the offeror do not recommend such stockholders
accept, or

(b)           a change in the
composition of the Board over a period of thirty-six (36) months or less
such that a majority of the Board members (rounded up to the next whole number)
ceases, by reason of one or more contested elections for Board membership, to
be comprised of individuals who are Continuing Directors.

2.02                        Continuing
Directors

“Continuing Directors”
means members of the Board who either (i) have been Board members continuously
for a period of at least thirty-six (36) months or (ii) have been
Board members for less than thirty-six (36) months and were elected or
nominated for election as Board members by at least a majority of the Board
members described in clause (i) who were still in office at the time such
election or nomination was approved by the Board.

2.03 Corporate
Transaction

“Corporate
Transaction” means any of the following transactions:

(a)           a merger or
consolidation in which the Company is not the surviving entity, except for a
transaction the principal purpose of which is to change the state in which the
Company is incorporated;

(b)           the sale, transfer or
other disposition of all or substantially all of the assets of the Company
(including the capital stock of the Company’s subsidiary corporations) in
connection with the complete liquidation or dissolution of the Company;

(c)           any reverse merger in
which the Company is the surviving entity but in which securities possessing
more than fifty percent (50%) of the total combined voting power of the
Company’s outstanding securities are transferred to a person or persons
different from those who held such securities immediately prior to such merger;
or

(d)           acquisition by any
person or related group of persons (other than the Company or by a
Company-sponsored employee benefit plan) of beneficial ownership (within the
meaning of Rule 13d-3 of the Exchange Act) of securities possessing more
than fifty percent (50%) of the total combined voting power of the Company’s
outstanding securities (whether or not in a transaction also constituting a
Change in Control), but excluding any such transaction that the Plan
Administrator determines shall not be a Corporate Transaction.

ARTICLE III

STOCK INCENTIVE GRANT TERMS

3.01                        Date of Grant
and Number of Shares

(a)           Initial Grant.  A Non-Qualified Stock Option to purchase
twenty thousand (20,000) shares of Common Stock shall be granted (“Initial
Grant”) to each Non-Employee Director elected or appointed to the Board for the
first time on or after March 29, 2002. Such Initial Grant shall be made on
the date each such Non-Employee Director first becomes a Non-Employee Director.

(b)           Subsequent Grants.  Immediately following each annual meeting of
the Company’s stockholders commencing with the annual meeting of the Company’s
stockholders in 2002, each Non-Employee Director who continues as a
Non-Employee Director following such annual meeting shall be granted an award
of three thousand (3,000) shares of Restricted Stock and a Non-Qualified Stock
Option to purchase six thousand (6,000) shares of Common Stock (each a
“Subsequent Grant”); provided that no Subsequent Grant shall be made to any
Non-Employee Director who has not served as a director of the Company, as of
the time of such annual meeting, for at least six (6) months. Each such
Subsequent Grant shall be made on the date of the annual stockholders’ meeting
in question.

(c)           Committee Service Grants.  Each Non-Employee Director who serves as a
member of a standing committee of the Board immediately following each annual
meeting of the Company’s stockholders, commencing with the annual meeting of
the Company’s stockholders in 2002, shall be granted a Non-Qualified Stock
Option to purchase three thousand (3,000) shares of Common Stock (a “Committee
Service Grant”). Non-employee directors shall receive an additional Committee
Service Grant for each individual standing committee of the Board upon 

which he or she serves as a member as described above. For purposes of
this provision, the term “standing committee” of the Board shall mean the Audit
Committee, the Compensation Committee, the Corporate Governance Committee, and
the Nominating Committee. Each such Committee Service Grant shall be made on
the date of the annual stockholders’ meeting in question.

(d)           Waiver of Grants.  The Board may waive the issuance of grants to
be made pursuant to this Section 3.01 of the Program for any particular
year, in whole or in part, provided such waiver is made prior to the date of
grant. Any waiver by the Board with respect to grants for a particular year
shall in no way affect the right of Non-Employee Directors to receive grants
under the Program in a subsequent year.

(e)           Discretion
Regarding Form of Awards.  Notwithstanding
the foregoing, the Board may elect to make the awards authorized by this
Section 3.1, in whole or in part, for any particular year, in any form of
stock compensation authorized under the Plan so that the total value of all
components of stock compensation granted pursuant to this Section 3.1(a),
(b) or (c), respectively, equals the value (determined using the Black-Scholes
valuation model, or any other valuation model selected by the Board) of the
grant that would otherwise have been made on the terms set forth in the
applicable subsection.

3.02                        Vesting

(a)           Initial Grant.  Each Initial Grant under the Program shall
vest and become exercisable as to 1/36 of the shares of Common Stock subject to
the Award on each monthly anniversary of the date of grant, such that the Award
will be fully exercisable (or no longer subject to any risk of forfeiture)
three (3) years after its date of grant.

(b)           Subsequent Grants and Committee Service Grants.  Each Non-Qualified Stock Option included in a
Subsequent Grant or Committee Service Grant under the Program shall vest and
become exercisable as to 1/12 of the shares of Common Stock subject to the
Award on each monthly anniversary of the date of grant, or on such other
schedule as the Board may specify, such that the Award will be fully
exercisable one (1) year after its date of grant.  Each award of Restricted Stock included in a
Subsequent Grant or Committee Service Grant under the Program shall be subject
to a forfeiture restriction that lapses as to 100 percent of the shares on the
one-year anniversary of the grant date, or on such other schedule as the Board
may specify, such that the Award will no longer be subject to any risk of
forfeiture one (1) year after its date of grant.

3.03                        Exercise
Price

The exercise price per share of Common Stock of each Initial Grant and
each Non-Qualified Stock Option included in a Subsequent Grant shall be one
hundred percent (100%) of the Fair Market Value per Share on the date of grant.

3.04                        Corporate
Transaction/Change in Control

(a)           In the event of a
Corporate Transaction, each Award which is at the time outstanding under the
Program automatically shall become fully vested and exercisable (or no longer
subject to any risk of forfeiture) immediately prior to the effective date of
such Corporate

Transaction. Effective upon the consummation of the Corporate
Transaction, all outstanding Awards under the Program shall terminate. However,
all such Awards shall not terminate if the Awards are, in connection with the
Corporate Transaction, assumed by the successor corporation or Parent thereof.

(b)           In the event of a
Change in Control (other than a Change in Control which also is a Corporate
Transaction), each Award which is at the time outstanding under the Program
automatically shall become fully vested and exercisable (or no longer subject
to any risk of forfeiture), immediately prior to the specified effective date
of such Change in Control. Each such Option shall remain so exercisable until
the expiration or sooner termination of the applicable Option term.

3.05                        Other
Terms

The Plan Administrator shall determine the
remaining terms and conditions of the Awards awarded under the Program.Exhibit 10.1

—  CONVENIENCE TRANSLATION  —

 

 

 

General Protocol 2007/No. 27  [27 written by hand]

OFFICIAL
DOCUMENT

 

AGREEMENT
FOR

SALE
AND ASSIGNMENT OF SHARES

 

Recorded in Basel (Switzerland) on 21 March 2007:

 

Before me, the
undersigned notary public

Dr. Patrick Wamister,

 

with office in Basel (Switzerland), appeared today:

 

1.                                                   Ms. Anne Isabell Krämer, born on 16 August 1977, of German
nationality, resident in Frankfurt am Main (Germany), identified by a valid
German identification card, who, according to her own statement, was not acting
on her own behalf but - to the exclusion of any personal liability, in
accordance with the copy of the attached power of attorney, the conformity of
which with the original power of attorney presented to me I hereby certify -

for SAUER-DANFOSS
HOLDING ApS, a company under Danish law with its registered office
in Nordborgvej 81, 6430 Nordborg (Denmark)

- hereinafter “Seller”  -

2.                                                   Mr. Mario Herrmann, born on 24 September 1973, of German
nationality, resident in Munich (Germany), identified by a valid German
identification card, who, according to his own statement, was not acting on his
own behalf but - to the exclusion of any personal liability, in accordance with
the copy of the attached power of attorney, the conformity of which with the
original power of attorney presented to me I hereby certify -

for Aurelius Industriekapital
GmbH, a company under German law with its registered office in
Bavariaring 11, 80336 Munich (Germany), entered in the Commercial Register of
the Local Court of Munich [Amtsgericht München]
under HRB 165493,

- hereinafter “Buyer”  -

 2
 

The Seller and the
Buyer are hereinafter collectively referred to as “Parties”,
and individually as “Party”.

The notary advised
the parties that due to the absence of certifications of the signatures the
legitimacy of the powers of attorney could not be verified definitively by him.

The notary
informed the parties about the prohibition of participation [Mitwirkungsverbot] according to the Law of Notaries of the
City of Basel [baselstädtisches Notariatsrecht] (EG-ZGB
§233 (1) subsection 4) and to the German Authentication Act [Beurkundungsgesetz] (§ 3 (1) no. 7). Both the parties and the
notary have negated any prior involvement of the notary or of any of the notary’s
office partners as well as of any other persons associated with the notary for
the purpose of jointly exercising their profession or of persons with whom he
shares his business premises within the meaning of these provisions.

The parties
appearing, acting as stated above, requested thereafter the notarization of the
following document:

 3
 

TABLE OF CONTENTS

	
  LIST OF SCHEDULES

  	
   

  	
  5

  
	
   

  	
   

  	
   

  
	
  DEFINITIONS

  	
   

  	
  6

  
	
   

  	
   

  	
   

  
	
  RECITALS

  	
   

  	
  7

  
	
   

  	
   

  	
   

  
	
  SECTION 1 THE COMPANY

  	
   

  	
  8

  
	
   

  	
   

  	
   

  
	
  SECTION 2 SALE AND ASSIGNMENT OF SHARES

  	
   

  	
  8

  
	
   

  	
   

  	
   

  
	
  SECTION 3 PURCHASE PRICE

  	
   

  	
  9

  
	
   

  	
   

  	
   

  
	
  SECTION 4 WARRANTIES

  	
   

  	
  10

  
	
   

  	
   

  	
   

  
	
  SECTION 5 LIABILITY OF SELLER

  	
   

  	
  15

  
	
   

  	
   

  	
   

  
	
  SECTION 6 OBLIGATIONS IN THE TIME PERIOD FROM
  THE SIGNING

  	
   

  	
   

  
	
  DATE UNTIL THE CLOSING DATE

  	
   

  	
  19

  
	
   

  	
   

  	
   

  
	
  SECTION 7 OTHER RIGHTS AND OBLIGATIONS

  	
   

  	
  20

  
	
   

  	
   

  	
   

  
	
  SECTION 8 TAXES

  	
   

  	
  24

  
	
   

  	
   

  	
   

  
	
  SECTION 9 CONFIDENTIALITY, PUBLICATIONS AND
  NOTICES

  	
   

  	
  25

  
	
   

  	
   

  	
   

  
	
  SECTION 10 FINAL PROVISIONS

  	
   

  	
  26

  

 4
 

LIST OF SCHEDULES

	
  Schedule 1.4

  	
   

  	
  Commercial Register Excerpts and Articles of
  Association

  
	
   

  	
   

  	
   

  
	
  Schedule 2.3

  	
   

  	
  Power of Attorney to receive Notice pursuant to
  § 16(1) of the German Limited Liability Company Act (GmbHG)

  
	
   

  	
   

  	
   

  
	
  Schedule 4

  	
   

  	
  Persons whose Knowledge shall be attributed to
  Seller

  
	
   

  	
   

  	
   

  
	
  Schedule 4.2 (a)

  	
   

  	
  Pro Forma Balance Sheet dated December 31, 2006

  
	
   

  	
   

  	
   

  
	
  Schedule 4.2 (b)

  	
   

  	
  Methodology for Pro Forma Determination

  
	
   

  	
   

  	
   

  
	
  Schedule 4.3 (a)

  	
   

  	
  List of Assets

  
	
   

  	
   

  	
   

  
	
  Schedule 4.3 (b)

  	
   

  	
  List of Assets with Encumbrances, etc.

  
	
   

  	
   

  	
   

  
	
  Schedule 4.4

  	
   

  	
  Legal Disputes

  
	
   

  	
   

  	
   

  
	
  Schedule 4.6 (a)

  	
   

  	
  Employment Agreements exceeding EUR 75,000 p.a.

  
	
   

  	
   

  	
   

  
	
  Schedule 4.6 (b)

  	
   

  	
  Employees of the Company

  
	
   

  	
   

  	
   

  
	
  Schedule 4.6 (c)

  	
   

  	
  Shop Agreements

  
	
   

  	
   

  	
   

  
	
  Schedule 4.6 (d)

  	
   

  	
  Agreements on
  Profit Participation, Part-Time Employment for Senior Employees, Pensions,
  etc.

  
	
   

  	
   

  	
   

  
	
  Schedule 4.6 (e)

  	
   

  	
  Bonus Payments

  
	
   

  	
   

  	
   

  
	
  Schedule 4.7

  	
   

  	
  Material
  Agreements

  
	
   

  	
   

  	
   

  
	
  Schedule 4.9

  	
   

  	
  Transactions/Actions
  outside the Ordinary Course of Business since 1 January 2007

  
	
   

  	
   

  	
   

  
	
  Schedule 4.9 (e)

  	
   

  	
  Salary Increases
  of Employees since 1 January 2007

  
	
   

  	
   

  	
   

  
	
  Schedule 7.1

  	
   

  	
  Agreements to be
  Terminated

  
	
   

  	
   

  	
   

  
	
  Schedule 7.2

  	
   

  	
  Guarantees and
  Letters of Credit to be Discharged

  
	
   

  	
   

  	
   

  
	
  Schedule 7.3

  	
   

  	
  Form of Absolute (selbstschuldnerisch) Guarantee

  
	
   

  	
   

  	
   

  
	
  Schedule 7.7

  	
   

  	
  Transfer of AC
  Motor Business and DC Motor Business

  
	
   

  	
   

  	
   

  
	
  Schedule 10.5

  	
   

  	
  Continuing
  Agreements

  

 

 5
 

DEFINITIONS

	
  AC Motor Business

  	
   

  	
  as defined in Preamble (D)

  
	
  Bonus Payments

  	
   

  	
  as defined in Section 4.6 (e)

  
	
  DC Motor
  Business

  	
   

  	
  as defined in Preamble (D)

  
	
  Third Party
  Claim

  	
   

  	
  as defined in Section 5.4

  
	
  Due Diligence
  CD-ROM

  	
   

  	
  as defined in Section 5.1 (b) (y)

  
	
  Shares

  	
   

  	
  as defined in Preamble (C)

  
	
  Company

  	
   

  	
  as defined in Preamble (C)

  
	
  Warranties

  	
   

  	
  as defined in Section 4

  
	
  Purchaser Claim

  	
   

  	
  as defined in Section 5.1

  
	
  Purchaser

  	
   

  	
  as defined under No. 2 of the Recitals

  
	
  Purchase Price

  	
   

  	
  as defined in Section 3.1

  
	
  Seller’s
  Knowledge

  	
   

  	
  as defined in Section 4

  
	
  Liquid Assets

  	
   

  	
  as defined in Section 4.2 (b)

  
	
  Necessary
  Production Resources

  	
   

  	
  as defined in Section 4.3

  
	
  Party

  	
   

  	
  as defined in the Recitals

  
	
  Parties

  	
   

  	
  as defined in the Recitals

  
	
  Pro Forma
  Balance Sheet

  	
   

  	
  as defined in Section 4.2 (a)

  
	
  S-D
  Kaiserslautern

  	
   

  	
  as defined in Section 1.2

  
	
  Taxes

  	
   

  	
  as defined in Section 4.8

  
	
  Cut-Off Date

  	
   

  	
  as defined in Section 2.2

  
	
  Seller

  	
   

  	
  as defined under No. 1 of the Recitals

  
	
  Sealing Period

  	
   

  	
  as defined in Section 10.6

  
	
  Closing Date

  	
   

  	
  as defined in Section 3.2

  
	
  Auditors

  	
   

  	
  as defined in Section 5.3 (a)

  

 

 6

AGREEMENT
FOR SALE AND ASSIGNMENT OF SHARES

entered
into between

1.                                      Sauer-Danfoss Holding ApS, a company organized under Danish law and
having its registered office in Nordborgvej 81, 6430 Nordborg, Denmark
(hereinafter “Seller”)

and

2.                                      Aurelius  Industriekapital GmbH,
a company organized under German law
and having its registered office in Bavariaring 11, 80336 Munich (hereinafter “Purchaser”)

Hereinafter Seller and
Purchaser shall collectively be referred to as the “Parties”
and individually shall be referred to as a “Party”.

Recitals

(A)                             Seller is a subsidiary of Sauer-Danfoss Inc.,
a corporation having its seat in Lincolnshire, Illinois, U.S.A.

(B)                               Purchaser is a German limited liability
company (Gesellschaft mit beschränkter Haftung)
having its seat in Munich.

(C)                               Seller holds all shares (hereinafter the “Shares”) of Sauer-Danfoss (Berching) GmbH, Industriestrasse
8, 92334 Berching, recorded in the Commercial Register at the Local Court of
Nuremberg under number HRB 19293 (hereinafter the “Company”).

(D)                              The Company develops and produces DC motors
and drive systems for applications in mobile hydraulic systems. On or before
the Closing Date, the development and production of DC motors also operated by
Sauer-Danfoss ApS, with a business seat in Odense, Denmark, will fully be
transferred to the Company (hereinafter for the entire development and
production of DC motors in both locations also referred to as the “DC Motor Business”). In return, the development and
production of AC motors (hereinafter the “AC Motor Business”)
will, on or before the Closing Date, be transferred to Odense and therefore is
not subject to this Agreement.

(E)                                Subject to the terms and conditions of this
Agreement, Seller intends to sell its Shares of the Company to Purchaser, and
Purchaser intends to purchase Seller’s Shares of the Company.

 7
 

Section 1

The Company

1.1                                The registered capital stock of the Company
totals €25,000.

1.2                                The Company holds 100% of the shares of
Sauer-Danfoss (Kaiserslautern) GmbH, Sauerwiesen 6, 67661 Kaiserslautern,
recorded in the Commercial Register at the Local Court of Kaiserslautern under
number HRB 2805 (hereinafter “S-D Kaiserslautern”).
The registered capital stock of S-D Kaiserslautern totals DEM 70,000. As of the
Closing Date, S-D Kaiserslautern will no longer conduct any operating
activities.

1.3                                The Company has no other direct or indirect
subsidiaries or branch offices.

1.4                                The Commercial Register excerpts of the
Company and S-D Kaiserslautern attached as Schedule 1.4 reflect
— with the exception of the revocation of the Prokurist
Ralf Kriegel by shareholders’ resolution dated February 28, 2007, which
has been filed, but not yet registered in the Commercial Register of the
Company - all facts required to be recorded in the Commercial Register. The
attached copies of the articles of association for the Company and S-D
Kaiserslautern are up-to-date; these articles of association have not been
amended since then.

Section 2

Sale and Assignment of Shares

2.1                                Seller hereby sells to Purchaser, and
Purchaser hereby purchases from Seller, Seller’s Shares of the Company,
including all rights and obligations pertaining thereto (including dividend
rights for the current and previous fiscal years).

2.2                                Subject to the conditions precedent

(i)                                     that the Purchase Price is paid in accordance
with Section 3.3;

(ii)                                the bank guaranty is issued pursuant to
Section 7.3 or the letter of comfort itemized in Schedule
7.2 has been discharged by way of an equivalent security of a
German/European major bank, savings bank (Sparkasse) or
cooperative bank (Volksbank) in the amount of at
least EUR1,200,000 with discharging effect for Sauer-Danfoss Inc.; and

(iii)                               the conclusion of the agreements described in
Section 7.7,

 8
 

Seller hereby assigns the
Shares of the Company to Purchaser. Purchaser hereby accepts said assignment.
The transfer shall be effected with commercial effect as of January 1,
2007, 00:00 hours (hereinafter the “Cut-Off Date”).
Seller shall have the right to waive the condition precedent set forth in lit.
(ii) by declaration vis-à-vis the Purchaser.

2.3                                The present managing directors of the Company
and S-D Kaiserslautern will resign as of the Closing Date (as defined below)
and Purchaser will hold a shareholders’ meeting, release the current managing
directors and appoint new managing directors as of the Closing Date. Purchaser
shall cause the Company to act accordingly with respect to S-D Kaiserslautern.
The present managing directors of the Company have authorized Purchaser to
receive notice pursuant to § 16 para. 1 of the German Limited
Liability Company Act (GmbHG)
according to the power of attorney attached as Schedule
2.3.

Section 3

Purchase Price

3.1                                The purchase price for the Shares shall total
EUR 3,875,000 (in words: three million eighthundredseventyfivethousand euros)
(hereinafter the “Purchase Price”).
The Purchase Price shall be reduced to EUR 3,650,000 (in words: three
million six-hundred fifty thousand euros) in case a German/European major bank,
saving banks (Sparkasse) or cooperative bank (Volksbank), at the instigation of Purchaser or an affiliate
of Purchaser, has fully discharged the letter of comfort itemized in Schedule 7.2 by way of an
equivalent security with discharging effect for Sauer-Danfoss Inc. until the
Closing Date.

3.2                                In the case that a discharge will not be
effected before the Closing Date pursuant to Section 3.1 sentence 2,
but a German/European major bank, savings bank (Sparkasse)
or cooperative bank (Volksbank), at
the instigation of Purchaser or an affiliate of Purchaser, discharges the
letter of comfort itemized in Schedule 7.2 by
way of an equivalent security with discharging effect for Sauer-Danfoss Inc.

(i)                                     within
30 days after the Closing Date in the full amount, Seller undertakes to repay a
partial amount of the Purchase Price in the amount of EUR 225,000;

(ii)                                  within
60 days after the Closing Date in the full amount, Seller undertakes to repay a
partial amount of the Purchase Price in the amount of EUR 150,000;

(iii)                               within 90 days after the
Closing Date in the full amount, Seller undertakes to repay a partial amount of
the Purchase Price in the amount of EUR 75,000.

 9
 

The repayment obligation shall become due with ten
(10) business days after the Purchaser has proven the discharge to the Seller
by appropriate documentation.

3.3                                Purchaser shall irrevocably pay to Seller the
Purchase Price no later than 11:00 a.m. (CET) on March 30, 2007 or any
other day agreed by the Parties pursuant the last sentence of this Section 3.3
(the “Closing Date”). to Seller’s account at Deutsche
Bank AG, SWIFT DEUTDEHH212, IBAN DE43212700200513884701 without deduction of any costs, fees or
taxes. On the Closing Date, the Parties will confirm the fulfillment of the
conditions precedent and the transfer of the Shares pursuant to Section 2.2 by
way of a written closing protocol. If the conditions precedent set forth in
Section 2.2 (iii) has not been fulfilled on March 30, 2007, the Parties will
mutually determine a new Closing Date.

3.4                                The Purchaser shall have no right to offset
any counterclaims or withhold performance based upon any counterclaims against
its payment obligations under this Section 3, unless such counterclaims are
undisputed or have been an established by a final and conclusive court
judgment.

3.5                                Unless otherwise provided in this Agreement,
a Party in default with payment shall pay default interest at the rate of 800
basis points above the base interest rate as defined in § 247 (1) of the
Civil Code to the other Party. The right of the creditor to seek other,
additional remedies shall remain unaffected thereby. Any claim for payment of
default interest shall accrue without any further notice or demand for any
payments for which a payment due date or payment period is specified in this
Agreement.

Section 4

Warranties

Seller hereby warrants,
pursuant to an independent warranty within the meaning of § 311 (1) of the
Civil Code, that the following representations (the “Warranties”)
are true and correct on signing date of this Agreement. The contents and scope
of the Warranties, as well as the legal remedies for any breach of warranty
shall be determined exclusively by this Agreement. This shall apply, in
particular, to the limitations of Seller’s liability under Section 5, which are
hereby made an integral part of the Warranties. For clarification purposes, it
is hereby agreed that the Warranties shall not be construed as warranties of
quality within the meaning of § 434 of the Civil Code or as warranties within
the meaning of §§ 443-444 of the Civil Code. For purposes of this Agreement “Seller’s knowledge” shall mean the positive knowledge of the
persons named in Schedule 4.
Any personal liability of officers, directors or employees of Seller in
connection with any breach of the Warranties is hereby excluded, except in
cases involving intentional misconduct.

 10
 

4.1                                Legal matters, Shares

(a)                                The representations made in the Recitals, as
well as in Section 1 of this Agreement are true and correct. Seller has the
unrestricted right to transfer the Shares. The Shares are not subject to any
rights of third parties, and no third parties have any rights of first refusal
or other rights to purchase the Shares. The capital contributions for the Shares
have been fully paid in and have not been repaid to the shareholders in whole
or part.

(b)                               The assets of the Company are not subject to
any insolvency proceedings, nor has a petition for insolvency been filed so far
with respect to the assets of the Company and the Seller is not aware of any
circumstances that the opening of such proceedings is threatened.

4.2                                Pro Forma Balance Sheet 

(a)                                The pro forma balance sheet dated 31 December
2006 attached as Schedule 4.2(a)
(the “Pro Forma Balance Sheet”) has been
prepared in the exercise of reasonable business care in compliance with the
principles of proper accounting and in compliance with German accounting
regulations in such way as if the measures described in Preamble (D) had been
already completed as of 31 December 2006, although without consideration of the
participation in S-D Kaiserslautern and according to the methodology attached
as Schedule 4.2(b). The Pro Forma
Balance Sheet (taking into consideration the aforementioned principles and the
pro forma approach) fairly and accurately reflect the Company’s net worth and
financial position as of 31 December 2006.

(b)                               As of the Closing Date, the Company has
Liquid Assets in the amount of at least EUR 500,000. “Liquid
Assets” means cash, cheques, bank deposits and securities.

(c)                                On 31 December 2006, the Company pursuant to
the pro forma approach described in Section 4.2(a) had at its disposal net
current assets, defined as the balance from trade accounts receivable plus
inventory minus trade accounts payable, in the amount of at least
EUR 7,500,000.

4.3                                Assets

As of the Closing Date, the
Company owns all fixed assets and current assets reported in the Schedule of
Assets as of 31 December 2006 included as Schedule 4.3(a),
with the exception of assets sold in the ordinary course of business since 1
January 2007. The assets listed in Schedule 4.3(a)
are not subject to any restrictions on transferability or other third-party 

 11
 

rights in rem,
with the exception of reservations of title securing the claims of suppliers
against the Company, as well as statutory liens, and the security interests
listed in Schedule 4.3(b).

The Company is equipped with
all material assets necessary for continuing the DC Motor Business in the
current manner. These assets include, but are not limited to, the items listed
in Schedule 4.3(a), as well as
transferred patents (if any), industrial property rights (if any), licenses (if
any) and all material documentation related to the current development and
manufacture of DC Motors in Odense (referred to collectively as the “Necessary Production Resources”). With these Necessary
Production Resources, and irrespective of the spin-off of the AC Motor
Business, the Company is capable of continuing the DC Motor Business (which
will forthwith be operated only by the Company) in an appropriately independent
manner and — subject to the provisions of Section 7 — without performances
by Seller and/or companies affiliated with Seller pursuant to §§ 15 et seq. of the Stock Corporation Act (Aktiengesetz). However, Purchaser is aware that while Seller
cannot give any warranty (i) for the use of the name “Schabmüller” by the
Company, it shall use reasonable endeavors, without incurring any cost burden,
to enable the Company to use such name, (ii) for the continuation of agreements
with third parties on the basis of the current conditions and (iii) for the
future business development of the Company.

4.4                                Court and regulatory proceedings

As of the signing date of
this Agreement, the Company is not a party to a proceeding pending before
courts or arbitration tribunals, as well as all regulatory proceedings which
has an amount in controversy of more than €20,000. To Seller’s knowledge and
except as disclosed in Schedule 4.4,
as of the signing date of this Agreement, no additional proceedings of the
above kind have been threatened against the Company in substantiated form
(orally or in writing). The provisions in Schedule 4.4
are part of this Agreement.

4.5                                Permits and approvals, environment

(a)                                The Company holds all material regulatory
permits and approvals necessary for the continuation of its business operations
in accordance with past practice. Such permits and approvals have not been
withdrawn, revoked or canceled and to Seller’s knowledge, this has not been
threatened.

(b)                               To Seller’s knowledge, no real properties
used by Seller are subject to any ground contamination within the meaning of
the Federal Soil Protection Act (Bundes-Bodenschutzgesetz).

 12

4.6                                Employees

(a)                            All employment agreements with managing
directors of the Company, as well as all employment agreements with employees
receiving compensation (not including variable bonuses) in excess of €75,000
per annum, are disclosed in Schedule 4.6 (a).
Purchaser hereby acknowledges that the current managing directors of the
Company will leave the Company as of the Closing Date.

(b)                           Schedule 4.6 (b) contains an (anonymous) list of all
employees of the Company as of the Closing Date, specifying for each employee
the position, age, start of employment, fixed salary and variable compensation
(bonuses), and any special status (part-time, maternity protection,
handicapped, trainee, works council), and said list is with reagrd to the
number of person complete and otherwise in all material respects complete and
correct, except for changes in the ordinary course between the date of this
Agreement and the Closing Date (e.g. terminations).

(c)                            Schedule 4.6 (c) lists all works agreements and, if resulting
in any payment obligations or other material obligations to Company, corporate
practices. 

(d)                                 Except as disclosed in Schedule 4.6 (d), the Company has made no agreements for
profit-sharing, part-time employment for senior employees, pensions or other
retirement, health or disability benefits.

(e)                                  Sellers warrants that neither the Company nor
Seller nor a company affiliated with Seller within the meaning of §§ 15 et seq. of the Stock Corporation Act has
promised or held out the prospect of payments or other benefits or compensation
to executive bodies of the Company and/or employees of the Company on the
occasion of or in connection with this Agreement (“Bonus
Payments”) above and beyond the Bonus Payments listed in Schedule 4.6(e), and that the Bonus
Payments reported in Schedule 4.6(e) will be paid directly by Seller.

4.7                                Material agreements

Except as disclosed in Schedule
4.7, the Company is not bound by any agreements of the following
kind the primary obligations of which have, at the date hereof, not been fully
accomplished:

(a)                                 Joint venture and similar cooperation
agreements with a financial impact for the Company exceeding EUR 50,000 in
the individual case;

(b)                                agreements on the acquisition or disposal of
real estate with a value exceeding EUR 50,000 in the individual case;

 13
 

(c)                                 customer and supply agreements providing for
obligations of the Company exceeding EUR 50,000 per year or in the
individual case;

(d)                                loan facilities, notes, debt obligations or
other bonds from or vis-à-vis third parties having a volume exceeding
EUR 50,000 per individual case;

(e)                                 lease or leasing agreements providing for
obligations of the Company exceeding EUR 25,000 in the individual case per
year.

4.8                                Taxes

The Company has filed all legally required tax
returns in a timely manner. All taxes, tax prepayments, social insurance
contributions, any other taxes assessed against the Company or reported by the
Company in estimated tax returns have, to the extent due for payment, been paid
on the applicable payment due date. The term “taxes”
in this Agreement shall include taxes including interest, costs and any
ancillary charges (Nebenabgaben)
within the meaning of § 3 of the German Fiscal Code (Abgabenordnung).

4.9                                Conduct of business operations since 1
January 2007

In the time period from 1 January 2007 until the
signing date of this Agreement, the Company has (with the exception of those
measures described in Preamble (D)) made no transactions or taken any other
actions outside the ordinary course of business, and, except as disclosed in Schedule 4.9, none of the
following actions or events have been taken or occurred:

(a)                                any actions subject to approval by the
shareholders’ meeting under applicable law or the Company’s articles of
incorporation and bylaws;

(b)                               any delivery of monetary or non-monetary
benefits to any shareholders, companies affiliated with any shareholder, or
persons associated with any shareholder;

(c)                                acquisition of any fixed assets with a value
in excess of €50,000 per transaction, unless provided for in the investment
plan delivered to Purchaser prior to the signing date of this Agreement;

(d)                               any amendments or modifications to material
agreements as defined in Section 4.7;

(e)                                any changes to the compensation or notice
period for termination of any employees, or promises of any other benefits
(including, without limitation, pension benefits), 

 14
 

with the exception of salary increases pursuant to Schedule 4.9(e); any actions representing operational
changes within the meaning of § 111 of the German Works Constitutional Act (BetrVG);

(f)                                  any damages to the Company’s assets in excess
of EUR 50,000 per individual case.

Section 5

Liability of Seller

5.1                                In the event of breach or non-performance of
any Warranties or of any other obligation of Seller under this Agreement
(hereinafter “Purchaser Claim”), Seller shall
place Purchaser in the position in which Purchaser would have been, had the
warranty in question or other obligation of Seller not been breached (specific
performance). Seller may at any time pay monetary damages in lieu of rendering
specific performance, in accordance with the following terms and conditions. If
and to the extent that specific performance has not been initiated within
thirty (30) calendar days from notice of a Purchaser Claim in accordance with
Section 5.2 or if specific performance is objectively impossible from the
outset, Purchaser may demand monetary damages in lieu of specific performance,
in accordance with the following terms and conditions:

(a)                                   Any liability of Seller under this Agreement
shall be limited to Purchaser’s actual direct damages, with recovery of
consequential damages of any kind (including increased refinancing costs),
compensation for depreciation of the sold Shares or for reduced net worth of
the Company, and recovery of any lost profits or internal costs and expenses of
Purchaser being excluded in all cases.

(b)                                  Seller shall have no liability under Section
5.1, if

(i)                                   the damages resulting from a breach of
warranty have been taken into account by specific valuation allowances or
accruals in the Pro Forma Balance Sheet (the Parties, however, agree that this
provision shall not apply to the case mentioned in Schedule
4.4);

(ii)                                the damages claimed have been recovered, or
in the exercise of reasonable care and diligence could have been recovered,
from third parties; or

(iii)                             circumstances resulting in a Purchaser Claim
were known to Purchaser on the signing date of this Agreement. Purchaser shall
be deemed to have knowledge of all facts disclosed in this Agreement (including
the Schedules thereto) or in the following documentation:

 15
 

(x)                                            Seller’s “Information Memorandum” of
September 2006;

(y)                                          the documents made available in the data room
for purposes of the due diligence review which have been recorded on the CD-ROM
that has been handed over to the Notary pursuant to Section 10.6 (the “Due Diligence CD-ROM”); and

(z)                                            the responses to the requests for information
submitted by Purchaser or its advisors; or

(iv)                            Purchaser has failed to follow the procedures
defined in Sections 5.2 and 5.4 above, causing financial losses to Seller.

(c)                                   Purchaser shall have no Purchaser Claim
unless each claim individually exceeds the amount of €10,000 and all claims
collectively exceed a total amount of € 150,000. If a Purchaser Claim or
Claims exceed the aforementioned amounts, Purchaser’s recovery shall be limited
to the excess amount. This limitation shall not apply to Purchaser Claims
based  on a breach or non-performance of
the Warranty pursuant to Section 4.2 (b).

The liability of Seller for any breach of warranty —
with the exception of the Warranties made in Section 4.1 and Section
4.2 (b) — shall be limited to a total amount of 50% of the Purchase Price.

The total liability of Seller under this Agreement
shall however be limited to the Purchase Price.

The limitations of liabilities provided for in this
Subsection (c) shall however not apply to any claims alleging fraudulent or
intentional misconduct by Seller.

(d)                                      The limitation period for any and all
Purchaser Claims shall be two (2) years from the Closing Date, provided however
that the limitation period for any Purchaser Claims alleging a failure of
Seller to transfer the sold Shares free and clear of third-party liens
(liability for defects in title) shall be five (5) years from the Closing Date.
The limitation period for any Purchaser Claims alleging fraudulent or
intentional misconduct by Seller shall be governed by applicable law. The
limitation periods set out in Section 8.3 shall remain unaffected by this
Subsection (d).

5.2                                In the event of breach or non-performance of
any Warranties or other obligation of Seller under this Agreement, Purchaser
shall provide Seller with written notice of a Purchaser 

 16
 

Claim within twenty (20)
business days from discovery of the circumstances by Purchaser reasonably indicating
accrual of a Purchaser Claim. The notice shall specify the type of and grounds
for the Purchaser Claim, as well as the amount of the Purchaser Claim to the
extent the determinable at such time. Without prejudice to the validity of the
Purchaser Claim, Purchaser shall permit Seller and its advisors to investigate
the circumstances surrounding the alleged Purchaser Claim, in particular the
grounds for and amount of such claim. Purchaser shall provide Seller and its
advisors with information and permit Seller and its advisors to inspect
Purchaser’s files and records to a reasonable extent. This right shall include
the right, to the extent permitted by law, to gain access to the business
premises of Purchaser and the Company, the right to question employees of
Purchaser of the Company, and the right to inspect, copy or photograph all
documents and records which are in the opinion of the Seller necessary to
clarify the facts, provided however that Seller shall reimburse Purchaser for
all reasonable, appropriately documented costs and expenses incurred in
connection therewith. Purchaser warrants compliance with the provisions of this
Section 5.2 by the Company. The rights of Seller provided for in this Section
5.2 shall continue in effect even if a legal action is pending between the
Parties.

5.3                                If Purchaser gives notice to Seller pursuant
to Section 5.2 that in its opinion the warranty under
Section 4.2 (a) or (c) is not correct, the following shall apply:

(a)                                  Purchaser shall instruct Bayerische
Treuhandgesellschaft Aktiengesellschaft Wirtschaftsprüfungsgesellschaft
Steuerbe­ratungsgesellschaft (the “Auditors”) to
review the Pro Forma Balance Sheet (the “Review”) and to
summarize the results in an audit opinion within the meaning of § 322 of
the German Commercial Code (HGB —
hereinafter the “Commercial Code”) or, if the
Auditors refuse to issue an audit opinion within the meaning of § 322 of
the Commercial Code (for any legal reasons), summarize the audit results in an
audit opinion which is, in substance, identical to an audit opinion within the
meaning of § 322 of the Commercial Code.

(b)                                 If in the view of one Party the result of the
Review has not been prepared in accordance with the principles referenced in
Section 4.2 lit. (a) or (b) above, it may provide the other Party
with written notice thereof within one (1) month from receipt of the result of
the Review, specifying the relevant balance sheet items as well as the grounds
for the objection of either Party. If the Parties are unable to settle their dispute
regarding the result of the Review within one (1) month from receipt of such
notice, the matter shall finally be settled by an independent accountant as an
arbitrator upon application by either party. If the Parties are unable to agree
upon an accountant within the aforesaid one month period, an accountant shall
be appointed by the Institut der Wirtschaftsprüfer e.V. (Institute of
German Accountants) in Düsseldorf, upon application by either Party.
The decision of the arbitrator shall be binding for both Parties in accordance
with § 319 (1) of the Civil Code. The costs of

 17
 

the arbitrator shall be
borne by the Parties in proportion to the extent to which each Party prevails
or loses.

(c)                                  Purchaser shall ensure that Seller, Seller’s
representatives, and the arbitrator shall receive access to all documentation
and information relevant to the review (including the work products of the
Auditors), as well as an opportunity to speak with the management and all
relevant employees of the Company.

5.4                                In the event that any third parties
(including any government agencies or tax authorities) raise any claims,
objections of defenses against Purchaser, the Company or S-D Kaiserslautern, or
any legal actions or other legal measures are instituted or threatened against
Purchaser, the Company or S-D Kaiserslautern, or any administrative
investigations, audits or administrative acts that may result in a Purchaser
Claim (hereinafter “Third-Party Claim”)
being instituted, decreed or threatened, the following provisions shall apply:

(a)                                   Purchaser shall provide Seller with notice of
any Third-Party Claim in accordance with Section 5.2. Purchaser shall ensure
that, to the extent permitted by law, all documentation and information
relevant to a review of the Third-Party Claim (including copies of all
correspondence, as well as all notices from courts or regulatory authorities)
shall, to the extent available to Purchaser, be made available to Seller and
its advisors at Seller’s cost, and that Seller and its advisors shall be
afforded an opportunity to coordinate the defense of the Third-Party Claim with
Purchaser and the Company. Seller shall, in particular, be afforded an
opportunity to state its position with respect to and participate in any tax
audits and to review the results of any tax audits, to the extent permitted by
law and not unduly burdensome.

(b)                                  Under no circumstances shall Purchaser, the
Company or S-D Kaiserslautern have any right to accept full or partial
liability for, settle, or otherwise dispose of any Third-Party Claim without
the prior written consent of Seller. Seller shall have the right to take any
actions in or out of court at its own cost which, in the view of Seller, are
necessary for raising defenses against any Third-Party Claim, for raising
objections against any Third-Party Claim or for otherwise defending against
such claim, or for accepting liability for such claim (including the right to
bring counterclaims or other claims against third parties in Seller’s own name
and at Seller’s own risk). Seller will inform Purchaser thereof without undue
delay.

(c)                                   Purchaser shall provide Seller and its
advisors with reasonable information in connection with the aforementioned
actions, support Seller at Seller’s cost in the exercise of Seller’s rights
under this Subsection 3, in particular in connection with taking legal recourse
against any Third-Party Claim.

 18

 

(d)                                  The provisions of Section 5.2 hereof
regarding the cooperation obligations of Purchaser shall apply without
limitation.

(e)                                   Purchaser warrants that the Company and S-D
Kaiserslautern shall comply with the obligations arising from this Section 5.4.

5.5                                The remedies available to Purchaser for any
breach of the Warranties made in Section 4 shall be governed exclusively by
this Section 5. Except for the (primary) claims for performance with respect to
the delivery of the Shares created by this Agreement and claims for breach of
any of the obligations expressly defined in this Agreement, neither Party shall
— on any legal grounds whatsoever — have any other claims arising from or in
connection with this Agreement and/or the Company. In particular, Purchaser shall
have no statutory warranty claims, and neither Party shall have any claims for
breach of pre-contractual obligations (§ 311 (2) of the Civil Code),
claims for breach of any other contractual subsidiary obligations, or any
claims for frustration of contract (§ 313 of the Civil Code). In particular,
Seller shall not be liable for the Company’s future business development,
financial condition or future performance or any details or information which
have been given orally vis-à-vis the Purchaser or were contained in documents —
unless explicitly provided otherwise under this Agreement. Under no
circumstances shall the Parties have a right to rescind this Agreement or to
otherwise unwind this Agreement — this shall not apply for Seller’s right to
withdraw from this Agreement in case Purchaser fails to pay the Purchase Price
for more then five (5) bank business days. Any claims by one Party alleging
intentional misconduct by the other Party shall remain unaffected thereby.

5.6                                The Parties agree that a breach of more than
one Warranty made in Section 4 through the same circumstances shall only be
taken into account or entitle the Purchaser to claim the damages once.

5.7                                Any payment of damages by Seller in
accordance with this Section 5 shall, in relation to Purchaser, qualify as a
reduction of the Purchase Price.

Section 6

Obligations in the Time Period from 

the Signing Date until the Closing Date

6.1                                Seller shall ensure, to the extent permitted
by law, that in the time period from the signing date until the Closing Date of
this Agreement, the Company shall continue to operate its businesses in the
ordinary course of business, and in the same manner and to the same extent as
in the past. Any measures as described in Preamble (D) shall remain unaffected
thereby.

 19
 

6.2                                Seller shall ensure that in the time period
from the signing date until the Closing Date of this Agreement, Purchaser and
its advisors shall upon demand be permitted to inspect any documents and
records of the Company, gain access to any business premises of the Company,
contact any managing directors and employees of the Company, and collect
information about any matters related to the Company during regular business
hours, to the extent necessary in connection with the performance of this
Agreement.

Section 7

Other Rights and Obligations

7.1                                The Parties agree that all those agreements
listed in Schedule 7.1 which have
not been (fully) accomplished or which provide for ongoing obligations between
Seller and/or its affiliates on the one hand and the Company on the other hand
shall be terminated effective no later than the Closing Date. The Parties agree
insofar that, effective as of the Closing Date, all claims or liabilities of
the Seller and its affiliates on the one hand and the Company on the other hand
resulting from such agreements shall lapse or be discharged as of the Closing
Date, and that the Parties shall mutually release one another from all such
claims and liabilities.

7.2                                Effective as of the Closing Date, Purchaser
shall assume all obligations of Seller (or any of its affiliated companies)
arising from or in connection with the guarantees and letters of credit
itemized in Schedule 7.2. Purchaser
shall make best efforts to discharge such guarantees and letters of credit as
soon as possible.

7.3                                In the event that Purchaser is unable to
discharge any guarantees or letters of credit in accordance with Section 7.2,
Purchaser shall indemnify and hold harmless Seller or, as relevant the
respective affiliated company, from and against any and all liability in
connection therewith. This indemnity obligation shall be secured up to an
amount of EUR 1,200,000 by an absolute guarantee from a German/European
major bank, savings bank (Sparkasse) or
cooperative bank (Volksbank), substantially in the
form attached as Schedule 7.3.
The guarantee shall be returned to the Purchaser once the letter of comfort itemized in Schedule 7.2 has been fully discharged with discharging effect for
Sauer-Danfoss Inc. The Parties
agree that the statute of limitation of the indemnity obligation shall not
commence before a claim has been raised against Seller or the respective group
company.

7.4                                Immediately
following the Closing Date, Purchaser shall procure that the term “Sauer-Danfoss”
and any other names, logos, descriptions, trade marks and references allowing
for a link to the Seller’s business operations, the products or its former
capacity as shareholder of the Company, used in the business domain or the
scope of responsibility of the Company 

 20
 

and/or S-D Kaiserslautern, will be removed and not be
used in the future any longer (and that such usage will neither be granted to
any third parties); such obligation includes the change of the corporate names
of the Company and S-D Kaiserslautern, which must have been submitted to the
competent register court within one (1) month after the Closing Date (Seller
must be provided with a corresponding verification). The foregoing obligation
shall not prevent Purchaser from using information and technical documents and
labelling material in stock for a
transition period of six (6) months after the Closing Date.

7.5                                The
Parties agree that any assets related to the AC Motor Business shall not remain
with the Company. To the extent, any doubts arise in future as to whether
certain assets, which have not been relocated as per Closing Date to
Sauer-Danfoss ApS in Odense, shall in fact remain with the Company or whether
these assets rather relate to the AC Motor Business, the Parties will make best
efforts to decide amicably whether the respective asset relates to the AC Motor
Business. In case of dispute, it shall in particular be taken into account
whether the respective asset according to its nature and quality, and mainly
with respect to its commercial and functional purpose serves the AC Motor
Business. Purchaser shall be responsible that the Company will make any
declarations necessary for the transfer of legal title of the respective assets
to a company nominated by Seller and take any other transfer actions. 

7.6
                             The Parties agree that any assets belonging to
the DC Motor Business shall be transferred to the Company. Should any doubts
arise in the future as to whether certain assets that have not been
transferred to the Company as per Closing Date shall in fact remain with
Sauer-Danfoss ApS in Odense or whether these assets rather belong to the DC
Motor Business, the Parties will make best efforts to decide amicably whether
the respective asset relates to the DC Motor Business. Particularly in case of
dispute, the determinative aspect shall be whether the nature and quality of
the respective asset, and in particular its commercial and functional purpose,
are intended to serve the DC Motor Business. Seller guarantees that
Sauer-Danfoss ApS in Odense will make any declarations necessary for the transfer
of legal title of the respective assets to the Company and take any other
transfer actions.

7.7                                Sauer-Danfoss ApS and the Company will enter
into separate agreements regarding the transfer of the AC Motor Business and
the consolidation of the DC Motor Business, including the transfer of customer
relations as well as the performance of services and repairs with regard to the
products delivered by the respective other party to clients prior to the
Cut-Off Date, substantially in the form attached as Schedule 7.7,
but subject to the final agreement of the Seller and the Purchaser. The Parties
will jointly endeavour to have these agreements signed by March 28, 2007 at the
latest.  

7.8                                The Parties agree that based upon the
outsourcing of the AC Motor Business to Odense and the consolidation of the DC
Motor Business at the Company, a trusting collaboration 

 21
 

between Sauer-Danfoss ApS and the Company is necessary
in order to successfully accomplish the restructuring of both companies. In
this context, Seller agrees to take reasonable efforts to ensure that
Sauer-Danfoss ApS will provide the Company — to a reasonable extent and at cost
- with all information and support necessary for continuation of the DC Motor
Business for a time period of twelve (12) months following the Closing Date. In
return, Purchaser agrees to take reasonable efforts to ensure that the Company
will provide Sauer-Danfoss ApS — to a reasonable extent and at cost - with the
necessary information and support for the continuation of the AC Motor Business
for a time period of twelve (12) months following the Closing Date.

7.9                                In the event any expenses are incurred by the
Company after the Closing Date that are directly connected to the transportation,
setup, installation, modification, and dismantling of equipment and systems as
well as buildings and building sections affected by the outsourcing of the AC Motor Business and the takeover
of the DC Motor Business previously operated in Odense, Seller shall reimburse
to the Company for any corresponding proven external costs. This, however,
shall not apply to any expenses of the Company required after the Closing Date
for adjustments of such machines and facilities to German safety provisions;
these costs shall be borne by the Company or, as the case may be, the
Purchaser, and the Purchaser shall indemnify the Seller in this respect.

The Seller will provide to the Company for a period of
three (3) months after the Closing Date Internet access as well as e-mail
services (including all services connected thereto such as server, firewall,
etc.) at no charge, provided, however, that the Seller shall not be liable for
misperformance unless it acted intentionally or gross negligently. Furthermore,
the Seller shall be obliged for a period of further six (6) months after the
aforementioned three-month period to forward to the Company the e-mails
addressed to employees of the Company.

7.10                          Seller agrees to refrain for a period of three
(3) years from the Closing Date from enticing directly or indirectly current
employees of the Company, and affirms that no service or employment agreements
have been offered to the employees of the Company thus far, nor have such
agreements been signed with the employees of the Company unless otherwise
explicitly permitted under the terms of this Agreement. In this context, Seller will similarly guarantee that
companies affiliated with Seller within the meaning of §§15 et seq. of the Stock Corporation Act will
meet the aforementioned obligation. Excluded from the above obligations is the
hiring of employees applying with reference to a general job advertisement (as
opposed to an advertisement in a regional newspaper).

In
case of a breach of the aforementioned obligations Purchaser shall be obligated
to pay a lump sum in the amount of EUR 50,000 for each work or employment
agreement concluded with an employee within the aforementioned meaning.

 22
 

7.11                         Purchaser
agrees to refrain for a period of three (3) years from the Closing Date from
enticing directly or indirectly current employees of Seller, and affirms that
no service or employment agreements have been offered to the employees of
Seller or Sauer-Danfoss ApS in Odense thus far, nor have such agreements been
signed with the employees of Seller or Sauer-Danfoss ApS in Odense unless otherwise
explicitly permitted under the terms of this Agreement. In this context,
Purchaser will similarly guarantee that companies affiliated with Purchaser
within the meaning of §§15 et seq.
of the Stock Corporation Act will meet the aforementioned obligations. Excluded from the above obligations is the
hiring of employees applying with reference to a general job advertisement (as
opposed to an advertisement in a regional newspaper).

In case of a breach of the aforementioned obligations
Purchaser shall be obligated to pay a lump sum in the amount of EUR 50,000
for each work or employment agreement concluded with an employee within the
aforementioned meaning.

7.12                          Purchaser is aware that the Company’s insurance
coverage is currently covered by frame agreements and group policies of the
Seller group. The Company’s insurance coverage will be terminated as of the
Closing Date and the Purchaser will have to make sure that the Company obtains
insurance policies after such date.

7.13                          Purchaser declares that it intends to enter
into negotiations on the extension of the current preservation of the location
with the works council of the Company.

 23

Section 8

Taxes

8.1                                Seller shall indemnify Purchaser for any
liabilities incurred by the Company as a result of any tax audits with respect
to any taxes (as defined in Section 4.8), social security contributions, or
other charges or dues (in each case including interest, penalties, late charges
and other internal costs) for assessment periods ending prior to or on the
Cut-Off Date, less the cash value (discounted at the rate of 3%) of any tax
benefits received by Purchaser in connection therewith within the five (5)
fiscal years following the Cut-Off Date. The indemnity obligation shall
only apply if the liabilities are determined through a formally unchallengeable
order which is neither of preliminary nature nor subject to review by the respective
tax authority. Further, the indemnity obligation shall only apply to the extent
the liabilities have not been indicated as liabilities or accruals in the Pro Forma Balance Sheet. The indemnity
obligation shall not apply to the extent the liabilities derive from voluntary
measures of the Purchaser (such as the modification of annual statements or tax
declarations of the Company, unless such modifications are required by
mandatory law) which have been effected after the Closing Date.

8.2                                Purchaser shall pay to Seller (also by way of
offset) any refunds for taxes, social security contributions or other charges
or dues related to the Company and assessment periods ending prior to or on the
Cut-Off Date. The payment obligation shall apply only insofar as the
underlying tax, contribution or charges receivable have not been set forth in
the Pro Forma Balance Sheet. Purchaser shall provide Seller with prompt
notice of any such refunds. Further, the Purchaser shall indemnify the
Seller from any taxes and all direct any indirect detriments if and to the
extent they derive from voluntary measures taken by the Purchaser.

8.3                                The limitation period for any claims of
Purchaser under Section 8.1 shall be six (6) months from issuance of a final
and enforceable tax assessment notice (following a tax audit). The limitation
period for any claims of Seller under Section 8.2 shall be six (6) months from
receipt of a tax refund notice by Seller in accordance with Section 8.2, or,
in case of a tax burden or any detriment within the meaning of Section 8.2
sentence 4, within six (6) months after such tax burden or detriment has
demonstrably become known to the Seller.

8.4                                The
Purchaser shall inform the Seller immediately and fully on any commencement of
an audit or any other proceedings, if and to the extent the legal position of
the Seller could be affected thereby. Purchaser
shall afford Seller or its authorized representatives an opportunity to
participate in any external tax audits related to time periods ending before or on the Cut-Off Date. The
provisions of Section 5.4 of this Agreement shall apply mutatis mutandis (irrespective of whether a Third-Party
Claim in the technical meaning of Section 5.4 has been asserted).

 24
 

8.5                                Tax
declarations which must be filed by the Purchaser or the Company with respect
to a period ending prior to or on the Cut-Off Date shall be subject to review
and prior written consent by the Seller. The Purchaser shall ensure that the
Seller without, any delay, obtains a copy of all tax assessments which are
issued after the Closing Date and relate to periods which end prior to or on
the Cut-Off Date.

8.6                                Legal
remedies (including court proceedings) relating to periods ending prior to or
on the Cut-Off Date, shall be pursued jointly by the Purchaser and the Seller.
The Purchaser shall not terminate such remedies by settlement without the prior
written consent of the Seller.

Section 9

Confidentiality, Publications and Notices

9.1                                The Parties agree to keep the terms and
conditions of this Agreement confidential. The Parties shall coordinate all
public announcements required to be made after the signing of this Agreement in
compliance with national or international, statutory or regulatory reporting
obligations, unless prohibited by law or impracticable.

9.2                                Purchaser shall have the right to announce
its acquisition of the Company immediately after the signing of this Agreement
by issuing a press release in coordination with Seller.

9.3                                Purchaser shall be responsible that Seller
and its personnel and/or advisors will be granted access to any information and
documents of the Company after the Closing Date to the extent necessary to
allow Seller to pursue its legitimate interests associated with this Agreement
or with any activities related to the time period prior to the Closing Date.
The foregoing shall also apply to information required by Seller from the
business operations of the Company in connection with the measures described in
Preamble (D) after the Closing Date.

9.4                                All notices from Seller to Purchaser shall be
effected by telefax, registered mail or courier and shall be addressed to the
following recipients:

Aurelius
Industriekapital GmbH

Attn.:
Management Board

Bavariaring
11

80336
München

Federal
Republic of Germany

Fax: +49 89 54 47 99 55

 25
 

9.5                                All notices from Purchaser to Seller shall be
effected by telefax, registered mail or courier and shall be addressed to the
following recipients:

SAUER-DANFOSS
Holding ApS

Attn.: John Langrick,
Director

c/o Sauer-Danfoss GmbH
& Co. oHG

Postfach 2460

D-24531 Neumünster

Fax: +49 432 187 11 21

with a copy to:

Sauer-Danfoss
Inc.

Attn:
Mr Andrew Ballantine

Corporate
Counsel

250
Parkway Drive, Suite 270

Lincolnshire,
Illinois 60069 USA

Fax: +1 (847) 876-1762

Section 10

Final Provisions

10.1                          Interest shall be computed based upon the
actual number of days elapsed and an interest year of 365 days.

10.2                          Neither Party shall have the right to assign
any rights or obligations arising from this Agreement to third parties except
with the consent of the other Party.

10.3                          All transfer taxes (within the meaning of the
German Fiscal Code), fees (including notary’s fees), stamp taxes, registration
fees or other fees incurred in connection with the execution and performance of
this Agreement (including fees for any regulatory permits or approvals) shall be
paid by Purchaser. Each Party shall pay the costs of its own advisors.

10.4                          This Agreement reflects the entire agreement
made by the Parties with respect to the subject matter hereof; no further
obligations of Seller with respect to the Company and its business shall derive
from any side agreements or written or oral disclosure or information made or
given in the course of the transaction procedure. Any modifications or
amendments to this Agreement, including any modification of this provision,
shall be in written form or in compliance with any applicable, more stringent
form requirements.

 26
 

10.5                          With effect as from the Closing Date,
Purchaser shall be responsible vis-à-vis Seller that the Company, its
affiliates, directors, employees and other personnel assert no claims vis-à-vis
the Seller or its affiliates or vis-à-vis third parties with effect to the
Seller or its affiliates and shall indemnify (irrespective of any requirement
of fault) the Seller or its affiliates from any liabilities, costs and damages
resulting from the assertion of the aforementioned claims. This Section 10.5
shall not apply to claims arising from agreements set out in Schedule 10.5.

10.6                          The Parties hereby
mandate the acting Notary to seal the Due Diligence CD-ROM for a period of thirty
(30) months commencing on the date of signing of this Agreement (the “Sealing Period”). During the Sealing
Period, each Party may, in the presence of the other Party, have the Due
Diligence CD-ROM unsealed, review the information contained therein and have it
subsequently re-sealed by the notary. After the expiry of the Sealing Period
the Notary shall — after corresponding notification vis-à-vis the Parties —
duly destroy the Due Diligence CD-ROM, if neither Party has brought a claim
based on information contained in the Due Diligence CD-ROM. The obligation to
bear the cost provided for in Section 10.3 sentence 1 shall apply.

10.7                          Seller has prepared an English translation of
this Agreement. The German version shall however be controlling for purposes of
the interpretation of this Agreement.

10.8                          This Agreement shall be governed by and
construed in accordance with German law, with the exception and under exclusion
of the provisions of the UN Convention on Contracts for the International Sale
of Goods (CISG). Any disputes arising from or in connection with this Agreement
shall be determined exclusively by a court of competent jurisdiction in
Frankfurt am Main, Germany.

10.9                          If any provision of this Agreement shall be
held invalid or unenforceable in whole or in part, such invalidity or
unenforceability shall not affect the remaining provisions of this Agreement.
In such event, any invalid provision shall be deemed to be replaced by such
valid provision as most closely reflects the commercial intent and purpose of
the original provision, in particular if the length of a time period is
involved, in which case the invalid time period shall be replaced by the
longest time period permitted by law. The foregoing shall apply analogously to
any omissions under this Agreement.

 27
 

IN
WITNESS THEREOF, the present document was, with the exception
of the English translation in annex 7.7 and the annexes 4, 4.3 (a), 4.6 (a),
4.6 (b), 4.6 (c), 4.6 (e), 4.7 and 7.1, read aloud in my presence in its
entirety to the parties appearing, acknowledged as correct and approved by them
as well as personally signed by the parties appearing and by myself, the
notary, together with the affixation of my seal. The annexes 4, 4.3 (a), 4.6
(a), 4.6 (b), 4.6 (c), 4.6 (e), 4.7 and 7.1 were presented to the parties
involved for their attention and each page of such annexes was signed by them.
The parties appearing have renounced the reading aloud of such annexes.

DONE AT
BASEL, 21 (twenty-first day of ) March 2007 (two thousand and
seven)

 

 

[Seal of
the notary: NOTARIUS BASILIENSIS PATRICK WAMISTER I.U.D.]

 

 

[Signatures
of Ms. Anne[Isabell] Krämer, Mr. Mario Herrmann and Dr. Patrick Wamister,
notary]

[Stamp of
Dr. Patrick Wamister, notary]

 

General Protocol
2007/No. 27 [27 written by hand]

[21 March
2007] [written by hand]

 

 28

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