Document:

Exhibit 10.1

 

Sauer-Danfoss Inc. 2006 Omnibus Incentive Plan

2008 Performance Unit Award Agreement

 

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

 

Participant:
Dave Anderson

 

Date of
Award: March 12, 2008

 

Target
Number of Performance Units Awarded: 31,421

 

Performance
Period: 1 January 2008 to 31 December 2010

 

Performance
Measure: Simple Average Annual Return on Net Assets and Sales
Growth 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. For purposes of this Award Agreement, the term Sauer-Danfoss Group
shall mean the Company, its Subsidiaries and any Affiliate designated as such
by the Committee pursuant to Section 2.1 of the Plan. 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 Sauer-Danfoss Group from the Date of Award through the end of
the Performance Period, as specified above. Notwithstanding the preceding
sentence and subject to Section 6, the Participant will not vest in the
Performance Units covered by this Award Agreement until the date of payment as
provided in Section 6. However, neither such condition regarding further
employment nor the award of the Performance Units shall impose upon the
Sauer-Danfoss Group any obligation to retain the Participant in its employ for
any given period or upon any specific terms of employment.

 

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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 Measures. The Performance Measures
under this Award Agreement shall be the Simple Average Annual Return on Net
Assets and the Simple Average Annual Sales Growth as further defined in Exhibit A.

 

4.
Performance Goals. Achievement of a Simple Average Annual RoNA over the
Performance Period equal to the pre-determined performance goal target will
entitle the Participant to payment of 90% 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 or
greater than the pre-determined performance goal maximum shall entitle the
Participant to payment of 130% of the Target Number of Performance Units
Awarded. Achievement of a Simple Average Annual RoNA equal to the
pre-determined performance goal threshold shall entitle the Participant to
payment of 46% of the Target Number of Performance Units Awarded. Achievement
of a Simple Average Annual RoNA between the pre-determined performance goal
threshold and the pre-determined performance goal maximum 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 as Exhibit B.
Achievement of a Simple Average Annual RoNA of less than the performance goal
threshold shall result in no payment of Performance Units to the Participant
under this Award Agreement.

 

The earned performance units
computed pursuant to the preceding paragraph may be increased, depending upon
the achieved, Average Annual Sales Growth. The increase shall be in the form of
a percentage add-on, according to the table reflected on Exhibit B.

 

5.
Certification Of Achieved Performance and Approval of Payouts. Actual
achieved performance with respect to the Performance Measures shall be derived
from the consolidated financial statements of the Company for the Performance
Period as defined above and on Exhibit A. The ultimate determination of
payout under this Agreement is subject to:

 

i)                 completion of the financial
audits for each fiscal year during the Performance Period;

 

ii)              certification and approval
of the performance results by the Committee; and

 

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

 

6. 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

 

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Performance Period. Subject
to the Plan, the Committee has authorized that the future payment of any earned
Performance Units under this Award Agreement shall be made 100% in Shares. The
Sauer-Danfoss Group shall withhold from any such payout Shares having a value
equivalent to the amount needed to satisfy the minimum statutory tax
withholding requirements of the Sauer-Danfoss Group in the appropriate taxing
jurisdiction.

 

7. Voting Rights and Dividends. During the Performance
Period and until the date of payment of Performance Units as provided for in Section 6,
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 6 and as approved by
the Committee or the Board, the Participant shall receive all dividends,
dividend equivalents and other distributions paid with respect to a number of
shares of common stock of the Company equal to the Target Number of Performance
Units Awarded under this Award Agreement. 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.

 

Notwithstanding the previous
paragraph, if the Participant is no longer employed by the Sauer-Danfoss Group
but retains a right to a pro-rated payment under the provisions of Section 8
of this Award Agreement, the right to receive dividends, dividend equivalents
and other distributions as provided in the previous paragraph will cease.

 

8. Termination of Employment Due to Death, Disability, or Retirement. In the event
the employment of a Participant with the Sauer-Danfoss Group is terminated by
reason of death, Disability, or Retirement 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 4.

 

The prorated payment of
Performance Units pursuant to this Section 8 shall be made at the same
time as payments are made to Participants who did not terminate employment
during the Performance Period as set forth in Section 6.

 

For purposes of this Section 8,
to the extent permitted by Code Section 409A, Disability shall have the meaning
ascribed to such term in the Participant’s governing long-term disability plan,
or if  not so permitted, then the definition ascribed to such term in Code Section 409A.
For purposes of  this Section 8, Retirement means a
termination from employment with the Sauer-Danfoss Group on  the normal
retirement date on which a Participant qualifies for full (i.e., unreduced for
early retirement or other actuarial reductions) retirement benefits under the
Participant’s governing defined benefit retirement plan, as identified by the
Committee.

 

9. Termination of Employment for Other Reasons. In the event
that the Participant, prior to the payout date set forth in Section 6,
terminates employment with the Sauer-Danfoss Group for any reason other than
those reasons set forth in Section 8 or 10, or in the event that the Sauer-

 

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Danfoss Group terminates the
employment of the Participant with cause prior to the payout date set forth in Section 6,
all Performance Units awarded to the Participant under this Award Agreement
shall be forfeited by the Participant; provided, however, that the Committee,
in its sole discretion, may waive such automatic forfeiture provision and pay
out on a pro rata basis in accordance with Section 8. When the Committee
exercises its sole discretion regarding forfeiture, it may take into
consideration any individual facts and circumstances that it deems relevant for
purposes of achieving the desired objectives under the Plan. Any determination regarding
forfeiture under this Section 9 for a given Participant shall not dictate
any required result for a different Participant in a similar or different
situation.

 

10. Change in Control Event or Certain Termination Events. If a Change
in Control (as defined in the Plan), a termination by the Company without Cause
(as defined in the Participant’s Executive Employment Agreement) or a termination
by the Participant for Good Reason (as defined in the Participant’s Executive
Employment Agreement) occurs during the Performance Period, the Target Number
of Performance Units Awarded shall become payable in full and such payment
shall be made within seventy-five (75) calendar days following the date of the
Change in Control, termination without Cause or termination for Good Reason, as
the case may be. The Committee, in its sole discretion, may make such payment
of the Target Number of Performance Units Awarded 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 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, termination without
Cause or termination for Good Reason, as the case may be, multiplied by the
number of Performance Units designated by the Committee to be paid in cash.

 

11. 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.

 

12. 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 4.4 of the Plan.

 

13. Tax Withholding. The Sauer-Danfoss Group shall have the
power and the right to deduct or withhold, or require the Participant or
beneficiary to remit to the Sauer-Danfoss Group, 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. For Awards payable in Shares, the Sauer-Danfoss Group’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 Sauer-Danfoss Group in the appropriate taxing jurisdiction.

 

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14. 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 Sauer-Danfoss Group
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.

 

15. 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 Sauer-Danfoss
Group, and for a period of eighteen (18) months following the termination of
Participant’s employment with the Sauer-Danfoss Group 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 Sauer-Danfoss Group; provided,
however, that the Participant shall not be deemed to have breached this
undertaking if his or her sole relation with such entity consists of his or her
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 Sauer-Danfoss Group”
shall mean any product or product line of the Sauer-Danfoss Group, 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 Sauer-Danfoss Group
are of a special, unique, unusual, extraordinary, and intellectual character; (b) the
business of the Sauer-Danfoss Group is worldwide in scope and its products are
marketed throughout the world; (c) the Sauer-Danfoss Group competes with
other businesses that are or could be located in any part of the world; and (d) the
provisions of this Section 15 are reasonable and necessary to protect the
Sauer-Danfoss Group’s business.

 

If any covenant in this Section 15
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 15 will be extended by the
duration of any violation by the Participant of such covenant.

 

The Participant will, while
the covenants under this Section 15 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

 

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this Award Agreement and, at
the Company’s election, may furnish such employer with a copy of this Award
Agreement or relevant portions thereof.

 

Any nonenforcement of this Section 15
will not be construed to be a waiver by the Company to enforce such provision
in the future. If the Participant has received a payment under this Award
Agreement, the Company retains the right to demand verification of employment
and compliance with this Section 15 at any time prior to the date that is
eighteen (18) months after the end of the Performance Period. The Company or
any member of the Sauer-Danfoss Group may seek restitution and repayment of the
total payments made to the Participant under this Award Agreement if the
Company determines that the Participant has violated this Section 15
during the eighteen (18) month period following the end of the Performance
Period.

 

16. 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 Sauer-Danfoss Group or any of its
trade secrets of which the Participant has gained knowledge during his or her
employment with the Sauer-Danfoss Group. Any trade secrets of the Sauer-Danfoss
Group 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 Sauer-Danfoss Group (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 or any member of the
Sauer-Danfoss Group and the Participant, all of the Proprietary Items, whether
or not developed by the Participant, are the exclusive property of the Company
or the member of the Sauer-Danfoss Group, as the case may be. Upon termination
of this Award Agreement by either party, or upon the request of the Company or
any member of the Sauer-Danfoss Group during the employment period, the
Participant will return to the Company or the Sauer-Danfoss Group member 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 Sauer-Danfoss Group, including,
without limitation, product specifications, data, know-how, formulae,
compositions, processes, designs, sketches, photographs, graphs, drawings,
samples, inventions and ideas, past, current, and

 

6

 

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 Sauer-Danfoss Group 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.

 

Any nonenforcement of this Section 16
will not be construed to be a waiver by the Company to enforce such provision
in the future. If the Participant has received a payment under this Award Agreement,
the Company retains the right to demand verification of compliance with this Section 16
at any time prior to the date that is eighteen (18) months after the end of the
Performance Period. The Company or any member of the Sauer-Danfoss Group may
seek restitution and repayment of the total payments made to the Participant
under this Award Agreement if the Company determines that the Participant has
violated this Section 16 during the eighteen (18) month period following
the end of the Performance Period.

 

17. 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 Sauer-Danfoss Group 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 Sauer-Danfoss Group; 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
Sauer-Danfoss Group during the time of the Participant’s employment, whether or
not the Participant had personal contact with such person.

 

Any nonenforcement of this Section 17
will not be construed to be a waiver by the Company to enforce such provision
in the future. If the Participant has received a payment under this Award Agreement,
the Company retains the right to demand verification of compliance with this Section 17
at any time prior to the date that is eighteen (18) months after the end of the
Performance Period. The Company or any member of the Sauer-Danfoss Group may
seek restitution and repayment of the total payments made to the Participant
under this Award Agreement if the Company determines that the Participant has
violated this Section 17 during the eighteen (18) month period following
the end of the Performance Period.

 

7

 

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

 

The Participant acknowledges
that the injury that would be suffered by the Sauer-Danfoss Group as a result
of a breach of the provisions of this Award Agreement (including any provision
of Sections 15, 16, and 17) would be irreparable and that an award of monetary
damages to the Sauer-Danfoss Group for such a breach would be an inadequate
remedy. Consequently, the Company or any member of the Sauer-Danfoss Group 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 or
any member of the Sauer-Danfoss Group will not be obligated to post bond or
other security in seeking such relief. Without limiting the Sauer-Danfoss Group’s
rights under this Section 18 or any other remedies of the Sauer-Danfoss
Group, if the Participant breaches any of the provisions of Sections 15, 16, or
17, the Sauer-Danfoss Group 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 15, 16, and 17 are essential elements and preconditions
to 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 15),
with specific regard to the nature of the business conducted by the Sauer-Danfoss
Group. The Participant’s covenants in Sections 15, 16, and 17 are independent
covenants and the existence of any claim by the Participant against the Company
or any member of the Sauer-Danfoss Group under this Award Agreement or
otherwise, will not excuse the Participant’s breach of any covenant in Sections
15, 16, or 17.

 

If this Award Agreement or
the Participant’s employment with the Sauer-Danfoss Group 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 15, 16, 17, and 18.

 

19. 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 Vice President
— Human Resources 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):

  
	
   

  
	
   

  
	
   

  
	
   

  
	
   

  
	
   

  

 

8

 

20. 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.

 

21. 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 Sauer-Danfoss Group, nor shall this Award
Agreement interfere in any way with the Sauer-Danfoss Group’s right to
terminate the Participant’s employment at any time, subject to employment laws
in the appropriate jurisdiction.

 

22. 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 this Award
Agreement are only applicable to the Awards distributed pursuant to this Award
Agreement.

 

23. 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 Section 23.
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 and other members of the
Sauer-Danfoss Group will transfer Data amongst themselves as necessary for the
purpose of implementation, administration and management of the Plan. The
Company or another member of the Sauer-Danfoss Group may further transfer Data
to any third parties assisting 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, the
Participant may affect his or her ability to participate in the Plan.

 

9

 

24. 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.

 

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

 

26. Award Agreement. 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.

 

	
  /s/ Ronald C. Hanson

  	
   

  	
   

  	
   

  	
  /s/ David J. Anderson

  
	
  Ronald C. Hanson

  	
   

  	
   

  	
   

  	
  Participant

  

 

 

10

 

Exhibit A

 

SAUER-DANFOSS
INC.

2006
OMNIBUS INCENTIVE PLAN

 

2008
PERFORMANCE UNIT AWARD AGREEMENT

 

 

2008 Performance
Measure: Simple Average Annual Return on Net Assets (RoNA)

 

Annual Return on Net Assets
(“Annual RoNA”) is defined as earnings before taxes, net interest expense, and
minority interest per the audited consolidated financial statements of the
Company for the fiscal year divided by the 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 of the Company. 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.

 

2008
Performance Measure: Simple Average Sales Growth

 

Annual Sales Growth is
defined as the total consolidated sales for the current fiscal year (e.g. 2008)
divided by the total consolidated sales for the immediately prior fiscal year
(e.g. 2007). The Simple Average Sales Growth is defined as the sum of the three
Annual Sales Growth calculations for each of the three fiscal years comprising
the Performance Period, divided by three.

 

In the event that the total
consolidated sales decline from one year to the next, the Annual Sales Growth
for that fiscal year shall be a negative number, which shall work to reduce the
Simple Average Sales Growth computation.

 

11

 

Exhibit B

 

	
   

  	
  Examples:

  
	
   

  
	
   

  	
  Payout At 14% Rona & 8% Sales Growth = 90% x 1.13
  = 101.7%

  
	
   

  	
   

  
	
   

  	
  Payout At 14% Rona & 15% Sales Growth = 90% x
  1.20 = 108.0%

  
	
   

  	
   

  
	
   

  	
  Payout At 16% Rona & 8% Sales Growth = 130% x
  1.13 = 146.9%

  
	
   

  	
   

  
	
   

  	
  Payout At 16% Rona & 15% Sales Growth = 130% x
  1.20 = 156.0%

  
	
   

  	
   

  
	
   

  	
  Payout At 9% Rona & 15% Sales Growth = 0% x 1.20
  = 0%

  
			

 

1Exhibit 10.1

 

AMENDMENT TO DJO INCORPORATED

2007 INCENTIVE STOCK PLAN

 

Section 3(a) of the DJO Incorporated 2007 Stock Incentive
Plan (the “Plan”) is hereby amended to read as follows:

 

“(a)         Shares
Issuable. The maximum number of shares of Stock reserved and
available for distribution pursuant to Awards under the Plan shall be 7,500,000
shares. Such shares of Stock may consist, in whole or in part, of authorized
and unissued shares or treasury shares. If (i) an Award expires or
terminates for any reason without being exercised in full or is satisfied
without the distribution of Stock, or (ii) Stock distributed pursuant to
an Award is forfeited or reacquired by the Company, or is surrendered upon
exercise of an Award, the Stock subject to such Award or so forfeited,
reacquired or surrendered shall again be available for distribution pursuant to
the Plan.”

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