Exhibit 10.1

Sauer-Danfoss Inc. 2006 Omnibus Incentive Plan
2007 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:

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 or Article 12.3 of the Plan, which specifically prohibits the upward adjustment of any Awards intended to qualify as Performance-Based Compensation.

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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 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.

[ Alternative Language for Participants To Be Paid In Cash.  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 cash, less applicable tax withholdings.  For purposes of this cash payment, the value of an earned Performance Unit will be equal to the Fair Market Value, as defined in the Plan, of a share of common stock of the Company as of the close of the Performance Period. ]

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.

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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 in the event that the Sauer-Danfoss Group terminates the employment of the Participant with cause prior to the payout date set forth in Section 6 or without cause prior to the end of the Performance Period, 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 .  In the event of a Change in Control (as defined in the Plan) 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.  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 earned Performance Units designated by the Committee to be paid in Shares.  The amount of cash to be paid if any shall be equal to the Fair Market Value, as defined in the Plan, of a share of the common stock of the Company as of the date of the Change in Control multiplied by the number of Performance Units designated by the Committee to be paid in cash.

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

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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.

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