Exhibit 10.1(bx)
Sauer-Danfoss Inc. 1998 Long-Term
Incentive Plan
2005 Performance Unit Award Agreement
You have been selected to be a
Participant in the Sauer-Danfoss Inc. 1998 Long-Term Incentive Plan
(the “Plan”), as specified below:
Participant:
Date of Award:
February 22, 2005
Target Number of Performance
Units Awarded:
Performance Period:
1 January 2005 to
31 December 2007
Performance Measure:
Simple Average Annual Return on Net
Assets Pursuant to Sec. 3 below
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This document constitutes part of
the prospectus covering securities that have been registered under
the Securities Act of 1933.
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THIS AWARD AGREEMENT, effective as
of the Date of Award set forth above, represents the award of
Performance Units by Sauer-Danfoss Inc., a Delaware U.S.A.
corporation (the “Company”), to the Participant named
above, pursuant to the provisions of the Plan.
The Plan provides a complete
description of the terms and conditions governing Performance
Units. If there is any inconsistency between the terms of
this Award Agreement and the terms of the Plan, the Plan’s
terms shall completely supersede and replace the conflicting terms
of this Award Agreement. All capitalized terms shall have the
meanings ascribed to them in the Plan, unless specifically set
forth otherwise herein. In consideration of the mutual
promises contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are
acknowledged, the parties hereto agree as follows:
1.
Employment by the
Company . The
Performance Units granted hereunder are awarded on the condition
that the Participant remains employed by the Company from the Date
of Award through the end of the Performance Period, as specified
above. However, neither such condition nor the award of the
Performance Units shall impose upon the Company any obligation to
retain the Participant in its employ for any given period or upon
any specific terms of employment.
2.
Earning Performance
Units . Subject to
the terms of the Plan and this Award Agreement, the Participant
shall be entitled to receive payment of the number and value of
Performance Units earned by the Participant over the Performance
Period, where the number of Performance Units is determined as a
function of the extent to which the corresponding performance goals
have been achieved.
3.
Performance Measure
. The Performance Measure
under this Award Agreement shall be the Simple Average Annual
Return on Net Assets as derived from the consolidated financial
statements of the Company for the Performance Period as defined
above. Annual Return on Net Assets (“Annual
RoNA”) is defined as earnings before taxes, interest expense,
and minority interest per the audited consolidated financial
statements for the fiscal year divided by the average Net Assets
for the four quarters in the fiscal year (i.e. the sum of Net
Assets at the beginning of the year plus Net Assets at the end of
each of the next four quarters divided by five). Net Assets
are defined as the sum of total equity including minority
interests, and all interest bearing indebtedness shown in the
consolidated balance sheet. The Simple Average Annual RoNA is
defined as the sum of the three Annual RoNA calculations for each
of the three fiscal years comprising the Performance Period divided
by three.
Achievement of a Simple Average
Annual RoNA over the Performance Period equal to15% will entitle
the Participant to payment of the Target Number of Performance
Units Awarded as set forth above, subject to other provisions of
the Plan and this Award Agreement. Achievement of a Simple
Average Annual RoNA equal to 17% shall entitle the Participant to
payment of 200% of the Target Number of Performance Units
Awarded. Achievement of a Simple Average Annual RoNA of 11.0%
shall entitle the Participant to payment of 50% of the Target
Number of Performance Units Awarded. Achievement of a Simple
Average Annual RoNA between 11.0% and 17.0% shall entitle the
Participant to payment of the number of Performance Units
interpolated according to a performance achievement function
defined by the foregoing achievement levels, and as reflected on
the graph attached hereto. Achievement of a Simple Average
Annual RoNA of less than 11.0% shall result in no payment of
Performance Units to the Participant under this Award
Agreement.
4.
Form and Timing of Payment of
Performance Units .
Payment of earned Performance Units shall be made within
seventy-five (75) calendar days following the close of the
applicable Performance Period. Subject to the Plan, the
Committee has authorized that the future payment of any earned
Performance Units shall be made 100% in Shares. The
Company will withhold from any such payout Shares having a value
equivalent to the amount needed to satisfy the minimum statutory
tax withholding requirements of the Company or its Subsidiary in
the appropriate taxing jurisdiction.
5.
Voting Rights and
Dividends . During
the Performance Period and until the date of payment of Performance
Units as provided for in Section 4, the Participant will not have
voting rights with respect to the Performance Units. During
the Performance Period and until and including the date of payment
of Performance Units as provided in Section 4, the Participant
shall receive all dividends, dividend equivalents and other
distributions paid with respect to the number of shares of Common
Stock of the Company equal to the number of Performance Units
granted under this Award. Any such payment of dividend,
dividend equivalent or other distribution will be made on one of
the Participant’s next two regular paydays following the
specified record date.
6.
Termination of Employment Due to
Death, Disability, or Retirement . In the event the employment of a
Participant is terminated by reason of death, Disability, or
Retirement (as such
terms are defined in the Plan)
during the Performance Period, the Participant or the
Participant’s beneficiary or estate, as the case may be,
shall be entitled to receive a prorated payment of the Performance
Units. The prorated payment shall be determined by the
Committee, in its sole discretion, based on the number of full
months of the Participant’s employment during the Performance
Period, in relation to the total number of months in the
Performance Period, and shall further be adjusted based on the
achievement of the pre-established performance goals set forth in
Section 3.
Payment of Performance Units shall
be made at the time specified by the Committee in its sole
discretion. Notwithstanding the foregoing, with respect to a
Participant who retires during the Performance Period, payments
shall be made at the same time as payments are made to Participants
who did not terminate employment during the applicable Performance
Period as set forth in Section 4.
7.
Termination of Employment for
Other Reasons . In
the event that the Participant terminates employment with the
Company for any reason other than those reasons set forth in
Section 6, or in the event that the Company terminates the
employment of the Participant with or without cause, all
Performance Units awarded to the Participant under this Award
Agreement shall be forfeited by the Participant to the Company;
provided, however, that in the event of a termination of the
employment of the Participant by the Company with or without cause,
the Committee, in its sole discretion, may waive such automatic
forfeiture provision and pay out on a pro rata basis in accordance
with Section 6.
8.
Change in Control
. In the event of a Change in
Control (as defined in the Plan) during the Performance Period, the
Target Number of Performance Units shall become payable in full and
such payment shall be made within seventy-five (75) calendar
days following date of the Change in Control. The Committee,
in its sole discretion, may make such payment of the Target Number
of Performance Units in the form of cash or in shares (or in a
combination thereof). The number of Shares to be issued, if
any, shall be equal to the number of earned Performance Units
designated by the Committee to be paid in Shares. The amount
of cash to be paid if any shall be equal to the Fair Market Value,
as defined in the Plan, of a share of the Common Stock of the
Company as of the date of the Change in Control multiplied by the
number of Performance Units designated by the Committee to be paid
in cash.
9.
Nontransferability
. Performance Units may not be
sold, transferred, pledged, assigned, or otherwise alienated or
hypothecated, other than by will or by the laws of descent and
distribution. Further, except as otherwise determined by the
Committee and provided in this Award Agreement, a
Participant’s rights under the Plan shall be exercisable
during the Participant’s lifetime only by the Participant or
the Participant’s legal representative.
10. Adjustments in Authorized Shares
. The Committee shall have the
sole discretion to adjust the number of Performance Units awarded
pursuant to this Award Agreement, in accordance with
Section 4.3 of the Plan.
11. Tax Withholding . The Company shall have the power and the
right to deduct or withhold, or require the Participant or
beneficiary to remit to the Company, an amount sufficient to
satisfy federal, state, and local taxes, domestic or foreign,
required by law or regulation to be withheld with respect to any
taxable event arising as a result of this Award Agreement.
The Company’s power and right to withhold includes the right
to withhold Shares with a value equivalent to the amount needed to
satisfy the minimum statutory tax withholding requirements of the
Company or its Subsidiary in the appropriate taxing
jurisdiction.
12. Share Withholding . With respect to withholding required
upon any other taxable event arising as a result of Awards granted
hereunder, the Participant may elect, subject to the approval of
the Committee, to satisfy the withholding requirement, in whole or
in part, by having the Company withhold Performance Units having a
Fair Market Value on the date the tax is to be determined equal to
the minimum statutory total tax which could be withheld on the
transaction. All such elections shall be irrevocable, made in
writing, signed by the Participant, and shall be subject to any
restrictions or limitations that the Committee, in its sole
discretion, deems appropriate.
13. Covenant Not to Compete . Without the consent of the Company, the
Participant shall not, directly or indirectly, anywhere in the
world, at any time during the Participant’s employment with
the Company or any of its subsidiaries, and for a period of
eighteen (18) months following the termination of
Participant’s employment with the Company and its
subsidiaries for any reason, be associated or in any way connected
as an owner, investor, partner, director, officer, employee, agent,
or consultant with any business entity directly engaged in the
manufacture and/or sale of products competitive with any material
product or product lines of the Company or any of its subsidiaries;
provided, however, that the Participant shall not be deemed to have
breached this undertaking if his sole relation with such entity
consists of his holding, directly or indirectly, an equity
inter
