8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report:  July 11, 2008

Date of Earliest Event Reported:  July 10, 2008

Sauer-Danfoss Inc.

(Exact name of registrant as specified in its charter)

Delaware
(State or other
jurisdiction of incorporation) 1-14097
(Commission
File Number) 36-3482074
(I.R.S. Employer
Identification No.)

250 Parkway Drive, Suite 270 Lincolnshire, Illinois	60069
(Address of principal executive offices)	(U.S. Zip Code)

Registrant’s telephone number, including area code:  (515) 239-6000

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Section 3	Securities and Trading Markets
Item 3.03	Material Modification to Rights of Security Holders

The stockholders of Sauer-Danfoss Inc. (the “Company”) approved an Amended and Restated Certificate of Incorporation (the “Certificate”) of the Company at the reconvened annual meeting of stockholders held on July 10, 2008.  The annual meeting was originally convened on June 12, 2008 but was adjourned until July 10.  The Certificate became effective upon filing with the Delaware Secretary of State on July 10.  A copy of the Certificate is attached hereto as Exhibit 3.1 and is incorporated herein by reference.

The Certificate has eliminated certain 80% supermajority voting provisions that were contained in the Company’s former Certificate of Incorporation, replacing them with simple majority approval requirements.  The supermajority voting provisions applied to any stockholder vote to amend, alter, or repeal Articles FIFTH through TENTH of the former Certificate of Incorporation.  Such Articles cover a variety of subject matters, including the size and manner of selection of the Board of Directors; the alteration, amendment, or repeal of the Company’s Bylaws; the limitation of liability of members of the Board of Directors for certain breaches of their fiduciary duties; the limitation on the stockholders’ right to take action via written consent in lieu of a meeting; the indemnification rights of all officers, directors, employees, other representatives, or persons serving in capacities upon request of the Company for liability arising from their roles as such; and the Company’s related right to maintain insurance with respect to any such liability, whether covered by such indemnification rights or not.

The Certificate has also deleted the requirement contained in Article SIXTH of the former Certificate of Incorporation that mandated an 80% supermajority voting requirement for the stockholders to alter, amend, or repeal any provision of the Company’s Bylaws, or to add any new provision to the Company’s Bylaws.  The Certificate replaces this supermajority requirement with the requirement for a simple majority of the stockholders to approve such matters.

The changes affect the rights of holders of common stock of the Company.  The foregoing description of the Certificate is qualified in its entirety by reference to the full text of the Certificate attached hereto and incorporated by reference herein.

Section 5	Corporate Governance and Management
Item 5.01	Changes in Control of Registrant

On July 11, 2008, Danfoss A/S (“Danfoss”) acquired a controlling interest in the outstanding capital stock of the Company (“Common Stock”) upon the closing of a share purchase transaction (the “Transaction”) with Sauer Holding GmbH (“Sauer Holding”) pursuant to that certain Share Purchase Agreement (the “Purchase Agreement”) dated as of March 10, 2008 and amended on July 11, 2008.  In the Transaction, Danfoss acquired (i) 8,358,561 shares of Common Stock and (ii) all of the Sauer Holding’s shares of voting and nonvoting common stock in Danfoss Murmann Holding A/S (“DMH”), which holds 18,241,962 shares of Common Stock (the shares referred to in clauses (i) and (ii) are referred to herein as the “Shares”).  As a result of the Transaction, Danfoss now holds all of the outstanding capital stock of DMH.  As a result of the Transaction and the execution of the Stockholders Agreement (as defined below), Danfoss may be deemed to be the beneficial owner of 36,629,787 shares of Common Stock, representing approximately 75.9% of the outstanding shares of Common Stock of the Company.

The aggregate purchase price paid by Danfoss to Sauer Holding for the Shares in the Transaction was $493,228,298.73.

2

In connection with the consummation of the Transaction, the potential exercise of either or both stages of its call/put option for the acquisition of additional shares of Common Stock under the Stockholders Agreement (as defined and described below) and for its general working capital purposes, Danfoss entered into a Facilities Agreement (the “Facilities Agreement”), dated as of February 4, 2008, with Danske Bank A/S (the “Lender”) under which the Lender committed to provide Danfoss with a seven-year term loan and revolving credit facilities in an aggregate amount up to US $600,000,000, consisting of one US $200,000,000 revolving credit facility and two US $200,000,000 term loan facilities.  Principal amounts outstanding under each of the facilities accrue interest at customary interbank market rates, plus applicable margin, and are due on February 4, 2015.  Interest that accrues is due and payable at the end of interest periods of varying length (ranging from one month to twelve months).  Amounts borrowed under the facilities may be prepaid in minimum amounts of US $5,000,000 (in integral multiples of US $1,000,000).  Amounts drawn under the revolving credit facility may be redrawn following prepayment, whereas amounts prepaid under the term loan facilities may not be redrawn.  Any subsidiary of Danfoss may become party to the Facilities Agreement as an additional borrower thereunder, with Danfoss serving as a guarantor of any such additional borrower’s repayment obligations.  Danfoss has been charged a customary up-front flat fee on the aggregate amount of the facilities, along with a commitment fee on the undrawn, uncancelled amount of the aggregate commitment under the facilities during the seven-year commitment period.

Contemporaneously with the closing of the Transaction, Danfoss, Sauer Holding, and certain affiliates of Sauer Holding entered into a Stockholders Agreement (the “Stockholders Agreement”) that terminated and replaced that certain Joint Venture Agreement dated January 22, 2000, as amended as of February 22, 2000, by and among Danfoss, Sauer Holding, and DMH (the “Joint Venture Agreement”), in governing the rights and obligations of the parties with respect to their ownership and control of the Company and the Common Stock that they hold.

The Stockholders Agreement has altered the arrangements between Danfoss and Sauer Holding for the nomination of directors of the Company and other governance matters.  The size of the board of directors of the Company will remain set at ten members.  Under the Stockholders Agreement, Danfoss possesses nomination rights with respect to eight members (two independent and six non-independent members) and Sauer Holding possesses nomination rights with respect to two members (one independent and one non-independent member).  As called for by the Stockholders Agreement, the board of directors of the Company has eliminated its Nominating and Executive Committees.

Pursuant to the Stockholders Agreement, Sauer Holding has granted to Danfoss the right to purchase from Sauer Holding (via the exercise of a call option), and Danfoss has granted to Sauer Holding the right to require Danfoss to purchase from Sauer Holding (via the exercise of a put option), the remaining 10,029,264 shares of Common Stock held by Sauer Holding, in two equal stages of 5,014,632 shares each, during the 21-day periods starting on August 1 and running until August 21 following delivery of the Company’s audited financial statements to Sauer Holding for the Company’s 2009 and 2011 fiscal years, respectively.  The purchase price for the shares subject to the call option and put option will be determined based on the operating income of, and adjusted with respect to the net debt level of, the Company in the 2009 and 2011 fiscal years of the Company, respectively, but will be set within a range of $29.67 and $49.45 per share, subject to adjustment as a result of stock splits and other similar transactions.  Under the Stockholders Agreement, Danfoss may also, at any time, accelerate its exercise of either or both stages of its call option by electing to purchase Sauer Holding’s shares of Common Stock subject to such option at a price equal to $49.45 per share, subject to adjustment as a result of stock splits and other similar transactions.  Sauer Holding, on the other hand, is entitled to accelerate its exercise of either or both stages of its put option and to sell its shares of Common Stock subject to such option to Danfoss at a price equal to $29.67 or $39.56 per share (depending on the identity of the third party entity involved in the transaction giving rise to the acceleration right), subject to adjustment as a result of stock

3

splits and other similar transactions, only upon notice from Danfoss that Danfoss had approved a merger transaction that would result in the extinguishment or exchange of the Company’s Common Stock for securities of a successor entity (but not cash consideration).  The number of shares subject to the call and put options is subject to reduction based on shares of Common Stock sold by Sauer Holding as a result of Danfoss’ exercise of drag-along rights or Sauer Holding’s exercise of tag-along rights (described below).

In addition to the put and call options, the Stockholders Agreement also provides for drag-along rights and a right of first refusal for Danfoss, and tag-along rights for Sauer Holding.  If Danfoss desires to sell any of its shares of Common Stock to an unaffiliated third party in a transaction that would cause a change of control of the Company, Danfoss is entitled to “drag along” Sauer Holding and require it to sell an equivalent percentage of its shares of Common Stock to such third party at the same price as Danfoss sells its shares.  However, to the extent that Danfoss exercises its drag-along rights beginning after October 15, 2009 or October 15, 2011 through the end of Sauer Holding’s put option exercise periods that follow the Issuer’s 2009 and 2011 fiscal years, respectively, Sauer Holding may be entitled to receive additional consideration from Danfoss in the drag-along transaction if Sauer Holding would have been entitled to such consideration upon exercise of its put option.  In each case, the consideration to be received by Sauer Holding in a drag-along scenario will be in the range of $29.67 and $49.45 per share of Common Stock, subject to adjustment as a result of stock splits and other similar transactions, with all excess consideration to be payable to Danfoss.  If the consideration being paid by a third party to Danfoss is other than cash or freely tradable shares of an issuer that is listed on a nationally recognized securities exchange in the United States, France, the United Kingdom or Germany, Sauer Holding can require Danfoss to purchase its shares at a price of $29.67 per share in lieu of Sauer Holding’s selling such shares to the third party under the drag-along procedure.  In the event of a proposed transfer by Sauer Holding of any of its shares of Common Stock to a third party, Danfoss has the right to purchase such shares within 45 days of receipt of notice of the proposed sale, upon the terms and conditions specified in the notice.

In the event of a proposed private sale by Danfoss of all of its shares of Common Stock to a third party, Sauer Holding has the right to “tag along” and participate in the sale to the third party on the same terms and conditions by delivering notice to Danfoss within twenty-one (21) days of notification by Danfoss as to the sale.  In such transaction, Sauer Holding is entitled to sell such portion of the shares to be sold to the third party as equals its percentage of the total number of shares of Common Stock held by it and Danfoss, in the aggregate.  Proceeds received from third parties in any sales in which Sauer Holding “tags along” will be distributed first to Danfoss, for the first $248,028,174.87 of such proceeds, and then to Sauer Holding and Danfoss pro rata based on the number of shares of Common Stock sold by each of them in such sales.

Section 5	Corporate Governance and Management
Item 5.03	Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year

The Board of Directors of the Company approved Amended and Restated Bylaws (the “Restated Bylaws”) of the Company at a meeting held immediately following the reconvened annual meeting of stockholders of the Company on July 10, 2008.  The Restated Bylaws became effective immediately.  The Restated Bylaws made the following changes to the Company’s previous Bylaws:

·Removed the provision in Article III, Section 3 that previously permitted Klaus H. Murmann to serve as a director past his 70th birthday.  As amended, Article III, Section 3 provides that no director shall be eligible to serve beyond the annual meeting of stockholders following his or her 70th birthday.

4

·Deleted former Article III, Section 8(b), which provided for an 80% supermajority voting requirement for all Board actions with respect to certain large acquisitions; certain large stock issuances; amendments to the Restated Bylaws; actions having a material adverse effect on the Company’s Nørdborg, Denmark operations; material changes in the Company’s lines of business; changes in the number of directors to constitute the Board; election or removal of members of the Nominating Committee of the Board; election or removal of the Chairman or Vice Chairman of the Board; election or removal of the Chief Executive Officer and President, the Chief Financial Officer, or the Chief Operating Officer of the Company; and approval of an annual business plan (the “Annual Business Plan”) presented by the Chief Executive Officer and President or of any action materially deviating from the Annual Business Plan.  As a result of this deletion, any of the foregoing actions may be approved by a simple majority vote of the Board.

·Deleted former Article III, Section 8(c), which required the Chief Executive Officer and President to develop and submit the Annual Business Plan for Board approval.

·Deleted former Article III, Section 11, which required the Board to establish a standing Nominating Committee to recommend candidates for Board membership.

·Amended former Article III, Section 15 (now renumbered 14) to call for the Board, and not a Nominating Committee, to nominate candidates for Board membership.  Section 14 continues to provide the right for stockholders to nominate candidates for election to the Board under specified conditions.

·Amended former Article III, Section 17 (now renumbered 16) to eliminate provisions for (a) the Vice Chairman to preside at all meetings of the independent directors and (b) the Chairman to consult with the Vice Chairman prior to determining the agenda for any meeting of stockholders or directors.

·Added a new Section 17 to Article III to provide that, at any time the Chief Executive Officer and President is not an elected director of the Company, such officer shall serve as the Executive Director and Co-Vice Chairman of the Company with the right to attend and provide input, but not to vote at, all meetings of the Board.

·Amended Article VIII, Section 1 to reflect the change in the Company’s Certificate of Incorporation pursuant to which the stockholders may amend the Restated Bylaws by the affirmative vote of holders of a majority of the outstanding shares, rather than the 80% supermajority that had previously been required.

Section 8	Other Events
Item 8.01	Other Events

On July 11, 2008, the Company issued a press release announcing the results of the actions taken by the stockholders at the annual meeting of stockholders.  The press release also announced the closing of the Transaction.  A copy of the press release is attached hereto as Exhibit 99.1.

5

Section 9	Financial Statements and Exhibits
Item 9.01	Financial Statements and Exhibits
(d)		Exhibits
3.1		Amended and Restated Certificate of Incorporation dated July 10, 2008.
3.2		Amended and Restated Bylaws dated July 10, 2008.
99.1		Press Release dated July 11, 2008.

6

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Company has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

	SAUER-DANFOSS INC.
DATE:  July 11, 2008
	By:	/s/ Kenneth D. McCuskey
	Name:	Kenneth D. McCuskey
	Title:	Vice President and Chief Accounting Officer

7

EX-3.1

Exhibit 3.1

AMENDED AND RESTATED

CERTIFICATE OF INCORPORATION

OF

SAUER-DANFOSS INC.

SAUER-DANFOSS INC., a corporation organized and existing under the laws of the State of Delaware (the “Corporation”), hereby certifies as follows:

1.The present name of the corporation is Sauer-Danfoss Inc.  Sauer-Danfoss Inc. was originally incorporated under the name Sundstrand Venture Company, and the original Certificate of Incorporation was filed with the Secretary of State of the State of Delaware on September 25, 1986.

2.This Amended and Restated Certificate of Incorporation amends and restates the provisions of the Certificate of Incorporation of this Corporation as heretofore amended or supplemented, and was duly adopted in accordance with the provisions of Sections 242 and 245 of the General Corporation Law of the State of Delaware.

3.The text of the Certificate of Incorporation is hereby amended and restated to read in its entirety as follows:

FIRST:  The name of the corporation is Sauer-Danfoss Inc. (hereinafter, the “Corporation”).

SECOND:  Its registered office in the State of Delaware is to be located at 1209 Orange Street, in the City of Wilmington, County of New Castle, Delaware 19801.  The name of its registered agent at such address is The Corporation Trust Company.

THIRD:  The nature of the business or purposes to be conducted or promoted is to engage in any lawful act or activity for which corporations may be organized under the General Corporation Law of Delaware.

FOURTH:  The total number of shares of all classes of stock which the Corporation shall have authority to issue shall be 79,500,000, of which 75,000,000 shares are to be Common Stock, having a par value of $0.01 per share, and 4,500,000 shares are to be Preferred Stock, having a par value of $0.01 per share.

Authority is hereby expressly granted to the Board of Directors from time to time to issue Preferred Stock, for such consideration and on such terms as it may determine, as Preferred Stock of one or more series and in connection with the creation of any such series to fix by the resolution or resolutions providing for the issue of shares thereof the designation, powers and relative participating, optional, or other special rights of such series, and the qualifications, limitations, or restrictions thereof.  Such authority of the Board of Directors with respect to each such series shall include, but not be limited to, the determination of the following:

(a)the distinctive designation of, and the number of shares comprising, such series, which number may be (except where otherwise provided by the Board of Directors in creating such series) increased or decreased (but not below the number of shares thereof then outstanding) from time to time by like action of the Board of Directors;

(b)the dividend rate or amount for such series, the conditions and dates upon which such dividends shall be payable, the relation which such dividends bear to the dividends payable on any other class or classes or any other series of any class or classes of stock, and whether such dividends shall be cumulative, and if so, from which date or dates for such series;

(c)whether or not the shares of such series shall be subject to redemption by the Corporation and the times, prices, and other terms and conditions of such redemption;

(d)whether or not the shares of such series shall be subject to the operation of a sinking fund or purchase fund to be applied to the redemption or purchase of such shares and if such a fund be established, the amount thereof and the terms and provisions relative to the application thereof;

(e)whether or not the shares of such series shall be convertible into or exchangeable for shares of any other class or classes, or of any other series of any class or classes, of stock of the Corporation and, if provision be made for conversion or exchange, the times, prices, rates, adjustments, and other terms and conditions of such conversion or exchange;

(f)whether or not the shares of such series shall have voting rights, in addition to the voting rights provided by law, and if they are to have such additional voting rights, the extent thereof;

(g)the rights of the shares of such series in the event of any liquidation, dissolution, or winding up of the Corporation or upon any distribution of its assets; and

(h)any other powers, preferences, and relative, participating, optional, or other special rights of the shares of such series, and the qualifications, limitations, or restrictions thereof, to the full extent now or hereafter permitted by law and not inconsistent with the provisions hereof.

FIFTH:  The number of directors shall be fixed by, or in the manner provided in, the Bylaws of the Corporation.

SIXTH:  The Board of Directors shall have power to make, and from time to time alter, amend, or repeal the Bylaws of the Corporation; provided, however, that (a) the stockholders shall have the paramount power to alter, amend and repeal the Bylaws or adopt new Bylaws, exercisable by the affirmative vote of the holders of not less than a majority of the outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors (considered for this purpose as one class), and (b) if and to the extent the stockholders exercise such power, the Board of Directors shall not thereafter suspend, alter, amend or repeal the Bylaws, or portions thereof, adopted by the stockholders, unless, in adopting such Bylaws, or portions thereof, the stockholders otherwise provide.

SEVENTH:  A director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for

2

liability (a) for any breach of the director’s duty of loyalty to the Corporation or its stockholders, (b) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (c) under the provisions of Section 174 of the Delaware General Corporation Law and amendments thereto, or (d) for any transaction from which the director derived an improper personal benefit.  If the Delaware General Corporation Law is amended to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the Delaware General Corporation Law, as so amended.  No amendment, repeal or adoption of any provision of this Certificate of Incorporation inconsistent with this Article Seventh shall apply or have any effect on the liability of any director of the Corporation for or with respect to any acts or omissions of such director occurring prior to such amendment, repeal, or adoption of any inconsistent provision.

EIGHTH:  The stockholders of the Corporation may not take action by written consent in lieu of a meeting, but must take any such action at a duly called annual or special meeting.

NINTH:

(a)Each person who was or is made a party or is threatened to be made a party to or is involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative (“proceeding”), by reason of the fact that he or she, or a person of whom he or she is the legal representative, is or was a director or officer of the Corporation, or is, or was serving, at the request of the Corporation as a director or officer of another corporation, or of a partnership, joint venture, trust or other enterprise, including service with respect to employee benefit plans, whether the basis of such proceeding is alleged action in an official capacity as a director or officer or in any other capacity while serving as a director or officer, shall be indemnified and held harmless by the Corporation to the fullest extent authorized by the Delaware General Corporation Law, as the same exists or may hereafter be amended (but, in the case of any such amendment, only to the extent that such amendment permits the Corporation to provide broader indemnification rights than said laws permitted the Corporation to provide prior to such amendment), against any and all expense, liability loss (including attorneys’ fees, judgments, fines, ERISA excise taxes or penalties and amounts paid or to be paid in settlement and amounts expended in seeking indemnification granted to such person under applicable law, this Article Ninth or any agreement with the Corporation) reasonably incurred or suffered by such person in connection therewith and such indemnification shall continue as to a person who has ceased to be a director or officer and shall inure to the benefit of his or her heirs, executors and administrators; provided, however, that, except as provided in paragraph (b) of this Article Ninth, the Corporation shall indemnify any such person seeking indemnity in connection with an action, suit or proceeding (or part thereof) initiated by such person only if (a) such indemnification is expressly required to be made by law, (b) the action, suit or proceeding (or part thereof) was authorized by the Board of Directors of the Corporation, (c) such indemnification is provided by the Corporation, in its sole discretion, pursuant to the powers vested in the Corporation under the Delaware General Corporation Law, or (d) the action, suit or proceeding (or part thereof) is brought to establish or enforce a right to indemnification under an indemnity agreement or any other statute or law or otherwise as required under Section 145 of the Delaware General Corporation Law.  Such right shall be a contract right and shall include the

3

right to be paid by the Corporation expenses incurred in defending any such proceeding in advance of its final disposition; provided, however, that, unless the Delaware General Corporation Law then so prohibits, the payment of such expenses incurred by a director or officer of the Corporation in his or her capacity as a director or officer (and in any other capacity in which service was or is tendered by such person while a director or officer, including, without limitation, service to an employee benefit plan) in advance of the final disposition of such proceeding shall be made only upon delivery to the Corporation of an undertaking, by or on behalf of such director or officer, to repay any amounts so advanced if it should be determined ultimately that such director or officer is not entitled to be indemnified under this Article Ninth or otherwise.

(b)If a claim under paragraph (a) of this Article Ninth is not paid in full by the Corporation within thirty (30) days after a written claim has been received by the Corporation, the claimant may at any time thereafter bring suit against the Corporation to recover the unpaid amount of the claim and, if such suit is not frivolous or brought in bad faith, the claimant shall be entitled to be paid also the expense of prosecuting such claim.  The burden of proving such claim shall be on the claimant.  It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in defending any proceeding in advance of its final disposition where the required undertaking, if any, has been tendered to this Corporation) that the claimant has not met the standards of conduct which make it permissible under the Delaware General Corporation Law for the Corporation to indemnify the claimant for the amount claimed.  Neither the failure of the Corporation (including its Board of Directors, independent legal counsel, or its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct set forth in the Delaware General Corporation Law, nor an actual determination by the Corporation (including its Board of Directors, independent legal counsel or its stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that claimant has not met the applicable standard of conduct.

(c)The rights conferred on any person in paragraphs (a) and (b) of this Article Ninth shall not be exclusive of any other right which such persons may have or hereafter acquire under any statute, provision of this Certificate of Incorporation, the Bylaws of the Corporation, agreement, vote of stockholders or disinterested directors or otherwise.

(d)The Board of Directors is authorized to enter into a contract with any director, officer, employee or agent of the Corporation, or any person serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, including employee benefit plans, providing for indemnification rights equivalent to or, if the Board of Directors so determines, greater than, those provided for in this Article Ninth.

(e)The Corporation may maintain insurance to the extent reasonably available, at its expense, to protect itself and any such director, officer, employee or agent of the Corporation or another corporation, partnership, joint venture, trust or other enterprise

4

against any such expense, liability or loss, whether or not the Corporation would have the power to indemnify such person against such expense, liability or loss under the Delaware General Corporation Law.

(f)Any amendment, repeal or modification of any provision of this Article Ninth by the stockholders or the directors of the Corporation shall not adversely affect any right or protection of a director or officer of the Corporation existing at the time of such amendment, repeal or modification.

IN WITNESS WHEREOF, this Amended and Restated Certificate of Incorporation has been executed on behalf of the Corporation this 10^th day of July, 2008.

SAUER-DANFOSS INC.
By:	/s/ Kenneth D. McCuskey
Kenneth D. McCuskey, Vice President
and Chief Accounting Officer

5

EX-3.2

Exhibit 3.2

AMENDED AND RESTATED BYLAWS

OF

SAUER-DANFOSS INC.

Effective July 10, 2008

ARTICLE I

Offices

Section 1.The registered office shall be at 1209 Orange Street, in the City of Wilmington, County of New Castle, State of Delaware.

Section 2.The corporation may also have offices at such other places both within and without the State of Delaware, as the Board of Directors may from time to time determine or the business of the corporation may require.

ARTICLE II

Meetings of Stockholders

Section 1.All meetings of the stockholders shall be held at such place within or without the State of Delaware as may be designated from time to time by the Board of Directors.

Section 2.Annual meetings of stockholders shall be held on the third Tuesday in April if not a legal holiday, and if a legal holiday, then on the next business day following, at 9:00 a.m., or at such other date and time as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting, at which they shall elect by a plurality vote the Board of Directors, and transact such other business as may properly be brought before the meeting.

Section 3.Written notice of the annual meeting stating the place, date and hour of the meeting shall be given to each stockholder entitled to vote at such meeting not less than ten nor more than sixty days before the date of the meeting.

Section 4.No business may be transacted at an annual meeting of stockholders, other than business that is either (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors (or any duly authorized committee thereof), (b) otherwise properly brought before the annual meeting by or at the direction of the Board of Directors (or any duly authorized committee thereof), or (c) otherwise properly brought before the annual meeting by any stockholder of the Company (i) who is a stockholder of record on the date of the giving of the notice provided for in this Section 4 and on the record date for the determination of stockholders entitled to vote at such annual meeting and (ii) who complies with the notice procedure set forth in this Section 4.

In addition to any other applicable requirements, for business to be properly brought before an annual meeting by a stockholder, such stockholder must have given timely notice thereof in proper written form to the Secretary of the corporation. To be timely, a stockholder proposal to be presented at an annual meeting shall be received at the corporation’s principal executive offices not less than 120 calendar days in advance of the date that the corporation’s proxy statement was

released to stockholders in connection with the previous year’s annual meeting of stockholders, except that if no annual meeting was held in the previous year or the date of the annual meeting has been changed by more than 30 calendar days from the date contemplated at the time of the previous year’s proxy statement, notice by the stockholder to be timely must be received not later than the close of business on the tenth day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made. To be in proper written form, a stockholder’s notice to the Secretary shall set forth as to each matter the stockholder proposes to bring before the annual meeting (a) a brief description of the business desired to be brought before the annual meeting, (b) the name and address, as they appear on the corporation’s books, of the stockholder proposing such business, (c) the class and number of shares of the Corporation which are beneficially owned by the stockholder, (d) any material interest of the stockholder in such business, and (e) a representation that such stockholder intends to appear in person or by proxy at the annual meeting to bring such business before the meeting.

No business shall be conducted at the annual meeting of shareholders except business brought before the annual meeting in accordance with the procedures set forth in this Section 4; provided, however, that, once business has been properly brought before the annual meeting in accordance with such procedures, nothing in this Section 4 shall be deemed to preclude discussion by any stockholder of any such business.  If the Chairman, or other officer presiding at a meeting in the absence of the Chairman, determines that business was not properly brought before the meeting in accordance with the foregoing procedures, the Chairman, or other officer presiding at a meeting in the absence of the Chairman, shall declare to the meeting that the business was not properly brought before the meeting and such business shall not be transacted.

Section 5.The officer who has charge of the stock ledger of the corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder.

Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held.  The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder who is present.

Section 6.Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute or by the Certificate of Incorporation, may only be called by the Chairman, by the Vice Chairman, by the Chief Executive Officer and President, at the request in writing of a majority of the stock issued and outstanding and entitled to vote thereat, or at the request in writing of a majority of the Board of Directors.  Any such written request delivered pursuant to this Section 6 of Article II shall state the purpose or purposes of the proposed meeting.

Section 7.Written notice of a special meeting stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called, shall be given not less than ten nor more than sixty days before the date of the meeting, to each stockholder entitled to vote at such meeting.

2

Section 8.Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice.

Section 9.The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business, except as otherwise provided by statute or by the Certificate of Incorporation. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented any business may be transacted which might have been transacted at the meeting as originally notified. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.

Section 10.When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power present in person or represented by proxy shall decide any question brought before such meeting, unless the question is one upon which by express provision of the statutes or of the Certificate of Incorporation, a different vote is required in which case such express provision shall govern and control the decision of such question.

Section 11.Unless otherwise provided in the Certificate of Incorporation, each stockholder shall at every meeting of the stockholders be entitled to one vote in person or by proxy for each share of the capital stock having voting power held by such stockholder, but no proxy shall be voted on after three years from its date, unless the proxy provides for a longer period.

ARTICLE III

Board of Directors

Section 1.The property, business and affairs of the corporation shall be controlled and managed by a Board of Directors. The number of directors to constitute the Board of Directors shall be ten.  Vacancies on the Board of Directors may be filled by a majority of the directors then in office, although less than a quorum.

Section 2.The business of the corporation shall be managed by its Board of Directors, which may exercise all such powers of the corporation and do all such lawful acts and things as are not by statute or by the Certificate of Incorporation or by these bylaws directed or required to be exercised or done by the stockholders.

Section 3.No director shall be eligible to serve after the annual meeting of stockholders following his or her seventieth birthday.

Meetings of the Board of Directors

Section 4.The Board of Directors of the corporation may hold meetings, both regular and special, either within or without the State of Delaware.

3

Section 5.The first meeting of each newly elected Board of Directors shall be held at such time and place as shall be fixed by the vote of the stockholders at the annual meeting and no notice of such meeting shall be necessary to the newly elected directors in order legally to constitute the meeting, provided a quorum shall be present. In the event of the failure of the stockholders to fix the time or place of such first meeting of the newly elected Board of Directors, or in the event such meeting is not held at the time and place so fixed by the stockholders, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the Board of Directors, or as shall be specified in a written waiver signed by all of the directors.

Section 6.Regular meetings of the Board of Directors may be held without notice at such time and at such place as shall from time to time be determined by the Board.

Section 7.Special meetings of the Board may be called by the Chairman, by the Vice Chairman or by the Chief Executive Officer and President on two days’ notice to each director, either personally or by mail, telegram, telex, telecopy, or other form of facsimile transmission setting forth the time, place and purpose of the meeting; special meetings shall be called by the Chairman, by the Vice Chairman, by the Chief Executive Officer and President, or by the Secretary in like manner and on like notice on the written request of two directors.

Section 8.At all meetings of the Board a majority of directors shall constitute a quorum for the transaction of business and, the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors, except as may otherwise be specifically provided by statute, by the Certificate of Incorporation or by these bylaws.  If a quorum shall not be present at any meeting of the Board of Directors, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present.

Section 9.Unless otherwise restricted by the Certificate of Incorporation, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if all members of the Board or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board or committee.

Section 10.Unless otherwise restricted by the Certificate of Incorporation, members of the Board of Directors or of any committee thereof, may participate in a meeting of the Board or committee by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting by use of such equipment shall constitute presence in person at such meeting.

4

Committees of Directors

Section 11.The Board of Directors may, by resolution passed by a majority of the fully constituted Board of Directors, designate one or more committees, each committee to consist of one or more of the directors of the corporation. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board of Directors, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the corporation, and may authorize the seal of the corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the Certificate of Incorporation, adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the corporation’s property and assets, recommending to the stockholders a dissolution of the corporation or a revocation of a dissolution, or amending the bylaws of the corporation; and, unless the resolution or the Certificate of Incorporation expressly so provide, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the Board of Directors.

Section 12.Each committee shall keep regular minutes of its meetings and report the same to the Board of Directors when required.

Compensation of Directors

Section 13.Unless otherwise restricted by the Certificate of Incorporation, the Board of Directors shall have the authority to fix the compensation of directors. The directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors and may be paid a fixed sum for attendance at each meeting of the Board of Directors and a stated salary as a director. No such payment shall preclude any director from serving the corporation in any other capacity and receiving compensation therefor.  Members of special or standing committees may be allowed like compensation for attending committee meetings.

Nomination of Directors

Section 14.Subject to the rights of holders of any class or series of Preferred Stock then outstanding, nominations for the election of Directors shall be made by the Board of Directors or by any stockholder entitled to vote in the election of directors generally. However, any stockholder entitled to vote in the election of directors generally may nominate one or more persons for election as directors at a meeting only if timely notice of such stockholder’s intent to make such nomination or nominations has been given in writing to the Secretary of the corporation. To be timely, a stockholder nomination for a director to be elected at an annual meeting shall be received at the corporation’s principal executive offices not less than 120 calendar days in advance of the date that the corporation’s proxy statement was released to stockholders in connection with the previous

5

year’s annual meeting of stockholders, except that if no annual meeting was held in the previous year or the date of the annual meeting has been changed by more than 30 calendar days from the date contemplated at the time of the previous year’s proxy statement, or in the event of a nomination for director to be elected at a special meeting, notice by the stockholders to be timely must be received not later than the close of business on the tenth day following the day on which such notice of the date of the special meeting was mailed or such public disclosure was made. Each such notice shall set forth (a) the name and address of the stockholder who intends to make the nomination and of the person or persons to be nominated, (b) a representation that the stockholder is a holder of record of stock of the corporation entitled to vote for the election of directors on the date of such notice and intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice, (c) a description of all arrangements or understandings between the stockholder and each nominee and any other person or persons (naming such person or persons) pursuant to which the nomination or nominations are to be made by the stockholder, (d) such other information regarding each nominee proposed by such stockholder as would be required to be included in a proxy statement filed pursuant to the proxy rules of the Securities and Exchange Commission, had the nominee been nominated, or intended to be nominated, by the Board of Directors, and (e) the consent of each nominee to serve as a director of the corporation if so elected.

No person shall be eligible for election as a director of the Company unless nominated in accordance with the procedures set forth in this Section 14. If the Chairman, or other officer presiding at a meeting in the absence of the Chairman, determines that a nomination was not made in accordance with the foregoing procedures, the Chairman, or other officer presiding at a meeting in the absence of the Chairman, shall declare to the meeting that the nomination was defective and such defective nomination shall be disregarded.

Chairman and Vice Chairman

Section 15.The Board of Directors at its first meeting after each annual meeting of stockholders shall elect one of its members to be Chairman and one other of its members to be Vice Chairman.  The Chairman and Vice Chairman positions shall be non-executive, non-officer positions of the corporation and the directors elected Chairman and Vice Chairman shall not hold any officer position with the corporation or be employed in any capacity by the corporation.  Accordingly, the Board of Directors retains the right to determine that such a non-executive Chairman or Vice Chairman is an independent director under the applicable rules of the Securities and Exchange Commission and the New York Stock Exchange.  The Board of Directors shall fill any vacancy in the position of Chairman or Vice Chairman at such time and in such manner as the Board of Directors shall determine.

Duties of Chairman and Vice Chairman

Section 16.The Chairman shall preside at, and determine the agenda for, all meetings of the stockholders and at all meetings of the Board of Directors.  The Chairman shall also preside at all meetings of the independent members of the Board of Directors.  The Chairman shall exercise and perform all the duties incident to the office of Chairman and such other duties as from time to time may be assigned by the Board of Directors or as may be prescribed by these bylaws.  In the absence of the Chairman, the Vice Chairman shall preside at all meetings of the Board of Directors and stockholders.  The Vice Chairman shall exercise and perform all the duties incident to the office of

6

Vice Chairman and such other duties as from time to time may be assigned by the Board of Directors or as may be prescribed by these bylaws.

Executive Director and Co-Vice Chairman

Section 17.At any time that the Chief Executive Officer and President of the corporation is not serving as an elected director of the corporation, such officer shall serve as the Executive Director and Co-Vice Chairman.  At any time that the Chief Executive Officer and President is serving as an elected director of the corporation, there shall be no Executive Director and Co-Vice Chairman.  The Executive Director and Co-Vice Chairman shall be entitled to attend all meetings of the Board of Directors and to provide input, but not to vote as a director, at such meetings.  The Executive Director and Co-Vice Chairman shall exercise and perform all the duties incident to the office of Executive Director and Co-Vice Chairman and such other duties as from time to time may be assigned by the Board of Directors or as may be prescribed by these bylaws.

Emeritus Positions

Section 18.From time to time, the Board of Directors may designate an individual to serve as a Director Emeritus, as a Chairman Emeritus or as a Vice Chairman Emeritus.  These positions shall be honorary positions and persons appointed to such positions shall be entitled to attend meetings of the Board of Directors.  An individual holding an emeritus position shall not receive compensation for serving in such capacity, shall not be an officer of the corporation, and, unless such person is a regularly elected or appointed director, shall have no vote at a directors’ meeting.  An individual designated to hold an emeritus position may be so designated for any reason deemed appropriate by the Board of Directors, including, without limitation, such individual’s experience with and contributions to the corporation.  Any person may be removed from an emeritus position by the Board of Directors, either with or without cause, at any time

ARTICLE IV

Notices

Section 1.Whenever, under the provisions of the statutes or of the Certificate of Incorporation or of these bylaws, notice is required to be given to any director or stockholder, it shall not be construed to mean personal notice, but such notice may be given in writing, by mail, addressed to such director or stockholder at his address as it appears on the records of the corporation, with postage thereon prepaid, and such notice shall be deemed to be given three days after the time when the same shall be deposited in the United States mail. Notice to directors may also be given by telegram, telex, telecopy or other form of facsimile transmission if not given later than two days before the meeting of the directors or stockholders is to be held.

Section 2.Whenever any notice is required to be given under the provisions of the statutes or of the Certificate of Incorporation or of these bylaws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto.

7

ARTICLE V

Officers

Section 1.The officers of the corporation shall be chosen by the Board of Directors and shall be a Chief Executive Officer and President, a Vice President, a Chief Financial Officer, a Secretary and a Treasurer and such other officers as the Board of Directors deems necessary or appropriate. The Board of Directors may also choose additional Vice Presidents, and one or more Assistant Secretaries and Assistant Treasurers. Any number of offices may be held by the same person, unless the Certificate of Incorporation or these bylaws otherwise provide.

Section 2.The Board of Directors at its first meeting after each annual meeting of stockholders shall choose a Chief Executive Officer and President, one or more Vice Presidents, a Chief Financial Officer, a Secretary and a Treasurer.

Section 3.The Board of Directors may appoint such other officers and agents as it shall deem necessary who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board.

Section 4.The salaries of all officers and agents of the corporation shall be fixed by the Board of Directors. Any payments made to an officer of the corporation as compensation, salary, commission, bonus, interest, or rent, or in reimbursement of entertainment or travel expense incurred by him, which shall be disallowed in whole or in part as a deductible expense of the corporation for federal income tax purposes for the reason that it does not constitute an ordinary and necessary business expense, shall be reimbursed by such officer to the corporation to the full extent of such disallowance. The Board of Directors shall enforce payment of each such amount disallowed. In lieu of payment by the officer, subject to the discretion of the Board of Directors, proportionate amounts may be withheld from the officer’s future compensation payments until the amount owed to the corporation has been recovered.

Section 5.The officers of the corporation shall hold office until their successors are chosen and qualify.  Any officer elected or appointed by the Board of Directors may be removed at any time by the affirmative vote of a majority of the Board of Directors. Any vacancy occurring in any office of the corporation shall be filled by the Board of Directors.

The Chief Executive Officer and President

Section 6.The Chief Executive Officer and President shall be the chief executive and administrative officer of the corporation, shall have general supervision of the business of the corporation, shall see that all orders and resolutions of the Board of Directors are carried into effect and shall, in the absence of the Chairman and the Vice Chairman, preside at all meetings of the stockholders and directors subject, however, to the right of the directors to delegate any specific powers to any other officer or officers of the corporation except such as may be by statute exclusively conferred upon the Chief Executive Officer and President. The Chief Executive Officer and President may execute all bonds, deeds, mortgages, conveyances, contracts and other instruments, except in cases where the signing and execution thereof shall be expressly delegated by the Board of Directors or by these bylaws to some other officer or agent of the corporation, or shall

8

be required by law otherwise to be signed or executed. He shall have the power to appoint, determine the duties and fix the compensation of such agents and employees as in his judgment may be necessary or proper for the transaction of the business of the corporation. In general, he shall perform all authorized duties incident to the office of Chief Executive Officer and President and such other duties as may from time to time be assigned to him by the Board of Directors.

The Vice Presidents

Section 7.The Vice Presidents shall perform such duties as shall be assigned to them and shall exercise such powers as may be granted to them by the Board of Directors or by the Chief Executive Officer and President of the corporation. In the absence of the Chief Executive Officer and President, the Vice Presidents, in order of their seniority (the Executive Vice President and Chief Operating Officer, if any, being deemed for this purpose to be the senior Vice President), may perform the duties and exercise the powers of the Chief Executive Officer and President with the same force and effect as if performed by the Chief Executive Officer and President. Any Vice President may sign and execute in the name of the corporation deeds, mortgages, bonds, contracts or other instruments authorized by the Board of Directors or by any duly authorized committee of directors, except in cases where the signing and execution thereof shall be expressly delegated by the Board of Directors or by any duly authorized committee of directors or by these bylaws to some other officer or agent of the corporation, or shall be required by law otherwise to be signed or executed.

The Chief Financial Officer

Section 8.The Chief Financial Officer shall be responsible for supervision of the finances of the corporation, including all accounting matters, and shall perform such other duties and exercise such other powers as may be granted to him by the Board of Directors or by the Chief Executive Officer and President of the corporation. The Chief Financial Officer may sign all bonds, deeds, mortgages, conveyances, contracts and other instruments to the extent authorized by the Chief Executive Officer and President, or the Board of Directors, except in cases where the signing thereof shall be expressly delegated by the Board of Directors or these bylaws to some other officer or agent of the corporation, or shall be required by law otherwise to be signed.

The Secretary and Assistant Secretary

Section 9.The Secretary shall attend all meetings of the Board of Directors and all meetings of the stockholders and record all the proceedings of the meetings of the corporation and of the Board of Directors in a book to be kept for that purpose and shall perform like duties for the standing committees when required. He shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the Board of Directors, and shall perform such other duties as may be prescribed by the Board of Directors or Chief Executive Officer and President, under whose supervision he shall be. He shall have custody of the corporate seal of the corporation and he, or an Assistant Secretary, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by his signature or by the signature of such Assistant Secretary.  The Board of Directors may give general authority to any other officer to affix the seal of the corporation and to attest the affixing by his signature.

9

Section 10.The Assistant Secretary, or if there be more than one, the Assistant Secretaries in the order determined by the Board of Directors (or if there be no such determination, then in the order of their election), shall, in the absence of the Secretary or in the event of his inability or refusal to act, perform the duties and exercise the powers of the Secretary and shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe.

The Treasurer and Assistant Treasurers

Section 11.The Treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the Board of Directors.

Section 12.He shall disburse the funds of the corporation as may be ordered by the Board of Directors, taking proper vouchers for such disbursements, and shall render to the Chief Financial Officer, Chairman, Vice Chairman, Chief Executive Officer and President, and the Board of Directors, at its regular meetings, or when the Board of Directors so requires, an account of all his transactions as Treasurer and of the financial condition of the corporation.

Section 13.If required by the Board of Directors, he shall give the corporation a bond (which shall be renewed every six years) in such sum and with such surety or sureties as shall be satisfactory to the Board of Directors for the faithful performance of the duties of his office and for the restoration to the corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the corporation.

Section 14.The Assistant Treasurer, or if there shall be more than one, the Assistant Treasurers in the order determined by the Board of Directors (or if there be no such determination, then in the order of their election), shall, in the absence of the Treasurer or in the event of his inability or refusal to act, perform the duties and exercise the powers of the Treasurer and shall perform such other duties and have such other powers as the Board of Directors may from time to time prescribe.

ARTICLE VI

Capital Stock

Section 1.The shares of the corporation shall be represented by certificates, provided that the Board of Directors of the corporation may provide by resolution that some or all of any or all classes or series of its stock shall be uncertificated shares.  Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the corporation.  Notwithstanding the adoption of such a resolution by the Board of Directors, every holder of stock represented by certificates and upon request of every holder of uncertificated shares shall be entitled to have a certificate signed by, or in the name of the corporation by the Chairman or the Vice Chairman, or the Chief Executive Officer and President or a Vice President and the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary of the corporation, representing the

10

number of shares registered in certificate form. Any or all of the signatures on the certificate may be a facsimile.

Section 2.In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue.

Lost Certificates

Section 3.The Board of Directors may direct a new certificate of stock or uncertificated shares to be issued in place of any certificate theretofore issued by the corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate, or his legal representative, to advertise the same in such manner as it shall require and/or to give the corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the corporation with respect to the alleged loss, theft or destruction of such certificate or the issuance of such new certificate or uncertificated shares.

Transfers of Stock

Section 4.Transfers of shares of stock of the corporation shall be made on the record of stockholders of the corporation only upon authorization by the registered holder thereof, or by an attorney authorized by power of attorney duly executed and filed with the Secretary or with a transfer agent or transfer clerk, or upon surrender to the corporation or the transfer agent of the corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment, or authority to transfer; provided, however, that the corporation shall refuse to register any transfer of shares purchased pursuant to an exemption from registration under Regulation S unless such transfer is made in accordance with the provisions of Regulation S or pursuant to a registration statement under the Securities Act of 1933 or other exemption from registration and the corporation receives an opinion of counsel to such effect reasonably satisfactory to it.

Fixing Record Date

Section 5.In order that the corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more than sixty nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.

11

Registered Stockholders

Section 6.The corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware.

ARTICLE VII

General Provisions

Dividends

Section 1.Dividends upon the capital stock of the corporation, subject to the provisions of the Certificate of Incorporation, if any, may be declared by the Board of Directors at any regular or special meeting, pursuant to law.  Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the Certificate of Incorporation.

Section 2.Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purpose as the directors shall think conducive to the interest of the corporation, and the directors may modify or abolish any such reserve in the manner in which it was created.

Annual Statement

Section 3.The Board of Directors shall present at each annual meeting, and at any special meeting of the stockholders when called for by vote of the stockholders, a full and clear statement of the business and condition of the corporation.

Checks and Deposits

Section 4.All checks or demands for money and notes of the corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate. All funds of the corporation not otherwise employed may be deposited to the credit of the corporation in such banks, trust companies or other depositories as the Board of Directors may from time to time select.

Fiscal Year

Section 5.The fiscal year of the corporation shall be fixed by resolution of the Board of Directors.

12

Seal

Section 6.The corporate seal shall have inscribed thereon the name of the corporation and the words “Corporate Seal, Delaware.” The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise.

ARTICLE VIII

Amendments

These bylaws may be altered, amended or repealed or new bylaws may be adopted by the stockholders (by the affirmative vote of the holders of not less than a majority of the outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors, considered for this purpose as one class) or by the Board of Directors, when such power is conferred upon the Board of Directors by the Certificate of Incorporation and in accordance with these bylaws, at any regular meeting of the stockholders or of the Board of Directors or at any special meeting of the stockholders or of the Board of Directors if notice of such alteration, amendment, repeal or adoption of new bylaws be contained in the notice of such special meeting.

  /s/ Kenneth D. McCuskey

Kenneth D. McCuskey, Secretary

Dated:  July 10, 2008

13

EX-99.1

Exhibit 99.1

PRESS RELEASE

JULY 11, 2008

SAUER-DANFOSS INC. ELECTS BOARD OF DIRECTORS AT ANNUAL STOCKHOLDER MEETING; DANFOSS A/S ACQUIRES CONTROLLING INTEREST

CHICAGO, Illinois, USA, July 11, 2008 – The stockholders of Sauer-Danfoss Inc. (NYSE:SHS) elected ten members to its Board of Directors at the 2008 annual meeting of stockholders, which commenced on June 12 and concluded yesterday after an adjournment.  The stockholders also approved the Amended and Restated Certificate of Incorporation proposed by the Board of Directors in the proxy statement for the annual meeting.

Sauer-Danfoss Inc. further announced today that Danfoss A/S has closed its purchase of a controlling interest in Sauer-Danfoss Inc. from Sauer Holding GmbH, a company owned by members of the Klaus Murmann family.  Danfoss A/S now controls more than 50% of the outstanding common stock of Sauer-Danfoss Inc.  In addition, Sauer Holding GmbH has granted Danfoss A/S call options, and Danfoss A/S has granted Sauer Holding GmbH put options, exercisable during 21-day periods in August 2009 and August 2011, pursuant to which Danfoss A/S may purchase the remaining shares of Sauer-Danfoss Inc. stock owned by Sauer Holding GmbH.

At the annual meeting, five new directors were elected to the Sauer-Danfoss Inc. Board.  They are:  Niels B. Christiansen, Vice Chief Executive Officer of Danfoss A/S; Kim Fausing, Executive Vice President and Chief Operating Officer of Danfoss A/S; William E. Hoover Jr., formerly with McKinsey & Co.; Frederik Lotz, Chief Financial Officer of Danfoss A/S; and Sven Ruder, President of the Motion Controls division of Danfoss A/S.

Directors re-elected were Jørgen M. Clausen (Chairman), President and Chief Executive Officer of Danfoss A/S, a director since 2000; Johannes F. Kirchhoff, Owner and Managing Director of FAUN Umwelttechnik GmbH & Co., KG, a director since 1997; F. Joseph Loughrey, President and Chief Operating Officer of Cummins Inc., a director since 2000; Sven Murmann (Vice Chairman), Managing Director of Sauer

Executive Offices:  250 Parkway Drive, Suite 270, Lincolnshire, IL 60069

Holding GmbH, a director since 1994; and Steven H. Wood, Chief Financial Officer of Becker-Underwood, Inc., a director since 2003.

David J. Anderson, President and Chief Executive Officer, was appointed a nonvoting Executive Director and Co-Vice Chairman.

In addition, Sauer-Danfoss Inc.’s stockholders ratified the appointment of KPMG LLP as the company’s independent registered public accounting firm for 2008.

About Sauer-Danfoss

Sauer-Danfoss Inc. is a worldwide leader in the design, manufacture, and sale of engineered hydraulic, electric and electronic systems and components, for use primarily in applications of mobile equipment.  Sauer-Danfoss, with 9,800 employees worldwide and revenue of approximately $2.0 billion, has sales, manufacturing, and engineering capabilities in Europe, the Americas, and the Asia-Pacific region.  The Company’s executive offices are located near Chicago in Lincolnshire, Illinois.  More details online at www.sauer-danfoss.com.

For further information please contact:

Sauer-Danfoss Inc. – Investor Relations

Kenneth D. McCuskey	Sauer-Danfoss Inc.	Phone:	(515) 239-6364
Vice President and	2800 East 13th Street	Fax:	(515) 956-5364
Chief Accounting Officer	Ames, Iowa, USA, 50010	kmccuskey@sauer-danfoss.com
John N. Langrick	Sauer-Danfoss Inc.	Phone:	+49-4321-871-190
Director of Finance Europe	Krokamp 35	Fax:	+49-4321-871-121
	24539 Neumünster, Germany	jlangrick@sauer-danfoss.com

Internet: http://www.sauer-danfoss.com

2