Exhibit 10.2

AMENDED AND RESTATED EXECUTIVE RETENTION AGREEMENT

THIS AMENDED AND RESTATED EXECUTIVE RETENTION AGREEMENT by and between KĀDANT
INC., a Delaware corporation (the “Company”), and William A. Rainville (the
“Executive”) is made as of December 9, 2008 (the “Effective Date”).

WHEREAS, the Company and the Executive are parties to that certain Executive
Retention Agreement dated as of August 8, 2001, as amended and restated
effective as of December 5, 2006 (the “Original Agreement”);

WHEREAS, the Board of Directors of the Company (the “Board”) recognizes that, as
is the case with many publicly-held corporations, the possibility of a change in
control of the Company exists and that such possibility, and the uncertainty and
questions which it may raise among key personnel, may result in the departure or
distraction of key personnel to the detriment of the Company and its
stockholders;

WHEREAS, the Board has determined that appropriate steps should be taken to
reinforce and encourage the continued employment and dedication of the Company’s
key personnel without distraction from the possibility of a change in control of
the Company and related events and circumstances; and

WHEREAS, the Board and the Executive intend that the Original Agreement comply
with the provisions of Section 409A of the Internal Revenue Code (the “Code”)
and for that purpose desire to amend and restate the Original Agreement; and

NOW, THEREFORE, as an inducement for and in consideration of the Executive
remaining in the Company’s employ, the Executive and the Company agree as
follows:

1. Key Definitions.

As used herein, the following terms shall have the following respective
meanings:

1.1 “Change in Control” means an event or occurrence set forth in any one or
more of subsections (a) through (d) below (including an event or occurrence that
constitutes a Change in Control under one of such subsections but is
specifically exempted from another such subsection):

(a) the acquisition by an individual, entity or group (within the meaning of
Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”)) (a “Person”) of beneficial ownership of any capital stock
of the Company if, after such acquisition, such Person beneficially owns (within
the meaning of Rule 13d-3 promulgated under the Exchange Act) 20% or more of
either (i) the then-outstanding shares of common stock of the Company (the
“Outstanding

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Company Common Stock”) or (ii) the combined voting power of the then-outstanding
securities of the Company entitled to vote generally in the election of
directors (the “Outstanding Company Voting Securities”); provided, however, that
for purposes of this subsection (a), the following acquisitions shall not
constitute a Change in Control: (i) any acquisition by the Company, (ii) any
acquisition by any employee benefit plan (or related trust) sponsored or
maintained by the Company or any corporation controlled by the Company, or
(iii) any acquisition by any corporation pursuant to a transaction which
complies with clauses (i) and (ii) of subsection (c) of this Section 1.1; or

(b) such time as the Continuing Directors (as defined below) do not constitute a
majority of the Board (or, if applicable, the Board of Directors of a successor
corporation to the Company), where the term “Continuing Director” means at any
date a member of the Board (i) who was a member of the Board on the date of the
execution of this Agreement or (ii) who was nominated or elected subsequent to
such date by at least a majority of the directors who were Continuing Directors
at the time of such nomination or election or whose election to the Board was
recommended or endorsed by at least a majority of the directors who were
Continuing Directors at the time of such nomination or election; provided,
however, that there shall be excluded from this clause (ii) any individual whose
initial assumption of office occurred as a result of an actual or threatened
election contest with respect to the election or removal of directors or other
actual or threatened solicitation of proxies or consents, by or on behalf of a
person other than the Board; or

(c) the consummation of a merger, consolidation, reorganization,
recapitalization or statutory share exchange involving the Company or a sale or
other disposition of all or substantially all of the assets of the Company in
one or a series of transactions (a “Business Combination”), unless, immediately
following such Business Combination, each of the following two conditions is
satisfied: (i) all or substantially all of the individuals and entities who were
the beneficial owners of the Outstanding Company Common Stock and Outstanding
Company Voting Securities immediately prior to such Business Combination
beneficially own, directly or indirectly, more than 80% of the then-outstanding
shares of common stock and the combined voting power of the then-outstanding
securities entitled to vote generally in the election of directors,
respectively, of the resulting or acquiring corporation in such Business
Combination (which shall include, without limitation, a corporation which as a
result of such transaction owns the Company or substantially all of the
Company’s assets either directly or through one or more subsidiaries) (such
resulting or acquiring corporation is referred to herein as the “Acquiring
Corporation”) in substantially the same proportions as their ownership,
immediately prior to such Business Combination, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities, respectively; and
(ii) no Person (excluding the Acquiring Corporation or any employee benefit plan
(or related trust) maintained or sponsored by the Company or by the Acquiring
Corporation) beneficially owns, directly or indirectly, 20% or more of the then
outstanding shares of common stock of the Acquiring Corporation, or of the
combined voting power of the then-outstanding securities of such corporation
entitled to vote generally in the election of directors; or

 

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(d) approval by the stockholders of the Company of a complete liquidation or
dissolution of the Company.

1.2 “Change in Control Date” means the first date during the Term (as defined in
Section 2) on which a Change in Control occurs. Anything in this Agreement to
the contrary notwithstanding, if (a) a Change in Control occurs, (b) the
Executive’s employment with the Company is terminated prior to the date on which
the Change in Control occurs, and (c) it is reasonably demonstrated by the
Executive that such termination of employment (i) was at the request of a third
party who has taken steps reasonably calculated to effect a Change in Control or
(ii) otherwise arose in connection with or in anticipation of a Change in
Control, then for all purposes of this Agreement the “Change in Control Date”
shall mean the date immediately prior to the date of such termination of
employment.

1.3 “Cause” means the Executive’s willful engagement in illegal conduct or gross
misconduct after the Change in Control Date which is materially and demonstrably
injurious to the Company. For purposes of this Section 1.3, no act or failure to
act by the Executive shall be considered “willful” unless it is done, or omitted
to be done, in bad faith and without reasonable belief that the Executive’s
action or omission was in the best interests of the Company.

1.4 “Good Reason” means the occurrence, without the Executive’s written consent,
of any of the events or circumstances set forth in clauses (a) through (g) below
on or after the Change in Control Date. Notwithstanding the occurrence of any
such event or circumstance, such occurrence shall not be deemed to constitute
Good Reason if, prior to the Date of Termination specified in the Notice of
Termination (each as defined in Section 3.2(a)) given by the Executive in
respect thereof, such event or circumstance has been fully corrected within 30
days after notice thereof and the Executive has been reasonably compensated for
any losses or damages resulting therefrom.

(a) the assignment to the Executive of duties inconsistent in any material
respect with the Executive’s position (including status, offices, titles and
reporting requirements, including but not limited to a change in any of the
foregoing that results in the Executive no longer being an officer of a public
company), authority or responsibilities in effect immediately prior to the
earliest to occur of (i) the Change in Control Date, (ii) the date of the
execution by the Company of the initial written agreement or instrument
providing for the Change in Control or (iii) the date of the adoption by the
Board of Directors of a resolution providing for the Change in Control (with the
earliest to occur of such dates referred to herein as the “Measurement Date”) or
a material diminution in such position, authority or responsibilities;

(b) a reduction in the Executive’s annual base salary as in effect on the
Measurement Date or as the same was or may be increased thereafter from time to
time;

 

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(c) the failure by the Company to (i) continue in effect any material
compensation or benefit plan or program (including without limitation any life
insurance, medical, health and accident or disability plan and any vacation or
automobile program or policy) (a “Benefit Plan”) in which the Executive
participates or which is applicable to the Executive immediately prior to the
Measurement Date, unless an equitable arrangement (embodied in an ongoing
substitute or alternative plan) has been made with respect to such plan or
program, (ii) continue the Executive’s participation therein (or in such
substitute or alternative plan) on a basis not materially less favorable than
the basis existing immediately prior to the Measurement Date (iii) award cash
bonuses to the Executive in amounts and in a manner substantially consistent
with past practice in light of the Company’s financial performance or
(iv) continue to provide any material fringe benefit enjoyed by Executive
immediately prior to the Measurement Date;

(d) a change by the Company in the location at which the Executive performs his
or her principal duties for the Company to a new location that is both
(i) outside a radius of 50 miles from the Executive’s principal residence
immediately prior to the Measurement Date and (ii) more than 30 miles from the
location at which the Executive performed his or her principal duties for the
Company immediately prior to the Measurement Date; or a requirement by the
Company that the Executive travel on Company business to a substantially greater
extent than required immediately prior to the Measurement Date;

(e) the failure of the Company to obtain the agreement from any successor to the
Company to assume and agree to perform this Agreement, as required by
Section 6.1;

(f) a material breach of this Agreement; or

(g) any failure of the Company to pay or provide to the Executive any portion of
the Executive’s compensation or benefits due under any Benefit Plan within seven
days of the date such compensation or benefits are due, or any material breach
by the Company of this Agreement or any employment agreement with the Executive.

The Executive’s right to terminate his or her employment for Good Reason shall
not be affected by the Executive’s incapacity due to physical or mental illness.

1.5 “Disability” means the Executive’s absence from the full-time performance of
the Executive’s duties with the Company for 180 consecutive calendar days as a
result of incapacity due to mental or physical illness which is determined to be
total and permanent by a physician selected by the Company or its insurers and
acceptable to the Executive or the Executive’s legal representative.

2. Term of Agreement. This Agreement, and all rights and obligations of the
parties hereunder, shall take effect upon the Effective Date and shall expire
upon the first

 

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to occur of (a) the expiration of the Term (as defined below) if a Change in
Control has not occurred during the Term, (b) the date 24 months after the
Change in Control Date, if the Executive is still employed by the Company as of
such later date, or (c) the fulfillment by the Company of all of its obligations
under Sections 4 and 5.2 if the Executive’s employment with the Company
terminates within 24 months following the Change in Control Date. “Term” shall
mean the period commencing as of the Effective Date and continuing in effect
through December 31, 2011; provided, however, that commencing on January 1, 2012
and each January 1, thereafter, the Term shall be automatically extended for one
additional year unless, not later than 90 days prior to the scheduled expiration
of the Term (or any extension thereof), the Company shall have given the
Executive written notice that the Term will not be extended.

3. Employment Status; Termination Following Change in Control.

3.1 Not an Employment Contract. The Executive acknowledges that this Agreement
does not constitute a contract of employment or impose on the Company any
obligation to retain the Executive as an employee and that this Agreement does
not prevent the Executive from terminating employment at any time. If the
Executive’s employment with the Company terminates for any reason and
subsequently a Change in Control shall occur, the Executive shall not be
entitled to any benefits hereunder except as otherwise provided pursuant to
Section 1.2.

3.2 Termination of Employment.

(a) If the Change in Control Date occurs during the Term, any termination of the
Executive’s employment by the Company or by the Executive within 24 months
following the Change in Control Date (other than due to the death of the
Executive) shall be communicated by a written notice to the other party hereto
(the “Notice of Termination”), given in accordance with Section 7. Any Notice of
Termination shall: (i) indicate the specific termination provision (if any) of
this Agreement relied upon by the party giving such notice, (ii) to the extent
applicable, set forth in reasonable detail the facts and circumstances claimed
to provide a basis for termination of the Executive’s employment under the
provision so indicated and (iii) specify the Date of Termination (as defined
below). The effective date of an employment termination (the “Date of
Termination”) shall be the close of business on the date specified in the Notice
of Termination (which date may not be less than 15 days or more than 120 days
after the date of delivery of such Notice of Termination), in the case of a
termination other than one due to the Executive’s death, or the date of the
Executive’s death, as the case may be. In the event the Company fails to satisfy
the requirements of Section 3.2(a) regarding a Notice of Termination, the
purported termination of the Executive’s employment pursuant to such Notice of
Termination shall not be effective for purposes of this Agreement.

(b) The failure by the Executive or the Company to set forth in the Notice of
Termination any fact or circumstance which contributes to a showing of Good
Reason or Cause shall not waive any right of the Executive or the Company,

 

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respectively, hereunder or preclude the Executive or the Company, respectively,
from asserting any such fact or circumstance in enforcing the Executive’s or the
Company’s rights hereunder.

(c) Any Notice of Termination for Cause given by the Company must be given
within 90 days of the occurrence of the event(s) or circumstance(s) that
constitute(s) Cause. Prior to any Notice of Termination for Cause being given
(and prior to any termination for Cause being effective), the Executive shall be
entitled to a hearing before the Board of Directors of the Company at which the
Executive may, at the Executive’s election, be represented by counsel and at
which the Executive shall have a reasonable opportunity to be heard. Such
hearing shall be held on not less than 15 days prior written notice to the
Executive stating the Board of Directors’ intention to terminate the Executive
for Cause and stating in detail the particular event(s) or circumstance(s) that
the Board of Directors believes constitutes Cause for termination.

(d) Any Notice of Termination for Good Reason given by the Executive must be
given within 90 days of the first occurrence of the event(s) or circumstance(s)
that constitute(s) Good Reason.

4. Benefits to Executive.

4.1 Stock Acceleration. If the Change in Control Date occurs during the Term,
then, effective upon the Change in Control Date, (a) each outstanding option to
purchase shares of Common Stock of the Company held by the Executive shall
become immediately exercisable in full and will no longer be subject to a right
of repurchase by the Company and (b) each outstanding restricted stock award
shall be deemed to be fully vested and will no longer be subject to a right of
repurchase by the Company.

4.2 Compensation. If the Change in Control Date occurs during the Term and the
Executive’s employment with the Company terminates within 24 months following
the Change in Control Date, the Executive shall be entitled to the following
benefits:

(a) Termination Without Cause or for Good Reason. If the Executive’s employment
with the Company is terminated by the Company (other than for Cause, Disability
or Death) or by the Executive for Good Reason within 24 months following the
Change in Control Date, then the Executive shall be entitled to the following
benefits:

(i) the Company shall pay to the Executive in a lump sum in cash within 30 days
after the Date of Termination the aggregate of the following amounts:

(1) the sum of (A) the Executive’s base salary through the Date of Termination,
(B) the annual bonus paid or payable (including any bonus or portion thereof
which has been earned but deferred) for the most recently

 

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completed fiscal year (if such bonus has not yet been paid), (C) the product of
(x) the greater of (I) the annual bonus paid or payable to the Executive
(including any bonus or portion thereof which has been earned but deferred) for
the most recently completed fiscal year and (II) the Executive’s target or
reference bonus for the fiscal year in which the Date of Termination took place
and (y) a fraction, the numerator of which is the number of days in the current
fiscal year through the Date of Termination, and the denominator of which is 365
and (D) the amount of any compensation previously deferred by the Executive
(together with any accrued interest or earnings thereon) and any accrued
vacation pay, in each case to the extent not previously paid (the sum of the
amounts described in clauses (A), (B), (C) and (D) shall be hereinafter referred
to as the “Accrued Obligations”); and

(2) the amount equal to (A) three multiplied by (b) the sum of (x) the
Executive’s highest annual base salary in any twelve-month period (on a rolling
basis) during the five-year period prior to the Change in Control Date and
(y) the greater of (I) the Executive’s highest annual bonus in any twelve-month
period (on a rolling basis) during the five-year period prior to the Change in
Control Date and (II) the Executive’s target or reference bonus for the fiscal
year in which the Change in Control took place.

(ii) for three years after the Date of Termination, or such longer period as may
be provided by the terms of the appropriate plan, program, practice or policy,
the Company shall continue to provide benefits (including, without limitation,
automobile, retirement, medical, dental, life insurance and disability benefits)
to the Executive and the Executive’s family at least equal to those which would
have been provided to them if the Executive’s employment had not been
terminated, in accordance with the applicable benefit plans in effect on the
Measurement Date or, if more favorable to the Executive and the Executive’s
family, in effect generally at any time thereafter with respect to other peer
executives of the Company and its affiliated companies; provided, however, that
if the Executive becomes reemployed with another employer and is eligible to
receive a particular type of benefits (e.g., medical benefits) from such
employer on terms at least as favorable to the Executive and the Executive’s
family as those being provided by the Company, then the Company shall no longer
be required to provide those particular benefits to the Executive and the
Executive’s family; and provided further, however, that (A) if any particular
benefits cannot be provided because of plan or regulatory restrictions, then the
Company will pay to the Executive an amount equal to the cost the Executive will
incur in acquiring such benefits directly as a result of the Company not
providing such benefits and (B) to the extent the Company determines that the
Executive’s qualifying event for purposes of continuation of medical benefits
under COBRA occurs on the Executive’s Date of Termination, such period of
continuation of benefits shall not be counted against or otherwise reduce the
period for which the Company must provide continuation of medical benefits under
this Section 4.2(a)(ii) unless the Executive otherwise agrees;

(iii) to the extent not previously paid or provided, the Company shall timely
pay or provide to the Executive any other amounts or benefits

 

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required to be paid or provided or which the Executive is eligible to receive
following the Executive’s termination of employment under any plan, program,
policy, practice, contract or agreement of the Company and its affiliated
companies (such other amounts and benefits shall be hereinafter referred to as
the “Other Benefits”); and

(iv) Retirement Plan Benefits. If not already vested, the Executive shall be
deemed fully vested as of the Measurement Date in any Company retirement plans
or other written agreements between the Executive and the Company relating to
pay or other benefits upon retirement in which the Executive was a participant,
party or beneficiary immediately prior to the Change in Control, and any
additional plans or agreements in which such Executive became a participant,
party or beneficiary after the Change in Control and before the Date of
Termination. In addition to the foregoing, for purposes of determining the
amounts to be paid to the Executive under such plans or agreements, the years of
service with the Company and the age of the Executive under all such plans and
agreements shall be deemed increased by thirty-six (36) months. For purposes of
this Section 4.2 (a)(iv), the term “plans” includes, without limitation, the
Company’s qualified pension plan, non-qualified pension plans, profit-sharing
plans and 401(k) plans, and any companion, successor or amended plans, and the
term “agreements” encompasses, without limitation, the terms of any offer letter
leading to the Executive’s employment with the Company where the Executive was a
signatory thereto, any written amendments to the foregoing and any subsequent
amendments on such matters. In the event the terms of the plans referenced in
this Section 4.2 (a)(iv) do not for any reason coincide with the provisions of
this Section 4.2 (a)(iv) (e.g., if plan amendments would cause disqualification
of qualified plans), the Executive shall be entitled to receive from the
Company, under the terms of this Agreement, an amount equal to all amounts the
Executive would have received , at the time the Executive would have received
such amounts, had all such plans continued in existence as in effect on the date
of this Agreement after being amended to coincide with the terms of this
Section 4.2 (a)(iv).

(b) Resignation without Good Reason; Termination for Death or Disability. If the
Executive voluntarily terminates his or her employment with the Company within
24 months following the Change in Control Date, excluding a termination for Good
Reason, or if the Executive’s employment with the Company is terminated by
reason of the Executive’s death or Disability within 24 months following the
Change in Control Date, then the Company shall (i) pay the Executive (or the
Executive’s estate, if applicable), in a lump sum in cash within 30 days after
the Date of Termination, the Accrued Obligations and (ii) timely pay or provide
to the Executive the Other Benefits.

(c) Termination for Cause. If the Company terminates the Executive’s employment
with the Company for Cause within 24 months following the Change in Control
Date, then the Company shall (i) pay the Executive, in a lump sum in cash within
30 days after the Date of Termination, the sum of (A) the Executive’s annual
base salary through the Date of Termination and (B) the amount of any
compensation previously deferred by the Executive, in each case to the extent
not previously paid, and (ii) timely pay or provide to the Executive the Other
Benefits.

 

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4.3 Taxes.

(a) In the event that the Company undergoes a “Change in Ownership or Control”
(as defined below), and thereafter, the Executive becomes eligible to receive
“Contingent Compensation Payments” (as defined below) the Company shall, as soon
as administratively feasible after the Executive becomes so eligible determine
and notify the Executive (with reasonable detail regarding the basis for its
determinations) (i) which of the payments or benefits due to the Executive
following such Change in Ownership or Control constitute Contingent Compensation
Payments, (ii) the amount, if any, of the excise tax (the “Excise Tax”) payable
pursuant to Section 4999 of the Internal Revenue Code of 1986, as amended (the
“Code”), by the Executive with respect to such Contingent Compensation Payment
and (iii) the amount of the “Gross-Up Payment” (as defined below) due to the
Executive with respect to such Contingent Compensation Payment. Within 30 days
after delivery of such notice to the Executive, the Executive shall deliver a
response to the Company (the “Executive Response”) stating either (A) that the
Executive agrees with the Company’s determination pursuant to the preceding
sentence or (B) that the Executive disagrees with such determination, in which
case the Executive shall indicate which payment and/or benefits should be
characterized as a Contingent Compensation Payment, the amount of the Excise Tax
with respect to such Contingent Compensation Payment and the amount of the
Gross-Up Payment due to the Executive with respect to such Contingent
Compensation Payment. If the Executive states in the Executive Response that the
Executive agrees with the Company’s determination, the Company shall make the
Gross-Up Payment to the Executive within three business days following delivery
to the Company of the Executive Response. If the Executive states in the
Executive Response that the Executive disagrees with the Company’s
determination, then, for a period of 15 days following delivery of the Executive
Response, the Executive and the Company shall use good faith efforts to resolve
such dispute. If such dispute is not resolved within such 15-day period, such
dispute shall be settled exclusively by arbitration in Boston, Massachusetts, in
accordance with the rules of the American Arbitration Association then in
effect. Judgment may be entered on the arbitrator’s award in any court having
jurisdiction. The Company shall, within three business days following delivery
to the Company of the Executive Response, make to the Executive those Gross-Up
Payments as to which there is no dispute between the Company and the Executive
regarding whether they should be made. The balance of the Gross-Up Payments
shall be made within three business days following the resolution of such
dispute. The amount of any payments to be made to the Executive following the
resolution of such dispute shall be increased by the amount of the accrued
interest thereon computed at the prime rate announced from time to time by The
Wall Street Journal compounded monthly from the date that such payments
originally were due. In the event that the Executive fails to deliver an
Executive Response on or before the required date, the Company’s initial
determination shall be final. The Gross-Up Payment shall be made no later than
the end of the Executive’s taxable year next following the Executive’s taxable
year in which he paid the taxes related to the Gross-Up Payment.

 

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(b) For purposes of this Section 4.3, the following terms shall have the
following respective meanings:

(i) “Change in Ownership or Control” shall mean a change in the ownership or
effective control of the Company or in the ownership of a substantial portion of
the assets of the Company determined in accordance with Section 280G(b)(2) of
the Code.

(ii) “Contingent Compensation Payment” shall mean any payment (or benefit) in
the nature of compensation that is made or supplied to a “disqualified
individual” (as defined in Section 280G(c) of the Code) and that is contingent
(within the meaning of Section 280G(b)(2)(A)(i) of the Code) on a Change in
Ownership or Control of the Company.

(iii) “Gross-Up Payment” shall mean an amount equal to the sum of (i) the amount
of the Excise Tax payable with respect to a Contingent Compensation Payment and
(ii) the amount necessary to pay all additional taxes imposed on (or
economically borne by) the Executive (including the Excise Taxes, state and
federal income taxes and all applicable withholding taxes) attributable to the
receipt of such Gross-Up Payment. For purposes of the preceding sentence, all
taxes attributable to the receipt of the Gross-Up Payment shall be computed
assuming the application of the maximum tax rates provided by law.

4.4 Outplacement Services. In the event the Executive is terminated by the
Company (other than for Cause, Disability or Death), or the Executive terminates
employment for Good Reason, within 24 months following the Change in Control
Date, the Company shall provide outplacement services through one or more
outside firms of the Executive’s choosing up to an aggregate of $25,000 with
such services to extend until the earlier of (i) 12 months following the
termination of Executive’s employment or (ii) the date the Executive secures
full time employment.

4.5 Mitigation. The Executive shall not be required to mitigate the amount of
any payment or benefits provided for in this Section 4 by seeking other
employment or otherwise. Further, except as provided in Section 4.2(a)(ii), the
amount of any payment or benefits provided for in this Section 4 shall not be
reduced by any compensation earned by the Executive as a result of employment by
another employer, by retirement benefits, by offset against any amount claimed
to be owed by the Executive to the Company or otherwise.

4.6 Payments Subject to Section 409A. Subject to the provisions in this
Section 4.6, any severance payments or benefits under this Agreement shall begin
only upon the date of the Employee’s “separation from service” (determined as
set forth below) which occurs on or after the date of termination of the
Employee’s employment. The following rules shall apply with respect to
distribution of the payments and benefits, if any, to be provided to the
Employee under this Agreement:

(a) It is intended that each installment of the severance payments and benefits
provided under this Agreement shall be treated as a separate “payment” for
purposes of Section 409A of the Code and the guidance issued thereunder
(“Section 409A”). Neither the Company nor the Employee shall have the right to
accelerate or defer the delivery of any such payments or benefits except to the
extent specifically permitted or required by Section 409A.

 

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(b) If, as of the date of Employee’s “separation from service” from the Company,
the Employee is not a “specified employee” (within the meaning of Section 409A),
then each installment of the severance payments and benefits shall be made on
the dates and terms set forth in this Agreement.

(c) If, as of the date of the Employee’s “separation from service” from the
Company, the Employee is a “specified employee” (within the meaning of
Section 409A), then:

(i) Each installment of the severance payments and benefits due under this
Agreement that, in accordance with the dates and terms set forth herein, will in
all circumstances, regardless of when the separation from service occurs, be
paid within the Short-Term Deferral Period (as hereinafter defined) shall be
treated as a short-term deferral within the meaning of Treasury Regulation §
1.409A-1(b)(4) to the maximum extent permissible under Section 409A. For
purposes of this Agreement, the “Short-Term Deferral Period” means the period
ending on the later of the fifteenth day of the third month following the end of
the Employee’s tax year in which the separation from service occurs and the
fifteenth day of the third month following the end of the Company’s tax year in
which the separation from service occurs; and

(ii) Each installment of the severance payments and benefits due under this
Agreement that is not described in subsection (c)(i) above and that would,
absent this subsection, be paid within the six-month period following the
Employee’s “separation from service” from the Company shall not be paid until
the date that is six months and one day after such separation from service (or,
if earlier, the Employee’s death), with any such installments that are required
to be delayed being accumulated during the six-month period and paid in a lump
sum on the date that is six months and one day following the Employee’s
separation from service and any subsequent installments, if any, being paid in
accordance with the dates and terms set forth herein; provided, however, that
the preceding provisions of this sentence shall not apply to any installment of
severance payments and benefits if and to the maximum extent that such
installment is deemed to be paid under a separation pay plan that does not
provide for a deferral of compensation by reason of the application of Treasury
Regulation § 1.409A-1(b)(9)(iii) (relating to separation pay upon an involuntary
separation from service). Any installments that qualify for the exception under
Treasury Regulation § 1.409A-1(b)(9)(iii) must be paid no later than the last
day of the Employee’s second taxable year following the taxable year in which
the separation from service occurs.

 

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(d) The determination of whether and when the Employee’s separation from service
from the Company has occurred shall be made and in a manner consistent with, and
based on the presumptions set forth in, Treasury Regulation § 1.409A-1(h).
Solely for purposes of this paragraph (d), “Company” shall include all persons
with whom the Company would be considered a single employer under Section 414(b)
and 414(c) of the Code.

(e) All reimbursements and in-kind benefits provided under this Agreement shall
be made or provided in accordance with the requirements of Section 409A to the
extent that such reimbursements or in-kind benefits are subject to Section 409A,
including, where applicable, the requirements that (i) any reimbursement is for
expenses incurred during the Employee’s lifetime (or during a shorter period of
time specified in this Agreement), (ii) the amount of expenses eligible for
reimbursement during a calendar year may not affect the expenses eligible for
reimbursement in any other calendar year, (iii) the reimbursement of an eligible
expense will be made on or before the last day of the calendar year following
the year in which the expense is incurred and (iv) the right to reimbursement is
not subject to set off or liquidation or exchange for any other benefit.

(f) This Agreement is intended to comply with the provisions of Section 409A and
the Agreement shall, to the extent practicable, be construed in accordance
therewith. The Company makes no representation or warranty and shall have no
liability to the Executive or any other person if any provisions of this
Agreement are determined to constitute deferred compensation subject to
Section 409A and do not satisfy an exemption from, or the conditions of,
Section 409A.

5. Disputes.

5.1 Settlement of Disputes; Arbitration. All claims by the Executive for
benefits under this Agreement shall be directed to and determined by the Board
of Directors of the Company and shall be in writing. Any denial by the Board of
Directors of a claim for benefits under this Agreement shall be delivered to the
Executive in writing and shall set forth the specific reasons for the denial and
the specific provisions of this Agreement relied upon. The Board of Directors
shall afford a reasonable opportunity to the Executive for a review of the
decision denying a claim. Any further dispute or controversy arising under or in
connection with this Agreement shall be settled exclusively by arbitration in
Boston, Massachusetts, in accordance with the rules of the American Arbitration
Association then in effect. Judgment may be entered on the arbitrator’s award in
any court having jurisdiction.

5.2 Expenses. The Company agrees to pay as incurred, to the full extent
permitted by law, all legal, accounting and other fees and expenses which the
Executive may reasonably incur as a result of any claim or contest (regardless
of the outcome thereof) by the Company, the Executive or others regarding the
validity or enforceability of, or liability under, any provision of this
Agreement or any guarantee of

 

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performance thereof (including as a result of any contest by the Executive
regarding the amount of any payment or benefits pursuant to this Agreement),
plus in each case interest on any delayed payment at the applicable Federal rate
provided for in Section 7872(f)(2)(A) of the Code.

6. Successors.

6.1 Successor to Company. The Company shall require any successor (whether
direct or indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business or assets of the Company expressly to assume
and agree to perform this Agreement to the same extent that the Company would be
required to perform it if no such succession had taken place. Failure of the
Company to obtain an assumption of this Agreement at or prior to the
effectiveness of any succession shall be a breach of this Agreement and shall
constitute Good Reason if the Executive elects to terminate employment, except
that for purposes of implementing the foregoing, the date on which any such
succession becomes effective shall be deemed the Date of Termination. As used in
this Agreement, “Company” shall mean the Company as defined above and any
successor to its business or assets as aforesaid which assumes and agrees to
perform this Agreement, by operation of law or otherwise.

6.2 Successor to Executive. This Agreement shall inure to the benefit of and be
enforceable by the Executive’s personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees. If the
Executive should die while any amount would still be payable to the Executive or
the Executive’s family hereunder if the Executive had continued to live, all
such amounts, unless otherwise provided herein, shall be paid in accordance with
the terms of this Agreement to the executors, personal representatives or
administrators of the Executive’s estate.

7. Notice. All notices, instructions and other communications given hereunder or
in connection herewith shall be in writing. Any such notice, instruction or
communication shall be sent either (i) by registered or certified mail, return
receipt requested, postage prepaid, or (ii) prepaid via a reputable nationwide
overnight courier service, in each case addressed to the Company, at One
Technology Park Drive, Westford, Massachusetts 01886 and to the Executive at the
Executive’s principal residence as currently reflected on the Company’s records
(or to such other address as either the Company or the Executive may have
furnished to the other in writing in accordance herewith). Any such notice,
instruction or communication shall be deemed to have been delivered five
business days after it is sent by registered or certified mail, return receipt
requested, postage prepaid, or one business day after it is sent via a reputable
nationwide overnight courier service. Either party may give any notice,
instruction or other communication hereunder using any other means, but no such
notice, instruction or other communication shall be deemed to have been duly
delivered unless and until it actually is received by the party for whom it is
intended.

 

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8. Miscellaneous.

8.1 Severability. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision
of this Agreement, which shall remain in full force and effect.

8.2 Injunctive Relief. The Company and the Executive agree that any breach of
this Agreement by the Company is likely to cause the Executive substantial and
irrevocable damage and therefore, in the event of any such breach, in addition
to such other remedies which may be available, the Executive shall have the
right to specific performance and injunctive relief.

8.3 Governing Law. The validity, interpretation, construction and performance of
this Agreement shall be governed by the internal laws of the Commonwealth of
Massachusetts, without regard to conflicts of law principles.

8.4 Waivers. No waiver by the Executive at any time of any breach of, or
compliance with, any provision of this Agreement to be performed by the Company
shall be deemed a waiver of that or any other provision at any subsequent time.

8.5 Counterparts. This Agreement may be executed in counterparts, each of which
shall be deemed to be an original but both of which together shall constitute
one and the same instrument.

8.6 Tax Withholding. Any payments provided for hereunder shall be paid net of
any applicable tax withholding required under federal, state or local law.

8.7 Entire Agreement. This Agreement sets forth the entire agreement of the
parties hereto in respect of the subject matter contained herein and supersedes
all prior agreements, promises, covenants, arrangements, communications,
representations or warranties, whether oral or written, by any officer, employee
or representative of any party hereto in respect of the subject matter contained
herein; and any prior agreement of the parties hereto in respect of the subject
matter contained herein is hereby terminated and cancelled.

8.8 Amendments. This Agreement may be amended or modified only by a written
instrument executed by both the Company and the Executive.

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first set forth above.

 

KĀDANT INC.

/s/ Thomas M. O’Brien

By: Thomas M. O’Brien Executive Vice President and Chief Financial Officer
EXECUTIVE

/s/ William A. Rainville

William A. Rainville

 

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