Exhibit 10.20

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (“Agreement”) is entered into as of April 7, 2005, by
and between Kadant Inc., a Delaware corporation with its principal place of
business at One Acton Place, Acton, Massachusetts 01720 (“Kadant”), and Rudolf
A. Leerentveld, residing at 988 Treasure Island Drive, Mattawan, Michigan 49071
(the “Employee”). Kadant and the Employee are referred to together herein as the
“Parties.”

Introduction

WHEREAS, Kadant, a Delaware corporation, Johnson Acquisition Corp., a Michigan
corporation, The Johnson Corporation, a Michigan corporation (the “Company”),
and certain stockholders of the Company have entered into a Purchase Agreement,
dated as of April 7, 2005 (the “Purchase Agreement”), pursuant to which the
Company will be acquired by and become a wholly owned subsidiary of Kadant; and

WHEREAS, after the Closing Date, Kadant desires that the Employee be employed by
the Company (the Company being referred to herein in such capacity as the
“Employer”), and the Employee desires such employment, subject to and in
accordance with the terms set forth in this Agreement.

NOW, THEREFORE, in consideration of the mutual covenants and promises contained
herein, and other good and valuable consideration, the receipt and adequacy of
which is hereby acknowledged, the Parties agree as follows:

1. Term of Employment; Compensation and Benefits.

1.1 Term of Employment. The Employer hereby agrees to employ the Employee, and
the Employee hereby accepts employment with the Employer, upon the terms set
forth in this Agreement, for the period commencing on the Closing Date (the
“Commencement Date”) and ending on the second anniversary of the Closing Date
(such period, the “Employment Period”), unless sooner terminated in accordance
with the provisions of Section 2 hereof. Nothing herein shall be interpreted to
limit the Parties’ ability to continue the employment of the Employee by the
Employer on an “at will” basis after the expiration of the Employment Period;
provided that such employment will be on the Employer’s then current terms and
conditions of employment for similarly situated employees.

1.2 Duties and Responsibilities. The Employee shall serve as the President of
the Company. The Employee shall be subject to the supervision of and shall have
such authority as is delegated to him by the Chief Executive Officer of Kadant
or his designee. The Employee hereby accepts such employment and agrees to
undertake the duties and responsibilities inherent in such position and such
other duties and responsibilities as the Employer or Kadant shall from time to
time reasonably assign to him consistent with the terms hereof. The Employee
agrees to devote his entire business time, attention and energies to the
business and interests of the Employer during the Employment Period. The
Employee further agrees to abide by:

(a) the rules, regulations, instructions, personnel practices and policies of
Kadant which are generally applicable to all Kadant employees and any changes
therein which may be adopted from time to time by Kadant;

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(b) Kadant’s Insider Trading Policy and any changes therein which may be adopted
from time to time by Kadant; and

(c) Kadant’s Code of Business Conduct and Ethics and any changes therein which
may be adopted from time to time by Kadant.

1.3 Compensation.

(a) Commencing on the Closing Date, the Employer shall pay the Employee as
salary for the services and duties performed hereunder Two Hundred Twenty-five
Thousand Dollars ($225,000) per year in accordance with the Employer’s customary
payroll procedures then in effect. Such salary shall be subject to upward
adjustment thereafter as determined by the Chief Executive Officer of Kadant,
but shall not be less than $225,000 annually during the term of this Agreement.

(b) The Employer shall pay the Employee an annual bonus of $300,000 per year.
Employee must be employed by the Employer as of the last day of Kadant’s fiscal
year to be entitled to and paid the full annual bonus. In case the Employee’s
employment is discontinued prior to the last day of Kadant’s fiscal year, then
the bonus to which the Employee shall be entitled shall be pro-rated in
proportion to the days in such fiscal year that the Employee was employed under
this Agreement. In case the Employee’s employment is discontinued “For Cause” as
defined in Section 2.2 of this Agreement, no bonus payment shall be due.

(c) Effective upon the Closing Date, and provided that the Employee is employed
by the Company on the Closing Date, the Compensation Committee of the Board of
Directors of Kadant shall grant to the Employee a nonqualified stock option to
purchase 100,000 shares of common stock, $0.01 par value per share (the “Common
Stock”), of Kadant at an exercise price equal to the closing price of the Common
Stock on the Closing Date as reported by the New York Stock Exchange, pursuant
to the terms and conditions set forth in the form of Nonqualified Stock Option
Agreement attached hereto as Exhibit A.

1.4 Fringe Benefits. The Employee shall be entitled to participate in all
benefit programs the Employer establishes and makes available to its executive
officers from time to time, if any, to the extent that the Employee’s position,
tenure, salary, age, health and other qualifications make him eligible to
participate. The Employee’s service with the Company or its subsidiaries shall
be counted as service with the Employer for the purposes of determining
eligibility for, entitlement to and vesting of benefits under all benefit plans
provided by the Employer to its employees as allowed by law.

 

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1.5 Profit Sharing Plan. The Employer shall make certain periodic contributions
on behalf of and for the benefit of the Employee, in accordance with the
provisions of and subject to the limitations set forth in the Company’s Profit
Sharing Plan, as may be amended from time to time.

1.6 Reimbursement of Business and Personal Expenses. The Employer shall
reimburse the Employee for all reasonable travel, living and other business
expenses incurred or paid by the Employee in connection with, or related to, the
performance of his duties, responsibilities or services under this Agreement,
upon presentation by the Employee of documentation, expense statements, vouchers
and/or such other supporting information as the Employer may request, in
accordance with Kadant’s travel expense policies and guidelines.

1.7 Appointment as a Vice President of Kadant. The Chief Executive Officer of
Kadant intends to recommend to the Board of Directors of Kadant the appointment
of the Employee as a Vice President of Kadant at the regularly scheduled meeting
of the Board of Directors of Kadant held concurrently with the first annual
meeting of stockholders of Kadant after the Closing Date. Such appointment is
subject to the approval and discretion of the Board of Directors of Kadant,
based upon their assessment of the performance of the Employee and such other
factors as they deem appropriate in their sole discretion. Upon such
appointment, the Employee shall be deemed an “officer” of Kadant as such term is
defined in Rule 16a-1(f) of the Securities and Exchange Act of 1934, as amended
(the “Act”) and agrees to comply with all reporting requirements of an officer
as required by the Act.

2. Employment Termination.

The employment of the Employee by the Employer pursuant to this Agreement shall
terminate upon the occurrence of any of the following:

2.1 Expiration of the Employment Period. At the expiration of the Employment
Period or such longer period of employment in accordance with Section 1 hereof;

2.2 For Cause. At the election of the Employer, “for cause” (as defined below),
immediately upon written notice by the Employer to the Employee. For the
purposes of this Agreement, “for cause” termination shall be deemed to exist
upon (a) a good faith finding by the Employer of dishonesty, gross negligence or
willful misconduct related to the performance of the Employee’s duties for the
Employer; (b) the conviction of the Employee of, or the entry of a pleading of
guilty or nolo contendere by the Employee to, any crime involving moral
turpitude or any felony; (c) the Employee’s habitual drunkenness, or the use,
possession, distribution or being under the influence of alcohol or illegal
substances or illegal drugs in the workplace or in a manner otherwise affecting
the Employee’s performance of his duties for the Employer; or (d) the breach by
the Employee of Section 4 of this Agreement;

2.3 In the Event of Death or Disability. Thirty days after the death or
“disability” (as defined below) of the Employee. As used in this Agreement, the
term “disability” shall mean the inability of the Employee, due to a physical or
mental disability, for a period of 180 days, whether or not consecutive, during
any 360-day period to perform the services contemplated under this Agreement. A
determination of disability shall be made by a physician satisfactory to

 

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both the Employee and the Employer, provided that if the Employee and the
Employer do not agree on a physician, the Employee and the Employer shall each
select a physician and these two together shall select a third physician, whose
determination as to disability shall be binding on all parties;

2.4 Termination without Cause. At the election of the Employer, without cause
and for no cause, upon not less than six months’ prior written notice of
termination; provided, however, that the Employer reserves the right to place
the Employee on a paid leave during such notice period; or

2.5 Voluntary Termination. At the election of the Employee prior to the
expiration of the Employment Period in accordance with Section 1 hereof upon not
less than six months prior written notice of termination or notice equal to the
remainder of the Employment Period, whichever is less.

3. Effect of Termination.

3.1 Termination Upon Expiration of Employment or for Cause. In the event the
Employee’s employment is terminated upon expiration of the Employment Period
pursuant to Section 2.1 or for cause pursuant to Section 2.2 hereof, the
Employer shall pay to the Employee the compensation and benefits otherwise
payable to him under Section 1 through the last day of his actual employment by
the Employer. The date upon which the Employee’s employment with the Employer
ceases is referred to herein as the “Employment Termination Date”.

3.2 Termination for Death or Disability. If the Employee’s employment is
terminated by death or because of disability pursuant to Section 2.3 hereof, the
Employer shall pay to the estate of the Employee or to the Employee, as the case
may be, the compensation which would otherwise be payable to the Employee
through the Employment Termination Date.

3.3 Termination by Employer without Cause. If the Employee’s employment is
terminated by the Employer without cause pursuant to Section 2.4 hereof prior to
the expiration of the Employment Period, the Employer shall pay to the Employee
(a) a lump sum payment on the Employment Termination Date equivalent to one year
of the Employee’s salary at his salary rate then in effect and (b) if such
termination occurs after the end of the fiscal year, the annual bonus as set
forth in Section 1.3(b) hereof.

3.4 Voluntary Termination. If the Employee’s employment is voluntarily
terminated by the Employee pursuant to Section 2.5 hereof prior to the
expiration of the Employment Period, the Employer shall pay to the Employee the
compensation and benefits otherwise payable to him under Section 1 through the
Employment Termination Date.

4. Non-Compete; Non-Solicitation; Confidential Information; Assignment of
Inventions.

The Employee understands and agrees that he shall continue to be subject to that
certain Employee Invention, Non-Disclosure, Non-Competition and Non-Solicitation
Agreement dated February 23, 2000 (the “Confidentiality Agreement”), by and
between the Employee and the Company. The Employee further understands and
agrees that he is also subject to the following

 

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provisions set forth in the Purchase Agreement: (a) the confidentiality and non
disclosure provisions set forth in Section 9.1 of the Purchase Agreement;
(b) the restrictions on the solicitation or hiring of former employees set forth
in Section 9.2 of the Purchase Agreement; and (c) the non competition provisions
set forth in Section 9.3 of the Purchase Agreement. For purposes of this
Section 4, in the event the Confidentiality Agreement conflicts with the
Purchase Agreement, the provisions set forth in the Purchase Agreement shall
govern. The provisions of this Section 4 shall survive the termination of this
Agreement.

5. Entire Agreement.

Except for (i) the Retention Bonus Agreement between the Company and the
Employee dated March 31, 2005, (ii) the Agreement between the Company and the
Employee dated April 6, 2005, (iii) the Employee Invention, Non-Disclosure,
Non-Competition and Non-Solicitation Agreement between the Company and the
Employee dated February 23, 200, (iv) the Stock Option Agreement between the
Company and the Employee dated December 30, 2003 (the “Option Agreement”) and
(v) the Stock Holders Agreement between the Company and the Employee dated
December 30, 2003 (the “Stock Holders Agreement”), this Agreement constitutes
the entire agreement between the Parties and supersedes all prior understandings
and agreements, written or oral (including, without limitation, (a) any
employment agreement between the Employee and the Company or any of its
Affiliates entered into prior to the date hereof and (b) that certain Agreement,
effective as of July 1, 2004, by and between the Employee and the Company), that
may have related in any way to the subject matter of this Agreement. The
Employee acknowledges and agrees that the Option Agreement and the Stock Holders
Agreement shall be void and of no further force or effect as of the Commencement
Date.

6. Amendment.

This Agreement may be amended or modified only by a written instrument executed
by Kadant and the Employee.

7. Governing Law, Forum and Jurisdiction.

This Agreement shall be governed by and construed in accordance with the
internal laws of the State of Delaware without reference to the conflict of laws
provisions thereof. Any action, suit or other legal proceeding that is commenced
to resolve any matter arising under or relating to any provision of this
Agreement shall be commenced only in a court of the State of Delaware (or, if
appropriate, a federal court located within Delaware), and Kadant and the
Employee each consent to the jurisdiction of such a court.

8. Succession and Assignment.

This Agreement shall be binding upon and inure to the benefit of the Parties and
their respective successors and permitted assigns. No Party may assign either
this Agreement or any of its rights, interests or obligations hereunder without
the prior written approval of the other Party; provided, that Kadant may assign
its rights, interests or obligations hereunder to (a) an Affiliate of Kadant
provided that Kadant shall remain responsible to the Employee for such
obligations in the event they are not met by such Affiliate or (b) a person who
acquires (whether by stock or merger or otherwise) all or substantially all of
the business or assets of Kadant or the Employer.

 

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9. Notices.

All notices, requests, demands, claims and other communications hereunder shall
be in writing. Any notice, request, demand, claim or other communication
hereunder shall be deemed duly delivered two 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, in each case to the intended recipient as set forth below:

If to the Employee:

Rudolf A. Leerentveld

988 Treasure Island Drive

Mattawan, MI 49071

Copy to:

Stan Stek, Esq.

Miller Canfield

99 Monroe Avenue N.W.

Suite 1200

Grand Rapids, MI 49503

If to Kadant:

Kadant Inc.

One Acton Place

Acton, MA 01720

Attention: Chief Executive Officer

Copy to:

Kadant Inc.

One Acton Place

Acton, MA 01720

Attention: General Counsel

Any Party may give any notice, request, demand, claim or other communication
hereunder using any other means (including personal delivery, expedited courier,
messenger service, telecopy, telex, ordinary mail or electronic mail), but no
such notice, request, demand, claim or other communication shall be deemed to
have been duly given unless and until it actually is received by the individual
for whom it is intended. Any Party may change the address to which notices,
request, demand, claims and other communications hereunder are to be delivered
by giving the other Party notice in the manner herein set forth.

 

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10. Miscellaneous.

10.1 No delay or omission by any Party in exercising any right under this
Agreement shall operate as a waiver of that or any other right. A waiver or
consent given by any Party to this Agreement on any one occasion shall be
effective only in that instance and shall not be construed as a bar or waiver of
any right of such Party on any other occasion.

10.2 The section headings in this Agreement are inserted for convenience only
and shall not affect in any way the meaning or interpretation of this Agreement.

10.3 In case any provision of this Agreement shall be invalid, illegal or
otherwise unenforceable, the validity, legality and enforceability of the
remaining provisions shall in no way be affected or impaired thereby. If any
restriction set forth in this Agreement is found by any court of competent
jurisdiction to be unenforceable because it extends for too long a period of
time or over too great a range of activities or in too broad a geographic area
as to which it may be enforceable, it shall be interpreted to extend only over
the maximum period of time, range of activities or geographic area as to which
it may be enforceable. The Parties intend that the provisions in Section 4 of
the Agreement shall be deemed to be a series of separate covenants, one for each
and every county of each and every state of the United States of America and
each and every political subdivision of each and every country outside the
United States of America where those provisions are intended to be effective.

10.4 The Employee recognizes that his willingness to be bound by the provisions
of Section 4 hereof was a critical condition precedent to Kadant’s willingness
to enter into and perform under this Agreement and the Purchase Agreement and
that the restrictions contained in Section 4 hereof are necessary for the
protection of the business and goodwill of Kadant and are considered by the
Employee to be reasonable for such purpose. The Employee also acknowledges that
the restrictions contained in Section 4 will not materially or unreasonably
interfere with the Employee’s ability to earn a living. The Employee agrees that
any breach of this Agreement is likely to cause Kadant substantial and
irrevocable damage and that therefore, in the event of any breach of this
Agreement, the Employee agrees that Kadant in addition to such other remedies
that may be available at law or in equity, shall be entitled to specific
performance and other injunctive relief without posting a bond.

10.5 This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original but all of which together shall constitute one and
the same instrument.

10.6 Capitalized terms used herein and not otherwise defined shall have the
meanings ascribed to such terms in the Purchase Agreement.

10.7 In the event the Purchase Agreement is terminated in accordance with
Section 10.1 thereof prior to the Commencement Date, this Agreement shall be
null and void and of no further force and effect.

[Remainder of Page Intentionally Left Blank.]

 

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

 

KADANT INC. By:  

/s/ William A. Rainville

Name:   William A. Rainville Title:   Chairman & CEO EMPLOYEE:

/s/ Rudolf A. Leerentveld

Rudolf A. Leerentveld

 

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Exhibit A

KADANT INC.

Nonqualified Stock Option Agreement

1. Grant of Option. This Nonqualified Stock Option Agreement (the “Option
Agreement”) contains the terms and conditions of a grant of a nonqualified stock
option (the “Option”) to purchase the shares of the common stock of the Company
(the “Option Shares”) made to you pursuant to the stock option plan identified
on the cover page of this Option Agreement (the “Plan”). The date on which your
Option was granted by the Company’s Board of Directors is written on the cover
page of this Option Agreement and is called the Grant Date. A copy of the Plan
that governs your Option is attached and made a part of this Option Agreement.
This Option is intended to be a non-statutory stock option under the U.S.
Internal Revenue Code of 1986, as amended.

2. Exercisability and Vesting of Option. Your Option only may be exercised once
your Option Shares have vested. Your Option Shares vest and become exercisable
in three installments for the number of shares listed on the cover page of this
Option Agreement under the heading “Shares” and on the vesting dates written on
the cover page of this Option Agreement under the heading “Full Vest”, provided
that on each vesting date you have been continuously employed by the Company or
an “Affiliated Employer” since the Grant Date. Your Option Shares will fully
vest immediately in the event of a Change in Control, an event that is defined
in the Plan, if the Change in Control occurs before the date on which you cease
to be an employee of the Company or an Affiliated Employer. The date on which
you cease to be an employee of the Company or an Affiliated Employer is called
your “Employment Termination Date”. An “Affiliated Employer” means any
corporation that more than 50% of its outstanding common stock is owned by the
Company. On your Employment Termination Date, all Option Shares that have not
already vested are immediately forfeited to the Company and cancelled.

3. Termination of Option. The date on which your Option terminates or expires is
called the “Option Termination Date.” Your Option will terminate when the first
of the following events occurs:

(a) the Expiration Date of the Option, which is seven years from your Grant Date
and identified on the cover page of this Option Agreement under the heading
“Expiration”; or

(b) three months after your Employment Termination Date if the Employment
Termination Date occurs for any reason other than the reasons named in Sections
3(c), 3(d) or 3(e); or

(c) one year after your Employment Termination Date if your Employment
Termination Date occurs due to your death or disability. For purposes of this
Option Agreement, “disability” means that you are receiving disability benefits
under the Company’s Long Term Disability Coverage, as then in effect, on the
Employment Termination Date; or

 

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(d) two years after your Employment Termination Date if the Employment
Termination Date occurs due to your retirement. For purposes of this Option
Agreement, (i) if you are an outside director of the Company, “retirement” means
the date on which you cease to serve as a director of the Company, and (ii) if
you are an employee of the Company or an Affiliated Employer, “retirement” means
the termination of your employment after age 55 and the completion of 10 years
of continuous service (consisting of at least 20 hours per week) to the Company
or an Affiliated Employer; or

(e) the date the Company is dissolved or liquidated.

4. No Assignment of Rights. Except for assignments or transfers by will or the
applicable laws of descent and distribution, your rights and interests under
this Option Agreement and the Plan may not be assigned or transferred in whole
or in part either directly or by operation of law or otherwise, including
without limitation by way of execution, levy, garnishment, attachment, pledge or
bankruptcy, and no such rights or interests shall be subject to any of your
obligations or liabilities. Notwithstanding the foregoing, if you are a director
or officer of Kadant Inc. on the date of grant, or subsequently become a
director or officer of Kadant Inc., the Company consents to the transfer of this
Option by you to an immediate member of your family, a family trust or family
partnership, provided that you, the Company and the transferee execute a written
assignment of this Option in the form specified by the Company and upon terms
satisfactory to the Company prior to such assignment becoming effective.

5. Exercise of Option; Delivery and Deposit of Certificate(s). You (or in the
case of your death, your legal representative) may exercise vested Option Shares
in whole or in part by giving written notice to the Company on the form provided
by the Company (the “Exercise Notice”) any time before the Option Termination
Date. Your Exercise Notice must be accompanied by full payment for the Option
Shares being purchased before it will be considered complete. You may pay for
the Option Shares by any of the following methods:

 

  •   in cash or by certified or bank cashier’s check payable to the order of
the Company, in an amount equal to the number of Option Shares being purchased
multiplied by the Exercise Price (the “Exercise Consideration”),

 

  •   in unrestricted shares of the Company’s common stock (the “Tendered
Shares”) with a market value equal to the Exercise Consideration,

 

  •   by delivery of an unconditional and irrevocable undertaking by a broker to
deliver promptly to the Company sufficient funds to pay the Exercise
Consideration, or

 

  •   any combination of cash, certified or bank cashier’s check or Tendered
Shares having a total value equal to the Exercise Consideration.

Tendered Shares that were acquired directly from the Company may be surrendered
as all or part of the Exercise Consideration only if you acquired such Tendered
Shares more than six months prior to the date of exercise. As soon as reasonably
practicable after receipt of the Exercise Notice and the Exercise Consideration,
the Company will deliver or cause to be delivered to you a certificate or
certificates representing the number of Option Shares you purchased, registered
in your name.

 

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6. Rights With Respect to Option Shares. Prior to the date the Option is
exercised, you shall not be considered to be the holder of the common stock
represented by the Option Shares for any purpose. Upon the issuance to you of a
certificate or certificates representing Option Shares, you shall have ownership
of those Option Shares, including the right to vote and receive dividends,
subject, however, to the other restrictions and limitations that may be imposed
either pursuant to the Plan and this Option Agreement or which may now or at
some date in the future be imposed by the Certificate of Incorporation or the
By-Laws of the Company.

7. Dilution and Other Adjustments. In the event a stock dividend, stock split or
combination of shares, or other distribution with respect to holders of common
stock other than normal cash dividends, occurs while the Option is outstanding
(after the Grant Date and before the date the Option is exercised), the
committee appointed by the Company’s Board of Directors to administer the Plan
(the “Committee”) may in its discretion adjust the number of shares for which
the Option may be exercised and the Exercise Price for the Option to reflect
such event. In the event any recapitalization, merger or consolidation involving
the Company, any transaction in which the Company becomes a subsidiary of
another entity, any sale or other disposition of all or a substantial portion of
the assets of the Company or any similar transaction, as determined by the
Committee, (any of the foregoing, a “covered transaction”) occurs while the
Option is outstanding, the Committee in its discretion may (i) accelerate the
exercisability of the Option, (ii) adjust the terms of the Option (whether or
not in a manner that complies with the requirements of Section 424(a) of the
Internal Revenue Code of 1986, as amended (the “Code”)), (iii) if there is a
survivor or acquiror entity, provide for the assumption of the Option by such
survivor or acquiror or an affiliate thereof or for the grant of one or more
replacement options by such survivor or acquiror or an affiliate thereof, in
each case on such terms (which may, but need not, comply with the requirements
of Section 424(a) of the Code) as the Committee may determine, (iv) terminate
the Option (provided, that if the Committee terminates the Option, it shall, in
connection therewith, either (A) accelerate the exercisability of the Option
prior to such termination, or (B) provide for a payment to the holder of the
Option of cash or other property or a combination of cash or other property in
an amount reasonably determined by the Committee to approximate the value of the
Option assuming an exercise immediately prior to the transaction, or (C) if
there is a survivor or acquiror entity, provide for the grant of one or more
replacement options pursuant to clause (iii) above), or (v) provide for none of,
or any combination of, the foregoing. No fraction of a share or fractional
shares shall be purchasable or deliverable under this Option Agreement.

8. Reservation of Shares. The Company will at all times during the term of this
Option Agreement reserve and keep available enough shares of its common stock to
satisfy the requirements of this Option Agreement and shall pay all fees and
expenses necessarily incurred by the Company in connection with this Option
Agreement and the issuance of Option Shares.

9. Taxes. The Company, in its sole discretion, will determine whether the
Company, any of its subsidiaries, or any other person has incurred or will incur
any liability to withhold any federal, state or local income or other taxes by
reason of the grant or exercise of the Option, the issuance of Option Shares to
you or the lapse of any restrictions applicable to the Option Shares. You agree
to pay promptly, upon demand by the Company or any of its subsidiaries, to the
Company or such subsidiary, any amount requested by it for the purpose of
satisfying such tax

 

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liability. If you fail to pay promptly the amount requested, the Company will
refuse to issue you the Option Shares and will, without further consent by you,
have the right to deduct such taxes from any payment of any kind otherwise due
to you, and may hold back from the Option Shares to be delivered to you on
exercise that number of shares calculated to satisfy all federal, state, local
or other applicable taxes required to be withheld in connection with such
exercise.

The Company may permit you to satisfy the minimum statutory withholding tax
requirement (the “Obligation”) arising from exercise of the Option by making an
election (an “Election”) to have the Company withhold from the number of shares
to be issued upon exercise of the Option, or to otherwise tender to the Company,
that number of shares of common stock having a value equal to the amount of the
Obligation. The value of the shares to be withheld or tendered shall be based
upon the closing price of the common stock on the date that the amount of the
Obligation is determined (the “Tax Date”), as reported by the stock exchange on
which the Company’s shares are then traded. Each Election must be made at the
time the Option is exercised or the Tax Date, whichever is later. The Committee
may disapprove of any Election or may suspend or terminate the right to make
Elections. An Election is irrevocable.

10. Determination of Rights. Any dispute or disagreement concerning the Plan or
this Option Agreement shall be determined by the committee appointed by the
Company’s Board of Directors to administer the Plan (the “Committee”), in its
sole discretion, and any decision made by the Committee in good faith shall be
conclusive on you and all other parties. The interpretation, construction and
determination of any question by the Committee of any provision of this Option
Agreement or the Plan, or any rule or regulation adopted pursuant to the Plan,
shall be final and conclusive on all parties.

11. Limitation of Employment Rights. The Option confers upon you no right to
continue in the employ of the Company or an Affiliated Employer or interferes in
any way with the right of the Company or an Affiliated Employer to terminate
your employment at any time.

12. Communications. Any communication or notice required or permitted to be
given under this Option Agreement will be in writing, and mailed by registered
or certified mail, by express courier or delivered in hand, to the Company
addressed to its Stock Option Administrator, Kadant Inc., One Acton Place, Suite
202, Acton, MA 01720, and to you at the address you most recently have given to
the Company.

 

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