Exhibit 10.1
 
                                                                        Kadant
Inc.
                                                                        ID:
52-1762325
Notice of Grant of Award                              One Technology Park Drive
and Award Agreement                                   Westford, MA    01886
 
 
[Recipient name]                                            Award Number: 
        [##]
[Recipient address]                                       
Plan:                            [##]
                                                                       
ID:                               [##]
 
 
Effective 5/24/2007, you have been granted an award of [##] restricted stock
units. These units are restricted until the vest date(s) shown below, at which
time you will receive shares of Kadant Inc. (the Company) common stock.
 
The current total value of the award is $[##].
 
The award will vest in increments on the date(s) shown.
 
                                    Shares                          Full Vest
[##]                              1/2/2010
 
 
 
 
 
By your signature and the Company’s signature below, you and the Company agree
that this award is granted under and governed by the terms and conditions of the
Company’s Award Plan as amended and the Award Agreement, all of which are
attached and made a part of this document.
 
 
 
___________________________________                          May 24,
2007_________________
Kadant
Inc.                                                                             
Date 
 
 
___________________________________                          May 24,
2007_________________
[Recipient
name]                                                                      
Date 
 
 
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KADANT INC.
 
AWARD AGREEMENT FOR
PERFORMANCE-BASED RESTRICTED STOCK UNITS
(“Award Agreement”)
 
1.   Preamble.  On the effective date shown on the first page of this Award
Agreement (“Award Date”), the Company granted to the Recipient restricted stock
units (“RSUs”) with respect to the number of shares of common stock of the
Company identified on the first page of this Award Agreement (“Award Shares”),
subject to the terms, conditions and restrictions set forth in this Award
Agreement and the provisions of the Company’s 2006 Equity Incentive Plan
(“Plan”). The RSUs represent a promise by the Company to deliver the Award
Shares upon vesting. Any consideration due to the Company on the issuance of
Award Shares pursuant to this Award Agreement will be deemed to have been
satisfied by services rendered by the Recipient to the Company during the
vesting period. 
 
2.   Restrictions on Transfer.  Unless and until the Award Shares shall have
vested as provided in Section 3 below, the Recipient shall not sell, transfer,
pledge, hypothecate, assign or otherwise dispose of, by operation of law or
otherwise, any RSUs, or any interest therein.
 
3.   Vesting Date.  Subject to the terms, conditions and restrictions of this
Award Agreement, including the Forfeiture provisions described in Section 4
below, the Recipient shall vest in all RSUs on January 2, 2010 (the “Vesting
Date”), provided that the performance measure set forth in this Section 3 is
met.
 
The Company has established as the performance measure earnings before interest,
taxes, depreciation and amortization (EBITDA) generated by its continuing
operations during the nine-month period beginning April 1, 2007 and ending
December 29, 2007 (the “Measurement Period”), equal to the amount set forth in
Exhibit A to this Award Agreement and as such amount may be adjusted as set
forth in such Exhibit A (the “Target EBITDA”). Upon the conclusion of the
Measurement Period, the Company shall calculate and determine the actual EBITDA
generated by its continuing operations during the Measurement Period as set
forth in Exhibit A (“Actual EDITDA”). The number of Award Shares deliverable to
the Recipient will be adjusted and determined by a continuous line graph based
on the following data points, which graph is included as Exhibit B:
 
Actual EDITDA is:                                    Number of Award Shares
Deliverable
Less than 80% of Target EBITDA                          0% of Award Shares
80% of Target EBITDA                                         50% of Award Shares
100% of Target EBITDA                                       100% of Award Shares
125% or greater of Target EBITDA                       150% of Award
Shares                                   
 
In the event that the Company does not generate Actual EBITDA equal to or more
than 80% of Target EBITDA, then all of the RSUs shall be automatically forfeited
to the Company. The Compensation Committee of the Company’s Board of Directors
shall be responsible for
 
 
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certifying the extent to which the performance measure has been met, prior to
the release of the Company’s earnings for the full 2007 fiscal year.
 
As soon as administratively practicable after the Vesting Date, but in any event
within the period ending on the later to occur of the date that is 75 days from
the end of the (i) Recipient’s tax year that includes the Vesting Date, or (ii)
the Company’s fiscal year that includes the Vesting Date, the Company shall
instruct its transfer agent to issue the Award Shares in the name of the
Recipient, subject to payment of all applicable withholding taxes pursuant to
Section 6 below.
 
4.      Forfeiture.
 
(a)  Definitions.  For purposes of this Award Agreement, “Forfeiture” shall mean
any forfeiture of RSUs pursuant to Section 4(b) below.  For purposes of this
Award Agreement, “employ” or “employment” with the Company shall include
employment with a parent or subsidiary of the Company, which controls, is
controlled by, or under common control of the Company.
 
(b)   Termination of Employment.
 
(i)   In the event that the Recipient ceases to be employed by  the Company
prior to the Vesting Date for any reason or no reason (except for death or
disability), with or without cause, then all of the Recipient’s RSUs shall be
automatically and immediately forfeited and returned to the Company as of the
date employment ceases.
 
(ii)  In the event that the Recipient ceases to be employed by the Company by
reason of death or disability, then the Company shall deliver to the Recipient a
pro rata portion of the Award Shares covered by the RSUs determined in
accordance with the schedule set forth below.  The balance of the Recipient’s
RSUs and Award Shares that are not so delivered shall be automatically and
immediately forfeited and returned to the Company as of the date of the
Recipient’s death or disability. For purposes of this Award Agreement,
“disability” means that you are receiving disability benefits under the
Company’s Long Term Disability Coverage, as then in effect, on the date
employment ceases.
 
Event occurs:                                           % of Award Shares
Delivered
Prior to December 29, 2007                                                  0%
On or after December 29, 2007                                          33 1/3%
On or after January 3, 2009                                                66
2/3%
On or after January 2, 2010                                                100%
 
(c)  Change in Control. In the event of a “Change in Control” that occurs (i)
prior to the Vesting Date and before the last day of the Measurement Period and
(ii) on a date on which the Recipient is employed by the Company, then 100% of
the Recipient’s RSUs that have not previously been forfeited shall become
immediately vested and shall no longer be subject to the Forfeiture provisions
in this Section 4, and the Company shall

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immediately issue that number of Award Shares to the Recipient equal to the
number shown on the first page of this Award Agreement, without adjustment. In
the event of a “Change in Control” that occurs (i) prior to the Vesting Date and
on or after the last day of the Measurement Period and (ii) on a date on which
the Recipient is employed by the Company, then 100% of the Recipient’s RSUs that
have not previously been forfeited shall become immediately vested and shall no
longer be subject to the Forfeiture provisions in this Section 4, and the
Company shall immediately issue that number of Award Shares to the Recipient
equal to the number of Award Shares deliverable based on the achievement of the
performance measures, as adjusted and determined in Section 3. A “Change in
Control” shall have the same meaning for the purposes of this Award Agreement as
set forth in Section 8 of the Plan, as the same may be amended from time to
time.
 
5.   No Stockholder Rights.  Except as set forth in the Plan, neither the
Recipient nor any person claiming under or through the Recipient shall be, or
have any rights or privileges of, a stockholder of the Company in respect of the
Award Shares issuable pursuant to the RSUs until the Award Shares are issued in
the name of the Recipient.
 
6.   Withholding Taxes.  The Company’s obligation to deliver Award Shares to the
Recipient upon the vesting of the RSUs shall be subject to the satisfaction of
all income tax (including federal, state, local and foreign taxes), social
insurance, payroll tax, payment on account or other tax-related withholding
requirements of any applicable jurisdiction, based on minimum statutory
withholding rates for all tax purposes, including payroll and social security
taxes (“Withholding Taxes”). In order to satisfy all Withholding Taxes due in
connection with the award or vesting of the RSUs or the delivery of the Award
Shares, the Recipient hereby irrevocably agrees to the following actions by the
Company, at the Company’s sole election:
 
(a)  The Company may sell, or arrange for the sale of, such number of the Award
Shares that the Recipient is entitled to receive on the Vesting Date, with no
further action by the Recipient, as is sufficient to generate net proceeds at
least equal to the value of the Withholding Taxes, and the Company shall retain
such net proceeds in satisfaction of such Withholding Taxes. The Company shall
remit to the Recipient in cash any portion of such net proceeds in excess of the
value of such Withholding Taxes.
 
(b)  The Company may retain such number of the Award Shares that the Recipient
is otherwise entitled to receive on the Vesting Date, with no further action by
the Recipient, by deducting and retaining from the number of Award Shares to
which the Recipient is entitled that number of Award Shares as is equal to the
value of the Withholding Taxes. The Recipient understands that the fair market
value of the surrendered Award Shares will be determined in accordance with the
Company’s Stock Option and Equity Award Grant and Exercise Procedures as then in
effect.
 
(c)  The Recipient hereby appoints each of the Chief Financial Officer, General
Counsel and the Secretary of the Company as his or her attorney in fact to sell
or transfer the Recipient’s Award Shares in accordance with this Section 6. The
Recipient agrees to execute and deliver such documents, instruments and
certificates as may reasonably be

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required in connection with the sale, transfer or retention of Award Shares
pursuant to this Section 6, including an irrevocable order to sell shares
authorizing a brokerage firm selected by the Company to sell the Recipient’s
Award Shares.
 
7.   No Compensation Deferral. Neither the Plan nor this Award Agreement is
intended to provide for an elective deferral of compensation that would be
subject to Section 409A (“Section 409A”) of the U.S. Internal Revenue Code of
1986, as amended. The Company reserves the right, to the extent the Company
deems necessary or advisable in its sole discretion, to unilaterally amend or
modify the Plan and/or this Award Agreement to ensure that no awards (including,
without limitation, the RSUs) become subject to the requirements of Section
409A.
 
8.   Administration.  The Compensation Committee of the Company’s Board of
Directors or other committee designated in the Plan, shall have the authority to
manage and control the operation and administration of this Award Agreement. 
Any interpretation of the Award Agreement by any of the entities specified in
the preceding sentence and any decision made by any of them with respect to the
Award Agreement is final and binding.
 
9.   Plan Definitions.  Notwithstanding anything in this Award Agreement to the
contrary, the terms of this Award Agreement shall be subject to the terms of the
Plan, a copy of which has already been provided to the Recipient.
 
10.  Recipient’s Undertakings. In signing this Award Agreement and accepting the
RSU, the Recipient acknowledges that:
 
(a)  The Plan and this Award were established voluntarily by the Company, each
is discretionary in nature, and each may be modified, amended, suspended or
terminated by the Company at any time, unless otherwise provided in the Plan and
this Award Agreement;
 
(b)  The grant of RSUs is voluntary and occasional and does not create any
contractual or other right to receive future awards of RSUs, or benefits in lieu
of RSUs even if RSUs have been awarded repeatedly in the past or future;
 
(c)    All decisions with respect to future grants of RSUs, if any, will be at
the sole discretion of the Company;
 
(d)   The Recipient’s participation in the Plan and receipt and acceptance of
the Award is voluntary;
 
(e)   RSUs are an extraordinary item that do not constitute compensation of any
kind for services of any kind rendered to the Company or to the Recipient’s
employer, and RSUs are outside the scope of the Recipient’s employment contract,
if any;
 
(f)   RSUs are not part of normal or expected compensation or salary for any
purpose, including, but not limited to, calculation of any severance,
resignation, termination,

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redundancy, end of service payments, bonuses, long-service awards, pension or
retirement benefits or similar payments and in no event should be considered as
compensation for, or relating in any way to, past services for the Company or
the Recipient’s employer;
 
(g)  The future value of the underlying Award Shares is unknown and cannot be
predicted with certainty;
 
(h)  The value of the Award Shares underlying the RSUs may increase or decrease
in value during the period from the Award Date to the Vesting Date;
 
(i)   In consideration of the grant of RSUs, no claim or entitlement to
compensation or damages arises from termination of the RSUs or diminution in
value of the RSUs or Award Shares received upon vesting of RSUs resulting from
termination of the Recipient’s employment by the Company or the Recipient’s
employer (for any reason whatsoever and whether or not in breach of local labor
laws) and the Recipient irrevocably releases the Company and his or her employer
from any such claim that may arise; and if, notwithstanding the foregoing, any
such claim is found by a court of competent jurisdiction to have arisen, then,
by signing this Award Agreement, the Recipient shall be deemed irrevocably to
have waived his or her entitlement to pursue such claim; and
 
(j)   Further, if the Recipient ceases to be an employee (whether or not in
breach of local labor laws), the Recipient’s right to receive RSUs and vest
under the Award Agreement or Plan, if any, will terminate effective as of the
date that the Recipient is no longer actively employed by the Company and will
not be extended by any notice period mandated under local law (e.g., active
employment would not include a period of “garden leave” or similar period
pursuant to local law); and the Compensation Committee of the Company’s Board of
Directors shall have the exclusive discretion to determine when the Recipient is
no longer actively employed for purposes of this Award Agreement and the Plan.
 
11. Data Privacy Notice and Consent. The Recipient hereby explicitly and
unambiguously consents to the collection, use and transfer, in electronic or
other form, of his or her personal data as described in this paragraph, by and
among, as applicable, the Recipient’s employer and the Company and its
subsidiaries and affiliates for, among other purposes, implementing,
administering and managing the Recipient’s participation in the Plan. The
Recipient understands that the Company and its subsidiaries hold or will hold
certain personal information about the Recipient, including the Recipient’s
name, home address and telephone number, date of birth, social security number
or identification number, salary, nationality, job title, any shares or
directorships held in the Company, details of all options or awards or any other
interests in shares awarded, canceled, exercised, vested, unvested or
outstanding in the Recipient’s name, for the purposes of managing and
administering the Plan (“Data”). The Recipient further understands that the
Company and its subsidiaries will transfer Data amongst themselves as necessary
for employment purposes, including implementation, administration and management
of the Recipient’s participation in the Plan,

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and that the Company and any of its subsidiaries may each further transfer Data
to a broker or other stock plan service provider or other third parties
assisting the Company with the processing of Data. The Recipient understands
that these third parties may be located in the United States, and that the third
party’s country may have different data privacy laws and protections than in the
Recipient’s country. The Recipient authorizes them to receive, possess, use,
retain and transfer the Data, in electronic or other form, for the purposes
described in this Section, including any requisite transfer to a broker or other
stock plan service provider or other third party as may be required for the
administration of the Plan and the subsequent holding of Award Shares on the
Recipient’s behalf. The Recipient understands that he or she may, at any time,
request access to the Data, request any necessary amendments to it or refuse or
withdraw the consents herein, in any case without cost, by contacting in writing
the Company’s Stock Option Manager at the Company’s headquarters address. The
Recipient understands, however, that withdrawal of consent may affect the
Recipient’s ability to participate in or realize the benefits of the Plan and
this Award Agreement. For more information on the consequences of refusal to
consent or withdrawal of consent, the Recipient understands that he or she may
contact the Company’s Stock Option Manager.
 
12.  Miscellaneous.
 
(a)  No Rights to Employment. The Recipient acknowledges and agrees that the
vesting of the RSUs pursuant to this Award Agreement is earned only in
accordance with the terms hereof. The Recipient further acknowledges and agrees
that the transactions contemplated hereunder and the vesting schedule set forth
herein do not constitute an express or implied promise of continued engagement
as an employee for the vesting period, for any period, or at all.
 
(b)  Unfunded Rights. The right of the Recipient to receive Award Shares
pursuant to this Award Agreement is an unfunded and unsecured obligation of the
Company. The Receipient shall have no rights under this Award Agreement other
than those of an unsecured general creditor of the Company.
 
(c)  Severability. The invalidity or unenforceability of any provision of this
Award Agreement shall not affect the validity or enforceability of any other
provision of this Award Agreement, and each other provision of this Award
Agreement shall be severable and enforceable to the extent permitted by law.
 
(d) Waiver. Any provision for the benefit of the Company contained in this Award
Agreement may be waived, either generally or in any particular instance, by the
Compensation Committee of the Board of Directors of the Company.
 
(e)  Binding Effect. This Award Agreement shall be binding upon and inure to the
benefit of the Company and the Recipient and their respective heirs, executors,
administrators, legal representatives, successors and assigns, subject to the
restrictions on transfer set forth in this Award Agreement.

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(f)   Language. The English version of this Award Agreement, the Plan and any
other document delivered pursuant to either the Award Agreement or the Plan,
will control over any translated version of any such document in the event such
translated version is different from the English version.
 
(g)  Entire Agreement. This Award Agreement and the Plan constitute the entire
agreement between the parties, and supercedes all prior agreements and
understandings, relating to the subject matter of this Award Agreement.
 
(h)  Governing Law. This Award Agreement shall be construed, interpreted and
enforced in accordance with the internal laws of the State of Delaware without
regard to any applicable conflicts of laws.
 
(i)   Amendment.  This Award Agreement may be amended only by written agreement
between the Recipient and the Company, without the consent of any other person.
 
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