Exhibit 10.1

FORM OF EXECUTIVE OFFICER PERFORMANCE-BASED RESTRICTED STOCK UNIT AWARD
AGREEMENT
 

 
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 [Date], 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
[##]                                               [Date]

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.

___________________________________                                  _____________________________
Kadant
Inc.                                                                                              
    Date

___________________________________                                   
_____________________________
[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 the last day of the Company’s [year] fiscal
year, [Date] (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 [year] fiscal year (beginning [date] and ending [date]
(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 50% of Target
EBITDA                                                         0% of Award
Shares
50% of Target
EBITDA                                                                           50%
of Award Shares
100% of Target
EBITDA                                                                         100%
of Award Shares
115% 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 50% 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 certifying the extent to which the performance measure
has been met, prior to the release of the Company’s earnings for the full [year]
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 2 ½ months
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
cause its transfer agent to issue and deliver the Award Shares in the name of
the Recipient, subject to payment of all applicable withholding taxes pursuant
to Section 6 below.

 
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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 vest in 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 vested 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 Vested
Prior to
[date]                                                                                 
 0%
On or after
[date]                                                                          
  33 1/3%
On or after
[date]                                                                          
  66 2/3%
On or after
[date]                                                                          
  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 deliver as soon as administratively
feasible but no later than 30 days after the Vesting Date 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 deliver as soon
as administratively feasible but no later than 30 days after the Vesting Date
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:

 
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        (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 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 any 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 all awards (including, without
limitation, the RSUs) are either exempt from or compliant with 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, 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;

 
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         (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, 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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