Exhibit 10.4

EXECUTION COPY
GUARANTY

Dated as of July 30, 2007.

Guaranty. To induce JPMORGAN CHASE BANK, N.A., SHANGHAI BRANCH, with an
address of 31F, HSBC Tower, 1000 Lu Jia Zui Ring Road, Shanghai, P.R. China,
200120 Attn: Betty Wang, Fax No.:8621-61602707, its successors and assigns,
directly or through any of its branches, offices, subsidiaries, or affiliates
(collectively, the “Bank”), to provide: (a) a credit facility in the original
principal amount of up to RMB Forty Million (RMB40,00,000) to be entered into
with KADANT JINING LIGHT MACHINERY CO., LTD, a company incorporated in Jining,
China (“K-Jining”) pursuant to a RMB40,000,000 Term Loan Agreement, among
K-Jining and the Bank (“Term Credit Agreement”), (b) a credit facility in the
original principal amount of up to RMB Forty Five Million (RMB45,00,000) to
K-Jining pursuant to a Short-Term Advised Credit Line Facility Agreement, dated
as of July 30, 2007, among K-Jining and the Bank (“364 Day KJ Credit
Agreement”), (c) a credit facility in the original principal amount of up to RMB
Fifteen Million (RMB15,00,000) to KADANT PULP AND PAPER EQUIPMENT (YANZHOU) CO.
LTD. , a company incorporated in Yanzhou, China (“K-Yanzhou”) pursuant to a
Short-Term Advised Credit Line Facility Agreement, dated as of July 30, 2007,
among K-Jining and the Bank (“364 Day KY Credit Agreement”) and (d) foreign
exchange facilities and cash management services to KADANT JOHNSON (WUXI)
TECHNOLOGY CO. LTD., a company incorporated in Wuxi, China (“K-Wuxi”; together
with K-Jining and K-Yanzhou, the “Borrowers”) pursuant to (i) in the case of
foreign exchange facilities, any agreement with respect to any swap, forward,
future or derivative transaction or option or similar agreement involving, or
settled by reference to, one or more rates, currencies, commodities, equity or
debt instruments or securities, or economic, financial or pricing indices or
measures of economic, financial or pricing risk or value or any similar
transaction or any combination of these transactions (“Foreign Exchange
Facility”) and (ii) in the case of cash management services, any agreement
providing for treasury, depositary or cash management services, including in
connection with any automated clearing house transfers of funds or any similar
transactions (“Cash Management Facility”; together with the Term Credit
Agreement, 364 Day KJ Credit Agreement, 364 Day KY Credit Agreement and Foreign
Exchange Facility, the “Loan Documents”), and because the undersigned (the
“Guarantor”) has determined that executing this Guaranty is in its interest and
to its financial benefit, the Guarantor absolutely, unconditionally and
irrevocably guarantees to the Bank, as primary obligor and not merely as surety,
the full and prompt payment of the Liabilities when due (whether on demand, at
stated maturity, by acceleration or otherwise) in accordance with the Facility
Documents. The Guarantor will not only pay the Liabilities when due in
accordance with the Facility Documents, but will also reimburse the Bank for any
fees, charges, costs and expenses, including reasonable attorneys' fees, that
the Bank may pay in collecting from the Borrower or the Guarantor, and for
liquidating any Collateral or this Guaranty. Subject to the provisions in
“Payments Generally” below, the Guarantor’s obligations under this Guaranty
shall be payable in the currency or currencies specified in the Facility
Documents (as defined below). Unless otherwise defined herein, terms used in
this Guaranty have the meanings provided in the Loan Documents. As used herein,
the term “Collateral” in this Guaranty means all real or personal property of
each of the Borrowers described in (if any) all security agreements, pledge
agreements, mortgages, deeds of trust, assignments, or other instruments
previously, concurrently, or hereafter executed in connection with any of the
Liabilities.

Liabilities. The term “Liabilities” in this Guaranty means all obligations,
indebtedness, and liabilities of the Borrowers to the Bank, now existing or
later arising, related to certain credit facilities being provided by the Bank
to each of the Borrowers, as described in the Loan Documents; all monetary
obligations of each of the Borrowers to the Bank incurred or accrued during the
pendency of any bankruptcy, insolvency, receivership

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or similar proceedings related to the Loan Documents, regardless of whether
allowed or allowable in such proceeding, and all renewals, extensions,
modifications, consolidations or substitutions of any of the foregoing, whether
the Borrowers may be liable jointly with others or individually liable as a
debtor, maker, co-maker, drawer, endorser, guarantor, surety or otherwise, and
whether voluntarily or involuntarily incurred, due or not due, absolute or
contingent, direct or indirect, liquidated or unliquidated. The Guarantor
acknowledges that, without limiting the scope of the foregoing or any other
provision of this Guaranty, including any provisions in the paragraph below
captioned “Payments Generally,” the term “Liabilities” in addition to the above
definition, includes, but is not limited to, any loss that the Bank may incur on
account of prohibitions or limitations that may exist under the laws or
regulations of the State Administration of Foreign Exchange or other regulatory
authorities in the Peoples Republic of China regarding the conversion into RMB
of U.S. dollars that may be paid by the Guarantor to the Bank to satisfy any of
the Guarantor’s obligations under this Guaranty.

Facility Documents. All writings evidencing, supporting, securing, or otherwise
executed in connection with any of the Liabilities, including but not limited to
this Guaranty and the Loan Documents, as such writings may be amended, modified,
replaced, or supplemented from time to time, are referred to collectively as the
“Facility Documents” and individually as a “Facility Document”.

Continued Reliance. Subject to the provisions in “Reinstatement” below, this
Guaranty shall in all respects be a continuing, absolute, unconditional and
irrevocable guaranty of payment, and shall remain in full force and effect until
the Liabilities under the Loan Documents by the Borrowers have been paid and
satisfied in full. In the event of any future termination for any reason
(including as a result of a prepayment by the Guarantor) of (i) the Credit
Agreement, dated as of May 9, 2005 (as may be amended, supplemented, modified or
extended from time to time), among the Guarantor, the Foreign Subsidiary
Borrowers from time to time parties thereto, the several Lenders from time to
time parties thereto and JPMorgan Chase Bank, N.A., as Administrative Agent (the
“ US Credit Agreement”) or (ii) any credit agreement that in whole substantially
replaces the Credit Agreement and in which JPMorgan Chase Bank, N.A., is a
participant (the “Successor US Credit Agreement”), prior to the satisfaction of
all the obligations as provided for in the Loan Documents, then Sections 6, 7
and 8 of the US Credit Agreement or their equivalent sections of the Successor
US Credit Agreement, as the same shall be in effect immediately prior to such
termination, shall be incorporated herein by reference and shall remain in full
force and effect until the Liabilities under the Loan Documents by the Borrowers
have been paid and satisfied in full.

Bank's Right of Setoff. The Bank is authorized to setoff and apply, all
Accounts, Securities and Other Property, and Bank Debt against any and all
obligations of the Guarantor under this Guaranty in accordance with the
provisions of this paragraph. Subject to applicable law, this right of setoff
may be exercised at any time and from time to time, without prior notice to the
Guarantor, after demand has been made under any of the Liabilities (if any such
Liabilities are payable on demand) or after a default has occurred and is
continuing under any of the Liabilities and there has been a failure to cure any
such default within any applicable cure period, in each case, the giving effect
to any grace or cure periods for payments under “Payments Generally” below. This
security interest and right of setoff may be enforced or exercised by the Bank
regardless of whether or not the Bank has made any demand on the Guarantor under
this paragraph or whether the Liabilities are contingent, matured, or unmatured,
so long as demand has been made under any of the Liabilities (if any such
Liabilities are payable on demand) or after a default has occurred and is
continuing under any of the Liabilities and there has been a failure to cure any
such default within any applicable cure period. Any delay, neglect or conduct by
the Bank in exercising its rights under this paragraph will not be a waiver of
the right to exercise this right of setoff. The rights of the Bank under this
paragraph are in addition to other rights the Bank may have by law. In this
paragraph: (a) the term “Accounts” means any and all accounts and deposits of
the Guarantor (whether general, special, time, demand, provisional or final), in
U.S. dollars or any other currency, regardless of whether such accounts or
deposits are then due to the Guarantor, at any time held by the Bank or any
Lending Installation (as defined below) (including all Accounts held

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jointly with another, but excluding any IRA or Keogh Account, or any trust or
other type of Account in which a right of setoff would be prohibited by law);
(b) the term “Securities and Other Property” means any and all securities and
other property of the Guarantor in the custody, possession or control of the
Bank or any Lending Installation (other than property held by the Bank or any
Lending Installation in a fiduciary capacity); and (c) the term “Bank Debt”
means all indebtedness at any time owing by the Bank or any Lending Installation
to or for the credit or account of the Guarantor.

Remedies. If the Guarantor fails to pay any amount owing under this Guaranty,
the Bank shall have all of the rights and remedies provided by law or under any
other agreement. The Guarantor is liable to the Bank for all reasonable costs
and expenses of any kind incurred in the making and collection of this Guaranty,
including without limitation reasonable attorneys' fees and court costs. These
costs and expenses include without limitation any costs or expenses incurred by
the Bank in any bankruptcy, reorganization, insolvency or other similar
proceeding.

Permissible Actions. If any monies become available from any source other than
the Guarantor that the Bank can apply to the Liabilities, the Bank may apply
them in any manner it chooses, including but not limited to applying them
against obligations, indebtedness or liabilities which are not covered by this
Guaranty. The Bank may take any action against the Borrower, the Collateral, or
any other person liable for any of the Liabilities. The Bank may release the
Borrower or anyone else from the Liabilities, either in whole or in part, or
release the Collateral, and need not perfect a security interest in or lien on
the Collateral. The Bank does not have to exercise any rights that it has
against the Borrower or anyone else, or make any effort to realize on the
Collateral or any other collateral for the Liabilities, or exercise any right of
set-off. The Guarantor authorizes the Bank, without notice or demand and without
affecting the Guarantor's obligations hereunder, from time to time, to: (a)
renew, modify, compromise, extend, accelerate or otherwise change the time for
payment of, or otherwise change the terms of the Liabilities or any part
thereof, including increasing or decreasing the rate of interest thereon; (b)
release, substitute or add any one or more endorsers, Guarantor or other
guarantors; (c) take and hold Collateral for the payment of the Liabilities, and
enforce, exchange, substitute, subordinate, waive or release any such
Collateral; (d) proceed against such Collateral and direct the order or manner
of sale of such Collateral as the Bank in its discretion may determine; and (e)
apply any and all payments from the Borrower, the Guarantor or any other
guarantor, or recoveries from such Collateral, in such order or manner as the
Bank in its discretion may determine. The Guarantor's obligations under this
Guaranty shall not be released, diminished or affected by (i) any act or
omission of the Bank, (ii) the voluntary or involuntary liquidation, sale or
other disposition of all or substantially all of the assets of the Borrower, or
any receivership, insolvency, bankruptcy, reorganization, or other similar
proceedings affecting the Borrower or any of its assets, (iii) any change in the
composition or structure of the Borrower or the Guarantor, including a merger or
consolidation with any other person or entity, or (iv) any payments (other than
payment in full) made upon the Liabilities. The Guarantor hereby expressly
consents to any impairment of Collateral, including, but not limited to, failure
to perfect a security interest and release Collateral and any such impairment or
release shall not affect the Guarantor's obligations hereunder.

Nature of Guaranty. This Guaranty is a guaranty of performance and payment when
due and not of collectibility. Therefore, the Bank may insist that the Guarantor
pay immediately, and the Bank is not required to attempt to collect first from
the Borrower, the Collateral, or any other person liable for the Liabilities.
The obligation of the Guarantor shall be unconditional and absolute even if all
or any part of any agreement between the Bank and the Borrower is unenforceable,
void, voidable or illegal, and regardless of the existence of any defense,
setoff or counterclaim which the Borrower may assert. If the Borrower is a
corporation, limited liability company, partnership or trust, it is not
necessary for the Bank to inquire into the powers of the Borrower or the
officers, directors, members, managers, partners, trustees or agents acting or
purporting to act on its behalf, and any of the Liabilities made or created in
reliance upon the professed exercise of such powers shall be guaranteed
hereunder.

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Rights of Subrogation. The Guarantor waives and agrees not to enforce any rights
of subrogation, contribution or indemnification that it may have against the
Borrower, any person liable on the Liabilities, or the Collateral, in each case,
arising from payments under this Guaranty, until the Borrower and the Guarantor
have fully performed all their obligations to the Bank under the Loan Documents
and the Loan Documents have been terminated and all amounts due thereunder have
been paid and satisfied in full.

Waivers. The Guarantor waives (a) to the extent permitted by law, all rights and
benefits under any laws or statutes regarding sureties, as may be amended, and
(b) any right the Guarantor may have to receive notice of the following matters
before the Bank enforces any of its rights: (i) the Bank's acceptance of this
Guaranty, (ii) any credit that the Bank extends to the Borrower, (iii) the
Borrower's default, (iv) any demand, diligence, presentment, dishonor and
protest, or (v) any action that the Bank takes regarding the Borrower, anyone
else, the Collateral, or any of the Liabilities, which it might be entitled to
by law or under any other agreement, (c) any right it may have to require the
Bank to proceed against the Borrower, any other obligor or guarantor of the
Liabilities, or the Collateral for the Liabilities or the Guarantor's
obligations under this Guaranty, or pursue any remedy in the Bank's power to
pursue, (d) any defense based on any claim that the Guarantor's obligations
exceed or are more burdensome than those of the Borrower, (e) any defense
arising by reason of any disability or other defense of the Borrower or by
reason of the cessation from any cause whatsoever (other than payment in full)
of the obligation of the Borrower for the Liabilities, and (f) any defense based
on or arising out of any defense that the Borrower may have to the payment or
performance (other than payment in full) of the Liabilities. The Bank may waive
or delay enforcing any of its rights without losing them. Any waiver affects
only the specific terms and time period stated in the waiver. No modification or
waiver of this Guaranty is effective unless it is in writing and signed by the
party against whom it is being enforced.

Payments Generally. Upon demand by the Bank or otherwise when such payments are
due and payable, all payments by the Guarantor shall be made in (i) U.S. dollars
to the Bank at its principal office the equivalent amount in U.S. dollars
computed at the selling rate of the Bank or a selling rate chosen by the Bank,
most recently in effect on or prior to the date the Liability becomes due, for
cable transfers of the Payment Currency to the place where the Liability is
payable or (ii) in the absence of any Event of Default (as defined by the US
Credit Agreement or the Successor US Credit Agreement) by the Guarantor, RMB;
provided that, such payment shall be made within 60 days after such demand or
otherwise and when such payments are due and payable; provided further that, the
Guarantor shall use State Administration of Foreign Exchange (“SAFE”) system for
making such payments, including but not limited to, registering with SAFE for
actual foreign debt registration according to the Notice regarding the
Perfection of Foreign Debt Management (《国家外汇管理局关于完善外债管理有关樒杨的濦知》) issued by SAFE
on 21 October 2005 (as may be amended from time to time), whereby the same quota
system (total investment of the Borrower minus registered capital of the
Borrower) shall apply. Notwithstanding anything else stated in this Agreement,
the Guarantor shall hold the Bank harmless from any loss incurred by the Bank
arising from any change in the value of U.S. dollars in relation to RMB between
the date the Liability becomes due and the date the Bank is actually able,
following the conversion of the U.S. dollars paid by the Guarantor into RMB and
remittance of RMB to the place where such Liability is payable, to apply such
Payment Currency to such Liability

Judgment Currency. Notwithstanding anything else stated to the contrary in this
Agreement, if, for the purpose of obtaining judgment in any court, it is
necessary to convert a sum owing hereunder in one currency into another
currency, each party hereto agrees, to the fullest extent that it may
effectively do so, that the rate of exchange used shall be that at which, in
accordance with normal banking procedures in the relevant jurisdiction, the
first currency could be purchased with such other currency on the business day
immediately preceding the day on which final judgment is given. The obligations
of the Guarantor in respect of any sum due to any party hereto or any holder of
the obligations owing hereunder (the “Applicable Creditor”) shall,
notwithstanding any judgment in a currency (the “Judgment Currency”) other than
the currency in which such sum is stated to be due hereunder (the “Agreement
Currency”), be discharged only to the extent that, on the business day following

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receipt by the Applicable Creditor of any sum adjudged to be so due in the
Judgment Currency, the Applicable Creditor may in accordance with normal banking
procedures in the relevant jurisdiction purchase the Agreement Currency with the
Judgment Currency; if the amount of the Agreement Currency so purchased is less
than the sum originally due to the Applicable Creditor in the Agreement
Currency, the Guarantor as a separate obligation and notwithstanding any such
judgment, agrees to indemnify the Applicable Creditor against such loss. The
obligations of the relevant contained in herein shall survive the termination of
this Agreement and the payment of all other amounts owing hereunder.

Certain Taxes. The Guarantor further agrees that all payments to be made
hereunder shall be made without setoff or counterclaim and free and clear of,
and without deduction for, any taxes, levies, imposts, duties, charges, fees,
deductions, withholdings or restrictions or conditions of any nature whatsoever
now or hereafter imposed, levied, collected, withheld or assessed by any country
or by any political subdivision or taxing authority thereof or therein (”Tax” or
“Taxes”). If any Tax is required to be withheld from any amounts payable to the
Bank hereunder, the amounts so payable to the Bank shall be increased to the
extent necessary to yield to the Bank (after payment of the Tax) the amounts
payable hereunder in the full amounts so to be paid. Whenever any Tax is paid by
the Guarantor, as promptly as possible thereafter, the Guarantor shall send the
Bank an official receipt showing payment thereof, together with such additional
documentary evidence as may be required from time to time by the Bank.

Lending Installations. Each of the Liabilities may be booked at any office,
branch, subsidiary, or affiliate of the Bank, as selected by the Bank (each, a
“Lending Installation”). All terms of this Guaranty apply to and may be enforced
by or on behalf of any Lending Installation.

Reinstatement. The Guarantor agrees that to the extent any payment by a Borrower
is received by the Bank in connection with the Liabilities, and all or any part
of such payment is subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid by the Bank or paid over to a
trustee, receiver or any other entity, whether under any bankruptcy act, foreign
or domestic, or otherwise (any such payment is hereinafter referred to as a
“Preferential Payment”), then this Guaranty shall continue to be effective or
shall be reinstated, as the case may be, and whether or not the Bank is in
possession of this Guaranty, and, to the extent of such payment or repayment by
the Bank, the Liabilities or part thereof intended to be satisfied by such
Preferential Payment shall be revived and continued in full force and effect as
if said Preferential Payment had not been made.

Information. The Guarantor assumes all responsibility for being and keeping
itself informed of the Borrower's financial condition and assets, and of all
other circumstances bearing upon the risk of nonpayment of the Liabilities and
the nature, scope and extent of the risks that the Guarantor assumes and incurs
under this Guaranty, and agrees that the Bank does not have any duty to advise
the Guarantor of information known to it regarding those circumstances or risks.

Severability. The provisions of this Guaranty are severable; if any of the
obligations of the Guarantor under this Guaranty is invalid, illegal or
unenforceable in any jurisdiction, the validity, legality and enforceability of
the remaining obligations of the Guarantor shall not in any way be affected or
impaired, and the invalidity, illegality or unenforceability in one jurisdiction
shall not affect the validity, legality or enforceability of the obligations of
the Guarantor under this Guaranty in any other jurisdiction. Further, in any
action or proceeding involving any state corporate law, or any state, federal or
foreign bankruptcy, insolvency, reorganization or other law affecting the rights
of creditors generally, if the obligations of the Guarantor under this Guaranty
would otherwise be held or determined to be avoidable, invalid or unenforceable
on account of the amount of the Guarantor's liability under this Guaranty, then,
notwithstanding any other provision of this Guaranty to the contrary, the amount
of such liability shall, without any further action by the Guarantor or the
Bank, be automatically limited and reduced to the highest amount that is valid
and enforceable as determined in such action or proceeding.

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Representations by Guarantor. The Guarantor represents that: (a) the execution
and delivery of this Guaranty and the performance of the obligations it imposes
do not violate any law, do not conflict with, result in a breach of or
constitute a default under any agreement or instrument by which it is bound, or
require the consent or approval of any governmental authority or any third party
and (b) this Guaranty is a valid and binding agreement, enforceable according to
its terms. The Guarantor further represents that: (a) it is duly organized,
existing and in good standing under the laws where it is organized, and (b) the
execution and delivery of this Guaranty and the performance of the obligations
it imposes (i) are within its powers and have been duly authorized by all
necessary action of its governing body, and (ii) do not contravene the terms of
its articles of incorporation or organization, its by-laws, or any agreement
governing its affairs.

Notices. All notices, requests and other communications to any party under this
Guaranty must be in writing in English (including bank wire, facsimile
transmission or similar writing) and must be given to that party, in the case of
the Guarantor, at its address or facsimile number set forth on the signature
page of this Guaranty, and, in the case of the Bank, at the address or facsimile
number stated above, with a copy concurrently sent to:

 
JPMorgan Chase Bank, N.A.
 
Attn: Division Manager
 
Mail Code IL1-1742
 
120 South La Salle Street
 
Chicago, IL 60603-3403 United States  
 
Fax No.: 312-661-3566

Either party may change the address or facsimile number to which notice is to be
sent for that party by sending a written notice to the other party specifying
the change. Each notice, request or other communication is effective (i) if
given by facsimile transmission, when transmitted to the facsimile number(s) for
the other party and confirmation of receipt is received, (ii) if given by mail,
72 hours after the communication is deposited in the mails with first class
postage prepaid, to the address(es) for the other party, or (iii) if given by
any other means, when delivered at the address(es) for the other party.

Governing Law and Venue. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK. The Guarantor
hereby irrevocably and unconditionally: (i) submits for itself and its property
in any legal action or proceeding relating to this Agreement, or for recognition
and enforcement of any judgment in respect thereof, to the non exclusive general
jurisdiction of the courts of the State of New York, the courts of the United
States of America for the Southern District of New York, and appellate courts
from any thereof, (ii) consents that any such action or proceeding may be
brought in such courts and waives any objection that it may now or hereafter
have to the venue of any such action or proceeding in any such court or that
such action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same, (iii) agrees that service of process in any such action
or proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage prepaid, to
the Guarantor at its address as set forth on the signature page of this Guaranty
and (iv) agrees that nothing herein shall affect the right to effect service of
process in any other manner permitted by law or shall limit the right to sue in
any other jurisdiction.

Miscellaneous. The Guarantor's liability under this Guaranty is independent of
its liability under any other guaranty previously or subsequently executed by
the Guarantor or any one of them, singularly or together with others, as to all
or any part of the Liabilities, and may be enforced for the full amount of this
Guaranty regardless of the Guarantor's liability under any other guaranty. This
Guaranty binds the Guarantor's heirs, successors and assigns, and benefits the
Bank and its successors and assigns. Guarantor may not assign or otherwise
transfer any of its rights or obligations under this Guaranty without the
written prior consent of the Bank. The Bank may assign this Guaranty in whole or
in part without notice, but only together with the Liabilities to which it
relates. The use of headings have been inserted in this Guaranty as a matter of

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convenience for reference only and it is agreed that such headings are not apart
of this Guaranty and does not limit the provisions of this Guaranty and shall
not be used in the interpretation of any provision of this Guaranty. The
Guarantor agrees that the Bank may provide any information or knowledge the Bank
may have about the Guarantor or about any matter relating to this Guaranty to
JPMorgan Chase & Co. (“JPMC”), or any of its subsidiaries or affiliates or their
successors, or to one or more purchasers or potential purchasers of this
Guaranty or the Liabilities guaranteed hereby; provided, that prior to any such
disclosure, each such purchasers or potential purchasers are advised of and
agree to be bound by either the provisions in “Confidentiality” below or other
provisions at least as restrictive as contained therein.

Confidentiality. The Bank agrees to keep any information delivered or made
available by the Guarantor to it confidential from anyone other than persons
employed or retained by the Bank who are or are expected to become engaged in
evaluating, approving, structuring or administering the Loan Documents, and who
are advised by the Bank of the confidential nature of such information;
provided, that nothing herein shall prevent the Bank from disclosing such
information (a) to affiliates of JPMC (it being understood that such affiliates
of JPMC will be informed of the confidential nature of such information and
instructed to keep such information confidential) , (b) upon the order of any
court or administrative agency, (c) upon the request or demand of any regulatory
agency or authority, (d) which has been publicly disclosed other than as a
result of a disclosure by the Bank which is not permitted by this Guaranty, (e)
in connection with any litigation to which the Bank may be a party to the extent
reasonably required, (f) to the extent reasonably required in connection with
the exercise of any remedy hereunder, (g) to the Bank’s legal counsel and
independent auditors, and (h) to any actual or proposed participant or assignee
of all or part of its rights hereunder or to any direct or indirect contractual
counterparty (or the professional advisors thereto) to any swap or derivative
transaction relating to the Borrower and its obligations, in each case, subject
to the proviso in the last sentence of in “Miscellaneous” above. If the Bank is
in any manner requested or required to disclose any of the information delivered
or made available to it by the Guarantor under clauses (b) or (e) of this
provision, the Bank will, to the extent permitted by law, provide the Guarantor
with prompt notice, to the extent reasonable, so that the Guarantor may seek, at
its sole expense, a protective order or other appropriate remedy or may waive
compliance with this provision.

WAIVER OF IMMUNITY. TO THE EXTENT THAT THE GUARANTOR HAS OR HEREAFTER MAY BE
ENTITLED TO CLAIM OR MAY ACQUIRE, FOR ITSELF OR ANY OF ITS ASSETS, ANY IMMUNITY
FROM SUIT, JURISDICTION OF ANY COURT, OR FROM ANY LEGAL PROCESS (WHETHER FROM
SERVICE OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION
OF A JUDGMENT, EXECUTION OR OTHERWISE) AS TO ITSELF OR ITS PROPERTY, AND TO THE
EXTENT PERMITTED BY LAW THE GUARANTOR HEREBY IRREVOCABLY WAIVES SUCH IMMUNITY IN
REGARD TO ITS OBLIGATIONS UNDER THIS GUARANTY.

WAIVER OF SPECIAL DAMAGES. THE GUARANTOR WAIVES, TO THE MAXIMUM EXTENT NOT
PROHIBITED BY LAW, ANY RIGHT THE UNDERSIGNED MAY HAVE TO CLAIM OR RECOVER FROM
THE BANK IN ANY LEGAL ACTION OR PROCEEDING ANY SPECIAL, EXEMPLARY, PUNITIVE OR
CONSEQUENTIAL DAMAGES.
 
JURY WAIVER. THE GUARANTOR HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES TRIAL
BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT AND FOR ANY
COUNTERCLAIM THEREIN.

[SIGNATURE PAGE FOLLOWS]

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Guarantor:
             
Address:
One Technology Park Drive
KADANT INC.
     
Westford MA 01886 U.S.A.
     
Attn:
Chief Financial Officer, Treasurer
       
And Chief Legal Officer
         
By:
/s/ Daniel J. Walsh
 
Fax No.:
+1 978-635-1593
         
Its:
Treasurer