KAI Form 10-Q 2Q 2007 Exhibit 10.1


    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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