KAI Form 10-Q 2Q 2007 Exhibit 10.4


    

      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



      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      


      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 


      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      


      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