Exhibit 10.20
EMPLOYMENT
AGREEMENT
THIS EMPLOYMENT AGREEMENT
(“Agreement”) is entered into as of April 7, 2005,
by and between Kadant Inc., a Delaware corporation with its
principal place of business at One Acton Place, Acton,
Massachusetts 01720 (“Kadant”), and Rudolf A.
Leerentveld, residing at 988 Treasure Island Drive, Mattawan,
Michigan 49071 (the “Employee”). Kadant and the
Employee are referred to together herein as the
“Parties.”
Introduction
WHEREAS, Kadant, a Delaware
corporation, Johnson Acquisition Corp., a Michigan corporation, The
Johnson Corporation, a Michigan corporation (the
“Company”), and certain stockholders of the Company
have entered into a Purchase Agreement, dated as of April 7,
2005 (the “Purchase Agreement”), pursuant to which the
Company will be acquired by and become a wholly owned subsidiary of
Kadant; and
WHEREAS, after the Closing Date,
Kadant desires that the Employee be employed by the Company (the
Company being referred to herein in such capacity as the
“Employer”), and the Employee desires such employment,
subject to and in accordance with the terms set forth in this
Agreement.
NOW, THEREFORE, in consideration of
the mutual covenants and promises contained herein, and other good
and valuable consideration, the receipt and adequacy of which is
hereby acknowledged, the Parties agree as follows:
1. Term of Employment;
Compensation and Benefits .
1.1 Term of Employment . The
Employer hereby agrees to employ the Employee, and the Employee
hereby accepts employment with the Employer, upon the terms set
forth in this Agreement, for the period commencing on the Closing
Date (the “Commencement Date”) and ending on the second
anniversary of the Closing Date (such period, the “Employment
Period”), unless sooner terminated in accordance with the
provisions of Section 2 hereof. Nothing herein shall be
interpreted to limit the Parties’ ability to continue the
employment of the Employee by the Employer on an “at
will” basis after the expiration of the Employment Period;
provided that such employment will be on the
Employer’s then current terms and conditions of employment
for similarly situated employees.
1.2 Duties and
Responsibilities . The Employee shall serve as the President of
the Company. The Employee shall be subject to the supervision of
and shall have such authority as is delegated to him by the Chief
Executive Officer of Kadant or his designee. The Employee hereby
accepts such employment and agrees to undertake the duties and
responsibilities inherent in such position and such other duties
and responsibilities as the Employer or Kadant shall from time to
time reasonably assign to him consistent with the terms hereof. The
Employee agrees to devote his entire business time, attention and
energies to the business and interests of the Employer during the
Employment Period. The Employee further agrees to abide
by:
(a) the rules, regulations,
instructions, personnel practices and policies of Kadant which are
generally applicable to all Kadant employees and any changes
therein which may be adopted from time to time by
Kadant;
(b) Kadant’s Insider Trading
Policy and any changes therein which may be adopted from time to
time by Kadant; and
(c) Kadant’s Code of Business
Conduct and Ethics and any changes therein which may be adopted
from time to time by Kadant.
1.3 Compensation .
(a) Commencing on the Closing Date,
the Employer shall pay the Employee as salary for the services and
duties performed hereunder Two Hundred Twenty-five Thousand Dollars
($225,000) per year in accordance with the Employer’s
customary payroll procedures then in effect. Such salary shall be
subject to upward adjustment thereafter as determined by the Chief
Executive Officer of Kadant, but shall not be less than $225,000
annually during the term of this Agreement.
(b) The Employer shall pay the
Employee an annual bonus of $300,000 per year. Employee must be
employed by the Employer as of the last day of Kadant’s
fiscal year to be entitled to and paid the full annual bonus. In
case the Employee’s employment is discontinued prior to the
last day of Kadant’s fiscal year, then the bonus to which the
Employee shall be entitled shall be pro-rated in proportion to the
days in such fiscal year that the Employee was employed under this
Agreement. In case the Employee’s employment is discontinued
“For Cause” as defined in Section 2.2 of this
Agreement, no bonus payment shall be due.
(c) Effective upon the Closing Date,
and provided that the Employee is employed by the Company on the
Closing Date, the Compensation Committee of the Board of Directors
of Kadant shall grant to the Employee a nonqualified stock option
to purchase 100,000 shares of common stock, $0.01 par value per
share (the “Common Stock”), of Kadant at an exercise
price equal to the closing price of the Common Stock on the Closing
Date as reported by the New York Stock Exchange, pursuant to the
terms and conditions set forth in the form of Nonqualified Stock
Option Agreement attached hereto as Exhibit A .
1.4 Fringe Benefits . The
Employee shall be entitled to participate in all benefit programs
the Employer establishes and makes available to its executive
officers from time to time, if any, to the extent that the
Employee’s position, tenure, salary, age, health and other
qualifications make him eligible to participate. The
Employee’s service with the Company or its subsidiaries shall
be counted as service with the Employer for the purposes of
determining eligibility for, entitlement to and vesting of benefits
under all benefit plans provided by the Employer to its employees
as allowed by law.
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1.5 Profit Sharing Plan . The
Employer shall make certain periodic contributions on behalf of and
for the benefit of the Employee, in accordance with the provisions
of and subject to the limitations set forth in the Company’s
Profit Sharing Plan, as may be amended from time to
time.
1.6 Reimbursement of Business and
Personal Expenses . The Employer shall reimburse the Employee
for all reasonable travel, living and other business expenses
incurred or paid by the Employee in connection with, or related to,
the performance of his duties, responsibilities or services under
this Agreement, upon presentation by the Employee of documentation,
expense statements, vouchers and/or such other supporting
information as the Employer may request, in accordance with
Kadant’s travel expense policies and guidelines.
1.7 Appointment as a Vice
President of Kadant . The Chief Executive Officer of Kadant
intends to recommend to the Board of Directors of Kadant the
appointment of the Employee as a Vice President of Kadant at the
regularly scheduled meeting of the Board of Directors of Kadant
held concurrently with the first annual meeting of stockholders of
Kadant after the Closing Date. Such appointment is subject to the
approval and discretion of the Board of Directors of Kadant, based
upon their assessment of the performance of the Employee and such
other factors as they deem appropriate in their sole discretion.
Upon such appointment, the Employee shall be deemed an
“officer” of Kadant as such term is defined in Rule
16a-1(f) of the Securities and Exchange Act of 1934, as amended
(the “Act”) and agrees to comply with all reporting
requirements of an officer as required by the Act.
2. Employment Termination
.
The employment of the Employee by
the Employer pursuant to this Agreement shall terminate upon the
occurrence of any of the following:
2.1 Expiration of the Employment
Period . At the expiration of the Employment Period or such
longer period of employment in accordance with Section 1
hereof;
2.2 For Cause . At the
election of the Employer, “for cause” (as defined
below), immediately upon written notice by the Employer to the
Employee. For the purposes of this Agreement, “for
cause” termination shall be deemed to exist upon (a) a
good faith finding by the Employer of dishonesty, gross negligence
or willful misconduct related to the performance of the
Employee’s duties for the Employer; (b) the conviction
of the Employee of, or the entry of a pleading of guilty or nolo
contendere by the Employee to, any crime involving moral turpitude
or any felony; (c) the Employee’s habitual drunkenness,
or the use, possession, distribution or being under the influence
of alcohol or illegal substances or illegal drugs in the workplace
or in a manner otherwise affecting the Employee’s performance
of his duties for the Employer; or (d) the breach by the
Employee of Section 4 of this Agreement;
2.3 In the Event of Death or
Disability . Thirty days after the death or
“disability” (as defined below) of the Employee. As
used in this Agreement, the term “disability” shall
mean the inability of the Employee, due to a physical or mental
disability, for a period of 180 days, whether or not consecutive,
during any 360-day period to perform the services contemplated
under this Agreement. A determination of disability shall be made
by a physician satisfactory to
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both the Employee and the Employer,
provided that if the Employee and the Employer do not agree
on a physician, the Employee and the Employer shall each select a
physician and these two together shall select a third physician,
whose determination as to disability shall be binding on all
parties;
2.4 Termination without Cause
. At the election of the Employer, without cause and for no cause,
upon not less than six months’ prior written notice of
termination; provided , however , that the Employer
reserves the right to place the Employee on a paid leave during
such notice period; or
2.5 Voluntary Termination .
At the election of the Employee prior to the expiration of the
Employment Period in accordance with Section 1 hereof upon not
less than six months prior written notice of termination or notice
equal to the remainder of the Employment Period, whichever is
less.
3. Effect of Termination
.
3.1 Termination Upon Expiration
of Employment or for Cause . In the event the Employee’s
employment is terminated upon expiration of the Employment Period
pursuant to Section 2.1 or for cause pursuant to
Section 2.2 hereof, the Employer shall pay to the Employee the
compensation and benefits otherwise payable to him under
Section 1 through the last day of his actual employment by the
Employer. The date upon which the Employee’s employment with
the Employer ceases is referred to herein as the “Employment
Termination Date”.
3.2 Termination for Death or
Disability . If the Employee’s employment is terminated
by death or because of disability pursuant to Section 2.3
hereof, the Employer shall pay to the estate of the Employee or to
the Employee, as the case may be, the compensation which would
otherwise be payable to the Employee through the Employment
Termination Date.
3.3 Termination by Employer
without Cause . If the Employee’s employment is
terminated by the Employer without cause pursuant to
Section 2.4 hereof prior to the expiration of the Employment
Period, the Employer shall pay to the Employee (a) a lump sum
payment on the Employment Termination Date equivalent to one year
of the Employee’s salary at his salary rate then in effect
and (b) if such termination occurs after the end of the fiscal
year, the annual bonus as set forth in Section 1.3(b)
hereof.
3.4 Voluntary Termination .
If the Employee’s employment is voluntarily terminated by the
Employee pursuant to Section 2.5 hereof prior to the
expiration of the Employment Period, the Employer shall pay to the
Employee the compensation and benefits otherwise payable to him
under Section 1 through the Employment Termination
Date.
4. Non-Compete; Non-Solicitation;
Confidential Information; Assignment of Inventions .
The Employee understands and agrees
that he shall continue to be subject to that certain Employee
Invention, Non-Disclosure, Non-Competition and Non-Solicitation
Agreement dated February 23, 2000 (the “Confidentiality
Agreement”), by and between the Employee and the Company. The
Employee further understands and agrees that he is also subject to
the following
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provisions set forth in the Purchase Agreement:
(a) the confidentiality and non disclosure provisions set
forth in Section 9.1 of the Purchase Agreement; (b) the
restrictions on the solicitation or hiring of former employees set
forth in Section 9.2 of the Purchase Agreement; and
(c) the non competition provisions set forth in
Section 9.3 of the Purchase Agreement. For purposes of this
Section 4, in the event the Confidentiality Agreement
conflicts with the Purchase Agreement, the provisions set forth in
the Purchase Agreement shall govern. The provisions of this
Section 4 shall survive the termination of this
Agreement.
5. Entire Agreement
.
Except for (i) the Retention
Bonus Agreement between the Company and the Employee dated
March 31, 2005, (ii) the Agreement between the Company
and the Employee dated April 6, 2005, (iii) the Employee
Invention, Non-Disclosure, Non-Competition and Non-Solicitation
Agreement between the Company and the Employee dated
February 23, 200, (iv) the Stock Option A
