Exhibit 10.1

 

Executive Employment Agreement

 

This Executive Employment Agreement (the “Agreement”) is entered into between
Polymer Group, Inc., (“PGI”) a Delaware corporation, and Veronica M. Hagen
(“Executive”) effective as of April 23, 2010 (the “Effective Date”).  PGI and
Executive agree as follows:

 

ARTICLE 1:  EMPLOYMENT, COMPENSATION AND BENEFITS

 

1.1           Term and Position.  PGI agrees to employ Executive and Executive
agrees to be employed by PGI as Chief Executive Officer of PGI.  As Chief
Executive Officer, Executive shall be a member of PGI’s Board of Directors (the
“Board”).  Executive shall have the normal duties, responsibilities, functions
and authority of the Chief Executive Officer and shall devote full working time
to the successful conduct of the business of PGI; however, Executive shall be
permitted to serve on the board of directors of two for-profit corporations
(provided any such corporation is not in competition with PGI) and one
not-for-profit corporation.  Executive will report directly to the Board and
Executive’s specific duties shall be determined by the Board.  The term of the
Agreement shall be for a period of 3 years, commencing on April 23, 2010 and
ending on April 22, 2013 (the “Term”)

 

1.2           Compensation.

 

a.             Base Compensation.  For all services rendered by Executive during
the Term, Executive shall receive base compensation at a rate of $765,000 per
annum (“Base Compensation”), payable in accordance with PGI’s then existing
payroll practices, less such deductions as are authorized or required by law. 
Executive’s Base Compensation shall be subject to review annually by the Board.

 

b.             Bonus. Executive shall be entitled to participate in the Polymer
Group, Inc. Short-Term Incentive Compensation Plan (the “Bonus Plan”) to the
extent such a plan is implemented for any given year.  Executive’s annual target
cash bonus potential under any such Bonus Plan will be, and shall not exceed,
100% of Base Compensation, and shall be based on annual performance goals to be
mutually agreed upon by the Board and Executive.  PGI is under no obligation to
establish a Bonus Plan for any given year.

 

c.             Equity Compensation.  Executive shall be entitled to participate
in any long-term incentive compensation programs implemented at PGI on the same
terms and conditions as other senior executives.  During each fiscal year,
Executive shall receive a long-term incentive grant (the “Equity Award”).  The
targeted value of each annual Equity Award will be set by the Compensation
Committee of the Board (the “Committee”) so as to provide the Executive with a
total target annual compensation package (including Base Compensation, target
cash bonus and annual Equity Award at target performance but excluding benefits
and the Retirement Incentive) that at least approximates market median practice,
as defined by the Committee, so long as such award does not, in the Committee’s
opinion, create a significant financial or operational burden on the Company. 
In the determining the targeted value of the Equity Award in a year where no
Bonus Plan has been established, the Committee shall increase the Equity Award
to compensate for the absence of a target cash bonus in the total target annual
compensation package.  In the event Executive receives a discretionary bonus in
a year where no Bonus Plan has been established, the Company will not offset or
adjust the size of an Equity Award previously granted for that year but may take
such facts into consideration in determining the total target

 

 

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annual compensation for the subsequent year.  The Committee shall annually
solicit, and consider in its review, market data from a third party compensation
consultant.

 

Sale restrictions and other terms and conditions for equity awards, shall be
detailed in a grant agreement to be executed at the time of an equity award
issuance; provided, in the event of any conflict between the terms and
conditions of a grant agreement and this Agreement, the terms and conditions of
this Agreement shall prevail.  If, prior to full vesting of any equity award,
(and regardless of whether the Term has then expired), Executive is terminated
by PGI without “cause” (where “cause” is defined in Section 2.1.a. of this
Agreement), Executive terminates for “good reason” (where “good reason” is
defined in Section 2.2.a. of this Agreement), or Executive’s employment
terminates due to her death or her “disability” (where “disability” is defined
in Section 2.1.c.ii of this Agreement), Executive shall continue to vest
pursuant to the original vesting schedule (including any performance conditions)
contained in the grant agreement as if Executive’s employment had not
terminated; provided, Executive remains in compliance with the terms and
conditions of this Agreement and the grant agreement; provided further, that
vesting shall cease and unvested awards shall be forfeited immediately upon
Executive’s material breach of this Agreement or the grant agreement.  In the
event of both a “change in control” of PGI (defined below) at a time while
Executive remains Chief Executive Officer of PGI and her Involuntary Termination
following the “change in control,” Executive shall become fully vested in all
equity awards granted to her on or after the Effective Date.  For avoidance of
doubt, all equity awards granted previously to Executive pursuant to her prior
employment agreement, shall continue to vest in accordance with such prior
agreement and the grant documents issued thereunder.

 

For purposes of any equity awards, “change in control” shall mean that term as
it is defined in the Equity Plan.  For all other purposes of this Agreement,
Change in Control means any of the following events:

 

(i)            if any “person” or “group” as those terms are used in Sections
13(d) and 14(d) of the Exchange Act or any successors thereto, other than an
Exempt Person, is or becomes the “beneficial owner” (as defined in Rule 13d-3
under the Exchange Act or any successor thereto), directly or indirectly, of
securities of PGI representing (A) 50% or more of the combined voting power of
PGI’s then outstanding securities or (B) 30% or more of the combined voting
power of the PGI’s then outstanding securities if at such time, such person or
group also beneficially owns more of the combined voting power of the PGI’s then
outstanding securities, other than an Exempt Person; or

 

(ii)           during any period of two consecutive years, individuals who at
the beginning of such period constitute the Board and any new directors whose
election by the Board or nomination for election by PGI’s stockholders was
approved by at least two-thirds of the directors then still in office who either
were directors at the beginning of the period or whose election was previously
so approved, cease for any reason to constitute a majority thereof; or

 

(iii)          the consummation of a merger or consolidation of PGI with any
other corporation, other than a merger or consolidation (A) which would result
in all or a portion of the voting securities of PGI outstanding immediately
prior thereto continuing to represent (either by remaining outstanding or by
being converted into voting securities of the surviving entity) more than 50% of
the combined voting power of the voting securities of PGI or such surviving
entity outstanding immediately after such merger or consolidation or (B) by
which the corporate existence of PGI is not affected and following which PGI’s
chief executive officer and directors retain their positions with PGI (and
constitute at least a majority of the Board); or

 

 

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(iv)          the consummation of a plan of complete liquidation of PGI or
consummation of the sale or disposition by PGI of all or substantially all PGI’s
assets, other than a sale to an Exempt Person.

 

(v)           For purposes of this Agreement, the term “Exempt Person” means
(1) MatlinPatterson Global Opportunities Fund L.P., MatlinPatterson Global
Opportunities Partners, L.P., MatlinPatterson Global Opportunities Partners B,
L.P., MatlinPatterson LLC, MatlinPatterson Asset Management LLC, MatlinPatterson
Global Advisers LLC, MatlinPatterson Global Opportunities Partners (Bermuda),
L.P., MatlinPatterson Global Partners LLC and any of their respective affiliated
entities, (2) any person, entity or group under the control of any party
included in clause (1), or (3) any employee benefit plan of PGI or a trustee or
other administrator or fiduciary holding securities under an employee benefit
plan of PGI.

 

d.             Reimbursement of Expenses.  During the Term, PGI shall reimburse
Executive for all reasonable business expenses incurred by her in the course of
performing her duties and responsibilities under this Agreement which are
consistent with PGI’s policies in effect from time to time with respect to
travel, entertainment and other business expenses, subject to PGI’s requirements
with respect to reporting and documentation of such expenses.

 

1.3           Paid Leave.

 

a.             Vacation.  Executive shall be entitled to 4 weeks vacation per
calendar year, without carryover, which vacation shall accrue ratably during the
year in accordance with PGI’s policies.

 

b.             Sick Leave. Executive shall be entitled to sick leave in
accordance with the policies adopted from time to time by PGI for its employees.

 

c.             Holiday Leave.  Executive shall be entitled to paid time off on
such holidays for which PGI is closed for business.

 

1.4           Benefits.  Executive shall be entitled to participate in the
various employee benefit programs (including health, life, retirement and
disability) which PGI may establish and modify from time to time for the benefit
of all its employees, if and when Executive satisfies the eligibility
requirements for such employee benefit plans.

 

PGI retains the right to amend, modify or terminate any employee benefits from
time to time in its discretion.

 

1.5           Company Automobile.  PGI shall provide Executive with the
continued use of an automobile for the duration of the existing automobile lease
term.  When the existing lease expires, PGI shall not be under any obligation to
provide for Executive’s use of an automobile or to adjust Executive’s
compensation as a result of the lease expiring.  As long as the lease is in
place, PGI shall maintain automobile insurance on the automobile, will cover the
cost of general maintenance on the automobile, and reimburse Executive for
fuel.  To the extent Executive uses the automobile for personal purposes, the
value of such personal use shall be included in Executive’s income in accordance
with applicable tax law.

 

 

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1.6           Retirement Incentive.  Upon the expiration date of this Agreement,
provided Executive is an employee in good standing on such date, PGI shall
provide Executive with a one-time award of cash and equity as described in and
subject to the conditions of this Section 1.6 (the “Retirement Incentive”).

 

The Retirement Incentive shall consist of:

 

(i) an equity award, with the number of shares awarded to be calculated with
reference to the “Ending Stock Price” (which shall equal the average reported
closing price of PGI’s class A common stock over the forty (40) trading days
immediately prior to the expiration date of this Agreement) as shown in the
table below:

 

Ending Stock Price

 

Number of Shares Awarded

 

Less than $17.50

 

20,000

 

$17.50

 

20,000

 

$22.50

 

40,000

 

$25.00

 

55,000

 

$27.50

 

75,000

 

$30.00 or higher

 

100,000

 

 

For an Ending Stock Price that falls between two given points on the table
above, the number of shares awarded will be computed using straight-line
interpolation using the formula below:

 

[(E - LP) / (HP - LP) x (HS - LS)] + LS

 

Where:

 

E = Ending Stock Price (rounded to $0.01)

LP = The stock price given on the table that is closest to E, but still lower
than E

HP = The stock price given on the table that is closest to E but still higher
than E

LS = The number of shares awarded when the Ending Stock Price equals LP, as per
the table

HS = The number of shares awarded when the Ending Stock Price equals HP, as per
the table

 

For purposes of illustration, if the Ending Stock Price is computed to be
$26.82, the number of shares awarded under the Retirement Incentive would be
69,560, computed as follows:

 

[(E - LP) / (HP - LP) x (HS - LS)] + LS

 

[($26.82 - $25.00) / ($27.50 - $25.00) x (75,000 - 55,000)] + 55,000 = 69,560

 

[($1.82) / ($2.50) x (20,000)] + 55,000 = 69,560

 

[(.728) x (20,000)] + 55,000 = 69,560

 

14,560 + 55,000 = 69,560

 

 

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If, prior to the expiration date of this Agreement, PGI’s class A common stock
ceases (either by the affirmative act of the Company or after the exhaustion of
remedies) to be publicly traded either on (x) the Over-The-Counter Bulletin
Board (“OTCBB”) or (y) if subsequently listed on an exchange, an exchange, then
the equity award of this Section 1.6(i) shall be converted to a cash award, with
the initial value of such award being equal to the product of (A) the number of
shares to be paid as determined in this Section 1.6(i) assuming the Ending Stock
Price is equal to the final closing price of the Company’s class A common stock 
on the OTCBB or the exchange and (B) the final closing price of the Company’s
class A common stock on the OTCBB or the exchange (the “Cash Conversion Value”).

 

The Cash Conversion Value shall be credited with interest at a rate equal to the
Moody’s Aa rate (compounded annually) between the date the Cash Conversion Value
is set until the date of payout to the Executive.

 

(ii)           a one-time cash award equal to thirty percent (30%) of the value
of the shares (computed as the Ending Stock Price multiplied by the number of
shares awarded) or the Cash Conversion Value awarded in Section 1.6(i), provided
the cash award of this Section 1.6(ii) shall be neither less than two hundred
fifty thousand dollars ($250,000) nor greater than one million dollars
($1,000,000).

 

Each component of the Retirement Incentive provided in Sections 1.6(i) and (ii),
respectively, shall be payable in three equal installments, with the first
installment being due on the expiration date of this Agreement and each of the
following installments paid on the next two anniversaries of the expiration date
of this Agreement.

 

If, after the Retirement Incentive is awarded, Executive materially breaches
this Agreement or the grant agreements governing the equity award, then all
unvested amounts of the Retirement Incentive shall be forfeited immediately.

 

ARTICLE 2:  TERMINATION BEFORE THE TERM EXPIRES AND EFFECTS OF SUCH TERMINATION

 

2.1           Termination By PGI.  PGI may terminate Executive’s employment
before the Term expires for the following reasons:

 

a.             Cause.  For “cause” upon the determination by the Board that
“cause” exists to terminate Executive.  “Cause” means (i) a material breach of
this Agreement by Executive; provided, that if such breach is capable of being
cured, Executive shall be provided 15 days written notice to cure such breach,
(ii) a breach of Executive’s duty of loyalty to PGI or any of its subsidiaries
or any act of dishonesty or fraud with respect to PGI or any of its
subsidiaries, (iii) the commission by Executive of a felony, a crime involving
moral turpitude or other act or omission (excluding business acts or omissions
in the ordinary course) causing material harm to the standing and reputation of
PGI and its subsidiaries, (iv) Executive reporting to work under the influence
of alcohol or illegal drugs, the use of illegal drugs (whether or not at the
workplace) or other repeated conduct (excluding business conduct in the ordinary
course) causing PGI or any of its subsidiaries substantial public disgrace or
disrepute or economic harm, or (v) any willful act or omission by Executive
aiding or abetting a competitor, supplier or customer of PGI or any of its
subsidiaries to the material disadvantage or detriment of PGI and its
subsidiaries.  The burden for establishing the validity of any termination for
Cause shall rest upon PGI.  No termination shall be deemed to be for Cause
unless and until there shall have been delivered to Executive a copy of a

 

 

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resolution duly adopted by the affirmative vote of not less than three-quarters
of the entire membership of the Board called and held for such purpose (after
reasonable notice is provided to Executive and Executive is given an
opportunity, together with counsel, to be heard before the Board), finding that,
in the good faith opinion of the Board, Executive is guilty of the conduct
described above, and specifying the particulars thereof in reasonable detail. 
If PGI terminates Executive’s employment for Cause, Executive shall be entitled
only to the pro rata Base Compensation through the date of such termination, and
all future compensation and benefits shall cease (except for those benefits
vested per plan terms).  For avoidance of doubt, the Retirement Incentive shall
be forfeited as well.

 

b.             Involuntary Termination Before a Change in Control.  Involuntary
termination at PGI’s option may occur for any reason whatsoever, including
termination without cause, in the sole discretion of the Board (“Involuntary
Termination”).  Upon an Involuntary Termination before the Term expires,
Executive shall be entitled to receive from PGI as severance payments, in lieu
of severance payments under any other plan or program of PGI, an amount equal to
(i) the sum of (A) Executive’s Base Compensation and (B) target annual
incentive, which sum shall apply from the termination date through the
expiration date of this Agreement, (ii) her annual target bonus opportunity for
the fiscal year in which the termination date occurs, adjusted for actual
performance to date of termination, as determined by the Committee (if
performance cannot be adequately assessed, target performance will be assumed),
multiplied by a fraction equal to the number of days of employment completed by
Executive during the fiscal year in which the termination date occurs divided by
365 (the “Pro Rata Bonus”), each as in effect immediately prior to the date of
her termination (the “Severance Amount”), and (iii) any annual bonus for a
completed fiscal year of PGI that has been earned but not yet been paid to
Executive (the “Prior Year Earned Bonus”), in each case if and only if Executive
has executed and delivered to PGI the General Release substantially in form and
substance as set forth in Exhibit A attached hereto and only so long as
Executive has not breached the provisions of Article 3 or Section 4.1 hereof and
does not apply for unemployment compensation chargeable to PGI during the period
from the date of termination through the expiration date of this Agreement (the
“Severance Period”).  In addition, upon an Involuntary Termination, Executive
shall be entitled to the Retirement Incentive set forth in Section 1.6;
provided, that such incentive shall be effective as of the date of termination
and such date of termination shall be used, rather than the expiration date of
this Agreement, as the date for all measurements in Section 1.6; provided
further, that such incentive shall be payable in installments as set forth in
and subject to Section 1.6.  The Severance Amount payable pursuant to this
Section 2.1.b. for the first six months of the Severance Period and the Prior
Year Earned Bonus payable pursuant to this Section 2.1.b. shall be paid to
Executive in a lump sum on the first day of the calendar month following the six
month anniversary of the termination date, and the Severance Amount payable
pursuant to this Section 2.1.b. for the remainder of the Severance Period shall
be payable in regular monthly installments.  The amounts payable pursuant to
this Section 2.1.b. shall not be reduced by the amount of any compensation
Executive receives with respect to any other employment during the Severance
Period.

 

Upon Involuntary Termination and continuing through the expiration date of this
Agreement, PGI shall, at its expense, continue on behalf of the Executive and
her dependants and beneficiaries, the medical, dental and hospitalization
benefits provided to the Executive immediately prior to the date of
termination.  The coverage and benefits (including deductibles and costs)
provided in this Section 2.1.b. shall be no less favorable to the Executive and
her dependants and beneficiaries, than the coverage and benefits provided to
other salaried employees under PGI’s benefit plans, as such plans may be amended
from time to time.  PGI’s obligation hereunder with respect to the foregoing
benefits shall be limited to the extent that the Executive obtains any such
benefits pursuant to a subsequent employer’s benefit plans, in which case PGI
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provide the Executive hereunder so long as the aggregate coverage and benefits
of the combined benefit plans is no less favorable to the Executive than the
coverages and benefits required to be provided hereunder.  This Section 2.1.b.
shall not be interpreted so as to limit any benefits to which the Executive, her
dependants or beneficiaries may otherwise be entitled under any of PGI’s
employee benefit plans, programs or practices following the termination of
employment of the Executive, including without limitation, any applicable
retiree life insurance benefits.  Except as otherwise expressly provided herein,
all of Executive’s rights to salary, bonuses, employee benefits and other
compensation hereunder which would have accrued or become payable after the
termination or expiration of the Term shall cease upon such termination or
expiration, other than those expressly required under applicable law (such as
COBRA); provided, that for purposes of determining Executive’s rights under
COBRA, the date of the later to occur of (x) the date of the termination or
expiration of the Term or (y) the date of the final payment of any severance
payments made pursuant to Section 2.1.b. above, shall be deemed to be the
qualifying event for such purpose.  PGI may offset any amounts Executive owes it
or its subsidiaries against any amounts it or its subsidiaries owes Executive
hereunder.

 

Other than what is provided in this Section 2.1.b, Executive shall not be
entitled to any other salary, compensation or benefits as a result of an
Involuntary Termination.

 

c.             Involuntary Termination At or After a Change in Control.  In the
event that Executive incurs an Involuntary Termination hereunder after a Change
in Control and before the Term expires, the Executive shall become fully vested
in the Retirement Incentive and receive the benefits described in Section 2.1.b
above if, and only if, Executive has executed and delivered to PGI the General
Release substantially in the form and substance as set forth in Exhibit A
attached hereto and only so long as Executive has not breached the provisions of
Article 3 or Section 4.1 hereof and does not apply for unemployment compensation
chargeable to PGI during the Severance Period.  The Retirement Incentive and the
Severance Amount payable pursuant to this Section 2.1.c. shall both be paid in a
single lump sum on the 31st day following termination, so as not to result in
the imposition of the additional tax on Executive described in Section 409A of
the Internal Revenue Code of 1986, as amended (the “Code”).

 

d.             Death/Disability.  Upon Executive’s (i) death, or (ii) becoming
incapacitated or disabled so as to entitle Executive to benefits under PGI’s
long-term disability plan, or (iii) becoming permanently and totally unable to
perform Executive’s duties for PGI as a result of any physical or mental
impairment supported by a written opinion by a physician selected by PGI,
Executive or Executive’s heirs shall be entitled to Executive’s pro rata Base
Compensation through the date of such determination and the Prior Year Earned
Bonus.

 

2.2           Termination By Executive.  Executive may terminate the employment
relationship before the Term expires for the following reasons:

 

a.             Good Reason.  For “good reason.”  A termination for Good Reason
shall be deemed to be an Involuntary Termination and shall mean a termination as
a result of:

 

(i)            A material breach by PGI of any material provision of this
Agreement which remains uncorrected for  30 days following Executive’s written
notice to PGI of such breach; or

 

(ii)           The assignment to Executive, without her express written consent,
of any duties reasonably inconsistent with Executive’s position, duties,
responsibilities and status with PGI as of the Effective Date, or a change in
Executive’s titles or offices (if any) in effect on the Effective

 

 

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Date, or any removal of Executive from, or any failure to reelect Executive to
(or, in the case of the Board, to nominate to), any of such positions, except in
connection with Executive’s termination for Cause, death, disability, or as a
result of the expiration of this Agreement; or

 

(iii)          A reduction by PGI in Executive’s Base Compensation as in effect
on the Effective Date, or as the same may be increased from time to time
thereafter; or

 

(iv)          Any purported termination for Cause or disability without grounds
therefor; or

 

(v)           A change in PGI’s headquarters location that is at least 50 miles
from PGI’s headquarters in effect on the Effective Date.

 

b.             Voluntary Termination.  For any other reason whatsoever, in
Executive’s sole discretion.  Upon a “Voluntary Termination” before the Term
expires, all of Executive’s future compensation and benefits (including unvested
equity awards) shall cease as of the date of termination (except benefits vested
as of the termination per plan terms), and Executive shall be entitled only to
pro rata Base Compensation through the termination date.  For avoidance of
doubt, the Retirement Incentive shall be forfeited as well.

 

2.3           Certain Obligations Continue.  Neither termination of employment
nor expiration of the Term terminates the continuing obligations of this
Agreement, including obligations under Articles 3 and 4.1.

 

2.4           Employment Beyond Term.  Unless the parties hereto mutually agree
otherwise at a later date, should Executive remain employed by PGI after the
Term expires, such employment shall convert to an employment-at-will
relationship, terminable at any time by either PGI or Executive for any reason
whatsoever, with or without cause.

 

ARTICLE 3:  CONFIDENTIAL INFORMATION; POST-EMPLOYMENT OBLIGATIONS

 

3.1           This Agreement.  The terms of this Agreement constitute
confidential information, which Executive shall not disclose to anyone other
than Executive’s spouse, attorneys, tax advisors, or as required by law.  PGI
may disclose the terms of this Agreement as required by law.

 

3.2           PGI Property.  All written materials, records, data, and other
documents prepared or possessed by Executive during Executive’s employment by
PGI are PGI’s property.  All memoranda, notes, records, files, correspondence,
drawings, manuals, models, specifications, computer programs, maps, and all
other documents, data, or materials of any type embodying such information,
ideas, concepts, improvements, discoveries, and inventions are PGI’s property.

 

All information, ideas, concepts, improvements, discoveries, and inventions that
are conceived, made, developed, or acquired by Executive individually or in
conjunction with others during Executive’s employment (whether during business
hours and whether on PGI’s premises or otherwise) which relate to PGI’s
business, products, or services are PGI’s property.  Executive agrees to make
prompt and full disclosure to PGI or its subsidiaries, as the case may be, of
all ideas, discoveries, trade secrets, inventions, innovations, improvements,
developments, methods of doing business, processes, programs, designs, analyses,
drawings, reports, data, software, firmware, logos and all similar or related

 

 

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information  (whether or not patentable and whether or not reduced to practice)
that relate to PGI’s or its subsidiaries’ actual or anticipated business,
research and development, or existing or future products or services and that
are conceived, developed, acquired, contributed to, made, or reduced to practice
by Executive (either solely or jointly with others) while employed by PGI or its
subsidiaries and for a period of one (1) year thereafter (collectively, “Work
Product”).  Any copyrightable work falling within the definition of Work Product
shall be deemed a “work made for hire” under the copyright laws of the United
States, and ownership of all rights therein shall vest in PGI or its
subsidiary.  To the extent that any Work Product is not deemed to be a “work
made for hire,” Executive hereby assigns and agrees to assign to PGI or such
subsidiary all right, title and interest, including without limitation, the
intellectual property rights that Executive may have in and to such Work
Product.  Executive shall promptly perform all actions reasonably requested by
the Board (whether during or after the employment period) to establish and
confirm PGI’s or such subsidiary’s ownership (including, without limitation,
providing testimony and executing assignments, consents, powers of attorney, and
other instruments).

 

At the termination of Executive’s employment with PGI for any reason, Executive
shall return all of PGI’s property to PGI.

 

3.3           Confidential Information:  Non-Disclosure.  Executive acknowledges
that the business of PGI and its subsidiaries is highly competitive and that PGI
has provided and will provide Executive with access to Confidential Information
relating to the business of PGI and its subsidiaries.  “Confidential
Information” means and includes PGI’s confidential and/or proprietary
information and/or trade secrets that have been developed or used and/or will be
developed and that cannot be obtained readily by third parties from outside
sources.  Confidential Information includes, by way of example and without
limitation, the following:  information regarding customers, employees,
contractors, and the industry not generally known to the public; strategies,
methods, books, records, and documents; technical information concerning
products, equipment, services, and processes; procurement procedures and pricing
techniques; the names of and other information concerning customers, investors,
and business affiliates (such as contact name, service provided, pricing for
that customer, amount of services used, credit and financial data, and/or other
information relating to PGI’s relationship with that customer); pricing
strategies and price curves; plans and strategies for expansion or acquisitions;
budgets; customer lists; research; weather data; financial and sales data;
trading terms; evaluations, opinions, and interpretations of information and
data; marketing and merchandising techniques; prospective customers’ names and
marks; grids and maps; electronic databases; models; specifications; computer
programs; internal business records; contracts benefiting or obligating PGI;
bids or proposals submitted to any third party; technologies and methods;
training methods and training processes; organizational structure; salaries of
personnel; payment amounts or rates paid to consultants or other service
providers; and other such confidential or proprietary information.  Executive
acknowledges that this Confidential Information constitutes a valuable, special,
and unique asset used by PGI or its subsidiaries in their business to obtain a
competitive advantage over their competitors.  Executive further acknowledges
that protection of such Confidential Information against unauthorized disclosure
and use is of critical importance to PGI and its subsidiaries in maintaining
their competitive position.

 

Executive also will have access to, or knowledge of, Confidential Information of
third parties, such as actual and potential customers, suppliers, partners,
joint venturers, investors, financing sources and the like, of PGI and its
subsidiaries.

 

Executive agrees that Executive will not, at any time during or after
Executive’s employment with PGI, make any unauthorized disclosure of any
Confidential Information of PGI or its subsidiaries, or

 

 

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PGI

 

Executive

 

 

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make any use thereof, except in the carrying out of her employment
responsibilities hereunder.  Executive also agrees to preserve and protect the
confidentiality of third party Confidential Information to the same extent, and
on the same basis, as PGI’s Confidential Information.

 

3.4           Non-Competition Obligations.  Executive acknowledges that PGI is
providing Executive with access to Confidential Information. Executive’s
non-competition obligations are ancillary to PGI’s agreements provided in
Article 2 and agreement to disclose Confidential Information to Executive.  In
order to protect the Confidential Information described above, and in
consideration for Executive’s receiving access to this Confidential Information,
right to compensation and benefits upon certain terminations as provided in
Article 2, and receiving other compensation provided in this Agreement, PGI and
Executive agree to the following non-competition provisions:

 

During the greater of the Severance Period or the twelve (12) month period
following Executive’s date of termination for Cause or a Voluntary Termination
(including retirement), Executive will not, directly or indirectly, for
Executive or for others in any geographic area where PGI or its subsidiaries
engage or plan to engage in business:

 

a.             engage in any business competing with any businesses in which PGI
or its subsidiaries currently engage in business, has plans to engage in
business, or has engaged in business in the 12-month period preceding the date
of termination (a “Competing Business”);

 

b.             perform any job, task, function, skill, or responsibility for a
Competing Business that Executive has provided for PGI in the 12-month period
preceding the date of termination; or

 

c.             render advice or services to, or otherwise assist, any other
person, association or entity in the business of “a” or “b” above.

 

Executive understands that the foregoing restrictions may limit her ability to
engage in certain businesses and during the period provided for above, but
acknowledges that these restrictions are necessary to protect the Confidential
Information PGI has provided to Executive.

 

Executive agrees that this provision defining the scope of activities
constituting competition with PGI is narrow and reasonable for the following
reasons:  (i) Executive is free to seek employment with other companies
providing services that do not directly or indirectly compete with any business
of PGI or its subsidiaries; (ii) Executive is free to seek employment with other
companies that do not directly or indirectly compete with any business of PGI or
its subsidiaries; and (iii) there are many other companies that do not directly
or indirectly compete with any business of PGI or its subsidiaries.  Thus, this
restriction on Executive’s ability to compete does not prevent Executive from
using and offering the skills that Executive possessed prior to receiving
Confidential Information, specialized training, and knowledge from PGI.

 

3.5           Non-Solicitation of Customers.  During the greater of the
Severance Period or the twelve (12) months following the termination of
employment for any reason, Executive will not call on, service, or solicit
competing business from customers of PGI or its subsidiaries whom the Executive,
within the twenty-four (24) months prior to termination of employment, (i) had
or made contact with, or (ii) had access to information and files about.  These
restrictions are limited by geography to the specific places, addresses, or
locations where a customer is present and available for soliciting or servicing.

 

 

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PGI

 

Executive

 

 

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3.6           Non-Solicitation of Employees.  During Executive’s employment and
during the greater of the Severance Period or the twelve (12) months following
the termination of employment for any reason, Executive will not, either
directly or indirectly, call on, solicit, or induce any other employee or
officer of PGI, or their affiliates whom Executive had contact with, knowledge
of, or association with in the course of employment with PGI to terminate his or
her employment, and will not assist any other person or entity in such a
solicitation.

 

3.7           Arbitration.  Except with respect to disputes or claims under
Article 3 or Section 4.1 hereof (which may be pursued in any court of competent
jurisdiction as specified herein and with respect to which each party shall bear
the cost of its own attorney’s fees and expenses except as otherwise required by
applicable law), each party hereto agrees that the arbitration procedure set
forth in Exhibit B hereto shall be the sole and exclusive method for resolving
any claim or dispute (“Claim”) arising out of or relating to the rights and
obligations acknowledged and agreed to in this Agreement and the employment of
Executive by PGI and its subsidiaries (including, without limitation, disputes
and claims regarding employment discrimination, sexual harassment, termination
and discharge), whether such Claim arose or the facts on which such Claim is
based occurred prior to or after the execution and delivery of adoption of this
Agreement.  The parties agree that the result of any arbitration hereunder shall
be final, conclusive and binding on all of the parties.  Nothing in this
paragraph shall prohibit a party hereto from instituting litigation to enforce
any Final Determination (as defined in Exhibit B hereto).  Each party hereto
hereby irrevocably submits to the jurisdiction of any United States District
Court or North Carolina state court of competent jurisdiction sitting in
Mecklenburg County, North Carolina, and agrees that such court shall be the
exclusive forum with respect to disputes and claims under this Agreement and for
the enforcement of any Final Determination, and irrevocably and unconditionally
waives (i) any objection to the laying of venue of any such action, suit or
proceeding in such court or (ii) any argument, claim, defense or allegation that
any such action, suit or proceeding brought in such court has been brought in an
inconvenient forum.  Each party hereto irrevocably consents to service of
process by registered mail or personal service and waives any objection on the
grounds of personal jurisdiction, venue or inconvenience of the forum.

 

3.8           Warranty.  Executive warrants that Executive is not a party to any
other restrictive agreement limiting Executive’s activities in her employment by
PGI.  Executive further warrants that at the time of the signing of this
Agreement, Executive knows of no written or oral contract or of any other
impediment that would inhibit or prohibit employment with PGI and that Executive
will not knowingly use any trade secret, confidential information, or other
intellectual property right of any other party in the performance of Executive’s
duties hereunder.

 

ARTICLE 4:  MISCELLANEOUS

 

4.1           Mutual Non-Disparagement.

 

a.             Executive shall refrain, both during and after her employment,
from publishing any oral or written statements about PGI, any of its respective
subsidiaries, or any of such entities’ officers, employees, agents, or
representatives that are slanderous, libelous, or defamatory; or that disclose
private or confidential information about their business affairs; or that
constitute an intrusion into their seclusion or private lives; or that give rise
to unreasonable publicity about their private lives; or that place them in a
false light before the public; or that constitute a misappropriation of their
name or likeness.

 

 

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Executive

 

 

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b.             PGI shall refrain, both during and after Executive’s employment,
from publishing any oral or written statement about Executive that are
slanderous, libelous, or defamatory, or that disclose private or confidential
information about her personal business affairs; or that constitute an intrusion
into her seclusion or private life; or that give rise to unreasonable publicity
about her private life; or that places her in a false light before the public.

 

4.2           Notices.  Any notice provided for in this Agreement shall be in
writing and shall be either personally delivered, sent by reputable overnight
courier service or mailed by first class mail, return receipt requested, to the
recipient at the address below indicated:

 

Notices to Executive:

 

Veronica M. Hagen

15503 Fisherman’s Rest Court

Cornelius, NC 29031

 

Notices to the Company:

 

Polymer Group, Inc.

9335 Harris Corners Parkway

Suite 300

Charlotte, NC 28269

Attn:  General Counsel

 

or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party.  Any
notice under this Agreement shall be deemed to have been given when so
delivered, sent or mailed.

 

4.3           No Waiver.  No failure by either party at any time to give notice
of any breach by the other party of, or to require compliance with, any
condition or provision of this Agreement shall be deemed a waiver of any
provisions or conditions of this Agreement.

 

4.4           409A Compliance.  This Agreement and any amendments thereto shall,
to the extent applicable, comply with and be interpreted in such a manner as to
be consistent with the provisions of Section 409A of the Code, and any Treasury
regulations or other Internal Revenue Service guidance promulgated thereunder. 
In addition, notwithstanding any provision herein to the contrary, because
Executive is a “specified employee” (as such term is defined in
Section 409A(a)(2)(B)(i) of the Code), any payment due and payable hereunder as
a result of Employee’s separation from service shall not be made before the date
which is six (6) months after Executive’s date of separation from service.

 

4.5           Assignment.  This Agreement shall be binding upon and inure to the
benefit of PGI and any other person, association, or entity that may acquire or
succeed to all or substantially all of the business or assets of PGI. 
Executive’s rights and obligations under this Agreement are personal, and they
shall not be assigned or transferred without PGI’s prior written consent.

 

4.6           Excise Tax.   Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any payment, benefit
or distribution to or for your benefit or the acceleration thereof would be
subject to the excise tax imposed by Section 4999 of the Internal Revenue Code
of 1986, as amended (the “Code”) or any interest or penalties with respect to
such excise tax (collectively,

 

 

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Executive

 

 

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such excise tax, together with any such interest or penalties, the “Excise Tax”)
(all such payments and benefits, including any cash severance payments payable
pursuant to any other plan, arrangement or agreement, hereinafter referred to as
the “Total Payments”), then, after taking into account any reduction in the
Total Payments provided by reason of Section 280G of the Code in such other
plan, arrangement or agreement, the cash severance payments shall first be
reduced, and the noncash severance payments shall thereafter be reduced, to the
extent necessary so that no portion of the Total Payments is subject to the
Excise Tax but only if (i) the net amount of such Total Payments, as so reduced
(and after subtracting the net amount of federal, state and local income taxes
on such reduced Total Payments and after taking into account the phase out of
itemized deductions and personal exemptions attributable to such reduced Total 
Payments) is greater than or equal to (ii) the net amount of such Total Payments
without such reduction (but after subtracting the net amount of federal, state
and local income taxes on such Total Payments and the amount of Excise Tax to
which you would be subject in respect of such unreduced Total Payments and after
taking into account the phase out of itemized deductions and personal exemptions
attributable to such unreduced Total Payments); provided, however, that you may
elect to have the noncash severance payments reduced (or eliminated) prior to
any reduction of the cash severance payments.  You shall remain solely liable
for all income taxes, Excise Tax, or other amounts assessed on any payments or
benefits and nothing in this Agreement shall be interpreted as obligating the
Company, or any successors thereto, to pay (or reimburse you for) any income
taxes, Excise Tax, or other taxes or amounts assessed against or incurred by you
in connection with your receipt of any such payments or benefits.

 

4.7           Indemnification, Liability Insurance.  PGI agrees to indemnify the
Executive and hold the Executive harmless to the fullest extent permitted by
PGI’s certificate of incorporation and under the bylaws of PGI against and in
respect to any and all actions, suits, proceedings, claims, demands, judgments,
costs, expenses (including reasonable attorneys’ fees), losses, and damages
resulting from the Executive’s good-faith performance of the Executive’s duties
and obligations to PGI.  PGI shall cover the Executive under directors and
officers liability insurance both during and, while potential liability exists,
after the Term of this Agreement in the same amount and on the same terms as PGI
covers its other active officers and directors, if such coverage is obtainable,
but in all events such coverage shall be at least in substantially the same
amount and on substantially the same terms as PGI covers its other active
officers and directors.

 

4.8           Recovery of Awards.  If, prior to or within two (2) years of the
termination of Executive’s employment with PGI, either (i) PGI is required to
make a material restatement of financial results for years during which
Executive was an employee and due to actions or inactions by her or that she had
knowledge of, or (ii) Executive is found to have engaged in misconduct while an
employee, which, if discovered at the time would have justified a Cause
termination, Executive may be required by the Board to return any outstanding
equity awards granted after January 1, 2010 and any value received from any
incentive awards (including, without limitation, the Retirement Incentive)
granted after January 1, 2010.

 

4.9           Other Agreements; Inconsistency.  This Agreement replaces and
merges any other previous agreements and discussions pertaining to the nature
of, term, and termination of Executive’s employment relationship with PGI, and
this Agreement constitutes the entire agreement of the parties with respect to
such subject matters.  No representation, inducement, promise, or agreement has
been made by either party with respect to such subject matters, and no
agreement, statement, or promise relating to the employment of Executive by PGI
that is not contained in this Agreement shall be valid or binding.  Any
modification of this Agreement will be effective only if it is in writing and
signed by each

 

 

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Executive

 

 

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party.  In the event of any inconsistency between this Agreement and any other
agreement (including but not limited to any profits interest, long-term
incentive or other equity award agreement), plan, program, policy or practice
(collectively, “Other Provision”) of PGI, the terms of this Agreement shall
control over such Other Provision to the extent that the terms of this Agreement
are more beneficial to the Executive.

 

4.10         Survival/Severability/Headings.  It is the express intention and
agreement of the parties that the provisions of Article 3 and Sections 4.1 and
4.8 shall survive the termination of employment of Executive.  In addition, all
obligations of PGI to make payments, and to provide for equity vesting, under
this Agreement shall survive any termination of this Agreement on the terms and
conditions set forth in this Agreement.  The invalidity or unenforceability of
any one or more provisions of this Agreement shall not affect the validity or
enforceability of the other provisions of this Agreement, which shall remain in
full force and effect.  Article and section headings contained in this Agreement
are provided for convenience and reference only, and do not define or affect the
meaning, construction, or scope of any of the provisions of this Agreement.

 

IN WITNESS WHEREOF, PGI and Executive have executed this Agreement in multiple
originals to be effective on the first date of the Term.

 

 

POLYMER GROUP, INC.

 

VERONICA M. HAGEN

 

 

 

 

 

 

By:

 

 

 

 

Name:

Dennis Norman

 

 

 

Title:

Chief Financial Officer

 

 

 

 

 

 

 

 

 

 

Dated this the        day of March, 2010

 

Dated this the        day of March, 2010

 

 

 

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PGI

 

Executive

 

 

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Exhibit A

 

GENERAL RELEASE

 

I, Veronica M. Hagen, in  consideration of and subject to the performance by
Polymer Group, Inc., a Delaware corporation (together with its subsidiaries, the
“Company”), of its obligations under the Employment Agreement, entered into on
April 23, 2010, (the “Agreement”), do hereby release and forever discharge as of
the date hereof the Company and its affiliates and all present and former
directors, officers, agents, representatives, employees, successors and assigns
of the Company and its affiliates and the Company’s direct or indirect owners
(collectively, the “Released Parties”) to the extent provided below.

 

1.             I understand that any payments or benefits paid or granted to me
under paragraph 2(b) of the Agreement represent, in part, consideration for
signing this General Release and are not salary, wages or benefits to which I
was already entitled. I understand and agree that I will not receive the
payments and benefits specified in paragraph 2(b) of the Agreement unless I
execute this General Release and do not revoke this General Release within the
time period permitted hereafter or breach this General Release.  Such payments
and benefits will not be considered compensation for purposes of any employee
benefit plan, program, policy or arrangement maintained or hereafter established
by the Company or its affiliates.  I also acknowledge and represent that I have
received all payments and benefits that I am entitled to receive (as of the date
hereof) by virtue of any employment by the Company.

 

2.             Except as provided in paragraph 4 below and except for the
provisions of my Employment Agreement which expressly survive the termination of
my employment with the Company, I knowingly and voluntarily (for myself, my
heirs, executors, administrators and assigns) release and forever discharge the
Company and the other Released Parties from any and all claims, suits,
controversies, actions, causes of action, cross-claims, counter-claims, demands,
debts, compensatory damages, liquidated damages, punitive or exemplary damages,
other damages, claims for costs and attorneys’ fees, or liabilities of any
nature whatsoever in law and in equity, existing or hereafter arising, based in
whole or in part upon any act or omission, transaction, agreement, event or
other occurrence taking place from the beginning of time through the date this
General Release becomes effective and enforceable and whether known or unknown,
suspected, or claimed against the Company or any of the Released Parties which
I, my spouse, or any of my heirs, executors, administrators or assigns, may
have, which arise out of or are connected with my employment with, or my
separation or termination from, the Company (including, but not limited to, any
allegation, claim or violation, arising under: Title VII of the Civil Rights Act
of 1964, as amended; the Civil Rights Act of 1991; the Age Discrimination in
Employment Act of 1967, as amended (including the Older Workers Benefit
Protection Act); the Equal Pay Act of 1963, as amended; the Americans with
Disabilities Act of 1990; the Family and Medical Leave Act of 1993; the Worker
Adjustment Retraining and Notification Act; the Employee Retirement Income
Security Act of 1974; any applicable Executive Order Programs; the Fair Labor
Standards Act; or their state or local counterparts; the North Carolina Equal
Employment Practice Act, N.C. Gen. Stat. § 143-422.1, et seq.; the North
Carolina Persons With Disabilities Protection Act, N.C. Gen. Stat. § 168A-1
et seq.; and the North Carolina Retaliatory Employment Discrimination Act, N.C.
Gen. Stat. § 95-240 et seq. or under any other federal,

 

 

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Executive

 

 

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state or local civil or human rights law, or under any other local, state, or
federal law, regulation or ordinance; or under any public policy, contract or
tort, or under common law; or arising under any policies, practices or
procedures of the Company; or any claim for wrongful discharge, breach of
contract, infliction of emotional distress, defamation; or any claim for costs,
fees, or other expenses, including attorneys’ fees incurred in these matters)
(all of the foregoing collectively referred to herein as the “Claims”).

 

3.             I represent that I have made no assignment or transfer of any
right, claim, demand, cause of action, or other matter covered by paragraph 2
above.

 

4.             I agree that this General Release does not waive or release any
rights or claims that I may have under the Age Discrimination in Employment Act
of 1967 which arise after the date I execute this General Release.  I
acknowledge and agree that my separation from employment with the Company in
compliance with the terms of the Agreement shall not serve as the basis for any
claim or action (including, without limitation, any claim under the Age
Discrimination in Employment Act of 1967).

 

5.             In signing this General Release, I acknowledge and intend that it
shall be effective as a bar to each and every one of the Claims hereinabove
mentioned or implied. I expressly consent that this General Release shall be
given full force and effect according to each and all of its express terms and
provisions, including those relating to unknown and unsuspected Claims
(notwithstanding any state statute that expressly limits the effectiveness of a
general release of unknown, unsuspected and unanticipated Claims), if any, as
well as those relating to any other Claims hereinabove mentioned or implied. I
acknowledge and agree that this waiver is an essential and material term of this
General Release and that without such waiver the Company would not have agreed
to the terms of the Agreement.  I further agree that in the event I should bring
a Claim seeking damages against the Company, or in the event I should seek to
recover against the Company in any Claim brought by a governmental agency on my
behalf, this General Release shall serve as a complete defense to such Claims. I
further agree that I am not aware of any pending charge or complaint of the type
described in paragraph 2 as of the execution of this General Release.

 

6.             I agree that neither this General Release, nor the furnishing of
the consideration for this General Release, shall be deemed or construed at any
time to be an admission by the Company, any Released Party or myself of any
improper or unlawful conduct.

 

7.             I agree that I will forfeit all amounts payable by the Company
pursuant to the Agreement if I challenge the validity of this General Release. I
also agree that if I violate this General Release by suing the Company or the
other Released Parties, I will pay all costs and expenses of defending against
the suit incurred by the Released Parties, including reasonable attorneys’ fees,
and return all payments received by me pursuant to the Agreement.

 

8.             I agree that this General Release is confidential and agree not
to disclose any information regarding the terms of this General Release, except
to my immediate family and any tax, legal or other counsel I have consulted
regarding the meaning or effect hereof or as required by law, and I will
instruct each of the foregoing not to disclose the same to anyone.

 

 

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9.             Any non-disclosure provision in this General Release does not
prohibit or restrict me (or my attorney) from responding to any inquiry about
this General Release or its underlying facts and circumstances by the Securities
and Exchange Commission (SEC), the National Association of Securities
Dealers, Inc. (NASD), any other self-regulatory organization or governmental
entity.

 

10.           I agree to reasonably cooperate with the Company in any internal
investigation or administrative, regulatory, or judicial proceeding. I
understand and agree that my cooperation may include, but not be limited to,
making myself available to the Company upon reasonable notice for interviews and
factual investigations; appearing at the Company’s request to give testimony
without requiring service of a subpoena or other legal process; volunteering to
the Company pertinent information; and turning over to the Company all relevant
documents which are or may come into my possession all at times and on schedules
that are reasonably consistent with my other permitted activities and
commitments. I understand that in the event the Company asks for my cooperation
in accordance with this provision, the Company will reimburse me solely for
reasonable travel expenses, including lodging and meals, upon my submission of
receipts.

 

11.           I agree that as of the date hereof, I have returned to the Company
any and all property, tangible or intangible, relating to its business, which I
possessed or had control over at any time (including, but not limited to,
company-provided credit cards, building or office access cards, keys, computer
equipment, manuals, files, documents, records, software, customer data base and
other data) and that I shall not retain any copies, compilations, extracts,
excerpts, summaries or other notes of any such manuals, files, documents,
records, software, customer data base or other data.

 

12.           Notwithstanding anything in this General Release to the contrary,
this General Release shall not relinquish, diminish, or in any way affect any
rights or claims arising out of any breach by the Company or by any Released
Party of the Agreement after the date hereof.

 

13.           Whenever possible, each provision of this General Release shall be
interpreted in, such manner as to be effective and valid under applicable law,
but if any provision of this General Release is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
any other provision or any other jurisdiction, but this General Release shall be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provision had never been contained herein.

 

BY SIGNING THIS GENERAL RELEASE, I REPRESENT AND AGREE THAT:

 

(a)           I HAVE READ IT CAREFULLY;

 

(b)           I UNDERSTAND ALL OF ITS TERMS AND KNOW THAT I AM GIVING UP
IMPORTANT RIGHTS, INCLUDING BUT NOT LIMITED TO, RIGHTS UNDER THE AGE
DISCRIMINATION IN EMPLOYMENT ACT OF 1967, AS AMENDED, TITLE VII OF THE CIVIL
RIGHTS ACT OF 1964, AS AMENDED; THE EQUAL PAY ACT OF 1963, THE AMERICANS WITH
DISABILITIES ACT OF 1990; AND THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED;

 

 

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(c)           I VOLUNTARILY CONSENT TO EVERYTHING IN IT;

 

(d)           I HAVE BEEN ADVISED TO CONSULT WITH AN ATTORNEY BEFORE EXECUTING
IT AND I HAVE DONE SO OR, AFTER CAREFUL READING AND CONSIDERATION I HAVE CHOSEN
NOT TO DO SO OF MY OWN VOLITION;

 

(e)           I HAVE HAD AT LEAST 21 DAYS FROM THE DATE OF MY RECEIPT OF THIS
RELEASE SUBSTANTIALLY IN ITS FINAL FORM ON                                    ,
           TO CONSIDER IT AND THE CHANGES MADE SINCE THE
                                   ,            VERSION OF THIS RELEASE ARE NOT
MATERIAL AND WILL NOT RESTART THE REQUIRED 21-DAY PERIOD;

 

(f)            THE CHANGES TO THE AGREEMENT SINCE                               
      ,            EITHER ARE NOT MATERIAL OR WERE MADE AT MY REQUEST.

 

(g)           I UNDERSTAND THAT I HAVE SEVEN DAYS AFTER THE EXECUTION OF THIS
RELEASE TO REVOKE IT AND THAT THIS RELEASE SHALL NOT BECOME EFFECTIVE OR
ENFORCEABLE UNTIL THE REVOCATION PERIOD HAS EXPIRED;

 

(h)           I HAVE SIGNED THIS GENERAL RELEASE KNOWINGLY AND VOLUNTARILY AND
WITH THE ADVICE OF ANY COUNSEL RETAINED TO ADVISE ME WITH RESPECT TO IT; AND

 

(i)            I AGREE THAT THE PROVISIONS OF THIS GENERAL RELEASE MAY NOT BE
AMENDED, WAIVED, CHANGED OR MODIFIED EXCEPT BY AN INSTRUMENT IN WRITING SIGNED
BY AN AUTHORIZED REPRESENTATIVE OF THE COMPANY AND BY ME.

 

 

DATE:

 

 

 

 

 

 

Initials:

 

 

 

 

 

 

 

 

 

 

PGI

 

Executive

 

 

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Exhibit B

 

ARBITRATION PROCEDURE

 

1              Notice of Claim.  A party asserting a Claim (the “Claimant”)
shall deliver written notice to each party against whom the Claim is asserted
(collectively, the “Opposing Party”), with a copy to the persons required to
receive copies of notices under the Agreement (the “Additional Notice Parties”),
specifying the nature of the Claim and requesting a meeting to resolve same. 
The Additional Notice Parties shall be given reasonable notice of and invited
and permitted to attend any such meeting.  If no resolution is reached within 10
business days after delivery of such notice, the Claimant or the Opposing Party
may, within 45 days after giving such notice, invoke the arbitration procedure
provided herein by delivering to each Opposing Party and the Additional Notice
Parties a notice of arbitration which shall specify the Claim as to which
arbitration is sought, the nature of the Claim, the basis for the Claim and the
nature and amount of any damages or other compensation or relief sought (a
“Notice of Arbitration”).  Each party agrees that no punitive damages may be
sought or recovered in any arbitration, judicial proceeding or otherwise. 
Failure to file a Notice of Arbitration within 45 days shall constitute a waiver
of any right to relief for the matters asserted in the notice of Claim.  Any
Claim shall be forever barred, and no relief may be sought therefor, if written
notice of such Claim is not made as provided above within one year of the date
such Claim accrues.

 

2              Selection of Arbitrator.  Within 20 business days after receipt
of the Notice of Arbitration, the Executive and a duly authorized representative
of PGI shall confer, whether in person, by telephone or in writing, and attempt
to agree on an arbitrator to hear and decide the Claim.  If the Executive and
the Board cannot agree on an arbitrator within ten business days, then they
shall request the American Arbitration Association (the “AAA”) in Charlotte,
North Carolina to appoint an arbitrator experienced in the area of dispute who
does not have an ongoing business relationship with any of the parties to the
dispute.  If the arbitrator selected informs the parties he cannot hear and
resolve the Claim within the time-frame specified below, the Executive and the
Board shall request the appointment of another arbitrator by the AAA subject to
the same requirements.

 

3              Arbitration Procedure.  The following procedures shall govern the
conduct of any arbitration under this section.  All procedural matters relating
to the conduct of the arbitration other than those specified below shall be
discussed among counsel for the parties and the arbitrator.  Subject to any
agreement of the parties, the arbitrator shall determine all procedural matters
not specified herein.

 

(a)           Within 30 days after the delivery of a Notice of Arbitration, each
party shall afford the other, or its counsel, with reasonable access to
documents relating directly to the issues raised in the Notice of Arbitration. 
All documents produced and all copies thereof shall be maintained as strictly
confidential, shall be used for no purpose other than the arbitration hereunder,
and shall be returned to the producing party upon completion of the
arbitration.  There shall be no other discovery except that, if a reasonable
need is shown, limited depositions may be allowed in the discretion of the
arbitrator, it being the expressed intention and agreement of each party to have
the arbitration proceedings conducted and resolved as expeditiously,
economically and fairly as reasonably practicable, and with the maximum degree
of confidentiality.

 

(b)           All written communications regarding the proceeding sent to the
arbitrator shall be sent simultaneously to each party or its counsel, with a
copy to the Additional Notice Parties.  Oral

 

 

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communications between any of the parties or their counsel and the arbitrator
shall be conducted only when all parties or their counsel are present and
participating in the conversation.

 

(c)           Within 20 days after selection of the arbitrator, the Claimant
shall submit to the arbitrator a copy of the Notice of Arbitration, along with a
supporting memorandum and any exhibits or other documents supporting the Claim.

 

(d)           Within 20 days after receipt of the Claimant’s submission, the
Opposing Party shall submit to the arbitrator a memorandum supporting its
position and any exhibits or other supporting documents.  If the Opposing Party
fails to respond to any of the issues raised by the Claimant within 20 days of
receipt of the Claimant’s submission, then the arbitrator may find for the
Claimant on any such issue and bar any subsequent consideration of the matter.

 

(e)           Within 20 days after receipt of the Opposing Party’s response, the
Claimant may submit to the arbitrator a reply to the Opposing Party’s response,
or notification that no reply is forthcoming.

 

(f)            Within 10 days after the last submission as provided above, the
arbitrator shall confer with the parties to select the date of the hearing on
the issues raised by the Claim.  Scheduling of the hearing shall be within the
sole discretion of the arbitrator, but in no event more than 30 days after the
last submission by the parties, and shall take place within 50 miles of the
corporate headquarters of PGI at a place selected by the arbitrator or such
other place as is mutually agreed.  Both parties shall be granted substantially
equal time to present evidence at the hearing.  The hearing shall not exceed one
business day, except for good cause shown.

 

(g)           Within 30 days after the conclusion of the hearing, the arbitrator
shall issue a written decision to be delivered to both parties and the
Additional Notice Parties (the “Final Determination”).  The Final Determination
shall address each issue disputed by the parties, state the arbitrator’s
findings and reasons therefor, and state the nature and amount of any damages,
compensation or other relief awarded.

 

(h)           The award rendered by the arbitrator shall be final and
non-appealable, except as otherwise provided under the Federal Arbitration Act,
and judgment may be entered upon it in accordance with applicable law in such
court as has jurisdiction thereof.

 

4              Costs of Arbitration.  Each party shall bear its own costs of
conducting the arbitration, and administrative fees shall be shared equally
among the parties.

 

5              Satisfaction of Award.  If any party fails to pay the amount of
the award, if any, assessed against it within 30 days after the delivery to such
party of the Final Determination, the unpaid amount shall bear interest from the
date of such delivery at the lesser of (i) prime lending rate announced by
Citibank N.A. plus three hundred basis points and (ii) the maximum rate
permitted by applicable usury laws.  In addition, such party shall promptly
reimburse the other party for any and all costs or expenses of any nature or
kind whatsoever (including attorneys’ fees) reasonably incurred in seeking to
collect such award or to enforce any Final Determination.

 

6              Confidentiality of Proceedings.  The parties hereto agree that
all of the arbitration proceedings provided for herein, including any notice of
claim, the Notice of Arbitration, the submissions of the parties, and the Final
Determination issued by the arbitrator, shall be confidential and

 

 

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shall not be disclosed at any time to any person other than the parties, their
representatives, the arbitrator and the Additional Notice Parties; provided,
however, that this provision shall not prevent the party prevailing in the
arbitration from submitting the Final Determination to a court for the purpose
of enforcing the award, subject to comparable confidentiality protections if the
court agrees; and further provided that the foregoing shall not prohibit
disclosure to the minimum extent reasonably necessary to comply with
(i) applicable law (or requirement having the force of law), court order,
judgment or decree, including, without limitation, disclosures which may be
required pursuant to applicable securities laws, and (ii) the terms of
contractual arrangements (such as financing arrangements) to which PGI or any
Additional Notice Party may be subject so long as such contractual arrangements
were not entered into for the primary purpose of permitting disclosure which
would otherwise be prohibited hereunder.

 

 

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