EXHIBIT 10.5

PROPEX HOLDINGS INC.

NONQUALIFIED STOCK OPTION AGREEMENT

FOR EMPLOYEES

(2005 Stock Awards Plan)

This Nonqualified Stock Option Agreement (“Option Agreement”) is between Propex
Holdings Inc., a Delaware corporation (the “Company”), and                     
(the “Optionee”).

W I T N E S S E T H:

The Company has heretofore adopted the Propex Fabrics Holdings Inc. 2005 Stock
Awards Plan (the “Plan”) for the purposes of attracting able persons to the
Company and providing employees, directors and consultants of the Company and
its Affiliates (as defined in the Plan) with additional incentive to enhance the
profitable growth of the Company and to encourage them to remain in the employ
or service of the Company and its Affiliates (collectively hereinafter referred
to as the “Company”).

NOW THEREFORE, for and in consideration of these premises it is agreed as
follows:

52. Option. Subject to the terms and conditions contained herein, the Company,
effective as of September 1, 2006 (the “Grant Date”), hereby irrevocably grants
to Optionee the right and option (“Option”) to purchase from the Company shares
of the Company’s Class A Common Stock, $0.01 par value (“Stock”), at a price of
$108.00 per share.

53. Option Period. Unless otherwise provided for herein, the Option herein
granted may be exercised by Optionee in whole or in part at any time during a
ten (10) year period (the “Option Period”) beginning on the Grant Date, subject
to the limitation that said Option shall not be exercisable for more than a
portion of the aggregate number of shares offered by this Option, in accordance
with the following schedule:

 

Date

   Cumulative Percentage of Total
Shares Granted That May Be
Purchased (“Vested”) February 20, 2007    25% February 20, 2008    50%

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February 20, 2009

   75%

February 20, 2010

   100%

The shares of Stock may be purchased at any time after they become vested, in
whole or in part, during the Option Period; provided, however, the Option may
only be exercisable to acquire whole shares. The right of exercise provided
herein shall be cumulative so that if the Option is not exercised to the maximum
extent permissible after vesting, the vested portion of the Option shall be
exercisable, in whole or in part, at any time during the Option Period.

Upon the occurrence of a “Change of Control” (as defined in Section 11), the
Option granted under this Option Agreement shall be fully exercisable and
vested.

Notwithstanding anything in this Agreement to the contrary, the Committee (as
defined in the Plan), in its sole discretion, may waive the foregoing schedule
of vesting, and upon written notice to the Optionee, accelerate the earliest
date or dates on which any of the Options granted hereunder are exercisable.

54. Procedure for Exercise. The Option herein granted may be exercised by
written notice by Optionee to the Chief Financial Officer and the General
Counsel of the Company setting forth the number of shares of Stock with respect
to which the Option is to be exercised, accompanied by payment for the shares to
be purchased, and specifying the address to which the certificate for such
shares is to be mailed. Payment shall be by means of cash, or a cashier’s check,
bank draft, postal or express money order payable to the order of the Company,
or through withholding the number of shares equal to the aggregate exercise
price, or in Stock theretofore owned by such Optionee for at least six
(6) months (or a combination of cash and Stock). Notice may also be delivered by
fax or telecopy provided that the purchase of such shares is delivered to the
Company via wire transfer on the same day the fax is received by the Chief
Financial Officer and the General Counsel of the Company. As promptly as
practicable after receipt of such written notification and payment, the Company
shall deliver to Optionee certificates for the number of shares of Stock with
respect to which such Option has been so exercised.

55. Involuntary Termination For Cause or Voluntary Termination Without Good
Reason. If Optionee’s employment or service with the Company is terminated
during the Option Period for “Cause” (as defined below) or if Optionee
voluntarily terminates his or her employment or service with the Company without
“Good Reason” (as defined below) (“Voluntary Termination Without Good Reason”),
Options granted to him or her, even though they are Vested on such date of
termination of employment or service For Cause or on the date of Optionee’s
Voluntary Termination Without Good Reason of employment or service, shall
thereupon expire.

As used in this Agreement, the term “Cause” has the same meaning as set forth in
Optionee’s employment agreement that is in effect at the time the Company
intends to terminate Optionee for Cause. If no such Agreement is in effect, then
“Cause” shall mean (i) the breach of Optionee’s obligations under any offer
letter or employment agreement after

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Optionee has been given notice specifying such breach and a reasonable
opportunity to cure such breach; (ii) failure to adhere to any written policy of
the Company and its Affiliates after Optionee has been given notice specifying
the failure and a reasonable opportunity to comply with such policy or cure
Optionee’s failure to comply; (iii) Optionee’s conviction of, indictment for or
the entering of a guilty plea or plea of no contest with respect to, a felony,
the equivalent thereof, or any other crime with respect to which imprisonment is
a possible punishment; (iv) the commission by Optionee of an act of fraud upon
the Company or any of its Affiliates; (v) the misappropriation (or attempted
misappropriation) of any funds or property of the Company or any of its
Affiliates; (vi) failure to perform the duties assigned to Optionee under any
offer letter or employment agreement after reasonable notice and opportunity to
cure such performance; (vii) Optionee’s engagement in any direct, material
conflict of interest with the Company or any of its Affiliates without
compliance with the conflict of interest policy of the Company or any of its
Affiliates, if any, then in effect; (viii) Optionee’s engagement, without the
written approval of the Board of Directors of the Company (“Board”), in any
activity which competes with the business of the Company or any of its
Affiliates or which would result in a material injury to the Company or any of
its Affiliates; (ix) Optionee’s engagement in any activity which would
constitute a material violation of the provisions of the Company’s or any of its
Affiliates’ insider trading policy or business ethics policy, if any, then in
effect, or (xi) any act or omission that, in the judgment of the Board has or
could have a material adverse effect on (a) the Company’s properties, operations
or public image, or (b) the health, safety or morale of any of the suppliers,
employees or customers of the Company or any of its Affiliates.

As used in this Agreement, the term “Good Reason” has the same meaning as set
forth in Optionee’s employment agreement that is in effect at the time the
Company intends to terminate Optionee for Good Reason. If no such Agreement is
in effect, then “Good Reason” shall mean any of the following events occurring
without the Optionee’s consent: (i) the assignment to Optionee of duties
substantially inconsistent with his or her position with the Company (as of the
date hereof) or a substantial reduction of the Optionee’s duties or
responsibilities, which persists for at least 30 days following written notice
thereof by Optionee; or (ii) a material reduction by the Company to Optionee’s
compensation (including bonus opportunities) which is provided as of the date
hereof.

56. Other Termination of Employment. If the Company terminates the Optionee’s
employment or service with the Company for any reason other than For Cause or if
the Optionee voluntarily terminates employment or service with the Company on
account of a Good Reason or if the Optionee’s employment or service with the
Company is terminated by his or her death or “Permanent Disability” (as defined
below), then all Options granted hereunder and Vested as of the date Optionee’s
employment or service with the Company is terminated shall be thereafter
exercisable until the last day of the Option Period by the Optionee, his
executor or administrator, or the person or persons to whom his rights under
this Option Agreement shall pass by will or by the laws of descent and
distribution, as the case may be. Upon the expiration of the Option Period, the
Option shall expire. In no event may any Option be exercised after the end of
the Option Period. As used in this Agreement, the term “Permanent Disability”
has the same meaning as set forth in Optionee’s employment agreement that is in
effect at the time of the Permanent Disability. If no such Agreement is in
effect, Optionee shall be deemed subject to a “Permanent Disability” if, in the
opinion of a

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physician selected by the Committee, he is incapable of performing services for
the Company of the kind he was performing at the time the disability occurred by
reason of any medically determinable physical or mental impairment which can be
expected to result in death or to be of long, continued and indefinite duration.
The date of determination of disability for purposes hereof shall be the date of
such determination by such physician.

57. Cashing Out Option. On receipt of written notice of exercise pursuant to
Section 3, the Committee may elect to cash-out all or a part of the portion of
the shares of Stock for which all or a portion of this Option is being exercised
by paying Optionee an amount, in cash or Stock, equal to the excess of the Fair
Market Value (as defined in the Plan) of the Stock over the option price times
the number of shares of Stock for which the Option is being exercised (and
cashed-out) on the effective date of such exercise.

58. Transferability. This Option shall not be transferable by Optionee otherwise
than by Optionee’s will or by the laws of descent and distribution. During the
lifetime of Optionee, the Option shall be exercisable only by him. Any heir or
legatee of Optionee shall take rights herein granted subject to the terms and
conditions hereof. No such transfer of this Option Agreement to heirs or
legatees of Optionee shall be effective to bind the Company unless the Company
shall have been furnished with written notice thereof and a copy of such
evidence as the Committee may deem necessary to establish the validity of the
transfer and the acceptance by the transferee or transferees of the terms and
conditions hereof.

59. No Rights as Stockholder. Optionee shall have no rights as a stockholder
with respect to any shares of Stock covered by this Option Agreement until the
date of issuance of a certificate for shares of Stock purchased pursuant to this
Option Agreement. Until such time, Optionee shall not be entitled to dividends
or to vote at meetings of the stockholders of the Company. Except as provided in
Section 10 hereof, no adjustment shall be made for dividends (ordinary or
extraordinary, whether in cash or securities or other property) paid or
distributions or other rights granted in respect of any share of Stock for which
the record date for such payment, distribution or grant is prior to the date
upon which the Optionee shall have been issued share certificates, as provided
herein above.

60. Extraordinary Corporate Transactions. If the Company recapitalizes or
otherwise changes its capital structure, (each of the foregoing a “Fundamental
Change”), then thereafter upon any exercise of any Option hereunder, the
Optionee shall be entitled to purchase under the Option, in lieu of the number
of shares of Stock as to which the Option shall then be exercisable, the number
and class of shares of stock and securities to which the Optionee would have
been entitled pursuant to the terms of the Fundamental Change if, immediately
prior to such Fundamental Change, the Optionee had been the holder of record of
the number of shares of Stock as to which the Option is then exercisable. Upon
the occurrence of a Fundamental Change, the Options granted hereunder shall be
governed by Paragraph XII of the Plan.

61. Changes in Capital Structure. The existence of outstanding Options shall not
affect in any way the right or power of the Company or its shareholders to make
or authorize any or all adjustments, recapitalizations, reorganizations or other
changes in the Company’s capital structure or its business, or any merger or
consolidation of the Company, or any issuance of Stock or subscription rights
thereto, or any issuance of bonds, debentures,

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preferred or prior preference stock ahead of or affecting the Stock or the
rights thereof, or the dissolution or liquidation of the Company, or any sale or
transfer of all or any part of its assets or business, or any other corporate
act or proceedings, whether of a similar character or otherwise. If the
outstanding shares of Stock of the Company shall at any time be changed or
exchanged by declaration of a stock dividend, stock split, combination of
shares, or recapitalization, the number and kind of shares subject to the Plan
or subject to any Options theretofore granted, and the Option prices, shall be
appropriately and equitably adjusted so as to maintain the proportionate number
of shares without changing the aggregate Option price.

62. Change of Control. Except as provided below, each of the following events
shall hereinafter be defined as a “Change of Control”:

(a) any merger, consolidation or other reorganization (other than a merger or
consolidation with the Principal Holder (as defined in the Plan)), in which the
Company is not the surviving entity or in which the Company survives only as a
subsidiary of an entity, other than a previously wholly-owned subsidiary of the
Company or the Principal Holder;

(b) the Company sells, leases or exchanges all or substantially all of the
Company’s assets to any other person or entity (other than a wholly-owned
subsidiary of the Company, or the Principal Holder);

(c) any person or entity (other than the Principal Holder), including a “group”
as contemplated by Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended (“1934 Act”), acquires or gains ownership or control of (including,
without limitation, power to vote) more than 50% of the outstanding shares of
the Company’s voting stock (based upon voting power with respect to the election
of directors);

(d) the Company is to be dissolved and liquidated; or

(e) as a result of or in connection with a contested election of directors, the
persons who were directors of the Company before such election shall cease to
constitute a majority of the Board.

63. Occurrence of a Change of Control. Upon the occurrence of an event of Change
of Control, the Committee, in its discretion, may act to affect one or more of
the following alternatives with respect to this Option:

(a) determine a limited period of time for the exercise of the Option in a
manner determined by the Committee on or before a specified date (before or
after such Change of Control) after which specified date any unexercised portion
of the Option and all rights of Optionee shall terminate;

(b) require the mandatory surrender to the Company by the Optionee of some or
all of the outstanding Option (irrespective of whether the Option is exercisable
under the provisions of the Plan) as of a date, before or after such Change of
Control, specified by the Committee, in which event the Committee shall
thereupon cancel the Option and the Company shall pay to the Optionee an amount
of cash and other consideration, as determined by the Committee in its sole
discretion, where the total cash and other consideration paid or

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delivered per share is equal to the excess, if any, of the Change of Control
Value (as defined in the Plan) of the shares subject to the unexercised portion
of the Option over the exercise price of the Option;

(c) make such adjustments to the Option then outstanding as the Committee deems
appropriate to reflect the Change of Control; or

(d) provide that upon any exercise of this Option, the Optionee shall be
entitled to purchase under such Option, the number and class of shares of stock
or other securities or property (including, without limitation, cash) to which
the Optionee would have been entitled if, immediately prior to the Change of
Control, the Optionee had been the holder of record of the number of shares of
Stock then covered by the Option.

The provisions contained in this Section shall be inapplicable to this Option if
granted within six (6) months before the occurrence of a Change of Control, but
only if (i) the Optionee is subject to the reporting requirements of
Section 16(a) of the 1934 Act and (ii) such provisions (even after preapproval
by the Committee or the Board pursuant to Rule 16b-3) would create a matching
transaction under Section 16(b) of the 1934 Act with respect to the Optionee.
The provisions contained in this Section shall not terminate any rights of the
Optionee to further payments pursuant to any other agreement with the Company
following a Change of Control.

64. Compliance With Securities Laws. Upon the acquisition of any shares pursuant
to the exercise of the Option herein granted, Optionee (or any person acting
under Section 7) will enter into such written representations, warranties and
agreements as the Company may reasonably request in order to comply with
applicable securities laws or with this Option Agreement.

65. Compliance With Laws. Notwithstanding any of the other provisions hereof,
Optionee agrees that he will not exercise the Option(s) granted hereby, and that
the Company will not be obligated to issue any shares pursuant to this Option
Agreement, if the exercise of the Option(s) or the issuance of such shares of
Stock would constitute a violation by the Optionee or by the Company of any
provision of any law or regulation of any governmental authority.

66. Withholding of Tax. To the extent that the exercise of this Option or the
disposition of shares of Stock acquired by exercise of this Option results in
compensation income to the Optionee for federal or state income tax purposes,
the Optionee shall pay to the Company at the time of such exercise or
disposition (or such other time as the law permits if the Optionee is subject to
Section 16(b) of the 1934 Act) such amount of money as the Company may require
to meet its obligation under applicable tax laws or regulations or authorize the
Company to withhold the number of shares equal to the withholding taxes; and, if
the Optionee fails to do so, the Company is authorized to withhold, from any
cash remuneration then or thereafter payable to the Optionee, any tax required
to be withheld by reason of such resulting compensation income, or Company may
otherwise refuse to issue or transfer any shares otherwise required to be issued
or transferred pursuant to the terms hereof. Payment of the withholding tax by
the Optionee shall be made in accordance with Paragraph XIV(c) of the Plan.

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67. Stockholders Agreements. Optionee, or the Optionee’s representative upon the
Optionee’s death or disability, agrees that with respect to all shares of Stock
purchased under this Option, he or she shall be bound by any Stockholders
Agreement of the Company which restrict the ability of such stockholders of the
Company to transfer their shares of Stock, unless the Company otherwise waives
the Optionee’s obligation under this Section 16.

68. Resolution of Disputes. As a condition of the granting of the Option hereby,
the Optionee and his heirs and successors agree that any dispute or disagreement
which may arise hereunder shall be determined by the Committee in its sole
discretion and judgment, and that any such determination and any interpretation
by the Committee of the terms of this Option Agreement shall be final and shall
be binding and conclusive, for all purposes, upon the Company, Optionee, his
heirs and personal representatives.

69. Legends on Certificate. The certificates representing the shares of Stock
purchased by exercise of an Option will be stamped or otherwise imprinted with
legends in such form as the Company or its counsel may require with respect to
any applicable restrictions on sale or transfer and the stock transfer records
of the Company will reflect stop-transfer instructions with respect to such
shares.

70. Notices. Every notice hereunder shall be in writing and shall be given by
registered or certified mail or by fax or telecopy. All notices of the exercise
of any Option hereunder shall be directed to Propex Holdings Inc., 6025 Lee
Highway, Chattanooga, TN 37421, Attention: Chief Financial Officer and the
General Counsel. Any notice given by the Company to Optionee directed to him at
his address on file with the Company shall be effective to bind him and any
other person who shall acquire rights hereunder. The Company shall be under no
obligation whatsoever to advise Optionee of the existence, maturity or
termination of any of Optionee’s rights hereunder and Optionee shall be deemed
to have familiarized himself with all matters contained herein and in the Plan
which may affect any of Optionee’s rights or privileges hereunder.

71. Construction and Interpretation. Whenever the term “Optionee” is used herein
under circumstances applicable to any other person or persons to whom this
award, in accordance with the provisions of Section 7 hereof, may be
transferred, the word “Optionee” shall be deemed to include such person or
persons. References to the masculine gender herein also include the feminine
gender for all purposes.

72. Agreement Subject to Plan. This Option Agreement is subject to the Plan. The
terms and provisions of the Plan (including any subsequent amendments thereto)
are hereby incorporated herein by reference thereto. In the event of a conflict
between any term or provision contained herein and a term or provision of the
Plan, the applicable terms and provisions of the Plan will govern and prevail.
All definitions of words and terms contained in the Plan shall be applicable to
this Option Agreement.

73. Employment Relationship. Employees shall be considered to be in the
employment of the Company as long as they remain employees of the Company or a
parent or subsidiary corporation (as defined in Section 424 of the Internal
Revenue Code of 1986, as amended (the “Code”). Any questions as to whether and
when there has been a termination of such employment and the cause of such
termination, shall be determined by the Committee,

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and its determination shall be final. Nothing contained herein shall be
construed as conferring upon the Optionee the right to continue in the employ of
the Company, nor shall anything contained herein be construed or interpreted to
limit the “employment at will” relationship between the Optionee and the
Company.

74. Section 409A and Gross-Up Treatment. To the extent applicable, it is
intended that this Agreement comply with the requirements of Section 409A of the
Code and any related regulations or other guidance promulgated with respect to
that section by the U.S. Department of the Treasury or the Internal Revenue
Service (“Section 409A”). Any provision that would cause the Agreement to fail
to satisfy Section 409A will have no force or effect until amended to comply
with Section 409A, which amendment may be retroactive to the extent permitted by
Section 409A. Such amendment may include, but will not be limited to, a delay in
payments that would otherwise be made upon termination of employment to the
extent necessary to comply with Section 409A. However, in no event shall any
payments or benefits hereunder be diminished to comply with Section 409A. In the
event that this Agreement fails to comply with Section 409A such that Optionee
is liable for the excise tax thereunder, the Company shall pay Optionee, in a
lump sum, an amount (the “409A” Gross-Up”) such that, after payment of the
excise tax imposed by Section 409A, Optionee will be fully reimbursed for the
amount of such excise tax.

75. Binding Effect. This Option Agreement shall be binding upon and inure to the
benefit of any successors to the Company and all persons lawfully claiming under
Optionee.

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IN WITNESS WHEREOF, this Option Agreement has been executed this [            ]
day of October, 2006.

 

PROPEX HOLDINGS INC.

By:

 

 

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OPTIONEE

 

Name: