Exhibit 10.1


 


POLYMER
GROUP, INC.


2005
EMPLOYEE RESTRICTED STOCK PLAN


 


1.                                       Purpose.
This plan shall be known as the Polymer Group, Inc. 2005 Employee
Restricted Stock Plan (the “Plan”).  The
purpose of the Plan shall be to promote the long-term growth and profitability
of Polymer Group, Inc. (the “Company”) and its Subsidiaries by providing
certain employees of the Company
and its Subsidiaries with incentives to maximize stockholder value and
otherwise contribute to the success of the Company.  Only grants of restricted stock may be made
under the Plan.


 


2.                                       Definitions.


 


(a)           “Board of Directors” and “Board” mean
the board of directors of the Company.


 


(b)           “Cause” means the occurrence of one
or more of the following events:


 


(i)            Conviction of a felony or any crime
or offense lesser than a felony involving the property of the Company or a
Subsidiary; or


 


(ii)           A breach of Executive’s duty of
loyalty to the Company or any of its Subsidiaries or any act of dishonesty or
fraud with respect to the Company or any of its Subsidiaries; or


 


(iii)          The commission by Executive of a
felony, a crime involving moral turpitude or other act or omission causing
material harm to the standing and reputation of the Company and its
Subsidiaries; or


 


(iv)          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 causing the Company or any of its
Subsidiaries substantial public disgrace or disrepute or economic harm; or


 


(v)           Any act or omission aiding or
abetting a competitor, supplier or customer of the Company or any of its
Subsidiaries to the material disadvantage or detriment of the Company and its
Subsidiaries


 


(c)           “Change in Control” means the
occurrence of one 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 the Company representing 50%
or more of the combined voting power of the Company’s then outstanding
securities, other than (A) an acquisition by an Exempt Person or (B) an
acquisition by a “group” or “person” that contains or has as an owner, as the
case may be, an Exempt Person that is the “beneficial owner”, directly or
indirectly, of securities or other equity or equity-like interests representing
20% or more of the


 





















 


combined voting
power of such “group’s” or “person’s”, as the case may be, then outstanding
voting securities or other equity or equity-like interests; 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 the
Company’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 the Company with any other corporation, other than a merger or
consolidation (A) which would result in all or a portion of the voting
securities of the Company 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 the Company or such surviving entity outstanding
immediately after such merger or consolidation or (B) by which the
corporate existence of the Company is not affected and following which the
Company’s chief executive officer and directors retain their positions with the
Company (and constitute at least a majority of the Board), or (C) other
than a merger or consolidation by or with any “person” that has as an owner an
Exempt Person that is the “beneficial owner”, directly or indirectly, of securities
or other equity or equity-like interests representing 20% or more of the
combined voting power of the Company’s or such surviving entity’s then
outstanding voting securities or other equity or equity-like interests ; or


 


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


 


(d)           “Code”  means the Internal Revenue Code of 1986, as
amended.


 


(e)           “Committee” means the Compensation Committee of the Board, as constituted
from time to time.


 


(f)            “Common Stock” means the Class A
Common Stock, par value $.01 per share,
of the Company, and any other shares into which such stock may be changed by
reason of a recapitalization, reorganization, merger, consolidation or any
other change in the corporate structure or capital stock of the Company.


 


(g)           “Disability” means a disability that
would entitle an eligible participant to payment of monthly disability payments
under any Company disability plan or as otherwise determined by the Committee.


 


(h)           “Exchange Act” means the Securities
Exchange Act of 1934, as amended.


 


(i)            “Exempt Person” means (i) MatlinPatterson
Global Opportunities Fund L.P., MatlinPatterson Global Opportunities Partners,
L.P., MatlinPatterson Global Opportunities Partners B, L.P., Matlin Patterson
LLC, MatlinPatterson Asset Management LLC, MatlinPatterson Global Advisers LLC,
MatlinPatterson Global Opportunities Partners(Bermuda),


 


2





















 


L.P.,
MatlinPatterson Global Partners LLC and any of their respective affiliated
entities, (ii) any person, entity or group under the control of any party
included in clause (i), or (iii) any employee benefit plan of the Company
or a trustee or other administrator or fiduciary holding securities under an
employee benefit plan of the Company.


 


(j)            “Fair Market Value” of a share of
Common Stock of the Company means, as of the date in question, the
officially-quoted closing selling price of the stock (or if no selling price is
quoted, the bid price) on the principal securities exchange on which the Common
Stock is then listed for trading (including for this purpose the Nasdaq
National Market) (the “Market”) for the applicable trading day or, if the
Common Stock is not then listed or quoted in the Market, the Fair Market Value
shall be the fair value of the Common Stock determined in good faith by the
Board.


 


(k)           “Subsidiary” means a corporation or
other entity of which outstanding shares or ownership interests representing
50% or more of the combined voting power of such corporation or other entity
entitled to elect the management thereof, or such lesser percentage as may be
approved by the Committee, are owned directly or indirectly by the Company.


 


3.             Administration. The Plan shall be administered by
the Committee; provided that the Board may, in its discretion, at any time and
from time to time, resolve to administer the Plan, in which case the term “Committee”
shall be deemed to mean the Board for all purposes herein.  Subject to the provisions of the Plan, the
Committee shall be authorized to (i) determine the form and substance of
grants made under the Plan to each participant, and the conditions and
restrictions, if any, subject to which such grants will be made, (ii) certify
that the conditions and restrictions applicable to any grant have been met, (iii) modify
the terms of grants made under the Plan, (iv) interpret the Plan and
grants made thereunder, and (iv) adopt, amend, or rescind such rules and
regulations, and make such other determinations, for carrying out the Plan as
it may deem appropriate.  Decisions of
the Committee on all matters relating to the Plan shall be in the Committee’s
sole discretion and shall be conclusive and binding on all parties.  The validity, construction, and effect of the
Plan and any rules and regulations relating to the Plan shall be
determined in accordance with applicable federal and state laws and rules and
regulations promulgated pursuant thereto. 
No member of the Committee and no officer of the Company shall be liable
for any action taken or omitted to be taken by such member, by any other member
of the Committee or by any officer of the Company in connection with the performance
of duties under the Plan, except for such person’s own willful misconduct or as
expressly provided by statute.


 


The expenses of the Plan
shall be borne by the Company.


 


4.                                       Shares
Available for the Plan.


 


Subject to adjustments as
provided in Section 10, an aggregate of 482,000 shares of Common Stock
(the “Shares”) may be issued pursuant to the Plan; provided, that
approval from the Board, in addition to the approval from the Committee, will
be required to approve any grants under the Plan that would cause the total
number of Shares outstanding to exceed 384,000 Shares.  Such Shares may be in whole or in part
authorized and unissued or held by the Company


 


3





















 


as treasury shares. 
If any grant under the Plan is forfeited as to any Shares, or is
tendered or withheld as to any Shares in payment of the taxes payable with
respect to the grant or vesting of such award, then such forfeited, tendered,
or withheld Shares shall thereafter be available for further grants under the
Plan.


 


Without limiting the
generality of the foregoing provisions of this Section 4 or the generality
of the provisions of Sections 3, 6 or 11 or any other section of this
Plan, the Committee may, at any time or from time to time, and on such terms
and conditions (that are consistent with and not in contravention of the other
provisions of this Plan) as the Committee may, in its sole discretion,
determine, enter into agreements (or take other actions with respect to the
options) for new shares of restricted stock containing terms more (or less)
favorable than any outstanding restricted shares.


 


5.                                       Participation.


 


Participation in the Plan
shall be limited to the employees of the Company and its Subsidiaries.  Nothing in the Plan or in any grant
thereunder shall confer any right on a participant to continue in the employ
of, or in the performance of services for, the Company or shall interfere in
any way with the right of the Company to terminate the employment or to reduce
the compensation or responsibilities of a participant at any time.  By accepting any award under the Plan, each
participant and each person claiming under or through him or her shall be
conclusively deemed to have indicated his or her acceptance and ratification
of, and consent to, any action taken under the Plan by the Company, the Board
or the Committee.


 


Determinations made by
the Committee under the Plan need not be uniform and may be made selectively
among eligible individuals under the Plan, whether or not such individuals are
similarly situated.  A grant made
hereunder in any one year to an eligible participant shall neither guarantee
nor preclude a further grant to such participant in that year or subsequent
years.


 


6.             Restricted Stock. The
Committee may at any time and from time to time grant Shares of restricted
stock under the Plan to such participants and in such amounts as it
determines.  Each grant of restricted
stock shall specify the applicable restrictions on such Shares, the duration of
such restrictions (which shall be at least six months except as otherwise
determined by the Committee or provided in the third paragraph of this Section 6),
and the time or times at which such restrictions shall lapse with respect to
all or a specified number of Shares that are part of the grant.


 


The participant will be
required to pay the Company the aggregate par value of any Shares of restricted
stock (or such larger amount as the Board may determine to constitute capital
under Section 154 of the Delaware General Corporation Law, as amended, or
any successor thereto) within ten days of the date of grant, unless such Shares
of restricted stock are treasury shares. 
Unless otherwise determined by the Committee, certificates representing
Shares of restricted stock granted under the Plan will be held in escrow by the
Company on the participant’s behalf during any period of restriction thereon
and will bear an appropriate legend specifying the applicable restrictions
thereon, and the participant will be required to execute a blank stock power
therefore.  Except as otherwise provided
by the Committee, during such period of


 


4





















 


restriction the participant shall have all of the
rights of a holder of Common Stock, including but not limited to the rights to
receive dividends and to vote, and any stock or other securities received as a
distribution with respect to such participant’s restricted stock shall be
subject to the same restrictions as then in effect for the restricted stock.


 


Except as otherwise
provided by the Committee, immediately
prior to the consummation of a Change in Control, or at such time as a
participant ceases to be an employee of the Company and its Subsidiaries due to
death or Disability during any period of restriction, all restrictions on
Shares granted to such participant shall lapse.


 


7.                                       Withholding
Taxes.


 


(a)           Participant Election.  Unless otherwise determined by the Committee,
a participant may elect to deliver shares of Common Stock (or have the Company
withhold shares granted) to satisfy, in whole or in part, the amount the
Company is required to withhold for taxes in connection with the grant or
vesting of an award.  Such election must
be made on or before the date the amount of tax to be withheld is
determined.  Once made, the election
shall be irrevocable.  The fair market
value of the shares to be tendered or withheld will be the Fair Market Value as
of the date the amount of tax to be withheld is determined.


 


(b)           Company Requirement.  The Company may require, as a condition to
any grant under the Plan or to the delivery of certificates for Shares issued
hereunder, that the grantee make provision for the payment to the Company,
either pursuant to Section 7(a) or this Section 7(b), of
federal, state or local taxes of any kind required by law to be withheld with
respect to any delivery of Shares.  The
Company, to the extent permitted or required by law, shall have the right to
deduct from any payment of any kind otherwise due to a grantee, an amount equal
to any federal, state or local taxes of any kind required by law to be withheld
with respect to any delivery of Shares under the Plan.


 


8.                                       Transferability.


 


Unless
the Committee determines otherwise, no Shares granted under the Plan
shall be transferable by a participant other than by will or the laws of
descent and distribution prior to the date the restrictions on the Shares
lapse, or, subject to the provision of Section 5 of the form of grant, to
any family members by a qualified domestic relations order as defined by the
Code.


 


9.                                       Listing,
Registration and Qualification.


 


If the Committee
determines that the listing, registration or qualification upon any securities
exchange or under any law of Shares is necessary or desirable as a condition
of, or in connection with, the issue of Shares hereunder, no such Shares may be
granted, unless such listing, registration or qualification is effected free of
any conditions not acceptable to the Committee.


 


5





















 


10.                                 Adjustments.


 


In the event of a
reorganization, recapitalization, stock split, stock dividend, combination of
shares, merger, consolidation, distribution of assets, or any other fundamental
change in the corporate structure or Shares of the Company, the Shares under the
Plan shall be automatically adjusted in the number and kind of Shares or other
property available for issuance under the Plan (including, without limitation,
the total number of Shares available for issuance under the Plan pursuant to Section 4)
in the same manner in which Shares not subject to this Plan are adjusted.  Notwithstanding the foregoing, nothing in
this Section 10 is intended to result in any adjustment merely to reflect
an additional issuance of shares of Common Stock, absent other circumstances as
described in the immediately preceding sentence or unless such an adjustment is
approved by the Committee in its discretion. 
Any such adjustment shall be final, conclusive and binding for all
purposes of the Plan.


 


11.                                 Amendment
and Termination of the Plan.


 


The Board of Directors or
the Committee, without approval of the stockholders, may amend or terminate the
Plan, except that no amendment shall become effective without prior approval of
the stockholders of the Company if stockholder approval would be required by
applicable law or regulations, including if required for continued compliance
with the performance-based compensation exception of Section 162(m) of the
Code or any successor thereto or by any listing requirement of the principal
stock exchange on which the Common Stock is then listed.  No amendment of the Plan shall materially and
adversely affect any of the rights or obligations of any person, without his or
her written consent, under any grant of Shares theretofore granted under the
Plan.


 


12.                                 Commencement
Date; Termination Date.


 


The date of commencement
of the Plan shall be December 1, 2005, subject to approval by the shareholders of the Company.


 


Unless previously
terminated upon the adoption of a resolution of the Board terminating the Plan
on an earlier date, the Plan shall terminate at the close of business on November 30,
2015.  No termination of the Plan shall
materially and adversely affect any of the rights or obligations of any person,
without his or her written consent, under any grant of Shares theretofore
granted under the Plan.


 


13.                                 Severability.


 


Whenever possible, each
provision of the Plan shall be interpreted in such manner as to be effective
and valid under applicable law, but if any provision of the Plan is held to be
prohibited by or invalid under applicable law, such provision shall be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of the Plan.


 


6





















 


14.                                 Governing
Law.


 


The Plan shall be
governed by the corporate laws of the State of Delaware, without giving effect
to any choice of law provisions that might otherwise refer construction or
interpretation of the Plan to the substantive law of another jurisdiction.


 


7