Exhibit 10.1


 


AMENDED AND RESTATED


POLYMER GROUP, INC.


SHORT-TERM INCENTIVE COMPENSATION
PLAN


 


1.0      Establishment, Objectives, and Duration


 


1.1  
Establishment of the Plan.  
Polymer Group, Inc., a Delaware corporation (“PGI” or the “Company”),
hereby establishes an incentive compensation plan to be known as the “Polymer
Group, Inc. Short-Term Incentive Compensation Plan” (the “Plan”), as set
forth herein and as it may be amended from time to time. The Plan shall become
effective as of the date the Company’s shareholders first approve the Plan (the
“Effective Date”), and shall remain in effect as provided in Section 1.3
hereof.


 


1.2   Plan Objectives.


 


1.2.1   To
provide annual incentive compensation to key employees of the Company and its
operating units by directly linking financial rewards to corporate performance
and increases in shareholder value.


 


1.2.2   To
provide competitive levels of compensation to enable the Company to attract and
retain employees who are expected to be able to exert a positive impact on the
Company’s financial results.


 


1.2.3   To
encourage global teamwork and cooperation in the achievement of Company goals.


 


1.3  
Duration of the Plan.  
The Plan shall commence on the Effective Date and shall remain in effect,
subject to the right of the Committee to amend or terminate the Plan at any
time pursuant to Article 10 hereof, until the close of business on the
date of the Company’s annual meeting of shareholders in the year 2015, at which
time the right to grant Awards under the Plan shall terminate.


 


2.0      Definitions


 


2.1  
“Award” means an award described in Article 5 hereof.


 


2.2  
“Award Pool” means, with respect to a Plan Year, an amount determined by the
Board.


 


2.3  
“Board” or “Board of Directors” means the Board of Directors of the Company.


 


2.4  
“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 any of its Subsidiaries; or (ii) a breach of Employee’s
duty of loyalty to the Company or any of its Subsidiaries; or (iii) the
commission by Employee 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 it
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.


 


2.5  
“Change of 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 an acquisition by 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 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


 


(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.


 


2.6  
“Code” means the Internal Revenue Code of 1986, as amended from time to time.


 


2.7  
“Committee” means the Compensation Committee of the Board or any other
committee appointed by the Board to administer the Plan and Awards to
Participants hereunder, as specified in Article 3 hereof.


 


2.8  
“Company” means Polymer Group, Inc., a Delaware corporation, and any
successor thereto as provided in Article 11 hereof.


 


2.9  
“Directors” means any individual who is a member of the Board.


 


2.10 “Effective
Date” shall have the meaning ascribed to such term in Section 1.1 hereof.


 


2.11 “Employee”
means any employee of the Company or of a Subsidiary.


 


2.12 “Exchange
Act” means the Securities Exchange Act of 1934, as amended from time to time,
or any successor statute.


 


2.13 “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), 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.


 


2.14 “Named
Executive Officers” means the Chief Executive Officer and the four most highly
compensated executive officers of the Company other than the Chief Executive
Officer as determined by the Company for purposes of Item 402 of Regulation SK.


 


2.15 “Participant”
means a key Employee who has been selected to receive an Award or who holds an
outstanding Award.


 


2.16 “Payment
Date” shall have the meaning ascribed to such term in Section 5.5.4
hereof.


 


2.17 “Performance-Based
Exception” means the performance-based exception from the tax deductibility
limitation imposed by Code Section 162(m), as set forth in Code Section 162(m)(4)(C).


 


2.18 “Plan”
means the Polymer Group, Inc. Short-Term Incentive Compensation Plan, as
set forth herein and as it may be amended from time to time.


 


2.19 “Plan
Year” means the Company’s fiscal year.


 


2.20 “Subsidiary”
means (a) a corporation, partnership, joint venture, or other entity in
which the Company has an ownership interest of at least fifty percent (50%),
and (b) a corporation, partnership, joint venture, or other entity in
which the Company holds an ownership interest, where the ownership interest is
less than fifty percent (50%), but which, in the discretion of the Committee,
is treated as a Subsidiary for purposes of the Plan.


 


3.0      Administration


 


3.1  
General.   Except as
otherwise determined by the Board in its discretion, the Plan shall be
administered by the Committee, which shall consist exclusively of two (2) or
more non-employee directors within the meaning of the rules promulgated by
the Securities and Exchange Commission under Section 16


 

















 


of the Exchange Act who
also qualify as outside directors within the meaning of Code Section 162(m) and
the related regulations under the Code. The members of the Committee shall be
appointed from time to time by, and shall serve at the discretion of, the
Board.


 


3.2  
Authority of the Committee.  
Except as limited by law or by the Certificate of Incorporation or Bylaws of
the Company, and subject to the provisions hereof, the Committee in its
discretion shall select the key Employees who participate in the Plan;
determine the sizes and types of Awards; determine the terms and conditions of
Awards in a manner consistent with the Plan; construe and interpret the Plan
and any Award, document, or instrument issued under the Plan; establish, amend,
or waive rules and regulations for the Plan’s administration; and (subject
to the provisions of Article 10 hereof) amend the terms and conditions of
any outstanding Award as provided in the Plan. Further, the Committee shall
make all other determinations that may be necessary or advisable for the
administration of the Plan. The Committee shall have the authority to delegate
administrative duties to officers of the Company; provided, however, that the
Committee may not delegate its authority with respect to the eligibility,
participation, and Awards for the Company’s Named Executive Officers.


 


3.3  
Decisions Binding.  
All determinations and decisions made by the Committee pursuant to the
provisions of the Plan and all related orders and resolutions of the Committee
shall be final, conclusive and binding on all persons, including the Company,
its shareholders, Directors, Employees, Participants, and their estates and
beneficiaries.


 


3.4  
Performance-Based Awards.  
For purposes of the Plan, it shall be presumed that all Awards are intended to
qualify for the Performance-Based Exception.


 


4.0     
Eligibility
and Participation


 


4.1  
Eligibility.   All
Employees are eligible to participate in the Plan.


 


4.2  
Actual Participation.  
Subject to the provisions of the Plan, the Committee may, from time to time,
select from all eligible Employees those to whom awards shall be granted and
shall determine the nature and amount of each Award. In general, officers of
the Company, division general managers, and certain other key individuals may
actually participate in the Plan. However, actual participation will depend
upon the contribution and impact each eligible Employee has on the overall
success of the Company, as approved by the Committee.


 


4.3  
Nomination and Approval.  
The Committee shall determine the Named Executive Officers’ eligibility and
participation under the Plan. For eligible Employees other than the Named
Executive Officers, operating/business unit executives will nominate Employees
to participate in the Plan. The Committee may delegate to the Chief Executive
Officer the authority to approve eligibility and participation for individuals
other than the Named Executive Officers. Selection normally will take place,
and will be communicated to each Participant, within 90 days of the beginning
of the Plan Year.


 


5.0      Awards.


 


5.1  
Grant of Awards.   All
Awards under the Plan shall be granted upon terms approved by the Committee.
However, no Award shall be inconsistent with the terms of the Plan or fail to
satisfy the requirements of applicable law. Each Award shall relate to a
designated Plan Year. The Committee shall determine Awards for the Named
Executive Officers. The Committee may delegate to the Chief Executive Officer
the authority determine Awards for individuals other than the Named Executive Officers.


 


5.2  
Award Pool Limitation.  
The sum of the Awards for a single Plan Year shall not exceed the amount in the
Award Pool for that Plan Year.


 


5.3  
Participant Target Awards.  
Each Participant will have an established target Award expressed as a
percentage of his/her fiscal year base salary earned. A Participant may earn an
Award of more or less than the target down to a low of zero and up to a maximum
of two times target. The total amount of the maximum Awards for any Plan Year
shall not exceed one hundred percent (100%) of the Award Pool for that Plan
Year.


 

















 


5.4      Payment.


 


5.4.1   Subject
to Article 6 hereof, a Participant shall have no right to receive an Award
payment for a Plan Year unless the Participant is employed by the Company or a
Subsidiary at all times during the Plan Year and on the date of payment. In
addition, only those Participants who are Employees as of the Payment Date
shall be eligible to receive an Award.


 


5.4.2  
Notwithstanding the achievement of the targets contained in any Award, the
Committee may, in its discretion, authorize payment to a Participant of less
than the Participant’s otherwise earned Award and may provide that a
Participant shall not receive any payment with respect to an otherwise earned
Award. In exercising its discretion, the Committee shall take into account such
factors as it considers appropriate. The Committee’s decision shall be final
and binding upon any person claiming a right to a payment under the Plan.


 


5.4.3   All
Awards will be paid in cash; provided, the Committee may offer Participants the
opportunity to voluntarily accept alternative forms of payment, including
without limitation equity-based awards under the Company’s 2008 Long-Term Stock
Incentive Plan or such other equity compensation plan of the Company specified
by the Committee.


 


5.4.4  
Payments shall be made on a date prescribed by the Committee following an audit
of the Company’s year end financial results (the “Payment Date”).


 


5.4.5   Awards
made under the Plan may be includable in the Participant’s compensation for
purposes of the Company’s 401k retirement savings plan(s) subject to
overall plan rules and regulatory limits.


 


5.4.6   The
Company and its Subsidiaries shall have the power and the right to deduct or
withhold, or to require a Participant to remit to the Company or to a
Subsidiary, an amount that the Company or a Subsidiary reasonably determines to
be required to comply with federal, state, local, or foreign tax withholding
requirements.


 


6.0      
Changes
in Status.


 


6.1  
New Hires and Transfers.  
Participants newly hired during the Plan Year and Participants transferred,
promoted, or reassigned during the Plan Year to a position qualifying for
participation or to a position resulting in a change in the level of
participation may receive a pro-rata Award based on the percentage of the Plan
Year the employee is in each qualifying position. In such a circumstance, the
Employee will be notified by the Committee at the time of hire or reassignment
of the eligibility for potentially receiving an Award.


 


6.2  
Resignation.   An
employee who resigns during the Plan Year or subsequent to the end of the Plan
Year but prior to the Payment Date shall not be eligible for an Award.


 


6.3  
Death, Disability, or Retirement.  
Participants whose employment terminates subsequent to the end of a Plan Year
shall be eligible for the entire Award earned in the completed Plan Year if the
termination was due to death, disability, or retirement.


 


6.4  
Leave of Absence.   A
Participant whose status as an active Employee is changed during a Plan Year as
a result of an approved leave of absence may be eligible for a pro-rata Award
based on the number of full months of service he or she worked in the year that
the leave of absence occurred.


 


6.5  
Discharge for Cause.  
A Participant discharged for Cause during the Plan Year or subsequent to the
Plan Year but prior to the Payment Date shall not be eligible for an Award.


 


7.0      Beneficiary Designation.


 


Each
Participant may name any beneficiary or beneficiaries (who may be named
contingently or successively) to whom any benefit under this Plan is to be paid
in case of the Participant’s death. Each such designation shall revoke all
prior designations by the Participant, shall be in the form prescribed by the
Company, and shall be effective only when filed by the Participant in writing
with the Company during his or her lifetime. In the absence of any such
designation, benefits remaining unpaid at the Participant’s death shall be paid
to the Participant’s estate.


 

















 


8.0      
No Right to Employment or Participation.


 


The
Plan shall not interfere with or limit in any way the right of the Company or
of any Subsidiary to terminate any Participant’s employment at any time, and
the Plan shall not confer upon any Participant the right to continue in the
employ of the Company or of any Subsidiary. Further, no Employee shall have the
right to be selected to receive an Award or, having been so selected, to be
selected to receive a future Award.


 


9.0      
Change
of Control.


 


9.1  
Outstanding Awards.  
Notwithstanding any contrary terms, conditions, or provisions of the Plan or
any Award, upon a Change in Control, all then-outstanding Awards (determined on
the basis of the assumption that the relevant performance targets have been
achieved) under the Plan shall become immediately nonforfeitable and payable at
the normal payment date established by the Committee before the Change in
Control and any provision requiring a Participant to be employed on the Payment
Date in order to receive an Award shall be waived, other than that related to a
termination for Cause. If the Participant’s Award is based on a performance
percentage, his or her Award for the Plan Year in which a Change in Control
occurs shall be determined by using a performance percentage that is not less
than the Participant’s target percentage under the Plan for that Plan Year. If
the Participant’s Award is based on a performance percentage, his or her Award
for any earlier Plan Year for which the Participant’s Award has not been
finally determined at the time the Change in Control occurs, shall be
determined by using a performance percentage that is not less than the
Participant’s target percentage under the Plan for that earlier Plan Year. If
the Participant is involuntarily terminated without Cause following a Change of
Control, he or she shall be entitled to receive a pro-rated Award under this Section 9.1
based on the number of full months of service he or she worked in the year that
the Change in control occurred.


 


9.2  
Modification of Awards.  
Upon the occurrence of, or after, a Change in Control, the Committee may not
under any circumstances change any determination of the basis on which any
previously granted Awards shall be measured or paid or change any other terms,
conditions or provisions affecting any previously granted Awards, if the change
would reduce or adversely affect the previously granted Award or the
Participant’s rights thereto.


 


9.3  
Award Terms and Conditions.  
Without limiting the provisions of Section 9.1 and 9.2 hereof, the
Committee may, in its discretion, include in an Award provisions that the
Committee considers to be appropriate to assure fair and equitable treatment of
the Participant or a beneficiary in the event of a Change in Control,
including, but not limited to, provisions that: (i) accelerate the time
period for purposes of vesting in, or realizing gain from, any Award and (ii) make
adjustments or modifications to an Award that the Committee deems appropriate
to maintain and protect the rights and interests of the Participant or a
beneficiary following a Change in Control. Any such action by the Committee
shall be conclusive and binding on the Company, Participants, beneficiaries,
and all other parties.


 


10.0      Amendment,
Modification, and Termination.


 


10.1 Amendment, Modification, and Termination.  
Subject to the other terms of the Plan, including Article 9, the Committee
may at any time and from time to time, alter, amend, suspend, or terminate the
Plan in whole or in part; provided that unless the Committee specifically
provides otherwise, any revision or amendment that would cause the Plan to fail
to comply with any requirement of applicable law, regulation, or rule if
such amendment were not approved by the shareholders of the Company shall not
be effective unless and until shareholder approval is obtained.


 


10.2 Certain Unusual or Non-Recurring Events.  
The Committee may make adjustments in the terms and conditions of, and the
criteria included in, Awards in recognition of unusual or nonrecurring events
affecting the Company or the financial statements of the Company, or of changes
in applicable laws, regulations, or accounting principles, whenever the
Committee determines that such adjustments are appropriate in order to prevent
dilution or enlargement of the benefits or potential benefits intended to be
made available under the Plan; provided that the Committee shall not be
authorized to adjust an Award that the Committee intends to qualify for the Performance-Based
Exception if such adjustment (or the authority to make such adjustment) would
prevent the Award from qualifying for the Performance-Based Exception.


 


10.3 Awards Previously Granted.  
Notwithstanding any other provision of the Plan to the contrary, no
termination, amendment, or modification of the Plan shall cause any previously
granted Awards to be


 

















 


forfeited. After the
termination of the Plan, any previously granted Award shall remain in effect
and shall continue to be governed by the terms of the Plan and the Award.


 


11.0    Successors.


 


All
obligations of the Company under the Plan with respect to Awards granted
hereunder shall be binding on any successor to the Company, whether the
existence of such successor is the result of a direct or indirect purchase,
merger, consolidation, or otherwise, of all or substantially all of the
business and/or assets of the Company.


 


12.0    Miscellaneous


 


12.1 Expenses of the Plan.   The
expenses of administering this Plan shall be borne by the Company.


 


12.2 Severability.   If any provision
of the Plan shall be held illegal or invalid for any reason, such illegality or
invalidity shall not affect the remaining parts of the Plan, and the Plan shall
be construed and enforced as if the illegal or invalid provision had not been
included.


 


12.3 Requirements of Law.   The
granting of Awards under the Plan shall be subject to all applicable laws,
rules, and regulations, and to such approvals by any governmental agencies as
may be required.


 


12.4 Governing Law.   The Plan and
all Awards shall be construed in accordance with and governed by the laws of
the State of Delaware (without regard to the legislative or judicial conflict
of laws rules of any state), except to the extent superseded by federal
law.