Exhibit 10.1


 


POLYMER GROUP, INC.


 


EXECUTIVE
EMPLOYMENT AGREEMENT


 


THIS AGREEMENT is entered
into on March     , 2004, between Polymer Group, Inc.,
a Delaware corporation (the “Company”), and James L. Schaeffer (“Executive”).


 


In consideration of the
mutual covenants contained herein and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties
hereto agree as follows:


 


1.                                       Employment
Period.  The Company shall employ
Executive, and Executive hereby accepts employment with the Company, upon the
terms and conditions set forth in this Agreement for the period beginning on
and as of April 1, 2003 and ending as provided in paragraph 4 hereof (the “Employment
Period”).


 


2.                                       Position
and Duties.


 


(a)                                  During
the Employment Period, Executive shall serve as the Chief Executive Officer of
the Company and shall have the normal duties, responsibilities, functions and
authority of the Chief Executive Officer, subject to the power and authority of
the Board to expand or limit such duties, responsibilities, functions and
authority within the scope of duties, responsibilities, functions and authority
associated with the position of Chief Executive Officer and to overrule actions
of officers of the Company.  During the
Employment Period, Executive shall render such executive and managerial
services to the Company and its Subsidiaries which are consistent with
Executive’s position and as the Board may from time to time direct.


 


(b)                                 During
the Employment Period, Executive shall report to the Board and shall devote his
best efforts and his full business time and attention (except for permitted
vacation periods and reasonable periods of illness or other incapacity)
exclusively to the business and affairs of the Company and its Subsidiaries.  Executive shall perform his duties,
responsibilities and functions to the Company and its Subsidiaries hereunder to
the best of his abilities in a diligent, trustworthy, professional and
efficient manner and shall comply with the Company’s and its Subsidiaries’
policies and procedures in all material respects.  In performing his duties and exercising his
authority under the Agreement, Executive shall support and implement the
business and strategic plans approved from time to time by the Board and shall
support and cooperate with the Company’s and its Subsidiaries’ efforts to
expand their businesses and operate profitably and in conformity with the
business and strategic plans approved by the Board.  So long as Executive is employed by the
Company, Executive shall not, without the prior written consent of the Board,
accept other employment or perform other services for compensation.


 


(c)                                  For
purposes of this Agreement, “Subsidiaries” shall mean any corporation or
other entity of which the securities or other ownership interests having the
voting power to elect a majority of the board of directors or other governing
body are, at the time of determination, owned by the Company, directly or
through one of more Subsidiaries.


 





















 


3.                                       Compensation
and Benefits.


 


(a)                                  During
the Employment Period, Executive’s base salary shall be $500,000 per annum or
such higher rate as the Board may determine from time to time (as adjusted from
time to time, the “Base Salary”), which salary shall be payable by the
Company in regular installments in accordance with the Company’s general
payroll practices (in effect from time to time).  The Board shall undertake an annual review of
Executive’s Base Salary.  In addition,
during the Employment Period, Executive shall be entitled to participate in all
of the Company’s employee benefit programs for which senior executive employees
of the Company and its Subsidiaries are generally eligible, and Executive shall
be entitled to four weeks of paid vacation each calendar year in accordance
with the Company’s policies, which if not taken during any year may not be
carried forward to any subsequent calendar year and no compensation shall be
payable in lieu thereof.  During the
Employment Period, the Company shall provide Executive with a car comparable to
that which he is using on the date of this Agreement (“Car”).  The Employee shall take good care of the Car
and ensure that the provisions and conditions of any policy of insurance
relating thereto are observed (including the provision with respect to
protection of the Car), and in the event that the Employee’s employment
terminates for whatever reason, he shall forthwith return the Car with the keys
and all licenses and other documentation relating to the Car, to the
Company.  The Employee shall not have any
lien right in the Car or in any document or property relating thereto.


 


(b)                                 During
the Employment Period, the Company shall reimburse Executive for all reasonable
business expenses incurred by him in the course of performing his duties and
responsibilities under this Agreement which are consistent with the Company’s
policies in effect from time to time with respect to travel, entertainment and
other business expenses, subject to the Company’s requirements with respect to
reporting and documentation of such expenses.


 


(c)                                  In
addition to the Base Salary, the Board may, in its sole discretion, award a
bonus to Executive following the end of each fiscal year during the Employment
Period based upon Executive’s performance and the Company’s operating results
during such year; provided, that as long as Executive shall remain
employed by the Company on January 4, 2004, Executive shall be entitled to
a minimum performance bonus equal to 25% of his Base Salary for fiscal 2003.


 


(d)                                 In
addition to the Base Salary and any bonuses payable to Executive pursuant to
this paragraph, Executive shall be entitled to health insurance and disability
insurance of such coverage as reasonably determined by the Board and term life
insurance in an amount equal to two times Executive’s Base Salary.


 


(e)                                  During
the Employment Period, Executive shall also be entitled to reasonable periods
of sick leave (without loss of pay) in accordance with the Company’s policies
as in effect from time to time.


 


(f)                                    All
amounts payable to Executive as compensation hereunder shall be subject to all
required and customary withholding by the Company.


 


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4.                                       Term.


 


(a)                                  Unless
renewed by the mutual agreement of the Company and Executive, the Employment
Period shall end on March 31, 2005. 
The Employment Period shall automatically be renewed on the same terms
and conditions set forth herein as modified from time to time by the parties
hereto for additional one-year periods beginning on April 1, 2005, unless
the Company or Executive gives the other party written notice of the election
not to renew the Employment Period at least 120 days prior to any such renewal
date; provided that (i) the Employment Period shall terminate prior to
such date immediately upon Executive’s resignation (with or without Good
Reason, as defined below), death or Disability and (ii) the Employment
Period may be terminated by the Company at any time prior to such date for
Cause (as defined below) or without Cause. 
Except as otherwise provided herein, any termination of the Employment
Period by the Company shall be effective as specified in a written notice, or
oral notice later confirmed in writing, from the Company to Executive.


 


(b)                                 If
the Employment Period is terminated by the Company without Cause or upon
Executive’s resignation with Good Reason prior to the second anniversary of the
date of this Agreement, Executive shall be entitled to continue to receive his
Base Salary payable in regular installments as special severance payments from
the date of termination through the 9 month anniversary of the date of
termination (the “Severance
Period”), if and only if Executive has executed and delivered to the
Company 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 paragraphs 5, 6 and 7 hereof and does not apply for
unemployment compensation chargeable to the Company during the Severance
Period, and Executive shall not be entitled to any other salary, compensation
or benefits after termination of the Employment Period, except as specifically
provided for in the Company’s employee benefit plans or as otherwise expressly
required by applicable law.  The Base
Salary payable pursuant to this paragraph 4(b) shall be payable in regular
monthly installments.  The amounts
payable pursuant to this paragraph 4(b) shall not be reduced by the amount
of any compensation Executive receives with respect to any other employment
during the Severance Period.


 


(c)                                  If
the Employment Period is terminated by the Company for Cause or is terminated
pursuant to clause (a)(i) above (other than termination with Good Reason)
or expires and is not renewed hereunder, Executive shall only be entitled to
receive his Base Salary through the date of termination or expiration and shall
not be entitled to any other salary, compensation or benefits from the Company
or its Subsidiaries thereafter, except as otherwise specifically provided for
under the Company’s employee benefit plans or as otherwise expressly required
by applicable law.


 


(d)                                 For
twelve months following the date of Executive’s termination, the Company shall,
at its expense, continue on behalf of the Executive and his or her dependants
and beneficiaries, the life insurance, disability, 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 4(d) shall
be no less favorable to the Executive and his or her dependants and
beneficiaries, than the coverage and benefits provided to Executive immediately
prior to his termination.  The Company’s
obligation hereunder with


 


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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 the
Company may reduce the coverage of any benefits it is required to 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 subsection (d) shall not be interpreted so as to limit
any benefits to which the Executive, his or her dependants or beneficiaries may
otherwise be entitled under any of the Company’s employee benefit plans,
programs or practices following the termination of employment of the Executive,
including without limitation, any applicable retiree medical and 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 Employment Period 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 Employment Period or (y)
the date of the final payment of any severance payments made pursuant to Section 4(b) above,
shall be deemed to be the qualifying event for such purpose.  The Company may offset any amounts Executive
owes it or its Subsidiaries against any amounts it or its Subsidiaries owes
Executive hereunder.


 


(e)                                  For
purposes of this Agreement, “Cause” shall mean with respect to Executive
one or more of the following:  (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 notice to cure
such breach, (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, (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, (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.


 


(f)                                    For
purposes of this Agreement, “Disability” shall mean Executive’s
inability to perform the essential duties, responsibilities and functions of
his position with the Company and its Subsidiaries as a result of any mental or
physical disability or incapacity even with reasonable accommodations of such
disability or incapacity provided by the Company and its Subsidiaries or if
providing such accommodations would be unreasonable, all as determined by the
Board in its reasonable good faith judgment. 
Executive shall cooperate in all respects with the Company if a question
arises as to whether he has become disabled (including, without limitation,
submitting to an examination by a medical doctor or other health care
specialists selected by the Company and authorizing such medical doctor or such
other health care specialist to discuss Executive’s condition with the
Company).


 


(g)                                 For
purposes of this Agreement, “Good Reason” shall mean if Executive
resigns from employment with the Company and its Subsidiaries prior to the end
of the Employment Period as a result of one or more of the following
reasons:  (i) the Company reduces


 


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the amount of the Base
Salary, (ii) the Company changes Executive’s title or reduces his
responsibilities inconsistent with the positions he holds or (iii) Executive
and the Company are unable to agree upon the proper reporting of any financial
matter which Executive reasonably believes is appropriate in order to comply
with the rules and regulations of the United States Securities and
Exchange Commission or in order for the Company’s financial statements to be
prepared in conformity with generally accepted accounting principles; provided
that written notice of Executive’s resignation for Good Reason must be
delivered to the Company within 30 days after the occurrence of any such event
in order for Executive’s resignation with Good Reason to be effective
hereunder.


 


5.                                       Confidential
Information.


 


(a)                                  Obligation
to Maintain Confidentiality. 
Executive acknowledges that the continued success of the Company and its
Subsidiaries, depends upon the use and protection of a large body of
confidential and proprietary information. 
All of such confidential and proprietary information existing prior
hereto, now existing or to be developed in the future will be referred to in
this Agreement as “Confidential Information.”  Confidential Information will be interpreted
as broadly as possible to include all information of any sort (whether merely
remembered or embodied in a tangible or intangible form) that is (i) related
to the Company’s or its Subsidiaries’ current or potential business and (ii) is
not generally or publicly known. 
Confidential Information includes, without specific limitation, the
information, observations and data obtained by him during the course of his
performance under this Agreement concerning the business and affairs of the
Company and its Subsidiaries, information concerning acquisition opportunities
in or reasonably related to the Company’s or its Subsidiaries’ business or
industry of which Executive becomes aware during the Employment Period, the
persons or entities that are current, former or prospective suppliers or
customers of any one or more of them during Executive’s course of performance
under this Agreement, as well as development, transition and transformation
plans, methodologies and methods of doing business, strategic, marketing and
expansion plans, including plans regarding planned and potential sales,
financial and business plans, employee lists and telephone numbers, locations
of sales representatives, new and existing programs and services, prices and
terms, customer service, integration processes, requirements and costs of
providing service, support and equipment. 
Therefore, Executive agrees that he shall not disclose to any
unauthorized person or use for his own account any of such Confidential
Information without both Board’s prior written consent, unless and to the
extent that any Confidential Information (i) becomes generally known to
and available for use by the public other than as a result of Executive’s acts
or omissions to act or (ii) is required to be disclosed pursuant to any
applicable law or court order.  Executive
agrees to deliver to the Company at the end of the Employment Period, or at any
other time the Company may request in writing, all memoranda, notes, plans,
records, reports and other documents (and copies thereof) relating to the
business of the Company or its Subsidiaries (including, without limitation, all
Confidential Information) that he may then possess or have under his control.


 


(b)                                 Ownership
of Intellectual Property.  Executive
agrees to make prompt and full disclosure to the Company 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


 


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similar or related
information  (whether or not patentable
and whether or not reduced to practice) that relate to the Company’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 the Company 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 the Company 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 the Company 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
the Company’s or such Subsidiary’s ownership (including, without limitation,
providing testimony and executing assignments, consents, powers of attorney,
and other instruments).


 


(c)                                  Third
Party Information. Executive understands that the Company and its
Subsidiaries will receive from third parties confidential or proprietary
information (“Third Party Information”) subject to a duty on the Company’s
and its Subsidiaries’ part to maintain the confidentiality of such information
and to use it only for certain limited purposes.  During the Employment Period and thereafter,
and without in any way limiting the provisions of Section 5(a) above,
Executive will hold Third Party Information in the strictest confidence and
will not disclose to anyone (other than personnel of the Company or its
Subsidiaries who need to know such information in connection with their work
for the Company or such Subsidiaries) or use, except in connection with his
work for the Company or its Subsidiaries, Third Party Information unless
expressly authorized by a member of the Board in writing.


 


6.                                       Non-Compete,
Non-Solicitation.


 


(a)                                  In
further consideration of the compensation to be paid to Executive hereunder,
Executive acknowledges that during the course of his employment with the
Company and its Subsidiaries he shall become familiar with the Company’s trade
secrets and with other Confidential Information concerning the Company and its
predecessors and its Subsidiaries and that his services shall be of special,
unique and extraordinary value to the Company and its Subsidiaries, and
therefore, Executive agrees that, during the Employment Period and for such
time as Executive is receiving any severance payments from the Company, or six
months if Executive is not entitled to receive any severance payments hereunder
(other than in the specific case in which Executive is terminated for cause as
a result of events that occurred prior to December 31, 2002, in which case
this provision shall not apply), (the “Noncompete Period”), he shall not
directly or indirectly own any interest in, manage, control, participate in,
consult with, render services for, or in any manner engage in any business
competing with the businesses of the Company or its Subsidiaries, as such
businesses exist or are in process during the Employment Period on the date of
the termination or expiration of the Employment Period, within any geographical
area in which the Company or its Subsidiaries engage or plan to engage in such
businesses.  Nothing herein shall
prohibit Executive from being a passive owner of not


 


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more than 2% of the
outstanding stock of any class of a corporation which is publicly traded, so
long as Executive has no active participation in the business of such
corporation.


 


(b)                                 During
the Noncompete Period, Executive shall not directly or indirectly through
another person or entity (i) induce or attempt to induce any employee of
the Company or any Subsidiary to leave the employ of the Company or such
Subsidiary, or in any way interfere with the relationship between the Company
or any Subsidiary and any employee thereof, (ii) hire any person who was
an employee of the Company or any Subsidiary at any time during the Employment
Period or (iii) induce or attempt to induce any customer, supplier,
licensee, licensor, franchisee or other business relation of the Company or any
Subsidiary to cease doing business with the Company or such Subsidiary, or in
any way interfere with the relationship between any such customer, supplier,
licensee or business relation and the Company or any Subsidiary (including,
without limitation, making any negative or disparaging statements or
communications regarding the Company or its Subsidiaries).


 


(c)                                  If,
at the time of enforcement of this paragraph 6, a court shall hold that the duration,
scope or area restrictions stated herein are unreasonable under circumstances
then existing, the parties agree that the maximum duration, scope or area
reasonable under such circumstances shall be substituted for the stated
duration, scope or area and that the court shall be allowed to revise the
restrictions contained herein to cover the maximum period, scope and area
permitted by law.  Executive acknowledges
that the restrictions contained in this paragraph 6 are reasonable and that he
has reviewed the provisions of this Agreement with his legal counsel.


 


(d)                                 In
the event of the breach or a threatened breach by Executive of any of the
provisions of this paragraph 6, the Company would suffer irreparable harm, and
in addition and supplementary to other rights and remedies existing in its
favor, the Company shall be entitled to specific performance and/or injunctive
or other equitable relief from a court of competent jurisdiction in order to
enforce or prevent any violations of the provisions hereof (without posting a
bond or other security).  In addition, in
the event of an alleged breach or violation by Executive of this paragraph 6,
the Noncompete Period shall be tolled until such breach or violation has been
duly cured.  Executive acknowledges that
the restrictions contained in paragraph 6 are reasonable and that he has
reviewed the provisions of this Agreement with his legal counsel.


 


(e)                                  Change
in Control of the Company.  In the
event of a Change in Control of the Company (as defined in the Company’s 2003
Stock Option Plan), the provisions of this Section 6 shall, on and after
such time, cease to apply and be of no further force and effect.


 


7.                                       Executive’s
Representations.  Executive hereby
represents and warrants to the Company that (i) the execution, delivery
and performance of this Agreement by Executive do not and shall not conflict
with, breach, violate or cause a default under any contract, agreement,
instrument, order, judgment or decree to which Executive is a party or by which
he is bound, (ii) Executive is not a party to or bound by any employment
agreement, noncompete agreement or confidentiality agreement with any other
person or entity and (iii) upon the execution and delivery of this
Agreement by the Company, this Agreement shall be the valid and binding
obligation of Executive, enforceable in accordance with its terms.  Executive hereby acknowledges and represents
that he has consulted with independent legal counsel regarding his


 


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rights and obligations
under this Agreement and that he fully understands the terms and conditions
contained herein.


 


8.                                       Survival.  Paragraphs 4 through 27 shall survive and
continue in full force in accordance with their terms notwithstanding the
expiration or termination of the Employment Period.


 


9.                                       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:


 


James L. Schaeffer

8 Ripplemoor Lane

Charleston, S.C.  29404


 


With a copy to:


 


Charles F. Castner

Parker Poe Adams & Bernstein L.L.P.

200 Meeting Street

Suite 301

Charleston, S.C.  29401


 


Notices to the Company:


 


Polymer Group, Inc.

4055 Faber Place Drive

North Charleston, S.C.  29405

Attn:  General Counsel


 


With a copy to:


 


H. Kurt von Moltke, P.C.

Kirkland & Ellis LLP

200 East Randolph Drive

Chicago, IL  60601


 


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.


 


10.                                 Severability.
 Whenever possible, each provision of
this Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement 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


 


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not affect any other
provision of this Agreement or any action in any other jurisdiction, but this
Agreement shall be reformed, construed and enforced in such jurisdiction as if
such invalid, illegal or unenforceable provision had never been contained
herein.


 


11.                                 Complete
Agreement.  This Agreement, those
documents expressly referred to herein and other documents of even date
herewith, embody the complete agreement and understanding among the parties and
supersede and preempt any prior understandings, agreements or representations
by or among the parties, written or oral, which may have related to the subject
matter hereof in any way including, without limitation, the Company’s Key
Employee Retention and Severance Program adopted in 2002.


 


12.                                 No
Strict Construction.  The language
used in this Agreement shall be deemed to be the language chosen by the parties
hereto to express their mutual intent, and no rule of strict construction
shall be applied against any party.


 


13.                                 Counterparts.  This Agreement may be executed in separate
counterparts, each of which is deemed to be an original and all of which taken
together constitute one and the same agreement.


 


14.                                 Successors
and Assigns.  This Agreement is
intended to bind and inure to the benefit of and be enforceable by Executive,
the Company and their respective heirs, successors and assigns, except that
Executive may not assign his rights or delegate his duties or obligations
hereunder without the prior written consent of the Company.


 


15.                                 Choice
of Law.  All issues and questions
concerning the construction, validity, enforcement and interpretation of this
Agreement and the exhibits and schedules hereto shall be governed by, and
construed in accordance with, the laws of the State of South Carolina, without
giving effect to any choice of law or conflict of law rules or provisions
(whether of the State of South Carolina or any other jurisdiction) that would
cause the application of the laws of any jurisdiction other than the State of
South Carolina.


 


16.                                 Amendment
and Waiver.  The provisions of this
Agreement may be amended or waived only with the prior written consent of the
Company (as approved by the Board) and Executive, and no course of conduct or
course of dealing or failure or delay by any party hereto in enforcing or
exercising any of the provisions of this Agreement (including, without
limitation, the Company’s right to terminate the Employment Period for Cause)
shall affect the validity, binding effect or enforceability of this Agreement
or be deemed to be an implied waiver of any provision of this Agreement.


 


17.                                 Insurance.  The Company may, at its discretion, apply for
and procure in its own name and for its own benefit life and/or disability
insurance on Executive in any amount or amounts considered advisable.  Executive agrees to cooperate in any medical
or other examination, supply any information and execute and deliver any
applications or other instruments in writing as may be reasonably necessary to
obtain and constitute such insurance. 
Executive hereby represents that he has no reason to believe that his
life is not insurable at rates now prevailing for healthy men of his age.


 


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18.                                 Indemnification
and Reimbursement of Payments on Behalf of Executive.  The Company and its respective Subsidiaries
shall be entitled to deduct or withhold from any amounts owing from the Company
or any of its Subsidiaries to Executive any federal, state, local or foreign
withholding taxes, excise tax, or employment taxes (“Taxes”) imposed
with respect to Executive’s compensation or other payments from the Company or
any of its Subsidiaries or Executive’s ownership interest in the Company
(including, without limitation, wages, bonuses, dividends, the receipt or
exercise of equity options and/or the receipt or vesting of restricted
equity).  In the event the Company or any
of its Subsidiaries does not make such deductions or withholdings, Executive
shall indemnify the Company and its Subsidiaries for any amounts paid with
respect to any such Taxes.


 


19.                                 Waiver
of Jury Trial.  AS A SPECIFICALLY
BARGAINED FOR INDUCEMENT FOR EACH OF THE PARTIES HERETO TO ENTER INTO THIS
AGREEMENT (AFTER HAVING THE OPPORTUNITY TO CONSULT WITH COUNSEL), EACH PARTY
HERETO EXPRESSLY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY LAWSUIT OR PROCEEDING
RELATING TO OR ARISING IN ANY WAY FROM THIS AGREEMENT OR THE MATTERS
CONTEMPLATED HEREBY.


 


20.                                 Executive’s
Cooperation.  During the Employment
and thereafter, Executive shall cooperate with the Company and its Subsidiaries
in any internal investigation or administrative, regulatory or judicial
proceeding as reasonably requested by the Company (including, without
limitation, Executive being 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 all pertinent information and turning over to the
Company all relevant documents which are or may come into Executive’s
possession, all at times and on schedules that are reasonably consistent with
Executive’s other permitted activities and commitments). In the event the
Company requires Executive’s cooperation in accordance with this paragraph, the
Company shall reimburse Executive solely for reasonable travel expenses
(including lodging and meals, upon submission of receipts).


 


21.                                 Arbitration.  Except with respect to disputes or claims
under paragraphs 5 and 6 hereof (which may be pursued in any court of competent
jurisdiction as specified below 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 the Company 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 South Carolina state court of competent
jurisdiction sitting in Charleston


 


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County, South Carolina,
and agrees that such court shall be the exclusive forum with respect to
disputes and claims under paragraphs 5 and 6 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.


 


22.                                 Section and
Headings.  The division of this
Agreement into sections and the insertion of headings are for the convenience
of reference only and shall not affect the construction or interpretation of
this Agreement.  The terms “this
Agreement”, “hereof”, “hereunder” and similar expressions refer to this
Agreement and not to any particular section or other portion hereof.  Unless something in the subject matter or
context is inconsistent therewith, references to sections and clauses are to
sections and clauses of this Agreement.


 


23.                                 Number.  In this Agreement, words importing the
singular number only shall include the plural and vice versa, and words
importing the masculine gender shall include the feminine and neuter genders
and vice versa, and words importing persons shall include individuals,
partnerships, associations, trusts, unincorporated organizations and
corporations.


 


24.                                 Independent
Advice.  The Company and the
Executive acknowledge and agree that they have each obtained independent legal
advice in connection with this Agreement and they further acknowledge and agree
that they have read, understand and agree with all of the terms hereof and that
they are executing this Agreement voluntarily and in good faith.


 


25.                                 Copy
of Agreement.  The Executive hereby
acknowledges receipt of a copy of this Agreement duly signed by the Company.


 


26.                                 Termination
Prior to Effective Date.  In the
event of a termination of employment of the Executive prior to the Effective
Date, this Agreement shall be terminated and shall have no further force or
effect.


 


27.                                 Currency.  All dollar amounts set forth or referred to
in this Agreement refer to U.S. currency.


 


28.                                 Effectiveness.  Once this Agreement has been duly executed
and delivered by each party hereto, all of the provisions shall become
effective as of April 1, 2003, as if this Agreement had been entered into
at such time, including the compensation provisions contained in Section 3.


 


    *   
*    *    *


 


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IN WITNESS WHEREOF, the
parties hereto have executed this Agreement as of the date first written above.


 


 


	
   

  	
  Polymer Group, Inc.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Its:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  James
  L. Schaeffer

  



 





















 


Exhibit A


 


GENERAL RELEASE


 


I, James L. Schaeffer,
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 March     , 2004, (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
4(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 4(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 South Carolina Human Affairs Law, S.C.
Code


 


A-1





















 


sections 1-13-10 et seq.; S.C. Code
sections 41-10-10 et seq. or under any other federal, 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.


 


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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.


 


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 not to disparage the Company, its past and present investors, officers,
directors or employees or its affiliates and to keep all confidential and
proprietary information about the past or present business affairs of the
Company and its affiliates confidential unless a prior written release from the
Company is obtained.  I further 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


 


A-3





















 


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;


 


(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:

  	
   

  	
   

  	
   

  	
   

  



 


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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 the Company 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
Charleston, South 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


 


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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 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 the Company 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,


 


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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
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 the Company 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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