Exhibit 10.3    January 7,
2008  Mr. Michael Hale PO Box 903 Benson, NC 27504   Re:Change in Control
Severance Compensation Agreement  Dear Mike:  The board of directors (the Board) of Polymer Group, Inc.
(the Company) has determined that it is in the best interests of the Company
and its shareholders to assure the continued dedication to the Company of
certain senior management personnel, notwithstanding any possibility, threat or
occurrence of a Change in Control of the Company (as defined below) or other
situations that could result in the termination of your employment.  Accordingly, in order to encourage your
continued attention and dedication to your assigned duties regardless of any
such possibility, threat or occurrence, the Board has authorized the Company to
enter into this Change in Control Severance Compensation Agreement (the Agreement)
in order to provide you with certain compensation and other benefits in the
event that your employment with the Company is terminated under the circumstances
set forth below.  The terms and conditions of this Agreement are as
follows:  1.Term of the Agreement.  (A) The
Term of this Agreement shall commence on the date executed by the Company below
and shall end on December 31, 2009; subject to any extension under Paragraph 1(B) below.  In addition, the Term of this Agreement shall
automatically end upon the occurrence of any of the following:  (i)Your death or receipt of a Notice of
Termination due to Disability;  (ii)Your attainment of your Retirement Date;
or  (iii)A determination by the Board that you are
no longer eligible to receive the benefits set forth in this Agreement in
connection with your Termination prior to a Change in Control of the
Company due to performance-related matters and your receipt of notice of any
such determination; provided, that such a determination shall have no
effect if made in anticipation of a Change in Control of the Company and for
the sole purpose of avoiding application of this Agreement to your
Termination, in which case your Termination shall be deemed to have been a
Termination without Cause pursuant to this Agreement and, if the Change in
Control of the Company occurs during the Term and within twelve (12)
months of your Termination, you shall be entitled to the benefits pursuant
to Paragraph 4 payable on the later of (i) the first business day of the
calendar year following the calendar year in which the


Termination occurs and (ii) five (5) days
following the date of the Change in Control of the Company, but in any event no
later than the last day of the calendar year following the calendar year in
which the Termination occurs.  (B)In the event of a Change in Control of
the Company, subject to Paragraph 1(A), the Term of this Agreement shall be
automatically extended to the earlier of: 
(i) the date that is one year from the date such Change in Control
of the Company occurred; or (ii) the occurrence of an event described in
Paragraph 1(A)(i) or 1(A)(ii) above.  2.Change in Control of the Company. 
For purposes of this Agreement, a Change in Control of the Company
shall mean any of the following events:  (A)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 (A) 50% or more of the combined voting power of the Companys
then outstanding securities or (B) 30% or more of the combined voting
power of the Companys then outstanding securities if at such time, such person
or group also beneficially owns more of the combined voting power of the
Companys then outstanding securities than an Exempt Person; or  (B)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  (C)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  (D)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.  (E)For purposes of this Agreement, the term (i) Exempt
Person means (a) MatlinPatterson Global Opportunities Fund L.P.,
MatlinPatterson Global Opportunities Partners, L.P., MatlinPatterson Global
Opportunities Partners B, L.P., MatlinPatterson LLC, MatlinPatterson Asset
Management LLC, MatlinPatterson Global Advisers LLC,  2


MatlinPatterson Global Opportunities Partners (Bermuda), L.P.,
MatlinPatterson Global Partners LLC and any of their respective affiliated
entities, (b) any person, entity or group under the control of any party
included in clause (a), or (c) 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.  3.Termination of Employment Following
Change in Control of the Company.  (A)Termination. 
If a Change in Control of the Company occurs, you shall be entitled,
upon the subsequent termination of your employment (but only if the termination of your employment also constitutes a separation
from service as defined in Treasury Regulation §1.409A-1(h), as amended or
supplemented from time to time) with the Company (Termination), to the
benefits described in Paragraph 4 below, unless such Termination is:  (i) by you other than for Good Reason; (ii) by
the Company for Cause or because of your Disability; or (iii) because of
your death or attainment of your Retirement Date.  Any Termination (except a Termination
resulting from your death) shall be made by written Notice of Termination from
the party initiating such Termination to the other party to this Agreement.  (B)Notice of Termination. 
A Notice of Termination shall mean a written document stating the
specific provision in this Agreement upon which a Termination is based and
otherwise setting forth the facts and circumstances which provide the basis for
a Termination.  (C)Date of Termination. 
The Date of Termination shall mean: 
(i) if the Termination occurs as a result of Disability, thirty
(30) days after a Notice of Termination is given; (ii) if the Termination
occurs for Good Reason, the date specified in the Notice of Termination; and (iii) if
the Termination occurs for any other reason, the date on which the Notice of
Termination is given.  (D)Good Reason. 
A Termination for Good Reason shall mean a Termination as a result of:  (i)The assignment to you, without your
express written consent, of any duties reasonably inconsistent with your
position, duties, responsibilities and status with the Company immediately
prior to a Change in Control of the Company, or a change in your titles or
offices (if any) in effect immediately prior to a Change in Control of the
Company, or any removal of you from, or any failure to reelect you to, any of
such positions, except in connection with your Termination for Cause, death,
Disability, or as a result of your attainment of your Retirement Date; or  (ii)A reduction by the Company in your base
salary as in effect on the date hereof, or as the same may be increased from
time to time thereafter; or  (iii)The failure of the Company to continue in
effect any material compensation, welfare or benefit plan in which you are
participating at the time of a Change in  3


Control of the Company, without substituting therefor
plans providing you with substantially similar benefits at substantially the
same cost to you; or the taking of any action by the Company which would
adversely affect your participation in or materially reduce your benefits or
materially increase the cost to you under any of such plans or deprive you of
any material fringe benefit enjoyed by you at the time of the Change in Control
of the Company; or  (iv)Any purported Termination for Cause or
Disability without grounds therefor; or  (v)A requirement that you relocate your
principal residence at least 100 miles from that in effect prior to the Change
in Control to continue to provide services to the Company.  (E)Cause.  A Termination
for Cause shall mean a Termination as a result of one or more of the
following:  (i) a material breach of
this Agreement by you; provided, that if such breach is capable of being cured,
you shall be provided 15 days notice to cure such breach, (ii) a breach of
your 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 you 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.  The
burden for establishing the validity of any termination for Cause shall rest
upon the Company.  No Termination shall
be deemed to be for Cause unless and until there shall have been delivered to
you a copy of a resolution duly adopted by the affirmative vote of not less
than three-quarters of the entire membership of the Board called and held for
such purpose (after reasonable notice is provided to you and you are given an
opportunity, together with counsel, to be heard before the Board), finding
that, in the good faith opinion of the Board, you are guilty of the conduct
described above, and specifying the particulars thereof in reasonable detail.  (F)Disability.  A Disability
shall mean that, as a result of your incapacity due to physical or mental
illness, you shall have been unable to perform your duties with the Company for
a period of six (6) months, and have no prospect of returning to
employment with the Company within an additional six (6) months; provided,
that the Company shall have made a reasonable accommodation of any such
incapacity pursuant to, and shall otherwise have complied in all respects with,
the provisions of the Americans with Disabilities Act of 1990 or any successors
thereto.  (G)Retirement Date. 
Your Retirement Date shall mean the date on which you attain age
70-1/2.  4.Benefits.  Subject in each case to Paragraph 3(A),  4


(A)The Company shall pay to you in a lump sum payment within five (5) business
days following the Date of Termination, an amount that is the sum of (i) twenty-four (24) times your monthly
base salary at the rate in effect at the time a Notice of Termination is given and (ii) two times the greater of (x) your
annual bonus earned for the most-recently completed fiscal year of the Company
and (y) your annual target bonus for the year which includes the Date of
Termination; provided, that you shall have executed a reasonable
and customary release in favor of the Company and its subsidiaries releasing
all claims related to or arising out of the termination of your employment.  (B)In addition to any rights you may have
under the 2005 Employee Restricted Stock Plan, all of your then-unvested shares
of Restricted Stock issued under such Plan shall vest as of the Date of Termination and, 90 days thereafter, you shall
be free to sell such shares without restriction.  (C)The Company shall maintain in full force
and effect, for a period of twelve (12) months following your Date of
Termination, all life insurance and medical insurance plans and programs (the Company
Programs) in which you are entitled to participate immediately prior to the
Date of Termination; provided that your continued participation is
possible under the terms and provisions of such Company Programs.  In the event that your participation in any
Company Program is not permitted under the terms and provisions thereof, the
Company will use its commercially reasonable efforts to provide you with, or
arrange coverage for you which is substantially similar to (including
comparable terms), the coverage that you would have received under the
applicable Company Program. 
Notwithstanding the foregoing, the Companys obligations under this
Paragraph 4(C) shall terminate with respect to any Company Program on the
date that you first become eligible, after your Date of Termination, for the
same type of coverage under another employers plan.  (D)The Company shall pay all reasonable
legal fees and expenses incurred by you as a result of your Termination
(including all such reasonable fees and expenses, if any, incurred in
contesting or disputing your Termination or in seeking to obtain or enforce any
rights or benefits provided by this Agreement).  (E)The Company shall pay the costs of
reasonable outplacement services until you are employed on a full-time basis; provided
that payment by the Company of such costs shall not exceed $15,000.  (F)You shall not be required to mitigate the
amount of any payment provided for in this Paragraph 4 by seeking other
employment or otherwise, nor shall the amount of any payment provided for in
this Paragraph 4 be reduced by any compensation earned by you as a result of
employment by another employer after the Date of Termination, or otherwise,
except as specifically provided in Paragraph 4(C).  (G)Notwithstanding
the above and unless exempt under Treasury Regulation §1.409A-1(b)(9), if you
are a specified employee within the meaning of Code §416(i) and Treasury
Regulation §1.409A-1(i), no payments may be made under this Agreement before
the  5


date that is six months after the Termination
(or, if earlier, the date of death of the specified employee).  In such case, all payments to which you are
entitled during the first six months shall be accumulated and paid on the first
date of the seventh month following Termination.  (H)If it is
determined that any payments hereunder, either separately or in conjunction
with any other payments, benefits and entitlements received by you hereunder,
would constitute an excess parachute payment within the meaning of Section 280G
of the Internal Revenue Code of 1986, as amended (the Code), and thereby be
subject to the excise tax imposed by Section 4999 of the Code (the Excise
Tax), then in such event, the Company shall be obligated to pay to you
promptly following such determination and upon notice thereof a gross-up
payment in an amount equal to the amount of such Excise Tax, plus all federal
and state income or other taxes with respect to the payment of the amount of
such Excise Tax, including all such taxes (including any additional Excise Tax)
with respect to any such gross-up payment.  5.Confidential Information.  (A)Obligation to Maintain Confidentiality. 
You acknowledge 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 you during the course of your
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 it Subsidiaries business or
industry of which you become aware during your employment, the persons or entities that are current, former
or prospective suppliers or customers of any one or more of them during your
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, you agree that you shall not
disclose to any unauthorized person or use for your own account any of such
Confidential Information without the 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 your
acts or omissions to act or (ii) is required to be disclosed pursuant to
any applicable law or court order.  You
agree to deliver to the Company at the end of your employment, 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  6


Subsidiaries (including, without limitation, all Confidential
Information) that you may then possess or have under your control.  (B)Ownership of Intellectual Property. 
You agree 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 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 you (either solely or
jointly with others) while employed by the Company or it 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 right 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, you hereby assign and agree to assign to the Company or such Subsidiary
all right, title and interest, including without limitation, the intellectual
property rights that you may have in and to such Work Product.  You shall promptly perform all actions reasonably
requested by the Board (whether during or after your employment) 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. 
You understand 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 your employment and thereafter, and
without in any way limiting the provisions of Paragraph 5(A) above, you
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 you hereunder, whether under Article 4 or
Paragraph 6(E), you acknowledge that during the course of your employment with
the Company and its Subsidiaries you 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 your services shall be of
special, unique and extraordinary value to the Company and its Subsidiaries,
and therefore, you agree that, during the time you are employed by the Company
and for a period of time equal to twenty-four
(24) months thereafter (the Noncompete Period), you shall not
directly or indirectly own any interest in, manage, control, participate in,
consult with, render services for, or in any manner  7


engage in any business competing with the businesses of the Company or
its Subsidiaries, as such businesses exist or are in process during your employment on the date of the
termination or expiration of your employment,
within any geographical area in which the Company or its Subsidiaries engage or
plan to engage in such businesses. 
Nothing herein shall prohibit you from being a passive owner of not more
than 2% of the outstanding stock of any class of a corporation which is
publicly traded, so long as you have no active participation in the business of
such corporation.  (B)During the Noncompete Period, you 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 your employment 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.  (D)In the event of the breach or a
threatened breach by you 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 you of this Paragraph
6, the Noncompete Period shall be tolled until such breach or violation has
been duly cured.  You acknowledge that
the restrictions contained in Paragraph
6 are reasonable and that you have been
given the opportunity to review the provisions of this Agreement with
legal counsel.  (E)Absent a Change in Control of the
Company, you shall be entitled, upon your Termination (unless such Termination
is (i) by you other than for Good Reason; (ii) by the Company for
Cause or because of your Disability; or (iii) because of your death or
attainment of your Retirement Date), to those Company benefits to which you
would otherwise be entitled; provided that you shall receive an amount of
severance pay equal to no less than the amount set forth in Paragraph 4(A).  8


7.Miscellaneous.  (A)Limitation of Effect. 
Except as may otherwise be provided in Paragraph 1(A)(iii) or
Paragraph 6(E), notwithstanding any other provision in this Agreement, this
Agreement shall have no effect on any Termination of your employment prior to a
Change in Control of the Company, or upon any Termination of your employment at
any time as a result of your Disability, attainment of your Retirement Date, or
death; and upon the occurrence of any such events, you shall receive only those
benefits to which you would have been otherwise entitled prior to a Change in
Control of the Company.  (B)Successors.  (i)  The
Company will require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business and/or
assets of the Company, to assume and agree to perform this Agreement in the
same manner and to the same extent that the Company would be required to
perform this Agreement if no such succession had taken place.  Failure of the Company to obtain such
assumption or agreement prior to the effectiveness of any such succession shall
be a breach of this Agreement.  (ii)This Agreement shall inure to the benefit
of and be enforceable by your personal or legal representatives, executors,
administrators, successors, heirs, distributees, devisees and legatees.  If you should die while any amounts would
still be payable to you hereunder if you had continued to live, all such
amounts, unless otherwise provided herein, shall be paid in accordance with the
terms of this Agreement to your devisee, legatee or other designee or, if there
be no such designee, to your estate.  (C)Notice.  Notices
provided for in the Agreement shall be in writing and shall be deemed to have
been duly given when delivered in person or mailed by United States registered
mail, return receipt requested, postage prepaid, to you at the address set
forth on the first page of this Agreement, or to the Company at Polymer
Group, Inc., 9335 Harris Corners Parkway, Suite 300, Charlotte, NC
28269, Attn: Vice President, Global Human Resources, or to such other address
as either party may have furnished to the other in writing, except that notices
of change of address shall be effective only upon receipt by the other party.  (D)Modifications. 
No provision of this Agreement may be modified, waived or discharged
unless such modification, waiver, or discharge is agreed to in writing and is
signed by you and the Company.  No waiver
by either party hereto at any time of any breach by the other party hereto of,
or compliance with, any condition or provision of this Agreement to be
performed by such other party shall be deemed a waiver of similar or dissimilar
provisions or conditions at the same or at any prior or subsequent time.  (E)Interpretation. 
The validity, interpretation, construction and performance of this
Agreement shall be governed by the laws of the State of North Carolina.  The invalidity or unenforceability of any provisions
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement, which shall remain in full force and effect.  9


(F)Other Agreements. 
This Agreement shall supercede all other agreements, arrangements,
understandings or policies, related to the payment of severance amounts between
you and the Company that are in existence on the date hereof, and shall be the
exclusive agreement between you and the Company with respect to the subject
matter hereof; provided, that if you would otherwise be entitled to
receive any payments in the nature of severance or separation pay from the
Company, whether by separate agreement, Company policy, statutory provision or
otherwise, any amounts otherwise to be received hereunder shall be reduced on a
dollar-for-dollar basis by the amount of such other payments you receive.  (G)Consequences of Termination or Expiration. 
The provisions of this Agreement that by their nature are intended to
survive termination or expiration of this Agreement shall survive termination
or expiration.  If you agree that the foregoing correctly sets forth
the agreement between us, please sign both copies of this Agreement in the
space indicated below and return both copies to the Company.  This Agreement will not become effective
until signed by the Company in the space indicated below.  Following proper execution of this Agreement
by you and the Company, the Company will return one fully-executed copy to you
for your files.  Very truly yours,Polymer
  Group, Inc./s/Daniel L. RikardDaniel L. RikardVice President, General
  Counsel & Secretary  10


Agreed to as of the date
executed by Polymer Group, Inc. below:  EMPLOYEE
  
  POLYMER GROUP, INC./s/ Michael W. Hale
  
  /s/Mary TomaselloName:
  
  Name:Date Signed:
  1-17-08
  
  Title: VP Global HREffective Date:
  1/23/08  11