**Exhibit 10.1**

**POLYMER GROUP, INC.**

**EXECUTIVE EMPLOYMENT AGREEMENT**

THIS AGREEMENT is entered into on March 24, 2006,between Polymer Group, Inc., a Delaware corporation (the “Company”), andJames L. Schaeffer (“Executive”).

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

# 1.             Employment Period. The Company shall employExecutive, and Executive hereby accepts employment with the Company, upon theterms and conditions set forth in this Agreement for the period beginning onand as of April 1, 2006 and ending on March 31, 2009, unlessotherwise terminated earlier as provided in paragraph 4 hereof (the “EmploymentPeriod”).

# 2.             Position and Duties.

## (a)           During theEmployment Period, Executive shall serve as the Chief Executive Officer of theCompany and shall have the normal duties, responsibilities, functions andauthority of the Chief Executive Officer, subject to the power and authority ofthe Board to expand or limit such duties, responsibilities, functions andauthority within the scope of duties, responsibilities, functions and authorityassociated with the position of Chief Executive Officer and to overrule actionsof officers of the Company. During the Employment Period, Executive shallrender such executive and managerial services to the Company and itsSubsidiaries which are consistent with Executive’s position and as the Boardmay from time to time direct.

## (b)           During theEmployment Period, Executive shall report to the Board and shall devote hisbest efforts and his full business time and attention (except for permittedvacation periods and reasonable periods of illness or other incapacity)exclusively to the business and affairs of the Company and its Subsidiaries. Executiveshall perform his duties, responsibilities and functions to the Company and itsSubsidiaries hereunder to the best of his abilities in a diligent, trustworthy,professional and efficient manner and shall comply with the Company’s and itsSubsidiaries’ policies and procedures in all material respects. In performinghis duties and exercising his authority under the Agreement, Executive shallsupport and implement the business and strategic plans approved from time totime by the Board and shall support and cooperate with the Company’s and itsSubsidiaries’ efforts to expand their businesses and operate profitably and inconformity with the business and strategic plans approved by the Board. So longas Executive is employed by the Company, Executive shall not, without the priorwritten consent of the Board, accept other employment or perform other servicesfor compensation. Notwithstanding the foregoing, it shall not be considered aviolation of this Agreement if during the Employment Period Executive (i) agreesto serve on the board of directors of one other company with operations relatedto the nonwovens field which would not be considered to be a competitor of thecompany and devotes a reasonable amount of time to performing his duties as anoutside director of such company, or (ii) serves on civic or charitable

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boards or committees consistent with his status as afull-time executive officer, so long as such activities do not significantlyinterfere with his performance of his responsibilities as an executive officerof the Company.

## (c)           For purposes of thisAgreement, “Subsidiaries” shall mean any corporation or other entity ofwhich the securities or other ownership interests having the voting power toelect a majority of the board of directors or other governing body are, at thetime of determination, owned by the Company, directly or through one of moreSubsidiaries.

# 3.             Compensation and Benefits.

## (a)           During theEmployment Period, Executive’s base salary shall be $650,000 per annum,effective on and after April 1, 2006, or such higher rate as the Board maydetermine from time to time (as adjusted from time to time, the “Base Salary”),which salary shall be payable by the Company in regular installments inaccordance with the Company’s general payroll practices (in effect from time totime). The Board shall undertake an annual review of Executive’s Base Salary,and shall approve such increases to such Base Salary by such amounts, if any,as the Board determines to be appropriate. In addition, during the EmploymentPeriod, Executive shall be entitled to participate in all of the Company’semployee benefit programs for which senior executive employees of the Companyand its Subsidiaries are generally eligible, and Executive shall be entitled tofour weeks of paid vacation each calendar year in accordance with the Company’spolicies, which if not taken during any year may not be carried forward to anysubsequent calendar year and no compensation shall be payable in lieu thereof. Duringthe Employment Period, the Company shall provide Executive with a carcomparable to that which he is using on the date of this Agreement (“Car”). TheEmployee shall take good care of the Car and ensure that the provisions andconditions of any policy of insurance relating thereto are observed (includingthe provision with respect to protection of the Car), and in the event that theEmployee’s employment terminates for whatever reason, he shall forthwith returnthe Car with the keys and all licenses and other documentation relating to theCar, to the Company. The Employee shall not have any lien right in the Car orin any document or property relating thereto.

## (b)           During theEmployment Period, the Company shall reimburse Executive for all reasonablebusiness expenses incurred by him in the course of performing his duties andresponsibilities under this Agreement which are consistent with the Company’spolicies in effect from time to time with respect to travel, entertainment andother business expenses, subject to the Company’s requirements with respect toreporting and documentation of such expenses.

## (c)           In addition to theBase Salary, the Board may, in its sole discretion, award a bonus to Executivefollowing the end of each fiscal year during the Employment Period based uponExecutive’s performance and the Company’s operating results during such year; provided,that Executive shall be entitled to a minimum performance bonus opportunityeach year of not less than 50% of his Base Salary, which bonus shall be payableupon the achievement by the Company of certain performance target levelsestablished by the Board for Executive and the other senior executive officersof the Company. In addition, Executive may be eligible for specific bonuses asmay be determined by the Board from time to time relating to certainextraordinary corporate events, such as acquisitions or dispositions.

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## (d)           In addition to theBase Salary and any bonuses payable to Executive pursuant to this paragraph, Executiveshall be entitled to health insurance and disability insurance of such coverageas reasonably determined by the Board and term life insurance in an amountequal to two times Executive’s Base Salary.

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

## (f)            All amounts payableto Executive as compensation hereunder shall be subject to all required andcustomary withholding by the Company.

# 4.             Term.

## (a)           Unless renewed bythe mutual agreement of the Company and Executive, the Employment Period shallend on March 31, 2009. The Employment Period shall terminate prior to suchdate (i) immediately upon Executive’s resignation (with or without GoodReason, as defined below), death or Disability and (ii) the EmploymentPeriod may be terminated by the Company at any time prior to such date forCause (as defined below) or without Cause. Except as otherwise provided herein,any termination of the Employment Period by the Company shall be effective asspecified in a written notice, or oral notice later confirmed in writing, fromthe Company to Executive.

## (b)           If the EmploymentPeriod is terminated by the Company without Cause or upon Executive’sresignation with Good Reason during the term of this Agreement, Executive shallbe entitled to receive from the Company as special severance payments an amountequal to (i) his Base Salary, as in effect immediately prior to the date ofhis termination, for the period equal to the 36 month anniversary of the dateof termination****(the “SeverancePeriod”), and (ii) his target bonus opportunity for the fiscal year inwhich the termination date occurs, multiplied by a fraction equal to the numberof days of employment completed by Executive during the fiscal year in whichthe termination date occurs divided by 365, in each case if and only ifExecutive has executed and delivered to the Company the General Releasesubstantially in form and substance as set forth in Exhibit Aattached hereto and only so long as Executive has not breached the provisionsof paragraphs 5, 6 and 7 hereof and does not apply for unemploymentcompensation chargeable to the Company during the Severance Period, and Executiveshall not be entitled to any other salary, compensation or benefits aftertermination of the Employment Period, except as specifically provided for inthe Company’s employee benefit plans or as otherwise expressly required byapplicable law. The Base Salary payable pursuant to this paragraph 4(b) forthe first six months of the Severance Period and the target bonus opportunityshall be paid to Executive in a lump sum on the first day of the calendar monthfollowing the six month anniversary of the termination date, and the BaseSalary payable pursuant to this paragraph 4(b) for the remainder of theSeverance Period shall be payable in regular monthly installments. The amountspayable pursuant to this paragraph 4(b) shall not be reduced by the amountof any compensation Executive receives with respect to any other employmentduring the Severance Period.

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## (c)           If the EmploymentPeriod is terminated by the Company for Cause or is terminated pursuant toclause (a)(i) above (other than termination with Good Reason) or expiresand is not renewed hereunder, Executive shall only be entitled to receive hisBase Salary through the date of termination or expiration and shall not beentitled to any other salary, compensation or benefits from the Company or itsSubsidiaries thereafter, except as otherwise specifically provided for underthe Company’s employee benefit plans or as otherwise expressly required byapplicable law.

## (d)           For twelve monthsfollowing the date of Executive’s termination, the Company shall, at its expense,continue on behalf of the Executive and his dependants and beneficiaries, thelife insurance, disability, medical, dental and hospitalization benefitsprovided to the Executive immediately prior to the date of termination. Thecoverage and benefits (including deductibles and costs) provided in this Section 4(d) shallbe no less favorable to the Executive and his dependants and beneficiaries,than the coverage and benefits provided to Executive immediately prior to histermination. The Company’s obligation hereunder with respect to the foregoingbenefits shall be limited to the extent that the Executive obtains any suchbenefits pursuant to a subsequent employer’s benefit plans, in which case theCompany may reduce the coverage of any benefits it is required to provide theExecutive hereunder so long as the aggregate coverage and benefits of thecombined benefit plans is no less favorable to the Executive than the coveragesand benefits required to be provided hereunder. This subsection (d) shallnot be interpreted so as to limit any benefits to which the Executive, hisdependants or beneficiaries may otherwise be entitled under any of the Company’semployee benefit plans, programs or practices following the termination ofemployment of the Executive, including without limitation, any applicableretiree medical and life insurance benefits. Except as otherwise expresslyprovided herein, all of Executive’s rights to salary, bonuses, employeebenefits and other compensation hereunder which would have accrued or becomepayable after the termination or expiration of the Employment Period shallcease upon such termination or expiration, other than those expressly requiredunder applicable law (such as COBRA); provided, that for purposes ofdetermining Executive’s rights under COBRA, the date of the later to occur of (x) thedate of the termination or expiration of the Employment Period or (y) thedate 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 mayoffset any amounts Executive owes it or its Subsidiaries against any amounts itor its Subsidiaries owes Executive hereunder.

## (e)           For purposes of thisAgreement, “Cause” shall mean with respect to Executive one or more ofthe following:  (i) a materialbreach of this Agreement by Executive; provided, that if such breach is capableof 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 itsSubsidiaries or any act of dishonesty or fraud with respect to the Company orany of its Subsidiaries, (iii) the commission by Executive of a felony, acrime involving moral turpitude or other act or omission causing material harm tothe standing and reputation of the Company and its Subsidiaries, (iv) reportingto work under the influence of alcohol or illegal drugs, the use of illegaldrugs (whether or not at the workplace) or other repeated conduct causing theCompany or any of its Subsidiaries substantial public disgrace or disrepute oreconomic 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 materialdisadvantage or detriment of the Company and its Subsidiaries.

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

## (g)           For purposes of thisAgreement, “Good Reason” shall mean if Executive resigns from employmentwith the Company and its Subsidiaries prior to the end of the Employment Periodas a result of one or more of the following reasons:  (i) the Company reduces the amount ofthe Base Salary as set forth in paragraph 3(a) or the target annual bonusopportunity payable to Executive (assuming achievement of the relevantperformance goals) as set forth in paragraph 3(c), (ii) the Companychanges Executive’s title or reduces his responsibilities inconsistent with thepositions he holds or (iii) Executive and the Company are unable to agreeupon the proper reporting of any financial matter which Executive reasonablybelieves is appropriate in order to comply with the rules and regulationsof the United States Securities and Exchange Commission or in order for theCompany’s financial statements to be prepared in conformity with generallyaccepted accounting principles; provided that written notice of Executive’sresignation for Good Reason must be delivered to the Company within 30 daysafter the occurrence of any such event in order for Executive’s resignationwith Good Reason to be effective hereunder.

# 5.             Confidential Information.

## (a)           Obligation toMaintain Confidentiality. Executive acknowledges that the continued successof the Company and its Subsidiaries, depends upon the use and protection of alarge body of confidential and proprietary information. All of suchconfidential and proprietary information existing prior hereto, now existing orto be developed in the future will be referred to in this Agreement as “ConfidentialInformation.”  ConfidentialInformation will be interpreted as broadly as possible to include allinformation of any sort (whether merely remembered or embodied in a tangible orintangible 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, theinformation, observations and data obtained by him during the course of hisperformance under this Agreement concerning the business and affairs of theCompany and its Subsidiaries, information concerning acquisition opportunitiesin or reasonably related to the Company’s or its Subsidiaries’ business orindustry of which Executive becomes aware during the Employment Period, thepersons or entities that are current, former or prospective suppliers orcustomers of any one or more of them during Executive’s course of performanceunder this Agreement, as well as development, transition and transformationplans, methodologies and methods of doing business, strategic, marketing andexpansion plans, including plans regarding planned and potential sales,financial and business plans, employee lists and telephone numbers, locationsof sales representatives, new and existing 

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programs and services, prices and terms, customerservice, integration processes, requirements and costs of providing service,support and equipment. Therefore, Executive agrees that he shall not discloseto any unauthorized person or use for his own account any of such ConfidentialInformation without both Board’s prior written consent, unless and to theextent that any Confidential Information (i) becomes generally known toand available for use by the public other than as a result of Executive’s actsor omissions to act or (ii) is required to be disclosed pursuant to anyapplicable law or court order. Executive agrees to deliver to the Company atthe end of the Employment Period, or at any other time the Company may requestin writing, all memoranda, notes, plans, records, reports and other documents(and copies thereof) relating to the business of the Company or itsSubsidiaries (including, without limitation, all Confidential Information) thathe may then possess or have under his control.

## (b)           Ownership ofIntellectual Property. Executive agrees to make prompt and full disclosureto 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 orrelated information  (whether or notpatentable and whether or not reduced to practice) that relate to the Company’sor 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 (eithersolely or jointly with others) while employed by the Company or itsSubsidiaries and for a period of one (1) year thereafter (collectively, “WorkProduct”). Any copyrightable work falling within the definition of WorkProduct shall be deemed a “work made for hire” under the copyright laws of theUnited States, and ownership of all rights therein shall vest in the Company orits Subsidiary. To the extent that any Work Product is not deemed to be a “workmade for hire,” Executive hereby assigns and agrees to assign to the Company orsuch Subsidiary all right, title and interest, including without limitation,the intellectual property rights that Executive may have in and to such WorkProduct. Executive shall promptly perform all actions reasonably requested bythe Board (whether during or after the Employment Period) to establish andconfirm the Company’s or such Subsidiary’s ownership (including, withoutlimitation, providing testimony and executing assignments, consents, powers ofattorney, and other instruments).

## (c)           Third PartyInformation. Executive understands that the Company and its Subsidiarieswill receive from third parties confidential or proprietary information (“ThirdParty 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 forcertain limited purposes. During the Employment Period and thereafter, andwithout in any way limiting the provisions of Section 5(a) above,Executive will hold Third Party Information in the strictest confidence andwill not disclose to anyone (other than personnel of the Company or itsSubsidiaries who need to know such information in connection with their workfor the Company or such Subsidiaries) or use, except in connection with hiswork for the Company or its Subsidiaries, Third Party Information unlessexpressly authorized by a member of the Board in writing.

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# 6.     Non-Compete, Non-Solicitation.

## (a)           In furtherconsideration of the compensation to be paid to Executive hereunder, Executiveacknowledges that during the course of his employment with the Company and itsSubsidiaries he shall become familiar with the Company’s trade secrets and withother Confidential Information concerning the Company and its predecessors andits Subsidiaries and that his services shall be of special, unique andextraordinary value to the Company and its Subsidiaries, and therefore, Executiveagrees that, during the Employment Period and for twelve months thereafter (the“Noncompete Period”), he shall not directly or indirectly own anyinterest in, manage, control, participate in, consult with, render servicesfor, or in any manner engage in any business competing with the businesses ofthe Company or its Subsidiaries, as such businesses exist or are in processduring the Employment Period on the date of the termination or expiration ofthe Employment Period, within any geographical area in which the Company or itsSubsidiaries engage or plan to engage in such businesses. Nothing herein shallprohibit Executive from being a passive owner of not more than 2% of theoutstanding stock of any class of a corporation which is publicly traded, solong as Executive has no active participation in the business of suchcorporation.

## (b)           During theNoncompete Period, Executive shall not directly or indirectly through anotherperson or entity (i) induce or attempt to induce any employee of theCompany or any Subsidiary to leave the employ of the Company or suchSubsidiary, or in any way interfere with the relationship between the Companyor any Subsidiary and any employee thereof, (ii) hire any person who wasan employee of the Company or any Subsidiary at any time during the EmploymentPeriod or (iii) induce or attempt to induce any customer, supplier,licensee, licensor, franchisee or other business relation of the Company or anySubsidiary to cease doing business with the Company or such Subsidiary, or inany 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 orcommunications regarding the Company or its Subsidiaries).

## (c)           If, at the time ofenforcement of this paragraph 6, a court shall hold that the duration, scope orarea restrictions stated herein are unreasonable under circumstances thenexisting, the parties agree that the maximum duration, scope or area reasonableunder such circumstances shall be substituted for the stated duration, scope orarea and that the court shall be allowed to revise the restrictions containedherein to cover the maximum period, scope and area permitted by law. Executiveacknowledges that the restrictions contained in this paragraph 6 are reasonableand that he has reviewed the provisions of this Agreement with his legalcounsel.

## (d)           In the event of thebreach or a threatened breach by Executive of any of the provisions of thisparagraph 6, the Company would suffer irreparable harm, and in addition andsupplementary to other rights and remedies existing in its favor, the Companyshall be entitled to specific performance and/or injunctive or other equitablerelief from a court of competent jurisdiction in order to enforce or preventany violations of the provisions hereof (without posting a bond or othersecurity). In addition, in the event of an alleged breach or violation byExecutive of this paragraph 6, the Noncompete Period shall be tolled until suchbreach or violation has been

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duly cured. Executive acknowledges that therestrictions contained in paragraph 6 are reasonable and that he has reviewedthe provisions of this Agreement with his legal counsel.

# 7.     Executive’s Representations. Executivehereby represents and warrants to the Company that (i) the execution,delivery and performance of this Agreement by Executive do not and shall notconflict with, breach, violate or cause a default under any contract, agreement,instrument, order, judgment or decree to which Executive is a party or by whichhe is bound, (ii) Executive is not a party to or bound by any employmentagreement, noncompete agreement or confidentiality agreement with any otherperson or entity and (iii) upon the execution and delivery of thisAgreement by the Company, this Agreement shall be the valid and bindingobligation of Executive, enforceable in accordance with its terms. Executivehereby acknowledges and represents that he has consulted with independent legalcounsel regarding his rights and obligations under this Agreement and that hefully understands the terms and conditions contained herein.

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

# 9.     Notices. Any notice provided for inthis 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. Schaeffer8 Ripplemoor LaneCharleston, S.C. 29404

With a copy to:

William H. SturgesPartnerShumaker, Loop & Kendrick, LLP128 South Tryon StreetSuite 1800Charlotte, NC  28202

Notices to the Company:

Polymer Group, Inc.4055 Faber Place DriveNorth Charleston, S.C. 29405Attn:  General Counsel

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With a copy to:

H. Kurt von Moltke, P.C.Kirkland & Ellis LLP200 East Randolph DriveChicago, IL  60601

or such other address or to the attention of suchother person as the recipient party shall have specified by prior writtennotice to the sending party. Any notice under this Agreement shall be deemed tohave been given when so delivered, sent or mailed.

# 10.   Severability. Whenever possible, eachprovision of this Agreement shall be interpreted in such manner as to beeffective and valid under applicable law, but if any provision of thisAgreement is held to be invalid, illegal or unenforceable in any respect underany applicable law or rule in any jurisdiction, such invalidity,illegality or unenforceability shall not affect any other provision of thisAgreement or any action in any other jurisdiction, but this Agreement shall bereformed, 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 dateherewith, including the Change in Control Severance Compensation Agreementreferred to in Section 12, embody the complete agreement and understandingamong the parties and supersede and preempt any prior understandings,agreements or representations by or among the parties, written or oral, whichmay have related to the subject matter hereof in any way.

# 12.   Construction with Change in ControlSeverance Compensation Agreement. The Company and Executive are enteringinto a Change in Control Severance Compensation Agreement dated as of March 24,2006, concurrently with entering into this Agreement. For the avoidance ofdoubt, the Change in Control Severance Compensation Agreement is to be read asadditive to this Agreement solely in the circumstances following a Change inControl of the Company, so that the provisions of Sections 4 and Section 6of the Change in Control Severance Compensation Agreement are in addition tothe provisions of Sections 4 and 6 of this Agreement; provided, that theamounts payable to Executive under Section 4(a) of the Change inControl Severance Agreement and the amounts payable to Executive under Section 4(b) ofthis Agreement shall in no event exceed the total amounts payable to Executiveunder Section 4(b) of this Agreement.

# 13.   No Strict Construction. The languageused in this Agreement shall be deemed to be the language chosen by the partieshereto to express their mutual intent, and no rule of strict constructionshall be applied against any party.

# 14.   Counterparts. This Agreement may beexecuted in separate counterparts, each of which is deemed to be an originaland all of which taken together constitute one and the same agreement.

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# 15.   Successors and Assigns. This Agreementis intended to bind and inure to the benefit of and be enforceable byExecutive, the Company and their respective heirs, successors and assigns,except that Executive may not assign his rights or delegate his duties orobligations hereunder without the prior written consent of the Company.

# 16.   Choice of Law. All issues andquestions concerning the construction, validity, enforcement and interpretationof 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 orprovisions (whether of the State of South Carolina or any other jurisdiction)that would cause the application of the laws of any jurisdiction other than theState of South Carolina.

# 17.   Amendment and Waiver. The provisionsof this Agreement may be amended or waived only with the prior written consentof the Company (as approved by the Board) and Executive, and no course ofconduct or course of dealing or failure or delay by any party hereto in enforcingor exercising any of the provisions of this Agreement (including, withoutlimitation, the Company’s right to terminate the Employment Period for Cause)shall affect the validity, binding effect or enforceability of this Agreementor be deemed to be an implied waiver of any provision of this Agreement.

# 18.   Insurance. The Company may, at itsdiscretion, apply for and procure in its own name and for its own benefit lifeand/or disability insurance on Executive in any amount or amounts consideredadvisable. Executive agrees to cooperate in any medical or other examination,supply any information and execute and deliver any applications or otherinstruments in writing as may be reasonably necessary to obtain and constitutesuch insurance. Executive hereby represents that he has no reason to believethat his life is not insurable at rates now prevailing for healthy men of hisage.

# 19.   Indemnification and Reimbursement ofPayments on Behalf of Executive. The Company and its respectiveSubsidiaries shall be entitled to deduct or withhold from any amounts owingfrom 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 theCompany or any of its Subsidiaries or Executive’s ownership interest in theCompany (including, without limitation, wages, bonuses, dividends, the receiptor 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 suchdeductions or withholdings, Executive shall indemnify the Company and itsSubsidiaries for any amounts paid with respect to any such Taxes.

# 20.   Waiver of Jury Trial. AS A SPECIFICALLYBARGAINED FOR INDUCEMENT FOR EACH OF THE PARTIES HERETO TO ENTER INTO THISAGREEMENT (AFTER HAVING THE OPPORTUNITY TO CONSULT WITH COUNSEL), EACH PARTYHERETO EXPRESSLY WAIVES THE RIGHT TO TRIAL BY JURY IN ANY LAWSUIT OR PROCEEDINGRELATING TO OR ARISING IN ANY WAY FROM THIS AGREEMENT OR THE MATTERSCONTEMPLATED HEREBY.

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# 21.   Executive’s Cooperation. During theEmployment and thereafter, Executive shall cooperate with the Company and itsSubsidiaries in any internal investigation or administrative, regulatory orjudicial proceeding as reasonably requested by the Company (including, withoutlimitation, Executive being available to the Company upon reasonable notice forinterviews and factual investigations, appearing at the Company’s request togive testimony without requiring service of a subpoena or other legal process,volunteering to the Company all pertinent information and turning over to theCompany all relevant documents which are or may come into Executive’spossession, all at times and on schedules that are reasonably consistent withExecutive’s other permitted activities and commitments). In the event theCompany requires Executive’s cooperation in accordance with this paragraph, theCompany shall reimburse Executive solely for reasonable travel expenses(including lodging and meals, upon submission of receipts).

# 22.   Arbitration. Except with respect todisputes or claims under paragraphs 5 and 6 hereof (which may be pursued in anycourt of competent jurisdiction as specified below and with respect to whicheach party shall bear the cost of its own attorney’s fees and expenses exceptas otherwise required by applicable law), each party hereto agrees that thearbitration procedure set forth in Exhibit B hereto shall be the sole andexclusive method for resolving any claim or dispute (“Claim”) arising out of orrelating to the rights and obligations acknowledged and agreed to in thisAgreement and the employment of Executive by the Company and its Subsidiaries(including, without limitation, disputes and claims regarding employmentdiscrimination, sexual harassment, termination and discharge), whether suchClaim arose or the facts on which such Claim is based occurred prior to orafter the execution and delivery of adoption of this Agreement. The partiesagree that the result of any arbitration hereunder shall be final, conclusiveand binding on all of the parties. Nothing in this paragraph shall prohibit aparty hereto from instituting litigation to enforce any Final Determination (asdefined in Exhibit B hereto). Each party hereto hereby irrevocablysubmits to the jurisdiction of any United States District Court or SouthCarolina state court of competent jurisdiction sitting in Charleston County,South Carolina, and agrees that such court shall be the exclusive forum withrespect to disputes and claims under paragraphs 5 and 6 and for the enforcementof any Final Determination, and irrevocably and unconditionally waives (i) anyobjection to the laying of venue of any such action, suit or proceeding in suchcourt or (ii) any argument, claim, defense or allegation that any suchaction, suit or proceeding brought in such court has been brought in aninconvenient forum. Each party hereto irrevocably consents to service ofprocess by registered mail or personal service and waives any objection on thegrounds of personal jurisdiction, venue or inconvenience of the forum.

# 23.   Section and Headings. Thedivision of this Agreement into sections and the insertion of headings are forthe convenience of reference only and shall not affect the construction orinterpretation of this Agreement. The terms “this Agreement”, “hereof”, “hereunder”and similar expressions refer to this Agreement and not to any particularsection or other portion hereof. Unless something in the subject matter orcontext is inconsistent therewith, references to sections and clauses are tosections and clauses of this Agreement.

# 24.   Number. In this Agreement, wordsimporting the singular number only shall include the plural and vice versa, andwords importing the masculine gender shall include

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the feminine and neuter genders and vice versa, andwords importing persons shall include individuals, partnerships, associations,trusts, unincorporated organizations and corporations.

# 25.   Independent Advice. The Company andthe Executive acknowledge and agree that they have each obtained independentlegal advice in connection with this Agreement and they further acknowledge andagree that they have read, understand and agree with all of the terms hereofand that they are executing this Agreement voluntarily and in good faith.

# 26.   Copy of Agreement. The Executivehereby acknowledges receipt of a copy of this Agreement duly signed by theCompany.

# 27.   Termination Prior to Effective Date. Inthe event of a termination of employment of the Executive prior to theEffective Date, this Agreement shall be terminated and shall have no furtherforce or effect.

# 28.   Currency. All dollar amounts set forthor referred to in this Agreement refer to U.S. currency.

# 29.   Effectiveness. Once this Agreement hasbeen duly executed and delivered by each party hereto, all of the provisionsshall become effective as of April 1, 2006, as if this Agreement had beenentered into at such time, including the compensation provisions contained in Section 3.

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

PolymerGroup, Inc.

By:                                                                                                          

Its:                                                                                                          

 

 

__________________________________________________

James L. Schaeffer

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Exhibit A

GENERAL RELEASE

I, James L. Schaeffer, in  consideration of and subject to theperformance by Polymer Group, Inc., a Delaware corporation (together withits subsidiaries, the “Company”), of its obligations under the EmploymentAgreement, entered into on March 24, 2006, (the “Agreement”), dohereby release and forever discharge as of the date hereof the Company and itsaffiliates and all present and former directors, officers, agents,representatives, employees, successors and assigns of the Company and itsaffiliates and the Company’s direct or indirect owners (collectively, the “ReleasedParties”) to the extent provided below.

1.                                       Iunderstand that any payments or benefits paid or granted to me under paragraph4(b) of the Agreement represent, in part, consideration for signing thisGeneral Release and are not salary, wages or benefits to which I was alreadyentitled. I understand and agree that I will not receive the payments andbenefits specified in paragraph 4(b) of the Agreement unless I executethis General Release and do not revoke this General Release within the timeperiod permitted hereafter or breach this General Release. Such payments andbenefits will not be considered compensation for purposes of any employeebenefit plan, program, policy or arrangement maintained or hereafterestablished by the Company or its affiliates. I also acknowledge and representthat 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.                                       Exceptas provided in paragraph 4 below and except for the provisions of my EmploymentAgreement which expressly survive the termination of my employment with theCompany, I knowingly and voluntarily (for myself, my heirs, executors,administrators and assigns) release and forever discharge the Company and theother Released Parties from any and all claims, suits, controversies, actions,causes of action, cross-claims, counter-claims, demands, debts, compensatorydamages, liquidated damages, punitive or exemplary damages, other damages,claims for costs and attorneys’ fees, or liabilities of any nature whatsoeverin law and in equity, existing or hereafter arising, based in whole or in partupon any act or omission, transaction, agreement, event or other occurrencetaking place from the beginning of time through the date this General Releasebecomes effective and enforceable and whether known or unknown, suspected, orclaimed 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 ariseout of or are connected with my employment with, or my separation ortermination 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 EmploymentAct of 1967, as amended (including the Older Workers Benefit Protection Act);the Equal Pay Act of 1963, as amended; the Americans with Disabilities Act of1990; the Family and Medical Leave Act of 1993; the Worker AdjustmentRetraining and Notification Act; the Employee Retirement Income Security Act of1974; any applicable Executive Order Programs; the Fair Labor Standards Act; ortheir state or local counterparts; the South Carolina Human Affairs Law, S.C.Code

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sections 1-13-10et seq.; S.C. Code sections 41-10-10 et seq. or under any otherfederal, 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, practicesor procedures of the Company; or any claim for wrongful discharge, breach ofcontract, 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.                                       Irepresent 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.                                       Iagree that this General Release does not waive or release any rights or claimsthat I may have under the Age Discrimination in Employment Act of 1967 whicharise after the date I execute this General Release. I acknowledge and agreethat my separation from employment with the Company in compliance with theterms of the Agreement shall not serve as the basis for any claim or action(including, without limitation, any claim under the Age Discrimination inEmployment Act of 1967).

5.                                       Insigning this General Release, I acknowledge and intend that it shall beeffective as a bar to each and every one of the Claims hereinabove mentioned orimplied. I expressly consent that this General Release shall be given fullforce and effect according to each and all of its express terms and provisions,including those relating to unknown and unsuspected Claims (notwithstanding anystate statute that expressly limits the effectiveness of a general release ofunknown, unsuspected and unanticipated Claims), if any, as well as thoserelating to any other Claims hereinabove mentioned or implied. I acknowledgeand agree that this waiver is an essential and material term of this GeneralRelease and that without such waiver the Company would not have agreed to theterms of the Agreement. I further agree that in the event I should bring aClaim seeking damages against the Company, or in the event I should seek torecover against the Company in any Claim brought by a governmental agency on mybehalf, 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 thetype described in paragraph 2 as of the execution of this General Release.

6.                                       Iagree that neither this General Release, nor the furnishing of theconsideration for this General Release, shall be deemed or construed at anytime to be an admission by the Company, any Released Party or myself of anyimproper or unlawful conduct.

7.                                       Iagree that I will forfeit all amounts payable by the Company pursuant to theAgreement if I challenge the validity of this General Release. I also agreethat if I violate this General Release by suing the Company or the other ReleasedParties, I will pay all costs and expenses of defending against the suitincurred by the Released Parties, including reasonable attorneys’ fees, andreturn all payments received by me pursuant to the Agreement.

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8.                                       Iagree that this General Release is confidential and agree not to disclose anyinformation regarding the terms of this General Release, except to my immediatefamily and any tax, legal or other counsel I have consulted regarding themeaning or effect hereof or as required by law, and I will instruct each of theforegoing not to disclose the same to anyone.

9.                                       Anynon-disclosure provision in this General Release does not prohibit or restrictme (or my attorney) from responding to any inquiry about this General Releaseor its underlying facts and circumstances by the Securities and ExchangeCommission (SEC), the National Association of Securities Dealers, Inc.(NASD), any other self-regulatory organization or governmental entity.

10.                                 Iagree to reasonably cooperate with the Company in any internal investigation oradministrative, regulatory, or judicial proceeding. I understand and agree thatmy cooperation may include, but not be limited to, making myself available tothe Company upon reasonable notice for interviews and factual investigations;appearing at the Company’s request to give testimony without requiring serviceof a subpoena or other legal process; volunteering to the Company pertinentinformation; and turning over to the Company all relevant documents which areor may come into my possession all at times and on schedules that arereasonably consistent with my other permitted activities and commitments. Iunderstand that in the event the Company asks for my cooperation in accordancewith this provision, the Company will reimburse me solely for reasonable travelexpenses, including lodging and meals, upon my submission of receipts.

11.                                 Iagree not to disparage the Company, its past and present investors, officers,directors or employees or its affiliates and to keep all confidential and proprietaryinformation about the past or present business affairs of the Company and itsaffiliates confidential unless a prior written release from the Company isobtained. I further agree that as of the date hereof, I have returned to theCompany any and all property, tangible or intangible, relating to its business,which I possessed or had control over at any time (including, but not limitedto, company-provided credit cards, building or office access cards, keys,computer equipment, manuals, files, documents, records, software, customer database 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.                                 Notwithstandinganything in this General Release to the contrary, this General Release shallnot relinquish, diminish, or in any way affect any rights or claims arising outof any breach by the Company or by any Released Party of the Agreement afterthe date hereof.

13.                                 Wheneverpossible, each provision of this General Release shall be interpreted in, suchmanner as to be effective and valid under applicable law, but if any provisionof this General Release is held to be invalid, illegal or unenforceable in anyrespect under any applicable law or rule in any jurisdiction, suchinvalidity, illegality or unenforceability shall not affect any other provisionor any other jurisdiction, but this General Release

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shall be reformed,construed and enforced in such jurisdiction as if such invalid, illegal orunenforceable provision had never been contained herein.

BY SIGNING THIS GENERAL RELEASE, I REPRESENT AND AGREETHAT:

(a)                                  IHAVE READ IT CAREFULLY;

(b)                                 IUNDERSTAND ALL OF ITS TERMS AND KNOW THAT I AM GIVING UP IMPORTANT RIGHTS,INCLUDING BUT NOT LIMITED TO, RIGHTS UNDER THE AGE DISCRIMINATION IN EMPLOYMENTACT 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 THEEMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED;

(c)                                  IVOLUNTARILY CONSENT TO EVERYTHING IN IT;

(d)                                 IHAVE BEEN ADVISED TO CONSULT WITH AN ATTORNEY BEFORE EXECUTING IT AND I HAVEDONE SO OR, AFTER CAREFUL READING AND CONSIDERATION I HAVE CHOSEN NOT TO DO SOOF MY OWN VOLITION;

(e)                                  IHAVE HAD AT LEAST 21 DAYS FROM THE DATE OF MY RECEIPT OF THIS RELEASESUBSTANTIALLY IN ITS FINAL FORM ON                  ,      TO CONSIDER IT AND THE CHANGES MADESINCE THE                  ,      VERSION OF THIS RELEASE ARE NOT MATERIALAND WILL NOT RESTART THE REQUIRED 21-DAY PERIOD;

(f)                                    THECHANGES TO THE AGREEMENT SINCE                  ,      EITHER ARE NOT MATERIAL OR WERE MADE ATMY REQUEST.

(g)                                 IUNDERSTAND THAT I HAVE SEVEN DAYS AFTER THE EXECUTION OF THIS RELEASE TO REVOKEIT AND THAT THIS RELEASE SHALL NOT BECOME EFFECTIVE OR ENFORCEABLE UNTIL THEREVOCATION PERIOD HAS EXPIRED;

(h)                                 IHAVE SIGNED THIS GENERAL RELEASE KNOWINGLY AND VOLUNTARILY AND WITH THE ADVICEOF ANY COUNSEL RETAINED TO ADVISE ME WITH RESPECT TO IT; AND

(i)                                     IAGREE THAT THE PROVISIONS OF THIS GENERAL RELEASE MAY NOT BE AMENDED,WAIVED, CHANGED OR MODIFIED EXCEPT BY AN INSTRUMENT IN WRITING SIGNED BY ANAUTHORIZED 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 personsrequired to receive copies of notices under the Agreement (the “AdditionalNotice Parties”), specifying the nature of the Claim and requesting ameeting to resolve same. The Additional Notice Parties shall be givenreasonable notice of and invited and permitted to attend any such meeting. Ifno resolution is reached within 10 business days after delivery of such notice,the Claimant or the Opposing Party may, within 45 days after giving suchnotice, invoke the arbitration procedure provided herein by delivering to eachOpposing Party and the Additional Notice Parties a notice of arbitration whichshall specify the Claim as to which arbitration is sought, the nature of theClaim, the basis for the Claim and the nature and amount of any damages orother compensation or relief sought (a “Notice of Arbitration”). Eachparty agrees that no punitive damages may be sought or recovered in anyarbitration, judicial proceeding or otherwise. Failure to file a Notice ofArbitration within 45 days shall constitute a waiver of any right to relief forthe 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 notmade as provided above within one year of the date such Claim accrues.

# 2.             Selection of Arbitrator. Within 20 business daysafter receipt of the Notice of Arbitration, the Executive and a duly authorizedrepresentative of the Company shall confer, whether in person, by telephone orin 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 tenbusiness days, then they shall request the American Arbitration Association(the “AAA”) in Charleston, South Carolina to appoint an arbitratorexperienced in the area of dispute who does not have an ongoing businessrelationship with any of the parties to the dispute. If the arbitrator selectedinforms the parties he cannot hear and resolve the Claim within the time-framespecified below, the Executive and the Board shall request the appointment ofanother arbitrator by the AAA subject to the same requirements.

# 3.             Arbitration Procedure. The following proceduresshall govern the conduct of any arbitration under this section. All proceduralmatters relating to the conduct of the arbitration other than those specifiedbelow shall be discussed among counsel for the parties and the arbitrator. Subjectto any agreement of the parties, the arbitrator shall determine all proceduralmatters not specified herein.

## (a)           Within 30 days afterthe delivery of a Notice of Arbitration, each party shall afford the other, orits counsel, with reasonable access to documents relating directly to theissues raised in the Notice of Arbitration. All documents produced and allcopies thereof shall be maintained as strictly confidential, shall be used forno purpose other than the arbitration hereunder, and shall be returned to theproducing party upon completion of the arbitration. There shall be no otherdiscovery except that, if a reasonable need is shown, limited depositions maybe allowed in the discretion of the arbitrator, it being the expressedintention and agreement of each

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party to have the arbitration proceedings conductedand resolved as expeditiously, economically and fairly as reasonablypracticable, and with the maximum degree of confidentiality.

## (b)           All writtencommunications regarding the proceeding sent to the arbitrator shall be sentsimultaneously to each party or its counsel, with a copy to the AdditionalNotice Parties. Oral communications between any of the parties or their counseland the arbitrator shall be conducted only when all parties or their counselare present and participating in the conversation.

## (c)           Within 20 days afterselection of the arbitrator, the Claimant shall submit to the arbitrator a copyof the Notice of Arbitration, along with a supporting memorandum and anyexhibits or other documents supporting the Claim.

## (d)           Within 20 days afterreceipt of the Claimant’s submission, the Opposing Party shall submit to thearbitrator a memorandum supporting its position and any exhibits or othersupporting documents. If the Opposing Party fails to respond to any of theissues raised by the Claimant within 20 days of receipt of the Claimant’ssubmission, then the arbitrator may find for the Claimant on any such issue andbar any subsequent consideration of the matter.

## (e)           Within 20 days afterreceipt of the Opposing Party’s response, the Claimant may submit to thearbitrator a reply to the Opposing Party’s response, or notification that noreply is forthcoming.

## (f)            Within 10 daysafter the last submission as provided above, the arbitrator shall confer withthe 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 thearbitrator, but in no event more than 30 days after the last submission by theparties, and shall take place within 50 miles of the corporate headquarters ofthe Company at a place selected by the arbitrator or such other place as ismutually agreed. Both parties shall be granted substantially equal time topresent evidence at the hearing. The hearing shall not exceed one business day,except for good cause shown.

## (g)           Within 30 days afterthe conclusion of the hearing, the arbitrator shall issue a written decision tobe delivered to both parties and the Additional Notice Parties (the “FinalDetermination”). The Final Determination shall address each issue disputed bythe parties, state the arbitrator’s findings and reasons therefor, and statethe nature and amount of any damages, compensation or other relief awarded.

## (h)           The award renderedby the arbitrator shall be final and non-appealable, except as otherwiseprovided under the Federal Arbitration Act, and judgment may be entered upon itin accordance with applicable law in such court as has jurisdiction thereof.

# 4.             Costs of Arbitration. Each party shall bear itsown costs of conducting the arbitration, and administrative fees shall beshared equally among the parties.

# 5.             Satisfaction of Award. If any party fails to paythe amount of the award, if any, assessed against it within 30 days after thedelivery to such party of the Final Determination,

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the unpaid amount shall bear interest from the date ofsuch delivery at the lesser of (i) prime lending rate announced byCitibank N.A. plus three hundred basis points and (ii) the maximum ratepermitted by applicable usury laws. In addition, such party shall promptlyreimburse the other party for any and all costs or expenses of any nature orkind whatsoever (including attorneys’ fees) reasonably incurred in seeking tocollect such award or to enforce any Final Determination.

# 6.             Confidentiality of Proceedings. The partieshereto agree that all of the arbitration proceedings provided for herein,including any notice of claim, the Notice of Arbitration, the submissions ofthe parties, and the Final Determination issued by the arbitrator, shall beconfidential and shall not be disclosed at any time to any person other thanthe parties, their representatives, the arbitrator and the Additional NoticeParties; provided, however, that this provision shall not prevent the partyprevailing in the arbitration from submitting the Final Determination to acourt for the purpose of enforcing the award, subject to comparableconfidentiality protections if the court agrees; and further provided that theforegoing shall not prohibit disclosure to the minimum extent reasonablynecessary to comply with (i) applicable law (or requirement having theforce of law), court order, judgment or decree, including, without limitation,disclosures which may be required pursuant to applicable securities laws, and (ii) theterms of contractual arrangements (such as financing arrangements) to which theCompany or any Additional Notice Party may be subject so long as suchcontractual arrangements were not entered into for the primary purpose ofpermitting disclosure which would otherwise be prohibited hereunder.

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