Exhibit 10.1


FORM OF

RESTRICTED STOCK GRANT AGREEMENT


                    
     , 200   


[Name and Address]


Re:        Polymer
Group, Inc. Grant of Restricted Stock


Dear                                :


Polymer
Group, Inc. (the “Company”) is pleased to advise you that, pursuant to
the Company’s 2005 Employee Restricted Stock Plan (the “Plan”), the
Company’s Compensation Committee has granted to you restricted shares of the
Company’s Class A Common Stock, par value $ .01
per share (the “Common Stock”), as set forth below (the “Restricted
Shares”), subject to the restrictions on transfer and other terms and
conditions set forth herein:




	
  Original Grant Date:

  	
   

  	
   

  	
   

  	
   

  
	
  Total Number of Restricted Shares:

  	
   

  	
   

  	
   

  	
   

  






 




	
  

  	
   

  	
  Vesting Date

  	
   

  	
  Number

  
	
  Vesting Dates and Number of 

  Restricted Shares Vesting based on 

  Service (“Service Vesting”):

  	
   

  	
   

  	
   

  	
   

  






 




	
  

  	
   

  	
  Vesting Date

  	
   

  	
  Number

  
	
  Vesting Dates and Number of 

  Restricted Shares Subject to Vesting in 

  accordance with Paragraph 2 below:

  	
   

  	
   

  	
   

  	
   

  






 


Certain
capitalized terms used herein are defined in paragraph 9 below.


1.      Grant.


(a)    Term. Subject to the terms and
conditions set forth herein, the Company hereby grants to you (or such other
persons as permitted by paragraph 5) the Restricted Shares.


(b)    Payment of Par Value. Within ten (10)
days following the date of grant, you shall be required to pay to the Company
an amount (“Par Price”) equal to the product of (i) the number of
Restricted Shares granted and (ii) the par value of each Restricted Share to be
acquired. Payment of the Par Price shall be made in cash (including check, bank
draft, money order or wire transfer of immediately available funds).









 



2.      Exercisability/Vesting and Expiration.


(a)    Corporate Financial Performance Vesting.
Except for those Restricted Shares subject to Service Vesting, which shares
shall vest in the amounts and on the Vesting Dates set forth in the
introductory paragraph of this letter, each grant of Restricted Shares shall be
subject to performance-based vesting in the amount set forth above for the
calendar year set forth above. Prior to April 30 of each year, the Compensation
Committee shall establish the overall corporate target (“Corporate Financial
Performance”) that must be obtained for the percentage of the grant set forth
above to vest for such year. The Committee shall establish such financial
target as it determines for the purpose of measuring the Corporate Financial
Performance, which shall initially be based on the earnings before interest,
taxes, depreciation and amortization (“EBITDA”) of the Company. Such target may
be determined by reference to generally accepted accounting principles or
otherwise. Prior to March 31 of each year, beginning in 2006, the Committee
shall notify the grantees as to whether the Company has achieved the Corporate
Financial Performance target for the just-completed year (e.g., March 31, 2006,
for the year of 2005). In order for each portion of a grant to vest, such
target must be met in full and the grantee must be employed by the
Company on the March 31 next following the target year in question (e.g., March
31, 2007, for the year of 2006). There will not be any pro-rata vesting.


(b)    Make-Up Provision. In the event that
in any particular year the Corporate Financial Performance target is not met (“Missed
Year”), the Committee shall so notify each grantee and the number of Restricted
Shares that were subject to vesting and did not vest in the Missed Year (“Carryover
Amount”) shall be carried over to the immediately succeeding year on one
occasion and tested for vesting against the applicable performance standard for
such immediately succeeding year. If the performance standard in such
immediately succeeding year is met, the Carryover Amount related to the Missed
Year shall vest at the same time and in the same manner as the portion of the
Restricted Shares originally allocated to such succeeding year. In no event
shall any unvested portion of a grant be subject to carryover vesting for more
than the one year following the Missed Year. By way of example, if the Company
missed a performance target for 2005, the unvested amount for 2005 would be
subject to vesting if the target established for 2006 was met at the end of
2006. If such new 2006 target was not met, the 2005 portion would expire
unvested and the 2006 portion would be subject to carryover for 2007. If the
2006 target was met, both the 2005 and 2006 portions would vest.


(c)    Effect on Vesting of Service Termination.
Notwithstanding paragraphs 2(a) and (b) above, the following special vesting rules
shall apply if your service as an employee of the Company terminates prior to
the Restricted Shares becoming fully vested:


(i)     Death or Disability. If you die or
become subject to a Disability while an employee of the Company, then the
Restricted Shares shall become fully vested.



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(ii)    Discharge for Cause. If you cease to
be an employee of the Company due to Cause, then all of the Restricted Shares not
yet vested, and any Restricted shares not yet sold by you or your permitted
transferor under paragraph 5, shall be forfeited immediately upon such
cessation.


(iii)   Other Termination. Unless otherwise
determined by the Committee, if you cease to be an employee of the Company
other than by death, Disability, or discharge for Cause, then any portion of
the Restricted Shares which have not yet vested as of the date of termination
of employment shall not vest thereafter and shall be forfeited immediately upon
such termination.


(d)    Change in Control. Upon the
consummation of a Change in Control, the Restricted Shares shall become fully
vested.


3.      Withholding of Taxes. The Company,
to the extent permitted or required by law, shall have the right to deduct from
any payment of any kind otherwise due to you, an amount equal to any federal,
state or local taxes of any kind required by law to be withheld with respect to
the delivery of Restricted Shares under this Agreement.


4.      Transferability of Restricted Shares.
You may transfer the Restricted Shares granted hereunder only by will or the
laws of descent and distribution or, subject to paragraph 5, to any of your
family members by a qualified domestic relations order as defined by the Code. Unless
the context requires otherwise, references herein to you are deemed to include
any permitted transferee under this paragraph 4.


5.      Restrictions on Sale. (a) Notwithstanding
anything else contained in this Agreement or the Plan, you agree not to sell,
transfer, assign or otherwise dispose of any Restricted Shares, and agree to
place the same restrictions on any permitted transferee hereunder, as long as
you remain as an employee of the Company at any time when MatlinPatterson
Global Opportunities Fund, L.P. or its Affiliates (collectively, “MP”),
beneficially owns Common Stock of the Company greater than or equal to 50% of
the total actual outstanding shares of Common Stock (not taking into account
any options). Notwithstanding the foregoing, at or after such time or times
following the date hereof when MP shall sell any shares of its Common Stock,
you shall have the right to sell a portion of your then-vested Restricted
Shares equal to the same percentage as the Shares sold by MP bears to MP’s
aggregate holdings of Common Stock prior to such sale; provided, however,
that at all times you must retain vested Restricted Shares equal in value,
based on the current market price of the Common Stock, to [five (5) times] [one and one-half (1.5) times] your annual base compensation for
the most recently completed fiscal year of the Company. At such time when the
beneficial ownership of MP is below 50% but
greater than or equal to 20% of
the outstanding Common Stock of the Company (without taking into account any
outstanding options), you may sell your then-vested Restricted Shares subject
to the proviso in the immediately preceding sentence and otherwise in
accordance with any Company policies on stock trading then in effect. At such time when the beneficial ownership of
MP is below 20% of the outstanding Common Stock of the Company (without taking
into account any outstanding options), 



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you may sell your then-vested Restricted Shares in
accordance with any Company policies on stock trading then in effect.


(b)    Following the termination of your services
as an employee of the Company and subject to paragraph 5(c), you may, 90 days
following the date of your termination or at any time thereafter, dispose of
your vested Restricted Shares in accordance with applicable law; provided,
that there shall be no such limitation in the event of a Change in Control.


(c)    You may not dispose of any of your vested
Restricted Shares prior to approval of the Plan by the shareholders of the
Company.


6.      Conformity with Plan. The grant of
Restricted Shares is intended to conform in all respects with, and is subject
to all applicable provisions of, the Plan (which is incorporated herein by
reference). Inconsistencies between this Agreement and the Plan shall be
resolved in accordance with the terms of the Plan. By executing and returning
the enclosed copy of this Agreement, you acknowledge your receipt of this
Agreement and the Plan and agree to be bound by all of the terms of this
Agreement and the Plan.


7.      Rights of Participants. Nothing in
this Agreement shall interfere with or limit in any way the right of the
Company or its stockholders to terminate your duties as an employee at any time
(with or without Cause), nor confer upon you any right to continue as an
employee of the Company for any period of time, or to continue your present (or
any other) rate of compensation.


8.      Remedies. The parties hereto shall
be entitled to enforce their rights under this Agreement specifically, to
recover damages by reason of any breach of any provision of this Agreement and
to exercise all other rights existing in their favor. The parties hereto
acknowledge and agree that money damages would not be an adequate remedy for
any breach of the provisions of this Agreement and that any party hereto may,
in its sole discretion, apply to any court of law or equity of competent
jurisdiction for specific performance and/or injunctive relief (without posting
bond or other security) in order to enforce or prevent any violation of the
provisions of this Agreement.


9.      Successors and Assigns. Except as
otherwise expressly provided herein, all covenants and agreements contained in
this Agreement by or on behalf of any of the parties hereto shall bind and
inure to the benefit of the respective successors and permitted assigns of the
parties hereto whether so expressed or not.


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 prohibited by or invalid under applicable law, such
provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of this Agreement.



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11.    Counterparts. This Agreement may be
executed simultaneously in two or more counterparts, each of which shall
constitute an original, but all of which taken together shall constitute one
and the same Agreement.


12.    Descriptive Headings. The descriptive
headings of this Agreement are inserted for convenience only and do not
constitute a part of this Agreement.


13.    Governing Law. THE VALIDITY,
CONSTRUCTION, INTERPRETATION, ADMINISTRATION AND EFFECT OF THE PLAN, AND OF ITS
RULES AND REGULATIONS, AND RIGHTS RELATING TO THE PLAN AND TO THIS AGREEMENT,
SHALL BE GOVERNED BY THE SUBSTANTIVE LAWS, BUT NOT THE CHOICE OF LAW RULES, OF
THE STATE OF DELAWARE.


14.    Notices. All notices, demands or
other communications to be given or delivered under or by reason of the
provisions of this Agreement shall be in writing and shall be deemed to have
been given when delivered personally or mailed by certified or registered mail,
return receipt requested and postage prepaid, to the recipient. Such notices,
demands and other communications shall be sent to you at the address appearing
on the signature page to this Agreement and to the Company at Polymer Group, Inc.,
4055 Faber Place Drive, North Charleston, S.C. 29405, Attn: Vice President,
Human Resources, or to such other address or to the attention of such other
person as the recipient party has specified by prior written notice to the
sending party.


15.    Entire Agreement. This Agreement and
the terms of the Plan constitute the entire understanding between you and the
Company, and supersede all other agreements, whether written or oral, with
respect to your acquisition of the Restricted Shares.


*      *      *      *      *



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Signature Page to
Restricted Stock Grant Agreement


Please
execute the extra copy of this Agreement in the space below and return it to
the Vice President, Human Resources at Polymer Group, Inc. to confirm your
understanding and acceptance of the agreements contained in this Agreement.


	
  

  	
  Very truly yours,

  
	
   

  	
   

  
	
   

  	
  Polymer Group, Inc.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
					



 


	
  Enclosures:

  	
  1.

  	
  Extra copy of this Agreement

  
	
   

  	
   

  	
  Copy of the Plan

  



 


The
undersigned hereby acknowledges having read this Agreement and the Plan and
hereby agrees to be bound by all provisions set forth herein and in the Plan.


	
  Dated as of                          ,
  200   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  [Name]