Exhibit 10.1


 


Executive
Employment Agreement


 


This
Executive Employment Agreement (the “Agreement”) is
entered into between Polymer Group, Inc., (“PGI”)
a Delaware corporation, and Veronica M. Hagen (“Executive”)
effective as of April 23, 2010 (the “Effective Date”).  PGI and Executive agree as follows:


 


ARTICLE 1:  EMPLOYMENT, COMPENSATION AND BENEFITS


 


1.1           Term and Position. 
PGI agrees to employ Executive and Executive agrees to be employed by
PGI as Chief Executive Officer of PGI. 
As Chief Executive Officer, Executive shall be a member of PGI’s Board
of Directors (the “Board”).  Executive shall have the normal duties,
responsibilities, functions and authority of the Chief Executive Officer and
shall devote full working time to the successful conduct of the business of
PGI; however, Executive shall be permitted to serve on the board of directors
of two for-profit corporations (provided any such corporation is not in
competition with PGI) and one not-for-profit corporation.  Executive will report directly to the Board
and Executive’s specific duties shall be determined by the Board.  The term of the Agreement shall be for a
period of 3 years, commencing on April 23, 2010 and ending on April 22,
2013 (the “Term”)


 


1.2           Compensation.


 


a.             Base Compensation. 
For all services rendered by Executive during the Term, Executive shall
receive base compensation at a rate of $765,000 per annum (“Base Compensation”), payable in accordance with PGI’s then
existing payroll practices, less such deductions as are authorized or required
by law.  Executive’s Base Compensation
shall be subject to review annually by the Board.


 


b.             Bonus. Executive shall be entitled to participate in the
Polymer Group, Inc. Short-Term Incentive Compensation Plan (the “Bonus Plan”) to the extent such a plan is implemented for
any given year.  Executive’s annual
target cash bonus potential under any such Bonus Plan will be, and shall not
exceed, 100% of Base Compensation, and shall be based on annual performance
goals to be mutually agreed upon by the Board and Executive.  PGI is under no obligation to establish a
Bonus Plan for any given year.


 


c.             Equity Compensation. 
Executive shall be entitled to participate in any long-term incentive
compensation programs implemented at PGI on the same terms and conditions as
other senior executives.  During each
fiscal year, Executive shall receive a long-term incentive grant (the “Equity
Award”).  The targeted value of each
annual Equity Award will be set by the Compensation Committee of the Board (the
“Committee”) so as to provide the
Executive with a total target annual compensation package (including Base
Compensation, target cash bonus and annual Equity Award at target performance
but excluding benefits and the Retirement Incentive) that at least approximates
market median practice, as defined by the Committee, so long as such award does
not, in the Committee’s opinion, create a significant financial or operational
burden on the Company.  In the
determining the targeted value of the Equity Award in a year where no Bonus
Plan has been established, the Committee shall increase the Equity Award to
compensate for the absence of a target cash bonus in the total target annual
compensation package.  In the event
Executive receives a discretionary bonus in a year where no Bonus Plan has been
established, the Company will not offset or adjust the size of an Equity Award
previously granted for that year but may take such facts into consideration in
determining the total target


 


	
   

  	
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annual compensation for the subsequent year.  The Committee shall annually solicit, and
consider in its review, market data from a third party compensation consultant.


 


Sale restrictions
and other terms and conditions for equity awards, shall be detailed in a grant
agreement to be executed at the time of an equity award issuance; provided, in
the event of any conflict between the terms and conditions of a grant agreement
and this Agreement, the terms and conditions of this Agreement shall
prevail.  If, prior to full vesting of
any equity award, (and regardless of whether the Term has then expired),
Executive is terminated by PGI without “cause” (where “cause” is defined in Section 2.1.a.
of this Agreement), Executive terminates for “good reason” (where “good reason”
is defined in Section 2.2.a. of this Agreement), or Executive’s employment
terminates due to her death or her “disability” (where “disability” is defined
in Section 2.1.c.ii of this Agreement), Executive shall continue to vest
pursuant to the original vesting schedule (including any performance
conditions) contained in the grant agreement as if Executive’s employment had
not terminated; provided, Executive remains in compliance with the terms and
conditions of this Agreement and the grant agreement; provided further, that
vesting shall cease and unvested awards shall be forfeited immediately upon
Executive’s material breach of this Agreement or the grant agreement.  In the event of both a “change in control” of
PGI (defined below) at a time while Executive remains Chief Executive Officer
of PGI and her Involuntary Termination following the “change in control,”
Executive shall become fully vested in all equity awards granted to her on or
after the Effective Date.  For avoidance
of doubt, all equity awards granted previously to Executive pursuant to her
prior employment agreement, shall continue to vest in accordance with such
prior agreement and the grant documents issued thereunder.


 


For
purposes of any equity awards, “change in control” shall mean that term as it
is defined in the Equity Plan.  For all
other purposes of this Agreement, Change in Control means any of the following
events:


 


(i)            if any “person” or “group” as those terms
are used in Sections 13(d) and 14(d) of the Exchange Act or any
successors thereto, other than an Exempt Person, is or becomes the “beneficial
owner” (as defined in Rule 13d-3 under the Exchange Act or any successor
thereto), directly or indirectly, of securities of PGI representing (A) 50%
or more of the combined voting power of PGI’s then outstanding securities or (B) 30%
or more of the combined voting power of the PGI’s then outstanding securities
if at such time, such person or group also beneficially owns more of the combined
voting power of the PGI’s then outstanding securities, other than an Exempt
Person; or


 


(ii)           during any period of two consecutive
years, individuals who at the beginning of such period constitute the Board and
any new directors whose election by the Board or nomination for election by PGI’s
stockholders was approved by at least two-thirds of the directors then still in
office who either were directors at the beginning of the period or whose
election was previously so approved, cease for any reason to constitute a
majority thereof; or


 


(iii)          the
consummation of a merger or consolidation of PGI with any other corporation,
other than a merger or consolidation (A) which would result in all or a
portion of the voting securities of PGI 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 PGI or such surviving entity
outstanding immediately after such merger or consolidation or (B) by which
the corporate existence of PGI is not affected and following which PGI’s chief
executive officer and directors retain their positions with PGI (and constitute
at least a majority of the Board); or


 


	
   

  	
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(iv)          the consummation of a plan of complete
liquidation of PGI or consummation of the sale or disposition by PGI of all or
substantially all PGI’s assets, other than a sale to an Exempt Person.


 


(v)           For purposes of this Agreement, the term “Exempt
Person” means (1) 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, MatlinPatterson Global
Opportunities Partners (Bermuda), L.P., MatlinPatterson Global Partners LLC and
any of their respective affiliated entities, (2) any person, entity or
group under the control of any party included in clause (1), or (3) any
employee benefit plan of PGI or a trustee or other administrator or fiduciary
holding securities under an employee benefit plan of PGI.


 


d.             Reimbursement of Expenses. 
During the Term, PGI shall reimburse Executive for all reasonable
business expenses incurred by her in the course of performing her duties and
responsibilities under this Agreement which are consistent with PGI’s policies
in effect from time to time with respect to travel, entertainment and other
business expenses, subject to PGI’s requirements with respect to reporting and
documentation of such expenses.


 


1.3           Paid Leave.


 


a.             Vacation.  Executive
shall be entitled to 4 weeks vacation per calendar year, without carryover,
which vacation shall accrue ratably during the year in accordance with PGI’s
policies.


 


b.             Sick Leave. Executive shall be entitled to sick leave in
accordance with the policies adopted from time to time by PGI for its
employees.


 


c.             Holiday Leave. 
Executive shall be entitled to paid time off on such holidays for which
PGI is closed for business.


 


1.4           Benefits.  Executive
shall be entitled to participate in the various employee benefit programs
(including health, life, retirement and disability) which PGI may establish and
modify from time to time for the benefit of all its employees, if and when
Executive satisfies the eligibility requirements for such employee benefit
plans.


 


PGI
retains the right to amend, modify or terminate any employee benefits from time
to time in its discretion.


 


1.5           Company Automobile. 
PGI shall provide Executive with the continued use of an automobile for
the duration of the existing automobile lease term.  When the existing lease expires, PGI shall
not be under any obligation to provide for Executive’s use of an automobile or
to adjust Executive’s compensation as a result of the lease expiring.  As long as the lease is in place, PGI shall
maintain automobile insurance on the automobile, will cover the cost of general
maintenance on the automobile, and reimburse Executive for fuel.  To the extent Executive uses the automobile
for personal purposes, the value of such personal use shall be included in
Executive’s income in accordance with applicable tax law.


 


	
   

  	
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1.6           Retirement Incentive. 
Upon the expiration date of this Agreement, provided Executive is an
employee in good standing on such date, PGI shall provide Executive with a
one-time award of cash and equity as described in and subject to the conditions
of this Section 1.6 (the “Retirement Incentive”).


 


The Retirement Incentive
shall consist of:


 


(i) an equity award, with the number of shares
awarded to be calculated with reference to the “Ending Stock Price” (which
shall equal the average reported closing price of PGI’s class A common stock
over the forty (40) trading days immediately prior to the expiration date of
this Agreement) as shown in the table below:


 


	
  Ending Stock Price

  	
   

  	
  Number of Shares Awarded

  	
   

  
	
  Less than $17.50

  	
   

  	
  20,000

  	
   

  
	
  $17.50

  	
   

  	
  20,000

  	
   

  
	
  $22.50

  	
   

  	
  40,000

  	
   

  
	
  $25.00

  	
   

  	
  55,000

  	
   

  
	
  $27.50

  	
   

  	
  75,000

  	
   

  
	
  $30.00 or higher

  	
   

  	
  100,000

  	
   

  



 


For an Ending Stock Price that falls between two
given points on the table above, the number of shares awarded will be computed
using straight-line interpolation using the formula below:


 


[(E - LP) / (HP -
LP) x (HS - LS)] + LS


 


Where:


 


E = Ending Stock
Price (rounded to $0.01)


LP = The stock
price given on the table that is closest to E, but still lower than E


HP = The stock
price given on the table that is closest to E but still higher than E


LS = The number
of shares awarded when the Ending Stock Price equals LP, as per the table


HS = The number
of shares awarded when the Ending Stock Price equals HP, as per the table


 


For purposes of illustration, if the Ending Stock
Price is computed to be $26.82, the number of shares awarded under the
Retirement Incentive would be 69,560, computed as follows:


 


[(E - LP) / (HP -
LP) x (HS - LS)] + LS


 


[($26.82 - $25.00)
/ ($27.50 - $25.00) x (75,000 - 55,000)] + 55,000 = 69,560


 


[($1.82) / ($2.50)
x (20,000)] + 55,000 = 69,560


 


[(.728) x (20,000)]
+ 55,000 = 69,560


 


14,560 + 55,000 =
69,560


 


	
   

  	
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If, prior to the
expiration date of this Agreement, PGI’s class A common stock ceases (either by
the affirmative act of the Company or after the exhaustion of remedies) to be
publicly traded either on (x) the Over-The-Counter Bulletin Board (“OTCBB”) or (y) if subsequently listed
on an exchange, an exchange, then the equity award of this Section 1.6(i) shall
be converted to a cash award, with the initial value of such award being equal
to the product of (A) the number of shares to be paid as determined in
this Section 1.6(i) assuming the Ending Stock Price is equal to the
final closing price of the Company’s class A common stock  on the OTCBB or the exchange and (B) the
final closing price of the Company’s class A common stock on the OTCBB or the
exchange (the “Cash Conversion Value”).


 


The Cash Conversion Value
shall be credited with interest at a rate equal to the Moody’s Aa rate
(compounded annually) between the date the Cash Conversion Value is set until
the date of payout to the Executive.


 


(ii)           a one-time cash award equal to thirty percent (30%)
of the value of the shares (computed as the Ending Stock Price multiplied by
the number of shares awarded) or the Cash Conversion Value awarded in Section 1.6(i),
provided the cash award of this Section 1.6(ii) shall be neither less
than two hundred fifty thousand dollars ($250,000) nor greater than one million
dollars ($1,000,000).


 


Each
component of the Retirement Incentive provided in Sections 1.6(i) and
(ii), respectively, shall be payable in three equal installments, with the
first installment being due on the expiration date of this Agreement and each
of the following installments paid on the next two anniversaries of the
expiration date of this Agreement.


 


If, after the Retirement
Incentive is awarded, Executive materially breaches this Agreement or the grant
agreements governing the equity award, then all unvested amounts of the
Retirement Incentive shall be forfeited immediately.


 


ARTICLE 2:  TERMINATION BEFORE THE TERM EXPIRES AND
EFFECTS OF SUCH TERMINATION


 


2.1           Termination By PGI. 
PGI may terminate Executive’s employment before the Term expires for the
following reasons:


 


a.             Cause.  For “cause”
upon the determination by the Board that “cause” exists to terminate
Executive.  “Cause”
means (i) a material breach of this Agreement by Executive; provided, that
if such breach is capable of being cured, Executive shall be provided 15 days
written notice to cure such breach, (ii) a breach of Executive’s duty of
loyalty to PGI or any of its subsidiaries or any act of dishonesty or fraud
with respect to PGI or any of its subsidiaries, (iii) the commission by
Executive of a felony, a crime involving moral turpitude or other act or
omission (excluding business acts or omissions in the ordinary course) causing
material harm to the standing and reputation of PGI and its subsidiaries, (iv) Executive
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
(excluding business conduct in the ordinary course) causing PGI or any of its
subsidiaries substantial public disgrace or disrepute or economic harm, or (v) any
willful act or omission by Executive aiding or abetting a competitor, supplier
or customer of PGI or any of its subsidiaries to the material disadvantage or
detriment of PGI and its subsidiaries. 
The burden for establishing the validity of any termination for Cause
shall rest upon PGI.  No termination
shall be deemed to be for Cause unless and until there shall have been
delivered to Executive a copy of a


 


	
   

  	
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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 Executive and Executive is given an opportunity, together
with counsel, to be heard before the Board), finding that, in the good faith
opinion of the Board, Executive is guilty of the conduct described above, and
specifying the particulars thereof in reasonable detail.  If PGI terminates Executive’s employment for
Cause, Executive shall be entitled only to the pro rata Base Compensation
through the date of such termination, and all future compensation and benefits
shall cease (except for those benefits vested per plan terms).  For avoidance of doubt, the Retirement
Incentive shall be forfeited as well.


 


b.             Involuntary Termination Before a Change
in Control.  Involuntary termination at PGI’s option may
occur for any reason whatsoever, including termination without cause, in the
sole discretion of the Board (“Involuntary Termination”).  Upon an Involuntary Termination before the
Term expires, Executive shall be entitled to receive from PGI as severance
payments, in lieu of severance payments under any other plan or program of PGI,
an amount equal to (i) the sum of (A) Executive’s Base Compensation
and (B) target annual incentive, which sum shall apply from the
termination date through the expiration date of this Agreement, (ii) her
annual target bonus opportunity for the fiscal year in which the termination
date occurs, adjusted for actual performance to date of termination, as
determined by the Committee (if performance cannot be adequately assessed,
target performance will be assumed), multiplied by a fraction equal to the
number of days of employment completed by Executive during the fiscal year in
which the termination date occurs divided by 365 (the “Pro Rata
Bonus”), each as in effect immediately prior to the date of her
termination (the “Severance Amount”),
and (iii) any annual bonus for a completed fiscal year of PGI that has
been earned but not yet been paid to Executive (the “Prior Year
Earned Bonus”), in each case if and only if Executive has executed
and delivered to PGI the General Release substantially in form and substance as
set forth in Exhibit A attached hereto and only so long as
Executive has not breached the provisions of Article 3 or Section 4.1
hereof and does not apply for unemployment compensation chargeable to PGI
during the period from the date of termination
through the expiration date
of this Agreement (the “Severance Period”).  In addition, upon an Involuntary Termination,
Executive shall be entitled to the Retirement Incentive set forth in Section 1.6;
provided, that such incentive shall be effective as of the date of termination and such date of termination shall be
used, rather than the expiration date of this Agreement, as the date for
all measurements in Section 1.6; provided further, that such incentive
shall be payable in installments as set forth in and subject to Section 1.6.  The Severance Amount payable pursuant to this
Section 2.1.b. for the first six months of the Severance Period and the
Prior Year Earned Bonus payable pursuant to this Section 2.1.b. shall be
paid to Executive in a lump sum on the first day of the calendar month
following the six month anniversary of the termination date, and the Severance
Amount payable pursuant to this Section 2.1.b. for the remainder of the
Severance Period shall be payable in regular monthly installments.  The amounts payable pursuant to this Section 2.1.b.
shall not be reduced by the amount of any compensation Executive receives with
respect to any other employment during the Severance Period.


 


Upon
Involuntary Termination and continuing through the expiration date of this
Agreement, PGI shall, at its expense, continue on behalf of the Executive and
her dependants and beneficiaries, the medical, dental and hospitalization
benefits provided to the Executive immediately prior to the date of
termination.  The coverage and benefits
(including deductibles and costs) provided in this Section 2.1.b. shall be
no less favorable to the Executive and her dependants and beneficiaries, than
the coverage and benefits provided to other salaried employees under PGI’s
benefit plans, as such plans may be amended from time to time.  PGI’s obligation hereunder with respect to
the foregoing benefits shall be limited to the extent that the Executive
obtains any such benefits pursuant to a subsequent employer’s benefit plans, in
which case PGI may reduce the coverage of any benefits it is required to


 


	
   

  	
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provide
the Executive hereunder so long as the aggregate coverage and benefits of the
combined benefit plans is no less favorable to the Executive than the coverages
and benefits required to be provided hereunder. 
This Section 2.1.b. shall not be interpreted so as to limit any
benefits to which the Executive, her dependants or beneficiaries may otherwise
be entitled under any of PGI’s employee benefit plans, programs or practices
following the termination of employment of the Executive, including without
limitation, any applicable retiree life insurance benefits.  Except as otherwise expressly provided
herein, all of Executive’s rights to salary, bonuses, employee benefits and
other compensation hereunder which would have accrued or become payable after
the termination or expiration of the Term shall cease upon such termination or
expiration, other than those expressly required under applicable law (such as
COBRA); provided, that for purposes of determining Executive’s rights
under COBRA, the date of the later to occur of (x) the date of the
termination or expiration of the Term or (y) the date of the final payment
of any severance payments made pursuant to Section 2.1.b. above, shall be
deemed to be the qualifying event for such purpose.  PGI may offset any amounts Executive owes it
or its subsidiaries against any amounts it or its subsidiaries owes Executive
hereunder.


 


Other
than what is provided in this Section 2.1.b, Executive shall not be
entitled to any other salary, compensation or benefits as a result of an
Involuntary Termination.


 


c.             Involuntary Termination At or After a
Change in Control.  In the event that Executive incurs an
Involuntary Termination hereunder after a Change in Control and before the Term
expires, the Executive shall become fully vested in the Retirement Incentive
and receive the benefits described in Section 2.1.b above if, and only if,
Executive has executed and delivered to PGI the General Release substantially
in the form and substance as set forth in Exhibit A attached hereto and
only so long as Executive has not breached the provisions of Article 3 or Section 4.1
hereof and does not apply for unemployment compensation chargeable to PGI
during the Severance Period.  The
Retirement Incentive and the Severance Amount payable pursuant to this Section 2.1.c.
shall both be paid in a single lump sum on the 31st day following termination, so as not to result
in the imposition of the additional tax on Executive described in Section 409A
of the Internal Revenue Code of 1986, as amended (the “Code”).


 


d.             Death/Disability. 
Upon Executive’s (i) death, or (ii) becoming incapacitated or
disabled so as to entitle Executive to benefits under PGI’s long-term
disability plan, or (iii) becoming permanently and totally unable to
perform Executive’s duties for PGI as a result of any physical or mental
impairment supported by a written opinion by a physician selected by PGI,
Executive or Executive’s heirs shall be entitled to Executive’s pro rata Base
Compensation through the date of such determination and the Prior Year Earned
Bonus.


 


2.2           Termination By Executive. 
Executive may terminate the employment relationship before the Term
expires for the following reasons:


 


a.             Good Reason. 
For “good reason.”  A termination
for Good Reason shall be deemed to be an Involuntary Termination and shall mean
a termination as a result of:


 


(i)            A material breach by PGI of any material
provision of this Agreement which remains uncorrected for  30 days following Executive’s written notice
to PGI of such breach; or


 


(ii)           The assignment to Executive, without her
express written consent, of any duties reasonably inconsistent with Executive’s
position, duties, responsibilities and status with PGI as of the Effective
Date, or a change in Executive’s titles or offices (if any) in effect on the
Effective


 


	
   

  	
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Date, or any removal of Executive from, or any failure to reelect
Executive to (or, in the case of the Board, to nominate to), any of such
positions, except in connection with Executive’s termination for Cause, death,
disability, or as a result of the expiration of this Agreement; or


 


(iii)          A reduction by PGI in Executive’s Base
Compensation as in effect on the Effective Date, or as the same may be
increased from time to time thereafter; or


 


(iv)          Any purported termination for Cause or
disability without grounds therefor; or


 


(v)           A change in PGI’s headquarters location
that is at least 50 miles from PGI’s headquarters in effect on the Effective
Date.


 


b.             Voluntary Termination. 
For any other reason whatsoever, in Executive’s sole discretion.  Upon a “Voluntary Termination”
before the Term expires, all of Executive’s future compensation and benefits
(including unvested equity awards) shall cease as of the date of termination
(except benefits vested as of the termination per plan terms), and Executive
shall be entitled only to pro rata Base Compensation through the termination
date.  For avoidance of doubt, the
Retirement Incentive shall be forfeited as well.


 


2.3           Certain Obligations Continue. 
Neither termination of employment nor expiration of the Term terminates
the continuing obligations of this Agreement, including obligations under
Articles 3 and 4.1.


 


2.4           Employment Beyond Term.  Unless
the parties hereto mutually agree otherwise at a later date, should Executive
remain employed by PGI after the Term expires, such employment shall convert to
an employment-at-will relationship, terminable at any time by either PGI or
Executive for any reason whatsoever, with or without cause.


 


ARTICLE 3:  CONFIDENTIAL INFORMATION; POST-EMPLOYMENT
OBLIGATIONS


 


3.1           This Agreement. 
The terms of this Agreement constitute confidential information, which
Executive shall not disclose to anyone other than Executive’s spouse,
attorneys, tax advisors, or as required by law. 
PGI may disclose the terms of this Agreement as required by law.


 


3.2           PGI Property. 
All written materials, records, data, and other documents prepared or
possessed by Executive during Executive’s employment by PGI are PGI’s
property.  All memoranda, notes, records,
files, correspondence, drawings, manuals, models, specifications, computer
programs, maps, and all other documents, data, or materials of any type
embodying such information, ideas, concepts, improvements, discoveries, and
inventions are PGI’s property.


 


All
information, ideas, concepts, improvements, discoveries, and inventions that
are conceived, made, developed, or acquired by Executive individually or in
conjunction with others during Executive’s employment (whether during business
hours and whether on PGI’s premises or otherwise) which relate to PGI’s
business, products, or services are PGI’s property.  Executive agrees to make prompt and full
disclosure to PGI 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


 


	
   

  	
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information  (whether or not patentable and whether or not
reduced to practice) that relate to PGI’s or its subsidiaries’ actual or
anticipated business, research and development, or existing or future products
or services and that are conceived, developed, acquired, contributed to, made,
or reduced to practice by Executive (either solely or jointly with others)
while employed by PGI or its subsidiaries and for a period of one (1) year
thereafter (collectively, “Work Product”).  Any copyrightable work falling within the
definition of Work Product shall be deemed a “work made for hire” under the
copyright laws of the United States, and ownership of all rights therein shall
vest in PGI or its subsidiary.  To the
extent that any Work Product is not deemed to be a “work made for hire,”
Executive hereby assigns and agrees to assign to PGI or such subsidiary all
right, title and interest, including without limitation, the intellectual
property rights that Executive may have in and to such Work Product.  Executive shall promptly perform all actions
reasonably requested by the Board (whether during or after the employment period)
to establish and confirm PGI’s or such subsidiary’s ownership (including,
without limitation, providing testimony and executing assignments, consents,
powers of attorney, and other instruments).


 


At
the termination of Executive’s employment with PGI for any reason, Executive
shall return all of PGI’s property to PGI.


 


3.3           Confidential Information:  Non-Disclosure.  Executive
acknowledges that the business of PGI and its subsidiaries is highly
competitive and that PGI has provided and will provide Executive with access to
Confidential Information relating to the business of PGI and its
subsidiaries.  “Confidential Information”
means and includes PGI’s confidential and/or proprietary information and/or
trade secrets that have been developed or used and/or will be developed and
that cannot be obtained readily by third parties from outside sources.  Confidential Information includes, by way of
example and without limitation, the following: 
information regarding customers, employees, contractors, and the
industry not generally known to the public; strategies, methods, books,
records, and documents; technical information concerning products, equipment,
services, and processes; procurement procedures and pricing techniques; the
names of and other information concerning customers, investors, and business
affiliates (such as contact name, service provided, pricing for that customer,
amount of services used, credit and financial data, and/or other information
relating to PGI’s relationship with that customer); pricing strategies and
price curves; plans and strategies for expansion or acquisitions; budgets;
customer lists; research; weather data; financial and sales data; trading
terms; evaluations, opinions, and interpretations of information and data;
marketing and merchandising techniques; prospective customers’ names and marks;
grids and maps; electronic databases; models; specifications; computer
programs; internal business records; contracts benefiting or obligating PGI;
bids or proposals submitted to any third party; technologies and methods;
training methods and training processes; organizational structure; salaries of
personnel; payment amounts or rates paid to consultants or other service
providers; and other such confidential or proprietary information.  Executive acknowledges that this Confidential
Information constitutes a valuable, special, and unique asset used by PGI or
its subsidiaries in their business to obtain a competitive advantage over their
competitors.  Executive further
acknowledges that protection of such Confidential Information against
unauthorized disclosure and use is of critical importance to PGI and its
subsidiaries in maintaining their competitive position.


 


Executive
also will have access to, or knowledge of, Confidential Information of third
parties, such as actual and potential customers, suppliers, partners, joint
venturers, investors, financing sources and the like, of PGI and its
subsidiaries.


 


Executive
agrees that Executive will not, at any time during or after Executive’s
employment with PGI, make any unauthorized disclosure of any Confidential
Information of PGI or its subsidiaries, or


 


	
   

  	
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make
any use thereof, except in the carrying out of her employment responsibilities
hereunder.  Executive also agrees to
preserve and protect the confidentiality of third party Confidential
Information to the same extent, and on the same basis, as PGI’s Confidential
Information.


 


3.4           Non-Competition Obligations. 
Executive acknowledges that PGI is providing Executive with access to
Confidential Information. Executive’s non-competition obligations are ancillary
to PGI’s agreements provided in Article 2 and agreement to disclose
Confidential Information to Executive. 
In order to protect the Confidential Information described above, and in
consideration for Executive’s receiving access to this Confidential
Information, right to compensation and benefits upon certain terminations as
provided in Article 2, and receiving other compensation provided in this
Agreement, PGI and Executive agree to the following non-competition provisions:


 


During
the greater of the Severance Period or the twelve (12) month period following
Executive’s date of termination for Cause or a Voluntary Termination (including
retirement), Executive will not, directly or indirectly, for Executive or for
others in any geographic area where PGI or its subsidiaries engage or plan to
engage in business:


 


a.             engage in any business competing with any
businesses in which PGI or its subsidiaries currently engage in business, has
plans to engage in business, or has engaged in business in the 12-month period
preceding the date of termination (a “Competing Business”);


 


b.             perform any job, task, function, skill,
or responsibility for a Competing Business that Executive has provided for PGI
in the 12-month period preceding the date of termination; or


 


c.             render advice or services to, or
otherwise assist, any other person, association or entity in the business of “a”
or “b” above.


 


Executive
understands that the foregoing restrictions may limit her ability to engage in
certain businesses and during the period provided for above, but acknowledges
that these restrictions are necessary to protect the Confidential Information
PGI has provided to Executive.


 


Executive
agrees that this provision defining the scope of activities constituting
competition with PGI is narrow and reasonable for the following reasons:  (i) Executive is free to seek employment
with other companies providing services that do not directly or indirectly
compete with any business of PGI or its subsidiaries; (ii) Executive is
free to seek employment with other companies that do not directly or indirectly
compete with any business of PGI or its subsidiaries; and (iii) there are
many other companies that do not directly or indirectly compete with any
business of PGI or its subsidiaries. 
Thus, this restriction on Executive’s ability to compete does not
prevent Executive from using and offering the skills that Executive possessed
prior to receiving Confidential Information, specialized training, and
knowledge from PGI.


 


3.5           Non-Solicitation of Customers. 
During the greater of the Severance Period or the twelve (12) months
following the termination of employment for any reason, Executive will not call
on, service, or solicit competing business from customers of PGI or its
subsidiaries whom the Executive, within the twenty-four (24) months prior to
termination of employment, (i) had or made contact with, or (ii) had
access to information and files about. 
These restrictions are limited by geography to the specific places,
addresses, or locations where a customer is present and available for
soliciting or servicing.


 


	
   

  	
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3.6           Non-Solicitation of Employees. 
During Executive’s employment and during the greater of the Severance
Period or the twelve (12) months following the termination of employment for
any reason, Executive will not, either directly or indirectly, call on, solicit,
or induce any other employee or officer of PGI, or their affiliates whom
Executive had contact with, knowledge of, or association with in the course of
employment with PGI to terminate his or her employment, and will not assist any
other person or entity in such a solicitation.


 


3.7           Arbitration. 
Except with respect to disputes or claims under Article 3 or Section 4.1
hereof (which may be pursued in any court of competent jurisdiction as
specified herein and with respect to which each party shall bear the cost of
its own attorney’s fees and expenses except as otherwise required by applicable
law), each party hereto agrees that the arbitration procedure set forth in Exhibit B
hereto shall be the sole and exclusive method for resolving any claim or dispute
(“Claim”) arising out of or relating to
the rights and obligations acknowledged and agreed to in this Agreement and the
employment of Executive by PGI and its subsidiaries (including, without
limitation, disputes and claims regarding employment discrimination, sexual
harassment, termination and discharge), whether such Claim arose or the facts
on which such Claim is based occurred prior to or after the execution and
delivery of adoption of this Agreement. 
The parties agree that the result of any arbitration hereunder shall be
final, conclusive and binding on all of the parties.  Nothing in this paragraph shall prohibit a
party hereto from instituting litigation to enforce any Final Determination (as
defined in Exhibit B hereto). 
Each party hereto hereby irrevocably submits to the jurisdiction of any
United States District Court or North Carolina state court of competent
jurisdiction sitting in Mecklenburg County, North Carolina, and agrees that
such court shall be the exclusive forum with respect to disputes and claims
under this Agreement and for the enforcement of any Final Determination, and
irrevocably and unconditionally waives (i) any objection to the laying of
venue of any such action, suit or proceeding in such court or (ii) any
argument, claim, defense or allegation that any such action, suit or proceeding
brought in such court has been brought in an inconvenient forum.  Each party hereto irrevocably consents to
service of process by registered mail or personal service and waives any
objection on the grounds of personal jurisdiction, venue or inconvenience of
the forum.


 


3.8           Warranty.  Executive
warrants that Executive is not a party to any other restrictive agreement
limiting Executive’s activities in her employment by PGI.  Executive further warrants that at the time
of the signing of this Agreement, Executive knows of no written or oral
contract or of any other impediment that would inhibit or prohibit employment
with PGI and that Executive will not knowingly use any trade secret, confidential
information, or other intellectual property right of any other party in the
performance of Executive’s duties hereunder.


 


ARTICLE 4:  MISCELLANEOUS


 


4.1           Mutual
Non-Disparagement.


 


a.             Executive shall refrain, both during and
after her employment, from publishing any oral or written statements about PGI,
any of its respective subsidiaries, or any of such entities’ officers,
employees, agents, or representatives that are slanderous, libelous, or
defamatory; or that disclose private or confidential information about their
business affairs; or that constitute an intrusion into their seclusion or
private lives; or that give rise to unreasonable publicity about their private
lives; or that place them in a false light before the public; or that
constitute a misappropriation of their name or likeness.


 


	
   

  	
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b.             PGI shall refrain, both during and after
Executive’s employment, from publishing any oral or written statement about Executive
that are slanderous, libelous, or defamatory, or that disclose private or
confidential information about her personal business affairs; or that
constitute an intrusion into her seclusion or private life; or that give rise
to unreasonable publicity about her private life; or that places her in a false
light before the public.


 


4.2           Notices.  Any notice
provided for in this Agreement shall be in writing and shall be either
personally delivered, sent by reputable overnight courier service or mailed by
first class mail, return receipt requested, to the recipient at the address
below indicated:


 


Notices to Executive:


 


Veronica
M. Hagen


15503
Fisherman’s Rest Court


Cornelius,
NC 29031


 


Notices to the Company:


 


Polymer Group, Inc.


9335 Harris Corners Parkway


Suite 300


Charlotte, NC 28269


Attn:  General
Counsel


 


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


 


4.3           No Waiver.  No failure by
either party at any time to give notice of any breach by the other party of, or
to require compliance with, any condition or provision of this Agreement shall
be deemed a waiver of any provisions or conditions of this Agreement.


 


4.4           409A Compliance.  This Agreement and any amendments thereto
shall, to the extent applicable, comply with and be interpreted in such a
manner as to be consistent with the provisions of Section 409A of the
Code, and any Treasury regulations or other Internal Revenue Service guidance
promulgated thereunder.  In addition,
notwithstanding any provision herein to the contrary, because Executive is a “specified
employee” (as such term is defined in Section 409A(a)(2)(B)(i) of the
Code), any payment due and payable hereunder as a result of Employee’s
separation from service shall not be made before the date which is six (6) months
after Executive’s date of separation from service.


 


4.5           Assignment.  This
Agreement shall be binding upon and inure to the benefit of PGI and any other
person, association, or entity that may acquire or succeed to all or
substantially all of the business or assets of PGI.  Executive’s rights and obligations under this
Agreement are personal, and they shall not be assigned or transferred without
PGI’s prior written consent.


 


4.6           Excise Tax.   Anything in this Agreement to the contrary
notwithstanding, in the event it shall be determined that any payment, benefit
or distribution to or for your benefit or the acceleration thereof would be
subject to the excise tax imposed by Section 4999 of the Internal Revenue
Code of 1986, as amended (the “Code”) or any interest or penalties with respect
to such excise tax (collectively,


 


	
   

  	
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such excise tax, together with any such interest or penalties, the “Excise
Tax”) (all such payments and benefits, including any cash severance payments
payable pursuant to any other plan, arrangement or agreement, hereinafter
referred to as the “Total Payments”), then, after taking into account any
reduction in the Total Payments provided by reason of Section 280G of the
Code in such other plan, arrangement or agreement, the cash severance payments
shall first be reduced, and the noncash severance payments shall thereafter be
reduced, to the extent necessary so that no portion of the Total Payments is
subject to the Excise Tax but only if (i) the net amount of such Total Payments,
as so reduced (and after subtracting the net amount of federal, state and local
income taxes on such reduced Total Payments and after taking into account the
phase out of itemized deductions and personal exemptions attributable to such
reduced Total  Payments) is greater than
or equal to (ii) the net amount of such Total Payments without such
reduction (but after subtracting the net amount of federal, state and local
income taxes on such Total Payments and the amount of Excise Tax to which you
would be subject in respect of such unreduced Total Payments and after taking
into account the phase out of itemized deductions and personal exemptions
attributable to such unreduced Total Payments); provided, however, that you may
elect to have the noncash severance payments reduced (or eliminated) prior to
any reduction of the cash severance payments. 
You shall remain solely liable for all income taxes, Excise Tax, or
other amounts assessed on any payments or benefits and nothing in this
Agreement shall be interpreted as obligating the Company, or any successors
thereto, to pay (or reimburse you for) any income taxes, Excise Tax, or other
taxes or amounts assessed against or incurred by you in connection with your
receipt of any such payments or benefits.


 


4.7           Indemnification, Liability Insurance. 
PGI agrees to indemnify the Executive and hold the Executive harmless to
the fullest extent permitted by PGI’s certificate of incorporation and under
the bylaws of PGI against and in respect to any and all actions, suits,
proceedings, claims, demands, judgments, costs, expenses (including reasonable
attorneys’ fees), losses, and damages resulting from the Executive’s good-faith
performance of the Executive’s duties and obligations to PGI.  PGI shall cover the Executive under directors
and officers liability insurance both during and, while potential liability
exists, after the Term of this Agreement in the same amount and on the same
terms as PGI covers its other active officers and directors, if such coverage
is obtainable, but in all events such coverage shall be at least in
substantially the same amount and on substantially the same terms as PGI covers
its other active officers and directors.


 


4.8           Recovery of Awards. 
If, prior to or within two (2) years of the termination of
Executive’s employment with PGI, either (i) PGI is required to make a
material restatement of financial results for years during which Executive was
an employee and due to actions or inactions by her or that she had knowledge
of, or (ii) Executive is found to have engaged in misconduct while an
employee, which, if discovered at the time would have justified a Cause
termination, Executive may be required by the Board to return any outstanding
equity awards granted after January 1, 2010 and any value received from
any incentive awards (including, without limitation, the Retirement Incentive)
granted after January 1, 2010.


 


4.9           Other Agreements; Inconsistency. 
This Agreement replaces and merges any other previous agreements and
discussions pertaining to the nature of, term, and termination of Executive’s
employment relationship with PGI, and this Agreement constitutes the entire
agreement of the parties with respect to such subject matters.  No representation, inducement, promise, or
agreement has been made by either party with respect to such subject matters,
and no agreement, statement, or promise relating to the employment of Executive
by PGI that is not contained in this Agreement shall be valid or binding.  Any modification of this Agreement will be
effective only if it is in writing and signed by each


 


	
   

  	
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party.  In the event of any inconsistency between
this Agreement and any other agreement (including but not limited to any
profits interest, long-term incentive or other equity award agreement), plan,
program, policy or practice (collectively, “Other
Provision”) of PGI, the terms of this Agreement shall control over
such Other Provision to the extent that the terms of this Agreement are more
beneficial to the Executive.


 


4.10         Survival/Severability/Headings. 
It is the express intention and agreement of the parties that the
provisions of Article 3 and Sections 4.1 and 4.8 shall survive the
termination of employment of Executive. 
In addition, all obligations of PGI to make payments, and to provide for
equity vesting, under this Agreement shall survive any termination of this
Agreement on the terms and conditions set forth in this Agreement.  The invalidity or unenforceability of any one
or more provisions of this Agreement shall not affect the validity or
enforceability of the other provisions of this Agreement, which shall remain in
full force and effect.  Article and
section headings contained in this Agreement are provided for convenience and
reference only, and do not define or affect the meaning, construction, or scope
of any of the provisions of this Agreement.


 


IN
WITNESS WHEREOF, PGI and Executive have executed this Agreement in multiple
originals to be effective on the first date of the Term.


 


 


	
  POLYMER GROUP, INC.

  	
   

  	
  VERONICA M. HAGEN

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
   

  	
  Name:

  	
  Dennis Norman

  	
   

  	
   

  
	
   

  	
  Title:

  	
  Chief Financial Officer

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Dated
  this the        day of March, 2010

  	
   

  	
  Dated
  this the        day of March, 2010

  



 


 


	
   

  	
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Exhibit A


 


GENERAL
RELEASE


 


I, Veronica M. Hagen,
in  consideration of and subject to the
performance by Polymer Group, Inc., a Delaware corporation (together with
its subsidiaries, the “Company”), of its obligations under the Employment
Agreement, entered into on April 23, 2010, (the “Agreement”),
do hereby release and forever discharge as of the date hereof the Company and
its affiliates and all present and former directors, officers, agents,
representatives, employees, successors and assigns of the Company and its
affiliates and the Company’s direct or indirect owners (collectively, the “Released Parties”) to the extent provided below.


 


1.             I understand that any payments or benefits paid or
granted to me under paragraph 2(b) of the Agreement represent, in part,
consideration for signing this General Release and are not salary, wages or
benefits to which I was already entitled. I understand and agree that I will
not receive the payments and benefits specified in paragraph 2(b) of the
Agreement unless I execute this General Release and do not revoke this General
Release within the time period permitted hereafter or breach this General
Release.  Such payments and benefits will
not be considered compensation for purposes of any employee benefit plan,
program, policy or arrangement maintained or hereafter established by the
Company or its affiliates.  I also
acknowledge and represent that I have received all payments and benefits that I
am entitled to receive (as of the date hereof) by virtue of any employment by
the Company.


 


2.             Except as provided in paragraph 4 below and except for
the provisions of my Employment Agreement which expressly survive the
termination of my employment with the Company, I knowingly and voluntarily (for
myself, my heirs, executors, administrators and assigns) release and forever
discharge the Company and the other Released Parties from any and all claims,
suits, controversies, actions, causes of action, cross-claims, counter-claims,
demands, debts, compensatory damages, liquidated damages, punitive or exemplary
damages, other damages, claims for costs and attorneys’ fees, or liabilities of
any nature whatsoever in law and in equity, existing or hereafter arising,
based in whole or in part upon any act or omission, transaction, agreement,
event or other occurrence taking place from the beginning of time through the
date this General Release becomes effective and enforceable and whether known
or unknown, suspected, or claimed against the Company or any of the Released
Parties which I, my spouse, or any of my heirs, executors, administrators or
assigns, may have, which arise out of or are connected with my employment with,
or my separation or termination from, the Company (including, but not limited
to, any allegation, claim or violation, arising under: Title VII of the Civil
Rights Act of 1964, as amended; the Civil Rights Act of 1991; the Age
Discrimination in Employment Act of 1967, as amended (including the Older
Workers Benefit Protection Act); the Equal Pay Act of 1963, as amended; the
Americans with Disabilities Act of 1990; the Family and Medical Leave Act of
1993; the Worker Adjustment Retraining and Notification Act; the Employee
Retirement Income Security Act of 1974; any applicable Executive Order
Programs; the Fair Labor Standards Act; or their state or local counterparts;
the North Carolina Equal Employment Practice Act, N.C. Gen. Stat.
§ 143-422.1, et seq.; the North Carolina Persons With
Disabilities Protection Act, N.C. Gen. Stat. § 168A-1 et seq.;
and the North Carolina Retaliatory Employment Discrimination Act, N.C. Gen.
Stat. § 95-240 et seq. or under any other federal, 


 


	
   

  	
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state or local civil or
human rights law, or under any other local, state, or federal law, regulation
or ordinance; or under any public policy, contract or tort, or under common
law; or arising under any policies, practices or procedures of the Company; or
any claim for wrongful discharge, breach of contract, infliction of emotional
distress, defamation; or any claim for costs, fees, or other expenses,
including attorneys’ fees incurred in these matters) (all of the foregoing collectively
referred to herein as the “Claims”).


 


3.             I represent that I have made no assignment or transfer
of any right, claim, demand, cause of action, or other matter covered by
paragraph 2 above.


 


4.             I agree that this General Release does not waive or release
any rights or claims that I may have under the Age Discrimination in Employment
Act of 1967 which arise after the date I execute this General Release.  I acknowledge and agree that my separation
from employment with the Company in compliance with the terms of the Agreement
shall not serve as the basis for any claim or action (including, without
limitation, any claim under the Age Discrimination in Employment Act of 1967).


 


5.             In signing this General Release, I acknowledge and
intend that it shall be effective as a bar to each and every one of the Claims
hereinabove mentioned or implied. I expressly consent that this General Release
shall be given full force and effect according to each and all of its express
terms and provisions, including those relating to unknown and unsuspected
Claims (notwithstanding any state statute that expressly limits the
effectiveness of a general release of unknown, unsuspected and unanticipated
Claims), if any, as well as those relating to any other Claims hereinabove mentioned
or implied. I acknowledge and agree that this waiver is an essential and
material term of this General Release and that without such waiver the Company
would not have agreed to the terms of the Agreement.  I further agree that in the event I should bring
a Claim seeking damages against the Company, or in the event I should seek to
recover against the Company in any Claim brought by a governmental agency on my
behalf, this General Release shall serve as a complete defense to such Claims.
I further agree that I am not aware of any pending charge or complaint of the
type described in paragraph 2 as of the execution of this General Release.


 


6.             I agree that neither this General Release, nor the
furnishing of the consideration for this General Release, shall be deemed or
construed at any time to be an admission by the Company, any Released Party or
myself of any improper or unlawful conduct.


 


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


 


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


 


	
   

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


 


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


 


11.           I agree that as of the date hereof, I have returned to
the Company any and all property, tangible or intangible, relating to its
business, which I possessed or had control over at any time (including, but not
limited to, company-provided credit cards, building or office access cards,
keys, computer equipment, manuals, files, documents, records, software,
customer data base and other data) and that I shall not retain any copies,
compilations, extracts, excerpts, summaries or other notes of any such manuals,
files, documents, records, software, customer data base or other data.


 


12.           Notwithstanding anything in this General Release to
the contrary, this General Release shall not relinquish, diminish, or in any
way affect any rights or claims arising out of any breach by the Company or by
any Released Party of the Agreement after the date hereof.


 


13.           Whenever possible, each provision of this General
Release shall be interpreted in, such manner as to be effective and valid under
applicable law, but if any provision of this General Release is held to be
invalid, illegal or unenforceable in any respect under any applicable law or rule in
any jurisdiction, such invalidity, illegality or unenforceability shall not
affect any other provision or any other jurisdiction, but this General Release
shall be reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable provision had never been contained herein.


 


BY SIGNING THIS GENERAL
RELEASE, I REPRESENT AND AGREE THAT:


 


(a)           I HAVE READ IT CAREFULLY;


 


(b)           I UNDERSTAND ALL OF ITS TERMS AND KNOW THAT I AM
GIVING UP IMPORTANT RIGHTS, INCLUDING BUT NOT LIMITED TO, RIGHTS UNDER THE AGE
DISCRIMINATION IN EMPLOYMENT ACT OF 1967, AS AMENDED, TITLE VII OF THE CIVIL
RIGHTS ACT OF 1964, AS AMENDED; THE EQUAL PAY ACT OF 1963, THE AMERICANS WITH
DISABILITIES ACT OF 1990; AND THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF
1974, AS AMENDED;


 


	
   

  	
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(c)           I VOLUNTARILY CONSENT TO EVERYTHING IN IT;


 


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


 


(e)           I HAVE HAD AT LEAST 21 DAYS FROM THE DATE OF MY
RECEIPT OF THIS RELEASE SUBSTANTIALLY IN ITS FINAL FORM ON
                              
    ,           
TO CONSIDER IT AND THE CHANGES MADE SINCE THE
                              
    ,           
VERSION OF THIS RELEASE ARE NOT MATERIAL AND WILL NOT RESTART THE REQUIRED
21-DAY PERIOD;


 


(f)            THE CHANGES TO THE AGREEMENT SINCE
                              
      ,           
EITHER ARE NOT MATERIAL OR WERE MADE AT MY REQUEST.


 


(g)           I UNDERSTAND THAT I HAVE SEVEN DAYS AFTER THE
EXECUTION OF THIS RELEASE TO REVOKE IT AND THAT THIS RELEASE SHALL NOT BECOME
EFFECTIVE OR ENFORCEABLE UNTIL THE REVOCATION PERIOD HAS EXPIRED;


 


(h)           I HAVE SIGNED THIS GENERAL RELEASE KNOWINGLY AND
VOLUNTARILY AND WITH THE ADVICE OF ANY COUNSEL RETAINED TO ADVISE ME WITH
RESPECT TO IT; AND


 


(i)            I AGREE THAT THE PROVISIONS OF THIS GENERAL RELEASE MAY NOT
BE AMENDED, WAIVED, CHANGED OR MODIFIED EXCEPT BY AN INSTRUMENT IN WRITING
SIGNED BY AN AUTHORIZED REPRESENTATIVE OF THE COMPANY AND BY ME.


 


 


	
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Exhibit B


 


ARBITRATION
PROCEDURE


 


1              Notice of Claim.  A party asserting a Claim (the “Claimant”) shall deliver written notice to
each party against whom the Claim is asserted (collectively, the “Opposing Party”), with a copy to the persons
required to receive copies of notices under the Agreement (the “Additional Notice Parties”), specifying the
nature of the Claim and requesting a meeting to resolve same.  The Additional Notice Parties shall be given
reasonable notice of and invited and permitted to attend any such meeting.  If no resolution is reached within 10
business days after delivery of such notice, the Claimant or the Opposing Party
may, within 45 days after giving such notice, invoke the arbitration procedure
provided herein by delivering to each Opposing Party and the Additional Notice
Parties a notice of arbitration which shall specify the Claim as to which
arbitration is sought, the nature of the Claim, the basis for the Claim and the
nature and amount of any damages or other compensation or relief sought (a “Notice of Arbitration”).  Each party agrees that no punitive damages
may be sought or recovered in any arbitration, judicial proceeding or
otherwise.  Failure to file a Notice of
Arbitration within 45 days shall constitute a waiver of any right to relief for
the matters asserted in the notice of Claim. 
Any Claim shall be forever barred, and no relief may be sought therefor,
if written notice of such Claim is not made as provided above within one year of
the date such Claim accrues.


 


2              Selection of Arbitrator.  Within 20 business days after receipt of the
Notice of Arbitration, the Executive and a duly authorized representative of
PGI shall confer, whether in person, by telephone or in writing, and attempt to
agree on an arbitrator to hear and decide the Claim.  If the Executive and the Board cannot agree
on an arbitrator within ten business days, then they shall request the American
Arbitration Association (the “AAA”) in Charlotte, North Carolina to appoint an
arbitrator experienced in the area of dispute who does not have an ongoing
business relationship with any of the parties to the dispute.  If the arbitrator selected informs the
parties he cannot hear and resolve the Claim within the time-frame specified
below, the Executive and the Board shall request the appointment of another
arbitrator by the AAA subject to the same requirements.


 


3              Arbitration Procedure.  The following procedures shall govern the
conduct of any arbitration under this section. 
All procedural matters relating to the conduct of the arbitration other
than those specified below shall be discussed among counsel for the parties and
the arbitrator.  Subject to any agreement
of the parties, the arbitrator shall determine all procedural matters not
specified herein.


 


(a)           Within 30 days after the delivery
of a Notice of Arbitration, each party shall afford the other, or its counsel,
with reasonable access to documents relating directly to the issues raised in
the Notice of Arbitration.  All documents
produced and all copies thereof shall be maintained as strictly confidential,
shall be used for no purpose other than the arbitration hereunder, and shall be
returned to the producing party upon completion of the arbitration.  There shall be no other discovery except
that, if a reasonable need is shown, limited depositions may be allowed in the
discretion of the arbitrator, it being the expressed intention and agreement of
each party to have the arbitration proceedings conducted and resolved as
expeditiously, economically and fairly as reasonably practicable, and with the
maximum degree of confidentiality.


 


(b)           All written communications
regarding the proceeding sent to the arbitrator shall be sent simultaneously to
each party or its counsel, with a copy to the Additional Notice Parties.  Oral 


 


	
   

  	
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communications between any of the
parties or their counsel and the arbitrator shall be conducted only when all
parties or their counsel are present and participating in the conversation.


 


(c)           Within 20 days after selection of
the arbitrator, the Claimant shall submit to the arbitrator a copy of the
Notice of Arbitration, along with a supporting memorandum and any exhibits or
other documents supporting the Claim.


 


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


 


(e)           Within 20 days after receipt of the
Opposing Party’s response, the Claimant may submit to the arbitrator a reply to
the Opposing Party’s response, or notification that no reply is forthcoming.


 


(f)            Within 10 days after the last
submission as provided above, the arbitrator shall confer with the parties to
select the date of the hearing on the issues raised by the Claim.  Scheduling of the hearing shall be within the
sole discretion of the arbitrator, but in no event more than 30 days after the
last submission by the parties, and shall take place within 50 miles of the
corporate headquarters of PGI at a place selected by the arbitrator or such
other place as is mutually agreed.  Both
parties shall be granted substantially equal time to present evidence at the
hearing.  The hearing shall not exceed
one business day, except for good cause shown.


 


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


 


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


 


4              Costs of Arbitration.  Each party shall bear its own costs of
conducting the arbitration, and administrative fees shall be shared equally
among the parties.


 


5              Satisfaction of Award.  If any party fails to pay the amount of the
award, if any, assessed against it within 30 days after the delivery to such
party of the Final Determination, the unpaid amount shall bear interest from
the date of such delivery at the lesser of (i) prime lending rate
announced by Citibank N.A. plus three hundred basis points and (ii) the
maximum rate permitted by applicable usury laws.  In addition, such party shall promptly
reimburse the other party for any and all costs or expenses of any nature or
kind whatsoever (including attorneys’ fees) reasonably incurred in seeking to
collect such award or to enforce any Final Determination.


 


6              Confidentiality of Proceedings.  The parties hereto agree that all of the
arbitration proceedings provided for herein, including any notice of claim, the
Notice of Arbitration, the submissions of the parties, and the Final
Determination issued by the arbitrator, shall be confidential and 


 


	
   

  	
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shall not be disclosed at any time
to any person other than the parties, their representatives, the arbitrator and
the Additional Notice Parties; provided, however, that this provision shall not
prevent the party prevailing in the arbitration from submitting the Final
Determination to a court for the purpose of enforcing the award, subject to
comparable confidentiality protections if the court agrees; and further
provided that the foregoing shall not prohibit disclosure to the minimum extent
reasonably necessary to comply with (i) applicable law (or requirement
having the force of law), court order, judgment or decree, including, without
limitation, disclosures which may be required pursuant to applicable securities
laws, and (ii) the terms of contractual arrangements (such as financing
arrangements) to which PGI or any Additional Notice Party may be subject so
long as such contractual arrangements were not entered into for the primary
purpose of permitting disclosure which would otherwise be prohibited hereunder.


 


	
   

  	
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