Document:

exv10w13

Exhibit 10.13

[Final Draft]

NONQUALIFIED STOCK OPTION AGREEMENT

UNDER THE

2011 SCORPIO HOLDINGS CORPORATION STOCK INCENTIVE PLAN

          THIS AGREEMENT (the “Agreement”) by and between Scorpio Holdings Corporation, a
Delaware corporation (the “Company”), and the individual named on the Participant Master
Signature Page hereto (the “Participant”) is made as of the date set forth on such
Participant Master Signature Page.

R E C I T A L S:

          WHEREAS, the Company has adopted the Plan (as defined below), the terms of which are hereby
incorporated by reference and made a part of this Agreement; and

          WHEREAS, the Committee (as defined in the Plan) has determined that it would be in the best
interests of the Company and its stockholders to grant the Options (as defined below) provided for
herein to the Participant pursuant to the Plan and the terms set forth herein.

          NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth, the parties
agree as follows:

          1. Definitions. Whenever the following terms are used in this Agreement, they shall
have the meanings set forth below. Capitalized terms not otherwise defined herein shall have the
same meanings as in the Plan.

          (a) Cause: “Cause” shall mean “Cause” as such term may be defined in any agreement which
is an employment agreement and not a change in control severance compensation agreement, that is in
effect at the time of the Participant’s termination of Employment between the Participant and the
Company or its Subsidiaries or Affiliates, or, if
there is no such employment agreement or such term is not defined therein, “Cause” shall
mean the occurrence of one or more of the following events: (i) the indictment or conviction of, or
a plea of nolo contendre by, the Participant of either a (x) felony or (y) any crime or offense
lesser than a felony involving moral turpitude or the property of the Company or a Subsidiary or
Affiliate; (ii) a breach of the Participant’s duty of loyalty to the Company or any of its
Subsidiaries or Affiliates or any act of dishonesty or fraud with respect to the Company or any of
its Subsidiaries or Affiliates; (iii) the Participant’s willful failure to perform duties which is
not cured within 10 days following written notice or the Participant’s willful malfeasance or
misconduct which is demonstrably injurious to the Company and its Subsidiaries, (iv) the commission
by the Participant of (x) a felony, (y) a crime involving moral turpitude or (z) other act or
omission causing material harm (financial or otherwise) to the standing and reputation of the
Company and its Subsidiaries and Affiliates; (v) the Participant’s reporting to work under the
influence of alcohol or illegal drugs, the use of illegal drugs (whether or not at the workplace)
or other repeated conduct causing the Company or any of its Subsidiaries substantial public
disgrace or disrepute or economic harm; (vi) any act or omission aiding or abetting a competitor,
supplier or customer of the Company or any of its Subsidiaries to the material disadvantage or

 

 

detriment of the Company and its Subsidiaries; or (vii) breach by the Participant of the material
terms of any agreement with the Company or its Subsidiaries, including, without limitation, any
non-competition, non-solicitation or confidentiality provisions thereof. In any event, the
existence of “Cause” shall be determined by the Company, employing Subsidiary or Affiliate, and/or
Committee.

          (b) Date of Grant: The “Date of Grant” specified on the Participant Master Signature Page
hereto.

          (c) Exit Option: An option with respect to which the terms and conditions are set forth in
Section 3(c) of this Agreement.

          (d) Expiration Date: The tenth anniversary of the Date of Grant.

          (e) Fiscal Year: Each fiscal year of the Company.

          (f) Good Reason: ”Good Reason” shall mean “Good Reason” or “Constructive Termination” (or
any similar term) as such term may be defined in any agreement which is an employment agreement and
not a change in control severance compensation agreement, that is in effect at the time of the
Participant’s termination of Employment between the Participant and the Company or its Subsidiaries
or Affiliates, or, if there is no such employment agreement or such term is not defined therein,
“Good Reason” shall mean, without the Participant’s consent, (i) failure of the Company to pay
compensation or benefits to the Participant when due; (ii) any reduction of the Participant’s
annual rate of base salary (other than a reduction of Participant’s annual rate of base salary that
is part of an across-the-board reduction of the base salaries of substantially all of the Company’s
senior executives); or (iii) moving the Participant’s then-principal business location more than 75
miles; provided, however, that each of the events described in clauses (i), (ii), and (iii) shall
constitute Good Reason only if the Company fails to cure such event within 45 days after receipt
from Participant of written notice of the event which constitutes Good Reason; provided, further,
that Good Reason shall cease to exist for an event on
the 60th day following the later of its occurrence or Participant’s knowledge
thereof, unless Participant has given the Company written notice thereof prior to such date.

          (g) Merger: “Merger” shall mean the consummation of the merger contemplated by the
Agreement and Plan of Merger dated as of October 4, 2010 among Polymer Group, Inc., a Delaware
corporation, Scorpio Acquisition Corporation, Scorpio Merger Sub Corporation and MatlinPatterson
Global Opportunities Partners L.P.

          (h) Option: Collectively, the Time Option, the Performance Option, and the Exit Option
granted under this Agreement.

          (i) Performance Option: An option with respect to which the terms and conditions are set
forth in Section 3(b) of this Agreement.

          (j) Plan: The 2011 Scorpio Holdings Corporation Stock Incentive Plan, as it may be
amended or supplemented from time to time.

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          (k) Qualifying Termination: The termination of the Participant’s Employment (i) by the
Company without Cause or as a result of Participant’s Disability, (ii) by the Participant for Good
Reason or (iii) due to death of the Participant.

          (l) Shareholders Agreement: The Shareholders Agreement substantially in the form attached
hereto as Exhibit A attached hereto, as amended or supplemented from time to time in accordance
with the terms thereof.

          (m) Subscription Agreement: The Subscription Agreement substantially in the form attached
hereto as Exhibit B attached hereto, as amended or supplemented from time to time in accordance
with the terms thereof.

          (n) Time Option: An option with respect to which the terms and conditions are set forth
in Section 3(a) of this Agreement.

          (o) Vested Portion: At any time, the portion of an Option which has become vested, as
described in Section 3 of this Agreement.

          2. Grant of Options. The Company hereby grants to the Participant the right and
option to purchase, on the terms and conditions hereinafter set forth, all or any part of the
number of Shares subject to the Time Option, the Performance Option, and the Exit Option as set
forth on the Participant Master Signature Page hereto, subject to adjustment as set forth in the
Plan and this Agreement, and subject to the terms and conditions set forth in this Agreement and
the Plan. The exercise price per Share subject to the Option shall be the “Option Price” specified
on the Participant Master Signature Page hereto. The Option is intended to be a nonqualified stock
option, and is not intended to be treated as an option that complies with Section 422 of the Code.

	 	3.	 	Vesting of the Options; Expiration of Unvested Options.

          (a) Vesting of the Time Option.

          (i) In General. Subject to the Participant’s continued Employment through the
applicable vesting date, the Time Option shall vest and become exercisable with respect to
twenty percent (20%) of the Shares subject to such Time Option on each of the first five
anniversaries of the Date of Grant.

          (ii) Change in Control. Notwithstanding the foregoing, in the event of a Change
in Control during the Participant’s continued Employment the Time Option shall, to the
extent not then vested or previously forfeited or cancelled, become fully vested and
exercisable.

          (b) Vesting of the Performance Option.

          (i) In General. Subject to the Participant’s continued Employment through the
applicable vesting date, the Performance Option shall vest and become exercisable with
respect to twenty percent (20%) of the Shares subject to the Performance Option on each of
the first five anniversaries of March 31, 2011 (each such anniversary, a

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“Performance Option Vesting Date”) if, as of the last day of the Fiscal Year ending immediately prior
to the applicable Performance Option Vesting Date, the actual free cash flow for the Company
and its consolidated Subsidiaries for such Fiscal Year, calculated in accordance with
Appendix I hereto and as determined in good faith by the Committee following the completion
of the Company’s annual audit (“Actual FCF”) equals or exceeds the free cash flow
goal set forth on the Participant’s Master Signature Page hereto (the “Annual FCF
Goal”) for such Fiscal Year.

          (ii) Catch-Up. Notwithstanding the foregoing, subject to the Participant’s
continued Employment through the applicable vesting date described below, if the portion of
the Performance Option that is scheduled to vest in respect of a given Fiscal Year does not
vest because Actual FCF did not equal or exceed the Annual FCF Goal in respect of such
Fiscal Year pursuant to the terms of Section 3(b)(i) (any such Fiscal Year in respect of
which no vesting occurs, a “Missed Year”), then the portion of the Performance
Option that was eligible to vest but failed to vest due to the failure to achieve or exceed
the Annual FCF Goal in such Missed Year shall, to the extent not then vested or previously
forfeited or cancelled, nevertheless vest and become exercisable if, as of the last
day of any Fiscal Year (including the Missed Year), the cumulative actual free cash flow for
the Company and its consolidated Subsidiaries for such Fiscal Year and all prior Fiscal
Years since the first Fiscal Year specified on the Participant’s Master Signature Page,
calculated in accordance with Appendix I hereto and as determined in good faith by the
Committee following the completion of the Company’s annual audit (“Actual Cumulative
FCF”) equals or exceeds the Cumulative FCF Goal set forth on the Participant Master
Signature Page hereto (the “Cumulative FCF Goal”) in respect of such period;
provided that the Cumulative FCF Goal for the next Fiscal Year shall be increased by the sum
of (x) 10% per annum of any cumulative shortfall in Actual Cumulative FCF relative to
Cumulative FCF Goal (prior to any adjustment for the 10% per annum charge) at the end of
each Fiscal Year and (y) any prior shortfall charge (it being understood that any excess
Actual Cumulative FCF at the end of any Fiscal Year shall be used to reduce such 10% per
annum charge, if applicable).

          (iii) Change in Control. Notwithstanding the foregoing, in the event of a Change
in Control that occurs prior to March 31, 2016 (and subject to the Participant’s continued
Employment through such Change in Control), if (A) the consummation of such Change in
Control results in an Exit Vesting Date (as defined below) and (B) actual cumulative
free cash flow measured as of the Exit Vesting Date is equal to or greater than 90% of the
sum of (1) the Cumulative FCF Goal for the Performance Vesting Date immediately prior to the
Exit Vesting Date plus (2) a pro rata portion of the Annual FCF Goal for the Fiscal
Year in which the Exit Vesting Date occurred, then the portion of the Performance Option
which is not then vested and has not been previously forfeited or cancelled shall become
fully vested and exercisable. If the consummation of such Change in Control does not result
in an Exit Vesting Date, the Performance Option shall, to the extent not previously
forfeited or cancelled, remain outstanding in accordance with its terms, unless otherwise
provided by the Committee in accordance with Section 9(c) of the Plan.

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          (iv) Adjustments. The Annual FCF Goals and the Cumulative Annual FCF Goals
shall be adjusted in good faith by the Committee from time to time in accordance with
Section 3(b)(ii), and to reflect acquisitions, divestitures and other similar corporate
transactions that would affect the Annual FCF Goals and the Cumulative FCF Goals, in which
case such adjusted Annual FCF Goals and the Cumulative FCF Goals shall be binding on the
parties hereto.

          (c) Vesting of the Exit Option. Subject to the Participant’s continued Employment through
the applicable vesting date, the Exit Option shall vest on the date, if any, when the Sponsor shall
have received cash proceeds in respect of its investment in the Company’s equity securities
(excluding, for this purpose, any equity securities transferred by the Sponsor to any Person or
group of Persons on or prior to the one year anniversary of the Closing Date in connection with the
syndication of such equity securities) (i) aggregating in excess of 2.0 times the amount of its
cumulative invested capital in the Company’s equity securities and (ii) resulting in an annual
internal rate of return of at least 20% on its cumulative invested capital in the Company’s equity
securities (such date, the “Exit Vesting Date”).

          (d) Termination of Employment. Except as otherwise provided for in this Section 3(d), if
the Participant’s Employment terminates for any reason, the Option, to the extent not then vested
and exercisable, shall be immediately canceled by the Company without consideration and the Vested
Portion of an Option shall remain exercisable for the period set forth in Section 4(a).
Notwithstanding anything to the contrary in this Agreement, including, for the avoidance of doubt,
Sections 3(a), 3(b), and 3(c), in the event of a Qualifying Termination, (w) the Participant, as of
the date of such Qualifying Termination, shall be deemed vested in any portion of the Time Option
that would otherwise have vested within 12 months following such Qualifying Termination, (x) any
portion of the Time Option which remains unvested shall remain outstanding and vest if a Change in
Control occurs within 90 days following such Qualifying Termination, (y) the Exit Option shall
remain outstanding and vest if an Exit Vesting Date occurs within 12 months following such
Qualifying Termination, and (z) the portion of the Performance Option that was, immediately prior
to such Qualifying Termination, eligible to vest and become exercisable on the next Performance
Option Vesting Date shall remain outstanding and eligible to vest in accordance with its terms on such Performance Option Vesting Date
if the applicable Annual FCF Goal or Cumulative FCF Goal is achieved.

          (e) Complete Exit by Sponsor. The Exit Option, to the extent not then vested and
exercisable, shall be immediately canceled by the Company without consideration at such time as the
Sponsor shall cease to have an investment in the Company’s equity securities.

          4. Exercise of Options.

          (a) Period of Exercise. Subject to the provisions of the Plan and this Agreement, the
Participant may exercise all or any part of the Vested Portion of an Option at any time prior to
the Expiration Date. Notwithstanding the foregoing, if the Participant’s Employment terminates
prior to the Expiration Date, the Vested Portion of an Option shall remain exercisable for the
period set forth below:

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          (i) Death or Disability. If the Participant’s Employment is terminated due to
the Participant’s death or Disability, (A) the Participant may exercise the Vested Portion
of an Option that became vested on or prior to the date of termination for a period ending
on the earlier of (x) one year following such termination of Employment and (y) the
Expiration Date and (B) the Participant may exercise the Vested Portion of an Option that
became vested after the date of termination for a period ending on the earlier of (x) one
year following the date such Option became a Vested Portion and (y) the Expiration Date.

          (ii) Termination by the Company Other than for Cause, and Other than Due to Death or
Disability; Termination by the Participant for Good Reason. If (1) the Participant’s
Employment is terminated by the Company not for Cause and not due to the Participant’s death
or Disability or (2) the Participant’s Employment is terminated by the Participant for Good
Reason, (A) the Participant may exercise the Vested Portion of an Option that became vested
on or prior to the date of termination for a period ending on the earlier of (x) 90 days
following such termination of Employment and (y) the Expiration Date and (B) the Participant
may exercise the Vested Portion of an Option that became vested after the date of
termination for a period ending on the earlier of (x) 90 days following the date such Option
became a Vested Portion, and (y) the Expiration Date;

          (iii) Termination by the Participant without Good Reason. If the Participant’s
Employment is terminated by the Participant without Good Reason the Participant may exercise
the Vested Portion of an Option that became vested on or prior to the date of termination
for a period ending on the earlier of (A) 10 days following such termination of Employment
and (B) the Expiration Date; and

          (iv) Termination by the Company for Cause; Restricted Activity. If the
Participant’s Employment is terminated by the Company for Cause or the Participant violates
any provision of Section 5 of this Agreement, or any similar provision contained in any
other agreement between the Participant and the Company or any of its Affiliates,
the Vested Portion of an Option shall immediately terminate in full and cease to be
exercisable.

          (b) Method of Exercise.

          (i) Subject to Section 4(a) of this Agreement and Section 6(c) of the Plan, the Vested
Portion of an Option may be exercised by delivering to the Company at its principal office
written notice of intent to so exercise; provided that, the Option may be exercised
with respect to whole Shares only. Such notice shall specify the number of Shares for which
the Option is being exercised and shall be accompanied by payment in full of the Option
Price. The payment of the Option Price may be made at the election of the Participant (i)
in cash or its equivalent (e.g., by check or, if permitted by the Committee, a full-recourse
promissory note), (ii) to the extent permitted by the Committee, in Shares having a Fair
Market Value equal to the aggregate Option Price for the Shares being purchased and
satisfying such other requirements as may be imposed by the Committee; provided, that such
Shares have been held by the Participant for any

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period as established from time to time by the Committee in order to avoid adverse accounting treatment applying generally accepted
accounting principles, (iii) to the extent permitted by the Committee, partly in cash and
partly in such Shares, (iv) if there is a public market for the Shares at such time, to the
extent permitted by the Committee and subject to such rules as may be established by the
Committee, through the delivery of irrevocable instructions to a broker to sell Shares
obtained upon the exercise of the Option and to deliver promptly to the Company an amount
out of the proceeds of such sale equal to the aggregate option price for the Shares being
purchased, or (v) to the extent permitted by the Committee, using a net settlement mechanism
whereby the number of Shares delivered upon the exercise of the Option will be reduced by a
number of Shares that has a Fair Market Value equal to the Option Price. The Participant
shall not have any rights to dividends or other rights of a stockholder with respect to
Shares subject to an Option until the Participant has given written notice of exercise of
the Option, paid in full for such Shares and, if applicable, has satisfied any other
conditions imposed by the Committee pursuant to the Plan.

          (ii) Notwithstanding any other provision of the Plan or this Agreement to the contrary,
absent an available exemption to registration or qualification, an Option may not be
exercised prior to the completion of any registration or qualification of an Option or the
Shares under applicable state and federal securities or other laws, or under any ruling or
regulation of any governmental body or national securities exchange that the Committee shall
in its sole discretion determine to be necessary or advisable; provided, that the Company
shall use commercially reasonable efforts to take such actions as are necessary and
appropriate to register or qualify the Shares subject to the Option so it may be exercised.

          (iii) Upon the Company’s determination that an Option has been validly exercised as to
any of the Shares, the Company may issue certificates in the Participant’s name for such
Shares. However, the Company shall not be liable to the Participant for damages relating to
any delays in issuing the certificates to the Participant, any loss by
the Participant of the certificates, or any mistakes or errors in the issuance of the
certificates or in the certificates themselves.

          (iv) In the event of the Participant’s death, the Vested Portion of an Option shall
remain exercisable by the Participant’s executor or administrator, or the person or persons
to whom the Participant’s rights under this Agreement shall pass by will or by the laws of
descent and distribution as the case may be, to the extent set forth in Section 4(a) of this
Agreement. Any heir or legatee of the Participant shall take rights herein granted subject
to the terms and conditions hereof.

          (v) As a condition to the exercise of any Option evidenced by this Agreement, the
Participant shall execute the Shareholders Agreement and the Subscription Agreement
(provided that, if the Participant is already a party to the Shareholders Agreement and the
Subscription Agreement, then the Shares acquired under the Option shall automatically become
subject to such agreements without any further action).

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          5. Confidential Information; Post-Employment Obligations.

          (a)
This Agreement. The terms of this Agreement constitute confidential information,
which Participant shall not disclose to anyone other than Participant’s spouse, attorneys, tax
advisors, or as required by law. Parent and the Company may disclose the terms of this Agreement
subject to applicable law.

          (b)
Company Property. All written materials, records, data, and other documents prepared
or possessed by Participant during Participant’s Employment are the Company’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 the Company’s
property.

          (i) All information, ideas, concepts, improvements, discoveries, and inventions that
are conceived, made, developed, or acquired by Participant individually or in conjunction
with others during Participant’s Employment (whether during business hours and whether on
the Company’s premises or otherwise) which relate to the Company’s business, products, or
services are the Company’s property. Participant agrees to make prompt and full disclosure
to the Company or its subsidiaries, as the case may be, of all ideas, discoveries, trade
secrets, inventions, innovations, improvements, developments, methods of doing business,
processes, programs, designs, analyses, drawings, reports, data, software, firmware, logos
and all similar or related information (whether or not patentable and whether or not reduced
to practice) that relate to the Company’s or its subsidiaries’ actual or anticipated
business, research and development, or existing or future products or services and that are
conceived, developed, acquired, contributed to, made, or reduced to practice by Participant
(either solely or jointly with others) during Participant’s Employment and for a period of
one (1) year thereafter (collectively, “Work Product”). Any copyrightable work falling
within the definition of Work Product shall be deemed a “work made for hire” under the
copyright laws of the United States, and ownership of all rights therein shall vest in the Company or one or
more of its subsidiaries. To the extent that any Work Product is not deemed to be a “work
made for hire,” Participant hereby assigns and agrees to assign to the Company or such
subsidiary all right, title and interest, including without limitation, the intellectual
property rights that Participant may have in and to such Work Product. Participant shall
promptly perform all actions reasonably requested by the Committee (whether during or after
the employment period) to establish and confirm the Company’s or such subsidiary’s ownership
(including, without limitation, providing testimony and executing assignments, consents,
powers of attorney, and other instruments).

          (ii) At the termination of Participant’s employment with the Company for any reason,
Participant shall return all of the Company’s property to the Company.

          (c)
Confidential Information: Non-Disclosure. Participant acknowledges that the business
of the Company and its subsidiaries is highly competitive and that the Company has provided and
will provide Participant with access to Confidential Information relating to the business of the
Company and its subsidiaries. “Confidential Information” means and includes the

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Company’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 the Company’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
the Company; 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. Participant acknowledges that this Confidential Information constitutes a valuable,
special, and unique asset used by the Company or its subsidiaries in their business to obtain a
competitive advantage over their competitors. Participant further acknowledges that protection of
such Confidential Information against unauthorized disclosure and use is of critical importance to
the Company and its subsidiaries in maintaining their competitive position.

          (i) Participant 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 the Company and its subsidiaries.

          (ii) Participant agrees that Participant will not, at any time during or after
Participant’s employment with the Company, make any unauthorized disclosure of any
Confidential Information of the Company or its subsidiaries, or make any use thereof, except
in the carrying out responsibilities related to Participant’s Employment. Participant also
agrees to preserve and protect the confidentiality of third party Confidential Information
to the same extent, and on the same basis, as the Company’s Confidential Information.

          (d)
Non-Competition Obligations. Participant acknowledges that the Company is providing
Participant with access to Confidential Information. Participant’s non-competition obligations are
ancillary to the Participant’s Employment, this agreement and agreement to disclose Confidential
Information to Participant. In order to protect the Confidential Information described above, and
in consideration for Participant’s receiving access to this Confidential Information, right to
benefits upon certain terminations of Employment as provided in Section 3, and receiving other
benefits provided in this Agreement and elsewhere, the Company and Participant agree to the
following non-competition provisions:

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          (i) During Participant’s employment and during the twelve (12) month period (the
“Restricted Period”) following Participant’s date of termination of Employment for
any reason (or such longer period as Participant is eligible to receive severance payments
pursuant to any other written agreement with the Company or its Affiliates), Participant
will not, in any geographic area where the Company or its subsidiaries engage or plan to
engage in business directly or indirectly, either on Participant’s own behalf or on behalf
of any other person, association or entity:

     (A) engage in any business competing with any businesses in which the Company 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 Participant has provided for the Company 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.

          (ii) Participant understands that the foregoing restrictions may limit Participant’s
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
the Company has provided to Participant.

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

          (e)
Non-Solicitation of Customers. During Participant’s Employment and during the
Restricted Period following the termination of such Employment for any reason, Participant will not
call on, service, or solicit competing business from customers of the Company or its subsidiaries
whom the Participant, 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.

          (f)
Non-Solicitation of Employees. During Participant’s employment and during the
Restricted Period following the termination of such Employment for
any reason, Participant .

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will not, either directly or indirectly, call on, solicit, or induce any other employee or officer of
the Company or its affiliates whom Participant had contact with, knowledge of, or association with
in the course of employment with the Company to terminate his or her employment, and will not
assist any other person or entity in such a solicitation.

          6. Repayment of Proceeds. If the Participant’s Employment is terminated by the
Company for Cause or the Participant violates any provision of Section 5 of this Agreement, or any
similar provision contained in any other agreement between the Participant and the Company or any
of its Affiliates, or the Company discovers after a termination of Employment that grounds for a
termination with Cause existed at the time thereof, then Participant shall be required to pay to
the Company, within 10 business days’ of the Company’s request to the Participant therefor so long
as such request is provided to the Participant within the 18 months immediately following the
Participant’s termination of Employment (or in the case of a Restrictive Covenant Violation, 18
months from the date of the Company’s actual knowledge of such Restrictive Covenant Violation), an
amount equal to the excess, if any, of (A) the aggregate after-tax proceeds (taking into account
all amounts of tax that would be recoverable upon a claim of loss for payment of such proceeds in
the year of repayment) Participant received upon the sale or other disposition of, or distributions
in respect of, Shares acquired under any Option over (B) the aggregate price paid by Participant
for such Shares. Any reference in this Agreement to grounds existing for a termination with Cause
shall be determined without regard to any notice period, cure period or other procedural delay or
event required prior to finding of, or termination for, Cause. The foregoing remedy shall not be
exclusive.

          7. No Right to Continued Employment. Neither the Plan nor this Agreement shall be
construed as giving the Participant the right to be retained in the employ of, or in any consulting
relationship to, the Company or any Affiliate. Further, the Company or any Affiliate may at any
time dismiss the Participant or discontinue any consulting relationship, free from any liability or
any claim under the Plan or this Agreement, except as otherwise expressly provided herein.

          8. Legend on Certificates. The certificates representing the Shares purchased by
exercise of an Option shall be subject to such stop transfer orders and other restrictions as the
Committee may deem advisable under the Plan or the rules, regulations, and other requirements of
the Securities and Exchange Commission, any stock exchange upon which such Shares are listed or
quoted or market to which the Shares are admitted for trading and, any applicable federal or state
or any other applicable laws and the Company’s Certificate of Incorporation and Bylaws, and the
Committee may cause a legend or legends to be put on any such certificates to make appropriate
reference to such restrictions.

          9. Transferability. An Option may not be assigned, alienated, pledged, attached,
sold or otherwise transferred or encumbered by the Participant otherwise than by will or by the
laws of descent and distribution, and any such purported assignment, alienation, pledge,
attachment, sale, transfer or encumbrance shall be void and unenforceable against the Company or
any Affiliate; provided that the designation of a beneficiary shall not constitute an
assignment, alienation, pledge, attachment, sale, transfer or encumbrance. No such permitted
transfer of an Option to heirs or legatees of the Participant shall be effective to bind the
Company unless the Committee shall have been furnished with written notice thereof and a copy of
such evidence as

11

 

the Committee may deem necessary to establish the validity of the transfer and the
acceptance by the transferee or transferees of the terms and conditions thereof. During the
Participant’s lifetime, an Option is exercisable only by the Participant.

          10. Withholding. The Participant shall be required to pay to the Company or any
Affiliate and the Company or its Affiliates shall have the right and are authorized to withhold any
applicable withholding taxes in respect of an Option, its exercise, or any payment or transfer
under or with respect to an Option and to take such other action as may be necessary in the opinion
of the Committee to satisfy all obligations for the payment of such withholding taxes.

          11. Securities Laws. Upon the acquisition of any Shares pursuant to the exercise of
an Option, the Participant will make or enter into such written representations, warranties and
agreements as the Committee may reasonably request in order to comply with applicable securities
laws or with this Agreement.

          12. Notices. Any notice under this Agreement shall be addressed to the Company in
care of its Chief Financial Officer and a copy to the General Counsel, each copy addressed to the
principal executive office of the Company and to the Participant at the address appearing in the
personnel records of the Company for the Participant or to either party at such other address as
either party hereto may hereafter designate in writing to the other. Any such notice shall be
deemed effective upon receipt thereof by the addressee.

          13. Governing Law. This Agreement shall be governed by and construed in accordance
with the laws of the State of Delaware without regard to conflicts of laws.

          14. Option Subject to Plan, Shareholders Agreement and Subscription Agreement. By
entering into this Agreement the Participant agrees and acknowledges that the Participant has
received and read a copy of the Plan, the Shareholders Agreement and the Subscription Agreement.
The Options and the Shares received upon exercise of an Option are
subject to the Plan, the Shareholders Agreement and the Subscription Agreement. The terms and
provisions of the Plan, the Shareholders Agreement and the Subscription Agreement, as each may be
amended from time to time are hereby incorporated by reference. In the event of a conflict between
any term or provision contained herein and a term or provision of the Plan, the Shareholders
Agreement or the Subscription Agreement, the applicable terms and provisions of the Plan, the
Shareholders Agreement or the Subscription Agreement will govern and prevail. In the event of a
conflict between any term or provision of the Plan and any term or provision of the Shareholders
Agreement or the Subscription Agreement, the applicable terms and provisions of the Shareholders
Agreement or the Subscription Agreement, as applicable, will govern and prevail.

          15. Amendment. The Committee may waive any conditions or rights under, amend any
terms of, or alter, suspend, discontinue, cancel or terminate this Agreement, but no such waiver,
amendment, alteration, suspension, discontinuance, cancellation or termination shall materially
diminish the rights of the Participant hereunder without the consent of the Participant unless such
action is made in accordance with the terms of the Plan.

12

 

          16. Entire Agreement.This Agreement and the documents referred to herein or delivered
pursuant hereto which form a part hereof contain the entire understanding of the parties with
respect to the subject matter hereof and thereof, provided that if the Company or its Affiliates is
a party to one or more agreements with Executive related to the matters subject to Section 5, such
other agreements shall remain in full force and effect and continue in addition to this Agreement.
There are no restrictions, agreements, promises, representations, warranties, covenants or
undertakings with respect to the subject matter hereof other than those expressly set forth herein
and therein. This Agreement supersedes all prior agreements and understandings between the parties
with respect to such subject matter, other than as specifically provided for herein.

          17. Signature in Counterparts. This Agreement may be signed in counterparts, each of
which shall be an original, with the same effect as if the signatures thereto and hereto were upon
the same instrument.

[The remainder of this page intentionally left blank.]

* * * * *

          This Option Agreement between the Company and the
Participant named on the Participant Master Signature Page
hereto is dated and executed as of the date set forth on such
Participant Master Signature Page.

* * * * *

13

 

Appendix I

Calculation of Free Cash Flow

For the purpose of determining whether any Annual FCF Goal or Cumulative FCF Goal has been
achieved, “Free Cash Flow” shall be equal to Management EBITDA: (1) minus capital
expenditures; (2) minus capitalized IT costs and (3) minus restructuring and
integration cash payments.

The Committee shall, fairly and appropriately, adjust the calculation of Free Cash Flow to reflect,
to the extent not contemplated in establishment of the Annual FCF Goals and Cumulative FCF Goals as
of the date hereof, acquisitions, divestitures, and any changes in generally accepted accounting
principles. The Committee’s determination of such adjustment shall be based on the Company’s
accounting as set forth in its books and records and on the financial plan of the Company pursuant
to which the Annual FCF Goals and Cumulative FCF Goals were originally established.

“Management EBITDA” shall mean net income attributable to Polymer Group, Inc. (“Net
Income”), as disclosed in accordance with GAAP or IFRS as applicable:

     (a) increased by the sum of the following amounts, to the extent decreasing Net Income,
without duplication:

     (i) provision for taxes based on income or profits or capital gains, including,
without limitation, state, franchise and foreign withholding taxes; plus

     (ii) Consolidated Interest Expense as defined in the Credit Agreement;
plus

     (iii) depreciation and amortization expense; plus

     (iv) non-cash charges relating to impairment of assets; plus

     (v) non-cash compensation expenses; plus

     (vi) restructuring and integration costs; plus

     (vii) management, monitoring and advisory fees (including termination fees) and
related indemnities and expenses paid or accrued under the Sponsor Management
Agreements; plus

     (viii) fees and expenses directly related to evaluation of potential
acquisitions, mergers or consolidation; plus

     (ix) non-cash litigation charges to reserve for future liabilities;
plus

     (x) factoring fees; plus

14

 

     (xi) lease expense associated with the GE Lease as defined in the Credit
Agreement;

     (b) decreased by non-cash gains, to the extent increasing Net Income, without
duplication, excluding reversals of an accrual or reserve for a potential cash item that
previously reduced Net Income;

     (c) increased or decreased by, to the extent decreasing or increasing Net Income,
without duplication:

     (i) net unrealized gains or losses (after any offset) resulting in such period
from hedging obligations and the application of ASC 815 Derivatives and Hedging;

     (ii) net non-operating gains or losses attributable to currency translation and
financing transactions;

     (iii) net gains or losses attributable to asset dispositions;

     (iv) increases or decreases resulting from adjustments to the tax indemnity
asset;

     (v) increases or decreases resulting from the impact of purchase accounting
adjustments; and

     (vi) other items included in special charges, net or other non-operating items
included in other expense (income), as reported on the Company’s Consolidated
Statements of Operations in public filings;

     (d) decreased by, to the extent increasing Net Income, without duplication, any net
licensing profits earned by the Company related to its nanotechnology IP or related
technologies; and

     (e) increased for the 2011 fiscal year only, to the extent decreasing Net Income, to
account for the flood at the Cali, Columbia facility, the amount equal to the difference
between $21.8 mm and the actual EBITDA of the Cali, Columbia facility for the 2011 fiscal
year.

Capitalized terms used but not defined herein shall have the meaning ascribed to such terms in the
credit agreement entered into by the Company, Scorpio Merger Sub Corporation, and the lenders
identified therein, dated on or about January 28, 2010.

15

 

Exhibit A

Shareholders Agreement

(Distributed Separately)

 

 

Exhibit B

Subscription Agreement

(Distributed Separately)exv10w14

Exhibit
10.14

AMENDED AND RESTATED

POLYMER GROUP, INC.

SHORT-TERM INCENTIVE COMPENSATION PLAN

1.0 Establishment, Objectives, and Duration

     1.1 Establishment of the Plan. Polymer Group, Inc., a Delaware corporation (“PGI”
or the “Company”), hereby establishes an incentive compensation plan to be known as the
“Polymer Group, Inc. Short-Term Incentive Compensation Plan” (the “Plan”), as set forth
herein and as it may be amended from time to time. The Plan shall become effective as of the date
the Company’s shareholders first approve the Plan (the “Effective Date”), and shall remain
in effect as provided in Section 1.3 hereof.

     1.2 Plan Objectives.

     1.2.1 To provide annual incentive compensation to key employees of the Company and its
operating units by directly linking financial rewards to corporate performance and increases in
shareholder value.

     1.2.2 To provide competitive levels of compensation to enable the Company to attract and
retain employees who are expected to be able to exert a positive impact on the Company’s
financial results.

     1.2.3 To encourage global teamwork and cooperation in the achievement of Company goals.

     1.3 Duration of the Plan. The Plan shall commence on the Effective Date and shall remain
in effect, subject to the right of the Committee to amend or terminate the Plan at any time
pursuant to Article 10 hereof.

2.0 Definitions

     2.1 “Award” means an award described in Article 5 hereof.

     2.2 “Award Pool” means, with respect to a Plan Year, an amount determined by the
Board.

     2.3 “Board” or “Board of Directors” means the Board of Directors of the Company.

     2.4 “Cause” means the occurrence of one or more of the following events: (i)
conviction of a felony or any crime or offense lesser than a felony involving the property of the
Company or any of its Subsidiaries; or (ii) a breach of Employee’s duty of loyalty to the Company
or any of its Subsidiaries; or (iii) the commission by Employee of a felony, a crime involving
moral turpitude or other act or omission causing material harm to the standing and reputation of
the Company and its Subsidiaries; or (iv) reporting to work under the influence of alcohol or
illegal drugs, the use of illegal drugs (whether or not at the workplace) or other repeated conduct
causing the Company or any of its Subsidiaries substantial public disgrace or disrepute or economic
harm; or (v) any act or omission aiding or abetting a competitor, supplier or customer of the
Company or any of its Subsidiaries to the material disadvantage or detriment of the Company and its
Subsidiaries.

     2.5 “Change of Control” means (i) the sale or disposition, in one or a series of
related transactions, of all or substantially all of the assets of the Company and its
Subsidiaries, as a whole, to any Person or Group other than the Sponsor or (ii) any Person or
Group, other than the Sponsor, is or becomes the Beneficial Owner, directly or indirectly, of more
than 50% of the total voting power of the voting equity of the Company, including by way of merger,
consolidation or otherwise and the Sponsor ceases to directly or indirectly control the Board.

     2.6 “Code” means the Internal Revenue Code of 1986, as amended from time to time.

     2.7 “Committee” means the Compensation Committee of the Board or any other committee
appointed by the Board to administer the Plan and Awards to Participants hereunder, as specified in
Article 3 hereof, or if no such committee has been so appointed, the Board.

     2.8 “Company” shall have the meaning ascribed to such term in Section 1.1 hereof.

     2.9 “Director” means any individual who is a member of the Board.

 

 

     2.10 “Effective Date” shall have the meaning ascribed to such term in Section 1.1
hereof.

     2.11 “Employee” means any employee of the Company or of a Subsidiary.

     2.12 “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to
time, or any successor statute.

     2.13 “Group” means a “group” as such term is used for purposes of Section 13(d) or
14(d) of the Exchange Act.

     2.14 “Named Executive Officers” means the Chief Executive Officer and the four most
highly compensated executive officers of the Company other than the Chief Executive Officer as
determined by the Company for purposes of Item 402 of Regulation SK.

     2.15 “Participant” means a key Employee who has been selected to receive an Award or
who holds an outstanding Award.

     2.16 “Payment Date” shall have the meaning ascribed to such term in Section 5.4.4
hereof.

     2.17 “Performance-Based Exception” means the performance-based exception from the tax
deductibility limitation imposed by Code Section 162(m), as set forth in Code Section 162(m)(4)(C).

     2.18 “Person” means a “person”, as such term is used for purposes of the Exchange Act.

     2.19 “Plan” shall have the meaning ascribed to such term in Section 1.1 hereof.

     2.20 “Plan Year” means the Company’s fiscal year.

     2.21 “Public Trading Date” means the first date upon which shares of common stock of
the Company are listed (or approved for listing) upon notice of issuance on any national securities
exchange.

     2. 22 “Sponsor” means Blackstone Capital Partners V L.P. and its Affiliates.

     2.23 “Subsidiary” means (a) a corporation, partnership, joint venture, or other entity
in which the Company has an ownership interest of at least fifty percent (50%), and (b) a
corporation, partnership, joint venture, or other entity in which the Company holds an ownership
interest, where the ownership interest is less than fifty percent (50%), but which, in the
discretion of the Committee, is treated as a Subsidiary for purposes of the Plan.

3.0 Administration

     3.1 General. Except as otherwise determined by the Board in its discretion, the Plan shall
be administered by the Board, which may delegate its duties and powers in whole or in part to the
Committee, provided that from and after the Public Trading Date the Plan shall be administered by
the Committee, which shall consist exclusively of two (2) or more non-employee directors within the
meaning of the rules promulgated by the Securities and Exchange Commission under Section 16 of the
Exchange Act who also qualify as outside directors within the meaning of Section 162(m) of the Code
and the related regulations under the Code. The members of the Committee, if any, shall be
appointed from time to time by, and shall serve at the discretion of, the Board.

     3.2 Authority of the Committee. Except as limited by law or by the Certificate of
Incorporation or Bylaws of the Company, and subject to the provisions hereof, the Committee in its
discretion shall select the key Employees who participate in the Plan; determine the sizes and
types of Awards; determine the terms and conditions of Awards in a manner consistent with the Plan;
construe and interpret the Plan and any Award, document, or instrument issued under the Plan;
establish, amend, or waive rules and regulations for the Plan’s administration; and (subject to the
provisions of Article 10 hereof) amend the terms and conditions of any outstanding Award as
provided in the Plan. Further, the Committee shall make all other determinations that may be
necessary or advisable for the administration of the Plan. Subject to Sections 4.3 and 5.1 hereof,
the Committee shall have the authority to delegate administrative duties to officers of the
Company.

     3.3 Decisions Binding. All determinations and decisions made by the Committee pursuant to
the provisions of the Plan and all related orders and resolutions of the Committee shall be final,
conclusive and

 

 

binding on all persons, including the Company, its shareholders, Directors, Employees,
Participants, and their estates and beneficiaries.

     3.4 Performance-Based Awards. For purposes of the Plan, following the Public Trading Date,
it shall be presumed that all Awards are intended to qualify for the Performance-Based Exception.

4.0 Eligibility and Participation

     4.1 Eligibility. All Employees are eligible to participate in the Plan.

     4.2 Actual Participation. Subject to the provisions of the Plan, the Committee may, from
time to time, select from all eligible Employees those to whom awards shall be granted and shall
determine the nature and amount of each Award. In general, officers of the Company, division
general managers, and certain other key individuals may actually participate in the Plan. However,
actual participation will depend upon the contribution and impact each eligible Employee has on the
overall success of the Company, as approved by the Committee.

     4.3 Nomination and Approval. The Committee shall determine the Named Executive Officers’
eligibility and participation under the Plan. For eligible Employees other than the Named Executive
Officers, operating/business unit executives will nominate Employees to participate in the Plan.
The Committee may delegate to the Chief Executive Officer the authority to approve eligibility and
participation for individuals other than the Named Executive Officers. Selection normally will take
place, and will be communicated to each Participant, within 90 days of the beginning of the Plan
Year.

5.0 Awards.

     5.1 Grant of Awards. All Awards under the Plan shall be granted upon terms approved by the
Committee. However, no Award shall be inconsistent with the terms of the Plan or fail to satisfy
the requirements of applicable law. Each Award shall relate to a designated Plan Year. The
Committee may delegate to the Chief Executive Officer the authority determine Awards for
individuals, provided that after the Public Trading Date, the Committee shall determine Awards for
the Named Executive Officers.

     5.2 Award Pool Limitation. The sum of the Awards for a single Plan Year shall not exceed
the amount in the Award Pool for that Plan Year.

     5.3 Participant Target Awards. Each Participant will have an established target Award
expressed as a percentage of his/her fiscal year base salary earned. A Participant may earn an
Award of more or less than the target down to a low of zero and up to a maximum of two times
target. The total amount of the maximum Awards for any Plan Year shall not exceed one hundred
percent (100%) of the Award Pool for that Plan Year.

     5.4 Payment.

     5.4.1 Subject to Article 6 hereof, a Participant shall have no right to receive an Award
payment for a Plan Year unless the Participant is employed by the Company or a Subsidiary at
all times during the Plan Year and on the date of payment. In addition, only those Participants
who are Employees as of the Payment Date shall be eligible to receive an Award.

     5.4.2 Notwithstanding the achievement of the targets contained in any Award, the
Committee may, in its discretion, authorize payment to a Participant of less than the
Participant’s otherwise earned Award and may provide that a Participant shall not receive any
payment with respect to an otherwise earned Award. In exercising its discretion, the Committee
shall take into account such factors as it considers appropriate. The Committee’s decision
shall be final and binding upon any person claiming a right to a payment under the Plan.

     5.4.3 All Awards will be paid in cash; provided, the Committee may offer Participants
the opportunity to voluntarily accept alternative forms of payment, including without
limitation, equity-based awards granted under the 2011 Scorpio Holdings Corporation Stock
Incentive Plan.

     5.4.4 Payments shall be made on a date prescribed by the Committee following an audit of
the Company’s year end financial results (the “Payment Date”).

 

 

     5.4.5 Awards made under the Plan may be includable in the Participant’s compensation for
purposes of the Company’s 401(k) retirement savings plan(s) subject to overall plan rules and
regulatory limits.

     5.4.6 The Company and its Subsidiaries shall have the power and the right to deduct or
withhold, or to require a Participant to remit to the Company or to a Subsidiary, an amount
that the Company or a Subsidiary reasonably determines to be required to comply with federal,
state, local, or foreign tax withholding requirements.

6.0 Changes in Status.

     6.1 New Hires and Transfers. Participants newly hired during the Plan Year and
Participants transferred, promoted, or reassigned during the Plan Year to a position qualifying for
participation or to a position resulting in a change in the level of participation may receive a
pro-rata Award based on the percentage of the Plan Year the employee is in each qualifying
position. In such a circumstance, the Employee will be notified by the Committee at the time of
hire or reassignment of the eligibility for potentially receiving an Award.

     6.2 Resignation. An employee who resigns during the Plan Year or subsequent to the end of
the Plan Year but prior to the Payment Date shall not be eligible for an Award.

     6.3 Death, Disability, or Retirement. Participants whose employment terminates subsequent
to the end of a Plan Year shall be eligible for the entire Award earned in the completed Plan Year
if the termination was due to death, disability, or retirement.

     6.4 Leave of Absence. A Participant whose status as an active Employee is changed during a
Plan Year as a result of an approved leave of absence may be eligible for a pro-rata Award based on
the number of full months of service he or she worked in the year that the leave of absence
occurred.

     6.5 Discharge for Cause. A Participant discharged for Cause during the Plan Year or
subsequent to the Plan Year but prior to the Payment Date shall not be eligible for an Award.

7.0 Beneficiary Designation.

     Each Participant may name any beneficiary or beneficiaries (who may be named contingently or
successively) to whom any benefit under this Plan is to be paid in case of the Participant’s death.
Each such designation shall revoke all prior designations by the Participant, shall be in the form
prescribed by the Company, and shall be effective only when filed by the Participant in writing
with the Company during his or her lifetime. In the absence of any such designation, benefits
remaining unpaid at the Participant’s death shall be paid to the Participant’s estate.

8.0 No Right to Employment or Participation.

     The Plan shall not interfere with or limit in any way the right of the Company or of any
Subsidiary to terminate any Participant’s employment at any time, and the Plan shall not confer
upon any Participant the right to continue in the employ of the Company or of any Subsidiary.
Further, no Employee shall have the right to be selected to receive an Award or, having been so
selected, to be selected to receive a future Award.

9.0 Change of Control.

     9.1 Outstanding Awards. Notwithstanding any contrary terms, conditions, or provisions of
the Plan or any Award, upon a Change in Control, all then-outstanding Awards (determined on the
basis of the assumption that the relevant performance targets have been achieved) under the Plan
shall become immediately nonforfeitable and payable at the normal payment date established by the
Committee before the Change in Control and any provision requiring a Participant to be employed on
the Payment Date in order to receive an Award shall be waived, other than that related to a
termination for Cause. If the Participant’s Award is based on a performance percentage, his or her
Award for the Plan Year in which a Change in Control occurs shall be determined by using a
performance percentage that is not less than the Participant’s target percentage under the Plan for
that Plan Year. If the Participant’s Award is based on a performance percentage, his or her Award
for any earlier Plan Year for which the Participant’s Award has not been finally determined at the
time the Change in Control occurs, shall be determined by using a

 

 

performance percentage that is not less than the Participant’s target percentage under the
Plan for that earlier Plan Year. If the Participant is involuntarily terminated without Cause
following a Change of Control, he or she shall be entitled to receive a pro-rated Award under this
Section 9.1 based on the number of full months of service he or she worked in the year that the
Change in Control occurred.

     9.2 Modification of Awards. Upon the occurrence of, or after, a Change in Control, the
Committee may not under any circumstances change any determination of the basis on which any
previously granted Awards shall be measured or paid or change any other terms, conditions or
provisions affecting any previously granted Awards, if the change would reduce or adversely affect
the previously granted Award or the Participant’s rights thereto.

     9.3 Award Terms and Conditions. Without limiting the provisions of Section 9.1 and 9.2
hereof, the Committee may, in its discretion, include in an Award provisions that the Committee
considers to be appropriate to assure fair and equitable treatment of the Participant or a
beneficiary in the event of a Change in Control, including, but not limited to, provisions that:
(i) accelerate the time period for purposes of vesting in, or realizing gain from, any Award and
(ii) make adjustments or modifications to an Award that the Committee deems appropriate to maintain
and protect the rights and interests of the Participant or a beneficiary following a Change in
Control. Any such action by the Committee shall be conclusive and binding on the Company,
Participants, beneficiaries, and all other parties.

10.0 Amendment, Modification, and Termination.

     10.1 Amendment, Modification, and Termination. Subject to the other terms of the Plan,
including Article 9, the Committee may at any time and from time to time, alter, amend, suspend, or
terminate the Plan in whole or in part; provided that unless the Committee specifically provides
otherwise, any revision or amendment that would cause the Plan to fail to comply with any
requirement of applicable law, regulation, or rule if such amendment were not approved by the
shareholders of the Company shall not be effective unless and until shareholder approval is
obtained.

     10.2 Certain Unusual or Non-Recurring Events. The Committee may make adjustments in the
terms and conditions of, and the criteria included in, Awards in recognition of unusual or
nonrecurring events affecting the Company or the financial statements of the Company, or of changes
in applicable laws, regulations, or accounting principles, whenever the Committee determines that
such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the Plan; provided that following the Public
Trading Date, the Committee shall not be authorized to adjust an Award that the Committee intends
to qualify for the Performance-Based Exception if such adjustment (or the authority to make such
adjustment) would prevent the Award from qualifying for the Performance-Based Exception.

     10.3 Awards Previously Granted. Notwithstanding any other provision of the Plan to the
contrary, no termination, amendment, or modification of the Plan shall cause any previously granted
Awards to be forfeited. After the termination of the Plan, any previously granted Award shall
remain in effect and shall continue to be governed by the terms of the Plan and the Award.

11.0 Successors.

     All obligations of the Company under the Plan with respect to Awards granted hereunder shall
be binding on any successor to the Company, whether the existence of such successor is the result
of a direct or indirect purchase, merger, consolidation, or otherwise, of all or substantially all
of the business and/or assets of the Company.

12.0 Miscellaneous

     12.1 Expenses of the Plan. The expenses of administering this Plan shall be borne by the
Company.

     12.2 Severability. If any provision of the Plan shall be held illegal or invalid for any
reason, such illegality or invalidity shall not affect the remaining parts of the Plan, and the
Plan shall be construed and enforced as if the illegal or invalid provision had not been included.

     12.3 Requirements of Law. The granting of Awards under the Plan shall be subject to all
applicable laws, rules, and regulations, and to such approvals by any governmental agencies as may
be required.

     12.4 Governing Law. The Plan and all Awards shall be construed in accordance with and
governed by the laws of the State of Delaware (without regard to the legislative or judicial
conflict of laws rules of any state), except to the extent superseded by federal law.

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