Document:

Ex.10.1 - HagenRetirementAgreement

Execution Version
RETIREMENT AGREEMENT  
(Veronica M. Hagen)
This Retirement Agreement (“Agreement”), dated as of June 17, 2013, is entered into by and among Veronica M. Hagen (“Hagen”), Polymer Group, Inc., a Delaware corporation (“PGI”), Scorpio Holdings Corporation, a Delaware corporation (“Parent” and together with PGI and its subsidiaries, the “Company”).  PGI and Parent, together with each of its successors, subsidiaries, officers, directors and each holder, directly or indirectly (as of the date of this Agreement) who owns at least ten percent (10%) of the outstanding common stock of Parent are herein referred to as the “Beneficiaries”.  
WHEREAS, Hagen and Parent entered into an Executive Employment Agreement, dated as of October 4, 2010 (the “Employment Agreement”), and Hagen, Parent and PGI entered into an Assignment and Assumption Agreement, dated as of January 28, 2011;
WHEREAS, the Company and Hagen have agreed that Hagen will accept a change in her employment status from Chief Executive Officer (“CEO”) of PGI to Employee of PGI effective as of July 15, 2013 (or, if earlier,  the date on which PGI’s new CEO commences employment); and
WHEREAS, the Company and Hagen have agreed that Hagen’s employment with PGI will terminate effective August 31, 2013, or such earlier date as PGI may elect (any such date, the “Retirement Date”) under the circumstances described in Section 2.1(b) of the Employment Agreement; and 
WHEREAS, Hagen currently holds 3,069.8 shares of common stock of Parent (the “Shares”) and options to purchase 4,521.75 Shares of Parent pursuant to that certain Management Equity Subscription Agreement with Parent (the “MESA”) dated January 25, 2011, that certain Nonqualified Stock Option Agreement with Parent (the “Option Agreement”) dated January 25, 2011, that certain 2011 Scorpio Holdings Corporation Stock Incentive Plan dated January 25, 2011 (the “2011 Plan”) and that certain Scorpio Holdings Corporation Participant Master Signature Page dated January 25, 2011 (the “Master Signature Page”), as applicable.
NOW, THEREFORE, in consideration of the recitals, promises, and other good and valuable consideration specified herein, the receipt and sufficiency of which is hereby acknowledged, Hagen, PGI and Parent, on behalf of all the Beneficiaries, agree as follows.  All capitalized terms used but not defined herein shall have the meanings assigned to such terms in the Employment Agreement.
		
	1.
	PAYMENTS AND BENEFITS

1.1    Contingent Payments.  Subject in each case to the expiration of the Revocation Period (as defined in Section 2.2 below), PGI will pay to Hagen the amounts specified in this Section 1.1 or provide the benefits specified in Section 1.1 in consideration for Hagen entering into this Agreement, specifically including the General Release (as described in Section 2 below) and other restrictive covenants identified herein: 
(a)    Cash Severance.  PGI will pay to Hagen beginning on the first regularly scheduled payroll payment date of PGI following the Retirement Date, $2,559,000, which amount represents the product of 1.5 and (y) the sum of (i) Hagen’s Base Compensation and (ii) Hagen’s target Annual Bonus (which amount shall be 100% of Base Compensation, as described in Section 

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2.1(b) of the Employment Agreement), payable in substantially equal installments, in accordance with PGI’s normal payroll practices, during the 18-month period following the Retirement Date.  
(b)    Cash Bonus.  PGI will pay to Hagen, in a lump sum when annual bonuses generally are paid to other senior executives of PGI, Hagen’s Annual Bonus for fiscal year 2013 (i.e. target of 100% of Base Compensation and maximum of 200% of Base Compensation), as described in Section 1.2(b) of the Employment Agreement, and as though Hagen had continued to participate as an executive in the annual Bonus Plan of PGI through such payment date;  
(c)    Special Bonus.  PGI will pay to Hagen, in a lump sum payable no later than March 15, 2014, an amount equal to $266,656, contingent upon Hagen’s willingness to continue serving on the board of directors of Parent (the “Board”) through December 31, 2013; and
(d)    Medical Coverage.  PGI shall, at its expense, continue on behalf of Hagen and her dependents and beneficiaries, the medical, dental and hospitalization benefits provided to Hagen immediately prior to the Retirement Date for a period of 18 months. The coverage and benefits (including deductibles and costs) provided in this Section 1.1(d) shall be no less favorable to Hagen and her dependents 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 Hagen 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 provide Hagen hereunder so long as the aggregate coverage and benefits of the combined benefit plans is no less favorable to Hagen than the coverages and benefits required to be provided hereunder.
(e)    Equity.  
		
	(i)
	Time Options.  602.90 of the Time Options (as such term is defined in the Option Agreement) held by Hagen will be forfeited upon the Retirement Date.  904.35 of the Time Options held by Hagen shall be vested as of the Retirement Date.  Notwithstanding Section 4 of the Option Agreement, such vested Time Options shall expire on the earlier of (x) the Expiration Date (as such term is defined in the Option Agreement) or (y) such earlier date that Hagen (1) engages in “Competitive Activity” (as defined in the MESA) or (2) otherwise breaches any restrictive covenant in Article III of the Employment Agreement, Section 5 of the Option Agreement, Section 4.2(iv)-(v) of the MESA or Article IV herein.  

		
	(ii)
	Performance Options.  All 1,507.25 of the Performance Options (as such term is defined in the Option Agreement) held by Hagen will be forfeited upon the Retirement Date.  

		
	(iii)
	Exit Options.  602.90 of the Exit Options (as such term is defined in the Option Agreement) held by Hagen will be forfeited upon the Retirement Date.  Notwithstanding Section 4 of the Option Agreement, (A) the remaining 904.35 of the Exit Options held by Hagen shall remain eligible to vest if the applicable vesting conditions are satisfied prior to the expiration of the Exit Option and (B) such Exit Options shall expire on the earlier of (x) the Expiration Date (as such term is defined in the Option Agreement) or (y) such earlier date that Hagen (1) engages in “Competitive Activity” (as defined in the MESA) or (2) otherwise 

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breaches any restrictive covenant in Article III of the Employment Agreement, Section 5 of the Option Agreement, Section 4.2(iv)-(v) of the MESA or Article IV herein.  
		
	(iv)
	Net Settlement.  Upon any exercise of the vested portion of the Time Options or Exit Options after the Retirement Date, Hagen may elect to pay the “option price” and any mandatory tax withholding due upon the exercise therefor using a net settlement mechanism whereby the number of Shares delivered upon the exercise of the Options will be reduced by a number of Shares that has a Fair Market Value (as defined in the MESA and as modified by the Master Signature Page) equal to the amount of such option price and tax withholding.

		
	(v)
	Call Rights.  Each of Parent and Sponsor (as such term is defined in the MESA) shall waive its Call Option (as such term is defined in the MESA) under Section 4.2 of the MESA, unless Hagen (x) engages in “Competitive Activity” as defined in Section 1.10 of the MESA or (y) otherwise breaches any restrictive covenant in Article III of the Employment Agreement, Section 5 of the Option Agreement, Section 4.2(iv)-(v) of the MESA or Article IV herein, in which case the Call Option specified in Section 4.2 shall continue to apply.

(f)    Attorneys Fees.  PGI shall pay Hagen’s reasonable professional fees in connection with the negotiation, documentation, and implementation of this Agreement and any related agreements, up to an amount equal to $5,000.
1.2    Continued Services.
(a)    Employment Prior to Retirement Date.  PGI will continue to employ Hagen as CEO of PGI, and Hagen shall continue to perform all duties and responsibilities Hagen has been performing as CEO of PGI, through July 15, 2013 (or, if earlier,  the date on which PGI’s new CEO commences employment).  PGI will employ Hagen as an Employee from July 15, 2013 (or, if earlier,  the date on which PGI’s new CEO commences employment) through the Retirement Date.  With respect to compensation for Hagen’s services as an Employee of PGI, PGI shall pay to Hagen a base salary at the rate of $16,404 per week (the “Employee Base Salary”) beginning on the date Hagen commences employment as an Employee of PGI and ending on the Retirement Date.  Such Employee Base Salary shall be payable in accordance with the normal payroll practices of PGI (which will include the withholding of applicable taxes).
(b)    Board Services
1.3    Tax Withholding.  PGI may withhold from any amounts payable in cash under this Agreement such Federal, state and local income, employment and other taxes as may be required to be withheld in respect of any payment and/or any benefit provided for under this Agreement pursuant to any applicable law or regulation.
1.4    Full Satisfaction of Potential Claims.  Hagen hereby acknowledges and agrees that her receipt and satisfaction of all payments and benefits provided in this Section 1.1 of this Agreement will constitute full and final payment, accord and satisfaction of any and all potential claims described in the General Release against PGI and the Beneficiaries (subject to the terms and limitations in the General Release).  

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	2.
	RELEASE; REPRESENTATIONS

2.1    General Release.  For and in consideration of the payment of the amounts and the provision of the benefits described in Section 1 of this Agreement, Hagen hereby agrees to execute a release of all claims against the Beneficiaries in the form attached as Exhibit A hereto (the “General Release”).  
2.2    Hagen’s Representations and Warranties.  Hagen represents that she has read carefully and fully understands the terms of this Agreement, and that Hagen has been advised to consult with an attorney and has availed herself of the opportunity to consult with an attorney prior to signing this Agreement.  Hagen acknowledges and agrees that she is executing this Agreement willingly, voluntarily and knowingly, of her own free will, in exchange for the payments and benefits described in Section 1 of this Agreement, and that she has not relied on any representations, promises or agreements of any kind made to her in connection with her decision to accept the terms of this Agreement, other than those set forth in this Agreement.  Hagen further acknowledges, understands, and agrees that as of the Retirement Date her employment with PGI terminated, that the provisions of Section 1 of this Agreement are in lieu of any and all payments and benefits to which Hagen may otherwise be entitled to receive pursuant to the Employment Agreement, that Hagen will not be reemployed by PGI, and that Hagen will not apply for or otherwise seek employment with PGI or any of its parents, companies, subsidiaries, divisions or affiliates.  Hagen understands that, except as otherwise expressly provided for under this Agreement, she will not receive any payments or benefits under this Agreement (other than under Section 1.2) until the seven (7) day revocation period provided for under the General Release has passed, and then, only if she has not revoked the General Release (such period during which no such revocation has occurred, the “Revocation Period”).
		
	3.
	WAIVER OF JURY TRIAL

3.1    Waiver of Jury Trial.  TO THE FULLEST EXTENT PERMITTED BY LAW, EACH OF THE PARTIES HERETO HEREBY WAIVES THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THE TRANSACTIONS CONTEMPLATED HEREIN.  Each of the parties hereto also waives any bond or surety or security upon such bond, which might, but for this waiver, be required of any of the other parties. The scope of this waiver is intended to be all‐encompassing of any and all disputes that may be filed in any court and that relate to the subject matter of this Agreement or the General Release, including, without limitation, contract claims, tort claims, breach of duty claims, and all other common law and statutory claims.  Each of the parties hereto acknowledges that this waiver is a material inducement to enter into a business relationship, that each has already relied on the waiver in entering into this Agreement, and that each will continue to rely on the waiver in their related future dealings.  Each of the parties hereto further warrants and represents that each has reviewed this waiver with her or its legal counsel and that each knowingly and voluntarily waives her or its jury trial rights following consultation with legal counsel.  This waiver is irrevocable, meaning that it may not be modified either orally or in writing, and the waiver shall apply to any subsequent amendments, renewals, supplements or modifications to this Agreement.  In the event of litigation, this Agreement may be filed as a written consent to a trial by the court.
		
	4.
	CONTINUING EFFECTIVENESS OF RESTRICTIVE COVENANTS

4.1    Mutual Non-Disparagement.  Hagen shall refrain, both during and after her employment, from making any oral or written statements to third parties about Parent, PGI, Blackstone, any of their respective subsidiaries or affiliates, or any of such entities’ officers, employees, agents, or representatives that are slanderous, libelous, or defamatory; or that disclose private or confidential 

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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; or that are intended to, or reasonably likely to, disparage them.  PGI, Parent, and Blackstone shall refrain, both during and after Hagen’s employment, from making any oral or written statements to third parties about Hagen 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 place her in a false light before the public; or that are intended to, or reasonably likely to, disparage her, provided, that any actions by an employee of PGI, Parent or Blackstone who is not an officer or director of either PGI, Parent or Blackstone without the approval of the Board shall not constitute a violation of the foregoing. PGI, Parent and Blackstone shall be entitled to make statements in the ordinary course of their business or as is reasonably necessary to comply with applicable law (including applicable securities and disclosure requirements).  
4.2    Continuation of Restrictive Covenants and Indemnification; Separate Liability.  Hagen agrees and acknowledges that, except as may be expressly otherwise agreed by the parties hereto in writing, the restrictive covenants set forth in Article III of the Employment Agreement, Section 5 of the Option Agreement, and Section 4.2(iv)-(v) of the MESA shall continue in full force and effect following the Retirement Date, pursuant to their terms, except that the time periods for which the covenants in Article III of the Employment Agreement, Section 5 of the Option Agreement, and Section 4.2(iv)-(v) of the MESA shall continue are hereby amended such that such restrictions shall continue for the longer of (a) the periods specified in Article III of the Employment Agreement, Section 5 of the Option Agreement, and Section 4.2(iv)-(v) of the MESA, respectively, and (b)  the date Hagen’s service as a member of the Board terminates (for any reason, including, for the avoidance of doubt, her voluntary withdrawal or her removal by Parent PGI with or without Cause).  Hagen further agrees and understands that her obligations set forth in Article IV of this Agreement (and the restrictive covenants set forth in Article III of the Employment Agreement, Section 5 of the Option Agreement, and Section 4.2(iv)-(v) of the MESA, as modified hereby) are separate from any other provisions in this Agreement and that any breach of those provisions (or any of the restrictive covenants of the Employment Agreement, as modified hereby) may be treated by PGI and the Beneficiaries as a breach of this covenant for which Hagen may be separately liable, and for which PGI may seek any remedies to which it is entitled as set forth in Article III of the Employment Agreement, Section 5 of the Option Agreement, or Section 4.2(iv)-(v) of the MESA (each, as modified hereby) or otherwise at law or in equity (and that, in addition to any other remedy, Hagen shall forfeit and/or return all amounts and benefits paid or payable pursuant to Sections 1.1, 1.2 and 1.3 if Hagen breaches her obligations set forth in Article IV of this Agreement (or the restrictive covenants set forth in Article III of the Employment Agreement, Section 5 of the Option Agreement, or Section 4.2(iv)-(v) of the MESA, as modified hereby).  
		
	5.
	GOVERNING LAW; RESOLUTION OF DISPUTES

5.1    Governing Law.  
This Agreement and the General Release shall each be governed and interpreted in accordance with and enforced in all respects pursuant to the laws of the State of North Carolina, irrespective of the choice of law rules of that or any other jurisdiction that direct the application of the laws of any jurisdiction other than the State of North Carolina, which is the place of domicile of PGI.
5.2    Resolution of Disputes
Except with respect to disputes or claims under Article 3 or Section 4.1 of the Employment Agreement or Article IV of this Agreement (which may be pursued in any court of competent jurisdiction 

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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 to the Employment Agreement 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 Hagen by Parent, PGI and their 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 to the Employment Agreement). 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.  

		
	6.
	SEVERABILITY

If any provision of this Agreement is determined to be invalid or unenforceable, in whole or in part, this determination will not affect any other provision of this Agreement or the remaining portion of a partially invalid provision, which shall remain in force, and the provision in question shall be modified by the court so as to be rendered enforceable.
		
	7.
	CONSTRUCTION

Each party and its counsel have reviewed this Agreement and the General Release and have been provided the opportunity to review this Agreement and the General Release and accordingly, the normal rule of construction to the effect that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement or the General Release.  Instead, the language of all parts of this Agreement and the General Release shall be construed as a whole, and according to their fair meaning, and not strictly for or against either party.
		
	8.
	ACCEPTANCE AND EFFECTIVENESS

This Agreement shall become effective immediately upon Hagen’s execution of this Agreement; provided, however, that the parties’ obligations hereunder shall not become effective until the eighth (8th) day following the Retirement Date, so long as Hagen has not then revoked the General Release.
		
	9.
	APPLICATION OF SECTION 409A.

This Agreement shall be interpreted to avoid any penalty sanctions under section 409A of the Code.  For purposes of section 409A of the Code, all payments to be made upon a termination of employment under this Agreement may only be made upon a “separation from service” (within the meaning of such term under section 409A of the Code), each payment made under this Agreement shall be treated as a separate payment and the right to a series of installment payments under this Agreement is to be treated as a right to a series of separate payments.  All reimbursements provided under this Agreement shall be made or provided in accordance with the requirements of section 409A, including, where applicable, the 

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requirement that:  (i) any reimbursement is for expenses incurred during Hagen’s lifetime (or during a shorter period of time specified in this Agreement); (ii) the amount of expenses eligible for reimbursement during a calendar year may not affect the expenses eligible for reimbursement in any other calendar year; (iii) the reimbursement of an eligible expense will be made on or before the last day of the calendar year following the year in which the expense is incurred; and (iv) the right to reimbursement is not subject to liquidation or exchange for another benefit.  In no event may the Employee, directly or indirectly, designate the calendar year of payment.

		
	10.
	ENTIRE AGREEMENT; COUNTERPARTS

10.1    This Agreement and the General Release together set forth the entire agreement between the parties hereto and fully supersede any and all prior agreements or understandings, including the Employment Agreement (other than as expressly set forth herein, including with respect to the Employment Agreement to the extent described in Section 4.3 hereof) between the parties hereto pertaining to the subject matter hereof.
10.2    This Agreement may be executed in one or more counterparts and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.
[Signatures on next page.]

075759-0006-Active.14041310

IN WITNESS WHEREOF, the parties hereto have executed this Retirement Agreement effective as of the date first above written.

	
						
	POLYMER GROUP, INC.
	 
	VERONICA M. HAGEN

	 
	 
	 

	By:
	/s/ Mike Zafirovski
	 
	/s/ Veronica M. Hagen

	 
	Name:
	Mike Zafirovski
	 
	 
	 

	 
	Title:
	Chairman
	 
	 
	 

	 
	 
	 
	 
	 

	Dated this 17th day of June, 2013
	 
	Dated this 17th day of June, 2013

	 
	 
	 
	 

	 
	 
	 
	 

	SCORPIO HOLDINGS CORPORATION

	 
	 
	 

	 
	 
	 
	 
	 

	By:
	/s/ Jason Giordano
	 
	 
	 

	 
	Name:
	Jason Giordano
	 
	 
	 

	 
	Title:
	Director
	 
	 
	 

	 
	 
	 
	 
	 

	Dated this 17th day of June, 2013
	 
	 
	 

075759-0006-Active.14041310Ex 10.2 - HackneyEmploymentAgreement

[Execution Copy]
EXECUTIVE EMPLOYMENT AGREEMENT
This Executive Employment Agreement (the “Agreement”) is entered into between Polymer Group, Inc., (“PGI”), a Delaware corporation, and Joel Hackney (“Executive”) as of June 11, 2013, with Executive’s employment to commence on July 15, 2013 or such earlier date as the parties may agree (the “Effective Date”).
In consideration of the respective covenants and agreements set forth below, PGI and Executive agree as follows:
Article I Employment, Compensation And Benefits
1.1    Term and Position. 
(a)    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 serve as a member of PGI’s Board of Directors and the Board of Directors of PGI’s parent company, Scorpio Holdings Corporation (collectively, 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 may in the future serve on the board of directors of one for-profit corporation (provided any such corporation is not in competition with PGI or any affiliate of The Blackstone Group L.P. (“Blackstone”), provided further that Blackstone’s consent to any such directorship shall not be unreasonably withheld) and two not-for-profit corporations. Executive will report directly to the Board and Executive’s specific duties shall be determined by the Board. 
(b)    The term of the Agreement (the “Term”) shall be for the period beginning on the Effective Date and ending on the fifth anniversary of the Effective Date, unless extended in writing by the parties or earlier terminated in accordance with the terms of Article II  hereof.  
(c)    As of the Effective Date, Executive’s principal place of employment shall be located in the Charlotte metropolitan area. Executive shall be required to relocate Executive’s residence permanently to the Charlotte metropolitan area within six months of the Effective Date.
1.2    Compensation.
(a)    Base Compensation. For all services rendered by Executive during the Term, Executive shall receive base compensation at a rate of $850,000 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.

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(b)    Bonus Payments. 
		
	(i)
	Executive shall be eligible to receive an annual bonus pursuant to a short-term cash incentive bonus plan (a “Bonus Plan”) to the extent such a plan is implemented for any given year during the Term, on terms no less favorable than the terms under which other members of senior management participate (any such bonus, the “Annual Bonus”). During each fiscal year, Executive’s target Annual Bonus under any such Bonus Plan will be, and shall not exceed, 100% of Base Compensation, and the maximum Annual Bonus payable to Executive will be 200% of Base Compensation. The amount of the Annual Bonus, if any, shall be based on annual performance goals to be established by the Board in consultation with Executive. 

		
	(ii)
	PGI is under no obligation to establish a Bonus Plan for any given year, and no Annual Bonus shall be payable in respect of any fiscal year in which Executive’s employment is terminated, except to the extent expressly provided in Article II . 

		
	(iii)
	In lieu of Executive’s participation in the 2013 Bonus Plan, on the occurrence of the Effective Date, Executive shall be entitled to receive a sign-on bonus in an amount equal to the sum of (A) $850,000 multiplied by a fraction, the numerator of which is the number of days between the Effective Date and December 31, 2013 (inclusive), and the denominator of which is 365, plus (B) $150,000 (such sum, the “Sign-On Bonus”), less applicable withholding and payable within 30 days of the Effective Date, provided that Executive will be obligated to refund the Sign-On Bonus to PGI in the event of Executive’s resignation without Good Reason (as defined below) or termination by PGI of Executive’s employment for Cause (as defined below), in either case, prior to January 31, 2014.

1.3    Equity Compensation.  
(a)    Stock Option. Effective as of the Effective Date, Executive will be granted an option (the “Option”) to purchase 6,000 shares of common stock of Scorpio Holdings Corporation, a Delaware corporation (the “Parent”), with an exercise price per share equal to the fair market value on the Effective Date (which is expected to be $1,000 per share). The exercise of the Option will be subject to achievement of time-based and exit vesting criteria on the terms set forth in the attached form of stock option agreement as Exhibit C, and the Option shall be solely subject to the definitive documents evidencing such awards or incorporated therein.
(b)    Restricted Stock Units. Effective as of the Effective Date, Executive will be granted restricted stock units (the “RSUs”) covering 3,000 shares of common stock of Parent. The RSUs will be subject to vesting criteria as set forth in the attached form of restricted stock 

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unit agreement as Exhibit D, and the RSUs shall be solely subject to the definitive documents evidencing such awards or incorporated therein.
(c)    Co-investment. During the 90-day period following the Effective Date, Executive may elect to make an investment (the “Co-Investment”) in Parent or one of its affiliates, at a per share price equal to the fair market value of a share of common stock of Parent on the closing date of such Co-Investment. The Co-Investment, if any, shall solely be subject to the definitive documents evidencing investment or incorporated therein.  
1.4    Reimbursement of Expenses. During the Term, PGI shall reimburse Executive for all reasonable business expenses incurred by Executive in the course of performing Executive’s 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.  PGI shall reimburse Executive for all fees and dues paid in connection with Executive’s membership and participation in business organizations and Executive’s attendance at conferences.  PGI shall pay up to $25,000 of Executive’s reasonable professional fees in incurred in connection with the negotiation and preparation of this Agreement and agreements described herein.
1.5    Paid Leave.
(a)    Vacation. Executive shall be entitled to 4 weeks’ vacation pay 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.
1.6    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.  PGI shall provide Executive reimbursement for life insurance premiums in an amount not to exceed $1,000 per annum.
1.7    Company Automobile. PGI shall provide Executive with the continued use of an automobile during the Term. 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. Executive 

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shall be responsible for any costs in excess of $20,000 per year that result from the provision of benefits pursuant to this Section 1.7. 
1.8    Relocation.  PGI shall reimburse all reasonable costs of relocation of Executive (and his family) to the Charlotte metropolitan area commensurate with his position, including physical packing (and unpacking), including crating and insurance for antiques, artwork and other fragile valuables, and moving personal property, up to 120 days’ temporary housing and storage, all expenses of the sale of Executive’s current residence and purchase of a residence in metropolitan Charlotte (including brokers’ commissions, attorneys’ fees, title charges, inspection, transfer taxes and fees, and mortgage fees and expenses (but not points)), a miscellaneous cash allowance of $50,000, and such other expenses as are covered under the relocation policy of PGI generally applicable to its senior executives, other than any miscellaneous cash allowances provided for therein.  All such relocation payments and benefits will be fully grossed-up for any applicable income and employment taxes with respect to any reportable income.
Article II    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:
(c)    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; provided that PGI shall furnish notice to Executive of such Cause termination, which notice must specify in reasonable detail the particulars of Executive’s conduct that constitute Cause. 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). Other than what is provided in this Section 2.1(a) Executive shall not be entitled to any other salary, compensation or benefits as a result of a termination for Cause.
(d)    Involuntary Termination. 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 

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expires, Executive shall be entitled to receive from PGI, in lieu of severance payments under any other plan or program of PGI, 
		
	(i)
	for an Involuntary Termination (A) an amount equal to 1.5 times the sum of (1) Executive’s Base Compensation and (2) target Annual Bonus, each as in effect immediately prior to the date of Executive’s termination (the “Severance Amount”); 

		
	(ii)
	the Annual Bonus for the fiscal year in which the termination date occurred, determined by the Committee as though Executive had continued to be employed through the end of the fiscal year in which the termination date occurred (but with any subjective performance ratings applicable solely to Executive’s individual performance deemed satisfied at target levels, and all other subjective performance ratings deemed achieved at actual achievement levels and consistent with any comparable subjective performance ratings of company-wide performance), multiplied by a fraction equal to the number of days of employment completed by Executive during the fiscal year in which the termination date occurred divided by 365 (the “Pro Rata Bonus”); 

		
	(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”); and 

		
	(iv)
	a lump sum equal to 18 months of COBRA premiums to cover continued medical benefits, 

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 C attached hereto no later than the 45th day following the termination date and only so long as Executive has not breached the provisions of Article III  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 date that is 18 months after the date of termination (the “Severance Period”).  The Severance Amount payable pursuant to this Section 2.1(b) and the Prior Year Earned Bonus shall be paid in twelve equal monthly installments beginning on the 53rd day following the termination date, and the second installment on the 60th day following the termination date, and each other installment payable each month thereafter during the Severance Period.  The Pro Rata Bonus shall be payable at such time any annual bonuses in respect of the fiscal year in which the termination date occurs are paid to senior executives of PGI. The disposition of the Option and the RSUs on Executive’s termination shall be governed by the terms of the respective grant agreements.  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.
This Section 2.1(b) shall not be interpreted so as to limit any benefits to which the Executive, Executive’s dependents or beneficiaries may otherwise be entitled under any of PGI’s 

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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.
(e)    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. Other than what is provided in this Section 2.1(c) Executive shall not be entitled to any other salary, compensation or benefits as a result of termination of employment due to death or disability.
(f)    Board/Committee Resignation. Upon termination of Executive’s employment for any reason, Executive agrees to resign, as of the date of such termination and to the extent applicable, from the Board (and any committees thereof) and the Board of Directors (and any committees thereof) of PGI’s affiliates and subsidiaries.
2.2    Termination By Executive. Executive may terminate the employment relationship before the Term expires for the following reasons:
(d)    Good Reason. A termination for “Good Reason” shall be deemed to be an Involuntary Termination and shall mean a termination as a result of the following, in each case without Executive’s prior written consent:
		
	(i)
	The failure of PGI to pay or cause to be paid Executive’s Base Compensation or Annual Bonus when due hereunder;

		
	(ii)
	The assignment to Executive of duties materially inconsistent with Executive’s then-current duties, responsibilities and status with PGI, or a change in Executive’s then-current titles or offices at PGI, or removal from, or failure to reelect Executive to, any such position; or

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	(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; 

		
	(iv)
	A failure of PGI to agree to extend the date of expiration of the Term by at least one year in response to a written request delivered by Executive not later than 90 days before the expiration date (which termination for Good Reason shall be effective on the expiration date of the Term);

		
	(v)
	Any purported termination by PGI for Cause or Disability, without grounds therefor; or

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

provided, however, that each of the events described in clauses (i) through (v) shall constitute Good Reason only if PGI fails to cure such event within 30 days after receipt from Executive of written notice of the event which constitutes Good Reason; and provided, further, that Good Reason shall cease to exist for an event on the 60th day following the later of its occurrence or Executive’s knowledge thereof, unless Executive has given PGI written notice thereof prior to such date.

(e)    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 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.
2.3    Certain Obligations Continue. Neither termination of employment nor expiration of the Term terminates the continuing obligations of this Agreement, including obligations under Article III  and Section 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. During such continued employment, Article III  and Sections 4.1 and 4.7 shall continue in full force and effect.
Article III    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. Parent and PGI may disclose the terms of this Agreement as required by law.

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3.2    Parent and PGI Property. All written materials, records, data, and other documents prepared or possessed by Executive during Executive’s employment by Parent or PGI are Parent’s and PGI’s respective 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 Parent’s and 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 Parent’s or PGI’s premises or otherwise) which relate to Parent’s or PGI’s business, products, or services are Parent’s or PGI’s property. Executive agrees to make prompt and full disclosure to Parent and PGI or their 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 Parent’s, PGI’s or their 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 Parent, PGI or their 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 Parent or PGI or one or more of their subsidiaries. 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 Parent, 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 Parent’s, 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 Parent or PGI for any reason, Executive shall return all of Parent’s or PGI’s property to Parent or PGI, as applicable.
3.3    Confidential Information: Non-Disclosure. Executive acknowledges that the business of Parent, PGI and their subsidiaries is highly competitive and that Parent and PGI have provided and will provide Executive with access to Confidential Information relating to the business of Parent, PGI and their subsidiaries. “Confidential Information” means and includes Parent’s and 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, 

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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 Parent’s or 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 Parent or 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 Parent, PGI or their 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 Parent, PGI and their 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 Parent, PGI and their subsidiaries.
Executive agrees that Executive will not, at any time during or after Executive’s employment with Parent or PGI, make any unauthorized disclosure of any Confidential Information of Parent, PGI or their subsidiaries, or make any use thereof, except in the carrying out of Executive’s 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 Parent’s and PGI’s Confidential Information.
3.4    Non-Competition Obligations. Executive acknowledges that Parent and PGI are providing Executive with access to Confidential Information. Executive’s non-competition obligations are ancillary to PGI’s agreements provided in Article II 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 II, and receiving other compensation provided in this Agreement, PGI and Executive agree to the following non-competition provisions: 
During Executive’s employment and during the eighteen (18) month period following Executive’s date of termination for any reason, Executive will not, in any geographic area where Parent, PGI or their subsidiaries engage or plan to engage in business directly or indirectly, either on Executive’s own behalf or on behalf of any other person, association or entity:
(a)    engage in any business competing with any businesses in which Parent, PGI or their 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”);

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(b)    perform any job, task, function, skill, or responsibility for a Competing Business that Executive has provided for Parent or 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 Executive’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 Parent and/or PGI have provided to Executive.
Executive agrees that this provision defining the scope of activities constituting competition with Parent and 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 Parent, PGI or their subsidiaries; (ii) Executive is free to seek employment with other companies that do not directly or indirectly compete with any business of Parent, PGI or their subsidiaries; and (iii) there are many other companies that do not directly or indirectly compete with any business of Parent, PGI or their 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 Parent, PGI and/or their subsidiaries.
3.5    Non-Solicitation of Customers. During Executive’s employment and during the eighteen (18) months following the termination of employment for any reason, Executive will not call on, service, or solicit competing business from customers of Parent, PGI or their 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. 
3.6    Non-Solicitation of Employees. During Executive’s employment and during the eighteen (18) 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 Parent, PGI or their affiliates whom Executive had contact with, knowledge of, or association with in the course of employment with Parent or 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 equitable remedies sought in disputes or claims under Article III  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 Parent, PGI and their subsidiaries (including, without limitation, disputes and 

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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 Executive’s employment by Parent or 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 Parent or 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 IV    Miscellaneous
4.1    Mutual Non-Disparagement.
(a)    Executive shall refrain, both during and after Executive’s employment, from making any oral or written statements to third parties about Parent, PGI, Blackstone, any of their respective subsidiaries or affiliates, 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; or that are intended to, or reasonably likely to, disparage them.
(b)    PGI, Parent, and Blackstone shall refrain, both during and after Executive’s employment, from making any oral or written statements to third parties about Executive that are slanderous, libelous, or defamatory, or that disclose private or confidential information about Executive’s personal business affairs; or that constitute an intrusion into Executive’s seclusion or private life; or that give rise to unreasonable publicity about Executive’s private life; or that place him in a false light before the public; or that are intended to, or reasonably likely to, disparage him, provided, that any actions by an employee of PGI or Blackstone who is not an officer or director of either Parent, PGI, or Blackstone without the approval of the Board shall not constitute a violation of the foregoing. Parent, PGI and 

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Blackstone shall be entitled to make statements in the ordinary course of their business or as is reasonably necessary to comply with applicable law (including applicable securities and disclosure requirements), and including any statements determined by their corporate counsel to be reasonably necessary if Executive is terminated for Cause.
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: at the address specified in PGI’s personnel records.

	Notices to PGI:

	Polymer Group, Inc. 
9335 Harris Corners Parkway 
Suite 300 
Charlotte, NC 28269 
Attn: General Counsel

	With a copy to:

	 

	The Blackstone Group L.P. 
345 Park Avenue 
New York, NY 10154 
Fax No.: (212) 583-5722  
Attention: Anjan Mukherjee

	and:

	Simpson Thacher & Bartlett LLP 
425 Lexington Avenue 
New York, NY 10017 
Fax No.: (212) 455-4502 
Attention: Gregory T. Grogan 

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, if Executive is determined to be a “specified employee” (as such term is 

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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 PGI 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. 
(a)    If both Parent and PGI are not an entity whose stock is readily tradable on an established securities market (or otherwise) at the time that a “change of control” under Regulation 1.280G occurs following the Effective Date, Executive, Parent, and PGI shall use their respective best efforts to avoid the imposition of the excise tax imposed by Section 4999 of the Internal Revenue Code of 1986, as amended (the “Code”) or a loss of deductibility under Section 280G of the Code, including, to the extent Executive agrees to waive Executive’s entitlement to potential “parachute payments” (as defined under Regulation 1.280G), Parent or PGI shall seek to obtain stockholder approval thereof in accordance with the terms of Section 280G(b)(5) of the Code.
(b)    If PGI or Parent is an entity whose stock is readily tradable on an established securities market (or otherwise) at the time that a “change in control” under Regulation 1.280G occurs following the Effective Date, then anything in this Agreement to the contrary notwithstanding, in the event it shall be determined that any payment, benefit or distribution to or for Executive’s benefit or the acceleration thereof would be subject to the excise tax imposed by Section 4999 of the Code or any interest or penalties with respect to such excise tax (collectively, 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 Executive 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 Executive may elect to have the noncash severance payments reduced (or eliminated) prior to any reduction of the cash severance payments. Executive shall remain 

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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 PGI, or any successors thereto, to pay (or reimburse Executive for) any income taxes, Excise Tax, or other taxes or amounts assessed against or incurred by Executive in connection with Executive’s 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 him or that he 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 on or after the Effective Date and any value received from any cash-based or equity-based incentive awards granted on or after the Effective Date by PGI or any successor entity.
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 (and the documents referenced herein) 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 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 III  and Sections 4.1, 4.7 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 

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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.
[Remainder of page left intentionally blank.  Signatures follow.]

075759-0006-13471-Active.14024570.4    

IN WITNESS WHEREOF, PGI and Executive have executed this Agreement in multiple originals as of the date first written above.
 
	
					
	POLYMER GROUP, INC.
	 
	JOEL HACKNEY

	 
	 
	 

	/s/ Mike S. Zafirovski
	 
	/s/ Joel Hackney

	By:
	 
	 
	 

	 
	Name:
	Mike S. Zafirovski
	 
	 

	 
	Title:
	Chairman
	 
	 

	 
	 
	 
	 

	 
	 
	 
	 

	 
	 
	 

 

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