Document:

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                                                                   EXHIBIT 10.27

                 THE ___________________ SALES INCENTIVE PLAN

                           Effective January 1, 2000

          1.  Purpose.  The ____________________ Sales Incentive Plan (the
              -------
"Plan") is intended to provide incentives which will attract, retain and
motivate highly competent persons of ____________________ (the "Company".

          2.  Administration.  The Plan will be administered by a committee of
              --------------
the Board of Directors of the Company (the "Board") or a subcommittee of a
committee of the Board appointed by the Board from among its members (the
"Committee").  The Committee is authorized, subject to the provisions of the
Plan, to establish such rules and regulations as it deems necessary for the
proper administration of the Plan and to make such determinations and
interpretations and to take such action in connection with the Plan as it deems
necessary or advisable.  All determinations and interpretations made by the
Committee shall be binding and conclusive on all participants and their legal
representatives.  No member of the Board, no member of the Committee and no
employees of the Company shall be liable for any act or failure to act
hereunder, except in circumstances involving his or her bad faith, gross
negligence or willful misconduct, or for any failure to act hereunder by any
other member or employee or by any agent to whom duties in connection with the
administration of the Plan have been delegated.  The Company shall indemnify
members of the Committee and any agent of the Committee who is an employee of
the Company, against any and all liabilities or expenses to which they may be
subjected by reason of any act or failure to act with respect to their duties on
behalf of the Plan, except in circumstances involving such person's bad faith,
gross negligence or willful misconduct.

          3.  Term.  The Plan shall be effective January 1, 2000 and shall end
              ----
on December 31, 2001.

          4.  Participants.  Participants shall consist of such employees of the
              ------------
Company as the Committee in its sole discretion determines to be in a position
to impact the success and future growth and profitability of the Company and
whom the Committee may designate from time to time to receive benefits under the
Plan.  The Committee shall consider such factors as it deems pertinent  in
selecting participants.   Each participant  and the respective participant's
share of the Benefit Pool (as that term is defined below), or a specific pool
within the Benefit Pool, shall be listed on Exhibit A attached to the Plan.  The
Committee may make additions from time to time to Exhibit A.

          5.  Benefit Pool.  The aggregate benefits payable under the Plan (the
              ------------
"Benefit Pool") shall be the following percentages of the net proceeds (the "Net
Proceeds") received by the Company on the sale of real estate after deducting
all debt obligations on the property sold, seller's closing costs (including,
but not limited to, title changes and transfer taxes) and any real estate
broker's commissions:

               a.   3% of the Net Proceeds received by the Company in 2000 from
                    sales of real property closed in 2000 (the "2000 Benefit
                    Pool"); and

               b.   3% of the Net Proceeds received by the Company in 2001 on
                    sales of real property closed in 2001 (the "2001 Benefit
                    Pool").

          6.  Payments.
              --------
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               a.  As soon as administratively practicable after December 31,
     2000, but in no event later than March 31, 2001, each participant shall
     receive 50% of his/her share in the 2000 Benefit Pool.  If the participant
     is an employee of the Company on December 31, 2000, the balance of the 2000
     Benefit Pool shall be paid on December 31, 2001 without interest.  If the
     participant is not an employee on December 31, 2000, the unpaid balance of
     the 2000 Benefit Pool shall be forfeited.

               b.  As soon as administratively practicable after December 31,
     2001, but in no event later than March 31, 2002, if a participant is an
     employee of the Company as of December 31, 2001, such participant shall
     receive 100% of his/her share in the 2001 Benefit Pool.  If the participant
     is not an employee on December 31, 2001, the unpaid balance of the 2001
     Benefit Pool shall be forfeited.

          7.   Cessation of Employment.
               -----------------------

               a.  In the event a participant ceases to be an employee of the
     Company as a result of the participant's death, total and permanent
     disability, resignation, retirement or termination without cause, such
     participant, or the participant's designated beneficiary or estate shall
     receive, except as provided in Section 6, all accrued benefits through the
     date on which the participant ceased to be an employee of the Company.

               b.  In the event a participant ceases to be an employee of the
     Company as a result of the participant's termination with cause, such
     participant shall forfeit all accrued benefits through such date of
     termination with cause.

               c.  For purposes of subsection b of this Section 7, termination
     with cause shall have the following meaning:

                    (i)    a participant's commission of a material act of fraud
                           against the Company or its affiliates;

                    (ii)   a participant's conviction of any crime which
                           constitutes a felony in the jurisdiction involved; or

                    (iii)  a participant's willful, repeated and demonstrable
                           failure to substantially perform his/her duties over
                           a period of not less than 30 days, other than any
                           such failure resulting from incapacity due to
                           physical or mental illness, or material breach of any
                           obligations under this Agreement, and failure to cure
                           such failure or breach within 30 days after receipt
                           of written notice from the Board. No act or failure
                           to act will be considered "willful" unless done, or
                           omitted to be done in good faith and without
                           reasonable belief that such action or omission was in
                           the best interests of the Company and its affiliates.

                                      -2-
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               d.  All amounts in the Benefit Pool which are forfeited may be
          allocated by the Committee to existing participants in the Plan or to
          additional participants or not allocated in whole or part.  Any
          amounts not allocated under the Plan shall not be included in any
          benefits payable under the Plan.

          8.  Amendment and Termination.  The Committee, in its absolute
              -------------------------
discretion and without any notice, may at any time modify or amend, in whole or
in part, any or all of the provisions of this Plan, or suspend or terminate it
entirely.

          9.  Withholding.  All payments made pursuant to this Plan shall be net
              -----------
of any amounts required to be withheld pursuant to applicable federal, state and
local tax withholding requirements.

          10  Governing Law.  The Plan shall be construed, administered and
              -------------
governed in all respects under and by the laws of the state of Illinois.

                                    ____________________________________

                                    By:_________________________________

                                    Its: _______________________________

                                      -3-<PAGE>

                                                                    Exhibit 10.1

                              [LETTERHEAD OF PGI]

                                                                    May 22, 1998

Personal and Confidential
-------------------------

Mr. Jerry Zucker
Chairman, President and CEO
Polymer Group, Inc.
4838 Jenkins Avenue
North Charleston, S. C. 29405

Dear Jerry:

Polymer Group, Inc. ("PGI") considers the establishment and continuance of a
strong and vital management to be essential to protecting and enhancing the best
interests of PGI and its shareholders. In this connection, PGI recognizes that
when events which could lead to a change of control of PGI occur, they give rise
to material uncertainties and questions as to the ownership and future direction
of PGI which would persist for some time. The Board recognizes that such
uncertainties could result in the departure or possible distraction of key
management personnel to the detriment of PGI and its shareholders. Accordingly,
the Board wishes to clarify arrangements relating to your employment by PGI or
its affiliates, particularly in circumstances relating to change of control to
reinforce and encourage you to continue employment with PGI.  In particular, the
Board believes it important, should PGI or its shareholders receive a proposal
in respect of a change in ownership of PGI, that your employment with PGI or its
affiliates be continued during the pendency of such proposals and you be able to
assess and advise PGI and its shareholders and to take such other action
regarding such proposals as the Board might determine to be appropriate, without
being influenced by the uncertainties of your own situation.

In order to induce you to remain in the employ of PGI, this letter agreement
("Agreement"), which was approved by the Board at its May 5, 1998 Board meeting,
sets forth the severance and termination benefits which PGI agrees will be
provided to you in the event your employment with PGI is terminated or
significantly affected subsequent to a Fundamental Change (as defined) in the
ownership or the direction of PGI under the circumstances described below.  Also
note that this Agreement revokes and shall supersede all other prior agreements
between you and PGI dealing with the specific benefits to be given to you under
any Benefit Plan (as hereinafter defined) in the event your employment with PGI
is terminated or significantly affected within twenty-four (24) months
subsequent to a Fundamental Change.  The obligations of PGI to provide the
benefits under this Agreement are applicable only in the event of a Fundamental
Change in the ownership or direction of PGI in the circumstances described below
and do not otherwise affect your present terms and conditions of employment.
This Agreement does not in any way establish a precedent or guideline for PGI's
obligation to provide such benefits in circumstances other than those described
herein. Accordingly, the definitions contained herein, including the definition
of "Cause" and "Good Reason," are applicable only for the purpose of this
Agreement.
<PAGE>

I.   Definitions
     -----------

1.1  In this Agreement, the term:

     (a)  "Base Salary" shall mean your annual salary in effect prior to the
           -----------
          date of delivery of a Notice of Termination (without regard to any
          reduction in that salary in the sixty (60) days prior to the date of
          delivery of such Notice).

     (b)  "Beneficial Owner of Voting Securities" means a Person who has any
           -------------------------------------
          beneficial interest in or control or direction over the Voting
          Securities or has a right to control or direct voting or disposition
          of Voting Securities held in a trust or has the right to acquire any
          beneficial interest in Voting Securities, whether issued or unissued
          conditionally or unconditionally, within sixty (60) days whether by
          exercise of an option, warrant, right, subscription privilege,
          agreement, revocation of a trust or otherwise.

     (c)  "Benefit Plan" shall mean any compensation plan such as an incentive,
           ------------
          stock option plan or any employee benefit plan such as a saving,
          pension, profit sharing, medical, dental, disability, accident, life
          insurance plan or a relocation plan or policy or any other material
          plan, program, perquisite or policy of PGI intended to benefit
          employees.

     (d) "Board" means the Board of Directors of PGI.
          -----

     (e)  "Cause" shall mean (i) the willful and continued failure by you to
           -----
          perform substantially your duties with PGI (other than any such
          failure resulting from your incapacity due to physical or mental
          illness) after a written demand for substantial performance is
          delivered to you by the Board which specifically identifies the manner
          in which the Board of Directors believes that you have not
          substantially performed your duties, or (ii) the willful engaging by
          you in illegal conduct which is materially and demonstrably injurious
          to PGI.  For the purposes of this definition, no act, or failure to
          act, on your part, shall be considered "willful" unless done or
          omitted to be done by you in bad faith and without reasonable belief
          that such action or omission was in, or not opposed to, the best
          interests of PGI.

     (f)  "Date of Termination" means the date specified in Section VII of
           -------------------
          this Agreement.

     (g)  "Fundamental Change" shall mean any one of the following events:
           ------------------

          (i)   any Person or group of Persons acting jointly and in concert,
                becomes the beneficial Owner, directly or indirectly, of thirty-
                five percent (35%) or more of the combined voting power of PGI's
                Voting Securities, but not including any Person whose ownership
                of such a percentage of Voting Securities results solely from a
                share repurchase by PGI or a subsidiary thereof (unless such
                Person or Persons subsequently purchases any additional Voting
                Securities).

          (ii)  a Person or group of Persons acting jointly and in concert, who
                is the registered owner or beneficial Owner of five percent (5%)
                or greater of the combined voting power of PGI's Voting
                Securities (A) indicates in an information circular sent to
                shareholders of PGI or otherwise indicates in writing, that such
                Person or Persons intends to nominate, or (B) at a meeting of
                PGI's shareholders nominates, individuals for election to the
                Board who have not been approved by the Incumbent Board (either
                by a specific vote or by
<PAGE>

                approval of the proxy statement of PGI in which such person is
                named as a nominee for director, without objection to such
                nomination) and who, if elected, would constitute a majority of
                the members on the Board who are not full-time employees of PGI
                or its subsidiaries and a majority of such nominees are so
                elected.

          (iii) PGI ceases to control in fact, directly or indirectly, all or
                substantially all of the assets employed in carrying on the
                business of PGI.

          Notwithstanding anything in the foregoing to the contrary, no
          Fundamental Change shall be deemed to have occurred for purposes of
          this Agreement by virtue of any transaction which results in any
          Person or Persons approved by the Incumbent Board becoming the
          beneficial Owner of Voting Securities, directly or indirectly, of more
          than thirty-five percent (35%) but less than fifty per cent (50%) of
          the combined voting power of PGI's voting securities.

     (h)  "Good Reason" shall mean:
           -----------

          (i)   a reduction by PGI in your Base Salary or the opportunity for
                cash and non-cash incentive and other compensation as in effect
                immediately prior to the Fundamental Change;

          (ii)  at any time after the happening of a Fundamental Change, an
                adverse change in your status, position(s) or salary group or
                scope of responsibility as an executive in effect immediately
                prior to the Fundamental Change, including, without limitation,
                a diminution of your scope of duties or responsibilities, the
                addition of new executive positions with equal or greater title,
                status or responsibility, any change in reporting responsibility
                or the assignment to you of any duties or areas of
                responsibilities which, in your reasonable judgment, are
                inconsistent with such status or position(s), co-
                responsibilities undertaken prior to a Fundamental Change or any
                removal of you from or any failure to reappoint or reelect you
                to such position(s) (except in connection with the termination
                of your employment for Cause or disability);

          (iii) the failure by PGI to continue in effect any Benefit Plan in
                which you are participating at the time of the Fundamental
                Change or the taking of any action, or the failure to act, by
                PGI which would adversely affect your continued participation in
                any of such Benefit Plans on at least as favorable a basis to
                you as is the case at the time of the Fundamental Change or
                which would materially reduce your benefits in the future under
                any of such Benefit Plans or deprive you of any material
                employment related benefit enjoyed by you at the time of the
                Fundamental Change; provided, any modification required by the
                Employee Retirement Income Security Act of 1974, as amended
                ("ERISA") or the Internal Revenue Code of 1986, as amended (the
                "Code") shall not constiute Good Reason;

          (iv)  PGI requiring you to regularly report for employment to an
                office located anywhere in excess of fifty (50) miles from where
                your office is located immediately prior to the Fundamental
                Change, except for required travel on PGI's business to an
                extent substantially consistent with the business travel
                obligations which you undertook on behalf of PGI prior to the
                Fundamental Change,
<PAGE>

          (v)   any purported termination by PGI of your employment which is not
                effected pursuant to a Notice of Termination satisfying the
                requirements of paragraph 6.1 below (and, if applicable,
                paragraphs 1.1(e) and 5.2 of this Agreement);

          (vi)  failure by PGI to pay or cause to be paid to you any amounts due
                to you under the terms of any of PGI's Benefit Plan after a
                decision of the Board that it is in PGI's best interests to do
                so in accordance with paragraph 4.1 of this Agreement;

          (vii) the failure by PGI to obtain from any Successor the assent to
                this Agreement contemplated by paragraph 10.1 hereof.

     (i)  "Incumbent Board" means the members of the Board on the date hereof
           ---------------
          and any person becoming a director of PGI subsequent to that date
          whose election, or nomination for election by PGI's shareholders, was
          approved by a vote of at least three-quarters (3/4) of the directors
          comprising the Incumbent Board (either by a specific vote or by
          approval of the proxy statement of PGI in which such person is named
          as a nominee for director, without objection to such nomination).

     (j)  "Notice of Termination"  means a notice given in accordance with
           ---------------------
          paragraph 6.1 of this Agreement.

     (k)  "Person" or "Persons" shall mean and include any individual,
           -------------------
          corporation, partnership, unincorporated organization or syndicate or
          association, trust, trustee, executor, administrator or other legal
          representative other than PGI, a subsidiary of PGI or any employee
          benefit plan(s) sponsored by PGI or a subsidiary of PGI.

     (l)  "PGI" means Polymer Group, Inc. and includes any corporation or other
           ---
          entity which is the surviving or continuing entity in respect of any
          amalgamation, merger, consolidation, combination, recapitalization,
          dissolution or form of business combination.

     (m)  "Retirement" shall mean termination by you of your employment with PGI
           ----------
          on or after your normal retirement date, including early retirement
          with your written consent, under and in accordance with the terms of
          the registered pension plan of PGI in which you participate or the
          retirement date declared by you in writing.

     (n)  "Successor" shall mean any Person that concurrently with or subsequent
           ---------
          to a Fundamental Change succeeds to, or has the practical ability to
          control (either immediately or with the passage of time), PGI's
          business directly, by merger or consolidation, or indirectly, by
          purchase of PGI's Voting Securities, all or substantially all of its
          assets or otherwise.

     (o)  "Voting Securities" shall mean any share or other security that
           -----------------
          carries a voting right either under all circumstances or under some
          circumstances that have occurred and are continuing and also includes
          any share or security that is ultimately exercisable or convertible
          into a Voting Security, whether conditionally or unconditionally.
<PAGE>

II.  Agreement to Provide Services: Right to Terminate
     -------------------------------------------------

2.1  Except as otherwise provided in paragraph 2.2 below, after the first
     occurrence of a Fundamental Change, PGI or you may terminate your
     employment at any time subject to PGI providing to you the benefits
     hereinafter specified in respect of termination of your employment all in
     accordance with the terms hereof.

2.2  In the event a take-over is made by a Person or Persons acting jointly and
     in concert in respect of any securities of PGI prior to the first
     occurrence of a Fundamental Change, you agree that you will not leave the
     employ of PGI (other than as a result of disability or upon Retirement)
     until the earliest of (a) one hundred and twenty (120) days after the
     commencement of such take-over bid, (b) such take-over bid has been
     abandoned or terminated, or (c) the first occurrence of a Fundamental
     Change.

III.  Term of the Agreement
      ---------------------

3.1  This Agreement shall commence on the date hereof and shall continue to be
     in effect for a minimum period of five years commencing May 5, 1998 and
     shall, automatically be extended for additional periods of one year unless
     at least ninety (90) days prior to the expiration of the current one year
     period, PGI or you shall have given written notice that this Agreement
     shall not be extended.

3.2  It is further provided that this Agreement shall continue to be in effect
     for a period of twenty four (24) months beyond the term provided in
     paragraph 3.1 above if a Fundamental Change in PGI shall have occurred
     during such term. Notwithstanding anything in this Section III to the
     contrary, your employment may be terminated by PGI prior to the happening
     of a Fundamental Change, without giving rise to the obligations of PGI
     hereunder provided, however, any such termination will be subject to
     applicable laws and any other agreements you may have with PGI. This
     Agreement may be terminated by you prior to the happening of a Fundamental
     Change, except after the commencement of a take-over bid wherein you may
     terminate this Agreement only in the circumstances indicated in paragraph
     2.2. above.

IV.  Stock Option Plan
     -----------------

4.1  The Board shall continue to have any power to accelerate the vesting of
     options and stock appreciation rights that is currently available to it
     under the Stock Option Plan. In addition, providing that the Board of
     Directors judges that it is in the best interests of the shareholders not
                                                                           ---
     to have the options vested automatically, all options and stock
     appreciation rights granted to you under the Stock Option Plan, whether
     vested or not, shall become vested and immediately exercisable:

     (a)  If at any time, any person, other than yourself or an Affiliate
          thereof, beneficially owns, directly or indirectly, voting securities
          of the Corporation carrying more than 35% of the votes for the
          election of directors or any person makes a successful take-over bid
          for 50% or more of the voting securities of the Corporation (including
          the voting securities of the Corporation then held by such offeror).
<PAGE>

     (b)  less than 20% of PGI's Voting Securities are listed on The New York
          Stock Exchange, or a similar recognized stock exchange and are widely
          held by persons other than the Person (or group of Persons acting
          jointly or in concert) whose actions have given rise to the
          Fundamental Change; or

     (c)  you are terminated other than for Cause, in accordance with the terms
          of this Agreement.

V.  Termination Following Fundamental Change
    ----------------------------------------

5.1  Following the first occurrence of any Fundamental Change in PGI, you shall
     be entitled to the benefits provided in paragraph 8.2 hereof upon:

     (a)  the termination of your employment by PGI at any time within twenty-
          four (24) months after the happening of such Fundamental Change unless
          such termination is (A) because of your death or Retirement, or (B) by
          PGI for Cause or disability;

     (b)  the termination of your employment by you with Good Reason providing
          that such termination occurs within twenty-four (24) months after the
          happening of such Fundamental Change; or

     (c)  termination of your employment within the mutual consent of you and
          PGI within twenty-four (24) months of the happening of such
          Fundamental Change.

5.2  If PGI intends to terminate your employment for Cause following a
     Fundamental Change then any act, or failure to act, based upon authority
     given pursuant to a resolution duly adopted by the Board or based upon the
     advice of counsel for PGI shall be conclusively presumed to be done, or
     omitted to be done, by you in good faith and in the best interests of PGI.

     Notwithstanding the foregoing, you shall not be deemed to have been
     terminated for Cause unless and until a copy of a resolution duly adopted
     by the affirmative vote of not less than three-quarters (3/4) of the
     directors who are not full-time employees of PGI or any of its subsidiaries
     at a meeting of the Board called and held for the purpose (after reasonable
     notice to you and an opportunity for you, together with your counsel, to be
     heard before the Board has been given), finding that in the good faith
     opinion of the Board you were guilty of the conduct set forth above in sub-
     clauses (i) or (ii) of paragraph 1.1(e) and specifying the particulars
     thereof in detail is delivered to you.

VI.  Notice of Termination
     ---------------------

6.1  Any purported termination by PGI or by you following a Fundamental Change
     shall be communicated by written Notice of Termination to the other party
     hereto and shall indicate with reasonable particularity the specific
     termination provision in this Agreement relied upon.

VII.  Date of Termination
      -------------------

7.1  "Date of Termination"  following a Fundamental Change shall mean:
      -------------------

     (a)  if your employment is to be terminated by PGI for Cause, the date
          specified in the Notice of Termination which shall be on or after the
          date upon which the Notice of Termination is delivered;
<PAGE>

      (b)  if you terminate employment with Good Reason, a date no earlier than
           thirty (30) days from the date on which the Notice of Termination is
           given; or

      (c)  if your employment is to be terminated by PGI for any reason other
           than Cause, the date specified in the Notice of Termination, which in
           no event shall be a date earlier than sixty (60) days after the date
           on which a Notice of Termination is given unless an earlier date has
           been expressly agreed to by you in writing either in advance of, or
           after, receiving such Notice of Termination.

7.2   In the case of termination by PGI of your employment for Cause, if you
      have not previously expressly agreed in writing to the termination, then
      within thirty (30) days after receipt by you of the Notice of Termination
      with respect thereto, you may notify PGI that a dispute exists concerning
      the termination, in which event the Date of Termination shall be the date
      set either by mutual written agreement of the parties or by the
      arbitrators in a proceeding as provided in paragraph 12.7 hereof.

VIII. Compensation Upon Termination
      -----------------------------

8.1   If your employment shall be terminated for Cause following a Fundamental
      Change, PGI shall pay you your Base Salary and prorated bonus through the
      Date of Termination plus any other benefits or awards (including the cash
      value of any Benefit Plan) which have been earned or become payable, but
      which have not yet been paid to you. Thereupon PGI shall have no further
      obligations to you under this Agreement.

8.2   If your employment is terminated after the first occurrence of any
      Fundamental Change in accordance with the manner described in paragraph
      5.1 then, on the fifth (5th) day following the Date of Termination (except
      as otherwise provided), you shall be entitled without regard to any
      contrary provisions of any Benefit Plan, to the benefits as provided below

      (a)  PGI shall pay your base Salary plus any annual benefits or awards
           (including both the cash and non-cash value of any Benefit Plan
           including bonus or incentives) pro-rated to the Date of Termination
           on the basis that any targets necessary to obtain such awards have
           been achieved, in a manner acceptable to you. Notwithstanding
           anything in this Section VIII to the contrary, the amount payable to
           you in respect of bonus or incentive plans shall be paid to you
           within five days of receipt by PGI of the audited financial results
           for the year in which the Date of Termination occurs.

      (b)  PGI shall pay you as severance pay and in lieu of any further salary
           for periods subsequent to the Date of Termination, an amount in cash
           equal to 2.99 times the aggregate of your (i) Base Salary plus (ii)
           the cash value of the non-cash Benefit Plans plus (iii) the average
           of annual bonus you received in the two (2) years immediately
           preceding the Date of Termination.

8.3   The amount of any payment provided for in this Section VIII shall not be
      reduced, offset or subject to recovery by PGI by reason of any
      compensation earned by you as the result of employment by another employer
      after the Date of Termination, or otherwise.

8.4   In the event that your employment is terminated in the circumstances
      described in paragraph 5.1, in the Notice of Termination or otherwise,
      within four (4) days of the Date of Termination, you may, in writing,
      direct PGI that any amounts which should become payable to you pursuant to
      paragraph 8.2 hereof shall be paid to you in three (3) equal annual
      installments, with the first such installment payable five (5) business
      days after the Date of Termination and each
<PAGE>

      successive installment paid on the anniversary of the Date of Termination
      or the next following business day if such date is not a business day;
      provided, any amounts to be paid from the trust(s) of qualified plans
      shall only be payable at the time and in the manner prescribed under such
      plans.

IX.   Additional Rights
      -----------------

9.1   You agree that the provisions of this Agreement include any statutory
      entitlements to notice of termination or termination pay in lieu of notice
      and severance pay and is in lieu of and replaces any common law
      entitlements to notice of termination or pay in lieu thereof and you waive
      your right at common law to reasonable notice. (The notice period for
      termination of employment as provided herein shall comply with the notice
      of termination provisions of applicable employment standards legislation,
      as amended from time to time).

X.    Successors:  Binding Agreement
      ------------------------------

10.1  Any Successor to PGI shall be bound by this Agreement. PGI will seek to
      have any Successor assent to the fulfillment by PGI of its obligations
      under this Agreement at your request. Failure of PGI to obtain such assent
      within thirty (30) days after such request shall constitute Good Reason
      for termination by you of your employment and shall entitle you to the
      benefits provided in paragraph 8.2 hereof upon delivery by you of a Notice
      of Termination.

10.2  This Agreement shall inure to the benefit of and be enforceable by your
      personal or legal representatives, executors, administrators, successors
      or heirs. If you should die while any amount would still be payable to you
      hereunder if you had continued to live, all such amounts, unless otherwise
      provided herein, shall be paid in accordance with the terms of this
      Agreement to a beneficiary designated by you in writing or barring such
      designation to your estate; provided, with respect to all employee Benefit
      Plans subject to ERISA, any beneficiary designation will be governed by
      the terms of such plans.

XI.   Fees and Expenses:  Mitigation
      ------------------------------

11.1  PGI shall pay all reasonable legal and accounting fees and related
      expenses incurred by you in connection with the Agreement following a
      Fundamental Change including, without limitation, (a) all such fees and
      expenses, if any, incurred in contesting or disputing any termination of
      your employment by PGI after a Fundamental Change or incurred by you in
      seeking advice with respect to general taxation and financial advice with
      respect to the receipt of payments hereunder or (b) your seeking to obtain
      or enforce any right or benefit provided by this Agreement provided,
      however, you shall be required to repay any such amounts to PGI to the
      extent that a court issues a final and non-appealable order setting forth
      the determination that the position taken by you was frivolous or advanced
      by you in bad faith.

11.2  You shall not be required to mitigate the amount of any payment PGI
      becomes obligated to make to you in connection with this Agreement, by
      seeking other employment or otherwise.

XII.  General
      -------

12.1  Confidentiality.  Notwithstanding any provision of this Agreement, any
      ---------------
      provision governing an obligation of confidentiality on your part to PGI
      that is contained in any other agreement that you may have with PGI shall
      continue to be of full force and effect.
<PAGE>

12.2  Taxes and Other Amounts.  All payments to be made to you under this
      -----------------------
      Agreement will be subject to required withholding of income tax and other
      amounts under federal, and state tax laws.

12.3  Survival.  The respective obligations of, and benefits afforded to PGI and
      --------
      you as provided in Sections VIII, X and XI and paragraphs 12.2 and 12.7 of
      this Agreement that have accrued upon the first occurrence of a
      Fundamental Change shall survive termination of this Agreement.

12.4  Notice.  For the purposes of this Agreement, notices and all other
      ------
      communications provided for in the Agreement shall be in writing and shall
      be deemed to have been duly given when delivered postage prepaid and
      addressed, in the case of PGI, to the address set forth on the first page
      of this Agreement or, in the case of the undersigned employed, to the
      address set forth below his signature provided that all notices to PGI
      shall be directed to the attention of the Secretary of the Board or
      Chairman of the Compensation Committee, or to such other address as either
      party may have furnished to the other in writing in accordance herewith,
      except that notice of change of address shall be effective only upon
      receipt.

12.5  Miscellaneous.  No provision of this Agreement may be modified, waived or
      -------------
      discharged unless such modification, waiver or discharge is agreed to in
      writing signed by you and the Board of PGI. No waiver by either party
      hereto at any time of any breach by the other party hereto of, or in
      compliance with, any condition or provision of this Agreement to be
      performed by such other party shall be deemed a waiver of similar or
      dissimilar provisions or conditions at the same or at any prior or
      subsequent time. No agreements or representations, oral or otherwise,
      express or implied, with respect to the subject matter hereof have been
      made by either party which are not expressly set forth in this Agreement.
      The validity, interpretation, construction and performance of this
      Agreement shall be governed by the laws of the State of South Carolina.

12.6  Validity.  The invalidity or unenforceability of any provision of this
      --------
      Agreement shall not affect the validity or enforceability of any other
      provision of this Agreement, which shall remain in full force and effect.

12.7  Arbitration.  Any dispute or controversy arising under or in connection
      -----------
      with this Agreement shall be settled, exclusively by arbitration by three
      arbitrators in accordance with the rules of the American Arbitration
      Association then in effect. Judgment may be entered on the arbitrators'
      award in any court having jurisdiction; provided, however, that you shall
      be entitled to seek specific performance of your right to be paid until
      the Date of Termination during the pendency of any dispute or controversy
      arising under or in connection with this Agreement. PGI shall bear all
      costs and expenses arising in connection with any arbitration proceeding
      pursuant to this paragraph 12.7.

12.8  Counterparts.  This Agreement may be executed in several counterparts,
      ------------
      each of which shall be deemed to be an original but all of which together
      will constitute one and the same instrument.

12.9  Amendments.  Notwithstanding anything in the foregoing to the contrary,
      ----------
      the Incumbent Board may by resolution or otherwise prior to the occurrence
      of a Fundamental Change effect any amendments to this Agreement as it
      deems appropriate provided that such amendments are not adverse to your
      right to receive any benefits to which you may become entitled in the
      event of a Fundamental Change as described in this Agreement.
<PAGE>

If this letter correctly sets forth our agreement on the subject matter hereof,
kindly sign and retime to PGI the enclosed copy of this letter which will then
constitute our agreement on this subject.

Sincerely,

POLYMER GROUP, INC.

By: /s/ Bruce V. Rauner
   -----------------------
     Bruce V. Rauner
     Chairman
     Compensation Committee

Agreed as of the 5th day of May 1998

/s/ Jerry Zucker
--------------------------
Jerry Zucker
<PAGE>

                                 [LETTERHEAD OF PGI]
                                                                 May 22, 1998

Personal and Confidential
-------------------------

Mr. James G. Boyd
Executive Vice President, Treasurer & CFO
Polymer Group, Inc.
4838 Jenkins Avenue
North Charleston, S. C. 29405

Dear Jim:

Polymer Group, Inc. ("PGI") considers the establishment and continuance of a
strong and vital management to be essential to protecting and enhancing the best
interests of PGI and its shareholders. In this connection, PGI recognizes that
when events which could lead to a change of control of PGI occur, they give rise
to material uncertainties and questions as to the ownership and future direction
of PGI which would persist for some time. The Board recognizes that such
uncertainties could result in the departure or possible distraction of key
management personnel to the detriment of PGI and its shareholders. Accordingly,
the Board wishes to clarify arrangements relating to your employment by PGI or
its affiliates, particularly in circumstances relating to change of control to
reinforce and encourage you to continue employment with PGI.  In particular, the
Board believes it important, should PGI or its shareholders receive a proposal
in respect of a change in ownership of PGI, that your employment with PGI or its
affiliates be continued during the pendency of such proposals and you be able to
assess and advise PGI and its shareholders and to take such other action
regarding such proposals as the Board might determine to be appropriate, without
being influenced by the uncertainties of your own situation.

In order to induce you to remain in the employ of PGI, this letter agreement
("Agreement"), which was approved by the Board at its May 5, 1998 Board meeting,
sets forth the severance and termination benefits which PGI agrees will be
provided to you in the event your employment with PGI is terminated or
significantly affected subsequent to a Fundamental Change (as defined) in the
ownership or the direction of PGI under the circumstances described below.  Also
note that this Agreement revokes and shall supersede all other prior agreements
between you and PGI dealing with the specific benefits to be given to you under
any Benefit Plan (as hereinafter defined) in the event your employment with PGI
is terminated or significantly affected within twenty-four (24) months
subsequent to a Fundamental Change.  The obligations of PGI to provide the
benefits under this Agreement are applicable only in the event of a Fundamental
Change in the ownership or direction of PGI in the circumstances described below
and do not otherwise affect your present terms and conditions of employment.
This Agreement does not in any way establish a precedent or guideline for PGI's
obligation to provide such benefits in circumstances other than those described
herein. Accordingly, the definitions contained herein, including the definition
of "Cause" and "Good Reason," are applicable only for the purpose of this
Agreement.
<PAGE>

I.  Definitions
    -----------

1.1  In this Agreement, the term:

     (a)  "Base Salary" shall mean your annual salary in effect prior to the
           -----------
          date of delivery of a Notice of Termination (without regard to any
          reduction in that salary in the sixty (60) days prior to the date of
          delivery of such Notice).

     (b)  "Beneficial Owner of Voting Securities" means a Person who has any
           -------------------------------------
          beneficial interest in or control or direction over the Voting
          Securities or has a right to control or direct voting or disposition
          of Voting Securities held in a trust or has the right to acquire any
          beneficial interest in Voting Securities, whether issued or unissued
          conditionally or unconditionally, within sixty (60) days whether by
          exercise of an option, warrant, right, subscription privilege,
          agreement, revocation of a trust or otherwise.

     (c)  "Benefit Plan" shall mean any compensation plan such as an incentive,
           ------------
          stock option plan or any employee benefit plan such as a saving,
          pension, profit sharing, medical, dental, disability, accident, life
          insurance plan or a relocation plan or policy or any other material
          plan, program, perquisite or policy of PGI intended to benefit
          employees.

     (d)  "Board" means the Board of Directors of PGI.
           -----

     (e)  "Cause" shall mean (i) the willful and continued failure by you to
           -----
          perform substantially your duties with PGI (other than any such
          failure resulting from your incapacity due to physical or mental
          illness) after a written demand for substantial performance is
          delivered to you by the Board which specifically identifies the manner
          in which the Board of Directors believes that you have not
          substantially performed your duties, or (ii) the willful engaging by
          you in illegal conduct which is materially and demonstrably injurious
          to PGI.  For the purposes of this definition, no act, or failure to
          act, on your part, shall be considered "willful" unless done or
          omitted to be done by you in bad faith and without reasonable belief
          that such action or omission was in, or not opposed to, the best
          interests of PGI.

     (f)  "Date of Termination" means the date specified in Section VII of
           -------------------
          this Agreement.

     (g)  "Fundamental Change" shall mean any one of the following events:
           ------------------

          (i)  any Person or group of Persons acting jointly and in concert,
               becomes the beneficial Owner, directly or indirectly, of thirty-
               five percent (35%) or more of the combined voting power of PGI's
               Voting Securities, but not including any Person whose ownership
               of such a percentage of Voting Securities results solely from a
               share repurchase by PGI or a subsidiary thereof (unless such
               Person or Persons subsequently purchases any additional Voting
               Securities).

          (ii) a Person or group of Persons acting jointly and in concert, who
               is the registered owner or beneficial Owner of five percent (5%)
               or greater of the combined voting power of PGI's Voting
               Securities (A) indicates in an information circular sent to
               shareholders of PGI or otherwise indicates in writing, that such
               Person or Persons intends to nominate, or (B) at a meeting of
               PGI's shareholders nominates, individuals for election to the
               Board who have not been approved by the Incumbent Board (either
               by a specific vote or by
<PAGE>

                approval of the proxy statement of PGI in which such person is
                named as a nominee for director, without objection to such
                nomination) and who, if elected, would constitute a majority of
                the members on the Board who are not full-time employees of PGI
                or its subsidiaries and a majority of such nominees are so
                elected.

          (iii) PGI ceases to control in fact, directly or indirectly, all or
                substantially all of the assets employed in carrying on the
                business of PGI.

          Notwithstanding anything in the foregoing to the contrary, no
          Fundamental Change shall be deemed to have occurred for purposes of
          this Agreement by virtue of any transaction which results in any
          Person or Persons approved by the Incumbent Board becoming the
          beneficial Owner of Voting Securities, directly or indirectly, of more
          than thirty-five percent (35%) but less than fifty per cent (50%) of
          the combined voting power of PGI's voting securities.

     (h)  "Good Reason" shall mean:
           -----------

          (i)   a reduction by PGI in your Base Salary or the opportunity for
                cash and non-cash incentive and other compensation as in effect
                immediately prior to the Fundamental Change;

          (ii)  at any time after the happening of a Fundamental Change, an
                adverse change in your status, position(s) or salary group or
                scope of responsibility as an executive in effect immediately
                prior to the Fundamental Change, including, without limitation,
                a diminution of your scope of duties or responsibilities, the
                addition of new executive positions with equal or greater title,
                status or responsibility, any change in reporting responsibility
                or the assignment to you of any duties or areas of
                responsibilities which, in your reasonable judgment, are
                inconsistent with such status or position(s), co-
                responsibilities undertaken prior to a Fundamental Change or any
                removal of you from or any failure to reappoint or reelect you
                to such position(s) (except in connection with the termination
                of your employment for Cause or disability);

          (iii) the failure by PGI to continue in effect any Benefit Plan in
                which you are participating at the time of the Fundamental
                Change or the taking of any action, or the failure to act, by
                PGI which would adversely affect your continued participation in
                any of such Benefit Plans on at least as favorable a basis to
                you as is the case at the time of the Fundamental Change or
                which would materially reduce your benefits in the future under
                any of such Benefit Plans or deprive you of any material
                employment related benefit enjoyed by you at the time of the
                Fundamental Change; provied, any modification required by the
                Employee Retirement Income Security Act of 1974, as amended
                ("ERISA") or the Internal Revenue Code of 1986, as amended (the
                  -----
                "Code") shall not constitute Good Reason;
                 ----

          (iv)  PGI requiring you to regularly report for employment to an
                office located anywhere in excess of fifty (50) miles from where
                your office is located immediately prior to the Fundamental
                Change, except for required travel on PGI's business to an
                extent substantially consistent with the business travel
                obligations which you undertook on behalf of PGI prior to the
                Fundamental Change,
<PAGE>

          (v)   any purported termination by PGI of your employment which is not
                effected pursuant to a Notice of Termination satisfying the
                requirements of paragraph 6.1 below (and, if applicable,
                paragraphs 1.1(e) and 5.2 of this Agreement);

          (vi)  failure by PGI to pay or cause to be paid to you any amounts due
                to you under the terms of any of PGI's Benefit Plan after a
                decision of the Board that it is in PGI's best interests to do
                so in accordance with paragraph 4.1 of this Agreement;

          (vii) the failure by PGI to obtain from any Successor the assent to
                this Agreement contemplated by paragraph 10.1 hereof.

     (i)  "lncumbent Board" means the members of the Board on the date hereof
           ---------------
          and any person becoming a director of PGI subsequent to that date
          whose election, or nomination for election by PGI's shareholders, was
          approved by a vote of at least three-quarters (3/4) of the directors
          comprising the Incumbent Board (either by a specific vote or by
          approval of the proxy statement of PGI in which such person is named
          as a nominee for director, without objection to such nomination).

     (j)  "Notice of Termination"  means a notice given in accordance with
           ---------------------
          paragraph 6.1 of this Agreement.

     (k)  "Person" or "Persons" shall mean and include any individual,
           -------------------
          corporation, partnership, unincorporated organization or syndicate or
          association, trust, trustee, executor, administrator or other legal
          representative other than PGI, a subsidiary of PGI or any employee
          benefit plan(s) sponsored by PGI or a subsidiary of PGI.

     (l)  "PGI" means Polymer Group, Inc. and includes any corporation or other
           ---
          entity which is the surviving or continuing entity in respect of any
          amalgamation, merger, consolidation, combination, recapitalization,
          dissolution or form of business combination.

     (m)  "Retirement" shall mean termination by you of your employment with PGI
           ----------
          on or after your normal retirement date, including early retirement
          with your written consent, under and in accordance with the terms of
          the qualified plans of PGI in which you participate or the retirement
          date declared by you in writing.

     (n)  "Successor" shall mean any Person that concurrently with or subsequent
           ---------
          to a Fundamental Change succeeds to, or has the practical ability to
          control (either immediately or with the passage of time), PGI's
          business directly, by merger or consolidation, or indirectly, by
          purchase of PGI's Voting Securities, all or substantially all of its
          assets or otherwise.

     (o)  "Voting Securities" shall mean any share or other security that
           -----------------
          carries a voting right either under all circumstances or under some
          circumstances that have occurred and are continuing and also includes
          any share or security that is ultimately exercisable or convertible
          into a Voting Security, whether conditionally or unconditionally.
<PAGE>

II.  Agreement to Provide Services: Right to Terminate
     -------------------------------------------------

2.1  Except as otherwise provided in paragraph 2.2 below, after the first
     occurrence of a Fundamental Change, PGI or you may terminate your
     employment at any time subject to PGI providing to you the benefits
     hereinafter specified in respect of termination of your employment all in
     accordance with the terms hereof.

2.2  In the event a take-over is made by a Person or Persons acting jointly and
     in concert in respect of any securities of PGI prior to the first
     occurrence of a Fundamental Change, you agree that you will not leave the
     employ of PGI (other than as a result of disability or upon Retirement)
     until the earliest of (a) one hundred and twenty (120) days after the
     commencement of such take-over bid, (b) such take-over bid has been
     abandoned or terminated, or (c) the first occurrence of a Fundamental
     Change.

III. Term of the Agreement
     ---------------------

3.1  This Agreement shall commence on the date hereof and shall continue to be
     in effect for a minimum period of five years commencing May 5, 1998 and
     shall, automatically be extended for additional periods of one year unless
     at least ninety (90) days prior to the expiration of the current one year
     period, PGI or you shall have given written notice that this Agreement
     shall not be extended.

3.2  It is further provided that this Agreement shall continue to be in effect
     for a period of twenty four (24) months beyond the term provided in
     paragraph 3.1 above if a Fundamental Change in PGI shall have occurred
     during such term. Notwithstanding anything in this Section III to the
     contrary, your employment may be terminated by PGI prior to the happening
     of a Fundamental Change, without giving rise to the obligations of PGI
     hereunder provided, however, any such termination will be subject to
     applicable laws and any other agreements you may have with PGI. This
     Agreement may be terminated by you prior to the happening of a Fundamental
     Change, except after the commencement of a take-over bid wherein you may
     terminate this Agreement only in the circumstances indicated in paragraph
     2.2. above.

3.3  Any amendment or termination of this Agreement in accordance with the terms
     hereof shall not be construed as a termination of your employment nor shall
     it constitute a change in the terms of your employment so as to amount to
     your constructive dismissal and you hereby waive any rights to pursue such
     a claim on the basis of such amendment or termination of this Agreement.

IV.  Stock Option Plan
     -----------------

4.1  The Board shall continue to have any power to accelerate the vesting of
     options and stock appreciation rights that is currently available to it
     under the Stock Option Plan. In addition, providing that the Board of
     Directors judges that it is in the best interests of the shareholders not
                                                                           ---
     to have the options vested automatically, all options and stock
     appreciation rights granted to you under the Stock Option Plan, whether
     vested or not, shall become vested and immediately exercisable:

     (a)  If at any time, any person, other than yourself or an Affiliate
          thereof, beneficially owns, directly or indirectly, voting securities
          of the Corporation carrying more than 35% of the votes for the
          election of directors or any person makes a successful take-over bid
          for 50% or more of the voting securities of the Corporation (including
          the voting securities of the Corporation then held by such offeror).
<PAGE>

     (b)  less than 20% of PGI's Voting Securities are listed on The New York
          Stock Exchange, or a similar recognized stock exchange and are widely
          held by persons other than the Person (or group of Persons acting
          jointly or in concert) whose actions have given rise to the
          Fundamental Change; or

     (c)  you are terminated other than for Cause, in accordance with the terms
          of this Agreement.

V.   Termination Following Fundamental Change
     ----------------------------------------

5.1  Following the first occurrence of any Fundamental Change in PGI, you shall
     be entitled to the benefits provided in paragraph 8.2 hereof upon:

     (a)  the termination of your employment by PGI at any time within twenty-
          four (24) months after the happening of such Fundamental Change unless
          such termination is (A) because of your death or Retirement, or (B) by
          PGI for Cause or disability;

     (b)  the termination of your employment by you with Good Reason providing
          that such termination occurs within twenty-four (24) months after the
          happening of such Fundamental Change; or

     (c)  termination of your employment within the mutual consent of you and
          PGI within twenty-four (24) months of the happening of such
          Fundamental Change.

5.2  If PGI intends to terminate your employment for Cause following a
     Fundamental Change then any act, or failure to act, based upon authority
     given pursuant to a resolution duly adopted by the Board or based upon the
     advice of counsel for PGI shall be conclusively presumed to be done, or
     omitted to be done, by you in good faith and in the best interests of PGI.

     Notwithstanding the foregoing, you shall not be deemed to have been
     terminated for Cause unless and until a copy of a resolution duly adopted
     by the affirmative vote of not less than three-quarters (3/4) of the
     directors who are not full-time employees of PGI or any of its subsidiaries
     at a meeting of the Board called and held for the purpose (after reasonable
     notice to you and an opportunity for you, together with your counsel, to be
     heard before the Board has been given), finding that in the good faith
     opinion of the Board you were guilty of the conduct set forth above in sub-
     clauses (i) or (ii) of paragraph 1.1(e) and specifying the particulars
     thereof in detail is delivered to you.

VI.  Notice of Termination
     ---------------------

6.1  Any purported termination by PGI or by you following a Fundamental Change
     shall be communicated by written Notice of Termination to the other party
     hereto and shall indicate with reasonable particularity the specific
     termination provision in this Agreement relied upon.

VII. Date of Termination
     -------------------

7.1  "Date of Termination"  following a Fundamental Change shall mean:
      -------------------

     (a)  if your employment is to be terminated by PGI for Cause, the date
          specified in the Notice of Termination which shall be on or after the
          date upon which the Notice of Termination is delivered;
<PAGE>

      (b)  if you terminate employment with Good Reason, a date no earlier than
           thirty (30) days from the date on which the Notice of Termination is
           given; or

      (c)  if your employment is to be terminated by PGI for any reason other
           than Cause, the date specified in the Notice of Termination, which in
           no event shall be a date earlier than sixty (60) days after the date
           on which a Notice of Termination is given unless an earlier date has
           been expressly agreed to by you in writing either in advance of, or
           after, receiving such Notice of Termination.

7.2   In the case of termination by PGI of your employment for Cause, if you
      have not previously expressly agreed in writing to the termination, then
      within thirty (30) days after receipt by you of the Notice of Termination
      with respect thereto, you may notify PGI that a dispute exists concerning
      the termination, in which event the Date of Termination shall be the date
      set either by mutual written agreement of the parties or by the
      arbitrators in a proceeding as provided in paragraph 12.7 hereof.

VIII. Compensation Upon Termination
      -----------------------------

8.1   If your employment shall be terminated for Cause following a Fundamental
      Change, PGI shall pay you your Base Salary and prorated bonus through the
      Date of Termination plus any other benefits or awards (including the cash
      value of any Benefit Plan, if applicable) which have been earned or become
      payable, but which have not yet been paid to you. Thereupon PGI shall have
      no further obligations to you under this Agreement.

8.2   If your employment is terminated after the first occurrence of any
      Fundamental Change in accordance with the manner described in paragraph
      5.1 then, on the fifth (5th) day following the Date of Termination (except
      as otherwise provided), you shall be entitled without regard to any
      contrary provisions of any Benefit Plan, to the benefits as provided below

      (a)  PGI shall pay your base Salary plus any annual benefits or awards
           (including both the cash and non-cash value of any Benefit Plan, if
           applicable, including bonus or incentives) pro-rated to the Date of
           Termination on the basis that any targets necessary to obtain such
           awards have been achieved, in a manner acceptable to you.
           Notwithstanding anything in this Section VIII to the contrary, the
           amount payable to you in respect of bonus or incentive plans shall be
           paid to you within five days of receipt by PGI of the audited
           financial results for the year in which the Date of Termination
           occurs.

      (b)  PGI shall pay you as severance pay and in lieu of any further salary
           for periods subsequent to the Date of Termination, an amount in cash
           equal to 2.99 times the aggregate of your (i) Base Salary plus (ii)
           the cash value of the non-cash Benefit Plans plus (iii) the average
           of annual bonus you received in the two (2) years immediately
           preceding the Date of Termination.

8.3   The amount of any payment provided for in this Section VIII shall not be
      reduced, offset or subject to recovery by PGI by reason of any
      compensation earned by you as the result of employment by another employer
      after the Date of Termination, or otherwise.

8.4   In the event that your employment is terminated in the circumstances
      described in paragraph 5.1, in the Notice of Termination or otherwise,
      within four (4) days of the Date of Termination, you may, in writing,
      direct PGI that any amounts which should become payable to you pursuant to
      paragraph 8.2 hereof shall be paid to you in three (3) equal annual
      installments, with the first such installment payable five (5) business
      days after the Date of Termination and each
<PAGE>

     successive installment paid on the anniversary of the Date of Termination
     or the next following business day if such date is not a business day;
     provided, any amounts to be paid from the trust(s) of qualified plans shall
     only be payable at the time and in the manner prescribed under such plans.

IX.  Additional Rights
     -----------------

9.1  You agree that the provisions of this Agreement include any statutory
     entitlements to notice of termination or termination pay in lieu of notice
     and severance pay and is in lieu of and replaces any common law
     entitlements to notice of termination or pay in lieu thereof and you waive
     your right at common law to reasonable notice.  (The notice period for
     termination of employment as provided herein shall comply with the notice
     of termination provisions of applicable employment standards legislation,
     as amended from time to time).

X.   Successors:  Binding Agreement
     ------------------------------

10.1 Any Successor to PGI shall be bound by this Agreement. PGI will seek to
     have any Successor assent to the fulfillment by PGI of its obligations
     under this Agreement at your request. Failure of PGI to obtain such assent
     within thirty (30) days after such request shall constitute Good Reason for
     termination by you of your employment and shall entitle you to the benefits
     provided in paragraph 8.2 hereof upon delivery by you of a Notice of
     Termination.

10.2 This Agreement shall inure to the benefit of and be enforceable by your
     personal or legal representatives, executors, administrators, successors or
     heirs.  If you should die while any amount would still be payable to you
     hereunder if you had continued to live, all such amounts, unless otherwise
     provided herein, shall be paid in accordance with the terms of this
     Agreement to a beneficiary designated by you in writing or barring such
     designation to your estate; provided, with respect to all employee Benefit
     Plans subject to ERISA, any beneficiary designation will be governed by the
     terms of such plans.

XI.  Fees and Expenses:  Mitigation
     ------------------------------

11.1 PGI shall pay all reasonable legal and accounting fees and related
     expenses incurred by you in connection with the Agreement following a
     Fundamental Change including, without limitation, (a) all such fees and
     expenses, if any, incurred in contesting or disputing any termination of
     your employment by PGI after a Fundamental Change or incurred by you in
     seeking advice with respect to general taxation and financial advice with
     respect to the receipt of payments hereunder or (b) your seeking to obtain
     or enforce any right or benefit provided by this Agreement provided,
     however, you shall be required to repay any such amounts to PGI to the
     extent that a court issues a final and non-appealable order setting forth
     the determination that the position taken by you was frivolous or advanced
     by you in bad faith.

11.2 You shall not be required to mitigate the amount of any payment PGI
     becomes obligated to make to you in connection with this Agreement, by
     seeking other employment or otherwise.

XII. General
     -------

12.1 Confidentiality.  Notwithstanding any provision of this Agreement, any
     ---------------
     provision governing an obligation of confidentiality on your part to PGI
     that is contained in any other agreement that you may have with PGI shall
     continue to be of full force and effect.
<PAGE>

12.2  Taxes and Other Amounts.  All payments to be made to you under this
      -----------------------
      Agreement will be subject to required withholding of income tax and other
      amounts under federal, and state tax laws.

12.3  Survival.  The respective obligations of, and benefits afforded to PGI and
      --------
      you as provided in Sections VIII, X and XI and paragraphs 12.2 and 12.7 of
      this Agreement that have accrued upon the first occurrence of a
      Fundamental Change shall survive termination of this Agreement.

12.4  Notice.  For the purposes of this Agreement, notices and all other
      ------
      communications provided for in the Agreement shall be in writing and shall
      be deemed to have been duly given when delivered postage prepaid and
      addressed, in the case of PGI, to the address set forth on the first page
      of this Agreement or, in the case of the undersigned employed, to the
      address set forth below his signature provided that all notices to PGI
      shall be directed to the attention of the Secretary of the Board or
      Chairman of the Compensation Committee, or to such other address as either
      party may have furnished to the other in writing in accordance herewith,
      except that notice of change of address shall be effective only upon
      receipt.

12.5  Miscellaneous.  No provision of this Agreement may be modified, waived or
      -------------
      discharged unless such modification, waiver or discharge is agreed to in
      writing signed by you and the Board of PGI. No waiver by either party
      hereto at any time of any breach by the other party hereto of, or in
      compliance with, any condition or provision of this Agreement to be
      performed by such other party shall be deemed a waiver of similar or
      dissimilar provisions or conditions at the same or at any prior or
      subsequent time. No agreements or representations, oral or otherwise,
      express or implied, with respect to the subject matter hereof have been
      made by either party which are not expressly set forth in this Agreement.
      The validity, interpretation, construction and performance of this
      Agreement shall be governed by the laws of the State of South Carolina.

12.6  Validity.  The invalidity or unenforceability of any provision of this
      --------
      Agreement shall not affect the validity or enforceability of any other
      provision of this Agreement, which shall remain in full force and effect.

12.7  Arbitration.  Any dispute or controversy arising under or in connection
      -----------
      with this Agreement shall be settled, exclusively by arbitration by three
      arbitrators in accordance with the rules of the American Arbitration
      Association then in effect. Judgment may be entered on the arbitrators'
      award in any court having jurisdiction; provided, however, that you shall
      be entitled to seek specific performance of your right to be paid until
      the Date of Termination during the pendency of any dispute or controversy
      arising under or in connection with this Agreement. PGI shall bear all
      costs and expenses arising in connection with any arbitration proceeding
      pursuant to this paragraph 12.7.

12.8  Counterparts.  This Agreement may be executed in several counterparts,
      ------------
      each of which shall be deemed to be an original but all of which together
      will constitute one and the same instrument.

12.9  Amendments.  Notwithstanding anything in the foregoing to the contrary,
      ----------
      the Incumbent Board may by resolution or otherwise prior to the occurrence
      of a Fundamental Change effect any amendments to this Agreement as it
      deems appropriate provided that such amendments are not adverse to your
      right to receive any benefits to which you may become entitled in the
      event of a Fundamental Change as described in this Agreement.
<PAGE>

If this letter correctly sets forth our agreement on the subject matter hereof,
kindly sign and retime to PGI the enclosed copy of this letter which will then
constitute our agreement on this subject.

Sincerely,

POLYMER GROUP, INC.

By: /s/ Bruce V. Rauner
   -------------------------------------
     Bruce V. Rauner
     Chairman
     Compensation Committee

Agreed as of the 5th day of May, 1998

/s/ James G. Boyd
----------------------------------------
James G. Boyd

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