<SUBMISSION>
<ACCESSION-NUMBER>0000905148-03-000952
<TYPE>SC 13D
<PUBLIC-DOCUMENT-COUNT>6
<FILING-DATE>20030317
<GROUP-MEMBERS>DAVID J. MATLIN
<GROUP-MEMBERS>MARK R. PATTERSON
<GROUP-MEMBERS>MATLIN PATTERSON LLC
<GROUP-MEMBERS>MATLINPATTERSON ASSET MANAGEMENT LLC
<GROUP-MEMBERS>MATLINPATTERSON GLOBAL ADVISERS LLC
<GROUP-MEMBERS>MATLINPATTERSON GLOBAL OPPORTUNITIES PARTNERS B, L.P.
<GROUP-MEMBERS>MATLINPATTERSON GLOBAL OPPORTUNITIES PARTNERS L.P.
<GROUP-MEMBERS>MATLINPATTERSON GLOBAL OPPORTUNITIES PARTNERS(BERMUNDA)L.P
<GROUP-MEMBERS>MATLINPATTERSON GLOBAL PARTNERS LLC
<SUBJECT-COMPANY>
<COMPANY-DATA>
<CONFORMED-NAME>POLYMER GROUP INC
<CIK>0000927417
<ASSIGNED-SIC>2221
<IRS-NUMBER>571003983
<STATE-OF-INCORPORATION>DE
<FISCAL-YEAR-END>0103
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>SC 13D
<ACT>34
<FILE-NUMBER>005-46353
<FILM-NUMBER>03606465
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>4838 JENKINS AVE
<CITY>NORTH CHARLESTON
<STATE>SC
<ZIP>29405
<PHONE>8037445174
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>4838 JENKINS AVENUE
<CITY>NORTH CHARLESTON
<STATE>SC
<ZIP>29405
</MAIL-ADDRESS>
</SUBJECT-COMPANY>
<FILED-BY>
<COMPANY-DATA>
<CONFORMED-NAME>MATLINPATTERSON GLOBAL OPPORTUNITIES PARTNERS LP
<CIK>0001203389
<IRS-NUMBER>000000000
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>SC 13D
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>520 MADISON AVENUE
<STREET2>9TH FLOOR
<CITY>NEW YORK
<STATE>NY
<ZIP>10022
<PHONE>212 651 9500
</BUSINESS-ADDRESS>
</FILED-BY>
<DOCUMENT>
<TYPE>SC 13D
<SEQUENCE>1
<FILENAME>efc3-0412_5333843sch13d.txt
<TEXT>



                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549

                                 SCHEDULE 13D
                                (Rule 13d-101)

                   Under the Securities Exchange Act of 1934

                              Polymer Group, Inc.
                               (Name of Issuer)

                    Common Stock, par value $0.01 per share
                        (Title of Class of Securities)

                                   731745105
                                (CUSIP Number)

              MatlinPatterson Global Opportunities Partners L.P.
         MatlinPatterson Global Opportunities Partners (Bermuda) L.P.
             MatlinPatterson Global Opportunities Partners B, L.P.
                      MatlinPatterson Global Advisers LLC
                      MatlinPatterson Global Partners LLC
                     MatlinPatterson Asset Management LLC
                              MatlinPatterson LLC
                               Mark R. Patterson
                                David J. Matlin
                           (Name of Persons Filing)

                                 Robert Weiss
                      MatlinPatterson Global Advisers LLC
                              520 Madison Avenue
                           New York, New York 10022
                           Telephone: (212) 651-9525
           (Name, Address and Telephone Number of Person Authorized
                    to Receive Notices and Communications)

                                 March 6, 2003
            (Date of Event which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to
report the acquisition that is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-l(e), 13d-l(f) or 13d-l(g), check the
following box [ ]

Note: Schedules filed in paper format shall include a signed original and five
copies of the  Schedule,  including  all  exhibits.  See Rule  13d-7 for other
parties to whom copies are to be sent.

The information required on this cover page shall not be deemed to be "filed"
for the purpose of Section 18 of the Securities Exchange Act of 1934
("Exchange Act") or otherwise subject to the liabilities of that section of
the Exchange Act but shall be subject to all other provisions of the Exchange
Act (however, see the Notes)
                        (Continued on following pages)


                              (Page 1 of 31 pages)
<PAGE>


                                 SCHEDULE 13D

-------------------------------------------------------------------------------
CUSIP No.    731745105                                     Page  2 of 31 Pages
-------------------------------------------------------------------------------

      1    NAMES OF REPORTING PERSONS

           I.R.S.  IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)

                MatlinPatterson Global Opportunities Partners L.P.
-------------------------------------------------------------------------------
      2    CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP        (a) /_/
                                                                   (b) /x/
-------------------------------------------------------------------------------
      3    SEC USE ONLY
-------------------------------------------------------------------------------
      4    SOURCE OF FUNDS
                       AF, WC
-------------------------------------------------------------------------------
      5    CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
           REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)                 /_/
-------------------------------------------------------------------------------
      6    CITIZENSHIP OR PLACE OF ORGANIZATION
                       Delaware
-------------------------------------------------------------------------------

    SHARES                       7               SOLE VOTING POWER
 BENEFICIALLY
 OWNED BY EACH                                            0
   REPORTING
  PERSON WITH
-------------------------------------------------------------------------------

                                 8               SHARED VOTING POWER
                                                      10,727,193
-------------------------------------------------------------------------------

                                 9               SOLE DISPOSITIVE POWER
                                                           0
-------------------------------------------------------------------------------

                                 10              SHARED DISPOSITIVE POWER
                                                       10,727,193
-------------------------------------------------------------------------------
     11          AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
                 PERSON
                             10,727,193
-------------------------------------------------------------------------------
     12          CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
                 CERTAIN SHARES                                        /_/
-------------------------------------------------------------------------------
     13          PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
                             80.3%
-------------------------------------------------------------------------------
     14          TYPE OF REPORTING PERSON
                             PN
-------------------------------------------------------------------------------


                                (Page 2 of 31)
<PAGE>


                                 SCHEDULE 13D

-------------------------------------------------------------------------------
CUSIP No.       731745105                                 Page 3 of 31 Pages
-------------------------------------------------------------------------------

      1       NAMES OF REPORTING PERSONS

              I.R.S.  IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)

                 MatlinPatterson Global Opportunities Partners (Bermuda) L.P.
-------------------------------------------------------------------------------
      2       CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP       (a) /_/
                                                                     (b) /x/
-------------------------------------------------------------------------------
      3       SEC USE ONLY
-------------------------------------------------------------------------------
      4       SOURCE OF FUNDS
                          AF, WC
-------------------------------------------------------------------------------
      5       CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
              PURSUANT TO ITEMS 2(d) or 2(e)                         /_/
-------------------------------------------------------------------------------
      6       CITIZENSHIP OR PLACE OF ORGANIZATION
                          Bermuda
-------------------------------------------------------------------------------

    SHARES                       7               SOLE VOTING POWER
 BENEFICIALLY
 OWNED BY EACH
   REPORTING
 PERSON WITH                                               0
-------------------------------------------------------------------------------

                                 8               SHARED VOTING POWER
                                                       2,736,403
-------------------------------------------------------------------------------

                                 9               SOLE DISPOSITIVE POWER
                                                           0
-------------------------------------------------------------------------------

                                 10              SHARED DISPOSITIVE POWER
                                                       2,736,403
-------------------------------------------------------------------------------
     11          AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
                 PERSON
                            2,736,403
-------------------------------------------------------------------------------
     12          CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
                 CERTAIN SHARES                                       /_/
-------------------------------------------------------------------------------
     13          PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
                            28.9%
-------------------------------------------------------------------------------
     14          TYPE OF REPORTING PERSON
                            PN
-------------------------------------------------------------------------------


                                (Page 3 of 31)
<PAGE>


                                 SCHEDULE 13D

-------------------------------------------------------------------------------
CUSIP No.             731745105                             Page 4 of 31 Pages
-------------------------------------------------------------------------------

      1        NAMES OF REPORTING PERSONS

               I.R.S.  IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)

                   MatlinPatterson Global Opportunities Partners B, L.P.
-------------------------------------------------------------------------------
      2       CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP     (a) /_/
                                                                   (b) /x/
-------------------------------------------------------------------------------
      3       SEC USE ONLY
-------------------------------------------------------------------------------
      4       SOURCE OF FUNDS
                          AF, WC
-------------------------------------------------------------------------------
      5       CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
              PURSUANT TO ITEMS 2(d) or 2(e)                            /_/
-------------------------------------------------------------------------------
      6       CITIZENSHIP OR PLACE OF ORGANIZATION
                          Delaware
-------------------------------------------------------------------------------

    SHARES                       7               SOLE VOTING POWER
 BENEFICIALLY
 OWNED BY EACH                                             0
  REPORTING
 PERSON WITH
-------------------------------------------------------------------------------

                                 8               SHARED VOTING POWER
                                                        132,581
-------------------------------------------------------------------------------

                                 9               SOLE DISPOSITIVE POWER
                                                           0
-------------------------------------------------------------------------------

                                 10              SHARED DISPOSITIVE POWER
                                                         132,581
-------------------------------------------------------------------------------
     11           AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
                  PERSON

                  132,581
-------------------------------------------------------------------------------
     12           CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
                  CERTAIN SHARES                                      /_/
-------------------------------------------------------------------------------
     13           PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
                       1.6%
-------------------------------------------------------------------------------

     14           TYPE OF REPORTING PERSON
                       PN
-------------------------------------------------------------------------------


                                (Page 4 of 31)
<PAGE>


                                 SCHEDULE 13D

-------------------------------------------------------------------------------
CUSIP No.           731745105                               Page 5 of 31 Pages
-------------------------------------------------------------------------------

      1       NAMES OF REPORTING PERSONS

              I.R.S.  IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)

                      MatlinPatterson Global Advisers LLC
-------------------------------------------------------------------------------
      2       CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP        (a)/_/
                                                                      (b)/x/
-------------------------------------------------------------------------------
      3       SEC USE ONLY
-------------------------------------------------------------------------------
      4       SOURCE OF FUNDS
                          AF, WC
-------------------------------------------------------------------------------
      5       CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
              PURSUANT TO ITEMS 2(d) or 2(e)                            /_/
-------------------------------------------------------------------------------
      6       CITIZENSHIP OR PLACE OF ORGANIZATION
                          Delaware
-------------------------------------------------------------------------------

    SHARES                       7               SOLE VOTING POWER
 BENEFICIALLY
 OWNED BY EACH                                             0
  REPORTING
 PERSON WITH
-------------------------------------------------------------------------------

                                 8               SHARED VOTING POWER
                                                      10,727,193
-------------------------------------------------------------------------------

                                 9               SOLE DISPOSITIVE POWER
                                                           0
-------------------------------------------------------------------------------

                                 10              SHARED DISPOSITIVE POWER
                                                       10,727,193
-------------------------------------------------------------------------------
     11            AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
                   PERSON

                   10,727,193
-------------------------------------------------------------------------------
     12            CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
                   CERTAIN SHARES                                        /_/
-------------------------------------------------------------------------------
     13            PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
                        80.3%
-------------------------------------------------------------------------------
     14            TYPE OF REPORTING PERSON
                        IA
-------------------------------------------------------------------------------


                                (Page 5 of 31)
<PAGE>


                                 SCHEDULE 13D

-------------------------------------------------------------------------------
CUSIP No.          731745105                                Page 6 of 31 Pages
-------------------------------------------------------------------------------

      1        NAMES OF REPORTING PERSONS

               I.R.S.  IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)

                       David J. Matlin
-------------------------------------------------------------------------------
      2        CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP        (a)/_/
                                                                       (b)/x/
-------------------------------------------------------------------------------
      3        SEC USE ONLY
-------------------------------------------------------------------------------
      4        SOURCE OF FUNDS
                           AF, WC
-------------------------------------------------------------------------------
      5        CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
               PURSUANT TO ITEMS 2(d) or 2(e)                          /_/
-------------------------------------------------------------------------------
      6        CITIZENSHIP OR PLACE OF ORGANIZATION
                           Delaware
-------------------------------------------------------------------------------

    SHARES                       7               SOLE VOTING POWER
 BENEFICIALLY
 OWNED BY EACH                                             0
  REPORTING
 PERSON WITH

-------------------------------------------------------------------------------

                                 8               SHARED VOTING POWER
                                                      10,727,193
-------------------------------------------------------------------------------

                                 9               SOLE DISPOSITIVE POWER
                                                           0
-------------------------------------------------------------------------------

                                 10              SHARED DISPOSITIVE POWER
                                                       10,727,193
-------------------------------------------------------------------------------
     11            AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
                   PERSON

                   10,727,193
-------------------------------------------------------------------------------
     12            CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
                   CERTAIN SHARES                                     /_/
-------------------------------------------------------------------------------
     13            PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
                        80.3%
-------------------------------------------------------------------------------
     14            TYPE OF REPORTING PERSON
                        IN
-------------------------------------------------------------------------------


                                (Page 6 of 31)
<PAGE>


                                 SCHEDULE 13D

-------------------------------------------------------------------------------
CUSIP No.       731745105                                  Page 7 of 31 Pages
-------------------------------------------------------------------------------

      1       NAMES OF REPORTING PERSONS

              I.R.S.  IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)

                      Mark R. Patterson
-------------------------------------------------------------------------------
      2       CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP         (a) /_/
                                                                       (b) /x/
-------------------------------------------------------------------------------
      3       SEC USE ONLY
-------------------------------------------------------------------------------
      4       SOURCE OF FUNDS
                          AF, WC
-------------------------------------------------------------------------------
      5       CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
              PURSUANT TO ITEMS 2(d) or 2(e)                            /_/
-------------------------------------------------------------------------------
      6       CITIZENSHIP OR PLACE OF ORGANIZATION
                          Delaware
-------------------------------------------------------------------------------

    SHARES                       7               SOLE VOTING POWER
 BENEFICIALLY
 OWNED BY EACH                                             0
  REPORTING
 PERSON WITH
-------------------------------------------------------------------------------

                                 8               SHARED VOTING POWER
                                                      10,727,193
-------------------------------------------------------------------------------

                                 9               SOLE DISPOSITIVE POWER
                                                           0
-------------------------------------------------------------------------------

                                 10              SHARED DISPOSITIVE POWER
                                                       10,727,193
-------------------------------------------------------------------------------
     11             AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
                    PERSON

                    10,727,193
-------------------------------------------------------------------------------
     12             CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
                    CERTAIN SHARES                                       /_/
-------------------------------------------------------------------------------
     13             PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
                         80.3%
-------------------------------------------------------------------------------
     14             TYPE OF REPORTING PERSON
                         IN
-------------------------------------------------------------------------------


                                (Page 7 of 31)
<PAGE>


                                 SCHEDULE 13D

-------------------------------------------------------------------------------
CUSIP No.         731745105                                  Page 8 of 31 Pages
-------------------------------------------------------------------------------

      1        NAMES OF REPORTING PERSONS

               I.R.S.  IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)

                       MatlinPatterson Global Partners LLC
-------------------------------------------------------------------------------
      2       CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP        (a) /_/
                                                                      (b) /x/
-------------------------------------------------------------------------------
      3       SEC USE ONLY
-------------------------------------------------------------------------------
      4       SOURCE OF FUNDS
                          AF, WC
-------------------------------------------------------------------------------
      5       CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
              PURSUANT TO ITEMS 2(d) or 2(e)                            /_/
-------------------------------------------------------------------------------
      6       CITIZENSHIP OR PLACE OF ORGANIZATION
                          Delaware
-------------------------------------------------------------------------------

    SHARES                       7               SOLE VOTING POWER
 BENEFICIALLY
 OWNED BY EACH                                             0
  REPORTING
 PERSON WITH

-------------------------------------------------------------------------------

                                 8               SHARED VOTING POWER
                                                      10,727,193
-------------------------------------------------------------------------------

                                 9               SOLE DISPOSITIVE POWER
                                                           0
-------------------------------------------------------------------------------

                                 10              SHARED DISPOSITIVE POWER
                                                      10,727,193
-------------------------------------------------------------------------------
     11            AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
                   10,727,193
-------------------------------------------------------------------------------
     12            CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
                   CERTAIN SHARES                                       /_/
-------------------------------------------------------------------------------
     13            PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
                        80.3%
-------------------------------------------------------------------------------
     14            TYPE OF REPORTING PERSON
                        HC
-------------------------------------------------------------------------------


                                (Page 8 of 31)
<PAGE>


                                 SCHEDULE 13D

-------------------------------------------------------------------------------
CUSIP No.          731745105                                 Page 9 of 31 Pages
-------------------------------------------------------------------------------

      1       NAMES OF REPORTING PERSONS

              I.R.S.  IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)

                   MatlinPatterson Asset Management LLC
-------------------------------------------------------------------------------
      2       CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP        (a) /_/
                                                                      (b) /x/
-------------------------------------------------------------------------------
      3       SEC USE ONLY
-------------------------------------------------------------------------------
      4       SOURCE OF FUNDS
                          AF, WC
-------------------------------------------------------------------------------
      5       CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
              PURSUANT TO ITEMS 2(d) or 2(e)                            /_/
-------------------------------------------------------------------------------
      6       CITIZENSHIP OR PLACE OF ORGANIZATION
                          Delaware
-------------------------------------------------------------------------------

    SHARES                       7               SOLE VOTING POWER
 BENEFICIALLY
 OWNED BY EACH                                             0
  REPORTING
 PERSON WITH

-------------------------------------------------------------------------------

                                 8               SHARED VOTING POWER
                                                       10,727,193
-------------------------------------------------------------------------------

                                 9               SOLE DISPOSITIVE POWER
                                                           0
-------------------------------------------------------------------------------

                                 10              SHARED DISPOSITIVE POWER
                                                       10,727,193
-------------------------------------------------------------------------------
     11           AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
                  PERSON

                  10,727,193
-------------------------------------------------------------------------------
     12           CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
                  CERTAIN SHARES                                       /_/
-------------------------------------------------------------------------------
     13           PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
                       80.3%
-------------------------------------------------------------------------------
     14           TYPE OF REPORTING PERSON
                       HC
-------------------------------------------------------------------------------


                                (Page 9 of 31)
<PAGE>


                                 SCHEDULE 13D

-------------------------------------------------------------------------------
CUSIP No.         731745105                               Page 10 of 31 Pages
-------------------------------------------------------------------------------

      1        NAMES OF REPORTING PERSONS

               I.R.S.  IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)

                       MatlinPatterson LLC
-------------------------------------------------------------------------------
      2        CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP        (a) /_/
                                                                       (b) /x/
-------------------------------------------------------------------------------
      3        SEC USE ONLY
-------------------------------------------------------------------------------
      4        SOURCE OF FUNDS
                           AF, WC
-------------------------------------------------------------------------------
      5        CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
               PURSUANT TO ITEMS 2(d) or 2(e)                           /_/
-------------------------------------------------------------------------------
      6        CITIZENSHIP OR PLACE OF ORGANIZATION
                           Delaware
-------------------------------------------------------------------------------

    SHARES                       7               SOLE VOTING POWER
 BENEFICIALLY
 OWNED BY EACH                                             0
  REPORTING
 PERSON WITH
-------------------------------------------------------------------------------

                                 8               SHARED VOTING POWER
                                                      10,727,193
-------------------------------------------------------------------------------

                                 9               SOLE DISPOSITIVE POWER
                                                           0
-------------------------------------------------------------------------------

                                 10              SHARED DISPOSITIVE POWER
                                                     10,727,193
-------------------------------------------------------------------------------
     11           AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
                  PERSON

                       10,727,193
-------------------------------------------------------------------------------
     12           CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
                  CERTAIN SHARES                                        /_/
-------------------------------------------------------------------------------
     13           PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
                       80.3%
-------------------------------------------------------------------------------
     14           TYPE OF REPORTING PERSON
                       HC
-------------------------------------------------------------------------------


                               (Page 10 of 31)
<PAGE>


Introduction.

         This Schedule 13D Statement (this "Statement") is filed on behalf of
(i) MatlinPatterson Global Opportunities Partners L.P., ("Matlin Partners
(Delaware)") a limited partnership organized under the laws of Delaware,
MatlinPatterson Global Opportunities Partners B, L.P., (the "Opt-Out Fund") a
limited partnership organized under the laws of Delaware, and MatlinPatterson
Global Opportunities Partners (Bermuda) L.P. ("Matlin Partners (Bermuda)"),
collectively with the Opt-Out Fund and Matlin Partners Delaware, "Matlin
Partners"), a limited partnership organized under the laws of Bermuda (ii)
MatlinPatterson Global Advisers LLC, ("Matlin Advisers") a limited liability
company organized under the laws of Delaware, by virtue of their investment
authority over securities held by Matlin Partners, (iii) MatlinPatterson
Global Partners LLC, ("Matlin Global Partners") a limited liability company
organized under the laws of Delaware, as general partner of Matlin Partners,
(iv) MatlinPatterson Asset Management LLC, ("Matlin Asset Management") a
limited liability company organized under the laws of Delaware, as the holder
of all of the membership interests in Matlin Global Partners and Matlin
Advisers, (v) MatlinPatterson LLC, ("MatlinPatterson") a limited liability
company organized under the laws of Delaware, as the holder of all of the
membership interests in Matlin Asset Management, (vi) and Mark Patterson and
David Matlin each as a holder of 50% of the membership interests in
MatlinPatterson (Matlin Partners (Delaware), Matlin Partners (Bermuda), the
Opt-Out Fund, Matlin Advisers, Matlin Global Partners, Matlin Asset
Management, MatlinPatterson, Mark Patterson and David Matlin, collectively,
the "Reporting Persons" and each a "Reporting Person"), for the purpose of
disclosing the acquired beneficial ownership of the Reporting Persons in the
Issuer (as defined below) pursuant to the Debtor's Joint Second Amended and
Modified Plan of Reorganization (the "Plan"), approved on January 16, 2003 by
the United States Bankruptcy Court for the District of South Carolina (Case
No. 02-5773(w)).

Item 1.  Security and Issuer

         The name of the issuer is Polymer Group, Inc. (the "Issuer"). This
Statement relates to the Issuer's Class A Common Stock, par value $.01 per
share (the "Class A Common Stock"). The principal executive offices of the
Issuer are located at Polymer Group, Inc., 4838 Jenkins Avenue, North
Charleston, SC 29405.

Item 2.  Identity and Background

         (i) Matlin Partners (Delaware) and the Opt-Out Fund are limited
partnerships organized under the laws of Delaware. MatlinPartners (Delaware)
generally invests in equity and subordinated debt securities of companies. The
Opt-Out Fund holds investments of investors who originally invested in
MatlinPartners (Delaware) but opted out of subsequent investments upon the spin
off of MatlinPatterson entities from Credit Suisse First Boston in July 2002.
The address of Matlin Partners (Delaware) and the Opt-Out Fund's principal
business and principal office is c/o Matlin Global Partners 520 Madison
Avenue, New York, New York 10022.


                               (Page 11 of 31)
<PAGE>


         (ii) MatlinPartners (Bermuda) is a limited partnership organized
under the laws of Bermuda. MatlinPartners (Bermuda) holds participation
interests in the investments of MatlinPartners (Delaware). MatlinPartners
(Bermuda) generally invests in equity and subordinated debt securities of
companies. The address of Matlin Partners (Bermuda)'s principal business and
principal office is c/o Quorum International Limited, Reid House, 31 Church
Street, Hamilton, Bermuda.

         (iii) Matlin Global Partners is a limited liability company organized
under the laws of Delaware. Matlin Global Partners serves as General Partner
of Matlin Partners (Delaware), Matlin Partners (Bermuda) and the Opt-Out Fund.
The address of Matlin Global Partners' principal business and principal office
is 520 Madison Avenue, New York, New York 10022. The principal business of
Matlin Global Partners is acting as the general partner to Matlin Partners
(Delaware), Matlin Partners (Bermuda) and the Opt-Out Fund.

         (iv) Matlin Advisers is a limited liability company organized under
the laws of Delaware. Matlin Advisers serves as investment advisor to Matlin
Partners (Delaware), Matlin Partners (Bermuda) and the Opt-Out Fund. The
address of Matlin Advisers' principal business and principal office is 520
Madison Avenue, New York, New York 10022. Matlin Advisers performs certain
investment advisory services on behalf of Matlin Partners (Delaware) and
Matlin Partners (Bermuda), pursuant to a certain amended and restated
Investment Advisory Agreement dated as of July 17, 2002 among Matlin Advisers,
Matlin Partners (Delaware) and Matlin Partners (Bermuda).

         (v) Matlin Asset Management is a limited liability company organized
under the laws of Delaware. Matlin Asset Management is the holder of all of
the membership interests in Matlin Global Partners and Matlin Advisers. The
address of Matlin Asset Management's principal business and principal office
is 520 Madison Avenue, New York, New York 10022. Matlin Asset Management's
principal business is owning Matlin Global Partners and Matlin Advisers.

         (vi) MatlinPatterson is a limited liability company organized under
the laws of Delaware. MatlinPatterson is the holder of all of the membership
interests in Matlin Asset Management. The address of MatlinPatterson's
principal business and principal office is 520 Madison Avenue, New York, New
York 10022. MatlinPatterson's principal business is owning Matlin Asset
Management.

         (vii) Mark R. Patterson and David J. Matlin are each the holder of
50% of the membership interests in MatlinPatterson. The address of Mark R.
Patterson and David J. Matlin's principal business office is 520 Madison
Avenue, New York, New York 10022. Mark R. Patterson's present principal
occupation is acting as Chairman of Matlin Advisers and David J. Matlin's
present principal occupation is acting as Chief Executive Officer of Matlin
Advisers. Mark R. Patterson and David J. Matlin are citizens of the United
States of America.

         (viii) In the past five years, the Reporting Persons have not been
(a) convicted in a criminal proceeding (other than traffic violations or
similar misdemeanors) or (b) been a party to a civil proceeding of a judicial
or administrative body of competent jurisdiction in which it was or is subject
to a judgment, decree or final order enjoining future violations of, or
prohibiting


                               (Page 12 of 31)
<PAGE>


or mandating activities subject to, federal or state securities laws nor has
it been found to have violated such laws.

Item 3.  Source and Amount of Funds or Other Consideration

         The information set forth in Item 6 is hereby incorporated by
reference into this Item 3.

         Pursuant to the Plan, the Reporting Persons acquired beneficial
ownership of 5,499,445 shares of Class A Common Stock in consideration of the
cancellation of certain debt instruments (and all pre-petition interest
thereon) which has been acquired by the Reporting Persons through a series of
trades at an aggregate cost to the Reporting Persons of $150,732,172 as
follows: 1,579,425 shares issued in respect of $114,813,000 principal amount
8.75% Senior Subordinated Notes of the Issuer due 2008 (the "8.75% Senior
Subordinated Notes") (and all pre-petition interest thereon) acquired by the
Reporting Persons at a total cost of $43,108,511; 3,907,871 shares issued in
respect of $279,549,000 principal amount 9% Senior Subordinated Notes of the
Issuer due 2008 (the "9% Senior Subordinated Notes") and all pre-petition
interest thereon acquired by the Reporting Persons at a total cost of
$107,413,619; 1,480 shares issued in respect of $113,000 principle amount
9.25% Senior Notes due 2006 of Dominion Textile (USA) Inc. and all
pre-petition interest thereon acquired by the Reporting Persons at a total
cost of $25,425; and 10,669 shares issued in respect of $821,000 principle
amount 8.875% Senior Subordinated Notes due 2003 of Dominion Textile and all
pre-petition interest thereon acquired by the Reporting Persons at a total
cost of $184,725.

         The Reporting Persons acquired $38,119,000 face value of the 10%
Junior Subordinated Notes due 2007 (the "Convertible Notes") which are
immediately convertible into 5,227,749 shares of Class A Common Stock at a
conversion price of $7.29. The Reporting Person paid cash at their par value
from working capital for the Convertible Notes. No funds were borrowed or
otherwise obtained for the purpose of acquiring, holding, trading or voting the
Class A Common Stock and Convertible Notes.

Item 4.  Purpose of Transaction

         The Class A Common Stock and Convertible Notes held by Matlin
Partners were acquired as described in Item 3 and Item 6. The information set
forth in Item 3 and Item 6 hereof is hereby incorporated by reference into
this Item 4. Matlin Partners currently holds such Class A Common Stock and
Convertible Notes for investment purposes subject to the next paragraph.

         Subject to the agreements and arrangements described in Item 6
hereof, the Reporting Persons continuously evaluate the Issuer's businesses
and prospects, alternative investment opportunities and all other factors
deemed relevant in determining whether additional Class A Common Stock or
Convertible Notes of the Issuer will be acquired by Matlin Partners and/or by
other accounts and funds which Matlin Global Partners is the general partner
and/or investment manager or whether Matlin Partners and/or any such other
accounts or funds will dispose of Class A Common Stock or Convertible Notes of
the Issuer. At any time, additional Class A Common Stock or Convertible Notes
may be acquired or some or all of the Class A Common Stock or Convertible
Notes of the Issuer beneficially owned by Matlin Partners may be sold, in
either case in the open market, in privately negotiated transactions or
otherwise. Except as otherwise disclosed herein, no Reporting Person currently
has any agreements, beneficially or otherwise, which would be related to or
would result in any of the matters described in Items 4(a) - (j) of Schedule
13D; however, as part of the ongoing evaluation of this investment and
investment alternatives, any Reporting Person may consider such matters, and,
subject to applicable law, may formulate a plan with respect to such matters,
and, from time to time, any Reporting Person may hold discussions with or make
formal


                               (Page 13 of 31)
<PAGE>


proposals to management or the Board of Directors of the Issuer, other
shareholders of the Issuer or other third parties regarding such matters.

         Lap Chan, an employee of Matlin Advisers, serves on the Board of
Directors of the Issuer. As a director of the Issuer, Lap Chan may have
influence over the corporate activities of the Issuer, including activities
which may relate to items described in Items 4(a) - (j) of Schedule 13D.

         Ramon Betolaza, an employee of Matlin Advisers, serves on the Board
of Directors of the Issuer. As a director of the Issuer, Ramon Betolaza may
have influence over the corporate activities of the Issuer, including
activities which may relate to items described in Items 4(a) - (j) of Schedule
13D.

         Michael Watzky, an employee of Matlin Advisers, serves on the Board
of Directors of the Issuer. As a director of the Issuer, Michael Watzky may
have influence over the corporate activities of the Issuer, including
activities which may relate to items described in Items 4(a) - (j) of Schedule
13D.

Item 5.  Interest in Securities of the Issuer

     (a) (i) As of the date hereof, (A) Matlin Partners (Delaware), is a
direct beneficial owner of 10,727,193 shares of Class A Common Stock
consisting of 5,499,445 shares of common stock and $38,119,000 aggregate face
value of the Convertible Notes, which are immediately convertible into
5,227,749 shares of Class A Common Stock and (B) MatlinPatterson, Matlin Asset
Management, Matlin Advisers, Matlin Global Partners, Mark R. Patterson and
David J. Matlin are each an indirect beneficial owner of 10,727,193 shares of
Class A Common Stock consisting of 5,499,445 shares of common stock and
$38,119,000 aggregate face value of the Convertible Notes, which are
immediately convertible into 5,227,749 shares of Class A Common Stock. The
10,727,193 shares of Class A Common Stock represent beneficial ownership of
approximately 80.3% of the Issuer's issued and outstanding shares of Class A
Common Stock (assuming conversion of the Convertible Notes beneficially owned
by the Reporting Persons).

         (ii) Matlin Partners (Delaware) and Matlin Partners (Bermuda) have
entered into a Participation Agreement (the "Bermuda Participation Agreement")
dated as of May 15, 2001. Pursuant to such agreement, Matlin Partners
(Bermuda) holds a participation interest in its pro rata share of the right,
title and interest in the Class A Common Stock and Convertible Notes
beneficially owned by Matlin Partners (Delaware). Matlin Partners (Bermuda)'s
pro rata share is (i) 25.2% in relation to the Class A Common Stock
beneficially owned by Matlin Partners (Delaware) representing 1,386,011 shares
of Class A Common Stock and (ii) 25.83% in relation to the Convertible Notes
or $9,844,361 in aggregate face value of the Convertible Notes which portion
is immediately convertible into 1,350,392 shares of Class A Common Stock. As a
result of such participation interest, Matlin Partners (Bermuda) may be deemed
to be the beneficial owner of 2,736,403. shares of Class A Common Stock. The
2,736,403 shares of Class A Common Stock represent beneficial ownership of
approximately 28.9% of the Issuer's issued and outstanding shares of Class A
Common Stock (assuming conversion of the Convertible Notes in which Matlin
Partners (Bermuda) has a participation interest).


                               (Page 14 of 31)
<PAGE>


         (iii) Matlin Partners (Delaware) and the Opt-Out Fund have entered
into a Participation Agreement (the "Opt-Out Fund Participation Agreement")
dated as of July 16, 2002. Pursuant to such agreement, the Opt-Out Fund holds
a participation interest in 2.4108% of the right, title and interest in the
Class A Common Stock beneficially owned by Matlin Partners (Delaware)
representing 132,581 shares of Class A Common Stock. As a result of such
participation interest, the Opt-Out Fund may be deemed to be the beneficial
owner of 132,581 shares of Class A Common Stock. The 132,581 shares of Class A
Common Stock represent beneficial ownership of approximately 1.63% of the
Issuer's issued and outstanding shares of Class A Common Stock (assuming no
conversion of any of the Convertible Notes).

         (iv) Matlin Global Partners serves as General Partner of Matlin
Partners. By reason of such relationships, Matlin Global Partners may be
deemed to beneficially own share the shares owned by Matlin Partners
(Delaware).

         (v) Matlin Advisers serves as investment advisor to Matlin Partners.
By reason of such relationships, Matlin Advisers may be deemed to beneficially
own the shares owned by Matlin Partners (Delaware).

         (vi) Matlin Asset Management is the holder of all of the membership
interests in Matlin Global Partners and Matlin Advisers. By reason of such
relationships, Matlin Asset Management may be deemed to beneficially own the
shares owned by Matlin Partners (Delaware).

         (vii) MatlinPatterson is the holder of all of the membership
interests in Matlin Asset Management. By reason of such relationship,
MatlinPatterson may be deemed to beneficially own the shares owned by Matlin
Partners (Delaware).

         (viii) Mark R. Patterson and David J. Matlin are the holders of all
of the membership interests in MatlinPatterson. By reason of such
relationships, each of Mark Patterson and David Matlin may be deemed to share
voting and dispositive power over the shares owned by Matlin Partners
(Delaware).

        (b) To the best knowledge of MatlinPatterson, Matlin Asset Management,
Matlin Advisers and Matlin Global Partners with respect to the directors and
executive officers named in this Statement, none of the persons (i)
beneficially owns any shares of Class A Common Stock (other than in his or her
capacity as a controlling member, executive officer or director of such
corporation or limited liability company) or (ii) has the right to acquire any
Class A Common Stock owned by other parties.

         The filing of this Statement shall not be construed as an admission
by any of the Reporting Persons that it is, for purposes of Section 13(d) of
the Exchange Act, the beneficial owner of shares of Class A Common Stock owned
by other parties.


                               (Page 15 of 31)
<PAGE>


Item 6. Contracts, Arrangements, Understandings or Relationships With Respect
        to Securities of the Issuer

I.   Polymer Group, Inc.'s Joint Second Amended Modified Plan of
     Reorganization

     A. Background

         In 2001, the Issuer breached certain financial covenants in its
Second Amended, Restated and Consolidated Credit Facility (the "Credit
Facility"), dated as of July 3, 1997. As a result, the lenders under the
Credit Facility (the "Senior Lenders") exercised their right to block the
payments of interest due to the holders of the 9% Senior Subordinated Notes on
January 2, 2002, and to the holders of the 8.75% Senior Subordinated Notes
(collectively with the 9% Senior Subordinated Notes, the "Senior Subordinated
Notes") on March 1, 2002, respectively.

         On March 15, 2002, the Issuer and Matlin Global Partners, which then
held approximately 67% of the Senior Subordinated Notes, executed a term sheet
(the "Exchange Offer Term Sheet") setting forth the terms of a proposed
recapitalization of the Issuer and its domestic subsidiaries (collectively,
the "Debtors"), together with an agreement pursuant to which, among other
things, Matlin Global Partners agreed to support the Issuer's recapitalization
plan (the "Exchange Offer Support Agreement"). The recapitalization plan was
to take the form of an exchange offer (the "Exchange Offer") that was to
remain open through April 15, 2002, and which was subsequently extended to May
15, 2002. Both Exchange Offer Term Sheet and Exchange Offer Support Agreement
have been terminated.

         On March 25, 2002, during the pendency of the Exchange Offer, certain
creditors of the Debtors (the "Petitioning Creditors") filed an involuntary
bankruptcy petition (the "Involuntary Petition") against the Debtors in the
United States Bankruptcy Court for the District of South Carolina (the
"Bankruptcy Court"). On April 26, 2002, the Bankruptcy Court dismissed the
Involuntary Petition in connection with a Dismissal Agreement between the
Debtors and the Petitioning Creditors (the "Dismissal Agreement").

         The Dismissal Agreement provided that the Debtors would extend the
Exchange Offer through May 15, 2002. The Debtors and Matlin Global Partners
also agreed to forbear through, and including, May 15, 2002, from implementing
any modifications to the Senior Subordinated Notes and the indentures
governing them. The Petitioning Creditors agreed to forbear through, and
including, May 12, 2002 (the "Forbearance Period"), from exercising any and
all remedies under the indentures for the Senior Subordinated Notes, the
Senior Subordinated Notes or any applicable law, including any filing of an
involuntary petition against any of the Debtors. During the Forbearance
Period, the Debtors agreed (i) not to file a voluntary petition for relief
under Chapter 11 of Title 11 of the United States Code (the "Bankruptcy Code")
in a jurisdiction other than Columbia, South Carolina, and (ii) to contest any
involuntary petition under the Bankruptcy Code filed in any such other
jurisdiction, in each case, without the prior written consent of the
Petitioning Creditors. Matlin Global Partners and the Petitioning Creditors
agreed not to file an involuntary petition against the Debtors in any venue
other than the Bankruptcy Court. Negotiations proceeded among the Debtors,
Matlin Global Partners and


                               (Page 16 of 31)
<PAGE>


the Petitioning Creditors, but no agreement was reached regarding a consensual
restructuring of the Debtors. Eventually, the Exchange Offer, Exchange Offer
Term Sheet and Exchange Offer Support Agreement were terminated.

         Subsequently, Matlin Global Partners and the Issuer executed a term
sheet (the "Bankruptcy Term Sheet"), dated as of May 10, 2002, setting forth
the terms of a bankruptcy reorganization of the Debtors, and a support
agreement (the "Bankruptcy Support Agreement"), dated as of May 10, 2002,
pursuant to which, among other things, Matlin Global Partners agreed to
support a joint plan of reorganization on terms and conditions set forth in
the Bankruptcy Term Sheet.

         On May 11, 2002, the Debtors (other than Bonlam (S.C.), Inc., for
which the petition date was April 23, 2002) filed voluntary petitions for
reorganization under the Bankruptcy Code in the Bankruptcy Court. On June 14,
2002, the Debtors filed a plan of reorganization (the "Prearranged Plan") and
a disclosure statement. The Official Committee of Unsecured Creditors (the
"Committee") opposed the Prearranged Plan. As a result of this opposition, the
Debtors, Matlin Global Partners and the Committee entered into negotiations,
and eventually agreed upon a revised plan of reorganization that each party
supported. During the course of such negotiations, the Bankruptcy Term Sheet
and Bankruptcy Support Agreement terminated.

         On January 16, 2003, the Bankruptcy Court approved the Plan, with the
support of the Senior Lenders, Matlin Global Partners and the members of the
Committee. The Plan was consummated on March 6, 2003.

     B. Description of Certain Provisions of the Plan

         (1) Reorganization of the Issuer. The Plan provided for, among other
things: (1) the restructuring of the Credit Facility, including a payment of
$50,000,000 on the effective date of the Plan to the agent under the Credit
Facility for the benefit of the existing Senior Lenders, exclusive of the
proceeds (the "Chicopee Sale Proceeds") of the sale of the South Brunswick
facility owned by Chicopee, Inc.; (2) the payment to the Senior Lenders of
100% of the Chicopee Sale Proceeds; (3) the payment of an additional amount of
at least $5,000,000 to the Senior Lenders; (4) the retirement of the Debtors'
obligations under the Senior Subordinated Notes, wherein each holder of Senior
Subordinated Notes and other general unsecured creditors (other than Critical
Vendor Claims and Intercompany Claims (each as defined in the Plan)) would
receive on, or as soon as practicable after, the effective date of the Plan in
exchange for its allowed claim against the Debtors, (a) its pro rata share of
Class A Common Stock, or (b) at the election of any such holder who was a
Qualified Institutional Buyer (as defined in Rule 144A under the Securities
Act of 1933 (the "Securities Act")), its pro rata share of Class C Common
Stock, par value $.01 per share, of the Issuer; (5) the payment in full of all
Critical Vendor Claims and Intercompany Claims (each as defined in the Plan);
(6) the offering of $50,000,000 of the Convertible Notes to each holder of an
allowed unsecured claim, on a pro rata basis; (7) that Matlin Global Partners
would issue, or cause to be issued, a letter of credit in the aggregated
amount of $25,000,000 (the "Exit Letter of Credit") in favor of the agent
under the Credit Facility, as restructured pursuant to the Plan, to support
the amortization payments required to be made by the Issuer on December 31,
2003, June 30, 2004, and


                               (Page 17 of 31)
<PAGE>


December 31, 2004; (8) that upon any drawing under the Exit Letter of Credit
(if any) (or any advances made, or caused to be made, by Matlin Global
Partners solely in lieu of drawing on the Exit Letter of Credit), Matlin
Global Partners would be entitled to a 10% Senior Subordinated Note due 2007
(the "New Senior Subordinated Note") equal to the amount (if any) drawn
against the Exit Letter of Credit (or such other advance made or caused to be
made by Matlin Global Partners); (9) that holders of the Issuer's common stock
outstanding immediately prior to the effective date of the Plan and rights
therefor (including options and subscription rights) (the "Old Polymer Equity
Interests") would receive 100% of the Class B Common Stock, par value $.01 per
share, of the Issuer (the "Class B Common Stock") (which will not be diluted
by any conversions of the Convertible Notes) and the Series A Warrants (the
"Series A Warrants") and Series B Warrants (the "Series B Warrants" and,
collectively with the Series A Warrants, the "Warrants") to purchase,
respectively, Series D Common Stock, par value $.01 per share, and Series E
Common Stock, par value $.01 per share, of the Issuer in exchange for their
Old Polymer Equity Interests; and (10) mutual releases among the Issuer,
Matlin Global Partners, the Committee, the members of the Committee, the
Senior Lenders, the past and present directors, management and professionals
of the Issuer and its subsidiaries and affiliates, and certain other persons
and entities.

         In the event that any holder of Senior Subordinated Notes other than
Matlin Global Partners did not elect to subscribe for Convertible Notes,
holders of Senior Subordinated Notes other than Matlin Global Partners that
did subscribe for Convertible Notes were given the right to elect to purchase
their pro rata share of such unsubscribed Convertible Notes. Matlin Global
Partners agreed to act as "standby purchaser" to ensure that all such
Convertible Notes were purchased and that the issuance of such Convertible
Notes resulted in proceeds of $50,000,00.

         (2) Provisions Relating to the Organizational Documents of the Issuer
and its Subsidiaries and Corporate Governance. The Plan sets forth
requirements with respect to the organizational documents of the Issuer and
its subsidiaries and certain arrangements among the Issuer and its
shareholders (including, without limitation, covenants with respect to the
voting of the Common Stock, par value $.01 per share, of the Issuer (the
"Common Stock"), contractual preemptive rights in connection with the issuance
of capital stock of the Issuer (subject to exceptions), tag-along rights in
connection with certain sales of Common Stock by Matlin Global Partners and
other obligations of the Issuer). The arrangements regarding the voting of the
Issuer's Common Stock, contractual preemptive rights in connection with the
issuance of capital stock of the Issuer (subject to exceptions), tag-along
rights in connection with certain sales of Common Stock by Matlin Global
Partners and certain other obligations of the Issuer are memorialized in a
Shareholders Agreement, which was executed upon the consummation of the Plan
and is described below. Additionally, the Issuer's Rights Agreement, dated as
of April 15, 1996, by and among the Issuer and First Union Bank of North
Carolina was terminated pursuant to the Plan and an order of the Bankruptcy
Court.

     C. Hold Back of Class A Common Stock

         In connection with the consummation of the Plan, the Issuer has
informed Matlin Global Partners that it held back 1,355,693 shares of Class A
Common Stock from distribution to holders of allowed unsecured claims pending
the resolution of certain claims against the Debtors


                               (Page 18 of 31)
<PAGE>


for up to approximately $104,590,813. To the extent disputed claims are
allowed by Order of the Bankruptcy Court, such claims will be satisfied by the
issuance of Class A Common Stock. To the extent the aggregate awards under
such disputed claims total less than $104,590,813, a portion of the 1,355,693
shares of Class A Common Stock held back will be distributed to holders of
allowed unsecured claims (including Matlin Global Partners) on a pro rata
basis.

II.  Shareholders Agreement

         In order to effectuate certain provisions of the Plan, Matlin Global
Partners, the Issuer, Northeast Investors Trust ("NIT"), One Group Income Bond
Fund ("One Group Income"), One Group High Yield Bond Fund ("One Group High
Yield"), Southern Ute Growth Fund ("Southern Ute Growth"), Southern Ute
Permanent Fund (together with One Group Income, One Group High Yield and
Southern Ute Growth, "Pacholder"), Atlantic Global Funding Ltd. ("Atlantic"),
CHYPS 1997-1 Ltd. ("CHYPS 1997"), CHYPS 1999-1 Ltd., a Cayman Islands company
(collectively with Atlantic and CHYPS 1997, "Delaware Investments") (NIT,
Pacholder and Delaware Investments are collectively referred to herein as the
"Non-Matlin Global Partners Holders"), Jerry Zucker ("Zucker") and James G.
Boyd ("Boyd") entered into a Shareholders Agreement, dated as of March 5, 2003
(the "Shareholders Agreement"). The terms of the Shareholders Agreement are
described below.

     A. Contractual Preemptive Rights

         Pursuant to the Shareholders Agreement, the Issuer granted
contractual preemptive rights to each holder of the Common Stock issued: (a)
pursuant to the Plan; (b) upon the conversion of the Convertible Notes or
exercise of the Warrants, (c) upon antidilution adjustments to the Class B
Common Stock, or Convertible Notes, or (d) upon stock splits, stock dividends
or otherwise, in each case, in respect of the securities set forth in clauses
(a), (b) and (c) above (collectively, the "Initial Common Stock"). Such
contractual preemptive rights give each holder of Initial Common Stock the
right to purchase up to its pro rata share of any shares of capital stock or
options, warrants, conversion rights or other rights to acquire shares of
capital stock proposed to be issued by the Issuer, subject to certain excluded
issuances set forth in the Shareholders Agreement and summarized in the
immediately following sentence. Issuances of the following securities of the
Issuer are not subject to the preemptive rights: (a) shares of Common Stock
issuable upon conversion of the Convertible Notes; (b) shares of Class B
Common Stock issuable pursuant to the anti-dilution provisions of the Class B
Common Stock upon conversion of the Convertible Notes as set forth in Article
IV, Section 2(a)(x) of the Issuer's Amended and Restated Certificate of
Incorporation; (c) equity securities of the Issuer issued in connection with
(i) any acquisition of another entity (other than an individual) by the Issuer
or any subsidiary of the Issuer by merger, stock purchase, purchase of all or
substantially all of the assets, or other reorganization, or (ii) the purchase
of all or substantially all of the assets of another entity, in each case that
is approved by a majority of the Issuer's Board of Directors; (d) up to an
aggregate of 4,000,000 shares of Common Stock (or related options) issued to
employees, officers, directors, consultants, other persons performing services
for the Issuer (including distributors and sales representatives) and their
respective affiliates, in each case, pursuant to any stock option plan, or
similar equity-based compensatory arrangement approved by a majority of the
Issuer's Board of Directors; (e) shares of Common Stock issued in connection
with any stock split, stock dividend, recapitalization or similar transaction
by the


                               (Page 19 of 31)
<PAGE>


Issuer; (f) shares of Common Stock issued pursuant to a firm commitment
underwritten public offering of the Issuer's Common Stock; (g) non-convertible
debt securities or debt instruments; (h) shares of capital stock issued
pursuant to a rights offering made to all holders of Initial Common Stock in
accordance with applicable Federal securities laws; (i) shares of Common Stock
and other securities issuable pursuant to the Plan; (j) shares of Common Stock
issuable upon exercise of the Warrants; and (k) shares of capital stock issued
pursuant to an anti-takeover plan, takeover defense plan or "poison pill" in
the form of a shareholder rights plan or similar plan adopted by the Issuer.
The contractual preemptive rights may be waived with the prior consent of the
Issuer's Board of Directors, including at least one Non-Matlin Global Partners
Board Member (as defined below), and Matlin Global Partners. The contractual
preemptive rights terminate upon a change of control of the issuer (as defined
in the Shareholders Agreement) or with the consent of the Issuer's Board of
Directors, including at least one Non-Matlin Global Partners Board Member, and
Matlin Global Partners.

     B. Tag-Along Rights

         Pursuant to the Shareholders Agreement, Matlin Global Partners has
granted "tag-along" rights to each holder of Initial Common Stock. In the
event Matlin Global Partners proposes to sell any of its Common Stock of the
Issuer, subject to certain exempt transactions set forth in the Shareholders
Agreement, each holder of Initial Common Stock shall have the right to sell,
along side Matlin Global Partners, its pro rata share of the total number of
shares proposed to be sold by Matlin Global Partners to the proposed purchaser
on the same terms and conditions as Matlin Global Partners. The tag-along
rights may be waived with the prior consent of the Issuer's Board of
Directors, including at least one Non-Matlin Global Partners Board Member, and
Matlin Global Partners. The tag-along rights terminate upon a change of
control of the issuer (as defined in the Shareholders Agreement) or with the
consent of the Issuer's Board of Directors, including at least one Non-Matlin
Global Partners Board Member, and Matlin Global Partners.

     C. Provisions Regarding the Issuer's Board of Directors

         In accordance with the Plan, the Shareholders Agreement sets forth
certain covenants of the parties thereto with respect to the composition of
the Issuer's Board of Directors and the voting of the shares held thereby with
respect to the nomination, election and removal of directors.

         (1) Number, Term and Qualifications; Subsequent Elections. Pursuant
to the Plan and the Shareholders Agreement, as of March 6, 2003 (the
"Effective Date"), the Issuer's Board of Directors will be (a) fixed at nine
members, each with one year terms, subject to the removal provisions of the
Issuer's Bylaws, and (b) composed of five directors designated by Matlin
Global Partners (together with any direct or indirect successors thereto
designated by Matlin Global Partners, the "MP Board Members"), two directors
designated by the pre-Effective Date Board of Directors of the Company, who
shall be Zucker and Boyd (together with any direct or indirect successors
thereto, the "ZB Board Members"), and two directors designated by the
Non-Matlin Global Partners Holders (together with any direct or indirect
successors thereto, the "Non-Matlin Global Partners Board Members").


                               (Page 20 of 31)
<PAGE>


         At the annual meeting of stockholders for the calendar years 2003,
2004 and 2005, Matlin Global Partners, each Non-Matlin Global Partners Holder,
Zucker (as long as he is a director) and Boyd (as long as he is a director)
each shall vote or cause to be voted all shares of Common Stock and other
voting equity owned by him or it, or over which he or it has voting control,
and otherwise use its respective best efforts, so as to nominate and elect to
the Board of Directors the Matlin Global Partners Board Members, Non-Matlin
Global Partners Board Members and ZB Board Members sitting on the Issuer's
Board of Directors on the date immediately preceding such meeting; provided
that if there shall be any vacancy on the Issuer's Board of Directors on the
date immediately preceding such meeting as the result of the removal,
resignation, death, disability or otherwise of a Matlin Global Partners Board
Member, Non-Matlin Global Partners Board Member or ZB Board Member, Matlin
Global Partners, each Non-Matlin Global Partners Holder, Zucker and Boyd each
shall vote or cause to be voted all shares of Common Stock and other voting
equity owned by him or it, or over which he or it has voting control, and
otherwise use its respective best efforts, so as to nominate and elect a
successor designated by Matlin Global Partners, if the director was a Matlin
Global Partners Board Member, designated by the remaining Non-Matlin Global
Partners Board Member, if the director was a Non-Matlin Global Partners Board
Member and designated by the remaining ZB Board Member, if the director was a
ZB Board Member; provided that (a) Matlin Global Partners shall not be
required to vote, or cause to be voted, the shares of Common Stock or other
voting equity owned by it or over which it has voting control, or use its best
efforts, to nominate or elect any proposed director if such proposed director
was previously removed from the Board of Directors in accordance with the
terms of the Shareholders Agreement, and (b) upon the removal of any ZB Board
Member pursuant to Sections 4.2(c) or (d) of the Shareholders Agreement
(summarized in Paragraphs II(C)(2)(c) and (d) of this Item 6), the remaining
ZB Board Member shall not have the right to designate a successor to the
removed ZB Board Member.

         (2) Vacancies.

              (a) At any time prior to the third anniversary of the Effective
Date, upon the vacancy of any director due to resignation, removal or
otherwise, Matlin Global Partners, each Non-Matlin Global Partners Holder,
Zucker and Boyd each shall vote or cause to be voted all shares of Common
Stock and other voting equity owned by him or it, or over which he or it has
voting control, and otherwise use its respective best efforts, so as to
nominate and elect a successor designated by Matlin Global Partners, if the
director was a Matlin Global Partners Board Member, designated by the
remaining Non-Matlin Global Partners Board Member, if the director was a
Non-Matlin Global Partners Board Member and designated by the remaining ZB
Board Member, if the director was a ZB Board Member; provided that (i) Matlin
Global Partners shall not be required to vote, or cause to be voted, the
shares of Common Stock or other voting equity owned by it or over which it has
voting control, or use its best efforts, to nominate or elect any proposed
director if such proposed director was previously removed from the Issuer's
Board of Directors in accordance with the terms of the Shareholders Agreement,
and (ii) upon the removal of any ZB Board Member pursuant to Sections 4.2(c)
or (d) of the Shareholders Agreement (summarized in Paragraphs II(C)(2)(c) and
(d) of this Item 6), the remaining ZB Board Member shall not have the right to
designate a successor to the removed ZB Board Member.


                               (Page 21 of 31)
<PAGE>


              (b) At any time on or after the third anniversary of the
Effective Date, Matlin Global Partners, each Non-Matlin Global Partners
Holder, Zucker and Boyd is to each vote or cause to be voted all shares of
Common Stock and other voting equity owned by him or it, or over which he or
it has voting control, so as to nominate, include on the Issuer's slate of
directors and elect each Matlin Global Partners Board Member, ZB Board Member
and Non-Matlin Global Partners Board Member that served on the Board of
Directors immediately prior to such election and/or each other shareholder
nominee; provided that in the case of each such specific nomination (i) such
Matlin Global Partners Board Member, ZB Board Member, Non-Matlin Global
Partners Board Member or other Shareholder nominee has been properly nominated
by a shareholder, and (ii) the nomination thereof has the support of the
affirmative vote of at least 12.5% of the issued and outstanding shares of
Common Stock; provided, further that each share of Common Stock may be counted
in support of only one nominee; provided further that in no event shall the
size of the Issuer's Board of Directors be increased by operation of this
provision.

              (c) Matlin Global Partners may not vote, or cause to be voted,
the shares of Common Stock or other voting equity owned by it, or over which
it has voting control, to remove Zucker or any ZB Board Member that is a
direct or indirect successor thereto from the Issuer's Board of Directors
without cause unless (i) Zucker's employment with the Issuer or its
subsidiaries is terminated for cause, or (ii) (A) Zucker's employment with the
Issuer or its subsidiaries is terminated without cause or Zucker resigns and
(B) the Issuer tenders or otherwise pays to Zucker the amounts that he is
entitled to receive under his letter agreement dated May 22, 1998, as amended
on May 11, 2002 (as the same may be amended from time to time, the "Zucker
Change of Control Agreement") or any other applicable agreement; provided,
however, that during the pendency of any dispute relating to (I) Zucker's
termination of employment, (II) whether such termination of employment is for
cause, or (III) whether Zucker is entitled to payment under the Zucker Change
of Control Agreement or any other applicable agreement, Matlin Global Partners
shall be permitted to vote, and cause to be voted, the shares of Common Stock
or other voting equity owned by it, and over which it has voting control, to
remove Zucker (or any ZB Board Member that is a direct or indirect successor
thereto) from the Issuer's Board of Directors. Nothing in this provision
limits Matlin Global Partners' right to vote, or cause to be voted, the shares
of Common Stock or other voting equity owned by it, or over which it has
voting control, to remove for cause Zucker or any ZB Board Member that is a
direct or indirect successor thereto from the Issuer's Board of Directors.

              (d) Matlin Global Partners may not vote, or cause to be voted,
the shares of Common Stock or other voting equity owned by it, or over which
it has voting control, to remove Boyd or any ZB Board Member that is a direct
or indirect successor thereto from the Issuer's Board of Directors without
cause unless (i) Boyd's employment with the Issuer or its subsidiaries is
terminated for cause, or (ii) (A) Boyd's employment with the Issuer or its
subsidiaries is terminated without cause or Boyd resigns and (B) the Issuer
tenders or otherwise pays Boyd the amounts that he is entitled to receive
under his letter agreement dated May 22, 1998, as amended on May 11, 2002 (as
the same may be amended from time to time, the "Boyd Change of Control
Agreement") or any other applicable agreement; provided, however, that during
the pendency of any dispute relating to (I) Boyd's termination of employment,
(II) whether such termination of employment is for cause, or (III) whether
Boyd is entitled to payment under the Boyd Change of Control Agreement or any
other applicable agreement,


                               (Page 22 of 31)
<PAGE>


Matlin Global Partners shall be permitted to vote, and cause to be voted, the
shares of Common Stock or other voting equity owned by it, and over which it
has voting control, to remove Boyd (or any ZB Board Member that is a direct or
indirect successor thereto) from the Issuer's Board of Directors. Nothing in
this provision limits Matlin Global Partners' right to vote, or cause to be
voted, the shares of Common Stock or other voting equity owned by it, or over
which it has voting control, to remove for cause Boyd or any ZB Board Member
that is a direct or indirect successor thereto from the Issuer's Board of
Directors.

              (e) If a ZB Board Member is removed as a director for cause or
otherwise in accordance with Section 4.2(c) or (d) of the Shareholders
Agreement (summarized in Paragraphs II(C)(2)(c) and (d) of this Item 6), the
Issuer is to promptly call a special meeting of shareholders for the purpose
of reducing the number of directors on the Issuer's Board of Directors to
eliminate the vacancy created by such removal and Matlin Global Partners
shall, at such special meeting, vote, and cause to be voted, the shares of
Common Stock or other voting equity owned by it, or over which it has voting
control, in favor of reducing the number of directors on the Issuer's Board of
Directors to eliminate such vacancy; provided, however, that (i) during the
pendency of any dispute described in the proviso of Section 4.2(c)(ii) of the
Shareholders Agreement (summarized in Paragraph II(C)(2)(c)(ii) of this Item
6), Matlin Global Partners shall not vote, or cause to be voted, the shares of
Common Stock or other voting equity owned by it, or over which it has voting
control in favor of either the elimination of the vacancy created by the
removal of Zucker or any ZB Board Member that is a direct or indirect
successor thereto or the election of any director to fill such vacancy, and
(ii) during the pendency of any dispute described in the proviso of Section
4.2(d)(ii) of the Shareholders Agreement (summarized in Paragraph
II(C)(2)(d)(ii) of this Item 6), Matlin Global Partners shall not vote, or
cause to be voted, the shares of Common Stock or other voting equity owned by
it, or over which it has voting control in favor of either the elimination of
the vacancy created by the removal of Boyd or any ZB Board Member that is a
direct or indirect successor thereto or the election of any director to fill
such vacancy.

                   (f) Matlin Global Partners shall not vote, or cause to be
voted, the shares of Common Stock or other voting equity owned by it, or over
which it has voting control, to remove without cause any Non-Matlin Global
Partners Board Member.

         (3) Committees. At least one Non-Matlin Global Partners Board Member
shall be a member of each of the audit committee, compensation committee and
executive committee for so long as a Non-Matlin Global Partners Board Member
has a right to a seat on the Issuer's Board of Directors pursuant to Sections
4.1, 4.2(a) or 4.2(b) of the Shareholders Agreement (summarized in Paragraphs
II(C)(1), (2)(a) and (2)(b) of this Item 6); provided that at least one
Non-Matlin Global Partners Board Member is a member of the Issuer's Board of
Directors during such period and that the member to serve on such committees
satisfies all applicable Federal, state, securities exchange, quotation
system, and self regulatory organization (including, without limitation, the
Securities and Exchange Commission, New York Stock Exchange, Nasdaq and the
OTC Bulletin Board, as the case may be) rules and regulations regarding,
concerning and relating to qualifications and requirements necessary for
service on such committees.


                               (Page 23 of 31)
<PAGE>


         (4) Termination. The provisions of the Shareholders Agreement
regarding the composition of the Issuer's Board of Directors and the voting of
the shares held by the parties thereto with respect to the nomination,
election and removal of directors shall terminate upon a change of control of
the Issuer (as defined in the Shareholders Agreement).

     D. Additional Obligations of the Issuer

         In accordance with the Plan and pursuant to the Shareholders
Agreement, the issuer is subject to the following additional obligations.

         (1) Reporting Obligations. If a class of the Issuer's equity
securities is not otherwise registered pursuant to Section 12(d) or Sections
12(g)(1)(A) or (B) of the Securities Exchange Act of 1934 (the "Exchange
Act"), as amended, the Issuer shall (a) use its best efforts to register the
Class A Common Stock, on a voluntary basis, with the Securities and Exchange
Commission pursuant to Section 12(g) of the Exchange Act and to have such
registration declared effective as soon as possible after the date hereof, and
(b) file all periodic and other reports and filings required to be filed by
issuers with a class of equity securities registered under Sections 12(d) or
(g) of the Exchange Act. The Issuer shall not seek to terminate any voluntary
registration of its Class A Common Stock required by the Shareholders
Agreement (as summarized above), and shall continue to file all periodic and
other reports and filings required to be filed by issuers with a class of
equity securities registered under Section 12(g) of the Exchange Act, until
the termination of such obligation in accordance with the Shareholders
Agreement.

         (2) Incorporation. The Issuer shall maintain its corporate existence
in Delaware; provided, however, that the Issuer may reincorporate elsewhere if
such reincorporation is necessary to effectuate a bona fide business
combination or other transaction; provided, further, that any such business
combination or other transaction with a PGI Affiliate shall require the
approval of one Non-Matlin Global Partners Board Member.

         (3) Listing. On the Effective Date, or as soon as practicable
thereafter, the Issuer shall use its reasonable best efforts to become a
listed company on the New York Stock Exchange or to become included for
quotation on The Nasdaq Stock Market; provided that the Issuer shall initially
list its shares of Class A Common Stock and Class B Common Stock for trading
on the Nasdaq bulletin board or over-the-counter market.

         (4) Related Party Transactions. Without the written approval of at
least one Non-Matlin Global Partners Board Member, the Issuer may not enter
into any New Polymer Affiliated Transaction (as defined in the Shareholders
Agreement); provided that, solely for the avoidance of doubt, nothing in this
provision requires the termination of any of the existing terms or provisions
of, or existing obligations under, any of the following relationships between
the Issuer and any PGI Affiliate (as defined in the Shareholders Agreement):
(i) the existing lease and shared services agreement relating to the Issuer's
headquarters, among the Issuer, The InterTech Group, Inc. and ZS Associates,
as in effect on the Effective Date; (b) the shared insurance purchasing
arrangement between the Issuer and The InterTech Group, Inc., as in effect on
the Effective Date; and (c) the shared employee benefits management agreement
between the Issuer and The InterTech Group, Inc, as in effect on the Effective
Date. Notwithstanding


                               (Page 24 of 31)
<PAGE>


anything to the contrary herein, (x) any amendment, modification, extension or
change to, or waiver under, any of the relationships between the Company and
any PGI Affiliate set forth in the final proviso to the immediately preceding
sentence shall require the written approval of at least one Non-Matlin Global
Partners Board Member, and (y) nothing in this Agreement shall restrict or
prevent the Issuer from terminating any of the relationships, agreements or
arrangements set forth in the final proviso to the immediately preceding
sentence. Notwithstanding the foregoing, in no case shall the Issuer enter
into any agreement to pay, nor shall it pay, any management fee or transaction
fee to any PGI Affiliate, excluding fees of up to an aggregate of $4,500,000
payable to Matlin Global Partners pursuant to the Plan.

         (5) Registration Rights. In the event that the Issuer, Matlin Global
Partners or any Non-Matlin Global Partners Holder shall determine, based upon
the reasonable advice of counsel, that (a) the Convertible Notes may not be
offered for resale or resold, or (b) the Initial Common Stock issuable upon
conversion of the Convertible Notes may not be issued, offered for resale
and/or resold, in each of the cases set forth in the foregoing clauses (a) and
(b), without the registration of such offer, resale and/or issuance under the
Securities Act and the rules and regulations promulgated thereunder, or an
exemption therefrom, Matlin Global Partners or such Non-Matlin Global Partners
Holder shall have the right to cause the Issuer to use its reasonable best
efforts to register the offer, resale and/or issuance of all Convertible Notes
and/or Initial Common Stock issuable upon the conversation thereof, as the
case may be, under the Securities Act pursuant to a registration statement on
Form S-1 or Form S-3, if available to the Issuer (or successors to such forms
adopted by the Securities and Exchange Commission). In the event a
registration is requested pursuant to this provision, Matlin Global Partners
and the Non-Matlin Global Partners Holders shall reasonably cooperate with the
Issuer in the preparation of the registration statement, and the Issuer shall,
among other things, pay all expenses of the registration, including, without
limitation, the costs and expenses of one counsel to Matlin Global Partners
and the Non-Matlin Global Partners Holders, provide such counsel with a
reasonable opportunity to review and comment upon the registration statement,
communications with the staff of the Securities Exchange Commission and
related documents, and effect such registration as soon as shall be reasonably
practicable.

         (6) Termination of Obligations. The obligations of the Issuer
summarized in this Paragraph II(D) of Item 6 shall terminate upon a change of
control of the Issuer (as defined in the Shareholders Agreement) or a going
private transaction involving the Issuer.

     E. Miscellaneous Provisions

         The Shareholders Agreement contains other provisions regarding, among
other things, transfers rights granted by the Shareholders Agreement, third
party beneficiaries and enforcement of certain provisions of the Shareholders
Agreement thereby, specific performance, amendments, granting of equivalent
rights to additional shareholders of the Issuer, and termination of the
requirements for approval of actions by Non-Matlin Global Partners Board
Members. In particular, any waiver, termination, amendment or other action
that, pursuant to the Shareholders Agreement, requires the consent or approval
of a Non-Matlin Global Partners Board Member shall require such consent or
approval only if both (1) at least one Non-Matlin Global Partners Board Member
has the right to a seat on the Issuer's Board of Directors pursuant to the
Shareholders Agreement, and (b) at the time such approval is sought one of the
following


                               (Page 25 of 31)
<PAGE>


is true (i) at least one Non-Matlin Global Partners Board Member is a member
of the Issuer's Board of Directors, (ii) if a Non-Matlin Global Partners Board
Member is not a member of the Issuer's Board of Directors, a Non-Matlin Global
Partners Board Member shall have been a member of the Issuer's Board of
Directors within sixty days of such time, or (iii) if a Non-Matlin Global
Partners Board Member is not, and, within sixty days of such time, has not
been, a member of the Issuer's Board of Directors, a nomination or designation
of a proposed Non-Matlin Global Partners Board Member shall have been made in
good faith pursuant to the terms of the Shareholders Agreement and not
withdrawn, and such nominee or designee shall not have refused or declined
appointment to the Issuer's Board of Directors.

III. Senior Subordinated Note Purchase Agreement

         In order to facilitate the issuance of a New Senior Subordinated Note
in the amount of any drawing under the Exit Letter of Credit, Matlin Global
Partners, the Issuer and the Issuer's domestic subsidiaries, as guarantors,
entered into a Senior Subordinated Note Purchase Agreement (the "Senior
Subordinated Note Purchase Agreement"), dated as of March 5, 2003, and
pursuant thereto, the Issuer issued to Matlin Global Partners a New Senior
Subordinated Note.

         The Senior Subordinated Note Purchase Agreement and Senior
Subordinated Note provide that upon any drawing under the Exit Letter of
Credit, the principal amount due under the New Senior Subordinated Note will
automatically increase by the amount of such drawing. The Issuer is required
to pay interest on any amount outstanding under the New Senior Subordinated
Note semi-annually in arrears on January 1 and June 1 of each year, commencing
on June 1, 2003, at a rate of 10% per annum, and default interest in an amount
of 2% per annum will be payable on the principal amount in addition to the
existing 10% rate. The Issuer shall, to the extent lawful, pay interest at a
rate of 12% per annum on overdue interest.

         The Issuer's obligations under the Senior Subordinated Note Purchase
Agreement and Senior Subordinated Note are guaranteed by the Issuer's domestic
subsidiaries. Both the Issuer's obligations under the Senior Subordinated Note
and the guarantees thereof are subordinate to the indebtedness outstanding
under the Issuer's restructured Credit Facility.

         The Senior Subordinated Note Purchase Agreement contains customary
representations and warranties and standard default terms. Additionally, the
Senior Subordinated Note Purchase Agreement contains affirmative and negative
covenants of the Issuer with respect to (a) delivery of information, (b)
transactions with affiliates, (c) limitation on indebtedness, (d) disposition
of proceeds of asset sales, (e) limitation on restricted payments, (f)
corporate existence, (g) limitation on liens, (h) future domestic subsidiary
guarantors, (i) designation of unrestricted subsidiaries, and (j) mergers and
similar transactions involving the Issuer or the guarantors.

         References to, and descriptions of, the Plan, Shareholders Agreement
and the Senior Subordinated Note Purchase Agreement as set forth above in this
Item 6, are qualified in their entirety by reference to the copies of the
Plan, Shareholders Agreement and Senior Subordinated Note Purchase Agreement
included as Exhibits 7, 5 and 4, respectively, to this


                               (Page 26 of 31)
<PAGE>


Schedule 13D, and incorporated in this Item 6 in their entirety where such
references and descriptions appear.

         Reference is made to the descriptions of the Bermuda Participation
Agreement in Item 5 of this Statement and to the Bermuda Participation
Agreement which is annexed hereto as Exhibit 2, which is incorporated herein
by reference.

         Reference is made to the descriptions of the Opt-Out Fund
Participation Agreement in Item 5 of this Statement and to the Opt-Out
Fund Participation Agreement which is annexed hereto as Exhibit 3, which is
incorporated herein by reference.

Item 7.  Materials to be Filed as Exhibits


      Exhibit No.         Description
      -----------         -----------

           1              Joint Filing Agreement, dated as of March 17, 2003,
                          by and among MatlinPatterson LLC, MatlinPatterson
                          Asset Management LLC, MatlinPatterson Global
                          Advisers LLC, MatlinPatterson Global Partners LLC,
                          MatlinPatterson Global Opportunities Partners L.P.,
                          MatlinPatterson Global Opportunities Partners
                          (Bermuda) L.P., MatlinPatterson Global Opportunities
                          Partners B, L.P. Mark Patterson and David Matlin.

           2              Participation Agreement, dated as of May 15, 2001
                          by and between MatlinPatterson Global Opportunities
                          L.P. (formerly, CSFB Global Opportunities Partners,
                          L.P.) and MatlinPatterson Global Opportunities
                          Partners (Bermuda) L.P. (formerly, CSFB Global
                          Opportunities Partners (Bermuda), L.P.)

           3              Participation Agreement, dated as of July 16, 2002
                          by and between MatlinPatterson Global Opportunities
                          L.P. and MatlinPatterson Global Opportunities
                          Partners B, L.P.

           4              Senior Subordinated Note Purchase Agreement, dated
                          March 5, 2003, by and between the Issuer and its
                          affiliates and MatlinPatterson Global Opportunities
                          Partners L.P.

          5(a)            Shareholders Agreement, dated as of March 5, 2003, by
                          and the Issuer, MatlinPatterson Global Opportunities
                          Partners L.P., Northeast Investors Trust, One Group
                          Income Bond Fund, One Group High Yield Bond Fund,
                          Southern Ute Growth Fund, Southern Ute Permanent
                          Fund, CHYPS 1997-1 Ltd., CHYPS 1999-1 Ltd., James G.
                          Boyd and Jerry Zucker.

          6(b)            Amended Modified Disclosure Statement for Joint
                          Amended Modified Plan of Reorganization of the
                          Issuer and its affiliates under Chapter 11 of the
                          Bankruptcy Code, dated November 25, 2002.

           7              Debtor's Joint Second Amended Modified Plan of
                          Reorganization of the Issuer and its affiliates
                          under Chapter 11 of the Bankruptcy Code, dated


                  (Page 27 of 31)
<PAGE>


                          January 16, 2003.

(a) Incorporated by reference from Exhibit 3 to the Registration Statement on
Form 8-A filed on March 6, 2003 by Polymer Group, Inc.

(b) Incorporated by reference from Exhibit T3E1 to the Application for
Qualification of Indentures on Form T-3 filed on December 17, 2002 by Polymer
Group, Inc.


                               (Page 28 of 31)
<PAGE>


                                   SIGNATURE

         After reasonable inquiry and to the best of our knowledge and belief,
we certify that the information set forth in this Statement is true, complete
and correct.

Dated: March 17, 2003

                                 MATLINPATTERSON LLC


                                 By:  /s/ Mark R. Patterson
                                     ----------------------------------------
                                        Name:  Mark R. Patterson
                                        Title: Member


                                 MATLINPATTERSON ASSET MANAGEMENT LLC


                                 By:  /s/ Mark R. Patterson
                                     ----------------------------------------
                                        Name:  Mark R. Patterson
                                        Title: Chairman


                                 MATLINPATTERSON GLOBAL ADVISERS LLC


                                 By:  /s/ Mark R. Patterson
                                     ----------------------------------------
                                        Name:  Mark R. Patterson
                                        Title: Chairman


                                 MATLINPATTERSON GLOBAL PARTNERS
                                 LLC


                                 By:  /s/ Mark R. Patterson
                                     ----------------------------------------
                                        Name:  Mark R. Patterson
                                        Title: Director


                                 MATLINPATTERSON GLOBAL
                                 OPPORTUNITIES PARTNERS L.P.


                                 By:  MatlinPatterson Global Partners LLC


                                 By:   /s/ Mark R. Patterson
                                      ---------------------------------------
                                        Name:  Mark R. Patterson
                                        Title: Director


                               (Page 29 of 31)
<PAGE>


                                 MATLINPATTERSON GLOBAL
                                 OPPORTUNITIES PARTNERS B, L.P.


                                 By:  MatlinPatterson Global Partners LLC


                                 By:  /s/ Mark R. Patterson
                                     ----------------------------------------
                                        Name:  Mark R. Patterson
                                        Title: Director


                                 MATLINPATTERSON GLOBAL
                                 OPPORTUNITIES PARTNERS (BERMUDA) L.P.

                                 By:  MatlinPatterson Global Partners LLC

                                 By:  /s/ Mark R. Patterson
                                     ----------------------------------------
                                        Name:  Mark R. Patterson
                                        Title: Director

                                 DAVID J. MATLIN

                                 By:  /s/ David J. Matlin
                                     ----------------------------------------
                                        Name:  David J. Matlin

                                 MARK R. PATTERSON

                                 By:  /s/ Mark R. Patterson
                                     ----------------------------------------
                                        Name:  Mark R. Patterson


                               (Page 30 of 31)
<PAGE>


                                 EXHIBIT INDEX
                                 -------------

      Exhibit No.         Description
      -----------         -----------

           1              Joint Filing Agreement, dated as of March 17, 2003,
                          by and among MatlinPatterson LLC, MatlinPatterson
                          Asset Management LLC, MatlinPatterson Global
                          Advisers LLC, MatlinPatterson Global Partners LLC,
                          MatlinPatterson Global Opportunities Partners L.P.,
                          MatlinPatterson Global Opportunities Partners
                          (Bermuda) L.P., MatlinPatterson Global Opportunities
                          Partners B, L.P. Mark Patterson and David Matlin.

           2              Participation Agreement, dated as of May 15, 2001
                          by and between MatlinPatterson Global Opportunities
                          L.P. (formerly, CSFB Global Opportunities Partners,
                          L.P.) and MatlinPatterson Global Opportunities
                          Partners (Bermuda) L.P. (formerly, CSFB Global
                          Opportunities Partners (Bermuda), L.P.)

           3              Participation Agreement, dated as of July 16, 2002
                          by and between MatlinPatterson Global Opportunities
                          L.P. and MatlinPatterson Global Opportunities
                          Partners B, L.P.

           4              Senior Subordinated Note Purchase Agreement, dated
                          March 5, 2003, by and between Polymer Group, Inc.
                          and its affiliates and MatlinPatterson Global
                          Opportunities Partners L.P.

          5(a)            Shareholders Agreement, dated as of March 5, 2003,
                          by and among Polymer Group, Inc., MatlinPatterson
                          Global Opportunities Partners L.P., Northeast
                          Investors Trust, One Group Income Bond Fund, One
                          Group High Yield Bond Fund, Southern Ute Growth
                          Fund, Southern Ute Permanent Fund, CHYPS 1997-1
                          Ltd., CHYPS 1999-1 Ltd., James G. Boyd and Jerry
                          Zucker.

          6(b)            Amended Modified Disclosure Statement for Joint
                          Amended Modified Plan of Reorganization of Polymer
                          Group, Inc. and its affiliates under Chapter 11 of
                          the Bankruptcy Code, dated November 25, 2002.

           7              Debtor's Joint Second Amended Modified Plan of
                          Reorganization of Polymer Group, Inc. and its
                          affiliates under Chapter 11 of the Bankruptcy Code,
                          dated January 16, 2003.

(a) Incorporated by reference from Exhibit 3 to the Registration Statement on
Form 8-A filed on March 6, 2003 by Polymer Group, Inc.

(b) Incorporated by reference from Exhibit T3E1 to the Application for
Qualification of Indentures on Form T-3 filed on December 17, 2002 by Polymer
Group, Inc.


                                (Page 31 of 31)


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-1
<SEQUENCE>3
<FILENAME>efc3-0412_exh1.txt
<DESCRIPTION>MATLIN PATTERSON POLYMER
<TEXT>


                                                                     Exhibit 1


                            JOINT FILING AGREEMENT
                          Dated as of March 17, 2003


         In accordance with Rule 13d-1(k)(1) under the Securities Exchange Act
of 1934, as amended, the undersigned hereby agree to the joint filing of
MatlinPatterson LLC, MatlinPatterson Asset Management LLC, MatlinPatterson
Global Advisers LLC, MatlinPatterson Global Partners LLC, MatlinPatterson
Global Opportunities Partners L.P., MatlinPatterson Global Opportunities
Partners (Bermuda) L.P., MatlinPatterson Global Opportunities Partners B,
L.P., David J. Matlin and Mark R. Patterson, on behalf of each of them a
statement on Schedule 13D (including amendments thereto) with respect to
shares of common stock, par value $0.01 per share, of Polymer Group, Inc., and
that this Agreement be included as an Exhibit to such joint filing. This
Agreement may be executed in any number of counterparts all of which taken
together shall constitute one and the same instrument.

         IN WITNESS WHEREOF, the undersigned hereby execute this Agreement
this 17th day of March 2003.


                                      MATLINPATTERSON LLC


                                      By:  /s/ Mark R. Patterson
                                          -----------------------------------
                                             Name:  Mark R. Patterson
                                             Title: Member


                                      MATLINPATTERSON ASSET MANAGEMENT LLC

                                      By:  /s/ Mark R. Patterson
                                          -----------------------------------
                                             Name:  Mark R. Patterson
                                             Title: Chairman


                                      MATLINPATTERSON GLOBAL ADVISERS LLC


                                      By:  /s/ Mark R. Patterson
                                          -----------------------------------
                                             Name:  Mark R. Patterson
                                             Title: Chairman


                                (Page 1 of 3)
<PAGE>


                                      MATLINPATTERSON GLOBAL PARTNERS LLC


                                      By:  /s/ Mark R. Patterson
                                          ------------------------------------
                                             Name:  Mark R. Patterson
                                             Title: Director


                                      MATLINPATTERSON GLOBAL
                                      OPPORTUNITIES PARTNERS L.P.

                                      By: MatlinPatterson Global Partners LLC


                                      By:  /s/ Mark R. Patterson
                                          ------------------------------------
                                             Name:  Mark R. Patterson
                                             Title: Director

                                      MATLINPATTERSON GLOBAL
                                      OPPORTUNITIES PARTNERS B, L.P.

                                      By: MatlinPatterson Global Partners LLC


                                      By:  /s/ Mark R. Patterson
                                          ------------------------------------
                                             Name:  Mark R. Patterson
                                             Title: Director


                                      MATLINPATTERSON  GLOBAL
                                      OPPORTUNITIES PARTNERS (BERMUDA) L.P.

                                      By: MatlinPatterson Global Partners LLC


                                      By:  /s/ Mark R. Patterson
                                          ------------------------------------
                                             Name:  Mark R. Patterson
                                             Title: Director


                                (Page 2 of 3)
<PAGE>


                                      DAVID J. MATLIN


                                      By:   /s/ David J. Matlin
                                           -----------------------------------
                                             Name:  David J. Matlin

                                      MARK R. PATTERSON


                                      By:   /s/ Mark R. Patterson
                                           -----------------------------------
                                             Name:  Mark R. Patterson


                                (Page 3 of 3)


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-2
<SEQUENCE>4
<FILENAME>efc3-0412_exh2.txt
<DESCRIPTION>MATLIN PATTERSON POLYMER
<TEXT>
                                                                     Exhibit 2


                            PARTICIPATION AGREEMENT

                      (Delaware and Bermuda Partnerships)

          PARTICIPATION AGREEMENT dated as of May 15, 2001 (this "Agreement")
by and between CSFB Global Opportunities Partners, L.P. a Delaware limited
partnership (the "Delaware Partnership"), and CSFB Global Opportunities
Partners (Bermuda), L.P. (the "Bermuda Partnership", and together with the
Delaware Partnership, the "Partnerships").

                            Preliminary Statement

          This Agreement sets forth the terms and conditions on which the
Bermuda Partnership will participate in, and be a beneficial owner of, a
portion of each investment (and certain other assets) held by the Delaware
Partnership.

          Each of the Partnerships is a private investment fund managed by
CSFB Global Opportunities Advisers, LLC and each is in the process of raising
funds. The Partnerships intend to invest proportionately with each other in
the same investments. This Agreement is being entered into as a convenience to
enable the Delaware Partnership and the Bermuda Partnership to adjust after
each closing their respective ownership interests in their investments to be
proportionate to the aggregate Capital Commitments made to each Partnership,
as contemplated under each Partnership's respective partnership agreement,
without the additional expense and administrative burden of transferring the
ownership (or partial ownership) of investments between the Delaware
Partnership and the Bermuda Partnership after each such closing.

          1. Definitions. Capitalized terms not defined herein shall have the
meanings given to them in the partnership agreement of the Delaware
Partnership.

          2. Participations.

               (a) From and after the date of this Agreement, at the time each
Investment Asset (as defined below) is acquired, the Delaware Partnership
hereby agrees to sell to the Bermuda Partnership, and the Bermuda Partnership
agrees to purchase from the Delaware Partnership, without further action, a
participation interest (each, a "Participation") in the Delaware Partnership's
right, title and interest in such Investment Asset. The amount of the Bermuda
Partnership's Participation in each Investment Asset shall equal its Pro Rata
Share of such Investment Asset.

               "Investment Asset" means each investment (including expenses
related to such investment) of the Delaware Partnership acquired at any time
during the term of this Agreement, whether such investment is in the form of
debt or equity securities, commodities, currencies, loans, derivatives, trade
claims, short positions or any other type of asset acquired or held by the
Delaware Partnership for investment purposes, together with all interest,
dividends, income distributions and other earnings in respect of each such
Investment Asset and cash, to the extent the Bermuda Partnership has provided
cash to the Delaware Partnership, or an Investment Asset has been liquidated.

<PAGE>

               The Bermuda Partnership's "Pro Rata Share" of each Investment
Asset shall be a fraction (expressed as a percentage), the numerator of which
is the amount of the aggregate Capital Commitments made to the Bermuda
Partnership and the denominator of which is the Overall Capital Commitments.

               (b) Each Investment Asset shall be held by the Delaware
Partnership in its own name but, to the extent of the Bermuda Partnership's
interest therein, subject to the Bermuda Partnership's rights with respect
thereto, as herein set forth.

               (c) The Bermuda Partnership shall have no direct interest in
any Investment Asset except that, as a participant, the Bermuda Partnership
shall participate, based upon its Pro Rata Share of each such Investment
Asset, in any and all benefits, payments, recoveries and any other amounts
received by the Delaware Partnership from or in connection with the Investment
Assets.

               (d) The Bermuda Partnership's Pro Rata Share shall be adjusted
immediately after each closing of the Delaware Partnership, each closing of
the Bermuda Partnership and any other event (each such event, an "Adjustment
Event") which causes a change in the relative proportions of Capital
Commitments made to the Bermuda Partnership and the Delaware Partnership.
Immediately after each Adjustment Event, the Delaware Partnership shall sell
to the Bermuda Partnership, and the Bermuda Partnership shall purchase from
the Delaware Partnership, or the Bermuda Partnership shall sell to the
Delaware Partnership, and the Delaware Partnership shall purchase from the
Bermuda Partnership, as may be required, such amount of the Participation
Interest in each Investment Asset as will result in the Bermuda Partnership
owning a Participation equal to its adjusted Pro Rata Share of each Investment
Asset.

               (e) As soon as practicable after the Last Closing Date, the
Bermuda Partnership's Pro Rata Share of each Investment Asset shall be
transferred to the Bermuda Partnership.

               3. Manner of Payment. On the date the Delaware Partnership
acquires an Investment Asset, the Bermuda Partnership shall deposit with, or
otherwise make available to, the Delaware Partnership, cash to fund the
Bermuda Partnership's Participation in such Investment Asset in an amount
equal to the cost of the Bermuda Partnership's Pro Rata Share of such
Investment Asset.

               4. Relationship of Parties. The Delaware Partnership neither is
nor shall be deemed to be a fiduciary of, or otherwise have a trust
relationship with, or be an agent of, the Bermuda Partnership in connection
with this Agreement or any transaction contemplated herein, and the Delaware
Partnership shall have no obligation, duty or responsibility to the Bermuda
Partnership except as expressly set forth herein. Each Participation in an
Investment Asset sold hereunder shall constitute an assignment, without
recourse to the Delaware Partnership, of an undivided interest in and to such
Investment Asset. This Agreement shall not be construed as a loan by the
Bermuda Partnership to the Delaware Partnership. Nothing in this Agreement
shall be construed as creating a partnership, joint venture, association,
syndicate, unincorporated business or other separate entity.

                                      2

<PAGE>

               5. Obligations Absolute. The obligations of the Bermuda
Partnership hereunder shall be absolute, unconditional and irrevocable and
shall be paid and performed strictly in accordance with the terms hereof.

               6. Delivery of Documents and Information.

               (a) Unless prohibited from doing so by any document governing
any Investment Asset (each, a "Document"), the Delaware Partnership will
furnish to the Bermuda Partnership (i) a copy of each material financial
statement, subscription agreement, transfer agreement or tax form the Delaware
Partnership receives from time to time pursuant to any Document and (ii) a
copy of each amendment or other modification of, or waiver or consent granted
in connection with, any Document.

               (b) Failure of the Delaware Partnership to provide any
information referred to in the foregoing subsection (a) above shall not result
in any liability of the Delaware Partnership or excuse the Bermuda Partnership
from the performance of any of its obligations hereunder.

               7. Modification of Documents. Etc. The Delaware Partnership may
(in its sole discretion), without the approval or consent of the Bermuda
Partnership, (a) agree to any amendment or other modification of any Document
and (b) exercise or refrain from exercising any right or remedy the Delaware
Partnership may have under any Document.

               8. Limitation on the Liability of the Delaware Partnership.

               (a) The Delaware Partnership shall not be liable to the Bermuda
Partnership for any error in judgment or for any action taken or omitted to be
taken by the Delaware Partnership, except for gross negligence, willful
misconduct, fraud or bad faith of the Delaware Partnership. Subject to the
preceding sentence, the Delaware Partnership will exercise the same care in
administering the Bermuda Partnership's interest in each Investment Asset as
the Delaware Partnership exercises with respect to each such Investment Asset
for its own account and risk, and the Delaware Partnership shall have no
further responsibility to the Bermuda Partnership. Without limiting the
foregoing, the Delaware Partnership may rely on the advice of counsel
concerning legal matters and on any written communication or telephone
conversation which it believes to be genuine and correct and to have been
signed, sent or made by the proper person or persons.

               (b) The Delaware Partnership makes no representation or
warranty in connection with, and assumes no responsibility for, the financial
or other condition of any borrower or company to which an Investment Asset
relates, or other party to any Document or the performance of the obligations
of any such Person under any Document, or for the due execution, authenticity,
validity, enforceability or colleetibility of any thereof. The Delaware
Partnership shall have no duty to file any document relating to any collateral
or to maintain any such filing. The Delaware Partnership shall have no
obligation to make any claim on, or assert any lien upon or assert any setoff
against any property held by it. The Delaware Partnership may make loans or
otherwise extend credit to, or purchase equity in, and generally engage in any
kind of investment business with, any borrower or other person obligated in
respect of an Investment

                                      3

<PAGE>

Asset, or any bank that may have originated a loan or acquired an Investment
Asset (if the originator or acquirer (as applicable) is not the Delaware
Partnership).

               9. Independent Investigation. The Bermuda Partnership
represents that it has entered into this Agreement on the basis of its own
credit evaluation, the Delaware Partnership has not made any representations
or warranties to the Bermuda Partnership, except as otherwise set forth
herein, and no act hereafter taken by the Delaware Partnership, including,
without limitation, any review of the affairs of any Borrower or any other
party to any Document, shall be deemed to constitute any representation or
warranty by the Delaware Partnership to the Bermuda Partnership. The Bermuda
Partnership represents and warrants to, and agrees with, the Delaware
Partnership that it has made and will continue to make, independently and
without reliance upon the Delaware Partnership or counsel to the Delaware
Partnership and based on such documents and information as it deems
appropriate, (A) its own appraisal of and investigation into the operations,
financial condition, creditworthiness, affairs, status and nature of each
Borrower and other party to any Document, and (B) its own decision to enter
into this Agreement and to take any action hereunder.

               10. Existing Agreements. The parties hereto acknowledge that
Hemisphere Global Opportunities, Ltd. is the general partner of each of the
Partnerships, and agree that notwithstanding anything to the contrary
contained in this Agreement, this Agreement shall not be deemed to modify,
supersede, amend or otherwise effect the duties and obligations of the general
partner under the partnership agreements of either Partnership.

               11. Indemnification. The Bermuda Partnership agrees to
indemnify and hold harmless the Delaware Partnership for the Bermuda
Partnership's respective Pro Rata Share of any and all liabilities, claims,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind and nature whatsoever (collectively,
"Losses") which may be imposed on, incurred by or asserted against the
Delaware Partnership in connection with an Investment Asset.

               The Delaware Partnership hereby agrees that, in the event it
incurs any Losses which are not related to an Investment Asset in which the
Bermuda Partnership has a Participation under this Agreement, it will not hold
the Bermuda Partnership liable for any of the foregoing.

               This section 11 shall survive termination of this Agreement.

               12. Notices. Unless otherwise specified herein, all notices and
other communications provided for hereunder shall be in writing and shall be
mailed, by certified or registered mail, postage prepaid (return receipt
requested), telecopied, telexed, telegraphed or delivered, to such party at
its address or at such other address as shall be designated by such party in a
written notice to the other party complying as to delivery with the terms of
this section. All such notices and other communications shall be effective {a}
if mailed, when received or three days after matting, whichever is earlier;
(b) if telegraphed, when delivered to the telegraph company; (c) if
telecopied, when transmitted; (d) if telexed, when the appropriate answerback
has been received; or (e) if delivered, upon delivery.

                                      4

<PAGE>

               13. Termination. This Agreement shall terminate upon the
transfer of all the Investment Assets as provided in section 2(e) hereof
and/or distribution of all Proceeds of all Investment Assets to the Bermuda
Investors.

               14. Miscellaneous. This Agreement may be executed in any number
of counterparts and by different parties hereto in separate counterparts, each
of which shall be deemed to be an original, but all of which taken together
shall constitute one and the same agreement. This Agreement shall be governed
by and construed and interpreted in accordance with the laws of the State of
New York.

                                      5

<PAGE>

               IN WITNESS WHEREOF, the parties hereto have executed this
Agreement by their duly authorized officers as of the date above first
written.

                           CSFB GLOBAL OPPORTUNITIES PARTNERS, L.P.


                           By: Hemisphere Global Opportunities Partners, Ltd.,
                               In its capacity as General Partner of CSFB
                               Global Opportunities Partners, L.P.

                           By: /s/ Marty Brandt
                              ------------------------------------------------
                              Name:  Marty Brandt
                              Title: Director


                           CSFB GLOBAL OPPORTUNITIES PARTNERS (BERMUDA), L.P.


                           By: Hemisphere Global Opportunities Partners, Ltd.,
                               In its capacity as the General Partner of CSFB
                               Global Opportunities Partners (Bermuda), L.P.


                           By: /s/ Marty Brandt
                              ------------------------------------------------
                              Name:  Marty Brandt
                              Title: Director

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-3
<SEQUENCE>5
<FILENAME>efc3-0412_exh3.txt
<DESCRIPTION>MATLIN PATTERSON POLYMER
<TEXT>


                                                                    Exhibit 3


                            PARTICIPATION AGREEMENT

                             (Opt-Out Partnership)

            PARTICIPATION AGREEMENT dated as of July 16, 2002 (this
"Agreement") by and between Matlin Patterson Global Opportunities Partners
L.P. (f/k/a CSFB Global Opportunities Partners, L.P.), a Delaware limited
partnership (the "Delaware Partnership"), and Matlin Patterson Global
Opportunities Partners B, L.P. (the "Opt-Out Partnership", and together with
the Delaware Partnership, the "Partnerships"), permit the Delaware Partnership
to own and manage the Investments in which the Opt-Out Investors have an
interest as determined under the Fifth Amended and Restated Agreement of
Limited Partnership of the Delaware Partnership, dated July 1, 2002, as such
agreement may be amended from time to time (the "Delaware Partnership
Agreement").

                             Preliminary Statement

            This Agreement sets forth the terms and conditions on which the
Opt-Out Partnership will participate in, and be a beneficial owner of, a
portion of certain Investments held by the Delaware Partnership.

            Each of the Partnerships is a private investment fund managed by
Matlin Patterson Global Advisers LLC (the "Investment Adviser"). The Opt-Out
Investors are limited partners of the Delaware Partnership who, in connection
with the Spin-off of the Investment Professionals of the Investment Adviser
from CSFB, elected not to participate in future Investments (other than
Convertible Investments) and to receive the Proceeds of their share of
existing Investments as such Investments are realized and Proceeds become
available. The General Partner of the Delaware Partnership used its authority
under the Delaware Partnership Agreement to transfer the Opt-Out Investors to
the Opt-Out Partnership on the date hereof.

            This Agreement is being entered into as a convenience to permit
the Delaware Partnership to own and manage the Investments in which the
Opt-Out Investors have an interest, as determined under the Delaware
Partnership Agreement without the additional expense and administrative burden
of transferring the ownership (or partial ownership) of Investments between
the Delaware Partnership and the Opt-Out Partnership.

            1.    Definitions. Capitalized terms not defined herein shall
have the meanings given to them in the Delaware Partnership Agreement.

            2. Participations.

                  (a) In consideration for the Opt-Out Investors becoming
limited partners in the Opt-Out Partnership, the Delaware Partnership as of
the date of this Agreement, hereby agrees to sell to the Opt-Out Partnership,
and the Opt-Out Partnership agrees to purchase from the Delaware Partnership,
without further action, a participation interest (each a "Participation") in
the Delaware Partnership's right, title and interest in each Opt-Out Asset.
The amount of the Opt-Out Partnership's Participation in each Opt-Out Asset
shall equal, at all times, its Pro Rata Share (as defined below) of such
Opt-Out Asset.

<PAGE>

            "Opt-Out Asset" means each investment (including expenses related
to such investment) of the Delaware Partnership listed on Schedule A hereto,
whether such investment is in the form of debt or equity securities,
commodities, currencies, loans, derivatives, trade claims, short positions or
any other type of asset acquired or held by the Delaware Partnership for
investment purposes, together with all interest, dividends, income
distributions and other earnings in respect of each such Opt-Out Asset and
cash, to the extent the Opt-out Partnership has provided cash to the Delaware
Partnership, or an Opt-Out Asset has been liquidated; provided that any asset
of the Delaware Partnership from which an Opt-Out Investor was excluded from
participating shall not be an Opt-Out Asset.

            The Opt-Out Partnership's "Pro Rata Share" of each Opt-Out Asset
shall be a fraction (expressed as a percentage), the numerator of which is the
amount of the aggregate Capital Commitments of the Opt-Out Investors and the
denominator of which is the Overall Capital Commitments.

                  (b) Each Opt-Out Asset shall be held by the Delaware
Partnership in its own name but, to the extent of the Opt-Out Partnership's
interest therein, subject to the Opt-Out Partnership's rights with respect
thereto, as herein set forth.

                  (c) The Opt-Out Partnership shall have no direct interest in
any Opt-Out Asset except that, as a participant, the Opt-Out Partnership shall
participate, based upon its Pro Rata Share of each such Opt-Out Asset, in any
and all benefits, payments, recoveries and any other amounts received by the
Delaware Partnership from or in connection with the Opt-Out Assets.

                  (d) The Delaware Partnership shall not reinvest the Proceeds
of any Opt-Out Asset, except to the extent assets attributable to Opt-Out
Investors may be reinvested under the Delaware Partnership Agreement, and the
Delaware Partnership shall either distribute such Proceeds to the Opt-Out
Partnership (or to the Opt-Out Investors on behalf of the Opt-Out Partnership)
or apply such Proceeds to reserves or to pay expenses and management fees as
required under the Delaware Partnership Agreement.

                  (e) As soon as practicable after the Last Closing Date, the
Opt-Out Partnership's Pro Rata Share of each Opt-Out Asset shall be
transferred to the Opt-Out Partnership.

            3. Manner of Payment. The Opt-Out Partnership shall deposit with,
or otherwise make available to, the Delaware Partnership, cash to fund the
Opt-Out Partnership's Participation in each Opt-Out Asset in an amount equal
to the cost of the Opt-Out Partnership's Pro Rata Share of such Opt-Out Asset.

            4. Relationship of Parties. The Delaware Partnership neither is
nor shall be deemed to be a fiduciary of, or otherwise have a trust
relationship with, or be an agent of, the Opt-Out Partnership in connection
with this Agreement or any transaction contemplated herein, and the Delaware
Partnership shall have no obligation, duty or responsibility to the Opt-Out
Partnership except as expressly set forth herein. Each Participation in an
Opt-Out Asset sold hereunder shall constitute an assignment, without recourse
to the Delaware Partnership, of an

                                      2

<PAGE>

undivided interest in and to such Opt-Out Asset. This Agreement shall not be
construed as a loan by the Opt-Out Partnership to the Delaware Partnership.
Nothing in this Agreement shall be construed as creating a partnership, joint
venture, association, syndicate, unincorporated business or other separate
entity.

            5. Obligations Absolute. The obligations of the Opt-Out
Partnership hereunder shall be absolute, unconditional and irrevocable and
shall be paid and performed strictly in accordance with the terms hereof.

            6. Delivery of Documents and Information.

                  (a) Unless prohibited from doing so by any document
governing any Opt-Out Asset (each, a "Document"), the Delaware Partnership
will furnish to the Opt-Out Partnership (i) a copy of each material financial
statement, subscription agreement, transfer agreement or tax form the Delaware
Partnership receives from time to time pursuant to any Document and (ii) a
copy of each amendment or other modification of, or waiver or consent granted
in connection with, any Document.

                  (b) Failure of the Delaware Partnership to provide any
information referred to in the foregoing subsection (a) above shall not result
in any liability of the Delaware Partnership or excuse the Opt-Out Partnership
from the performance of any of its obligations hereunder.

            7. Modification of Documents, Etc. The Delaware Partnership may
(in its sole discretion), without the approval or consent of the Opt-Out
Partnership, (a) agree to any amendment or other modification of any Document,
and (b) exercise or refrain from exercising any right or remedy the Delaware
Partnership may have under any Document.

            8. Limitation on the Liability of the Delaware Partnership.

                  (a) The Delaware Partnership shall not be liable to the
Opt-Out Partnership for any error in judgment or for any action taken or
omitted to be taken by the Delaware Partnership, except for gross negligence,
willful misconduct, fraud or bad faith of the Delaware Partnership. Subject to
the preceding sentence, the Delaware Partnership will exercise the same care
in administering the Opt-Out Partnership's interest in each Opt-Out Asset as
the Delaware Partnership exercises with respect to each such Opt-Out Asset for
its own account and risk, and the Delaware Partnership shall have no further
responsibility to the Opt-Out Partnership. Without limiting the foregoing, the
Delaware Partnership may rely on the advice of counsel concerning legal
matters and on any written communication or telephone conversation which it
believes to be genuine and correct and to have been signed, sent or made by
the proper person or persons.

                  (b) The Delaware Partnership makes no representation or
warranty in connection with, and assumes no responsibility for, the financial
or other condition of any borrower or company to which an Opt-Out Asset
relates, or other party to any Document or the performance of the obligations
of any such Person under any Document, or for the due execution, authenticity,
validity, enforceability or collectibility of any thereof. The Delaware

                                      3

<PAGE>

Partnership shall have no duty to file any document relating to any collateral
or to maintain any such filing. The Delaware Partnership shall have no
obligation to make any claim on, or assert any lien upon or assert any setoff
against any property held by. it. The Delaware Partnership may make loans or
otherwise extend credit to, or purchase equity in, and generally engage in any
kind of investment business with, any borrower or other person obligated in
respect of an Opt-Out Asset, or any bank that may have originated a loan or
acquired an Opt-Out Asset (if the originator or acquirer (as applicable) is
not the Delaware Partnership).

            9. Independent Investigation. The Opt-Out Partnership represents
that it has entered into this Agreement on the basis of its own credit
evaluation, the Delaware Partnership has not made any representations or
warranties to the Opt-Out Partnership, except as otherwise set forth herein,
and no act hereafter taken by the Delaware Partnership, including, without
limitation, any review of the affairs of any Borrower or any other party to
any Document, shall be deemed to constitute any representation or warranty by
the Delaware Partnership to the Opt-Out Partnership. The Opt-Out Partnership
represents and warrants to, and agrees with, the Delaware Partnership that it
has made and will continue to make, independently and without reliance upon
the Delaware Partnership or counsel to the Delaware Partnership and based on
such documents and information as it deems appropriate, (A) its own appraisal
of and investigation into the operations, financial condition,
creditworthiness, affairs, status and nature of each Borrower and other party
to any Document, and (B) its own decision to enter into this Agreement and to
take any action hereunder.

            10. Existing Agreements. The parties hereto acknowledge that
Hemisphere Global Opportunities, Ltd. is the general partner of the Delaware
Partnership and Matlin Patterson Global Partners LLC is the general partner of
the Opt-Out Partnership, and agree that notwithstanding anything to the
contrary contained in this Agreement, this Agreement shall not be deemed to
modify, supercede, amend or otherwise effect the duties and obligations of the
general partners, or their successors under partnership agreements of either
Partnership.

            11. Indemnification. The Opt-Out Partnership agrees to indemnify
and hold harmless the Delaware Partnership for the Opt-Out Partnership's
respective Pro Rata Share of any and all liabilities, claims, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind and nature whatsoever (collectively, "Losses") which
may be imposed on, incurred by or asserted against the Delaware Partnership in
connection with an Opt-Out Asset.

                  The Delaware Partnership hereby agrees that, in the event it
incurs any Losses which are not related to an Opt-Out Asset in which the
Opt-Out Partnership has a Participation under this Agreement, it will not hold
the Opt-Out Partnership liable for any of the foregoing.

                  This section 11 shall survive termination of this Agreement.

            12. Notices. Unless otherwise specified herein, all notices and
other communications provided for hereunder shall be in writing and shall be
mailed, by certified or registered mail, postage prepaid (return receipt
requested), telecopied, telexed, telegraphed or delivered, to such party at
its address or at such other address as shall be designated by such

                                      4
<PAGE>

party in a written notice to the other party complying as to delivery with the
terms of this section. All such notices and other communications shall be
effective (a) if mailed, when received or three days after mailing, whichever
is earlier; (b) if telegraphed, when delivered to the telegraph company; (c)
if telecopied, when transmitted; (d) if telexed, when the appropriate
answerback has been received; or (e) if delivered, upon delivery.

            13. Termination. This Agreement shall terminate upon the transfer
of all the Opt-Out Assets as provided in section 2(e) hereof and/or
distribution of all Proceeds of all Opt-Out Assets to the Opt-Out Investors.

            14. Miscellaneous. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which shall be deemed to be an original, but all of which taken together shall
constitute one and the same agreement. This Agreement shall be governed by and
construed and interpreted in accordance with the laws of the State of New
York.

                                      5
<PAGE>

            IN WITNESS WHEREOF, the parties hereto have executed this
Agreement by their duly authorized officers as of the date above first
written.

                           MATLIN PATTERSON GLOBAL OPPORTUNITIES PARTNERS L.P.

                           By:  Hemisphere Global Opportunities, Ltd.,
                                In its capacity as General Partner of Matlin
                                Patterson Global Opportunities Partners L.P.

                           By: /s/ Marty Brandt
                              ------------------------------------------------
                              Name:  Marty Brandt
                              Title: Director

                           MATLIN PATTERSON GLOBAL OPPORTUNITIES PARTNERS B,
                           L.P.

                           By:  Matlin Patterson Global Partners LLC,
                                In its capacity as the General Partner of
                                Matlin Patterson Global Opportunities Partners
                                B, L.P.

                           By: /s/ Mark R. Patterson
                              ------------------------------------------------
                                Name:   Mark R. Patterson
                                Title:  Director


                                      6

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-4
<SEQUENCE>6
<FILENAME>efc3-0412_exh4.txt
<DESCRIPTION>MATLIN PATTERSON POLYMER
<TEXT>
                                                                     Exhibit 4


                                                                EXECUTION COPY

             SENIOR SUBORDINATED NOTE PURCHASE AGREEMENT


           SENIOR SUBORDINATED NOTE PURCHASE AGREEMENT, dated as of March 5,
2003 (the "Effective Date"), between POLYMER GROUP, INC., a Delaware
corporation (the "Borrower"), each of the entities identified under the
caption "GUARANTORS" on the signature pages hereto (individually and together
with any entity that shall become a guarantor hereunder pursuant to Section
6.01(h) hereof, a "Guarantor", and, together with the Borrower, the
"Obligors") and MATLINPATTERSON GLOBAL OPPORTUNITIES PARTNERS LP, a Delaware
limited partnership ("GOF").

           WHEREAS, on May 11, 2002, the Borrower and its domestic
subsidiaries (other than Bonlam (S.C.), Inc., for which the petition date was
April 23, 2002) filed voluntary petitions for reorganization under chapter 11
of title 11 of the United States Code in the United States Bankruptcy Court
for the District of South Carolina (the "Bankruptcy Court");

           WHEREAS, on January 3, 2003, the Bankruptcy Court issued an order
confirming the Borrower's and its domestic subsidiaries' Joint Second Amended
Modified Plan of Reorganization (the "Plan") and on January 16, 2003 the
Bankruptcy Court entered a supplemental order confirming the Plan;

           WHEREAS, (a) the Plan and the Credit Agreement contemplate that GOF
shall issue or cause to be issued a letter of credit in favor of the
Administrative Agent, as beneficiary, in the face amount of $25,000,000, in
substantially the form of Exhibit A hereto (the "Letter of Credit"); and (b)
such Letter of Credit shall, in accordance with the terms thereof and of the
Credit Agreement, support the payments due under the Credit Agreement from the
Borrower to the Administrative Agent on December 31, 2003, June 30, 2004 and
December 31, 2004 to the extent that the Borrower fails to meet such payment
obligations;

           WHEREAS, GOF has caused, or, simultaneously with the execution and
delivery of this Agreement, is causing, the Letter of Credit to be issued; and

           WHEREAS, the Plan requires (and the Credit Agreement contemplates)
that, upon any drawing under the Letter of Credit, the Borrower shall issue to
GOF senior subordinated promissory notes in the face amount of such drawing,
with such additional terms and conditions as are more fully set forth in this
Agreement.

           NOW, THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties hereto hereby
agree as follows:

                                   ARTICLE I
                                  DEFINITIONS

           Section 1.01. Definitions. As used in this Agreement, the following
terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):

<PAGE>

           "Acquired Indebtedness" means Indebtedness of a Person (a) assumed
in connection with an Acquisition from such Person or (b) existing at the time
such Person becomes a Restricted Subsidiary or is merged or consolidated with
or into the Borrower or any Subsidiary.

           "Acquired Person" means, with respect to any specified Person, any
other Person which merges with or into or becomes a Subsidiary of such
specified Person.

           "Acquisition" means (i) any capital contribution (by means of
transfers of cash or other property to others or payments for property or
services for the account or use of others, or otherwise) by the Borrower or
any Restricted Subsidiary to any other Person, or any acquisition or purchase
of Equity Interests of any other Person by the Borrower or any Restricted
Subsidiary, in either case pursuant to which such Person shall become a
Restricted Subsidiary or shall be consolidated with or merged into the
Borrower or any Restricted Subsidiary or (ii) any acquisition by the Borrower
or any Restricted Subsidiary of the assets of any Person which constitute
substantially all of an operating unit or line of business of such Person or
which is otherwise outside of the ordinary course of business.

           "Administrative Agent" means JPMorgan Chase Bank, as administrative
agent under the Credit Agreement, together with any successor thereto.

           "Affiliate" of any specified Person means any other Person,
directly or indirectly, controlling or controlled by, or under direct or
indirect common control with such specified Person. The term "control,"
"controlling", "controlled by" or "under common control with" with respect to
any Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such Person,
whether through the ownership of voting securities by agreement or otherwise.

           "Affiliate Transaction" has the meaning set forth in Section
6.01(b).

           "Agreement" means this Senior Subordinated Note Purchase Agreement,
as the same may be amended, supplemented or otherwise modified from time to
time.

           "Asset Sale" means any direct or indirect sale, conveyance,
transfer, lease (that has the effect of a disposition) or other disposition
(including, without limitation, any merger, consolidation or sale-leaseback
transaction) to any Person other than the Borrower or a Wholly Owned
Restricted Subsidiary, in one transaction or a series of related transactions,
of (i) any Equity Interest of any Restricted Subsidiary (other than directors'
qualifying shares, to the extent mandated by applicable law); (ii) any assets
of the Borrower or any Restricted Subsidiary which constitute substantially
all of an operating unit or line of business of the Borrower or any Restricted
Subsidiary; or (iii) any other property or asset of the Borrower or any
Restricted Subsidiary outside of the ordinary course of business (including
the receipt of proceeds paid on account of the loss of or damage to any
property or asset and awards of compensation for any asset taken by
condemnation, eminent domain or similar proceedings). For the purposes of this
definition, the term "Asset Sale" shall not include (a) any transaction
consummated in compliance with Section 6.02 and the creation of any Lien not
prohibited by Section 6.01(g); (b) sales of property or equipment that has
become worn out, obsolete or damaged or otherwise unsuitable

                                      2
<PAGE>

for use in connection with the business of the Borrower or any Restricted
Subsidiary, as the case may be; (c) any transaction consummated in compliance
with Section 6.01(d); (d) any transfers of properties and assets between
Wholly Owned Restricted Subsidiaries; (e) any transaction pursuant to which
the Borrower or any Restricted Subsidiary transfers property to a Person and
the Borrower or such Restricted Subsidiary leases such property from such
Person; provided, however, that such transaction complies with Sections
6.01(d) and (e); (f) sales of Investments (i) that were originally made
pursuant to clauses (a), (b), (c) or (d) of the definition of Permitted
Investments or (ii) to the extent that such Investments were treated as
Restricted Payments; and (g) any Qualified Securitization Transaction. In
addition, solely for purposes of Section 6.01(d), any sale, conveyance,
transfer, lease or other disposition of any property or asset, whether in one
transaction or a series of related transactions, involving assets with a Fair
Market Value not in excess of $25,000,000 in any fiscal year shall be deemed
not to be an Asset Sale; provided, further, that any sale, conveyance,
transfer, lease or other disposition of any property or assets, including
without limitation the Chicopee Sale consummated on or prior to the Effective
Date shall be excluded in any determination made pursuant to this sentence.

           "Assignment and Acceptance" means an assignment and acceptance
entered into by GOF or an Eligible Assignee and an Eligible Assignee in
substantially the form of Exhibit B hereto.

           "Bankruptcy Code" means Title I of the Bankruptcy Reform Act of
1978, as amended from time to time, as set forth in sections 101 et seq. of
Title 11 of the United States Code, and applicable portions of Titles 18 and
28 of the United States Code.

           "Bankruptcy Court" has the meaning set forth in the first whereas
clause.

           "Bankruptcy Law" means the Bankruptcy Code or any similar Federal,
state or foreign law for the relief of debtors.

           "Bonlam" means Bonlam S.A. de C.V., a corporation duly organized
and validly existing under the laws of Mexico.

           "Borrower" has the meaning set forth in the first introductory
paragraph hereto.

           "Borrowing" has the meaning set forth in Section 2.01.

           "Business Day" means any day other than a Saturday, a Sunday or a
day on which banking institutions are not required by law or authorized to
close in New York, New York.

           "Bylaws" means the Bylaws of the Borrower in substantially the form
attached as Exhibit C hereto.

           "Capital Lease Obligations" means, at the time any determination
thereof is to be made, the amount of the liability in respect of a capital
lease that would at such time be properly capitalized on the balance sheet in
accordance with GAAP.

                                      3
<PAGE>

           "Capital Stock" means any and all shares or other equivalents
(however designated) of capital stock, including all common stock and all
preferred stock, in the case of a corporation, partnership interests or other
equivalents (however designated) in the case of a partnership, membership
interests or other equivalents (however designated) in the case of a limited
liability company, or common shares of beneficial interest or other
equivalents (however designated) in the case of a trust.

           "Cash Equivalents" means: (a) U.S. Dollars; (b) securities issued
or directly and fully guaranteed or insured by the U.S. government or any
agency or instrumentality thereof having maturities of not more than six
months from the date of acquisition; (c) certificates of deposit and
eurodollar time deposits with maturities of six months or less from the date
of acquisition, bankers' acceptances with maturities not exceeding six months
and overnight bank deposits, in each case with any domestic commercial bank
having capital and surplus in excess of $500,000,000; (d) repurchase
obligations with a term of not more than seven days for underlying securities
of the types described in clauses (b) and (c) above entered into with any
financial institution meeting the qualifications specified in clause (c)
above; (e) commercial paper rated P-1, A-1 or the equivalent thereof by
Moody's or S&P, respectively, and in each case maturing within six months
after the date of acquisition; and (f) corporate securities having a rating
equal to or higher than BBB -- and Baa3, or the equivalents thereof, by both
S&P and Moody's, respectively, if both such entities rate the securities, or
having such rating from one of such entities if only one such entity is rating
such securities.

           "CERCLA" has the meaning set forth in Section 5.01(m)(iii).

           "CERCLIS" has the meaning set forth in Section 5.01(m)(iii).

           "Certificate of Incorporation" means the Borrower's Amended and
Restated Certificate of Incorporation in substantially the form of Exhibit D
hereto.

           "Change of Control" means the occurrence of any of the following
events (whether or not approved by the Board of Directors of the Borrower):
(i) any Person (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act, including any group acting for the purpose of acquiring, holding
or disposing of securities within the meaning of Rule 13d-5(b)(1) under the
Exchange Act), other than one or more Permitted Holders, is or becomes the
"beneficial owner" (as defined in Rule 13d-3 and 13d-5 under the Exchange Act,
except that a Person shall be deemed to have "beneficial ownership" of all
shares that any such Person has the right to acquire, whether such right is
exercisable immediately or only after the passage of time, upon the happening
of an event or otherwise), directly or indirectly, of more than 50% of the
total voting power of the then outstanding Voting Equity Interests of the
Borrower; (ii) the Borrower consolidates with, or merges with or into, another
Person (other than the Borrower or any Wholly Owned Restricted Subsidiary) or
the Borrower or any Significant Restricted Subsidiary sells, assigns, conveys,
transfers, leases or otherwise disposes of all or substantially all of the
assets of the Borrower and its Subsidiaries (determined on a consolidated
basis) to any Person (other than the Borrower or any Wholly Owned Restricted
Subsidiary), other than any such transaction where immediately after such
transaction the Person or Persons that "beneficially owned" (as defined in
Rules 13d-3 and 13d-5 under the Exchange Act, except that a Person shall be
deemed to have

                                      4
<PAGE>

"beneficial ownership" of all securities that such Person has the right to
acquire, whether such right is exercisable immediately or only after the
passage of time upon the happening of an event or otherwise) immediately prior
to such transaction, directly or indirectly, a majority of the total voting
power of the then outstanding Voting Equity Interests of the Borrower, as the
case may be, "beneficially own" (as so determined), directly or indirectly, a
majority of the total voting power of the then outstanding Voting Equity
Interests of the surviving or transferee Person; or (iii) the Borrower is
liquidated or dissolved or adopts a plan of liquidation or dissolution other
than in a transaction which complies with the provisions of Section 6.02.

           "Chicopee Sale" means the sale of the warehouse in Dayton, New
Jersey, owned by Chicopee, Inc., a Delaware corporation.

           "Class C Dividends" means the special annual dividend on the
Borrower's Class C Common Stock, par value $.01 per share, required to be paid
by the Borrower pursuant to its Amended and Restated Certificate of
Incorporation.

           "Consolidated Coverage Ratio" as of any date of determination means
the ratio of (i) the aggregate amount of Consolidated EBITDA for the four
quarter period of the most recent four consecutive fiscal quarters for which
financial statements are available ending prior to the date of such
determination (the "Four Quarter Period") to (ii) Consolidated Fixed Charges
for such Four Quarter Period; provided, however, that (1) if the Borrower or
any Restricted Subsidiary has incurred any Indebtedness since the beginning of
such Four Quarter Period that remains outstanding on such date of
determination or if the transaction giving rise to the need to calculate the
Consolidated Coverage Ratio is an Incurrence of Indebtedness, Consolidated
EBITDA and Consolidated Fixed Charges for such Four Quarter Period shall be
calculated after giving effect on a pro forma basis to such Indebtedness as if
such Indebtedness had been Incurred on the first day of such Four Quarter
Period and the discharge of any other Indebtedness repaid, repurchased or
otherwise discharged with the proceeds of such new Indebtedness as if such
discharge had occurred on the first day of such Four Quarter Period, (2) if
since the beginning of such Four Quarter Period the Borrower or any Restricted
Subsidiary shall have made any Asset Sale, the Consolidated EBITDA for such
Four Quarter Period shall be reduced by an amount equal to the Consolidated
EBITDA (if positive) directly attributable to the assets that are the subject
of such Asset Sale for such Four Quarter Period or increased by an amount
equal to the Consolidated EBITDA (if negative) directly attributable thereto
for such Four Quarter Period and Consolidated Fixed Charges for such Four
Quarter Period shall be reduced by an amount equal to the Consolidated Fixed
Charges directly attributable to any Indebtedness of the Borrower or any
Restricted Subsidiary repaid, repurchased or otherwise discharged with respect
to the Borrower and its continuing Restricted Subsidiaries in connection with
such Asset Sale for such Four Quarter Period (or, if the Equity Interests of
any Restricted Subsidiary are sold, the Consolidated Fixed Charges for such
Four Quarter Period directly attributable to the Indebtedness of such
Restricted Subsidiary to the extent the Borrower and its continuing Restricted
Subsidiaries are no longer liable for such Indebtedness after such sale), (3)
if since the beginning of such Four Quarter Period the Borrower or any
Restricted Subsidiary (by merger or otherwise) shall have made an Investment
in any such Restricted Subsidiary (or any Person that becomes a Restricted
Subsidiary) or an Acquisition of assets, including any Acquisition of assets
occurring in connection with a transaction causing a calculation to be made
hereunder, which constitutes all or

                                      5
<PAGE>

substantially all of an operating unit or a line of a business or which
constitutes Replacement Assets, Consolidated EBITDA and Consolidated Fixed
Charges for such Four Quarter Period shall be calculated after giving pro
forma effect to (x) such Investment or Acquisition of assets (including the
Incurrence of any Indebtedness) as if such Investment or Acquisition occurred
on the first day of such Four Quarter Period and (y) net cost savings that the
Borrower reasonably believes in good faith could have been achieved during the
Four Quarter Period as a result of such Investment or Acquisition and which
cost savings could then be reflected in pro forma financial statements under
GAAP (provided that both (A) such cost savings were identified and quantified
in an Officer's Certificate delivered to the each of the holders of Senior
Subordinated Notes at the time of the consummation of the Investment or
Acquisition and (B) with respect to each Investment or Acquisition completed
prior to the 90th day preceding such date of determination, actions were
commenced or initiated by the Borrower within 90 days of such Investment or
Acquisition to effect such cost savings identified in such Officer's
Certificate) and (4) if since the beginning of such Four Quarter Period any
Person (that subsequently became a Restricted Subsidiary or was merged with or
into the Borrower or any Restricted Subsidiary since the beginning of such
Four Quarter Period) shall have made any Asset Sale or any Investment or
Acquisition of assets that would have required an adjustment pursuant to
clause (2) or (3) above if made by the Borrower or a Restricted Subsidiary
during such Four Quarter Period, Consolidated EBITDA and Consolidated Fixed
Charges for such Four Quarter Period shall be calculated after giving pro
forma effect thereto as if such Asset Sale, Investment or Acquisition of
assets occurred on, with respect to any Investment or Acquisition, the first
day of such Four Quarter Period and, with respect to any Asset Sale, the day
prior to the first day of such Four Quarter Period. For purposes of this
definition, whenever pro forma effect is to be given to an Acquisition of
assets, the amount of income or earnings relating thereto and the amount of
Consolidated Fixed Charges associated with any Indebtedness Incurred in
connection therewith, the pro forma calculations shall be determined in
accordance with GAAP. If any Indebtedness bears a floating rate of interest
and is being given pro forma effect, the interest expense on such Indebtedness
shall be calculated as if the rate in effect on the date of determination had
been the applicable rate for the entire period (taking into account any
agreement under which Hedging Obligations are outstanding applicable to such
Indebtedness if such agreement under which such Hedging Obligations are
outstanding has a remaining term as at the date of determination in excess of
12 months); provided, however, that the Consolidated Fixed Charges of the
Borrower attributable to interest on any Indebtedness Incurred under a
revolving credit facility computed on a pro forma basis shall be computed
based upon the average daily balance of such Indebtedness during the Four
Quarter Period.

           "Consolidated EBITDA" means, for any period, the Consolidated Net
Income for such period, plus the following to the extent deducted in
calculating such Consolidated Net Income: (i) Consolidated Income Tax Expense
for such period; (ii) Consolidated Interest Expense for such period; (iii)
Consolidated Non-Cash Charges for such period; and (iv) expenses relating to
employee profit sharing arising in connection with applicable Mexican
statutory requirements less (A) all non-cash items increasing Consolidated Net
Income for such period and (B) all cash payments during such period relating
to non-cash charges that were added back in determining Consolidated EBITDA in
any prior period.

                                      6
<PAGE>

           "Consolidated Fixed Charge" means, with respect to any Person for
any period, the sum, without duplication, of (i) Consolidated Interest Expense
and (ii) the product of (x) the amount of all dividend payments on any series
of Preferred Equity Interest of such Person (other than dividends paid solely
in Qualified Equity Interests) paid, accrued or scheduled to be paid or
accrued during such period times (y) a fraction, the numerator of which is one
and the denominator of which is one minus the then current effective
consolidated Federal, state and local tax rate of such Person, expressed as a
decimal.

           "Consolidated Income Tax Expense" means, with respect to the
Borrower for any period, the provision for Federal, state, local and foreign
income taxes payable by the Borrower and the Restricted Subsidiaries for such
period as determined on a consolidated basis in accordance with GAAP.

           "Consolidated Interest Expense" means, with respect to the Borrower
for any period, without duplication, the sum of (i) the interest expense of
the Borrower and the Restricted Subsidiaries for such period as determined on
a consolidated basis in accordance with GAAP, including, without limitation,
(a) any amortization of debt discount, (b) the net cost under Hedging
Obligations, (c) the interest portion of any deferred payment obligation, (d)
all commissions, discounts and other fees and charges owed with respect to
letters of credit and bankers' acceptance financing and (e) all capitalized
interest and all accrued interest and (ii) the interest component of Capital
Lease Obligations paid, accrued and/or scheduled to be paid or accrued by the
Borrower and the Restricted Subsidiaries during such period as determined on a
consolidated basis in accordance with GAAP.

           "Consolidated Net Income" means, for any period, the consolidated
net income (loss) of the Borrower and the Restricted Subsidiaries; provided,
however, that there shall not be included in such Consolidated Net Income: (i)
any net income (loss) of any Person if such person is not a Restricted
Subsidiary, except (A) to the extent of cash actually distributed by such
Person during such period to the Borrower or a Restricted Subsidiary as a
dividend or other distribution, (B) with respect to foreign joint ventures, to
the extent that cash is available for distribution (without restriction and
not committed for other purposes) during such period to the Borrower or a
Restricted Subsidiary as a dividend or other distribution, but is not
distributed due to adverse tax or other business reasons, such cash shall be
included and (C) the Borrower's equity in a net loss of any such Person (other
than an Unrestricted Subsidiary) for such period shall be included in
determining such Consolidated Net Income; (ii) any net income (loss) of any
person acquired by the Borrower or a Restricted Subsidiary in a pooling of
interests transaction for any period prior to the date of such acquisition;
(iii) any net income (but not loss) of any Restricted Subsidiary if such
Restricted Subsidiary is subject to restrictions, directly or indirectly, on
the payment of dividends or the making of distributions by such Restricted
Subsidiary, directly or indirectly, to the Borrower to the extent of such
restrictions; (iv) any gain or loss realized upon the sale or other
disposition of any asset of the Borrower or the Restricted Subsidiaries
(including pursuant to any sale/leaseback transaction) outside of the ordinary
course of business; (v) any extraordinary gain or loss; (vi) the cumulative
effect of a change in accounting principles; (vii) any restoration to income
of any contingency reserve of an extraordinary, non-recurring or unusual
nature, except to the extent that provision for such reserve was made out of
Consolidated Net

                                      7
<PAGE>

Income accrued at any time following the Effective Date; and (viii) gains and
losses resulting from foreign currency transaction adjustments.

           "Consolidated Non-Cash Charges" means, with respect to any Person,
for any period the sum of (i) depreciation, (ii) amortization and (iii) other
non-cash expenses of such Person and its Restricted Subsidiaries reducing
Consolidated Net Income of such Person and its Restricted Subsidiaries for
such period, determined on a consolidated basis in accordance with GAAP
(excluding, for purposes of clause (iii) only, such charges which require an
accrual of or a reserve for cash charges for any future period).

           "Credit Agreement" means the Third Amended, Restated and
Consolidated Credit Agreement, dated as of March 5, 2003, as in effect on the
date hereof, between the Borrower, the Subsidiaries of the Borrower identified
on the signature pages thereof and any Subsidiary that is later added thereto,
the lenders named therein, and JPMorgan Chase Bank, as administrative agent,
as further amended, including any deferrals, renewals, extensions,
replacements, refinancings, restructurings or refundings thereof, or
amendments, modifications or supplements thereto and any agreement providing
therefor (including any restatements thereof and any increases in the amount
of the commitment thereunder), whether by or with the same or any other
lender, creditor, group of lenders or group of creditors, and including
related notes, guarantee and note agreements and other instruments and
agreements executed in connection therewith.

           "Custodian" means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.

           "Debtor Subsidiary" means a Subsidiary of the Borrower that is
subject to the Plan.

           "Default" means any event that is or with the passage of time or
giving of notice or both, would be an Event of Default.

           "Designated Guarantor Senior Indebtedness" means, with respect to
any Guarantor, any Indebtedness of such Guarantor outstanding under the Credit
Agreement.

           "Designated Senior Indebtedness" means (a) any Indebtedness
outstanding under the Credit Agreement, and (b) any other Senior Indebtedness
which, at the time of determination, has an aggregate principal amount
outstanding, together with any commitments to lend additional amounts, of at
least $25,000,000, if the instrument governing such Senior Indebtedness
expressly states that such Indebtedness is "Designated Senior Indebtedness"
for purposes of this Agreement and a resolution of the Borrower's Board of
Directors setting forth such designation by the Borrower has been delivered to
each of the holders of Senior Subordinated Notes.

           "Designation" has the meaning set forth in Section 6.01(i).

           "Designation Amount" has the meaning set forth in Section 6.01(i).

           "Disclosure Statement" means the Amended Modified Disclosure
Statement of the Borrower and its Debtor Subsidiaries.

                                      8
<PAGE>

           "Disposition" means, with respect to any Person, any merger,
consolidation or other business combination involving such Person (whether or
not such Person is the Surviving Person) or the sale, assignment, transfer,
lease, conveyance or other disposition of all or substantially all of such
Person's assets.

           "Disqualified Equity Interest" means any Equity Interest which, by
its terms (or by the terms of any security into which it is convertible or for
which it is exchangeable at the option of the holder thereof), or upon the
happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or redeemable, at the option of the
holder thereof (except, in each case, upon the occurrence of a Change of
Control), in whole or in part, or exchangeable into Indebtedness on or prior
to Termination Date.

           "Domestic Restricted Subsidiary" means a Restricted Subsidiary of
the Borrower organized under the laws of the United States or any political
subdivision thereof or the operations of which are located substantially
inside the United States.

           "Effective Date" has the meaning set forth in the first
introductory paragraph hereto.

           "Eligible Assignee" means, (a) any Affiliate of GOF, and (b) any
other Person or Persons approved by GOF, or by an assignee pursuant to this
Agreement, as applicable, and, so long as no Event of Default shall have
occurred and be continuing, approved by the Borrower, which approval shall not
be unreasonably delayed, conditioned or withheld.

           "Environmental Claims" means, with respect to any Person, any
written notice, claim, demand or other written communication (collectively, a
"claim") by any other Person alleging or asserting such Person's liability for
investigatory costs, cleanup costs, governmental response costs, damages to
natural resources or other Property, personal injuries, fines or penalties
arising out of, based on or resulting from (i) the presence, or Release into
the environment, of any Hazardous Material at any location, whether or not
owned by such Person, or (ii) circumstances forming the basis of any
violation, or alleged violation, of any Environmental Law. The term
"Environmental Claim" shall include, without limitation, any claim by any
Governmental Authority for enforcement, cleanup, removal, response, remedial
or other actions or damages pursuant to any applicable Environmental Law, and
any claim by any third party seeking damages, contribution, indemnification,
cost recovery, compensation or injunctive relief resulting from the presence
of Hazardous Materials or arising from alleged injury or threat of injury to
health, safety or the environment.

           "Environmental Laws" means all laws, rules, regulations, codes,
ordinances, technical standards, orders, decrees, judgments, injunctions,
notices or binding agreements issued, promulgated or entered into by any
Governmental Authority, relating in any way to the environment, preservation
or reclamation of natural resources, the management, Release or threatened
Release of any Hazardous Material or to health and safety matters.

           "Equity Interest" in any Person means any and all shares,
interests, rights to purchase, warrants, options, participations or other
equivalents of or interests in (however

                                      9
<PAGE>

designated) corporate stock or other equity participations, including
partnership interests, whether general or limited, in such Person, including
any Preferred Equity Interests but excluding the Junior Subordinated
Convertible Notes.

           "Equity Rights" means, with respect to any Person, any outstanding
subscriptions, options, warrants, commitments, preemptive rights or agreements
of any kind (including, without limitation, any stockholders' or voting trust
agreements) for the issuance, sale, registration or voting of, or outstanding
securities convertible into, any additional shares of capital stock of any
class, or partnership or other ownership interests of any type in, such
Person.

           "ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time.

           "ERISA Affiliate" means any corporation or trade or business that
is a member of any group of organizations (i) described in Section 414(b) or
(c) of the Internal Revenue Code of which the Borrower is a member and (ii)
solely for purposes of potential liability under Section 302(c)(11) of ERISA
and Section 412(c)(11) of the Internal Revenue Code and the lien created under
Section 302(f) of ERISA and Section 412(n) of the Internal Revenue Code,
described in Section 414(m) or (o) of the Internal Revenue Code of which the
Borrower is a member.

           "ERISA Plan" means an employee benefit or other plan established or
maintained by the Borrower or any ERISA Affiliate and that is covered by Title
IV of ERISA, other than a Multiemployer Plan.

           "Event of Default" has the meaning specified in Section 7.01.

           "Exchange Act" means the Securities Exchange Act of 1934, as the
same may be amended from time to time.

           "Fair Market Value" means, with respect to any asset, the price
(after taking into account any liabilities relating to such assets) which
could be negotiated in an arm's-length free market transaction, for cash,
between a willing seller and a willing and able buyer, neither of which is
under any compulsion to complete the transaction; provided, however, that the
Fair Market Value of any such asset or assets shall be determined conclusively
by the Board of Directors of the Borrower acting in good faith, and shall be
evidenced by resolutions of the Board of Directors of the Borrower delivered
to each of the holders of Senior Subordinated Notes.

           "Foreign Corrupt Practices Act" means the U.S. Foreign Corrupt
Practices Act of 1977, as amended from time to time.

           "Foreign Restricted Subsidiary" means a Restricted Subsidiary of
the Borrower not organized under the laws of the United States or any
political subdivision thereof and the operations of which are located
substantially outside of the United States.

           "Four Quarter Period" has the meaning set forth in the definition
of Consolidated Coverage Ratio.

                                      10
<PAGE>

           "Funding Guarantor" has the meaning set forth in Section 3.05.

           "GAAP" has the meaning specified in Section 1.03.

           "Governmental Authority" means any nation or government, any state
or other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.

           "GOF" has the meaning set forth in the first introductory paragraph
hereto.

           "GOF Nominee" means any member of the Borrower's Board of Directors
that was nominated or designated by GOF pursuant to the Shareholders Agreement
or otherwise.

           "Gurantee" has the meaning set forth in Section 3.01.

           "Guarantee Obligations" has the meaning set forth in Section 3.01.

           "Guarantor(s)" has the meaning set forth in the first introductory
paragraph hereto.

           "Guarantor Blockage Period" has the meaning set forth in Section
3.08(a).

           "Guarantor Payment Blockage Notice" has the meaning set forth in
Section 3.08(a).

           "Guarantor Senior Indebtedness" means, with respect to any
Guarantor, at any date, (a) all Obligations of such Guarantor under the Credit
Agreement; (b) all Hedging Obligations of such Guarantor; (c) all Obligations
of such Guarantor under stand-by letters of credit; and (d) all other
Indebtedness of such Guarantor for borrowed money, including principal,
premium, if any, and interest (including Post-Petition Interest) on such
Indebtedness unless the instrument under which such Indebtedness of such
Guarantor for money borrowed is Incurred expressly provides that such
Indebtedness for money borrowed is not senior or superior in right of payment
to such Guarantor's Guarantee of the Senior Subordinated Notes, and all
renewals, extensions, modifications, amendments or refinancings thereof.
Notwithstanding the foregoing, Guarantor Senior Indebtedness shall not include
(a) to the extent that it may constitute Indebtedness, any Obligation for
Federal, state, local or other taxes; (b) any Indebtedness among or between
such Guarantor and any Subsidiary of such Guarantor or any Affiliate of such
Guarantor or any of such Affiliate's Subsidiaries; unless, and for so long as
such Indebtedness has been pledged to secure obligations under or in respect
of Guarantor Senior Indebtedness; (c) to the extent that it may constitute
Indebtedness, any Obligation in respect of any trade payable Incurred for the
purchase of goods or materials, or for services obtained, in the ordinary
course of business; (d) that portion of any Indebtedness that is Incurred in
violation of this Agreement; (e) Indebtedness evidenced by such Guarantor's
Guarantee of the Senior Subordinated Notes; (f) Indebtedness of such Guarantor
that is expressly subordinate or junior in right of payment to any other
Indebtedness of such Guarantor; (g) to the extent that it may constitute
Indebtedness, any obligation owing under leases (other than Capital Lease
Obligations) or management agreements; (h) any obligation that by operation of
law is subordinate to any general unsecured

                                      11
<PAGE>

obligations of such Guarantor; and (i) Indebtedness of a Guarantor to the
extent such Indebtedness is owed to and held by any Federal, state, local or
other governmental authority.

           "Hazardous Materials" means all explosive or radioactive substances
or wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.

           "Hedging Agreements" means, with respect to any Person, agreements
with respect to all interest rate swap or similar agreements or foreign
currency or commodity hedge, exchange or similar agreements of such Person.

           "Hedging Obligations" means, with respect to any Person, the
Obligations of such Person under Hedging Agreements.

           "HSR Act" has the meaning set forth in Section 4.01(i).

           "Incur" means, with respect to any Indebtedness or other obligation
of any Person, to create, issue, incur (including by conversion, exchange or
otherwise), assume, guarantee or otherwise become liable in respect of such
Indebtedness or other obligation or the recording, as required pursuant to
GAAP or otherwise, of any such Indebtedness or other obligation on the balance
sheet of such Person (and "Incurrence," "Incurred" and "Incurring" shall have
meanings correlative to the foregoing). Indebtedness of any Acquired Person or
any of its Subsidiaries existing at the time such Acquired Person becomes a
Restricted Subsidiary (or is merged into or consolidated with the Borrower or
any Restricted Subsidiary), whether or not such Indebtedness was Incurred in
connection with, as a result of, or in contemplation of, such Acquired Person
becoming a Restricted Subsidiary (or being merged into or consolidated with
the Borrower or any Restricted Subsidiary), shall be deemed Incurred at the
time any such Acquired Person becomes a Restricted Subsidiary or merges into
or consolidates with the Borrower or any Restricted Subsidiary.

           "Indebtedness" means (without duplication), with respect to any
Person, whether recourse is to all or a portion of the assets of such Person
and whether or not contingent, (a) every obligation of such Person for money
borrowed; (b) every obligation of such Person evidenced by bonds, debentures,
notes or other similar instruments, including obligations incurred in
connection with the acquisition of property, assets or businesses; (c) every
reimbursement obligation of such Person with respect to letters of credit,
bankers' acceptances or similar facilities issued for the account of such
Person; (d) every obligation of such Person issued or assumed as the deferred
purchase price of property or services (but excluding trade accounts payable
incurred in the ordinary course of business and payable in accordance with
industry practices, or other accrued liabilities arising in the ordinary
course of business which are not overdue or which are being contested in good
faith); (e) every Capital Lease Obligation of such Person; (f) every net
obligation under Hedging Agreements of such Person; (g) every obligation of
the type referred to in clauses (a) through (f) of another Person and all
dividends of another Person the payment of which, in either case, such Person
has guaranteed or is responsible or liable for, directly or

                                      12
<PAGE>

indirectly, as obligor, guarantor or otherwise; and (h) any and all deferrals,
renewals, extensions and refundings of, or amendments, modifications or
supplements to, any liability of the kind described in any of the preceding
clauses (a) through (g) above. Indebtedness (a) shall never be calculated
taking into account any cash and cash equivalents held by such Person; (b)
shall not include obligations of any Person (x) arising from the honoring by a
bank or other financial institution of a check, draft or similar instrument
inadvertently drawn against insufficient funds in the ordinary course of
business, provided that such obligations are extinguished within two Business
Days of their incurrence, (y) resulting from the endorsement of negotiable
instruments for collection in the ordinary course of business and consistent
with past business practices and (z) under stand-by letters of credit to the
extent collateralized by cash or Cash Equivalents; (c) which provides that an
amount less than the principal amount thereof shall be due upon any
declaration of acceleration thereof shall be deemed to be incurred or
outstanding in an amount equal to the accreted value thereof at the date of
determination; (d) shall include the liquidation preference and any mandatory
redemption payment obligations in respect of any Disqualified Equity Interests
of the Borrower or any Restricted Subsidiary; and (e) shall not include
obligations under performance bonds, performance guarantees, surety bonds and
appeal bonds, letters of credit or similar obligations, incurred in the
ordinary course of business.

           "Indenture" means the Indenture, dated as of the date hereof, among
the Borrower, Wilmington Trust Company and the other parties thereto relating
to the Junior Subordinated Convertible Notes.

           "Insolvency or Liquidation Proceeding" means, with respect to any
Person, any liquidation, dissolution or winding up of such Person, or any
bankruptcy, reorganization, insolvency, receivership or similar proceeding
with respect to such Person, whether voluntary or involuntary.

           "Intercompany Notes" means, collectively, the Bonlam Intercompany
Notes (as defined in the Credit Agreement) and the Fabrene Intercompany Notes
(as defined in the Credit Agreement).

           "Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended from time to time, and the regulations promulgated and rulings issued
thereunder.

           "Investment" means, with respect to any Person, any direct or
indirect loan, advance, guarantee or other extension of credit or capital
contribution to (by means of transfers of cash or other property or assets to
others or payments for property or services for the account or use of others,
or otherwise), or purchase or acquisition of capital stock, bonds, notes,
debentures or other securities or evidences of Indebtedness issued by, any
other Person. For purposes of the "Limitation on Restricted Payments"
covenant, the amount of any Investment shall be the original cost of such
Investment, plus the cost of all additions thereto, but without any other
adjustments for increases or decreases in value, or write-ups, write-downs or
write-offs with respect to such Investment; reduced by the payment of
dividends or distributions in connection with such Investment or any other
amounts received in respect of such Investment; provided, however, that no
such payment of dividends or distributions or receipt of any such other
amounts shall reduce the amount of any Investment if such payment of dividends
or distributions or receipt of any such

                                      13
<PAGE>

amounts would be included in Consolidated Net Income. If the Borrower or
any Restricted Subsidiary sells or otherwise disposes of any Voting Equity
Interests of any direct or indirect Restricted Subsidiary such that, after
giving effect to any such sale or disposition, the Borrower no longer owns,
directly or indirectly, greater than 50% of the outstanding Voting Equity
Interests of such Restricted Subsidiary, the Borrower shall be deemed to have
made an Investment on the date of any such sale or disposition.

           "Junior Subordinated Convertible Notes" means the 10% convertible
subordinated notes due December 2007 to be issued pursuant to the Plan.

           "Letter of Credit" has the meaning set forth in the third whereas
clause.

           "Lien" means any lien, mortgage, charge, security interest,
hypothecation, assignment for security or encumbrance of any kind (including
any conditional sale or capital lease or other title retention agreement, any
lease in the nature thereof, and agreement to give any security interest).

           "Limited Originator Recourse" means a reimbursement obligation to
the Borrower or a Restricted Subsidiary in connection with a drawing on a
letter of credit, revolving loan commitment, cash collateral account or other
such credit enhancement issued to support Indebtedness of a Securitization
Entity under a facility for the financing of trade receivables; provided that
the available amount of any such form of credit enhancement at any time shall
not exceed 15.0% of the principal amount of such Indebtedness at such time.

           "Margin Stock" means "margin stock" within the meaning of
Regulations U and X.

           "Material Adverse Effect" means a material adverse effect on (a)
the business, operations, properties or condition (financial or otherwise) of
the Borrower and its Subsidiaries taken as a whole, or (b) the ability of the
Borrower to perform its material obligations hereunder or under the Senior
Subordinated Note or (c) the validity or enforceability of this Agreement or
the Senior Subordinated Notes, including the rights or remedies of GOF
hereunder or thereunder, other than arising solely as a result of any action
or inaction of GOF.

           "Maturity Date" means December 1, 2007.

           "Moody's" means Moody's Investors Service, Inc. and its
successors.

           "Multiemployer Plan" means a multiemployer plan defined as such in
Section 3(37) of ERISA to which contributions have been made by the Borrower
or any ERISA Affiliate and which is covered by Title IV of ERISA.

           "Net Cash Proceeds" means the aggregate proceeds in the form of
cash or Cash Equivalents received by the Borrower or any Restricted Subsidiary
in respect of any Asset Sale, including all cash or Cash Equivalents received
upon any sale, liquidation or other exchange of proceeds of Asset Sales
received in a form other than cash or Cash Equivalents, net of (a) the direct
costs relating to such Asset Sale (including, without limitation, legal,
accounting and

                                      14
<PAGE>

investment banking fees, and sales commissions) and any relocation expenses
incurred as a result thereof; (b) taxes paid or payable as a result thereof
(after taking into account any available tax credits or deductions and any tax
sharing arrangements); (c) amounts required to be applied to the repayment of
Indebtedness secured by a Lien on the asset or assets that were the subject of
such Asset Sale; (d) amounts deemed, in good faith, appropriate by the Board
of Directors of the Borrower to be provided as a reserve, in accordance with
GAAP, against any liabilities associated with such assets which are the
subject of such Asset Sale; including, without limitation, pension and other
post-employment benefit liabilities, liabilities related to environmental
matters and liabilities under any indemnification obligations associated with
such Asset Sale, all as reflected in an Officer's Certificate delivered to
each of the holders of Senior Subordinated Notes (provided that the amount of
any such reserves shall be deemed to constitute Net Cash Proceeds at the time
such reserves shall have been reversed or are not otherwise required to be
retained as a reserve); and (e) with respect to Asset Sales by Restricted
Subsidiaries, the portion of such cash payments attributable to Persons
holding a minority interest in such Restricted Subsidiary.

           "New Investment" means the purchase by certain creditors of the
Borrower and its Debtor Subsidiaries of Junior Subordinated Convertible Notes
for a total purchase price of $50,000,000 pursuant to the terms and conditions
of the Plan.

           "Non-Recourse Debt" means Indebtedness (i) as to which neither the
Borrower nor any Restricted Subsidiary (a) provides credit support of any kind
(including any undertaking, agreement or instrument that would constitute
Indebtedness), (b) is directly or indirectly liable (as a guarantor or
otherwise), or (c) constitutes the lender; and (ii) no default with respect to
which (including any rights that the holders thereof may have to take
enforcement action against an Unrestricted Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Indebtedness (other
than the Senior Subordinated Notes) of the Borrower or any of its Restricted
Subsidiaries to declare a default on such other Indebtedness or cause the
payment thereof to be accelerated or payable prior to its stated maturity; and
(iii) as to which the lenders have been notified in writing that they will not
have any recourse to the stock or assets of the Borrower or any of its
Restricted Subsidiaries.

           "NPL" has the meaning set forth in Section 5.01(m)(iii).

           "Obligations" means any principal, interest (including, without
limitation, Post-Petition Interest), penalties, fees, indemnifications,
reimbursement obligations, damages and other liabilities payable under the
documentation governing any Indebtedness.

           "Obligors" has the meaning set forth in the first introductory
paragraph hereto.

           "Officer's Certificate" means a certificate signed by the
Borrower's or Guarantor's president, chief executive officer, chief operating
officer, or its chief financial officer (or, if no such officer exists, an
officer or manager with substantially similar authority) on behalf of the
Borrower or a Guarantor, as applicable, stating that (i) the officer signing
such certificate has made or has caused to be made such investigations as are
necessary in order to permit him to verify the accuracy of the information set
forth in such certificate and (ii) to the best of such officer's actual
knowledge, after making the investigations required by clause (i), does not


                                      15
<PAGE>

misstate any material fact and does not omit to state any fact necessary to
make the certificate not misleading.

           "Operating Divisions" means the Nonwovens, Oriented Polymers and
Corporate operating divisions of the Borrower and its Subsidiaries.

           "Opinion of Counsel" means a written opinion from legal counsel who
is reasonably acceptable to GOF; provided that if GOF shall assign all of its
interest in the Senior Subordinated Note, such counsel shall be reasonably
acceptable to the holders of a majority of the principal amount outstanding
under all Senior Subordinated Notes. The counsel may be an employee of or
counsel to the Borrower, GOF or any other holder of a Senior Subordinated
Note.

           "Organizational Documents" means the certificate of incorporation,
articles of organization, bylaws, operating agreement, partnership agreement,
and/or other organizational and governing documents (including all those that
govern or impact the appointment, election, and/or removal of directors,
managers, managing partners or persons of equivalent authority), as the case
may be, of a Person (other than an individual).

           "Other Taxes" has the meaning specified in Section 2.05(b).

           "Payment Blockage Notice" has the meaning set forth in Section
8.02(a).

           "Payment Blockage Period" has the meaning set forth in Section
8.02(a).

           "PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.

           "Permitted Holder" means MatlinPatterson Global Opportunities
Partners L.P. and its Affiliates, The InterTech Group, Inc. and its
Affiliates, Golder, Thoma, Cressey Fund III Limited Partnership and its
Affiliates, Jerry Zucker and James G. Boyd and members of either of their
immediate families and trusts of which such persons are the beneficiaries.

           "Permitted Indebtedness" has the meaning set forth in Section
6.01(c).

           "Permitted Investments" means (a) Cash Equivalents; (b) Investments
in prepaid expenses, negotiable instruments held for collection and lease,
utility and workers' compensation, performance and other similar deposits; (c)
Hedging Obligations; (d) bonds, notes, debentures or other securities received
as a result of Asset Sales permitted under Section 6.01(d) not to exceed 35%
of the total consideration for such Asset Sales; (e) Investments in the
Borrower and Investments in a Restricted Subsidiary or a Person that, as a
result of or in connection with such Investment, becomes a Restricted
Subsidiary or is merged with or into or consolidated with the Borrower or
another Restricted Subsidiary; (f) Investments existing as of the Effective
Date; and (g) any Investment consisting of a guarantee by a Restricted
Subsidiary of Senior Indebtedness or any guarantee of Indebtedness otherwise
permitted by this Agreement.

           "Permitted Junior Securities" means any securities of the Borrower
or any other Person that are (i) equity securities without special covenants
or (ii) debt securities expressly

                                      16
<PAGE>

subordinated in right of payment to the Senior Subordinated Notes and all
Senior Indebtedness that may at the time be outstanding, to substantially the
same extent as, or to a greater extent than, the Junior Subordinated
Convertible Notes are subordinated as provided in the Indenture, in any event
pursuant to a court order so providing as to which (a) the rate of interest on
such securities shall not exceed the effective rate of interest on the Senior
Subordinated Notes on the date of this Agreement, (b) such securities shall
not be entitled to the benefits of covenants or defaults materially more
beneficial to the holders of such securities than those in effect with respect
to the Senior Subordinated Notes on the date of this Agreement and (c) such
securities shall not provide for amortization (including sinking fund and
mandatory prepayment provisions) commencing prior to the date six months
following the final scheduled maturity date of the Senior Subordinated Notes
and Senior Indebtedness (as modified by the plan of reorganization pursuant to
which such securities are issued).

           "Permitted Liens" means (a) Liens on property of a Person existing
at the time such Person is merged into or consolidated with the Borrower or
any Restricted Subsidiary; provided, however, that such Liens were in
existence prior to the contemplation of such merger or consolidation and do
not secure any property or assets of the Borrower or any Restricted Subsidiary
other than the property or assets subject to the Liens prior to such merger or
consolidation; (b) Liens imposed by law such as carriers', warehousemen's and
mechanics' Liens and other similar Liens arising in the ordinary course of
business which secure payment of obligations not more than 60 days past due or
which are being contested in good faith and by appropriate proceedings; (c)
Liens existing on the Effective Date; (d) Liens securing only the Senior
Subordinated Notes, the Guarantees or the Junior Subordinated Convertible
Notes or guarantees thereof; (e) Liens in favor of the Borrower or any
Restricted Subsidiary (including any such Liens securing Indebtedness, to the
extent and for so long as such Indebtedness is pledged to secure Senior
Indebtedness); (f) Liens for taxes, assessments or governmental charges or
claims that are not yet delinquent or that are being contested in good faith
by appropriate proceedings promptly instituted and diligently concluded;
provided, however, that any reserve or other appropriate provision as shall be
required in conformity with GAAP shall have been made therefor; (g) easements,
reservation of rights of way, restrictions and other similar easements,
licenses, restrictions on the use of properties, or minor imperfections of
title that in the aggregate do not in any case materially detract from the
properties subject thereto or interfere with the ordinary conduct of the
business of the Borrower and the Restricted Subsidiaries; (h) Liens resulting
from the deposit of cash or notes in connection with contracts, tenders or
expropriation proceedings, or to secure workers' compensation, surety or
appeal bonds, costs of litigation when required by law and public and
statutory obligations or obligations under franchise arrangements entered into
in the ordinary course of business; (i) Liens securing Indebtedness consisting
of Capital Lease Obligations, Purchase Money Indebtedness, mortgage
financings, industrial revenue bonds or other monetary obligations, in each
case incurred solely for the purpose of financing all or any part of the
purchase price or cost of construction or installation of assets used in the
business of the Borrower or the Restricted Subsidiaries, or repairs, additions
or improvements to such assets, provided, however, that (I) such Liens secure
Indebtedness in an amount not in excess of the original purchase price or the
original cost of any such assets or repair, addition or improvement thereto
(plus an amount equal to the reasonable fees and expenses in connection with
the incurrence of such Indebtedness), (II) such Liens do not extend to any
other assets of the

                                      17
<PAGE>

Borrower or the Restricted Subsidiaries (and, in the case of repair, addition
or improvements to any such assets, such Lien extends only to the assets (and
improvements thereto or thereon) repaired, added to or improved), (III) the
Incurrence of such Indebtedness is permitted by Section 6.01(c) and (IV) such
Liens attach within 90 days of such purchase, construction, installation,
repair, addition or improvement; and (j) Liens to secure any refinancings,
renewals, extensions, modifications or replacements (or successive
refinancings), in whole or in part, of any Indebtedness secured by Liens
referred to in the clauses above so long as such Lien does not extend to any
other property (other than improvements thereto).

           "Person" means any individual, corporation, partnership, joint
venture, association, joint stock company, limited liability company, limited
liability partnership, trust, unincorporated organization, or a government or
any agency or political subdivision thereof.

           "Plan" has the meaning set forth in the second whereas clause.

           "Post-Petition Interest" means, with respect to any Indebtedness of
any Person, all interest accrued or accruing on such Indebtedness after the
commencement of any Insolvency or Liquidation Proceeding against such Person
in accordance with and at the contract rate (including, without limitation,
any rate applicable upon default) specified in the agreement or instrument
creating, evidencing or governing such Indebtedness, whether or not, pursuant
to applicable law or otherwise, the claim for such interest is allowed as a
claim in such Insolvency or Liquidation Proceeding.

           "Preferred Equity Interest" in any Person, means an Equity Interest
of any class or classes (however designated) which is preferred as to the
payment of dividends or distributions, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such Person,
over Equity Interests of any other class in such Person.

           "Property" means any right or interest in or to property of any
kind whatsoever, whether real, personal or mixed and whether tangible or
intangible.

           "Purchase Money Indebtedness" means Indebtedness of the Borrower or
any Restricted Subsidiary Incurred for the purpose of financing all or any
part of the purchase price, or the cost of construction or improvement of any
property used in the business of the Borrower; provided, however, that the
aggregate principal amount of such Indebtedness does not exceed the lesser of
the Fair Market Value of such property or such purchase price or cost,
including any refinancing of such Indebtedness that does not increase the
aggregate principal amount (or accreted amount, if less) thereof as of the
date of refinancing.

           "Purchase Money Note" means a promissory note of a Securitization
Entity evidencing a line of credit, which may be irrevocable, from the
Borrower or any Restricted Subsidiary in connection with a Qualified
Securitization Transaction, which note shall be repaid from cash available to
the Securitization Entity, other than amounts required to be established as
reserves pursuant to agreements, amounts paid to investors in respect of
interest, principal and other amounts owning to such investors and amounts
paid in connection with the purchase of newly generated receivables.

                                      18
<PAGE>

           "Qualified Equity Interest" in any Person means any Equity Interest
in such Person other than any Disqualified Equity Interest.

           "Qualified Securitization Transaction" means any transaction or
series of transactions pursuant to which the Borrower or any of its Restricted
Subsidiaries may sell, convey or otherwise transfer to (a) a Securitization
Entity (in the case of a transfer by the Borrower or any of its Restricted
Subsidiaries) and (b) any other Person (in case of a transfer by a
Securitization Entity), or may grant a security interest in, any receivables
(whether now existing or arising or acquired in the future) of the Borrower or
any of its Restricted Subsidiaries, and any assets related thereto including,
without limitation, all collateral securing such receivables, all contracts
and contract rights and all guarantees or other obligations in respect of such
receivables, proceeds of such receivables and other assets (including contract
rights) which are customarily transferred or in respect of which security
interests are customarily granted in connection with asset securitization
transactions involving receivables (collectively, "Transferred Assets");
provided that in the case of any such transfer by the Borrower or any of its
Restricted Subsidiaries, the transferor receives cash or Purchase Money Notes
in an amount which (when aggregated with the cash and Purchase Money Notes
received by the Borrower and its Restricted Subsidiaries upon all other such
transfers of Transferred Assets during the 90 days preceding such transfer) is
at least equal to 75% of the aggregate face amount of all receivables so
transferred during such day and the 90 preceding days.

           "Regulations A, D, U and X" means, respectively, Regulations A, D,
U and X of the Board of Governors of the Federal Reserve System (or any
successor), as the same may be modified or supplemented and in effect from
time to time.

           "Release" means any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor environment, including, without limitation, the movement
of Hazardous Materials through ambient air, soil, surface water, ground water,
wetlands, land or subsurface strata.

           "Replacement Assets" has the meaning set forth in Section 6.01(d).

           "Restricted Payment" has the meaning set forth in Section 6.01(e).

           "Restricted Subsidiary" means any Subsidiary of the Borrower that
has not been designated by the Board of Directors of the Borrower, by a
resolution of the Board of Directors of the Borrower delivered to each of the
holders of Senior Subordinated Notes, as an Unrestricted Subsidiary pursuant
to Section 6.01(i). Any such designation may be revoked by a resolution of the
Board of Directors of the Borrower delivered to each of the holders of Senior
Subordinated Notes, subject to the provisions of such covenant.

           "Revocation" has the meaning set forth in Section 6.01(i).

           "S&P" means Standard & Poor's Ratings Group, a division of The
McGraw-Hill Companies; and its successors.

                                      19
<PAGE>

           "Securitization Entity" means either a Wholly Owned Restricted
Subsidiary of the Borrower (or another Person in which the Borrower or any
Restricted Subsidiary makes an Investment and to which the Borrower or any
Restricted Subsidiary transfers receivables and related assets) or an
Unrestricted Subsidiary that engages in no activities other than in connection
with the financing of receivables and that is designated by the Board of the
Directors of the Borrower (as provided below) as a Securitization Entity (a)
no portion of the Indebtedness or any other Obligations (contingent or
otherwise) of which (i) is guaranteed by the Borrower or any Restricted
Subsidiary other than pursuant to Standard Securitization Undertakings or
Limited Originator Recourse, (ii) is recourse to or obligates the Borrower or
any Restricted Subsidiary (other than the Securitization Entity) in any way
other than pursuant to Standard Securitization Undertakings or Limited
Originator Recourse or (iii) subjects any property or asset of the Borrower or
any Restricted Subsidiary (other than the Securitization Entity), directly or
indirectly, contingently or otherwise, to the satisfaction thereof, other than
pursuant to Standard Securitization Undertakings or Limited Originator
Recourse, (b) with which neither the Borrower nor any Restricted Subsidiary
has any material contract, agreement, arrangement or understanding other than
on terms no less favorable to the Borrower or such Restricted Subsidiary than
those that might be obtained at the time from Persons that are not Affiliates
of the Borrower, other than fees payable in the ordinary course of business in
connection with servicing receivables of such entity and (c) to which neither
the Borrower nor any Restricted Subsidiary of the Borrower has any obligation
to maintain or preserve such entity's financial condition or cause such entity
to achieve certain levels of operating results. Any such designation by the
Board of Directors of the Borrower shall be evidenced to each of the holders
of Senior Subordinated Notes by delivery thereto of a certified copy of the
resolution of the Board of Directors of the Borrower giving effect to such
designation and an Officer's Certificate certifying that such designation
complied with the foregoing conditions.

           "Senior Indebtedness" means, at any date, (a) all Obligations of
the Borrower under the Credit Agreement; (b) all Hedging Obligations of the
Borrower; (c) all Obligations of the Borrower under stand-by letters of
credit; and (d) all other Indebtedness of the Borrower for borrowed money,
including principal, premium, if any, and interest (including Post-Petition
Interest) on such Indebtedness, unless the instrument under which such
Indebtedness of the Borrower for money borrowed is Incurred expressly provides
that such Indebtedness for money borrowed is not senior or superior in right
of payment to the Senior Subordinated Notes, and all renewals, extensions,
modifications, amendments or refinancings thereof. Notwithstanding the
foregoing, Senior Indebtedness shall not include (a) to the extent that it may
constitute Indebtedness, any Obligation for Federal, state, local or other
taxes; (b) any Indebtedness among or between the Borrower and any Subsidiary
of the Borrower or any Affiliate of the Borrower or any of such Affiliate's
Subsidiaries; unless and for so long as such Indebtedness has been pledged to
secure obligations under or in respect of Senior Indebtedness; (c) to the
extent that it may constitute Indebtedness, any Obligation in respect of any
trade payable incurred for the purchase of goods or materials, or for services
obtained, in the ordinary course of business; (d) Indebtedness of the Borrower
that is pari passu with, or expressly subordinate or junior in right of
payment to, the Senior Subordinated Notes; (e) to the extent that it may
constitute Indebtedness, any obligation owing under leases (other than Capital
Lease Obligations) or management agreements; (f) any obligation that by
operation of law is subordinate to any general

                                      20
<PAGE>

unsecured obligations of the Borrower; and (g) Indebtedness of the Borrower to
the extent such Indebtedness is owed to and held by any Federal, state, local
or other governmental authority.

           "Senior Subordinated Note(s)" has the meaning set forth in Section
2.01.

           "Shareholders Agreement" means the Shareholders Agreement dated as
of March 5, 2003, between the Borrower, GOF and the other parties identified
therein.

           "Shareholder Rights Plan" means the Borrower's shareholder rights
plan or "poison pill" embodied in the Rights Agreement, dated as of April 15,
1996, by and among the Borrower and First Union Nation Bank of North Carolina.

           "Significant Restricted Subsidiary" means, at any date of
determination, (a) any Restricted Subsidiary that, together with its
Subsidiaries that constitute Restricted Subsidiaries (i) for the most recent
fiscal year of the Borrower accounted for more than 20.0% of the consolidated
revenues of the Borrower and the Restricted Subsidiaries or (ii) as of the end
of such fiscal year, owned more than 20.0% of the consolidated assets of the
Borrower and the Restricted Subsidiaries, all as set forth on the consolidated
financial statements of the Borrower and the Restricted Subsidiaries for such
year prepared in conformity with GAAP and (b) any Restricted Subsidiary which,
when aggregated with all other Restricted Subsidiaries that are not otherwise
Significant Restricted Subsidiaries and as to which any event described in
clause (h) of Section 7.01 has occurred, would constitute a Significant
Restricted Subsidiary under clause (a) of this definition.

           "Standard Securitization Undertakings" means representations,
warranties, covenants and indemnities entered into by the Borrower or any
Subsidiary of the Borrower that are reasonably customary in receivables
securitization transactions.

           "Subordinated Indebtedness" means, with respect to the Borrower or
any Guarantor, any Indebtedness of the Borrower or such Guarantor, as the case
may be, which is pari passu with, or expressly subordinated in right of
payment to, the Senior Subordinated Notes or such Guarantor's Guarantee, as
the case may be, including without limitation, the Junior Subordinated
Convertible Notes.

           "Subsidiary" means, with respect to any Person, (a) any corporation
of which the outstanding Voting Equity Interests having at least a majority of
the votes entitled to be cast in the election of directors shall at the time
be owned, directly or indirectly, through one or more Persons by such Person,
or (b) any other Person of which at least a majority of Voting Equity
Interests are at the time, directly or indirectly, owned by such first named
Person.

           "Surviving Person" means, with respect to any Person involved in or
that makes any Disposition, the Person formed by or surviving such Disposition
or the Person to which such Disposition is made.

           "Taxes" has the meaning specified in Section 2.05(a).

                                      21
<PAGE>

           "Termination Date" means the date and time at which each of the
following conditions are satisfied: (a) the passage of the dates December 31,
2003, June 30, 2004 and December 31, 2004, regardless of whether the Borrower
has timely made the payments due to the Administrative Agent under the Credit
Agreement thereon; (b) the payment by the Obligors of all amounts owed to GOF
and any other holders of Senior Subordinated Notes hereunder and under the
Senior Subordinated Notes (including any and all costs and expenses), to the
reasonable satisfaction of GOF, or, if GOF shall have assigned all of its
interest in the Senior Subordinated Note, to the reasonable satisfaction of
the holders of a majority of the principal amount outstanding under all Senior
Subordinated Notes immediately prior to such payment; and (c) the termination
of the Letter of Credit.

           "Transferred Assets" has the meaning set forth in the definition of
Qualified Securitization Transaction.

           "United States" and "U.S." each means United  States
of America.

           "Unrestricted Subsidiary" means any Subsidiary of the Borrower
designated as such pursuant to Section 6.01(i). Any such designation may be
revoked by a resolution of the Board of Directors of the Borrower delivered to
each of the holders of Senior Subordinated Notes, subject to Section 6.01(i).

           "Unutilized Net Cash Proceeds" has the meaning set forth in Section
6.01(d)(iii).

           "Voting Equity Interests" means Equity Interests in a corporation
or other Person with voting power under ordinary circumstances entitling the
holders thereof to elect the Board of Directors or other governing body of
such corporation or Person.

           "Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the sum
of the products obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required scheduled payment
of principal, including payment of final maturity, in respect thereof, by (ii)
the number of years (calculated to the nearest one twelfth) that will elapse
between such date and the making of such payment, by (b) the then outstanding
aggregate principal amount of such Indebtedness.

           "Wholly Owned Restricted Subsidiary" means any Restricted
Subsidiary all of the outstanding Voting Equity Interests (other than
directors' qualifying shares) of which are owned, directly or indirectly, by
the Borrower and/or one or more Wholly Owned Restricted Subsidiaries.

           Section 1.02. Computation of Time Periods. In this Agreement in the
computation of periods of time from a specified date to a later specified
date, the word "from" means "from and including" and the words "to" and
"until" each mean "to but excluding".

           Section 1.03. Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with generally
accepted accounting principles ("GAAP").

                                      22
<PAGE>

           Section 1.04. References to Credit Agreement. Wherever this
Agreement defines a term by reference to the Credit Agreement, such term shall
have the definition ascribed to it in the Credit Agreement, and, in the event
the Credit Agreement is terminated, or amended, modified or restated to remove
the definition of such term, then the term so defined shall have the meaning
ascribed thereto in the version of the Credit Agreement existing immediately
prior to such termination, amendment, modification or restatement.

                                  ARTICLE II
               AMOUNT AND TERMS OF THE SENIOR SUBORDINATED NOTE

           Section 2.01. Initial Issuance of Senior Subordinated Note;
Aggregate Principal Amount. Simultaneously with the execution and delivery of
this Agreement, the Borrower is issuing and delivering to GOF a note in
substantially the form of Exhibit E hereto (the "Senior Subordinated Note",
and, together with any additional Senior Subordinated Notes issued pursuant to
Section 9.06(d), if any, the "Senior Subordinated Notes") with a principal
amount of TWENTY FIVE MILLION DOLLARS ($25,000,000.00); provided, however,
that in accordance with Section 2.03 and the terms of the Senior Subordinated
Note, the Borrower shall only be required to pay such amount thereof as equals
the sum of each drawing under the Letter of Credit by the Administrative Agent
(each such drawing being referred to herein as a "Borrowing"), plus accrued
interest and any other costs and expenses due hereunder or under the Senior
Subordinated Notes.

           Section 2.02. Interest.

           (a) Interest. The Borrower shall pay to GOF and its assigns
interest on the amount of each Borrowing from the date thereof, semi-annually
in arrears on January 1 and July 1 of each year, at a rate of 10% per annum,
subject to adjustment pursuant to Section 2.02(b).

           (b) Default Interest. Upon the occurrence and during the
continuance of an Event of Default, the Borrower shall pay interest on the
aggregate unpaid principal amount of the Borrowings at the rate per annum set
forth in Section 2.02(a) plus 2% on demand. The Borrower shall, to the extent
lawful, pay interest on overdue interest at the rate of 12% per annum.

           (c) Computations. All computations of interest shall be made on the
basis of 360 days for the actual number of days (including the first day but
excluding the last day) occurring in the period for which such interest is
payable.

           Section 2.03.  Repayment.

           (a) Repayment on Maturity. Subject to Article VIII, on the Maturity
Date, the Borrower shall be liable to pay to GOF and its assigns in US Dollars
an amount equal to the sum of each Borrowing, together with all accrued and
unpaid interest and any other amounts then owing to GOF and its assigns in
respect thereof (including for costs and expenses).

           (b) Mandatory Prepayment. Subject to Article VIII and the terms and
provisions of the Credit Agreement, within 1 Business Day of the consummation
of a Change of


                                      23
<PAGE>

Control transaction, the Borrower shall prepay in US Dollars the aggregate
principal amount of all Borrowings, together with all accrued and unpaid
interest outstanding under the Senior Subordinated Notes, together with all
other amounts then owing to GOF and its assigns in respect thereof (including
for costs and expenses).

           (c) Optional Prepayment. Subject to Article VIII and the terms and
provisions of the Credit Agreement, the Borrower may, at its option, prepay
its obligations under this Agreement and the Senior Subordinated Notes in
whole or in part at any time, without penalty, upon 3 Business Days prior
notice to the holders of the Senior Subordinated Notes; provided that all
accrued and unpaid interest and any costs or expenses owing to GOF and its
assigns in respect of the prepaid amount shall be simultaneously paid.

           Section 2.04. Proceeds of Letter of Credit. The Borrower shall have
no direct access to the proceeds of drawings under the Letter of Credit, and
such proceeds shall be received directly by the Administrative Agent and
applied in accordance with the Credit Agreement.

           Section 2.05.  Taxes.

           (a) Any and all payments by the Obligors hereunder or under the
Senior Subordinated Notes shall be made, or applied in accordance with Section
2.03, free and clear of and without deduction for any and all present or
future taxes, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto ("Taxes") excluding Taxes based on the net
income of a Person. Notwithstanding the foregoing, if the Obligors shall be
required by law to deduct any Taxes from or in respect of any sum payable
hereunder or under the Senior Subordinated Notes, (i) the sum payable, or
applied in accordance with Section 2.03, shall be increased as may be
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 2.05), GOF receives
or is entitled to receive or have applied under Section 2.03 an amount equal
to the sum it would have received had no such deductions been made, (ii) the
Obligors shall make such deductions and (iii) the Obligors shall pay the full
amount deducted to the relevant taxation authority or other authority in
accordance with applicable law.

           (b) In addition, the Obligors shall pay any present or future stamp
or documentary taxes or any other excise or property taxes, charges or similar
levies that arise from any payment made hereunder or under the Senior
Subordinated Notes or from the execution, delivery or registration of,
performing under, or otherwise with respect to, this Agreement or the Senior
Subordinated Notes (hereinafter referred to as "Other Taxes").

           (c) The Obligors shall indemnify GOF and any other holders of
Senior Subordinated Notes for the full amount of Taxes and Other Taxes
(including, without limitation, any Taxes imposed by any jurisdiction on
amounts payable under this Section 2.05) imposed on or paid by GOF and such
other holders and any liability (including penalties, interest and expenses)
arising therefrom or with respect thereto. Any indemnification payment shall
be made within 30 days from the date GOF or such other holders make written
demand therefor.

                                      24
<PAGE>

           (d) Within 30 days after the date of any payment of Taxes and Other
Taxes, the Obligors shall furnish GOF and any other holders of Senior
Subordinated Notes the original or a certified copy of a receipt evidencing
payment thereof.

           Section 2.06. Increased Costs. If, due to either (i) the
introduction of or any change after the date hereof, in or in the
interpretation of any law or regulation or (ii) the compliance with any
guideline or request introduced after the date hereof, from any central bank
or other Governmental Authority (whether or not having the force of law),
there shall be any increase in the cost to GOF and any other holders of Senior
Subordinated Notes of making or keeping the Letter of Credit available or
carrying the Senior Subordinated Notes (excluding for purposes of this Section
2.06 any such increased costs resulting from (i) Taxes or Other Taxes (as to
which Section 2.05 shall govern) and (ii) changes in the basis of taxation of
overall net income or overall gross income by the United States), then the
Borrower shall from time to time, upon demand by GOF or such other holders,
pay to GOF and such other holders additional amounts sufficient to compensate
GOF and any such other holders for such increased cost. A certificate as to
the amount of such increased cost, submitted to the Borrower by GOF or any
such other holder, shall be conclusive and binding for all purposes, absent
manifest error.

                                  ARTICLE III
                                   GUARANTEE

           Section 3.01.  Unconditional Guarantee.

           (a) Each Guarantor hereby unconditionally, jointly and severally,
guarantees (each, a "Guarantee") to GOF and any other holders of Senior
Subordinated Notes that the principal of, interest on and all other amounts
owing in respect of the Senior Subordinated Notes will be promptly paid in
full when due, subject to any applicable grace period, whether at maturity, by
acceleration or otherwise, and interest on the overdue principal and interest
on any overdue interest on the Senior Subordinated to the extent lawful, and
all other obligations of the Borrower to GOF and its successors and assigns
under the Senior Subordinated Notes will be promptly paid in full or
performed, all in accordance with the terms hereof and thereof (all of the
foregoing being hereinafter called the "Guarantee Obligations"); subject,
however, to the limitations set forth in Section 3.04. Each Guarantor hereby
agrees that its obligations hereunder shall be unconditional, irrespective of
the validity, regularity or enforceability of the Senior Subordinated Notes or
this Agreement, the absence of any action to enforce the same, any waiver or
consent by GOF or its successors or assigns with respect to any provisions
hereof or thereof, the recovery of any judgment against the Borrower, any
action to enforce the same or any other circumstance which might otherwise
constitute a legal or equitable discharge or defense of a Guarantor. Each
Guarantor hereby waives diligence, presentment, demand of payment, filing of
claims with a court in the event of insolvency or bankruptcy of the Borrower,
any right to require a proceeding first against the Borrower, protest, notice
and all demands whatsoever and covenants that the Guarantee will not be
discharged except by complete performance of the obligations continued in the
Senior Subordinated Notes, this Agreement, and this Guarantee. If GOF or its
successors or assigns is required by any court or otherwise to return to the
Borrower, any Guarantor, or any custodian, trustee, liquidator or other
similar official acting in relation to the Borrower or any Guarantor, any
amount paid by the Borrower or any Guarantor to GOF or

                                      25
<PAGE>

such successor or assign, this Guarantee, to the extent theretofore
discharged, shall be reinstated in full force and effect. Each Guarantor
further agrees that, as between each Guarantor, on the one hand, and GOF and
its successors and assigns, on the other hand, (x) the maturity of the
obligations guaranteed hereby may be accelerated as provided in Article VII
for the purpose of this Guarantee, notwithstanding any stay, injunction or
other prohibition preventing such acceleration in respect of the obligations
guaranteed hereby, and (y) in the event of any acceleration of such
obligations as provided in Article VII, such obligations (whether or not due
and payable) shall become due and payable by each Guarantor for the purpose of
this Guarantee.

           Each Guarantor further agrees that the Guarantee Obligations may be
extended or renewed, in whole or in part, without notice or further assent
from such Guarantor and that such Guarantor will remain bound under this
Article III notwithstanding any extension or renewal of any Guarantee
Obligation.

           (b) Each Guarantor waives notice of any default under the Senior
Subordinated Notes or the Guarantee Obligations. The obligations of each
Guarantor hereunder shall not be affected by (i) any extension or renewal of
any thereof; (ii) any rescission, waiver, amendment or modification of any of
the terms or provisions of this Agreement, the Senior Subordinated Notes or
any other agreement; (iii) the release of any security held by any holder of
Senior Subordinated Notes for the Guarantee Obligations or any of them; (iv)
the failure of any holder of Senior Subordinated Notes to exercise any right
or remedy against any other guarantor of the Guarantee Obligations; or (v)
except as set forth in Section 3.03, any change in ownership of such
Guarantor.

           (c) Each Guarantor further agrees that its Guarantee herein
constitutes a guarantee of payment, performance and compliance when due (and
not a guarantee of collection) and waives any right to require that any resort
be had by any holder of Senior Subordinated Notes to any security held for
payment of the Guarantee Obligations.

           (d) The obligations of each Guarantor hereunder shall not be
subject to any reduction, limitation, impairment or termination for any reason
(other than payment of the Guarantee Obligations in full), including any claim
of waiver, release, surrender, alteration or compromise, and shall not be
subject to any defense of setoff, counterclaim, recoupment or termination
whatsoever or by reason of the invalidity, illegality or unenforceability of
the Guarantee Obligations or otherwise. Without limiting the generality of the
foregoing, the obligations of each Guarantor herein shall not be discharged or
impaired or otherwise affected by the failure of any holder of Senior
Subordinated Notes to assert any claim or demand or to enforce any remedy
under this Agreement, the Senior Subordinated Notes or any other agreement, by
any waiver or modification of any thereof, by any default, failure or delay,
willful or otherwise, in the performance of the Guarantee Obligations, or by
any other act or thing or omission or delay to do any other act or thing that
may or might in any manner or to any extent vary the risk of such Guarantor or
would otherwise operate as a discharge of such Guarantor as a matter of law or
equity.

                                      26
<PAGE>

           (e) In furtherance of the foregoing and not in limitation of any
other right that any holder of Senior Subordinated Notes has at law or at
equity against any Guarantor by virtue hereof, upon the failure of the
Borrower to pay the principal of or interest on any Guarantee Obligation when
and as the same shall become due, whether at maturity, by acceleration, by
redemption or otherwise, or to perform or comply with any other Guarantee
Obligation, each Guarantor hereby promises to and shall, upon receipt of
written demand by GOF, forthwith pay, or cause to be paid, in cash, to the
holders of Senior Subordinated Notes Holders an amount equal to the sum of (i)
the unpaid amount of such Guarantee Obligations, (ii) accrued and unpaid
interest on such Guarantee Obligations (but only to the extent not prohibited
by law) and (iii) all other monetary Guarantee Obligations of the Borrower to
the holders of the Senior Subordinated Notes.

           Section 3.02. Severability. In case any provision of this Guarantee
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.

           Section 3.03. Release of a Guarantor. If the Senior Subordinated
Notes are defeased in accordance with the terms of this Agreement, or if
Section 6.02(b) is complied with, or if, subject to the requirements of
Section 6.02(a), all or substantially all of the assets of any Guarantor or
all of the Equity Interests of any Guarantor are sold (including by issuance
or otherwise) by the Borrower in a transaction constituting an Asset Sale and
(x) the Net Cash Proceeds from such Asset Sale are used in accordance with
Section 6.01(d) or (y) the Borrower delivers to each holder of Senior
Subordinated Notes an Officer's Certificate to the effect that the Net Cash
Proceeds from such Asset Sale shall be used in accordance with Section 6.01(d)
and within the time limits specified by Section 6.01(d), then each Guarantor
(in the case of defeasance) or such Guarantor (in the case of compliance with
Section 6.02(b) or in the event of a sale or other disposition of all of the
Equity Interests of such Guarantor) or the corporation acquiring such assets
(in the event of a sale or other disposition of all or substantially all of
the assets of such Guarantor) shall be released and discharged from all
obligations under this Article III without any further action required on the
part of GOF or its successors or assigns. GOF or its successors or assigns
shall, at the sole cost and expense of the Borrower and upon receipt at the
reasonable request of GOF of an Opinion of Counsel that the provisions of this
Section 3.03 have been complied with, deliver an appropriate instrument
evidencing such release upon receipt of a request by the Borrower accompanied
by an Officer's Certificate certifying as to the compliance with this Section
3.03. Any Guarantor not so released remains liable for the full amount of
principal of and interest on the Senior Subordinated Notes and the other
obligations of the Borrower hereunder as provided in this Article III.

           Section 3.04. Limitation of a Guarantor's Liability. Each
Guarantor, and by its acceptance hereof GOF, hereby confirms that it is the
intention of all such parties that the guarantee by such Guarantor pursuant to
its Guarantee not constitute a fraudulent transfer or conveyance for purposes
of title 11 of the United States Code, as amended, the Uniform Fraudulent
Conveyance Act, the Uniform Fraudulent Transfer Act or any similar U.S.
Federal or state or other applicable law. To effectuate the foregoing
intention, GOF and each Guarantor hereby irrevocably agree that the
obligations of each Guarantor under its Guarantee shall be listed

                                      27
<PAGE>

to the maximum amount as will, after giving effect to all other contingent and
fixed liabilities of such Guarantor (including any Senior Indebtedness
Incurred after the Effective Date) and after giving effect to any collections
from or payments made by or on behalf of any other Guarantor in respect of the
obligations of such other Guarantor under its Guarantee or pursuant to Section
3.05, result in the obligations of such Guarantor under its Guarantee not
constituting such a fraudulent transfer or conveyance under Federal or state
law.

           Section 3.05. Contribution. In order to provide for just and
equitable contribution among the Guarantors, the Guarantors agree, inter se,
that in the event any payment or distribution is made by any Guarantor (a
"Funding Guarantor") under the Guarantee, such Funding Guarantor shall be
entitled to a contribution from all other Guarantors in a pro rata amount,
based on the net assets of each Guarantor (including the Funding Guarantor),
determined in accordance with GAAP, subject to Section 3.04, for all payments,
damages and expenses incurred by such Funding Guarantor in discharging the
Borrower's obligations with respect to the Senior Subordinated Notes or any
other Guarantor's obligations with respect to the Guarantee.

           Section 3.06. Subordination of Subrogation and Other Rights. Each
Guarantor hereby agrees that any claim against the Borrower that arises from
the payment, performance or enforcement of such Guarantor's obligations under
its Guarantee or this Agreement, including, without limitation, any right of
subrogation, shall be subject and subordinate to, and no payment with respect
to any such claim of such Guarantor shall be made before, the payment in full
in cash of the outstanding Senior Subordinated Notes in accordance with the
provisions provided therefor in this Agreement.

           Section 3.07. Guarantee Obligations Subordinated to Guarantor
Senior Indebtedness. Each Guarantor covenants and agrees, and GOF by his
acceptance thereof likewise covenants and agrees, that the Guarantee of such
Guarantor shall be issued subject to the provisions of this Article III; and
each person holding any Senior Subordinated Note, whether GOF upon original
issue to or upon transfer, assignment or exchange thereof, accepts and agrees
that all payments of the principal of and interest on the Senior Subordinated
Notes, and all other amounts payable under this Agreement, pursuant to the
Guarantee made by or on behalf of any Guarantor shall, to the extent and in
the manner set forth in this Article III, be subordinated and junior in right
of payment to the prior payment in full in cash of all amounts payable under
Guarantor Senior Indebtedness of such Guarantor.

           Section  3.08.  No Payment  on  Guarantees  in Certain
Circumstances.

           (a) No direct or indirect payment (excluding any payment or
distribution of Permitted Junior Securities but including any payment
constituting any distribution in respect of any other Indebtedness that is
subordinated to the Guarantees) by or on behalf of any Guarantor of principal
of or interest on the Senior Subordinated Notes pursuant to such Guarantor's
Guarantee, whether pursuant to the terms of the Senior Subordinated Note, upon
acceleration or otherwise, shall be made if, at the time of such payment,
there exists a default in the payment of all or any portion of the obligations
on any Designated Guarantor Senior Indebtedness of such Guarantor, whether at
maturity, on account of mandatory redemption or prepayment, acceleration


                                      28
<PAGE>

or otherwise, and such default shall not have been cured or waived or the
benefits of this sentence waived by or on behalf of the holders of such
Designated Guarantor Senior Indebtedness. In addition, during the continuance
of any nonpayment event of default with respect to any Designated Guarantor
Senior Indebtedness pursuant to which the maturity thereof may be immediately
accelerated, and upon receipt by the Trustee of written notice (the "Guarantor
Payment Blockage Notice") from the holder or holders of such Designated
Guarantor Senior Indebtedness or the trustee or agent acting on behalf of such
Designated Guarantor Senior Indebtedness, then, unless and until such
nonpayment event of default has been cured or waived or has ceased to exist or
such Designated Guarantor Senior Indebtedness has been discharged or paid in
full in cash or the benefits of these provisions have been waived by the
holders of such Designated Guarantor Senior Indebtedness, no direct or
indirect payment (excluding any payment or distribution of Permitted Junior
Securities) shall be made by or on behalf of such Guarantor of principal or
interest on the Senior Subordinated Notes during a period (a "Guarantor
Blockage Period") commencing on the date of receipt of such notice by GOF and
its successors and assigns and ending 179 days thereafter; provided however,
that so long as any Indebtedness remains outstanding under the Credit
Agreement or any replacement, renewal, refinancing or extension thereof, no
Guarantor Payment Blockage Notice may be initiated to block payment of
principal or interest on the Senior Subordinated Notes pursuant to the terms
of this Section 3.08(a) except by the Administrative Agent (or similar
authorized party) under the Credit Agreement or any replacement, renewal,
refinancing or extension thereof.

           (b) Notwithstanding anything herein or in the Senior Subordinated
Notes to the contrary, (x) in no event shall a Guarantor Blockage Period
extend beyond 179 days from the date the Guarantor Payment Blockage Notice in
respect thereof was given, (y) there shall be a period of at least 181
consecutive days in each 360 day period when no Guarantor Blockage Period is
in effect and (z) not more than one Guarantor Blockage Period may be commenced
with respect to any Guarantor during any period of 360 consecutive days. No
nonpayment event of default that existed or was continuing on the date of
commencement of any Guarantor Blockage Period with respect to the Designated
Guarantor Senior Indebtedness initiating such Guarantor Blockage Period (to
the extent the holder of Designated Guarantor Senior Indebtedness, or trustee
or agent, giving notice commencing such Guarantor Blockage Period had
knowledge of such existing or continuing event of default) may be, or be made,
the basis for the commencement of any other Guarantor Blockage Period by the
holder or holders of such Designated Guarantor Senior Indebtedness or the
trustee or agent acting on behalf of such Designated Guarantor Senior
Indebtedness, whether or not within a period of 360 consecutive days, unless
such nonpayment event of default has been cured or waived for a period of not
less than 90 consecutive days.

           (c) In the event that, notwithstanding the foregoing, any payment
shall be made directly to the holders of Senior Subordinated Notes when such
payment is prohibited by Section 3.08(a), such payment shall be held in trust
for the benefit of, and shall be paid over or delivered by the recipient
thereof (if notice of the conditions prohibiting such payment under Section
3.08(a) has been received by the holders of Senior Subordinated Notes) to the
holders of such Designated Guarantor Senior Indebtedness or their respective
representatives, or to the trustee or trustees under any indenture pursuant to
which any of such Designated Guarantor Senior Indebtedness may have been
issued, as their respective interests may appear, but only to

                                      29
<PAGE>

the extent that, upon notice from the holders of Senior Subordinated Notes to
the holders of such Designated Guarantor Senior Indebtedness that such
prohibited payment has been made, the holders of such Designated Guarantor
Senior Indebtedness (or their representative or representatives or a trustee
or trustees) notify the holders of Senior Subordinated Notes in writing of the
amounts then due and owing on such Designated Guarantor Senior Indebtedness,
if any, and only the amounts specified in such notice to the holders of Senior
Subordinated Notes shall be paid to the holders of such Designated Guarantor
Senior Indebtedness.

           Section 3.09   Payment Over Proceeds upon Dissolution, Etc.

           (a) Upon any payment or distribution of assets or securities of any
Guarantor of any kind or character, whether in cash, property or securities
(excluding any payment or distribution of Permitted Junior Securities), upon
any dissolution or winding up or total liquidation or reorganization of such
Guarantor, whether voluntary or involuntary or in bankruptcy, insolvency,
receivership or other proceedings, all Guarantor Senior Indebtedness of such
Guarantor shall first be paid in full in cash before the holders of Senior
Subordinated Notes shall be entitled to receive any payment by such Guarantor
of the principal of or interest on the Senior Subordinated Notes pursuant to
such Guarantor's Guarantee, or any payment to acquire any of the Senior
Subordinated Notes for cash, property or securities, or any distribution with
respect to the Senior Subordinated Notes of any cash, property or securities
(excluding any payment or distribution of Permitted Junior Securities). Before
any payment may be made by, or on behalf of, any Guarantor of the principal of
or interest on the Senior Subordinated Notes upon any such dissolution or
winding up or total liquidation or reorganization, any payment or distribution
of assets or securities of such Guarantor of any kind or character, whether in
cash, property or securities (excluding any payment or distribution of
Permitted Junior Securities), to which GOF or its successors or assigns would
be entitled in respect of the Senior Subordinated Notes, but for the
subordination provisions of this Agreement, shall be made by such Guarantor or
by any receiver, trustee in bankruptcy, liquidating trustee, agent or other
Person making such payment or distribution, directly to the holders of the
Guarantor Senior Indebtedness of such Guarantor (pro rata to such holders on
the basis of the respective amounts of such Guarantor Senior Indebtedness held
by such holders) or their representatives or to the trustee or trustees or
agent or agents under any agreement or indenture pursuant to which any of such
Guarantor Senior Indebtedness may have been issued, as their respective
interests may appear, to the extent necessary to pay all such Guarantor Senior
Indebtedness in full in cash after giving effect to any prior or concurrent
payment, distribution or provision therefor to or for the holders of such
Guarantor Senior Indebtedness.

           (b) In the event that, notwithstanding the foregoing provision
prohibiting such payment or distribution, any payment or distribution of
assets or securities of any Guarantor of any kind or character, whether in
cash, property or securities (excluding any payment or distribution of
Permitted Junior Securities), shall be made directly to holders of the Senior
Subordinated Notes at a time when such payment or distribution is prohibited
by Section 3.09(a) and before all obligations in respect of the Guarantor
Senior Indebtedness of such Guarantor are paid in full in cash, such payment
or distribution shall be received and held in trust for the benefit of, and
shall be paid over or delivered by the recipient thereof (if notice of the
conditions


                                      30
<PAGE>

prohibiting such payment under Section 3.09(a) has been received thereby) to,
the holders of such Guarantor Senior Indebtedness (pro rata to such holders on
the basis of the respective amounts of such Guarantor Senior Indebtedness held
by such holders) or their respective representatives, or to the trustee or
trustees or agent or agents under any indenture pursuant to which any of such
Guarantor Senior Indebtedness may have been issued, as their respective
interests may appear, for application to the payment of such Guarantor Senior
Indebtedness remaining unpaid until all such Guarantor Senior Indebtedness has
been paid in full in cash after giving effect to any prior or concurrent
payment, distribution or provision therefor to or for the holders of such
Guarantor Senior Indebtedness.

           (c) The consolidation of any Guarantor with, or the merger of any
Guarantor with or into, another corporation or the liquidation or dissolution
of any Guarantor following the conveyance or transfer of its property as an
entirety, or substantially as an entirety, to another corporation upon the
terms and conditions provided in Section 6.02 shall not be deemed a
dissolution, winding up, liquidation or reorganization for the purposes of
this Section 3.09 if such other corporation shall, as a part of such
consolidation, merger, conveyance or transfer, comply with the conditions
stated in Section 6.02.

           Section 3.10   Subrogation.

           (a) Upon the payment in full in cash of all Guarantor Senior
Indebtedness of a Guarantor, or provision for payment, GOF and its successors
or assigns shall be subrogated to the rights of the holders of such Guarantor
Senior Indebtedness to receive payments or distributions of cash, property or
securities of such Guarantor made on such Guarantor Senior Indebtedness until
the principal of and interest on the Senior Subordinated Notes shall be paid
in full in cash; and, for the purposes of such subrogation, no payments or
distributions to the holders of such Guarantor Senior Indebtedness of any
cash, property or securities to which GOF and its successors and assigns would
be entitled except for the provisions of this Article III, and no payment over
pursuant to the provisions of this Article III to the holders of such
Guarantor Senior Indebtedness by GOF and its successors and assigns, as
between such Guarantor, its creditors other than holders of such Guarantor
Senior Indebtedness, and GOF and its successors and assigns, be deemed to be a
payment by such Guarantor to or on account of such Guarantor Senior
Indebtedness. It is understood that the provisions of this Article III are and
are intended solely for the purpose of defining the relative rights of the
holders of the Senior Subordinated Notes solely in their capacity as such, on
the one hand, and the holders of Guarantor Senior Indebtedness of each
Guarantor, on the other hand.

           (b) If any payment or distribution to which the GOF or its
successors or assigns would otherwise have been entitled but for the
provisions of this Article III shall have been applied, pursuant to the
provisions of this Article III, to the payment of all amounts payable under
Guarantor Senior Indebtedness, then and in such case, GOF and it successors or
assigns shall be entitled to receive from the holders of such Guarantor Senior
Indebtedness any payments or distributions received by such holders of
Guarantor Senior Indebtedness in excess of the amount required to make payment
in full in cash of such Guarantor Senior Indebtedness.

            Section 3.11  Obligations of Guarantors Unconditional.

                                      31
<PAGE>

           (a) Nothing contained in this Article III or elsewhere in this
Agreement or in the Senior Subordinated Notes or the Guarantees is intended to
or shall impair, as among each of the Guarantors and GOF or its successors and
assigns, the obligation of each Guarantor, which is absolute and
unconditional, to pay to GOF and/or its successors and assigns the principal
of, interest on the Senior Subordinated Notes as and when the same shall
become due and payable in accordance with the terms of the Guarantee of such
Guarantor, or is intended to or shall affect the relative rights of GOF and/or
its successors and assigns and creditors of any Guarantor other than the
holders of Guarantor Senior Indebtedness of such Guarantor, nor shall anything
herein or therein prevent GOF and/or its successors and assigns from
exercising all remedies otherwise permitted by applicable law upon default
under this Agreement, subject to the rights, if any, under this Article III of
the holders of Guarantor Senior Indebtedness in respect of cash, property or
securities of any Guarantor received upon the exercise of any such remedy.

           (b) Without limiting the generality of the foregoing, nothing
contained in this Article III shall restrict the right of GOF or its
successors or assigns to take any action to declare the Senior Subordinated
Notes to be due and payable prior to its stated maturity pursuant to Sections
7.01 and 7.02 or to pursue any rights or remedies hereunder; provided,
however, that all Guarantor Senior Indebtedness of any Guarantor then due and
payable shall first be paid in full before GOF and/or its successors and
assigns are entitled to receive any direct or indirect payment from such
Guarantor of principal of, interest on the Senior Subordinated Notes pursuant
to such Guarantor's Guarantee.

           Section 3.12 Reliance on Judicial Order or Certificate of
Liquidating Agent. Upon any payment or distribution of assets or securities of
a Guarantor referred to in this Article III, GOF and/or its successors or
assigns shall be entitled to rely upon any order or decree made by any court
of competent jurisdiction in which bankruptcy, dissolution, winding up,
liquidation or reorganization proceedings are pending, or upon a certificate
of the receiver, trustee in bankruptcy, liquidating trustee, agent or other
person making such payment or distribution, delivered to GOF and/or its
successors or assigns for the purpose of ascertaining the persons entitled to
participate in such distribution, the holders of Guarantor Senior Indebtedness
of such Guarantor and other indebtedness of such Guarantor, the amount thereof
or payable thereon, the amount or amounts paid or distributed thereon and all
other facts pertinent thereto or to this Article III.

           Section 3.13 Subordination Rights Not Impaired by Acts or Omissions
of the Guarantors or Holders of Guarantee Senior Indebtedness. No right of any
present or future holders of any Guarantor Senior Indebtedness to enforce
subordination as provided herein shall at any time in any way be prejudiced or
impaired by any act or failure to act on the part of any Guarantor or by any
act or failure to act, in good faith, by any such holder, or by any
noncompliance by any Guarantor with the terms of this Agreement, regardless of
any knowledge thereof which any such holder may have or otherwise be charged
with. The provisions of this Article III are intended to be for the benefit
of, and shall be enforceable directly by, the holders of Guarantor Senior
Indebtedness.

                                      32
<PAGE>

           Section 3.14 This Article Not to Prevent Events of Default. The
failure to make a payment on account of principal of or interest on the Senior
Subordinated Notes by reason of any provision of this Article III shall not be
construed as preventing the occurrence of an Event of Default specified in
clauses (a), (b) or (c) of Section 7.01.

           Section 3.15 No Waiver of Guarantee Subordination Provisions.
Without in any way limiting the generality of Section 3.13, the holders of
Guarantor Senior Indebtedness may, at any time and from time to time, without
the consent of or notice to GOF and/or its successors or assigns, without
incurring responsibility to GOF and/or its successors or assigns and without
impairing or releasing the subordination provided in this Article III or the
obligations hereunder of GOF and/or its successors and assigns to the holders
of Guarantor Senior Indebtedness, do any one or more of the following: (a)
change the manner, place or terms of payment or extend the time of payment of,
or renew or alter, Guarantor Senior Indebtedness or any instrument evidencing
the same or any agreement under which Guarantor Senior Indebtedness is
outstanding or secured; (b) sell, exchange, release or otherwise deal with any
property pledged, mortgaged or otherwise securing Guarantor Senior
Indebtedness; (c) release any Person liable in any manner for the collection
of Guarantor Senior Indebtedness; and (d) exercise or refrain from exercising
any rights against any Guarantor and any other Person.

           Section 3.16 Payments May be Paid Prior to Dissolution. Nothing
contained in this Article III or elsewhere in this Agreement shall prevent a
Guarantor, except under the conditions described in Section 3.08, from making
payments of principal of and interest on the Senior Subordinated Notes unless
at least two Business Days prior to the date upon which such payment becomes
due and payable, the Borrower and such Guarantor shall have received the
written notice provided for in Section 3.08(b). The Guarantors shall give
prompt written notice to GOF and/or its successors and assigns of any
dissolution, winding up, liquidation or reorganization of such Guarantor.

                                  ARTICLE IV
                             CONDITIONS PRECEDENT

           Section 4.01. Conditions Precedent. The obligation of GOF to cause
the Letter of Credit to be issued is subject to the satisfaction of the
following conditions precedent, each to the reasonable satisfaction of GOF, or
the waiver thereof by GOF in its sole discretion:

           (a) Borrower's Certificate of Incorporation. The Certificate
Incorporation shall have been filed with the Secretary of State of the State
of Delaware and, in any event, shall have been amended to satisfy the
requirements of the Plan and the Bankruptcy Code, including, without
limitation, to contain the following terms and provisions, each to the
reasonable satisfaction of GOF:

                (i)  The Borrower's authorized Capital Stock, and the
                     designated shares in each class or series of Capital
                     Stock, shall be limited to such number of shares as is
                     necessary for the issuances contemplated by the Plan,
                     including conversion or exercise of all


                                      33
<PAGE>

                     convertible or exercisable securities to be issued
                     thereunder, including applicable anti-dilution protection;

                (ii) The stockholders of the Borrower shall be authorized to
                     take action by written consent in lieu of a meeting
                     thereof;

                (iii)The  Borrower's  Board of Directors  shall not
                     be classified;

                (iv) The provisions of the Borrower's certificate of
                     incorporation as of May 11, 2002 that require an
                     affirmative vote of 80% of the voting Capital Stock for
                     the taking of certain actions shall be amended to provide
                     that such actions may be taken with the affirmative vote
                     of 50% of the voting Capital Stock; and

                (v)  The issuance of non-voting capital equity securities
                     shall be prohibited, but only to the extent required by
                     Section 1123(a)(6) of the Bankruptcy Code.

           (b) Borrower's Bylaws. The Bylaws shall have been adopted by the
Borrower, and, in any event, shall have been amended to satisfy the
requirements of the Plan and the Bankruptcy Code, including, without
limitation, to contain the following terms and provisions, each to the
reasonable satisfaction of GOF:

                (i)  Shareholders holding a minimum of 25% of the Borrower's
                     Common Stock shall be authorized to call special meetings
                     of the shareholders;

                (ii) The notice requirements for shareholders to place matters
                     on the ballot for consideration at annual and special
                     meetings shall not be unduly prohibitive and, in any
                     event, shall be to GOF's reasonable satisfaction;

               (iii) Shareholders shall be authorized to take action by
                     written consent in lieu of a meeting thereof; and

               (iv)  The Borrower's officers shall be prohibited from
                     exercising voting rights of any securities held by the
                     Borrower without express authorization from the
                     Borrower's Board of Directors.

           (c) Organizational Documents of Debtor Subsidiaries. The
certificate or articles of incorporation and by-laws of each Debtor
Subsidiary shall be amended as necessary to satisfy the provisions of the
Plan and the Bankruptcy Code, and shall include, among other things, pursuant
to Section 1123(a)(6) of the Bankruptcy Code, a provision prohibiting the
issuance of non-voting equity securities, but only to the extent required by
Section 1123(a)(6) of the Bankruptcy Code.


                                      34
<PAGE>


           (d) Organization Documents of Subsidiaries and Certain Affiliates.
In addition to the requirements of Section 4.01(c) above, the Organizational
Documents of the Borrower's Subsidiaries and Affiliates (excluding GOF) shall,
to the reasonable satisfaction of GOF:

                (i)  prohibit their respective officers from exercising voting
                     rights of any securities by such Subsidiaries and
                     Affiliates without express authorization from such
                     Subsidiary's or Affiliate's Board of Directors or other
                     applicable governing body; and

               (ii)  provide that the shareholders, members, partners or other
                     equity holders, as the case may be, of such Subsidiary or
                     Affiliate shall be permitted to remove as of the
                     Effective Date, at any time and from time to time
                     thereafter, any director, manager, managing partner or
                     person of equivalent authority, with or without cause at
                     any time, through action by a majority in interest of
                     such shareholders, members, partners or other equity
                     holders (which action may, at the option thereof and to
                     the extent permissible by law, be taken in writing or
                     pursuant to a meeting thereof).

           (e) Shareholder Rights Plan. The Shareholder Rights Plan shall have
been rejected by the Bankruptcy Court and terminated.

           (f) Shareholders Agreement. The Shareholders Agreement shall have
been executed and delivered by each of the parties thereto.

           (g) Documents to be Delivered. GOF shall have received the
following documents, each dated the Effective Date (unless otherwise provided
herein or unless previously provided in accordance with this Section 4.01), in
form and substance satisfactory to GOF:

                (i)  The Senior Subordinated Note to the order of GOF in the
                     amount of $25,000,000.00, subject to the terms hereof and
                     thereof;

                (ii) Certified copies of all documents and instruments,
                     including all authorizations, consents and approvals of,
                     evidence of all other actions by, and notices and filings
                     with, all governmental authorities and regulatory bodies
                     or other Persons to whom the Obligors have contractual
                     obligations as shall be required for the execution,
                     delivery and performance of this Agreement by the
                     Obligors, including those consents and approvals required
                     by Section 4.01(i);

                (iii)An Officer's Certificate (the statements made in which
                     certificate shall be true on and as of the Effective
                     Date), of each Obligor certifying as to: (A) the truth of
                     the representations and warranties made by such Obligor
                     in this

                                      35
<PAGE>

                     Agreement immediately before and immediately after giving
                     effect to the execution and delivery hereof and the
                     issuance of the Senior Subordinated Note; and (B) the
                     satisfaction, as of the Effective Date, of all conditions
                     precedent set forth in this Section 4.01 that are to be
                     performed or satisfied by such Obligor; provided that the
                     Borrower's Officer's Certificate shall certify the
                     satisfaction of all conditions precedent set forth in
                     this Section 4.01;

                (iv) A signed copy of a certificate of the Secretary or an
                     Assistant Secretary or other appropriate officer of the
                     Borrower certifying (A) as to true and complete copies of
                     the Certificate of Incorporation and Bylaws and the
                     Organizational Documents of each of the Borrower's
                     Subsidiaries as in effect on the Effective Date and the
                     absence of any amendments to the charter or by-laws since
                     such dates; and (B) the names and true signatures of the
                     officers of the Borrower authorized to sign this
                     Agreement, and the other documents to be delivered
                     hereunder; and

                (v)  A signed copy of a certificate of the Secretary or an
                     Assistant Secretary or other appropriate officer or
                     manager of each Obligor (other than the Borrower)
                     certifying (A) as to true and complete copies of the
                     Organizational Documents of such Obligor as in effect on
                     the Effective Date and the absence of any amendments to
                     the charter or by-laws since such dates; and (B) the
                     names and true signatures of the officers of such Obligor
                     authorized to sign this Agreement, and the other
                     documents to be delivered hereunder.

           (h) Environmental Due Diligence. GOF shall not have given the
Borrower written notice that GOF, in its sole discretion, has determined that
the results of its environmental diligence review were not reasonably
satisfactory.

           (i) Consents and Approvals. The Borrower, its Debtor Subsidiaries
and the other Obligors, if any, shall have obtained all governmental consents
and made all governmental filings required or reasonably advisable in
connection with the transactions contemplated by the Plan (including without
limitation, any consents and filings required or reasonably advisable pursuant
to the Hart-Scott-Rodino Antitrust Act (the "HSR Act"), any applicable foreign
antitrust law or regulation, and the New Jersey Industrial Site Recovery Act)
prior to the applicable deadlines, filing periods or other timeframes
associated with such consents and filings, and the applicable waiting period
under the HSR Act or any applicable foreign antitrust law or regulation, if
any, shall have expired or been terminated.

                                      36
<PAGE>

           (j) Credit Agreement. The closing of the Credit Agreement shall
have occurred, or shall occur substantially simultaneously with the execution
and delivery hereof.

           (k) New Investment. The closing of the New Investment shall have
occurred, or shall occur substantially simultaneously with the execution and
delivery hereof.

           (l) Management Letters. On or before the Confirmation Date, Jerry
Zucker and James Boyd shall have executed and delivered a letter in the form
of Exhibit L and Exhibit M, respectively, to the Disclosure Statement, unless
this condition is waived in writing by GOF.

           (m) Compliance with Plan. The Borrower and its Debtor Subsidiaries
shall be in compliance with the material terms and provisions of the Plan
immediately prior to the execution and delivery of this Agreement.

           (n) Additional Information and Documents. Each Obligor shall have
provided GOF with such additional information and shall have executed and
delivered such additional documents as may be reasonably requested by GOF.

                                   ARTICLE V
                        REPRESENTATIONS AND WARRANTIES

           Section 5.01. Representations and Warranties of the Borrower. The
Borrower and each Obligor hereby jointly and severally represents and warrants
to GOF as of the Effective Date as follows:

           (a) Corporate Existence. The Borrower and each of its Subsidiaries
(a) is a corporation, partnership, limited liability company, or other entity
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization; (b) has all requisite corporate or other
power and authority, and has all material governmental licenses,
authorizations, consents and approvals necessary to own its assets and carry
on its business as now being or as proposed to be conducted; and (c) is
qualified to do business and is in good standing in all jurisdictions in which
the nature of the business conducted by it makes such qualification necessary
and where failure so to qualify could have a Material Adverse Effect.

           (b) Financial Condition. The Borrower has heretofore furnished to
GOF the following financial statements: (i) the audited consolidated balance
sheets of the Borrower and its consolidated Subsidiaries and the related
audited consolidated statements of operations, shareholders' equity (deficit)
and cash flows of the Borrower and its consolidated Subsidiaries for the
fiscal year ended December 29, 2001, reported on by Ernst & Young LLP; (ii)
the unaudited consolidated balance sheets of the Borrower and its consolidated
Subsidiaries and the related unaudited consolidated statements of operations,
shareholders' equity (deficit) and cash flows of the Borrower and its
consolidated Subsidiaries for the nine-month period ended September 28, 2002;
and (iii) pro forma consolidated balance sheets of the Borrower and its
consolidated

                                      37
<PAGE>

Subsidiaries, and related consolidated statements of shareholders' equity
(deficit) as at December 28, 2002, which balance sheets and statements reflect
the consummation of the Plan as if the same had been consummated on said date.

      All such financial statements fairly present the respective actual or
pro forma financial condition, as applicable, of the Borrower and its
consolidated Subsidiaries as at the respective dates, and the respective
actual results of operations for the respective periods ended on said
respective dates, all in accordance with GAAP and practices applied on a
consistent basis; provided that, as to projections, the Borrower and its
consolidated Subsidiaries represent only that such projections have been
prepared in good faith based on estimates and assumptions believed by the
Borrower and its consolidated subsidiaries to be reasonable as of the date
such projections were prepared. None of the Borrower or any of its
Subsidiaries has on the date hereof any material contingent liabilities,
material liabilities for Taxes, material unusual forward or long-term
commitments or material unrealized or anticipated losses from any unfavorable
commitments, except as referred to or reflected or provided for in said
respective balance sheets as at said respective dates. Since September 28,
2002, there has been no material adverse change in the financial condition,
operation, business or prospects of the Borrower and its consolidated
Subsidiaries taken as a whole from that set forth in the respective financial
statements as at such date.

           (c) Litigation. Except as set forth in Schedule 5.01(c) hereto,
there are no legal or arbitral proceedings, or any proceedings by or before
any governmental or regulatory authority or agency, now pending or (to the
knowledge of any Obligor) threatened against the Borrower or any of the
Borrower's Subsidiaries which, if adversely determined, could reasonably be
expected to have a Material Adverse Effect.

           (d) No Breach. None of the execution and delivery of this Agreement
and the Senior Subordinated Note, the consummation of the transactions herein
and therein contemplated or compliance with the terms and provisions hereof
and thereof will conflict with or result in a breach of, or require any
consent under, the Organizational Documents of the Borrower, any other Obligor
or any of the Borrower's other Subsidiaries, if any, or any applicable law or
regulation, or any order, writ, injunction or decree of any court or
Governmental Authority, or any agreement or instrument to which the Borrower,
any other Obligor or any of the Borrower's other Subsidiaries, if any, is a
party or by which any of them or any of their Property is bound or to which
any of them is subject, or constitute a default under any such agreement or
instrument, or result in the creation or imposition of any Lien upon any
Property of the Borrower, any other Obligor, or any of the Borrower's other
Subsidiaries, if any, pursuant to the terms of any such agreement or
instrument.

           (e) Action. Each Obligor has all necessary corporate or other
power, authority and legal right to execute, deliver and perform its
obligations under this Agreement and the Senior Subordinated Note, as the case
may be; the execution, delivery and performance by each Obligor of this
Agreement and the Senior Subordinated Note, as the case may be, has been duly
authorized by all necessary corporate or other action on the part of each
Obligor (including, without limitation, any required shareholder approvals);
and this Agreement has been duly and

                                      38
<PAGE>

validly executed and delivered by each Obligor and constitutes, and the Senior
Subordinated Note, as the case may be, constitutes, its legal, valid and
binding obligation, enforceable against each Obligor in accordance with the
terms hereof and thereof, except as such enforceability may be limited by (a)
bankruptcy, insolvency, reorganization, moratorium or similar laws of general
applicability affecting the enforcement of creditors' rights and (b) the
application of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).

           (f) Approvals. No authorizations, approvals (other than the approval
of the Bankruptcy Court, which has previously been obtained) or consents of
(including any exchange control approval), and no filings or registrations
with, any governmental or regulatory authority or agency, or any securities
exchange, are necessary for the execution, delivery or performance by each
Obligor of this Agreement or by the Borrower of the Senior Subordinated Note
or for the legality, validity or enforceability hereof or thereof.

           (g) Use of Credit. None of the Obligors is engaged principally, or
as one of its important activities, in the business of extending credit for
the purpose, whether immediate, incidental or ultimate, of buying or carrying
Margin Stock, and no part of the proceeds of any extension of credit hereunder
will be used to buy or carry any Margin Stock in violation of the applicable
provisions of Regulations U and X.

           (h) ERISA. Each ERISA Plan, and, to the knowledge of each Obligor,
each Multiemployer Plan, is in compliance in all material respects with, and
has been administered in all material respects in compliance with, the
applicable provisions of ERISA, the Internal Revenue Code and any other
Federal or state law, and no event or condition has occurred and is continuing
as to which any Obligor would be under an obligation to furnish a report to
GOF under Section 6.01(a) hereof.

           (i) Taxes. The Borrower and its Subsidiaries (other than their
respective Foreign Subsidiaries) are members of an affiliated group of
corporations filing consolidated returns for Federal income tax purposes, of
which the Borrower is the "common parent" (within the meaning of Section 1504
of the Internal Revenue Code) of such group. There is no tax sharing, tax
allocation or similar agreement currently in effect providing for the manner
in which tax payments owing by the members of such affiliated group (whether
in respect of Federal, state or foreign income or other Taxes) are allocated
among the members of the group. The Borrower and its Subsidiaries have filed
(either directly, or indirectly through the Borrower) all United States
Federal, and all foreign, income tax returns and all other material tax
returns that are required to be filed by them and have paid (either directly,
or indirectly through the Borrower) all Taxes due pursuant to such returns or
pursuant to any assessment received by the Borrower or any of its
Subsidiaries. The charges, accruals and reserves on the books of the Borrower
and the Borrower's Subsidiaries in respect of Taxes and other governmental
charges are, in the opinion of the Borrower, adequate.

                                      39
<PAGE>

           (j) Investment Company Act. Neither the Borrower nor any of its
Subsidiaries is an "investment company", or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of
1940, as amended.

           (k) Public Utility Holding Company Act. Neither the Borrower nor
any of its Subsidiaries is a "holding company", or an "affiliate" of a
"holding company" or a "subsidiary company" of a "holding company", within the
meaning of the Public Utility Holding Company Act of 1935, as amended.

           (l) Material Agreements and Liens.

                (i)  Indebtedness. Part A of Schedule 4.01(l) hereto is a
                     complete and correct list, as of the date of this
                     Agreement (and after giving effect to the transactions
                     contemplated to occur on the Effective Date), of each
                     credit agreement, loan agreement, indenture, purchase
                     agreement, lease, guarantee, letter of credit or other
                     arrangement (excluding this Agreement) providing for or
                     otherwise relating to any Indebtedness or any extension
                     of credit (or commitment for any extension of credit) to,
                     or guarantee by, the Borrower and its Subsidiaries, the
                     aggregate principal or face amount of which equals or
                     exceeds (or may equal or exceed) U.S. $100,000, and the
                     aggregate principal or face amount outstanding or that
                     may become outstanding under each such arrangement is
                     correctly described in Part A of said Schedule 4.01(l).

                (ii) Liens. Part B of Schedule 4.01(l) hereto is a complete
                     and correct list, as of the date of this Agreement (and
                     after giving effect to the transactions contemplated to
                     occur on the Effective Date), of each Lien securing
                     Indebtedness of any Person the aggregate principal or
                     face amount of which equals or exceeds (or may equal or
                     exceed) U.S. $100,000 and covering any Property of the
                     Borrower or its Subsidiaries, and the aggregate
                     Indebtedness secured (or which may be secured) by each
                     such Lien and the Property covered by each such Lien is
                     correctly described in Part B of said Schedule 4.01(l).

           (m) Environmental Matters. The Borrower and each of its
Subsidiaries has obtained all environmental, health and safety permits,
licenses and other authorizations required under all Environmental Laws to
carry on its business as now being or as proposed to be conducted, except to
the extent failure to have any such permit, license or authorization would not
have a Material Adverse Effect. Each of such permits, licenses and
authorizations is in full force and effect and the Borrower and each of its
Subsidiaries is in compliance with the terms and conditions thereof, and is
also in compliance with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and timetables
contained in any applicable Environmental Law or in any regulation, code,
plan, order, decree, judgment,

                                      40
<PAGE>

injunction, notice or demand letter issued, entered, promulgated or approved
thereunder, except to the extent failure to comply therewith would not have a
Material Adverse Effect.

           In addition, except as set forth in Schedule 4.01(m) hereto:

                (i)  No Pending Environmental Matters. No notice,
                     notification, demand, request for information, citation,
                     summons or order has been issued, no complaint has been
                     filed, no penalty has been assessed and no investigation
                     or review is pending or threatened by any governmental or
                     other entity with respect to any alleged failure by the
                     Borrower or any of its Subsidiaries to have any
                     environmental, health or safety permit, license or other
                     authorization required under any Environmental Law in
                     connection with the conduct of the business of the
                     Borrower or any of its Subsidiaries or with respect to
                     any generation, treatment, storage, recycling,
                     transportation, discharge or disposal, or any Release of
                     any Hazardous Materials generated by the Borrower or any
                     of its Subsidiaries which alleged failure, generation,
                     treatment, storage, recycling, transportation, discharge
                     or disposal or Release would have a Material Adverse
                     Effect.

                (ii) No Treatment Facilities or Releases. Except to the extent
                     the same could not reasonably be expected to have a
                     Material Adverse Effect: (A) neither the Borrower nor any
                     of its Subsidiaries owns, operates or leases a treatment,
                     storage or disposal facility requiring a permit under the
                     Resource Conservation and Recovery Act of 1976, as
                     amended, or under any comparable state or local statute;
                     (B) no polychlorinated biphenyls (PCB's) is or has been
                     present at any site or facility now or previously owned,
                     operated or leased by the Borrower or any of its
                     Subsidiaries; (C) no asbestos or asbestos-containing
                     materials is or has been present at any site or facility
                     now or previously owned, operated or leased by the
                     Borrower or any of its Subsidiaries; (D) there are no
                     underground storage tanks or surface impoundments for
                     Hazardous Materials, active or abandoned, at any site or
                     facility now or previously owned, operated or leased by
                     the Borrower or any of its Subsidiaries; (E) no Hazardous
                     Materials have been Released at, on or under any site or
                     facility now or previously owned, operated or leased by
                     the Borrower or any of its Subsidiaries in a reportable
                     quantity established by statute, ordinance, rule,
                     regulation or order; and (F) no Hazardous Materials have
                     been otherwise Released at, on or under any site or
                     facility now or previously owned, operated or leased by
                     the Borrower or any of its Subsidiaries.

                                      41
<PAGE>

                (iii)No Hazardous Material Transported to NPL Sites. Neither
                     the Borrower nor any of its Subsidiaries has transported
                     or arranged for the transportation of any Hazardous
                     Material to any location that is listed on the National
                     Priorities List ("NPL") under the Comprehensive
                     Environmental Response, Compensation and Liability Act of
                     1980, as amended ("CERCLA"), listed for possible
                     inclusion on the NPL by the Environmental Protection
                     Agency in the Comprehensive Environmental Response and
                     Liability Information System, as provided for by 40
                     C.F.R. ss. 300.5 ("CERCLIS"), or on any similar state,
                     local or foreign list or that is the subject of Federal,
                     state, local or foreign enforcement actions or other
                     investigations that may lead to Environmental Claims
                     against the Borrower or any of its Subsidiaries, in each
                     case to the extent such Environmental Claims could
                     reasonably be expected to have a Material Adverse Effect.

                (iv) No Notifications or Listings. No oral or written
                     notification of a Release of a Hazardous Material has
                     been filed by or on behalf of the Borrower or any of its
                     Subsidiaries and no site or facility now or previously
                     owned, operated or leased by the Borrower or any of its
                     Subsidiaries is listed or proposed for listing on the
                     NPL, CERCLIS or any similar state or foreign list of
                     sites requiring investigation or clean-up.

                (v)  No Liens or Restrictions. No Liens have arisen under or
                     pursuant to any Environmental Laws on any site or
                     facility owned, operated or leased by the Borrower or any
                     of its Subsidiaries, and neither the Borrower nor any of
                     its Subsidiaries has received any notification (or
                     otherwise has any knowledge) of any government action
                     that has been taken or is in process that could subject
                     any such site or facility to such Liens, and neither the
                     Borrower nor any of its Subsidiaries would be required to
                     place any notice or restriction relating to the presence
                     of Hazardous Materials at any site or facility owned by
                     it in any deed to the real property on which such site or
                     facility is located.

                (vi) Full Disclosure. There have been no so-called "Phase I"
                     or "Phase II" environmental investigations or other
                     analyses conducted by or that are in the possession of
                     the Borrower or any of its Subsidiaries in relation to
                     any site or facility now or previously owned, operated or
                     leased by the Borrower or any of its Subsidiaries which
                     have not been made available to GOF.

                                      42
<PAGE>

           (n)  Capitalization.

                (i)  Outstanding Equity. The authorized Capital Stock of the
                     Borrower and each of the Subsidiaries will consist as of
                     the Effective Date, after giving effect to the
                     transactions contemplated to occur on or before the
                     Effective Date, of the aggregate number of shares of
                     common and preferred stock, having the respective par
                     values and series, in each case as listed in Schedule
                     4.01(n) hereto. On the Effective Date, after giving
                     effect to the transactions contemplated to occur on or
                     before the Effective Date, the number of shares of common
                     stock and each series of preferred stock of the Borrower
                     and each of its Subsidiaries will be duly and validly
                     issued and outstanding as listed in said Schedule 4.01(n)
                     and will be owned beneficially and of record by the
                     Persons as listed in said Schedule 4.01(n).

                (ii) Outstanding Equity Rights. As of the Effective Date,
                     after giving effect to the transactions contemplated to
                     occur on or before the Effective Date, except as set
                     forth in Schedule 4.01(n) hereto, (A) there will be no
                     outstanding Equity Rights with respect to the Borrower or
                     any of its Subsidiaries and (B) there will be no
                     outstanding obligations of the Borrower or any of its
                     Subsidiaries to repurchase, redeem, or otherwise acquire
                     any shares of Capital Stock of the Borrower or any of its
                     Subsidiaries nor will there be any outstanding
                     obligations of the Borrower any of its Subsidiaries to
                     make payments to any Person, such as "phantom stock"
                     payments, where the amount thereof is calculated with
                     reference to the fair market value or equity value of the
                     Borrower or any of its Subsidiaries.

           (o) Subsidiaries and Investments.

                (i)  Subsidiaries. Set forth in Part A of Schedule 4.01(o)
                     hereto is a complete and correct list of all of the
                     Borrower's Subsidiaries as of the Effective Date after
                     giving effect to the transactions contemplated to occur
                     on or before the Effective Date, together with, for each
                     such Subsidiary, (A) the jurisdiction of organization of
                     such Subsidiary, (B) each Person holding ownership
                     interests in such Subsidiary and (C) the nature of the
                     ownership interests held by each such Person and the
                     percentage of ownership of such Subsidiary represented by
                     such ownership interests. Except as disclosed in Part A
                     of Schedule 4.01(o) hereto, (x) the Borrower and its
                     Subsidiaries own, or will own on the Effective Date, free
                     and clear of Liens, and have the unencumbered right to
                     vote, all outstanding ownership interests in each Person
                     shown to be held by

                                      43
<PAGE>

                     them in Part A of Schedule 4.01(o) hereto, (y) all of the
                     issued and outstanding Capital Stock of each such Person
                     organized as a corporation is validly issued, fully paid
                     and nonassessable and (z) (except as disclosed in
                     Schedule 4.01) there are no outstanding Equity Rights
                     with respect to such Person.

                (ii) Investments. Set forth in Part B of Schedule 4.01(o)
                     hereto is a complete and correct list of all Investments
                     (other than Investments disclosed in Part A of said
                     Schedule 4.01(o) hereto and Permitted Investments) held
                     by the Borrower and its Subsidiaries in any Person on the
                     date hereof, or that will be held on the Effective Date
                     after giving effect to the transactions contemplated to
                     occur on or before the Effective Date, and, for each such
                     Investment, (x) the identity of the Person or Persons
                     holding such Investment and (y) the nature of such
                     Investment. Except as disclosed in Part B of Schedule
                     4.01 hereto, the Borrower and each of its Subsidiaries
                     owns, or will own, free and clear of all Liens, all such
                     Investments.

               (iii) Absence of Certain Restrictions. Except as provided for
                     in the Intercompany Notes Agreements (as defined in the
                     Credit Agreement), neither the Borrower nor any of its
                     Subsidiaries is, on the date hereof, subject to any
                     indenture, agreement, instrument or other arrangement of
                     the type described in Section 9.16(e) of the Credit
                     Agreement.

           (p) Title to Assets. The Borrower and each of its Subsidiaries on
the Effective Date will own and have good and marketable title (subject only
to Permitted Liens) to the material Properties shown to be owned in the most
recent financial statements referred to in Section 5.01(b)(iii) hereof (other
than Properties disposed of in the ordinary course of business or otherwise
permitted to be disposed of pursuant to Section 6.01(d) hereof or in
accordance with the Plan). The Borrower and each of its Subsidiaries on the
Effective Date will own (or have available for use under lease, license or
other arrangements entered into with any other Person) good and marketable
title to, and enjoy on the Effective Date, peaceful and undisturbed possession
of, all Properties (subject only to Permitted Liens) that are necessary for
the operation and conduct of their businesses.

           (q) True and Complete Disclosure. All written information furnished
after the date hereof by the Obligors to GOF, in its capacity as a holder of
the Senior Subordinated Note, in connection with this Agreement and the Senior
Subordinated Note and the transactions contemplated hereby and thereby will be
true, complete and accurate in every material respect, or (in the case of
projections) based on reasonable estimates, on the date as of which such
information is stated or certified.

           (s) Real Property. Set forth on Schedule 4.01(s) attached hereto is
a list of all of the real property interests of the Borrower and its
Subsidiaries on the Effective Date, after

                                      44
<PAGE>

giving effect to the transactions contemplated to occur on or before the
Effective Date, indicating in each case whether the respective Property is
owned or leased, the identity of the owner or lessee and the location of the
respective Property. All such leases necessary for the conduct of the business
of the Borrower or its Subsidiaries are valid and subsisting and are in full
force and effect, except for such failures to be valid, subsisting and in full
force and effect as would not, individually or in the aggregate, have a
Material Adverse Effect. Each of the Borrower and its Subsidiaries enjoys
peaceful and undisturbed possession under all such leases, and each of the
Borrower and its Subsidiaries has complied with all material obligations under
all leases to which it is a party, except where the failure to so comply could
not reasonably be expected to have a Material Adverse Effect.

           Section 5.02. Representations and Warranties of GOF. GOF hereby
represents and warrants as of the Effective Date as follows:

           (a) Due Organization, Etc. GOF is a limited partnership duly
organized and validly existing under the laws of the State of Delaware.

           (b) Corporate Power, Etc. GOF has full power and authority to enter
into, deliver and perform its obligations under this Agreement and the Senior
Subordinated Note and to consummate each of the transactions contemplated
hereby and thereby, and has taken all necessary action to authorize the
execution, delivery and performance by it of this Agreement.

           (c) No Conflict. Neither the execution and delivery of this
Agreement, nor the performance by GOF of its obligations hereunder, will
conflict in any material respect with or result in a material breach of, or
constitute a material default under, any applicable laws or any indenture,
mortgage, deed of trust or other material instrument or agreement to which GOF
is a party or is bound.

           (d) Approvals, Etc. No order, license, consent, authorization or
approval of, or exemption by, or notice to or registration with, any
Governmental Authority or regulatory body, and no filing, recording,
publication or registration in any public office or any other place, is
required in connection with the execution, delivery and performance by GOF of
any this Agreement, or for the legality, validity, binding effect or
enforceability hereof, except such orders, licenses, consents, authorizations
and approvals as have been duly obtained or made and are in full force and
effect, or will be obtained and made after the date hereof, as permitted by
the applicable Governmental Authority or regulatory body.


                                  ARTICLE VI
                                   COVENANTS

           Section 6.01. General Covenants. The Borrower and the other
Obligors, as the case may be, covenant and agree as follows:

           (a) Delivery of Information. The Obligors shall deliver to GOF
(provided, however, that GOF may suspend delivery of any of the information
set forth in the following

                                      45
<PAGE>

clauses (i) through (xii), or any subset of such information, by delivering
written notice to the Borrower, with such suspension to continue until GOF
delivers written notice to the Borrower directing the resumption of the
delivery thereof):

                (i) as soon as available and in any event within (x) 45 days
after the end of each monthly accounting period for the fiscal year of the
Borrower ending January 3, 2004 and (y) 30 days after the end of each monthly
accounting period of each fiscal of the Borrower commencing with the fiscal
year ending January 1, 2005 (unless such monthly accounting period ends on the
end of a fiscal quarter or fiscal year, in which case the provisions of
paragraph (ii) and (iii) below shall apply), consolidated statements of
income, retained earnings and cash flows of the Borrower and its Restricted
Subsidiaries (and, separately stated, of the Borrower and its Restricted
Subsidiaries, and, with respect to statements of income, Operating Divisions)
for such period and for the period from the beginning of the respective fiscal
year to the end of such period, and the related consolidated balance sheets of
the Borrower and its Restricted Subsidiaries as at the end of such period
(and, separately stated, of the Borrower and its Restricted Subsidiaries, and,
with respect to statements of income, Operating Divisions), setting forth in
each case in comparative form the corresponding consolidated figures for the
corresponding period in the preceding fiscal year, accompanied by a
certificate of a senior financial officer of the Borrower, which certificate
shall state that said consolidated financial statements fairly present the
consolidated financial condition and results of operations of the Borrower and
its Restricted Subsidiaries (or of the Borrower and its Restricted
Subsidiaries and Operating Divisions, as the case may be), in each case in
accordance with GAAP, consistently applied, as at the end of, and for, such
period (subject to the absence of footnote disclosures and to normal year-end
audit adjustments);

                (ii) as soon as available and in any event within (x) 60 days
after the end of each quarterly fiscal period for the fiscal year ending
January 3, 2004 and (y) 45 days after the end of each quarterly fiscal period
of each fiscal year of the Borrower commencing with the fiscal year ending
January 1, 2005 (unless such quarterly fiscal period ends on the end of a
fiscal year, in which case the provisions of paragraph (iii) below shall
apply), consolidated statements of income, retained earnings and cash flows of
the Borrower and its Restricted Subsidiaries (and, separately stated, of the
Borrower and its Restricted Subsidiaries, and, with respect to statements of
income, Operating Divisions) for such period and for the period from the
beginning of the respective fiscal year to the end of such period, and the
related consolidated balance sheets of the Borrower and its Restricted
Subsidiaries as at the end of such period (and, separately stated, of the
Borrower and its Restricted Subsidiaries, and, with respect to statements of
in come, Operating Divisions), setting forth in each case in comparative form
the corresponding consolidated figures for the corresponding period in the
preceding fiscal year, accompanied by a certificate of a senior financial
officer of the Borrower, which certificate shall state that said consolidated
financial statements fairly present the consolidated financial condition and
results of operations of the Borrower and its Restricted Subsidiaries (or of
the Borrower, its Restricted Subsidiaries and Operating Divisions, as the case
may be), in each case in accordance with GAAP, consistently applied, as at the
end of, and for, such period (subject to the absence of footnote disclosures
and to normal year-end audit adjustments);

                                      46
<PAGE>

                (iii)as soon as available and in any event within (x) 120 days
after the end of the fiscal year of the Borrower ending January 3, 2004 and
(y) 90 days after the end of each fiscal year of the Borrower commencing with
the fiscal year ending January 1, 2005, consolidated statements of income,
retained earnings and cash flows of the Borrower and its Restricted
Subsidiaries (and, separately stated, of the Borrower and its Restricted
Subsidiaries and Operating Divisions) for such fiscal year and the related
consolidated balance sheets of the Borrower and its Restricted Subsidiaries
(and, separately stated, of the Borrower and its Restricted Subsidiaries and
Operating Divisions) as at the end of such fiscal year, setting forth in each
case in comparative form the corresponding consolidated figures for the
preceding fiscal year, and accompanied by an opinion thereon of independent
certified public accountants of recognized national standing, which opinion
shall state that said consolidated financial statements fairly present the
consolidated financial condition and results of operations of the Borrower and
its Restricted Subsidiaries (or of the Borrower and its Restricted
Subsidiaries and Operating Divisions, as the case may be) as at the end of,
and for, such fiscal year in accordance with GAAP, consistently applied;

                (iv) promptly upon their becoming available, copies of all
registration statements and regular periodic reports, if any, which any of the
Borrower or its Subsidiaries shall have filed with the Securities and Exchange
Commission (or any governmental agency substituted therefor) or any national
securities exchange;

                (v) promptly upon the mailing thereof to the holders of any
publicly-traded debt or equity securities of any of the Borrower or its
Subsidiaries, copies of all financial statements, certificates, reports, proxy
statements and other notices or information so mailed;

                (vi) as soon as possible, and in any event within 10 days
after any Obligor knows or has reason to believe that any of the events or
conditions specified below with respect to any ERISA Plan or Multiemployer
Plan has occurred or exists, a statement signed by a senior financial officer
of such Obligor or its Subsidiary setting forth details respecting such event
or condition and the action, if any, that the Obligors and their ERISA
Affiliates propose to take with respect thereto (and a copy of any report or
notice required to be filed with or given to PBGC by the Borrower or an ERISA
Affiliate with respect to such event or condition): (A) any reportable event,
as defined in Section 4043(c) of ERISA and the regulations issued thereunder,
with respect to an ERISA Plan, as to which the PBGC has not by regulation
waived the requirement of Section 4043(a) of ERISA that it be notified within
30 days of the occurrence of such event (provided that a failure to meet the
minimum funding standard of Section 412 of the Internal Revenue Code or
Section 302 of ERISA, including, without limitation, the failure to make on or
before its due date a required installment under Section 412(m) of the
Internal Revenue Code or Section 302(e) of ERISA, shall be a reportable event
regardless of the issuance of any waivers in accordance with Section 412(d) of
the Internal Revenue Code); and any request for a waiver under Section 412(d)
of the Internal Revenue Code for any ERISA Plan; (B) the distribution under
Section 4041 of ERISA of a notice of intent to terminate any ERISA Plan or any
action taken by the Borrower or an ERISA Affiliate to terminate any ERISA
Plan; (C) the institution by the PBGC of proceedings under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer,
any ERISA Plan, or the receipt by

                                      47
<PAGE>

the Borrower or any ERISA Affiliate of a notice from a Multiemployer Plan that
such action has been taken by the PBGC with respect to such Multiemployer
Plan; (D) the complete or partial withdrawal from a Multiemployer Plan by the
Borrower or any ERISA Affiliate that results in liability under Section 4201
or 4204 of ERISA (including the obligation to satisfy secondary liability as a
result of a purchaser default) or the receipt by the Borrower or any ERISA
Affiliate of notice from a Multiemployer Plan that it is in reorganization or
insolvency pursuant to Section 4241 or 4245 of ERISA or that it intends to
terminate or has terminated under Section 4041A of ERISA; (E) the institution
of a proceeding by a fiduciary of any Multiemployer Plan against the Borrower
or any ERISA Affiliate to enforce Section 515 of ERISA, which proceeding is
not dismissed within 30 days; and (F) the adoption of an amendment to any
ERISA Plan that, pursuant to Section 401(a)(29) of the Internal Revenue Code
or Section 307 of ERISA, would require security to be provided to the ERISA
Plan in accordance with the provisions of said Sections;

                (vii)as soon as available and in any event within 30 days
after the beginning of each fiscal year of the Borrower, (A) a projection
(setting forth an itemization of the principal assumptions relating thereto)
for such fiscal year of the Borrower of the anticipated income statement, cash
flow statement and changes in financial position of the Borrower, and the
related balance sheets and (B) promptly after any material change in such
projections (either positive or negative) becomes known, notice of such
change;

                (viii) promptly after any Obligor has reason to believe that
any Default has occurred under this Agreement or the Senior Subordinated
Notes, a notice of such Default describing the same in reasonable detail and,
together with such notice or as soon thereafter as possible, a description of
the action that such Obligor has taken or proposes to take with respect
thereto;

                (ix) promptly after the Borrower has reason to believe that
any default has occurred under the Credit Agreement, and in any event no later
than notice thereof is delivered to the Administrative Agent, a notice of such
default describing the same in reasonable detail and, together with such
notice or as soon thereafter as possible, a description of the action that the
Borrower has taken or proposes to take with respect thereto;

                (x) immediately after the Borrower or any of its Subsidiaries
has reason to believe that it may not timely make any of the payments due
under the Credit Agreement from the Borrower to the Administrative Agent on
December 31, 2003, June 30, 2004 and December 31, 2004, a notice of such fact,
describing the reason for such determination in reasonable detail and,
together with such notice or as soon thereafter as possible, a description of
the action that the Borrower has taken or proposes to take to remedy such
situation;

                (xi) immediately upon the addition of any guarantor under the
Credit Agreement pursuant to Section 9.16(b) thereof or otherwise, notice of
such addition, copies of the Guaranty Agreement executed by such additional
guarantor and a statement of the basis for such addition;



                                      48
<PAGE>
                (xii) from time to time such other information regarding the
financial condition, operations, business or prospects of the Borrower or any
of its Subsidiaries (including, without limitation, any ERISA Plan or
Multiemployer Plan and any reports or other information required to be filed
under ERISA) as GOF may reasonably request; and

                (xiii) the Borrower shall deliver to GOF, within 120 days
after the close of each fiscal year a certificate signed by the principal
executive officer, principal financial officer or principal accounting officer
stating that a review of the activities of the Borrower has been made under
the supervision of the signing officers with a view to determining whether a
Default or Event of Default has occurred and whether or not the signers know
of any Default or Event of Default by the Borrower that occurred during such
fiscal year. If they do know of such a Default or Event of Default, the
certificate shall describe all such Defaults or Events of Default, their
status and the action the Borrower is taking or proposes to take with respect
thereto. The first certificate to be delivered by the Borrower pursuant to
this Section 6.01(a) shall be for the fiscal year ending January 3, 2004.

           (b) Transactions with Affiliates. The Borrower shall not, and shall
not cause or permit any Restricted Subsidiary to, directly or indirectly,
conduct any business or enter into any transaction (or series of related
transactions) with or for the benefit of any of their respective Affiliates or
any officer, director or employee of the Borrower or any Restricted Subsidiary
(each an "Affiliate Transaction"), unless (i) such Affiliate Transaction is on
terms which are no less favorable to the Borrower or such Restricted
Subsidiary, as the case may be, than would be available in a comparable
transaction with an unaffiliated third party and (ii) (A) if such Affiliate
Transaction (or series of related Affiliate Transactions) involves aggregate
payments or the transfer of other consideration between the Borrower and an
Affiliate of the Borrower having a Fair Market Value in excess of $25,000,000,
such Affiliate Transaction is in writing and the Borrower delivers an
Officer's Certificate to each holder of Senior Subordinated Notes certifying
that such Affiliate Transaction (or series of Affiliate Transactions) complies
with the foregoing provisions, (B) if such Affiliate Transaction (or series of
related Affiliate Transactions) involves aggregate payments or the transfer of
other consideration between the Borrower and an Affiliate of the Borrower
having a Fair Market Value in excess of $25,000,000, such Affiliate
Transaction is in writing and a majority of the disinterested members of the
Board of Directors of the Borrower shall have approved such Affiliate
Transaction and determined that such Affiliate Transaction complies with the
foregoing provisions.

           Notwithstanding the foregoing, the restrictions set forth in this
covenant shall not apply to (i) transactions with or among the Borrower and
any Wholly Owned Restricted Subsidiary or between or among Wholly Owned
Restricted Subsidiaries; (ii) reasonable fees and compensation paid to and
indemnity provided on behalf of, officers, directors, employees, consultants
or agents of the Borrower or any Subsidiary as determined in good faith by the
Borrower's Board of Directors; (iii) any transactions undertaken pursuant to
any contractual obligations or rights in existence on the Effective Date (as
in effect on the Effective Date), including without limitation redemption
features in any outstanding securities or the issuance of, or the payment of
the principal, interest or any other amounts due on, the Junior Subordinated
Convertible Notes; (iv) any Restricted Payments made in compliance with
Section 6.01(e); (v)


                                      49
<PAGE>

loans and advances to officers, directors and employees of the Borrower or any
Restricted Subsidiary for travel, entertainment, moving and other relocation
expenses, in each case made in the ordinary course of business for bona fide
business purposes of the Borrower or a Restricted Subsidiary; (v) entering
into by the Borrower and any of its consolidated Restricted Subsidiaries of a
tax sharing or similar arrangement; and (vii) entering into by the Borrower
and any Restricted Subsidiary a Qualified Securitization Transaction.

           (c) Limitation on Indebtedness. The Borrower shall not, and shall
not cause or permit any Restricted Subsidiary to, directly or indirectly,
Incur any Indebtedness (including Acquired Indebtedness), except for Permitted
Indebtedness; provided, however, that the Borrower and any Restricted
Subsidiary may Incur Indebtedness if, at the time of and immediately after
giving pro forma effect to such Incurrence of Indebtedness and the application
of the proceeds therefrom, the Consolidated Coverage Ratio would be greater
than 1.0 to 1.0.

           The foregoing limitations will not apply to the Incurrence by the
Borrower or any Restricted Subsidiary of any of the following (collectively,
"Permitted Indebtedness"), each of which shall be given independent effect:
(A) Indebtedness under the Senior Subordinated Notes, the Junior Subordinated
Convertible Notes and other indebtedness outstanding on the Effective Date;
(B) Indebtedness Incurred pursuant to (i) the Credit Agreement and/or (ii) any
other agreements or indentures governing Senior Indebtedness if at the time of
and immediately after giving effect thereto, the aggregate consolidated
Indebtedness Incurred under both clauses (i) and (ii) would not exceed
$800,000,000 at any one time outstanding; provided, however, that such
$800,000,000 shall be reduced (without duplication) by the amount of any
repayment of Indebtedness under the Credit Agreement pursuant to Section
5.01(g) and any drawing under the Letter of Credit; (C) Indebtedness of any
Subsidiary of the Borrower owed to and held by the Borrower or any Guarantor,
other Indebtedness of the Borrower owed to and held by any Guarantor which is
unsecured and subordinated in right of payment to the payment and performance
of the Borrower's obligations under any Senior Indebtedness and the Senior
Subordinated Notes and Indebtedness of a Foreign Restricted Subsidiary that is
not a Guarantor owed to and held by any other Restricted Subsidiary that is
not a Guarantor; provided, however, that an Incurrence of Indebtedness that is
not permitted by this clause (C) shall be deemed to have occurred upon (i) any
sale or other disposition of any Indebtedness of the Borrower or any
Restricted Subsidiary referred to in this clause (C) to a Person (other than
the Borrower or a Guarantor), (ii) any sale or other disposition of Equity
Interests of any Guarantor which holds Indebtedness of the Borrower or another
Subsidiary of the Borrower such that such Guarantor ceases to be a Guarantor,
and (iii) the designation of a Restricted Subsidiary that is a Guarantor and
which holds Indebtedness of the Borrower or any other Restricted Subsidiary as
an Unrestricted Subsidiary; (D) the Guarantees and guarantees by any Guarantor
of Indebtedness of the Borrower permitted under this Section 6.01(c);
provided, however, that if such guarantee is of Subordinated Indebtedness,
then the Guarantee of such Guarantor shall be senior to such Guarantor's
guarantee of Subordinated Indebtedness; (E) Hedging Obligations of the
Borrower or any Guarantor entered into in the ordinary course of business; (F)
Purchase Money Indebtedness and Capital Lease Obligations which do not exceed
$50,000,000 in the aggregate at any one time outstanding; (G) Indebtedness to
the extent representing a replacement, renewal, refinancing or extension
(collectively for purposes of this Section 6.01(c), a "refinancing") of
outstanding Indebtedness Incurred in compliance with the Consolidated Coverage
Ratio of the

                                      50
<PAGE>

first paragraph of this Section 6.01(c) or clause (B) of this paragraph of
this Section 6.01(c); provided, however, that (i) any such refinancing shall
not exceed the sum of the principal amount (or accreted amount (determined in
accordance with GAAP), if less) of the Indebtedness being refinanced, plus the
amount of accrued interest thereon, plus the amount of any reasonably
determined prepayment premium necessary to accomplish such refinancing and
such reasonable fees and expenses Incurred in connection therewith, (ii)
Indebtedness representing a refinancing of Indebtedness other than Senior
Indebtedness shall have a Weighted Average Life to Maturity equal to or
greater than the Weighted Average Life to Maturity of the Indebtedness being
refinanced, (iii) Indebtedness that is pari passu with the Senior Subordinated
Notes may only be refinanced with Indebtedness that is made pari passu with or
subordinate in right of payment to the Senior Subordinated Notes and
Subordinated Indebtedness may only be refinanced with Subordinated
Indebtedness, (iv) no Restricted Subsidiary that is not a Guarantor may Incur
Indebtedness to refinance Indebtedness of the Borrower or any Guarantor and
(v) Indebtedness of the Borrower may only be refinanced by Indebtedness of the
Borrower and Indebtedness of a Restricted Subsidiary may only be refinanced by
Indebtedness of such Restricted Subsidiary or by the Borrower; (H) in addition
to the items referred to in clauses (A) through (G) above, Indebtedness of the
Borrower (including any Indebtedness under the Credit Agreement that utilizes
this subparagraph (H)) having an aggregate principal amount not to exceed
$200,000,000 at any one time outstanding; and (I) Indebtedness of a
Securitization Entity in a Qualified Securitization Transaction that is
Non-Recourse Debt with respect to the Borrower and its other Restricted
Subsidiaries (except for Standard Securitization Undertakings and Limited
Originator Recourse).

           (d) Disposition of Proceeds of Asset Sales.

                (i) The Borrower shall not, and shall not cause or permit any
Restricted Subsidiary to, directly or indirectly, make any Asset Sale, unless
(A) the Borrower or such Restricted Subsidiary, as the case may be, receives
consideration for such Asset Sale at least equal to the Fair Market Value of
the assets sold or otherwise disposed of and (B) at least 65% of such
consideration consists of (I) cash or Cash Equivalents, or (II) properties,
capital assets and interests in joint ventures (however structured) that
replace the properties and assets that were the subject of such Asset Sale or
in properties and capital assets that will be used in the business of the
Borrower and its Restricted Subsidiaries as existing at such time or in
businesses reasonably related thereto (as determined in good faith by the
Borrower's Board of Directors) ("Replacement Assets"). The amount of any
Indebtedness (other than any Subordinated Indebtedness) of the Borrower or any
Restricted Subsidiary that is actually assumed by the transferee in such Asset
Sale and from which the Borrower and the Restricted Subsidiaries are fully and
unconditionally released shall be deemed to be cash for purposes of
determining the percentage of cash consideration received by the Borrower or
the Restricted Subsidiaries.

                (ii) The Borrower or such Restricted Subsidiary, as the case
may be, may (A) apply the Net Cash Proceeds of any Asset Sale to repay Senior
Indebtedness and permanently reduce any related commitment, or (B) make an
Investment in Replacement Assets, in each case, within 270 days of receipt
thereof.

                                      51
<PAGE>

               (iii) To the extent all or part of the Net Cash Proceeds of any
Asset Sale are not applied within 270 days of such Asset Sale as described in
clause (A) or (B) of the immediately preceding paragraph (such Net Cash
Proceeds, the "Unutilized Net Cash Proceeds"), the Borrower shall, within 45
days after such 270th day, prepay the Senior Subordinated Notes up to a
maximum principal amount equal to the amount of such Unutilized Net Cash
Proceeds in accordance with Section 2.02(c) irrespective of whether or not an
Event of Default has occurred and is continuing.

                (iv) In the event GOF has assigned any portion of the Senior
Subordinated Note in accordance with the provisions hereof, any prepayment
effected pursuant to this covenant, to the extent the aggregate principal
amount outstanding under the Senior Subordinated Notes and accrued and unpaid
interest and other amounts owing in respect thereof exceeds the Unutilized Net
Cash Proceeds to be applied to the prepayment thereof, the prepayment shall be
made pro rata based on the aggregate principal amount of the Senior
Subordinated Notes held by GOF and any assignees. To the extent the Unutilized
Net Cash Proceeds exceed the aggregate principal amount outstanding under the
Senior Subordinated Notes and accrued and unpaid interest and other amounts
owing in respect thereof, the Borrower may retain and utilize any portion of
the Unutilized Net Cash Proceeds not applied to prepay Senior Subordinated
Notes for any purpose consistent with the other terms hereof.

           (e) Limitation on Restricted Payments. The Borrower shall not, and
shall not cause or permit any Restricted Subsidiary to, directly or
indirectly, to:

                (i) declare or pay any dividend or any other distribution on
any Equity Interests of the Borrower or any Restricted Subsidiary or make any
payment or distribution to the direct or indirect holders (in their capacities
as such) of Equity Interests of the Borrower or any Restricted Subsidiary
(other than Class C Dividends and any dividends, distributions and payments
made to the Borrower or any Restricted Subsidiary and dividends or
distributions payable to any Person solely in Qualified Equity Interests of
the Borrower or in options, warrants or other rights to purchase Qualified
Equity Interests of the Borrower);

               (ii) purchase, redeem or otherwise acquire or retire for value
any Equity Interests of the Borrower or any Restricted Subsidiary (other than
the Senior Subordinated Notes, Junior Subordinated Convertible Notes and any
Equity Interests owned by the Borrower or any Restricted Subsidiary);

              (iii) purchase, redeem, defease or retire for value, or make
any principal payment on, prior to any scheduled maturity, scheduled repayment
or scheduled sinking fund payment, any Subordinated Indebtedness; or

               (iv) make any Investment in any Person (other than Permitted
Investments)

(any such payment or any other action (other than any exception thereto)
described in (i), (ii), (iii) or (iv) each, a "Restricted Payment"), unless:

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<PAGE>

                (i) no Default or Event of Default shall have occurred and be
continuing at the time or immediately after giving effect to such Restricted
Payment;

               (ii) immediately after giving effect to such Restricted
Payment, the Borrower would be able to Incur $1.00 of additional Indebtedness
(other than Permitted Indebtedness) under the Consolidated Coverage Ratio of
the first paragraph of Section 6.01(c); and

              (iii) immediately after giving effect to such Restricted
Payment, the aggregate amount of all Restricted Payments declared or made on
or after the Effective Date does not exceed an amount equal to the sum of (A)
50% of cumulative Consolidated Net Income determined for the period (taken as
one period) from the Effective Date and ending on the last day of the most
recent fiscal quarter immediately preceding the date of such Restricted
Payment for which consolidated financial information of the Borrower is
available (or if such cumulative Consolidated Net Income shall be a loss,
minus 100% of such loss), plus (B) the aggregate net cash proceeds received by
the Borrower either (x) as capital contributions to the Borrower after the
Effective Date or (y) from the issue and sale (other than to a Restricted
Subsidiary) of its Qualified Equity Interests after the Effective Date
(excluding the net proceeds from any issuance and sale of Qualified Equity
Interests financed, directly or indirectly, using funds borrowed from the
Borrower or any Restricted Subsidiary until and to the extent such borrowing
is repaid), plus (C) the principal amount (or accreted amount (determined in
accordance with GAAP), if less) of any Indebtedness of the Borrower or any
Restricted Subsidiary Incurred after the Effective Date which has been
converted into or exchanged for Qualified Equity Interests of the Borrower,
plus (D) without duplication of any amounts included in clause (i) above, in
the case of the disposition or repayment of, or the receipt by the Borrower or
any Restricted Subsidiary of any dividends or distributions from, any
Investment constituting a Restricted Payment made after the Effective Date, an
amount equal to the lesser of the amount of such Investment and the amount
received by the Borrower or any Restricted Subsidiary upon such disposition,
repayment, dividend or distribution, plus (E) in the event the Borrower or any
Restricted Subsidiary makes any Investment in a Person that, as a result of or
in connection with such Investment, becomes a Restricted Subsidiary, an amount
equal to the Borrower's or any Restricted Subsidiary's existing Investment in
such Person that was previously treated as a Restricted Payment, plus (F)
$100,000,000.

           The foregoing provisions will not prevent (i) the payment of any
dividend or distribution on, or redemption of, Equity Interests within 60 days
after the date of declaration of such dividend or distribution or the giving
of formal notice of such redemption, if at the date of such declaration or
giving of such formal notice such payment or redemption would comply with the
provisions hereof; (ii) the purchase, redemption, retirement or other
acquisition of any Equity Interests of the Borrower in exchange for, or out of
the net cash proceeds of the substantially concurrent issue and sale (other
than to a Restricted Subsidiary) of, Qualified Equity Interests of the
Borrower; provided, however, that any such net cash proceeds and the value of
any Qualified Equity Interests issued in exchange for such retired Equity
Interests are excluded from clause (iii)(B) of the preceding paragraph (and
were not included therein at any time) and are not used to prepay the Senior
Subordinated Notes; (iii) the purchase, redemption, retirement, defeasance or

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<PAGE>

other acquisition of Subordinated Indebtedness, or any other payment thereon,
made in exchange for, or out of the net cash proceeds of, a substantially
concurrent issue and sale (other than to a Restricted Subsidiary) of (x)
Qualified Equity Interests of the Borrower; provided, however, that any such
net cash proceeds and the value of any Qualified Equity Interests issued in
exchange for Subordinated Indebtedness are excluded from clauses (iii)(B) and
(iii)(C) of the preceding paragraph (and were not included therein at any
time) and are not used to prepay the Senior Subordinated Notes or (y)
Subordinated Indebtedness permitted to be Incurred pursuant to clause (G) of
the second paragraph of Section 6.01(c); (iv) the making of loans or advances
to officers and directors of the Borrower or any Restricted Subsidiary entered
into in the ordinary course of business in an amount not to exceed $5,000,000
at any one time outstanding; (v) the repurchase, redemption, defeasance,
retirement, refinancing or acquisition for value or payment of principal of
Subordinated Indebtedness at a purchase price not greater than 110% of the
principal amount of such Subordinated Indebtedness in the event of a Change of
Control; and (vi) Investments in joint ventures (however structured) not to
exceed $100.0 million at any one time outstanding; provided, however, that in
the case of each of clauses (ii), (iii), (v) and (vi) no Default or Event of
Default shall have occurred and be continuing or would arise therefrom.

           In determining the amount of Restricted Payments permissible under
this Section 6.01(e), amounts expended pursuant to clauses (i) and (iv) of the
immediately preceding paragraph shall be included as Restricted Payments. The
amount of any noncash Restricted Payment shall be deemed to be equal to the
Fair Market Value thereof at the date of the making of such Restricted
Payment.

           (f) Corporate Existence. Subject to Section 6.02, the Borrower
shall do or shall cause to be done all things necessary to preserve and keep
in full force and effect its corporate existence and the corporate,
partnership or other existence of each Restricted Subsidiary in accordance
with the respective organizational documents of each such Restricted
Subsidiary and the rights (charter and statutory) and material franchises of
the Borrower and the Restricted Subsidiary, provided, however, that the
Borrower shall not be required to preserve any such right or franchise, or the
corporate existence of any Restricted Subsidiary, if the Board of Directors of
the Borrower shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Borrower and the Restricted
Subsidiaries, taken as a whole and the loss thereof is not materially adverse
to the Borrower and the Restricted Subsidiaries, taken as a whole; provided,
further, however, that a determination of the Board of Directors of the
Borrower shall not be required in the event of a merger of one or more Wholly
Owned Restricted Subsidiaries with or into another Wholly Owned Restricted
Subsidiary or another Person, if the surviving Person is a Wholly Owned
Restricted Subsidiary organized under the laws of the United States or a State
thereof or of the District of Columbia or, in the case of a Foreign Restricted
Subsidiary, the jurisdiction of incorporation or organization of such Foreign
Restricted Subsidiary. This Section 6.01(f) shall not prohibit the Borrower
from taking any other action otherwise permitted by, and made in accordance
with, the provisions hereof.

           (g) Limitation on Liens. The Borrower shall not, and shall not
cause or permit any of its Restricted Subsidiaries to, directly or indirectly,
Incur any Liens of any kind against or upon any of their respective properties
or assets now owned or hereafter acquired, or any proceeds therefrom or any
income or profits therefrom, to secure any Indebtedness unless

                                      54
<PAGE>

contemporaneously therewith effective provision is made, (i) in the case of
the Borrower, to secure the Senior Subordinated Notes and all other amounts
due hereunder, and (ii) in the case of a Restricted Subsidiary which is a
Guarantor, to secure such Restricted Subsidiary's Guarantee of the Senior
Subordinated Notes and all other amounts due under hereunder, in each case,
equally and ratably with such Indebtedness (or, in the event that such
Indebtedness is subordinated in right of payment to the Senior Subordinated
Notes or such Restricted Subsidiary's Guarantee, prior to such Indebtedness)
with a Lien on the same properties and assets securing such Indebtedness for
so long as such Indebtedness is secured by such Lien, except for (A) Liens
securing Senior Indebtedness (including, without limitation, Indebtedness
incurred under the Credit Agreement); (ii) Liens securing Indebtedness
Incurred in a Qualified Securitization Transaction by the Borrower and its
Restricted Subsidiaries; (iii) Permitted Liens and (iv) Liens under Hedging
Agreements.

           (h) Future Domestic Restricted Subsidiary Guarantors. In the event
that the Borrower causes or permits any Domestic Restricted Subsidiary that is
not a Guarantor to, directly or indirectly, guarantee the payment of any
Indebtedness of the Borrower under the Credit Agreement then the Borrower
shall cause such Domestic Restricted Subsidiary to simultaneously execute and
deliver a guarantee, substantially in form and substance as the guarantee
executed thereby with respect to its guarantee of indebtedness under the
Credit Agreement, pursuant to which it will become a Guarantor under this
Agreement.

           (i) Designation of Unrestricted Subsidiaries.

                (i) The Borrower may designate after the Effective Date any
Subsidiary of the Borrower as an Unrestricted Subsidiary under this Agreement
(a "Designation") only if: (A) no Default or Event of Default shall have
occurred and be continuing at the time of or after giving effect to such
Designation; (B) at the time of and after giving effect to such Designation,
the Borrower could Incur $1.00 of additional Indebtedness (other than
Permitted Indebtedness) under the Consolidated Coverage Ratio of the first
paragraph of Section 6.01(c); and (C) the Borrower would be permitted to make
an Investment (other than a Permitted Investment) at the time of Designation
(assuming the effectiveness of such Designation) pursuant to the first
paragraph of Section 6.01(e) in an amount (the "Designation Amount") equal to
the amount of the Borrower's Investment in such Subsidiary on such date.

               (ii) Neither the Borrower nor any Restricted Subsidiary shall
at any time (x) provide credit support for, subject any of its property or
assets (other than the Equity Interests of any Unrestricted Subsidiary) to the
satisfaction of, or guarantee, any Indebtedness of any Unrestricted Subsidiary
(including any undertaking, agreement or instrument evidencing such
Indebtedness), (y) be directly or indirectly liable for any Indebtedness of
any Unrestricted Subsidiary, or (z) be directly or indirectly liable for any
Indebtedness which provides that the holder thereof may (upon notice, lapse of
time or both) declare a default thereon or cause the payment thereof to be
accelerated or payable prior to its final scheduled maturity upon the
occurrence of a default with respect to any Indebtedness of any Unrestricted
Subsidiary, except for any nonrecourse guarantee given solely to support the
pledge by the Borrower or any Restricted Subsidiary of the capital stock of
any Unrestricted Subsidiary. For purposes of the

                                      55
<PAGE>


foregoing, the Designation of a Subsidiary of the Borrower as an Unrestricted
Subsidiary shall be deemed to include the Designation of all of the
Subsidiaries of such Subsidiary.

              (iii) The Borrower may revoke any Designation of a Subsidiary
as an Unrestricted Subsidiary (a "Revocation") only if: (A) no Default or
Event of Default shall have occurred and be continuing at the time of and
after giving effect to such Revocation; and (B) all Liens and Indebtedness of
such Unrestricted Subsidiary outstanding immediately following such Revocation
would, if Incurred at such time, have been permitted to be Incurred for all
purposes of this Agreement.

               (iv) All Designations and Revocations must be evidenced by
Board Resolutions of the Borrower, delivered to each holder of Senior
Subordinated Notes, certifying compliance with the foregoing provisions.

           Section 6.02 Mergers; Successor Corporation.

           (a) Mergers, Sale of Assets, etc. The Borrower shall not
consolidate with or merge with or into any other entity and the Borrower shall
not and shall not cause or permit any Restricted Subsidiary to, sell, convey,
assign, transfer, lease or otherwise dispose of all or substantially all of
the Borrower's and the Restricted Subsidiaries properties and assets
(determined on a consolidated basis for the Borrower and the Restricted
Subsidiaries) to any entity in a single transaction or series of related
transactions, unless: either (i) the Borrower shall be the Surviving Person or
(ii) the Surviving Person (if other than the Borrower) shall be a corporation
organized and validly existing under the laws of the United States of America
or any State thereof or the District of Columbia or, if any such Restricted
Subsidiary was a Foreign Restricted Subsidiary, under the laws of the United
States of America or any state thereof or the District of Columbia or the
jurisdiction under which such Foreign Restricted Subsidiary was organized, and
shall, in any such case, expressly assume by supplemental agreement, the due
and punctual payment of the principal of and interest on the Senior
Subordinated Notes and the performance and observance of every covenant in
this Agreement to be performed or observed on the part of the Borrower;
provided, however, that if such transaction results in a Change of Control,
the Senior Subordinated Notes shall be prepaid if required pursuant to Section
2.02(b).

           For purposes of the foregoing, the transfer (by lease, assignment,
sale or otherwise, in a single transaction or series of transactions) of all
or substantially all the properties and assets of one or more Restricted
Subsidiaries the Equity Interests of which constitutes all or substantially
all the properties and assets of the Borrower shall be deemed to be the
transfer of all or substantially all the properties and assets of the
Borrower.

           (b) Guarantors. No Guarantor (other than a Guarantor whose
Guarantee is to be released in accordance with the terms of Section 3.03)
shall consolidate with or merge with or into another Person, whether or not
such Person is affiliated with such Guarantor and whether or not such
Guarantor is the Surviving Person, unless (i) the Surviving Person (if other
than such Guarantor) is a corporation organized and validly existing under the
laws of the United States, any State thereof or the District of Columbia or,
if any such Guarantor was a Foreign Restricted Subsidiary, under the laws of
the United States of America or any state thereof or the District of



                                      56
<PAGE>

Columbia or the jurisdiction under which the Foreign Restricted Subsidiary
was organized; (ii) the Surviving Person (if other than such Guarantor)
expressly assumes by supplemental indenture all the obligations of such
Guarantor under its Guarantees of the Senior Subordinated Notes and the
performance and observance of every covenant of the Indenture to be performed
or observed by such Guarantor; (iii) at the time of and immediately after such
Disposition, no Default or Event of Default shall have occurred and be
continuing; and (iv) immediately after giving effect to any such transaction
involving the Incurrence by such Guarantor, directly or indirectly, of
additional Indebtedness (and treating any Indebtedness not previously an
obligation of such Guarantor in connection with or as a result of such
transaction as having been Incurred at the time of such transaction), the
Borrower could Incur, on a pro forma basis after giving effect to such
transaction as if it had occurred at the beginning the latest fiscal quarter
for which consolidated financial statements of the Borrower are available, at
least $1.00 of additional Indebtedness (other than Permitted Indebtedness)
under the Consolidated Coverage Ratio of the first paragraph of Section
6.01(c); provided, however, that this paragraph shall not be a condition to a
merger or consolidation of a Guarantor if such merger or consolidation only
involves the Borrower and/or one or more other Guarantors. Notwithstanding the
foregoing, nothing in this covenant shall prohibit the consolidation or merger
with or into or the sale of all or substantially all of the assets or
properties of a Guarantor to any other Restricted Subsidiary that is a
Guarantor.

           (c) Successor Corporation Substituted. In the event of any
transaction (other than a lease) described in and complying with the
conditions listed in Section 6.02(a) and (b) in which the Borrower or a
Guarantor, as the case may be, is not the Surviving Person and the Surviving
Person is to assume all the Obligations of the Borrower under the Senior
Subordinated Notes, this Agreement or of such Guarantor under its Guarantee
and this Agreement, as the case may be, pursuant to supplemental agreements,
such Surviving Person shall succeed to, and be substituted for, and may
exercise every right and power of, the Borrower or such Guarantor, as the case
may be, and the Borrower shall be discharged from its Obligations under this
Agreement and the Senior Subordinated Notes or such Guarantor shall be
discharged from its Obligations under this Agreement and its Guarantee, as the
case may be.

           Section 6.03. Termination of Covenants. The covenants set forth in
this Article VI shall terminate and be of not further force or effect upon the
Termination Date.

                                  ARTICLE VII
                               EVENTS OF DEFAULT

           Section 7.01. Events of Default. Each of the following shall be an
"Event of Default" for purposes of this Indenture:

           (a) failure to pay principal of the Senior Subordinated Notes when
due (whether or not prohibited by the provisions of Article VIII);

           (b) failure to pay any interest on any Senior Subordinated Notes
when due, continued for 30 days or more (whether or not prohibited by the
provisions of Article VIII);

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<PAGE>

           (c) default in the payment of principal of, or interest on, any
Senior Subordinated Notes required to be prepaid by this Agreement (whether or
not prohibited by the provisions of Article VIII);

           (d) failure to perform or comply with any of the provisions of
Section 6.02;

           (e) failure to perform any other covenant or agreement of the
Borrower under this Agreement or in the Senior Subordinated Note or of the
Guarantors under this Agreement for 30 days or more after written notice to
the Borrower by GOF;

           (f) Default or defaults under the terms of one or more instruments
evidencing or securing Indebtedness of the Borrower or any of its Restricted
Subsidiaries having an outstanding principal amount of $50,000,00 or more
individually or in the aggregate that has resulted in the acceleration of the
payment of such Indebtedness or failure by the Borrower or any of its
Restricted Subsidiaries to pay principal of at least $50,000,000 when due at
the stated maturity of any such Indebtedness and such default or defaults
shall have continued after any applicable grace period and shall not have been
cured or waived within 10 days after the occurrence thereof;

           (g) the rendering of a final judgment or judgments (not subject to
appeal) against the Borrower or any of its Restricted Subsidiaries in an
amount of $50,000,000 or more (net of any amounts covered by reputable and
creditworthy insurance companies) which remains undischarged or unstayed for a
period of 60 days after the date on which the right to appeal has expired;

           (h) the Borrower or any Significant Restricted Subsidiary pursuant
to or within the meaning of any Bankruptcy Law: (i) admits in writing its
inability to pay its debts generally as they become due; (ii) commences a
voluntary case or proceeding; (iii) consents to the entry of an order for
relief against it in an involuntary case or proceeding; (iv) consents or
acquiesces in the institution of a bankruptcy or insolvency proceeding against
it; (v) consents to the appointment of a Custodian of it or for all or
substantially all of its property; or (vi) makes a general assignment for the
benefit of its creditors, or takes any action to authorize or effect any of
the foregoing;

           (i) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that: (i) is for relief against the Borrower or any
Significant Restricted Subsidiary in an involuntary case or proceeding or (ii)
appoints a Custodian of the Borrower or any Significant Restricted Subsidiary
of the Borrower for all or substantially all of its properties, or orders the
liquidation of the Borrower or any Significant Restricted Subsidiary, and, in
each case the order or decree remains unstayed and in effect for 60 days; or

           (j) other than as provided in or pursuant to any Guarantee or this
Agreement, the Guarantee of any Guarantor that constitutes a Significant
Restricted Subsidiary ceases to be in full force and effect or is declared
null and void and unenforceable or found to be invalid or any Guarantor that
is a Significant Restricted Subsidiary denies its liability under its
Guarantee

                                      58
<PAGE>

(other than by reason of a release of such Guarantor from its Guarantee in
accordance with the terms of the Indenture and such Guarantee).

           Section 7.02 Acceleration. If an Event of Default with respect to
the Senior Subordinated Notes (other than an Event of Default with respect to
the Borrower described in clause (h) of Section 7.01) occurs and is
continuing, GOF by notice in writing to the Borrower may declare the unpaid
principal of, accrued interest to the date of acceleration on all outstanding
Senior Subordinated Notes to be due and payable immediately and, upon any such
declaration, such principal amount, accrued interest, notwithstanding anything
contained in this Agreement or the Senior Subordinated Notes to the contrary,
shall become immediately due and payable; provided, however, that so long as
the Credit Agreement shall be in full force and effect, if an Event of Default
shall have occurred and be continuing (other than an Event of Default with
respect to the Borrower described in clause (h) of Section 7.01), the Senior
Subordinated Notes shall not become due and payable until the earlier to occur
of (x) five Business Days following delivery of a written notice of such
acceleration of the Senior Subordinated Notes to the agent under the Credit
Agreement and (y) the acceleration (ipso facto or otherwise) of any
Indebtedness under the Credit Agreement. If an Event of Default specified in
clause (h) of Section 7.01 with respect to the Borrower occurs, the Senior
Subordinated Notes will ipso facto become immediately due and payable without
any declaration or other act on the part of GOF.

           After a declaration of acceleration, but before a judgment or
decree of the money due in respect of the Senior Subordinated Notes has been
obtained, GOF by written notice to the Borrower may rescind an acceleration
and its consequences if all existing Events of Default (other than the,
nonpayment of principal of and interest on the Senior Subordinated Notes which
has become due solely by virtue of such acceleration) have been cured or
waived and if the rescission would not conflict with any judgment or decree.
No such rescission shall affect any subsequent Default or impair any right
consequent thereto.

           Section 7.03 Other Remedies. If an Event of Default occurs and is
continuing, GOF may pursue any available remedy by proceeding at law or in
equity to collect the payment of principal of or interest on the Senior
Subordinated Notes or to enforce the performance of any provision of the
Senior Subordinated Notes or this Agreement. No remedy is exclusive of any
other remedy. All available remedies are cumulative to the extent permitted by
law.

           Section 7.04 Undertaking for Costs. In any suit for the enforcement
of any right or remedy under this Agreement, a court in its discretion may
require the filing by any party litigant in the suit of an undertaking to pay
the costs of the suit, and the court in its discretion may assess reasonable
costs, including reasonable attorneys' fees and expenses, against any party
litigant in the suit, having due regard to the merits and good faith of the
claims or defenses made by the party litigant. This Section 7.04 shall not
apply to a suit instituted by GOF for the enforcement or the payment of the
principal or interest on any Senior Subordinated Notes on or after the
respective due dates expressed in the Senior Subordinated Note.


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                                 ARTICLE VIII
                                 SUBORDINATION

           Section 8.01 Senior Subordinated Notes Subordinated to Senior
Indebtedness. The Borrower covenants and agrees, and GOF by its acceptance
thereof likewise covenants and agrees, that the Senior Subordinated Notes
shall be issued subject to the provisions of this Article VIII; and each
person holding any Senior Subordinated Notes, whether GOF upon original issue
or upon transfer, assignment or exchange thereof, accepts and agrees that all
payments of the principal of and interest on the Senior Subordinated Notes,
and all other amounts payable under this Agreement, by the Borrower shall, to
the extent and in the manner set forth in this Article VIII, be subordinated
and junior in right of payment to the prior payment in full in cash of all
amounts payable under Senior Indebtedness.

           Section 8.02   No Payment on Senior  Subordinated Notes
in Certain Circumstances.

           (a) No direct or indirect payment (excluding any payment or
distribution of Permitted Junior Securities but including any payment
constituting any distribution in respect of any other Indebtedness that is
subordinated to the Senior Subordinated Notes) by or on behalf of the Borrower
of principal of or interest on the Senior Subordinated Notes, whether pursuant
to the terms of the Senior Subordinated Notes, upon acceleration, pursuant to
an obligation under Article II to prepay or otherwise, shall be made if, at
the time of such payment, there exists a default in the payment of all or any
portion of the obligations on any Designated Senior Indebtedness, whether at
maturity, on account of mandatory redemption or prepayment, acceleration or
otherwise, and such default shall not have been cured or waived or the
benefits of this sentence waived by or on behalf of the holders of such
Designated Senior Indebtedness. In addition, during the continuance of any
non-payment event of default with respect to any Designated Senior
Indebtedness pursuant to which the maturity thereof may be immediately
accelerated, and upon receipt by the holders of Senior Subordinated Notes of
written notice (a "Payment Blockage Notice") from the holder or holders of
such Designated Senior Indebtedness or the trustee or agent acting on behalf
of such Designated Senior Indebtedness, then, unless and until such event of
default has been cured or waived or has ceased to exist or such Designated
Senior Indebtedness has been discharged or repaid in full in cash or the
benefits of these provisions have been waived by the holders of such
Designated Senior Indebtedness, no direct or indirect payment (excluding any
payment or distribution of Permitted Junior Securities) shall be made by or on
behalf of the Borrower of principal of or interest on the Senior Subordinated
Notes during a period (a "Payment Blockage Period") commencing on the date of
receipt of such notice by the holders of Senior Subordinated Notes and ending
179 days thereafter; provided however, that so long as any Indebtedness
remains outstanding under the Credit Agreement or any replacement, renewal,
refinancing or extension thereof, no Payment Blockage Notice may be initiated
to block payment of principal or interest on the Senior Subordinated Notes
pursuant to the terms of this Section 8.02(a) except by the Administrative
Agent (or similar authorized party) under the Credit Agreement or any
replacement, renewal, refinancing or extension thereof.

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<PAGE>

           (b) Notwithstanding anything herein or in the Senior Subordinated
Notes to the contrary, (x) in no event shall a Payment Blockage Period extend
beyond 179 days from the date the Payment Blockage Notice in respect thereof
was given, (y) there shall be a period of at least 181 consecutive days in
each 360-day period when no Payment Blockage Period is in effect and (z) not
more than one Payment Blockage Period may be commenced with respect to the
Senior Subordinated Notes during any period of 360 consecutive days. No event
of default that existed or was continuing on the date of commencement of any
Payment Blockage Period with respect to the Designated Senior Indebtedness
initiating such Payment Blockage Period (to the extent the holder of
Designated Senior Indebtedness, or trustee or agent, giving notice commencing
such Payment Blockage Period had knowledge of such existing or continuing
event of default) may be, or be made, the basis for the commencement of any
other Payment Blockage Period by the holder or holders of such Designated
Senior Indebtedness or the trustee or agent acting on behalf of such
Designated Senior Indebtedness, whether or not within a period of 360
consecutive days, unless such event of default has been cured or waived for a
period of not less than 90 consecutive days.

           (c) In the event that, notwithstanding the foregoing, the Borrower
shall have made payment to the holders of Senior Subordinated Notes when such
payment is prohibited by Section 8.02(a), such payment shall be held in trust
for the benefit of, and shall be paid over or delivered by the recipient of
such payment (if notice of the conditions prohibiting such payment under
Section 8.02(a) has been received by the holders of Senior Subordinated Notes)
to, the holders of Designated Senior Indebtedness or their respective
representatives, or to the trustee or trustees under any indenture pursuant to
which any of such Designated Senior Indebtedness may have been issued, as
their respective interests may appear, but only to the extent that, upon
notice from the holders of Senior Subordinated Notes to the holders of
Designated Senior Indebtedness that such prohibited payment has been made, the
holders of the Designated Senior Indebtedness (or their representative or
representatives or a trustee or trustees) notify each of the holders of Senior
Subordinated Notes in writing of the amounts then due and owing on the
Designated Senior Indebtedness, if any, and only the amounts specified in such
notice to each of the holders of Senior Subordinated Notes shall be paid to
the holders of Designated Senior Indebtedness.

           Section 8.03 Payment Over of Proceeds upon Dissolution, Etc.

           (a) Upon any payment or distribution of assets or securities of the
Borrower of any kind or character, whether in cash, property or securities
(excluding any payment or distribution of Permitted Junior Securities), upon
any dissolution or winding-up or total liquidation or reorganization of the
Borrower, whether voluntary or involuntary or in bankruptcy, insolvency,
receivership or other proceedings, all Senior Indebtedness shall first be paid
in full in cash before any payment is made in respect of the Senior
Subordinated Notes (excluding any payment or distribution of Permitted Junior
Securities). Before any payment may be made by, or on behalf of, the Borrower
of the principal of or interest on the Senior Subordinated Notes upon any such
dissolution or winding-up or total liquidation or reorganization, any payment
or distribution of assets or securities of the Borrower of any kind or
character, whether in cash, property or securities (excluding any payment or
distribution of Permitted Junior Securities) payment shall be made by the
Borrower or by any receiver, trustee in bankruptcy, liquidation

                                      61
<PAGE>

trustee, agent or other Person making such payment or distribution, directly
to the holders of the Senior Indebtedness (pro rata to such holders on the
basis of the respective amounts of Senior Indebtedness held by such holders)
or their representatives or to the trustee or trustees or agent or agents
under any agreement or indenture pursuant to which any of such Senior
Indebtedness may have been issued, as their respective interests may appear,
to the extent necessary to pay all such Senior Indebtedness in full in cash
after giving effect to any prior or concurrent payment, distribution or
provision therefor to or for the holders of such Senior Indebtedness.

           (b) In the event that, notwithstanding the foregoing provision
prohibiting such payment or distribution, any payment or distribution of
assets or securities of the Borrower of any kind or character, whether in
cash, property or securities (excluding any payment or distribution of
Permitted Junior Securities), shall be paid by the Borrower to the holders of
Senior Subordinated Notes at a time when such payment or distribution is
prohibited by Section 8.03(a) and before all obligations in respect of Senior
Indebtedness are paid in full in cash, such payment or distribution shall be
received and held in trust for the benefit of, and shall be paid over or
delivered by the recipient of such payment (if notice of the conditions
prohibiting such payment under Section 8.03(a) has been received by the
holders of Senior Subordinated Notes) to the holders of Senior Indebtedness
(pro rata to such holders on the basis of the respective amounts of Senior
Indebtedness held by such holders) or their respective representatives, or to
the trustee or trustees or agent or agents under any indenture pursuant to
which any of such Senior Indebtedness may have been issued, as their
respective interests may appear, for application to the payment of Senior
Indebtedness remaining unpaid until all such Senior Indebtedness has been paid
in full in cash after giving effect to any prior or concurrent payment,
distribution or provision therefor to or for the holders of such Senior
Indebtedness.

           (c) The consolidation of the Borrower with, or the merger of the
Borrower with or into, another corporation or the liquidation or dissolution
of the Borrower following the conveyance or transfer of its property as an
entirety, or substantially as an entirety, to another corporation upon the
terms and conditions provided in Section 6.02 shall not be deemed a
dissolution, winding-up, liquidation or reorganization for the purposes of
this Section 8.03 if such other corporation shall, as a part of such
consolidation, merger, conveyance or transfer, comply with the conditions
stated in Section 6.02.

           Section 8.04   Subrogation.

           (a) Upon the payment in full in cash of all Senior Indebtedness, or
provision for payment, the holders of the Senior Subordinated Notes shall be
subrogated to the rights of the holders of Senior Indebtedness to receive
payments or distributions of cash, property or securities of the Borrower made
on such Senior Indebtedness until the principal of and interest on the Senior
Subordinated Notes shall be paid in full in cash; and, for the purposes of
such subrogation, no payments or distributions to the holders of the Senior
Indebtedness of any cash, property or securities to which such holders of the
Senior Subordinated Notes would be entitled except for the provisions of this
Article VIII, and no payment over pursuant to the provisions of this Article
VIII to the holders of Senior Indebtedness by holders of the Senior
Subordinated Notes, as between the Borrower, its creditors other than holders
of Senior Indebtedness, and such holders

                                      62
<PAGE>

of the Senior Subordinated Notes, be deemed to be a payment by the Borrower to
or on account of the Senior Indebtedness. It is understood that the provisions
of this Article VIII are and are intended solely for the purpose of defining
the relative rights of such holders of the Senior Subordinated Notes, on the
one hand, and the holders of the Senior Indebtedness, on the other hand.

           (b) If any payment or distribution to which the holders of the
Senior Subordinated Notes would otherwise have been entitled but for the
provisions of this Article VIII shall have been applied, pursuant to the
provisions of this Article VIII, to the payment of all amounts payable under
Senior Indebtedness, then and in such case, the holders of the Senior
Subordinated Notes shall be entitled to receive from the holders of such
Senior Indebtedness any payments or distributions received by such holders of
Senior Indebtedness in excess of the amount required to make payment in full
in cash of such Senior Indebtedness.

           Section 8.05   Obligations of Borrower Unconditional.

           (a) Nothing contained in this Article VIII or elsewhere in this
Agreement or in the Senior Subordinated Notes is intended to or shall impair,
as among the Borrower and GOF, the obligation of the Borrower, which is
absolute and unconditional, to pay to GOF and its successors and assigns the
principal of and interest on the Senior Subordinated Notes as and when the
same shall become due and payable in accordance with their terms, or is
intended to or shall affect the relative rights of the holders of the Senior
Subordinated Notes and creditors of the Borrower other than the holders of the
Senior Indebtedness, nor shall anything herein or therein prevent GOF and its
successors or assigns from exercising all remedies otherwise permitted by
applicable law upon default under this Agreement, subject to the rights, if
any, under this Article VIII of the holders of the Senior Indebtedness in
respect of cash, property or securities of the Borrower received upon the
exercise of any such remedy.

           (b) Without limiting the generality of the foregoing, nothing
contained in this Article VIII shall restrict the right of GOF and its
successors and assigns to take any action to declare the Senior Subordinated
Notes to be due and payable prior to its stated maturity pursuant to Sections
7.01 and 7.02 or to pursue any rights or remedies hereunder; provided,
however, that all Senior Indebtedness then due and payable shall first be paid
in full in cash before GOF or its successors and assigns are entitled to
receive any direct or indirect payment from the Borrower of principal of or
interest on the Senior Subordinated Notes.

           Section 8.06 Reliance on Judicial Order or Certificate of
Liquidating Agent. Upon any payment or distribution of assets or securities
referred to in this Article VIII, the holders of the Senior Subordinated Notes
shall be entitled to rely upon any order or decree made by any court of
competent jurisdiction in which bankruptcy, dissolution, winding-up,
liquidation or reorganization proceedings are pending, or upon a certificate
of the receiver, trustee in bankruptcy, liquidating trustee, agent or other
person making such payment or distribution, delivered to the holders of the
Senior Subordinated Notes for the purpose of ascertaining the persons entitled
to participate in such distribution, the holders of the Senior Indebtedness
and other indebtedness of the Borrower, the amount thereof or payable thereon,
the amount or amounts paid or distributed thereon and all other facts
pertinent thereto or to this Article VIII.

                                      63
<PAGE>

           Section 8.07 Subordination Rights Not Impaired by Acts or Omissions
of the Borrower or Holders of Senior Indebtedness. No right of any present or
future holders of any Senior Indebtedness to enforce subordination as provided
herein shall at any time in any way be prejudiced or impaired by any act or
failure to act on the part of the Borrower or by any act or failure to act, in
good faith, by any such holder, or by any noncompliance by the Borrower with
the terms of this Agreement, regardless of any knowledge thereof which any
such holder may have or otherwise be charged with. The provisions of this
Article VIII are intended to be for the benefit of, and shall be enforceable
directly by, the holders of Senior Indebtedness.

           Section 8.08 This Article Not to Prevent Events of Default. The
failure to make a payment on account of principal of, interest on or other
amounts owing in respect of the Senior Subordinated Notes by reason of any
provision of this Article VIII shall not be construed as preventing the
occurrence of an Event of Default specified in clauses (a), (b) or (c) of
Section 7.01.

           Section 8.09 No Waiver of Subordination Provisions. Without in any
way limiting the generality of Section 8.07, the holders of Senior
Indebtedness may, at any time and from time to time, without the consent of or
notice to the holders of the Senior Subordinated Notes, without incurring
responsibility to the holders of the Senior Subordinated Notes and without
impairing or releasing the subordination provided in this Article VIII or the
obligations hereunder of the holders of the Senior Subordinated Notes to the
holders of Senior Indebtedness, do any one or more of the following: (a)
change the manner, place or terms of payment or extend the time of payment of,
or renew or alter, Senior Indebtedness or any instrument evidencing the same
or any agreement under which Senior Indebtedness is outstanding or secured;
(b) sell, exchange, release or otherwise deal with any property pledged,
mortgaged or otherwise securing Senior Indebtedness; (c) release any Person
liable in any manner for the collection of Senior Indebtedness; and (d)
exercise or refrain from exercising any rights against the Borrower and any
other Person.

           Section 8.10 Acceleration of the Senior Subordinated Notes. If
payment of the Senior Subordinated Notes is accelerated because of an Event of
Default, the Borrower shall promptly notify holders of the Senior Indebtedness
of the acceleration.

                                  ARTICLE IX
                                 MISCELLANEOUS

           Section 9.01. Amendments, Etc. No amendment or waiver of any
provision of this Agreement or the Senior Subordinated Notes, nor consent to
any departure by any party therefrom, shall in any event be effective unless
the same shall be in writing and signed by the Borrower and GOF, and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given.

                                      64
<PAGE>


           Section 9.02.  Notices, Etc.

           (a) Any notice or demand authorized or required by this Agreement
 to be given or made shall be sufficiently given or made when and if delivered
 in person, by telecopier with a confirmation of good transmission, by FedEx
 or United Parcel Service or by registered or certified U.S. mail, addressed
 to the office of the party expressly designated by such party as its office
 for purposes of this Agreement (until otherwise notified in accordance with
 this Section), as follows:

 To the Borrower or any Guarantor, to it at:

                Polymer Group, Inc.
                4838 Jenkins Avenue
                North Charleston, South Carolina 29405
                Attention:  General Counsel and Chief Financial
                Officer
                Telephone:  (843) 566-7293
                Fax:  (843) 747-4092

With a copy to:
                Kirkland & Ellis
                200 East Randolph Drive
                Chicago, Illinois 60601
                Attention: H. Kurt von Moltke, Esq.
                Facsimile: (312) 861-2200
                Telephone: (312) 861-2000

 To GOF:
                MatlinPatterson Global Opportunities Partners LP
                C/O: MatlinPatterson Global Advisers LLC
                520 Madison Avenue
                New York, NY 10022
                Attention:  General Counsel and Ramon Betolaza
                Telephone:  (212) 651-9000
                Fax:  (212) 651-4010

 With a copy to:
                Duncan D. Darrow, Esq.
                Orrick, Herrington & Sutcliffe LLP
                666 Fifth Avenue
                New York, New York  10103
                Telephone: (212) 506-5000
                Fax:  (212) 506-5151;

           (b) Unless otherwise specified herein, such notices or other
communications shall be deemed effective (a) on the date delivered, if
delivered personally, (b) one Business Day after being delivered, if delivered
by telecopier with confirmation of good transmission, (c) one


                                      65
<PAGE>

Business Day after being sent by Federal Express or United Parcel Service, if
sent by Federal Express or United Parcel Service and delivered thereto prior
to their deadline for next-day delivery, or (d) seven Business Days after
being sent, if sent by registered or certified mail. Each of the parties
hereto shall be entitled to specify a different address by giving notice as
aforesaid to each of the other parties hereto.

           Section 9.03. No Waiver; Remedies. No failure on the part of any
party to exercise, and no delay in exercising, any right hereunder or under
the Senior Subordinated Notes shall operate as a waiver thereof; nor shall any
single or partial exercise of any such right preclude any other or further
exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not exclusive of any remedies provided by law.

           Section 9.04. Costs and Expenses. The Obligors jointly and
severally agree to pay on demand all reasonable costs and expenses, if any
(including, without limitation, reasonable counsel fees and expenses), of GOF
and its successors and assigns in connection with the enforcement (whether
through negotiations or in any action, suit or litigation, any bankruptcy,
insolvency or other similar proceeding affecting creditors' rights generally
or otherwise) of this Agreement or the Senior Subordinated Notes, including,
without limitation, reasonable counsel fees and expenses in connection, with
the enforcement of rights under this Section 9.04.

           Section 9.05. Binding Effect. This Agreement shall become effective
when it shall have been executed by the Obligors and GOF and thereafter shall
be binding upon and inure to the benefit of the Obligors and GOF and their
respective successors and assigns, except that the Borrower shall not have the
right to assign or otherwise transfer all or any part of its rights or
obligations hereunder or any interest herein, whether by agreement, merger,
change of control, by operation of law or otherwise, without the prior written
consent of GOF.

           Section 9.06. Assignments. (a) GOF, and any assignee permitted
pursuant to this Agreement, may assign to one or more Persons all or a portion
of its rights and obligations under this Agreement (including, without
limitation, all or a portion of the Senior Subordinated Note held by it),
provided, however, that (i) each such assignment shall be to an Eligible
Assignee, and (ii) the parties to each such assignment shall execute and
deliver to the Borrower an Assignment and Acceptance, together with any Senior
Subordinated Note subject to such assignment. Upon such execution and
delivery, from and after the effective date specified in each Assignment and
Acceptance, (x) the assignee thereunder shall be a party hereto and, to the
extent that rights and obligations hereunder have been assigned to it pursuant
to such Assignment and Acceptance, have the rights and obligations of the
assignor hereunder and (y) the assignor shall, to the extent that rights and
obligations hereunder have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights and be released from its obligations under
this Agreement (and, in the case of an Assignment and Acceptance covering all
or the remaining portion of the assignor's rights and obligations under this
Agreement, the assignor shall cease to be a party hereto).

           (b) Any Assignment and Acceptance shall contain the provisions set
out in Exhibit B of this Agreement, including without limitation the
following: (i) other than as provided in such Assignment and Acceptance, the
assignor makes no representation or warranty

                                      66
<PAGE>


and assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with this Agreement or the Senior
Subordinated Note or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement or the Senior Subordinated
Note; (ii) the assignor makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower or the
performance or observance by the Borrower of any of its obligations under this
Agreement or the Senior Subordinated Note; (iii) such assignee confirms that
it has received a copy of this Agreement and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (iv) such assignee
will, independently and without reliance upon the assignor and based on such
documents and information as it shall deem appropriate at the time, continue
to make its own credit decisions in taking or not taking action under this
Agreement; (v) such assignee confirms that it is an Eligible Assignee; and
(vi) such assignee agrees that it will perform in accordance with their terms
all of the obligations that by the terms of this Agreement are required to be
performed by it. If GOF or any Assignee wishes to assign the right to
repayment arising out of any future drawing under the Letter of Credit, the
Assignment and Assumption will so state and will further state the percentage
of such rights to repayment that are being assigned and all other agreements
and information reasonably required in connection therewith. The parties
hereto hereby agree to be bound by, and give full recognition to, such
Assignment and Acceptance.

           (c) The assignor may, in connection with any assignment or proposed
assignment pursuant to this Section 9.06, disclose to the assignee or proposed
assignee, any information relating to the Borrower furnished to such assignor
by or on behalf of the Borrower provided such proposed assignee agrees in
writing to be bound by Section 9.12 as if it were such assignor.

           (d) Upon any assignment of all of a Senior Subordinated Note, upon
surrender of such Senior Subordinated Note to the Borrower, the Borrower
promptly shall issue, at is sole expense, a new Senior Subordinated Note
payable to the assignee. Upon any assignment of a portion of a Senior
Subordinated Note, upon surrender of such Senior Subordinated Note to the
Borrower, the Borrower promptly shall issue, at its sole expense, one or more
new Senior Subordinated Notes in accordance with the instructions of the
assignor. Proper provision shall be made in any new Senior Subordinated Notes
for the apportionment of the right to repayment arising out of any future
drawing under the Letter of Credit, in accordance with the terms of the
Assignment and Assumption; provided that in no event shall the aggregate face
amount under all notes issued pursuant to this Section 9.06(d) exceed
$25,000,000, and, in no event, shall the actual principal amount outstanding
under any such notes exceed the aggregate principal amount outstanding
immediately prior to such surrender.

           Section 9.07. Governing Law. This Agreement and the Senior
Subordinated Notes shall be governed by, and construed in accordance with, the
laws of the State of New York.

           Section 9.08. Execution in Counterparts. This Agreement may be
executed in any number of counterparts and by different parties thereto in
separate counterparts, each of which

                                      67
<PAGE>

when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.

           Section 9.09. Consent to Jurisdiction. (a) The Obligors hereby
irrevocably submit to the jurisdiction of any New York State or Federal court
sitting in the City of New York, New York County and any court with
jurisdiction to hear appeals from decisions of such courts, in any action or
proceeding arising out of or relating to this Agreement or the Senior
Subordinated Notes, and the Obligors hereby irrevocably agree that all claims
in respect of such action or proceeding may be heard and determined in such
court. The Obligors hereby irrevocably waive, to the fullest extent it may
effectively do so, the defense of an inconvenient forum to the maintenance of
such action or proceeding. The Obligors hereby irrevocably consent to the
service of copies of any summons and complaint and any other process which may
be served in any such action or proceeding by certified mail, return receipt
requested, or by delivering a copy of such process to any Obligor, at its
address specified in Section 9.02 or by any other method permitted by law. The
Obligors agree that a final judgment in any such action or proceeding may be
enforced in other jurisdictions by suit on the judgment or by any other manner
provided by law.

           (b) Nothing in this Section 9.09 shall affect the right of any
 party to serve legal process in any other manner permitted by law or affect
 the right of any party to bring any action or proceeding against the Borrower
 or their property in the courts of other jurisdictions.

           Section 9.10. WAIVER OF JURY TRIAL. EACH OF THE OBLIGORS, AND GOF
HEREBY IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING
OR COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF
OR RELATING TO THIS AGREEMENT OR THE SENIOR SUBORDINATED NOTES, ANY DOCUMENT
DELIVERED HEREUNDER OR THEREUNDER, OR THE ACTIONS OF THE OBLIGORS AND GOF IN
THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR ENFORCEMENT THEREOF.

           Section 9.11.  Publicity and Confidentiality.

           (a) Publicity. The Obligors agree that none of them will make any
press release or statement regarding the transactions contemplated hereby
without the consent of GOF. Additionally, the Obligors shall not make any
statement which is inconsistent with any press release agreed to by GOF.
Notwithstanding the foregoing, each of the parties hereto may, in documents
required to be filed by it with any regulatory body, make such statements with
respect to the transactions contemplated hereby as each may be advised is
legally necessary upon advice of its counsel.

           (b) Confidentiality. Except as otherwise required by law or
judicial order or decree or by any governmental regulatory agency or
authority, or any self-regulatory organization, GOF will use its best efforts
to maintain the confidentiality of all nonpublic information obtained by it
hereunder, such efforts being no less than GOF employs with respect to
maintaining the confidentiality of similar non-public information about GOF.

                                      68
<PAGE>

           Section 9.12. Termination. Subject to the repayment by the Borrower
of all outstanding amounts, whether in the form of principal, interest or any
costs and expenses payable under this agreement and other than Sections 1 (to
the extent a definition is used in another section referred to in this Section
9.12), 9.02, 9.04 (to the extent this section is relevant to the other
sections referred to in this Section 9.12), 9.11 and this Section 9.12, the
provisions of this Agreement shall terminate on the Termination Date. Sections
1 (to the extent a definition is used in another section referred to in this
Section 9.12), 9.02, 9.04 (to the extent this section is relevant to the other
sections referred to in this Section 9.12), 9.11 and this Section 9.12, shall
survive the Termination Date.

                  REMAINDER OF PAGE LEFT INTENTIONALLY BLANK


                                      69
<PAGE>

          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.


                               THE BORROWER

                               POLYMER GROUP, INC.



                               By:_____________________________________
                                  Name:
                                  Title:

                               GOF

                               MATLINPATTERSON GLOBAL OPPORTUNITIES
                               PARTNERS LP


                               By:  MatlinPatterson Global
                                    Opportunities Advisers LLC, its
                                    Investment Advisor




                               By:_____________________________________
                                  Name:
                                  Title:





       [Execution Page to Senior Subordinated Note Purchase Agreement]
<PAGE>


                               THE GUARANTORS

                               PGI POLYMER, INC.
                               PGI EUROPE, INC.
                               PNA CORP.
                               FNA POLYMER CORP.
                               FABRENE CORP.
                               FABRENE GROUP, L.L.C.
                               FIBERTECH GROUP, INC.
                               TECHNETICS GROUP, INC.
                               FIBERGOL CORPORATION
                               CHICOPEE, INC.
                               DOMINION TEXTILE (USA) INC.
                               POLY-BOND INC.
                               LORETEX CORPORATION
                               FNA ACQUISITION, INC.
                               FABPRO ORIENTED POLYMERS, INC.
                               PGI ASSET MANAGEMENT COMPANY
                               PGI SERVICING COMPANY
                               PRISTINE BRANDS CORPORATION
                               POLYIONIX SEPARATION TECHNOLOGIES, INC.
                               BONLAM (S.C.), INC.

                               as Guarantors




                               By:_____________________________________
                                  Name:
                                  Title:



       [Execution Page to Senior Subordinated Note Purchase Agreement]
<PAGE>


                                   EXHIBIT A

                               LETTER OF CREDIT

<PAGE>


                                   EXHIBIT B

                           ASSIGNMENT AND ACCEPTANCE


           Reference is made to the Senior Subordinated Note Purchase
Agreement dated as of March 5, 2003 (as amended or modified from time to time,
the "Agreement") among POLYMER GROUP, INC., a Delaware corporation (the
"Borrower"), each of the entities identified under the caption "GUARANTORS" on
the signature pages thereto (individually, a "Guarantor", and, together with
the Borrower, the "Obligors") and MATLINPATTERSON GLOBAL OPPORTUNITIES
PARTNERS LP, a Delaware limited partnership ("GOF"). Capitalized terms used
herein and not defined shall have the meanings ascribed thereto in the
Agreement.

           The "Assignor" and the "Assignee" referred to on Schedule 1 hereto
agree as follows:

           1. The Assignor hereby sells and assigns to the Assignee, and the
Assignee hereby purchases and assumes from the Assignor, an interest in and to
the Assignor's rights and obligations under the Agreement as of the date
hereof equal to the percentage interest specified on Schedule 1 hereto of all
outstanding rights and obligations under the Agreement. After giving effect to
such sale and assignment, the Assignee's pro rata share of the outstanding
Borrowings owing to the Assignee will be as set forth on Schedule 1 hereto.

           2. The Assignor (i) represents and warrants that it is the legal
and beneficial owner of the interest being assigned by it hereunder and that
such interest is free and clear of any adverse claim; (ii) makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the
Agreement or the Senior Subordinated Note or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Agreement
or the Senior Subordinated Note, or any other instrument or document furnished
pursuant thereto; (iii) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower or the
performance or observance by the Borrower of any of its obligations under the
Agreement or the Senior Subordinated Note or any other instrument or document
furnished pursuant thereto; and (iv) attaches the Senior Subordinated Note
held by the Assignor and requests that the Borrower exchange such Senior
Subordinated Note for a new Senior Subordinated Note payable to the order of
the Assignee in an amount equal to the amount of the Assignee's pro rata share
of the outstanding Borrowings owing to the Assignee pursuant hereto or new
Senior Subordinated Notes payable to the order of the Assignee in an amount
equal to the amount of the Assignee's pro rata share owing to the Assignee
pursuant hereto and the Assignor in an amount equal to the amount of the
Assignor's pro rata share of the outstanding Borrowings owing to the Assignor
under the Agreement, respectively, as specified on Schedule 1 hereto.

           3. The Assignee (i) confirms that it has received a copy of the
Agreement thereof and such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter into this
Assignment and Acceptance; (ii) agrees that it will,

<PAGE>

independently and without reliance upon the Assignor and based on such
documents and information as it shall deem appropriate at the time, continue
to make its own credit decisions in taking or not taking action under the
Agreement; (iii) confirms that it is an Eligible Assignee; (iv) agrees that it
will perform in accordance with their terms all of the obligations that by the
terms of the Agreement are required to be performed by the Assignor; and (vi)
attaches any U.S. Internal Revenue Service forms required under Section 2.05
of the Agreement.

           4. Following the execution of this Assignment and Acceptance, it
will be delivered to the Borrower. The effective date for this Assignment and
Acceptance (the "Assignment Effective Date") shall be the date of receipt by
the Borrower, unless otherwise specified on Schedule 1 hereto.

           5. Upon such receipt by the Borrower, as of the Assignment
Effective Date, (i) the Assignee shall be a party to the Agreement and, to the
extent provided in this Assignment and Acceptance, have the rights and
obligations of the Assignor thereunder and (ii) the Assignor shall, to the
extent provided in this Assignment and Acceptance, relinquish its rights and
be released from its obligations under the Agreement.

           6. From and after the Assignment Effective Date, the Borrower shall
make all payments under the Agreement and the Senior Subordinated Note in
respect of the interest assigned hereby (including, without limitation, all
payments of principal and interest with respect thereto) to the Assignee. The
Assignor and Assignee shall make all appropriate adjustments in payments under
the Agreement and the Senior Subordinated Note for periods prior to the
Assignment Effective Date directly between themselves.

           7. This Assignment and Acceptance shall be governed by, and
construed in accordance with, the laws of the State of New York, without
reference to the principals of conflicts of law thereof.

           8. This Assignment and Acceptance may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which
taken together shall constitute one and the same agreement. Delivery of an
executed counterpart of Schedule 1 to this Assignment and Acceptance by
telecopier shall be effective as delivery of a manually executed counterpart
of this Assignment and Acceptance.

           IN WITNESS WHEREOF, the Assignor and the Assignee have caused
Schedule 1 to this Assignment and Acceptance to be executed by their officers
thereunto duly authorized as of the date specified thereon.


<PAGE>


                                  Schedule 1
                                      to
                           Assignment and Acceptance


Percentage interest assigned:                           _________%

Aggregate outstanding principal amount of
outstanding Borrowings assigned:                        $__________

Principal amount of Senior Subordinated Note
payable to Assignee:                                    $__________

Principal amount of Senior Subordinated Note
payable to Assignor:                                    $__________

Assignment Effective Date*:    ___________________, 200__


                               [NAME OF ASSIGNOR], as Assignor


                               By__________________________________
                                  Title:

                               Dated:  ____________________, 200__


                               [NAME OF ASSIGNEE], as Assignee


                               By__________________________________
                                  Title:


-------------------------
*     This date should be no earlier than five Business Days after the
      delivery of this Assignment and Acceptance to GOF.


<PAGE>


                                   EXHIBIT C
                                    BYLAWS

<PAGE>


                                   EXHIBIT D
                         CERTIFICATE OF INCORPORATION

<PAGE>



                                   EXHIBIT E
                SENIOR SUBORDINATED PROMISSORY NOTE




      $25,000,000.00                                         MARCH 5, 2003


      FOR VALUE RECEIVED, POLYMER GROUP, INC., a Delaware corporation (the
"Maker"), hereby promises to pay to the order of MATLINPATTERSON GLOBAL
OPPORTUNITIES PARTNERS LP, a Delaware corporation (the "Payee"), on the terms
set forth below, the sum of TWENTY FIVE MILLION UNITED STATES DOLLARS (U.S.
$25,000,000.00), or such lesser amount as equals the sum of all Borrowings,
together with interest on the unpaid principal balance of each Borrowing from
the date thereof at 10% per annum, payable in cash, semi-annually on January 1
and July 1 of each year. All capitalized terms in this Senior Subordinated
Promissory Note (this "Senior Subordinated Note") shall have the same meaning
as in the Senior Subordinated Note Purchase Agreement dated as of March 5,
2003 between the Maker and the Payee (the "Agreement").

      The unpaid principal balance of, and any and all accrued and unpaid
interest on, this Senior Subordinated Note (the "Aggregate Amount") shall be
payable in cash, subject to any repayment made by the Maker in accordance with
Section 2.03 of the Agreement, at the Maturity Date.

      If the Events of Default specified in Section 7.01(e) of the Agreement
or a Change of Control occurs, the unpaid principal and interest of this
Senior Subordinated Note, and all other amounts due hereunder, shall, at the
option of the Payee, ipso facto become and be immediately due and payable in
cash without any declaration or other act on the part of the Payee. Upon the
occurrence of any other Event of Default set forth in Section 7.01, the unpaid
principal and interest of this Senior Subordinated Note, and all other amounts
due hereunder, shall, at the option of the Payee upon notice to the Borrower,
become and be immediately due and payable in cash. During the period following
the occurrence of an Event of Default until either (a) such Event of Default
is remedied to the satisfaction of the Payee, or (b) the principal and
interest of this Senior Subordinated Note is paid, default interest at a rate
of 2% per annum will be payable on the principal amount in addition to the
existing 10% rate. The Borrower shall, to the extent lawful, pay interest on
overdue interest at the rate of 12% per annum.

      The Maker agrees to pay on demand all reasonable costs and expenses,
including, without limitation, the reasonable fees and out-of-pocket expenses
of counsel to the Payee in connection with the enforcement, collection,
protection or preservation (whether through negotiations, legal proceedings or
otherwise) of any of its rights under this Senior Subordinated Note.

      The Maker hereby waives demand, presentment for payment, notice of
extensions, nonpayment and protest, and agrees that any extensions or renewals
hereof shall not affect its liability, whether has notice of such extensions
or renewals or not, and waives any and all defenses and counterclaims with
respect to this Note Senior Subordinated.


<PAGE>

      No waiver of any right granted hereunder or amendment hereto shall be
effective unless expressly waived or agreed to in writing by the party whose
waiver or agreement to such amendment is alleged.

      This Senior Subordinated Note and the Agreement constitute the entire
agreement of the parties with respect to the matters contained herein and
therein.

      The provisions hereof shall bind and inure to the benefit of the
respective successors and assigns of the Maker and the Payee.

      This Senior Subordinated Note shall be governed by, and interpreted
under, the laws of the State of New York without giving effect to the
principles of conflict of laws.

      IN WITNESS WHEREOF, the Maker has caused this instrument to be duly
executed as of the date first written above.


                               POLYMER GROUP, INC.



                               By:  __________________________
                                   Name:
                                   Title:


</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-7
<SEQUENCE>7
<FILENAME>efc3-0412_exh7.txt
<DESCRIPTION>MATLIN PATTERSON POLYMER
<TEXT>
                                                                     Exhibit 7



                     IN THE UNITED STATES BANKRUPTCY COURT
                      FOR THE DISTRICT OF SOUTH CAROLINA

In re:                             )  Chapter 11
                                   )
POLYMER GROUP, INC. et al.,1       )  Case No. 02-5773 (W)
                                   ) (Jointly Administered)
                 Debtors.          )

-------------------------------------------------------------------
   DEBTORS' JOINT SECOND AMENDED MODIFIED PLAN OF REORGANIZATION
-------------------------------------------------------------------





    James A. Stempel             George B. Cauthen
    Jonathan P. Friedland        District Court ID No. 81
    Roger J. Higgins             NELSON MULLINS RILEY
    Ryan Nadick                     & SCARBOROUGH, L.L.P.
    Ryan B. Bennett              Keenan Building, Third Floor
    KIRKLAND & ELLIS             1330 Lady Street
    200 East Randolph Drive      P.O. Box 11070 (29211)
    Chicago, Illinois  60601     Columbia, SC 29201
    Telephone: (312) 861-2000    Telephone: (803) 799-2000
    Facsimile:  (312) 861-2200   Facsimile: (803) 256-7500

                                 Co-Counsel to Polymer Group, Inc., et al.

                                 Dated:  January __, 2003
















---------------------------
     1 The Debtors are the following entities: Polymer Group, Inc., PGI
Polymer, Inc., PGI Europe, Inc., Chicopee, Inc., FiberTech Group, Inc.,
Technetics Group, Inc., Fibergol Corporation, Fabrene Corp., Fabrene Group
LLC, PNA Corp., FNA Polymer Corp., FNA Acquisition, Inc., Loretex Corporation,
Dominion Textile (USA) Inc., Poly-Bond Inc., FabPro Oriented Polymers, Inc.,
PGI Asset Management Company, PGI Servicing Company, Pristine Brands
Corporation; PolyIonix Separation Technologies, Inc., Bonlam (S.C.), Inc.

<PAGE>



                               TABLE OF CONTENTS

ARTICLE I.  DEFINITIONS, RULES OF INTERPRETATION, COMPUTATION OF TIME AND
            GOVERNING LAW....................................................1
        A.  Rules of Interpretation, Computation of Time and Governing Law...1
        B.  Defined Terms....................................................1

ARTICLE II. TREATMENT OF UNCLASSIFIED CLAIMS................................16
        A.  DIP Facility Claims.............................................16
        B.  Administrative Expense Claims...................................16
        C.  Compensation and Reimbursement Claims of Professionals..........16
        D.  Priority Tax Claims.............................................16

ARTICLE III. CLASSIFICATION AND TREATMENT OF CLASSIFIED CLAIMS AND EQUITY
            INTERESTS.......................................................16
        A.  Summary.........................................................16
        B.  Classification and Treatment of Claims Against and Equity
            Interests in the Debtors........................................17

ARTICLE IV. ACCEPTANCE OR REJECTION OF THE AMENDED MODIFIED PLAN............20
        A.  Voting Classes..................................................20
        B.  Acceptance by Impaired Classes..................................20
        C.  Presumed Acceptance of Amended Modified Plan....................21
        D.  Presumed Rejection of Amended Modified Plan.....................21
        E.  Non-Consensual Confirmation.....................................21

ARTICLE V. MEANS FOR IMPLEMENTATION OF THE AMENDED MODIFIED PLAN............21
        A.  Continued Corporate Existence...................................21
        B.  Corporate Governance, Corporate Action, and Directors and
            Officers........................................................21
        C.  Cancellation of Securities And Agreements.......................24
        D.  Issuance of New Polymer Common Stock and New Polymer Notes......24
        E.  Revesting Of Assets; Releases of Liens..........................25
        F.  Sources of Cash for Amended Modified Plan Distribution..........25
        G.  Exit Revolving Credit Facility..................................25
        H.  New Investment..................................................25
        I.  Exit Letters of Credit..........................................26
        J.  Compensation And Benefit Programs...............................27
        K.  Restructuring Transactions......................................27
        L.  Limited Substantive Consolidation...............................27

ARTICLE VI. EXECUTORY CONTRACTS AND UNEXPIRED LEASES........................28
        A.  Assumption and Rejection of Executory Contracts and Unexpired
            Leases..........................................................28
        B.  Rejection Claims; Cure of Defaults..............................28
        C.  Indemnification and Reimbursement Obligations...................28

ARTICLE VII. PROVISIONS GOVERNING DISTRIBUTIONS.............................29
        A.  Manner of Payment...............................................29
        B.  Distributions for Claims Allowed as of the Effective Date.......29
        C.  Delivery of Distributions and Undeliverable or Unclaimed
            Distributions...................................................29
        D.  Record Date and Distribution Record Date........................30
        E.  Timing and Calculation of Amounts to be Distributed.............30
        F.  De Minimis and Fractional Distributions.........................30
        G.  Setoffs.........................................................30
        H.  Surrender of Canceled Instruments or Securities.................31
        I.  Lost, Stolen, Mutilated or Destroyed Instruments or Securities..31
        J.  Preservation of Subordination Rights............................31

                                      i
<PAGE>

ARTICLE VIII. PROCEDURES FOR TREATMENT OF DISPUTED, CONTINGENT, AND
              UNLIQUIDATED CLAIMS...........................................32
        A.  Prosecution of Objections to Claims.............................32
        B.  Estimation of Claims............................................32
        C.  Payments and Distributions on Disputed Claims...................32
        D.  Allowance of Claims.............................................32

ARTICLE IX. CONDITIONS PRECEDENT TO CONFIRMATION AND CONSUMMATION OF THIS
            AMENDED MODIFIED PLAN...........................................33
        A.  Conditions Precedent to Confirmation............................33
        B.  Conditions Precedent to Consummation............................33
        C.  Conditions Precedent to Closing of New Investment...............33
        D.  Waiver of Conditions Precedent..................................34
        E.  Effect of Non-Occurrence of Consummation........................34

ARTICLE X. RELEASE, INJUNCTIVE AND RELATED PROVISIONS.......................34
        A.  Certain Mutual Releases.........................................34
        B.  Limited Releases by Holders of Equity Interests and Claims......35
        C.  Preservation of Causes of Action................................35
        D.  Exculpation.....................................................37
        E.  Injunction......................................................37
        F.  Discharge of Claims and Termination of Equity Interests.........37

ARTICLE XI. RETENTION OF JURISDICTION.......................................37

ARTICLE XII. MISCELLANEOUS PROVISIONS.......................................38
        A.  Dissolution of Committee........................................38
        B.  Payment of Statutory Fees.......................................38
        C.  Fees and Expenses...............................................38
        D.  Maintenance of Director and Officer Liability Insurance.........39
        E.  Discharge of Debtors............................................39
        F.  Effectuating Documents, Further Transactions and Corporate
            Action..........................................................39
        G.  Modification of Amended Modified Plan...........................39
        H.  Revocation of Amended Modified Plan.............................40
        I.  Successors and Assigns..........................................40
        J.  Reservation of Rights...........................................40
        K.  Section 1146 Exemption..........................................40
        L.  Further Assurances..............................................40
        M.  Term of Existing Injunctions or Stays...........................40
        N.  Post Effective Date Fees and Expenses...........................41
        O.  Severability....................................................41
        P.  Conflicts.......................................................41
        Q.  Notices.........................................................41
        R.  Closing of Cases................................................43




                                     -ii-
<PAGE>


-------------------------------------------------------------------
      DEBTORS' JOINT AMENDED MODIFIED PLAN OF REORGANIZATION
-------------------------------------------------------------------

      Pursuant to chapter 11 of the Bankruptcy Code, Polymer Group, Inc. and
its Filing Subsidiaries (as defined herein), debtors and debtors in possession
in the above-captioned and numbered cases, hereby respectfully propose the
following Joint Amended Modified Plan of Reorganization (the "Amended Modified
Plan").

                                  ARTICLE I.

                  DEFINITIONS, RULES OF INTERPRETATION,
                  COMPUTATION OF TIME AND GOVERNING LAW

A.    Rules of Interpretation, Computation of Time and Governing Law(2)

          1. For purposes of this Amended Modified Plan: (a) whenever from the
     context it is appropriate, each term, whether stated in the singular or
     the plural, shall include both the singular and the plural, and pronouns
     stated in the masculine, feminine or neuter gender shall include the
     masculine, feminine and the neuter gender; (b) any reference in this
     Amended Modified Plan to a contract, instrument, release, Indenture or
     other agreement or document being in a particular form or on particular
     terms and conditions means that such document shall be substantially in
     such form or substantially on such terms and conditions; (c) any
     reference in this Amended Modified Plan to an existing document or
     exhibit Filed, or to be Filed, shall mean such document or exhibit, as it
     may have been or may be amended, modified or supplemented; (d) unless
     otherwise specified, all references in this Amended Modified Plan to
     Sections, Articles and Exhibits are references to Sections, Articles and
     Exhibits of or to this Amended Modified Plan; (e) the words "herein" and
     "hereto" refer to this Amended Modified Plan in its entirety rather than
     to a particular portion of this Amended Modified Plan; (f) captions and
     headings to Articles and Sections are inserted for convenience of
     reference only and are not intended to be a part of, or to affect the
     interpretation of, this Amended Modified Plan; (g) the rules of
     construction set forth in section 102 of the Bankruptcy Code shall apply;
     and (h) any term used in capitalized form in this Amended Modified Plan
     that is not defined herein but that is defined in the Bankruptcy Code or
     the Bankruptcy Rules shall have the meaning assigned to such term in the
     Bankruptcy Code or the Bankruptcy Rules, as the case may be.

          2. In computing any period of time prescribed or allowed by this
     Amended Modified Plan, the provisions of Fed. R. Bankr. P. 9006(a) shall
     apply.

          3. Except to the extent that the Bankruptcy Code or the Bankruptcy
     Rules are applicable, and subject to the provisions of any contract,
     instrument, release, Indenture or other agreement or document entered
     into in connection with this Amended Modified Plan, the rights and
     obligations arising under this Amended Modified Plan shall be governed
     by, and construed and enforced in accordance with, the laws of the State
     in which the Bankruptcy Court resides, without giving effect to the
     principles of conflict of laws thereof.

     B. Defined Terms

      Unless the context otherwise requires, as used in this Amended Modified
Plan, the following terms shall have the respective meanings specified below:

          1. "8 3/4% Indenture" means that certain Indenture dated March 1,
     1998, between Harris Trust and Savings Bank (predecessor to The Bank of
     New York), as indenture trustee, and Polymer.

--------------
   2  Capitalized  terms not defined in Article I.A. shall have the
meaning ascribed in Article I.B. herein.





<PAGE>

          2. "8 3/4% Senior Subordinated Notes" means the 8 3/4% Series B
     Senior Subordinated Notes due in 2008 issued by Polymer pursuant to the
     8 3/4% Indenture in the original principal amount of $200 million and
     guaranteed by all of the Debtors other than Polymer.

          3. "8 7/8% Dominion Notes" means the 8 7/8% notes due 2003 issued by
     Dominion pursuant to a November 1, 1993 Indenture.

          4. "9 1/4% Dominion Notes" means the 9 1/4% notes due 2006, issued
     by Dominion pursuant to an April 1, 1996 Indenture.

          5. "9% Indenture" means that certain Indenture dated July 1, 1997,
     between Harris Trust and Savings Bank (predecessor to the Bank of New
     York), as indenture trustee, and Polymer.

          6. "9% Senior Subordinated Notes" means the Series B 9% Senior
     Subordinated Notes due in 2007 issued by Polymer in the original
     principal amount of $400 million pursuant to the 9% Indenture and
     guaranteed by all of the Debtors other than Polymer.

          7. "Accrued Professional Compensation" means, at any given moment:
     (a) all accrued fees (including but not limited to success fees) for
     services rendered by all Professionals in the Chapter 11 Cases that the
     Bankruptcy Court has not yet awarded as compensation, either pursuant to
     an interim order or a Final Order; and (b) all expenses incurred by all
     Professionals in the Chapter 11 Cases that the Bankruptcy Court has not
     awarded as reimbursement, either pursuant to an interim order or a Final
     Order.

          8. "Adequate Protection Obligations" means any and all security
     interests, liens and/or superpriority Allowed Claims granted to the
     Prepetition Agent and/or Senior Lenders pursuant to the DIP Credit
     Agreement and Final Order (I) authorizing Debtors to (A) Obtain
     Post-Petition Financing pursuant to 11 U.S.C. ss.ss.105, 361, 362, 363,
     364(c)(1), 364(c)(2), 364(c)(3) and 364(d)(1); and (B) Utilize Cash
     Collateral pursuant to 11 U.S.C. ss.ss.105, 361, 362, 363; and (II)
     Granting Adequate Protection to Prepetition Secured Lenders pursuant to
     11 U.S.C. ss.ss.105, 361, 362 and 363.

          9. "Administrative Expense Claim" means any Claim for costs and
     expenses of administration of the Chapter 11 Cases under sections 503(b),
     507(b) or 1114(e)(2) of the Bankruptcy Code, including: (a) the actual
     and necessary costs and expenses of preserving the Estates and operating
     the businesses of the Debtors (such as wages, salaries or commissions for
     services and payments for goods and other services and leased premises)
     incurred after the Petition Date; (b) compensation for legal, financial
     advisory, accounting and other services and reimbursement of expenses
     awarded or allowed under section 330(a) or 331 of the Bankruptcy Code;
     (c) all fees and charges assessed against the Estates under Chapters 123
     of Title 28 of the United States Code, 28 U.S.C. ss.ss.1911-30; (d)
     Adequate Protection Obligations; (e) obligations designated as Allowed
     Administrative Expense Claims pursuant to a Final Order.

          10. "Affiliate" means any Person that is an "Affiliate" of any of
     the Debtors within the meaning of section 101(2) of the Bankruptcy Code.

          11. "Allowed" means, with respect to any Claim or Equity Interest,
     as of the date of determination, except as otherwise provided herein: (a)
     a Claim or Equity Interest that has been scheduled by the Debtors in
     their schedules of liabilities or interests as other than disputed,
     contingent or unliquidated and as to which neither the Debtors nor any
     other party in interest has Filed an objection or request for estimation
     by the Effective Date; (b) a Claim or Equity Interest that either (i) is
     evidenced by a timely-filed Proof of Claim or Equity Interest and is not
     a Disputed Claim or Disputed Equity Interest after the deadline for
     objecting to or requesting an estimation of such a Claim or Equity
     Interest has expired; or (ii) has been allowed by an order of the
     Bankruptcy Court; (c) a Claim or Equity Interest that is allowed in any
     contract, instrument, Indenture or other agreement entered into or
     assumed in connection with this Amended Modified Plan; or (d) a Claim or
     Equity Interest that is allowed pursuant to the terms of this Amended
     Modified Plan.

          12. "Amended Modified Disclosure Statement" means the Amended
     Modified Disclosure Statement with respect to this Amended Modified Plan,
     as it may be amended, supplemented or modified

                                      2
<PAGE>

     from time to time, prepared by the Debtors and distributed in accordance
     with sections 1125, 1126(b) and/or 1145 of the Bankruptcy Code, Fed. R.
     Bankr. P. 3018 and/or other applicable law.

          13. "Amended Modified Plan" means this Debtors' Joint Second Amended
     Modified Plan of Reorganization and any and all exhibits thereto, as may
     be modified, amended or supplemented from time to time.

          14. "Amended Modified Plan Supplement" means a separate volume, to
     be Filed, containing, among other things, the Indenture governing the
     Convertible Notes, Series A Warrants and Series B Warrants. The Amended
     Modified Plan Supplement (containing drafts or final versions of the
     foregoing documents) shall be Filed as early as practicable (but in no
     event later than ten (10) Business Days) prior to the commencement of the
     Confirmation Hearing, or on such other date as the Bankruptcy Court may
     establish.

          15. "Ballot" or "Ballots" means the forms accompanying the Amended
     Modified Disclosure Statement upon which the Holders of Impaired Claims
     and Impaired Equity Interests shall indicate their acceptance or
     rejection of this Amended Modified Plan.

          16. "Balloting Order" means the order entered on December 3, 2002,
     (a) Approving Solicitation Procedures; (b) Approving the Form and Manner
     of Notice of the Confirmation Hearing; and (c) Scheduling the Hearing on
     Confirmation of the Amended Modified Plan of Reorganization.

          17. "Bank Term Sheet" means the Summary of Terms and Conditions,
     dated as of May 8, 2002, as amended by the Supplement to Summary Terms
     and Conditions, the terms of which are supported by the Steering
     Committee of Senior Lenders, which shall be attached as Exhibit G to the
     Amended Modified Disclosure Statement.

          18. "Bankruptcy Code" means Title I of the Bankruptcy Reform Act of
     1978, as amended from time to time, as set forth in sections 101 et seq.
     of Title 11 of the United States Code, and applicable portions of Titles
     18 and 28 of the United States Code.

          19. "Bankruptcy Court" means the United States Bankruptcy Court for
     the District of South Carolina (Columbia Division) or any other court
     having jurisdiction of the Chapter 11 Cases.

          20. "Bankruptcy Rules" means the Federal Rules of Bankruptcy
     Procedure, as amended from time to time, as applicable to the Chapter 11
     Cases under 28 U.S.C. ss. 2075, and Local Rules of the Bankruptcy Court,
     as amended from time to time.

          21. "Bar Date" means September 4, 2002, the last date on which
     Creditors could have timely filed Proofs of Claim or Equity Interests in
     the Chapter 11 Cases, or such other date as may be set by the Bankruptcy
     Court.

          22. "Beneficial Holder" means the Person or Entity holding the
     beneficial interest in a Claim or Equity Interest.

          23. "Bonlam (S.C.)" means Bonlam (S.C.), Inc., a South Carolina
     corporation, a debtor and debtor-in-possession in the Chapter 11 Cases.

          24. "Boyd" means James G. Boyd.

          25. "Business Day" means a day other than a Saturday, a Sunday or
     any other day on which commercial banks in New York, New York are
     required or are authorized to close by law or executive order.

          26. "Cash" means legal tender of the United States of America or the
     equivalent thereof, including bank deposits, checks or similar
     instruments.

                                      3
<PAGE>

          27. "Cash Equivalents" means equivalents of Cash in the form of
     readily marketable securities or instruments issued by a Person other
     than the Debtors, including, without limitation, readily marketable
     direct obligations of, or obligations guaranteed by, the United States of
     America, commercial paper of domestic corporations carrying a Moody's
     rating of "A" or better, or equivalent rating of any other nationally
     recognized rating service, or interest bearing certificates of deposit or
     other similar obligations of domestic banks or other financial
     institutions having a shareholders' equity or capital of not less than
     one hundred million dollars ($100,000,000) having maturities of not more
     than one (1) year, at the then best generally available rates of interest
     for like amounts and like periods.

          28. "Causes of Action" means all Claims, actions, choses in action,
     causes of action, suits, debts, dues, sums of money, accounts,
     reckonings, bonds, bills, specialties, covenants, contracts,
     controversies, agreements, promises, variances, trespasses, damages,
     judgments, third-party claims, counterclaims and cross claims (including,
     but not limited to, all Claims in any avoidance, recovery, subordination
     or other actions against Insiders and/or any other Persons under the
     Bankruptcy Code, including sections 510, 542, 543, 544, 545, 547, 548,
     549, 550, 551 and 553 of the Bankruptcy Code) of the Debtors, the
     Debtors-in-Possession and/or the Estates (including, but not limited to,
     those actions listed in the Amended Modified Disclosure Statement and the
     Amended Modified Plan Supplement) that are or may be pending on the
     Effective Date or instituted by the Reorganized Debtors after the
     Effective Date against any Person based on law or equity, including, but
     not limited to, under the Bankruptcy Code, whether direct, indirect,
     derivative, or otherwise and whether asserted or unasserted, known or
     unknown.

          29. "Change of Control Agreement" means, with respect to Zucker and
     Boyd, those certain letter agreements, each of which is dated May 22,
     1998, as amended on May 11, 2002.

          30. "Chapter 11 Cases" means the above-captioned cases commenced by
     the Debtors under chapter 11 of the Bankruptcy Code on the Petition Date,
     styled In re Polymer Group, Inc., et al., Case No. 02-5773(W) (Bankr.
     D.S.C. 2002) (Jointly Administered), currently pending before the
     Bankruptcy Court.

          31. "Chicopee" means Chicopee, Inc., a Delaware corporation and a
     debtor and debtor-in-possession in the Chapter 11 Cases.

          32. "Chicopee Sale" means the sale of the warehouse in Dayton,
     New Jersey, owned by Chicopee.

          33. "Chicopee Sale Order" means the Order of the Bankruptcy Court
     dated October 28, 2002 approving the Chicopee Sale. The Confirmation
     Order shall constitute the "further order" contemplated by the Chicopee
     Sale Order and shall contain provisions permitting the release from
     escrow of the Escrow Funds (as defined in the Chicopee Sale Order) and
     application thereof in accordance with the Bank Term Sheet.

          34. "Chicopee Sale Proceeds" means 100% of the Net Proceeds (as
     defined in the Chicopee Sale Order) of the Chicopee Sale.

          35. "Claim" means a claim, as defined in section 101(5) of the
     Bankruptcy Code, whether or not asserted by a Proof of Claim or otherwise
     in the Chapter 11 Cases.

          36. "Claims Objection Deadline" means the date that is 60 days after
     the Effective Date unless otherwise extended by an order of the
     Bankruptcy Court.

          37. "Class" means a category of Holders of Claims or Equity
     Interests, as described in Article III of this Amended Modified Plan.

          38. "Class A Common Stock" means the shares of Class A Common Stock,
     par value $.01 per share of New Polymer (of which, 9.6 million shares,
     less the number of Class C Common Stock shall be issued on the Effective
     Date) containing terms and conditions to be described in the Amended
     Modified Plan Supplement.

                                      4
<PAGE>

          39. "Class B Common Stock" means the 400,000 shares of Class B
     Common Stock, par value $.01 per share, representing 4% of the New
     Polymer Common Stock issued on the Effective Date, containing the terms
     and conditions described in the Amended Modified Plan Supplement,
     together with any additional shares subsequently issued in respect of the
     limited anti-dilution provisions of the Class B Common Stock relating to
     the issuance of Class A Common Stock upon the conversion of some or all
     of the Convertible Notes.

          40. "Class C Common Stock" means the shares of Class C Common Stock,
     par value $.01 per share, authorized to be issued by New Polymer (which
     shall be issued on the Effective Date as part of the 9.6 million shares
     of Class A and Class C Common Stock) to the Electing Non-GOF Holders, who
     shall transfer, on the Effective Date, all such shares of Class C Common
     Stock to the SPE in exchange for their respective Pro Rata shares of SPE
     Equity and SPE Notes. The Class C Common Stock shall contain the terms
     and conditions described in the Amended Modified Plan Supplement.

          41. "Class D Common Stock" means the 498,688 shares of Class D
     Common Stock, par value $.01 per share, authorized to be issued by New
     Polymer upon the exercise of the Series A Warrants, containing the terms
     and conditions described in the Amended Modified Plan Supplement,
     together with any additional shares subsequently issued in respect of the
     limited anti-dilution provisions of the Series A Warrants.

          42. "Class E Common Stock" means the 523,557 shares of Class E
     Common Stock, par value $.01 per share, authorized to be issued by New
     Polymer upon the exercise of the Series B Warrants, containing the terms
     and conditions described in the Amended Modified Plan Supplement,
     together with additional shares subsequently issued in respect of the
     limited anti-dilution provisions of the Series B Warrants.

          43. "Committee" means the official committee of unsecured creditors
     appointed in the Chapter 11 Cases by the United States Trustee on May 17,
     2002.

          44. "Committee Members" means any current or former members of the
     Committee.

          45. "Confirmation" means entry on the docket by the clerk of the
     Bankruptcy Court of the Confirmation Order.

          46. "Confirmation Date" means January 3, 2003, the date of entry on
     the docket by the clerk of the Bankruptcy Court of the Original
     Confirmation Order.

          47. "Confirmation Hearing" means the hearing to consider
     confirmation of this Amended Modified Plan under section 1128 of the
     Bankruptcy Code.

          48. "Confirmation Order" means the order entered by the Bankruptcy
     Court on January __, 2003, confirming this Amended Modified Plan, as may
     be supplemented, modified, amended or superseded by further order of the
     Bankruptcy Court, and which supersedes the Original Confirmation Order;
     provided, however, that the term "Confirmation Order" also includes the
     Original Confirmation Order as appropriate.

          49. "Consummation" means the occurrence of the Effective Date.

          50. "Convertible Notes" means the 10% convertible subordinated notes
     due December 2007, to be issued by New Polymer to the Participating
     Allowed Class 4 Claim Holders in exchange for the New Investment and
     which shall be issued pursuant to the Indenture attached as an exhibit to
     the Amended Modified Plan Supplement in an aggregate principal amount
     equal to $50 million.

          51. "Critical Business Relations Claims" means all prepetition
     claims of Critical Business Relations.

          52. "Critical Business Relations" means any vendor who provided
     services or goods on terms to the Debtors during the pendency of these
     Chapter 11 Cases and with whom the Reorganized Debtors intend to do
     business subsequent to the Effective Date.

                                      5
<PAGE>

          53. "CSFB" means Credit Suisse First Boston.

          54. "D&O Releasees" means all of the past and present directors,
     current Management, and Professionals of the Debtors and their Affiliates
     in each case in their capacity as such.

          55. "Debtors" or "Debtors-in-Possession" means: Polymer, PGI
     Polymer, PGI Europe, Chicopee, FiberTech, Technetics, Fibergol, Fabrene,
     Fabrene Group, PNA, FNA, FNA Acquisition, Loretex, Dominion, Poly-Bond,
     FabPro, PGI Asset Management, PGI Servicing, Pristine; PolyIonix, and
     Bonlam (S.C.).

          56. "DIP Agent" means J.P. Morgan Chase Bank, in its capacity as
     Administrator and Collateral Agent under the DIP Facility.

          57. "DIP Credit Agreement" means the Revolving Credit and Guaranty
     Agreement, dated as of May 30, 2002, among Polymer, the DIP Lenders and
     JP Morgan Chase Bank, as Administrative, Documentation and Collateral
     Agent.

          58. "DIP Facility" means the commitment secured by the Debtors for
      the debtors-in-possession financing from the DIP Lenders in the original
      principal amount of $125 million.

          59. "DIP Facility Claim" means a Claim arising under or as a result
      of the DIP Facility.

          60. "DIP Lenders" mean the lenders that are party to the DIP Credit
     Agreement.

          61. "Disputed" means, with respect to any Claim or Equity Interest,
     as of the date of determination, any Claim or Equity Interest: (a) listed
     on the Schedules as unliquidated, disputed or contingent, unless and
     until it is Allowed; (b) as to which any Debtor or any other
     party-in-interest has Filed a timely objection or request for estimation
     in accordance with the Bankruptcy Code and the Bankruptcy Rules, which
     objection or request for estimation has not been withdrawn or determined
     by an order of the Bankruptcy Court; (c) as to which the deadline for
     filing objections has not passed (whether or not an objection has been
     filed), unless and to the extent such Claim or Equity Interest has been
     Allowed pursuant to an order of the Bankruptcy Court; or (d) is otherwise
     disputed by any of the Debtors or any other party in interest in
     accordance with applicable law, which dispute has not been withdrawn or
     determined by an order of the Bankruptcy Court.

          62. "Distribution Notification Date" means the fortieth (40th) day
     following the Confirmation Date.

          63. "Dominion" means Dominion Textile (USA) Inc., a Delaware
     corporation, a debtor and debtor-in-possession in the Chapter 11 Cases.

          64. "Dominion Notes" means, collectively, the 8 7/8% Dominion Notes
     and the 9 1/4% Dominion Notes.

          65. "Dominion Note Claims" means, collectively, all Claims arising
     from or related to the Dominion Notes.

          66. "Effective Date" means the date selected by the Debtors which is
     the later of (i) 45 days after the Confirmation Date; or (ii) three (3)
     business days after all conditions specified in Article IX.B herein have
     been (x) satisfied or (y) waived in accordance with Article IX.D herein;
     but, in no event later than February 21, 2003, unless waived in writing
     by the Prepetition Agent; provided, however, that the Prepetition Agent,
     on behalf of the Senior Lenders, will agree to waive compliance with this
     February 21, 2003, deadline to the extent that the Debtors make payments
     of current interest due under the Prepetition Credit Facility at rates
     set in the Bank Term Sheet (together with the applicable margins set
     forth in the Bank Term Sheet as applicable to the Restructured
     Facilities); provided, further, that the Effective Date shall in no event
     occur later than 90 days after the Confirmation Date unless waived in
     writing by GOF and the Prepetition Agent (on behalf of the Senior
     Lenders).

                                      6
<PAGE>

          67. "Electing Non-GOF Holders" means Non-GOF Holders who elect to
     receive their Pro Rata shares of Class C Common Stock in satisfaction of
     their respective Allowed Class 4 Claims. On the Effective Date, Electing
     Non-GOF Holders shall be deemed to have transferred all of such shares of
     Class C Common Stock to the SPE in exchange for their Pro Rata shares of
     SPE Equity and SPE Notes. In order to be an Electing Non-GOF Holder, a
     Non-GOF Holder must be a Qualified Institutional Buyer and make a
     representation to that effect.

          68. "Entity" means an "entity" within the meaning of section 101(15)
     of the Bankruptcy Code.

          69. "Equity Interest" means any equity interest in any of the
     Debtors including, but not limited to, all issued, unissued, authorized
     or outstanding shares of stock or other Equity Security together with any
     warrants, options or contractual rights to purchase or acquire such
     interests at any time and all rights arising with respect thereto.

          70. "Equity Releasees" means the Holders of Equity Interests in the
     Debtors, solely in their capacity as Holders of Equity Interests, and
     their attorneys, financial advisors, accountants, investment bankers,
     agents, and other representatives (solely in connection with their
     representation of such Holders in respect of their Equity Interests).

          71. "Equity Security" means a (i) share in a corporation, whether or
     not denominated "stock" or security; (ii) an interest of a limited
     partner in a limited partnership; (iii) an interest in a general
     partnership; or (iv) a warrant or right (other than a right to consent)
     to purchase, sell or subscribe to a share, security or interest of the
     kind specified in (i), (ii) or (iii) of this definition.

          72. "Estates" means the collective estates of each of the Debtors
     created by section 541 of the Bankruptcy Code on and after the Petition
     Date.

          73. "Exit Facility" means the Restructured Facilities and the Exit
     Revolving Credit Facility.

          74. "Exit Letters of Credit" means the letters of credit in the
     aggregate amount of $25 million to be issued or caused to be issued by
     GOF in favor of the Postpetition Agent to support amortization payments
     due between the Effective Date and December 31, 2004, under the
     Restructured Facilities pursuant to the Bank Term Sheet, which amount
     shall not exceed $25 million.

          75. "Exit Revolving Credit Facility" means that certain five-year
     revolving credit facility in the amount of $50 million to be provided to
     the Debtors as contemplated by the Bank Term Sheet and pursuant to the
     terms and conditions of a Commitment Letter (which shall be consistent in
     all respects to those of the Bank Term Sheet) to be executed before the
     Confirmation Date and subject to definitive documentation to be filed as
     part of the Amended Modified Plan Supplement.

          76. "FabPro" means FabPro Oriented Polymers, Inc., a Delaware
     corporation, a debtor and debtor-in-possession in the Chapter 11 Cases.

          77. "Fabrene Group" means Fabrene Group LLC, a Delaware corporation,
     a debtor and debtor-in-possession in the Chapter 11 Cases.

          78. "Fabrene" means Fabrene Corp., a Delaware corporation, a debtor
     and debtor-in-possession in the Chapter 11 Cases.

          79. "Fibergol" means Fibergol Corporation, a Delaware corporation, a
     debtor and debtor-in-possession in the Chapter 11 Cases.

          80. "FiberTech" means FiberTech Group, Inc., a Delaware corporation,
     a debtor and debtor-in-possession in the Chapter 11 Cases.

          81. "File" means to file with the Clerk of the Bankruptcy Court in
     the Chapter 11 Cases in accordance with the Bankruptcy Code and
     Bankruptcy Rules.

                                      7
<PAGE>

          82. "Filing Subsidiaries" means, collectively, PGI Polymer, PGI
     Europe, Chicopee, FiberTech, Technetics, Fibergol, Fabrene, Fabrene
     Group, PNA, FNA, FNA Acquisition, Loretex, Dominion, Poly-Bond, FabPro,
     PGI Asset Management, PGI Servicing, Pristine, PolyIonix, Bonlam (S.C.).

          83. "Final Decree" means the decree contemplated under Fed. R.
     Bankr. P. 3022.

          84. "Final Order" means an order of the Bankruptcy Court (i) as to
     which the time to appeal, petition for certiorari or move for reargument,
     reconsideration or rehearing has expired and as to which no appeal,
     petition for certiorari or other proceedings for reargument,
     reconsideration or rehearing is pending; or (ii) if an appeal, writ of
     certiorari, reargument or rehearing thereof has been sought, such order
     has been affirmed by the highest court to which such order was appealed
     or from which certiorari was sought, reargument, reconsideration or
     rehearing has been denied or resulted in no modification of such order,
     and the time to take any further appeal, petition for certiorari or move
     for reargument, reconsideration or rehearing has expired; provided,
     however, that a possibility that a motion under Rule 59 or 60 of the
     Federal Rules of Civil Procedure or any analogous Bankruptcy Rule may be,
     but has not been, Filed with respect to such order, shall not cause such
     order not to be a Final Order.

          85. "FNA Acquisition" means FNA Acquisition Group, a Delaware
     corporation, a debtor and debtor-in-possession in the Chapter 11 Cases.

          86. "FNA" means FNA Polymer Corp, a North Carolina corporation, a
     debtor and debtor-in-possession in the Chapter 11 Cases.

          87. "General Unsecured Claim" means any unsecured Claim against one
     or more of the Debtors (including the Dominion Note Claims and the
     GK/Ives Claims) that is not a Priority Tax Claim, Priority Non-Tax Claim,
     Administrative Expense Claim, Senior Lender Claim, Critical Business
     Relations Claim, Intercompany Claim or Other Securities Claim and
     Interest, and shall include, except as set forth above in this
     definition, all unsecured claims not otherwise classified that are not
     cured, paid, released or waived pursuant to this Amended Modified Plan,
     assumed by a Debtor pursuant to this Amended Modified Plan or agreements
     incorporated into this Amended Modified Plan, or classified in any other
     class, including, without limitation, claims (a) for goods sold and/or
     services rendered, (b) for monies lent, (c) based upon guarantees of
     performance or payment of the obligations or duties of any Person, (d)
     for tort liability, (e) for environmental remediation, (f) of
     Governmental Units under any applicable unclaimed property or escheat
     laws, (g) of Governmental Units for taxes, assessments, penalties or
     charges which are not Tax Claims, (h) for contribution, reimbursement or
     indemnity, (i) for fines, penalties or other assessments; (j) for the
     portion of any Claim supported directly or indirectly by a letter of
     credit issued for the account of a Debtor in excess of the amount
     available under such letter of credit; and (k) representing the
     undersecured portion of any claim that is otherwise a Secured Claim.

          88. "GK/Ives" means, together, Dr. Guillermo Kraves and the Ives
     Company Limited.

          89. "GK/Ives Claims" means those Claims against the Debtors of
     GK/Ives arising from that certain Purchase and Option Agreement, dated as
     of July 1, 2000, (and any other agreements, if any, referenced by GK/Ives
     in its proofs of claim) as evidenced in certain proofs of claim as timely
     filed on December 23, 2002, in the aggregate amount of $18,590,813.06, as
     the same may be amended or modified (with all rights of the Debtors and
     parties in interest to object to any proposed amendment or modification
     being reserved).

          90. "GOF" means MatlinPatterson Global Opportunities Partners L.P.

          91. "GOF Board Members" means the five members of the New Polymer
     Board of Directors who shall be appointed by GOF pursuant to this Amended
     Modified Plan.

          92. "Holder" means the Beneficial Holder of a Claim or Equity
     Interest.

                                      8
<PAGE>

          93. "Impaired" means, with respect to a Claim or an Equity Interest,
     a Claim or an Equity Interest with respect to which this Amended Modified
     Plan alters the legal, equitable or contractual rights to which such
     Claim or Equity Interest entitles its Holder.

          94. "Impaired Claim" means a Claim classified in an Impaired Class.

          95. "Impaired Class" means each of Classes 2, 4 and 6, as set forth
     in Article III herein.

          96. "Impaired Equity Interest" means an Equity Interest that is
     classified in an Impaired Class.

          97. "Intercompany Claim" means any Claim held by any direct or
     indirect subsidiary of Polymer that is not a Filing Subsidiary against
     any Debtor or by any Debtor against any other Debtor, including, but not
     limited to a Claim that was: (a) incurred after the Petition Date; or (b)
     incurred as a result of the extension of credit in connection with the
     purchase of goods or services in the ordinary course of business.

          98. "Intercompany Interests" means any and all Equity Securities of
     a Debtor that are owned by another Debtor as of the Record Date.

          99. "Lien" means any charge against or interest in property to
     secure payment of a debt or performance of an obligation, including a
     right of set off to secure payment of a debt or performance of an
     obligation.

          100. "Loretex" means Loretex Corporation, a New York corporation, a
     debtor and debtor-in-possession in the Chapter 11 Cases.

          101. "Management" means, collectively, Zucker, Boyd and all other
     officers covered by the director and officer liability insurance policies
     referred to in Article XII.D hereof.

          102. "Master Ballots" means the forms accompanying the Amended
     Modified Disclosure Statement upon which the Nominees of the Beneficial
     Holders of the Senior Subordinated Notes and the Nominees of Beneficial
     Holders of Class 6 Equity Interests respectively, shall indicate
     acceptances or rejections of this Amended Modified Plan by the Beneficial
     Holders in accordance with the Voting Instructions.

          103. "New Investment" means the purchase by the Participating
     Allowed Class 4 Claim Holders of Convertible Notes for a total purchase
     price of $50 million, all in accordance with the provisions of Article
     V.H hereof.

          104. "New Polymer" means Polymer or any successor thereto, by
     merger, consolidation, or otherwise, on and after the Effective Date.

          105. "New Polymer Affiliate" means (i) GOF; (ii) Zucker; (iii) Boyd;
     (iv) CSFB; (v) any "Insider" (as defined in the Bankruptcy Code) of GOF,
     Zucker, Boyd or CSFB; (vi) the Intertech Group, Inc.; (vii) GTC Fund III
     Limited Partnership and (viii) any other Entity directly or indirectly
     controlling or controlled by or under direct or indirect common control
     with GOF, Zucker, Boyd or CSFB where "control" means the power to direct
     the management or policies of such Entity, directly or indirectly;
     provided, that nothing in this definition shall be an admission that any
     such entity is an affiliate of New Polymer for any purpose other than for
     the purpose of defining New Polymer Affiliated Transactions.

          106. "New Polymer Affiliated Transaction" means entering into any
     transaction involving any New Polymer Affiliate; provided, however, that,
     in the case of GOF, CSFB or a New Polymer Affiliate of GOF or CSFB, that
     such transaction exceeds $10 million, provided, further, that
     transactions between New Polymer, its subsidiaries or its affiliates and
     Huntsman Company, LLC, its subsidiaries or its affiliates substantially
     consistent with past practice shall not be a "New Polymer Affiliated
     Transaction" for the purposes of the foregoing. The foregoing $10 million
     threshold shall not apply to management or transaction fees because such
     transactions are prohibited at any dollar amount.

                                      9
<PAGE>

          107. "New Polymer Board of Directors" means the board of directors
     of New Polymer, constituted in accordance with Article V.B.3 hereof.

          108. "New Polymer Common Stock" means collectively, the Class A
     Common Stock, the Class B Common Stock, the Class C Common Stock, the
     Class D Common Stock and the Class E Common Stock, authorized to be
     issued pursuant to, and with rights and obligations set forth in, any
     document created by, or agreement entered into by, New Polymer.

          109. "New Polymer Notes" means the Convertible Notes and the New
     Senior Subordinated Notes.

          110. "New Senior Subordinated Notes" means the 10% Senior
     Subordinated Notes due December 2007, to be issued by New Polymer to GOF
     in a face amount equal to the amount of any drawing under the Exit
     Letters of Credit (or any other advances made by or caused by GOF solely
     in lieu of drawing under the Exit Letters of Credit to make the
     amortization payments due under the Restructured Facilities from the
     Effective Date to December 31, 2004), which New Senior Subordinated Notes
     shall have the terms listed in an Exhibit to the Amended Modified Plan
     Supplement. The New Senior Subordinated Notes shall be senior in right of
     payment to the Convertible Notes. In no event shall the aggregate
     principal amount of the New Senior Subordinated Notes exceed $25 million.

          111. "Nominee" means any broker, dealer, commercial bank, trust
     company, savings and loan association or other Person in whose name a
     Beneficial Holder's Subordinated Notes are registered or held of record
     as of the Record Date.

          112. "Non-GOF Holders" means those Holders of Class 4 General
     Unsecured Claims other than GOF.

          113. "Non-GOF Board Members" means the two members of the New
     Polymer Board of Directors appointed, pursuant to the Amended Modified
     Plan, by the Non-GOF Holders, who are Committee Members and who are
     Holders of Senior Subordinated Notes.

          114. "Notice, Claims and Balloting Agent" means Trumbull Bankruptcy
     Services, located at 4 Griffin Road North, Windsor, CT 06095, Attn:
     Francine Gordon -- (860) 687-7592.

          115. "Official Bankruptcy Forms" means the Official and Procedural
     Bankruptcy Forms, prescribed by the Judicial Conference of the United
     States, in accordance with Fed. R. Bankr. P. 9009.

          116. "Old Polymer Common Stock" means all of the issued and
     outstanding shares of Polymer's common stock.

          117. "Organizational Documents" means the certificate of
     incorporation, articles of organization, bylaws, operating agreement,
     partnership agreement, and/or other organizational and governing
     documents (including all those that govern or impact the appointment,
     election, and/or removal of directors, managers, managing partners or
     persons of equivalent authority), as the case may be, of an Entity.

          118. "Original Confirmation Order" means the order entered by the
     Bankruptcy Court on January 3, 2003, confirming this Amended Modified
     Plan, which order is superseded by the Confirmation Order.

          119. "Other Priority Claims" means any Claim accorded priority in
     right of payment under section 507(a) of the Bankruptcy Code, other than
     a Priority Tax Claim or an Administrative Expense Claim.

          120. "Other Secured Claims" means all Secured Claims, other than
     Senior Lender Claims, against any of the Debtors held by any Person or
     Entity.

          121. "Other Securities Claims and Interests" means (a) any Equity
     Interest in Polymer (other than Old Polymer Common Stock), including, but
     not limited to, any warrants, options, conversion privileges or contract
     rights to purchase or acquire any equity securities of Polymer at any
     time (including any rights, if any, under the Shareholder Rights Plan,
     whether contingent or otherwise), and (b) any Claims, obligations,

                                      10
<PAGE>

     rights, suits, damages, causes of action, remedies, and liabilities
     whatsoever, whether known or unknown, foreseen or unforeseen, currently
     existing or hereafter arising, in law, equity or otherwise arising from
     rescission of a purchase or sale of a security of Polymer (including the
     Senior Subordinated Notes and Old Polymer Common Stock) or the purchase
     or sale of a security of an Affiliate of Polymer, for damages arising
     from the purchase, sale or holding of such securities or the exercise of
     an option, warrant, conversion privilege or contractual right to such
     purchase or sale (including any rights, if any, under the Shareholder
     Rights Plan, whether contingent or otherwise), or for reimbursement,
     indemnification or contribution allowed under section 502 of the
     Bankruptcy Code on account of such a Claim.

          122. "Over Subscription Rights" means, in the event that any Non-GOF
     Holder does not elect to exercise its Subscription Rights, the right of
     each Participating Allowed Class 4 Claim Holder to elect to purchase
     those unpurchased Convertible Notes on a Pro Rata basis (determined
     exclusive of accrued and unpaid interest).

          123. "Participating Allowed Class 4 Claim Holders" means those
     Holders of Allowed Class 4 Claims or their permitted transferees who
     elect to participate in the New Investment in accordance with the
     Subscription Rights.

          124. "Person" means a "person" within the meaning of section 101(41)
     of the Bankruptcy Code.

          125. "Petition Date" means the date on which Debtors filed their
     respective voluntary petitions for relief commencing the Chapter 11
     Cases, which for all the Debtors other than Bonlam (S.C.), was May 11,
     2002, and which was April 23, 2002, for Bonlam (S.C.).

          126. "PGI Asset Management" means PGI Asset Management Company, a
     Delaware corporation, a debtor and debtor-in-possession in the Chapter 11
     Cases.

          127. "PGI Board Members" means the two members of the New Polymer
     Board of Directors appointed by Polymer's existing board of directors
     pursuant to the Amended Modified Plan and who initially shall be Zucker
     and Boyd.

          128. "PGI Europe" means PGI Europe, Inc., a Delaware corporation, a
     debtor and debtor-in-possession in the Chapter 11 Cases.

          129. "PGI Polymer" means PGI Polymer, Inc., a Delaware corporation,
     a debtor and debtor-in-possession in the Chapter 11 Cases.

          130. "PGI Servicing" means PGI Servicing Company, a Delaware
     corporation, a debtor and debtor-in-possession in the Chapter 11 Cases.

          131. "Plan Party" means GOF, the Debtors, the Committee and each of
     the Committee Members.

          132. "PNA" means PNA Corp., a North Carolina corporation, a debtor
     and debtor-in-possession in the Chapter 11 Cases.

          133. "Poly-Bond" means Poly-Bond Inc., a Delaware corporation, a
     debtor and debtor-in-possession in the Chapter 11 Cases.

          134. "PolyIonix" means PolyIonix Separation Technologies, Inc., a
     Delaware corporation, a debtor and debtor-in-possession in the Chapter 11
     Cases.

          135. "Polymer" means Polymer Group, Inc., a Delaware corporation, a
     debtor and debtor-in-possession in the Chapter 11 Cases.

          136. "Post-Confirmation Estates" means each Estate, collectively and
     individually, upon and after the Effective Date, pursuant to the terms
     and conditions of this Amended Modified Plan.

                                      11
<PAGE>

          137. "Postpetition Agent" means J.P. Morgan Chase Bank, in its
     capacity as Agent under the Exit Facility.

          138. "Prepetition Agent or Prepetition Administrative Agent" means
     JP Morgan Chase Bank (formerly known as The Chase Manhattan Bank), in its
     capacity as Agent under the Prepetition Credit Facility.

          139. "Prepetition Credit Facility" means the Second Amended,
     Restated and Consolidated Credit Agreement, dated as of July 3, 1997, as
     amended through and including Amendment No. 7 among the Prepetition
     Agent, the Senior Lenders and the Debtors, which provides for secured
     revolving credit borrowings, term loans and letters of credit with
     aggregate commitments of up to $600 million, together with all related
     notes, certificates, security agreements, mortgages, pledges,
     indemnities, collateral assignments, undertakings, guarantees, and other
     instruments and documents, as each may have been amended or modified from
     time to time.

          140. "Priority Non-Tax Claim" means a Claim entitled to priority
     pursuant to section 507(a) of the Bankruptcy Code other than a Priority
     Tax Claim.

          141. "Priority Tax Claim" means a Claim entitled to priority
     treatment pursuant to section 507(a)(8) of the Bankruptcy Code.

          142. "Pristine" means Pristine Brands Corporation, a Delaware
     corporation, a debtor and debtor-in-possession in the Chapter 11 Cases.

          143. "Pro Rata" means proportionately, so that, e.g., with respect
     to a distribution on account of an Allowed Claim, the ratio of (a) (i)
     the amount of property distributed on account of a particular Allowed
     Claim to (ii) the amount of the Allowed Claim, is the same as the ratio
     of (b) (i) the amount of property distributed on account of all Allowed
     Claims in the Class in which such Allowed Claim is included to (ii) the
     amount of all Allowed Claims in that Class.

          144. "Professionals' Escrow Account" means an interest-bearing
     savings account maintained by the Reorganized Debtors with funds
     deposited solely for the purpose of paying all fees and expenses of
     Professionals in the Chapter 11 Cases.

          145. "Professional" means a Person or Entity (a) employed pursuant
     to a Final Order in accordance with sections 327 and 1103 of the
     Bankruptcy Code and to be compensated for services rendered prior to the
     Effective Date, pursuant to sections 327, 328, 329, 330 and 331 of the
     Bankruptcy Code or (b) for which compensation and reimbursement has been
     allowed by the Bankruptcy Court pursuant to section 503(b)(4) of the
     Bankruptcy Code.

          146. "Proof of Claim" has the meaning ascribed to it in Fed. R.
     Bankr. P. 3001.

          147. "Qualified Institutional Buyer" means a "qualified
     institutional buyer" as defined in Rule 144A, promulgated under the
     Securities Act.

          148. "Record Date" means the date to be established by the
     Bankruptcy Court in the Scheduling Order for the purpose of determining
     those Holders of Allowed Claims and Equity Interests that are entitled to
     vote to accept or reject this Amended Modified Plan.

          149. "Releasees" means each of the Debtors, the Reorganized Debtors,
     the D&O Releasees, the Senior Lender Releasees, CSFB, GOF,
     MatlinPatterson Global Advisers LLC, CSFB Global Opportunities Advisers
     L.L.C., the Committee, the Committee Members, the DIP Agent and the DIP
     Lenders (and all Subsidiaries and Affiliates and officers, directors,
     partners, members, attorneys and other professionals, and agents of each
     of the foregoing), as such are referred to in connection with certain
     mutual releases described in Article X.A herein.

                                      12
<PAGE>

          150. "Reorganized Debtors" means the Debtors and
     Debtors-in-Possession, or any successors thereto, by merger,
     consolidation, or otherwise pursuant to this Amended Modified Plan, on
     and after the Effective Date.

          151. "Restated By-laws" means the restated by-laws of the
     Reorganized Debtors, the form of which shall be Filed on or before the
     Confirmation Date.

          152. "Restated Certificate of Incorporation" means that certificate
     of incorporation of New Polymer that has been amended pursuant to Article
     V.B.1 herein.

          153. "Restructured Facilities" means, the Prepetition Credit
     Facility as restructured pursuant to the terms and conditions contained
     in the Bank Term Sheet and subject to execution of definitive
     documentation, forms of which will be included as exhibits to the Amended
     Modified Plan Supplement.

          154. "Restructuring Transactions" means the transactions described
     in Article V.K herein.

          155. "Schedules" means the schedules of assets and liabilities and
     schedules of executory contracts as Filed on July 1, 2002, and the
     statement of financial affairs as Filed on June 28, 2002, as amended and
     supplemented from time to time.

          156. "Scheduling Order" means the order entered by the Bankruptcy
     Court on November 14, 2002, granting the Motion of the Debtors with
     Supporting Memorandum of Law for Entry of an Order Approving the
     Procedures and Materials Employed to Provide Notice of the Modified
     Disclosure Statement, filed on November 14, 2002.

          157. "Secured Claim" means that portion of a Claim (a) that is
     secured by a Lien on property in which any of the Debtors or their
     Estates has an interest, which Lien is valid, perfected and enforceable
     under applicable law or by reason of a Final Order and is not subject to
     avoidance under the Bankruptcy Code or applicable non-bankruptcy law, or
     that is subject to setoff under section 553 of the Bankruptcy Code, to
     the extent of the value of the Claim Holder's interest in the Debtors' or
     Estates' interest in such property or to the extent of the amount subject
     to setoff, as applicable, as determined pursuant to section 506(a) of the
     Bankruptcy Code; or (b) Allowed under this Amended Modified Plan as a
     Secured Claim.

          158. "Securities Act" means the Securities Act of 1933, 15 U.S.C.
     sections 77a-77aa, as now in effect or hereafter amended, or any similar
     federal, state or local law.

          159. "Senior Lender Claims" means any and all Claims of the Senior
     Lenders arising from the Prepetition Credit Facility, excluding the
     Adequate Protection Obligations, which Claims shall be deemed Allowed
     without the need to File any Proof of Claim.

          160. "Senior Lender Closing Prepayment" means the payment that the
     Debtors shall make to the Prepetition Agent on the Effective Date, for
     the Pro Rata benefit of the Senior Lenders, to the extent Cash and Cash
     Equivalents held by Polymer and its subsidiaries (after giving effect to
     payment of (i) Professional Fees (which shall include any success fees
     payable by the Debtors or the Committee to a financial advisor) relating
     to these Chapter 11 Cases and the payments to GOF set forth in Article
     XII.C hereof; (ii) the Chicopee Sale Proceeds (to the extent that the
     Chicopee Sale closes before the Effective Date); and (iii) the Senior
     Lender Paydown) is greater than $35 million; provided that such Senior
     Lender Closing Prepayment shall be in an amount at least equal to $5
     million.

          161. "Senior Lender Paydown" means the payment that the Debtors
     shall make to the Prepetition Agent on the Effective Date, for the Pro
     Rata benefit of the Senior Lenders, comprising $50 million in Cash from
     funds generated by the New Investment.

          162. "Senior Lender Releasees" means all Senior Lenders and the
     Prepetition Administrative Agent, Postpetition Agent, as well as all
     former Holders of indebtedness incurred under the Prepetition Credit
     Facility (solely in such capacity) and their attorneys, financial
     advisors, employees, officers and

                                      13
<PAGE>

     directors, accountants, investment bankers, agents and other
     representatives (solely in connection with their representation of such
     Senior Lenders, Prepetition Administrative Agent, Postpetition Agent and
     former Holders of indebtedness incurred under the Prepetition Credit
     Facility in respect of the Prepetition Credit Facility).

          163. "Senior Lenders" means those certain financial institutions
     party to the Prepetition Credit Facility that continue, as of the Record
     Date, to be Holders of indebtedness incurred under the Prepetition Credit
     Facility, and the other Holders, as of the Record Date, of indebtedness
     incurred under the Prepetition Credit Facility.

          164. "Senior Subordinated Note Claims" means, collectively, all
     Claims arising from or related to the Senior Subordinated Notes.

          165. "Senior Subordinated Notes" means, collectively, the 9% Senior
     Subordinated Notes and the 8 3/4% Senior Subordinated Notes.

          166. "Senior Subordinated Note Indentures" means, collectively, the
     8 3/4% Indenture and the 9% Indenture.

          167. "Senior Subordinated Notes Indenture Trustee" means BNY Midwest
     Trust Company as successor trustee to Harris Trust and Savings Bank under
     the Senior Subordinated Note Indentures.

          168. "Series A Warrants" means the Series A Warrants to purchase
     498,688 shares of Class D Common Stock, par value $.01 per share, to be
     issued by New Polymer, which are designed to allow the Holders to
     participate as stockholders in the appreciation of the equity value of
     New Polymer above certain thresholds and which contain the terms and
     conditions described in Exhibit D to the Amended Modified Plan
     Supplement, including, without limitation, the requirement that the
     Series A Warrants shall not be exercisable until holders of Class A
     Common Stock, Class B Common Stock, and Class C Common Stock shall have
     received distributions in accordance with the priorities set forth in
     Exhibit J to the Amended Modified Disclosure Statement at section C,
     "Distributions".

          169. "Series B Warrants" means the Series B Warrants to purchase
     523,557 shares of Class E Common Stock, par value $.01 per share, to be
     issued by New Polymer, which are designed to allow the Holders to
     participate as stockholders in the appreciation of the equity value of
     New Polymer above certain thresholds and which contain the terms and
     conditions described in Exhibit E to the Amended Modified Plan
     Supplement, including, without limitation, the requirement that the
     Series A Warrants shall not be exercisable until holders of Class A
     Common Stock, Class B Common Stock, Class C Common Stock and Class D
     Common Stock shall have received distributions in accordance with the
     priorities set forth in Exhibit J to the Amended Modified Disclosure
     Statement at section C, "Distributions".

          170. "Shareholder Rights Plan" means Polymer's shareholder rights
     plan or "poison pill" embodied in the Rights Agreement, dated as of April
     15, 1996, by and among Polymer and First Union National Bank of North
     Carolina.

          171. "Solicitation Agent" means Innisfree M&A Incorporated, located
     at 501 Madison Avenue, New York, New York 10022.

          172. "SPE" means the special purpose entity that will, in the event
     that Non-GOF Holders elect to receive Class C Common Stock, hold Class C
     Common Stock and whose SPE Equity and SPE Notes will, in such event, be
     held by the Electing Non-GOF Holders.

          173. "SPE Equity" means the equity interests in the SPE that are
     issued to the Electing Non-GOF Holders, together with the SPE Notes, in
     exchange for their Class C Common Stock.

          174. "SPE Notes" means those debt instruments that are to be issued
     by the SPE to the Electing Non-GOF Holders, together with the SPE Equity,
     in exchange for their Class C Common Stock. Such SPE Notes, at maturity,
     will equal the amount of the Allowed Class 4 Claims exchanged by such
     Electing Non-

                                      14
<PAGE>

     GOF Holders for Pro Rata shares of Class C Common Stock under the Amended
     Modified Plan, which shall be contributed to the SPE in exchange for Pro
     Rata shares of SPE Equity and SPE Notes with interest payable-in-kind
     (other than payments on the SPE Notes from the irreducible cash payment
     in the form of a dividend or other contractual commitment by New Polymer
     on the Class C Common Stock that, in the aggregate, shall equal the
     lesser of (i) 1% per annum of the principal amount of the SPE Notes; and
     (ii) $1.0 million per annum). The SPE Notes will be nonrecourse to
     Polymer and New Polymer.

          175. "Statement of Officers and Directors" means the statement Filed
     seven (7) Business Days prior to the commencement of the Confirmation
     Hearing identifying the initial officers and directors of the Reorganized
     Debtors, and containing any other information, if any, required by
     Article V.B.3 of this Amended Modified Plan.

          176. "Subscription Rights" means (a) the right of the Holders of
     Allowed Class 4 Claims to elect to purchase the Convertible Notes on a
     Pro Rata basis (determined exclusive of accrued and unpaid interest), and
     (b) unless otherwise indicated, the Over Subscription Rights which shall
     be attached to, and inure to the benefit of, the Holders of Subscription
     Rights, in each case as described in Article V.H of this Amended Modified
     Plan.

          177. "Subsidiary" means a corporation or limited liability company
     in which any Debtor owns or controls, directly or indirectly, at least a
     50% equity interest.

          178. "Substantive Consolidation Order" means the Order of the
     Bankruptcy Court substantively consolidating, for limited purposes, the
     Chapter 11 Cases (which may be part of the Confirmation Order).

          179. "Supplemental Election Form" means the form by which a
     Participating Allowed Class 4 Claim Holder may indicate its intention to
     participate in the New Investment and by which a Holder of an Allowed
     Class 4 Claim (if such a Holder is a Qualified Institutional Buyer) must
     indicate whether such Holder elects to receive Class A Common Stock or
     Class C Common Stock as its treatment under the Amended Modified Plan.

          180. "Tax Rate" means the rate equal to the underpayment rate
     specified in 26 U.S.C. ss. 6621 (determined without regard to 26 U.S.C.
     ss. 6621(c)) as of the Effective Date.

          181. "Technetics" means Technetics Group, Inc., a Delaware
     corporation, a debtor and debtor-in-possession in the Chapter 11 Cases.

          182. "Unimpaired Claim" means each Claim that is in an Unimpaired
     Class under the Amended Modified Plan.

          183. "Unimpaired Classes" means Classes 1, 3, 5 and 7, which are not
     impaired Classes within the meaning of section 1124 of the Bankruptcy
     Code.

          184. "Voting Deadline" means the date stated in the Voting
     Instructions by which all Ballots must be received.

          185. "Voting Instructions" means the instructions for voting on this
     Amended Modified Plan contained in (a) the Section of the Amended
     Modified Disclosure Statement entitled VOTING AND CONFIRMATION PROCEDURE
     and (b) the Ballots and Master Ballots.

          186. "Warrants" means the Series A Warrants and Series B Warrants.

          187. "Zucker" means Jerry Zucker.


                                      15
<PAGE>

                                  ARTICLE II.

                       TREATMENT OF UNCLASSIFIED CLAIMS

          A. DIP Facility Claims

          On the Effective Date, each Holder of an Allowed DIP Facility Claim
shall receive in full satisfaction, settlement, release, and discharge of, and
in exchange for, such Allowed DIP Facility Claim, any and all liens against,
or security interests in, property of the Debtors or the Estates, Cash equal
to the unpaid portion of such Allowed DIP Facility Claim. At such time, the
DIP Facility shall be deemed terminated and the obligations thereunder of the
Debtors and the Reorganized Debtor shall be terminated.

          B. Administrative Expense Claims

          Each Holder of an Allowed Administrative Expense Claim (other than
Professionals) shall receive the full unpaid amount of such Allowed
Administrative Expense Claim in Cash on the Effective Date, or upon such other
terms as may be agreed upon by such Holder and the Debtors, or otherwise upon
order of the Bankruptcy Court; provided, however, that Allowed Administrative
Expense Claims representing obligations incurred in the ordinary course of
business or otherwise assumed by the Reorganized Debtors pursuant to this
Amended Modified Plan shall be paid in the ordinary course of business in
accordance with the terms and conditions of the particular agreements
governing such obligations.

          C. Compensation and Reimbursement Claims of Professionals

          All Professionals that are awarded compensation or reimbursement by
the Bankruptcy Court in accordance with sections 330 or 331 of the Bankruptcy
Code that are entitled to the priorities established pursuant to sections
503(b)(2), 503(b)(3), 503(b)(4), or 503(b)(5) of the Bankruptcy Code, shall be
paid in full, in Cash, the amounts allowed by the Bankruptcy Court: (a) on or
as soon as reasonably practicable following the later to occur of (i) the
Effective Date; and (ii) the date upon which the Bankruptcy Court order
allowing such Claim becomes a Final Order; or (b) upon such other terms as may
be mutually agreed upon between such Professional and the Reorganized Debtors.
On the Effective Date, there shall be escrowed into the Professionals' Escrow
Account all estimated accrued amounts owed to Professionals through the
Confirmation Date pending entry of a Final Order on each such Professional's
final fee application.

          D. Priority Tax Claims

          Each Holder of an Allowed Priority Tax Claim, at the sole option of
the Debtors, shall be entitled to receive on account of such Allowed Priority
Tax Claim, in full satisfaction, settlement, release and discharge of and in
exchange for such Allowed Priority Tax Claim, (i) equal Cash payments made on
the last Business Day of every three-month period following the Effective
Date, over a period not exceeding six (6) years after the assessment of the
tax on which such Claim is based, totaling the principal amount of such Claim
plus simple interest on any outstanding balance from the Effective Date
calculated at the interest rate available on ninety (90) day United States
Treasuries on the Effective Date; or (ii) such other treatment agreed to by
the Allowed Priority Tax Claim Holder and the Debtors.

                                 ARTICLE III.

               CLASSIFICATION AND TREATMENT OF CLASSIFIED CLAIMS
                             AND EQUITY INTERESTS
          A. Summary

          Pursuant to sections 1122 and 1123(a)(1) of the Bankruptcy Code, the
categories of Claims and Equity Interests listed below classify Claims and
Equity Interests for all purposes, including voting and distribution pursuant
to this Amended Modified Plan. A Claim or Equity Interest shall be deemed
classified in a particular Class only to the extent that such Claim or Equity
Interest qualifies within the description of that Class and shall be deemed
classified in a different Class to the extent that any remainder of such
Claim or Equity Interest qualifies within the description of such different
Class. A Claim or Equity Interest is in a particular Class only to the extent

                                      16
<PAGE>

that such Claim or Equity Interest is Allowed in that Class and has not been
paid or otherwise settled prior to the Effective Date.

THIS AMENDED MODIFIED PLAN SEEKS LIMITED SUBSTANTIVE CONSOLIDATION OF THE
DEBTORS' ESTATES SOLELY FOR THE LIMITED PURPOSES ENUMERATED IN THIS AMENDED
MODIFIED PLAN, AS FURTHER DESCRIBED IN ARTICLE V.L HEREIN. IF SUCH LIMITED
SUBSTANTIVE CONSOLIDATION IS AUTHORIZED AND ORDERED BY THE BANKRUPTCY COURT,
ALL ALLOWED CLAIMS AGAINST THE DEBTORS OR THEIR ESTATES SHALL BE SATISFIED
FROM THE COMBINED CASH AND OTHER ASSETS OF ALL OF THE DEBTORS AND REORGANIZED
DEBTORS.

      The classification of Claims against and Equity Interests in the Debtors
pursuant to this Amended Modified Plan is as follows:

====================================================================

 Class             Claim             Status       Voting Rights
====================================================================

   1  Priority Non-Tax Claims   Unimpaired      Not entitled to vote

   2  Senior Lender Claims      Impaired        Entitled to vote

   3  Other Secured Claims      Unimpaired      Not entitled to vote

   4  General Unsecured Claims  Impaired        Entitled to vote

   5  Critical Business         Unimpaired      Not entitled to vote
      Relations Claims and
      Intercompany Claims

   6  Old Polymer Common        Impaired        Entitled to vote
      Stock Interests

   7  Intercompany Interests    Unimpaired      Not entitled to vote

   8  Other Securities Claims   Impaired        Not entitled to vote
         and Interests                          (deemed to have rejected)
======================================================================

B.    Classification and Treatment of Claims Against and Equity Interests in
      the Debtors

      1.  Class 1 - Priority Non-Tax Claims

          a. Classification: Class 1 consists of all Priority Non-Tax Claims.

          b. Treatment: The legal, equitable and contractual rights of the
Holders of Class 1 Claims are unaltered by this Amended Modified Plan. Unless
the Debtors and the Holder of an Allowed Class 1 Claim agree to a different
treatment, each such Holder shall receive one of the following alternative
treatments, at the Reorganized Debtors' election.

               (i) to the extent due and owing on the Effective Date, such
          Claim will be paid on the Effective Date in full in Cash by the
          Reorganized Debtors;

               (ii) to the extent not due and owing on the Effective Date,
          such Claim will be paid in full in Cash by the Reorganized Debtors
          when and as such Claim becomes due and owing in the ordinary course
          of business; or

               (iii) such Claim will be otherwise treated in any other manner
          so that such Claim shall otherwise be rendered unimpaired pursuant
          to section 1124 of the Bankruptcy Code.

                                      17
<PAGE>

      Any default with respect to any Class 1 Claim that existed immediately
      prior to the Petition Date shall be deemed cured upon the Effective
      Date.

          c. Voting: Class 1 is not impaired, and the Holders of Class 1
     Claims are conclusively deemed to have accepted this Amended Modified
     Plan pursuant to section 1126(f) of the Bankruptcy Code. Therefore, the
     Holders of Claims in Class 1 are not entitled to vote to accept or reject
     this Amended Modified Plan.

          2. Class 2 - Senior Lender Claims

               a. Classification: Class 2 consists of all Senior Lender Claims.

               b. Treatment: On or as soon as practicable after the Effective
     Date, in full and complete satisfaction of all Senior Lender Claims
     asserted against any and all Debtors, each Holder of an Allowed Senior
     Lender Claim shall receive, on account of its Allowed Senior Lender Claim
     in accordance with the Bank Term Sheet, its Pro Rata share of (A)
     participation in the Restructured Facilities, (B) the Senior Lender
     Paydown, (C) the Chicopee Sale Proceeds (provided, that the Chicopee Sale
     closes before the Effective Date) and (D) the Senior Lender Closing
     Prepayment.

               c. Voting: Class 2 is impaired, and the Holders of Class 2
     Claims are entitled to vote to accept or reject this Amended Modified
     Plan. In the event Class 2 rejects this Amended Modified Plan, Debtors
     reserve the right to seek confirmation pursuant to section 1129(b) of the
     Bankruptcy Code as set forth in Article IV.E herein.

          3. Class 3 - Other Secured Claims

               a. Classification: Class 3 consists of all Other Secured
     Claims.

               b. Treatment: Unless the Holder of such Claim and Debtors agree
     to a different treatment, each Holder of an Allowed Class 3 Claim shall
     receive one of the following alternative treatments, at the election of
     the Reorganized Debtors:

                    (i) the legal, equitable and contractual rights of the
          Holders of Allowed Class 3 Claims shall be unaltered by this Amended
          Modified Plan;

                    (ii) Debtors shall surrender all Collateral securing such
          Claim to the Holder thereof, without representation or warranty by
          or recourse against the Debtors or Reorganized Debtors; or

                    (iii) such Claim will be otherwise treated in any other
          manner so that such Claim shall be rendered unimpaired pursuant to
          section 1124 of the Bankruptcy Code.

     Any default with respect to any Class 3 Claim that existed immediately
     prior to the Petition Date shall be deemed cured upon the Effective
     Date.

               c. Voting: Class 3 is not impaired, and the Holders of Class 3
     Claims are conclusively deemed to have accepted this Amended Modified
     Plan pursuant to section 1126(f) of the Bankruptcy Code. Therefore, the
     Holders of Class 3 Claims are not entitled to vote to accept or reject
     this Amended Modified Plan.

          4. Class 4 - General Unsecured Claims

               a. Classification: Class 4 consists of all General Unsecured
     Claims.

               b. Treatment: Each Holder of an Allowed General Unsecured Claim
     shall receive, in full and complete satisfaction of each such Holder's
     Claim, on, or as soon as practicable after the Effective

                                      18
<PAGE>

     Date, its Pro Rata share of Class A Common Stock in exchange for the
     amount of its Allowed Claim, provided, however, that, in the alternative,
     each such Holder who is a Qualified Institutional Buyer may elect to
     receive its Pro Rata share of Class C Common Stock, which shall be
     contributed to the SPE in exchange for SPE Equity and SPE Notes. The
     Holder of an Allowed Class 4 Claim may make only one election with
     respect to its Claim on the Supplemental Election Form, which election
     will be made after the Confirmation Date and prior to the 40th day
     thereafter. The failure of a Class 4 Claim Holder to make an election
     under this Amended Modified Plan shall be deemed an election to receive
     its Pro Rata share of Class A Common Stock with respect to its Allowed
     Claim. The total number of Class A Common Stock and Class C Common Stock
     shares to be issued on the Effective Date will be 9.6 million. Each
     Holder of an Allowed Class 4 Claim also will be given the option to take
     part in the New Investment by exercising its Subscription Rights in
     accordance with the Supplemental Election Form.

               c. Voting: Class 4 is impaired, and the Holders of Class 4
     Claims are entitled to vote to accept or reject this Amended Modified
     Plan. In the event Class 4 rejects this Amended Modified Plan, Debtors
     reserve the right to seek confirmation pursuant to section 1129(b) of the
     Bankruptcy Code as set forth in Article IV.E herein.

          5. Class 5 - Critical Business Relations Claims and Intercompany
     Claims

               a. Classification: Class 5 consists of all Critical Business
     Relations Claims and Intercompany Claims.

               b. Treatment: The legal, equitable and contractual rights of
     the Holders of Class 5 Claims are unaltered by this Amended Modified
     Plan. Unless the Holder of such Claim and Debtors agree to a different
     treatment, each Holder of an Allowed Class 5 Claim shall receive one of
     the following alternative treatments, at the election of the Debtors:

                    (i) to the extent then due and owing on the Effective
          Date, such Claim will be paid in full in Cash by the Reorganized
          Debtors;

                    (ii) to the extent not due and owing on the Effective
          Date, such Claim (A) will be paid in full in Cash by the Reorganized
          Debtors on the Effective Date, or (B) will be paid in full in Cash
          by the Reorganized Debtors when and as such Claim becomes due and
          owing in the ordinary course of business; or

                    (iii) such Claim will be otherwise treated in any other
          manner so that such Claim shall otherwise be rendered unimpaired
          pursuant to section 1124 of the Bankruptcy Code.

     Any default with respect to any Class 5 Claim that existed immediately
     prior to the filing of the Chapter 11 Case shall be deemed cured upon the
     Effective Date.

          c. Voting: Class 5 is not impaired and the Holders of Class 5 Claims
     are conclusively deemed to have accepted this Amended Modified Plan
     pursuant to section 1126(f) of the Bankruptcy Code. Therefore, the
     Holders of Class 5 Claims are not entitled to vote to accept or reject
     this Amended Modified Plan.

     6. Class 6 - Old Polymer Common Stock Equity Interests

               a. Classification: Class 6 consists of all Old Polymer Common
     Stock Interests.

               b. Treatment: On or as soon as practicable after the Effective
     Date, each Holder of an Allowed Equity Interest in Old Polymer Common
     Stock shall receive, in full and complete satisfaction of such Equity
     Interest, a Pro Rata share of (i) Class B Common Stock (which shall not
     be diluted by any conversion of the Convertible Notes); (ii) the Series A
     Warrants; and (iii) the Series B Warrants.

                                      19
<PAGE>

               c. Allowance: Each Holder of an Allowed Class 6 Old Polymer
     Common Stock Equity Interest shall be Allowed in the amount of the number
     of shares of Old Polymer Common Stock held by each applicable Holder as
     of the Record Date.

               d. Voting: Class 6 is impaired and Holders of Allowed Class 6
     Old Polymer Common Stock Equity Interests are entitled to vote to accept
     or reject this Amended Modified Plan. In the event Class 6 rejects this
     Amended Modified Plan, Debtors reserve the right to seek confirmation
     pursuant to section 1129(b) of the Bankruptcy Code as set forth in
     Article IV.E herein.

          7. Class 7 - Intercompany Interests

               a. Classification: Class 7 consists of all Intercompany
     Interests.

               b. Treatment: The legal, equitable and contractual rights of
     the Holders of Class 7 Claims are unaltered by this Amended Modified
     Plan.

               c. Voting: Class 7 is not impaired, and the Holders of Class 7
     Claims are conclusively deemed to have accepted this Amended Modified
     Plan pursuant to section 1126(f) of the Bankruptcy Code. Therefore, the
     Holders of Class 7 Claims are not entitled to vote to accept or reject
     this Amended Modified Plan.

          8. Class 8 - Other Securities Claims and Interests

               a. Classification: Class 8 consists of all Other Securities
     Claims and Interests of whatever kind or nature.

               b. Treatment: On the Effective Date, all Other Securities
     Claims and Interests shall be deemed cancelled and of no further force
     and effect, whether surrendered for cancellation or otherwise, and no
     distribution to the Holders of Other Securities Claims and Interests
     shall be made hereunder.

               c. Voting: Class 8 is impaired, but since Holders of Other
     Securities Claims and Interests are receiving no distribution hereunder,
     Holders of Class 8 Claims shall be deemed to have rejected this Amended
     Modified Plan and are not entitled to vote to accept or reject this
     Amended Modified Plan.

                                  ARTICLE IV.

             ACCEPTANCE OR REJECTION OF THE AMENDED MODIFIED PLAN

     A. Voting Classes

     Subject to Articles IV.C and D herein, Claim and Equity Interest Holders
in each Impaired Class of Claims or Equity Interests are entitled to vote as a
class to accept or reject this Amended Modified Plan. Each Holder of an
Allowed Claim or Equity Interest in Classes 2, 4 and 6 shall be entitled to
vote to accept or reject this Amended Modified Plan.

     B. Acceptance by Impaired Classes

     An Impaired Class of Claims shall be deemed to have accepted this Amended
Modified Plan if: (a) the Holders (other than any Holder designated under
section 1126(e) of the Bankruptcy Code) of at least two-thirds in amount of
the Allowed Claims actually voting in such Class have voted to accept this
Amended Modified Plan; (b) the Holders (other than any Holder designated under
section 1126(e) of the Bankruptcy Code) of more than one-half in number of the
Allowed Claims actually voting in such Class have voted to accept this Amended
Modified Plan. An Impaired Class of Equity Interests shall be deemed to have
accepted this Amended Modified Plan if the Holders (other than any Holder
designated under section 1126(e) of the Bankruptcy Code) of at least
two-thirds in amount of the Allowed Equity Interests actually voting in such
Class have voted to accept this Amended Modified Plan.

                                      20
<PAGE>

     C. Presumed Acceptance of Amended Modified Plan

     Classes 1, 3, 5 and 7 are Unimpaired Classes under this Amended Modified
Plan, and, therefore, are presumed to have accepted this Amended Modified Plan
pursuant to section 1126(f) of the Bankruptcy Code.

     D. Presumed Rejection of Amended Modified Plan

     Class 8 is impaired under this Amended Modified Plan and is receiving no
distribution hereunder. Accordingly, Class 8 is deemed to have rejected this
Amended Modified Plan.

     E. Non-Consensual Confirmation

     To the extent that any Impaired Class rejects this Amended Modified Plan
or is deemed to have rejected this Amended Modified Plan, the Debtors will
request confirmation of this Amended Modified Plan as it may be modified from
time to time, under section 1129(b) of the Bankruptcy Code. The Debtors
reserve the right to alter, amend, modify, revoke or withdraw this Amended
Modified Plan or any Amended Modified Plan Exhibit or Schedule, including to
amend or modify it to satisfy the requirements of section 1129(b) of the
Bankruptcy Code, if necessary.

                                  ARTICLE V.

          MEANS FOR IMPLEMENTATION OF THE AMENDED MODIFIED PLAN

     A. Continued Corporate Existence

     Subject to any Restructuring Transactions, the Reorganized Debtors shall
continue to exist after the Effective Date as separate corporate entities, in
accordance with the applicable laws in the respective jurisdictions in which
they are incorporated and pursuant to their respective certificates or
articles of incorporation and by-laws in effect prior to the Effective Date,
except to the extent such certificates or articles of incorporation and
by-laws are amended by, or pursuant to, this Amended Modified Plan.

     B. Corporate Governance, Corporate Action, and Directors and Officers

          1. Certificates of Incorporation and By-laws.

               a. The certificate or articles of incorporation and by-laws of
     each Debtor shall be amended as necessary to satisfy the provisions of
     this Amended Modified Plan and the Bankruptcy Code, and shall include,
     among other things, pursuant to section 1123(a)(6) of the Bankruptcy
     Code, a provision prohibiting the issuance of non-voting equity
     securities, but only to the extent required by section 1123(a)(6) of the
     Bankruptcy Code.

               b. In addition to the foregoing, New Polymer's Certificate of
     Incorporation shall include the following terms and provisions:

                    (i) New Polymer's authorized capital stock, and the
          designated shares in each class or series of capital stock, shall be
          limited to such number of shares as is necessary for the issuances
          contemplated hereunder, including conversion or exercise of all
          convertible or exercisable securities to be issued hereunder,
          including applicable anti-dilution protection;

                    (ii) The stockholders of New Polymer shall be authorized
          to take action by written consent in lieu of a meeting thereof;

                    (iii) The New Polymer Board of Directors shall not be
          classified; and

                    (iv) The provisions of Polymer's current Certificate of
          Incorporation that require an affirmative vote of 80% of the voting
          capital stock for the taking of certain

                                      21
<PAGE>


          actions shall be amended to provide that such actions may be taken
          with the affirmative vote of 50% of the voting capital stock.

               c. In addition to the foregoing, New Polymer's bylaws shall
     provide for the following terms and conditions:

                    (i) Shareholders holding a minimum of 25% of New Polymer
          Common Stock shall be authorized to call special meetings;

                    (ii) The notice requirements for shareholders to place
          matters on the ballot for consideration at annual and special
          meetings shall not be unduly prohibitive and, in any event, shall be
          to GOF's and the Committee's reasonable satisfaction; and

                    (iii) Shareholders shall be authorized to take action by
          written consent in lieu of a meeting thereof.

          2. Corporate Action. All actions contemplated by, and required for
the effectiveness of, this Amended Modified Plan shall be deemed authorized
and approved in all respects. All matters provided for in this Amended
Modified Plan involving the corporate structure of the Debtors or the
Reorganized Debtors, and any corporate action required by the Debtors or the
Reorganized Debtors in connection with this Amended Modified Plan, shall be
deemed to have occurred and shall be in effect, without any requirement of
further action by the directors of the Debtors or the Reorganized Debtors. On
the Effective Date, the appropriate officers and directors of the Reorganized
Debtors are authorized and directed to issue, execute and deliver the
agreements, documents, Equity Securities and instruments contemplated by this
Amended Modified Plan in the name of and on behalf of the Reorganized Debtors.

          3. Directors and Officers of the Reorganized Debtors.

               a. Pursuant to section 1129(a)(5) of the Bankruptcy Code, the
     Debtors will disclose, by Filing, ten (10) days prior to the Confirmation
     Date, a Statement of Officers and Directors, identifying any Person
     proposed to serve on the initial boards of directors of the Reorganized
     Debtors. To the extent any such Person is an Insider, the nature of any
     compensation for such Person also will be disclosed. The classification
     and composition of the boards of directors shall be consistent with each
     Reorganized Debtor's amended Certificate of Incorporation and other
     constituent documents. Each such director or officer shall serve from and
     after the Effective Date pursuant to the terms of each Reorganized
     Debtor's amended Certificate of Incorporation, other constituent
     documents, and the applicable state incorporation law.

               b. New Polymer will be governed by the New Polymer Board of
     Directors, which shall consist of nine members, each of whom shall have a
     term of three years, comprising the following categories: (i) five GOF
     Board Members; (ii) two PGI Board Members, who initially shall be Zucker
     and Boyd; and (iii) two Non-GOF Board Members.

               c. During such three year term, any vacancy by a GOF Board
     Member shall be filled by GOF, any vacancy by a PGI Board Member shall be
     filled by a nominee of the other PGI Board Member subject to the
     limitation set forth in clause d of this Article V.B.3, and any vacancy
     by a Non-GOF Board Member shall be filled by a nominee of the other
     Non-GOF Board Member. After three years from the Effective Date, each
     Non-GOF Board Member, each PGI Board Member and any other stockholder
     nominee will be included on New Polymer's slate of board nominees only if
     such Non-GOF Board Member, such PGI Board Member or other stockholder
     nominee is supported by the affirmative vote of shares representing not
     less than 12 1/2 % of the New Polymer Common Stock (provided that, for
     purposes of nomination, each share of holders of New Polymer Common Stock
     may only be counted in support of one nominee). GOF will agree to vote in
     favor of any nominee included on New Polymer's slate of board nominees
     whose nomination is supported by shares representing at least 12 1/2% of
     the New Polymer Common Stock as set forth above.

                                      22
<PAGE>

               d. GOF Board Members, Non-GOF Board Members and PGI Board
     Members may be removed only for cause subject to the following
     exceptions: (i) GOF may remove any GOF Board Member with or without
     cause; and (ii) each of Zucker and Boyd (or any director who is appointed
     to fill a vacancy created by the death, resignation or removal of Zucker
     or Boyd) may be removed from the board (a) if Zucker's or Boyd's
     employment, as the case may be, with New Polymer or its subsidiaries is
     terminated for cause; or (b) if Zucker's or Boyd's employment, as the
     case may be, with New Polymer or any Subsidiaries or affiliates is
     terminated without cause or Zucker or Boyd, as the case may be, resigns
     and, in either such case under this clause (b), he is paid the amounts,
     if any, to which he is legally entitled under his respective Change of
     Control Agreement or any other applicable agreement, provided, however,
     that, during the pendency of any dispute relating to (x) his termination;
     (y) whether his termination is for cause; or (z) whether he is entitled
     to payment under his respective Change of Control Agreement or any other
     applicable agreement, the New Polymer Board of Directors shall be
     permitted to remove him (or his successor) from the New Polymer Board of
     Directors. If Zucker or Boyd ultimately is removed as a director for
     cause or pursuant to clause (ii) (b) of the foregoing sentence, the
     number of directors on the New Polymer Board of Directors shall be
     reduced to eliminate such vacancy or vacancies; provided, however, that
     during the pendency of any dispute as described above the vacancy or
     vacancies shall not be eliminated nor shall any replacement director be
     appointed.

               e. At least one Non-GOF Board Member shall be on each of the
     audit, compensation and executive committees of the New Polymer Board of
     Directors.

     4. Corporate Governance. The Plan Parties will take all actions necessary
to implement the corporate governance provisions as set forth below:

               a. New Polymer shall be a reporting company under Section 12(g)
     of the Securities Exchange Act of 1934, as amended, on the Effective
     Date. New Polymer will agree not to seek suspension of its reporting
     obligations pursuant to Rule 12h-3 of the Securities Exchange Act of
     1934, as amended, or otherwise. Unless and until New Polymer is taken
     private, New Polymer shall remain a reporting company and shall continue
     to file quarterly and annual reports and all other required filings made
     by reporting companies regardless of the number of Holders of its New
     Polymer Common Stock or Convertible Notes. New Polymer shall remain a
     Delaware corporation, except to the extent necessary to effectuate a
     bonafide business combination or other transaction; provided, however,
     that any such business combination or other transaction with a
     New Polymer Affiliate shall require the approval of a Non-GOF Board
     Member.

               b. New Polymer shall use reasonable best efforts to be a listed
     company on the NYSE or included for quotation on The NASDAQ Stock Market
     on the Effective Date of the Amended Modified Plan or as soon as
     practicable thereafter.

               c. All Holders of outstanding shares of the New Polymer Common
     Stock shall have pre-emptive rights to buy a pro-rata share of any
     issuance of securities by New Polymer after the Effective Date, subject
     to customary exclusions, including, without limitation, exclusions for
     (i) employee and non-employee director stock option grants and similar
     stock-based compensatory arrangements; (ii) the shares issuable upon the
     conversion of the Convertible Notes; and (iii) the shares of Class B
     Common Stock pursuant to the anti-dilution provisions of the Class B
     Common Stock pursuant to conversion of the Convertible Notes. Holders of
     New Polymer Common Stock shall be granted "tag-along" rights by GOF
     applicable to all sales by GOF and GOF affiliates that result in GOF and
     GOF affiliates beneficially owning less than an aggregate of 54.9% of the
     New Polymer Common Stock on a fully-diluted basis and any sales
     thereafter.

               d. New Polymer shall not enter into any agreement to pay, nor
     will pay, any management or transaction fee to any New Polymer Affiliate.
     Without the written approval of at least one Non-GOF Board Member, New
     Polymer (i) may not enter into any New Polymer Affiliated Transaction; or
     (ii) may not change any provision of its charter, by-laws, shareholder
     agreements or other agreements or operative document that accomplish the
     provisions of Article V.B.3 or B.4 of this Amended Modified Plan.

               e. The Shareholder Rights Plan shall be terminated and
     rejected.

                                      23
<PAGE>


               f. As of the Effective Date, the Organizational Documents of
     New Polymer and its Subsidiaries and Affiliates shall prohibit their
     respective officers from exercising voting rights of any securities held
     by New Polymer or such subsidiaries and affiliates without express
     authorization from the New Polymer Board of Directors or other applicable
     governing body.

               g. As of the Effective Date, the Organizational Documents of
     each Subsidiary and Affiliate of New Polymer (including, without
     limitation, each Entity identified on Exhibit H to the Amended Modified
     Disclosure Statement) shall each provide that the stockholders, members,
     partners or other equity Holders, as the case may be, of such Entity
     shall be permitted to remove as of the Effective Date, at any time and
     from time to time thereafter, any director, manager, managing partner or
     person of equivalent authority, with or without cause at any time,
     through action by a majority in interest of such stockholders, members,
     partners or other equity Holders (which action may, at the option thereof
     and to the extent permissible by law, be taken in writing or pursuant to
     a meeting thereof).

               h. Any action by the New Polymer Board of Directors requiring a
     vote from a Non-GOF Board Member shall require the vote of a Non-GOF
     Board Member only as long as the New Polymer Board of Directors continues
     to have seats designated for such Non-GOF Board Members.

     C. Cancellation of Securities And Agreements.

      On the Effective Date, except as otherwise provided for in this Amended
Modified Plan, (a) Senior Subordinated Note Claims, Other Securities Claims
and Interests, Old Polymer Common Stock, and any other note, bond, Indenture,
or other instrument or document evidencing or creating any indebtedness or
obligation of a Debtor, and (b) the obligations of the Debtors under any
agreements, Indentures or certificates of designations governing Senior
Subordinated Note Claims, Other Securities Claims and Interests, Old Polymer
Common Stock, and any other note, bond, Indenture or other instrument or
document evidencing or creating any indebtedness or obligation of a Debtor, as
the case may be, shall be cancelled and terminated and shall be discharged
pursuant to section 1141 of the Bankruptcy Code.

          D. Issuance of New Polymer Common Stock and New Polymer Notes

               1. New Polymer Common Stock. On the Effective Date, New Polymer
          shall issue and distribute in accordance with the terms of this
          Amended Modified Plan, the New Polymer Common Stock as follows: the
          Class A Common Stock Pro Rata (in sum with the Class C Common Stock,
          9.6 million shares to be issued on the Effective Date) to Holders of
          Allowed Class 4 Claims who elect to receive Class A Common Stock,
          the Class B Common Stock (400,000 shares of New Polymer Common Stock
          issued on the Effective Date) to Holders of Allowed Claims in Class
          6 and the Class C Common Stock (representing in sum with the Class A
          Stock, 9.6 million shares to be issued on the Effective Date) to the
          Electing Non-GOF Holders.

               2. Section 1145 Exemption. To the maximum extent provided by
          section 1145 of the Bankruptcy Code and applicable nonbankruptcy
          laws, the shares of New Polymer Common Stock issued pursuant to this
          Amended Modified Plan are exempt from registration under the
          Securities Act.

               3. Issuance of Instruments. Except as otherwise provided
          herein, on or as soon as reasonably practicable after the Effective
          Date, the Reorganized Debtors shall issue all securities, notes,
          instruments, certificates, warrants and other documents to be issued
          in accordance with this Amended Modified Plan. The Reorganized
          Debtors shall execute and deliver such other agreements, documents
          and instruments as are required to be executed in accordance with
          the terms herein.

               4. Pursuant to Article V.H hereof, on the Effective Date, New
          Polymer shall issue Convertible Notes to the new indenture
          trustee(s) on behalf of the Holders of Participating Allowed Class 4
          Claim in exchange for the New Investment in an aggregate principal
          amount equal to $50 million. The Convertible Notes shall be issued
          pursuant to the Indenture attached as an exhibit to the Amended
          Modified Plan Supplement.


                                      24
<PAGE>

               5. New Polymer also shall issue New Senior Subordinated Notes
          to GOF to the extent of any draws on the Exit Letters of Credit (or
          any other advance made, or caused to be made, by GOF solely in lieu
          of a drawing under the Exit Letters of Credit to make the
          amortization payments under the Restructured Facilities from the
          Effective Date through December, 2004, which amount shall not exceed
          $25 million). The New Senior Subordinated Notes shall be senior in
          right of payment to the Convertible Notes.

               6. Except as otherwise provided in this Amended Modified Plan,
          on or as soon as reasonably practicable after the Effective Date,
          the Reorganized Debtors shall issue all Equity Securities, notes,
          instruments, certificates, warrants and other documents to be issued
          in accordance with this Amended Modified Plan. The Reorganized
          Debtors shall execute and deliver such other agreements, documents
          and instruments as are required to be executed in accordance with
          the terms of this Amended Modified Plan.

          E.    Revesting Of Assets; Releases of Liens

          The property of each Debtor's Estate, together with any property of
each Debtor that is not property of its Estate and that is not specifically
disposed of pursuant to this Amended Modified Plan, shall revest in the
applicable Debtor on the Effective Date. Thereafter, each Reorganized Debtor
may operate its business and may use, acquire, and dispose of property free of
any restrictions of the Bankruptcy Code, the Bankruptcy Rules, and the
Bankruptcy Court. As of the Effective Date, all property of each Reorganized
Debtor shall be free and clear of all Claims and Equity Interests, except as
specifically provided in this Amended Modified Plan or the Confirmation Order.
Without limiting the generality of the foregoing, each Reorganized Debtor may,
without application to or approval by the Bankruptcy Court, pay fees that it
incurs after the Effective Date for reasonable professional fees and expenses.

          F. Sources of Cash for Amended Modified Plan Distribution

          All Cash necessary for the Reorganized Debtors to make payments
pursuant to this Amended Modified Plan shall be obtained from existing Cash
balances, the New Investment, the operations of the Debtors or Reorganized
Debtors or post-Confirmation borrowing under all available facilities of the
Debtors or Reorganized Debtors, including, but not limited to, the Exit
Revolving Credit Facility, to the extent permitted thereunder. The Reorganized
Debtors may also make such payments using Cash received from their
Subsidiaries and Affiliates in the ordinary course of business.

          G. Exit Revolving Credit Facility

               1. On the Effective Date, New Polymer, certain of its
          Subsidiaries, and certain Senior Lenders and, if necessary, other
          parties, shall enter into the Exit Revolving Credit Facility, in
          order to (a) make other payments required to be made on the
          Effective Date; provided, that the Exit Revolving Credit Facility
          may not be used to repay the DIP Facility Claim, and (b) provide
          such additional borrowing capacity as may be required by the
          Reorganized Debtors and the Subsidiaries following the Effective
          Date to maintain their operations. The Confirmation Order shall
          provide that the Debtors are authorized to execute, deliver, record
          or file all documents necessary or appropriate to implement the Exit
          Revolving Credit Facility.

          H.   New Investment

               1. General. On the Effective Date, New Polymer will be provided
          with $50.0 million of funding. The New Investment will be made by
          the Participating Allowed Class 4 Claim Holders who choose to
          participate in the New Investment by exercising their Subscription
          Rights and will consist of $50.0 million in Cash which will be used
          to fund the Senior Lender Paydown on the Effective Date in
          accordance with the Bank Term Sheet. The Participating Allowed Class
          4 Claims Holders shall receive Convertible Notes as summarized
          below.

               2. Subscription Rights and Over Subscription Rights; Method of
          Election to Participate in New Investment. On the Confirmation Date,
          all Holders of Allowed Class 4 Claims as of the Record Date shall be
          deemed to have been issued Subscription Rights to purchase their Pro
          Rata share (determined exclusive of accrued and unpaid interest) of
          the Convertible Notes to be issued by New Polymer on the

                                      25
<PAGE>

          Effective Date. Each Subscription Right shall carry with it an
          Over Subscription Right, which shall attach to, and inure to the
          benefit of, the Beneficial Holder of the Subscription Right. Subject
          to all applicable state and federal securities laws, the
          Subscription Rights, along with any attendant Over Subscription
          Rights, shall be transferable for a period of not less than forty
          (40) days commencing on the Confirmation Date. Parties electing to
          purchase or sell Subscription Rights and Over Subscription Rights
          separately from the corresponding underlying Claims shall do so at
          their own risk and judgment as to whether such purchases and sales
          comply with applicable laws and regulations. To purchase
          Convertible Notes and participate in the New Investment, Beneficial
          Holders of Subscription Rights (which may include the Holders of
          Allowed Class 4 Claims to which such Subscription Rights are
          initially issued or their transferees) must exercise the
          Subscription Rights in the manner set forth on the Supplemental
          Election Form on or prior to the date which is forty (40) days after
          the Confirmation Date. Non-GOF Holders are not obligated to exercise
          their Subscription Rights, and, in the event that not all
          Subscription Rights are properly exercised, Participating Allowed
          Class 4 Claim Holders shall be entitled to exercise their Over
          Subscription Rights. Exercise of the Over Subscription Rights shall
          be in the manner set forth in the Supplemental Election Form.
          Participating Allowed Class 4 Claim Holders that are Non-GOF Holders
          are not obligated to exercise their Over Subscription Rights. GOF
          has committed itself to elect to exercise its Subscription Rights
          and its Over Subscription Rights, if any. As to all Convertible
          Notes allocated for purchase by the Non-GOF Holders pursuant to the
          Subscription Rights or the Over Subscription Rights which are not
          purchased by such Non-GOF Holders, GOF agrees to act as "Standby
          Purchaser" to ensure that all such Convertible Notes will be
          purchased and the issuance of such Convertible Notes results in
          proceeds of $50 million.

               3. Convertible Notes. Interest on the Convertible Notes will be
          paid in cash, semi-annually in arrears, at a rate of 10% per annum.
          The principal of the Convertible Notes is due December 2007.

          Holders of the Convertible Notes will be entitled at any time before
     the final maturity of the Convertible Notes, subject to prior redemption
     or repurchase, to convert any Convertible Notes or portions thereof into
     Class A Common Stock at the then applicable conversion price. The
     Convertible Notes, prior to giving effect to any anti-dilution
     adjustments, shall be convertible into an aggregate number of shares of
     New Polymer Common Stock representing 40% of the outstanding equity of
     New Polymer (after giving effect to the conversion of such Convertible
     Notes and the related anti-dilution provisions of the Class B Common
     Stock issued to Holders of Allowed Equity Interests in Old Polymer Common
     Stock). The Convertible Notes will have anti-dilution provisions
     equivalent to customary broad-based anti-dilution protections of
     preferred stock with customary exclusions.

          At any time prior to the final maturity of the Convertible Notes,
     subject to any limitations contained in the Exit Facility, New Polymer
     may redeem the outstanding Convertible Notes in whole or from time to
     time in part on at least thirty (30) days prior written notice if the
     trading price of the Class A Common Stock exceeds 130% of the conversion
     price of the Convertible Notes for twenty (20) trading days in a period
     of thirty (30) consecutive trading days. The redemption price will equal
     100% of the face amount of the Convertible Notes to be redeemed together
     with accrued interest thereon.

          The Convertible Notes will be unsecured and will be subordinate in
     right of payment to (i) all other existing and future senior indebtedness
     of New Polymer; and (ii) any Senior Subordinated Notes.

          Each Reorganized Debtor shall guarantee the Convertible Notes on a
     junior subordinated basis.

     I. Exit Letters of Credit.

           Under this Amended Modified Plan, GOF will issue or cause to be
      issued the Exit Letters of Credit to guarantee the amortization payments
      due from the Effective Date through December 31, 2004, under the
      Restructured Facilities and the Bank Term Sheet in the event that the
      Reorganized Debtors are unable to make such amortization payments.

           Any drawings under the Exit Letters of Credit (or any advances
      made, or caused to be made, by GOF, solely in lieu of drawing on the
      Exit Letters of Credit to make the amortization payments under the
      Restructured Facilities from the Effective Date through December 31,
      2004, which amount shall not exceed

                                      26
<PAGE>


      $25 million) will be evidenced by the New Senior Subordinated Notes to be
      issued by New Polymer to GOF.

          On the Effective Date, GOF will receive certain fees for posting
      the Exit Letters of Credit. See Article XII.C herein.

          J. Compensation And Benefit Programs

          Except and to the extent previously assumed by a Final Order on or
before the Confirmation Date, all employee compensation and benefit programs
of the Debtors, including programs subject to sections 1114 and 1129(a)(13) of
the Bankruptcy Code, entered into before or after the Petition Date and not
since terminated, shall be deemed to be, and shall be treated as though they
are, executory contracts that are assumed under Article VI.A herein.

          K. Restructuring Transactions

          On or after the Effective Date, the applicable Reorganized Debtors
may enter into such transactions and may take such actions as may be necessary
or appropriate to effect a corporate restructuring of their respective
businesses, to otherwise simplify the overall corporate or capital structure
of the Reorganized Debtors, or to reincorporate certain of the Filing
Subsidiaries under the laws of jurisdictions other than the laws of which the
applicable Filing Subsidiaries are presently incorporated. Such restructuring
may include one or more mergers, consolidations, restructures, dispositions,
liquidations, or dissolutions, as may be determined by the Debtors or
Reorganized Debtors to be necessary or appropriate (collectively, the
"Restructuring Transactions"). The actions to effect the Restructuring
Transactions may include: (a) the execution and delivery of appropriate
agreements or other documents of merger, consolidation, restructuring,
disposition, liquidation, or dissolution containing terms that are consistent
with the terms of this Amended Modified Plan and that satisfy the applicable
requirements of applicable state law and such other terms to which the
applicable entities may agree; (b) the execution and delivery of appropriate
instruments of transfer, assignment, assumption, or delegation of any asset,
property, right, liability, duty, or obligation on terms consistent with the
terms of this Amended Modified Plan and having such other terms to which the
applicable entities may agree; (c) the filing of appropriate certificates or
articles of merger, consolidation, or dissolution pursuant to applicable state
law; and (d) all other actions that the applicable entities determine to be
necessary or appropriate, including making filings or recordings that may be
required by applicable state law in connection with such transactions. In each
case in which the surviving, resulting, or acquiring corporation in any such
transaction is a successor to a Reorganized Debtor, such surviving, resulting,
or acquiring corporation will perform the obligations of the applicable
Reorganized Debtor pursuant to this Amended Modified Plan to pay or otherwise
satisfy the Allowed Claims against such Reorganized Debtor, except as provided
in any contract, instrument, or other agreement or document effecting a
disposition to such surviving, resulting, or acquiring corporation, which may
provide that another Reorganized Debtor will perform such obligations.

          L. Limited Substantive Consolidation

          1. This Amended Modified Plan is premised upon the limited
     substantive consolidation of the Debtors solely for purposes of actions
     associated with the confirmation and consummation of this Amended
     Modified Plan, including but not limited to voting, confirmation and
     distribution. This Amended Modified Plan does not contemplate the merger
     or dissolution of any Debtor or the transfer or commingling of any asset
     of any Debtor, except to accomplish the distributions under this Amended
     Modified Plan, other than distributions on account of Intercompany
     Claims, which shall be made in the ordinary course of business following
     the Effective Date. Such limited substantive consolidation shall not
     effect (other than for Amended Modified Plan voting, treatment, and/or
     distribution purposes) (i) the legal and corporate structures of the
     Reorganized Debtors, subject to the right of the Debtors or Reorganized
     Debtors to effect Restructuring Transactions as provided in Article V.K
     herein; (ii) Equity Interests in the Subsidiaries or (iii) pre- and
     post-Petition Date guarantees that are required to be maintained (x) in
     connection with executory contracts or unexpired leases that were entered
     into during the Chapter 11 Cases or that have been or will be assumed; or
     (y) pursuant to the terms and conditions contained herein.

                                      27
<PAGE>

          2. This Amended Modified Plan shall serve as a motion seeking entry
     of an order substantively consolidating the Chapter 11 Cases, as
     described herein. Unless an objection to substantive consolidation is
     made in writing by any creditor affected by this Amended Modified Plan as
     herein provided on or before five (5) days prior to the date that is
     fixed by the Bankruptcy Court as the last date on which acceptances to
     this Amended Modified Plan may be received, or such other date as may be
     fixed by the Bankruptcy Court, the Substantive Consolidation Order (which
     may be the Confirmation Order) may be entered by the Bankruptcy Court. In
     the event any such objections are timely filed, a hearing with respect
     thereto shall be scheduled by the Bankruptcy Court, which hearing may,
     but need not, coincide with the Confirmation Hearing.

                                 ARTICLE VI.

                   EXECUTORY CONTRACTS AND UNEXPIRED LEASES

          A. Assumption and Rejection of Executory Contracts and Unexpired
Leases

          Attached as an exhibit to the Amended Modified Disclosure Statement
is a list of executory contracts and unexpired leases that the Debtors wish to
reject. Such executory contracts and unexpired leases shall be deemed rejected
by the Debtors on the Effective Date, and the entry of the Confirmation Order
by the Bankruptcy Court shall constitute approval of such rejections pursuant
to sections 365(a) and 1123 of the Bankruptcy Code. The Debtors may, in the
future, identify additional executory contracts and unexpired leases that they
may wish to reject and reserve the right to seek such rejection prior to the
Effective Date.

          Any executory contracts or unexpired leases which (i) have not
expired by their own terms on or prior to the Effective Date; (ii) have not
been assumed, assumed and assigned or rejected prior to the Effective Date;
(iii) have not been rejected pursuant to the terms of this Amended Modified
Plan; or (iv) are not the subject of a motion to reject pending as of the
Effective Date, shall be deemed assumed by the Debtors on the Effective Date,
and the entry of the Confirmation Order by the Bankruptcy Court shall
constitute approval of such assumptions pursuant to sections 365(a) and 1123
of the Bankruptcy Code.

          B. Rejection Claims; Cure of Defaults

          If the rejection of an executory contract or unexpired lease results
in damages to the other party or parties to such contract or lease, any claim
for such damages, if not heretofore evidenced by a Proof of Claim that has
been Filed, shall be forever barred and shall not be enforceable against the
Debtors, the Reorganized Debtors, or their properties, successors or assigns,
unless a Proof of Claim is Filed and served upon counsel for the Debtors on or
before thirty (30) days after the later to occur of (i) the Confirmation Date;
and (ii) the date of entry of an order by the Bankruptcy Court authorizing
rejection of a particular executory contract or unexpired lease.

          The Debtors believe that no cure payments pursuant to section
365(b)(1) of the Bankruptcy Code need to be made on any of the executory
contracts and unexpired leases that they are assuming under this Amended
Modified Plan because the Debtors are current on all of their obligations with
respect to such contracts and leases and all prepetition obligations will have
been satisfied under the Amended Modified Plan. If, however, a counterparty to
any such executory contract or unexpired lease believes that cure payments are
due pursuant to section 365(b)(1) of the Bankruptcy Code, or that there is a
dispute regarding the ability of the Reorganized Debtors to provide "adequate
assurance of future performance" within the meaning of the Bankruptcy Code
under the contract or lease to be assumed, or there is a dispute with regard
to any other matters pertaining to the assumption or the cure payments
required by section 365(b)(1) of the Bankruptcy Code, such counterparty must
File an objection to the assumption of its executory contract or unexpired
lease by the Debtors not later than ten (10) days prior to the Confirmation
Date. The Bankruptcy Court shall have, and exercise, jurisdiction over any
such objection, and which objection shall be resolved by a Final Order. The
effective date of the assumption of an executory contract or unexpired lease
subject to any such objection shall be determined by any such Final Order.

          C. Indemnification and Reimbursement Obligations

          Pursuant to this Amended Modified Plan, the Reorganized Debtors
shall assume the obligations of the Debtors, if any, to indemnify and
reimburse the D&O Releasees against and for any obligations incurred pursuant
to

                                      28
<PAGE>

articles or certificates of incorporation, codes of regulations, by-laws,
applicable law or specific agreements, or any combination of the foregoing.

                                 ARTICLE VII.

                   PROVISIONS GOVERNING DISTRIBUTIONS

          A. Manner of Payment

          Any payment in Cash to be made by the Debtors shall be made, at the
election of the Debtors, by check drawn on a domestic bank or by wire transfer
from a domestic bank.

          B. Distributions for Claims Allowed as of the Effective Date

          Except as otherwise required by the Bankruptcy Code or as may be
ordered by the Bankruptcy Court, distributions to be made on the Effective
Date on account of Claims that are Allowed as of the Effective Date and that
are entitled to receive distributions under this Amended Modified Plan shall
be made on the Effective Date or as soon as practicable thereafter.
Distributions on account of Claims that become Allowed Claims after the
Effective Date shall be made pursuant to Article VII and Article VIII hereof.

          C. Delivery of Distributions and Undeliverable or Unclaimed
Distributions

               1. Delivery of Distributions in General

          Distributions to the Holders of Allowed Claims who are Holders of
record as of the Record Date shall be made at the address of such Holder as
indicated on the books and records of the Debtors. Except as otherwise
provided by the Amended Modified Plan or the Bankruptcy Code, distributions
shall be made in accordance with the provisions of the applicable Indenture,
participation agreement, loan agreement or analogous instrument or agreement,
if any. Distributions of Class A Common Stock to the Holders of Allowed Senior
Subordinated Note Claims shall be made directly to the Senior Subordinated
Notes Indenture Trustee. Similarly, distributions of Class A Common Stock to
Holders of Allowed Dominion Note Claims shall be made to the Indenture Trustee
for the Dominion Notes. Distribution of Class C Common Stock shall be made to
the Electing Non-GOF Holders, who shall contribute such Class C Common Stock
to the SPE in exchange for SPE Equity and SPE Notes, pursuant to the terms of
the SPE governing instruments.

               2. Undeliverable Distributions

                    a. Holding of Undeliverable Distributions. If any Allowed
          Claim Holder's distribution is returned to the Reorganized Debtors
          as undeliverable, no further distributions shall be made to such
          Holder unless and until the Reorganized Debtors are notified in
          writing of such Holder's then-current address, such that the
          distribution becomes deliverable. Undeliverable distributions shall
          remain in the possession of the Reorganized Debtors until such time
          as a distribution becomes deliverable. Undeliverable Cash shall not
          be entitled to any interest, dividends or other accruals of any
          kind.

                    b. Failure to Claim Undeliverable Distributions. In an
          effort to ensure that all Holders of Allowed Claims receive their
          allocated distributions, the Reorganized Debtors shall File a
          listing of Holders of undeliverable distributions. This list will be
          maintained for as long as the Chapter 11 Cases remain open. Any
          Holder of an Allowed Claim that does not assert a Claim for an
          undeliverable distribution within two years after the Effective Date
          shall have his, her, or its Claim for such undeliverable
          distribution discharged and shall be forever barred from asserting
          any such Claim against the Reorganized Debtors or their property. In
          such cases, any Cash or New Polymer Common Stock held for
          distribution on account of such Claims shall become property of the
          Reorganized Debtors, free of any restrictions thereon. Nothing
          contained herein requires the Reorganized Debtors to attempt to
          locate any Holder of an Allowed Claim.

                    c. Compliance with Tax Requirements. In connection with
          this Amended Modified Plan, to the extent applicable, the
          Reorganized Debtors shall comply with all tax withholding and
          reporting

                                      29
<PAGE>

          requirements imposed by any government unit, and all
          distributions pursuant to this Amended Modified Plan shall be
          subject to such withholding and reporting requirements.

               3. Time Bar to Cash Payments

          Checks issued by the Reorganized Debtors on account of Allowed
Claims shall be null and void if not negotiated within ninety (90) days from
and after the date of issuance thereof. Requests for reissuance of any check
shall be made directly to the Reorganized Debtors by the Holder of the Allowed
Claim with respect to which the check was originally issued. Any Claim in
respect of such a voided check shall be made on or before the second (2nd)
anniversary of the Effective Date. After such date, all Claims and respective
voided checks shall be discharged and forever barred and the Reorganized
Debtors shall retain all monies related thereto.

          D. Record Date and Distribution Record Date

          As of the close of business on the Record Date, the transfer
registers for any instrument, security, or other documentation canceled
pursuant to Article V.C herein shall be closed for voting purposes. From the
Confirmation Date until the Distribution Notification date, Holders of Allowed
Class 4 Claims may freely trade Allowed Class 4 Claims and the associated
Subscription Rights. As of the close of business in the Distribution
Notification Date, the transfer registers shall be closed for all Claims and
Equity Interests. Each Reorganized Debtor shall have no obligation to
recognize the transfer of any such instrument, security, or other
documentation occurring after the Distribution Notification Date, and shall be
entitled for all purposes herein to recognize and deal only with those Holders
of record as of the close of business on the Distribution Notification Date,
as the case may be.

          E. Timing and Calculation of Amounts to be Distributed

          Beginning on the Effective Date, the Reorganized Debtors, in their
sole discretion and as frequently as reasonably practicable and efficient
under the circumstances, shall make the distributions to the Holders of
Allowed Claims in accordance with this Amended Modified Plan. Beginning on the
date that is the end of each calendar quarter following the Effective Date,
the Reorganized Debtors, in their discretion and as frequently and reasonably
practicable and efficient under the circumstances, shall also make the
distributions to Holders of Disputed Claims whose Claims were Allowed during
the preceding calendar quarter, in accordance with this Amended Modified Plan.

          F. De Minimis and Fractional Distributions

          No Cash payment of less than ten dollars ($10.00) shall be made by
the Reorganized Debtors on account of any Allowed Claim, unless a specific
request therefore is made in writing by the Holder of any such Claim. In the
event a Holder of an Allowed Claim is entitled to distribution that is not a
whole dollar number, the actual payment or issuance made will reflect a
rounding of such fractional portion of such distribution down or up to the
nearest whole dollar, but in any case not to result in a distribution that
exceeds total distribution authorized by this Amended Modified Plan for such
Holder. No fractional shares of New Polymer will be issued. If any issuance of
shares would otherwise call for issuance of a fraction of a share, (a)
fractions 1/2 or greater shall be rounded to the next higher whole number, and
(b) fractions of less than 1/2 shall be rounded to the next lower whole
number.

          G. Setoffs

          Except as otherwise provided herein, the Reorganized Debtors may,
pursuant to sections 502(d) or 553 of the Bankruptcy Code or applicable
non-bankruptcy law, offset against any Allowed Claim, and the distributions to
be made pursuant to this Amended Modified Plan on account of such Claim
(before any distribution is made on account of such Claim), the Claims,
rights, and Causes of Action of any nature that the Debtors or Reorganized
Debtors may hold against the Holder of such Allowed Claim; provided, however,
that neither the failure to effect such a setoff nor the allowance of any
Claim hereunder shall constitute a waiver or release by the Debtors or
Reorganized Debtors of any such Claims, rights, and Causes of Action that the
Debtors or Reorganized Debtors may possess against such Holder.

                                      30
<PAGE>

          H. Surrender of Canceled Instruments or Securities

               1. Generally

          Except as set forth in Section I of Article VII herein, as a
condition precedent to receiving any distribution pursuant to this Amended
Modified Plan on account of an Allowed Claim evidenced by the instruments,
securities or other documentation canceled pursuant to Article V.C herein, the
Holder of a Claim shall tender the applicable instruments, securities or other
documentation evidencing the Holder's Claim to the Reorganized Debtors except
as set forth herein. Any distributions pursuant to this Amended Modified Plan
on account of any Claim evidenced by such instruments, securities, or other
documentation shall, pending such surrender, be treated as an undeliverable
distribution pursuant to Article VII.C hereof.

               2. Old Polymer Common Stock

          Each record Holder of an Allowed Equity Interest representing Old
Polymer Common Stock shall transmit the certificates representing its Old
Polymer Common Stock to the Solicitation Agent in accordance with written
instructions that the Reorganized Debtors will provide, as promptly as
practicable following the Effective Date, to those record Holders. These
instructions shall specify that delivery of stock certificates representing
Old Polymer Common Stock will be effected, and risk of loss and title thereto
will pass, only upon the proper delivery of stock certificates with a letter
of transmittal in accordance with those instructions. All surrendered stock
certificates shall be marked as canceled.

               3. Failure to Surrender Canceled Instruments

          If any Holder of an Allowed Claim evidenced by an instrument,
security, or other documentation canceled pursuant to Article V.C herein,
fails to either tender such instrument, security, or other documentation or
comply with the provisions of Article VII herein within one year after the
Effective Date, its entitlement to a distribution pursuant to this Amended
Modified Plan on account of such canceled instrument, security, or other
documentation shall be discharged, and such Holder shall be forever barred
from asserting such Claim against or interest in any Reorganized Debtor or its
property. In such case, any property held for distribution on account of such
Claim shall be disposed of pursuant to the provisions set forth in Article
VII.C herein.

          I. Lost, Stolen, Mutilated or Destroyed Instruments or Securities

          Any Holder of an Allowed Claim on account of any instrument,
security, or other documentation canceled pursuant to Article V.C herein that
has been lost, stolen, mutilated or destroyed shall, in lieu of surrendering
any such instrument, security or other documentation: (i) deliver to the
Reorganized Debtors (or, in the case of the Senior Subordinated Notes, the
applicable Senior Subordinated Notes Indenture Trustee) (A) an affidavit of
loss reasonably satisfactory to the Reorganized Debtors (or, in the case of a
Senior Subordinated Note, to the applicable Senior Subordinated Notes
Indenture Trustee) setting forth the unavailability of such instrument,
security, or other document; and (B) such additional security or indemnity as
may reasonably be required by the Reorganized Debtors to hold the Reorganized
Debtors (or, in the case of the Senior Subordinated Notes and the Dominion
Notes, the applicable Indenture trustee) harmless from any damages,
liabilities or costs incurred in treating such individual as a Holder of an
Allowed Claim; and (ii) satisfy any other requirements under the applicable
Senior Subordinated Note Indenture, any article or certificate of
incorporation or by-law, or any other relevant document. Upon compliance with
this Section of this Amended Modified Plan by a Holder of a Claim evidenced by
such instrument, security or other documentation, such Holder shall, for all
purposes under this Amended Modified Plan, be deemed to have surrendered such
instrument, security or other documentation.

          J. Preservation of Subordination Rights

          All subordination rights and Claims relating to subordination of the
Allowed Claim of any Creditor shall remain valid, enforceable and unimpaired
in accordance with section 510 of the Bankruptcy Code or otherwise, except as
otherwise provided in this Amended Modified Plan.

                                      31
<PAGE>

                                ARTICLE VIII.

                     PROCEDURES FOR TREATMENT OF DISPUTED,
                      CONTINGENT, AND UNLIQUIDATED CLAIMS

          A. Prosecution of Objections to Claims

          After the Confirmation Date, the Debtors and the Reorganized Debtors
shall have the exclusive authority to File, settle or compromise (with the
consent of GOF) withdraw or litigate to judgment, any objections to Claims.
From and after the Confirmation Date, the Debtors and the Reorganized Debtors,
with the consent of GOF, may settle or compromise any Disputed Claim without
approval of the Bankruptcy Court.

          B. Estimation of Claims

          The Debtors or the Reorganized Debtors may, at any time, request
that the Bankruptcy Court estimate any contingent or unliquidated Claim
pursuant to section 502(c) of the Bankruptcy Code regardless of whether the
Debtors or Reorganized Debtors previously have objected to such Claim or
whether the Bankruptcy Court has ruled on any such objection, and the
Bankruptcy Court will retain jurisdiction to estimate any Claim at any time
during the litigation concerning any objection to any Claims, including
without limitation, during the pendency of any appeal relating to any such
objection. Subject to the provisions of section 502(j) of the Bankruptcy Code,
in the event that the Bankruptcy Court estimates any contingent or
unliquidated Claim, the amount so estimated shall constitute the Allowed
amount of such Claim. If the estimated amount constitutes a maximum limitation
on the amount of such Claim, the Debtors may pursue supplementary proceedings
to object to the allowance of such Claim. All of the aforementioned objection,
estimation and resolution procedures are intended to be cumulative and not
necessarily exclusive of one another. Claims may be estimated and subsequently
compromised, settled, withdrawn or resolved by any mechanism approved by the
Bankruptcy Court.

          C. Payments and Distributions on Disputed Claims

          Notwithstanding any provision herein to the contrary, except as
otherwise agreed to by the Debtors or the Reorganized Debtors in their sole
discretion, no partial payments and no partial distributions will be made with
respect to a Disputed Claim until the resolution of such dispute by settlement
or Final Order. In accordance with Article VII herein, as soon as reasonably
practicable after a Disputed Claim becomes an Allowed Claim, the Holder of
such Allowed Claim will receive all payments and distributions to which such
Holder is then entitled under this Amended Modified Plan. Notwithstanding the
foregoing, any Person or Entity who holds both an Allowed Claim(s) and a
Disputed Claim(s) will receive the appropriate payment or distribution on the
Allowed Claim(s), although, except as otherwise agreed to by the Debtors or
the Reorganized Debtors in their sole discretion, no payment or distribution
will be made on the Disputed Claim(s) until such dispute is resolved by
settlement or Final Order. In the event there are Disputed Claims requiring
adjudication and resolution, the Debtors reserve the right to, or, if so
ordered by the Bankruptcy Court shall, establish appropriate reserves for
potential payment of such Claims.

          D. Allowance of Claims

          Except as expressly provided herein or any order entered in the
Chapter 11 Cases prior to the Effective Date (including the Confirmation
Order), no Claim shall be deemed Allowed, unless and until such Claim is
deemed Allowed under the Bankruptcy Code or by the Debtors or Reorganized
Debtors, or the Bankruptcy Court enters a Final Order in the Chapter 11 Cases
allowing such Claim. Except as expressly provided in this Amended Modified
Plan or any order entered in the Chapter 11 Cases prior to the Effective Date
(including the Confirmation Order), the Reorganized Debtors after Confirmation
will have and retain any and all rights and defenses the Debtors had with
respect to any Claim as of the Petition Date, including the Causes of Action
referenced in Article X.C herein and Section III.J.3 of the Amended Modified
Disclosure Statement and the Filing of any motions or other pleadings for
estimation of the amount of disputed claims. All Claims of any Person or
Entity that owes money to the Debtors shall be disallowed unless and until
such Person or Entity pays the full amount it owes the Debtors. Any objection
to an Administrative Expense Claim, Priority Claim, Secured Claim or Critical
Business Relations Claims and Intercompany Claims must be Filed and served on
or before one hundred and twenty (120) days after the Effective Date.

                                      32
<PAGE>

                                 ARTICLE IX.

                     CONDITIONS PRECEDENT TO CONFIRMATION
                AND CONSUMMATION OF THIS AMENDED MODIFIED PLAN

          A. Conditions Precedent to Confirmation

          It shall be a condition precedent to the Confirmation of this
Amended Modified Plan that the following conditions shall have been satisfied
or waived pursuant to the terms and conditions contained herein:

               1. The Clerk of the Bankruptcy Court shall have entered an
          order granting approval of the Amended Modified Disclosure Statement
          and finding that it contains adequate information pursuant to
          section 1125 of the Bankruptcy Code and that order shall have become
          a Final Order; and

               2. The Substantive Consolidation Order and the Confirmation
          Order in form and substance acceptable to the Debtors and GOF shall
          have been signed by the Bankruptcy Court and duly entered on the
          docket for the Chapter 11 Cases by the Clerk of the Bankruptcy
          Court.

          B. Conditions Precedent to Consummation

          It shall be a condition to the Consummation of this Amended Modified
Plan that the following conditions shall have been satisfied or waived
pursuant to the provisions of Article IX.D herein:

               1. The Confirmation Order and the Substantive Consolidation
          Order shall be Final Order(s);

               2. The closing of the Exit Revolving Credit Facility and the
          Restructured Facilities shall have occurred;

               3. The New Investment shall have been made by the Participating
          Allowed Class 4 Claim Holders;

               4. The Senior Lenders shall have received the Senior Lender
          Paydown, the Chicopee Sale Proceeds, (provided, that the Chicopee
          Sale shall have closed prior to the Effective Date) and the Senior
          Lender Closing Prepayment as contemplated by the Bank Term Sheet;
          and

               5. GOF shall have issued, or caused the issuance, of the Exit
          Letters of Credit for the benefit of the Postpetition Agent.

          C. Conditions Precedent to Closing of New Investment

          It shall be a condition to the closing of the New Investment and
GOF's obligations as a standby purchaser that the following conditions, among
others, shall have been satisfied or waived by GOF:

               1. The closing of the Exit Revolving Credit Facility and the
          Restructured Facilities shall have occurred in accordance with this
          Amended Modified Plan.

               2. GOF shall not have given Polymer written notice that GOF, in
          its sole discretion, has determined that the results of its
          environmental diligence review were not reasonably satisfactory.

               3. The Debtors, GOF or New Polymer, as the case may be, shall
          have obtained all governmental consents and made all governmental
          filings required or reasonably advisable in connection with the
          transactions contemplated by the Amended Modified Plan (including
          without limitation, any consents and filings required or reasonably
          advisable pursuant to the Hart-Scott-Rodino Antitrust Act (the "HSR
          Act"), any applicable foreign antitrust law or regulation, and the
          New Jersey Industrial Site Recovery Act) prior to the applicable
          deadlines, filing periods or other timeframes associated with such
          consents and filings, and the applicable waiting period under the
          HSR Act or any applicable foreign antitrust law or regulation, if
          any, shall have expired or been terminated.

                                      33
<PAGE>

               4. New Polymer's Certificate of Incorporation shall have been
          duly amended to reflect the changes set forth in this Amended
          Modified Plan.

               5. New Polymer's Bylaws shall have been amended to reflect the
          changes set forth in this Amended Modified Plan.

               6. Polymer's Shareholder Rights Plan shall be rejected pursuant
          to a Filed order, which order may be the Confirmation Order.

               7. The Organizational Documents of each Reorganized Debtor and
          their direct or indirect subsidiaries shall be duly modified to
          reflect changes set forth in this Amended Modified Plan.

               8. On or before the Confirmation Date, Zucker and Boyd shall
          execute and deliver a letter in the form of Exhibit L and Exhibit M,
          respectively, to the Amended Modified Disclosure Statement, unless
          this condition is waived in writing by GOF.

          D. Waiver of Conditions Precedent

          To the extent legally permissible, each of the conditions precedent
set forth in Article IX.A and Article IX.B may be waived, in whole or in part,
by the Debtors with the consent of GOF, the Prepetition Agent, the
Postpetition Agent and the Committee. Any such waiver of a condition precedent
shall be in writing and may be effected at any time, without notice or leave
or order of the Bankruptcy Court and without any formal action.

          E. Effect of Non-Occurrence of Consummation

          If the Confirmation Order is vacated, this Amended Modified Plan
shall be null and void in all respects and nothing contained in this Amended
Modified Plan or the Amended Modified Disclosure Statement shall: (1)
constitute a waiver or release of any Claims by or against, or any Equity
Interests in, the Debtors; (2) prejudice in any manner the rights of the
Debtors; or (3) constitute an admission, acknowledgment, offer or undertaking
by the Debtors in any respect.

                                  ARTICLE X.

               RELEASE, INJUNCTIVE AND RELATED PROVISIONS

          A. Certain Mutual Releases

          Except as otherwise specifically provided herein, on and after the
Effective Date, each of the Releasees, for good and valuable consideration,
including, but not limited to, the commitment, obligation and service of each
of the aforementioned individuals and entities to facilitate the expeditious
reorganization of the Debtors and the implementation of the restructuring
contemplated by this Amended Modified Plan, shall automatically be deemed to
have released one another unconditionally and forever from any and all Claims,
obligations, rights, suits, damages, Causes of Action, remedies and
liabilities whatsoever, whether liquidated or unliquidated, fixed or
contingent, matured or unmatured, known or unknown, foreseen or unforeseen,
existing or hereafter arising, in law, equity or otherwise, that any of the
foregoing Persons or Entities would have been legally entitled to assert (in
their own right, whether individually or collectively, or on behalf of the
Holder of any Claim or Equity Interest or other Person or Entity), based in
whole or in part upon any act or omission, transaction, agreement, event or
other occurrence taking place on or before the Effective Date, relating in any
way to the Debtors, the Reorganized Debtors, the Chapter 11 Cases, this
Amended Modified Plan, the Amended Modified Disclosure Statement, or any
related agreements, instruments or other documents, except for (i) Claims
arising under this Amended Modified Plan; and (ii) any intentional acts of the
D&O Releasees, GOF and the Committee and Committee Members which constitute
fraud and, when the party bringing the cause of action (or its respective
employees, agents or advisors) did not have actual knowledge of such
intentional acts (or the substance of such acts) as of the Effective Date;
provided, however, with respect to any intentional acts which constitute
fraud, the knowledge of former and existing officers and directors of Polymer
or any of its Debtor Affiliates shall not be imputed to Polymer or New Polymer
(before or after the Effective Date). With respect to any claim brought by the
Reorganized Debtors in the nature of a derivative claim or otherwise (x) if
the action is initiated by Non-GOF Holders, directly or indirectly, the actual
knowledge of the Committee Members or of their and the Committee's

                                      34
<PAGE>

employees, agents or advisors who have provided advice in the Chapter 11 Cases
shall determine whether or not the Debtors or the Reorganized Debtors had
actual knowledge of the intentional acts as of the Effective Date; and (y) if
the action is initiated by GOF, directly or indirectly, the actual knowledge
of GOF or its employees, agents or advisors shall determine whether or not the
Debtors or the Reorganized Debtors had actual knowledge of the intentional
acts as of the Effective Date, provided, however, that the approval of the New
Polymer Board of Directors of an action primarily initiated by the Non-GOF
Holders or Non-GOF Board Members shall not change the determination of actual
knowledge. Each of GOF and each Committee Member, after inquiry of its
employees, agents and advisors who have provided advice in the Chapter 11
Cases, acknowledges and agrees that either (i) it has no actual knowledge of
any intentional acts which constitute fraud, or could reasonably form the
basis for a claim that such acts constitute fraud, as of the date hereof; or
(ii) to the extent that either GOF or any Committee Member may have any actual
knowledge of any such intentional acts which constitute fraud, or could
reasonably form the basis for a claim that such acts constitute fraud, as of
the date hereof, GOF or the applicable Committee Member, as the case may be,
agrees that any claims based on such knowledge will be released on the
Effective Date. Notwithstanding the foregoing, D&O Releasees shall not be
released or discharged from contractual obligations to the Debtors or
Reorganized Debtors with respect to employment and other agreements assumed
pursuant to the Amended Modified Plan or otherwise.

          B. Limited Releases by Holders of Equity Interests and Claims

          On and after the Effective Date, each Holder of a Claim or Equity
Interest who is voting on the Amended Modified Plan should make an election on
their Ballot to either agree or not agree to the Releases described in the
paragraph below. Any Holder of a Claim or Interest in Class 4 or 6 that does
not make an election will be deemed to not agree to the Releases. Holders of
Class 8 Claims, who are deemed to have rejected the Amended Modified Plan,
shall be deemed to have not agreed to the Releases. Holders of Class 1, 3, 5
or 7 Claims (who are deemed to have accepted the Amended Modified Plan
pursuant to section 1126 of the Bankruptcy Code) also shall be deemed not to
have agreed to the Releases. This Release does not apply to (i) Holders of
Class 2 Claims, (ii) GK/Ives or (iii) any Holder of an Allowed Class 4 Claim
or Class 6 Equity Interest that did not specifically agree to the Limited
Release. The Limited Release applies only to those Holders of Allowed Class 4
Claims and Class 6 Equity Interests who specifically agree to the Limited
Releases.

          The Release unconditionally releases the Releasees from any and all
claims (as defined in section 101(5) of the Bankruptcy Code), obligations,
rights, suits, damages, causes of action, remedies and liabilities whatsoever,
whether known or unknown, foreseen or unforeseen, existing or hereafter
arising, in law, equity or otherwise, that such Person or Entity would have
been legally entitled to assert (whether individually or collectively), based
in whole or in part upon any act or omission, transaction, agreement, event or
other occurrence taking place on or before the Effective Date in any way
relating or pertaining to the Debtors or the Reorganized Debtors, the Debtors'
Chapter 11 Cases, or the negotiation, formulation and preparation of this
Amended Modified Plan or any related agreements, instruments or other
documents.

          C. Preservation of Causes of Action

          The Debtors are currently investigating whether to pursue potential
Causes of Action against certain Persons or Entities. The investigation has
not been completed to date, and, subject to the Releases granted in Article X
hereof, the Reorganized Debtors shall retain all rights on behalf of the
Debtors to commence and pursue any and all Causes of Action (under any theory
of law, including, without limitation, the Bankruptcy Code, and in any court
or other tribunal including, without limitation, in an adversary proceeding
Filed in the Chapter 11 Cases) discovered in such an investigation to the
extent the Reorganized Debtors deem appropriate. Potential Causes of Action
currently being investigated by the Debtors, which may but need not be pursued
by the Debtors prior to the Effective Date and by the Reorganized Debtors
after the Effective Date to the extent warranted include, without limitation,
(i) a list of potential Claims and Causes of Action that will be set forth in
the Amended Modified Plan Supplement to the extent determined as of the date
thereof; and (ii) Preference Actions that will be set forth in the Amended
Modified Plan Supplement to the extent determined as of the date thereof:

               1. Any other Causes of Action, whether legal, equitable or
          statutory in nature, arising out of, or in connection with the
          Debtor's businesses or operations, including, without limitation,
          the following: possible claims against vendors, landlords,
          sublessees, assignees, customers or suppliers for warranty,

                                      35
<PAGE>

          indemnity, back charge/set-off issues, overpayment or duplicate
          payment issues and collections/accounts receivables matters;
          deposits or other amounts owed by any creditor, lessor, utility,
          supplier, vendor, landlord, sublessee, assignee, or other Person or
          Entity; employee, management or operational matters; claims against
          landlords, sublessees and assignees arising from the various leases,
          subleases and assignment agreements relating thereto, including,
          without limitation, claims for overcharges relating to taxes, common
          area maintenance and other similar charges; financial reporting;
          environmental, and product liability matters; actions against
          insurance carriers relating to coverage, indemnity or other matters;
          counterclaims and defenses relating to notes or other obligations;
          contract or tort claims which may exist or subsequently arise;

               2. Any and all avoidance actions pursuant to any applicable
          section of the Bankruptcy Code, including, without limitation
          sections 544, 545, 547, 548, 549, 550, 551, 553(b) and/or 724(a) of
          the Bankruptcy Code, arising from any transaction involving or
          concerning any of the Debtors; and

               3. Any and all Causes of Action listed in the Schedule of
          Causes of Action set forth in the Amended Modified Plan Supplement.

          In addition, there may be numerous other Causes of Action which
currently exist or may subsequently arise that are not set forth herein, in
the Cause of Action Summary or in the List of Retained Causes of Action,
because the facts upon which such Causes of Action are based are not currently
or fully known by the Debtors and, as a result, can not be raised during the
pendency of the Chapter 11 Cases (collectively, the "Unknown Causes of
Action"). The failure to list any such Unknown Cause of Action herein, or in
the Cause of Action Summary or the List of Retained Causes of Action, is not
intended to limit the rights of the Reorganized Debtors to pursue any Unknown
Cause of Action to the extent the facts underlying such Unknown Cause of
Action subsequently become fully known to the Debtors.

          Unless Causes of Action against a Person or Entity are expressly
waived, relinquished, released, compromised or settled in the Amended Modified
Plan or any Final Order, the Debtors expressly reserve all Causes of Action
and Unknown Causes of Action, including the Causes of Action described herein
and in the Causes of Action Summary and the List of Retained Causes of Action,
as well as any other Causes of Action or Unknown Causes of Action, for later
adjudication and therefore, no preclusion doctrine, including, without
limitation, the doctrines of res judicata, collateral estoppel, issue
preclusion, claim preclusion, estoppel (judicial, equitable or otherwise) or
laches shall apply to such Causes of Action upon or after the confirmation or
consummation of the Amended Modified Plan. In addition, the Debtors expressly
reserve the right to pursue or adopt any claims alleged in any lawsuit in
which the Debtors are a defendant or an interested party, including the
lawsuits described in the Amended Modified Disclosure Statement, against any
Person, including, without limitation, the plaintiffs and co-defendants in
such lawsuits.

          Except as otherwise provided in the Amended Modified Plan or in any
contract, instrument, release, Indenture or other agreement entered into in
connection with the Amended Modified Plan, in accordance with section
1123(b)(3) of the Bankruptcy Code, any Claims, rights, and Causes of Action
that the respective Debtors, Estates, or Post-Confirmation Estates may hold
against any Person or Entity, including but not limited to those Causes of
Action listed in the Amended Modified Disclosure Statement, shall vest in the
Reorganized Debtors, and the Reorganized Debtors shall retain and may
exclusively enforce, as the authorized representatives of the respective
Estates and Post-Confirmation Estates, any and all such Claims, rights, or
Causes of Action. The Reorganized Debtors may pursue any and all such Claims,
rights, or Causes of Action, as appropriate, in accordance with the best
interests of the Reorganized Debtors. Subject to Article VIII.A herein, the
Reorganized Debtors shall have the exclusive right, authority, and discretion
to institute, prosecute, abandon, settle, or compromise any and all such
Claims, rights, and Causes of Action without the consent or approval of any
third party and without any further order of the Bankruptcy Court.

      The Debtors specifically waive any and all Claims, rights and Causes of
Action accruing prior to the Confirmation Date that they or their respective
estates may have against the Senior Lenders, the Prepetition Agent, GOF, CSFB
Global Opportunities Advisers L.L.C., MatlinPatterson Global Advisers LLC or
the Committee.

                                      36
<PAGE>

          D. Exculpation

          The Releasees shall neither have nor incur any liability to any
Person or Entity for any act taken or omitted to be taken in connection with
or related to the formulation, preparation, dissemination, implementation,
administration, Confirmation or Consummation of this Amended Modified Plan,
the Amended Modified Disclosure Statement or any contract, instrument, release
or other agreement or document created or entered into in connection with this
Amended Modified Plan (except for any obligations arising in the ordinary
course of business), or any other act taken or omitted to be taken in
connection with the Chapter 11 Cases; provided, however, that the foregoing
provisions of this Article X.D shall have no effect on the liability of any
Person or Entity that results from any such act or omission that is determined
in a Final Order to have constituted gross negligence or willful misconduct;
provided, however, that exculpation for any such acts or omissions shall
remain subject to the Bankruptcy Court's potential future review, whether sua
sponte or at the request of a party-in-interest.

          E. Injunction

          From and after the Effective Date, the Releasees, all Persons and
Entities specifically and expressly agreeing to the Limited Release and all
Persons and Entities to whom the Exculpation applies are permanently enjoined
from commencing or continuing in any manner, any suit, action or other
proceeding, on account of or respecting any Claim, demand, liability,
obligation, debt, right, Cause of Action, interest or remedy exculpated,
released or to be released as to such Person or Entity pursuant to this
Article.

          F. Discharge of Claims and Termination of Equity Interests

          Except as otherwise provided in the Amended Modified Plan, (a) the
rights afforded in the Amended Modified Plan and the treatment of all Claims
and Equity Interests therein, shall be in exchange for and in complete
satisfaction, discharge and release of Claims and Equity Interests of any
nature whatsoever, including any interest accrued on such Claims from and
after the Petition Date, against the Debtors and the Debtors-in-Possession, or
any of their assets or properties, (b) on the Effective Date, all such Claims
against, and Equity Interests in the Debtors shall be satisfied, discharged
and released in full and (c) all Persons and Entities shall be precluded from
asserting against the Reorganized Debtors, their successors or their assets or
properties any other or further Claims or Equity Interests based upon any act
or omission, transaction or other activity of any kind or nature that occurred
prior to the Confirmation Date.

                                 ARTICLE XI.

                           RETENTION OF JURISDICTION

          Notwithstanding the entry of the Confirmation Order and the
occurrence of the Effective Date, the Bankruptcy Court shall retain such
jurisdiction over the Chapter 11 Cases after the Effective Date as is legally
permissible, including without limitation, jurisdiction to:

          A. allow, disallow, determine, liquidate, classify, estimate or
establish the priority or secured or unsecured status of any Claim, including
the resolution of any request for payment of any Administrative Expense Claim
and the resolution of any and all objections to the allowance or priority of
Claims;

          B. grant or deny any applications for allowance of compensation or
reimbursement of expenses authorized pursuant to the Bankruptcy Code or this
Amended Modified Plan, for periods ending on or before the Confirmation Date;

          C. resolve any matters related to the assumption, assumption and
assignment, or rejection of any executory contract or unexpired lease to which
any of the Debtors is a party or with respect to which any of the Debtors may
be liable and to hear, determine and, if necessary, liquidate any Claims
arising therefrom;

          D. ensure that distributions to Holders of Allowed Claims are
accomplished pursuant to the provisions of this Amended Modified Plan,
including without limitation ruling on any motion Filed pursuant to Article
VIII herein and resolving any disputes concerning any distributions
contemplated in or relating to Article VII herein;

                                      37
<PAGE>

          E. decide or resolve any motions, adversary proceedings, contested
or litigated matters and any other matters and grant or deny any applications
involving the Debtors that may be pending on the Effective Date;

          F. enter such orders as may be necessary or appropriate to implement
or consummate the provisions of this Amended Modified Plan and all contracts,
instruments, releases, Indentures and other agreements or documents created in
connection with this Amended Modified Plan or the Amended Modified Disclosure
Statement;

          G. resolve any cases, controversies, suits or disputes that may
arise in connection with the Consummation, interpretation or enforcement of
this Amended Modified Plan or any Person's or Entity's obligations incurred in
connection with this Amended Modified Plan;

          H. issue injunctions, enter and implement other orders or take such
other actions as may be necessary or appropriate to restrain interference by
any Person or Entity with the Consummation or enforcement of this Amended
Modified Plan, except as otherwise provided herein;

          I. resolve any cases, controversies, suits or disputes with respect
to the releases, injunction and other provisions contained in Article X herein
and enter such orders as may be necessary or appropriate to implement such
releases, injunction and other provisions;

          J. enter and implement such orders as are necessary or appropriate
if the Confirmation Order is for any reason modified, stayed, reversed,
revoked or vacated;

          K. determine any other matters that may arise in connection with or
relate to this Amended Modified Plan, the Confirmation Order or any contract,
instrument, release, Indenture or other agreement or document created in
connection with this Amended Modified Plan or the Amended Modified Disclosure
Statement; and

          L. enter an order and/or final decree closing the Chapter 11 Cases.

                                 ARTICLE XII.

                           MISCELLANEOUS PROVISIONS

          A. Dissolution of Committee

          On the Effective Date, the Committee shall dissolve and the
Committee Members, and the Professionals retained by the Committee shall be
released and discharged from all rights and duties arising from, or related to
the Chapter 11 Cases.

          B. Payment of Statutory Fees

          All fees payable pursuant to 28 U.S.C. ss. 1930, as determined by
the Bankruptcy Court at the hearing pursuant to section 1128 of the Bankruptcy
Code, shall be paid on or before the Effective Date.

          C. Fees and Expenses

          On the Effective Date, in consideration of GOF acting as Standby
Purchaser for the New Investment, and in consideration of GOF's role in
facilitating a consensual resolution of the disputes among the Plan Parties
and the Senior Lenders Steering Committee, New Polymer shall pay GOF a standby
purchaser fee of $2 million plus a plan facilitation fee of $2 million. GOF
and New Polymer shall support payment in full of all the Committee's
reasonable documented professionals' fees and expenses and those of Committee
Members (for actions taken in these Chapter 11 Cases as Committee Members),
subject to approval of all such fees and expenses by the bankruptcy court, and
shall support any reasonable documented request for payment by White & Case
LLP, The McNair Law Firm, P.A., and Loeb Partners for work done prior to the
commencement of these cases or prior to the retention of Kasowitz, Benson,
Torres & Friedman LLP. GOF and the Committee shall support payment in full of
all Polymer's reasonable documented legal fees and expenses, subject to
approval of all such fees and expenses by the Bankruptcy Court.

                                      38
<PAGE>

          On the Effective Date, in accordance with the Bank Term Sheet, GOF
shall receive a fee of 2% ($500,000) of the face amount for posting, or
causing to be posted, the Exit Letters of Credit. Upon any drawing under the
Exit Letters of Credit (or other advances made, or caused to be made, by GOF
solely in lieu of a drawing under the Exit Letters of Credit to make the
amortization payments under the Restructured Facilities from the Effective
Date through December 31, 2004, which amount shall not exceed $25 million),
New Polymer shall issue New Senior Subordinated Notes in a face amount equal
to such drawing (or other advance).

          D. Maintenance of Director and Officer Liability Insurance

          New Polymer shall cause to be maintained in effect for six years
from the Effective Date, the current policies of the directors' and officers'
liability insurance maintained by Polymer (provided that New Polymer may
substitute therefore policies of at least the same coverage containing terms
and conditions which are not materially less advantageous) with respect to
matters or events occurring on or prior to the Effective Date to the extent
available; provided, however, that in no event shall New Polymer be required
to expend more than an amount per year in excess of 200% of the per annum
premiums for such insurance paid by New Polymer as of the Effective Date to
maintain or procure insurance coverage pursuant hereto; and, provided further,
that if the annual premiums of such insurance coverage exceed such amount, New
Polymer shall be obligated to obtain a policy with the greatest coverage
available for a cost not exceeding such amount.

          E. Discharge of Debtors

          Except as otherwise provided herein, on the Effective Date: (1) the
rights afforded herein and the treatment of all Claims and Equity Interests
therein, shall be in exchange for and in complete satisfaction, discharge and
release of Claims and Equity Interests of any nature whatsoever, including any
interest accrued on such Claims from and after the Petition Date, against the
Debtors and the Debtors in Possession, or any of their assets, property, or
Estates; (2) this Amended Modified Plan shall bind all Holders of Claims
against, and Equity Interests in, the Debtors and Debtors in Possession, and
the Debtors' liability with respect thereto shall be extinguished completely,
including, without limitation, any liability of the kind specified under
section 502(g) of the Bankruptcy Code; and (3) all Persons and Entities shall
be precluded from asserting against the Debtors, the Estates, and the
Reorganized Debtors, their successors and assigns, their assets and
properties, any other Claims or Equity Interests based upon any documents,
instruments, or any act or omission, transaction or other activity of any kind
or nature that occurred prior to the Effective Date.

          F. Effectuating Documents, Further Transactions and Corporate Action

          Each of the Debtors and the Reorganized Debtors are authorized to
execute, deliver, file or record such contracts, instruments, releases and
other agreements or documents and take such actions as may be necessary or
appropriate to effectuate, implement and further evidence the terms and
conditions herein and the notes and securities issued pursuant to the terms
and conditions herein, including, but not limited to, all documents related to
the Exit Facility.

          Prior to, on or after the Effective Date (as appropriate), all
matters provided for under this Amended Modified Plan that would otherwise
require approval of the shareholders or directors of the Debtors or the
Reorganized Debtors shall be deemed to have occurred and shall be in effect
prior to, on or after the Effective Date (as appropriate) pursuant to the
applicable general corporation law of each state in which the respective
Debtors or Reorganized Debtors are organized without any requirement of
further action by the shareholders or directors of the Debtors or the
Reorganized Debtors.

          G. Modification of Amended Modified Plan

          Subject to the limitations contained herein, (1) the Debtors reserve
the right, in accordance with the Bankruptcy Code and the Bankruptcy Rules, to
amend or modify this Amended Modified Plan prior to the entry of the
Confirmation Order and (2) after the entry of the Confirmation Order, the
Debtors or the Reorganized Debtors, as the case may be, may, upon order of the
Bankruptcy Court, amend or modify this Amended Modified Plan, in accordance
with section 1127(b) of the Bankruptcy Code, or remedy any defect or omission
or reconcile any

                                      39
<PAGE>


inconsistency in this Amended Modified Plan in such manner as may be necessary
to carry out the purpose and intent of this Amended Modified Plan.

          H. Revocation of Amended Modified Plan

          The Debtors reserve the right, at any time prior to the entry of the
Confirmation Order, to revoke and withdraw this Amended Modified Plan.

          I. Successors and Assigns

          The rights, benefits and obligations of any Person or Entity named
or referred in this Amended Modified Plan shall be binding on, and shall inure
to the benefit of, any heir, executor, administrator, successor or assign of
such Person or Entity.

          J. Reservation of Rights

          Except as expressly set forth herein, this Amended Modified Plan
shall have no force or effect unless the Bankruptcy Court shall enter the
Confirmation Order. The filing of this Amended Modified Plan, any statement or
provision contained in this Amended Modified Plan, or the taking of any action
by the Debtors or Debtors-in-Possession with respect to this Amended Modified
Plan shall not be and shall not be deemed to be an admission or waiver of any
rights of the Debtors or Debtors-in-Possession with respect to the Holders of
Claims or Equity Interests.

          K. Section 1146 Exemption

          Pursuant to section 1146(c) of the Bankruptcy Code, under this
Amended Modified Plan, (1) the issuance, distribution, transfer, or exchange
of any debt, Equity Security or other interest in the Debtors or Reorganized
Debtors; (2) the creation, modification, consolidation or recording of any
mortgage, deed or trust, or other security interest, or the securing of
additional indebtedness by such or other means (whether (a) in connection with
the issuance and distribution of any debt, Equity Security, or other interest
in the Debtors or Reorganized Debtors, (b) the Exit Revolving Credit Facility,
or (c) otherwise in furtherance of, or in connection with, this Amended
Modified Plan); (3) the making, assignment, or recording of any lease or
sublease; or (4) the making, delivery, or recording of any deed or other
instrument of transfer under, in furtherance of, or in connection with, this
Amended Modified Plan, including any deeds, bills of sale, assignments or
other instrument of transfer executed in connection with any transaction
arising out of, contemplated by, or in any way related to this Amended
Modified Plan, shall not be subject to any document recording tax, mortgage
recording tax, stamp tax, or similar tax or government assessment, and the
appropriate state or local government official or agent shall be directed by
the Bankruptcy Court to forego the collection of any such tax or government
assessment and to accept for filing and recording any of the foregoing
instruments or other documents without the payment of any such tax or
government assessment.

          L. Further Assurances

          The Debtors, the Reorganized Debtors, all Holders of Allowed Claims
receiving distributions under this Amended Modified Plan, and all other
parties in interest shall, from time to time, prepare, execute and deliver any
agreements or documents and take any other actions as may be necessary or
advisable to effectuate the provisions and intent of this Amended Modified
Plan.

          M. Term of Existing Injunctions or Stays

          Unless otherwise provided in the Confirmation Order or herein, all
injunctions or stays in effect in the Chapter 11 Cases, pursuant to sections
105, 362 or 525 of the Bankruptcy Code, or otherwise, and in existence on the
Confirmation Date, shall remain in full force and effect until the Effective
Date.

                                      40
<PAGE>

          N. Post Effective Date Fees and Expenses

          From and after the Effective Date, the Reorganized Debtors shall, in
the ordinary course of business and without the necessity for any approval by
the Bankruptcy Court, pay the reasonable professional fees and expenses
incurred by the Reorganized Debtors related to the Consummation and to the
implementation of this Amended Modified Plan.

          O. Severability

          The provisions of this Amended Modified Plan shall not be severable
unless such severance is agreed to by the Debtors or Reorganized Debtors, as
applicable, and such severance would constitute a permissible modification of
this Amended Modified Plan pursuant to section 1127 of the Bankruptcy Code.

          P. Conflicts

          To the extent any provision of the Amended Modified Disclosure
Statement, and any documents executed in connection with the Confirmation
Order (or any exhibits, schedules, appendices, supplements or amendments to
the foregoing) conflicts with or is in any way inconsistent with the terms of
this Amended Modified Plan, the terms and provisions of this Amended Modified
Plan shall govern and control.

          Q. Notices

          All notices, requests, and demands to or upon the Debtors or the
Reorganized Debtors to be effective shall be in writing, including by
facsimile transmission, and unless otherwise expressly provided herein, shall
be deemed to have been duly given or made when actually delivered to all of
the following or, in the case of notice by facsimile, when received by all of
the following, addressed as follows or to such other addresses as Filed with
the Bankruptcy Court.

           Polymer Group, Inc.
           PO Box 5069
           4838 Jenkins Avenue
           North Charleston, SC 29405
           Attention:     Jerry Zucker
                          James G. Boyd
           Telephone:     (843) 566-7293
           Telecopier:    (843) 308-0104

           With a copy to:

           Kirkland & Ellis
           Aon Building
           200 East Randolph Drive
           Chicago, Illinois 60601
           Attention:  James A. Stempel, Esq.
                       Roger J. Higgins, Esq.
           Telephone:  (312) 861-2000
           Telecopier: (312) 861-2200

           Nelson Mullins Riley & Scarborough, LLP
           Keenan Building, Third Floor
           1330 Lady Street
           P.O. Box 11070 (29211)
           Columbia, SC 29201
           Attention:  George B. Cauthen, Esq.
           Telephone:  (803) 799-2000
           Telecopier: (803) 256-7500

                                      41
<PAGE>

           MatlinPatterson Global Advisers LLC
           520 Madison Avenue
           New York, NY  10022
           Attention:  Ramon Betolaza
                       Lap Chan
           Telecopier: (212) 651-4014

           Kasowitz, Benson, Torres & Friedman, LLP
           1633 Broadway
           New York, NY 10019
           Attention:  David S. Rosner, Esq.
                       Robert M. Novick, Esq.
           Telephone:  (212) 506-1700
           Telecopier: (212) 506-1800


                                      42
<PAGE>

          R.    Closing of Cases

          The Reorganized Debtors shall promptly, upon the full administration
of the Chapter 11 Cases, File with the Bankruptcy Court all documents required
by Fed. R. Bankr. P. 3022 and any applicable order of the Bankruptcy Court.

Respectfully submitted,


Polymer Group, Inc.,
Debtor and Debtor-in-Possession


By:
   -----------------------
Name:
     ---------------------
Title:
      --------------------


PGI Polymer, Inc.,
Debtor and Debtor-in-Possession


By:
   -----------------------
Name:
     ---------------------
Title:
      --------------------


PGI Europe, Inc.,
Debtor and Debtor-in-Possession


By:
   -----------------------
Name:
     ---------------------
Title:
      --------------------


Chicopee, Inc.,
Debtor and Debtor-in-Possession


By:
   -----------------------
Name:
     ---------------------
Title:
      --------------------


FiberTech Group, Inc.,
Debtor and Debtor-in-Possession


By:
   -----------------------
Name:
     ---------------------
Title:
      --------------------


                                      43
<PAGE>

Technetics Group, Inc.,
Debtor and Debtor-in-Possession


By:
   -----------------------
Name:
     ---------------------
Title:
      --------------------


Fibergol Corporation,
Debtor and Debtor-in-Possession


By:
   -----------------------
Name:
     ---------------------
Title:
      --------------------


Fabrene Corp.,
Debtor and Debtor-in-Possession


By:
   -----------------------
Name:
     ---------------------
Title:
      --------------------


Fabrene Group L.L.C.,
Debtor and Debtor-in-Possession


By:
   -----------------------
Name:
     ---------------------
Title:
      --------------------


PNA Corp.,
Debtor and Debtor-in-Possession


By:
   -----------------------
Name:
     ---------------------
Title:
      --------------------


FNA Polymer Corp.,
Debtor and Debtor-in-Possession


By:
   -----------------------
Name:
     ---------------------
Title:
      --------------------

                                      44
<PAGE>


FNA Acquisition, Inc.,
Debtor and Debtor-in-Possession


By:
   -----------------------
Name:
     ---------------------
Title:
      --------------------


Loretex Corporation,
Debtor and Debtor-in-Possession


By:
   -----------------------
Name:
     ---------------------
Title:
      --------------------


Dominion Textile (USA) Inc.,
Debtor and Debtor-in-Possession


By:
   -----------------------
Name:
     ---------------------
Title:
      --------------------


Poly-Bond Inc.,
Debtor and Debtor-in-Possession


By:
   -----------------------
Name:
     ---------------------
Title:
      --------------------


PolyIonix Separation Technologies, Inc.,
Debtor and Debtor-in-Possession


By:
   -----------------------
Name:
     ---------------------
Title:
      --------------------


FabPro Oriented Polymers, Inc.,
Debtor and Debtor-in-Possession


By:
   -----------------------
Name:
     ---------------------
Title:
      --------------------


                                      45
<PAGE>

Pristine Brands Corporation,,
Debtor and Debtor-in-Possession


By:
   -----------------------
Name:
     ---------------------
Title:
      --------------------

                                      46
<PAGE>


PGI Asset Management Company,
Debtor and Debtor-in-Possession


By:
   -----------------------
Name:
     ---------------------
Title:
      --------------------


PGI Servicing Company,
Debtor and Debtor-in-Possession


By:
   -----------------------
Name:
     ---------------------
Title:
      --------------------


<PAGE>


Bonlam (S.C.), Inc.,
Debtor and Debtor-in-Possession


By:
   -----------------------
Name:
     ---------------------
Title:
      --------------------








</TEXT>
</DOCUMENT>
</SUBMISSION>
