CONFIDENTIAL SEPARATION AGREEMENT, WAIVER AND RELEASE

        This SEPARATION AGREEMENT, WAIVER AND RELEASE ("Separation Agreement")
is between MOD-PAC CORP., a New York corporation ("Employer"), and C. ANTHONY
RIDER ("Executive").

        WHEREAS

, Executive and Employer wish to clarify and amend their respective rights and
obligations arising from the separation of Executive;

        NOW, THEREFORE

, in consideration of the mutual promises, benefits and covenants herein
contained, Employer and Executive hereby agree as follows:

        1.    

Employment Separation. Executive herewith resigns as an officer and director of
Employer and its subsidiaries and is separated from employment with Employer
effective May 6, 2005 (the "Separation Date"). Executive and Employer agree, for
all purposes, to announce and describe Executive's separation as a voluntary
resignation.

        2.    

Salary Continuation; Other Benefits.

                (a) Employer shall make 52 equal weekly payments of $3,815.33,
less required withholding and deductions, to Executive commencing on May 20,
2005 and ending with the payment on May 12, 2006 (the foregoing period referred
to herein as the "Term" of this Separation Agreement). Executive will not be
entitled to bonus or incentive compensation for the Employer's fiscal year ended
December 31, 2005.

                (b) Employer shall transfer to Executive title to the automobile
which has been provided for Executive's use, and shall pay the Executive for
fees and expenses, including taxes such as sales and use tax and income tax,
incurred in connection with such transfer up to a maximum amount of $5,000 on
June 3, 2005.

                (c) At Employer's expense, Executive will be continued in
Employer's health plan for the Term of this Separation Agreement at the same
level and on the same terms as currently provided Executive. Additional coverage
may be available thereafter pursuant to the consolidated Omnibus Budget
Reconciliation Act of 1986 ("COBRA").

                (d) Employer shall make available to Executive, at Employer's
expense, Employer's standard outplacement service for up to three (3) months.

                (e) Employer shall reimburse Executive for professional fees
charged him by Davis Blesy in connection with the preparation of Executive's
2004 federal and New York State income tax returns, up to a maximum amount of
$3,000.

                (f) Employer shall reimburse Executive for all previously
un-reimbursed business related expenses incurred by Executive through May 5,
2005, provided, that Executive submits to Employer proper receipts in accordance
with Employer's customary practice no later than June 3, 2005.

                (g) All other forms of compensation, insurances and other
benefits, not expressly dealt with in this Section 3, shall terminate on the
Separation Date.

        3.    

Stock Options. In accordance with the provisions of the Employer's Stock Option
Plans, Executive and Employer acknowledge that Executive has three months from
the Separation Date, or until August 4, 2005, to exercise his vested options in
shares of Employer's stock heretofore granted to him.

        4.    

Release. (a) The parties agree and acknowledge that the consideration to be
provided to Executive, as set forth above in Section 2, is being provided to
extinguish and release all of Executive's claims against Employer and any of its
past, present or future parent companies, subsidiaries, affiliates, and all
their respective past, present and future employees, officers, directors,
trustees, shareholders, agents, and successors and assigns (collectively,
"Releasees"), and that this consideration to be provided to Executive exceeds
anything of value to which Executive would otherwise be entitled.

                (b) For and in consideration of the promises and other valuable
consideration paid to Executive pursuant to this Separation Agreement,
Executive, for himself and for his heirs, executors, successors and assigns
(collectively, "Releasors"), hereby releases and discharges the Releasees from
any and all claims, demands, causes of action, and liabilities of any kind
whatsoever, whether known or unknown, which the Releasors ever had, now have or
may hereafter have against the Releasees by reason of any actual or alleged act,
omission, transaction, practice, conduct, occurrence, or other matter, except
for those rights expressly reserved in this Separation Agreement.

                (c) Without limiting the generality of Section 4(a) above or
characterizing the nature of the Releasors' claims, this document releases the
Releasees from (i) any and all claims arising out of Executive's employment with
Employer; (ii) any and all claims (whether based on a federal, state or local
stature, or court decision) including, but not limited to, claims under the Age
Discrimination in Employment Act, Title VII of the Civil Rights Act of 1964, the
American with Disabilities Act, the Employee Retirement and Income Security Act,
the Sarbanes-Oxley Act of 2002, the New York Human Rights Law, the New York
Labor Law, and/or any other federal, state or local statute or court decision;
(iii) any and all claims for breach of contract; (iv) any and all claims for
lost wages, bonuses, back pay, front pay, employee benefits, including severance
pay, or for damages or injury of any type whatsoever, including, but not limited
to, defamation, injury to reputation, intentional or negligent infliction of
emotional distress, (whether arising by virtue of statute or common law, and
whether based upon negligent or willful actions or omissions); and (v) any and
all claims for compensatory or punitive damages, attorneys' fees, costs and
disbursements which the Releasors ever had, now have or hereafter can, shall or
may have against the Releasees for, upon or by reason of any actual or alleged
act, omission, transaction, practice, conduct, occurrence or other matter up to
and including the date of the execution of this Separation Agreement by
Executive, except for those rights expressly reserved in this Agreement.

                (d) Notwithstanding any other provision of this Agreement, the
Executive shall at all times be entitled to all rights of indemnification and
advancement of expenses from Employer as authorized under Employer's Certificate
of Incorporation or By-Laws or applicable law, with respect to any action or
proceeding to which Executive is made a party or threatened to be made a party
by reason of the fact that Executive was an officer of the Employer or any
affiliate of the Employer.

        5.    

Future Claims. (a) Except for Executive's rights to enforce this Separation
Agreement, Executive covenants, to the maximum extent permitted by law, that he
shall not at any time hereafter commence, maintain, prosecute, participate in,
or permit to be filed by any other person on his behalf, any action, charge,
complaint, suit or proceeding or any kind, before any court, administrative
agency, or other tribunal, against any of the Releasees with respect to any
actual or alleged act, omission, transaction, practice, conduct, occurrence or
other matter up to and including the date of the execution of this Separation
Agreement by Executive. The foregoing covenant shall not preclude Executive from
testifying in a proceeding before a court or agency under compulsion of law,
provided that Executive complies fully with Section 6(c) below.

                (b) Executive further covenants, to the maximum extent permitted
by law, that he shall not at any time hereafter provide information, support or
assistance, directly or indirectly, to any individual or organization, in
connection with any action, charge, complaint, suit or proceeding of any kind
against Employer or any of the Releasees. The foregoing covenant shall not
preclude Executive from testifying in a proceeding before a court or agency
under compulsion of law, provided that Executive complies fully with Section
6(c) below.

                (c) Executive agrees to give Employer notice of any and all
attempts to compel disclosure of any information he is prohibited from
disclosing by this Section 6. Executive shall provide written notice of an
attempt to compel such disclosure as promptly as possible to Employer, and at
least five (5) days before compliance with any subpoena or order is requested or
required.

                (d) Executive further covenants that he will not make to any
person or entity any statement, whether written or oral, that directly or
indirectly impugns the integrity of, or reflects negatively on, any of the
Releasees, or that denigrates, disparages or results in detriment to any of the
Releasees. The Releasees agree that they will not make to any person or entity
any statement, whether written or oral, that directly or indirectly impugns the
integrity of, or reflects negatively on Executive, or that denigrates,
disparages, or results in detriment to Executive, except as any Releasee may be
obligated to comply with SEC and other regulatory requirements. Employer agrees
to give Executive notice of any and all attempts to compel disclosure of any
information which is prohibited from disclosing by this Section 6. Employer
shall provide written notice of an attempt to compel such disclosure as promptly
as possible to Executive, and at least five (5) days before compliance is
requested or required.

        6.    

Confidentiality. (a) The existence and terms of this Separation Agreement are
and shall be deemed confidential and shall not be disclosed by Executive or
Employer, or any party acting on behalf of Executive or Employer, to any person
or entity, except that: (i) Executive may disclose the terms of this Separation
Agreement to his spouse, attorney, and tax and financial advisors, who will each
be advised of the confidentiality of this Separation Agreement; and (ii)
Employer may file such disclosure as appropriate to satisfy obligations imposed
by federal securities laws.

                (b) Except pursuant to an order of a government body or court
and as otherwise provided herein, and then only provided that Executive has
complied with Section 6(c), neither Executive, nor any party or individual
acting on his behalf, shall disclose to or discuss with any person or entity any
information concerning (i) any matter relating directly or indirectly to his
employment by Employer, (ii) any matter relating directly or indirectly to this
Separation Agreement, (iii) the termination of Executive's employment with
Employer, or (iv) Employer's Confidential Information.

                (c) For purposes of this Separation Agreement, "Confidential
Information" includes, but is not limited to, any and all records, files,
reports, letters, memoranda, records, data, flowcharts, promotional materials,
agreements, information, market studies and other secret, confidential or
proprietary information of any nature relating to Employer, its affiliates and
subsidiaries, and their parents, officers, board members, distributors,
suppliers or employees, which is not generally available to the public. In order
to enforce compliance with this covenant, Executive acknowledges that the
failure to comply with the provisions of this Separation Agreement will cause
Employer irrevocable harm and that a remedy at law for such failure would be an
inadequate remedy for Employer. Therefore, Executive consents that Employer may
obtain an order of specific performance, an injunction, a restraining order, or
other equitable relief from a court or arbitrator having jurisdiction. The
availability of equitable relief shall not preclude Employer from recovering any
monetary damages to which it is entitled under applicable law.

        7.    

Executive Cooperation. Executive shall make himself available at reasonable
times and places to:

        (a) fully cooperate and assist with the transition of Executive's duties
and responsibilities;

        (b) fully cooperate and assist with any examination of the Employer
conducted by regulatory authorities having jurisdiction over the Employer,
including attendance at meetings and production of notes and records that may be
in Executive's possession;

        (c) fully cooperate and assist the Employer in any internal
investigations or audits; and

        (d) provide consultative assistance to the Employer. Employer will
reimburse Executive any reasonable out of pocket expenses associated with
requests for assistance under this provision, including travel, lodging and
meals.

        8.    

Breach. Any material breach by Executive of this Separation Agreement, shall be
considered a breach for which Employer shall be entitled to cease the payments
and benefits described in Section 2 of this Separation Agreement after providing
Executive with at least ten (10) calendar days written notice of such breach and
Executive's failure to cure such breach, in addition to any other remedies to
which the Employer may be entitled by law.

        9.    

Sec Reporting. Executive acknowledges his obligation to report transactions in
capital stock of Employer and agrees that for a period of six (6) months
following the Separation Date, as provided in Section 1, he will furnish timely
information of any such transactions to Employer.

        10.    

Non-Disparagement. Each of Executive and Employer agrees that he or it shall not
make to any person or entity any statement, whether written or oral, that
directly or indirectly, impugns the integrity of, or reflects negatively on, the
other or that denigrates or disparages the other party.

        11.    

Unenforceability. If any provision of this Separation Agreement is held to be
illegal, void or unenforceable, such provisions shall have no effect upon, and
shall not impair the legality or enforceability of, any other provision of this
Separation Agreement.

        12.    

Binding Effect. This Separation Agreement is binding upon, and shall inure to
the benefit of, the parties and their respective heirs, executors,
representatives, successors and assigns.

        13.    

No Admission. The making of this Separation Agreement is not intended, and shall
not be construed, as any admission that Employer or any of the Releasees has
violated any federal, state, or local law, or has committed any wrong against
Executive or any other person or entity.

        14.    

Opportunity to Review. Executive acknowledges and warrants that:

                (a) He has had the opportunity to consider, up to twenty-one
days, the terms and provisions of this Separation Agreement;

                (b) He has been advised by Employer in this writing to consult,
and has had adequate opportunity to consult with, an attorney of his choosing
prior to executing this Separation Agreement;

                (c) He has carefully read this Separation Agreement in its
entirety, has had an opportunity to have its provisions explained to him by an
attorney of his choosing, and fully understands the significance of all of its
terms and provisions; and

                (d) He is signing this Agreement voluntarily and of his own free
will and assents to all of the terms and conditions contained herein.

        15.    

Effective Date. This Separation Agreement shall not become effective until the
eighth day following its execution by Employee (the "Effective Date"). Employee
shall have the right to revoke this Separation Agreement for a period of seven
(7) days following his execution of this Separation Agreement by giving written
notice by personal delivery of such revocation to Employer. If Executive revokes
this Separation Agreement prior to the Effective Date, the promises and
obligations contained herein shall be null and void.

        16.    

Entire Agreement. This Separation Agreement is the entire agreement between the
parties with respect to the subject matter hereof, and the duties, compensation
and benefits of Executive; and, except as otherwise specifically provided
herein, supersedes all prior communications, representations, agreements,
understandings, plans and arrangements between the parties, whether oral or
written.

        17.    

Return of Employer Property. Executive agrees to return immediately all
Employer's property in Executive's custody or possession, whether created by
Executive or others, including but not limited to any keys or electronic cards
providing access to any of Employer's facilities, personal or laptop computers,
handheld computers, the originals and all copies of all documents, files,
reports, letters, memoranda, records, data, flow charts, promotional materials,
agreements, market studies and other tangible material containing confidential
or proprietary information concerning the Employer, its affiliates,
subsidiaries, officers, board members of employees.

        18.    

Return of Executive Property. Employer agrees to return immediately all
Executive's property currently in Employer's custody or possession, including
but not limited to any files (physical or electronic) regarding personal
investments and entities for which the Executive is a member of such entities'
Boards of Directors or otherwise associated with, stock certificates, books and
reference materials.

        19.    

Responses to Prospective Employer's Inquiries Regarding Executive. The Employer
will promptly respond to inquiries from prospective employers regarding the
Executive and such responses shall be limited to: confirm that the Executive
voluntarily resigned his position with Employer; confirm dates of service;
confirm salary levels; confirm duties and titles. In the course of such
response(s) Employer shall be mindful of paragraph 10 of this agreement.

        IN WITNESS WHEREOF

, the parties hereto have executed this Separation Agreement.

/s/ Anthony Rider                                                  MOD-PAC CORP.
C. ANTHONY RIDER      
Date:05/09/05                                                        By: /s/
Daniel G. Keane                               Daniel G. Keane     President and
CEO       Date: 05/09/05