EXHIBIT 10.1

SEPARATION AGREEMENT AND GENERAL RELEASE

This Separation Agreement and General Release (“Agreement”), dated as of
March 23, 2006 (the “Effective Date”), is made by and among Edmund A. Stanczak,
Jr. (“Stanczak”), Propex Fabrics Inc. (“Propex”) and Propex Fabrics Holdings
Inc. (“Holdings”).

WITNESSETH:

WHEREAS, on August 11, 2005, Propex and Stanczak entered into an employment
relationship governed by that certain letter agreement between Propex and
Stanczak dated as of such date (the “Letter Agreement”);

WHEREAS, the parties have determined to terminate the Letter Agreement and sever
the employment relationship;

WHEREAS, Stanczak has also served as an officer and/or director of Propex,
Holdings and some or all of their affiliated companies; and

WHEREAS, Stanczak has resigned as an officer and/or director of Propex, Holdings
and their affiliated companies.

NOW, THEREFORE, in consideration of the mutual covenants and agreements herein
contained, the receipt, adequacy and sufficiency of which are hereby
acknowledged, the parties hereto, intending to be legally bound, hereby agree as
follows:

1. Termination of Employment. Stanczak’s employment with Propex, Holdings and
their affiliated companies will terminate effective as of March 20, 2006 (the
“Separation Date”), and the Letter Agreement shall be deemed terminated and of
no further force and effect as of the Separation Date. After the Separation
Date, Stanczak shall receive no further compensation or benefits from Propex,
Holdings or any of their affiliated companies other than as provided herein
except for any vested accrued benefits Stanczak has with respect to any
“employee benefit plan” as such term is defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended, that is maintained or
sponsored by Propex, Holdings or any of their affiliated companies (the “Vested
Accrued Benefits”).

2. Payments. Within thirty days after the Effective Date, Stanczak shall receive
a lump-sum severance payment in cash (less any applicable statutory withholdings
or deductions) of Seven Hundred Thousand and No/100 Dollars ($700,000). The date
that such payment is made is referred to herein as the “Initial Payment Date”.
In addition, on the Initial Payment Date, Stanczak shall receive a lump-sum
relocation payment in cash (less any applicable statutory withholdings or
deductions) of Three Hundred Thousand and No/100 Dollars ($300,000). Finally,
Propex shall reimburse Stanczak for up to Thirty Thousand and No/100 Dollars
($30,000) of the actual out-of-pocket expenses paid by Stanczak to third parties
for outplacement services during the twelve-month period immediately following
the Effective Date.

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3. Confidentiality Obligations. Stanczak agrees that he will not make use of or
disclose, without the prior consent of Propex, any Confidential Information (as
hereinafter defined) relating to Propex, Holdings or any of their affiliated
companies, and further agrees that he will return to Propex at the request of
Propex all written materials in his possession at any time embodying any such
Confidential Information. For purposes of this Agreement, “Confidential
Information” includes information conveyed or assigned to Stanczak or known to,
conceived, compiled, created, developed, discovered, used, or obtained by
Stanczak during his employment relationship with or association with Propex,
Holdings or any of their affiliated companies or any of their predecessors which
concerns the business or affairs of Propex, Holdings or any of their affiliated
companies. Without limiting the generality of the foregoing, “Confidential
Information” includes information relating to inventions, trade secrets,
technologies, algorithms, source codes, passwords, databases, software,
products, services, finances, business plans, marketing plans, forecasts,
projections, legal affairs, supplier relationships, customer relationships,
potential customers and suppliers, business prospects, business opportunities,
personnel assignments, policies of every kind, compensation and benefits,
employees, contracts, assets or liabilities of Propex, Holdings or any of their
affiliated companies and information made available to Propex, Holdings or any
of their affiliated companies by other parties under a confidential
relationship. “Confidential Information,” however, shall not include information
(a) which is, at the time in question, in the public domain through no act of
Stanczak, (b) which is required by court or governmental order, law or
regulation to be disclosed, or (c) which Propex has expressly given Stanczak the
right to disclose pursuant to a separate written agreement.

4. Non-Compete Obligations. In consideration of the payments made and to be made
to Stanczak hereunder and other good and valuable considerations, the receipt
and sufficiency of which are hereby acknowledged, Stanczak agrees that during
the “Non-Compete Term” (as defined below) he will not:

(a) represent, engage in, carry on, or have a financial interest in, directly or
indirectly, individually, as a partner of a partnership or member of a limited
liability company, equity owner, stockholder (other than as a stockholder of
less than one percent (1%) of the issued and outstanding stock of a
publicly-held company whose gross assets exceed $100 million), investor, owner,
officer, director, trustee, manager, employee, agent, associate or consultant,
any business which directly competes with any of the services or products
produced, sold, conducted, developed, or in the process of development by
Propex, its parent or any of its subsidiaries or other affiliated companies on
the Separation Date within a 300 mile radius of Austell, Georgia;

(b) directly or indirectly, whether as a principal, agent, officer, director,
employee, consultant, independent contractor or otherwise, alone, in association
with or on behalf of any other person, firm, corporation or other business

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organization, solicit, sell, call upon, advise, do or attempt to do business
with or otherwise contact any customer of Propex, its parent or any of its
subsidiaries or other affiliated companies as of the Separation Date;

(c) directly or indirectly, whether as a principal, agent, officer, director,
employee, consultant, independent contractor or otherwise, alone, in association
with or on behalf of any other person, firm, corporation or other business
organization, hire, attempt to hire, or assist in hiring any employee of Propex,
its parent or any of its subsidiaries or other affiliated companies, or
encourage any such employee to terminate his/her employment with Propex, its
parent, subsidiaries or other affiliated companies;

(d) directly or indirectly, whether as a principal, agent, officer, director,
employee, consultant, independent contractor or otherwise, alone, in association
with or on behalf of any other person, firm, corporation or other business
organization, solicit, encourage or induce any customer, supplier or other
person, firm, corporation or other business organization having a business
relationship with Propex, its parent or any of its subsidiaries or other
affiliated companies to reduce, curtail, limit or terminate his, her or its
business with Propex, its parent or any of its subsidiaries or other affiliated
companies; or

(e) make any statement (orally or in writing) about Propex, its parent or any of
its subsidiaries or affiliated companies or any of their products or services,
which statement could reasonably be expected to be detrimental to Propex, its
parent or any of its subsidiaries or other affiliated companies or the marketing
or sale of any of their products or services.

The term “Non-Compete Term” means the period beginning on the Separation Date
and ending on June 20, 2008.

Stanczak acknowledges that the limitations set forth herein on Stanczak’s rights
to compete with Propex, its parent, subsidiaries and other affiliated companies
are reasonable and necessary for the protection of Propex, its parent,
subsidiaries and other affiliated companies. In this regard, Stanczak hereby
specifically agrees that the limitations as to period of time and geographic
area, as well as all other restrictions on Stanczak’s activities specified
herein, are reasonable and necessary for the protection of Propex, its parent,
subsidiaries and other affiliated companies. Stanczak agrees that, in the event
that the provisions of this Section 4 should ever be deemed to exceed the scope
of business, time or geographic limitations permitted by applicable law, such
provisions shall be and are hereby reformed to the maximum scope of business,
time or geographic limitations permitted by applicable law.

Stanczak acknowledges and agrees that the breach of any of the covenants made by
Stanczak in Section 3 or this Section 4 would cause irreparable injury to
Propex, which could not sufficiently be remedied by monetary damages; and,
therefore, that Propex shall be entitled to obtain such equitable relief as
declaratory judgments, temporary, preliminary and permanent injunctions and
orders of specific performance, without in any

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case the posting of any bond, to enforce those covenants or to prohibit any act
or omission by Stanczak that constitutes a breach thereof. If a party must bring
suit to enforce this Agreement or to defend any such action, the prevailing
party shall be entitled to recover its attorneys’ fees and costs related
thereto.

5. Consulting Arrangement. During the period (the “Consulting Period”) beginning
on March 20, 2007 and ending on June 20, 2008, Stanczak shall make himself
available to consult with Propex, Holdings and their affiliated companies with
respect to their businesses and operations at such reasonable times as may be
requested by Propex on reasonable notice to Stanczak. On or before the twentieth
day of each month during the Consulting Period, beginning on April 20, 2007 and
ending on June 20, 2008, Stanczak shall receive a consulting services fee in
cash (less any applicable statutory withholdings or deductions) of Twenty-Six
Thousand Six Hundred Sixty-Seven and No/100 Dollars ($26,667).

6. Continuation of Health Care Benefits. Stanczak will be eligible for continued
health (medical/dental/vision) care insurance in accordance with the
Consolidated Omnibus Budget Reconciliation Act (COBRA) for eighteen months from
the Separation Date, if Stanczak elects coverage, at Propex’s sole cost and
expense. Stanczak shall promptly notify Propex of any change of status, such as
reemployment, which would affect his rights to continued coverage under COBRA.

7. Cancellation of Options. Stanczak agrees that all stock option and other
rights, if any, of Stanczak to acquire any capital stock or other equity
interest in Propex, Holdings or any of their affiliated companies have been and
are hereby cancelled and terminated.

8. Resignation as Officer and Director. Stanczak has and does hereby resign as
an officer and director of Propex and Holdings and any of their affiliated
companies of which he is an officer or director, effective as of the Separation
Date.

9. Job References for Stanczak. Propex and Holdings agree that any requests for
information regarding Stanczak’s performance as Director, President and CEO of
Propex and Holdings will be referred to Mr. George W. Henderson III.

10. Waiver and Release by Stanczak. Stanczak, on behalf of himself, his heirs,
executors, successors, administrators and assigns (collectively, “Stanczak
Parties”), knowingly and voluntarily hereby discharges and releases Propex,
Holdings, their respective subsidiaries, affiliated companies and minority owned
companies and their respective predecessors, successors and assigns their
respective officers, stockholders, employees, directors, attorneys, and insurers
(the “Propex Parties”) from and waives any claims, demands, liabilities,
obligations, rights, damages and/or causes of action whatsoever, presently known
or unknown, that are based upon or arise in connection with any act, omission or
fact occurring prior to the Effective Date, including but not limited to the
following: (a) any statutory claims under the Age Discrimination in Employment
Act of 1967 and as amended by the Older Workers Benefit Protection Act, the
Americans with Disabilities Act of 1990, the Family and Medical Leave Act
of 1993, the Civil

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Rights Acts of 1964 and 1991, the Employee Retirement Income Security Act of
1974, or arising from any federal, state or local statute, ordinance or
regulation, (b) any common law, tort or contract claims, including but not
limited to, claims arising under any written or oral agreements between Stanczak
and any of the Propex Parties, and (c) any claims, matters or actions related to
Stanczak’s employment and/or affiliation with, or separation from Propex,
Holdings or their affiliated companies; SAVE AND EXCEPT only (i) rights that
cannot be waived under mandatory provisions of applicable law, (ii) Stanczak’s
rights under this Agreement and (iii) Stanczak’s rights to the Vested Accrued
Benefits.

11. Waiver and Release by Propex and Holdings. Propex and Holdings, on behalf of
themselves and all of their all affiliated entities and their respective
predecessors, successors, and assigns (the “Propex Releasing Parties”) hereby
fully and finally discharge and release the Stanczak Parties and their attorneys
from any and all claims and causes of action of whatsoever nature, whether known
or unknown that are based upon or arise in connection with any act, fact or
omission occurring prior to the Effective Date SAVE AND EXCEPT only the rights
of the Propex Releasing Parties under this Agreement. The Propex Releasing
Parties acknowledge that Stanczak has returned all property due to be returned
to them.

12. Certain Acknowledgements, Representations and Agreements. Stanczak
acknowledges, represents and agrees (a) that he has been fully informed and is
fully aware of his right to discuss any and all aspects of this matter with an
attorney of his choice, (b) that he has carefully read and fully understands all
of the provisions of this Agreement, (c) that he has had sufficient time to
consider fully this Agreement and has knowingly and voluntarily elected to
execute and deliver this Agreement after having had sufficient time to consider
it, and (d) that he accepts the terms of this Agreement as fair and equitable
under all the circumstances and voluntarily executes this Agreement.

13. Notices. All notices, requests, or consents provided for or permitted to be
given under this Agreement must be in writing and shall be considered delivered
to the recipient when actually delivered to the recipient in person, by United
States mail, courier, telegram or facsimile transmission. The address of Propex
and Holdings for purposes of notice shall be 260 The Bluffs, Austell, Georgia
30168 or such other address as may specified by Propex by notice to Stanczak.
The address of Stanczak for purposes of notice shall be 7745 Scenic Dr.,
Cumming, GA 30041 or such other address as may be specified by Stanczak by
notice to Propex.

14. Entire Agreement. This Agreement sets forth the entire agreement between
Stanczak, Propex and Holdings and supercedes any prior understandings or oral
agreements among the parties with respect to the subject matter hereof or any
employment relationship between Stanczak and Propex, Holdings or any of their
affiliated companies. No one has promised Stanczak anything that is different
from what is set forth in this Agreement. No other promises or agreements shall
be binding upon Stanczak, Propex or Holdings with respect to the subject matter
of this Agreement unless separately agreed to in writing. Except as provided in
Section 14, this Agreement may be modified or amended or any provision hereof
waived only by a written instrument signed by all of the parties hereto.

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15. Modification and Severability. If a court of competent jurisdiction declares
that any provision of this Agreement is illegal, invalid or unenforceable, then
such provision shall be modified automatically to the extent necessary to make
such provision fully legal, valid or enforceable. If such court does not modify
any such provision as contemplated herein, but instead declares it to be wholly
illegal, invalid or unenforceable, then such provision shall be severed from
this Agreement, this Agreement and the rights and obligations of the parties
hereto shall be construed as if this Agreement did not contain such severed
provision, and this Agreement otherwise shall remain in full force and effect.

16. Assignability; Binding Effect. Neither this Agreement nor any interest
herein may be assigned, directly or indirectly, by Stanczak without the prior
written consent of Propex. This Agreement and any interest herein is freely
assignable, directly or indirectly, by Propex and Holdings. This Agreement shall
be binding upon and inure to the benefit of Stanczak and his heirs, legal
representatives and permitted successors and assigns, and Propex and Holdings
and their respective successors and assigns.

17. Multiple Counterparts. This Agreement may be executed by the parties hereto
in multiple counterparts, each of which shall be deemed an original for all
purposes, and all of which together shall constitute one and the same
instrument.

18. Controlling Law. This Agreement has been made in the State of Georgia and
Georgia law applies to it. If any part is found to be invalid, the remaining
parts of the Agreement will remain in effect as if there were no invalid part.

 

PROPEX FABRICS INC. By:  

/s/ Joseph F. Dana

Name:   Joseph F. Dana Title:   President & CEO Date:   March 23, 2006

PROPEX FABRICS HOLDINGS INC.

By:  

/s/ Joseph F. Dana

Name:   Joseph F. Dana Title:   President & CEO Date:   March 23, 2006

 

/s/ Edmund A. Stanczak, Jr.

Edmund A. Stanczak, Jr. Date: March 23, 2006