Exhibit
10.1

     

    TERMINATION
AGREEMENT

     

    TERMINATION
AGREEMENT (this “Termination Agreement”), dated as of May
30, 2008 by and between Tekni-Plex, Inc., a Delaware corporation (the “Employer”), having its
principal offices at 201 Industrial Parkway, Somerville, NJ 08876, and F.
Patrick Smith, an individual (the “Executive”), residing at 8601
Riviera Court, Tour 18, Flower Mound, TX 75022.

     

    W
I T N E S S E T H:

     

    WHEREAS,
the Employer and the Executive are party to the Second Amended and Restated
Employment agreement dated May 13, 2005 (as extended, amended, or supplemented
prior to the date hereof, the “Employment
Agreement”);

     

    WHEREAS,
the Employer entered into a Restructuring Agreement dated as of April 11, 2008
among the Employer, its domestic subsidiaries and the other parties signatory
thereto (the “Restructuring
Agreement”);

     

    WHEREAS,
pursuant to the terms of the Restructuring Agreement, the Employment Agreement
shall hereby be terminated in accordance with the terms set forth
herein;

     

    NOW
THEREFORE, in consideration of the foregoing and the mutual covenants contained
in this Termination Agreement and in certain other agreements effectuating the
Restructuring (as defined in the Restructuring Agreement), the Employer and the
Executive, intending to be legally bound, hereby agree as follows:

     

     

    ARTICLE
1

    Termination
of Employment Agreement

     

    Section
1.01.  Termination of
Employment Agreement.  In accordance with Section 15 of the
Employment Agreement, upon the terms and subject to the conditions contained
herein, the Employer and the Executive hereby agree that this Termination
Agreement terminates the Employment Agreement in its entirety (including,
without limitation, Section 10 thereof, except as expressly provided herein)
effective as of the date hereof and the Employment Agreement will be of no
further force or effect.

     

    Section
1.02.  Non-Solicitation of Employees;
Confidentiality.  The Executive hereby agrees that for a period
of one year following the date hereof (or to such lesser extent and for such
lesser period as may be deemed enforceable by a court of competent jurisdiction,
it being the intention of the parties that this 

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    provision
shall be so enforced), the Executive shall not directly or indirectly induce or
attempt to influence any employee of the Employer to terminate his or her
employment with the Employer.  In addition, the Executive agrees that
the Executive shall not (a) at any time directly or indirectly disclose to any
person, firm or corporation any trade, technical or technological secrets or (b)
for a period of one year following the date hereof disclose any details of
organization or business affairs, or any names of past, present or future
(“future” as used herein, shall mean at or prior to the time of termination of
employment) customers of the Employer.  For purposes of this Section
1.02, the term “Employer” shall be deemed to include Employer and all of its
subsidiary corporations.

     

     

    ARTICLE
2

    Accrued
Benefits and Expenses

     

    Section
2.01.  Payment of Accrued Benefits and
Expenses.  In connection with the termination of the Employment
Agreement, the Employer agrees to pay or reimburse Executive for ordinary course
benefits and business expenses (excluding golf membership or any other
extraordinary expense) that are accrued or incurred by the Executive during the
course of his employment with the Employer through and including the date hereof
in accordance with the Employer’s regular policies.  No later than the
effective date of this Agreement, Executive shall deliver to the Employer and to
Paul, Weiss, Rifkind, Wharton & Garrison LLP, as counsel to certain holders
of the Employer’s 12.75% Senior Subordinated Notes due 2010, a list (including
approximate amounts) of all such benefits and expenses that have not been paid
or reimbursed as of such date for which Executive intends to seek payment or
reimbursement from the Employer pursuant to the immediately foregoing
sentence.

     

    Section
2.02.  No Further Employer
Obligation.  The Employer and the Executive hereby agree that
other than as provided pursuant to the foregoing Section 2.01, the Employer has
no other obligations to the Executive with respect to the Executive’s employment
with the Employer through and including the date hereof, including but not
limited to any earned but previously deferred salary.

     

     

    ARTICLE
3

    Release

     

    Section
3.01   Release of
Claims.  The Employer and the Executive each hereby release and
waive any claims (including without limitation any claims for any payments or
benefits) and causes of action that it and he (as applicable) have or may have
under the Employment Agreement, except for any claims and causes of action as
may arise under the terms of this Termination Agreement.

     

     

    
      
        
        

      

      
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    ARTICLE
4

    Miscellaneous

     

    Section
4.01.  Notices.  All
notices, requests and other communications to the Employer or to the Executive
shall be in writing (including facsimile or similar writing) and shall be
given,

     

    if to the
Employer, to:

    


    Tekni-Plex,
Inc.

    201
Industrial Parkway

    Somerville,
NJ 08876

    Attention:
Michael W. Zelenty

    Facsimile
No.: (908) 595-0806

    Email:
michael.zelenty@tekni-plex.com

     

    with a
copy to:

     

    Davis Polk
& Wardwell

    450
Lexington Avenue

    New York,
New York  10017

    Attention:
Marshall S. Huebner

    Facsimile
No.: (212) 450-3800

    Email:
mhuebner@dpw.com

     

    


    if to the
Executive, to:

    


    Dr. F.
Patrick Smith

    8601
Riviera Court, Tour 18,

    Flower
Mound, TX 75022

    Facsimile:  (817)490-1145

    Email:  fpatsmith@aol.com

    


    and with a
copy to:

     

    Carrington,
Coleman, Sloman & Blumenthal, L.L.P.

    901 Main
Street

    Suite
5500

    Dallas,
Texas 75202

    Attention:  Peter
Tierney

    Facsimile:  (214)855-1333

    Email:  ptierney@ccsb.com

    


    


    
      
        
        

      

      
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    Section
4.02.  Headings.  Headings
are for ease of reference only and shall not form a part of this Termination
Agreement.

     

    Section
4.03.  Entire
Agreement.  This Termination Agreement contains the entire
agreement between the parties hereto concerning the respective obligations of
the parties with respect to the subject matter hereof, and supersedes all prior
agreements and understandings, oral or written, with respect to such
matters.

     

    Section
4.04.  Governing
Law.  This Termination Agreement shall be construed and
interpreted in accordance with and governed by the laws of the State of New
York, without giving effect to the principles of conflicts of laws
thereof.

     

    Section
4.05.  Jurisdiction.  The parties
hereto (i) submit for themselves, and any legal action or proceeding relating to
this Termination Agreement or for recognition and enforcement of any judgment in
respect hereof, to the exclusive jurisdiction of the courts of the State of New
York, the courts of the United States of America for the Southern District of
New York, and the appellate courts therefor, (ii) consent that any action or
proceeding shall be brought in such courts, and waive any objection that each
may now or hereafter have to the venue of any such action or proceeding in any
such court, (iii) agree that service of process of any such action or proceeding
may be effected by certified mail (or any substantially similar form of mail),
postage prepaid, to the appropriate party at its address as set forth herein,
and service made shall be deemed to be completed upon the earlier of actual
receipt or five days after the same shall have been posted as aforesaid and (iv)
agree that nothing herein shall affect the right to effect service of process in
any other manner permitted by law.

     

    Section
4.06.  Counterparts.  This Termination
Agreement may be signed in counterparts, each of which shall be deemed an
original.

     

     

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    IN WITNESS
WHEREOF, the parties hereto have caused this Termination Agreement to be
executed as of the date first written above written.

     

     

    
      	

              TEKNI-PLEX,
      INC.

            	 
	 	 	 
	By:	/s/
      James E. Condon	 
	 	
              Name:

            	
              James
      E. Condon

            	 
	 	
              Title:

            	
              Vice
      President and 

              Chief
      Financial Officer

            	 


    

     

    
      	

              EXECUTIVE

            	 
	 	 	 
	By:	/s/
      F.
      Patrick Smith	 
	 	
              F.
      Patrick Smith