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                                                               Exhibit 10.16


                                  CONFIDENTIAL

                              EMPLOYMENT AGREEMENT

    This Employment Agreement is made and entered into as of September 19, 1998
by and between Applied Extrusion Technologies, Inc., a Delaware corporation (the
"Company"), and Gerald M. Haines II ("Employee").

    For and in consideration of the mutual promises, terms, provisions and
conditions contained in this Agreement, the Company and Employee hereby agree as
follows:

    1.   Employment. The Company offers and Employee accepts employment
subject to the terms and conditions set forth in this Agreement.

    2.   Term. Subject to earlier termination as hereinafter provided,
Employee's employment hereunder shall be for a term of three years, commencing
on the effective date hereof (the "Commencement Date") and ending on the third
anniversary of such date, and shall automatically renew thereafter for
subsequent one year periods (the initial term and each renewal term being
hereafter referred to as the "Employment Term").

    3.   Capacity and Performance. Employee shall serve on a full-time basis as
the Company's Vice President and Chief Financial Officer or in such other senior
executive position as the Chief Executive Officer or Board of Directors of the
Company may designate from time to time, shall report to the Chief Executive
Officer, and shall perform such duties and responsibilities on behalf of the
Company, consistent with such position, as may be designated from time to time
by the Chief Executive Officer of the Company or by his designee. During the
Employment Term, Employee shall devote his full time and best efforts, business
judgement, skill and knowledge to the advancement of the Company's interests and
to the discharge of his duties and responsibilities hereunder. Employee shall
not engage in any other business activity during the


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Employment Term except as may be approved in advance in writing by the Chief
Executive Officer.

    4.   Compensation and Benefits. Subject to performance of Employee's duties
and of the obligations of Employee to the Company, pursuant to this Agreement or
otherwise:

         (a)  Base Salary. As compensation for all services performed under and
during his employment hereunder, the Company shall pay Employee an annual base
salary of $150,000. The base salary payable to Employee in periods after the
Commencement Date shall be subject to upward adjustment only as recommended by
the Chief Executive Officer of the Company or his designee consistent with the
Company's compensation policies and guidelines. The base salary in effect from
time to time is hereafter referred to as the "Base Salary." The Base Salary
shall be payable in accordance with the payroll practices of the Company for its
executives.

         (b)  Bonuses. The Employee's position with the Company will at all
times be a bonus-eligible position. Bonuses will be based upon objective
criteria that are defined annually by the Company.

         (c)  Benefits. Employee shall be entitled to participate in any and all
employee benefit plans, medical insurance plans, life insurance plans,
disability income plans, retirement plans, incentive compensation plans and
other benefit plans from time to time in effect for executives of the Company
generally, except to the extent such plans are duplicative of benefits otherwise
provided to Employee under this Agreement. Employee shall be entitled to
receive, at the Company's expense, a complete physical examination by a
physician of his choice. In accordance with Company's policy, Employee shall
also be entitled to four weeks of paid vacation in any fiscal year during his
employment hereunder.


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         (d)  Business Expenses. The Company shall pay or reimburse Employee for
all reasonable business expenses incurred or paid by him in the performance of
his duties and responsibilities hereunder, subject to such reasonable
substantiation and documentation as may be requested by the Company.

    5.   Termination and Termination Benefits. Notwithstanding the provisions of
Section 2, Employee's employment hereunder shall terminate under the following
circumstances:

         (a)  Death. In the event of Employee's death, Employee's employment
hereunder shall immediately and automatically terminate. In such event, the
Company shall pay to the Employee's estate an amount equal to any unpaid Base
Salary and declared bonus and benefits accrued through the date of Employee's
death.

         (b)  Disability.

              (i)  The Company may terminate Employee's employment hereunder,
upon written notice to Employee, in the event that Employee becomes disabled
through any illness, injury, accident or condition of either a physical or
psychological nature and, as a result, is unable to perform substantially all of
his duties and responsibilities hereunder for one hundred eighty (180) days
during any period of three hundred and sixty-five (365) consecutive calendar
days.

              (ii) The Chief Executive Officer of the Company may designate
another employee to act in Employee's place during any period of his disability.
Notwithstanding any such designation, Employee shall continue to receive his
full salary and benefits in accordance with Section 4 of this Agreement until he
becomes eligible for disability income under the Company's disability income
plan or until the termination of his employment hereunder,


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whichever shall first occur.

              (iii) While receiving disability income payments under the
Company's disability income plan, Employee shall not be entitled to receive any
Base Salary under Section 4(a) or any bonus under Section 4(b), but shall
continue to participate in Company benefit plans in accordance with Section 4(c)
until the termination of his employment hereunder. The terms of the disability
plan maintained by the Company, if any, will govern the Employee's entitlement
to and the payment of disability income to Employee.

              (iv) If any question shall arise as to whether during any period
Employee is disabled, Employee may, and at the request of the Company shall,
submit to a medical examination by a physician selected by the Company to whom
Employee or his guardian has no reasonable objection to determine whether
Employee is so disabled and such determination shall for the purposes of this
Agreement be conclusive of this issue. If such question shall arise and Employee
shall fail to submit to such medical examination, the Company's determination of
the issue shall be binding on Employee.

         (c)  Termination by the Company for Cause. The Company may terminate
Employee's employment hereunder for cause at any time upon written notice to
Employee setting forth in reasonable detail the nature of such cause. For
purposes of this Agreement, the following shall constitute "cause" for
termination:

              (i)       Employee's conviction of, or entry into a consent decree
                        or substantially similar arrangement in connection with,
                        a crime involving fraud, dishonesty, or other conduct
                        which reflects materially and adversely on the Company;

              (ii)      breach by Employee of any material provision of this
                        Agreement, which breach has not been cured within 30
                        days after written


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                        notice to Employee by the Company; or

              (iii)     conduct by Employee, as determined in the reasonable
                        judgment of the Board of Directors of the Company,
                        demonstrating gross misconduct and gross unfitness to
                        serve and which has caused material harm to the business
                        or interests of the Company;

provided, however, that "cause" shall not mean acts or failure to act, whether
due to error of judgment or otherwise, where Employee has exercised good faith
and reasonable diligence in the exercise of his duties. Upon the giving of
written notice of termination of Employee's employment hereunder for cause, the
Company shall have no further obligation to Employee other than for Base Salary
earned and payment for vacation time accrued through the date of termination.

   
         (d)  Termination by the Company Other than for Cause. The Company may
terminate Employee's employment hereunder other than for cause at any time upon
written notice to Employee. In the event of such termination, the Company shall
(i) continue to pay Employee the Base Salary at the rate in effect at the date
of termination for twelve months or the remainder of the Employment Term,
whichever is longer (the "Severance Period"), payable at such times and in such
amounts as Employee would have received if his employment hereunder
had not been terminated, and (ii) provide to Employee during the Severance
Period the benefits set forth in Sections 4(c) of this Agreement (or the 
equivalent thereof in all material respects if continued participation in a 
Company benefit plan is not permitted under applicable law or benefit plan 
terms), subject to such contributions as Employee would have been required to 
make had he remained an employee of the Company.
    

For purposes of this Section 5(d), if Employee is required by the Company to
relocate the place if


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his employment to, or perform his duties primarily from, a location or locations
more than 30 miles from the Company's current location in Peabody,
Massachusetts, then the imposition of such requirement shall, at Employee's
option to be exercised in Employee's sole and absolute discretion, be treated as
a termination of Employee's employment hereunder other than for cause.

    6.   Effect of Termination. Payment by the Company of all amounts, and
provision of all benefits, that the Company may be required to pay or provide to
Employee pursuant to Section 5 upon termination of his employment hereunder
shall constitute the entire obligation of the Company to Employee, and
performance by the Company shall constitute full settlement of any claim that
Employee might otherwise assert against the Company or any director, officer or
employee of the Company, as a result of or in connection with such termination.
The provisions of Sections 6, 7, 8 and 9 of this Agreement shall survive
termination.


    7.   Nondisclosure and Nonuse of Confidential Information. Employee shall 
not disclose to any other person (except as required by applicable law or in 
connection with the performance of his duties and responsibilities 
hereunder), or use for his own benefit or gain, any Confidential Information 
(as defined below) relating to the business conducted or proposed to be 
conducted by the Company. Employee understands that this restriction shall 
continue to apply after Employee's employment terminates, regardless of the 
reason for such termination. "Confidential Information" includes, without 
limitation, information relating to (i) the development, research, testing, 
manufacturing and marketing activities of the Company, (ii) the products 
manufactured, sold or distributed by the Company, (iii) the costs, sources of 
supply and strategic plans of the Company, (iv) the identity and special 
needs of the customers of the

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Company and (v) people and organizations with whom the Company has business
relationships and the existence or nature of those relationships. Confidential
Information also includes comparable information that the Company may receive or
has received belonging to customers or others who do business with the Company.

    8.   Restricted Activities. Employee agrees that some restrictions on his
activities during and after his employment with the Company are necessary to
protect the goodwill, Confidential Information and other legitimate business
interests of the Company. In recognition thereof, while he is employed by the
Company and for a period of two years immediately following termination of his
employment with the Company (the "Restricted Period"), Employee shall not,
directly or indirectly, whether as owner, partner, investor, consultant, agent,
employee, co-venturer or otherwise, compete with the Company. Specifically, but
without limiting the foregoing, Employee agrees not to engage in any manner in
any activity that is directly or indirectly competitive or potentially
competitive with the business of the Company as conducted at any time during his
employment by the Company. The foregoing restriction shall not prevent Employee
from owning 5% or less of the publicly traded equity securities of any company
or from accepting employment from or providing consulting services to any person
who does not compete with the Company.

    9.   Relief, Interpretation. Employee agrees that the Company shall, in
addition to any other remedies available to it, be entitled to preliminary and
permanent injunctive relief against any breach by him of the covenants contained
in Sections 6, 7 and 8, without having to post bond. In the event that any
provision of Sections 6, 7, and 8 shall be determined by any court of competent
jurisdiction to be unenforceable by reason of its being extended over too great
a time, too large a geographic area or too great a range of activities, it shall
be interpreted to extend only

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over the maximum period of time, geographic area or range of activities as to
which it may be enforceable. For purposes of Sections 6, 7 and 8, the term
"Company" shall mean the Company and any of its subsidiaries and affiliates who
are such during the term of the Employee's employment with the Company.

    10.  Conflicting Agreements. Employee hereby represents and warrants that
the execution of this Agreement and the performance of his obligations hereunder
will not breach or be in conflict with any other agreement to which he is a
party or is bound, and that he is not subject to any covenants against
competition or similar covenants which would affect the performance of his
obligations hereunder. Employee will not disclose to or use on behalf of the
Company any proprietary information of a third party without such party's
consent.

    11.  Withholding. All payments made by the Company under this Agreement
shall be reduced by any tax or other amounts required to be withheld by the
Company under applicable law.

    12.  Assignment. Neither the Company nor Employee may make any assignment of
this Agreement or any interest herein, by operation of law or otherwise, without
the prior written consent of the other party; provided, however, that the
Company may assign its rights and obligations hereunder without the consent of
Employee in the event that the Company shall hereafter effect a reorganization,
consolidate with, or merge into any other person or transfer all or
substantially all of its properties or assets to any other person. This
Agreement shall inure to the benefit of and be binding upon the Company and
Employee, their respective successors, executors, administrators, heir and
permitted assigns.

    13.  Enforceability. If any portion or provision of this Agreement shall be
to any extent be declared illegal or unenforceable by a court of competent
jurisdiction, then the


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remainder of this Agreement, or the application of such portion or provisions in
circumstances other than those as to which is so declared illegal or
unenforceable, shall not be affected thereby, and each portion and provision of
this Agreement shall be valid and enforceable to the fullest extent permitted by
law.

    14.  Waiver. No waiver of any provision hereof shall be effective unless
made in writing and signed by the waiving party. The failure of either party to
require the performance of any term or obligation of this Agreement, or the
waiver by either party of any breach of this Agreement, shall not prevent any
subsequent enforcement of such term or obligation or be deemed a waiver of any
subsequent breach.

    15.  Notices. Any notices, requests, demands or other communications
provided for by this Agreement shall be in writing and shall be effective when
delivered in person or deposited in the United States mail, postage prepaid,
registered or certified mail, and addressed to Employee at his address set forth
under his signature on the last page hereof or such other address as Employee
shall have notified the Company of in writing, or, in the case of notice to the
Company, addressed to it at its main office, to the attention of the Chief
Executive Officer.

    16.  Miscellaneous. This Agreement and that letter agreement between the
Company and Employee dated May 18, 1998 together constitute the entire agreement
between the parties and supersedes any prior communications, agreements and
understandings, written or oral, with respect to the terms and conditions of
Employee's employment with the Company. This Agreement may be amended or
modified only by a written instrument signed by Employee and by a duly
authorized representative of the Company. This is a Massachusetts contract and
shall be construed and enforced in accordance with the laws of The Commonwealth
of Massachusetts, without regard to the conflict of laws principles or
provisions thereof.


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    IN WITNESS WHEREOF, this Agreement has been executed as a sealed instrument
by the Company, by its duly authorized officer, and by Employee, as of the date
first above written.

EMPLOYEE:                        APPLIED EXTRUSION TECHNOLOGIES, INC.


/s/ Gerald M. Haines II          By: /s/ Thomas E. Williams
----------------------------        ------------------------------------------
Address: 57 Alderbrook Drive        Title: President and Chief Executive Officer
         Topsfield, MA 01983
Date:    September 19, 1998


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