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                                                                    Exhibit 10.8


                               SEVERANCE AGREEMENT

    This Agreement is dated as of August 22, 1997 by and between Applied
Extrusion Technologies, Inc., a Delaware corporation (the "Company"), and
Anthony J. Allott, an individual residing at 18 Washington Street, Marblehead,
Massachusetts, 01945 ("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.  TERMINATION AND TERMINATION BENEFITS. In the event that Employee's 
employment with the Company is terminated by the Company at any time, the
following provisions shall apply with respect to such termination:

        (A) TERMINATION BY THE COMPANY FOR CAUSE. In the event that the Company
terminates Employee's employment hereunder for cause, the Company shall have no
further obligation to Employee other than for base salary earned up to the date
of termination. Any such termination for cause shall be given by written notice
to Employee setting forth in reasonable detail the nature of such cause. As used
herein, the term "cause" shall mean:

            (i)     Employee's willful and material failure to perform (except
                    by reason of disability or death), or willful and material
                    negligence in the performance of, his duties and
                    responsibilities;

            (ii)    other material breach by Employee of any provision of this
                    Agreement; or

            (iii)   other conduct by Employee that is materially harmful to the
                    business or interests of the Company;

as determined by the Company in its reasonable judgment.

        (B) TERMINATION BY THE COMPANY OTHER THAN FOR CAUSE. In the event that
the Company terminates Employee's employment hereunder at any time other than
for cause, (i) the Company shall continue to pay Employee his base salary at the
rate in effect at the date of termination, payable at such times and in such
amounts as Employee would have received if his employment hereunder had not been
terminated, until the earliest of (a) the date on which Employee commences other
comparable full-time employment, and (b) eighteen months from the date of
termination; and (ii) Employee may, subject to applicable employee contribution,
continue participation in the Company's group medical and dental insurance
plans. Employee agrees to use his best reasonable efforts to find other
comparable full-time employment as referenced in the preceding sentence.

    2.  EFFECT OF TERMINATION. Payment by the Company of any amount that it may
be required to pay Employee pursuant to Section 1 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






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any director, officer or employee of the Company as a result of or in connection
with such termination. The provisions of Sections 2, 3, and 4 of this Agreement
shall survive termination.

    3.  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,
marketing and financial 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 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.

    4.  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 one year immediately following termination of his
employment with the Company (the "Restricted Period"), Employee shall not (i)
directly or indirectly, whether as owner, partner, investor, consultant, agent,
employee, co-venturer or otherwise, compete with the Company, or (ii) solicit
any individual who is or has been within the prior six months employed by the
Company to leave the employment of the Company or to become associated, whether
as an owner, partner, investor, consultant, agent, employee, co-venturer or
otherwise, with any individual or entity selling products which compete with the
products sold by 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 restrictions shall not prevent Employee from owning 5% or less of the
equity securities of any publicly traded company or from accepting employment
from or providing consulting services to any person who does not compete with
the Company.

    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/ Anthony J. Allott           By: /s/ Thomas E. Williams
----------------------------        -----------------------------------------
Anthony J. Allott                       Thomas E. Williams,                  
                                        President and Chief Executive Officer


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