SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT

 

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                                                                 Execution Copy

 

                SECOND AMENDED AND RESTATED EMPLOYMENT AGREEMENT

 

     This Second Amended and Restated Employment Agreement (the "Agreement") is

dated the 13th day of May, 2005 (the "Effective Date") 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 Executive has been continuously employed by the Employer since

March 18, 1994 and the Executive and the Employer desire that the Executive

continue in his role as the Chairman of the Board of Directors and Chief

Executive Officer of Employer, upon the terms and conditions herein set forth;

 

     WHEREAS, on January 30, 1997 the Employer and Executive entered into an

employment agreement which superceded and replaced in its entirety the prior

employment agreement between the Employer and the Executive dated March 18, 1994

(as amended, the "Prior Agreement");

 

     WHEREAS, on March 2, 1998 the Employer and the Executive entered into

Amendment Number 1 to the employment agreement dated as of January 30, 1997 (as

amended, the "Original Agreement");

 

     WHEREAS, on June 21, 2000 the Employer and the Executive entered into an

amended and restated employment agreement amending the terms of and restating

the prior Original Agreement (as amended, the "Amended and Restated Original

Agreement") in connection with the recapitalization of the Employer pursuant to

the Recapitalization Agreement dated as of April 12, 2000 among the Employer and

other parties thereto; and

 

     WHEREAS, in connection with the issuance by the Employer of Series A

Preferred Stock under the Series A Preferred Stock Purchase Agreement dated May

13, 2005, the Employer and Executive each desires to amend the terms of and

restate the existing Amended and Restated Original Agreement;

 

     NOW, THEREFORE, in consideration of the foregoing and of the mutual

covenants contained in this Agreement, the Employer and the Executive, intending

to be legally bound, hereby agree as follows:

 

     1. Employment. Subject to the terms and conditions hereinafter set forth,

the Employer hereby employs the Executive as Chairman of the Board of Directors

and Chief Executive Officer of Employer, and the Executive hereby accepts such

employment.

 

     2. Term. The term of employment of the Executive by the Employer commenced

on March 18, 1994 pursuant to the Prior Agreement, which was superceded and

replaced by the Original Agreement effective January 30, 1997, the Amended and

Restated Original Agreement effective June 21, 2000 and by this Agreement on the

date hereof. The term of employment (the "Employment Term") pursuant to this

Agreement shall terminate upon the earlier of (a) two

 

 

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years from the date hereof, or (b) the date on which the employment of the

Executive is terminated pursuant to Section 9 hereof. The Employment Term will

not be extended beyond two years from the date hereof unless agreed to in

writing by the parties hereto.

 

     3. Duties. During the Employment Term, the Executive shall devote such time

as necessary to discharge his duties and responsibilities as Chairman of the

Board of Directors and Chief Executive Officer of the Employer and shall possess

all rights and authorities as have been exercised previously under the Prior

Agreement, such duties and authorities not to be diminished. In addition to the

foregoing, the Executive shall hold, without additional compensation therefor,

such other offices, directorships or memberships of committees of the Employer

and/or any subsidiary or affiliate of the Employer, as the Board of Directors

may reasonably request, and to which, from time to time, during the Employment

Term, the Executive may be elected or appointed.

 

     4. Salary Compensation. In consideration of the services to be rendered by

the Executive as described in Section 3 above, the Employer shall pay or cause

to be paid to the Executive during the Employment Term, and the Executive shall

accept, compensation at the rate of four million ($4,000,000.00) dollars per

annum (the "Salary"). The Salary shall be payable in equal installments in

accordance with the usual payroll practices of Employer which are in effect from

time to time during the Employment Term, but in no event less frequently than

monthly. The Executive's Salary shall be subject to all applicable withholding

and other taxes.

 

     5. Bonus Compensation. Bonuses may be awarded solely at the discretion of

the Board of Directors of the Employer with the affirmative consent of a

director designated by Weston Presidio (the "WP Designee" as defined in the

Amended and Restated Certificate of Incorporation).

 

     6. Employment Benefits. During the Employment Term, the Executive shall be

entitled, in addition to the benefits generally available to other executive

officers of Employer, to the following employment benefits at Employer's cost:

 

          (a) Four weeks paid vacation for each year of the Employment Term and

     sick leave in accordance with the Employer's policies from time to time in

     effect for executive officers of the Employer;

 

          (b) Participation in a reasonable medical and hospitalization plan,

     but in no event providing lesser benefits than those in effect at March 18,

     1994, and applicable to its executive officers generally;

 

          (c) A long-term disability policy (non-Employer policy naming

     Executive as beneficiary and owner) providing for benefits in the amount of

     50% of Executive's Base Salary to age 65, and Executive's compensation

     shall be grossed-up annually to cover any additional taxes resulting from

     the annual premium paid for such policy by the Employer and treated as

     compensation to the Executive;

 

          (d) Participation, subject to classification requirements and

     continued maintenance thereof by Employer, in other employee benefit plans,

     such as profit

 

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     sharing plans, which are from time to time applicable to the Employer's

     executive officers generally;

 

          (e) In the event Executive is relocated, a temporary monthly living

     allowance until Executive is permanently relocated to cover reasonable

     living and travel expenses in connection with maintenance of a temporary

     residence, reimbursement, upon presentation of appropriate receipts, of all

     reasonable moving expenses, brokerage commissions and closing expenses

     related to the sale of his current residence and the purchase of his new

     residence, and, following such relocation, provided Executive's current

     home remains unrented and a good faith effort is being made to sell

     Executive's current residence, Employer shall reimburse Executive for the

     cost of interest on mortgages (not to exceed current levels of debt) and

     real estate taxes for a period not to exceed twelve months;

 

          (f) A leased automobile, including insurance and maintenance therefor;

 

          (g) Tax return preparation and reasonable financial planning services;

 

          (h) A $1 million term life insurance policy on the Executive's life