Exhibit 10.5

AEP INDUSTRIES INC.
Directors Stock Option Certificate
Under 2005 Stock Option Plan
For Options Granted After January 1, 2005

Date of Grant:                            

Name of Optionee:                            

Address of Optionee:                            

Number of Shares:                            

Price Per Share:                            

This is to certify that, effective on the date of grant specified above (which
shall in no event be after December 31, 2014), AEP Industries Inc. (the
“Company”) has granted to the above-named optionee (the “Optionee”) an option to
purchase from the Company, for the price per share set forth above, the number
of shares of Common Stock, $.01 par value of the Company (the “Stock”) set forth
above pursuant to the AEP Industries Inc. 2005 Stock Option Plan (the “Plan”).
This option is granted pursuant to Section 12 of the Plan as an automatic grant
to outside directors and shall be treated as a nonqualified Stock Option.

The terms and conditions of the option granted hereby, in addition to the terms
and conditions contained in the Plan, are as follows:

The price at which each share of Stock subject to this option may be purchased
shall be the price set forth above, subject to any adjustments which may be made
pursuant to Section 9 hereof, provided that it shall in no event be less than
the market value (as determined pursuant to Section 4 hereof) per share of Stock
on the date of grant, and provided further that in the event that the Optionee
owns on the date of grant stock possessing more than 10% of the total combined
voting power of all classes of stock of the Company or of any Parent or
Subsidiary corporations (within the meaning of Sections 425(e) and (f) of the
Code and referred to herein as “Parent” and “Subsidiary”, respectively), the
price per share shall not be less than 110% of the market value per share of
Stock on the date of grant.

2.    Subject to the terms and conditions set forth herein, this option may be
exercised to purchase shares of Stock covered by this option only in accordance
with the following schedule:

 

Exercise Period

 

Cumulative Percentage of
Aggregate Number of Shares
of Stock Covered by Option
Which May be Purchased

 

Within 1st year from date of grant:

 

0

%

Beginning one year from date of grant:

 

20

%

Beginning two years form date of grant:

 

40

%

Beginning three years from date of grant:

 

60

%

Beginning four years from date of grant:

 

80

%

Beginning five years from date of grant:

 

100

%

 

less, in the case of each exercise period, the number of shares of Stock, if
any, previously purchased hereunder. This option shall terminate and no shares
of Stock may be purchased hereunder more than ten years after the date of grant,
provided that if the Optionee owns on the date of grant stock possessing more
than 10% of the total combined voting power of all

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classes of stock of the Company or of any Parent or Subsidiary, this option
shall not be exercisable after the fifth anniversary of the date of grant and
shall be 100% exercisable four years and nine months after the date of grant.

3.    Except as provided in Section 7 hereof, this option may not be exercised
unless the Optionee is a member of the Board of Directors of the Company at the
time of such exercise or a period of one year following the termination of such
service other than cause.

4.    Subject to the terms and conditions set forth herein, the Optionee may
exercise this option at any time as to all or any of the shares of Stock then
purchasable in accordance with Section 2 hereof by delivering to the Company
written notice specifying:

(i)                  the number of whole shares of Stock to be purchased
together with payment in full (in a manner specified below) of the aggregate
option price of such shares, provided that this option may not be exercised for
less than one hundred shares of Stock or the number of shares of Stock remaining
subject to option, whichever is smaller;

(ii)                 the name or names in which the stock certificate or
certificates are to be registered;

(iii)                the address to which dividends, notices, reports, etc. are
to be sent; and

(iv)                the Optionee’s social security number.

Only one Stock certificate will be issued unless the Optionee otherwise requests
in writing. Payment shall be in cash, or by certified or bank cashier’s check
payable to the order of the Company, free from all collection charges; provided,
however, that payment may be made in shares of Stock owned by the Optionee
having a market value on the date of exercise equal to the aggregate purchase
price, or in a combination of cash and Stock. For purposes of the Plan, the
market value per share of Stock shall be the last sale price regular way on the
date of reference, or, in case no sale takes place on such day, the average of
the closing high bid and low asked prices regular way, in either case on the
principal national securities exchange on which the stock is listed to admitted
to trading, or if the Stock is not listed or admitted to trading on any national
securities exchange, the average of the closing high bid and low asked prices of
the Stock in the over-the-counter market on such date, as reported on the
National Association of Securities Dealers Automated Quotation System
(“NASDAQ”), or if there is no such price reported on NASDAQ on such date, as
furnished to the Committee by a New York Stock Exchange member selected from
time to time by the Committee for such purpose. If there are no bid and asked
prices reported on any such date, the market value shall be determined by the
Committee in accordance with the regulations promulgated under Section 2031 of
the Code, or by any other appropriate method selected by the Committee. If the
Optionee so requests, shares of Stock purchased upon exercise of an option may
be issued in the name of the Optionee or another person, provided the Optionee
pays all transfer and documentary taxes, if any, resulting from such issuance.
No Optionee shall be entitled to any rights as a stockholder of the Company in
respect of any shares of Stock covered by this option until such shares of Stock
shall have been paid for in full and issued to the Optionee.

5.    As soon as practicable after the Company receives payment for shares of
Stock covered by this option, it shall deliver a certificate or certificates
representing the shares of Stock so purchased to the Optionee or his designee.
Such certificate shall be registered in the name of the Optionee, or in such
other name or names as the Optionee shall request.

6.    This option is personal to the Optionee and during the Optionee’s lifetime
may be exercised only by the Optionee. This option shall not be transferable
other than by will or the laws of descent and distribution.

7.    This option does not confer on the Optionee any right to continue in the
employ of the Company or interfere in any way with the right of the Company to
determine the terms of the Optionee’s employment.

8.    In the event of a reorganization, recapitalization, stock split, stock
dividend, combination of shares, merger, consolidation, rights offering, or any
other change in the corporate structure or shares of the Company, the Committee
shall make such adjustments, if any, as it deems appropriate in the number and
kind of shares covered by this option, or in the option price per share
hereunder, or both.

9.    This option shall be subject to the requirement that if at any time the
Board of Directors shall determine that the registration, listing or
qualification of the shares of Stock covered hereby upon any securities exchange
or under any Federal or State law, or the consent or approval of any
governmental regulatory body is necessary or desirable as a condition of, or in
connection with, the granting of this option or the purchase of shares of Stock
hereunder, this option may not be exercised unless and until such registration,
listing, qualification, consent or approval shall have been effected or

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obtained free of any conditions not acceptable to the Board of Directors. The
Committee may require that the person exercising this option shall make such
representations and agreements and furnish such information as it deems
appropriate to assure compliance with the foregoing or any other applicable
legal requirements.

10.  This option and the terms and conditions herein set forth are subject in
all respects to the terms and conditions of the Plan, which shall be
controlling. All interpretations or determinations of the Committee shall be
binding and conclusive upon the Optionee and his legal representatives on any
question arising hereunder or under the Plan.

11.  By acceptance of this option, the Optionee agrees that in the event the
Optionee sells or otherwise disposes of any shares of Stock subject to this
option on or prior to (i) the date two years from the date of the grant of this
option, or (ii) the date one year from the date of the transfer of any of such
shares to him pursuant to the exercise of this option or any portion thereof,
the Optionee shall promptly upon the occurrence of any such event (x) give
notice to the Company of the occurrence thereof, which notice shall specify the
manner in which such shares of Stock were sold or disposed of and the
consideration received therefor, and (y) furnish to the Company such other
information as may reasonably be requested by the Company.

12.  All notices hereunder to the Company shall be delivered or mailed to the
following address:

AEP Industries Inc.
Attention:  Secretary, Stock Option Committee
125 Phillips Avenue
South Hackensack, New Jersey  07606

Such address for the service of notices may be changed at any time provided
notice of such change is furnished in advance to the Optionee.

13.  All notices hereunder to the Optionee shall be delivered or mailed to the
address set forth on page 1 hereof. Such address for the service of notices may
be changed at any time provided notice of such change is furnished in advance to
the Company.

 

 

 

AEP INDUSTRIES INC.

 

 

By

 

 

 

 

 

 

Secretary

 

 

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