Exhibit 10.4


 


AMENDMENT
NO. 2 TO

LOAN AND SECURITY AGREEMENT


 


AMENDMENT NO. 2 TO
LOAN AND SECURITY AGREEMENT (“Amendment No. 2”) dated as of July 10, 2002
by and among AEP Industries, Inc. (“Borrower”), the financial institutions from
time to time parties to the Loan Agreement (as hereinafter defined) as lenders
(each individually, a “Lender” and collectively, “Lenders”) and Congress
Financial Corporation, a Delaware corporation, in its capacity as agent for
Lenders (in such capacity, “Agent”).


 


WITNESSETH


 


WHEREAS,
Agent, Lenders and Borrower have entered into financing arrangements pursuant
to which Agent and Lenders have made and may make loans and advances and
provide other financial accommodations to Borrower as set forth in the Loan and
Security Agreement, dated November 20, 2001, by and among Agent, Lenders
and Borrower, as amended by Amendment No. 1 to Loan and Security Agreement
dated December 9, 2001 (as the same now exists and may hereafter be
further amended, modified, supplemented, extended, renewed, restated or
replaced, the “Loan Agreement”) and the agreements, documents and instruments
at any time executed and/or delivered in connection therewith or related
thereto (collectively, together with the Loan Agreement, the “Financing
Agreements”);


 


WHEREAS, Borrower has
requested that Agent make available to Borrower Letter of Credit Accommodations
in the form of banker’s acceptances of up to $5,000,000 at any one time
outstanding and Agent is willing to do so to the extent and subject to terms
and conditions set forth herein.


 


NOW,
THEREFORE, in consideration of the mutual conditions and agreements and
covenants set forth herein, and for other good and valuable consideration, the adequacy
and sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:


 


Section 1.
Definitions.


 


1.1 Defined
Terms. For purposes of this Amendment, all terms used herein, including but
not limited to, those terms used and/or defined herein or in the recitals
hereto shall have the respective meanings assigned thereto in the Loan
Agreement as amended by this Amendment No. 2 to Loan and Security Agreement.


 


1.2 Amendments
to Definitions.  All
references to the term “Letter of Credit Accommodations” in the Loan Agreement
and the other Financing Agreements and each such reference is hereby amended to
mean, collectively, letters of credit and banker’s acceptances issued with
respect to drafts presented under letters of credit for the purchase of
merchandise, and merchandise purchase or other guaranties which are from time
to time either (a) issued or opened by Agent or any Lender for the account of
Borrower or any Obligor or (b) with respect to which Agent or Lenders have
agreed to indemnify the issuer or guaranteed to the issuer the performance by
Borrower or any Obligor of its obligations to such issuer, sometimes being


 





















 


referred
to in the Loan Agreement or such other Financing Agreements individually as a “Letter
of Credit Accommodation”. The term “banker’s acceptance” as used herein shall
refer to a time draft that is an order written by the beneficiary of a letter
of credit as the drawer of the time draft instructing the issuer of the letter
of credit as the drawee to pay the amount specified in the time draft that has
been accepted by a bank.


 


Section 2.
Amendments to Loan Agreement.


 


2.1 Letter
of Credit Accommodation  Fees. Section 2.2(b) of the Loan
Agreement is hereby deleted in its entirety and replaced with the following:


 


“(b) In
addition to any charges, fees or expenses charged by any bank or issuer in
connection with the Letter of Credit Accommodations, Borrower shall pay to
Agent, for the benefit of Lenders, (i) a letter of credit fee at a rate equal
to two (2%) percent per annum on the daily outstanding balance of the Letter of
Credit Accommodations, other than banker’s acceptances, for the immediately
preceding month (or part thereof), (ii) an acceptance fee at a rate equal to
two and one half (2 1/2%) percent per annum on the daily outstanding balance of
Letter of Credit Accommodations consisting of banker’s acceptances for the
immediately preceding month (or part thereof), in each case, payable in arrears
as of the first day of each succeeding month, except that Agent may, and
upon the written direction of Required Lenders shall, require Borrower to pay
to Agent for the ratable benefit of Lenders such letter of credit fee under
clause (i), at a rate equal to four (4%) percent per annum, and such acceptance
fee under clause (ii), at a rate equal to five and one half (5 1/2%) percent
per annum in each case on the applicable daily outstanding balance for: (A) the
period from and after the date of termination hereof until Agent and Lenders
have received full and final payment of all Obligations (notwithstanding entry
of a judgment against Borrower) and (B) the period from and after the date of
the occurrence of an Event of Default for so long as such Event of Default is continuing
as determined by Agent in good faith. Such letter of credit fees and acceptance
fees shall be calculated on the basis of a three hundred sixty (360) day year
and actual days elapsed and the obligation of Borrower to pay such fees shall
survive the termination of this Agreement”.


 


2.2 Letter
of Credit Accommodation Fees. Section 2.2(e) of the Loan Agreement is
hereby amended by adding the following to the end thereto:


 


“, provided,
that, the amount of all outstanding Letter of Credit Accommodations consisting of
banker’s acceptances and all other commitments and obligations made or incurred
in connection therewith shall not at any time exceed $5,000,000.”


 


Section 3.
Provisions of General Application


 


3.1 Effect
of this Amendment. Except as modified pursuant hereto, no other changes or
modifications to the Financing Agreements are intended or implied and in all
other respects the Financing Agreements are hereby specifically ratified,
restated and confirmed by all parties hereto as of the effective date hereof.
To the extent of conflict between the terms of this


 


2





















 


Amendment
No. 2 and the other Financing Agreements, the terms of this Amendment No. 2 shall control. The Loan Agreement
and this Amendment No. 2 shall be read and construed as one agreement.


 


3.2 Governing
Law. The rights and obligations hereunder of each of the parties hereto
shall be governed by and interpreted and determined in accordance with the laws
of the State of New York, but excluding any principles of conflicts of law or other rule of law that would result in the application of the
law of any jurisdiction other than the laws of the State of New York.


 


3.3 Binding
Effect. This Amendment No. 2 shall be binding upon and inure to the benefit of each of the parties hereto
and their respective successors and assigns.


 


3.4 Counterparts.
This Amendment No. 2 may be executed in any number of counterparts, but all of
such counterparts shall together constitute but one and the same agreement.  In making proof of this Amendment, it shall not be
necessary to produce or account for more than one counterpart thereof signed by
each of the parties hereto.


 


IN
WITNESS WHEREOF, the parties hereto have caused this Amendment No. 2 to be duly
executed and delivered by their authorized officers as of the date and year first above written.


 


 


	
   

  	
  CONGRESS
  FINANCIAL CORPORATION, as Agent and

  as Lender

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  AEP INDUSTRIES,
  INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
   

  	
   

  
						



 


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