Exhibit 10.5


 


AMENDMENT
NO. 3 TO

LOAN AND SECURITY AGREEMENT


 


AMENDMENT
NO. 3 TO LOAN AND SECURITY AGREEMENT (“Amendment No. 3 “) dated as of October 16,
2002 by and among AEP Industries, Inc. (“Borrower”), the parties from time to
time 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 and Amendment No. 2, dated July 10, 2002 (as
amended hereby and as the same 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”); and


 


WHEREAS,
Borrower has advised Agent and Lenders that Borrower intends to, among other
things, (i) purchase all of the issued and outstanding shares of capital stock
of FIAP Germany (as hereinafter defined) from AEP Italy (as hereinafter
defined), (ii) cancel certain indebtedness of FIAP Germany owing to Borrower,
(iii) dissolve and liquidate FIAP Germany, (iv) purchase all of the issued and
outstanding shares of capital stock of AEP Italy from AEP Belgium (as
hereinafter defined), (v) merge AEP Italy with and into FIAP Italy (as
hereinafter defined) and (v) cause AEP Belgium to repay certain indebtedness of
AEP Belgium to Borrower with the proceeds received by AEP Belgium from the sale
of the capital stock of AEP Italy to Borrower; and


 


WHEREAS,
Borrower has requested that Agent and Lenders to consent to such transactions
to the extent such consent is required and Agent and Lenders are willing to
consent to such transactions subject to the 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:


 





















 


1. Definitions.


 


(a) Additional
Definitions. As used herein or in any of the other Financing Agreements,
the following terms shall have the respective meanings given to them below, and
the Loan Agreement and the other Financing Agreements shall be deemed and are
hereby amended to include, in addition and not in limitation, each of the
following definitions:


 


(i) “AEP
Belgium” shall mean AEP Belgium S.A., a company incorporated under the laws of
Belgium, and its successors and assigns.


 


(ii) “AEP
Italy” shall mean AEP Italia SpA, a company incorporated under the laws of
Italy, and its successors and assigns.


 


(iii) “AEP
Italy Purchase Agreement” shall mean the Share Sale and Purchase Agreement,
dated as of October 1, 2002, between AEP Belgium, as seller and Borrower,
as buyer, as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced.


 


(iv) “FIAP
Germany” shall mean FIAP Deutschland GmbH, a company incorporated under the
laws of Germany, and its successors and assigns.


 


(v) “FIAP
Germany Purchase Agreement” shall mean the Purchase Agreement, dated March 1,
2002, between AEP Italy, as seller and Borrower, as buyer, as the same now
exists or may hereafter be amended, modified, supplemented, extended, renewed,
restated or replaced.


 


(vi) “FIAP
Italy” shall mean FIAP SpA, a company organized under the laws of Italy, and
its successors and assigns.


 


(b) Interpretation.
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. 3.


 


2. FIAP
Germany.


 


(a)
Subject to the terms and conditions contained herein, notwithstanding anything
to the contrary contained in the Loan Agreement, including without limitation,
Sections 9.7(b) or 9.10(g) thereof, Agent and Lenders hereby consent to the
purchase by Borrower of all of the issued and outstanding shares of Capital
Stock of FIAP Germany from AEP Italy pursuant to the terms of the FIAP Germany
Purchase Agreement as in effect on the date hereof, provided,  that,
(i) such purchase and sale shall be on the terms and conditions set forth in
the FIAP Germany Purchase Agreement as in effect on the date hereof, (ii) Agent
shall have received a true, correct and complete copy of the FIAP Germany
Purchase Agreement and all agreements, documents and instruments related
thereto, (iii) the only consideration payable by Borrower for the purchase of
such share shall be one Euro, (iv) Borrower shall not incur or assume or
otherwise become


 


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liable for any
Indebtedness or other obligations as a result of the purchase of such shares,
(v) all of the conditions set forth in Section 9.10(g) of the Loan
Agreement with respect to such purchase by Borrower shall be satisfied, other
than the conditions set forth in Section 9.10(g)(vii), but subject to Section 2(b)
of this Amendment No. 3 below, and (vi) such purchase and sale shall be
effective on or before October 31, 2002.


 


(b)
Notwithstanding anything to the contrary contained in Section 9.10(g) of
the Loan Agreement, Agent and Lenders shall not require that the conditions set
forth in Section 9.10(g)(vii) of the Loan Agreement be satisfied with
respect to the purchase by Borrower of the shares of the Capital Stock of FIAP
Germany from AEP Italy as consented to above, provided,  that, (i)
FIAP Germany has been dissolved and liquidated by no later than January 31,
2003 and (ii) Agent shall have received evidence of such dissolution and
liquidation in form and substance satisfactory to Agent on or before such date.
In the event that FIAP Germany has not been dissolved and liquidated by such
date, then at any time thereafter promptly upon Agent’s request, Borrower shall
execute and deliver, or cause to be executed and delivered, to Agent the
agreements, documents and instruments contemplated by Section 9.10(g)(vii)
of the Loan Agreement, together with such other agreements, documents and
instruments as Agent may request in connection therewith.


 


(c) As
of October 16, 2002, the Indebtedness of FIAP Germany to Borrower is
approximately $2,397,840. Borrower intends to cancel such Indebtedness prior to
January 1, 2003. Borrower hereby confirms and represents to Agent and
Lenders that the conditions set forth in Section 9.10(h) of the Loan
Agreement are and shall be satisfied in connection with the cancellation by
Borrower of such Indebtedness on or about such date.


 


3. AEP
Italy.


 


(a)
Subject to the terms and conditions contained in this Amendment No. 3,
notwithstanding anything to the contrary contained in the Loan Agreement,
including without limitation, Sections 9.7(b), 9.10(b) or 9.12 thereof, Agent
and Lenders hereby consent to the purchase by Borrower of all of the issued and
outstanding shares of Capital Stock of AEP Italy from AEP Belgium pursuant to
the terms of the AEP Italy Purchase Agreement as in effect on the date hereof, provided,
that, (i) such purchase and sale shall be on the terms and conditions
set forth in the AEP Italy Purchase Agreement as in effect on the date hereof,
(ii) Agent shall have received a true, correct and complete copy of the AEP
Italy Purchase Agreement and all agreements, documents and instruments related
thereto, (iii) the only consideration payable by Borrower for the purchase of
such shares shall be approximately Euros 1,400,000, (iv) Borrower shall not
incur or assume or otherwise become liable for any Indebtedness or other obligations
as a result of the purchase of such shares, (v) such purchase and sale shall be
effective on or before January 1, 2003, (vi) all of the consideration paid
by Borrower pursuant to the AEP Italy Purchase Agreement or otherwise in
connection with the purchase of such shares shall be used by AEP Belgium to
make a payment in cash or other immediately available funds to Borrower in the
full amount thereof substantially contemporaneously with the payment of such
purchase price by Borrower to AEP Belgium, which funds received by Borrower
shall be applied to certain existing Indebtedness of AEP Belgium to Borrower,
and (vii) all of the conditions set forth in Section 9.10(g) with respect
to such purchase by Borrower shall be satisfied, other than the


 


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requirements
set forth in Section 9.10(g)(vii), which shall be satisfied by no later
than March 30, 2003.


 


(b)
Borrower shall give written notice to Agent that AEP Italy and FIAP Italy have
merged within ten (10) days of the effective date of such merger. Borrower
hereby confirms and represents that each of the conditions to such merger to be
satisfied under Section 9.7(a)(ii) of the Loan Agreement have been or will
be satisfied as of the date of such merger.


 


4. Representations
and Warranties. Borrower represents and warrants with and to Agent and
Lenders as follows, which representations and warranties shall survive the
execution and delivery hereof, the truth and accuracy of, or compliance with
each, together with the representations, warranties and covenants in the other
Financing Agreements, being a continuing condition of the making of any Loans
by Agent (or Agent on behalf of Lenders) to Borrower:


 


(a) The
execution and delivery of the FIAP Germany Purchase Agreement and the AEP Italy
Purchase Agreement, and the consummation of the transactions contemplated
therein or any of the other transactions otherwise consented to by Agent and Lenders
pursuant to this Amendment No. 3, or otherwise referred to herein, do not and
will not violate any law or regulation or any order, writ, injunction or decree
of any court or other Governmental Authority in any respect or do not and will
not result in the breach of, or constitute a default in any respect under, any
material indenture, mortgage, deed of trust, agreement or instrument to which
Borrower is a party or may be bound, or result in the creation or imposition
of, require or give rise to the obligation to grant, any lien, charge or
encumbrance upon any of the property of Borrower.


 


(b)
Borrower has obtained all consents, waivers or approvals of any Persons
required in connection with the transactions consented to by Agent and Lenders
pursuant to this Amendment No. 3, or otherwise referred to herein, and such
consents, waivers or approvals are and shall be in full force and effect.


 


(c) As of
the date hereof and after giving effect to the consents provided for herein, no
Default or Event of Default exists or has occurred and is continuing.


 


(d) This
Amendment No. 3 and each other agreement or instrument to be executed and
delivered by Borrower in connection herewith have been duly authorized,
executed and delivered by all necessary action on the part of Borrower and the
agreements and obligations of Borrower contained herein constitute legal, valid
and binding obligations of Borrower enforceable against Borrower in accordance
with their respective terms.


 


(e) As of
the date hereof FIAP Germany is inactive and does not engage in any business or
commercial activity and FIAP Germany does not and will not hold any assets or
properties.


 


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5. Conditions
Precedent. The effectiveness of the consents contained herein shall only be
effective upon the satisfaction of each of the following conditions precedent
in a manner satisfactory to Agent:


 


(a) Agent
shall have received an executed original or executed original counterparts of
this Amendment No. 3 (as the case may be), duly authorized, executed and
delivered by Borrower;


 


(b) Agent
shall have received such approvals of the Lenders to the terms of this
Amendment No. 3 as may be required in the determination of Agent under the
terms of the Loan Agreement;


 


(c) Agent
shall have received, in form and substance satisfactory to Agent, the AEP Italy
Purchase Agreement duly authorized, executed and delivered by the parties
thereto;


 


(d) Agent
shall have received, in form and substance satisfactory to Agent, the FIAP
Germany Purchase Agreement duly authorized, executed and delivered by the parties
thereto.


 


6. Provisions
of General Application.


 


(a) 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 Amendment No. 3 and the
other Financing Agreements, the terms of this Amendment No. 3 shall control.
The Loan Agreement and this Amendment No. 3 shall be read and construed as one
agreement. Any acknowledgment or consent contained herein shall not be
construed to constitute a consent to any other or further action by Borrower or
any Subsidiary of Borrower or to entitle Borrower or any Subsidiary of Borrower
to any other consent.


 


(b) 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.


 


(c) Binding
Effect. This Amendment No. 3 shall be binding upon and inure to the benefit
of each of the parties hereto and their respective successors and assigns.


 


(d) Counterparts.
This Amendment No. 3 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 No. 3, it shall not be necessary to produce or
account for more than one counterpart thereof signed by each of the parties
hereto. Delivery of an executed counterpart of this Amendments No. 3 by
telefacsimile shall have the same force and effect as delivery of an original
manually executed counterpart of this Amendment No. 3. Any party delivering any
executed counterpart of this Amendment NO. 3 by telefacsimile shall


 


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also deliver an original
manually executed counterpart, but the failure to do so shall not affect the
validity, enforceability and binding effect of this Amendment No. 3 as to such
party or any other party.


 


IN
WITNESS WHEREOF, the parties hereto have caused this Amendment No. 3 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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