Exhibit 10.1


 


EXECUTION COPY


PURCHASE AGREEMENT


This PURCHASE AGREEMENT (this “Agreement”) is
made and entered into as of August 1, 2006 by and among AEP Industries Inc., a
Delaware corporation (the “Company”), AEP Industries Finance Inc., a
Delaware corporation and a wholly owned subsidiary of the Company (“Buyer”),
Third Point LLC, a Delaware limited liability company acting as investment
manager or adviser to Sellers (as defined below) (“Third Point”), Daniel
S. Loeb, managing member of Third Point (“Mr. Loeb”), and Third Point
Partners Qualified L.P., a Delaware limited partnership, Third Point Partners
L.P., a Delaware limited partnership, Third Point Resources L.P., a Delaware
limited partnership, Third Point Offshore Fund, Ltd., a Cayman Islands limited
liability exempted company, Third Point Ultra Ltd., a British Virgin Islands
limited liability company, and Third Point Resources Ltd., a Cayman Islands
limited liability exempted company (collectively, “Sellers”).


WHEREAS, Sellers directly own shares of the issued and outstanding common stock,
par value $0.01 per share, of the Company (“Company Shares”); and


WHEREAS,
Sellers desire to sell, and Buyer and the Company desire to purchase, free and
clear of any and all Liens (as defined herein) an aggregate number of Company
Shares having an aggregate purchase price of $30,600,000 as set forth herein.


NOW, THEREFORE, in consideration of
the foregoing premises and the covenants, agreements and representations and
warranties contained herein, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:


ARTICLE I




PURCHASE AND SALE; CLOSINGS


Section 1.1             Purchase and Sale.  Upon the terms and subject to the conditions
of this Agreement, Sellers agree to sell, convey, assign, transfer and deliver
to Buyer and the Company, and Buyer and the Company agree to purchase from
Sellers, 850,000 Company Shares (the “Purchased Shares”), free and clear
of any and all mortgages, pledges, encumbrances, liens, security interests,
options, charges, claims, deeds of trust, deeds to secure debt, title retention
agreements, rights of first refusal or offer, limitations on voting rights,
proxies, voting agreements, limitations on transfer or other agreements or
claims of any kind or nature whatsoever (collectively, “Liens”), in such amounts set forth on Schedule
I hereto in respect of each Seller.


 


Section 1.2             Purchase Price.  Upon the terms and subject to the conditions
of this Agreement, in consideration of the aforesaid sale, conveyance, assignment,
transfer and delivery to Buyer and the Company of the Purchased Shares, Buyer
and the Company shall pay to Sellers a price per Purchased Share of $36.00 (the
“Purchase Price”), for an aggregate price of $30,600,000 in cash, in such
amounts set forth on Schedule I hereto in respect of each Seller.  To effectuate the foregoing, (a) at


 















 


the First Closing (as
defined below), the Company shall purchase that number of Purchased Shares
having an aggregate purchase price of $18,180,000 and (b) at the Second Closing
(as defined below), Buyer shall purchase that number of Purchased Shares having
an aggregate purchase price of $12,420,000, in the case of each of (a) and (b),
based upon the Purchase Price.


Section 1.3             Expenses.  Except as expressly set forth in this
Agreement, all fees and expenses incurred by a party hereto in connection with
the matters contemplated by this Agreement shall be borne by the party
incurring such fee or expense, including without limitation the fees and
expenses of any investment banks, attorneys, accountants or other experts or
advisors retained by such party.


Section 1.4             Closings.  The consummation of the transactions
contemplated by this Agreement (the “Closings”) shall take place at
10:00 a.m., local time, on August 2, 2006 and August 3, 2006 at the offices of
Skadden, Arps, Slate, Meagher & Flom LLP, Four Times Square, New York, New
York, 10036, or at such other place, date or time as the parties may agree in
writing (such dates being the “First Closing Date” and “Second
Closing Date”, respectively, and each, a “Closing Date”); provided
that the Company’s and Buyer’s obligations to consummate the transactions
contemplated by this Agreement shall be conditioned on (a) no condition
existing on either Closing Date which would prevent the Company from drawing
funds under the Loan and Security Agreement, dated November 20, 2001, among the
Company, Wachovia Bank (as successor by merger to Congress Financial
Corporation), as Agent, and the financial institutions party thereto, as
amended or otherwise modified through the date hereof, and (b) no injunction or
other order, judgment, law, regulation, decree or ruling or other legal
restraint or prohibition having been issued, enacted or promulgated by a court
or other governmental authority of competent jurisdiction that would have the
effect of prohibiting or preventing the consummation of the transactions
contemplated hereunder.


Section
1.5             Closing Deliveries.


(a)           At the
Closings, in accordance with Section 1.2, Buyer and/or the Company, as
applicable, shall deliver or cause to be delivered to Sellers the following:


(i)         on the relevant Closing Date, the cash
amounts set forth on Schedule I hereto in respect of each Seller, by
wire transfer of immediately available funds to such accounts as Third Point on
behalf of Sellers has specified in writing prior to such Closing Date; and


(ii)        on the First Closing Date, a properly
executed termination and amendment agreement in the form attached hereto as Exhibit
A (the “Termination and Amendment Agreement”) providing for
termination, waiver and release of all of Sellers’, Third Point’s and Bradley
Louis Radoff’s (“Mr. Radoff”) rights, interests and claims and the
Company’s and J. Brendan Barba’s (“Mr. Barba”) obligations pursuant to



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Article II of the Agreement, dated as of February 4, 2005, by and among
the Company, Sellers, Mr. Radoff and Mr. Barba (the “Third Point Agreement”);
provided that, for the avoidance of doubt, the Termination and Amendment
Agreement shall not limit or otherwise affect the registration rights set forth
in the Third Point Agreement in respect of the Registrable Securities (as
defined therein) that are not Purchased Shares.


(b)           At the
Closings, Sellers shall deliver or cause to be delivered to Buyer and the
Company the following:


(i)         on the relevant Closing Date,
certificates representing the Purchased Shares to be purchased on such Closing
Date as set forth on Schedule I hereto in respect of each Seller, duly
and validly endorsed or accompanied by stock powers duly and validly executed
in blank and sufficient to convey to Buyer and the Company good, valid and
marketable title in and to such Purchased Shares, free and clear of any and all
Liens; and


(ii)        on the First Closing Date, a properly
executed Termination and Amendment Agreement in accordance with Section
1.5(a)(ii).


ARTICLE II


 


COVENANTS


Section
2.1             Standstill.


(a)        During the
period beginning on the date hereof and ending on the date that is the second
anniversary of the Second Closing Date (the “Standstill Period”), except
as specifically permitted by the terms of this Agreement, Sellers, Third Point
and Mr. Loeb shall not, and shall cause each of their respective Affiliates (as
defined in Section 5.3) not to, acquire, offer or propose to acquire, or agree
to acquire, directly or indirectly, by purchase or otherwise, any (i) Voting
Securities (as defined in Section 5.3), or (ii) direct or indirect rights or
options to acquire (through purchase, exchange, conversion or otherwise) any
Voting Securities.


(b)        During the
Standstill Period, except upon the express prior written invitation of the
Company, Sellers, Third Point and Mr. Loeb shall not, and shall cause each of
their respective Affiliates not to, directly or indirectly, singly or as part
of a partnership, limited partnership, syndicate or other group (as those terms
are used within the meaning of Section 13(d)(3) of the Securities Exchange Act
of 1934, as amended (the “Exchange Act”), which meanings shall apply for
all purposes of this Agreement): (i) make, or in any way participate in, any “solicitation”
of “proxies” (as such terms are defined or used in Regulation 14A under the
Exchange Act) or exempt solicitation under Rule 14a-2(b)(1) or otherwise with
respect to any Voting Securities (including by the



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execution of actions by written consent), become a “participant” or a “participant
in a solicitation” (as such terms are defined or used in Regulation 14A under
the Exchange Act) with respect to the Company or otherwise communicate with any
stockholder of the Company pursuant to Rule 14a-1(l)(2)(iv) under the Exchange
Act; (ii) initiate, propose or otherwise solicit, or participate in the
solicitation of, stockholders for the approval of one or more stockholder
proposals with respect to the Company, including any proposal made pursuant to
Rule 14a-8 under the Exchange Act, or encourage or induce any other individual
or entity to initiate any stockholder proposal relating to the Company, or make
any demand or request for any list of the holders of Voting Securities; (iii)
form, encourage the formation, join or in any way participate in a “group”
which owns or seeks or offers to acquire beneficial ownership of Voting
Securities or rights to acquire such securities (other than Voting Securities
beneficially owned by Sellers, Third Point or Mr. Loeb that are not Purchased
Shares) or which seeks or offers to acquire control of the Company or influence
its policies; (v) solicit, seek or offer to effect, negotiate with or provide
any information to any party with respect to, make any statement or proposal,
whether written or oral, either alone or in concert with others, to the board
of directors of the Company, to any director or officer of the Company or to
any other stockholder of the Company with respect to, or otherwise formulate
any plan or proposal or make any public announcement, proposal, offer or filing
under the Exchange Act, any similar or successor statute or otherwise, or take
action to cause the Company to make any such filing, with respect to: (A) any
form of business combination, restructuring, recapitalization, dissolution or
similar transaction involving the Company or any Affiliate thereof, including,
without limitation, a merger, tender or exchange offer, share repurchase or
liquidation of the Company’s assets, (B) any acquisition or disposition of
assets material to the Company, (C) any request to amend, waive or terminate
the provisions of this Agreement or (D) any proposal or other statement
inconsistent with the terms of this Agreement; (vi) otherwise act, alone or in
concert with others (including by providing financing for another party), to seek
or offer to acquire control of the Company or influence, in any manner, its
management, board of directors or policies; or (vii) assist or encourage any
third party, whether or not a “group” with such third party, to take any of the
actions enumerated in this Section 2.1(b).


 


Section
2.2             Non-disparagement.


(a)        The Company
(on its own behalf and on behalf of its directors, officers, subsidiaries and
Affiliates and each of their respective successors and assigns (collectively,
the “Company Parties”)) agrees that, during the Standstill Period, it
shall not (whether directly or indirectly, individually or in concert with
others, publicly or privately, orally or in writing) engage in any conduct or
make, or cause to be made, any statement, observation or opinion, or
communicate any information that is calculated to or is reasonably likely to
have the effect of (i) undermining, impugning, disparaging, injuring the
reputation of or otherwise in any way reflecting adversely or detrimentally
upon any of Sellers, Third Point or Mr. Loeb or their respective Affiliates,
successors or assigns (collectively, the “Seller Parties”) or (ii)
accusing or implying that any Seller Party engaged in any wrongful, unlawful or
improper conduct.  The foregoing shall
not



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apply to
any compelled testimony, either by legal process, subpoena or otherwise or to
any response to any request for information from any governmental authority
having jurisdiction over the Company; provided, however, that in
the event that any Company Party is requested pursuant to, or required by,
applicable law, regulation or legal process to testify or otherwise respond to
a request for information from any governmental authority, the Company shall
notify Third Point promptly so that the Seller Parties may seek a protective
order or other appropriate remedy.  In
the event that no such protective order or other remedy is obtained, or any
Seller Party waives compliance with the terms of this Section 2.2(a), such
Company Party shall furnish only such information which it has been advised by
counsel is legally required and will exercise reasonable efforts to obtain
reliable assurance that such information will be accorded confidential
treatment.


(b)        Each of
Sellers, Third Point and Mr. Loeb (on its or his own behalf and on behalf of
the other Seller Parties) agrees that, during the Standstill Period, it or he
shall not (whether directly or indirectly, individually or in concert with
others, publicly or privately, orally or in writing) engage in any conduct or
make, or cause to be made, any statement, observation or opinion, or
communicate any information, including, without limitation, to any member of
the press, analyst, governmental or regulatory agency, that is calculated to or
is reasonably likely to have the effect of (i) undermining, impugning,
disparaging, injuring the reputation of or otherwise in any way reflecting
adversely or detrimentally upon any Company Party or (ii) accusing or implying
that any Company Party engaged in any wrongful, unlawful or improper conduct; provided,
however, that in the event that a Seller Party is requested pursuant to,
or required by, applicable law, regulation or legal process to testify or
otherwise respond to a request from any governmental authority, Third Point
shall notify the Company promptly so that the Company may seek a protective
order or other appropriate remedy.  In
the event that no such protective order or other remedy is obtained, or any
Company Party waives compliance with the terms of this Section 2.2(b), such
Seller Party shall furnish only such information which it is advised by counsel
is legally required and will exercise reasonable efforts to obtain reliable
assurance that such information will be accorded confidential treatment.


Section
2.3             Public Announcement; Public
Filings.


(a)     Upon execution
of this Agreement, the Company and Third Point shall issue a joint press
release (in substantially the form attached hereto as Exhibit B) with
such changes as may be mutually agreed by the Company and Third Point.  No party hereto nor any of its respective
Affiliates shall issue any press release or make any public statement relating
to the transactions contemplated hereby (including, without limitation, any
statement to any governmental or regulatory agency or accrediting body) that is
inconsistent with, or are otherwise contrary to, the statements in the press
release.


(b)     Promptly
following the date hereof, Third Point will cause to be filed with the
Securities and Exchange Commission an amendment to its Schedule 13D filed on
February 14, 2005 and prior to filing will provide the Company and its counsel
a reasonably opportunity to review and comment upon such amendment.



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Section
2.4             Confidentiality.  Sellers, Third Point and Mr. Loeb shall not
disclose and shall maintain the confidentiality of (and shall cause their
respective Affiliates, directors, officers and employees to not disclose and to
maintain the confidentiality of) any non-public information which relates to
the business, legal or financial affairs of the Company (the “Confidential
Information”).  Sellers, Third Point
and Mr. Loeb shall use at least the same degree of care to safeguard and to
prevent the disclosure, publication or dissemination of the Confidential
Information as they respectively employ to avoid unauthorized disclosure,
publication or dissemination of their own information of a similar nature, but
in no case less than reasonable care.  In
the event that a Seller, Third Point or Mr. Loeb (or any Affiliate, director,
officer or employee) is requested or required (by oral question, interrogatory,
request for information or documents, subpoena, civil investigative demand or
similar process) to disclose any Confidential Information, Third Point shall
(a) notify the Company promptly so that the Company may seek a protective order
or other appropriate remedy and (b) cooperate with the Company in any effort
the Company undertakes to obtain a protective order or other remedy.  In the event that no such protective order or
other remedy is obtained, the applicable party shall disclose to the person
compelling disclosure only that portion of the Confidential Information which
such party is advised by counsel is legally required and shall exercise
reasonable efforts to obtain reliable assurance that confidential treatment is
accorded the Confidential Information so disclosed.


Section
2.5             Demand Registration.  Sellers hereby (a) make a request pursuant to
Section 3.2(a) of the Third Point Agreement that the Company file a
registration statement under the Securities Act of 1933, as amended (the “Securities
Act”) to cover the registration of any and all of Sellers’ Registrable
Securities (as defined in the Third Point Agreement) that are not Purchased
Shares and (b) represent that there are no Holders (as defined in the Third
Point Agreement) other than Sellers and Mr. Radoff who could be entitled to
notice from the Company of such request as contemplated by Section 3.2(a),
which notice is hereby waived by the holders of Registrable Securities party
hereto.  The Company acknowledges such
registration request and agrees to effect a registration of such Registrable
Securities in accordance with the terms, conditions and limitations contained
in Article III of the Third Point Agreement. 
The Company represents, as of the date hereof, that it is not aware of
any existing Valid Business Reason (as defined in the Third Point Agreement)
that would permit it to postpone filing a registration statement relating to
Sellers’ request or, when filed, withdraw and terminate the effectiveness of or
postpone amending or supplementing such registration statement under Section
3.2(f) of the Third Point Agreement. 
Sellers hereby acknowledge that the Company may not be eligible to use
Form S-3 to effect such registration.



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ARTICLE III


REPRESENTATIONS AND WARRANTIES OF


SELLERS,
THIRD POINT AND MR. LOEB


Each of Sellers, Third Point and Mr. Loeb hereby
makes, jointly and severally with respect to each other such party, the
following representations and warranties to Buyer and the Company:


Section
3.1             Existence; Authority.  Each of Sellers and Third Point is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization.  Each
of Sellers, Third Point and Mr. Loeb has all requisite competence, power and
authority to execute and deliver this Agreement and the Termination and
Amendment Agreement, to perform its or his obligations hereunder and thereunder
and to consummate the transactions contemplated hereby and thereby and has
taken all necessary action to authorize the execution, delivery and performance
of this Agreement and the Termination and Amendment Agreement.


Section
3.2             Enforceability.  This Agreement has been duly and validly
executed and delivered by each of Sellers, Third Point and Mr. Loeb and, upon
its execution and delivery, the Termination and Amendment Agreement will be
duly and validly executed and delivered by Third Point, Mr. Radoff and each
Seller party thereto and, assuming due and valid authorization, execution and
delivery by Buyer, the Company and/or Mr. Barba, as applicable, this Agreement
constitutes, and the Termination and Amendment Agreement will constitute, a
legal, valid and binding obligation of each of Sellers, Third Point, Mr. Loeb
and/or Mr. Radoff, as applicable, enforceable against each such person in
accordance with its terms, except as such enforceability may be affected by
bankruptcy, insolvency, moratorium and other similar laws relating to or
affecting creditors’ rights generally and general equitable principles.


Section
3.3             Ownership.  Each Seller is the sole record and beneficial
owner of the Purchased Shares set forth opposite its name on Schedule I
hereto, free and clear of any and all Liens. 
Each Seller has full power and authority to transfer full legal ownership
of its respective Purchased Shares to Buyer and the Company, and no Seller is
required to obtain the approval of any person or governmental agency or
organization to effect the sale of the Purchased Shares.  The entire direct or indirect beneficial ownership
of Sellers, Third Party and Mr. Loeb or any of their respective Affiliates in
the Company is 2,000,000 Company Shares.


Section
3.4             Good Title Conveyed.  The stock certificates and stock powers
executed and delivered by Sellers at the Closings will be valid and binding
obligations of Sellers, enforceable in accordance with their respective terms,
and effectively vest in Buyer and the Company good, valid and marketable title
to all Purchased Shares, free and clear of any and all Liens. 



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Section
3.5             Absence of Litigation.  There is no suit, action, investigation or
proceeding pending or, to the knowledge of any Seller, Third Point or Mr. Loeb,
threatened against such party that could impair the ability of any of Sellers,
Third Point or Mr. Loeb to perform its obligations hereunder or to consummate
the transactions contemplated hereby.


Section
3.6             Other Acknowledgments.


(a)        Each of
Sellers, Third Point and Mr. Loeb hereby represents and acknowledges that it or
he is a sophisticated investor and that it or he knows that Buyer or the
Company may have material Confidential Information concerning the Company and
its condition (financial and otherwise), results of operations, businesses,
properties, plans and prospects and that such information could be material to
Sellers’ decision to sell the Purchased Shares or otherwise materially adverse
to Sellers’ interests.  Each of Sellers,
Third Point and Mr. Loeb acknowledges and agrees that Buyer and the Company
shall have no obligation to disclose to it or him any such information and
hereby waives and releases, to the fullest extent permitted by law, any and all
claims and causes of action it has or may have against Buyer, the Company and
their respective Affiliates, officers, directors, employees, agents and representatives
based upon, relating to or arising out of nondisclosure of such information or
the sale of the Purchased Shares hereunder.


(b)        Each of
Sellers, Third Point and Mr. Loeb further represents that it or he has adequate
information concerning the business and financial condition of the Company to
make an informed decision regarding the sale of the Purchased Shares and has,
independently and without reliance upon Buyer or the Company, made its or his
own analysis and decision to sell the Purchased Shares.  With respect to legal, tax, accounting,
financial and other considerations involved in the transactions contemplated by
this Agreement, including the sale of the Purchased Shares, none of Sellers,
Third Point or Mr. Loeb is relying on Buyer or the Company (or any agent or
representative thereof).  Each of
Sellers, Third Point and Mr. Loeb has carefully considered and, to the extent
it or he believes such discussion necessary, discussed with professional legal,
tax, accounting, financial and other advisors the suitability of the
transactions contemplated by this Agreement, including the sale of the
Purchased Shares.  Each of Sellers, Third
Point and Mr. Loeb acknowledges that none of Buyer or the Company or any of their
respective directors, officers, subsidiaries or Affiliates has made or makes
any representations or warranties, whether express or implied, of any kind
except as expressly set forth in this Agreement.


(c)        Sellers,
Third Point and Mr. Loeb are “accredited investors” as defined in Rule 501 promulgated
under the Securities Act.  The sale of
the Purchased Shares by Sellers (i) was privately negotiated in an independent
transaction and (ii) does not violate any rules or regulations applicable to
Sellers.



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ARTICLE IV


 


REPRESENTATIONS AND WARRANTIES OF


BUYER AND THE
COMPANY


Each of Buyer and the Company makes, jointly and
severally with respect to each other, the following representations and
warranties to Sellers:


Section
4.1             Existence; Authority.  Each of Buyer and the Company is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Delaware.  Each of
Buyer and/or the Company, as applicable, has all requisite corporate power and
authority to execute and deliver this Agreement and the Termination and Amendment
Agreement, to perform its obligations hereunder and thereunder and to
consummate the transactions contemplated hereby and thereby and has taken all
necessary corporate action to authorize the execution, delivery and performance
of this Agreement and the Termination and Amendment Agreement.


Section
4.2             Enforceability.  This Agreement has been duly and validly
executed and delivered by Buyer and the Company and, upon its execution and
delivery, the Termination and Amendment Agreement will be duly and validly
executed and delivered by the Company and Mr. Barba and, assuming due and valid
authorization, execution and delivery by Sellers, Third Point, Mr. Loeb and/or
Mr. Radoff, as applicable, this Agreement constitutes, and the Termination and
Amendment Agreement will constitute, a legal, valid and binding obligation of
each of Buyer, the Company and/or Mr. Barba, as applicable, enforceable against
it in accordance with its terms, except as such enforceability may be affected
by bankruptcy, insolvency, moratorium and other similar laws relating to or
affecting creditors’ rights generally and general equitable principles.


Section
4.3             Absence of Litigation.  There is no suit, action, investigation or
proceeding pending or, to the knowledge of Buyer or the Company, threatened
against such party that could impair the ability of Buyer or the Company to
perform its obligations hereunder or to consummate the transactions
contemplated hereby.


ARTICLE V


 


MISCELLANEOUS


Section
5.1             Survival.  Each of the representations, warranties,
covenants, and agreements in this Agreement or pursuant hereto shall survive
the Closings.  Notwithstanding any
knowledge of facts determined or determinable by any party by investigation,
each party shall have the right to fully rely on the representations,
warranties, covenants and agreements of the other parties contained in this
Agreement or in any other documents or papers delivered in connection
herewith.  Each representation, warranty,
covenant and agreement of the parties contained in this Agreement is
independent of each other representation, warranty, covenant and
agreement.  Except as



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expressly set forth in
this Agreement, no party has made any representation warranty, covenant or
agreement.


Section
5.2             Notices.  All notices, requests, claims, demands and
other communications hereunder shall be in writing and shall be given (and
shall be deemed to have been duly given if so given) by hand delivery, cable,
telecopy or mail (registered or certified, postage prepaid, return receipt requested)
to the respective parties hereto addressed as follows:


If to the Company or Buyer:


c/o AEP Industries Inc.


125 Phillips Avenue


South Hackensack, New Jersey 07606


Attn: Paul Feeney


Facsimile: (201) 807-6801


With a copy to:


Skadden, Arps, Slate, Meagher & Flom LLP


Four Times Square


New York, New York 10036


Attn: Richard J. Grossman


Sal Guerrera


Facsimile: (212)
735-2000


If to any Seller, Third Point or Mr. Loeb:


c/o Third Point LLC


390 Park Avenue


18th Floor


New York, New York 10022 


Attn: Operations


Facsimile: (212) 224-7401


With a copy to:


Willkie Farr & Gallagher LLP


787 Seventh Avenue


New York, New York 10019


Attn: Michael A. Schwartz


Facsimile: (212) 728-9267


Section
5.3             Certain Definitions.  As used in this Agreement, (a) the term “Affiliate”
shall have the meaning set forth in Rule 12b-2 under the Exchange Act and shall
include persons who become Affiliates of any person subsequent to the date



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hereof; (b) the term “Voting
Securities” shall mean the Company Shares and any other securities of the Company
entitled to vote in the election of directors, or securities convertible into,
or exercisable or exchangeable for, securities of the Company entitled to vote
in the election of directors, whether or not subject to the passage of time or
other contingencies; and (c) the Company, Buyer, Third Point, Mr. Loeb and each
Seller will be referred to herein individually as a “party” and
collectively as “parties.”


Section
5.4             Specific Performance.  Each of Buyer and the Company, on the one
hand, and Sellers, Third Point and Mr. Loeb, on the other hand, acknowledge and
agree that the other would be irreparably injured by a breach of this Agreement
and that money damages are an inadequate remedy for an actual or threatened
breach of this Agreement.  Accordingly,
the parties agree to the granting of specific performance of this Agreement and
injunctive or other equitable relief as a remedy for any such breach or
threatened breach, without proof of actual damages, and further agree to waive
any requirement for the securing or posting of any bond in connection with any
such remedy.  Such remedy shall not be
deemed to be the exclusive remedy for a breach of this Agreement, but shall be
in addition to all other remedies available at law or equity.


Section
5.5             No Waiver.  Any waiver by any party hereto of a breach of
any provision of this Agreement shall not operate as or be construed to be a
waiver of any other breach of such provision or of any breach of any other
provision of this Agreement.  The failure
of a party hereto to insist upon strict adherence to any term of this Agreement
on one or more occasions shall not be considered a waiver or deprive that party
of the right thereafter to insist upon strict adherence to that term or any
other term of this Agreement.


Section
5.6             Severability.  If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction or
other authority to be invalid or unenforceable, the remainder of the terms,
provisions, covenants and restrictions of this Agreement shall remain in full
force and effect and shall in no way be affected, impaired or invalidated by
such holding.  The parties agree that the
court making any such determination of invalidity or unenforceability shall
have the power to reduce the scope, duration or area of, delete specific words
or phrases in, or replace any such invalid or unenforceable provision with one
that is valid and enforceable and that comes closest to expressing the
intention of such invalid or unenforceable provision, and this Agreement shall
be enforceable as so modified after the expiration of the time within which the
judgment may be appealed.


Section
5.7             Successors and Assigns.  This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns; provided that this Agreement (and any of the rights, interests
or obligations of any party hereunder) may not be assigned by any party without
the prior written consent of the other parties hereto, such consent not to be
unreasonably withheld.  Any purported
assignment of a party’s rights under this Agreement in violation of the
preceding sentence shall be null and void.



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Section
5.8             Entire Agreement;
Amendments.  This Agreement
(including any Schedules and Exhibits hereto) constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes
all other prior agreements and understandings, both written and oral, among the
parties with respect to the subject matter hereof and, except as expressly set
forth herein, is not intended to confer upon any person other than the parties
hereto any rights or remedies hereunder. 
This Agreement may be amended only by a written instrument duly executed
by the parties hereto or their respective permitted successors or assigns.


Section
5.9             Headings.  The section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.


Section
5.10           Governing Law.  This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Delaware,
without giving effect to choice of law principles thereof that would cause the
application of the laws of any other jurisdiction.


Section
5.11           Submission to
Jurisdiction.  Each of the parties
irrevocably submits to the exclusive jurisdiction and service and venue in any
federal or state court sitting in the State of Delaware for the purposes of any
action, suit or proceeding arising out of or with respect to this
Agreement.  Each of the parties
irrevocably and unconditionally waives any objections to the laying of venue of
any action, suit or proceeding relating to this Agreement in any federal or
state court sitting in the State of Delaware, and hereby further irrevocably
and unconditionally waives and agrees not to plead or claim in any such court
that any such action, suit or proceeding brought in any such court has been
brought in an inconvenient forum.  EACH
OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES THE RIGHT TO A TRIAL BY JURY.


Section
5.12           Counterparts; Facsimile.  This Agreement may be executed in
counterparts, including by facsimile or PDF electronic transmission, each of
which shall be deemed an original, but all of which together shall constitute
one and the same Agreement.


Section
5.13           Further Assurances.  Upon the terms and subject to the conditions
of this Agreement, each of the parties hereto agrees to execute such additional
documents, to use commercially reasonable efforts to take, or cause to be
taken, all actions, and to do, or cause to be done, and to assist and cooperate
with the other parties in doing, all things necessary, proper or advisable to
consummate or make effective, in the most expeditious manner practicable, the transactions
contemplated by this Agreement.


Section
5.14           Interpretation.  The parties acknowledge and agree that this
Agreement has been negotiated at arm’s length and among parties equally
sophisticated and knowledgeable in the matters covered hereby.  Accordingly, any rule of law or legal



 12
 






 



decision that would
require interpretation of any ambiguities in this Agreement against the party
that has drafted it is not applicable and is hereby waived.


[SIGNATURE PAGES FOLLOW]



 13














 


IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first written above.


 


	
   

  	
  AEP INDUSTRIES INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ PAUL M.
  FEENEY

  	
   

  
	
   

  	
  Name:

  	
  Paul M. Feeney

  
	
   

  	
  Title:

  	
  Executive Vice President, Finance and

  
	
   

  	
   

  	
  Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  AEP INDUSTRIES FINANCE INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ PAUL M.
  FEENEY

  	
   

  
	
   

  	
  Name:

  	
  Paul M. Feeney

  
	
   

  	
  Title:

  	
  Vice President and

  
	
   

  	
   

  	
  Chief Financial Officer

  
	
   

  	
   

  	
   

  
	
   

  	
  THIRD POINT LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ KEITH
  WALLER

  	
   

  
	
   

  	
  Name:

  	
  Keith Waller

  
	
   

  	
  Title:

  	
  Managing Director Operations

  
	
   

  	
   

  	
  Third Point LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  DANIEL S. LOEB

  
	
   

  	
   

  	
   

  
	
   

  	
  /s/ DANIEL S.
  LOEB

  	
   

  
	
   

  	
  Name: Daniel S. Loeb

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  THIRD POINT PARTNERS QUALIFIED L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Third Point Advisors LLC, its general

  partner

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ KEITH
  WALLER

  	
   

  
	
   

  	
  Name:

  	
  Keith Waller

  
	
   

  	
  Title:

  	
  Managing Director Operations

  
	
   

  	
   

  	
  Third Point LLC

  
						



 


 


[Purchase Agreement]



  
  
 






 



 


	
  

  	
  THIRD POINT PARTNERS L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Third Point Advisors LLC, its general

  partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ KEITH WALLER

  	
   

  
	
   

  	
  Name:

  	
  Keith Waller

  
	
   

  	
  Title:

  	
  Managing Director Operations

  
	
   

  	
   

  	
  Third Point LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  THIRD POINT RESOURCES L.P.

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  Third Point Advisors LLC, its general

  partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ KEITH
  WALLER

  	
   

  
	
   

  	
  Name:

  	
  Keith Waller

  
	
   

  	
  Title:

  	
  Managing Director Operations

  
	
   

  	
   

  	
  Third Point LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  THIRD POINT OFFSHORE FUND, LTD.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ KEITH
  WALLER

  	
   

  
	
   

  	
  Name:

  	
  Keith Waller

  
	
   

  	
  Title:

  	
  Managing Director Operations

  
	
   

  	
   

  	
  Third Point LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  THIRD POINT ULTRA LTD.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ KEITH
  WALLER

  	
   

  
	
   

  	
  Name:

  	
  Keith Waller

  
	
   

  	
  Title:

  	
  Managing Director Operations

  
	
   

  	
   

  	
  Third Point LLC

  
	
   

  	
   

  	
   

  
	
   

  	
  THIRD POINT RESOURCES LTD.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ KEITH
  WALLER

  	
   

  
	
   

  	
  Name:

  	
  Keith Waller

  
	
   

  	
  Title:

  	
  Managing Director Operations

  
	
   

  	
   

  	
  Third Point LLC

  
					



 


 


[Purchase Agreement]



  
  














 


SCHEDULE
I


Purchased Shares; Payments


	
  Cert. #

  	
   

  	
  Name of Seller

  	
   

  	
  # of Purchased

  Shares to be

  delivered by

  Seller at First

  Closing

  	
   

  	
  Payment to be

  made to Seller at

  First Closing

  	
   

  	
  # of

  Purchased

  Shares to be

  delivered by

  Seller at

  Second

  Closing

  	
   

  	
  Payment to be

  made to Seller at

  Second Closing

  	
   

  	
  Total # of

  Purchased

  Shares

  beneficially

  owned by

  Seller

  	
   

  	
  Total payment

  to be made to

  Seller in

  consideration of

  Purchased

  Shares

  	
   

  
	
  —

  	
   

  	
  Third Point Partners
  Qualified L.P.

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  —

  	
   

  
	
  AEP
  8135

  	
   

  	
  Third Point Partners
  L.P.

  	
   

  	
  140,000

  	
   

  	
  $

  	
  5,040,000

  	
   

  	
  50,000

  	
   

  	
  $

  	
  1,800,000

  	
   

  	
  190,000

  	
   

  	
  $

  	
  6,840,000

  	
   

  
	
  AEP
  8136

  	
   

  	
  Third Point Offshore
  Fund, Ltd.

  	
   

  	
  262,400

  	
   

  	
  $

  	
  9,446,400

  	
   

  	
  250,000

  	
   

  	
  $

  	
  9,000,000

  	
   

  	
  512,400

  	
   

  	
  $

  	
  18,446,400

  	
   

  
	
  AEP
  8137

  	
   

  	
  Third Point Ultra Ltd.

  	
   

  	
  40,000

  	
   

  	
  $

  	
  1,440,000

  	
   

  	
  45,000

  	
   

  	
  $

  	
  1,620,000

  	
   

  	
  85,000

  	
   

  	
  $

  	
  3,060,000

  	
   

  
	
  AEP
  8138

  	
   

  	
  Third Point Resources
  L.P.

  	
   

  	
  25,300

  	
   

  	
  $

  	
  910,800

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  25,300

  	
   

  	
  $

  	
  910,800

  	
   

  
	
  AEP
  8139

  	
   

  	
  Third Point Resources
  Ltd.

  	
   

  	
  37,300

  	
   

  	
  $

  	
  1,342,800

  	
   

  	
  —

  	
   

  	
  —

  	
   

  	
  37,300

  	
   

  	
  $

  	
  1,342,800

  	
   

  
	
   

  	
   

  	
  TOTAL

  	
   

  	
  505,000

  	
   

  	
  $

  	
  18,180,000

  	
   

  	
  345,000

  	
   

  	
  $

  	
  12,420,000

  	
   

  	
  850,000

  	
   

  	
  $

  	
  30,600,000

  	
   

  



 


 



 I-1














 


EXHIBIT A


Form of Termination and Amendment Agreement


TERMINATION AND
AMENDMENT AGREEMENT


This Termination
and Amendment Agreement (this “Agreement”) is made and entered into as
of August [   ], 2006 by and among AEP Industries Inc., a
Delaware corporation (the “Company”), J. Brendan Barba (“Mr. Barba”),
Bradley Louis Radoff (“Mr. Radoff”) and Third Point Partners Qualified
L.P., a Delaware limited partnership, Third Point Partners L.P., a Delaware
limited partnership, Third Point Resources L.P. (formerly Banzai Partners
L.P.), a Delaware limited partnership, Third Point Offshore Fund, Ltd., a
Cayman Islands limited liability exempted company, Third Point Ultra Ltd.
(formerly Points West International Investments Ltd.), a British Virgin Islands
limited liability company, Third Point Resources Ltd. (formerly Banzai Offshore
Fund, Ltd.), a Cayman Islands limited liability exempted company (together with
Mr. Radoff, “Sellers”), and Third Point LLC, a Delaware limited
liability company (“Third Point”).


W I T N E S S E T
H


WHEREAS, the
Company, Sellers (other than Mr. Radoff) and Third Point have entered into a
Purchase Agreement (the “Purchase Agreement”), made and entered into as
of August 1, 2006, by and among the Company, AEP Industries Finance Inc. (“Buyer”),
a Delaware corporation and a wholly owned subsidiary of the Company, Sellers
(other than Mr. Radoff), Third Point and Daniel S. Loeb, managing member of
Third Point, pursuant to which Sellers (other than Mr. Radoff) will sell, and Buyer
and the Company will purchase, an aggregate number of shares of common stock,
par value $0.01 per share, of the Company having an aggregate purchase price of
$30,600,000 as determined therein;


WHEREAS, the
Purchase Agreement requires that the Company, Buyer and Sellers (other than Mr.
Radoff) effect the termination of certain governance related rights of Sellers
and Third Point and obligations of the Company and Mr. Barba under Article II
of the Agreement (the “Third Point Agreement”), dated as of February 4,
2005, by and among the Company, Sellers and Mr. Barba; and


WHEREAS, the
Company, Mr. Barba, Sellers and Third Point each desire to effect such
termination in accordance with Section 6.2(a) of the Third Point Agreement.


NOW, THEREFORE, in consideration of the foregoing premises
and the agreements contained herein, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:


Section 1.               Termination and Amendment.  The Third Point Agreement is hereby amended
by deleting Article II in its entirety. 
Each of Sellers and Third Point (for itself and each of its Affiliates)
hereby unconditionally, irrevocably and forever (a)



 A-1
 






 



waives any and all of its
rights, interests and claims that it ever had, now has or ever may have or
claim to have against Mr. Barba and the Company (including its successors and
assigns and any of its present or former directors, officers, employees or
agents) pursuant to such Article and (b) releases and discharges Mr. Barba and
the Company (including its successors and assigns and any of its present or
former directors, officers, employees or agents) from any and all obligations
of any kind or character whatsoever thereunder. 
Except as expressly amended hereby, the Third Point Agreement shall
remain in full force and effect.  For the
avoidance of doubt, the parties hereto do not intend that this Agreement should
limit or otherwise affect the registration rights set forth in Article III of
the Third Point Agreement in respect of the Registrable Securities (as defined
therein) that are not Purchased Shares (as defined in the Purchase Agreement),
which registration rights shall remain in effect in accordance with the terms
of the Third Point Agreement.


Section 2.               Governing Law; Submission to
Jurisdiction.  This Agreement shall
be governed by and construed and enforced in accordance with the laws of the
State of Delaware, without giving effect to choice of law principles thereof
that would cause the application of the laws of any other jurisdiction.  Each of the parties irrevocably submits to
the exclusive jurisdiction and service and venue in any federal or state court
sitting in the State of Delaware for the purposes of any action, suit or
proceeding arising out of or with respect to this Agreement.  Each of the parties irrevocably and
unconditionally waives any objections to the laying of venue of any action,
suit or proceeding relating to this Agreement in any federal or state court
sitting in the State of Delaware, and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such action, suit or proceeding brought in any such court has been brought
in an inconvenient forum.  EACH OF THE
PARTIES HERETO HEREBY IRREVOCABLY WAIVES THE RIGHT TO A TRIAL BY JURY.


[SIGNATURE PAGES FOLLOW]



 A-2














 


IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first written above.


 


	
   

  	
  AEP INDUSTRIES INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  THIRD POINT LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  THIRD POINT PARTNERS QUALIFIED L.P.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Third Point Advisors LLC, its general

  partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  THIRD POINT PARTNERS L.P.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Third Point Advisors LLC, its general

  partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  



 


 


[Termination and
Amendment Agreement]



  
  
 






 



 


	
  

  	
  THIRD POINT RESOURCES L.P.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Third Point Advisors LLC, its general

  partner

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  THIRD POINT OFFSHORE FUND, LTD.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  THIRD POINT ULTRA LTD.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  THIRD POINT RESOURCES LTD.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Name:

  
	
   

  	
  Title:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BRADLEY LOUIS RADOFF

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:  Bradley
  Louis Radoff

  
					



 


[Termination and
Amendment Agreement]



  
  
 






 



 


	
  

  	
  J. BRENDAN BARBA

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Name:  J.
  Brendan Barba

  



 


[Termination and
Amendment Agreement]



  
  














 


EXHIBIT
B


Form of Joint Press Release


AEP
Industries Inc. and Third Point LLC Announce Stock Repurchase Agreement


AEP Industries
Inc. Announces Separate $15 Million Stock Repurchase Program


SOUTH HACKENSACK, N.J. and NEW YORK, N.Y., August 1,
2006.  AEP Industries Inc. (Nasdaq: AEPI,
the “Company”) and Third Point LLC (“Third Point”) today announced they have
entered into an agreement whereby the Company will repurchase 850,000 of its
common shares from investment funds affiliated with Third Point in a privately
negotiated transaction at $36 per share for a total purchase price of $30.6
million.  The price per share represents
a discount of 19.4% to yesterday’s closing price of the Company’s common stock.


Brendan Barba, Chairman
and Chief Executive Officer of the Company, commented, “This transaction
enables us to make attractive use of our capital to acquire a meaningful block
of Company shares at a favorable price. 
The repurchase should be immediately accretive to earnings per share.”


The repurchase, which is
expected to close in the next several days, will reduce Third Point’s
beneficial ownership of the Company’s common stock from approximately 23% to
approximately 15%.  Pursuant to the
purchase agreement, Third Point and its affiliates will be bound by a two-year
standstill provision and their rights to appoint up to two members of the board
of directors of the Company will terminate. 
Under a previous agreement with the Company, Third Point has requested
that the Company register its remaining shares. 
The Company will take immediate steps to comply with this request.


Authorization
of Stock Repurchase Program


The Company separately
announced that its Board of Directors has authorized a stock repurchase program
under which the Company may purchase up to $15 million of its common
stock.  Repurchases would be made in the
open market, in privately negotiated transactions or by other means, from time
to time, subject to market conditions, applicable legal requirements and other
factors.  The program does not obligate
the Company to acquire any particular amount of common stock and the program
may be suspended at any time at the Company’s discretion.


AEP Industries Inc.
manufactures, markets, and distributes an extensive range of plastic packaging
products for the food/beverage, industrial and agricultural markets.  The Company has operations in three countries
in North America and Europe.


Except for historical
information contained herein, statements in the release are forward-looking
statements that are made pursuant to the safe harbor provisions of the Private



 B-1
 






 



Securities Litigation
Reform Act of 1995.  Forward-looking
statements involve known and unknown risks and uncertainties, which may cause
the Company’s actual results in future periods to differ materially from
forecasted results.  Those risks include,
but are not limited to, risks associated with pricing, volume, cash flow
guidance, fluctuations in exchange rates and conditions of markets.  Those and other risks are described in the
Company’s filings with the Securities and Exchange Commission (the “SEC”) over
the last 12 months, copies of which are available from the SEC or may be
obtained from the Company.


 



 B-2