Exhibit 10.3


 


EMPLOYMENT
AGREEMENT


 


dated as of


 


November 1,
2004, between


 


AEP INDUSTRIES
INC.,


 


a Delaware
corporation (the “Company”), and


 


John J. Powers


 


(the “Executive”).


 





















 


EMPLOYMENT
AGREEMENT


 


This Employment Agreement,
dated May 9, 2005, by and between AEP Industries Inc., a Delaware corporation
having its offices at 125 Phillips Avenue, South Hackensack, New Jersey 07606
(the “Company”),
and John J. Powers (the “Executive”),
presently residing at 528 Old Post Road, Wyckoff, NJ 07481, is entered into and
shall be effective as of November 1, 2004 (the “Effective Date”).


 


RECITALS


 


The Executive is an employee
of the Company; and


 


The Company desires to
continue to employ Executive upon the terms and conditions set forth in this
Agreement, and Executive desires to accept such continuation of employment.


 


Accordingly, in
consideration of the mutual promises contained herein, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound hereby, the parties hereto
agree as follows:


 


Section 1.                                            Employment; Term.


 


(a)                                  Employment.  Subject to Section 3, commencing as of the Effective
Date, the Company hereby agrees to continue to employ Executive, and Executive
hereby agrees to continue to be employed by the Company, in accordance with the
terms and provisions of this Agreement.


 


(b)                                 Term.  The initial term of this Agreement shall be a period of
three (3) years (the “Initial Term”). 
Thereafter this Agreement shall be extended for successive periods of
one (1) year each from the Effective Date (each an “Extended Term” and
together with the Initial Term the “Term”) unless either party gives written
notice to the other at least one hundred (180) days before the expiration of
the Initial Term or the then current Extended Term that it does not wish to
extend this Agreement beyond the last day of the current Term.


 


Section 2.                                            Terms of Employment.


 


(a)                                  Position.  During the term of Executive’s
employment, Executive shall serve in the position set forth on the signature page hereto
and shall report to the person or persons set forth on the Executive Data Sheet
annexed hereto as Exhibit A.  Executive shall have supervision and control
over, and responsibility for, such management and operational functions of the
Company currently assigned to such position, and shall have such other powers
and duties (including holding officer positions with the Company and one or
more subsidiaries of the Company) as may from time to time be prescribed by the
person or persons to whom Executive will report, so long as such powers and
duties are reasonable and customary for such position of an enterprise
comparable to the Company.  The primary
person(s) that Executive reports to shall be such person(s) as set forth under
the label “Reports to” on the Executive Data Sheet annexed hereto as Exhibit A.


 


(b)                                 Duties.  During the term of Executive’s
employment, and excluding any periods of vacation and sick leave to which
Executive is entitled, Executive agrees to devote substantially all of his
business time to the business and affairs of the Company and, to the extent
necessary to discharge the responsibilities assigned to Executive hereunder, to
use Executive’s reasonable best


 


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efforts
to perform faithfully, effectively and efficiently such responsibilities.  During the term of Executive’s employment, it
shall not be a violation of this Agreement for Executive to (1) serve on
corporate, civic or charitable boards or committees, (2) deliver lectures
or fulfill speaking engagements, and (3) manage personal investments, so
long as such activities do not interfere with the performance of Executive’s
responsibilities as an employee of the Company in accordance with this Agreement.


 


(c)                                  Compensation.


 


(i)                                     Base Salary.  During the term of Executive’s
employment, Executive shall receive an annual base salary (the “Annual Base Salary”),
which shall be paid in accordance with the customary payroll practices of the
Company, at least equal to the base salary set forth on the Executive Data
Sheet annexed hereto as Exhibit A.  Commencing on November 1, 2005 (the “First Date”), and on
each subsequent anniversary date of the First Date as long as Executive remains
an employee of the Company (the First Date and each subsequent anniversary of
the First Date being herein referred to as an “Adjustment Date”), the Annual Base
Salary of Executive in effect on the day preceding the Adjustment Date shall be
increased by (A) the percentage equal to the percentage increase, if any,
in the Consumer Price Index for all Urban Consumers for the New
York-Northeastern New Jersey Metropolitan Area (or any successor Consumer Price
Index) based on data published by the Bureau of Labor Statistics of the United
States Department of Labor for the 12-month period ended on the September 30th
immediately preceding the Adjustment Date over such Consumer Price Index for September 30,
in the year preceding the Adjustment Date, and (B) such additional amount
as the Board of Directors of the Company (the “Board”) in its discretion may determine
to be appropriate.  The result of such
increase or increases to the then current Annual Base Salary shall constitute
Executive’s Annual Base Salary commencing on the Adjustment Date then at hand
and continuing until the next Adjustment Date. 
Any increase in Annual Base Salary shall not serve to limit or reduce
any other obligation to Executive under this Agreement.  After an Adjustment Date the term Annual Base
Salary as used in this Agreement shall refer to Annual Base Salary as so
increased.


 


(ii)                                  Bonuses.  In addition to his Base
Salary, Executive shall be paid an annual bonus (the “Bonus”)
during the term of his employment pursuant to the Company’s Management
Incentive Plan or any successor thereto (the “MIP”).  The Bonus shall be based upon performance
criteria and objectives determined by the Compensation Committee of the Board
in its reasonable discretion and approved by the Board.  All Bonuses shall become payable on a date reasonably
determined by the Company after the Company finally determines with respect to
Executive that the Company has achieved the applicable performance criteria and
objectives under the MIP, and the amount of the Bonus shall be paid to
Executive promptly thereafter.


 


(iii)                               Benefits.  The Company shall provide
Executive during the term of his employment hereunder with coverage under all
employee pension and compensation programs, plans and practices (commensurate
with his positions in the Company and to the extent permitted under any
employee benefit plan) in accordance with the terms thereof, which the Company
makes available to its senior executives. 
During the term of Executive’s employment, Executive shall be entitled
to receive, in addition to the benefits described above, such perquisites and
fringe benefits appertaining to his position in accordance with any practice
existing at the Company prior to the Effective Date or as subsequently changed
by the Board, which perquisites and fringe benefits will be consistent with
past practice.   The Executive shall also
be entitled to an additional perquisite allowance each year in an amount from
time to time determined by the Company’s Compensation Committee in order to
cover expenses not covered by the Company’s


 


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business expense
reimbursement policy.


 


(iv)                              Expenses.  During the term of Executive’s
employment, Executive shall be entitled to receive reimbursement for all
reasonable employment expenses incurred by Executive in accordance with the
policies, practices and procedures of the Company, including, without
limitation, expenses for travel and similar items related to such duties and
responsibilities.  The Company will
reimburse Executive for all such expenses upon presentation by Executive from
time to time of appropriately itemized and approved (consistent with the
Company’s policy) accounts of such expenditures.


 


(v)                                 Vacation;  During the term of Executive’s
employment, Executive shall be entitled to such number of days of paid vacation
as set forth under the label “Vacation Days” on the Executive Data Sheet
annexed hereto as Exhibit A,
to be taken in accordance with the existing policies of the Company and past
practice.  Any paid vacation shall be taken
at such times as are consistent with Executive’s responsibilities
hereunder.  Unless otherwise approved by
the Company, any vacation days not taken in any calendar year shall be
forfeited without payment thereof as permitted by applicable law.   No such vacation days shall be forfeited to
the extent that such vacation days are not taken at the request of the Company.


 


(vi)                              Stock Options etc.  In
addition to any benefits Executive may receive hereunder, the Company may, from
time to time, grant Executive stock options exercisable for shares of common
stock of the Company or restricted stock, stock appreciation rights or
performance awards under the Company’s then current Stock Option Plan (the “Executive Options”),
and such Executive Options shall be of such kind, in such number and have such
terms and provisions as may be determined appropriate by the Board or Stock
Option Committee thereof.


 


(vii)                           Witholding.  The Company shall be entitled to withhold
from payment any amount of withholding required by law as the Company may
reasonably determine.


 


(d)                                 Director’s and Officer’s Liability Insurance.  The
Company shall use all commercially reasonably efforts to obtain and maintain a
director’s and officer’s liability insurance policy during the term of Executive’s
employment covering Executive on commercially reasonable terms, and the amount
of coverage shall be reasonable in relation to Executive’s position and
responsibilities hereunder; provided, however, that such coverage may be
reduced or eliminated to the extent that the Company reduces or eliminates
coverage for its directors and executives generally.


 


Section 3.                                            Termination of Employment.


 


(a)                                  Death or Disability. 
Executive’s employment shall terminate automatically upon Executive’s
death.  If Executive becomes Disabled
during the Employment Period (pursuant to the definition of Disability set
forth below), the Company may give to Executive written notice in accordance
with Section 10(g) of its intention to terminate Executive’s
employment on the date specified in such notice.  In such event, Executive’s employment with
the Company shall terminate effective on such specified date, which date shall
be at least on thirty (30) days after receipt of such notice by Executive (the “Disability Effective Date”),
prior to the Disability Effective Date, Executive shall not have returned to
full-time performance of Executive’s duties. 
For purposes of this Agreement, “Disability” means, with respect to Executive,
Executive’s inability to perform the duties and obligations required by
Executive’s job by reason of any medically determined physical or mental
impairment, as determined in accordance with the


 


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provisions
of the long term disability coverage under the AEP Industries Inc. Long Term Disability Plan (the “AEP Disability Plan”),
if Executive has elected coverage thereunder, provided, however, that if
Executive has not elected long term disability coverage under the AEP
Disability Plan, then “Disability”
shall mean, with respect to Executive, any medically determined physical or
mental impairment by the Compensation Committee of the Company or its insurers
and acceptable to Executive or Executive’s legal representative that prevents
Executive from performing the duties and obligations required by Executive’s
job for more than ninety (90) days during a period of one hundred and eight
(180) consecutive days.


 


(b)                                 Cause.  Executive’s employment may be
terminated at any time by the Company for Cause or without Cause.  For purposes of this Agreement, “Cause” shall mean an
Executive’s (i) commission of a crime of moral turpitude or a felony that
involves financial misconduct or moral turpitude or has resulted, or reasonably
could be expected to result, in any adverse publicity regarding Executive or
the Company or economic injury to the Company, (ii) dishonesty or willful
commission or omission of any action that has resulted, or reasonably could be
expected to result, in any adverse publicity regarding Executive or the Company
or has caused, or reasonably could be expected to cause, demonstrable and
serious economic injury to the Company, or (iii) material breach of this
Agreement or any other agreement entered into between Executive and the Company
or any of its subsidiaries or Affiliates (other than as a result of the
Disability of Executive or other factors outside of Executive’s control) after
notice and a reasonable opportunity to cure (if such breach can be cured).  For purposes of this Agreement, “without Cause” shall
mean a termination by the Company of Executive’s employment during the
Employment Period for any reason other than a termination based upon Cause,
death or Disability.  For purposes
hereof, no act or omission shall be considered willful unless committed in bad
faith or without a reasonable belief that the act or omission was in the best
interests of the Company or any of its Affiliates.  For purposes of this Agreement, “Affiliate” of the
Company means a Person (as defined below) that directly or indirectly through
one or more intermediaries, controls, or is controlled by, or is under common
control with, the Company.  As used in
this definition, the term “control,”
including the correlative terms “controlling,” “controlled by” and “under common control with”
mean the possession, directly or indirectly, of the power to direct or cause
the direction of management or policies (whether through ownership of
securities or any partnership or other ownership interest, by contract or
otherwise) of a Person.  For purposes of
this Agreement, “Person”
shall be construed broadly and shall include, without limitation, an
individual, a partnership, a limited liability company, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization and a governmental entity or any department, agency or political
subdivision thereof.


 


(c)                                  Good Reason.  Executive’s employment may be
terminated at any time by Executive for Good Reason or without Good
Reason.  For purposes of this Agreement, “Good Reason” means
voluntary resignation after any of the following actions are taken by the
Company or any of its subsidiaries without Executive’s consent: (a) any
material breach by the Company of any provision of this Agreement; (b) a
significant diminution in the responsibilities or authority of Executive which
are materially inconsistent with Executive’s position other than (1) an
insubstantial and inadvertent diminution that is remedied by the Company
promptly after receipt of written notice thereof sent by Executive, (2) in
connection with the termination of Executive’s employment for Cause, (3) as
a result of Executive’s Disability, or (4) by Executive other than for
Good Reason; (c) a significant diminution in the Annual Base Salary and
Bonus to be paid to Executive (but not including any diminution related to a
broader compensation reduction that is not limited to any particular employee
or executive); provided, however, that none of the events described in the
foregoing clauses (a), (b) or (c) shall constitute Good Reason unless
Executive shall have notified the Company in writing describing the events
which


 


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constitute Good Reason and
then only if the Company shall have failed to cure such events within (x) in
the case of clause (a), fifteen (15) days, or (y) in the case of clauses (b) or
(c), thirty (30) days, after the Company’s receipt of such written notice.


 


(d)                                 Notice of Termination.  Any
termination by the Company for Cause or without Cause, or by Executive for Good
Reason or without Good Reason, shall be communicated by Notice of Termination
to the other party hereto given in accordance with Section 11(g).  For purposes of this Agreement, a “Notice of Termination”
means a written notice which (i) indicates the specific termination
provision in this Agreement relied upon, (ii) to the extent applicable,
sets forth in reasonable detail the facts and circumstances claimed to provide
a basis for termination of Executive’s employment under the provision so
indicated, and (iii) if the Date of Termination (as defined below) is
other than the date of receipt of such notice, specifies the termination date
(which date shall not be more than five (5) days after the giving of such
notice).  The failure by Executive or the
Company to set forth in the Notice of Termination any fact or circumstance
which contributes to a showing of Good Reason or Cause shall not waive any
right of Executive or the Company hereunder or preclude Executive or the
Company from asserting such fact or circumstance in enforcing Executive’s or
the Company’s rights hereunder.


 


(e)                                  Date of Termination.  “Date of Termination”
means (i) if Executive’s employment is terminated by the Company for Cause
or without Cause, or by Executive for Good Reason or without Good Reason, the
date of receipt of the Notice of Termination or any later date specified
therein pursuant to Section 3(d), as the case may be, and (ii) if
Executive’s employment is terminated by reason of death or Disability, the date
of death of Executive or the Disability Effective Date, as the case may be.


 


Section 4.  Obligations of the Company upon
Termination.


 


(a)                                  With Good Reason; Other Than for Cause, Death
or Disability.  If, during the period commencing with the
Effective Date and ending with the termination of Executive’s employment (the “Employment Period”), (1) the
Company shall terminate Executive’s employment other than for Cause, or (2) Executive
shall terminate his employment for Good Reason or within thirty (30) days
subsequent to a Discontinuation Event, and (3) the termination of
Executive’s employment in any case is not due to his death or Disability, then
the Company will provide Executive with the following severance payments and/or
benefits:


 


(i)                                     The Company shall pay, subject to Section 8,
to Executive as a severance payment an amount equal to two (2) times the
sum of (x) the Annual Base Salary in effect immediately prior to the event
giving rise to such termination and (y) the Bonus earned, if any, for the fiscal
year immediately preceding the fiscal year in which the event giving rise to
such termination occurs.  The severance
payment shall be payable over a period of two (2) years commencing on the
Termination Date (subject to applicable federal and state withholding taxes,
social security contributions, any garnishments, or any deductions required by
law and any other deductions) in accordance with the ordinary payroll practices
of the Company, but no less frequently than semi-monthly following such termination
of employment.  In addition, the Company
shall pay to Executive (A) any earned but unpaid Bonus of Executive with
respect to the fiscal year preceding this termination, (B) any earned but
unpaid Bonus of Executive with respect to the fiscal year in which his
termination occurs, multiplied by a fraction, (x) the numerator of which is the
number of days during such fiscal year that Executive was employed by the
Company, and (y) the denominator of which is three hundred and sixty-five
(365), and (C) amounts with respect to accrued and unused vacation through
the Date of Termination to the extent not theretofore paid (“Accrued Obligations”);
[Q: change re: termination by the Company


 


5





















 


without Cause, e.g. downsize]


 


(ii)                                  Solely for
purposes of this Section 4(a), the following defined terms shall have the
following meanings:


 


“Discontinuation Event” shall have
occurred if the conditions set forth in any one of the following paragraphs
shall have been satisfied:


 


(A) Any person, corporation or other entity or
group, including any “group” as
defined in Section 13(d)(3) of the Exchange Act of 1934, as amended,
other than (1) those persons in control of the Company on the Effective
Date, (2) any person acting on behalf of the Company in a distribution of
stock to the public, or (3) a trustee or other fiduciary holding
securities of the Company under an employee benefit plan of the Company,
becomes the beneficial owner of shares of the Company having fifty (50%) percent
or more of the total number of votes that may be cast for the election of
directors of the Company; or


 


(B) As the result of, or in connection with,
any tender or exchange offer, merger or other business combination, sale of
assets or contested election, or any combination of the foregoing (a “Transaction”), the persons who were
directors of the Company before the Transaction shall cease to constitute a
majority of the Board of Directors of the Company or any successor to the
Company or its assets; or


 


(C) If at any time, (1) the Company shall
consolidate with, or merge with, any other Person and the Company shall not be
the continuing or surviving corporation, (2) any Person shall consolidate
with, or merge with, the Company, and the Company shall be the continuing or
surviving corporation and in connection therewith, all or part of the
outstanding Stock shall be changed into or exchanged for stock or other
securities of any other Person or cash or any other property, (3) the
Company shall be a party to a statutory share exchange with any other Person
after which the Company is a Subsidiary of any other Person, or (4) the
Company shall sell or otherwise transfer 50% or more of the assets or earning
power of the Company and its Subsidiaries (taken as a whole) to any Person or
Persons;


 


“Person” shall have the meaning
ascribed to such term in Section 3(a)(9) of the Exchange Act of 1934,
as amended, and used in Sections 13(d) and 14(d) thereof, including a
“group” as defined in Section 13(d);
and


 


“Subsdiary” shall mean, a
subsidiary of the Company within the meaning Section 424(f) of
Internal Revenue Code, as amended. .


 


(iii)                               After the Date of Termination, Executive (and
Executive’s eligible family members) will be entitled to continue their
participation in the Company’s medical and dental insurance plans at normal
associate contribution rates during the period ending on the earlier of (A) the
last day of the Severance Period and (B) the first date as of which the
Company ceases to be obligated to make such plans available to Executive under
COBRA (the “COBRA
Termination Date”).  In
the event that the date specified in clause (A) is the earlier date,
Executive (and Executive’s eligible family members) shall be entitled to
continue their participation in the Company’s medical and dental insurance
plans during the period from such date until the COBRA Termination Date by
paying the full monthly premiums under these plans.


 


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Except in the case of a
termination by reason of Executive’s death or Disability, the Company’s
obligations to make payments under this Section 4(a) will be
conditioned on Executive executing and delivering a customary general release
reasonably satisfactory to the parties.


 


(b)                                 Death; Disability; Cause; Other than for Good
Reason.  If Executive’s employment shall be terminated
by reason of Executive’s death or Disability, by the Company for Cause or by
Executive without Good Reason, Executive shall only be entitled to receive (i) any
earned but unpaid Annual Base Salary through the date of the termination event,
(ii) any earned but unpaid Bonus of Executive with respect to the fiscal
year preceding his termination, (iii) if other than Cause, any earned but
unpaid Bonus of Executive with respect to the fiscal year in which his
termination occurs, multiplied by a fraction, (x) the numerator of which is the
number of days during such current fiscal year that Executive was employed by
the Company, and (y) the denominator of which is three hundred and sixty-five
(365), (iv) payment of Accrued Obligations to Executive or his legal
representatives in the case of the death or, if applicable, the Disability of
Executive, and (v) the continuance of benefits under the Company’s
employee benefit plans to the Date of Termination and in the case of death or
Disability, the continuance of death or Disability benefits thereafter in
accordance with the terms of such plans and the Company’s perquisite policies
as in effect as of such date.  [Company
Policy must be written.]


 


(c)                                  Company Obligations After Termination. 
After the termination of Executive’s employment under Section 4(b) and
payment of all amounts due and provision of all benefits due to Executive
pursuant to Section 4(b), the obligations of the Company under this
Agreement to make any further payments or provide any benefits specified
elsewhere in this Agreement (other than benefits required to be provided by
applicable law or under the terms of any employee benefit of the Company in
which the Executive was a participant), shall thereupon cease and terminate.


 


(d)                                 Nature of Payments. 
Notwithstanding anything contained in this Section 4, all payments
under this Section 4 shall be deemed severance payments for the purpose of
Section 8 and may be terminated as therein provided.


 


(e)                                  Executive’s Obligations after Termination. 
Executive agrees that at any time after the Date of Termination he will
cooperate with the Company in any litigation brought by or against the Company
at no additional compensation.  Executive
shall, however, be entitled to be reimbursed by the Company for his reasonable
costs and expenses in connection with such cooperation.


 


Section 5.                                            Nondisclosure and Nonuse of Confidential
Information.


 


(a)                                  Executive shall not disclose or use at any time,
either during the Employment Period or thereafter, any Confidential Information
(as hereinafter defined) of which Executive is or becomes aware, whether or not
such information is developed by him, except (i) to the extent that such
disclosure or use is directly related to, and required by, Executive’s
performance in good faith of duties assigned to Executive by the Company or (ii) when
required to do so by a court of competent jurisdiction, by any governmental
agency having supervisory authority over the business of the Company, or by any
administrative body or legislative body (including a committee thereof) with
jurisdiction to order Executive to divulge, disclose or make accessible such
information, provided that Executive shall notify the Company promptly upon
learning that such event may occur, and, if the Company shall so request,
Executive shall use his reasonable best efforts (without any additional
consideration to be paid to Executive) to assist the Company in


 


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seeking
a protective order to prevent and/or limit disclosure of such Confidential
Information.  Executive will take all
appropriate steps to safeguard Confidential Information in his possession and
to protect it against disclosure, misuse, espionage, loss and theft.  Executive shall deliver to the Company at the
termination of the Employment Period, and at any time, either before or after
the Termination Date, as the Company may request, all memoranda, notes, plans,
records, reports, computer tapes and software and other documents and data (and
copies thereof) relating to the Confidential Information or the Work Product
(as hereinafter defined) of the business of the Company or any of its
Affiliates which Executive may then possess or have under his control.


 


(b)                                 As used in this Agreement, the term “Confidential Information”
means information that is not generally known to the public in the context in
which used and that is used, developed or obtained by Executive in the course
of performing his duties for the Company, including, but not limited to,
information, observations and data obtained by Executive while employed by the
Company or any predecessors thereof (including those obtained prior to the date
of this Agreement) concerning (i) the business or affairs of the Company
and its Affiliates (or such predecessors), including without limitation,
financial data, marketing plans, strategic business plans, product development
plans (or other product data), (ii) products or services, (iii) fees,
costs and pricing structures, (iv) designs, (v) analyses, (vi) drawings,
photographs and reports, (vii) computer software, including operating
systems, applications and program listings, (viii) flow charts, manuals
and documentation, (ix) data bases, (x) accounting and business methods,
(xi) inventions, devices, new developments, methods and processes, whether
patentable or unpatentable and whether or not reduced to practice, (xii)
customers and clients and customer or client lists, (xiii) other copyrightable
works, (xiv) all production methods, processes, technology, know how and trade
secrets, and (xv) all similar and related information in whatever form.  Confidential Information will not include any
information in the context in which used that has been published in a form
generally available to the public prior to the date Executive proposes to
disclose or use such information. 
Confidential Information will not be deemed to have been published
merely because individual portions of the information have been separately
published, but only if all material features comprising such information have
been published in combination.


 


(c)                                  As used in this Agreement, the term “Work Product” means
all inventions, innovations, improvements, technical information, systems,
software developments, methods, designs, analyses, drawings, reports, service
marks, trademarks, trade names, logos and all similar or related information
(whether patentable or unpatentable) which relates to the Company’s or any of
its Affiliates’ actual or anticipated business, research and development or
existing or future products or services and which are conceived, developed or
made by Executive (whether or not during usual business hours and whether or
not alone or in conjunction with any other person) while employed (and for the
Restricted Period (as defined below) if and to the extent such Work Product
results from any work performed for the Company, any use of the Company’s
premises or property or any use of the Company’s Confidential Information) by
the Company (including those conceived, developed or made prior to the date of
this Agreement) together with all patent applications, letters patent,
trademark, trade name and service mark applications or registrations,
copyrights and reissues thereof that may be granted for or upon any of the
foregoing.


 


Section 6.                                            Non-Solicitation; Non-Compete.


 


(a)                                  During the period commencing on the Effective
Date and ending on the latter of (x) second anniversary of the Termination Date
or (y) the first anniversary of the date on which Executive ceases to receive
any payments from the Company or any of its Affiliates related to salary, bonus
or severance (the “Restricted Period”),
Executive shall not directly or indirectly through another Person (i) induce
or attempt to induce anyone who was engaged or employed by


 


8





















 


the
Company or any Affiliate of the Company to leave the employ or engagement of
the Company or such Affiliate, or in any way interfere with the relationship
between the Company or any such Affiliate, on the one hand, and any such person
thereof, on the other hand, (ii) hire any person who was engaged or
employed by the Company or any Affiliate of the Company at any time until
twenty-four (24) months after such individual’s employment relationship or
engagement with the Company or such Affiliate has been terminated, or (iii) induce
or attempt to induce any customer, supplier, licensee or other business
relation of the Company or any Affiliate of the Company to cease doing business
with the Company or such Affiliate, or in any way interfere with the
relationship between any such customer, supplier, licensee or business
relation, on the one hand, and the Company or any Affiliate, on the other hand.  Executive further agrees that, during the
period of his employment and thereafter during the restricted period, Executive
will not disparage the Company or any of its Affiliates or any of employee of
the Company or its Affiliates in any manner whatsoever


 


(b)                                 Executive acknowledges that in the course of
his employment with the Company and/or its Affiliates and their predecessors,
he has become familiar, or will become familiar, with the Company’s and its
Affiliates’ and their predecessors’ trade secrets and with other Confidential
Information concerning the Company, its subsidiaries or Affiliates and their
respective predecessors and that his services have been and will be of special,
unique and extraordinary value to the Company, its subsidiaries and its Affiliates.  Therefore, Executive agrees that, during the
Restricted Period, Executive shall not directly or indirectly, engage in the
production, sale or distribution of any product produced, sold or distributed
by the Company, its subsidiaries or its or Affiliates on the Effective Date or
during the Restricted Period in the same geographic areas in which the Company,
its subsidiaries or any of its Affiliates is doing business.  For purposes of this Agreement, the phrase “directly or indirectly engage in”
shall include any direct or indirect ownership or profit participation interest
in such enterprise, whether as an owner, stockholder, partner, principal,
manager, agent, consultant, officer, investor, lender, joint venturer of or
otherwise in any capacity whatsoever, and shall include any direct or indirect
participation in such enterprise as an employee, consultant, licensor of
technology or otherwise.  Nothing herein
shall prohibit Executive from being a passive owner of not more than two (2%)
percent of the outstanding stock or ownership interest of any class of a
corporation or other entity which is publicly traded, so long as Executive has
no active participation in the business or management of such corporation or
other entity.


 


(c)                                  Executive understands that the foregoing
restrictions may limit his ability to earn a livelihood in a business similar
to the business of the Company and any of its subsidiaries and Affiliates, but
he nevertheless believes that he has received and will receive sufficient
consideration and other benefits as an employee of the Company and as otherwise
provided hereunder or as described in the recitals hereto to clearly justify
such restrictions which, in any event (that given his education, skills and
ability), Executive does not believe would prevent him from otherwise earning a
living.  Executive has carefully
considered the nature and extent of the restrictions placed upon him by this
Agreement, and hereby acknowledges and agrees that the same are reasonable in
time and territory and do not confer a benefit upon the Company
disproportionate to the detriment of Executive.


 


Section 7.                                            Enforcement.


 


Because Executive’s services
are unique and because Executive has access to Confidential Information and
Work Product, and because Executive acknowledges that any breach of the
covenants contained in Section 6 would irreparably injure the Company, the
parties hereto agree that money damages would be an inadequate remedy for any
breach of this


 


9





















 


Agreement.  Therefore, in the event of a breach or
threatened breach of this Agreement, the Company or its successors or assigns
may, in addition to other rights and remedies existing in their favor at law or
in equity, apply to any court of competent jurisdiction for specific
performance and/or injunctive or other relief in order to enforce, or prevent
any violations of, the provisions hereof (without posting a bond or other
security) or require Executive to account for and pay over to the Company all compensation,
profits, moneys, accruals, increments or other benefits derived from or
received as a result of any transactions constituting a breach of the covenants
contained herein in this Agreement, if and when final judgment of a court of
competent jurisdiction is so entered against Executive.


 


Section 8.                                            Severance Payments.


 


In addition to the
foregoing, and not in any way in limitation thereof, or in limitation of any
right or remedy otherwise available to the Company, if Executive violates any
provision of the foregoing Section 5 or 6, any severance payments then or
thereafter due from the Company to Executive under Section 4 or otherwise
shall be terminated forthwith, and the Company’s obligation to pay, and
Executive’s right to receive, such severance payments shall terminate and be of
no further force or effect, if and when determined by a court of competent
jurisdiction, in each case without limiting or affecting Executive’s
obligations under such Sections 5 and 6 or the Company’s other rights and remedies
available at law or equity.


 


Section 9.                                            Executive’s Representations, Warranties and
Covenants.


 


(a)                                  Executive hereby represents and warrants to
the Company that:


 


(1)                                  Executive has all requisite power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby, and this Agreement has been duly executed by
Executive;


 


(2)                                  the execution, delivery and performance of
this Agreement by Executive does not and will not, with or without notice or
the passage of time, conflict with, breach, violate or cause a default under
any agreement, contract or instrument to which Executive is a party or any
judgment, order or decree to which Executive is subject;


 


(3)                                  Executive is not a party to or bound by any
employment agreement, consulting agreement, non-compete agreement,
non-solicitation agreement, confidentiality agreement or similar agreement with
any other Person;


 


(4)                                  upon the execution and delivery of this
Agreement by the Company and Executive, this Agreement will be a legal, valid
and binding obligation of Executive, enforceable in accordance with its terms;


 


(5)                                  Executive is a continuing employee of the
Company or one of its Affiliates; and


 


(6)                                  Executive understands that the Company will
rely upon the accuracy and truth of the representations and warranties of
Executive set forth herein, and Executive consents to such reliance.


 


10





















 


Section 10.                                      General Provisions.


 


(a)                                  Severability.  It
is the desire and intent of the parties hereto that the provisions of this
Agreement be enforced to the fullest extent permissible under the laws and
public policies applied in each jurisdiction in which enforcement is
sought.  Accordingly, if any particular
provision of this Agreement shall be adjudicated by a court of competent
jurisdiction to be invalid, prohibited or unenforceable under any present or
future law, and if the rights and obligations of any party under this Agreement
will not be materially and adversely affected thereby, such provision, as to
such jurisdiction, shall be ineffective, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of
such provision in any other jurisdiction; furthermore, in lieu of such invalid
or unenforceable provision there will be added automatically as a part of this
Agreement, a legal, valid and enforceable provision as similar in terms to such
invalid or unenforceable provision as may be possible.  Notwithstanding the foregoing, if such provision
could be more narrowly drawn so as not to be invalid, prohibited or
unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so
narrowly drawn, without invalidating the remaining provisions of this Agreement
or affecting the validity or enforceability of such provision in any other
jurisdiction.


 


(b)                                 Entire Agreement.  Each
party acknowledges and agrees that, except as expressly set forth herein, no
representations, warranties, promises or statements of any kind or character
have been made to them by each other, or their agents, representatives or
attorneys, to induce the execution of this Agreement.  This Agreement, together with the Executive
Data Sheet annexed hereto as Exhibit A
and such other employee benefits that
Executive has on the Effective Date, constitute the entire agreement
between the parties with respect to the subject matter hereof and supersedes
all prior agreements, commitments, arrangements, negotiations or undertakings,
whether oral or written, between the parties with respect to its subject
matter.  No changes, amendments, waivers
or modifications to this Agreement shall be valid, unless made by a written
instrument that expressly refers to the relevant provision of this Agreement
and that is executed by all parties in the case of any changes or modifications
and by the party against whom enforcement is sought in the case of any
discharge or waiver and then only to the specific purpose, extent and instance
so provided.  This Agreement shall be
deemed to have been jointly drafted and, in construing and interpreting this
Agreement, no provision shall be construed or interpreted for or against any
party because such party prepared or requested such provision.


 


(c)                                  Successors and Assigns.


 


(i)                                     This Agreement is personal to Executive and
without the prior written consent of the Company shall not be assignable by
Executive otherwise than by will or the laws of descent and distribution.  This Agreement shall inure to the benefit of and
be enforceable by Executive’s legal representatives or estate upon Executive’s
death or, if applicable, Disability.


 


(ii)                                  This Agreement shall inure to the benefit of
and be binding upon the Company and its successors and assigns.  The Company will require any successor
(whether direct or indirect, by purchase, merger, consolidation or otherwise)
to all or substantially all of the business and/or assets of the Company to
assume expressly and agree to perform this Agreement in the same manner and to
the same extent that the Company would be required to perform it if no such
succession had taken place.  As used in
this Agreement, “Company”
shall mean the Company as hereinbefore defined and any successor to its
business and/or assets as aforesaid which assumes and agrees to perform this
Agreement by operation of law, or otherwise.


 


11





















 


(d)                                 Governing Law.  THIS
AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW JERSEY, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICTING
PROVISION OR RULE (WHETHER OF THE STATE OF DELAWARE OR ANY OTHER JURISDICTION)
THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW
JERSEY TO BE APPLIED.  IN FURTHERANCE OF
THE FOREGOING, THE INTERNAL LAW OF THE STATE OF NEW JERSEY WILL CONTROL THE
INTERPRETATION AND CONSTRUCTION OF THIS AGREEMENT, EVEN IF UNDER SUCH
JURISDICTION’S CHOICE OF LAW OR CONFLICT OF LAW ANALYSIS, THE SUBSTANTIVE LAW
OF SOME OTHER JURISDICTION WOULD ORDINARILY APPLY.


 


(e)                                  Remedies.  Each of the parties to this
Agreement and any such person or entity granted rights hereunder whether or not
such person or entity is a signatory hereto shall be entitled to enforce its
rights under this Agreement specifically to recover damages and costs for any
breach of any provision of this Agreement and to exercise all other rights
existing in its favor.  The parties
hereto agree and acknowledge that money damages may not be an adequate remedy
for any breach of the provisions of this Agreement and that the Company may in
its sole discretion apply to any court of law or equity of competent
jurisdiction for specific performance and/or other injunctive relief (without
posting any bond or deposit) in order to enforce or prevent any violations of
the provisions of this Agreement.  Each
party shall be responsible for paying its own attorneys’ fees, costs and other
expenses pertaining to any such action for and enforcement, regardless of
whether an award or finding or any judgment or verdict thereon is entered
against Executive. [Q-add: except that Executive shall be entitled to be
reimbursed for his reasonable legal fees if he is successful in enforcing the
provisions requiring payment by the Company.]


 


(f)                                    Amendment and Waiver.  The
provisions of this Agreement may be amended and waived only with the prior
written consent of the Company and Executive.  
The failure of any party to insist upon strict performance of any
provision hereof, irrespective of the length of time for which such failure
continues, shall not be a waiver of such party’s right to demand strict
compliance in the future, and no consent or waiver, express or implied, to any
breach or default in the performance of any obligation hereunder shall
constitute a consent or waiver to any other breach or default in the
performance of the same or any other obligation hereunder.


 


(g)                                 Notices.  All notices, requests,
demands, claims, consents and other communications required or permitted to be
given in this Agreement must be in writing and must be either personally delivered,
transmitted via telecopier, mailed by certified or registered mail (postage
prepaid and return receipt requested) or sent by reputable overnight courier
service (charges prepaid) to the recipient at the address below indicated or at
such other address or to the attention of such other person as the recipient
party has specified by prior written notice to the sending party.  Notices will be deemed to have been given
hereunder and received when delivered personally, when received if transmitted
via telecopier, five (5) days after deposit in the U.S. mail and one (1) day
after deposit with a reputable overnight courier service.


 


If to the Company, to:


 


AEP Industries Inc.

125 Phillips Avenue

South Hackensack, NJ 07606-1546

Facsimile: (201) 807-6801

Attention: Paul M. Feeney

Executive Vice President, Finance


 


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with a copy (which shall not
constitute notice) to:


 


Warshaw Burstein Cohen Schlesinger & Kuh, LLP

555 Fifth Avenue

New York, New York 10017

Facsimile: (212) 972-9150

Attention: Paul E. Gelbard, Esq.


 


If to Executive, to
Executive’s address set forth on the signature page hereto.


 


(h)                                 Survival of Representations, Warranties and
Agreements.  All representations, warranties and
agreements contained herein shall survive the consummation of the transactions
contemplated hereby indefinitely.


 


(i)                                     Descriptive Headings; Counterparts.  The
descriptive headings of this Agreement are inserted for convenience only and do
not constitute a part of this Agreement. 
This Agreement may be executed in separate counterparts, each of which
is deemed to be an original and all of which taken together constitute one and
the same agreement.


 


(j)                                     Construction. 
Where specific language is used to clarify by example a general statement
contained herein, such specific language shall not be deemed to modify, limit
or restrict in any manner the construction of the general statement to which it
relates.  The language used in this
Agreement shall be deemed to be the language chosen by the parties to express
their mutual intent, and no rule of strict construction shall be applied
against any party.


 


(k)                                  Nouns and Pronouns. 
Whenever the context may require, any pronouns used herein shall include
the corresponding masculine, feminine or neuter forms, and the singular form of
nouns and pronouns shall include the plural and vice-versa.


 


(l)                                     Further Assurances. Executive
agrees to do such further acts and things, and to execute and deliver such
additional conveyances, assignments, agreements and instruments, as the Company
may at any time reasonably request in connection with the administration and
enforcement of this Agreement or in order better to assure and confirm unto the
Company its rights and remedies hereunder.


 


(m)                               Acknowledgements.  Executive has carefully read and considered
all of the terms and conditions of the Agreement, including the restraints and
obligations imposed upon Executive under Sections 5 and 6 of this Agreement.  Executive agrees that said restraints and
obligations are necessary for the reasonable and proper protection of the
Company and its Affiliates, and that each and every one of the restraints and
obligations is reasonable in respect to subject matter, length of time and
otherwise.


 


Executive has had an opportunity
to consult with independent counsel with respect to the execution of this
Agreement and Executive has made such investigation of the facts pertaining to
this Agreement and of all the matters pertaining hereto as Executive deem
necessary or appropriate.


 


(n)                                 Acceptance of
Offer; Reservation of Rights to Withdraw Offer.  By executing the enclosed counterpart of this
Agreement where indicated and returning it to the Company, Executive hereby
accepts the Company’s offer of continued employment and agrees to all terms and
conditions of this Agreement. 
Until such execution, the Company hereby reserves all rights to withdraw
its offer of employment to Executive pursuant to this Agreement.


 


13





















 


(o)                                 Waiver
of Jury Trial.  EACH OF THE PARTIES
HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM ARISING OUT OF, OR RELATING TO, THIS AGREEMENT.


 


IN WITNESS WHEREOF, the parties
hereto have executed this Agreement as of the date first written above.


 


	
   

  	
  AEP INDUSTRIES INC.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ Paul M. Feeney

  	
   

  	
   

  
	
   

  	
   

  	
  Name: Paul M. Feeney

  	
   

  
	
   

  	
   

  	
  Title: Executive Vice President, Finance and

  Chief Financial Officer

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  John J.
  Powers, Executive

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Signature

  	
   /s/ John J. Powers

  	
   

  	
   

  
							



 


14





















 


EXHIBIT A


 


Executive
Data Sheet for Signature Page


 


	
  Name

  	
   

  	
  John
  J. Powers

  
	
   

  	
   

  	
   

  
	
  Address

  	
   

  	
  528
  Old Post Road, Wyckoff, NJ 07481

  
	
   

  	
   

  	
   

  
	
  Annual
  Base Salary (Fiscal 2005)

  	
   

  	
  $262,544.94

  
	
   

  	
   

  	
   

  
	
  Position

  	
   

  	
  Executive
  Vice President, Sales and Marketing

  
	
   

  	
   

  	
   

  
	
  Reports
  to

  	
   

  	
  J.
  Brendan Barba

  
	
   

  	
   

  	
   

  
	
  Vacation
  Days

  	
   

  	
  15
  days

  



 


15