Exhibit 10.3


 


AEP
INDUSTRIES INC.


Performance
Unit Grant Certificate


Under 2005
Stock Option Plan


 


Date of Grant:


 


Name of Employee:


 


Grant Amount:


 


This is to certify that, effective on the date of grant specified
above, the Board of Directors/Compensation Committee of AEP Industries Inc.
(the “Company”) has granted to the above-named employee (the “Employee”) the
number of Performance Units of the Company (the “Performance Units”) set forth
above pursuant to the Company’s 2005 Stock Option Plan (the “Plan”).  Each Performance Unit represents the right to
receive, upon vesting and the satisfaction of any required withholding
obligation, one share of Stock or the Unit Value of one share of Stock.


 


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


 


1.                                       As
used herein, the following terms shall have the following meanings:


 


“Adjusted Grant Amount” shall mean the actual number of shares of Performance
Units granted to the Employee pursuant to this Agreement (rounded to the
nearest whole share), as finally determined as of the end of the current fiscal
year of the Company as follows:


 


(i)                                     in
the event that the Company’s actual EBITDA for such fiscal year equals or
exceeds Forecasted EBITDA for such fiscal year, the Adjusted Grant Amount shall
mean the Grant Amount set forth above;


 


(ii)                                  in
the event that the Company’s actual EBITDA for such fiscal year is less than
Forecasted EBITDA for such fiscal year, but is not less than eighty percent
(80%) of such forecast, the Adjusted Grant Amount shall mean the Grant Amount
set forth above, reduced by the same percentage by which actual EBITDA is lower
than Forecasted EBITDA for such fiscal year; or


 


(ii)                                  in
the event that the Company’s actual EBITDA for such fiscal year is less than
eighty percent (80%) of Forecasted EBITDA, the Adjusted Grant Amount shall be
zero.


 


“Change of Control” shall have the meaning ascribed to such term in the
Plan.


 


“Code” shall
mean the Internal Revenue Code of 1986, as amended from time to time.


 


“EBITDA” shall mean, for any fiscal year, the
Company’s earnings for such fiscal year before provision for interest, taxes,
depreciation and amortization, as determined in accordance with United States
generally accepted accounting principals (“GAAP”).


 


“Fair
Market Value” shall have the meaning ascribed to such term in the Plan.


 

















 


“Forecasted EBITDA” shall mean, for any
fiscal year, the Company’s forecast of EBITDA for such fiscal year, as approved
by the Board of Directors of the Company and as provided to the Employee as of
the date of the grant hereunder.


 


“Parent” shall
have the meaning set forth in section 425(e) of the Code.


 


“Subsidiary” shall have the meaning set forth
in section 425(f) of the Code.


 


“Termination Due to Business Divestiture”
shall mean the termination of employment of the Employee due to a transaction
or series of related transactions (other than a transaction or series of
transactions that are part of a Change of Control) that result in a divestiture,
sale, transfer, assignment or other disposition of any division, subsidiary,
business unit, product line or group, or any other asset of the Company or any
of its affiliates.


 


“Unit Value” shall mean, as of any date of
determination, the Adjusted Grant Amount multiplied by the Fair Market Value.


 


2.                                       The
Employee may not sell, assign, transfer, pledge, hypothecate, mortgage or
otherwise dispose of, by gift or otherwise, or in any way encumber all or any
of the Performance Units granted hereby until such time as such Performance
Unit becomes vested pursuant to the provisions of this Agreement.


 


3.                                       Subject
to the terms and conditions set forth herein, the Performance Units covered by
this grant shall vest and become deliverable only in accordance with the following
schedule:


 


	
  Vesting Period

  	
   

  	
  Percentage of Adjusted Grant

  Amount to be Issued to Employee

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Within first year from date of grant:

  	
   

  	
  0

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Beginning one year from date of grant:

  	
   

  	
  20

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Beginning two years form date of grant:

  	
   

  	
  40

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Beginning three years from date of grant:

  	
   

  	
  60

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Beginning four years from date of grant:

  	
   

  	
  80

  	
  %

  
	
   

  	
   

  	
   

  	
   

  
	
  Beginning five years from date of grant:

  	
   

  	
  100

  	
  %

  



 


4.                                       The
Employee shall not be entitled to any rights as a stockholder of the Company in
respect of any Performance Units covered by this grant until such Performance
Units become vested pursuant to the provisions of this Agreement.


 


5.                                       At
the end of each vesting period or the earlier vesting date provided in Section 7
below, the Employee shall be entitled to receive the shares of Stock vested as
of such period or date or the Unit Value of such shares of Stock or any
combination thereof, at the Employee’s option. 
The Employee shall notify the Company in writing of its desire to receive
either the shares, the Unit Value thereof or any combination thereof.  As soon as practicable after receipt of such
notice, the Company shall deliver either (i) the certificate for the
shares of Stock vested as of such period or date to the Employee, which
certificate shall be registered in the Employee’s name, (ii) pay the
Employee the Unit Value of such 


 


2

















 


vested shares of Stock, or (iii) any combination thereof as
designated by the Employee.  Any shares
or cash to be delivered will be delivered as soon as practicable after vesting,
but no later than the date that is 2-1/2 months after the end of the Employee’s
tax year in which the vesting date occurs.


 


6.                                       In
the event that the Employee’s employment as an employee of the Company or of
any Parent or Subsidiary  (hereinafter
the “Employee’s employment”) is terminated prior to the time that the shares of
Stock granted hereby have fully vested (other than as set forth in Section 7
below), the unvested portion of the grant will terminate automatically and will
be forfeited to the Company immediately and without further notice.


 


7.                                       A.                                   All
Performance Units granted hereunder shall become immediately vested in the
event of:


 


(i)                                     the
death of the Employee;


(ii)                                  the
permanent disability (within the
meaning of section 22(e)(3) of the Code) of the Employee; or


(iii)                               a
Termination Due to Business Divestiture.


 


B.                                     In the event of a
Change of Control or immediately prior to a Change of Control, the Company may,
in its complete discretion as provided in the Plan, cause all Performance Units
granted hereunder not then vested to become immediately vested, provided that
should the Company elect to exercise that discretion, it must do so during the
calendar year in which the Change of Control occurs.


 


In the event that any of the foregoing occurs
before the end of the current fiscal year in which the grant was made, for the
purposes of determining the Adjusted Grant Amount for such Employee,
year-to-date EBITDA as of the end of the fiscal quarter immediately preceding
to date of the event shall be annualized and compared to Forecasted EBITDA for
such fiscal year.


 


8.                                       The grant of Performance
Units hereunder shall terminate and shall have no further force or effect in
the event that the Company’s actual EBITDA for the current fiscal year is less
than eighty percent (80%) of Forecasted EBITDA for such fiscal year.


 


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


 


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


 


11.                                 The
Company currently has an effective registration statement on file with the Securities
and Exchange Commission with respect to the shares of Common Stock. The Company
intends to maintain this registration but has no obligation to do so. If the
registration ceases to be effective, you will not be able to transfer or sell Common
Stock issued to you pursuant to this grant unless an exemption from
registration under applicable securities laws is available.  You agree that any resale by you of the
shares of Common Stock issued pursuant to this grant shall comply in all
respects with the requirements of all applicable securities laws, rules and
regulations (including, without limitation, the provisions of the Securities
Act, the Exchange Act and the respective rules and regulations promulgated
thereunder) and any other law, rule or regulation applicable thereto, as
such laws, rules, and regulations may be amended 


 


3

















 


from time to time. The Company shall not be obligated to either issue
the Common Stock or permit the resale of any Common Stock if such issuance or
resale would violate any such requirements.


 


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


 


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


 


AEP Industries Inc.


Attention: 
Secretary


125 Phillips Avenue


South Hackensack, NJ  07606


 


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


 


14.                                 All
notices hereunder to the Employee shall be to the Employee’s address as appearing on the records of the Company.


 


 


	
   

  	
  AEP INDUSTRIES INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Secretary

  



 


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