Exhibit 10.3


 





October 9, 2015


 


Advanced Environmental Recycling Technologies, Inc.


914 N. Jefferson


Springdale, Arkansas 72764


Attention: Chief Executive Officer 


 


Ladies and Gentlemen:


 


The undersigned, being the holder of all of the issued and outstanding
shares of Series E Convertible Preferred Stock of Advanced Environmental Recycling Technologies, Inc., a Delaware corporation (the
“Company”), hereby acknowledges that the Company has failed to have (i) a Leverage Ratio (as defined in that
certain Credit Agreement, dated as of March 18, 2011, as amended by that certain First Amendment to Credit Agreement, dated as
of May 23, 2011, and as further amended by that certain Second Amendment to Credit Agreement, dated as of October 20, 2011 (as
further amended, restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), by
and among the Company, the lenders from time to time parties thereto and H.I.G. AERT, LLC) of below 3.10 to 1.00, (ii) a Fixed
Charge Coverage Ratio greater than 1.50, (iii) a Minimum EBITDA of $10 million, and (iv) Capital Expenditures of less than $2.5
million for the current fiscal year, respectively (collectively, the “Specified Events of Default”) for four
Fiscal Quarters (as defined in the Credit Agreement) ending September 30, 2015. The Specified Events of Default represent Events
of Default under the Notes (as defined in the Company’s Certificate of Designations, Preferences and Rights of the Series
E Convertible Preferred Stock of Advanced Environmental Recycling Technologies, Inc. dated March 17, 2011 (the “Certificate
of Designation”)) resulting in the occurrence of a Triggering Event (as defined in the Certificate of Designation) under
Section 5(a)(ii) of the Certificate of Designation.


 


You have requested that the holders of the Company’s Series
E Convertible Preferred Stock waive their right to deliver a Triggering Event Redemption Notice (as defined in the Certificate
of Designation) as a result of the Specified Event of Default. This letter (this “Waiver”) is to advise you
that the holders of the Company’s Series E Convertible Preferred Stock hereby waive the right to deliver a Triggering Event
Redemption Notice solely as a result of the Specified Event of Default.


 


This Waiver shall not (i) constitute a waiver
of the right of the holders of Series E Convertible Preferred Stock to deliver one or more Triggering Event Redemption Notice upon
the occurrence of any Triggering Event other than the Triggering Event resulting from the Specified Event of Default and (ii) otherwise
hinder, restrict or modify the rights and remedies of the holders of Series E Convertible Preferred Stock under the Certificate
of Designation. The holders of Series E Convertible Preferred Stock hereby reserve the right to require strict compliance in the
future with all terms and conditions of, and to exercise any other rights or remedies provided for in, the Certificate of Designation.


 


This Waiver may be executed in multiple counterparts,
each of which (including any counterpart delivered by facsimile or other electronic method of transmission) shall be deemed to
be an original and all of which, taken together, shall constitute one and the same agreement.


 



     

    




    




IN WITNESS WHEREOF, the parties hereto
have caused this Waiver to be executed and delivered as of the date first above written.


 


 





	 	H.I.G. AERT, LLC, as the
holder of all of the 
	 	 issued and outstanding shares of Series E 
	 	Convertible Preferred
    Stock
	 	 	 	 	 
	 	 	 	 	 
	 	By:	/s/ Bobby Sheth	 
	 	 	Name:  	Bobby Sheth
	 	 	Title:	Authorized Signatory


 





 


 


Acknowledged and agreed to


as of the date first written above:


 


 


ADVANCED ENVIRONMENTAL 


RECYCLING TECHNOLOGIES, INC.,


a Delaware corporation


 


 





	By:	/s/ J. R. Brian Hanna	 
	Name:	J. R. Brian Hanna	 
	Title:	Chief Financial Officer & Principal Accounting Officer


 





 


 




 


 


 


 


 


Waiver (Series E Preferred)