Exhibit 10.3


 





July 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 June 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/ Todd Ofenloch
	 	 	Name: 	Todd Ofenloch
	 	 	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)