Document:

Blueprint

 

Exhibit 10.25

 

WAIVER

 

December
31, 2016

 

 

Advanced
Environmental Recycling Technologies, Inc.

914 N.
Jefferson

Springdale,
Arkansas 72764

Attention:
Chief Executive Officer

 

 

Ladies
and Gentlemen:

Reference hereby is
made to 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,
and as further amended by that certain Third Amendment to Credit
Agreement, dated as of November 15, 2012, and as further amended by
that certain Fourth Amendment to Credit Agreement, dated as of
October 15, 2015, (as further amended, restated, supplemented, or
otherwise modified from time to time, the “Credit Agreement”), by
and among Advanced Environmental Recycling Technologies, Inc., a
Delaware corporation (“Borrower”), the lenders
from time to time parties hereto (the “Lenders”), H.I.G. AERT,
LLC, as the administrative agent for the Lenders (in such capacity,
together with its successors and assigns in such capacity,
“Agent”; and together with the Lenders, collectively, the
“Lender
Group”).
Capitalized terms used herein and not otherwise defined or limited
herein shall have the meanings ascribed to such terms in the Credit
Agreement.

 

As you
are aware, Borrower has failed to perform obligations owed to the
Lender Group under the terms and conditions of the Credit Agreement
as a result of Borrower’s
failure to comply with Sections 2.12(a),
2.12(b) and 7.01(b) which
requires Borrower to begin paying cash interest on the Series A
Term Loan beginning March 17, 2013, and cash interest on the Series
B Term Loan respectively (collectively, the
“Specified Events of
Default”).

As a
result of the Specified Events of Default, Events of Default have
occurred and are currently continuing under the Credit Agreement.
You have requested that the Lender Group waive the Specified Events
of Default until March 31, 2017, at which time all interest on the
Series A Term Loan will bear cash interest at 7.25% per annum
(collectively, the “Series A Interest Rate”) and the
Series B Term Loan will bear cash interest at 4.0% per annum
(collectively, the “Series B Interest Rate”). This
letter (this “Waiver”) is to advise you
that the Lender Group hereby waives the Specified Events of Default
and their rights and remedies under the Credit Agreement arising as
a result of the Specified Events of Default.

Notwithstanding the
foregoing, such waiver shall not waive any other requirement or
hinder, restrict or otherwise modify the rights and remedies of the
Lender Group following the occurrence of any other Event of Default
under the Credit Agreement. Except as otherwise expressed herein,
the text of the Credit Agreement and the other Credit Documents
shall remain in full force and effect, and the Lender Group hereby
reserves its rights to require strict compliance in the future with
all terms and conditions of the Credit Agreement and the other
Credit Documents. Borrower hereby reaffirms its obligations under
each Credit Document to which it is a party. Borrower hereby
further ratifies and reaffirms the validity and enforceability of
all of the Liens heretofore granted, pursuant to and in connection
with the Security Agreement or any other Credit Document, to Agent,
on behalf and for the benefit of each member of the Lender Group,
as collateral security for the Obligations under the Credit
Documents in accordance with their respective terms, and
acknowledges that all of the Liens, and all Collateral heretofore
pledged as security for the Obligations, continues to be and remain
Collateral for the Obligations from and after the date hereof.
Borrower hereby restates, ratifies and reaffirms each and every
term and condition set forth in the Credit Agreement and the Credit
Documents effective as of the date hereof.

 

 

 

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, and this Waiver shall be deemed to be made
under, and for all purposes shall be construed in accordance with,
the laws of the State of New York. This Waiver shall be effective
as of the date set forth above when and only when, Agent shall have
received a counterpart of this Waiver duly executed by Borrower and
the Lenders.

This
Waiver shall constitute a Credit Document for all
purposes.

[remainder of page
intentionally left blank]

 

 

 

 

 

 

 

 

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
Administrative Agent and Lender

	

	

 

	

 

	

 

	

 

	
 

	
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

 

 

 

 

Waiver
(H.I.G. LOAN Agreement)Blueprint

 

Exhibit 10.26

 

December
31, 2016

 

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 pay cash interest on
both the “Series A Term Loan” and the “Series B
Term Loan” as defined in Section 2.12, (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, and as further amended by
that certain Third Amendment to Credit Agreement dated as of
November 15, 2012, and as further amended by that certain Fourth
Amendment to Credit Agreement, dated as of October 15, 2015, (as
further amended, restated, supplemented or otherwise modified from
time to time, the “Credit Agreement”)
for the current fiscal year,
respectively (collectively, the “Specified Events of
Default”) ending December
31, 2016. 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)Blueprint

Exhibit
10.27

 

ADVANCED ENVIRONMENTAL RECYCLING TECHNOLOGIES, INC.

_____________________

 

Key Employee Incentive Plan

for Transaction Bonuses

 

As Amended and Restated on March 16, 2017

_____________________

 

1. Effective
Date and Term. This Key Employee Incentive Plan for
Transaction Bonuses (the “Plan”) of Advanced
Environmental Recycling Technologies, Inc. and its subsidiaries
(together, the “Company”) is effective on
the date (the “Effective Date”) of the
Plan’s approval by the Board of Directors of the Company (the
“Board"), and
shall consist of the opportunity for each Participant (as
determined pursuant to Section 2 below) to receive two payments
(collectively, a “Bonus”) pursuant to the
terms and conditions set forth herein to the extent vested. The
Plan shall remain in effect until the payment of all Bonuses that
become payable hereunder; subject to any earlier termination
pursuant to Section 6(k) below.

 

2. Participants
Covered. Each person listed on Exhibit A (subtitled
“Initial Participants and
Bonus Amounts”) shall become a participant in the Plan
as of the Effective Date, provided that such person executes a
“Notice of
Acceptance” substantially in the form attached as
Exhibit
B within 14 days after receiving such form from the Company
(thereby becoming a “Participant”). With
respect to the Bonus otherwise payable to a Participant whose
cessation of employment or other actions result in a forfeiture of
Plan participation, the “Committee” (as defined in
Section 6(a) below) may elect to add participants to the Plan after
the Effective Date, and any such additional participant shall be
considered to be a Participant as of the date specified by the
Committee in a written notice setting forth for the individual the
terms and conditions (including the bonus applicable from
Exhibit
A) associated with his or her participation in the Plan,
provided that such person
executes a “Notice of
Acceptance” substantially in the form attached as
Exhibit
B within 14 days after receiving such form from the Company.
Unless otherwise granted to a different or new Participant, the
Bonus allocated to a Participant whose employment is terminated or
who otherwise forfeits his or her Plan participation (except as set
forth in Section 3 below) shall be extinguished in its entirety and
be property of the Company and its stakeholders. In connection with
the consummation of a Transaction, to the extent of any Unallocated
Bonus Percentage as set forth on Exhibit A or
unvested Bonus Percentage held by any Participant, the Company
shall allocate such Percentage among the remaining employee
Participants employed at the time of such Transaction as determined
in the Company’s sole discretion.

 

3. Bonus
Payments. To motivate and reward Participants for
contributing to a successful “Transaction” (as defined
in Section 3(a) below) and as an incentive for Participants to
abide by certain restrictive covenants (including post-termination
non-compete, non-solicitation, and non-use or disclosure of a
purchaser’s confidential information) in employment
agreements between each Participant and the Company or the
purchaser or an affiliate, which will go into effect as of or
immediately following the Transaction (the “Restricted
Covenants”), the Plan offers them the opportunity to earn
Bonuses, in amounts that are determined pursuant to Section 3(b)
below, and that are paid in accordance with Section 3(c) below to
those Participants who meet the requirements set forth herein.
Aside from Bonuses paid hereunder, no other benefits shall be
payable pursuant to this Plan. A Participant shall forfeit all
rights under the Plan and shall not receive any Bonus if, prior to
a Transaction, the Participant’s employment with the Company
ceases for any reason (other than Participant’s death,
permanent disability or permanent retirement from full time
employment, in which case the Participant shall keep its rights
under the Plan to the extent vested).

 

 

 

 

(a) “Transaction”
means the sale or other disposition, in one or a series of
transactions, of (i) all or substantially all of the assets of the
Company, or (ii) at least 60% of the voting equity interests in the
Company. If the Company engages in a series of sale or disposition
transactions, then the occurrence of a Transaction shall be
determined on the basis of all transactions in the series
collectively, and shall be deemed to occur upon the closing of the
last transaction after which substantially all of the assets of the
Company and/or such voting equity interests have been sold or
otherwise disposed of. Notwithstanding the foregoing, a
“Transaction” shall not be deemed to have occurred by
virtue of the consummation of any transaction or series of
integrated transactions immediately following which the record
holders of the voting equity interests of the Company immediately
prior to such transaction or series of transactions continue to own
the majority of the equity interests in an entity which owns all or
substantially all of the assets of the Company immediately
following such transaction or series of transactions.

 

(b) Bonus
Calculation. In the event of a Transaction but subject to
the terms and conditions set forth in this Section 3, each
Participant shall be entitled to receive a Bonus (payable in two
installments as described in Section 3(c) below) in an amount equal
to the Participant’s applicable Bonus percentage to the
extent vested that is set forth in Exhibit A for the
Participant multiplied
by the applicable Bonus Pool Amount:

 

	

Enterprise Value
of Transaction

	

Bonus Pool
Amount

	

Below
$65,000,000

	

$0

	

Equal
to or greater than $65,000,000

	

$2,000,000

	

For
each dollar above $65,000,000

	

10% of
such increment (in addition to the $2,000,000 above)

 

For
purposes of this Agreement, “Enterprise Value” means
the value of any cash and securities that the Company or its
stakeholders (including its lenders) actually receive at the time
of consummation of such Transaction (i.e., such value is determined net of
any and all fees (including management fees) and expenses);
provided that any
additional cash or securities sale proceeds actually received
within five (5) years after the closing (e.g. earnouts, equity and
escrows that has been converted into cash or securities proceeds)
shall be included in the calculation of Enterprise Value and any
increase to the Bonus will paid to Executive within five (5)
business days after receipt thereof by the stakeholders;
provided
further , any
equity of the buyer granted to the Company or its stakeholders may
be valued by the Committee in its sole discretion as of the
consummation of a Transaction and included at such time in the
calculation of Enterprise Value. With respect to any mergers,
acquisitions, divestitures and/or similar business combinations
directly relating to the Company, the Enterprise Value targets
shall be equitably adjusted by the Company. The Enterprise Value
target above (i.e. $65,000,000) shall be adjusted upward for each
additional dollar of equity or principal amount of debt invested in
the Company by its affiliates on or after the Effective Date of the
Plan.

 

For example, if the Enterprise Value: is (i) $64,000,000, no Bonus
shall be paid, (ii) $65,000,000, the aggregate Bonus Pool Amount
shall be $2,000,000 and (iii) $100,000,000, the aggregate Bonus
Pool Amount shall be $5,500,000.

 

 

 

 

(c) Payment
of Bonuses. On or within ten (10) business days after the
consummation of a Transaction, the Company shall make a payment to
each Participant who is employed in good standing on such date. The
payment shall consist of the same proportional amount of cash and
securities received by the Company’s stakeholders in the
Transaction; provided that if the
Participant is unable to receive such securities pursuant to
applicable law, the Company shall value such securities and instead
make a payment of cash in lieu thereof. The amount of such payment
will equal one-half (50%) of the Bonus determined for the
Participant under Section 3(b) above. The Company (or the successor
in a Transaction) shall pay the remaining (50%) of the
Participant’s Bonus within the ten-day period beginning sixty
(60) days after the consummation of the Transaction, provided that either the Participant is
employed in good standing on such sixtieth (60th) day after the
Transaction or such Participant’s employment was terminated
after the consummation of the Transaction by the Company (or the
successor in a Transaction) without Cause beforehand.
Notwithstanding the foregoing, a Participant shall not qualify to
receive a Bonus payment unless, on or before the first date for its
payment pursuant to the foregoing terms and conditions, such
Participant shall have executed and not revoked (and the time
period for revocation shall have lapsed) a general release of
claims in the form provided by the Company. If a Participant fails
to qualify for receipt of a Bonus payment, such Participant shall
forfeit all rights under the Plan, and no Bonus shall be payable to
such Participant.

 

(d) “Cause”
means (i) the Participant’s act or acts of personal
dishonesty, incompetence, willful misconduct, gross negligence or
breach of fiduciary duty, (ii) the Participant’s commission
(plea of Nolo Contendere)
of a crime constituting a felony (or a crime or offense of
equivalent magnitude in any jurisdiction), crime involving moral
turpitude or his or her willful violation of any other law, rule,
or regulation (other than a traffic violation or other misdemeanor
offense or violation outside of the course of employment that in no
way adversely affects the Company or its reputation or the ability
of the Participant to perform his or her employment related duties
or to represent the Company), (iii) the material breach by the
Participant of any applicable written policy of the Company, (iv)
refusal by Participant to perform the lawful duties assigned to him
or her by the Company, or (v) the commission of any other act or
omission involving theft, dishonesty, disloyalty or fraud with
respect to the Company or any of its customers or suppliers;
provided that, with respect
to any Participant who is party to an employment agreement with the
Company or a subsidiary or affiliated company, “Cause”
shall have the meaning specified in such Participant’s
employment agreement. The determination as to whether
“Cause” has occurred shall be made by the Committee,
which shall have the authority to waive the consequences under the
Plan of the existence or occurrence of any of the events, acts, or
omissions constituting “Cause.” The foregoing
definition does not in any way limit the Company’s ability to
terminate a Participant’s employment at any time, and the
term “Company” will be interpreted herein to include
any subsidiary, affiliate, or successor thereto, if appropriate.
Furthermore, a Participant’s
employment shall be deemed to have terminated for Cause within the
meaning hereof if, at any time (whether before, on, or after
termination of the Participant’s employment), facts or
circumstances are discovered that would have justified a
termination for Cause.

 

4. Forfeiture
of Bonus. Participant agrees to repay the Company all or a prorated
amount of the Bonus within 30 days of any decision by a court or
arbitrator that Participant has violated the Restricted Covenants,
with the repayment amount equal to: (i) the entire Bonus if such
violation occurs prior to the sixtieth (60th) day following the
Transaction, (ii) if the violation of the Restricted Covenants
occurs on or after the sixtieth (60th) day following the
Transaction and before the termination of the Participant’s
employment with the Company, two-thirds (2/3) of the Bonus; or
(iii) if the violation of the Restricted Covenants occurs after the
sixtieth (60) day following the Transaction and after the
Participant’s termination of employment with the Company,
two-thirds (2/3) of the Bonus multiplied by a fraction, the
numerator of which is the number of full or partial months
remaining in the Participant’s covenant not to compete at the
time of the Participant’s violation of the Restricted
Covenants and the denominator of which is the total number of
months post-termination of employment in the Participant’s
covenant not to compete. Any repayment of the consideration for the
Bonus is in addition to any other remedy to which the entity
seeking to enforce the Restricted Covenants may be
entitled.

 

 

 

 

5. Section
409A. Each payment due under this Plan shall be considered
to be a separate payment for purposes of Section 409A of the
Internal Revenue Code of 1986 (as amended from time to time, the
“Code”), and all such
payments are intended to be short-term deferrals that are exempt
from Section 409A. The Committee shall interpret and administer the
Plan accordingly, and shall have complete discretion to make any
determination and to take any determination that avoids any
violation of Section 409A.

 

6. Miscellaneous.

 

(a) Administration. The Company,
acting by its Board or a Compensation Committee appointed by such
Board (in either case, the “Committee”), shall
administer the Plan, shall in such capacity be responsible for the
general administration and management of the Plan, and shall have
all powers and duties necessary to fulfill its responsibilities,
including the discretion to determine all questions relating to the
eligibility of employees to collect Bonuses, and the calculation
and payment of all such Bonuses. The Committee shall accordingly
have the discretion to interpret or construe ambiguous, unclear, or
implied (but omitted) terms in any fashion the Committee deems to
be appropriate in its sole and absolute discretion, to revise any
form associated with this Plan in any manner that the Committee
determines to be appropriate, and to make any findings of fact
needed in the administration of the Plan. The validity of any such
interpretation, construction, decision, or finding of fact shall
not be given de novo review if challenged in court, by arbitration,
or in any other forum, and shall instead be upheld unless clearly
arbitrary or capricious. The Committee’s prior exercise of
discretionary authority shall not obligate it to exercise its
authority in a like fashion thereafter. Unless arbitrary and
capricious, all actions taken and all determinations made by the
Committee shall be final and binding on all persons claiming any
interest in or under the Plan.

 

(b) Manner of Payment, and Tax
Withholding. Any amounts payable under this Plan shall be
paid to Participants in the same manner as they receive regular
payroll (or by mail to the last known address of any Participant
whose employment has terminated). The Company will deduct from any
Bonus payment all required withholdings for state, federal, and
local employment, income, payroll, or other taxes. The Company
shall pay all Bonuses out of its general assets. Nothing contained
in this Plan shall constitute, or be treated as creating, a trust
or create any fiduciary relationship. The Company shall be under no
obligation to segregate any assets for the purpose of providing
Bonuses under the Plan and no person or entity which is entitled to
payment under the terms of the Plan shall have any claim, right,
security interest, or other interest in any fund, trust, account,
insurance contract, or asset of the Company. To the extent that a
Participant or any other person acquires a right to receive any
Bonus under the Plan, such right shall be limited to that of a
recipient of an unfunded, unsecured promise to pay amounts in the
future and the Participant's (or other person's) position with
respect to such amounts shall be that of a general unsecured
creditor of the Company.

 

 

 

 

(c) No Right to Continued
Employment. Nothing contained in this Plan shall be
construed as a guarantee or right of any Participant to be
continued as an employee of the Company or its successors, or as a
limitation of their right to terminate the employment of any
Participant for any or no reason.

 

(d) Governing Law. This Plan shall
be governed by and construed and enforced in accordance with the
laws of the State of Delaware, without reference to conflict of law
principles which would require application of the law of another
jurisdiction (except to the minimum extent that the law of the
State of Delaware specifically and mandatorily requires
otherwise).

 

(e) Dispute Resolution. Each of the
parties agrees that any dispute between the parties regarding this
Agreement shall be resolved only in the courts of the State of
Delaware or the U.S. District Court of Delaware, and the appellate
courts having jurisdiction of appeals in such courts. Without
limiting the generality of the foregoing, each of the Company and
the Participants hereto irrevocably and unconditionally (a) submits
for himself or itself in any proceeding relating to this Plan, or
for the recognition and enforcement of any judgment in respect
thereof (a “Proceeding”), to the
exclusive jurisdiction of the courts of the State of Delaware, the
U.S. District Court of Delaware, and appellate courts having
jurisdiction of appeals from any of the foregoing, and agrees that
all claims in respect of any such Proceeding shall be heard and
determined in such courts; and (b) consents that any such
Proceeding may and shall be brought in such courts and waives any
objection that he or it may now or thereafter have to the venue or
jurisdiction of any such Proceeding in any such court or that such
Proceeding was brought in an inconvenient court and agrees not to
plead or claim the same.

 

(f) Notices. All notices, requests,
demands and other communications required or permitted to be given
under this Plan shall be in writing and shall be deemed given (i)
when personally delivered to the recipient (provided a written acknowledgement of
receipt is obtained), (ii) one (1) business day after being sent by
a nationally recognized overnight courier (provided that a written acknowledgement
of receipt is obtained by the overnight courier) or (iii) four (4)
business days after mailing by certified or registered mail,
postage prepaid, return receipt requested, to the party concerned
at the address indicated below (or such other address as the
recipient shall specify by ten days’ advance written notice
given in accordance with this paragraph (e):

 

To the
Company:

 

Advanced
Environmental Recycling Technologies, Inc.

 
             914 N. Jefferson Street

Springdale,
Arkansas 72764

Attention: Chief
Executive Officer

 

With
a copy to:

 

Paul
Hastings LLP

71 S.
Wacker Drive, 45th Floor

                                           
Chicago, IL
60606

Attention: Amit
Mehta

 

 

 

 

and

 

HIG
Capital, LLC

500
Boylston, Suite 1350

Boston,
MA 02116

Attention: Michael
Phillips and Todd Ofenloch

 

To the
Participant: The last address shown in the Company’s
records.

 

(g) Successors and Assigns. The
Company shall be entitled to assign this Plan to a purchaser of all
or substantially of the Company’s assets; provided, however, such assignment shall not
relieve the Company of its obligations under the Plan. Except as
provided Section 6(i) below, no rights or benefits under this Plan
may be assigned by any Participant without the Company’s (or
its assignee’s) prior written consent.

 

(h) Anti-alienation Clause. No
payment under the Plan may be anticipated, assigned (either at law
or in equity), alienated, or subject to attachment, garnishment,
levy, execution or other legal or equitable process whether
pursuant to a “qualified domestic relations order” as
defined in Section 414(p) of the Code or otherwise.

 

(i) Beneficiary Designation. A
Participant may from time to time designate, in the manner
specified by the Company, a beneficiary to receive in the event of
the Participant’s death any payment due under the Plan. In
the event that there is no properly designated beneficiary living
at the time of a Participant’s death, his benefit hereunder
shall be paid to his or her estate.

 

(j) Effect on Other Plans and Bonus
Rights. The Bonuses provided under the Plan supersede any
bonus or other incentive compensation that is otherwise payable by
the Company in connection with any Transaction, including any stock
option agreements to the extent not vested provided by the Company
to any Participant. By accepting the terms of this Plan and
becoming a Participant, any stock option agreement (to the extent
not vested) executed by a Participant is automatically terminated
in full.

 

(k) Amendment and Termination. The
Board or the Committee may amend this Plan any time and from time
to time, and may terminate this Plan at any time; provided that any amendment, or
termination other than pursuant to the following clause, that
adversely and materially affects a Participant will be subject to
the Participant’s written consent thereto.

 

(l) Adjustments. In the event of a
reorganization, recapitalization, acquisition, divestiture or other
material change to the capital structure of the Company, the Board
or the Committee, in order to prevent the dilution or enlargement
of rights under this Plan, shall consider in good faith any
adjustments to the Plan as may be determined to be appropriate and
equitable.

 

 

 

IN
WITNESS WHEREOF, the Company’s Board has caused this Plan to
be adopted as of the Effective Date.

 

 

Exhibit
10.27

 

Exhibit A

 

ADVANCED ENVIRONMENTAL RECYCLING TECHNOLOGIES, INC.

 

KEY EMPLOYEE INCENTIVE PLAN

 

FOR TRANSACTION BONUSES

 

______________________________

 

“Initial Participants and Bonus
Percentages”

 

As of March 16, 2017

 

______________________________

 

 

 

	

Name

 

	

Title

 

	

Bonus Percentage*

 

	

Tim
Morrison

 

	

CEO

 

	

28.0%

 

	

Randall
Gottlieb

 

	

President

 

	

17.0%

 

	

Brian
Hanna

 

	

CFO

 

	

17.0%

 

	

Brent
Gwatney

 

	

SVP of
Sales

 

	

15.0%

 

	

Stormy
Luttrell

 

	

Director
of Purchasing and Logistics

 

	

3.0%

 

	

Mary
Jones

 

	

Controller

 

	

6.0%

 

	

Rich
Shields

 

	

VP
Operations

 

	

8.0%

 

	

Gary
Hobbs

 

	

Sr.
Engineer R&D

 

	

6.0%

 

	

Unallocated

 

	
 

	

0.0%

 

	
 

	
 

	

100.0%

 

 

 

 

*This column lists the aggregate bonus percentage that is payable
in two installments in accordance with the Plan subject to vesting
as set forth in the Notice of Acceptance.

 

NOTE: Actual payments will be calculated based on the terms and
conditions of the Plan.

 

 

 

Exhibit
10.27

 

Exhibit B

 

ADVANCED ENVIRONMENTAL RECYCLING TECHNOLOGIES, INC.

 

“Notice of Acceptance”

 

_________,
2017

 

[Participant’s
Name]

[Address]

 

Subject:
AERT Key Employee Incentive Plan

   for
Transaction Bonuses

 

Dear
_______:

 

We are
pleased to provide you with this “Notice of Acceptance”
pursuant to the terms and conditions of our Key Employee Incentive
Plan for Transaction Bonuses (the “Plan”). This letter constitutes
our offer to have you participate in the Plan according to its
terms and conditions. A copy of the Plan is enclosed for your
reference.

 

If you
want to accept this offer for Plan participation, you must execute
the acceptance below and return this form to the Company, within
the next 14 days, using the enclosed stamped envelope. If you fail
to reply within this time frame, you will not be entitled to
participate in the Plan.

 

Pursuant
to, and subject to the terms and conditions of, the Plan, the
amount of the bonus that you may become entitled to receive will
equal __% of the Bonus Pool Amount multiplied by your vested
percentage as set forth in the immediately following paragraph
(which the aggregate amount would be payable in two installments in
accordance with the Plan).

 

Your
vested percentage will equal 100% if and only if you have been
continuously employed through the last full month prior to a
consummation of a Transaction.

 

The
Bonuses provided under the Plan supersede any bonus or other
incentive compensation that is otherwise payable by the Company in
connection with any Transaction, including any stock option
agreements provided by the Company to any Participant. By accepting
the terms of this Plan and becoming a Participant, any stock option
agreement (to the extent not vested) executed by a Participant is
automatically terminated in full.

 

Should
you have any questions, please contact _____________.

 

Best
regards,

 

 

* * *

 

ACCEPTED this __ day of __________, 2017, by the undersigned, who
hereby acknowledges having had a fair, adequate, and satisfactory
opportunity to consider the Plan’s terms and conditions, and
to consult with personal legal counsel before signing
below.

 

Your
Signature: _______________________________

 

Your
Printed Name: ___________________________________

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