Document:

exh_103.htm

Exhibit 10.3

 

April 13, 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 and (ii) a Minimum EBITDA of $10 million, respectively (collectively, the “Specified Events of Default”) for four Fiscal Quarters (as defined in the Credit Agreement) ending March 31, 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 J. Sheth	 
	 	 	Name: Bobby J. 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 Officerexh_105.htm

Exhibit 10.5

 

 

March 26, 2015

VIA OVERNIGHT COURIER

 

Advanced Environmental Recycling Technologies, Inc. 

914 N. Jefferson Springdale, AR  72763 

Attention: Chief Executive Officer

 

Re: First Amendment to Loan and Security Agreement (this "Amendment")

 

Ladies and Gentlemen:

 

ADVANCED ENVIRONMENTAL RECYCLING TECHNOLOGIES, INC., a Delaware corporation ("Borrower"), and ALOSTAR BANK OF COMMERCE, a state banking institution incorporated or otherwise organized under the laws of the State of Alabama ("Lender"), are parties to that certain Loan and Security Agreement dated November 15, 2012, (as at any time amended, modified, restated, or supplemented, the "Loan Agreement"; all capitalized terms used herein but not otherwise defined shall have the meanings given such terms in the Loan Agreement), pursuant to which Lender has made certain advances and financial accommodations available to Borrower.  The parties desire to amend the Loan Agreement as hereinafter set forth.

 

NOW, THEREFORE, for and in consideration of Ten Dollars ($10.00) in hand paid and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows:

 

The Loan Agreement is hereby amended as follows:

(a) By deleting the reference to "and Lowe's Companies, Inc." from the parenthetical in clause (e)(iii) of the definition of "Eligible Account" in Section 1.1 of the Loan Agreement.

(b) By deleting the reference to "or (u) it arises from a retail sale of Inventory to a Person who is purchasing the same primarily for personal, family or household purposes." from the definition of "Eligible Account" in Section 1.1 of the Loan Agreement and by substituting in lieu thereof a reference to "(u) it arises from a retail sale of Inventory to a Person who is purchasing the same primarily for personal, family or household purposes; or (v) it arises out of a sale made by Borrower to Lowe's Companies, Inc."

(c) By deleting the definition of "Minimum Availability Reserve" in Section 1.1 of the Loan Agreement and by substituting in lieu thereof the following new definition:

"Minimum Availability Reserve" means a reserve in the amount of $1,000,000; provided, however, that during the period beginning March 20, 2015, through and including June 20, 2015, the Minimum Availability Reserve shall be deemed to be $0.

 

  

  

  

(d) By deleting the reference to "and (ix) proceeds received by Borrower under any business interruption insurance policy" from the definition of "EBITDA" in Item 16 of the Terms Schedule to the Loan Agreement and by substituting in lieu thereof a reference to ", (ix) proceeds received by Borrower under any business interruption insurance policy and (x) fees, costs and expenses incurred by Borrower pursuant to the First Amendment to Loan and Security Agreement dated March 26, 2015, by and between Borrower and Lender."

(e) By deleting the reference to "cash interest payments paid by Borrower in such period" from the definition of "Fixed Charge Coverage Ratio" in Item 16 of the Terms Schedule to the Loan Agreement and by substituting in lieu thereof a reference to "cash interest payments paid by Borrower in such period (which, for the avoidance of doubt, shall not include fees paid pursuant to the First Amendment to Loan and Security Agreement dated March 26, 2015, by and between Borrower and Lender)".

(f) By deleting the reference to "Springdale, AK  72763" in Item 18 of the Terms Schedule to the Loan Agreement and by substituting in lieu thereof a reference to "Springdale, AR  72763".

The effectiveness of this Amendment shall be conditioned upon Lender's receipt of (i) a duly executed and delivered counterpart of this Amendment from Borrower, and (ii) the amendment fee described below.

 

Borrower hereby: (i) acknowledges and stipulates that no Event of Default exists under the Loan Agreement or any other Loan Document, (ii) ratifies and reaffirms each of the Loan Documents and all of Borrower's covenants, duties and liabilities thereunder; (iii) acknowledges and stipulates that the Loan Agreement and the other Loan Documents are legal, valid and binding obligations of Borrower that are enforceable against Borrower in accordance with the terms thereof, subject only to bankruptcy and similar laws affecting creditors' rights generally; (iv) represents and warrants that the execution, delivery and performance of this Amendment have been duly authorized by all requisite company action on the part of Borrower and this Amendment has been duly executed and delivered by Borrower; and (v) all of the Obligations are owing and payable without defense, offset or counterclaim (and to the extent there exists any such defense, offset or counterclaim on the date hereof, the same is hereby waived by Borrower).

 

Upon the effectiveness of this Amendment, each reference in the Loan Agreement to "this Agreement," "hereunder," or words of like import shall mean and be a reference to the Loan Agreement, as amended by this Amendment. This Amendment shall be governed by and construed in accordance with the internal laws of the State of Georgia.

 

In consideration of Lender's willingness to enter into the amendment set forth herein, Borrower agrees to pay to Lender an amendment fee of $20,000 in immediately available funds on the date hereof. Additionally, Borrower agrees to pay, on demand, all reasonable, out-of-pocket costs and expenses incurred by Lender in connection with the preparation, negotiation and execution of this Amendment and any other Loan Documents executed pursuant hereto and any and all amendments, modifications, and supplements thereto.

 

  

  

  

Except as otherwise expressly provided in this Amendment, nothing herein shall be deemed to amend or modify any provision of the Loan Agreement or any other Loan Documents, all of which shall remain in full force and effect.  This Amendment is not intended to be, nor shall it be construed to create, a novation or accord and satisfaction, and the Loan Agreement as herein modified shall continue in full force and effect.

 

[Remainder of page intentionally left blank.]

 

  

  

  

This Amendment may be executed in any number of counterparts and by different parties to this Amendment on separate counterparts, each of which, when so executed, shall be deemed an original, but all such counterparts shall constitute one and the same agreement. Any signature delivered by a party by facsimile or other electronic transmission shall be deemed to be an original signature hereto. To the fullest extent permitted by applicable law, the parties hereto each hereby waives the right to trial by jury in any action, suit, counterclaim or proceeding arising out of or related to this Amendment.

 

	 	 	
Very truly yours,

 

ALOSTAR BANK OF COMMERCE

 

 

 

	 	
By:

	
/s/ Eddie Carpenter

	 
	 	
Name:

	
Eddie Carpenter

	 
	 	
Title:

	
Director

	 

 

 

 [Signatures continue on following page.]

 

First Amendment to Loan and Security Agreement (AERT)

  

  

  

Acknowledged and Agreed:

ADVANCED ENVIRONMENTAL RECYCLING TECHNOLOGIES, INC.

 

	
By:

	
/s/ J. R. Brian Hanna

	 
	
Name:

	
J. R. Brian Hanna

	 
	
Title:

	
Chief Financial Officer

	 

 

 

 [CORPORATE SEAL]

 

 

 

 

 

 

 

 

 

 

 

First Amendment to iDan and Security Agreement (AERT)

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