WAIVER January 20, 2016

Exhibit 25

WAIVER

January 20, 2016

Advanced Environmental Recycling Technologies, Inc.

914 X. Xxxxxxxxx

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 (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, Xxxxxxxx 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 15, 2016, 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 Xxxxxxxx and the Lenders.

This Waiver shall constitute a Credit Document for all purposes.

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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/ Xxxxx X. Xxxxx
		Name:		Xxxxx X. Xxxxx
		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. Xxxxx Xxxxx
		Name: J. R. Xxxxx Xxxxx
		Title:   Chief Financial Officer

WAIVER (H.I.G. LOAN AGREEMENT)