Annual Report — Form 10-K — Sect. 13 / 15(d) – SEA’34 Filing Table of Contents
Document/ExhibitDescriptionPagesSize
1: 10-K Annual Report HTML 475K
2: EX-2.3 Plan of Purchase, Sale, Reorganization, HTML 407K
Arrangement, Liquidation or Succession
3: EX-3.3 Articles of Incorporation / Bylaws HTML 25K
4: EX-4.2 Instruments Defining the Rights of Security HTML 26K
Holders, Including Indentures Instruments Defining
the Rights of Security Holders, Including
Indentures
5: EX-10.25 Waiver of Series A & B Interest Dated December 31, HTML 33K
2016
6: EX-10.26 Waiver of Triggering Event Redemption Notice Dated HTML 30K
December 31, 2016
7: EX-10.27 Material Contracts HTML 67K
8: EX-23.1 Consents of Experts and Counsel HTML 21K
13: EX-99.1 Press Release, Dated March 17, 2017 HTML 34K
9: EX-31.1 Certification Pursuant to Rule 13A-14(A)/15D-14(A) HTML 27K
Certifications Section 302 of the Sarbanes-Oxly
Act of 2002
10: EX-31.2 Certification Pursuant to Rule 13A-14(A)/15D-14(A) HTML 27K
Certifications Section 302 of the Sarbanes-Oxly
Act of 2002
11: EX-32.1 Certificate Pursuant to Section 18 U.S.C. Pursuant HTML 23K
to Section 906 of the Sarbanes-Oxley Act of 2002
12: EX-32.2 Certificate Pursuant to Section 18 U.S.C. Pursuant HTML 23K
to Section 906 of the Sarbanes-Oxley Act of 2002
20: R1 Document And Entity Information HTML 50K
21: R2 Balance Sheets HTML 124K
22: R3 Balance Sheets (Parenthetical) HTML 49K
23: R4 Statements of Operations HTML 63K
24: R5 Statements of Stockholders' Deficit HTML 31K
25: R6 Statements of Cash Flows HTML 77K
26: R7 Note 1 - Description of the Company HTML 24K
27: R8 Note 2 - Summary of Significant Accounting HTML 89K
Policies
28: R9 Note 3 - Related Party Transactions HTML 26K
29: R10 Note 4 - Line of Credit HTML 27K
30: R11 Note 5 - Long-Term Debt HTML 71K
31: R12 Note 6 - Equity HTML 38K
32: R13 Note 7 - Equity Incentive Plan HTML 23K
33: R14 Note 8 - Leases HTML 27K
34: R15 Note 9 - Income Taxes HTML 44K
35: R16 Note 10 - Commitments and Contingencies HTML 24K
36: R17 Note 11 - 401(k) Plan HTML 24K
37: R18 Note 12 - Subsequent Events HTML 26K
38: R19 Note 2 - Summary of Significant Accounting HTML 134K
Policies (Policies)
39: R20 Note 2 - Summary of Significant Accounting HTML 68K
Policies (Tables)
40: R21 Note 4 - Line of Credit (Tables) HTML 26K
41: R22 Note 5 - Long-Term Debt (Tables) HTML 54K
42: R23 Note 8 - Leases (Tables) HTML 24K
43: R24 Note 9 - Income Taxes (Tables) HTML 40K
44: R25 Note 2 - Summary of Significant Accounting HTML 24K
Policies (Details)
45: R26 Note 2 - Summary of Significant Accounting HTML 38K
Policies (Details 1)
46: R27 Note 2 - Summary of Significant Accounting HTML 26K
Policies (Details 2)
47: R28 Note 2 - Summary of Significant Accounting HTML 31K
Policies (Details 3)
48: R29 Note 2 - Summary of Significant Accounting HTML 28K
Policies (Details 4)
49: R30 Note 2 - Summary of Significant Accounting HTML 31K
Policies (Details 5)
50: R31 Note 2 - Summary of Significant Accounting HTML 66K
Policies (Details 6)
51: R32 Note 2 - Summary of Significant Accounting HTML 62K
Policies (Details Narrative)
52: R33 Note 3 - Related Party Transactions (Details HTML 25K
Narrative)
53: R34 Note 4 - Line of Credit (Details) HTML 35K
54: R35 Note 5 - Long-Term Debt (Details) HTML 43K
55: R36 Note 5 - Long-Term Debt (Details 1) HTML 39K
56: R37 Note 5 - Long-Term Debt (Details 2) HTML 31K
57: R38 Note 5 - Long-Term Debt (Details 3) HTML 37K
58: R39 Note 5 - Long-Term Debt (Details 4) HTML 34K
59: R40 Note 5 - Long-Term Debt (Details Narrative) HTML 23K
60: R41 Note 8 - Leases (Details) HTML 31K
61: R42 Note 8 - Leases (Details Narrative) HTML 22K
62: R43 Note 9 - Income Taxes (Details) HTML 44K
63: R44 Note 9 - Income Taxes (Details 1) HTML 51K
64: R45 Note 9 - Income Taxes (Details Narrative) HTML 25K
65: R46 Note 11 - 401(k) Plan (Details Narrative) HTML 22K
67: XML IDEA XML File -- Filing Summary XML 107K
66: EXCEL IDEA Workbook of Financial Reports XLSX 62K
14: EX-101.INS XBRL Instance -- aert-20161231 XML 805K
16: EX-101.CAL XBRL Calculations -- aert-20161231_cal XML 139K
17: EX-101.DEF XBRL Definitions -- aert-20161231_def XML 320K
18: EX-101.LAB XBRL Labels -- aert-20161231_lab XML 649K
19: EX-101.PRE XBRL Presentations -- aert-20161231_pre XML 486K
15: EX-101.SCH XBRL Schema -- aert-20161231 XSD 126K
68: ZIP XBRL Zipped Folder -- 0001654954-17-002109-xbrl Zip 95K
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).
C:
(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.
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.
*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: ___________________________________
Dates Referenced Herein and Documents Incorporated by Reference