AMERICAN ELECTRIC TECHNOLOGIES, INC. (NASDAQ:AETI) Files An 8-K Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant

Item2.03

On March23, 2017, American Electric Technologies, Inc. (the
Company) and its subsidiaries, MI Electric Industries, Inc. and
South Coast Electric Systems, LLC (collectively, the Sellers)
issued and sold to HD Special-Situations III, L.P. (the
Purchaser) a$7,000,000 principal amount Senior Secured Term Note
with principal of $500,000 repayable by June30, 2017 with the
balance due 48 months after issuance (the Note) for cash at par
to a Note Purchase Agreement dated March23, 2017 (the Purchase
Agreement). Proceeds from the sale of the Note will be used to
fully repay and terminate the Companys existing revolving credit
facilities with the approximately $1,000,000 being available for
the Companys working capital and general business purposes.

The Note bears interest at 11.5%per annum payable monthly in
arrears. The Note is secured by a first-priority lien on
substantially all existing and after-acquired personal property
assets and real estate owned by the Sellers (with certain
exceptions) and is subject to covenants restricting the Sellers
ability to incur debt, grant liens, pay dividends, engage in
transactions with affiliates andother customary covenants for
financing of this type (subject to certain exceptions). The Note
will be subject to an interest make-whole such that any
prepayment of the principal thereunder in excess of $1,500,000
(the Prepayment Threshold) within one year of the date of
issuance (the Make-Whole Period) shall be subject to the payment
of a prepayment premium, on the date of such prepayment, in an
amount based on an interest rate of 11.5% per annum of the
prepayment amount in excess of Prepayment Threshold for the
portion of the Make-Whole Period that will remain after the date
that the prepayment is made. After the one year Make-Whole Period
the Note may be prepaid in part or in full with no penalty.

The Purchase Agreement contains representations and affirmative,
negative and financial covenants usual and customary for
financing of this type, including covenants that place conditions
upon the Sellers ability to merge or consolidate with other
companies, sell any material part of their business or property,
incur liens, and pay dividends on, make distributions on or
redeem their equity interests. Other covenants in the Purchase
Agreement require the Company to maintain minimum monthly
revenue, maintain minimum monthly EBITDA, maintain minimum
monthly cash on hand, maintain minimum monthly debt service
coverage ratio, maintain a maximum debt-to-EBITDA ratio, maintain
a minimum monthly collateral coverage ratio and obtain consent of
the Purchaser for certain capital expenditures.

The foregoing descriptions of the Note and the Purchase Agreement
are summaries and are qualified in their entirety by reference to
the Note Purchase Agreement, the Note and the Security Agreements
filed as exhibits to this Current Report on Form8-Kand
incorporated herein by this reference.

The information set forth in Item 2.03 of this Current Report on
Form 8-K is incorporated into this Item 3.03 by reference.

Until the payment of all obligations under the Purchase
Agreement, the Sellers have agreed to not pay dividends on, make
distributions on or redeem their equity interests.

With regard to the Companys outstanding Series A Convertible
Preferred Stock (the Preferred Stock), the Company has agreed
with Purchaser and the holder of the Preferred Stock (the Holder)
not to declare, authorize or pay any cash dividends on the
Preferred Stock until the earlier of (i)March23, 2018, or (ii)the
obligations under the Purchase Agreement have been paid in full
(the Standstill Period), without the prior written consent of the
Purchaser. Following the expiration of the Standstill Period, for
so long as the obligations under the Purchase Agreement remain
outstanding, the Company may, at its sole discretion, declare,
authorize or pay dividends in cash on the Preferred Stock so long
as no event of default exists under the Note or would result
therefrom. The Holder also agreed that it shall not exercise its
rights to require the Company to redeem any of the Preferred
Stock during the Standstill Period. Following the expiration of
the Standstill Period, so long as the obligations under the
Purchase Agreement remain outstanding, the Holder may compel the
Company to redeem shares of Preferred Stock provided no event of
default exists under the Note or would result from such
redemption.

(d) Exhibits.

About AMERICAN ELECTRIC TECHNOLOGIES, INC. (NASDAQ:AETI)

American Electric Technologies, Inc. is a provider of power delivery solutions to the global energy industry. The Company serves a range of markets, such as power generation and distribution, oil and gas, and marine and industrial. It provides power delivery solutions for the power generation and distribution market sectors. It works with turbine manufacturers, engine-generator manufacturers and dealers, engineering, procurement and construction (EPC) firms, and high voltage service companies to provide electric power delivery products and solutions. It designs, manufactures, commissions and maintains its equipment for implementation in base-load, peaking power, cogeneration and substation transmission facilities across the world. It provides power delivery solutions for the upstream, midstream and downstream oil and natural gas sectors. Its industrial markets include non-oil and gas industrial markets, such as steel, paper, heavy commercial, and other non-oil and gas applications.

AMERICAN ELECTRIC TECHNOLOGIES, INC. (NASDAQ:AETI) Recent Trading Information

AMERICAN ELECTRIC TECHNOLOGIES, INC. (NASDAQ:AETI) closed its last trading session 00.00 at 1.95 with 4,225 shares trading hands.