Exhibit 10.1

LETTER LOAN AGREEMENT

October 31, 2007

JPMorgan Chase Bank, N.A.

712 Main Street

Houston, Harris 77002

Attention: Carlos Valdez, Jr.

Gentlemen:

The undersigned, AMERICAN ELECTRIC TECHNOLOGIES, INC . (“Borrower”), a corporation duly organized, validly existing and in good standing under the laws of the State of Florida, has requested that JPMORGAN CHASE BANK, N.A., a national association (“Lender”), lend to Borrower the funds provided herein. Lender has advised Borrower that Lender is willing to lend such funds to Borrower upon the terms and subject to the conditions set forth in this letter loan agreement (the “ Agreement ”). Terms not defined herein have the meanings assigned to them in Exhibit A attached hereto. In consideration for the above premises and the mutual promises and covenants herein contained Borrower and Lender do hereby agree as follows:

1. Borrowing Base Facility.

(a) Commitment. Subject to the terms and conditions set forth herein, Lender agrees to make loans (each of which is a “ Loan ”, and collectively the “ Loans ”) to Borrower, on a revolving basis (the “ Borrowing Base Facility ”) from time to time during the period commencing on the date hereof and continuing through October 31, 2009 (the “Maturity Date”), the maturity date of the promissory note evidencing the Borrowing Base Facility, such amounts as Borrower may request hereunder; provided, however, the total principal amount (the “ Borrower’s Loan Limit ”) outstanding at any time shall not exceed the lesser of (i) an amount equal to the Borrowing Base and (ii) $8,000,000 minus the aggregate face amount of any Letters of Credit. Subject to the terms and conditions hereof, Borrower may borrow, repay and reborrow hereunder. If at any time the outstanding advances under the Borrowing Base Facility exceed the Borrower’s Loan Limit as shown on any reports delivered to Lender under Section 6(d)(ii) or as indicated by Lender’s own records, Borrower shall, on the date of the delivery of such report to Lender or on the date of notice from Lender as to Lender’s records, prepay on the Borrowing Base Facility such amount as may be necessary to eliminate such excess, plus all accrued but unpaid interest thereon. The sums advanced under the Borrowing Base Facility shall be used for general corporate purposes and working capital. As used in this Agreement, the term “Borrowing Base” shall have the meaning set forth in Exhibit A attached hereto.

(b) Letter of Credit Sub-Facility. Subject to the terms and conditions

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set forth herein, and in any application for a letter of credit (the “LC Application”), Lender agrees to make available to Borrower under the Borrowing Base Facility a sub-facility (the “ Letter of Credit Facility ”) for the issuance of one or more letters of credit (each such letter of credit and any renewals, extensions and modifications thereof are collectively referred to as the “Letter of Credit”). The total aggregate face amount the Letter of Credit Facility shall not exceed at any one time the lesser of (i) $1,000,000 and (ii) the Borrower’s Loan Limit. Repayment of drafts against a Letter of Credit shall be governed by this Agreement and an LC Application and shall be and is secured by the Collateral and guaranties provided herein. Borrower shall pay a letter of credit commission to Lender in respect of each Letter of Credit issued by Lender equal to the greater of $500 and an amount determined by multiplying (i) one percent (1%) of the face amount of such Letter of Credit by (ii) a fraction, the numerator of which shall be the number of days between the date of such Letter of Credit and the stated expiration date thereof and the denominator of which shall be 360; such commission shall be payable at the time a Letter of Credit is issued and upon any renewal or extension thereof; additionally, Borrower agrees to reimburse Lender for all actual out-of-pocket expenses incurred by Lender, such as advising or confirming bank fees, telex charges and the like and to pay those fees customarily charged by Lender for any amendments to a Letter of Credit. Lender reserves the right to require Borrower to give Lender not less than three (3) clays prior notice of each requested issuance of a Letter of Credit.

(c) Advances, Conversions, Continuations. Borrower may request that the Loans be (i) made as or converted to Base Rate Loans by irrevocable written or electronic notice (or telephonic notice promptly confirmed in writing) to be received by Lender not later than 11:00 a.m. on the Business Day of the borrowing or conversion, or (ii) made or continued as, or converted to, Libor Rate Loans by irrevocable notice to be received by Lender not later than 11:00 a.m. three Business Days prior to the Business Day of the borrowing, continuation or conversion. If Borrower fails to give a notice of conversion or continuation prior to the end of any Interest Period in respect of any Libor Rate Loan, Borrower shall be deemed to have requested that such Loan be converted to a Base Rate Loan on the last day of the applicable Interest Period. If Borrower requests that a Loan be continued as or converted to a Libor Rate Loan, but fails to specify an Interest Period with respect thereto, Borrower shall be deemed to have selected an Interest Period of one month. Notices pursuant to this Section 1(c) may be given by telephone if promptly confirmed in writing. Each Libor Rate Loan shall be in a principal amount of $500,000 or a whole multiple of $100,000 in excess thereof. Each Base Rate Loan shall be in a minimum principal amount of $50,000. There shall not be more than five (5) different Interest Periods in effect at any time.

(d) Interest. At the option of Borrower, Loans shall bear interest at a rate per annum equal to (i) the Adjusted Libor Rate or (ii) the Adjusted Base Rate. Interest on Base Rate Loans shall be calculated on the basis of a year of 365 or 366 days and actual days elapsed. All other interest hereunder shall be calculated on the basis of a year of 360 days and actual days elapsed. Borrower promises to pay interest (i) for each Libor Rate Loan, (A) on the day of the applicable Interest Period and (B) on the date of any conversion of such Loan to a Base Rate Loan; (ii) for Base Rate Loans, on the last

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Business Day of each calendar month; and (iii) for all Loans, on the Maturity Date. If the time for any payment is extended by operation of law or otherwise, interest shall continue to accrue for such extended period.

After the date any principal amount of any Loan is due and payable (whether on the Maturity Date, upon acceleration or otherwise), or after any other monetary obligation hereunder shall have become due and payable (in each case without regard to any applicable grace periods), Borrower shall pay interest (after as well as before judgment) on such amounts at a rate per annum equal to the Default Rate. Furthermore, while any Event of Default exists, Borrower shall pay interest on the principal amount of the Loans at a rate per annum equal to the Default Rate. Accrued and unpaid interest on past due amounts shall be payable on demand.

(e) Repayment. Borrower promises to pay all Loans then outstanding on the Maturity Date. Borrower shall make all payments required hereunder not later than 11:00 a.m. on the date of payment in same day funds in U.S. dollars at the office of Lender specified in the Note. All payments by Borrower to Lender hereunder shall be made to Lender in full without set-off or counterclaim and free and clear of and exempt from, and without deduction or withholding for or on account of, any present or future taxes, levies, imposts, duties or charges of whatsoever nature imposed by any government or any political subdivision or taxing authority thereof. Borrower shall reimburse Lender for any taxes imposed on or withheld from such payments (other than taxes imposed on Lender’s income, and franchise taxes imposed on Lender, by the jurisdiction under the laws of which Lender is organized or any political subdivision thereof).

(f) Prepayments. Borrower may, upon three Business Days’ notice, in the case of Libor Rate Loans, and upon same-day notice in the case of Base Rate Loans, prepay Loans on any Business Day provided that Borrower pays all Breakage Costs, if any, associated with such prepayment on the date of such prepayment. Prepayments of Libor Rate Loans must be accompanied by a payment of interest on the amount so prepaid. Prepayments of Libor Rate Loans must be in a principal amount of $500,000 or a whole multiple of $100,000 in excess thereof. Prepayments of Base Rate Loans must be in a principal amount of $100,000 or, if less, the entire principal amount thereof then outstanding.

2. Promissory Note.

The Borrowing Base Facility and the Letter of Credit Facility shall be evidenced by a revolving promissory note (herein sometimes called, together with any renewals and extensions thereof, the “Note”) in a form satisfactory to Lender, duly executed by Borrower in the principal amount of the Borrower’s Loan Limit and made payable to the order of Lender. Such loan accounts, records and Note shall be conclusive absent manifest error of the amount of the Loans and payments thereon. Any failure to record any Loan or payment thereon or any error in doing so shall not limit or otherwise affect the obligation of Borrower to pay any amount owing with respect to the Loans.

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3. Collateral and Guaranties.

(a) Repayment of the Note and performance of the obligations described herein shall be secured, directly or indirectly, by a first priority, perfected security interest in all of Borrower’s accounts, inventory, general intangibles and letter of credit rights (collectively, the “Collateral”).

(b) M & I Electric Industries, Inc., a Texas corporation, and each Subsidiary of Borrower (collectively, “Guarantor”) shall unconditionally guarantee payment of the Borrowing Base Facility pursuant to guaranties in form and substance acceptable to Lender.

4. Conditions Precedent.

(a) Conditions Precedent to Initial Advance. The obligation of Lender to make the initial advance under the Borrowing Base Facility or issue the initial Letter of Credit is subject to the conditions precedent that, as of the date of such advance, (i) Lender shall have received duly executed copies of each document listed on Exhibit B attached hereto, in form and substance acceptable to Lender and its legal counsel (such documents, together with this Agreement and any other security documents relating to the Borrowing Base Facility and any modifications thereof, are hereinafter collectively referred to as the “Loan Documents”) and (ii) Borrower shall have paid the costs and fees of Lender’s counsel.

(b) Conditions Precedent to Each Advance, Continuation and Conversion. Lender’s obligation to make any advance, continuation or conversion under the Borrowing Base Facility shall be subject to the additional conditions precedent that, as of the date of such advance, continuation or conversion and after giving effect thereto: (i) timely receipt by Lender of a request for advance or an LC Application, (ii) all representations and warranties made by any party to Lender in the Loan Documents are true and correct, as if made on such date, and no condition or event exists which constitutes an Event of Default or which, with the lapse of time and/or giving of notice, would constitute an Event of Default, (iii) all documents and proceedings shall be reasonably satisfactory to legal counsel for Lender and (iv) all conditions precedent set forth in subparagraph (a) above shall have been satisfied.

4. Representations and Warranties.

In order to induce Lender to provide the Borrowing Base Facility, Borrower represents and warrants to Lender that:

(a) Organization and Good Standing. Borrower is a corporation, duly organized, validly existing and in good standing under the laws of the State of Florida and has the power to own its property and to carry on its business in each jurisdiction in which Borrower operates;

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(b) Authorization. Borrower has full power and authority to enter into this Agreement, to make the borrowing hereunder, to execute and deliver the Loan Documents and to incur the obligations provided for in the Loan Documents, all of which have been duly authorized by all necessary corporate action;

(c) Enforceable Obligations. The Loan Documents to which Borrower is a party are the legal and binding obligations of Borrower, enforceable in accordance with their respective terms, except as limited by bankruptcy, insolvency or other laws of general application relating to the enforcement of creditors’ rights;

(d) No Conflicts or Consents. Neither the execution and delivery of this Agreement and the other Loan Documents to which Borrower is a party, nor consummation of any of the transactions herein or therein contemplated, nor compliance with the terms and provisions hereof or thereof, will contravene or conflict with any provision of law, statute or regulation to which Borrower is subject or any judgment, license, order or permit applicable to Borrower or any indenture, mortgage, deed of trust or other instrument to which Borrower maybe subject; no consent, approval, authorization or order of any court, governmental authority or third party is required in connection with the execution and delivery by Borrower of this Agreement or any of the other Loan Documents to which Borrower is a party or to consummated the transactions contemplated herein or therein;

(e) Initial Financial Statements. All financial statements delivered by Borrower to Lender prior to the date hereof are true and correct, fairly present the financial condition of Borrower and have been prepared in accordance with GAAP; as of the date hereof, there are no obligations, liabilities or indebtedness (including contingent and indirect liabilities) which are material to Borrower and not reflected in such financial statements; and no material adverse changes have occurred in the financial condition or business of Borrower since the date of the most recent financial statements which Borrower has delivered to Lender;

(f) Litigation. No litigation, investigation, or governmental proceeding is pending, or, to the knowledge of any of Borrower’s officers, threatened against or affecting Borrower, which may result in any material adverse change in Borrower’s business, properties or operations;

(g) No Material Adverse Change. There is no specific fact known to Borrower that Borrower has not disclosed to Lender in writing which may result in any material adverse change in Borrower’s business, properties or operations;

(h) Title to Assets. Borrower owns all of the assets reflected on its most recent balance sheet free and clear of all liens, security interests or other encumbrances, except as previously disclosed in writing to Lender;

(i) Taxes. All taxes required to be paid by Borrower have in fact been paid, except for taxes being contested in good faith by appropriate proceedings for which adequate reserves have been established;

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(j) Full Disclosure. No written certificate or written statement herewith or heretofore delivered by Borrower to Lender in connection herewith, or in connection with any transaction contemplated hereby, contains any untrue statement of a material fact or fails to state any material fact necessary to keep the statements contained therein from being misleading;

(k) Governmental Regulation. Borrower is not in violation of any law, ordinance, governmental rule or regulation to which it is subject, and is not in default under any material agreement, contract or understanding to which it is a party, which violation or default would result in any material adverse change in Borrower’s business, properties or operations;

(1) Environmental Laws. Borrower and any properties or assets owned by Borrower are not in violation of, in any material respect, any environmental laws, nor are there existing, pending or threatened any investigation or inquiry by any governmental authority pursuant to any environmental laws, nor is there existing or pending any remedial obligations under any environmental laws;

(m) Names and Places of Business. Neither Borrower nor Guarantor has, during the five (5) years preceding the date hereof, been known by, or used any other trade or fictitious name, except as disclosed in Section 5(m) of the Disclosure Schedule or been organized in a jurisdiction other than its jurisdiction of organization as of the date hereof,

(n) Subsidiaries. As of the date hereof, (i) Borrower does not have any Subsidiary except those listed in Section 5(n) of the Disclosure Schedule or disclosed to Lender in writing and (ii) Borrower has no equity investments in any other Person except those listed in Section 5(n) of the Disclosure Schedule. Borrower owns, directly or indirectly, the equity interests in each of its Subsidiaries which is indicated in Section 5(n) of the Disclosure Schedule or as disclosed to Lender in writing; and

(o) Business Purposes. All advances evidenced by the Note are and shall be for business, commercial, investment or other similar purposes and not primarily for personal, family, household or agricultural use, as such terms are used in Chapter 306 of the Texas Finance Code.

5. Affirmative Covenants.

Until payment in full of the Note and all other obligations and liabilities of Borrower hereunder, Borrower agrees and covenants that (unless Lender shall otherwise consent in writing):

(a) Interim Financial Statements. Borrower shall furnish to Lender as soon as available, and in any event within sixty (60) days after the end of each calendar quarter of each calendar year of Borrower, copies of (i) the Consolidated balance sheet of Borrower and its Subsidiaries as of the end of each such period and (ii) the Consolidated statement of operations, equity and cash flows of Borrower and its Subsidiaries for that

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period and for the portion of the calendar ending with such period and (iii) a schedule of consolidating balance sheets and statements of operations, equity and cash flows of each Subsidiary for that period and for the portion of the calendar year ending with such period, all in reasonable detail, and certified by an authorized officer of Borrower as being true and correct and as having been prepared in accordance with GAAP, subject to year-end adjustments;

(b) Annual Financial Statements. Borrower shall furnish to Lender as soon as available, and in any event within ninety (90) days after the end of each calendar year of Borrower, copies of (i) the Consolidated balance sheet of Borrower and its Subsidiaries as of the close of such calendar year and (ii) Consolidated statement of operations, equity and cash flows of Borrower and its Subsidiaries for such calendar year and (iii) a schedule of consolidating balance sheets and statements of operations, equity and cash flows of each Subsidiary for such calendar year, in each case setting forth in comparative form the figures for the preceding calendar year, all in reasonable detail and accompanied by an opinion thereon (which shall not be qualified by reason of any limitation imposed by Borrower) of Tedder, James, Worden & Associates, P.A. or other independent public accountants of recognized national standing selected by Borrower and satisfactory to Lender, to the effect that (1) such financial statements have been prepared in accordance with GAAP (except for changes with which such accountants concur), and (2) the examination of such accounts in connection with such financial statements has been made in accordance with accounting principles generally accepted in the United States, and, accordingly, includes such tests of the accounting records and such other auditing procedures as were considered necessary in the circumstances;

(c) Financial Reports and Notices. Promptly upon their becoming available, copies of all financial statements, reports, notices and proxy statements sent by Borrower to its equity holders and all registration statements, periodic reports and other statements and schedules filed by Borrower with any securities exchange, the Securities and Exchange Commission or any similar governmental authority;

(d) Reports. Borrower shall furnish the following:

(i) Compliance Certificate. Concurrently with the delivery of the financial statements described in subsections 6(a) and 6(b) above, a certificate signed by an authorized officer stating that Borrower is in full compliance with all of its obligations under this Agreement and all other Loan Documents and is not in default of any term or provisions hereof or thereof, and setting forth the calculations of and establishing compliance with all financial covenants set forth in Section 8 of this Agreement;

(ii) Borrowing Base Report. For each monthly period when, at any time, the aggregate outstanding advances under the Note during any such period are more than $500,000, then as soon as available, and in any event within thirty (30) days after the end of each such calendar month, a Borrowing Base Report signed by an authorized officer; and

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(iii) Inventory Listing. Upon request of Lender, a list of Borrower’s inventory in form and detail satisfactory to Lender;

(e) Compliance with Laws. Borrower shall conduct its business in an orderly and efficient manner consistent with good business practices and in accordance with all valid regulations, laws and orders of any governmental authority and will act in accordance with customary industry standards in maintaining and operating its assets, properties and investments, and shall not change the nature or type of its basic business;

(f) Accounts and Records. Borrower shall maintain complete and accurate books and records of its transactions in accordance with GAAP, and will give Lender access during business hours to all books, records and documents of Borrower and permit Lender to make and take away copies thereof;

(g) Notice of Event of Default. Borrower shall furnish to Lender, immediately upon becoming aware of the existence of any condition or event constituting an Event of Default or event which, with the lapse of time and/or giving of notice, would constitute an Event of Default, written notice specifying the nature and period of existence thereof and any action which Borrower is taking or proposes to take with respect thereto;

(h) Insurance. Borrower shall maintain or cause to be maintained insurance from responsible and reputable companies in such amounts and covering such risks as is acceptable to Lender, is prudent and is usually carried by companies engaged in businesses similar to that of Borrower including, without limitation, casualty and business interruption insurance coverage; Borrower shall furnish Lender, on request, with certified copies of insurance policies or other appropriate evidence of compliance with the foregoing covenant;

(i) Notice of Material Adverse Change. Borrower shall promptly notify Lender of (i) any material adverse change in its financial condition or business, (ii) any default under any material agreement, contract or other instrument to which Borrower is a party or by which any of its properties are bound, or any acceleration of any maturity of any indebtedness owing by Borrower, (iii) any material adverse claim against or affecting Borrower or any of its properties, and (iv) any litigation, or any claim or controversy which might become the subject of litigation, against Borrower or affecting any of Borrower’s property, if such litigation or potential litigation might, in the event of an unfavorable outcome, have a material adverse effect (which for purposes hereof shall mean $100,000 or more) on Borrower’s financial condition or business or might cause an Event of Default;

(j) Maintenance of Licenses. Borrower shall preserve and maintain all licenses, privileges, franchises, certificates and the like necessary for the operation of its business;

(k) Payment of Claims. Borrower shall promptly pay all lawful claims,

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whether for labor, materials or otherwise, which might or could, if unpaid, become a lien or charge on any property or assets of Borrower, unless and to the extent only that the same are being contested in good faith by appropriate proceedings and reserves have been established therefore;

(l) Maintenance of Existence and Qualifications. Borrower will, and will cause each of its Subsidiaries to, maintain and preserve its existence and its rights and franchises in full force and effect and will qualify to do business in all states or jurisdictions where required by applicable Law, except where the failure so to qualify could cause a Material Adverse Change;

(m) Guaranties of Borrower’s Subsidiaries. Borrower shall cause each Subsidiary of Borrower now existing or created, acquired or coming into existence after the date hereof shall, promptly upon request by Lender, execute and deliver to Lender an absolute and unconditional guaranty of the timely repayment of the Borrowing Base Facility and the due and punctual performance of the obligations of Borrower hereunder, which guaranty shall be satisfactory to Lender in form and substance. Each Subsidiary of Borrower existing on the date hereof shall duly execute and deliver such a guaranty prior to the making of any advance hereunder. Borrower will cause each of Borrower’s Subsidiaries to deliver to Lender, simultaneously with its delivery of such a guaranty, written evidence satisfactory to Lender and its counsel that such Subsidiary has taken all company action necessary to duly approve and authorize its execution, delivery and performance of such guaranty and any other documents which it is required to execute;

(n) Deposit Relationship. Borrower and each of its Subsidiaries shall utilize and maintain Lender as Borrower’s primary depository and treasury management services provider for its operational, business deposit accounts; and

(o) Additional Information. Borrower shall promptly furnish to Lender, at Lender’s request, such additional financial or other information concerning assets, liabilities, operations and transactions of Borrower and its Subsidiaries as Lender may from time to time reasonably request.

6. Negative Covenants.

Until payment in full of the Note and all other obligations and liabilities of Borrower hereunder, Borrower and each of its Subsidiaries shall not (unless Lender shall otherwise consent in writing):

(a) Indebtedness. Create, incur or assume any indebtedness or borrow money, except for (i) the Note, (ii) trade debt incurred in the ordinary course of Borrower’s or a Subsidiary’s business, (iii) debt reflected on Borrower’s Consolidated balance sheet as of the date hereof, and (iv) debt created, incurred or assumed in any calendar year not to exceed $100,000;

(b) Liens. Mortgage, assign, encumber, incur, assume or grant a

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security interest in or lien upon any of Borrower’s or its Subsidiaries’ assets, except (i) to Lender (provided, however, that the foregoing shall not apply to an inchoate lien for taxes which are not delinquent or which are being contested in good faith, and liens resulting from deposits to secure the payments of workers’ compensation or social security or to secure the performance of bids or contracts in the ordinary course of business), and (ii) purchase money financing to secure debt permitted under clause (iv) of subparagraph 7(a) above;

(c) Contingent Liabilities. Endorse, guarantee or otherwise become liable for the obligations of any Person except for endorsements of negotiable instruments by Borrower or a Subsidiary in the ordinary course of business;

(d) Liquidations, Mergers, Consolidations. Liquidate, dissolve or reorganize; or merge or consolidate with, or acquire all or substantially all of the assets of, any other Person except as permitted under clause (iii) of subparagraph 7(f) below; or make or permit any other substantial change in its capitalization;

(e) Limitations on Dividends and Redemptions. Neither Borrower nor any Subsidiary will declare or make directly or indirectly any Dividend, other than (i) Dividends payable to Borrower or to Guarantors that are Subsidiaries of Borrower and (ii) Dividends by Borrower or a Subsidiary payable only in Borrower’s or such Subsidiary’s common stock, so long as Borrower’s interest in any of its Subsidiaries is not thereby reduced;

(f) Limitation on Investments and New Businesses. Neither Borrower nor any Subsidiary will (i) make any expenditure or commitment or incur any obligation or enter into or engage in any transaction except in the ordinary course of business, (ii) engage directly or indirectly in any business or conduct any operations except in connection with or incidental to its present businesses and operations as presently conducted, or (iii) make any acquisitions of or capital contributions to or other investments in any Person or property; provided, however, Borrower or a wholly owned Subsidiary may make an investment in the equity interests or acquire the assets of another Person so long as any such investment or acquisition does not exceed $1,000,000 in the aggregate;

(g) Sale of Assets. Sell any of its assets used or useful in its business, except in the ordinary course of business, unless replaced with assets of equal value; or sell any of its assets to any other Person with the agreement that such assets shall be leased back to Borrower or a Subsidiary; or sell any of its accounts receivable, with or without recourse;

(h) Loans. Own, purchase or acquire, directly or indirectly, any promissory notes, stock or securities of any other Person, other than securities guaranteed as to the principal and interest by the United States government; or make any loans or advances to any other person; or

(i) Change of Ownership. Neither Borrower nor any Subsidiary will

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permit any transfer, pledge or other change in the ownership of its equity interests, except for (i) such pledges to Lender and other non-consensual liens arising by operation of law and (ii) changes in ownership not constituting a Change of Control;

(j) Subordinated Debt. Except as may otherwise be provided in a subordination agreement, neither Borrower nor its Subsidiaries shall make any payments of principal of or interest on the Subordinated Debt prior to the satisfaction in full of the Borrowing Base Facility and the termination of this Agreement and the other Loan Documents. The documents evidencing any Subordinated Debt may not be modified, amended, or waived without the consent of Lender, provided that the maturity of the Subordinated Debt may be extended and the interest rate may be reduced without first obtaining such consent; or

(k) Transactions with Affiliates. Neither Borrower nor any of its Subsidiaries will engage in any material transaction with any of its Affiliates on terms which are less favorable to it than those which would have been obtainable at the time in arm’s-length dealing with Persons other than such Affiliates, provided that such restriction shall not apply to transactions among Borrower and its wholly owned Subsidiaries.

8. Financial Covenants.

(a) Definitions. For purposes of this Section 8, the following terms shall have the respective meanings assigned to them below:

“Consolidated Current Assets” means, as of any date, the total assets of Borrower and its Consolidated Subsidiaries that would be reflected on a Consolidated balance sheet of Borrower as “current assets” in accordance with GAAP.

“Consolidated Current Liabilities” means, as of any date, the total Consolidated liabilities of Borrower and its Consolidated Subsidiaries that would be reflected on a Consolidated balance sheet of Borrower and its Consolidated Subsidiaries as “current liabilities” in accordance with GAAP.

“Consolidated Intangible Assets” means assets that are (i) deferred assets, other than prepaid insurance and prepaid taxes, (ii) patents, copyrights, trademarks, trade names, franchises, goodwill, experimental expenses and other similar assets which would be classified as intangible assets on a balance sheet, and (iii) unamortized debt discount and expense.

“Consolidated Tangible Net Worth” means all of Borrower’s and its Subsidiaries’ assets less the sum of (i) the aggregate book value of Consolidated Intangible Assets, (ii) accounts receivable from the holders of equity interests and Borrower’s Affiliates, (iii) Consolidated Total Liabilities.

“Consolidated Total Liabilities” means, as of any date, the liabilities of Borrower and its Consolidated Subsidiaries that would be reflected on a Consolidated

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balance sheet of Borrower and its Consolidated Subsidiaries as “liabilities” in accordance with GAAP.

“GAAP” means generally accepted accounting principles, applied on a consistent basis, that are applicable in the circumstances as of the date in question.

“Subordinated Debt” means any secured or unsecured indebtedness of Borrower or its Subsidiary which expressly contains in the instruments evidencing such indebtedness or in the indenture or other similar instrument under which it is issued (which indenture or other similar instrument shall be binding on all holders of such indebtedness) subordination provisions (in form and substance satisfactory to Lender in its sole discretion) substantially to the effect that the holder agrees that the indebtedness evidenced by such instrument, and any renewals or extensions thereof, shall at all times and in all respects be subordinate and junior in right of payment to the Note.

(b) Financial Tests. Until payment in full of the Note and all other obligations and liabilities of Borrower hereunder, Borrower covenants that it shall not (unless Lender shall otherwise consent in writing):

(i) Current Ratio. Permit, as of the end of each calendar quarter, the ratio of its Consolidated Current Assets (excluding prepaid expenses) to its Consolidated Current Liabilities to be less than 2 to 1; or

(ii) Total Liabilities to Tangible Net Worth Ratio. Permit, as of the end of each calendar quarter, the ratio of its Consolidated Total Liabilities (excluding any Subordinated Debt) to Consolidated Tangible Net Worth to be more than 1.25 to 1.

9. Default.

An “Event of Default” shall exist if any one or more of the following events (individually, an “Event of Default” and collectively, “Events of Default”) shall occur:

(a) Borrower shall fail to pay when due or within three (3) days thereof any principal of, or interest on, the Note or any other fee or payment due hereunder or under any of the Loan Documents;

(b) Any representation or warranty made in any of the Loan Documents shall prove to be untrue or inaccurate in any material respect as of the date on which such representation or warranty is made;

(c) Default shall occur in the performance of any of the covenants or agreements of Borrower and/or Guarantors contained herein or in any of the other Loan Documents and such default (other than a monetary default) shall continue uncured for a period of ten (10) days;

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(d) Borrower or any Guarantor shall (i) apply for or consent to the appointment of a receiver, custodian, trustee, intervenor or liquidator of it or of all or a substantial part of its assets, (ii) voluntarily become the subject of a bankruptcy, reorganization or insolvency proceeding or be insolvent or admit in writing that it is unable to pay debts as they become due, (iii) make a general assignment for the benefit of creditors, (iv) file a petition or answer seeking reorganization or an arrangement with creditors or taking advantage of any bankruptcy or insolvency laws, (v) file an answer admitting the material allegations of, or consent to, or default in answering, a petition filed against it in any bankruptcy, reorganization or insolvency proceeding, or (vi) become the subject of an order for relief under any bankruptcy, reorganization or insolvency proceeding;

(e) An order, judgment or decree shall be entered by any court of competent jurisdiction or other competent authority approving a petition appointing a receiver, custodian, trustee, intervenor or liquidator of Borrower or any Guarantor or of all or substantially all of its assets, and such order, judgment or decree shall continue unstayed and in effect for a period of thirty (30) days; or a complaint or petition shall be filed against Borrower or any Guarantor seeking or instituting a bankruptcy, insolvency, reorganization, rehabilitation or receivership proceeding of Borrower or any Guarantor, and such petition or complaint shall not have been dismissed within thirty (30) days;

(f) Borrower (i) fails to make any payment in respect of any indebtedness (other than indebtedness hereunder) or guaranty obligation when due (whether by scheduled maturity, required prepayment, acceleration, demand, or otherwise), or (ii) fails to observe or perform any other agreement or condition relating to any such indebtedness or guaranty obligation or contained in any instrument or agreement evidencing, securing or relating thereto, or any other event shall occur, the effect of which default or other event is to cause, or to permit the holder or holders of such indebtedness or beneficiary or beneficiaries of such guaranty obligation (or a trustee or agent on behalf of such holder or holders or beneficiary or beneficiaries) to cause, with the giving of notice if required, such indebtedness to be demanded or become due or to be repurchased, prepaid, defeased or redeemed (automatically or otherwise), or an offer to repurchase, prepay, defease or redeem such indebtedness to be made, prior to its stated maturity, or such guaranty obligation to become payable or cash collateral in respect thereof to be demanded;

(g) Any Change of Control occurs; or

(h) Any final judgment for the payment of money in excess of the sum of $100,000 in the aggregate shall be rendered against Borrower or any Guarantor and such judgment(s) shall not be satisfied or discharged at least sixty (60) days prior to the date on which any of Borrower’s or such Guarantor’s assets could be lawfully sold to satisfy such judgment(s).

10. Remedies Upon Event of Default.

Upon the occurrence of any one or more Events of Default (following any

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applicable grace period), then Lender, at its option, may (i) declare the principal of, and all interest then accrued on, the Note and any other liabilities of Borrower to Lender to be forthwith due and payable, whereupon the same shall forthwith become due and payable without notice, presentment, demand, protest, notice of intention to accelerate, notice of acceleration, or other notice of any kind, all of which Borrower hereby expressly waives, anything contained herein or in the Note to the contrary notwithstanding, (ii) cease further advances under the Note, (iii) reduce any claim to judgment, and/or (iv) without notice of default or demand, pursue and enforce any of Lender’s rights and remedies under the Loan Documents or otherwise provided under or pursuant to any applicable law or agreement.

11. Miscellaneous.

(a) Waiver. No failure to exercise, and no delay in exercising, on the part of Lender, any right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right. The rights of Lender hereunder and under the other Loan Documents shall be in addition to all other rights provided by law. No notice or demand given in any case shall constitute a waiver of the right to take other action in the same, similar or other instances without such notice or demand.

(b) Notices. Any notices or other communications required or permitted to be given by any of the Loan Documents must be given in writing and must be personally delivered, sent by facsimile transmission or mailed by prepaid certified or registered mail to the party to whom such notice or communication is directed at the address of such party as follows:

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Any such notice or other communication shall be deemed to have been given (whether actually received or not) on the day it is personally delivered or faxed as aforesaid, or, if mailed, on the third day after it is mailed as aforesaid. Any party may change its address for purposes of this Agreement by giving notice of such change to all other parties pursuant to this paragraph.

(c) Governing Law. This Agreement and the other Loan Documents are being executed and delivered, and are intended to be performed, in the State of Texas, and the substantive laws of Texas shall govern the validity, construction, enforcement and interpretation of this Agreement and all other Loan Documents, except to the extent: (i) otherwise specified therein; (ii) the federal or state laws governing national banking associations expressly supersede and have contrary application; or (iii) federal laws governing maximum interest rates shall provide for rates of interest higher than those permitted under the laws of the State of Texas.

(d) Invalid Provisions. If any provision of this Agreement is held to be illegal, invalid or unenforceable under present or future laws effective during the term of this Agreement, such provision shall be fully severable and this Agreement shall be construed and enforced as if such illegal, invalid or unenforceable provision had never comprised a part of this Agreement, and the remaining provisions of this Agreement shall remain in full force and effect and shall not be affected by the illegal, invalid or unenforceable provision or by its severance from this Agreement.

(e) Maximum Interest Rate. Regardless of any provisions contained in this Agreement, any Note or in any of the other Loan Documents, Lender shall never be deemed to have contracted for or be entitled to receive, collect or apply as interest on any Note, any amount in excess of the Maximum Rate, and, in the event Lender ever receives, collects or applies as interest any such excess, such amount which would be excessive interest shall be deemed to be a partial prepayment of principal and treated hereunder as such, and, if the principal balance of any Note is paid in full, any remaining excess shall forthwith be paid to Borrower. In determining whether or not the interest paid or payable under any specific contingency exceeds the Maximum Rate, Borrower, and Lender shall, to the maximum extent permitted under applicable law, (i) characterize any non-principal payment (other than payments which are expressly designated as interest payments hereunder) as an expense, fee, or premium, rather than as interest, (ii) exclude voluntary prepayments and the effect thereof, and (iii) spread the total amount of interest throughout the entire contemplated term of any Note so that the interest rate is uniform throughout such term.

(f) Entirety and Amendments. The Loan Documents embody the entire agreement between the parties and supersede all prior agreements and understandings, if any, relating to the subject matter hereof and thereof, and this Agreement and the other Loan Documents may be amended only by an instrument in writing executed by the party, or an authorized officer of the party, against whom such amendment is sought to be enforced.

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(g) Parties Bound. This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns; provided, however, that Borrower may not, without the prior written consent of Lender, assign any rights, powers, duties or obligations hereunder.

(h) Headings. Paragraph and section headings are for convenience of reference only and shall in no way affect the interpretation of this Agreement.

(i) Construction and Conflicts. The provisions of this Agreement shall be in addition to those of the Note, the Loan Documents and any guaranty, pledge or security agreement, note or other evidence of liability held by Lender, all of which shall be construed as complementary to each other. Nothing herein contained shall prevent Lender from enforcing the Note, the Loan Documents and any and all other notes, guaranty, pledge or security agreements in accordance with their respective terms. To the extent of any conflict or contradiction between the terms hereof and the terms of the Note, the Loan Documents or any other document executed in connection herewith, the terms hereof shall control.

(j) Expenses of Lender. Borrower agrees to pay all costs and expenses of Lender (including, without limitation, the reasonable attorneys’ fees of Lender’s legal counsel) incurred by Lender in connection with the preservation and enforcement of Lender’s rights under this Agreement, the Note and/or the other Loan Documents, and all reasonable costs and expenses of Lender (including, without limitation, the reasonable fees and expenses of Lender’s legal counsel) in connection with the negotiation, preparation, execution and delivery of this Agreement, the Note and the other Loan Documents and any and all amendments, modifications and supplements thereof or thereto.

(k) Right of Set-off. Upon the occurrence and during the continuance of any Event of Default, Lender is hereby authorized at any time and from time to time, to the fullest extent permitted by law, to set-off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held and other indebtedness at any time owing by Lender to or for the credit or the account of Borrower against any and all of the obligations of Borrower now or hereafter existing under this Agreement, irrespective of whether or not Lender shall have made any demand under this Agreement and although such obligations may be contingent and unmatured. Lender agrees promptly to notify Borrower after any such set-off and application, provided that the failure to give such notice shall not affect the validity of such set-off and application. The rights of Lender under this subparagraph are in addition to other rights and remedies (including, without limitation, other rights of set-off) which Lender may have.

(1) Participation of the Loans. Borrower agrees that Lender may, at its option, sell interests in the Note and its rights under this Agreement to a financial institution or institutions and, in connection with each such sale, Lender may disclose any financial and other information available to Lender concerning Borrower to each prospective purchaser.

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(m) Counterparts. This Agreement may be separately executed in any number of counterparts, each of which shall be an original, but all of which, taken together, shall be deemed to constitute one and the same instrument.

(n) Facsimile Documents and Signatures. For purposes of negotiating and finalizing this Agreement, if this document or any document executed in connection with it is transmitted by facsimile machine, it shall be treated for all purposes as an original document. Additionally, the signature of any party on this document transmitted by way of a facsimile machine shall be considered for all purposes as an original signature. Any such faxed document shall be considered to have the same binding legal effect as an original document. At the request of any party, any faxed document shall be re-executed by each signatory party in an original form.

(o) USA Patriot Act Compliance. Neither Borrower nor any Guarantor shall be or become subject at any time to any law, regulation or list of any government agency (including, without limitation, the U.S. Office of Foreign Asset Control list) that prohibits or limits Lender from making any advance or extension of credit to Borrower or from otherwise conducting business with Borrower, or fail to provide documentary and other evidence of Borrower’s identity as may be requested by Lender at any time to enable Lender to verify Borrower’s identity or to comply with any applicable law or regulation, including, without limitation, Section 326 of the USA Patriot Act of 2001, 31 U.S.C. Section 5318.

12. JURY WAIVER. BORROWER AND LENDER (BY ITS ACCEPTANCE HEREOF) HEREBY VOLUNTARILY, KNOWINGLY, IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE (WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) BETWEEN OR AMONG BORROWER AND LENDER ARISING OUT OF OR IN ANY WAY RELATED TO THIS DOCUMENT, ANY OTHER RELATED DOCUMENT, OR ANY RELATIONSHIP BETWEEN LENDER AND BORROWER. THIS PROVISION IS A MATERIAL INDUCEMENT TO LENDER TO PROVIDE THE LOAN.

13. NO ORAL AGREEMENTS. THIS WRITTEN LOAN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

If Lender agrees to the foregoing, Lender should execute this Agreement in the space indicated below.

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Exhibit 10.2

American Electric Technologies, Inc.

6410 Long Drive

Houston, Texas 77087

November 13, 2007

Stuart Schube, Individually

Stuart Schube

President

Acorn Ventures, Inc.

6324 Rutgers, Suite 900

Houston, Texas 77005

Dear Stuart:

It is my pleasure to offer to you and to Acorn Ventures, Inc. (“Acorn”) a continuation of your part-time role of corporate and strategic planning consultant to American Electric Technologies, Inc. and all its subsidiaries and affiliates (the “Company”). Acorn agrees that Stuart Schube (“Schube”) will perform the services described below on behalf of Acorn. The terms of Schube’s and Acorn’s retention by the Company are outlined below:

1. Acorn’s role will be as stated above, and shall be responsible for assisting in corporate and strategic planning and identifying potential senior management personnel and business acquisitions for the Company, with Schube reporting to me as the President and CEO, and to the Board of Directors on stockholder issues. Schube has agreed to continue serving as a member of the Board of Directors of the Company without further compensation except as stated in paragraphs 2 and 4 below. We expect that Acorn’s tasks will occupy no more than one-quarter of Schube’s working time. In general we expect that during the next year, Schube will explore all areas necessary to improve the Company’s growth and performance, including potential bolt-on acquisitions that could further the business of the Company. This work will be periodically reported to, discussed with and implemented by the undersigned and the Board of Directors throughout the term of this agreement.

2. The Company and Acorn have agreed that the monthly payment under this arrangement shall be Five Thousand One Hundred Dollars ($5,100). However, of such sum, Seven Hundred Fifty Dollars ($750) shall be at risk depending on the Company’s performance, as determined by the undersigned or the Board of Directors. Mr. Schube shall not be entitled to the compensation paid to other non-employee directors; this stipulated monthly fee includes his fees to compensate him for any time or efforts expended in serving as a director.

3. This engagement will continue and automatically renew for monthly periods unless either Acorn or the Company notifies the other of a desire not to renew on not less than six (6) months’ prior written notice.

4. While no binding legal agreement will exist, the Company will consider additional special bonuses in the event of a Change of Control Event or in the event of an acquisition by the Company, in either case relating to transactions in which Schube and Acorn have played a pivotal role. Whether a bonus is paid or not and the amount of the bonus shall be determined by the Board of Directors at the time of any such transaction, but as a guideline the Company anticipates compensating Acorn and

Schube for transactions in which they are substantively involved a consulting bonus equal to three percent (3%) on the first $4 million in transaction value, one and one-half per cent (1-1/2%) on transaction values of more than $4 million but less than $10 million and one percent (1%) on transaction values above $10 million. However, if any transaction is initiated by James Thompson, James Steffeck, or the undersigned identifying a potential candidate for acquisition by the Company, the guideline amount will be half the percentages stated above. Transaction value, for the purposes of this paragraph include the purchase price, any contractual payments (such as employment agreements and non-competition agreements) and all debt of the target company assumed. Also as a guideline, should any transaction in which Schube or Acorn are involved close within two (2) years after the date of termination of this engagement, the Company shall consider payment of the guideline fee s in full.

5. Schube will not be entitled to any fringe benefits, In addition, the Company does not presently intend to issue Mr. Schube any stock options other than options granted to all non-employee directors. Schube will be entitled to be reimbursed for all expenses reasonably incurred in connection with his services described above. The Company agrees to indemnify and hold harmless Acorn and Schube and each of its employees, affiliates, agents, counsel and other advisors, to the full extent allowed by law or equity, from and against any and all judgments, losses, claims (whether or not valid), damages, costs, fees, expenses or liabilities, joint or several, to which such persons or entities may become subject, related to or arising out of Acorn’s or Schube’s engagement or performance of services under this agreement, unless caused by an act or acts of gross negligence or willful misconduct of the persons or entities so indemnified. The above indemnification provisions shall survive the termination of this Agreement.

6. This Agreement may only be amended or terminated by the written agreement of all parties. Should any dispute arise regarding this agreement or any related matter, the dispute shall be arbitrated pursuant to the rules of the American Arbitration Association in Houston, Texas.

Should Acorn choose to accept and the terms of engagement as stated above, please sign the duplicate original in the space provided below and return to me at your earliest convenience.

Exhibit 10.3

AMERICAN ELECTRIC TECHNOLOGIES, INC.

2007 EMPLOYEE STOCK INCENTIVE PLAN

1. Purposes.

The 2007 EMPLOYEE STOCK INCENTIVE PLAN (the “Plan”) of American Electric Technologies, Inc. (the “Company”) is an element of the Company’s compensation program which is intended to enable to Company to attract, retain, motivate, reward and remunerate qualified personnel, encourage Participants to exert maximum efforts towards the Company’s success, focus on the long-term growth of stockholder value as well as promote a closer identity of interest between Participants and stockholders of the Company. By thus encouraging Participants and promoting their continued association with the Company, the Plan is expected to benefit the Company and its stockholders.

2. Shares Subject to the Plan.

The total number of shares of Common Stock of the Company that may be issued under the Plan shall be 300,000 shares, subject to adjustment as provided in Section 11 hereunder. The Company shall at all times while the Plan is in force reserve such number of shares of Common Stock as will be sufficient to satisfy the requirement of outstanding awards granted under the Plan, except as otherwise provided below. In the event any award granted under the Plan shall expire or terminate, in whole or in part, for any reason without the issuance of all the shares subject to that award the unissued shares subject thereto shall again be available for the granting of awards under the Plan. In the event any shares issued under the Plan are returned to the Company in accordance with the Plan such shares shall again be available for the granting of awards under the Plan. If the Option Price of any Option granted under the Plan or the tax withholding requirements with respect to any award under the Plan are satisfied by tendering shares or Options to the Company, or if any Stock Appreciation Right is exercised, only the net number of shares issued shall be deemed issued for purposes of determining the maximum number of shares available for issuance under the Plan.

3. Awards Available Under the Plan.

The Company may award Nonqualified Stock Options, Incentive Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Shares, Performance Units and Stock-Based Awards to eligible persons under this Plan.

In a given fiscal year, the maximum number of shares that can be subject to an award granted under the Plan to a single person shall be limited to 15,000 shares, as may be adjusted pursuant to Section 11. The aforesaid limitation is intended to comply with Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”). To the extent any provision of the Plan or action by the Board of Directors or Committee, as hereinafter defined, fails to comply with Section 162(m), it shall be deemed null and void to the extent required by statute and to the extent deemed advisable by the Board of Directors and/or such Committee.

4. Eligibility for Awards Under the Plan.

Awards under the Plan may be granted to persons who are employees (including employees who are also directors and officers), independent contractors and consultants of the Company or of a subsidiary or parent of the Company (the “Participants”), provided, however, that Incentive Stock Options may only be granted to persons who are employees of the Company or of a “subsidiary” or “parent” of the Company, as defined within Section 424 of the Code.

5. Administration of the Plan.

(a) The Plan shall be administered by a Compensation Committee of the Board of Directors of the Company (the “Committee”) comprised of at least two outside directors (as described under Rule 16b-3, promulgated under

the Securities Exchange Act of 1934 (the “1934 Act”), and in accordance with the requirement of Section 162(m) of the Code, appointed by the Board of Directors of the Company. In the event such Committee is not comprised of said outside directors, any award granted hereunder shall not be deemed automatically null and void, except as otherwise provided below. Within the limits of the express provisions of the Plan, the Committee shall have the authority, in its discretion, to determine the individuals to whom, and the time or times at which, awards shall be granted, the character of such and the number of shares of Common Stock to be subject to each award, and to interpret the Plan, to prescribe, amend and rescind rules and regulations relating to the Plan, to determine the terms and provisions of agreements that may be entered into in connection with awards (which need not be identical), and to make all other determinations and take all other actions necessary or advisable for the administration of the Plan. In making such determinations, the Committee may take into account the nature of the services rendered by such individuals, their present and potential contributions to the Company’s success, and such other factors as the Committee, in its discretion, shall deem relevant. The Committee’s determinations on the matters referred to in this Section shall be conclusive.

(b) Notwithstanding anything contained herein to the contrary, the Committee shall have the exclusive right to grant awards to persons subject to Section 16 of the 1934 Act and set forth the terms and conditions thereof. With respect to persons subject to Section 16 of the 1934 Act, transactions under the Plan are intended to comply with all applicable conditions of Rule 16b-3, as amended from time to time (and its successor provisions, if any), under the 1934 Act. To the extent any provision of the Plan or action by the Board of Directors or Committee fails to so comply, it shall be deemed null and void to the extent required by law and to the extent deemed advisable by the Board of Directors and/or such Committee.

6. Stock Options.

The Committee may award Incentive Stock Options (“ISOs”) (as defined in Section 422(b) of the Code) and Non-Qualified Stock Options (“NQSOs”), not intended to qualify under Section 422(b) of the Code (ISOs and NQSOs hereinafter collectively the “Options”) under the Plan. An ISO or an NQSO enables the participant to purchase from the Company, at any time during a specified exercise period, a specified number of shares Company Common Stock at a specified price (the “Option Price”). Options may be granted to Participants in such number and on such terms as shall be determined by the Committee in its discretion, subject to the following:

(a) No Options may be granted more than ten (10) years after the Effective Date of the Plan.

(b) Each Option grant shall be evidenced by an Award Agreement that shall specify the Option Price, the duration of the Option, the number of Shares to which the Option pertains, the conditions on which an Option shall become vested and exercisable, the method of exercise of an Option and such other provisions as the Committee shall determine. The Award Agreement also shall specify whether the Option is intended to be an ISO or a NQSO.

(c) The Option Price for each grant of an Option under the Plan shall be determined by the Committee and shall be specified in the Award Agreement but in no event shall the Option Price be less than the fair market value of the Company’s Common Stock on the date of grant. For all purposes under the Plan, the fair market value of a share of the Company’s Common Stock on a particular date shall be equal to the NASDAQ official closing price on that date or if no sales are reported on that date, on the last preceding date on which the official closing price of shares are so reported. If the stock is traded over the counter at the time a determination of its fair market value is required to be made hereunder, its fair market value shall be deemed to be equal to the average between the reported high and low prices of Stock on the most recent date on which the shares were publicly traded. In the event the Company’s Common Stock is not publicly traded at the time a determination of its value is required to be made hereunder, the determination of its fair market value shall be made by the Committee in such manner as it deems appropriate. If an ISO is granted to an individual who, immediately before the ISO is to be granted, owns directly or through attribution) more than 10% of the total combined voting power of all classes of capital stock of the Company or a subsidiary or parent of the Company, the Option Price of the shares of Common Stock subject to such ISO shall not be less than 110% of the fair market value per share of the shares of Common Stock at the time such ISO is granted.

(d) Each Option granted under the Plan shall expire and not be exercisable after ten (10) years from the date of grant or at such earlier time as the Committee shall determine at the time of grant, provided, however, if an ISO is granted to any individual who, immediately before the ISO is granted, owns (directly or through attribution) more than 10% of the total combined voting power of all classes of capital stock of the Company or of a subsidiary or parent of the Company, such ISO shall by its terms expire and shall not be exercisable after the expiration of five (5) years from the date of its grant.

(e) Options granted under the Plan shall be exercisable at such times and on the occurrence of such events, and be subject to such terms and conditions, as the Committee shall in each instance set forth in the Award Agreement, which need not be the same for each grant or for each Participant.

(f) The Option Price on exercise of any Option shall be payable to the Company in full either: (i) in cash or its equivalent; (ii) by tendering (either by actual delivery or attestation) previously acquired Shares having an aggregate fair market value at the time of exercise equal to the total Option Price; (iii) by tendering unexercised Options having a fair market value at the time of exercise equal to the Option Price; (iv) by a combination of (i), (ii) and (iii); or (v) any other method approved or accepted by the Committee in its sole discretion subject to such rules and regulations as the Committee may establish. For all purposes under the Plan, the fair market value of an Option on a particular date shall be equal to the excess of the fair market value of the Company’s Common Stock on such date over the Option Price of such Option on such date.

(g) The Committee may impose such restrictions on any Shares acquired under the exercise of an Option granted under the Plan as it may deem advisable, including, without limitation, requiring the Participant to hold the Shares acquired for a specified period of time, or restrictions under applicable laws or under the requirements of any stock exchange or market on which such Shares are listed and/or traded.

(h) Each Participant’s Award Agreement shall set forth the extent to which the Participant shall have the right to exercise the Option following termination of the Participant’s employment with the Company. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Award Agreement entered into with each Participant, need not be uniform among all Options issued under the Plan, and may reflect distinctions based on the reasons for termination.

(i) No ISO granted under this Plan may be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. Further, all ISOs granted to a Participant shall be exercisable during his or her lifetime only by such Participant. Except as otherwise provided in a Participant’s Award Agreement at the time of grant, or thereafter by the Committee, NQSOs granted under the Plan may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. Further, except as otherwise provided in a Participant’s Award Agreement at the time of grant or thereafter by the Committee, all NQSOs granted to a Participant under the Plan shall be exercisable during the Participant’s lifetime only by such Participant.

(j) The holder of an Option shall have none of the rights of a stockholder with respect to the shares of Common Stock covered by such holder’s Option until such shares of Common Stock shall be issued to such holder upon the exercise of the Option.

(k) All Options granted under the Plan shall not be transferable otherwise than by will or the laws of descent and distribution, and any Option granted under the Plan may be exercised during the lifetime of the holder thereof only by the holder. No Option granted under the Plan shall be subject to execution, attachment or other process.

(l) Options granted under the Plan shall be exercisable at such times and on the occurrence of such events, and be subject to such restrictions and conditions, as the Committee shall in each instance approve, which need not be the same for each grant or for each Participant.

(m) The aggregate fair market value of the shares of Common Stock with respect to which ISOs granted under the Plan are exercisable for the first time during any calendar year and under incentive stock options qualifying as such in accordance with Section 422 of the Code granted under any other incentive

stock option plan maintained by the Company or its parent or subsidiary corporations, shall not exceed $100,000. Any grant of Options in excess of such amount shall be deemed a grant of a NQSO. In addition, and notwithstanding anything contained herein to the contrary, in the event an ISO granted hereunder does not, for any reason, at the time of grant or during the term of the ISO satisfy all of the conditions under the Code with respect to being deemed an ISO, then said ISO shall be deemed a NQSO, but only to the extent, if applicable, said ISO exceeds any such conditions, and any said determination that said ISO is deemed an NQSO shall not be deemed the grant of a new Option hereunder.

7. Stock Appreciation Rights.

The Committee may award Stock Appreciation Rights (“SAR”) under the Plan. SARs may be granted to Participants in such number and on such terms as shall be determined by the Committee in its discretion, subject to the following:

(a) Each SAR grant shall be evidenced by an Award Agreement that shall specify the Grant Price, which shall not be less than the fair market value of the Company’s Common Stock on the date of grant, the duration of the SAR, the number of Shares to which the SAR pertains, the conditions on which an SAR shall become vested and exercisable, the method of exercise of an SAR and any such other provisions as the Committee shall determine.

(b) No SAR shall be exercisable later than the tenth (10th) anniversary of the date of its grant.

(c) On the exercise of an SAR, a participant shall be entitled to receive payment from the Company in an amount determined by multiplying the excess of the fair market value of a share of Company Common Stock on the date of exercise over the Grant Price by the number of such shares with respect to which the SAR is exercised. The payment on SAR exercise shall be in Company Common Stock of equivalent value based on the fair market value on the date of exercise of the SAR.

(d) Each Award Agreement shall set forth the extent to which the Participant shall have the right to exercise the SAR following termination of the Participant’s employment with the Company. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Award Agreement, need not be uniform among all SARs issued under the Plan, and may reflect distinctions based on the reasons for termination.

(e) Except as otherwise provided in a Participant’s Award Agreement at the time of grant or thereafter by the Committee, an SAR granted under this Plan may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution. Further, except as otherwise provided in a Participant’s Award Agreement at the time of grant or thereafter by the Committee, all SARs granted to a Participant under this Plan shall be exercisable during his or her lifetime only by such Participant.

(f) Subject to the other provisions of this Plan, the Committee may impose such other conditions and/or restrictions on any Shares received on exercise of an SAR granted under the Plan as it may deem advisable. This includes, but is not limited to, requiring the Participant to hold the Shares received on exercise of an SAR for a specified period of time.

8. Restricted Stock and Restricted Stock Units.

Restricted Stock and Restricted Stock Units may be granted to Participants in such number and on such terms as shall be determined by the Committee in its discretion, subject to the following:

(a) Each Restricted Stock and Restricted Stock Unit award shall be evidenced by an Award Agreement that shall specify the restrictions applicable to the award, the number of shares of Restricted Stock or the number of Restricted Stock Units granted, and such other provisions as the Committee shall determine.

(b) Except as otherwise provided in the Plan or the Award Agreement, the Shares of Restricted Stock or Restricted Stock Units granted may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated until the termination of the restrictions specified in the Award Agreement (and in the case of

Restricted Stock Units until the date of delivery of the shares related to the award). All rights with respect to the Restricted Stock and Restricted Stock Units granted to a Participant under this Plan shall be available during his or her lifetime only to such Participant, except as otherwise provided in the Award Agreement at the time of grant or thereafter by the Committee.

(c) Shares of Restricted Stock covered by each Restricted Stock Award shall become freely transferable by the Participant after all conditions and restrictions applicable to such award have been satisfied or lapse.

(d) When Restricted Stock Units become payable, a Participant having received the grant of such units shall be entitled to receive payment from the Company in shares of equivalent value based on the fair market value as defined in the Award Agreement at the time of grant.

(e) Each Award Agreement shall set forth the extent to which the Participant shall have the right to retain Restricted Stock and Restricted Stock Units following termination of the Participant’s employment with the Company. These provisions shall be determined in the sole discretion of the Committee, shall be included in the Award Agreement entered into with each Participant, need not be uniform among all awards of Restricted Stock and Restricted Stock Units issued under this Plan, and may reflect distinctions based on the reasons for termination.

9. Performance Shares and Performance Units.

Performance Shares and Performance Units may be granted to Participants in such number and on such terms as shall be determined by the Committee in its discretion, subject to the following:

(a) Each Performance Share shall have an initial value equal to the fair market value of Company Common Stock on the date of grant. Each Performance Unit shall have an initial value that is established by the Committee at the time of grant which shall in no event be less than the fair market value of Company Common Stock on the date of grant. The Committee shall set performance criteria for a specified period following the grant (the “Performance Period”) which, depending on the extent to which such performance criteria are met in such Performance Period, will determine, in the manner set forth in the Award Agreement, the value and/or number of each Performance Share or Performance Unit that will be paid to the Participant. Such performance criteria shall be based on one or more of the following on a consolidated basis or for specified subsidiaries, divisions, affiliates or other business units of the Company: (i) the attainment of certain target levels of, or a specified percentage increase in, revenues, income before income taxes and extraordinary items, net income, earnings before income tax, earnings before interest, taxes, depreciation and amortization, or a combination of any or all of the foregoing; (ii) the attainment of certain target levels of, or a percentage increase in, after-tax or pre-tax profits including, without limitation, that attributable to continuing and/or other operations; (iii) the attainment of certain target levels of, or a specified increase in, operational cash flow; (iv) the achievement of a certain level of, reduction of, or other specified objectives with regard to limiting the level of increase in, all or a portion of, the Company’s bank debt or other long—term or short—term public or private debt or other similar financial obligations of the Company, which may be calculated net of such cash balances and/or other offsets and adjustments as may be established by the Committee; (v) the attainment of a specified percentage increase in earnings per share or earnings per share from continuing operations; (vi) the attainment of certain target levels of, or a specified increase in return on capital employed or return on invested capital; (vii) the attainment of certain target levels of, or a percentage increase in, after-tax or pre-tax return on stockholders’ equity; (viii) the attainment of certain target levels of, or a specified increase in, economic value added targets based on a cash flow return on investment formula; (ix) the attainment of certain target levels in the fair market value of the shares of the Company’s common stock; (x) the growth in the value of an investment in the Company’s Common Stock assuming the reinvestment of dividends; and (xi) reducing costs of the Company, as evidenced by meeting or reducing budgeted expenses established by the Company. For purposes of item (i) above, extraordinary items shall mean all items of gain, loss or expense for the fiscal year determined to be extraordinary or unusual in nature or infrequent in occurrence or related to a corporate transaction (including, without limitation, a disposition or acquisition) or related to a change in accounting principle, all as determined in accordance with standards established by Opinion No. 30 of the Accounting Principles Board.

(b) Subject to the terms of the Plan, after the applicable Performance Period has ended, the holder of Performance Shares and Performance Units shall be entitled to receive payout in Company Common Stock based on the value and number of Performance Shares and Performance Units determined as a function of the extent to which the corresponding performance criteria have been achieved. Despite the foregoing, the Award Agreement may require the Participant to hold the shares received for a specified period of time after issuance.

(c) Payment of earned Performance Shares and Performance Units shall be as set forth in the Award Agreement. Earned Performance Shares and Performance Units shall be paid in Company Common Stock equal to the value of the earned Performance Shares and Performance Units at the close of the applicable Performance Period. Any shares may be granted subject to such restrictions deemed appropriate by the Committee.

(d) Each Award Agreement shall set forth the extent to which the Participant shall have the right to retain Performance Shares and Performance Units following termination of the Participant’s employment with the Company. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the Award Agreement entered into with each Participant, need not be uniform among all Awards of Performance Shares and Performance Units issued under the Plan, and may reflect distinctions based on the reasons for termination.

(e) Except as otherwise provided in a Participant’s Award Agreement, Performance Shares and Performance Units may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution.

10. Stock-Based Awards.

Stock-Based Awards may be granted in such number and on such terms as shall be determined by the Committee in its discretion in satisfaction of such obligations, past services and other valid consideration, or in lieu of, or in addition to, any cash compensation due to a Participant, subject to the following:

(a) Each Stock-Based Award shall be evidenced by an Award Agreement that shall specify the (i) the number of shares of Company Common Stock subject to such award or a formula for determining such number; (ii) the purchase price of the shares, if any, and the means of payment for the shares; (iii) such terms and conditions on the grant, issuance, vesting and forfeiture of the shares; and (iv) such further terms and conditions, in each case not inconsistent with the Plan.

(b) Each Award Agreement shall set forth the extent to which the Participant shall have the right to receive Stock-Based Awards following termination of the Participant’s employment with the Company. Such provisions shall be determined in the sole discretion of the Committee, shall be included in the applicable Award Agreement, need not be uniform among all Awards of Stock-Based Awards issued under this Plan, and may reflect distinctions based on the reasons for termination.

(c) Except as otherwise provided in a Participant’s Award Agreement, Stock-Based Awards may not be sold, transferred, pledged, assigned, or otherwise alienated or hypothecated, other than by will or by the laws of descent and distribution.

11. Adjustment Upon Changes in Capitalization.

(a) In the event that the outstanding shares of Company Common Stock are hereafter changed by reason of recapitalization, reclassification, stock split, combination or exchange of shares of Common Stock or the like, or by the issuance of dividends payable in shares of Common Stock, an appropriate adjustment shall be made by the Committee, in the aggregate number of shares of Common Stock available under the Plan, in the number of shares of Common Stock issuable upon exercise of outstanding Options and SARs and the Option Price per share and the provisions of other outstanding awards. In the event of any consolidation or merger of the Company with or into another company, or the conveyance of all or substantially all of the assets of the Company to another company, each then outstanding Option, SAR or other award under the Plan shall thereafter entitle the holder thereof to such number of shares of Common Stock or other securities or property to which a holder of shares of Common Stock of the Company would have been entitled to upon such consolidation, merger or conveyance; and in any such case appropriate adjustment, as determined by the Committee shall be made as set forth above

with respect to any future changes in the capitalization of the Company or its successor entity. In the event of the dissolution or liquidation of the Company, all outstanding Options and SARs under the Plan will automatically terminate, unless otherwise provided by the Board of Directors of the Company or any authorized committee thereof.

(b) Any adjustment in the number of shares of Common Stock shall apply proportionately to only the unexercised portion of the Options and SAR’s granted hereunder. If fractions of shares of Common Stock would result from any such adjustment, the adjustment shall be revised to the next higher whole number of shares of Common Stock.

12. Further Conditions of Issuance.

(a) Unless the shares of Common Stock issuable pursuant to an award under the Plan have been registered under the Securities Act of 1933, as amended, prior to the exercise of any Option or SAR or issuance pursuant to an award, a participant must represent in writing to the Company that such shares of Common Stock are being acquired for investment purposes only and not with a view towards the further resale or distribution thereof, and must supply to the Company such other documentation as may be required by the Company, unless in the opinion of counsel to the Company such representation, agreement or documentation is not necessary to comply with said Act.

(b) The Company shall not be obligated to deliver any shares of Common Stock until they have been listed on each securities exchange on which the shares of Common Stock may then be listed or until there has been qualification under or compliance with such state or federal laws, rules or regulations as the Company may deem applicable. The Company shall use reasonable efforts to obtain such listing, qualification and compliance.

(c) The Committee may make such provisions and take such steps as it may deem necessary or appropriate for the withholding of any taxes by the Company that is required by any law or regulation of any governmental authority, whether federal, state or local, domestic or foreign, in connection with any award under the Plan including, but not limited to, withholding the amount due from any such person’s wages or compensation due such person. With the consent of the Committee, the participant may authorize the Company to withhold a sufficient number of the shares of Common Stock otherwise issuable to the participant as payment of his or her obligation with respect to the withholding taxes (such shares to be valued on the basis of the fair market value of the shares on the date of the event giving rise to such tax withholding obligation).

13. Termination, Modification and Amendment.

(a) The Plan (but not Options and awards previously granted under the Plan) shall terminate ten (10) years from the earliest of the date of its adoption by the Board of Directors, or the date the Plan is approved by the stockholders of the Company, or such date of termination, as hereinafter provided, and no award shall be granted after termination of the Plan.

(b) The Plan may from time to time be terminated, modified or amended by the affirmative vote of the holders of a majority of the outstanding shares of capital stock of the Company voting as a single class, and entitled to vote thereon, present, or represented, and entitled to vote at a meeting duly held in accordance with the applicable laws of the state or other jurisdiction in which the Company is incorporated.

(c) The Plan may be amended, suspended, or terminated at any time or from time to time by the Committee, provided that (i) no such amendment or modification may, without written consent of the participant, alter or impair any rights or obligations under any outstanding awards under the Plan; and (ii) no amendment will be effective unless approved by the affirmative vote of the holders of a majority of shares of the Company present, or represented, and entitled to vote at a meeting of stockholders of the Company duly held within twelve months of the date of adoption where such amendment will: (i) increase the total number of shares reserved for the issuance under the Plan (other than for adjustments required to be made under Section 9 herein); (ii) materially change the standards of eligibility under the Plan; (iii) materially increase the benefits which may accrue to

Participants under the Plan; or (iv) result in the adoption of a new plan or require the approval of the stockholders under any applicable tax, regulatory or stock market requirement.

(d) No termination, modification or amendment of the Plan may adversely affect the rights under any outstanding Option, SAR or other award without the consent of the individual to whom such award shall have been previously granted.

14. Effective Date of the Plan.

The Plan shall become effective (the “Effective Date”) upon adoption by the Board of Directors of the Company. The Plan shall be subject to approval by the affirmative vote of the holders of a majority of the outstanding shares of capital stock of the Company entitled to vote thereon, present, or represented, and entitled to vote at a meeting duly held in accordance with the applicable laws of the state or other jurisdiction in which the Company is incorporated, within one year after adoption of the Plan by the Board of Directors. No shares may be issued under the Plan until such stockholder approval is obtained. Any Options, SARs or other awards issued pursuant to the Plan are issued subject to such stockholder approval.

15. Not a Contract of Employment.

Nothing contained in the Plan or in any award agreement executed pursuant hereto shall be deemed to confer upon any individual to whom an award is or may be granted hereunder any right to remain in the employ of the Company or of a subsidiary or parent of the Company or in any way limit the right of the Company, or of any parent or subsidiary thereof, to terminate the employment of any employee, or to terminate any other relationship with a participant, including that of independent contractor or consultant. Notwithstanding anything contained herein to the contrary, and except as otherwise provided at the time of grant, all references hereunder to termination of employment shall with respect to consultants and independent contractors mean the termination of retention of their services with or for the Company or of a subsidiary or parent of the Company.

16. Other Compensation Plans.

This Plan shall serve as the successor to the Company’s 2004 Employee Stock Incentive Plan and 2000 Employee Stock Option Plan (the “Predecessor Plans”), and no further grants shall be made under the Predecessor Plans from and after the Effective Date of this Plan. The adoption of the Plan shall not affect any other stock option plan, incentive plan or any other compensation plan in effect for the Company, nor shall the Plan preclude the Company from establishing any other form of stock option plan, incentive plan or any other compensation plan.

Exhibit 10.4

AMERICAN ELECTRIC TECHNOLOGIES, INC.

NON-EMPLOYEE DIRECTORS’

DEFERRED COMPENSATION PLAN

I. INTRODUCTION

The American Electric Technologies, Inc. Non-Employee Directors’ Deferred Compensation Plan (the “Plan”) has been established to permit each director of American Electric Technologies, Inc. (the “Company”) who is not an employee of the Company or any of its subsidiaries (a “Non-Employee Director”) to defer receipt of certain director compensation payable by the Company and provide a convenient way to purchase shares from the Company at fair market value. The Plan is intended to enable the Company to attract, retain and motivate qualified Directors and to encourage the long-term mutuality of interest between directors and stockholders of the Company.

II. ADMINISTRATION

The Plan shall be administered by the Compensation Committee of the Board of Directors of the Company (the “Committee”). The Committee shall have complete discretion and authority with respect to the Plan and its application, except as expressly limited by the Plan. The Plan shall be administered such that shares issued under the Plan shall be deemed to be exempt under Rule 16b-3 of the Securities and Exchange Commission under the Exchange Act, as such Rule is in effect on the Effective Date of the Plan and as it may be subsequently amended from time to time.

III. MAXIMUM NUMBER OF SHARES

The aggregate number of shares of Company common stock which may be issued under the Plan shall not exceed 120,000 shares, subject to adjustment as provided in Section VII herein.

IV. DEFERRAL OF RETAINER FEES

A Non-Employee Director may elect in advance to defer the receipt of 50% or 100% of the retainer fees payable for service as a Director of the Company, the retainer fees, if any, payable to a Non-Employee Director for service as a member or chair of a committee of the Board of Directors; and any fees payable to a Non-Employee Director for attendance at meetings of the Board of Directors and any of its committees. (the “Eligible Payments”). To make an election to defer any Eligible Payments, the Non-Employee Director must execute and deliver to the Corporate Secretary an election form specifying the percentage of Eligible Payments he or she wishes to defer which form shall designate in writing the portion of such Eligible Payments, stated as a whole percentage, to be credited to the Cash Account, the portion to be credited to the Stock Unit Account and the portion to be credited to the Stock Purchase Account. If an Eligible Director fails to notify the Corporate Secretary as to how to allocate any Eligible Payments among the Accounts, 100% of such Eligible Payments shall be credited to the Cash Account. By written notice to the Corporate Secretary of the Company, a Non-employee Director may change the manner in which the Eligible Payments with respect to services rendered after the end of such calendar year are allocated among the Accounts, provided that any such election shall not be effective if the change would cause liability under Section 16(b) of the Exchange Act. Except with respect to a newly elected or appointed Non-Employee Director or in connection with the establishment of this Plan, any election under this paragraph shall apply only to Eligible Payments that are payable with respect to services to be performed beginning on or after the start of the next calendar year after such receipt and acceptance. A Non-Employee Director who is serving as a director on the Effective Date may, within 30 days of the Effective Date, file a deferral election which shall apply to Eligible Payments that are earned with respect to services performed subsequent to the election. A newly elected or appointed Non-Employee Director, may, within 30 days of becoming a Non-Employee Director, file a deferral election which shall apply only to Eligible Payments that are earned with respect to services to be performed subsequent to the election. An election shall remain in

effect from year to year, until a new election becomes effective with respect to Eligible Payments payable in the next calendar year. A Non-Employee Director may revoke his or her deferral election with respect to Eligible Payments that are payable in the calendar year beginning after receipt by the Company of his written revocation.

A.  Stock Unit Account . As of the date such Eligible Payments would have been paid to the Non-Employee Director, a Non-Employee Director’s Stock Unit Account shall be credited with a number of whole and fractional stock units determined by dividing his deferred Eligible Payments allocated to the Stock Unit Account by the fair market value of a share of common stock, par value $0.001 per share, of the Company (“Stock”). For purposes of this Plan, “fair market value” of a share of Stock on any given date shall mean the last reported sale price at which Stock is traded on such date, or if no Stock is traded on such date, the most recent date on which Stock was traded on the NASDAQ Stock Market, or if applicable, any other national stock exchange on which Stock is traded. Whenever dividends (other than dividends payable only in shares of Stock) are paid with respect to Stock, each Stock Unit Account shall be credited with a number of whole and fractional stock units determined by multiplying the dividend value per share by the stock unit balance of the Account on the record date and dividing the result by the fair market value of a share of Stock on the dividend payment date.

B. Cash Account . As of the date such Eligible Payments would have been paid to the Non-Employee Director, a Non-Employee Director’s Cash Account shall be credited with his deferred Eligible Payments allocated to the Cash Account. Any amounts credited to the Cash Account shall be credited with interest at the prime rate as published by the Wall Street Journal from time to time.

C. Stock Purchase Account . As of the date such Eligible Payments would have been paid to the Non-Employee Director, a Non-Employee Director’s Stock Purchase Account shall credited with a number of whole and fractional shares of Stock determined by dividing his deferred Eligible Payments allocated to the Stock Purchase Account by the fair market value of a share of Stock. Subject to approval of the issuance of the Stock by the stockholders as provided in Section VII.F such shares shall be issued and made available to the Non-Employee Director as soon as practicable after each purchase date. Such shares may not be sold, assigned, transferred, pledged or otherwise encumbered prior to the date the Non-Employee Director ceases to be a member of the Board of Directors of the Company and will contain a legend to such effect.

D.  Designation of Beneficiary . A Non-Employee Director may designate one or more beneficiaries to receive payments from his Accounts in the event of his death. A designation of beneficiary shall apply to a specified percentage of a Non-Employee Director’s entire interest in his Accounts. Such designation, or any change therein, must be in writing and shall be effective upon receipt by the Secretary of the Company. If there is no effective designation of beneficiary, or if no beneficiary survives the Non-Employee Director, the estate of the Non-Employee Director shall be deemed to be the beneficiary.

E.  Distributions .

(1) Stock Unit Account . All stock units credited to a Non-Employee Director’s Stock Unit Account shall be paid in shares of Stock to the Non-Employee Director, or his designated beneficiary (or beneficiaries) or estate, in a lump sum; provided, however, that fractional shares shall be paid in cash. Such payment shall be made six months after the Non-Employee Director ceases to be a member of the Board of Directors of the Company.

(2) Cash Account . The aggregate amount, if any, credited to a Non-Employee Director’s Cash Account shall be distributed in cash to the Non-Employee Director, or his designated beneficiary (or beneficiaries) or estate, in a lump sum. Such payment shall be made on the first business day of the calendar month after the Non-Employee Director ceases to be a member of the Board of Directors of the Company.

(3) Stock Purchase Account . All Company common stock purchased by the Non-Employee Director pursuant to the stock purchase election shall, to the extent not previously issued and delivered or made available to the Non-Employee Director or his designated beneficiary (or beneficiaries) or estate, be issued and made available to the Non-Employee Director or his designated beneficiary (or beneficiaries) or estate as soon as practicable after the Non-Employee Director ceases to be a member of the Board of Directors of

the Company. All restrictions on sale and transfer of the shares, other than restrictions arising out of the securities laws of the United States or any state, shall expire as of the date the Non-Employee Director ceases to be a member of the Board of Directors of the Company.

V. ADJUSTMENTS

In the event that any stock dividend, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split-up, spin-off, combination, exchange of shares, warrants or rights offering to purchase Stock at a price substantially below Fair Market Value, or other similar event affects the outstanding shares of Company Common Stock, an appropriate adjustment shall be made by the Committee, in the aggregate number of shares of Common Stock available under the Plan and in the number of stock units credited to Non-Employee Directors’ Accounts. In the event of any consolidation or merger of the Company with or into another company, or the conveyance of all or substantially all of the assets of the Company to another company, the then outstanding stock units shall upon distribution thereafter entitle the Non-Employee Director, or his designated beneficiary (or beneficiaries) or estate to receive such number of shares of Common Stock or other securities or property to which a holder of shares of Common Stock of the Company would have been entitled to upon such consolidation, merger or conveyance; and in any such case appropriate adjustment, as determined by the Committee, shall be made as set forth above with respect to any future changes in the capitalization of the Company or its successor entity.

VI. AMENDMENT OR TERMINATION OF PLAN

The Plan shall terminate on the tenth anniversary of the Effective Date. Notwithstanding anything herein to the contrary, the Board may at any time and from time to time terminate, modify, suspend or amend the Plan in whole or in part; provided, however, that no such termination, modification, suspension or amendment shall be effective without shareholder approval if such approval is required to comply with any applicable law or stock exchange rule; and provided further, that the Board may not, without shareholder approval, increase the maximum number of shares issuable under the Plan except as provided in Section V above, and further provided that no such action shall adversely affect a Non-Employee Director’s right to receive compensation earned before the date of such action or his rights under the Plan with respect to amounts credited to his Accounts before the date of such action. In no event shall the distribution of Accounts to Non-Employee Directors be accelerated by virtue of any amendment or termination of the Plan, except to the extent permitted by Section 409A of the Internal Revenue Code of 1986.

VII. MISCELLANEOUS PROVISIONS

A. Compliance . The Company shall not be obligated to deliver any Stock under the Plan until the shares have been listed on each securities exchange on which the Stock may then be listed and until there has been qualification under or compliance with such state and federal laws, rules and regulations as the Company may deem applicable.

B.  Notices . Any notice required or permitted to be given by the Company or the Committee pursuant to the Plan shall be deemed given when personally delivered or deposited in the United States mail, registered or certified, postage prepaid, addressed to the Non-Employee Director at the last address shown for the Non-Employee Director on the records of the Company.

C.  Nontransferability of Rights . During a Non-Employee Director’s lifetime, any distribution under the Plan shall be made only to him. No sum or other interest under the Plan shall be subject in any manner to anticipation, alienation, sale, transfer, assignment, pledge, encumbrance or charge, and any attempt by a Non-Employee Director or any beneficiary under the Plan to do so shall be void. No interest under the Plan shall in any manner be liable for or subject to the debts, contracts, liabilities, engagements or torts of a Non-Employee Director or beneficiary entitled thereto.

D.  Company’s Obligations to Be Unfunded and Unsecured . The Company shall be under no obligation to establish a fund or reserve in order to pay the benefits under the Plan. Accounts under the Plan represent a contractual obligation of the Company to deliver Stock or pay cash to the Non-Employee Directors or their beneficiaries or estates as provided herein. The Company has not segregated or earmarked any Stock or any of the Company's assets for the benefit of the Non-Employee Directors or their beneficiaries or estates, and the Plan does not, and shall not be construed to require the Company to do so. The Non-Employee Directors and their beneficiaries or estates shall have only an unsecured, contractual right against the Company with respect to any benefits hereunder, and such right shall not be deemed superior to the right of any other creditor.

E.  Governing Law . The terms of the Plan shall be governed, construed, administered and regulated in accordance with the laws of the State of Florida. In the event any provision of this Plan shall be determined to be illegal or invalid for any reason, the other provisions shall continue in full force and effect as if such illegal or invalid provision had never been included herein.

F.  Effective Date of Plan . The Plan shall become effective as of August 22, 2007 (the “Effective Date”) and is subject to the approval of the issuance of the Stock pursuant to the Plan by the stockholders of the Company by no later than the next Annual Meeting to occur after the Effective Date. If such stockholder approval is not obtained by the date of such Annual Meeting, all Stock Unit Accounts and Stock Purchase Accounts shall be void ab initio and of no further force and effect and the Eligible Payments allocated to such accounts shall be allocated to the Cash Accounts of the Non-Employee Directors.

Exhibit 10.5

AMERICAN ELECTRIC TECHNOLOGIES, INC.

2007 EMPLOYEE STOCK PURCHASE PLAN

1. Purpose. The purpose of this 2007 AMERICAN ELECTRIC TECHNOLOGIES, INC. Employee Stock Purchase Plan is to provide employees of the Company and its Designated Subsidiaries with an opportunity to purchase Common Stock of the Company through accumulated payroll deductions. It is the intention of the Company to have the Plan qualify as an “Employee Stock Purchase Plan” under Section 423 of the Internal Revenue Code of 1986, as amended. The provisions of the Plan, accordingly, shall be construed in a manner consistent with the requirements of Section 423 and related sections of the Code.

2. Definitions.

(a) “Board” shall mean the Company’s Board of Directors.

(b) “Code” shall mean the Internal Revenue Code of 1986, as amended.

(c) “Committee” shall mean the Compensation Committee of the Board.

(d) “Common Stock” shall mean the Common Stock, $.001 par value, of the Company.

(e) “Company” shall mean AMERICAN ELECTRIC TECHNOLOGIES, INC., a Florida corporation, and any Designated Subsidiary of the Company.

(f) “Compensation” shall mean all cash compensation received by an Employee from the Company or a Designated Subsidiary and includable in the Employee’s gross income for federal income tax purposes, other than any taxable reimbursements. By way of illustration, but not limitation, “Compensation” shall include regular compensation such as salary, wages, overtime, shift differentials, bonuses, commissions, and incentive compensation, but shall exclude relocation reimbursements, expense reimbursements, tuition or other reimbursements, and income realized as a result of participation in any stock option, stock purchase, or similar plan of the Company or any Designated Subsidiary.

(g) “Designated Subsidiary” shall mean any Subsidiary of the Company designated by the Board from time to time in its sole discretion as eligible to participate in the Plan.

(h) “Employee” shall mean any individual who is an employee of the Company for tax purposes. For purposes of the Plan, the employment relationship shall be treated as continuing intact while the individual is on sick leave or other leave of absence approved by the Company., except that where the period of leave exceeds 90 days and the individual’s right to reemployment is not guaranteed by either statute or contract, the employment relationship shall be deemed to have terminated on the 91 ^st day of such leave.

(i) “Fair Market Value” shall mean, as of any date, the NASDAQ official closing price of Common Stock on that date or if no sales are reported on that date, on the last preceding date on which the official closing price of shares are so reported. If the stock is traded over the counter at the time a determination of its fair market value is required to be made hereunder, its fair market value shall be deemed to be equal to the average between the reported high and low prices of Stock on the most recent date on which the shares were publicly traded. In the event the Company’s Common Stock is not publicly traded at the time a determination of its value is required to be made hereunder, the determination of its fair market value shall be made by the Committee in such manner as it deems appropriate.

(j) “Offering Commencement Date” shall mean the first day of each Offering Period.

(k) “Offering Period” shall mean a period established by the Committee during which funds may be accumulated for the purchase of Company common stock pursuant to the Plan.

(l) “Parent” shall mean a corporation, domestic or foreign, that owns not less than 50% of the voting shares of the Company or of another Parent, whether or not such corporation now exists or is hereafter organized or acquires the Company or a Parent.

(m) “Participant” shall mean an eligible Employee who has elected to participate in the Plan.

(n) “Plan” shall mean this 2007 AMERICAN ELECTRIC TECHNOLOGIES, INC. Employee Stock Purchase Plan.

(o) “Purchase Date” shall mean the last day of each Offering Period.

(p) “Purchase Price” shall mean an amount which is not be less than (1) 95% of fair market value of our common stock on the first day of an Offering Period or (2) a discount from the market price on the first day of the Offering Period which does not exceed the per-share amount of share issuance costs that would have been incurred to raise a significant amount of capital by a public offering.

(q) “Subsidiary” shall mean a corporation, domestic or foreign, of which not less than 50% of the voting shares are held by the Company or another Subsidiary, whether or not such corporation now exists or is hereafter organized or acquired by the Company or a Subsidiary.

(r) “Trading Day” shall mean a day on which United States national stock exchanges are open for trading.

3. Eligibility.

(a) Any Employee employed by the Company on a given Offering Commencement Date shall be eligible to participate in the Plan, except:

(1) Any Employee employed by the Company for less than six (6) months before the applicable Offering Commencement Date;

(2) Any Employee whose customary employment is less than 20 hours per week; and

(3) Any Employee whose customary employment is not more than five (5) months in any year.

(b) Any provisions of the Plan to the contrary notwithstanding, no Employee shall be granted an option under the Plan (i) to the extent that, immediately after the grant, such Employee (including by attribution under Section 424(d) of the Code) would own capital stock of the Company and/or hold outstanding options to purchase stock of the Company constituting in the aggregate five percent (5%) or more of the total combined voting power or value of all classes of the capital stock of the Company, or (ii) to the extent that his or her option rights to purchase stock under this Plan and any other employee stock purchase plans of the Company and its subsidiaries exceeds Twenty-Five Thousand Dollars ($25,000) worth of stock (determined at the fair market value of the shares at the time such option is granted) in the aggregate for each calendar year in which such option right is outstanding at any time.

(c) The Committee may also exclude from participation in the Plan the highly compensated employees as defined in Code Section 414(q) of the Company and its Subsidiaries provided such exclusion does not effect the non-compensatory accounting treatment of the Plan under applicable accounting provisions.

4. Offering Periods. The Plan shall be implemented by consecutive Offering Periods established by the Committee of no long than 27 months’ duration. The first Offering Period shall not commence until the Plan has been approved by the Company’s stockholders.

5. Participation.

(a) An eligible Employee may become a Participant in the Plan by completing a subscription agreement authorizing payroll deductions in the form provided by the Company and filing it with the designated representative of the Company before the applicable Offering Commencement Date, unless a later time for submission, not to exceed 31 days after an Offering Commencement Date, is set by the Committee for all eligible Employees with respect to a given Offering Period.

(b) Payroll deductions for a Participant shall commence on the first payroll date occurring on or after the applicable Offering Commencement Date and shall end on the last payroll date occurring on or before the last day of the Offering Period to which such authorization is applicable.

6. Payroll Deductions.

(a) At the time a Participant files his or her subscription agreement, he or she shall elect to have payroll deductions made on each pay day during the Offering Period in an amount equal to a whole percentage (e.g., 1%, 2%, etc.), but not exceeding three percent (3%), of the Compensation that he or she receives on each pay day during the Offering Period.

(b) All payroll deductions made for a Participant shall be credited to his or her account under the Plan. A Participant may not make any additional payments into such account. A Participant’s account shall be only a bookkeeping account maintained by the Company, and neither the Company nor any Subsidiary shall be obligated to segregate or hold in trust or escrow any funds in a Participant’s account. Except for amounts not expended because of the Plan rule that fractional shares shall not be purchased, no amount of accumulated payroll deductions shall be carried over with respect to any Participant from the end of one offering period to the beginning of another.

(c) A Participant may discontinue his or her participation in the Plan effective as of the end of the then current Offering Period as provided in Section 10 hereof, but no other change can be made and, specifically, a Participant may not alter the rate of his or her payroll deductions during an Offering Period. A Participant’s subscription agreement shall remain in effect for successive Offering Periods unless terminated as provided in Section 10 hereof.

(d) Notwithstanding the foregoing, to the extent necessary to comply with the limitations of Section 423(b)(8) of the Code and Section 3(b) hereof, a Participant’s payroll deductions may be decreased to zero percent (0%) at any time during an Offering Period. In such event, payroll deductions shall recommence at the rate provided in such Participant’s subscription agreement at the beginning of the first Offering Period scheduled to end in the following calendar year, unless terminated by the Participant as provided in Section 10 hereof

(e) Each Participant must make adequate provision for federal, state, or other tax withholding obligations, if any, arising upon the disposition of the Common Stock. The Company may, but shall not be obligated to, withhold from the Participant’s compensation the amount necessary for the Company to meet applicable withholding obligations related to the Participant’s tax obligations, including any withholding required to make available to the Company any tax deductions or benefits attributable to sale or early disposition of Common Stock by the Employee that may be available to it.

7. Shares to be Purchased. Effective on the Offering Commencement Date of each Offering Period, each eligible Employee participating in such Offering Period shall purchase at the applicable Purchase Price, a number of shares of the Company’s Common Stock determined by dividing such Employee’s total payroll deductions actually made during the Offering Period by the applicable Purchase Price.

8. Mechanics of Purchase. Except to the extent that the limitation of Section 423(b)(8) of the Code would otherwise be violated, the maximum number of full shares shall be purchased for such Participant at with the accumulated payroll deductions in the Participants account no later than the last day of each Offering Period. No fractional shares shall be purchased; any payroll deductions accumulated in a Participant’s account that are insufficient to purchase a full share shall be retained in the Participant’s account for the subsequent Offering Period, subject to earlier withdrawal by the Participant as provided in Section 10 hereof. During a Participant’s lifetime, a Participant’s option to purchase shares hereunder is exercisable only by him or her.

9. Delivery. As promptly as practicable after each purchase of shares occurs, the Company shall arrange for the delivery to each Participant or his or her broker, or to a broker designated by the Committee, of a stock certificate evidencing the shares purchased under the Plan. Shares may be registered in the name of the Participant or jointly in the name of the Participant and his or her spouse as joint tenants with right of survivorship, or as community property. If the Company authorizes the issuance of common stock without certificates the Company may evidence the issuance of shares under the Plan by providing the Participant with a written statement documenting such issuance in accordance with the by-laws and applicable law.

10. Withdrawal from Plan Participation.

(a) A Participant may withdraw from participation in the Plan by giving notice of such withdrawal to the Company’s representative designated by the Committee. Such withdrawal shall be effective for all subsequent Offering Periods. All of the Participant’s payroll deductions credited to his or her account shall be paid to such Participant promptly after receipt of notice of withdrawal, such Participant’s option for the Offering Period shall automatically be terminated, and no further payroll deductions for the purchase of shares shall be made for such Offering Period. After a Participant withdraws from the Plan, payroll deductions shall not resume at the beginning of the succeeding Offering Period or any Offering Period thereafter unless the Participant delivers to the Company a new subscription agreement.

(b) A Participant’s withdrawal from the Plan shall not have any effect upon his or her eligibility to participate in any succeeding Offering Period after such withdrawal.

11. Termination of Employment . Upon a Participant’s ceasing to be an Employee for any reason at any time on or before the end of an Offering Period, he or she shall be deemed to have elected to withdraw from the Plan effective for all subsequent Offering Periods and the payroll deductions credited to such Participant’s account at the end of such Offering Period shall be returned to such Participant or, in the case of his or her death, to the person or persons entitled thereto under Section 15 hereof.

12. No Interest. No interest shall accrue or be payable on the payroll deductions of a Participant in the Plan.

13. Stock.

(a) The shares of Common Stock to be sold to Participants under the Plan may, at the election of the Company, be either treasury shares or shares originally issued by the Company.

(b) Subject to adjustment upon changes in capitalization of the Company as provided in Section 19 hereof, the maximum number of shares of the Company’s Common Stock available for sale under the Plan shall be 50,000 shares. If at any time the number of shares with respect to which purchases are to be made under the Plan exceeds the number of shares then available under the Plan, the Company shall make a pro rata allocation of the shares remaining available for purchase in as uniform a manner as shall be practicable and as it shall determine to be equitable.

(c) The Participant shall have no interest or voting rights in shares covered by his or her option or in any dividends declared by the Company in respect of its outstanding Common Stock until such option has been exercised.

(d) Shares to be delivered to a Participant under the Plan shall be registered in the name of the Participant or in the name of the Participant and his or her spouse, as designated by the Participant.

14. Administration . The Plan shall be administered by the Compensation Committee of the Board of Directors. The Committee shall have full and exclusive discretionary authority to construe, interpret and apply the terms of the Plan, to determine eligibility and to adjudicate all disputed claims filed under the Plan. Every finding, decision, and determination made by the Committee, to the fullest extent permitted by law, be final and binding upon all parties.

15. Designation of Beneficiary .

(a) A Participant may file a written designation of a beneficiary who is to receive any shares and cash, if any, from the Participant’s account under the Plan in the event of such Participant’s death subsequent to an Purchase Date on which the option is exercised, but before delivery to such Participant of such shares and cash. In addition, a Participant may file a written designation of a beneficiary who is to receive any cash from the Participant’s account under the Plan in the event of such Participant’s death before exercise of the option. If a Participant is married and the designated beneficiary is not the spouse, spousal consent shall be required for such designation to be effective.

(b) Such designation of beneficiary maybe changed by the Participant at any time by written notice. In the event of the death of a Participant and in the absence of a beneficiary validly designated under the Plan

who is living at the time of such Participant’s death, the Company shall deliver such shares and/or cash to the executor or administrator of the estate of the Participant or, if to the best of the Company’s knowledge no such executor or administrator has been appointed, the Company, in its discretion, may deliver such shares and/or cash to the spouse or to any one or more dependents or relatives of the Participant, or if no spouse, dependent, or relative is known to the Company, then to such other person as the Company may designate.

16. Transferability. Neither payroll deductions credited to a Participant’s account nor any rights with regard to the exercise of an option or to receive shares under the Plan may be assigned, transferred, pledged, or otherwise disposed of in any way (other than by will, the laws of descent and distribution, or as provided in Section 15 hereof) by the Participant. Any such attempt at assignment, transfer, pledge, or other disposition shall be without effect.

17. Use of Funds. All payroll deductions received or held by the Company under the Plan shall be general corporate funds and as such may be used by the Company for any corporate purpose, and the Company shall not be obligated to segregate such payroll deductions or pay interest thereon.

18. Reports. Individual accounts shall be maintained for each Participant in the Plan. Statements of account shall be given to Participants at least annually, which statements shall set forth the amounts of payroll deductions, the Purchase Price, the number of shares purchased, and the remaining cash balance, if any.

19. Adjustments Upon Changes in Capitalization, Dissolution, Liquidation, Merger, or Asset Sale.

(a) Changes in Capitalization. Subject to any required action by the stockholders of the Company, number of shares available for issuance under the Plan, the maximum number of shares each Participant may purchase per Offering Period, as well as the price per share and the number of shares of Common Stock covered by subscriptions shall be proportionately adjusted for any increase or decrease in the number of issued shares of Common Stock resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Common Stock, or any other increase or decrease in the number of shares of Common Stock effected without receipt of consideration by the Company; provided, however, that conversion of any convertible securities of the Company shall not be deemed to have been “effected without receipt of consideration.” Such adjustment shall be made by the Board, whose determination in that respect shall be final and binding on all parties. Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or of securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of shares of Common Stock subject to the Plan.

(b) Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, the Offering Period then in progress shall be shortened by setting a new Purchase Date (the New Purchase Date”), and shall terminate immediately before the consummation of such proposed dissolution or liquidation, unless provided otherwise by the Board. The New Purchase Date shall be before the date of the Company’s proposed dissolution or liquidation. The Board shall notify each Participant in writing, at least ten (10) business days before the New Purchase Date, that the Purchase Date for the Participant’s option has been changed to the New Purchase Date and that the Participant’s option shall be exercised automatically on the New Purchase Date, unless before such date the Participant has withdrawn from the Offering Period as provided in Section 10 hereof

(c) Merger or Asset Sale. In the event of a sale of all or substantially all of the assets of the Company, or the merger of the Company with or into another corporation, each outstanding option shall be assumed, or an equivalent option substituted, by the successor corporation or a Parent or Subsidiary of the successor corporation. In the event that the successor corporation refuses to assume the option or substitute equivalent options, the Offering Period then in progress shall be shortened by setting a new Purchase Date (the New Purchase Date”). The New Purchase Date shall be before the date of the Company’s proposed sale or merger. The Board shall notify each Participant in writing, at least ten (10) business days before the New Purchase Date, that the Purchase Date for the Participant’s option has been changed to the New Purchase

Date and that the Participant’s option shall be exercised automatically on the New Purchase Date, unless before such date the Participant has withdrawn from the Offering Period as provided in Section 10 hereof.

20. Amendment and Termination.

(a) The Board of Directors of the Company may at any time and for any reason terminate or amend the Plan. Except as provided in Section 19 hereof, no such termination can affect options previously granted, provided that an Offering Period may be terminated by the Board of Directors on any Purchase Date if the Board determines that the termination of the Offering Period or the Plan is in the best interests of the Company and its stockholders. Except as provided in Section 19 and this Section 20 hereof, no amendment may make any change in any option theretofore granted that adversely affects the rights of any Participant. To the extent necessary to comply with Section 423 of the Code (or any other applicable law, regulation, or stock exchange rule), the Company shall obtain shareholder approval in such manner and to such degree as required.

(b) Without shareholder consent and without regard to whether any Participant’s rights may be considered to have been “adversely affected,” the Board shall be entitled to: change the Offering Periods, the maximum amount of permitted payroll deductions, and the frequency and/or number of permitted changes in the amount withheld during an Offering Period; establish the exchange ratio applicable to amounts withheld in a currency other than U. S. dollars; permit payroll withholding in excess of the amount designated by a Participant in order to adjust for delays or mistakes in the Company’s processing of properly completed withholding elections; establish reasonable waiting and adjustment periods and/or accounting and crediting procedures to ensure that amounts applied toward the purchase of Common Stock for each Participant properly correspond with amounts withheld from the Participant’s Compensation; and establish such other limitations and procedures as the Board determines in its sole discretion are advisable.

(c) In the event that the Board determines that the ongoing operation of the Plan may result in unfavorable financial accounting consequences, the Board may, in its discretion and, to the extent necessary or desirable, modify or amend the Plan to reduce or eliminate such accounting consequences including, but not limited to:

(1) altering the Purchase Price for any Offering Period, including an Offering Period underway at the time of the change in Purchase Price; or

(2) shortening any Offering Period so that the Offering Period ends on a new Purchase Date, including an Offering Period underway at the time of the Board action.

Such modifications or amendments shall not require stockholder approval or the consent of any Plan Participants.

21. Notices. All notices or other communications by a Participant to the Company under or in connection with the Plan shall be deemed to have been duly given when received in the form specified by the Company at the location, or by the person, designated by the Company for the receipt thereof.

22. Conditions Upon Issuance of Shares.

(a) Shares shall not be issued with respect to an option unless the exercise of such option and the issuance and delivery of such shares pursuant thereto will comply with all applicable provisions of law, domestic or foreign, including, without limitation, the Securities Act of 1933, as amended, the Securities Exchange Act of 1934, as amended, the rules and regulations promulgated thereunder, and the requirements of any stock exchange on which the shares may then be listed, and shall be further subject to the approval of counsel for the Company with respect to such compliance.

(b) As a condition to the exercise of an option, the Company may require the person exercising such option to represent and warrant at the time of any such exercise that the shares are being purchased only for investment and without any present intention to sell or distribute such shares if, in the opinion of counsel for the Company, such a representation is required by any of the aforementioned applicable provisions of law.

23. Term of Plan. The Plan shall become effective upon approval by the stockholders in accordance with Treasury Regulations Section 1.423-2(c) within 12 months after its adoption by the Board. Once effective, the Plan shall continue in effect for a term of ten (10) years unless sooner terminated by the Board pursuant to Section 20 hereof.

24. Additional Restrictions of Rule 16b-3. The terms and conditions of options granted hereunder to, and the purchase of shares by, persons subject to Section 16 of the Exchange Act shall comply with the applicable provisions of Rule 16b-3. In the cases of any such persons, this Plan and options issued to such persons shall be deemed to contain, and the shares issued upon exercise of such options shall be subject to, such additional conditions and restrictions as may be required by Rule 16b-3 to qualify for the maximum exemption from Section 16 of the Exchange Act with respect to Plan transactions on behalf of such persons.