UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d)
of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 1, 2017
AMERICAN ELECTRIC TECHNOLOGIES, INC.
(Exact name of registrant as specified in its charter)
| Florida | 000-24575 | 59-3410234 | ||
| (State or other jurisdiction | (Commission | (IRS Employer | ||
| of incorporation) | File Number) | Identification No.) | ||
| 1250 Wood Branch Park Drive, Suite 600 | 77079 | |||
| (Address of principal executive offices) | (Zip Code) | |||
Registrant’s telephone number, including area code 713-644-8182
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 1.01 | Entry into a Material Definitive Agreement. |
On August 1, 2017 American Electric Technologies, Inc. (the “Company”) entered into an agreement (the “Repricing Agreement”) with JCH Crenshaw Holdings, LLC (the “Investor”), repricing the initial conversion price of the Series A Convertible Preferred Stock (the “Series A Preferred Stock”) and the initial exercise price of the Common Stock Purchase Warrants (the “Warrants”) which were sold to the Investor in 2012. As previously disclosed in the Company’s Current Report on Form 8-K filed March 27, 2017 and Quarterly Report on Form 10-Q filed May 15, 2017, the Company and the Investor entered into an agreement restricting payment of cash dividends on and redemption of the Series A Preferred Stock to facilitate the sale of the Company’s senior secured Term Note in March 2017. In consideration of the Investor’s consent to the foregoing restrictions the Company and the Investor agreed to an adjustment to the initial conversion price of the Common Stock issuable upon conversion of the Series A Preferred Stock and the initial exercise price of the Warrants to reflect the current market value of the Company’s common stock.
Casey Crenshaw, a director of the Company, is the beneficial owner of the Investor. The Repricing Agreement was approved by the conflicts committee of the Company’s Board of Directors made up of three independent directors.
The following description of the Repricing Agreement is not complete and is qualified in its entirety by reference to the full text of the Repricing Agreement, which is filed as Exhibit 10.1 to this Form 8-K and is incorporated herein by this reference.
Revised Initial Conversion Price of Series A Preferred Stock
Pursuant to the Repricing Agreement each share of Series A Preferred Stock will be initially convertible, at the option of the holder, into one (1) share of common stock at a conversion price of $2.26 per share of common stock, so that the Series A Preferred Stock sold to the Investor are currently convertible into an aggregate of 2,212,389 shares of common stock.
Revised Initial Exercise Price of the Warrants
Pursuant to the Repricing Agreement, the Series A Warrants sold to the Investor will be exercisable for 125,000 shares of common stock at an initial exercise price of $2.72 per share and the Series B Warrants sold to the Investor will be exercisable for 200,000 shares of common stock at an initial exercise price of $3.17 per share.
Limitations on Issuance and Voting
In order to comply with the rules of the NASDAQ Stock Market, the Repricing Agreement prohibits the issuance of more than 19.99% of our common stock or voting power outstanding to the Investor as of the date of the Repricing Agreement without stockholder approval. The Company has agreed to seek the approval of its stockholders as soon as practicable. In the event that stockholder approval is received and the Investor were to convert all of its Series A Preferred Stock into common stock and exercised all of its Common Stock Purchase Warrants for cash, the Investor would be issued more than 19.99% of our common stock and voting power as of the date of the Repricing Agreement.
On August 3, 2017 the Company issued a press release which reported that the Company entered into an agreement repricing the initial conversion price of the Series A Convertible Preferred Stock and the initial exercise price of the Common Stock Purchase Warrants (the “Warrants”) which were sold to the Investor in 2012.
A copy of the press release is filed as Exhibit 99.1.
| Item 8.01 | Other Events. |
On June 12, 2017 the Company issued a press release reporting that it had entered into discussions with Casey Crenshaw, a Director of the Company, concerning potential business strategies, opportunities and financing, which press release was attached as Exhibit 99.1 to the Company’s Current Report on Form 8-K filed June 16, 2017.
The Company reports that such discussions have now terminated.
| Item 9.01 | Financial Statements and Exhibits. |
|
Exhibit No. |
Description |
|
| 10.1 | Agreement dated August 1, 2017 between the Company and JCH Crenshaw Holdings, LLC relating to the repricing of the initial conversion price of the Series A Convertible Preferred Stock and initial exercise price of the Common Stock Purchase Warrants sold in 2012. | |
| 99.1 | Press Release dated August 3, 2017. | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| AMERICAN ELECTRIC TECHNOLOGIES, INC. | ||||||
| Date: August 3, 2017 | By: |
/s/ William B. Brod |
||||
| William B. Brod | ||||||
| Senior Vice President and CFO | ||||||
Exhibit 10.1
AGREEMENT
This AGREEMENT (the “ Agreement ”) is made as of August 1, 2017 by and between American Electric Technologies, Inc., a Florida corporation (the “ Company ”), and JCH Crenshaw Holdings, LLC, a Texas limited liability company (the “ Investor ”).
RECITALS:
WHEREAS , the Company and the Investor entered into a Securities Purchase Agreement dated April 13, 2012 (the “Securities Purchase Agreement”); and
WHEREAS , pursuant to the Securities Purchase Agreement the Company sold and issued to the Investor 1,000,000 shares of its Series A Convertible Preferred Stock, $.001 par value (the Series A Preferred Stock”), a Series A Common Stock Purchase Warrant for the purchase of 125,000 shares of its Common Stock (the “Series A Warrant”) and a Series B Common Stock Purchase Warrant for the purchase of 200,000 shares of its Common Stock (the “Series B Warrant”); and
WHEREAS, the Company and the Investor entered into a letter agreement dated March 22, 2017 (the “Letter Agreement”) which contains certain restrictions with respect to dividends, redemption and conversion of the Series A Preferred Stock. For purposes of identification, the Letter Agreement was filed as Exhibit 10.6 to the Company’s Current Report on Form 8-K filed March 27, 2017.
WHEREAS, the Company and the Investor desire to amend certain terms of Series A Preferred Stock, the Series A Warrant and the Series B Warrant in the manner set forth herein.
AGREEMENT:
NOW, THEREFORE , in consideration of the premises herein contained, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
Section 1. Amendment of Conversion Price of Series A Preferred Stock.
The Conversion Price of the Series A Preferred Stock as set forth in Section 4(a)(i) of the Company’s Articles of Amendment of Articles of Restatement of Articles of Incorporation filed with the Florida Department of State on April 30, 2012 (the “Articles”) is hereby amended to be $2.26, subject to adjustment as provided in the Articles. As soon as practicable after the date hereof the Company shall cause the foregoing amendment to the Conversion Price to be filed in an Articles of Amendment with the Florida Department of State.
Section 2. Amendments to Series A Warrant.
(a) The initial Warrant Price for exercise of the Series A Warrant is hereby amended to be $2.72 per share, subject to adjustment as provided in the Series A Warrant.
(b) Section 3(d) of the Series A Warrant is hereby amended to read as follows:
“(d) Whenever the number of Warrant Shares purchasable upon the exercise of this Warrant is adjusted as herein provided, the Warrant Price will be adjusted to the Conversion Price per share of Series A Convertible Preferred Stock as of such date plus $0.46. No adjustment to the Warrant Price pursuant to this Section 3 shall have the effect of increasing the Warrant Price above the Warrant Price in effect immediately prior to such adjustment.”
Section 3. Amendments to Series B Warrant.
(a) The initial Warrant Price for exercise of the Series B Warrant is hereby amended to be $3.17 per share, subject to adjustment as provided in the Series B Warrant.
(b) Section 3(d) of the Series B Warrant is hereby amended to read as follows:
“(d) Whenever the number of Warrant Shares purchasable upon the exercise of this Warrant is adjusted as herein provided, the Warrant Price will be adjusted to the Conversion Price per share of Series A Convertible Preferred Stock as of such date plus $0.91. No adjustment to the Warrant Price pursuant to this Section 3 shall have the effect of increasing the Warrant Price above the Warrant Price in effect immediately prior to such adjustment.”
Section 4. Issuance and Voting Limitation.
The Company and Investor acknowledge and agree that, until the Company obtains the required shareholder approval under NASDAQ Marketplace Rule 5635 (the “ Approval ”), (a) the total number of shares of Common Stock resulting from the conversion of the Series A Preferred Stock and the exercise of the Series A and B Warrants cannot exceed 19.99% of the total number of shares of Common Stock outstanding immediately prior to the date hereof (as adjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction), and (b) the holders of the shares of Common Stock resulting from the conversion of the Series A Preferred Stock and the exercise of the Series A and B Warrants and the holders of the Series A Preferred Stock cannot be entitled to more than 19.99% of the total voting power of the Company’s equity securities outstanding immediately prior to the date hereof (as adjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction). The Company covenants and agrees to use its commercially reasonable efforts to obtain the Approval as soon as reasonably practicable, and immediately after the Approval is obtained, the limitations under this Section 4 shall no longer apply. Investor acknowledges that in connection with the Approval, none of the Series A Preferred Stock and shares of Common Stock resulting from the conversion of the Series A Preferred Stock and the exercise of the Series A and B Warrants may vote on such matter. If at any time this provision limits voting power with respect to the Series A Preferred Stock, the voting power of the Series A Preferred Stock shall be reduced to the minimum extent necessary to allow the holders of the holders of the shares of Common
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Stock resulting from the conversion of the Series A Preferred Stock and the exercise of the Series A and B Warrants and the Series A Preferred Stock to collectively exercise 19.99% of the total voting power of the Company’s equity securities outstanding immediately prior to the date of this Agreement (as adjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction).
Section 5. Effect of this Agreement.
Except as expressly provided in this Agreement, the terms, covenants and conditions of the Securities Purchase Agreement, the Articles, the Series A Warrant, the Series B Warrant and the Letter Agreement shall remain in full force and effect, and all such terms, covenants and conditions thereof are hereby ratified and confirmed by the parties hereto in all respects.
Section 6. Conflict of Terms.
If any provision contained in this Agreement conflicts with any provision in the Securities Purchase Agreement, the Articles, the Series A Warrant, the Series B Warrant and the Letter Agreement, the provision contained in this Agreement shall govern and control.
Section 7. Entire Agreement.
This Agreement and the documents expressly referred to herein constitute the entire agreement between the parties hereto with respect to the matters covered hereby, and any other prior or contemporaneous oral or written understandings or agreements with respect to the matters covered hereby are expressly superseded by this Agreement.
Section 8. Miscellaneous.
This Agreement (a) may be amended only by a writing signed by each of the parties; (b) may be executed in several counterparts and by fax, email or PDF. Each counterpart shall be deemed an original but all of which shall constitute one and the same instrument; (c) shall be governed by, and construed and enforced in accordance with the laws of the State of Texas, without giving effect to any conflict of law rules; and (d) shall be binding upon, and inure to the benefit of, the parties and their respective successors and assigns.
IN WITNESS WHEREOF, the Parties have executed this Agreement as of the date first above written.
| COMPANY: | ||
| American Electric Technologies, Inc. | ||
| By: |
s/ Charles M. Dauber |
|
| Charles M. Dauber | ||
| President | ||
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| INVESTOR: | ||
| JCH Crenshaw Holdings, LLC | ||
| By: |
s/ Casey Crenshaw |
|
| Casey Crenshaw | ||
| Title: | President | |
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Exhibit 99.1
FOR RELEASE – August 3, 2017 – 7:00 am (EST)
AETI reports repricing of Preferred Stock conversion price and exercise price of Common Stock Purchase Warrants
HOUSTON, August 3, 2017 - American Electric Technologies, Inc. (NASDAQ: AETI) (the “Company”), a leading supplier of power delivery solutions for the global energy industry, today reported that it has entered into a repricing agreement with the holder of its Series A Convertible Preferred Stock and related Common Stock Purchase Warrants to adjust the initial conversion price of the Convertible Preferred Stock and the initial exercise price of the related Common Stock Purchase Warrants which were originally issued in 2012.
Because a representative of the holder of the Series A Preferred Stock and the Common Stock Purchase Warrants, Casey Crenshaw, has been a director of the Company from the original issuance of the Preferred Stock and Warrants in 2012, the repricing agreement was approved by a special conflicts committee of the Company’s Board of Directors composed of three of its independent Directors.
The following is a description of the major terms of the repricing agreement. The full text of the repricing agreement will be filed with the SEC as an exhibit to Form 8-K shortly.
Revised Initial Conversion Price of Series A Preferred Stock
Pursuant to the repricing agreement each share of Preferred Stock will be initially convertible, at the option of the holder, into one (1) share of common stock at a conversion price of $2.26 per share of common stock, so that the outstanding Series A Preferred Stock are currently convertible into an aggregate of 2,212,389 shares of common stock.
Revised Initial Exercise Price of the Warrants
Pursuant to the repricing agreement, the outstanding Series A Warrants will be exercisable for 125,000 shares of common stock at an initial exercise price of $2.72 per share and the outstanding Series B Warrants will be exercisable for 200,000 shares of common stock at an initial exercise price of $3.17 per share.
Limitations on Issuance and Voting
In order to comply with the rules of the NASDAQ Stock Market, the Repricing Agreement prohibits the issuance of more than 19.99% of our common stock or voting power outstanding to the Investor as of the date of the Repricing Agreement without stockholder approval. The Company has agreed to seek the approval of its stockholders as soon as practicable. In the event that stockholder approval is received and the Investor were to convert all of its Series A Preferred Stock into common stock and exercised all of its Common Stock Purchase Warrants for cash, the Investor would be issued more than 19.99% of our common stock and voting power as of the date of the Repricing Agreement.
American Electric Technologies, Inc. (NASDAQ:AETI) is a leading provider of power delivery solutions to the global energy industry. AETI offers M&I Electric ™ power distribution and control products, electrical services, and construction services.
AETI is headquartered in Houston and has global sales, support and manufacturing operations in Beaumont, Texas and Houma, Louisiana; and Rio de Janeiro, Macaé and Belo Horizonte, Brazil. In addition, AETI has minority interests in two joint ventures, which have facilities located in Xian, China and Singapore. AETI’s SEC filings, news and product/service information are available at www.aeti.com .
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Investor Contact:
American Electric Technologies, Inc.
Bill Brod
713-644-8182
investorrelations@aeti.com