13D Filing: Van Steenwyk Matthew and American Power Group Corp (APGI)

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Upon the issuance of the Series D Preferred Stock, the Company issued each Purchaser New Warrants to purchase two times that number of shares of the Common Stock into which such Purchaser’s shares of Series D Preferred Stock is convertible. The New Warrants may be exercised only for cash.

Each New Warrant included in the Shares entitles the holder to purchase up to 2,000,000 shares of Common Stock at an exercise price of $0.10 per share. The New Warrants may be exercised at any time with respect to not more than one-half of the number of shares of Common Stock for which each of the New Warrants is exercisable until such time as the Company has filed a certificate of amendment to its Restated Certificate of Incorporation with the Secretary of State of the State of Delaware increasing the number of authorized shares of Common Stock from 200,000,000 to 350,000,000 shares. Upon the filing of the certificate of amendment, the New Warrants may be exercised for the remaining shares (the “Contingent Shares”). If the holders of a majority of the New Warrants (measured with reference to the number of shares of Common Stock issuable from time to time upon the exercise of all New Warrants) exercise their New Warrants in whole or part, the holders of all New Warrants are required to exercise a pro rata portion of their New Warrants. The New Warrants are initially exercisable for a period of five years. However, (a) if the certificate of amendment is not effective by January 8, 2017, then the New Warrants will remain exercisable, with respect to the Contingent Shares only, until January 8, 2022; and (b) if the certificate of amendment is not effective by January 8, 2018, then the New Warrants will remain exercisable, with respect to all of the shares underlying the New Warrants, until January 8, 2026. In addition, if the certificate of amendment is not effective by January 8, 2018, the Company will incur certain monetary penalties payable to the holders of the New Warrants.

The Company has agreed to take all action reasonably necessary to convene a meeting of its stockholders to be held at the earliest practicable time for the purpose of approving the certificate of amendment.

Pursuant to the terms of the Purchase Agreement, Arrow exchanged its shares of the Company’s Series A Preferred Stock and Series B Preferred Stock for an equal number of shares of a new Series D-2 Preferred Stock, and additionally exchanged its shares of the Company’s Series C Preferred Stock for an equal number of shares of a new Series D-3 Preferred Stock.

Suspension of Cash Dividends; Dividend on Series D Preferred Stock

The Board of Directors elected to suspend the payment of cash dividends on the Series A Preferred Stock and the Series B Preferred Stock, commencing with the dividend payable on September 30, 2015, until such time as the Board of Directors determines that the Company possesses funds legally available for the payment of dividends. During the deferral period, dividends on the Series A Preferred Stock and Series B Preferred Stock may be paid in shares of Common Stock in the discretion of the Board of Directors.