NEITHER THIS WARRANT NOR THE SECURITIES FOR WHICH THIS SECURITY IS EXERCISABLE
HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE
SECURITIES COMMISSION OF ANY STATE IN RELIANCE UPON AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH EFFECT, THE SUBSTANCE OF WHICH SHALL BE REASONABLY ACCEPTABLE TO THE
COMPANY.

COMMON STOCK PURCHASE WARRANT

AMERICAN POWER GROUP CORPORATION
Warrant Shares: 1,540,000                Original Issue Date: November 27, 2012

THIS COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that, for value
received, WheelTime Network LLC (the “Holder”) is entitled, upon the terms and
subject to the limitations on exercise and the conditions hereinafter set forth,
at any time on or after the Exercise Date (as defined below) and on or prior to
the close of business on December 31, 2017 (the “Termination Date”) but not
thereafter, to subscribe for and purchase from American Power Group Corporation,
a Delaware corporation (the “Company”), up to 1,540,000 shares (the “Warrant
Shares”) of Common Stock. The purchase price of one share of Common Stock under
this Warrant shall be equal to the Exercise Price, as defined in Section 2(b).
Section 1.    Definitions. Capitalized terms used and not otherwise defined
herein shall have the meanings set forth in that certain National Distributor
and Master Marketing Agreement (the “Marketing Agreement”), dated as of the date
hereof, among American Power Group, Inc., an Iowa corporation and subsidiary of
the Company (“APG”) and the Holder hereof. As used in this Agreement, the
following terms shall have the following meanings:
a)“Common Stock” means common stock of the Company, par value $0.01 per share.
b)“Exercise Date” means: (i) with respect to 100,000 Warrant Shares, the
Original Issue Date; (ii) with respect to up to an additional 900,000 Warrant
Shares, an additional 50,000 Warrant Shares on each date on which a member of
the Holder (a “Member”) enters into a Certified Installer Agreement with APG, so
long as such date is on or before the one-year anniversary of the Original Issue
Date; and (iii) with respect to up to an additional 540,000 Warrant Shares, an
additional 30,000 Warrant Shares on each date on which a Member enters into an
Exclusive Dealer Agreement with APG, so long as such date is on or before the
one-year anniversary of the Original Issue Date and so long as such Member has
also entered into a Certified Installer Agreement.

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Section 2.    Exercise.
a)Exercise of Warrant. Exercise of the purchase rights represented by this
Warrant may be made, in whole or in part, at any time or times on or after the
Exercise Date and on or before the Expiration Date by delivery to the Company
(or such other office or agency of the Company as it may designate by notice in
writing to the registered Holder at the address of the Holder appearing on the
books of the Company) of this Warrant, together with a duly executed Notice of
Exercise form annexed hereto and with the aggregate Exercise Price for the
shares specified in the applicable Notice of Exercise. The Exercise Price may be
paid (i) by wire transfer or cashier's check drawn on a United States bank, (ii)
in a “cashless” exercise permitted under Section 2(c) below, or (iii) by a
combination of the methods described in (i) and (ii) above.
b)Exercise Price. The exercise price per share of the Common Stock under this
Warrant shall be $0.55, subject to adjustment hereunder (the “Exercise Price”).
c)Net Issue Exercise. Notwithstanding any provisions herein to the contrary, if
the fair market value of one Warrant Share is greater than the Exercise Price
(at the date of calculation as set forth below), in lieu of exercising this
Warrant for cash, the Holder may elect to receive Warrant Shares equal to the
value (as determined below) of this Warrant (or the portion thereof being
canceled) by surrender of this Warrant at the principal office of the Company
together with the properly endorsed Notice of Exercise and notice of such
election in which event the Company shall issue to the Holder a number of
Warrant Shares computed using the following formula:
X
=
Y (A-B)
A
 
 
 

Where X= the number of Warrant Shares to be issued to the Holder
Y
=    the number of Warrant Shares purchasable under the Warrant or, if only a
portion of the Warrant is being exercised, the portion of the Warrant being
canceled (at the date of such calculation) if such purchase were by means of a
cash exercise rather than a cashless exercise

A
=    the fair market value of one Warrant Share (at the date of such
calculation)

B
=    Exercise Price (as adjusted to the date of such calculation)

For purposes of this Warrant, the fair market value of a Warrant Share (the
“Fair Market Value”) on any particular date, shall mean (a) the last reported
closing bid price per share of Common Stock on such date on the Trading Market
(as reported by Bloomberg Financial Markets (“Bloomberg”) at 4:15 p.m. (New York
City time)), (b) if there is no such price on such date, then the closing bid
price on the Trading Market on the date nearest preceding such date (as reported
by Bloomberg at 4:15 p.m. (New York City time)), (c) if the Common Stock is not
then listed or quoted on a Trading Market and if prices for the Common Stock are
then reported in the “pink sheets” published by Pink OTC Markets, Inc. (or a
similar organization or agency succeeding to its functions of reporting prices),
the most recent bid price per share of the Common Stock so reported, or (d) if
the shares of Common Stock are not then publicly traded, the fair market value
as of such date of a share of Common Stock as determined by an independent
appraiser selected in good faith by the Holder and reasonably acceptable to the
Company, the fees and expenses of which shall be paid fifty percent (50%) by the
Company and fifty percent (50%) by the Holder. “Trading Market” means any of the
following markets or exchanges on which the Common Stock is listed or quoted for
trading on the date in question: the NYSE AMEX, the Nasdaq Capital Market, the
Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock
Exchange or the OTC Bulletin Board (or any successors to any of the foregoing).

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d)Mechanics of Exercise.
i.Delivery of Certificates Upon Exercise. As soon as practicable after any
exercise of this Warrant, the Company, at its own expense, will deliver to the
registered Holder hereof one or more certificates representing the number of
Warrant Shares to which such Holder is entitled in respect of such exercise,
together, in the case of any partial exercise, with a new Warrant representing
the unexercised portion thereof.
ii.No Fractional Shares or Scrip. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant. As to any
fraction of a share which the Holder would otherwise be entitled to purchase
upon such exercise, the Company shall, at its election, either pay a cash
adjustment in respect of such final fraction in an amount equal to such fraction
multiplied by the Exercise Price or round up to the next whole share.
iii.Charges, Taxes and Expenses. Issuance of certificates for Warrant Shares
shall be made without charge to the Holder for any issue or transfer tax or
other incidental expense in respect of the issuance of such certificate, all of
which taxes and expenses shall be paid by the Company, and such certificates
shall be issued in the name of the Holder or in such name or names as may be
directed by the Holder; provided, however, that in the event certificates for
Warrant Shares are to be issued in a name other than the name of the Holder,
this Warrant when surrendered for exercise shall be accompanied by the
Assignment Form attached hereto duly executed by the Holder and the Company may
require, as a condition thereto, the payment of a sum sufficient to reimburse it
for any transfer tax incidental thereto.
iv.Closing of Books. The Company will not close its stockholder books or records
in any manner which prevents the timely exercise of this Warrant, pursuant to
the terms hereof.

e)Expiration. This Warrant and the Holder's rights hereunder will expire on the
date (the “Expiration Date”) of the earlier to occur of the following (i) the
Termination Date; or (ii) the termination of the Marketing Agreement for any
reason.
Section 3.    Adjustments for Reorganizations, Consolidations, Mergers, Etc.
a)Certain Adjustments. If the Company, at any time while this Warrant is
outstanding: (i) pays a stock dividend or otherwise makes a distribution or
distributions on shares of its Common Stock or any other equity or equity
equivalent securities payable in shares of Common Stock (which, for avoidance of
doubt, shall not include any shares of Common Stock issued by the Company upon
exercise of this Warrant), (ii) subdivides outstanding shares of Common Stock
into a larger number of shares, (iii) combines (including by way of reverse
stock split) outstanding shares of Common Stock into a smaller number of shares,
or (iv) issues by reclassification of shares of the Common Stock any shares of
capital stock of the Company, then in each case the Exercise Price shall be
multiplied by a fraction of which the numerator shall be the number of shares of
Common Stock (excluding treasury shares, if any) outstanding immediately before
such event and of which the denominator shall be the number of shares of Common
Stock outstanding immediately after such event, and the number of shares
issuable upon exercise of this Warrant shall be proportionately adjusted such
that the aggregate Exercise Price of this Warrant shall remain unchanged. Any
adjustment made pursuant to this Section 3(a) shall become effective immediately
after the record date for the determination of stockholders entitled to receive
such dividend or distribution and shall become effective immediately after the
effective date in the case of a subdivision, combination or re‑classification.
b)Continuation of Terms. Upon any reorganization, consolidation, merger, or
transfer (and any dissolution following any transfer) referred to in this
Section 3, this Warrant will continue in full force and effect and the terms
hereof will be applicable to the securities, cash, and/or property receivable on
the exercise of this Warrant after or simultaneously with the consummation of
such reorganization, consolidation, or merger or the effective date of
dissolution following any such transfer, as the case may be, and will be binding
upon the issuer of any such stock or other securities, including, in the case of
any such transfer, the person or entity acquiring all or substantially all of
the properties or assets of the Company,

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whether or not such person or entity expressly assumes the Company's obligations
under this Warrant as provided in Section 4 hereof.

Section 4.    No Impairment. The Company will not, by amendment of its
certificate of incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities, or any other
action, avoid or seek to avoid the observance or performance of any of the terms
of this Warrant. Without limiting the generality of the foregoing, the Company
(i) will not increase the par value of any shares of stock receivable on the
exercise of this Warrant above the amount payable therefor on such exercise,
(ii) will take all such action as may be necessary or appropriate in order that
the Company may validly and legally issue fully paid and non-assessable shares
of stock upon exercise of this Warrant from time to time, and (iii) will not
transfer all or substantially all of its properties and assets to any other
person or entity or consolidate into or merge with or into any other person or
entity (if the Company is not the surviving entity), unless such other person or
entity expressly agrees in writing (naming the registered Holder hereof, as
such, as an intended third-party beneficiary) to assume and satisfy all of the
Company's obligations under this Warrant.
Section 5.    Notice of Record Date, Etc. In the event from time to time of any
proposed or contemplated:
a)
taking by the Company of a record of the holders of Common Stock for the purpose
of determining the holders thereof who are entitled to receive any dividend or
other distribution; or

b)
capital reorganization of the Company, any reclassification or recapitalization
of the capital stock of the Company, or any transfer of all or substantially all
the assets of the Company to, or any consolidation or merger of the Company with
or into, any other person or entity; or

c)
voluntary or involuntary dissolution, liquidation, or winding-up of the Company;

then, and in each such event, the Company will mail or cause to be mailed to the
registered Holder of this Warrant a notice specifying (i) the date on which any
such record is to be taken for the purpose of such dividend, distribution, or
right, and stating the amount and character of such dividend, distribution, or
right, or (ii) the date on which any such reorganization, reclassification,
recapitalization, transfer, consolidation, merger, dissolution, liquidation, or
winding-up is anticipated to take place, and the time, if any is to be fixed, as
of which the holders of record of any class or series of the Company's capital
stock or other securities will be entitled to exchange such stock or other
securities for other securities, cash, and/or other property deliverable on such
reorganization, reclassification, recapitalization, transfer, consolidation,
merger, dissolution, liquidation, or winding-up. Such notice will be mailed at
least five (5) days prior to the earliest date specified in such notice on which
any such action or transaction is to be taken or consummated.

Section 6.    Transfer of Warrant.
a)Transferability. This Warrant and all rights hereunder are transferable, in
whole or in part, upon surrender of this Warrant at the principal office of the
Company or its designated agent, together with a written assignment of this
Warrant substantially in the form attached hereto duly executed by the Holder or
its agent or attorney and funds sufficient to pay any transfer taxes payable
upon the making of such transfer; provided that upon transfer the transferee is
reasonably acceptable to the Company and agrees to be bound by the terms of this
Warrant. Upon such surrender and, if required, such payment, the Company shall
execute and deliver a new Warrant or Warrants in the name of the assignee or
assignees, as applicable,

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and in the denomination or denominations specified in such instrument of
assignment, and shall issue to the assignor a new Warrant evidencing the portion
of this Warrant not so assigned, and this Warrant shall promptly be cancelled.
The Warrant, if properly assigned in accordance herewith, may be exercised by a
new holder for the purchase of Warrant Shares without having a new Warrant
issued.
b)New Warrants. This Warrant may be divided or combined with other Warrants upon
presentation hereof at the aforesaid office of the Company, together with a
written notice specifying the names and denominations in which new Warrants are
to be issued, signed by the Holder or its agent or attorney. Subject to
compliance with Section 6(a), as to any transfer which may be involved in such
division or combination, the Company shall execute and deliver a new Warrant or
Warrants in exchange for the Warrant or Warrants to be divided or combined in
accordance with such notice. All Warrants issued on transfers or exchanges shall
be dated the initial issuance date set forth on the first page of this Warrant
and shall be identical with this Warrant except as to the number of Warrant
Shares issuable pursuant thereto.
c)Warrant Register. The Company shall register this Warrant, upon records to be
maintained by the Company for that purpose (the “Warrant Register”), in the name
of the record Holder hereof from time to time. The Company may deem and treat
the registered Holder of this Warrant as the absolute owner hereof for the
purpose of any exercise hereof or any distribution to the Holder, and for all
other purposes, absent actual notice to the contrary.
d)Representation by the Holder. The Holder, by the acceptance hereof, represents
and warrants that it is acquiring this Warrant and, upon any exercise hereof,
will acquire the Warrant Shares issuable upon such exercise, for its own account
and not with a view to or for distributing or reselling such Warrant Shares or
any part thereof in violation of the Securities Act or any applicable state
securities law, except pursuant to sales registered or exempted under the
Securities Act.

Section 7.    Miscellaneous.
a)No Rights as Stockholder Until Exercise. This Warrant does not entitle the
Holder to any voting rights, dividends or other rights as a stockholder of the
Company prior to the exercise hereof as set forth in Section 2(c).
b)Loss, Theft, Destruction or Mutilation of Warrant. The Company covenants that
upon receipt by the Company of evidence reasonably satisfactory to it of the
loss, theft, destruction or mutilation of this Warrant or any stock certificate
relating to the Warrant Shares, and in case of loss, theft or destruction, of
indemnity or security reasonably satisfactory to it (which, in the case of the
Warrant, shall not include the posting of any bond), and upon surrender and
cancellation of such Warrant or stock certificate, if mutilated, the Company
will make and deliver a new Warrant or stock certificate of like tenor and dated
as of such cancellation, in lieu of such Warrant or stock certificate.
c)Saturdays, Sundays, Holidays, etc. If the last or appointed day for the taking
of any action or the expiration of any right required or granted herein shall
not be a Business Day, then, such action may be taken or such right may be
exercised on the next succeeding Business Day.
d)Authorized Shares. The Company covenants that, during the period the Warrant
is outstanding, it will reserve from its authorized and unissued Common Stock a
sufficient number of shares to provide for the issuance of the Warrant Shares
upon the exercise of any purchase rights under this Warrant.
e)Governing Law. This Warrant shall be governed by and construed in accordance
with the laws of the State of Delaware without regard to choice of law
principles.
f)Restrictions. The Holder acknowledges that the Warrant Shares acquired upon
the exercise of this Warrant will have restrictions upon resale imposed by state
and federal securities laws.
g)Remedies. The Holder, in addition to being entitled to exercise all rights
granted by law, including recovery of damages, will be entitled to specific
performance of its rights under this Warrant. The Company agrees that monetary
damages would not be adequate compensation for any loss incurred by

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reason of a breach by it of the provisions of this Warrant and hereby agrees to
waive and not to assert the defense in any action for specific performance that
a remedy at law would be adequate.
h)Successors and Assigns. Subject to applicable securities laws, this Warrant
and the rights and obligations evidenced hereby shall inure to the benefit of
and be binding upon the successors and permitted assigns of the Company and the
successors and permitted assigns of Holder. The provisions of this Warrant are
intended to be for the benefit of any Holder from time to time of this Warrant
and shall be enforceable by the Holder or holder of Warrant Shares.
i)Amendment. This Warrant may be modified or amended or the provisions hereof
waived with the written consent of the Company and holders of Warrants
representing a majority of the Warrant Shares.
j)Severability. Wherever possible, each provision of this Warrant shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Warrant shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating the remainder of such provisions
or the remaining provisions of this Warrant.
k)Headings. The headings used in this Warrant are for the convenience of
reference only and shall not, for any purpose, be deemed a part of this Warrant.

********************

(Signature Pages Follow)

IN WITNESS WHEREOF, the Company and the Holder hereof have each caused this
Warrant to be executed by its officer thereunto duly authorized as of the date
first above indicated.

AMERICAN POWER GROUP CORPORATION
By: /s/Charles E. Coppa
     Name: Charles E. Coppa
     Title: Chief Financial Officer

HOLDER:

WHEELTIME NETWORK, LLC

By: /s/Mike Delaney
     Name: Mike Delaney
     Title: President and CEO
 

    

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