Exhibit
10.3


 


NEITHER
THIS WARRANT NOR ANY SECURITIES THAT MAY BE ISSUED UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE “SECURITIES ACT”), OR REGISTERED OR QUALIFIED UNDER ANY STATE SECURITIES LAWS. THIS WARRANT HAS BEEN
ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO ITS DISTRIBUTION OR RESALE, AND THIS WARRANT AND ANY SUCH SECURITIES MAY NOT BE
SOLD, PLEDGED, OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT FOR THIS WARRANT OR SUCH SECURITIES UNDER
THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY TO THE EFFECT THAT
SUCH REGISTRATION IS NOT REQUIRED.


 


American
Power Group Corporation


 


Common
Stock Purchase Warrant


 


	Warrant
    – ______	__________,
    2017


 


American
Power Group Corporation, a Delaware corporation with a principal place of business of 7 Kimball Lane Building A, Lynnfield, Massachusetts
01940 (the “Company”), hereby certifies that, subject to the terms and conditions set forth herein, ____________
or its permitted assigns (the “Holder”), is entitled to purchase up to __________ shares (the “Warrant
Shares”) of the Company’s Common Stock, $.01 par value per share (“Common Stock”), at an exercise
price of $.10 per Warrant Share (the “Exercise Price”), at any time or from time to time after the date hereof
and prior to 5:00 p.m. (Boston, Massachusetts time), on __________, 2027 (the “Expiration
Date”). This Warrant is one of a series of warrants (together, the “Warrants”) issued pursuant to
that certain Convertible Note Purchase Agreement dated as of January 27, 2017 among the Company and the original holders of the
Warrants (the “Purchase Agreement”).


 


1.       Exercise
of Warrant. This Warrant may be exercised by the Holder by surrender to the Company of this Warrant, with the attached form
of notice of exercise (a “Notice of Exercise”) duly executed by such Holder, accompanied by payment, by certified
or bank check payable to the order of the Company or by wire transfer to the Company’s account, in an amount equal to the
aggregate Exercise Price payable hereunder for the number of Warrant Shares for which this Warrant is being exercised.


 


2.
      Delivery of Certificates; Fractional Shares.




 


(a)       Delivery
of Certificates Upon Exercise. Certificates for shares purchased hereunder shall be transmitted by the Transfer Agent to the
Holder by crediting the account of the Holder’s prime broker with The Depository Trust Company through its Deposit or Withdrawal
at Custodian system (“DWAC”) if the Company is then a participant in such system and either (A) there is an
effective registration statement permitting the issuance of the Warrant Shares to or resale of the Warrant Shares by the Holder
or (B) the shares are eligible for resale by the Holder pursuant to Rule 144, and otherwise by physical delivery to the address
specified by the Holder in the Notice of Exercise by the date that is three (3) Trading Days after the latest of (A) the delivery
to the Company of the Notice of Exercise, (B) surrender of this Warrant (if required) and (C) payment of the aggregate Exercise
Price as set forth above (such date, the “Warrant Share Delivery Date”). The Warrant Shares shall be deemed
to have been issued, and Holder or any other Person so designated to be named therein shall be deemed to have become a holder
of record of such shares for all purposes, as of the date the Warrant has been exercised, with payment to the Company of the Exercise
Price and all taxes required to be paid by the Holder, if any, pursuant to Section 2(f) prior to the issuance of such shares,
having been paid.


 




    	 



    	 



    

 


(b)       Delivery
of New Warrants Upon Exercise. If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder
and upon surrender of this Warrant certificate, at the time of delivery of the certificate or certificates representing Warrant
Shares, deliver to Holder a new Warrant evidencing the rights of Holder to purchase the unpurchased Warrant Shares called for
by this Warrant, which new Warrant shall in all other respects be identical with this Warrant.


 


(c)       Rescission
Rights. If the Company fails to cause the Transfer Agent to transmit to the Holder a certificate or the certificates representing
the Warrant Shares pursuant to Section 2(a) by the Warrant Share Delivery Date, then, the Holder will have the right to rescind
such exercise.


 


(d)       Compensation
for Buy-In on Failure to Timely Deliver Certificates Upon Exercise. In addition to any other rights available to the Holder,
if the Company fails to cause the Transfer Agent to transmit to the Holder a certificate or the certificates representing the
Warrant Shares pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Holder is required
by its broker to purchase (in an open market transaction or otherwise) or the Holder’s brokerage firm otherwise purchases,
shares of Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant Shares which the Holder anticipated receiving
upon such exercise (a “Buy-In”), then the Company shall (A) pay in cash to the Holder the amount, if any, by
which (x) the Holder’s total purchase price (including brokerage commissions, if any) for the shares of Common Stock so
purchased exceeds (y) the amount obtained by multiplying (1) the number of Warrant Shares that the Company was required to deliver
to the Holder in connection with the exercise at issue times (2) the price at which the sell order giving rise to such purchase
obligation was executed, and (B) at the option of the Holder, either reinstate the portion of the Warrant and equivalent number
of Warrant Shares for which such exercise was not honored (in which case such exercise shall be deemed rescinded) or deliver to
the Holder the number of shares of Common Stock that would have been issued had the Company timely complied with its exercise
and delivery obligations hereunder. For example, if the Holder purchases Common Stock having a total purchase price of $11,000
to cover a Buy-In with respect to an attempted exercise of shares of Common Stock with an aggregate sale price giving rise to
such purchase obligation of $10,000, under clause (A) of the immediately preceding sentence the Company shall be required to pay
the Holder $1,000. The Holder shall provide the Company written notice indicating the amounts payable to the Holder in respect
of the Buy-In and, upon request of the Company, evidence of the amount of such loss. Nothing herein shall limit a Holder’s
right to pursue any other remedies available to it hereunder, at law or in equity including, without limitation, a decree of specific
performance and/or injunctive relief with respect to the Company’s failure to timely deliver certificates representing shares
of Common Stock upon exercise of the Warrant as required pursuant to the terms hereof.


 




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(e)       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.


 


(f)       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.


 


(g)       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.


 


3.       Certain
Adjustments.


 


(a)       Stock
Dividends and Splits. 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.


 




    	3



    	 



    

 


(b)       Pro
Rata Distributions. If the Company, at any time while this Warrant is outstanding, shall distribute to all holders of Common
Stock (and not to the Holder) evidences of its indebtedness or assets (including cash and cash dividends) or rights or warrants
to subscribe for or purchase any security other than the Common Stock, then in each such case the Exercise Price shall be adjusted
by multiplying the Exercise Price in effect immediately prior to the record date fixed for determination of stockholders entitled
to receive such distribution by a fraction of which the denominator shall be the VWAP determined as of the record date mentioned
above, and of which the numerator shall be such VWAP on such record date less the then per share fair market value at such record
date of the portion of such assets or evidence of indebtedness or rights or warrants so distributed applicable to one outstanding
share of the Common Stock as determined by the Company’s Board of Directors in good faith. In either case the adjustments
shall be described in a statement provided to the Holder of the portion of assets or evidences of indebtedness so distributed
or such subscription rights applicable to one share of Common Stock. Such adjustment shall be made whenever any such distribution
is made and shall become effective immediately after the record date mentioned above.


 


(c)       Fundamental
Transaction. If, at any time while this Warrant is outstanding, (i) the Company, directly or indirectly, in one or more related
transactions effects any merger or consolidation of the Company with or into another Person, (ii) the Company, directly or indirectly,
effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially all of its assets
in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer or exchange offer (whether
by the Company or another Person) is completed pursuant to which holders of Common Stock are permitted to sell, tender or exchange
their shares for other securities, cash or property and has been accepted by the holders of 50% or more of the outstanding Common
Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects any reclassification, reorganization
or recapitalization of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted
into or exchanged for other securities, cash or property, (v) the Company, directly or indirectly, in one or more related transactions
consummates a stock or share purchase agreement or other business combination (including, without limitation, a reorganization,
recapitalization, spin-off or scheme of arrangement) with another Person whereby such other Person acquires more than 50% of the
outstanding shares of Common Stock (not including any shares of Common Stock held by the other Person or other Persons making
or party to, or associated or affiliated with the other Persons making or party to, such stock or share purchase agreement or
other business combination) (each a “Fundamental Transaction”), then, upon any subsequent exercise of this
Warrant, the Holder shall have the right to receive, for each Warrant Share that would have been issuable upon such exercise immediately
prior to the occurrence of such Fundamental Transaction, at the option of the Holder, the number of shares of Common Stock of
the successor or acquiring corporation or of the Company, if it is the surviving corporation, and any additional consideration
(the “Alternate Consideration”) receivable as a result of such Fundamental Transaction by a holder of the number
of shares of Common Stock for which this Warrant is exercisable immediately prior to such Fundamental Transaction. For purposes
of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to apply to such Alternate Consideration
based on the amount of Alternate Consideration issuable in respect of one share of Common Stock in such Fundamental Transaction,
and the Company shall apportion the Exercise Price among the Alternate Consideration in a reasonable manner reflecting the relative
value of any different components of the Alternate Consideration. If holders of Common Stock are given any choice as to the securities,
cash or property to be received in a Fundamental Transaction, then the Holder shall be given the same choice as to the Alternate
Consideration it receives upon any exercise of this Warrant following such Fundamental Transaction. Notwithstanding anything to
the contrary in this Warrant from the date hereof until the Expiration Date, in the event of a Fundamental Transaction that is
(1) an all cash transaction, (2) a “Rule 13e-3 transaction” as defined in Rule 13e-3 under the Securities Exchange
Act of 1934, as amended, or (3) a Fundamental Transaction involving a Person not traded on a national securities exchange, including,
but not limited to, the Nasdaq Global Select Market, the Nasdaq Global Market, or the Nasdaq Capital Market, the Company or any
Successor Entity (as defined below) shall, at the Holder’s request, delivered at any time concurrently with, or within 30
days after, the consummation of the Fundamental Transaction, purchase this Warrant from the Holder by paying to the Holder an
amount of cash equal to the Black Scholes Value.


 




    	4



    	 



    

 


(d)       The
Company shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor
Entity”) to assume in writing all of the obligations of the Company under this Warrant in accordance with the provisions
of this Section 3(d) pursuant to a written agreement in form and substance reasonably satisfactory to the Holder and approved
by the Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of the holder of this
Warrant, deliver to the Holder in exchange for this Warrant a security of the Successor Entity evidenced by a written instrument
substantially similar in form and substance to this Warrant which is exercisable for a corresponding number of shares of capital
stock of such Successor Entity (or its parent entity) equivalent to the shares of Common Stock acquirable and receivable upon
exercise of this Warrant (without regard to any limitations on the exercise of this Warrant) prior to such Fundamental Transaction,
and with an exercise price which applies the exercise price hereunder to such shares of capital stock (but taking into account
the relative value of the shares of Common Stock pursuant to such Fundamental Transaction and the value of such shares of capital
stock, such number of shares of capital stock and such exercise price being for the purpose of protecting the economic value of
this Warrant immediately prior to the consummation of such Fundamental Transaction), and which is reasonably satisfactory in form
and substance to the Holder. Upon the occurrence of any such Fundamental Transaction, the Successor Entity shall succeed to, and
be substituted for (so that from and after the date of such Fundamental Transaction, the provisions of this Warrant referring
to the “Company” shall refer instead to the Successor Entity), and may exercise every right and power of the Company
and shall assume all of the obligations of the Company under this Warrant with the same effect as if such Successor Entity had
been named as the Company herein.


 


(e)       Calculations.
All calculations under this Section 3 shall be made to the nearest cent or the nearest 1/100th of a share, as the case may be.
For purposes of this Section 3, the number of shares of Common Stock deemed to be issued and outstanding as of a given date shall
be the sum of the number of shares of Common Stock (excluding treasury shares, if any) issued and outstanding.


 




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(f)       Notices
to Holder.


 


(i)       Adjustment
to Exercise Price. Whenever the number of Warrant Shares for which this Warrant may be exercised or the Exercise Price is
adjusted pursuant to any provision of this Section 3, the Company shall promptly mail to the Holder a notice setting forth the
number of Warrant Shares for which this Warrant may be exercised and/or the Exercise Price after such adjustment and setting forth
a brief statement of the facts requiring such adjustment. For purposes of clarification, the Holder shall be entitled to the benefit
of any adjustment to the Exercise Price hereunder regardless of whether the Holder accurately refers to the adjusted Exercise
Price in the Notice of Exercise.


 


(ii)       Notice
to Allow Exercise by Holder. If (A) the Company shall declare a dividend (or any other distribution in whatever form) on the
Common Stock, (B) the Company shall declare a special nonrecurring cash dividend on or a redemption of the Common Stock, (C) the
Company shall authorize the granting to all holders of the Common Stock rights or warrants to subscribe for or purchase any shares
of capital stock of any class or of any rights, (D) the approval of any stockholders of the Company shall be required in connection
with any reclassification of the Common Stock, any consolidation or merger to which the Company is a party, any sale or transfer
of all or substantially all of the assets of the Company, or any compulsory share exchange whereby the Common Stock is converted
into other securities, cash or property, or (E) the Company shall authorize the voluntary or involuntary dissolution, liquidation
or winding up of the affairs of the Company, then, in each case, the Company shall cause to be mailed to the Holder at its last
address as it shall appear upon the Warrant Register of the Company, at least 10 calendar days prior to the applicable record
or effective date hereinafter specified, a notice stating (x) the date on which a record is to be taken for the purpose of such
dividend, distribution, redemption, rights or warrants, or if a record is not to be taken, the date as of which the holders of
the Common Stock of record to be entitled to such dividend, distributions, redemption, rights or warrants are to be determined
or (y) the date on which such reclassification, consolidation, merger, sale, transfer or share exchange is expected to become
effective or close, and the date as of which it is expected that holders of the Common Stock of record shall be entitled to exchange
their shares of the Common Stock for securities, cash or other property deliverable upon such reclassification, consolidation,
merger, sale, transfer or share exchange; provided that the failure to mail such notice or any defect therein or in the mailing
thereof shall not affect the validity of the corporate action required to be specified in such notice. The Holder shall remain
entitled to exercise this Warrant during the period commencing on the date of such notice to the effective date of the event triggering
such notice except as may otherwise be expressly set forth herein.


 




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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 consolidate into or merge with or into any other
Person (if the Company is not the surviving entity), unless such other Person 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.


 


5.       Transfers.


 


(a)       Unregistered
Security. The Holder acknowledges that this Warrant and the Warrant Shares have not been registered under the Securities Act
of 1933, as amended (the “Securities Act”), and agrees not to sell, pledge, distribute, offer for sale, transfer
or otherwise dispose of this Warrant or any Warrant Shares issued upon its exercise in the absence of (i) an effective registration
statement under the Act as to this Warrant or such Warrant Shares, as the case may be, and registration or qualification of this
Warrant or such Warrant Shares, as the case may be, under any applicable U.S. federal or state securities law then in effect,
or (ii) an opinion of counsel, satisfactory to the Company, that such registration and qualification are not required. Each certificate
or other instrument for Warrant Shares issued upon the exercise of this Warrant shall bear a legend substantially to the foregoing
effect.


 


(b)       Transfer
of Warrant. Neither this Warrant, nor any rights of the Holder hereunder, may be transferred or assigned, whether by operation
of law or otherwise, without prior notice in writing to the Company. The Company may condition any such transfer or assignment
on the prior receipt from the proposed transferee or assignee of a written representation that such transferee or assignee is
an “accredited investor,” as such term is defined in Regulation D as promulgated under the Securities Act and the
written agreement that such transferee or assignee will bound by all of the terms of this Warrant. Any such transfer or assignment,
or attempted transfer or assignment, in violation of this Warrant shall be null and void.


 


(c)       Warrant
Register. The Company will maintain a register containing the names and address of the Holder of the Warrant. Any Holder may
change such Holder’s address as shown on the warrant register by written notice to the Company requesting such change.


 


6.       Authorized
Shares.


 


(a)       Reservation
of Shares. The Company covenants that, subject to the satisfaction of the Exercise Condition, 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. The Company further covenants that
its issuance of this Warrant shall constitute full authority to its officers who are charged with the duty of executing stock
certificates to execute and issue the necessary certificates for the Warrant Shares upon the exercise of the purchase rights under
this Warrant. The Company will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued
as provided herein without violation of any applicable law or regulation, or of any requirements of the Trading Market upon which
the Common Stock may be listed. The Company covenants that all Warrant Shares which may be issued upon the exercise of the purchase
rights represented by this Warrant will, upon exercise of the purchase rights represented by this Warrant and payment for such
Warrant Shares in accordance herewith, be duly authorized, validly issued, fully paid and nonassessable and free from all taxes,
liens and charges created by the Company in respect of the issue thereof (other than taxes in respect of any transfer occurring
contemporaneously with such issue).


 




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(b)       No
Impairment. Except and to the extent as waived or consented to by the Holder, the Company shall not by any action, including,
without limitation, amending its certificate of incorporation or through any reorganization, transfer of assets, consolidation,
merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance
of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the
taking of all such actions as may be necessary or appropriate to protect the rights of Holder as set forth in this Warrant against
impairment. Without limiting the generality of the foregoing, the Company will (i) not increase the par value of any Warrant Shares
above the amount payable therefor upon such exercise immediately prior to such increase in par value, (ii) take all such action
as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Warrant
Shares upon the exercise of this Warrant and (iii) use commercially reasonable efforts to obtain all such authorizations, exemptions
or consents from any public regulatory body having jurisdiction thereof, as may be, necessary to enable the Company to perform
its obligations under this Warrant.


 


(c)       Authorizations
or Exemptions. Before taking any action which would result in an adjustment in the number of Warrant Shares for which this
Warrant is exercisable or in the Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents
thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof.


 


7.      Certain
Definitions. As used in this Warrant, the following terms shall have the following meanings:


 


“Black
Scholes Value” means the value of the unexercised portion of this Warrant remaining on the date of the Holder’s
request pursuant to Section 3(c), which value is calculated using the Black Scholes Option Pricing Model obtained from the “OV”
function on Bloomberg utilizing (i) an underlying price per share equal to the greater of (1) the highest Closing Sale Price of
the Common Stock during the period beginning on the Trading Day immediately preceding the earliest to occur of (x) the public
disclosure of the applicable Fundamental Transaction (as defined below), (y) the consummation of the applicable Fundamental Transaction
and (z) the date on which the Holder first became aware of the applicable Fundamental Transaction and ending on the Trading Day
of the Holder’s request pursuant to Section 3(c) and (2) the sum of the price per share being offered in cash in the applicable
Fundamental Transaction (if any) plus the value of the non-cash consideration being offered in the applicable Fundamental Transaction
(if any), (ii) a strike price equal to the Exercise Price in effect on the date of the Holder’s request pursuant to Section
3(c), (iii) a risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the greater of (1) the remaining
term of this Warrant as of the date of the Holder’s request pursuant to Section 3(c) and (2) the remaining term of this
Warrant as of the date of consummation of the applicable Fundamental Transaction or as of the date of the Holder’s request
pursuant to Section 3(c) if such request is prior to the date of the consummation of the applicable Fundamental Transaction, (iv)
a zero cost of borrow and (v) an expected volatility equal to the greater of 100% and the 100 day volatility obtained from the
HVT function on Bloomberg (determined utilizing a 365 day annualization factor) as of the Trading Day immediately following the
earliest to occur of (x) the public disclosure of the applicable Fundamental Transaction, (y) the consummation of the applicable
Fundamental Transaction and (z) the date on which the Holder first became aware of the applicable Fundamental Transaction.


 




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“Bloomberg”
means Bloomberg, L.P.


 


“Closing
Sale Price” means, for any security as of any date, the last closing trade price for such security on the Trading Market,
as reported by Bloomberg, or, if the Trading Market begins to operate on an extended hours basis and does not designate the closing
trade price, then the last trade price of such security prior to 4:00:00 p.m., New York time, as reported by Bloomberg, or, if
the Trading Market is not the principal securities exchange or trading market for such security, the last trade price of such
security on the principal securities exchange or trading market where such security is listed or traded as reported by Bloomberg,
or if the foregoing does not apply, the last trade price of such security in the over-the-counter market on the electronic bulletin
board for such security as reported by Bloomberg, or, if no last trade price is reported for such security by Bloomberg, the average
of the ask prices of any market makers for such security as reported in the “pink sheets” by OTC Markets Group Inc.
(formerly Pink Sheets LLC). If the Closing Sale Price cannot be calculated for a security on a particular date on any of the foregoing
bases, the Closing Sale Price of such security on such date shall be the fair market value as mutually determined by the Company
and the Holder. If the Company and the Holder are unable to agree upon the fair market value of such security, then the fair value
of such security will be determined by an independent, reputable appraiser selected in good faith by the Company and reasonably
acceptable to the Majority Holders. The fees and expenses of such appraiser shall be borne by the Company. All such determinations
shall be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction during such
period.


 


“Majority
Holders” means the holders of a majority of the Warrants (measured with reference to the number of Warrant Shares issuable
from time to time upon the exercise of all Warrants).


 


“Person”
means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.


 




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“Rule
144” means Rule 144 promulgated by the Securities and Exchange Commission pursuant to the Securities Act, as such Rule
may be amended from time to time, or any similar rule or regulation hereafter adopted by such Commission having substantially
the same effect as such Rule.


 


“Trading
Day” means a day on which the principal Trading Market is open for trading.


 


“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 Alternext, 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).


 


“Transfer
Agent” means American Stock Transfer & Trust Company, LLC, the current transfer agent of the Company, with a mailing
address of 6201 15th Avenue

Brooklyn, New York 11219, and a facsimile number of (718) 765-8712, and any successor transfer agent of the Company.


 


“VWAP”
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Common Stock is then
listed or quoted on a Trading Market, the daily volume weighted average price of the Common Stock for such date (or the nearest
preceding date) on the Trading Market on which the Common Stock is then listed or quoted as reported by Bloomberg (based on a
Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)), (b) if the OTC Bulletin Board is not a Trading
Market, the volume weighted average price of the Common Stock for such date (or the nearest preceding date) on the OTC Bulletin
Board, (c) if the Common Stock is not then listed or quoted for trading on the OTC Bulletin Board 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) in
all other cases, the fair market value of a share of Common Stock as determined by an independent appraiser selected in good faith
by the Company and reasonably acceptable to the Majority Holders, the fees and expenses of which shall be paid by the Company.


 





8.       Termination;
Expiration Date. This Warrant shall terminate on the Expiration Date, and this Warrant shall not be exercised or exercisable
thereafter.


 


9.       Exchange
of Warrants. Upon the surrender by the Holder of this Warrant, properly endorsed, to the Company at the principal office of
the Company, the Company will, subject to the provisions of Section 5 hereof, issue and deliver to or upon the order of such Holder,
at the Company’s expense, a new Warrant or Warrants of like tenor, in the name of such Holder or as such Holder (upon payment
by such Holder of any applicable transfer taxes) may direct, calling in the aggregate on the face or faces thereof for the number
of shares of Common Stock called for on the face or faces of the Warrant or Warrants so surrendered.


 




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10.       Replacement
of Warrants. Upon receipt of evidence reasonably satisfactory to the Company of the loss, theft, destruction or mutilation
of this Warrant and (in the case of loss, theft or destruction) upon delivery of an indemnity agreement (with surety if reasonably
required) in an amount reasonably satisfactory to the Company, or (in the case of mutilation) upon surrender and cancellation
of this Warrant, the Company will issue, in lieu thereof, a new Warrant of like tenor.


 


11.       No
Rights as Stockholder. Until the exercise of this Warrant, the Holder of this Warrant shall not have or exercise any rights
by virtue hereof as a stockholder of the Company.


 


12.       Captions.
The captions of sections or subsections of this Warrant are for reference only and will not affect the interpretation or construction
of this Warrant.


 


13.       Equitable
Relief. The Company hereby acknowledges that any breach by it of its obligations under this Warrant would cause substantial
and irreparable damage to the registered Holder hereof, and that money damages would be an inadequate remedy therefor, and accordingly,
acknowledges and agrees that, in addition to any other rights and remedies to which the registered Holder hereof may be entitled
in respect of any breach of such obligations, such Holder will be entitled to an injunction, specific performance, and/or other
equitable relief to prevent the breach of such obligations.


 


14.       Nonwaiver
and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate
as a waiver of such right or otherwise prejudice Holder’s rights, powers or remedies. Without limiting any other provision
of this Warrant, if the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any
material damages to the Holder, the Company shall pay to Holder such amounts as shall be sufficient to cover any costs and expenses
including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by Holder
in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.


 


15.       Limitation
of Liability. No provision hereof, in the absence of any affirmative action by Holder to exercise this Warrant to purchase
Warrant Shares, and no enumeration herein of the rights or privileges of Holder, shall give rise to any liability of Holder for
the purchase price of any Common Stock or as a stockholder of the Company, whether such liability is asserted by the Company or
by creditors of the Company.


 


16.       Amendments;
Waivers. None of the terms or conditions of this Warrant may be changed or amended, and no right of the Holder of this Warrant
may be waived, except with the written consent of the Company and the Holder.


 


17.       Reservation
of Rights. No failure or other delay by the registered Holder hereof exercising any right, power, or privilege hereunder will
be or operate as a waiver thereof, nor will any single or partial exercise thereof preclude any other or further exercise thereof
or the exercise of any other right, power, or privilege.


 


18.       Governing
Law; Venue; Waiver of Jury Trial. All questions concerning the construction, validity, enforcement and interpretation of this
Warrant shall be determined in accordance with the provisions of the Purchase Agreement. IN ANY ACTION, SUIT, OR PROCEEDING
IN ANY JURISDICTION BROUGHT BY ANY HOLDER OR THE COMPANY AGAINST THE OTHER, SUCH HOLDER AND THE COMPANY EACH KNOWINGLY AND INTENTIONALLY,
TO THE GREATEST EXTENT PERMITTED BY APPLICABLE LAW, HEREBY ABSOLUTELY, UNCONDITIONALLY, IRREVOCABLY AND EXPRESSLY WAIVES FOREVER
TRIAL BY JURY. 


 


[Remainder
of page intentionally left blank.]


 




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IN
WITNESS WHEREOF, the Company has executed and delivered this Warrant, under seal, on the day and year first above written.


 


	 	AMERICAN
    POWER GROUP CORPORATION
	 	 	 
	 	By:	 
	 	 	Charles
    E. Coppa
	 	 	Chief
    Financial Officer


 




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American
Power Group Corporation


 


Common
Stock Purchase Warrant


(Warrant
_______)


Notice
of Exercise


 


To:     american
power group corporation


 


(1)       The
undersigned hereby elects to purchase ________ Warrant Shares of the Company pursuant to the terms of the attached Warrant (only
if exercised in full), and tenders herewith payment of the exercise price in full, together with all applicable transfer taxes,
if any.


 


(2)       The
undersigned hereby represents and warrants to the Company that the undersigned is an “Accredited Investor,” as that
term is defined in the Convertible Note Purchase Agreement, on the date hereof.


 


(3)       Please
issue a certificate or certificates representing said Warrant Shares in the name of the undersigned or in such other name as is
specified below:


 


 






 


The
Warrant Shares shall be delivered to the following DWAC Account Number or by physical delivery of a certificate to:


 


 






 


 



 


 









 


[SIGNATURE
OF HOLDER]


 


Name
of Investing Entity: ___________________________________________________________________________


 


Signature
of Authorized Signatory of Investing Entity:______________________________________________________


 


Name
of Authorized Signatory: _______________________________________________________________________


 


Title
of Authorized Signatory: ________________________________________________________________________


 


Date:
___________________________________________________________________________________________


 




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American
Power Group Corporation


 


Common
Stock Purchase Warrant


(Warrant
_______)


Assignment
Form


 


(To
assign the foregoing warrant, execute

this form and supply required information.

Do not use this form to exercise the warrant.)


 


FOR
VALUE RECEIVED, [____] all of or [_______] shares of the foregoing Warrant and all rights evidenced thereby are hereby assigned
to


 


_______________________________________________
whose address is


 


_______________________________________________________________.


 


_______________________________________________________________


 


	 	Dated:
    ______________, _______


 





	 	Holder’s
    Signature:	 	 
	 	 	 	 
	 	Holder’s Address:	 	 
	 	 	 	 
	 	 	 	 


 


Signature
Guaranteed: ___________________________________________


 


NOTE:
The signature to this Assignment Form must correspond with the name as it appears on the face of the Warrant, without alteration
or enlargement or any change whatsoever, and must be guaranteed by a bank or trust company. Officers of corporations and those
acting in a fiduciary or other representative capacity should file proper evidence of authority to assign the foregoing Warrant.


 




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