FORM OF COMMON STOCK PURCHASE WARRANT

EXHIBIT 10.1

NEITHER THIS SECURITY NOR THE SECURITIES INTO 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.

FORM OF COMMON STOCK PURCHASE WARRANT

To Purchase [                      ] Shares of Common Stock of

PMFG, INC.

     THIS COMMON STOCK PURCHASE WARRANT (this “ Warrant ”) certifies that, for value received, [                      ] (the “ Warrant 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 date occurring six months after the date hereof (the “ Initial Exercise Date ”) and on or prior to 5:00 P.M. New York City time on the fifth anniversary of the date hereof (the “ Termination Date ”) but not thereafter, to subscribe for and purchase from PMFG, Inc., a Delaware corporation (the “ Company ”), up to [                      ] shares (the “ Warrant Shares ”) of common stock, par value $0.01 per share, of the Company (the “ Common Stock ”). The purchase price of one share of Common Stock (the “Exercise Price”) under this Warrant shall be equal to $10.56, the Closing Price on the Trading Day immediately preceding the entering into the Securities Purchase Agreement (as defined in Section 1 ), such Exercise Price subject to adjustment hereunder.

1. Definitions.

     “ Affiliate ” means any person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 144 under the Securities Act. Any investment fund or managed account that is managed on a discretionary basis by the same investment manager as the Warrant Holder will be deemed to be an Affiliate of the Warrant Holder.

      “Buy-In” has the meaning given to it in Section 2(a) .

     “ Closing Price ” means on any particular date (a) if the Common Stock is then listed on a Trading Market, the last reported closing bid price per share of Common Stock on such date on the Trading Market (as reported by Bloomberg L.P. at 4:15 P.M. (New York City time)), or, 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 L.P. at 4:15 P.M. (New York City time) for the closing bid price for regular session trading on such day), or (b) if the Common Stock is not then listed on a Trading Market and if prices for the Common Stock are then quoted on the OTC Bulletin Board, the last reported closing bid price per share of Common Stock on such date (or the nearest preceding date) on the OTC Bulletin Board, or (c) if the Common Stock is not then quoted on the OTC Bulletin Board and if prices for the Common Stock are then reported in the Pink Sheets published by Pink Sheets LLC (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 publicly traded, the fair market value of a share of Common Stock as determined by an appraiser selected in good faith by the Warrant Holder and reasonably acceptable to the Company.

     “ Common Stock ” has the meaning given to it in the Preamble.

     “ Company ” has the meaning given to it in the Preamble.

     “ Credit Facility ” means the Revolving Credit and Term Loan Agreement, dated as of April 30, 2008, among Peerless Mfg. Co., PMC Acquisition, Inc., the Company, Comerica Bank, as administrative agent for the lenders, and the other lenders party thereto, as such agreement may be amended, restated, modified, renewed, replaced, supplemented or refinanced in whole or in part from time to time (including successive amendments, restatements, modifications, renewals, replacements, supplements or refinancings and whether or not with the original administrative agent and lenders or another administrative agent or agents or other lenders); provided , that any such amendment, restatement, modification, renewal, replacement, supplement or refinancing shall not increase by more than ten (10) percent the aggregate amount of the indebtedness and commitments covered thereby as of the date hereof, or impose materially more restrictive limitations on the payment of dividends on, or the redemption of, the Preferred Stock, than those set forth therein as of the date hereof; provided , further , that the modification of financial or other covenants (other than the covenant set forth in Section 8.5 therein on the date hereof with respect to dividends and redemptions) or defaults, which has the effect of making them more restrictive, shall be deemed not to be an additional restriction on the payment of dividends on, or the redemption of, the Preferred Stock.

     “ DWAC ” has the meaning given to it in Section 2(a) .

     “ Exchange Act ” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.

     “ Exercise Period ” means the period commencing on the Initial Exercise Date and ending on the Termination Date.

     “ Exercise Price ” has the meaning given to it in the Preamble.

     “ Incumbent Directors ” means the individuals who, as of the date hereof, are directors of the Company and any individual becoming a director subsequent to the date hereof whose election, nomination for election by the Company’s stockholders, or appointment, was approved

by a vote of at least two-thirds of the then Incumbent Directors (either by a specific vote or by approval of the proxy statement of the Company in which such person is named as a nominee for director, without objection to such nomination); provided , however , that an individual shall not be an Incumbent Director if such individual’s election or appointment to the Company’s Board of Directors occurs as a result of an actual or threatened election contest (as described in Rule 14a-12(c) of the Exchange Act) with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Company’s Board of Directors.

     “ Initial Exercise Date ” has the meaning given to it in the Preamble.

     “ Notice of Exercise ” has the meaning given to it in Section 2(a) .

     “ 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.

     “ Reorganization Event ” means the occurrence of any of the following events:

     (i) the acquisition by any Person, other than Brown Advisory Securities, LLC, of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of 50% or more of the then outstanding shares of Common Stock; provided , however , that for the purposes of this provision, the following acquisitions shall not constitute a Reorganization Event: (A) any acquisition by the Company or a subsidiary of the Company (each a “ Subsidiary ”) of shares of Common Stock or other securities entitled to vote generally in the election of directors in the case of the Company (“ Voting Securities ”) or (B) any acquisition of Voting Securities by any Person pursuant to a Business Combination (as defined below) that complies with clauses (A), (B) and (C) of clause (iii) below;

     (ii) a majority of the Board ceases to be comprised of Incumbent Directors; and

     (iii) consummation of a reorganization, merger or consolidation, a sale or other disposition of all or substantially all of the assets of the Company (for purposes herein, “all or substantially all of the assets” shall mean more than a majority of the Company’s total assets) or other transaction (each, a “ Business Combination ”), unless, in each case, immediately following the Business Combination, (A) all or substantially all of the individuals and entities who were the beneficial owners of Voting Securities immediately prior to the Business Combination beneficially own, directly or indirectly, more than 50% of the combined voting power of the then outstanding Voting Securities of the entity resulting from the Business Combination (including, without limitation, an entity which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries), (B) no Person (other than the Company, such entity resulting from the Business Combination, or any employee benefit plan (or related trust) sponsored or maintained by the Company, any Subsidiary or such entity resulting from the Business Combination) beneficially owns, directly or indirectly, 50% or more of the combined voting power of the then outstanding Voting Securities of the entity resulting from the Business Combination, and (C) at least a majority of the members of the board of directors of the entity resulting from the Business Combination were Incumbent Directors at the time of the execution of the initial agreement or of the action of the Company’s Board of Directors providing for the Business Combination.

     “ Securities Act ” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.

     “ Securities Purchase Agreement ” means that certain Securities Purchase Agreement, dated as of September 4, 2009, by and between the Company and the purchasers whose names and addresses are set forth on the signature pages thereto.

     “ Termination Date ” has the meaning given to it in the Preamble.

     “ Trading Day ” means (A) a day on which the Common Stock is traded on a Trading Market (as defined below), or (B) if the Common Stock is not listed on a Trading Market, a day on which the Common Stock is traded on the over the counter market, as reported by the OTC Bulletin Board, or (C) if the Common Stock is not quoted on the OTC Bulletin Board, a day on which prices for the Common Stock are reported in the Pink Sheets published by Pink Sheets LLC (or any similar organization or agency succeeding to its functions of reporting prices); provided, that in the event that the Common Stock is not listed, quoted or reported as set forth in (A), (B) and (C) hereof, then Trading Day shall mean a Trading Day.

     “ Trading Market ” means the following national securities exchanges on which the Common Stock is listed or quoted for trading on the date in question: the NASDAQ Global Select Market, the NASDAQ Global Market, the NASDAQ Capital Market, the American Stock Exchange or the New York Stock Exchange.

     “ Volume Weighted Average Price ” or “ 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 on a Trading Market, the volume weighted average of the prices per share of the Common Stock traded on such date (or the nearest preceding date) on the Trading Market on which the Common Stock is then listed as reported by Bloomberg L.P. (based on a Trading Day from 9:30 A.M. New York City time to 4:00 P.M. New York City time); (b) if the Common Stock is not then listed on a Trading Market and if prices for the Common Stock are then quoted on the OTC Bulletin Board, the volume weighted average of the prices per share of the Common Stock traded on such date (or the nearest preceding date) on the OTC Bulletin Board; (c) if the Common Stock is not then quoted on the OTC Bulletin Board and if prices for the Common Stock are then reported in the Pink Sheets published by Pink Sheets LLC (or a similar organization or agency succeeding to its functions of reporting prices), the last bid price per share of the Common Stock so reported on such date (or the most recent bid price if none is reported for such date); 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 Warrant Holder and reasonably acceptable to the Company.

     “ Warrant ” has the meaning given to it in the Preamble.

     “ Warrant Holder ” has the meaning given to it in the Preamble.

     “ Warrant Share Delivery Date ” has the meaning given to it in Section 2(a) .

     “ Warrant Shares ” has the meaning given to it in the Preamble.

2. Exercise.

     (a) This Warrant may be exercised in whole or in part at any time on or after the Initial Exercise Date and prior to the Termination Date upon delivery of the notice of exercise form attached hereto as Appendix A (the “ Notice of Exercise ”) and payment of the aggregate Exercise Price for that number of Warrant Shares then being purchased to the Company during normal business hours on any Trading Day at the Company’s principal executive offices (or such other office or agency of the Company as the Company may designate by notice to the Warrant Holder). The Warrant Shares so purchased shall be deemed to be issued to the Warrant Holder or the Warrant Holder’s designee, as the record owner of such shares, as of 5:00 P.M. New York City time on the date on which the aggregate Exercise Price shall have been paid and the completed Notice of Exercise shall have been delivered. Payment of the Exercise Price shall be made only by the surrender and cancellation of Warrant Shares issuable under this Warrant (and without the payment of the Exercise Price in cash) as consideration for receiving a certificate or certificates evidencing a number of Warrant Shares determined according to the following formula:

X = Y (A-B) / A

Certificates for the Warrant Shares so purchased shall be transmitted by the Company’s transfer agent by crediting the account of the Warrant Holder’s prime broker with The Depository Trust Company through its Deposit / Withdrawal At Custodian (“ DWAC ”) system if the Company is a participant in such system (and so long as the legend may be removed in accordance with Section 5.12 of the Securities Purchase Agreement), and otherwise by physical delivery to the address specified by the Warrant Holder in the Notice of Exercise, within a reasonable time, not exceeding three (3) Trading Days after this Warrant shall have been so exercised, including the delivery of a completed Notice of Exercise (the “ Warrant Share Delivery Date ”). The certificates so delivered shall be in such denominations as may be requested by the Warrant Holder and shall be registered in the name of the Warrant Holder or such other name as shall be designated by the Warrant Holder. In addition to any other rights available to the Warrant Holder, if the Company fails to deliver to the Warrant Holder a certificate or certificates representing the Warrant Shares pursuant to an exercise on or before the Warrant Share Delivery Date, and if after such date the Warrant Holder is required by its broker to purchase (in an open market transaction or otherwise) shares of Common Stock to deliver in satisfaction of a sale by the Warrant Holder of the Warrant Shares which the Warrant Holder anticipated receiving upon such exercise (a “ Buy-In ”), then the Company shall, to the extent permitted by the Credit Facility, (1) pay in cash to the Warrant Holder the amount by which (x) the Warrant Holder’s total purchase price (including customer brokerage commissions, if any) for the shares of

Common Stock so purchased exceeds (y) the amount obtained by multiplying (A) the number of Warrant Shares that the Company was required to deliver to the Warrant Holder in connection with the exercise at issue times (B) the price at which the sell order giving rise to such purchase obligation was executed, and (2) at the option of the Warrant Holder, eith