AMENDMENT NO. 2 TO
SECURITIES PURCHASE AGREEMENT
 
This Amendment No. 2 to Securities Purchase Agreement (“Amendment No. 2”) dated
as of December 15, 2009, is made by and between Axion Power International, Inc.,
a Delaware corporation (the “Company”) and The Quercus Trust (“Quercus”).
 
RECITALS
 
A.           WHEREAS, the Company and Quercus are parties to that certain
Securities Purchase Agreement, dated as of January 14, 2008 (the “Original
Agreement”), as amended by Amendment to Warrants and Securities Purchase
Agreement, dated September 22, 2009 (“Amendment No. 1”). The Original Agreement,
as amended by Amendment No. 1 is hereinafter referred to as the “Securities
Purchase Agreement”. Capitalized terms used herein have the respective meanings
ascribed thereto in the Securities Purchase Agreement unless otherwise defined
herein.
 
B.           WHERAS, the Company now proposes to enter into a Purchase Agreement
(the “Purchase Agreement”) with the investors party thereto (the “Investors”),
pursuant to which the Investors propose to purchase from the Company an
aggregate of up to • shares of common stock, par value $0.0001 per share (the
“Common Stock”) at a purchase price of $0.57 per share (the “New Investment”).
 
C.           WHEREAS, in order to induce the Investors to enter into the
Purchase Agreement, the parties desire to further amend the Securities Purchase
Agreement and the Warrants as set forth below and to waive certain of the
provisions thereof effective as of the closing of the New Investment (the
“Closing”).

 
 

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AGREEMENT
 
NOW, THEREFORE, in consideration of the mutual covenants and other agreements
contained in this Amendment No. 2, and intending to be legally bound, the
Company and Quercus hereby agree as follows:
 
1.           Quercus hereby irrevocably waives any rights it has pursuant to
Article 4 of the Securities Purchase Agreement with respect to any Cut Back
Shares.
 
2.           Sections 4.3 and 4.6 of the Warrants are hereby deleted in their
entirety. Not later than the Closing, Quercus shall surrender the Warrants to
the Company in exchange for new Warrants of like tenor reflecting the changes
made to the Warrants pursuant to Amendment No. 1 and this Amendment No. 2.
 
3.           No later than the Closing, Quercus shall pay to the Company
$500,000 by wire transfer of immediately available funds to an account
previously specified by the Company in writing.
 
4.           Section 5.8 of the Securities Purchase Agreement is hereby deleted
in its entirety.
 
5.           The amendments and waivers of the Securities Purchase Agreement and
the Warrants are expressly conditioned upon and shall be effective immediately
prior to the Closing of the New Investment. In the event that the New Investment
is abandoned, the terms of this Amendment No. 2 shall be void and of no further
force and effect.
 
6.           Except as expressly modified hereby, the Securities Purchase
Agreement and the Warrants shall remain in full force and effect.
 
7.           The Investors shall be deemed to be express third party
beneficiaries of this Amendment No. 2 and each Investor shall have the right to
enforce this Amendment No. 2 as if it was a party hereto.
 
8.           This Amendment No. 2 may be executed in counterparts, each of which
shall be deemed an original and all of which together shall constitute one and
the same instrument.
 
 
 

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 2 to be
duly executed by their respective authorized signatories as of the date first
indicated above.

 
AXION POWER INTERNATIONAL, INC.
     
By:
     
Tom Granville, President
     
THE QUERCUS TRUST
     
By:
/s/ David Gelbaum
   
David Gelbaum, Co- Trustee
     
By:
     
Monica Chavez Gelbaum, Co- Trustee

 
 

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