Exhibit 10.1


[FORM OF SECURITIES PURCHASE
AGREEMENT]


SECURITIES PURCHASE
AGREEMENT (the “Agreement”), dated as of August [__], 2015, by and among Axion Power International, Inc.,
a Delaware corporation, with headquarters located at 3601 Clover Lane, New Castle, PA 16105 (the “Company”),
and the investors listed on the Schedule of Buyers attached hereto (individually, a “Buyer” and collectively,
the “Buyers”).


WHEREAS:


A.         The
Company and each Buyer is executing and delivering this Agreement in reliance upon the exemption from securities registration afforded
by Section 4(a)(2) of the Securities Act of 1933, as amended (the “1933 Act”), and Rule 506(b) of Regulation
D (“Regulation D”) as promulgated by the United States Securities and Exchange Commission (the “SEC”)
under the 1933 Act.


B.          The
Company has authorized a new series of senior convertible notes of the Company, in substantially the form attached hereto as Exhibit
A (the “Notes”), which Notes shall be convertible into the Company’s common stock, par value $0.005
per share (the ”Common Stock”) (the shares of Common Stock issuable pursuant to the terms of the Notes, including,
without limitation, upon conversion or otherwise, collectively, the “Conversion Shares”), in accordance with
the terms of the Notes.


C.          Each
Buyer wishes to purchase, and the Company wishes to sell, upon the terms and conditions stated in this Agreement, (i) that aggregate
principal amount of Notes set forth opposite such Buyer’s name in column (3) on the Schedule of Buyers attached hereto (which
aggregate principal amount of Notes for all Buyers shall be $705,882), and (ii) Warrants, in substantially the form attached hereto
as Exhibit B (the “Warrants”), representing the right to acquire that number of shares of Common Stock
set forth opposite such Buyer’s name in column (4) on the Schedule of Buyers (as exercised, collectively, the “Warrant
Shares”).


D.         The
Notes will rank senior to all outstanding and future indebtedness of the Company and its Subsidiaries except as otherwise provided
herein or in the Notes (as defined below).


E.          The
Notes, the Conversion Shares, the Warrants and the Warrant Shares collectively are referred to herein as the “Securities”.


NOW, THEREFORE,
the Company and each Buyer hereby agree as follows:


1.          PURCHASE
AND SALE OF NOTES AND WARRANTS.


(a)        Purchase
of Notes and Warrants. Subject to the satisfaction (or waiver) of the conditions set forth in Sections 6 and 7 below, the Company
shall issue and sell to each Buyer, and each Buyer severally, but not jointly, agrees to purchase from the Company on the Closing
Date (as defined below), (x) a principal amount of Notes as is set forth opposite such Buyer’s name in column (3) on the
Schedule of Buyers and (y) Warrants to acquire up to that number of Warrant Shares as is set forth opposite such Buyer’s
name in column (4) on the Schedule of Buyers (the “Closing”).




    	 



    	 



    


 


(b)        Closing.
The date and time of the Closing (the “Closing Date”) shall be 10:00 a.m., New York City time, on the date hereof
(or such other date and time as is mutually agreed to by the Company and each Buyer) after notification of satisfaction (or waiver)
of the conditions to the Closing set forth in Sections 6 and 7 below, at the offices of Schulte Roth & Zabel LLP, 919 Third
Avenue, New York, New York 10022.


(c)        Purchase
Price. The aggregate purchase price for the Notes and the Warrants to be purchased by each Buyer at the Closing (the “Purchase
Price”) shall be the amount set forth opposite each Buyer’s name in column (5) of the Schedule of Buyers. Each
Buyer shall pay $850 for each $1,000 of principal amount of Notes and related Warrants to be purchased by such Buyer at the Closing.
The Buyers and the Company agree that the Notes and the Warrants constitute an “investment unit” for purposes of Section
1273(c)(2) of the Internal Revenue Code of 1986, as amended (the “Code”). The Buyers and the Company mutually
agree that the allocation of the issue price of such investment unit between the Notes and the Warrants in accordance with Section
1273(c)(2) of the Code and Treasury Regulation Section 1.1273-2(h) shall be an aggregate amount of $215.65 per $850 of Purchase
Price to be allocated to the Warrants and the balance of the Purchase Price allocated to the Notes, and neither the Buyers nor
the Company shall take any position inconsistent with such allocation in any tax return or in any judicial or administrative proceeding
in respect of taxes.


(d)        Form
of Payment. On the Closing Date, (i) each Buyer shall pay its Purchase Price to the Company for the Notes and the Warrants
to be issued and sold to such Buyer at the Closing (less, in the case of Empery Asset Master Ltd. (“Empery”),
the amounts withheld pursuant to Section 4(g)), by wire transfer of immediately available funds in accordance with the Company’s
written wire instructions and (ii) the Company shall deliver to each Buyer the Notes (allocated in the principal amounts as such
Buyer shall request) which such Buyer is then purchasing hereunder along with the Warrants (allocated in the amounts as such Buyer
shall request) which such Buyer is purchasing hereunder, in each case duly executed on behalf of the Company and registered in
the name of such Buyer or its designee.


2.          BUYER’S
REPRESENTATIONS AND WARRANTIES. Each Buyer, severally and not jointly, represents and warrants with respect to only itself
that, as of the date hereof and as of the Closing Date:


(a)        No
Public Sale or Distribution. Such Buyer is (i) acquiring the Notes and the Warrants and (ii) upon issuance of the Conversion
Shares pursuant to the terms of the Notes and upon exercise of the Warrants (other than pursuant to a Cashless Exercise (as defined
in the Warrants)) will acquire the Conversion Shares issuable pursuant to the terms of the Notes and the Warrant Shares issuable
upon exercise of the Warrants, for its own account and not with a view towards, or for resale in connection with, the public sale
or distribution thereof, except pursuant to sales registered or exempted under the 1933 Act; provided, however, that
by making the representations herein, such Buyer does not agree to hold any of the Securities for any minimum or other specific
term and reserves the right to dispose of the Securities at any time in accordance with or pursuant to a registration statement
or an exemption under the 1933 Act. Such Buyer is acquiring the Securities hereunder in the ordinary course of its business. Such
Buyer does not presently have any agreement or understanding, directly or indirectly, with any Person (as defined below) to distribute
any of the Securities. For purposes of this Agreement, “Person” means an individual, a limited liability company,
a partnership, a joint venture, a corporation, a trust, an unincorporated organization, any other entity and any government or
any department or agency thereof.



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(b)        Accredited
Investor Status. Such Buyer is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D.


(c)        Reliance
on Exemptions. Such Buyer understands that the Securities are being offered and sold to it in reliance on specific exemptions
from the registration requirements of United States federal and state securities laws and that the Company is relying in part upon
the truth and accuracy of, and such Buyer’s compliance with, the representations, warranties, agreements, acknowledgments
and understandings of such Buyer set forth herein in order to determine the availability of such exemptions and the eligibility
of such Buyer to acquire the Securities.


(d)        Information.
Such Buyer and its advisors, if any, have been furnished with all materials relating to the business, finances and operations of
the Company and materials relating to the offer and sale of the Securities that have been requested by such Buyer. Such Buyer and
its advisors, if any, have been afforded the opportunity to ask questions of the Company. Neither such inquiries nor any other
due diligence investigations conducted by such Buyer or its advisors, if any, or its representatives shall modify, amend or affect
such Buyer’s right to rely on the Company’s representations and warranties contained herein. Such Buyer understands
that its investment in the Securities involves a high degree of risk. Such Buyer has sought such accounting, legal and tax advice
as it has considered necessary to make an informed investment decision with respect to its acquisition of the Securities.


(e)        No
Governmental Review. Such Buyer understands that no United States federal or state agency or any other government or governmental
agency has passed on or made any recommendation or endorsement of the Securities or the fairness or suitability of the investment
in the Securities nor have such authorities passed upon or endorsed the merits of the offering of the Securities.


(f)        Transfer
or Resale. Such Buyer understands that: (i) the Securities have not been and are not being registered under the 1933 Act or
any state securities laws, and may not be offered for sale, sold, assigned or transferred unless (A) subsequently registered thereunder,
(B) such Buyer shall have delivered to the Company an opinion of counsel, in a generally acceptable form, to the effect that such
Securities to be sold, assigned or transferred may be sold, assigned or transferred pursuant to an exemption from such registration,
or (C) such Buyer provides the Company with reasonable assurance that such Securities can be sold, assigned or transferred pursuant
to Rule 144 or Rule 144A promulgated under the 1933 Act, as amended, (or a successor rule thereto) (collectively, “Rule
144”); (ii) any sale of the Securities made in reliance on Rule 144 may be made only in accordance with the terms of
Rule 144 and further, if Rule 144 is not applicable, any resale of the Securities under circumstances in which the seller (or the
Person) through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the 1933 Act) may require
compliance with some other exemption under the 1933 Act or the rules and regulations of the SEC thereunder; and (iii) neither the
Company nor any other Person is under any obligation to register the Securities under the 1933 Act or any state securities laws
or to comply with the terms and conditions of any exemption thereunder. Notwithstanding the foregoing, the Securities may be pledged
in connection with a bona fide margin account or other loan or financing arrangement secured by the Securities and such pledge
of Securities shall not be deemed to be a transfer, sale or assignment of the Securities hereunder, and no Buyer effecting a pledge
of Securities shall be required to provide the Company with any notice thereof or otherwise make any delivery to the Company pursuant
to this Agreement or any other Transaction Document (as defined in Section 3(b)), including, without limitation, this Section 2(f).



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(g)        Legends.
Such Buyer understands that the certificates or other instruments representing the Notes and the Warrants and, until such time
as the resale of the Conversion Shares and the Warrant Shares have been registered under the 1933 Act, the stock certificates representing
the Conversion Shares and the Warrant Shares, except as set forth below, shall bear a restrictive legend in substantially the following
form (and a stop-transfer order may be placed against transfer of such stock certificates):


[NEITHER THE ISSUANCE AND SALE
OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE [CONVERTIBLE]
[EXERCISABLE] HAVE BEEN][THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN] REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD,
TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL SELECTED BY THE HOLDER, IN A GENERALLY ACCEPTABLE FORM, THAT REGISTRATION IS
NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING,
THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE
SECURITIES.


The legend set forth above shall be
removed and the Company shall issue a certificate without such legend to the holder of the Securities upon which it is stamped
or issue to such holder by electronic delivery at the applicable balance account at The Depository Trust Company (“DTC”),
if (i) such Securities are registered for resale under the 1933 Act, (ii) in connection with a sale, assignment or other transfer,
such holder provides the Company with an opinion of counsel, in a generally acceptable form, to the effect that such sale, assignment
or transfer of the Securities may be made without registration under the applicable requirements of the 1933 Act, or (iii) the
Securities can be sold, assigned or transferred pursuant to Rule 144 or Rule 144A. The Company shall be responsible for the fees
of its transfer agent and all DTC fees associated with such issuance.



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(h)        Validity;
Enforcement. This Agreement has been duly and validly authorized, executed and delivered on behalf of such Buyer and shall
constitute the legal, valid and binding obligations of such Buyer enforceable against such Buyer in accordance with their respective
terms, except as such enforceability may be limited by general principles of equity or to applicable bankruptcy, insolvency, reorganization,
moratorium, liquidation and other similar laws relating to, or affecting generally, the enforcement of applicable creditors’
rights and remedies.


(i)        No
Conflicts. The execution, delivery and performance by such Buyer of this Agreement and the consummation by such Buyer of the
transactions contemplated hereby will not (i) result in a violation of the organizational documents of such Buyer or (ii) conflict
with, or constitute a default (or an event which with notice or lapse of time or both would become a default) under, or give to
others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to which such
Buyer is a party, or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and
state securities laws) applicable to such Buyer, except in the case of clauses (ii) and (iii) above, for such conflicts, defaults,
rights or violations which would not, individually or in the aggregate, reasonably be expected to have a material adverse effect
on the ability of such Buyer to perform its obligations hereunder.


3.          REPRESENTATIONS
AND WARRANTIES OF THE COMPANY.


The Company represents
and warrants to each of the Buyers that, as of the date hereof and as of the Closing Date:


(a)        Organization
and Qualification. Each of the Company and each of its “Subsidiaries” (which for purposes of this Agreement
means any entity in which the Company, directly or indirectly, owns any of the capital stock or holds an equity or similar interest)
are entities duly organized and validly existing and in good standing under the laws of the jurisdiction in which they are formed,
and have the requisite power and authorization to own their properties and to carry on their business as now being conducted and
as presently proposed to be conducted. Each of the Company and each of its Subsidiaries is duly qualified as a foreign entity to
do business and is in good standing in every jurisdiction in which its ownership of property or the nature of the business conducted
by it makes such qualification necessary, except to the extent that the failure to be so qualified or be in good standing would
not reasonably be expected to have a Material Adverse Effect. As used in this Agreement, “Material Adverse Effect”
means any material adverse effect on the business, properties, assets, liabilities, operations, results of operations, condition
(financial or otherwise) or prospects of the Company and its Subsidiaries, individually or taken as a whole, or on the transactions
contemplated hereby or on the other Transaction Documents or by the agreements and instruments to be entered into in connection
herewith or therewith, or on the authority or ability of the Company to perform any of its obligations under any of the Transaction
Documents (as defined below). The Company has no Subsidiaries except as set forth on Schedule 3(a).



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(b)        Authorization;
Enforcement; Validity. The Company has the requisite power and authority to enter into and perform its obligations under this
Agreement, the Notes, the Warrants, the Irrevocable Transfer Agent Instructions (as defined in Section 5(b)) and each of the other
agreements entered into by the parties hereto in connection with the transactions contemplated by this Agreement (collectively,
the “Transaction Documents”) and to issue the Securities in accordance with the terms hereof and thereof. The
execution and delivery of this Agreement and the other Transaction Documents by the Company and the consummation by the Company
of the transactions contemplated hereby and thereby, including, without limitation, the issuance of the Notes and the Warrants,
and the reservation for issuance and the issuance of the Conversion Shares and the reservation for issuance and issuance of Warrant
Shares issuable upon exercise of the Warrants have been duly authorized by the Company’s Board of Directors and (other than
the filing of a Form D with the SEC and other filings as may be required by state securities agencies) no further filing, consent,
or authorization is required by the Company, its Board of Directors or its stockholders. This Agreement and the other Transaction
Documents have been duly executed and delivered by the Company, and constitute the legal, valid and binding obligations of the
Company, enforceable against the Company in accordance with their respective terms, except as such enforceability may be limited
by general principles of equity or applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating
to, or affecting generally, the enforcement of applicable creditors’ rights and remedies.


(c)        Issuance
of Securities. The issuance of the Notes and the Warrants are duly authorized and, upon issuance, shall be validly issued and
free from all preemptive or similar rights, taxes, liens, charges and other encumbrances with respect to the issue thereof. As
of the Closing, a number of shares of Common Stock shall have been duly authorized and reserved for issuance which equals or exceeds
(the “Required Reserved Amount) the sum of (i) the maximum number of Conversion Shares issued and issuable pursuant
to the Notes based on the Conversion Price (as defined in the Notes) (without taking into account any limitations on the issuance
thereof pursuant to the terms of the Notes) and (ii) the maximum number of Warrant Shares issued and issuable pursuant to the Warrants,
each as of the Trading Day (as defined in the Warrants) immediately preceding the applicable date of determination (without taking
into account any limitations on the exercise of the Warrants set forth in the Warrants). As of the date hereof, there are 96,600,128
shares of Common Stock authorized and unissued. Upon conversion of the Notes in accordance with the Notes or exercise of the Warrants
in accordance with the Warrants, as the case may be, the Conversion Shares and the Warrant Shares, respectively, will be validly
issued, fully paid and nonassessable and free from all preemptive or similar rights, taxes, liens, charges and other encumbrances
with respect to the issue thereof, with the holders being entitled to all rights accorded to a holder of Common Stock. Assuming
the accuracy of each of the representations and warranties set forth in Section 2 of this Agreement, the offer and issuance by
the Company of the Securities is exempt from registration under the 1933 Act.



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(d)        No
Conflicts. The execution, delivery and performance of the Transaction Documents by the Company and the consummation by the
Company of the transactions contemplated hereby and thereby (including, without limitation, the issuance of the Notes and the Warrants
and reservation for issuance and issuance of the Conversion Shares and the Warrant Shares) will not (i) result in a violation of
the Certificate of Incorporation (as defined in Section (3(r)) or Bylaws (as defined in Section (3(r)), any memorandum of association,
certificate of incorporation, certificate of formation, bylaws, any certificate of designations or other constituent documents
of the Company or any of its Subsidiaries, any capital stock of the Company or any of its Subsidiaries or the articles of association
or bylaws of the Company or any of its Subsidiaries or (ii) conflict with, or constitute a default (or an event which with notice
or lapse of time or both would become a default) in any respect under, or give to others any rights of termination, amendment,
acceleration or cancellation of, any agreement, indenture or instrument to which the Company or any of its Subsidiaries is a party,
or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including other foreign, federal and state
securities laws and regulations and the rules and regulations of The NASDAQ Capital Market (the “Principal Market”)
and including all applicable laws of the State of Delaware and any foreign, federal and state laws, rules and regulations) applicable
to the Company or any of its Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries is bound
or affected.


(e)        Consents.
The Company is not required to obtain any consent, authorization or order of, or make any filing or registration with (other than
the filing of a Form D with the SEC and other filings as may be required by state securities agencies), any court, governmental
agency or any regulatory or self-regulatory agency or any other Person in order for it to execute, deliver or perform any of its
obligations under or contemplated by the Transaction Documents, in each case in accordance with the terms hereof or thereof. All
consents, authorizations, orders, filings and registrations which the Company is required to obtain pursuant to the preceding sentence
have been obtained or effected on or prior to the Closing Date (or in the case of the filings detailed above, will be made timely
after the Closing Date), and the Company is unaware of any facts or circumstances that might prevent the Company from obtaining
or effecting any of the registration, application or filings pursuant to the preceding sentence. The Company is not in violation
of the listing requirements of the Principal Market and has no knowledge of any facts or circumstances that would reasonably lead
to delisting or suspension of the Common Stock in the foreseeable future. The issuance by the Company of the Securities shall not
have the effect of delisting or suspending the Common Stock from the Principal Market.


(f)        Acknowledgment
Regarding Buyer’s Purchase of Securities. The Company acknowledges and agrees that each Buyer is acting solely in the
capacity of an arm’s length purchaser with respect to the Transaction Documents and the transactions contemplated hereby
and thereby and that no Buyer is (i) an officer or director of the Company or any of its Subsidiaries, (ii) an “affiliate”
of the Company or any of its Subsidiaries (as defined in Rule 144) or (iii) to the knowledge of the Company, a “beneficial
owner” of more than 10% of the shares of Common Stock (as defined for purposes of Rule 13d-3 of the Securities Exchange Act
of 1934, as amended (the “1934 Act”)). The Company further acknowledges that no Buyer is acting as a financial
advisor or fiduciary of the Company or any of its Subsidiaries (or in any similar capacity) with respect to the Transaction Documents
and the transactions contemplated hereby and thereby, and any advice given by a Buyer or any of its representatives or agents in
connection with the Transaction Documents and the transactions contemplated hereby and thereby is merely incidental to such Buyer’s
purchase of the Securities. The Company further represents to each Buyer that the Company’s decision to enter into the Transaction
Documents has been based solely on the independent evaluation by the Company and its representatives.



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(g)        No
General Solicitation; Placement Agent’s Fees. Neither the Company, nor any of its Subsidiaries or affiliates, nor any
Person acting on its or their behalf, has engaged in any form of general solicitation or general advertising (within the meaning
of Regulation D) in connection with the offer or sale of the Securities. The Company shall be responsible for the payment of any
placement agent’s fees, financial advisory fees, or brokers’ commissions (other than for persons engaged by any Buyer
or its investment advisor) relating to or arising out of the transactions contemplated hereby, including, without limitation, any
placement agent fees payable in connection with the sale of the Securities. The Company shall pay, and hold each Buyer harmless
against, any liability, loss or expense (including, without limitation, attorney’s fees and out-of-pocket expenses) arising
in connection with any such claim. Neither the Company nor any of its Subsidiaries has engaged any placement agent or other agent
in connection with the sale of the Securities.


(h)        No
Integrated Offering. None of the Company, its Subsidiaries, any of their affiliates, nor any Person acting on their behalf
has, directly or indirectly, made any offers or sales of any security or solicited any offers to buy any security, under circumstances
that would require registration of the issuance of any of the Securities under the 1933 Act, whether through integration with prior
offerings or otherwise, or cause this offering of the Securities to require approval of stockholders of the Company for purposes
of the 1933 Act or any applicable stockholder approval provisions, including, without limitation, under the rules and regulations
of any exchange or automated quotation system on which any of the securities of the Company are listed or designated for quotation.
None of the Company, its Subsidiaries, their affiliates nor any Person acting on their behalf will take any action or steps referred
to in the preceding sentence that would require registration of the issuance of any of the Securities under the 1933 Act or cause
the offering of any of the Securities to be integrated with other offerings for purposes of any such applicable stockholder approval
provisions.


(i)        Dilutive
Effect. The Company further acknowledges that its obligation to issue Conversion Shares pursuant to the terms of the Notes
in accordance with this Agreement and the Notes and Warrants is absolute and unconditional regardless of the dilutive effect that
such issuance may have on the ownership interests of other stockholders of the Company.


(j)        Application
of Takeover Protections; Rights Agreement. The Company and its board of directors have taken all necessary action, if any,
in order to render inapplicable any control share acquisition, interested shareholder, business combination, poison pill (including,
without limitation, any distribution under a rights agreement) or other similar anti-takeover provision under the Certificate of
Incorporation, Bylaws or other organizational documents or the laws of the jurisdiction of its formation which is or could become
applicable to any Buyer as a result of the transactions contemplated by this Agreement, including, without limitation, the Company’s
issuance of the Securities and any Buyer’s ownership of the Securities. The Company has not adopted a stockholder rights
plan or similar arrangement relating to accumulations of beneficial ownership of Common Stock or a change in control of the Company
or any of its Subsidiaries.



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(k)        SEC
Documents; Financial Statements. Except as disclosed in Schedule 3(k), during the two (2) years prior to the date hereof,
the Company has timely filed all reports, schedules, forms, statements and other documents required to be filed by it with the
SEC pursuant to the reporting requirements of the 1934 Act (all of the foregoing filed prior to the date hereof or prior to the
Closing Date, and all exhibits included therein and financial statements, notes and schedules thereto and documents incorporated
by reference therein being hereinafter referred to as the “SEC Documents”). The Company has delivered to the
Buyers or their respective representatives true, correct and complete copies of the SEC Documents not available on the EDGAR system.
As of their respective filing dates, the SEC Documents complied in all material respects with the requirements of the 1934 Act
and the rules and regulations of the SEC promulgated thereunder applicable to the SEC Documents, and none of the SEC Documents,
at the time they were filed with the SEC, contained any untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which
they were made, not misleading. As of their respective filing dates, the financial statements of the Company included in the SEC
Documents complied as to form in all material respects with applicable accounting requirements and the published rules and regulations
of the SEC with respect thereto. Such financial statements have been prepared in accordance with generally accepted accounting
principles, consistently applied, during the periods involved (“GAAP”) (except (i) as may be otherwise indicated
in such financial statements or the notes thereto, or (ii) in the case of unaudited interim statements, to the extent they may
exclude footnotes or may be condensed or summary statements) and fairly present in all material respects the financial position
of the Company and its Subsidiaries as of the dates thereof and the results of its operations and cash flows for the periods then
ended (subject, in the case of unaudited statements, to normal year-end audit adjustments which will not be material either individually
or in the aggregate). No other information provided by or on behalf of the Company to any of the Buyers which is not included in
the SEC Documents, including, without limitation, information referred to in Section 2(d) of this Agreement or in the disclosure
schedules to this Agreement, contains any untrue statement of a material fact or omits to state any material fact necessary in
order to make the statements therein, in the light of the circumstance under which they are or were made, not misleading.


(l)        Absence
of Certain Changes. Except as disclosed in Schedule 3(l), since March 31, 2015, there has been no material adverse change
and no material adverse development in the business, assets, liabilities, properties, operations, condition (financial or otherwise),
results of operations or prospects of the Company or any of its Subsidiaries. Except as disclosed in Schedule 3(l), since
March 31, 2015, neither the Company nor any of its Subsidiaries has (i) declared or paid any dividends, (ii) sold any assets, individually
or in the aggregate, in excess of $100,000 outside of the ordinary course of business or (iii) had capital expenditures, individually
or in the aggregate, in excess of $100,000. Neither the Company nor any of its Subsidiaries has taken any steps to seek protection
pursuant to any law or statute relating to bankruptcy, insolvency, reorganization, receivership, liquidation or winding up nor
does the Company or any Subsidiary have any knowledge or reason to believe that any of its respective creditors intend to initiate
involuntary bankruptcy proceedings or any actual knowledge of any fact that would reasonably lead a creditor to do so. The Company
and its Subsidiaries, individually and on a consolidated basis, are not as of the date hereof, and after giving effect to the transactions
contemplated hereby to occur at the Closing, will not be Insolvent (as defined below). For purposes of this Section 3(l), “Insolvent”
means, with respect to any Person, (i) the present fair saleable value of such Person’s assets is less than the amount required
to pay such Person’s total Indebtedness (as defined in Section 3(s)), (ii) such Person is unable to pay its debts and liabilities,
subordinated, contingent or otherwise, as such debts and liabilities become absolute and matured, (iii) such Person intends to
incur or believes that it will incur debts that would be beyond its ability to pay as such debts mature or (iv) such Person has
unreasonably small capital with which to conduct the business in which it is engaged as such business is now conducted and is proposed
to be conducted.



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(m)        No
Undisclosed Events, Liabilities, Developments or Circumstances. No event, liability, development or circumstance has occurred
or exists, or is contemplated to occur with respect to the Company, its Subsidiaries or their respective business, properties,
prospects, operations or financial condition, that would be required to be disclosed by the Company under applicable securities
laws on a registration statement on Form S-1 filed with the SEC relating to an issuance and sale by the Company of its Common Stock
and which has not been publicly announced.


(n)        Conduct
of Business; Regulatory Permits. Neither the Company nor any of its Subsidiaries is in violation of any term of or in default
under any certificate of designations of any outstanding series of preferred stock of the Company (if any), its Certificate of
Incorporation or Bylaws or their organizational charter or memorandum of association or certificate of incorporation or articles
of association or bylaws, respectively. Neither the Company nor any of its Subsidiaries is in violation of any judgment, decree
or order or any statute, ordinance, rule or regulation applicable to the Company or any of its Subsidiaries, and neither the Company
nor any of its Subsidiaries will conduct its business in violation of any of the foregoing, except for possible violations which
could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. Without limiting the generality
of the foregoing, the Company is not in violation of any of the rules, regulations or requirements of the Principal Market and
has no knowledge of any facts or circumstances that would reasonably lead to delisting or suspension of the Common Stock by the
Principal Market in the foreseeable future that cannot be cured within any applicable cure time periods provided by the Principal
Market. Except as set forth in Schedule 3(n), during the two (2) years prior to the date hereof, the Common Stock has been
designated for quotation on the Principal Market or the OTCQB. Except as set forth in Schedule 3(n), during the two (2)
years prior to the date hereof, (i) trading in the Common Stock has not been suspended by the SEC or the Principal Market and (ii)
the Company has received no communication, written or oral, from the SEC or the Principal Market regarding the suspension or delisting
of the Common Stock from the Principal Market. The Company and its Subsidiaries possess all certificates, authorizations and permits
issued by the appropriate federal, state or foreign regulatory authorities necessary to conduct their respective businesses, except
where the failure to possess such certificates, authorizations or permits would not have, individually or in the aggregate, a Material
Adverse Effect, and neither the Company nor any such Subsidiary has received any notice of proceedings relating to the revocation
or modification of any such certificate, authorization or permit.


(o)        Foreign
Corrupt Practices. Neither the Company, nor any of its Subsidiaries, nor any director, officer, agent, employee or other Person
acting on behalf of the Company or any of its Subsidiaries has, in the course of its actions for, or on behalf of, the Company
or any of its Subsidiaries (i) used any corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses
relating to political activity; (ii) made any direct or indirect unlawful payment to any foreign or domestic government official
or employee from corporate funds; (iii) violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act
of 1977, as amended; or (iv) made any unlawful bribe, rebate, payoff, influence payment, kickback or other unlawful payment to
any foreign or domestic government official or employee.



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(p)        Sarbanes-Oxley
Act. The Company is in compliance with any and all applicable requirements of the Sarbanes-Oxley Act of 2002, as amended, that
are effective as of the date hereof, and any and all applicable rules and regulations promulgated by the SEC thereunder that are
effective as of the date hereof.


(q)        
Transactions With Affiliates. Except as set forth on Schedule 3(q), none of the officers, directors or employees
of the Company or any of its Subsidiaries is presently a party to any transaction with the Company or any of its Subsidiaries (other
than for ordinary course services as employees, officers or directors), including any contract, agreement or other arrangement
providing for the furnishing of services to or by, providing for rental of real or personal property to or from, or otherwise requiring
payments to or from any such officer, director or employee or, to the knowledge of the Company or any of its Subsidiaries, any
corporation, partnership, trust or other entity in which any such officer, director, or employee has a substantial interest or
is an officer, director, employee, trustee or partner.


(r)        Equity
Capitalization. As of the date hereof, the authorized capital stock of the Company consists of (i) 100,000,000 shares of Common
Stock, of which as of the date hereof, 3,399,872 shares are issued and outstanding, 86,857 shares are reserved for issuance
pursuant to the Company’s stock option and purchase plans and 627,955 shares are reserved for issuance pursuant to securities
(other than the aforementioned options, the Notes and the Warrants) exercisable or exchangeable for, or convertible into, Common
Stock, (ii) 12,500,000 shares of preferred stock, par value $ 0 per share, of which (w) 61,607 shares are designated as Series
A preferred stock, [all] of which are issued and outstanding and (iii) there are 3,386,762 shares of Common Stock held by
non-affiliates of the Company (total shares issued and outstanding without officers and directors). All of such outstanding shares
have been, or upon issuance will be, validly issued and are fully paid and nonassessable. Except as disclosed in (i) Schedule
3(r)(i), none of the Company’s capital stock is subject to preemptive rights or any other similar rights or any liens
or encumbrances suffered or permitted by the Company; (ii) Schedule 3(r)(ii), there are 15,336 outstanding options of which
5,314 are subject to future vesting, 689,562 warrants, scrip, rights to subscribe to, calls or commitments of any character whatsoever
relating to, or securities or rights convertible into, or exercisable or exchangeable for, any shares of capital stock of the Company
or any of its Subsidiaries, or contracts, commitments, understandings or arrangements by which the Company or any of its Subsidiaries
is or may become bound to issue additional shares of capital stock of the Company or any of its Subsidiaries or options, warrants,
scrip, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities or rights convertible
into, or exercisable or exchangeable for, any shares of capital stock of the Company or any of its Subsidiaries; (iii) Schedule
3(r)(iii), there are no outstanding debt securities, notes, credit agreements, credit facilities or other agreements, documents
or instruments evidencing Indebtedness of the Company or any of its Subsidiaries or by which the Company or any of its Subsidiaries
is or may become bound; (iv) Schedule 3(r)(iv), there are no financing statements securing obligations in any material amounts,
either singly or in the aggregate, filed in connection with the Company or any of its Subsidiaries; (v) Schedule 3(r)(v),
there are no agreements or arrangements under which the Company or any of its Subsidiaries is obligated to register the sale of
any of their securities under the 1933 Act; (vi) Schedule 3(r)(vi), there are no outstanding securities or instruments of
the Company or any of its Subsidiaries which contain any redemption or similar provisions, and there are no contracts, commitments,
understandings or arrangements by which the Company or any of its Subsidiaries is or may become bound to redeem a security of the
Company or any of its Subsidiaries; (vii) Schedule 3(r)(vii), there are no securities or instruments containing anti-dilution
or similar provisions that will be triggered by the issuance of the Securities; (viii) Schedule 3(r)(viii), neither the
Company nor any Subsidiary has any stock appreciation rights or “phantom stock” plans or agreements or any similar
plan or agreement; and (ix) Schedule 3(r)(ix), the Company and its Subsidiaries have no liabilities or obligations required
to be disclosed in the SEC Documents but not so disclosed in the SEC Documents, other than those incurred in the ordinary course
of the Company’s or any of its Subsidiary’s’ respective businesses and which, individually or in the aggregate,
do not or would not have a Material Adverse Effect. The Company has furnished or made available to the Buyers true, correct and
complete copies of the Company’s Certificate of Incorporation, as amended and as in effect on the date hereof (the “Certificate
of Incorporation”), and the Company’s Bylaws, as amended and as in effect on the date hereof (the “Bylaws”),
and the terms of all securities convertible into, or exercisable or exchangeable for shares of Common Stock and the material rights
of the holders thereof in respect thereto.



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(s)        Indebtedness
and Other Contracts. Neither the Company nor any of its Subsidiaries (i) except as disclosed in Schedule 3(s)(i), has
any outstanding Indebtedness (as defined below), (ii) except as disclosed in Schedule 3(s)(ii), is a party to any contract,
agreement or instrument, the violation of which, or default under which, by the other party(ies) to such contract, agreement or
instrument could reasonably be expected to result in a Material Adverse Effect, (iii) except as disclosed in Schedule 3(s)(iii),
is in violation of any term of or in default under any contract, agreement or instrument relating to any Indebtedness, except where
such violations and defaults would not result, individually or in the aggregate, in a Material Adverse Effect, or (iv) except as
disclosed in Schedule 3(s)(iv), is a party to any contract, agreement or instrument relating to any Indebtedness, the performance
of which, in the judgment of the Company’s officers, has or is expected to have a Material Adverse Effect. Schedule 3(s)
provides a detailed description of the material terms of any such outstanding Indebtedness. For purposes of this Agreement: (x)
“Indebtedness” of any Person means, without duplication (A) all indebtedness for borrowed money, (B) all obligations
issued, undertaken or assumed as the deferred purchase price of property or services, including, without limitation, “capital
leases” in accordance with GAAP (other than trade payables entered into in the ordinary course of business consistent with
past practice), (C) all reimbursement or payment obligations with respect to letters of credit, surety bonds and other similar
instruments, (D) all obligations evidenced by notes, bonds, debentures or similar instruments, including obligations so evidenced
incurred in connection with the acquisition of property, assets or businesses, (E) all indebtedness created or arising under any
conditional sale or other title retention agreement, or incurred as financing, in either case with respect to any property or assets
acquired with the proceeds of such indebtedness (even though the rights and remedies of the seller or bank under such agreement
in the event of default are limited to repossession or sale of such property), (F) all monetary obligations under any leasing or
similar arrangement which, in connection with GAAP, consistently applied for the periods covered thereby, is classified as a capital
lease, (G) all indebtedness referred to in clauses (A) through (F) above secured by (or for which the holder of such Indebtedness
has an existing right, contingent or otherwise, to be secured by) any mortgage, deed of trust, lien, pledge, charge, security interest
or other encumbrance of any nature whatsoever in or upon any property or assets (including accounts and contract rights) with respect
to any asset or property owned by any Person, even though the Person which owns such assets or property has not assumed or become
liable for the payment of such indebtedness, and (H) all Contingent Obligations in respect of indebtedness or obligations of others
of the kinds referred to in clauses (A) through (G) above; and (y) “Contingent Obligation” means, as to any
Person, any direct or indirect liability, contingent or otherwise, of that Person with respect to any Indebtedness, lease, dividend
or other obligation of another Person if the primary purpose or intent of the Person incurring such liability, or the primary effect
thereof, is to provide assurance to the obligee of such liability that such liability will be paid or discharged, or that any agreements
relating thereto will be complied with, or that the holders of such liability will be protected (in whole or in part) against loss
with respect thereto.



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(t)        Absence
of Litigation. There is no action, suit, proceeding, inquiry or investigation before or by the Principal Market, any court,
public board, government agency, self-regulatory organization or body pending or, to the knowledge of the Company, threatened against
or affecting the Company or any of its Subsidiaries, the Common Stock or any of the Company’s Subsidiaries or any of the
Company’s or its Subsidiaries’ officers or directors, whether of a civil or criminal nature or otherwise, in their
capacities as such, except as set forth in Schedule 3(t). The matters set forth in Schedule 3(t) would not reasonably
be expected to have a Material Adverse Effect.


(u)        Insurance.
The Company and each of its Subsidiaries are insured by insurers of recognized financial responsibility against such losses and
risks and in such amounts as management of the Company believes to be prudent and customary in the businesses in which the Company
and its Subsidiaries are engaged. Neither the Company nor any such Subsidiary has been refused any insurance coverage sought or
applied for and neither the Company nor any such Subsidiary has any reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to
continue its business at a cost that would not have a Material Adverse Effect.


(v)        Employee
Relations.


(i)           Neither
the Company nor any of its Subsidiaries is a party to any collective bargaining agreement or employs any member of a union. The
Company and its Subsidiaries believe that their relations with their respective employees are good. No executive officer of the
Company or any of its Subsidiaries (as defined in Rule 501(f) of the 1933 Act) has notified the Company or any such Subsidiary
that such officer intends to leave the Company or any such Subsidiary or otherwise terminate such officer’s employment with
the Company or any such Subsidiary. No executive officer of the Company or any of its Subsidiaries, to the knowledge of the Company
or any of its Subsidiaries, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality,
disclosure or proprietary information agreement, non-competition agreement, or any other contract or agreement or any restrictive
covenant, and the continued employment of each such executive officer does not subject the Company or any of its Subsidiaries to
any liability with respect to any of the foregoing matters.



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(ii)           The
Company and its Subsidiaries are in compliance with all federal, state, local and foreign laws and regulations respecting labor,
employment and employment practices and benefits, terms and conditions of employment and wages and hours, except where failure
to be in compliance would not, either individually or in the aggregate, reasonably be expected to result in a Material Adverse
Effect.


(w)        Title.
The Company and its Subsidiaries have good and marketable title in fee simple to all real property and good and marketable title
to all personal property owned by them which is material to the business of the Company and its Subsidiaries, in each case except
as set forth on Schedule 3(w), free and clear of all liens, encumbrances and defects except such as do not materially affect
the value of such property and do not interfere with the use made and proposed to be made of such property by the Company and any
of its Subsidiaries. Any real property and facilities held under lease by the Company and any of its Subsidiaries are held by them
under valid, subsisting and enforceable leases with such exceptions as are not material and do not interfere with the use made
and proposed to be made of such property and buildings by the Company and its Subsidiaries.


(x)        Intellectual
Property Rights. The Company and its Subsidiaries own or possess adequate rights or licenses to use all trademarks, trade names,
service marks, service mark registrations, service names, original works of authorship, patents, patent rights, copyrights, inventions,
licenses, approvals, governmental authorizations, trade secrets and other intellectual property rights and all applications and
registrations therefor (“Intellectual Property Rights”) necessary to conduct their respective businesses as
now conducted and as presently proposed to be conducted. Each of patents owned by the Company or any of its Subsidiaries is listed
on Schedule 3(x)(i). Except as set forth in Schedule 3(x)(ii), none of the Company’s or its Subsidiaries’
Intellectual Property Rights have expired or terminated or have been abandoned or are expected to expire or terminate or are expected
to be abandoned, within three years from the date of this Agreement. The Company does not have any knowledge of any infringement
by the Company or its Subsidiaries of Intellectual Property Rights of others. There is no claim, action or proceeding being made
or brought, or to the knowledge of the Company or any of its Subsidiaries, being threatened, against the Company or any of its
Subsidiaries regarding its Intellectual Property Rights. Neither the Company nor any of its Subsidiaries is aware of any facts
or circumstances which might give rise to any of the foregoing infringements or claims, actions or proceedings. The Company and
its Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality and value of all of their Intellectual
Property Rights.


(y)        Environmental
Laws. The Company and its Subsidiaries (i) are in compliance with any and all Environmental Laws (as hereinafter defined),
(ii) have received all permits, licenses or other approvals required of them under applicable Environmental Laws to conduct their
respective businesses and (iii) are in compliance with all terms and conditions of any such permit, license or approval where,
in each of the foregoing clauses (i), (ii) and (iii), the failure to so comply could be reasonably expected to have, individually
or in the aggregate, a Material Adverse Effect. The term “Environmental Laws” means all federal, state, local
or foreign laws relating to pollution or protection of human health or the environment (including, without limitation, ambient
air, surface water, groundwater, land surface or subsurface strata), including, without limitation, laws relating to emissions,
discharges, releases or threatened releases of chemicals, pollutants, contaminants, or toxic or hazardous substances or wastes
(collectively, “Hazardous Materials”) into the environment, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials, as well as all authorizations,
codes, decrees, demands or demand letters, injunctions, judgments, licenses, notices or notice letters, orders, permits, plans
or regulations issued, entered, promulgated or approved thereunder.



    	- 14 -



    	 



    

 


(z)        Subsidiary
Rights. The Company or one of its Subsidiaries has the unrestricted right to vote, and (subject to limitations imposed by applicable
law) to receive dividends and distributions on, all capital securities of its Subsidiaries as owned by the Company or such Subsidiary.


(aa)       Investment
Company Status. Neither the Company nor any Subsidiary is, and upon consummation of the sale of the Securities, and for so
long any Buyer holds any Securities, will be, an “investment company,” a company controlled by an “investment
company” or an “affiliated person” of, or “promoter” or “principal underwriter” for,
an “investment company” as such terms are defined in the Investment Company Act of 1940, as amended.


(bb)       Tax
Status. The Company and each of its Subsidiaries (i) has made or filed all U.S. federal, state and foreign income and all other
tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has paid all taxes and other governmental
assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations, except
those being contested in good faith and (iii) has set aside on its books provision reasonably adequate for the payment of all taxes
for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material
amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company know of no basis for any
such claim.


(cc)       Internal
Accounting and Disclosure Controls. The Company and each of its Subsidiaries maintain a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or
specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity
with generally accepted accounting principles and to maintain asset and liability accountability, (iii) access to assets or incurrence
of liabilities is permitted only in accordance with management’s general or specific authorization and (iv) the recorded
accountability for assets and liabilities is compared with the existing assets and liabilities at reasonable intervals and appropriate
action is taken with respect to any difference. The Company maintains disclosure controls and procedures (as such term is defined
in Rule 13a-15 under the 1934 Act) that are effective in ensuring that information required to be disclosed by the Company in the
reports that it files or submits under the 1934 Act is recorded, processed, summarized and reported, within the time periods specified
in the rules and forms of the SEC, including, without limitation, controls and procedures designed to ensure that information required
to be disclosed by the Company in the reports that it files or submits under the 1934 Act is accumulated and communicated to the
Company’s management, including its principal executive officer or officers and its principal financial officer or officers,
as appropriate, to allow timely decisions regarding required disclosure. During the twelve months prior to the date hereof neither
the Company nor any of its Subsidiaries has received any notice or correspondence from any accountant relating to any material
weakness in any part of the system of internal accounting controls of the Company or any of its Subsidiaries.



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(dd)       Off
Balance Sheet Arrangements. There is no transaction, arrangement, or other relationship between the Company and an unconsolidated
or other off balance sheet entity that is required to be disclosed by the Company in its 1934 Act filings and is not so disclosed
or that otherwise would be reasonably likely to have a Material Adverse Effect.


(ee)       Ranking
of Notes. Except as set forth in Schedule 3(ee), no Indebtedness of the Company or any of its Subsidiaries is senior
to or ranks pari passu with the Notes in right of payment, whether with respect of payment of redemptions, interest, damages
or upon liquidation or dissolution or otherwise.


(ff)         Eligibility
for Registration. The Company is eligible to register the Conversion Shares and the Warrant Shares for resale by the Buyers
using Form S-3 promulgated under the 1933 Act.


(gg)       Transfer
Taxes. On the Closing Date, all stock transfer or other taxes (other than income or similar taxes) which are required to be
paid in connection with the sale and transfer of the Securities to be sold to each Buyer hereunder will be, or will have been,
fully paid or provided for by the Company, and all laws imposing such taxes will be or will have been complied with.


(hh)       Manipulation
of Price. The Company has not, and to its knowledge no one acting on its behalf has, (i) taken, directly or indirectly, any
action designed to cause or to result, or that could reasonably be expected to cause or result, in the stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale of any of the Securities, (ii) sold, bid for, purchased,
or paid any compensation for soliciting purchases of, any of the Securities, or (iii) paid or agreed to pay to any person any compensation
for soliciting another to purchase any other securities of the Company.


(ii)          Acknowledgement
Regarding Buyers’ Trading Activity. The Company acknowledges and agrees that (i) none of the Buyers has been asked to
agree, nor has any Buyer agreed, to desist from purchasing or selling, long and/or short, securities of the Company, or “derivative”
securities based on securities issued by the Company or to hold the Securities for any specified term; (ii) any Buyer, and counter-parties
in “derivative” transactions to which any such Buyer is a party, directly or indirectly, presently may have a “short”
position in the Common Stock, and (iii) each Buyer shall not be deemed to have any affiliation with or control over any arm’s
length counter-party in any “derivative” transaction. The Company further understands and acknowledges that one or
more Buyers may engage in hedging and/or trading activities at various times during the period that the Securities are outstanding,
including, without limitation, during the periods that the value of the Conversion Shares and/or the Warrant Shares are being determined
and (b) such hedging and/or trading activities, if any, can reduce the value of the existing stockholders’ equity interest
in the Company both at and after the time the hedging and/or trading activities are being conducted. The Company acknowledges that
such aforementioned hedging and/or trading activities do not constitute a breach of this Agreement, the Notes, the Warrants or
any of the documents executed in connection herewith.



    	- 16 -



    	 



    

 


(jj)         U.S.
Real Property Holding Corporation. The Company is not, has never been, and so long as any Securities remain outstanding, shall
not become, a U.S. real property holding corporation within the meaning of Section 897 of the Code and the Company shall so certify
upon any Buyer’s request.


(kk)       Bank
Holding Company Act. Neither the Company nor any of its Subsidiaries or affiliates is subject to the Bank Holding Company Act
of 1956, as amended (the “BHCA”) and to regulation by the Board of Governors of the Federal Reserve System (the
“Federal Reserve”). Neither the Company nor any of its Subsidiaries or affiliates owns or controls, directly
or indirectly, five percent (5%) or more of the outstanding shares of any class of voting securities or twenty-five percent (25%)
or more of the total equity of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve. Neither
the Company nor any of its Subsidiaries or affiliates exercises a controlling influence over the management or policies of a bank
or any entity that is subject to the BHCA and to regulation by the Federal Reserve.


(ll)         No
Additional Agreements. Neither the Company nor any of its Subsidiaries has any agreement or understanding with any Buyer with
respect to the transactions contemplated by the Transaction Documents other than as specified in the Transaction Documents.


(mm)     Disclosure.
Except for discussions specifically regarding the offer and sale of the Securities, the Company confirms that neither it nor any
other Person acting on its behalf has provided any of the Buyers or their agents or counsel with any information that constitutes
or could reasonably be expected to constitute material, nonpublic information concerning the Company or any of its Subsidiaries,
other than the existence of the transactions contemplated by this Agreement and the other Transaction Documents. The Company understands
and confirms that each of the Buyers will rely on the foregoing representations in effecting transactions in securities of the
Company. All disclosure provided to the Buyers regarding the Company and its Subsidiaries, their businesses and the transactions
contemplated hereby, including the schedules to this Agreement, furnished by or on behalf of the Company or any of its Subsidiaries
is true and correct and does not contain any untrue statement of a material fact or omit to state any material fact necessary in
order to make the statements made therein, in the light of the circumstances under which they were made, not misleading. All of
the written information furnished after the date hereof by or on behalf of the Company or any of its Subsidiaries to you pursuant
to or in connection with this Agreement and the other Transaction Documents, taken as a whole, will be true and correct in all
material respects as of the date on which such information is so provided and will not contain any untrue statement of a material
fact or omit to state any material fact necessary in order to make the statements made therein, in the light of the circumstances
under which they are made, not misleading. Each press release issued by the Company or any of its Subsidiaries during the twelve
(12) months preceding the date of this Agreement did not at the time of release contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading. No event or circumstance has occurred or information exists with
respect to the Company or any of its Subsidiaries or its or their business, properties, liabilities, prospects, operations (including
results thereof) or conditions (financial or otherwise), which, under applicable law, rule or regulation, requires public disclosure
at or before the date hereof or announcement by the Company but which has not been so publicly announced or disclosed. The Company
acknowledges and agrees that no Buyer makes or has made any representations or warranties with respect to the transactions contemplated
hereby other than those specifically set forth in Section 2.



    	- 17 -



    	 



    

 


(nn)       Shell
Company Status. The Company is not, and has never been, an issuer identified in Rule 144(i)(1) of the 1933 Act.


(oo)       Stock
Option Plans. Each stock option granted by the Company was granted (i) in accordance with the terms of the applicable stock
option plan of the Company and (ii) with an exercise price at least equal to the fair market value of the Common Stock on the date
such stock option would be considered granted under GAAP and applicable law. No stock option granted under the Company’s
stock option plan has been backdated. The Company has not knowingly granted, and there is no and has been no policy or practice
of the Company to knowingly grant, stock options prior to, or otherwise knowingly coordinate the grant of stock options with, the
release or other public announcement of material information regarding the Company or its Subsidiaries or their financial results
or prospects.


(pp)       No
Disagreements with Accountants and Lawyers. There are no material disagreements of any kind presently existing, or reasonably
anticipated by the Company to arise, between the Company and the accountants and lawyers formerly or presently employed by the
Company and the Company is current with respect to any fees owed to its accountants and lawyers which could affect the Company’s
ability to perform any of its obligations under any of the Transaction Documents.


(qq)       Money
Laundering. The Company and its Subsidiaries are in compliance with, and have not previously violated, the USA Patriot Act
of 2001 and all other applicable U.S. and non-U.S. anti-money laundering laws and regulations, including, but not limited to, the
laws, regulations and Executive Orders and sanctions programs administered by the U.S. Office of Foreign Assets Control, including,
but not limited, to (i) Executive Order 13224 of September 23, 2001 entitled, “Blocking Property and Prohibiting Transactions
With Persons Who Commit, Threaten to Commit, or Support Terrorism” (66 Fed. Reg. 49079 (2001)); and (ii) any regulations
contained in 31 CFR, Subtitle B, Chapter V.


(rr)       No
Disqualification Events. With respect to Securities to be offered and sold hereunder in reliance on Rule 506(b) under the 1933
Act (“Regulation D Securities”), none of the Company, any of its predecessors, any affiliated issuer, any director,
executive officer, other officer of the Company participating in the offering hereunder, any beneficial owner of 20% or more of
the Company’s outstanding voting equity securities, calculated on the basis of voting power, nor any promoter (as that term
is defined in Rule 405 under the 1933 Act) connected with the Company in any capacity at the time of sale (each, an “Issuer
Covered Person” and, together, “Issuer Covered Persons”) is subject to any of the “Bad Actor”
disqualifications described in Rule 506(d)(1)(i) to (viii) under the 1933 Act (a “Disqualification Event”),
except for a Disqualification Event covered by Rule 506(d)(2) or (d)(3). The Company has exercised reasonable care to determine
whether any Issuer Covered Person is subject to a Disqualification Event. The Company has complied, to the extent applicable, with
its disclosure obligations under Rule 506(e), and has furnished to the Buyers a copy of any disclosures provided thereunder.



    	- 18 -



    	 



    

 


(ss)       Other
Covered Persons. The Company is not aware of any Person that has been or will be paid (directly or indirectly) remuneration
for solicitation of Buyers or potential purchasers in connection with the sale of any Regulation D Securities.


4.          COVENANTS.


(a)        Best
Efforts. Each party shall use its best efforts timely to satisfy each of the covenants and the conditions to be satisfied by
it as provided in Sections 6 and 7 of this Agreement.


(b)        Form
D and Blue Sky. The Company agrees to file a Form D with respect to the Securities as required under Regulation D and to provide
a copy thereof to each Buyer promptly after such filing. The Company shall, on or before the Closing Date, take such action as
the Company shall reasonably determine is necessary in order to obtain an exemption for or to qualify the Securities for sale to
the Buyers at the Closing pursuant to this Agreement under applicable securities or “Blue Sky” laws of the states of
the United States (or to obtain an exemption from such qualification), and shall provide evidence of any such action so taken to
the Buyers on or prior to the Closing Date. The Company shall make all filings and reports relating to the offer and sale of the
Securities required under applicable securities or “Blue Sky” laws of the states of the United States following the
Closing Date.


(c)        Reporting
Status. Until the date on which the Buyers shall have sold all of the Conversion Shares and Warrant Shares and none
of the Notes or Warrants are outstanding (the “Reporting Period”), the Company shall timely file all
reports required to be filed with the SEC pursuant to the 1934 Act, and the Company shall not terminate its status as an issuer
required to file reports under the 1934 Act even if the 1934 Act or the rules and regulations thereunder would no longer require
or otherwise permit such termination.


(d)        Use
of Proceeds. The Company will use the proceeds from the sale of the Securities solely as set forth on Schedule 4(d).


(e)        Financial
Information. The Company agrees to send the following to each Investor during the Reporting Period (i) unless the following
are filed with the SEC through EDGAR and are available to the public through the EDGAR system, within one (1) Business Day after
the filing thereof with the SEC, a copy of its Annual Reports on Form 10-K, any Quarterly Reports on Form 10-Q, any Current Reports
on Form 8-K (or any analogous reports under the 1934 Act) and any registration statements (other than on Form S-8) or amendments
filed pursuant to the 1933 Act, (ii) on the same day as the release thereof, facsimile or e-mailed copies of all press releases
issued by the Company or any of its Subsidiaries, and (iii) copies of any notices and other information made available or given
to the stockholders of the Company generally, contemporaneously with the making available or giving thereof to the stockholders.
As used herein, “Business Day” means any day other than Saturday, Sunday or other day on which commercial banks
in The City of New York are authorized or required by law to remain closed.



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(f)        Listing.
The Company shall promptly secure the listing of all the Warrant Shares, Conversion Shares and any capital stock of the Company
issued or issuable with respect to the Warrant Shares, the Warrants, the Conversion Shares or the Notes, in each case as a result
of any stock split, stock dividend, recapitalization, exchange or similar event or otherwise, without regard to any limitations
on the exercise of the Warrants and/or the conversion of the Notes (the “Underlying Shares”), upon each national
securities exchange and automated quotation system, if any, upon which the Common Stock then listed (subject to official notice
of issuance) and shall maintain such listing of all Underlying Shares from time to time issuable under the terms of the Transaction
Documents. The Company shall maintain the authorization for quotation of the Common Stock on the Principal Market or any other
Eligible Market (as defined in the Warrants). Neither the Company nor any of its Subsidiaries shall take any action which would
be reasonably expected to result in the delisting or suspension of the Common Stock on the Principal Market. The Company shall
pay all fees and expenses in connection with satisfying its obligations under this Section 4(f).


(g)        Fees.
The Company shall reimburse Empery (a Buyer) or its designee(s) (in addition to any other expense amounts paid to any Buyer or
its counsel prior to the date of this Agreement) for all costs and expenses incurred in connection with the transactions contemplated
by the Transaction Documents (including all legal fees and disbursements in connection therewith, documentation and implementation
of the transactions contemplated by the Transaction Documents and due diligence in connection therewith), which amount may be withheld
by such Buyer from its purchase price for any Notes purchased at the Closing to the extent not previously reimbursed by the Company.
Notwithstanding the foregoing, in no event will the total fees paid inclusive of counsel of Empery reimbursed by the Company pursuant
to this Section 4(g) exceed $35,000 in the aggregate (including the $10,000 deposit paid by the Company to Empery, which $35,000
shall include all expenses) without the prior approval from the Company. The Company shall pay, and hold each Buyer harmless against,
any liability, loss or expense (including, without limitation, reasonable attorney’s fees and out-of-pocket expenses) arising
in connection with any claim relating to any payment with respect to placement agent’s fees, financial advisory fees, or
broker’s commissions (other than for Persons engaged by any Buyer) relating to or arising out of the transactions contemplated
hereby. Except as otherwise set forth in the Transaction Documents, each party to this Agreement shall bear its own expenses in
connection with the sale of the Securities to the Buyers.


(h)        Pledge
of Securities. The Company acknowledges and agrees that the Securities may be pledged by an Investor in connection with a bona
fide margin agreement or other loan or financing arrangement that is secured by the Securities. The pledge of Securities shall
not be deemed to be a transfer, sale or assignment of the Securities hereunder, and no Investor effecting a pledge of Securities
shall be required to provide the Company with any notice thereof or otherwise make any delivery to the Company pursuant to this
Agreement or any other Transaction Document, including, without limitation, Section 2(f) hereof; provided that an Investor
and its pledgee shall be required to comply with the provisions of Section 2(f) hereof in order to effect a sale, transfer or assignment
of Securities to such pledgee. The Company hereby agrees to execute and deliver such documentation as a pledgee of the Securities
may reasonably request in connection with a pledge of the Securities to such pledgee by an Investor.



    	- 20 -



    	 



    

 


(i)        Disclosure
of Transactions and Other Material Information. On or before 8:30 a.m., New York City time, on the first Business Day after
this Agreement has been executed, the Company shall issue a press release reasonably acceptable to the Buyers and file a Current
Report on Form 8-K describing the terms of the transactions contemplated by the Transaction Documents in the form required by the
1934 Act and attaching the material Transaction Documents (including, without limitation, this Agreement (and all schedules and
exhibits to this Agreement), the form of the Warrants and the form of Notes as exhibits to such filing (including all attachments),
the “8-K Filing”). From and after the filing of the 8-K Filing with the SEC, no Buyer shall be in possession
of any material, nonpublic information received from the Company, any of its Subsidiaries or any of their respective officers,
directors, employees, affiliates or agents, that is not disclosed in the 8-K Filing. In addition, effective upon the filing of
the 8-K Filing, the Company acknowledges and agrees that any and all confidentiality or similar obligations under any agreement,
whether written or oral, between the Company, any of its Subsidiaries or any of their respective officers, directors, employees,
affiliates or agents, on the one hand, and any of the Buyers or any of their affiliates, on the other hand, shall terminate. The
Company shall not, and shall cause each of its Subsidiaries and its and each of their respective officers, directors, employees,
affiliates and agents, not to, provide any Buyer with any material, nonpublic information regarding the Company or any of its Subsidiaries
from and after the date hereof without the express prior written consent of such Buyer. If a Buyer has, or believes it has, received
any such material, nonpublic information regarding the Company or any of its Subsidiaries from the Company, any of its Subsidiaries
or any of their respective officers, directors, employees, affiliates or agents, it may provide the Company with written notice
thereof. The Company shall, within two (2) Trading Days of receipt of such notice, make public disclosure of such material, nonpublic
information. In the event of a breach of the foregoing covenant by the Company, any of its Subsidiaries, or any of its or their
respective officers, directors, employees, affiliates and agents, in addition to any other remedy provided herein or in the Transaction
Documents, a Buyer shall have the right to make a public disclosure, in the form of a press release, public advertisement or otherwise,
of such material, nonpublic information without the prior approval by the Company, its Subsidiaries, or any of its or their respective
officers, directors, employees, affiliates or agents. No Buyer shall have any liability to the Company, its Subsidiaries, or any
of its or their respective officers, directors, employees, affiliates, stockholders or agents for any such disclosure. To the extent
that the Company delivers any material, nonpublic information to a Buyer without such Buyer’s consent, the Company hereby
covenants and agrees that such Buyer shall not have any duty of confidentiality to the Company, any of its Subsidiaries or any
of their respective officers, directors, employees, affiliates or agent with respect to, or a duty to the Company, any of its Subsidiaries
or any of their respective officers, directors, employees, affiliates or agent not to trade on the basis of, such material, nonpublic
information. Subject to the foregoing, neither the Company, its Subsidiaries nor any Buyer shall issue any press releases or any
other public statements with respect to the transactions contemplated hereby; provided, however, that the Company shall be entitled,
without the prior approval of any Buyer, to make any press release or other public disclosure with respect to such transactions
(i) in substantial conformity with the 8-K Filing and contemporaneously therewith and (ii) as is required by applicable law and
regulations (provided that in the case of clause (i) each Buyer shall be consulted by the Company in connection with any such press
release or other public disclosure prior to its release). Without the prior written consent of any applicable Buyer, neither the
Company nor any of its Subsidiaries or affiliates shall disclose the name of such Buyer in any filing, announcement, release or
otherwise.



    	- 21 -



    	 



    

 


(j)         Additional
Notes. So long as any Buyer beneficially owns any Securities, the Company will not issue any Notes other than to the Buyers
as contemplated hereby and the Company shall not issue any other securities that would cause a breach or default under the Notes.


(k)        Corporate
Existence. So long as any Buyer beneficially owns any Securities, the Company shall (i) maintain its corporate existence and
(ii) not be party to any Fundamental Transaction (as defined in the Notes) unless the Company is in compliance with the applicable
provisions governing Fundamental Transactions set forth in the Notes and the Warrants.


(l)         Reservation
of Shares. So long as any Buyer owns any Securities, the Company shall take all action necessary to at all times have authorized,
and reserved for the purpose of issuance, no less than the Required Reserve Amount. If at any time the number of shares of Common
Stock authorized and reserved for issuance is not sufficient to meet the Required Reserved Amount, the Company will promptly take
all corporate action necessary to authorize and reserve a sufficient number of shares, including, without limitation, calling a
special meeting of stockholders to authorize additional shares to meet the Company’s obligations under Section 3(c), in the
case of an insufficient number of authorized shares, obtain stockholder approval of an increase in such authorized number of shares,
and voting the management shares of the Company in favor of an increase in the authorized shares of the Company to ensure that
the number of authorized shares is sufficient to meet the Required Reserved Amount.


(m)        Conduct
of Business. The business of the Company and its Subsidiaries shall not be conducted in violation of any law, ordinance or
regulation of any governmental entity, except where such violations would not result, either individually or in the aggregate,
in a Material Adverse Effect.


(n)         Public
Information. At any time during the period commencing from the six (6) month anniversary of the Closing Date and ending at
such time that all of the Securities, if a registration statement is not available for the resale of all of the Securities, may
be sold without restriction or limitation pursuant to Rule 144 and without the requirement to be in compliance with Rule 144(c)(1),
if the Company shall (i) fail for any reason to satisfy the requirements of Rule 144(c)(1), including, without limitation, the
failure to satisfy the current public information requirement under Rule 144(c) or (ii) if the Company has ever been an issuer
described in Rule 144(i)(1)(i) or becomes such an issuer in the future, and the Company shall fail to satisfy any condition set
forth in Rule 144(i)(2) (a “Public Information Failure”) then, as partial relief for the damages to any holder
of Securities by reason of any such delay in or reduction of its ability to sell the Securities (which remedy shall not be exclusive
of any other remedies available at law or in equity), the Company shall pay to each such holder an amount in cash equal to two
percent (2.0%) of the aggregate Purchase Price of such holder’s Securities on the day of a Public Information Failure and
on every thirtieth day (pro rated for periods totaling less than thirty days) thereafter until the earlier of (i) the date such
Public Information Failure is cured and (ii) such time that such Public Information Failure no longer prevents a holder of Securities
from selling such Securities pursuant to Rule 144 without any restrictions or limitations. The payments to which a holder shall
be entitled pursuant to this Section 4(n) are referred to herein as “Public Information Failure Payments.” Public
Information Failure Payments shall be paid on the earlier of (I) the last day of the calendar month during which such Public
Information Failure Payments are incurred and (II) the third Business Day after the event or failure giving rise to the
Public Information Failure Payments is cured. In the event the Company fails to make Public Information Failure Payments
in a timely manner, such Public Information Failure Payments shall bear interest at the rate of 1.5% per month (prorated
for partial months) until paid in full.



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(o)        Notice
of Disqualification Events. The Company will notify the Buyers in writing, prior to the Closing Date of (i) any Disqualification
Event relating to any Issuer Covered Person and (ii) any event that would, with the passage of time, become a Disqualification
Event relating to any Issuer Covered Person.


(p)        FAST
Compliance. While any Warrants are outstanding, the Company shall maintain a transfer agent that participates in the DTC
Fast Automated Securities Transfer Program.


(q)        Closing
Documents. On or prior to fourteen (14) calendar days after the Closing Date, the Company agrees to deliver, or cause to be
delivered, to each Buyer and Schulte Roth & Zabel LLP a complete closing set of the executed Transaction Documents, Securities
and any other documents required to be delivered to any party pursuant to Section 7 hereof or otherwise.


5.          REGISTER;
TRANSFER AGENT INSTRUCTIONS.


(a)        Register.
The Company shall maintain at its principal executive offices (or such other office or agency of the Company as it may designate
by notice to each holder of Securities), a register for the Notes and the Warrants in which the Company shall record the name and
address of the Person in whose name the Notes and the Warrants have been issued (including the name and address of each
transferee), the principal amount of Notes held by such Person, the number of Conversion Shares issuable pursuant to the terms
of the Notes and the number of Warrant Shares issuable upon exercise of the Warrants held by such Person. The Company shall keep
the register open and available at all times during business hours for inspection of any Buyer or its legal representatives.



    	- 23 -



    	 



    

 


(b)        Transfer
Agent Instructions. The Company shall issue irrevocable instructions to its transfer agent, and any subsequent transfer agent,
in the form of Exhibit C attached hereto (the “Irrevocable Transfer Agent Instructions”) to issue certificates
or credit shares to the applicable balance accounts at DTC, registered in the name of each Buyer or its respective nominee(s),
for the Conversion Shares and the Warrant Shares issued at the Closing or pursuant to the terms of the Notes or exercise of the
Warrants in such amounts as specified from time to time by each Buyer to the Company upon conversion of the Notes or exercise of
the Warrants. The Company warrants that no instruction other than the Irrevocable Transfer Agent Instructions referred to in this
Section 5(b), and stop transfer instructions to give effect to Section 2(f) hereof, will be given by the Company to its transfer
agent, and that the Securities shall otherwise be freely transferable on the books and records of the Company as and to the extent
provided in this Agreement and the other Transaction Documents. If a Buyer effects a sale, assignment or transfer of the Securities
in accordance with Section 2(f), the Company shall permit the transfer and shall promptly instruct its transfer agent to issue
one or more certificates or credit shares to the applicable balance accounts at DTC in such name and in such denominations as specified
by such Buyer to effect such sale, transfer or assignment to the extent the transaction is FAST eligible (i.e.: if legended shares
are to be delivered, they will be in certificated form). In the event that such sale, assignment or transfer involves the Conversion
Shares or the Warrant Shares sold, assigned or transferred pursuant to an effective registration statement or pursuant to Rule
144, the transfer agent shall issue such Securities to the Buyer, assignee or transferee, as the case may be, without any restrictive
legend. The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to a Buyer. Accordingly,
the Company acknowledges that the remedy at law for a breach of its obligations under this Section 5(b) will be inadequate and
agrees, in the event of a breach or threatened breach by the Company of the provisions of this Section 5(b), that a Buyer shall
be entitled, in addition to all other available remedies, to an order and/or injunction restraining any breach and requiring immediate
issuance and transfer, without the necessity of showing economic loss and without any bond or other security being required.


6.            CONDITIONS
TO THE COMPANY’S OBLIGATION TO SELL.


The obligation of
the Company hereunder to issue and sell the Notes and the related Warrants to each Buyer at the Closing is subject to the satisfaction,
at or before the Closing Date, of each of the following conditions, provided that these conditions are for the Company’s
sole benefit and may be waived by the Company at any time in its sole discretion by providing each Buyer with prior written notice
thereof:


(i)        Such
Buyer shall have executed each of the Transaction Documents to which it is a party and delivered the same to the Company.


(ii)       Such
Buyer shall have delivered its Purchase Price to the Company (less, in the case of Empery, the amounts withheld pursuant to Section
4(g)), for the Notes and the related Warrants being purchased by such Buyer at the Closing by wire transfer of immediately available
funds pursuant to the wire instructions provided by the Company.



    	- 24 -



    	 



    

 


(iii)      The
representations and warranties of such Buyer shall be true and correct as of the date when made and as of the Closing Date as though
made at that time (except for representations and warranties that speak as of a specific date which shall be true and correct as
of such specified date), and such Buyer shall have performed, satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed, satisfied or complied with by such Buyer at or prior to the
Closing Date.


7.            CONDITIONS
TO EACH BUYER’S OBLIGATION TO PURCHASE.


The obligation of
each Buyer hereunder to purchase the Notes and the related Warrants at the Closing is subject to the satisfaction, at or
before the Closing Date, of each of the following conditions, provided that these conditions are for each Buyer’s sole benefit
and may be waived by such Buyer at any time in its sole discretion by providing the Company with prior written notice thereof:


(i)        The
Company and each of its Subsidiaries shall have duly executed and delivered to such Buyer each of the following documents to which
it is a party: (A) each of the Transaction Documents, (B) the Notes (allocated in such principal amounts as such Buyer shall request),
being purchased by such Buyer at the Closing pursuant to this Agreement and (C) the related Warrants (allocated in such amounts
as such Buyer shall request) being purchased by such Buyer at the Closing pursuant to this Agreement.


(ii)       Such
Buyer shall have received the opinion of Jolie Kahn, the Company’s outside counsel, dated as of the Closing Date, in substantially
the form of Exhibit D attached hereto.


(iii)      The
Company shall have delivered to such Buyer a copy of the Irrevocable Transfer Agent Instructions, in the form of Exhibit C
attached hereto, which instructions shall have been delivered to and acknowledged in writing by the Company’s transfer agent.


(iv)       The
Company shall have delivered to such Buyer a certificate evidencing the formation and good standing of the Company and each of
its Subsidiaries in such entity’s jurisdiction of formation issued by the Secretary of State (or comparable office) of such
jurisdiction, as of a date within ten (10) days of the Closing Date.


(v)        The
Company shall have delivered to such Buyer a certificate evidencing the Company’s qualification as a foreign corporation
and good standing issued by the Secretary of State (or comparable office) of each jurisdiction in which the Company conducts business,
as of a date within ten (10) days of the Closing Date.


(vi)       The
Company shall have delivered to such Buyer a certified copy of the Certificate of Incorporation of the Company as certified by
the Secretary of State (or comparable office) of the jurisdiction of formation of the Company within ten (10) days of the Closing
Date.


(vii)      The
Company shall have delivered to such Buyer a certificate, executed by the Secretary of the Company and dated as of the Closing
Date, as to (i) the resolutions consistent with Section 3(b) as adopted by the Company’s and each of its Subsidiaries’
Board of Directors in a form reasonably acceptable to such Buyer, (ii) the Certificate of Incorporation of the Company and (iii)
the Bylaws of the Company, each as in effect at the Closing, in the form attached hereto as Exhibit E.



    	- 25 -



    	 



    

 


(viii)     The
representations and warranties of the Company shall be true and correct as of the date when made and as of the Closing Date as
though made at that time (except for representations and warranties that speak as of a specific date which shall be true and correct
as of such specified date) and the Company shall have performed, satisfied and complied in all respects with the covenants, agreements
and conditions required by the Transaction Documents to be performed, satisfied or complied with by the Company at or prior to
the Closing Date. Such Buyer shall have received a certificate, executed by the Chief Executive Officer of the Company, dated as
of the Closing Date, to the foregoing effect and as to such other matters as may be reasonably requested by such Buyer in the form
attached hereto as Exhibit F.


(ix)       The
Company shall have delivered to such Buyer a letter from the Company’s transfer agent certifying the number of shares of
Common Stock outstanding as of a date within five (5) days of the Closing Date.


(x)       
The Common Stock (I) shall be designated for quotation or listed on the Principal Market and (II) shall not have been suspended,
as of the Closing Date, by the SEC or the Principal Market from trading on the Principal Market nor shall suspension by the SEC
or the Principal Market have been threatened, as of the Closing Date, either (A) in writing by the SEC or the Principal Market
or (B) by falling below the minimum listing maintenance requirements of the Principal Market.


(xi)       The
Company shall have obtained all governmental, regulatory or third party consents and approvals, if any, necessary for the sale
of the Securities.


(xii)      The
Company shall have delivered to such Buyer such other documents relating to the transactions contemplated by this Agreement as
such Buyer or its counsel may reasonably request.


8.          TERMINATION.
In the event that the Closing shall not have occurred with respect to a Buyer on or before five (5) Business Days from the date
hereof due to the Company’s or such Buyer’s failure to satisfy the conditions set forth in Sections 6 and 7 above (and
the nonbreaching party’s failure to waive such unsatisfied condition(s)), the nonbreaching party shall have the option to
terminate this Agreement with respect to such breaching party at the close of business on such date by delivering a written notice
to that effect to each other party to this Agreement and without liability of any party to any other party; provided, however,
that if this Agreement is terminated pursuant to this Section 8, the Company shall remain obligated to reimburse Empery or its
designee(s), as applicable, for the expenses described in Section 4(g) above.


9.          MISCELLANEOUS.


(a)        Governing
Law; Jurisdiction; Jury Trial. All questions concerning the construction, validity, enforcement and interpretation of this
Agreement shall be governed by the internal laws of the State of New York, without giving effect to any choice of law or conflict
of law provision or rule (whether of the State of New York or any other jurisdictions) that would cause the application of the
laws of any jurisdictions other than the State of New York. Each party hereby irrevocably submits to the exclusive jurisdiction
of the state and federal courts sitting in The City of New York, Borough of Manhattan, for the adjudication of any dispute hereunder
or in connection herewith or with any transaction contemplated hereby or discussed herein, and hereby irrevocably waives, and agrees
not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of any such court,
that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit,
action or proceeding by mailing a copy thereof to such party at the address for such notices to it under this Agreement and agrees
that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be
deemed to limit in any way any right to serve process in any manner permitted by law. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY
RIGHT IT MAY HAVE, AND AGREES NOT TO REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN CONNECTION WITH
OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY.



    	- 26 -



    	 



    

 


(b)        Counterparts.
This Agreement may be executed in two or more identical counterparts, all of which shall be considered one and the same agreement
and shall become effective when counterparts have been signed by each party and delivered to the other party; provided that a facsimile
or .pdf signature shall be considered due execution and shall be binding upon the signatory thereto with the same force and effect
as if the signature were an original, not a facsimile or .pdf signature.


(c)        Headings.
The headings of this Agreement are for convenience of reference and shall not form part of, or affect the interpretation of, this
Agreement.


(d)        Severability.
If any provision of this Agreement is prohibited by law or otherwise determined to be invalid or unenforceable by a court of competent
jurisdiction, the provision that would otherwise be prohibited, invalid or unenforceable shall be deemed amended to apply to the
broadest extent that it would be valid and enforceable, and the invalidity or unenforceability of such provision shall not affect
the validity of the remaining provisions of this Agreement so long as this Agreement as so modified continues to express, without
material change, the original intentions of the parties as to the subject matter hereof and the prohibited nature, invalidity or
unenforceability of the provision(s) in question does not substantially impair the respective expectations or reciprocal obligations
of the parties or the practical realization of the benefits that would otherwise be conferred upon the parties. The parties will
endeavor in good faith negotiations to replace the prohibited, invalid or unenforceable provision(s) with a valid provision(s),
the effect of which comes as close as possible to that of the prohibited, invalid or unenforceable provision(s).



    	- 27 -



    	 



    

 


(e)        Entire
Agreement; Amendments. This Agreement and the other Transaction Documents supersede all other prior oral or written agreements
between the Buyers, the Company, their affiliates and Persons acting on their behalf with respect to the matters discussed herein,
and this Agreement, the other Transaction Documents and the instruments referenced herein and therein contain the entire understanding
of the parties with respect to the matters covered herein and therein and, except as specifically set forth herein or therein,
neither the Company nor any Buyer makes any representation, warranty, covenant or undertaking with respect to such matters. Provisions
of this Agreement may be amended and the observance thereof may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company and the holders of at least a majority of the aggregate
number of shares of Common Stock issued or issuable under the Notes and Warrants (without regard to any restriction or limitation
on the exercise of the Warrants or conversion of the Notes contained therein) and shall include affiliates of Empery Asset Management,
LP (the “Designee”) so long as the Designee or any of its affiliates holds any Securities (the “Required
Holders”). Any amendment or waiver effected in accordance with this Section 9(e) shall be binding upon each Buyer and
holder of Securities and the Company. No such amendment shall be effective to the extent that it applies to less than all of the
Buyers or holders of Securities. No consideration shall be offered or paid to any Person to amend or consent to a waiver or modification
of any provision of any of the Transaction Documents unless the same consideration (other than the reimbursement of legal fees)
also is offered to all of the parties to the Transaction Documents, holders of Notes or holders of the Warrants, as the case may
be. The Company has not, directly or indirectly, made any agreements with any Buyers relating to the terms or conditions of the
transactions contemplated by the Transaction Documents except as set forth in the Transaction Documents. Without limiting the foregoing,
the Company confirms that, except as set forth in this Agreement, no Buyer has made any commitment or promise or has any other
obligation to provide any financing to the Company or otherwise.


(f)        Notices.
Any notices, consents, waivers or other communications required or permitted to be given under the terms of this Agreement must
be in writing and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent
by facsimile (provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending
party) or by electronic mail; or (iii) one Business Day after deposit with an overnight courier service, in each case properly
addressed to the party to receive the same. The addresses, facsimile numbers and e-mail addresses for such communications shall
be:


If to the Company:


Axion Power International, Inc.


3601 Clover Lane


New Castle, PA 16105


Telephone:           724-654-9300


Facsimile:            724-654-3300

Attention:             Chief Financial Officer


 



    	- 28 -



    	 



    

 


With a copy to (for informational purposes only):


Jolie Kahn, Esq.


2 Liberty Place


Suite 3401


Philadelphia, PA 19102


Telephone:      215-375-6646

Facsimile:       866-705-3071


Attention:        Jolie Kahn, Esq.


E-mail:            joliekahnlaw@sbcglobal.net





If to the Transfer Agent:


Continental Stock Transfer & Trust Company


17 Battery Place


New York, NY 10004

Telephone:      212-509-4000


Attention:        Michael Mullings


E-mail:            mmullings@continentalstock.com


If to a Buyer, to its address, facsimile
number and e-mail address set forth on the Schedule of Buyers, with copies to such Buyer’s representatives as set forth on
the Schedule of Buyers,


with a copy (for informational purposes only) to:


Schulte Roth & Zabel LLP

919 Third Avenue

New York, New York 10022

Telephone:     (212) 756-2000

Facsimile:      (212) 593-5955

Attention:       Eleazer N. Klein, Esq.

E-mail:           eleazer.klein@srz.com


or to such other address, facsimile
number and/or e-mail address and/or to the attention of such other Person as the recipient party has specified by written notice
given to each other party five (5) days prior to the effectiveness of such change. Written confirmation of receipt (A) given by
the recipient of such notice, consent, waiver or other communication, (B) mechanically or electronically generated by the sender’s
facsimile machine or e-mail containing the time, date, recipient facsimile number and an image of the first page of such transmission
or (C) provided by an overnight courier service shall be rebuttable evidence of personal service, receipt by facsimile or receipt
from an overnight courier service in accordance with clause (i), (ii) or (iii) above, respectively.


(g)        Successors
and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their respective successors
and assigns, including any purchasers of the Notes or the Warrants. The Company shall not assign this Agreement or any rights
or obligations hereunder without the prior written consent of the Required Holders, including by way of a Fundamental Transaction
(unless the Company is in compliance with the applicable provisions governing Fundamental Transactions set forth in the Notes
and the Warrants). A Buyer may assign some or all of its rights hereunder without the consent of the Company, in which event such
assignee shall be deemed to be a Buyer hereunder with respect to such assigned rights.



    	- 29 -



    	 



    




(h)        No
Third Party Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted
successors and assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other Person, except that
each Indemnitee shall have the right to enforce the obligations of the Company with respect to Section 9(k).


(i)        Survival.
Unless this Agreement is terminated under Section 8, the representations and warranties of the Company and the Buyers contained
in Sections 2 and 3, and the agreements and covenants set forth in Sections 4, 5 and 9 shall survive the Closing. Each Buyer shall
be responsible only for its own representations, warranties, agreements and covenants hereunder.


(j)        Further
Assurances. Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall
execute and deliver all such other agreements, certificates, instruments and documents, as any other party may reasonably request
in order to carry out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated
hereby.


(k)        Indemnification.
(i)In consideration of each Buyer’s execution and delivery of the Transaction Documents and acquiring the Securities thereunder
and in addition to all of the Company’s other obligations under the Transaction Documents, the Company shall defend, protect,
indemnify and hold harmless each Buyer and each other holder of the Securities and all of their stockholders, partners, members,
officers, directors, employees and direct or indirect investors and any of the foregoing Persons’ agents or other representatives
(including, without limitation, those retained in connection with the transactions contemplated by this Agreement) (collectively,
the “Indemnitees”) from and against any and all actions, causes of action, suits, claims, losses, costs, penalties,
fees, liabilities and damages, and expenses in connection therewith (irrespective of whether any such Indemnitee is a party to
the action for which indemnification hereunder is sought), and including reasonable attorneys’ fees and disbursements (the
“Indemnified Liabilities”), incurred by any Indemnitee as a result of, or arising out of, or relating to (a)
any misrepresentation or breach of any representation or warranty made by the Company in the Transaction Documents or any other
certificate, instrument or document contemplated hereby or thereby, (b) any breach of any covenant, agreement or obligation of
the Company contained in the Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby
or (c) any cause of action, suit or claim brought or made against such Indemnitee by a third party (including for these purposes
a derivative action brought on behalf of the Company) and arising out of or resulting from (i) the execution, delivery, performance
or enforcement of the Transaction Documents or any other certificate, instrument or document contemplated hereby or thereby, (ii)
any transaction financed or to be financed in whole or in part, directly or indirectly, with the proceeds of the issuance of the
Securities, (iii) any disclosure made by such Buyer pursuant to Section 4(i), or (iv) the status of such Buyer or holder of the
Securities as an investor in the Company pursuant to the transactions contemplated by the Transaction Documents. To the extent
that the foregoing undertaking by the Company may be unenforceable for any reason, the Company shall make the maximum contribution
to the payment and satisfaction of each of the Indemnified Liabilities that is permissible under applicable law.



    	- 30 -



    	 



    




(ii)       Promptly
after receipt by an Indemnitee under this Section 9(k) of notice of the commencement of any action or proceeding (including any
governmental action or proceeding) involving an Indemnified Liability, such Indemnitee shall, if a claim for indemnification in
respect thereof is to be made against any indemnifying party under this Section 9(k), deliver to the indemnifying party a written
notice of the commencement thereof, and the indemnifying party shall have the right to participate in, and, to the extent the
indemnifying party so desires, jointly with any other indemnifying party similarly noticed, to assume control of the defense thereof
with counsel mutually satisfactory to the indemnifying party and the Indemnitee; provided, however, that an Indemnitee
shall have the right to retain its own counsel with the fees and expenses of not more than one counsel for such Indemnitee to
be paid by the indemnifying party, if, in the reasonable opinion of the Indemnitee, the representation by such counsel of the
Indemnitee and the indemnifying party would be inappropriate due to actual or potential differing interests between such Indemnitee
and any other party represented by such counsel in such proceeding. Legal counsel referred to in the immediately preceding sentence
shall be selected by the Buyers holding at least a majority of the Securities issued and issuable hereunder. The Indemnitee shall
cooperate fully with the indemnifying party in connection with any negotiation or defense of any such action or Indemnified Liabilities
by the indemnifying party and shall furnish to the indemnifying party all information reasonably available to the Indemnitee that
relates to such action or Indemnified Liabilities. The indemnifying party shall keep the Indemnitee fully apprised at all times
as to the status of the defense or any settlement negotiations with respect thereto. No indemnifying party shall be liable for
any settlement of any action, claim or proceeding effected without its prior written consent, provided, however,
that the indemnifying party shall not unreasonably withhold, delay or condition its consent. No indemnifying party shall, without
the prior written consent of the Indemnitee, which consent shall not be unreasonably withheld conditioned or delayed, consent
to entry of any judgment or enter into any settlement or other compromise which (i) does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such Indemnitee of a release from all liability in respect to such Indemnified
Liabilities or litigation, (ii) requires any admission of wrongdoing by such Indemnitee, or (iii) obligates or requires an Indemnitee
to take, or refrain from taking, any action. Following indemnification as provided for hereunder, the indemnifying party shall
be subrogated to all rights of the Indemnitee with respect to all third parties, firms or corporations relating to the matter
for which indemnification has been made. The failure to deliver written notice to the indemnifying party within a reasonable time
of the commencement of any such action shall not relieve such indemnifying party of any liability to the Indemnitee under this
Section 9(k), except to the extent that the indemnifying party is prejudiced in its ability to defend such action.



    	- 31 -



    	 



    




(iii)      The
indemnification required by this Section 9(k) shall be made by periodic payments of the amount thereof during the course of the
investigation or defense, as and when bills are received or Indemnified Liabilities are incurred.


(iv)       The
indemnity agreements contained herein shall be in addition to (x) any cause of action or similar right of the Indemnitee against
the indemnifying party or others, and (y) any liabilities the indemnifying party may be subject to pursuant to the law.


(l)        No
Strict Construction. The language used in this Agreement will be deemed to be the language chosen by the parties to express
their mutual intent, and no rules of strict construction will be applied against any party.


(m)      Remedies.
Each Buyer and each holder of the Securities shall have all rights and remedies set forth in the Transaction Documents and all
rights and remedies which such holders have been granted at any time under any other agreement or contract and all of the rights
which such holders have under any law. Any Person having any rights under any provision of this Agreement shall be entitled to
enforce such rights specifically (without posting a bond or other security), to recover damages by reason of any breach of any
provision of this Agreement and to exercise all other rights granted by law. Furthermore, the Company recognizes that in the event
that it fails to perform, observe, or discharge any or all of its obligations under the Transaction Documents, any remedy at law
may prove to be inadequate relief to the Buyers. The Company therefore agrees that the Buyers shall be entitled to seek temporary
and permanent injunctive relief in any such case without the necessity of proving actual damages and without posting a bond or
other security.


(n)        Rescission
and Withdrawal Right. Notwithstanding anything to the contrary contained in (and without limiting any similar provisions of)
the Transaction Documents, whenever any Buyer exercises a right, election, demand or option under a Transaction Document and the
Company does not timely perform its related obligations within the periods therein provided, then such Buyer may rescind or withdraw,
in its sole discretion from time to time upon written notice to the Company, any relevant notice, demand or election in whole or
in part without prejudice to its future actions and rights.


(o)        Payment
Set Aside. To the extent that the Company makes a payment or payments to the Buyers hereunder or pursuant to any of the other
Transaction Documents or the Buyers enforce or exercise their rights hereunder or thereunder, and such payment or payments or
the proceeds of such enforcement or exercise or any part thereof are subsequently invalidated, declared to be fraudulent or preferential,
set aside, recovered from, disgorged by or are required to be refunded, repaid or otherwise restored to the Company, a trustee,
receiver or any other Person under any law (including, without limitation, any bankruptcy law, foreign, state or federal law,
common law or equitable cause of action), then to the extent of any such restoration the obligation or part thereof originally
intended to be satisfied shall be revived and continued in full force and effect as if such payment had not been made or such
enforcement or setoff had not occurred.



    	- 32 -



    	 



    




(p)        Independent
Nature of Buyers’ Obligations and Rights. The obligations of each Buyer under any Transaction Document are several and
not joint with the obligations of any other Buyer, and no Buyer shall be responsible in any way for the performance of the obligations
of any other Buyer under any Transaction Document. Nothing contained herein or in any other Transaction Document, and no action
taken by any Buyer pursuant hereto or thereto, shall be deemed to constitute the Buyers as, and the Company acknowledges that
the Buyers do not so constitute, a partnership, an association, a joint venture or any other kind of entity, or create a presumption
that the Buyers are in any way acting in concert or as a group, and the Company shall not assert any such claim with respect to
such obligations or the transactions contemplated by the Transaction Documents and the Company acknowledges that the Buyers are
not acting in concert or as a group with respect to such obligations or the transactions contemplated by the Transaction Documents.
The Company acknowledges and each Buyer confirms that it has independently participated in the negotiation of the transaction
contemplated hereby with the advice of its own counsel and advisors. Each Buyer shall be entitled to independently protect and
enforce its rights, including, without limitation, the rights arising out of this Agreement or out of any other Transaction Documents,
and it shall not be necessary for any other Buyer to be joined as an additional party in any proceeding for such purpose.


[Signature Page Follows]





    	- 33 -



    	 



    





IN WITNESS WHEREOF,
each Buyer and the Company have caused their respective signature page to this Securities Purchase Agreement to be duly executed
as of the date first written above.


	 	 	 	COMPANY:
	 	 	 	 
	 	 	 	AXION POWER INTERNATIONAL, INC.
					
	 	 	 	 	 
	 	 	 	By:	
         

	 	 	 	 	Name:
	 	 	 	 	Title:



 


[Signature Page to Securities
Purchase Agreement]






    	 



    	 



    

 

IN WITNESS WHEREOF,
each Buyer and the Company have caused their respective signature page to this Securities Purchase Agreement to be duly executed
as of the date first written above.


	 	 	 	BUYERS:
	 	 	 	 
	 	 	 	
        EMPERY ASSET MASTER LTD.

         

        By: EMPERY ASSET MANAGEMENT, LP, its Authorized Agent

         

        By: EMPERY AM GP, LLC, its General Partner

					
	 	 	 	 	 
	 	 	 	By:	
         

	 	 	 	 	Name:  Ryan M. Lane
	 	 	 	 	Title:  Managing Member
	 	 	 	 	 


 


    	 



    	 



    

 


IN WITNESS WHEREOF,
each Buyer and the Company have caused their respective signature page to this Securities Purchase Agreement to be duly executed
as of the date first written above.


	 	 	 	BUYERS:
	 	 	 	 
	 	 	 	
        EMPERY TAX EFFICIENT, LP

         

        By: EMPERY ASSET MANAGEMENT, LP, its Authorized Agent

         

        By: EMPERY AM GP, LLC, its General Partner

					
	 	 	 	 	 
	 	 	 	By:	
         

	 	 	 	 	Name:  Ryan M. Lane
	 	 	 	 	Title:  Managing Member
	 	 	 	 	 


 



    	 



    	 



    

 


IN WITNESS WHEREOF,
each Buyer and the Company have caused their respective signature page to this Securities Purchase Agreement to be duly executed
as of the date first written above.


	 	 	 	BUYERS:
	 	 	 	 
	 	 	 	
        EMPERY TAX EFFICIENT II, LP

         

        By: EMPERY ASSET MANAGEMENT, LP, its Authorized Agent

         

        By: EMPERY AM GP, LLC, its General Partner

					
	 	 	 	 	 
	 	 	 	By: 	
         

	 	 	 	 	Name:  Ryan M. Lane
	 	 	 	 	Title:  Managing Member
	 	 	 	 	 



[Signature Page to Securities
Purchase Agreement]


 



    	 



    	 



    

 

IN WITNESS WHEREOF,
each Buyer and the Company have caused their respective signature page to this Securities Purchase Agreement to be duly executed
as of the date first written above.


	 	 	 	BUYERS:
	 	 	 	 
	 	 	 	[Other Buyers]
					
	 	 	 	 	 
	 	 	 	By: 	
         

	 	 	 	 	Name:  
	 	 	 	 	Title:  


 



    	 



    	 



    

 


SCHEDULE OF BUYERS




	(1)	(2)	(3)	(4)	(5)	(6)
	Buyer
	Address
                                         and

                                         Facsimile Number
	Aggregate

                                         Principal

                                         Amount of Notes
	Number
                                         of

                                         Warrant Shares
	Purchase
                                         Price
	Legal
                                         Representative’s Address

                                         and Facsimile Number

	 	 	 	 	 	 
	Empery Asset Master
    Ltd.	c/o Empery Asset Management,
        LP

        1 Rockefeller Plaza, Suite 1205

        New York, NY 10020

        Attention: Ryan M. Lane

        Facsimile: +1 212 608 3307

        Telephone: +1 212 608 3300

        Email: notices@emperyam.com

         
	$[   ]	[   ]	$[   ]	Schulte Roth & Zabel LLP

    919 Third Avenue

    New York, New York  10022

    Attention:  Eleazer Klein, Esq.

    Facsimile: (212) 593-5955

    Telephone:  (212) 756-2376
	Empery Tax Efficient,
    LP	c/o Empery Asset Management, LP

    1 Rockefeller Plaza, Suite 1205

    New York, NY 10020

    Attention: Ryan M. Lane

    Facsimile:  +1 212 608 3307

    Telephone: +1 212 608 3300

    Email:  notices@emperyam.com

    
	$[   ]	[   ]	$[   ]	Schulte Roth & Zabel LLP

    919 Third Avenue

    New York, New York  10022

    Attention:  Eleazer Klein, Esq.

    Facsimile: (212) 593-5955

    Telephone:  (212) 756-2376
	Empery Tax Efficient
    II, LP	c/o Empery Asset Management, LP

    1 Rockefeller Plaza, Suite 1205

    New York, NY 10020

    Attention: Ryan M. Lane

    Facsimile:  +1 212 608 3307

    Telephone: +1 212 608 3300

    Email:  notices@emperyam.com

    
	$[   ]	[   ]	$[   ]	Schulte Roth & Zabel LLP

    919 Third Avenue

    New York, New York  10022

    Attention:  Eleazer Klein, Esq.

    Facsimile: (212) 593-5955

    Telephone:  (212) 756-2376
	Capital Ventures International	c/o Heights Capital Management

    101 California Street, Suite 3250

    San Francisco, CA 94111

    Attention: Sam Winer

    Facsimile:  (415) 403-6525

    Telephone: (415) 403-6500

    Email: winer@sig.com 

    
	$[   ]	[   ]	$[   ]	 
	D. Walker Wainwright	[                                ]	$[   ]	[   ]	$[   ]	 


 




    	 



    	 



    


 


EXHIBITS


	 	 
	Exhibit A	Form of Notes
	Exhibit B	Form of Warrants
	Exhibit C	Form of Irrevocable Transfer Agent Instructions
	Exhibit D	Form of Opinion of Company Counsel
	Exhibit E	Form of Secretary’s Certificate
	Exhibit F	Form of Officer’s Certificate



 


SCHEDULES


	 	 
	Schedule 3(a)	Subsidiaries
	Schedule 3(k)	SEC Documents
	Schedule 3(l)	Absence of Certain Changes
	Schedule 3(n)	Regulatory Permits
	Schedule 3(q)	Transactions with Affiliates
	Schedule 3(r)	Equity Capitalization
	Schedule 3(s)	Indebtedness and Other Contracts
	Schedule 3(t)	Absence of Litigation
	Schedule 3(x)	Intellectual Property Rights
	Schedule 3(ee)	Ranking of Notes
	Schedule 4(d)	Use of Proceeds





 



    	 



    	 



    

 


SCHEDULE
3(A)


SUBSIDIARIES 


Axion Power Battery Manufacturing, Inc. 


NOTE: Axion Power Corporation, a Canadian
Federal corporation, and C & T Co. Inc., an Ontario corporation, are inactive entities, and the Company has not included them
in the definition of “Subsidiaries”.


 



    	 



    	 



    


 

SCHEDULE 3(K)


SEC DOCUMENTS 


None.





    	 



    	 



    

 


SCHEDULE 3(L)


 


ABSENCE OF CERTAIN CHANGES


 


None.


 


    	 



    	 



    

 

SCHEDULE 3(N)


REGULATORY PERMITS


None.


 



    	 



    	 



    

 


SCHEDULE 3(Q)


 


TRANSACTIONS WITH AFFILIATES


 


The transactions contemplated by the June 2015 Binding Letter of
Intent with LCB International, Inc. filed on June 18, 2015 with the SEC as Exhibit 99.1 to the Current Report on Form 8-K, whether
such transaction is effected in one or a series of related transactions.


 



    	 



    	 



    

 


SCHEDULE 3(R)


 


EQUITY CAPITALIZATION, SCHEDULE 3(S) INDEBTEDNESS
AND OTHER

 CONTRACTS AND SCHEDULE 3(EE) RANKING OF NOTES


 


Outstanding stock options at June 30, 2015:


 


Outstanding                                 15,336


Subject to future vesting              5,314 (included in outstanding balance)


 


Warrants at June 30, 2015:


 


Outstanding “A” and “B” Warrants    689,562


 


PERMITTED INDEBTEDNESS AND LIENS/Ranking


 


1. $65,000 principal amount of subordinated convertible notes, dated
May 8, 2013. Unsecured.


 


2. $291,975 principal amount of notes due to landlords for deferred
rent May – December 2015, due December 31, 2015. Only security is the statutory Pennsylvania landlord’s lien on personal
property located on leased premises.


 


3. Commonwealth of Pennsylvania Department of Community and Economic
Development Machinery and Equipment Loan Fund. The balance owed on the loan at December 31, 2014 is $163,465, which bears interest
at a rate of 5.25% and matures on October 1, 2016.


 


4. The transactions contemplated by the June 2015 Binding Letter
of Intent with LCB International, Inc. filed on June 18, 2015 with the SEC as Exhibit 99.1 to the Current Report on Form 8-K, whether
such transaction is effected in one or a series of related transactions, which shall be secured by a first lien on the Company’s
IP and other assets related to its business.


 



    	 



    	 



    

 


SCHEDULE 3(T)


 


ABSENCE OF LITIGATION


 


None.


 



    	 



    	 



    

 


SCHEDULE 3(X)


INTELLECTUAL PROPERTY
RIGHTS


	 	·	U.S. Patent No. 6,466,429 (expires May 2021) - Electric double layer capacitor


 


	 	·	U.S. Patent No. 6,628,504 (expires May 2021) - Electric double layer capacitor


 


	 	·	U.S. Patent No. 6,706,079 (expires May 2022) - Method of formation and charge of the negative polarizable carbon electrode in an electric double layer capacitor


 


	 	·	U.S. Patent No. 7,006,346 (expires April 2024) - Positive Electrode of an electric double layer capacitor


 


	 	·	
        U.S. Patent No. 7,110,242
(expires February 2021) - Electrode for electric double layer capacitor and method of fabrication thereof



 


	 	·	
        U.S. Patent No. 7,119,047 (expires
        February 2021) - Modified activated carbon for carbon for capacitor electrodes and method of
        fabrication thereof



 


	 	·	
        U.S. Patent No. 7,569,514 (expires
        May 22, 2021) - Method of Fabrication of Modified Activated Carbon



 


	 	·	
        U.S. Patent No. 7,881,042 (expires
        March 2027) – Cell Assembly for an Energy Storage Device using PTFE Binder in Activated Carbon
        Electrodes



 


	 	·	
        U.S. Patent No. 7,998,616
(expires February 2028) – Negative Electrode for a Hybrid Energy Storage Device



 


	 	·	
        U.S. Patent No. 8,023,251
(expires November 2028) – Hybrid Energy Storage Device and Method of Making Same



 


	 	·	
        U.S. Patent No. 8,192,865
(expires October 2027) – Negative Electrode for a Hybrid Energy Storage Device



 


	 	·	U.S. Patent No. 8,202,653 (expires February 2028) – Electrode Grid Structure


 


	 	·	U.S. Patent No. 8,347,468 (expires February 2031) – Method of Making a Current Collector


 



    	 



    	 



    

 



SCHEDULE 4(D)


USE OF PROCEEDS


Working capital.