Document:

EXHIBIT 4.14

 

WARRANT AGREEMENT

 

Axion Power International, Inc.

 

and

 

Continental Stock Transfer and Trust
Company, as Warrant Agent

 

WARRANT AGREEMENT

 

THIS WARRANT AGREEMENT
(this “Agreement”), dated as of October 24 , 2014, is by and between Axion Power International,
Inc., a Delaware corporation (the “Company”), and Continental Stock Transfer and Trust Company 
, a                                          
    , as Warrant Agent (the “Warrant Agent ”).

 

WHEREAS, the Company
is engaged in a public offering (the “Offering”) of units consisting of common stock of the Company,
par value $0.005 per share (“Common Stock”) and warrants to purchase shares of Common Stock of the Company
(“Warrants”) and, in connection therewith, has determined to issue and deliver up to 1,875,000 Series
A Warrants to public investors in the Offering, each such Warrant evidencing the right of the holder thereof to purchase one share
of Common Stock of the Company for $3.25 per share, subject to adjustment as described herein (the “Series A Warrants”)
and up to 1,875,000 Series B Warrants to public investors in the Offering, each such Series B Warrant evidencing the right of the
holder, thereof to purchase one share of Common Stock of the Company for $3.25 per share, subject to adjustment as described herein
(the A Warrants and B Warrants are referred to collectively herein as the “Warrants”); and

 

WHEREAS, the Company
has filed with the Securities and Exchange Commission (the “Commission”) a registration statement, as
amended, on Form S-1, No. 333-197978 (the “Registration Statement”) and prospectus (the “Prospectus
”), for the registration, under the Securities Act of 1933, as amended (the “Securities Act”),
of the units to be sold in the Offering, the shares of Common Stock included in the units to be sold in the Offering, the Warrants
included in the units to be sold in the Offering and the shares of Common Stock underlying the Warrants; and

 

WHEREAS, the Company
desires the Warrant Agent to act on behalf of the Company, and the Warrant Agent is willing to so act, in connection with the issuance,
registration, transfer, exchange and exercise of the Warrants; and

 

WHEREAS, the Company
desires to provide for the form and provisions of the Warrants, the terms upon which they shall be issued and exercised, and the
respective rights, limitation of rights, and immunities of the Company, the Warrant Agent, and the holders of the Warrants (each
a “Holder”); and

 

WHEREAS, all acts and
things have been done and performed which are necessary to make the Warrants, when executed on behalf of the Company and countersigned
by or on behalf of the Warrant Agent, as provided herein, the valid, binding and legal obligations of the Company, and to authorize
the execution and delivery of this Agreement.

 

NOW, THEREFORE, in
consideration of the mutual agreements herein contained, the parties hereto agree as follows:

 

1. Appointment
of Warrant Agent. The Company hereby appoints the Warrant Agent to act as agent for the Company for the Warrants, and the Warrant
Agent hereby accepts such appointment and agrees to perform the same in accordance with the terms and conditions set forth in this
Agreement.

 

    	-1-

    	 

    

 

2. Warrants.

 

2.1. Form of Warrant
.. Each A Warrant and B Warrant shall be issued in registered form only and shall be in substantially the form of Exhibit A
and B hereto, respectively, the provisions of which are incorporated herein. Each Warrant shall be signed by, or bear the facsimile
signature of, the Chairman of the Board, President, Chief Executive Officer, Secretary or other principal officer of the Company.
In the event the person whose facsimile signature has been placed upon any Warrant shall have ceased to serve in the capacity in
which such person signed the Warrant before such Warrant is issued, it may be issued with the same effect as if he or she had not
ceased to be such at the date of issuance.

 

2.2. Effect of
Countersignature . Unless and until countersigned by the Warrant Agent pursuant to this Agreement, a Warrant shall be invalid
and of no effect and may not be exercised by the holder thereof.

 

2.3. Registration.

 

2.3.1 Warrant
Register . The Warrant Agent shall maintain books (the “Warrant Register”), for the registration
of original issuance and the registration of transfer of the Warrants. Upon the initial issuance of the Warrants, the Warrant Agent
shall issue and register the Warrants in the names of the respective holders thereof in such denominations and otherwise in accordance
with instructions delivered to the Warrant Agent by the Company.

 

2.3.2 Registered
Holder . Prior to due presentment for registration of transfer of any Warrant, the Company and the Warrant Agent may deem and
treat the person in whose name such Warrant is registered in the Warrant Register (the “Registered Holder”)
as the absolute owner of such Warrant and of each Warrant represented thereby (notwithstanding any notation of ownership or other
writing on the Warrant Certificate (as defined below) made by anyone other than the Company or the Warrant Agent), for the purpose
of any exercise thereof, and for all other purposes, and neither the Company nor the Warrant Agent shall be affected by any notice
to the contrary.

 

3. Terms and
Exercise of Warrants.

 

3.1. Exercise Price
.. Each Warrant shall, when countersigned by the Warrant Agent, entitle the Registered Holder thereof, subject to the provisions
of such Warrant and of this Warrant Agreement, to purchase from the Company the number of shares of Common Stock stated therein,
at the price of $ 3.25 per share for the A Warrants and $3.25 per share for the B Warrants, subject to the adjustments provided
herein. The term “Exercise Price” as used in this Warrant Agreement shall mean the price per share at
which shares of Common Stock may be purchased at the time a Warrant is exercised.

 

3.2. Duration of
Warrants . A Warrant may be exercised only during the period (the “Exercise Period”) commencing on
the date of issuance thereof and ending on the earlier of: (a)  October 29, 2019 for the A Warrants and January 29, 2016 for
the B Warrants; or (b) upon the dissolution and winding up of the Company (the “Expiration Date”);
provided, however, that the exercise of any Warrant shall be subject to the satisfaction of any applicable conditions, as set forth
in subsection 3.3.2 below with respect to an effective registration statement. Each Warrant not exercised on or before the Expiration
Date shall become void, and all rights thereunder and all rights in respect thereof under this Agreement shall cease at 5:00 p.m.
New York City time on the Expiration Date.

 

3.3. Exercise of
Warrants.

 

3.3.1 Payment.
Subject to the provisions of the Warrant and this Warrant Agreement, a Warrant, when countersigned by the Warrant Agent, may be
exercised by the Registered Holder thereof by submitting a duly executed election to purchase attached to the applicable Warrant,
at the office of the Warrant Agent in the Borough of Manhattan, City and State of New York or at the office of its successor as
Warrant Agent, in the Borough of Manhattan, City and State of New York, which may be done by fax or email delivery, and by paying,
within two days of the date of exercise, in full the Exercise Price for each full share of Common Stock as to which the Warrant
is exercised, in lawful money of the United States, by wire transfer or in good certified check or good bank draft payable to the
order of the Company or by Cashless Exercise in accordance with Section 3.2.2 hereof. Upon delivery of an exercise notice,
the Holder shall be deemed for all corporate purposes to have become the holder of record of the Warrant Shares with respect to
which a Warrant has been exercised, irrespective of the date such Warrant Shares are credited to the Holder’s DTC account
or the date of delivery of the certificates evidencing such Warrant Shares (as the case may be).

 

    	-2-

    	 

    

 

3.3.2 Cashless
Exercise. Notwithstanding anything contained herein to the contrary, if and only if an effective registration statement covering
the issuance of the shares of Common Stock that are subject to the exercise notice is not available for the issuance of such shares
of Common Stock, the Registered Holder may exercise this Warrant in whole or in part and, in lieu of making the cash payment otherwise
contemplated to be made to the Company upon such exercise in payment of the aggregate Exercise Price, elect instead to receive
upon such exercise the “Net Number” of shares of Common Stock determined according to the following formula (a “Cashless
Exercise” and this term shall include any Market Price Cashless Exercise for all provisions of this Agreement and
the Series B Warrant Certificate as applicable.):

 

 

	 	 	 	 	 
	 	 Net Number =	  (A x B) - (A x C)    	 	 
	 	 	B	 	 

 

For purposes of the
foregoing formula:

 

	A	=	the total number of shares with respect to which this Warrant is then being exercised.
	 	 	 
	B	=	the arithmetic average of the Closing Sale Prices (as defined below) of the Common Stock for the five (5) consecutive trading days ending on the date immediately preceding the date of the exercise notice.
	 	 	 
	C	=	the Exercise Price then in effect for the applicable shares of Common Stock at the time of such exercise.

  

The term “Closing
Sale Price ” means, for any security as of any date, the last closing bid price and last closing trade price, respectively,
for such security on the Nasdaq Capital Market, as reported by Bloomberg, or, if the Nasdaq Capital Market begins to operate on
an extended hours basis and does not designate the closing bid price or the closing trade price, as the case may be, then the last
bid price or the last trade price, respectively, of such security prior to 4:00:00 p.m., New York time, as reported by Bloomberg,
or, if the Nasdaq Capital Market is not the principal securities exchange or trading market for such security, the last closing
bid price or last trade price, respectively, of such security on the principal securities exchange or trading market where such
security is listed or traded as reported by Bloomberg, or if the foregoing do not apply, the last closing bid price or last trade
price, respectively, of such security in the over-the-counter market on the electronic bulletin board for such security as reported
by Bloomberg, or, if no closing bid price or last trade price, respectively, is reported for such security by Bloomberg, the average
of the bid prices, or the ask prices, respectively, of any market makers for such security as reported in the OTC Link or “pink
sheets” by OTC Markets Group Inc. (formerly Pink OTC Markets Inc.). If the Closing Sale Price cannot be calculated for a
security on a particular date on any of the foregoing bases, the Closing Sale Price of such security on such date shall be the
fair market value as mutually determined by the Company and the Registered Holder. If the Company and the Registered Holder are
unable to agree upon the fair market value of such security, then such dispute shall be resolved pursuant to Section 8.3 hereof.
All such determinations to be appropriately adjusted for any stock dividend, stock split, stock combination or other similar transaction
during the applicable calculation period

 

For purposes of Rule
144(d) promulgated under the Securities Act, as in effect on the date hereof, assuming the Registered Holder is not an affiliate
of the Company, it is intended that the shares of Common Stock issued in a Cashless Exercise shall be deemed to have been acquired
by the Registered Holder, and the holding period for the shares of Common Stock shall be deemed to have commenced, on the date
this Warrant was originally issued.

 

    	-3-

    	 

    

 

3.3.2.1 Further Cashless
Exercise of B Warrants upon Market Price Less than $3.25 per Share.  In addition to the rights set forth in Section 3.3.2
above, on any day, commencing on the 121st day subsequent to the date hereof through the 15 month anniversary of the date hereof,
the Market Price (as defined below) is less than $3.25 (as adjusted for stock split, stock dividends, recapitalization and other
similar events), then the Holder may, in its sole discretion, exercise this Warrant in whole or in part and, in lieu of making
the cash payment otherwise contemplated to be made to the Company upon such exercise in payment thereof and in lieu of making a
Cashless Exercise, elect instead to receive upon such exercise the "net number" of shares of Common Stock (the "Market
Price Net Number") determined according to the following formula (the "Market Price Cashless Exercise"):

 

Market Price Net Number
= 125% of the difference between (a) the quotient of (i) the product of (A) the number of B Warrants being exercised and (B) $3.25
(adjusted for stock splits, etc.) divided by (ii) the Market Price, and (b) the number of B Warrants being exercised.

 

For purposes of this
Section 3.3.2.1, “Market Price” shall mean 85% of the arithmetic average of the sum of the five lowest per share volume
weighted average prices for the 15 trading days on the Nasdaq Capital Market (or if not on the Nasdaq Capital Market, on the Company’s
then principal trading market) immediately prior to the date of exercise).

 

The Holder may exercise the Warrant
in part or full with respect to a Market Price Cashless Exercise pursuant to the provisions hereof; however, it may not sell on
any day shares received under this Section 3.3.2.1 in excess of 12.5% of the aggregate trading volume for the Company’s Common
Stock on the Nasdaq Capital Market (or if not on the Nasdaq Capital Market, on the Company’s then principal trading market)
on that day. The Holder may avail itself of this Section 3.3.2.1 regardless of whether there is an effective registration statement
covering the B Warrants and the shares of Common Stock into which the B Warrants are exercisable.

  

3.3.3 Issuance
of Common Stock on Exercise. Assuming funds for exercise are paid on or before the second trading day following the date of
receipt by the Company of an exercise notice, then on or before the third trading day following the date upon which the Company
has received an exercise notice for a Warrant, the Company shall cause its transfer agent to (i) provided that the transfer agent
is participating in The Depository Trust Company (“DTC”) Fast Automated Securities Transfer Program credit such aggregate
number of shares of Common Stock to which the Holder is entitled pursuant to such exercise to the Holder’s or its designee’s
balance account with DTC through its Deposit/Withdrawal at Custodian System, or (ii) if the transfer agent is not participating
in the DTC Fast Automated Securities Transfer Program, issue and deliver to the Holder, or at the Holder’s instruction pursuant
to the delivered exercise notice, the Holder’s agent or designee, in each case pursuant to this clause (ii), sent by reputable
overnight courier to the address specified in the applicable exercise notice, a certificate, registered in the Company’s
share register in the name of the Holder or its designee (as indicated in the applicable exercise notice), for the number of shares
of Common Stock to which the Holder is entitled pursuant to such exercise.

 

3.3.4 Valid Issuance
.. All Common Stock issued or issuable upon the proper exercise of a Warrant in conformity with this Agreement shall be validly
issued, fully paid and nonassessable.

 

3.3.5 Date of
Issuance . Each person in whose name any certificate for the Common Stock is issued shall for all purposes be deemed to have
become the holder of record of such Common Stock on the date on which the Warrant was surrendered and, other than in the case of
a Cashless Exercise, payment of the Exercise Price was made, irrespective of the date of delivery of such certificate, except that,
if the date of such surrender and payment is a date when the share transfer books of the Company are closed, such person shall
be deemed to have become the holder of such shares at the close of business on the next succeeding date on which the share transfer
books are open.

 

    	-4-

    	 

    

 

3.3.6 Share Delivery
Failure. If the Company shall fail, for any reason or for no reason, to issue to the Holder within three (3) trading days after
receipt of the applicable exercise notice (the “Share Delivery Deadline”), a certificate for the number of shares of
Common Stock to which the Holder is entitled upon Holder’s exercise of a Warrant or credit the Holder’s balance account
with DTC for such number of shares of Common Stock to which the Holder is entitled upon the Holder’s exercise of this Warrant
(as the case may be, but in each case without a restrictive legend) (a “Delivery Failure”), and if on such or after
such Share Delivery Deadline the Holder purchases (in an open market transaction or otherwise) shares of Common Stock to deliver
in satisfaction of a sale by the Holder of all or any portion of the number of shares of Common Stock issuable upon such exercise
that the Holder so anticipated receiving from the Company, then, in addition to all other remedies available to it, the Company
shall, within three (3) Business Days after the Holder’s request and in the Holder’s discretion, either (i) pay cash
to the Holder in an amount equal to 100% of the Holder’s total purchase price (including brokerage commissions and other
out-of-pocket expenses, if any) for the shares of Common Stock so purchased (including, without limitation, by any other person
in respect, or on behalf, of the Holder) (the “Buy-In Price”), at which point the Company’s obligation
to so issue and deliver such certificate or credit the Holder’s balance account with DTC for the number of shares of Common
Stock to which the Holder is entitled upon the Holder’s exercise hereunder (as the case may be) (and to issue such shares
of Common Stock) shall terminate, or (ii) promptly honor its obligation to so issue and deliver to the Holder a certificate or
certificates representing such shares of Common Stock or credit the Holder’s balance account with DTC for the number of shares
of Common Stock to which the Holder is entitled upon the Holder’s exercise hereunder (as the case may be) and pay cash to
the Holder in an amount equal to the excess (if any) of the Buy-In Price over the product of (A) such number of shares of Common
Stock multiplied by (B) the lowest Closing Sale Price of the shares of Common Stock on any trading day during the period commencing
on the date of the applicable exercise notice and ending on the date immediately preceding the date of such issuance and payment
under this clause (ii).

 

3.4. Beneficial
Ownership Limitation on Exercises . The Company shall not affect the exercise of any portion of a Warrant, and the Registered
Holder of such Warrant shall not have the right to exercise any portion of such Warrant, to the extent that after giving effect
to such exercise, the Registered Holder (together with the Registered Holder’s affiliates, and any persons acting as a group
together with the Holder or any Registered Holder’s affiliates) would beneficially own in excess of 4.99% (the “Maximum
Percentage”) of the Common Stock outstanding immediately after giving effect to such exercise. For purposes of the
foregoing sentence, the aggregate number of shares of Common Stock beneficially owned by such Registered Holder and its affiliates
shall include the number of shares of Common Stock issuable upon exercise of the Warrant with respect to which the determination
of such sentence is being made, but shall exclude shares of Common Stock which would be issuable upon (i) exercise of the
remaining, unexercised portion of the Warrant beneficially owned by the Registered Holder and its affiliates and (ii) exercise
or conversion of the unexercised or unconverted portion of any other securities of the Company beneficially owned by the Registered
Holder and its affiliates (including, without limitation, any convertible notes or convertible preferred stock or warrants) subject
to a limitation on conversion or exercise analogous to the limitation contained herein beneficially owned by the Registered Holder
or any of its affiliates. Except as set forth in the preceding sentence, for purposes of this paragraph, beneficial ownership shall
be calculated in accordance with Section 13(d) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”). To the extent that the limitation contained in this Section 3.4 applies, the Registered Holder’s
submission of an Election to Purchase shall be deemed to be the Registered Holder’s determination of whether a Warrant is
exercisable (in relation to any other securities owned by the Registered Holder together with any affiliates) and of which portion
of a Warrant is exercisable, in each case subject to the Maximum Percentage, and the Company shall have no obligation to verify
or confirm the accuracy of such determination. In addition, a determination as to any group status as contemplated above shall
be determined in accordance with Section 13(d) of the Exchange Act and the rules and regulations promulgated thereunder. For
purposes of the Warrants, in determining the number of outstanding shares of Common Stock, the Registered Holder may rely on the
number of outstanding shares of Common Stock as reflected in the most recent of (1) the Company’s most recent Form 10-K,
Form 10-Q, Current Report on Form 8-K or other public filing with the Commission, as the case may be, (2) a more recent public
announcement by the Company or (3) any other notice by the Company or its transfer agent setting forth the number of shares
of Common Stock outstanding. For any reason at any time, upon the written or oral request of the Registered Holder, the Company
shall within three (3) trading days confirm to the Registered Holder the number of shares of Common Stock then outstanding.
In any case, the number of outstanding shares of Common Stock shall be determined after giving effect to the conversion or exercise
of securities of the Company, including any Warrant, by the Registered Holder and its affiliates since the date as of which such
number of outstanding shares of Common Stock was reported. By written notice to the Company, the Registered Holder may from time
to time increase the Maximum Percentage to any other percentage of the number of shares of the Common Stock outstanding immediately
after giving effect to the issuance of shares of Common Stock upon exercise of a Warrant and the provisions of this Section 3.4
shall continue to apply; provided that (i) any such increase will not be effective until the sixty-first (61st) day after
such notice is delivered to the Company, and (ii) any such increase will apply only to that Registered Holder. For purposes
of clarity, the Common Stock underlying any Warrant in excess of the Maximum Percentage for a Registered Holder shall not be deemed
to be beneficially owned by that Registered Holder for any purpose including for purposes of Section 13(d) or Rule 16a-1(a)(1)
of the Exchange Act. The provisions of this paragraph shall be construed and implemented in a manner otherwise than in strict conformity
with the terms of this Section 3.4 to the extent necessary to correct this paragraph (or any portion hereof) which may be
defective or inconsistent with the intended beneficial ownership limitation herein contained or to make changes or supplements
necessary or desirable to properly give effect to such limitation.

 

    	-5-

    	 

    

 

4. Adjustments.

 

4.1. Stock Dividends.

 

4.1.1 Split-Ups.
If after the date hereof, and subject to the provisions of Section 4.5 below, the number of outstanding shares of Common Stock
is increased by a stock dividend payable in Common Stock, or by a split-up of Common Stock or other similar event, then, on the
effective date of such stock dividend, split-up or similar event, the number of shares of Common Stock issuable on exercise of
each Warrant shall be increased in proportion to such increase in the outstanding shares of Common Stock and the Exercise Price
shall be proportionally decreased such that the aggregate Exercise Price, after such adjustments, remains the same for each Warrant.

 

4.1.2 Dividends
and Other Distributions. If the Company shall declare or make any dividend or other distribution of its assets (or rights to
acquire its assets) to holders of Common Stock, by way of return of capital or otherwise (including, without limitation, any distribution
of cash, stock or other securities, property or options by way of a dividend, spin off, reclassification, corporate rearrangement,
scheme of arrangement or other similar transaction), except to the extent an adjustment was already made pursuant to Section 4.1.1
or 4.2 (a “Distribution”), at any time after the issuance of this Warrant, then, in each such case, the
Company shall reserve and put aside the maximum Distribution amount the Holder would have been entitled to receive if the Holder
had held the number of shares of Common Stock acquirable upon complete exercise of this Warrant (without regard to any limitations
on exercise hereof, including without limitation, the Maximum Percentage) immediately before the date on which a record is taken
for such Distribution, or, if no such record is taken, the date as of which the record holders of Common Stock are to be determined
for the participation in such Distribution. Upon exercise of this Warrant, in whole or in part, the Company shall, contemporaneously
with the delivery of the Warrant Shares, distribute to the Holder a pro rata portion of such Distribution based on the portion
of the Warrant that has been exercised (provided, however, to the extent that the Holder’s right to participate in any such
Distributions would result in the Holder exceeding the Maximum Percentage, then the Holder shall not be entitled to participate
in such Distribution at such time and to such extent (or the beneficial ownership of any such Common Stock as a result of such
Distribution to such extent) and such Distribution to such extent shall be held in abeyance for the benefit of the Holder until
such time, if ever, as its right thereto would not result in the Holder exceeding the Maximum Percentage, at which time or times
the Holder shall be granted such Distribution (and any Distributions declared or made on such initial Distribution or on any subsequent
Distribution to be held similarly in abeyance) to the same extent as if there had been no such limitation).

 

4.2. Aggregation
of Shares . If after the date hereof, and subject to the provisions of Section 4.5 hereof, the number of outstanding shares
of Common Stock is decreased by a consolidation, combination, reverse stock split or reclassification of Common Stock or other
similar event, then, on the effective date of such consolidation, combination, reverse stock split, reclassification or similar
event, the number of shares of Common Stock issuable on exercise of each Warrant shall be decreased in proportion to such decrease
in outstanding shares of Common Stock and the Exercise Price shall be proportionally increased such that the aggregate Exercise
Price, after such adjustments, remains the same for each Warrant.

 

    	-6-

    	 

    

 

4.3. Purchase Rights.
If at any time the Company grants, issues or sells any options, convertible securities or rights to purchase stock, warrants, securities
or other property pro rata to the record holders of any class of Common Stock (the “Purchase Rights”),
then the Holder will be entitled to acquire, upon the terms applicable to such Purchase Rights, the aggregate Purchase Rights which
the Holder could have acquired if the Holder had held the number of shares of Common Stock acquirable upon complete exercise of
this Warrant (without regard to any limitations on exercise hereof, including without limitation, the Maximum Percentage) immediately
before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights, or, if no such record is taken,
the date as of which the record holders of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights
(provided, however, to the extent that the Holder's right to participate in any such Purchase Right would result in the Holder
exceeding the Maximum Percentage, then the Holder shall not be entitled to participate in such Purchase Right to such extent (or
beneficial ownership of such Common Stock as a result of such Purchase Right to such extent) and such Purchase Right to such extent
shall be held in abeyance for the Holder until such time, if ever, as its right thereto would not result in the Holder exceeding
the Maximum Percentage, at which time or times the Holder shall be granted such right (and any Purchase Right granted, issued or
sold on such initial Purchase Right or on any subsequent Purchase Right to be held similarly in abeyance) to the same extent as
if there had been no such limitation).

 

4.4. Fundamental
Transactions. If, at any time while the Warrants are outstanding, (i) the Company, directly or indirectly, in one or more
related transactions effects any merger or consolidation of the Company with or into another person, (ii) the Company, directly
or indirectly, effects any sale, lease, license, assignment, transfer, conveyance or other disposition of all or substantially
all of its assets in one or a series of related transactions, (iii) any, direct or indirect, purchase offer, tender offer
or exchange offer (whether by the Company or another person) is completed pursuant to which holders of Common Stock are permitted
to sell, tender or exchange their shares for other securities, cash or property and has been accepted by the holders of 50% or
more of the outstanding Common Stock, (iv) the Company, directly or indirectly, in one or more related transactions effects
any reclassification, reorganization or recapitalization of the Common Stock or any compulsory share exchange pursuant to which
the Common Stock is effectively converted into or exchanged for other securities, cash or property, (v) the Company, directly
or indirectly, in one or more related transactions consummates a stock or share purchase agreement or other business combination
(including, without limitation, a reorganization, recapitalization, spin-off or scheme of arrangement) with another person or group
of persons whereby such other person or group acquires more than 50% of the outstanding shares of Common Stock (not including any
shares of Common Stock held by the other person or other persons making or party to, or associated or affiliated with the other
persons making or party to, such stock or share purchase agreement or other business combination) (each a “Fundamental
Transaction”), then, upon any subsequent exercise of a Warrant, the Registered Holder of each Warrant shall have
the right to receive, for each share of Common Stock that would have been issuable upon such exercise immediately prior to the
occurrence of such Fundamental Transaction, at the option of the Registered Holder (without regard to any limitation in Section 3.4
on the exercise of the Warrants), the number of shares of Common Stock of the successor or acquiring corporation or of the Company,
if it is the surviving corporation, and any additional consideration (the “Alternate Consideration”)
receivable as a result of such Fundamental Transaction by a holder of the number of shares of Common Stock for which a Warrant
is exercisable immediately prior to such Fundamental Transaction (without regard to any limitation in Section 3.4 on the exercise
of the Warrants). For purposes of any such exercise, the determination of the Exercise Price shall be appropriately adjusted to
apply to such Alternate Consideration based on the amount of Alternate Consideration issuable in respect of one share of Common
Stock in such Fundamental Transaction, and the Company shall apportion the Exercise Price among the Alternate Consideration in
a reasonable manner reflecting the relative value of any different components of the Alternate Consideration. If holders of Common
Stock are given any choice as to the securities, cash or property to be received in a Fundamental Transaction, then each Registered
Holder shall be given the same choice as to the Alternate Consideration such Registered Holder receives upon any exercise of a
Warrant following such Fundamental Transaction. Notwithstanding anything to the contrary, in the event of a Fundamental Transaction,
the Company shall, at a Registered Holder’s option, exercisable at any time prior to the consummation of the Fundamental
Transaction, purchase such Registered Holder’s Warrant immediately prior to the consummation of such Fundamental Transaction
from the Registered Holder by paying cash by wire transfer of immediately available funds in an amount equal to the Black Scholes
Value of the remaining unexercised portion of such Registered Holder’s Warrant immediately prior to the consummation of such
Fundamental Transaction. “Black Scholes Value” means the value of a Warrant based on the Black and Scholes
Option Pricing Model obtained from the “OV” function on Bloomberg, L.P. (“Bloomberg”) determined
immediately prior to the consummation of the applicable Fundamental Transaction for pricing purposes and reflecting (A) a
risk-free interest rate corresponding to the U.S. Treasury rate for a period equal to the time between the date of the public announcement
of the applicable Fundamental Transaction and the Expiration Date, (B) an expected volatility equal to the greater of 100%
and the 100 day volatility obtained from the HVT function on Bloomberg as of the trading day immediately following the public announcement
of the applicable Fundamental Transaction, (C) the underlying price per share used in such calculation shall be the sum of
the price per share of Common Stock being offered in cash, if any, plus the value of any non-cash consideration, if any, being
offered in such Fundamental Transaction (the “FMV”) and (D) a remaining option time equal to the
time between the date of the public announcement of the applicable Fundamental Transaction and the Expiration Date. The Company
shall cause any successor entity in a Fundamental Transaction in which the Company is not the survivor (the “Successor
Entity”) to assume in writing all obligations of the Company under each Warrant in accordance with the provisions
of this Section 4.3 pursuant to agreements in form and substance reasonably satisfactory to the Registered Holders and approved
by the Registered Holder (without unreasonable delay) prior to such Fundamental Transaction and shall, at the option of each Registered
Holder, deliver to such Registered Holder in exchange for such Registered Holder’s Warrant a security of the Successor Entity
evidenced by a written instrument substantially similar in form and substance to such Registered Holder’s Warrant which is
exercisable for a corresponding number of shares of capital stock of such Successor Entity (or its parent entity) equivalent to
the shares of Common Stock acquirable and receivable upon exercise of such Warrant (without regard to the limitations on exercise
set forth in Section 3.4) prior to such Fundamental Transaction, and with an exercise price which applies the Exercise Price
hereunder to such shares of capital stock (but taking into account the relative value of the shares of Common Stock pursuant to
such Fundamental Transaction and the value of such shares of capital stock, such number of shares of capital stock and such exercise
price being for the purpose of protecting the economic value of such Warrant immediately prior to the consummation of such Fundamental
Transaction), and which is reasonably satisfactory in form and substance to the Registered Holder. Upon the occurrence of any such
Fundamental Transaction, the Successor Entity shall succeed to, and be substituted for (so that from and after the date of such
Fundamental Transaction, the provisions of this Agreement and each Warrant referring to the “Company” shall refer instead
to the Successor Entity), and may exercise every right and power of the Company and shall assume all of the obligations of the
Company under this Agreement and each Warrant with the same effect as if such Successor Entity had been named as the Company herein.

 

    	-7-

    	 

    

 

4.5. Calculations
..  All calculations under this Section 4 shall be made to the nearest cent or the nearest whole share, as the case
may be. For purposes of this Section 4, any calculation of the number of shares of Common Stock deemed to be issued and outstanding
as of a given date shall not include treasury shares, if any. Notwithstanding anything to the contrary in this Section 4,
no adjustment in the Exercise Price shall be required unless such adjustment would require an increase or decrease of at least
1% in such price; provided however, that any adjustments which by reason of the immediately preceding sentence are not required
to be made shall be carried forward and taken into account in any subsequent adjustment. In any case in which this Section 4
shall require that an adjustment in the Exercise Price be made effective as of a record date for a specified event, if the Registered
Holder exercises a Warrant after such record date, the Company may elect to defer, until the occurrence of such event, the issuance
of the shares of Common Stock and other capital stock of the Company in excess of the shares of Common Stock and other capital
stock of the Company, if any, issuable upon such exercise on the basis of the Exercise Price in effect prior to such adjustment;
provided, however, that in such case the Company or the Warrant Agent shall deliver to the Registered Holder a due bill or other
appropriate instrument evidencing the Registered Holder’s right to receive such additional shares and/or other capital securities
upon the occurrence of the event requiring such adjustment.

 

4.6. Notices of
Changes in Warrant . Upon every adjustment of the Exercise Price or the number of shares issuable upon exercise of a Warrant,
the Company shall give written notice thereof to the Warrant Agent, which notice shall state the Exercise Price resulting from
such adjustment and the increase or decrease, if any, in the number of shares purchasable at such price upon the exercise of a
Warrant, setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based. Upon
the occurrence of any event specified in Sections 4.1, 4.2 or 4.3, the Company shall give written notice of occurrence
of such event to each Warrant holder, at the last address set forth for such holder in the Warrant Register, of the record date
or the effective date of the event. Failure to give such notice, or any defect therein, shall not affect the legality or validity
of such event.

 

4.7. No Fractional
Shares . Notwithstanding any provision contained in this Warrant Agreement to the contrary, the Company shall not issue fractional
shares upon exercise of Warrants. If, by reason of any adjustment made pursuant to this Section 4, the holder of any Warrant
would be entitled, upon the exercise of such Warrant, to receive a fractional interest in a share, the Company shall, upon such
exercise, round to the nearest whole number, the number of the shares of Common Stock to be issued to such holder.

 

    	-8-

    	 

    

 

4.8. Form of Warrant
.. The form of Warrant need not be changed because of any adjustment pursuant to this Section 4, and Warrants issued after
such adjustment may state the same Exercise Price and the same number of shares as is stated in the Warrants initially issued pursuant
to this Agreement; provided, however, that the Company may at any time in its sole discretion make any change in the form of Warrant
that the Company may deem appropriate and that does not affect the substance thereof, and any Warrant thereafter issued or countersigned,
whether in exchange or substitution for an outstanding Warrant or otherwise, may be in the form as so changed.

 

4.9. Other Events
.. In case any event shall occur affecting the Company as to which none of the provisions of preceding subsections of this Section 4 are
strictly applicable, but which would require an adjustment to the terms of the Warrants in order to (i) avoid an adverse impact
on the Warrants and (ii) effectuate the intent and purpose of this Section 4, then, in each such case, the Company shall
appoint a firm of independent public accountants, investment banking or other appraisal firm of recognized national standing, which
shall give its opinion as to whether or not any adjustment to the rights represented by the Warrants is necessary to effectuate
the intent and purpose of this Section 4 and, if they determine that an adjustment is necessary, the terms of such adjustment.
The Company shall adjust the terms of the Warrants in a manner that is consistent with any adjustment recommended in such opinion.

 

5. Transfer and
Exchange of Warrants.

 

5.1. Registration
of Transfer . The Warrant Agent shall register the transfer, from time to time, of any outstanding Warrant upon the Warrant
Register, upon surrender of such Warrant for transfer, properly endorsed with signatures properly guaranteed and accompanied by
appropriate instructions for transfer. Upon any such transfer, a new Warrant representing an equal aggregate number of Warrants
shall be issued and the old Warrant shall be cancelled by the Warrant Agent. The Warrants so cancelled shall be delivered by the
Warrant Agent to the Company from time to time upon request.

 

5.2. Procedure
for Surrender of Warrants . Warrants may be surrendered to the Warrant Agent, together with a written request for exchange
or transfer, and thereupon the Warrant Agent shall issue in exchange therefor one or more new Warrants as requested by the Registered
Holder of the Warrants so surrendered, representing an equal aggregate number of Warrants.

 

5.3. Fractional
Warrants . The Warrant Agent shall not be required to effect any registration of transfer or exchange which shall result in
the issuance of a warrant certificate for a fraction of a warrant.

 

5.4. Warrant Execution
and Countersignature . The Warrant Agent is hereby authorized to countersign and to deliver, in accordance with the terms of
this Agreement, the Warrants required to be issued pursuant to the provisions of this Section 5.

 

6. Other Provisions
Relating to Rights of Holders of Warrants.

 

6.1. No Rights
as Stockholder. A Warrant does not entitle the Registered Holder thereof to any of the rights of a stockholder of the Company,
including, without limitation, the right to receive dividends, or other distributions, exercise any preemptive rights to vote or
to consent or to receive notice as stockholders in respect of the meetings of stockholders or the election of directors of the
Company or any other matter.

 

6.2. Lost, Stolen,
Mutilated, or Destroyed Warrants. If any Warrant is lost, stolen, mutilated, or destroyed, the Company and the Warrant Agent
may on such terms as to indemnity bond or otherwise as they may in their discretion impose (which shall, in the case of a mutilated
Warrant, include the surrender thereof), issue a new Warrant of like denomination, tenor, and date as the Warrant so lost, stolen,
mutilated, or destroyed. Any such new Warrant shall constitute a substitute contractual obligation of the Company, whether or not
the allegedly lost, stolen, mutilated, or destroyed Warrant shall be at any time enforceable by anyone.

  

6.3. Reservation
of Common Stock . The Company shall at all times reserve and keep available a number of its authorized but unissued shares
of Common Stock that shall be sufficient to permit the exercise in full of all outstanding Warrants issued pursuant to this Agreement.

 

    	-9-

    	 

    

 

6.4. Registration
of Common Stock. The Company registered the Warrants and shares of Common Stock underlying the Warrants in the Registration
Statement. The Company will use its reasonable best efforts to maintain the effectiveness of such Registration Statement and the
current status of the Prospectus or to file and maintain the effectiveness of another registration statement and another current
prospectus covering the shares of Common Stock issuable upon exercise of the Warrants at any time that the Warrants are exercisable.
In addition, the Company agrees to use its reasonable best efforts to register such shares of Common Stock under the blue sky laws
of the states of residence of the exercising Warrant holders to the extent an exemption from such registration is not available.
If at any time, the Company does not have an effective registration statement covering the shares of Common Stock underlying the
Warrants, and Rule 144 is not available to cover such shares of Common Stock due to the failure of the Company to be currently
reporting under the Securities Exchange Act of 1934 (“Public Information Failure”), then the Company shall pay in cash
by wire transfer of immediately available funds an amount per month equal to 1% of the aggregate VWAP of the shares into which
a Warrant is converted which are not able to be delivered without legend because of such Public Information Failure to the Holder
thereof until such shares are able to be delivered without legend (to be pro-rated for any periods which are less than one month).

 

7. Concerning
the Warrant Agent and Other Matters.

 

7.1. Payment of
Taxes. The Company shall from time to time promptly pay all taxes and charges that may be imposed upon the Company or the Warrant
Agent in respect of the issuance or delivery of shares of Common Stock upon the exercise of the Warrants, but the Company shall
not be obligated to pay any transfer taxes in respect of the Warrants or such shares.

 

7.2. Resignation,
Consolidation, or Merger of Warrant Agent.

 

7.2.1 Appointment
of Successor Warrant Agent . The Warrant Agent, or any successor hereafter appointed, may resign its duties and be discharged
from all further duties and liabilities hereunder after giving 60 days’ notice in writing to the Company. If the office
of the Warrant Agent becomes vacant by resignation or incapacity to act or otherwise, the Company shall appoint in writing a successor
Warrant Agent in place of the Warrant Agent. If the Company shall fail to make such appointment within a period of thirty (30) days
after it has been notified in writing of such resignation or incapacity by the Warrant Agent or by the holder of a Warrant (who
shall, with such notice, submit his Warrant for inspection by the Company), then the holder of any Warrant may apply to the Supreme
Court of the State of New York for the County of New York for the appointment of a successor Warrant Agent at the Company’s
cost. Any successor Warrant Agent, whether appointed by the Company or by such court, shall be a corporation in good standing in
the State of New York and having its principal office in the Borough of Manhattan, City and State of New York, and authorized under
such laws to exercise corporate trust powers and subject to supervision or examination by federal or state authority. After appointment,
any successor Warrant Agent shall be vested with all the authority, powers, rights, immunities, duties, and obligations of its
predecessor Warrant Agent with like effect as if originally named as Warrant Agent hereunder, without any further act or deed;
but if for any reason it becomes necessary or appropriate, the predecessor Warrant Agent shall execute and deliver, at the expense
of the Company, an instrument transferring to such successor Warrant Agent all the authority, powers, and rights of such predecessor
Warrant Agent hereunder; and upon request of any successor Warrant Agent the Company shall make, execute, acknowledge, and deliver
any and all instruments in writing for more fully and effectually vesting in and confirming to such successor Warrant Agent all
such authority, powers, rights, immunities, duties, and obligations.

 

 

7.2.2 Notice
of Successor Warrant Agent . In the event a successor Warrant Agent shall be appointed, the Company shall give notice thereof
to the predecessor Warrant Agent and the transfer agent for the Common Stock not later than the effective date of any such appointment.

 

7.2.3 Merger
or Consolidation of Warrant Agent . Any company into which the Warrant Agent may be merged or with which it may be consolidated
or any corporation resulting from any merger or consolidation to which the Warrant Agent shall be a party shall be the successor
Warrant Agent under this Agreement without any further act.

 

    	-10-

    	 

    

 

7.3. Fees and Expenses
of Warrant Agent.

 

7.3.1 Remuneration.
The Company agrees to pay the Warrant Agent reasonable remuneration for its services as such Warrant Agent hereunder and any transfer
agent fees which are in addition thereto and shall, pursuant to its obligations under this Agreement, reimburse the Warrant Agent
upon demand for all expenditures that the Warrant Agent may reasonably incur in the execution of its duties hereunder.

 

7.3.2 Further
Assurances. The Company agrees to perform, execute, acknowledge, and deliver or cause to be performed, executed, acknowledged,
and delivered all such further and other acts, instruments, and assurances as may reasonably be required by the Warrant Agent for
the carrying out or performing of the provisions of this Agreement.

 

7.4. Liability
of Warrant Agent.

 

7.4.1 Reliance
on Company Statement . Whenever in the performance of its duties under this Agreement, the Warrant Agent shall deem it necessary
or desirable that any fact or matter be proved or established by the Company prior to taking or suffering any action hereunder,
such fact or matter (unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively
proved and established by a statement signed by the President or Chairman of the Board of the Company and delivered to the Warrant
Agent. The Warrant Agent may rely upon such statement for any action taken or suffered in good faith by it pursuant to the provisions
of this Agreement.

 

7.4.2 Indemnity
.. The Warrant Agent shall be liable hereunder only for its own gross negligence, willful misconduct or bad faith. The Company agrees
to indemnify the Warrant Agent and save it harmless against any and all liabilities, including judgments, costs and reasonable
counsel fees, for anything done or omitted by the Warrant Agent in the execution of this Agreement, except as a result of the Warrant
Agent’s gross negligence, willful misconduct or bad faith.

 

7.4.3 Exclusions
.. The Warrant Agent shall have no responsibility with respect to the validity of this Agreement or with respect to the validity
or execution of any Warrant (except its countersignature thereof). The Warrant Agent shall not be responsible for any breach by
the Company of any covenant or condition contained in this Agreement or in any Warrant. The Warrant Agent shall not be responsible
to make any adjustments required under the provisions of Section 4 hereof or responsible for the manner, method,
or amount of any such adjustment or the ascertaining of the existence of facts that would require any such adjustment; nor shall
it by any act hereunder be deemed to make any representation or warranty as to the authorization or reservation of any shares of
Common Stock to be issued pursuant to this Agreement or any Warrant or as to whether any shares of Common Stock shall, when issued,
be valid and fully paid and nonassessable.

 

7.5. Acceptance
of Agency . The Warrant Agent hereby accepts the agency established by this Agreement and agrees to perform the same upon the
terms and conditions herein set forth and among other things, shall account promptly to the Company with respect to Warrants exercised
and concurrently account for, and pay to the Company, all monies received by the Warrant Agent for the purchase of shares of Common
Stock through the exercise of the Warrants.

 

8. Miscellaneous
Provisions.

 

8.1. Successors
.. All the covenants and provisions of this Agreement by or for the benefit of the Company or the Warrant Agent shall bind and inure
to the benefit of their respective successors and assigns.

 

8.2. Notices
.. Any notice, statement or demand authorized by this Warrant Agreement to be given or made by the Warrant Agent or by the holder
of any Warrant to or on the Company shall be sufficiently given when so delivered if by hand or overnight delivery or if sent by
certified mail or private courier service within five (5) days after deposit of such notice, postage prepaid, addressed (until
another address is filed in writing by the Company with the Warrant Agent), as follows:

 

    	-11-

    	 

    

 

	 	Axion Power International, Inc.
	 	3601 Clover Lane
	 	New Castle, PA 16105
	 	 
	 	By Telefax (which constitutes notice): (724) 654-3300
	 	By Email (which constitutes notice): info@axionpower.com
	 	 
	 	with copies to:
	 	ddigiacinto@axionpower.com
	 	joliekahnlaw@sbcglobal.net

 

 

Any notice, statement
or demand authorized by this Agreement to be given or made by the holder of any Warrant or by the Company to or on the Warrant
Agent shall be sufficiently given when so delivered (i) upon receipt, if by hand or overnight delivery, (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) if sent by certified mail or private courier service within five (5) days after deposit
of such notice, postage prepaid, addressed (until another address is filed in writing by the Warrant Agent with the Company), as
follows:

 

8.3. Applicable
Law . The validity, interpretation, and performance of this Agreement and of the Warrants shall be governed in all respects
by the laws of the State of New York, without giving effect to conflicts of law principles that would result in the application
of the substantive laws of another jurisdiction. The Company hereby agrees that any action, proceeding or claim against it arising
out of or relating in any way to this Agreement shall be brought and enforced in the courts of the State of New York or the United
States District Court for the Southern District of New York, and irrevocably submits to such jurisdiction, which jurisdiction shall
be exclusive. The Company hereby waives any objection to such exclusive jurisdiction and that such courts represent an inconvenient
forum.

 

8.4. Persons Having
Rights under this Agreement . Nothing in this Agreement shall be construed to confer upon, or give to, any person or corporation
other than the parties hereto and the Registered Holders of the Warrants any right, remedy, or claim under or by reason of this
Warrant Agreement or of any covenant, condition, stipulation, promise, or agreement hereof. All covenants, conditions, stipulations,
promises, and agreements contained in this Warrant Agreement shall be for the sole and exclusive benefit of the parties hereto
and their successors and assigns and of the Registered Holders of the Warrants.

 

8.5. Examination
of the Warrant Agreement . A copy of this Agreement shall be available at all reasonable times at the office of the Warrant
Agent in the Borough of Manhattan, City of New York and State of New York, for inspection by the Registered Holder of any Warrant.
The Warrant Agent may require any such holder to submit his Warrant for inspection by it.

 

8.6. Counterparts
.. This Agreement may be executed in any number of original or facsimile counterparts and each of such counterparts shall for all
purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument.

 

8.7. Effect of
Headings . The section headings herein are for convenience only and are not part of this Warrant Agreement and shall not affect
the interpretation thereof.

 

8.8. Amendments
.. This Agreement may be amended by the parties hereto without the consent of any Registered Holder for the purpose of curing any
ambiguity, or curing, correcting or supplementing any defective provision contained herein or adding or changing any other provisions
with respect to matters arising under this Agreement as the parties may deem necessary or desirable and that the parties deem shall
not adversely affect the interest of the Registered Holders. All other modifications or amendments shall require the written consent
of the Company and the Registered Holders holding Warrants to purchase at least 65% of the shares of Common Stock underlying the
then outstanding Warrants.

 

    	-12-

    	 

    

 

8.9. Severability
.. This Warrant Agreement shall be deemed severable, and the invalidity or unenforceability of any term or provision hereof shall
not affect the validity or enforceability of this Warrant Agreement or of any other term or provision hereof. Furthermore, in lieu
of any such invalid or unenforceable term or provision, the parties hereto intend that there shall be added as a part of this Warrant
Agreement a provision as similar in terms to such invalid or unenforceable provision as may be possible and be valid and enforceable.

 

    	-13-

    	 

    

 

IN WITNESS WHEREOF,
the parties hereto have caused this Agreement to be duly executed as of the date first above written.

 

 

	 	 	 
	AXION POWER INTERNATIONAL, INC.
	 	 
	By:	 	 /s/ David DiGiacinto
	     Continental Stock Transfer & Trust Company                                 ,

as Warrant Agent
	By:	 	 /s/ Margaret Villiani
	Name:	 	  Margaret Villiani
	Title:	 	 Vice President

 

    	-14-

    	 

    

 

EXHIBIT A

 

[FORM OF A WARRANT CERTIFICATE]

 

 

 

Number

 

Warrants

 

THIS WARRANT SHALL BE VOID IF NOT
EXERCISED PRIOR TO

THE EXPIRATION OF THE EXERCISE PERIOD PROVIDED FOR

IN THE WARRANT AGREEMENT DESCRIBED BELOW

 

AXION POWER INTERNATIONAL, INC.

 

 

Incorporated Under the Laws of the State
of Delaware

 

CUSIP 05460X 117

 

Warrant Certificate

 

This Warrant
Certificate certifies that , or registered assigns, is the registered holder of warrant(s) (the “ Warrants
” and each, a “ Warrant ”) to purchase shares of Common Stock, no par value (“ Common
Stock ”), of Axion Power International, Inc., a California corporation (the “ Company ”). 
Each Warrant entitles the holder, upon exercise during the period set forth in the Warrant Agreement referred to below, to receive
from the Company that number of fully paid and nonassessable shares of Common Stock as set forth below, at the exercise price (the
“ Exercise Price ”) as determined pursuant to the Warrant Agreement, payable in lawful money (or through
“ cashless exercise ” as provided for in the Warrant Agreement) of the United States of America upon
surrender of this Warrant Certificate and payment of the Exercise Price at the office or agency of the Warrant Agent referred to
below, subject to the conditions set forth herein and in the Warrant Agreement. Defined terms used in this Warrant Certificate
but not defined herein shall have the meanings given to them in the Warrant Agreement (as defined on the reverse hereof).

 

Each Warrant is initially
exercisable for one fully paid and non-assessable share of Common Stock. The number of the shares of Common Stock issuable upon
exercise of the Warrants is subject to adjustment upon the occurrence of certain events set forth in the Warrant Agreement.

 

The initial Exercise
Price per share of Common Stock for any Warrant is equal to $3.25 per share. The Exercise Price is subject to adjustment upon
the occurrence of certain events set forth in the Warrant Agreement.

 

Subject to the conditions
set forth in the Warrant Agreement, the Warrants may be exercised only during the Exercise Period and to the extent not exercised
by the end of such Exercise Period, such Warrants shall become void.

 

Reference is hereby
made to the further provisions of this Warrant Certificate set forth on the reverse hereof and such further provisions shall for
all purposes have the same effect as though fully set forth at this place.

 

This Warrant Certificate
shall not be valid unless countersigned by the Warrant Agent, as such term is used in the Warrant Agreement.

 

This Warrant Certificate
shall be governed by and construed in accordance with the internal laws of the State of New York, without regard to conflicts of
laws principles thereof.

 

    	A-1

    	 

    

 

	 	AXION POWER INTERNATIONAL, INC.
	 	 	 	 
	 	By:	 	 
	 	 	Name: David DiGiacinto
	 	 	Title: Chief Executive Officer
	 	 	 	 
	 	
        CONTINENTAL STOCK TRANSFER &

        TRUST COMPANY, as Warrant Agent

	 	 	 	 
	 	By:	 	 
	 	 	Name:	 
	 	 	Title:	 

 

 

[Signature Page to Warrant Certificate]

 

    	A-2

    	 

    

 

[Form of Series A Warrant Certificate]

 

[Reverse]

  

The Warrants evidenced
by this Warrant Certificate are part of a duly authorized issue of Warrants entitling the holder on exercise to receive shares
of Common Stock and are issued or to be issued pursuant to a Warrant Agreement dated as of October 24, 2014 (the “ Warrant
Agreement ”), duly executed and delivered by the Company to Continental Stock Transfer & Trust Company, as warrant
agent (the “ Warrant Agent ”), which Warrant Agreement is hereby incorporated by reference in and made
a part of this instrument and is hereby referred to for a description of the rights, limitation of rights, obligations, duties
and immunities thereunder of the Warrant Agent, the Company and the holders (the words “ holders ” or
“ holder ” meaning the Registered Holders or Registered Holder) of the Warrants. A copy of the Warrant
Agreement may be obtained by the holder hereof upon written request to the Company. Defined terms used in this Warrant Certificate
but not defined herein shall have the meanings given to them in the Warrant Agreement.

 

Warrants may be exercised
at any time during the Exercise Period set forth in Section 3.3 of the Warrant Agreement.

  

Notwithstanding anything
else in this Warrant Certificate or the Warrant Agreement, no Warrant may be exercised unless at the time of exercise (i) a registration
statement covering the shares of Common Stock to be issued upon exercise is effective under the Securities Act and (ii) a prospectus
thereunder relating to the shares of Common Stock is current, except through “cashless exercise ” as
provided for in the Warrant Agreement.

 

The Warrant Agreement
provides that upon the occurrence of certain events the number of shares of Common Stock issuable upon exercise of the Warrants
set forth on the face hereof may, subject to certain conditions, be adjusted. If, upon exercise of a Warrant, the holder thereof
would be entitled to receive a fractional interest in a share of Common Stock, the Company shall, upon exercise, round up to the
nearest whole number of shares of Common Stock to be issued to the holder of the Warrant.

 

Warrant Certificates,
when surrendered at the principal corporate trust office of the Warrant Agent by the Registered Holder thereof in person or by
legal representative or attorney duly authorized in writing, may be exchanged, in the manner and subject to the limitations provided
in the Warrant Agreement, but without payment of any service charge, for another Warrant Certificate or Warrant Certificates of
like tenor evidencing in the aggregate a like number of Warrants.

 

Upon due presentation
for registration of transfer of this Warrant Certificate at the office of the Warrant Agent a new Warrant Certificate or Warrant
Certificates of like tenor and evidencing in the aggregate a like number of Warrants shall be issued to the transferee(s) in exchange
for this Warrant Certificate, subject to the limitations provided in the Warrant Agreement, without charge except for any tax or
other governmental charge imposed in connection therewith.

 

The Company and the
Warrant Agent may deem and treat the Registered Holder(s) hereof as the absolute owner(s) of this Warrant Certificate (notwithstanding
any notation of ownership or other writing hereon made by anyone), for the purpose of any exercise hereof, of any distribution
to the holder(s) hereof, and for all other purposes, and neither the Company nor the Warrant Agent shall be affected by any notice
to the contrary. Neither the Warrants nor this Warrant Certificate entitles any holder hereof to any rights of a stockholder of
the Company.

 

    	A-3

    	 

    

 

Election to Purchase

  

(To Be Executed Upon Exercise of Warrant)

 

The undersigned hereby
irrevocably elects to exercise the right, represented by this Warrant Certificate, to receive shares of Common Stock and herewith
tenders payment for such shares to the order of Axion Power International, Inc. (the “ Company ”) in
the amount of $   in accordance with the terms hereof. The undersigned requests that a certificate for such shares be
registered in the name of , whose address is and that such shares be delivered to whose address is . If said number of shares is
less than all of the shares of Common Stock purchasable hereunder, the undersigned requests that a new Warrant Certificate representing
the remaining balance of such shares be registered in the name of , whose address is , and that such Warrant Certificate be delivered
to , whose address is .

 

 

 

In the event that the Warrant is to be
exercised on a “cashless” basis pursuant to Section 3.3.2 of the Warrant Agreement, the number of shares that
this Warrant is exercisable for shall be determined in accordance with Section 3.3.2 of the Warrant Agreement.

 

                                        a “Cash
Exercise” with respect to                                                                                                  Warrant Shares; and/or

 

 

 

                                       a
“Cashless Exercise” with respect to Warrant Shares, resulting in a delivery obligation by the Company
to the Holder of shares of Common Stock representing the applicable Net Number, subject to adjustment.

 

In the event that the
Warrant may be exercised, to the extent allowed by the Warrant Agreement, through cashless exercise (i) the number of shares that
this Warrant is exercisable for would be determined in accordance with the relevant section of the Warrant Agreement which allows
for such cashless exercise and (ii) the holder hereof shall complete the following: The undersigned hereby irrevocably elects to
exercise the right, represented by this Warrant Certificate, through the cashless exercise provisions of the Warrant Agreement,
to receive shares of Common Stock. If said number of shares is less than all of the shares of Common Stock purchasable hereunder
(after giving effect to the cashless exercise), the undersigned requests that a new Warrant Certificate representing the remaining
balance of such shares be registered in the name of , whose address is , and that such Warrant Certificate be delivered to , whose
address is .

 

 

	Date: ____________, 20	 	(Signature)
	 	 	 
	 	 	(Address)
	 	 	 
	 	 	 
	 	 	(Tax Identification Number)
	 	 	 

 

    	A-4

    	 

    

 

EXHIBIT B

 

FORM OF SERIES B WARRANT CERTIFICATE

 

 

Number

 

Warrants

 

THIS WARRANT SHALL BE VOID IF NOT
EXERCISED PRIOR TO

THE EXPIRATION OF THE EXERCISE PERIOD PROVIDED FOR

IN THE WARRANT AGREEMENT DESCRIBED BELOW

 

AXION POWER INTERNATIONAL, INC.

 

Incorporated Under the Laws of the
State of Delaware

 

CUSIP 05460X
125

 

Warrant Certificate

 

This Warrant
Certificate certifies that , or registered assigns, is the registered holder of warrant(s) (the “Warrants
” and each, a “ Warrant ”) to purchase shares of Common Stock, no par value (“ Common
Stock ”), of Axion Power International, Inc., a California corporation (the “ Company ”). 
Each Warrant entitles the holder, upon exercise during the period set forth in the Warrant Agreement referred to below, to receive
from the Company that number of fully paid and nonassessable shares of Common Stock as set forth below, at the exercise price (the
“Exercise Price ”) as determined pursuant to the Warrant Agreement, payable in lawful money (or through
“ cashless exercise ” as provided for in the Warrant Agreement) of the United States of America upon
surrender of this Warrant Certificate and payment of the Exercise Price at the office or agency of the Warrant Agent referred to
below, subject to the conditions set forth herein and in the Warrant Agreement. Defined terms used in this Warrant Certificate
but not defined herein shall have the meanings given to them in the Warrant Agreement (as defined on the reverse hereof).

 

Each Warrant is initially
exercisable for one fully paid and non-assessable share of Common Stock. The number of the shares of Common Stock issuable upon
exercise of the Warrants is subject to adjustment upon the occurrence of certain events set forth in the Warrant Agreement.

 

The initial Exercise
Price per share of Common Stock for any Warrant is equal to $3.25 per share. The Exercise Price is subject to adjustment upon
the occurrence of certain events set forth in the Warrant Agreement.

 

Subject to the conditions
set forth in the Warrant Agreement, the Warrants may be exercised only during the Exercise Period and to the extent not exercised
by the end of such Exercise Period, such Warrants shall become void.

 

Reference is hereby
made to the further provisions of this Warrant Certificate set forth on the reverse hereof and such further provisions shall for
all purposes have the same effect as though fully set forth at this place.

 

This Warrant Certificate
shall not be valid unless countersigned by the Warrant Agent, as such term is used in the Warrant Agreement.

 

    	B-1

    	 

    

 

This Warrant Certificate
shall be governed by and construed in accordance with the internal laws of the State of New York, without regard to conflicts of
laws principles thereof.

 

	 	AXION POWER INTERNATIONAL, INC.
	 	 	 	 
	 	By:	 	 
	 	 	Name: David DiGiacinto
	 	 	Title: Chief Executive Officer
	 	 	 	 
	 	
        CONTINENTAL STOCK TRANSFER &

        TRUST COMPANY, as Warrant Agent

	 	 	 	 
	 	By:	 	 
	 	 	Name:	 
	 	 	Title:	 

 

 

[Signature Page to Warrant Certificate]

 

    	B-2

    	 

    

 

[Form of B Warrant Certificate]

 

[Reverse]

 

The Warrants evidenced
by this Warrant Certificate are part of a duly authorized issue of Warrants entitling the holder on exercise to receive shares
of Common Stock and are issued or to be issued pursuant to a Warrant Agreement dated as of October 24, 2014 (the “ Warrant
Agreement ”), duly executed and delivered by the Company to Continental Stock Transfer & Trust Company, as warrant
agent (the “ Warrant Agent ”), which Warrant Agreement is hereby incorporated by reference in and made
a part of this instrument and is hereby referred to for a description of the rights, limitation of rights, obligations, duties
and immunities thereunder of the Warrant Agent, the Company and the holders (the words “ holders ” or
“ holder ” meaning the Registered Holders or Registered Holder) of the Warrants. A copy of the Warrant
Agreement may be obtained by the holder hereof upon written request to the Company. Defined terms used in this Warrant Certificate
but not defined herein shall have the meanings given to them in the Warrant Agreement.

 

Warrants may be exercised
at any time during the Exercise Period set forth in Section 3.3 of the Warrant Agreement. 

  

Notwithstanding anything
else in this Warrant Certificate or the Warrant Agreement, no Warrant may be exercised unless at the time of exercise (i) a registration
statement covering the shares of Common Stock to be issued upon exercise is effective under the Securities Act and (ii) a prospectus
thereunder relating to the shares of Common Stock is current, except through “cashless exercise ” as
provided for in the Warrant Agreement.

 

 

The Warrant Agreement
provides that upon the occurrence of certain events the number of shares of Common Stock issuable upon exercise of the Warrants
set forth on the face hereof may, subject to certain conditions, be adjusted. If, upon exercise of a Warrant, the holder thereof
would be entitled to receive a fractional interest in a share of Common Stock, the Company shall, upon exercise, round up to the
nearest whole number of shares of Common Stock to be issued to the holder of the Warrant.

 

Warrant Certificates,
when surrendered at the principal corporate trust office of the Warrant Agent by the Registered Holder thereof in person or by
legal representative or attorney duly authorized in writing, may be exchanged, in the manner and subject to the limitations provided
in the Warrant Agreement, but without payment of any service charge, for another Warrant Certificate or Warrant Certificates of
like tenor evidencing in the aggregate a like number of Warrants.

 

Upon due presentation
for registration of transfer of this Warrant Certificate at the office of the Warrant Agent a new Warrant Certificate or Warrant
Certificates of like tenor and evidencing in the aggregate a like number of Warrants shall be issued to the transferee(s) in exchange
for this Warrant Certificate, subject to the limitations provided in the Warrant Agreement, without charge except for any tax or
other governmental charge imposed in connection therewith.

 

The Company and the
Warrant Agent may deem and treat the Registered Holder(s) hereof as the absolute owner(s) of this Warrant Certificate (notwithstanding
any notation of ownership or other writing hereon made by anyone), for the purpose of any exercise hereof, of any distribution
to the holder(s) hereof, and for all other purposes, and neither the Company nor the Warrant Agent shall be affected by any notice
to the contrary. Neither the Warrants nor this Warrant Certificate entitles any holder hereof to any rights of a stockholder of
the Company.

 

    	B-3

    	 

    

 

Election to Purchase

 

(To Be Executed Upon Exercise of Warrant)

 

The undersigned hereby
irrevocably elects to exercise the right, represented by this Warrant Certificate, to receive shares of Common Stock and herewith
tenders payment for such shares to the order of Axion Power International, Inc. (the “ Company ”) in
the amount of $   in accordance with the terms hereof. The undersigned requests that a certificate for such shares be
registered in the name of , whose address is and that such shares be delivered to whose address is . If said number of shares is
less than all of the shares of Common Stock purchasable hereunder, the undersigned requests that a new Warrant Certificate representing
the remaining balance of such shares be registered in the name of , whose address is , and that such Warrant Certificate be delivered
to , whose address is .

 

In the event that the
Warrant is to be exercised on a “cashless” basis pursuant to Section 3.3.2 of the Warrant Agreement, the number
of shares that this Warrant is exercisable for shall be determined in accordance with Section 3.3.2 of the Warrant Agreement.

 

 

a “Cash Exercise”
with respect to                                                                                                  Warrant Shares; and/or

 

 

 

                                        a
“Cashless Exercise” with respect to Warrant Shares, resulting in a delivery obligation by the Company
to the Holder of shares of Common Stock representing the applicable Net Number and, if applicable, Market Price Net Number,
subject to adjustment.

 

 

In the event that the
Warrant may be exercised, to the extent allowed by the Warrant Agreement, through cashless exercise (i) the number of shares that
this Warrant is exercisable for would be determined in accordance with the relevant section of the Warrant Agreement which allows
for such cashless exercise and (ii) the holder hereof shall complete the following: The undersigned hereby irrevocably elects to
exercise the right, represented by this Warrant Certificate, through the cashless exercise provisions of the Warrant Agreement,
to receive shares of Common Stock. If said number of shares is less than all of the shares of Common Stock purchasable hereunder
(after giving effect to the cashless exercise), the undersigned requests that a new Warrant Certificate representing the remaining
balance of such shares be registered in the name of , whose address is , and that such Warrant Certificate be delivered to , whose
address is .

 

 

	Date: ____________, 20	 	(Signature)
	 	 	 
	 	 	(Address)
	 	 	 
	 	 	 
	 	 	(Tax Identification Number)
	 	 	 

 

    	B-4EX-4.1

 Exhibit 4.1 

SUBORDINATED NOTE 

NEW HAMPSHIRE THRIFT BANCSHARES, INC. 

6.75% Subordinated Note due November 1, 2024 

THIS OBLIGATION IS NOT A DEPOSIT AND IS NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION (THE “FDIC”) OR ANY OTHER GOVERNMENT
AGENCY OR FUND. 
 THIS OBLIGATION IS SUBORDINATED AND JUNIOR IN RIGHT OF PAYMENT TO THE OBLIGATIONS OF ISSUER TO ITS GENERAL AND SECURED CREDITORS AND
IS UNSECURED. IT IS INELIGIBLE AS COLLATERAL FOR ANY EXTENSION OF CREDIT BY NEW HAMPSHIRE THRIFT BANCSHARES, INC. (“ISSUER”) OR ANY OF ITS SUBSIDIARIES. 

THIS NOTE MAY BE SOLD ONLY IN COMPLIANCE WITH APPLICABLE FEDERAL AND STATE SECURITIES LAWS. THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE SECURITIES LAWS OR ANY OTHER APPLICABLE SECURITIES LAWS. NEITHER THIS NOTE NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THIS NOTE IS ISSUED SUBJECT TO THE RESTRICTIONS ON TRANSFER AND
OTHER PROVISIONS OF A SUBORDINATED NOTE PURCHASE AGREEMENT, DATED AS OF OCTOBER 29, 2014, BETWEEN ISSUER AND THE NOTEHOLDERS REFERRED TO THEREIN (THE “AGREEMENT”), A COPY OF WHICH IS ON FILE WITH ISSUER. THE NOTE REPRESENTED BY THIS
INSTRUMENT MAY NOT BE TRANSFERRED OR EXERCISED EXCEPT IN COMPLIANCE WITH THE AGREEMENT. ANY SALE OR OTHER TRANSFER NOT IN COMPLIANCE WITH THE AGREEMENT WILL BE VOID. 

THIS NOTE WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN MINIMUM DENOMINATIONS OF $10,000 AND MULTIPLES OF $1,000 IN EXCESS THEREOF. ANY ATTEMPTED TRANSFER OF
THIS NOTE IN A DENOMINATION OF LESS THAN $10,000 SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER. ANY SUCH PURPORTED TRANSFEREE SHALL BE DEEMED NOT TO BE THE HOLDER OF THIS NOTE FOR ANY PURPOSE, INCLUDING, BUT NOT LIMITED TO, THE
RECEIPT OF PAYMENTS ON THIS NOTE, AND SUCH PURPORTED TRANSFEREE SHALL BE DEEMED TO HAVE NO INTEREST WHATSOEVER IN THIS NOTE. 
 CERTAIN ERISA
CONSIDERATIONS: 
 THE HOLDER OF THIS NOTE, OR ANY INTEREST HEREIN, BY ITS ACCEPTANCE HEREOF OR THEREOF ALSO AGREES, REPRESENTS AND WARRANTS THAT IT IS
NOT AN EMPLOYEE BENEFIT PLAN, INDIVIDUAL RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE 

 
RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED (“ERISA”), OR SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE “CODE”) (EACH A
“PLAN”), OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE “PLAN ASSETS” BY REASON OF ANY PLAN’S INVESTMENT IN THE ENTITY, AND NO PERSON INVESTING “PLAN ASSETS” OF ANY PLAN MAY ACQUIRE OR HOLD THIS NOTE OR ANY
INTEREST HEREIN, UNLESS SUCH PURCHASER OR HOLDER IS ELIGIBLE FOR THE EXEMPTIVE RELIEF AVAILABLE UNDER U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTION 96-23, 95-60, 91-38, 90-1 OR 84-14 OR ANOTHER APPLICABLE EXEMPTION OR ITS PURCHASE
AND HOLDING OF THIS NOTE, OR ANY INTEREST HEREIN, ARE NOT PROHIBITED BY SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE WITH RESPECT TO SUCH PURCHASE AND HOLDING. ANY PURCHASER OR HOLDER OF THIS NOTE OR ANY INTEREST HEREIN WILL BE DEEMED
TO HAVE REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF THAT EITHER (i) IT IS NOT AN EMPLOYEE BENEFIT PLAN OR OTHER PLAN TO WHICH TITLE I OF ERISA OR SECTION 4975 OF THE CODE IS APPLICABLE, A TRUSTEE OR OTHER PERSON ACTING ON BEHALF OF ANY
SUCH EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY OTHER PERSON OR ENTITY USING THE “PLAN ASSETS” OF ANY SUCH EMPLOYEE BENEFIT PLAN OR PLAN TO FINANCE SUCH PURCHASE, OR (ii) SUCH PURCHASE OR HOLDING WILL NOT RESULT IN A PROHIBITED TRANSACTION
UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE FOR WHICH FULL EXEMPTIVE RELIEF IS NOT AVAILABLE UNDER APPLICABLE STATUTORY OR ADMINISTRATIVE EXEMPTION. 

ANY FIDUCIARY OF ANY PLAN WHO IS CONSIDERING THE ACQUISITION OF ANY OF THIS SUBORDINATED NOTE SHOULD CONSULT WITH HIS OR HER LEGAL COUNSEL PRIOR TO
ACQUIRING SUCH SUBORDINATED NOTE. 

  
 2 

   

THIS SUBORDINATED NOTE IS NOT A DEPOSIT AND IT IS NOT INSURED 

BY THE FEDERAL DEPOSIT INSURANCE CORPORATION. 
  

 
  

			
	 Certificate Number D-            

$            
	  	October 29, 2014

 NEW HAMPSHIRE THRIFT BANCSHARES, INC. 

6.75% Subordinated Note due November 1, 2024 

1. Payment. 
 (a) New
Hampshire Thrift Bancshares, Inc., a Delaware corporation (“Issuer”), for value received, hereby promises to pay to             , or registered assigns (the
“Noteholder”), the principal sum of             Dollars (U.S.) ($            ,000), plus accrued but unpaid
interest, on November 1, 2024 (the “Maturity Date”) and to pay interest on such principal amount at the rate of 6.75% per annum (computed on the basis of a 360-day year of twelve 30-day months) from October 29, 2014,
or from the most recent Interest Payment Date to which interest has been paid or duly provided, on February 1, May 1, August 1 and November 1 of each year (each, an “Interest Payment Date”), commencing
February 1, 2015, until the principal hereof is paid or made available for payment. This Subordinated Note (this “Note”) is issued pursuant to the terms of that certain Subordinated Note Purchase Agreement of even date herewith
by and between Issuer and the Noteholder (as may be amended, restated, supplemented or modified from time to time, the “Agreement”). All capitalized terms used but not defined herein shall have the respective meanings ascribed to
them in the Agreement. 
 (b) Any payment of principal of or interest on this Note that would otherwise become due and payable on a day
which is not a Business Day shall become due and payable on the next succeeding Business Day, with the same force and effect as if made on the date for payment of such principal or interest, and no interest shall accrue in respect of such payment by
reason of such delay. The term “Business Day” means any day that is not a Saturday or Sunday and that is not a day on which banks in the State of New Hampshire are generally authorized or required by law or executive order to be
closed. 
 (c) Interest on this Note will accrue at the rate of 6.75% per annum from and including October 29, 2014, to but
excluding the first Interest Payment Date and then from and including the most recent Interest Payment Date to which interest has been paid or duly provided for to but excluding the next Interest Payment Date or Maturity Date, as the case may be
(each such period an “Interest Period”). The amount of accrued interest that Issuer will pay for any Interest Period will be calculated by multiplying the face amount of this Note by an accrued interest factor. This accrued interest
factor is computed by adding the interest factor calculated for each day from October 29, 2014, or from the last date interest was paid, to the date for which accrued interest is being calculated. The interest factor for each day is computed by
dividing the interest rate applicable to that day by 360. 

  
 3 

 All percentages resulting from any calculation of the interest rate on this Note will be rounded
to the nearest one hundred-thousandth of a percentage point with five one millionths of a percentage point rounded upwards (e.g., 9.876545% (or .09876545) would be rounded to 9.87655% (or .0987655)), and all dollar amounts used in or resulting from
such calculation on this Note will be rounded to the nearest cent (with one-half cent being rounded upward). Each calculation of the interest rate on this Note by Issuer will (in the absence of manifest error) be final and binding on the Noteholder
and Issuer. 
 2. Subordinated Notes. This Note is one of a duly authorized issue of notes of Issuer designated as 6.75% Subordinated
Notes due November 1, 2024, and issued by Issuer on or about October 29, 2014 (herein collectively referred to as the “Subordinated Notes”), initially limited in aggregate principal amount to
$        ,000,000. 
 3. Subordination. The indebtedness of Issuer evidenced by the
Subordinated Notes, including the principal and interest on this Note, shall be subordinate and junior in right of payment to the following, whether now outstanding or subsequently created, assumed or incurred (collectively, “Senior
Indebtedness”): (a) all indebtedness of Issuer for borrowed or purchased money, whether or not evidenced by bonds, debentures, securities, notes or other written instruments; (b) any deferred obligations of Issuer for the payment
of the purchase price of property, goods, materials, assets or services purchased or acquired by Issuer and accrued liabilities arising in the ordinary course of business; (c) all obligations, contingent or otherwise, of Issuer in respect of
any letters of credit, bankers’ acceptances, security purchase facilities and similar credit transactions; (d) any capital lease obligations of Issuer; (e) all obligations of Issuer in respect of interest rate swap, cap or other
agreements, interest rate future or option contracts, currency swap agreements, currency future or option contacts, commodity contracts and other similar arrangements; (f) any obligation of Issuer to its general creditors, as defined for
purposes of the capital adequacy regulations of the Board of Governors of the Federal Reserve System applicable to Issuer, as the same may be amended or modified from time to time (the “Capital Adequacy Regulations”); (g) all
obligations of the type referred to in clauses (a) through (f) of other persons for the payment of which Issuer is responsible or liable as obligor, guarantor or otherwise; and (h) all obligations of the types referred to in
clauses (a) through (g) of other persons secured by a lien on any property or asset of Issuer; except “Senior Indebtedness” does not include (i) the Subordinated Notes, (ii) any obligation that by its terms is on
parity with the Subordinated Notes, (iii) any indebtedness between Issuer and any of its subsidiaries or affiliates or (iv) the Junior Subordinated Indebtedness (as defined below). 

In the event of any insolvency, dissolution, assignment for the benefit of creditors, reorganization, restructuring of debt, marshaling of
assets and liabilities or similar proceedings or any liquidation or winding up of or relating to Issuer, whether voluntary or involuntary, holders of Senior Indebtedness shall be entitled to be paid in full before any payment shall be made on
account of the principal of or interest on the Subordinated Notes, including this Note. In the event of any such proceeding, after payment in full of all sums owing with respect to the Senior Indebtedness, the registered holders of the Subordinated
Notes from time to time (the “Noteholders”), together with the holders of any obligations of Issuer ranking on a parity with the Subordinated Notes, shall be entitled to be paid from the remaining assets of Issuer the unpaid
principal thereof and the unpaid interest thereon before any payment or other distribution, whether in cash, property or otherwise, shall be made on account of any capital stock or any 

  
 4 

 
present or future obligations of Issuer ranking junior to the Subordinated Notes (collectively, “Junior Subordinated Indebtedness”), which includes any obligation that by its
terms is subordinated to the Subordinated Notes. 
 If there shall have occurred and be continuing (a) a default in any payment with
respect to any Senior Indebtedness or (b) an event of default with respect to any Senior Indebtedness as a result of which the maturity thereof is accelerated, unless and until such payment default or event of default shall have been cured or
waived or shall have ceased to exist, no payments shall be made by Issuer with respect to this Note. The provisions of this paragraph shall not apply to any payment with respect to which the immediately preceding paragraph of this
Section 3 would be applicable. 
 Nothing herein shall impair the obligation of Issuer, which is absolute and unconditional, to
pay the principal of and interest on this Note in accordance with its terms. Nothing herein shall act to prohibit, limit or impede Issuer from issuing additional debt of Issuer having the same rank as the Subordinated Notes or which may be junior or
senior in rank to the Subordinated Notes. 
 4. Merger and Sale of Assets. Issuer shall not consolidate or merge into another entity
or convey, transfer or lease its properties and assets substantially as an entirety to any person, unless: 
 (a) the continuing entity
which results from such consolidation or merger, if not Issuer, or the person which acquires by conveyance or transfer or which leases the properties and assets of Issuer substantially as an entirety shall be a corporation, association or other
legal entity organized and existing under the laws of the United States of America, any State thereof or the District of Columbia and expressly assumes the due and punctual payment of the principal of and any premium and interest on the Subordinated
Notes according to their terms, and the due and punctual performance of all covenants and conditions hereof on the part of Issuer to be performed or observed; and 

(b) immediately after giving effect to such transaction, no Event of Default (as defined below), and no event which, after notice or lapse of
time or both, would become an Event of Default, shall have happened and be continuing. 
 5. Events of Default; Acceleration. If any
of the following events shall occur and be continuing (each an “Event of Default”): 
 (a) Issuer or any major subsidiary
depository institution (as defined for purposes of the Capital Adequacy Regulations, a “Major Subsidiary Depository Institution”) of Issuer shall commence a voluntary case under any applicable bankruptcy, insolvency, liquidation,
reorganization or other similar law now or hereafter in effect, or shall consent to the appointment of a receiver, liquidator, trustee or other similar official in any liquidation, insolvency or similar proceeding with respect to Issuer or all or
substantially all of its property, or shall make an assignment for the benefit of creditors; or 
 (b) a court or other governmental agency
or body having jurisdiction shall enter a decree or order for the appointment of a receiver, liquidator, trustee or other similar official in 

  
 5 

 
any liquidation, insolvency or similar proceeding with respect to Issuer or a Major Subsidiary Depository Institution of Issuer or all or substantially all of the property of Issuer or a Major
Subsidiary Depository Institution of Issuer, or for the winding up of the affairs or business of Issuer or a Major Subsidiary Depository Institution, and such decree or order shall have remained in force for 60 days; or 

(c) Issuer is notified that it is considered an institution in “troubled condition” within the meaning of 12 U.S.C.
Section 1831i and the regulations promulgated thereunder; or 
 (d) Issuer (a) becomes insolvent or is unable to pay its debts as
they mature, (b) makes an assignment for the benefit of creditors, or (c) admits in writing its inability to pay its debts as they mature; or 

(e) Issuer materially breaches any of the representations, warranties or covenants made by it in the Agreement; or 

(f) Issuer fails to make any required payment of principal or interest hereunder when due and payable (and, in the case of payment of
interest, such failure to pay shall have continued for 30 calendar days); 
 then, in the case of an Event of Default described in the foregoing clauses
(a) or (b), unless the principal of this Note already shall have become due and payable, the Noteholder of this Note, by notice in writing to Issuer, may declare the principal amount of this Note to be due and payable immediately and, upon any
such declaration the same shall become and shall be immediately due and payable. Issuer waives demand, presentment for payment, notice of nonpayment, notice of protest, and all other notices. 

Issuer, within 90 calendar days after the receipt of written notice from the Noteholder or any other holder of the Subordinated Notes of
the occurrence of an Event of Default with respect to this Note, shall mail to all the Noteholders, at their addresses shown on the Security Register (as defined in Section 10 below), such written notice of Event of Default, unless such Event
of Default shall have been cured or waived before the giving of such notice as certified by Issuer in writing. 
 6. Failure to Make
Payment. In the event of the occurrence of an Event of Default described in Section 5(f), Issuer will, upon demand of the Noteholder, pay to the Noteholder the whole amount then due and payable on this Note for principal and interest
(without acceleration), with interest on the overdue principal and interest at the rate borne by this Note, to the extent permitted by applicable law. If Issuer fails to pay such amount upon such demand, the Noteholder may, among other things,
institute a judicial proceeding for the collection of the sums so due and unpaid, may prosecute such proceeding to judgment or final decree and may enforce the same against Issuer and collect the amounts adjudged or decreed to be payable in the
manner provided by law out of the property of Issuer. 
 During the continuance of such an Event of Default described in Section 5(f),
Issuer shall not (a) declare or pay any dividends or distributions on, or redeem, purchase, acquire, or make a liquidation payment with respect to, any of Issuer’s capital stock, (b) make any payment of principal or interest or
premium, if any, on or repay, repurchase or redeem any debt securities of 

  
 6 

 
Issuer that rank equal with or junior to the Subordinated Notes, or (c) make any payments under any guarantee that ranks equal with or junior to the Subordinated Notes, other than
(i) any dividends or distributions in shares of, or options, warrants or rights to subscribe for or purchase shares of, any class of Issuer’s common stock, (ii) any declaration of a noncash dividend in connection with the
implementation of a stockholders’ rights plan, or the issuance of stock under any such plan in the future, or the redemption or repurchase of any such rights pursuant thereto, (iii) as a result of a reclassification of Issuer’s
capital stock or the exchange or conversion of one class or series of Issuer’s capital stock for another class or series of Issuer’s capital stock, (iv) the purchase of fractional interests in shares of Issuer’s capital stock
pursuant to the conversion or exchange provisions of such capital stock or the security being converted or exchanged, or (v) purchases of any class of Issuer’s common stock related to the issuance of common stock or rights under any of
benefit plans for Issuer’s directors, officers or employees or any of Issuer’s dividend reinvestment plans. 
 7. Redemption;
Prepayment; Capital Treatment Event Redemption . Issuer, in its discretion, shall have the right to redeem or prepay any or all of the Subordinated Notes, including this Note, in whole or in part, without premium or penalty, at any time on or
after November 1, 2019, and prior to the Maturity Date, but in all cases in a principal amount with integral multiples of $1,000, on any Interest Payment Date at a price of 100% of the principal amount of this Note to be redeemed or prepaid on
such date, plus interest accrued and unpaid to the date of redemption or prepayment. If less than the entire amount of the Subordinated Note is to be redeemed or prepaid, the notice of redemption or prepayment shall state the portion of the
principal amount to be redeemed or prepaid and shall state that on and after the date fixed for redemption or prepayment, upon surrender of such Subordinated Note, a new Subordinated Note in principal amount equal to the unpaid portion thereof will
be issued. 
 If all or any portion of the Subordinated Notes cease to be deemed to be Tier 2 Capital due to a change in applicable capital
regulations (a “Capital Treatment Event”), Issuer shall have the right to redeem, on any Interest Payment Date, all or such portion of the Subordinated Notes at the applicable redemption price as described in the next sentence. If
the Capital Treatment Event shall occur (a) prior to November 1, 2019, the redemption price shall equal the Special Redemption Price for the Subordinated Notes to be redeemed and (b) on or subsequent to November 1, 2019, the
redemption price shall be equal to 100% of the principal amount of the Subordinated Notes to be redeemed, plus accrued but unpaid interest to the date of redemption. As used in this Section 7, “Special Redemption Price” shall
refer to an amount in cash equal to 105% of the principal amount of Subordinated Notes to be redeemed prior to November 1, 2015 and thereafter equal to the percentage of the principal amount of the Subordinated Notes that is specified below
outstanding on the date of the relevant Special Event plus, in each case, unpaid interest accrued thereon to the date of redemption: 

  
 7 

			
	 Special Redemption During the

12-Month Period Beginning November 1,
	  	 Percentage of Principal

Amount

	 2015
	  	104%
	 2016
	  	103%
	 2017
	  	102%
	 2018
	  	101%

 In the case of any redemption or prepayment of this Note, Issuer will give the holders of the Subordinated
Notes to be redeemed or prepaid notice not less than 30 nor more than 45 calendar days prior to the redemption or prepayment date as to the aggregate principal amount to be redeemed or prepaid. In a case where Issuer is making a redemption or
prepayment with respect to the Subordinated Notes in an amount less than the aggregate amount of principal of the Subordinated Notes then outstanding, Issuer shall effect such partial redemption on a pro rata basis; provided that in no case
shall any Subordinated Notes held by any parent company or subsidiary of Issuer be deemed to be outstanding. 
 Any such redemption or
prepayment shall be subject to the prior approval of the Board of Governors of the Federal Reserve System (or its designee) or any successor agency to the extent such approval shall then be required by law, regulation or policy. 

8. Repayment; Payment Procedures. Issuer shall repay the aggregate principal amount of the Subordinated Notes plus all accrued but
unpaid interest thereon in full on the Maturity Date. Payment of the principal and interest payable on the Maturity Date will be made by check, or by wire transfer in immediately available funds to a bank account in the United States designated by
the registered Noteholder of this Note if such Noteholder shall have previously provided wire instructions to Issuer, upon presentation and surrender of this Note at the Payment Office (as defined in Section 13 below) or at such other
place or places as Issuer shall designate by notice to the registered Noteholders as the Payment Office, provided that this Note is presented to Issuer in time for Issuer to make such payments in such funds in accordance with its normal
procedures. Payments of interest (other than interest payable on the Maturity Date) shall be made by wire transfer in immediately available funds (if such Noteholder shall have previously provided wire transfer instructions to Issuer) or check
mailed to the registered Noteholder as such person’s address appears on the Security Register (as defined below). Interest payable on any Interest Payment Date shall be payable to the Noteholder in whose name this Note is registered at the
close of business on the January 15, April 15, July 15 or October 15, as the case may be (whether or not a Business Day), next preceding such Interest Payment Date (such date being referred to herein as the
“Regular Record Date”) for such Interest Payment Date, except that interest not paid on the Interest Payment Date, if any, will be paid to the Noteholder in whose name this Note is registered at the close of business on a Special
Record Date fixed by Issuer (a “Special Record Date”) notice of which shall be given to the holder not less than 10 calendar days prior to such Special Record Date. (The Regular Record Date and Special Record Date are referred to
herein collectively as the “Record Dates”). To the extent permitted by applicable law, interest shall accrue, at the rate at which interest accrues on the principal of this Note, on any amount of principal or interest on this Note
not paid when due. All payments on this Note shall be applied first to accrued interest and then the balance, if any, to principal. Presentment and surrender of this Note are hereby waived by Issuer. 

  
 8 

 9. Form of Payment. Payments of principal and interest on this Note shall be made in such
coin or currency of the United States of America as at the time of payment shall be legal tender for the payment of public and private debts. 

10. Registration of Transfer; Security Register. Except as otherwise provided herein, this Note is transferable in whole or in part,
and may be exchanged for a like aggregate principal amount of Subordinated Notes of other authorized denominations, by the Noteholder in person, or by his attorney duly authorized in writing, at the Payment Office (as defined in
Section 13 below). Issuer shall maintain a register providing for the registration of the Subordinated Notes and any exchange or transfer thereof (the “Security Register”). Upon surrender or presentation of this Note for
exchange or registration of transfer, Issuer shall execute and deliver in exchange therefor a Subordinated Note or Subordinated Notes in substantially the form hereof of like aggregate principal amount, each in a minimum denomination of $10,000 or
any amount in excess thereof which is an integral multiple of $1,000 (and, in the absence of an opinion of counsel satisfactory to Issuer to the contrary, bearing the restrictive legend(s) set forth hereinabove) and that is or are registered in such
name or names requested by the Noteholder. Any Note presented or surrendered for registration of transfer or for exchange shall be duly endorsed and accompanied by a written instrument of transfer in such form as is attached hereto and incorporated
herein, duly executed by the Noteholder or his attorney duly authorized in writing, with such tax identification number or other information for each person in whose name a Subordinated Note is to be issued, and accompanied by evidence of compliance
with any restrictive legend(s) appearing on such Subordinated Note or Subordinated Notes as Issuer may reasonably request to comply with applicable law. No exchange or registration of transfer of this Note shall be made during the period on or after
the 15 day immediately preceding the Maturity Date. This Note is subject to the restrictions on transfer of the Agreement, a copy of which is on file with Issuer. 

11. Charges and Transfer Taxes. No service charge (other than any cost of delivery) shall be imposed for any exchange or registration
of transfer of this Note, but Issuer may require the payment of a sum sufficient to cover any stamp or other tax or governmental fee or charge that may be imposed in connection therewith (or presentation of evidence that such tax, charge or fee has
been paid). 
 12. Ownership. Prior to due presentment of this Note for registration of transfer, Issuer may treat the Noteholder in
whose name this Note is registered in the Security Register as the absolute owner of this Note for receiving payments of principal and interest on this Note and for all other purposes whatsoever, whether or not this Note be overdue, and Issuer shall
not be affected by any notice to the contrary. 
 13. Notices. All notices to Issuer under this Note shall be in writing and
addressed to Issuer at New Hampshire Thrift Bancshares, Inc., 9 Main Street, P. O. Box 9, Newport, New Hampshire 03773, Attention: Stephen R. Theroux, President and Chief Executive Officer, or to such other address as Issuer may notify to the
Noteholder (the “Payment Office”). All notices to the Noteholders shall be in writing and sent by first-class mail to each Noteholder at his or its address as set forth in the Security Register. 

  
 9 

 14. Denominations. The Subordinated Notes are issuable only as fully registered Notes
without interest coupons in minimum denominations of $10,000 or any amount in excess thereof which is an integral multiple of $1,000. 
 15.
Absolute and Unconditional Obligation of Issuer. No provisions of this Note shall alter or impair the obligation of Issuer, which is absolute and unconditional, to pay the principal and interest on this Note at the times, places and rate, and
in the coin or currency, herein prescribed. 
 16. Waiver and Consent. 

(a) Any consent or waiver given by the Noteholder of this Note shall be conclusive and binding upon such Noteholder and upon all future
Noteholders of this Note and of any Note issued upon the registration of transfer hereof or in exchange therefor or in lieu hereof, whether or not notation of such consent or waiver is made upon this Note. 

(b) No delay or omission of the Noteholder to exercise any right or remedy accruing upon any Event of Default shall impair such right or
remedy or constitute a waiver of any such Event of Default or an acquiescence therein. 
 (c) Any insured depository institution which shall
be a Noteholder of this Note or which otherwise shall have any beneficial ownership interest in this Note shall, by its acceptance of such Note (or beneficial interest therein), be deemed to have waived any right of offset with respect to the
indebtedness evidenced thereby. 
 17. Further Issues. Provided that such notes qualify as Tier 2 Capital (as defined in the
Agreement), Issuer may, without the consent of the holders of the Subordinated Notes, create and issue additional notes having the same terms and conditions of the Subordinated Notes (except for the issue date, interest rate, issue price, and
maturity date) so that such further notes shall be consolidated and form a single series with the Subordinated Notes. Any such issuance will either be registered or issued pursuant to an exemption from registration under the Securities Act. 

18. Governing Law; Interpretation. This Note shall be governed by and construed in accordance with applicable federal law of the United
States of America and the laws of the State of Delaware, without regard to conflict of laws principles of said state. This Note is intended to meet the criteria for qualification of the outstanding principal as Tier 2 Capital under the Capital
Adequacy Regulations, and the terms hereof shall be interpreted in a manner to satisfy such intent. 
 19. Priority. The Subordinated
Notes rank pari passu among themselves and pari passu, in the event of any insolvency proceeding, dissolution, assignment for the benefit of creditors, reorganization, restructuring of debt, marshaling of assets and liabilities or
similar proceeding or any liquidation or winding up of Issuer, with all other present or future unsecured subordinated debt obligations of Issuer, except any unsecured subordinated debt that may be expressly stated to be senior to or subordinate to
the Subordinated Notes. Any Subordinated Notes held by any parent company or subsidiary of Issuer shall not be deemed to be outstanding. 

  
 10 

 IN WITNESS WHEREOF, the undersigned has caused this Note to be duly executed and attested and its
corporate seal to be hereunto affixed. 
  

									
	ATTEST:	 		 		 	NEW HAMPSHIRE THRIFT BANCSHARES, INC.
				
	  
	 		 	By:	 	  

	Name:  Laura Jacobi	 		 		 	Name:  Stephen R. Theroux
	Title:  First Senior Vice President and Chief Financial Officer	 		 		 	Title:  President and Chief Executive Officer

 ASSIGNMENT AGREEMENT 

To assign this Note, fill in the form below: 

I or we assign and transfer this Note to: 
  

 
 (Print or type assignee’s name,
address and zip code) 
  
  

(Insert assignee’s social security or tax I.D. No.) 

and irrevocably appoint                      agent
to transfer this Note on the books of Issuer. The agent may substitute another to act for him. 
  

					
	Date:	 	Your Signature:	 	  

 

			
	Signature Guarantee:	 	  

		 	                (Signature must be guaranteed)

 
  

Sign exactly as your name appears on the other side of this Note. 

The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to Rule 17Ad-15 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). 

The undersigned hereby certifies that it  ̈ is /  ̈ is not an
Affiliate of Issuer and that, to its knowledge, the proposed transferee  ̈ is /  ̈ is not an Affiliate of Issuer. 

In connection with any transfer or exchange of any of the Notes evidenced by this certificate occurring prior to the date that is one year after the later of
the date of original issuance of such Notes and the last date, if any, on which such Notes were owned by Issuer or any Affiliate of Issuer, the undersigned confirms that such Notes are being: 

CHECK ONE BOX BELOW: 
  

					
	(1)	  	 ̈	  	acquired for the undersigned’s own account, without transfer; or
			
	(2)	  	 ̈	  	transferred to Issuer; or
			
	(3)	  	 ̈	  	transferred pursuant to and in compliance with Rule 144A under the Securities Act of 1933, as amended (the “Securities Act”); or
			
	(4)	  	 ̈	  	transferred pursuant to an effective registration statement under the Securities Act; or
			
	(5)	  	 ̈	  	transferred pursuant to and in compliance with Regulation S under the Securities Act; or

  
 1 

							
	 (6)
	  	 ̈	 	  	  	transferred to an institutional “accredited investor” (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act) or an “accredited investor” (as defined in Rule 501(a)(4) under the Securities
Act), that has furnished a signed letter containing certain representations and agreements; or
			
	 (7)
	  	 ̈	 	  	  	transferred pursuant to another available exemption from the registration requirements of the Securities Act.

 Unless one of the boxes is checked, Issuer will refuse to register this Note in the name of any person other than the
registered Noteholder thereof; provided, however, that if box (5), (6) or (7) is checked, Issuer may require, prior to registering any such transfer of this Note, in its sole discretion, such legal opinions, certifications
and other information as Issuer may reasonably request to confirm that such transfer is being made pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act such as the exemption provided
by Rule 144 under such Act. 
  

							
		 		 	  

		 		 	Signature
	Signature Guarantee:	 		 	
			
	  
	 		 	  

	(Signature must be guaranteed)	 		 	Signature

 The signature(s) should be guaranteed by an eligible guarantor institution (banks, stockbrokers, savings and loan associations
and credit unions with membership in an approved signature guarantee medallion program), pursuant to Rule 17Ad-15 under the Exchange Act. 
 TO BE COMPLETED
BY PURCHASER IF BOX (1) OR (3) ABOVE IS CHECKED. 
 The undersigned represents and warrants that it is purchasing this Note for its own account or
an account with respect to which it exercises sole investment discretion and that it and any such account is a “qualified institutional buyer” within the meaning of Rule 144A under the Securities Act, and is aware that the sale to it is
being made in reliance on Rule 144A and acknowledges that it has received such information regarding Issuer as the undersigned has requested pursuant to Rule 144A or has determined not to request such information and that it is aware that the
transferor is relying upon the undersigned’s foregoing representations in order to claim the exemption from registration provided by Rule 144A. 
  

			
	Dated:	 	  

  
 2

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