Document:

EXHIBIT 10.12

 

REVOLVING
CREDIT and Letter of Credit Support AGREEMENT

 

THIS REVOLVING CREDIT
AND LETTER OF CREDIT SUPPORT AGREEMENT is dated November 15, 2013, among AXION INTERNATIONAL HOLDINGS, INC., a Colorado corporation
(“Parent”), AXION INTERNATIONAL, INC., a Delaware corporation and a wholly-owned subsidiary of Parent (“AXI”),
AXION Recycled Plastics Incorporated, an Ohio corporation and a wholly-owned subsidiary
of AXI (“Axion Recycling” and together with Parent and AXI, each a “Borrower” and collectively,
“Borrowers”), as borrowers, and the lenders identified on the signature page hereto (each, a “Lender”
and collectively, “Lenders”).

 

RECITAL

 

WHEREAS, Borrowers
and Lenders have agreed to enter into a loan facility under which Lenders will lend up to $2,500,000 to Borrowers, on a revolving
basis, including providing letter of credit support to Borrowers of up to $500,000, pursuant to the terms and conditions set forth
herein and in the documents and instruments entered into in connection herewith.

 

NOW, THEREFORE, in
consideration of the mutual agreements herein made, the parties hereto, intending to be legally bound, hereby agree as follows:

 

AGREEMENTS

 

Section
1.    Definitions.

 

1.1.           
Capitalized Terms. For the purposes of this Agreement (as defined below), the following capitalized terms
shall have the following meanings:

 

“Accounts”
has the meaning ascribed to it in the UCC.

 

“Aggregate
Revolving Commitment” means the sum of the Revolving Commitments of all Lenders.

 

“Agreement”
means this Revolving Credit and Letter of Credit Support Agreement as the same may hereafter be amended from time to time.

 

“Bankruptcy
Code” means the United States Bankruptcy Code of 1978, as amended from time to time, or any successor statute.

 

“Collateral”
means and includes all Accounts and Inventory of Borrowers, whether now owned or hereafter acquired, together with (a) all
books, records, ledger cards and other property pertaining to any of the foregoing; and (b) all products and proceeds of any of
the foregoing, and all insurance proceeds related to any of the foregoing, including, without limitation, any claims against third
parties for loss or damage to or destruction of any or all of the foregoing and any cash, negotiable instruments and other instruments
of money, chattel paper, security agreements or other documents.

 

“Common Stock”
means shares of Parent’s common stock, no par value.

 

    	 

    	 

    

 

“Credit Documents”
means, collectively, this Agreement, the Notes and the Security Agreement.

 

“Credit Extension”
means a borrowing of a Loan hereunder or the issuance or increase in the amount of a Letter of Credit issued on behalf of the LC
Support Issuer pursuant to the terms hereof.

 

“Debt”
means, as to any Person, without duplication: (a) all obligations of such Person for borrowed money or evidenced by bonds,
debentures, notes or similar instruments; (b) all obligations of such Person for the deferred purchase price of property or
services; (c) all capital lease obligations of such Person; (d) all obligations of others of the kind described in clauses (a),
(b) or (c) hereof secured by a Lien on any asset or revenues of such Person or a subsidiary of such Person, whether or not such
obligation is assumed by such Person or the subsidiary of such Person; (e) all obligations of others of the kind described
in clauses (a), (b) or (c) hereof to the extent directly or indirectly guaranteed by such Person or a subsidiary of such Person
or in respect of which such Person or a subsidiary of such Person is contingently or otherwise liable; and (f) all obligations
of such Person, contingent or otherwise, in respect of any letters of credit, bankers’ acceptances or similar instruments.

 

“Default”
means any condition or event which constitutes an Event of Default or which would become an Event of Default with the giving of
notice or lapse of time or both.

 

“Dollars”
and “$” means dollars in lawful money of the United States of America.

 

“Event of
Default” has the meaning set forth in Section 7.1 hereof.

 

“GAAP”
means generally accepted accounting principles applied on a consistent basis.

 

“Government”
means the government of the United States of America, the government of any other nation, any political subdivision of the United
States of America or any other nation (including, without limitation, any state, territory, federal district, municipality or political
entity).

 

“Interest
Rate” means Twelve Percent (12%) per annum.

 

“Inventory”
has the meaning ascribed to it in the UCC.

 

“LC Obligations”
means, at the time in question, the sum of all Matured LC Obligations plus the Maximum LC Drawing Amount.

 

“LC Sublimit”
means $500,000.

 

“LC Support
Issuer” means MLTM Lending, LLC, a Maryland limited liability company.

 

“Letter of
Credit” means any letter of credit issued on behalf of the LC Support Issuer at the application and for the account of
a Borrower in support of such Borrower’s payment obligations with respect to any of its vendors, lessors or otherwise.

 

“Lien”
means, with respect to any asset, any security interest, mortgage, pledge, assignment, lien or other encumbrance of any kind.

 

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“Loan”
means a Revolving Credit Loan.

 

“Matured LC
Obligations” means all amounts paid by the LC Support Issuer on drafts or demands for payment drawn or made or purported
to be made under any Letter of Credit and all other amounts due and owing to the LC Support Issuer under any application for any
Letter of Credit, to the extent the same have not been repaid to the LC Support Issuer.

 

“Material
Adverse Change” or “Material Adverse Effect” means a material adverse change in, or material adverse
effect on, the business, results of operations, operations, financial condition, cash flows or assets of a Borrower, or on the
ability of a Borrower to perform its obligations hereunder or under the Credit Documents or on the ability of Lenders to enforce
the terms of any of the Credit Documents.

 

“Maturity
Date” means December 31, 2015.

 

“Maximum LC
Drawing Amount” means, at the time in question, the sum of the maximum amounts which the LC Support Issuer might then
or thereafter be called upon to advance under all Letters of Credit which are then outstanding.

 

“Note”
and “Notes” means a Revolving Credit Note and all of the Revolving Credit Notes, respectively, as the same may
hereafter be amended from time to time.

 

“Percentage
Share” means the percentage obtained by dividing each Lender’s Revolving Commitment over the Aggregate Revolving
Commitment.

 

“Permitted
Liens” has the meaning set forth in the Security Agreement.

 

“Person”
means any individual, corporation, partnership, association, trust or other entity or organization, including a Government.

 

“Post-Default
Rate” means Fifteen Percent (15%) per annum.

 

“Principal
Market” means the OTC Bulletin Board unless and until the Common Stock is listed on an exchange in which event the Principal
Market shall be such exchange.

 

“Required
Lenders” means a Lender or Lenders whose aggregate Percentage Share exceeds fifty percent (50%).

 

“Revolving
Commitment” means, with respect to each Lender, the sum of (y) the commitment of such Lender to make Revolving Credit
Loans plus (z) as to Lender that is the LC Support Issuer, the LC Sublimit, as the same may be reduced hereunder
from time to time. The amount of each Lender’s Revolving Commitment on the date here is set forth on Schedule 1.

 

“Revolving
Credit Loans” has the meaning set forth in Section 2.1 hereof.

 

“Revolving
Credit Note” has the meaning set forth in Section 2.2 hereof.

 

“Secured Obligations”
means all loans, advances, indebtedness and each and every other obligation or liability of Borrowers to any Lender under this
Agreement.

 

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“Security
Agreement” means the Security Agreement dated concurrently herewith executed and delivered by Borrowers to Lenders, as
the same may be hereafter amended from time to time.

 

“Taxes”
means any taxes, levies, imposts, deductions, assessments, charges or withholdings, and all liabilities with respect thereto of
any nature whatsoever imposed by any taxing authority.

 

“Trading Day”
means any day on which the Common Stock is traded on the Principal Market, or, if the Principal Market is not the principal trading
market for the Common Stock, then on the principal securities exchange or securities market on which the Common Stock is then traded;
provided that “Trading Day” shall not include any day on which the Common Stock is scheduled to trade on such
exchange or market for less than 4.5 hours or any day that the Common Stock is suspended from trading during the final hour of
trading on such exchange or market (or if such exchange or market does not designate in advance the closing time of trading on
such exchange or market, then during the hour ending at 4:00:00 p.m., Maryland time).

 

“UCC”
means the Uniform Commercial Code as enacted in the State of Maryland.

 

“Weighted
Average Price” means, for any security as of any date, the dollar volume-weighted average price for such security on
the Principal Market during the period beginning at 9:30:01 a.m., Maryland time (or such other time as the Principal Market
publicly announces is the official open of trading), and ending at 4:00:00 p.m., Maryland time (or such other time as the Principal
Market publicly announces is the official close of trading) as reported by Bloomberg through its “Volume at Price”
functions, or, if the foregoing does not apply, the dollar volume-weighted average price of such security in the over-the-counter
market on the electronic bulletin board for such security during the period beginning at 9:30:01 a.m., Maryland time (or such other
time as such market publicly announces is the official open of trading), and ending at 4:00:00 p.m., Maryland time (or such other
time as such market publicly announces is the official close of trading) as reported by Bloomberg, or, if no dollar volume-weighted
average price is reported for such security by Bloomberg for such hours, the average of the highest closing bid price and the lowest
closing ask price of any of the market makers for such security as reported in the “pink sheets” by Pink Sheets LLC
(formerly the National Quotation Bureau, Inc.). If the Weighted Average Price cannot be calculated for a security on a particular
date on any of the foregoing bases, the Weighted Average Price of such security on such date shall be the fair market value as
determined by the Board of Directors of Parent in good faith. All determinations of Weighted Average Price shall be appropriately
adjusted for any stock dividend, stock split, stock combination, reclassification or similar transaction during the applicable
calculation period.

 

1.2.           
Use of Proceeds. Parent, AXI and Axion Recycling shall use the proceeds of the Loan and shall ensure that
all Letters of Credit are used for general working capital purposes in connection with the operation of their facilities located
in Waco, Texas and Zanesville, Ohio, respectively.

 

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Section
2.    Revolving Credit Loans; Letters of
Credit; Borrowing Procedure; Requesting Letters of Credit.

 

2.1.           
Revolving Credit Loans. During the period from and including the date hereof to but excluding the Maturity
Date, Lenders agree, on the terms and conditions set forth in this Agreement, to make one or more loans (the “Revolving
Credit Loans”) to Borrowers in minimum draws of One Hundred Thousand Dollars ($100,000) and in an aggregate principal
amount at any one time outstanding up to, but not exceeding, with respect to (a) all Lenders, the Aggregate Revolving Commitment
and (b) each Lender, such Lender’s Revolving Commitment. Subject to the terms of this Agreement, during such period, Borrowers
may borrow, repay and reborrow up to the amount of the Aggregate Revolving Commitment by means of Revolving Credit Loans.

 

2.2.           
Revolving Credit Notes. The Revolving Credit Loans made by Lenders shall be evidenced by a promissory note
of Borrowers issued to each Lender, in substantially the form attached hereto as Exhibit A (a “Revolving Credit
Note”), dated the date hereof, payable to the order of such Lender in a principal amount equal to the amount of such
Lender’s Revolving Commitment. The date, amount and interest rate of each Revolving Credit Loan made by Lenders to Borrowers,
and each payment made on account of the principal thereof, shall be recorded by Lenders on their books and records, such recordation
to constitute conclusive evidence in the absence of manifest error of the amount of such Revolving Credit Loans and payments.

 

2.3.           
Revolving Credit Loan Borrowing Procedure. A Borrower may request a Revolving Credit Loan by written notice
to Lenders, via facsimile transmission, electronic mail or otherwise, no less than five (5) business days prior to the date such
Borrower requests that such Revolving Credit Loan be advanced. With respect to any such request for a Revolving Credit Loan, each
Lender shall make a Revolving Credit Loan in the amount equal to the product obtained by multiplying (y) such Lender’s Percentage
Share times (z) the amount of the Revolving Credit Loan so requested, by wire transfer to an account designated by such
Borrower. Notwithstanding any provision in this Agreement to the contrary, no Lender shall be obligated to make any disbursement
or advance to a Borrower during the continuance of an Event of Default.

 

2.4.           
Letters of Credit2.4.1.     
. During the period from and including the date hereof to but excluding the Maturity Date, a Borrower may at any time request
the LC Support Issuer to cause one or more Letters of Credit to be issued on its behalf, for the account of such Borrower, or to
increase the amount of or otherwise amend or extend, one or more such Letters of Credit; provided that, after taking each
such Letter of Credit into account, (a) the aggregate amount of LC Obligations at such time does not exceed the LC Sublimit; (b)
the aggregate amount of LC Obligations at such time plus the outstanding principal amount of all Revolving Credit Loans does not
exceed the Aggregate Revolving Commitment; and (c) the expiration date of such Letter of Credit (as extended, if applicable) is
prior to the Maturity Date.

 

2.5.           
Requesting Letters of Credit2.5.1.     
. A Borrower may request a Letter of Credit by written notice to the LC Support Issuer, via facsimile transmission, electronic
mail or otherwise, no less than five (5) business days prior to the date such Borrower requests that such Letter of Credit
be issued for its account. Notwithstanding any provision in this Agreement to the contrary, the LC Support Issuer shall not be
obligated to have issued on its behalf, for the account of a Borrower, or increase the amount of or otherwise amend or extend,
any Letter of Credit during the continuance of an Event of Default.

 

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Section
3.    Interest; Repayment and Reimbursement
Obligations.

 

3.1.           
Interest.

 

3.1.1.     
Each Loan shall bear interest on the outstanding principal amount, for each day from the date such Loan is made until it
becomes due, at a rate equal to the Interest Rate, of which:

 

(a)               
four percent (4%) shall be paid in full by Borrowers in cash on the first business day of each month; and

 

(b)              
eight percent (8%) shall be paid in full by Borrowers in shares of restricted Common Stock, on the first business day of
each calendar quarter, each such share to be valued at a price equal to the average of the Weighted Average Price of a share of
Common Stock for the twenty (20) consecutive Trading Days prior to such interest payment date, with any fractional shares rounded
up to a whole share.

 

3.1.2.     
Notwithstanding the provisions of the preceding Section 3.1.1, all unpaid principal of any Loan shall bear interest
after maturity (whether by acceleration or otherwise) at a rate per annum equal to the higher of (a) the rate in effect
prior to such maturity or (b) the Post-Default Rate, with any such interest to be paid by a Borrower at its election in cash or
shares of restricted Common Stock.

 

3.1.3.     
Interest shall be calculated on the basis of a year of three hundred sixty (360) days consisting of twelve (12) months
each consisting of thirty (30) days (including the first day but excluding the last day).

 

3.2.           
Maturity of Revolving Credit Loans. Each Revolving Credit Loan shall mature, and the principal thereof, together
with all accrued and unpaid interest, shall be due and payable, on the Maturity Date.

 

3.3.           
Optional Prepayments and Reborrowings of Revolving Credit Loans·        
.

 

3.3.1.     
Borrowers may at any time and from time to time prepay the Revolving Credit Loans in whole or in part, together with all
accrued and unpaid interest, without premium or penalty. Partial prepayments shall be in an aggregate principal amount of One Hundred
Thousand Dollars ($100,000) or a whole multiple thereof.

 

3.3.2.     
Subject to the terms and provisions of this Agreement and if a Borrower is not then in Default hereunder, Lenders will reloan
to such Borrower such amounts as have been paid and applied on the principal balance of a Revolving Credit Loan prepaid pursuant
to this Section.

 

3.4.           
Reimbursement for Matured LC Obligations. Each Matured LC Obligation shall constitute a loan by the LC Support
Issuer to Borrowers, and Borrowers promise to pay the LC Support Issuer, or to the LC Support Issuer’s order, on demand,
the full amount of each Matured LC Obligation. The obligation of Borrowers to reimburse the LC Support Issuer for each Matured
LC Obligation shall be absolute, unconditional and irrevocable and shall be paid strictly in accordance with the terms of this
Agreement.

 

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3.5.           
Termination or Reduction of Revolving Commitments. Borrowers shall have the right, upon not less than five
(5) business days’ written notice to Lenders, to terminate the Revolving Commitments of Lenders or, from time to time, reduce
the amount of the Revolving Commitments of Lenders; provided that (a) any such reduction shall be accompanied by prepayment
of all of the Revolving Credit Loans then outstanding hereunder, together with accrued interest on the amount so prepaid to the
date of such prepayment, to the extent, if any, that the sum of the aggregate amount of the Revolving Credit Loans made hereunder
exceeds the amount of the Aggregate Revolving Commitment as then reduced; and (b) any such termination of the Revolving Commitments
shall be accompanied by prepayment in full of all of the Revolving Credit Loans then outstanding hereunder, together with accrued
interest thereon to the date of such prepayment.

 

3.6.           
Maximum Rate. Notwithstanding any provision to the contrary in this Agreement or in any Revolving Credit Note,
in no event shall the interest rate charged on the Loans exceed the maximum rate of interest permitted under applicable state and/or
federal usury law. Any payment of interest that would be deemed unlawful under applicable law for any reason shall be deemed received
on account of, and will automatically be applied to reduce, the principal sum outstanding and any other sums (other than interest)
due and payable to Lenders under the applicable Revolving Credit Note, and the provisions hereof shall be deemed amended to provide
for the highest rate of interest permitted under applicable law.

 

3.7.           
Fees and Expenses.

 

3.7.1.     
As consideration for the Revolving Credit Loans hereby extended, no later than November 29, 2013 with respect to the year
ending December 31, 2013, and prior to each of December 31, 2014 and 2015, Parent shall issue to Lenders an aggregate of 200,000
shares of restricted Common Stock during each such calendar year, up to a total of 600,000 shares of restricted Common Stock, such
shares to be allocated among Lenders as set forth on Schedule 1.

 

3.7.2.     
As consideration for the LC Support Issuer causing one or more Letters of Credit to be issued on its behalf, for the account
of a Borrower, such Borrower agrees to pay a letter of credit commission fee on the date hereof, and on each one (1) year anniversary
of the date hereof prior to the Maturity Date, in the amount equal to (a) two percent (2%) of the LC Sublimit in cash and (b) shares
of restricted Common Stock, with an aggregate value of four percent (4%) of the LC Sublimit, with each such share of Common Stock
valued at a price equal to the average of the Weighted Average Price of a share of Common Stock for the twenty (20) consecutive
Trading Days prior to the date of payment pursuant to this Section 3.7.2, with any fractional shares rounded up to a whole
share.

 

3.7.3.     
Borrowers shall pay all reasonable legal and accounting costs and expenses associated with the documentation of this Agreement
and the other Credit Documents.

 

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Section
4.    Conditions Precedent.

 

4.1.           
Initial Credit Extension. The obligations of Lenders to make their respective initial Credit Extension hereunder
is subject to each of the following conditions precedent (including, without limitation, that each document to be received by Lenders
shall be in form and substance reasonably satisfactory to Lenders):

 

4.1.1.     
each Lender shall have received a Note duly executed and delivered by Borrowers;

 

4.1.2.     
Lenders shall have received the duly executed Credit Documents (other than the Notes);

 

4.1.3.     
Lenders shall have received copies of filed UCC-1 financing statements with respect to the Collateral, in proper form for
filing in Colorado with respect to Parent and in Ohio with respect to Axion Recycling to perfect Lenders’ Liens on the Collateral;
and

 

4.1.4.     
Lenders shall have received such other certificates, documents and instruments relating to the transactions contemplated
hereby as Lenders or counsel to Lenders may reasonably request.

 

4.2.           
Initial and Subsequent Credit Extensions. The obligations of Lenders to make each of their respective Credit
Extensions (including, without limitation, the making of the initial Credit Extension) is subject to the further conditions precedent
that, both immediately prior to such Credit Extension and after giving effect thereto:

 

4.2.1.     
no Default shall have occurred and be continuing; and

 

4.2.2.     
the representations and warranties made by Borrowers herein shall be true and complete on and as of the date of the making
of such Credit Extension with the same force and effect as if made on and as of such date (except to the extent such representations
and warranties expressly relate to an earlier date).

 

Each request for a
Credit Extension by a Borrower hereunder shall constitute a certification by such Borrower to the effect set forth in Sections
4.2.1 and 4.2.2 above.

 

Section
5.    Representations and Warranties.
Each Borrower represents and warrants to Lenders:

 

5.1.           
Existence. Such Borrower (a) is a corporation, duly organized and validity existing under the laws of the
jurisdiction of its formation; (b) has all requisite corporate power and has all material governmental licenses, authorizations,
consents and approvals necessary to own its assets and carry on its business as now being or as proposed to be conducted; and (c) is
qualified to do business in all jurisdictions in which the nature of the business conducted by it makes such qualification necessary
and where failure so to qualify would have a Material Adverse Effect.

 

5.2.           
Financial Condition. All financial statements and information relating to Parent which have been filed with
the United States Securities and Exchange Commission is materially true and correct as of the date filed and has been prepared
in accordance with past practices consistently applied.

 

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5.3.           
Litigation. There are no proceedings by or before any governmental or regulatory authority or agency now pending
or (to the knowledge of such Borrower) threatened against such Borrower which, if adversely determined, would reasonably likely
to have a Material Adverse Effect.

 

5.4.           
No Violation. The execution, delivery and performance by such Borrower of any of the Credit Documents shall
not contravene any law or any governmental rule or order binding on such Borrower or its articles of incorporation or bylaws, nor
violate any agreement or instrument by which such Borrower is bound, nor result in the creation of a Lien on any assets of such
Borrower except the Lien granted to Lenders herein and Permitted Liens. No notice to, or consent by, any governmental body is needed
in connection with this transaction.

 

5.5.           
Borrower Action. Such Borrower has all necessary corporate power and authority to execute, deliver and perform
its obligations under each of the Credit Documents to which it is a party and the execution, delivery and performance thereof by
such Borrower has been duly authorized by all necessary corporate action on its part; and this Agreement has been duly and validity
executed and delivered by such Borrower and constitutes, and each of the Credit Documents to which such Borrower is a party when
executed and delivered by such Borrower will constitute, the legal, valid and binding obligation of such Borrower, enforceable
in accordance with its terms, except that the enforceability thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors’ rights generally and by application of general principles
of equity (regardless of whether enforcement is considered in proceedings at law or in equity).

 

5.6.           
Approvals. Except for any filings under applicable securities laws, no authorizations, approvals or consents
of, and no filings or registrations with, any governmental or regulatory authority or agency are necessary for the execution, delivery
or performance by such Borrower of the Credit Documents to which it is a party or for the validity or enforceability thereof.

 

5.7.           
Taxes. Such Borrower has filed, or caused to be filed, all material tax and informational returns that are
required to have been filed by it in any jurisdiction, and has paid all material Taxes shown to be due and payable on such returns
and all other taxes and assessments payable by it, to the extent the same have become due and payable (other than those Taxes (a) that
it is contesting in good faith and by appropriate proceedings, with adequate, segregated reserves established for such Taxes; or
(b) with respect to which failure to pay the same could not reasonably be expected to have a Material Adverse Effect) and, to the
extent such Taxes are not due, has established reserves therefor by allocating amounts that are adequate for the payment thereof
and are required by GAAP.

 

5.8.           
Compliance with Laws. Such Borrower is in compliance with all laws, regulations, rulings, orders, injunctions,
decrees, conditions or other requirements applicable to or imposed upon such Borrower by any law or by a governmental authority,
court or agency, except to the extent the failure to so comply would not have a Material Adverse Effect.

 

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Section
6.    Covenants. Until the later of
(a) the Maturity Date; (b) the date the Aggregate Revolving Commitment is no longer in effect; or (c) the date payment
in full of all Secured Obligations has been made:

 

6.1.           
Litigation. Each Borrower will promptly give Lenders notice of:

 

6.1.1.     
all proceedings by or before any governmental or regulatory authority or agency, and any material development in respect
of any such proceeding, affecting such Borrower, except proceedings which, if adversely determined, would not have a Material Adverse
Effect; or

 

6.1.2.     
the issuance by any United States Federal or state court or any United States Federal or state regulatory authority of any
injunction, order or other restraint prohibiting, or having the effect of prohibiting or delaying, the making of Credit Extensions,
or the institution of any litigation or similar proceedings seeking any such injunction, order or other restraint.

 

6.2.           
Existence, Etc. Each Borrower will:

 

6.2.1.     
preserve and maintain its corporate existence and all of its material licenses, rights, privileges, franchises, governmental
authorizations, patents, trademarks, copyrights or other rights necessary for the ownership of its properties and the advantageous
conduct of its business and as may be required from time to time by applicable law;

 

6.2.2.     
comply with the requirements of all applicable laws, rules, regulations and orders of governmental or regulatory authorities
if failure to comply with such requirements would have a Material Adverse Effect;

 

6.2.3.     
pay and discharge all Taxes imposed on it or on its income or profits or on any of its property prior to the date on which
penalties attach thereto, except for any such Taxes the payment of which are being contested in good faith and by proper proceedings
and against which adequate reserves are being maintained;

 

6.2.4.     
maintain all of its properties used or useful in its business in good working order and condition, ordinary wear and tear
excepted; and

 

6.2.5.     
keep proper books of record and account in accordance with GAAP, in which full, true and correct entries shall be made of
all dealings and transactions in relation to its business and activities, and permit representatives of Lenders, during normal
business hours and upon reasonable prior notice, to examine, copy and make extracts from its books and records, to inspect its
properties, and to discuss its business and affairs with its officers and independent public accountants (and by this provision
such Borrower authorizes said accountants to discuss its business and affairs with such representatives), all to the extent reasonably
requested by the Lender; and

 

6.2.6.     
immediately notify Lenders of the occurrence of any event which has a Material Adverse Effect on its financial condition
or business prospects.

 

6.3.           
Use of Proceeds. Each Borrower will use the proceeds of the Loans as provided in Section 1.2.

 

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Section
7.    Events of Default.

 

7.1.           
Events of Default. The occurrence and continuance of any one or more of the following events shall be an “Event
of Default” under this Agreement:

 

7.1.1.     
a Borrower shall default in the payment when due of any amounts owing under Sections 3.2, 3.3 or 3.4;

 

7.1.2.     
a Borrower shall default in the payment when due of interest on any Loan or any fee or other amount payable under any Credit
Document and such default shall continue unremedied for ten (10) days or more;

 

7.1.3.     
any representation, warranty or certification made or deemed made by a Borrower in any Credit Document or in any certificate,
document or other written statement furnished to Lenders pursuant to the provisions thereof, shall prove to have been materially
false or misleading as of the time made or deemed made in any material respect;

 

7.1.4.     
a Borrower shall default in the performance of any of its obligations in this Agreement in any material respect;

 

7.1.5.     
a Borrower shall default in the performance of any of their respective obligations under any of the Credit Documents (other
than this Agreement) in any material respect after giving effect to any applicable grace period;

 

7.1.6.     
a Borrower shall admit in writing its inability to pay its Debts as such Debts become due;

 

7.1.7.     
a Borrower shall (a) apply for or consent to the appointment of, or the taking of possession by, a receiver, custodian,
trustee or liquidator of itself or of all or a substantial part of its property; (b) make a general assignment for the benefit
of its creditors; (c) commence a voluntary case under the Bankruptcy Code (as now or hereafter in effect); (d) file a
petition seeking to take advantage of any other law relating to bankruptcy, insolvency, reorganization, winding-up, or composition
or readjustment of Debts; (e) fail to controvert in a timely and appropriate manner, or acquiesce in writing to, any petition
filed against it in an involuntary case under the Bankruptcy Code; or (f) take any action for the purpose of effecting any
of the foregoing;

 

7.1.8.     
a proceeding or case shall be commenced, without the application or consent of a Borrower, in any court of competent jurisdiction,
seeking (a) its liquidation, reorganization, dissolution or winding-up, or the composition or readjustment of its Debts; (b) the
appointment of a trustee, receiver, custodian, liquidator or the like of such Borrower or all or any substantial part of its respective
assets; or (c) similar relief in respect of such Borrower under any law relating to bankruptcy, insolvency, reorganization,
winding-up, or composition or adjustment of Debts, and such proceeding or case shall continue undismissed, or an order, judgment
or decree approving or ordering any of the foregoing shall be entered and continue unstayed and in effect, for a period of ninety (90)
or more days; or an order for relief against such Borrower shall be entered in an insolvency case under the Bankruptcy Code; or

 

    	11

    	 

    

 

7.1.9.     
the Liens created by the Credit Documents shall at any time not constitute valid and perfected Liens on the Collateral described
therein (to the extent perfection by filing, registration, recordation or possession is required herein or therein) in favor of
Lenders, or any of the provisions hereof shall at any time cease to be in full force and effect or shall be declared null and void
or the validity or enforceability thereof shall be contested by a Borrower.

 

7.2.           
Remedies. Upon the occurrence of any Event of Default, the Required Lenders may do any or all of the following:

 

7.2.1.     
cancel the Aggregate Revolving Commitment and/or declare the principal of all amounts owing under this Agreement and the
other Credit Documents and all other indebtedness of Borrowers to Lenders, together with accrued and unpaid interest thereon, to
be forthwith due and payable, regardless of any other specified maturity or due date, without notice of default, presentment or
demand for payment, protest or notice of nonpayment or dishonor, or other notices or demands of any kind or character, and without
the necessity of prior recourse to any security;

 

7.2.2.     
implement any or all remedies available to Lenders under or in connection with the Credit Documents;

 

7.2.3.     
if the Event of Default may be cured by Lenders by taking actions or making payments of money, the Required Lenders shall
have the right (but not the obligation) to take such actions (including without limitation the retention of attorneys and the commencement
or prosecution of actions on their own behalf or on behalf of Borrowers), make such payments and pay for the costs of such actions
(including without limitation reasonable attorneys’ fees and disbursements and court costs) from their own funds; provided,
that the taking of such actions at Lenders’ expense or the making of such payments out of Lenders’ own funds shall
not be deemed to cure such Event of Default, and the same shall not be so cured unless and until Borrowers shall have reimbursed
Lenders for such payment, together with interest at the Post-Default Rate from the date of such payment until the date of reimbursement.
If Lenders advance their own funds for such purposes, such funds shall be secured by the Credit Documents, notwithstanding that
such advances may cause the total amount advanced thereunder to exceed the amount committed to be advanced pursuant to this Agreement,
and Borrowers shall immediately upon demand reimburse Lenders therefore with interest at the Post-Default Rate, from the date of
such advance until the date of reimbursement;

 

7.2.4.     
exercise any and all rights under the Credit Documents, or otherwise as a secured creditor, including, without limitation,
foreclosing any security, and exercising any other rights with respect to security whether under the Credit Documents or any other
agreement or as provided by law, all in such order and in such manner as the Required Lenders in their sole discretion may determine;
and

 

7.2.5.     
in the case of the occurrence of an Event of Default referred to in Sections 7.1.7 or 7.1.8, the Revolving
Commitment of each Lender shall automatically be cancelled and the principal amount then outstanding of, and the accrued interest
on, the Loans and all other amounts payable by Borrowers hereunder, including with respect to the Matured LC Obligations and
under the Notes, shall automatically become immediately due and payable without presentment, demand, protest or other formalities
of any kind, all of which are hereby expressly waived by Borrowers.

 

    	12

    	 

    

 

7.3.           
Other Amounts Deemed Loans. If a Borrower fails to pay any material Taxes within the time permitted, or fails
to comply with any other obligation, the Required Lenders may, but shall not be obligated to, pay, satisfy, discharge or bond the
same for the account of such Borrower, and to the extent permitted by law and at the option of the Required Lenders, all monies
so paid by the Required Lenders on behalf of such Borrower shall be deemed Secured Obligations.

 

7.4.           
Cumulative Remedies. All remedies of Lenders provided for herein are cumulative and shall be in addition to
any and all other rights and remedies provided in any of the other Credit Documents, or provided by law from time to time. The
exercise of any right or remedy by Lenders hereunder shall not in any way constitute a cure or waiver of default hereunder or under
this Agreement or the other Credit Documents, nor invalidate any notice of default or any act done pursuant to any such notice,
nor prejudice Lenders in the exercise of any rights hereunder or under the other Credit Documents, unless in the exercise of said
right, Lenders realize all amounts owed to them under the Credit Documents and all Events of Default are cured.

 

Section
8.    Miscellaneous.

 

8.1.           
Appointment and Authority. Each Lender hereby irrevocably appoints MLTM Lending, LLC (“MLTM”)
as such Lender’s attorney-in-fact, in the name of such Lender or otherwise to, take any and all actions with respect to
this Agreement and the other Credit Documents as MLTM may so elect from time to time, including but not limited to actions (i) to
execute and deliver in the names of Lenders such instruments, documents, statements and amendments thereto as may be necessary
or appropriate to perfect or continue the perfection of the Lien granted in the Security Agreement or to evidence or provide for
the termination of such Lien, including the filing, or the authorization of the filing, of any termination statements; (ii) following
the occurrence of an Event of Default, and upon the election of the Required Lenders, to exercise any and all rights and remedies
of Lenders under this Agreement; and (iii) to do all other acts and things necessary to carry out the purposes of this Agreement
and the other Credit Documents, in each case as fully and completely as though MLTM was the absolute owner of the Collateral for
all purposes. The foregoing appointment is coupled with an interest, cannot be revoked without the prior written consent of the
Required Lenders. Each Lender severally, and not jointly, hereby holds MLTM harmless from, and agrees to indemnify MLTM in respect
of, any claim, obligation or liability (including without limitation reasonable attorneys’ fees and expenses) arising out
of any action by MLTM in its capacity as attorney-in-fact for Lenders other than any claim, obligation or liability solely and
directly resulting from MLTM’s gross negligence, willful misconduct or intentional breach of this Agreement.

 

8.2.           
Waiver. No failure on the part of Lenders to exercise and no delay in exercising, and no course of dealing
with respect to, any right, power or privilege under this Agreement or the other Credit Documents shall operate as a waiver thereof,
nor shall any single or partial exercise of any right, power or privilege under this Agreement or the other Credit Documents operate
as a waiver thereof, nor shall any single or partial exercise of any right, power or privilege under this Agreement or the other
Credit Documents preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The remedies
provided herein are cumulative and not exclusive of any remedies provided by law.

 

    	13

    	 

    

 

8.3.           
Notices. Except as otherwise expressly provided herein, any notice or other communication in connection with
this Agreement must be in writing and must be sent by United States certified mail, return receipt requested, postage prepaid,
by a nationally recognized overnight courier guaranteeing next day delivery, by facsimile transmission, or by personal delivery,
properly addressed as follows:

 

	If to a Borrower, to:	
        Axion International Holdings, Inc.

        Axion International, Inc.

        180 South Street

        Suite 104

        New Providence, NJ 07974

        Attention: Donald Fallon, CFO

        Facsimile: (908) 542-0999

         

        and

         

        Axion Recycled Plastics Incorporated

        4005 All American Way

        Zanesville, OH 43702

        Attention: Donald Fallon, CFO

         

	with a copy to:	
        Greenberg Traurig, LLP

        1750 Tysons Boulevard

        Suite 1200

        McLean, VA 22102

        Attention: Mark Wishner, Esq.

        Facsimile: (703) 714-8359

         

	If to Lenders, to:	
        Samuel G. Rose

        5301 Wisconsin Avenue, N.W.

        Suite 510

        Washington, DC 20015

        Attention: Samuel G. Rose

        Facsimile: (202) 686-3617

         

	and to:	
        MLTM Lending, LLC

        4922 A St. Elmo Ave.

        Bethesda, MD 20814

        Attention: Terry Mackinnon

        Facsimile: (301) 907-8706

         

	with a copy to:	
        Shreve Bowersox, PC

        10790 Symphony Park Drive

        N. Bethesda, MD 20852

        Attention: Tom Bowersox

        Facsimile: (301) 652-9834

         

 

    	14

    	 

    

 

All notices will be
deemed given three (3) business days following deposit in the United States mail with respect to certified or registered letters,
one (1) business day following deposit if delivered to an overnight courier guaranteeing nationwide next day delivery (e.g.,
UPS or FedEx), and on the same day if sent by personal delivery or by facsimile transmission (with proof of transmission). Attorneys
for each party will be authorized to give notices for each such party. Any party may change its address for the service of notice
by giving written notice of such change to the other parties in any manner above specified.

 

8.4.           
Amendments, Etc. Except as otherwise expressly provided herein, any provision of this Agreement may be amended
or modified only by an instrument in writing signed by Borrowers and the Required Lenders, and any provision of this Agreement
may be waived by the Required Lenders.

 

8.5.           
Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and permitted assigns.

 

8.6.           
Assignments and Participations. No party may assign its rights or obligations hereunder or under any other
Credit Document without the prior consent of each other party.

 

8.7.           
Further Assurances. Borrowers shall execute, acknowledge and deliver or cause to be executed, acknowledged
and delivered, any and all such further assurances and other agreements or instruments, and take or cause to be taken all such
other action, as shall be reasonable necessary from time to time to give effect to the Credit Documents and the transactions contemplated
thereby.

 

8.8.           
Captions. The captions and section headings appearing herein are included solely for convenience of reference
and are not intended to affect the interpretation of any provision of this Agreement.

 

8.9.           
Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be identical
and all of which, taken together, shall constitute one and the same instrument, and any of the parties hereto may execute this
Agreement by signing any such counterpart.

 

8.10.       
Confidential Information. Each Lender acknowledges that the information it will receive under this Agreement
is confidential and has been (or will be) prepared solely for such Lender’s private and confidential use and is not to be
used for any purpose other than in connection with this Agreement. By accepting this information, now and in the future, each Lender
agrees with Borrowers to maintain such confidential information in confidence, to the extent that such information is material
and is not otherwise public. Each Lender furthermore recognizes and acknowledges its obligations under applicable Federal securities
laws as to the use of such information.

 

    	15

    	 

    

 

8.11.       
Governing Law: Submission to Jurisdiction; Waiver of Jury Trial. THIS AGREEMENT AND THE NOTES SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF MARYLAND. EACH BORROWER HEREBY SUBMITS TO THE EXCLUSIVE
JURISDICTION OF ANY UNITED STATES DISTRICT COURT OR MARYLAND STATE COURT SITTING IN MONTGOMERY COUNTY, MARYLAND, FOR THE PURPOSES
OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EAHC BORROWER IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY
SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM. BORROWERS AND LENDERS HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO TRIAL BY JURY
IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. THIS PROVISION IS
A MATERIAL INDUCEMENT TO LENDERS TO ENTER INTO THE FINANCING TRANSACTION. IT SHALL NOT IN ANY WAY AFFECT, WAIVE, LIMIT, AMEND OR
MODIFY LENDERS’ ABILITY TO PURSUE THEIR REMEDIES INCLUDING, BUT NOT LIMITED TO, ANY CONFESSION OF JUDGMENT OR COGNOVIT PROVISION
CONTAINED HEREIN OR ANY OTHER DOCUMENT RELATED HERETO OR THERETO.

 

[Signature page follows]

 

    	16

    	 

    

 

IN WITNESS WHEREOF,
Borrower and Lenders have caused this Agreement to be duly executed as of the day and year first above written.

 

PARENT:

 

AXION INTERNATIONAL HOLDINGS, INC.

 

 

By: /s/ Steve Silverman

Name:Steve Silverman

Title:Chief Executive Officer

 

 

 

AXI:

 

AXION INTERNATIONAL, INC.

 

 

By: /s/ Steve Silverman

Name:Steve Silverman

Title:Chief Executive Officer

 

 

 

Axion
Recycling:

 

Axion Recycled
Plastics Incorporated

 

 

By: /s/ Steve Silverman

Name:Steve Silverman

Title:Chief Executive Officer

 

 

Signature page to Revolving Credit and Letter
of Credit Support Agreement

  

    	 

    	 

    

 

	 	Lenders:	 
	 	 	 	 
	 	MLTM Lending, LLC	 
	 	 	 	 
	 	By:	TM Investments, LP,	 
	 	 	its administrative member	 
	 	 	 	 
	 	By:	CF Holdings, Inc.,	 
	 	 	its general partner	 
	 	 	 	 
	 	 	 	 
	 	By:	/s/ Melvin Lenkin	 
	 	Name:	  Melvin Lenkin	 
	 	Title:	  President	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	/s/ Samuel G. Rose	 
	 	Samuel G. Rose	 

  

    	 

    	 

    

 

Schedule 1

 

Revolving
Commitment Amount AND SHARES OF COMMON STOCK

 

	Lender	Amount of Revolving Commitment 	Number of Shares of Common Stock issued pursuant to Section 3.7.1 with respect to each calendar year
	MLTM Lending, LLC	
        $1,250,000

         

        (including $500,000

        LC Sublimit)

         
	100,000
	Samuel G. Rose	$1,250,000	100,000
	TOTAL	$2,500,000	200,000

 

    	 

    	 

    

 

EXHIBIT A

 

Form of REVOLVING
CREDIT NOTE

 

 

See
attached.EXHIBIT 10.13

 

SECURITY
AGREEMENT

 

THIS SECURITY AGREEMENT
is dated November 15, 2013 (this “Agreement”), among Axion International
Holdings, Inc., a Colorado corporation (“Parent”), AXION INTERNATIONAL, INC., a Delaware corporation
and a wholly-owned subsidiary of Parent (“AXI”), and Axion Recycled
Plastics Incorporated, an Ohio corporation and a wholly-owned subsidiary of AXI (together with Parent and AXI, each a “Pledgor”
and collectively, the “Pledgors”), and the secured parties identified on the signature page hereto (individually
and collectively, the “Secured Party”).

 

WHEREAS, the Secured
Party, as lenders, have made available to the Pledgors a loan facility under which the Secured Party will lend up to $2,500,000
to the Pledgors, on a revolving basis, including providing letter of credit support to the Pledgors of up to $500,000, pursuant
to the Revolving Credit and Letter of Credit Support Agreement dated of even date herewith (the “Credit Agreement”);
and

 

WHEREAS, in order to
secure the Pledgor’s obligations under the Credit Agreement, the Pledgors have agreed to execute and deliver this Agreement.

 

NOW, THEREFORE, in
consideration of the above premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged by the Pledgors, the Pledgors hereby agree with the Secured Party as follows:

 

Section 1.Definitions.

 

(a)For the purposes
of this Agreement:

 

“Accounts”
means all “accounts” (as defined in the UCC) now owned or hereafter acquired by any Pledgor or in which any Pledgor
has or acquires any rights.

 

“Applicable
Law” means all applicable provisions of constitutions, statutes, laws, rules, regulations and orders of all governmental
bodies and all orders, rulings and decrees of all courts and arbitrators.

 

“Business
Day” means any day other than a Saturday, Sunday or other day on which banks in Maryland are authorized or required by
law to close.

 

“Collateral”
means all Accounts and Inventory, together with (a) all books, records, ledger cards and other property pertaining to any
of the foregoing; and (b) all products and proceeds of any of the foregoing, and all insurance proceeds related to any of the foregoing,
including, without limitation, any claims against third parties for loss or damage to or destruction of any or all of the foregoing
and any cash, negotiable instruments and other instruments of money, chattel paper, security agreements or other documents.

 

“Credit Documents”
has the meaning set forth in the Credit Agreement.

 

“Event of
Default” means (a) a breach by a Pledgor of any of its representations or warranties contained herein; (b) a
breach by a Pledgor of any of its covenants or agreements contained herein, which breach is not cured within thirty (30) days after
such Pledgor’s receipt of written notice of such breach; or (c) an Event of Default occurs under the Credit Agreement
or any of the other Credit Documents, which Event of Default has not been cured within the time period set forth therein.

 

    	1

    	 

    

 

“Inventory”
shall mean all “inventory” (as defined in the UCC) now owned or hereafter acquired by any Pledgor or in which any Pledgor
has or acquires any rights.

 

“Lien”
means, with respect to any asset, any security interest, mortgage, pledge, assignment, lien or other encumbrance of any kind.

 

“Notes”
means Parent’s 8% convertible promissory notes issued pursuant to the Note Purchase Agreement dated as of August 24, 2012,
among Parent and the investors identified on the signature page thereto, as the same may be amended from time to time.

 

“Obligations”
means, individually and collectively:

 

(i)all obligations
of either of the Pledgors owing to the Secured Party under or with respect to the Credit Agreement or the other Credit Documents;
and

 

(ii)all renewals,
substitutions, modifications, extensions and supplements to any of the foregoing.

 

“Permitted
Liens” means:

 

(i)Liens securing
taxes, assessments and other governmental charges or levies not yet due and payable or the claims of, or obligations owing to,
materialmen, mechanics, carriers, warehousemen or landlords for labor, materials, supplies or rentals incurred in the ordinary
course of business but not yet due and payable;

 

(ii)Liens consisting
of deposits or pledges made, in the ordinary course of business, in connection with, or to secure payment of, obligations under
workmen’s compensation, unemployment insurance or similar legislation;

 

(iii)non-monetary
Liens which in the sole judgment of the Secured Party do not materially detract from the value of the Collateral;

 

(iv)Liens in favor
of the Secured Party;

 

(v)Liens securing
the Notes and Liens securing Parent’s secured promissory notes which were issued in contemplation of exchanging such secured
promissory notes for the Notes;

 

(vi)purchase money
security interests; and

 

(vii)Liens securing
Senior Secured Indebtedness (as such term is defined in the Notes).

 

    	2

    	 

    

 

“Person”
means an individual, corporation, partnership, limited liability company, association, trust or unincorporated organization, or
a government or any agency or political subdivision thereof.

 

“Required
Lenders” has the meaning set forth in the Credit Agreement.

 

“UCC”
means the Uniform Commercial Code as in effect, from time to time, in the State of Maryland; provided that if by reason
of mandatory provisions of law, the perfection or the effect of perfection or non-perfection of the Liens in any Collateral is
governed by the Uniform Commercial Code as in effect in a jurisdiction other than Maryland, “UCC” shall mean
the Uniform Commercial Code as in effect in such other jurisdiction for purposes of the provisions hereof relating to such perfection
or effect of perfection or non-perfection.

 

(b)Unless otherwise
set forth herein to the contrary, all terms not otherwise defined herein and which are defined in the UCC are used herein with
the meanings ascribed to them in the UCC. However, if a term is defined in Article 9 of the UCC differently than in another Article
of the UCC, the term has the meaning specified in Article 9 of the UCC.

 

Section 2.Grant
of Security. To secure the prompt and complete payment, observance and performance when due (whether at stated maturity,
by acceleration or otherwise) of all of the Obligations, each of the Pledgors hereby collaterally assigns and pledges to the Secured
Party, and grants to the Secured Party a security interest and Lien in and to, the Collateral.

 

Section 3.Authorization
to File Financing Statements. Each of the Pledgors hereby irrevocably authorizes the Secured Party at any time and from
time to time to file in any Uniform Commercial Code jurisdiction any initial financing statements and amendments thereto with respect
to the Collateral and that contain any information required by part 5 of Article 9 of the UCC or the analogous part of
Article 9 of the Uniform Commercial Code of such other jurisdiction for the sufficiency or filing office acceptance of any
financing statement or amendment.

 

Section 4.Other
Actions. Further to ensure the attachment, perfection and priority of, and the ability of the Secured Party to enforce,
the Secured Party’s security interest in the Collateral, each Pledgor agrees, in each case at such Pledgor’s own expense,
to take any other action reasonably requested by the Secured Party to ensure the attachment, perfection and, priority of, and the
ability of the Secured Party to enforce, the Secured Party’s security interest in any and all of the Collateral.

 

Section 5.Covenants
Regarding Legal Status.  Each of the Pledgors covenants with the Secured Party as follows: (a) without providing
at least fifteen (15) Business Days prior written notice to the Secured Party, such Pledgor will not change its name, any place
of business or, if more than one, chief executive office, or its mailing address or organizational identification number if it
has one, and (b) without providing at least fifteen (15) Business Days prior written notice to the Secured Party, such Pledgor
will not change its type of organization, jurisdiction of organization or other legal structure.

 

    	3

    	 

    

 

Section 6.Representations
and Warranties Regarding Collateral, Etc. Each of the Pledgors further represents and warrants to the Secured Party as
follows: (a) such Pledgor is the owner of the Collateral pledged by it, free from any Lien, except for Permitted Liens, (b) none
of the Collateral pledged by it constitutes or is the proceeds of “farm products” as defined in § 9-102(a)(34)
of the UCC, (c) none of the account debtors or other persons obligated on any of the Collateral pledged by it is a governmental
authority covered by the Federal Assignment of Claims Act or like federal, state or local statute or rule in respect of such Collateral,
(d) such Pledgor does not hold any commercial tort claim, and (e) to the best of such Pledgor’s knowledge, such
Pledgor has at all times operated its business in compliance in all material respects with all Applicable Laws.

 

Section 7.Covenants
Regarding Collateral Generally. Each of the Pledgors further covenants with the Secured Party as follows: (a) other
than Permitted Liens, such Pledgor shall not pledge, mortgage or create, or suffer to exist any Lien in the Collateral in favor
of any Person, (b) such Pledgor shall keep the Collateral in good order and repair and will not use the same in violation
of any Applicable Law or any policy of insurance thereon, (c) such Pledgor shall permit the Secured Party, or its designee,
to inspect the Collateral at any reasonable time upon reasonable prior notice, wherever located, and (d) such Pledgor shall not
sell, transfer or otherwise dispose, or offer to sell, transfer or otherwise dispose, of the Collateral or any interest therein
except for (i) sales and leases of Inventory in the ordinary course of business and (ii) so long as no
Event of Default has occurred and is continuing, sales or other dispositions of obsolescent items of equipment in the ordinary
course of business consistent with past practices.

 

Section 8.Rights
and Remedies. Upon the occurrence and during the continuance of an Event of Default, the Secured Party, without any other
notice to or demand upon the Pledgors, shall have in any jurisdiction in which enforcement hereof is sought, in addition to the
rights and remedies of a secured party under the UCC and any additional rights and remedies as may be provided to a secured party
in any jurisdiction in which Collateral is located or enforcement is sought, including, without limitation, the right to take possession
of the Collateral, and for that purpose the Secured Party may, so far as the Pledgors can give authority therefor, enter upon any
premises on which the Collateral may be situated and remove the same therefrom. The Secured Party may in its discretion require
the Pledgors to assemble all or any part of the Collateral at such location or locations within the jurisdiction(s) of each Pledgor’s
principal office(s) or at such other locations as the Secured Party may reasonably designate. Unless the Collateral is perishable
or threatens to decline speedily in value or is of a type customarily sold on a recognized market, the Secured Party shall give
to the Pledgors at least five (5) Business Days prior written notice of the time and place of any public sale of Collateral or
of the time after which any private sale or any other intended disposition is to be made. Each of the Pledgors hereby acknowledges
that five (5) Business Days prior written notice of such sale or sales shall be reasonable notice. In addition, each of the Pledgors
waives any and all rights that it may have to a judicial hearing in advance of the enforcement of any of the Secured Party’s
rights and remedies hereunder, including, without limitation, its right following an Event of Default to take immediate possession
of the Collateral and to exercise its rights and remedies with respect thereto.

 

    	4

    	 

    

 

Section 9.No
Waiver by Secured Party, Etc. The Secured Party shall not be deemed to have waived any of its rights and remedies in respect
of the Obligations or the Collateral unless such waiver shall be in writing and signed by the Secured Party. No delay or omission
on the part of the Secured Party in exercising any right or remedy shall operate as a waiver of such right or remedy or any other
right or remedy. A waiver on any one occasion shall not be construed as a bar to or waiver of any right or remedy on any future
occasion. All rights and remedies of the Secured Party with respect to the Obligations or the Collateral, whether evidenced hereby
or by any other instrument or papers, shall be cumulative and may be exercised singularly, alternatively, successively or concurrently
at such time or at such times as the Secured Party deems expedient.

 

Section 10.Suretyship
Waivers by Pledgors. Each of the Pledgors waives demand, notice, protest, notice of acceptance of this Agreement,
notice of loans made, credit extended, Collateral received or delivered or other action taken in reliance hereon and all other
demands and notices of each description. With respect to both the Obligations and the Collateral, each of the Pledgors assents
to any extension or postponement of the time of payment or any other indulgence, to any substitution, exchange or release of or
failure to perfect any security interest in any Collateral, to the addition or release of any party or person primarily or secondarily
liable, to the acceptance of partial payment thereon and the settlement, compromising or adjusting of any thereof, all in such
manner and at such time or times as the Secured Party may deem advisable. The Secured Party shall not have any duty as to the collection
or protection of the Collateral or any income therefrom, the preservation of rights against prior parties, or the preservation
of any rights pertaining thereto beyond any duties imposed by Applicable Law. Each of the Pledgors further waives any and all other
suretyship defenses.

 

Section 11.Marshalling.
The Secured Party shall not be required to marshal any present or future collateral security (including but not limited to the
Collateral) for, or other assurances of payment of, the Obligations or any of them or to resort to such collateral security or
other assurances of payment in any particular order, and all of the rights and remedies of the Secured Party hereunder and of the
Secured Party in respect of such collateral security and other assurances of payment shall be cumulative and in addition to all
other rights and remedies, however existing or arising. To the extent that it lawfully may, each of the Pledgors hereby agrees
that it will not invoke any Applicable Law relating to the marshalling of collateral which might cause delay in or impede the enforcement
of the Secured Party’s rights and remedies under this Agreement or under any other instrument creating or evidencing any
of the Obligations or under which any of the Obligations is outstanding or by which any of the Obligations is secured or payment
thereof is otherwise assured, and, to the extent that it lawfully may, each of the Pledgors hereby irrevocably waives the benefits
of all such laws.

 

Section 12.Expenses;
Proceeds of Dispositions; Sharing Collateral. The Pledgors, jointly and severally, agree to pay to the Secured Party on
demand any and all reasonable expenses, including attorneys’ fees and disbursements, incurred or paid by the Secured Party
in protecting, preserving or enforcing the Secured Party’s rights and remedies under or in respect of any of the Obligations
or any of the Collateral. After deducting all of said expenses, the residue of any proceeds of collection or sale or other disposition
of Collateral shall, to the extent actually received in cash, be applied to the payment of the Obligations in such order or preference
as the Secured Party may determine, proper allowance and provision being made for any Obligations not then due. Upon the occurrence
of any Event of Default, and if MLTM Lending, LLC, as attorney-in-fact for the Secured Party pursuant to the Credit Agreement,
proceeds to exercise any rights with respect to the Collateral, the Secured Party shall share the Collateral and the proceeds of
such Collateral ratably, without priority of one over the other. Upon the final payment and satisfaction in full of all of the
Obligations and after making any payments required by Sections 9-608(a)(1)(C) or 9-615(a)(3) of the UCC, any excess shall
be returned to the Pledgors. In the absence of final payment and satisfaction in full of all of the Obligations, the Pledgors shall
remain liable for any deficiency.

 

    	5

    	 

    

 

Section 13.Amendments,
Etc. No amendment or waiver of any provision of this Agreement or consent to any departure by either of the Pledgors herefrom
shall in any event be effective unless the same shall be in writing and signed by the Pledgors and the Required Lenders, and then
such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

 

Section 14.Notices.
Unless otherwise provided herein, communications provided for hereunder shall be in writing and shall be mailed, couriered, telecopied
or delivered, to any party at its address for notices set forth in the Credit Agreement, or, as to each party, at such other address
as shall be designated by such party in a written notice to the other parties. All such notices and other communications to the
Pledgors or the Secured Party shall be deemed given when delivered personally, mailed by certified mail (postage pre-paid and return
receipt requested), sent by overnight courier service or faxed (transmission confirmed), or otherwise actually received.

 

Section 15.Severability.
Whenever possible, each provision of this Agreement shall be interpreted in such a manner as to be effective and valid under Applicable
Law, but if any provision of this Agreement shall be prohibited by or invalid under Applicable Law, such provisions shall be ineffective
only to the extent of such prohibition or invalidity, without invalidating the remainder of such provisions or the remaining provisions
of this Agreement.

 

Section 16.Counterparts.
 This Agreement may be executed in several counterparts, each of which shall be an original and all of which, taken together,
shall constitute but one and the same instrument.

 

Section 17. Actions by Secured Party.
Any actions, waivers or consents of Secured Party under this Agreement shall require the consent of the Required Lenders.

 

Section 18.Subordination. Secured
Party agrees to subordinate its Lien in favor of a holder of those Permitted Liens referenced in clauses (vi) and (vii) of the
definition of Permitted Liens.

 

Section 19.Miscellaneous.
The headings of each section of this Agreement are for convenience only and shall not define or limit the provisions thereof. This
Agreement and all rights and obligations hereunder shall be binding upon each of the Pledgors and its successors and assigns (including,
without limitation, trustees and liquidators), and shall inure to the benefit of the Secured Party and its successors and assigns
(including, without limitation, trustees and liquidators).

 

    	6

    	 

    

 

Section 20.Governing Law:
Submission to Jurisdiction; Waiver of Jury Trial. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAW OF THE STATE OF MARYLAND. THE PLEDGORS HEREBY SUBMIT TO THE EXCLUSIVE JURISDICTION OF ANY UNITED STATES DISTRICT COURT
OR MARYLAND STATE COURT SITTING IN MONTGOMERY COUNTY, MARYLAND, FOR THE PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PLEDGOR IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT
AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. PLEDGORS AND SECURED
PARTY HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. THIS PROVISION IS A MATERIAL INDUCEMENT TO
SECURED PARTY TO ENTER INTO THE CREDIT AGREEMENT. IT SHALL NOT IN ANY WAY AFFECT, WAIVE, LIMIT, AMEND OR MODIFY SECURED PARTY’S
ABILITY TO PURSUE THEIR REMEDIES INCLUDING, BUT NOT LIMITED TO, ANY CONFESSION OF JUDGMENT OR COGNOVIT PROVISION CONTAINED HEREIN
OR ANY OTHER DOCUMENT RELATED HERETO OR THERETO.

 

[Signature Page Follows]

 

    	7

    	 

    

 

IN WITNESS WHEREOF,
each of the Secured Party and the Pledgors has caused this Agreement to be duly executed and delivered under seal by its duly authorized
officer as of the day first above written.

 

PLEDGORS:

 

AXION INTERNATIONAL HOLDINGS, INC.

 

 

By: /s/ Steve Silverman

Name: Steve Silverman

Title: Chief Executive Officer

 

 

 

AXION INTERNATIONAL, INC.

 

 

By: /s/ Steve Silverman

Name: Steve Silverman

Title: Chief Executive Officer

 

 

 

AXION Recycled
Plastics Incorporated

 

 

By: /s/ Steve Silverman

Name: Steve Silverman

Title: Chief Executive Officer

 

 

Signature
page to Security Agreement

  

    	 

    	 

    

 

SECURED PARTY:

 

MLTM Lending,
LLC

 

By:TM Investments, LP,

       its administrative member

 

By:CF Holdings, Inc.,

       its general partner

 

 

By: /s/ Melvin Lenkin

Name:Melvin Lenkin

Title:President

 

 

 

 

/s/ Samuel G. Rose

Samuel G. Rose

 

 

Signature
page to Security Agreement

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