Document:

EX-10.20

    AXION
      POWER INTERNATIONAL, INC.

    COMMON
      STOCK PURCHASE WARRANT

    

    ISSUED
      TO: Robert G. Averill (the
      “Warrantholder”)

    

    This
      warrant is exercisable to purchase 50,000 shares

    of
      the $.0001 par value common stock of

    Axion
      Power International, Inc., a Delaware corporation

    (subject
      to adjustment as provided herein)

    

    This
      warrant is void after the first banking day of February
      2009

    

    This
      is
      to certify that, for value received and subject to the terms and conditions
      set
      forth below, the Warrantholder is entitled to purchase, and the Company promises
      and agrees to sell and issue to the Warrantholder, at any time on or after
      the
      date hereof, until 5:00 P.M. Eastern Standard Time on the first banking day
      of
      February2009, up to 50,000 shares of the Common Stock of the Company, adjusted
      as provided for herein.

    

    The
      exercise price of this Warrant shall be $6.00 per share until it expires on
      the
      first banking day of February 2009. The number and character of the shares
      of
      common stock issuable upon exercise of this warrant are subject to adjustment
      as
      provided below, and the term “Common Stock” shall mean, unless the context
      otherwise requires, the stock and other securities and property receivable
      upon
      the exercise of this Warrant. This Warrant Certificate is issued subject to
      the
      following terms and conditions:

    

    1. Definitions
      of Certain Terms.
      Except
      as may be otherwise clearly required by the context, the following terms have
      the following meanings:

    

    (a) “Acts,”
      means the Securities Acts of 1933, as amended, and the Securities Acts
      (Ontario).

    

    (b) “Commission,”
      means the Securities and Exchange Commission.

    

    (c) “Common
      Stock,” means the Common Stock, $0.0001 par value, of the Company.

    

    (d) “Company,”
      means Axion Power International, Inc., a Delaware corporation.

    

    (e) “Company’s
      Expenses,” means any and all expenses payable by the Company in connection with
      an offering described in Section 7 hereof, except Warrantholders’
Expenses.

    

    (f) “Exercise
      Price,” means the price at which a Warrantholder may purchase one share of
      Common Stock upon exercise of Warrants as determined from time to time pursuant
      to the provisions hereof.

    

    (g) “Rules
      and Regulations,” means the rules and regulations of the Commission adopted
      under the Acts.

    

    (h) “Warrant
      Certificate,” means a certificate evidencing Warrants.

    

    (i) “Warrantholder,”
      means a record holder of Warrants or Securities.

    

    (j) “Warrantholders’
      Expenses,” means the sum of (i) the aggregate amount of cash payments made to an
      underwriter, underwriting syndicate, or agent in connection with an offering
      described in Section 7 hereof multiplied by a fraction the numerator of which
      is
      the aggregate sale price of the Securities sold by such underwriter,
      underwriting syndicate, or agent in such offering and the denominator of which
      is the aggregate sale price of all of the securities sold by such underwriter,
      underwriting syndicate, or agent in such offering and (ii) all out-of-pocket
      expenses of the Warrantholders, except for the fees and disbursements of one
      firm retained as legal counsel for the Warrantholders that will be paid by
      the
      Company.

    

    (k) “Warrants,”
      means the warrants evidenced by this certificate, any similar certificate issued
      upon the assignment of this certificate, or any certificate issued upon the
      partial exercise of Warrants.

    

    2. Exercise
      of Warrants.
      All or
      any part of the Warrants evidenced hereby may be exercised by surrendering
      this
      Warrant Certificate, duly executed by the Warrantholder or by its duly
      authorized attorney, at the office of the Company, 100 Caster Avenue, Vaughan,
      Ontario, Canada L4L 5Y9, or at such other office or agency as the Company may
      designate. Upon notice of exercise, the Company shall immediately instruct
      its
      transfer agent to prepare certificates for the Common Stock to be issued to
      the
      Warrantholder upon completion of the Warrant exercise. When such certificates
      are prepared, the Company shall notify the Warrantholder and deliver such
      certificates to the Warrantholder immediately upon payment in full by the
      Warrantholder, in lawful money of the United States, of the Exercise Price
      payable for the Warrants being exercised.

    

    If
      fewer
      than all the Warrants evidenced by this Warrant Certificate are exercised,
      the
      Company will, in connection with each partial exercise, execute and deliver
      to
      the Warrantholder a new Warrant Certificate (dated as of the date hereof),
      in
      form and tenor similar to this Warrant Certificate, evidencing the Warrants
      not
      exercised. The issue date of all Common Stock obtained upon the exercise of
      Warrants will be the date the Company receives full payment of the Exercise
      Price.

    

    3. Adjustments
      in Certain Events.
      The
      number of shares and the exercise price of the Common Stock for which this
      Warrant may be exercised are subject to adjustment from time to time upon the
      happening of certain events as follows:

    

    (a) If
      the
      outstanding Common Stock is subdivided into a greater number of shares, the
      number of shares of Common Stock issuable upon exercise of the Warrants will
      be
      proportionately increased and exercise price of the Warrants will be
      proportionately reduced. Conversely, if the outstanding Common Stock is combined
      into a smaller number of shares, the number of shares of Common Stock issuable
      upon exercise of the Warrants will be proportionately reduced and the exercise
      price of the Warrants will be proportionately increased. The increases and
      reductions provided for in this subsection 3(a) will be made with the intent
      and, as nearly as practicable, the effect that neither the percentage of the
      total equity of the Company obtainable on exercise of the Warrants nor the
      price
      payable for such percentage upon such exercise will be affected by any event
      described in this subsection 3(a).

    

    (b) If
      the
      Common Stock is converted into or exchanged for other property or securities
      in
      connection with a merger, consolidation, reclassification, reorganization or
      partial liquidation of the Company, then, as a condition transaction, lawful
      and
      adequate provision will be made so that the holder of this Warrant Certificate
      will have the right thereafter to receive upon the exercise of the Warrants
      the
      kind and amount of other property or securities that he would have been entitled
      to receive if he had held the number of shares of Common Stock issuable upon
      the
      exercise of the Warrants immediately prior to transaction. In any such case,
      appropriate adjustment will be made in the application of the provisions set
      forth herein with respect to the rights and interest thereafter of the
      Warrantholder, to the end that the provisions set forth herein will thereafter
      be applicable, as nearly as reasonably may be, in relation to any other property
      or securities thereafter deliverable upon the exercise of the Warrants. The
      Company will not permit any of the above-referenced changes to occur unless
      the
      issuer of the other property or securities agrees to be bound by and comply
      with
      the provisions of this Warrant.

    

    (c) When
      any
      adjustment is required to be made in the number of shares of Common Stock
      purchasable upon exercise of the Warrants, the Company will promptly determine
      the new number of shares purchasable upon exercise of the Warrant and (i)
      prepare and retain on file a statement describing in reasonable detail the
      method used in arriving at the new number of shares and (ii) mail a copy of
      such
      statement to the Warrantholder within thirty (30) days after the date when
      the
      event giving rise to the adjustment occurred.

    (d) No
      fractional shares of Common Stock will be issued in connection with any exercise
      of Warrants, but the Company will pay, in lieu of fractional shares, a cash
      payment therefor on the basis of the mean between the bid and asked prices
      in
      the over-the-counter market or the closing price on a national securities
      exchange, whichever is the principal market, on the day immediately prior to
      exercise.

    

    4. Reservation
      of Shares.
      The
      Company agrees that a number of shares of Common Stock sufficient to provide
      for
      the exercise of the Warrants upon the basis set forth above will at all times
      during the term of the Warrants be reserved for exercise.

    

    5. Validity
      of Common Stock.
      All
      Common Stock delivered upon the exercise of the Warrants will be duly and
      validly issued, fully paid and nonassessable and the Company will pay all
      documentary and transfer taxes, if any, in respect of the original issuance
      thereof upon exercise of the Warrants.

    

    6. Registration
      of Common Stock Issuable on Exercise of Warrant
      Certificate.

    

    (a) On
      or
      before  ,
      the
      Company will file registration statements for the Common Stock issuable upon
      exercise of the Warrants pursuant to the Acts so as to allow the unrestricted
      re-sale of the Common Stock to the public from time to time commencing on the
      Effective Date of such Registration Statement and ending at 5:00 p.m. Eastern
      Time on the Expiration Date (the “Registration Period”). The Company will also
      file such applications and other documents necessary to permit the sale of
      the
      Common Stock to the public during the Registration Period in such other states
      and provinces as the Company and the Warrantholders agree to. In order to comply
      with the provisions of this Section 6(a), the Company may, but is not required
      to, file more than one registration statement.

    

    (b) The
      Company will pay all of the Company’s Expenses and Warrantholder will pay its
      share of the Warrantholder’s Expenses relating to the registration, offer, and
      sale of the Common Stock.

    

    (c) Except
      as
      specifically provided herein, the manner and conduct of the registration,
      including the contents of the registration, will be entirely in the control
      and
      at the discretion of the Company. The Company will file such post-effective
      amendments and supplements as may be necessary to maintain the currency of
      the
      registration statements during the period of their use. In addition, if the
      Warrantholder participating in the registration are advised by counsel that
      the
      registration statements, in their opinion, are deficient in any material
      respect, the Company will use its best efforts to cause the registration
      statements to be amended to eliminate the concerns raised.

    

    (d) The
      Company will furnish to the Warrantholder the number of copies of a prospectus,
      including a preliminary prospectus, in conformity with the requirements of
      the
      Acts, and such other documents as they may reasonably request in order to
      facilitate the disposition of Common Stock owned by them.

    

    7. Indemnification
      in connection with Registration.

    

    (a) In
      connection with the registration of the Common Stock issuable upon exercise
      of
      the Warrants, the Company will indemnify and hold harmless each selling
      Warrantholder, any person who controls any selling Warrantholder within the
      meaning of the Acts, and any participating underwriter against any losses,
      claims, damages, or liabilities, joint or several, to which any Warrantholder,
      controlling person, or participating underwriter may be subject under the Acts
      or otherwise; and it will reimburse each Warrantholder, each controlling person,
      and each participating underwriter for any legal or other expenses reasonably
      incurred by the Warrantholder, controlling person, or participating underwriter
      in connection with investigating or defending any such loss, claim, damage,
      liability, or action, insofar as such losses, claims, damages, or liabilities,
      joint or several (or actions in respect thereof), arise out of or are based
      upon
      any untrue statement or alleged untrue statement of any material fact contained,
      on the effective date thereof, in any such registration statement or any
      preliminary prospectus or final prospectus, or any amendment or supplement
      thereto, or arise out of or are based upon the omission or alleged omission
      to
      state therein a material fact required to be stated therein or necessary to
      make
      the statements therein not misleading; provided, however, that the Company
      will
      not be liable in any case to the extent that any loss, claim, damage, or
      liability arises out of or is based upon any untrue statement or alleged untrue
      statement or omission or alleged omission made in any registration statement,
      preliminary prospectus, final prospectus, or any amendment or supplement
      thereto, in reliance upon and in conformity with written information furnished
      by a Warrantholder for use in the preparation thereof. The indemnity agreement
      contained in this subparagraph (a) will not apply to amounts paid to any
      claimant in settlement of any suit or claim unless such payment is first
      approved by the Company, such approval not to be unreasonably
      withheld.

    

    (b) Each
      selling Warrantholder, as a condition of the Company’s registration obligation,
      will indemnify and hold harmless the Company, each of its directors, each of
      its
      officers who have signed any registration statement or other filing or any
      amendment or supplement thereto, and any person who controls the Company within
      the meaning of the Acts against any losses, claims, damages, or liabilities
      to
      which the Company or any such director, officer, or controlling person may
      become subject under the Acts or otherwise, and will reimburse any legal or
      other expenses reasonably incurred by the Company or any such director, officer,
      or controlling person in connection with investigating or defending any such
      loss, claim, damage, liability, or action, insofar as such losses, claims,
      damages, or liabilities (or actions in respect thereof) arise out of or are
      based upon any untrue or alleged untrue statement of any material fact contained
      in said registration statement, any preliminary or final prospectus, or other
      filing, or any amendment or supplement thereto, or arise out of or are based
      upon the omission or the alleged omission to state therein a material fact
      required to be stated therein or necessary to make the statements therein not
      misleading, but only to the extent that such untrue statement or alleged untrue
      statement or omission or alleged omission was made in said registration
      statement, preliminary or final prospectus, or other filing, or amendment or
      supplement, in reliance upon and in conformity with written information
      furnished by such Warrantholder for use in the preparation thereof; provided,
      however, that the indemnity agreement contained in this subparagraph (b) will
      not apply to amounts paid to any claimant in settlement of any suit or claim
      unless such payment is first approved by the Warrantholder, such approval not
      to
      be unreasonably withheld.

    

    (c) Promptly
      after receipt by an indemnified party under subparagraphs (a) or (b) above
      of
      notice of the commencement of any action, such indemnified party will, if a
      claim in respect thereof is to be made against an indemnifying party, notify
      the
      indemnifying party of the commencement thereof; but the omission to notify
      the
      indemnifying party will not relieve it from any liability that it may have
      to
      any indemnified party otherwise than under subparagraphs (a) and
      (b).

    

    (d) If
      any
      such action is brought against any indemnified party and it notifies an
      indemnifying party of the commencement thereof, the indemnifying party will
      be
      entitled to participate in, and, to the extent that it may wish, jointly with
      any other indemnifying party similarly notified, to assume the defense thereof,
      with counsel satisfactory to such indemnified party; and after notice from
      the
      indemnifying party to such indemnified party of its election to assume the
      defense thereof, the indemnifying party will not be liable to such indemnified
      party for any legal or other expenses subsequently incurred by such indemnified
      party in connection with the defense thereof other than reasonable costs of
      investigation.

    

    8. Restrictions
      on Transfer.
      This
      Warrant Certificate and the Warrants evidenced hereby may not be sold,
      transferred, subdivided or assigned without the express written consent of
      the
      Company, which will not be unreasonably withheld.

    

    9. No
      Rights as a Shareholder.
      Except
      as otherwise provided herein, the Warrantholder will not, by virtue of ownership
      of Warrants, be entitled to any rights of a shareholder of the Company but
      will,
      upon written request to the Company, be entitled to receive such quarterly
      or
      annual reports as the Company distributes to its shareholders.

     

    10.
      Notice.
      All
      notices under this Certificate shall be in writing and shall be delivered to
      the
      appropriate party at the address set forth below (subject to change from time
      to
      time by written notice to all other parties to this Agreement). All
      communications shall be deemed served upon delivery of, or if mailed, upon
      the
      first to occur of receipt or the expiration of three (3) days after the deposit
      in the United States Postal Service mail, first class, postage prepaid and
      addressed at the address specified. Notices must given by email and any other
      method of delivery, such as facsimile, regular mail, overnight or personal
      delivery, to the parties at the addresses listed below:

    

    If
      to the Company:

    

    Axion
      Power International, Inc.

    100
      Caster Avenue

    Vaughan,
      Ontario, Canada L4L 5Y9

    Facsimile:
      905-264-2385

    Email:
      tomg@gelevator.com

    

    

    If
      to the Warrantholder:

    

    Robert
      G.
      Averill

    377
      Cupshaw Drive

    Ringwood,
      New Jersey 07456

    Facsimile:
      973-962-6138

    Email:
      averillbob@yahoo.com

    

    11. Applicable
      Law.
      This
      Certificate will be governed by and construed in accordance with the laws of
      the
      state of Delaware.

    

    Dated
      this 31st
      day of January, 2006. Axion
      Power International, Inc.

    

    

    

    By:
       

    Thomas
      Granville, Chief Executive OfficerEX-10.21

    LEASE
      AGREEMENT

    

    

    THIS
      AGREEMENT is made as of this 14th
      day of
      February, 2006, BY AND

    

    BETWEEN

    

    STEVEN
      F. HOYE and
      STEVEN
      C. WARNER, hereinafter
      collectively referred to as “Lessor,”

    AND

    

    AXION
      BATTERY PRODUCTS, INC.,
      a
      Pennsylvania corporation hereinafter referred to as “Lessee.”

    

    WITNESSETH:

    

    WHEREAS,
      Lessor is the owner of certain property located in the Township of Neshannock,
      Lawrence County, Pennsylvania, as more fully described on Exhibit A hereto
      (the
      "Property"); and

    

    WHEREAS,
      Lessor desires to lease to Lessee, and Lessee desires to lease from Lessor,
      a
      portion of the Property; and 

    

    WHEREAS,
      Lessor currently leases approximately 11,000 square feet of the Property to
      Commercial Battery Company Of Pennsylvania ("CBC") 
      for use
      as warehouse, office, and retail sales space pursuant to a lease (the "CBC
      Lease") that expires September
      30th
      of
      2006;

    

    THEREFORE,
      in consideration of the covenants and premises hereby mutually undertaken to
      be
      kept and performed by the parties hereto, the parties agree as follows with
      the
      intent to be legally bound:

    

    1. Lessor
      hereby leases to Lessee, and Lessee hereby rents and takes from Lessor that
      portion of the Property consisting of approximately 62,732 square feet in the
      aggregate (including 42,500 square feet of manufacturing space, 7,232 square
      feet of office locker, lab and lunch area, 8,000 square feet of storage
      buildings, and 5,000 square feet of basement area), which portion of the
      Property is further described in Exhibit “A-1”, attached hereto and made part
      thereof (the "demised premises"). Lessor represents and warrants to Lessee
      that
      the CBC Lease will expire on September 30, 2006, subject to existing renewal
      or
      extension options exercisable by CBC. Lessor covenants that it will not renew,
      extend, amend or enter into a new lease with CBC without the prior written
      consent of Lessee; provided, however, the parties acknowledge that CBC may
      exercise its existing option to renew or extend the term of the CBC Lease.
      If
      Lessor and CBC do not enter into a new lease for the premises occupied by CBC,
      or if CBC does not exercise its option to renew or extend the term of the CBC
      Lease beyond September 30, 2006, Lessee shall have the option to lease such
      space, at Lessee's option, on the same terms and conditions as currently set
      forth in the CBC Lease, or on the terms and conditions set forth in this lease,
      for the remainder of the term (including any renewals) of this lease. In
      addition, from and after October 1, 2006, Lessee shall have the option to lease
      from Lessor the office space currently leased by CBC. In the event Lessee
      exercises such option by written notice to Lessor, Lessor shall be responsible
      for removing CBC from such space and making any renovations or other
      modifications necessary to accommodate CBC and Lessee, and upon delivery of
      possession and use to Lessee, such office space shall then be added to and
      considered as a part of the "demised premises" under this Lease, except the
      rent
      shall be proportionately increased to reflect the additional square
      feet.

    

    2. This
      lease shall be for a term of 2 years commencing on the date hereof and ending
      on
      the second anniversary hereof. Lessee will have the right and option to renew
      this lease for two (2) successive five (5) year terms upon the same terms and
      conditions by giving Lessor written notice of its intention to renew this lease
      at least ninety (90) days prior to the end of the original term or prior to
      the
      end of any renewal term. 

    

    3. Lessee
      hereby covenants and agrees to pay Lessor as rent in monthly installments
      without demand or counterclaim the sum of Ten Thousand and no/100 Dollars
      ($10,000.00) per month in advance on the first day of each and every month
      during the initial term (prorated at the rate of $333.33 per day for any partial
      month). The monthly rental to be paid for each and any renewal term shall be
      a
      commercially reasonable rental to be mutually agreed upon by Lessor and Lessee.
      In the event Lessor and Lessee are unable to agree on a rental rate, then a
      written opinion of an M.A.I. appraiser selected by the Lessor and Lessee as
      to a
      commercially reasonable rental rate shall be controlling. In the event the
      selection of an appraiser cannot be agreed upon, the Lessor shall select one
      M.A.I appraiser, the Lessee shall select one such appraiser, and the two
      appraisers so selected shall select a third. The controlling rental rate shall
      be the average of the three appraisals. The expense of the appraisals shall
      be
      equally divided between the Lessor and Lessee.

    

    4. Lessee
      shall cause to be paid all taxes, general or special, all public rates, dues
      and
      special assessments of any kind which shall become due and payable or which
      are
      assessed against or levied upon the demised premises during the term of this
      lease calculated on the percentage of the total building square footage leased
      by Lessee (prorated on the basis of a 360 day year for any partial calendar
      year
      of this lease). Such payments shall be due within 15 days after Lessee's receipt
      of Lessor's invoice therefor.

    

    5. Lessor
      shall arrange to have all public utility services customarily used in the
      operation of a commercial or industrial enterprise (including but not limited
      to
      water, sanitary sewer, gas, electricity, telephone, cable television or
      communications services such as DSL or broadband) connected and available to
      the
      demised premises for Lessee's use at the commencement of the term. If the
      parties agree in the future, Lessor shall arrange to establish separately
      metered service for all such utility services not separately metered on the
      date
      of this lease, and Lessor,
      unless otherwise agreed, shall pay for all
      connection, tap-in and facility charges to establish such connection and
      separate metering. Pending the establishment of separate meters, Lessee shall
      pay or cause to be paid all charges for gas, water, sewage, disposal, steam,
      electricity, light, heat or power, telephone or other communication service
      used
      or supplied in connection with the demised premises such cost to be offset
      by
      the historical utility costs for the building since the commencement of the
      lease term under the CBC Lease.

    

    6. As
      part
      of the consideration for this lease, Lessee covenants and agrees to maintain
      at
      its sole cost and expense at all times during the term of this lease, public
      liability insurance under which Lessor shall be named as additional insured,
      properly protecting and indemnifying Lessor, in an amount not less than One
      Million Dollars ($1,000,000.00) for injury to any one person (including death),
      and not less than One Million Dollars ($1,000,000.00) for personal injuries
      in
      any one (1) accident, and not less than Two Hundred and Fifty Thousand Dollars
      ($250,000.00) for property damage.

    

    During
      the term hereof, Lessee shall, at Lessee’s own cost and expense, provide and
      keep in force insurance, under which Lessor shall be named as an additional
      insured, against loss or damage or injury or destruction to any building or
      buildings and appurtenances there, now and hereafter erected on the demised
      premises, resulting from fire or from any hazard included in the normal broad
      extended coverage endorsement, with such company or companies as may be
      reasonably acceptable to Lessor in the amount at least equal to eighty percent
      (80%) of the replacement value of said building or buildings and appurtenances
      thereto.

    

    Lessee
      shall furnish Lessor with a certificate or certificates of insurance covering
      all insurance so maintained by Lessee, stipulating that such insurance shall
      not
      be cancelled without ten (10) days advance notice to Lessor.

    

    7. Lessee
      shall use and occupy the demised premises as a business office, warehouse and
      battery manufacturing facility and for any other lawful purpose or business.
      Lessee represents and warrants to Lessor that it will occupy the demised
      premises, and conduct its operations on the demised premises, in compliance
      with
      all applicable federal, state and local laws and regulations, including all
      environmental laws and regulations.

     

    8.     (a) Lessor
      represents and warrants to Lessee that it has good and marketable fee simple
      title to the demised premises, free and clear of all liens, restrictions, and
      encumbrances other than those which do not have a material adverse effect on
      Lessee's intended use of the demised premises. Lessor has received no written
      notice of violation of any law which remains uncorrected on the date hereof
      and,
      to Lessor's knowledge, the demised premises is in compliance with all applicable
      laws and regulations. Lessor shall provide Lessee with a current and valid
      certificate of occupancy for the demised premises simultaneously with the
      execution of this lease. 

    

    (b) Except
      as
      otherwise provided in this lease, it is understood and agreed that Lessee
      accepts the demised premises in the physical condition which the same now are
      and that Lessor shall be under no obligation whatever to make any repairs or
      replacements to the said premises during the term of this lease. 

    

    (c) Lessee,
      at its sole expense, shall keep and maintain the structural and exterior
      portions of the demised premises (including without limitation the walls,
      ceilings, doors, foundations and roofs) in substantially the same condition
      as
      they are in on the date of this lease, ordinary wear and tear excepted. Lessee,
      at its sole expense, shall also keep and maintain all mechanical systems serving
      the demised premises (including the plumbing, electrical, sewer and HVAC systems
      but excluding any assets owned by Lessee) in good operating order and repair.
      Lessee, at its sole expense, shall also make the initial repairs set forth
      on
      Exhibit "B" attached hereto as Lessor and Lessee may agree to, and make any
      necessary replacements and capital improvements which may be required to comply
      with the foregoing covenants or which may be required by any law; provided,
      however, in the event such replacements or capital improvements exceed,
      individually or in the aggregate, $75,000, Lessee shall have the option to
      make
      such replacements or capital improvements or terminate this lease on 60 days
      notice to Lessor. Except as otherwise set forth above, all such repairs and
      replacements shall be made within 30 days after the date Lessee provides Lessor
      with written notice of the need therefor, or immediately in the event such
      condition constitutes a hazard, emergency or violation of any law.

    

    (d) Except
      as
      otherwise provided in subsection (c) above, Lessee, at its sole expense, shall
      make any and all other necessary repairs to the demised premises in order to
      preserve, protect, and maintain the demised premises in substantially the same
      condition as they are in on the date hereof, ordinary wear and tear excepted.
      If
      Lessee fails to make such repairs or fails to maintain properly the demised
      premises, same may be made or done by Lessor at the expense of the Lessee and
      the costs thereof shall be collectible as additional rent or otherwise and
      shall
      be paid by Lessee within five (5) days after rendition of a bill or statement
      thereof.

    

    9. No
      installations, alterations, improvements, additions or changes of a structural
      nature shall be made in or to the demised premises by Lessee without the prior
      consent of Lessor. All installations, alterations, additions, or improvements
      of
      a permanent nature made by Lessee in the demised premises (except such trade
      and
      office fixtures and equipment of Lessee as may be removed without material
      damage to the premises) shall, immediately upon being made or installed, become
      the property of Lessor and shall remain upon and be surrendered with the demised
      premises as a part thereof upon the expiration or earlier termination of this
      lease, without disturbance or injury.

    

    10. Lessee
      shall not assign this lease or underlet the demised premises, or any part
      thereof, without the prior written consent of Lessor, which consent shall not
      be
      unreasonably withheld.

    

    11. Should
      the demised premises be destroyed or rendered unfit for use and occupancy by
      fire or other casualty, Lessee shall, at its option, either replace or repair
      the same, or terminate this agreement.

    

    12. If,
      during the term of this lease, all of the demised premises should be taken
      for
      any public or quasi-public use under any law, ordinance, or regulation or by
      the
      right of eminent domain, or should be sold to the condemning authority under
      threat of condemnation, this lease shall terminate and the rent shall be abated
      during the unexpired portion of this lease, effective as of the date of the
      taking of said premises by the condemning authority.

    

    If
      less
      than all of the leased premises shall be taken for any public or quasi-public
      use under any law, ordinance or regulation, or by right of eminent domain,
      or
      should be sold to the condemning authority under threat of condemnation, this
      lease shall not terminate but Lessor shall forthwith at its sole expense,
      restore and reconstruct the building and other improvements, situated on the
      leased premises, provided such restoration and reconstruction shall make the
      same reasonably tenantable and suitable for the uses for which the premises
      are
      leased and rent shall be equitably abated during such period; provided, however,
      that if such restoration or reconstruction cannot reasonably be or is not
      completed within 120 days following such taking, Lessee shall have the right
      in
      its sole option to terminate this lease. If not so terminated, the rent payable
      hereunder during the unexpired portion of this lease shall be adjusted
      equitably.

    

    In
      any
      event, any condemnation award, or purchase price in lieu thereof, for the taking
      of all or any portion of the premises shall be the property of Lessor whether
      such award or purchase price shall be made as a compensation for diminution
      in
      value of the leasehold or for the taking of the fee, and Lessee hereby assigns
      to Lessor all its right, title, and interest in and to any such award or
      purchase price. Nothing contained herein, however, shall be deemed to preclude
      Lessee from obtaining, or to give Lessor any interest in, any award to Lessee
      for moving expenses or for loss or damage to lessee’s fixtures, equipment or
      other property or for damages for cessation or interruption of Lessee’s
      business.

    

    13. Lessee
      shall keep the demised premises in a neat and clean appearance and shall not
      allow an accumulation of trash, waste or other refuse thereon.

    

    14. If
      Lessor
      should fail to perform any of its obligations under this lease within the time
      specified (or within thirty (30) days after written notice from Lessee if no
      time is specified), Lessee may, at its option, terminate this lease or
perform
      any such obligation (and
      in
      such event, Lessor's consent will not be required under Paragraph 9)
and
      receive a credit against future rental payments due under this lease, in
      addition to all other remedies provided by law or in equity for Lessor's
      default.

    

    15. The
      occurrence of any of the following shall constitute material default and breach
      of this lease by Lessee:

    

    (a) A
      failure
      by Lessee to pay the rent reserved herein, or to make any other payment required
      to be made by Lessee hereunder, where such failure continues for ten (10) days
      after written notice thereof from Lessor to Lessee;

    

    (b) A
      failure
      by Lessee to observe and perform any other provisions or covenants of this
      lease
      to be observed or performed by Lessee, where such failure continues for thirty
      (30) days after written notice thereof from Lessor to Lessee provided; however,
      that if the nature of the default is such that the same cannot reasonably be
      cured within such thirty-day period, Lessee shall not be deemed to be in default
      if Lessee shall within such period commence such cure and thereafter diligently
      prosecutes the same to completion; 

    

    (c) The
      making by Lessee of any assignment for the benefit of creditors; the
      adjudication that Lessee is bankrupt or insolvent; the filing by or against
      Lessee of a petition to have Lessee adjudged bankrupt or a petition for
      reorganization or arrangement under any law relating to bankruptcy (unless,
      in
      the case of a petition filed against Lessee the same is dismissed within sixty
      (60) days after the filing thereof); the appointment of a trustee or receiver
      to
      take possession of substantially all of Lessee’s assets located in the demised
      premises or of Lessee’s interest in this lease (unless possession is restored to
      Lessee within thirty (30) days after such appointment); or the attachment,
      execution or levy against or other judicial seizure of, substantially all of
      Lessee’s assets located in the demised premises or of Lessee’s interest in this
      lease (unless the same is discharged within thirty (30) days after issuance
      thereof).

    

    16. In
      the
      event of any material default or breach of this lease by Lessee as set forth
      in
      paragraph 15 hereof, the rent reserved herein for the entire unexpired portion
      of the term of this lease shall at the Lessor’s option thereupon immediately
      become due and payable. To the extent permitted by law, Lessee shall be
      obligated for such accelerated rent regardless of which, if any, of the remedies
      provided in paragraph 17 hereof or provided by law Lessor elects to pursue.
      

    

    17. In
      the
      event of any material default or breach of this lease by Lessee as set forth
      in
      paragraph 15 hereof; Lessor, at its option, may terminate this lease upon and
      by
      giving written notice of termination to Lessee, or Lessor, without terminating
      this lease, may at any time after such material default or breach, without
      notice or demand additional to that provided in paragraph 15 hereof, and without
      limiting Lessor in the exercise of any other right or remedy which Lessor may
      have by reason of such default or breach (other than the aforesaid right of
      termination), exercise any one or more of the remedies hereinafter provided
      in
      this paragraph or as otherwise provided by law, all of such remedies (whether
      provided herein or by law) being cumulative and non exclusive:

    

    (a) Lessor
      may enter the demised premises (to the extent permitted by law and without
      thereby incurring any liability to Lessee and without such entry being
      constituted an eviction of Lessee or termination of this lease) and take
      possession of the demised premises and, at any time and from time to time relet
      the demised premises or any part thereof for the account of Lessee, for such
      terms, upon such conditions and at such rental as Lessor may deem proper. In
      the
      event of such reletting, (i) Lessor shall receive and collect the rent therefrom
      and shall first apply such rent against such expenses as Lessor may have
      incurred in recovering possession of the demised premises, placing the same
      in
      good order and condition, altering or repairing the same for reletting and
      such
      other expenses, commissions and charges, including attorney’s fees, which Lessor
      may have paid or incurred in connection with such repossession and reletting,
      and then shall apply such rent against the accelerated rent. No re-entry by
      Lessor shall be deemed to be an acceptance of a surrender by Lessee of this
      lease or of the demised premises.

    

    18.
       The
      failure or delay on the part of Lessor or Lessee to enforce or exercise at
      any
      time any of the provisions, rights, or remedies in this lease shall in no way
      be
      construed to be a waiver thereof, nor in any way to effect the validity of
      this
      lease or any part hereof, or the right of Lessor or Lessee, as the case may
      be,
      to thereafter enforce each and every such provision, right to remedy. No waiver
      of any breach of this lease shall be held to be a waiver of any other or
      subsequent breach. The receipt by Lessor of rent at a time when the rent is
      in
      default under this lease shall not be construed as a waiver of such default.
      The
      receipt by Lessor of a lesser amount than the rent due shall not be construed
      to
      be other than a payment on account of the rent then due, nor shall any statement
      on Lessee’s check or any letter accompanying Lessee’s check be deemed an accord
      and satisfaction, and Lessor may accept such payment without prejudice to
      Lessor’s right to recover the balance of the rent due or to pursue any other
      remedies provided in this lease. No act or thing done by Lessor or Lessor’s
      agents or employees during the term of this lease shall be deemed an acceptance
      or a surrender of the demised premises, and no agreement to accept such a
      surrender shall be valid unless in writing and signed by Lessor.

    

    19. Lessor
      reserves the right to assign this lease at any time, including the assignment
      of
      rent as security, and Lessee hereby agrees to make payments of rent to any
      party
      to whom such an assignment is made upon written request of Lessor.

    

    20. Lessor
      shall have the permission at any reasonable time or times upon reasonable prior
      notice (except in the event of an emergency) to enter upon the demised premises
      for the purpose of making inspections and to make repairs, in the event Lessor
      should determine to make such repairs, or for the purpose of protection of
      such
      premises.

    

    21. At
      the
      expiration of the original term of this lease or any extension of such term
      by
      Lessee, Lessee shall surrender the demised premises to Lessor in the same
      condition as when Lessee took possession of such premises, ordinary wear and
      tear excepted.

    

    22. If
      Lessee
      holds over without written consent of Lessor after expiration or termination
      of
      the original term of the lease or any extension of such term by Lessee, Lessee’s
      holdover shall be at the will of Lessor.

    

    All
      notices provided to be given under this agreement shall be given by messenger,
      reliable express delivery service, telecopier or certified mail or registered
      U.S. mail, addressed to the proper party at the following address:

    

    LESSOR:     LESSEE:

    Steven
      F.
      Hoye and    Axion
      Battery Products, Inc.

    Steven
      C.
      Warner    Attn:
      Thomas G. Granville, CEO

    Box
      202     3601
      Wilmington Road

    New
      Wilmington, PA 16142   New
      Castle, PA 16105

    Fax:
            Fax:
      

    

    With
      a
      copy to:     With
      a
      copy to:

    

    William
      E. Kelleher, Jr., Esq.

    Cohen
      & Grigsby, P.C.

    11
      Stanwix Street, 15th
      Floor

    Pittsburgh,
      PA 15222

    Fax:
      412-209-1997

    

    Notices
      shall be deemed to have been given on the date of receipt by the addressee
      (or,
      if the date of receipt is not a business day, on the first business day after
      the date of receipt), as evidenced by (i) a receipt executed by the
      addressee (or a responsible person in his or her office) or a notice to the
      effect that such addressee refused to accept such communication, if sent by
      messenger, U.S. mail or express delivery service, or (ii) a receipt
      generated by the sender's telecopier showing that such communication was sent
      to
      the appropriate number on a specified date, if sent by telecopier. 

    

    24. At
      Lessee’s request, Lessor agrees to execute a Memorandum of Lease in such form as
      may be recorded in the Office of the Recorder of Deeds of Lawrence County,
      Pennsylvania.

    

    25. If
      and so
      long as Lessee pays the rent and observes and performs all of the covenants,
      conditions and provisions on Lessee's part to be observed and performed
      hereunder, Lessee shall and may peaceably and quietly have, hold and enjoy
      the
      Premises for the term and any renewal or extension thereof, subject nevertheless
      to all of the provisions of this lease. Lessor covenants that no other lessees
      of Lessor occupying any portion of Lessor's property shall unreasonably
      interfere with the business or operations of Lessee; provided, however, Lessee
      acknowledges that CBC is currently in possession and use of the premises leased
      under the CBC Lease. 

    

    WITNESS
      the following signatures and seals:

    

    
      	
              WITNESS:

               

               

               

               

               

               

               

            	
              LESSOR:

               

               

               

              Steven
                F. Hoye

               

               

               

              Steven
                C. Warner

               

            
	
              ATTEST:

               

               

               

               

               

            	
              LESSEE:

               

              AXION
                BATTERY PRODUCTS, INC.

               

               

              By:     

              Thomas
                G. Granville

              CEO
                and President

            

    

    

    1048999_1

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