Document:

ASSET
      PURCHASE AGREEMENT

     

    THIS
      ASSET PURCHASE AGREEMENT (this “Agreement”) is made and entered into this 10th
      day of February, 2006 (the “Effective Date”), by and between National City Bank
      of Pennsylvania, a national banking association (“Seller”), and Axion Battery
      Products, Inc., a Pennsylvania corporation (“Buyer”). 

     

    RECITALS:

     

    WHEREAS,
      pursuant to a Commercial Note dated June 4, 1997 (as may have been amended,
      modified or supplemented from time to time, the “Note”), Seller has made certain
      loans (the “Loans”) to New Castle Battery Manufacturing Company, a Pennsylvania
      corporation (the “Company”); 

     

    WHEREAS,
      the Loans were secured by a security interest in all of the Company’s Inventory,
      Chattel Paper, Accounts, Equipment and General Intangibles and other Collateral
      in accordance with, and as such terms are defined in, that certain Commercial
      Security Agreement between the Company and Seller, dated as of November 24,
      2002
      (the “Security Agreement”, and together with the Note and Loan Agreement,
      collectively, the “Loan Documents”);

     

    WHEREAS,
      Seller has advised Buyer that the Company is in default under the Loan
      Documents, that Seller has taken, or will take, possession of the Collateral
      and
      that Seller is entitled to sell the Assets (as defined below) at a private
      sale
      pursuant to Section 9-610 of the Uniform Commercial Code as in effect in
      Pennsylvania, 13 PA CONS. STAT. ANN. § 1101, et seq.
      (the
“UCC”); and 

     

    WHEREAS,
      the Seller wishes to sell, and the Buyer wishes to purchase, the Assets all
      on
      the terms and conditions set forth below.

     

    NOW
      THEREFORE, in consideration of the mutual promises, representations and
      warranties contained in this Agreement, and intending to be legally bound,
      the
      parties hereto do hereby agree as follows:

     

    ARTICLE
      I
      -  PURCHASE
      AND SALE

     

    1.1  Purchase
      and Sale.
      On the
      terms and subject to the conditions contained in this Agreement, on the Closing
      Date (as defined below), Buyer shall purchase from Seller, and Seller shall
      sell
      to Buyer, all of the Company’s rights, title and interest in and to all of the
      assets subject to Seller’s security interest (excluding Accounts, but including,
      by way of example only and not limitation, the property listed on Exhibit “A”
hereto) (the “Assets”) free and clear of any lien, security interest, charge,
      pledge or encumbrance, except only for the encumbrances listed on Exhibit "B"
      attached hereto ("Permitted Encumbrances").

     

    1.2  No
      Liabilities.
      Pursuant to UCC § 9617(a) and this Agreement, the transfer of the Assets to
      Buyer, at the Closing, will transfer all of the Company’s rights in the Assets,
      discharge the security interest of Seller in the Assets and discharge any other
      security interest or lien in the Assets that was subordinate to Seller’s
      security interest. By acquiring the Assets, Buyer assumes no liability of any
      nature or kind whatsoever, other than the obligation to pay the Purchase Price
      in accordance with Section 1.3 below.

     

    1.3   Purchase
      Price.

     

    (a)
       The
      purchase price for the Assets (the “Purchase Price”) shall be Eight Hundred
      Thousand Dollars ($800,000). Except as otherwise provided in the Escrow
      Agreement, the Purchase Price shall be paid by bank check or wire transfer
      as
      hereinafter provided. 

     

    (b)
       Seller
      acknowledges that Buyer has previously paid to Seller a deposit of $105,000,
      which deposit Seller shall apply to the Purchase Price at the Closing, and
      which
      deposit will be refundable only as provided in Section 8.1(b)
      hereof.

     

    (c)
       Contemporaneous
      with the signing of this Agreement, the parties, together with the Escrow Agent
      named therein, shall enter into an Escrow Agreement, on terms and conditions
      mutually satisfactory to the parties, providing for the escrow and subsequent
      payment to Seller (or refund to Buyer) of $90,000 of the Purchase
      Price.

     

    ARTICLE
      II -  CLOSING

     

    2.1  Time,
      Date and Place.
      The
      closing of the purchase and sale of the Assets and the other
      transactions contemplated by this Agreement (the“Closing”)
      shall take place at the offices of Klett Rooney Lieber & Schorling,
      40th
      Floor,
      One Oxford Centre, Pittsburgh, PA 15219, or such other place as the parties
      may
      agree. The Closing shall be held on a mutually convenient date and time as
      soon
      as practicable after all conditions to closing have been satisfied in accordance
      with Article VII, but no later than February 14, 2006 (such date is referred
      to
      throughout this Agreement as the “Closing Date”) unless this Agreement is
      earlier terminated in accordance with Article VIII. 

     

    2.2  Closing
      Costs And Due Diligence.
      All
      expenses incurred by Seller or Buyer with respect to the consummation of the
      transaction contemplated by this Agreement are to be borne and paid exclusively
      by the party incurring same. 

     

    ARTICLE
      III -  DELIVERIES
      AT THE CLOSING

     

    3.1  Deliveries
      by Seller.
      In
      addition to any other documents to be delivered under other provisions of this
      Agreement, at the Closing Seller shall deliver to Buyer the
      following:

     

    (a) a
      bill of
      sale executed by Seller for all of the Assets in a form to be mutually agreed
      to
      by the parties;

     

    (b) a
      duly
      executed counterpart of the Escrow Agreement;

     

    (c) an
      amendment or amendments (form UCC-3), in suitable form for filing in all
      applicable filing offices, to all financing statements filed by Seller against
      the Company confirming the discharge of Seller’s security interest in the
      Assets, together with confirmation that all such amendments have been filed,
      or
      will be filed contemporaneous with the Closing;

     

    (d) such
      other deeds, bills of sale, assignments, certificates of title, transfer
      statements, documents and other instruments of transfer and conveyance as may
      reasonably be requested by Buyer, each in a form to be to mutually agreed upon
      by the parties and executed by Seller; and

     

    (e)
       a
      certificate executed by Seller as to the accuracy of its representations and
      warranties as of the date of this Agreement and as of the Closing and as to
      its
      compliance with and performance of its covenants and obligations to be performed
      or complied with at or before the Closing in accordance with Section
      7.2.

     

    3.2  Deliveries
      by Buyer.
      In
      addition to any other documents to be delivered under other provisions of this
      Agreement, at the Closing Buyer shall deliver to Seller the
      following:

     

    (a)
      Six
      Hundred Five Thousand dollars ($605,000) by bank check or wire transfer to
      an
      account specified by Seller in writing to Buyer at least one (1) business day
      prior to the Closing Date;

     

    (b) a
      duly
      executed counterpart of the Escrow Agreement, together with evidence that Buyer
      has delivered the balance of the Purchase Price ($90,000) to Escrow Agent to
      be
      held and disbursed in accordance with the Escrow Agreement;

     

    (c) a
      certificate executed by Buyer as to the accuracy of its representations and
      warranties as of the date of this Agreement and as of the Closing and as to
      its
      compliance with and performance of its covenants and obligations to be performed
      or complied with at or before the Closing in accordance with Section 7.1; and
      

     

    (d)
       a
      certificate of the Secretary of Buyer certifying, as complete and accurate
      as of
      the Closing, attached copies of all requisite resolutions or actions of Buyer’s
      board of directors approving the execution and delivery of this Agreement and
      the consummation of the transaction contemplated hereby and certifying to the
      incumbency and signatures of the officers of Buyer executing this Agreement
      and
      any other documents relating to the transactions being consummated at the
      Closing.

     

    ARTICLE
      IV -  REPRESENTATIONS
      AND WARRANTIES OF SELLER

     

    4.1  Seller
      represents and warrants to Buyer as of the date hereof:

     

    (a) Seller
      is
      a national banking association duly organized, validly existing, and in good
      standing under the laws of the United States, with full corporate power and
      authority to carry on its business as currently conducted. 

     

    (b)
       (i)
      This
      Agreement and the Escrow Agreement constitute the legal, valid and binding
      obligations of Seller, enforceable against it in accordance with their terms.
      Seller has the absolute and unrestricted right, power and authority to execute
      and deliver, and carry out the transactions contemplated by, this Agreement
      and
      the Escrow Agreement.

     

    (ii) Neither
      the execution and delivery of this Agreement or the Escrow Agreement, nor the
      consummation or performance of any of the transactions contemplated by this
      Agreement or the Escrow Agreement, will directly or indirectly (with or without
      the passage of time): breach any provision of the charter or bylaws of Seller;
      breach or give any governmental body or other person the right to challenge
      the
      transactions contemplated by this Agreement or to exercise any remedy or obtain
      any relief under any law or order to which Seller or any of the Assets may
      be
      subject; contravene, conflict with or result in a violation or breach of any
      of
      the terms or requirements of, or give any governmental body the right to revoke,
      withdraw, suspend, cancel, terminate or modify, any governmental authorization
      that is held by Seller or that otherwise relates to the Assets; breach any
      provision of, or give any person the right to declare a default or exercise
      any
      remedy under, or to accelerate the maturity or performance of, or payment under,
      or to cancel, terminate or modify, any contract by which Seller is bound; or
      result in the imposition or creation of any encumbrance upon or with respect
      to
      any of the Assets.

     

    (iii) Except
      for the notices referenced in Section 7.2 below, Seller is not required to
      give
      any notice or obtain any consent from any person in connection with the
      execution and delivery of this Agreement or the consummation or performance
      of
      any of the transactions contemplated by this Agreement.

     

    (c) Seller
      has a duly perfected, first priority, valid and enforceable security interest
      in
      the Assets. The sale by Seller under this Agreement has been, and will be as
      of
      the Closing, conducted in compliance with and satisfaction of any applicable
      requirements of the Loan Documents and the UCC, and will transfer to Buyer
      good
      and transferable title to the Assets free and clear of any lien or encumbrance
      of any kind, except only for the Permitted Encumbrances. The Company is in
      default under the Loan Documents and the amount owed by the Company to Seller
      under the Loan Documents, as of the date of this Agreement, is not less than
      the
      Purchase Price.

     

    (d) There
      is
      no litigation, claim or administrative action, nor any order, decree or
      judgment, in progress or pending, or, to the knowledge of Seller, threatened,
      against or relating to Seller, to Seller’s knowledge, no facts or circumstances
      exist which would reasonably be expected to give rise to litigation, claims
      or
      administrative actions which would prevent, restrain or affect Seller’s ability
      to perform the transaction contemplated by this Agreement.

     

    ARTICLE
      V -  REPRESENTATIONS,
      WARRANTIES AND COVENANTS OF BUYER

     

    5.1  Buyer
      represents and warrants to Seller as of the date hereof:

     

    (a)  Buyer
      is
      a corporation duly organized, validly existing, and in good standing under
      the
      laws of the Commonwealth of Pennsylvania with full corporate power and authority
      to conduct its business as it is now conducted. 

     

    (b)  This
      Agreement and the Escrow Agreement constitute the legal, valid and binding
      obligations of Buyer, enforceable against it in accordance with their terms.
      Buyer has the absolute and unrestricted right, power and authority to execute
      and deliver this Agreement and the Escrow Agreement and to perform its
      obligations under this Agreement and such action has been duly authorized by
      all
      necessary corporate action.

     

    (c)  Neither
      the execution and delivery of this Agreement or the Escrow Agreement by Buyer,
      nor the consummation or performance of any of the transactions contemplated
      by
      this Agreement or the Escrow Agreement directly or indirectly (with or without
      the passage of time): will give any person the right to prevent, delay or
      otherwise interfere with any of the transactions contemplated hereby pursuant
      to: any provision of Buyer’s charter or bylaws; any resolution adopted by the
      board of directors of Buyer; any provision of any law, statute, rule, regulation
      or executive order to which Buyer or any of its assets or properties is subject;
      any contract to which Buyer is a party or by which Buyer may be bound; or any
      judgment, order, writ or decree of any court or administrative body applicable
      to Buyer or any of its assets or properties.

     

    (d)  There
      is
      no litigation, claim or administrative action, nor any order, decree or
      judgment, in progress or pending, or, to the knowledge of Buyer, threatened,
      against or relating to Buyer and, to Buyer’s knowledge, no facts or
      circumstances exist which would reasonably be expected to give rise to
      litigation, claims or administrative actions which would prevent, restrain
      or
      affect Buyer’s ability to perform the transaction contemplated by this
      Agreement.

     

    (e) Buyer
      is
      not and will not be required to give any notice or obtain any consent from
      any
      person in connection with the execution and delivery of this Agreement or the
      consummation or performance of any of the transactions contemplated by this
      Agreement.

     

    ARTICLE
      VI -  DUE
      DILIGENCE AND
      NO
      WARRANTIES

     

    6.1  Access
      and Investigation.
      Prior
      to the Closing and upon reasonable notice to it, Seller shall afford to the
      officers, attorneys, accountants or other authorized representatives of Buyer
      reasonable access during normal business hours to the Assets, so as to afford
      Buyer an opportunity to make, at its sole cost and expense, such review,
      examination and investigation as Buyer may reasonably desire to make of the
      Assets. Buyer acknowledges and agrees that Seller has never operated the Company
      or any business using the Assets. Therefore, Seller cannot, and will not,
      provide Buyer with any information about the business of the Company, the value
      of the Assets, or their usefulness in, or adequacy for, carrying on any
      business. 

     

    6.2 Disclaimer
      of Warranties; “AS-IS” Conveyance.

     

    (i)  BUYER
      ACKNOWLEDGES TO, AND AGREES WITH, SELLER THAT BUYER IS PURCHASING THE ASSETS
      IN
      AN “AS IS - WHERE IS” CONDITION “WITH ALL FAULTS” AND SPECIFICALLY AND EXPRESSLY
      WITHOUT ANY WARRANTIES, REPRESENTATIONS OR GUARANTEES, EITHER EXPRESS OR
      IMPLIED, OF ANY KIND OR NATURE FROM SELLER EXCEPT FOR THE REPRESENTATIONS AND
      WARRANTIES EXPRESSLY SET FORTH IN THIS AGREEMENT. Buyer acknowledges that Buyer
      has not relied, and is not relying, upon any information, document, sales
      brochure, due diligence/property information package or other literature, map
      or
      sketch, projection, pro forma statement, representation, guarantee or warranty
      (whether express or implied, or oral or written, material or immaterial) that
      may have been given by or made by or on behalf of or omitted by the Seller,
      its
      agents, representatives, consultants and/or attorneys with respect to
(i)
      the
      quality, nature, adequacy or physical condition of the Assets; (ii)
      the
      development potential of the Assets for any particular purpose; (iii)
      the
      Assets’ or their operation’s compliance with any applicable codes, laws,
      regulations, statutes, ordinances, covenants, conditions or restrictions of
      any
      governmental or quasi governmental entity; or (iv)
      the
      Assets’ or their operation’s compliance with any applicable labor laws.

     

    (ii)  BUYER
      ACKNOWLEDGES TO, AND AGREES WITH, SELLER THAT, WITH RESPECT TO THE ASSETS AND
      EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, SELLER HAS NOT AND DOES NOT
      AND
      WILL NOT MAKE ANY WARRANTIES OR REPRESENTATION, EXPRESS OR IMPLIED, OR ARISING
      BY OPERATION OF LAW INCLUDING, BUT IN NO WAY LIMITED TO, ANY WARRANTY OF TITLE,
      POSSESSION, QUIET ENJOYMENT, CONDITION, MERCHANTABILITY OR FITNESS FOR A
      PARTICULAR USE OR WITH RESPECT TO THE VALUE, PROFITABILITY OR MARKETABILITY
      OF
      THE ASSETS OR WITH RESPECT TO COMPLIANCE OF THE ASSETS WITH ANY ENVIRONMENTAL
      PROTECTION OR POLLUTION LAW, RULE OR REGULATION, ORDER OR REQUIREMENT, INCLUDING
      BUT NOT LIMITED TO, THOSE PERTAINING TO THE HANDLING, GENERATING, TREATING,
      STORING OR DISPOSING OF ANY HAZARDOUS WASTE OR SUBSTANCE.

     

    (iii)  Except
      with respect to any specific obligations of Seller under this Agreement or
      the
      Escrow Agreement, Buyer does hereby release, and forever discharge Seller,
      its
      employees, representatives, agents, sub-agents, successors, assigns and
      attorneys from any and all claims for damages and other causes of action at
      law
      or equity for injury, destruction, loss or damage of any kind or character,
      to
      the person or property of Buyer and Buyer’s employees, agents and
      representatives arising out of, or in any way relating to, any of the matters
      referred to in this Section 6.2 as not being the responsibility of
      Seller.

     

    (iv)  Except
      as
      otherwise set forth in the Escrow Agreement, Buyer acknowledges Seller shall
      not
      be obligated to pay, either prior to or after the Closing, any sums or perform
      any work with respect to any portion of the Assets for any reason
      whatsoever.

     

    ARTICLE
      VII -  CLOSING
      CONDITIONS 

     

    7.1  Seller’s
      Conditions to Closing.
      Seller’s obligation to sell the Assets and to take the other actions required to
      be taken by Seller at the Closing is subject to the satisfaction, at or prior
      to
      the Closing, of each of the following conditions (any of which may be waived
      by
      Seller in whole or in part):

     

    (a)  All
      of
      Buyer’s representations and warranties in this Agreement (considered
      collectively), and each of these representations and warranties (considered
      individually), shall have been accurate in all material respects as of the
      date
      of this Agreement and shall be accurate in all material respects as of the
      time
      of the Closing as if then made.

     

    (b)  All
      of
      the covenants and obligations that Buyer is required to perform or comply with
      pursuant to this Agreement at or prior to the Closing (considered collectively),
      and each of these covenants and obligations (considered individually), shall
      have been performed and complied with in all material respects. 

     

    (c)  Every
      consent which Buyer needs to obtain in order to consummate the transactions
      contemplated by this Agreement shall have been obtained and shall be in full
      force and effect. Copies of all such consents shall have been delivered to
      Seller prior to the Closing.

     

    (d)  Buyer
      shall have delivered to Seller a certificate of an officer of Buyer dated the
      Closing Date certifying that all conditions set forth in Section 7.2 have been
      satisfied or waived. 

     

    (e) There
      shall not be in effect any law or regulation or any injunction or other order
      that (i) prohibits the consummation of the transactions contemplated hereby
      and
      (ii) has been adopted or issued, or has otherwise become effective, since the
      date of this Agreement.

     

    7.2  Buyer’s
      Conditions to Closing.
      Buyer’s
      obligation to purchase the Assets and take the other actions required to be
      taken by Buyer at the Closing is subject to the satisfaction, at or prior to
      the
      Closing, of each of the following conditions (any of which may be waived by
      Buyer, in whole or in part):

     

    (a)  All
      of
      Seller’s representations and warranties in this Agreement (considered
      collectively), and each of these representations and warranties (considered
      individually), shall have been accurate in all material respects as of the
      date
      of this Agreement, and shall be accurate in all material respects as of the
      of
      the Closing as if then made.

     

    (b)  All
      of
      the covenants and obligations that Seller is required to perform or to comply
      with pursuant to this Agreement at or prior to the Closing (considered
      collectively), and each of these covenants and obligations (considered
      individually), shall have been performed and complied with in all material
      respects. 

     

    (c)  Every
      action which Seller needs to take in order to consummate the transactions
      contemplated by this Agreement shall have been taken or completed (including
      the
      lapse of any notice, grace or cure period) and shall be in full force and
      effect, including, but not limited to, declaring a default under its Loan
      Documents, taking possession of the Assets, notifying all parties entitled
      to
      notice under the UCC regarding this Agreement or any of the transactions
      contemplated by this Agreement, and, if necessary, obtaining from the Company
      or
      any guarantor a waiver of any right of redemption under UCC § 9623 or otherwise.
      Copies of all notices, demands and all other authenticated records, documents
      or
      instruments relating to the foregoing shall have been delivered by Seller to
      Buyer prior to Closing.

     

    (d)  Seller
      shall have delivered to Buyer a certificate of an officer or Seller dated the
      Closing Date certifying that all conditions set forth in Section 7.1 have been
      satisfied or waived.

     

    (e)  There
      shall not be in effect any law or regulation or any injunction or other order
      that (i) prohibits the consummation of the transactions contemplated hereby
      and
      (ii) has been adopted or issued, or has otherwise become effective, since the
      date of this Agreement.

     

    ARTICLE
      VIII -  TERMINATION

     

    8.1  By
      written notice given prior to or at the Closing, this Agreement may be
      terminated as follows:

     

    (a)  by
      mutual
      consent of Buyer and Seller;

     

    (b)  by
      Buyer
      if a material breach of any provision of this Agreement has been committed
      by
      Seller and such breach has not been waived by Buyer. If Buyer validly terminates
      this Agreement pursuant to this Section 8.1(b), Seller shall return the $105,000
      in deposits paid pursuant to Section 1.3 of this Agreement unless the Buyer
      is
      in material breach of this Agreement; 

     

    (c)  by
      Seller
      if a material breach of any provision of this Agreement has been committed
      by
      Buyer and such breach has not been waived by Seller; OR

     

    (d)  by
      either
      party if the Closing has not occurred on or before February 10, 2006 or such
      later date as the parties may agree upon, unless the terminating party is in
      material breach of this Agreement. 

     

    8.2  Each
      party’s right of termination under Section 8.1 is in addition to any other
      rights it may have under this Agreement or otherwise, and the exercise of such
      right of termination will not be an election of remedies. If this Agreement
      is
      terminated pursuant to Section 8.1, all obligations of the parties under this
      Agreement will terminate, except that the obligations of the parties in this
      Section 8.2 will survive, provided, however, that, if this Agreement is
      terminated because of a breach of this Agreement by the nonterminating party
      or
      because one or more conditions to the terminating party’s obligations under this
      Agreement is not satisfied as a result of the party’s failure to comply with its
      obligations under this Agreement, the terminating party’s right to pursue all
      legal remedies will survive such termination unimpaired.

     

    ARTICLE
      IX -  ADDITIONAL
      COVENANTS 

     

    9.1 The
      parties shall cooperate reasonably with each other in connection with any steps
      required to be taken as part of their respective obligations under this
      Agreement, and shall execute and deliver to each other such other documents
      and
      do such other acts and things, all as the other party may reasonably request
      for
      the purpose of carrying out the intent of this Agreement.

     

    ARTICLE
      X -  MISCELLANEOUS

     

    10.1  
      Neither
      party may assign any of its rights or delegate any of its duties or obligations
      under this Agreement without the prior written consent of the other party.
      Subject to the foregoing sentence, this Agreement shall be binding upon and
      inure to the benefit of the parties hereto and their respective successors
      and
      permitted assigns.

     

    10.2  All
      notices, consents, waivers and other communications required or permitted by
      this Agreement shall be in writing and shall be deemed given to a party when
      (a)
      delivered to the appropriate address by hand or by nationally recognized
      overnight courier service (costs prepaid); (b) sent by facsimile or e-mail
      with
      confirmation of transmission by the transmitting equipment; or (c) received
      or
      rejected by the addressee, if sent by certified mail, return receipt requested,
      in each case to the following addresses, facsimile numbers or e-mail addresses
      and marked to the attention of the person (by name or title) designated below
      (or to such other address, facsimile number, e-mail address or person as a
      party
      may designate by notice to the other parties):

     

    If
      to
      Buyer, to:

    Thomas
      G.
      Granville, CEO

    Axion
      Battery Products, Inc.

    c/o
      William E. Kelleher, Jr., Esq.

    Cohen
      & Grigsby, P.C.

    11
      Stanwix Street, 15th
      Floor

    Pittsburgh,
      PA 15222

     

    with
      a
      copy (which shall not constitute notice), to:

    Cohen
      & Grigsby, P.C.

    11
      Stanwix Street, 15th
      Floor

    Pittsburgh,
      PA 15222

    Attention:
      William E. Kelleher, Jr., Esq.

    

    If
      to
      Seller, to:

    National
      City Bank of Pennsylvania

    20
      Stanwix Street

    Pittsburgh,
      PA 15222

    Attention:
      Edward Kitchen

    

    with
      a
      copy (which shall not constitute notice), to:

    Klett
      Rooney Lieber & Schorling

    40th
      Floor, One Oxford Centre

    Pittsburgh,
      PA 15219-6498

    Attention:
      James D. Newell, Esq.

     

    10.3  This
      Agreement, together with the Escrow Agreement, supersedes all prior agreements,
      whether oral or written, between the parties with respect to the subject matter
      hereof and constitutes (along with the other documents delivered pursuant to
      this Agreement) a complete and exclusive statement of the terms of the agreement
      between the parts with respect to the subject matter hereof. This Agreement
      may
      not be amended, supplemented or otherwise modified except by a written document
      executed by the party to be charged with the amendment.

     

    10.4  Any
      proceeding arising out of or relating to this Agreement or any transaction
      contemplated hereunder may be brought in the courts of the Commonwealth of
      Pennsylvania, County of Allegheny, or if it has or can acquire jurisdiction,
      in
      the United States District Court for the Western District of Pennsylvania,
      and
      each of the parties irrevocably submits to the exclusive jurisdiction of each
      such court in any such proceeding, waives any objection it may now or hereafter
      have to venue or to convenience of forum, agrees that all claims in respect
      of
      the proceeding shall be heard or determined only in such court and agrees not
      to
      bring any proceeding arising out of or relating to this Agreement or any of
      the
      transactions contemplated hereunder in any other court.

     

    10.5  This
      Agreement may be executed in any number of counterparts, each of which shall
      be
      deemed to be an original, but all of which together shall constitute one and
      the
      same instrument.

     

    10.6  The
      section and subsection headings contained in this Agreement are included for
      convenience only and form no part of the agreement between the
      parties.

     

    10.7  If
      any
      provision of this Agreement is held invalid or unenforceable by any court of
      competent jurisdiction, the other provisions of this Agreement will remain
      in
      full force and effect. Any provision of this Agreement held invalid or
      unenforceable only in part or degree will remain in full force and effect to
      the
      extent not held invalid or unenforceable. 

     

    10.8  This
      Agreement shall be governed by and construed under the laws of the Commonwealth
      of Pennsylvania without regard to conflicts-of-laws principles that would
      require the application of any other law.

     

    10.9  Nothing
      in this Agreement shall confer any rights upon any person or entity other than
      the parties hereto (except for any permitted successors or assigns).

     

    SIGNATURES
      CONTAINED ON NEXT PAGE

    
      
        11

        

        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    SIGNATURE
      PAGE FOR ASSET PURCHASE AGREEMENT

     

    IN
      WITNESS WHEREOF, this Asset Purchase Agreement has been executed by the duly
      authorized officer or manager of each of the parties as of the Effective
      Date.

     

    BUYER:

     

    AXION
      BATTERY PRODUCTS, INC.

     

    By:
            

     

    Name:
           

     

    Title:
            

     

    SELLER:

     

    NATIONAL
      CITY BANK OF PENNSYLVANIA

     

    By:
            

     

    Name:
           

     

    Title:
            

     

    

     

    1041771_3EX-10.23

    ESCROW
      AGREEMENT

     

    This
      Escrow Agreement (the “Agreement”) is made and entered into as of the ___ day of
      February, 2006, by and among Axion Battery Products, Inc. ("Axion") and National
      City Bank of Pennsylvania ("Bank", and together with Axion, the "Parties")
      and
      William E. Kelleher, Jr. and James D. Newell (collectively, "Agents").

     

     Background

     

    A. The
      Bank,
      as Seller, and Axion, as Buyer, are parties to that certain Asset Purchase
      Agreement ("APA") of even date herewith, pursuant to which Seller has agreed
      to
      transfer to Buyer free and clear title to the Assets (as such term is defined,
      and as other capitalized terms used in this Agreement that are not otherwise
      defined herein are defined, in the APA) for the total Purchase Price of
      $800,000.

     

    B. Certain
      of the Assets, specifically three (3) molds (the "Molds") in the possession
      of
      Richardson Moulding, Inc. ("Richardson"), are the subject of a pre-judgment
      attachment or other encumbrance asserted by Richardson (the "Richardson Claim")
      in connection with the action brought by Richardson against New Castle Battery
      Manufacturing Company that is pending in the Chancery Court of Neshoba County,
      Mississippi at Cause No. 2005-343 (the "Action").

     

    C. Notwithstanding
      the Richardson Claim, Seller will convey to Buyer title to the Molds, but the
      Parties have agreed to escrow a portion of the Purchase Price pending resolution
      of the Richardson Claim, subject to and in accordance with the terms of this
      Agreement.

     

     Provisions

     

    The
      Parties, for good and valuable consideration, receipt and sufficiency of which
      is hereby acknowledged, and intending to be legally bound hereby, agree as
      follows:

     

    1.  Appointment
      of Escrow Agent. The
      Parties appoint Agents to act, jointly, as escrow agent ("Escrow Agent") under
      this Agreement and Agents agree to serve as Escrow Agent under this Agreement.
      

     

    2.  Escrowed
      Funds.“Escrowed
      Funds” shall mean and refer to the sum of $90,000 to be deposited by Axion with
      Escrow Agent, who shall maintain such funds in a joint (two signature)
      depository account ("Escrow Account") at a mutually acceptable bank (other
      than
      Bank) with offices in Pittsburgh until disbursed in accordance with this
      Agreement. To the extent required by any income tax, withholding or other
      applicable law, Axion will provide its Federal Employer Identification Number
      to
      Agents and the Escrowed Funds will be maintained or reported under such number;
      provided, however, that the ultimate liability or responsibility for any income
      or other taxes payable or reportable with respect to the Escrowed Funds or
      any
      interest earned thereon shall be determined by applicable law and not by this
      Agreement.

     

    3.  Operation
      of Escrow. The
      Escrow Agent is specifically and irrevocably authorized and directed by the
      Parties to maintain the Escrowed Funds in the Escrow Account to be disbursed
      consistent with the terms of this Agreement.

     

    4.  Disbursement
      of Funds. The
      Escrow Agent shall disburse the Escrow Funds (including any interest earned
      thereon, but less any maintenance, account fees or other charges imposed by
      the
      bank): (a) to Bank, upon receipt of a written certification from Bank, together
      with satisfactory written evidence from Richardson or the Court having
      jurisdiction over the Action that either (i) Richardson has voluntarily
      relinquished and irrevocably released the Richardson Claim as it relates to
      the
      Molds, or (ii) the Action has been resolved, in whole or in part, whether by
      stipulation, withdrawal, dismissal or judicial determination, in a manner that
      removes and releases, finally and without subject to any appeal, the Richardson
      Claim as it relates to the Molds, or (iii) Richardson has relinquished and
      irrevocably released any and all rights, claims and interests in the Molds
      that
      accrued prior to the date of this Agreement; (b) to Bank, upon written
      certification from Bank or Axion that actual possession of the Molds has been
      delivered to Axion at its facility in New Castle, Pennsylvania or to some other
      location designated by Axion; (c) to Bank, upon written certification from
      Axion
      that Richardson has agreed to produce products for Axion from the Molds on
      terms
      (including without limitation price, quantity, quality, shipping, and delivery
      time) deemed commercially reasonable and satisfactory to Axion and that at
      the
      expiration of such agreement with Richardson, the Molds will be returned to
      Axion; or (d) to Axion, if Escrow Agent has not received a written certification
      that one of the events in subsection (a) through (c) above has occurred prior
      to
      the expiration of the Escrow Period (as defined below). Disbursement of the
      Escrowed Funds in accordance with this Section 4 shall constitute full
      satisfaction of Axion's obligation to pay the balance of the Purchase Price
      under the APA.

     

    5.  Duration
      of Escrow.
      Unless
      extended by a written agreement signed by all parties hereto, under no
      circumstances shall the Escrow Agent maintain the Escrowed Funds for more than
      180 days from the date of execution of this Agreement ("Escrow
      Period").

     

    6.  Escrow
      Agent's Duties.
      The
      duties of Escrow Agent under this Agreement are purely ministerial in nature
      and
      shall be expressly limited to the safekeeping of the Escrowed Funds and for
      disbursement of the Escrowed Funds in accordance with the terms of this
      Agreement. The Escrow Agent undertakes to perform only the duties expressly
      contained in this Agreement, and no implied duties or obligations not identified
      in this Agreement.

     

    7.  Liability
      of Escrow Agent.
      Escrow
      Agent shall have no liability or obligation with respect to the Escrowed Funds
      except for Escrow Agent's willful misconduct or gross negligence. Escrow Agent's
      sole responsibility shall be for the safekeeping and disbursement of the
      Escrowed Funds in accordance with the terms of this Agreement. Escrow Agent
      may
      rely upon any writing or instrument, including any electronic communication,
      not
      only as to its due execution, validity and effectiveness, but also as to the
      truth and accuracy of any information contained therein, which Escrow Agent
      shall in good faith believe to be genuine, to have been signed or presented
      by
      the person or parties purporting to sign the same and which conforms to the
      provisions of this Escrow Agreement.

     

    8.  Resignation.
      Escrow
      Agent may resign at any time upon the giving of not less than thirty (30) days'
      written notice to the Parties. In such an event, the Escrow Agent shall deliver
      the Escrowed Funds and any and all documents relating thereto to the successor
      Escrow Agent mutually appointed by the Parties, who shall upon receipt of the
      Escrowed Funds become vested with all the rights, powers, privileges and duties
      of the retiring Escrow Agent. The retiring Escrow Agent shall be discharged
      from
      any duties and obligations under this Escrow Agreement, but shall not be
      discharged from any liability for actions taken as Escrow Agent hereunder prior
      to such succession. After retiring Escrow Agent's resignation or removal, the
      provisions of this Escrow Agreement shall inure to the retiring Escrow Agent's
      benefit as to any actions taken or omitted to be taken by the retiring Escrow
      Agent while acting as Escrow Agent under this Escrow Agreement.

     

    9.  Miscellaneous
      Provisions.

     

    9.1 Binding
      Effect.
      All of
      the terms and provisions of this Agreement shall be binding upon, inure to
      the
      benefit of, and be enforceable by, the signatories to this Agreement and their
      respective heirs, successors, legal representatives, and permitted
      assigns.

     

    9.2 Severability.
      If any
      provision of this Agreement or the application of a provision to any person
      or
      circumstance shall, to any extent, be invalid or unenforceable, the remainder
      of
      this Agreement and the application of the invalid or unenforceable provision
      to
      persons or circumstances other than those as to which it is invalid or
      unenforceable shall not be affected, and the remainder of this Agreement shall
      otherwise remain in full force and effect. Moreover, the invalid or
      unenforceable provision shall be reformed, if possible, so as to accomplish
      most
      closely the intent of the Parties consistent with applicable law.

     

    9.3 Waiver.
      Except
      as otherwise expressly provided in this Agreement, no waiver of any rights
      or
      obligations under this Agreement shall be deemed to have occurred unless the
      purported waiver is contained in a writing signed by the party against whom
      the
      waiver is asserted. Further, the failure or delay of any party at any time
      to
      require performance by another party of any provision of this Agreement shall
      not affect the right of that party at a later date to require performance of
      the
      provision or to exercise any right, power, or remedy provided for under this
      Agreement. The waiver by any party of any breach of any provision of this
      Agreement shall not be construed as continuing or as a bar to or waiver of
      any
      right or remedy as to any subsequent event. No notice to or demand on any party,
      in any case, shall of itself entitle that party to any other or further notice
      or demand in similar or other circumstances.

     

    9.4 Third
      Parties.
      Nothing
      in this Agreement, whether express or implied, is intended to confer any rights
      or remedies on any person or entity not a signatory to this Agreement (other
      than the parties' respective heirs, successors, legal representatives, and
      permitted assigns), nor is anything in this Agreement intended to relieve or
      discharge the obligation or liability of any third person or entity to any
      party
      to this Agreement.

     

    9.5 Governing
      Law.
      This
      Agreement and all transactions contemplated by this Agreement shall be governed
      by the laws of the Commonwealth of Pennsylvania.

     

    9.6 Entire
      Agreement.
      This
      Agreement shall constitute the entire agreement of the Parties with respect
      to
      the transactions contemplated in this Agreement. All prior understandings and
      agreements between the Parties with respect to such matters are merged into
      this
      Agreement, which alone fully and completely expresses their
      understanding.

     

    9.7 Amendments.
      This
      Agreement may not be amended, modified, altered, or changed in any respect,
      except by a further agreement in writing duly executed by each of the
      signatories to this Agreement.

     

    9.8 Counterparts.
      This
      Agreement may be executed in counterparts or in multiple originals, and separate
      signature pages may be attached to this Agreement containing the original
      signatures of one or more of the signatories to this Agreement. In any of the
      foregoing events, each counterpart or original shall be deemed an original
      of
      this Agreement but all such counterparts or originals together shall comprise
      one and the same agreement which shall be binding on all of the parties to
      this
      Agreement, notwithstanding that all of the parties are not signatories to the
      original or the same counterpart of this Agreement. For purposes of this
      Agreement, facsimile signatures are considered original signatures.

     

    9.9 Assignability.
      This
      Agreement is personal to the Parties to this Agreement. This Agreement may
      not
      be assigned without the prior written consent of the Parties and Escrow
      Agent.

     

    9.10 Notices.
      Any
      notice, demand, request, election, certification or other communication (any
      “Communication”) required or permitted to be given or made to or by any party to
      this Agreement or otherwise under this Agreement shall be in writing. Any
      Communication so required or permitted and any other Communication shall be
      deemed to have been delivered and received on the earlier of the day actually
      received (by whatever means sent) if received on a business day (or, if not
      received on a business day, on the first business day after the day of receipt)
      or, regardless of whether or not received after the dates hereinafter specified,
      (i) on the date of transmittal by telecopier if transmitted by telecopier
      prior to 5:00 p.m. on a day which is a business day; if transmitted by
      telecopier after 5:00 p.m. or on a day other than a business day, the
      Communication shall be deemed to have been delivered and received on the next
      business day, (ii) on the date of delivery or refusal of delivery, if by
      hand delivery, (iii) on the first business day after having been delivered
      to a nationally recognized overnight air courier service, such as Federal
      Express, (iv) on the second business day after having been deposited with
      the United States Postal Service, Express Mail, return receipt requested, in
      each case addressed to the respective party at the several addresses indicated
      below or to any other addresses that may hereafter be indicated by notice
      delivered in accordance with the terms of this Section to the other
      party:

     

    If
      to
      Bank:      With
      a
      copy to:

     

    National
      City Bank of Pennsylvania   Klett
      Rooney Lieber & Schorling

     

    20
      Stanwix Street       40th
      Floor,
      One Oxford Centre

     

    Pittsburgh,
      PA 15222        Pittsburgh,
      PA 15219-6498

     

    Attention:
      Edward Kitchen        Attention:
      James D. Newell

     

    If
      to
      Axion:      With
      a
      copy to:

     

    Thomas
      G.
      Granville, CEO    William
      E. Kelleher, Jr., Esq.

     

    Axion
      Battery Products, Inc.     
Cohen
      & Grigsby, P.C.

     

    c/o
      William E. Kelleher, Jr., Esq.     11
      Stanwix Street, Fifteenth Floor

     

    Cohen
      & Grigsby, P.C.     
Pittsburgh,
      PA 15222

     

    11
      Stanwix Street, 15th
      Floor

     

    Pittsburgh,
      PA 15222

     

    If
      to
      Escrow Agent:     

     

    William
      E. Kelleher, Jr. Esq.    

     

    Cohen
      & Grigsby, P.C.    

     

    11
      Stanwix Street, 15th
      Floor    

     

    Pittsburgh,
      PA 15222     

     

    AND

     

    James
      D.
      Newell

    Klett
      Rooney Lieber & Schorling

    40th
      Floor,
      One Oxford Centre

    Pittsburgh,
      PA 15219-6498

    

    The
      respective attorneys for the Parties are authorized to give any Communication
      pursuant to this Agreement on behalf of their respective clients. Any
      Communication so given by an attorney shall be deemed to have been given by
      that
      attorney's client. If the addressee refuses delivery of the notice or if the
      notice is returned to the addressor unopened by the addressee, effective notice
      shall still be deemed to have been given. For purposes of this Agreement, the
      term “business day” shall mean any day other than a Saturday, Sunday, or legal
      holiday.

     

    9.11. Advice
      of Counsel.
      Each of
      the Parties has reviewed this Agreement and all of its terms with legal counsel,
      or has had an opportunity to review this Agreement with legal counsel, and
      is
      not relying on any representations made to him by any other person concerning
      the effect of this Agreement. This Agreement shall be interpreted without regard
      to any presumption or rule requiring construction against the party causing
      this
      Agreement to be drafted.

     

    9.12 Jurisdiction
      and Venue.
      The
      Parties irrevocably agree and consent that any legal action or proceeding
      arising out of or in any way connected with this Agreement shall be instituted
      or brought exclusively in the State or Federal Courts of the Commonwealth of
      Pennsylvania, and irrevocably submit to the jurisdiction of those Courts in
      any
      such legal action or proceeding. In addition, the Parties irrevocably and
      unconditionally waive any objection which they may now or hereafter have to
      the
      laying of venue of any of these actions or proceedings in any such Court and.
      further irrevocably and unconditionally waive the right to plead or claim that
      any such action or proceeding brought in any such Court has been brought in
      an
      inconvenient forum.

     

    9.13 Use
      of Singular.
      Unless
      the context clearly requires otherwise, the use of the singular shall include
      the plural, and vice versa. Without limiting the generality of the foregoing,
      the term "Escrow Agent" as used in this Agreement shall mean and refer to each
      Escrow Agent individually and to both Escrow Agents collectively. 

     

    IN
      WITNESS WHEREOF, this Agreement has been duly executed on behalf of the Parties
      and shall be effective as of the date first set forth above.

     

    NATIONAL
      CITY BANK OF PENNSYLVANIA

     

    

     

    By:      

     

    Name:      

     

    Title:      

     

    

     

    AXION
      BATTERY PRODUCTS, INC.

     

    

     

    By:      

     

    Name:      

     

    Title:      

     

    

    ESCROW
      AGENT

     

    

     

    ____________________________________

    William
      E. Kelleher 

    

     

    

     

    ____________________________________

    James
      D.
      Newell

    

    1047781_2

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