Document:

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                                                                    EXHIBIT 10.1

                              HINES NURSERIES, INC.
             FOURTH AMENDMENT AND LIMITED WAIVER TO CREDIT AGREEMENT

     This FOURTH AMENDMENT AND LIMITED WAIVER TO CREDIT AGREEMENT (this
"AMENDMENT") is dated as of December 27, 2006 and entered into by and among
HINES NURSERIES, INC., a California corporation ("COMPANY" or "BORROWER"), the
financial institutions party hereto, and DEUTSCHE BANK TRUST COMPANY AMERICAS,
as administrative agent for Lenders (in such capacity, "AGENT"), and, for
purposes of Section 5 hereof, the Credit Support Parties (as defined in Section
5 hereof), and is made with reference to that certain Credit Agreement dated as
of September 30, 2003, as amended to the date hereof (the "CREDIT AGREEMENT"),
by and among Borrower, the financial institutions party thereto (each
individually referred to herein as a "LENDER" and collectively as "LENDERS") and
the Agent. Capitalized terms used herein without definition shall have the same
meanings herein as set forth in the Credit Agreement.

                                    RECITALS

     WHEREAS, the Company has advised Agent and Lenders that Company has
dissolved (i) Hines SGUS Inc., a Nevada corporation ("HINES SGUS"), and a
Borrower under the Credit Agreement, and (ii) Hines Fertilizer Inc., a Florida
corporation ("HINES FERTILIZER"), and a Guarantor under the Credit Agreement,
because Hines SGUS and Hines Fertilizer had no substantial assets or liabilities
other than under the Credit Agreement;

     WHEREAS, in the Third Amendment and Limited Waiver to Credit Agreement
dated as of August 8, 2006 among the Company, certain of its affiliates, the
Agent and the Lenders party thereto, the Revolving Loan Commitments were reduced
to $100,000,000 and, based on the Company's financial condition, certain
covenants were added which temporarily reduced the availability under the Credit
Agreement and the Company's ability to borrow up to the entire amount of the
Revolving Loan Commitments;

     WHEREAS, the Company has requested that the Credit Agreement be amended as
provided herein, including providing for increased availability under the Credit
Agreement in the event certain conditions are met; and

     WHEREAS, the Agent and the Lenders party hereto have agreed to amend the
Credit Agreement on the terms and conditions hereinafter set forth;

     NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, the parties hereto agree as follows:

<PAGE>

SECTION 1. AMENDMENTS TO THE CREDIT AGREEMENT

     1.1 AMENDMENTS TO SECTION 1.1: GENERAL DEFINITIONS.

          A. Section 1.1 of the Credit Agreement is hereby amended by deleting
the definition of "2006 Required Asset Sales" and by inserting in lieu thereof
the following:

          "2006 REQUIRED ASSET SALES" means the sales of the assets identified
on the 2006 Required Asset Sale Schedule dated as of July 6, 2006, as amended
and restated as of December 27, 2006, which amended and restated schedule has
been previously delivered by Borrower to Agent and Lenders.

     1.2 AMENDMENTS TO ARTICLE 8: NEGATIVE COVENANTS.

          A. Section 8.1(c) of the Credit Agreement shall be amended by deleting
it in its entirety and by inserting in lieu thereof the following:

          "(c) MAXIMUM UTILIZATION. (i) Subject to the succeeding clause (ii),
the Borrower shall not permit Total Revolving Utilization at any time to exceed
the maximum Total Revolving Utilization for corresponding Fiscal Quarter as set
forth on the Maximum Projected Utilization Schedule dated as of July 6, 2006 and
previously delivered by Borrower to Agent and Lenders; and (ii) the foregoing
clause (i) shall no longer apply upon Borrower's delivery of a Compliance
Certificate to Agent demonstrating Borrower's compliance with the Fixed Charge
Coverage Ratio set forth in SECTION 8.1(A) for the twelve-month period ending
December 31, 2007, or for any twelve-month period ending thereafter. Upon the
effectiveness of clause (ii), Borrower shall not permit Total Revolving
Utilization to exceed the lesser of (x) the aggregate of all Lenders' Revolving
Loan Commitments or (y) subject to SECTION 2.2(B), the Borrowing Base."

          B. RESTRICTIONS ON FUNDAMENTAL CHANGES; ASSET SALES AND ACQUISITIONS.
Section 8.5(g) of the Credit Agreement shall be amended by adding at the
beginning thereof the following:

          "(i) Borrower and its Subsidiaries shall sell the assets described in
items (1) and (3) of the 2006 Required Asset Sale Schedule by January 31, 2007,
and shall sell the assets described in item (2) of the 2006 Required Asset Sale
Schedule by March 31, 2007, in each case on the terms and conditions set forth
in the 2006 Required Asset Sale Schedule; and (ii)."

SECTION 2. LIMITED WAIVER

          Subject to the terms and conditions set forth herein and in reliance
on the representations and warranties of Borrower herein contained, Lenders
hereby waive compliance with the provisions of Section 8.1(a) of the Credit
Agreement for the fourth Fiscal Quarter in Fiscal Year 2006.

          Without limiting the generality of the provisions of Section 11.10 of
the Credit Agreement, the waiver set forth above shall be limited precisely as
written and relates solely to the noncompliance by Borrower with the provisions
of Section 8.1(a) of the Credit Agreement in the manner and to the extent
described above, and nothing in this Waiver shall be deemed to:

<PAGE>

               (a) constitute a waiver of compliance by Borrower with respect to
          (i) Section 8.1(a) of the Credit Agreement in any other instance or
          (ii) any other term, provision or condition of the Credit Agreement or
          any other instrument or agreement referred to therein; or

               (b) prejudice any right or remedy that Agent or any Lender may
          now have (except to the extent such right or remedy was based upon
          existing defaults that will not exist after giving effect to this
          Waiver) or may have in the future under or in connection with the
          Credit Agreement or any other instrument or agreement referred to
          therein.

          Except as expressly set forth herein, the terms, provisions and
conditions of the Credit Agreement and the other Credit Documents shall remain
in full force and effect and in all other respects are hereby ratified and
confirmed.

SECTION 3. CONDITIONS TO EFFECTIVENESS

          Sections 1 and 2 of this Amendment shall become effective as of
December 27, 2006 (the "FOURTH AMENDMENT EFFECTIVE DATE") only upon the
satisfaction of all of the following conditions precedent:

          A. BORROWER DOCUMENTS. Borrower shall deliver to Lenders on or before
the Fourth Amendment Effective Date the following, each, unless otherwise noted,
dated as of the Fourth Amendment Effective Date:

          1. Signature and incumbency certificates of its officers executing
     this Amendment; and

          2. Copies of this Amendment executed by Borrower and the Credit
     Support Parties.

          B. EXECUTION OF AMENDMENT BY LENDERS. Majority Lenders shall have
executed and delivered copies of this Amendment to Agent.

          C. OTHER PROCEEDINGS. All corporate and other proceedings taken or to
be taken in connection with the transactions contemplated hereby and all
documents incidental thereto not previously found acceptable by Agent, acting on
behalf of Lenders, shall be reasonably satisfactory in form and substance to
Agent, and Agent shall have received all such counterpart originals or certified
copies of such documents as Agent may reasonably request.

SECTION 4. BORROWER'S REPRESENTATIONS AND WARRANTIES

          In order to induce Lenders to enter into this Amendment and to amend
the Credit Agreement in the manner provided herein, Borrower represents and
warrants to each Lender that the following statements are true, correct and
complete:

          A. CORPORATE POWER AND AUTHORITY. Borrower has all requisite corporate
power and authority to enter into this Amendment and to carry out the
transactions contemplated by, and perform its obligations under, the Credit
Agreement as amended by this Amendment (the "Amended Agreement").

<PAGE>

          B. AUTHORIZATION OF AGREEMENTS. The execution and delivery of this
Amendment and the performance of the Amended Agreement have been duly authorized
by all necessary corporate action on the part of Borrower.

          C. NO CONFLICT. The execution and delivery by Borrower of this
Amendment and the performance by Borrower of the Amended Agreement do not and
will not: (i) violate any provision of any law or any governmental rule or
regulation applicable to Borrower or any of its Subsidiaries, the Certificate or
Articles of Incorporation or Bylaws of Borrower or any of its Subsidiaries or
any order, judgment or decree of any court or other agency of government binding
on Borrower or any of its Subsidiaries, (ii) conflict with, result in a breach
of or constitute (with due notice or lapse of time or both) a default under any
Material Contract of Borrower or any of its Subsidiaries, (iii) result in or
require the creation or imposition of any Lien upon any of the properties or
assets of Borrower or any of its Subsidiaries (other than Liens created under
any of the Credit Documents in favor of Agent on behalf of Lenders), or (iv)
require any approval of stockholders or any approval or consent of any Person
under any Material Contract of Borrower or any of its Subsidiaries, except for
such approvals or consents which will be obtained on or before the Fourth
Amendment Effective Date and disclosed in writing to Lenders.

          D. GOVERNMENTAL CONSENTS. The execution and delivery by Borrower of
this Amendment and the performance by Borrower of this Amendment do not and will
not require any registration with, consent or approval of, or notice to, or
other action to, with or by, any federal, state or other governmental authority
or regulatory body (other than filings or recordings required by the
transactions contemplated hereunder).

          E. BINDING OBLIGATION. This Amendment has been duly executed and
delivered by Borrower and is the legally valid and binding obligations of
Borrower, enforceable against Borrower in accordance with its respective terms,
except as may be limited by bankruptcy, insolvency, reorganization, moratorium
or similar laws relating to or limiting creditors' rights generally or by
equitable principles relating to enforceability.

          F. INCORPORATION OF REPRESENTATIONS AND WARRANTIES FROM CREDIT
AGREEMENT. The representations and warranties contained in Section 6 of the
Credit Agreement are and will be true, correct and complete in all material
respects on and as of the Fourth Amendment Effective Date and on and as of the
date of the execution of this Amendment by Borrower to the same extent as though
made on and as of that date, except to the extent such representations and
warranties specifically relate to an earlier date, in which case they were true,
correct and complete in all material respects on and as of such earlier date.

          G. ABSENCE OF DEFAULT. No event has occurred and is continuing or will
result from the consummation of the transactions contemplated by this Amendment
that would constitute an Event of Default or a Potential Event of Default.

<PAGE>

SECTION 5. ACKNOWLEDGEMENT AND CONSENT

          Each of the Borrower and Hines Horticulture, Inc. (collectively, the
"CREDIT SUPPORT PARTIES") is a party to certain Guaranties and Collateral
Documents, in each case as amended through the Fourth Amendment Effective Date,
pursuant to which such Credit Support Party has guarantied the Obligations and
created Liens in favor of Agent on certain Collateral to secure the obligations
of such Credit Support Party under the Credit Agreement, the Collateral
Documents and the Guaranties to which such Credit Support Party is a party. The
Guaranties and Collateral Documents referred to above are collectively referred
to herein as the "CREDIT SUPPORT DOCUMENTS".

          Each Credit Support Party hereby acknowledges that it has reviewed the
terms and provisions of the Credit Agreement and this Amendment and consents to
the amendment of the Credit Agreement and the other Credit Documents effected
pursuant to this Amendment. Each Credit Support Party hereby confirms that each
Credit Support Document to which it is a party or otherwise bound and all
Collateral encumbered thereby will continue to guaranty or secure, as the case
may be, to the fullest extent possible the payment and performance of all
"Obligations," "Guarantied Obligations" and "Secured Obligations," as the case
may be (in each case as such terms are defined in the applicable Credit Support
Document), including without limitation the payment and performance of all such
"Obligations," "Guarantied Obligations" or "Secured Obligations," as the case
may be, in respect of the Obligations of Company now or hereafter existing under
or in respect of the Amended Agreement.

          Each Credit Support Party acknowledges and agrees that any of the
Credit Support Documents to which it is a party or otherwise bound shall
continue in full force and effect and that all of its obligations thereunder
shall be valid and enforceable and shall not be impaired or limited by the
execution or effectiveness of this Amendment. Each Credit Support Party
represents and warrants that all representations and warranties contained in the
Amended Agreement and the Credit Support Documents to which it is a party or
otherwise bound are true, correct and complete in all material respects on and
as of the Fourth Amendment Effective Date to the same extent as though made on
and as of that date, except to the extent such representations and warranties
specifically relate to an earlier date, in which case they were true, correct
and complete in all material respects on and as of such earlier date.

          Each Credit Support Party (other than Company) acknowledges and agrees
that (i) notwithstanding the conditions to effectiveness set forth in this
Amendment, such Credit Support Party is not required by the terms of the Credit
Agreement or any other Credit Document to consent to the amendments to the
Credit Agreement effected pursuant to this Amendment and (ii) nothing in the
Credit Agreement, this Amendment or any other Credit Document shall be deemed to
require the consent of such Credit Support Party to any future amendments to the
Credit Agreement.

<PAGE>

SECTION 6. MISCELLANEOUS

          A. REFERENCE TO AND EFFECT ON THE CREDIT AGREEMENT AND THE OTHER
CREDIT DOCUMENTS.

          (i) On and after the Fourth Amendment Effective Date, each reference
     in the Credit Agreement to "this Agreement", "hereunder", "hereof",
     "herein" or words of like import referring to the Credit Agreement, and
     each reference in the other Credit Documents to the "Credit Agreement",
     "thereunder", "thereof" or words of like import referring to the Credit
     Agreement shall mean and be a reference to the Amended Agreement.

          (ii) Except as specifically amended by this Amendment, the Credit
     Agreement and the other Credit Documents shall remain in full force and
     effect and are hereby ratified and confirmed.

          (iii) The execution, delivery and performance of this Amendment shall
     not, except as expressly provided herein, constitute a waiver of any
     provision of, or operate as a waiver of any right, power or remedy of Agent
     or any Lender under, the Credit Agreement or any of the other Credit
     Documents.

          B. FEES AND EXPENSES. Borrower acknowledges that all reasonable costs,
fees and expenses incurred by Agent and its counsel with respect to this
Amendment and the documents and transactions contemplated hereby shall be for
the account of Borrower.

          C. HEADINGS. Section and subsection headings in this Amendment are
included herein for convenience of reference only and shall not constitute a
part of this Amendment for any other purpose or be given any substantive effect.

          D. APPLICABLE LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED
IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING
WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF
NEW YORK), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES.

          E. COUNTERPARTS. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.

          F. FURTHER ASSURANCES. Borrower agrees that from time to time, at the
expense of Borrower, Borrower will promptly execute and deliver any additional
amendments and related documents that Agent may reasonably request, in order to
effectuate this Amendment and the transactions contemplated hereunder.

<PAGE>

          IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.

                            BORROWER:

                            HINES NURSERIES, INC.,
                            as Borrower, Credit Support Party and
                            Funds Administrator

                            By: /s/ Claudia Pieropan
                                ----------------------------------
                            Name:   Claudia Pieropan
                            Title:  Chief Financial Officer

<PAGE>

                            ADDITIONAL CREDIT SUPPORT PARTIES:

                            HINES HORTICULTURE, INC.

                            By: /s/ Claudia Pieropan
                                --------------------------------
                            Name:   Claudia Pieropan
                            Title:  Chief Financial Officer

<PAGE>

                            LENDERS:

                            DEUTSCHE BANK TRUST COMPANY AMERICAS,
                            as Agent and Lender

                            By:      /s/ Stephen R. Lapidus
                                     -------------------------------------------
                            Name:    Stephen R. Lapidus
                                     -------------------------------------------
                            Title:   Director
                                     -------------------------------------------

                            By:      /s/ Frank Fazio
                                     -------------------------------------------
                            Name:    Frank Fazio
                                     -------------------------------------------
                            Title:   Director
                                     -------------------------------------------

<PAGE>

                            Bank of America, N.A., as Lender

                            By:      /s/ Jason Riley
                                     -------------------------------------------
                            Name:    Jason Riley
                                     -------------------------------------------
                            Title:   Vice President
                                     -------------------------------------------

<PAGE>

                            THE CIT GROUP/BUSINESS CREDIT, INC., as Lender

                            By:      /s/ Jang Kim
                                     -------------------------------------------
                            Name:    Jang Kim
                                     -------------------------------------------
                            Title:   Vice President
                                     -------------------------------------------

<PAGE>

                            LASALLE BUSINESS CREDIT, LLC, as Lender

                            By:      /s/ Peter Walthe
                                     -------------------------------------------
                            Name:    Peter Walthe
                                     -------------------------------------------
                            Title:   First Vice President
                                     -------------------------------------------

<PAGE>

                            COOPERATIEVE CENTRALE RAIFFEISEN-BOERENLEENBANK B.A.
                            "RABOBANK INTERNATIONAL" NEW YORK BRANCH, as Lender

                            By:      /s/ Marina Kremer
                                     -------------------------------------------
                            Name:    Marina Kremer
                                     -------------------------------------------
                            Title:   Vice President
                                     -------------------------------------------

                            By:      /s/ Rebecca O. Morrow
                                     -------------------------------------------
                            Name:    Rebecca O. Morrow
                                     -------------------------------------------
                            Title:   Vice President
                                     -------------------------------------------

<PAGE>

                            PNC BANK, NATIONAL ASSOCIATION, as Lender

                            By:      /s/ Gregory J. Hall
                                     -------------------------------------------
                            Name:    Gregory J. Hall
                                     -------------------------------------------
                            Title:   Vice President
                                     -------------------------------------------

<PAGE>

                            WELLS FARGO BANK, N.A., as Lender

                            By:      /s/ David G. James
                                     -------------------------------------------
                            Name:    David G. James
                                     -------------------------------------------
                            Title:   Senior Vice President
                                     -------------------------------------------EXECUTIVE EMPLOYMENT AGREEMENT

    

      EXECUTIVE
        EMPLOYMENT AGREEMENT

      

      This
        Executive Employment Agreement is entered into and effective this 29th day
        of
        December 2006 between Axion Power International, Inc., a Delaware corporation,
        having a place of business at 3601 Clover Lane, New Castle Pennsylvania (the
        “Company”) and Edward Buiel of New Castle, Pennsylvania, (the
“Executive”).

      

      WHEREAS,
        the
        Company is engaged in the ongoing development of a novel technology for a
        supercapacitor/battery hybrid that replaces the lead-based negative electrode
        in
        a lead-acid battery with a highly permeable nanoporous carbon electrode;
        and

      

      WHEREAS,
        the
        Company is desirous of making appropriate arrangements for the long term
        management and continued development of its technology; and

      

      WHEREAS,
        the
        Company is desirous of retaining the Executive to serve as its Vice President
        and Chief Technology Officer on the conditions set forth herein for the entire
        term of this Agreement, and 

      

      WHEREAS,
        in such
        capacity, the Executive will have access to all of the business methods and
        confidential information relating to the Company and its business activities
        including, but not limited to, its proprietary techniques and technologies,
        its
        operational and financial matters, its business and financial and development
        plans, its personnel training and development programs and its industry
        relationships.

      

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

      

      1. Executive
        Representations and Warranties.
        The
        Executive represents and warrants to the Company that he is free to accept
        employment hereunder and that he has no prior or other obligations or
        commitments of any kind to anyone that would in any way hinder or interfere
        with
        his acceptance of, or the full, uninhibited and faithful performance of this
        Agreement, or the exercise of his best efforts as an officer of the
        Company.

      

      2. Employment
        and Duties.
        The
        Company shall employ the Executive as its Vice President and Chief Technology
        Officer, or such other comparable executive capacity as the Board of Directors
        of the Company shall specify from time to time. The Executive will work from
        the
        Company's office in New Castle Pennsylvania. If an electrode manufacturing
        plant
        or corporate headquarters facility is established elsewhere in the Northeast
        the
        Executive will work from the newly established facility, provided that regular
        travel to the Company’s New Castle facilities will be expected. The Executive’s
        initial responsibilities shall include all of the duties and responsibilities
        described below:

      

      	·  	
              Collaborate
                with the Senior Management Team in the development of an overall
                business
                plan for Axion. This should include the development of operational
                plans
                and modifications to existing battery production lines to produce
                Axion’s
                e3
                Supercell with minimal capital
                expenditure.

            

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      	·  	
              Work
                to identify profitable product lines for value added lead-acid battery
                products that will augment the lead acid battery products already
                being
                built at New Castle and,

            

      

      	·  	
              Develop
                a commercialization strategy for Axion hybrid devices that includes
                activated carbon supply, electrode production, negative electrode
                assembly, and device assembly.

            

      

      	·  	
              Ensure
                that proper testing, reports, product evaluation, and any other necessary
                R&D activities are conducted effectively and
                efficiently.

            

      

      	·  	
              Work
                to assure that manufacturing operations achieve business plan goals.
                This
                cooperative endeavor includes ensuring all necessary functions are
                planned
                appropriately and are completed when
                necessary.

            

      

      	·  	
              Write
                and distribute to the BOD a monthly report outlining the key events
                and
                challenges that need to be overcome so that Axion can meet its established
                goals. Include status with respect to goals; important test results;
                product improvement opportunities; key commercialization status and
                challenges; resource requirements; general organizational health,
                and any
                other key information that is deemed of interest to the
                BOD.

            

      

      	·  	
              Provide
                coaching and training for all Axion employees to ensure Axion goals
                are
                achieved and that clear consistent communication is maintained at
                all
                times. 

            

      

      	·  	
              Collaborate
                with the Management Team to develop effective manufacturing processes
                and
                line extensions in support of new value-add lead-acid battery products
                and
                line extensions, assuring market feedback is incorporated into
                all.

            

      

      	·  	
              Ensure
                process quality and proper quality control measures are adopted for
                all
                product development and manufacturing
                efforts.

            

      

      	·  	
              Support
                fund raising activities whereever necessary.

            

      

      	·  	
              Support,
                encourage, and lead intellectual property development within the
                organization.

            

      

      	·  	
              Ensure
                that all elements of a safety program are developed and ensure that
                a safe
                working environment is maintained for all employees at all
                times.

            

      

      In
        addition, the Executive shall, perform such other mutually agreeable functions
        and duties as the Board of Directors or chief executive officer may entrust,
        delegate or assign to him from time to time.

      

      3. Conduct
        of Executive.
        During
        the entire Term of this Agreement, the Executive shall devote his full business
        time, effort, skill and attention to the affairs of the Company and its
        subsidiaries, will use his best efforts to promote the interests of the Company,
        and will discharge his responsibilities in a diligent and faithful manner,
        consistent with sound business practices. During the entire Term of this
        Agreement, the Executive shall agree to serve as a member of the Company’s

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      Board
        of
        Directors if appointed to such position by the board of directors or elected
        to
        such position by the shareholders of the Company. In furtherance of the
        foregoing:

      

      (a) The
        Executive understands and agrees that he owes the Company a fiduciary duty,
        without limiting any other obligations or requirements that are imposed on
        the
        Executive by this Employment Agreement or by law. As such, the Executive
        shall
        occupy a position of and commit to the highest degree of trust, loyalty,
        honesty
        and good faith in all of his dealings with and on behalf of the
        Company.

      

      (b) The
        Executive represents that his employment by the Company will not conflict
        with
        any obligations which he has to any other person, firm or entity. The Executive
        specifically represents that he has not brought to the Company, and he will
        not
        bring to the Company, any materials or documents of a former or present
        employer, or any confidential information or property of any other person,
        firm
        or entity.

      

      (c) The
        Executive shall not, without disclosure to and approval of the Board of
        Directors of the Company, directly or indirectly, assist or have an active
        interest in (whether as a principal, stockholder, lender, employee, officer,
        director, partner, consultant or otherwise) in any person, firm, partnership,
        association, corporation or business organization, entity or enterprise that
        competes with or is engaged in a business which is substantially similar
        to the
        business of the Company except that ownership of not more than 1% of the
        outstanding securities of any class of any publicly-held corporation shall
        not
        be deemed a violation of this sub-paragraph 3(c).

      

      (d) The
        Executive shall promptly disclose to the directors of the Company, in accordance
        with the Company’s policies, full information concerning any interests, direct
        or indirect, he holds (whether as a principal, stockholder, lender, Executive,
        director, officer, partner, consultant or otherwise) in any business which,
        as
        reasonably known to the Executive purchases or provides services or products
        to
        the Company or any of its subsidiaries, provided that the Executive need
        not
        disclose any such interest resulting from ownership of not more than 1% of
        the
        outstanding securities of any class of any publicly-held
        corporation.

      

      (e) The
        Executive shall not disclose to any person or entity (other than to the
        Company’s Board of Directors or to others as required, in his judgment, in the
        due performance of his duties under this Agreement) any confidential or secret
        information with respect to the business or affairs of the Company or any
        of its
        subsidiaries or affiliates.

      

      For
        a
        period of one year after termination for cause, the Executive shall not engage
        in any business or activity that seeks to develop or commercialize a lead-acid
        battery/supercapacitor hybrid device technology that would be directly
        competitive with the business of the Company, including the activities described
        above. Notwithstanding the generality of the foregoing, nothing in this
        Agreement shall be deemed to preclude the Executive from participating in
        other
        business opportunities if and to the extent that (i) such business opportunities
        are not directly competitive with the business of the Company, (ii) the
        Executive’s activities with respect to such opportunities do not have a material
        adverse 

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      effect
        on
        the performance of the Executive’s duties hereunder, and (iii) the Executive’s
        activities with respect to such opportunity have been fully disclosed in
        writing
        to the Company’s Board of Directors.

      

      4. Conditions
        of Employment.

      

      (a) Term
        of Employment.
        Unless
        terminated earlier in accordance with the provisions of this Agreement, the
        Company agrees to employ the Executive for a four-year period commencing
        on
        December 30, 2006 and terminating on December 29, 2010 (the “Term”). On or
        before September 30, 2010, the Company and the Executive shall open negotiations
        for a mutually acceptable renewal contract. In the absence of a renewal
        contract, this agreement shall be automatically renewed for an additional
        two-year term. 

      

      (b) Place
        of Employment.
        The
        Executive shall occupy offices at the Company’s New Castle facilities. The
        Executive may be required to relocate from this business location should
        a
        carbon electrode or corporate headquarters facility be established at some
        future time in the Northeastern United States. The Executive expressly agrees
        that regular travel shall be necessary as part of his duties.

      

      (c) Ownership
        of Company Records and Reports.
        The
        Executive shall not, except in the performance of his duties hereunder, at
        any
        time or in any manner make or cause to be made any copies, pictures, duplicates,
        facsimiles, or other reproductions or recordings or any abstracts or summaries
        of any reports, studies, memoranda, correspondence, manuals, records, plans
        or
        other written or otherwise recorded materials of any kind whatever belonging
        to
        or in the possession of the Company, or of any subsidiary or affiliate of
        the
        Company, including but not limited to materials describing or in any way
        relating to the Company’s business activities including, but not limited to, its
        proprietary techniques and technologies, its operational and financial matters,
        its business and financial and development plans, its personnel training
        and
        development programs and its industry relationships. The Executive shall
        have no
        right, title or interest in any such material, and the Executive agrees that,
        except in the performance of his duties hereunder, he will not, without the
        prior written consent of the Company remove any such material from any premises
        of the Company, or any subsidiary or affiliate of the Company, and immediately
        upon the termination of his employment for any reason whatsoever Executive
        shall
        return to the Company all such material in his possession.

      

      (d) Company's
        Trade Secrets.
        Without
        the prior written consent of the Company, the Executive shall not at any
        time
        (whether during or after his employment with the Company) use for his own
        benefit or purposes or for the benefit or purposes of any other person, firm,
        partnership, association, corporation or business organization, entity or
        enterprise, or disclose in any manner to any person, firm, partnership
        association, corporation or business organization, entity or enterprise,
        except
        in the performance of his duties hereunder, any trade secrets, or any
        information data, know-how or knowledge constituting trade secrets belonging
        to,
        or relating to the affairs of the Company, or any subsidiary, former subsidiary,
        or affiliate of the Company.

      

      (e) Inventions,
        Copyrights. Trademarks.
        The
        Executive shall promptly disclose to the Company (and to no one else) all
        improvements, discoveries, ideas and inventions that 

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

          may
        be of
        significance to the Company, or any subsidiary or affiliate of the Company,
        made
        or conceived alone or in conjunction with others (whether or not patentable,
        whether or not made or conceived at the request of or upon the suggestion
        of the
        Company or any subsidiary or affiliate of the Company during or out of his
        usual
        hours of work or in or about the premises of the Company or elsewhere) while
        in
        the employ of the Company or of any subsidiary or affiliate of the Company,
        or
        made or conceived within one year after the termination of his employment
        by the
        Company or of any subsidiary or affiliate of the Company if resulting from,
        suggested by or relating to such employment. All such improvements, discoveries,
        ideas and inventions shall be the sole and exclusive property of the Company
        and
        are hereby assigned to the Company. At the request of the Company and at
        its
        cost, the Executive shall assist the Company, or any person or persons from
        time
        to time designated by it, to obtain the copyright, trademark and/or grant
        of
        patents in the United States and/or in such other country or countries as
        may be
        designated by the Company, covering such improvements, discoveries, ideas
        and
        inventions and shall in connection therewith and in connection with the defense
        of any patents execute such applications, statements or other documents,
        furnish
        such information and data and take all such other action (including, but
        not
        limited to, the giving of testimony) as the Company may from time to time
        reasonably request.

      

      5. Compensation.
        The
        Company shall compensate the Executive for all services to be rendered by
        him
        during the Term as follows:

      

      (a) The
        Executive shall receive a salary of $14,000 per month for services rendered
        during the first year of its term. The increase in the Executive’s salary to
        $14,000 per month shall be retroactive to October 1, 2006. The Executive’s
        Salary shall be reviewed on a annual basis and subject to renegotiation based
        on
        the performance of the Executive and the Company. 

      

      (b) The
        Executive shall participate in any executive compensation plans adopted by
        the
        shareholders of the Company; provided, however, that the discretionary authority
        to determine the level of the Executive’s participation therein and the terms
        and conditions of such participation shall remain vested in the Compensation
        Committee of the Board of Directors and the Compensation Committee shall
        have
        the authority to adjust such participation upward or downward from time to
        time
        in its sole discretion. 

      

      (c) The
        Executive shall participate, without cost to the Executive, in the Company's
        standard employee benefit programs, including but not limited to medical
        and
        hospitalization insurance and group life insurance, as in effect from time
        to
        time. The Executive will be required to obtain Key Man Life Insurance. The
        company will bear the full cost of this insurance policy.

      

      (d) The
        Executive shall be entitled to an automobile allowance of $500 per month,
        plus
        reimbursement at the maximum allowable rate under applicable income tax rules
        for all reasonable business use of the automobile.

      

      (e) During
        the Term of this Agreement, the Company will reimburse the Executive for
        all
        reasonable business expenses incurred by him on behalf of the Company in
        the

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

          performance
        of his duties hereunder upon presentation of vouchers, receipts or other
        evidence of such expenses in accordance with the policies of the Company,
        and
        provided that the Executive shall incur no costs or expenses that exceed
        two
        thousand dollars without prior authorization of the Company.

      

      (f) Notwithstanding
        any other provision of this Agreement, it is agreed that the Executive shall
        be
        entitled to receive such incentive bonuses, stock options and other benefits
        as
        the Compensation Committee of the Board of Directors may grant from time
        to
        time.

      

      (g) Notwithstanding
        the general provisions of the Company’s Policy Manual relating to vacations, the
        Executive shall be entitled to a total of four (4) weeks of paid vacation
        per
        year. Except for the 4-week time period herein specified, all other provisions
        of the Policy Manual relating to vacation scheduling will be applicable to
        vacation time allocated to the Executive hereunder.

      

      6. Restricted
        Stock Grant.
        Simultaneously with the execution of this Agreement, the Executive shall
        be
        entitled to receive and the Company shall instruct its transfer agent to
        issue
        to the Executive 250,000 shares of the Company’s authorized and previously
        unissued common stock (the “Grant Shares”) which shall, upon issuance, be
        subject to all of the following terms and conditions:

      

      (a) The
        Grant
        Shares shall be issued to the Executive under the Company’s Incentive Stock Plan
        for the sole purpose of providing the Executive with a tangible incentive
        to put
        forth maximum efforts for the success of the Company and its business in
        the
        future. In the event that the Executive’s
        employment with the Company is terminated by the Executive without cause
        or by
        the Company with cause prior
        to the
        third anniversary of the date of this Agreement, then all Grant Shares shall
        be
        immediately forfeit without further action by the Company or the
        Executive.

      

      (b) Absolute
        and unrestricted ownership of the Grant Shares shall vest in the Executive
        on
        December 29, 2009. During the period between the issue date and the vesting
        date, the Executive shall be entitled to receive any and all dividends or
        other
        distributions payable with respect to the grant shares and shall be entitled
        to
        exercise all voting and other shareholders rights with respect to such shares.
        Executive shall not, however, be entitled to sell, transfer, hypothecate
        or
        otherwise encumber the grant shares until they are fully vested.

      

      (c) Notwithstanding
        the provisions of subparagraphs (a) and (b) absolute and unrestricted ownership
        of all Grant Shares shall immediately vest in the Executive in the event
        that
        the Executive’s
        employment with the Company is terminated by the Company without cause.
        Furthermore, all unvested Grant Shares
        shall
        vest in the Executive immediately prior to the consummation of (i) any merger,
        consolidation or similar business combination transaction where the Company
        is
        not the surviving entity, (ii) any sale of all or substantially all of the
        Company’s assets where the proceeds are intended for distribution to the
        stockholders, or (iii) any other transaction or series of transactions whereby
        any person, entity or group acting in concert acquires direct or indirect
        ownership of more than 20% of the Company’s outstanding voting
        securities.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      7. Grant
        of Stock Purchase Option. The
        Company acknowledges that the Executive has agreed to devote substantially
        all
        of his business time and effort to the Company during the entire Term of
        this
        Agreement. In recognition of the opportunity costs associated with such actions,
        the Executive is hereby granted an option to purchase 100,000 shares of the
        Company’s common stock at an exercise price of $3.75 (U.S.) per share. The
        foregoing option shall vest proportionally at the end of the third and fourth
        years of this contract. If the Executive's employment is terminated by the
        Company without
        cause
        (as
        defined in Section 8) or terminated by the Executive for good
        reason
        (as
        defined in Section 8), all unvested options shall immediately vest and become
        exercisable. In all other cases, all unvested options shall immediately
        terminate. Notwithstanding the generality of the foregoing, rights represented
        by vested options shall not be affected by the termination of the Executive’s
        employment because of the disability or death of the Executive. From and
        after
        the vesting dates, the vested options may be exercised at any time or from
        time
        to time, in whole or in part, for a period of five years. The option agreement
        attached hereto as “Exhibit A” shall be executed concurrently with this
        agreement.

      

      8. Termination
        of Employment.

      

      (a) This
        Agreement and the compensation payable to Executive hereunder shall terminate
        and cease to accrue forthwith upon Executive's death.

      

      (b) If
        the
        Executive's employment is terminated (i) other than for
        cause
        (as
        defined below) by the Company or (ii) by the Executive for good
        reason
        (as
        defined below), the Company shall pay to Executive an aggregate severance
        amount
        equal to 50% of the Executive's annual base salary in effect as of the date
        of
        such termination (i.e.,
        six
        months' base salary and such amount being referred to as the "Severance
        Amount").
        The
        Severance Amount may be paid in a single lump sum amount, provided that payment
        of the Severance Amount shall be contingent upon the Executive signing a
        suitable release and waiver agreement.

      

      (c) For
        the
        purposes of this agreement, "cause"
        for
        termination by the Company shall exist upon (i) the conviction of the
        Executive of, or the entry of a pleading of guilty or nolo contendere by
        the
        Executive to, any crime involving moral turpitude that may reasonably adversely
        reflect on the Company or any felony; (ii) willful misconduct in connection
        with the Executive's duties or willful failure to use reasonable effort to
        perform substantially his responsibilities in the best interest of the Company,
        provided that "willful
        misconduct"
        and
        "willful
        failure to perform"
        shall
        not include actions or inactions on the part of the Executive that were taken
        or
        not taken in good faith by the Executive; or (iii) fraud, material
        dishonesty, or gross misconduct in connection with the Company perpetuated
        by
        the Executive.

      

      (d) For
        the
        purposes of this agreement, "good
        reason"
        for
        termination by the Executive shall exist upon (i) a material change in the
        reporting responsibilities of the Executive to someone other than the Chief
        Executive Officer or the Board; (ii) a substantial diminution of the
        Executive's responsibilities; (iii) any reduction in the Executive's level
        of compensation without the approval of the Executive; or (iv) a transfer
        of the Executive's work location for purposes of performing his duties hereunder
        to a location other than the Northeastern United States.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      (e) At
        the
        end of the initial term of this agreement, the Executive’s employment may be
        terminated by either party for any reason, or for no reason, upon written
        notice
        given not less than 90 days prior to of the termination date.

      

      (f) The
        Executive shall retain the right to voluntarily terminate his employment
        hereunder at any time on 60 days’ written notice. Upon such a voluntary
        termination of the employment relationship, all future compensation that
        the
        Executive is entitled to receive and all future benefits for which the Executive
        is eligible shall cease and terminate as of the date of termination. The
        Executive shall be entitled to pro rata salary through the date of such
        termination, but the Executive shall not be entitled to any individual bonuses
        or individual incentive compensation not yet paid at the date of such
        termination.

      

      (g) Notwithstanding
        the termination of the Executive’s employment hereunder, the provisions of
        Paragraphs 3, 6, 7, 8 and 9 shall survive such termination.

      

      9. Specific
        Performance.
        If any
        portion of this Agreement is found by a court of competent jurisdiction to
        be
        too broad to permit enforcement of such restriction to its full extent, then
        such restriction shall be enforced to the maximum extent permitted by law,
        and
        the Executive hereby consents and agrees that such scope may be judicially
        modified accordingly in any proceeding brought to enforce such restriction.
        All
        provisions of this Agreement are severable, and the unenforceability or
        invalidity of any single provision hereof shall not affect any remaining
        provision. The Executive acknowledges and agrees that the Company's remedy
        at
        law for any breach of any of his obligations hereunder would be inadequate,
        and
        agrees and consents that temporary and permanent injunctive relief may be
        granted in any proceeding that may be brought to enforce any provision of
        this
        Agreement without the necessity of proof of actual damage and without any
        bond
        or other security being required. Such remedies shall not be exclusive and
        shall
        be in addition to any other remedy which the Company may have. 

      

      10. Miscellaneous.

      

      (a) The
        failure of a party to insist on any occasion upon strict adherence to any
        Term
        of this Agreement shall not be considered to be a waiver or deprive that
        party
        of the right thereafter to insist upon strict adherence to that Term or any
        other Term of this Agreement. Any waiver must be in writing.

      

      (b) All
        notices and other communications under this Agreement shall be in writing
        and
        shall be delivered personally or mailed by registered mail, return receipt
        requested, and shall be deemed given when so delivered or mailed, to a party
        at
        such address as a party may, from time to time, designate in writing to the
        other party.

      

      (c) This
        Agreement shall be assigned to and inure to the benefit of, and be binding
        upon,
        any successor to substantially all of the assets and business of the Company
        as
        a going concern, whether by merger, consolidation, liquidation or sale of
        substantially all of the assets of the Company or otherwise.

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      (d) This
        Agreement constitutes the entire Agreement between the parties regarding
        the
        above matters, and each party acknowledges that there are no other written
        or
        verbal Agreements or understandings relating to such subject matter between
        the
        Executive and the Company or between the Executive and any other individuals
        or
        entities other than those set forth herein. No amendment to this Agreement
        shall
        be effective unless it is in writing and signed by both the parties
        hereto.

      

      (e) Paragraph
        6 of this Agreement shall be construed in accordance with the General
        Corporation Law of Delaware. All other provision of this Agreement shall
        be
        construed according to the laws of the Commonwealth of Pennsylvania pertaining
        to Agreements formed and to be performed wholly within the State of
        Pennsylvania. In the event action is brought to enforce any provisions of
        this
        Agreement, the prevailing party shall be entitled to reasonable legal fees
        as
        fixed by the court. The Executive represents and warrants that he has reviewed
        this Agreement in detail with his legal and other advisors, as he considers
        appropriate, and that he fully understands the consequences to him of its
        provisions. The Executive is relying on his own judgment and the judgment
        of his
        advisors with respect to this Agreement.

      

      (f) In
        the
        event a dispute arises out of, in connection with, or with respect to this
        Agreement, or any breach thereof, such dispute shall, on the written request
        of
        one party delivered to the other party, be submitted to and settled by binding
        arbitration before a single arbitrator conducted in New Castle, Pennsylvania.
        The party against whom the arbitrator’s award is rendered shall pay all costs
        and expenses of such arbitration, unless the arbitrator shall specifically
        allocate costs in a different manner because the award is not entirely in
        favor
        of either party

      

      (g) This
        Agreement may be executed in any number of counterparts, which will each
        be
        deemed to be an original for all purposes hereof.

      

      IN
        WITNESS WHEREOF,
        the
        parties have signed this agreement intending to be bound thereby.

      

      
        	
                By:

              	
                Axion
                  Power International, Inc

              	 	
                
                  Executive

                

              	 
	 	
                Thomas
                  G. Granville

              	 	
                Edward
                  Buiel

              	 
	 	
                Chief
                  executive officer

              	 	 	 

      
        
          
             

          

          
          

        

        
          
          

          
            

          

        

        
          
          

          
          

        

      

      NONQUALIFIED
        STOCK OPTION AGREEMENT

      

      AXION
        POWER INTERNATIONAL, INC.

      (The
        Options Represented Hereby Are Not Presently Exercisable)

      

      THIS
        OPTION AGREEMENT
        (“Option
        Agreement”) is dated and delivered effective as of December 30, 2006, in New
        Castle, Pennsylvania between AXION
        POWER INTERNATIONAL, INC.,
        a
        Delaware corporation (hereinafter called the “Company”) and Edward
        Buiel
        (hereinafter called “Optionee”):

      

      R
        E C I T A L S

      

      The
        Company and the Optionee have entered into an employment agreement that requires
        the Company to grant the Optionee an option to purchase 100,000 shares of
        the
        Company’s common stock at a price of $3.75 per share as partial consideration
        for the services to be rendered under the agreement.

      

      The
        Compensation Committee of the Board of Directors (the “Committee”) has
        determined that it would be in the best interests of the Company and its
        stockholders to grant the option provided for herein (the “Option”) as an
        inducement to serve as an employee of the Company and to provide Optionee
        with a
        proprietary interest in the future of the Company;

      

      NOW
        THEREFORE,
        in
        consideration of the mutual covenants hereinafter set forth, the parties
        hereto
        agree as follows:

      

      1. Grant
        of the Option.
        The
        Company hereby grants to Optionee the right and option to purchase, on the
        terms
        and conditions hereinafter set forth, all or any part of an aggregate of
        100,000
        shares (the “Stock”) of the presently authorized but unissued common stock, par
        value $.0001 per share, of the Company (the “Common Stock”). The purchase price
        of the Stock subject to this Option shall be $3.75 per share.

      

      2. Vesting
        of the Option.
        As long
        as the Optionee remains an employee of the Company, the option granted hereby
        shall vest at the rate of 50,000 shares per year commencing on December 29,
        2009. If the Optionee’s employment is terminated by the Company
        without
        cause
        or
        terminated by the Optionee for good
        reason,
        all
        unvested options shall immediately vest and become exercisable. In all other
        cases, all unvested options shall immediately terminate. From and after the
        vesting dates, the vested options may be exercised at any time or from time
        to
        time, in whole or in part, for a period of five years. Notwithstanding the
        generality of the foregoing, rights represented by vested options shall not
        be
        affected by the termination of the Optionee’s employment because of the
        disability or death of the Optionee

      

      3. Exercise
        of Option.

      

      (a) Vested
        Options may only be exercised by the Optionee who shall have the right to
        exercise such Option in whole or in part, at any time or from time to time
        during the period commencing on a vesting date and terminating on the sixth
        anniversary of such vesting date. The 

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      Option
        is
        not transferable or assignable by the Optionee other than by will, as a result
        of the laws of descent and distribution or pursuant to a Qualified Domestic
        Relations Order. If the Option is transferred by will, as a result of the
        laws
        of descent and distribution or pursuant to a Qualified Domestic Relations
        Order,
        the transferee shall have all of the rights, powers and privileges that the
        Optionee would have had in the absence of such a transfer.

      

      (b) This
        Option may be exercised by written notice of intent to exercise the Option
        delivered to the Company at its principal office no fewer than five days
        in
        advance of the effective date of the proposed exercise. Such notice shall
        be
        accompanied by this Agreement, shall specify the number of shares of Common
        Stock with respect to which the Option is being exercised and shall specify
        the
        proposed effective date of such exercise. Such notice shall also be accompanied
        by payment in full to the Company at its principal office of the option price
        for the number of shares of the Common Stock with respect to which the Option
        is
        then being exercised. The payment of the option price shall be made in cash
        or
        by certified check, bank draft, or postal or express money order payable
        to the
        order of the Company or, with the consent of the Committee, in whole or in
        part
        in Common Stock which is owned by the Optionee and valued at its Fair Market
        Value on the date of exercise. Any payment in shares of Common Stock shall
        be
        effected by delivery of such shares to the Secretary of the Company, duly
        endorsed in blank or accompanied by stock powers duly executed in blank,
        together with any other documents or evidence as the Secretary of the Company
        shall require from time to time.

      

      (c) Upon
        the
        Company’s determination that the Option has been validly exercised as to any of
        the Stock, the Secretary of the Company shall issue a certificate or
        certificates in the Optionee’s name for the number of shares set forth in his
        written notice. However, the Company shall not be liable to the Optionee
        for
        damages relating to any delays in issuing the certificate(s) to him, any
        loss of
        the certificate(s), or any mistakes or errors in the issuance of the
        certificate(s) or in the certificate(s) themselves.

      

      3. Term
        of Employment.
        This
        Option shall not grant to Optionee any right to continue serving as an employee
        of the Company.

      

      4. Notices;
        Deliveries.
        Any
        notice or delivery required to be given under the terms of this Option Agreement
        shall be addressed to the Company in care of its Secretary at its principal
        office, 3601 Clover Lane, New Castle, Pennsylvania, and any notice or delivery
        to be given to Optionee shall be addressed to him at such address as the
        Optionee may hereafter designate in writing. Any such notice or delivery
        shall
        be effective as of the date of receipt.

      

      5. Disputes.
        As a
        condition of the granting of the Option hereby, the Optionee and his heirs
        and
        successors agree that any dispute or disagreement which may arise hereunder
        shall be determined by the Committee in its sole discretion and judgment,
        and
        that any such determination and any interpretation by the Committee of the
        terms
        of this Option shall be final and shall be binding and conclusive, for all
        purposes, upon the Company, Optionee, his heirs and personal
        representatives.

      

      6. Legend
        on Certificates.
        The
        certificate(s) representing the shares of Stock purchased by exercise of
        this
        Option will be stamped or otherwise imprinted with a legend in such form
        as the
        Company or its counsel may require with respect to any applicable restrictions
        on the sale or transfer 

       

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      of
        such
        shares and the stock transfer records of the Company will reflect stop-transfer
        instructions with respect to such shares.

      

      7. Miscellaneous.
        

      

      (a) All
        decisions of the Committee upon any questions arising under the Plan or under
        this Option Agreement shall be conclusive. 

      

      (b) Nothing
        herein contained shall affect Optionee’s right to participate in and receive
        benefits from and in accordance with the then current provisions of any pension,
        insurance or other employee welfare plan or program of the Company.

      

      (c) Optionee
        agrees to make appropriate arrangements with the Company for satisfaction
        of any
        applicable federal, state or local income tax, withholding requirements or
        like
        requirements, including the payment to the Company at the time of exercise
        of
        the Option of all such taxes and requirements. 

      

      (d) Whenever
        the term “Optionee” is used herein under circumstances applicable to any other
        person or persons to whom this Option, in accordance with the provisions
        hereof,
        may be transferred, the word “Optionee” shall be deemed to include such person
        or persons. 

      

      (e) Notwithstanding
        any of the other provisions hereof, Optionee agrees that he will not exercise
        this Option and that the Company will not be obligated to issue any of the
        Stock
        pursuant to this Option Agreement, if the exercise of the Option or the issuance
        of such shares of Common Stock would constitute a violation by the Optionee
        or
        by the Company of any provision of any law or regulation of any governmental
        authority or na-tional securities exchange. Upon the acquisition of any Stock
        pursuant to the exercise of the Option herein granted, Optionee will enter
        into
        such written representations, warranties and agreements as the Company may
        reasonably request in order to comply with applicable securities laws or
        with
        this Agreement. 

      

      (f) This
        Agreement shall be binding upon and inure to the benefit of any successor
        or
        successors of the Company. The interpretation, performance and enforcement
        of
        this Option Agreement shall be governed by the laws of the State of Delaware.
        

      

      IN
        WITNESS WHEREOF, the Company has, as of the date and place first above written,
        caused this Agreement to be executed on its behalf and the Optionee has hereunto
        set his hand as of the date and place first above written, which date is
        the
        date of grant of this Option. 

      

        
          	
                  By:

                	
                  Axion
                    Power International, Inc

                	 	
                  Optionee

                	 
	 	
                  Thomas
                    G. Granville

                	 	
                  Edward
                    Buiel

                	 
	 	
                  Chief
                    executive officer

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