UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

    (Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the Quarterly Period Ended March 31, 2013 

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

AXION POWER INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

 

Delaware   65-0774638
(State or other jurisdiction of   (I.R.S. Employer
Incorporation or organization)   Identification No.)
     
3601 Clover Lane    
New Castle, Pennsylvania   16105
(Address of principal executive offices)   (Zip Code) 
 

(724) 654-9300

(Registrant’s telephone number, including area code)

 

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes  þ      No  ¨

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes  þ  No ¨

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer ¨ Accelerated filer ¨

Non-accelerated filer ¨

(Do not check if a smaller reporting company)

Smaller reporting company þ

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  ¨      No þ

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

 

Title of Each Class Outstanding Shares at April 25, 2013
Common Stock, $0.0001 par value 113,290,364

 

 
 

 

AXION POWER INTERNATIONAL, INC.

 

FORM 10-Q

 

Report Index

 

PART I - Financial Information 3
     
    Item  1. Financial Statements (unaudited) 3
     
  Consolidated Statement of Balance Sheets at March 31, 2013 and December 31, 2012 3
     
  Consolidated Statement of Income and Comprehensive Income for the Three Month Periods Ended March 31, 2013 and 2012 4
     
  Consolidated Statements of Cash Flows for the Three Month Periods Ended March 31, 2013 and 2012 5
     
  Notes to the Consolidated Financial Statements 6
     
   Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 9
     
   Item 4. Controls and Procedures 14
     
PART II - Other Information 14
     
   Item 1. Legal Proceedings 14
     
   Item 1A. Risk Factors 14
     
   Item 4. Mine Safety Disclosures 14
     
   Item 6. Exhibits 15
     
   Signatures    

 

2
 

 

PART I - FINANCIAL INFORMATION

 

ITEM 1. FINANCIAL STATEMENTS

 

AXION POWER INTERNATIONAL, INC.

CONSOLIDATED BALANCE SHEETS

(unaudited)

 

    March 31, 2013     December 31, 2012  
ASSETS                
                 
Cash and cash equivalents   $ 758,926     $ 2,004,391  
Accounts receivable     286,976       771,410  
Other current assets     196,706       194,975  
Inventory, net     2,753,365       2,838,791  
Total current assets     3,995,973       5,809,567  
                 
Property & equipment, net     7,693,529       7,963,041  
Other receivables     38,000       41,000  
                 
Total Assets   $ 11,727,502     $ 13,813,608  
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY                
                 
Accounts payable   $ 625,620     $ 581,503  
Other liabilities     272,552       305,510  
Notes payable     104,777       113,921  
Total current liabilities     1,002,949       1,000,934  
                 
Deferred revenue     1,177,312       1,262,295  
Derivative liabilities     154       1,217  
Notes payable     303,678       331,247  
Total liabilities     2,484,093       2,595,693  
                 
Stockholders’ Equity                
Convertible preferred stock – 12,500,000 shares designated 0 shares issued and outstanding     -       -  
Common stock-200,000,000 shares authorized $0.0001 par value 113,290,364 shares issued & outstanding (113,260,006 in 2012)     11,329       11,326  
Additional paid in capital     96,106,122       96,013,439  
Retained earnings (deficit)     (86,622,430 )     (84,555,174 )
Cumulative foreign currency translation adjustment     (251,612 )     (251,676 )
Total Stockholders’ equity     9,243,409       11,217,915  
                 
TOTAL LIABILITIES & STOCKHOLDERS’ EQUITY   $ 11,727,502     $ 13,813,608  

 

The accompanying notes are an integral part of these consolidated financial statements.

 

3
 

 

AXION POWER INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF INCOME and COMPRHENSIVE INCOME

(Unaudited) 

 

    Three Months Ended  
    March 31,  
    2013     2012  
Net Sales                
Product   $ 2,237,647     $ 1,760,562  
Service Fees     -       -  
      2,237,647       1,760,562  
                 
Cost of Product Sales                
      1,990,473       1,566,570  
                 
Gross Profit     247,174       193,992  
                 
Selling, general and administrative expenses     2,310,912       2,485,039  
Derivative revaluations     (1,063 )     37,727  
Interest expense     4,580       4,015  
Loss before income taxes     (2,067,255 )     (2,332,789 )
                 
Provision for income taxes     -       -  
Net Loss     (2,067,255 )     (2,332,789 )
                 
Foreign translation adjustment     64       (33 )
Comprehensive Loss   $ (2,067,191 )   $ (2,332,822 )
                 
Loss per share                
                 
Basic and diluted loss per share   $ (0.02 )   $ (0.02 )
                 
Weighted average common shares outstanding     113,285,979       103,165,552  

 

The accompanying notes are an integral part of these consolidated financial statements.

 

4
 

 

AXION POWER INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

    Three Months Ended  
    March 31,  
    2013     2012  
Operating Activities                
                 
Net loss   $ (2,067,255 )   $ (2,332,789 )
                 
Adjustments to reconcile deficit accumulated for noncash items                
Depreciation     360,332       355,370  
Derivative revaluations     (1,063 )     37,727  
Share based compensation expense     92,685       95,309  
                 
Changes in operating assets & liabilities                
Accounts receivable     484,434       (196,912 )
Other receivables     -       99,218  
Prepaid expenses     (1,731 )     57,926  
Inventory, net     85,426       119,962  
Accounts payable     44,117       157,150  
Other current liabilities     (32,958 )     (69,458 )
Deferred revenue and other     (84,983 )     (56,715 )
Cash (used) by operating activities     (1,120,996 )     (1,733,212 )
                 
Investing Activities                
Other receivables     3,000       3,000  
Purchase of property & equipment     (90,820 )     (336,412 )
Cash (used) by investing activities     (87,820 )     (333,412 )
                 
Financing Activities                
Repayment of notes payable     (36,713 )     (26,755 )
Net proceeds from sale of common stock     -       8,626,007  
Cash (used) by financing activities     (36,713 )     8,599,252  
Net cash in cash and cash equivalents     (1,245,529 )     6,532,628  
Effect of exchange rate on cash     64       (33 )
Cash and cash equivalents – beginning     2,004,391       1,987,637  
Cash and cash equivalents – ending   $ 758,926     $ 8,520,232  

 

The accompanying notes are an integral part of these consolidated financial statements.

 

5
 

 

AXION POWER INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2013

(unaudited)

 

 

1. Financial Statements

 

In the opinion of management the accompanying unaudited consolidated financial statements contain all adjustments (which include normal recurring adjustments) necessary to present fairly the financial position, results of income and comprehensive income and cash flows for the periods presented. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) have been condensed or omitted pursuant to the rules and regulations of the United States Securities and Exchange Commission (SEC). These consolidated financial statements should be read in conjunction with the audited financial statements and footnotes thereto in the Axion Power International, Inc. (“the Company”) Annual Report on Form 10-K for the year ended December 31, 2012. The results of income for the three month period ended March 31, 2013 are not necessarily indicative of results of income and comprehensive income for the Company’s 2013 calendar year. 

 

Certain amounts for the results of income for the three month period ending March 31, 2012 have been revised to conform to the current year’s presentation.  

 

2. New Accounting Pronouncements

 

In January of 2013, the FASB issues ASU No. 2013-01, Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities. The amendments in this Update affect entities that have derivatives accounted for in accordance with Topic 815, including bifurcated embedded derivatives, repurchase agreements and reverse repurchase agreements, and securities borrowing and securities lending transactions that are either offset in accordance with Section 2010-20-45 or Section 815-10-45 or subject to an enforceable master netting arrangement or similar agreement. Entities with other types of financial assets and financial liabilities subject to a master netting arrangement or similar agreement also are affected because these amendments make them no longer subject to the disclosure requirements in Update 2011-11. An entity is required to apply the amendments for fiscal years beginning on or after January 1, 2013, and interim periods within those annual periods. An entity should provide the required disclosures retrospectively for all comparative periods presented. We do not expect the adoption of this standard to have a material impact on our financial statements.

 

In February of 2013, the FASB issued ASU No. 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified out of Accumulated Other Comprehensive Income. For public entities, the amendments are effective prospectively for reporting periods beginning after December 15, 2012. Early adoption is permitted. The amendments in this Update Apply to all entities that issue financial statements that are presented in conformity with U.S. GAAP and that report items of comprehensive income. The total of other comprehensive income for a period shall be transferred to a component of equity that is presented separately from retained earnings and additional paid-in capital in a statement of financial position at the end of an accounting period. A descriptive title such as accumulated other comprehensive income shall be used for that component of equity. The adoption of this standard did not have an impact on the Company’s consolidated financial position, results of operations or cash flows as it only requires a change in the format of the current presentation.

 

3.       Inventories

 

Inventories consist of the following:

    March 31,
2013
    December 31,
2012
 
Raw materials and components   $ 812,118     $ 945,382  
Work in process     1,902,727       1,828,687  
Finished goods     294,720       321,234  
Inventory reserves     (256,200 )     (256,512 )
    $ 2,753,365     $ 2,838,791  

 

6
 

 

AXION POWER INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2013

(unaudited)

 

4. Warrants

 

Warrants consist of the following as of March 31, 2013:

 

    Shares     Weighted
average
exercise price
    Weighted average
remaining contract
term (years)
 
Warrants outstanding at January 1, 2013     11,712,315     $ 0.83       3.0  
Granted     -       -       -  
Exercised     -       -       -  
Forfeited or lapsed     (3,238,095 )     0.73       -  
Warrants outstanding at March 31, 2013     8,474,220     $ 0.87       0.2  

 

As of March 31, 2013, 704,762 warrants were classified as derivative liabilities. For each reporting period, the warrants are revalued and reported as derivative revaluations on the statements of income. 

 

5. Equity Compensation

 

The Company adopted ASC 718 “ Compensation – Stock Compensation ” whereby employee-compensation expense related to stock based payments is recorded over the requisite service period based on the grant date fair value of the awards. The Company’s accounting policy for equity instruments issued to consultants and vendors in exchange for goods and services follows the provisions of ASC 505-50 “ Equity-Based Payments to Non-Employees” .  The measurement date for fair value of the equity instruments is determined by the earlier of (i) the date at which commitment for performance by the vendor or consultant is reached, or (ii) the date at which the consultant or vendor’s performance is complete. In the case of equity instruments issued to consultants, the fair value of the equity instrument is recognized over the term of the consulting agreement.

 

The compensation expense for options was $92,685 of which $18,600 was for Director’s compensation in lieu of cash, for the three months ended March 31, 2013 and had no impact on the diluted loss per share.

 

Outstanding compensatory options consist of the following based on grant date as of March 31, 2013:

 

          Weighted Average        
All Compensatory Options   Number of
Options
    Exercise     Fair
Value
    Remaining
Life
(years)
    Aggregate
Intrinsic
Value
 
Options outstanding at December 31, 2012     4,076,145     $ 1.70     $ 0.56       3.8     $ -  
Granted     -       -       -       -       -  
Exercised     -       -       -       -       -  
Forfeited or lapsed     (25,586 )   $ 4.08     $ 1.26       -       -  
Options outstanding at March 31, 2013     4,050,559     $ 1.68     $ 0.56       4.0     $ -  
Options exercisable at March 31, 2013     3,267,838     $ 1.84     $ 0.63       1.7     $ -  

 

There were no options granted or exercised during the three months ended March 31, 2013.

 

7
 

 

AXION POWER INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2013

(unaudited)

 

All non-vested compensatory stock options consist of the following as of March 31, 2013:

 

    All Options  
    Shares     Fair Value  
Options subject to future vesting at December 31, 2012     1,110,147     $ 0.24  
Options forfeited or lapsed     (25,586 )     1.53  
Options vested     (301,840 )     0.42  
Options subject to future vesting at March 31, 2013     787,721     $ 0.24  

 

As of March 31, 2013, there was $145,135 of unrecognized compensation related to non-vested options granted under the plans. The Company expects to recognize this expense over a weighted average period of 1.1 years. The total fair value of options which vested during the three months ended March 31, 2013 was $127,355.

 

6. Earnings (Loss) Per Share

 

Basic earnings per share is computed by dividing income available to common shareholders (the numerator) by the weighted-average number of common shares outstanding (the denominator) for the period. Diluted earnings per share are computed by assuming that any dilutive convertible securities outstanding were converted, with related preferred stock dividend requirements and outstanding common shares adjusted accordingly. It also assumes that outstanding common shares were increased by shares issuable upon exercise of those stock options for which the market price exceeds the exercise price, less shares which could have been purchased by us with the related proceeds. In periods of losses, diluted loss per share is computed on the same basis as basic loss per share as the inclusion of any other potential shares outstanding would be anti-dilutive.

 

If the Company had generated earnings during the three months ended March 31, 2013 and 2012, the Company would have added 89,924 and 1,397,846 respectively, of common equivalent shares to the weighted average shares outstanding to compute the diluted weighted average shares outstanding.

 

      7.

Subsequent Events

 

On May 7, 2013, we entered into a financing transaction for the sale of Senior Convertible Notes (“Convertible Notes”) of Axion Power International, Inc. (“Company” or “We”) and Warrants issued by the Company (“Warrants”) with gross proceeds of $9 million to us. At Closing, which occurred on May 8, 2013, we received cash proceeds of $3 million and had deposited an additional $6 million into a series of control accounts in our name. We are permitted to withdraw funds from our control accounts (i) in connection with certain conversions of the Convertible Notes or (ii) otherwise, as follows: $500 thousand on each 30 day anniversary of the Effective Date commencing on the 60 th  day after the Effective Date until there are no more funds in the control accounts.  The Convertible Notes bear interest at 8% per annum and are convertible into shares of our Common Stock at an initial per share conversion price of $0.264 subject to certain adjustments.  The Warrants entitle the holders of the Warrants to purchase, in aggregate, 17,281,107 million shares of our common stock. The five year Warrants will be exercisable at an exercise price equal to $0.302, subject to certain adjustments.

 

We received approximately $2.76 million in net proceeds at Closing, after deducting our placement agent’s fee of $240,000. Our other offering expenses, other than our placement agent’s fee, are approximately $100,000, which expenses will be paid out of the proceeds at Closing. At each Funds Release, we will receive approximately $460 thousand in net proceeds, after deducting our placement agent’s fee of $40,000.

 

Simultaneously with the Closing of the $9 million financing transaction, the Company sold $1 million principal amount of Subordinated Convertible Notes to investors consisting of management and directors of the Company and one individual investor. The sale of the Subordinated Convertible Notes will not carry any additional fees and expenses, so the entire $1 million investment is netted to the Company. The Subordinated Convertible Notes are subordinated in right of repayment to the Convertible Notes to the Company and mature 91 days subsequent to the Maturity Date of the Convertible Notes. The Subordinated Convertible Notes bear interest at the rate of 8% per annum which shall accrue. Once 2/3 of the Convertible Notes have been repaid, then the Subordinated Convertible Notes may be converted and/or prepaid in cash so long as there is no Event of Default with respect to the Convertible Notes and all Equity Conditions of the Convertible Notes are met. The conversion price for the Subordinated Convertible Notes is $0.264 per share. The holders of the Subordinated Convertible Notes will be issued five year warrants to purchase 1,920,123 shares of Company common stock. Each warrant has an exercise price of $0.302 per share.

 

8
 

 

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

Cautionary Note Regarding Forward-Looking Information

 

This Report on Form 10-Q, in particular Part I Item 2 “Management’s Discussion and Analysis of Financial Condition and Results of Income,” contains certain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements represent our expectations, beliefs, intentions or strategies concerning future events, including, but not limited to, any statements regarding our assumptions about financial performance; the continuation of historical trends; the sufficiency of our cash balances for future liquidity and capital resource needs; the expected impact of changes in accounting policies on our results of income, financial condition or cash flows; anticipated problems and our plans for future operations; and the economy in general or the future of the electrical storage device industry, all of which are subject to various risks and uncertainties.

 

When used in this Report on Form 10-Q and other reports, statements, and information we have filed with the Securities and Exchange Commission (the “Commission” or “SEC”), in our press releases, presentations to securities analysts or investors, in oral statements made by or with the approval of an executive officer, the words or phrases “believes,” “may,” “will,” “expects,” “should,” “continue,” “anticipates,” “intends,” “will likely result,” “estimates,” “projects” or similar expressions and variations thereof are intended to identify such forward-looking statements. However, any statements contained in this Report on Form 10-Q that are not statements of historical fact may be deemed to be forward-looking statements. We caution that these statements by their nature involve risks and uncertainties, certain of which are beyond our control, and actual results may differ materially depending on a variety of important factors.

 

 

Key Performance Indicators, Material Trends and Uncertainties

 

Our primary activity is the development, design, manufacture and marketing of advanced energy storage devices and components that are primarily based on our patented PbC technology.

  

We utilize appropriate non-financial measures to evaluate the performance of our R&D and engineering activities and projects with prospective customers. Our demonstration projects entail extended periods of time to assess our energy devices over multiple charge and discharge cycles. Further, the results of our demonstration projects do not lend themselves to simple measurement and presentation.

  

The most significant financial metrics for our business as we moved into our initial commercialization phase in 2012 are:

· Revenue growth of our PbC technologies.
· Extracting an acceptable and competitive level of operating profit from our revenue (as measured by EBITDA).
· Ensuring we can access the growth capital required to fund our short and long-term business requirements.

 

 We believe we will need to continue to characterize and perfect our products through working with prospective customers in a limited number of projects as we move into full commercial production. While the results of this work are moving toward that goal, we cannot provide assurances that the products will be successful in their present design or that further R&D will not be needed. The successful completion of present and future characterization and demonstration projects is critical to the development and acceptance of our technology.

 

We must continue to improve our methodologies for manufacturing carbon electrode assemblies for our energy storage devices in commercial quantities. While we have assembled an engineering team that we believe can accomplish this goal, and are adding to it as we go forward, there is no assurance that we will be able to successfully commercialize our produce in large quantities.

 

Award Activities: Grants and Contracts :

 

In May of 2012, we were awarded a $150,000 Phase I grant from the U.S. Department of Energy to fund a commercialization plan for the use of its PbC batteries in a “low-cost, high-efficiency” dual battery architecture for micro-hybrid vehicles. We successfully completed and as of April 20, 2013 all monies were received.

 

In an event subsequent to the end of the first quarter of 2013, we applied for the follow on Phase II grant on April 17, 2013. It has been confirmed to us that Phase II grants, of approximately $1,000,000 each, will be made to approximately fifty percent of the applying applicants that have successfully completed their Phase I grant award programs. Our Phase II grant schedule will not exceed 24 months. Any Phase II grant awardee that successfully completes the Phase II section of the program,will be eligible to apply for Phase III grants. This final portion of the SBIR grant program will have award sizes several times the size of the Phase II grants.

 

Our Phase II proof of concept effort includes collaboration with strategic partners chosen for their expertise in the development of compatible vehicle systems that are essential for our entry into both historical and emerging markets. The unique properties our PbC® battery exhibits – long cycle life; high charge acceptance; fast re-charge; and inherent string equalization – create a strong case for PbC adoption by historical industry leaders and by those with new cutting edge technologies. Our application pointed out, as further evidence of our potential place in those markets, that we are in various stages of lab or field vehicle testing with these strategic partners.

 

9
 

 

Results of Operations

 

Motive Transportation

 

Our work in this area continues with Norfolk Southern (NS) in the area of hybrid locomotives. We shipped batteries for the first yard switcher at the end of 2012. Due to various delays by NS contractors, that locomotive is not yet on the road. Although all of our work related to this first locomotive is complete, our string testing validation program in conjunction with NS and Penn State – which is designed to provide information for potential future builds - continues within projected result parameters.

 

Our hybrid passenger vehicle work has entered a new phase. The OEM, in an anticipated effort to insure they will not have a “sole source” issue, has asked us to pursue with them, an alternate provider of our final product. Since this initiative is in keeping with our long stated future strategy (“to become the leading supplier of carbon electrode assemblies for the global lead-acid battery industry”), we embraced the process. We are a few months into that program and it is going well.

 

Our hybrid truck program has bifurcated into distinct programs, although one of our strategic partners is participating in both. The first initiative is in the class 8 heavy duty truck conversion market where the rebuild of existing trucks, and the future build of new trucks, look to employ a hybid system consisting of a new drive and electronics system integrated with our PbC battery package. We have been working with ePower systems since 2010, but our interaction has steadily increased in the last 12 months. We sold 56 PbC batteries to them in December of 2012 for integration into one of their prototype trucks. The truck has performed very well and we continued to tweak the operation in the first quarter. ePower reported the performance was better than anything else they had tested, and since cycle life was expected to be significantly better as well, we all felt we had a product that could be taken into small fleet testing. Of course Axion has an ongoing R&D/Engineering program that is focused on product improvement in general as well as improvement for specific market applications. We are pleased to report that subsequent to the end of the quarter, we shipped the new improved PbC batteries to ePower and they immediately installed them in their truck. ePower reported, and we were onsite to observe, significant improvement in amperage available (greater than 25%), a decrease in the internal resistance of the battery (more than 25%) resulting in an ability to pull larger loads at speed. These improvements were obtained while maintaining the PbC’s biggest advantage over other battery technologies, namely its’ ability to quickly accept recharge back into the battery. There will be more on this exciting development as we go forward with ePower.

 

The second hybrid truck program we have been working on is a dual battery design for a truck stop/start technology. This is very similar to the stop/start initiative we have been working toward with passenger vehicle OEM’s, except that the battery sizes are larger. In this stop/start program, we have an historical industry leader as an initial strategic partner. We are in the early stages with this program, but we have been told that, if initial data continues to trend as we have predicted, then we will be able to incorporate data we developed in our passenger vehicle stop/start program. This is significant because it will literally reduce time to market by at least 1/3 rd .

 

Manufacturing

 

In March we commissioned our new improved continuous roll carbon sheeting line. This was a necessary step to move us to targeted cost improvements and to critical quality control specifications. We began manufacturing product on this line immediately but continue to work on improvements. In fact after six weeks of operation, we have modestly increased our carbon sheet energy density. This carbon sheet production line, when coupled with our robotic line, streamlines our manufacturing process and reduces both our labor requirements and our material waste. It has now become scalable, with the capability of being replicated at the Company’s New Castle facility, or at any other facility in the world.

 

We referenced available power improvements in the ePower PbC battery product, which is the result of a change in the way we manufacture our product and an example of what we can do now that the our robotic line is fully engaged. As we go forward, we look to continue the improvement process.

 

Stationary Applications

 

Our onsite PowerCube™ continues to perform well. The unit was commissioned in October of 2011 and immediately began to function in the PJM frequency regulation market. We have continued to participate in this market on a daily basis without a single battery failure. Numerous potential PowerCube customers have come to Axion to view the PowerCube. They include users on both sides of the meter. The Washington D.C. Naval Yard Net Zero Energy installation is another destination of potential PowerCube purchasers. Just like our onsite PowerCube, this installation continues to operate with the original PbC batteries. In the first quarter, we had more than a tenfold increase in PowerCube RFP and RFQ requests compared to 2012.

 

Largely because of the high cost of offshore energy, and in response to requests from governmental and private entities, we have formed a consortium to pursue energy solutions outside of North America. Our PbC battery and the PowerCube are well suited to these renewable off and on grid solutions. Our group includes wind, solar, electronics integration and contracting entities.

 

10
 

 

Overview

 

The following Management’s Discussion and Analysis (“MD&A”) is written to help the reader understand our Company. The MD&A is provided as a supplement to, and should be read in conjunction with, our unaudited consolidated financial statements, the accompanying unaudited consolidated financial statement notes appearing elsewhere in this report and our Annual Report on Form 10-K for the year ended December 31, 2012.

 

 

· Net product sales are derived from the sale of lead acid batteries for specialty collector and racing cars; sales of AGM batteries and flooded lead acid batteries; sales of PbC batteries and PbC energy storage components and devices and from sales of product and services related to advanced battery applications for our PbC® technology.

 

· Cost of product sales include raw materials, components, labor, and allocated manufacturing overhead to produce lead acid and PbC batteries and to provide components for PbC energy storage devices sold to customers. Cost of product sales also include, where required, provisions for inventory valuation and obsolescence reserves.

 

· Selling, general and administrative expenses includes expenses to design, develop, and test advanced batteries and carbon electrode assemblies for our energy storage devices, materials consumed in production of pilot products, manufacturing costs not assigned to product sales, selling, business development and marketing expenses and general and administrative expenses.

 

11
 

 

Statements of Income

 

Summarized selected financial data for the three months ended March 31, 2013 and 2012:

 

    2013     2012     Change  
Product sales   $ 2,237,647     $ 1,760,562     $ 477,085  
Service sales     -       -       -  
Total sales     2,237,647       1,760,562       477,085  
Cost of product sales     1,990,473       1,566,570       423,903  
Gross Profit     247,174       193,992       53,182  
Selling, general & administrative expenses     2,310,912       2,484,242       (173,330 )
Derivative revaluations     (1,063 )     37,727       (38,790 )
Loss before income taxes   $ (2,067,255 )   $ (2,332,789 )   $ (265,534 )

 

Reconciliation of net loss to EBITDA

 

    2013     2012     Change  
GAAP loss before income taxes   $ (2,067,255 )   $ (2,332,789 )   $ 265,534  
Plus: Interest     4,580       4,015       565  
Depreciation     360,332       355,370       4,962  
Equity based compensation     92,685       95,309       (2,624 )
Derivative revaluations     (1,063 )     37,727       (38,790 )
EBITDA (1)   $ (1,610,721 )   $ (1,840,368 )   $ 229,647  

 

(1) EBITDA, a non-GAAP financial measure, is defined as earnings before interest expense and interest income, taxes, depreciation, amortization, share based compensation, derivative revaluations, and impairment of assets.  EBITDA is used by management to internally measure our operating and management performance and by investors as a supplemental financial measure to evaluate the performance of our business that, when viewed with our GAAP results and the accompanying reconciliation, we believe provides additional information that is useful to gain an understanding of the factors and trends affecting our business.

 

Summary of Consolidated Income for the first quarter of 2013 compared with the first quarter of 2012

 

Product Sales

 

Product sales for the first quarter of 2013 were $2.2 million compared to $1.8 million for the first quarter of 2012. We have one customer that accounted for approximately 88 % and 76%, respectively, for the first quarter of 2013 compared to the first quarter of 2012. The increase in product sales is due to a series of orders for unbranded flooded lead–acid batteries with the purchaser carrying the cost of inventory and providing the raw materials for production. 

 

Cost of Product Sales

 

The costs of product sales for the first quarter of 2013 were $2.0 million compared to $1.6 million for the first quarter of 2012. The increase in cost of product sales resulted from the increase in product sales.  

 

Gross Profit

 

Gross profit for the first quarter of 2013 was $247,174 compared to $193,992 for the first quarter of 2012. Gross profit margin was 11% in the first quarters of both 2013 and 2012.

 

Selling, General & Administrative Expenses

 

Selling, general & administrative expenses (“SG&A”) for the first quarter of 2013 were $2.3 million compared to $2.5 million for the first quarter of 2012. Lower labor costs and R&D testing expenses were the primary drivers of lower SG&A in the first quarter of 2013 compared to the first quarter of 2012.

 

12
 

 

Liquidity and Capital Resources

 

 On February 10, 2012, the Company completed a registered direct common stock offering providing gross proceeds of approximately $9.4 million. The shares sold, par value $0.0001 were priced at $0.35, which was the volume-weighted average price of the shares over a 40-day trading period prior to the commencement of the offering. The shares were sold pursuant to a shelf registration statement declared effective July 14, 2011. Net proceeds were approximately $8.6 million after the expenses of the offering and placement fees. These proceeds were used for working capital, capital expenditures and general corporate purposes.

 

Our primary source of liquidity has historically been cash generated from issuances of our equity securities. From inception through March 31, 2013, we have generated revenue from operations that was not significant enough to produce an operating profit.

 

On May 7, 2013, we entered into a financing transaction for the sale of Senior Convertible Notes (“Convertible Notes”) of Axion Power International, Inc. (“Company” or “We”) and Warrants issued by the Company (“Warrants”) with gross proceeds of $9 million to us. At Closing, which occurred on May8, 2013, we received cash proceeds of $3 million and had deposited an additional $6 million into a series of control accounts in our name. We are permitted to withdraw funds from our control accounts (i) in connection with certain conversions of the Convertible Notes or (ii) otherwise, as follows: $500 thousand on each 30 day anniversary of the Effective Date commencing on the 60 th  day after the Effective Date until there are no more funds in the control accounts.  The Convertible Notes bear interest at 8% per annum and are convertible into shares of our Common Stock at an initial per share conversion price of $0.264 subject to certain adjustments.  The Warrants entitle the holders of the Warrants to purchase, in aggregate, 17,281,107 million shares of our common stock. The five year Warrants will be exercisable at an exercise price equal to $0.302, subject to certain adjustments.

 

We received approximately $2.76 million in net proceeds at Closing, after deducting our placement agent’s fee of $240,000. Our other offering expenses, other than our placement agent’s fee, are approximately $100,000, which expenses will be paid out of the proceeds at Closing. At each Funds Release, we will receive approximately $460 thousand in net proceeds, after deducting our placement agent’s fee of $40,000.

 

Simultaneously with the Closing of the $9 million financing transaction, the Company sold $1 million principal amount of Subordinated Convertible Notes to investors consisting of management and directors of the Company and one individual investor. The sale of the Subordinated Convertible Notes will not carry any additional fees and expenses, so the entire $1 million investment is netted to the Company. The Subordinated Convertible Notes are subordinated in right of repayment to the Convertible Notes to the Company and mature 91 days subsequent to the Maturity Date of the Convertible Notes. The Subordinated Convertible Notes bear interest at the rate of 8% per annum which shall accrue. Once 2/3 of the Convertible Notes have been repaid, then the Subordinated Convertible Notes may be converted and/or prepaid in cash so long as there is no Event of Default with respect to the Convertible Notes and all Equity Conditions of the Convertible Notes are met. The conversion price for the Subordinated Convertible Notes is $0.264 per share. The holders of the Subordinated Convertible Notes will be issued five year warrants to purchase 1,920,123 shares of Company common stock. Each warrant has an exercise price of $0.302 per share.

 

We believe that the currently available funds at March 31, 2013, and including the net proceeds from our May 8, 2013 issue of $9 million in senior convertible notes and $1 million in subordinated convertible notes plus internally generated funds from products sales will provide sufficient financial resources to fund our operations, working capital, and capital expenditures into the second quarter of 2014.

 

Subsequent sources of outside funding will be required to fund the Company’s working capital, capital expenditures and rate operations beyond the first quarter of 2014. No assurances can be given that the Company will be successful in complying with certain of the terms and conditions in the issuance of the May 8 senior convertible notes or in arranging further funding, if needed, to continue the execution of its business plan including the development and commercialization of new products, or if successful, on what terms. Failure to obtain such funding will require management to substantially curtail, if not cease operations, which will result in a material adverse effect on the financial position and results of operations of the Company.

 

Cash, Cash Equivalents and Working Capital

 

Cash and cash equivalents at March 31, 2013 was $.8 million compared to $2.0 million at December 31, 2012. Cash equivalents consist of short-term liquid investments with original maturities of no more than six months that are readily convertible into cash.  

 

Working capital at March 31, 2013 was $2.2 million compared to $4.0 million at December 31, 2012.  

 

Cash Flows from Operating Activities

 

Net cash used in operations for the first quarter of, 2013 was $1.1 million compared to $ 1.7 million for the same period in 2012. This represents a decrease in net cash used in operations of $0.6 million or 35%. The decrease in net cash used resulted from a $0.2 million reduction in our loss from operations and a $0.4 million decrease in working capital.

 

13
 

 

Cash Flows from Investing Activities

 

Net cash used by investing activities for first quarter of 2013 was $0.09 million compared to $0.3 million for the same period in 2012. This represents a decrease in cash used by investing activities of $.21 million or 29%. This was primarily due to lower purchases of property and equipment.

 

Cash Flows from Financing Activities

 

Net cash used by financing activities for the first quarter of 2013 was $0.04 million compared to net cash provided of $8.6 million in 2012.

 

Critical Accounting Policies, Judgments and Estimates

 

Our significant accounting policies are fundamental to understanding our results of operations and financial condition. Some accounting policies require that we use estimates and assumptions that may affect the value of our assets or liabilities and financial results. These policies are described in “Critical Accounting Policies, Judgments and Estimates” and Note 2 (Accounting Policies) to Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2012. During 2013, there have been no modifications to our critical accounting policies as defined on Form 10-K for the year ended December 31, 2012.

 

Off Balance Sheet Arrangements

 

  We do not have any off-balance sheet arrangements that have, or are reasonably likely to have, an effect on our financial condition, financial statements, revenues or expenses.

 

   ITEM 4. CONT ROLS AND PROCEDURES

 

Evaluation of Disclosure Controls and Procedures

 

As of the end of the period covered by our quarterly report, management performed, with the participation of our Chief Executive Officer and Chief Financial Officer, an evaluation of the effectiveness of our disclosure controls and procedures as defined in Rules 13a-15(e) and 15d-15(e) of the Exchange Act. Our disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s forms, and that such information is accumulated and communicated to our management including our Chief Executive Officer and our Chief Financial Officer, to allow timely decisions regarding required disclosures.

 

Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.

 

There has been no change in our internal control over financial reporting during our most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

PART II -OTHER INFORMATION

 

ITEM 1 . LEGAL PROCEEDINGS

 

From time to time, we are involved in lawsuits, claims, investigations and proceedings, including pending opposition proceedings involving patents that arise in the ordinary course of business. There are no matters pending that we expect to have a material adverse impact on our business, results of operations, financial condition or cash flows.

 

ITEM 1A. RISK FACTORS

 

There is no change to the risk factors disclosed in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012.

 

ITEM 4. MINE SAFETY DISCLOSURES

 

 

Not Applicable

 

14
 

 

ITEM 6.             EXHIBITS  
   
10.45 Securities Purchase Agreement, dated May 7, 2013, between Axion Power International, Inc. and the Investors (31)  
   
10.46 Form of Note (31)  
   
10.47 Form of Warrant (31)  
   
10.48 Registration Rights Agreement, dated May 8, 2013, between Axion Power International, Inc. and the Investors (31)  
   
10.49 Subordinated Note Purchase Agreement, dated May 7, 2013, between Axion Power International, Inc. and the Subordinated Investors (31)  
   
10.50 Form of Subordinated Note (31)  
   
10.51 Form of Subordinated Note Warrant (31)  
   
10.52 Subordination Agreement, dated May 8, 2013, by and among Axion Power International, Inc., the Investors and the Subordinated Investors (31)  
   
10.53 Executive Employment Agreement of Thomas Granville, effective April 1, 2013  
   
10.54 Executive Employment Agreement of Charles Trego, effective April 1, 2013  
   
10.55 Executive Employment Agreement of Phillip Baker, effective April 1, 2013  
   
10.56 Executive Employment Agreement of Vani Dantam, effective April 1, 2013  
   
    (31) Incorporated by reference from our Form 8-K, filed with the Securities and Exchange Commission on May 8, 2013  
   
31.1 Certification of Chief Executive Officer Pursuant to Rule 13a-14(a)
   
31.2 Certification of Chief Financial Officer Pursuant to Rule 13a-14(a)
   
32.1 Statement of Chief Executive Officer Pursuant to Section 1350 of Title 18 of the United States Code
   
32.2 Statement of Chief Financial Officer Pursuant to Section 1350 of Title 18 of the United States Code

 

The following materials from the Company’s Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2013, formatted in eXtensible Business Reporting Language: (i) the Condensed Balance Sheets, (ii) the  Consolidated Statements of Operations, (iii) the Consolidated Statements of Cash Flows and (v) the Notes to Condensed Financial Statements, as follows:

 

101.INS XBRL Instance Document
101.SCH XBRL Taxonomy Extension Schema

 

101.CAL XBRL Taxonomy Extension Calculation Linkbase
101.DEF XBRL Taxonomy Extension Definition Linkbase

 

101.LAB XBRL Taxonomy Extension Label Linkbase
101.PRE XBRL Extension Presentation Linkbase

 

15
 

 

SIGNATURES

 

In accordance with Section 13 or 15(d) of the Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

 

AXION POWER INTERNATIONAL, INC.

 

/s/ Thomas Granville  
   
Thomas Granville,  
Principal Executive Officer  
Dated: May 15, 2013  

 

/s/ Charles R. Trego  
   
Charles R. Trego, Principal Financial Officer and  
Principal Accounting Officer  
Dated: May 15, 2013  

 

16

 

 

EXECUTIVE EMPLOYMENT AGREEMENT

 

The Employment Agreement is entered into this 25th day of March, 2013 and effective April 1, 2013 between Axion Power International, Inc., a Delaware corporation, having a place of business at 3601 Clover Lane, New Castle, Pennsylvania 16105 (the "Company") and Thomas G. Granville 329 Edgebrook Lane, New Wilmington, PA 16105, (the “Executive”).

 

A. The Company is engaged in research, development, manufacturing and sales relating to 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 in research, development, manufacturing and sales relating to both conventional and advanced lead acid batteries including new grid technologies for the positive and potentially the negative lead and carbon additives to the standard lead acid battery; and is exploring various other integration technologies for stationary and motive applications.

 

B. The Company owns all of the proprietary interests in the Company's good will and its Confidential Information (as hereinafter defined), all of which information is not publicly available and is considered by the Company to be confidential trade secrets. The Company imparts to its Employees, and said Employees require during the course of their employment, access to Confidential Information.

 

C. Executive during the course of employment with the Company: (i) will obtain material knowledge and information regarding the Company's Customers, including without limitation Customers' specialized requirements, preferences and financial condition, all of which are materially important in the Company's business relationship with such Customers; (ii) may perform duties for the Company, which duties themselves are of a highly confidential nature; (iii) is encouraged by the Company to develop personal relationships with the Company's suppliers, Customers and prospective Customers; (iv) generally has access to Confidential Information; and (v) has developed and will develop expertise in the field of lead-acid batteries, Axion's PbC Technology, battery testing, carbon sheeting, and other technologies currently under development by Axion.

 

D. The Company is vulnerable to unfair post-employment competition by Executive, since Executive has access to Confidential Information and has personal relationships with the Company's suppliers, Customers and prospective Customers.

 

E. Executive acknowledges the vulnerability of the Company to post-employment competition by Executive and is willing to enter into this Agreement with the Company, pursuant to which Executive agrees not to disclose any of the Company's Confidential Information and not to compete against the Company following termination of employment for the time periods and to the limited extent set forth in this Agreement.

 

F. The Company desires to employ Executive as its Chief Executive Officer and Executive desires to accept such employment, pursuant to the terms set forth in this Agreement.

 

 
 

 

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 the full, uninhibited and faithful performance of this Agreement, or the exercise of his best efforts as an Executive of the Company.

 

2) Employment and Duties. The Company shall employ the Executive as its Chief Executive Officer. The Executive will work from the Company's office and battery manufacturing center in the New Castle, Pennsylvania area and will report directly to the Company’s Board of Directors. The Executive’s responsibilities shall include all of the duties and responsibilities of the Chief Executive Officer with such executive duties and responsibilities consistent with such positions and stature as the Board of Directors of the Company may from time to time determine.

 

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. 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 (during the period before the signing of this Agreement) 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 Company does not offer, pay, or receive payments in exchange for the referral of a customer. The Executive shall not receive any remuneration from any outside person or entity related to the services performed by the Executive for the Company or the products purchased or sold by the Company.

 

d) The Executive shall comply with all applicable laws, including Federal, State and Municipal purchasing requirements. The Executive understands that failure to do so exposes the Company, its officers, directors, Executives and agents to possible sanctions, monetary penalties, criminal prosecution and other disciplinary actions. The Executive shall seek appropriate guidance from the Company when the application of a law is unclear.

 

 
 

 

4) Conditions of Employment.

 

a) Term of Employment. Unless terminated earlier in accordance with the provisions of this Agreement, the Company will employ the Executive for a period commencing on April 1, 2013 and terminating on June 30, 2016 (the “Term”).

 

In determining whether to continue to term the employment of any Executive Officer, the board will use as a metric, the failure of the Company to meet at least 75% of its Total Net Sales and EBITDA projections for any prior six month period beginning January 1, 2014. Such projections will be published and made available to the board no later than the 10th day prior to each six month period beginning on January 1 and including June 1 of the applicable calendar years. In determining accountability for the failure to reach such projections, the board shall make exceptions for an Act of God, or a failure of a single source supplier to meet its supply commitments due to an act unforeseeable by the Company and unavoidable to remedy due to an unavoidable inability to establish an alternate second supplier of the item, or any other event that the board deems completely beyond the control of the Company. 

 

b) Place of Employment. The Executive shall occupy offices at the Company's facility in New Castle, PA. The Executive shall not be required to relocate to any other business location maintained by the Company although 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) It is expressly agreed and understood that the Executive shall execute and be bound by the terms and conditions of the Executive Agreement which is attached hereto and made a part hereof as Exhibit A.

 

 
 

 

5) Compensation.

 

a) The Company shall compensate the Executive for all services to be rendered by him during the Term as follows:

 

b) The Executive shall receive an annualized salary of $380,000.00, paid on a regular basis according to company payroll practice which at the time of signing is bi-weekly (subject to change) for services rendered during the period commencing on April 1, 2013 and terminating on March 31, 2016. The Executive's salary shall be reviewed on an annual basis. The amount of such Salary shall be eligible for adjustment, if any, subject to renegotiation based on the performance of the Executive and the performance of the Company. The Executive will also be eligible for 2013 cash and option bonus awards, based on plans, programs and/or milestones established by the CEO on advice and consent from the Compensation Committee of the Board of Directors with input from the Chief Operating Officer and the Executive. Both of these determinations will be made in writing within 45 days of the execution of this agreement.

 

In addition, The Executive shall be allowed an automobile allowance of $750.00 per month to be applied to the car of his choice. The Executive shall be entitled to reimbursement at the maximum allowable mileage rate under applicable income tax rules for all reasonable business use of his personal vehicle.

 

c) 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 Executive shall incur no expenses that exceed $2,500.00 without prior authorization of the Company.

 

d) As partial compensation for the execution  of this Agreement and in consideration of the level of compensation paid to the Executive since April, 2010, the Company will pay the Executive a  stipend   as an  additional  inducement to retain the services of the Executive  over the term of this Agreement as follows :
i) Upon execution of the Agreement , the Executive will be paid $38,000 (Thirty Eight Thousand dollars), subject to normal withholdings and deductions within 45 days following the execution of this Agreement:
ii) Provided the Executive is an employee in good standing in the position of Chief Financial Officer on April 1, 2014 , the Executive will be paid a stipend  of  $38,000 (Thirty Eight Thousand dollars), subject to normal withholdings and deductions on the first regularly scheduled payroll following April 30, 2014;
iii) Provided the Executive is an employee in good standing in the position of Chief Financial Officer on April 1, 2015 , the Executive will be paid a stipend  of  $38,000 (Thirty Eight Thousand dollars), subject to normal withholdings and deductions on the first regularly scheduled payroll following April 30, 2015:
iv) Provided the Executive is an employee in good standing in the position of Chief Financial Officer on April 1, 2016 , the Executive will be paid a stipend  of  $38,000 (Thirty Eight Thousand dollars), subject to normal withholdings and deductions on the first regularly scheduled payroll following April 30, 2016

 

e) 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 CEO and 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.

 

 
 

 

f) 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.

 

d) 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, and any income tax liabilities arising there from shall be due and payable at the Executive's sole expense, and the Executive acknowledges that the Company may make appropriate withholding from salary for such grants.

 

e) Benefits. During the Employment Period, Executive shall be entitled to the benefits approved by the Board or any of the Executive Officers; as such benefits may be adjusted by the Board or any of the Executive Officers from time to time in their sole and absolute discretion. Upon termination of the Employment Period, benefits for periods subsequent to such termination shall cease. Executive will be entitled to four (4) weeks paid vacation per full year of employment to be given and accrued as set forth in the Company employee handbook.

 

f) Health Benefits. Executive and his qualifying family members will be eligible to participate in the Company's health benefit plans, as may be in effect from time to time at the sole discretion of the Company, provided that the permanent residence of each person receiving benefits is in the New Castle, PA area. More information is available from Human Resources.

 

g) Deductions, Taxes and Withholding. All amounts payable or which become payable hereunder shall be subject to any deductions authorized by Executive, any set-off or reimbursement deemed appropriate by the Company and permitted by law and any deductions or set-offs permitted by this Agreement and all deductions and withholding authorized by law. Executive is responsible for payment of all taxes related to Executive's compensation, whether cash or equity compensation or otherwise.

 

h) 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 Fifty per cent (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 as part of the regular ongoing payroll for the specified time, provided that payment of the Severance Amount shall be contingent upon the Executive signing the release and waiver agreement in Exhibit B.

 

 
 

 

For the purposes of this Agreement, "cause" for termination by the Company shall mean (i) a material breach of this Agreement by Executive; (ii) a breach of Executive's duty of loyalty to the Company or any act of dishonesty with respect to the Company or its stockholders, customers or suppliers; (iii) Executive's continued failure or refusal to perform, in any material respect, any duty or responsibility to the Company which is normally attached to Executive's position(after notice and a 10-day cure period), provided, however, any subsequent failure or refusal to perform such duty or responsibility shall entitle the Company to terminate employment for Just Cause without notice or an opportunity to cure; (iv) Executive's gross negligence or willful misconduct in performing those duties which are normally attached to Executive's position; (v) the commission by Executive of an act of fraud, conversion, misappropriation (including the unauthorized use or disclosure of confidential or proprietary information of the Company) or embezzlement or crime of moral turpitude; (vi) a conviction of or guilty plea or confession by Executive to any fraud, conversion, misappropriation, embezzlement or felony; (vii) the exposure of the Company to any criminal liability or loss of business opportunity or reduction in revenues or increase in losses substantially caused by the conduct of Executive which results in a material adverse effect upon the Company's business, operations, financial condition or results of operations or the exposure of the Company to any bona fide claims which may result in civil liability caused by Executive's unlawful harassment in employment; or (viii) the repeated taking of any action prohibited (a) by the Board or any of the Executive Officers, provided that Executive has received at least one written notice of having taken an action so prohibited, or (b) by this Agreement. For purposes of this Agreement, "Executive's duty of loyalty to the Company" shall include Executive's fiduciary obligation to place the interests of the Company ahead of Executive's personal interests and thereby not knowingly profit personally at the expense of the Company, and shall also include specifically the affirmative obligation to disclose promptly to the Board any known conflicts of interest Executive may have with respect to the Company, and the negative obligations not to usurp corporate opportunities of the Company, not to engage in any "conflict-of-interest" transactions with the Company (without the approval of the Board), and not to compete directly with the Company (without the approval of the Board). Good Reason shall mean the occurrence or failure to cause the occurrence, as the case may be, without your express written consent, of any of the following circumstances: (i) material demotion (except in connection with the termination of your employment for Cause or as a result of your death, or temporarily as a result of your illness or other absence), (ii) a relocation of the Company's executive office in New Castle, PA to a location more than 70 miles from its current location; (iii) any material breach by the Company of any provision of this Agreement; or (iv) failure of any successor to the Company (whether direct or indirect and whether by merger, acquisition, consolidation or otherwise) to assume in a writing delivered to you upon the assignee becoming such, the obligations of the Company hereunder.

 

c. During the 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 ten (10) days prior to the termination date. Severance payment will not be owed if Executive chooses to leave the Company for any reason not initiated by the Company.

 

d. At the end of the 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 ninety (90) days prior to the termination date. Non-renewal of contract is not grounds for being eligible for a severance payment.

 

 
 

 

i) 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.

 

j) 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. Notwithstanding the termination of the Executive's employment hereunder, the provisions of Paragraphs 6, 7, 8 and 9 survive such termination.

 

d. 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.

 

e. 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.

 

f. This agreement shall remain confidential between the parties and not disclosed to anyone unless agreed to by both parties or otherwise required under law.

 

g. Paragraph 6 of this Agreement shall be construed in accordance with the General Corporation Law of Delaware. All other provisions of this Agreement shall be construed according to the laws of the Commonwealth of Pennsylvania pertaining to Agreements formed and to be formed wholly within the Commonwealth of Pennsylvania. 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.

 

 
 

 

h. 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, United States in accordance with the Laws of the Commonwealth of Pennsylvania. The award of such arbitrator shall be final and may be entered by any party hereto in any court of competent jurisdiction. 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.

 

i. 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.

 

AXION POWER INTERNATIONAL, INC.

 

/s/ D. W. Wainwright   4/3/2013
D.W. Wainwright, Chairman of the   Date signed
Compensation Committee, Board of Directors    
     
/s/ Thomas Granville   3/25/2013
Executive Signature   Date signed
     
     
Executive Printed Name    

 

 

 
 

 

EXHIBIT A

 

Executive Agreement

 

AXION POWER INTERNATIONAL, INC.

 

EXECUTIVE AGREEMENT

 

Granville   Thomas   G.
EXECUTIVE’S LAST NAME   FIRST NAME   INITIAL

 

A) DEFINITIONS

 

1) AXION means Axion Power International, Inc., and any existing or future subsidiaries, owned or controlled, directly or indirectly by Axion.

 

2) CONFIDENTIAL INFORMATION means information, not generally known, and proprietary to Axion, including trade secret information, about Axion's processes and products, including information relating to research, development, manufacture, purchasing, accounting, engineering, marketing, merchandising, selling, leasing, servicing, finance and business systems and techniques. All information disclosed to me, or to which I have reasonable basis to believe to be Confidential Information, or which is treated by Axion as being Confidential Information, shall be presumed to be Confidential Information.

 

3) INVENTIONS means discoveries, improvements and ideas (whether or not shown or described in writing or reduced to practice) and works of authorship, whether or not patentable or copyrightable, (1) which relate directly to the business of Axion, or (2) which relate to Axion’s actual or demonstrably anticipated research or development, or (3) which result from any work performed by me for Axion, or (4) for which equipment, supplies, facility or trade secret information of Axion is used, or (5) which is developed on any Axion time.

 

4) CONFLICTING PRODUCT means any product, process, system or service of any person or organization other than Axion, in existence or under development, which is the same as or similar to or competes with, or has a usage allied to, a product, process, system or service upon which I work (in either a sales or a non-sales capacity) during the last three years of my employment by Axion, or about which I acquire Confidential Information

 

5) CONFLICTING ORGANIZATION means any person or organization which is
engaged in or about to become engaged in, research on or development, production, marketing, leasing, selling or servicing of a Conflicting Product.

 

 
 

 

B) Agreement

 

I AM EMPLOYED OR DESIRE TO BE EMPLOYED BY AXION IN A CAPACITY IN WHICH I MAY RECEIVE OR CONTRIBUTE TO CONFIDENTIAL INFORMATION. IN CONSIDERATION OF SUCH EMPLOYMENT OR CONTINUED EMPLOYMENT, AND THE WAGES OR SALARY AND OTHER EXECUTIVE BENEFITS IN COMPENSATION FOR MY SERVICES, AND IN CONSIDERATION OF BEING GIVEN ACCESS TO CONFIDENTIAL INFORMATION; I AGREE THAT:

 

1) With respect to Inventions made, authorized or conceived by me, either solely or

 

2) jointly with others, (1) during my employment, whether or not during normal working hours or whether or not at Axion's premises; or (2) within one year after termination of my employment, I will:

 

a) Keep accurate, complete and timely records of such Inventions, which records shall be Axion property and be retained on Axion's premises.

 

b) Promptly and fully disclose and describe such Inventions in writing to Axion.

 

c) Assign (and I do hereby assign) to Axion all of my rights to such Inventions and to applications for letters patent and/or copyright in all countries and to letters patent and/or copyrights granted upon such Inventions in all countries,

 

d) Acknowledge and deliver promptly to Axion (without charge to Axion but at the expense of Axion) such written instruments and to do such other acts as may be necessary in the opinion of Axion to preserve property rights against forfeiture, abandonment or loss and to obtain and maintain letters patent and/or copyrights and to vest the entire right and title thereto in Axion.

 

e) At the request of Axion and at its cost, the Executive shall assist Axion, 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 Axion, 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 Axion may from time to time reasonably request.

 

NOTICE: This is to notify you that paragraph A of this Axion "Executive Agreement" you are being asked to sign as a condition of your employment does not apply to an Invention for which no equipment, supplies, facility or trade secret information of Axion was used and which was developed entirely on your own time, and (1) which does not relate (a) directly to the business of Axion or (b) to Axion's actual or demonstrably anticipated research or development, or (2) which does not result from any work performed by you for Axion. If any exists, a detailed list of it should be attached to this agreement as an addendum.

 

 
 

 

3) EXCEPT as required in my duties to Axion, I will never, either during my employment by Axion or thereafter, use or disclose any Confidential Information as defined in paragraph 2 hereinabove.

 

4) UPON termination of my employment with Axion, all records and any compositions, articles, devices, and other items which disclose or embody Confidential Information including all copies or specimens thereof in my possession, whether prepared or made by me or others, will be left with Axion.

 

5) EXCEPT as listed at the end of this Agreement, I will not assert any rights under any Inventions as having been made, conceived, authored or acquired by me prior to my being employed by Axion.

 

6) FOR a period of two years after termination of my employment with Axion:

 

a) I will inform any new employer, prior to accepting employment of the existence of this Executive agreement and provide such employer with a copy thereof.

 

b) If I have been or am employed by Axion in a sales capacity, I will not render services in the United States, directly or indirectly, to any Conflicting Organization in connection with the development, manufacture, marketing, sale, merchandising, leasing, servicing or promotion of any Conflicting Product to any person or organization upon whom I called, or whose account I supervised on behalf of Axion, at any time during the last three years of my employment by Axion.

 

c) If I have been or am employed by Axion in a non-sales capacity, I will not render, to any Conflicting Organization, services, directly or indirectly, in the United States or in any country in which Axion has a plant for manufacturing a product upon which I work during my employment by Axion or in which Axion provides a service in which I participate during my employment by Axion, except that I may accept employment with a large Conflicting Organization whose business is diversified (and which has separate and distinct divisions), and which as to part of its business is not a Conflicting Organization, provided Axion, prior to my accepting such employment, shall receive separate written assurances satisfactory to Axion from such Conflicting Organization and from me, that I will not render services directly or indirectly in connection with any Conflicting Product.

 

d) If I am unable to obtain employment consistent with my abilities and education, within one month after termination of my employment with Axion, solely because of provisions of this paragraph, such provisions shall thereafter continue to bind me only as long as Axion shall make payments to me equal to my monthly base pay at termination (exclusive of extra compensation, bonus or Employee benefits) for each month of such unemployment commencing with the second month after termination of my employment with Axion.

 

 
 

 

1) I agree that I will, during each month of such unemployment, make conscientious and aggressive efforts to find employment; and I will, within ten days after the end of each calendar month, give Axion a detailed written account of my efforts to obtain employment. Such account will include a statement by me that although I aggressively sought employment, I was unable to obtain it solely because of the provisions of this Agreement.

 

2) It is understood that Axion shall, at its option, be relieved of making a monthly payment to me for any month during which I failed to seek employment conscientiously and aggressively, and to account to Axion, as provided for above.

 

3) Axion is obligated to make such payments to me, upon my fulfillment of the conditions set forth above, for 23 consecutive months unless Axion gives me written permission to accept available employment, or gives me a written release from the obligations of paragraph E.

 

4) Axion's obligation to make such monthly payments shall terminate upon my death or upon my obtaining employment. I agree that I will give prompt
written notice of such employment to Axion.

 

5) Axion shall not be liable, under this Agreement, or in any action relating thereto, for any amount greater than the equivalent of 23 such monthly payments, less amounts paid to me by Axion pursuant to this Agreement; Axion not being obliged to make a payment to me for the first month of such unemployment.

 

e) If, after termination of my employment with Axion, I obtain other employment but because of the provisions of paragraph E, my position is such that my gross monthly income will be less than that which I last received from Axion as monthly base pay at termination, then Axion’s obligations to make payments to me for the period specified in paragraph E, d. I will be limited to the difference between my monthly base pay at Axion, at termination, and the gross monthly income I will receive in my subsequent employment (6), d),1)).

 

f) ALL MY obligations under paragraphs A through D of this Agreement shall be binding upon my heirs, spouses, assigns and legal representatives.

 

g) IF ANY provision of this Agreement shall contravene any statute of a particular state which I perform services for Axion, then this Agreement shall be construed as if such provision is not contained herein insofar as enforcement of this Agreement against me in such particular state is concerned.

 

h) THIS AGREEMENT replaces any existing Agreement entered into by me and Axion relating generally to the same subject matter; but such replacement shall not affect rights and obligations of either party arising out of any such prior Agreement which shall then continue to be in effect for that purpose.

 

 
 

 

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

 

AXION POWER INTERNATIONAL, INC.

 

/s/ D. W. Wainwright   4/3/2013
D. W. Wainwright, Chairman of the   Date signed
Compensation Committee, Board of Directors    
     
/s/ Thomas Granville   3/25/2013
Executive Signature   Date signed
     
     
Executive Printed Name    

 

 
 

 

Exhibit B

 

Sample SEPARATION AGREEMENT AND RELEASE

 

AXION POWER INTERNATIONAL, INC. and AXION POWER BATTERY MANUFACTURING, INC. (“Employer”), and ___________ (“Executive”) hereby agree that:

 

1.           Separation Date. Executive’s last day of employment with Employer shall be (insert date) (the “Separation Date”). Executive and Employer agree that Executive’s separation from Employer is by mutual agreement. Executive shall have no duty to report to work after the Separation Date.

 

2.           Return of Company Property and Confidential Information. On or before the Separation Date, Executive shall return all property of Employer (whether owned, leased or otherwise belonging to Employer) in her possession or under her control or in the possession or control of a third party at her direction, including, but not limited to, keys, access cards, company credit cards, cell phones, blackberry devices, documents, records, paper and electronic files (including computer disks, thumb drives, etc.). Executive specifically agrees to return any and all confidential and/or proprietary information of the Employer in Executive possession, custody or control, including, without limitation, trade secrets, policy and procedure manuals, customer lists and contact information, customer preferences and specifications, other confidential customer data, supplier and vendor lists and other confidential supplier and vendor information, sales and marketing information, business plans, business development reports, marketing strategies, computer processes and programs, computer software, software designs and code, computer reports, cost and pricing data, financial information, worksheets, ledgers, accounts, memoranda, correspondence, reports, profit information, financial data, drawings, engineering, product or process specifications and documentation, customer and client proposals, techniques and systems, productivity reports, status reports, conference reports, project cost estimates, project change orders, project cost analyses, invoices, unpublished designs, patterns and prospective trade identification, employee compensation data, production processes, improvements, developments, designs and technologies, and any other information or knowledge concerning the Employer, its customers, and its business or methods of doing business, whether or not in tangible form, that is of a proprietary and/or confidential nature, and/or has been heretofore or hereafter will be treated as confidential or secret by Employer (hereinafter collectively referred to as “Confidential Information”). By signing this Agreement, Executive hereby represents and warrants that all such Confidential Information and other Employer property have been returned to Employer, and that Executive has not retained any such Confidential Information or Employer property or any copies thereof.

 

3.           Consideration by Employer. In consideration for signing this Separation Agreement and Release and compliance with promises made herein, Employer agrees:

 

a. Contract Requirements . In accordance with section 7(c) of your employment agreement, Axion can terminate your employment without good reason at any time with Two (2) weeks written notice. Your employment is hereby terminated on (insert date). You will receive Twenty six (26) weeks of pay in the amount of $(xx,xxx.xx) in your final paycheck for the period ending (insert date) which will be mailed to your home address on (insert date).

 

 
 

 

b . Severance. To pay to Executive a severance in the amount of $ (____.__) in one lump sum, subject to regular payroll withholdings and deductions, on the first regular pay date following the expiration of the 7-day revocation period more fully described in paragraph 16 of this Agreement, provided that the Employer has received this Agreement signed by Executive, and that Executive has not exercised her revocation rights under paragraph 16.

 

4.           Payments as Consideration. Executive understands and agrees that he/she would not be entitled to receive severance monies specified in Paragraph 3 above, except for her execution of this Separation Agreement and Release and the fulfillment of the promises contained herein.

 

5.           Non-Disclosure. Executive acknowledges that in the course of performing services for the Employer, Executive had access to, developed and/or contributed certain Confidential Information, as defined above, concerning the Employer and its business. Executive hereby covenants and agrees that he/she shall not directly or indirectly, at any time prior or subsequent to the Separation Date, disclose, divulge, disseminate, publish, furnish or make accessible to any third party, or use for Executive’s own personal or professional purposes, profit or benefit, any of the Employer’s Confidential Information.

 

6.           Assignment. The rights and protections of the Employer shall extend to any of its successors or assigns and this Agreement may be assigned without Executive’s consent.

 

7.           Taxes. Executive is, and hereby agrees, to be responsible for the payment of any and all federal, state, and/or local taxes which may be payable on the consideration paid for this Agreement. Executive agrees to indemnify and hold harmless the Employer and its insurers, individually or collectively, from and against any and all claims for federal, state and/or local taxes which may be payable on the consideration paid for this Agreement. Executive expressly acknowledges that the Employer has not made, nor herein makes, any representation about the tax consequences of any consideration provided by the Employer to Executive pursuant to this Agreement, and Executive represents and agrees that he/she is not relying on the advice of the Employer or its attorneys as to the legal, tax, or other consequences of this Agreement.

 

8.           Release. In consideration of the payments referenced in paragraph 3, Executive hereby releases, remises and forever discharges Employer, including its shareholders, directors, officers, employees, agents, predecessors, successors, parent companies, affiliates, subsidiaries, assigns, attorneys and insurers from any and all claims, damages, demands, causes of action, suits, debts due, and sums of money of whatever kind and nature which Executive ever had, could have in the future, or now has against Employer arising out of or in any way related to or resulting from Executive’s employment with Employer and/or the cessation thereof. Executive knowingly and voluntarily releases and forever discharges Employer from any and all claims that he/she has or may have against Employer as of the date of her execution of this Separation Agreement and Release, including, but not limited to, any alleged violation of Title VII of the Civil Rights Act of 1964, as amended; The Civil Rights Act of 1991; Sections 1981 through 1988 of Title 42 of the United States Code, as amended; The Employee Retirement Income Security Act of 1974, as amended; The Immigration Reform and Control Act, as amended; The Americans with Disabilities Act of 1990, as amended; The Age Discrimination in Employment Act of 1967 (“ADEA”), as amended; The Older Workers Benefit Protection Act; The Worker Adjustment and Retraining Notification Act, as amended; The Occupational Safety and Health Act, as amended; The Family and Medical Leave Act; The Fair Labor Standards Act; The Vocational Rehabilitation Act of 1973; The Equal Pay Act; The Pennsylvania Human Relations Act, as amended; The Pennsylvania Wage Payment and Collection Law, as amended; The Pennsylvania Minimum Wage Act, as amended; The Pennsylvania Equal Pay Law, as amended; any other federal, state or local civil or human rights law or any other local, state or federal constitution, statute, regulation or ordinance; any public policy, contract, tort, or common law; or any claim for costs, fees, or other expenses including attorneys’ fees.

 

 
 

 

9.           No Claim Exists. Should Executive file any charge or complaint on his/her own behalf or participate in any charge or complaint which may be made by any other person or organization on her behalf before any federal, state, or local court or administrative agency against Employer, Executive agrees that he/she will not accept any relief or recovery therefrom. Executive confirms that no charge, complaint or action exists in any forum or form.

 

10.          Waiver of Right to Assist. Executive understands that if this Agreement were not signed, Executive would have the right to voluntarily assist other individuals or entities in bringing claims against Employer. Executive hereby waives that right and he/she will not provide any such assistance other than assistance in an investigation or proceeding conducted by the United States Equal Employment Opportunity Commission or as otherwise required by law.

 

11.          Confidentiality. Executive and Employer recognize and acknowledge their mutual interests in maintaining the confidentiality of this Agreement, and agree that each shall keep the fact and terms of this Agreement and the discussions leading to this Agreement strictly confidential. Executive and Employer promise and agree not to disclose, either directly or indirectly, in any manner whatsoever, any information of any kind regarding the terms and amounts paid under this agreement, to any person or organization, including but not limited to representatives of local, state or federal agencies, present and former officers, employees and agents of Employer, and other members of the public. The parties agree that the unauthorized disclosure of the existence or terms of this Agreement shall be considered a material breach of this Agreement, that such breach shall provide a separate and independent cause of action to the other Party to this Agreement, and that this Agreement may be used as evidence in a subsequent proceeding in which the other Party alleges a breach of this Agreement. In the event of a breach of this Paragraph, the breaching party acknowledges that the non-breaching party shall be entitled to injunctive or other equitable relief necessary to enforce this Paragraph. In the event that Employer or Executive takes steps to seek relief from an alleged breach of this Paragraph, all of the remaining provisions of this Agreement shall remain in full force and effect. Executive agrees to inform those persons who had knowledge of the fact and terms of this Agreement on the date hereof that they are bound by the same terms of confidentiality in this Agreement that apply to Executive. The provisions of this Paragraph shall not prohibit Executive from disclosing the fact and terms hereof to such accounting, legal, or similar professional advisors as he/she may from time to time engage. This Paragraph shall not prohibit Employer from disclosing the fact of and terms hereof to Employer’s accounting, legal, or similar professional advisors and to such employees of Employer who, as part of their employment duties in terms of personnel functions at Employer are required to have this information; however, all such employees shall be informed of the confidentiality of the fact of and terms of this Agreement, and they are bound by the same terms of confidentiality as apply to Employer.

 

 
 

 

12.          Severability. Should any part of this Agreement be rendered or declared invalid by a court of competent jurisdiction of the Commonwealth of Pennsylvania, such invalidation of such part or portion of this Agreement should not invalidate the remaining portions thereof, and they shall remain in full force and effect. However, if, within two (2) years from the date of this Agreement, any portion of the general release language is ruled to be unenforceable for any reason, the parties will enter into good faith discussions to amend the general release language to conform to all applicable laws regarding enforceability. If the parties are unable to mutually agree on an appropriate amendment to the general release language, Executive shall return the consideration paid hereunder to Employer.

13.          No Admission of Liability. Executive agrees that neither this Separation Agreement and Release nor the furnishing of the consideration for this Release shall be deemed or construed at any time for any purpose as an admission by Employer of any liability or unlawful conduct of any kind.

 

14.          Non-Disparagement. The parties mutually agree that they shall not make any statements to third parties with the intent or effect of disparaging the other party.

 

15.          Right to Review. Executive agrees that he/she has been given at least twenty-one (21) days after the receipt of this Separation Agreement and Release to consider its terms and decide whether or not to sign it, but that he/she can freely and knowingly waive the twenty-one (21) day period and execute the Agreement before the end of the twenty-one (21) day period, the effect of which is to begin the running of the seven (7) day period described below.

 

16.          Right to Revoke. Executive is aware that he/she may change her mind and freely revoke this Release, only insofar as it applies to any claim he/she may have under the Age Discrimination in Employment Act (ADEA), at any time during the seven (7) days after it is signed, in which case, the provisions of the Release as to the ADEA, only , will have no force or effect. Executive understands and agrees that, upon his/her execution of this Agreement, the payment of the severance sum specified herein will be held by Employer until the expiration of this seven (7) day revocation period, after which the payment will be tendered to Executive if he/she has not exercised her revocation rights under this paragraph. Executive understands and agrees that any revocation under this section must be in writing and delivered to counsel for Employer, at the address, which follows, postmarked within seven (7) days of Executive’s signing of this Agreement to be effective: Jolie Kahn, Esq., 1800 John F Kennedy Blvd., Suite 1400, Philadelphia, PA 19103. If the last day of the revocation period is a Saturday, Sunday, or legal holiday, then the revocation period shall not expire until the next following day which is not a Saturday, Sunday, or legal holiday. The parties acknowledge and agree that any revocation by Executive under this paragraph shall apply only to any claims Executive may have or assert under the ADEA, and is not effective to revoke Executive’s waiver and release of any other claims pursuant to this Release.

 

17.          Right to Consult with Counsel. Executive has been and/or is hereby advised to review this Separation Agreement and Release with Executive attorney, and expressly acknowledges that Executive has read and understands the Agreement and enters into the Agreement of Executive own free will and as a competent adult.

 

18.          Binding Effect. This Separation Agreement and Release shall be binding upon and inure to the benefit of all the parties hereto and their respective shareholders, partners, associates, members, officers, directors, employees, administrators, agents, predecessors, successors, parent companies, affiliates, subsidiaries, insurers, assigns, representatives, executors and heirs.

 

 
 

 

19.          Choice of Law. This Separation Agreement and Release shall be interpreted, endorsed and governed in accordance with the laws of the Commonwealth of Pennsylvania, without regard to its conflict of law rules.

 

20.          Modification . The terms or conditions of this Separation Agreement and Release may not be modified, altered or changed except upon express written consent of both parties wherein specific reference is made to this Agreement. Any waiver of the terms or covenants hereof must be in a writing executed by the party waiving compliance. Failure of any party at any time or times to require performance of any provision hereof shall in no manner affect his/her or its right at a later time to enforce the same. No waiver by a party of a breach of any term or covenant contained in this Agreement, whether by conduct or otherwise, in any one or more instances shall be deemed to be or construed as a further or continuing waiver of such term or covenant.

 

21.          Competency. The parties declare that each has fully participated in the negotiation of this Agreement, that each has carefully read this Agreement and reviewed its terms, that each has been given an opportunity to consult with legal counsel to the extent any party so desires, and that each agrees to it for the purpose of making a full and final compromise as to all matters referenced herein.

 

IN WITNESS WHEREOF, the parties hereto have caused this Separation Agreement and Release to be executed on their behalf as of the day and year indicated below.

 

AXION POWER INTERNATIONAL, INC.
     
     
By:  (name)   (Title)
     
Dated:        
       

 

     
Executive’s name   Dated
     
     
WITNESS   Dated

 

 

 

EXECUTIVE EMPLOYMENT AGREEMENT

 

The Employment Agreement is entered into this 25th day of March, 2013 and effective April 1, 2013 between Axion Power International, Inc., a Delaware corporation, having a place of business at 3601 Clover Lane, New Castle, Pennsylvania 16105 (the "Company") and Charles R. Trego 2018 Bishop Woods Court, Poland, OH 44514, (the “Executive”).

 

A. The Company is engaged in research, development, manufacturing and sales relating to 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 in research, development, manufacturing and sales relating to both conventional and advanced lead acid batteries including new grid technologies for the positive and potentially the negative late and carbon additives to the standard lead acid battery; and is exploring various other integration technologies for stationary and motive applications.

 

B. The Company owns all of the proprietary interests in the Company's good will and its Confidential Information (as hereinafter defined), all of which information is not publicly available and is considered by the Company to be confidential trade secrets. The Company imparts to its Employees, and said Employees require during the course of their employment, access to Confidential Information.

 

C. Executive during the course of employment with the Company: (i) will obtain material knowledge and information regarding the Company's Customers, including without limitation Customers' specialized requirements, preferences and financial condition, all of which are materially important in the Company's business relationship with such Customers; (ii) may perform duties for the Company, which duties themselves are of a highly confidential nature; (iii) is encouraged by the Company to develop personal relationships with the Company's suppliers, Customers and prospective Customers; (iv) generally has access to Confidential Information; and (v) has developed and will develop expertise in the field of lead-acid batteries, Axion's PbC Technology, battery testing, carbon sheeting, and other technologies currently under development by Axion.

 

D. The Company is vulnerable to unfair post-employment competition by Executive, since Executive has access to Confidential Information and has personal relationships with the Company's suppliers, Customers and prospective Customers.

 

E. Executive acknowledges the vulnerability of the Company to post-employment competition by Executive and is willing to enter into this Agreement with the Company, pursuant to which Executive agrees not to disclose any of the Company's Confidential Information and not to compete against the Company following termination of employment for the time periods and to the limited extent set forth in this Agreement.

 

F. The Company desires to employ Executive as its Chief Financial Officer and Executive desires to accept such employment, pursuant to the terms set forth in this Agreement.

 

 
 

 

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 the full, uninhibited and faithful performance of this Agreement, or the exercise of his best efforts as an Executive of the Company.

 

2) Employment and Duties. The Company shall employ the Executive as its Chief Financial Officer. The Executive will work from the Company's office and battery manufacturing center in the New Castle, Pennsylvania area and will report directly to Thomas Granville, Chief Executive Officer. Executive will devote Executive’s full time and effort, energies and abilities as are required in the discretion of the Executive Officers for the proper and efficient performance of such duties and responsibilities.

 

a) Specifically:

 

i) Executive will devote Executive's full time, attention and ability to the Company's business and affairs;

 

ii) Executive will not enter into the services of, nor be employed in any capacity or for any purpose whatsoever by, any person, firm or corporation other than us, nor will Executive be engaged in or by any business, enterprise or undertaking other than your employment under this Employment Agreement unless Executive obtains our prior written approval;

 

iii) Executive from time to time will be called upon to travel in the course of performing your responsibilities for the Company;

 

iv) Executive will be responsible for all the duties and responsibilities of the Chief Financial Officer including the following:

 

v) Present and report accurate timely financial information to Management and the Board of Directors.

 

vi) Develop reporting routines and briefings with the Audit Committee.

 

vii) Prepare financials in accordance with guidelines and cooperation of Independent Auditors

 

viii) Oversee SEC filings including 8-K's, 10-Q's and 10- K's.

 

ix) Interpret relevant SEC, FASB and GAAP pronouncements.

 

x) Work closely with the CEO as a partner and an advisor on all segments of the Company's business.

 

xi) Oversee the budget preparation process and provide updated information on a monthly basis.

 

 
 

 

xii) Oversee all accounting functions including processing of purchase orders, payables and receivables.

 

xiii) Oversee the capital structure of the Company and advise on the best changing mix of debt and equity.

 

xiv) Oversee any necessary changes to the NAV accounting system or with respect to implementation of new inventory control measures.

 

xv) Oversee and lead Sarbanes Oxley compliance. Oversee and be responsible for the collection of all corporate documents including contracts, debt instruments, equity instruments;-board of director minutes, committee minutes, etc.

 

xvi) Recommend and oversee required records retention programs.

 

xvii) Actively participate, as a member of the Senior Management Team, in the development of an overall business plan for Axion

 

xviii) Provide ongoing economic forecasts and modeling.

 

xix) Provide financial models for various existing and future products of the Company.

 

xx) Actively participate as a member of the product development/approval team.

 

xxi) Perform any other reasonable task that is consistent with the position of Chief Financial Officer as assigned by the CEO or at the direction the Board of Directors.

 

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. 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 (during the period before the signing of this Agreement) 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 Company does not offer, pay, or receive payments in exchange for the referral of a customer. The Executive shall not receive any remuneration from any outside person or entity related to the services performed by the Executive for the Company or the products purchased or sold by the Company.

 

 
 

 

d) The Executive shall comply with all applicable laws, including Federal, State and Municipal purchasing requirements. The Executive understands that failure to do so exposes the Company, its officers, directors, Executives and agents to possible sanctions, monetary penalties, criminal prosecution and other disciplinary actions. The Executive shall seek appropriate guidance from the Company when the application of a law is unclear.

 

4) Conditions of Employment.

 

a) Term of Employment. Unless terminated earlier in accordance with the provisions of this Agreement, the Company will employ the Executive for a period commencing on April 1, 2013 and terminating on March 31, 2016 (the “Term”).

 

In determining whether to continue to term the employment of any Executive Officer, the board will use as a metric, the failure of the Company to meet at least 75% of its Total Net Sales and EBITDA projections for any prior six month period beginning January 1, 2014. Such projections will be published and made available to the board no later than the 10th day prior to each six month period beginning on January 1 and including June 1 of the applicable calendar years. In determining accountability for the failure to reach such projections, the board shall make exceptions for an Act of God, or a failure of a single source supplier to meet its supply commitments due to an act unforeseeable by the Company and unavoidable to remedy due to an unavoidable inability to establish an alternate second supplier of the item, or any other event that the board deems completely beyond the control of the Company. 

 

b) Place of Employment. The Executive shall occupy offices at the Company's facility in New Castle, PA. The Executive shall not be required to relocate to any other business location maintained by the Company although 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) It is expressly agreed and understood that the Executive shall execute and be bound by the terms and conditions of the Executive Agreement which is attached hereto and made a part hereof as Exhibit A.

 

5) Compensation.

 

a) The Company shall compensate the Executive for all services to be rendered by him during the Term as follows:

 

b) The Executive shall receive an annualized salary of $225,000.00, paid on a regular basis according to company payroll practice which at the time of signing is bi-weekly (subject to change) for services rendered during the period commencing on April 1, 2013 and terminating on March 31, 2016. The Executive's salary shall be reviewed on an annual basis. The amount of such Salary shall be eligible for adjustment, if any, subject to renegotiation based on the performance of the Executive and the performance of the Company. The Executive will also be eligible for 2013 cash and option bonus awards, based on plans, programs and/or milestones established by the CEO on advice and consent from the Compensation Committee of the Board of Directors with input from the Chief Operating Officer and the Executive. Both of these determinations will be made in writing within 45 days of the execution of this agreement.

 

In addition, The Executive shall be allowed an automobile allowance of $750.00 per month to be applied to the car of his choice. The Executive shall be entitled to reimbursement at the maximum allowable mileage rate under applicable income tax rules for all reasonable business use of his personal vehicle.

 

c) 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 Executive shall incur no expenses that exceed $2,500.00 without prior authorization of the Company.

 

d) As partial compensation for the execution  of this Agreement and in consideration of the level of compensation paid to the Executive since April, 2010, the Company will pay the Executive a  stipend   as an  additional  inducement to retain the services of the Executive  over the term of this Agreement as follows :
i) Upon execution of the Agreement , the Executive will be paid $22,500 (Twenty Two Thousand Five Hundred dollars), subject to normal withholdings and deductions within 45 days following the execution of this Agreement:
ii) Provided the Executive is an employee in good standing in the position of Chief Financial Officer on April 1, 2014 , the Executive will be paid a stipend  of  $22,500 (Twenty Two Thousand Five Hundred dollars), subject to normal withholdings and deductions on the first regularly scheduled payroll following April 30, 2014;
iii) Provided the Executive is an employee in good standing in the position of Chief Financial Officer on April 1, 2015 , the Executive will be paid a stipend  of  $22,500 (Twenty Two Thousand Five Hundred dollars), subject to normal withholdings and deductions on the first regularly scheduled payroll following April 30, 2015:

 

 
 

 

  iv) Provided the Executive is an employee in good standing in the position of Chief Financial Officer on April 1, 2016 , the Executive will be paid a stipend  $22,500 (Twenty Two Thousand Five Hundred dollars), subject to normal withholdings and deductions on the first regularly scheduled payroll following April 30, 2016

 

e) 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 CEO and 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.

 

f) 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.

 

d) 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, and any income tax liabilities arising there from shall be due and payable at the Executive's sole expense, and the Executive acknowledges that the Company may make appropriate withholding from salary for such grants.

 

e) Benefits. During the Employment Period, Executive shall be entitled to the benefits approved by the Board or any of the Executive Officers; as such benefits may be adjusted by the Board or any of the Executive Officers from time to time in their sole and absolute discretion. Upon termination of the Employment Period, benefits for periods subsequent to such termination shall cease. Executive will be entitled to four (4) weeks paid vacation per full year of employment to be given and accrued as set forth in the Company employee handbook.

 

f) Health Benefits. Executive and his qualifying family members will be eligible to participate in the Company's health benefit plans, as may be in effect from time to time at the sole discretion of the Company, provided that the permanent residence of each person receiving benefits is in the New Castle, PA area. More information is available from Human Resources.

 

g) Deductions, Taxes and Withholding. All amounts payable or which become payable hereunder shall be subject to any deductions authorized by Executive, any set-off or reimbursement deemed appropriate by the Company and permitted by law and any deductions or set-offs permitted by this Agreement and all deductions and withholding authorized by law. Executive is responsible for payment of all taxes related to Executive's compensation, whether cash or equity compensation or otherwise.

 

 
 

 

h) 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 Fifty per cent (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 as part of the regular ongoing payroll for the specified time, provided that payment of the Severance Amount shall be contingent upon the Executive signing the release and waiver agreement in Exhibit B.

 

For the purposes of this Agreement, "cause" for termination by the Company shall mean (i) a material breach of this Agreement by Executive; (ii) a breach of Executive's duty of loyalty to the Company or any act of dishonesty with respect to the Company or its stockholders, customers or suppliers; (iii) Executive's continued failure or refusal to perform, in any material respect, any duty or responsibility to the Company which is normally attached to Executive's position(after notice and a 10-day cure period), provided, however, any subsequent failure or refusal to perform such duty or responsibility shall entitle the Company to terminate employment for Just Cause without notice or an opportunity to cure; (iv) Executive's gross negligence or willful misconduct in performing those duties which are normally attached to Executive's position; (v) the commission by Executive of an act of fraud, conversion, misappropriation (including the unauthorized use or disclosure of confidential or proprietary information of the Company) or embezzlement or crime of moral turpitude; (vi) a conviction of or guilty plea or confession by Executive to any fraud, conversion, misappropriation, embezzlement or felony; (vii) the exposure of the Company to any criminal liability or loss of business opportunity or reduction in revenues or increase in losses substantially caused by the conduct of Executive which results in a material adverse effect upon the Company's business, operations, financial condition or results of operations or the exposure of the Company to any bona fide claims which may result in civil liability caused by Executive's unlawful harassment in employment; or (viii) the repeated taking of any action prohibited (a) by the Board or any of the Executive Officers, provided that Executive has received at least one written notice of having taken an action so prohibited, or (b) by this Agreement. For purposes of this Agreement, "Executive's duty of loyalty to the Company" shall include Executive's fiduciary obligation to place the interests of the Company ahead of Executive's personal interests and thereby not knowingly profit personally at the expense of the Company, and shall also include specifically the affirmative obligation to disclose promptly to the Board any known conflicts of interest Executive may have with respect to the Company, and the negative obligations not to usurp corporate opportunities of the Company, not to engage in any "conflict-of-interest" transactions with the Company (without the approval of the Board), and not to compete directly with the Company (without the approval of the Board). Good Reason shall mean the occurrence or failure to cause the occurrence, as the case may be, without your express written consent, of any of the following circumstances: (i) material demotion (except in connection with the termination of your employment for Cause or as a result of your death, or temporarily as a result of your illness or other absence), (ii) a relocation of the Company's executive office in New Castle, PA to a location more than 70 miles from its current location; (iii) any material breach by the Company of any provision of this Agreement; or (iv) failure of any successor to the Company (whether direct or indirect and whether by merger, acquisition, consolidation or otherwise) to assume in a writing delivered to you upon the assignee becoming such, the obligations of the Company hereunder.

 

 
 

 

c. During the 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 ten (10) days prior to the termination date. Severance payment will not be owed if Executive chooses to leave the Company for any reason not initiated by the Company.

 

d. At the end of the 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 ninety (90) days prior to the termination date. Non-renewal of contract is not grounds for being eligible for a severance payment.

 

i) 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.

 

j) 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. Notwithstanding the termination of the Executive's employment hereunder, the provisions of Paragraphs 6, 7, 8 and 9 survive such termination.

 

d. 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.

 

 
 

 

e. 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.

 

f. This agreement shall remain confidential between the parties and not disclosed to anyone unless agreed to by both parties or otherwise required under law.

 

g. Paragraph 6 of this Agreement shall be construed in accordance with the General Corporation Law of Delaware. All other provisions of this Agreement shall be construed according to the laws of the Commonwealth of Pennsylvania pertaining to Agreements formed and to be formed wholly within the Commonwealth of Pennsylvania. 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.

 

h. 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, United States in accordance with the Laws of the Commonwealth of Pennsylvania. The award of such arbitrator shall be final and may be entered by any party hereto in any court of competent jurisdiction. 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.

 

i. 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.

 

AXION POWER INTERNATIONAL, INC.    
     
/s/ Thomas Granville   3/25/2013
Thomas Granville, CEO   Date signed
     
/s/ Charles Trego   3/25/2013
Executive Signature   Date signed
     
Executive Printed Name    

 

 
 

 

EXHIBIT A

 

Executive Agreement

 

AXION POWER INTERNATIONAL, INC.

 

EXECUTIVE AGREEMENT

  

Trego   Charles   R.
EXECUTIVE’S LAST NAME   FIRST NAME   INITIAL

 

A) DEFINITIONS

 

1) AXION means Axion Power International, Inc., and any existing or future subsidiaries, owned or controlled, directly or indirectly by Axion.

 

2) CONFIDENTIAL INFORMATION means information, not generally known, and proprietary to Axion, including trade secret information, about Axion's processes and products, including information relating to research, development, manufacture, purchasing, accounting, engineering, marketing, merchandising, selling, leasing, servicing, finance and business systems and techniques. All information disclosed to me, or to which I have reasonable basis to believe to be Confidential Information, or which is treated by Axion as being Confidential Information, shall be presumed to be Confidential Information.

 

3) INVENTIONS means discoveries, improvements and ideas (whether or not shown or described in writing or reduced to practice) and works of authorship, whether or not patentable or copyrightable, (1) which relate directly to the business of Axion, or (2) which relate to Axion’s actual or demonstrably anticipated research or development, or (3) which result from any work performed by me for Axion, or (4) for which equipment, supplies, facility or trade secret information of Axion is used, or (5) which is developed on any Axion time.

 

4) CONFLICTING PRODUCT means any product, process, system or service of any person or organization other than Axion, in existence or under development, which is the same as or similar to or competes with, or has a usage allied to, a product, process, system or service upon which I work (in either a sales or a non-sales capacity) during the last three years of my employment by Axion, or about which I acquire Confidential Information

 

5) CONFLICTING ORGANIZATION means any person or organization which is
engaged in or about to become engaged in, research on or development, production, marketing, leasing, selling or servicing of a Conflicting Product.

 

 
 

 

B) Agreement

 

I AM EMPLOYED OR DESIRE TO BE EMPLOYED BY AXION IN A CAPACITY IN WHICH I MAY RECEIVE OR CONTRIBUTE TO CONFIDENTIAL INFORMATION. IN CONSIDERATION OF SUCH EMPLOYMENT OR CONTINUED EMPLOYMENT, AND THE WAGES OR SALARY AND OTHER EXECUTIVE BENEFITS IN COMPENSATION FOR MY SERVICES, AND IN CONSIDERATION OF BEING GIVEN ACCESS TO CONFIDENTIAL INFORMATION; I AGREE THAT:

 

1) With respect to Inventions made, authorized or conceived by me, either solely or

 

2) jointly with others, (1) during my employment, whether or not during normal working hours or whether or not at Axion's premises; or (2) within one year after termination of my employment, I will:

 

a) Keep accurate, complete and timely records of such Inventions, which records shall be Axion property and be retained on Axion's premises.

 

b) Promptly and fully disclose and describe such Inventions in writing to Axion.

 

c) Assign (and I do hereby assign) to Axion all of my rights to such Inventions and to applications for letters patent and/or copyright in all countries and to letters patent and/or copyrights granted upon such Inventions in all countries,

 

d) Acknowledge and deliver promptly to Axion (without charge to Axion but at the expense of Axion) such written instruments and to do such other acts as may be necessary in the opinion of Axion to preserve property rights against forfeiture, abandonment or loss and to obtain and maintain letters patent and/or copyrights and to vest the entire right and title thereto in Axion.

 

e) At the request of Axion and at its cost, the Executive shall assist Axion, 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 Axion, 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 Axion may from time to time reasonably request.

 

NOTICE: This is to notify you that paragraph A of this Axion "Executive Agreement" you are being asked to sign as a condition of your employment does not apply to an Invention for which no equipment, supplies, facility or trade secret information of Axion was used and which was developed entirely on your own time, and (1) which does not relate (a) directly to the business of Axion or (b) to Axion's actual or demonstrably anticipated research or development, or (2) which does not result from any work performed by you for Axion. If any exists, a detailed list of it should be attached to this agreement as an addendum.

 

 
 

 

3) EXCEPT as required in my duties to Axion, I will never, either during my employment by Axion or thereafter, use or disclose any Confidential Information as defined in paragraph 2 hereinabove.

 

4) UPON termination of my employment with Axion, all records and any compositions, articles, devices, and other items which disclose or embody Confidential Information including all copies or specimens thereof in my possession, whether prepared or made by me or others, will be left with Axion.

 

5) EXCEPT as listed at the end of this Agreement, I will not assert any rights under any Inventions as having been made, conceived, authored or acquired by me prior to my being employed by Axion.

 

6) FOR a period of two years after termination of my employment with Axion:

 

a) I will inform any new employer, prior to accepting employment of the existence of this Executive agreement and provide such employer with a copy thereof.

 

b) If I have been or am employed by Axion in a sales capacity, I will not render services in the United States, directly or indirectly, to any Conflicting Organization in connection with the development, manufacture, marketing, sale, merchandising, leasing, servicing or promotion of any Conflicting Product to any person or organization upon whom I called, or whose account I supervised on behalf of Axion, at any time during the last three years of my employment by Axion.

 

c) If I have been or am employed by Axion in a non-sales capacity, I will not render, to any Conflicting Organization, services, directly or indirectly, in the United States or in any country in which Axion has a plant for manufacturing a product upon which I work during my employment by Axion or in which Axion provides a service in which I participate during my employment by Axion, except that I may accept employment with a large Conflicting Organization whose business is diversified (and which has separate and distinct divisions), and which as to part of its business is not a Conflicting Organization, provided Axion, prior to my accepting such employment, shall receive separate written assurances satisfactory to Axion from such Conflicting Organization and from me, that I will not render services directly or indirectly in connection with any Conflicting Product.

 

d) If I am unable to obtain employment consistent with my abilities and education, within one month after termination of my employment with Axion, solely because of provisions of this paragraph, such provisions shall thereafter continue to bind me only as long as Axion shall make payments to me equal to my monthly base pay at termination (exclusive of extra compensation, bonus or Employee benefits) for each month of such unemployment commencing with the second month after termination of my employment with Axion.

 

 
 

 

1) I agree that I will, during each month of such unemployment, make conscientious and aggressive efforts to find employment; and I will, within ten days after the end of each calendar month, give Axion a detailed written account of my efforts to obtain employment. Such account will include a statement by me that although I aggressively sought employment, I was unable to obtain it solely because of the provisions of this Agreement.

 

2) It is understood that Axion shall, at its option, be relieved of making a monthly payment to me for any month during which I failed to seek employment conscientiously and aggressively, and to account to Axion, as provided for above.

 

3) Axion is obligated to make such payments to me, upon my fulfillment of the conditions set forth above, for 23 consecutive months unless Axion gives me written permission to accept available employment, or gives me a written release from the obligations of paragraph E.

 

4) Axion's obligation to make such monthly payments shall terminate upon my death or upon my obtaining employment. I agree that I will give prompt
written notice of such employment to Axion.

 

5) Axion shall not be liable, under this Agreement, or in any action relating thereto, for any amount greater than the equivalent of 23 such monthly payments, less amounts paid to me by Axion pursuant to this Agreement; Axion not being obliged to make a payment to me for the first month of such unemployment.

 

e) If, after termination of my employment with Axion, I obtain other employment but because of the provisions of paragraph E, my position is such that my gross monthly income will be less than that which I last received from Axion as monthly base pay at termination, then Axion’s obligations to make payments to me for the period specified in paragraph E, d. I will be limited to the difference between my monthly base pay at Axion, at termination, and the gross monthly income I will receive in my subsequent employment (6), d),1)).

 

f) ALL MY obligations under paragraphs A through D of this Agreement shall be binding upon my heirs, spouses, assigns and legal representatives.

 

g) IF ANY provision of this Agreement shall contravene any statute of a particular state which I perform services for Axion, then this Agreement shall be construed as if such provision is not contained herein insofar as enforcement of this Agreement against me in such particular state is concerned.

 

h) THIS AGREEMENT replaces any existing Agreement entered into by me and Axion relating generally to the same subject matter; but such replacement shall not affect rights and obligations of either party arising out of any such prior Agreement which shall then continue to be in effect for that purpose.

 

 
 

 

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

 

AXION POWER INTERNATIONAL, INC.    
     
/s/ Thomas Granville   3/25/2013
Thomas Granville, CEO   Date signed
     
/s/ Charles Trego   3/25/2013
Executive Signature   Date signed
     
     
Executive Printed Name    

 

 
 

 

Exhibit B

 

Reference Exhibit B 10.53

 

 

 

 

 

EXECUTIVE EMPLOYMENT AGREEMENT

 

The Employment Agreement is entered into this 25th day of March, 2013 and effective April 1, 2013 between Axion Power International, Inc., a Delaware corporation, having a place of business at 3601 Clover Lane, New Castle, Pennsylvania 16105 (the "Company") and Philip S. Baker , 8682 Fairweather Trail, Poland, OH 44514 (the “Executive”).

 

A. The Company is engaged in research, development, manufacturing and sales relating to 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 in research, development, manufacturing and sales relating to both conventional and advanced lead acid batteries including new grid technologies for the positive and potentially the negative lead and carbon additives to the standard lead acid battery; and is exploring various other integration technologies for stationary and motive applications.

 

B. The Company owns all of the proprietary interests in the Company's good will and its Confidential Information (as hereinafter defined), all of which information is not publicly available and is considered by the Company to be confidential trade secrets. The Company imparts to its Employees, and said Employees require during the course of their employment, access to Confidential Information.

 

C. Executive during the course of employment with the Company: (i) will obtain material knowledge and information regarding the Company's Customers, including without limitation Customers' specialized requirements, preferences and financial condition, all of which are materially important in the Company's business relationship with such Customers; (ii) may perform duties for the Company, which duties themselves are of a highly confidential nature; (iii) is encouraged by the Company to develop personal relationships with the Company's suppliers, Customers and prospective Customers; (iv) generally has access to Confidential Information; and (v) has developed and will develop expertise in the field of lead-acid batteries, Axion's PbC Technology, battery testing, carbon sheeting, and other technologies currently under development by Axion.

 

D. The Company is vulnerable to unfair post-employment competition by Executive, since Executive has access to Confidential Information and has personal relationships with the Company's suppliers, Customers and prospective Customers.

 

E. Executive acknowledges the vulnerability of the Company to post-employment competition by Executive and is willing to enter into this Agreement with the Company, pursuant to which Executive agrees not to disclose any of the Company's Confidential Information and not to compete against the Company following termination of employment for the time periods and to the limited extent set forth in this Agreement.

 

F. The Company desires to employ Executive as its Chief Operating Officer and Executive desires to accept such employment, pursuant to the terms set forth in this Agreement.

  

 
 

 

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 the full, uninhibited and faithful performance of this Agreement, or the exercise of his best efforts as an Executive of the Company.

 

2) Employment and Duties. The Company shall employ the Executive as its Chief Operating Officer. The Executive will work from the Company's office and battery manufacturing center in the New Castle, Pennsylvania area and will report directly to Thomas Granville, Chief Executive Officer. Executive will devote Executive’s full time and effort, energies and abilities as are required in the discretion of the Executive Officers for the proper and efficient performance of such duties and responsibilities.

 

a) Specifically:

 

i) Executive will devote Executive's full time, attention and ability to the Company's business and affairs;
ii) Executive will not enter into the services of, nor be employed in any capacity or for any purpose whatsoever by, any person, firm or corporation other than us, nor will Executive be engaged in or by any business, enterprise or undertaking other than your employment under this Employment Agreement unless Executive obtains our prior written approval;
iii) Executive from time to time will be called upon to travel in the course of performing your responsibilities for the Company;
iv) Executive will be responsible for all the duties and responsibilities of the Chief Operating Officer including the following:
v) Executive will work to develop a team focus while establishing boundaries and providing mentoring as required;
vi) Executive will work to prepare the battery plant to be AGM centric in process and capable of sufficient production capacities for AGM and PbC production;
vii) Executive will be responsible for establishing a Quality Control culture while maintaining ISO 9001-2008 certification for battery and electrode production.
viii) Executive will be responsible for positive plate improvement for lead-acid and lead carbon products;
ix) Executive will be a contributing member of the product approval/development team;
x) Executive will participate, or chair, regular engineering and production meetings;
xi) Executive will work to improve overall manufacturing practices and improve organizational readiness;
xii) Executive will be a member of, and a contributor to, the planning and strategy leadership group;
xiii) Executive will provide monthly written reports to the CEO and, if required, to the board of directors, covering all direct reporting functions in the Company; and the
xiv) Executive will perform any other duties consistent with the position of Chief Operating Officer as directed by the CEO or the Board of Directors.

 

 
 

 

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. 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 (during the period before the signing of this Agreement) 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 Company does not offer, pay, or receive payments in exchange for the referral of a customer. The Executive shall not receive any remuneration from any outside person or entity related to the services performed by the Executive for the Company or the products purchased or sold by the Company.

 

d) The Executive shall comply with all applicable laws, including Federal, State and Municipal purchasing requirements. The Executive understands that failure to do so exposes the Company, its officers, directors, Executives and agents to possible sanctions, monetary penalties, criminal prosecution and other disciplinary actions. The Executive shall seek appropriate guidance from the Company when the application of a law is unclear.

 

4) Conditions of Employment.

 

a) Term of Employment. Unless terminated earlier in accordance with the provisions of this Agreement, the Company will employ the Executive for a period commencing on April 1, 2013 and terminating on March 31, 2016 (the “Term”).

 

In determining whether to continue to term the employment of any Executive Officer, the board will use as a metric, the failure of the Company to meet at least 75% of its Total Net Sales and EBITDA projections for any prior six month period beginning January 1, 2014. Such projections will be published and made available to the board no later than the 10th day prior to each six month period beginning on January 1 and including June 1 of the applicable calendar years. In determining accountability for the failure to reach such projections, the board shall make exceptions for an Act of God, or a failure of a single source supplier to meet its supply commitments due to an act unforeseeable by the Company and unavoidable to remedy due to an unavoidable inability to establish an alternate second supplier of the item, or any other event that the board deems completely beyond the control of the Company. 

 

 
 

 

b) Place of Employment. The Executive shall occupy offices at the Company's facility in New Castle, PA. The Executive shall not be required to relocate to any other business location maintained by the Company although 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) It is expressly agreed and understood that the Executive shall execute and be bound by the terms and conditions of the Executive Agreement which is attached hereto and made a part hereof as Exhibit A.

 

5) Compensation.

 

a) The Company shall compensate the Executive for all services to be rendered by him during the Term as follows:

 

b) The Executive shall receive an annualized salary of $199,800.00, paid on a regular basis according to company payroll practice which at the time of signing is bi-weekly (subject to change) for services rendered during the period commencing on April 1, 2013 and terminating on March 31, 2016. The Executive's salary shall be reviewed on an annual basis. The amount of such Salary shall be eligible for adjustment, if any, subject to renegotiation based on the performance of the Executive and the performance of the Company. The Executive will also be eligible for 2013 cash and option bonus awards, based on plans, programs and/or milestones established by the CEO on advice and consent from the Compensation Committee of the Board of Directors with input from the Chief Financial Officer and the Executive. Both of these determinations will be made in writing within 45 days of the execution of this agreement.

 

 
 

 

In addition, The Executive shall be allowed an automobile allowance of $500.00 per month to be applied to the car of his choice. The Executive shall be entitled to reimbursement at the maximum allowable mileage rate under applicable income tax rules for all reasonable business use of his personal vehicle.

 

c) 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 Executive shall incur no expenses that exceed $2,500.00 without prior authorization of the Company.

 

d) As partial compensation for the execution  of this Agreement and in consideration of the level of compensation paid to the Executive since April, 2010, the Company will pay the Executive a  stipend   as an  additional  inducement to retain the services of the Executive  over the term of this Agreement as follows :
i) Upon execution of the Agreement , the Executive will be paid $19,980 ( Nineteen Thousand Nine Hundred and Eighty dollars ), subject to normal withholdings and deductions within 45 days following the execution of this Agreement:
ii) Provided the Executive is an employee in good standing in the position of Chief Operating Officer on April 1, 2014 , the Executive will be paid a stipend  of  $$19,980 ( Nineteen Thousand Nine Hundred and Eighty dollars dollars), subject to normal withholdings and deductions on the first regularly scheduled payroll following April 30, 2014;
iii) Provided the Executive is an employee in good standing in the position of Chief Operating Officer on April 1, 2015 , the Executive will be paid a stipend  of  $19,980 (Nineteen Thousand Nine Hundred and Eighty dollars) subject to normal withholdings and deductions on the first regularly scheduled payroll following April 30, 2015:
iv) Provided the Executive is an employee in good standing in the position of Chief Operating Officer on April 1, 2016 , the Executive will be paid a stipend  of  $19,980 (Nineteen Thousand Nine Hundred and Eighty dollars) subject to normal withholdings and deductions on the first regularly scheduled payroll following April 30, 2016

 

e) 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 CEO and 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.

 

f) 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.

 

 
 

 

d) 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, and any income tax liabilities arising there from shall be due and payable at the Executive's sole expense, and the Executive acknowledges that the Company may make appropriate withholding from salary for such grants.

 

e) Benefits. During the Employment Period, Executive shall be entitled to the benefits approved by the Board or any of the Executive Officers; as such benefits may be adjusted by the Board or any of the Executive Officers from time to time in their sole and absolute discretion. Upon termination of the Employment Period, benefits for periods subsequent to such termination shall cease. Executive will be entitled to four (4) weeks paid vacation per full year of employment to be given and accrued as set forth in the Company employee handbook.

 

f) Health Benefits. Executive and his qualifying family members will be eligible to participate in the Company's health benefit plans, as may be in effect from time to time at the sole discretion of the Company, provided that the permanent residence of each person receiving benefits is in the New Castle, PA area. More information is available from Human Resources.

 

g) Deductions, Taxes and Withholding. All amounts payable or which become payable hereunder shall be subject to any deductions authorized by Executive, any set-off or reimbursement deemed appropriate by the Company and permitted by law and any deductions or set-offs permitted by this Agreement and all deductions and withholding authorized by law. Executive is responsible for payment of all taxes related to Executive's compensation, whether cash or equity compensation or otherwise.

 

h) 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 Fifty per cent (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 as part of the regular ongoing payroll for the specified time, provided that payment of the Severance Amount shall be contingent upon the Executive signing the release and waiver agreement in Exhibit B.

 

 
 

 

For the purposes of this Agreement, "cause" for termination by the Company shall mean (i) a material breach of this Agreement by Executive; (ii) a breach of Executive's duty of loyalty to the Company or any act of dishonesty with respect to the Company or its stockholders, customers or suppliers; (iii) Executive's continued failure or refusal to perform, in any material respect, any duty or responsibility to the Company which is normally attached to Executive's position(after notice and a 10-day cure period), provided, however, any subsequent failure or refusal to perform such duty or responsibility shall entitle the Company to terminate employment for Just Cause without notice or an opportunity to cure; (iv) Executive's gross negligence or willful misconduct in performing those duties which are normally attached to Executive's position; (v) the commission by Executive of an act of fraud, conversion, misappropriation (including the unauthorized use or disclosure of confidential or proprietary information of the Company) or embezzlement or crime of moral turpitude; (vi) a conviction of or guilty plea or confession by Executive to any fraud, conversion, misappropriation, embezzlement or felony; (vii) the exposure of the Company to any criminal liability or loss of business opportunity or reduction in revenues or increase in losses substantially caused by the conduct of Executive which results in a material adverse effect upon the Company's business, operations, financial condition or results of operations or the exposure of the Company to any bona fide claims which may result in civil liability caused by Executive's unlawful harassment in employment; or (viii) the repeated taking of any action prohibited (a) by the Board or any of the Executive Officers, provided that Executive has received at least one written notice of having taken an action so prohibited, or (b) by this Agreement. For purposes of this Agreement, "Executive's duty of loyalty to the Company" shall include Executive's fiduciary obligation to place the interests of the Company ahead of Executive's personal interests and thereby not knowingly profit personally at the expense of the Company, and shall also include specifically the affirmative obligation to disclose promptly to the Board any known conflicts of interest Executive may have with respect to the Company, and the negative obligations not to usurp corporate opportunities of the Company, not to engage in any "conflict-of-interest" transactions with the Company (without the approval of the Board), and not to compete directly with the Company (without the approval of the Board). Good Reason shall mean the occurrence or failure to cause the occurrence, as the case may be, without your express written consent, of any of the following circumstances: (i) material demotion (except in connection with the termination of your employment for Cause or as a result of your death, or temporarily as a result of your illness or other absence), (ii) a relocation of the Company's executive office in New Castle, PA to a location more than 70 miles from its current location; (iii) any material breach by the Company of any provision of this Agreement; or (iv) failure of any successor to the Company (whether direct or indirect and whether by merger, acquisition, consolidation or otherwise) to assume in a writing delivered to you upon the assignee becoming such, the obligations of the Company hereunder.

  

c. During the 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 ten (10) days prior to the termination date. Severance payment will not be owed if Executive chooses to leave the Company for any reason not initiated by the Company.

 

d. At the end of the 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 ninety (90) days prior to the termination date. Non-renewal of contract is not grounds for being eligible for a severance payment.

 

 
 

 

i) 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.

 

j) 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. Notwithstanding the termination of the Executive's employment hereunder, the provisions of Paragraphs 6, 7, 8 and 9 survive such termination.

 

d. 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.

 

e. 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.

 

f. This agreement shall remain confidential between the parties and not disclosed to anyone unless agreed to by both parties or otherwise required under law.

 

 
 

 

g. Paragraph 6 of this Agreement shall be construed in accordance with the General Corporation Law of Delaware. All other provisions of this Agreement shall be construed according to the laws of the Commonwealth of Pennsylvania pertaining to Agreements formed and to be formed wholly within the Commonwealth of Pennsylvania. 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.

 

h. 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, United States in accordance with the Laws of the Commonwealth of Pennsylvania. The award of such arbitrator shall be final and may be entered by any party hereto in any court of competent jurisdiction. 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.

 

i. 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.

 

AXION POWER INTERNATIONAL, INC.

 

/s/ Thomas Granville   3/25/2013
Thomas Granville, CEO   Date signed
     
/s/ Philip S. Baker   3/25/2013
Executive Signature   Date signed
     

Executive Printed Name

 

 
 

 

EXHIBIT A

 

Executive Agreement

 

AXION POWER INTERNATIONAL, INC.

 

EXECUTIVE AGREEMENT

  

Baker   Philip   S.
EXECUTIVE’S LAST NAME   FIRST NAME   INITIAL

 

A) DEFINITIONS

 

1) AXION means Axion Power International, Inc., and any existing or future subsidiaries, owned or controlled, directly or indirectly by Axion.

 

2) CONFIDENTIAL INFORMATION means information, not generally known, and proprietary to Axion, including trade secret information, about Axion's processes and products, including information relating to research, development, manufacture, purchasing, accounting, engineering, marketing, merchandising, selling, leasing, servicing, finance and business systems and techniques. All information disclosed to me, or to which I have reasonable basis to believe to be Confidential Information, or which is treated by Axion as being Confidential Information, shall be presumed to be Confidential Information.

 

3) INVENTIONS means discoveries, improvements and ideas (whether or not shown or described in writing or reduced to practice) and works of authorship, whether or not patentable or copyrightable, (1) which relate directly to the business of Axion, or (2) which relate to Axion’s actual or demonstrably anticipated research or development, or (3) which result from any work performed by me for Axion, or (4) for which equipment, supplies, facility or trade secret information of Axion is used, or (5) which is developed on any Axion time.

 

4) CONFLICTING PRODUCT means any product, process, system or service of any person or organization other than Axion, in existence or under development, which is the same as or similar to or competes with, or has a usage allied to, a product, process, system or service upon which I work (in either a sales or a non-sales capacity) during the last three years of my employment by Axion, or about which I acquire Confidential Information

 

5) CONFLICTING ORGANIZATION means any person or organization which is
engaged in or about to become engaged in, research on or development, production, marketing, leasing, selling or servicing of a Conflicting Product.

 

 
 

 

B) Agreement

 

I AM EMPLOYED OR DESIRE TO BE EMPLOYED BY AXION IN A CAPACITY IN WHICH I MAY RECEIVE OR CONTRIBUTE TO CONFIDENTIAL INFORMATION. IN CONSIDERATION OF SUCH EMPLOYMENT OR CONTINUED EMPLOYMENT, AND THE WAGES OR SALARY AND OTHER EXECUTIVE BENEFITS IN COMPENSATION FOR MY SERVICES, AND IN CONSIDERATION OF BEING GIVEN ACCESS TO CONFIDENTIAL INFORMATION; I AGREE THAT:

 

1) With respect to Inventions made, authorized or conceived by me, either solely or

 

2) jointly with others, (1) during my employment, whether or not during normal working hours or whether or not at Axion's premises; or (2) within one year after termination of my employment, I will:

 

a) Keep accurate, complete and timely records of such Inventions, which records shall be Axion property and be retained on Axion's premises.

 

b) Promptly and fully disclose and describe such Inventions in writing to Axion.

 

c) Assign (and I do hereby assign) to Axion all of my rights to such Inventions and to applications for letters patent and/or copyright in all countries and to letters patent and/or copyrights granted upon such Inventions in all countries,

 

d) Acknowledge and deliver promptly to Axion (without charge to Axion but at the expense of Axion) such written instruments and to do such other acts as may be necessary in the opinion of Axion to preserve property rights against forfeiture, abandonment or loss and to obtain and maintain letters patent and/or copyrights and to vest the entire right and title thereto in Axion.

 

e) At the request of Axion and at its cost, the Executive shall assist Axion, 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 Axion, 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 Axion may from time to time reasonably request.

 

NOTICE: This is to notify you that paragraph A of this Axion "Executive Agreement" you are being asked to sign as a condition of your employment does not apply to an Invention for which no equipment, supplies, facility or trade secret information of Axion was used and which was developed entirely on your own time, and (1) which does not relate (a) directly to the business of Axion or (b) to Axion's actual or demonstrably anticipated research or development, or (2) which does not result from any work performed by you for Axion. If any exists, a detailed list of it should be attached to this agreement as an addendum.

 

 
 

 

3) EXCEPT as required in my duties to Axion, I will never, either during my employment by Axion or thereafter, use or disclose any Confidential Information as defined in paragraph 2 hereinabove.

 

4) UPON termination of my employment with Axion, all records and any compositions, articles, devices, and other items which disclose or embody Confidential Information including all copies or specimens thereof in my possession, whether prepared or made by me or others, will be left with Axion.

 

5) EXCEPT as listed at the end of this Agreement, I will not assert any rights under any Inventions as having been made, conceived, authored or acquired by me prior to my being employed by Axion.

 

6) FOR a period of two years after termination of my employment with Axion:

 

a) I will inform any new employer, prior to accepting employment of the existence of this Executive agreement and provide such employer with a copy thereof.

 

b) If I have been or am employed by Axion in a sales capacity, I will not render services in the United States, directly or indirectly, to any Conflicting Organization in connection with the development, manufacture, marketing, sale, merchandising, leasing, servicing or promotion of any Conflicting Product to any person or organization upon whom I called, or whose account I supervised on behalf of Axion, at any time during the last three years of my employment by Axion.

 

c) If I have been or am employed by Axion in a non-sales capacity, I will not render, to any Conflicting Organization, services, directly or indirectly, in the United States or in any country in which Axion has a plant for manufacturing a product upon which I work during my employment by Axion or in which Axion provides a service in which I participate during my employment by Axion, except that I may accept employment with a large Conflicting Organization whose business is diversified (and which has separate and distinct divisions), and which as to part of its business is not a Conflicting Organization, provided Axion, prior to my accepting such employment, shall receive separate written assurances satisfactory to Axion from such Conflicting Organization and from me, that I will not render services directly or indirectly in connection with any Conflicting Product.

 

d) If I am unable to obtain employment consistent with my abilities and education, within one month after termination of my employment with Axion, solely because of provisions of this paragraph, such provisions shall thereafter continue to bind me only as long as Axion shall make payments to me equal to my monthly base pay at termination (exclusive of extra compensation, bonus or Employee benefits) for each month of such unemployment commencing with the second month after termination of my employment with Axion.

 

 
 

 

1) I agree that I will, during each month of such unemployment, make conscientious and aggressive efforts to find employment; and I will, within ten days after the end of each calendar month, give Axion a detailed written account of my efforts to obtain employment. Such account will include a statement by me that although I aggressively sought employment, I was unable to obtain it solely because of the provisions of this Agreement.

 

2) It is understood that Axion shall, at its option, be relieved of making a monthly payment to me for any month during which I failed to seek employment conscientiously and aggressively, and to account to Axion, as provided for above.

 

3) Axion is obligated to make such payments to me, upon my fulfillment of the conditions set forth above, for 23 consecutive months unless Axion gives me written permission to accept available employment, or gives me a written release from the obligations of paragraph E.

 

4) Axion's obligation to make such monthly payments shall terminate upon my death or upon my obtaining employment. I agree that I will give prompt
written notice of such employment to Axion.

 

5) Axion shall not be liable, under this Agreement, or in any action relating thereto, for any amount greater than the equivalent of 23 such monthly payments, less amounts paid to me by Axion pursuant to this Agreement; Axion not being obliged to make a payment to me for the first month of such unemployment.

 

e) If, after termination of my employment with Axion, I obtain other employment but because of the provisions of paragraph E, my position is such that my gross monthly income will be less than that which I last received from Axion as monthly base pay at termination, then Axion’s obligations to make payments to me for the period specified in paragraph E, d. I will be limited to the difference between my monthly base pay at Axion, at termination, and the gross monthly income I will receive in my subsequent employment (6), d),1)).

 

f) ALL MY obligations under paragraphs A through D of this Agreement shall be binding upon my heirs, spouses, assigns and legal representatives.

 

g) IF ANY provision of this Agreement shall contravene any statute of a particular state which I perform services for Axion, then this Agreement shall be construed as if such provision is not contained herein insofar as enforcement of this Agreement against me in such particular state is concerned.

 

h) THIS AGREEMENT replaces any existing Agreement entered into by me and Axion relating generally to the same subject matter; but such replacement shall not affect rights and obligations of either party arising out of any such prior Agreement which shall then continue to be in effect for that purpose.

 

 
 

 

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

 

 

AXION POWER INTERNATIONAL, INC.

 

/s/ Thomas Granville   3/25/2013
Thomas Granville, CEO   Date signed
     
/s/ Philip S. Baker   3/25/2013
Executive Signature   Date signed
     

Executive Printed Name

 

 
 

 

 

Exhibit B

 

Reference Exhibit B 10.53

 

 

   

EXECUTIVE EMPLOYMENT AGREEMENT

 

The Employment Agreement is entered into this 25th day of March, 2013 and effective April 1, 2013 between Axion Power International, Inc., a Delaware corporation, having a place of business at 3601 Clover Lane, New Castle, Pennsylvania 16105 (the "Company") and Vani Kumar Dantam , 9151 Springfield Road, Poland, Ohio 44514 (the “Executive”).

 

A. The Company is engaged in research, development, manufacturing and sales relating to 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 in research, development, manufacturing and sales relating to both conventional and advanced lead acid batteries including new grid technologies for the positive and potentially the negative lead and carbon additives to the standard lead acid battery; and is exploring various other integration technologies for stationary and motive applications.

 

B. The Company owns all of the proprietary interests in the Company's good will and its Confidential Information (as hereinafter defined), all of which information is not publicly available and is considered by the Company to be confidential trade secrets. The Company imparts to its Employees, and said Employees require during the course of their employment, access to Confidential Information.

 

C. Executive during the course of employment with the Company: (i) will obtain material knowledge and information regarding the Company's Customers, including without limitation Customers' specialized requirements, preferences and financial condition, all of which are materially important in the Company's business relationship with such Customers; (ii) may perform duties for the Company, which duties themselves are of a highly confidential nature; (iii) is encouraged by the Company to develop personal relationships with the Company's suppliers, Customers and prospective Customers; (iv) generally has access to Confidential Information; and (v) has developed and will develop expertise in the field of lead-acid batteries, Axion's PbC Technology, battery testing, carbon sheeting, and other technologies currently under development by Axion.

 

D. The Company is vulnerable to unfair post-employment competition by Executive, since Executive has access to Confidential Information and has personal relationships with the Company's suppliers, Customers and prospective Customers.

 

E. Executive acknowledges the vulnerability of the Company to post-employment competition by Executive and is willing to enter into this Agreement with the Company, pursuant to which Executive agrees not to disclose any of the Company's Confidential Information and not to compete against the Company following termination of employment for the time periods and to the limited extent set forth in this Agreement.

 

F. The Company desires to employ Executive as its Senior Vice President - Business Development, Sales and Marketing and Executive desires to accept such employment, pursuant to the terms set forth in this Agreement.

 

 
 

 

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 the full, uninhibited and faithful performance of this Agreement, or the exercise of his best efforts as an Executive of the Company.

 

2) Employment and Duties. The Company shall employ the Executive as its Senior Vice President - Business Development, Sales and Marketing The Executive will work from the Company's office and battery manufacturing center in the New Castle, Pennsylvania area and will report directly to Thomas Granville, Chief Executive Officer. Executive will devote Executive’s full time and effort, energies and abilities as are required in the discretion of the Executive Officers for the proper and efficient performance of such duties and responsibilities.

 

a) Specifically:

 

i) Executive will devote Executive's full time, attention and ability to the Company's business and affairs;

 

ii) Executive will not enter into the services of, nor be employed in any capacity or for any purpose whatsoever by, any person, firm or corporation other than us, nor will Executive be engaged in or by any business, enterprise or undertaking other than your employment under this Employment Agreement unless Executive obtains our prior written approval;

 

iii) Executive from time to time will be called upon to travel in the course of performing your responsibilities for the Company;

 

iv) Executive will be responsible for all the duties and responsibilities of the Senior Vice President - Business Development, Sales and Marketing.

 

v) Actively participate as a member of the product development/approval team.

 

vi) Perform any other reasonable task that is consistent with the position of Senior Vice President - Business Development, Sales and Marketing as assigned by the CEO or at the direction the Board of Directors.

 

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. 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 (during the period before the signing of this Agreement) 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 Company does not offer, pay, or receive payments in exchange for the referral of a customer. The Executive shall not receive any remuneration from any outside person or entity related to the services performed by the Executive for the Company or the products purchased or sold by the Company.

 

d) The Executive shall comply with all applicable laws, including Federal, State and Municipal purchasing requirements. The Executive understands that failure to do so exposes the Company, its officers, directors, Executives and agents to possible sanctions, monetary penalties, criminal prosecution and other disciplinary actions. The Executive shall seek appropriate guidance from the Company when the application of a law is unclear.

 

4) Conditions of Employment.

 

a) Term of Employment. Unless terminated earlier in accordance with the provisions of this Agreement, the Company will employ the Executive for a period commencing on April 1, 2013 and terminating on December 31, 2016 (the “Term”).

 

In determining whether to continue to term the employment of any Executive Officer, the board will use as a metric, the failure of the Company to meet at least 75% of its Total Net Sales and EBITDA projections for any prior six month period beginning January 1, 2014. Such projections will be published and made available to the board no later than the 10th day prior to each six month period beginning on January 1 and including June 1 of the applicable calendar years. In determining accountability for the failure to reach such projections, the board shall make exceptions for an Act of God, or a failure of a single source supplier to meet its supply commitments due to an act unforeseeable by the Company and unavoidable to remedy due to an unavoidable inability to establish an alternate second supplier of the item, or any other event that the board deems completely beyond the control of the Company. 

 

b) Place of Employment. The Executive shall occupy offices at the Company's facility in New Castle, PA. The Executive shall not be required to relocate to any other business location maintained by the Company although 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) It is expressly agreed and understood that the Executive shall execute and be bound by the terms and conditions of the Executive Agreement which is attached hereto and made a part hereof as Exhibit A.

 

5) Compensation.

 

a) The Company shall compensate the Executive for all services to be rendered by him during the Term as follows:

 

b) The Executive shall receive an annualized salary of $225,000.00, paid on a regular basis according to company payroll practice which at the time of signing is bi-weekly (subject to change) for services rendered during the period commencing on April 1, 2013 and terminating on December 31, 2016. The Executive's salary shall be reviewed on an annual basis. The amount of such Salary shall be eligible for adjustment, if any, subject to renegotiation based on the performance of the Executive and the performance of the Company. The Executive will also be eligible for 2013 cash and option bonus awards, based on plans, programs and/or milestones established by the CEO on advice and consent from the Compensation Committee of the Board of Directors and the Executive. Both of these determinations will be made in writing within 45 days of the execution of this agreement.

 

In addition, The Executive shall be allowed an automobile allowance of $500.00 per month to be applied to the car of his choice. The Executive shall be entitled to reimbursement at the maximum allowable mileage rate under applicable income tax rules for all reasonable business use of his personal vehicle.

 

c) 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 Executive shall incur no expenses that exceed $2,500.00 without prior authorization of the Company.

 

 
 

 

d) As partial compensation for the execution  of this Agreement and in consideration of the level of compensation paid to the Executive since April, 2010, the Company will pay the Executive a  stipend   as an  additional  inducement to retain the services of the Executive  over the term of this Agreement as follows :
i) Upon execution of the Agreement , the Executive will be paid $22,500 (Twenty Two Thousand Five Hundred dollars), subject to normal withholdings and deductions within 45 days following the execution of this Agreement:
ii) Provided the Executive is an employee in good standing in the position of Senior Vice President - Business Development, Sales and Marketing on April 1, 2014 , the Executive will be paid a stipend  of  $22,500 (Twenty Two Thousand Five Hundred dollars), subject to normal withholdings and deductions on the first regularly scheduled payroll following April 30, 2014;
iii) Provided the Executive is an employee in good standing in the position Senior Vice President - Business Development, Sales and Marketing on April 1, 2015 , the Executive will be paid a stipend  of  $22,500 (Twenty Two Thousand Five Hundred dollars), subject to normal withholdings and deductions on the first regularly scheduled payroll following April 30, 2015:
iv) Provided the Executive is an employee in good standing in the position Senior Vice President - Business Development, Sales and Marketing on April 1, 2016 , the Executive will be paid a stipend  $22,500 (Twenty Two Thousand Five Hundred dollars), subject to normal withholdings and deductions on the first regularly scheduled payroll following April 30, 2016

 

e) 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 CEO and 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.

 

f) 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.

 

g) 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, and any income tax liabilities arising there from shall be due and payable at the Executive's sole expense, and the Executive acknowledges that the Company may make appropriate withholding from salary for such grants.

 

 
 

 

h) Benefits. During the Employment Period, Executive shall be entitled to the benefits approved by the Board or any of the Executive Officers; as such benefits may be adjusted by the Board or any of the Executive Officers from time to time in their sole and absolute discretion. Upon termination of the Employment Period, benefits for periods subsequent to such termination shall cease. Executive will be entitled to four (4) weeks paid vacation per full year of employment to be given and accrued as set forth in the Company employee handbook.

 

i) Health Benefits. Executive and his qualifying family members will be eligible to participate in the Company's health benefit plans, as may be in effect from time to time at the sole discretion of the Company, provided that the permanent residence of each person receiving benefits is in the New Castle, PA area. More information is available from Human Resources.

 

j) Deductions, Taxes and Withholding. All amounts payable or which become payable hereunder shall be subject to any deductions authorized by Executive, any set-off or reimbursement deemed appropriate by the Company and permitted by law and any deductions or set-offs permitted by this Agreement and all deductions and withholding authorized by law. Executive is responsible for payment of all taxes related to Executive's compensation, whether cash or equity compensation or otherwise.

 

k) A Sales and Marketing Incentive Plan, Exhibit C, will outline Employee’s opportunity to earn incentive compensation in 2013. Incentive programs will be developed for subsequent years of this Agreement after completion and acceptance of business development, sales and marketing plans with a minimum annual incentive opportunity of 25% of base annualized salary.

 

d) 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 Fifty per cent (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 as part of the regular ongoing payroll for the specified time, provided that payment of the Severance Amount shall be contingent upon the Executive signing the release and waiver agreement in Exhibit B.

 

 
 

 

For the purposes of this Agreement, "cause" for termination by the Company shall mean (i) a material breach of this Agreement by Executive; (ii) a breach of Executive's duty of loyalty to the Company or any act of dishonesty with respect to the Company or its stockholders, customers or suppliers; (iii) Executive's continued failure or refusal to perform, in any material respect, any duty or responsibility to the Company which is normally attached to Executive's position(after notice and a 10-day cure period), provided, however, any subsequent failure or refusal to perform such duty or responsibility shall entitle the Company to terminate employment for Just Cause without notice or an opportunity to cure; (iv) Executive's gross negligence or willful misconduct in performing those duties which are normally attached to Executive's position; (v) the commission by Executive of an act of fraud, conversion, misappropriation (including the unauthorized use or disclosure of confidential or proprietary information of the Company) or embezzlement or crime of moral turpitude; (vi) a conviction of or guilty plea or confession by Executive to any fraud, conversion, misappropriation, embezzlement or felony; (vii) the exposure of the Company to any criminal liability or loss of business opportunity or reduction in revenues or increase in losses substantially caused by the conduct of Executive which results in a material adverse effect upon the Company's business, operations, financial condition or results of operations or the exposure of the Company to any bona fide claims which may result in civil liability caused by Executive's unlawful harassment in employment; or (viii) the repeated taking of any action prohibited (a) by the Board or any of the Executive Officers, provided that Executive has received at least one written notice of having taken an action so prohibited, or (b) by this Agreement. For purposes of this Agreement, "Executive's duty of loyalty to the Company" shall include Executive's fiduciary obligation to place the interests of the Company ahead of Executive's personal interests and thereby not knowingly profit personally at the expense of the Company, and shall also include specifically the affirmative obligation to disclose promptly to the Board any known conflicts of interest Executive may have with respect to the Company, and the negative obligations not to usurp corporate opportunities of the Company, not to engage in any "conflict-of-interest" transactions with the Company (without the approval of the Board), and not to compete directly with the Company (without the approval of the Board). Good Reason shall mean the occurrence or failure to cause the occurrence, as the case may be, without your express written consent, of any of the following circumstances: (i) material demotion (except in connection with the termination of your employment for Cause or as a result of your death, or temporarily as a result of your illness or other absence), (ii) a relocation of the Company's executive office in New Castle, PA to a location more than 70 miles from its current location; (iii) any material breach by the Company of any provision of this Agreement; or (iv) failure of any successor to the Company (whether direct or indirect and whether by merger, acquisition, consolidation or otherwise) to assume in a writing delivered to you upon the assignee becoming such, the obligations of the Company hereunder.

 

c. During the 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 ten (10) days prior to the termination date. Severance payment will not be owed if Executive chooses to leave the Company for any reason not initiated by the Company.

 

d. At the end of the 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 ninety (90) days prior to the termination date. Non-renewal of contract is not grounds for being eligible for a severance payment.

 

e) 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.

 

 
 

 

f) 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. Notwithstanding the termination of the Executive's employment hereunder, the provisions of Paragraphs 6, 7, 8 and 9 survive such termination.

 

d. 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.

 

e. 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.

 

f. This agreement shall remain confidential between the parties and not disclosed to anyone unless agreed to by both parties or otherwise required under law.

 

g. Paragraph 6 of this Agreement shall be construed in accordance with the General Corporation Law of Delaware. All other provisions of this Agreement shall be construed according to the laws of the Commonwealth of Pennsylvania pertaining to Agreements formed and to be formed wholly within the Commonwealth of Pennsylvania. 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.

 

 
 

 

h. 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, United States in accordance with the Laws of the Commonwealth of Pennsylvania. The award of such arbitrator shall be final and may be entered by any party hereto in any court of competent jurisdiction. 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.

 

i. 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.

 

AXION POWER INTERNATIONAL, INC.    
     
/s/ Thomas Granville   3/25/2013
Thomas Granville, CEO   Date signed
     
/s/ Vani K. Dantam   3/25/2013
Executive Signature   Date signed
     
     
Executive Printed Name    

 

 
 

 

EXHIBIT A

 

Executive Agreement

 

AXION POWER INTERNATIONAL, INC.

 

EXECUTIVE AGREEMENT

  

Dantam   Vani   K.
EXECUTIVE’S LAST NAME   FIRST NAME   INITIAL

 

A) DEFINITIONS

 

1) AXION means Axion Power International, Inc., and any existing or future subsidiaries, owned or controlled, directly or indirectly by Axion.

 

2) CONFIDENTIAL INFORMATION means information, not generally known, and proprietary to Axion, including trade secret information, about Axion's processes and products, including information relating to research, development, manufacture, purchasing, accounting, engineering, marketing, merchandising, selling, leasing, servicing, finance and business systems and techniques. All information disclosed to me, or to which I have reasonable basis to believe to be Confidential Information, or which is treated by Axion as being Confidential Information, shall be presumed to be Confidential Information.

 

3) INVENTIONS means discoveries, improvements and ideas (whether or not shown or described in writing or reduced to practice) and works of authorship, whether or not patentable or copyrightable, (1) which relate directly to the business of Axion, or (2) which relate to Axion’s actual or demonstrably anticipated research or development, or (3) which result from any work performed by me for Axion, or (4) for which equipment, supplies, facility or trade secret information of Axion is used, or (5) which is developed on any Axion time.

 

4) CONFLICTING PRODUCT means any product, process, system or service of any person or organization other than Axion, in existence or under development, which is the same as or similar to or competes with, or has a usage allied to, a product, process, system or service upon which I work (in either a sales or a non-sales capacity) during the last three years of my employment by Axion, or about which I acquire Confidential Information

 

5) CONFLICTING ORGANIZATION means any person or organization which is
engaged in or about to become engaged in, research on or development, production, marketing, leasing, selling or servicing of a Conflicting Product.

 

 
 

 

B) Agreement

 

I AM EMPLOYED OR DESIRE TO BE EMPLOYED BY AXION IN A CAPACITY IN WHICH I MAY RECEIVE OR CONTRIBUTE TO CONFIDENTIAL INFORMATION. IN CONSIDERATION OF SUCH EMPLOYMENT OR CONTINUED EMPLOYMENT, AND THE WAGES OR SALARY AND OTHER EXECUTIVE BENEFITS IN COMPENSATION FOR MY SERVICES, AND IN CONSIDERATION OF BEING GIVEN ACCESS TO CONFIDENTIAL INFORMATION; I AGREE THAT:

 

1) With respect to Inventions made, authorized or conceived by me, either solely or

 

2) jointly with others, (1) during my employment, whether or not during normal working hours or whether or not at Axion's premises; or (2) within one year after termination of my employment, I will:

 

a) Keep accurate, complete and timely records of such Inventions, which records shall be Axion property and be retained on Axion's premises.

 

b) Promptly and fully disclose and describe such Inventions in writing to Axion.

 

c) Assign (and I do hereby assign) to Axion all of my rights to such Inventions and to applications for letters patent and/or copyright in all countries and to letters patent and/or copyrights granted upon such Inventions in all countries,

 

d) Acknowledge and deliver promptly to Axion (without charge to Axion but at the expense of Axion) such written instruments and to do such other acts as may be necessary in the opinion of Axion to preserve property rights against forfeiture, abandonment or loss and to obtain and maintain letters patent and/or copyrights and to vest the entire right and title thereto in Axion.

 

e) At the request of Axion and at its cost, the Executive shall assist Axion, 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 Axion, 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 Axion may from time to time reasonably request.

 

NOTICE: This is to notify you that paragraph A of this Axion "Executive Agreement" you are being asked to sign as a condition of your employment does not apply to an Invention for which no equipment, supplies, facility or trade secret information of Axion was used and which was developed entirely on your own time, and (1) which does not relate (a) directly to the business of Axion or (b) to Axion's actual or demonstrably anticipated research or development, or (2) which does not result from any work performed by you for Axion. If any exists, a detailed list of it should be attached to this agreement as an addendum.

 

 
 

 

3) EXCEPT as required in my duties to Axion, I will never, either during my employment by Axion or thereafter, use or disclose any Confidential Information as defined in paragraph 2 hereinabove.

 

4) UPON termination of my employment with Axion, all records and any compositions, articles, devices, and other items which disclose or embody Confidential Information including all copies or specimens thereof in my possession, whether prepared or made by me or others, will be left with Axion.

 

5) EXCEPT as listed at the end of this Agreement, I will not assert any rights under any Inventions as having been made, conceived, authored or acquired by me prior to my being employed by Axion.

 

6) FOR a period of two years after termination of my employment with Axion:

 

a) I will inform any new employer, prior to accepting employment of the existence of this Executive agreement and provide such employer with a copy thereof.

 

b) If I have been or am employed by Axion in a sales capacity, I will not render services in the United States, directly or indirectly, to any Conflicting Organization in connection with the development, manufacture, marketing, sale, merchandising, leasing, servicing or promotion of any Conflicting Product to any person or organization upon whom I called, or whose account I supervised on behalf of Axion, at any time during the last three years of my employment by Axion.

 

c) If I have been or am employed by Axion in a non-sales capacity, I will not render, to any Conflicting Organization, services, directly or indirectly, in the United States or in any country in which Axion has a plant for manufacturing a product upon which I work during my employment by Axion or in which Axion provides a service in which I participate during my employment by Axion, except that I may accept employment with a large Conflicting Organization whose business is diversified (and which has separate and distinct divisions), and which as to part of its business is not a Conflicting Organization, provided Axion, prior to my accepting such employment, shall receive separate written assurances satisfactory to Axion from such Conflicting Organization and from me, that I will not render services directly or indirectly in connection with any Conflicting Product.

 

d) If I am unable to obtain employment consistent with my abilities and education, within one month after termination of my employment with Axion, solely because of provisions of this paragraph, such provisions shall thereafter continue to bind me only as long as Axion shall make payments to me equal to my monthly base pay at termination (exclusive of extra compensation, bonus or Employee benefits) for each month of such unemployment commencing with the second month after termination of my employment with Axion.

 

 
 

 

1) I agree that I will, during each month of such unemployment, make conscientious and aggressive efforts to find employment; and I will, within ten days after the end of each calendar month, give Axion a detailed written account of my efforts to obtain employment. Such account will include a statement by me that although I aggressively sought employment, I was unable to obtain it solely because of the provisions of this Agreement.

 

2) It is understood that Axion shall, at its option, be relieved of making a monthly payment to me for any month during which I failed to seek employment conscientiously and aggressively, and to account to Axion, as provided for above.

 

3) Axion is obligated to make such payments to me, upon my fulfillment of the conditions set forth above, for 23 consecutive months unless Axion gives me written permission to accept available employment, or gives me a written release from the obligations of paragraph E.

 

4) Axion's obligation to make such monthly payments shall terminate upon my death or upon my obtaining employment. I agree that I will give prompt
written notice of such employment to Axion.

 

5) Axion shall not be liable, under this Agreement, or in any action relating thereto, for any amount greater than the equivalent of 23 such monthly payments, less amounts paid to me by Axion pursuant to this Agreement; Axion not being obliged to make a payment to me for the first month of such unemployment.

 

e) If, after termination of my employment with Axion, I obtain other employment but because of the provisions of paragraph E, my position is such that my gross monthly income will be less than that which I last received from Axion as monthly base pay at termination, then Axion’s obligations to make payments to me for the period specified in paragraph E, d. I will be limited to the difference between my monthly base pay at Axion, at termination, and the gross monthly income I will receive in my subsequent employment (6), d),1)).

 

f) ALL MY obligations under paragraphs A through D of this Agreement shall be binding upon my heirs, spouses, assigns and legal representatives.

 

g) IF ANY provision of this Agreement shall contravene any statute of a particular state which I perform services for Axion, then this Agreement shall be construed as if such provision is not contained herein insofar as enforcement of this Agreement against me in such particular state is concerned.

 

h) THIS AGREEMENT replaces any existing Agreement entered into by me and Axion relating generally to the same subject matter; but such replacement shall not affect rights and obligations of either party arising out of any such prior Agreement which shall then continue to be in effect for that purpose.

 

 
 

 

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

 

AXION POWER INTERNATIONAL, INC.    
     
/s/ Thomas Granville   3/25/2013
Thomas Granville, CEO   Date signed
     
/s/ Vani k. Dantam   3/25/2013
Executive Signature   Date signed
     
     
Executive Printed Name    

  

 
 

 

Exhibit B

 

Reference Exhibit B 10.53

 

 

 

 

EXHIBIT 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER (PRINCIPAL EXECUTIVE OFFICER)

 

I, Thomas Granville, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of Axion Power International, Inc.;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have:

 

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

 

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

 

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

 

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

 

  /s/ Thomas Granville  
  Thomas Granville, Chief Executive Officer (Principal Executive Officer)  
     
  Dated:  May 15, 2013  

 

 

 

 

EXHIBIT 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER (PRINCIPAL FINANCIAL OFFICER AND PRINCIPAL ACCOUNTING OFFICER)

 

I, Charles R. Trego, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of Axion Power International, Inc.;

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

 

4. The registrant's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a–15(f) and 15d–15(f)) for the registrant and have:

 

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

 

5. The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

 

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

 

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

 

  /s/ Charles R. Trego  
  Charles R. Trego, Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)  
     
  Dated:  May 15, 2013  

 

 

 

 

EXHIBIT 32.1

 

STATEMENT OF CHIEF EXECUTIVE OFFICER (PRINCIPAL EXECUTIVE OFFICER)

PURSUANT TO SECTION 1350 OF TITLE 18 OF THE UNITED STATES CODE

 

Pursuant to Section 1350 of Title 18 of the United States Code, the undersigned, Thomas Granville, Chief Executive Officer of Axion Power International, Inc. (the “Company”), hereby certifies that:

 

1.      The Company’s Quarterly report on Form 10-Q for the quarter ended March 31, 2013 (the “Report”) fully complies with the requirements of Sections 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

2.      The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

/s/ Thomas Granville  
Thomas Granville, Chief Executive Officer (Principal Executive Officer)  
Dated:  May 15, 2013  

 

 

 

 

EXHIBIT 32.2

 

STATEMENT OF CHIEF FINANCIAL OFFICER
(PRINCIPAL FINANCIAL OFFICER AND PRINCIPAL ACCOUNTING OFFICER)

PURSUANT TO SECTION 1350 OF TITLE 18 OF THE UNITED STATES CODE

 

Pursuant to Section 1350 of Title 18 of the United States Code, the undersigned, Charles R. Trego, Chief Financial Officer of Axion Power International, Inc. (the “Company”), hereby certifies that:

 

1.      The Company’s Quarterly report on Form 10-Q for the quarter ended March 31, 2013 (the “Report”) fully complies with the requirements of Sections 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

2.      The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

 

/s/ Charles R. Trego  
Charles R. Trego, Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer)
 
Dated:  May 15, 2013