SUBSIDIARY GUARANTY

        THIS GUARANTY (this “Guaranty”), dated as of January __, 2004, is made
by ENER1 BATTERY COMPANY, INC., a Florida corporation (the “Guarantor”), in
favor of the investors (the “Investors”) party to the Purchase Agreement (as
hereinafter defined). This Guaranty is being given by Guarantor in connection
with that certain Securities Purchase Agreement, dated as of the date hereof
(the “Purchase Agreement”), by and between Ener1 Inc., a Florida corporation and
parent company of the Guarantor (the “Borrower”), and the Investors. Capitalized
term used and not otherwise defined herein shall have the meaning ascribed
thereto in the Purchase Agreement.

        WHEREAS, the Borrower owns, directly or indirectly, all of the issued
and outstanding capital stock of Guarantor;

        WHEREAS, the Guarantor shall derive substantial direct and/or indirect
benefits from the transactions contemplated under the Purchase Agreement; and

        WHEREAS, it is a condition precedent to the obligations of the Investors
under the Purchase Agreement that the Guarantor shall have executed and
delivered this Guaranty to the Investors.

        NOW, THEREFORE, in order to induce the Investors to enter into the
Purchase Agreement, Guarantor hereby agrees as follows:

1.    DEFINITIONS.

        1.1 Certain Definitions. When used herein, the following terms shall
have the respective meanings indicated:

        “Obligations” means all of the obligations and liabilities of the
Borrower and the Guarantor to the Investors (including, without limitation, all
of the interest that accrues on the Debentures after the Debentures become due
and payable and all interest that accrues on the Debentures after the filing of
any petition in bankruptcy, or the commencement of any insolvency,
reorganization or similar proceeding, relating to the Borrower whether or not a
claim for post-filing or post-petition interest is allowed in such proceeding),
whether direct or indirect, absolute or contingent, due or to become due, now
existing or hereafter incurred, that may arise under, with respect to, or in
connection with the Purchase Agreement, any of the other Transaction Documents
or any other document, agreement or instrument made, delivered or given in
connection with the Purchase Agreement or any other Transaction Document,
whether on account of principal, interest, fees, indemnities, costs, expenses or
otherwise (including, without limitation, all fees and expenses of counsel to
the Investors that are required to be paid by the Borrower pursuant to the terms
of the Purchase Agreement, any of the other Transaction Documents or any other
document, agreement or instrument made, delivered or given in connection with
the Purchase Agreement or any other Transaction Document).

        1.2 Other Definitional Provisions. Unless otherwise specified in this
Guaranty, the words “hereof,” “herein” and “hereunder” and words of similar
import when used in this Guaranty shall refer to this Guaranty as a whole and
not to any particular provision of this Guaranty. The meanings given to terms
defined in this Guaranty shall be equally applicable to both the singular and
plural forms of such terms.

2.    GUARANTY.

        2.1 Unconditional Guaranty. Subject to the provisions of Section 2.2 of
this Guaranty, Guarantor unconditionally and irrevocably guaranties to the
Investors the punctual and complete payment and performance by the Borrower of
each of the Obligations as and when such Obligation becomes due (whether at
stated maturity, by acceleration or otherwise).

        2.2 Costs of Collection. The Guarantor agrees to pay all of the fees,
expenses and costs (including, without limitation, all reasonable fees and
expenses of counsel) that may be paid or incurred by the Investors in enforcing
or obtaining advice of counsel regarding any rights with respect to, or
collecting, any of the Obligations or enforcing any rights with respect to, or
collecting against, the Guarantor under this Guaranty.

3.    SUBORDINATION.

        Any indebtedness of the Borrower to Guarantor now or hereafter existing
(including, without limitation, any rights of subrogation Guarantor may have as
a result of any payment by Guarantor under this Guaranty), together with any
interest thereon, shall be, and such indebtedness is hereby, deferred, postponed
and subordinated to the prior payment in full of all Obligations. Further, if
Guarantor shall now or at any time in the future comprise more than one Person,
Guarantor agrees that until the payment and performance in full of all
Obligations: (a) no Guarantor shall accept payment from the other Guarantors by
way of contribution on account of any payment made hereunder by such Guarantor
to the Investors; and (b) no Guarantor will take any action to exercise or
enforce any rights to such contribution. If Guarantor should receive any
payment, satisfaction or security from the Borrower or another Guarantor in
contravention of this Guaranty, the Purchase Agreement or any other Transaction
Document, such payment, satisfaction or security shall be delivered, to an
account established for the benefit of the Investors and consented to in writing
by the Investors holding a majority of the Registrable Securities into which all
of the Debentures and Warrants then outstanding are convertible or exercisable
(without regard to any limitation on such conversion or exercise), in the form
received, endorsed or assigned as may be appropriate for application on account
of, or as security for, the Obligations and until so delivered shall be held in
trust for the Investors as security for the Obligations.

4.    AMENDMENT OF TRANSACTION DOCUMENTS; RELEASE OF COLLATERAL.

        4.1 Transaction Documents; Collateral. The Investors may, in accordance
with the terms of the Transaction Documents (except as shall be required by
applicable law), at any time and from time to time without the consent of, or
notice to, the Guarantor, without incurring any liability or responsibility to
the Guarantor, and without impairing or releasing the obligations of the
Guarantor under this Guaranty:

    (i)        change the manner, place or terms of payment of, and/or change or
extend the time of payment of, renew, accelerate or alter, any of the
Obligations, any security therefor, or any liability incurred directly or
indirectly in respect of the Obligations, and the guaranty made pursuant to this
Guaranty shall apply to the Obligations as so changed, extended, renewed or
altered;

    (ii)        sell, exchange, release, surrender, realize upon or otherwise
deal with in any manner and in any order any property pledged or mortgaged to
secure the Obligations or any liabilities incurred directly or indirectly in
respect of the Obligations or this Guaranty;

    (iii)        exercise or refrain from exercising any rights or remedies
against the Borrower or any other Person (including the Guarantor) or otherwise
act or refrain from acting with respect to the Borrower or other Person
(including without limitation, the Guarantor);

    (iv)        settle or compromise any of the Obligations, any security
therefor or any liability (including any of those under this Guaranty) incurred
directly or indirectly in respect of the Obligations, or subordinate the payment
of all or any part of the Obligations to the payment of any other liability
(whether due or not) of the Borrower;

    (v)        apply any sums by whomsoever paid or howsoever realized to any
liability or liabilities of the Borrower to the Investors regardless of what
liabilities of the Borrower remain unpaid;

    (vi)        consent to or waive any breach of, or any act, omission or
default under, any of the Transaction Documents or any of the documents,
instruments or the agreements made, delivered or given in connection with the
Transaction Documents, or otherwise amend, modify, supplement, cancel or
terminate any of the Transaction Documents or any of the instruments, documents,
or the agreements made, delivered or given in connection with the Transaction
Documents;

    (vii)        act or fail to act in any manner referred to in this Guaranty
which may deprive the Guarantor of its right to subrogation against the Borrower
or any other Person to recover full indemnity for any payments made by the
Guarantor pursuant to this Guaranty; and/or

    (viii)        release or substitute the Borrower or any endorser, guarantor
or other obligor.

        4.2 Investors’ Action. The Investors shall not have any obligation at
any time to take any action, or expend any funds, to (i) secure or perfect any
Lien that is required to be granted by the Borrower as collateral security for
the Obligations, or (ii) insure or otherwise protect any assets or property that
is subject to a Lien granted by the Borrower as collateral security for the
Obligations.

5.    OBLIGATIONS OF GUARANTOR.

        5.1 Guaranty Absolute and Unconditional. (a) The Guarantor hereby waives
any and all notice of the creation, renewal, extension or accrual of any of the
Obligations and notice or proof of reliance by the Investors upon this Guaranty
or acceptance of this Guaranty; each Obligation shall conclusively be deemed to
have been created, contracted or incurred, or renewed, extended, amended or
waived in reliance upon this Guaranty; and all dealings between the Borrower
and/or the Guarantor, on the one hand, and the Investors, on the other hand,
shall be conclusively presumed to have been consummated in reliance upon this
Guaranty. The Guarantor understands and agrees that this Guaranty shall be
construed as a continuing, absolute and unconditional Guaranty of payment and
performance without regard to (i) the validity or enforceability of (1) the
Purchase Agreement, the Debentures, or any of the other Transaction Documents or
any document, instrument or agreement made, delivered or given in connection
with the Purchase Agreement, the Debentures or any other Transaction Document,
(2) any Lien securing the Obligations, (3) any of the collateral security for,
or any Guaranty of, the Obligations, or (4) any right of offset with respect to
the Obligations, (ii) any defense, set-off or counterclaim that may at any time
be available to, or be asserted by, the Borrower against the Investors, or (iii)
any other circumstance whatsoever (including, without limitation, insolvency or
bankruptcy of the Borrower or any other Person) that constitutes (or might be
construed to constitute) an equitable or legal discharge of the Obligations or
the obligations and liabilities of the Guarantor under this Guaranty, regardless
of whether the Guarantor has notice or knowledge of any such circumstance.

        5.2 Obligations Not Affected. None of the obligations and liabilities of
the Guarantor under this Guaranty shall be relieved or reduced, and none of the
rights and remedies of the Investors against the Guarantor shall be impaired or
adversely affected, as a result of (i) any demand by the Investors for payment
of any of the Obligations being subsequently rescinded, (ii) any amendment,
modification supplement or termination of the Purchase Agreement, the
Debentures, any other Transaction Document or any document, agreement or
instrument made, delivered or given in connection with the Purchase Agreement,
the Debentures or any other Transaction Document, or (iii) any or all of the
collateral security for, or any other Guaranty of, the Obligations or any right
of offset with respect to the Obligations being renewed, extended, amended,
modified, accelerated, compromised, waived, surrendered or released, in whole or
in part, by the Investors at any time.

        5.3 Waiver of Notice. The Guarantor hereby waives (to the fullest extent
permitted by applicable law) notice of (i) acceptance of this Guaranty and
notice of any liability to which it may apply, (ii) promptness, diligence,
presentment, demand of payment or performance, protest, notice of dishonor,
nonpayment or nonperformance of any of the Obligations, and (iii) any suit or
taking of other action by the Investors against, and any other notice to, any
Person liable on or with respect to the Obligations. When pursuing any of its
rights and remedies against the Guarantor, the Investors may, but shall be under
no obligation to, pursue any other rights and remedies that it may have against
the Borrower or any other Person or against any collateral security for, or any
Guaranty of, the Obligations or any right of offset that it may have with
respect to the Obligations; provided, however, that none of the obligations and
liabilities of the Guarantor under this Guaranty will be relieved or reduced,
and none of the rights of the Investors will be impaired or adversely affected,
as a result of any failure by the Investors to (i) pursue any rights or remedies
that it may have against the Borrower or any other Person, (ii) collect any
amounts that are due and payable with respect to the Obligations from the
Borrower or any other Person, or (iii) realize upon any collateral security or
Guaranty or exercise any right of offset. The Guarantor waives any right (to the
fullest extent permitted by applicable law) to require the Investors to: (i)
proceed against the Borrower or any other Person; (ii) proceed against or
exhaust any security held from the Borrower or any other Person; or (iii) pursue
any other remedy against the Borrower or any other Person. The Guarantor waives
(to the fullest extent permitted by applicable law) any defense based on or
arising out of any defense of the Borrower, or any other Person other than the
full payment and performance of the Obligations, including, without limitation,
any defense based on or arising out of the disability of the Borrower or any
other Person, or the unenforceability of the Obligations or any part thereof
from any cause, or the cessation from any cause of the liability of the Borrower
other than payment in full of the Obligations. The Investors may, at their
election, foreclose on any security held by the Investors by one or more
judicial or nonjudicial sales, or exercise any other right or remedy the
Investors may have against the Borrower or any other Person, or any security,
without affecting or impairing in any way the liability of the Guarantor under
this Guaranty except to the extent the Obligations have been paid and performed
in full. The Guarantor waives any defense arising out of any such election by
the Investors, even though such election operates to impair or extinguish any
right or reimbursement or subrogation or other right or remedy of the Guarantor
against the Borrower or any other Person or any security (to the extent
permitted by applicable law).

        5.4 No Impairment. The liability of the Guarantor under this Guaranty is
exclusive and independent of any security for or other guaranty of the
Obligations, whether executed by the Guarantor or by any other Person, and the
liability of the Guarantor under this Guaranty shall not be affected or impaired
by (a) any direction as to application of payment by the Borrower or by any
other Person, (b) any other continuing or other guaranty, undertaking or maximum
liability of a guarantor of the Borrower or of any other Person as to the
Obligations, (c) any payment on or in reduction of any such other guaranty or
undertaking, (d) any dissolution, termination or increase, decrease or change in
personnel by the Borrower, (e) any payment made to the Investors which is repaid
to the Borrower pursuant to a court order in any bankruptcy, reorganization,
arrangement, moratorium or other debtor relief proceeding, and the Guarantor
waives any right to the deferral or modification to its obligations hereunder by
reason of any of such proceeding, (f) any action or inaction by the Investors,
or (g) any invalidity, irregularity or unenforceability of all or part of the
Obligations or of any security therefor.

        5.5 Severability of Obligations; Statute of Limitations. The obligations
of the Guarantor under this Guaranty are independent of the obligations of the
Borrower or any other Person, and a separate action or actions may be brought
and prosecuted against the Guarantor whether or not action is brought against
the Borrower or any other Person and whether or not the Guarantor, the Borrower
or any Person be joined in any such action or actions. The Guarantor waives, to
the fullest extent permitted by law, the benefit of any statute of limitations
affecting its liability under this Guaranty or the enforcement of any such
statute of limitations. Any payment by the Borrower or other circumstance that
operates to toll any statute of limitations as to the Borrower shall operate to
toll the statute of limitations as to the Guarantor.

        5.6 Authority. It shall not be necessary for the Investors to inquire
into the authority, capacity or powers of the Borrower or any of its
Subsidiaries or the officers, directors, partners or agents acting or purporting
to act on its behalf, and any indebtedness made or created in reliance upon the
professed exercise of such powers shall be guarantied under this Guaranty.

        5.7 Reinstatement. Notwithstanding any other provision of this Guaranty
to the contrary, if any payment with respect to the Obligations is rescinded or
required to be restored or returned by the Investors for any reason whatsoever
(including, without limitation, as a result of the insolvency, bankruptcy,
dissolution, liquidation or reorganization of the Borrower or the appointment of
a receiver, intervenor or conservator of, or trustee or similar officer for, the
Borrower or any of its assets or properties), this Guaranty shall continue to be
effective, and shall be reinstated if previously terminated, as though such
payment had not been made.

        5.8 Payments. The Guarantor hereby covenants and agrees that all amounts
due and payable by the Guarantor under this Guaranty shall be paid to the
Investors without set-off or counterclaim by wire transfer of immediately
available United States dollar funds to such account as the Investors may
designate in writing to the Guarantor from time to time.

6.    REPRESENTATIONS AND WARRANTIES.

        6.1 Representations and Warranties. The Guarantor hereby makes the
following representations and warranties to the Investors and agrees with the
Investors that, as of the date of this Guaranty and, if different, as of the
Closing Date:

    (a)        the Guarantor (i) is a duly organized and validly existing
corporation in good standing under the laws of the State of Florida, (ii) has
the corporate power and authority to own its property and assets and to transact
the business in which it is engaged and presently proposes to engage, and (iii)
is duly qualified and is authorized to do business and is in good standing in
each jurisdiction where the conduct of its business requires such qualification
except for failures to be qualified which, individually or in the aggregate,
could not reasonably be expected to have a material adverse effect on the
Guarantor;

    (b)        the Guarantor has (i) the corporate power and authority to
execute, deliver and perform the terms and provisions of this Guaranty and each
other Transaction Document to which it is a party and has taken all necessary
corporate action to authorize the execution, delivery and performance by it of
this Guaranty and each Transaction Document to which it is a party and (ii) has
duly executed and delivered this Guaranty and each other Transaction Document to
which it is a party, and this Guaranty and each such Transaction Document
constitutes the legal, valid and binding obligation of the Guarantor,
enforceable against the Guarantor in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to, or
affecting generally the enforcement of creditors’ rights and remedies or by
other equitable principles of general application;

    (c)        neither the execution, delivery or performance by the Guarantor
of this Guaranty or any other Transaction Document to which it is a party, nor
the compliance by it with the terms and provisions hereof and thereof, (i) will
contravene any provision of any applicable law, statute, rule or regulation, or
any applicable order, writ, injunction or decree of any court or governmental
instrumentality, (ii) will conflict with or result in any material breach of any
of the terms, covenants, conditions or provisions of, or constitute a default
under, or result in the creation or imposition of (or the obligation to create
or impose) any Lien upon any of the property or assets of the Guarantor pursuant
to the terms of any indenture, mortgage, deed of trust, loan agreement, or any
other material agreement or other instrument to which the Guarantor is a party
or by which it or any of its property or assets are bound or to which it may be
subject, or (iii) will violate any provision of the charter or bylaws of the
Guarantor;

    (d)        no order, consent, approval, license, authorization or validation
of, or filing, recording or registration with (except as have been obtained or
made), or exemption by, any governmental or public body or authority, or any
subdivision thereof, is required to authorize, or is required in connection
with, (i) the execution, delivery and performance of this Guaranty or any other
Transaction Document to which the Guarantor is a party, or (ii) the legality,
validity, binding effect or enforceability of this Guaranty or any other
Transaction Document to which the Guarantor is a party;

    (e)        there are no actions, suits or proceedings (private or
governmental) pending or threatened (i) with respect to this Guaranty or any
Transaction Documents to which the Guarantor is a party, or (ii) with respect to
the Guarantor that could reasonably be expected to have a material adverse
effect on the Guarantor; and

    (f)        all of the representations and warranties of the Borrower in the
Purchase Agreement that relate to the Guarantor will be true and correct to the
extent they relate to the Guarantor in all material respects on the Closing Date
(except that any such representation and warranty that is expressly stated as
being made only as of a specified date shall be true and correct in all material
respects as of such specified date).

7.    MISCELLANEOUS.

        7.1 Survival; Severability. The representations, warranties, covenants
and indemnities made by the Guarantor herein shall survive the Closing
notwithstanding any due diligence investigation made by or on behalf of the
party seeking to rely thereon. In the event that any provision of this Guaranty
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Guaranty shall continue in full force and effect
without said provision; provided that in such case the parties shall negotiate
in good faith to replace such provision with a new provision which is not
illegal, unenforceable or void, as long as such new provision does not
materially change the economic benefits of this Guaranty to the parties.

        7.2 Successors and Assigns. The terms and conditions of this Guaranty
shall inure to the benefit of and be binding upon the successors and permitted
assigns of the Investors. The Investors may assign their rights hereunder in
connection with any private sale or transfer of the Debentures or Warrants in
accordance with the terms Purchase Agreement, in which case the term “Investor”
shall be deemed to refer to such transferee as though such transferee were an
original signatory hereto. The Guarantor may not assign its rights or
obligations under this Guaranty.

        7.3 Governing Law; Jurisdiction. This Guaranty shall be governed by and
construed under the laws of the State of New York applicable to contracts made
and to be performed entirely within the State of New York. The Guarantor hereby
irrevocably submits to the non-exclusive jurisdiction of the state and federal
courts sitting in the City of New York, borough of Manhattan, for the
adjudication of any dispute hereunder or in connection herewith or with any
transaction contemplated hereby or discussed herein, and hereby irrevocably
waives, and agrees not to assert in any suit, action or proceeding, any claim
that it is not personally subject to the jurisdiction of any such court, that
such suit, action or proceeding is brought in an inconvenient forum or that the
venue of such suit, action or proceeding is improper. The Guarantor hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by mailing a copy thereof to the
Guarantor at the address in effect for notices to it under this Guaranty and
agrees that such service shall constitute good and sufficient service of process
and notice thereof. Nothing contained herein shall be deemed to limit in any way
any right to serve process in any manner permitted by law.

        7.4 Headings. The headings used in this Guaranty are used for
convenience only and are not to be considered in construing or interpreting this
Guaranty.

        7.5 Notices. Any notice, demand or request required or permitted to be
given by the Guarantor or a Investor pursuant to the terms of this Guaranty
shall be in writing and shall be deemed delivered (i) when delivered personally
or by verifiable facsimile transmission, unless such delivery is made on a day
that is not a Business Day, in which case such delivery will be deemed to be
made on the next succeeding Business Day, (ii) on the next Business Day after
timely delivery to an overnight courier and (iii) on the Business Day actually
received if deposited in the U.S. mail (certified or registered mail, return
receipt requested, postage prepaid), addressed as follows:

  If to the Corporation:

Ener1, Inc.
550 Cypress Creek Road
Suite 120
Fort Lauderdale, Florida 33309
Attn: Kevin P. Fitzgerald
Tel: 954-202-4442
Fax: 954-202-2884

with a copy to:

Gibson, Dunn & Crutcher LLP
1050 Connecticut Avenue N.W.
Washington, DC 20036
Attn: Stephen I. Glover
Tel: 202 955-8500
Fax: 202 467-0539

and if to a Investor, to the address for such Investor as shall appear on the
signature page to the Purchase Agreement executed by such Investor, or as shall
be designated by such Investor in writing to the Guarantor in accordance with
this Section 7.5.

        7.6 Entire Agreement; Amendments. This Guaranty and the other
Transaction Documents constitute the entire agreement between the parties with
regard to the subject matter hereof and thereof, superseding all prior
agreements or understandings, whether written or oral, between or among the
parties. Except as expressly provided herein, neither this Guaranty nor any term
hereof may be amended except pursuant to a written instrument executed by the
Guarantor and the Investors holding at least two-thirds (2/3) of the Registrable
Securities into which all of the Debentures and Warrants then outstanding are
convertible or exercisable (without regard to any limitation on such conversion
or exercise), and no provision hereof may be waived other than by a written
instrument signed by the party against whom enforcement of any such waiver is
sought.

        7.7 No Waiver. The Investors shall not by any act (except as provided in
Section 7.6 above), any failure to act or any delay in acting be deemed to have
(i) waived any right or remedy under this Guaranty, any other Transaction
Document or any document, agreement or instrument made, delivered or given in
connection with this Guaranty or the other Transaction Documents, or (ii)
acquiesced in any Event of Default or in any breach of any of the terms and
conditions of this Guaranty, any other Transaction Document or any document,
agreement or instrument made, delivered or given in connection with this
Guaranty or the other Transaction Documents. No failure to exercise, nor any
delay in exercising, any right, power or privilege of the Investors under this
Guaranty, any other Transaction Document or any document, agreement or
instrument made, delivered or given in connection with this Guaranty or the
other Transaction Documents shall operate as a waiver of any such right, power
or privilege. No single or partial exercise of any right, power or privilege
under this Guaranty, any other Transaction Document or any document, agreement
or instrument made, delivered or given in connection with this Guaranty or the
other Transaction Documents shall preclude any other or further exercise of any
other right, power or privilege. A waiver by the Investors of any right or
remedy under this Guaranty, any other Transaction Document or any other document
or instrument made, delivered or given in connection with this Guaranty or the
other Transaction Documents on any one occasion shall not be construed as a bar
to any right or remedy that the Investors would otherwise have on any future
occasion.

        7.8 Cumulative Remedies. The rights and remedies provided in this
Guaranty are cumulative, may be exercised singly or concurrently, and are not
exclusive of any other rights or remedies provided by law.

        7.9 Indemnification. The Guarantor agrees to indemnify and hold harmless
the Investors and each of their directors, officers, employees, Affiliates,
advisors and agents (each, an “Indemnified Person”) from and against, and shall
pay each Indemnified Person as and when incurred, all claims, damages, losses,
liabilities, costs and expenses of any kind whatsoever, including reasonable
fees and expenses of attorneys, incurred or imposed on any such Indemnified
Person relating to the matters in this Guaranty, the Mortgage or the Security
Agreement, including, without limitation, in connection with any such
Indemnified Person’s defense of any action brought by a third party against such
Indemnified Person relating to this Guaranty, the Mortgage or the Security
Agreement, except to the extent a court holds in final and nonappealable
judgment that such claims, damages, losses, liabilities, costs and expenses
directly resulted from the gross negligence or willful misconduct of such
Indemnified Person. In case any action or proceeding is brought against an
Indemnified Person in respect of which indemnity may be sought under this
Guaranty, the Investor with whom such Indemnified Person is affiliated shall
promptly give notice of any such action or proceeding to the Guarantor and may
require the Guarantor, upon such notice, to assume the defense of the action or
proceeding, provided that the failure of an Indemnified Person to give such
notice shall not relieve the Guarantor of its obligations under this Section
7.9. The Investors agree to give the Guarantor reasonable notice of any event of
which the Investors become aware for which indemnification may be required under
this Section 7.9, and the Investors may elect (but is not obligated) to direct
the defense thereof; provided, that the selection of counsel shall be subject to
the Guarantor’s consent, which consent shall not be unreasonably withheld or
delayed, and the Guarantor shall be entitled to participate in the defense of
any matter for which indemnification may be required under this Section 7.9. Any
Indemnified Person may, in its reasonable discretion, take such actions as it
deems necessary and appropriate to investigate, defend or settle any event or
take other remedial or corrective actions with respect thereto as may be
necessary for the protection of such Indemnified Person, subject to the
Guarantor’s prior approval of any settlement, which shall not be unreasonably
withheld or delayed.

        7.10 Waivers of Jury Trial. The Guarantor hereby irrevocably and
unconditionally waives trial by jury in any legal action or proceeding relating
to this Guaranty or any other Transaction Document to which it is a party and
for any counterclaim therein.

        7.11 Compliance with the Purchase Agreement. The Guarantor covenants and
agrees that on and after the date hereof and until all Obligations have been
paid and performed in full, the Guarantor shall take, or will refrain from
taking, all actions that are necessary to be taken or not taken so that no
violation of any covenant or agreement of the Borrower contained in the Purchase
Agreement is caused by the actions of the Guarantor or any of its affiliates.
The Guarantor hereby agrees to pay all reasonable out-of-pocket costs and
expenses of the Investors in connection with the enforcement of this Guaranty
and any amendment, waiver or consent relating hereto (including, without
limitation, reasonable legal fees and disbursements).

        7.12 Cross Default. The Guarantor agrees and acknowledges that a default
under the terms of this Guaranty shall constitute default under the other
Transaction Documents, and a default under any of the other Transaction
Documents shall constitute default under this Guaranty.

[SIGNATURE PAGE FOLLOWS]

        IN WITNESS WHEREOF, the undersigned has caused this Guaranty to be duly
executed and delivered by its duly authorized officer as of the date first
written above.

                                        

                                        
                                        
                                        

State of New York        )
                                        )         ss.:
County of                      ) ENER1 BATTERY COMPANY, a Florida corporation

By: _________________________
         Name:
         Title:

On the _________________ day of ______________ in the year _____, before me, the
undersigned, a Notary Public in and for said State, personally appeared
____________________, personally known to me or proved to me on the basis of
satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed
to the within instrument and acknowledged to me that he/she/they executed the
same in his/her/their capacity(ies), and that by his/her/their signature(s) on
the instrument, the individual(s) or the person upon behalf of which the
individual(s) acted, executed the instrument.

_________________
Notary Public