LOAN COMMITMENT

 
December 30, 2011
 
ENER1, Inc.
1540 Broadway
New York, New York 10036

 
Re:
Proposed US$40,000,000 Loan from Wanxiang International Investment Corporation
to ENER1, Inc.

 
Gentlemen:
 
Wanxiang International Investment Corporation, a Cayman Islands corporation or
an affiliate (“Lender”), agrees to make the above-referenced loan pursuant to
the terms of this commitment (“Commitment”) subject to the following terms and
conditions:
 
1.           DESCRIPTION OF LOAN AND BORROWER.
 
1.1.           Amount.  The loan shall be a term loan in the amount of up to
US$40,000,000 (“Loan”) which shall be disbursed in two installments of
US$20,000,000 each pursuant to the terms and provisions of the Note attached
hereto as Exhibit A (the “Note”).
 
1.2.           Borrower.  The Loan shall be made to ENER1, Inc., a Florida
Corporation (“Borrower”).
 
1.3.           Purpose of Loan.  The purpose of the Loan is to pay a portion of
Borrower’s capital contribution requirements (“Borrower’s Capital Contribution
Requirements”) set forth in that certain Sino-Foreign Equity Joint Venture
Contract of Zhejiang Wanxiang Ener1 Power Systems Co., Ltd. (the “Joint
Venture”) dated January, 2011 between Borrower and Wanxiang EV Co., Ltd. (the
“Joint Venture Agreement”).
 
1.4.           Term of Loan.  The term of the Loan shall commence when all of
the conditions precedent set forth in this Commitment have been satisfied (the
“Closing Date”) and shall mature on the fourth (4th) anniversary of the Closing
Date.
 
2.           COLLATERAL.  The obligations of Borrower to Lender shall be secured
by first priority perfected security interests in Borrower’s equity interests in
the Joint Venture as further described in that certain Security Agreement
(Assignment of Equity Interests As Collateral) attached hereto as Exhibit B (the
“Security Agreement”).
 
 
 

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3.           CONDITIONS OF CLOSING.  As a condition precedent to closing the
First Loan Installment (as defined in the Note), on or before the Closing Date
the documents described in this Section 3 must be delivered to Lender, and the
other conditions set forth in this Section 3 must be satisfied, all in a form,
manner and substance reasonably satisfactory to Lender, in Lender’s sole
discretion:
 
3.1.           Loan Documents.  Such duly executed loan documents as Lender
shall require to evidence and secure payment of the Loan, including, without
limitation, the Note and the Security Agreement (collectively, “Loan
Documents”).  The Loan Documents shall contain such terms and conditions, events
of default, remedies, affirmative and negative covenants, representations and
warranties, indemnities and other conditions and covenants as customarily are
included by Lender for transactions of this type and amount.
 
3.2            Escrow.  On or before the date of this Commitment Borrower shall
have deposited into escrow with Barack Ferrazzano Kirschbaum & Nagelberg LLP
(“Escrow Agent”) US$4,000,000 (the “Deposit”) to pay a portion of Borrower’s
Capital Contribution Requirement pursuant to that certain Escrow Agreement dated
December 30, 2011 between Borrower, Lender and Escrow Agent (the “Escrow
Agreement”) and such Deposit shall remain on deposit pursuant to the Escrow
Agreement as of the Closing Date.
 
3.3.           Power and Authority.  Such documents as Lender shall require to
establish (i) the proper organization and good standing of Borrower, and (ii)
the authority of Borrower to execute the Loan Documents and Escrow Agreement.
 
3.4.           Reorganization.  Borrower shall have restructured its debt
obligations so that upon the restructuring there are no events of default
outstanding under any such obligations and the maturity date applicable to each
obligation shall have been extended to a day not sooner than July 2, 2013.  If
Borrower achieves such a restructuring through a Chapter 11 Case (as defined
below), this condition shall be satisfied upon Borrower having confirmed a plan
of reorganization under Chapter 11 of the Bankruptcy Code, that such plan having
become effective, that pursuant to such plan Borrower having the authority to
enter into and perform under the Note and Security Agreement in accordance with
the terms thereof, that under such plan (or otherwise in the course of the
bankruptcy proceeding) Borrower having assumed the Joint Venture Agreement in
accordance with 11 U.S.C. § 365, and that Wanxiang EV Co., Ltd. having waived
any rights or remedies it may be entitled to at such time under the Joint
Venture Agreement relating to such Chapter 11 Case, including, without
limitation, Sections 13.2, 51.1.2 and 51.1.4 of the Joint Venture Agreement.
 
3.5.           Loan Fees and Expenses. Payment of the Expenses (as hereinafter
defined) incurred by Lender to date in connection with the transactions
contemplated herein.  As of the date hereof, Lender’s legal fees total $32,000.
 
 
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4.           BINDING EFFECT.  Borrower has notified the Lender that it may file
a voluntary petition pursuant to chapter 11 of title 11 of the United States
Code (a “Chapter 11 Case”).  Subject to the terms and conditions of this
Commitment, Lender agrees that it and its successor(s) and/or assign(s) shall
remain bound by this Commitment notwithstanding the commencement of a Chapter 11
Case by the Borrower or that Lender’s undertakings herein might be subject to 11
U.S.C. §365(c)(2) or (e)(2)(B).  In the event of any restructuring described in
Section 3.4 above, Lender agrees to take all reasonable actions to cause
Wanxiang EV Co., Ltd. to waive any rights or remedies it may be entitled to
under the Joint Venture Agreement relating to the Borrower’s filing of a Chapter
11 Case, including, without limitation, Sections 13.2, 51.1.2 and 51.1.4 of the
Joint Venture Agreement.
 
5.           CHOICE OF LAW.  The validity and interpretation of this Commitment
and the Loan Documents shall be construed in accordance with the laws and
decisions of the State of Illinois.
 
6.           FEES AND EXPENSES.  Whether or not the Loan closes, Borrower shall
pay to Lender as provided above Lender’s attorneys’ reasonable fees and
expenses, and Lender’s other out-of-pocket expenses incurred in documenting,
negotiating and making the Loan (the “Expenses”).
 
7.           ACCEPTANCE, EXPIRATION AND TERM.  This Commitment shall not become
effective unless a copy hereof executed by Borrower is delivered to Lender on or
before December 31, 2011.  The Closing Date must occur on or before May 1, 2012
(“Commitment Termination Date”).  If the Closing Date does not occur on or
before such date, this Commitment shall automatically terminate.
 
8.           ENTIRE AGREEMENT.  This Commitment represents the entire agreement
between the parties hereto with respect to the subject matter hereof and
supersedes all prior oral and written agreements.
 
[Signature Pages to Follow]
 
 
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We welcome this opportunity to be of service to you by offering this financing
and look forward to working with you on this transaction
 
WANXIANG INTERNATIONAL
INVESTMENT CORPORATION, a
Cayman Islands corporation
 
By:
/s/ Daniel Li  
Name:
   
Title:
 

 
Accepted and Agreed to this 30th day of December, 2011.
 
ENER1, INC., a Florida corporation
 
By:
/s/ Nicholas Brunero  
Name:
Nicholas Brunero  
Title:
President

 
 
 

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EXHIBIT A
 
Note
 
 
 

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ENER1, INC.
 
FLOATING RATE SECURED NOTE
 
Borrower:
ENER1, Inc.
Lender:
Wanxiang International
 
1540 Broadway
 
Investment Corporation
 
New York, New York 10036
 
88 Airport Road
     
Elgin, IL 60123

 

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Principal Amount: $40,000,000.00
Date of Note: __________ ___, 2012

 
For value received, ENER1, INC., a Florida corporation (the “Borrower”), hereby
promises to pay to the order of WANXIANG INTERNATIONAL INVESTMENT CORPORATION, a
Cayman Islands corporation (together with its successors and assigns, the
“Lender”), in accordance with the terms of this Floating Rate Secured Note (this
“Note”), the principal amount of up to Forty Million United States Dollars
(US$40,000,000) (the “Loan”), together with interest on the principal amount of
the Loan outstanding from time to time hereunder.  Provided that the Borrower
has complied with all conditions precedent to the Lender’s obligation to make
the Loan, including, without limitation, the condition precedents set forth in
Section 1.9 and Section 1.10, as applicable, of this Note, the Lender shall
advance the proceeds of the Loan to the Borrower or on behalf of the Borrower
under this Note as follows: (i) US$20,000,000 on the date on which this Note is
executed and delivered by the Borrower to the Lender (the “First Loan
Installment”) and (ii) US$20,000,000 on or before the date set by the Board of
Directors of the Joint Venture (as hereinafter defined) as the date the second
installment of capital contributions are due pursuant to the Joint Venture
Agreement (as hereinafter defined) (the “Second Loan Installment”).
 
This Note is secured pursuant to a pledge by the Borrower of certain collateral
as set forth in Article 2 below.
 
All payments to be made in cash under or pursuant to this Note shall be made in
United States dollars by wire transfer of immediately available funds to the
Lender’s account, instructions for which the Lender may designate from time to
time in writing to the Borrower.  The outstanding balance of this Note shall be
due and payable as to the First Loan Installment and the Second Loan Installment
on the fourth (4th) anniversary of the date on which the Lender advances the
related proceeds for each such Installment (each such date hereinafter an
“Installment Maturity Date”) or at such earlier time provided herein.
 
 
 

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Interest.  Interest shall accrue on the outstanding principal balance of this
Note at an annual rate equal to the Applicable Interest Rate then in
effect.  For purposes hereof, “Applicable Interest Rate” means, as of any date,
the rate published on such date by the Wall Street Journal (or any successor
publication) as the “prime rate” + 5.00% (but in no event shall the Applicable
Interest Rate be lower than 9%).  The Applicable Interest Rate shall be
determined on (A) the date on which this Note is executed and delivered by the
Borrower (the “Issuance Date”) and (B) on the first business day of each
calendar month after such date (each of (A) and (B), a “Determination
Date”).  The Applicable Interest Rate, as so determined, shall apply during the
calendar month immediately following the applicable Determination Date.  The
Borrower shall pay accrued interest on each January 1, April 1, July 1 and
October 1 while principal of this Note remains outstanding, with the first such
payment due on April 1, 2012 (collectively, the “Schedule Payments”).  Interest
shall be computed on the basis of a 360-day year for the actual days
elapsed.  Upon the occurrence of an Event of Default (as defined in below) under
this Note, whether or not such default is declared or other rights or remedies
are exercised, the Applicable Interest Rate shall increase by 2% per annum (the
“Default Rate”) or unless a waiver of such Event of Default shall be provided by
the Lender in its sole and absolute discretion.  Interest shall stop accruing
when the Interests (as defined in the Security Agreement, defined below) have
been liquidated, sold or otherwise conveyed to or for the benefit of the Lender.
 
Payment at Maturity.  This Note shall mature as to the First Loan Installment
and the Second Loan Installment, and all outstanding amounts of principal of and
interest accrued on this Note with respect to each such Installment shall be
paid, on the Applicable Installment Maturity Date.
 
Use of Proceeds.  All amounts advanced by the Lender under this Note shall be
delivered by the Borrower as a capital contribution to Zhejiang Wanxiang Enerl
Power System Co., Ltd., a Sino-foreign equity joint venture company existing as
a limited liability company under the laws of the People’s Republic of China
(the “Joint Venture”), pursuant to Articles 11, 12 and 13 of a Sino-Foreign
Equity Joint Venture Contract between Wanxiang EV Co., Ltd. and Ener1, Inc.,
dated as of January, 2011 (the “Joint Venture Agreement”).  Notwithstanding the
foregoing, the Lender shall have the option, in the Lender’s sole and absolute
discretion and with prior written notice to Borrower, to disburse the Loan
proceeds directly to the Joint Venture on the Borrower’s behalf.
 
Prepayment.  All or a portion of amounts of principal of and interest accrued on
this Note may be prepaid by the Borrower prior to the due date therefor without
penalty or premium.
 
Payment on Non-Business Days.  Whenever any payment or any advance on payment to
be made shall be due on any day other than a business day, such payment shall be
due on the next succeeding business day and such next succeeding business day
shall be included in the calculation of the amount of accrued interest payable
on such date.  For purposes of this Note a business day is a day other than a
Saturday, Sunday or legal holiday under the laws of the State of Illinois.
 
 
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Replacement.  Upon the loss, theft or destruction of this Note (or any
replacement hereof), or, in the case of a mutilation of this Note, upon
surrender and cancellation of such Note, and receipt of a duly executed,
notarized and written statement, including indemnification in favor of and
reasonably satisfactory to Borrower from the Lender with respect thereto, the
Borrower shall issue a new Note, of like tenor and amount, in lieu of such lost,
stolen, destroyed or mutilated Note.
 
Transfer.  This Note may not, in whole or in part, be sold, transferred or
assigned by the Lender to any person or entity, unless such person or entity is
an affiliate of the Lender, without the Borrower’s written consent which consent
shall not be unreasonably withheld or delayed.
 
Payment of Lender’s Fees and Expenses.  Payment of all of the actual
out-of-pocket costs and expenses incurred by Lender to date and after the date
hereof in connection with the transactions contemplated herein, such as Lender’s
reasonable attorneys’ fees and expenses and other fees and expenses paid or
payable to consultants shall be paid by the Borrower, and may, at the Lender’s
option, (a) be withheld by Lender from the proceeds of the Loan prior to
disbursing such proceeds pursuant to Section 1.3 of this Note; or (b) be paid to
Lender as a condition precedent to Lender’s obligation to fund the Loan.  The
Borrower shall reimburse Lender for any additional fees and expenses incurred by
Lender with respect to the Loan after the date hereof within 10 days after
request therefor.
 
Capital Contribution.  It shall be a condition precedent to Lender’s obligation
to fund the First Loan Installment that the Borrower provide evidence
satisfactory to Lender that the Borrower has funded $4,000,000 capital
contribution to the Joint Venture prior to or concurrently with the distribution
of the First Loan Installment.  It shall be a condition precedent to Lender’s
obligation to fund the Second Loan Installment that Borrower provide evidence
satisfactory to Lender that Borrower has funded an additional $4,000,000 capital
contribution to the Joint Venture as the second installment of capital
contributions becomes due pursuant to the Joint Venture Agreement, prior to or
concurrently with the distribution of the Second Loan Installment.
 
Second Loan Installment.  It shall be a condition precedent to Lender’s
obligation to fund the Second Loan Installment that (i) no Event of Default
shall have occurred and no event that with either notice, passage of time or
both shall become an Event of Default shall then exist; (ii) the terms of this
Note have not been modified, altered or restructured except as expressly
consented to and accepted by the Lender; (iii) no default on the part of the
Borrower shall exist under the Joint Venture Agreement (except with respect to
such defaults to be waived by Wanxiang EV Co. Ltd. pursuant to clause (iv)
below); (iv) Wanxiang EV Co., Ltd. has agreed to waive any rights or remedies it
may be entitled to under the Joint Venture Agreement relating to Sections 13.2,
51.1.2 and 51.1.4 of the Joint Venture Agreement as the same solely relate to
(A) Borrower’s failure to timely fund the portion of the required capital
contribution under the Joint Venture Agreement that is being funded with the
proceeds of the Loan and (B) Borrower’s filing of a Chapter 11 Case (as
hereinafter defined) prior to the date of this Note; (v) Borrower has delivered
to Lender true and accurate documents which provide a basis for Lender to
reasonably conclude that (x) Borrower is not insolvent and will not be rendered
insolvent by the incurrence of the Second Loan Installment and (y) Borrower is
able to service its current debt obligations including its current debt
obligations with respect to the Second Loan Installment as such payments become
due; and (vi) the Borrower shall have provided the Lender with at least ten (10)
business days, but no more than thirty (30) days prior written notice of the
Borrower’s request that the Lender fund the Second Loan Installment.
 
 
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For the purposes of this Note, the phrase “Chapter 11 Case” shall mean a
voluntary petition pursuant to chapter 11 of title 11 of the United States Code.
 
Collateral.  This Note is secured by and entitled to the benefits of, among
other things, that certain Security Agreement (Assignment of Ownership Interests
as Collateral) made in favor of Lender (as may be amended, restated or modified
from time to time, the “Security Agreement”) (the “Collateral”), to which the
reference to the Security Agreement and Collateral is hereby made for a
description of the property covered thereby and the nature and extent of the
security, and the terms and conditions of the Security Agreement are hereby
incorporated and made a part of this Note.
 
Events of Default.  Each of the following shall constitute an “Event of
Default”:
 
the Borrower shall fail to pay to the Lender any amount of principal, interest
or other amounts when and as due under this Note, the Security Agreement or any
other document evidencing or securing the Loan; or
 
the Borrower shall fail to observe or perform any other covenant, condition or
agreement contained in this Note, the Security Agreement or any other document
evidencing or securing the Loan, which failure is not cured, if possible to
cure, within ten (10) days after such failure; or
 
any representation or warranty made by the Borrower in this Note, the Security
Agreement or any other document evidencing or securing the Loan shall prove to
have been false or incorrect or breached in a material respect on the date as of
which it was made; or
 
all or substantially all of the assets of the Joint Venture are transferred,
unless such transfer is approved by the Lender and a portion of such
consideration is distributed to the Borrower as provided in the Joint Venture
Agreement and an equivalent amount of consideration is prepaid under this Note
to the Lender; or
 
either the Borrower or the Joint Venture ceases to conduct its business
substantially in the same manner as is now conducted in the ordinary course of
its business; or
 
the filing by the Borrower of a petition for relief under the Bankruptcy Code,
or under any other present or future state or federal or foreign law regarding
bankruptcy, reorganization or other debtor relief law without the prior written
consent of Lender; the filing of any pleading or an answer by the Borrower in
any involuntary proceeding under the Bankruptcy Code or other debtor relief law
which admits the jurisdiction of the court or the petition’s material
allegations regarding the Borrower’s insolvency; a general assignment by the
Borrower for the benefit of creditors; or the Borrower applying for, or the
appointment of, a receiver, trustee, custodian or liquidator of the Borrower or
any of its property; or
 
 
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the failure of the Borrower to effect a full dismissal of any involuntary
petition under the Bankruptcy Code or any other debtor relief law that is filed
against the Borrower or in any way restrains or limits the Borrower or the
Lender regarding the Loan, prior to the earlier of the entry of any court order
granting relief sought in such involuntary petition, or sixty (60) days after
the date of filing of such involuntary petition; or
 
any receiver, trustee or custodian is appointed to take possession of all or any
substantial portion of the assets of the Borrower or the Joint Venture; or
 
there shall have occurred a Change of Control (as hereinafter defined).
 
If an Event of Default with respect to Note shall have occurred, the Lender may
declare by written notice to the Borrower the principal amount of this Note and
accrued and unpaid interest thereon (and any other amounts owed by the Borrower
hereunder) to be immediately due and payable (an “Acceleration”).  In addition,
the Lender shall have all rights and remedies available to the Lender at law or
in equity with respect to such Event of Default.
 
Upon the occurrence of an Acceleration, the Borrower shall deliver to the Lender
by wire transfer of immediately available funds an amount in cash equal to the
entire outstanding principal amount of this Note, all unpaid interest accrued
thereon through the effective date of such Acceleration and all other amounts
due under this Note.
 
For the purposes of this Note, a “Change of Control” shall be deemed to occur
if, at any time the Borrower shall fail to own, directly or indirectly,
beneficially and of record, all of the issued and outstanding Equity Interests
(defined below) of its subsidiary EnerDel, Inc., a Delaware
corporation.  “Equity Interests” of any person shall mean any and all shares,
interests, rights to purchase or otherwise acquire, warrants, options,
participations or other equivalents of or interests in (however designated)
equity or ownership of such person, including any preferred stock, any limited
or general partnership interest and any limited liability company membership
interest, and any securities or other rights or interests convertible into or
exchangeable for any of the foregoing.
 
Due on Sale.  In the event of the sale of all or substantially all of the assets
of the Borrower, then, notwithstanding anything in this Note to the contrary,
the entire principal balance hereof and all accrued and unpaid interest
hereunder shall be due and payable concurrently with the closing of such
transaction.
 
Notices.  Any notice, demand, request, consent, waiver or other communication
required or permitted to be given hereunder shall be in writing and shall be
effective (a) upon personal delivery at the address set forth in the first
paragraph of this Note (if delivered on a business day during normal business
hours where such notice is to be received), or the first business day following
such delivery (if delivered other than on a business day during normal business
hours where such notice is to be received) or (b) on the first business day
following the date of mailing by express courier service, fully prepaid,
addressed to such address, or upon actual receipt of such mailing, whichever
shall first occur.
 
 
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Governing Law.  This Note shall be governed by and construed in accordance with
the internal laws of Illinois, without giving effect to any of the conflicts of
law principles which would result in the application of the substantive law of
another jurisdiction.
 
Headings.  Article and section headings in this Note are included herein for
purposes of convenience of reference only and shall not constitute a part of
this Note for any other purpose.
 
Binding Effect.  The obligations of the Borrower and the Lender set forth herein
shall be binding upon the successors and assigns of each such party, whether or
not such successors or assigns are permitted by the terms hereof.
 
Amendments.  No provision of this Note may be modified or amended other than by
a written instrument signed by the Borrower and the Lender
 
Parties in Interest.  This Note shall be binding upon, inure to the benefit of
and be enforceable by the Borrower, the Lender and their respective successors
and permitted assigns.
 
Failure or Indulgence Not Waiver.  No failure or delay on the part of the Lender
in the exercise of any power, right or privilege hereunder, or course of conduct
relating hereto, shall operate as a waiver thereof, nor shall any single or
partial exercise of any such power, right or privilege preclude other or further
exercise thereof or of any other right, power or privilege.
 
Business Purpose Loan.  The Borrower represents and agrees that the indebtedness
created hereunder constitutes business loan that comes within the purview of
Chapter 815, Section 205/4(1)(c) of the Illinois Compiled Statutes and, as such,
will not avail themself, by way of defense or otherwise, of any statutory or
case law relief relating to usury or compounding of interest to avoid or defeat
the payment of interest or any other sum in connection with the indebtedness
created hereunder.  All agreements between the Borrower and the Lender are
expressly limited so that in no event whatsoever shall the amount paid or agreed
to be paid to the Lender exceed the highest lawful rate of interest permissible
under the laws of the State of Illinois.  If, for any circumstances whatsoever,
fulfillment of any provision hereof, at the time performance of such provision
shall be due, shall involve exceeding the limit of validity prescribed by law
which a court of competent jurisdiction may deem applicable hereto, then ipso
facto, the obligation to be fulfilled shall be reduced to the highest lawful
rate of interest permissible under the laws of the State of Illinois, and if for
any reason whatsoever, the Lender shall ever receive as interest an amount that
would be deemed unlawful, such interest shall be applied to the payment of the
principal amount outstanding under this Note (whether or not then due and
payable) and not to the payment of interest.
 
No Joint Venture.  Nothing contained herein or in any other Loan Document, and
no action or inaction whatsoever on the part of the Lender, shall be deemed to
make the Lender a partner or joint venturer with the Borrower.
 
 
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WAIVER OF JURY TRIAL.  THE BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES ANY RIGHT THAT THE BORROWER MAY HAVE TO A TRIAL BY JURY IN
ANY LITIGATION ARISING IN ANY WAY IN CONNECTION WITH THIS NOTE, THE SECURITY
AGREEMENT OR ANY OTHER DOCUMENTS EVIDENCING OR SECURING THE LOAN OR ANY OTHER
STATEMENTS OR ACTIONS OF THE LENDER.  THE BORROWER ACKNOWLEDGES THAT THIS WAIVER
IS A MATERIAL INDUCEMENT FOR LENDER TO GRANT THE LOAN TO THE BORROWER.
 
CONSENT TO JURISDICTION.  TO INDUCE THE LENDER TO ACCEPT THIS NOTE, THE BORROWER
IRREVOCABLY AGREES THAT, SUBJECT TO THE LENDER’S SOLE AND ABSOLUTE ELECTION, ALL
ACTIONS OR PROCEEDINGS IN ANY WAY ARISING OUT OF OR RELATED TO THIS NOTE WILL BE
LITIGATED IN COURTS HAVING SITUS IN CHICAGO, ILLINOIS.  THE BORROWER HEREBY
CONSENTS AND SUBMITS TO THE JURISDICTION OF ANY COURT LOCATED WITHIN CHICAGO,
ILLINOIS, WAIVES PERSONAL SERVICE OF PROCESS UPON THE BORROWER, AND AGREES THAT
ALL SUCH SERVICE OF PROCESS MAY BE MADE BY REGISTERED MAIL OR EXPRESS COURIER
SERVICE DIRECTED TO THE BORROWER AT THE ADDRESS STATED ON THE FIRST PAGE OF THIS
NOTE AND SERVICE SO MADE WILL BE DEEMED TO BE COMPLETED UPON ACTUAL RECEIPT.
 
WAIVER OF DEFENSES.  OTHER THAN CLAIMS BASED UPON THE FAILURE OF THE LENDER TO
ACT IN A COMMERCIALLY REASONABLE MANNER OR WITH RESPECT TO THE NON-RECOURSE
LIMITATION, THE BORROWER WAIVES EVERY PRESENT AND FUTURE DEFENSE (OTHER THAN THE
DEFENSE OF PAYMENT IN FULL), CAUSE OF ACTION, COUNTERCLAIM OR SETOFF WHICH THE
BORROWER MAY NOW HAVE OR HEREAFTER MAY HAVE TO ANY ACTION BY THE LENDER IN
ENFORCING THIS NOTE OR ANY OTHER DOCUMENTS EVIDENCING OR SECURING THE
LOAN.  THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE LENDER GRANTING ANY
FINANCIAL ACCOMMODATION TO THE BORROWER.
 
Non-Recourse.  Notwithstanding anything herein, in the Security Agreement or in
any other agreement, document or instrument relating to this Note or the Loan
(collectively, the “Loan Documents”), to the contrary, the maximum liability of
the Borrower with respect to the repayment of the principal amount of the Loan
hereunder and under the Loan Documents shall in no event exceed and shall be
limited solely to the Borrower’s right, title and interest in, to and under the
Interests (as defined in the Security Agreement).  Except with respect to the
Interests, the Loan is a non-recourse loan with respect to the principal amount
of the Loan, and the Borrower shall have no personal obligations with respect to
the repayment of the principal of the Loan other than the assignment of the
Interests and the rights with respect thereto as contemplated under the Security
Agreement (collectively the “Non-Recourse Limitation”).  In no event shall any
interest or other amounts other than the principal amount due under this Note or
any other Loan Documents be subject to this Non-Recourse Limitation.
 
 
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[Remainder of Page Left Blank Intentionally]
 
 
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IN WITNESS WHEREOF, the Borrower has caused this Note to be duly executed by its
duly authorized officer as of the date first above indicated.

 
ENER1, INC.
 
By:
   
Name:
   
Title:
 

 
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EXHIBIT B
 
Security Agreement
 
 
 

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SECURITY AGREEMENT
(ASSIGNMENT OF EQUITY INTERESTS AS COLLATERAL)
 
THIS SECURITY AGREEMENT (ASSIGNMENT OF EQUITY INTERESTS AS COLLATERAL) (this
“Agreement”) is made as of __________ __, 20__ by ENER1, INC. a Florida
corporation (“Assignor”), to WANXIANG INTERNATIONAL INVESTMENT CORPORATION, a
Cayman Islands corporation (“Secured Party”).  Initially capitalized terms used
herein but not defined herein shall have the meanings respectively ascribed to
them in the Note (defined below).
 
RECITALS
 
A.           Assignor owns forty percent (40%) of the equity interests of
Zhejiang Wanxiang Enerl Power Systems Co., Ltd., a Sino-foreign equity joint
venture existing as a limited liability company under the laws of the People’s
Republic of China (the “Company”), as set forth in that certain Sino-Foreign
Equity Joint Venture Contract dated January, 2011 (as amended, modified or
restated from time to time, the “Joint Venture Agreement”).
 
B.           Secured Party is committing to make a loan to Assignor in the
original principal amount of up to Forty Million and No/100 U.S. Dollars
(US$40,000,000.00) (the “Loan”), of which US$20,000,000 constituting the First
Loan Installment is being funded on the date hereof.
 
C.           As evidence of the indebtedness of the Loan, Assignor has executed
and delivered to Secured Party a Floating Rate Secured Note of even date
herewith in the original principal amount of Forty Million and No/100 U.S.
Dollars (US$40,000,000.00) (as amended, modified or restated from time to time,
the “Note”), which Note is secured by, this Agreement.
 
D.           In consideration of the foregoing, Assignor has agreed to grant to
Secured Party a security interest in the Interests (as hereinafter defined) as
described herein.
 
NOW THEREFORE, for and in consideration of the foregoing recitals (which are
hereby incorporated into the operative provisions of this Agreement by this
reference) and the mutual promises, agreements and undertakings set out in this
Agreement, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
 
ARTICLE I.  ASSIGNMENT
 
1.1           Equity Interests Assigned.  Assignor hereby assigns, transfers,
pledges, conveys and grants to Secured Party, for collateral purposes, a first
priority security interest in and to (i) Assignor’s entire equity interests in
the Company and (ii) all of Assignor’s right, title and interest in, to and
under the Joint Venture Agreement arising from Assignor’s equity interests in
the Company, including, without limitation, all of Assignor’s rights to and with
respect to: (a) all certificates and instruments representing or evidencing such
equity interests, and all cash, securities, interest, dividends, rights and
other property at any time and from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all thereof; (b)
any and all amounts (including cash, notes and any security therefor) received
by Assignor in connection with a sale by Assignor of its interest in the Company
(provided, however, that Secured Party shall not be deemed to have approved any
such sale); (c) any products, proceeds or avails of any of the foregoing; and
(d) any voting rights and other rights to control or influence the Company’s
decisions arising from the Assignor’s equity interest in the Company (all of the
foregoing whether now owned or hereafter at any time acquired by Assignor and
wherever located, including all replacements, additions, accessions,
substitutions, proceeds and products relating thereto or therefrom, and all
documents, ledger sheets and files of Assignor relating thereto, are referred to
collectively hereinafter as the “Interests”).
 
 
 

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Assignor agrees to deliver to the Secured Party, promptly upon receipt and in
due form for transfer (i.e., endorsed in blank or accompanied by stock powers or
the equivalent executed in blank), any Interests which may at any time or from
time to time come into the possession or control of Assignor; and prior to the
delivery thereof to the Secured Party, such Interests shall be held by Assignor
separate and apart from its other property and in express trust for the Secured
Party.
 
1.2           Material Inducement.  Assignor hereby acknowledges that, in
addition to the consideration recited above, Secured Party has given sufficient
consideration for this Agreement and the assignment described herein by entering
into the Note and agreeing to make the Loan and that Secured Party is doing so
in reliance on each of the terms of this Agreement and that the foregoing
assignment of the Interests is a material inducement to Secured Party to enter
into the Note.
 
1.3           Obligations Secured.  The foregoing assignment shall secure full
performance and payment in full by Assignor of any and all obligations to
Secured Party of any kind whatsoever, howsoever created, arising or evidenced,
whether pursuant to a covenant, representation, warranty, indemnity or other
agreement of any kind, whether direct or indirect, absolute or contingent,
recourse or non-recourse, or now or hereafter existing, or due or to become due,
all as and to the extent arising under the Note, including, without limitation,
any and all obligations under the Note (including, without limitation, the
obligation to pay the principal amount of the Note when due thereunder and the
obligation to pay interest under the Note, including any interest at the Default
Rate (as defined in the Note), and any future advances made by Secured Party and
evidenced by the Note or a similar note to or for the account of Assignor) (all
of the foregoing, collectively, the “Obligations”).
 
1.4           No Assumption of Liability.  By its acceptance hereof, Secured
Party shall not be deemed to have assumed or become liable for any other
obligations or liabilities of Assignor under the Joint Venture Agreement,
whether provided for by the terms thereof or arising by operation of law or
otherwise.
 
1.5           Non-Recourse.  Notwithstanding anything herein, in the Note or in
any other agreement, document or instrument relating to the Note or the Loan
(collectively, the “Loan Documents”), to the contrary, the maximum liability of
the Assignor with respect to the repayment of the principal amount of the Loan
hereunder and under the Loan Documents shall in no event exceed and shall be
limited solely to the Assignor’s right, title and interest in, to and under the
Interests.  Except with respect to the Interests, the Loan is a non-recourse
loan with respect to the principal amount of the Loan, and the Assignor shall
have no personal obligations with respect to the repayment of the principal of
the Loan other than the assignment of the Interests and the rights with respect
thereto as contemplated under this Agreement (collectively the “Non-Recourse
Limitation”).  In no event shall any interest or other amounts other than the
principal amount due under the Note or any other Loan Documents be subject to
this Non-Recourse Limitation.
 
 
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ARTICLE II COVENANTS, REPRESENTATIONS AND WARRANTIES
 
Assignor hereby covenants, represents and warrants to Secured Party with respect
to the Interests as follows:
 
2.1           Assignor Owns the Interests.  Assignor (a) is the sole owner of
the Interests, free from any lien, security interest, claim or encumbrance, (b)
has the right to grant Secured Party a security interest therein, and (c) shall
defend the Interests against the claims and demands of any and all persons at
any time claiming the same or any interest therein.  As of the date hereof,
there are no certificates, instruments or other documents evidencing any of the
Interests.
 
2.2           No Transfers.  Assignor will not, without the prior written
consent of Secured Party, in any way hypothecate or create or permit to exist
any lien, security interest or encumbrance on or other interest in Interests
except that created by this Agreement, nor will Assignor sell, transfer, assign,
exchange or otherwise dispose of the Interests or any interest therein unless
expressly permitted by the terms and conditions of the Note (and only then after
prior written notice has been given to Secured Party and after the execution,
procurement and delivery to Lender of any and all documents, financing
statements or other instruments, notices or agreements, including, without
limitation, anything or action which may be required by Secured Party under
Section 2.5 hereof) reasonably required by Secured Party to perfect or continue
perfection and first priority of Secured Party’s security interest in the
Interests.
 
2.3           No Other Financing Statement; Authorization to File Financing and
Registration Statements.  No financing statement covering the Interests or any
part thereof is on file in any public office.  Assignor hereby authorizes
Secured Party to file any and all (a) financing statements pursuant to the
Uniform Commercial Code, as adopted in the State of Illinois, or such other
jurisdiction (as applicable, the “Code”) in order to perfect or otherwise
evidence, and limited solely to, the security interest granted hereby and (b)
registration statements or other filings with any governmental authority or
regulatory authority of the People’s Republic of China or any local or municipal
government or authority located in the People’s Republic of China (collectively,
“Chinese Law”) Secured Party deems necessary or desirable in order to perfect or
otherwise evidence, and limited solely to, the security interest granted hereby,
including, without limitation, that certain Share Pledge Contract in the form
attached hereto as Exhibit A.  In the event of any inconsistency between the
terms and provisions of any such agreement or filing governed by Chinese Law and
this Agreement, the terms and provisions of this Agreement shall
control.  Assignor agrees that it shall pay the fee for filing same in all
public offices where such filing may reasonably be deemed necessary by Secured
Party.
 
2.4           Discharge of Liens.  Assignor shall pay any indebtedness which may
be secured by a lien or charge upon the Interests and otherwise keep the
Interests free of unpaid charges; upon request, Assignor shall deliver to
Secured Party reasonably satisfactory evidence of any such payment.
 
 
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2.5           Assurances Regarding Perfection.  Assignor will cause the Company
to keep a copy of this Agreement with the records of the Company and to denote
wherever appropriate elsewhere in such records that the Interests have been
assigned to Secured Party as collateral hereunder.  In addition, Assignor will,
promptly upon request by Secured Party, procure or execute and deliver any
document, give any notices, execute and file (or, in the case of financing
statements, authorize to be filed) any financing statements or other documents,
all in form and substance reasonably satisfactory to Secured Party, mark any
chattel paper, deliver any chattel paper or instruments to Secured Party and
take any other actions which are necessary or, in the reasonable judgment of
Secured Party, desirable to perfect or continue the perfection and first
priority of Secured Party’s security interest in the Interests pursuant to both
the law of the State of Illinois and Chinese Law, to protect the Interests
against the rights, claims or interests of third persons or to effect the
purposes of this Security Agreement, including, without limitation, causing the
Interests to be certificated and the delivery of the certificates to Secured
Party, and will pay all reasonable costs incurred in connection therewith.
 
2.6           Compliance.  Assignor will comply with all laws, statutes and
regulations pertaining to the use or ownership of the Interests.
 
2.7           Location.  Assignor is a corporation, duly organized, validly
existing and in good standing under the laws of the State of Florida.
 
ARTICLE III DEFAULTS AND REMEDIES
 
3.1           Defaults.  The occurrence of any one or more of the following
events or conditions shall constitute an event of default (“Event of Default”)
under this Agreement:
 
(a)           Assignor fails to pay when due any amount due under this Agreement
or any other Loan Document.
 
(b)           Assignor materially fails to keep or perform any of its
non-monetary material agreements, undertakings, obligations, covenants or
conditions under this Agreement and such failure continues for a period of
thirty (30) days after notice thereof from Secured Party to Assignor provided,
that if such failure cannot, because of its nature, be cured with said thirty
(30) day period, then, if Assignor commences curing such failure within said
thirty (30) day period and diligently continues to attempt to cure such failure,
Assignor shall have up to an additional sixty (60) day period to cure such
failure;
 
(c)           Any material representation, warranty or certification made in
this Agreement or the Note by Assignor shall be materially incorrect or false as
of the date when made or any other Loan Document; or
 
(d)           A “Event of Default” which is not cured before the expiration of
any applicable cure period shall occur under the Note.
 
 
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3.2           Remedies.  Upon the occurrence of an Event of Default hereunder,
Secured Party may, at its option, without notice to or demand upon Assignor, do
any one or more of the following:
 
(a)           Declare the Loan and all other indebtedness of Assignor to Secured
Party to be immediately due and payable, whereupon all unpaid principal and
interest on said advances and other indebtedness shall become and be immediately
due and payable;
 
(b)           Exercise any or all of the rights and remedies provided for by the
Code or Chinese Law, specifically including, without limitation, the right to
recover the reasonable attorneys’ fees and other expenses incurred by Secured
Party in the enforcement of this Agreement;
 
(c)           Notify Assignor that Secured Party has the right to receive any
distributions and payments from the Company to Assignor, as a holder of equity
interests in the Company; Assignor hereby authorizes and directs the Company,
after the occurrence of an Event of Default, to make all payments and
distributions on the Interests to which Assignor would otherwise be entitled,
directly to Secured Party to be applied to the Loan and agrees to promptly
deliver to Secured Party any distributions and payments it nevertheless receives
with respect thereto;
 
(d)           Retain or take possession of the Interests until and to the extent
necessary for the full satisfaction of the Obligations secured hereby, or
transfer the Interests or any portion thereof into the name of its nominee;
 
(e)           Proceed by an action or actions at law or in equity with respect
to the Obligations secured hereby or to foreclose this Agreement and sell the
Interests, or any portion thereof, pursuant to a judgment or decree of a court
or courts of competent jurisdiction; in each case, at the option of Secured
Party, Assignor shall cause the Interests to be marketed and sold in accordance
with the requirements of Secured Party;
 
(f)            Transfer, sell, or otherwise dispose of the Interests or any
portion of the Interests at a public or private sale or make other commercially
reasonable disposition of the Interests or any portion thereof after ten (10)
days’ notice to Assignor, and the Secured Party may purchase the Interests or
any portion thereof at any public or private sale; without limiting the
foregoing, in the event that any of the Interests is sold at private sale,
Assignor agrees that if the Interests are sold for a price which Secured Party
in good faith believes to be reasonable, then (A) the sale shall be deemed to be
commercially reasonable in all respects, (B) Assignor shall not be entitled to a
credit against the Obligations in an amount in excess of the purchase price, and
(C) Secured Party shall not incur any liability or responsibility to Assignor in
connection therewith, notwithstanding the possibility that a substantially
higher price might have been realized at a public sale.  Assignor recognizes
that a ready market may not exist for Interests which are not regularly traded
on a recognized securities exchange or in another recognized market, and that a
sale by Secured Party of any such Interests for an amount substantially less
than a pro rata share of the fair market value of the issuer’s assets minus
liabilities may be commercially reasonable in view of the difficulties that may
be encountered in attempting to sell Interests that are privately traded; and
 
 
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(g)           Enforce one or more remedies hereunder, successively or
concurrently, and such action shall not operate to estop or prevent Secured
Party from pursuing any other or further remedy which it may have.  Assignor
shall reimburse Secured Party from the Interests for, or Secured Party may apply
any proceeds of the Interests to, the costs and expenses (including attorneys’
fees, transfer taxes and any other charges) incurred by Secured Party in
connection with any sale, disposition or retention of the Interests hereunder.
 
3.3           Holding in the Name of Secured Party.  The Secured Party may from
time to time after the occurrence of an Event of Default, take all or any of the
following actions: (a) transfer or cause to be transferred all or any part of
the Interests into the name of the Secured Party or any nominee or sub-agent for
the Secured Party, with or without disclosing that such Interests are subject to
the lien and security interest hereunder, (b) appoint one or more sub-lenders or
nominees for the purpose of retaining physical possession of the Interests, (c)
notify the parties obligated on any of the Interests to make payment to the
Secured Party of any amounts due or to become due thereunder, (d) endorse any
checks, drafts or other writings in the name of Assignor to allow collection of
the Collateral, (e) enforce collection of any of the Interests by suit or
otherwise, and surrender, release or exchange all or any part thereof, or
compromise or renew for any period (whether or not longer than the original
period) any obligations of any nature of any party with respect thereto, and (f)
take control of any proceeds of the Interest.
 
3.4           No Marshalling.  Secured Party shall not be required to marshall
the Interests or any other security for the obligations secured hereby or to
resort to the Interests or any other security for the obligations secured hereby
in any particular order and all of Secured Party’s rights under the various
instruments relating to the collateral shall be cumulative.
 
3.5           Waiver.  Assignor, to the maximum extent permitted by law, hereby
waives every defense (now, theretofore or hereafter arising) of estoppel,
laches, extension or moratorium applicable to any obligations or liabilities
covered by this Agreement or of Assignor under this Agreement and any claim that
the release, substitution or addition of any portion of the Interests, endorsers
or guarantors affects the liability of Assignor hereunder.  Assignor also
expressly waives extension of the obligations of this Agreement arising by any
reason whatsoever, including, without limitation, by reason of the institution
of proceedings by or against Assignor or the Company under or pursuant to the
Federal Bankruptcy Code, or any amendment thereto, or any similar state or
federal laws relating to the relief of debtors.
 
3.6           Protection of Collateral.  At any time after the occurrence and
during the continuance of an Event of Default, Secured Party shall have the
right to make any payments and do any other acts Secured Party may deem
necessary to protect its security interest in the Interests, including, without
limitation, the rights to pay, purchase, contest or compromise any encumbrance,
charge or lien which in the judgment of Secured Party appears to be prior to or
superior to the security interest granted hereunder, and appear in and defend
any action or proceeding purporting to affect its security interest in and/or
the value of the Interests, and in exercising any such powers or authority, the
right to pay all expenses incurred in connection therewith, including attorneys’
fees.  Notwithstanding anything to the contrary set forth herein, any payment
made by Secured Party under this Section 3.6 to the Company to fund, in whole or
in part, any of Assignor’s capital contributions under the Joint Venture
Agreement shall be deemed to be a principal amount of the Loan and within the
purview of and subject to the Non-Recourse Limitation.  Assignor hereby agrees
to reimburse Secured Party from the Interests for all reasonable payments (other
than any payment excepted in the immediately preceding sentence) made and
expenses incurred by Secured Party in connection with the exercise of Secured
Party’s rights under this Section 3.6, which amounts shall be secured under this
Agreement, and agrees they shall be bound by any payment made or act taken by
Secured Party hereunder.  Secured Party shall have no obligation to make any of
the foregoing payments or perform any of the foregoing acts.
 
 
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3.7           Voting Rights After Event of Default.  Upon the occurrence of an
Event of Default and for so long as any of the Obligations remain unpaid,
Assignor covenants and agrees that it will not, without the prior written
consent of Secured Party, exercise any voting rights under the Joint Venture
Agreement and (i) Secured Party may, upon written notice to Assignor of its
intention to do so, exercise all voting rights, and all other ownership or
consensual rights with respect to the Interests, but under no circumstances is
Secured Party obligated by the terms of this Agreement to exercise such rights,
and (ii) in addition to any other grants hereunder, Assignor hereby appoints
Secured Party Assignor’s true and lawful attorney-in-fact and irrevocable proxy
to vote the Interests in any manner Secured Party deems advisable for or against
all matters submitted or which may be submitted to a vote of the holders of the
equity interests the Company.  The power of attorney granted hereby is coupled
with an interest and shall be irrevocable for so long as any of the Obligations
remain unpaid.
 
ARTICLE IV MISCELLANEOUS PROVISIONS
 
4.1           Notices.  Any notice which either party hereto may be required or
may desire to give hereunder shall be given in accordance with Section 5.1 of
the Note.
 
4.2           Governing Law.  This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Illinois.  Assignor and all persons
and entities in any manner obligated to Secured Party hereunder consent to the
jurisdiction of any Federal or State Court within the State of Illinois having
proper venue and also consent to service of process by any means authorized by
Illinois or Federal law.
 
4.3           Miscellaneous.  This Agreement or any provision hereof may be
changed, waived, or terminated only by a statement in writing signed by the
party against which such change, waiver or termination is sought to be
enforced.  The various headings in this Agreement are inserted for convenience
only and shall not affect the meaning or interpretation of this Agreement or any
provision hereof.  No delay in enforcing or failure to enforce any right under
this Agreement by Secured Party shall constitute a waiver by Secured Party of
such right.  No waiver by Secured Party of any default hereunder shall be
effective unless in writing, nor shall any waiver operate as a waiver of any
other default or of the same default on a future occasion.  Time is of the
essence of each provision of this Agreement of which time is an
element.  Secured Party may not assign any of its Interests under this Agreement
to any person or entity, unless such person or entity is an affiliate of Secured
Party, without Assignor’s consent, which consent shall not be unreasonably
withheld or delayed.  All rights of Secured Party hereunder shall inure to the
benefit of its successors and assigns.  Assignor may not assign any of its
interest under this Agreement without the prior written consent of Secured
Party.  Any purported assignment inconsistent with this provision shall, at the
option of Secured Party, be null and void.  In any action or proceeding brought
to enforce any provision of this Agreement, or to seek damages for a breach of
any provision hereof, or where any provision hereof is validly asserted as a
defense, the successful party shall be entitled to recover reasonable attorneys’
fees in addition to any other available remedy.  If any provision of this
Agreement should be found to be invalid or unenforceable, all of the other
provisions shall nonetheless remain in full force and effect to the maximum
extent permitted by law.  This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which shall
together constitute one and the same agreement.
 
 
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4.4           Entire Agreement.  This Agreement, together with any other
agreement executed in connection herewith, is intended by the parties as a final
expression of their agreement and is intended as a complete and exclusive
statement of the terms and conditions thereof.  Acceptance of or acquiescence in
a course of performance rendered under this Agreement shall not be relevant to
determine the meaning of this Agreement even though the accepting or acquiescing
party had knowledge of the nature or the performance and opportunity for
objection.
 
4.5           Survival of Provisions.  All representations, warranties and
covenants of Assignor contained herein shall survive the execution and delivery
of this Agreement, and shall terminate only upon the full and final satisfaction
by Assignor of its obligations hereunder and of the Obligations.
 
4.6           Authority of the Secured Party.  Secured Party shall have and be
entitled to exercise all powers hereunder which are specifically delegated to
Secured Party by the terms hereof.  Secured Party may perform any of its duties
hereunder or in connection with the Interests by or through agents or employees
and shall be entitled to retain counsel and to act in reliance upon the advice
of counsel concerning all such matters.  Neither Secured Party nor any director,
officer, employee, attorney or agent of Secured Party shall be liable to
Assignor or the Company for any action taken or omitted to be taken by it or
them hereunder, except for its or their own gross negligence or willful
misconduct; nor shall Secured Party be responsible for the validity,
effectiveness or sufficiency hereof or of any document or security furnished
pursuant hereto.  Secured Party and Assignor shall be entitled to rely on any
communication, instrument or document believed by it or them to be genuine and
correct and to have been signed or sent by the proper person or
persons.  Assignor agrees to indemnify and hold harmless Secured Party and/or
any member, manager, parent, affiliate, subsidiary, director, officer, employee,
attorney, representative or agent of Secured Party from and against any and all
costs, expenses (including reasonable attorneys’ fees), claims or liability
incurred by Secured Party or such person hereunder, unless such claim or
liability shall be due to willful misconduct or gross negligence on the part of
Secured Party or such person.  If an Event of Default does not then exist, any
delay in commencing or responding to such action or proceeding shall not
prejudice the rights of Secured Party or subject Secured Party to any increased
liability, and if Assignor or any of its affiliates is not a party to such
action or proceeding, Secured Party shall give Assignor notice of its intention
to commence, appear in or defend such action or proceeding and Assignor shall
have ten (10) days after such notice to propose to Secured Party the form and
nature of Secured Party’s representations in such action or proceeding, which
Secured Party may accept or reject in its sole and absolute discretion.  The
foregoing notice and Secured Party’s decision to accept or reject shall not
limit or prejudice Secured Party’s rights to payments or indemnification
provided in this Agreement.
 
 
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4.7           Further Assurances.  Assignor will execute and deliver to Secured
Party, at its request, any further instruments and will perform any and all acts
deemed reasonably necessary by Secured Party to carry into effect the terms,
conditions and provisions of this Agreement and the transactions connected
herewith.  In the event that the same be required in connection with this
transaction, or in connection with any sale made in the course of enforcement of
this Agreement, Assignor shall execute and deliver any and all instruments which
may be required by law or by the regulations or rules of any governmental agency
to effectuate this Agreement and to perfect the security interest granted herein
to Secured Party, as well as to effectuate the sale and transfer of the
Interests sold to the purchaser or purchasers at any sale made pursuant to, or
in enforcement or foreclosure of, this Agreement.  Should Assignor fail to
execute or deliver any such instruments or to perform any such acts, Assignor
hereby irrevocably authorizes and appoints Secured Party to execute and to
deliver such instruments and to perform such acts in the name of Assignor and on
its behalf as its attorney-in-fact.
 
4.8           Waiver of Jury Trial.  ASSIGNOR HEREBY KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY WAIVES ANY RIGHT THAT IT MAY HAVE TO A TRIAL BY JURY IN ANY
LITIGATION ARISING IN ANY WAY IN CONNECTION WITH THE LOAN, THIS AGREEMENT OR ANY
OF THE OTHER DOCUMENTS EVIDENCING OR SECURING THE LOAN OR ANY OTHER STATEMENTS
OR ACTIONS OF THE SECURED PARTY.  ASSIGNOR ACKNOWLEDGES THAT THIS WAIVER IS A
MATERIAL INDUCEMENT FOR THE SECURED PARTY TO MAKE THE LOAN.
 
4.9           Consent to Jurisdiction.  TO INDUCE THE SECURED PARTY TO MAKE THE
LOAN, THE ASSIGNOR IRREVOCABLY AGREES THAT, SUBJECT TO THE SECURED PARTY’S SOLE
AND ABSOLUTE ELECTION, ALL ACTIONS OR PROCEEDINGS IN ANY WAY ARISING OUT OF OR
RELATED TO THE LOAN WILL BE LITIGATED IN COURTS HAVING SITUS IN CHICAGO,
ILLINOIS.  THE COMPANY HEREBY CONSENTS AND SUBMITS TO THE JURISDICTION OF ANY
COURT LOCATED WITHIN CHICAGO, ILLINOIS, WAIVES PERSONAL SERVICE OF PROCESS UPON
THE COMPANY, AND AGREES THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY
REGISTERED MAIL OR EXPRESS COURIER SERVICE DIRECTED TO THE ASSIGNOR AT THE
ADDRESS STATED ON THE FIRST PAGE OF THE NOTE AND SERVICE SO MADE WILL BE DEEMED
TO BE COMPLETED UPON ACTUAL RECEIPT.
 
4.10           The Secured Party’s Duty of Care.  The Secured Party shall not be
liable for any acts, omissions, errors of judgment or mistakes of fact or law
including, without limitation, acts, omissions, errors or mistakes with respect
to the Interests, except for those arising out of or in connection with the
Secured Party’s gross negligence or willful misconduct.  Without limiting the
generality of the foregoing, the Secured Party shall be under no obligation to
take any steps necessary to preserve rights in the Interests against any other
parties but may do so at its option.  All expenses incurred in connection
therewith shall be for the sole account of Assignor, and shall constitute part
of the obligations secured hereby.
 
 
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4.11           Attorneys’ Fees.  In any action or proceeding brought to enforce
any provision of this Agreement, or to seek damages for a breach of any
provision hereof, or where any provision hereof is validly asserted as a
defense, the successful party shall be entitled to recover reasonable attorneys’
fees in addition to any other available remedy.

 
(SIGNATURES COMMENCE ON NEXT PAGE)
 
 
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IN WITNESS WHEREOF, Assignor has caused this Agreement to be executed by its
duly authorized representative as of the date first above written.
 
“ASSIGNOR”
       
ENER1, INC.
     
By:
         
Name:
         
Title:
       
“SECURED PARTY”
WANXIANG INTERNATIONAL
 
INVESTMENT CORPORATION
     
By:
         
Name:
         
Title:
   

 
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ACKNOWLEDGEMENT
 
The undersigned, ZHEJIANG WANXIANG ENER1 POWER SYSTEMS CO., LTD., hereby
executes this Agreement for the purpose of acknowledging its consent to and
agreement with the assignment of the Interests of the Assignor to Secured Party
and to the exercise of Secured Party’s rights and remedies under the Agreement
pursuant to the terms and provisions hereof.
 
ZHEJIANG WANXIANG ENER1 POWER
SYSTEMS CO., LTD.
 
By:
   
Name:
   
Title:
 

 
 
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