Execution Version
 
THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES
ACT”), OR ANY STATE SECURITIES LAW, AND MAY NOT BE OFFERED FOR SALE, SOLD OR
TRANSFERRED UNLESS A REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS SHALL BE EFFECTIVE WITH RESPECT THERETO, OR AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS IS
AVAILABLE IN CONNECTION WITH SUCH OFFER, SALE OR TRANSFER.
 
CLASS E WARRANT
 
TO PURCHASE COMMON STOCK

OF

ENER1, INC.
 
Issue Date:  June 29, 2011

This Class E Warrant (this “Warrant”) entitles BZINFIN, a British Virgin Islands
company, or any subsequent holder hereof (the “Holder”), to purchase from ENER1,
INC., a Florida corporation (the “Company”), up to Two Million Six Hundred
Seventy Eight Thousand Five Hundred Seventy One (2,678,571) fully paid and
nonassessable shares (the “Warrant Shares”) of the Company’s common stock, par
value $0.01 per share (the “Common Stock”), at a price per share equal to $1.40
(the “Exercise Price”), on the terms and subject to the conditions set forth
herein. This Warrant is issued pursuant to the terms of a  Line of Credit
Agreement, dated as of June 29, 2011 (the “Credit Agreement”) by and between the
Company and the initial Holder, and the date of initial issuance of this Warrant
is referred to herein as the “Issue Date”. Capitalized terms used herein and not
otherwise defined have the meanings set forth in the Credit Agreement.
 
 
 

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1. 
Exercise.

 
(a)          Right to Exercise; Exercise Price.  The Holder shall have the right
to exercise this Warrant at any time and from time to time during the period
beginning on the date that is six (6) months from the Issue Date (the
“Commencement Date”) and ending on the fourth (4th) anniversary of the
Commencement Date (the “Expiration Date”); provided, however, in the event this
Warrant on the Issue Date is subject to the approval of the Company’s
shareholders by reason of any federal or state law or regulation or the rules of
the Principal Market as of the Issue Date, the Commencement Date shall be
automatically deferred unless and until such stockholder approval is obtained
and upon obtaining such stockholder approval, the Commencement Date shall
automatically commence on the date of such shareholder approval even if such
date is prior to the six-month anniversary of the Issue Date (it being
understood and agreed that the Company shall forthwith give written notice to
the Holder of any such deferral and commencement in accordance with Section 11
hereof); and further provided, however, that if the Expiration Date occurs on a
date that is not a Business Day, the immediately following Business Day shall be
deemed to be the Expiration Date. Notwithstanding anything to the contrary set
forth herein,  the Holder may not exercise this Warrant and the Company shall
not be required to comply with any Exercise Notice unless and until the Holder
and the Company, as applicable, shall have obtained any applicable Regulatory
Approvals for issuance of the Warrant Shares.  The Company agrees to use
reasonable best efforts to assist the Holder in seeking such Regulatory
Approvals.  The Holder may pay the Exercise Price in either of the following
forms or, at the election of the Holder, a combination thereof:

(i)           through a cash exercise (a “Cash Exercise”) by delivering
immediately available funds, or

(ii)          through a cashless exercise (a “Cashless Exercise”) by noting on
the Exercise Notice that the Holder wishes to effect a Cashless Exercise, in
which case the Company shall issue to the Holder a number of Warrant Shares
determined as follows:

X = Y x (A-B)/A

 
where:
X = the number of Warrant Shares to be issued to the Holder;

 
Y = the number of Warrant Shares with respect to which this Warrant is being
exercised;

 
A = the Market Price (as defined below) as of the Exercise Date; and

 
B = the Exercise Price.

For purposes of Rule 144, it is intended and acknowledged that the Warrant
Shares issued in a Cashless Exercise transaction shall be deemed to have been
acquired by the Holder, and the holding period for the Warrant Shares required
by Rule 144 shall be deemed to have been commenced, on the Issue Date. “Market
Price” means, as of any date, the arithmetical average of daily VWAP during the
ten (10) trading days immediately preceding (but not including) such date, and
“VWAP” means the volume weighted average price of the Common Stock on the
Principal Market as reported by Bloomberg Financial Markets or by a comparable
reporting service
 
 
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(b)           Exercise Notice.  In order to exercise this Warrant, the Holder
shall send to the Company by facsimile transmission, at any time prior to 6:00
p.m., eastern time, on the Business Day on which the Holder wishes to effect
such exercise (the “Exercise Date”), (i) a notice of exercise in substantially
the form attached hereto as Exhibit A (the “Exercise Notice”), (ii) a copy of
the original Warrant, and (iii) in the case of a Cash Exercise, the Exercise
Price by wire transfer of immediately available funds.  The Exercise Notice
shall state the name or names in which the shares of Common Stock that are
issuable on such exercise shall be issued.  In the case of a dispute between the
Company and the Holder as to the calculation of the Exercise Price or the number
of Warrant Shares issuable hereunder (including, without limitation, the
calculation of any adjustment to the Exercise Price or the Warrant Shares
pursuant to Section 5 below), the Company shall issue to the Holder the number
of Warrant Shares that are not disputed within the time periods specified in
Section 2 below and shall submit the disputed calculations to a certified public
accounting firm of national reputation (other than the Company’s regularly
retained accountants) within two (2) Business Days following the date on which
the Holder’s Exercise Notice is delivered to the Company.  The Company shall
cause such accountant to calculate the Exercise Price and/or the number of
Warrant Shares issuable hereunder and to notify the Company and the Holder of
the results in writing no later than three (3) Business Days following the day
on which such accountant received the disputed calculations (the “Dispute
Procedure”). Such accountant’s calculation shall be deemed conclusive absent
manifest error.  The fees of any such accountant shall be borne by the party
whose calculations were most at variance with those of such accountant.

(c)           Holder of Record.  The Holder shall, for all purposes, be deemed
to have become the holder of record of the Warrant Shares specified in an
Exercise Notice on the Exercise Date specified therein, irrespective of the date
of delivery of such Warrant Shares subject, in the case of a Cash Exercise, to
payment of the Exercise Price.  Except as specifically provided herein, nothing
in this Warrant shall be construed as conferring upon the Holder hereof any
rights as a shareholder of the Company prior to the Exercise Date.

(d)           Cancellation of Warrant.  This Warrant shall be canceled upon its
exercise in full and, if this Warrant is exercised in part, the Company shall,
at the time that it delivers Warrant Shares to the Holder pursuant to such
exercise as provided herein, issue a new warrant, and deliver to the Holder a
certificate representing such new warrant, with terms identical in all respects
to this Warrant (except that such new warrant shall be exercisable into the
number of shares of Common Stock with respect to which this Warrant shall remain
unexercised); provided, however, that the Holder shall be entitled to exercise
all or any portion of such new warrant at any time following the time at which
this Warrant is exercised, regardless of whether the Company has actually issued
such new warrant or delivered to the Holder a certificate therefor.

2.           Delivery of Warrant Shares Upon Exercise.  Upon receipt of a fax
copy of an Exercise Notice pursuant to Section 1 above, the Company shall, no
later than the close of business on the third (3rd) Business Day following the
later to occur of (i) the Exercise Date specified in such Exercise Notice and
(ii) such later date on which the Company has received payment of the Exercise
Price (such later date being referred to as a “Delivery Date”), issue and
deliver or caused to be delivered to the Holder the number of Warrant Shares
determined as provided herein.  The Company shall effect delivery of Warrant
Shares to the Holder, as long as the Company’s designated transfer agent (the
“Transfer Agent”) participates in the Depository Trust Company (“DTC”) Fast
Automated Securities Transfer Program (“FAST”) and no restrictive legend is
required pursuant to the terms of this Warrant or the Credit Agreement, by
crediting the account of the Holder or its nominee at DTC (as specified in the
applicable Exercise Notice) with the number of Warrant Shares required to be
delivered, no later than the close of business on such Delivery Date.  In the
event that the Transfer Agent is not a participant in FAST or if the Holder so
specifies in a Exercise Notice or otherwise in writing on or before the Exercise
Date, the Company shall effect delivery of Warrant Shares by delivering to the
Holder or its nominee physical certificates representing such Warrant Shares, no
later than the close of business on such Delivery Date.  The Company shall at
all times reserve and keep available out of its authorized and unissued Common
Stock, solely for the purpose of providing for exercise of this Warrant, such
number of shares of Common Stock as shall, from time to time, be sufficient
therefor.  Warrant Shares delivered to the Holder shall not contain any
restrictive legend unless such legend is required pursuant to the terms of the
Credit Agreement.
 
 
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3.           [Intentionally Omitted]
 
4.           [Intentionally Omitted]

5.           Anti-Dilution Adjustments; Distributions; Other Events. The
Exercise Price and the number of Warrant Shares issuable hereunder shall be
subject to adjustment from time to time as provided in this Section 5.  In the
event that any adjustment of the Exercise Price required herein results in a
fraction of a cent, the Exercise Price shall be rounded up or down to the
nearest one hundredth of a cent.

(a)          Subdivision or Combination of Common Stock.  If the Company, at any
time after the Issue Date, subdivides (by any stock split, stock dividend,
recapitalization, reorganization, reclassification or otherwise) the outstanding
shares of Common Stock into a greater number of shares, then effective upon the
close of business on the record date for effecting such subdivision, the
Exercise Price in effect immediately prior to such subdivision will be
proportionately reduced and the number of Warrant Shares issuable hereunder
proportionately increased.  If the Company, at any time after the Issue Date,
combines (by reverse stock split, recapitalization, reorganization,
reclassification or otherwise) the outstanding shares of Common Stock into a
smaller number of shares, then, effective upon the close of business on the
record date for effecting such combination, the Exercise Price in effect
immediately prior to such combination will be proportionally increased and the
number of Warrant Shares issuable hereunder proportionately reduced.

(b)          Distributions.  If, at any time after the Issue Date, the Company
declares or makes any distribution of cash or any other assets (or rights to
acquire such assets) to holders of Common Stock, as a partial liquidating
dividend or otherwise, including without limitation any dividend or distribution
to the Company’s shareholders in shares (or rights to acquire shares) of capital
stock of a subsidiary) (a “Distribution”), the Company shall deliver written
notice of such Distribution (a “Distribution Notice”) to the Holder at least
thirty (30) days prior to the earlier to occur of (i) the record date for
determining shareholders entitled to such Distribution (the “Record Date”) and
(ii) the date on which such Distribution is made (the “Distribution Date”) (the
earlier of such dates being referred to as the “Determination Date”).  In the
Distribution Notice to the Holder, the Company shall indicate whether the
Company has elected (A) to deliver to the Holder, upon any exercise of this
Warrant after the Determination Date, the same amount and type of assets being
distributed in such Distribution as though the Holder were, on the Determination
Date, a holder of a number of shares of Common Stock into which this Warrant is
exercisable as of such Determination Date (such number of shares to be
determined at the Exercise Price then in effect and without giving effect to any
limitations on such exercise) or (B) upon any exercise of this Warrant on or
after the Determination Date, to reduce the Exercise Price applicable to such
exercise by reducing the Exercise Price in effect on the Business Day
immediately preceding the Record Date by an amount equal to the fair market
value of the assets to be distributed divided by the number of shares of Common
Stock as to which such Distribution is to be made, such fair market value to be
reasonably determined in good faith by the Company’s Board of Directors.  If the
Company does not notify the Holder of its election pursuant to the preceding
sentence on or prior to the Determination Date, the Company shall be deemed to
have elected clause (A) of the preceding sentence.
 
 
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(c)          Adjustments; Additional Shares, Securities or Assets.  In the event
that at any time, as a result of an adjustment made pursuant to this Section 5,
the Holder of this Warrant shall, upon exercise of this Warrant, become entitled
to receive securities or assets (other than Common Stock) then, wherever
appropriate, all references herein to shares of Common Stock shall be deemed to
refer to and include such shares and/or other securities or assets; and
thereafter the number of such shares and/or other securities or assets shall be
subject to adjustment from time to time in a manner and upon terms as nearly
equivalent as practicable to the provisions of this Section 5.

 
7. 
Fractional Interests.

No fractional shares or scrip representing fractional shares shall be issuable
upon the exercise of this Warrant, but instead shall be rounded up or down to
the nearest whole share amount.

 
8. 
Transfer of this Warrant.

From and after the Commencement Date, the Holder may sell, transfer, assign,
pledge or otherwise dispose of this Warrant, in whole or in part, as long as
such sale or other disposition is made pursuant to an effective registration
statement or an exemption from the registration requirements of the Securities
Act.  Upon such transfer or other disposition (other than a pledge), the Holder
shall deliver this Warrant to the Company together with a written notice to the
Company, substantially in the form of the Transfer Notice attached hereto as
Exhibit B (the “Transfer Notice”), indicating the person or persons to whom this
Warrant shall be transferred and, if less than all of this Warrant is
transferred, the number of Warrant Shares to be covered by the part of this
Warrant to be transferred to each such person. Within three (3) Business Days of
receiving a Transfer Notice and the original of this Warrant, the Company shall
deliver to the each transferee designated by the Holder a Warrant or Warrants of
like tenor and terms for the appropriate number of Warrant Shares and, if less
than all this Warrant is transferred, shall deliver to the Holder a Warrant for
the remaining number of Warrant Shares.
 
 
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9. 
Benefits of this Warrant.

This Warrant shall be for the sole and exclusive benefit of the Holder of this
Warrant and nothing in this Warrant shall be construed to confer upon any person
other than the Holder of this Warrant any legal or equitable right, remedy or
claim hereunder.

 
10. 
Loss, theft, destruction or mutilation  of Warrant.

Upon receipt by the Company of evidence of the loss, theft, destruction or
mutilation of this Warrant, and (in the case of loss, theft or destruction) of
indemnity reasonably satisfactory to the Company, and upon surrender of this
Warrant, if mutilated, the Company shall execute and deliver a new Warrant of
like tenor and date.

 
11. 
Notice or Demands.

 
Any notice, demand or request required or permitted to be given by the Company
or the Holder pursuant to the terms of this Warrant 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 Company:

Ener1, Inc.
1540 Broadway, Suite 40D
New York, NY 10036
Attn:        Chief Financial Officer
Tel:          212-920-3500
Fax:         212-920-3510

and if to the Holder, to such address for such party as shall appear on the
records of the Company. Any party may change its address for notice by sending
notice in accordance with this Section 11.
 
 
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12. 
Applicable Law.

This Warrant is issued under and shall for all purposes be governed by and
construed in accordance with the laws of the State of New York applicable to
contracts made and to be performed entirely within the State of New York. Each
party hereby irrevocably submits to the exclusive jurisdiction of the state and
federal courts sitting in the City and County of New York for the adjudication
of any dispute hereunder or in connection herewith or with any transaction
contemplated hereby, 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.  Each party 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 such party at the address in effect for
notices to it under this Warrant 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.

 
13. 
Amendments.

No amendment, modification or other change to, or waiver of any provision of,
this Warrant may be made unless such amendment, modification, change or waiver
is set forth in writing and is signed by the Company and the Holder.

 
14.
           Entire Agreement.

 
This Warrant constitutes the entire agreement among the parties hereto with
respect to the subject matter hereof.  There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein and
therein.  This Warrant supersedes all prior agreements and understandings among
the parties hereto with respect to the subject matter hereof.
 

 
15.
           Headings.

 
The headings in this Agreement are for convenience of reference only and shall
not limit or otherwise affect the meaning hereof.

[Signature Page Follows]

 
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IN WITNESS WHEREOF, the Company has duly executed and delivered this Warrant as
of the Issue Date.

 
ENER1, INC.
       
By:
     
Name:
   
Title:

 
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Execution Version
 
EXHIBIT A to WARRANT
 
EXERCISE NOTICE

The undersigned Holder hereby irrevocably exercises the right to purchase
__________ shares of Common Stock (“Warrant Shares”) of Ener1, Inc. (the
“Company”) evidenced by the attached Class E Warrant (the
“Warrant”).  Capitalized terms used herein and not otherwise defined shall have
the respective meanings set forth in the Warrant.

1.           Form of Exercise Price.  The Holder intends that payment of the
Exercise Price shall be made as:

______ a Cash Exercise with respect to _________________ Warrant Shares; and/or

______ a Cashless Exercise with respect to _________________ Warrant Shares, as
permitted by Section 1(a) of the attached Warrant.

2.           Payment of Exercise Price.  In the event that the Holder has
elected a Cash Exercise with respect to some or all of the Warrant Shares to be
issued pursuant hereto, the Holder shall pay the sum of $________________ to the
Company in accordance with the terms of the Warrant.

Date:
       
Name of Registered Holder
   
By:
   
Name:
 
Title:

 
 

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EXHIBIT B to WARRANT
 
TRANSFER NOTICE

FOR VALUE RECEIVED, the undersigned Holder of the attached Class E Warrant
hereby sells, assigns and transfers unto the person or persons named below the
right to purchase __________shares of the Common Stock of _____________________
evidenced by the attached Class E Warrant.

Date:
        Name of Registered Holder    
By:
   
Name:
 
Title:
   
Transferee Name and Address:
             

 
 

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