EXHIBIT
      4.23





**MEMORANDUM
      AGREEMENT**




This
      Memorandum Agreement made effective as of the 12 th day of
      October, 2006 between Ener1, Inc. (“Ener1”) and Ener1 Group, Inc.
      (“Group”).





WHEREAS,
      the Board of Directors of Group has elected Ajit Habbu as its Chief Financial
      Officer; and





WHEREAS,
      the Board of Directors of Ener1 has elected Ajit Habbu as its Chief Financial
      Officer; and




WHEREAS,
      the Ener1 Board’s decision to elect Mr. Habbu and set his annual salary at
      $325,000 was made with the understanding that Group would defray, in cash,
      $100,000 of such salary cost, along with any employment tax payments and tax
      or
      other payments required relative to the $400,000 portion and any additional
      amounts required to purchase health insurance and other employee benefits for
      Mr. Habbu, reflecting that Mr. Habbu will be performing services to Group as
      its
      Chief Financial Officer; and





WHEREAS,
      in return for such payments, Ener1 would allow Mr. Habbu to perform services
      for
      Group, subject to the terms hereof; and





WHEREAS,
      Group and Ener1 wish to memorialize and define the above understandings in
      this
      Agreement.





NOW,
      THEREFORE, in consideration of the premises and the mutual covenants and
      conditions herein, and for other good and valuable consideration, the receipt
      and sufficiency of which is hereby acknowledged, the parties hereto agree as
      follows:





1.  Group
      will wire to Ener1’s account, in time to be included in the ADP draft for
      payroll funding for Ener1 (generally, not less than two business days prior
      to
      each payroll date): (a) an amount sufficient to cover 31% ($100,000/$325,000)
      of
      the payroll, payroll taxes and other payments required for Mr. Habbu; (b)
      amounts sufficient to cover 31% of the payments required from Ener1 to cover
      Mr.
      Habbu’s health insurance and other employee benefits; and (c) an amount
      sufficient to cover all expenses incurred by Mr. Habbu on behalf of Group to
      the
      extent that such expenses are requested to be paid by Ener1; provided, with
      respect to (b) and (c), that Ener1 identifies to Group the exact amount of
      each
      such payment with itemized details in writing the day prior to the day such
      payment is required. The dollar amounts in (a) and (b) will be adjusted as
      necessary to reflect any increments in Mr. Habbu’s salary or benefits. In
      return, Ener1 will allow Mr. Habbu to perform services for Group, provided
      that
      the amount, type and timing of such services does not adversely affect Ener1.
      Group will use any such services at its own risk. Ener1 shall not be responsible
      for any failure by Mr. Habbu to perform any such services or for his failure
      to
      perform any such services timely or properly, nor for any results of such
      failure; and Group hereby releases Ener1 from any costs, expenses, claims,
      damages, suits or investigations (including, without limitation, attorneys
      fees,
      court costs and costs of investigation, or fines or penalties of any nature)
      (“Losses”), resulting from such failure or the services provided to Group or the
      results thereof. Likewise, Ener1 hereby releases Group from any Ener1 Losses
      resulting from Mr. Habbu providing services to Group, except to the extent
      such
      Losses result from Mr. Habbu’s negligence, willful misconduct, violation of law
      or breach of fiduciary duty.





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2.  In
      the
      event that Group fails to make any of the above-required payments on time,
      in
      addition to any other remedies available to Ener1 hereunder or at law or in
      equity, Group will indemnify and hold Ener1 and its subsidiaries, and the
      officers and directors of each of them, harmless, on a dollar-for-dollar basis,
      for any costs, expenses, claims, damages, suits or investigations (including,
      without limitation, attorneys fees, court costs and costs of investigation,
      or
      fines or penalties of any nature), resulting from such failure. In addition
      to
      such indemnification in the event of such payment failure, after notice and
      the
      opportunity to cure (such cure period to be five days), Ener1 may require Mr.
      Habbu to cease his services to Group. In addition, all such amounts that Group
      fails to pay to Ener1 shall be offset against any amount owed to Group by Ener1,
      first against intercompany advances that have not been documented into
      promissory notes, and any excess remaining after exhausting all such
      intercompany advances will be offset against such outstanding promissory notes
      outstanding from Ener1 to Group as Ener1 shall choose; and all such promissory
      notes outstanding shall be deemed modified hereby to so provide. If the amounts
      that Group fails to pay shall exceed the total of intercompany advances and
      promissory notes outstanding, Group shall execute a demand note payable to
      Ener1
      for such amounts and increase the principal of such note in the amount of any
      subsequent payment failures hereunder.





3.  Nothing
      in this Agreement shall eliminate or reduce the fiduciary and other
      responsibilities that Group and/or Mr. Habbu may have to Ener1.





4.  General
      Terms .




(a)  Notices .
      All
      notices, demands or other communications given under this Agreement shall be
      in
      writing and shall be mailed by first-class, registered or certified mail, return
      receipt requested, postage prepaid, or transmitted by hand delivery (including
      delivery by courier), telegram, telex, or facsimile transmission, addressed
      as
      follows:




If to ENER1:
              Ajit HabbuEner1, Inc.500 W. Cypress Creek Rd.,
                Suite 100Ft. Lauderdale, FL
                33309Facsimile:
                954-556-4031
  With a copy to:
                Ronald StewartEner1, Inc.500 W. Cypress Creek
                  Rd.,
                  Suite 100Ft. Lauderdale, FL
                  33309Facsimile:
                  954-776-3359
 2
  If to ENER1:
                  Mike ZoiEner1, Inc.500 W. Cypress Creek
                    Rd.,
                    Suite 100Ft. Lauderdale, FL
                    33309Facsimile:
                    954-556-4031
  With a copy to:
                Curtis WolfeEner1, Inc.500 W. Cypress Creek
                  Rd.,
                  Suite 100Ft. Lauderdale, FL
                  33309Facsimile:
                  954-229-7595






or
      to
      such other address which each Party may designate by notice in writing. Each
      such notice, demand or other communication which shall be mailed, delivered
      or
      transmitted in the manner described above shall be deemed given for all purposes
      at such time as it is delivered to the addressee (with the return receipt,
      the
      delivery receipt, the affidavit of messenger or (with respect to a telex) the
      answer back being deemed conclusive (but not exclusive) evidence of such
      delivery) or at such time as delivery is refused by the addressee upon
      presentation.




(b)  Governing
      Law .
      The
      construction and interpretation of this Agreement and the rights of the Parties
      shall be governed by the laws of the State of Florida, without regard to its
      conflicts of laws provisions. The state and federal courts located in Florida
      shall have exclusive jurisdiction over any dispute arising from or in connection
      with this Agreement not otherwise submitted to arbitration. Each Party hereby
      consents to the personal jurisdiction of the state and federal courts in Florida
      in any such dispute arising from or relating to this Agreement. Each Party
      further agrees that services of process may be made, in addition to any other
      method permitted by law, by certified mail, return receipt requested, sent
      to
      the applicable address set forth herein. Any award or injunctive relief granted
      in any dispute may be enforced by either Party in either the courts of the
      State
      of Florida or in the United States District Courts located in Broward County,
      Florida. The Parties hereby expressly waive their rights to trial by
      jury.




(c)  Assignment .
      This
      Agreement shall be binding upon and shall inure to the benefit of the Parties
      hereto and their respective successors and assigns as permitted hereunder.
      No
      person or entity other than the Parties hereto is or shall be entitled to bring
      any action to enforce any provision of this Agreement against any of the Parties
      hereto, and the covenants and agreements set forth in this Agreement shall
      be
      solely for the benefit of, and shall be enforceable only by, the Parties hereto
      or their respective successors and assigns as permitted hereunder.





(d)  Entire
      Agreement; Amendment .
      This
      Agreement constitutes the entire agreement between the Parties with respect
      to
      the subject matter hereof and supersedes all other prior agreements and
      understandings, both written and oral, between the Parties with respect to
      such
      matters. No amendment to this Agreement shall be made except by an instrument
      in
      writing signed on behalf each Party.




(e)  Severability .
      If any
      court or arbiter of applicable jurisdiction determines that any of the
      agreements, covenants and undertakings set forth herein, or any part thereof,
      is
      invalid or unenforceable, the provision shall, to the extent possible, be
      restated to reflect the original intention of the Parties, and the remainder
      of
      this Agreement shall be given full effect, without regard to the invalid or
      restated portions.




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(f)  Waiver .
      The
      failure of either Party to assert a right hereunder or to insist upon compliance
      with any term or condition of this Agreement shall not constitute a waiver
      of
      that right or excuse a similar subsequent failure to perform any such term
      or
      condition by the other Party.





(g)  Counterparts .
      This
      Agreement may be executed in two or more counterparts, each of which shall
      be
      deemed to be an original, but all of which together shall constitute one and
      the
      same agreement.




(h)  Compliance
      with Laws .
      In
      performing under this Agreement, both Parties agree to comply with all
      applicable laws, rules, and regulations of any governmental entity.




(i)  Term .
      This
      Agreement shall remain in force until Mr. Habbu is no longer employed by Ener1
      and all Group obligations to Ener1 hereunder have been paid in
      full.




WHEREFORE,
      the parties hereto have caused their duly authorized officers to execute this
      Agreement on their behalf, effective as of the date first written
      above.









ENER1,
      INC.       ENER1
      GROUP, INC.




By:  _/s/
      Ronald Stewart_______    By:  _/s/
      Curtis Wolfe______




Name:  Ronald
      Stewart     Name:  Curtis
      Wolfe




Title:  General
      Counsel, Secretary    Title:  General
      Counsel






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