EX-10.03






Exhibit 10.03




Execution Copy




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 AND THE HOLDER DELIVERS TO THE ISSUER AN OPINION OF
COUNSEL IN A FORM REASONABLY SATISFACTORY TO THE ISSUER THAT REGISTRATION IS NOT REQUIRED UNDER THE
SECURITIES ACT OR SUCH OFFER, SALE OR TRANSFER IS MADE PURSUANT TO RULE 144 UNDER THE SECURITIES
ACT. SUBJECT TO COMPLIANCE WITH THE REQUIREMENTS OF THE SECURITIES ACT AND APPLICABLE STATE
SECURITIES LAWS, THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT MAY BE
PLEDGED OR HYPOTHECATED IN CONNECTION WITH A BONA FIDE MARGIN LOAN OR EXTENSION OF CREDIT SECURED
BY THIS WARRANT OR ANY OF THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT WITHOUT REQUIRING
THE CONSENT OF THE ISSUER OR THE DELIVERY OF ANY SUCH OPINION.



WARRANT 




TO PURCHASE COMMON STOCK 




OF




ENER1, INC.




Issue Date: January 5, 2007 Warrant No. 1



THIS CERTIFIES that CREDIT SUISSE SECURITIES (USA), LLC or any subsequent holder hereof (the
“Holder”), has the right to purchase from ENER1, INC., a Florida corporation (the “Company”), up to
five million (5,000,000) fully paid and nonassessable shares of the Company’s common stock, par
value $0.01 per share (the “Common Stock”), subject to adjustment as provided herein, at a price
per share equal to the Exercise Price (as defined below), beginning on the date on which this
Warrant is issued (the “Issue Date”) and ending at 5:00 p.m., New York time, on the fifth
(5th) anniversary of the Issue Date (the “Expiration Date”). This Warrant is issued
pursuant to a Purchase Agreement, dated as of January 5, 2007 (the “Purchase Agreement”).
Capitalized terms used herein and not otherwise defined shall have the respective meanings set
forth in the Purchase Agreement.



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 as to all or any part of the shares of Common Stock
issuable hereunder (the “Warrant Shares”). The “Exercise Price” for each Warrant Share purchased
by the Holder upon the exercise of this Warrant shall be equal to $0.30, subject to adjustment for
the events specified in Section 5 below. 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) if, at any time following the Registration Deadline (as defined in the
Registration Rights Agreement), an effective Registration Statement is not available for the
resale of all of the Warrant Shares issuable hereunder at the time an Exercise Notice is
delivered to the Company, through a cashless exercise (a “Cashless Exercise”). The Holder
may effect a Cashless Exercise by surrendering this Warrant to the Company and noting on the
Exercise Notice that the Holder wishes to effect a Cashless Exercise, upon which the Company
shall issue to the Holder the 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 Trading Price (as defined in the Registration Rights
Agreement) 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.



(b) Exercise Notice. In order to exercise this Warrant, the Holder shall (i) send by
facsimile transmission, at any time prior to 5:00 p.m., New York time, on the Business Day on which
the Holder wishes to effect such exercise (the “Exercise Date”), to the Company an executed copy of
the notice of exercise in the form attached hereto as Exhibit A (the “Exercise Notice”), (ii)
deliver the original Warrant and (iii) in the case of a Cash Exercise, pay the Exercise Price to
the Company by wire transfer in immediately available funds. The Exercise Notice shall also state
the name or names (with address) in which the shares of Common Stock that are issuable on such
exercise shall be issued. If shares are to be issued in the name of a person other than the
Holder, the Holder will pay all transfer taxes payable with respect thereto.



(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 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,
including, without limitation, the right to vote, the right to receive dividends or other
distributions made to shareholders of the Company, and the right to exercise preemptive rights,
prior to the Exercise Date.



(d) Cancellation of Warrant. This Warrant shall be canceled upon its exercise 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 an Exercise Notice
pursuant to Section 1, the Company shall, no later than the close of business on the later to occur
of (i) the third (3rd) Business Day following the Exercise Date set forth in such Exercise Notice
and (ii) the date on which the Company has received payment of the Exercise Price and the taxes
specified in Section 1(b), if any, are paid in full (a “Delivery Date”), issue and deliver or cause
to be delivered to the Holder the number of Warrant Shares as shall be determined as provided
herein. The Company shall effect delivery of Warrant Shares to the Holder by, as long as the
Transfer Agent participates in the Depository Trust Company (“DTC”) Fast Automated Securities
Transfer program (“FAST”), 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 Warrant Shares are not otherwise eligible for delivery through
FAST, or if the Holder so specifies in an 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.



3. Failure to Deliver Warrant Shares.



(a) In the event that the Company fails for any reason (other than as a result of the Holder’s
failure to deliver the original Warrant to the Company or to pay the aggregate Exercise Price for
the Warrant Shares being purchased) to deliver to the Holder the number of Warrant Shares specified
in the applicable Exercise Notice on or before the Delivery Date therefor (an “Exercise Default”),
and such default continues for five (5) Business Days following delivery of a written notice of
such default by the Holder to the Company, the Company shall pay to the Holder payments (“Exercise
Default Payments”) in the amount of (i) (N/365) multiplied by (ii) the aggregate Exercise
Price of the Warrant Shares which are the subject of such Exercise Default multiplied by
(iii) the lower of fifteen percent (15%) and the maximum rate permitted by applicable law (the
“Default Interest Rate”), where “N” equals the number of days elapsed between the original Delivery
Date of such Warrant Shares and the date on which all of such Warrant Shares are issued and
delivered to the Holder. Cash amounts payable hereunder shall be paid on or before the fifth (5th)
Business Day of each calendar month following the calendar month in which such amount has accrued.



(b) The Holder’s rights and remedies hereunder are cumulative, and no right or remedy is
exclusive of any other. In addition to the amounts specified herein, the Holder shall have the
right to pursue all other remedies available to it at law or in equity (including, without
limitation, a decree of specific performance and/or injunctive relief). Nothing herein shall limit
the Holder’s right to pursue actual damages for the Company’s failure to issue and deliver Warrant
Shares on the applicable Delivery Date (including, without limitation, damages relating to any
purchase of Common Stock by the Holder to make delivery on a sale effected in anticipation of
receiving Warrant Shares upon exercise, such damages to be in an amount equal to (A) the aggregate
amount paid by the Holder for the Common Stock so purchased minus (B) the aggregate amount
of net proceeds, if any, received by the Holder from the sale of the Warrant Shares issued by the
Company pursuant to such exercise).



4. Exercise Limitations. In no event shall the Holder be permitted to exercise this
Warrant, or part thereof, if, upon such exercise, the number of shares of Common Stock beneficially
owned by the Holder (other than shares which would otherwise be deemed beneficially owned except
for being subject to a limitation on conversion or exercise analogous to the limitation contained
in this Section 4, would exceed 4.99% of the number of shares of Common Stock then issued and
outstanding. As used herein, beneficial ownership shall be determined in accordance with Section
13(d) of the Securities Exchange Act of 1934, as amended, and the rules thereunder. To the extent
that the limitation contained in this Section 4 applies, the submission of an Exercise Notice by
the Holder shall be deemed to be the Holder’s representation that this Warrant is exercisable
pursuant to the terms hereof and the Company shall be entitled to rely on such representation
without making any further inquiry as to whether this Section 4 applies. The Company shall have no
liability to any person if the Holder’s determination of whether this Warrant is convertible
pursuant to the terms hereof is incorrect. Nothing contained herein shall be deemed to restrict
the right of a Holder to exercise this Warrant, or part thereof, at such time as such exercise will
not violate the provisions of this Section 4. This Section 4 may not be amended unless such
amendment is agreed to in writing by the Holder and approved by the holders of a majority of the
Common Stock then outstanding; provided, however, that the Holder shall have the
right to waive the provisions of this Section 4 upon prior written notice to the Company following
the announcement of a Major Transaction (as defined below), or otherwise upon sixty (60) days’
prior written notice to the Company.



5. Adjustments to Exercise Price; Distributions; Repurchase Right.



(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) its shares of Common Stock into a greater number of shares, then
after the date of record for effecting such subdivision, the Exercise Price in effect immediately
prior to such subdivision will be proportionately reduced. If the Company, at any time after the
Issue Date, combines (by reverse stock split, recapitalization, reorganization, reclassification or
otherwise) its shares of Common Stock into a smaller number of shares, then, after the date of
record for effecting such combination, the Exercise Price in effect immediately prior to such
combination will be proportionally increased. Any adjustment made pursuant to this Section 5(a)
that results in a decrease or increase in the Exercise Price shall also effect a proportional
increase or decrease, as the case may be, in the number of shares of Common Stock into which this
Warrant is exercisable.



(b) Distributions. If the Company shall declare or make any distribution of its
assets (or rights to acquire its assets) to holders of Common Stock as a partial liquidating
dividend or otherwise (including any dividend or distribution to the Company’s stockholders in cash
or 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 fifteen (15) Business Days prior to the earlier to occur of (i) the record date for
determining stockholders entitled to such Distribution (the “Record Date”) and (ii) the date on
which such Distribution is made (the “Distribution Date”). The Holder shall be entitled, at its
option (to be exercised by written notice delivered to the Company on or before the fifteenth
(15th) Business Day following the date on which a Distribution Notice is delivered to
the Holder), either (A) upon any exercise of this Warrant on or after the Record Date, to be
entitled to receive, on the Distribution Date (for any exercise effected prior to the Distribution
Date) or the applicable Delivery Date (for any exercise effected after the Distribution Date), the
amount of such assets which would have been payable to the holder with respect to the shares of
Common Stock issuable upon such exercise (without giving effect to any limitations on such exercise
contained in this Warrant or the Purchase Agreement) had the Holder been the holder of such shares
of Common Stock on the Record Date or (B) upon any exercise of this Warrant on or after the
Distribution 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 independent members of the Company’s Board of Directors.
Notwithstanding anything herein to the contrary, if the Holder does not notify the Company of
whether the Holder has elected clause (A) or (B) in the preceding sentence by the date that is
fifteen (15) Business Days after the date on which the Company delivers a Distribution Notice to
the Holder, the Company shall have the right, exercisable upon written notice to the Holder, to
determine whether clause (A) or (B) shall be applicable to exercises of this Warrant effected on or
after the Distribution Date.



(c) Repurchase Right. If the Holder exercises its Repurchase Right under the Purchase
Agreement, then, effective concurrently with such exercise and without any further action by or
consideration from the Company or the Holder, the total number of shares of Common Stock for which
this Warrant is then exercisable shall be reduced by fifty percent (50%).



6. Major Transactions. In the event of a merger, consolidation, business combination,
tender offer, exchange of shares, recapitalization, reorganization, redemption or other similar
event, as a result of which shares of Common Stock shall be changed into the same or a different
number of shares of the same or another class or classes of stock or securities or other assets of
the Company or another entity or the Company shall sell all or substantially all of its assets
(each of the foregoing being a “Major Transaction”), the Company will give the Holder at least ten
(10) Trading Days’ written notice prior to the earlier of (I) the closing or effectiveness of such
Major Transaction and (II) the record date for the receipt of such shares of stock or securities or
other assets, and the Holder shall be permitted to exercise this Warrant in whole or in part at any
time prior to the record date for the receipt of such consideration and shall be entitled to
receive, for each share of Common Stock issuable to the Holder upon such exercise, the same per
share consideration payable to the other holders of Common Stock in connection with such Major
Transaction. If and to the extent that the Holder retains this Warrant or any portion hereof
following such record date, the Company will cause the surviving or, in the event of a sale of
assets, purchasing entity, as a condition precedent to such Major Transaction, to assume the
obligations of the Company with respect to this Warrant, with such adjustments to the Exercise
Price and the securities covered hereby as may be necessary in order to preserve the economic
benefits of this Warrant to the Holder.



7. Fractional Interests. No fractional shares or scrip representing fractional shares
shall be issuable upon the exercise of this Warrant. If, on exercise of this Warrant, the Holder
hereof would be entitled to a fractional share of Common Stock or a right to acquire a fractional
share of Common Stock, the Company shall, in lieu of issuing any such fractional share, pay to the
Holder an amount in cash equal to the product resulting from multiplying such fraction by the
Trading Price as of the Exercise Date.



8. Transfer of this Warrant. 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, and applicable state securities laws, and is otherwise made in
accordance with the applicable provisions of the Purchase Agreement. Upon such transfer or other
disposition, 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 (a
“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 ten (10) 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.



9. Benefits of this Warrant; Headings. 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. The headings used in this Warrant are for convenience of reference only and
shall not limit or otherwise affect the meaning hereof.



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 in replacement for the lost, stolen, destroyed or mutilated Warrant.



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 or the Issuer:



	 	 	 
	Ener1 Group, Inc.

712 Fifth Avenue, Suite 9A

New York, New York 10019

	 	





	 
	 	 
	Attention: Charles Gassenheimer

	 
	 	 
	Tel:

Fax:

	 	(212) 920-3500

(212) 920-3510






and if to the Holder, to such address as shall be designated by the Holder in writing to the
Company.




	 	12.	 	Taxes.





(a) The issue of stock certificates on exercises of this Warrant shall be made without charge
to the exercising Holder for any tax in respect of the issue thereof. The Company shall not,
however, be required to pay any tax which may be payable in respect of any transfer involved in the
issue and delivery of stock in any name other than that of the Holder of any Warrant exercised, and
the Company shall not be required to issue or deliver any such stock certificate unless and until
the person or persons requesting the issue thereof shall have paid to the Company the amount of
such tax or shall have established to the reasonable satisfaction of the Company that such tax has
been paid.



(b) Notwithstanding any other provision of this Warrant or any other Transaction Document, for
income tax purposes, any assignee or transferee shall agree that the Company and the Transfer Agent
shall be permitted to withhold from any amounts payable to such assignee or transferee any taxes
required by law to be withheld from such amounts. Unless exempt from the obligation to do so, each
assignee or transferee shall, upon request, execute and deliver to the Company or the Transfer
Agent, as applicable, a properly completed Form W-8 or W-9, indicating that such assignee or
transferee is not subject to back-up withholding for United States Federal income tax purposes.



13. Governing Law. This Warrant shall be governed by and construed under the laws of
the State of New York applicable to contracts made and to be performed entirely within the State of
New York. The Company hereby irrevocably submits to the non-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. The Company 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 it 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.



14. Amendments. Except as expressly provided herein, neither this Warrant nor any term
hereof may be amended except pursuant to a written instrument executed by the Company and the
Holder, and no provision hereof may be waived other than by a written instrument signed by the
party against whom enforcement of any such waiver is sought. Any waiver or consent shall be
effective only in the specific instance and for the specific purpose for which given.



15. Successors and Assigns. This Warrant shall be binding upon the successors and
permitted assigns of the parties. The Company may not assign its rights or obligations under this
Agreement without the prior written consent of the Holder, which consent shall not be unreasonably
withheld.



[Signature Page to Follow]






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




ENER1, INC.



By:      

Charles Gassenheimer

Vice Chairman




2



EXHIBIT A to WARRANT




EXERCISE NOTICE




The undersigned Holder hereby irrevocably exercises the right to purchase 
 of the shares of Common Stock (“Warrant Shares”) of ENER1, INC. evidenced by the
attached 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.



By tendering this Exercise Notice, the Holder represents to the Company that it is an
“accredited investor” as that term is defined in Rule 501 of Regulation D under the Securities Act,
and that it is acquiring the Warrants Shares solely for its own account, and not with a present
view to the public resale or distribution of all or any part thereof.



Date:      



     



Name of Registered Holder



By:      

Name:

Title:



EXHIBIT B to WARRANT




TRANSFER NOTICE




FOR VALUE RECEIVED, the undersigned Holder of the attached Warrant hereby sells, assigns and
transfers unto the person or persons named below the right to purchase  shares of
the Common Stock of ENER1, INC. evidenced by the attached Warrant.



Date:      



     



Name of Registered Holder



By:      

Name:

Title:




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