Exhibit 10.3






SUBSIDIARY GUARANTY 



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



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



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



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



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




1.    DEFINITIONS. 


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



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



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




2.    GUARANTY. 



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



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




3.    SUBORDINATION. 



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



     4.   
          AMENDMENT OF TRANSACTION DOCUMENTS; RELEASE OF COLLATERAL. 



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



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



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



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



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



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



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



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



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



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



     5.   
          OBLIGATIONS OF GUARANTOR. 



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



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



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



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



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



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



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



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



     6.   
          REPRESENTATIONS AND WARRANTIES. 



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



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



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



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



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



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



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




7.    MISCELLANEOUS. 



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



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



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



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



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



	 	If to the Corporation:



Ener1, Inc.

550 Cypress Creek Road

Suite 120

Fort Lauderdale, Florida 33309

Attn:    Kevin P. Fitzgerald

Tel:     954-202-4442

Fax:     954-202-2884



with a copy to:



Gibson, Dunn & Crutcher LLP

1050 Connecticut Avenue N.W.

Washington, DC 20036

Attn:    Stephen I. Glover

Tel:     202 955-8500

Fax:     202 467-0539







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



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



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



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



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



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



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



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




[SIGNATURE PAGE FOLLOWS] 












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








	                                        





                                        

                                        

                                        



State of New York        )

                     
                  )         ss.:

County of                      )
	ENER1 BATTERY COMPANY, a Florida corporation





By:      _________________________

         Name:

         Title:







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



     _________________
Notary Public