# Ener1, Inc.550 West
Cypress Creek RoadSuite 120Ft. Lauderdale, Florida 33309

October 29, 2003

Randall Paulfus6950 N.E.
7th AvenueBoca Raton, Florida 33487

Dear Randall:

Please allow this letter to serve as
the entire agreement between Ener1, Inc. (the Company) and you, Randall
Paulfus (the Employee) with respect to certain aspects of your employment with
the Company.

Acknowledgement

The Company acknowledges and agrees
that the Employee is and will remain a partner of, and has and will retain an interest in,
Tatum CFO Partners, LLP (Tatum), which will benefit the Company in that the
Employee will have access to certain Tatum resources. The Company further acknowledges and
agrees that the Employee has requested that a portion of his or her compensation be
allocated to Tatum as compensation for Tatums provision of resources to the Employee
as provided in the Resources Agreement between the Company and Tatum, dated on or about
the date of this agreement. The Company and the Employee agree that any payments made to
Tatum will reduce the Employees compensation for purposes of determining taxable
income and should not be reflected as compensation in the Employees W-2 report.

Beginning Date

The Employee will work for the
Company beginning on November 10, 2003.

Compensation

Salary:                $175,000.00 per
year, payable twice monthly, in accordance with the Company's normal practices.

| | (After
allocation of a portion of the Salary to Tatum, the Employee will be paid                 $145,833.33 per
year).
| | -----------------------------------------------------------------------------------------------------------------------

Cash Bonus:     In accordance with policy for other senior executives, but subject to determination and
                            approval by the Company of a specific arrangement for the Employee.

Equity:               Options to purchase 200,000 shares of Ener1, Inc. common stock at current market price.
                            Vesting - 1/3 each twelve months, in arrears (i.e., first 1/3 at twelve months, etc.).

Other Compensation
Provisions:In accordance with policy for other senior executives.

Benefits

The Employee will be eligible for any
Company employment retirement and for vacation and holidays consistent with the
Companys policy and if as an when offered by the Company, as it applies to senior
management, and the Employee will be exempt from any delay periods required for
eligibility to the extent allowed by law.

In lieu of the Employee participating
in the Company-sponsored employee medical insurance benefit and disability plans, the
Employee will participate in Tatums group plans as a partner of Tatum, and the
Company will pay the Employee an amount equal to the costs that would normally be incurred
by the Company for the Employees participation in the Companys plans. Such
payment will be made at least monthly as an expense reimbursement and not part of employee
compensation. Notwithstanding the above, the Company may include the Employee as a
participant in the Companys own disability plan or other benefit plans if such plans
are not provided by Tatum.

The Employee must receive written
evidence that the Company maintains adequate director and officer insurance to cover the
Employee at no additional cost to the Employee, and the Company will maintain such
insurance at all times while this agreement remains in effect.

The Company agrees to indemnify the
Employee in accordance with and subject to the indemnification provisions of its by-law
relating to indemnification of officers and directors.

Termination

The Company may terminate the
Employees employment with cause (defined to include willful misconduct, continued
failure to follow reasonable instructions of the Chairman and CEO related to the
Employees principle duties and responsibilities, fraud, theft and crimes of moral
turpitude) immediately at any time and without cause upon at least 30 days prior
written notice to the Employee, such termination to be effective on the date specified in
the notice, provided that, in the case of termination without cause, such date is no
earlier than 30 days from the date of delivery of the notice. Likewise, the Employee may
terminate his or her employment for any reason upon at least 30 days prior written
notice to the Company, such termination to be effective on the date 30 days following the
date of the notice. The Employee will continue to render services and to be paid during
such 30-day period, regardless of who gives such notice, except in the case of termination
for cause or if the Company requests the Employee not to continue rendering services. The
Employee may terminate this letter agreement immediately if the Company has not remained
current in its obligations under this letter or if the Company engages in or asks the
Employee to engage in or to ignore any illegal or unethical conduct.

This agreement will terminate
immediately upon the death or permanent disability of the Employee. For purposes of this
agreement, permanent disability will be as defined by the applicable policy of disability
insurance or, in the absence of such insurance, by the Companys Board of Directors
acting in good faith.

The Employees Salary will be
prorated for the final pay period based on the number of days in the final pay period up
to the effective date of termination or expiration.

If the Company terminates this
Agreement for cause, no further payments from the Company will be required hereunder. If
this agreement is terminated within 90 days of the Employees start of employment
without cause, or by the Employee for cause, the Employee shall be entitled to receive one
months Salary, plus prorated portions of all cash bonuses earned under this
Agreement. If this agreement is terminated after 90 days from the Employees start of
employment without cause, or by the Employee for cause, the Employee shall be entitled to
receive two months Salary, plus prorated portions of all cash bonuses earned under
this Agreement.

Miscellaneous

This agreement contains the entire
agreement between the parties with respect to the matters contained herein, superseding
any prior oral or written statements or agreements.

The provisions in this agreement
concerning the payment of Salary and Bonuses will survive any termination or expiration of
this agreement, subject, however, to the terms of this Agreement.

The terms of this letter agreement
are severable and may not be amended except in a writing signed by the parties. If any
portion of this agreement is found to be unenforceable, the rest of this agreement will be
enforceable except to the extent that the severed provision deprives either party of a
substantial portion of its bargain.

This agreement will be governed by
and construed in all respects in accordance with the laws of the State of Florida, without
giving effect to conflicts-of-laws principles.

Each person signing below is
authorized to sign on behalf of the party indicated, and in each case such signature is
the only one necessary.

Please sign below and return a signed
copy of this letter to indicate your agreement with its terms and conditions.

Sincerely yours,

Ener1, Inc.

By:
____________________________ Signature

Name: Kevin FitzgeraldTitle: Chairman and Chief
Executive Officer

Acknowledged and agreed by:

| | EMPLOYEE:
__________________________
(Signature)
Randall Paulfus
Date:________________
| | --------------------------------------------------------------------------------------