EX-10.1






Exhibit 10.1




SECURITIES PURCHASE AGREEMENT




THIS SECURITIES PURCHASE AGREEMENT, dated as of November 19, 2007 (this “Agreement”), is by
and between ENER1, INC., a Florida corporation (the “Company”), and each entity that is named on
Exhibit A hereto. Each such entity, together with its successors and permitted assigns, is
referred to herein as an “Investor”, and all such entities, together with their successors and
permitted assigns, are collectively referred to herein as the “Investors”.



A. The Company wishes to sell to each Investor, and each Investor wishes to purchase from the
Company, upon the terms and subject to the conditions set forth in this Agreement, (i) the number
of shares of the Company’s common stock, par value $0.01 per share (the “Common Stock”), set forth
opposite such Investor’s name on Exhibit A and (ii) a warrant in the form attached hereto as
Exhibit B, exercisable into the number of shares of Common Stock set forth opposite such Investor’s
name on Exhibit A (each, a “Warrant” and, collectively, the “Warrants”). The shares of Common
Stock to be sold and purchased pursuant to this Agreement are sometimes referred to herein as the
“Shares” and the shares of Common Stock issuable under the Warrants are sometimes referred to
herein as the “Warrant Shares”. The Shares, the Warrants and the Warrant Shares are sometimes
referred to herein as the “Securities”.



B. The Company has agreed to effect the registration of the Shares and the Warrant Shares for
resale by the holders thereof under the Securities Act of 1933 (as amended, and the rules and
regulations promulgated thereunder, the “Securities Act”), pursuant to a Registration Rights
Agreement in the form attached hereto as Exhibit C (the “Registration Rights Agreement”).



C. The sale of the Shares and the Warrants by the Company to each Investor will be effected in
reliance upon the exemption from securities registration afforded by the provisions of Regulation D
(“Regulation D”) under the Securities Act.



In consideration of the mutual promises made herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the Company and each
Investor hereby agree as follows:



1. PURCHASE AND SALE OF SHARES; DEFINITIONS.



1.1 Closing. Upon the terms and subject to the satisfaction (or waiver by the
appropriate party) of the conditions set forth herein, the Company agrees to sell, and each
Investor agrees to purchase, the number of Shares set forth opposite such Investor’s name on
Exhibit A and a Warrant for the purchase price set forth opposite such Investor’s name on Exhibit A
(the “Purchase Price”). The date on which the closing of such purchase and sale occurs (the
“Closing”) is hereinafter referred to as the “Closing Date”. The Closing will be deemed to occur
at the offices of Mazzeo Song LLP, 708 Third Avenue, 19th Floor, New York, New York
10017 when (A) this Agreement and the other Transaction Documents have been executed and delivered
by the Company and each Investor, (B) each of the conditions to the Closing described in this
Agreement has been satisfied or waived as specified therein, and (C) payment of each Investor’s
Purchase Price has been made by wire transfer of immediately available funds against delivery of
the Shares and Warrant being purchased by such Investor hereunder.



1.2 Certain Definitions. When used herein, the terms below shall have the respective
meanings indicated:



“Affiliate” means, as to any Person (the “subject Person”), any other Person (a) that directly
or indirectly through one or more intermediaries controls or is controlled by, or is under direct
or indirect common control with, the subject Person, (b) that directly or indirectly beneficially
owns or holds ten percent (10%) or more of any class of voting equity of the subject Person, or
(c) ten percent (10%) or more of the voting equity of which is directly or indirectly beneficially
owned or held by the subject Person. For the purposes of this definition, “control” when used with
respect to any Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, through representation
on such Person’s board of directors or other management committee or group, by contract or
otherwise.



“Board of Directors” means the Company’s board of directors.



“Business Day” means any day other than a Saturday, a Sunday or a day on which the Principal
Market is closed or on which banks in the City of New York are required or authorized by law to be
closed.



“Closing” and “Closing Date” have the respective meanings specified in Section 1.1 of this
Agreement.



“Commission” means the Securities and Exchange Commission and any successor agency or
organization.



“Common Stock” has the meaning specified in the recitals to this Agreement.



“Company Subsidiary” means a Subsidiary of the Company.



“Disclosure Documents” means all SEC Documents filed with the Commission at least three (3)
Business Days prior to the Execution Date.



“Effective Date” has the meaning specified in the Registration Rights Agreement.



“Environmental Law” means any federal, state, provincial, local or foreign law, statute, code
or ordinance, principle of common law, rule or regulation, as well as any permit, order, decree,
judgment or injunction issued, promulgated, approved or entered thereunder, relating to pollution
or the protection, cleanup or restoration of the environment or natural resources, or to the public
health or safety, or otherwise governing the generation, use, handling, collection, treatment,
storage, transportation, recovery, recycling, discharge or disposal of hazardous materials.



“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.



“Excluded Securities” means (i) securities purchased under this Agreement; (ii) shares of
Common Stock issued upon exercise of the Warrants; (iii) shares of Common Stock issuable or issued
to (x) employees, consultants or directors from time to time upon the exercise of options, in such
case granted or to be granted in the discretion of the Board of Directors pursuant to one or more
stock option plans or restricted stock plans in effect as of the Closing Date or adopted after the
Closing Date by the Board of Directors, and (y) vendors pursuant to warrants or options to purchase
Common Stock that are outstanding on the date hereof or issued hereafter, provided such issuances
are approved by the Board of Directors; (iv) shares of Common Stock issued in connection with any
stock split, stock dividend or recapitalization of the Company; (v) shares of Common Stock issued
in connection with any convertible securities, warrants or other rights to receive Common Stock
that are outstanding on the Closing Date; (vi) shares of Common Stock issued to Persons with whom
the Company is entering into a joint venture, acquisition, strategic alliance or other commercial
relationship in connection with the operation of the Company’s business and not for the purpose of
raising equity capital and (vii) shares of Common Stock and Warrants that are issued to one or more
Persons during the period of ten (10) Business Days following the Closing Date on terms that are
substantially similar to, or more advantageous to the Company than, the terms of the purchase and
sale by the Investors under this Agreement.



“Execution Date” means the date of this Agreement.



“GAAP” means generally accepted accounting principles, applied on a consistent basis, as set
forth in (i) opinions of the Accounting Principles Board of the American Institute of Certified
Public Accountants, (ii) statements of the Financial Accounting Standards Board and (iii)
interpretations of the Commission and the staff of the Commission. Accounting principles are
applied on a “consistent basis” when the accounting principles applied in a current period are
comparable in all material respects to those accounting principles applied in a preceding period.



“Governmental Authority” means any nation or government, any state, provincial or political
subdivision thereof and any entity or agency exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government, including, without
limitation, any stock exchange, securities market or self-regulatory organization.



“Governmental Requirement” means any law, statute, code, ordinance, order, rule, regulation,
judgment, decree, injunction, franchise, license or other directive or requirement of any federal,
state, county, municipal, parish, provincial or other Governmental Authority or any department,
commission, board, court, agency or any other instrumentality of any of them.



“Information Statement” has the meaning specified in Section 3.7 of this Agreement.



“Intellectual Property” means any U.S. or foreign patents, patent rights, patent applications,
trademarks, trade names, service marks, brand names, logos and other trade designations (including
unregistered names and marks), trademark and service mark registrations and applications,
copyrights and copyright registrations and applications, inventions, invention disclosures,
protected formulae, formulations, processes, methods, trade secrets, computer software, computer
programs and source codes, manufacturing research and similar technical information, engineering
know-how, customer and supplier information, assembly and test data drawings or royalty rights.



“Investor Party” has the meaning specified in Section 4.10 of this Agreement.



“Lien” means, with respect to any Property, any mortgage, pledge, hypothecation, assignment,
deposit arrangement, security interest, tax lien, financing statement, pledge, charge, or other
lien, charge, easement, encumbrance, preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever on or with respect to such Property
(including, without limitation, any conditional sale or other title retention agreement having
substantially the same economic effect as any of the foregoing).



“Material Adverse Effect” means an effect on (i) the consolidated business, properties,
assets, operations, results of operations or financial condition of the Company and the Company
Subsidiaries taken as a whole, or (ii) the ability of the Company to perform its obligations under
this Agreement or the other Transaction Documents that, in any such case, is material and adverse.



“Material Contracts” means, as to the Company and the Company Subsidiaries, any agreement
required pursuant to Item 601 of Regulation S-B or Item 601 of Regulation S-K, as applicable,
promulgated under the Securities Act to be filed as an exhibit to any report, schedule,
registration statement or definitive proxy statement filed or required to be filed by the Company
with the Commission under the Exchange Act or any rule or regulation promulgated thereunder, and
any and all amendments, modifications, supplements, renewals or restatements thereof.



“Person” means any individual, corporation, trust, association, company, partnership, joint
venture, limited liability company, joint stock company, Governmental Authority or other entity.



“Principal Market” means the principal exchange, market or quotation system on which the
Common Stock is listed, traded or quoted.



“Property” means property and/or assets of all kinds, whether real, personal or mixed,
tangible or intangible (including, without limitation, all rights relating thereto).



“Purchase Price” has the meaning specified in Section 1.1.



“Registration Rights Agreement” has the meaning specified in the recitals to this Agreement.



“Regulation D” has the meaning specified in the recitals to this Agreement.



“Rule 144” means Rule 144 under the Securities Act or any successor provision.



“SEC Documents” means all reports, forms, schedules, registration statements and definitive
proxy statements filed by the Company with the Commission.



“Securities Act” has the meaning specified in the recitals of this Agreement.



“Subsidiary” means, with respect to any Person, any corporation or other entity of which at
least a majority of the outstanding shares of stock or other ownership interests having by the
terms thereof ordinary voting power to elect a majority of the board of directors (or Persons
performing similar functions) of such corporation or entity (regardless of whether or not at the
time, in the case of a corporation, stock of any other class or classes of such corporation shall
have or might have voting power by reason of the happening of any contingency) is at the time
directly or indirectly owned or controlled by such Person or one or more of its Subsidiaries or by
such Person and one or more of its Subsidiaries.



“Transaction Documents” means (i) this Agreement, (ii) the Warrants, (iii) the Registration
Rights Agreement and (iv) any other agreement or instrument executed and delivered by or on behalf
of the Company at the Closing in connection with the transactions contemplated by this Agreement.



1.3 Usage and Other Definitional Provisions. All definitions contained in this
Agreement are equally applicable to the singular and plural forms of the terms defined. The words
“hereof”, “herein” and “hereunder” and words of similar import contained in this Agreement refer to
this Agreement as a whole and not to any particular provision of this Agreement.



2. REPRESENTATIONS AND WARRANTIES OF EACH INVESTOR.



Each Investor (with respect to itself only) hereby represents and warrants to the Company and
agrees with the Company that, as of the Execution Date:



2.1 Authorization; Enforceability. Such Investor is duly and validly organized,
validly existing and in good standing under the laws of the jurisdiction of its incorporation or
organization as set forth opposite such Investor’s name on Exhibit A, with the requisite corporate
power and authority to purchase the Shares to be purchased by it hereunder and to execute and
deliver this Agreement and the other Transaction Documents to which it is a party. This Agreement
constitutes, and upon the execution and delivery thereof, each other Transaction Document to which
such Investor is a party will constitute, such Investor’s valid and legally binding obligation,
enforceable in accordance with its terms, subject to (i) applicable bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium or other similar laws of general application
relating to or affecting the enforcement of creditors’ rights generally and (ii) general principles
of equity.



2.2 Accredited Investor; No Public Sale or Distribution. Such Investor (i) is an
“accredited investor” as that term is defined in Rule 501 of Regulation D, (ii) was not formed or
organized for the specific purpose of making an investment in the Company, and (iii) is acquiring
the Securities being purchased by it solely for its own account and not with a present view to the
public resale or distribution of all or any part thereof, except pursuant to sales that are
registered under, or exempt from the registration requirements of, the Securities Act; provided,
however, that in making such representation, such Investor does not agree to hold such Securities
for any minimum or specific term and reserves the right to sell, transfer or otherwise dispose of
the Securities at any time in accordance with the provisions of this Agreement and with federal and
state securities laws applicable to such sale, transfer or disposition.



2.3 Information. The Company has, prior to the Execution Date, provided such Investor
with information regarding the business, operations and financial condition of the Company and the
Company Subsidiaries and has, prior to the Execution Date, granted to such Investor the opportunity
to ask questions of and receive answers from representatives of the Company, including its
officers, directors, employees and agents, concerning the Company in order to enable such Investor
to make an informed decision with respect to its investment in the Securities. Such Investor has
such knowledge and experience in business and financial matters so as to enable it to understand
the risks of and form an investment decision with respect to its investment in the Shares. Such
Investor understands that its investment in the Securities involves a high degree of risk, and
represents that it can bear the economic risk of a total loss of its investment in the Securities.
Such Investor has sought such accounting, legal, and tax advice that it has considered necessary to
make an informed investment decision with respect to its purchase of the Securities.



2.4 Limitations on Disposition. Such Investor acknowledges that, except as provided
in the Registration Rights Agreement, the Securities have not been and are not being registered
under the Securities Act and may not be transferred or resold without registration under the
Securities Act or unless pursuant to an exemption therefrom.



2.5 Legend. Such Investor understands that the certificates representing the
Securities may bear at issuance a restrictive legend in substantially the following form:



“The securities represented by this certificate have not been registered
under the Securities Act of 1933, as amended (the “Securities Act”), or any
state securities laws, and may not be offered for sale or sold unless a
registration statement under the Securities Act and applicable state
securities laws shall have become 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 or sale.”



Notwithstanding the foregoing, such Investor and the Company agree that, as long as (A) the resale
or transfer of any of the Securities has been made pursuant to an effective registration statement,
(B) such Securities have been sold pursuant to Rule 144, subject to receipt by the Company of
customary documentation reasonably acceptable to the Company in connection therewith, or (C) such
Securities are eligible for resale under Rule 144(k) or any successor provision, such Securities
shall be issued without any legend or other restrictive language and, with respect to outstanding
Securities upon which such legend is stamped, the Company shall instruct its transfer agent to
issue replacement Securities without such legend to the holder upon request (but in no event later
than the third (3rd) Business Day following such request).



2.6 Reliance on Exemptions. Such Investor understands that the Securities are being
offered and sold to it in reliance upon specific exemptions from the registration requirements of
federal and state securities laws and that the Company is relying upon the truth and accuracy of
the representations and warranties of such Investor set forth in this Section 2 in order to
determine the availability of such exemptions and the eligibility of such Investor to acquire the
Securities. Such Investor acknowledges that it did not purchase the Securities based upon any
advertisement in any publication of general circulation.



2.7 Non-Affiliate Status; Common Stock Ownership. Such Investor is not an Affiliate
of the Company or of any other Investor and is not acting in association or concert with any other
Person in regard to its purchase of the Securities or otherwise in respect of the Company. Such
Investor’s investment in the Securities is not for the purpose of acquiring, directly or
indirectly, control of, and it has no intent to acquire or exercise control of, the Company or to
influence the decisions or policies of the Board of Directors.



2.8 Fees. Such Investor has not agreed to pay any compensation or other fee, cost or
related expenditure to any underwriter, broker, agent or other representative in connection with
the transactions contemplated hereby.



2.9 No Conflicts. The execution and performance of this Agreement and the other
Transaction Documents to which it is a party do not conflict in any material respect with any
agreement to which such Investor is a party or is bound, any court order or judgment applicable to
such Investor, or the organizational documents of such Investor, except for such
conflicts which would not, individually or in the aggregate, reasonably be expected to have a
material adverse effect on the Company or the ability of such Purchaser to perform its obligations
hereunder..



2.10 No Governmental Review. Such Investor understands that no federal or state
agency or any other Governmental Authority has passed on or made any recommendation or endorsement
of the Securities or the fairness or suitability of an investment in the Securities nor have such
authorities passed upon the accuracy of any information provided to such Investor or made any
findings or determinations as to the merits of the offering of the Securities.



2.11 Residency. Such Investor is a resident of the jurisdiction set forth opposite
its name on Exhibit A.



3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company hereby represents and
warrants to each Investor and agrees with each Investor that, as of the Execution Date:



3.1 Organization, Good Standing and Qualification. Each of the Company and the
Company Subsidiaries is duly organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation or organization and has all requisite power and authority to
carry on its business as now conducted. Each of the Company and the Company Subsidiaries is duly
qualified to transact business and is in good standing in each jurisdiction in which it conducts
business except where the failure so to qualify has not had or would not reasonably be expected to
have a Material Adverse Effect.



3.2 Authorization; Consents. The Company has the requisite corporate power and
authority to enter into and perform its obligations under the Transaction Documents, and to issue
and sell the Securities to the Investors in accordance with the terms hereof. All corporate action
on the part of the Company by its officers, directors and shareholders necessary for the
authorization, execution and delivery of, and the performance by the Company of its obligations
under, the Transaction Documents has been taken, and no further consent or authorization of the
Company, the Board of Directors, shareholders or any other Person (other than such approval as may
be required under the Securities Act and applicable state laws in respect of the Registration
Rights Agreement) is required. The Board of Directors has determined that the sale and issuance of
the Securities, and the consummation of the other transactions contemplated hereby and by the other
Transaction Documents, are in the best interests of the Company.



3.3 Enforcement. This Agreement has been duly executed and delivered by the Company
and, at the Closing, the Company will have duly executed and delivered each of the other
Transaction Documents. This Agreement constitutes and, as of the Closing, each of the other
Transaction Documents to which the Company is a party will constitute, the valid and legally
binding obligations of the Company, enforceable against the Company in accordance with their
respective terms, subject to (i) applicable bankruptcy, insolvency, fraudulent transfer,
moratorium, reorganization or other similar laws of general application relating to or affecting
the enforcement of creditors’ rights generally and (ii) general principles of equity.



3.4 Valid Issuance. The Shares are duly authorized and, at the Closing, shall be duly
and validly issued, fully-paid and non-assessable, free and clear of any Liens imposed by or
through the Company. The Warrants are duly authorized and, at the Closing, shall be duly and
validly issued, free and clear of any Liens imposed by or through the Company. The Warrant Shares
are duly authorized and, upon exercise of the Warrants, shall be duly and validly issued,
fully-paid and non-assessable, free and clear of any Liens imposed by or through the Company.
Assuming the accuracy of each Investor’s representations contained herein, the issuance and sale of
the Securities under this Agreement will not require registration under the Securities Act and will
be effected in compliance with all applicable federal and state securities laws.



3.5 No Conflict. Neither the Company nor any Company Subsidiary is in violation of
any provisions of its charter, bylaws or any other governing document. Neither the Company nor any
Company Subsidiary is in violation of or in default (and no event has occurred which, with notice
or lapse of time or both, would constitute a default) under any provision of any Material Contract
to which it is a party or by which it or any of its Property is bound, or in violation of any
provision of any Governmental Requirement applicable to the Company or any Company Subsidiary,
except for any violation or default that has not had or would not reasonably be expected to have a
Material Adverse Effect. The (i) execution, delivery and performance of this Agreement and the
other Transaction Documents and (ii) consummation of the transactions contemplated hereby and
thereby (including without limitation, the issuance of the Securities) will not (x) result in any
violation of any provisions of the Company’s charter, bylaws or any other governing document or in
a default under any provision of any Material Contract to which the Company or Company Subsidiary
is a party or by which it or any of its Property is bound, (y) result in any violation of any
provision of any Governmental Requirement applicable to the Company or Company Subsidiary or (z)
conflict with or constitute, with or without the passage of time and giving of notice, either a
default under any such provision, instrument or contract or an event which results in the creation
of any Lien upon any assets of the Company or of any Company Subsidiary.



3.6 Disclosure Documents. The Company is subject to the reporting requirements of the
Exchange Act and, the Company has filed with the Commission all SEC Documents that the Company was
required to file with the Commission on or after December 31, 2006. The Company is not aware of
any event occurring or expected to occur on or prior to the Closing Date (other than the
transactions effected hereby) that would require the filing of, or with respect to which the
Company intends to file, a Form 8-K after the Closing. Each SEC Document filed on or after
December 31, 2006, as of the date of the filing thereof with the Commission (or if amended or
superseded by a filing prior to the Execution Date, then on the date of such amending or
superseding filing), complied in all material respects with the requirements of the Securities Act
or Exchange Act, as applicable, and, as of the date of such filing (or if amended or superseded by
a filing prior to the Execution Date, then on the date of such filing), such SEC Document did not,
contain an untrue statement of material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of the circumstances under which they
were made, not misleading. All documents required to be filed as exhibits to the SEC Documents
filed on or after December 31, 2006 have been filed as required. Except as set forth in the
Disclosure Documents, the Company has no liabilities, contingent or otherwise, other than
liabilities incurred in the ordinary course of business which, under GAAP, are not required to be
reflected in the financial statements included in the Disclosure Documents and which, individually
or in the aggregate, are not material to the consolidated business or financial condition of the
Company and the Company Subsidiaries taken as a whole. As of their respective dates, the financial
statements of the Company included in the SEC Documents complied as to form in all material
respects with applicable accounting requirements and the published rules and regulations of the
Commission with respect thereto. Such financial statements have been prepared in accordance with
GAAP consistently applied at the times and during the periods involved (except (i) as may be
otherwise indicated in such financial statements or the notes thereto, or (ii) in the case of
unaudited interim statements, to the extent they may exclude footnotes or may be condensed or
summary statements) and fairly present in all material respects the financial position of the
Company as of the dates thereof and the results of its operations and cash flows for the periods
then ended (subject, in the case of unaudited statements, to normal year-end adjustments). The
Company will prepare the financial statements to be included in any reports, schedules,
registration statements and definitive proxy statements that the Company is required to file or
files with the Commission after the date hereof in accordance with GAAP (except in the case of
unaudited interim statements, to the extent they may exclude footnotes or may be condensed or
summary statements).



3.7 Equity Capitalization. As of the date hereof, the authorized capital stock of the
Company consists of (a) 750,000,000 shares of Common Stock (not including 200,000,000 additional
shares that have been approved by the Company’s controlling shareholder and will constitute
authorized capital stock upon the filing of a preliminary Information Statement with the
Commission, the distribution of the final Information Statement (the “Information Statement”) to
the Company’s shareholders, and the filing of an amendment to the Company’s Articles of
Incorporation with the Secretary of State of the State of Florida), of which as of the date hereof,
557,479,837 are issued and outstanding, 525,000 shares are reserved for issuance pursuant to the
Company’s incentive compensation employee and stock purchase plans and 61,112,500 shares are
reserved for issuance pursuant to securities exercisable or exchangeable for, or convertible into,
shares of Common Stock, and (b) 180,000 shares of Series B preferred stock, $0.01 par value per
share, of which as of the date hereof, none are issued and outstanding. All of such outstanding
shares have been validly issued and are fully paid and non-assessable. Except as disclosed in the
Disclosure Documents: (i) none of the Company’s capital stock is subject to preemptive rights or
any other similar rights or any Liens suffered or permitted by the Company; (ii) there are no
outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of any character
whatsoever relating to, or securities or rights convertible into, or exercisable or exchangeable
for, any capital stock of the Company or any of the Company Subsidiaries, or contracts,
commitments, understandings or arrangements by which the Company or any of the Company Subsidiaries
is or may become bound to issue (x) additional capital stock of the Company or any of the Company
Subsidiaries or (y) options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into, or exercisable or
exchangeable for, any capital stock of the Company or any of the Company Subsidiaries; (iii) there
are no agreements or arrangements under which the Company or any of the Company Subsidiaries is
obligated to register the resale of any of their securities under the Securities Act (except
pursuant to the Registration Rights Agreement); (iv) there are no securities or instruments
containing anti-dilution or similar provisions that will be triggered by the issuance of the
Shares; and (v) the Company does not have any stock appreciation rights, “phantom stock” plans or
agreements, shareholder agreements or any similar plan or agreement.



3.8 No General Solicitation; Placement Agent’s Fees. Neither the Company, nor any of
the Company Subsidiaries or Affiliates, nor any Person acting on its or their behalf, has engaged
in any form of general solicitation or general advertising (within the meaning of Regulation D) in
connection with the offer or sale of the Securities. The Company shall be responsible for the
payment of any placement agent’s fees, financial advisory fees, or brokers’ commissions (other than
for Persons engaged by any Investor) relating to or arising out of the transactions contemplated
hereby. Except as set forth on Schedule 3.8, the Company has not engaged any placement agent or
other agent in connection with the sale of the Securities.



3.9 No Integrated Offering. Neither the Company, nor any of the Company Subsidiaries
or Affiliates, nor any Person acting on its or their behalf, has made any offers or sales of any
security or solicited any offers to buy any security under circumstances that would require
registration of any of the Securities under the Securities Act or cause the offering of the
Securities to be integrated with prior offerings by the Company for purposes of the Securities Act
or any other applicable Governmental Requirement. Neither the Company, nor any of the Company
Subsidiaries or Affiliates, nor any Person acting on its or their behalf, will take any action or
steps referred to in the preceding sentence that would require registration of any of the
Securities under the Securities Act or cause the offering of the Securities to be integrated with
other offerings.



3.10 Application of Takeover Protections; Rights Agreement. The Company and the Board
of Directors have taken all necessary action, if any, in order to render inapplicable any control
share acquisition, business combination, poison pill (including any distribution under a rights
agreement) or other similar anti-takeover provision under the Company’s organizational documents or
the laws of the State of Florida which is or could become applicable solely as a result of the
transactions contemplated by this Agreement, including, without limitation, the Company’s issuance
of the Securities and any Investor’s ownership of the Securities.



3.11 Financial Condition; Taxes; Litigation.



3.11.1 The financial condition of each of the Company and each Company Subsidiary is, in all
material respects, as described in the Disclosure Documents, except for changes in the ordinary
course of business and normal year-end adjustments that are not, in the aggregate, materially
adverse to the consolidated business or financial condition of the Company and the Company
Subsidiaries taken as a whole. Since the date of the Company’s most recent financial statements
contained in the Disclosure Documents, there has been no (i) material adverse change to the
business, operations, properties, financial condition or results of operations of the Company and
the Company Subsidiaries taken as a whole since the date of the most recent financial statements
contained in the Disclosure Documents or (ii) change by the Company in its accounting principles,
policies and methods except as required by changes in GAAP.



3.11.2 Except as set forth on Schedule 3.11.2, each of the Company and the Company
Subsidiaries has prepared in good faith and duly and timely filed all tax returns required to be
filed by it and such returns are complete and accurate in all material respects, and has paid all
taxes required to have been paid by it, except for taxes that it reasonably disputes in good faith
or the failure of which to pay has not had or would not reasonably be expected to have a Material
Adverse Effect. Neither the Company nor any Company Subsidiary has any liability with respect to
taxes that accrued on or before the date of the most recent balance sheet of the Company included
in the Disclosure Documents in excess of the amounts accrued with respect thereto that are
reflected on such balance sheet.



3.11.3 Neither the Company nor any Company Subsidiary is the subject of any pending or, to
the Company’s knowledge, threatened inquiry, investigation or administrative or legal proceeding by
the Internal Revenue Service, the taxing authorities of any state or local jurisdiction, the
Commission, any state securities commission or other Governmental Authority.



3.11.4 There is no material claim, litigation or administrative proceeding pending, or, to
the Company’s knowledge, threatened or contemplated, against the Company or any Company Subsidiary,
or against any current officer, director or employee of the Company or any such Company Subsidiary
in connection with such Person’s employment therewith. Neither the Company nor any Company
Subsidiary is a party to or subject to the provisions of, any order, writ, injunction, judgment or
decree of any court or Government Authority which has had or would reasonably be expected to have a
Material Adverse Effect.



3.12 Intellectual Property. The Company and the Company Subsidiaries own, free and
clear of claims or rights or any other Person, with full right to use, sell, license, sublicense,
dispose of, and bring actions for infringement of, or, to the knowledge of the Company, have
acquired licenses or other rights to use, all Intellectual Property necessary for the conduct of
their respective businesses as presently conducted (other than with respect to software which is
generally commercially available and open source software which may be subject to one or more
“general public” licenses), except for Intellectual Property as to which the failure to own or
license would not reasonably be expected to have a Material Adverse Effect. The business of the
Company and the Company Subsidiaries as presently conducted and the production, marketing,
licensing, use and servicing of any products or services of the Company and the Company
Subsidiaries do not, to the knowledge of the Company, infringe or conflict with any patent,
trademark, copyright, or trade secret rights of any third parties or any other Intellectual
Property of any third parties in any material respect. Neither the Company nor any Company
Subsidiary has received written notice from any third party asserting that any Intellectual
Property owned or licensed by the Company or the Company Subsidiaries, or which the Company or any
Company Subsidiary otherwise has the right to use, is invalid or unenforceable by the Company or
such Company Subsidiary and, to the Company’s knowledge, there is no valid basis for any such claim
(whether or not pending or threatened). All licenses or other agreements under which the Company
or any Company Subsidiary is granted Intellectual Property rights (excluding licenses to use
software that is generally commercially available) are in full force and effect and, to the
Company’s knowledge, there is no material default by any party thereto. The Company and the
Company Subsidiaries have taken reasonable security measures to protect the secrecy,
confidentiality and value of their respective Intellectual Property rights.



3.13 Environment. Except as disclosed in the Disclosure Documents, the Company and
the Company Subsidiaries have no liabilities under any Environmental Law, nor, to the Company’s
knowledge, do any factors exist that are reasonably likely to give rise to any such liability,
affecting any of the properties owned or leased by the Company or any Company Subsidiary that,
individually or in the aggregate, has had or would reasonably be expected to have a Material
Adverse Effect. Neither the Company nor any Company Subsidiary has violated any Environmental Law
applicable to it now or previously in effect, other than such violations or infringements that,
individually or in the aggregate, have not had and would not reasonably be expected to have a
Material Adverse Effect.



3.14 Foreign Corrupt Practices. Neither the Company, nor any of the Company
Subsidiaries or Affiliates, nor any Person acting on its or their behalf, has (i) used any
corporate funds for any unlawful contribution, gift, entertainment or other unlawful expenses
relating to political activity, (ii) made any direct or indirect unlawful payment to any foreign or
domestic government official or employee, or (iii) violated any provision of the Foreign Corrupt
Practices Act of 1977, as amended, or made any bribe, rebate, payoff, influence payment, kickback
or other unlawful payment to any foreign or domestic government official or employee.



3.15 Money Laundering. The operations of the Company and the Company Subsidiaries are
and have been conducted at all times in compliance with applicable financial record-keeping and
reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended,
and other applicable money laundering statutes and applicable rules and regulations thereunder
(collectively, the “Money Laundering Laws”), and no action, suit, proceeding or inquiry by or
before any Governmental Authority involving the Company or any of the Company Subsidiaries with
respect to the Money Laundering Laws is pending or, to the knowledge of the Company, threatened.



3.16 OFAC. Neither the Company nor any Company Subsidiary nor, to the knowledge of
the Company, any director, officer, agent, employee or affiliate of the Company or any Company
Subsidiary is currently subject to any U.S. sanctions administered by the Office of Foreign Assets
Control of the U.S. Treasury Department (“OFAC”); and the Company will not, directly or indirectly,
use the proceeds of the offering, or lend, contribute or otherwise make available such proceeds to
any Company Subsidiary, joint venture partner or other Person, for the purpose of financing the
activities of any person currently subject to any U.S. sanctions administered by OFAC.



3.17 Sarbanes-Oxley Act; Internal Controls and Procedures. The Company is in
compliance with any and all applicable requirements of the Sarbanes-Oxley Act of 2002, as amended,
and any and all applicable rules and regulations promulgated by the Commission thereunder that are
effective as of the Effective Date. The Company maintains internal accounting controls, policies
and procedures, and such books and records, as are reasonably designed to provide reasonable
assurance that (i) all transactions to which the Company or any Company Subsidiary is a party or by
which it is bound are effected by a duly authorized employee or agent of the Company, supervised by
and acting within the scope of the authority granted by the Company’s senior management and/or by
the Board of Directors; (ii) the recorded accounting of the Company’s consolidated assets is
compared with existing assets at regular intervals; and (iii) all transactions to which the Company
or any Company Subsidiary is a party, or by which its properties are bound, are recorded (and such
records maintained) in accordance with all Governmental Requirements and as may be necessary or
appropriate to ensure that the financial statements of the Company are prepared in accordance with
GAAP.



3.18 Employee Matters. Neither the Company nor any of the Company Subsidiaries is a
party to any collective bargaining agreement or employs any member of a union. No executive
officer of the Company or any of the Company Subsidiaries (as defined in Rule 501(f) of the
Securities Act) has notified the Company or any Company Subsidiary that such officer intends to
leave the Company or any such Company Subsidiary or otherwise terminate such officer’s employment
with the Company or any such Company Subsidiary. No executive officer of the Company or any of the
Company Subsidiaries is, to the Company’s knowledge, in violation of any material term of any
employment contract, confidentiality, disclosure or proprietary information agreement,
non-competition agreement, or any other contract or agreement or any restrictive covenant, and the
continued employment of each such executive officer does not, to the Company’s knowledge, subject
the Company or any of the Company Subsidiaries to any liability with respect to any of the
foregoing matters. The Company and the Company Subsidiaries are in compliance with all federal,
state, local and foreign laws and regulations respecting labor, employment and employment practices
and benefits, terms and conditions of employment and wages and hours, except where failure to be in
compliance would not, either individually or in the aggregate, reasonably be expected to result in
a Material Adverse Effect.



3.19 Insurance. The Company maintains insurance for itself and the Company
Subsidiaries in such amounts and covering such losses and risks as are reasonably sufficient and
customary in the businesses in which the Company and the Company Subsidiaries are engaged. As of
the date hereof and as of the Closing Date, no notice of cancellation has been received for any of
such policies and the Company is in compliance in all material respects with all of the terms and
conditions thereof. The Company has no reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue to conduct its business as currently conducted
without a significant increase in cost.



3.20 Property. Except as disclosed in the Disclosure Documents, the Company and the
Company Subsidiaries have good and marketable title in fee simple to all real property and good and
marketable title to all personal property owned by them which is material to the business of the
Company and the Company Subsidiaries, in each case, except as disclosed in the Disclosure
Documents, free and clear of all Liens, encumbrances and defects except such as do not materially
affect the value of such property and do not interfere with the use made and proposed to be made of
such property by the Company and any of the Company Subsidiaries. Any real property and facilities
held under lease by the Company and any of the Company Subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as are not material and do not interfere
with the use made and proposed to be made of such property and buildings by the Company and the
Company Subsidiaries.



3.21 Regulatory Permits. The Company and the Company Subsidiaries possess all
certificates, authorizations and permits issued by the appropriate federal, state or foreign
regulatory authorities necessary to conduct their respective businesses, except where the failure
to have any such certificate, authorization or permit would not have a Material Adverse Effect, and
neither the Company nor any Company Subsidiary has received any notice of proceedings relating to
the revocation or modification of any such certificate, authorization or permit.



3.22 Transactions with Interested Persons. Except as disclosed in the Disclosure
Documents, no officer, director or employee of the Company or any Company Subsidiary is or has made
any arrangements with the Company or any Company Subsidiary to become a party to any transaction
with the Company or any Company Subsidiary (other than for services as employees, officers and
directors), including any contract, agreement or other arrangement providing for the furnishing of
services to or by, providing for rental of real or personal property to or from, or otherwise
requiring payments to or from any officer, director or such employee or, to the knowledge of the
Company, any entity in which any officer, director, or any such employee has a substantial interest
or is an officer, director, trustee or partner.



3.23 Customers and Suppliers. The relationships of the Company and the Company
Subsidiaries with their respective customers and suppliers are maintained on commercially
reasonable terms. To the Company’s knowledge, no customer or supplier of the Company or any
Company Subsidiary has any plan or intention to terminate its agreement with the Company or such
Company Subsidiary, which termination would reasonably be expected to have a Material Adverse
Effect.



3.24 Accountants. Malone & Bailey, PC, which has rendered an audit opinion with
respect to the consolidated financial statements of the Company as of December 31, 2006, is a
“registered public accounting firm” within the meaning of Section 3(a)(59) of the Exchange Act.



3.25 Off Balance Sheet Arrangements. There is no transaction, arrangement, or other
relationship between the Company and an unconsolidated or other off balance sheet entity that is
required to be disclosed by the Company in its Exchange Act filings and is not so disclosed.



3.26 U.S. Real Property Holding Corporation. The Company is not, nor has ever been, a
U.S. real property holding corporation within the meaning of Section 897 of the Internal Revenue
Code of 1986, as amended.



3.27 Investment Company. Neither the Company nor the Company Subsidiaries is or,
after giving effect to the offering and sale of the Shares and the application of the proceeds
thereof, will become an “investment company” or an “affiliated person” of, or “promoter” or
“principal underwriter” for an investment company, within the meaning of the Investment Company Act
of 1940, as amended.



3.28 Exchange Act Registration; OTCBB Eligibility. The Common Stock is registered
pursuant to Section 12(b) or 12(g) of the Exchange Act, and the Company has taken no action
designed to, or which to the Company’s knowledge is likely to have the effect of, terminating the
registration of the Common Stock under the Exchange Act nor has the Company received any
notification that the Commission is contemplating terminating such registration. The Company is
eligible for the continued quotation of the Common Stock on the OTC Bulletin Board, and is not
aware of any circumstance or event that would reasonably be expected to result in the suspension of
the quotation of the Common Stock on the OTC Bulletin Board.



3.29 Manipulation of Price. The Company has not, and to its knowledge no one acting
on its behalf has, taken, directly or indirectly, any action designed to cause or to result in the
stabilization or manipulation of the price of any security of the Company.



3.30 No Other Agreements. The Company has not, directly or indirectly, entered into
any agreement with or granted any right to any Investor relating to the terms or conditions of the
transactions contemplated by the Transaction Documents, except as expressly set forth in the
Transaction Documents.



3.31 Disclosure. The representations, warranties and written statements contained in
this Agreement and the other Transaction Documents and in the certificates, exhibits and schedules
delivered to such Investor by the Company pursuant to this Agreement and the other Transaction
Documents, do not contain any untrue statement of a material fact, and do not omit to state a
material fact required to be stated therein or necessary in order to make such representations,
warranties or statements not misleading in light of the circumstances under which they were made.
Neither the Company nor any Person acting on its behalf or at its direction has provided such
Investor with material non-public information other than the terms of the transactions contemplated
hereby. Following the issuance of a press release in accordance with Section 4.1(c) of this
Agreement, to the Company’s knowledge, such Investor will not possess any material non-public
information concerning the Company that was provided to such Investor by the Company or its agents
or representatives. The Company acknowledges that such Investor is relying on the representations,
acknowledgments and agreements made by the Company in this Agreement in making trading and other
decisions concerning the Company’s securities.



	 	 	 	 	 	 	 
	4.	 	COVENANTS OF THE COMPANY AND EACH INVESTOR.
	 	 	 
	
 
	 	 	4.1	 	 	The Company agrees with each Investor that the Company will:






(a) file a Form D with respect to the Securities issued at the Closing as and when required
under Regulation D and provide a copy thereof to such Investor promptly upon request;



(b) at or prior to the Closing, take such action as the Company reasonably determines upon the
advice of counsel is necessary to qualify the sale of the Securities pursuant to this Agreement
under applicable state or “blue-sky” laws or obtain an exemption therefrom, and shall promptly
provide evidence of any such action to such Investor at such Investor’s request; and



(c) (i) on or prior to 8:30 a.m. (eastern time) on the Business Day following the Closing
Date, issue a press release disclosing the material terms of this Agreement and the other
Transaction Documents and the transactions contemplated hereby and thereby, and (ii) on or prior to
5:00 p.m. (eastern time) on the Business Day following the Closing Date, file with the Commission a
Current Report on Form 8-K disclosing the material terms of and including as exhibits this
Agreement and the other Transaction Documents.



4.2 Use of Proceeds. The Company shall use the proceeds from the sale of the
Securities for working capital and general corporate purposes.



4.3 Conduct of Business. The business of the Company and the Company Subsidiaries
shall not be conducted in violation of any Governmental Requirement, except where such violations
would not result, either individually or in the aggregate, in a Material Adverse Effect.



4.4 Reporting Status. During the period beginning on the Closing Date and ending on
the second anniversary of the Closing Date, the Company shall timely file all reports required to
be filed with the Commission pursuant to the Exchange Act, and the Company shall not terminate its
status as an issuer required to file reports under the Exchange Act even if the Exchange Act or the
rules and regulations thereunder would no longer require or otherwise permit such termination.



4.5 Limitations on Disposition of Securities by Investors. No Investor shall sell,
transfer, assign or dispose of any Securities, unless:



(a) there is then in effect an effective registration statement under the Securities Act
covering such proposed disposition and such disposition is made in accordance with such
registration statement; or



(b) such Investor has notified the Company in writing of any such disposition, and furnished
the Company with an opinion of counsel, reasonably satisfactory to the Company, that such
disposition will not require registration of such Securities under the Securities Act; provided,
however, that no such opinion of counsel will be required (A) if the sale, transfer, assignment or
disposition is made to an Affiliate of such Investor, (B) if the sale, transfer, assignment or
disposition is made pursuant to Rule 144 and such Investor provides the Company with evidence
reasonably satisfactory to the Company that the proposed transaction satisfies the requirements of
Rule 144, (C) if such Securities are eligible for resale under Rule 144(k) or any successor
provision or (D) if in connection with a bona fide pledge or hypothecation of any Securities under
a margin arrangement with a broker-dealer or other financial institution (provided that such
opinion shall be required in connection with the sale of any such Securities by such broker-dealer
or other financial institution following such Investor’s default under any such margin arrangement.



4.6 Use of Investor Name. Except as may be required by applicable law and/or this
Agreement, the Company shall not use, directly or indirectly, any Investor’s name or the name of
any of its Affiliates in any advertisement, announcement, press release or other similar
communication unless it has received the prior written consent of such Investor for the specific
use contemplated or as otherwise required by applicable law or regulation.



4.7 Quotation on Principal Market. The Company shall maintain its eligibility for
continued quotation of the Common Stock on the OTC Bulletin Board. Neither the Company nor any of
the Company Subsidiaries shall take any action which would be reasonably expected to result in the
suspension of the quotation of the Common Stock on the OTC Bulletin Board.



4.8 No Integrated Offering. None of the Company, the Company Subsidiaries, any of
their Affiliates, or any Person acting on their behalf shall, directly or indirectly, make any
offers or sales of any security or solicit any offers to buy any security, which will be integrated
with the sale of the Shares in a manner which would require the registration of the Shares under
the Securities Act or require stockholder approval under the rules and regulations of the Principal
Market, and the Company will take all action that is appropriate or necessary to assure that its
offerings of other securities will not be integrated with the offering of the Shares contemplated
by this Agreement for purposes of the Securities Act and the rules and regulations of the Principal
Market.



4.9 Issuance Limitations. During the period beginning on the Execution Date and
ending on the ninetieth (90th) following the Closing Date, the Company shall not issue,
sell or exchange, or agree or obligate itself to issue, sell or exchange or reserve, agree to or
set aside for issuance, sale or exchange, (1) any shares of Common Stock, (2) any other equity
security of the Company, including without limitation shares of preferred stock, (3) any other
security of the Company which by its terms is convertible into or exchangeable or exercisable for
any equity security of the Company, or (4) any option, warrant or other right to subscribe for,
purchase or otherwise acquire any such security described in the foregoing clauses (1) through (3);
provided, however, that the foregoing shall not apply to any Excluded Security.



4.10 Information Statement. The Company will file an Information Statement with the
Commission within five (5) Business Days following the Closing Date.



4.11 Indemnification of Investors. The Company will indemnify and hold each Investor
and its directors, managers, officers, shareholders, members, partners, employees and agents (each,
an “Investor Party”) harmless from any and all losses, liabilities, obligations, claims,
contingencies, damages, costs and expenses, including all judgments, amounts paid in settlements,
court costs and reasonable attorneys’ fees and costs of investigation that any such Investor Party
may suffer or incur as a result of or relating to (a) any breach of any of the representations,
warranties, covenants or agreements made by the Company in this Agreement or in the other
Transaction Documents, (b) any violation of a Governmental Requirement applicable to the Company,
or (c) any action instituted against an Investor, or any of them or their respective Affiliates, by
any shareholder of the Company who is not an Affiliate of such Investor, with respect to any of the
transactions contemplated by the Transaction Documents (unless such action is based upon a breach
of such Investor’s representation, warranties or covenants under the Transaction Documents or any
agreements or understandings such Investor may have with any such shareholder or any violations by
such Investor of state or federal securities laws or any conduct by such Investor which constitutes
fraud, gross negligence, willful misconduct or malfeasance). If any action shall be brought
against any Investor Party in respect of which indemnity may be sought pursuant to this Agreement,
such Investor Party shall promptly notify the Company in writing, and the Company shall have the
right to assume the defense thereof with counsel of its own choosing. Any Investor Party shall
have the right to employ separate counsel in any such action and participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of such Investor Party
except to the extent that (i) the employment thereof has been specifically authorized by the
Company in writing, (ii) the Company has failed after a reasonable period of time following such
Investor Party’s written request that it do so, to assume such defense and to employ counsel or
(iii) in such action there is, in the reasonable opinion of such separate counsel, a material
conflict on any material issue between the position of the Company and the position of such
Investor Party. The Company will not be liable to any Investor Party under this Agreement (i) for
any settlement by an Investor Party effected without the Company’s prior written consent, which
shall not be unreasonably withheld or delayed; or (ii) to the extent, but only to the extent that a
loss, claim, damage or liability is attributable to such Investor Party’s wrongful actions or
omissions, or gross negligence or to such Investor Party’s breach of any of the representations,
warranties, covenants or agreements made by such Investor in this Agreement or in the other
Transaction Documents.



5. CONDITIONS TO CLOSING.



5.1 Conditions to each Investor’s Obligations at the Closing. Each Investor’s
obligations to effect the Closing, including, without limitation, its obligation to purchase the
Securities set forth opposite its name on Exhibit A, are conditioned upon the fulfillment (or
waiver by such Investor in its sole and absolute discretion) of each of the following events as of
the Closing Date, and the Company shall use commercially reasonable efforts to cause each of such
conditions to be satisfied:




	 	5.1.1	 	the representations and warranties of the Company set forth in
this Agreement and in the other Transaction Documents shall be true and correct
in all material respects as of such date as if made on such date (except that
to the extent that any such representation or warranty relates to a particular
date, such representation or warranty shall be true and correct in all material
respects as of that particular date);






	 	5.1.2	 	the Company shall have complied with or performed in all
material respects all of the agreements, obligations and conditions set forth
in this Agreement and in the other Transaction Documents that are required to
be complied with or performed by the Company on or before the Closing;






	 	5.1.3	 	the Company shall have delivered to such Investor (i) an
opinion of New York counsel for the Company, dated as of the Closing Date, in
the form attached hereto as Exhibit D-1, and (ii) an opinion of Florida counsel
for the Company, dated as of the Closing Date, in the form attached hereto as
Exhibit D-2;






	 	5.1.4	 	the Company shall have executed and delivered to such Investor
a certificate representing the Shares and the original Warrant being purchased
by such Investor at the Closing;






	 	5.1.5	 	the Company shall have executed and delivered to such Investor
the Registration Rights Agreement;






	 	5.1.6	 	the Company shall have delivered to such Investor a
certificate, signed by the Secretary or an Assistant Secretary of the Company,
attaching (i) the articles of incorporation and by-laws of the Company and (ii)
resolutions passed by the Board of Directors authorizing the transactions
contemplated hereby and by the other Transaction Documents, and certifying that
such documents are true and complete copies of the originals and have not been
amended or superseded, it being understood that such Investor may rely on such
certificate as a representation and warranty of the Company made herein;






	 	5.1.7	 	there shall have occurred no material adverse change in the
Company’s consolidated business or financial condition since the date of the
Company’s most recent financial statements contained in the Disclosure
Documents; and






	 	5.1.8	 	there shall be no injunction, restraining order or decree of
any nature of any court or Governmental Authority of competent jurisdiction
that is in effect that restrains or prohibits the consummation of the
transactions contemplated hereby and by the other Transaction Documents.





5.2 Conditions to Company’s Obligations at the Closing. The Company’s obligations to
effect the Closing with an Investor are conditioned upon the fulfillment (or waiver by the Company
in its sole and absolute discretion) of each of the following events as of the Closing Date:




	 	5.2.1	 	the representations and warranties of such Investor set forth
in this Agreement and in the other Transaction Documents to which it is a party
shall be true and correct in all material respects as of such date as if made
on such date (except that to the extent that any such representation or
warranty relates to a particular date, such representation or warranty shall be
true and correct in all material respects as of that date);






	 	5.2.2	 	such Investor shall have complied with or performed all of the
agreements, obligations and conditions set forth in this Agreement that are
required to be complied with or performed by such Investor on or before the
Closing;






	 	5.2.3	 	there shall be no injunction, restraining order or decree of
any nature of any court or Governmental Authority of competent jurisdiction
that is in effect that restrains or prohibits the consummation of the
transactions contemplated hereby and by the other Transaction Documents;






	 	5.2.4	 	such Investor shall have executed each Transaction Document to
which it is a party and shall have delivered the same to the Company; and






	 	5.2.5	 	such Investor shall have tendered to the Company the Purchase
Price for the Securities being purchased by it at the Closing by wire transfer
of immediately available funds.





6. MISCELLANEOUS.



6.1 Survival; Severability. The representations, warranties, covenants and
indemnities made by the parties herein and in the other Transaction Documents 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 Agreement becomes or is declared by a
court of competent jurisdiction to be illegal, unenforceable or void, this Agreement 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 Agreement to the parties.



6.2 Successors and Assigns, Assignment. The terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the respective successors and permitted assigns
of the parties. Nothing in this Agreement, express or implied, is intended to confer upon any
party other than the parties hereto or their respective successors and permitted assigns any
rights, remedies, obligations or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement. An Investor may assign its rights and obligations hereunder
in connection with any private sale or transfer of the Securities in accordance with the terms
hereof, as long as, as a condition precedent to such transfer, the transferee executes an
acknowledgment agreeing to be bound by the applicable provisions of this 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 Company may not assign its rights or obligations under this
Agreement except in connection with the merger or sale of substantially all of the assets of the
Company.



6.3 No Reliance. Each party acknowledges that (i) it has such knowledge in business
and financial matters as to be fully capable of evaluating this Agreement, the other Transaction
Documents and the transactions contemplated hereby and thereby, (ii) it is not relying on any
advice or representation of any other party in connection with entering into this Agreement, the
other Transaction Documents or such transactions (other than the representations made in this
Agreement or the other Transaction Documents), (iii) it has not received from any other party any
assurance or guarantee as to the merits (whether legal, regulatory, tax, financial or otherwise) of
entering into this Agreement or the other Transaction Documents or the performance of its
obligations hereunder and thereunder, and (iv) it has consulted with its own legal, regulatory,
tax, business, investment, financial and accounting advisors to the extent that it has deemed
necessary, and has entered into this Agreement and the other Transaction Documents based on its own
independent judgment and, if applicable, on the advice of such advisors, and not on any view
(whether written or oral) expressed by any other party.



6.4 Independent Nature of Investors’ Obligations and Rights. The obligations of each
Investor hereunder are several and not joint with the obligations of the other Investors hereunder,
and no Investor shall be responsible in any way for the performance of the obligations of any other
Investor hereunder. The Company acknowledges and agrees that nothing contained herein or in any
other Transaction Document, and no action taken by any Investor pursuant hereto or thereto, shall
be deemed to constitute the Investors as a partnership, an association, a joint venture or any
other kind of entity, or a “group” as described in Section 13(d) of the Exchange Act, or create a
presumption that the Investors are in any way acting in concert with respect to such obligations or
the transactions contemplated by this Agreement. Each Investor has been represented by its own
separate counsel in connection with the transactions contemplated hereby, shall be entitled to
protect and enforce its rights, including without limitation rights arising out of this Agreement
or the other Transaction Documents, individually, and shall not be required to join any other
Investor as an additional party in any proceeding for such purpose.



6.5 Injunctive Relief. The Company acknowledges and agrees that a breach by it of its
obligations hereunder will cause irreparable harm to each Investor and that the remedy or remedies
at law for any such breach will be inadequate and agrees, in the event of any such breach, in
addition to all other available remedies, such Investor shall be entitled to seek an injunction
restraining any breach and requiring immediate and specific performance of such obligations without
the necessity of showing economic loss or the posting of any bond.



6.6 Governing Law; Jurisdiction; Waiver of Jury Trial. (a) This Agreement 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. 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 any other Transaction Document or in connection
herewith or therewith or with any transaction contemplated hereby or thereby, 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 Agreement 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.



(b) Each party to this Agreement acknowledges and agrees that any dispute or controversy that
may arise under this Agreement or the other Transaction Documents is likely to involve complicated
and difficult issues and, therefore, each party hereby irrevocably and unconditionally waives any
right such party may have to a trial by jury in respect of any litigation directly or indirectly
arising out of or relating to this agreement, or the breach, termination or validity of this
Agreement or the other Transaction Documents, or the transactions contemplated hereby or thereby.
Each party to this Agreement certifies and acknowledges that (i) no representative, agent or
attorney of any other party has represented, expressly or otherwise, that such other party would
not, in the event of litigation, seek to enforce the foregoing waiver, (ii) each such party
understands and has considered the implications of this waiver, (iii) each such party makes this
waiver voluntarily, and (iv) each such party has been induced to enter into this agreement by,
among other things, the mutual waivers and certifications in this Section 6.6(b).



6.7 Counterparts; Facsimile Signatures. This Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, and all of which together shall
constitute one and the same instrument. An executed counterpart of this Agreement may be delivered
by verifiable facsimile transmission or by email in a suitable electronic format.



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



6.9 Notices. Any notice, demand or request required or permitted to be given by the
Company or the Investor pursuant to the terms of this Agreement 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.

c/o Ener1 Group, Inc.

5 Penn Plaza

23rd Floor

New York, New York 10001

Attn:Chief Executive Officer

Tel:(212) 920-3500

Fax: (212) 920-3510

	with a copy (which shall not constitute notice) to:







	 	 	 
	Mazzeo Song LLP

	708 Third Avenue

	19th Floor

	New York, New York 10017

	Tel:

Fax:

	 	(212) 599-0700

(212) 599-8400






and if to any Investor, to such address for such Investor as shall appear opposite such Investor’s
name on Exhibit A. Any party hereto may change its address for notice by sending notice in
accordance with this Section 6.9.



6.10 Expenses. Each of the Company and each Investor shall pay all costs and expenses
that it incurs in connection with the negotiation, execution, delivery and performance of this
Agreement or the other Transaction Documents.



6.11 Entire Agreement; Amendments. This Agreement 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 Agreement nor any term hereof
may be amended except pursuant to a written instrument executed by the Company and by the Investors
holding a majority of the aggregate number of the Shares and the Warrant Shares (assuming for such
purpose the full exercise of the Warrants) then held by all of the Investors. Any waiver or consent
shall be effective only in the specific instance and for the specific purpose for which given.



[Signature Pages Follow]



1




IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first-above written.



ENER1, INC.



	 	 	 	 	 	 	 	 	 
	By:	 	_______________________________
	 
	 	Name:	 	 	 	 
	 
	 	Title:	 	 	 	 
	[INVESTOR]
	 	 	 	 
	By:	 	_____________________
	 
	 	By:	 	 	—	 
	 
	 	 	 	 	 	Name:
	 
	 	 	 	 	 	Title:
	[INVESTOR]
	 	 	 	 
	By:	 	_____________________
	 
	 	By:	 	 	—	 
	 
	 	 	 	 	 	Name:
	 
	 	 	 	 	 	Title:
	[INVESTOR]
	 	 	 	 
	By:	 	_____________________
	 
	 	By:	 	 	—	 
	 
	 	 	 	 	 	Name:
	 
	 	 	 	 	 	Title:






2




Exhibit A to the

Securities Purchase Agreement




SCHEDULE OF INVESTORS




	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Legal
	 	 	 	 	 	 	Jurisdiction of	 	 	 	 	 	Number of Warrant	 	 	 	 	 	Representative’s
	Investor Name	 	Address for Notices	 	Residence	 	Number of Shares	 	Shares	 	Purchase Price	 	Address
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Schulte Roth &
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Zabel LLP
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	919 Third Avenue
	 
	 	c/o Lehman Brothers	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	New York, New York
	 
	 	Inc. 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	10022	 
	 
	 	399 Park Avenue, 9th	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Attn: Eleazer N.
	 
	 	Floor	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Klein, Esq.
	 
	 	New York, NY 10022	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Phone:
	 
	 	Attn: Eric	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	212-756-2000	 
	LBI Group Inc.
	 	Salzman/Jaime Ogden	 	NY	 	 	4,000,000	 	 	 	3,600,000	 	 	$	2,000,000	 	 	Fax: 212-593-5955
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	2309 Santiago Drive	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Newport Beach, CA	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	The Quercus Trust
	 	 	92660	 	 	CA	 	 	20,000,000	 	 	 	18,000,000	 	 	$	10,000,000	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	One Ferry Building	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Suite 255	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	San Francisco, CA	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	94111	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Attn: Adam Epstein	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Enable Growth
	 	Phone: 415-677-1579	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Partners LP
	 	Fax:     415-677-1580	 	CA	 	 	2,850,000	 	 	 	2,565,000	 	 	$	1,425,000	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	One Ferry Building	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Suite 255	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	San Francisco, CA	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	94111	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Pierce Diversified
	 	Attn: Adam Epstein	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Strategy Master
	 	Phone: 415-677-1579	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Fund LLC
	 	Fax:     415-677-1580	 	CA	 	 	150,000	 	 	 	135,000	 	 	$	75,000	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Credit Suisse	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Securities	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	One Madison Avenue	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	2nd Floor/V45L	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Credit Suisse
	 	New York, NY 10010	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Securities (USA)
	 	Attn:  Jerry	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	LLC
	 	Gordon/Nanci Garcia	 	NY	 	 	2,000,000	 	 	 	1,800,000	 	 	$	1,000,000	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	1585 Broadway, 10th	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Floor	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	New York, NY 10036	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Morgan Stanley &
	 	Phone: 212-761-1036	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Co., Incorporated
	 	Attn: Gina Walsh	 	NY	 	 	28,500,000	 	 	 	25,650,000	 	 	$	14,250,000	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Mag & Co.
fbo Fidelity
Commonwealth Trust:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Fidelity Small Cap
Stock Fund 
	 	 	 	 	 	MA	 	 	5,000,000	 	 	 	4,500,000	 	 	$	2,500,000	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Mag & Co.
fbo Fidelity Select
Portfolios:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Automobile
Portfolio 
	 	 	 	 	 	MA	 	 	500,000	 	 	 	450,000	 	 	$	250,000	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	CD Capital	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Management LLC	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	111 S. Wacker Drive,	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Suite 3950	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Chicago, Illinois	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	60606	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Attn: John Ziegelman	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	CD Investment
	 	Phone: 312-803-5011	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Partners, Ltd.
	 	Fax: 312-559-1288	 	Il	 	 	1,000,000	 	 	 	900,000	 	 	$	500,000	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Totals
	 	 	 	 	 	 	 	 	 	 	64,000,000	 	 	 	57,600,000	 	 	$	32,000,000	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 












3






Schedule 3.8 to

Securities Purchase Agreement




Fee Schedule




	 	 	 	 	 	 	 
	Stonegate Securities

	 	 	5	%	 	Placement Fee
	Ener1 Group

	 	 	3	%	 	Advisory Fee






4




Schedule 3.11.2 to

Securities Purchase Agreement




Income Tax Returns




The Company has prepared for filing, but has not yet filed, its consolidated 2005 Federal tax
return, which shows that no taxes are due.  The Company has filed an extension request for its
consolidated 2006 Federal tax return; no taxes will be due when such return is filed. 




5