Document:

Exhibit 10.2

Exhibit E to the 

Securities Purchase
Agreement 

SECURITY AGREEMENT 

        THIS
SECURITY AGREEMENT (this “Agreement”) is made and entered into as of
January __, 2004 by ENER1 BATTERY COMPANY, a Florida corporation
(“Guarantor”), in favor of Satellite Asset Management, L.P. (the
“Agent”) and each of the lenders whose names appear on the signature
pages hereof. Such lenders are each referred to herein as a “Secured
Party” and, collectively, as the “Secured Parties”. This
Agreement is being executed and delivered by the Guarantor and the Secured Parties in
connection with that certain Securities Purchase Agreement (the “Purchase
Agreement”) by and between Ener1 Inc., a Florida corporation and parent company
of the Guarantor (the “Borrower”), and each Secured Party. Capitalized
terms used herein and not otherwise defined herein shall have the respective meanings set
forth in the Purchase Agreement. 

W I T N E S S E T H: 

        WHEREAS,
pursuant to the terms of the Purchase Agreement, the Secured Parties have agreed to
purchase from the Borrower, and the Borrower has agreed to sell to the Secured Parties, 5%
Senior Secured Convertible Debentures (the “Debentures”); 

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

        WHEREAS,
it is a condition to the obligation of the Secured Parties to purchase the Debentures that
the Guarantor guaranty the full and timely satisfaction of all of the Obligations (as
hereinafter defined) and, in furtherance thereof, the Guarantor has entered into that
certain Subsidiary Guaranty, dated as of the date hereof (the “Subsidiary
Guaranty”), in favor of the Secured Parties; 

        WHEREAS,
the Obligations are secured by, among other things, that certain Mortgage, Security
Agreement and Assignment of Leases and Rents, dated as of the date hereof (the
“Mortgage”), given by the Guarantor in favor of the Secured Parties; 

        WHEREAS,
it is the intent of the parties hereto that the Obligations be further secured by the
Collateral (as hereinafter defined) in accordance with the terms of this Agreement; and 

        WHEREAS,
pursuant to that certain Intercreditor Agreement, dated as of the date hereof (the
“Intercreditor Agreement”), by and among the Agent and the Secured
Parties, the Secured Parties have designated the Agent as their collateral agent. 

        NOW,
THEREFORE, in consideration of the foregoing, the covenants set forth herein, and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Agent, Secured Parties and the Guarantor hereby agree as follows. 

ARTICLE I 

COLLATERAL; OBLIGATION
SECURED 

        Section
1.1 Grant and Description. As security for the Borrower’s and Guarantor’s
obligations under this Agreement, the Purchase Agreement, the Debentures, the Mortgage and
the Subsidiary Guaranty (collectively, the “Transaction Documents”), the
Guarantor hereby grants to each Secured Party a continuing first priority security
interest in all of the Guarantor’s right, title and interest in, to and under the
“Collateral,” which shall mean: (A) the Special Proceeds Accounts (as
hereinafter defined), (B) the assets and properties described on Exhibit A hereto,
and (C) the assets and properties described on Exhibit B hereto (the
“Loaned Equipment”). 

        Section
1.2 Financing Statements; Further Assurances. The Guarantor hereby authorizes the
Agent to file, transmit or communicate, as applicable, UCC financing statements and
amendments in order to perfect each Secured Party’s first priority security interest
in the Collateral without the Guarantor’s signature to the extent permitted by
applicable law, provided that the Agent shall concurrently copy the Guarantor on all such
filings. In addition to the foregoing, at any time upon the written request of the Agent,
the Guarantor shall promptly (i) execute (or cause to be executed) and deliver to the
Agent, any and all agreements, financing statements, certificates, instruments and other
documents (the “Additional Documents”) upon which the Guarantor’s
signature may be required and that the Agent may reasonably request in form and substance
satisfactory to the Agent, and/or (ii) perform any acts; in each case, to perfect and
continue perfected or better perfect each Secured Party’s security interest in the
Collateral (whether now owned or hereafter arising or acquired), and in order to fully
consummate all of the transactions contemplated hereby and under the other Transaction
Documents that the Agent reasonably believes to be necessary as a result of any amendment
to the Uniform Commercial Code in effect from time to time in the State of Florida (the
“UCC”), provided, that any Additional Documents that require the
Guarantor to assume any new obligations shall be subject to the review and approval of the
Guarantor, such approval not to be unreasonably withheld or delayed. To the maximum extent
permitted by applicable law, the Guarantor hereby authorizes the Agent to execute any such
Additional Documents in the Guarantor’s name and authorize the Agent to file such
executed Additional Documents in any appropriate filing office, provided, that any
Additional Documents that require the Guarantor to assume any new obligations shall be
subject to the review and approval of the Guarantor, such approval not to be unreasonably
withheld or delayed. The Guarantor also hereby ratifies its authorization for the Agent to
have filed in any jurisdiction the financing statements or amendments thereto filed prior
to the date hereof (if any), copies of which have previously been provided to the
Guarantor. The Guarantor shall not terminate, amend or file any correction statement with
respect to any UCC financing statement filed pursuant to this Agreement without obtaining
the prior written consent of Secured Parties holding at least a majority of the
Registrable Securities into which all of the Debentures then outstanding are convertible
(without regard to any limitation on such conversion). The Guarantor appoints the Agent as
the Guarantor’s attorney-in-fact, with a power of attorney to execute on behalf of
the Guarantor such Additional Documents and other similar instruments as the Agent may
from time to time deem necessary or desirable to protect or perfect the security interest
in the Collateral, provided, that any Additional Documents that require the
Guarantor to assume any new obligations shall be subject to the review and approval of the
Guarantor, such approval not to be unreasonably withheld or delayed. Such power of
attorney is coupled with an interest and shall be irrevocable. 

        Section
1.3 Obligations Secured. The Collateral and the power of collection pertaining
thereto shall secure any and all indebtedness, liabilities and obligations of the
Borrower or the Guarantor to the Secured Parties evidenced by and/or arising pursuant to
this Agreement, the Purchase Agreement, the Subsidiary Guaranty, the Mortgage or the
Debentures, now existing or hereafter arising, whether direct, indirect, related,
unrelated, fixed, contingent, liquidated, unliquidated, joint, several or joint and
several, including, without limitation, the obligations of the Company to repay principal
of the Debentures, to pay interest on the Debentures (including, without limitation,
interest accruing after any bankruptcy, insolvency, reorganization or other similar
filing) and to pay all fees, indemnities, costs and expenses (including attorneys’
fees) provided for in this Agreement, the Purchase Agreement, the Subsidiary Guaranty, the
Mortgage or the Debentures (collectively the “Obligations”). 

ARTICLE II 

COVENANTS 

        Section
2.1 Duties of the Guarantor Regarding Collateral. At all times after the date
hereof, the Guarantor agrees that it shall: 

     (a)    
          Preserve the Collateral in good condition and order (ordinary wear and tear
          excepted) and not permit it to be abused or misused; provided, however, that
          Agent and Secured Parties shall be obligated to exercise reasonable care with
          respect to any Collateral that comes into any of their possession; 

     (b)    
          Not allow any of the Collateral to be affixed to real estate, except for any
          property deemed to be fixtures; 

     (c)    
          Maintain good and complete title to the Collateral subject to Permitted Liens; 

     (d)    
          Keep the Collateral free and clear at all times of all Liens other than
          Permitted Liens; 

     (e)    
          Take or cause to be taken such acts and actions as shall be necessary or
          appropriate to assure that the Secured Parties’ security interest in the
          Collateral shall not become subordinate or junior to the security interests,
          liens or claims of any other Person; 

     (f)    
          Refrain from selling, assigning or otherwise disposing of any of the Collateral
          or moving or removing any of the Collateral (except to the extent permitted
          under and in accordance with Section 2.4 of this Agreement), without
          obtaining the prior written consent of the Secured Parties holding a majority of
          the Registrable Securities into which all of the Debentures then outstanding are
          convertible (without regard to any limitation on such conversion), or until all
          of the Obligations have been fully performed and paid in full; provided,
          however, that concurrently with any disposition permitted by this Section
          2.1(f), (x) the security interest granted hereby shall automatically be
          released from the Collateral so disposed, and (y) the security interest shall
          continue in the Proceeds (as defined in the UCC) of such Collateral or any
          property purchased with such Proceeds; and provided further, that, Agent and
          Secured Parties shall execute and deliver, at the Guarantor’s sole cost and
          expense, any releases or other documents reasonably requested by the Guarantor,
          that is in form and substance reasonably acceptable to the executing party,
          confirming the release of the security interest in that portion of the
          Collateral that is the subject of a disposition permitted by this Section
          2.1(f); 

     (g)    
          Promptly provide to Agent and each Secured Party such financial statements,
          reports, lists and schedules related to the Collateral and any other information
          relating to the Collateral as Agent or such Secured Party may reasonably request
          from time to time; 

     (h)    
          Upon reasonable notice, permit Agent or any Secured Party to inspect all books
          and records of the Guarantor relating to the Collateral at such times and as
          often as Agent or any such Secured Party may reasonably request; and 

     (i)    
          Promptly notify Agent and each Secured Party if any Event of Default (as
          hereinafter defined) occurs. 

        Section
2.2 Other Encumbrances. At all times after the date hereof, the Guarantor shall:
(i) defend its title to, and the Secured Parties’ interest in, the Collateral against
all claims, (ii) take any action necessary to remove any encumbrances on the Collateral
other than Permitted Liens, and (iii) defend the right, title and interest of the Secured
Parties in and to any of the Guarantor’s rights in the Collateral. 

        Section
2.3 Change Name or Location. The Guarantor shall not, except upon 30 days’
prior written notice to Agent and each Secured Party, change its company name or conduct
its business under any name other than that set forth herein or change its jurisdiction of
organization or incorporation, chief executive office, place of business from the current
location. 

        Section
2.4. Special Proceeds Account. Notwithstanding anything contained herein to the
contrary, the Guarantor may, pursuant to an arms’ length transaction and subject to
the restrictions in the Purchase Agreement (including, without limitation, restrictions
relating to transactions with Affiliates), sell any of the Collateral as long as the
Guarantor, concurrently with such sale, (i) uses all or any of the proceeds of such sale
to purchase, pursuant to an arms’ length transaction, other property in which the
Secured Parties have a perfected first priority security interest immediately upon the
consummation of such purchase, and (ii) deposits all of the remaining proceeds of such
sale into one or more Special Proceeds Accounts (as hereinafter defined). In addition to
the foregoing, the Guarantor shall deposit all Special Net Proceeds (as defined in the
Mortgage) that are not used to repay the Obligations into one or more Special Proceeds
Account immediately upon receipt. As used herein, the term “Special Proceeds
Account” means an account (i) that is established at a financial institution that
is reasonably acceptable to the Agent and each Secured Party, and (ii) in which the
Secured Parties have a first priority perfected security interest. In furtherance of the
foregoing, the Guarantor shall not be permitted to sell, assign or otherwise dispose of
any Collateral pursuant to this Section 2.4 unless and until a Special Proceeds Account
that is reasonably acceptable to the Agent and each Secured Party has been established.
From and after the date that is two (2) years after the Closing Date, each Secured Party
shall have the right, but not the obligation, in such Secured Party’s sole
discretion, to apply its Proportionate Loan Share (as defined in the Mortgage) of any
funds contained in a Special Proceeds Account to satisfy all or any of the Obligations
then owing to such Secured Party in any order that such Secured Party deems appropriate. 

        Section
2.5. Loaned Equipment. Guarantor shall deliver, or cause to be delivered, all of
the Loaned Equipment to the premises described on Exhibit A-1 hereto as promptly as
practicable after the date hereof (but in no event later than December 31, 2004).
Guarantor shall, at its sole cost and expense, take all actions reasonably requested by
any Secured Party in order to ensure that such Secured Party has a perfected first
priority security interest in all of the Loaned Equipment, including, without limitation,
entering into a security agreement similar to this Agreement with respect to the Loaned
Equipment and taking such other actions described in Section 1.2 of this Agreement
with respect to the Loaned Equipment. 

ARTICLE III 

EVENTS OF DEFAULT 

        Section
3.1 Events of Default Defined. The occurrence of any of the following events shall
constitute an event of default under this Agreement (each, an “Event of
Default”): 

         (a)       
          The failure of the Guarantor to perform or comply in a material respect with any
          act, duty or obligation required to be performed under this Agreement if such
          failure is not remedied within ten (10) Business Days after the Guarantor
          receives written notice of such failure from any Secured Party, provided,
          that if during such ten Business Day period, the Guarantor is diligently and in
          good faith taking steps to cure such breach, such period will be extended from
          ten Business Days to fifteen (15) Business Days; 

         (b)       
          If any of the representations or warranties of the Guarantor set forth in this
          Agreement shall prove to have been incorrect in any material respect when made,
          or becomes incorrect in any material respect and is not cured within ten (10)
          Business Days after the Guarantor receives written notice from any Secured
          Party, provided, that if during such ten Business Day period, the
          Guarantor is diligently and in good faith taking steps to cure such breach, such
          period will be extended from ten Business Days to fifteen (15) Business Days; 

         (c)       
          If any material portion of the Collateral shall be damaged, destroyed or
          otherwise lost and such damage, destruction or loss is not covered by insurance;
          or 

         (d)       
          If an “Event of Default” as defined in the Debentures, the Purchase
          Agreement, the Subsidiary Guaranty or the Mortgage shall have occurred. 

        Section
3.2 Rights and Remedies Upon Default. If an Event of Default shall have occurred
hereunder, any Secured Party may, at its option, without notice or demand, declare the
Obligations to be immediately due and payable. As to any Collateral, the Agent shall, in
its capacity as collateral agent for the Secured Parties, have the rights and remedies of
any secured creditor under the UCC, such rights to be exercised in such order or manner as
the Secured Parties may determine against the Guarantor. If for any reason the Agent
should be required by law or otherwise to give notice to the Guarantor of the sale of any
Collateral, the Guarantor agrees that any written notice sent by overnight delivery
service not less than ten (10) calendar days before the sale or mailed postage prepaid,
return receipt requested, to the Guarantor’s address listed below not less than
fifteen (15) calendar days before the sale shall be deemed reasonable and adequate. 

        Section
3.3 Allocation of Proceeds. Any funds received by the Agent or a Secured Party
pursuant to this Agreement shall be allocated among and paid to each Secured Party in
accordance with each Secured Party’s Proportionate Loan Share (as defined in the
Mortgage). To the extent that a Secured Party receives greater than its Proportionate Loan
Share, such Secured Party shall promptly remit such overpayment to each other Secured
Party as required to comply with the preceding sentence. Each Secured Party may determine
the order in which to apply funds received by it regardless of the order in which any
other Secured Party applies funds (e.g., a Secured Party may determine to apply funds
first to expenses, second to interest and third to principal and another Secured Party may
determine to apply funds first to interest, second to expenses and third to principal). 

ARTICLE IV 

ADDITIONAL REMEDIES 

        Upon
the occurrence of an Event of Default, the Guarantor shall: 

         (a)       
          Endorse any and all documents evidencing any Collateral to the Agent, or as
          otherwise instructed by the Agent, and notify any payor that said documents have
          been so endorsed and that all sums due and owing pursuant to them should be paid
          directly to the Agent, or as otherwise instructed by the Agent; 

         (b)       
          Turn over to the Agent, or as otherwise instructed by the Agent, copies of all
          documents evidencing any right to collection of any sums due the Guarantor
          arising from or in connection with any of the Collateral; 

         (c)       
          Take any action reasonably required by the Agent with reference to the Federal
          Assignment of Claims Act; and 

         (d)       
          Keep all of its books, records, documents and instruments relating to the
          Collateral in such manner as the Agent may require. 

ARTICLE V 

REPRESENTATIONS AND
WARRANTIES 

        The
Guarantor represents and warrants to the Agent and the Secured Parties as follows: 

        Section
5.1 Title to Collateral. The Guarantor is the owner of and has good and marketable
title to, or has a valid and subsisting leasehold interest in, all of the Collateral. All
of the Additional Collateral (as defined in Exhibit A hereto) is located at the
premises described on Exhibit A-1 hereto. 

        Section
5.2 No Other Encumbrances. The Guarantor has not granted, nor will it grant, a
security interest in the Collateral to any other individual or entity, and such Collateral
is free and clear of any mortgage, pledge, lease, trust, bailment, lien, security
interest, encumbrance, charge or other arrangement (other than the Permitted Liens). 

        Section
5.3 Authority; Enforceability. The Guarantor has the authority and capacity to
perform its obligations hereunder, and this Agreement, when executed and delivered, will
be the valid and binding obligation of the Guarantor enforceable against the Guarantor in
accordance with its terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency or other similar laws of general application affecting the
enforcement of creditors’ rights or general equitable principals, whether
applied in law or equity. 

        Section
5.4 Company Name; Place of Business; Location of Collateral. The Guarantor’s
true and correct company name, all trade name(s) under which it conducts its business, its
jurisdiction of organization or incorporation and each of its chief executive office, its
place(s) of business and the locations of the Collateral or records relating to the
Collateral are set forth in Exhibit C hereto. 

        Section
5.5 Perfection; First Priority Security Interest. Upon the filing of UCC financing
statements with the Secured Transaction Registry (and such other jurisdictions where the
Guarantor may, in the future, become organized or incorporated from time to time), the
security interest in the Collateral granted hereunder shall constitute at all times a
valid first priority security interest (other than with respect to Permitted Liens and
except where the Secured Parties have failed to file necessary continuation statements),
perfected with respect to all Collateral for which the filing of the UCC financing
statements is a valid method of perfection, vested in the Secured Parties, in and upon the
Collateral, free and clear of any liens (other than the Permitted Liens). 

ARTICLE VI 

MISCELLANEOUS 

        Section
6.1 Survival; Severability. The representations, warranties, covenants and
indemnities made by the Guarantor herein shall survive the execution and delivery of this
Agreement 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. 

        Section
6.2 Successors and Assigns. The terms and conditions of this Agreement shall inure
to the benefit of and be binding upon the successors and permitted assigns of the Agent
and the Secured Parties. Each Secured Party may assign its rights hereunder in connection
with any private sale or transfer of the Debentures in accordance with the terms of the
Purchase Agreement, in which case the term “Secured Party” shall be
deemed to refer to such transferee as though such transferee was an original signatory
hereto. The Agent may resign or be replaced in accordance with the terms of the
Intercreditor Agreement, in which case the term “Agent” shall be deemed
to refer to the successor agent as though such agent was an original signatory hereto. The
Guarantor may not assign its rights or obligations under this Agreement. 

        Section
6.3 Governing Law; Jurisdiction. This Agreement shall be governed by and construed
under the laws of the State of Florida applicable to contracts made and to be performed
entirely within the State of Florida. The Guarantor hereby irrevocably submits to the
non-exclusive jurisdiction of the state and federal courts sitting in the City of Miami,
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 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. 

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

        Section
6.5 Notices. Any notice, demand or request required or permitted to be given by the
Guarantor, the Agent or a Secured Party 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 Guarantor:

Ener1 Battery Company

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

If to the Agent:

Satellite Asset Management, L.P.

623 Fifth Avenue, 20th Floor

New York, NY 10022

Attn:    Charles Gassenheimer

Tel:     212-209-2087

Fax:     212- 209-2020

with a copy to:

Duval & Stachenfeld LLP

300 East 42nd Street

New York, NY 10019

Attn:    Robert L. Mazzeo

Tel:     212-883-1700

Fax:     212-883-8883

and if to a Secured Party, to the
address for such Secured Party as shall appear on the signature page to the Purchase
Agreement executed by such Secured Party, or as shall be designated by such Secured Party
in writing to the Guarantor in accordance with this Section 6.5. 

        Section
6.6 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 Guarantor, the Agent and the Secured Parties holding at least
two-thirds (2/3) of the Registrable Securities into which all of the Debentures then
outstanding are convertible (without regard to any limitation on such conversion), 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. 

        Section
6.7 No Waiver. Neither the Agent nor any Secured Party shall by any act (except as
provided in Section 6.6 above), any failure to act or any delay in acting be deemed
to have (i) waived any right or remedy under this Agreement, any other Transaction
Document or any document, agreement or instrument made, delivered or given in connection
with this Agreement 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 Agreement, any other
Transaction Document or any document, agreement or instrument made, delivered or given in
connection with this Agreement or the other Transaction Documents. No failure to exercise,
nor any delay in exercising, any right, power or privilege of the Agent or any Secured
Party under this Agreement, any other Transaction Document or any document, agreement or
instrument made, delivered or given in connection with this Agreement 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 Agreement, any
other Transaction Document or any document, agreement or instrument made, delivered or
given in connection with this Agreement or the other Transaction Documents shall preclude
any other or further exercise of any other right, power or privilege. A waiver by the
Agent or a Secured Party of any right or remedy under this Agreement, any other
Transaction Document or any other document or instrument made, delivered or given in
connection with this Agreement or the other Transaction Documents on any one occasion
shall not be construed as a bar to any right or remedy that the Agent or such Secured
Party would otherwise have on any future occasion. 

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

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

        Section
6.10 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 Agent and each Secured Party in connection with the enforcement
of this Agreement and any amendment, waiver or consent relating hereto (including, without
limitation, reasonable legal fees and disbursements). 

        Section
6.11 Waivers. The Guarantor acknowledges that the Obligations arose out of a
commercial transaction and hereby knowingly and intelligently waives any right to require
the Agent or any Secured Party to (i) proceed against any person or entity,
(ii) proceed against any other collateral under any other agreement, (iii) pursue any
other remedy available to the Agent or such Secured Party, or (iv) make presentment,
demand, dishonor, notice of dishonor, acceleration and/or notice of non-payment. 

        The
Guarantor further waives any defense that it may have to the exercise by the Agent or any
Secured Party of its rights under this Agreement, other than the defense that the
Obligations have fully been paid and performed. 

        Section
6.12 Attorney-in-Fact. The Guarantor appoints the Agent its true attorney-in-fact
to perform any of the following powers, which are irrevocable until termination of this
Agreement and may be exercised, from time to time, by the Agent’s officers and
employees or any of them if an Event of Default occurs: (i) to perform any obligation of
the Guarantor hereunder in the Guarantor’s name or otherwise; (ii) to collect by
legal proceedings or otherwise all dividends, interest, principal or other sums now or
hereafter payable upon or on account of the Collateral, to accept other property in
exchange for the Collateral, and any money or property received in exchange for the
Collateral may be applied to the Obligations or held by the Agent under this Agreement;
(iii) to make any compromise or settlement the Agent deems desirable or proper in respect
of the Collateral; and (iv) to insure, process and preserve the Collateral. The foregoing
power of attorney shall take effect only upon an Event of Default. 

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

        Section
6.14 Fees and Expenses. On demand by the Agent or any Secured Party, without
limiting any of the terms of any other Transaction Document, the Guarantor is obligated to
pay all reasonable fees, and out-of-pocket costs, and expenses (including, without
limitation, reasonable attorneys’ fees and legal expenses) incurred by the Agent or
such Secured Party in connection with (i) filing or recording any documents (including all
taxes in connection therewith) in public offices; and (ii) paying or discharging any
taxes, counsel fees, maintenance fees, encumbrances, or other amounts in connection with
protecting, maintaining, or preserving the Collateral or defending or prosecuting any
actions or proceedings arising out of or related to the Collateral. 

        Section
6.15 Release. No transfer or renewal, extension, assignment or termination of this
Agreement or of any instrument or document executed and delivered by the Guarantor or any
other obligor to a Secured Party, nor additional advances made by any Secured Party to the
Guarantor, nor the taking of further security, nor the retaking or re-delivery of the
Collateral to the Guarantor by the Agent or any Secured Party nor any other act of the
Agent or any Secured Party shall release the Guarantor from any Obligation, except a
release or discharge executed in writing by each Secured Party with respect to such
Obligation or upon full payment and satisfaction of all Obligations and termination of the
Debentures. At such time the Obligations have been satisfied in full, the Agent and each
Secured Party shall execute and deliver to the Guarantor all assignments and other
instruments as may be reasonably necessary or proper to terminate such Secured
Party’s security interest in the Collateral, subject to any disposition of the
Collateral that may have been made by the Agent or such Secured Party pursuant to
this Agreement. For the purpose of this Agreement, the Obligations shall be deemed to
continue if the Guarantor or the Borrower enters into any bankruptcy or similar proceeding
at a time when any amount paid to the Agent or a Secured Party could be ordered to
be repaid as a preference or pursuant to a similar theory, and shall continue until it is
finally determined that no such repayment can be ordered. 

        Section
6.16 Marshalling and Other Matters. The Guarantor hereby waives, to the extent
permitted by law, the benefit of all appraisement, valuation, stay, extension,
reinstatement and redemption laws now or hereafter in force and all rights of marshalling
in the event of any sale hereunder of the Collateral or any part thereof or any interest
therein. Further, the Guarantor hereby expressly waives any and all rights of redemption
from sale under any order or decree of foreclosure of this Agreement on behalf of the
Guarantor, and on behalf of each and every person acquiring any interest in or title to
the Collateral subsequent to the date of this Agreement and on behalf of all persons to
the extent permitted by applicable law. 

[Signatures Page to
Follow] 

        IN
WITNESS WHEREOF, the Guarantor, the Agent and each Secured Party have duly executed this
Agreement as of the date first written above. 

	 	GUARANTOR:

ENER1 BATTERY COMPANY, a Florida corporation

By:      _________________________

         Name:

         Title:

AGENT:

SATELLITE ASSET MANAGEMENT, L.P.

By:      _____________________, its general partner

By:      _____________________

         Name:

         Title:

SECURED PARTY:

_______________________________

By:      _________________________

         Name:

         Title:

Exhibit A 

        All
equipment and fixtures existing as of the date hereof associated with the Guarantor’s
operations and located at 1751 West Cypress Creek Road, Ft. Lauderdale, Florida 33309 (as
more specifically described on Exhibit A-1 hereto), including, without limitation,
(i) all of the property listed and described below under the heading “Additional
Collateral”), and (ii) all of the proceeds resulting therefrom. 

        As
used in this Exhibit A, the terms “equipment”, “fixtures” and
“proceeds” shall have the meanings given such terms under the Florida Uniform
Commercial Code, Chapter 671, et seq., Florida Statutes (2002). 

Additional Collateral 

Model SDS299A soft cell degassing and
sealing machine, s/n 299M-B80A 

Model SPF446Q soft pak cell packaging and
assembly machine, s/n 446G-BW6A 

Model ASB469P lithium anode assembly
& insertion into separator bag, s/n 469G-BW3A 

Model CFV472Q cell filling under
vacuum machine, s/n 472G-BW5A 

Model TFW486Q tab welding machine,
s/n 486Q-BW4A 

Model ENC4996B electrode notching and
cutting machine, s/n 499M-BW2A 

Model SPF300P soft cell packaging
& filling machine, s/n 300G-BC2A 

Model EBE292A electrode banking
machine, s/n 292M-A69A 

Model SPF446P soft pak cell packaging
machine, s/n 446G-BC3A 

Model TFT470P tab current collector
folding and trimming unit, s/n 470G-BR0A 

Model TFF471P tab final folding unit,
s/n 471G-BR1A 

Model TTW294P tab to current
collector welding unit, s/n 294G-A73A 

Model PRT473P Pallet return transport
system and auxiliary tools, s/n 473G-BS0A 

Model SDS299A soft pak cell degassing and
sealing machine, s/n 299M-B24A 

Model ASB469P lithium anode assembly
and inserting into separator bag, s/n 469M-BS5A 

Model CFV472P cell filling under
vacuum machine, s/n 472G-BR2A 

Automatic pilot line for cathode materials
with dual loading chambers & hoppers, unserialized 

     (2)    
          Multitherm N7-N17 high frequency induction furnace, in storage, not in use, pend
          install mid 2004 (est), serial nos. 163162 and 163163 

Automatic pilot line for cathode
materials with dual loading chambers & hoppers, unserialized pending final install,
est ready for use 1/04 

Glove Boxes, line #1, quantity –
14, including (2) Mbraun MB300G & (1) MB VOH-200 unserialized 

Glove Box System for lithium
production unserialized 

Glove Boxes, line #2, quantity –
14, including (2) Mbraun MB300G & (1) MB VOH-200 unserialized 

Glove Boxes, line #3, quantity – 17,
including (2) Mbraun MB300G & (1) MB VOH-200 unserialized 

Compressed Argon Supply Units,
quantity (3), s/n 210814, 210930 & 210931 

Mbraun solvent removal &
protection of gas cleaning units, stainless steel, unserialized 

Assembly Line #3
including: 

Model ASB469P lithium anode assembly
and inserting into separator bag, s/n 469G-B77A; Model SPF446Q soft pak cell packaging
& assembly machine s/n 446G-B75A; Model ENC499 electrode notching & cutting
machine, s/n 499M-B74A; Model CVF472Q cell filling under vacuum machine, s/n 472G-B78A;
Model SD299A soft cell degassing & sealing machine, s/n 299M-B76A; Model TFW486 tab
welding machine, s/n 486G-B79A 

Compressed Argon Supply Units
including (6) Sera MV4751 tandem metal membrane argon compressors with pressure vessels,
s/n 1390, 1392, 1393, 1394, 1398 & 1400 

Electrical Feed Throughs
(glove boxes) 

Hirano MG4342 dual side coating
machine including; dryer, ET64 winder, ET6G rewinder, AC Panel, (3) Allen Bradley controls
stations unserialized 

     (2)    
          Model MB150 BG Glove Box Systems, S/n 2208 & BG888 

     (2)    
          Yamato Ovens, s/n 39100027 & 39100028 & Taiyo Chamber Filtration System
          (no s/n) 

scales of various capacities &
(1) moisture analyzer, s/n not available 

Labsys TGA, s/n 3-111074 

Setsys Thermo Gravimetric
Analyzer, s/n 31-111067 

Calvet DSC111 Gas
Measurement Device, s/n 115028 

     (3)     Vacuum
          ovens & vent hoods, storage cabinets, drawers & furniture, unserialized 

Saturn Digisizer 5200
particle analyzer, s/n 130 

Saturn 5200 handling unit, s/n 150 

Pompe Chimche Lab Hood,
unserialized 

Additional equipment including but
not limited to: 

Serialized: 

D4 Endeavor Xray Defractometer, s/n
D42A1A1A1; Thermo Elemental Radio Frequency Generator, s/n 11105; Lindberg Furnace, 240v,
s/n STF55666C; erg Furnace, 240v, s/n STF55666C, Chromolox Heat Control Unit, s/n JOO130;
(3) argon storage tanks, s/n 411056, 411316 & 410391; Micrometrics Generator, s/n 5155
with floor prep station, s/n 1065; Micrometrics Vacuum Prep, model 06-1, s/n 822; Alzeta
Catalydic Oxydizer, s/n JOO130; Ingersoll Rand SSR compressor, s/n A01954U95013; Zeks Air
Dryer, model 100HSBA100, s/n 82281-1; Additional equipment including but not limited to:
Viscicomm Frequency Convertor, s/n 4928 

Unserialized: 

vent hoods, ovens, distiller, storage
vault, coating machinery, industrial sieve, lab furniture, tooling, coulometer,
multimeters, vacuum pumps, magnetic & mechanical stirrers, chillers, radiometers,
process piping, recirculator, impedance measuring unit, automatic catalyst
characterization system, moisture analyzers and other accessories, attachments and
peripherals 

Exhibit A-1 

Description of Property 

Ener1 Battery Company, a Florida
corporation, is the record owner of all that certain lot, piece or parcel of land, with
the buildings, improvements and fixtures thereon, situate, lying and being in Broward
County Florida, and being more particularly described as follows: 

	 	
The
West 1/2 of Lot 40, of FORT LAUDERDALE INDUSTRIAL AIRPARK SECTION 2, according to the map
or plat thereof, as recorded in Plat Book 63, Page 8, of the Public Records of Broward
County, Florida, less the South 5 feet. 

	 	
Together
with appurtenant rights under Joint Use Agreement, recorded in Official Records Book
22595, at Page 204, Public Records of Broward County, Florida. 

B-1 

Exhibit B 

Loaned Equipment 

        All
of the (i) equipment listed and described below under the heading “Loaned
Equipment”), and (ii) all of the proceeds resulting therefrom. 

        As
used in this Exhibit B, the terms “equipment” and “proceeds”
shall have the meanings given such terms under the Florida Uniform Commercial Code,
Chapter 671, et seq., Florida Statutes (2002). 

Loaned Equipment 

      The
Loaned Equipment is located at:

Ener1
Ukraine
c/o Chemical Power Sources Research Laboratory (ONILhit)
Ukrainian State Chemical
Technology University
8 Gagarin Ave.
Dnipropetrovsk 4900, Ukraine

        The
specific Loaned Equipment are as follows: 

	1

 

 

2

 

 

3

 

 

 

4

 

 

5
	Electronic Blocks of High Frequency Induction Furnace

for Oxide Materials Treatment                        

                                                     

Electronic Blocks of High Frequency Induction Furnace

for Oxide Materials Treatment- Electron Resonator (2 

items)                                               

Gas Composition and Pressure Control System for      

Oxide-Sulphide Synthesis                             

                                                     

                                                     

Flow Prep for Gemeni                                 

                                                     

                                                     

Lab Glove Box                                        

                                                     

                                                     
	Model: Gemini

Manufacturer: Micrometrics, USA

Serial Number: 3133

Model Number: N 11/ HR

Manufacturer: Nabertherm, Germany

Serial Numbers: 163160 and 163161

Model Number: E2MO.7

Manufacturer: Edwards High Vacuum

International, England

Serial Number: 0169377192

Model Number: 060 LB

Manufacturer: Micrometrics, USA

Serial Number: 1202

Model Number: MB 150B-G-II

Manufacturer: MBraun, Germany

Serial Number: N/A

C-1 

Exhibit C 

List of Collateral
Locations, Executive Offices and 

Jurisdiction of
Organization or Incorporation of Guarantor 

              

	                              

                              

                              

                              

Collateral Location:          

                              

                              

Jurisdiction of Incorporation:
	Executive Offices:

Ener1 Battery Company

550 West Cypress Creek Road, Suite 120

Ft. Lauderdale, Florida 33309

1751 West Cypress Creek Road, Ft. Lauderdale,  Florida 33309 (other than Loaned
Equipment,  all of which,  as of the date  hereof,  are  located at the address
specified on Exhibit B to the Agreement)

Ener1 Battery Company - State of FloridaExhibit 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

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