Document:

Exhibit
10.1

     

    SUPPLY
AGREEMENT

     

    THIS
SUPPLY AGREEMENT, dated as of October 6, 2010 (this “Agreement”), is made by and
between Ener1, Inc., a Florida, USA, corporation (“Ener1”), as represented by
Bruce Curtis, acting on the basis of the authority granted to him under the
bylaws of Ener1, and Open Joint Stock Company “Mobile Gas Turbine Electric
Powerplants”, a Russian corporation (“MGTES”), as represented by
General Director Oleg Valentinovich Braghin, acting on the basis of the charter
of MGTES.  Ener1 and MGTES are each referred to herein as a “Party” and, together, as the
“Parties.”

     

    WHEREAS,
Ener1 has developed or has possession of patented and proprietary technology and
other intellectual property relating to, among other things, lithium-ion
batteries and battery cells designed for various applications including electric
energy storage (collectively, “Ener1
Technology”);

     

    WHEREAS,
MGTES seeks to utilize Ener1 Technology in the implementation of a grid energy
storage system (the “GES
Systems”) in Russia as part of its development of smart-grid technologies
(the “Smart-Grid Technologies
Program”); and

     

    WHEREAS,
Ener1 is interested in designing, developing, manufacturing and selling
lithium-ion batteries and related products using Ener1 Technology to MGTES, and
MGTES is interested in purchasing such lithium-ion batteries and related
products from Ener1, in connection with the implementation of the GES Systems
and for such other purposes as the Parties may mutually agree, all in accordance
with the terms and conditions set forth in this Agreement.

     

    NOW,
THEREFORE, in consideration of the mutual covenants contained herein, the
Parties agree as follows:

    
      
         

      

      
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    1.             SUBJECT
OF THIS AGREEMENT.

     

    1.1           Sale and Purchase of the
Units.  Ener1 undertakes to sell and supply, within the
timeframe stipulated herein, the Units (as defined below) to MGTES (or another
person designated by MGTES) and to perform and render related works and services
in connection therewith as specified in this Agreement, and MGTES undertakes to
accept and pay for such Units and related works and services supplied as per the
terms and conditions of this Agreement.  The Parties agree that the
term “Unit” means a
separate, independent and ready-for-operation unit used to power the GES Systems
comprised of lithium-ion batteries and specified battery elements, parts and
equipment to be sold by Ener1 to MGTES under this Agreement.

     

    1.2           Specification. Each
Unit shall in all respects conform to the Specification.  The term
“Specification” means
the specifications set forth in Exhibits 1A, 1B, 1C and 1D,
each as amended to take into account the terms of reference to be delivered by
MGTES and described further in Section 1.4 (the “Terms of
Reference”).  The Specification shall be subject to the mutual
agreement of and signed by the Parties (or a “joint-working group” to be
established by the Parties).  The Specification may also include
information pertaining to technical specifications, bundling of the Unit
components, a plan to ensure quality of the Units, warranty periods and warranty
terms for the Units, and the value and terms of delivery of the
Units.  The Parties acknowledge and agree that the Specification is
intended to supplement the terms of this Agreement, and that if there is any
conflict between the terms of this Agreement and the Specification, the terms of
this Agreement shall prevail.  The Parties further acknowledge and
agree that the Specification may be amended and updated from time to time by
mutual agreement of the Parties in accordance with Section 1.3.  All
references to “this Agreement” shall, unless the context clearly intends
otherwise, be deemed to include the Exhibits to this Agreement, as amended,
modified and supplemented by the Parties.

     

    1.3           Production Timeline; Changes
to Specification.  The Schedule of Work set forth in Exhibit
1В (the “Schedule of
Work”) indicates the anticipated timeline of the development and
production of the Units.  The Parties acknowledge and agree that
during the engineering development stage and the pilot production stage outlined
in the Schedule of Work, modifications may be necessary to the Specification in
order to make the transactions contemplated by this Agreement feasible, in which
case each Party shall negotiate in good faith to enter into an amendment to the
Specification as, and to the extent, necessary to accommodate such
modifications, and such amended Specification, upon execution thereof by the
Parties, shall become part of this Agreement. The procedure for introducing
amendments shall be agreed by the Parties
additionally.  Notwithstanding the foregoing, Exhibit 1D sets forth the key
technical and material aspects of the Specification, the modification of which
would have a material impact on the economics or feasibility of the transactions
contemplated by this Agreement (the “Key Technical Parameters”),
and any change to the Key Technical Parameters shall be subject to a change in
the Purchase Price (as defined below) that is mutually satisfactory to the
Parties.

    
      
         

      

      
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    1.4           Terms of Reference.
The Terms of Reference specify, at minimum, the following:  (i) Unit
and Unit component quantity and delivery requirements, (ii) ancillary works and
services to be provided by Ener1, (iii) technical parameters and functional
properties of the Units, (iv) requirements regarding the design and manufacture
of the Units, (v) environmental, fire and other safety requirements of the
Units, (vi) technical documentation to provided with the Units, (vii) training
of the operational and maintenance staff, (viii) Unit and Unit component
labeling and packaging, and (ix) field (in-place) testing of the Units, (x)
requirements on providing reports, as well as other terms and conditions
pertaining to supply, commissioning into operation and operation of the
Units.

     

    1.5           Unit Quality Control; Spare
Parts. The Units shall be new and free from any liens or encumbrances,
and shall come with the spare parts required in the Specification, with special
tools and accessories required for assembly, adjustment, operation and
subsequent maintenance and repairs of the Units, all as provided in the
Specification.

     

    1.6           Unit Services. The
works and services related to the Units to be provided by Ener1 shall include
but not be limited to the following:

     

    1.6.1        designing
and modification, including fine-tuning, the Units to achieve the state required
in accordance with the Terms of Reference in all respects;

     

    1.6.2        technical
support until launch and during trial industrial operation (field testing) of
the Units;

     

    1.6.3        participation
in “joint research” in accordance with Section 8 of this Agreement;
and

    
      
         

      

      
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    1.6.4        training
the MGTES staff with respect to the operation and maintenance of the
Units.

     

    2.             PRICE OF
UNITS.

     

    2.1           Pricing. The
Specification sets forth, in Exhibit 1C, the purchase price for two Units and
related equipment, services and other items.    All amounts
payable by MGTES hereunder for the Units and related equipment, services and
other items are referred to herein as the “Purchase Price”.

     

    2.2           Items Included as Part of
the Purchase Price. The Parties acknowledge and agree that the Purchase
Price includes all expenditures of Ener1 in connection with the supply of the
Ener1's Units on the terms agreed by the Parties in the Specification, including
performance of accompanying works and services, including, but not limited to
expenditures on design, manufacture and transportation of the Units to the
locations indicated in the Specification (hereinafter the “Supply
Locations”), containers, packaging, transportation insurance, customs
clearance, customs fees, start-up works, training of MGTES personnel, technical
support (including supervision during installation and start-up works),
modification of the Ener1's Units to the state requirements according to the
Terms of Reference, as well as additional expenditures on providing to obtain
insurance of risks under Section 9 hereof. MGTES shall compensate to Ener1 all
customs clearance expenses for the Units in the Russian Federation and related
documented costs and expenses for custom broker services and all required
customs fees and duties pursuant to the terms of the Agreement. MGTES shall pay
for all, not included in the Purchase Price, costs related to transporting the
Units from the Supply Location to the Placement Locations.

     

    2.3           VAT. The Purchase
Price does not include VAT which is payable by MGTES directly to the relevant
taxing authority.  With respect to each Unit and its components and
other parts to be delivered to MGTES hereunder, MGTES shall pay all applicable
VAT for such items at the time such items are imported into the Russian
Federation during customs clearance.

     

    2.4           Changes to Purchase
Price. The Purchase Price shall not be subject to change as the Parties
change the Specification unless changes are made to the Key Technical Parameters
that materially increase the production costs of the Units.  In such
situations requiring an increase in pricing, the Parties shall negotiate in good
faith to agree on a mutually acceptable increase to the Purchase Price, and the
Specification shall be amended to reflect such change.

    
      
         

      

      
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    3.             PROCEDURE AND TERMS OF
PAYING FOR THE UNITS.

     

    3.1           Payment in U.S.
Dollars. All payments to be made by MGTES to Ener1 under this Agreement
shall be made by wire transfer of immediately available funds in
USD.

     

    3.2           Payment
Milestones.  The payment milestones (each, a “Payment Milestone”) Purchase Price
hereunder are set forth in Exhibit 1C, including the
invoices and other documents to be submitted or obtained by Ener1 as a condition
for executing such Payment Milestones.

     

    4.             TERMS OF
SUPPLY.

     

    4.1           General. Ener1 shall
deliver the Units to MGTES on the terms DDP, VAT excluded to the Supply Location
(not including VAT) (according to Incoterms 2000), within the timeframe and on
the terms agreed upon by the Parties in the Specification.

     

    4.2           Incoterms-2000. For the purposes hereof,
the terms of delivery and other trade terms used to describe the obligations of
the Parties with respect to the matters described in this Section
4 shall be interpreted in accordance with the publication INCOTERMS-2000
published by the International Chamber of Commerce (publication No 560), unless a
different interpretation is stipulated in this Agreement.

    

    4.3           Warranties with Respect to
Delivery and Units. Ener1 hereby warrants that: (i) delivery of the Units
in accordance with this Agreement will not violate any agreements to which Ener1
is subject in any material manner, (ii) the Units will be new and unused, and
not encumbered by any liens or other encumbrances, and (iii) the Units will not
violate any third party’s intellectual property rights, including patent and
licensing rights. Should Ener1 be in breach of this Section 4.3, Ener1 shall,
independently and at its own expense, cure such breaches as promptly as
practicable, and reimburse MGTES for its real damage incurred as a result of
such breach.

    
      
         

      

      
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    4.4           Packaging. Packaging
and labeling of the Units, as well as documentation for the Units, shall be in
compliance with the requirements set forth in the Specification in all respects.
Notwithstanding the foregoing sentence, Ener1 shall deliver the Units in
containers and packaging that guarantee their preservation while in transit to
the applicable Placement Location (as defined in Exhibit 1A). In particular,
the packaging shall, without any limitations, be able to endure intense
lifting-transportation handling and exposure to extreme temperatures, salt and
precipitation during transportation by sea, as well as outdoor storage, all to
the extent customary for the type of Units being shipped as well as shipping
method and location.  For these purposes, MGTES shall specify the
restrictions on dimensions of the packaged Units and their weight so that all
cargo packages shipped to MGTES hereunder comply with all applicable laws and
regulations of the Russian Federation.

    

    4.5           Supply Schedule. The
shipping and delivery schedule of the Units shall be consistent with the
anticipated timeline in the Specification. Both Parties shall use good faith and
commercially reasonable efforts to meet the target dates set forth in the
Specification. If Ener1 has reason to believe that a shipping/supply will be
delayed, Ener1 shall promptly notify MGTES of such possible delay, including a
description of the extent and cause of the delay. If Ener1 is late in
shipping/supplying a Unit in accordance with the Specification (after giving
effect to any valid postponements contemplated by the Specification), MGTES
shall be entitled to receive liquidated damages in accordance with the
applicable provisions of Section 13. For purposes
hereof, (i) a Unit shall be deemed supplied on the date on which the Parties or
their authorized representatives sign the Report on External Examination of the
Units' transportation package (Attachment 1B, Table 2, Cl. 3) for such Unit at
the Supply Location, and (ii) a Unit shall be deemed shipped on the date on
which Ener1 has transferred such Unit to the applicable carrier at the shipping
location as specified in the Specification (the “Shipping Location”), which
date is specified in the appropriate report document indicated in the
Specification.

    

    4.6           Risk of Loss and Ownership
Title. The ownership title to the Units shall be passed by Ener1 to MGTES
at the time of signing the reporting documents for Stage No. 1, as indicated in
Specification (Exhibit 1B, Table 2, Cl. 1)). Risk of loss, damage and
destruction of the Units will simultaneously pass to MGTES upon delivery of the
Units to the Supply Location in accordance with the Specification.

    

    5.             DOCUMENTATION AND
CERTIFICATION.

     

    5.1           Governmental
Approvals.  The Parties shall cooperate in good faith to ensure
that the Units conform to and be accompanied by appropriate certificates,
permits and other documents required by the applicable laws and regulations of
the Russian Federation, which may include:

     

    5.1.1        a
permit for use, issued by bodies of Rostechnadzor of the Russian
Federation;

     

    5.1.2        a
GOST-R certificate of conformity;

    
      
         

      

      
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    5.1.3        a
positive industrial safety expert review; and

     

    5.1.4        an
environmental certificate of conformity (or a letter regarding the permit for
use) issued by the bodies of Rospotrebnadzor of the Russian
Federation;

     

    5.2           Allocation of
Responsibilities for Governmental Approvals.  Any expenses
involved in obtaining documents and certifications specified in Section 5.1
shall be borne by Ener1. Ener1 shall obtain all such documents and
certifications in place at least 30 calendar days before the date on which the
first Unit is commissioned for pilot operation.

    

    5.2.1       
Government
Delays. Neither Party shall have any liability toward the other Party, or
pay any penalty or liquidated damages pursuant to any provision of this
Agreement, due to any delay in performance of an obligation under this Agreement
that is due directly or indirectly to the unjustified refusal or delay to issue
certificates, permits or other documents required pursuant to the applicable
laws and regulations of the Russian Federation or the U.S.A., provided that the
Party that has not performed its obligation to obtain a such permit or
certificate has timely submitted all data and documents required pursuant to the
applicable laws and regulations of the Russian Federation or the U.S.A. and that
such refusal or delay occurred due to an unjustified action or inaction of
Russian federal state administrative bodies or administrative bodies of the
U.S.A. which are beyond the control of the defaulting Party.

    

    5.3           Unit-Related
Documents. Ener1 shall, simultaneously with supply of the Units, deliver
the following documents  to MGTES as specified in the Specification in
connection with the supply of the Units, unless otherwise agreed to by the
Parties:

    

    5.3.1        packing
lists and shipping specifications;

    

    5.3.2        Ener1's
warranty certificates;

    

    5.3.3        certificate
of origin;

    

    5.3.4        technical
documentation indicated in the Specification;

    

    5.3.5        documents
required, as per the effective Russian Federation legislation, for refunding VAT
paid by MGTES in accordance with Section 2.3; or

    

    5.3.6        such
other documents mutually agreed to by the Parties.

    

    5.4           Documents in Russian.
The list of documents to be presented in Russian shall be set forth in the
Specification.

    
      
         

      

      
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    5.5           Evaluation Tests and
Documentation.  In order to conduct an evaluation of the Units
for their use as part of the Unified National Power Grid of the Russian
Federation (RF UNPG), the Parties agree on the following
procedures:

    

    5.5.1        the
Parties shall jointly prepare a set of documents to conduct evaluation,
including a list of metrics whereby tests of the Units must be performed for
Unit evaluation purposes (the “Evaluation Tests”), as well
as the range of permissible values of such metrics;

    

    5.5.2        Ener1,
within a timeframe agreed upon with MGTES and using MGTES experts, shall conduct
Evaluation Tests of the Units by means of an international organization
specialized is in the area of consulting, testing and certifying power
engineering equipment (for instance, KEMA);

    

    5.5.3        in
the event of an unsatisfactory result of Evaluation Tests, Ener1, at its own
expense, shall fine-tune the Units and perform repeat Evaluation Tests following
the procedure stipulated in Section 5.5.2;

    

    5.5.4        Ener1
shall submit Evaluation Test results to MGTES for approval; and

    

    5.5.5        following
approval by MGTES of the Evaluation Test results, the Units shall be considered
compliant, in which case, the Parties shall sign a report on evaluating the
Units.

    

    6.             UNIT
ACCEPTANCE.

     

    6.1           General. Stages of
Unit acceptance (each, an “Acceptance Stage”) shall be as set forth
in the Specification.  Ener1 shall, at least 14 calendar days before
the proposed acceptance date with respect to an Acceptance Stage taking place
within the USA, or 7 calendar days before the proposed acceptance date with
respect to an Acceptance Stage taking place within the Russian Federation,
notify MGTES in writing, including via facsimile communication, of such proposed
acceptance date for such Acceptance Stage. In turn, MGTES shall notify Ener1, at
least 7 calendar days before a proposed acceptance date, on the stages of the
Units acceptance at the Placement Locations, of such proposed date of the Units
acceptance, and such notice shall be in writing, including via facsimile
communication.  Each Party shall make one or more of its authorized
representatives available for each such Acceptance Stage (save for the stage
No.2 specified in the Specification), and such representative shall be
authorized to deem the applicable Acceptance Stage satisfied (or unsatisfied) on
behalf of such Party in accordance with Section 6.2.

    
      
         

      

      
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    6.2           Testing and Acceptance
Report.  Testing and demonstration for each Acceptance Stage
shall be performed in the presence of an authorized Ener1 representative and an
authorized MGTES representative, except as otherwise provided in the
Specification. The date of Unit acceptance for the respective stage shall be the
date of signing by the Parties of the respective report documents listed in the
Specification.

     

    If the
authorized representatives of Ener1 and/or MGTES, who have been informed of the
place and time of Unit acceptance in according with Clause 6.1 hereof, fail to
appear for the Unit acceptance on any stage of acceptance a record of this shall
be made in the respective Unit acceptance act, the acceptance is performed and
the act is signed by the representatives who have come. In this case, the act
shall have legal force.

     

    6.3           Scope and
Timeframe.  The timeframes, report documents and scope of Unit
acceptance for each Acceptance Stage shall be set forth in the
Specification.  The draft report documents for an Acceptance Stage
shall be prepared by Ener1 and forwarded to MGTES in advance for approval, such
approval not to be unreasonably withheld, prior to the date on which the
applicable Acceptance Stage is to be held.

     

    6.4           Breach by Ener1. If,
prior to an Acceptance Stage, Ener1 is in breach of this Agreement, MGTES shall
have the right to withhold approval of such Acceptance Stage until such breach
has been cured to MGTES’s reasonable satisfaction.

     

    6.5           Claims for Defects, detected
after the acceptance. In instances when the damage to packaging or a
shortage of Units or their separate components could not have been detected
during the visual inspection performed when the Units were supplied to the
Supply Location, MGTES shall be entitled to make claims for quantity and
integrity of the Units within 30 calendar days from the date of the Unit
acceptance act for the respective stage. In this case, Ener1 shall be obliged to
repair the detected defects within the terms indicated in Clause 6.8
hereof.

     

    6.6           Damage Identified during
acceptance. If, in the course of Unit acceptance, violations of
provisions contained in this Agreement are identified, MGTES shall prepare a
“Reclamation act” that specifies the violations identified and actions required
to be taken by the Parties to remedy them, and the act shall be signed by both
Parties. The act shall constitute grounds for MGTES not to sign the acceptance
act for the applicable Unit acceptance stage and not to pay the remainder of the
amounts due for the Units, which do not comply with the requirements of the
Agreement or are supplied in violation of its terms. In such event Ener1 shall
eliminate the revealed violations within the timeframes specified in Clause 6.8
hereof.

    
      
         

      

      
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    6.7           Damage Identified with
respect to Quality. MGTES may accept a Unit or Unit components, as far as
their quantity, without conducting a preliminary inspection of their quality if
such Unit or Unit components are contained within proper containers and
packaging and lack visible defects. MGTES may, following acceptance of such Unit
or Unit components as far as quantity, inspect their quality, including by way
of conducting necessary tests during starting-up and adjustment works and
putting into operation, and, should defects then be identified, shall notify
Ener1 of such defects in writing.  In that case, Ener1 shall be
required to correct such defects within the timeframe specified in Section 6.8.

     

    6.8           Damage Correction
Procedures.  If, in the course of Unit acceptance pursuant to
Section 6.5, 6.6 or
6.7, the Parties have
identified that a Unit is not complete and/or fail to conform to the quality
requirements as set forth in the Specification, the Parties shall determine, in
a supplemental agreement hereto (an “Agreement to Correct Units”),
a reasonable period of time for delivering the parts of such Unit that failed to
be delivered and/or replacing the defective parts of such Unit, which shall not
relieve Ener1 from liability under Section 13. Should Ener1 fail
to remove identified violations within the timeframe specified in the applicable
Agreement to Correct Units, MGTES may make claims against Ener1 concerning
proper performance of this Agreement, in the amount of reasonable expenses
incurred by it in removing the defects and confirmed by appropriate
documentation. Payment of expenses incurred in remedial action and of penalties
shall not relieve Ener1 from the obligation to transfer, at the request of
MGTES, short-supplied Unit components and/or replace defective parts of the
applicable Unit.

     

    6.9           Rejection of
Unit.  MGTES may decline a Unit delivered in violation of the
product range, completeness, quantity and/or quality requirements specified in
the Specification by giving written notice thereof to Ener1 (a “Rejection Notice”) if Ener1
fails to perform its obligations to correct such violation in all respects
within one hundred (100) calendar days of the date on which MGTES notified Ener1
of such violation in writing pursuant to Section 6.5, 6.6 or 6.7 (or
such date on which such violation was to be corrected pursuant to an Agreement
to Correct Units).  If MGTES delivers a Rejection Notice, the Unit
subject to such Rejection Notice shall not be accepted, shall not be paid for,
and Ener1 shall return previously paid amounts with respect to such Unit within
30 calendar days of the date on which such Rejection Notice was delivered to
Ener1, and Ener1 shall reimburse MGTES for related, documented
damages.

    
      
         

      

      
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    6.10         Ener1
Representatives. Ener1 based on a written request of MGTES shall make its
representatives available to arrive to the place indicated in MGTES’s request
and advise MGTES on the causes of any defects or deficiencies in the Units, the
anticipated timeframe for curing any such defects or deficiencies, and any other
inquiries reasonably made by MGTES with respect thereto. If a representative of
Ener1 does not arrive for consideration of defects detected during the
acceptance of the Units and completion of a respective Act during the terms
indicated in MGTES’s request, MGTES shall involve an independent expert
(hereinafter ”Expert”). The competence of the Expert in the question of
determining the quantity and quality of the Units shall be confirmed by the
licenses and certificates of the Expert. The costs of involving such an Expert
shall be compensated by Ener1 based on confirming documents.

     

    6.11         Disputes. If the
Parties are unable to agree on the nature, significance, quantity or any other
aspect of a defect and/or deficiency in a Unit or Unit components, an
independent expert reasonably acceptable to both Parties shall be appointed to
evaluate and mediate the dispute.  The conclusion of the expert on the
questions that arose during the Unit acceptance is final and all the actions of
the Parties shall be based on this decision and shall not contradict it. The
guilty Party shall bear all of the costs of such expert.

     

    7.           
 WARRANTIES.

     

    7.1           Conformance with
Specification.  Ener1 shall ensure conformity of the quality of
the Units supplied hereunder to the requirements contained in the Specification
in all respects.  MGTES is required to promptly notify Ener1 in
writing of any and all matters of non-conformity.  The Parties shall
enter into an Agreement to Correct Units with respect to any such non-conformity
in accordance with Section
6.8.

     

    7.2           Warranty
Period.  The total warranty period for each Unit warranty under
this Section 7 shall
commence on the date of the signing act of acceptance of the putting Units
into

     

    pilot
launch of each Unit as set out in Table 3 and expire on the date that is
[REDACTED] days after such date.  The first [REDACTED] days of the
warranty will cover [REDACTED] period of the Units [REDACTED] and materials and
workmanship, and the remaining [REDACTED] days of the warranty will cover
[REDACTED] only.

    
      
         

      

      
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    [REDACTED]

     

    7.3           [REDACTED]

     

    7.4           Technical Support. In
addition to other obligations indicated in this Agreement, Ener1 shall provide
“round-the-clock” technical support for MGTES (by phone and via e-mail), and,
upon the occurrence of an emergency with respect to the Units supplied, supply
immediately the spare parts required for repairing the same.  The
purchase price for spare parts and services supplied following expiration of the
warranty period shall be mutually agreed to by the Parties in good faith prior
to or contemporaneously with any such emergency repair.

     

    7.5           Spare Parts. At
MGTES’s request, Ener1 shall, as promptly as possible, replenish MGTES’s spare
parts reserve. The purchase price, procedure and timeframe for replenishing the
replacement part reserve shall be mutually agreed to by the Parties prior to
shipment of such parts to MGTES.

     

    7.6           Maintenance and
Support.  During installation, startup and launch of the Units
into operation, as well as during trial industrial operation of the Units,
Ener1, at MGTES’s request, shall provide the necessary maintenance and support,
including supervision during Unit installation, start-up, Unit testing,
supervision of the putting of Units into trial industrial operation, training of
operating and maintenance staff, technical support and field (in-place) testing
in the course of trial industrial operation of the Units, all as set forth in
the Specification.

     

    MGTES
shall operate and maintain the Units in compliance with the operating and
maintenance instructions furnished by Ener1. MGTES shall perform or arrange for
all necessary routine, and non-routine inspections, and maintenance and overhaul
of the Units under the supervision of Ener1. [REDACTED]

     

    7.7           Investigation by
Ener1.  Ener1 undertakes to arrange for prompt participation of
its representatives in investigating technological disruptions in the work of
the Units.

     

    7.8           Exchange of
Information.  Ener1 and MGTES shall endeavor to promptly inform
the other Party of any information that may be material to the improvement of
the Units.

    
      
         

      

      
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    8.             JOINT
ANALYSIS.

     

    8.1           Field (On-Site)
Testing. Following the installation and pilot launch of a Unit, the
Parties will conduct comprehensive field testing and analysis of the obtained
results (“Field
Testing”) of such Unit to, among other things, evaluate its performance
characteristics, assess utility and obtain design feedback.  Field
Testing will be performed in accordance with the Specification in a manner that
is mutually agreed to by the Parties. It is anticipated that Field Testing will
occur over a period of eighteen (18) months, and that the program will include
the installation and uses of necessary high-accuracy remote data monitoring and
recording systems to be supplied by Ener1. The cost of these systems is included
in the cost of the Units.

     

    8.2           Economic Viability
Analysis.  The Parties will jointly conduct an economic
viability analysis of all potential energy storage uses for lithium-ion
batteries and other Ener1 Technology. Among other things, the economic viability
analysis will seek to identify those applications suitable, among others, for
the Smart-Grid Technologies Program to create a prioritized list of potential
projects. Ener1 and MGTES shall jointly set up working groups comprised of their
personnel to conduct testing, selection and identification of priority applied
solutions in the energy storage area, and to design and develop a GES System for
the selected priority applied solutions. The ultimate goal is to jointly develop
a GES System to be used in power grids. The procedure and timeframe for the
economic viability analysis shall be on terms mutually agreed to by the
Parties in a separate agreement.

     

    8.3           Localization.  The
Parties will consider the availability of raw materials and qualified personnel
and evaluate market conditions to determine the feasibility of producing
lithium-ion batteries and use of related technology in the Russian Federation.
The procedure and timeframe for measures on arranging localization shall be on
terms mutually agreed to by the Parties in a separate agreement.

     

    8.4           Results
Confidential.  The result of the joint analysis indicated in
this Section 8 shall
constitute confidential information and property of MGTES, provided that information
that constituted Confidential Information or Intellectual Property of Ener1 at
the time disclosed or provided by Ener1 in connection with such analysis shall
remain Confidential Information and/or Intellectual Property of
Ener1.  In the absence of preliminary written consent from MGTES,
Ener1 cannot transfer to third parties any information obtained as a result of
performing such joint analysis indicated in Section 8.

    
      
         

      

      
        --13 --

        
          

        

      

      
         

      

    

    
      

      8.5           Expenses. Each party
shall bear its own expenses incurred in connection with holding the joint
analysis indicated in this Section 8.

      

      9.        
    INSURANCE AGAINST
RISKS.

      

      9.1           General. Ener1
undertakes to maintain, with a top-class insurance company, insurance against
general liability in delivery of the Units.  Ener1 shall bear the
costs of such insurance, provided that MGTES shall
promptly reimburse Ener1 for all such documented costs.

      

      9.2           Proof of Insurance.
Ener1 shall present proof of such insurance to MGTES in the form of an original
of the insurance policy along with the documents transferred under Acceptance
Phase 1 indicated in the Specification.  Such insurance shall cover
any and all risks of accidental loss of or damage to the Units until the risk of
loss with respect to the Units passes to MGTES, which shall be at the Supply
Location of such Units.

      

      9.3           Insurance Type. The
Units must be insured “for all risks” (terms of provision
“А” of the
Institute of London Underwriters No 252 1/1/82) for the
purposes of transportation from the manufacturer to the Supply
Location.  For purposes of this Section 9.3, insurance must
cover all events of wreckage, loss or damage to the entire cargo or part thereof
occurring for any reason of accidental nature, and also must cover costs of
general average and salvage, distributed or established in accordance with the
shipping contract and/or effective regulatory acts of the relevant state in
whose territory the cargo was located at the moment of its wreckage, loss,
damage and with the established business customs and caused by the necessity to
avoid loss for any reason. The beneficiary under such insurance policy shall be
MGTES. Ener1 shall obtain MGTES’s approval in advance pertaining to the form of
such insurance policy and the insurance company.

      

      9.4           Coverage Limits. The
insured sum under the cargo insurance policy shall be established in the amount
of the Purchase Price of the Units.

       

      
        
          
          

        

        
          --14 --

          
            

          

        

        
          
          

        

      

       

      10.           REPRESENTATIONS AND
WARRANTIES.

      

      10.1         Representations by
Ener1.  Ener1 represents and warrants that, as of the date
hereof: (i) it is duly organized and validly existing under the laws of the
State of Florida, USA and has full corporate power and authority to enter into
this Agreement; (ii) the Board of Directors of Ener1 approved this Agreement at
a meeting held on October 1, 2010, and Ener1 has taken all corporate actions
necessary to authorize the execution and delivery of this Agreement and the
performance of its obligations under this Agreement; and (iii) the performance
of its obligations under this Agreement does not conflict with, or constitute a
default under, its charter documents, any of its contractual obligation or any
court order applicable to it. 

      

      10.2         Representations by
MGTES.  MGTES represents and warrants that, as of the date
hereof:  (i) MGTES is duly organized and validly existing under the
laws of the Russian Federation and has full corporate power and authority to
enter into this Agreement; (ii) the Board of Directors of MGTES shall consider
and approve this Agreement at a meeting scheduled to be held no later than on
October 31, 2010;

       

      MGTES's
obligation to perform its obligations under this Agreement and Ener1's right to
claim MGTES's liability hereof is conditional upon receipt of the requisite
approval of the Board of Directors of MGTES as provided for herein and once such
approval has been obtained to approve this Agreement MGTES shall provide to
Ener1 written notice (that further will be accompanied by a notarized extract
from the Minutes of Board of Directors) evidencing that the Agreement has been
approved, and as of the date of such decision, MGTES will have taken all
corporate actions necessary to authorize the execution and delivery of this
Agreement and the performance of its obligations under this Agreement, provided
further, however, that for each day after October 22, 2010 that this Agreement
remains contingent upon approval as provided for herein, all dates set forth in
Exhibit 1B shall be extended by 1 day; and (iii) the performance of its
obligations under this Agreement does not conflict with, or constitute a default
under, its charter documents, any of its contractual obligation or any court
order applicable to it.

       

      
        
          
          

        

        
          --15 --

          
            

          

        

        
          
          

        

      

       

      11.           INTELLECTUAL PROPERTY
RIGHTS.

      

      11.1         Ener1 Intellectual Property
Rights. Notwithstanding any provision in this Agreement to the contrary,
as between MGTES and Ener1, Ener1 shall retain exclusive ownership of all right,
title and interest, throughout the world, in all Intellectual Property (as
defined below) relating to the Units (and any other products supplied by Ener1
hereunder) or the manufacture and/or development of the Units or such other
products (the “Ener1 IP
Rights”),
whether or not based on materials, information, advice and the like received by
Ener1 from MGTES or any other party, and whether or not developed independently
or collaboratively with MGTES or any other party.  For the avoidance
of doubt, as between MGTES and Ener1, Ener1 exclusively owns and will own all
Intellectual Property relating to the lithium-ion battery technology and all
derivatives thereof incorporated into the Units or used in the manufacture
and/or development of the Units.  Nothing in this Agreement shall be
deemed to constitute a transfer of Intellectual Property from Ener1 to MGTES, or
to any other party.  Ener1 and MGTES shall retain all rights in their
respective trademarks and trade names.  MGTES undertakes not to alter
or remove any of Ener1’s trademarks and shall not use any of Ener1’s trademarks
or trade names without Ener1’s prior written consent.

      

      11.2         Covenants of MGTES.
MGTES will not directly or indirectly: (i) challenge or contest the validity or
enforceability of any of the Ener1 IP Rights, or any Ener1 trademarks or trade
names; (ii) dispute the validity, enforceability or Ener1’s exclusive ownership
of any of the Ener1 IP Rights, or any Ener1 trademarks or trade names, or
initiate or participate in any proceeding opposing the grant of any license,
patent, trademark or other intellectual property right, or challenging any
patent or trademark application in connection with any matter that is a part of
the Ener1 IP Rights or any Ener1 trademarks or trade names; (iii) apply to
register or otherwise obtain registration of any Ener1 IP Rights or any Ener1
trademarks or trade names; or (iv) assist any other party to do any of the
foregoing. 

      

      11.3         Definition of “Intellectual
Property”. As used herein, the term “Intellectual Property” means any and all U.S.
or foreign patents, patent 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, know-how, customer and supplier information, assembly and test data
drawings or royalty rights, with the exception of joint analysis indicated in
Section 8
hereof.

       

      
        
          
          

        

        
          --16 --

          
            

          

        

        
          
          

        

      

       

      12.           CONFIDENTIALITY.

      

      12.1         General.  Each
Party ( the “Receiving
Party”) agrees (i) to hold the Confidential Information (as defined
below) of the other Party (the “Disclosing Party”) in strict
confidence and to take all precautions to protect such Confidential Information
(including, without limitation, all precautions the Receiving Party employs with
respect to its own Confidential Information), (ii) not to disclose any
Confidential Information or any information derived therefrom to any third
party; provided, however, that the
Receiving Party may disclose Confidential Information to any of its officers,
directors, employees, associates, agents, attorneys, financial advisors or
auditors (collectively, “Representatives”) who need to
know such information for purposes of implementing the terms of this Agreement,
but only if such Representatives are advised of this Agreement and agree to
abide by its terms, and only if the Receiving Party agrees it shall be liable
for any breach by such Representatives of the confidentiality obligations
contained herein, and (iii) not to make any use whatsoever at any time of such
Confidential Information except to implement the terms of this
Agreement.  Without granting any right or license, the Disclosing
Party agrees that the foregoing clauses (i), (ii) and (iii) shall not apply with
respect to any information that the Receiving Party conclusively documents (a)
is, through no improper action or inaction by the Receiving Party or any
affiliate or Representative of the Receiving Party, generally available to the
public, (b) was in its possession or known by it prior to receipt of such
information from the Disclosing Party, (c) was lawfully disclosed to it by a
third party not under a duty of confidentiality with respect to such
information, provided the Receiving Party complies with any restrictions imposed
on it by such third party, or (d) was developed by the Receiving Party without
the use of any Confidential Information of the Disclosing Party. 

      

      12.2         Disclosure under Legal
Process.  The Receiving Party may disclose Confidential
Information to the extent such disclosure is required by the order of any court
or regulatory authority; provided, however, that the
Receiving Party (i) shall use diligent efforts to limit such disclosure and (ii)
shall provide the Disclosing Party with prior written notice of such disclosure
for the purpose of taking other measures to prevent such disclosure.

      

      12.3         Return of Confidential
Information.  The Receiving Party acknowledges and agrees that
all Confidential Information will remain the property of the Disclosing Party
and will be promptly returned or destroyed upon the Disclosing Party’s
request.  The Receiving Party will promptly inform the Disclosing
Party if it becomes aware of any misappropriation, misuse or improper disclosure
of any Confidential Information or any breach of this Agreement by the Receiving
Party or its Representatives.  Immediately upon (i) the termination of
this Agreement in accordance with the terms hereof, or (ii) a request made at
any time by the Disclosing Party, the Receiving Party will deliver to the
Disclosing Party all Confidential Information of the Disclosing Party in the
possession of the Receiving Party or its Representatives, including all
documents or media containing any such Confidential Information and any and all
copies or extracts thereof, whether prepared by the Receiving Party or the
Disclosing Party. 

       

      
        
          
          

        

        
          --17 --

          
            

          

        

        
          
          

        

      

       

      12.4         Reverse
Engineering.  The Receiving Party agrees not to copy, alter,
modify, reverse engineer, or attempt to derive the composition or underlying
information, structure or ideas of any Confidential Information and must not
remove, overprint, deface or change any notice of confidentiality, copyright,
trademark, logo, legend or other notices of ownership from any originals or
copies of Confidential Information it receives from the Disclosing
Party.

      

      12.5         Duration.  The
Parties’ obligations hereunder with respect to any Confidential Information
disclosed hereunder will survive for a period of five years from the last date
on which any such Confidential Information was disclosed, provided that the Parties’
obligations hereunder with respect to any Confidential Information that also
constitutes Intellectual Property will survive indefinitely.

      

      12.6         Definition of Confidential
Information.  As used herein, the term “Confidential Information”
means any technical or business information of a Disclosing Party or any of its
affiliates, regardless of whether such information is specifically designated as
confidential and regardless of whether such information is conveyed or
maintained in written, oral, graphic, physical, electronic, or other
form.  Confidential Information may include, without limitation,
unpublished patent applications, inventions, trade secrets, know-how, show-how,
processes, procedures, formulae, products, drawings, materials, apparatus,
methods, customer or supplier specifications or requirements, computer software
and other data, technical documentation or specifications, plans, records, test
results, permissions, licenses and approvals, telephone numbers, e-mail
addresses and names, techniques, business operations, financial information
(including pricing and costing), customer and/or supplier information,
distribution information, and other records and information.

       

      
        
          
          

        

        
          --18 --

          
            

          

        

        
          
          

        

      

       

      13.           LIABILITY OF THE
PARTIES.

      

      13.1         General.  Ener1
shall supply the Units in accordance with this Agreement.  If Ener1
becomes aware of a possible delay in the performance of any of its obligations
under this Agreement, it shall promptly notify MGTES in writing of the possible
delay, its expected duration and cause (causes) of the delay.  If
there is a delay in the performance by Ener1 of any of its obligations under
this Agreement, and such delay is not the result of MGTES’s fault, or any Force
Majeure, MGTES, at its discretion, may extend the deadline for the performance
by Ener1 of its obligations hereunder and/or impose any applicable liquidated
damages described in Section
13.2.

      

      13.2         [REDACTED]

      

      13.3         [REDACTED]

      

      13.4         Absolute Performance
Ratios. If the Units fail to meet the Absolute Performance Ratios
indicated in the Specification (Exhibit 1D), then such
failure shall be deemed to constitute non-compliance with the quality
requirements stipulated in this Agreement with regard to such Units, in which
case, the Parties shall act in accordance with the provisions in Section 6.7.

      

      13.5         Delay in Payment. If
MGTES, due to its own fault, is delinquent on any payment required under this
Agreement by more than five business days for a reason other than a Force
Majeure, Ener1 may charge MGTES liquidated damages at the rate of 0.1% on the
amount due for every calendar day of the delay until the same is paid in full,
provided that the
aggregate amount of the liquidated damages paid by MGTES under this Section 13.5 cannot exceed
10% of the amount of the delayed payment. The Parties have agreed that no other
penalties or liquidated damages shall apply for the failure by MGTES to make
payments on a timely basis hereunder.

      

      13.6         Continuing
Obligations. Payment of liquidated damages shall not relieve a Party from
performing its obligations under this Agreement.

      

      13.7         No Other
Compensation.  Except as contemplated by this Agreement,
neither Party shall demand compensation of any kind from the other Party and
each Party shall bear its own costs, risks and liabilities arising out of its
obligations and efforts under this Agreement.

      

      14.           LIMITATION ON WARRANTIES AND
LIABILITIES.

      

      14.1         Limitation on
Warranties. No oral or written representation or statement made by Ener1
or any of its Representatives, including, but not limited to, any
specifications, descriptions or statements contained in any manual or guide
provided to MGTES that is not restated in this Agreement, is binding upon Ener1
as a warranty or promise of performance.  Ener1 does not make any
warranties or promises, express or implied, with respect to the merchantability,
fitness for use, condition, duration or suitability of the Units and are not
responsible for any patent or latent defects in any of the Units, or damages
resulting therefrom, except as expressly provided in this
Agreement.

       

      
        
          
          

        

        
          --19 --

          
            

          

        

        
          
          

        

      

       

      14.2         LIMITATION ON
LIABILITY. IN NO EVENT SHALL ENER1 BE LIABLE IN CONTRACT OR IN TORT,
INCLUDING NEGLIGENCE AND STRICT LIABILITY, FOR ANY DAMAGES WHATSOEVER, INCLUDING
SPECIAL, PUNITIVE, INDIRECT, INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND OR
CHARACTER, INCLUDING, WITHOUT LIMITATION, LOSS OF USE OF PRODUCTIVE FACILITIES
OR EQUIPMENT, LOSS OF REVENUES OR PROFITS OR LOSS UNDER PURCHASES OR CONTRACTS
MADE IN RELIANCE ON THE PERFORMANCE OR NON-PERFORMANCE OF THIS AGREEMENT,
WHETHER SUFFERED BY A PARTY TO THIS AGREEMENT OR ANY THIRD PARTY, OR FOR ANY
LOSS OR DAMAGE ARISING OUT OF THE SOLE OR CONTRIBUTORY NEGLIGENCE OF SUCH PARTY,
ITS EMPLOYEES OR AGENTS OR ANY THIRD PARTY. IN ADDITION TO AND WITHOUT LIMITING
THE FOREGOING, THE MAXIMUM AGGREGATE AMOUNT OF LIABILITIES FOR WHICH ENER1 SHALL
BE LIABLE UNDER THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY
(INCLUDING ANY LIQUIDATED DAMAGES UNDER SECTION 13) SHALL UNDER NO
CIRCUMSTANCES EXCEED [REDACTED]

      

      15.           AMENDMENT AND TERMINATION OF
THIS AGREEMENT.

      

      15.1         Amendments;
Waivers.

      

      15.1.1 
    Any amendments, modifications and/or supplements to this
Agreement shall be made pursuant to a writing signed by a duly authorized
representative of each Party, and shall be an integral part of this Agreement as
of the date of its signing. All instances in this Agreement requiring “the
mutual agreement of the Parties” or other phrases of similar import shall be
evidenced by a writing signed by both Parties and shall be construed as an
amendment to this Agreement.

      

      15.1.2      No
waiver of any provision of this Agreement will be valid or effective unless in
writing and signed by the Party from whom such waiver is sought.  A
failure by either Party to exercise any rights or remedies it may have hereunder
shall not operate as a waiver of such rights or remedies. A waiver by either
Party of any of the terms and conditions of this Agreement in any instance will
not be deemed or construed to be a waiver of such term or condition for the
future, or of any subsequent breach hereof.  

      

      15.2      
  Termination. This
Agreement may be terminated as follows:

       

      
        
          
          

        

        
          --20 --

          
            

          

        

        
          
          

        

      

       

      15.2.1     
by mutual agreement of the Parties in writing at any time for any reason or no
reason;

      

      15.2.2      by
MGTES upon written notice to Ener1 if:

      

      (a)           Ener1
fails to deliver a Unit to the Shipping Location for such Unit, or (ii) such
Unit is not assembled and put into pilot operation in the Placement Location
within 180 calendar days of the date on which such delivery or assembly and
pilot launch was required to have occurred under the Specification, provided that all of the
rights and obligations of the Parties with respect to the other Unit shall
survive such termination;

      

      (b)           MGTES
has validly delivered a Rejection Notice with respect to a Unit in accordance
with Section 6.9, provided that all of the
rights and obligations of the Parties with respect to the other Unit shall
survive such termination;

      

      (c)           Ener1
has continually and breached its obligations under this Agreement (other than a
breach that is covered in paragraphs (a) or (b) above), and is not making
a good faith effort to cure such breaches after receiving not less than 30 days’
written notice thereof from MGTES; or

      

      (d)           bankruptcy
proceedings are instituted against Ener1.

      

      In the
event that MGTES elects to terminate the Agreement pursuant to this Section
15.2.2(a), then Ener1 shall pay liquidated damages with regard to the first 100
days of delay, and with regard to the next 80 days of delay MGTES shall be
entitled to receive only interest at the rate of 12% per annum on any amounts
previously paid by MGTES to Ener1 under this Agreement, and sums that are
subject to payment in accordance with Section 15.3.

      

      In
addition, in the event of termination of this Agreement pursuant to Section.
15.2.2(a), Ener1 shall return to MGTES all earlier sums paid to it pursuant to
this Agreement within 30 calendar days from the time that MGTES sends the
corresponding notification.

      
        

      

      
        15.2.3 by
Ener1 upon written notice to MGTES if:

      

      
        

      

      (a)           MGTES
fails to timely make its payment obligations hereunder and such failure is not
cured within 90 days after MGTES receives written notice thereof from Ener1,
provided that Ener1 may cease its performance under this Agreement if MGTES
fails to timely make its payment obligations hereunder and such failure is not
cured within 30 days from when such payment was due to Ener1, and such
cessation of performance by Ener1 shall not be considered to be a breach or
default by Ener1 of its obligations under this Agreement, and the applicable
time periods set forth in this Agreement shall be proportionally adjusted to
account for MGTES's delay in payment in excess of such 30 days; or

      
         

        
          
            
            

          

          
            --21 --

            
              

            

          

          
            
            

          

        

         

      

      
        (b)           bankruptcy
proceedings are instituted against MGTES.

      

      
        

      

      15.3         The
provisions of Sections 11, 12,
13, 14, 15 and
16, and all payment and performance obligations of the Parties that have
accrued but remain unpaid or performance obligations that have not been
completed as of the date of termination (or partial termination under Sections 15.2.2(a) or 15.2.2(b)), shall survive the
termination of this Agreement until satisfied in full.

      

      

      15.4         This
Agreement shall in all respects be binding on both Parties hereto and may only
be terminated on the grounds set forth in this Section 15.

      

      15.5         The
Party terminating the Agreement shall be entitled to present to the other Party
a claim for reasonable and documented costs in connection with such
termination.  If there is a dispute between the Parties with respect
to such claim, the Parties may pursue such dispute as provided for in Section
16.5.

      

      16.           MISCELLANEOUS.

      

      16.1         Relationship of the
Parties.  Nothing in this Agreement is intended or will be
deemed to constitute a partnership, joint venture, joint development, agency or
employer-employee relationship between the Parties.  Neither Party
shall have the right, power or authority to make any representation or any
binding agreement or arrangement on behalf of the other Party. 

      

      16.2         Force Majeure. Neither Party will be liable for any breach or failure to perform
under this Agreement if such breach or failure to perform is due to an act
beyond the control of such Party (a “Force Majeure”), which
include by way of illustration, but not limitation, acts of God, fire, floods,
war, civil disobedience, strikes, lockouts, freight embargos, inclement weather,
or any other cause or condition beyond such Party’s control; provided, however, that the
Party which has been so affected will (i) promptly give written notice to the
other of the fact that it is unable to so perform and the cause(s) therefore;
and (ii) resume its performance under this Agreement immediately upon the
cessation of such cause(s) and give a notice of same to the other
Party.

      

      16.3         Entire Agreement.
This Agreement and its Exhibits constitute and contain the entire understanding
and agreement of the Parties respecting the subject matter hereof and cancel and
supersede any and all prior and contemporaneous negotiations, correspondence,
understandings and agreements between the Parties, whether oral or written,
regarding such subject matter, including, without limitation, the agreement to
carry out a joint project previously executed by the Parties in the city of
Sochi on September 17, 2010..

       

      
        
          
          

        

        
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      16.4         Captions.  The
captions to this Agreement are for convenience only, and are to be of no force
or effect in construing or interpreting any of the provisions of this Agreement.

      

      16.5         Arbitration; Governing
Law.

      

      16.5.1      The
Parties shall attempt to resolve any questions that may arise out of or in
connection with the present Agreement or the execution, breach or termination
thereof by means of negotiations.

      

      16.5.2      Any
dispute, controversy or claim which may arise out of or in connection with the
present Agreement, or the execution, breach, termination or invalidity thereof,
shall be settled by the International Commercial Arbitration Court at the
Chamber of Commerce and Industry of the Russian Federation in accordance with
its Rules.

      

      16.5.3      Within
30 (thirty) calendar days of submission of the dispute for arbitration, MGTES
and Ener1 shall each appoint one arbitrator. The two arbitrators thus appointed
shall agree on and select a candidate for the third arbitrator, which third
arbitrator shall act as the chairperson of the panel, within 30 (thirty)
calendar days of the respondent(s) appointing an arbitrator, it being further
agreed that two of the three arbitrators shall be foreign persons who are not
citizens of the Russian Federation or the USA. Should either Party fail to
appoint an arbitrator or should the two arbitrators fail to agree on appointing
the third arbitrator within a thirty-day period of time, an arbitrator shall be
appointed in accordance with the then effective rules of the International
Chamber of Commerce.

      

      16.5.4      The
location of arbitral proceedings shall be the city of Moscow,
Russia.

      

      16.5.5      The
language of arbitral proceedings shall be the English language.

      

      16.5.6      The
governing law of this Agreement and all disputes arising under or pertaining to
this Agreement or the subject matter hereof shall be the substantive law of
England, without giving effect to any conflict of laws provisions.

      

      16.5.7      The
prevailing Party in any such action shall be entitled to recover its reasonable
and documented costs in full from the non-prevailing party, including any
arbitration costs and any interest on any judgement as determined by the
arbitration panel. Any judgement with respect to a failure to pay liquidated
damages shall accrue interest at the rate of 0.1% per day on such amount of
unpaid penalties calculated from the day when such penalty is subject to payment
in accordance with Section. 13.3 until the sum is paid in full provided that the
aggregate interest cannot exceed 20% of the amount of such penalty that is
determined by the arbitrator to be subject to payment.

       

      
        
          
          

        

        
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      16.6           Notices and
Deliveries. Any notice, demand or request required or permitted to be
given by a Party to the other Party pursuant to or concerning the terms of this
Agreement or the resolution of any dispute hereunder shall be in Russian, in
writing and shall be deemed delivered (i) when delivered personally, (ii) on the
next business day after timely delivery to a reputable 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), (iv)
in the event of sending via e-mail or by fax – on the date specified in the
confirmation of receipt of such notice, demand, or request, which shall not be
unreasonable withheld by a recipient, addressed as follows:

      

      If to Ener1:

      

      Ener1,
Inc.

      1540
Broadway, Suite 25C

      New York,
NY 10036

      USA

      Attn:             Bruce
Curtis,

      President
Ener1, Inc. GES

      Fax:
+1  (212) 920-3510

      e-mail:
bcurtis@ener1.com

       

      
        
          
          

        

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

      

      Ener1,
Inc.

      1540
Broadway, Suite 25C

      New York,
NY 10036

      USA

      Attn:             General
Counsel

      Fax:  +1
(212) 920-3510

      

      If
to MGTES:

      

      JSC
«Mobile GTES»,

      47
Volgogradsky Ave., Moscow, Russian Federation

      Attn: О.V. Braghin,
General Director  

      Fax:      +
7 (495) 937 42 61

      e-mail:  info@mobilegtes.ru

       

      The
Parties shall be entitled to appoint other representative for carrying out
correspondence hereunder by giving a prior written notice to the other
Party.

      

      16.7           Severability.  If
any provision of this Agreement is held to be prohibited by, invalid or
unenforceable under applicable law, such provision will be ineffective only to
the extent of such prohibition, unenforceability, or invalidity, without
invalidating the remainder of this Agreement. The Parties will make a good faith
effort to replace the applicable provision with one that is both valid and which
the Parties agree is in substance consistent with the original
provision.  In the event the Parties do not agree upon such a
substitute provision, either Party shall have the right to terminate this
Agreement by providing sixty (60) days written notice of termination to the
other. 

      

      16.8           Compliance with
Laws.

      

      16.8.1        The
Parties shall cooperate in good faith to ensure that all requisite governmental
approvals, licenses and permits relating to the export of the Units are timely
obtained.

      

      16.8.2        MGTES
agrees to comply with all applicable U.S. export control laws and regulations,
specifically including, but not limited to, the requirements of the Arms Export
Control Act, the International Traffic in Arms Regulation (ITAR), the Export
Administration Act, and the Export Administration Regulations and all
requirements for obtaining export licenses or agreements.

       

      
        
          
          

        

        
          --25 --

          
            

          

        

        
          
          

        

      

       

      16.8.3        MGTES
shall immediately notify Ener1 if MGTES is, or becomes, listed in any “Denied
Parties List” or if MGTES’s export privileges are otherwise denied, suspended or
revoked in whole or in part by any U.S. Government entity or agency, or by any
entity or agency of MGTES’s own country, if MGTES becomes aware of
it.

      

      16.8.4        If
Ener1 is prohibited by government bodies of the USA, for any reason, from
exporting or re-exporting a Unit or any Ener1 Technology material to the
performance of its obligations under this Agreement, each of Ener1 and MGTES
shall have the right to terminate this Agreement without any liability to the
other Party, provided that all funds paid prior to termination of the Agreement
pursuant to this Section16.8.4 shall be repaid by Ener1 to MGTES within 30
calendar days following such termination of this Agreement.

      

      16.8.5        The
parties hereto, hereby affirm their intent that all activities connected with
the sale of the Units by Ener1 to MGTES shall comply with the United States
Foreign Corrupt Practices Act, 15 U.S.C. 78, (hereinafter "FCPA"), and any
amendments thereto.

      

      16.8.6        Each
Party shall be responsible for and indemnify and hold other Party harmless
against any and all losses, costs, claims, causes of action, damages,
liabilities and expenses, including attorneys’ fees and costs, arising from any
negligent act or omission of such indemnifying Party, its officers, employees,
agents, sellers, or subcontractors at any tier, in the performance of its
obligations under this Section 16.8.

      

      16.9           Counterparts.  This
Agreement shall be executed simultaneously in the Russian and English languages
and each party shall receive five originally signed copies. The text of this
Agreement in the Russian language shall prevail over the text of this Agreement
in the English language.

      

      16.10         Assignment.  Ener1
may not assign its rights and obligations hereunder absent prior written consent
by MGTES, which consent shall not be unreasonably withheld.  MGTES may
assign its rights and obligations hereunder to a third party that is a member of
the FSK UES Group. For the assignment to be deemed to have taken place an MGTES
notice addressed to Ener1 shall be sufficient. An assignment shall be deemed to
be effective as of the date on which Ener1 shall receive such written
notice.  Notwithstanding the foregoing, any assignment by MGTES shall
be conditional upon a guarantee issued by MGTES to Ener1 of such assignee's
obligations under this Agreement.

       

      
        
          
          

        

        
          --26 --

          
            

          

        

        
          
          

        

      

       

      17.         
   LIST
OF EXHIBITS.

      

      17.1           Each
of the following Exhibits, as may be amended, modified and supplemented by
mutual agreement by the Parties, constitutes an integral part of this
Agreement:

      

      17.1.1        Exhibit
1A «SCOPE OF WORK»

      

      17.1.2        Exhibit
1B «SCHEDULE OF WORK»

      

      17.1.3        Exhibit
1С «SCHEDULE AND TERMS OF PAYMENTS»

      

      17.1.4        Exhibit
1D «TECHNICAL DESCRIPTION OF THE UNIT»

       

      
        
          
          

        

        
          --27 --

          
            

          

        

        
          
          

        

      

       

      IN
WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their
respective duly authorized officers as of the date first above
written.

      

      Ener1,
Inc. / Ener1, Inc.

      

      By:  /s/
Bruce Curtis

      Name:
Bruce Curtis

      Title:
President, Grid Energy Storage

      

      Joint
Stock Company “Mobile GTES”

      

      By:  /s/ Oleg
Valentinovich Bragin

      Name:  Oleg
Valentinovich Bragin

      Title:  General
Director

      

      
        
          
          

        

        
          --28 --Unassociated Document

     

     Exhibit
10.1

    -
Unofficial Translation -

    

    Equity
Transfer Agreement

     

    
      
        	
                Party
      A (Transferor):

              	
                LU
      Wenhua

              
	(ID
      Card No.: 612701197401140015)	 

      

       

      
        
          	
                  Party
      B (Transferee):

                	
                  Xi'an
      Baorun Enterprise Development Co.,
Ltd.

                

        

        
          	
                  Legal
      Representative:

                	
                  GAO
      Xincheng

                

        

      

    

     

    Party A
and Party B, after friendly negotiation on the equal basis, have reached the
following Agreement with regard to the transfer by Party A of all the equity
held by Party A in Shenmu County Erlingtu Hongtu Oil Material Co., Ltd.
("Company") to Party B:

    

    

    
      	
              Article
      I

            	
              Definitions

            

    

    

    
      	
               
      

            	
              1.

            	
              The
      "Equity Transferred" hereunder
means:

            

    

    

    (1)           Equity
held by Party A in Shenmu County Erlingtu Hongtu Oil Material Co.,
Ltd.;

    

    (2)           The
Company's equity, the major assets of which include: all the assets of the
Hongjianzhuo Gas Station that the Company owns, the land occupied by the gas
station and all the underground and above ground structures, operation
facilities and equipment, including but not limited to the use right to the land
occupied by the gas station and the underground and above ground structures,
operation facilities and equipment (13 mu of land occupied by the
gas station; a 1,200-m2 rain
shed and 14 business rooms; 6 oil storage tanks; 10 gas filling machines, two of
which are double ; a 15-kilowatt diesel generator; 3 sets of water-supply
facility).

    

    (3)           At
the time of executing this Agreement, Party A must provide to Party B all the
certificates pertaining to the Company and its Hongjianzhuo Gas Station,
including but not limited to operation certificates, tax registration
certificates, organization code certificates, hazardous and chemical material
certificates, land use right certificates, approval documents, and copies of
relevant contracts and agreements.

    

    2.           The
"Transfer Consideration" hereunder means all the consideration for the equity
transfer of RMB 61,000,000.00 in total (Sixty-One Million Yuan even, including
all the fees and expenses that Party A must pay to the government administrative
authorities in connection with the relevant registration and change registration
procedures) that Party B must pay to Party A pursuant to the provisions
herein.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    
      	
              Article
      II

            	
              Party
      A's Information Disclosure Prior to the Execution of this
      Agreement

            

    

    

    1.           Prior
to the execution of this Agreement, Party A must present to Party B the original
copies of the certificates, approval documents and contracts and agreements
pertaining to the Company and its Hongjianzhuo Gas Station mentioned
above.

    

    2.           Prior
to the execution of this Agreement, Party A must truthfully inform Party B of
the sources of the certificates, approval documents and contracts and agreements
pertaining to the Company and its Hongjianzhuo Gas Station mentioned above, of
their authenticity and the situation about their performance and fulfillment, of
the situation about the land use right to the land occupied by the gas station,
of the ownership certificates of the property above ground and of the conditions
of the underground structure, operation facilities and
equipment.  Party A must warrant that it has the complete ownership to
such assets and that it shall compensate Party B in full for any loss resulting
from any reason on the part of the Company and from any defects of the assets
mentioned above.

    

    
      	
              Article
      III

            	
              Equity
      Transfer Consideration Payment Method and Term of
  Payment

            

    

    

    1.           The
consideration for the equity transfer is RMB 61,000,000.00 (Sixty-One Million
Yuan even), and Party A and Party B agree that the payment of the consideration
must be in the form of bank transfer into the shareholder's personal account
designated by Party A.  The bank with which the account is held:
Agricultural Bank of China; Account title: LU Wenhua; Account No.:
6228482940515033319.

    

    2.           On
the day following the execution of this Agreement, the two parties will begin
the handover of assets; if Party B does not find any material defects about the
Company and its gas station assets that will affect the normal operation, Party
B must make the first payment to Party A in the amount of the 60% of total
equity transfer consideration, that is, RMB 36,600,000.00 (Thirty-Six Million
and Six Hundred Thousand even); if Party B finds any material defects about the
Company and its gas station assets, Party B has the right to terminate this
Agreement and return all the assets received from Party A.

    

    3.           Within
60 days upon receiving the first payment, Party A must have the change
registration procedures for all the certificates and documents pertaining the
Company and its gas station completed by its legal representative or its
responsible person; if there is any loss suffered by Party B as the result of
incomplete documentation regarding any assets, Party A must return in full the
amount of the first payment for the equity transfer consideration and compensate
for all the loss as the result of Party B's inability to have normal
operation.  If Party A have delivered all the valid certificates after
the change to Party B, then Party B must make the payment in the amount of 30%
of the total equity transfer consideration, that is, RMB 18,300,000.00 (Eighteen
Million Three Hundred Thousand even) within 15 days upon receiving
them.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    4.           Party
B will pay the remaining 10% of the equity transfer consideration, that is, RMB
6,100,000.00 (Six Million One Hundred Thousand) within 15 business days after
the first anniversary of its operation, if Party B confirms that the Company and
its gas station has no issues regarding taxes, land use and road planning and
the enterprise can continue its operation.

    

    

    
      	
              Article
      IV

            	
              Handover
      of Seals, Documentation and Assets

            

    

    

    1.           With
5 days upon the execution of this Agreement, Party A must deliver the original
copies of all the certificates and documents listed herein to Party B for Party
B to use; Party B must sign and imprint its seal on the delivery list and, at
the same time, verify the copies of the certificates and documents against the
originals and then sign and imprint its seal on the copies, which are to be
maintained by Party A for future reference.

    

    2.           With
5 days upon the execution of this Agreement, Party A must hand over all the
assets listed herein to Party B for Party B to use, and Party B must sign and
imprint its seal on the handover list.

    

    

    
      	
              Article
      V

            	
              Responsibilities
      Before and After the Execution of This
Agreement

            

    

    

    1.           After
the execution of this Agreement but before formally handover of the gas station,
Party A bears all the economical responsibilities for the Company and
Hongjianzhuo Gas Station that the Company owns; after the handover, the
surviving company bears such responsibilities.

    

    2.           Party
A must bear responsibility for all the harm to Party B's interests caused by
transferring or pledging the Company and  Hongjianzhuo Gas Station
that the Company owns to any third party or by any other means and compensate
Party B in full for all the resulting loss.

    

    3.           During
the transition period, Party A and Party B must active cooperate with and assist
each other so as to resolve all the issues encountered during Party B's
operation.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    

    
      	
              Article
      VI

            	
              Confidentiality
      Obligation

            

    

    

    Party A and Party B both promise that
both parties have the obligation to maintain confidentiality on all the
financial, legal, management and other information obtained in connection with
this Agreement about the other party.   And neither party shall
make this Agreement known to any other party besides Party A and Party B;
otherwise the party that reveals such information must compensate the other
party for all the resulting economic loss.

    

    

    
      	
              Article
      VII

            	
              Breach
      Liability

            

    

    

    1.           Party
A's failure to fulfill the obligation for delivery and handover and the
obligation for completing the change registration procedures in according with
the schedule specified herein shall constitute a breach; for each past due day,
Party A must pay to Party B a breach penalty in the amount equal to 0.02% of the
total equity transfer consideration.

    

    2.           Party
B's failure to make payments for the equity transfer consideration in according
with the schedule specified herein shall constitute a breach; for each past due
day, Party B must pay to Party A a breach penalty in the amount equal to 0.02%
of the total equity transfer consideration.

    

    3.           If
the loss caused by one party's breach exceeds the breach penalty mentioned
above, then the party in breach shall compensate the other party for all the
actual loss.

    

    4.           After
Party A completes all the required procedures and 30 days from the date when
Party A requests Party B to accept the handover of the gas station, if Party B
is not able to accept the handover, Party A has the right to terminate the
Agreement.  After Party B accepts the handover of the gas station,
Party A has no right to request termination of this Agreement.

    

    

    
      	
              Article
      VIII

            	
              Resolution
      of Dispute

            

    

    

    Any dispute arising from and in
connection with this Agreement must be settled through negotiation between the
two parties; if such negotiation fails, the dispute can be submitted to legal
proceeding at the people's court that has jurisdiction.

    

    

    
      	
              Article
      IX

            	
              Others

            

    

    

    1.           This
Agreement becomes effective after it is signed and imprinted with seal by both
parties.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    2.           The
performance of this Agreement starts on October 19, 2010; the amount of RMB
20,000,000.00 (Twenty Million even) initially pre-paid will be deducted from the
acquisition consideration.

    

    3.           Other
matters not covered herein may be negotiated between the two parties and be
stipulated in supplemental agreements.  Any supplemental agreement
shall have the same legal effect as this Agreement.

    

    4.           This
Agreement is in duplicates, with one to each party.

    

    

    
      	
              Party
      A:

            	
              /s/
      LU Wenhua

            

    

    

    
      	
              Party
      B:

            	
              /seal/
      Xi'an Baorun Enterprise Development Co.,
Ltd.

            

    

    
      
        	
                Representative's
      signature:

              	
                /s/
      [signature visible but not
legible]

              

      

    

    

    

    
      	
              Date:

            	
              October
      19, 2010

            

    

    
      	
              Place:

            	
              Xi'an

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