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: 

    

    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.

    
      
         

      

      
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    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.

    

    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

    

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

    
      
         

      

      
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    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.

    

    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.

    
      
         

      

      
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    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.

    

    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:

    
      
         

      

      
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    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;

    

    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.

    

    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:

    
      
         

      

      
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    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.

    

    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.

    
      
         

      

      
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    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.

    

    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 1,278
days after such date.  The first 548 days of the warranty will cover
the trial industrial operation period of the Units (including guarantees
indicated in the Specification on Capacity of the accumulator battery of the
Units, AC Nominal Power, efficiency of the Units during double transformation
and Unit Utilization Factor) and materials and workmanship, and the remaining
730 days of the warranty will cover parts, assemblies, materials and workmanship
only.

    

    In the
event the Units are replaced within the effective Warranty Period, Ener1 shall
provide a warranty for such Units for the period equal to the initial period
specified in this Section.

    

    In the
event the Units are repaired under Warranty, the Warranty Period shall be
extended by the duration of the period within which the Units were not used due
to the revealed defects.

    

    The parts
supplied in the replacement of defective parts or new parts supplied for the
warranty repair shall be subject to a new warranty period equal to the period
specified in this Section and applied on the same conditions. This measure shall
not cover the remaining parts of the Units with respect to which the warranty
period will be extended by the duration of the period within which the Units
were not used due to revealed defects.

    
      
         

      

      
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    7.3          Provision of Experts.
Should defects in the Units be identified during the warranty period, Ener1
shall ensure the arrival of one or more of its experts within five business days
(including time required for travel) of receipt of a written request from MGTES
to cure such defect.  For the purposes of proper performance of its
obligations hereunder, Ener1 undertakes to ensure the presence of a service
engineer within the Russian Federation to provide warranty maintenance of the
Units throughout their warranty period.  The cost of travel, as agreed
upon by the Parties, to the Placement Locations and living expenses of the
service engineer while providing maintenance services for the Units shall be
borne by Ener1, subject to subsequent reimbursement by MGTES based on supporting
documents.

    

    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. Ener1 shall carry out all work to
repair the Units and deliver spare parts for maintenance and overhaul during the
Warranty period.

    

    For the
purposes of proper performance of its obligations before MGTES, Ener1 undertakes
to ensure the presence of a service engineer in the Russian Federation to
provide service and warranty maintenance of the Units supplied by Ener1
throughout their warranty period after putting them into the industrial
operation. The cost of travel, as agreed upon by the Parties, to the Placement
Locations and living expenses of the service engineer while providing
maintenance services for the Units shall be borne by Ener1, subject to
subsequent reimbursement by MGTES based on supporting documents.

    

    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.

    

    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.

    
      
         

      

      
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    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.

    

    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.

    
      
         

      

      
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    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.

    

    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.

    
      
         

      

      
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    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. 

    

    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.

    

    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.

    
      
         

      

      
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    13.2        Liquidated Damages.
The following liquidated damages may apply for a breach by Ener1 of its
obligations under this Agreement with respect to each Unit:

    

    13.2.1     for
a delay in shipping such Unit from its Shipping Location caused by Ener1, in the
amount of USD 20,000 for each calendar day of such delay, not to exceed USD
2,000,000 in total for each Unit;

    

    13.2.2     for
exceeding the time allocated for assembling and putting into pilot operation in
the  applicable Placement Location, as referred to in Table 1 of
Exhibit 1B, and such delay is caused by Ener1 and is not due to violation of
instructions of chief engineers of Ener1 regarding performance of work by MGTES
or its contractors, in the amount of USD 20,000 for each calendar day of such
delay, not to exceed USD 2,000,000 in total per each Unit (the aforementioned
timeframe for assembly and putting into pilot operation at the relevant
operating location shall be defined as the difference between the date of Unit
delivery to the applicable Placement Location and the date of putting such Unit
into the pilot operation, less the delay in obtaining permits from the bodies of
the Federal Service of the Russian Federation for Environmental, Technological
and Nuclear Oversight to put Units into pilot operation, as indicated in the
Schedule of Work, that occurred through
no fault of Ener1).

    

    13.2.3     for
a delay in transferring a set of documents regarding the 3rd stage
of submission of project documentation for such Unit, as indicated in clause 1
of Exhibit 1A, and such delay is caused by Ener1, in the amount of USD 3,200 for
each calendar day of such delay, not to exceed USD 320,000 in
total;

    

    13.2.4     for
such Unit’s failure, during a warranty test, to achieve the values of guaranteed
technical ratios indicated in the Specification (Exhibit 1D,clause 3.5 and 3.6),
in the amount of:

     

    (a)           USD
10,000 for each kilowatt-hour short of the Battery Capacity;

    

    (b)          USD
10,000 for each kilowatt short of the Rated Power of the Battery accounting for
losses on own needs;

    

    (c)          USD
384 for each 0.1 % short of the system’s round trip efficiency ratio;
and

    (d)          USD
720 for each 0.1 % short of the Unit Capacity Utilization Factor;

    

    Provided
that the aggregate amount of liquidated damages for which Ener1 is liable for
under this Section 13.2 with respect to a Unit shall not exceed 10% of the value
of such Unit agreed by the parties in the Specification.

    

    Should a
Unit fail to achieve guaranteed performance ratios for the items described in
clauses (a), (b) and (c) of this Section as required in the Specification, Ener1
may, during a period of time agreed with MGTES, modify such Unit and conduct
repeat warranty tests at its own expense. Should such Unit again fail to achieve
guaranteed performance ratios for the items described in clauses (a), (b) and
(c) of this Section as required in the Specification, MGTES may demand payment
of the penalties stipulated by Section 13.2.4.

    
      
         

      

      
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    In
addition, if the values of the guaranteed performance ratios for the items
described in described in Subsections (a), (b) and (c) of this Section obtained
in warranty tests fall short of their values as per the Specification by more
than 5%, such deviation may be viewed as a violation of the requirements
regarding quality of the Products, and MGTES shall be entitled to send to Ener1
a “Notice on Rejection” of such Unit and in such event the parties shall act in
accordance with Section 6.9.

    

    Deviations
in the values of guaranteed performance ratios for the items described in
Subsections (a), (b) and (c) of this Section obtained in warranty tests of less
than 5% of their values set forth in the Specification shall not grant MGTES the
right to reject such Unit in accordance with Section 6.9.

    

    The
utility ratio for the Unit shall be defined as indicated in Exhibit 1D,
Part 4.

    

    13.3        Payment of Liquidated
Damages.  All payments of liquidated damages hereunder shall be
due within 10 banking days after such written claim for damages has been
received by Ener1, and if Ener1 disputes such claim, the final resolution of
such dispute in accordance with the terms of this
Agreement.  

    

    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.

    
      
         

      

      
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    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 THE LESSER OF (I) USD 8,000,000 AND (II) 20% OF THE TOTAL
AMOUNT PAID BY MGTES TO ENER1 PURSUANT TO THIS AGREEMENT. THE
PROVISIONS OF THIS CLAUSE 14.2 APPLY TO THE EXTENT THAT IT DOES NOT CONTRADICT
OTHER PROVISIONS OF THIS AGREEMENT.

    

    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:

    

    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;

    
      
         

      

      
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    (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

    
      

    

    
      (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. 

    
      
         

      

      
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    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..

    

    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.

    
      
         

      

      
        18
(41)

        
          

        

      

      
         

      

    

    

    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.

    

    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

    

    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. 

    
      
         

      

      
        19
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    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.

    

    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.

    
      
         

      

      
        20
(41)

        
          

        

      

      
         

      

    

    

    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»

    
      
         

      

      
        21
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    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

    
      
         

      

      
        22
(41)

        
          

        

      

      
         

      

    

    Exhibit
1A

    to Supply
Agreement

    Capitalized
terms used in this Exhibit 1A that are not defined in this Exhibit shall have
the meanings given to such terms in the Supply Agreement, dated as of October 6,
2010 (the “Agreement”),
entered into by Mobile Gas Turbine Electric Powerplants (“MGTES”) and Ener1, Inc. (“Ener1”), and if not defined
in the Agreement, then the meanings given to such terms in the other Exhibits to
the Agreement.

    SCOPE OF
WORK

    General

    The scope
of work shall be the delivery of the following components and
services:

    

    1            
Development and delivery of the Units for use:

    i.             to
St-Petersburg or Leningrad region (2 MW/ 2 MWh)

    ii.            to
the Sochi substation (1 MW / 3 MWh)

    2             Field
tests of the Units, long-term monitoring and analysis

    3             Economic
Viability Analysis

    4             Manufacture
localization study

    5             Training
of MGTES personnel with respect to the operation and maintenance of the
Units

    Within
two weeks of the effectiveness of the Agreement, the Parties shall sign separate
agreements to determine working groups comprising Ener1 and MGTES specialists,
as well as  third-party organizations’ employees and specialists, for
the purpose of the following activities:

    a.            Research:
Economic Viability Analysis.  Selection and prioritization of applied
solutions in the field of energy storage under Section 8.2 of the
Agreement.

    b.        
   Engineering: Updating and adding to the Specification as
deemed reasonably necessary by the Parties in accordance with Sections 1.3 of
the Agreement; development of the Units; performance of manufacture localization
studies under Section 8.3 of the Agreement to examine availability of raw
materials and skilled human resources, and assess the market conditions and
establish whether lithium ion batteries and associated hardware can be produced
in the Russian Federation; development and performance of a long-term testing
program; and coordination of any actions necessary to obtain requisite approvals
for the Units from the Russian Federation.

    1.            Development
and Delivery of the Units

    Unit Development
Process

    To make
sure that each Unit matches the specific application it is being designed for,
Ener1 and MGTES specialists shall, as part of the operations of joint working
group “A,” commence a phased process of document submission to the relevant
governmental authorities to clarify the characteristics of each Unit as
presented in Exhibit 1D, and to obtain approval for the same from such
authorities. Three phases are envisaged hereby for submission of design
documentation.

    1             First
stage of design documentation submission

    o             Selection
of long-lead components: battery cells, inverters, temperature control
components, electrical components, as well as SCADA and communications
hardware

    2             Second
stage of design documentation submission:

    o             Integration
of the SCADA system (control and communication) and the grid

    3             Third
and final stage of design documentation submission.

    Final
design of the power module and the battery module

    Delivery of the
Units

    Ener1
shall supply MGTES with the following two Units:

    ·             A
2 MW, 2 MWh Unit to be installed in St-Petersburg or Leningrad region
(hereinafter also referred to as “Unit 1” or “Placement Location 1,”
respectively)

    
      
         

      

      
        23
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    ·             A
1 MW, 3 MWh Unit to be installed at the Sochi substation (hereinafter also
referred to as “Unit 2” or “Placement Location 2,” respectively)

    In
addition, Ener1 shall supply MGTES with a test module (that is, a battery module
having approximately 70 kWh capacity) to be tested for the purpose of gathering
the requisite data for research and evaluation that MGTES reasonably deems
appropriate for purposes of the implementation and use of the Units in the
designated Placement Locations.  Delivery timeline and locations will
be further agreed to by the Parties.

    Parameters of the Units to
Be Delivered are Detailed in Exhibit 1D

    The Units
shall be installed in an ISO standard cargo container and shall be comprised of
a number of battery modules (that include DC battery installations) and power
modules (that include DC and AC electronics, controls, and grid
distributors).

    Each Unit
shall have the following specifications: 0.4 kV, 50 Hz three phase current at
the power module output. Equipment to connect such module to the grid, including
a step-up transformer, as well as the connection of such, shall be provided by
MGTES.

    Battery
Modules

    Each
battery module shall be fully enclosed, installed, and tested. It shall be
comprised of the following components:

    

    ·             Lithium
ion battery modules comprised of Ener1 A306 cells (part number 15-11052 in Ener1
catalogue)

    ·             Rack
system for battery installation

    ·             Temperature
control and HVAC system

    ·             Battery
management system (BMS)

    ·             DC
equipment for internal needs, buses, and relevant cabling

    ·             Fire
suppression and HVAC system

    ·             Lightning
systems and auxiliary power sources

    Power
Module

    Power
module shall also be fully enclosed, installed and tested. It shall include the
following components:

    

    ·             Power
electronics for charging/discharging the battery, including a two-way
inverter

    ·             SCADA
system (for remote control and data gathering)

    ·             DC
equipment for internal needs, buses, and relevant cabling

    ·             Fire
suppression

    ·             HVAC

    ·             Lighting
systems and auxiliary power sources

    Module
Interconnection

    Ener1
shall supply cables and wiring required for electrical interconnection and
communication between power modules and battery modules.

    Maintenance
Support

    Ener1
shall provide technical support for equipment installation and commissioning of
the Units, including:

    ·             Technical/engineering
support in the course of Units installation, pilot launch, and acceptance
tests

    ·             Training
of operators and service personnel (maintenance and repairs)

    Design
Documentation

    Ener1
shall provide the customary documentation that Ener1 deems reasonably necessary
for any Unit, including training materials for the operating personnel, training
materials for service personnel (maintenance and repairs), user manuals, and
instructions on operations, maintenance, and repairs (and, to the extent
practicable, translated in Russian).

    
      
         

      

      
        24
(41)

        
          

        

      

      
         

      

    

    2 
          Field Tests,
Long-Term Monitoring, and Review of the Units

    Following
the installation and pilot launch of each Unit, Ener1 and MGTES shall carry out
joint integrated field tests, perform long-term monitoring, gather data, and
analyze each engineering solution. Such tests shall continue for at least 18
months. The key objectives of such tests, monitoring, data gathering, and
analysis are as follows:

    ·  
         Verify the Units’
operating performance with regard to each individual engineering solution,
including overall operational reliability and performance, as well as
performance at cell level, the entire Unit, and selected components
thereof.

    ·            Verify
the economic and operational advantages associated with running the Units
(factoring in costs savings, operation and maintenance).

    ·     
       Provide Ener1 with information to improve
the “next generation” of Units to be used at the upcoming stages of the
program.

    The
program includes installation of highly accurate monitoring systems to be
delivered by Ener1 for the purpose of remote data control and recording of
information. In addition, specific field tests will be developed and performed
to validate the Units’ operating performance and proper functioning in all modes
of operation.

    Reports
as to field tests, long-term monitoring, and analysis of each Unit shall be
prepared by Ener1 and submitted to MGTES at 3 months, 6 months, 12 months, and
18 months following the pilot launch of each Unit.

    3      
      Economic Viability Analysis

    

    With
MGTES’s support, Ener1 shall perform a comprehensive study by way of Economic
Viability Analysis (“EVA”) to cover all potential uses of lithium ion batteries
for energy storage purposes.

    The
purpose of such study is to identify and analyze potential uses for the Units
and select economically feasible applied solutions for their application within
the Unified National Power Grid of the Russian Federation. Any solutions that
meet the applicable requirements shall undergo a detailed review from the
cost-benefit perspective. Such data shall inform a final list of top priority
applied solutions and projects.

    4 
           Manufacture
Localization Study

    With
MGTES’s support, Ener1 shall study the potential for manufacture localization.
The purpose of such review is to identify existing Russian equipment components,
materials that might be used in the project, as well as any potential for system
integration of GES Units in Russia.

    Based on
the outcome of such study and MGTES order volumes, Ener1 shall decide whether to
use local equipment and labor in any future GES Units.

    
      
         

      

      
        25
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    Exhibit
1B

    to Supply
Agreement

    Capitalized
terms used in this Exhibit 1B that are not defined in this Exhibit shall have
the meanings given to such terms in the Supply Agreement, dated as of October 6,
2010 (the “Agreement”),
entered into by Mobile Gas Turbine Electric Powerplants (“MGTES”) and Ener1, Inc. (“Ener1”), and if not defined
in the Agreement, then the meanings given to such terms in the other Exhibits to
the Agreement.

    SCHEDULE
OF WORK

    1. 
          Schedule of
Work

    The
Units’ shipping location shall be a USA seaport (“Shipping
Location”).

    The
Units’ delivery location shall be the temporary storage location of the seaport
of St. Petersburg, Russia (“Delivery Location”) or any other port selected by
MGTES and reasonably acceptable to Ener1.

    The
specific requirements of Ener1 and MGTES with respect to the Placement
Locations’ readiness for the Units’ installation and startup shall be further
agreed by the Parties.

    
    

    Table
1

    
      
        
          	
                  No.

                	  	
                  Work Item

                	  	
                  Completion Date *

                
	
                  1

                	 
      	
                  Approval
      of the document package pertaining to the primary components to be ordered
      as part of the first stage of design document submission

                	 
      	
                  November 15, 2010

                
	 
      	 
      	 
      	 
      	 
      
	
                  2

                	 
      	
                  Approval
      of the document package at the second stage of design document
      submission

                	 
      	
                  December
      15, 2010

                
	 
      	 
      	 
      	 
      	 
      
	
                  3

                	 
      	
                  Completion
      of the Economic Viability Analysis

                	 
      	
                  February
      15, 2011

                
	 
      	 
      	 
      	 
      	 
      
	
                  4

                	 
      	
                  Approval
      of the document package at the third stage of design document
      submission

                	 
      	
                  January
      15, 2011

                
	 
      	 
      	 
      	 
      	 
      
	
                  5

                	 
      	
                  Shipment
      of Unit 1 from the Shipping location as per Article 4.1 of the
      Agreement

                	 
      	
                  March
      15, 2011

                
	 
      	 
      	 
      	 
      	 
      
	
                  6

                	 
      	
                  Shipment
      of Unit 2 from the Shipping location as per Article 4.1 of the
      Agreement

                	 
      	
                  March
      30, 2011

                
	 
      	 
      	 
      	 
      	 
      
	
                  7

                	 
      	
                  Delivery
      of Unit 1 to the Delivery Location as per Article 4.1 of the
      Agreement

                	 
      	
                  April
      15, 2011

                
	 
      	 
      	 
      	 
      	 
      
	
                  8

                	 
      	
                  Delivery
      of Unit 2 to the Delivery Location as per Article 4.1 of the
      Agreement

                	 
      	
                  April
      30, 2011

                
	 
      	 
      	 
      	 
      	 
      
	
                  9

                	 
      	
                  Completion
      of the manufacture localization study

                	 
      	
                  March
      30, 2011

                
	 
      	 
      	 
      	 
      	 
      
	
                  10

                	 
      	
                  Delivery
      of Unit 1 to Placement Location 1; Placement Location 1 ready for Unit 1
      installation and commissioning.

                	 
      	
                  April
      30, 2011

                
	 
      	 
      	 
      	 
      	 
      
	
                  11

                	 
      	
                  Approval
      obtained from bodies of the RF Rostekhnadzor (Federal Service of the
      Russian Federation for Environmental, Technological and Nuclear Oversight)
      for pilot operation of Unit 1.

                	 
      	
                  May
      15, 2011

                
	 
      	 
      	 
      	 
      	 
      
	
                  12

                	 
      	
                  Approval
      obtained from bodies of the RF Rostekhnadzor for pilot operation of Unit
      2.

                	 
      	
                  May
      30, 2011

                
	 
      	 
      	 
      	 
      	 
      
	
                  13

                	 
      	
                  Pilot
      launch of Unit 1 in St-Petersburg or Leningrad region.

                	 
      	
                  May
      15, 2011

                
	 
      	 
      	 
      	 
      	 
      
	
                  14

                	 
      	
                  Pilot
      launch of Unit 2 at the Sochi substation.

                	 
      	
                  May
      30, 2011

                
	 
      	 
      	 
      	 
      	 
      
	
                  15

                	 
      	
                  Final
      acceptance of Unit 1 on completion of pilot operation.

                	 
      	
                  November
      15, 2012

                
	 
      	 
      	 
      	 
      	 
      
	
                  16

                	
                    

                	
                  Final
      acceptance of Unit 2 on completion of pilot operation.

                	
                    

                	
                  November
      30, 2012

                

        

      

    

     

    
      
         

      

      
        26
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    * 
          The timeline shown
in the “Completion Date” column are estimates made as of the date of the
Agreement, and are subject to change due to project delays and unforeseen
circumstances, including delays in obtaining requisite board approvals of the
Parties.  Both Parties shall use good faith to meet the target dates
set forth under the Completion Date column, provided that neither Party shall be
liable for any delays unless such delays are the result of such Party’s gross
negligence or willful misconduct.

     

    Table
2

    
      
        
          	
                  Stage 

                	  	
                  Stage Description 

                	  	
                  Acceptance

                  Location 

                	  	
                  Reporting Documents 

                
	
                  1

                	 
      	
                  Factory
      tests of the Unit under Article 3.02, Part 3, Exhibit  D to the
      Specification; acceptance in terms of quantity (to see whether the
      Products constitute a full complement)

                	 
      	
                  Factory
      premises of Ener1

                	 
      	
                  Test
      reports; Certificate of successful completion of factory tests;
      Certificate showing that the Units constitute a full complement, Insurance
      policy for each Unit

                
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                  2

                	 
      	
                  Unit’s
      shipment from the Shipping Location under Article 4.1 of the
      Agreement

                	 
      	
                  Delivery
      Location

                	 
      	
                  Clean
      marine bill of lading

                
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                  3

                	 
      	
                  Unit’s
      delivery to the Delivery Location as per the terms and conditions of
      Section 4 of the Agreement

                	 
      	
                  Delivery
      Location

                	 
      	
                  Documents
      under Article 5.3 of the Agreement; Report on external examination of the
      Unit’s transportation package

                
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                  4

                	 
      	
                  Pilot
      launch of the Unit (Conditional Acceptance)

                	 
      	
                  Placement
      Location

                	 
      	
                  The
      Unit’s pilot launch certificate

                
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                  5

                	
                    

                	
                  Final
      acceptance of the Unit

                	
                    

                	
                  Placement
      Location

                	
                    

                	
                  The
      Unit’s final acceptance
certificate

                

        

      

    

     

    
      
         

      

      
        27
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    Exhibit
1C

    to Supply
Agreement

    Capitalized
terms used in this Exhibit 1C that are not defined in this Exhibit shall have
the meanings given to such terms in the Supply Agreement, dated as of October 6,
2010 (the “Agreement”),
entered into by Mobile Gas Turbine Electric Powerplants (“MGTES”) and Ener1, Inc. (“Ener1”), and if not defined
in the Agreement, then the meanings given to such terms in the other Exhibits to
the Agreement.

    SCHEDULE
AND TERMS OF PAYMENT

    1.           
The purchase price for the two Units comprising the Products consists of the
following:

    1.1          Forty
Million U.S. Dollars ($40,000,000.00);

    1.2          Ener1’s
documented costs of clearing the Units through customs in the Russian
Federation, including customs brokerage fees and payment of all requisite
customs payments and duties on the terms and conditions specified in the
Agreement.

    2.           
All payments shall be made within fifteen (15) banking days of MGTES receiving
documents as to the relevant Payment Milestone, other than the initial down
payment, which shall be made within fifteen (15) banking days of the Effective
Date of the Agreement, provided Ener1 has furnished an unconditional and
irrevocable bank guarantee for proper performance of its obligations under the
Agreement in accordance with Section 3.3 of the
Agreement.

    3.            Under
the Agreement, Ener1’s products shall be paid for in several stages shown below
(“Payment Milestones”):

    
      
         

      

      
        28
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    Table
3

    
      
        
          
            
              
                
                  
                    
                      
                        
                          
                            	
                                    No.

                                  	 	
                                    Payment Milestone

                                  	 	
                                    Amount, US

                                    dollars

                                  	 	
                                    Payment against Document

                                  
	 
      	 	 
      	 	 	 	 
      
	
                                    1

                                  	 	
                                    Approval
      of the project’s final version

                                  	 	$	1 600 000,00	 	
                                    A
      Two Party Protocol confirming the the project’s final design; and an
      invoice for the amount of this Payment Milestone.

                                  
	 
      	 	 
      	 	 	 	 	 
      
	
                                    2

                                  	 	
                                    Completion
      of the Economic Viability Analysis

                                  	 	$	200 000,00	 	
                                    A
      Two Party Protocol confirming the the Economic Viability Analysis; and an
      invoice for the amount of this Payment Milestone.

                                  
	 
      	 	 
      	 	 	 	 	 
      
	
                                    3

                                  	 	
                                    Successful
      completion of factory tests as per Unit 1’s quality control
      program

                                  	 	$	7 280 000,00	 	
                                    Protocols
      about the factory tests and a Two Party Act about successful completion of
      factory tests, and a two party act about the factory tests and a Two Party
      Act about successful completion of factory tests, and a Two Party Act
      about the completion of Unit 1, and an invoice for payment for such Stage,
      and an insurance policy for Unit 1.

                                  
	 
      	 	 
      	 	 	 	 	 
      
	
                                    4

                                  	 	
                                    Successful
      completion of factory tests as per Unit 2’s quality control
      program

                                  	 	$	10 920 000,00	 	
                                    Protocols
      about the factory tests and a Two Party Act about successful completion of
      factory tests, and a two party act about the factory tests and a Two Party
      Act about successful completion of factory tests, and a Two Party Act
      about the completion of Unit 2, and an invoice for payment for this Stage,
      and an insurance policy for Unit 2.

                                  
	 
      	 	 
      	 	 	 	 	 
      
	
                                    5

                                  	 	
                                    Delivery
      of Unit 1 to the Delivery Location

                                  	 	$	
                                    4 240 000,00

                                    plus
      costs referred

                                    to
      in the Note to

                                    this
      Table 3

                                  	 	
                                    Documents
      for delivery of Unit 1 prepared in accordance with Section 5.3 of the
      Agreement, and an Act about external Inspection of the Unit’s
      transportation packaging , and an invoice for payment for this
      Stage

                                  
	 
      	 	 
      	 	 	 	 	 
      
	
                                    6

                                  	 	
                                    Delivery
      of Unit 2 to the Delivery Location

                                  	 	$	
                                    6 360 000,00

                                    plus
      costs referred

                                    to
      in the Note to

                                    this
      Table 3

                                  	 	
                                    Documents
      for delivery of Unit 2 prepared in accordance with Section 5.3 of the
      Agreement, and an Act about external Inspection of the Unit’s
      transportation packaging , and an invoice for payment for this
      Stage

                                  
	 
      	 	 
      	 	 	 	 	 
      
	
                                    7

                                  	 	
                                    Completion
      of the manufacture localization study

                                  	 	$	200 000,00	 	
                                    Two
      Party Protocol about completion of the manufacture localization study; and
      an invoice for the amount of this Payment Milestone.

                                  
	 
      	 	 
      	 	 	 	 	 
      
	
                                    8

                                  	 	
                                    Pilot
      launch of Unit 1, completion of MGTES personnel training

                                  	 	$	1 600 000,00	 	
                                    An
      Act about the pilot of Unit 1, and a Two Party Protocol about completion
      of the training of personnel of MGTES, ; and an invoice for the amount of
      this Payment Milestone.

                                  
	 
      	 	 
      	 	 	 	 	 
      
	
                                    9

                                  	 	
                                    Pilot
      launch of Unit 2, completion of MGTES personnel training

                                  	 	$	1 600 000,00	 	
                                    An
      Act about the pilot of Unit 2, and a Two Party Protocol about completion
      of the training of personnel of MGTES, ; and an invoice for the amount of
      this Payment Milestone

                                  
	 
      	 	 
      	 	 	 	 	 
      
	
                                    10

                                  	 	
                                    Remediation
      of defects and punch list items

                                  	 	$	2 000 000,00	 	
                                    Two
      Party Protocol about the remediation of any defects and punch list items
      (if any) having been completed; and invoice for the amount of this Payment
      Milestone.

                                  
	 
      	 	 
      	 	 	 	 	 
      
	
                                    11

                                  	 	
                                    Final
      acceptance of Unit 1

                                  	 	$	2 000 000,00	 	
                                    An
      Act about the final acceptance of Unit 1, and  an invoice for
      the amount of this Payment Milestone

                                  
	 
      	 	 
      	 	 	 	 	 
      
	
                                    12

                                  	 	
                                    Final
      acceptance of Unit 2

                                  	 	$	2 000 000,00	 	
                                    An
      Act about the final acceptance of Unit 2, and  an invoice for
      the amount of this Payment Milestone.

                                  
	 
      	 	 
      	 	 	 	 	 
      
	 
      	 	
                                    Total:

                                  	 	$	40 000 000,00	 	 
      

                          

                        

                      

                    

                  

                

              

            

          

        

      

    

     

    
      
         

      

      
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    *The
Parties acknowledge and agree that all items requiring mutual agreement of the
Parties under the column titled “Payment against Document” shall be deemed to
impose on each Party a duty to negotiate in good faith and the use of a
“commercially reasonable” standard when determining whether the set of
conditions to be satisfied for a Payment Milestone has been
satisfied.

    4.            Ener1’s
Products shall be paid for in USD cash funds to an account specified by Ener1 in
writing.

    5.            The
date when cash funds leave MGTES bank account shall be deemed to constitute the
payment date under the Agreement.

    
      
         

      

      
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    Exhibit
1D

    to Supply
Agreement

    Capitalized
terms used in this Exhibit 1D that are not defined in this Exhibit shall have
the meanings given to such terms in the Supply Agreement, dated as of October 6,
2010 (the “Agreement”),
entered into by Mobile Gas Turbine Electric Powerplants (“MGTES”) and Ener1, Inc. (“Ener1”), and if not defined
in the Agreement, then the meanings given to such terms in the other Exhibits to
the Agreement.

    TECHNICAL
DESCRIPTION OF THE UNIT

    PART 1 -
GENERAL

    1.1          SCOPE

    A.           Capitalized
terms used in this Exhibit 1D that are not defined in this Exhibit 1D shall have
the meanings given to such terms in the Supply Agreement entered into by Mobile
Gas Turbine Electric Powerplants and Ener1, Inc.  This Technical
Description applies to the Unit based on a lithium-ion battery intended to
connect to an external power grid. This Technical Description does not cover
transformers, control or switchgear, and other electric equipment at the point
where each Unit is connected to an external power grid (hereinafter, the Point
of Common Coupling (PCC)).

    B.           The
Unit must be able to charge batteries when connected to the grid or export
electric energy to the grid as requested by the grid control authority. The Unit
shall interface with the grid at specified voltage levels within specified
tolerances, as set forth in this Technical Description, and under various normal
and abnormal operating scenarios and environments.  The Unit shall
also include power and energy management as indicated in this Technical
Description, and monitoring functionality for all Unit systems.

    1.2         GENERAL
UNIT DESCRIPTION

    A.          The
Unit shall be designed to be fully self-contained and provide power conversion
function and the function to delivery energy to the grid.  The Unit
shall include batteries, racks, housing, battery management system (BMS), all
necessary interconnecting wiring and cables, HVAC system, necessary DC circuit
breakers/disconnect switches, AC circuit breakers/disconnect switches, DC/AC
inverters, local controls, remote SCADA interface, and Unit System interfaces,
as well as an automatic fire suppression system capable of manual activation,
and a security video surveillance system with remote control
capability.

    B.           The
Unit Control System, described herein, and SCADA shall be supplied by
Ener1.

    C.           The
Unit shall be housed in ISO containers for shipment by land, sea, railway or
air. One container (or multiple containers) shall house the battery equipment.
The other container (or multiple containers) shall house the Power Conversion
System (PCS). The containers shall be designed to protect the components from
temperature extremes and moisture.  The Unit’s equipment shall be
assembled in the enclosures by Ener1 including all interconnecting wiring,
supports, and ancillary equipment as described below:

    1.            Cabling
between components

    2.            Lighting
and distribution circuits

    3.            HVAC
equipment and controls

    4.            Access
doors

    5.            Automatic
fire suppression system manual activation capability

    6. A
video surveillance system with remote control capability

    1.3
QUALITY AND SAFETY ASSURANCE, AND GUARANTEES

    A.           Each
Unit and its associated enclosures shall be factory inspected and tested to
verify the design, construction, and operation of the enclosure and its
installed equipment and materials.  A test program shall be
coordinated with MGTES in advance. Test reports shall be provided to
MGTES.

    B.           The
Unit and its enclosures shall be designed and/or tested to meet the standards
below or their local equivalent:

    
      
         

      

      
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    1.            UL
1741 (where applicable)

    1.            NFPA
70 & NFPA 70E

    2.            IEEE
1547,all parts

    3.            IEEE
519

    4.            IEEE
C62.41.2

    5.            FERC
order 661A

    6.            PRC-024-WECC-1-CR

    8.            BOCA
Code

    9.            Uniform
Building Code

    10.          All
applicable local building, electrical and technical, environmental,
fire-fighting norms and rules relative to the installation site.

    11.          All
applicable transportation regulations for delivery to site.

    12.          United
States Advanced Battery Consortium – EV Battery Core Testing

    13.          Compliance
with all international standards and certifications.

    C.       
    Ener1 shall establish a warranty period for equipment
and materials for each Unit, which shall be calculated as of and commence on the
date the Parties sign the acceptance report relating to such Unit and shall last
18 months with respect to guarantees on energy, power, efficiency and uptime,
and materials and workmanship, and shall last an additional 24 months with
respect to materials and workmanship only.

    1.3          TECHNICAL
DOCUMENT SUBMITTALS

    A.           Ener1
will submit to MGTES technical material as described below, in both the English
and Russian languages, in hard copy and on an electronic medium in 4 (four)
copies:

    1.            Outline
and installation drawings showing all exterior dimensions, cable access points,
and clearances. The drawings shall show sizes (including door opening sizes),
weights, centers of gravity, lifting points, anchoring points, relationships
between individual shipping units, the location and designation of all field
wiring termination areas, foundation requirements, and the maximum number and
permissible size range of power conductors that can be accommodated for each
power termination.

    2.           
Requirements and instruction for transportation, mothballing (de-mothballing),
as well as lifting and rigging requirements.  Center of gravity and
lifting points shall be marked on all containers and shipping
splits.

    3.           
Installation planning requirements, field assembly instructions, and mounting
details for all equipment and shipping splits.

    4.            Descriptions
and technical parameters of Unit operation (including limitations on Unit
operation as applicable to local electrotechnical, fire-fighting, and
environmental requirements, norms and rules), including:

    - P&I diagrams;

    - a list of Unit
components;

    - equipment drawings and coupling
diagrams inside the enclosure;

    - description of all systems of the
Unit;

    - description of inverter control
algorithms;

    - list and parameters for SCADA
output signals;

    - description of the Unit’s
protection systems;

    - maps of protection of the
Unit

    5.         
  Point-to-point interconnect drawings (connection diagrams) showing
all termination points and terminal designations for all field wiring between
equipment or shipping splits.

    6.          
 Operating and servicing instructions, including maintenance procedures and
requirements, including frequency and scope of maintenance.

    7.           
Recommended spare parts list for the warranty period, and also for maintenance
and repairs. A set of spare parts for the warranty period, special tools,
accessories and instruments shall be supplied with the Unit.

    8.            Test
reports.

    
      
         

      

      
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    9.            On-site
quality control and start-up procedures

    10.          Training
materials

    11.        
 Material Safety Data Sheets

    12.  Equipment
certificates.

    13. 
Identifying, information and warning plates and signs (in Russian)

    1.5         TERMS
AND DEFINITIONS

    -             ALT 
Accelerated Life Test

    -             BMS           Battery
Management System

    -             HALT         Highly
Accelerated Life Test

    -             HVAC         Heating,
Ventilation and Air Conditioning

    -             MTBF         Mean
Time Between Failures

    -             PCC  
Point of Common Coupling

    -             PCS   Power
Conversion System

    -             PLC   Programmable
Logic Controller

    -             SOC  
State of Charge

    -             THD  Total
Harmonic Distortion

    

    PART 2 –
PRODUCTS

    2.1          UNIT
DESIGN

    A.      
    DESCRIPTION

    1.          
 Each Unit shall be based on electrochemical battery technology. The
battery shall have a DC Voltage on the battery’s output leads that is compatible
with standard 750 – 1050 V inverter DC input voltage rails. Each battery stack
or string shall interface with the AC electrical system through a set of
commercially available IGBT based, four-quadrant, DC-AC inverters and associated
controls.

    2.            The
Unit shall be housed in ISO containers for shipment by land, sea, railway or
air. One container (or multiple containers) shall house the battery equipment.
The containers shall house the battery strings, DC-AC inverters, HVAC, BMS,
SCADA, and Unit controls, including a control terminal.

     

    B.           UNIT’S
ENCLOSURES

     

    1.            The
basic design ratings shall be defined below.  These ratings may be
exceeded if necessary and subject to coordination with MGTES to meet other
requirements of this Technical Description.

     

    a.            Maximum
width – 8.5 feet (2.6 meters)

    b.            Maximum
height - 12.5 feet (3.81 meters)

    c.            Maximum
length – 53 feet (16.16 meters)

    d.            Seismic
Design Category D or E (ASCE 7-05)

    e.            Floor
load - 250 psf (1,220 kg/sq m)

    f.             Roof
load - 85 psf (415 kg/sq m)

    g.           
Wall/Wind load 125 mph (60 m/s) w/ 0.3 gust factor

    h.           Minimum
interior temperature with -20 °C exterior temperature: 20 °C

    i.             Maximum
interior temperature with 50 °C exterior temperature: 30 °C (Battery Section) /
40 °C (Inverter and Controls Section)

    2.            The
enclosure shall have a design life of 20+ years without maintenance. It shall be
constructed of materials which are inherently resistant to corrosion or
deterioration or suitably finished to protect them.

    3.            Ener1
shall supply all ancillary equipment such as lighting (normal and emergency),
heating, ventilating, cooling, fire suppression, and electrical power
distribution for the enclosure ancillary equipment.

    4.            The
enclosure shall be designed to meet the seismic requirements and codes
applicable at the installation site including Seismic Design Category
TBD.

    
      
         

      

      
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    C.           BATTERY

     

    1.            The
enclosure shall contain battery system racks designed for field service access
to each battery module.

    2.            The
battery modules shall be arranged in such a manner that the system has a total
useable, end-of-life capacity as indicated in the Technical Specifications (see
part 4) with a DC Voltage range compatible with standard 750 – 1050 V inverter
DC input voltage rails. Ener1 shall define end-of-life capacity as the
recommended percentage of initial capacity.

    3.            The
DC voltage of the battery system shall not be ground referenced. Battery strings
shall not be positively or negatively grounded.

    4.            Each
battery cell voltage shall be individually monitored by the Battery Management
System (BMS).  Module temperature measurement shall be provided at
points specified by the design.

     

    D.           INVERTER
DESIGN

     

    1.            The
system shall contain IGBT-based DC-AC inverters. The following section shall
describe the necessary requirements for a single inverter. This description
shall also be valid for each inverter contained within the
enclosure.

    2.          
 The DC-AC inverters shall use reliable technology. The DC-AC inverter
shall be capable of delivering rated power continuously at the maximum voltage
of the DC rails at the concurrent conditions of maximum rated ambient
temperature, maximum altitude, and the worst-case rated grid
voltage.

    3.           
The DC-AC inverter shall be protected from over-current and
over-voltage.  Over-voltage protection devices shall be rated to have
a let-through voltage capability that adequately protects downstream
components.

    4.          
 The DC voltage of the battery string shall not be ground referenced. The
battery string shall connect to the DC input of its associated inverter module.
The DC input of the inverter module shall have an appropriate means of
disconnection. The three-phase output of the inverter shall be ungrounded and
connected to the utility grid through an isolation transformer.

    5.          
 The output of the inverter shall be designed for utility grid
compatibility and compliant with applicable local interconnection rules at the
Point of Common Coupling (PCC). The inverter shall be designed to control
harmonic and DC current injection and avoid resonance between the inverter
output, the isolation transformer, and the PCC.

    E.          
 INVERTER MODULE CONSTRUCTION

    1.         
  Inverter modules shall fit through the doorway provided without
removal of doorjambs, stops, or inverter components.  Shipping splits
shall be easily reconnected on site and unconnected for removal.

    2.         
  All materials used shall be new, of current manufacture, high
quality, free from defects and shall not have been in previous use except as
required for factory testing.

    3.          
 Within the enclosure, the inverter shall be housed in a free-standing NEMA
1 enclosure.

    4.          
 All wiring shall be in accordance with applicable
standards.   Power conductors, transformer, and choke windings
may be copper or aluminum. All bus bar connections shall be between copper,
silver-plated copper or tin-plated copper surfaces and shall be properly
torqued.

    5.            All
control wiring conductors shall be copper.  Interconnections between
shipping splits of a single piece of equipment shall be fitted with connectors
or fanning strips constructed and identified to prevent incorrect connection.
The most widely used (for local conditions) connectors and fanning strips and
other coupling elements shall be employed.

    6.            All
field control wiring terminations shall be labeled and be made to terminal
blocks or appropriate receptacles for plug-in connections. Receptacles shall
have appropriate restraints to prevent plugs from loosening.

    7.            The
inverter rating nameplate shall be permanently attached to a non-removable part
on the front of the inverter enclosure.

    
      
         

      

      
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    F.
           OPERATION
REQUIREMENTS

    1.  
         The Unit shall be designed
for unattended and automatic operation. The Unit shall determine the acceptable
operating conditions based on battery voltage, SOC (state of charge), and AC
grid Voltage.

    2.   
        The Unit shall have provisions
for remote turn on/off of the system via SCADA, assuming all requisite safe
operating conditions exist.

    3.    
       The Unit shall be designed to export
or consume energy in accordance with a remote signal or with a predetermined
schedule. (e.g. load shifting, spinning reserve, black start, etc).

    4.     
      When there is no demand for the Unit to
export or import power, the Unit shall have set points at which to maintain each
battery system at an appropriate SOC subject to predetermined
algorithms.

    G.           ELECTROTECHNICAL
REQUIREMENTS (See Technical Specifications, Part 4)

    H.           ENVIRONMENTAL
REQUIREMENTS

    1.          
The Unit shall be able to operate continuously at full charge/discharge at worst
case outdoor ambient air temperatures and humidity as specified in the Technical
Specifications without degradation of performance.

    2.           The
Unit shall be designed to operate at elevations as shown in the Technical
Specifications.

    I.           
 CONTROLS, INSTRUMENTATION, AND ENERGY ACCOUNTING

    The Unit
shall consist of the following control systems:

    - Unit
Controls

    - Battery
Management System

    -
Inverter Controls

    -
SCADA

    - Energy
accounting system

    

    1. UNIT
CONTROLS

    a.           The
Unit Master Controls shall be based on PLC platform. The Unit Controls shall act
as a master controller and interface with the battery monitoring system (BMS),
the inverter controls, and SCADA.

    b.           The
Unit Controls shall calculate the power available for import or export depending
on mode of operation.

    c.           The
Unit Master Controls shall receive a remote dispatch signal from the Grid
Control Authority. The dispatch signal shall correspond to a specific amount of
power to import or export.

    d.           The
Unit Controls shall employ appropriate control systems to insure the actual
output power of the Unit corresponds to the power demanded either from the ramp
rate control algorithm or the external demand signal to within
+/-5%.

    e.           When
there is no demand for the Unit to export or import power, the Unit shall have
set points at which to maintain each battery system at an appropriate SOC
subject to predetermined algorithms.

    f.          
 The Unit Master Controls shall regulate charge/discharge power based on
feedback from the BMS and Inverter Controls.  Should either of the two
sub systems report abnormal but acceptable conditions, the Unit Controls shall
derate the power input / export to maintain a safe operating
environment.  Should a safe operating environment not be achievable,
the Unit controls shall disconnect the system from the grid.

    

    Note: all
controls, instrumentation, and the alarm panel shall be marked and have symbols
Russian.

    2.           
BMS (BATTERY MANAGEMENT SYSTEM)

    a.          
 The BMS shall monitor the voltage and temperature of each cell and shall
also monitor the battery system current.

    
      
         

      

      
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    b.           The
BMS shall balance the individual cell voltages, insuring that all cells within a
given string are at the same voltage, within a tolerance of 3% or less
SOC.

    c.           The
BMS system shall monitor the cells for abnormal conditions such as under
voltage, over voltage, over temperature, under temperature, and over
current.

    3.           
INVERTER CONTROLS

    a.          
 Each inverter shall be controlled and monitored by its own
microprocessor-based controller. The inverter controller shall protect the
inverter module from abnormal operation conditions such as over current, over
temperature, and any grid fault conditions including, but not limited to,
anti-islanding.

    b.           A
hardware Emergency Stop button with a protective cover that prevents accidental
operation shall be readily accessible from the front of the
inverter.  The Emergency Stop button shall disconnect all input power
sources and turn off the inverter output.

    4.          
 SCADA SYSTEM (Supervisory Control and Data Acquisition
System)

    a.     The
SCADA system shall monitor the operation of all devices: Unit Master Controls,
Inverter Controls and BMS.

    b.     The
user shall have control over the Unit through the SCADA graphical user
interface, from a control panel mounted on the enclosure or a remote control
panel, including connecting SCADA through Internet. Menu screens shall provide
the user with the following capabilities: (1) toggle between auto and manual
operation, (2) set limits for charge and discharge parameters, (3) perform
diagnostics such as capacity and efficiency test routines, and (4) place
inverters online or offline.

    c.            SCADA
communications from each device (GES System Controls, BMS, and Inverter
Controls) shall feed into a single access point for the remote SCADA
system.

    d.           The
SCADA graphical user interface shall have an intuitive interface and be
localized (in Russian).

    5.            Energy
accounting system

    a.            A
system for accounting for power exported/imported to and from the grid shall
consist of electronic bi-directional energy meters, measuring transformers
mounted on the AC side, as well as switchgear and other equipment.

    b.           Energy
meters and measuring transformers shall be entered in the RF State Register of
Measuring Equipment, have compliance certificates and calibration
certificates.

    c.            Energy
meter class of accuracy shall be 0.2 S, that of measuring transformers,
0.5.

    d.           The
design shall enable easy removal and installation of energy meters and measuring
transformers for calibration or replacement.

    e.            All
energy accounting system equipment shall be located within the
enclosure.

    PART 3 –
REQUIREMENTS REGARDING FACTORY TESTS, UNIT INSTALLATION, START-UP, COMMISSIONING
AND ACCEPTANCE TESTING

    

    3.1          OBJECTIVE

    A.           To
provide factory and on-site quality control, testing, start-up and to support
commissioning services as specified herein.

    3.2          FACTORY
TESTS OF THE UNIT

    A.           Ener1
shall successfully perform its standard factory tests plus any other factory
tests that may be specified and mutually agreed to by Ener1 and MGTES. A factory
test report shall be available upon request. MGTES shall be afforded an
opportunity to have its experts present at the factory tests. Evaluation tests
may be conducted during factory tests, for which Ener1 shall, at its own
expense, retain an independent specialized entity.

    B.           At
a minimum, the tests shall demonstrate the following:

    1.           
Verification of key technical parameters: The following measurements shall be
verified against a calibrated test device. All voltages and currents shall be
within 1%; all power readings shall be within 2%.

    
      
         

      

      
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    a. 
          AC
Voltage

    b.           
AC Current

    c.          
 AC Power (kVA and kW)

    d.          
 Inverter DC Voltage

    e.          
 Inverter DC Current

    f.           
 Inverter AC Voltage

    g.          
 Inverter AC Current

    h.          
 Inverter AC Power (kVA and kW)

    2.          
 Rated Power (Burn-in) Test: The battery shall be charged and discharged at
a continuous AC power rating. The period and amplitude of the discharge shall be
defined by a simulated utility dispatch signal.  The following points
shall be monitored:

    a.           
AC Voltage

    b.          
 AC Current

    c.          
 AC Power (kVA and kW)

    d.          
 Inverter DC Voltage

    e.          
 Inverter DC Current

    f.          
  Inverter DC Power (kW)

    g.         
  Inverter AC Voltage

    h.         
  Inverter AC Current

    i.           
 Inverter AC Power (kVA and kW)

    j.           
 Inverter temperature

    k.         
  Battery cell voltages

    l.          
  Battery temperatures

    m.           Thermal
(IR) scan of bolted connections (battery terminals, inverter DC and AC field
terminals, etc.)

    n.          
 Outdoor and indoor ambient temperature

    o.          
 Parasitic/Passive Load

    p.          
 Total Charge / Discharge Energy

    3.           
Round Trip Efficiency Test: The battery shall be charged and discharged
following the schedule below and the AC output power at the PCC shall be
recorded.

    a.          
 25% of rated power

    b.           50%
of rated power

    c.          
 75% of rated power

    d.           100%
of rated power.

    4.           
Full Load Discharge / Recharge Test: The battery shall be charged to 100% SOC.
Upon reaching 100% SOC, the battery shall be discharged at full power (100% of
rated power) until the minimum cell voltage is reached. When the minimum cell
voltage is reached, the BMS shall inhibit the GES System controls from further
discharging the battery. The duration of the test shall be noted and the battery
capacity verified. The battery shall then be charged to 100% SOC. When the
maximum cell voltage is reached the BMS shall inhibit the GES System controls
from further charging the battery. The duration of the test shall be noted and
the battery capacity verified. Any alarms shall be recorded.

    5.
           Battery
Monitoring System Tests

    a.
           Measurement

    b. 
          Cell
Balancing

    c.   
        Protective Function
Check-up

    6.    
       Systems Inspections &
Tests

    a.     
      HVAC functionality

    b.      
     Electrical Protection

    c.        
   Grounding System & Ground Fault Detection

    d.         
  Compliance with specification and local codes

    
      
         

      

      
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    3.3          UNIT
INSTALLATION

    A.         
 The requisite installation operations shall be carried out by MGTES
personnel under management and supervision of Ener1 engineering
supervisors.

    A.           The
following general and visual inspections shall be performed on site by Ener1
engineering supervisors at the time the equipment is installed. An Ener1
engineering supervisor shall prepare and submit report documentation to MGTES
for each of the following items:

    

    1.      Visually
inspect the exterior and interior of all Unit systems for signs of damage,
cleanliness, and foreign objects.

    2.      Install
and assemble all battery modules and other items within the
container.  If each Unit includes multiple containers, install
interconnecting wiring, raceways, ducts, and piping.

    

    3.      Verify
control, monitoring, and power wiring terminations for correct routing, support,
termination, and tightness.

    4.      Verify
sizing and connection of field installed power and ground
conductors.

    5.      Verify
that the installation conforms to factory drawings, requirements, and
procedures.

    6.      Verify
control logic revision level and verify correct software set
points.

    3.4         UNIT
START-UP

    A.          Ener1’s
engineering supervisors shall perform required start-up procedures, involving
MGTES personnel.  At a minimum, the following tests shall be
performed.

    

    1.            Verify
all indicators, control operators, and power switches.

    2.            Verify
all manual and automatic control functions and sequences of the Unit under
normal and abnormal conditions.

    3.            Verify
all AC and DC bus voltage and current metering devices and
circuits.

    4.            Verify
Unit remote control system.

    5.            Verify
proper operation of HVAC system and controls.

    6.            Verify
all protective functions and alarms, including ground loop.

    7.            Verify
operation of systems for data logging, event recording, and data
communications.

    8.            Verify
energy accounting system.

    

    3.5          COMMISSIONING
AND ACCEPTANCE TESTING

    A.          Ener1
shall provide on-site support to perform commissioning and acceptance testing,
including the presence of an engineering supervisor at each site, and shall
conduct acceptance testing, including tests to confirm the warranted targets
(performance tests).

    B.           At
a minimum, commissioning and acceptance testing shall demonstrate the
following:

    1.          
 Verification of key technical parameters: The following metering points
shall be verified against a calibrated test device. All voltages and currents
shall be within 1%; all power readings shall be within 2%.

    a.           
AC Voltage

    b.      
     AC Current

    c.       
    AC Power (kVA and kW)

    d.       
    Inverter DC Voltage

    e.          
 Inverter DC Current

    f.           
 Inverter AC Voltage

    g.          
 Inverter AC Current

    h.          
 Inverter AC Power (kVA and kW)

    2.           
Round Trip Efficiency Test: The battery shall be charged and discharged
following the schedule below and the AC output power at the PCC shall be
recorded.

    a.          
 25% of rated power

    b.          
50% of rated power

    c.          
 75% of rated power

    
      
         

      

      
        38
(41)

        
          

        

      

      
         

      

    

    d.           100%
of rated power.

    3.           Full
Load Discharge Test: The battery shall be charged to 100% SOC. Upon reaching
100% SOC, the battery shall be discharged at full power (100% of rated power)
until the minimum cell voltage is reached. When the minimum cell voltage is
reached, the BMS shall inhibit the Unit Controls from further discharging the
battery. The duration of the test shall be noted and the battery capacity
verified.

    4.           Normal
and abnormal operating sequence and protective functions.

    5.           Performance
of any and all other tests that could not be conducted at the manufacturer’s
premises to a sufficient extent.

    6.           Preparation
of a Report on the results of such tests, including a report showing that any
warranted targets have been confirmed.

    7.           Pilot
operations shall continue for eighteen (18) months. Ener1 shall provide
technical support throughout the pilot operation period and the warranty period,
including on site availability throughout the above period, of a skilled
engineering supervisor capable of communicating in Russian, who shall be
accessible 24 hours a day via a cell phone. Such engineering supervisor shall
arrive at any site within 5 day of being summoned by MGTES on his cell
phone.

    3.6         COMPLETION
OF THE UNIT’S PILOT OPERATION

    A.          Ener1
shall provide on-site support, including availability of a skilled engineering
supervisor at each site, during tests on completion of eighteen (18) months of
pilot operation, including tests intended to confirm the achievement of
warranted targets (performance tests). In order to run such tests intended to
confirm the achievement of warranted targets, Ener1 shall retain an independent
specialized organization at its expense. When analyzing results of the
performance tests, an aging ratio of equipment – 0.95 – shall be taken into
account.

    B.           At
a minimum, the tests shall provide for the following:

    1.            Verification
of key technical parameters: The following metering points shall be verified
against a calibrated test device. All voltages and currents shall be within 1%;
all power readings shall be within 2%:

    a.            AC
Voltage

    b.      
     AC Current

    c.            AC
Power (kVA and kW)

    d.           Inverter
DC Voltage

    e.            Inverter
DC Current

    f.             Inverter
AC Voltage

    g.          
 Inverter AC Current

    h.           
Inverter AC Power (kVA and kW)

    2.            Round
Trip Efficiency Test: The battery shall be charged and discharged following the
schedule below and the AC output power at the PCC shall be
recorded.

    a.            25%
of rated power

    a.            50%
of rated power

    b.            75%
of rated power

    c.            100%
of rated power.

    3.            Full
Load Discharge Test: The battery shall be charged to 100% SOC. Upon reaching
100% SOC, the battery shall be discharged at full power (100% of rated power)
until the minimum cell voltage is reached. When the minimum cell voltage is
reached, the BMS shall inhibit the Unit controls from further discharging the
battery. The duration of the test shall be noted and the battery capacity
verified.

    4.            Normal
and abnormal operating sequence and protective functions.

    5.            Preparation
of a Report on the results of such tests, including a report showing that any
warranted targets have been confirmed.

    6.            Preparation
of a Pilot Operation Report.

    
      
         

      

      
        39
(41)

        
          

        

      

      
         

      

    

    PART 4 –
TECHNICAL SPECIFICATIONS OF THE UNIT

    

    
      
        
          
            
              	
                      PARAMETER

                    	 
      	
                      PARAMETER VALUE

                    	 
      	
                      WARRANTED /

                      ABSOLUTE 

                      TARGET / 

                    
	 
      	 
      	 
      	 
      	 
      
	
                      Battery
      Capacity (Unit 1/ Unit 2)

                    	 
      	
                      2.0
      MWh / 3.0 MWh / (*)

                    	 
      	
                      Warranted

                    
	 
      	 
      	 
      	 
      	 
      
	
                      AC
      Rated Voltage, 3 ph. 50Hz

                    	 
      	
                      400
      Volts (+10%, -12%)

                    	 
      	
                      Absolute

                    
	 
      	 
      	 
      	 
      	 
      
	
                      Displacement
      Power Factor:

                    	 
      	
                      >0.95,
      controllable to +/- 0.95

                      (VAR
      export)

                    	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	
                      Current
      Harmonics:

                    	 
      	
                      <5%
      THD

                    	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	
                      AC
      Short Circuit Current:

                    	 
      	
                      100%
      of rated

                    	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	
                      Max
      DC Rated Voltage:

                    	 
      	
                      1050
      VDC

                    	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	
                      DC
      Nominal Voltage:

                    	 
      	
                      750
      – 1050 VDC

                    	 
      	
                      Absolute

                    
	 
      	 
      	 
      	 
      	 
      
	
                      DC
      Voltage Ripple:

                    	 
      	
                      <
      2%

                    	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	
                      Efficiency
      of inverter:

                    	 
      	
                      >
      95%

                    	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	
                      Rated
      Ambient Temp:

                    	 
      	
                      -45°C
      to 50°C (-49°F
      to 122°F)

                    	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	
                      AC
      Rated Power (Unit 1/ Unit 2): /

                    	 
      	
                      2
      MW / 1 MW (*)

                    	 
      	
                      Warranted

                    
	 
      	 
      	 
      	 
      	 
      
	
                      Maximum
      Charge / Discharge Rate: /

                    	 
      	
                      1
      С

                    	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	
                      System
      Round Trip Efficiency, Minimum: /

                    	 
      	
                      88%

                    	 
      	
                      Warranted
      /

                    
	 
      	 
      	 
      	 
      	 
      
	
                      Maximum
      Parasitic Load:

                    	 
      	
                      <2%
      of power rating

                    	 
      	 
      

            

          

        

      

    

    
      
         

      

      
        40
(41)

        
          

        

      

      
         

      

    

     

    
      
        
          
            
              
                
                  
                    	
                            PARAMETER

                          	 
      	
                            PARAMETER VALUE

                          	 
      	
                            WARRANTED /

                            ABSOLUTE 

                            TARGET / 

                          
	 
      	 
      	 
      	 
      	 
      
	
                            Nominal
      Parasitic Load:

                          	 
      	
                            <1%
      of power rating

                          	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	
                            Altitude
      Rating:

                          	 
      	
                            Max.
      2000 m (6562 ft.)

                          	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	
                            Humidity
      (relative):

                          	 
      	
                            15-95%
      (non-condensing)

                          	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	
                            Storage
      Temp:

                          	 
      	
                            -45
      to 85°C (-49 to
      185°F)

                          	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	
                            Lifetime
      number of charge-discharge cycles (approximate):

                          	 
      	
                            1600

                          	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	
                            Unit
      availability (defined as a ratio of hours in a year while the Unit is
      ready for operation, to total hours in a year (8,760 hours)),
      min.:

                          	 	 	 	 
	 	 	 	 	 
	
                            -      first
      6 months of pilot operation

                          	
                              

                          	
                            0.96

                          	
                              

                          	
                            Warranted

                          
	 	 	 	 	 
	
                            subsequent
      year of pilot operation and each year of commercial
      operation  /

                          	 	 	 	 

                  

                

              

            

          

        

      

    

     

    
      
         

      

      
        41
(41)Unassociated Document

     

    
      

      

       

      PLACEMENT
AGENCY AGREEMENT

       

      November
23, 2010

       

      WestPark
Capital, Inc.

      1900
Avenue of the Stars, Suite 310

      Los
Angeles, CA  90067

      

      Ladies
and Gentlemen:

       

      SRKP 23,
Inc. a Delaware corporation and Weixin International Co., Limited, a company
organized under the laws of the British Virgin Islands (collectively, the “Company”), proposes,
subject to the terms and conditions of that certain form of Subscription
Agreement in the form attached hereto as Exhibit A between the
Company and certain Investors (the “Purchase Agreement”),
as described in that Private Placement Memorandum dated November 22, 2010 (the
“PPM”) and
further to a Share Exchange Agreement dated November 12, 2010, a copy of which
is attached hereto as Exhibit B (the “Share Exchange
Agreement”), to issue and sell a minimum of $500,000 and up to an
aggregate of up to $5,500,000 in shares (the “Shares”) of its
Common Stock, $0.0001 par value per share (the “Common Stock” or the
“Securities”),
directly to the Investors (the “Offering”). The
Company previously engaged WestPark Capital, Inc. (“WestPark”), as the
Company’s exclusive placement agent (in such capacity, the “Placement Agent”), on
a best efforts basis, in connection with the Offering, pursuant to that certain
Engagement Letter executed as of May 10, 2010 between WestPark and the Company
(the “Engagement
Letter”), attached hereto as Exhibit
C.  The Purchase Agreement, PPM and Share Exchange Agreement
are together the “Transaction Documents”. Capitalized Terms not otherwise
defined herein shall have the meanings set forth in the Purchase
Agreement.

       

      The
Company hereby confirms and clarifies its agreement with the Placement Agent as
follows:

       

      Section
1. Placement Agent Services,
Compensation and Expenses.

       

      (a) The
Company acknowledges that WestPark has acted pursuant to the Engagement Letter
as the Company’s exclusive placement agent, on a best efforts basis, in
connection with the issuance and sale by the Company of the Securities in a
private offering pursuant to Regulation D as promulgated under the Securities
Act of 1933, as amended (the “Securities Act”), and
that the terms of the Offering are subject to market conditions and negotiations
between the Company and the Investors.

       

      (b) The
Company confirms that as compensation for services rendered in connection with
the Offering, and provided that the Securities are sold to Investors in the
Offering, at each Closing (as defined in the Purchase Agreement) of the
Offering, the Company shall pay to the Placement Agent (i) a cash fee equal to
10% of the gross proceeds received from the sale of the Securities sold at such
Closing and (ii) a non-accountable expense allowance cash fee equal to 4% of the
gross proceeds received from the sale of the Securities at such
Closing.  Additionally, upon the final Closing, the Company shall pay
to the Placement Agent cash fee equal to $140,000 as a success fee for services
provided in connection with the Share Exchange Agreement.

       

      (c) The
Company acknowledges and agrees that the Placement Agent itself has made no
commitment to purchase any of the Securities, and the Placement Agent
acknowledges and agrees that it shall have no authority to bind the Company
regarding a sale and issuance of the Securities.  The Company
acknowledges that any advice given by the Placement Agent or its representatives
to the Company is solely for the benefit and use of the Company, the Board of
Directors of the Company (the “Board”) and the
management of the Company and may not be used, reproduced, disseminated, quoted
or referred to, without the Placement Agent’s prior written
consent.

       

      
        
           

        

        
          1

          
            

          

        

        
           

        

      

       

      (d) Whether
or not the sale to the Investors of the Securities on the Closing Date is
consummated, the Company agrees to reimburse all costs, fees and expenses
incurred by the Placement Agent in connection with the Offering, including
attorneys’ fees and expenses and costs related to travel and meetings with the
Investors and potential investors.

       

      (e) The
“Term” of the Placement Agent’s exclusive engagement is defined in and governed
by the Engagement Letter, including the rights and obligations of the parties
hereto if the Offering is not consummated as contemplated hereby or within the
Term.

       

      Section
2. Representations, Warranties and
Covenants of the Company.

       

      The
Company hereby represents, warrants and covenants to the Placement Agent as of
the date hereof, and as of the Closing Date of the Offering, as
follows:

       

      (a) Transaction
Documents.  The representations and warranties made by the
Company in the Purchase Agreement qualified as to materiality are true and
correct as of the date made and shall be true and correct at all times prior to
and on each Closing Date as so qualified, except to the extent any such
representation or warranty expressly speaks as of an earlier date, in which case
such representation or warranty shall be true and correct as of such earlier
date as so qualified, and, the representations and warranties made by the
Company in the Purchase Agreement not qualified as to materiality are true and
correct in all material respects as of the date made and shall be true and
correct at all times prior to and on each Closing Date, except to the extent any
such representation or warranty expressly speaks as of an earlier date, in which
case such representation or warranty shall be true and correct in all material
respects as of such earlier date.  The Company shall perform in all
material respects all obligations and covenants required to be performed by it
pursuant to the Purchase Agreement on or prior to each Closing
Date.  The Placement Agent shall be made party to the Registration
Rights Agreement contemplated by the Purchase Agreement.

       

      (b) Authorization;
Enforceability.  This Agreement has been duly authorized,
executed and delivered by, and is a valid and binding agreement of, the Company,
enforceable against the Company in accordance with its terms, except as rights
to indemnification and contribution hereunder may be limited by applicable law
and except as the enforcement hereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting the
rights and remedies of creditors or by general equitable
principles.

       

      (c) UDF Account.  At
the closing of the WRASP Offering (as defined in the Engagement Letter), the
Company will deposit a minimum of US$1,000,000 (one million dollars) in a U.S.
Dollar account to fund payment of professional fees related to the Company’s
obligations as a U.S. public company.

       

      (d) Use of
Proceeds.  The Company will not use any proceeds of the
Offering for (i) investment in other companies, (ii) establishment of new
business ventures either within the Company’s existing operations or outside
them, or (iii) for any purpose not disclosed to investors in the
PPM.

       

      (e) Lock-up Agreements. Prior to
the initial Closing Date and in connection with the Share Exchange Agreement,
WestPark shall have received (a) executed lock-up agreements in the form
attached hereto as Exhibit D from the
shareholders of SRKP 23, Inc., (b) executed lock-up agreements in the form
attached hereto as Exhibit E from each
of the Company’s shareholder(s) and/or designees, and (c) an executed lock-up
agreement in the form attached hereto as Exhibit F from the
Company, in each case as further provided by the Share Exchange
Agreement.

       

      
        
           

        

        
          2

          
            

          

        

        
           

        

         

      

      (f) SEC Filings.  The
Company will file a Notice of Sale of Securities Pursuant to Regulation D
Section 4(6), and/or Uniform Limited Offering Exemption (“Form D”) with the
Securities and Exchange Commission within 15 days of Closing
Date.  Once filed, the Company will provide a copy of the Form D as
filed to WestPark.  Filing the Form D is the responsibility of the
Company and failure to do so will result in a material breach of this
Agreement.

       

      (g) Consulting Agreement.  After the Closing of
the Private Placement, the Company will retain the Placement Agent as its
consultant to assist and advise the Company in its financial strategy for a
period of six (6) months.  The Company will compensate the Placement
Agent $4,000 per month, in advance, payable on or before the first day of
each month.

       

      (h) Chief Financial
Officer.  The Company shall select and hire a Chief Financial
Officer within 60 days of the initial Closing Date, such Chief Financial Officer
to be mutually agreeable to the Company and WestPark.

       

      Section
3. Indemnification and
Contribution.

       

      The Company and the Placement Agent
hereby affirm their agreement set forth in Section 14 of the Engagement Letter,
and Appendix 1 to the Engagement Letter as referenced therein, regarding the
Placement Agent’s rights to indemnification and contribution from the Company in
connection with the Offering, provided, however, that
nothing in this Section 3 or in the documentation incorporated by reference
shall reduce or vitiate the Placement Agent’s rights to indemnification pursuant
to the terms and conditions of the Registration Rights Agreement.

       

      Section
4. Representations,
Warranties and Covenants of the Placement Agent

       

      The
Placement Agent hereby represents, warrants and covenants to the Company as of
the date hereof, and as of the Closing Date of the Offering, as
follows:

       

      (a) Regulation D
Compliance.  The Placement Agent has not engaged in any
activity that constitutes general solicitation or general advertising in
connection with the Offering.

       

      (b) Other
Compliance.  The Placement Agent has complied and will comply
with Regulation M, applicable FINRA rules and regulations and any other rules
and regulations setting forth restrictions on the dissemination of research
reports and the activities of analysts in connection with this Offering, and is
a member in good standing with FINRA and any applicable state licensing
authorities.

       

      (c) No Unauthorized Distribution of
Materials.  The Placement Agent has not distributed and will
not distribute any offering material in connection with the Offering and sale of
the Securities other than copies of the Company’s SEC Filings and the
Transaction Documents or as otherwise instructed by the Company.

       

      Section
5. Representations and Indemnities to
Survive Delivery.

       

      The
respective indemnities, agreements, representations, warranties and other
statements of the Company or any person controlling the Company, including its
officers and directors, and of the Placement Agent set forth in or made pursuant
to this Agreement, including, but not limited to the indemnity and contribution
agreements contained in Section 3 above, will remain in full force and effect,
regardless of (i) any investigation made by or on behalf of any Placement Agent
or any person controlling such Placement Agent, the Company, its directors or
officers or any persons controlling the Company; and (ii) any termination of
this Agreement.  A successor to any Placement Agent, or to the
Company, its directors or officers or any person controlling the Company, shall
be entitled to the benefits of the indemnity, contribution and reimbursement
agreements contained in Sections 1 and 3 above.

       

      
        
           

        

        
          3

          
            

          

        

        
           

        

         

      

      Section
6. Notices.

       

      All
communications to the parties hereto hereunder shall be in writing and shall be
mailed, hand delivered or sent by facsimile, with confirmation of receipt by the
intended recipient confirmed as follows:

       

      If to the
Placement Agent:

      

      WestPark
Capital, Inc.

      1900
Avenue of the Stars, Suite 310

      Los
Angeles, CA  90067

      Facsimile:  (310)
843-9304

      Attention:  Managing
Director

      

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

      

      Stubbs
Alderton & Markiles LLP

      15260
Ventura Blvd., 20th
Fl

      Sherman
Oaks, CA 91403

      Facsimile:  (818)
444-6313

      Attention:  Scott
Galer, Esq.

      

      

      If to the
Company:

      

      3/F., Jin
Peng Building

      9 Shen
Zhou Road

      Guangzhou
Science City, Guangzhou,

      People’s
Republic of China

      Attention:  Xiao
Liu

      Facsimile:__________________________

      

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

      

      K&L
Gates LLP

      10100
Santa Monica Boulevard,

      Seventh
Floor

      Los
Angeles, California 90067

      Facsimile:  (310)
552-5001

      Attention:  Thomas
J. Poletti, Esq.

      

      Any party
hereto may change the address for receipt of communications by giving written
notice to the others.

       

      
        
           

        

        
          4

          
            

          

        

        
           

        

         

      

      Section
7. Successors.

       

      This
Agreement will inure to the benefit of and be binding upon the parties hereto,
and to the benefit of their respective employees, officers and directors and
controlling persons, and to their respective successors, and personal
representatives, and no other person will have any right or obligation
hereunder.  Neither the Company nor the Placement Agent shall be
entitled to assign their rights, or delegate their responsibilities, hereunder
without the prior written consent of the other party hereto.

       

      Section
8. Partial
Unenforceability.

       

      The
invalidity or unenforceability of any section, paragraph or provision of this
Agreement shall not affect the validity or enforceability of any other Section,
paragraph or provision hereof.  If any Section, paragraph or provision
of this Agreement is for any reason determined to be invalid or unenforceable,
there shall be deemed to be made such minor changes (and only such minor
changes) as are necessary to make it valid and enforceable.

       

      Section
9. Governing Law
Provisions.

       

      (a) Governing
Law.  This agreement shall be governed by and construed in
accordance with the internal laws of the state of California applicable to
agreements made and to be performed in such state.

       

      (b) Consent to
Jurisdiction.  Any legal suit, action or proceeding arising out
of or based upon this Agreement or the transactions contemplated hereby (“Related Proceedings”)
may be instituted in the federal courts of the United States of America located
in Los Angeles County, California, or the courts of the State of California in
each case located in Los Angeles County (collectively, the “Specified Courts”),
and each party irrevocably submits to the exclusive jurisdiction (except for
proceedings instituted in regard to the enforcement of a judgment of any such
court (a “Related
Judgment”), as to which such jurisdiction is non-exclusive) of such
courts in any such suit, action or proceeding.  Service of any
process, summons, notice or document by mail to such party’s address set forth
above shall be effective service of process for any suit, action or other
proceeding brought in any such court.  The parties irrevocably and
unconditionally waive any objection to the laying of venue of any suit, action
or other proceeding in the Specified Courts and irrevocably and unconditionally
waive and agree not to plead or claim in any such court that any such suit,
action or other proceeding brought in any such court has been brought in an
inconvenient forum.

       

      Section
10. General
Provisions.

       

      This
Agreement and the Engagement Letter, as each is informed by the further
agreements referenced therein, together constitute the entire agreement of the
Placement Agent and the Company with respect to the Offering, and supersede all
prior or contemporaneous written or oral agreements, understandings and
negotiations with respect to the subject matter hereof.  For clarity,
it is the parties’ intent that this Agreement supplements and amends the
Engagement Letter solely to the extent set forth herein; if a provision of this
Agreement and the Engagement Letter are contradictory, this Agreement shall
control.

       

      
        
           

        

        
          5

          
            

          

        

        
           

        

         

      

      This
Agreement may be executed in two or more counterparts (including via facsimile
or by emailed document in PDF format), each one of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the same
instrument.  This Agreement may not be amended or modified unless in
writing by all of the parties hereto, and no condition herein (express or
implied) may be waived unless waived in writing by each party whom the condition
is meant to benefit.  Section headings herein are for the convenience
of the parties only and shall not affect the construction or interpretation of
this Agreement.

       

      [The remainder of this page has been
intentionally left blank. Signature page follows.]

      

      
        
           

        

        
          6

          
            

          

        

        
           

        

      

      

      If the
foregoing is in accordance with your understanding of our agreement, please sign
and return to the Company the enclosed copies hereof, whereupon this instrument,
along with all counterparts hereof, shall become a binding agreement in
accordance with its terms.

       

      Very
truly yours,

       

      WEIXIN
INTERNATIONAL CO., LIMITED,

      a company
organized under the laws of the British Virgin Islands

      

      

      By:/s/ Zhang Hong
Yu_____________

            Name:
Zhang Hong
Yu

            Title:  Director

      

      SRKP
23, INC.,

      a
Delaware corporation

      

      

      By:  /s/ Richard
Rappaport____________

            Name:
_Richard
Rappaport_________

            Title:  President                                         

      

      

      The
foregoing Placement Agency Agreement is hereby confirmed and accepted by the
Placement Agent as of the date first above written.

       

      WESTPARK
CAPITAL, INC.

      

      

      By: /s/ Richard
Rappaport____________

            Name: _Richard
Rappaport_________

            Title:  CEO                                                  

      

      
        
           

        

        
          7

          
            

          

        

        
           

        

      

      

      EXHIBIT
A

      

      Purchase
Agreement

       

      
        
           

        

        
          8

          
            

          

        

        
           

        

      

       

      EXHIBIT
B

      

       

      Share Exchange
Agreement

      
         

        
          
             

          

          
            9

            
              

            

          

          
             

          

        

         

      

      EXHIBIT
C

       

      Engagement Letter Executed
May 10, 2010

      
         

        
          
             

          

          
            10

            
              

            

          

          
             

          

        

         

      

      EXHIBIT D

       

      FORM
OF LOCK-UP AGREEMENT FOR SHELL STOCKHOLDERS

       

      ______________,
2010

       

      China
Wesen Recycling Technology, Inc.

      3/F., Jin
Peng Building

      9 Shen
Zhou Road

      Guangzhou
Science City, Guangzhou,

      People’s
Republic of China

      

      WestPark
Capital, Inc.

      1900
Avenue of the Stars, Suite 310

      Los
Angeles, CA 90067

       

      The undersigned is a security holder of
China Wesen Recycling Technology, Inc. (formerly known as SRKP 23, Inc. and
referred to herein as the “Company”) and hereby
delivers this Lock-Up Agreement to the Company.  Capitalized terms
used herein and not otherwise defined herein shall have the meanings ascribed to
them in that certain Share Exchange Agreement dated November 12, 2010 (the
“Share Exchange
Agreement”) by and among the Company; Weixin International Co., Limited,
a company organized under the laws of the British Virgin Islands; Wei Xin
Holding Group Limited, a company organized under the laws of Hong Kong; Gangzhou
Kelida Intelligent Equipment Co., Ltd., a company organized under the laws of
the People’s Republic of China; Zhaoqing Hua Su Plastic Trading Company,
Zhaoqing Chuang Yi Resources Recycle Co., Ltd., Zhaoqing Xin Ye Plastic Co.,
Ltd, and Zhaoqing Li Jun Craftwork Co., Ltd., each a company organized under the
laws of the People’s Republic of China, and all of the shareholders of Weixin
International Co., Ltd.

      

      The
undersigned recognizes that, as a condition to the Share Exchange and the
transactions contemplated therein, it is in the best financial interests of the
Company and of the undersigned, as a stockholder of the Company, that the
securities of the Company held by the undersigned be subject to certain
restrictions and hereby agrees as follows:

       

      Other
than as set forth below, the undersigned shall not: (a) sell, assign,
exchange, transfer, pledge, distribute or otherwise dispose of (i) any
shares of the Company’s Common Stock held by the undersigned or (ii) any
interest (including, without limitation, an option to buy or sell) in any such
shares of the Company’s Common Stock, in whole or in part, and no such attempted
transfer shall be treated as effective for any purpose; or (b) engage in
any transaction in respect to any such shares of the Company’s Common Stock held
by the undersigned or any interest therein, the intent or effect of which is the
effective economic disposition of such shares (including, but not limited to,
engaging in put, call, short-sale, straddle or similar market transactions) (the
foregoing restrictions are referred to herein as the “Lock-Up
Restrictions”).

       

      If the
aggregate dollar amount of shares sold in the underwritten public offering,
including the dollar amount of shares sold in any over-allotment options
exercised in connection therewith (the “Public Offering”),
that the Company intends to conduct in connection with its application for
listing or quotation of the Company's Common Stock on either the New York Stock
Exchange, NYSE Amex, NASDAQ Global Market, NASDAQ Capital Market or the OTC
Bulletin Board (the “Listing”) is in an
amount that is equal to or greater than $5,000,000, the Lock-up Restrictions
shall be released in full on the date that is six (6) months from the date of
such Listing (the “Listing
Date”).

       

      
        
           

        

        
          11

          
            

          

        

        
           

        

      

       

      If the
aggregate dollar amount of shares sold by the Company in the Public Offering is
less than $5,000,000, one-tenth (1/10) of the shares of the Company’s Common
Stock held as of the date hereof by the undersigned shall be released from the
Lock-Up Restrictions on the date that is ninety (90) days after the Listing Date
(the “Initial Release
Date”), and the undersigned’s shares will automatically be released from
the Lock-Up Restrictions every thirty (30) days after the Initial Release Date
on a pro
rata basis over the next nine (9) months, until all of the shares are
released from the Lock-Up Restrictions.

       

      WestPark
Capital, Inc., in its discretion, may release from the Lock-up Restrictions some
or all the undersigned’s shares of the Company’s Common Stock earlier than the
schedule set forth in this Lock-up Agreement.

       

      The
certificates evidencing the Company Common Stock held by the undersigned shall
bear a legend as set forth below (the “Lock-Up Legend”) and
such Lock-Up Legend shall remain during the term of this Lock-Up Agreement as
set forth above:

       

      THE
SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO TRANSFER RESTRICTIONS SET
FORTH IN THAT CERTAIN LOCK-UP AGREEMENT BY AND BETWEEN THE COMPANY, A DELAWARE
CORPORATION, AND THE HOLDER HEREOF (THE “LOCK-UP AGREEMENT”), AND MAY NOT BE
SOLD, ASSIGNED, EXCHANGED, TRANSFERRED, ENCUMBERED, PLEDGED, DISTRIBUTED OR
OTHERWISE DISPOSED OF PRIOR TO THAT CERTAIN TIME PERIOD DETAILED IN THE LOCK-UP
AGREEMENT. UPON SATISFACTION OF THE REQUIREMENTS SET FORTH THEREIN, THE ISSUER
AGREES TO REMOVE THIS RESTRICTIVE LEGEND (AND ANY STOP ORDER PLACED WITH THE
TRANSFER AGENT) UPON THE EXPIRATION OF THE TIME PERIOD SPECIFIED IN THE LOCK-UP
AGREEMENT.  A COPY OF THE LOCK-UP AGREEMENT IS AVAILABLE FOR REVIEW AT
THE PRINCIPAL EXECUTIVE OFFICE OF THE ISSUER.

       

      [SIGNATURE
PAGE FOLLOWS]

       

      
        
           

        

        
          12

          
            

          

        

        
           

        

      

       

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

       

      ________________________________________

      Printed
Name of Holder

       

      Signature:                                                                           

       

      Date:                                                                                     

       

      Amount of
Shares: _________________________

       

      
        
           

        

        
          13

          
            

          

        

        
           

        

      

       

      EXHIBIT
E

       

      FORM
OF LOCK-UP AGREEMENT FOR COMPANY SHAREHOLDER(S) AND DESIGNEES

       

      ___________,
2010

       

      WESTPARK
CAPITAL, INC.

      1900
Avenue of the Stars, Suite 310

      Los
Angeles, CA 90067

       

      Dear
Ladies and Gentlemen:

       

      The
undersigned is a security holder of China Wesen Recycling Technology, Inc.
(formerly known as SRKP 23, Inc. and referred to herein as the “Company”) and hereby
delivers this Lock-Up Agreement to the Company.  Capitalized terms
used herein and not otherwise defined herein shall have the meanings ascribed to
them in that certain Share Exchange Agreement dated November 12, 2010 (the
“Share Exchange
Agreement”) by and among the Company; Weixin International Co., Limited,
a company organized under the laws of the British Virgin Islands; Wei Xin
Holding Group Limited, a company organized under the laws of Hong Kong; Gangzhou
Kelida Intelligent Equipment Co., Ltd., a company organized under the laws of
the People’s Republic of China; Zhaoqing Hua Su Plastic Trading Company,
Zhaoqing Chuang Yi Resources Recycle Co., Ltd., Zhaoqing Xin Ye Plastic Co.,
Ltd, and Zhaoqing Li Jun Craftwork Co., Ltd., each a company organized under the
laws of the People’s Republic of China, and all of the shareholders of Weixin
International Co., Ltd.

       

      The
undersigned recognizes that, as a condition to the Share Exchange and the
transactions contemplated therein, it is in the best financial interests of the
Company and of the undersigned, as a stockholder of the Company that the
securities of the Company held by the undersigned be subject to certain
restrictions and hereby agrees as follows:

       

      As a
condition to the Share Exchange Agreement, and in recognition of the benefit
that such Share Exchange will confer upon the undersigned as a stockholder of
the Company, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the undersigned irrevocably
agrees, with each of the recipients identified above, joint and severally, for
the benefit of the Company and you, that the undersigned will not publicly
announce any intention to, will not allow any affiliate or subsidiary, if
applicable, to, and will not itself, without the prior written consent of
WestPark Capital, Inc., directly or indirectly, (i) offer, pledge, sell,
offer to sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, lend or otherwise transfer or dispose of any of the shares of Common
Stock or any securities convertible into, or exercisable or exchangeable for,
shares of Common Stock, or (ii) enter into any swap or other agreement that
transfers, in whole or in part, any of the economic consequences of ownership of
the shares of Common Stock or such other securities convertible into, or
exercisable or exchangeable for, shares of Common Stock (whether any such
transaction described in clause (i) or (ii) above is to be settled by
delivery of the shares of Common Stock or such other securities, in cash or
otherwise), in each case, beneficially owned (within the meaning of
Rule 13d-3 under the Securities Exchange Act of 1934, as amended) or
otherwise controlled by the undersigned on the date hereof or hereafter acquired
or otherwise controlled, for a period beginning from the date of listing or
quotation of the Company's Common Stock on either the New York Stock Exchange,
NYSE Amex, NASDAQ Global Market, NASDAQ Capital Market or the OTC Bulletin Board
(the “Listing
Date”) and continuing to and including the date twenty-four (24) months
after the Listing Date; provided, however, that, if the undersigned is an
individual, the undersigned may, without the prior written consent of WestPark
Capital, Inc., (i) transfer shares of Common Stock or any securities
convertible into, or exercisable or exchangeable for, Common Stock either during
his or her lifetime or, on death, by bona fide gifts, will or intestacy to
members of the undersigned’s immediate family or to trusts exclusively for the
benefit of members of the undersigned’s immediate family, provided that, prior
to any such transfer, such transferee executes an agreement, satisfactory to
WestPark Capital, Inc., pursuant to which such transferee agrees to receive and
hold such shares subject to the provisions hereof and that there shall be no
further transfer except in accordance with the provisions hereof, and
(ii) exercise options held in the undersigned's name to purchase shares of
Common Stock provided that, any securities obtained upon the exercise of such
option will be held subject to the provisions hereof and that there shall be no
further transfer of any such securities except in accordance with the provisions
hereof.  For purposes of this paragraph, “immediate family” shall mean
the undersigned’s spouse, lineal descendents, father, mother, brothers or
sisters (including any such relatives by adoption).

       

      
        
           

        

        
          14

          
            

          

        

        
           

        

      

       

      The
undersigned confirms that he, she or it understands that WestPark Capital, Inc.
and the Company will rely upon the representations set forth in this agreement
as a condition to the Share Exchange.  The undersigned agrees and
consents to the entry of stop transfer instructions with the Company’s transfer
agent against the transfer of Common Stock except in compliance with this
agreement.  This agreement shall be binding on the undersigned and
his, her or its respective successors, heirs, personal representatives and
assigns.

       

      Sincerely,

       

      _____________________________________

      Signature

       

      _____________________________________

      Name

      
         

        _____________________________________

        Title

      

       

      
        
           

        

        
          15

          
            

          

        

        
           

        

      

       

      EXHIBIT
F

       

      FORM
OF LOCK-UP AGREEMENT FOR COMPANY

       

      November
23, 2010

       

      WESTPARK
CAPITAL, INC.

      1900
Avenue of the Stars, Suite 310

      Los
Angeles, CA 90067

       

      Dear
Ladies and Gentlemen:

       

      The
undersigned, SRKP 23, Inc., a Delaware corporation (referred to herein as the
“Company”),
hereby delivers this Lock-Up Agreement to WestPark Capital, Inc. (“WestPark” or “you”).  Capitalized
terms used herein and not otherwise defined herein shall have the meanings
ascribed to them in that certain Placement Agency Agreement dated November 23,
2010 (the “Placement
Agency Agreement”) by and among the Company, Weixin International Co.,
Limited, a company organized under the laws of the British Virgin Islands, and
WestPark.

       

      As a
condition to the Placement Agency Agreement, and in recognition of the benefit
that the Offering will confer upon the Company, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
undersigned irrevocably covenants and agrees that except as expressly
contemplated by the Share Exchange and the Offering, it will not, directly or
indirectly, (a) offer, pledge, sell, offer to sell, contract to sell, sell any
option or contract to purchase, purchase any option or contract to sell, grant
any option, right or warrant to purchase, lend or otherwise transfer or dispose
of any of the shares of Common Stock or any securities convertible into, or
exercisable or exchangeable for, shares of Common Stock, or (b) enter into any
swap or other agreement that transfers, in whole or in part, any of the economic
consequences of ownership of the shares of Common Stock or such other securities
convertible into, or exercisable or exchangeable for, shares of Common Stock
(whether any such transaction described in clause (a) or (b) above is to be
settled by delivery of the shares of Common Stock or such other securities, in
cash or otherwise), other than repurchases at cost or without cost pursuant to
the terms of the Company’s option and restricted stock purchase agreements, in
each case, beneficially owned (within the meaning of Rule 13d-3 under the
Securities Exchange Act of 1934, as amended) or otherwise controlled by the
Company on the date hereof or hereafter acquired or otherwise controlled, for a
period beginning from the date of listing or quotation of the Company's Common
Stock on either the New York Stock Exchange, NYSE Amex, NASDAQ Global Market,
NASDAQ Capital Market or the OTC Bulletin Board (the “Listing Date”) and
continuing to and including the date eighteen (18) months after the Listing
Date, without the prior written consent of WestPark; provided, however, that the
Company may, without the prior written consent of WestPark, issue equity awards
to employees of the Company pursuant to equity incentive plans approved by the
board of directors and shareholders of the Company (provided that such grants do
not exceed 7% of the outstanding shares, which includes the issuance of the
shares issued in connection with the Offering).

       

      
        
           

        

        
          16

          
            

          

        

        
           

        

         

      

      The
Company confirms that it understands that WestPark Capital, Inc. will rely upon
the representations set forth in this agreement as a condition to the Placement
Agency Agreement.  This agreement shall be binding on the undersigned
and its successors, heirs, personal representatives and assigns.

       

      Sincerely,

       

      SRKP
23, INC.,

      a
Delaware corporation

      

      

      By:                                                                                   

            Name:
_______________________________

            Title:                                                                

      

      

      RATIFIED,
ACCEPTED & AGREED:

      

      CHINA
WESEN RECYCLING TECHNOLOGY, INC.,

      a
Delaware corporation

      

      By:                                                      

            Name:  Xiao
Liu

            Title:  Chief
Executive Officer

      Date:
November 23, 2010

      

      
        
           

        

        
          17

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