option agreement

October 1, 2005

Dear Mr. Grape:

The Board of Directors of ENER1, INC. (the "Corporation") is pleased to award you an option (the "Option") to purchase shares of the common stock, par value $0.01 per share, of the Corporation (the "Common Stock"). This option agreement (the "Agreement") will describe the Option granted to you. Your signature on this Agreement is an acknowledgement to us that you have read and understand this Agreement and that you agree to abide by its terms.

1.         Grant of Option . Subject to the conditions hereinafter set forth, we grant you the right to purchase one million (1,000,000) shares of Common Stock at $0.49 per share, the current fair market value of a share of Stock. On October 1 2006, and the following three anniversaries of such date, the right to purchase the shares of Common Stock shall vest with respect to 250,000 shares. Notwithstanding anything to the contrary in this Agreement, the right to purchase shares of Common Stock shall not vest on any date unless you are employed as of such date by EnerDel, Inc. ("EnerDel"), a subsidiary of the Corporation. In the event of a Change of Control of EnerDel, the right to purchase the shares of Common Stock shall vest and shall be fully exercisable immediately. A " Change in Control " shall be deemed to occur if any Person shall acquire direct or indirect beneficial ownership (whether as a result of stock ownership, revocable or irrevocable proxies or otherwise) of securities of EnerDel, pursuant to one or more transactions, such that after consummation and as a result of such transaction, such Person has direct or indirect beneficial ownership of 50% or more of the total combined voting power with respect to the election of directors of the issued and outstanding securities of EnerDel. " Person " shall mean any person, corporation, partnership, joint venture or other entity or any group (as such term is defined for purposes of Section 13(d) of the Exchange Act), other than a Parent or Subsidiary, and "beneficial ownership" shall be determined in accordance with Rule 13d-3 under the Exchange Act. Notwithstanding the foregoing, for purposes of this Agreement, "Change of Control" shall not include any change of control, actual or implicit, resulting from any Person or Persons gaining 50% or more of the combined voting power for EnerDel (or less than 50%, even though such lesser amount may represent effective voting control) through an initial public offering by EnerDel or other financing conducted by or on behalf of EnerDel.

2.         Time of Exercise . The Option may be exercised at any time and from time to time beginning when the right to purchase the shares of Stock vests and ending when this Option terminates as provided in Section 5 hereof. Notwithstanding anything to the contrary in this Agreement, the Option may not be exercised unless EnerDel reports revenue of at least $1.5 million for calendar 2005 and $7.0 million for calendar 2006, as confirmed by review or audit by EnerDel's independent registered auditors. If EnerDel's revenue falls short of these target(s) for any of the time frames involved by 20% or more, you shall not be able to exercise any portion of the Option that has vested unless and until EnerDel's revenue for subsequent time frames exceeds $6.8 million (which is 80% of the combined target revenue for 2005 and 2006).

3.         Method of Exercise . The Option shall be exercised by written notice to the Corporation’s Secretary at the Corporation's principal place of business. The notice shall set forth the number of shares of Common Stock to be acquired and how the shares of Common Stock to be acquired should be registered (in your name only or in your name and your spouse's names as community property or as joint tenants with right of survivorship).

The Corporation shall not be obligated to issue any shares of Common Stock until you shall have paid the total exercise price for that number of shares of Common Stock. The exercise price may be paid in cash or by certified or cashiers' check or by such other method as permitted by the Board of Directors of the Corporation.

Fractional shares may not be exercised. Shares of Common Stock will be issued as soon