Dated: October 31, 2007

COMMON STOCK AND WARRANT PURCHASE AGREEMENT

               AGREEMENT, dated as of October 25, 2007, between Electro Energy Inc., a Florida corporation ("EEI"), and KIT Financial, Inc., a Delaware corporation (the "Investor").

R E C I T A L S

               The Board of Directors of EEI, deeming it advisable for the benefit of EEI and its stockholders that the Investor subscribe for and purchase shares of common stock of EEI, par value $.001 per share (“Common Stock”) and a warrant for the purchase of additional shares of Common Stock in the event of certain subsequent issuances of equity securities .

               THEREFORE, for and in consideration of the mutual agreements herein contained, the parties hereto agree as follows:

ARTICLE I

SUBSCRIPTION FOR AND PURCHASE OF COMMON STOCK

               1.01    Subscription for Shares . Subject to and in accordance with the terms and conditions of this Agreement, on the date hereof, the Investor hereby subscribes for and agrees to purchase, and EEI hereby agrees to issue and sell to the Investor, 2,500,000 duly authorized, validly issued, fully paid and non-assessable unregistered shares of Common Stock (“Investor Common Stock”), at a purchase price of $.30 per share, or an aggregate purchase price of $750,000, payable in cash.

               1.02    Purchase and Sale of Warrant . Subject to and in accordance with the terms and conditions of this Agreement, on the date hereof, for the purchase price of $10.00 plus other good and valuable consideration, the receipt of which is hereby acknowledged, the Investor hereby agrees to purchase, and EEI hereby agrees to issue and sell to the Investor, a warrant (the “Warrant”) to purchase from EEI up to two million five hundred thousand (2,500,000) shares of Common Stock of EEI at an exercise price of $0.30 per share. The Warrant shall be exercisable on the date or dates (each, a ‘Vesting Date”) that EEI consummates any issuance of Common Stock or securities exercisable, convertible or exchangeable into Common Stock (“Common Stock Equivalents”) to any third party (a “Third Party Issuance”) in the 24 month period subsequent to the date of the Closing (as defined below). The number of shares of Common Stock that Investor may purchase under the Warrant as of each Vesting Date shall be equal to ten percent (10%) of the Common Stock issued and issuable under Common Stock Equivalents issued to such third party on each Vesting Date. The Warrant shall expire on the date that is 36 months from the first Vesting Date to occur thereunder. Notwithstanding the foregoing, in no event shall the total number of Common Shares issuable under the Warrant exceed the lesser of (i) that number of shares, which when added to (x) 2.815 million plus (y) any shares issued to Investor pursuant to the provisions of Article IV below, exceeds 9.98% of the total outstanding Common Shares of EEI at the time of exercise or (ii) 2.5 million shares. In no event shall a Third Party Issuance include issuances of Common Stock or Common Stock Equivalents (i) to the Investor, (ii) pursuant to any employee stock, stock option or similar plan or grant, (ii) to any director, consultant, agent, vendor or strategic partner in consideration of goods, services or other non-cash consideration rendered in the ordinary course of business or (iii) the conversion, exchange or exercise of any Common Stock Equivalents outstanding as of the date of this Agreement.

               1.03    The Closing . The closing of the subscription for and purchase of the Common Stock and Warrant described in this Article 1 (the “Closing”) shall take place at the offices of EEI on the date hereof. At or immediately following the Closing, EEI shall deliver to the Investor (i) one certificate registered in the name of the Investor representing 2,500,000 shares of Common Stock and (ii) the Warrant.

ARTICLE II

REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE INVESTOR

               The Investor represents and warrants to, and agrees with, EEI as follows:

               2.01    Validity of Transaction . The Investor has all requisite power and authority to execute, deliver and perform this Agreement. All necessary corporate proceedings of the Investor have been duly taken to authorize the execution, delivery and performance of this Agreement. This Agreement has been duly authorized, executed and delivered by the Investor, is the legal, valid and binding obligation of the Investor, and is enforceable as to the Investor in accordance with its terms. No consent, authorization, approval, order, license, certificate, or permit of or from, or declaration or filing with, any Federal, state, local or other governmental authority or of any court or other tribunal is required by the Investor for the execution, delivery or performance of this Agreement by the Investor. No consent of any party to any contract, agreement, instrument, lease, license, arrangement or understanding to which the Investor is a party or by which any of its properties or assets is bound, is required for the execution, delivery or performance by the Investor of this Agreement, except for such consents as have been obtained at or prior to the date of this Agreement, other than such consents which do not and will not have a material and adverse change in, or effect on, the financial condition, properties assets, liabilities, operations or business, of a person and its subsidiaries taken as a whole, a (“Material Adverse Effect”). The execution, delivery and performance of this Agreement by the Investor will not (a) violate, result in a breach of, conflict with, or (with or without the giving of notice or the passage of time or both) entitle any party to terminate or call a default under any such contract, agreement, instrument, lease, license, arrangement or understanding, or (b) violate or result in a breach of any term of the Certificate of Incorporation or By-laws of the Investor, or (c) violate, result in a breach of, or conflict with any law, rule, regulation, order, judgment or decree binding on the Investor or which any of its operations, business, properties or assets is subject, except in the case of (a) or (c) such violations, breaches or conflicts which would not result in a Material Adverse Effect.

               2.02    Finder or Broker . Neither the Investor nor any person acting on behalf of the Investor has negotiated with any finder, broker, intermediary or similar person in connection with the transactions contemplated hereby.

               2.03    Accredited Investor . The Investor is an “accredited investor,” as that term is defined in Rule 501 of Regulation D promulgated under the Securities Act of 1933, as amended (the “Securities Act”).

               2.04    Investment Intent . The Investor is acquiring the shares of Common Stock pursuant hereto for its own account for investment and not with a view to, or for sale in connection with, any public distribution thereof in violation of the Securities Act. The Investor understands that such shares of Common Stock are “restricted securities” and have not been registered for sale under the Securities Act or qualified under applicable state securities laws and that the Common Stock will be delivered to the Investor pursuant to one or more exemptions from the registration or qualification requirements of such securities laws and that the representations and warranties contained in this Article II are given with the intention that EEI may rely thereon for purposes of claiming such exemptions. The Investor understands that it must bear the economic risk of its investment in EEI for an indefinite period of time, as the Common Stock cannot be sold unless registered under the Securities Act and qualified under state securities laws, unless an exemption from such registration and qualification is available.

               2.05    Transfer of Shares . The Investor will not sell or otherwise dispose of the Warrant, any Investor Common Stock or Warrant Stock (collectively, the “Securities”) unless (a) a registration statement with respect thereto has become effective under the Securities Act and such Securities have been qualified under applicable state securities laws or (b) there is presented to EEI notice of the proposed transfer and, if EEI so requests, there is also presented to EEI a legal opinion reasonably satisfactory to EEI that such registration and qualification are not required. The Investor consents that the transfer agent for the Common Stock may be instructed not to transfer the Common Stock acquired pursuant hereto unless it receives satisfactory evidence of compliance with the foregoing provisions, and that there may be endorsed upon any certificate representing the Common Stock acquired pursuant hereto (and any certificates issued in substitution therefor) the following legend calling attention to the foregoing restrictions on transferability and stating in substance:

EEI shall, upon the request of any holder of a certificate bearing the foregoing legend and the surrender of such certificate, issue a new certificate without such legend if (i) the securities evidenced by such certificate have been effectively registered under the Securities Act and qualified under any applicable state securities law and sold by the holder thereof in accordance with such registration and qualification or (ii) such holder shall have delivered to EEI a legal opinion reasonably satisfactory to EEI to the effect that the restrictions set forth herein are no longer required or necessary under the Securities Act or any applicable state law.

ARTICLE III

REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF EEI

               EEI represents and warrants to, and agrees with, the Investor as follows:

               3.01    Validity of Transaction . EEI has all requisite power and authority to execute, deliver and perform this Agreement and to issue and sell to the Investor the shares of Common Stock and the Warrant. EEI is a corporation duly organized, validly existing and in good standing under the laws of the State of Florida. All necessary corporate proceedings of EEI have been duly taken to authorize the execution, delivery and performance of this Agreement, and the issuance and sale to the Investor of the shares of Common Stock and the Warrant. This Agreement has been duly authorized, executed and delivered by EEI, is the legal, valid and binding obligation of EEI, and is enforceable as to EEI in accordance with its terms. No consent, authorization, approval, order, license, certificate, or permit of or from, or declaration or filing with, any Federal, state, local or other governmental authority or of any court or other tribunal or stock exchange is required by EEI for the execution, delivery or performance of this Agreement by EEI. No consent of any party to any contract, agreement, instrument, lease, license, arrangement or understanding to which EEI is a party, or by which any of its properties or assets is bound, is required for the execution, delivery or performance by EEI of this Agreement, except for such consents as have been obtained at or prior to the date of this Agreement; and the execution, delivery and performance of this Agreement by EEI will not violate, result in a breach of, conflict with, or (with or without the giving of notice or the passage of time or both) entitle any party to terminate or call a default under any such contract, agreement, instrument, lease, license, arrangement or understanding, or violate or result in a breach of any term of the Articles of Incorporation or By-laws of EEI, or violate, result in a breach of, or conflict with any law, rule, regulation, order, judgment or decree binding on EEI or to which any of its operations, business, properties or assets is subject. The shares of Investor Common Stock and the Warrant have been duly authorized and, upon receipt by EEI from the Investor of payment therefor pursuant to this Agreement, the Investor Common Stock will be validly issued, fully paid and non-assessable, will not have been issued in violation of any preemptive right of stockholders or rights of first refusal, and the Investor will receive good title to the shares of Common Stock, free and clear of all liens, security interests, pledges, charges, encumbrances, stockholders agreements and voting trusts (other than any created by the Investor).

               3.02    Capitalization . As of the date hereof, the authorized capital stock of EEI consists of (i) 50,000,000 shares of Common Stock, of which 26,251,374 shares are currently issued and outstanding, and (ii) 10,000 shares of preferred stock, par value $.001 per share, of which 5,000 shares of preferred stock have been designated as series A convertible preferred stock and 160 such shares are currently issued and outstanding. In addition, as of October 17, 2007, there are 4,749,345 shares of Common Stock reserved for issuance upon the exercise of outstanding warrants and 2,046,958 shares of Common Stock reserved for issuance upon the exercise of outstanding stock options. As of the date hereof, all shares of Common Stock have been duly authorized, are validly issued, fully paid and non-assessable, have not have been issued in violation of any preemptive right of stockholders or rights of first refusal, and free and clear of all liens, security interests, pledges, charges, encumbrances, stockholders agreements and voting trusts. Except as described above and except for the transaction contemplated by this Agreement, or disclosed in the SEC Reports (as such term is defined below), EEI will not, upon the consummation of the transaction contemplated hereby (A) have outstanding any capital stock or securities convertible into or exchangeable for any shares of its capital stock and no person will have any right to subscribe for or to purchase, or any options for the purchase of, or any agreements providing for the issuance of, any calls, commitments or other claims relating to, any capital stock or any stock or securities convertible into or exchangeable for any capital stock of EEI or (B) be subject to any obligation to repurchase or otherwise acquire or retire any shares of its capital stock or any convertible securities, rights or options of the type described in clause (A) above.

               3.03    Finder or Broker . Neither EEI nor any person acting on behalf of EEI has negotiated with any finder, broker, intermediary or similar person in connection with the transactions contemplated herein.

               3.04    Full Disclosure . All documents filed by EEI pursuant to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), since June 7, 2004 (“SEC Reports”), (i) were prepared in accordance with the requirements of the Exchange Act and the rules and regulations thereunder, (ii) did not at the time they were filed contain any untrue statement of a material fact, and (iii) did not at the time they were filed omit to state a material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. From the date as of which information is given in the most recent SEC Report filed by EEI under the Exchange Act to the date of this Agreement, there has not been any material adverse change in, or any adverse development which materially affects, the business, results of operations or financial condition of EEI and its subsidiaries taken as a whole. EEI has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months.

               3.05    Material Changes . Except as set forth in the SEC Reports or as otherwise contemplated herein, since June 30, 2007, there has been no Material Adverse Effect. Except as set forth in the SEC Reports, since June 30, 2007, there has not been: (i) any direct or indirect redemption, purchase or other acquisition by EEI of any shares of Common Stock; (ii) any declaration, setting aside or payment of any dividend or other distribution by EEI with respect to the common Stock; (iii) any borrowings incurred or any material liabilities assumed, other than current liabilities incurred in the ordinary course of business, liabilities under contr