PROMISSORY NOTE
 
 

$36,500.00 New York, New York July 1, 2002  

 
 
 
FOR VALUE RECEIVED, Robert S. Ehrlich (“Maker”) hereby promises to pay to the
order of Electric Fuel Corporation (“EFC”), at 632 Broadway, New York, New York,
or at such other place as may be designated in writing by EFC or any subsequent
holder of this Note (“Holder”), the principal sum of Thirty-Six Thousand Five
Hundred Dollars ($36,500.00), on July 1, 2012, together with simple interest
from the date hereof on the principal amount from time to time unpaid at a per
annum rate equal to the lesser of (i) 5.75%, and (ii) 1% over the then-current
Federal Fund Rate, until the principal sum is paid in full. Interest will accrue
on the loan until maturity.
 
All payments hereunder shall be made in United States Dollars only. Maker may
prepay this Note at any time and from time to time without premium or penalty.
 
Maker will bear no personal liability on the principal and accrued interest of
this Note.
 
In the event that the Maker files or has filed against the Maker any petition
under any bankruptcy or insolvency law or for the appointment of a receiver or
makes a general assignment for the benefit of creditors, then the entire unpaid
principal of this note, together with accrued interest thereon, shall
automatically become immediately due and payable. No failure by the holder to
take action with respect to any default hereunder shall affect its subsequent
rights to take action with respect to the same or any other default. In the
event of default the Maker agrees to pay all reasonable costs of collection,
including reasonable attorneys’ fees, to the extent allowed by law.
 
This Note shall be secured by a pledge to EFC of 50,000 shares (the “Pledged
Shares”) of EFC’s common stock, $0.01 par value, acquired with this note.
 
The recourse under this note shall only be to the Pledged Shares. EFC shall have
all rights of a secured party under the Uniform Commercial Code as in effect in
the State of New York, including without limitation all remedies available
thereunder to a secured party in the event of a default in the performance of
the obligation secured, with respect to the Pledged Shares, and Maker will take
all actions reasonably requested by EFC to perfect such security interest,
including without limitation delivering to EFC the stock certificate or
certificates representing the Pledged Shares, together with stock powers duly
endorsed in blank. EFC shall release its security interest in the Pledged Shares
when all principal and interest owed hereunder have been paid in full.
Notwithstanding the foregoing, EFC shall sell Pledged Shares per Maker’s
instructions from time to time, provided that with respect to any and each such
sale EFC may withhold from the proceeds of such sale that percentage of the
original principal and accrued but unpaid interest under this Note as the
Pledges Shares sold shall bear to the original 50,000 Pledged Shares (so that
if, for example, Maker instructs EFC to sell 14,000 Pledged Shares, EFC shall be
entitled to withhold from the proceeds of such sale 28% of the original
principal amount and accrued but unpaid interest under this Note).
 
The Maker hereby waives presentment, demand, notice of nonpayment, protest and
all other demands, notices and defenses (other than payment) in connection with
the delivery, acceptance, performance and enforcement of this note.
 
This Note shall be deemed to have been made under and shall in all respects be
governed by the internal laws of the State of New York without reference to
conflicts of laws. Maker consents to the exclusive jurisdiction of the courts in
New York, New York with respect to any and all suits brought in connection with
this Agreement, and waives any right to object to the personal or subject matter
jurisdiction of such court and waives any right to move dismissal based on
grounds of forum non conveniens.
 
IN WITNESS WHEREOF, the undersigned has duly executed and delivered this Note as
of the 1st day of July, 2002.
 

 
 
Robert S. Ehrlich

                                                                        
_______________________