<PAGE>

                                                                 Exhibit 4.2
                                                               ---------------


NEITHER  THESE  SECURITIES  NOR THE SECURITIES ISSUABLE UPON CONVERSION OF THESE
SECURITIES  HAVE  BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR
THE  SECURITIES  COMMISSION  OF  ANY  STATE  IN  RELIANCE UPON AN EXEMPTION FROM
REGISTRATION  UNDER  THE  SECURITIES  ACT  OF  1933, AS AMENDED (THE "SECURITIES
ACT"),  AND,  ACCORDINGLY,  MAY  NOT  BE  OFFERED  OR SOLD EXCEPT PURSUANT TO AN
EFFECTIVE  REGISTRATION  STATEMENT  UNDER  THE  SECURITIES ACT OR PURSUANT TO AN
AVAILABLE  EXEMPTION  FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION
REQUIREMENTS  OF  THE  SECURITIES  ACT  AND  IN ACCORDANCE WITH APPLICABLE STATE
SECURITIES  LAWS AS EVIDENCED BY A LEGAL OPINION OF COUNSEL TO THE TRANSFEROR TO
SUCH  EFFECT,  THE  SUBSTANCE  OF  WHICH  SHALL  BE REASONABLY ACCEPTABLE TO THE
COMPANY.  THESE  SECURITIES  AND  THE SECURITIES ISSUABLE UPON EXERCISE OF THESE
SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER
LOAN  SECURED  BY  SUCH  SECURITIES.



                                           ORIGINAL ISSUE DATE: DECEMBER31, 2002
No.  [  ]                                                          $[  ]


                            ELECTRIC FUEL CORPORATION
                9% SECURED CONVERTIBLE DEBENTURE DUE JUNE30, 2005

     THIS  DEBENTURE is one of a series of duly authorized and issued debentures
of ELECTRIC FUEL CORPORATION, a corporation organized under the laws of Delaware
(the  "COMPANY"),  designated  as its 9% Secured Convertible Debentures due June
30,  2005  in  the  aggregate  principal  amount  of  [  ]  Dollars ($_________)
(collectively,  the  "DEBENTURES").

     FOR  VALUE RECEIVED, the Company promises to pay to the order of [ ] or its
registered  assigns  (the  "HOLDER") the principal sum of [ ] Dollars ($[ ]) and
any  additional sums due pursuant to the terms hereof, on June 30, 2005, or such
earlier  date  as  the  Debentures  are  required  or  permitted to be repaid as
provided  hereunder  (the "MATURITY DATE"), and to pay interest to the Holder on
the principal amount of this Debenture in accordance with the provisions hereof.
This  Debenture  is  subject  to  the  following  additional  provisions.

1.     Definitions.  In  addition  to  the  terms  defined  elsewhere  in  this
       -----------
Debenture,  capitalized  terms  that are not otherwise defined herein shall have
the  meanings  given  to such terms in the Securities Purchase Agreement of even
date  herewith  to  which  the  Company and the original Holder are parties (the
"PURCHASE  AGREEMENT").

     "AFFILIATE"  means  any  Person that, directly or indirectly through one or
more  intermediaries,  controls  or  is controlled by or is under common control
with  a Person, as such terms are used in and construed under Rule 144 under the
Securities  Act.

     "BANKRUPTCY  EVENT"  means  any of the following events: (a) the Company or
any  subsidiary  thereof  commences  a  case  or  other  proceeding  under  any
bankruptcy,  reorganization, arrangement, adjustment of debt, relief of debtors,


<PAGE>

dissolution,  insolvency  or  Liquidation  or  similar  law  of any jurisdiction
relating  to  the  Company  or  any  subsidiary  thereof; (b) there is commenced
against  the  Company or any subsidiary thereof any such case or proceeding that
is  not  dismissed  within  60  days  after commencement; (c) the Company or any
subsidiary  thereof  is adjudicated insolvent or bankrupt or any order of relief
or other order approving any such case or proceeding is entered; (d) the Company
or  any  subsidiary thereof suffers any appointment of any custodian or the like
for  it or any substantial part of its property that is not discharged or stayed
within  60  days;  (e)  the  Company  or  any subsidiary thereof makes a general
assignment  for  the  benefit  of  creditors;  (f) the Company or any subsidiary
thereof  fails  to  pay, or states that it is unable to pay or is unable to pay,
its  debts  generally  as  they  become  due;  (g) the Company or any subsidiary
thereof calls a meeting of its creditors with a view to arranging a composition,
adjustment  or  restructuring of its debts; or (h) the Company or any subsidiary
thereof,  by  any  act  or  failure  to act, expressly indicates its consent to,
approval  of  or  acquiescence in any of the foregoing or takes any corporate or
other  action  for  the  purpose  of  effecting  any  of  the  foregoing.

     "BLOOMBERG"  means  Bloomberg Financial L.P. (or its successor to reporting
stock  prices).

     "BUSINESS  DAY"  means  any  day  except Saturday, Sunday and any day which
shall  be a legal holiday or a day on which banking institutions in the State of
New  York  are  authorized  or  required  by law or other governmental action to
close.

     "CLOSING  DATE" shall have the meaning set forth in the Purchase Agreement.

     "CLOSING  PRICE"  means, for any date, the price determined by the first of
the  following  clauses  that applies: (a) if the Common Stock is then listed or
quoted on an Trading Market, the closing bid price per share of the Common Stock
for  such  date (or the nearest preceding date if there is no such price on such
date)  on the Trading Market on which the Common Stock is then listed or quoted;
(b)  if  the  Common Stock is not then listed or quoted on an Trading Market and
if  prices  for  the Common Stock are then quoted on the OTC Bulletin Board, the
closing  bid  price  per share of the Common Stock for such date (or the nearest
preceding  date  if  there  is  no  such price on such date) on the OTC Bulletin
Board; (c) if the Common Stock is not then listed or quoted on an Trading Market
or  the  OTC Bulletin Board and if prices for the Common Stock are then reported
in  the  "Pink  Sheets"  published by the Pink Sheets LLC (formerly the National
Quotation  Bureau  Incorporated) (or a similar organization or agency succeeding
to  its  functions  of reporting prices), the most recent bid price per share of
the  Common  Stock so reported; or (d) in all other cases, the fair market value
of a share of Common Stock as determined by an independent appraiser selected in
good  faith  by  the  Holder.

     "COMMISSION"  means  the  Securities  and  Exchange  Commission.

     "COMMON  STOCK" means the Company's Common Stock, $.01 par value per share,
and  stock  of  any  other  class  into  which  such shares may be reclassified.

     "COMMON  SHARE  EQUIVALENTS"  means  any  securities  of the Company or any
Subsidiary  (as  defined  in  the  Purchase  Agreement) which entitle the holder
thereof  to  acquire Common Stock at any time, including without limitation, any
debt,  preferred stock, rights, options, warrants or other instrument that is at

                                      -2-
<PAGE>

any  time convertible into or exchangeable for, or otherwise entitles the holder
thereof  to receive, Common Stock or other securities that entitle the holder to
receive,  directly  or  indirectly,  Common  Stock.

     "COMPANY  REDEMPTION  PRICE" means the sum of (i) the outstanding principal
amount  of  this  Debenture plus (ii) all other amounts, interest and liquidated
damages  due  in  respect  of  this  Debentures.

     "CONVERSION  DATE"  is  the date specified in a Conversion Notice to effect
conversions  of Debentures under Section 5(a)(i), which date may not be prior to
the  date  the  Holder delivers such Conversion Notice. If no Conversion Date is
specified in a Conversion Notice, then the Conversion Date for such notice shall
be  the  date  that  such  notice  is  deemed  delivered  hereunder.

     "CONVERSION  PRICE"  means  $.75  (subject to adjustment in accordance with
Section  5(d)).

     "DISTRIBUTION"  means,  with  respect  to  any  Person,  the declaration or
payment of any dividends by such Person, or the purchase, redemption, retirement
or  other  acquisition for value of any of its capital stock or other equity now
or  hereafter  outstanding,  or  the making of any distribution of assets to its
stockholders  as  such whether in cash, assets or in obligations of such Person,
or  the  allocation  or  other  setting  apart of any sum for the payment of any
dividend  or  distribution  on,  or  for the purchase, redemption, retirement or
other acquisition of any shares of its capital stock, or the making of any other
distribution  by  reduction  of capital or otherwise in respect of any shares of
its  capital  stock.

     "INTEREST  PAYMENT  DATE" means each of March 31, June 30, September 30 and
December  31,  except  if  such  date  is  not a Trading Day, in which case such
Interest  Payment  Date  shall  be  the  next  succeeding  Trading  Day.

     "EFFECTIVE  DATE" means the date that the initial Registration Statement is
first  declared  effective  by  the  Securities  and  Exchange  Commission.

     "EXCHANGE  ACT"  means  the  Securities  Exchange  Act of 1934, as amended.

     "EQUITY  CONDITIONS"  means, with respect to a specified issuance of Common
Stock,  that  each  of  the following conditions is satisfied: (i) the number of
authorized  but  unissued  and  otherwise  unreserved  shares of Common Stock is
sufficient  for  such  issuance; (ii) such shares of Common Stock are registered
for  resale  by  the Holder pursuant to an effective registration statement, and
the  prospectus  thereunder  is  available  for  use  by the Holder to sell such
shares, or all such shares may be sold by the Holder without volume restrictions
pursuant  to  Rule  144(k)  under  the Securities Act; (iii) the Common Stock is
listed  or  quoted  (and  is not suspended from trading) on a Trading Market and
such shares of Common Stock are approved for listing on such Trading Market upon
issuance;  (iv)  such  issuance would be permitted in full without violating the
rules  or  regulations  of the Trading Market on which such shares are listed or
quoted;  (v)  no  Bankruptcy  Event  has  occurred;  (vii) the Company is not in
default  with respect to any obligation hereunder or under any other Transaction
Document;  or  (ix)  no  Event of Default nor any event that with the passage of
time  and  without  being  cured  would constitute an Event of Default which has
occurred  and  not  been  cured.


                                      -3-
<PAGE>

     "EVENT OF DEFAULT" means the occurrence of any one or more of the following
events  (whatever the reason and whether it shall be voluntary or involuntary or
effected by operation of law or pursuant to any judgment, decree or order of any
court,  or  any  order, rule or regulation of any administrative or governmental
body):

     (i)  any  default  in  the  payment  of  principal or liquidated damages in
respect of any Debentures, as and when the same becomes due and payable (whether
by  acceleration  or  otherwise)  or  any  default in the payment of interest in
respect of any Debentures, within five Trading Days of when the same becomes due
and  payable;

     (ii)  any  default in the payment of the Additional Payment (as hereinafter
defined)  as and when the same becomes due and payable, within five Trading Days
of  when  the  same  becomes  due  and  payable;

     (iii)  the  Company  or  any  Subsidiary defaults in any of its obligations
under  any  other debenture or any mortgage, credit agreement or other facility,
indenture  agreement,  factoring agreement or other instrument under which there
may  be issued, or by which there may be secured or evidenced, any Indebtedness,
whether  such  Indebtedness now exists or is hereafter created, and such default
results in such Indebtedness becoming or being declared due and payable prior to
the  date  on  which  it  would  otherwise  become  due  and  payable;

     (iv)  a  Bankruptcy  Event;

     (v)  the  Company  shall  fail  for  any  reason  to  deliver  certificates
representing  Underlying Shares issuable upon a conversion hereunder that comply
with  the  provisions hereof prior to the fifth Trading Day after the Conversion
Date  or  the  Company  shall  provide notice to any Holder, including by way of
public  announcement,  at any time, of its intention not to comply with requests
for  conversion  of  Debentures  in  accordance  with  the  terms  hereof;

     (vi)  the  Company  shall  fail for any reason to pay in full the amount of
cash  due  pursuant  to  a  Buy-In  within  seven  days after notice therefor is
delivered  hereunder or shall fail to pay any liquidated damages due pursuant to
the  Transaction Documents within seven days of the date of the request for such
payment;

     (vii)  the  Company  shall  fail  to  have available a sufficient number of
authorized  and unreserved shares of Common Stock to issue to such Holder upon a
conversion  hereunder;

     (viii)  a  Fundamental  Transaction  with  respect  to  the  Company or its
subsidiaries;

     (ix)  the  Registration Statement shall not have been declared effective by
the  Commission  on  or  prior  to  the  90th day after the Original Issue Date;

     (x)  during the Effectiveness Period (as defined in the Registration Rights
Agreement),  the  effectiveness  of  the  Registration  Statement lapses for any
reason or the Holder shall not be permitted to resell Registrable Securities (as
defined  in the Registration Rights Agreement) under the Registration Statement,
in  either  case, for more than five consecutive Trading Days or an aggregate of
eight  Trading  Days  (which  need  not  be  consecutive  Trading  Days);


                                      -4-
<PAGE>

     (xi)  an  Event (as defined in the Registration Rights Agreement) shall not
have been cured to the satisfaction of the Holder prior to the expiration of ten
days  from  the  Event  Date  (as  defined in the Registration Rights Agreement)
relating thereto (other than an Event resulting from a failure of a Registration
Statement to be declared effective by the Commission on or prior to the 90th day
after  the  Original Issue Date, which shall be covered by clause (viii) above);

     (xii)  the  Company  defaults  in  the  timely  performance  of  any  other
obligation  under  the Transaction Documents (including, without limitation, any
of  the  Security Agreements) and such default continues uncured for a period of
five  Trading  Days  after  the  date on which written notice of such default is
first  given  to  the  Company  by the Holder (it being understood that no prior
notice  need  be  given in the case of a default that cannot reasonably be cured
within  five  Trading  Days);  and

     (xiii)  the  Company  or  any  Subsidiary  takes  (or  agrees  to take) any
Restricted  Action  in  violation  of  this  Debenture.

     "FILING  DATE"  shall have the meaning set forth in the Registration Rights
Agreement.

     "FUNDAMENTAL  TRANSACTION"  means any (i)  merger  or  consolidation of the
Company  with or into another Person, (ii) any sale of more than one-half of the
assets  of  the  Company  (on  an as valued basis) in one or a series of related
transactions,  (iii)  any tender offer or exchange offer (whether by the Company
or  another  Person)  pursuant to which holders of Common Stock are permitted to
tender  or exchange their shares for other securities, cash or property, or (iv)
any  reclassification  of  the  Common  Stock  or  any compulsory share exchange
pursuant  to  which  the Common Stock is effectively converted into or exchanged
for  other  securities,  cash  or  property.

     "INDEBTEDNESS"  shall mean the principal amount of, premium, if any, profit
participation,  if any, and accrued and unpaid interest on and all other amounts
and costs payable in respect of (a) indebtedness for money borrowed from others;
(b) indebtedness guaranteed, directly or indirectly, in any manner, or in effect
guaranteed,  directly  or  indirectly,  in  any  manner  through  an  agreement,
contingent  or  otherwise,  to supply funds to, or in any other manner invest in
the  debtor, or to purchase indebtedness, or to purchase and pay for property if
not delivered or pay for services if not performed, primarily for the purpose of
enabling  the debtor to make payment of the indebtedness or to assure the owners
of  the indebtedness against loss; (c) all indebtedness secured by any mortgage,
lien,  pledge,  charge  or other encumbrance upon property owned by the Company;
(d)  all  indebtedness  of  such person created or arising under any conditional
sale,  lease (intended primarily as a financing device) or other title retention
or  security  agreement  with  respect  to property acquired by the Company even
though  the  rights  and  remedies  of  the  seller, lessor or lender under such
agreement  or  lease in the event of a default may be limited to repossession or
sale  of  such property; (e); and (f) renewals, extensions and refundings of any
such  indebtedness.

                                      -5-
<PAGE>

     "INTEREST  SHARES"  means  the shares of Common Stock issued or issuable in
payment  of  accrued  interest  under  Section  2.

     "LIEN"  means  any  lien  (statutory  or  otherwise),  security  interest,
mortgage,  deed  of  trust,  priority,  pledge,  charge, conditional sale, title
retention  agreement,  financing  lease or other encumbrance or similar right of
others,  or  any  agreement  to  give  any  of  the  foregoing.

     "LIQUIDATION"  means  for  any  Person,  any  liquidation,  dissolution  or
winding-up of such Person, whether voluntary or involuntary, by operation or law
or  otherwise.

     "MANDATORY  PREPAYMENT  AMOUNT"  for any Debentures shall equal the sum of:
(i)  the greater of (A) the principal amount of Debentures to be prepaid and, if
applicable,  the  Reinstated  Principal  (to  the  extent the Holder returns the
Underlying  Shares  subject  to such Reinstated Principal), plus all accrued and
unpaid  interest  thereon,  and  (B)  the  principal  amount of Debentures to be
prepaid  and,  if applicable, the Reinstated Principal (to the extent the Holder
returns  the  Underlying  Shares subject to such Reinstated Principal), plus all
accrued  and  unpaid  interest  thereon,  divided by the Conversion Price on the
Trading  Day  immediately  preceding (x) the date of the Event of Default or (y)
the  date  the  Mandatory  Prepayment Amount is paid in full, whichever is less,
multiplied  by  the Closing Price on (x) the date of the Event of Default or (y)
the  date the Mandatory Prepayment Amount is paid in full, whichever is greater,
and  (ii)  all  other  amounts,  costs,  expenses  and liquidated damages due in
respect  of  such  Debentures.

     "ORIGINAL  ISSUE  DATE"  means  the  date  of  the  first  issuance  of any
Debentures regardless of the number of transfers of any particular Debenture and
regardless  of  the  number of certificates which may be issued to evidence such
Debentures.

     "PERSON"  means  an  individual  or  corporation,  partnership,  trust,
incorporated  or  unincorporated  association,  joint venture, limited liability
company,  joint  stock company, government (or an agency or subdivision thereof)
or  other  entity  of  any  kind.

     "PROCEEDING"  means  an  action,  claim,  suit, investigation or proceeding
(including,  without limitation, an investigation or partial proceeding, such as
a  deposition),  whether  commenced or threatened concerning the interpretation,
enforcement  or  defense  of  any  transaction  contemplated  by any Transaction
Document  (whether  brought  against  a party hereto or such parties affiliates,
directors,  officers,  employees  or  agents).

     "PROPERTY"  means  any  interest  in any kind of property or asset, whether
real,  personal  or mixed, and whether tangible or intangible, of the Company or
any  of  its  subsidiaries,  now  or  hereinafter  acquired

     "REGISTRATION  RIGHTS  AGREEMENT"  means the Registration Rights Agreement,
dated  as  of  the Original Issuance Date, to which the Company and the original
Holders  are  parties, as amended, modified or supplemented from time to time in
accordance  with  its  terms.

     "REGISTRATION  STATEMENT"  means  a  registration  statement  meeting  the
requirements  of  the  Registration Rights Agreement and covering the resale of,
among  other things, all Underlying Shares by the Holders, who shall be named as
"selling  stockholders"  thereunder.


                                      -6-
<PAGE>

     "REINSTATED  PRINCIPAL"  means the principal amount of Debentures converted
during  the  ten  Trading  Days  preceding  the  delivery of an Event of Default
Notice, for which the Company issued or was obligated to issue Underlying Shares
to  the  Holder.

     "RESTRICTED ACTIONS" means the taking by Company or any of its subsidiaries
of  any  of  the  following  actions"

     (i)     create,  incur,  assume  or suffer to exist any Indebtedness, other
than  Indebtedness  reflected  in  the Company's most recent quarterly financial
statement that has been filed with the Commission prior to the Original Issuance
Date,  or  Indebtednessin  the  ordinary course of business consistent with past
practices;  provided, however, that the Company may incur indebtedness to borrow
funds in an amount not to exceed $1,000,000 to be used solely in connection with
the  operation  of  the  zinc  air  battery  business,  which  amount will be an
unsecured  obligation of the Company; provided, further, that such lenders shall
have  entered  a subordination agreement with the holders of the Debentures in a
form  agreed  to  by  the  holders  of  the  Debentures;

     (ii)     create,  incur,  assume or suffer to exist any guaranty, provided,
that  the Company may suffer to exist any existing guaranties for obligations of
Subsidiaries  that  it  had  entered  into  in  the  ordinary course of business
consistent  with  past  practice;

     (iii)  create,  incur,  assume  or  suffer  to exist any Lien, upon or with
respect  to any interest in Property, except for Liens disclosed in the Purchase
Agreement  or  for  Lienspursuant  to  the  Debenture  or  for Liens incurred in
connection  with  the settlement with Yehuda Harats regarding assets of Electric
Fuel  (E.F.L.)  Ltd.;

     (iii) create, incur, assume or suffer to exist any obligation as lessee for
the  rental  or  hire  of  any  Property, except leases existing on the Original
Issuance  Date,  and  any  extensions,  supplements  or  renewals  thereof;

     (iv)  make  any  loan  or  advance  to  any Person or any purchase or other
acquisition of any capital stock, assets, obligations or other securities of any
Person,  or  any capital contribution to, investment in, or other acquisition of
any  interest  in,  any  Person;

     (v)  make  any  Distribution,  except  that  any  subsidiary  may  make
Distributions  to  the  Company;

     (vi)  make  any  capital expenditures, in any single or a series of related
transactions,  during  any  year,  exceeding  $75,000;

     (vii)  sell, lease, assign, transfer or otherwise dispose of any of its now
owned  or  hereafter acquired Property (including, without limitation, shares of
stock  and  Indebtedness,  receivables  and  leasehold interests), except in the
ordinary  course  of  business  consistent  with  past  practices;

     (viii)  sell,  lease,  assign  or  otherwise dispose of any Property to any
Affiliate;  (a)  merge  into or consolidate with or purchase or acquire Property

                                      -7-
<PAGE>

from  any  Affiliate;  or  (b)  enter  into  any  other  transaction directly or
indirectly  with  or  for  the  benefit  of  any  Affiliate  (including, without
limitation, guaranties and assumption of obligations of any Affiliate); provided
that;  any  Affiliate  who  is an individual may serve as a director, officer or
employee  of  the  Company  or  any  subsidiary  thereof  and receive reasonable
compensation  for  his  or  her  services  in  such  capacity;

     (ix) merge or consolidate with, or sell, assign, lease or otherwise dispose
of  (whether  in  one transaction or in a series of related transactions) all or
substantially  all  of  its assets (whether now owned or hereafter acquired) to,
any Person, or acquire all or substantially all of the assets or the business of
any  Person  (or  enter  into  any  agreement  to  do  any  of  the  foregoing);

     (x)  enter  into  any  agreement  with  respect  to  any  of  the foregoing
provisions  (i)  through  (ix).

     "SECURITIES  ACT"  means  the  Securities  Act  of  1933,  as  amended.

     "SECURITY  AGREEMENTS"  means  (i)  the Security Agreement, dated as of the
Original  Issuance  Date,  by  and  among  the  Company, the subsidiaries of the
Company  party  thereto  and  the  holders  of  the  Debentures  and  (ii)  the
Intellectual  Property  Security  Agreement,  dated  as of the Original Issuance
Date,  by  and  among the Company, the subsidiaries of the Company party thereto
and  the  holders  of  the  Debentures.

     "TRADING  DAY"  means  (i)  a day on which the Common Stock is traded on an
Trading  Market, or (ii) if the Common Stock is not listed on an Trading Market,
a  day  on  which  the Common Stock is traded in the over the counter market, as
reported  by  the OTC Bulletin Board, or (iii) if the Common Stock is not quoted
on the OTC Bulletin Board, a day on which the Common Stock is quoted in the over
the counter market as reported by the National Quotation Bureau Incorporated (or
any  similar  organization  or  agency  succeeding  its  functions  of reporting
prices);  provided,  that  in  the  event that the Common Stock is not listed or
quoted as set forth in (i), (ii) and (iii) hereof, then Trading Day shall mean a
business  day.

     "TRADING  MARKET"  means  whichever  of  the  New  York Stock Exchange, the
American  Stock  Exchange,  the  Nasdaq  National  Market or the Nasdaq SmallCap
Market  on  which  the  Common  Stock  is  then  listed or quoted on the date in
question.

     "TRANSACTION  DOCUMENTS"  shall  have the meaning set forth in the Purchase
Agreement.

     "UNDERLYING  SHARES"  means,  collectively,  the Common Stock issuable upon
conversion  of  Debentures  and the Interest Shares in accordance with the terms
hereof.

     "VWAP"  means,  with respect to any date of determination, the daily volume
weighted  average price (as reported by Bloomberg using the VAP function) of the
Common Stock on such date of determination, or if there is no such price on such
date  of determination, then the daily volume weighted average price on the date
nearest  preceding  such  date.

     "WARRANTS"  shall  have  the  meaning  set forth in the Purchase Agreement.

    2.  Interest.
        --------

                                      -8-
<PAGE>

          (a)  The  Company  shall  pay  interest to the Holder on the aggregate
     unconverted  and  then  outstanding  principal  amount  of  this  Debenture
     (including  any  interest  added  to such principal in accordance with this
     Section 2) at the rate of 9% per annum, payable in arrears on each Interest
     Payment  Date  and  on  the  Maturity Date; provided, that interest for the
     first nine months following the Original Issuance Date shall be paid on the
     Original Issuance Date by delivering to the Holder on such date such number
     of  shares  of  Common  Sock  (the "INTEREST SHARES") equal to the quotient
     obtained  by dividing the amount of such interest by the arithmetic average
     of  the  VWAP  for  each of the five (5) Trading Days immediately preceding
     (but  not  including)  the  Original  Issuance  Date.  Interest  shall  be
     calculated on the basis of a 360-day year and shall accrue daily commencing
     on  the  Original  Issue Date (regardless of the number of transfers of the
     Debentures).

          (b) Except as provided in Section 2(a), the Company shall pay interest
     under  this  Debenture  in cash. If the Company fails for any reason to pay
     interest  on  the  Interest  Payment Date, the Holder may (but shall not be
     required  to)  treat such interest as if it had been added to the principal
     amount  of  this  Debenture  as  of  such  Interest  Payment  Date.

          (c)  On  each  of  the first three Interest Payment Dates, the Company
     shall  deliver to the Holder an amount (the "ADDITIONAL PAYMENT"), in cash,
     equal  to the product (if a positive number) of (x) the difference, if any,
     between  (i)  the  arithmetic  average of the VWAP for each of the five (5)
     Trading  Days  immediately  preceding  (but  not  including)  the  Original
     Issuance  Date  and (ii) the arithmetic average of the VWAP for each of the
     five  (5)  Trading  Days  immediately  preceding  (but  not  including) the
     applicable  Interest  Payment Date times (y) the product of (i) .0225 times
     (ii)  the  outstanding  principal  amount  of  this  Debenture.

          (d)  If  on  any of the first three Interest Payment Dates, the Equity
     Conditions  are not satisfied with respect to the Interest Shares, then the
     Holder,  at its sole option, shall have the right to require the Company to
     repurchase  from the Holder a number of Interest Shares equal to 1/3 of the
     Interest  Shares  delivered  by the Company to such Holder at Closing for a
     repurchase  price  equal to the cash amount of the interest due and payable
     on  such  Interest  Payment  Date.  The  Holder  may exercise this right by
     delivering  a  put  notice  to  the  Company  not  more  than 1 Trading Day
     following  the  Interest Payment Date. The Holder shall not be obligated to
     deliver  the  Interest Shares subject to the put notice at issue until such
     time  as  payment of the put price shall have been received by such Holder.

          (e)  Any interest to be paid in cash hereunder that is not paid on the
     Interest  Payment  Date  and  not  added  to  the  principal  amount of the
     Debenture  shall continue to accrue and shall entail a late fee, which must
     be  paid in cash, at the rate of 12% per annum or the lesser rate permitted
     by  applicable  law (such fees to accrue daily, from the date such interest
     is  due  hereunder  through  and  including  the  date  of  payment).

   3.  Registration  of  Debentures.  The  Company shall register the Debentures
       ----------------------------
upon  records  to  be maintained by the Company for that purpose (the "DEBENTURE
REGISTER")  in  the  name  of each record holder thereof from time to time.  The
Company  may  deem  and  treat  the  registered  Holder of this Debenture as the
absolute owner hereof for the purpose of any conversion hereof or any payment of
interest  hereon,  and  for all other purposes, absent actual notice to the
contrary.

                                      -9-
<PAGE>

   4.  Registration  of Transfers and Exchanges.  The Company shall register the
       ----------------------------------------
transfer  of  any  portion  of  this  Debenture  in  the Debenture Register upon
surrender  of  this Debenture to the Company at its address for notice set forth
herein.  Upon  any  such  registration  or  transfer,  a  new  debenture,  in
substantially  the  form  of  this  Debenture  (any  such  new debenture, a "NEW
DEBENTURE"),  evidencing  the  portion of this Debenture so transferred shall be
issued to the transferee and a New Debenture evidencing the remaining portion of
this  Debenture  not  so  transferred,  if  any,  shall  be  issued  to the
transferring  Holder.  The  acceptance  of  the  New Debenture by the transferee
thereof  shall  be deemed the acceptance by such transferee of all of the rights
and  obligations of a holder of a Debenture.  This Debenture is exchangeable for
an  equal  aggregate  principal  amount  of  Debentures  of different authorized
denominations,  as  requested  by  the  Holder surrendering the same. No service
charge  or other fee will be imposed in connection with any such registration of
transfer or exchange.  Transfers of this Debenture and the Underlying Shares are
governed  by  Section  4.1  of  the  Purchase  Agreement.

   5.  Conversion.
       ----------

       (a) At the Option of the Holder.      All or any portion of the principal
           ------------------------------
amount  of this Debenture then outstanding (together with all accrued but unpaid
interest  thereon)  shall  be  convertible  into  Common  Stock  (subject to the
limitations set forth in Section 5(b)), at the option of the Holder, at any time
and  from  time  to  time  from and after the Original Issue Date.  Holders
shall  effect  conversions  under this Section 5(a)(i) by delivering the Company
with  a  written  notice in the form attached hereto as Exhibit A (a "CONVERSION
                                                        ---------
NOTICE") together with a schedule in the form of Schedule 1 attached hereto (the
                                                 ----------
"CONVERSION  SCHEDULE").  The  number  of  Underlying  Shares  issuable upon any
conversion  hereunder  shall  (subject to the limitations of Section 5(b)) equal
the  outstanding principal amount of this Debenture (plus all accrued but unpaid
interest  thereon)to  be  converted  divided  by  the  Conversion  Price.

      (b)  Certain  Conversion  Restrictions.
          ---------------------------------

          (i)  Notwithstanding  anything  to  the contrary contained herein, the
     number  of shares of Common Stock that may be acquired by a Holder upon any
     conversion  of Debentures (or otherwise in respect hereof) shall be limited
     to the extent necessary to insure that, following such conversion (or other
     issuance),  the  total  number  of shares of Common Stock then beneficially
     owned  by  such  Holder  and  its  affiliates  and  any other Persons whose
     beneficial  ownership  of  shares  of Common Stock would be aggregated with
     such  Holder's  for purposes of Section 13(d) of the Exchange Act, does not
     exceed  4.999%  of  the  total  number  of issued and outstanding shares of
     Common  Stock  (including  for  such  purpose  the  shares  of Common Stock
     issuable  upon  such  conversion).  For such purposes, beneficial ownership
     shall  be  determined  in accordance with Section 13(d) of the Exchange Act
     and  the  rules  and regulations promulgated thereunder. Each delivery of a
     Conversion  Notice  hereunder  will  constitute  a  representation  by  the
     applicable  Holder  that  it has evaluated the limitation set forth in this
     paragraph  and  determined  that  issuance of the full number of Underlying
     Shares  issuable  in respect of such Conversion Notice does not violate the
     restriction  contained in this paragraph. By written notice to the Company,
     the Holder may waive the provisions of this Section but (i) any such waiver
     will  not be effective until the 61st day after such notice is delivered to
     the Company, and (ii) any such waiver will apply only to the Holder and not
     to  any  other  holder of Debentures. This provision shall not restrict the
     number of shares of Common Stock which a Holder may receive or beneficially


                                      -10-
<PAGE>

     own  in  order to determine the amount of securities or other consideration
     that  such  Holder  may  receive  in  the  event of a merger, sale or other
     business  combination  or  reclassification  involving  the  Company  as
     contemplated  herein.

          (ii)  Notwithstanding  anything  to the contrary contained herein, the
     number  of shares of Common Stock that may be acquired by a Holder upon any
     conversion  of Debentures (or otherwise in respect hereof) shall be limited
     to the extent necessary to insure that, following such conversion (or other
     issuance),  the  total  number  of shares of Common Stock then beneficially
     owned  by  such  Holder  and  its  affiliates  and  any other Persons whose
     beneficial  ownership  of  shares  of Common Stock would be aggregated with
     such  Holder's  for purposes of Section 13(d) of the Exchange Act, does not
     exceed  9.999%  of  the  total  number  of issued and outstanding shares of
     Common  Stock  (including  for  such  purpose  the  shares  of Common Stock
     issuable  upon  such  conversion).  For such purposes, beneficial ownership
     shall  be  determined  in accordance with Section 13(d) of the Exchange Act
     and  the  rules  and regulations promulgated thereunder. Each delivery of a
     Conversion  Notice  hereunder  will  constitute  a  representation  by  the
     applicable  Holder  that  it has evaluated the limitation set forth in this
     paragraph  and  determined  that  issuance of the full number of Underlying
     Shares  issuable  in respect of such Conversion Notice does not violate the
     restriction  contained in this paragraph. This provision shall not restrict
     the  number  of  shares  of  Common  Stock  which  a  Holder may receive or
     beneficially  own  in  order to determine the amount of securities or other
     consideration  that  such Holder may receive in the event of a merger, sale
     or  other business combination or reclassification involving the Company as
     contemplated  herein.

   (c)  Mechanics  of  Conversion.
        -------------------------

          (i)  By  the third Trading Day after each Conversion Date, the Company
     shall  issue or cause to be issued and cause to be delivered to or upon the
     written  order  of  the  Holder and in such name or names as the Holder may
     designate  a  certificate  for  the  Underlying  Shares  issuable upon such
     conversion  which, unless required by the Purchase Agreement, shall be free
     of  all restrictive legends. The Holder, or any Person so designated by the
     Holder  to  receive  Underlying  Shares, shall be deemed to have become the
     holder  of  record  of such Underlying Shares as of the Conversion Date. If
     the  Company's  transfer agent is eligible to participate in the Depositary
     Trust Corporation DWAC system and no legends are required to be included on
     the  certificates  representing  Underlying Shares pursuant to the Purchase
     Agreement,  the  Company  shall,  upon  request of the Holder, use its best
     efforts  to  deliver Underlying Shares hereunder electronically through the
     Depository  Trust  Corporation  or another established clearing corporation
     performing  similar  functions.

          (ii) To effect conversions hereunder, the Holder shall not be required
     to  physically  surrender  this  Debenture  unless  the aggregate principal
     amount  represented  by  such Debenture is being converted, in which event,
     the  Holder  shall deliver such Debenture promptly to the Company (it being
     understood that such delivery is not a condition precedent to the Company's
     obligations to deliver Underlying Shares upon such conversion). Conversions
     hereunder  shall  have  the  effect  of  lowering the outstanding principal
     amount  represented  by such Debenture in an amount equal to the applicable
     conversion, which shall be evidenced by entries set forth in the Conversion
     Schedule  attached  as  Schedule I, which will be maintained by the Company
                             -----------
     and  the  Holder.


                                      -11-
<PAGE>

          (iii) The Company's obligations to issue and deliver Underlying Shares
     upon  conversion  of this Debenture in accordance with the terms hereof are
     absolute  and  unconditional, irrespective of any action or inaction by the
     Holder  to  enforce  the  same,  any  waiver or consent with respect to any
     provision  hereof,  the  recovery of any judgment against any Person or any
     action  to  enforce  the  same,  or  any  setoff, counterclaim, recoupment,
     limitation or termination, or any breach or alleged breach by the Holder or
     any  other  Person  of  any  obligation  to the Company or any violation or
     alleged  violation  of  law  by  the  Holder  or  any  other  Person,  and
     irrespective  of  any  other  circumstance which might otherwise limit such
     obligation  of the Company to the Holder in connection with the issuance of
     such  Underlying  Shares.

          (iv)  If  by the third Trading Day after a Conversion Date the Company
     fails  to  deliver to the Holder such Underlying Shares in such amounts and
     in  the manner required pursuant to Section 5(a), then the Holder will have
     the  right  to  rescind  such  conversion.

          (v)  If  by  the third Trading Day after a Conversion Date the Company
     fails  to  deliver to the Holder such Underlying Shares in such amounts and
     in  the  manner  required  pursuant to this Section 5(c), and if after such
     third  Trading  Day  the Holder purchases (in an open market transaction or
     otherwise)  shares  of Common Stock to deliver in satisfaction of a sale by
     such Holder of the Underlying Shares which the Holder anticipated receiving
     upon  such conversion (a "BUY-IN"), then the Company shall: (A) pay in cash
     to  the  Holder (in addition to any remedies available to or elected by the
     Holder)  the  amount  by  which  (x)  the  Holder's  total  purchase  price
     (including brokerage commissions, if any) for the shares of Common Stock so
     purchased  exceeds (y) the amount obtained by multiplying (1) the aggregate
     number of Underlying Shares that the Company was required to deliver to the
     Holder  in connection with the conversion at issue by (2) the Closing Price
     at  the  time of the obligation giving rise to such purchase obligation and
     (B)  at  the option of the Holder, either reinstate the principal amount of
     Debentures  and  equivalent  number  of  Underlying  Shares  for which such
     conversion  was  not  timely honored or deliver to the Holder the number of
     shares  of  Common Stock that would have been issued had the Company timely
     complied  with  its  conversion  and  delivery  obligations  hereunder. For
     example,  if  the  Holder  purchases  shares of Common Stock having a total
     purchase  price  of  $11,000 to cover a Buy-In with respect to an attempted
     conversion  of  Debentures  with  a  market price on the date of conversion
     totaling  $10,000,  under clause (A) of the immediately preceding sentence,
     the  Company  shall  be required to pay the Holder $1,000. The Holder shall
     provide  the  Company  written notice indicating the amounts payable to the
     Holder  in  respect  of  the  Buy-In.

   (d)  Adjustments  to Conversion Price.  The Conversion Price in effect on any
        --------------------------------
Conversion  Date shall be subject to adjustments in accordance with this Section
5(d):

 (i)  Stock Dividends and Splits. If the Company, at any time
      --------------------------
     while  any  Debentures  are  outstanding,  (i) pays a stock dividend on its
     shares  of  Common  Stock or otherwise makes a distribution on any class of
     capital  stock  that  is payable in shares of Common Stock, (ii) subdivides
     outstanding shares of Common Stock into a larger number of shares, or (iii)
     combines  outstanding  shares  of  Common  Stock  into  a smaller number of
     shares,  then in each such case the Conversion Price shall be multiplied by
     a  fraction  of which the numerator shall be the number of shares of Common
     Stock  outstanding  immediately  before  such  event  and  of  which  the
     denominator  shall  be  the  number  of  shares of Common Stock outstanding
     immediately after such event. Any adjustment made pursuant to clause (i) of
     this paragraph shall become effective immediately after the record date for
     the  determination  of  stockholders  entitled  to receive such dividend or
     distribution,  and  any adjustment pursuant to clause (ii) or (iii) of this
     paragraph  shall  become  effective immediately after the effective date of
     such  subdivision  or  combination.


                                      -12-
<PAGE>

          (ii)  Additional  Distributions. If the Company, at any time while any
                -------------------------
     Debentures  are  outstanding,  shall distribute to all holders of shares of
     Common  Stock  (and not to Holders) evidences of its indebtedness or assets
     or  rights  or  warrants to subscribe for or purchase any security, then in
     each  such  case  the  Conversion  Price  at  which the principal amount of
     Debentures  shall  thereafter  be  convertible  shall  be  determined  by
     multiplying  the Conversion Price in effect immediately prior to the record
     date  fixed  for  determination  of  stockholders  entitled to receive such
     distribution  by  a  fraction of which the denominator shall be the Closing
     Price  determined  as  of the record date mentioned above, and of which the
     numerator  shall  be  such  Closing Price on such record date less the then
     fair  market  value  at  such  record date of the portion of such assets or
     evidence of indebtedness so distributed applicable to one outstanding share
     of  Common  Stock as determined by the Board of Directors in good faith. In
     either  case  the adjustments shall be described in a statement provided to
     the  Holders  of  the  portion  of  assets  or evidences of indebtedness so
     distributed  or  such subscription rights applicable to one share of Common
     Stock. Such adjustment shall be made whenever any such distribution is made
     and  shall  become  effective  immediately  after the record date mentioned
     above.

          (iii)  Calculations.  All  calculations  under this Section 5 shall be
                --------------
     made to the nearest cent or the nearest 1/100th of a share, as the case may
     be.  The  number  of  shares  of Common Stock outstanding at any given time
     shall  not  include  shares  owned  or  held  by  or for the account of the
     Company,  and  the  disposition  of  any such shares shall be considered an
     issue  or  sale  of  Common  Stock.

          (iv)  Notice of Adjustments. Whenever the Conversion Price is adjusted
                -----------------------
     pursuant  to  the  terms  hereof  the  Company  shall promptly mail to each
     Holder,  a  notice setting forth the Conversion Price after such adjustment
     and setting forth a brief statement of the facts requiring such adjustment.

    (e) Certain  Fundamental  Transactions.  In  case  of  any  Fundamental
        ----------------------------------
Transaction,  a  Holder  shall  have  the  right to do any of the following: (1)
convert  its  Debentures into the shares of stock and other securities, cash and
property  receivable  upon  or  deemed to be held by holders of shares of Common
Stock  following  such Fundamental Transaction and such Holder shall be entitled
upon such Fundamental Transaction to receive such amount of securities, cash and
property  as  the  shares  of Common Stock into which such Debentures could
have been converted immediately prior to such Fundamental Transaction would have
been  entitled,  or  (2)(x)  require the surviving entity to issue debentures in
such  principal  amount  equal to the principal amount of the Debentures held by
such  Holder prior to such Fundamental Transaction, plus all other amounts owing
thereon,  which  newly issued debentures shall have identical terms to the terms
of the Debentures and shall be entitled to all of the rights and privileges of a
Holder  set forth herein and the agreements pursuant to which the prepayment was
issued,  and (y) simultaneously with the issuance of such convertible debentures
shall  have the right to convert such shares only into shares of stock and other
securities, cash and property receivable upon or deemed to be held by holders of
shares  of  Common  Stock following such Fundamental Transaction (the conversion
price applicable for the newly issued convertible debentures shall be based upon
the amount of securities, cash and property that each Common Share would receive
in  such  Fundamental Transaction and the Conversion Price stated herein) or (3)
at  the  Holder's  option and request, any successor to the Company or surviving
entity  in  such  Fundamental  Transaction  shall  either  pay to the Holder the
greater  of  (A) the outstanding principal amount of the Debentures held by such
Holder  plus  all  accrued  and  unpaid  interest thereon, and (B) the principal
amount  of  the  Debenture  held  by  such  Holder,  plus all accrued and unpaid
interest thereon, divided by the Conversion Price on the Trading Day immediately
preceding  (x) the date of prior to such Fundamental Transaction or (y) the date
the  amount  set  forth  in  this  section  is  paid in full, whichever is less,
multiplied  by  the Closing Price on (x) the date of the Fundamental Transaction


                                      -13-
<PAGE>

or  (y) the date the amount set forth in this section is paid in full, whichever
is greater.  Any Fundamental Transaction shall include such terms so as continue
to  give  the Holders the right to receive the securities, cash and property set
forth  in  this  Section upon any conversion or redemption following such event.
This  provision  shall  similarly  apply  to  successive  such  Fundamental
Transactions. The rights set forth herein shall not alter the rights of a Holder
set forth elsewhere in this Debenture; provided, that a Holder may only exercise
the  rights  set forth herein with respect to a single event giving rise to such
rights.

   (f)  Reclassifications;  Share Exchanges.  In case of any reclassification of
        -----------------------------------
the  shares  of Common Stock, or any compulsory share exchange pursuant to which
the  shares  of  Common  Stock  are  converted  into  other  securities, cash or
property,  the  Holders  of the Debentures then outstanding shall have the right
thereafter  to  convert  such  shares  only  into  the shares of stock and other
securities, cash and property receivable upon or deemed to be held by holders of
shares  of  Common Stock following such reclassification or share exchange,
and  the  Holders  shall  be  entitled upon such event to receive such amount of
securities, cash or property as a holder of the number of shares of Common Stock
of  the  Company  into which such shares of Debentures could have been converted
immediately  prior  to  such  reclassification or share exchange would have been
entitled.  This  provision shall similarly apply to successive reclassifications
or  share  exchanges.

   (g)  Notice  of  Corporate  Events.  If:  (a)  the  Company  shall  declare a
        -----------------------------
dividend  (or any other distribution) on the Common Stock, (b) the Company shall
declare  a  special  nonrecurring cash dividend on or a redemption of the Common
Stock,  (c)  the  Company  shall authorize the granting to all holders of Common
Stock  rights  or  warrants  to  subscribe for or purchase any shares of capital
stock of any class or of any rights, (d) the approval of any stockholders of the
Company  shall  be required in connection with any Fundamental Transaction,
or  (e)  the  Company  shall authorize the voluntary or involuntary dissolution,
liquidation  or winding up of the affairs of the Company; then the Company shall
file  a  press release or Current Report on Form 8-K to disclose such occurrence
and  notify  the  Holders  at their last addresses as they shall appear upon the
stock  books  of  the Company, at least 20 calendar days prior to the applicable
record or effective date hereinafter specified, a notice stating (x) the date on
which  a  record  is to be taken for the purpose of such dividend, distribution,
redemption,  rights  or warrants, or if a record is not to be taken, the date as
of  which the holders of Common Stock of record to be entitled to such dividend,
distributions,  redemption,  rights  or warrants are to be determined or (y) the
date  on  which any such Fundamental Transaction is expected to become effective

                                      -14-
<PAGE>

or  close,  and the date as of which it is expected that holders of Common Stock
of  record shall be entitled to exchange their Common Stock for securities, cash
or  other  property  deliverable upon any such Fundamental Transaction.  Holders
are  entitled  to  convert  the  outstanding  principal amount of the Debentures
during  the  10-day  period  commencing the date of such notice to the effective
date  of  the  event  triggering  such  notice.

   (h)  Reservation  of Common Stock.  The Company covenants that it will at all
        ----------------------------
times  reserve  and  keep available out of its authorized and unissued shares of
Common  Stock  solely for the purpose of issuance upon conversion of Debentures,
each  as  herein  provided,  free  from  preemptive  rights  or any other actual
contingent purchase rights of persons other than the Holders, not less than such
number  of  shares  of  Common Stock as shall be issuable upon the conversion of
all  outstanding principal amount of Debentures.  The Company covenants that all
shares  of Common Stock that shall be so issuable shall, upon issue, be duly and
validly  authorized  and  issued  and  fully  paid  and  nonassessable.

   (i)  Fractional Shares.  Upon a conversion hereunder the Company shall not be
        -----------------
required  to issue stock certificates representing fractions of shares of Common
Stock,  but  may  if  otherwise permitted, make a cash payment in respect of any
final  fraction  of  a  share  based  on  the  Closing  Price  on the applicable
Conversion  Date.  If  any fraction of an Underlying Share would, except for the
provisions of this Section, be issuable upon a conversion hereunder, the Company
shall  pay  an  amount  in cash equal to the Conversion Price multiplied by such
fraction.

   (j)  Stamp  Taxes.  The  issuance  of  certificates  for  Common  Stock  on
        ------------
conversion of principal amount of this Debenture shall be made without charge to
the  Holders  thereof  for  any  documentary  stamp or similar taxes that may be
payable  in  respect of the issue or delivery of such certificate, provided that
the  Company shall not be required to pay any tax that may be payable in respect
of  any  transfer  involved in the issuance and delivery of any such certificate
upon  conversion  in  a name other than that of the Holder of such Debentures so
converted.

   (k)  Notices.  Any  and  all notices or other communications or deliveries to
        -------
be provided by the Holders, including, without limitation, any Holder Conversion
Notice,  shall be in writing and delivered personally, by facsimile or sent by a
nationally  recognized  overnight courier service, addressed to the attention of
the  Chief  Financial  Officer  of  the  Company  addressed  to  Electric  Fuel
Corporation,  632  Broadway, Suite 301, New York, NY 10012, fax: (212) 529-5800,
attention  Chief  Financial Officer and General Counsel, with a copy to Electric
Fuel  (E.F.L.)  Ltd.,  Western  Industrial  Zone,  Beit  Shemesh  99000, Israel,
Facsimile  No.:  011-972-2-990-6688,  Attn.: Chief Financial Officer and General
Counsel,  or  to such other address or facsimile number as shall be specified in
writing  by  the  Company  for  such  purpose.  Any  and  all  notices  or other
communications or deliveries to be provided by the Company hereunder shall be in
writing  and  delivered  personally,  by  facsimile  or  sent  by  a  nationally
recognized  overnight courier service, addressed to each Holder at the facsimile
telephone  number  or  address  of  such  Holder  appearing  on the books of the
Company,  or  if  no  such facsimile telephone number or address appears, at the
principal place of business of the Holder.  Any notice or other communication or
deliveries  hereunder shall be deemed given and effective on the earliest of (i)
the  date  of  transmission,  if  such  notice or communication is delivered via
facsimile  at  the facsimile telephone number specified in this Section prior to
6:30 p.m. (New York City time)(with confirmation of transmission), (ii) the date
after the date of transmission, if such notice or communication is delivered via
facsimile at the facsimile telephone number specified in this Section later than
6:30 p.m. (New York City time) on any date and earlier than 11:59 p.m. (New York
City time) on such date (with confirmation of transmission), (iii) upon receipt,
if  sent  by  a  nationally  recognized  overnight courier service, or (iv) upon
actual  receipt  by  the  party  to  whom  such  notice is required to be given.

                                      -15-
<PAGE>

   6.  Prepayment.
       ----------

   (a)  Upon  Event of Default.  Upon the occurrence of a Event of Default, each
        ----------------------
Holder  shall  (in  addition  to all other rights it may have hereunder or under
applicable  law), have the right, exercisable at the sole option of such Holder,
and  by  delivery  of a written notice to the Company to require the Company (an
"EVENT  OF  DEFAULT  NOTICE")  to prepay all or a portion of the Debentures then
held  by  such  Holder and, at the option of the Holder, all or a portion of the
Reinstated  Principal, for an amount, in cash, equal to the Mandatory Prepayment
Amount.  The  Mandatory  Prepayment  Amount shall be due and payable within five
Trading  Days  of the date of the Event of Default Notice.  For purposes of this
Section, principal amount of Debentures shall remain outstanding until such date
as  the  Holder shall have received Underlying Shares upon a conversion (or
attempted  conversion)  thereof  that  meets  the  requirements  hereof.
Notwithstanding  anything  herein  to  the  contrary,  upon  the occurrence of a
Bankruptcy  Event,  all outstanding principal and accrued but unpaid interest on
this Debenture shall immediately become due and payable in full in cash, without
any further action by the Holder, and the Company shall immediately be obligated
to  pay  the  Mandatory  Prepayment  Amount pursuant to this paragraph as if the
Holder  had  delivered  a  Event  of  Default  Notice  immediately  prior to the
occurrence  of  any  such Event of Default.  The Holder need not provide and the
Company  hereby  waives  any presentment, demand, protest or other notice of any
kind,  and the Holder may immediately and without expiration of any grace period
enforce  any and all of its rights and remedies hereunder and all other remedies
available  to  it  under  applicable law.  Such declaration may be rescinded and
annulled  by  Holder at any time prior to payment hereunder.  No such rescission
or  annulment  shall  affect any subsequent Event of Default or impair any right
consequent  thereon.

   (b)  At  Company's Option.  At any time after the Effective Date, the Company
        --------------------
may  deliver  a  notice  to the Holders (an "OPTIONAL PREPAYMENT NOTICE" and the
date  such  notice  is  received by the Holders, the "OPTIONAL PREPAYMENT NOTICE
DATE")  of  its  irrevocable election to prepay all, or any portion, of the then
aggregate amount of outstanding Debentures, for an amount, in cash, equal to the
Company  Redemption  Price.  The Company Redemption Amount payable pursuant
to  this  Section  6(b)  is  due  in full on the tenth Trading Day following the
Optional  Prepayment  Notice Date (the "OPTIONAL PREPAYMENT DATE").  The Company
may only deliver an Optional Prepayment Notice if each of the following shall be
true:  (i)  the  Company shall have duly honored all conversions and redemptions
scheduled  to  occur  or  occurring  by virtue of one or more Conversion Notices
prior  to  the  Optional  Prepayment  Notice Date and (ii) the Equity Conditions
shall  have been satisfied at all times from the Optional Prepayment Notice Date
to the Optional Prepayment Date.  If any of the foregoing conditions shall cease
to  be satisfied at any time during the required period, or if the Company shall
fail  to  pay  the Optional Prepayment Amount in full by the Optional Prepayment
Date, then the Optional Prepayment Notice shall be null and void, ab initio, and
the  Company  may  not  deliver any subsequent Optional Prepayment Notices.  The
Holder  may  convert  any  portion  of  this  Debenture  prior  to  the Optional
Prepayment  Date.  The  Company  covenants  and  agrees  that  it will honor all
Conversion Notices tendered from the time of delivery of the Optional Prepayment
Notice  through  the  Optional  Prepayment  Date.

                                      -16-
<PAGE>

   7.  Ranking.  This  Debenture ranks pari passu to all other Debentures now or
       -------
hereafter  issued pursuant to the Transaction Documents.  No Indebtedness of the
Company is senior to this Debenture in right of payment, whether with respect of
interest,  damages  or  upon  Liquidation  or  dissolution  or  otherwise.

   8.  Secured  Obligations.  The  payment  obligations under this Debenture are
       --------------------
secured  pursuant  to  the Security Agreements.  Such agreements will terminate,
with  respect  to the Holder, upon the date on which all payments hereunder have
been  made in full or the Debenture has otherwise been converted pursuant to the
terms  hereof.

   9.  Restricted  Actions.  Neither  the Company nor any subsidiary shall taken
       -------------------
any  Restricted  Action  without the prior written consent of the holders of the
Debentures.

   10.  Miscellaneous.
        -------------

          (a) This Debenture shall be binding on and inure to the benefit of the
     parties  hereto and their respective successors and assigns. This Debenture
     may  be  amended  only  in writing signed by the Company and the Holder and
     their  successors  and  assigns.

          (b) Nothing in this Debenture shall be construed to give to any person
     or corporation other than the Company and the Holder any legal or equitable
     right,  remedy  or  cause  under  this  Debenture.

          (c)  All  questions concerning the construction, validity, enforcement
     and interpretation of this Debenture shall be governed by and construed and
     enforced  in  accordance  with  the internal laws of the State of New York,
     without  regard  to  the principles of conflict of laws thereof. Each party
     agrees that all Proceedings shall be commenced exclusively in the state and
     federal  courts  sitting in the City of New York, Borough of Manhattan (the
     "NEW  YORK  COURTS").  Each  party hereto hereby irrevocably submits to the
     exclusive  jurisdiction  of  the  New  York  Courts for any proceeding, and
     hereby  irrevocably waives, and agrees not to assert in any Proceeding, any
     claim that it is not personally subject to the jurisdiction of any New York
     Court  or  that  a  New  York  Court  is  an  inconvenient  forum  for such
     Proceeding. Each party hereto hereby irrevocably waives personal service of
     process  and  consents  to  process  being served in any such Proceeding by
     mailing  a  copy  thereof  via  registered  or  certified mail or overnight
     delivery (with evidence of delivery) to such party at the address in effect
     for  notices  to it under this Debenture and agrees that such service shall
     constitute  good  and  sufficient  service  of  process and notice thereof.
     Nothing  contained  herein shall be deemed to limit in any way any right to
     serve  process  in  any  manner  permitted by law. Each party hereto hereby
     irrevocably  waives, to the fullest extent permitted by applicable law, any
     and  all  right  to  trial by jury in any legal Proceeding. If either party
     shall  commence  a Proceeding, then the prevailing party in such Proceeding
     shall  be  reimbursed  by the other party for its attorney's fees and other
     costs  and  expenses  incurred  with  the  investigation,  preparation  and
     prosecution  of  such  Proceeding.

          (d)  The headings herein are for convenience only, do not constitute a
     part  of  this  Debenture and shall not be deemed to limit or affect any of
     the  provisions  hereof.

                                      -17-
<PAGE>


          (e)  In case any one or more of the provisions of this Debenture shall
     be invalid or unenforceable in any respect, the validity and enforceability
     of  the  remaining  terms and provisions of this Debenture shall not in any
     way  be  affected  or impaired thereby and the parties will attempt in good
     faith  to  agree  upon  a  valid and enforceable provision which shall be a
     commercially  reasonable  substitute  therefor, and upon so agreeing, shall
     incorporate  such  substitute  provision  in  this  Debenture.

          (f)  No provision of this Debenture may be waived or amended except in
     a  written  instrument  signed, in the case of an amendment, by the Company
     and the Holder or, or, in the case of a waiver, by the Holder. No waiver of
     any default with respect to any provision, condition or requirement of this
     Debenture  shall  be  deemed  to  be a continuing waiver in the future or a
     waiver  of  any  subsequent  default  or  a  waiver of any other provision,
     condition  or requirement hereof, nor shall any delay or omission of either
     party  to exercise any right hereunder in any manner impair the exercise of
     any  such  right.

          (g) If it shall be found that any interest due hereunder shall violate
     applicable  laws  governing  usury,  the  applicable  rate  of interest due
     hereunder  shall be reduced to the maximum permitted rate of interest under
     such  law.

          (h)  Except  pursuant  to the terms of this Debenture, the outstanding
     principal  amount  and  interest under this Debenture may not be prepaid by
     the  Company  without  the  prior  written  consent  of  the  Holder.


                   [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
                             SIGNATURE PAGE FOLLOWS]

                                      -18-
<PAGE>

          IN  WITNESS  WHEREOF, the Company has caused this Debenture to be duly
     executed by a duly authorized officer as of the date first above indicated.

                                 ELECTRIC  FUEL  CORPORATION


                                 By:________________________________
                                    Name:
                                    Title:

                                      -19-
<PAGE>


                                    EXHIBIT A

                                CONVERSION NOTICE

(To  be  Executed  by  the  Registered  Holder
in  order  to  convert  Debentures)

          The  undersigned  hereby  elects  to  convert  the principal amount of
Debenture  indicated  below,  into  shares  of  Common  Stock  of  Electric Fuel
Corporation  as  of  the  date written below.  If shares are to be issued in the
name  of  a Person other than undersigned, the undersigned will pay all transfer
taxes  payable with respect thereto and is delivering herewith such certificates
and opinions as reasonably requested by the Company in accordance therewith.  No
fee  will  be charged to the Holder for any conversion, except for such transfer
taxes,  if any.  All terms used in this notice shall have the meanings set forth
in  the  Debenture.

     By  the  delivery  of  this  Conversion  Notice,  the Holder represents and
warrants  to  the  Company that its ownership of the shares of Common Stock does
not  exceed  the  restrictions  set  forth  in  Sections  5(b) of the Debenture.


Conversion  calculations:

                         ------------------------------------------------------
                         Date  to  Effect  Conversion


                         ------------------------------------------------------
                         Principal amount of Debenture owned prior to conversion

                         ------------------------------------------------------
                         Principal  amount  of  Debenture  to  be  Converted

                         ------------------------------------------------------
                         Principal  amount  of  Debenture  remaining  after
                         Conversion


                         ------------------------------------------------------
                         Number  of  shares  of  Common  Stock  to  be  Issued


                         Conversion  Price
                                          -------------------------------------
                         Signature
                                    -------------------------------------------
                         Name
                                 ----------------------------------------------
                         Address
                               ------------------------------------------------


<PAGE>

                                   SCHEDULE 1

                               CONVERSION SCHEDULE

9%  Secured Convertible Debenture, due June 30, 2005, in the aggregate principal
amount  of  $_______  issued  by  Electric  Fuel  Corporation.  This  Conversion
Schedule  reflects  conversions  made  under  the  above  referenced  Debenture.

Dated:  December  31,  2002


<TABLE>
<CAPTION>


Date  of  Conversion     Amount  of  Conversion     Aggregate  Principal  Amount            Applicable           Mandatory
                                                    Remaining Subsequent to Conversion      Conversion Price     Prepayment  Amount
----------------------- ------------------------ ------------------------------------- ----------------------- --------------------
<S>                           <C>                              <C>                               <C>                 <C>




















</TABLE>

<PAGE>