<PAGE>

                                                                 Exhibit  4.5
                                                                 ------------



                    INTELLECTUAL PROPERTY SECURITY AGREEMENT
                    ----------------------------------------

     INTELLECTUAL  PROPERTY  SECURITY AGREEMENT, dated as of December  31, 2002,
between  Electric  Fuel  Corporation,  a  Delaware  corporation  (the "PARENT"),
Electric  Fuel  Transportation  Corp.,  a Delaware corporation ("EFT"), Electric
Fuel  B.V.,  a  Netherlands  corporation ("EF-BV"), Instant Power Corporation, a
Delaware  corporation  ("IPC"),  I.E.S.  Defense  Services,  Inc.,  a  Delaware
corporation ("IDS"), IES Interactive Training, Inc. ("IES"), Electric Fuel GmbH,
a  German  corporation ("EF-G"), Summit Training International, Inc., a Delaware
corporation  ("STI"),  Electric  Fuel  UK  Ltd., a British corporation ("EF-UK")
(each  of  EFT,  EF-BV,  IPC, IDS, IES, EF-G, STI and EF-UK, a "SUBSIDIARY" and,
together  with  Parent,  the "DEBTORS") and the investors signatory hereto (each
investor  including  their  respective  successors,  endorsees,  transferees and
assigns,  a  "SECURED  PARTY",  and  collectively,  the  "SECURED  PARTIES").

                              W I T N E S S E T H:
                              -------------------

     WHEREAS,  pursuant  to  the  Securities  Purchase Agreement, dated the date
hereof  between  the  Parent and the Secured Parties (the "PURCHASE AGREEMENT"),
the  Secured  Parties  have  agreed  to extend certain loans to the Parent which
shall be evidenced by the issuance to the Secured Parties of Secured Convertible
Debentures,  due  June  30,  2005  (the  "DEBENTURES");  and

     WHEREAS,  in order to induce the Secured Parties to enter into the Purchase
Agreement, the Debtors have agreed to execute and deliver to the Secured Parties
this  Agreement  for the benefit of the Secured Parties and a separate agreement
granting  to  them  a  first  priority  security  interest in certain intangible
property of the Debtors (the "SECURITY AGREEMENT") to secure the prompt payment,
performance  and discharge in full of all of the Debtors' obligations under this
Agreement,  the  Debentures  and  the  Security  Agreement.

     NOW, THEREFORE, in consideration of the agreements herein contained and for
other  good  and valuable consideration, the receipt and sufficiency of which is
hereby  acknowledged,  the  parties  hereto  hereby  agree  as  follows:

     1.  Certain  Definitions.  As  used  in this Agreement, the following terms
         --------------------
shall  have  the  meanings  set  forth  in  this  Section 1.  Terms used but not
otherwise  defined  in  this  Agreement that are defined in Article 9 of the UCC
(such  as  "GENERAL  INTANGIBLES"  and  "PROCEEDS")  shall  have  the respective
meanings  given  such  terms  in  Article  9  of  the  UCC.

          (a)  "AGENT" means ZLP Master Technology Fund as agent for each of the
Secured  Parties  pursuant to this Agreement and the Security Agreement, or such
other  Person  as  shall  have  been subsequently appointed as a successor agent
pursuant  to  this  Agreement.

          (b)  "COLLATERAL"  means all of the Debtors' right, title and interest
in and to all of Trademarks, Patents, Copyrights, domain names and other general
intangible  property  of  the  Debtors,  all  Debtors'  trade  secrets, Debtors'
intellectual property rights in Debtors' computer software and Debtors' computer
software  products,  design  rights which may be available, owned or licensed to

<PAGE>

the  Debtors,  all  income, royalties, damages and payments now or hereafter due
and/or  payable  under  any  of  the  foregoing  or  with  respect to any of the
foregoing  Debtors'  rights  to  proceeds  arising  from  any and all claims for
damages  by  way of past, present and future infringement of any Collateral with
the  right  but  not the obligation to sue on behalf of and collect such damages
for  said  use  or  infringement  of  the Copyrights, Patents or Trademarks, and
Debtors' rights with respect to licenses granted by Debtors' to third parties or
licensed  to  Debtors  to  use  any  of the Copyrights, domain names, Patents or
Trademarks,  and  all license fees and royalties due to the Debtors arising from
such use to the extent permitted by such license or rights, all of which are now
or  hereafter  existing,  created, acquired or held. The term "COLLATERAL" shall
include  all  of  the  foregoing  items,  whether presently owned or existing or
hereafter  acquired  or  coming  into  existence,  all of Debtors' additions and
accessions  thereto, all of Debtors' substitutions and replacements thereof, and
all  of  Debtors'  proceeds,  products  and  accounts thereof, including without
limitation  all  proceeds  from  the  licensing  or  sale  or  other transfer of
Collateral  and  of  insurance  covering  the  same  and  of  any tort claims in
connection  therewith.

          (c)  "COPYRIGHTS"  means  any  and  all  of Debtors' (i) copyrights in
computer  software  owned by the Company, including any revisions and derivative
works,  whether registered or not and whether or not the same also constitutes a
trade  secret,  now or hereafter existing, created, acquired or held, including,
without  limitation,  those  set  forth  on  Exhibit  A attached hereto and (ii)
                                             ----------
copyrights,  copyright applications, copyright registration and like protections
in  each  work of authorship and any derivative work thereof, including computer
programs,  that  is created by the Debtors, whether published or unpublished and
whether  or  not  the  same  also  constitutes a trade secret, and all copyright
licenses  now  or  hereafter existing, created, acquired or held by the Debtors,
including, without limitation, those registrations and applications set forth on
Exhibit A attached hereto
---------

          (d)  "OBLIGATIONS"  means  all  of the Debtors' obligations under this
Agreement,  the Debentures and the Security Agreement, in each case, whether now
or hereafter existing, voluntary or involuntary, direct or indirect, absolute or
contingent, liquidated or unliquidated, whether or not jointly owed with others,
and  whether  or  not  from  time  to  time  decreased or extinguished and later
increased,  created  or  incurred, and all or any portion of such obligations or
liabilities  that  are  paid,  to  the extent all or any part of such payment is
avoided  or  recovered  directly  or  indirectly  from  the Secured Parties as a
preference, fraudulent transfer or otherwise as such obligations may be amended,
supplemented,  converted,  extended  or  modified  from  time  to  time.

          (e)  "PATENTS" means all of the Debtors' patents, patent applications,
patent licenses, letters patent and like protections of the United States or any
other  country,  including,  without  limitation,  improvements,  divisions,
continuations,  renewals,  reissues, extensions and continuations-in-part of the
same,  all of which are now or hereafter existing, created, acquired or held and
including, without limitation, those registrations and applications set forth on
Exhibit  B attached hereto and all goodwill associated with or symbolized by any
---------
of  the  foregoing.

                                      -2-
<PAGE>

          (f)  "TRADEMARKS"  means  any  Debtor trademark or service mark right,
whether  or  not registered, Debtors' applications to register and registrations
of the same and like protections, any trademark or service mark licenses and the
entire  goodwill  of the business of the Debtors connected with or symbolized by
such  trademarks  or  service marks, including all renewals thereof all of which
are  now  or  hereafter  existing, created, acquired or held, including, without
limitation, those registrations and applications set forth on Exhibit C attached
                                                              ---------
hereto  all  goodwill  associated  with  or  symbolized by any of the foregoing.

          (g)  "UCC"  means  the  Uniform  Commercial  Code  and/or  any  other
applicable  law  of  each  jurisdiction  in  which any Debtor is incorporated or
organized  (including,  without  limitation  the  State  of  Delaware)  and  any
jurisdiction  as  to  any  Collateral  located  therein.

     2.  Grant  of  Security  Interest.  As  an  inducement  for  the  Secured
         ------------------------------
Parties  to  enter  into  the  Purchase Agreement and to secure the complete and
timely payment, performance and discharge in full, as the case may be, of all of
the  Obligations,  each  of the Debtors hereby, unconditionally and irrevocably,
pledges,  grants  and  hypothecates  to  the Secured Parties, a continuing first
priority  security interest in, a first lien upon and a right of set-off against
all  of  the Debtors' right, title and interest of whatsoever kind and nature in
and  to  the  Collateral  (the  "SECURITY  INTEREST").

     3.  Representations,  Warranties,  Covenants  and Agreements of the Debtors
         -----------------------------------------------------------------------
jointly and severally represent and warrant to, and covenant and agree with, the
Secured  Parties  as  follows:

          (a)  Each  Debtor  has  the requisite corporate power and authority to
enter into this Agreement and otherwise to carry out its obligations thereunder.
The execution, delivery and performance by each Debtor of this Agreement and the
filings  contemplated  therein have been duly authorized by all necessary action
on  the  part  of  such Debtor and no further action is required by such Debtor.

          (b) Except for the Security Interest and as set forth in Schedule 3(b)
                                                                   -------------
hereto,  each  Debtor  is  the  sole  owner  of  the  Collateral  (except  for
non-exclusive  licenses  granted  by  the  Debtors  in  the  ordinary  course of
business),  free and clear of any liens, security interests or encumbrances, and
is  fully  authorized  to  grant  the  Security  Interest  in  and to pledge the
Collateral.  There  is  not on file in any governmental or regulatory authority,
agency  or recording office an effective financing statement, security agreement
or  transfer  or  any notice of any of the foregoing (other than those that have
been  filed in favor of the Secured Parties pursuant to this Agreement) covering
or  affecting  any  of  the  Collateral.  So  long as this Agreement shall be in
effect,  the  Debtors  shall not execute and shall not knowingly permit to be on
file in any such office or agency any such financing statement or other document
or  instrument  (except  to the extent filed or recorded in favor of the Secured
Parties  pursuant  to  the  terms  of  this  Agreement).

                                      -3-
<PAGE>

          (c)  Exhibit  A  sets  forth  a true and complete list of all Debtors'
               ----------
registrations  and  applications  for  Copyrights in existence as of the date of
this  Agreement.  Exhibit  B sets forth a true and complete list of all Debtors'
                  ----------
registrations  and  applications for Patents that have been filed as of the date
of  this  Agreement.  Exhibit  C  sets  forth  a  true  and complete list of all
                      ----------
Debtors'  registrations  and applications for Trademarks filed as of the date of
this  Agreement.  The Debtors shall, within ten (10) days of obtaining knowledge
thereof,  advise the Secured Parties in writing of any change in the composition
of  the  Collateral,  including,  without  limitation,  any subsequent ownership
rights  of  the  Debtors  in  or  to  any  Copyrights,  Patents  or  Trademarks.

          (d)  Each  of  the  Patents,  Trademarks  and  Copyrights is valid and
enforceable,  and  no  part  of  the  Collateral  has  been  judged  invalid  or
unenforceable.  No  written  claim  has  been  received that any of the Patents,
Trademarks  or  Copyrights  or  the  Debtors' use of any Collateral violates the
rights  of  any  third party. There has been no adverse decision to the Debtors'
claim  of  ownership  rights in or exclusive rights to use the Collateral in any
jurisdiction  or  to  the Debtors' right to keep and maintain such Collateral in
full  force and effect, and there is no proceeding involving said rights pending
or,  to the best knowledge of the Debtors, threatened before any court, judicial
body,  administrative  or  regulatory  agency,  arbitrator or other governmental
authority.

          (e)  Each  Debtor shall at all times maintain its books of account and
records  relating  to  the Collateral at its principal place of business and may
not relocate such books of account and records unless it delivers to the Secured
Parties  at  least  30  days prior to such relocation (i) written notice of such
relocation and the new location thereof (which must be within the United States)
and  (ii)  evidence  that  appropriate  financing statements and other necessary
documents  have  been  filed  and  recorded  and  other steps have been taken to
perfect the Security Interest to create in favor of the Secured Parties a valid,
perfected  and  continuing first priority liens in the Collateral. The principal
place of business of the Debtors is located at the address set forth in Schedule
                                                                        --------
A  hereto,  and  will  not  be  moved  without  notice  to  each  Secured Party.
--

          (f)  This  Agreement  creates  in favor of the Secured Parties a valid
security  interest  in  the  Collateral,  including the Collateral listed on the
Exhibits  hereto, securing the payment and satisfaction of the Obligations, and,
upon  making  the  filings  described  in  the immediately following sentence, a
perfected  first priority security interest in such Collateral that is senior to
all  existing  and  hereinafter  created  security interests. Except for (x) the
filing of this Agreement with the United States Patent and Trademark Office with
respect  to the Patents and Trademarks and the filing of this Agreement with the
United  States  Copyrights  Office  with  respect to the Copyrights, and (y) the
filing  of  financing  statements  on  Form  UCC-1  under  the  UCC  with  the
jurisdictions  indicated  in  Schedule  A,  attached hereto, no authorization or
                              -----------
approval of or filing with or notice to any governmental authority or regulatory
body  is  required  either  (i)  for  the  grant  by  the  Debtors  of,  or  the
effectiveness  of,  the  Security  Interest granted hereby or for the execution,
delivery  and  performance  of  this  Agreement  by  the Debtors or (ii) for the
perfection  of  or  exercise  by  the Secured Parties of its rights and remedies
hereunder.  The  Debtors acknowledge and agree that a copy of this Agreement (or
instruments  executed  and delivered pursuant hereto) will be filed and recorded

                                      -4-
<PAGE>

with each of the United States Patent and Trademark Office and the United States
Copyrights  Office  with  respect to the Patents, Trademarks and Copyrights that
are  now  or  hereafter  in  existence.

          (g) The Debtors acknowledge and agree that on the date of execution of
this  Agreement,  the  Secured  Parties  will:  (i)  file  one or more financing
statements  under  the UCC with respect to the Security Interest for filing with
the  jurisdictions  indicated  on  Schedule A, attached hereto and in such other
                                   -----------
jurisdictions  the  Secured  Parties  may  deem  necessary  and (ii) one or more
executed  recordation  sheets  relating  to  the  filing  and  recording of this
Agreement  with  each  of  the United States Patent and Trademark Office and the
United  States  Copyrights  Office  with  respect to the Patents, Trademarks and
Copyrights  that  are  now  in  existence.

          (h) The execution, delivery and performance of this Agreement does not
conflict with or cause a breach or default, or an event that with or without the
passage  of  time  or  notice,  shall  constitute a breach or default, under any
agreement  to  which  the Debtors are a party or by which the Debtors are bound.
No  consent  (including,  without limitation, from stock holders or creditors of
the  Debtors)  is  required  for  the  Debtors  to  enter into and perform their
obligations  hereunder.

          (i)  The  Debtors  shall  at all times maintain the liens and Security
Interest  provided for hereunder as valid and perfected first priority liens and
security  interests in the Collateral in favor of each of the Secured Parties to
ensure  that  such  liens and Security Interest are and remain senior to all not
existing and hereafter created security interests and liens. The Collateral will
be  kept  free  of  all  liens,  security  interest,  claims  and  encumbrances
whatsoever.  Each  Debtor  hereby  agrees to defend the same against any and all
persons.  Each Debtor shall safeguard and protect all Collateral for the account
of  the Secured Parties. At the request of the Agent and/or Secured Parties, the
Debtors will sign and deliver to the Secured Parties at any time or from time to
time  one  or  more  financing statements pursuant to the UCC in form reasonably
satisfactory  to the Secured Parties and will pay the cost of filing the same in
all  public  offices  wherever filing is, or is deemed by the Secured Parties to
be,  necessary  or  desirable  to effect the rights and obligations provided for
herein.  Without limiting the generality of the foregoing, the Debtors shall pay
all  fees,  taxes and other amounts necessary to maintain the Collateral and the
Security  Interest  hereunder,  and  the Debtors shall obtain and furnish to the
Secured  Parties  from  time  to  time,  upon  demand,  such  releases  and/or
subordinations  of  claims  and  liens  which  may  be  required to maintain the
priority  of  the  Security  Interest  hereunder.

          (j)  The  Debtors  will  not  allow  any  Collateral  to be abandoned,
forfeited  or  dedicated  to the public without the prior written consent of the
Secured  Parties.  The Debtors will not transfer, pledge, hypothecate, encumber,
license  (except  for  non-exclusive  licenses  granted  by  the  Debtors in the
ordinary course of business), sell or otherwise dispose of any of the Collateral
without  the  prior  written  consent  of  the  Secured  Parties.

                                      -5-
<PAGE>

          (k)  Each  Debtor  shall,  within ten (10) days of obtaining knowledge
thereof,  advise  the  Agent, in sufficient detail, of any substantial change in
the  Collateral,  and of the occurrence of any event which would have a material
adverse  effect  on  the  value  of  the  Collateral  or on the Secured Parties'
security  interest  therein.

          (l)  The  Debtors  shall  permit  the  Secured  Parties  and  its
representatives  and  agents  upon  reasonable  prior  notice  to  inspect  the
Collateral  at  any  time  during  normal  business hours, and to make copies of
records  pertaining to the Collateral as may be requested by the Secured Parties
from  time  to  time.

          (m)  Each  Debtor  will, at its own expense, take all steps reasonably
necessary  to  diligently  pursue  and seek to preserve, enforce and collect any
rights,  claims,  causes  of  action  and  accounts receivable in respect of the
Collateral.

          (n)  Each  Debtor shall promptly notify the Agent in sufficient detail
upon  becoming  aware  of  any attachment, garnishment, execution or other legal
process  levied  against any Collateral and of any other information received by
the Debtors that may materially affect the value of the Collateral, the Security
Interest  or  the  rights  and  remedies  of  the  Secured  Parties  hereunder.

          (o)  Each  Debtor  shall  not  use or permit any Collateral to be used
unlawfully  or in violation of any provision of this Agreement or any applicable
statute,  regulation  or  ordinance  or  any  policy  of  insurance covering the
Collateral  where  violation  is  reasonably  likely  to have a material adverse
effect  on  the  Secured  Parties'  rights in the Collateral or Secured Parties'
ability  to  foreclose  on  the  Collateral.

          (p)  The Debtors shall not grant to any person or entity any rights or
interests in or to any of the Collateral that are senior to, or pari passu with,
the  Secured  Parties.

          (q)  Each Debtor shall notify the Agent of any change in such Debtor's
name,  identity,  chief  place  of business, chief executive office or residence
within  5  days  of  such  change.

          (r)  All  information  heretofore, herein or hereafter supplied to the
Secured Parties by or on behalf of the Debtors with respect to the Collateral is
accurate  and  complete  in  all  material  respects  as  of the date furnished.

     4.  Defaults.  The  following  events  shall  be  "EVENTS  OF  DEFAULT":
         --------

          (a)  The  occurrence  of  an  Event  of  Default  (as  defined  in the
Debentures)  under  the  Debentures;

          (b) Any representation or warranty of the Debtors in this Agreement or
in  the  Security  Agreement  shall prove to have been incorrect in any material
respect  when  made;  and

                                      -6-
<PAGE>

               (c)  The  failure  by  a  Debtor to observe or perform any of its
obligations  hereunder  or  in  the  Security  Agreement for ten (10) days after
receipt  by  the  Debtors  of  notice  of such failure from the Secured Parties.

     5.  Duty  To  Hold  In  Trust.  Upon  the  occurrence  and  during  the
         -------------------------
continuation  of  any Event of Default, the Debtors shall, upon receipt by it of
any  revenue,  income  or  other  sums subject to the Security Interest, whether
payable  pursuant  to the Debentures or otherwise, or of any check, draft, note,
trade  acceptance  or  other instrument evidencing an obligation to pay any such
sum,  hold the same in trust for the Secured Parties and shall forthwith endorse
and  transfer  any such sums or instruments, or both, to the Secured Parties for
application  to  the  satisfaction  of  the  Obligations.

     6.  Rights  and  Remedies  Upon Default. Upon the occurrence and during the
         ------------------------------------
continuation  of  any  Event  of  Default,  the Agent (on behalf of, and for the
benefit  of  itself  and  each  of  the Secured Parties) shall have the right to
exercise all of the remedies conferred hereunder, under the Debentures and under
the Security Agreement, and the Agent and the Secured Parties shall have all the
rights  and  remedies of a secured party under the UCC.  Without limitation, the
Secured  Parties  shall  have  the  following  rights  and  powers:

          (a)  The Agent shall have the right to take possession of all tangible
manifestations  or  embodiments  of the Collateral and, for that purpose, enter,
with the aid and assistance of any person, any premises where the Collateral, or
any part thereof, is or may be placed and remove the same, and the Debtors shall
assemble  the  Collateral and make it available to the Agent at places which the
Agent  shall  reasonably  select, whether at the Debtors' premises or elsewhere.

          (b)  The  Agent  shall  have  the right to operate the business of the
Debtors  using  the  Collateral  and  shall  have  the right to assign, sell, or
otherwise dispose of and deliver all or any part of the Collateral, at public or
private  sale  or  otherwise,  either  with  or  without  special  conditions or
stipulations,  for  cash  or on credit or for future delivery, in such parcel or
parcels  and  at  such  time or times and at such place or places, and upon such
terms  and conditions as the Agent may deem commercially reasonable, all without
(except  as  shall  be  required  by  applicable  statute  and cannot be waived)
advertisement  or demand upon or notice to the Debtors or right of redemption of
the  Debtors, which are hereby expressly waived. Upon each such sale, assignment
or  other transfer of Collateral, the Agent may, unless prohibited by applicable
law  which  cannot  be  waived, purchase all or any part of the Collateral being
sold,  free  from  and discharged of all trusts, claims, right of redemption and
equities  of  the  Debtors,  which  are  hereby  waived  and  released.

          (c)  The  Agent  may  license  or,  to  the same extent the Debtors is
permitted  by  law and contract to do so, sublicense, whether on an exclusive or
non-exclusive basis, any of the Collateral throughout the world for such period,
on  such  conditions  and  in  such  manner as the Secured Parties shall, in its
reasonable  discretion,  determine.

                                      -7-
<PAGE>

          (d)  The  Agent  may  (without assuming any obligations or liabilities
thereunder),  at  any  time,  enforce  (and  shall  have  the exclusive right to
enforce)  against licensee or sublicensee all rights and remedies of the Debtors
in, to and under any license agreement with respect to such Collateral, and take
or  refrain  from  taking  any  action  thereunder.

          (e) The Agent may, in order to implement the assignment, license, sale
or other disposition of any of the Collateral pursuant to this Section, pursuant
to  the  authority  provided for in Section 12, execute and deliver on behalf of
the  Debtors  one  or  more  instruments of assignment of the Collateral in form
suitable  for  filing,  recording  or  registration  in any jurisdictions as the
Secured  Parties  may  determine  advisable.

          (f) In the event that any Secured Party shall recover from the Debtors
or  the  Collateral  more than its pro rata share of the Obligations owed to all
Secured  Parties  hereunder,  whether by agreement, understanding or arrangement
with the Debtors or any other Person, set off or other means, such Secured Party
shall  immediately  deliver  or  pay over to the other Secured Parties their pro
rata  portion  of  any  such  recovery  in  the  form  received.

          (g) Agent may, at any time or times that an Event of Default exists or
has  occurred  and is continuing, (i) notify any or all account debtors that the
Accounts  have  been assigned to Secured Parties and that Secured Parties have a
security  interest  therein  and Agent may direct any or all accounts debtors to
make  payment  of  Accounts directly to Secured Parties, (ii) extend the time of
payment of, compromise, settle or adjust for cash, credit, return of merchandise
or  otherwise,  and  upon any terms or conditions, any and all Accounts or other
obligations  included  in  the  Collateral  and thereby discharge or release the
account  debtor  or  any  other  party  or parties in any way liable for payment
thereof  without  affecting  any  of  the  Obligations, (iii) demand, collect or
enforce  payment of any Accounts or such other obligations, but without any duty
to  do  so,  and Agent shall not be liable for its failure to collect or enforce
the  payment  thereof  nor  for  the  negligence of its agents or attorneys with
respect  thereto and (iv) take whatever other action Agent may deem necessary or
desirable  for  the  protection  of  its interests. At any time that an Event of
Default  exists  or  has  occurred  and  is  continuing, at Agent's request, all
invoices and statements sent to any account debtor shall state that the Accounts
and such other obligations have been assigned to Secured Parties and are payable
directly and only to Secured Parties and the Debtors shall deliver to Agent such
originals  of  documents  evidencing  the  sale  and  delivery  of  goods or the
performance  of  services  giving  rise  to  any  Accounts as Agent may require.

     7.  Applications  of  Proceeds.  The  proceeds  of  any  such  sale, lease,
         --------------------------
license  or  other  disposition of the Collateral hereunder shall be applied (i)
first,  to  the expenses of retaking, holding, storing, processing and preparing
for  sale, selling, and the like (including, without limitation, any taxes, fees
and other costs incurred in connection therewith) of the Collateral, (ii) to the
reasonable  attorneys'  fees  and  expenses incurred by the Agent and/or Secured
Parties  in  enforcing  its  rights hereunder and in connection with collecting,
storing  and  disposing  of  the  Collateral,  (iii)  to  satisfaction  of  the
Obligations, and (iv) to the payment of any other amounts required by applicable

                                      -8-
<PAGE>

law,  after  which  the  Secured  Parties  shall  pay to the Debtors any surplus
proceeds. If, upon the sale, license or other disposition of the Collateral, the
proceeds  thereof  are  insufficient  to  pay  all  amounts to which the Secured
Parties  are  legally  entitled,  the Debtors will be liable for the deficiency,
together  with  interest  thereon,  at  the  rate of 12% per annum or the lesser
amount permitted by applicable law (the "DEFAULT RATE"), and the reasonable fees
of  any  attorneys  employed by the Agent and/or Secured Parties to collect such
deficiency.  To  the  extent permitted by applicable law, each Debtor waives all
claims,  damages  and  demands  against  the  Secured Parties arising out of the
repossession,  removal,  retention  or sale of the Collateral, unless due to the
gross  negligence  or  willful  misconduct  of the Agent and/or Secured Parties.

     8.  Costs  and  Expenses.  The Debtors agree to pay all out-of-pocket fees,
         --------------------
costs  and  expenses  incurred in connection with any filing required hereunder,
including,  without  limitation,  any  financing  statements,  continuation
statements,  partial  releases  and/or termination statements related thereto or
any  expenses  of  any  searches  reasonably required by the Agent.  The Debtors
shall  also  pay all other claims and charges which in the reasonable opinion of
the  Agent  and/or  Secured Parties might prejudice, imperil or otherwise affect
the  Collateral  or  the Security Interest therein.  The Debtors will also, upon
demand,  pay  to  the  Agent  and/or  Secured  Parties the amount of any and all
reasonable  expenses,  including the reasonable fees and expenses of its counsel
and  of any experts and agents, which the Agent and/or Secured Parties may incur
in  connection  with  (i) the enforcement of this Agreement, (ii) the custody or
preservation of, or the sale of, collection from, or other realization upon, any
of  the Collateral, or (iii) the exercise or enforcement of any of the rights of
the  Secured  Parties  under  the  Debentures.  Until  so paid, any fees payable
hereunder  shall  be  added  to the principal amount of the Debentures and shall
bear  interest  at  the  Default  Rate.

     9.  Responsibility  for Collateral. Each Debtor assumes all liabilities and
         -------------------------------
responsibility  in  connection  with all Collateral, and the obligations of such
Debtor  hereunder, under the Debentures or under the Security Agreement shall in
no  way  be affected or diminished by reason of the loss, destruction, damage or
theft  of  any  of  the  Collateral  or  its  unavailability  for  any  reason.

     10.  Security  Interest Absolute. All rights of the Secured Parties and all
          ----------------------------
Obligations  of  the  Debtors  hereunder,  shall  be absolute and unconditional,
irrespective  of:  (a) any lack of validity or enforceability of this Agreement,
the  Debentures,  the  Security  Agreement  or  any  agreement  entered  into in
connection  with the foregoing, or any portion hereof or thereof; (b) any change
in  the time, manner or place of payment or performance of, or in any other term
of,  all  or  any of the Obligations, or any other amendment or waiver of or any
consent  to  any  departure  from  the Debentures, the Security Agreement or any
other agreement entered into in connection with the foregoing; (c) any exchange,
release  or  nonperfection of any of the Collateral, or any release or amendment
or  waiver  of  or  consent  to  departure from any other collateral for, or any
guaranty,  or  any  other  security,  for all or any of the Obligations; (d) any
action  by  the Secured Parties to obtain, adjust, settle and cancel in its sole
discretion  any  insurance  claims or matters made or arising in connection with
the  Collateral;  or (e) any other circumstance which might otherwise constitute
any  legal  or equitable defense available to the Debtors, or a discharge of all

                                      -9-
<PAGE>

or  any  part  of  the  Security Interest granted hereby.  Until the Obligations
shall  have  been  paid and performed in full, the rights of the Secured Parties
shall  continue  even  if  the Obligations are barred for any reason, including,
without  limitation,  the  running  of the statute of limitations or bankruptcy.
Each  Debtor  expressly  waives presentment, protest, notice of protest, demand,
notice  of  nonpayment and demand for performance. In the event that at any time
any  transfer  of  any Collateral or any payment received by the Secured Parties
hereunder shall be deemed by final order of a court of competent jurisdiction to
have been a voidable preference or fraudulent conveyance under the bankruptcy or
insolvency  laws of the United States, or shall be deemed to be otherwise due to
any  party other than the Secured Parties, then, in any such event, the Debtors'
obligations  hereunder  shall  survive cancellation of this Agreement, and shall
not  be discharged or satisfied by any prior payment thereof and/or cancellation
of  this  Agreement, but shall remain a valid and binding obligation enforceable
in  accordance  with  the  terms  and provisions hereof.  Each Debtor waives all
right  to  require the Secured Parties to proceed against any other person or to
apply  any  Collateral  which  the  Secured  Parties may hold at any time, or to
marshal  assets,  or to pursue any other remedy.  Each Debtor waives any defense
arising  by  reason  of  the  application  of  the statute of limitations to any
obligation  secured  hereby.

     11.  Term  of  Agreement.  This  Agreement  and the Security Interest shall
          -------------------
terminate  on the date on which all payments under the Debentures have been made
in  full  or  otherwise  converted  pursuant  to the terms thereof and all other
Obligations  have  been  paid  or discharged. Upon such termination, the Secured
Parties,  at  the  request  and  at  the  expense  of  the Debtors, will join in
executing  any  termination  statement  with  respect to any financing statement
executed  and  filed  pursuant  to  this  Agreement.

     12.  Power  of Attorney; Further Assurances. (a) Each Debtor authorizes the
          --------------------------------------
Secured  Parties,  and  does  hereby  make,  constitute  and appoint it, and its
respective  officers,  agents,  successors  or  assigns  with  full  power  of
substitution,  as  the Debtors' true and lawful attorney-in-fact, with power, in
its  own name or in the name of the Debtors, to, after the occurrence and during
the  continuance  of an Event of Default, (i) endorse any notes, checks, drafts,
money  orders, or other instruments of payment (including payments payable under
or  in respect of any policy of insurance) in respect of the Collateral that may
come  into  possession  of the Secured Parties; (ii) to sign and endorse any UCC
financing  statement  or  any  invoice, freight or express bill, bill of lading,
storage  or  warehouse  receipts,  drafts  against  debtors,  assignments,
verifications  and  notices  in  connection  with  accounts, and other documents
relating  to  the  Collateral;  (iii) to pay or discharge taxes, liens, security
interests  or  other  encumbrances at any time levied or placed on or threatened
against the Collateral; (iv) to demand, collect, receipt for, compromise, settle
and  sue  for monies due in respect of the Collateral; and (v) generally, to do,
at  the option of the Secured Parties, and at the Debtors' expense, at any time,
or  from  time  to  time,  all  acts  and  things which the Secured Parties deem
necessary  to protect, preserve and realize upon the Collateral and the Security
Interest  granted  therein  in order to effect the intent of this Agreement, the
Debentures  and  the  Security  Agreement,  all  as fully and effectually as the
Debtors  might  or  could  do;  and  each  Debtor  hereby ratifies all that said
attorney  shall lawfully do or cause to be done by virtue hereof.  This power of

                                      -10-
<PAGE>

attorney  is  coupled  with an interest and shall be irrevocable for the term of
this  Agreement  and  thereafter  as  long  as  any  of the Obligations shall be
outstanding.

          (b)  On  a  continuing  basis,  each  Debtor  will  make,  execute,
acknowledge,  deliver,  file  and  record,  as  the case may be, with the proper
filing  and recording places in any jurisdiction, including, without limitation,
the  jurisdictions  indicated  on  Schedule  A,  attached  hereto,  all  such
                                   ------------
instruments,  including  appropriate  financing  and continuation statements and
collateral  agreements  and  filings with the United States Patent and Trademark
Office  and the United States Copyrights Office, and take all such action as may
reasonably  be  deemed necessary or advisable, or as reasonably requested by the
Secured  Parties,  to  perfect  the  Security  Interest  granted  hereunder  and
otherwise  to  carry  out  the  intent  and  purposes  of this Agreement, or for
assuring  and  confirming  to  the  Secured Parties the grant or perfection of a
first  priority  security  interest  in  all  the  Collateral.

          (c)  Each  Debtor  hereby  irrevocably appoints the Secured Parties as
such  Debtors'  attorney-in-fact,  with full authority in the place and stead of
such  Debtor  and  in  the name of such Debtor, from time to time in the Secured
Parties'  discretion, to take any action and to execute any instrument which the
Agent  may  deem  necessary  or  advisable  to  accomplish  the purposes of this
Agreement,  including:

               (i)  To  modify,  in  its sole discretion, this Agreement without
     first  obtaining the Debtors' approval of or signature to such modification
     by  amending Exhibit A, Exhibit B and Exhibit C, hereof, as appropriate, to
                  ---------- ---------     ---------
     include  reference  to  any  right,  title  or  interest in any Copyrights,
     Patents or Trademarks acquired by the Debtors after the execution hereof or
     to  delete any reference to any right, title or interest in any Copyrights,
     Patents  or  Trademarks  in  which  the Debtors no longer has or claims any
     right,  title  or  interest;  and

               (ii)  To  file,  in its sole discretion, one or more financing or
     continuation  statements  and  amendments  thereto,  relative to any of the
     Collateral  without  the  signature  of the Debtors where permitted by law.

        13.  Agent.
             -----

          (a)  Actions  The  Agent shall at all times act upon and in accordance
               -------
with  written  instructions  received from a Majority-in-Interest (as defined in
Section  16)  time to time. The Agent shall be deemed to be authorized on behalf
of  each  Secured  Party  to  act  on  behalf  of  such Secured Party under this
Agreement and the Security Agreement and, in the absence of written instructions
from  a  Majority-in-Interest  (with  respect  to which the Agent agrees that it
will,  subject  to  the  last  two  sentences of this Section, comply, except as
otherwise  advised by counsel), to exercise such powers hereunder and thereunder
as  are  specifically  delegated to or required of the Agent by the terms hereof
and  thereof, together with such powers as may be reasonably incidental thereto.
The  Agent  shall  have no duty to ascertain or inquire as to the performance or
observance  of  any  of the terms of this Agreement or Security Agreement by the
Debtors.  By  accepting  their Debentures, each Secured Party shall be deemed to

                                      -11-
<PAGE>

have  agreed  to  indemnify  the  Agent  (which  agreement  shall  survive  any
termination  of  such  Secured Party's percentage), from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs,  expenses  or disbursements of any kind or nature whatsoever which may at
any  time  be  imposed on, incurred by, or asserted against the Agent in any way
relating  to  or  arising out of this Agreement, the Debentures and the Security
Agreement,  including  the  reimbursement  of  the  Agent  for all out-of-pocket
expenses  (including  attorneys'  fees)  incurred  by  the Agent hereunder or in
connection  herewith  or  in enforcing the Obligations of the Debtors under this
Agreement,  the  Debentures  or the Security Agreement, in all cases as to which
the Agent is not reimbursed by the Debtors; provided that no Secured Party shall
                                            --------
be  liable  for  the  payment  of  any portion of such liabilities, obligations,
losses,  damages,  penalties,  actions,  judgments,  suits,  costs,  expenses or
disbursements  determined  by  a  court  of  competent  jurisdiction  in a final
proceeding  to have resulted solely from the Agent's gross negligence or willful
misconduct.  The Agent shall not be required to take any action hereunder, under
the  Debentures  or under Security Agreement, or to prosecute or defend any suit
in  respect  of  this  Agreement  or  under the Debentures or under the Security
Agreement, unless the Agent is indemnified to its reasonable satisfaction by the
Secured Parties against loss, costs, liability and expense.  If any indemnity in
favor  of  the Agent shall become impaired, it may call for additional indemnity
and  cease to do the acts indemnified against until such additional indemnity is
given.

               (b)  Exculpation.  Neither  the  Agent  nor any of its directors,
                    -----------
officers,  partners,  members, shareholders, employees or agents shall be liable
to  any  Secured  Party  for any action taken or omitted to be taken by it under
this  Agreement,  the  Debentures  or  the  Security Agreement, or in connection
herewith or therewith, except for its own willful misconduct or gross negligence
or  be  responsible  for  the consequences of any error in judgment. Neither the
Agent  nor  any  of  its  directors,  officers, partners, members, shareholders,
employees  or  agents  has  any fiduciary relationship with any Secured Party by
virtue  of  this  Agreement  or  the  Security Agreement. The Agent shall not be
responsible  to  any Secured Party for any recitals, statements, representations
or  warranties  herein  or  in  any  certificate  or other document delivered in
connection  herewith  or  for  the  authorization,  execution,  effectiveness,
genuineness,  validity,  enforceability,  perfection,  collectibility,  or
sufficiency  this  Agreement,  the  Debentures  or  the  Security Agreement, the
financial  condition  of  the  Debtors  or  the condition or value of any of the
Collateral, or be required to make any inquiry concerning either the performance
or  observance  of any of the terms, provisions or conditions of this Agreement,
the Debentures or the Security Agreement, the financial condition of the Debtors
or  the  existence or possible existence of any default or event of default. The
Agent  shall be entitled to rely upon advice of counsel concerning legal matters
and  upon  any  notice,  consent,  certificate,  statement  or  writing which it
believes  to  be  genuine  and  to  have  presented  by  a  proper  person.

          (c)  Obligations  Held  by  the  Agent.  The Agent shall have the same
               ----------------------------------
rights  and  powers  with  respect  to  any  Debentures held by it or any of its
affiliates, as any Secured Party and may exercise the same as if it were not the
Agent.  Each  of  the  Debtors  and  the Secured Parties hereby waives, and each
successor to any Secured Party shall be deemed to waive, any right to disqualify

                                      -12-
<PAGE>

any  Secured  Party  from serving as the Agent or any claim against that Secured
Party  for  serving  as  Agent.

          (d)  Copies,  etc.  The Agent shall give prompt notice to each Secured
               -------------
Party  of  each notice or request required or permitted to be given to the Agent
by  the  Debtors  pursuant  to  the  terms  of  this  Agreement.  The Agent will
distribute  to  each  Secured Party each instrument and other agreement received
for  its  account  and  copies of all other communications received by the Agent
from a Debtor for distribution to the Secured Parties by the Agent in accordance
with  the  terms of this Agreement. Notwithstanding anything herein contained to
the  contrary,  all  notices  to  and communications with the Debtors under this
Agreement  shall  be  effected  by  the  Secured  Parties  through  the  Agent.

          (e)  Resignation  of  Agent.  The Agent may resign as such at any time
               -----------------------
upon  at least thirty (30) days' prior notice to the Debtors and all the Secured
Parties,  such  resignation  not  to  be effective until a successor Agent is in
place. If the Agent at any time shall resign, a Majority-in-Interest may jointly
appoint  another Secured Party as a successor Agent which shall thereupon become
the  Agent  hereunder. Upon the acceptance of any appointment as Agent hereunder
by a successor Agent, such successor Agent shall be entitled to receive from the
retiring Agent such documents of transfer and assignment as such successor Agent
may  reasonably  request,  and shall thereupon succeed to and become vested with
all  rights,  powers,  privileges,  and  duties  of  the retiring Agent, and the
retiring  Agent  shall  be discharged from its duties and obligations under this
Agreement.

          (f)  Replacement  of Agent. A Majority-in-Interest may at any time and
              ----------------------
for  any  reason  replace  the  Agent with a successor Agent jointly selected by
them, upon at least ten days written notice to the Debtors and the other Secured
Parties.  Upon  the  acceptance  of  any  appointment  as  Agent  hereunder by a
successor  Agent,  such  successor  Agent  shall be entitled to receive from the
                                                    --------
terminated  Agent  such  documents  of transfer and assignment as such successor
Agent  may  reasonably request, and shall thereupon succeed to and become vested
with  all  rights, powers, privileges, and duties of the retiring Agent, and the
terminated  Agent shall be discharged from its duties and obligations under this
Agreement.

     14.  Notices.  All  notices,  requests,  demands  and  other communications
          -------
hereunder  shall be in writing, with copies to all the other parties hereto, and
shall  be  deemed  to  have  been duly given when (i) if delivered by hand, upon
receipt,  (ii)  if  sent by facsimile, upon receipt of proof of sending thereof,
(iii)  if  sent  by  nationally  recognized  overnight delivery service (receipt
requested), the next business day or (iv) if mailed by first-class registered or
certified  mail,  return  receipt  requested,  postage  prepaid, four days after
posting in the U.S. mails, in each case if delivered to the following addresses:

     If  to  the  Debtors:  Electric  Fuel  Corporation
                            632  Broadway,  Suite  301
                            New  York,  NY  10012
                            Facsimile  No.:  (212)  529-5800
                            Attn: Chief Financial Officer and General Counsel

                                      -13-
<PAGE>


       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

If  to Secured Parties: To the address set forth under such Secured Parties'
                        name  on  the signature  pages  hereto.

     15. Other Security. To the extent that the Obligations are now or hereafter
         --------------
secured  by  property other than the Collateral or by the guarantee, endorsement
or  property  of  any  other person, firm, corporation or other entity, then the
Secured  Parties  shall  have  the  right,  in  its  sole discretion, to pursue,
relinquish,  subordinate,  modify or take any other action with respect thereto,
without in any way modifying or affecting any of the Secured Parties' rights and
remedies  hereunder.

     16.  Actions by Secured Parties. Any action required or permitted hereunder
          ---------------------------
to  be taken by or on behalf of the Secured Parties shall, for such action to be
valid,  require  the approval of the Majority-in-Interest prior to the taking of
such  action.  If the consent, approval or disapproval of the Secured Parties is
required  or  permitted  pursuant  to  this Agreement, such consent, approval or
disapproval  shall  only  be  valid  if  given  by  the  Majority-in-Interest.
"MAJORITY-IN-INTEREST"  means  the Secured Party or Secured Parties (as the case
may  be)  holding in excess of a majority of the outstanding aggregate principal
amount  under  the  Debentures,  determined  on  a  cumulative  basis.

     17.  Miscellaneous.  (a)  No  course of dealing between the Debtors and the
          -------------
Secured  Parties,  nor  any failure to exercise, nor any delay in exercising, on
the  part of the Secured Parties, any right, power or privilege hereunder, under
the  Debentures  or  under  the  Security  Agreement  shall  operate as a waiver
thereof;  nor  shall  any  single  or  partial  exercise  of any right, power or
privilege hereunder or thereunder preclude any other or further exercise thereof
or  the  exercise  of  any  other  right,  power  or  privilege.

          (b) All of the rights and remedies of the Secured Parties with respect
to  the  Collateral,  whether  established  hereby,  by  the  Debentures, by the
Security  Agreement  or  by any other agreements, instruments or documents or by
law  shall  be  cumulative  and  may  be  exercised  singly  or  concurrently.

          (c)  This  Agreement  constitutes  the entire agreement of the parties
with respect to the subject matter hereof and is intended to supersede all prior
negotiations,  understandings  and  agreements  with  respect thereto. Except as
specifically  set forth in this Agreement, no provision of this Agreement may be
modified  or  amended  except  by  a  written  agreement  signed by the parties.

                                      -14-
<PAGE>

          (d)  In  the  event that any provision of this Agreement is held to be
invalid,  prohibited or unenforceable in any jurisdiction for any reason, unless
such provision is narrowed by judicial construction, this Agreement shall, as to
such  jurisdiction, be construed as if such invalid, prohibited or unenforceable
provision  had  been  more narrowly drawn so as not to be invalid, prohibited or
unenforceable.  If,  notwithstanding  the  foregoing,  any  provision  of  this
Agreement  is  held  to  be  invalid,  prohibited  or  unenforceable  in  any
jurisdiction,  such  provision, as to such jurisdiction, shall be ineffective to
the  extent  of  such  invalidity,  prohibition  or  unenforceability  without
invalidating  the remaining portion of such provision or the other provisions of
this  Agreement  and  without  affecting  the validity or enforceability of such
provision  or  the other provisions of this Agreement in any other jurisdiction.

          (e)  No  waiver  of  any  breach  or  default  or any right under this
Agreement  shall  be  considered valid unless in writing and signed by the party
giving  such  waiver,  and  no  such  waiver  shall  be  deemed  a waiver of any
subsequent  breach or default or right, whether of the same or similar nature or
otherwise.

          (f)  This  Agreement shall be binding upon and inure to the benefit of
each  party  hereto  and  its  successors  and  assigns.

          (g)  Each party shall take such further action and execute and deliver
such  further documents as may be necessary or appropriate in order to carry out
the  provisions  and  purposes  of  this  Agreement.

          (h)  This  Agreement shall be construed in accordance with the laws of
the  State  of  New  York,  except  to  the  extent  the validity, perfection or
enforcement  of  a  security  interest  hereunder  in  respect of any particular
Collateral which are governed by a jurisdiction other than the State of New York
in  which  case  such  law  shall govern. Each of the parties hereto irrevocably
submits  to  the  exclusive  jurisdiction of any New York State or United States
Federal  court  sitting in New York county over any action or proceeding arising
out  of or relating to this Agreement, and the parties hereto hereby irrevocably
agree  that  all claims in respect of such action or proceeding may be heard and
determined  in  such  New  York State or Federal court. The parties hereto agree
that  a  final judgment in any such action or proceeding shall be conclusive and
may  be  enforced in other jurisdictions by suit on the judgment or in any other
manner  provided by law. The parties hereto further waive any objection to venue
in  the  State  of  New York and any objection to an action or proceeding in the
State  of  New  York on the basis of forum non convenient. If either party shall
commence  an action or a proceeding to enforce any provisions of this Agreement,
then  the  prevailing  party in such action or 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  action  or
proceeding.

          (i)  EACH PARTY HERETO HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO
A  JURY  TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS
AGREEMENT.  THE  SCOPE  OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY
DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF

                                      -15-
<PAGE>

THIS  AGREEMENT,  INCLUDING  WITHOUT  LIMITATION  CONTRACT  CLAIMS, TORT CLAIMS,
BREACH  OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. EACH PARTY
HERETO  ACKNOWLEDGES THAT THIS WAIVER IS A MATERIAL INDUCEMENT FOR EACH PARTY TO
ENTER  INTO  A BUSINESS RELATIONSHIP, THAT EACH PARTY HAS ALREADY RELIED ON THIS
WAIVER IN ENTERING INTO THIS AGREEMENT AND THAT EACH PARTY WILL CONTINUE TO RELY
ON THIS WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH PARTY FURTHER WARRANTS AND
REPRESENTS  THAT  IT  HAS  REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT
SUCH PARTY KNOWINGLY AND VOLUNTARILY WAIVES ITS RIGHTS TO A JURY TRIAL FOLLOWING
SUCH  CONSULTATION.  THIS  WAIVER  IS IRREVOCABLE, MEANING THAT, NOTWITHSTANDING
ANYTHING  HEREIN  TO  THE  CONTRARY,  IT MAY NOT BE MODIFIED EITHER ORALLY OR IN
WRITING,  AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS AND
SUPPLEMENTS  OR  MODIFICATIONS  TO THIS AGREEMENT. IN THE EVENT OF A LITIGATION,
THIS  AGREEMENT  MAY  BE  FILED  AS  A  WRITTEN CONSENT TO A TRIAL BY THE COURT.

          (j) This Agreement may be executed in any number of counterparts, each
of  which  when  so executed shall be deemed to be an original and, all of which
taken  together  shall  constitute one and the same Agreement. In the event that
any  signature  is  delivered  by  facsimile  transmission, such signature shall
create  a  valid  binding  obligation of the party executing (or on whose behalf
such  signature  is executed) the same with the same force and effect as if such
facsimile  signature  were  the  original  thereof.

                              * * * * * * * * * * *

                                      -16-
<PAGE>


     IN  WITNESS  WHEREOF,  the  parties  hereto  have  caused this Intellectual
Property  Security Agreement to be duly executed on the day and year first above
written.

                                   ELECTRIC  FUEL  CORPORATION

                                   By:  _____________________________
                                   Name:
                                   Title:

                                   ELECTRIC  FUEL  TRANSPORTATION
                                   CORP.

                                   By:  _____________________________
                                   Name:
                                   Title:

                                   I.E.S.  DEFENSE  SERVICES,  INC.

                                   By:  _____________________________
                                   Name:
                                   Title:

                                   IES  INTERACTIVE  TRAINING,  INC.

                                   By:  _____________________________
                                   Name:
                                   Title:

                                   ELECTRIC  FUEL  GMBH

                                   By:  _____________________________
                                   Name:
                                   Title:

                                   SUMMIT  TRAINING  INTERNATIONAL,  INC.

                                   By:  _____________________________
                                   Name:
                                   Title:

<PAGE>


                                   ELECTRIC  FUEL  UK  LTD.

                                   By:  _____________________________
                                   Name:
                                   Title:

                                   ELECTRIC  FUEL  B.V.

                                   By:  _____________________________
                                   Name:
                                   Title:

                                   INSTANT  POWER  CORPORATION

                                   By:  _____________________________
                                   Name:
                                   Title:



<PAGE>

     IN  WITNESS  WHEREOF,  the  parties  hereto  have  caused this Intellectual
Property  Security Agreement to be duly executed on the day and year first above
written.

                                   ZLP  MASTER  TECHNOLOGY  FUND,  LTD.


                                   By:_____________________________________
                                   Name:
                                   Title:

                                   Address  for  Notice:

                                   45  Broadway  -  28th  Floor
                                   New  York,  NY  10006
                                   Facsimile  No.:  (    )
                                   Attn:

                                   With  a  copy  to:

                                   Bryan  Cave  LLP
                                   1290  Avenue  of  the  Americas
                                   New  York,  NY  10104
                                   Facsimile No.:(212)541-4630 and (212)541-1432
                                   Attn:  Eric  L.  Cohen,  Esq.

<PAGE>

     IN  WITNESS  WHEREOF,  the  parties  hereto  have  caused this Intellectual
Property  Security Agreement to be duly executed on the day and year first above
written.

                                   SMITHFIELD  FIDUCIARY  LLC


                                   By:_____________________________________
                                      Name:
                                      Title:

                                   Address  for  Notice:

                                   c/o  Highbridge  Capital  Management,  LLC
                                   9  West  57th  Street,  27th  Floor
                                   New  York,  New  York  10019
                                   Attention:  Ari  J.  Storch / Adam  J. Chill
                                   Facsimile:  212-751-0755
                                   Telephone:  212-287-4720

                                   With  a  copy  to:

                                   Bryan  Cave  LLP
                                   1290  Avenue  of  the  Americas
                                   New  York,  NY  10104
                                   Facsimile No.:(212)541-4630 and (212)541-1432
                                   Attn:  Eric  L.  Cohen,  Esq.

<PAGE>

     IN  WITNESS  WHEREOF,  the  parties  hereto  have  caused this Intellectual
Property  Security Agreement to be duly executed on the day and year first above
written.
                                   VERTICAL  VENTURES  INVESTMENTS,  LLC


                                   By:_________________________________
                                      Name:
                                      Title:

                                   Address  for  Notice:

                                   c/o  Vertical  Ventures,  LLC
                                   900  Third  Avenue,  26th  Floor
                                   New  York,  NY  10022
                                   Facsimile  No.:     (646)  274-1728
                                   Attn:  Joshua  Silverman

                                   With  a  copy  to:

                                   Bryan  Cave  LLP
                                   1290  Avenue  of  the  Americas
                                   New  York,  NY  10104
                                   Facsimile No.:(212)541-4630 and (212)541-1432
                                   Attn:  Eric  L.  Cohen,  Esq.



<PAGE>

                                    EXHIBIT A
                                    ---------

                                   COPYRIGHTS

                            Registration     Registration
Description                    Number             Date
------------------------------------------------------------------











<PAGE>



                                    EXHIBIT B
                                    ---------

                                     PATENTS




                            Registration     Registration
Description                    Number             Date
------------------------------------------------------------------











<PAGE>



                                    EXHIBIT C
                                    ---------

                                   TRADEMARKS

                            Registration     Registration
Description                    Number             Date
------------------------------------------------------------------











<PAGE>



                                   SCHEDULE A
                                   ----------


Jurisdictions:
--------------







<PAGE>