<PAGE>

                                                                 Exhibit 4.4
                                                               --------------

                               SECURITY AGREEMENT
                               ------------------

     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  and  a separate security agreement with respect to the Debtors'
intellectual  property  ("IP SECURITY AGREEMENT") for the benefit of the Secured
Parties  and  to  grant  to  it  a  first  priority security interest in certain
property  of the Debtors to secure the prompt payment, performance and discharge
in  full of all of the Parent's obligations under the Debentures, this Agreement
and  the  IP  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)  "ACCOUNTS"  shall mean all present and future rights of the Debtors to
payment  for  goods  sold  or  leased  or  for  services rendered, which are not
evidenced  by  instruments  or  chattel  paper,  and  whether  or  not earned by
performance.

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

<PAGE>

     (c)  "COLLATERAL"  means  the  collateral  in which the Secured Parties are
granted  a  first  priority  security interest by this Agreement and which shall
include the following, whether presently owned or existing or hereafter acquired
or  coming  into  existence,  and  all  additions and accessions thereto and all
substitutions  and replacements thereof, and all proceeds, products and Accounts
thereof,  including,  without limitation, all proceeds from the sale or transfer
of  the  Collateral and of insurance covering the same and of any tort claims in
connection  therewith:

          (i)  All  Goods  of  the  Debtors, including, without limitations, all
     machinery,  equipment,  computers,  motor  vehicles,  trucks, tanks, boats,
     ships, appliances, furniture, special and general tools, fixtures, test and
     quality  control  devices  and other equipment of every kind and nature and
     wherever  situated,  together  with  all  documents  of title and documents
     representing  the  same, all additions and accessions thereto, replacements
     therefor,  all parts therefor, and all substitutes for any of the foregoing
     and  all  other  items  used  and  useful  in  connection with the Debtors'
     businesses  and  all  improvements thereto (collectively, the "EQUIPMENT");
     and

          (ii)  All  Inventory  of  the  Debtors;  and

          (iii)  All  of  the  Debtors' contract rights and general intangibles,
     including,  without  limitation,  all partnership interests, stock or other
     securities,  licenses, distribution and other agreements, computer software
     development  rights,  leases,  franchises,  customer lists, quality control
     procedures,  grants  and rights, goodwill, trademarks, service marks, trade
     styles,  trade  names,  patents,  patent  applications, copyrights, deposit
     accounts, and income tax refunds (collectively, the "GENERAL INTANGIBLES");
     and
          (iv) All Accounts of the Debtors including all insurance proceeds, and
     rights  to  refunds  or indemnification whatsoever owing, together with all
     instruments,  all documents of title representing any of the foregoing, all
     rights  in  any  merchandising, goods, equipment, motor vehicles and trucks
     which  any  of  the  same may represent, and all right, title, security and
     guaranties with respect to each Receivable, including any right of stoppage
     in  transit;

          (v)  All  Pledged  Shares;  and

          (vi)  All  of  the  Debtors' documents, instruments and chattel paper,
     files,  records,  books  of account, business papers, computer programs and
     the  products  and proceeds of all of the foregoing Collateral set forth in
     clauses  (i)-(v)  above.

     (d)  "OBLIGATIONS"  means  all  of  the  Debtors'  obligations  under  this
Agreement,  the  Debentures and the IP 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.

                                      -2-
<PAGE>


     (e)  "PLEDGED  SHARES"  means (i) all the shares of common stock of each of
the Subsidiaries  of  which the Parent is the direct or indirect beneficial and
record  holder  and set forth on Schedule C attached hereto, (ii) all additional
                                 ----------
shares  of  each of the Subsidiaries from time to time acquired by the Parent in
any manner; (ii) the certificates representing the shares referred to in clauses
(i)  and  (ii)  above;  and  (iii)  subject  to  Section 4, all dividends, cash,
instruments,  options,  rights and other property or proceeds, from time to time
received,  receivable or otherwise distributed or distributable in respect of or
in  exchange  for  any  or all of the shares referred to in clauses (i) and (ii)
above.

     (f) "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.
       -----------------------------

     (a)  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").

     (b)  Concurrently  with  or  promptly  following  the  execution  of  this
Agreement,  all  certificates  or  instruments  representing  or  evidencing the
Pledged Shares shall be delivered to and held by the Secured Parties pursuant to
this Agreement and shall be accompanied by undated stock powers duly endorsed in
blank and irrevocable proxies; provided, however, that the Company shall use its
best  effort to deliver the certificates evidencing its ownership of IDS as soon
as  possible.

3.     Representations, Warranties, Covenants and Agreements of the Debtors. 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) Each Debtor represents and warrants that it has no place of business or
offices  where  its respective books of account and records are kept (other than
temporarily  at  the  offices  of  its attorneys or accountants) or places where
Collateral  is  stored  or  located,  except as set forth on Schedule A attached
                                                             ----------
hereto;


                                      -3-
<PAGE>

     (c)  (i)  Except  for  the  Security  Interest and as set forth in Schedule
                                                                        --------
3(c)(i)  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, encumbrances, rights
or  claims,  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, license 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).

    (ii)     The  Parent is the record, direct and beneficial owner of the
Pledged  Shares  (other  than STI, which is wholly-owned by IES).  Except as set
forth  in  Schedule  3(c)(ii) hereto, all of the Pledged Shares are owned by the
           ------------------
Parent or its subsidiary, as the case may be, free and clear of any lien, claim,
encumbrance,  security  interest, right or other charge, other than the Security
Interest  granted  to  the  Secured Parties hereunder. The Parent has the power,
authority  and legal right to pledge, assign, transfer, deliver, deposit and set
over  the  Pledged  Shares  pledged  to  the Secured Parties as provided herein.

     (d)  No part of the Collateral has been judged invalid or unenforceable. No
written  claim  has been received that any Collateral 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 its
Collateral  at the locations set forth on Schedule A attached hereto and may not
                                          ----------
relocate  such  books  of  account  and records or tangible Collateral unless it
delivers  to  each  of  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 under the UCC 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 each of the Secured Parties a valid, perfected and continuing
first  priority liens in the Collateral. The principal place of business of each
of the Debtors is located at the address set forth in Schedule Ahereto, 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  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.
Except  for  the  filing  of  financing  statements pursuant to the UCC with the
proper  filing and recording agencies in the jurisdictions indicated on Schedule
                                                                        --------
B,  attached hereto, no authorization or approval of or filing with or notice to
--

                                      -4-
<PAGE>


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.

     (g) The Debtors acknowledge and agree that on the date of execution of this
Agreement,  the Secured Parties will file one or more financing statements under
the  UCC  with  respect  to  the  Security  Interest  with the proper filing and
recording agencies in the jurisdictions indicated on Schedule B, attached hereto
                                                     ----------
and  in  such  other  jurisdictions  as  the Secured Parties may deem necessary.

     (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 the 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.

     (k)  Each Debtor shall keep and preserve its Equipment, Inventory and other
tangible Collateral in good condition, repair and order and shall not operate or
locate  any  such  Collateral  (or  cause to be operated or located) in any area
excluded  from  insurance  coverage.

                                      -5-
<PAGE>

     (l) 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.

     (m)  Each  Debtor shall promptly execute and deliver to the Secured Parties
such  further  deeds,  mortgages,  assignments,  security  agreements, financing
statements or other instruments, documents, certificates and assurances and take
such further action as the Secured Parties may from time to time request and may
in  its  sole  discretion  deem  necessary  to  perfect,  protect or enforce its
security  interest  in  the  Collateral  including,  without  limitation, the IP
Security Agreement in which each the Secured Parties has been granted a security
interest  hereunder,  substantially in a form acceptable to the Secured Parties,
which  IP  Security Agreement, other than as stated therein, shall be subject to
all  of  the  terms  and  conditions  hereof.

     (n)  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.

     (o)  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.

     (p)  Each  Debtor  shall  promptly notify the Secured Parties 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.

     (q)  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.

     (r)  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.

     (s) 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 10
days  prior  to  such  change.

     (t) 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.     Voting  Rights;  Dividends;  Etc.
       --------------------------------

                                      -6-
<PAGE>

   (a)  As  long  as  no  Event  of Default (as defined in Section 5) shall have
occurred  and  be  continuing and, in the case of Section 4(b)(i), as long as no
notice  thereof  shall  have  been  given by the Secured Parties to the Parent):

     (i)  The  Parent shall be entitled to exercise any and all voting and other
consensual  rights  pertaining  to the Pledged Shares pledged by it hereunder or
any  part  thereof  for  any  purpose  not  inconsistent  with the terms of this
Agreement  or  the  Debenture;  provided,  however,  that  the  Parent shall not
exercise  or refrain from exercising any such right if such action would have an
adverse  effect  on  the  value  of  the  Pledged  Shares  or  any part thereof.

     (ii)  The  Parent  shall  be  entitled  to  receive  and retain any and all
dividends  paid  in respect of the Pledged Shares pledged by it hereunder, other
than  any  and  all:

          (1)  dividends  paid  or payable other than in cash in respect of, and
     instruments  and  other  property  received,  receivable  or  otherwise
     distributed  in  respect  of,  or  in  exchange  for,  any  Pledged Shares;

          (2)  dividends  and  other  distributions  paid  or payable in cash in
     respect  of  any  Pledged  Shares  in  connection  with  a partial or total
     liquidation  or  dissolution  or in connection with a reduction of capital,
     capital  surplus  or  paid-in-surplus;  and

          (3)  cash  paid, payable or otherwise distributed in redemption of, or
     in  exchange  for,  any  Pledged  Shares,

          all  of  which shall be, and all of which shall be forthwith delivered
to  the  Secured Parties to hold as Pledged Shares and shall, if received by the
Parent,  be  received  in  trust  for  the  benefit  of  the Secured Parties, be
segregated  from  the  other  property  or funds of the Parent, and be forthwith
delivered  to  the  Secured  Parties  as  Pledged  Shares in the same form as so
received  (with  any  necessary  endorsement).

   (iii)       The  Secured  Parties  shall  execute and deliver (or cause to be
executed  and delivered) to the Parent all such proxies and other instruments as
the  Parent  may  reasonably  request  for the purpose of enabling the Parent to
exercise  the  voting and other rights which it is entitled to exercise pursuant
to  subsection  (a)(i) above and to receive the dividends which it is authorized
to  receive  and  retain  pursuant  to  subsection  (a)(ii)  above.

       (b)  Upon  the  occurrence  and  during the continuance of an Event of
     Default:

               (i)  All  rights  of  the Parent to exercise the voting and other
          consensual  rights  which  it  would otherwise be entitled to exercise
          pursuant  to  Section  4(a)(i)  above shall cease upon notice from the
          Secured  Parties  to  the  Parent, and all such rights shall thereupon
          become vested in the Secured Parties who shall thereupon have the sole
          right  to exercise such voting and other consensual rights and any and
          all  rights of conversion, exchange, subscription or any other rights,
          privileges  or  options  pertaining  to the Pledged Shares or any part
          thereof,  and  Secured Parties may exercise such powers in such manner
          as  the  Secured Parties may elect, but the Secured Parties shall have
          no  duty to exercise any of the aforesaid right, privileges or options
          and  shall  not  be  responsible  for any failure to do so or delay in
          doing  so.


                                      -7-
<PAGE>

               (ii)  All  rights of the Parent to receive the dividends which it
          or  he would otherwise be authorized to receive and retain pursuant to
          Section  4(a)(ii)  above  shall  cease,  and  all  such  rights  shall
          thereupon  become  vested  in  the Parent who shall thereupon have the
          sole  right  to  receive  and  hold as part of the Pledged Shares such
          dividends.

               (iii)  All dividends which are received by the Parent contrary to
          the  provisions  of  paragraph  (ii)  of  this  Section  4(b) shall be
          received  in  trust  for  the benefit of the Secured Parties, shall be
          segregated  from other funds of the Parent and shall be forthwith paid
          over  to  the Secured Parties as Pledged Shares in the same form as so
          received  (with any necessary endorsement).

          (c)  In order to permit the Secured Parties to exercise the voting and
     other  rights  which  it  may  be  entitled to exercise pursuant to Section
     4(b)(i)  above, and to receive all dividends and distributions which it may
     be  entitled  Secured Parties, from time to time execute and deliver to the
     Secured  Parties  appropriate  proxies,  dividend  payment orders and other
     instruments  as  the  Secured  Parties  may  reasonably  request.

   5.  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  IP  Security  Agreement  shall prove to have been incorrect in any
     material  respect  when  made;  and

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

   6.  Duty  To  Hold In Trust.  Upon the occurrence and 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.

   7.  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 IP Security Agreement, and the Agent and 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,

                                      -8-
<PAGE>


     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, and make available to the Agent, without
     rent,  all  of  the  Debtors'  respective  premises  and facilities for the
     purpose  of  the  Agent  taking  possession  of,  removing  or  putting the
     Collateral  in  saleable  or  disposable  form.

          (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,
     lease  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, lease, 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 are
     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.

          (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 13, 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

                                      -9-
<PAGE>

     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 and Secured Parties 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.

   8.  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
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.

   9.  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 pursuant to the UCC,
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.

   10.  Responsibility  for  Collateral. Each Debtor assumes all liabilities and
        -------------------------------
responsibility  in  connection  with all Collateral, and the obligations of such

                                      -10-
<PAGE>


Debtor  hereunder, under the Debentures or under the IP 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.


   11.  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,  IP  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 or the IP 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
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.

   12.  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.

   13.  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,


                                      -11-
<PAGE>

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
financing statement pursuant to the UCC 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  deems  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 IP 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  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  agencies  in  any  jurisdiction,  including,  without limitation, the
jurisdictions  indicated  on  Schedule B, attached hereto, all such instruments,
----------  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  under  the  UCC.

     (c)  Each  Debtor  hereby  irrevocably appoints the Secured Parties as such
Debtor's  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 Secured
Parties  may  deem  necessary  or  advisable  to accomplish the purposes of this
Agreement,  including  the  filing,  in  its  sole  discretion,  of  one or more
financing  or continuation statements and amendments thereto, relative to any of
the  Collateral  without  the  signature  of such Debtor where permitted by law.

14.     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
17)  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 IP 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 the IP Security Agreement by
the Debtors. By accepting their Debentures each Secured Party shall be deemed to



                                      -12-
<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 IP 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 IP 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  IP Security Agreement, or to prosecute or defend any
suit  in  respect of this Agreement or under the Debentures or under IP 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  IP  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 IP 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 IP 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  IP  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 any Secured
Party  from  serving  as  the  Agent or any claim against that Secured Party for
serving  as  Agent.

                                      -13-
<PAGE>


     (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.

   15.  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

     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


                                      -14-
<PAGE>

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


   16.  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.


    17. 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.

    18. 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  IP  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 IP
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 hereto.

     (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

                                      -15-

<PAGE>

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
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

                                      -16-
<PAGE>


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.




                              * * * * * * * * * * *

                                      -17-
<PAGE>


     IN  WITNESS WHEREOF, the parties hereto have caused this 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:



                                      -18-
<PAGE>


                        ELECTRIC  FUEL  UK  LTD.

                         By:_____________________________________
                         Name:
                         Title:

                         ELECTRIC  FUEL  B.V.

                         By:  _____________________________
                         Name:
                         Title:

                         INSTANT  POWER  CORPORATION

                         By:  _____________________________
                         Name:
                         Title:






                                      -19-
<PAGE>

     IN  WITNESS WHEREOF, the parties hereto have caused this 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.


                                      -20-
<PAGE>


     IN  WITNESS WHEREOF, the parties hereto have caused this 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.



                                      -21-
<PAGE>

     IN  WITNESS WHEREOF, the parties hereto have caused this 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.




                                      -22-

<PAGE>


                                   Schedule A
                                   ----------



Principal  Place  of  Business  of  the  Debtors:
------------------------------------------------


Locations  Where  Collateral  is  Located  or  Stored:
-----------------------------------------------------
















                                      -23-
<PAGE>

                                   Schedule B
                                   ----------



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





















                                      -24-
<PAGE>


<TABLE>
<CAPTION>



                                   Schedule C
                                   ----------

Name/Address of Subsidiary     Jurisdiction of    Class of       No. of Shares   No. of Pledged
                               Incorporation      Securities     Outstanding     Shares
----------------------------- ------------------- ------------- ---------------- --------------
<S>                                 <C>              <C>              <C>           <C>



I.E.S.  Defense
Services,  Inc.
----------------------------- ------------------- ------------- ---------------- --------------

IES  Interactive
Training,  Inc.

----------------------------- ------------------- ------------- ---------------- --------------
Electric  Fuel
GmbH

----------------------------- ------------------- ------------- ---------------- --------------
Summit  Training
International,  Inc.

----------------------------- ------------------- ------------- ---------------- --------------
Electric  Fuel
UK  Ltd.

----------------------------- ------------------- ------------- ---------------- --------------
M.D.T.  Protective
Services  Ltd.

----------------------------- ------------------- ------------- ---------------- --------------
Electric  Fuel  Ltd.

----------------------------- ------------------- ------------- ---------------- --------------




</TABLE>
                                      -25-


<PAGE>