Exhibit 10.1
 
Termination Agreement and Release
Agreement (“Agreement”) entered into this 22nd day of August, 2016, by and
be-tween Arotech Corporation, a Delaware corporation (“Arotech”) and
Epsilor-Electric Fuel Ltd., an Israeli corporation (“Epsilor” and, together with
Arotech, the “Company”), and Robert S. Ehrlich, an individual residing at 21
Nahal Soreq Street, Beit Shemesh, Israel 9909129 (the “Employee”).
W I T N E S S E T H :
WHEREAS, the Company and Employee are parties to a Seventh Amended and Restated
Employment Agreement effective as of January 1, 2015 (the “Employment
Agreement”); and
WHEREAS, the primary project on which the Employee is currently engaged is being
discontinued; and
WHEREAS, the Company and the Employee accordingly desire to bring the Employee’s
employment with the Company to an early and orderly close and to resolve fully
and finally any and all claims, potential claims, controversies or differences
between them; and as more specifically set forth below and solely under the
terms and conditions of this Termination Agreement and Release;
NOW, THEREFORE, in consideration of the premises and the mutual agreements
hereinafter contained, the parties hereby agree as follows:
1.          Employment Termination.
(a)          The Company and Employee agree that, subject to fulfillment of all
the terms of this Agreement, the employment of the Employee shall cease on
August 31, 2016.
(b)          Subject to fulfillment of all the terms of this Agreement and the
release to the Employee of amounts currently held on his behalf by statutory
severance and/or continuing education insurance funds as required by the
relevant provisions of Israeli law, the Employee represents and warrants that he
shall have received full salary and any other compensation or benefit to which
he is entitled from the Company.
(c)          For the avoidance of doubt, it is agreed that the Employee will not
be entitled to any compensation or benefit for his employment with the Company
other than as set forth in this Agreement.
(d)          The Company acknowledges that the Employee has returned to the
Company all credit cards, records, data, notes, correspondence developed or
received by the Employee pursuant to Employee’s employment with the Company or
otherwise belonging to the Company.
2.          Payments.
(a)          In place of whatever amounts to which the Employee may be entitled
by law or by contract, and as full settlement of all mutual claims of the
parties, the Employee agrees to accept a payment of $524,051.50 (which payment
is in substitution for all payments and benefits required by the terms of the
Employment Agreement).

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(b)          Subject to fulfillment of all the terms of this Agreement, the
above payment of US $524,051.50 shall be paid by wire transfer to the same bank
account used for payment of the Employee’s last salary payment.
(c)          The Employee acknowledges that he is responsible for, and he does
hereby indemnify the Company and its shareholders, directors, officers and
employees from and against, the payment of any and all federal and state,
including without limitations in Israel, income and like taxes, social security
payments or any other withholding which may be or become payable with respect to
any and all payment or any other consideration provided in this Agreement. With
respect to any of the payments provided above, the Company shall deduct all
statutory withholdings under any applicable law, including without limitations
income tax and social security payments. If the Company will deduct any sum of
the above payments it will submit to the Employee all documentation concerning
such deduction.
(d)          In addition to the foregoing, the Company will also release the
Employee’s statutory severance and continuing education funds. The Company will
take all steps reasonably necessary to release the above funds to the Employee,
including but not limited to the prompt execution of any necessary paperwork.
The Company declares that it does not have any rights whatsoever in the above
funds and will not have any demands in regard with such funds.
(e)          The Employee will retain title to the 12,000 restricted shares of
his 2016 restricted share grant that were scheduled to vest on December 31, 2016
based solely on tenure, and such shares will vest in accordance with their
original vesting schedule. The Employee will have no claim to the 24,000 shares
that were scheduled to vest on December 31, 2016 on the basis of the Company’s
financial results, and such shares will be returned to the Company for
cancellation.
3.          Release of Claims.
(a)          The Employee, subject to the release provided in subsection (b)
below, for himself, his heirs, executors, administrators, successors and
assigns, hereby fully and unconditionally waives, releases, and forever
discharges, the Company, its subsidiary companies, related and affiliated
companies, predecessors, successors, assigns and its present and former
directors, officers, agents and employees, from any and all suits, causes of
action, and claims of any nature whatsoever, known or unknown, which the
Employee may have against the Company and the other parties released hereby,
which he and his heirs, executors, administrators, successors and assigns ever
had, now have or hereafter can, shall or may have, for, upon, or by reason of
any matter, cause or thing whatsoever from the beginning of the world to the day
of the date of this release, including without limitation any and all claims in
any way resulting from, arising out of or connected with his employment or its
termination or pursuant to any Israeli common law, statute, regulation or other
requirement, including without limitation (i) the Severance Payment Law of 1963,
Annual Vacation Law of 1951, Protection of Wages Law of 1958, Sick Payment Law
of 1976, Prior Notice for Dismissal and Resignation Law of 2001, recreation
payment (Dmei Havra’a) and any and all claims under any collective bargaining
agreement or extension thereof; (ii) any other compensation or consideration as
a result of employment relations or end of employment relations including
without limitation, Bituach Menahalim, Keren Hishtalmut, pension compensation,
and/or any compensation and consideration resulting from such relations, or
arising out of or connected with his position as a director of the Company
and/or as a principal in the Company and/or connected with any act or vote of
the Company’s board of directors, whether by virtue of his position as a
director,
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officer, employee or shareholder, all pursuant to any Israeli common law,
statute, order, regulation or other requirement (including without limitation
the Companies Ordinance [New Version] of 1983, the Companies Law of 1999, the
Securities Law of 1968, the Torts Ordinance [New Version], each as amended from
time to time, infliction of any tort, or breach of contract, whether actual or
implied, or whether oral or written) including without limitation any United
States federal, state or local common law, statute, regulation or other
requirement (including without limitation the General Corporation Law of the
State of Delaware, the United States Securities Act of 1933, and the United
States Securities Exchange Act of 1934, Title VII of the Civil Rights Act of
1964, the Age Discrimination in Employment Act, the Americans with Disabilities
Act, the fair employment practices laws of the state or states in which the
Employee have been employed by the Company, each as amended from time to time,
infliction of any tort, or breach of contract, whether actual or implied, or
whether oral or written).
(b)          The Company, subject to the release provided in subsection (a)
above, for itself, its subsidiary companies, related and affiliated companies,
predecessors, successors, assigns and its present and former directors,
officers, agents and employees, hereby fully and unconditionally waives,
releases, and forever discharges, the Employee, his heirs, executors,
administrators, successors and assigns, from any and all suits, causes of
action, and claims of any nature whatsoever, known or unknown, which the Company
may have against the Employee and the other parties released hereby, which it
and its subsidiary companies, related and affiliated companies, predecessors,
successors, assigns and its present and former directors, officers, agents and
employees, ever had, now have or hereafter can, shall or may have, for, upon, or
by reason of any matter, cause or thing whatsoever from the beginning of the
world to the day of the date of this release, including without limitation any
and all claims in any way resulting from, arising out of or connected with his
employment or its termination or arising out of or connected with his position
as a director of the Company and/or as a principal in the Company and/or
connected with any act or vote of the Employee in the board of directors, and/or
connected with any act of the Employee as a shareholder, all pursuant to any
Israeli common law, statute, order, regulation or other requirement (including
without limitation the Companies Ordinance [New Version] of 1983, the Companies
Law of 1999, the Securities Law of 1968, the Torts Ordinance [New Version], each
as amended from time to time, infliction of any tort, or breach of contract,
whether actual or implied, or whether oral or written) including without
limitation any United States federal, state or local common law, statute,
regulation or other requirement (including without limitation all Securities
acts, laws and regulations, the General Corporation Law of the State of
Delaware, the United States Securities Act of 1933, and the United States
Securities Exchange Act of 1934, Title VII of the Civil Rights Act of 1964, the
Age Discrimination in Employment Act, the Americans with Disabilities Act, the
fair employment practices laws of the states in which the Employee have been
employed by the Company, each as amended from time to time, infliction of any
tort, or breach of contract, whether actual or implied, or whether oral or
written).
(c)          The Employee has carefully read this Agreement, knows its contents,
and freely and voluntarily agrees to all of its terms and conditions. The
Employee acknowledges that he has had reasonable time to consider and discuss
this Agreement with his attorney. By signing this Agreement, the Employee
specifically acknowledges that he has read it; he understands it and knows he is
giving up important rights; he agrees with everything in it; he is aware of his
right to consult an attorney of his own choice before signing it; and he has
signed it knowingly and voluntarily.
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(d)          This Agreement also constitutes a compromise agreement and notice
of final clearance in according with Article 29 of the Severance Payment Law of
1963.
4.          Surviving Terms of Employment Agreement. The Employee acknowledges
and agrees that he shall continue to be bound by and comply with the provisions
of Section 8 of the Employment Agreement (entitled “Confidentiality; Proprietary
Rights; Competitive Activity”). The Company will at the request of the Employee
comply with the terms of Section 16 of the Employment Agreement (entitled
“Registration Rights”), provided that the Employee shall fulfill in a timely
fashion all of his obligations under the terms of Section 16 of the Employment
Agreement.
5.          Debts.
(a)          The parties hereto acknowledge that the only debts which the
Employee has to the Company that will continue in existence after the date of
this Agreement is the debt in the original principal amount of US $329,163 (the
“Debt”) for which the Employee has executed a non-recourse promissory note on
February 9, 2000 (the “Promissory Note”).
(b)          The parties hereto acknowledge that the shares specified in the
Promissory Note are the sole security for the Debt; that the Debt will be
governed only according to the provisions and conditions set forth in the
Promissory Note; that the recourse of the Debt under the Promissory Notes shall
only be the pledged shares specified in the Promissory Note and presently in the
possession of the Company; and that the Debt will not be released by this
Agreement.
6.          Binding Effect. This Agreement be binding upon or injure to the
benefit of the successors and assigns of the Company and the Employee and his
personal representative(s).
7.          Binding Arbitration.
(a)          This Agreement, the performance thereof and all matters arising
from and connected with the Agreement, shall be governed by and construed,
solely and exclusively, in accordance with the laws of Israel.
(b)          Any dispute hereunder shall be finally settled by a binding
arbitration held in Tel Aviv, Israel, exclusively in the English language, by
one arbitrator, a retired judge with commercial background to be chosen by the
parties and if the parties do not consent about the arbitrator, the arbitrator
will be appointed by the president of the Israeli Chamber of Certified
Accountants. This section constitutes an arbitration agreement.
(c)          The decision or award of the arbitrators shall be published to each
party and will be final and binding upon all of the parties. Each of the parties
hereby irrevocably and expressly agrees to comply promptly and in good faith
with any and all such decisions or awards.
(d)          The arbitration hereunder shall be the exclusive and conclusive
method for resolving disputes under this Agreement and no court shall have the
power to adjudicate such disputes.
(e)          The costs of the arbitration, including without limitations
attorneys’ fees, shall be borne by the non-prevailing party.
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8.          Severability. If one or more of the provisions of this Agreement or
any application thereof shall be invalid, illegal, or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
thereof shall in no way be affected or impaired.
9.          Entire Agreement. The foregoing contains the entire agreement of the
parties and may not be altered, amended, or terminated except by an instrument
in writing signed by the parties hereto.
10.          Joint and Several Obligations. The obligations and liabilities of
each company hereunder (Arotech and Epsilor) shall be joint and several with the
obligations and liabilities of the other company hereunder.
11.          Execution in Counterparts. This agreement may be executed in any
number of separate counterparts, each of which shall together be deemed an
original, but the several counterparts shall together constitute but one and the
same agreements of the parties hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first written above.

 
AROTECH CORPORATION
         
By:
/s/ Steven Esses       Name: Steven Esses       Title: President and CEO        
    EPSILOR-ELECTRIC FUEL LTD.             By: /s/ Ronen Badichi      
Name: Ronen Badichi       Title: General Manager                        /s/
Robert S. Ehrlich      
Robert S. Ehrlich
 

 
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