Exhibit 4.3

                                [FORM OF WARRANT]

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

                               AROTECH CORPORATION

                                     WARRANT

Warrant No.: __________
Number of Shares: _____________
Date of Issuance:  January __, 2004 ("Issuance Date")

Arotech Corporation, a Delaware corporation (the "Company"), hereby certifies
that, for value received, the receipt and sufficiency of which are hereby
acknowledged, [ ], the registered holder hereof or its permitted assigns (the
"Holder"), is entitled, subject to the terms set forth below, to purchase from
the Company, at the Exercise Price (as defined below) then in effect, at any
time or times on or after July 7, 2004 (the "Initial Exercise Date"), but not
after 11:59 p.m., New York Time, on the Expiration Date (as defined below),
______________ (_____________)1 (the "Initial Exercise Number") fully paid
nonassessable shares of Common Stock (as defined below) (the "Warrant Shares").
Except as otherwise defined herein, capitalized terms in this Warrant shall have
the meanings set forth in Section 15. This Warrant (including all Warrants
issued in exchange, transfer or replacement hereof, the "Warrants") is one of
the Warrants (the "SPA Warrants") issued pursuant to Section 1 of that certain
Securities Purchase Agreement, dated as of January 7, 2004 (the "Subscription
Date"), among the Company and the investors (the "Buyers") referred to therein
(the "Securities Purchase Agreement").

----------
1     Insert number of Purchased Shares acquired by Holder pursuant to the
      Securities Purchase Agreement.


<PAGE>

      1.    EXERCISE OF WARRANT.

            (a) Mechanics of Exercise. Subject to the terms and conditions
hereof (including, without limitation, the limitations set forth in Section
1(g)), this Warrant may be exercised by the Holder on any day from and after the
Initial Exercise Date, in whole or in part, by (i) delivery of a written notice,
in the form attached hereto as Exhibit A (the "Exercise Notice"), of such
Holder's election to exercise this Warrant, and (ii) (A) payment to the Company
of an amount equal to the applicable Exercise Price multiplied by the number of
Warrant Shares as to which this Warrant is being exercised (the "Aggregate
Exercise Price") in cash or wire transfer of immediately available funds or (B)
by notifying the Company that this Warrant is being exercised pursuant to a
Cashless Exercise (as defined in Section 1(d)). The date the Exercise Notice and
the Aggregate Exercise Price (or notice of a Cashless Exercise) are delivered to
the Company (as determined in accordance with the notice provisions hereof) is
an "Exercise Date." The Holder shall not be required to deliver the original
Warrant in order to effect an exercise hereunder. Execution and delivery of the
Exercise Notice with respect to less than all of the Warrant Shares shall have
the same effect as cancellation of the original Warrant and issuance of a new
Warrant evidencing the right to purchase the remaining number of Warrant Shares.
On or before the first Business Day following the Exercise Date, the Company
shall transmit by facsimile an acknowledgment of confirmation of receipt of the
Exercise Notice and the Aggregate Exercise Price to the Holder and the Company's
transfer agent (the "Transfer Agent"). On or before the third Business Day
following the Exercise Date, the Company shall direct the Transfer Agent to
credit through The Depository Trust Company ("DTC") Fast Automated Securities
Transfer Program such aggregate number of shares of Common Stock to which the
Holder is entitled pursuant to such exercise to the Holder's or its designee's
balance account with DTC through its Deposit Withdrawal Agent Commission system.
On the Exercise Date, the Holder shall be deemed for all corporate purposes to
have become the holder of record of the Warrant Shares with respect to which
this Warrant has been exercised, irrespective of the date of delivery of the
certificates evidencing such Warrant Shares. Upon surrender of this Warrant to
the Company following one or more partial exercises, the Company shall as soon
as practicable and in no event later than three Business Days after receipt of
the Warrant and at its own expense, issue a new Warrant (in accordance with
Section 7(d)) representing the right to purchase the number of Warrant Shares
purchasable immediately prior to such exercise under this Warrant, less the
number of Warrant Shares with respect to which this Warrant is exercised. No
fractional shares of Common Stock are to be issued upon the exercise of this
Warrant, but rather the number of shares of Common Stock to be issued shall be
rounded up to the nearest whole number. The Company shall pay any and all taxes
which may be payable with respect to the issuance and delivery of Warrant Shares
upon exercise of this Warrant. In the event that the Company is unable to
electronically deliver the Warrant Shares because of applicable securities laws,
then the Company shall issue and deliver to the address as specified in the
Exercise Notice a certificate, registered in the name of the Holder or its
designee, for the number of shares of Common Stock to which the holder of this
Warrant is entitled pursuant to such exercise.

            (b) Exercise Price. For purposes of this Warrant, "Exercise Price"
means the greater of (x) $1.88 and (y) the Weighted Average Price on the date of
the issuance of the Press


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Release (as defined in the Securities Purchase Agreement), subject to adjustment
as provided herein. The Exercise Price initially determined on the date of
issuance of the Press Release is referred to herein as the "Initial Exercise
Price".

            (c) Company's Failure to Timely Deliver Shares. Subject to Section
1(g), if the Company shall fail for any reason or for no reason within three
Business Days of the Exercise Date to credit the Holder's balance account with
DTC for such number of shares of Common Stock to which the Holder is entitled
upon the Holder's exercise of this Warrant, and if after such third Business Day
the Holder purchases (in an open market transaction or otherwise) shares of
Common Stock to deliver in satisfaction of a sale by the Holder of the Warrant
Shares that the Holder anticipated receiving from the Company (a "Buy-In"), then
the Company shall, within three Business Days after the Holder's request and in
the Holder's discretion, either (i) pay cash to the Holder in an amount equal to
the Holder's total purchase price (including brokerage commissions, if any) for
the shares of Common Stock so purchased (the "Buy-In Price"), at which point the
Company's obligation to issue such Common Stock shall terminate, or (ii)
promptly honor its obligation to credit to the Holder such Common Stock and pay
cash to the Holder in an amount equal to the excess (if any) of the Buy-In Price
over the product of (A) such number of shares of Common Stock, times (B) the
Closing Sale Price on the date of the event giving rise to the Company's
obligation to deliver such certificate. Subject to Section 1(g), if the Company
shall fail for any reason or for no reason within three Business Days of the
Exercise Date to credit the Holder's balance account with DTC for such number of
shares of Common Stock to which the Holder is entitled upon the Holder's
exercise of this Warrant, then the Holder will have the right to rescind such
exercise.

            (d) Cashless Exercise. Notwithstanding anything contained herein to
the contrary, if at any time during the period commencing ten (10) Business Days
prior to the Holder's delivery of an Exercise Notice and ending on the day of
delivery of the Exercise Notice, the Registration Statement (as defined in the
Registration Rights Agreement) covering the Warrant Shares that are the subject
of the Exercise Notice (the "Unavailable Warrant Shares") is not available for
the issuance of such Unavailable Warrant Shares, the Holder may, in its sole
discretion, exercise this Warrant in whole or in part and, in lieu of making the
cash payment otherwise contemplated to be made to the Company upon such exercise
in payment of the Aggregate Exercise Price, elect instead to receive upon such
exercise the "Net Number" of shares of Common Stock determined according to the
following formula (a "Cashless Exercise"):

                         Net Number = (A x B) - (A x C)
                                      -----------------
                                              B

            For purposes of the foregoing formula:

                  A= the total number of shares with respect to which this
                     Warrant is then being exercised.


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<PAGE>

                  B= the Closing Sale Price of the Common Stock on the date
                     immediately preceding the date of the Exercise Notice.

                  C= the Exercise Price then in effect for the applicable
                     Warrant Shares at the time of such exercise.

            (e) Absolute and Unconditional Obligation. The Company's obligations
to issue and deliver Warrant Shares in accordance with the terms hereof are
absolute and unconditional, irrespective of any action or inaction by the Holder
to enforce the same, the recovery of any judgment against any Person or any
action to enforce the same, or any setoff, counterclaim, recoupment, limitation
or termination, or any breach or alleged breach by the Holder or any other
Person of any obligation to the Company or any violation or alleged violation of
law by the Holder or any other Person. Nothing herein shall limit the Holder's
right to pursue any other remedies available to it hereunder, at law or in
equity, including, without limitation, a decree of specific performance and/or
injunctive relief with respect to the Company's failure to timely deliver
certificates representing Warrant Shares upon exercise of the Warrant as
required pursuant to the terms hereof.

            (f) Disputes. In the case of a dispute as to the determination of
the Exercise Price or the arithmetic calculation of the Warrant Shares, the
Company shall promptly issue to the Holder the number of Warrant Shares that are
not disputed and resolve such dispute in accordance with Section 12.

            (g) Limitations on Exercises. The Company shall not effect the
exercise of this Warrant, and no Person who is a holder of this Warrant shall
have the right to exercise this Warrant, to the extent that after giving effect
to such exercise, such Person (together with such Person's affiliates) would
beneficially own in excess of 4.99% of the shares of the Common Stock
outstanding immediately after giving effect to such exercise. For purposes of
the foregoing sentence, the aggregate number of shares of Common Stock
beneficially owned by such Person and its affiliates shall include the number of
shares of Common Stock issuable upon exercise of this Warrant with respect to
which the determination of such sentence is being made, but shall exclude shares
of Common Stock which would be issuable upon (i) exercise of the remaining,
unexercised portion of this Warrant beneficially owned by such Person and its
affiliates and (ii) exercise or conversion of the unexercised or unconverted
portion of any other securities of the Company beneficially owned by such Person
and its affiliates (including, without limitation, any convertible notes,
convertible debentures, convertible preferred stock or warrants) subject to a
limitation on conversion or exercise analogous to the limitation contained
herein. Except as set forth in the preceding sentence, for purposes of this
paragraph, beneficial ownership shall be calculated in accordance with Section
13(d) of the Securities Exchange Act of 1934, as amended. For purposes of this
Warrant, in determining the number of outstanding shares of Common Stock a
Holder may rely on the number of outstanding shares of Common Stock as reflected
in (1) the Company's most recent Form 10-Q, Form 10-K or other public filing
with the Securities and Exchange Commission, as the case may be, (2) a more
recent public announcement by the Company or (3) any other notice by the Company
or its Transfer Agent


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<PAGE>

setting forth the number of shares of Common Stock outstanding. For any reason
at any time, upon the written or oral request of the Holder, the Company shall
within two Business Days confirm orally and in writing to the Holder the number
of shares of Common Stock then outstanding. In any case, the number of
outstanding shares of Common Stock shall be determined after giving effect to
the conversion or exercise of securities of the Company, including the SPA
Warrants, by the Holder and its affiliates since the date as of which such
number of outstanding shares of Common Stock was reported.

The Company shall not be obligated to issue any shares of Common Stock upon
exercise of this Warrant if the issuance of such shares of Common Stock would
exceed that number of shares of Common Stock which the Company may issue upon
exercise of this Warrant without breaching the Company's obligations under the
rules or regulations of the Principal Market (the "Exchange Cap"), except that
such limitation shall not apply in the event that the Company obtains, only if
required, the approval of its stockholders as required by the applicable rules
of the Principal Market for issuances of shares of Common Stock in excess of
such amount. Until such approval is obtained, no Buyer shall be issued, upon
exercise of any SPA Warrants, shares of Common Stock in an amount greater than
the product of the Exchange Cap multiplied by a fraction, the numerator of which
is the total number of shares of Common Stock underlying the SPA Warrants issued
to such Buyer pursuant to the Securities Purchase Agreement on the Subscription
Date and the denominator of which is the aggregate number of shares of Common
Stock underlying all the Warrants issued to the Buyers pursuant to the
Securities Purchase Agreement on the Subscription Date (with respect to each
Buyer, the "Exchange Cap Allocation"). In the event that any Buyer shall sell or
otherwise transfer any of such Buyer's SPA Warrants, the transferee shall be
allocated a pro rata portion of such Buyer's Exchange Cap Allocation, and the
restrictions of the prior sentence shall apply to such transferee with respect
to the portion of the Exchange Cap Allocation allocated to such transferee. In
the event that any holder of SPA Warrants shall exercise all of such holder's
SPA Warrants into a number of shares of Common Stock which, in the aggregate, is
less than such holder's Exchange Cap Allocation, then the difference between
such holder's Exchange Cap Allocation and the number of shares of Common Stock
actually issued to such holder shall be allocated to the respective Exchange Cap
Allocations of the remaining holders of SPA Warrants on a pro rata basis in
proportion to the shares of Common Stock underlying the SPA Warrants then held
by each such holder. In the event that the Company is prohibited from issuing
any Warrant Shares for which an Exercise Notice has been received as a result of
the operation of this paragraph, the Company shall pay cash in exchange for
cancellation of such Warrant Shares, at a price per Warrant Share equal to the
difference between the Closing Sale Price and the Exercise Price as of the date
of the attempted exercise.

            (h) Exercise at the Company's Election. On or after the later of
(the "Company Exercise Triggering Date") (x) the 12 month anniversary of the
date on which the Registration Statement has been declared effective by the SEC
and (y) July 7, 2005, the Company shall have the right, on one occasion in its
sole discretion and subject to Section 1(g) hereof, to require that up to
one-half of the Initial Exercise Number of the outstanding Warrants be exercised
(the "Company's Exercise Election") at the applicable Exercise Price; provided
that the Conditions to Exercise at the Company's Election (as set forth below)
are satisfied as of


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the Company's Election Exercise Date (as defined below) or waived by the Holder.
The Company shall exercise its right to Company's Exercise Election by providing
the Holder and each other each holder of SPA Warrants written notice ("Company's
Exercise Election Notice") by facsimile and overnight courier; provided,
however, that the Company may not deliver more than one Company's Exercise
Election Notice hereunder. The date on which the Holder actually receives the
Company's Exercise Election Notice is referred to herein as the "Company's
Exercise Election Notice Date." The Company's Exercise Election Notice shall
indicate the date selected by the Company for exercise (the "Company's Election
Exercise Date"), which date shall be not less than 20 Business Days or more than
60 Business Days after the Company's Exercise Election Notice Date, and the
number of outstanding Warrants the Company is electing to be subject to the
Company's Exercise Election (the "Company Exercise Number"). Subject to the
satisfaction of all the conditions of this Section 1(h) and Section 1(g), on the
Company's Election Exercise Date the Holder will be deemed to have submitted an
Exercise Notice in accordance with Section 1(a) for all of the Company Exercise
Number (subject to Section 1(g)). "Conditions to Exercise At The Company's
Election" means the following conditions: (i) on each day during the period
beginning on the date which is 90 days prior to the date of the Company's
Exercise Election Notice Date and ending on and including the Company's Election
Exercise Date (the "Measuring Period"), the Registration Statement shall be
effective and available for the sale of at least all of the Registrable
Securities required to be included in such Registration Statement and there
shall not have been any Events (as defined in the Registration Rights
Agreement); (ii) on each day during the Measuring Period, the Common Stock is
designated for quotation on the Principal Market and shall not have been
suspended from trading on such market or exchange (other than suspensions of not
more than one day and occurring prior to the Company's Exercise Election Notice
Date due to business announcements by the Company) nor shall delisting or
suspension by such exchange or market been threatened or pending either (A) in
writing by such exchange or market or (B) by falling below the minimum listing
maintenance requirements of such exchange or market; (iii) during the Measuring
Period there shall not have occurred the public announcement of a pending,
proposed or intended Organic Change, unless such pending, proposed or intended
Organic Change has been terminated, abandoned or consummated and the Company has
publicly announced such termination, abandonment or consummation of such Organic
Change; (iv) during the Measuring Period, the Company shall have delivered
Warrant Shares upon exercise of the Warrants to the holders on a timely basis as
set forth in Section 1 hereof; (v) the Company shall not have failed to timely
make any payments within five (5) Business Days of when such payment is due
pursuant to this Warrant, the Securities Purchase Agreement, or the Registration
Rights Agreement, including, but not limited to, cash payments due under the
provisions of the Securities Purchase Agreement, the Registration Rights
Agreement or the Warrants; and (vi) the Weighted Average Price of the Common
Stock for any ten (10) trading days out of any thirty (30) consecutive trading
days occurring after the Company Exercise Triggering Date and immediately prior
to the date of the Company's Exercise Election Notice is at or above 150% of the
Initial Exercise Price (subject to adjustment for stock splits, stock dividends,
recapitalizations, combinations, reverse stock splits or other similar events).
Notwithstanding the above, any holder of Warrants may exercise such Warrants
into Common Stock pursuant to Section 1(a) on or prior to the date immediately
preceding the Company's Election Exercise Date. In the event the Holder delivers
any Exercise Notice(s) to the Company prior to the


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Company's Election Exercise Date, then the aggregate number of Warrant Shares
issued or issuable pursuant to such Exercise Notice(s) shall be deducted from
the Company Exercise Number.

      2.    ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF WARRANT SHARES UPON
SUBDIVISION OR COMBINATION OF COMMON STOCK. If the Company at any time after the
date of issuance of this Warrant subdivides (by any stock split, stock dividend,
recapitalization or otherwise) one or more classes of its outstanding shares of
Common Stock into a greater number of shares, the Exercise Price in effect
immediately prior to such subdivision will be proportionately reduced and the
number of Warrant Shares will be proportionately increased. If the Company at
any time after the date of issuance of this Warrant combines (by combination,
reverse stock split or otherwise) one or more classes of its outstanding shares
of Common Stock into a smaller number of shares, the Exercise Price in effect
immediately prior to such combination will be proportionately increased and the
number of Warrant Shares will be proportionately decreased. Any adjustment under
this Section 2 shall become effective at the close of business on the date the
subdivision or combination becomes effective.

      3.    RIGHTS UPON DISTRIBUTION OF ASSETS. If the Company shall declare or
make any dividend or other distribution of its assets (or rights to acquire its
assets) to holders of Common Stock, by way of return of capital or otherwise
(including, without limitation, any distribution of cash, stock or other
securities, property or options by way of a dividend, spin off,
reclassification, corporate rearrangement or other similar transaction) (a
"Distribution"), at any time after the issuance of this Warrant, then, in each
such case:

            (a) any Exercise Price in effect immediately prior to the close of
business on the record date fixed for the determination of holders of Common
Stock entitled to receive the Distribution shall be reduced, effective as of the
close of business on such record date, to a price determined by multiplying such
Exercise Price by a fraction of which (i) the numerator shall be the Closing Bid
Price of the Common Stock on the trading day immediately preceding such record
date minus the value of the Distribution (as determined in good faith by the
Company's Board of Directors) applicable to one share of Common Stock, and (ii)
the denominator shall be the Closing Bid Price of the Common Stock on the
trading day immediately preceding such record date; and

            (b) the number of Warrant Shares shall be increased to a number of
shares equal to the number of shares of Common Stock obtainable immediately
prior to the close of business on the record date fixed for the determination of
holders of Common Stock entitled to receive the Distribution multiplied by the
reciprocal of the fraction set forth in the immediately preceding paragraph (a);
provided that in the event that the Distribution is of common stock ("Other
Common Stock") of a company whose common stock is traded on a national
securities exchange or a national automated quotation system, then the Holder
may elect to receive a warrant to purchase Other Common Stock in lieu of an
increase in the number of Warrant Shares, the terms of which shall be identical
to those of this Warrant, except that such warrant shall be exercisable into the
number of shares of Other Common Stock that would have been


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payable to the Holder pursuant to the Distribution had the Holder exercised this
Warrant immediately prior to such record date and with an aggregate exercise
price equal to the product of the amount by which the exercise price of this
Warrant was decreased with respect to the Distribution pursuant to the terms of
the immediately preceding paragraph (a) and the number of Warrant Shares
calculated in accordance with the first part of this paragraph (b).

      4.    PURCHASE RIGHTS; ORGANIC CHANGE.

            (a) Purchase Rights. In addition to any adjustments pursuant to
Section 2 above, if at any time the Company grants, issues or sells any Options,
Convertible Securities or rights to purchase stock, warrants, securities or
other property pro rata to the record holders of any class of Common Stock (the
"Purchase Rights"), then the Holder will be entitled to acquire, upon the terms
applicable to such Purchase Rights, the aggregate Purchase Rights which such
Holder could have acquired if such Holder had held the number of shares of
Common Stock acquirable upon complete exercise of this Warrant (without regard
to any limitations on the exercise of this Warrant) immediately before the date
on which a record is taken for the grant, issuance or sale of such Purchase
Rights, or, if no such record is taken, the date as of which the record holders
of Common Stock are to be determined for the grant, issue or sale of such
Purchase Rights.

            (b) Organic Change. Any recapitalization, reorganization,
reclassification, consolidation, merger, sale of all or substantially all of the
Company's assets to another Person or other transaction, in each case which is
effected in such a way that holders of Common Stock are entitled to receive
securities or assets with respect to or in exchange for Common Stock is referred
to herein as an "Organic Change." Prior to the consummation of any (i) sale of
all or substantially all of the Company's assets to an acquiring Person or (ii)
other Organic Change following which the Company is not a surviving entity, the
Company will secure from the Person purchasing such assets or the Person issuing
the securities or providing the assets in such Organic Change (in each case, the
"Acquiring Entity") a written agreement (in form and substance reasonably
satisfactory to the holders of SPA Warrants representing at least a majority of
the shares of Common Stock obtainable upon exercise of the SPA Warrants then
outstanding) to deliver to the Holder in exchange for this Warrant, a security
of the Acquiring Entity evidenced by a written instrument substantially similar
in form and substance to this Warrant and reasonably satisfactory to the Holder
(including, an adjusted exercise price equal to the value for the Common Stock
reflected by the terms of such consolidation, merger or sale, and exercisable
for a corresponding number of shares of Common Stock acquirable and receivable
upon exercise of this Warrant (without regard to any limitations on the exercise
of this Warrant), if the value so reflected is less than the Exercise Price in
effect immediately prior to such consolidation, merger or sale). In the event
that an Acquiring Entity is directly or indirectly controlled by a company or
entity whose common stock or similar equity interest is listed, designated or
quoted on a securities exchange or trading market, the Holder may elect to treat
such Person as the Acquiring Entity for purposes of this Section 4(b). Prior to
the consummation of any other Organic Change, the Company shall make appropriate
provision (in form and substance reasonably satisfactory to the holders of SPA
Warrants representing at least a majority of the shares of Common Stock
obtainable upon exercise of the SPA Warrants then outstanding) to insure that


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the Holder thereafter will have the right to acquire and receive in lieu of or
in addition to (as the case may be) the shares of Common Stock immediately
theretofore acquirable and receivable upon the exercise of this Warrant (without
regard to any limitations on the exercise of this Warrant), such shares of
stock, securities or assets that would have been issued or payable in such
Organic Change with respect to or in exchange for the number of shares of Common
Stock which would have been acquirable and receivable upon the exercise of this
Warrant as of the date of such Organic Change (without regard to any limitations
on the exercise of this Warrant).

      5.    NONCIRCUMVENTION. The Company hereby covenants and agrees that the
Company will not, by amendment of its Certificate of Incorporation or through
any reorganization, transfer of assets, consolidation, merger, dissolution,
issue or sale of securities, or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms of this Warrant, and
will at all times in good faith carry out all the provisions of this Warrant and
take all action as may be required to protect the rights of the Holder. Without
limiting the generality of the foregoing, the Company (i) will not increase the
par value of any shares of Common Stock receivable upon the exercise of this
Warrant above the Exercise Price then in effect, (ii) will take all such actions
as may be necessary or appropriate in order that the Company may validly and
legally issue fully paid and nonassessable shares of Common Stock upon the
exercise of this Warrant, and (iii) will, so long as any of the SPA Warrants are
outstanding, take all action necessary to reserve and keep available out of its
authorized and unissued Common Stock, solely for the purpose of effecting the
exercise of the SPA Warrants, 100% of the number of shares of Common Stock as
shall from time to time be necessary to effect the exercise of the SPA Warrants
then outstanding (without regard to any limitations on exercise).

      6.    HOLDER NOT DEEMED A STOCKHOLDER. Except as otherwise specifically
provided herein, no Holder, solely in such Person's capacity as a holder of this
Warrant, shall be entitled to vote or receive dividends or be deemed the holder
of shares of the Company for any purpose, nor shall anything contained in this
Warrant be construed to confer upon the Holder, solely in such Person's capacity
as a Holder, any of the rights of a shareholder of the Company or any right to
vote, give or withhold consent to any corporate action (whether any
reorganization, issue of stock, reclassification of stock, consolidation,
merger, conveyance or otherwise), receive notice of meetings, receive dividends
or subscription rights, or otherwise, prior to the issuance to the Holder of the
Warrant Shares which such Person is then entitled to receive upon the due
exercise of this Warrant. In addition, nothing contained in this Warrant shall
be construed as imposing any liabilities on such Holder to purchase any
securities (upon exercise of this Warrant or otherwise) or as a stockholder of
the Company, whether such liabilities are asserted by the Company or by
creditors of the Company. Notwithstanding this Section 6, the Company will
provide the Holder with copies of the same notices and other information given
to the stockholders of the Company generally, contemporaneously with the giving
thereof to the stockholders.


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<PAGE>

      7.    REISSUANCE OF WARRANTS.

            (a) Transfer of Warrant. If this Warrant is to be transferred, the
Holder shall surrender this Warrant to the Company, whereupon the Company will
forthwith issue and deliver upon the order of the Holder a new Warrant (in
accordance with Section 7(d)), registered as the Holder may request,
representing the right to purchase the number of Warrant Shares being
transferred by the Holder and, if less then the total number of Warrant Shares
then underlying this Warrant is being transferred, a new Warrant (in accordance
with Section 7(d)) to the Holder of this Warrant representing the right to
purchase the number of Warrant Shares not being transferred.

            (b) Lost, Stolen or Mutilated Warrant. Upon receipt by the Company
of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Warrant, and, in the case of loss, theft or
destruction, of any indemnification undertaking by the Holder to the Company in
customary form and, in the case of mutilation, upon surrender and cancellation
of this Warrant, the Company shall execute and deliver to the Holder a new
Warrant (in accordance with Section 7(d)) representing the right to purchase the
Warrant Shares then underlying this Warrant.

            (c) Warrant Exchangeable for Multiple Warrants. This Warrant is
exchangeable, upon the surrender hereof by the Holder at the principal office of
the Company, for a new Warrant or Warrants (in accordance with Section 7(d))
representing in the aggregate the right to purchase the number of Warrant Shares
then underlying this Warrant, and each such new Warrant will represent the right
to purchase such portion of such Warrant Shares as is designated by the Holder
at the time of such surrender; provided, however, that no Warrants for
fractional shares of Common Stock shall be given.

            (d) Issuance of New Warrants. Whenever the Company is required to
issue a new Warrant pursuant to the terms of this Warrant, such new Warrant (i)
shall be of like tenor with this Warrant, (ii) shall represent, as indicated on
the face of such new Warrant, the right to purchase the Warrant Shares then
underlying this Warrant (or in the case of a new Warrant being issued pursuant
to Section 7(a) or Section 7(c), the Warrant Shares designated by the Holder
which, when added to the number of shares of Common Stock underlying the other
new Warrants issued in connection with such issuance, does not exceed the number
of Warrant Shares then underlying this Warrant), (iii) shall have an issuance
date, as indicated on the face of such new Warrant which is the same as the
Issuance Date, and (iv) shall have the same rights and conditions as this
Warrant.

      8.    NOTICES. Any notices, consents, waivers or other communications
required or permitted to be given under the terms of this Warrant must be in
writing and will be deemed to have been delivered: (i) upon receipt, when
delivered personally; (ii) upon receipt, when sent by facsimile (provided
confirmation of transmission is mechanically or electronically generated and
kept on file by the sending party); or (iii) one Business Day after deposit with
an overnight courier service, in each case properly addressed to the party to
receive the same. The addresses and facsimile numbers for such communications
shall be:


                                     - 10 -
<PAGE>

            If to the Company:

                  Arotech Corporation
                  632 Broadway
                  Suite 1200
                  New York, New York 10012
                  Facsimile No.:   (646) 654-2187
                  Telephone No.:  (646) 654-2107
                  Attn.:  Chief Executive Officer

            With a copy to:

                  Electric Fuel (E.F.L.) Ltd.
                  One HaSolela Street, POB 641
                  Western Industrial Park
                  Beit Shemesh 99000, Israel
                  Facsimile No.: 011-972-2-990-6688
                  Telephone No.:  011-972-2-990-6623
                  Attn.: General Counsel

If to the Holder, to its address and facsimile number set forth on the Schedule
of Buyers to the Securities Purchase Agreement, with copies to such Holder's
representatives as set forth on the Schedule of Buyers,

            With a copy to:

                  Schulte Roth & Zabel LLP
                  919 Third Avenue
                  New York, New York 10022
                  Facsimile No.:   (212) 593-5955
                  Telephone No.:  (212) 756-2000
                  Attn.: Eleazer Klein, Esq.

or to such other address and/or facsimile number and/or to the attention of such
other Person as the recipient party has specified by written notice given to
each other party five (5) days prior to the effectiveness of such change.
Written confirmation of receipt (A) given by the recipient of such notice,
consent, waiver or other communication, (B) mechanically or electronically
generated by the sender's facsimile machine containing the time, date, recipient
facsimile number and an image of the first page of such transmission or (C)
provided by an overnight courier service shall be rebuttable evidence of
personal service, receipt by facsimile or receipt from an overnight courier
service in accordance with clause (i), (ii) or (iii) above, respectively.

The Company shall provide the Holder with prompt written notice of all actions
taken pursuant to this Warrant, including in reasonable detail a description of
such action and the reason therefore. Without limiting the generality of the
foregoing, the Company will give written notice to the Holder (i) immediately
upon any adjustment of the Exercise Price, setting forth in reasonable detail,
and certifying, the calculation of such adjustment and (ii) promptly after the
date on which the Company establishes a record date (A) with respect to any
dividend or


                                     - 11 -
<PAGE>

distribution upon the Common Stock, (B) with respect to any grants, issues or
sales of any Options, Convertible Securities or rights to purchase stock,
warrants, securities or other property to holders of Common Stock or (C) for
determining rights to vote with respect to any Organic Change, dissolution or
liquidation, provided in each case that such information shall be made known to
the public prior to or in conjunction with such notice being provided to the
Holder.

      9. AMENDMENT AND WAIVER. Except as otherwise provided herein, the
provisions of this Warrant may be amended and the Company may take any action
herein prohibited, or omit to perform any act herein required to be performed by
it, only if the Company has obtained the written consent of the holders of SPA
Warrants representing at least a majority of the shares of Common Stock
obtainable upon exercise of the SPA Warrants then outstanding; provided that no
such action may increase the exercise price of any SPA Warrant or decrease the
number of shares or class of stock obtainable upon exercise of any SPA Warrant
without the written consent of the Holder. No such amendment shall be effective
to the extent that it applies to less than all of the holders of the SPA
Warrants then outstanding.

      10. GOVERNING LAW. This Warrant shall be construed and enforced in
accordance with, and all questions concerning the construction, validity,
interpretation and performance of this Warrant shall be governed by, the
internal laws of the State of New York, without giving effect to any choice of
law or conflict of law provision or rule (whether of the State of New York or
any other jurisdictions) that would cause the application of the laws of any
jurisdictions other than the State of New York.

      11. CONSTRUCTION; HEADINGS. This Warrant shall be deemed to be jointly
drafted by the Company and all the Buyers and shall not be construed against any
person as the drafter hereof. The headings of this Warrant are for convenience
of reference and shall not form part of, or affect the interpretation of, this
Warrant.

      12. DISPUTE RESOLUTION. In the case of a dispute as to the determination
of the Exercise Price or the arithmetic calculation of the Warrant Shares, the
Company shall submit the disputed determinations or arithmetic calculations via
facsimile within two Business Days of receipt of the Exercise Notice giving rise
to such dispute, as the case may be, to the Holder. If the Holder and the
Company are unable to agree upon such determination or calculation of the
Exercise Price or the Warrant Shares within three Business Days of such disputed
determination or arithmetic calculation being submitted to the Holder, then the
Company shall, within two Business Days submit via facsimile (a) the disputed
determination of the Exercise Price to an independent, reputable investment bank
selected by the Company and approved by the Holder or (b) the disputed
arithmetic calculation of the Warrant Shares to the Company's independent,
outside accountant. The Company shall cause at its expense the investment bank
or the accountant, as the case may be, to perform the determinations or
calculations and notify the Company and the Holder of the results no later than
ten Business Days from the time it receives the disputed determinations or
calculations. Such investment bank's or accountant's determination or
calculation, as the case may be, shall be binding upon all parties absent
demonstrable error.


                                     - 12 -
<PAGE>

      13. REMEDIES, OTHER OBLIGATIONS, BREACHES AND INJUNCTIVE RELIEF. The
remedies provided in this Warrant shall be cumulative and in addition to all
other remedies available under this Warrant and the Securities Purchase
Agreement, at law or in equity (including a decree of specific performance
and/or other injunctive relief), and nothing herein shall limit the right of the
Holder to pursue actual damages for any failure by the Company to comply with
the terms of this Warrant. The Company acknowledges that a breach by it of its
obligations hereunder will cause irreparable harm to the Holder and that the
remedy at law for any such breach may be inadequate. The Company therefore
agrees that, in the event of any such breach or threatened breach, the Holder
shall be entitled, in addition to all other available remedies, to an injunction
restraining any breach, without the necessity of showing economic loss and
without any bond or other security being required.

      14. TRANSFER. This Warrant may be offered for sale, sold, transferred or
assigned without the consent of the Company.

      15. CERTAIN DEFINITIONS. For purposes of this Warrant, the following terms
shall have the following meanings:

            (a) "Bloomberg" means Bloomberg Financial Markets.

            (b) "Business Day" means any day other than Saturday, Sunday or
other day on which commercial banks in The City of New York are authorized or
required by law to remain closed.

            (c) "Closing Bid Price" and "Closing Sale Price" means, for any
security as of any date, the last closing bid price and last closing trade
price, respectively, for such security on the Principal Market, as reported by
Bloomberg, or, if the Principal Market begins to operate on an extended hours
basis and does not designate the closing bid price or the closing trade price,
as the case may be, then the last bid price or last trade price, respectively,
of such security prior to 4:00:00 p.m., New York Time, as reported by Bloomberg,
or, if the Principal Market is not the principal securities exchange or trading
market for such security, the last closing bid price or last trade price,
respectively, of such security on the principal securities exchange or trading
market where such security is listed or traded as reported by Bloomberg, or if
the foregoing do not apply, the last closing bid price or last trade price,
respectively, of such security in the over-the-counter market on the electronic
bulletin board for such security as reported by Bloomberg, or, if no closing bid
price or last trade price, respectively, is reported for such security by
Bloomberg, the average of the bid prices, or the ask prices, respectively, of
any market makers for such security as reported in the "pink sheets" by Pink
Sheets LLC (formerly the National Quotation Bureau, Inc.). If the Closing Bid
Price or the Closing Sale Price cannot be calculated for a security on a
particular date on any of the foregoing bases, the Closing Bid Price or the
Closing Sale Price, as the case may be, of such security on such date shall be
the fair market value as mutually determined by the Company and the Holder. If
the Company and the Holder are unable to agree upon the fair market value of
such security, then such dispute shall be resolved pursuant to Section 12. All
such determinations to be appropriately adjusted for any stock dividend, stock
split, stock combination or other similar transaction during the applicable
calculation period.


                                     - 13 -
<PAGE>

            (d) "Common Stock" means (i) the Company's common stock, par value
$.01 per share, and (ii) any capital stock into which such Common Stock shall
have been changed or any capital stock resulting from a reclassification of such
Common Stock.

            (e) "Convertible Securities" means any stock or securities (other
than Options) directly or indirectly convertible into or exercisable or
exchangeable for Common Stock.

            (f) "Expiration Date" means July 7, 2007.

            (g) "Options" means any rights, warrants or options to subscribe for
or purchase Common Stock or Convertible Securities.

            (h) "Person" means an individual, a limited liability company, a
partnership, a joint venture, a corporation, a trust, an unincorporated
organization, any other entity and a government or any department or agency
thereof.

            (i) "Principal Market" means the Nasdaq National Market.

            (j) "Registration Rights Agreement" means that certain registration
rights agreement dated the Subscription Date by and among the Company and the
Buyers.

            (k) "Weighted Average Price" means, for any security as of any date,
the dollar volume-weighted average price for such security on the Principal
Market during the period beginning at 9:30:01 a.m., New York Time (or such other
time as the Principal Market publicly announces is the official open of
trading), and ending at 4:00:00 p.m., New York Time (or such other time as the
Principal Market publicly announces is the official close of trading) as
reported by Bloomberg through its "Volume at Price" functions, or, if the
foregoing does not apply, the dollar volume-weighted average price of such
security in the over-the-counter market on the electronic bulletin board for
such security during the period beginning at 9:30:01 a.m., New York Time (or
such other time as such market publicly announces is the official open of
trading), and ending at 4:00:00 p.m., New York Time (or such other time as such
market publicly announces is the official close of trading) as reported by
Bloomberg, or, if no dollar volume-weighted average price is reported for such
security by Bloomberg for such hours, the average of the highest closing bid
price and the lowest closing ask price of any of the market makers for such
security as reported in the "pink sheets" by Pink Sheets LLC (formerly the
National Quotation Bureau, Inc.). If the Weighted Average Price cannot be
calculated for a security on a particular date on any of the foregoing bases,
the Weighted Average Price of such security on such date shall be the fair
market value as mutually determined by the Company and the Holder. If the
Company and the Holder are unable to agree upon the fair market value of such
security, then such dispute shall be resolved pursuant to Section 12. All such
determinations to be appropriately adjusted for any stock dividend, stock split,
stock combination or other similar transaction during the applicable calculation
period.

                            [Signature Page Follows]


                                     - 14 -
<PAGE>

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

                                        AROTECH CORPORATION

                                        By: ____________________________________
                                            Name:  Robert S. Ehrlich
                                            Title: Chief Executive Officer


                                     - 15 -
<PAGE>

                                    Exhibit A

                                 EXERCISE NOTICE
            TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE THIS
                                     WARRANT

                               AROTECH CORPORATION

To:   Arotech Corporation

      The undersigned is the Holder of Warrant No. _____ (the "Warrant") issued
by Arotech Corporation, a Delaware corporation (the "Company"). Capitalized
terms used herein and not otherwise defined shall have the respective meanings
set forth in the Warrant.

      1. The Warrant is currently exercisable to purchase a total of
____________ Warrant Shares.

      2. The undersigned holder hereby exercises its right to purchase
______________ Warrant Shares pursuant to the Warrant.

      3. The Holder intends that payment of the Exercise Price shall be made as:

            ____________ a "Cash Exercise" with respect to _________________
                         Warrant Shares; and/or

            ____________ a "Cashless Exercise" with respect to _______________
                         Warrant Shares.

      4. Pursuant to this exercise, the Company shall deliver to the holder
__________ Warrant Shares in accordance with the terms of the Warrant.

      5. Following this exercise, the Warrant shall be exercisable to purchase a
total of ________________ Warrant Shares.

      Please issue the Warrant Shares in the following name and to the following
address:

      Issue to:_________________________________________________________________

               _________________________________________________________________

      Account Number:___________________________________________________________

      DTC Participant Number:___________________________________________________

Date: _______________ __, ______


___________________________________
Name of Registered Holder


By:
   ________________________________
   Name:
   Title:

<PAGE>

                                 ACKNOWLEDGMENT

      The Company hereby acknowledges this Exercise Notice and hereby directs
American Stock Transfer & Trust Co. to issue the above indicated number of
shares of Common Stock in accordance with the Transfer Agent Instructions dated
January __, 2004, from the Company and acknowledged and agreed to by American
Stock Transfer & Trust Co.

                                        AROTECH CORPORATION

                                        By:_____________________________________
                                           Name:
                                           Title:

<PAGE>

                               FORM OF ASSIGNMENT

           [To be completed and signed only upon transfer of Warrant]

      FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto ________________________________ the right represented by the within
Warrant to purchase ____________ shares of Common Stock of Arotech Corporation
to which the within Warrant relates and appoints ________________ attorney to
transfer said right on the books of Arotech Corporation with full power of
substitution in the premises.

      Dated:___,___________________

                                        ________________________________________
                                        (Signature must conform in all respects
                                        to name of Holder as specified on the
                                        face of the Warrant)

                                        ________________________________________
                                        Address of Transferee

      In the presence of:

      _____________________________