Exhibit 10.15   AMENDED
AND RESTATED EMPLOYMENT AGREEMENT
  THIS AMENDED AND RESTATED EMPLOYMENT
AGREEMENT is signed on the 14th day of
April, 2008, effective as of the 1st day of
January, 2008, by and between Arotech Corporation, a
Delaware corporation with offices at 1229 Oak Valley Drive, Ann Arbor, Michigan
48108 (the “Company”), and Thomas J. Paup, an individual
residing at 4716 Lohr Road, Ann Arbor, Michigan 46108 (the
“Employee”).
  W I T N E S S E T H
:
  WHEREAS, the Company and the
Employee entered into an Employment Agreement dated as of December 30, 2005 (the
“Original Agreement”); and
  WHEREAS, the Company and the
Employee now wish to extend the Employee’s employment and to amend and restate
the Original Agreement in its entirety in accordance with the terms of this
Agreement;
  NOW, THEREFORE, the parties hereto
do hereby agree as follows:
  1.      
     Title and Duties.
  (a)           The
Employee will serve as Vice President – Finance and Chief Financial Officer of
the Company, except that the Company may, from time to time, change the title
and/or duties of the Employee in such manner as shall not unduly prejudice the
rights of the Employee hereunder. The Employee will report to the President and
Chief Operating Officer of the Company or to such other person as shall be
designated, from time to time, by the Board of Directors of the
Company.
  (b)           The
Employee shall not during the term hereof undertake or accept any other
employment or occupation, whether paid or unpaidprovided, however, that the Employee
may continue to work up to eight (8) evenings per month as a Finance
Instructor atEasternMichiganUniversity.
The Employee acknowledges and agrees that, although ordinary working hours are
expected to be Monday through Friday, 8 a.m. to 5 p.m., under certain
circumstances the performance of his duties hereunder may require additional
time and/or domestic and international travel. The Employee acknowledges that
this is a managerial position, and that accordingly overtime hours will be
worked as needed, without additional compensation.
  (c)           The
Employee’s place of work will be in Ann Arbor, Michigan, or at such other place
as the Company may from time to time specify, provided that the employment of
the Employee on a permanent basis at a place which is located more that fifty
(50) miles from Ann Arbor, Michigan shall be done only with the Employee’s prior
consent.
  2.         
   Compensation and Benefits.
  (a)           The
Company shall pay the Employee, as compensation for all of the employment
services provided by him hereunder during the term of this Agreement, an
annualized base salary of one hundred sixty thousand dollars ($160,000) (the
“Base Salary”). The Base Salary will be paid semi-monthly in arrears on the
fifteenth and final day of each month. The Base Salary will, effective January 1
of each year beginning January 1, 2009, be increased annually by six percent
(6%) to reflect changes in the Consumer Price Index during the previous year,
irrespective of the actual extent of any such changes. Additionally, the Base
Salary may be increased from time to time, effective January 1 of each year
beginning January 1, 2009,  in accordance with the Company’s
procedures, and in the Company’s sole discretion, based on the Employee’s
performance during the prior year.
  
  (b)           The
Company agrees to pay or cause to be paid to the Employee on each March 31
following the first anniversary of this Agreement, or as soon thereafter as may
be possible in order to determine the relevant results of the Company, an annual
bonus, as follows:
  (i)      
     If, as of such anniversary, the Company shall have
attained 90% of the Company’s Budgeted Number (as defined below) for the year
preceding such anniversary, then Employee’s bonus shall be equal to 20% of
Employee’s gross annual Base Salary as then in effect for the year preceding
such anniversary;
  (ii)      
    If, as of such anniversary, the Company shall have
attained 120% of the Company’s Budgeted Number (as defined below) for the year
preceding such anniversary, then Employee’s bonus shall be equal to 50% of
Employee’s gross annual Base Salary as then in effect for the year preceding
such anniversary;
  (iii)       
  If, as of such anniversary, the Company shall have attained more
than 90% but less than 120% of the Company’s Budgeted Number (as defined below),
then Employee’s bonus shall be calculated as follows:
  B
=         (S x 20%) + (N-90)/30 x (S x
30%)
  Where:
  B  =
              The
      amount of Employee’s annual bonus;
and
  N  =
              The
      percentage of the Budgeted Number (as defined below) that was attained by
      the Company in the immediately preceding fiscal year; provided, however, that N is more
      than 90 and less than 120;
  S  =
              Employee’s
      gross annual Base Salary.
  For the
purposes of this Section 2(b), the Budgeted Number shall be the budgeted results
of the Company as agreed by the Board prior to the end of each fiscal year for
the fiscal year designated in such budget, and may include targets for any or
all of the following factors: (i) revenues; (ii) cash flow, and (iii) EBITDA. In
the event that some but not all targets are reached, the Compensation Committee
shall made a determination as to what percentage of the Budgeted Number was
attained.
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  (c)           The
Company has granted to the Employee a retention bonus of 65,000 shares of
restricted stock, vesting (i) 10,834 shares on December 31, 2008, 10,833 shares
on December 31, 2009, and 10,833 shares on December 31, 2010, with each such
vesting being contingent on the Employee being employed by the Company on the
scheduled vesting date, and (ii) 10,834 shares on December 31, 2008, 10,833
shares on December 31, 2009, and 10,833 shares on December 31, 2010, with each
such vesting being contingent on the Employee being employed by the Company on
the scheduled vesting date and on performance criteria to be established by the
Compensation Committee of the Board of Directors.
  (d)           The
Employee shall be entitled to a paid annual vacation of twenty (20) business
days with respect to, and during, each twelve (12) month period of his
employment hereunder, provided that the unused portion of any such vacation, in
respect to any year, may be carried forward only to the next two-year period.
Upon termination Employee shall be paid for all accrued but unused vacation. Any
vacation days taken by Employee in advance of their actual accrual shall be
considered an advance on wages and deducted from any wages owing at termination.
Timing of vacations will be cleared in advance with the Company.
  (e)           The
Employee shall be entitled to paid sick leave of five (5) days with respect to,
and during, each twelve (12) month period of his employment
hereunder.
  (f)           The
Company shall provide the Employee and his family with medical insurance and
related insurance benefits in accordance with its policies from time to time for
all employees generally.
  (g)           The
Company shall reimburse the Employee’s work-related expenses, against proper
receipts, subject to and in accordance with policies adopted, from time to time,
by the Company.
  3.      
      Confidential Information; Return of
Materials; Inventions; on-Solicitation.
  (a)           In
the course of his employment by the Company hereunder, the Employee will have
access to, and become familiar with, “Confidential Information” (as hereinafter
defined) of the Company. The Employee shall at all times hereinafter maintain in
the strictest confidence all such Confidential Information and shall not divulge
any Confidential Information to any person, firm or corporation without the
prior written consent of the Company. For purposes hereof, “Confidential
Information” shall mean all information in any and all media which is
confidential by its nature including, without limitation, data, technology,
know-how, inventions, discoveries, designs, processes, formulations, models,
customer lists and contact people, prices and any other trade and business
secrets relating to any line of business in which the Company’s marketing and
business plans relating to current, planned or nascent products.
  (b)           The
Employee shall not use Confidential Information for, or in connection with, the
development, manufacture or use of any product or for any other purpose
whatsoever except as and to the extent necessary for him to perform his
obligations under this Agreement.
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  (c)           Notwithstanding
the foregoing, Confidential Information shall not include information which the
Employee can evidence to the Company by appropriate documentation is in, or
enters, the public domain otherwise than by reason of breach hereof by the
Employee.
  (d)           All
Confidential Information made available to, or received by, the Employee shall
remain the property of the Company, and no license or other rights in or to the
Confidential Information is granted hereby.
  (e)           All
files, records, documents, drawings, specifications, equipment, and similar
items relating to the business of the Company, whether prepared by the Employee
or otherwise coming into his possession, and whether classified as Confidential
Information or not, shall remain the exclusive property of the Company. Upon
termination or expiration of this Agreement, or upon request by the Company at
any time, the Employee shall promptly turn over to the Company all such files,
records, reports, analyses, documents, and other material of any kind and in any
medium concerning the Company which the Employee obtained, received or prepared
pursuant to this Agreement without retaining any copies thereof in any
medium.
  (f)           Commencing
on the date hereof and ending two (2) years after the termination of this
Agreement (irrespective of the reason for such termination), the Employee shall
not solicit nor in any manner encourage other employees of the Company to leave
its employ. The Employee further agrees that during that two (2) year period he
will not offer, or cause to be offered, employment to any person who was
employed by the Company at any time during the three months prior to the
termination of this Agreement.
  (g)           The
Employee acknowledges that the provisions set forth in Section 3 of this
Agreement are fair and reasonable. The Employee further acknowledges that the
Company will be irreparably harmed if the Employee’s obligations under this
Section 3 are not specifically enforced and that the Company would not have an
adequate remedy at law in the event of an actual or threatened violation by the
Employee of the Employee’s obligations. Therefore, and in addition to any and
all other remedies to which it may be entitled, the Company shall be entitled to
an injunction or any appropriate decree of specific performance for any actual
or threatened violations or breach by the Employee without the necessity of the
Company showing actual damages or that monetary damages would not afford an
adequate remedy, and without posting a bond.
  (h)           The
provisions of this Section 3 shall survive the expiration or termination of this
Agreement regardless of the reasons therefor. Furthermore, the period of time
during which the restrictions set forth in subsection (f) above shall be in
effect shall be extended by the length of time during which the Employee is in
breach of any of the terms of such subsection.
  4.          
  Prohibition on Trading While in Possession of Material Non-Public
Information.
  (a)           The
Employee acknowledges that the Company is a publicly-listed company, and that
the Employee is a “person having a duty of trust or confidence” as defined in
Rule 10b5-2 promulgated under the United States Securities Exchange Act of 1934,
as amended, and that the Employee is accordingly prohibited from trading in
shares of the Company on the basis of material non-public information. The
Employee covenants and agrees that the Employee will not trade in, or, without
the express consent of the Company, exercise any option to purchase securities
of the Company (the “Arotech Shares”) (1) until at least two Trading Days (a
“Trading Day” being a day on which the U.S. Financial markets are open for
trading) have passed since such material information was released to the public,
and (2) during the period beginning on the eleventh calendar day of the third
month of each fiscal quarter and ending at the close of the second Trading Day
following the release of quarterly or annual financial results. The Employee
understands and acknowledges that the most appropriate time to trade in Arotech
Shares is the period beginning on the third Trading Day and ending on the
twelfth Trading Day following the release of quarterly or financial information,
provided that during such period the Employee possesses no other material
non-public information which is not disclosed in such release.
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  (b)           If
at any time the Employee is working on securities matters regarding the Company,
or is aware that the Company is offering or selling its own securities or is
involved in a tender offer situation, the Employee shall consult with the
General Counsel of the Company before trading in Arotech Shares.
  (c)           The
provisions of this Section 4 shall survive the expiration or termination of this
Agreement regardless of the reasons therefor.
  5.          Term and Termination. This
Agreement shall be for a period of three years (the “Initial Term”), provided, however, that the term of
this Agreement shall be automatically extended for additional terms of two (2)
years each (each, an “Additional Term”) upon the end of the Initial Term and
each Additional Term, unless either the Employee or the Company shall have given
written notice to the other at least ninety days (90) days prior thereto that
the Initial Term or any Additional Term of this Agreement shall not be so
extended (a “Non-Renewal”). This Agreement may be terminated at any time, as
follows:
  (a)           This
Agreement shall terminate upon the death or incapacitation of the Employee. For
purposes hereof, the Employee shall be deemed to be incapacitated if he is
unable to perform his duties hereunder, as evidenced by a certificate(s) to that
effect, signed by a doctor reasonably satisfactory to the Company, for a
continuous period of one hundred fifty (150) days or for shorter periods
aggregating more than two hundred (200) days in any period of twelve (12)
consecutive months.
  (b)           The
Company shall have the right to terminate this Agreement and the employment
relationship hereunder for cause, at any time, by informing the Employee that
such termination is for and cause and by further informing the Employee of the
acts or omissions constituting cause. In such event, this Agreement and the
employment relationship between the Company and the Employee shall be terminated
as of the time Employee is informed that such termination is for cause. For
purposes hereof, “cause” shall mean: (1) a breach of trust by the Employee,
including, for example, but without limitation, commission of an act of moral
turpitude, theft, embezzlement, self-dealing or insider trading; (2) the
unauthorized disclosure by the Employee of confidential information of or
relating to the Company; (3) a material breach by the Employee of this
Agreement; or (4) any act of, or omission by, the Employee which, in the
reasonable judgment of the Company, amounts to a serious failure by the Employee
to perform his responsibilities or functions or in the exercise of his
authority, which failure, in the reasonable judgment of the Company, rises to a
level of gross nonfeasance, misfeasance or malfeasance.
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  (c)           Upon
termination of this Agreement other than for the reasons set forth in subsection
(b) above, including without limitation a Non-Renewal, the Company shall pay the
Employee as severance pay an amount equal to (x) four (4) times the monthly Base
Salary at the highest rate in effect at any time within the ninety (90) day
period ending on the Termination Date, plus (y) an additional two (2) months’
Base Salary for every year worked during the term of this Agreement, with the
maximum severance payable (the sum of (x) and (y) above) of twelve (12) months’
Base Salary; provided,
however, that if the
Employee’s employment is terminated by reason of a Change of Control (as
hereinafter defined), the minimum termination payment shall be an amount equal
to twice the amount that it would had been had it been terminated for reasons
other than a Change of Control. For purposes of this Agreement, a “Change in
Control” shall mean any of the following events:
  (i) the
acquisition (other than from the Company in any public offering or private
placement of equity or equivalent securities) by any person or entity of
beneficial ownership of thirty percent (30%) or more of the combined voting
power of the Company’s then outstanding voting securities; or
  (ii) individuals
who, as of December 31, 2007, were members of the Board of the Company (the
“Original Board”), together with individuals approved by a vote of at least
two-thirds (2/3) of the individuals who were members of the Original Board and
are then still members of the Board of the Company, cease for any reason to
constitute at least one-third (1/3) of the Board of the Company; or
  (iii)           approval
by the shareholders of the Company of a complete winding-up of the Company or an
agreement for the sale or other disposition of all or substantially all of the
assets of the Company.
  6.           Miscellaneous.
  (a)           All
notices and other communications required or permitted under this Agreement
shall be in writing and shall be sent by facsimile transmission to the other
party at the fax number set forth below, with a copy sent by first class mail or
express courier to said party at the address set forth below, or to such other
fax number and/or address as a party may hereinafter designate by notice to the
other. Notices shall be effective on the date they are sent by facsimile
transmission if the facsimile transmission report confirms receipt by the
receiving fax.
  (b)           This
Agreement shall be subject to, governed by and construed in accordance with, the
laws of the State of Michigan without regard to conflicts of law provisions and
principles of that State, and the courts located in Washtenaw County, Michigan
shall have exclusive jurisdiction and venue of any dispute
hereunder.
  (c)           This
Agreement contains the entire agreement between the Employee and the Company
with respect to all matters relating to the Employee’s employment with the
Company and will supersede and replace all prior agreements and understandings,
written or oral, between the parties relating to the subject matter hereof. This
Agreement may be amended, modified, or supplemented only by a written instrument
signed by both of the parties hereto. No waiver or failure to act by either
party with respect to any breach or default hereunder, whether or not the other
party has notice thereof, shall be deemed to be a waiver with respect to any
subsequent breach or default, whether of similar or different
nature.
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  (d)           If
any provision of this Agreement, under all the then relevant circumstances, is
held to be invalid, illegal or unenforceable, the other provisions shall remain
in full force and effect, and the relevant provision shall automatically be
modified by substituting for the unenforceable provision an enforceable
provision which most closely approximates the intent and economic effect of the
invalid provision.
  (e)           This
Agreement shall inure to the benefit of the Company and its successors and
assigns.
  (f)           The
headings contained in this Agreement are intended solely for ease of reference
and shall be given no effect in the construction or interpretation of this
Agreement.
  IN WITNESS WHEREOF, the
parties hereto have duly executed this Agreement as of the effective date set
forth above:
  Arotech
      CorporationBy:Thomas
      J. Paup
              
              
              Name:Title:
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