----

| BETWEEN: | AROTECH      CORPORATION |
|----------|--------------------------|

|   | Private      Company 2249957 (Delaware, USA) |
|--------|----------------------------------------------|

|   | Convened      by the laws of Delaware, USA, and located in the USA  at: |
|--------|-------------------------------------------------------------------------|

|   | 1229      Oak Valley Drive, Ann Arbor,Michigan |
|--------|------------------------------------------------|

|   | (Hereinafter:      “Arotech”) |
|--------|-------------------------------------------|

| AND    BETWEEN: | ELECTRIC FUEL (E.P.L.)      LTD. |
|-----------------|----------------------------------|

|   | Private      Company 511532673 |
|--------|--------------------------------|

|   | Israeli      company, located at 1 Hasolela Street, Beit Shemesh Industrial Zone, West,      Israel |
|--------|-----------------------------------------------------------------------------------------------------|

|   | (Hereinafter:      “Electric      Fuel”) |
|--------|------------------------------------------------------|

| AND    BETWEEN: | MDT ARMOR      CORPORATION |
|-----------------|----------------------------|

|   | Private      Company 3658224 (Delaware, USA) |
|--------|----------------------------------------------|

|   | Convened      by the laws of Delaware, USA, and located in the USA  at: |
|--------|-------------------------------------------------------------------------|

|   | 308      Alabama Street, Auburn, AL 36832 |
|--------|-------------------------------------------|

|   | (Hereinafter:      “MDT”) |
|--------|---------------------------------------|

| AND    BETWEEN: | M.D.T. PROTECTIVE INDUSTRIES      LTD. |
|-----------------|----------------------------------------|

|   | Private      company 511362451 |
|--------|--------------------------------|

|   | Israeli      company, located at 1 Hamasger Street, Lod,  Israel |
|--------|------------------------------------------------------------------|

|   | (Hereinafter:      “M.D.T.) |
|--------|-----------------------------------|

----

| AND    BETWEEN: | HRT  LTD. |
|-----------------|-----------|

|   | Private      Company 513162719 |
|--------|--------------------------------|

|   | Israeli      company, located at 50 Wolfson Street, Rishon Lezion,    Israel |
|--------|------------------------------------------------------------------------------|

|   | (Hereinafter:      “HRT”) |
|--------|---------------------------------------|

| AND    BETWEEN: | YOSSI  BAR |
|-----------------|------------|

|   | Israeli      Identity Number 0-1062177-9 |
|--------|------------------------------------------|

|   | Residing      at 50 Wolfson Street, Rishon Lezion |
|--------|---------------------------------------------------|

|   | (Hereinafter:      “Yossi      Bar” |
|--------|-------------------------------------------------|

| WHEREAS | HRT      is the owner and sole holder of 539 regular shares with a set value of NIS      1 each (hereinafter: “Regular Shares”) of      M.D.T., of the share capital issued and redeemed by M.D.T. comprising 2200      regular shares, so that HRT’s shares in M.D.T. comprise approximately      24.5% of the issued and redeemed shares of M.D.T. (hereinafter: “HRT’s Shares in      M.D.T.); |
|---------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | AND    WHEREAS | Electric      Fuel is the owner and sole holder of 1661 regular shares of M.D.T., so      that Electric Fuel’s shares in M.D.T. comprise approximately 75.5% of the      issued and redeemed shares ofM.D.T.; |
|--|----------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | AND    WHEREAS | HRT      is the owner and sole holder of 49 common shares, of the issued and      redeemed share capital of MDT, each valued at 0.01 USA Dollars      (hereinafter: “Dollar”), comprising 408      common shares, so that HRT’s shares in MDT comprise approximately 12.01%      of the issued and redeemed shares of MDT (hereinafter: “HRT’s Shares in      MDT”); |
|--|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| AND    WHEREAS | Yossi      Bar was given the option of purchasing 5% of MDT’s shares (hereinafter:      the      Option”); |
|----------------|------------------------------------------------------------------------------------------------------------------------|

| AND    WHEREAS | Yossi      Bar is the shareholder and CEO ofHRT; |
|----------------|--------------------------------------------------|

----

|  | AND    WHEREAS | HRT      and Yossi Bar declare and undertake, as a fundamental and basic element of      this agreement, that all the shares of HRT in M.D.T. and all of HRT’s      shares in MDT are under the full, sole and complete ownership of HRT and      are clear and free of any right and/or attachment and/or seizure and/or      contradictory undertaking toward any third party (hereinafter: “Clear and Free”), and      there is no deterrent by any law and/or agreement that HRT and/or Yossi      Bar and/or any representative on his behalf sell all HRT’s shares in      M.D.T. and HRT’s shares in MDT and that, as needed, HRT come to a legal      decision to sell all its shares as stated above, according to the      directives of this agreement; |
|--|----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | AND    WHEREAS | Electric      Fuel is interested in purchasing all HRT’s shares in M.D.T. from HRT and      HRT is interested in selling Electric Fuel all HRT’s shares in M.D.T. and      Arotech is interested in purchasing all HRT’s shares in MDT from HRT and      HRT is interested in selling all HRT’s shares in MDT to Arotech - all      according to the terms of this agreement; and that, as needed, Arotech      and/or Electric Fuel have effected a legal decision to purchase the shares      as stated above, according to the directives of this      agreement; |
|--|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | AND    WHEREAS | After      the sale of all HRT’s shares in M.D.T. and the sale of all HRT’s shares in      MDT, according to the directives of this agreement, HRT and/or Yossi Bar      will not have any right and/or claim and/or demand and/or suit, of any      type or kind, today or in the future, towards Arotech and/or Electric Fuel      and/or M.D.T. and/or MDT and/or any person connected to them and/or any      representative on their behalf, including, but without excluding, any      worker and/or manager and/or position holder and/or director and/or      shareholder, amongst them; |
|--|----------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | AND    WHEREAS | on      January 3, 2008, Yossi Bar was dismissed from M.D.T., a position which he      had held from February 1, 1989 and according to this agreement M.D.T.      wishes to settle all accounts between M.D.T. and Yossi Bar in regard to      the employer-employee relations between them, in a manner that will serve      as a full and complete defrayal of any right and/or demand and/or claim      and/or suit, of any type or kind, today or in the future, of Yossi Bar to      M.D.T. and/or any person on its behalf or connected to it in any way      (directly or indirectly, including, but not excluding, shareholders,      position holders and workers) regarding the working relations that existed      between Yossi Bar and M.D.T., including, but not excluding, in regard to      the dismissal of Yossi Bar from his abovementioned    employment; |
|--|----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|  | AND    WHEREAS | The      working relationship between M.D.T. and HRT terminated on January 3, 2008,      according to which HRT provided M.D.T. with engineering services, and as      part of this agreement M.D.T. wishes to settle all accounts between M.D.T.      and HRT regarding the services provided by HRT as stated above, in a      manner that will serve as a full and complete defrayal of any right and/or      demand and/or claim and/or suit, of any type or kind, today or in the      future, of HRT to M.D.T. and/or any person on its behalf or connected to      it in any way (directly or indirectly, including, but not excluding,      shareholders, position holders andworkers); |
|--|----------------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | AND    WHEREAS | M.D.T.      wishes to receive from Yossi Bar and any person on his behalf, not as part      of employer-employee relations, services connected to the completion of      M.D.T.’s undertakings toward third parties in the Tzivoni Project, and      Yossi Bar wishes and agrees to provide M.D.T. with the abovementioned      services, not as part of employer-employee  relations; |
|--|----------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | AND    WHEREAS | The      parties wish to settle, in a final, comprehensive, full and complete      manner, any dispute and/or conflict and/or claim and/or suit and/or demand      and/or matter pertaining to the relationship between the parties,      including, but without excluding, the fact that HRT is a shareholder in      M.D.T. and/or MDT and/or the working relations between Yossi Bar and      M.D.T. and/or the relations between HRT and  M.D.T. |
|--|----------------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 1. | Introduction |
|----|--------------|

|   | 1.1 | The      preamble to this agreement and its appendices are an inseparable part      thereof and taken to be one of itsterms. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------|

----

|   | 1.2 | The      titles of the sections in this agreement are used for convenience sake      only and do not carry any weight in its  interpretation. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------|

|   | 1.3 | This      agreement cancels or terminates any other consent and/or relationship      and/or agreement and/or contract previously written and/or signed between      the parties, including contacts for the purpose of employment and      employer-employee relations of Yossi Bar at M.D.T. and/or contacts between      HRT and M.D.T., excluding any undertaking for maintaining      confidentiality. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 2. | Declarations and      Undertakings of the Parties |
|----|---------------------------------------------------|

|   | 2.1 | Electric Fuel declares and      undertakes as follows: |
|--------|-----|--------------------------------------------------------|

|   | 2.1.1 | It      recognizes the situation of M.D.T., including, but not excluding, its      legal situation, undertakings and assets and it purchases all of HRT’s      shares in M.D.T., according to the situation of the company and subject to      the directives of this agreement, including the correctness of the      presentations and undertakings of HRT and/or Yossi Bar, it waives any      claim and/or suit and/or demand towards HRT and any representative on its      behalf or towards Yossi Bar and/or any representative on his      behalf. |
|--------|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2.1.2 | There      is no deterrent, according to any law and/or agreement to which Electric      Fuel is a party, to purchase all of HRT’s shares in M.D.T. from      HRT. |
|--------|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2.1.3 | As      far as is required, Electric Fuel has reached the legal decision to      purchase all of HRT’s shares in M.D.T. fromHRT. |
|--------|-------|----------------------------------------------------------------------------------------------------------------------------------------|

|   | 2.2 | Arotech declares and undertakes      as follows: |
|--------|-----|--------------------------------------------------|

|   | 2.2.1 | It      recognizes the situation of M.D.T., including, but not excluding, its      legal situation, undertakings and assets, and its purchases all of HRT’s      shares in M.D.T., according to the situation of the company and subject to      the directives of this agreement, including the correctness of the      presentations and undertakings of HRT and/or Yossi Bar, it waives any      claim and/or suit and/or demand towards HRT and any representative on its      behalf or towards Yossi Bar and/or any representative on his      behalf. |
|--------|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | 2.2.2 | There      is no deterrent, according to any law and/or agreement to which Arotech is      a party, to purchase all of HRT’s shares in M.D.T. from    HRT. |
|--------|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2.2.3 | As      far as is needed, Arotech has reached the legal decision to purchase all      of HRT’s shares in M.D.T. from HRT. |
|--------|-------|---------------------------------------------------------------------------------------------------------------------------------|

|   | 2.3 | M.D.T. declares and undertakes      as follows: |
|--------|-----|-------------------------------------------------|

|   | 2.3.1 | There      is no deterrent, according to any law and/or agreement to which M.D.T. is      a party, to purchase all of HRT’s shares in M.D.T. from    HRT. |
|--------|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2.3.2. | Subject      to the terms of this agreement, including the correctness of the      presentations and undertakings of HRT and/or Yossi Bar, it waives any      claim and/or suit and/or demand towards HRT and any representative on its      behalf or towards Yossi Bar and/or any representative on his      behalf |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2.3.3 | As      far as is required, Arotech has reached the legal decision to purchase all      of HRT’s shares in M.D.T. from HRT. |
|--------|-------|-----------------------------------------------------------------------------------------------------------------------------------|

|   | 2.4 | MDT declares and undertakes as      follows: |
|--------|-----|----------------------------------------------|

|   | 2.4.1 | There      is no deterrent, according to any law and/or agreement to which MDT is a      party, to purchase all of HRT’s shares in MDT from  HRT. |
|--------|-------|---------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2.4.2. | Subject      to the terms of this agreement, including the correctness of the      presentations and undertakings of HRT and/or Yossi Bar, it waives any      claim and/or suit and/or demand towards HRT and any representative on its      behalf or towards Yossi Bar and/or any representative on his      behalf |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2.4.3 | As      far as is required, MDT has reached the legal decision to purchase all of      HRT’s shares in MDT from HRT. |
|--------|-------|----------------------------------------------------------------------------------------------------------------------------|

|   | 2.5 | HRT      and Yossi Bar, jointly and severally, declare and undertake as      follows: |
|--------|-----|---------------------------------------------------------------------------------------|

|   | 2.5.1 | HRT      is the owner and the only and sole holder of all HRT’s shares in M.D.T.,      i.e. 539 regular shares of M.D.T. at a set value of NIS 1 each, comprising      24.5% of M.D.T.’s issued and redeemed share  capital. |
|--------|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | 2.5.2 | HRT      is the owner and the only and sole holder of all HRT’s shares in MDT, i.e.      49 common shares of MDT at a set value of 0.01 USA Dollars each,      comprising 12.01% of MDT’s issued and redeemed share    capital. |
|--------|-------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2.5.3 | All      HRT’s shares in M.D.T. are clear and free and all HRT’s shares in MDT are      clear and free, and are sold to Electric Fuel and to Arotech (as the case      may be) while clear and free. |
|--------|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2.5.4 | The      option of Yossi Bar is clear andfree. |
|--------|-------|------------------------------------------------|

|   | 2.5.5 | There      is no deterrent, of right and/or agreement, for Yossi Bar to sell all      HRT’s shares in M.D.T. to Electric Fuel and/or to sell all HRT’s shares in      MDT to Arotech, while clear andfree. |
|--------|-------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 2.5.6 | As      required, HRT has come to the decision to sell all HRT’s shares in M.D.T.      to Electric Fuel and/or to all HRT’s shares in MDT to    Arotech. |
|--------|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 3. | Sale and Transfer of      Shares and Option |
|----|---------------------------------------------|

|   | 3.1 | Subject      to the payment of remuneration as stated in Section 4 below, HRT hereby      sells and transfers to Electric Fuel, and Electric Fuel hereby receives      from HRT, all HRT’s shares in M.D.T., while clear and free, so that with      the transfer of shares as stated above, Electric Fuel will become the sole      owner of the shares, while clear and free. At the time of signing this      agreement, HRT will deliver the legally signed share transfer bills and      notifications to the State Registrar in Israel regarding their transfer,      according to the version in Appendix      3.1. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 3.2 | Subject      to the payment of remuneration as stated in Section 4 below, HRT hereby      sells and transfers to Arotech and Arotech hereby receives from HRT all      HRT’s shares in MDT, while clear and free, so that with the transfer of      shares as stated above, Arotech will become the sole owner of the shares,      while clear and free. At the time of signing this agreement, HRT will      deliver the share certificates and share transfer bills, according to the      version in Appendix      3.2. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | 3.3 | Subject      to the payment of remuneration as stated in Section 4 below, Yossi Bar      hereby waives, finally, completely and irrevocably, the option, so that      after the payment of remuneration as stated in Section 4 below, the option      will be annulled and will not give Yossi Bar any right toward MDT and/or      to receive shares from MDT. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 3.4 | The      parties hereby undertake and declare that they will sign on any document      and/or notification and/or protocol and/or bill and/or form needed to      validate and legalize the directives of this  agreement. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 3.5 | After      the transfer of shares and annulment of the option as stated above, and      the payment of remuneration in lieu of the shares and option, as stated in      Section 4 below, neither of the parties shall have any right and/or claim,      of any type or kind, towards the otherparty. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 4. | Remuneration in Lieu      of the Sale of Shares and Waiver of  Option |
|----|-----------------------------------------------------------------------|

|   | 4.1 | Subject      to the declarations and undertaking of the parties, as stated in Section      3, Electric Fuel will pay HRT a sum of $1,000,000 (one million USA      Dollars), according to the followingdetails: |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4.1.1 | In      return for 539 shares of M.D.T., held by HRT, an amount of 179,796 USA      Dollars (calculation of the value of M.D.T. was conducted according to the      evaluation of Accountant David Cohen, attached and marked 4). |
|--------|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 4.1.2 | In      return for 5% of Yossi Bar’s options in MDT, an amount of 241,237 USA      Dollars. |
|--------|-------|---------------------------------------------------------------------------------------------------|

|   | 4.1.3 | In      return for 49 common shares of MDT held by HRT, an amount of 578,967 USA      Dollars. |
|--------|-------|------------------------------------------------------------------------------------------------|

|   | 4.2 | Remuneration      payments, as stated above, will be transferred in two simultaneous      payments, according to thefollowing: |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------|

|   | 4.2.1 | A      sum of $241,237, in a bank transfer to account number 193756, at Bank      Hapoalim, branch 555, in the name of YossiBar. |
|--------|-------|----------------------------------------------------------------------------------------------------------------------------------|

|   | 4.2.2 | A      sum of $758,763, in a bank transfer to account number517365, at Bank      Hapoalim, branch 555, in the name ofHRT. |
|--------|-------|---------------------------------------------------------------------------------------------------------------------------|

|   | 4.3 | It      is hereby agreed that the sale of HRT’s shares in MDT, while clear and      free, as stated above, serves also as the redemption of the loan given by      Arotech to HRT in the amount of $90,000 + interest according to the loan      agreement, and that subject to the sale and transfer of all HRT’s shares      in MDT to Arotech, while clear and free, as stated above, HRT and/or any      person on its behalf and Yossi Bar and/or anyone on his behalf does not      bear any debt to Arotech and/or to Electric Fuel and/or to MDT and/or to      M.D.T. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | 4.4 | It      is hereby clarified and explicitly stated that the amounts of remuneration      stated above are complete and final amounts, which will not change for any      reason, and include any legal tax and/or payment, excluding VAT, if and      when imposed, and this will be added to the amount of remuneration in      exchange for a legal tax invoice. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 5. | Finality of Employment      and Waiver of Claims |
|----|--------------------------------------------------|

|   | 5.1 | Subject      to the correctness of all presentations and declarations and the      fulfillment of all undertakings of the parties, as stated above and below,      the parties hereby declare and undertake that they and/or any person on      their behalf does not and will not have any claim and/or demand and/or      suit and/or right, of any type or kind, today or in the future, towards      the other party and/or any person on their behalf and/or connected to      them. |
|--------|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 6. | Settling Accounts      between M.D.T. and HRT in Regard to Services Provided by HRT to      M.D.T. |
|----|----------------------------------------------------------------------------------------------------|

|   | 6.1 | M.D.T.      and/or Arotech and/or Electric Fuel hereby undertake to pay off M.D.T.’s      debt to HRT with interest added, as by law, for services provided by HRT      to M.D.T. as specified in M.D.T.’s books, and which, at the time of the      signing of the agreement, amounted toNIS      494, 619. At the same time and the same ratio M.D.T.’s debt to Arotech      will be paid off, which, at the time of the signing of the agreement,      amounted to NIS 3,325,089. Despite the above mentioned, if M.D.T.’s entire      debt to HRT has not been paid off within four years from the date of the      signing of this agreement, as stated above, M.D.T. and/or Arotech and/or      Electric Fuel will pay off the remainder of the debt, in full and      immediately, with no connection whatsoever to paying off the remainder of      M.D.T.’s debt to Arotech. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 6.2 | MDT      and/or Arotech and/or Electric Fuel hereby undertake to pay off MDT’s debt      to HRT with interest added as by law, for services provided by HRT to MDT      which, at the time of the signing of the agreement, amounted to $22,000      (twenty-two thousand USA Dollars). At the same time and the same ratio      MDT’s debt will be paid off. Despite the abovementioned, if MDT’s entire      debt to HRT has not been paid off within four years from the date of the      signing of this agreement, as stated above, MDT and/or Arotech and/or      Electric Fuel will pay off the remainder of the debt, in full and      immediately, with no connection whatsoever to paying off the remainder of      MDT’s debt toArotech. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | 6.3 | For      the avoidance of doubt, it is hereby clarified and agreed that, excluding      the abovementioned debt amounts, M.D.T. and/or MDT do not have any other      debt, of any type of kind, to HRT and/or Yossi Bar and/or a representative      on his behalf and/or any person connected to them, and with the paying off      of the debt amounts mentioned above in this Section, HRT does not have,      nor will it have, any rights and/or claims and/or demands and/or suits, of      any type or kind, directly or indirectly, towards M.D.T. and/or MDT also      in connection with that mentioned above in this  section. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 7. | Settling of Accounts      in Regard to the Dismissal of YossiBar |
|----|------------------------------------------------------------------|

|   | 7.1 | At      the time of the signing of this agreement and for the purpose of ending      all disputes between the parties regarding the terms awarded in favor of      Mr. Yossi Bar following his dismissal, M.D.T. hereby undertakes to pay Mr.      Yossi Bar and to transfer in hisname: |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 7.1.1 | The      entire amount accrued in favor of Yossi Bar as part of the Managers’      Insurance (bituach      menahalim), in lieu of compensation pay in the amount of NIS      180,429 and NIS      88,539 for pension. |
|--------|-------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 7.1.2 | Transfer      of a car - Mazda MPV, license number 75-206-57, valued at NIS 88,200 -      owned by M.D.T to the ownership of Yossi Bar. All taxes for this section      will be paid by Yossi Bar. |
|--------|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 7.2 | Even      so, Yossi Bar agrees that if he ever brings to court a claim according to      which he is entitled by law to a larger sum than that which has accrued in      Managers’ Insurance, the section in this agreement dealing with the sale      of the option in MDT and this amount will be returned to Arotech in favor      of the remaining compensation pay, and will constitute full coverage for      all the rights of Yossi Bar to legal compensation from M.D.T. and will      release M.D.T. from any liability to pay legal    compensation. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 7.3 | Yossi      Bar declares and undertakes that after receiving the abovementioned      payment, he does not have any claim and/or demand and/or suit and/or right      against M.D.T. in regard to his employment with M.D.T., including, but      without excluding, all matters regarding the termination of his employment      with M.D.T. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

| 8. | Receiving Advisory      Services in Regard to Projects byM.D.T. |
|----|-----------------------------------------------------------------|

|   | 8.1 | Mr.      Yossi Bar and/or HRT and/or any other company owned by Yossi Bar      (including HRT) providing advisory (or any other) services in the field of      protection (or in any other field) to the general public (without      limitation), hereby undertake to provide advisory and protective services      to M.D.T. for the purpose of completing the Tzivoni    project. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 8.2 | In      any case, it is hereby clarified and agreed that the services will be      provided as an independent and external contractor and there will not      exist any employer-employee relations between Yossi Bar and/or any person      providing the actual services and M.D.T. This directive is fundamental in      any connection according to the directives of this  section. |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 8.3 | Remuneration in Lieu of the      Tzivoni Project |
|--------|-----|--------------------------------------------------|

|   | 8.3.1 | In      return for advisory services in regard to the Tzivoni project to be      provided by Yossi Bar or any person on his behalf to M.D.T., M.D.T. will      pay Yossi Bar and/or any person on his behalf on an hourly basis for work      performed by Yossi Bar and/or any person on his behalf. Yossi Bar will      provide a cost estimate for thisproject. |
|--------|-------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 8.3.2 | In      return for every hour’s work, M.D.T. will pay Yossi Bar a total of $ 90      (ninety USA Dollars) per hour, with legally added  VAT. |
|--------|-------|----------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 8.3.3 | The      remuneration, as stated, will be paid once a month for the previous month,      not later than the tenth of every Gregorian month, against a legal tax      invoice. |
|--------|-------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 8.3.4 | Amounts      stated in Dollars will be paid in New Israeli Shekels according to the      representative exchange rate published by the Bank of Israel and known on      the day of payment. |
|--------|-------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 8.3.5 | It      is hereby agreed that M.D.T. will bear all of Yossi Bar’s expenses in      regard to his providing of advisory services, as stated above, according      to the budget approved by M.D.T., in advance and in    writing. |
|--------|-------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 8.4 | Remuneration in Lieu of Other      Projects |
|--------|-----|---------------------------------------------|

|  |   | The      return for advisory services in connection with other projects, if      requested and if provided to M.D.T., will be agreed upon between the      parties, in advance and in writing, prior to the providing of      services. |
|--|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 9. | Confidentiality and      Non-Competition |
|----|------------------------------------------|

|   | 9.1 | HRT      and/or Yossi Bar hereby undertake not to make any use, of any type and      kind (including by transfer to a third party), themselves or through a      representative and/or any person connected to them, of the name of MDT      and/or M.D.T., and/or in the name of any company connected to them; of the      reputation of MDT and/or of M.D.T. and/or of any other company connected      to them. This undertaking is valid without any time      limitation. |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

----

|   | 9.2 | Without      detracting from the generality of the above, HRT and/or Yossi Bar      undertake to maintain confidentiality, not to disclose or transfer,      directly or indirectly, to any person or entity, any information      connected, directly or indirectly, to the company, its business, property,      rights, undertakings and privileges and any other information that will be      brought to the knowledge of HRT and/or Yossi Bar, due to the fulfillment      of their positions in the company or in regard to it. This undertaking is      valid without any time limitation. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 9.3 | HRT      and Yossi Bar undertake not to approach any M.D.T. and/or MDT worker,      (other than those who have resigned and/or were dismissed) with a work      proposal, for a period of 24 months after the date of signing this      agreement (they are: Mr. Yossi Bar, Mr. Oren Bar, Ms. Henia Bar, Mr. Ofer      Keren and Ms. Natalie Parisien). |
|--------|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 9.4 | Mr.      Yossi Bar and/or HRT and/or any other company owned by Mr. Yossi Bar are      permitted to engage in any field and any business without any limitation,      on condition that no commercial secrets of Arotech, Electric Fuel, M.D.T.,      and/or MDT are used. |
|--------|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 9.5 | Mr.      Yossi Bar and/or HRT and/or any other company owned by Mr. Yossi Bar are      permitted to engage in any field and any business even if they compete      with M.D.T. and/or MDT, subject to Section 9.1, 9.2 and 9.3      above. |
|--------|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | 9.6 | Any      information that is public knowledge (and did not become public knowledge      due to the violation of the confidentiality requirement in this agreement)      will not be considered confidential according to this      agreement. |
|--------|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 10. | Taxes and      Expenses |
|-----|-------------------------|

|  | 10.1 | Any      tax requirement and/or fee and/or other legal payment, direct or indirect,      that affects any of the payments according to this agreement, will apply      in full to the party legally bound by this. Tax at source will be deducted      from all amounts paid according to this agreement, unless the other party      presents the paying party with a valid exemption from paying tax at      source. |
|--|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 10.2 | Without      detracting from the generality of the above, VAT, if required on any of      the payments according to the directives of this agreement, will be added      to the payment against a legal taxinvoice. |
|--|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| 11. | Application |
|-----|-------------|

|  | 11.1 | The      application of Section 3.1-3.3 and 7.1.2 will be retroactive from December      31, 2007. |
|--|------|----------------------------------------------------------------------------------------------------|

| 12. | Settlement of Dispute:      the Applied Law and Place ofJurisdiction |
|-----|----------------------------------------------------------------------|

|  | 12.1 | Any      dispute between the parties in regard to this agreement, including, and      without excluding, its implementation, understanding and upholding, will      be decided in an arbitration process, according to the Law of Arbitration,      5728 - 1968 (hereinafter: “the Law of      Arbitration”), by a single arbitrator whose identity will be agreed      upon between the parties and with the lack of such agreement, each party      may petition, within seven days since the petition of one party to the      other, the head of the Tel Aviv District Committee of the Israel Bar to      appoint an arbitrator (hereinafter: “the      Arbitrator”). |
|--|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 12.2 | The      Arbitrator will be authorized to issue temporary and interim orders and      any other - temporary or permanent - relief, to be considered correct      under the circumstances at hand. |
|--|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 12.3 | The      Arbitrator is exempt from legal procedures and laws of proof, but must      rule according to the essential law of the State of Israel and justify his      decision. Subject to any other decision of the Arbitrator in regard to      expenses, the parties will split the Arbitrator’s fees and arbitration      expenses in equal parts. |
|--|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 12.4 | The      signing on this agreement is equal to the signing on the arbitration      agreement, according to the rules of  arbitration. |
|--|------|---------------------------------------------------------------------------------------------------------------------------------------|

|  | 12.5 | Laws      of the State of Israel apply to this agreement. Only the authorized court      in Tel Aviv-Jaffa will have sole judicial authority in regard to this      agreement. |
|--|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 13. | Violations and      Relief |
|-----|----------------------------|

|  | 13.1 | Sections      2, 3, 4, 5, 6, 7, and 9 of this agreement are fundamental sections and the      violation thereof is considered a fundamental violation of this      agreement. |
|--|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 14. | General |
|-----|---------|

|  | 14.1 | Any      change and/or correction and/or addition to this agreement will be valid      only if made in writing and with the signing of all parties to the      agreement. |
|--|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 14.2 | Any      dispute or violation of any section in the agreement will not affect the      upholding of other sections in theagreement. |
|--|------|-------------------------------------------------------------------------------------------------------------------------------------|

|  | 14.3 | This      agreement exhausts all that agreed between the parties and any arrangement      and/or promise and/or presentation and/or undertaking made between the      parties, both orally and in writing, directly or indirectly, prior to this      agreement, is hereby null and void. Drafts and other documents that were      passed between the parties prior to the signing of this agreement will be      considered as if never effected and will not be used in any way as proof      or support for interpretation and/or suit and/or for any other      purpose. |
|--|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|  | 14.4 | The      parties will work jointly, and perform any action required in a reasonable      manner and will sign any required document in a reasonable manner, for the      full implementation and upholding of all matters connected to, and      involved with, the execution of thisdeal. |
|--|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 14.5 | In      any case where one party refrains from using any right awarded to him      according to this agreement or by law, this will not be considered to be a      waiver on his part of that right, and he is permitted to use his rights      later. The violator may not claim any demands of postponement or      waiver. |
|--|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 14.6 | The      parties undertake to behave in a manner of loyalty and honesty to each      other. |
|--|------|---------------------------------------------------------------------------------------------|

|  | 14.7 | The      parties declare that they have read this agreement and have signed it of      their own free will, after understanding the content, and each party is      represented by a lawyer on hisbehalf. |
|--|------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  | 14.8 | Each      party will bear his own expenses. |
|--|------|---------------------------------------------|

|  | 14.9 | The      addresses of the parties for the purpose of this agreement are as detailed      in the preamble to this agreement, or any other address in Israel of one      of the parties, of which he has informed the other parties in      writing. |
|--|------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|  |   | Any      notification sent from one party to the other according to the      abovementioned addresses will be considered as arriving at their      destination 72 hours after being deposited as registered mail at the post      office, and 24 hours after been sent by electronic mail and/or facsimile,      and if delivered by hand - at the time of  delivery. |
|--|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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|                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   | HRT      Ltd.                                                                                                                                                                                                                                                                                                                                                                                                                                        |   | M.D.T.      Protective Industries Ltd.                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Yossi      Bar                                                                                                                                                                                                                                                                                                                                                                                                                                                   |   | By:      Yossi      BarName      & position: CEO                                                                                                                                                                                                                                                                                                                                                                                                 |   | By:      Jonathan      WhartmanName      & position: CEO                                                                                                                                                                                                                                                                                                                                                                                                           |
| I,      the undersigned, Yonatan Drori Adv., license no. 41931, hereby approve      that this agreement was signed by Mr. Yossi Bar, Israeli Identity No.      010621779, who I know personally.­­­­­­­­­­­                                                                                                                                                                                               |   | I,      the undersigned, Yonatan Drori Adv., license no. 41931, hereby approve      that this agreement was signed by Mr. Yossi Bar, who is authorized by the      company to sign on this agreement and be obligated on its behalf, and the      company has made all required decision, by law, its fundamental documents      and its valid decisions, to undertake this agreement,                                                               |   | I,      the undersigned, Yaakov Har-Oz, Adv., license no. 16260, hereby approve      that this agreement was signed by Mr. Jonathan Whartman, who is authorized      by the company to sign on this agreement and be obligated on its behalf,      and the company has made all required decision, by law, its fundamental      documents and its valid decisions, to undertake this      agreement.                                                                   |
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| Yonatan      Drori, Adv.                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | Yonatan      Drori, Adv.                                                                                                                                                                                                                                                                                                                                                                                                                             |   | Yaakov      Har-Oz, Adv.                                                                                                                                                                                                                                                                                                                                                                                                                                               |
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|                                                                                                                                                                                                                                                                                                                                                                                                                                                             |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                 |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                   |
| Arotech      Corporation                                                                                                                                                                                                                                                                                                                                                                                                                                         |   | Electric      Fuel (EFL) Ltd.                                                                                                                                                                                                                                                                                                                                                                                                                        |   | M.D.T.      Armor Corporation                                                                                                                                                                                                                                                                                                                                                                                                                                          |
| By:      Jonathan      WhartmanName      & position: Vice-CEO                                                                                                                                                                                                                                                                                                                                                                                                |   | By:      Jonathan      WhartmanName      & position: CEO                                                                                                                                                                                                                                                                                                                                                                                         |   | By:      Jonathan      WhartmanName      & position: Vice-CEO                                                                                                                                                                                                                                                                                                                                                                                                      |
| I,      the undersigned, Yaakov Har-Oz, Adv., license no. 16260, hereby approve      that this agreement was signed by Mr. Jonathan Whartman, who is authorized      by the company to sign on this agreement and be obligated on its behalf,      and the company has made all required decision, by law, its fundamental      documents and its valid decisions, to undertake this      agreement.­­­­­­­­­­ |   | I,      the undersigned, Yaakov Har-Oz, Adv., license no. 16260, hereby approve      that this agreement was signed by Mr. Jonathan Whartman, who is authorized      by the company to sign on this agreement and be obligated on its behalf,      and the company has made all required decision, by law, its fundamental      documents and its valid decisions, to undertake this      agreement.­­­­­­­­ |   | I,      the undersigned, Yaakov Har-Oz, Adv., license no. 16260, hereby approve      that this agreement was signed by Mr. Jonathan Whartman, who is authorized      by the company to sign on this agreement and be obligated on its behalf,      and the company has made all required decision, by law, its fundamental      documents and its valid decisions, to undertake this      agreement.­­­­­­­­­­­ |
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| Yaakov      Har-Oz, Adv                                                                                                                                                                                                                                                                                                                                                                                                                                          |   | Yaakov      Har-Oz, Adv.                                                                                                                                                                                                                                                                                                                                                                                                                             |   | Yaakov      Har-Oz, Adv.                                                                                                                                                                                                                                                                                                                                                                                                                                               |

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