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| (a) | The      Executive shall be employed as President and Chief Operating Officer of      the Company. The Executive shall perform the duties, undertake the      responsibilities and exercise the authority customarily performed,      undertaken and exercised by persons situated in a similar executive      capacity in Israeli subsidiaries of publicly-held corporations. The      Executive shall exercise his authority in a reasonable manner and shall      report to the Chief Executive Officer of the Company (the      “CEO”). |
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| (b) | Excluding      periods of vacation and sick leave to which the Executive shall be      entitled, the Executive agrees to devote the attention and time to the      businesses and affairs of the Company required to discharge the      responsibilities assigned to the Executive hereunder. The Company      acknowledges that the Executive is a director of multiple non-profit      organizations. In addition, the Company acknowledges that the Executive is      involved in certain investment activities which, together with the above      mentioned positions, will consume a portion of his time. The Company      consents to these other positions and activities so long as these do not      interfere in any material manner with the Executive’s performance of his      duties hereunder and do not constitute a violation of Section 8      hereof. |
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| (c) | While      the Executive is employed by the Company hereunder, the Company shall use      its best efforts to cause the Executive to be elected to the Board of      Directors of the Company (the “Board”) and on the board of directors of      such of the Company’s Israeli subsidiaries as the CEO shall determine, as      a member of such Board(s). |
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| (d) | The      Company will use its reasonable best efforts to obtain, and to keep in      place at all times that the Executive is a director or officer of the      Company, a directors and officers liability policy covering the Executive      in an amount and otherwise containing terms and conditions consistent with      past practices. |
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| (e) | The      Executive agrees to serve on the Board and on the board of directors of      such Israeli subsidiaries of the Company as the CEO may      request. |
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| (f) | The      Executive shall be required to travel on a periodic basis. Air travel      shall be business class. |
|-----|--------------------------------------------------------------------------------------------------------------|

| (a) | Base Salary.      The Company agrees to pay or cause to be paid to the Executive, for his      services to the Company, during the first year of this Agreement a monthly      base salary at the rate of NIS 53,023.5 per month, or such larger amount      as the Compensation Committee of the Board (the “Compensation Committee)      may in its sole discretion determine following a review which shall be      conducted by the CEO and the Compensation Committee by not later than      March 31 of each year, such larger amount to take effect retroactively to      the January 1 immediately preceding such review (hereinafter referred to      as the “Base Salary”).  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. |
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| (b) | Retention Stock      Bonus. The Company has granted to the Executive a retention bonus      of up to 200,000 shares of restricted stock, vesting (i) 25,000 shares on      December 31, 2008, 25,000 shares on December 31, 2009, and 25,000 shares      on December 31, 2010, with each such vesting being contingent on the      Executive being employed by the Company on the scheduled vesting date,      (ii) 25,000 shares on December 31, 2008, 25,000 shares on December 31,      2009, and 25,000 shares on December 31, 2010, with each such vesting being      contingent on the Executive 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, and (iii) 50,000 shares      on January 1, 2011, with such vesting being contingent upon the Executive      succeeding to the position of Chief Executive Officer by such      date. |
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| (c) | Bonus. The      Company agrees to pay or cause to be paid to the Executive on each      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: |
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| (c) | Equity Grants.      The Executive will receive annual stock option or restricted stock bonus      grants in respect of the common stock of the Company’s parent corporation,      Arotech Corporation (“Arotech”), in amounts to be determined based on the      recommendation of the CEO and the decision of the Compensation Committee      of Arotech. |
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| (d) | Tax Planning      Reimbursement. The Company shall pay Executive an amount of up to      NIS 45,000 on each anniversary of this Agreement to cover Executive’s      legal, tax and financial planning expenses, against invoices or receipts;      any excess in any given year may be used by the Executive to fund      supplemental health or life insurance policies, if any. Any amounts not      used in a given year shall roll over to future years, but amounts unused      at notice of termination of this Agreement shall expire. Legal expenses      may not be used to finance legal advice or litigation against the      interests of the Company. |
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| (e) | Retention      Bonus. The Company will pay to the Executive under the conditions      described in the separate Salary Increment Agreement of even date      herewith, a retention bonus (the “Retention Bonus”) of NIS 900,000, if      paid in U.S. dollars at the rate of exchange on the date prior to the day      of payment as published by the Bank of Israel, which Retention Bonus will      be funded into a separate earmarked account on or before December 31,      2009. The Retention Bonus shall be payable to the Executive 90 days after      the Executive leaves the employment of the Company, as      follows: |
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| (a) | Life and Disability      Insurance. The Company will pay to an insurance company of the      Executive’s choice, as premiums for life and disability insurance for the      Executive, an amount equal to 13.33% of each monthly payment of the Base      Salary together with 2.5% of the Base Salary for disability, and will      deduct from each monthly payment of the Base Salary and pay to such      insurance company an amount equal to 5% of each monthly payment of the      Base Salary, which shall constitute the Executive’s contribution to such      premiums. Upon the termination of the Executive’s employment with the      Company for whatever reason, including without limitation termination for      Cause or the resignation by the Executive, the right to receive the life      and disability insurance benefits shall be automatically assigned to the      Executive. At the Executive’s option, in lieu of providing life and      disability insurance, the Company shall pay the amount it would otherwise      pay for such insurance to the trust referred to in Section 7(b)(ii)      hereof. |
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| (b) | Education Fund.      The Company will contribute to an education fund of the Executive’s choice      an amount equal to 7.5% of each monthly payment of the Base Salary, and      will deduct from each monthly payment of the Base Salary and contribute to      such education fund an additional amount equal to 2.5% of each such      monthly payment of the Base Salary. Additionally, the Company will pay a      supplementary amount to the education fund in the amount of 20% of the      Base Salary. Upon the termination of the Executive’s employment with the      Company for whatever reason, including without limitation termination for      Cause or the resignation by the Executive, the right to receive any      amounts in such fund shall be automatically assigned to the Executive. All      education fund contributions or imputed income made under this Section in      excess of the statutory exemption shall be tax-effected such that the      amount of contribution net of any taxes and withholding (including such      amounts in respect of payments pursuant to this sentence) equals the      percentages specified herein. |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| (c) | Vacation. The      Executive shall be entitled to an annual vacation at full pay equal to 24      work days. Vacation days may be accumulated and may, at the Executive’s      option or automatically upon termination, be converted into cash payments      in an amount equal to the proportionate part of the Base Salary for such      days; provided,      however, that if      the Executive accumulates more than two (2) times his then current annual      entitlement of vacation days, such excess shall be automatically converted      into the right to receive such a cash payment in respect of such excess.      Payments to which the Executive is entitled pursuant to this Section 4(c)      shall be made promptly after the Executive’s request    therefor. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (d) | Sick Leave. The      Executive shall be entitled to a maximum aggregate of 30 days of fully      paid sick leave (inclusive of days accrued under the Original Agreement),      accruing at the rate of 2.5 days per month; provided, however, that the      Executive shall not be entitled to sick leave payment to the extent he is      already covered by manager’s insurance. Sick leave may be accumulated and      may, at the Executive’s option, be converted into cash payments in an      amount equal to the proportionate part of the Base Salary for such days.      Payments to which the Executive is entitled pursuant to this Section 4(d)      shall be made promptly after the Executive’s request    therefor. |
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| (e) | Automobile.      Every three years, the Company shall make a new automobile available to      the Executive during the term of this Agreement. Such automobile shall be      of a high quality comparable to, but not less than, that of a current      (2007, with respect to the Initial Term) model Volvo SUV, and shall be      subject to the approval of the Executive, which shall not be unreasonably      withheld. The Executive shall be entitled to use the automobile for his      personal and business needs, so long as he does not allow anyone who would      not be covered by the Company’s insurance to drive it. The Company shall      pay all expenses of maintaining and operating the automobile. All expense      reimbursements or imputed income made under this Section shall be      tax-effected such that the amount of reimbursement received by the      Executive net of any taxes and withholdings (including such amounts in      respect of payments pursuant to this sentence) equals the expense      incurred. |
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| (f) | Benefit Plans.      The Executive shall be entitled to participate in all incentive, bonus,      benefit or other similar plans offered by the Company, including without      limitation the Company’s 2004 Stock Option and Restricted Stock Purchase      Plan, in accordance with the terms thereof and as determined by the Board      from time to time. |
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| (a) | Death. This      Agreement shall terminate upon the death of the  Executive. |
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| (b) | Disability. The      Company may terminate the Executive’s employment after having established      the Executive’s Disability. For purposes of this Agreement, “Disability”      means a physical or mental infirmity which impairs the Executive’s ability      to substantially perform his duties under this Agreement which continues      for a period of at least one hundred and eighty (180) consecutive      days. |
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| (c) | Cause. The      Company may terminate the Executive’s employment for Cause. For purposes      of this Agreement, termination for “Cause” shall mean and include:      (i) conviction for fraud, crimes of moral turpitude or other conduct      which reflects on the Company in a material and adverse manner; (ii) a      willful failure to carry out a material directive of the CEO, provided that such      directive concerned matters within the scope of the Executive’s duties,      was in conformity with Sections 2(a) and 2(b) hereof, would not give the      Executive Good Reason to terminate this Agreement and was capable of being      reasonably and lawfully performed; (iii) conviction in a court of      competent jurisdiction for embezzlement of funds of the Company; and (iv)      reckless or willful misconduct that is materially harmful to the Company;      provided, however, that the      Company may not terminate the Executive for Cause unless they have given      the Executive written notice of the basis for the proposed termination      (“Company’s Notice ofTermination”). |
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| (d) | Good Reason.      The Executive may terminate his employment under this Agreement for Good      Reason. For purposes of this Agreement, “Good Reason” shall mean the      occurrence of any of the events or conditions described in subsections (i)      through (vi) hereof: |
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|   | (i) | a      change (1) in the Executive’s status, title, position or responsibilities      which, in the Executive’s reasonable judgment, represents a reduction or      demotion in the Executive’s status, title, position or responsibilities as      in effect immediately prior thereto, or (2) in the primary location from      which the Executive shall have conducted his business activities during      the 60 days prior to such change; |
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|   | (ii) | a      reduction in the Executive’s BaseSalary; |
|--------|------|-------------------------------------------------------|

|   | (iii) | the      failure by the Company to continue the Executive as a participant in any      material compensation or benefit plan in which the other vice presidents      of the Company are participating unless agreed to by the      Executive; |
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|   | (iv) | the      insolvency or the filing (by any party, including the Company) of a      petition for the winding-up of the Company or of  Arotech; |
|--------|------|----------------------------------------------------------------------------------------------------------------------------------------------|

|   | (v) | any      material breach by the Company of any provision of this      Agreement; |
|--------|-----|----------------------------------------------------------------------------------|

|   | (vi) | any      purported termination of the Executive’s employment for Cause by the      Company which does not comply with the terms of Section 6(c) of this      Agreement; |
|--------|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (e) | Change in      Control. The Executive may terminate this Agreement if there is a      “Change in Control.” For purposes of this Agreement, a “Change in Control”      shall mean any of the followingevents: |
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|   | (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 Arotech’s then outstanding voting securities;      or |
|--------|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (ii) | individuals      who, as of January 1, 2004, were members of the Board of Arotech (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 Arotech;      or |
|--------|------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (iii) | approval      by the shareholders of Arotech of a complete winding-up of Arotech or an      agreement for the sale or other disposition of all or substantially all of      the assets of Arotech. |
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| (f) | Change of      Location. The Executive may terminate this Agreement if there is a      “Change of Location.” For purposes of this Agreement, a “Change of      Location” shall mean a change of more than 100 kilometers in the primary      location from which the business activities of the Executive shall have      been conducted during the 60 days prior to such  change. |
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| (g) | Termination Date,      Etc. “Termination Date”      shall mean in the case of the Executive’s death, his date of death, or in      all other cases, the date specified in the Notice of Termination subject      to the following: |
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|   | (i) | if      the Executive’s employment is terminated by the Company for Cause or due      to Disability, the date specified in the Company’s Notice of Termination      shall be at least thirty (30) days from the date the Notice of Termination      is given to the Executive, provided that in the      case of Disability the Executive shall not have returned to the full-time      performance of his duties during such period of at least thirty (30)      days; |
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|   | (ii) | if      the Executive’s employment is terminated for Good Reason, or because there      has been a Change in Control, the Termination Date specified in the      Executive’s Notice of Termination shall not be more than sixty (60) days      from the date the Notice of Termination is given to the      Company. |
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| (h) | Retirement. At      any time during the period beginning (i) 150 days prior to his 65th      birthday (“Retirement”) or (ii) from 150 days prior to his 55th birthday      until 150 days prior to his 65th birthday (“Early Retirement”), the      Executive may retire from his positions with the Companies by giving to      the Companies written Notice of Retirement specifying the Retirement Date,      which Retirement Date shall be at least one hundred and fifty (150) days      from the date of such Notice ofRetirement. |
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| (i) | Termination Without      Cause. Termination other than as set forth above shall constitute      termination “Without Cause.” |
|-----|------------------------------------------------------------------------------------------------------------------------------------------|

| (a) | If      the Executive’s employment is terminated by the Company for Cause or if      the Executive’s employment is terminated by the Executive Without Cause,      then the Company shall pay the Executive all amounts of Base Salary and      the employee benefits specified in clauses (a), (b) and (c) of Section 4      of this Agreement earned or accrued hereunder through the Termination Date      but not paid as of the Termination Date (collectively, “Accrued      Compensation”). |
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| (b) | If      the Executive’s employment by the Company shall be terminated (1) due to      Disability, (2) by the Executive for Good Reason, (3) by the Executive      because there has been a Change in Control or a Change of Location, (4) by      the Executive’s death, (5) due to Non-Renewal, (6) due to Retirement or      Early Retirement, or (7) by the Company Without Cause, then the Executive      shall be entitled to the additional benefits provided below, which, in the      case of death, Disability, Retirement or Early Retirement, shall be in      lieu of any further salary for periods subsequent to the Termination      Date): |
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|   | (i) | The      Company shall pay the Executive (a) all Accrued Compensation, (b) a bonus      at a rate of the higher of (i) 20%, or (ii) the rate that would otherwise      be payable pursuant to the provisions of Section 3(b) above for the year      in which the Termination Date occurs, of Executive’s annual Base Salary as      of the Termination Date, pro rated based on the      number of days in such year which occurred prior to the Termination Date,      and (c) the amounts referred to in Sections 4(d) and (e) above, to the      extent earned or accrued hereunder through the Termination Date but unpaid      as of the Termination Date; |
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|   | (ii) | The      Company shall pay into a trust to be established pursuant to a separate      trust agreement (the “Trust”) as termination pay and in lieu of any      further salary for periods subsequent to the Termination Date (except as      provided in Section 7(b)(i) above), as follows: (A) before the end of the      first year of this Agreement, a total of (i) $30,400 plus (ii) eighteen      (18) 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; (B)      before the end of the second year of this Agreement, a total of (i)      $56,000 plus (ii) twenty (20) 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; (C) before the end of the third year of this Agreement,      a total of (i) $81,600 plus (ii) twenty-two (22) 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; or (D) at or after the end of      the third year of this Agreement, a total of (i) $107,200 plus (ii)      twenty-four (24) 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 (together, the “Base Termination Pay”), subject to      subparagraph (v) below. Base Termination Pay will vest and be funded into      the Trust as provided in Section 7(b)(iv)below. |
|--------|------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   | (iii) | The      Company shall pay to the Executive, in respect of all benefits, an      additional sum in the amount of (i) $75,000, in the case of Termination      due to Disability, Good Reason, the Executive’s death, or Non-Renewal, or      (ii) $150,000, in the case of Termination due to Early Retirement,      Retirement, Change of Control or Change of Location. Additionally, the      Company shall transfer to the Executive title to the Volvo SUV currently      in the possession of the Executive, upon payment by the Executive to the      Company, in advance, of all taxes that the Company in good faith believes      will be due and owing as a result of the transfer of such      title. |
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|   | (iv) | The      termination pay will be funded into the Trust in two installments, the      first $100,000 of which has already been funded, and the remainder of      which is to be paid by December 31,2008. |
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|   | (v) | In      the event of a termination due to Change of Control or a Change in      Location, all of the Executive’s stock options, whether or not they have      yet vested, shall immediately vest and shall be extended for a period of      the later of (x) the expiration date thereof, and (y) the second      anniversary of such Change of Control or Change of Location, and all of      the Executive’s restricted stock shall immediately become unrestricted and      freely tradable (subject to applicable securities laws). In the event of      termination due to any other reason except for Termination for Cause, the      Executive’s then-vested stock options shall be extended for a period of      the earlier of (x) the expiration date thereof, and (y) two years after      such termination. |
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| (c) | All      U.S. dollar amounts payable under this Section 7 shall, at the Company’s      option, be paid either in U.S. dollars or in New Israeli Shekels at the      rate of exchange on the date prior to the day of payment as published by      the Bank of Israel. |
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| 8. | Confidentiality;      Proprietary Rights; CompetitiveActivity. |
|----|----------------------------------------------------------------|

| (a) | Confidentiality.      Executive recognizes and acknowledges that the technology, developments,      designs, inventions, improvements, data, methods, trade secrets and works      of authorship which the Company owns, plans or develops, including without      limitation the specifications, documentation and other information      relating to the Company’s zinc-air battery systems, and businesses and      equipment related thereto (in each case whether for their own use or for      use by their clients) are confidential and are the property of the      Company. Executive also recognizes that the Company’s technology, customer      lists, supplier lists, proposals and procedures are confidential and are      the property of the Company. Executive further recognizes and acknowledges      that in order to enable the Company to perform services for its clients,      those clients may furnish to the Company confidential information      concerning their business affairs, property, methods of operation or other      data. All of these materials and information will be referred to below as      “Proprietary Information”; provided, however, that such      information shall not include any information known generally to the      public (other than as a result of unauthorized disclosure by the      Executive). |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b) | Non-Disclosure.      Executive agrees that, except as directed by the Company, and in the      ordinary course of the Company’s business, Executive will not during      Executive’s employment with the Company and thereafter, disclose to any      person or entity or use, directly or indirectly for Executive’s own      benefit or the benefit of others, any Proprietary Information, or permit      any person to examine or make copies of any documents which may contain or      be derived from Proprietary Information; provided, however, that the      Executive’s duties under this Section 8(b) shall not extend to (i) any      disclosure that may be required by law in connection with any judicial or      administrative proceeding or inquiry or (ii) any disclosure which may be      reasonably required in connection with any actions or proceedings to      enforce the Executive’s rights under this Agreement. Executive agrees that      the provisions of this paragraph shall survive the termination of this      Agreement and Executive’s employment by the  Company. |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| (c) | Competitive      Activity. The Executive undertakes not, directly or indirectly      (whether as owner, partner, consultant, employee or otherwise) at any      time, during and for twelve (12) months following termination of his      employment with the Company, to engage in or contribute his knowledge to      any work or activity that involves a product, process, service or      development which is then directly (in any material manner) competitive      with any business that the Company has conducted during the term of this      Agreement or any extension hereof on which the Executive worked or with      respect to which the Executive had access to Proprietary Information while      with the Company. Notwithstanding the foregoing, the Executive shall be      permitted to engage in the aforementioned proposed work or activity if the      Company furnishes him with written consent to that effect signed by an      authorized officer of the Company. |
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| (d) | No      Solicitation. During the period specified in 8(c) hereof, Executive      will not solicit or encourage any customer or supplier of the Company or      of any group, division or subsidiary of the Company, to terminate its      relationship with the Company or any such group, division or subsidiary,      and Executive will not, directly or indirectly, recruit or otherwise seek      to induce any employee of the Company or any such group, division or      subsidiary to terminate his or her employment or violate any agreement      with or duty to the Company or any such group, division or      subsidiary. |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (e) | Equitable      Relief. The Executive agrees that violations of the material      covenants in this Section 8 will cause the Company irreparable injuries      and agrees that the Company may enforce said covenants by seeking      injunctive or other equitable relief (in addition to any other remedies      the Company may have at law for damages or otherwise) from a court of      competent jurisdiction. In the event such court declares these covenants      to be too broad to be specifically enforced, the covenants shall be      enforced to the largest extent as may be allowed by such court for the      Company’s protection. Executive further agrees that no breach by the      Company of, or other failure by the Company under this Agreement shall      relieve the Executive of any obligations under Sections 8(a) and 8(b)      hereof. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| 9. | Successors and      Assigns. |
|----|------------------------------|

| (a) | This      Agreement shall be binding upon and shall inure to the benefit of the      Company, its successors and assigns and the Company shall require any      successor or assign to expressly assume and agree to perform this      Agreement in the same manner and to the same extent that the Company would      be required to perform it if no such succession or assignment had taken      place. The term the “Company” as used herein shall include such successors      and assigns. The term “successors and assigns” as used herein shall mean a      corporation or other entity acquiring all or substantially all the assets      and business of the Company (including this Agreement) whether by      operations of law or otherwise. |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b) | Neither      this Agreement nor any right or interest hereunder shall be assignable or      transferable by the Executive, his beneficiaries or legal representatives,      except by will or by the laws of descent and distribution. This Agreement      shall inure to the benefit of and be enforceable by the Executive’s legal      personal representative. |
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| (c) | Nothing      to the contrary in the foregoing notwithstanding, the Executive may assign      this Agreement to any company of which he is a “control person” within the      meaning of the Securities Exchange Act of 1934, provided, that the      Executive shall continue to be obligated to fulfill the duties set forth      in Section 2 above, and provided, further, that the      Executive shall continue to be bound by the terms and provisions of      Section 8 of this Agreement notwithstanding any such      assignment. |
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| 10. | Notice. |
|-----|---------|

|   | The      Company: | Electric      Fuel (E.F.L.) Ltd. |
|--------|-------------------|----------------------------------|

|   | The      Executive: | Steven      Esses |
|--------|---------------------|-------------------|

| 11. | Miscellaneous. |
|-----|----------------|

| 12. | Governing Law;      Arbitration; Venue. |
|-----|-----------------------------------------|

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| 13. | Severability. |
|-----|---------------|

| 14. | Entire      Agreement. |
|-----|------------------------|

| 15. | Registration      Rights. |
|-----|---------------------------|

| (a) | If      the Company at any time proposes to register any of its securities under      the Securities Act of 1933, as from time to time in effect (together with      the rules and regulations thereunder, all as from time to time in effect,      the “Securities Act”), for its own account or for the account of any      holder of its securities, on a form which would permit registration of      Common Stock of the Company at the time held or obtainable upon the      exercise of options, warrants or rights, or the conversion of convertible      securities, at the time held by the Executive (“Registrable Securities”),      for sale to the public under the Securities Act, the Company will each      such time give notice to the Executive of its intention to do so. Such      notice shall describe such securities and specify the form, manner and      other relevant aspects of such proposed registration. The Executive may,      by written response delivered to the Company within 15 days after the      giving of any such notice, request that all or a specified part of the      Registrable Securities be included in such registration. the Company will      thereupon use its best efforts as part of its filing of such form to      effect the registration under the Securities Act of all Registrable      Securities which the Company has been so requested to register by the      Executive, to the extent required to permit the disposition (in accordance      with the intended methods thereof as aforesaid) of the Registrable      Securities to be so registered. |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

| (b) | The      Executive may, by notice to the Company specifying the intended method or      methods of disposition, given at any time and from time to time after the      Company has registered any shares of its Common Stock under the Securities      Act, request that the Company effect the registration under the Securities      Act of all or a specified part of the Registrable Securities; provided, however, that the      Company shall not be required to effect a registration pursuant to this      Section 15(b) unless such registration may be effected on a Form S-3 (or      any successor or similar Form); and provided, further, that each      registration pursuant to this Section 15(b) shall cover a number of      Registrable Shares equal to not less than 2% of the aggregate number of      shares of the Company Common Stock then outstanding. the Company will then      use its best efforts to effect the registration as promptly as practicable      under the Securities Act of the Registrable Securities which the Company      has been requested to register by the Executive pursuant to the Section      15(b). |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

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| (c) | Notwithstanding      the provisions of Section 15(b), in the event that Executive has requested      pursuant to Section 15(b) that the Company effect a registration of      securities, and (i) the CEO of the Company determines that it would be      seriously detrimental to the Company to effect a registration pursuant to      Section 15(b), or (ii) the CEO of the Company determines in good faith      that (A) the Company is in possession of material, non-public information      concerning an acquisition, merger, recapitalization, consolidation,      reorganization or other material transaction by or of the Company or      concerning pending or threatened litigation and (B) disclosure of such      information would jeopardize any such transaction or litigation or      otherwise materially harm the Company, then the Company shall promptly      notify Executive of the occurrence of any of the events described in the      foregoing clauses (i) or (ii). Upon the occurrence of any of the events      described in clauses (i) or (ii) hereof, the Company shall be allowed to      defer a registration of securities pursuant to Section 15(b) above, and if      a registration statement had already been filed at such time, Executive      shall not dispose of his Registrable Securities under such registration      statement until it is so advised in writing by the Company that the      registration of securities under 15(b) may be effected or resumed.      Notwithstanding the foregoing, any such deferment or prohibition on      disposition shall not be in effect for more than 90 days in any 12 months      period. |
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| (d) | The      Company shall not be obligated to effect any registration of Registrable      Securities under Section 15(a) hereof incidental to the registration of      any of its securities in connection with mergers, acquisitions, exchange      offers, dividend reinvestment plans or stock option or other employee      benefit plans. |
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| (e) | The      Company hereby agrees to pay, or cause to be paid, all legal, accounting,      printing and other expenses (other than the fees and expenses of the      Executive’s own counsel and other than underwriting discounts and      commissions attributable to the Registrable Securities) in connection with      each registration of Registrable Securities pursuant to this Section      15. |
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| (f) | In      connection with each registration of Registrable Securities pursuant to      this Section 15, the Company and the Executive will enter into such      agreements, containing such terms and conditions, as are customary in      connection with public offerings, such agreements to contain, without      limitation, customary indemnification provisions, representations and      warranties and opinions and other documents to be delivered in connection      therewith, and to be, if requested, with  underwriters. |
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| (g) | The      provisions of this Section 15 shall be subject to any agreement entered      into by the Company, in good faith, with any underwriter of the Company’s      securities or any person or entity providing financing to the Company, in      each case containing reasonable limitations on the Executive’s rights and      the Company’s obligationshereunder. |
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| (h) | The      provisions of this Section 15 shall survive the termination of the other      provisions of this Agreement. The rights of the Executive under this      Section 16 are assignable, in whole or in part, by the Executive to any      person or other entity acquiring securities of the Company from the      Executive. |
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| (i) | Notwithstanding      anything in the foregoing to the contrary, the Executive shall not demand      a registration during the 180 days following an underwritten public      offering of the Common Stock of theCompany. |
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| (j) | Without      the prior written consent of the underwriters managing any public      offering, for a period beginning ten days immediately preceding the      effective date of any registration statement filed by the Company under      the Securities Act of 1933, as amended, and ending on the earlier of (i)      180 days after the effective date of such registration statement and (ii)      the end of the shortest period generally applicable to any “affiliate” (as      defined in the Securities Act of 1933, as amended) of the Company who is a      selling shareholder pursuant to such registration statement or who is      otherwise subject to a lockup provision, the Executive (whether or not a      selling shareholder pursuant to such registration statement) shall not      sell or otherwise transfer any securities of the Company except pursuant      to such registration statement. |
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| 16. | Taxes. |
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| Electric      Fuel (E.F.L.) Ltd. |   |   |
|----------------------------------|--------|--------|
|                             |   |   |   |
|                             |   |   |   |
| By:                              |   |   |   |
|                             | Name:  |   | Steven      Esses |
|                             | Title: |   |   |

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| Electric      Fuel (E.F.L.) Ltd. |   |   |
|----------------------------------|--------|--------|
|                             |   |   |   |
|                             |   |   |   |
| By:                              |   |   |   |
|                             | Name:  |   | Steven      Esses |
|                             | Title: |   |   |

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