Arotech's MDT Awarded Record $22 Million Orders for 'David' Combat Armored Vehicles; Israel Defense Force (IDF) Will Use 'David' for Combat Missions.

ANN ARBOR, Mich. -- Arotech Corporation (NasdaqNM:ARTX) announced today that its Armor Division has recently entered into a $22 million supply agreement for providing "David" combat vehicles to the Israel Defense Force (IDF). The "David" was designed in Israel by Arotech's MDT Protective Industries in collaboration with the IDF and will be built in MDT Armor's Alabama facility.

With this supply agreement, Arotech's backlog stands at $39 million.

The new supply agreement follows the successful completion of a recently received pilot order from the IDF for MDT's "David" armored vehicles, most of which were delivered in the first quarter. The "David" is specifically designed as an urban combat vehicle, a result of years of MDT experience in designing armored vehicles.

"The demand for MDT's "David" indicates that there is a clear need for a new armored solution for urban military applications. The 'one-size-fits-all' concept that was well demonstrated with the non-armored HMMWV cannot be applied to armored vehicles in today's urban warfare scenarios. Constraints caused by the added weight of armor need to be addressed with the vehicle's mission in mind," said Robert S. Ehrlich, Chairman and CEO of Arotech Corporation.

"We are proud that the IDF has decided to equip its soldiers with our armored vehicles. We believe the "David" can be appropriate to many urban warfare situations, and we are planning on presentations of the David to other militaries facing similar urban warfare situations."

The "David" is an ultra-light armored personnel carrier for combat missions designed for the urban low intensity conflict. With a small footprint (considerably shorter, lighter and narrower than the up-armored HMMWV) it is ideal for operating in urban and other densely populated areas. Its flexible design allows for several armor options, seating arrangements and equipment installations, all designed to meet specific operational tasks. It can carry 4, 5 or 6 soldiers in full battle gear. Gun ports (in all 4 directions) allow for accurate return fire as soldiers have full view of gun sites and surrounding area through the armored windows.

About Arotech's Armor Division:

Arotech's Armor Division is an innovative leader in lightweight armored vehicles. The Armor Division has years of battlefield and commercial protection experience and has provided life saving protection under the most extreme conditions. In addition to armoring vehicles for military and commercial customers, Arotech manufactures armor kits for helicopters and fixed wing aircraft, for marine applications, personnel armor and fragmentation blankets.

The Armor Division consists of MDT Protective Industries Ltd in Israel and MDT Armor Corporation and Armor of America in the US. In addition, the Armor Division is a partner in Concord Safety Systems, a vehicle armoring joint venture in India.

About Arotech Corporation

Arotech Corporation is a leading provider of quality defense and security products for the military, law enforcement and security markets, including multimedia interactive simulators/trainers, lightweight armoring and advanced zinc-air and lithium batteries and chargers. Arotech operates through three major business divisions: Armor, Simulation and Training and Batteries and Power Systems.

Arotech is incorporated in Delaware, with corporate offices in Ann Arbor, Michigan, and research, development and production subsidiaries in Alabama, Colorado, Michigan, California and Israel.

Except for the historical information herein, the matters discussed in this news release include forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995, including the results of our restructuring program. Forward-looking statements reflect management's current knowledge, assumptions, judgment and expectations regarding future performance or events. Although management believes that the expectations reflected in such statements are reasonable, readers are cautioned not to place undue reliance on these forward-looking statements, as they are subject to various risks and uncertainties that may cause actual results to vary materially. These risks and uncertainties include, but are not limited to, risks relating to: the ineffectiveness of Arotech's internal control over financial reporting and disclosure controls and procedures; product and technology development; the uncertainty of the market for Arotech's products; changing economic conditions; delay, cancellation or non-renewal, in whole or in part, of contracts or of purchase orders; Arotech's ability to remain listed on the Nasdaq Stock Market in accordance with the Nasdaq's $1.00 minimum bid price and other continued listing standards; dilution resulting from issuances of Arotech's common stock upon conversion or payment of its outstanding convertible debt, which would be increasingly dilutive if and to the extent that the market price of Arotech's stock decreases; and other risk factors detailed in Arotech's most recent Annual Report on Form 10-K for the fiscal year ended December 31, 2005, and other filings with the Securities and Exchange Commission. Arotech assumes no obligation to update the information in this release. Reference to the Company's website above does not constitute incorporation of any of the information thereon into this press release.