|To: | March 12,
  2003
|--- | ----------------

AMS
Electronics Ltd.
41 Hataasia StreetArad

Dear Sirs,

In connection with the Manufacturing and Purchase Agreement entered
into between AMS Electronics Ltd. (AMS),
Nexus Telocation Systems Ltd. (Nexus
Telocation) and Nexus Data Inc. and Nexus Data (1993) Ltd.
(collectively, Nexus Data),
dated January 15, 2002 (the Original
Manufacturing Agreement; capitalized terms used herein and not
specifically otherwise defined shall have the meaning ascribed to them in the
Original Manufacturing Agreement); and , and further to our correspondence to
this matter we would like to put in writing our understanding regarding the changes and amendments to the Original
Manufacturing Agreement.

|WHEREAS, | Nexus
  Telocation and AMS signed a letter agreement amending the Original
  Manufacturing Agreement on January 27, 2003 (the Prior Amendment); and                                                                                                                                                                    
|-------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|         |                                                                                                                                                                                                                                                                                                                          
|WHEREAS  | Nexus
  Telocation and AMS agree to terminate the Prior Amendment and it shall be
  replaced in its entirety by this letter agreement; and                                                                                                                                                                               
|         |                                                                                                                                                                                                                                                                                                                          
|WHEREAS  | Nexus
  Telocation has sold all its holdings in Nexus Data on December 24, 2002, to
  third parties, subject to certain conditions, and since such sale has already
  been completed, Nexus Data is no longer a subsidiary of Nexus Telocation; and                                                                      
|         |                                                                                                                                                                                                                                                                                                                          
|WHEREAS  | AMS reached
  separate agreements with Nexus Telocation and Nexus Data in such a way that
  the Original Manufacturing Agreement shall continue to apply with each of
  Nexus Telocation and Nexus Data separately such that each of Nexus Telocation
  and Nexus Data shall only be responsible for its liabilities; and
|         |                                                                                                                                                                                                                                                                                                                          
|WHEREAS  | Nexus
  Telocation and AMS reached an agreement regarding certain changes to the
  terms of the Original Manufacturing Agreement as herein detailed; and                                                                                                                                                                 
|         |                                                                                                                                                                                                                                                                                                                          
|WHEREAS  | the parties
  wish to set forth their agreements with respect to the Original Manufacturing
  Agreement as it shall continue to apply to and between Nexus Telocation and
  AMS;                                                                                                                                         

Now
therefore, it is agreed to amend the terms of the
Original Manufacturing Agreement between Nexus Telocation and AMS as follows:

|1. | All
  reference to Nexus Data and its products and liabilities shall be deleted
  including all terms and conditions regarding Nexus Data and all such terms
  and conditions shall be deemed to apply and be binding on Nexus Data, subject
  to any amendment reached in a separate agreement between Nexus Data and AMS.
  Appendix 9 and all reference thereto and the term Related Manufacturing
  Agreement shall be deleted from the Original Manufacturing Agreement.
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|2. | The preamble
  to the Original Manufacturing Agreement is hereby cancelled and is null and
  void.                                                                                                                                                                                                                                                                                                                                                                             

---

---

|3. | Section 2 in
  to the Original Manufacturing Agreement is cancelled and is null and void in
  its entirety.  Instead of Section 2,
  Nexus Telocation commits to purchase from AMS during a four (4)-year period
  commencing on March 12, 2003 (the Manufacturing
  Term) Products for the lower of: (i) at least $2.5 million per
  year and for at least $10 million in the aggregate over the entire
  Manufacturing Term; or (ii) the actual amount purchased by Nexus Telocation,
  provided, however, that Nexus Telocation exclusively purchased the Products
  listed in Appendix 1 to the Original Manufacturing Agreement from AMS
  (subject to certain reservations provided below) and any other RMU products,
  including any developments and derivatives thereof.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|-- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   | If a
  customer of Nexus Telocation shall demand, in writing in its agreement with
  Nexus Telocation, that Products required by it be manufactured abroad, then
  Nexus Telocation will grant AMS the right of first refusal to provide the
  manufacturing in those countries through AMS manufacturing agreements with
  manufacturers in those countries.  In
  the event that AMS elects not to exercise the aforementioned right of first
  refusal, Nexus Telocation shall be entitled to manufacture such Products
  through any third party at its election and the same shall not be regarded as
  a violation of the exclusivity of AMS under Subsection (ii) of the
  preceding paragraph.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|4. | Notwithstanding
  anything to the contrary, the parties agree and acknowledge that as the
  exclusivity granted under the Subsection (ii) of the first paragraph of
  Section 3 above is based on the competitiveness of the prices offered,
  therefore, in the event Nexus Telocation shall receive an offer from another
  manufacturer (a Third Party Manufacturer)
  to manufacture all Products being manufactured by AMS at a price per unit
  lower by at least 6% (six percent) than the offered prices of AMS under the
  Original Manufacturing Agreement as amended hereunder, then Nexus Telocation
  shall offer AMS to manufacture and sell the Products to Nexus Telocation at
  such lower price and under all other terms as shall be agreed upon with such
  Third Party Manufacturer (the Proposed
  Terms), subject to such reasonable adjustments which may required
  in order to apply the Proposed Terms to AMS rather than to the Third Party
  Manufacturer, which required adjustments shall be negotiated in good faith
  discussions between Nexus Telocation and AMS; and if AMS elects not to accept
  such an offer, then Nexus Telocation will be entitled to enter into an
  agreement for the manufacture of the Products by such Third Party
  Manufacturer at the Proposed Terms, and the same shall not be regarded as
  violation of the exclusivity under Subsection (ii) of the first paragraph
  of Section 3 above.  In the event that
  AMS elects not to accept the offer to manufacture the Products under the
  Proposed Terms this Agreement shall be terminated in accordance with the
  amended Section 14.1(iii) to the Original Manufacturing Agreement attached
  hereto as Exhibit A. It is
  hereby clarified that Nexus Telocation is not entitled to approach AMS with
  competitive prices during the first two years of the Manufacturing Term and
  thereafter no more than once every nine months.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|5. | Section 8.2
  to the Original Manufacturing Agreement shall be amended such that the last
  two sentences shall be deleted commencing with In addition to the
  foregoing until the end of the paragraph.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|6. | Section 14
  to the Original Manufacturing Agreement shall be deleted and instead it shall
  be replaced with Section 14 detailed in Exhibit
  A hereto.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|7. | Section 18.3
  to the Original Manufacturing Agreement shall be amended such that the last
  sentence thereof shall read as follows: Neither partys liability for direct
  damages under this Agreement (whether in contract or tort) shall exceed
  $900,000, if at all.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|8. | Sections
  18.13 and 18.15 and Appendix 14 to the Original Manufacturing Agreement are
  hereby cancelled and is null and void in its entirety.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|9. | Notwithstanding
  anything in this Agreement to the contrary, AMS and Nexus Telocation
  acknowledge that Nexus Telocation is still responsible towards AMS for the
  debts and liabilities accrued to date under the terms of the Original
  Manufacturing Agreement regarding Nexus Telocation payments, which shall be
  repaid and settled by Nexus Telocation and AMS by April 1st, 2003
  (Current Liability).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                

- 2 -

---

---

|10. | The parties
  agree that the table of Permissible Percentages of Change in Section 3(e) of
  Appendix 8 to the Original Manufacturing Agreement is hereby replaced by the
  table attached hereto as Exhibit B
  and shall apply only as of January 27, 2003.                                                                                                                                                                                                                                                                                                                                                                                           
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|11. | Each party
  declares that, other than the payment of the Current Liability under Section
  8 above, it hereby irrevocably waives any and all claims, demands and causes
  of action (Claims) it has or
  may have against the other party and undertakes not to make any Claim based
  on the Original Manufacturing Agreement related to the period prior to this
  date. AMS confirms that Nexus Telocation shall not be liable for any
  liabilities, obligations or undertakings of Nexus Data, and that in no event
  shall a Claim be made by AMS against Nexus Telocation relating to Nexus
  Datas liabilities, obligations or undertakings.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|12. | All other
  terms and conditions shall remain without change except for those changes
  required to give effect to the changes above detailed and the deletion of
  Nexus Data from the Original Manufacturing Agreement and except for the
  provisions of the following Sections of the Original Manufacturing Agreement
  which shall be deleted and amended as specified above.                                                                                                                                                                                                                                                                     



|Sincerely,                                                                                                                     
|-------------------------------------------------------------------------------------------------------------------------------
|                                                                                                                               
|                                                                                                                               
|Nexus
  Telocation Systems Ltd.                                                                                                
|                                                                                                                               
|Yaron
  Sheinman - Chairman of the Board                                                                                       
|Shlomo
  Sadovsky - CEO                                                                                                        
|                                                                                                                               
|The
  undersigned, AMS Electronics Ltd., hereby agrees to the above detailed
  changes to the Original Manufacturing Agreement.
|                                                                                                                               
|                                                                                                                               
|                                                                                                                               
|AMS
  Electronics Ltd.                                                                                                         
|By:                                                                                                                            
|Title:                                                                                                                         
|By:                                                                                                                            
|Title:                                                                                                                         

- 3 -

---

---

Exhibit A

14.
14.1           (i)          Termination with Cause. This Agreement may
be terminated, by written notice, by either party upon the occurrence of any
one or more of the following events: (a) failure by either party to perform any
of its material obligations (including re-occurring late deliveries of the
Products (i.e., at least 2 consecutive delays in a given quarter and more than
four delays a year) resulting from substantial financial difficulties of AMS)
under this Agreement and to cure such failure within thirty (30) calendar days
after receipt of written notice describing the failure in sufficient detail, or
if the failure cannot be completely cured within thirty (30) calendar days,
failure to make substantial progress towards a cure within the thirty (30)
calendar day period; or immediately upon a material breach of Section 16.1
(Confidentiality); (b) entering into or filing of a petition, arrangement or
proceeding seeking: an order for relief under the bankruptcy laws of the State
of Israel or similar laws of any other jurisdiction; a receivership for any of
its assets; a composition with or assignment for the benefit of its creditors;
a readjustment or debt; its dissolution or liquidation all of which unless
cancelled or removed within thirty (30) calendar days; or in the event that the
accountants of AMS shall opine in the financial statements of AMS that there is
substantial doubt that AMS shall be able to continue its operations.

(ii)             Termination without cause.  This Agreement may be terminated, by written
notice, by either party without cause upon six (6) months prior written notice
to the terminated party, provided however, that, other than for a termination
for cause under Section 14.1(i) above, Nexus Telocation may so terminate this
Agreement only as of after the end of the Manufacturing Term.

(iii)            Effect of Termination.Upon termination of this Agreement:

| | (a) | In the event
  of: (1) termination by Nexus Telocation under Section 14.1(i) or (2)
  termination by AMS under Section 14.1(ii), AMS will, to the extent and at
  times requested and specified by Nexus Telocation, stop all work on
  outstanding Purchase Orders, and take reasonable actions to incur no further
  direct costs.  In the above referred
  to events referred to above in this sub-clause (a), Nexus Telocation will
  have the option to request that AMS complete work in process pursuant to any
  Purchase Orders open on the date of termination (in the event of termination
  without cause by Nexus the parties will assure that all work shall be
  performed prior to the expiration of the prior written notice period,
  provided that no Purchase Order shall be submitted with a delivery date later
  than the end of the notice period, unless specifically so agreed by AMS) and,
  in such case, AMS shall complete such work-in-process; for remaining
  work-in-process not to be completed as per Nexus Telocation stop work order,
  Nexus Telocation will pay a mutually agreed upon reasonable pro rata
  percentage of the finished Products purchase price;
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | (b) | Nexus
  Telocation will pay AMS the price for all Products Delivered to Nexus
  Telocation as of the termination date, and for all additional deliverables to
  be provided by AMS if so required by Nexus Telocation under sub-clause (a)
  above;                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | (c) | Each Party
  will return to the other, freight collect, all materials that contain the
  others Confidential Information, including all manufacturing files of Nexus
  Telocation and all copies thereof and all documents or things containing any
  portion of any Confidential Information, or if the other Party gives written
  instructions to do so, destroy all such materials and copies thereof and all
  documents or things containing any portion of any Confidential Information,
  and provide the other a written certificate of destruction within thirty (30)
  days after such destruction; and                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | (d) | AMS shall
  use no less than commercially reasonable efforts to cancel without charge any
  outstanding purchase order with third party suppliers relating to this
  Agreement, unless, in the events referred to in sub-clause (a) above,
  otherwise requested by Nexus Telocation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    

- 4 -

---

---

| | (e) | Except as
  otherwise provided in this Agreement, neither Party shall be liable to the
  other Party hereto for indirect, incidental or consequential damages, losses,
  indemnity, compensation or expenses of any kind or character whatsoever on
  account of the expiration or termination of this Agreement in accordance with
  the above terms of this section 14.1, whether such damages, losses, costs or
  expenses arise from loss of prospective sales, or expenses incurred or
  investments made in connection with the establishment, development or
  maintenance of a Partys business, creation of goodwill, markets and
  customers for the Products or any other reason whatsoever.  Subject to survival, notwithstanding
  anything to the contrary contained herein, expiration or termination of the
  Agreement shall not affect any claim, demand, liability or right of a Party
  arising pursuant to this Agreement prior to the expiration or termination
  hereof.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

14.2           Notwithstanding
the above, this Agreement shall terminate upon the earlier of (i) the end of
the Manufacturing Term; or (ii) the purchasing from AMS of Products for the
amount of at least $10 million.

- 5 -

---

---

Exhibit B

|Type of Change |  | Days                                                                              |  | % of Permissible
  Adjustment
|-------------- |  | --------------------------------------------------------------------------------- |  | -----------------------------
|               |  |                                                                                   |  |                              
|Decrease    or |  | 0-30 Days                                                                         |  | 0%                           
|Cancellation   |  | 30-60 Days                                                                        |  | 25%                          
|               |  | 60-90 Days                                                                        |  | 50%                          
|               |  | 90-120 Days                                                                       |  | 80%                          
|               |  | Over 120
  Days                                                                   |  | Unlimited                    
|Rescheduling   |  | 0-30 days
  past the scheduled Delivery
  date for the applicable Purchase Order. |  | Unlimited                    
|Increase       |  | 0-30                                                                              |  | 0%                           
|               |  | 30-60                                                                             |  | 30%                          
|               |  | 60-90                                                                             |  | 60%                          
|               |  | Over 90 Days                                                                      |  | Unlimited                    

*                Days means the number of calendar days
between NEXUSs order adjustment, plus 10 days, and the Delivery date, as
amended in the PO.

6

---

---