Document:

EXHIBIT 10.16

                                          CONFIDENTIAL TREATMENT REQUESTED.
                                          CONFIDENTIAL PORTIONS OF THIS DOCUMENT
                                          HAVE BEEN REDACTED AND HAVE BEEN
                                          SEPARATELY FILED WITH THE COMMISSION.

                                    AGREEMENT
                                    ---------

                 Made and executed in Holon on December 3, 2000

BETWEEN            Arad Technologies, Ltd.  No.
                                               --------------
                   Of: 6 Hacarmel St., Yokneam
                   Hereinafter: "ARAD"

                                                                 THE FIRST PARTY

AND BETWEEN        Tadiran Telematics, Ltd. No. 8-238387-51
                                            ---------------
                   Of: 26 Hashoftim St., Holon Industrial Zone
                   Hereinafter: "TELEMATICS"

                                                                THE SECOND PARTY

WHEREAS            Arad hereby declares that it is a company specializing in the
                   field of automatic meter reading (AMR);

AND WHEREAS        Telematics hereby declares that it is a company specializing
                   in the field of RF;

AND WHEREAS        The parties wish to cooperate together in order to develop,
                   manufacture and market RF systems for the AMR field, whereby
                   subject to the terms of this agreement Arad shall not
                   agreement with any other RF company except for Telematics;
                   and vice versa, Telematics shall not agreement with any other
                   AMR company except for Arad;

          THEREFORE THE PARTIES HAVE AGREED AND STIPULATED AS FOLLOWS:

1.   The declarations of the parties, as specified in the preamble to this
     agreement, shall constitute an integral part of this agreement and its
     terms.

2.   The period of the agreement shall be five years, from the date on which
     this agreement is signed (hereinafter, "the Original Agreement Period").

     Following the end of the Original Agreement Period, the agreement shall be
     renewed automatically for a period of an additional year, each year
     (hereinafter, "the Extension Period"), unless one of the parties shall
     inform the other via registered mail with confirmed delivery, of their
     desire to terminate the agreement, not later than 90 days prior to the end
     of the Original Agreement Period and/or any Extension Period, as relevant.
     Should one party inform the other party of their desire to terminate the
     agreement, as stated, all of the parties' mutual undertakings made during
     the Original Agreement Period or during any Extension Period shall remain
     valid

3.   A)   Telematics hereby declares and undertakes that throughout the entire
          Agreement Period, it shall not develop, manufacture, market, order
          and/or agreement in any manner whatsoever, with any body engaged in
          the "AMR" field, apart from Arad.

     B)   Arad hereby declares and undertakes that throughout the entire
          Agreement Period, it shall not develop, manufacture, market, order
          and/or contract in any manner whatsoever, with any body engaged in the
          "RF" field, apart from Telematics, with regard to AMR-RF systems,
          except as stated in sub-paragraphs (C) and (D) below.

     C)   Notwithstanding the contents of sub-paragraph (B) above, Arad has the
          right to continue its cooperation with bodies, contractors,
          manufacturers and other agents engaged in the RF field, and which are
          specified in Appendix A to this Agreement, with regard to existing
          projects and initiatives, until the conclusion of these agreements
          with the said bodies. Arad shall not renew the agreements it has with
          these bodies and shall contract with Telematics instead - to the
          extent this is possible. As far as possible, Arad and Telematics shall
          act to gradually replace the products of the said bodies with
          Telematics products on an economic basis, and provided that Arad does
          not suffer any damage as a result, such as: violation of existing
          agreements, payment of compensation, payment of excess expenses,
          increased costs, and the like.

     D)   Arad shall continue to grant services, including support, to bodies
          and agencies entitled to such support therefrom, on the basis of
          existing

          agreements and undertakings, even with regard to products originating
          from those said bodies and agencies as described in sub-paragraph (C)
          above.

     E)   In the event new, competitive technologies are developed in the AMR-RF
          field, which shall be more advanced than the technologies that have
          been developed up to that point in time by Telematics under this
          agreement or in general, Telematics shall have the right of first
          refusal to develop technologies at the level of the said new
          technologies.

          In such a case, Arad shall contact Telematics in writing, and shall
          specify the characteristics of the competitive system and shall
          include all information known to it regarding this technology, its
          features and applications, cost, name and supplier, and any other
          information. Not later than 30 days after receiving said communication
          from Arad, Telematics shall send written notice informing Arad whether
          it has decided to exercise its right of refusal or not. Should
          Telematics decide to exercise its right of refusal the parties shall
          agree immediately on a reasonable timetable for developing
          technologies at a comparable level.

          In the event no such notice is given, or in the event that Telematics
          decides not to exercise its aforementioned right of refusal, Arad
          shall be entitled to contract with another supplier for the sole
          purpose of this technology, on condition that it is identical to the
          technology specified in Arad's said communication to Telematics.

4.   Arad and Telematics do hereby undertake to develop, manufacture and market
     together an AMR-RF system according to the system characterization to which
     they shall agree, and financing and responsibility for each of the stages
     shall apply to one of the companies, as specified below:

     A)   SYSTEM CHARACTERIZATION - to be defined together, according to the
          marketing description supplied by Arad. The characterization shall be
          owned by both of the parties.

     B)   DEVELOPMENT - to be carried out together, whereby the system
          characterization shall specifically define the role of each party in
          the

          development process. Each party shall absorb the cost of developing
          its own part, and shall be sole owners of that part of the
          development.

          The development stages shall be agreed between the parties, each stage
          separately, and a joint committee consisting of the directors of both
          companies, the project managers and Arad's marketing director, shall
          decide with regard to its progress in a joint decision.

     C)   MANUFACTURING - to be carried out by Telematics, where Telematics
          shall supply Arad with the electronic system and Arad shall be
          responsible for installing and integrating it into the final product.

          In stage 1, Telematics shall provide a prototype product for the
          purpose of assessment and/or improvement and/or modification; Arad
          shall assess and examine all aspects of the product, and on the basis
          of the outcome of these tests Telematics shall make any modifications
          and improvements accordingly.

     D)   MARKETING - to be carried out by Arad, in consultation with
          Telematics.

     E)   SUPPORT - to be provided by Telematics, subject to a warranty and a
          support agreement, which will also grant any technical assistance that
          may be needed for the various markets, according to the support
          agreements.

     F)   ANCILLARY PRODUCTS - such as: connections to cellular networks,
          connections for hand-held (Palm) devices, etc., Arad shall give
          Telematics the right of first refusal regarding all aspects of
          developing and manufacturing ancillary products in Telematics's field
          of expertise as defined in this agreement. The right of first refusal
          mechanism shall be as stated above in paragraph 3(E), with the
          necessary and relevant changes.

          This paragraph shall not apply in the event the development is carried
          out by Arad (development in analog, digital or cellular fields, etc.),
          but shall apply to development in the RF sphere.

5.   In exchange for manufacturing the system, Telematics shall receive from
     Arad the production costs, as defined above, with the addition of the
     following sums:

     A)   For the sale of up to *** units, the sum of $ *** , not including
          VAT, *** $ *** in NIS (not including VAT).

     B)   For the sale of every unit above the first  ***   units - the sum of
          $ *** in NIS, not including VAT, *** $ *** in NIS (not including VAT).

          For the purpose of this paragraph:

          "Unit" shall mean an RF unit, not including batteries but without the
          housing.

          "Production cost" shall mean the direct cost, i.e., the ex-factory
          cost, without any other associated costs, such as publicity,
          marketing, transportation, insurance, taxes, parts that do not belong
          to the electronic components, such as plastic, glass, etc., and all of
          the other items and components that are not directly associated with
          the assembly line of the electronic product, but including
          Telematics's cost for the ongoing operation of its assembly line and
          support thereof, which shall be calculated once a year, and in any
          case, shall not exceed the cost of an engineer's yearly salary and
          shall not be less than half the cost of an engineer's yearly salary.

     C)   In exchange for manufacturing the system's ancillary components,
          Telematics shall receive from Arad ***% of the production cost.

     D)   It is understood that all of the data required to calculate the
          production costs, as defined above, shall be accessible and available
          to Arad.

     E)   During the Agreement Period, and following completion of the product's
          development according to the characterization and the goals defined,
          Telematics shall begin the process of value engineering, with a view
          to reducing the cost of the product without jeopardizing its quality
          while improving the venture's profitability.

          If Telematics is successful, then Telematics shall receive, after
          carrying out the process, the following sums:

***   Confidential material redacted and filed separately with the Commission.

          (1)  For the first *** units sold - *** % of the total savings X the
               number of units actually sold;

          (2)  Beyond the first *** units sold, no matter what the figure -
               *** % of the total savings X the number of units actually sold.

     F)   The parties shall agree between them regarding the manner and terms of
          the payments Arad is required to transfer to Telematics, according to
          standard market conditions at the time relating to similar
          transactions between companies, such as Net+, etc., and in accordance
          with the payments made to the sub-contractor.

6.   It is hereby agreed between the parties that any advertising and/or
     presentation made by one party to this agreement that uses the name of the
     other party, shall require prior approval by the party so mentioned in the
     advertising and/or presentation.

7.   During the Agreement Period, and even afterwards and subject to any law,
     the parties do hereby undertake one towards the other to maintain absolute
     confidentiality with regard to all of their joint business and/or the
     business of each one separately, and this shall refer to the following
     matters: finances, payments, costs, profit and loss, customers, suppliers,
     sub-contractors, production and marketing techniques, processes and
     methods, etc.

     Any party that shall violate this paragraph shall be considered as if he
     committed a substantial breach of contract, with all of the legal
     consequences this entails.

8.   Changes to the instructions contained in this agreement may be made only in
     writing, and signed by the two parties.

9.   Arad hereby undertakes to transfer to Telematics a deposit payment of
     $  ***  for LLI components within 30 days of the signing of this
     agreement, and this shall be against an order for  ***  units.

   AND IN WITNESS THEREOF THE PARTIES HAVE SIGNED ON THE AFOREMENTIONED DATE:

             (-signed-)                                (-signed-)
---------------------------------------  ---------------------------------------
       Tadiran Telematics, Ltd.                  Arad Technologies, Ltd.

***   Confidential material redacted and filed separately with the Commission.

                                ESCROW AGREEMENT
                                ----------------

This Escrow Agreement dated as of 11 June 2001 is entered into by and among
Tadiran Telematics Ltd. (hereinafter referred to as "Telematics"), a company
organized under the laws of ISRAEL), Arad Technologies Ltd. (hereinafter
referred to as "Arad"), a company organized under the laws of ISRAEL, and
________________ a corporation organized under the laws of Israel ("Escrow
Agent"), with reference to the following facts:

A. Telematics and Arad Technologies Ltd. (hereinafter referred to as "Arad") are
parties to that certain Agreement dated 3 December 2000 (the "AMR Agreement"); a
copy of which is attached hereto as Exhibit "A" concerning the development of an
AMR System (the "Product").

B.  It is the policy of Telematics not to disclose the Production File of the
AMR system, except as provided in this applicable escrow agreement.

C.  Telematics and Arad desire that upon the occurrence of certain events
described in Paragraph 3.1. below Arad will be entitled to use the AMR system
production file subject to the terms of this agreement.

THEREFORE, FOR VALUABLE CONSIDERATION Telematics, Arad and Escrow Agent agree as
follows:

1    Deliveries to Escrow Agent

     1.1  Three months after delivery of the first AMR System production batch,
          Telematics shall deliver the AMR system Production File to Escrow
          Agent. Escrow Agent shall confirm to Arad, in writing, that the AMR
          system production file have been deposited.

     1.2  Telematics shall deliver, when applicable, and, on an annual basis, to
          Escrow Agent the updates and new revision of any document included in
          the AMR system Production File (the "Upgrades").

                                                                          1 of 9

2.   Safekeeping of AMR system Production File

     2.l  The AMR system Documents held by the Escrow Agent shall remain the
          exclusive property of Telematics, and the Escrow Agent shall not use
          the AMR system Documents or disclose the same to any third party
          except as specifically provided for herein. The Escrow Agent shall
          hold the AMR system Documents in safekeeping as applicable for
          commercially sensitive material at its offices indicated below unless
          and until the Escrow Agent is to deliver the AMR system Documents to
          Arad or Telematics.

     2.2  The production file shall be identical to the production file provided
          to the manufacturers and will include PCB layouts, Gerber files, bill
          of material, production instruction, scheme drawings.

3.   Conditions for Release of AMR system Production File

     3.1  The occurrence of any of the following shall constitute a "Condition
          of Release" or by Escrow Agent under this Agreement:

          (a)  The commencement of voluntary or involuntary receivership,
               liquidation, winding up or reorganization proceedings against
               Telematics, that will prevent the Telematics from fulfillment of
               its obligations under the AMR Agreement, unless in the case of
               involuntary matters such proceedings are discharged within ninety
               (90) Days of their commencement, or any interim or permanent
               receiver or liquidator is appointed over the Telematics rights
               under the Contract or if Telematics becomes insolvent;

          (b)  Telematics does not execute a "AMR Purchase order" to Arad within
               120 days of the mutually agreed upon delivery schedule and
               provided that the delay is not due to external causes to which
               Telematics has no control over;

                                                                          2 of 9

     3.2  Arad shall give written notice (the "Release Notice") to the Escrow
          Agent of the occurrence of any Condition of Release. The Release
          Notice shall (a) identify the Agreement and this Escrow Agreement; (b)
          specify the Condition of Release that has occurred; (c) identify the
          AMR system Production File; and (d) demand the delivery of the AMR
          system Documents to Arad.

     3.3  Telematics, at any time, may give written notice (the "Termination
          Notice") to the Escrow Agent. The Termination Notice shall (a)
          identify the Agreement and this Escrow Agreement; (b) specify that the
          Agreement has terminated for reason other than a Condition of Release;
          (c) identify the AMR system Production File; and (d) demand delivery
          of the AMR system Production File to Telematics.

     3.4  Upon receipt of the Release Notice or the Termination Notice, the
          Escrow Agent shall send a copy thereof to the other party. If the
          other party desires to dispute the Release Notice or the Termination
          Notice, such party shall, within forty-five (45) days after the
          receipt of the copy of the Release Notice or the Termination Notice
          from the Escrow Agent, deliver to the Escrow Agent a sworn statement
          (the "Affidavit") stating that the specified condition or termination
          has not occurred, whereupon the provisions of Paragraph 4 below will
          become applicable. If the Escrow Agent received the Affidavit within
          such forty-five (45) day period, the Escrow Agent shall send a copy
          thereof to the party that sent the Release Notice or the Termination
          Notice, and Escrow Agent shall continue to hold the AMR system
          Documents under the terms of this Escrow Agreement. If the Escrow
          Agent does not receive the Affidavit within such forty-five (45) day
          period, the Escrow Agent shall deliver the AMR system Documents to the
          party that sent the Release Notice or the Termination Notice.

4.   Disputes

     4.1  In the event that a party files the Affidavit with the Escrow Agent in
          the manner and within the time period set forth in

                                                                          3 of 9

          Paragraph 3.4 above, the Escrow Agent shall not release the AMR system
          Documents to either party except (a) in accordance with a final
          decision of the arbitration panel as set forth in Paragraph 4.2 below,
          or (b) upon receipt of an agreement executed by Telematics and Arad,
          authorizing the release of the AMR system Documents to Telematics or
          to Arad.

     4.2  Disputes arising out of or relating to this Escrow Agreement, or the
          breach, termination, or invalidity thereof, shall be settled in
          accordance with the applicable dispute resolution provisions set forth
          in Para. 4.3 below. The Escrow Agent shall give prompt effect to any
          authenticated arbitration award. Notwithstanding anything to the
          contrary contained in this paragraph 4.2, neither party may terminate
          the Agreement nor pursue any remedies for its material breach first
          having given the breaching party written notice of the material breach
          and an opportunity to cure such breach within forty-five (45) days of
          the receipt of such written notice.

     4.3  Dispute Resolution and Arbitration

          (a)  If one or more disputes arise between the parties with respect to
               the obligations and responsibilities of either party under this
               Agreement, any such dispute shall be resolved in accordance with
               the process described in this Section 4.3, provided, however,
               that if either party determines that provisional relief (e.g. a
               temporary restraining order or preliminary injunction) is
               required to provide temporary relief, nothing herein shall
               prevent the aggrieved party from applying to a court for
               provisional relief. An application for provisional relief to a
               court shall not relieve either party of its obligation under this
               section 3.4, and shall not alter the power of the arbitrator to
               determine the rights and obligations of the parties under this
               Agreement.

          (b)  The parties shall attempt to select a mutually acceptable
               arbitrator. If, however, after 30 days of the declaring of a
               dispute and the suggestion of a candidate for arbitrator, the
               parties are unable to agree upon an arbitrator who is willing to
               accept the

                                                                          4 of 9

               appointment, the arbitrator shall be selected by the President of
               the Israeli Bar Association, whose selection shall be binding
               upon the parties.

          (c)  The arbitrator's fee and all other incidental costs incurred
               during the arbitration process will be shared equally between the
               parties.

          (d)  The arbitrator shall be neutral and impartial, and shall use the
               laws of the State of Israel to resolve the dispute between the
               parties.

          (e)  The arbitrator shall control the procedural aspects of the
               arbitration. The parties shall cooperate fully with the
               arbitrator at all times.

          (f)  The arbitrator shall, in consultation with the parties, fix the
               agenda for all meetings.

          (g)  Each party may be represented by counsel, who shall be authorized
               to recommend settlement options to their principals. Each party
               shall bear their attorney's fees.

          (h)  The arbitration shall be conducted expeditiously and shall be
               completed in less than 180 days from the date the arbitrator was
               selected. Each representative shall make every effort to be
               available for meetings, and the arbitrator shall ensure that he
               is able to devote all the time necessary to quickly and
               effectively render an arbitration judgement.

          (i)  The entire arbitration shall remain confidential. The parties or
               the arbitrator shall not disclose information regarding the
               process, including settlement terms, unless the parties agree
               otherwise.

               The arbitrator may obtain assistance and independent expert
               advice with the agreement of and at the expense of the parties.

          (j)  The arbitrator shall not be liable for any good faith act or
               omission in connection with his role as arbitrator.

                                                                          5 of 9

          (k)  The arbitration shall take place in Tel-Aviv, Israel.

          (l)  The arbitrator's decision shall be final and binding upon both
               parties.

5.   Payment to Escrow Agent

     The fees of the Escrow Agent for acting as escrow agent hereunder shall be
     shared equally by Telematics and Arad.

6.   Termination

     This Escrow Agreement shall terminate upon delivery of the AMR system
     Production File to either Telematics or Arad in accordance with the terms
     of this Agreement.

7.   Modification; Severability

     This Escrow Agreement shall not be waived, amended or modified except by
     the written agreement of all the parties hereto. Any invalidity, in whole
     or in part, of any provision of this Escrow Agreement shall not affect the
     validity of any other of its provisions.

8.   Notice

     All notices under this Agreement shall be in writing and shall be effective
     when delivered in person to the recipient by courier.

     All Notices to Telematics shall be delivered to:
     Tadiran Telematics Ltd.
     26, Hashoftim St., POBox 267
     Holon 58102
     Tel.: 03-5575700
     Fax:  03-5575703
     Attention: Eddy Kafzy
     All notices to Arad shall be delivered to:
     Arad Technologies Ltd.
     POB 332 Yakedon 20692 Israel

     Tel: 04-9935222
     Fax: 04-9935227

     Attention: Don Winter
     All notices to Escrow Agent shall be sent to:

                                                                          6 of 9

9.   Limitations or Responsibility and Liability

     9.1  The Escrow Agent shall exercise reasonable care as provided in Para.
          2.1 above with respect to safekeeping of the AMR system Documents and
          shall provide at least the same degree of care for the AMR system
          Production File as it maintains for its valuable documents and those
          of its customers lodged in the same location with appropriate
          atmospheric or other safeguards.

     9.2  The Escrow Agent shall be protected in acting upon any written notice,
          request, waiver, consent, receipt, or other paper or document
          furnished to Escrow Agent, not only in assuming the due execution and
          the validity and effectiveness of the provisions of the notice, but
          also as to the truth and acceptability of any information herein
          contained, with Escrow Agent reasonably and in good faith believes.

     9.3  The Escrow Agent shall have no duties except those which are expressly
          set forth herein.

     9.4  Telematics and Arad hereby jointly and severally shall indemnify the
          Escrow Agent against any loss, liability, or damage (other than any
          loss, liability, or damage caused by the gross negligence or willful
          misconduct of Escrow Agent), including reasonable costs of litigation
          and attorneys' fees, arising from and in connection with the
          performance of Escrow Agent's duties and obligations under this
          Agreement as such duties and obligations pertain to the AMR system
          Documents.

                                                                          7 of 9

     9.5  The parties agree that all remedies and damages that might otherwise
          be available against Telematics or Arad for claims arising out of or
          related to this Agreement shall be subject to the limitations set
          forth in the Agreement, including, but not limited to the limitation
          of liability set forth in Section 13 of the Agreement.

10.  Counterparts

     This Escrow Agreement may be executed in multiple counterparts each of
     which shall be deemed an original, and all of which together shall
     constitute one and the same Escrow Agreement.

11.  Choice Of Law

     The governing law of this Agreement shall be that of the State of Israel,
     as if both parties to this Agreement were resident and doing business in
     such state.

12.  Binding Effect

     This Agreement shall be binding on and insure to the benefit of the
     respective successors and permitted assigns of the parties.

13.  Entire Agreement

     This Escrow Agreement, together with the Agreement, constitutes the entire
     agreement of the parties with respect to the escrow of the AMR system
     Documents, and supersedes any and all prior negotiations, correspondence,
     understanding, and agreements between the parties respecting the subject
     matter of this Escrow Agreement.

IN WITNESS WHEREOF, the parties hereto have caused this Escrow Agreement to be
executed and delivered by their duly authorized representatives as of the year
and date first-above written.

                                                                          8 of 9

ESCROW AGENT

By:                                   Date:
Name:
Title:
Date:

TADIRAN TELEMATICS                    ARAD

By:    Eddy Kafry   Date: 11/6/01     By:    Dan Winter    Date: 11/6/01
Name:  Eddy Kafry                     Name:  Dan Winter
Title: President                      Title: VP Technology
                                      Date:

Roman Sternberg
/s/ Roman Sternberg

                                                                          9 of 9EXHIBIT 10.17

                                          CONFIDENTIAL TREATMENT REQUESTED.
                                          CONFIDENTIAL PORTIONS OF THIS DOCUMENT
                                          HAVE BEEN REDACTED AND HAVE BEEN
                                          SEPARATELY FILED WITH THE COMMISSION.

                            RMR PRODUCTION AGREEMENT
                            ------------------------

This RMR Production Agreement (the "Agreement") is made as of June 14, 2001 (the
"Effective Date") by and between Tadiran Telematics Ltd., a company having its
address at 26 Hashoftim st., POB 267, Holon 58102, Israel and ARAD Technologies,
a company having its address at 6 Hakarmel st., POB 337, Yokneam Ilit 20692,
Israel ("Buyer") (jointly - the "Parties"), both duly organized and existing
under the laws of Israel and cooperating according to the terms of Agreement
signed on December 3, 2000 (Cooperation Agreement), and the Escrow agreement
signed June 11, 2001

                     THE PARTIES THEREFORE AGREE AS FOLLOWS

1.       AGREEMENT TO PURCHASE AND SELL

Within the term of this Agreement (thirty two months from the date hereof or
completion of the delivery of *** units, whichever is earlier, in accordance
with exhibit C), Buyer shall purchase from Seller, and Seller shall sell to
Buyer one hundred thousand *** Remote Meter Reading (RMR) units. The buyer
is entitled to place additional orders within the term of this agreement, in
which case the term will be extended accordingly.

2.       UNIT SPECIFICATIONS AND CHANGES

2.1 The RMRs shall fully comply with the RMR technical specifications, as set
forth in Exhibit "A" which will be attached hereto and signed by the parties not
later than two weeks upon signature of this agreement (the "Specifications") and
will be an integral part of this agreement. The RMRs shall possess type approval
grants from FCC (USA) and MOC (Israel), as applicable. Possession of both types
approvals are precondition for the delivery of the phase I and following phases
as described in Exhibit "C".

2.2 Subject to provisions of Section 5 below, the Parties may negotiate changes
to the specifications which shall be implemented in a manner that will not
interrupt the then current production of RMRs. The Parties shall determine by
mutual consent the corresponding adjustment in prices and the delivery schedule,
and this Agreement shall be modified in writing accordingly.

3.       PURCHASE PRICE/PAYMENT TERMS

3.1 The parties acknowledge that the actual production cost will be established
after performing the ATP of the Pilot System and FCC approval. The price will be
based on the actual "production cost" at that time (which is expected to be
between $ *** to $ *** but in any case not more than $ *** ) plus compensation
according to the paragraph 5 of the Cooperation Agreement.

The compensation mechanism due to value-engineering cost reduction as specified
in paragraph 5 __ of the Cooperation Agreement will be applied below the
production cost of $ *** .

The above prices exclude the technical support cost to be paid in accordance
with paragraph 5 __ of the Cooperation Agreement and additional cost of up to
$ *** to be paid by the buyer for

***   Confidential material redacted and filed separately with the Commission.

the tools and test equipment, developed by seller and/or its subcontractors for
the purposes of cost reduction, subjected to prior approval by the buyer.

3.2 Subject to the provisions of Section 4 below, the Basic Price is Ex -
factory and does not include freight, handling, insurance, and other delivery
costs but includes packaging according to the industrial standard for similar
products.

3.3 Terms of Payment. Terms for the payment of the Purchase Price are as defined
in Exhibit "B" attached hereto.

4.  DELIVERY TERMS

4.1 Delivery Schedule. Seller shall deliver the RMRs to Buyer according to
the delivery schedule attached as Exhibit "C " (the "Delivery Schedule").
Signature of this agreement constitutes activation of the first phase order as
specified in Exhibit "C". Orders for the second and third phases will be placed
not later than 20-th of relevant month, at least 4 month in advance before
commencing the delivery of each phase (e.g. before January 20 for delivery in
May). The monthly delivery rate (as set forth in Exhibit "C" or amended by the
Parties) may be increased by buyer by up to 25% or decreased by buyer by up to
50% by means of a 60 days prior written notice. Minimum monthly delivery rates
applicable for each phase will be *** for phase I, *** for phase II and
 *** (*) for phase III.

(*) The minimum monthly rate for phase III can be decreased in some months, but
in any case the duration of phase III (delivery of *** units) shall be not
more than 12 months.

4.2 Delivery Point. All RMRs shall be delivered by Seller ex - factory.

4.3 If Seller delays each specific delivery by more than 3 months, Buyer shall
have the rights to cancel the delayed quantity, without prejudice to any rights
that it may have under the provision of this agreement.

5.  REQUEST FOR DEVIATIONS

The Parties may request reasonable deviations from the Specifications in
writing. Requests for deviations must clearly identify the following:
description of the deviation; reference the individual Specification being
deviated; term of deviation, i.e. temporary or permanent; number of RMRs
affected; Effective Date; effect of deviation on any other technical or
performance Specification, including whether, following the deviation, the Unit
remains within the applicable margin or tolerance; anticipated delay, if any, in
Delivery Schedule due to deviation; and reason for deviation. Deviations may be
made only if a written addendum describing the deviations (including the change,
if any, in Delivery Schedule) has been mutually agreed upon and signed by both
parties.

6.  WARRANTY

Seller hereby warrants the RMRs to be in compliance with the Specifications and
to be free from defects in materials and workmanship for one year from the date
the RMR-Bs have been delivered to Buyer. The period defined above shall be
referred to as the Warranty Period. Seller

                                       2

***   Confidential material redacted and filed separately with the Commission.

shall have the option of either repairing or replacing RMRs found to be
defective during the Warranty Period. Time to repair or replace shall not exceed
60 days from the date of actual delivery of the item to Seller's facility.

6.1 Buyer acknowledges that the warranty contained in this Section 6 above shall
not apply to damage, deterioration or malfunctions which, after passage of title
to the buyer, are caused by:

6.1.1 The improper removal or installation of RMRs, performed not according the
agreed upon procedure.

6.1.2 Accidents, acts of nature, misuse, abuse, negligence, neglect,
unauthorized product modification or failure to follow proper instruction
procedure by buyer.

6.1.3    Repair or attempted repair by any person not authorized by Seller.

6.2 Buyer also acknowledges that Buyer shall be responsible and shall bear all
costs and charges related to the de-installation of a defective RMRs and
reinstallation of the RMRs, Seller shall bear the cost of shipment of the RMRs
from Buyer to Seller and back.

6.3 THE WARRANTIES CONTAINED IN THIS SECTION 6 AND THOSE COVERED IN TADIRAN
TELEMATICS' CURRENT PRODUCT LIABILITY INSURANCE ARE IN LIEU OF ALL OTHER
WARRANTIES WHETHER ORAL, WRITTEN, OR EXPRESS, IMPLIED OR STATUTORY. EXCEPT AS
MENTIONED ABOVE IN THIS SECTION, SELLER SHALL NOT BE LIABLE FOR ANY BUSINESS
EXPENSES, LOSS OF PROFIT, INCONVENIENCE, OR DAMAGE, INCLUDING DIRECT, INDIRECT,
SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES RESULTING FROM RMR DEFECTS WHETHER
RESULTING FROM BREACH OF WARRANTY OR ANY OTHER LEGAL THEORY. SELLER DISCLAIMS
ALL LIABILITY, WHETHER IN CONTRACT, TORT, WARRANTY OR OTHERWISE TO ANY THIRD
PARTY OTHER THAN BUYER. NOTWITHSTANDING THE ABOVE, SELLER SHALL REMAIN LIABLE TO
BUYER (AND ONLY TO BUYER) UNDER THE ABOVE WARRANTY FOR THE DURATION OF THE
WARRANTY PERIOD, DESPITE PASSAGE OF TITLE TO THE RMRs TO ANY THIRD PARTIES.

7.       CONFIDENTIALITY AND PROPRIETARY RIGHTS

Neither party shall, without the prior written consent of the other party, use
(for any purpose other than that contemplated by this Agreement) or disclose or
divulge to any third party the terms and conditions of this Agreement or any
documents, specifications or information, including technical information,
received from the other party under or in connection with this Agreement,
provided, however, that Seller may disclose to third party, including its
employees and subcontractors (provided they have executed an appropriate NDA),
in connection with the manufacture of the RMRs, the documents, specifications or
information received from Buyer, to the extent that in Seller's reasonable
opinion it is necessary for the purposes of this Agreement. At all times Seller
shall retain exclusive proprietary rights in the RMR developed by the Seller
(including design, configurations, drawings, specifications, etc.) but subjected
to the Cooperation Agreement and nothing herein may be construed as granting any
intellectual property rights in the RMR to the Buyer.

                                       3

8.       USE OF NAME OR TRADEMARKS

For "stand-alone" RMRs, Seller shall print any name or mark requested by Buyer
on the RMRs in addition to the name "Tadiran Telematics". Buyer shall be liable
for an infringement of copyright or trademarks as a result of any name or mark
requested by Buyer on the RMRs. If Buyer elects to use another name in addition
to the name "Tadiran Telematics", Buyer shall give Seller such name or mark to
be used on the RMRs at least 90 days prior to the delivery date for such RMRs.
For "integrated" RMRs (i.e. integrated in the water meter), Buyer shall make an
effort, if it is common to do so, to print the name "Tadiran Telematics" on the
assembled product in a way that this name will be visible to the user.

9.       FORCE MAJEURE

If performance by Parties of their obligations hereunder is prevented by Force
Majeure, affecting the activities of any party connected with the sale,
manufacture, supply, shipment or delivery of RMRs, including but not limited to,
acts of God, flood, typhoon, earthquake, tidal wave, landslide, fire, plague,
commotion, strike, labor disturbances, blockade, arrest or restraint of
government, requisition of vessel or aircraft, explosion, war, government
request, guidance, order or regulation or the boycotting of Israeli goods, or
any other unforeseeable causes or circumstances beyond the reasonable control of
specific party, then this party shall not be liable for loss or damage or
failure or delay in performing its obligations under this Agreement; provided,
however, that this party promptly fulfills its obligations under this Agreement
immediately after such force Majeure ceases.

10.      COMPLIANCE

10.1 Compliance with Agreement. Parties hereby agree to fully cooperate with
each other and to sell and buy RMRs which fully comply with the terms,
conditions, provisions and Specifications of this Agreement, including the
exhibits attached hereto for price set forth herein to be paid in a timely
manner.

10.2 Compliance with Law. Parties shall be in compliance with and the RMRs shall
be in compliance with all federal, state and municipal regulations governing the
sale and use of the RMRs. The Parties shall cooperate in obtaining necessary
government agency approvals.

10.3 Compliance with Proprietary Rights Requirements. Seller shall retain the
right to use all technology, know-how, copyright, trademark and patent rights
used in producing the electronics parts of RMRs, developed by the Seller,
subject to the Cooperation Agreement.

11.      N/A

12.      CONTRACT ADMINISTRATION

ROMAN STERNBERG ("Roman") or his duly appointed successor shall administer the
terms of this Agreement on behalf of Buyer, and DANNY WINTER ("Danny") or his
duly appointed successor shall administer the terms of this Agreement on behalf
of Seller.

                                       4

13.      NOTICES

Any notice, request or demand required to be made or given hereunder by any
party shall be deemed to be duly given or made upon receipt. The notice, request
or demand must be sent by courier or registered or certified mail, or facsimile
to the respective addresses of the parties set forth below, or at such other
address as has been given by either party to the other in writing in accordance
with the terms of this Agreement.

ARAD technologies.
Danny Winter
-------------------
Attention: __________
With a copy to: Beck Gillon

Tadiran Telematics
26 Hashoftim Street
Holon, 58102 Israel
Attention: Roman Sternberg
With a copy to: Eddy Kafry

14.      TERMINATION

Each party shall have the right, as set forth below, to terminate this Agreement
without prejudice to any rights that it may have, whether under the provisions
of this Agreement, in law or in equity or otherwise, upon the occurrence of any
of the following events, hereinafter called "Defaults".

(a) Either party, if the other party defaults in the performance of a material
obligation, provided for in this Agreement; or

(b) Either party, if the other party files a voluntary petition in bankruptcy,
files any voluntary petition seeking any reorganization, arrangement,
readjustment, liquidation, dissolution or similar relief under the present or
any future federal or state bankruptcy or insolvency act; fails to remove an
involuntary petition for a reorganization, arrangement, readjustment,
liquidation, dissolution or similar relief under the present or any future
federal or state bankruptcy or insolvency act within 60 days after the filing of
such petition, or appoints a trustee, receiver or liquidator of its properties.

Notwithstanding the above, a corporate reorganization or spin off not under
bankruptcy or insolvency procedures shall not be considered a default, unless
there is an intention to abandon the business.

The party claiming a Default shall give written notice of termination to the
party alleged to be in Default in accordance with the notice provision set forth
in Section 13. The defaulting party shall have 90 business days in which to
correct any such Default, and failing such, this Agreement shall terminate. If
the defaulting party shall, within ten business days, notify the other party in
writing that it disputes the asserted Default, and the matter cannot be resolved
by mutual

                                       5

agreement of the parties, the matter shall be submitted to dispute resolution
and arbitration procedure as hereinafter provided.

15.      DECREASE OF QUANTITIES AND TERMINATION OF PRODUCTION

Buyer may decrease the total quantity of the RMRs he has undertaken to purchase
under Section 1.1 above under the following conditions:

15.1 Buyer must give Seller prior written notice of Buyer's election to decrease
the quantities of RMRs TO BE delivered under this Agreement ("Decrease Notice")
by choosing not to exercise orders of phase II or phase III as defined on
Exhibit "C". Notwithstanding the above, upon signature of this agreement, Buyer
may not decrease the first phase quantity under *** units, including already
the units addressed in the paragraph 9 of the Cooperation Agreement. In
addition, Buyer may not decrease the second phase quantity of additional ***
units upon placing the order of the second phase and the third phase quantity of
additional *** units upon placing the order of the third phase in accordance
with the provisions of paragraph 4.1.

15.2 Should the consequences of Decrease Notice require any changes in overall
delivery schedule, the Parties shall determine a new delivery schedule by mutual
consent.

15.3 Buyer shall compensate Seller in the amount of US$ *** per each RMR,
canceled in accordance with Sub-sections 15.1 and 15.2 above.

16.      ISRAELI LAW

This Agreement shall be governed by and construed in accordance with the laws of
the state of Israel as the same or any succeeding provision of law may be in
effect from time to time. For the purposes of any dispute between the parties,
this Agreement shall be construed as if all parties were resident and doing
business in Israel. If there are any ambiguities in the Agreement, such
ambiguities shall not be construed against either party on the basis of who
drafted the documents.

17       DISPUTE RESOLUTION

17.1 Disputes arising out of or relating to this Agreement, or the breach,
termination, or invalidity thereof, shall be settled in accordance with the
applicable dispute resolution provisions set forth in Para. 17.2 below.
Notwithstanding anything to the contrary contained in this paragraph 17.1,
neither party may terminate the Agreement nor pursue any remedies for its
material breach first having given the breaching party written notice of the
material breach and an opportunity to cure such breach within forty-five (45)
days of the receipt of such written notice.

17.2     Dispute Resolution and Arbitration

(a) If one or more disputes arise between the parties with respect to the
obligations and responsibilities of either party under this Agreement, any such
dispute shall be resolved in accordance with the process described in this
Section 17.2, provided, however, that if either party determines that
provisional relief (e.g. a temporary restraining order or preliminary
injunction) is required to provide temporary relief, nothing herein shall
prevent the aggrieved party from

                                       6

***   Confidential material redacted and filed separately with the Commission.

applying to a court for provisional relief. An application for provisional
relief to a court shall not relieve either party of its obligation under this
section 17.2, and shall not alter the power of the arbitrator to determine the
rights and obligations of the parties under this Agreement.

(b) The parties shall attempt to select a mutually acceptable arbitrator. If,
however, after 30 days of the declaring of a dispute and the suggestion of a
candidate for arbitrator, the parties are unable to agree upon an arbitrator who
is willing to accept the appointment, the arbitrator shall be selected by the
President of the Israeli Bar Association, whose selection shall be binding upon
the parties.

(c) The arbitrator's fee and all other incidental costs incurred during the
arbitration process will be shared equally between the parties.

(d) The arbitrator shall be neutral and impartial, and shall use the laws of the
State of Israel to resolve the dispute between the parties.

(e) The arbitrator shall control the procedural aspects of the arbitration. The
parties shall cooperate fully with the arbitrator at all times.

(f) The arbitrator shall, in consultation with the parties, fix the agenda for
all meetings.

(g) Each party may be represented by counsel, who shall be authorized to
recommend settlement options to their principals. Each party shall bear their
attorney's fees.

(h) The arbitration shall be conducted expeditiously and shall be completed in
less than 180 days from the date the arbitrator was selected. Each
representative shall make every effort to be available for meetings, and the
arbitrator shall ensure that he is able to devote all the time necessary to
quickly and effectively render an arbitration judgment.

(i) The entire arbitration shall remain confidential. The parties or the
arbitrator shall not disclose information regarding the process, including
settlement terms, unless the parties agree otherwise.

The arbitrator may obtain assistance and independent expert advice with the
agreement of and at the expense of the parties.

(j) The arbitrator shall not be liable for any good faith act or omission in
connection with his role as arbitrator.

(k) The arbitration shall take place in Tel-Aviv, Israel.

(l) The arbitrator's decision shall be final and binding upon both parties.

18. MISCELLANEOUS PROVISIONS

18.1 Successors. This Agreement shall be binding upon and inure to the benefit
of the parties and their respective executors, heirs, legal representatives,
successors and assigns.

                                       7

18.2 Assignment. Parties shall not assign, transfer or sell any of their rights
hereunder to any third party without the prior written permission of the other
Party. No rights hereunder shall devolve by operation of law or otherwise upon
any assignee, receiver, liquidator, trustee or other party. The RMRs delivered
hereunder shall be manufactured only by Tadiran Telematics Ltd., its legitimate
assigns, Tadiran Telematics Ltd's subcontractors, or as specified in Escrow
agreement.

18.3 No Waiver. Failure of either party to insist upon strict performance of any
of the terms, conditions, provisions or Specifications within this Agreement
(including the exhibits), or the delay in exercising any of its remedies, shall
not constitute a waiver of such terms conditions, provisions or Specifications
or a waiver of any default thereof nor the remedy of such default.

18.4 Survival of Obligations. Each party's obligations under this Agreement
which, by their nature, would continue beyond termination or expiration of this
Agreement, including by way of illustration only and not limitation, any Section
related to confidentiality, warranty and indemnification, shall survive
termination or expiration of this Agreement by either party for any reason.

18.5 Remedies. Except as specifically set forth in this Agreement, all remedies
available to either party for breach of this Agreement are cumulative, and may
be exercised concurrently or separately, and the exercise of any one remedy
shall not be deemed an election of such remedy to the exclusion of other
remedies.

18.6 Headings. The paragraph headings used in this Agreement are for convenience
of reference only, and shall not in any way limit or amplify the terms and
provisions hereof, nor enter into the interpretation of this Agreement.

18.7 Binding Agreement. The persons executing this Agreement on behalf of the
parties have been duly and validly authorized to do so, and this Agreement is a
valid and binding obligation of the parties.

18.8 Severability. If any term of this Agreement shall be unlawful, void or
unenforceable, such term shall be deemed omitted to the extent prohibited or
invalid, but the remainder of this Agreement shall not be invalidated and shall
be given effect as far as possible. If any term hereof is found by a court or
arbitrator to be over-broad, such term shall be limited to the extent required
to make it enforceable.

18.9 Modification. This Agreement may not be modified, supplemented or otherwise
changed except by a written instrument executed by both parties.

18.10 Attorney's Fees. If any action or proceeding (judicial or non-judicial) is
brought to interpret any term or provisions of this Agreement, the prevailing
party shall be entitled to costs and reasonable attorney's fees in addition to
any other relief to which it is entitled.

IN WITNESS WHEREOF, THE PARTIES HERETO HAVE SIGNED THIS AGREEMENT AS OF THE DAY
AND YEAR FIRST ABOVE WRITTEN.

Arad Technologies

By /s/ Illegible
     ------------------
     ------------------
Tadiran Telematics

By: /s/ Eddy Kafry

/s/ Roman Sternberg

                                       8

                                    EXHIBIT B
                                    ---------

                                TERMS OF PAYMENT

A down payment of $ *** will be provided within 30 days from of this
agreement. This down payment will be added to the payment of $ *** already
provided by the buyer for the initial purchase of LLI components.

In addition, a revolving irrevocable Letter of Credit of $ *** will be issued
by the buyer with in 30 days the signature of the agreement. The letter of
Credit serves only as guarantee for payments for ordered and shipped RMRs. It
dose not serve for any compensation for unordered phases or units not shipped.

The accumulative down payment of $ *** and the Letter of Credit will remain
in force during the term of the agreement and will be serve as a payment for the
last delivery. The L/C will be canceled after the payment for last delivery.

The payment will be made 60 days upon delivery. In the Israeli market the
payment terms will be coordinated, based on the market requirements.

***   Confidential material redacted and filed separately with the Commission.

                                    EXHIBIT C
                                    ---------

                                DELIVERY SCHEDULE

The RMR units will be delivered as follows:

1. *** Pilot units - supplied.

2. *** prototype units - 2 weeks upon signature of this agreement. These units
will not yet possess FCC type approval.

3. *** pre-production units - 2 weeks upon signature of this agreement. These
units will not yet possess FCC type approval.

4. Buyer shall perform Acceptance Testing and shall approve the prototype and
pre-production units according to the ATP specified in the Exhibit A, no later
than 60 days after delivery of prototype and pre-production units.

5. Phase I order: deliveries of minimum *** units per month for the period of
8 months, starting 2 month upon approval of pre-production and prototype units
by buyer.

6. Phase II order: deliveries of minimum *** units per month for the period of
8 months immediately following the completion of the deliveries of Phase I.

7. Phase III order: deliveries of *** units per month for the period of 9
months immediately following the completion of the deliveries of Phase II. The
duration of this *** units' phase may be extended up to 12 months with
according adjustment of monthly delivery rate.

***   Confidential material redacted and filed separately with the Commission.

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