EXHIBIT 10.1

 
SETTLEMENT AGREEMENT AND RELEASE

This Settlement Agreement and Release (the “Agreement”) is made as of October 8,
2009, (the “Effective Date”), by and among Volation Capital Partners LLC
(“Volation”) and Medis Technologies Ltd. (“Medis”).
 
WHEREAS, on June 8, 2009, Volation and Medis entered into a Preferred Stock
Purchase Agreement (the “Purchase Agreement”), Section 5.11 of which provides,
in pertinent part, that Medis shall not issue additional shares of its common
stock or securities convertible into Common Stock to any person other than
Volation and certain specified other persons; and
 
WHEREAS, on June 22, 2009, Volation and Medis entered into a Nondisclosure and
Exclusivity Agreement (the “Nondisclosure Agreement”), paragraph 18 of which
provides that Medis “shall not enter into the same or a similar Transaction with
a party other than [Volation] for a period equal to the later of (a) 6 months
from the date of this Agreement or (b) 6 months from the date of the closing of
a Transaction”; and
 
WHEREAS, on September 16, 2009, Medis entered into a Subscription Agreement (the
“Subscription Agreement”) with Iroquois Master Fund Ltd. (“Iroquois”), under
which, among other things, Medis entered into a transaction with Iroquois under
which Iroquois would receive warrants (the “Warrants”) to purchase 4,929,000
shares of Medis common stock and a Secured Convertible Promissory Note (the
“Note”) in the principal amount of $657,200 convertible at any time at the
option of Iroquois into shares of Medis common stock; and
 
WHEREAS, Volation alleges that the issuance by Medis of the Warrants and the
Note to Iroquois pursuant to the Subscription Agreement constitutes a breach of
the terms of Section 5.11 of the Purchase Agreement (the “Purchase Agreement
Claim”); and
 
 
 

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WHEREAS, Medis intended to issue shares to Iroquois pursuant to transactions
under Section 3(a)(10) of the Securities Act of 1933, which Volation alleges
would breach the Nondisclosure Agreement (the “Nondisclosure Agreement Claim,”
and, together with the Purchase Agreement Claim, the “Claims”); and
 
WHEREAS, on October 7, 2009, Volation commenced legal action against Medis with
respect to the Claims by filing a complaint with the Superior Court of
California, County of Los Angeles (the “Court”) (Case Number BC423353); and
 
WHEREAS, the parties desire to effect an amicable resolution of their disputes
with respect to the Claims; and
 
WHEREAS, Medis desires to settle the Claims in exchange for the issuance to
Volation of shares of Medis common stock; and
 
WHEREAS, Volation is willing to accept such shares in accordance with the terms
of this Agreement, subject to Court approval of the issuance of such shares (the
“Approval”) following a hearing as required by Section 3(a)(10) of the
Securities Act of 1933, as amended.
 
NOW THEREFORE, in consideration of the mutual covenants, agreements, and
releases contained herein, the parties agree to a settlement in accordance with
the terms and conditions set forth below.
 
1. In full and final settlement of the Claims, subject to prior receipt of the
Approval, Medis shall issue and deliver to Volation 1,232,541 shares of Medis
common stock, par value $0.01 per share (the “Settlement Shares”).
 
2. Release:  The parties hereby mutually agree that upon (a) receipt of the
Approval and (b) issuance by Medis of the Settlement Shares in accordance with
the terms hereof, Volation and Medis (respectively on behalf of themselves, any
parent, subsidiary, or affiliate
 
 
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entities, any predecessors, successors, and assigns, and all of their respective
past and present shareholders, principals and partners), do hereby fully release
each other (and any parent, subsidiary, or affiliate entities, any predecessors,
successors, and assigns, and all of their respective past and present
shareholders, principals and partners), from any and all claims or actions that
either party may have had or in the future may have against the other arising
out of the Nondisclosure Agreement or Section 5.11 of the Purchase Agreement.
 
3. Medis agrees that it will not enter, or publicly announce an intention to
enter, any transaction under Section 3(a)(10) of the Securities Act of 1933 or
similar transaction, before issuance by Medis to Volation of the Settlement
Shares in accordance with the terms hereof.
 
4. No Admission.  Nothing contained in this Agreement shall be construed as an
admission or concession, and this Agreement shall not be used as evidence in any
proceeding.
 
5. Entire Agreement; Amendments and Waivers.  This Agreement supersedes all
prior agreements, written or oral, among the parties hereto with respect to the
subject matter hereof and contains the entire agreement among the parties with
respect to the subject matter hereof.  This Agreement may not be amended,
supplemented or modified, and no provisions hereof may be modified or waived,
except by an instrument in writing signed by each party hereto (or in the case
of a waiver, the party granting the waiver).  
 
6. Choice of Law; Dispute Resolution; Remedies. 
 
a. This Agreement, the rights and obligations of the parties under this
Agreement and any claim or controversy directly or indirectly based upon or
arising out of this Agreement (whether based on contract, tort or any other
theory), including all matters of construction, validity and performance, shall
in all respects be governed by and interpreted, construed and determined in
accordance with, the laws of the State of California, without giving
 
 
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effect to any conflict of laws rules that might lead to the application of the
laws of any other jurisdiction. 
 
b. Any dispute, controversy or claim arising out of or relating to this
Agreement, or the breach thereof, shall be heard in the federal or state courts
in the state of California.
 
c. The parties hereto agree that irreparable damage would occur in the event
that any of the provisions of this Agreement were not performed in accordance
with its specific terms or were otherwise breached.  It is accordingly agreed
that the parties shall be entitled to an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
hereof in any court having jurisdiction, this being in addition to any other
remedy to which they are entitled at law or in equity.
 
7. Counterparts.  This Agreement may be executed in one or more counterparts,
each of which shall be deemed to be an original but all of which together shall
constitute one and the same instrument.
 
8. Headings.  All section headings herein are for convenience of reference only
and are not part of this Agreement, and no construction or reference shall be
derived therefrom.
 
[Signature page follows]
 
 
 

 

 
 
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective
Date:

VOLATION CAPITAL PARTNERS LLC
MEDIS TECHNOLOGIES, LTD.
       
By:  /s/ Michael Wachs

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Michael Wachs
By:  /s/ Jose A. Mejia

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Jose A. Mejia
Principal
Chief Executive Officer

 
 
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