EXHIBIT 10.2

 
SUBSIDIARY GUARANTY

1.           Identification.

This Guaranty (the “Guaranty”), dated as of September 16, 2009, is entered into
by Medis El Ltd., an Israel corporation, and More Energy Ltd., an Israel
corporation (each a “Guarantor” and collectively, “Guarantors”), for the benefit
of Iroquois Master Fund Ltd. (“Lender”).

2.           Recitals.

2.1          Guarantors are direct or indirect subsidiaries of Medis
Technologies Ltd., a Delaware corporation (“Parent”).  The Lender has made
and/or is making a loan to Parent (the “Loan”).  Guarantor has or will obtain
substantial benefit from the proceeds of the Loan.

2.2          The Loan is and will be evidenced by a certain secured promissory
Note issued by Parent  on or about the date of this Guaranty (“Note”) in the
principal amount of $657,200 pursuant to a subscription agreement dated at or
about the date hereof (“Subscription Agreement”).  The Note was or will be
executed by Parent as “Borrower” or “Debtor” for the benefit of Lender as the
“Holder” or “Lender” thereof.

2.3          In consideration of the Loan and for other good and valuable
consideration, and as security for the performance by Parent of its obligations
under the Note and as security for the repayment of the Loan and all other sums
due from Parent to Lender arising under the Note, Transaction Documents (as
defined in the Subscription Agreement) and any other agreement to which the
Lender and Parent are parties (collectively, the “Obligations”), Guarantor, for
good and valuable consideration, receipt of which is acknowledged, has agreed to
enter into this Guaranty.

3.           Guaranty.

3.1          Guaranty.  Guarantor hereby unconditionally and irrevocably
guarantees, jointly and severally with any other Guarantor, the punctual
payment, performance and observance when due, whether at stated maturity, by
acceleration or otherwise, of all of the Obligations now or hereafter existing,
whether for principal, interest (including, without limitation, all interest
that accrues after the commencement of any insolvency, bankruptcy or
reorganization of Parent, whether or not constituting an allowed claim in such
proceeding), fees, commissions, expense reimbursements, liquidated damages,
indemnifications or otherwise (such obligations, to the extent not paid by
Parent being the parts of and components of the “Obligations”), and agrees to
pay any and all reasonable costs, fees and expenses (including reasonable
counsel fees and expenses) incurred by Lender in enforcing any rights under the
guaranty set forth herein.  Without limiting the generality of the foregoing,
Guarantor’s liability shall extend to all amounts that constitute part of the
Obligations and would be owed by Parent to Lender, but for the fact that they
are unenforceable or not allowable due to the existence of an insolvency,
bankruptcy or reorganization involving Parent.
 
3.2          Guaranty Absolute.  Guarantor guarantees that the Obligations will
be paid strictly in accordance with the terms of the Note, regardless of any
law, regulation or order now or hereafter in effect in any jurisdiction
affecting any of such terms or the rights of Lender with respect thereto.  The
obligations of Guarantor under this Guaranty are independent of the Obligations,
and a separate action or actions may be brought and prosecuted against Guarantor
to enforce such obligations, irrespective of whether any action is brought
against Parent or any other Guarantor or whether Parent or any other Guarantor
is joined in any such action or actions.  The liability of Guarantor under this
Guaranty constitutes a primary obligation, and not a contract of surety, and to
the extent permitted by law, shall be irrevocable, absolute and unconditional
 
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irrespective of, and Guarantor hereby irrevocably waives any defenses it may now
or hereafter have in any way relating to, any or all of the following:

(a) any lack of validity of the Note or any agreement or instrument relating
thereto;
 
(b) any change in the time, manner or place of payment of, or in any other term
of, all or any of the Obligations, or any other amendment or waiver of or any
consent to departure from the Note, including, without limitation, any increase
in the Obligations resulting from the extension of additional credit to Parent
or otherwise;
 
(c) any taking, exchange, release, subordination or non-perfection of any
Collateral, or any taking, release or amendment or waiver of or consent to
departure from any other guaranty, for all or any of the Obligations;
 
(d) any change, restructuring or termination of the corporate, limited liability
company or partnership structure or existence of Parent; or
 
(e)  any other circumstance (including, without limitation, any statute of
limitations) or any existence of or reliance on any representation by Lender
that might otherwise constitute a defense available to, or a discharge of,
Parent or any other guarantor or surety.

This Guaranty shall continue to be effective or be reinstated, as the case may
be, if at any time any payment of any of the Obligations is rescinded or must
otherwise be returned by Lender, the Lender or any other entity upon the
insolvency, bankruptcy or reorganization of the Parent or otherwise (and whether
as a result of any demand, settlement, litigation or otherwise), all as though
such payment had not been made.

3.3          Waiver.  Guarantor hereby waives promptness, diligence, notice of
acceptance and any other notice with respect to any of the Obligations and this
Guaranty and any requirement that Lender exhaust any right or take any action
against any Borrower or any other person or entity or any Collateral.  Guarantor
acknowledges that it will receive direct and indirect benefits from the
financing arrangements contemplated herein and that the waiver set forth in this
Section 3.3 is knowingly made in contemplation of such benefits.  Guarantor
hereby waives any right to revoke this Guaranty, and acknowledges that this
Guaranty is continuing in nature and applies to all Obligations, whether
existing now or in the future.

3.4          Continuing Guaranty; Assignments.  This Guaranty is a continuing
guaranty and shall (a) remain in full force and effect until the later of the
indefeasible payment or other satisfaction in full of the Obligations and all
other amounts payable under this Guaranty, the Subscription Agreement,
Transaction Documents and the Note, (b) be binding upon Guarantor, its
successors and assigns and (c) inure to the benefit of and be enforceable by the
Lender and its successors, pledgees, transferees and assigns.  Without limiting
the generality of the foregoing clause (c), Lender may pledge, assign or
otherwise transfer all or any portion of its rights and obligations under this
Guaranty (including, without limitation, all or any portion of its Note owing to
it) to any other Person, and such other Person shall thereupon become vested
with all the benefits in respect thereof granted Lender herein or otherwise.
 
3.5          Subrogation.  Guarantor will not exercise any rights that it may
now or hereafter acquire against Lender or other Guarantor (if any) that arise
from the existence, payment, performance or enforcement of such Guarantor’s
obligations under this Guaranty, including, without limitation, any right of
subrogation, reimbursement, exoneration, contribution or indemnification,
whether or not such claim, remedy or right arises in equity or under contract,
statute or common law, including, without limitation, the right to take or
receive from Lender or other Guarantor (if any), directly or indirectly, in cash
or other
 
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property or by set-off or in any other manner, payment or security solely on
account of such claim, remedy or right, unless and until all of the Obligations
and all other amounts payable under this Guaranty shall have been indefeasibly
paid in full.
 
3.6          Maximum Obligations. Notwithstanding any provision herein contained
to the contrary, Guarantor’s liability with respect to the Obligations shall be
limited to an amount not to exceed, as of any date of determination, the amount
that could be claimed by Lender from Guarantor without rendering such claim
voidable or avoidable under Section 548 of the Bankruptcy Code or under any
applicable state Uniform Fraudulent Transfer Act, Uniform Fraudulent Conveyance
Act or similar statute or common law.
 
4.           Miscellaneous.
 
4.1          Expenses.  Guarantor shall pay to the Lender, on demand, the amount
of any and all reasonable expenses, including, without limitation, attorneys’
fees, legal expenses and brokers’ fees, which the Lender may incur in connection
with exercise or enforcement of any the rights, remedies or powers of the Lender
hereunder or with respect to any or all of the Obligations.

4.2          Waivers, Amendment and Remedies.  No course of dealing by the
Lender and no failure by the Lender to exercise, or delay by the Lender in
exercising, any right, remedy or power hereunder shall operate as a waiver
thereof, and no single or partial exercise thereof shall preclude any other or
further exercise thereof or the exercise of any other right, remedy or power of
the Lender.  No amendment, modification or waiver of any provision of this
Guaranty and no consent to any departure by Guarantor therefrom, shall, in any
event, be effective unless contained in a writing signed by the Majority in
Interest (as such term is defined in the Subscription Agreement) or the Lender
against whom such amendment, modification or waiver is sought, and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given.  The rights, remedies and powers of the
Lender, not only hereunder, but also under any instruments and agreements
evidencing or securing the Obligations and under applicable law are cumulative,
and may be exercised by the Lender from time to time in such order as the Lender
may elect.

4.3          Notices.  All notices or other communications given or made
hereunder shall be given in the same manner as set forth in Section 12(b) of the
Subscription Agreement to the party to receive the same at its address set forth
below or to such other address as either party shall hereafter give to the other
by notice duly made under this Section:

To Guarantor, to:                              c/o Medis Technologies Ltd.
805 Third Avenue
New York, NY 10022
Attn: Jose A. Mejia, CEO and President
Fax: (212) 935-9216

With a copy by facsimile
only to:                                              Sonnenschein Nath &
Rosenthal LLP
1221 Avenue of the Americas
New York, NY 10020
Attn: Ira I. Roxland, Esq.
Fax: (212) 768-6800

 
To Lender:
Iroquois Master Fund Ltd.

 
641 Lexington Ave., 26th Floor

New York NY 10022
Fax: (212) 207-3452

 
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If to Guarantor or Lender,
with a copy by telecopier only to:

Grushko & Mittman, P.C.
551 Fifth Avenue, Suite 1601
New York, New York 10176
Fax: (212) 697-3575

Any party may change its address by written notice in accordance with this
paragraph.

4.4          Term; Binding Effect.  This Guaranty shall (a) remain in full force
and effect until payment and satisfaction in full of all of the Obligations; (b)
be binding upon Guarantor and its successors and permitted assigns; and (c)
inure to the benefit of the Lender and its respective successors and
assigns.  Upon the payment in full of the Obligations, (i) this Guaranty shall
terminate and (ii) the Lender will, upon Guarantor’s request and at Guarantor’s
expense, execute and deliver to Guarantor such documents as Guarantor shall
reasonably request to evidence such termination, all without any representation,
warranty or recourse whatsoever.

4.5          Captions.  The captions of Paragraphs, Articles and Sections in
this Guaranty have been included for convenience of reference only, and shall
not define or limit the provisions hereof and have no legal or other
significance whatsoever.

4.6          Governing Law; Venue; Severability.  This Guaranty shall be
governed by and construed in accordance with the laws of the State of New York
without regard to principles of conflicts or choice of law.  Any legal action or
proceeding against Guarantor with respect to this Guaranty must be brought only
in the courts of the State of New York or of the United States for the Southern
District of New York, and, by execution and delivery of this Guaranty, Guarantor
hereby irrevocably accepts for itself and in respect of its property, generally
and unconditionally, the jurisdiction of the aforesaid courts.  Guarantor hereby
irrevocably waives any objection which they may now or hereafter have to the
laying of venue of any of the aforesaid actions or proceedings arising out of or
in connection with this Guaranty brought in the aforesaid courts and hereby
further irrevocably waives and agrees not to plead or claim in any such court
that any such action or proceeding brought in any such court has been brought in
an inconvenient forum.  If any provision of this Guaranty, or the application
thereof to any person or circumstance, is held invalid, such invalidity shall
not affect any other provisions which can be given effect without the invalid
provision or application, and to this end the provisions hereof shall be
severable and the remaining, valid provisions shall remain of full force and
effect.  This Guaranty shall be deemed an unconditional obligation of Guarantor
for the payment of money and, without limitation to any other remedies of
Lender, may be enforced against Guarantor by summary proceeding pursuant to New
York Civil Procedure Law and Rules Section 3213 or any similar rule or statute
in the jurisdiction where enforcement is sought.  For purposes of such rule or
statute, any other document or agreement to which Lender and Guarantor are
parties or which Guarantor delivered to Lender, which may be convenient or
necessary to determine Lender’s rights hereunder or Guarantor’s obligations to
Lender are deemed a part of this Guaranty, whether or not such other document or
agreement was delivered together herewith or was executed apart from this
Guaranty.  Each party hereby irrevocably waives personal service of process and
consents to process being served in any suit, action or proceeding in connection
with this Agreement or any other Transaction Document by mailing a copy thereof
via registered or certified mail or overnight delivery (with evidence of
delivery) to such party at the address in effect for notices to it under this
Agreement and agrees that such
 
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service shall constitute good and sufficient service of process and notice
thereof.  Nothing contained herein shall be deemed to limit in any way any right
to serve process in any other manner permitted by law.  Guarantor irrevocably
appoints Parent its true and lawful agent for service of process upon whom all
processes of law and notices may be served and given in the manner described
above; and such service and notice shall be deemed valid personal service and
notice upon each such Guarantor with the same force and validity as if served
upon such Guarantor.

4.7          Satisfaction of Obligations.  For all purposes of this Guaranty,
the payment in full of the Obligations shall be conclusively deemed to have
occurred when the Obligations have been indefeasibly paid.

4.8          Counterparts/Execution.  This Agreement may be executed in any
number of counterparts and by the different signatories hereto on separate
counterparts, each of which, when so executed, shall be deemed an original, but
all such counterparts shall constitute but one and the same instrument.  This
Agreement may be executed by facsimile signature and delivered by facsimile
transmission.

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IN WITNESS WHEREOF, the undersigned have executed and delivered this Guaranty,
as of the date first written above.
 

 

“GUARANTOR”     “GUARANTOR”  MEDIS EL LTD.     MORE ENERGY LTD.  an Israel
corporation      an Israel corporation        By: /s/ Stephen Crea             
  By: /s/ Stephen Crea                    Its: CFO                              
     Its: CFO                                      

 
 

This Guaranty may be signed by facsimile signature and
delivered by confirmed facsimile transmission.

 
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