SETTLEMENT AND RELEASE AGREEMENT

      THIS AGREEMENT is entered into by and among Lawrence A. Minkoff, Kenneth
C. Riscica, individually and on behalf of Riscica Associates, Inc., Jerome M.
Feldman, Joel S. Kanter, Jonathan Adereth, Seymour Kessler, Daniel M. Mulvena
and John R. Geisel (collectively "Management and former management") and
Magna-Lab Inc. ("Magna-Lab") as of the date on which this Agreement is accepted
by Magna-Lab.

      WHEREAS, Management and former management are owed an aggregate of
$113,112 in compensation earned but not paid during the period from September 1,
2002 through January 15, 2003 ("deferred compensation") as indicated on the
enclosed Exhibit 1; and

      WHEREAS, certain of the Management and former management hold outstanding
options to purchase an aggregate of 4,825,000 shares of common stock of
Magna-Lab Inc. ("stock options") as indicated on Exhibit 2; and

      WHEREAS, Magna-Lab Inc. does not currently have the means to pay the
deferred compensation; and

      WHEREAS, both Management and former management and Magna-Lab. believe that
it is in their mutual interest that this liability and these stock options
(other than those options to purchase 2,500,000 shares at $0.49 held by Jonathan
Adereth and expiring 625,000 on each of August 31, 2005, January 31, 2006,
625,000, August 31, 2006 and 625,000 on January 31, 2007 which shall remain
outstanding according to their terms) be resolved at this time; and

      WHEREAS, Management and former management have each agreed to release
Magna-Lab from all of its obligations to Management and former management
associated with the deferred compensation and, except for Mr. Adereth, stock
options subject to the terms and conditions set forth in this Agreement.

      NOW THEREFORE, IN CONSIDERATION OF the mutual promises and covenants
contained herein and for other good and valuable consideration, receipt and
legal sufficiency of which is hereby acknowledged, the parties hereby agree as
follows:

1.    Promptly following the date of this Agreement, Magna-Lab will issue and
      deliver to each member of Management and former management a certificate
      representing class A common shares of Magna-Lab common stock in the
      denominations set forth beside their respective names on the signature
      page hereof. In connection with the issuance of the shares, each member of
      Management and former management makes the investment and other
      representations set forth on Exhibit 3 hereto.

2.    Subject to receipt of their respective share certificates, each member of
      Management and former management hereby individually (i) releases and
      forever discharges Magna-Lab and its respective subsidiary and their
      respective officers, directors, affiliates, shareholders, agents,
      employees, representatives, successors and assigns, from any and all
      claims, defenses, demands, rights of setoff or recoupment, suits,
      lawsuits, liabilities, damages, actions, causes of action or complaints of
      whatever nature or kind, formal or informal, known or unknown, in law or
      at equity, in tort or contract ("Claims") relating to the deferred
      compensation to which each is entitled as set forth on Exhibit 1 and (ii)
      except for Mr. Adereth, cancels all stock options to which each is
      entitled as set forth on Exhibit 2.

<PAGE>

3.    Promptly following the date of this Agreement and in order to
      administratively effectuate the cancellation of stock options referred to
      above, each member of Management and former management, other than Mr.
      Adereth, will tender to Magna-Lab for cancellation each original stock
      option agreement, if any.

4.    Each member of Management and former management represents and warrants to
      Magna-Lab that the deferred compensation listed on Exhibit 1 and the stock
      options listed on Exhibit 2, if any, opposite their respective names
      constitutes the full amount of compensation owing by Magna-Lab to such
      persons, except for any current services which have been billed and
      recorded by the Company, and the full number of stock options, if any,
      owned or owing to such persons.

5.    The parties agree that they are entering into this Agreement as a
      compromise and to avoid the cost and expense of any dispute or litigation.
      By entering into this agreement, neither party admits wrongdoing or any
      liability whatsoever.

6.    This Agreement shall be of no force or effect unless and until accepted by
      Magna-Lab, which acceptance shall not be valid unless obtained on or
      before September 30, 2005.

7.    This Agreement embodies the full and complete understanding and agreement
      between the parties hereto with respect to the matters involved herein,
      and supercedes any previous negotiations or agreements between the parties
      with respect to such matters. This Agreement was not entered into in
      reliance upon any statement or representation by either party other than
      those set forth herein. If one or more provisions of this Agreement are
      held to be unenforceable under applicable law, such provisions(s) shall be
      excluded from this Agreement and the balance of the Agreement shall be
      interpreted as if such provision(s) were so excluded (but in a manner that
      most closely effects the intent of the parties as of the date of this
      Agreement) and the modified agreement shall be enforceable in accordance
      with its remaining terms. No amendment or modification of this Agreement
      shall be effective unless executed in writing by the parties hereto.

8.    The parties state that it is their intention that this Agreement be given,
      and remain in effect, as a full and complete release of the Claims
      described herein, notwithstanding the discovery or existence of any
      additional Claims or facts not now known or suspected which may exist in
      any party's favor, which if known might have materially affected this
      Agreement.

9.    This Agreement shall be binding and inure to the benefit of each of the
      parties, and to each of their attorneys, agents, directors, officers,
      employees, heirs, executors, administrators, legal successors and assigns,
      and any other person claiming by and through them.

10.   The parties acknowledge that they are authorized and competent to execute
      this Agreement, and that before executing it, each has read this document,
      discussed and reviewed it with their counsel, and that each part fully
      understands each provision contained herein.

<PAGE>

11.   This Agreement may be executed in two or more counterparts each of which
      shall be considered an original, but all of which together shall
      constitute the same agreement.

12.   If any action, suit or proceeding is brought by a party hereto with
      respect to any controversy, claim or other matter arising out of or
      relating to this Agreement, or the breach thereof, all costs and expenses
      of such action, suit or proceeding, including reasonable attorney's fees
      and expenses, shall be borne by each party separately.

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of
the day and year set forth below and do each hereby warrant and represent that
their respective signatories whose signature appears below have been and are on
the date of this Agreement duly authorized by all necessary and appropriate
action to execute this Agreement.

By: /s/ Lawrence A Minkoff                   By: /s/ Kenneth C. Riscica
    -------------------------------              -------------------------------
Name: Lawrence A. Minkoff (764,068 shares)   Name: Kenneth C. Riscica,
                                                   individually and on behalf of
                                                   Riscica Associates Inc.
                                                   (610,212 shares)


By: /s/ Jerome Feldman                       By: /s/ Joel Kanter
    -------------------------------              -------------------------------
Name: Jerome Feldman (157,682 shares)        Name: Joel Kanter (142,035 shares)


By: /s/Jonathan Adereth                      By: /s/ Seymour Kessler
    -------------------------------              -------------------------------
Name: Jonathan Adereth (208,620 shares)      Name: Seymour Kessler
                                                   (142,035 shares)


By: /s/ Daniel M. Mulvena                    By: /s/ John R. Geisel
    -------------------------------              -------------------------------
Name: Daniel M.Mulvena (166,948 shares)      Name: John R. Geisel
                                                   (782,323 shares)

ACCEPTED:

MAGNA-LAB INC.

By: /s/ Kenneth C. Riscica
    -------------------------------
Name: Kenneth C. Riscica
Title: Treasurer and Secretary
Date: as of September 29, 2005


By: /s/ Lawrence A. Minkoff
    -------------------------------
Name: Lawrence A. Minkoff
Title: President
Date: as of September 29, 2005

<PAGE>

                                   EXHIBIT #1
                              Deferred Compensation
                        Management and former management

            Geisel                                             $ 30,000
            Minkoff                                            $ 29,300
            Riscica                                            $ 23,400
            Adereth                                            $  8,000
            Mulvena                                            $  6,162
            Feldman                                            $  5,417
            Kanter                                             $  5,417
            Kessler                                            $  5,417
                                                               --------
                                                               $113,112
                                                               --------

                                   EXHIBIT #2
                            Outstanding Stock Options
                        Management and former management

                        Options                                  Strike
                          O/S               Term                 Price
                        -------             ----                 ------

            Geisel            0       expired 2004                    0
            Minkoff           0       expired 2003 & 2004             0
            Riscica           0       expired 2003 & 2004             0
            Adereth   2,500,000       expires in 2005 & 2006      $0.49
            Mulvena     600,000       expires 2005, 2006, 2007    $0.22
            Feldman   1,575,000       expires 2005 & 2006         $0.28
            Kanter       75,000       expires 1/1/2006            $0.25
            Kessler      75,000       expires 1/1/2006            $0.25
                      ---------
                      4,825,000
                      ---------

<PAGE>

                                    EXHIBIT 3
                           Investment Representations

(a)   Each of Lawrence A. Minkoff, Kenneth C. Riscica, Jerome M. Feldman, Joel
      S. Kanter, Jonathan Adereth, Seymour Kessler, Daniel M. Mulvena and John
      R. Geisel (collectively "Management and former management") has been given
      the opportunity to ask questions of, and receive answers from, Magna-Lab
      Inc. ("Magna") concerning the business of Magna and to obtain such
      additional written information, to the extent Magna possesses such
      information or can acquire it without unreasonable effort or expense,
      necessary to verify the accuracy of same as Magna desires in order to
      evaluate the investment. Each member of Management and former management
      has also been given the opportunity to review Magna's public filings with
      the Securities and Exchange Commission. Each member of Management and
      former management acknowledges that they have received no representations
      or warranties from Magna or its employees or agents in making this
      investment decision.

(b)   Each member of Management and former management is aware that its
      investment in Magna is speculative, involving a high degree of risk and
      that there is no guarantee that they will realize any gain from the
      investment, and that they could lose the total amount of their investment.

(c)   Each member of Management and former management is purchasing the class A
      common stock of Magna-Lab Inc. ("Shares") for his own account, with no
      present intention of dividing or allowing others to participate in this
      investment or of reselling or otherwise participating, directly, in a
      distribution of the Shares, and shall not make any sale, transfer, or
      pledge thereof without registration under the Securities Act of 1933 and
      any applicable securities laws of any state or unless an examination from
      registration is available under those laws.

(d)   Each member of Management and former management represents that he is an
      "Accredited Investor" as defined in Rule 501(a) of Regulation D
      promulgated under the Securities Act of 1933.

(e)   Each member of Management and former management has such knowledge and
      experience in financial and business matters as to be capable of
      evaluating the merits and risks of an investment in the Shares.

(f)   Each member of Management and former management acknowledges that the
      certificate for the Shares will contain a legend substantially as follows:

      THE SECURITIES WHICH ARE REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
      REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE
      SOLD, TRANSFERRED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNTIL A
      REGISTRATION STATEMENT WITH RESPECT THERETO IS DECLARED EFFECTIVE UNDER
      SUCH ACT, OR THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE COMPANY
      THAT AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT IS
      AVAILABLE.