WWW.EXFILE.COM, INC. -- 14701 -- MEDIS TECHNOLOGIES LTD. -- EXHIBIT 10.2 TO FORM 10-Q


     

    EXHIBIT
      10.2

    
 

    DISTRIBUTION
      AGREEMENT

     

    This
      Distribution Agreement (“Agreement”)
      is
      made and entered into as of October 29, 2006 (“Effective
      Date”),
      by
      and between Quasar Business Solutions, with business offices at 2455 Dollarton
      Hwy, North Vancouver, BC V7H 1B1 (“QBS”)
      and
      Medis Technologies Ltd., a Delaware corporation, with business offices at 805
      3rd
      Avenue,
      New York, NY 10022 (“Medis”).
      QBS
      and Medis are referred to in this Agreement as the “Parties” collectively, and
      each individually as a “Party.”

     

    BACKGROUND

     

    Medis
      is
      in the business of designing and developing advanced technology products related
      to sources of clean energy, with a primary focus on direct liquid fuel cell
      technology. QBS is in the business of developing, technology products and
      solutions for mobile power and connectivity devices. Medis is willing to appoint
      QBS, and QBS is willing to accept such appointment, as a distributor and
      ecommerce partner of certain Medis products, subject to the terms and conditions
      of this Agreement.

     

    TERMS

     

    
      	1.	
              Definitions

            


    

     

    1.1.  “Affiliate”
means
      any person, corporation, partnership or other entity (i) which, directly or
      indirectly, owns or controls at least fifty percent of the equity or voting
      power of a Party, or (ii) of which a Party, directly or indirectly, owns or
      controls at least fifty percent of the equity or voting power, or (iii) of
      which at least fifty percent of the equity or voting power, directly or
      indirectly, is under Medis or control that is common to a Party.

     

    1.2.  “Enhancement”
means
      (i) any modification made to a device identified in Exhibit A,
      (ii) any feature or functionality added to or combined with any device
      identified in Exhibit A, or (iii) any feature or functionality that is
      designed for use with any device identified in Exhibit A, in each case,
      which is created, developed or conceived by or for Medic, or created, developed
      or conceived by QBS and incorporated into the Product, during the term of this
      Agreement

     

    1.3.  “Intellectual
      Property Rights”
means
      any and all rights existing under patent law, copyright law, semiconductor
      chip
      design law, moral rights law, trade secret law, trademark law, unfair
      competition law, publicity rights, privacy rights and any and all other similar
      proprietary rights, and any and all renewals, extensions, continuations and
      restorations thereof, now or hereafter in force and effect.

     

    1.4.  “Marks”
means
      the trademarks, service marks, logos, trade names, business names, corporate
      names, brand names and similar identifying materials owned by or licensed to
      a
      particular Party.

     

    1.5.  “Packaging”
means
      the packaging for each Product, including without limitation, all cartons,
      containers, tags, labels, display stands, product inserts and wrapping materials
      to be used on or with such Product

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    1.6.  “Products”
means
      (i) the devices identified in Exhibit A (including, but not limited
      to, the finished goods in QBS-branded packages as contemplated in
      Section 3.1), and all parts and components necessary for the repair and
      replacement of such devices, (ii) all Enhancements, and (iii) all New
      Items added to this Agreement by written amendment in accordance with
      Section 3.2. Notwithstanding the foregoing, Products refers only to devices
      that are “secondary” power sources for charging portable/mobile handheld
      devices, including without limitation, cellular phones, MP3 players, Nintendo
      Game Boys and comparable game devices, computer tablets (PDAs) and similar
      devices. “Secondary” means other than the primary power source embedded within
      or integral to the powered handheld device.

     

    
      	2.	
              Appointment

            


    

     

    2.1.  General.
      Subject
      to the terms of this Agreement, Medis hereby appoints QBS, and QBS hereby
      accepts the appointment, as a worldwide distributor and exclusive ecommerce
      partner of the Products, and QBS shall have the right to market, offer to sell,
      sell, transfer and otherwise distribute the Products anywhere in the world
      to
      other distributors, customers and potential customers, but excluding purchasers
      that QBS has reason to believe are purchasing for military or law enforcement
      applications, and purchasers sourcing Products through established government
      contracting procedures and protocols.

     

    2.2.  “Semi-Exclusive”
      Nature of Rights.
      The
      rights granted to QBS under Section 2.1 shall be “semi-exclusive,” in that
      Medis agrees as follows:

     

    QBS
      has
      non exclusive worldwide distribution rights and is the exclusive ecommerce
      partner of Medis Technologies.

     

    2. Minimum
      Annual Purchase Targets.
      The
      Parties agree that QBS shall endeavor to purchase a minimum of 1,000,000 units
      from Medis upon acceptance of this agreement The purchase order shall become
      shippable in release quantities TBD by QBS and Medis once Medis has obtained
      a
      UL Listing on the product.

     

    2.4.  Failure
      to Meet Minimum Annual Purchase Target.
      If QBS
      fails in any Year to meet an annual purchase target of 2,500,000 units per
      year
      (Minimum Annual Purchase Target), then Merlin shall have the right, as Medis’s
      exclusive remedy, to terminate, as applicable, thirty (30) days after the
      effective date of the notice, as determined in accordance with
      Section 14.1.

     

    2.5.  QBS
      Non-Compete Commitment.
      QBS
      agrees that it will not directly or indirectly offer to sell, sell, distribute
      or otherwise transfer through its QBS any liquid fuel cell product winch
      includes the same or similar functionality as any of the Products, except with
      Medic’ prior written consent.

     

    2.6.  Affiliates.
      QBS
      may, at its sole discretion and without Medis’s further consent, extend any or
      all of the rights to Savenna Technologies or one or more of its Affiliates.
      QBS
      shall provide Medis with prompt written notice of each such
      extension.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	3.	
              Products

            


    

     

    3.1.  QBS
      Branded Products.
      Products will be in the standard form that they are sold generally by Medic,
      except for changes that are mutually agreed to in writing by the Parties to
      reflect QBS or Savenna Technologies branding features. The Parties currently
      intend that Products include both QBS’s and/or Savenna Technologies and Medis’s
      logos and trade names, will be packaged as specified by QBS, and may be
      otherwise modified as agreed to in writing by the Parties. Medis shall not,
      directly or indirectly, distribute any Product bearing any of QBS’s Packaging or
      Marks to any third party without the consent of QBS.

     

    3.2.  New
      Items; Right of First Refusal.
      The
      Parties will faunally meet at least once per calendar quarter to identify future
      opportunities for new items that incorporate Medic’ liquid fuel cell technology
      and are not considered Products (each a “New
      Item”).
      Examples of New Items include, but are not limited to, rechargeable power packs
      and recharge packs incorporating new or next generation liquid fuel cell
      technology to power products with significant sustained mobile operating
      requirements. Medis will submit to QBS specifications, and where existing in
      Medis’s drawings or samples, for each proposed New Item that Medis intends to
      develop, market or sell during the term of this Agreement Medis will indicate
      what participation, if any, it expects from QBS in facilitating or financing
      the
      development of such New Item. If QBS notifies Medis within sixty (60) days
      of receipt of the specifications that QBS is interested in distributing the
      New
      Item, then the Parties will negotiate in good faith and agree upon a product
      development and distribution arrangement which includes an estimated development
      schedule, associated non-recurring engineering costs and tooling charges, unit
      volume commitments, product price quotations, and other relevant details. Upon
      reaching mutual agreement, such New Item will be added to this Agreement by
      written amendment If QBS notifies Medis that it is not interested in
      distributing the New Item, QBS fails to timely notify Medis of QBS’s decision,
      or the Parties are unable to reach agreement for any reason regarding the terms
      of the development or distribution of the New Item after good faith
      negotiations, Medis shall be free to market the New Item directly or with a
      third party(ies) independently of QBS; however, before offering distribution
      tights to the New Item to a third party on terms and conditions more favorable
      to the third party than those last offered to QBS, Medis shall first give QBS
      the opportunity, on thirty (30) days’ prior written notice, to accept such
      more favorable terms and conditions.

     

    
      	4.	
              Product
                Development And Acceptance

            


    

     

    4.1.  Development.
      Medis
      shall be solely responsible for the development of each Product, which
      development shall generally consist of: (i) finalization of specifications
      for the Product consistent with the initial criteria set forth in
      Exhibit C, as amended from time to time by the Parties;
      (ii) successful beta testing of the Product in appropriate test
      environments and against reasonable performance criteria; and
      (iii) initiation of commercial production of the Product Medis will keep
      QBS apprised of the status of development for each Product, shall provide
      details reasonably requested by QBS with respect to each Product, and shall
      facilitate QBS’s coordination of distribution logistics with manufacturers of
      each Product in anticipation of commercialization, including without limitation,
      the estimated date for completion of each of sub-items (i) through
      (iii).

     

    4.2.  Samples.
      Upon UL
      Listing of each Product, Medis will provide QBS with at least two (2)
      manufactured units of the Product that meet the final specifications for the
      Product, 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    together
      with final Packaging and labeling criteria agreed upon by the Parties. Within
      thirty (30) days following receipt of such Product samples, QBS will advise
      Medis whether QBS, in its sole discretion, accepts the Product, accepts the
      Product subject to specified modifications, or rejects the Product. If QBS
      fails
      to timely notify Medis of QBS ‘s decision or QBS rejects the Product, Mortis
      shall have the right to terminate the Agreement by written notice to QBS,
      whereupon neither Party shall have any farther liability to the other Party.
      If
      QBS accepts the Product, the date of such notice to Medis shall be treated
      as
      the “Product Acceptance Date” for such Product.

     

    
      	5.	
              Product
                Sourcing

            


    

     

    5.1.  General.
      The
      Parties currently intend that Medis will, be solely responsible for the
      manufacture of each Product through subcontractors selected by Medis, and that
      QBS will purchase Products from Medis as finished goods (“Finished
      Goods Sourcing”).
      Prior
      to the Product Acceptance Date for each Product, the Parties will agree upon
      the
      arrangement under which QBS will purchase the Product from Medis and negotiate
      an appropriate agreement that will reflect terms and conditions of the type
      typical for purchasing finished products.

     

    5.2.  QBS
      Contribution to Manufacturing Set-Up.
      Notwithstanding the current intent of the Parties to conduct business under
      this
      Agreement in the nature of a finished good sourcing arrangement as described
      in
      Section 5.1, QBS agrees to collaborate with Medis as reasonably requested
      by Medis to identify and select manufacturers for each Product, evaluate
      production facilities, end generally facilitate manufacture of the
      Products.

     

    5.3.  Pricing

     

    5.3.1  Initial
      Price.
      Prior
      to the Product Acceptance Date, the Parties will negotiate a reasonable unit
      price for the first Product to be distributed by QBS (the “Initial Price” for
      such Product) in an amount that takes into account the broader logistics role
      undertaken by QBS in sourcing the Product In no event will the Initial Price
      for
      the first Product be greater than $  *    per unit (the
“Price Target” for the first Product) and $  *    per
      unit for the Power Management Cable, The Parties will engage in similar price
      negotiations to determine the Initial Price and Price Target for each additional
      Product to be distributed by QBS, such negotiations to occur no later than
      one
      hundred and twenty (120) days prior to the date set for the first commercial
      sale of such additional Product The Initial Price for each Product shall be
      subject to adjustment as provided in Sections 53.3 through 5.3.5.

     

    5.3.3  Lack
      of Economic Feasibility.
      If, as
      of the Commercialization Date for a Product, either Party in good faith
      reasonably believes that the Initial Price for the Product is not economically
      feasible to achieve the Party’s business objectives for commercialization of the
      Product, that Party shall notify the other Party in writing. Upon either giving
      or receiving such notice, QBS may, in its sole discretion exercised by giving
      written notice to Medis, elect to either: (i) immediately terminate this
      Agreement with respect to that Product (or the entire Agreement if there is
      then
      only one Product) and Medis shall immediately return to QBS all non-recurring
      engineering cost contributions, if any, previously requested or approved in
      writing by Medis, attributable to the Product development and paid by QBS
      pursuant to Section 5.2 and 

     
* Subject
    to a request for confidential treatment; Separately filed with the
    Commission.

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    


    after
      repayment neither Party shall have any further liability to the other in
      connection with the given Product (or this Agreement if there is only one
      Product, or (ii) continue the Agreement at price mutually agreed upon by
      the Parties that exceeds the Price Target.

     

    5.3.4  General
      Price Adjustment.
      Medis
      may adjust the Initial Price upon not less than ninety (90) days’ prior
      written notice to QBS to not more than the average price at which Medis sells
      the Product to third parties purchasing substantially similar volumes of Product
      on substantially similar terms. The Parties will collaborate regularly for
      the
      purpose of identifying opportunities for cost savings in the manufacture,
      logistical sourcing and distribution of the Products, measuring such cost
      savings, and devising an equitable procedure for the Parties to mutually benefit
      from and share the cost savings.

     

    5.3.5  Best
      Price Adjustment.
      Notwithstanding the provisions of Sections 5.3.3 and 5.3.4, the Initial Price
      for each Product, as well as any adjusted price for such Product, will be no
      greater than the lowest price for such Product charged by Medis to any
      non-military or non-law enforcement customer of Medis that purchases an
      aggregate of at least one million (1,000,000) units of Product within the
      twelve (12) month period immediately preceding QBS’s Product purchase.
      Medis shall automatically apply such best price to all QBS purchase orders
      shipped after best pricing is triggered under this provision.

     

    5.4.  Pricing
      Freedom.
      QBS
      shall be solely responsible for setting the prices it charges to its
      customers.

     

    5.5.  Payment
      Terms.
      QBS
      shall pay Medis for Products net sixty (60) days following delivery of
      Product by Medis, F.O.B. QBS’s designated facilities. Payment shall be made by
      wire transfer to a bank and account in the United States designated by Medis
      in
      writing from time to time.

     

    5.6.  QBS’s
      Duties.
      During
      the Term of this Agreement, QBS shall in addition to its other commitments
      set
      forth in this Agreement, and at its sole expense:

     

    5.6.1  Product
      Promotion.
      Both
      parties shall use reasonable commercial efforts to advertise, market and promote
      the Products in a manner consistent with the initiatives and programs used
      for
      QBS ‘s other Products, including without limitation, using due diligence to
      place Products in locations carrying other QBS products; promoting the Products
      at trade shows and on QBS’s world wide web site, and generally undertaking other
      initiatives it deems appropriate to expand distribution of the
      Products;

     

    5.6.2  Adherence
      to Product Labeling:
      promote
      the characteristics, functionality, and performance of the Product in a manner
      consistent with the Product labeling provided by Medis;

     

    5.6.3  Customer
      Service:
      train,
      and maintain a staff knowledgeable in the use of the Products and provide
      customer service support in a manner which, in QBS’s judgment, is best suited
      for the Products;

     

    5.6.4  Customer
      Feedback:
      provide
      Medis with timely customer feedback regarding Product performance and
      operational issues, claims and complaints;

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    5.6.5  Laws:
      inform
      Medis of potentially applicable regulatory requirements of Laws (as defined
      in
      Section 14) of which QBS may become aware in jurisdictions where QBS
      distributes the Product which requirements QBS reasonably believes may not
      be
      known to Medis;

     

    5.6.6  Assistance:
      take
      all reasonable actions and providing all reasonable assistance to Medis, as
      requested by Medis, to enable Medis to derive the benefits of-this Agreement;
      and

     

    5.6.7  Use
      of
      QBS Marks:
      utilize
      in the promotion of the Products only QBS Marks and Design work that does not
      infringe or otherwise violate any proprietary right or Intellectual Property
      Right of any third party.

     

    
      	6.	
              Branding;
                Trademarks; Design Work

            


    

     

    6.1.  Packaging
      Branding; Third Party Licenses.
      Responsibility for designing and developing the Packaging for each Product
      and
      the branding used on the Packaging, ownership of the Packaging and Intellectual
      Property Rights therein, and the responsibility for securing any third party
      copyright rights and trademark rights necessary for QBS to implement its
      branding strategies will be agreed upon by the Parties prior to the Product
      Acceptance Date.

     

    6.2.  Medis
      Marks.
      The
      Parties agree that at least one Medis Mark will be used at least one time on
      the
      Packaging for each Product Such use shall be in accordance with reasonable
      guidelines provided by Medis prior to the Product Acceptance Date. The Parties
      shall mutually determine which Medis Mark shall be used on each
      Product.

     

    6.3.  License.
      Medis
      grants to QBS a non-exclusive, royalty-free, worldwide right and license to
      use
      and reproduce Medis’s Marks on and in connection with the Products, to use and
      reproduce Medis’s Marks on and in connection with advertising, marketing and
      promotional materials for the Products, and to distribute such Products and
      materials throughout the world, in accordance with the reasonable guidelines
      provided by Medis and subject to the provisions of this Agreement.

     

    6.4.  Ownership
      of Marks.
      Each
      Party owns all right, title and interest in and to its own Marks. Each use
      of a
      Party’s Mark on or in connection with the Products shall inure to the sole and
      exclusive benefit of the owner of the Mark or its designated Affiliate, as
      applicable. The other Party acknowledges that it has no right, title or interest
      in or to the other Party’s Marks and that none is conferred by virtue of this
      Agreement. In the event that any such rights in the owner’s Marks are deemed to
      accrue to the other Party, such other Party does hereby irrevocably and in
      perpetuity assign all worldwide right, title and interest in and to the owner’s
      Marks to the owner or its designated Affiliate and shall, upon the owner’s
      request, confirm such assignment in writing.

     

    6.5.  Prohibited
      Action Against Owner’s Marks.
      During
      and after the term of this Agreement, each Party agrees that is will not,
      without the other Party’s prior written consent, directly or
      indirectly.

     

    6.5.1  Same
      or Confusingly Similar Mark.
      Use,
      file an application to register or register in any county, any Mark of the
      other
      Party, or any imitation or translation thereof; or any 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    trade
      name, trademark, service mark, word, symbol, emblem, or logo, that resembles
      or
      is confusingly similar to any Mark of the other Party. If any such use,
      application or registration arises, which in the reasonable opinion of the
      other
      Party is the same or confusingly similar, deceptive or misleading with respect
      to such other Party’s Marks, the Party shall immediately abandon such use,
      application or registration, or at the other Panty’s discretion, irrevocably and
      in perpetuity assign all worldwide right, title and interest in and to the
      same
      to the other Party or its designated Affiliate.

     

    6.5.2  Initiation
      of Acts Against the Other Party’s Marks.
      Take
      any action, or aid any person in taking any action, that might prejudice the
      validity of or the other Party’s or its Affiliates’ title to, such other Party’s
      Marks and shall not assert the invalidity or contest the Medis by the other
      Party or its Affiliates of such other Party’s Marks in any country, either as a
      complete or partial defense to any claim made by such other Party or its
      Affiliates, or as a basis of any claim against such other Party or its
      Affiliates.

     

    6.6.  Product
      Quality.
      Medis
      agrees to maintain quality standards for the Products bearing QBS’s Marks that
      are consistent with the standards of quality that Medis maintains for its other
      branded products, but no less than any mutually agreed upon standards. QBS
      may
      take reasonable precautions to ensure that the quality of the Products and
      Packaging with which its Marks are used is maintained.

     

    6.7.  Design
      Work

     

    6.7.1  Ownership.
      To the
      extent permitted by applicable laws, any design work initiated or requested
      in
      writing by QBS with respect to the Packaging of the Products (including without
      limitation, labels or package designs) or QBS-owned tooling, equipment or molds,
      and made by any employee or subcontractor of Medis (collectively, the
“QBS
      Works”)
      are
      the exclusive property of QBS and are provided to QBS on a “work made for hire”
basis.

     

    6.7.2  Assignment.
      Medis
      shall promptly sign and have each of its employees and subcontractors promptly
      sign all necessary papers, as determined and requested by QBS, to establish
      QBS’s Medis in the QBS Works, and all Intellectual Property Rights therein, and
      to have each such employee and subcontractor who qualifies as an inventor of
      any
      of the QBS Works, as determined by QBS, to promptly sign all papers requested
      by
      QBS for purposes of filing patent applications for the QBS Works in patent
      offices in all countries throughout the world. The Parties acknowledge that
      this
      provision shall only apply to design work provided by or requested by
      QBS.

     

    6.7.3  Ownership
      of Products and Enhancements.
      All
      Intellectual Property Rights owned by a Party prior to the Effective Date of
      this Agreement, and all Intellectual Property Rights developed solely by a
      Party
      during the Team of this Agreement shall remain the sole and exclusive property
      of that Party and any third party licensor from which the Party may have
      obtained such rights. The Products, their parts and component, and all
      Enhancements to the Products, shall be the sole and exclusive Property of Medis,
      except for the QBS Works, if any.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	7.	
              Representations
                And Warranties

            


    

     

    .
      Medis
      represents and warrants that as of the Effective Data and as of the Product
      Acceptance Date for each Product:

     

    7.1.  Ownership.
      The
      Products (with the exception of the QBS Works) and the Medis Marks are the
      result of Medis’s exclusive work and efforts and that Medis has exclusive Medis
      of all rights, including proprietary rights and Intellectual Property Rights,
      in
      all Products (with the exception of the QBS Works) and Medis Marks.

     

    7.2.  Assistance.
      Medis
      will take all reasonable actions and will provide all reasonable assistance
      to
      QBS, as requested by QBS, to enable QBS to derive the benefits of this
      Agreement.

     

    7.3.  Infringement.
      The
      manufacture, use, sale, offer for sale, import, reproduction and distribution
      of
      the Products (with the exception of the QBS Works and QBS Marks) as contemplated
      in this Agreement does not and will not infringe or otherwise violate any
      proprietary right or Intellectual Property Right of any third
      party.

     

    7.4.  Other
      Agreements.
      Medis
      is not a party to and has no knowledge of any other agreement now in effect
      that
      in any way affects the rights that QBS is obtaining under this
      Agreement.

     

    7.5.  Claims.
      There
      are no claims, actions, suits or proceedings commenced, pending or threatened
      against Medis which will or might in any way affect or relate to the rights
      and
      benefits granted to QBS under this Agreement, and Medis is not aware of any
      grounds existing on which any claims, actions, suits or proceedings might be
      commenced against Medis with respect to any of the Products or any Intellectual
      Property Rights therein.

     

    7.6.  No
      Pending Actions.
      No
      action, suit, proceeding, hearing, investigation, charge, complaint, claim,
      or
      demand is or has been pending or threatened against Medis in connection with
      any
      Product or anticipated Product Further, Medis has not been sued, or threatened
      with a lawsuit, action or proceeding that involves a claim that the manufacture,
      use, import, sale, offer for sale, reproduction or distribution of any Product
      infringes any Intellectual Property Right or other propriety right of any third
      party.

     

    7.7.  No
      Infringement by Third Parties.
      No
      person or entity is infringing, misappropriating or otherwise making any
      unauthorized use or disclosure of any intellectual Property Rights of Medis
      that
      may be incorporated into or related to any Product. Medis has not brought any
      action, suit or proceeding for infringement or violation of any of its
      Intellectual Property Rights that may be included in, encompassed by or related
      to any Product.

     

    7.8.  Product
      Warranty.
      The
      Parties will negotiate a mutually acceptable product warranty in connection
      with
      the finished goods sourcing arrangement.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
      	8.	
              Term

            


    

     

    .
      This
      Agreement shall commence on the Effective Date and continue for an Initial
      Term”
of thirty six (36) months, after which it shall automatically renew for
      successive periods of twenty-four (24) months (each a “Renewal Term”, unless
      either Party gives written notice to the other Party of an intent not to renew
      following the Initial Term or any Renewal Term, or unless the Agreement is
      terminated sooner as provided in Section 9.

     

    
      	9.	
              Termination

            


    

     

    9.1.  Right
      to Terminate.
      In the
      event that a Party commits a material beach of any of the terms of this
      Agreement or materially defaults in the performance of any of its duties or
      obligations hereunder, and such breach or default is not remedied within
      thirty (30) days after delivery of written notice of such breach or
      default, the non-breaching Party may immediately terminate this Agreement by
      giving written notice of termination. In addition, a Party may terminate this
      Agreement immediately upon written notice to the other Party in the event of
      such other Party’s liquidation, bankruptcy, proceedings under a debtor’s relief
      law, inability to meet debts as they mature or insolvency, or in the event
      that
      such other Party’s business or assets or any part thereof are seized or
      expropriated by judicial or governmental process, or in the event of a
      substantial change in control of such other Party without prior written consent
      of the Party, provided that notice of termination is given within,
      sixty (60) days of the change in control.

     

    9.2.  Effect
      of Termination.
      Termination of this Agreement shall not relieve either Party of any of its
      obligations that have matured as of the date of termination for payments or
      delivery of Products. Upon expiration or termination of this Agreement; all
      tooling, equipment, molds and other material owned by one Party and in the
      possession and control of the other Party shall be crated and shipped in good
      order, by and at the cost and risk of the shipping Party, F.O.B. the receiving
      Party’s designated facility, pi-inaptly as directed by the receiving
      Party.

     

    9.3.  Liquidation.
      Unless
      this Agreement is terminated by Medis as a result of an uncured material breach
      by QBS, QBS shall have the right to distribute all Products in transit to QBS
      or
      its customers, to distribute all. Products in QBS’s inventory, and to have
      completed the manufacture of all Products that are in the “Process of
      Manufacture” as of the date of termination or expiration. A Product shall be
      considered in the “Process of Manufacture” if, prior to the expiration or
      termination date (whichever is applicable), either (i) QBS or any of its
      Affiliates has placed an order for the Product which order has been accepted
      by
      Medis, or (ii) any aspect of the actual manufacturing process has commenced
      for Product that bears any QBS brand customization. QBS shall comply with all
      other terms and conditions of this Agreement with respect to such Products
      distributed pursuant to this provision.

     

    
      	10.	
              Indemnification

            


    

     

    10.1.  Indemnified
      Claims.
      Medis
      shall indemnify and hold harmless QBS, its successors, assigns, parent,
      subsidiaries and Affiliates, and the officers, directors, employees and agents
      of each of them, from and against any and all losses, damages and expenses
      of
      any nature (including reasonable attorneys’ fees) arising out of or relating
      directly or indirectly to any claim, suit, action, or proceeding (collectively,
      “Claims”)
      (i) that its performance or nonperformance under this Agreement infringes,
      violates or misappropriates any Intellectual Property Right of any third party,
      (ii) that Medis has or will violate any statute, regulation or rule of law
      in the manufacture, assembly, packaging or delivery of any Products (except
      to
      the extent of QBS’s 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    liability
      under Section 14); or (iii) based on the breach or alleged breach by
      Medis of any representation or warranty in this Agreement alleging personal
      injury, death, or property damage to a third party caused by a Product or
      related to a breach of the Product warranty as finally determined by the Parties
      (except to the extent such damage or Product defect was caused by or arose
      as a
      result of the acts of QBS while the Product was in its control or custody,
      or in
      connection with the Packaging of the Products by QBS, QBS Work, or QBS’s
      distribution of the Product).

     

    10.2.  Notice
      and Procedure.
      QBS
      shall promptly notify Medis in writing of any Claims or amounts subject to
      indemnity and will render to Medis at Medis’s expense whatever information and
      assistance Medis may reasonably require in connection with such Claims. Any
      delay in notice to Medis will relieve Medis of its defense and indemnity
      obligations only to the extent of any prejudice of the defense of the Claims.
      Medis will have the sole right to conduct the defense of any Claims and all
      negotiations for compromise or settlement, except that Medis will not enter
      into
      any compromise or settlement that will have the effect of creating any liability
      or obligation (whether legal or equitable) on QBS’s part without the prier
      written consent of QBS, and no compromise or settlement is authorized unless
      QBS
      is completely released of liability under the compromise or settlement. Any
      counsel selected by Medis to defend QBS will be subject to the reasonable
      approval of QBS. If Medis, after receiving notice of any Claims, fails to begin
      the defense of the Claims, or after commencing a defense fails to vigorously
      proceed with such defense, QBS may (following written notice to Medis) retain
      counsel and undertake the defense, compromise, or settlement of the Claims
      at
      the expense of Medis.

     

    10.3.  Additional
      Remedies.
      In the
      event of any infringement claim, and if required by QBS, Medis shall do in
      addition to its indemnity and defense obligations, one of the following and
      at
      its expense: (i) procure for QBS the right to continue selling the
      allegedly infringing Product(s) and component parts; (ii) replace the
      allegedly infringing Product(s) and component parts with non infringing items
      of
      substantially equivalent quality and purpose; (iii) modify the allegedly
      infringing Product(s) and component parts so as to avoid infringement, provided
      that as modified the Products) and components remain of substantially equivalent
      quality and purpose; or (iv) accept the return of the allegedly infringing
      Product(s) and component parts, and refund the total price paid.

     

    
      	11.	
              Insurance

            


    

     

    11.1.  Insurance
      to be Carried by Medis.
      During
      the term of this Agreement, Medis shall procure and maintain sufficient and
      adequate insurance policies, such as comprehensive general liability insurance,
      including contractual, products and completed operations, personal injury,
      bodily injury and property damage liability with a combined single limit of
      not
      less a reasonable amount per occurrence agreed upon by the Parties, with
      reputable insurance companies, such insurance to include QBS and its Affiliates
      as additional insureds.

     

    11.2.  Certificate
      of Insurance.
      Medis
      agrees to furnish QBS with certificates of all policies of insurance, and such
      certificates shall stipulate that coverage will, not be canceled or
      substantially changed without thirty (30) days’ prior written notice by
      registered mail to QBS.

     

    11.3.  Compliance
      With Insurance Provisions.
      Medis
      shall not be deemed to be relieved of any responsibility by the fact that it
      carries insurance. Should at any time Medis or 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    subcontractor
      neglect or refuse to provide the insurance requirements herein, or should such
      insurance be canceled or changed substantially, or should the full occurrence
      limit of any policy not be available to satisfy the requirements of this
      Agreement, QBS shall have the right to immediately cancel this
      Agreement.

     

    
      	12.	
              Confidentiality

            


    

     

    12.1.  Proprietary
      Information.
      A Party
      or its Affiliates (“Discloser”)
      may
      disclose to the other Party (“Recipient”)
      certain proprietary and confidential information that relates to the Product
      or
      distribution information and is marked as “confidential” or “proprietary” in
      writing or identified as confidential verbally prior to disclosure to the
      Recipient, including but not limited to technical information and all
      Intellectual Property Rights therein, business information, the terms and
      conditions of this Agreement, and the Parties’ discussions relating to the
      Products or distribution information (all such information hereinafter referred
      to as “Proprietary
      Information”).
      Proprietary Information, however, does not include information that: (i) is
      now or subsequently becomes generally available to the public through no fault
      or breach on the part of the Recipient; (ii) the Recipient can demonstrate
      to have had rightfully in its possession without an obligation of
      confidentiality prior to disclosure to the Discloser, or (ii) the Recipient
      rightfully obtains without an obligation of confidentiality from a third party
      who has the right to transfer or disclose it, or (iv) is independently
      developed by employees or agents of the Recipient who did not have access to
      the
      Proprietary Information.

     

    12.2.  Duty
      of Confidentiality.
      The
      Recipient acknowledges that the Proprietary Information is proprietary and
      strictly confidential. Accordingly, the Recipient shall hold in confidence,
      not
      disclose, divulge, furnish or make accessible to others and not use for its
      own
      purposes or for any purpose other than as contemplated in this Agreement, any
      Proprietary Information received from the Discloser. The Recipient may use
      the
      Proprietary Information only to the extent necessary for carrying out the
      Recipient’s obligations under this Agreement. The Recipient shall keep
      Proprietary Information in strict confidence, exercising the highest degree
      of
      care, and shall limit disclosure of Proprietary Information only to its key
      employees with a specific need to know and who have been advised in writing
      of
      the restrictions imposed by this Agreement and have agreed to abide by such
      restrictions. The Recipient will immediately advise the Discloser in writing
      of
      any actual or suspected misappropriation or misuse by any person of any
      Proprietary Information the Recipient has received from the
      Discloser.

     

    12.3.  Ownership.
      The
      Proprietary Information will be made available to the Recipient in
      correspondence and in the course of meetings and telephone conferences as well
      as in other forms between the Discloser and Recipient All Proprietary
      Information and materials supplied to the Recipient by the Discloser or their
      authorized agents, representatives and contractors, shall be and remain the
      exclusive property of the Discloser. The Recipient agrees to return all
      Proprietary Information of the Discloser within ten (10) days of the
      Discloser’s request therefor with any notes and extracts the Recipient has made.
      The Recipient will also, upon the Discloser’s request, supply written
      certification that all Proprietary Information has been returned.

     

    12.4.  Remedy.
      The
      Recipient acknowledges and agrees that the Proprietary Information is unique
      and
      proprietary, that there would not be an adequate remedy at law to 

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    protect
      the Proprietary Information, and that the Discloser would suffer irreparable
      injury from any unauthorized use or disclosure of any of its Proprietary
      Information The Recipient acknowledges and agrees that, in the event the
      Recipient breaches or threatens to breach any of the terms of this
      Section 12, the Discloser shall be entitled to seek a restraining order,
      injunction or similar remedy in order to specifically enforce those terms as
      well as a right to pursue all of its other remedies in equity and at
      law.

     

    12.5.  No
      Export.
      The
      Recipient certifies that no Proprietary Information, or any portion thereof,
      will be exported to any country in violation of the United States Export
      Administration Act and regulations thereunder.

     

    12.6.  No
      Other Rights.
      Except
      as expressly provided, nothing in this Agreement shall obligate the Discloser
      to
      disclose any information to the Recipient or to enter into any agreement or
      =segment with the Recipient; nor shall delivery of Proprietary Information
      by
      the Discloser be construed as granting any rights, by license or otherwise,
      in
      any information, specifications, technology or Products, or in any Intellectual
      Property Right or other proprietary right of the Discloser, and the Recipient
      shall not assert any claim to or right in any of the Discloser’s Proprietary
      Information. The Recipient’s obligations under this Agreement shall survive the
      termination of this Agreement regardless of the manner of such termination
      and
      notwithstanding the return of all the Proprietary Information.

     

    
      13.    No
        Rights In Either Party.
        Except
        as expressly provided, nothing in this Agreement or the relationship between
        and
        Medis shall grant to either Party any rights to or interest in the Intellectual
        Property Rights of the other, in the designs of any Product or Packaging,
        in any
        associated artwork or in any of either Party’s other Proprietary Information.
        All property now or hereafter owned by any Party under the terms of this
        Agreement shall be returned to such Party by and at the cost and risk of
        loss of
        the other immediately upon request therefor or upon termination of this
        Agreement or as soon as possible thereafter.

    

     

    
      14.    Compliance
        With Laws.
        Medis
        warrants that it will comply with all applicable United States and foreign
        laws,
        statutes, government rules, regulations and ordinances, including but not
        limited to environmental laws (collectively, “Laws”)
        with
        respect to the manufacture and sale of the Products and its performance under
        this Agreement and shall obtain all necessary approvals and permits to perform
        its obligations under this Agreement When delivered to QBS, all Products
        will be
        property classified, described, packaged, marked and labeled, and otherwise
        be
        in property condition according to applicable Laws. QBS shall be solely
        responsible for complying with all applicable Laws with respect to QBS’s
        distribution of the Products and its performance under this Agreement and
        shall
        obtain all necessary approvals and permits to perform its obligations under
        this
        Agreement If either Party receives any notice or becomes aware of any violation
        of any Laws by the Products or the distribution thereof, the Party shall
        promptly notify the other Petty of such notice or violations.

    

     

    
      15.    Force
        Majeure.
        Force
        Majeure in this Agreement shall mean any circumstances beyond the reasonable
        control of the affected Party, preventing complete or partial fulfillment
        by
        such Party of its obligations under this Agreement and shall include without
        limitation, fire, acts of nature, war, military operations of any character,
        blockade, and the like. The time stipulated for fulfillment of the respective
        obligations shall be automatically extended for a period, equal to that during
        which such circumstances remain in force, provided that a written notice
        is sent
        by 

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      the
        Party
        for whom it becomes difficult to meet its obligations not later than fourteen
        (14) days from the occurrence of any such circumstances and similarly another
        notice of its cessation is sent on cessation, and during the period of delay,
        the affected Party takes all reasonable efforts to address the
        delay.

    

     

    
      16.    Limitation
        Of Damages.
        Except
        for the indemnification obligations pursuant to Section! 10 (or a breach
        of
        those obligations), any breach of Section 12 Confidentiality, or a Party’s
        intentional recklessness or willful misconduct, under no circumstances and
        under
        no legal theory, in tort, contract, or otherwise, will either Party be liable
        to
        the other Pasty for any indirect, special, incidental or consequential damages,
        even if the Party has been informed of the possibility of such
        damages.

    

     

    
      	17.	
              Miscellaneous

            


    

     

    17.1.  Notices.
      All
      notices shall be in writing and, unless otherwise specified herein, shall be
      deemed effective when delivered personally or by courier service with receipt
      provided, or three (3) business days after deposit with a receipted
      overnight or two-day delivery service, prepaid, addressed as follows (or to
      such
      other address as specified by either Party in writing):

     

    
      	
            	If
              to Medis:	
              Medis
                Technologies Ltd.

            


    

    805
      Third
      Avenue, 156 Floor

    New York,
      NY 10022

    Attention:
      Robert K. Lifton

    Title:
      Chairman and Chief Executive Officer

    Fax
      No:
      212-935-9216

     

    
      	
            	If
              to QBS:	
              Quasar
                Business Solutions Inc.

            


    

    Suite
      104- 2455 Dollarton Hwy North

    Vancouver,
      BC V7H 1B1

    Attn.:
      Michael J. More O’Ferrall

    Fax
      No:
      866-924-0974

     

    17.2.  Entire
      Agreement.
      This
      Agreement (including the Exhibits) constitutes the entire agreement between
      the
      Parties concerning the subject matter of this Agreement and supersedes all
      prior
      agreements and understandings (whether written or oral) with respect to the
      subject matter of this Agreement No representative of QBS or Medis is authorized
      to make any representation, warranty or promise not contained in this Agreement,
      except as provided by the next succeeding sentence. No change, termination,
      waiver or other modification of any of the provisions of this Agreement shall
      be
      binding on either Party unless in writing and signed by an officer of each
      Party
      who is authorized to take such action. No change, termination, waiver or other
      modification of this Agreement (including the expiration hereof) shall affect
      the rights of either Party to enforce any claim that matured prior to the date
      of such modification. No waiver of any provision hereof or default, or exercise
      of any election provided under this Agreement, shall affect the right of either
      Party thereafter to enforce said provision or to exercise any right or remedy
      or
      election in the event of any other default, whether or not similar.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    17.3.  Remedies.
      The
      rights and remedies of each Party under this Agreement are not exclusive but
      shall be in addition to all other rights and remedies to which that Party is
      entitled against the other Party, subject to the provisions of
      Section 16.

     

    17.4.  Independent
      Contractor.
      Unless
      otherwise expressly agreed in this Agreement, Medis is an independent
      contractor, and Medis shall not represent that it has any power to bind QBS
      or
      to assume or to create any obligation or responsibility, express or implied,
      on
      behalf of QBS. This Agreement shall not be construed as constituting Medis
      and
      QBS partners or to create any other form of legal association, which would
      impose liability upon one Party for the acts or failure to act of the
      other.

     

    17.5.  Taxes;
      Fees.
      Medis
      shall bear any and all taxes other than applicable sales and use taxes, fees
      or
      other governmental charges applicable to its operations under this
      Agreement.

     

    17.6.  Governing
      Laws.
      This
      Agreement shall be interpreted in accordance with the laws of the State of
      New York, United States of America, as if agreed to and performed entirely
      within such State and Country.

     

    17.7.  Assignment;
      Subcontracts.
      QBS
      shall have the right, at its sole discretion, to assign this Agreement or any
      of
      its rights hereunder to any of its Affiliates or to a successor-in-interest
      to
      all or substantially all of its capital stock, business or assets. Medis may
      not
      assign any of its obligations under this Agreement without the prior written
      consent of QBS. Any attempted assignment, subcontract or transfer by either
      Party in contravention of this Section 14.7 shall be void and of no
      effect.

     

    17.8.  Exhibits.
      All
      exhibits attached to this Agreement are deemed for all purposes to be
      incorporated into this Agreement as if fully set forth herein.

     

    17.9.  Representation.
      Medis
      represents and warrants that it has not agreed to pay any commission, gift,
      compensation or other payment in connection with the manufacture or sale of
      the
      Product.

     

    Duly
      authorized representatives of the parties have executed and delivered this
      Agreement as of the above Effective Date.

     

    
      	
              Quasar
                Business Solutions Inc.

               

            	 	
              Medis
                Technologies Ltd.

               

            
	
              By:  
                /s/
                Michael J. More O’ Ferrall 

              
                

              

              Name:
                Michael J. More O’ Ferrall 

              Title:
                President

            	 	
              By: 
                /s/
                Robert K. Lifton

              
                

              

              Name:
                Robert K. Lifton 

              Title:
                Chairman & CEO

            


    

     

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    EXHIBIT
      A

     

    Products

    (Section
      1.6)

     

    Medis
      24/7 Fuel Cell Power Packs 

    Medis
      Power Management Cables 

    Medis
      “tips”

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    
      
        	 	
                Quasar
                  Business Solutions Inc.

                104-2455
                  Dollarton Highway

                North
                  Vancounver, BC V7H 0A2

              


      

      


      
        	
                Quasar
                  Business Solutions Inc

                Purchase
                  Order

                 

                Suite
                  104 - 2455 Dollarton Highway

                North
                  Vancouver, BC V7H 0A2

                PH:
                  1-866-924-0973 Fax:
                  1-866-924-0974

                 

              	
                P.O.
                  Box # 102906

                DATE:
                  OCTOBER 29, 2006

                 

              
	
                VENDOR

                 

              	
                Medis
                  Technologies Ltd

                805
                  Third Ave

                New
                  York, NY 10022

                PH:
                  212-924-8484 Fax:
                  212-934-9216

                Customer
                  ID: MT 805

              	
                SHIP

                TO

                 

              	
                Quasar
                  Business Solutions Inc

                Suite
                  104 - 2455 Dollarton Hwy

                North
                  Vancouver, BC V7H 0A2

                PH:
                  1-866-924-0973

                Fax:
                  1-866-924-0974

              


      

      


      
        	
                Shipping
                  Method

              	
                Shipping
                  Terms

              	
                Delivery
                  Date

              
	
                Standard

              	
                Contact
                  Michael J More O’Ferrall

              	
                TBD

              


      

      


      
        	
                QTY

              	
                ITEM
                  #

              	
                DESCRIPTION

              	
                JOB

              	
                UNIT
                  PRICE

              	
                LINE
                  TOTAL

              
	
                 

                1,000,000

                 

              	
                 

                247-PP

                 

              	
                 

                Medis
                  24/7 Power Pack Fuel Cell

                 

              	
                 

                D

                 

              	
                 

                *
                  USD

                 

              	
                 

                *
                  

                 

                USD

              


      

       

      
        	 	 	 	 	
                SUBTOTAL

              	
                *  
                   

                 

                USD

              
	 	 	 	 	
                 

                SALES
                  TAX

              	 
	 	 	 	 	
                 

                TOTAL

                 

              	
                 

                *
                  

                 

                USD

              


      

       

      
        
          	
                	1.	
                  Please
                    send two copies of your
                    invoice.

                


        

      

       

      
        	
              	2.	
                Enter
                  this order in accordance with the prices, terms, delivery method,
                  and
                  specifications listed above.

              


      

       

      
        
          	
                	3.	
                  Please
                    notify us immediately if you are unable to ship as
                    specified.

                


        

      

       

      
        	
              	4.	
                Send
                  all correspondence to:

              


      

      
        	
                Michael
                  J More O’Ferrall

                Suite
                  104-2455 Dollarton Highway

                North
                  Vancouver, BC V7H 0A2

                Phone
                  866-924-0973 Fax 866-924-0974 

              	
                /s/
                  Michael J. More O’Ferrall 
                  

                

                Authorized
                  by: Michael J. More    Date
                  10/29/06

                O’Ferrall 

              


      

       

      * Subject
        to a request for confidential treatment; Separately filed with the
        Commission.