**Exhibit 10.20**

** **

**DISTRIBUTION AGREEMENT**

 

This Distribution Agreement (“Agreement”) ismade and entered into as of March 9th, 2004 (“Effective Date”), byand between **ACCO Brands, Inc.,** aDelaware corporation, through its **KensingtonTechnology Group,** with business offices at 2000 Alameda de lasPulgas, 2nd Floor, San Mateo, CA 94403 (“Kensington”) and **MedisTechnologies Ltd.,**a Delaware corporation, with business offices at805 3rd Avenue, New York, NY 10022 (“Medis”).  Kensington and Medis are referred to in thisAgreement as the “Parties” collectively, and each individually as a “Party.”

 

**Background**

 

Medisis in the business of designing and developing advanced technology productsrelated to sources of clean energy, with a primary focus on direct liquid fuel celltechnology.  Kensington is in thebusiness of developing, manufacturing and distributing a variety of technologyaccessory products, including mobile power and connectivity devices.  Medis is willing to appoint Kensington, andKensington is willing to accept such appointment, as a distributor of certainMedis products, subject to the terms and conditions of this Agreement.

 

**Terms**

 

**1.             Definitions**

 

**1.1          “Affiliate**” means anyperson, corporation, partnership or other entity (i) which, directly orindirectly, owns or controls at least fifty percent of the equity or votingpower of a Party, or (ii) of which a Party, directly or indirectly, owns orcontrols at least fifty percent of the equity or voting power, or (iii) ofwhich at least fifty percent of the equity or voting power, directly orindirectly, is under ownership or control that is common to a Party.

 

**1.2          “Enhancement”** means (i) anymodification made to a device identified in Exhibit A, (ii) any feature orfunctionality added to or combined with any device identified in Exhibit A, or(iii) any feature or functionality that is designed for use with any deviceidentified in Exhibit A, in each case, which is created, developed or conceivedby or for Medis, or created, developed or conceived by Kensington andincorporated into the Product, during the term of this Agreement.

 

**1.3          “IntellectualProperty Rights**” means any and all rights existing under patentlaw, copyright law, semiconductor chip design law, moral rights law, tradesecret law, trademark law, unfair competition law, publicity rights, privacyrights and any and all other similar proprietary rights, and any and allrenewals, extensions, continuations and restorations thereof, now or hereafterin force and effect.

 

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**1.4          “Marks”** means thetrademarks, service marks, logos, trade names, business names, corporate names,brand names and similar identifying materials owned by or licensed to aparticular Party.

 

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

 

**1.6          “Products”**means (i) the devices identified in Exhibit A (including, but not limitedto, the finished goods in Kensington-branded packages as contemplated inSection 3.1), and all parts and components necessary for the repair andreplacement of such devices, (ii) all Enhancements, and (iii) all New Itemsadded to this Agreement by written amendment in accordance with Section3.2.  Notwithstanding the foregoing,Products refers only to devices that are “secondary” power sources for chargingportable/mobile handheld devices, including without limitation, cellularphones, digital cameras, MP3 players, Nintendo Game Boys and comparable gamedevices, computer tablets (PDAs) and similar devices.  “Secondary” means other than the primary power source embeddedwithin or integral to the powered handheld device.

 

**2.             Appointment**

 

**2.1          General.** Subject to the terms of thisAgreement, Medis hereby appoints Kensington, and Kensington hereby accepts theappointment, as a worldwide distributor of the Products, and Kensington shallhave the right to market, offer to sell, sell, transfer and otherwise distributethe Products anywhere in the world to other distributors, customers andpotential customers, but excluding purchasers that Kensington has reason tobelieve are purchasing for military or law enforcement applications, andpurchasers sourcing Products through established government contractingprocedures and protocols.

 

**2.2          “Semi-Exclusive”Nature of Rights. **The rightsgranted to Kensington under Section 2.1 shall be “semi-exclusive,” in thatMedis agrees as follows:

 

**2.2.1       Substantially Similar Products; Excluded Distributors.**  Medis will not directly or indirectly offerto sell, sell, distribute, license, or otherwise transfer any of the Products,or any item that is “Substantially Similar” to any Product, to any third partylisted on Exhibit B, or to any of such third party’s successors, assigns, orAffiliates, subject to the provisions of Section 2.2.1.  An item shall be considered “SubstantiallySimilar” to a Product if, in Kensington’s sole discretion acting in good faith,it is similar in appearance, construction, design and performance to suchProduct.

 

**2.2.2       Territory and Permitted Market Limitations. **Notwithstandingthe provisions of Section 2.2.1, if Medis has an opportunity to engage a thirdparty (excluding parties listed on Exhibit B) as a distributor of one or moreProducts in a particular geographic territory outside North America and thecountries 

 

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comprising theEuropean Union, (collectively, “Permitted Territory”) or particular markets,other than computer retailers, anywhere in the world including in North Americaand the countries comprising the European Union (“Permitted Markets”) but whichpotential distributor requires exclusivity to distribute the Products, Medisshall first notify Kensington of the situation and the Parties will promptlymeet to discuss the same.  If Medisdetermines that the opportunity requires granting the distributor exclusiverights in a Permitted Territory of Permitted Markets”), Medis may limitKensington’s exclusive rights to exclude that particular area in the PermittedTerritory or Permitted Market effective thirty (30) days following writtennotice to Kensington.  Medis will notifyKensington of the situation as described above prior to a decision by Mediswith the objective of discussing the situation.  If the Parties cannot reach an agreement, Medis’ determinationwill prevail.

 

**2.3          MinimumAnnual Purchase Targets. **The Partiesagree that Kensington shall endeavor to purchase at least **[Subject to a request for confidentialtreatment; Separately filed with the Commission]** units of Productsduring the first “Year” following the “Commercialization Date” (as the terms“Year” and “Commercialization Date” are defined in Section 5.3.1), and at least**[Subject toa request for confidential treatment; Separately filed with the Commission]**units of Products during the third Year (no minimum volume applies to thesecond Year) and each renewal Year thereafter (each being the “Minimum AnnualPurchase Target” for the respective Year.) From time to time at the request of either Party, the Parties agree toin good faith negotiate an increase or decrease in the Minimum Annual PurchaseTarget for any Year, whether adjusted prospectively or retrospectively, if therequesting Party can demonstrate to the other Party’s reasonable satisfactionbased on credible evidence of materially better or adverse and sustainedmarketplace conditions during the respective Year that are likely to impact orhave impacted Kensington’s ability to surpass or to meet such Minimum AnnualPurchase Target and achieve a reasonable profit margin on the Products. Forpurposes of clarification, a failure to reach such agreement for any reasonwill result in the contractual Minimum Annual Purchase Targets remaining ineffect.

 

**2.4          Failureto Meet Minimum Annual Purchase Target.**  If Kensington fails in any Year to meet the Minimum AnnualPurchase Target, as adjusted in accordance with Section 2.3, then Medis shallhave the right, as Medis’ exclusive remedy, to either (i) cease compliance withits obligations under Section 2.2 by providing written notice to Kensington nolater than sixty (60) days following the end of the Year in which the MinimumAnnual Purchase Target was not met, or (ii) terminate this Agreement.  Medis’ obligations under Section 2.2 shallcease or this Agreement will terminate, as applicable, thirty (30) days afterthe effective date of the notice, as determined in accordance with Section14.1.

 

**2.5          KensingtonNon-Compete Commitment.**  Duringthe period in which Medis’ obligations under Section 2.2 remain in effect,Kensington agrees that it will not directly or indirectly offer to sell, sell,distribute or otherwise transfer through its Kensington Technology Group anyliquid fuel cell product which includes the same or similar functionality asany of the Products, except with Medis’ prior written consent.

 

**2.6          Affiliates.** Kensingtonmay, at its sole discretion and without Medis’ further consent, extend any orall of the rights granted in Section 2.1 to one or more of its 

 

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Affiliates.  Kensington shall provide Medis with promptwritten notice of each such extension.

 

**3.             Products**

 

**3.1          KensingtonBranded Products.**  Productswill be in the standard form that they are sold generally by Medis, except forchanges that are mutually agreed to in writing by the Parties to reflectKensington branding features.  TheParties currently intend that Products will be modified to be in plastic colorsspecified by Kensington, will include both Kensington’s and Medis’ logos andtrade names, will be packaged as specified by Kensington, and may be otherwisemodified as agreed to in writing by the Parties.  Medis shall not, directly or indirectly, distribute any Productbearing any of Kensington’s Packaging or Marks to any third party.

 

**3.2          NewItems; Right of First Refusal.**  The Parties will formallymeet at least once per calendar quarter to identify future opportunitiesfor new items that incorporate Medis’ liquid fuel cell technology and are notconsidered Products (each a “New Item”). Examples of New Items include, but are not limited to, rechargeablepower packs and recharge packs incorporating new or next generation liquid fuelcell technology to power products with significant sustained mobile operatingrequirements.  Medis will submit toKensington specifications, and where existing in Medis’ 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 fromKensington in facilitating or financing the development of such New Item.  If Kensington notifies Medis within sixty(60) days of receipt of the specifications that Kensington is interested indistributing the New Item, then the Parties will negotiate in good faith andagree upon a product development and distribution arrangement which includes anestimated development schedule, associated non-recurring engineering costs andtooling charges, unit volume commitments, product price quotations, and otherrelevant details.  Upon reaching mutualagreement, such New Item will be added to this Agreement by written amendment.  If Kensington notifies Medis that it is notinterested in distributing the New Item, Kensington fails to timely notifyMedis of Kensington’s decision, or the Parties are unable to reach agreementfor any reason regarding the terms of the development or distribution of theNew Item after good faith negotiations, Medis shall be free to market the NewItem directly or with a third party(ies) independently of Kensington; however,before offering distribution rights to the New Item to a third party on termsand conditions more favorable to the third party than those last offered toKensington, Medis shall first give Kensington the opportunity, on thirty (30)days’ prior written notice, to accept such more favorable terms and conditions.

 

**4.****                                     ****ProductDevelopment and Acceptance**

 

**4.1          Development.**  Medis shall be solely responsible for thedevelopment of each Product, which development shall generally consist of: (i)finalization of specifications for the Product consistent with the initialcriteria set forth in Exhibit C, as amended from time to time by the Parties;(ii) successful beta testing of the Product in 

 

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appropriate test environments and againstreasonable performance criteria; and (iii) initiation of commercial productionof the Product.  Medis will keepKensington apprised of the status of development for each Product, shallprovide details reasonably requested by Kensington with respect to eachProduct, and shall facilitate Kensington’s coordination of distributionlogistics with manufacturers of each Product in anticipation ofcommercialization, including without limitation, the estimated date forcompletion of each of sub-items (i) through (iii).

 

**4.2          Samples.**  Upon completion of the development of eachProduct, Medis will provide Kensington with at least two (2) manufactured unitsof the Product that meet the final specifications for the Product, togetherwith final Packaging and labeling criteria agreed upon by the Parties.  Within thirty (30) days following receipt ofsuch Product samples, Kensington will advise Medis whether Kensington, in itssole discretion, accepts the Product, accepts the Product subject to specifiedmodifications, or rejects the Product. If Kensington fails to timely notify Medis of Kensington’s decision orKensington rejects the Product, Medis shall have the right to terminate theAgreement by written notice to Kensington, whereupon neither Party shall haveany further liability to the other Party. If Kensington accepts the Product,the date of such notice to Medis shall be treated as the “Product AcceptanceDate” for such Product.

 

**5.             Product Sourcing**

 

**5.1          General.**  The Parties currently intend that Medis willbe solely responsible for the manufacture of each Product throughsubcontractors selected by Medis, and that Kensington will purchase Productsfrom Medis as finished goods (“Finished Goods Sourcing”). However, the Partiesalso currently intend that Kensington will provide considerable logisticssupport in sourcing Products purchased by Kensington from the manufacturerselected by Medis.  Prior to the ProductAcceptance Date for each Product, the Parties will agree upon the arrangementunder which Kensington will purchase the Product from Medis and negotiate anappropriate agreement that will reflect terms and conditions of the type typicalfor purchasing finished products.

 

**5.2          KensingtonContribution to Manufacturing Set-Up.**  Notwithstanding the current intent of the Parties to conductbusiness under this Agreement in the nature of a finished good sourcingarrangement as described in Section 5.1, Kensington agrees to collaborate withMedis as reasonably requested by Medis to identify and select manufacturers foreach Product, evaluate production facilities, and generally facilitatemanufacture of the Products.  Kensingtonwill, in good faith, review any reasonable request from Medis that Kensingtoncontribute a portion of the nonrecurring engineering and tooling costs for anyProduct.

 

**5.3          Pricing**

 

**5.3.1       Commercialization Date and Year.**  “Commercialization Date” means the earlierto occur of April 1 or September 1 followingthe first delivery to Kensington of a commercially reasonable quantity of thefirst Product to be distributed by 

 

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Kensington. The twelve (12) month period following the Commercialization Date, andeach subsequent annual anniversary thereof, shall be referred to as a“Year.”  A “commercially reasonablequantity” shall mean the date Medis notifies Kensington in writing of Medis’ presentreadiness to deliver at least 50,000 units per month thereafter.

 

**5.3.2       Initial Price.**  Prior to the Product Acceptance Date, the Parties will negotiatea reasonable unit price for the first Product to be distributed by Kensington(the “Initial Price” for such Product) in an amount that takes into account thebroader logistics role undertaken by Kensington in sourcing the Product.  In no event will the Initial Price for thefirst Product be greater than **[Subject to a request for confidential treatment;Separately filed with the Commission]** per unit (the “Price Target”for the first Product).  The Partieswill engage in similar price negotiations to determine the Initial Price andPrice Target for each additional Product to be distributed by Kensington, suchnegotiations to occur no later than one hundred and twenty (120) days prior tothe date set for the first commercial sale of such additional Product.  The Initial Price for each Product shall besubject to adjustment as provided in Sections 5.3.3 through 5.3.5.

 

**5.3.3       Lack of Economic Feasibility.**  If, as of the Commercialization Date for a Product, either Partyin good faith reasonably believes that the Initial Price for the Product is noteconomically feasible to achieve the Party’s business objectives forcommercialization of the Product, that Party shall notify the other Party inwriting.  Upon either giving orreceiving such notice, Kensington may, in its sole discretion exercised bygiving written notice to Medis, elect to either: (i) immediately terminate thisAgreement with respect to that Product (or the entire Agreement if there isthen only one Product) and Medis shall immediately return to Kensington allnon-recurring engineering cost contributions, if any, previously requested orapproved in writing by Medis, attributable to the Product development and paidby Kensington pursuant to Section 5.2 and after repayment neither Party shallhave 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 Agreementat 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 Kensington to not more than the average price atwhich Medis sells the Product to third parties purchasing substantially similarvolumes of Product on substantially similar terms.  The Parties will collaborate regularly for the purpose ofidentifying opportunities for cost savings in the manufacture, logisticalsourcing and distribution of the Products, measuring such cost savings, anddevising an equitable procedure for the Parties to mutually benefit from andshare the cost savings.

 

**5.3.5       Best Price Adjustment.**  Notwithstanding the provisions of Sections 5.3.3 and 5.3.4, theInitial 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 toany non-military or non-law enforcement customer of Medis that purchases anaggregate of at least one million (1,000,000) units of Product within thetwelve (12) month period immediately preceding Kensington’s Productpurchase.  Medis shall 

 

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automatically apply such bestprice to all Kensington purchase orders shipped after best pricing is triggeredunder this provision.

 

**5.4          Pricing Freedom.**  Kensington shall be solely responsible forsetting the prices it charges to its customers.

 

                **5.5          PaymentTerms. **Kensington shall payMedis for Products net thirty (30) days following delivery of Product by Medis,F.O.B. Kensington’s designated facilities. Payment shall be made by wire transfer to a bank and account in theUnited States designated by Medis in writing from time to time.

 

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

 

**5.6.1       ProductPromotion. **Use reasonablecommercial efforts to advertise, market and promote the Products in a mannerconsistent with the initiatives and programs used for Kensington’s otherProducts, including without limitation, using due diligence to place Productsin locations carrying other Kensington products; promoting the Products attrade shows and on Kensington’s world wide web site, and generally undertakingother initiatives it deems appropriate to expand distribution of the Products;

 

**5.6.2       Adherence to ProductLabeling: **promote thecharacteristics, functionality, and performance of the Product in a mannerconsistent with the Product labeling provided by Medis;

 

**5.6.3       Customer Service: **train and maintain a staffknowledgeable in the use of the Products and provide customer service supportin a manner which, in Kensington’s judgment, is best suited for the Products;

 

**5.6.4       CustomerFeedback: **provide Mediswith timely customer feedback regarding Product performance and operationalissues, claims and complaints;

 

**5.6.5       Laws: **inform Medis of potentiallyapplicable regulatory requirements of Laws (as defined in Section 14) of whichKensington may become aware in jurisdictions where Kensington distributes theProduct which requirements Kensington reasonably believes may not be known toMedis;

 

**5.6.6       Assistance: **take all reasonable actionsand providing all reasonable assistance to Medis, as requested by Medis, toenable Medis to derive the benefits of this Agreement; and

 

**5.6.7       Use of KensingtonMarks: **utilize in thepromotion of the Products only Kensington Marks and Design work that does notinfringe or otherwise violate any proprietary right or Intellectual PropertyRight of any third party.

 

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**6.****                                     ****Branding;Trademarks; Design Work**

 

**6.1          Packaging; Branding; Third PartyLicenses.** Responsibility for designing and developing the Packaging for eachProduct and the branding used on the Packaging, ownership of the Packaging andIntellectual Property Rights therein, and the responsibility for securing anythird party copyright rights and trademark rights necessary for Kensington toimplement its branding strategies will be agreed upon by the Parties prior tothe Product Acceptance Date..

 

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

 

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

 

**6.4          Ownership of Marks. **Each Party ownsall right, title and interest in and to its own Marks. Each use of a Party’sMark on or in connection with the Products shall inure to the sole andexclusive benefit of the owner of the Mark or its designated Affiliate, asapplicable.  The other Partyacknowledges that it has no right, title or interest in or to the other Party’sMarks and that none is conferred by virtue of this Agreement.  In the event that any such rights in theowner’s Marks are deemed to accrue to the other Party, such other Party doeshereby irrevocably and in perpetuity assign all worldwide right, title andinterest in and to the owner’s Marks to the owner or its designated Affiliateand shall, upon the owner’s request, confirm such assignment in writing.

 

**6.5          Prohibited Action Against Owner’sMarks.**  During and after the term ofthis Agreement, each Party agrees that is will not, without the other Party’sprior written consent, directly or indirectly:

 

**6.5.1       Same orConfusingly Similar Mark.** Use, file an application to register or register in any country, anyMark of the other Party, or any imitation or translation thereof, or any tradename, trademark, service mark, word, symbol, emblem, or logo, that resembles oris confusingly similar to any Mark of the other Party.  If any such use, application or registrationarises, which in the reasonable opinion of the other Party is the same orconfusingly similar, deceptive or misleading with respect to such other Party’sMarks, the Party shall immediately abandon such use, application or registration,or at the other Party’s discretion, irrevocably and in perpetuity assign allworldwide right, title and interest in and to the same to the other Party orits designated Affiliate.

 

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**6.5.2       Initiationof Acts Against the Other Party’s Marks.** Take anyaction, or aid any person in taking any action, that might prejudice thevalidity of or the other Party’s or its Affiliates’ title to, such otherParty’s Marks and shall not assert the invalidity or contest the ownership bythe 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 Partyor its Affiliates, or as a basis of any claim against such other Party or itsAffiliates.

 

**6.6          Product Quality.**  Medis agrees to maintain quality standardsfor the Products bearing Kensington’s Marks that are consistent with thestandards of quality that Medis maintains for its other branded products, butno less than any mutually agreed upon standards.  Kensington may take reasonable precautions to ensure that thequality of the Products and Packaging with which its Marks are used ismaintained.

 

**6.7          Design Work**

 

**6.7.1       Ownership.**  To the extent permitted by applicable laws, any design workinitiated or requested in writing by Kensington with respect to the Packagingof the Products (including without limitation, labels or package designs) orKensington-owned tooling, equipment or molds, and made by any employee orsubcontractor of Medis (collectively, the “Kensington Works”) are the exclusiveproperty of Kensington and are provided to Kensington on a “work made for hire”basis.

 

**6.7.2       Assignment.**  Medis shall promptly sign and have each of its employees andsubcontractors promptly sign all necessary papers, as determined and requestedby Kensington, to establish Kensington’s ownership in the Kensington Works, andall Intellectual Property Rights therein, and to have each such employee andsubcontractor who qualifies as an inventor of any of the Kensington Works, asdetermined by Kensington, to promptly sign all papers requested by Kensingtonfor purposes of filing patent applications for the Kensington Works in patentoffices in all countries throughout the world. The Parties acknowledge that thisprovision shall only apply to design work provided by or requested byKensington.

 

**6.7.3       Ownership of Products and Enhancements**. All Intellectual Property Rights owned by a Party prior to the EffectiveDate of this Agreement, and all Intellectual Property Rights developed solelyby a Party during the Term of this Agreement shall remain the sole andexclusive property of that Party and any third party licensor from which theParty may have obtained such rights. The Products, their parts and components, and all Enhancements to theProducts, shall be the sole and exclusive Property of Medis, except for theKensington Works, if any.

 

**7.             Representations and Warranties. **Medisrepresents and warrants that as of the Effective Date and as of the ProductAcceptance Date for each Product:

 

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**7.1          Ownership.**  The Products (with the exception of theKensington Works) and the Medis Marks are the result of Medis’ exclusive workand efforts and that Medis has exclusive ownership of all rights, includingproprietary rights and Intellectual Property Rights, in all Products (with theexception of the Kensington Works) and Medis Marks.

 

**7.2          Assistance.**  Medis will take all reasonable actions andwill provide all reasonable assistance to Kensington, as requested byKensington, to enable Kensington 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 theexception of the Kensington Works and Kensington Marks) as contemplated in thisAgreement does not and will not infringe or otherwise violate any proprietaryright or Intellectual Property Right of any third party.

 

**7.4          OtherAgreements. **Medis is not aparty to and has no knowledge of any other agreement now in effect that in anyway affects the rights that Kensington is obtaining under this Agreement.

 

**7.5          Claims. **There are no claims,actions, suits or proceedings commenced, pending or threatened against Mediswhich will or might in any way affect or relate to the rights and benefitsgranted to Kensington under this Agreement, and Medis is not aware of anygrounds existing on which any claims, actions, suits or proceedings might becommenced against Medis with respect to any of the Products or any IntellectualProperty Rights therein.

 

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

 

**7.7          NoInfringement by Third Parties. **No person orentity is infringing, misappropriating or otherwise making any unauthorized useor disclosure of any Intellectual Property Rights of Medis that may beincorporated into or related to any Product. Medis has not brought any action, suit or proceeding for infringement orviolation of any of its Intellectual Property Rights that may be included in,encompassed by or related to any Product.

 

                **7.8          ProductWarranty.**  The Parties willnegotiate a mutually acceptable product warranty in connection with thefinished 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 automaticallyrenew for 

 

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successive periods of twenty-four (24) months(each a “Renewal Term”), unless either Party gives written notice to the otherParty 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 materialbeach of any of the terms of this Agreement or materially defaults in theperformance of any of its duties or obligations hereunder, and such breach ordefault is not remedied within thirty (30) days after delivery of writtennotice of such breach or default, the non-breaching Party may immediatelyterminate this Agreement by giving written notice of termination.  In addition, a Party may terminate thisAgreement immediately upon written notice to the other Party in the event ofsuch other Party’s liquidation, bankruptcy, proceedings under a debtor’s relieflaw, inability to meet debts as they mature or insolvency, or in the event thatsuch other Party’s business or assets or any part thereof are seized orexpropriated by judicial or governmental process, or in the event of a substantialchange in control of such other Party without prior written consent of theParty, provided that notice of termination is given within sixty (60) days ofthe change in control.

 

**9.2          Effect of Termination.**  Termination of this Agreement shall not relieveeither Party of any of its obligations that have matured as of the date oftermination 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 possessionand control of the other Party shall be crated and shipped in good order, byand at the cost and risk of the shipping Party, F.O.B. the receiving Party’sdesignated facility, promptly as directed by the receiving Party.

 

**9.3          Liquidation.**  Unless this Agreement is terminated by Medisas a result of an uncured material breach by Kensington, Kensington shall havethe right to distribute all Products in transit to Kensington or its customers,to distribute all Products in Kensington’s inventory, and to have completed themanufacture of all Products that are in the “Process of Manufacture” as of thedate of termination or expiration.  AProduct shall be considered in the “Process of Manufacture” if, prior to theexpiration or termination date (whichever is applicable), either (i) Kensingtonor any of its Affiliates has placed an order for the Product which order hasbeen accepted by Medis, or (ii) any aspect of the actual manufacturing processhas commenced for Product that bears any Kensington brand customization.  Kensington shall comply with all other termsand conditions of this Agreement with respect to such Products distributedpursuant to this provision.

 

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**10.          Indemnification**

 

**10.1        IndemnifiedClaims.**  Medis shall indemnify and holdharmless Kensington, its successors, assigns, parent, subsidiaries andAffiliates, 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 orindirectly 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 inthe manufacture, assembly, packaging or delivery of any Products (except to theextent of Kensington’s liability under Section 14); or (iii) based on thebreach or alleged breach by Medis of any representation or warranty in thisAgreement alleging personal injury, death, or property damage to a third partycaused by a Product or related to a breach of the Product warranty as finallydetermined by the Parties (except to the extent such damage or Product defectwas caused by or arose as a result of the acts of Kensington while the Productwas in its control or custody, or in connection with the Packaging of theProducts by Kensington, Kensington Work, or Kensington’s distribution of theProduct).

 

**10.2        Notice and Procedure.**  Kensington shall promptly notify Medis inwriting of any Claims or amounts subject to indemnity and will render to Medisat Medis’ expense whatever information and assistance Medis may reasonablyrequire in connection with such Claims. Any delay in notice to Medis will relieve Medis of its defense andindemnity obligations only to the extent of any prejudice of the defense of theClaims.  Medis will have the sole rightto conduct the defense of any Claims and all negotiations for compromise orsettlement, except that Medis will not enter into any compromise or settlementthat will have the effect of creating any liability or obligation (whether legalor equitable) on Kensington’s part without the prior written consent ofKensington, and no compromise or settlement is authorized unless Kensington iscompletely released of liability under the compromise or settlement.  Any counsel selected by Medis to defendKensington will be subject to the reasonable approval of Kensington.  If Medis, after receiving notice of anyClaims, fails to begin the defense of the Claims, or after commencing a defensefails to vigorously proceed with such defense, Kensington may (followingwritten 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 byKensington, Medis shall do in addition to its indemnity and defenseobligations, one of the following and at its expense: (i) procure forKensington the right to continue selling the allegedly infringing Product(s)and component parts; (ii) replace the allegedly infringing Product(s) andcomponent parts with non-infringing items of substantially equivalent qualityand purpose; (iii) modify the allegedly infringing Product(s) and componentparts so as to avoid infringement, provided that as modified the Product(s) andcomponents 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.

 

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**11.          Insurance**

 

**11.1        Insurance to be Carried by Medis.**  During the term of this Agreement, Medisshall procure and maintain sufficient and adequate insurance policies, such ascomprehensive general liability insurance, including contractual, products andcompleted operations, personal injury, bodily injury and property damageliability with a combined single limit of not less a reasonable amount peroccurrence agreed upon by the Parties, with reputable insurance companies, suchinsurance to include Kensington and its Affiliates as additional insureds.

 

**11.2        Certificate of Insurance. **Medis agrees to furnish Kensington with certificates of all policies ofinsurance, and such certificates shall stipulate that coverage will not becanceled or substantially changed without thirty (30) days’ prior writtennotice by registered mail to Kensington.

 

**11.3        Compliance with Insurance Provisions.**  Medis shall not be deemed to be relieved ofany responsibility by the fact that it carries insurance.  Should at any time Medis or subcontractorneglect or refuse to provide the insurance requirements herein, or should suchinsurance be canceled or changed substantially, or should the full occurrencelimit of any policy not be available to satisfy the requirements of thisAgreement, Kensington shall have the right to immediately cancel thisAgreement.

 

**12.          Confidentiality**

 

**12.1        Proprietary Information.**  A Party or its Affiliates (“Discloser”) may disclose to the otherParty (“Recipient”) certain proprietary and confidential information thatrelates to the Product or distribution information and is marked as“confidential” or “proprietary” in writing or identified as confidentialverbally prior to disclosure to the Recipient, including but not limited totechnical information and all Intellectual Property Rights therein, businessinformation, the terms and conditions of this Agreement, and the Parties’discussions relating to the Products or distribution information (all suchinformation hereinafter referred to as “Proprietary Information”).  Proprietary Information, however, does notinclude information that: (i) is now or subsequently becomes generallyavailable to the public through no fault or breach on the part of theRecipient; (ii) the Recipient can demonstrate to have had rightfully in itspossession without an obligation of confidentiality prior to disclosure to theDiscloser; or (iii) the Recipient rightfully obtains without an obligation ofconfidentiality from a third party who has the right to transfer or discloseit, or (iv) is independently developed by employees or agents of the Recipientwho did not have access to the Proprietary Information.

 

**12.2        Duty of Confidentiality.**  The Recipient acknowledges that the Proprietary Information isproprietary 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 purposesor for any purpose other than as contemplated in 

 

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this Agreement, anyProprietary Information received from the Discloser.  The Recipient may use the Proprietary Information only to theextent necessary for carrying out the Recipient’s obligations under thisAgreement.  The Recipient shall keepProprietary Information in strict confidence, exercising the highest degree ofcare, and shall limit disclosure of Proprietary Information only to its keyemployees with a specific need to know and who have been advised in writing ofthe restrictions imposed by this Agreement and have agreed to abide by suchrestrictions.  The Recipient willimmediately advise the Discloser in writing of any actual or suspectedmisappropriation or misuse by any person of any Proprietary Information theRecipient has received from the Discloser.

 

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

 

**12.4        Remedy.**  TheRecipient acknowledges and agrees that the Proprietary Information is uniqueand proprietary, that there would not be an adequate remedy at law to protectthe Proprietary Information, and that the Discloser would suffer irreparableinjury from any unauthorized use or disclosure of any of its ProprietaryInformation. The Recipient acknowledges and agrees that, in the event theRecipient breaches or threatens to breach any of the terms of this Section 12,the Discloser shall be entitled to seek a restraining order, injunction orsimilar remedy in order to specifically enforce those terms as well as a rightto pursue all of its other remedies in equity and at law.

 

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

 

**12.6        No Other Rights.**  Except as expressly provided, nothing in this Agreement shallobligate the Discloser to disclose any information to the Recipient or to enterinto any agreement or arrangement with the Recipient, nor shall delivery ofProprietary Information by the Discloser be construed as granting any rights,by license or otherwise, in any information, specifications, technology orProducts, or in any Intellectual Property Right or other proprietary right ofthe Discloser, and the Recipient shall not assert any claim to or right in anyof the Discloser’s Proprietary Information. The Recipient’s obligations under this Agreement shall survive thetermination of this Agreement regardless of the manner of such termination andnotwithstanding the return of all the Proprietary Information.

 

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

 

**14.          Compliance with Laws.**** **Mediswarrants that it will comply with all applicable United States and foreignlaws, statutes, government rules, regulations and ordinances, including but notlimited to environmental laws (collectively, “Laws”) with respect to themanufacture and sale of the Products and its performance under this Agreementand shall obtain all necessary approvals and permits to perform its obligationsunder this Agreement.  When delivered toKensington, all Products will be property classified, described, packaged,marked and labeled, and otherwise be in property condition according toapplicable Laws.  Kensington shall besolely responsible for complying with all applicable Laws with respect toKensington’s distribution of the Products and its performance under thisAgreement and shall obtain all necessary approvals and permits to perform itsobligations under this Agreement.  Ifeither Party receives any notice or becomes aware of any violation of any Lawsby the Products or the distribution thereof, the Party shall promptly notifythe other Party of such notice or violations.

 

**15.          FORCEMAJEURE. **Force Majeure in this Agreement shall mean any circumstances beyond thereasonable control of the affected Party, preventing complete or partialfulfillment by such Party of its obligations under this Agreement and shallinclude without limitation, fire, acts of nature, war, military operations ofany character, blockade, and the like. The time stipulated for fulfillment of the respective obligations shallbe automatically extended for a period, equal to that during which suchcircumstances remain in force, provided that a written notice is sent by theParty for whom it becomes difficult to meet its obligations not later thanfourteen (14) days from the occurrence of any such circumstances and similarlyanother notice of its cessation is sent on cessation, and during the period ofdelay, the affected Party takes all reasonable efforts to address the delay.

 

**16.          LIMITATIONOF 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 nocircumstances and under no legal theory, in tort, contract, or otherwise, willeither Party be liable to the other Party for any indirect, special, incidentalor consequential damages, even if the Party has been informed of thepossibility of such damages.

 

**17.          MISCELLANEOUS**

 

**17.1        Notices.**  All notices shall be in writing and, unless otherwise specifiedherein, shall be deemed effective when delivered personally or by courierservice with 

 

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receiptprovided, or three (3) business days after deposit with a receipted overnightor two-day delivery service, prepaid, addressed as follows (or to such otheraddress as specified by either Party in writing):

 

*If to Medis:*

 

Medis Technologies Ltd.

805 Third Avenue, 15thFloor

New York, NY  10022

Attention:  RobertK. Lifton

Title:  Chairmanand Chief Executive Officer

Fax No: 212-935-9216

 

*If to Kensington:*

 

ACCO Brands, Inc.

Through its KensingtonTechnology Group

2000 Alameda De Las Pulgas

San Mateo, CA  94403

Attention:  President

Fax No: 650-572-9675

 

*With a Copy to:*

 

Fortune Brands, Inc.

300 Tower Parkway

Lincolnshire, IL 60069

Attn:  General Counsel

Fax No: 847-484-4490

 

**17.2        Entire Agreement.**  This Agreement (including the Exhibits) constitutes the entire agreementbetween the Parties concerning the subject matter of this Agreement andsupersedes all prior agreements and understandings (whether written or oral)with respect to the subject matter of this Agreement.  No representative of Kensington or Medis is authorized to makeany representation, warranty or promise not contained in this Agreement, exceptas provided by the next succeeding sentence. No change, termination, waiver or other modification of any of the provisionsof this Agreement shall be binding on either Party unless in writing and signedby an officer of each Party who is authorized to take such action.  No change, termination, waiver or othermodification of this Agreement (including the expiration hereof) shall affectthe rights of either Party to enforce any claim that matured prior to the dateof such modification.  No waiver of anyprovision hereof or default, or exercise of any election provided under thisAgreement, shall affect the right of either Party thereafter to enforce saidprovision or to exercise any right or remedy or election in the event of anyother default, whether or not similar.

 

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**17.3        Remedies.**  The rights and remedies of each Party under this Agreement arenot exclusive but shall be in addition to all other rights and remedies towhich that Party is entitled against the other Party, subject to the provisionsof Section 16.

 

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

 

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

 

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

 

**17.7        Assignment; Subcontracts.**   Kensington shall have the right, at its sole discretion, toassign this Agreement or any of its rights hereunder to any of its Affiliatesor to a successor-in-interest to all or substantially all of its capital stock,business or assets.  Medis may notassign any of its obligations under this Agreement without the prior writtenconsent of Kensington.  Any attemptedassignment, subcontract or transfer by either Party in contravention of thisSection 14.7 shall be void and of no effect.

 

**17.8        Exhibits.** All exhibits attached to this Agreement aredeemed for all purposes to be incorporated into this Agreement as if fully setforth herein.

 

**17.9        Representation.**  Medis represents and warrants that it has not agreed to pay anycommission, gift, compensation or other payment in connection with themanufacture or sale of the Products.

 

Duly authorized representatives of theparties have executed and delivered this Agreement as of the above EffectiveDate.

 
| ACCO Brands, Inc.,           | Medis Technologies Ltd.             |
|------------------------------|-------------------------------------|
| through its                  |                                |
| Kensington Technology  Group |                                |
|                         |                                |
| By:                          | /s/ PAUL EASTHOPE                   |   | By: |  /s/ ROBERT K. LIFTON |   |
| Name: Paul Easthope          | Name: Robert K. Lifton              |
| Title:  President       | Title:   Chairman and CEO |
|                              |                                     |  |  |  |  |

 

 

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**Exhibit A**

 

**Products**

**(Section 1.6)**

 

 

 

 

Fuel Cell Power Packs

Recharge Packs

 

 

 

 

 

 

**Exhibit B**

 

**Entities Ineligible forDistribution Rights**

**(Section 2.2.1)**

 

**[Subject to a request for confidential treatment; Separatelyfiled with the Commission]**

 

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**Exhibit C**

 

**Product Criteria**

**(Section 4.1)**

 

 

Preliminary specification for Medis microfuel cell powered portable devices such as cellular phones, digital cameras andMP3 players.

 

**1.             Purpose and scope of document**:       The concept device described in thisdocument is a micro fuel cell power pack for portable electronic devices. Thisdocument calls out general, mechanical and electrical requirements and alsoprovides information on anticipated reliability, environmental and regulatorycompliance factors that will govern future commercialization of the device.

 

**2.****                                     ****Scope**

Power Pack is a system assembled of FuelCell, cartridge, and electronic device. **[Subject to a request for confidential treatment;Separately filed with the Commission]**

 

The Power Pack is designed to meet therequirement majority of cellular phones, digital cameras and MP3 players.

 

**3.             General requirements**:

 

**[Subject to a request for confidential treatment; Separatelyfiled with the Commission]**

 

**4.             Electrical requirements**:

 

**[Subject to a request for confidential treatment; Separatelyfiled with the Commission]**

 

**5.****                                     ****Mechanical requirements**:

 

**[Subject to a request for confidential treatment; Separatelyfiled with the Commission]**

 

**6.             Environmental & Full Regulatorycompliance**:

 

**[Subject to a request for confidential treatment; Separatelyfiled with the Commission]**

 

                ThePower Pack will meet the UL standards.

 

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