EXHIBIT
10.1
SETTLEMENT AGREEMENT AND
RELEASE
This Settlement
Agreement and Release (the “Agreement”) is made as of
October 8, 2009, (the “Effective Date”), by and among
Volation Capital Partners LLC (“Volation”) and Medis
Technologies Ltd. (“Medis”).
WHEREAS, on June 8, 2009, Volation and Medis
entered into a Preferred Stock Purchase Agreement (the
“Purchase Agreement”), Section 5.11 of which provides,
in pertinent part, that Medis shall not issue additional shares of
its common stock or securities convertible into Common Stock to any
person other than Volation and certain specified other persons;
and
WHEREAS, on June 22, 2009, Volation and Medis
entered into a Nondisclosure and Exclusivity Agreement (the
“Nondisclosure Agreement”), paragraph 18 of which
provides that Medis “shall not enter into the same or a
similar Transaction with a party other than [Volation] for a period
equal to the later of (a) 6 months from the date of this Agreement
or (b) 6 months from the date of the closing of a
Transaction”; and
WHEREAS, on
September 16, 2009, Medis entered into a Subscription Agreement
(the “Subscription Agreement”) with Iroquois Master
Fund Ltd. (“Iroquois”), under which, among other
things, Medis entered into a transaction with Iroquois under which
Iroquois would receive warrants (the “Warrants”) to
purchase 4,929,000 shares of Medis common stock and a Secured
Convertible Promissory Note (the “Note”) in the
principal amount of $657,200 convertible at any time at the option
of Iroquois into shares of Medis common stock; and
WHEREAS,
Volation alleges that the issuance by Medis of the Warrants and the
Note to Iroquois pursuant to the Subscription Agreement constitutes
a breach of the terms of Section 5.11 of the Purchase Agreement
(the “Purchase Agreement Claim”); and
WHEREAS, Medis
intended to issue shares to Iroquois pursuant to transactions under
Section 3(a)(10) of the Securities Act of 1933, which Volation
alleges would breach the Nondisclosure Agreement (the
“Nondisclosure Agreement Claim,” and, together with the
Purchase Agreement Claim, the “Claims”); and
WHEREAS, on
October 7, 2009, Volation commenced legal action against Medis with
respect to the Claims by filing a complaint with the Superior Court
of California, County of Los Angeles (the “Court”)
(Case Number BC423353); and
WHEREAS, the
parties desire to effect an amicable resolution of their disputes
with respect to the Claims; and
WHEREAS, Medis
desires to settle the Claims in exchange for the issuance to
Volation of shares of Medis common stock; and
WHEREAS,
Volation is willing to accept such shares in accordance with the
terms of this Agreement, subject to Court approval of the issuance
of such shares (the “Approval”) following a hearing as
required by Section 3(a)(10) of the Se
