MEDIS TECHNOLOGIES LTD
EXH. 10.1 BUSINESS COOP & DISTRIBUTION AGMT
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<FILENAME>form8k_050506ex101.txt
<DESCRIPTION>EXH. 10.1 BUSINESS COOP & DISTRIBUTION AGMT
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                                                                    Exhibit 10.1


                              COMPANY CONFIDENTIAL


                              BUSINESS COOPERATION
                                       AND
                             DISIRIBUTION AGREEMENT

     THIS AGREEMENT (the  "Agreement")  is made and entered into as of the 1 day
of May,  2006 by and between  More Energy Ltd.,  a company  duly  organized  and
registered  under the laws of the State of Israel and having its principal place
of business  at 2 Yodfat  Street,  Global  Park,  Lod,  Israel  ("MORE")  and Oy
Hydrocell  Ltd.,  a company  duly  organized  and  registered  under the laws of
Finland and having its principal  place of business at Minkkikatu  1-3,  Finland
("Hydrocell").

                                   WITNESSETH:

WHEREAS             MORE, inter alia, has proprietary  technology in the area of
                    portable direct liquid fuel cells, including various initial
                    commercial and military applications of same; and

WHEREAS             Hydrocell,  inter alia,  has  proprietary  technology in the
                    area of hydrogen gas based alkaline fuel cells, including an
                    initial dual use commercial and military  application  which
                    provides greater than 20 Watts of energy; and

WHEREAS             The  Parties are  interested  in  investigating  further the
                    possibilities  in  pursuing  a  technological   cooperation,
                    including (1) determining  whether certain  materials and/or
                    technologies  of one party may be  advantageous to the other
                    parties  products  and  if  so  agreeing  on a  process  for
                    cooperating in those  technological areas and (2) in jointly
                    developing certain new products that incorporate substantial
                    technological elements of both Parties; and

WHEREAS             Hydrocell is interested  that MORE act as its distributor of
                    its products for military  applications  to certain  markets
                    defined herein and MORE agrees to act as such distributor,

     NOW THEREFORE, the Parties mutually agree as follows:

1.   Definitions

In this Agreement,  the following terms shall have the meaning  ascribed thereto
in this Section 1:

"Business Day"      A day which is a business day both in Israel and Finland.

"Customer"          The Departments of Defense,  Police,  Homeland Security, and
                    the  like,   whether   at

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                    the Federal,  State or local  jurisdictional  level,  of the
                    following Countries:

                    The United States, Israel, Singapore, The Republic of China,
                    Taiwan, India, Japan, and Turkey.  Additional markets may be
                    added by a written  Addendum  to this  Agreement  signed and
                    dated by both Parties.



"Hydrocell Patents" shall mean any Patents owned or controlled by Hydrocell,  or
                    Patents filed and not yet issued, and in existence as of the
                    Effective  Date,  and  Patents  issued   subsequent  to  the
                    Effective Date to Hydrocell and which Hydrocell  establishes
                    by written  record are derived  from and  contain  Hydrocell
                    Technology without MORE Technology.

"Hydrocell
Technology"         shall mean  Technology  owned or under the legal  control of
                    Hydrocell as of the  Effective  Date,  as well as Technology
                    developed by Hydrocell based on Hydrocell  Technology  after
                    the   Effective   Date  and  which  does  not  contain  MORE
                    Technology.


"Joint Technology"  shall mean  Technology  which is developed by either or both
                    Parties  under  this  Cooperation   Agreement  and  separate
                    project specific agreement,  and which contains  significant
                    elements of both Hydrocell  Technology and MORE  Technology.
                    The Parties  will  identify  Joint  Technology  in a written
                    addendum to this Agreement from time to time.


"MORE Technology"   shall mean  Technology  owned or under the legal  control of
                    MORE  as of  the  Effective  Date,  as  well  as  Technology
                    developed  by  MORE  based  on  MORE  Technology  after  the
                    Effective   Date  and  which  does  not  contain   Hydrocell
                    Technology.


"MORE Patents"      shall  mean any  Patents  owned or  controlled  by MORE,  or
                    Patents filed and not yet issued, and in existence as of the
                    Effective  Date,  and  Patents  issued   subsequent  to  the
                    Effective Date to MORE and which MORE


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                    establishes  by written  record are derived from and contain
                    MORE Technology without Hydrocell Technology.


"Patents"           shall  mean any patent  issued in any  country of the world,
                    including  continuation  in parts,  divisional  and reissues
                    thereof and shall also include any patent pending until same
                    is denied or issued.

2.   Technological Cooperation

     2.1  The Parties  respective fuel cell technologies are both alkaline based
          systems,  however in all other  respects  there are major  differences
          between  them.  First,  Hydrocell  uses gas hydrogen as its fuel while
          MORE uses a  proprietary  liquid fuel based upon  sodium  borohydride.
          Hydrocell also studies the use of ethanol,  RME,  diesel,  glucose and
          possibly  other  hydrocarbon  liquids  and gases to be used as a fuel.
          Second,  Hydrocell has developed regenerative carbon dioxide filtering
          technology,  which is used in Hydrocell's  fuel cells.  Each party has
          developed  its own unique  anode  technology  as well as its own power
          management  elements to its systems.  In addition the architecture and
          design  of the  respective  Party's  systems  are very  distinct.  The
          Parties believe however that they may each have technological value to
          contribute to the other and they have decided to investigate  areas of
          cooperation.  In the event that during their cooperation hereunder the
          Parties  create  Joint  Technology,  then each  Party  will have equal
          rights of ownership  and use of such Joint  Technology in its products
          when separately agreed for the specific project, provided however that
          the sale of such  Joint  Technology  or the  grant of the right to use
          same to a third  Party will  require  the  written  agreement  of both
          Hydrocell and MORE.

     2.2  The first area of  cooperation  to be studied will be in the use of an
          alkaline gel divider that  Hydrocell and MORE are  developing  for use
          with MORE's power pack products.  The Parties have been developing the
          gel prior to this Agreement and they intend to complete that effort in
          accordance  with the  Statement  of Work GEL  Development  ("SOW GEL")
          attached  hereto as Annex 1. The  Parties  will  enter into a separate
          supply  and  license  agreement  which  will  come  into  effect  upon
          successful completion of that development and which will provide:

          2.2.1 The supply by  Hydrocell of  quantities  of the gel in the early
               stages of the MORE  development  phase of its new products  using
               the gel. The price of the gel for the  development  phase will be
               15 US$/  100ml of gel in orders  less than 20 liters  and 10 US$/
               100ml in orders more than 20 liters.


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          2.2.2 A transfer to MORE of the production data package, including the
               sale of the  necessary  tooling to MORE by  Hydrocell,  to enable
               MORE to manufacture large quantities of the gel for its products.
               Hydrocell  will  be  paid  its  costs  in  this  transfer  phase.
               Thereafter  MORE will either purchase the gel from Hydrocell at a
               mutually agreed price or manufacture  (or have  manufactured by a
               subcontractor) the gel for its use and pay to Hydrocell a royalty
               of the lesser of 20% of the price to MORE per product for the gel
               manufactured  or 1 US cents per current  type product and up to 3
               cents per product  for larger  systems  above 20 Watt.  Hydrocell
               will be entitled to obtain a  certified  statement  of said costs
               from MORE's outside Auditors.

          2.2.3 Hydrocell  will  undertake  not to sell  the gel or  derivatives
               thereof directly or indirectly (e.g., by license or otherwise) to
               third  parties for  inclusion  in an alkaline  fuel cell  product
               which  either uses sodium  borohydride  as a fuel source or which
               provides under 30 Watts of power.

     2.3  Annual payments for R&D

          MORE shall pay  Hydrocell  annually  100,000 US$ per annum  during two
          years  after  agreement  is  signed,   200,000  US$  in  all  for  R&D
          cooperation  as  described  prior in this  clause.  Annual  payment is
          divided in four parts, 25,000 US$ each.


3.   Joint Product Development

     3.1  The Parties are interested in  investigating a joint  development of a
          new line of products  which would combine key elements of  Hydrocell's
          existing technology of tubular shaped 20 Watt modular systems with key
          elements of MORE's existing  technology of proprietary fuel as well as
          catalytic materials and electrode technology. The performance envelope
          for such new  Products  will be no less than 20 Watts and no more than
          200  Watts  and  will be for  applications  in the  area  of  military
          programs, automotive uses, and stationary power systems. Any marketing
          or sale for other applications will require the prior written approval
          of both  Parties  which  they may deny at their sole  discretion.  The
          Parties will jointly own the resulting  product and they will agree on
          the   commercialization   sharing  including  allocation  of  markets,
          cross-licensing  terms and royalty  terms.  Both  Party's  reserve the
          right to offer their own products to the above  markets in parallel to
          the  new  jointly  owned  Product.  It is the  intention  that in each
          instance  where a party  intends to offer its own  products as well it
          will first discuss the situation with the other Party without limiting
          its absolute discretion to make its own decision.

     3.2  The Parties will  finalize a Statement of Work and separate  agreement
          for this joint development as soon as practicable.  It is


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          assumed that each Party would absorb its own costs in such development
          effort and would share joint expenses  (such as testing).  The Parties
          will make efforts to find  customer  funding if possible and they will
          equitably share in any such funding.

4.   Distributorship

     4.1  Appointment.  Subject to MORE's  undertaking  according to Section 4.3
          hereinafter, Hydrocell hereby grants to MORE, and MORE hereby accepts,
          a license to distribute  Hydrocell's  products to the Customers.  Once
          MORE initiates a marketing activity to a Customer,  Hydrocell will not
          take any competitive action with such Customer.  Furthermore, prior to
          taking any marketing  action with a Customer,  Hydrocell  will consult
          with MORE.

     4.2  Exclusivity. Hydrocell shall grant to MORE and MORE hereby accepts, an
          exclusive license to distribute  Hydrocell's products to the Customers
          in Israel and US for following  years when MORE meets the annual sales
          targets as  presented  in Appendix 2. The  exclusivity  ceases if MORE
          does  not meet the  annual  sales  targets  as soon as  Hydrocell  has
          terminated  it  by  written  registered  notice,   provided  that  any
          outstanding  proposals  to  Customers  by  MORE  will  be  honored  by
          Hydrocell. The license to distributor however survives.

     4.2  Term of  Distributorship.  The term of the  distributorship  discussed
          above  shall be  three  (3)  years  from  the  Effective  Date of this
          Agreement.  The three year term shall automatically be extended for an
          additional  three  (3)  years  as to each  Customer  to whom a sale of
          Hydrocell product has been concluded within the initial term.

     4.3  MORE's Undertakings.  More undertakes, directly or through a permitted
          sub-distributor  in  accordance  with  Section 4.4 hereof,  to promote
          Hydrocell's products to the Customers. It is understood that MORE will
          initially  introduce the products to the Israeli military customer and
          thereafter  the United States  military  customer and upon  successful
          results to the other listed  Customers.  MORE will report to Hydrocell
          in writing upon any material event related to the distributorship.

     4.5  Sub-distributors.  MORE is entitled to appoint  sub-distributor/s  for
          one or more  Customers  provided  that MORE will remain  directly  and
          solely  responsible  to  Hydrocell  for  all of the  efforts  of  such
          sub-distributor/s.   Hydrocell   has   however   a  right  to   reject
          sub-distributors.


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     4.6  Hydrocell's Developments and Support. Hydrocell shall, during the Term
          of the  Distributorship,  keep MORE  currently  advised of Hydrocell's
          technological  and product  developments  based on its own  decisions.
          Hydrocell   shall  support   MORE's   marketing   presentations   with
          appropriate  technical  literature and data and, upon MORE's  request,
          assist in actual presentations in a level decided solely by Hydrocell.
          The travel costs of Hydrocell personnel in such presentations shall be
          covered by MORE.


     4.7  Pricing. The Parties agree to negotiate a reasonable price to MORE for
          the products sold by MORE to Customers.

     4.8  Warranty and  Indemnity.  Hydrocell  shall provide at least a one year
          warranty  against defects in design,  workmanship and materials to the
          Customers purchasing from MORE products hereunder. Hydrocell will also
          indemnify  MORE  against  any  damage   resulting  from  a  patent  or
          intellectual  property claim by a third party regarding the marketing,
          sale, or use of the products  hereunder,  as well as against any third
          party claim for personal or property  injury caused by the products or
          product liability claims.

5.   Proprietary Rights and Confidentiality

     5.1  Proprietary  Rights.  Hydrocell reserves all right, title and interest
          in and to all  Hydrocell  Technology,  Hydrocell  Patents,  and  trade
          secrets, trade names and trademarks relating in any way to Hydrocell's
          products and technology.  MORE reserves all right,  title and interest
          in and to all MORE Technology,  MORE Patents, and trade secrets, trade
          names  and  trademarks  relating  in any way to  MORE's  products  and
          technology.

     5.2  Confidentiality.

          5.2.1 During the term of this  Agreement  and/or the  distributorship,
               certain   information   that   is   considered   proprietary   or
               confidential  may be disclosed or exchanged  between the parties.
               The term Confidential  Information shall include MORE Technology,
               Hydrocell Technology or other information considered confidential
               or  proprietary  by  the  Party  disclosing  same  when  same  is
               disclosed  hereunder by one party to the other in accordance with
               the following procedure:

               (i)  When disclosed in writing, Confidential Information shall be
                    labeled as being confidential; and

               (ii) When disclosed  orally,  Confidential  Information  shall be
                    identified as confidential  at the time of disclosure,


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                    with  subsequent  confirmation to the other party in writing
                    within thirty (30) days after  disclosure,  identifying  the
                    date and type of information disclosed.

          5.2.2 During the term of this  Agreement  and for a period of five (5)
               years after the termination of this  Agreement,  each party shall
               hold in confidence the other's Confidential Information and shall
               not,  without  the prior  written  consent  of the  other  party,
               disclose such  information to any person except its own employees
               having a need to know, and shall not use the other's Confidential
               Information  for any  purpose  except to  exercise  its rights in
               accordance with this Agreement. These obligations shall not apply
               to any Confidential Information that:

               (i)  Is generally available to the public in printed publications
                    before its disclosure under this Agreement,

               (ii) Becomes  generally   available  to  the  public  in  printed
                    publications  without  default  by either  party  under this
                    Agreement,  or

               (iii) Is  lawfully in the  possession  of one party in written or
                    other  recorded  form before the time of  disclosure  by the
                    other party.

               Upon the request of the disclosing  party,  the other party shall
               return all copies of  Confidential  Information  and  destroy any
               other copies of same in its possession.

6.   Termination.  (A) The  provisions  of  Article  4 of this  Agreement  shall
     terminate upon the later of the end of the Term of the  Distributorship  as
     defined above or three years, unless terminated by mutual written agreement
     of the Parties prior thereto.

     (B) The balance of this Agreement shall continue in effect  notwithstanding
     the  termination  under Paragraph (A) above,  provided  however that in the
     event that one of the Parties declares  bankruptcy or is declared  bankrupt
     by a court of law,  the other  Party will be  entitled  to  terminate  this
     entire Agreement by written notice. In the case of such  termination,  each
     Party  will  have  equal  rights  in  jointly  developed   products  (under
     Paragraphs  2 and 3 above)  and be free to deal with same  without  further
     agreement  of the other  party and MORE will  continue to have the right to
     manufacture,  have manufactured and sell the Gel described in Paragraph 2.2
     subject  to  the  continuing  payment  of  the  applicable  royalty  to the
     successor  entity to Hydrocell if any and the provisions of 2.2.2 and 2.2.3
     of this Agreement shall continue to apply to both Parties .

     (C)  Notwithstanding  the  termination  or expiration of this Agreement the
     terms of Section 5 above  shall  continue on its terms to be binding on the
     Parties.   Furthermore,   any  obligations   under  any  specific  purchase
     order/agreement  or an  obligation  of  payment,  warranty  or  delivery of
     products  which came into effect prior to the  termination or expiration of
     this  Agreement  shall  continue  in  force  as if this  Agreement  did not
     terminate.


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7.   Governing Law

This  Agreement  shall be governed  under  English  Law and any dispute  will be
submitted  to the  exclusive  jurisdiction  of the  arbitration  tribunal of the
International Chamber of Commerce in Geneva.  Nothing hereinabove will prevent a
party to seek injunctive relief in any court having jurisdiction for the purpose
of stopping an  illegitimate  use of its  proprietary  information  by the other
party.

8.   Notices. The following addresses shall apply for Notice hereunder:

         Oy Hydrocell Ltd.:

         Address: Minkkikatu 1-3,

                  Jarvenpaa, Finland 04430

         Attention: Tomi Anttila, Managing Director

         Fax No.: 35892911051

         E-Mail:  tomi.anttila@hydrocell.fi

         MORE Energy Ltd.:

         Address: 2 Yodfat Street, Global Park, P.O. Box 1112,

                  Lod 71291, Israel

         Attention:Mr. Gennadi Finkelshtain and Mr. Jacob Weiss

         Fax No.: +972 - 8 - 9200024

         E-Mail:  more@medisel.co.il and jweiss@medisel.co.il


9.   Effective Date.

This  Agreement  shall enter into effect upon the later of (i)  signature by the
last party hereto to sign and (ii)  approval by the Board of Directors of MORE's
parent company, Medis Technologies Ltd. (herein the "Effective Date").


10.  Miscellaneous

     10.1 Preamble  The preamble  and annexes  attached  hereto form an integral
          part of this Agreement.

     10.2 Language. All correspondence,  information,  specifications,  reports,
          notices  and any  other  written  or oral  communication  between  the
          Parties shall be in the English language.


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     10.3 Waivers. The failure of a party to insist in any one or more instances
          upon strict  performance  of any of the terms of this  Agreement or to
          exercise  any rights  herein  conferred  shall not be  construed  as a
          waiver or  relinquishment  to any extent by said party of said party's
          right to  assert  or rely  upon any such  term or right on any  future
          occasion.

     10.4 Assignment.  This  Agreement may not, in whole or in part, be assigned
          or  otherwise  transferred  by  Hydrocell  or MORE,  without the prior
          written  consent of the other  Party and any  assignment  or  transfer
          without such consent shall be null and void.

     10.5 Entire  Agreement;  Amendments.  The  terms  and  conditions  of  this
          Agreement  constitute  the entire  agreement  between  the parties and
          shall  supersede  all  previous  communications,   representations  or
          agreements, whether oral or written, between said parties with respect
          to the subject matter hereto. No agreement or understands, either oral
          or  written,  between the parties  will be binding  upon either  party
          unless in writing, signed by a duly authorized  representative of each
          party.

     IN WITNESS  WHEREOF,  the Parties hereto have caused their  respective duly
authorized  representatives  to  execute  this  Agreement  in two (2)  duplicate
originals, of which one (1) is left with MORE and one (1) with Hydrocell, all as
of the date first hereinabove written.

       Oy Hydrocell Ltd.                                 More Energy Ltd.

By:    /s/ Tomi Anttila                           By: /s/ Gennadi Finkelshtain
       --------------------                           ------------------------
Name:  Tomi Anttila                               Name: Gennadi Finkelshtain
Title: Managing Director                          Title: General Manager

By:                                               By: /s/ Israel Fisher
       --------------------                           --------------------
Name:                                             Name: Israel Fisher
       --------------------
Title:                                            Title: CFO
       --------------------


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Appendix 2.


Minimum  sales  levels  to  apply  from  Year  beginning  2009  and to be set by
agreement by mid 2008.











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