MEDIS TECHNOLOGIES LTD
COOPERATION AGREEMENT
<DOCUMENT>
<TYPE>EX-10.7
<SEQUENCE>5
<FILENAME>0005.txt
<DESCRIPTION>COOPERATION AGREEMENT
<TEXT>


                              COOPERATION AGREEMENT

     This COOPERATION AGREEMENT (hereinafter the "Agreement") is entered into on
this 6th day of  February  2001,  by and between  Medis  Technologies,  Ltd.,  a
company located in New York, Now York, USA,  (hereinafter  "Medis"),  of the one
part,  and SAGEM SA,  Defence and  Security  Division,  a Company  existing  and
organized under the laws of France,  whose registered office is 6, avenue d'lena
75783  PARIS  Cedex  16,  France,   hereinafter   referred  to  as  "SAGEM  SA,"
(hereinafter "SAGEM SA"), of the other part.

     WHEREAS, SAGEM SA is an international  industrial company, and, inter alia,
makes various consumer  electronics,  including in particular,  cellular phones,
handheld and manportable electronic devices called hereafter "application".

     WHEREAS,  Medis'  lower  tier  subsidiary,  More  Energy  Ltd.,  of Israel,
("More")  has  developed  certain  unique   proprietary   technologies  for  the
development of fuel cells,  in particular in the area of direct liquid  methanol
fuel cells,  and Medis is interested in arranging for the  collaborating by More
with OEM companies in the  development of specific  applications  for More's DLM
fuel cell technologies;

     WHEREAS,  SAGEM SA is  interested  in a DLM fuel cell  application  for its
power pack and other potential  applications and desires to cooperate with Medis
and More in that  effort  and  Medis  agrees  to cause  More to  carry-out  such
cooperation, all on the terms hereinafter set forth.

     NOW Therefore the Parties agree as follows:

1.   BASIC NATURE OF COOPERATION

     1.1.  The Parties  agree that their  cooperation  hereunder is motivated by
their mutual  interest to realize a DLM fuel cell power pack which will serve as
a secondary power source for SAGEM SA's application,  and effort will be carried
out on a best efforts basis.  Each Party will be responsible  for all of its own
expenses connected with the implementation of this cooperation and neither Party
will have any  liability  to the other  regarding  the success of this effort or
otherwise. In addition neither Party is undertaking to work exclusively with the
other in the area of fuel cell or battery  technologies  and they both retain to
themselves the right to work alone or with others  regarding such  technologies,
provided however this in no way derogates from the Parties obligations under the
provisions of Section 4 ("Confidential Information").

     1.2. It is further  understood  that More will be  developing an individual
fuel cell  which  will then be  incorporated  in a larger  assembly  which  will
constitute a power pack secondary  power source and that this  application  will
require  a  number  of  such   individual   fuel  cells.   The  integration  and
qualification  of the power pack shall be managed by a joining team  composed by
representatives  of SAGEM  SA and More  able to take  decisions  concerning  the
contents  of the  test  plan  and the  location  where  the  test  plan  will be
performed.

     1.3. Should the development effort by More to develop a DLM fuel cell power
pack as a secondary  power source for the SAGEM SA application  be  successfully
achieved  hereunder,  the Parties may negotiate a further  agreement under which
SAGEM SA could  purchase  DLM fuel cell power  packs from More or be licensed by
More to manufacture same for the sole use with the SAGEM SA application  against
which it was  developed.  Should  either  Party  not wish to enter  into  such a
further agreement or fail to agree on the terms thereof, neither Party will have
any  liability  to the other  and their  cooperation  will end  pursuant  to the
termination provisions of this Agreement.

2.   EVALUATION OF INDIVIDUAL CELL

     The Parties will each  designate a senior  engineer as the Project  manager
for the  respective  Party and those two  individuals  will be authorized by the
Parties to make all  necessary  technical  decisions in  implementation  of this
agreement for their respective company.

     SAGEM SA shall  provide to More a test plan  concerning  the  evaluation of
state of the art individual fuel cell with the purpose to better  understand the
More current  technology and to anticipate the key issues for the integration of
such devices in a portable equipment. This test plan will be carried out by More
under the SAGEM SA supervision.
<PAGE>

3.   DESIGN OF A POWER PACK PROTOTYPE

     With  better  knowledge  of system  considerations,  outputs of ss. 2, this
phase will  address the  manufacturing  process and cost for a future power pack
dedicated to SAGEM SA application.  SAGEM SA dealing with high technologies with
a large engineering  expertise agrees to undertake some engineering work jointly
with More to design a powerpack.

     The outputs of this phase is to design a power pack prototype able to drive
an application, to be manufactured and tested in step ss. 4. For this purpose, a
technical  specification  will be raised by SAGEM SA, taking into account system
considerations and the identified physical barriers.

     It is understood  that the individual cell being part of the powerpack will
consider the last technical improvements achieved from the evaluation phase.

4.   DEVELOPMENT, MANUFACTURING & TESTING OF A POWERPACK PROTOTYPE

     More and SAGEM SA undertake the  development  of a DLM powerpack  prototype
following  a design  output  from ss. 3. The  powerpack  casing and  accessories
required for the system  operation will be  manufactured  by SAGEM SA, More will
integrate the  individual  fuel cells.  The powerpack  prototype  will be tested
first by More at More Facility  after final  assembly under a specific test plan
mutually agreed. The optimized prototype will then be tested at SAGEM SA under a
specific  mutually  agreed  test  plan.  The  purpose  of these test plans is to
understand the behavior of the powerpack connected to a representative  load, to
optimize the interface  electronic circuit and to establish the management rules
of the powerpack in the different operational scenario.

     It is understood  that the individual cell being part of the powerpack will
consider the last  technical  improvements  achieved  from the  beginning of the
evaluation phase.

     An  optimization  phase will follow this work so that a definitive  concept
could be selected for the next phase dedicated to a proven powerpack.

5.   DEVELOPMENT, MANUFACTURING AND TESTING OF A PROVEN POWERPACK

     More and SAGEM SA undertake the  development  of a DLM powerpack  following
the optimized  design output from ss. 4. The  powerpack  casing and  accessories
required for the system operation will be designed and manufactured by SAGEM SA,
More  will  integrate  the  optimized  individual  fuel  cells and will test the
complete units under mutually agreed acceptance test procedures.

     It is understood  that the individual cell being part of the powerpack will
consider the last  technical  improvements  achieved  from the  beginning of the
evaluation phase.

     Few units will be manufactured and tested in appropriate  conditions agreed
mutually  by each  party.  The  achievements  of this phase will  condition  the
introduction  of the  demonstrators  at the end user  level for  evaluation  and
promotion.

     It is  understood  by SAGEM SA that  this  effort  is to  achieve  a proven
prototype  of the DLM fuel cell  power pack as a  secondary  power  source.  The
effort  hereunder does not include  production  engineering  for such individual
fuel cell or DLM fuel cell power  pack.  A  production  engineering  effort,  if
desired by SAGEM SA, would require a separate agreement  mutually  acceptable to
the Parties.

6.   PRIMARY POWER SOURCE

     Upon  successful   fulfillment  of  the  effort  hereunder   regarding  the
Powerpack,  the Parties will define a continuing development effort between them
for a primary power source for mutually agreed SAGEM SA applications  based upon
a design and  development  effort  similar  to the one set forth  herein for the
Powerpack.

7.   SCHEDULE

     A development plan is attached to this cooperation  agreement at the end of
the document. This particular plan is dedicated to a cell phone application.
<PAGE>

8.   CONFIDENTIAL INFORMATION

     8.1. The term  "Confidential  Information"  as used in this Agreement shall
mean all trade secrets and information  which is proprietary to either Party (In
the case of More,  fuel cell  technology and in the case of SAGEM SA, cell phone
technology)  including.   but  not  limited  to,  type  design  data,  drawings,
photographs,    specifications,    models,   prototypes,   designs,   materials,
construction or assembly, computer hardware and software, technical,  commercial
and  operational   information   concerning  products,   information  concerning
manufacturing methods and techniques, quality control and test methods, cost and
pricing  data and  product  applications.  Information  disclosed  in other than
written form shall be  considered  Confidential  Information  only to the extent
that the disclosing Party summarizes the same in written form, which clearly and
conspicuously  identifies the  Confidential  Information.  Such summary shall be
transmitted  to the  receiving  Party within  thirty (30)  calendar  days of the
non-written disclosures.

     8.2.  More hereby  acknowledges  that it is not  presently in possession of
know how or technology  related to the design or manufacture of cellular  phones
and SAGEM SA hereby  acknowledges that it is not presently in possession of know
how or technology  for a DLM fuel cell.  Each Party shall hold all  Confidential
Information  disclosed to it in strict  confidence  and will not disclose or use
the Confidential Information for its benefit or the benefit of any other company
or entity  anywhere in the world or any other purpose other than for the purpose
of  carrying  out the  cooperation  as  expressly  set forth in this  Agreement.
Notwithstanding the foregoing,  each Party may disclose Confidential Information
of the other  Party if and only to the  extent  required  pursuant  to any legal
process or order issued by any court,  provided (a) prior notice is given to the
other Party before any such  disclosure is made in order to enable such Party to
seek to obtain a protective  order,  and (b) that any such disclosure  shall not
result  in  such  Confidential  Information  becoming  subject  to  any  of  the
exceptions listed in paragraph 4.3 below.

     8.3. The  restrictions on Confidential  Information  shall not apply if the
receiving Party demonstrates that the:

          8.3.1  information  was  already in the  public  domain at the time of
     disclosure; or

          8.3.2 information, which though originally confidential,  subsequently
     becomes part of the public domain through no fault of the receiving Party.

In each case, the receiving  Party shall notify the disclosing  Party in writing
of its intent to make any disclosure based on one of the above-listed exceptions
at least 30 days in advance  (including a description  of the  information to be
disclosed and the basis for the claimed exception).

     8.4. The receiving Party shall maintain all Confidential Information in the
same manner that such Party maintains its own Confidential Information, provided
that the  standard  of care  required  shall be at least a  reasonable  industry
standard.

     8.5. Any  disclosure of  Confidential  Information  shall be limited to the
receiving  Party's  employees  who  have a strict  need  for  such  Confidential
Information in performance of this  Agreement.  The receiving Party shall advise
its employees of its  obligations  pursuant to this  Agreement in regards to the
nature and treatment of Confidential Information.

     8.6. All Confidential Information disclosed by More in connection with this
Agreement and all of the resulting  know how,  technology,  data, or information
resulting  from  the  development  of the DLM fuel  cell  and/or  DLM fuel  cell
secondary power source  application  hereunder is and shall remain the exclusive
property of More. SAGEM SA acknowledges that the More fuel cell technology is of
an extremely  sensitive  proprietary nature and therefore SAGEM SA shall refrain
from  disassembling  any fuel cell delivered to SAGEM SA hereunder and shall not
make or allow any other  party to make any attempt to reverse  engineer  the DLM
fuel cell technology of More.
<PAGE>

     8.7. At any time that the disclosing  Party may request,  but no later than
seven (7) calendar days after such request, the receiving Party shall return the
Confidential  Information to the  disclosing  Party and shall certify in writing
that all copies thereof in the receiving Party's possession have been destroyed.

     8.8.  If the  disclosing  Party at any time  does not  require  performance
and/or  enforcement  of any  provision  of this  Agreement,  this  shall  not be
construed  as a waiver  of its  rights  under  this  Agreement,  nor  shall  the
disclosing  Party not taking any action  affect its rights at some later date to
enforce these rights under this  Agreement for a breach of any of the provisions
of this Agreement.

     8.9.  Each  Party  acknowledges  that a  breach  of any  provision  of this
Agreement  will  result  in  irreparable  injury  and  continuing  damage to the
disclosing  Party's for which  there will be no  adequate  remedy at law. In the
event  of any  alleged  or  anticipated  breach  by the  receiving  Party of any
provision  of  this  Agreement,  the  disclosing  Party  shall  be  entitled  to
injunctive relief,  without the necessity of proof or actual damage, and to such
other and further relief as may be proper.

     8.10.  This Section 7 shall survive any  expiration or  termination of this
Agreement.

9.   TERMINATION

     Either Party may cancel this Cooperation Agreement by giving written notice
to the other Party hereto. Upon such cancellation, each Party will return and/or
destroy any  Confidential  Information  of the other Party in its possession and
other  than the  provisions  of  Section 4 above,  neither  Party  will have any
further obligation or liability vis-a-vis the other Party hereunder.

10.  APPLICABLE LAW

     This Cooperation  Agreement is governed in all respects by the federal laws
of Switzerland.  All disputes arising in connection with this Agreement shall be
exclusively  and finally  settled by arbitration in accordance with the rules of
arbitration  of the  international  chamber  of  commerce  by three  arbitrators
appointed in accordance with the said rules.  The place of arbitration  shall be
Geneva,  Switzerland.  The arbitral  procedure shall be conducted in the English
language. The arbitration award shall be final and binding on the parties.

11.  ASSIGNMENT

     Neither this Cooperation  Agreement nor any activity set forth herein,  may
be delegated,  assigned,  or otherwise transferred in any manner by either Party
without the prior express written consent of the other Party hereto.

12.  NON-WAIVER

     Any  failure  by either  Party to  enforce  any of the  provisions  of this
Cooperation  Agreement  or to require at any time the  performance  by the other
Party of any of the  provisions  hereof,  shall in no way affect the validity of
this  Cooperation  Agreement  or any part  hereof,  or the right of either Party
thereafter to enforce each and every such provision.

13.  NOTICES

     All notices and other communications required or authorized hereunder shall
be given in writing by  personal  delivery,  registered  air mail or telex,  and
shall be addressed to the respective Party as follows:

         To SAGEM SA
         Attention:        Patrick CURLIER

         To More
         Attention:        Zvi REHAVI

In  connection   with  the  Cooperation   Agreement   between  Sagem  and  Medis
Technologies,  both parties agree to maintain the existence of the Agreement and
the work to performed under the Projects  thereunder in confidence and shall not
disclose  same  by way of  any  public  announcements  and/or  other  publicity,
including without limitation at conferences,  congresses etc., without the other
Parties'  prior  written  consent,  which  consent  shall  not  be  unreasonably
withheld, provided that any disclosure required to be made by either Party under
law shall be made only after  consultation  with the other  Party as to the form
and content of such disclosure.
<PAGE>

     Such  notices/communications  shall  be  deemed  received  (in the  case of
personal delivery) on the date personally delivered/sent, as the case may be, or
(in the case of registered airmail  communications) within fourteen (14) days of
mailing.

14.  ENTIRE AGREEMENT

     This  Cooperation  Agreement  shall  constitute  the  entire  and  complete
agreement between the Parties regarding the subject matter hereof and supersedes
all prior communications and/or agreements between the Parties in respect of any
of the Parties'  rights and/or  obligations set forth  hereunder.  Any additions
and/or  amendments  and/or  changes  and/or   modifications  to  the  terms  and
conditions of this Cooperation Agreement shall be in writing and shall be signed
by duly authorized representatives of both Parties.

     IN WITNESS  WHEREOF,  the Parties  hereto have signed this AGREEMENT on the
day and year first hereinabove written.

       SAGEM SA                                 MEDIS TECHNOLOGIES LTD.
By:    /s/ Jacques Paccard               By:    /s/ Robert K. Lifton
       -----------------------------            ------------------------------

Name:  Jacques Paccard                   Name:  Robert K. Lifton
       -----------------------------            ------------------------------

       Managing Director
Title: Defense and Security Division     Title: Chairman and CEO
       ------------------------------           ------------------------------



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