EXHIBIT 10.1

RESIGNATION AND SETTLEMENT AGREEMENT

 

This RESIGNATION AND SETTLEMENT AGREEMENT is made as of the 28th day of March,
2007 (the "Effective Date"), by and between Zion Oil and Gas, Inc., a Delaware
corporation, with offices at 6510 Abrams Rd., Suite 300, Dallas, Texas 75231,
("Zion" or the "Company") and Eugene A. Soltero residing at 7127 Hillgreen
Drive, Dallas, Texas 75214 ("Soltero").

WHEREAS, Soltero currently serves as Zion's Chief Executive Officer under that
certain executive employment agreement between Zion and Soltero, entered into as
of January 1, 2004, and amended by letter agreement dated October 15, 2004,
(collectively, the "Employment Agreement") and concurrently serves as a Director
on the Board of Directors of Zion;

WHEREAS, Soltero, having served variously as CEO, COO and President over the
last six (6) years, successfully guided the Company through the originally
scheduled termination date of its IPO and an Amex listing, for which the Company
is grateful;

WHEREAS, Soltero acknowledges the long expressed intention of the Company to
progressively move the Company's operations and related functions to Israel,
which he has supported and continues to support; and

WHEREAS, as of the Effective Date, Soltero, planning to spend more time with his
family and on personal business interests, desires to resign from Soltero's
employment under the Employment Agreement and his service on the Company's Board
of Directors, and the Company is agreeable to such resignation, all on the terms
and conditions set forth herein.

NOW, THEREFORE, in consideration of the promises and covenants hereinafter set
forth, and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree as follows:

1. Resignation of Positions by Soltero. Subject to the terms and conditions set
forth herein (including, without limitation, the payment by Zion of the
Settlement Amount), by his execution of this Agreement, Soltero hereby resigns,
effective as of the Effective Date, from his positions as Zion's Chief Executive
Officer and as a director of Zion, and from any and all other offices and
committee memberships he holds or has held at the Company.

The parties acknowledge and agree that Soltero's signature to this Agreement
shall serve as adequate and complete legal notice of his resignation as a
director, officer, employee, and member of management and of the Board of
Directors of the Company as of the Effective Date.

The parties further agree that the Company's signature to this Agreement shall
serve as its acknowledgment of Soltero's resignation as of the Effective Date
from these capacities, and of its responsibility to provide timely notification
of such resignation to the Company's Board of Directors and to all authorities
to whom such resignation must be reported by law. Soltero agrees to execute any
reasonably necessary document to facilitate and effect any notification of his
resignation of positions with the Company.

2. Company Property. Except as otherwise provided herein, upon or immediately
prior to his signature hereto, Soltero shall return to the Company all Company
property then in Soltero's possession, and the Company shall return to Soltero
all Soltero property then in the Company's possession.

3. Terms Relating to Resignation by Soltero. Subject to the terms and conditions
set forth herein and in consideration of the resignations, waivers, releases,
promises and covenants by Soltero contained herein, the Company agrees to pay
Soltero the sum of Four Hundred Thousand and no/100 Dollars ($400,000.00) (the
"Settlement Amount") on account of, inter alia, salary (including that deferred
by prior agreement) and all payments otherwise due or to become due and payable
under the Employment Agreement. Promptly following execution and delivery by
Soltero of this Agreement, Zion shall remit the Settlement Amount by wire
transfer to a bank account designated in writing by Soltero.

By his signature below, Soltero acknowledges and agrees that payment of the
Settlement Amount is in full satisfaction of any and all obligations and
responsibilities of the Company to him under the Employment Agreement or
otherwise, and he hereby waives, releases and relinquishes any claim or cause of
action related to any and all other payments, rights or benefits including, but
not limited to, health care coverage, insurance coverage of any kind, club dues,
professional fees and management incentive plan rights, howsoever characterized
or denominated, due or to become due under the Employment Agreement or any other
document, instrument, understanding or agreement (verbal or written) or as may
be otherwise available to him at law or in equity.

All taxes, withholdings and deductions payable or due in respect of Soltero's
receipt of the Settlement Amount, or any component thereof, will be borne solely
by Soltero. Notwithstanding the foregoing, the Company will deduct from the
Settlement Amount all amounts required to be withheld in respect of deductions
and withholdings under applicable law customarily made by Zion and/or required
by law.

Except as otherwise provided in paragraph 4 herein or required by law, the
Company and Soltero agree that upon payment of the Settlement Amount and as of
the Effective Date, the Employment Agreement and any other agreement or
understanding between them are deemed to be, and are hereby, terminated, and
neither the Company nor Soltero shall have any further obligations or
responsibilities to the other thereunder or otherwise.

4. Continuing Obligations of Soltero. Notwithstanding anything else contained
herein, and for the same consideration described above, Soltero, for himself,
his heirs, personal representatives and assigns, hereby acknowledges and agrees
that the provisions of Section 7 of the Employment Agreement (Proprietary
Information) and Section 8 (Non-Competition) shall continue in full force and
effect after the Effective Date, in accordance with their terms and for the
duration specified therein. Nothing contained in this Agreement shall be
construed or interpreted as a waiver or relinquishment by the Company of any
right or remedy available under such sections and any related sections of the
Employment Agreement in the event of a breach occurring after the Effective Date
of this Agreement. Soltero shall cooperate with the Company to ensure an orderly
transfer of his responsibilities.

5. Releases.

5.1 In consideration of the promises, covenants and releases contained herein,
the adequacy of which is hereby acknowledged, Soltero (on his behalf and on
behalf of each of his agents, attorneys, heirs, successors, executors, personal
representatives and assigns) does hereby absolutely and unconditionally waive,
release, relinquish and forever discharge each of the Company and its respective
past, present and future officers, directors, shareholders, employees, agents,
attorneys, successors and assigns (hereinafter, the "Company Released Parties"),
from any and all claims, demands, obligations, liabilities, rights, causes of
action and damages, whether liquidated or unliquidated, absolute or contingent,
known or unknown, from the beginning of time to the Effective Date, or that
arise under the Employment Agreement or otherwise or that arise under any body
of labor, tort or contract law, or any claim for wrongful termination, or claims
with respect to any other payment required under law or by virtue of his
position as an officer, director, service provider and/or employee of Zion.
Notwithstanding the foregoing or any other provision to the contrary, (i) the
rights and obligations set forth in this Agreement shall remain in full force
and effect; (ii) no release hereunder shall be construed to release any rights
under this Agreement or any officer and director liability insurance coverage or
any errors and omissions coverage; (iii) no release hereunder shall waive any
indemnification rights applicable to Soltero as a former officer and Director of
the Company or shall be construed to waive any rights Soltero has as a
shareholder; and (iv) the foregoing release shall not be construed as a waiver
or release of claims by Soltero related to or arising from any claims or causes
of action arising at any time and from time to time from or as a result of or
arising out of any violation or breach by Zion of any law, regulation or
administrative ruling.

5.2 In consideration of the promises, covenants and releases contained herein,
the adequacy of which is hereby acknowledged, Zion (on its behalf and on behalf
of each of its respective past, present and future officers, directors,
employees, attorneys, agents, successors, executors, and assigns) and, except as
otherwise provided herein, does hereby absolutely and unconditionally waive,
release and forever discharge Soltero (and his agents, attorneys, heirs,
successors, executors, personal representatives and assigns), from any claims,
demands, obligations, liabilities, rights, causes of action and damages, whether
liquidated or unliquidated, absolute or contingent, known or unknown, from the
beginning of time to the Effective Date; provided, however, and notwithstanding
the foregoing, that the foregoing release shall not be construed as a waiver or
release of claims by Company related to or arising from: (i) Soltero's conduct,
actions or inaction after the date of this Agreement with respect to his
continuing obligations to Company under the Employment Agreement, as provided
herein, or otherwise, (ii) any obligations or undertakings of Soltero pursuant
to this Agreement; and (iii) any claims or causes of action arising at any time
and from time to time from or as a result of or arising out of any violation or
breach by Soltero of any law, regulation or administrative ruling.

6. Non-Disparagement. Soltero, on behalf of himself, his heirs, personal
representatives, assigns, agents, employees and any other party or parties
acting in concert or cooperation with him, agrees not to make disparaging or
damaging remarks concerning the Company or its respective businesses or any of
its respective employees, consultants, stockholders, directors, affiliates,
subsidiaries or representatives. The Company, on behalf of itself, its
successors, assigns, employees or any other party or parties acting in concert
or cooperation with it, agrees not to make disparaging or damaging remarks
concerning Soltero, his heirs, personal representatives, assigns, agents,
employees or any other party or parties acting in concert or cooperation with
him. Nothing contained herein, however, shall be interpreted as affecting either
of the parties' obligations to comply with the specific terms of any valid and
effective subpoena, oral questions, interrogatories, requests for information,
civil investigative demand or order issued by a court of competent jurisdiction
or by a governmental body or as otherwise required by law or regulation to which
either party is subject.

7. Press Release. On or immediately following the date of this Agreement, Zion
shall issue a press release as set forth in Exhibit I attached hereto relating
to Soltero's resignation (subject only to date changes). The Company intends to
also file with the Securities and Exchange Commission an appropriate special
report on Form 8-K substantially in the form of Exhibit II attached hereto.

8. Reliance. The parties acknowledge and agree that in the execution of this
Agreement, neither has relied upon any representation by any party or attorney,
except as expressly stated or referred to herein.

9. Headings. Section and subsection headings are not to be considered part of
this Agreement and are included solely for convenience and are not intended to
be full or accurate descriptions of the content thereof.

10. Successors and Assigns. Except as otherwise provided in or restricted by
this Agreement, all the terms and provisions of this Agreement shall be binding
upon, and shall inure to the benefit of, the parties hereto and their respective
heirs, personal representatives, successors and assigns.

11. Non-Assignment. By their respective signatures below, each of the Company
and Soltero represents and warrants that prior to the date of this Agreement, it
has not assigned or otherwise conveyed to any third party any claim against any
of, respectively, Soltero or the Company, and Soltero further agrees that he
shall not assign or transfer this Agreement without the prior written consent of
the Company.

12. Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.

13. Entire Agreement. This Agreement constitutes the entire agreement among the
parties hereto with respect to the subject matter hereof and supersedes any
prior or contemporaneous understanding or agreement or letters, written or
verbal, among the parties with respect to the subject matter hereof other than
as expressly referenced herein. No supplement, modification or waiver or
termination of this Agreement or any provision hereof shall be binding unless
executed in writing by the parties to be bound thereby.

14. Governing Law, Jurisdiction and Forum. Except as otherwise expressly
provided herein, this Agreement, its validity, construction and effect shall be
governed by and construed under the laws of the State of Texas without reference
to its conflict of laws principles. The parties hereby irrevocably consent to
the jurisdiction of the appropriate courts in the county of Dallas, Texas for
all actions, disputes, controversies, differences or questions arising out of or
relating to this Agreement. ^

15. Attorneys' fees. The prevailing party shall be entitled to the payment or
reimbursement in full of any reasonable attorneys' fees and out of pocket
expenses incurred by it in connection with any claim, defense, cause of action,
right or remedy exercised in connection with this Agreement.

16. Severability. If any provision or provisions of this Agreement shall be held
invalid, illegal or unenforceable for any reason whatsoever, the validity,
legality and enforceability of the remaining provisions of this Agreement
(including, without limitation, all portions of any paragraphs of this Agreement
containing any such provision held to be invalid, illegal or unenforceable, that
are not themselves invalid, illegal or unenforceable) shall not in any way be
affected or impaired thereby.

17. Representation. Each of Soltero and Zion acknowledges that they have had the
opportunity to consult with legal counsel respecting this Agreement. Each person
executing this Agreement on behalf of a corporation hereby represents and
warrants that he has been authorized to do so by all necessary corporate action.

IN WITNESS WHEREOF

, each of the parties has set forth its/ his signature as of the date first
written above.

Zion Oil and Gas, Inc.

Soltero:

By: /s/ John Brown

/s/ Eugene A. Soltero

John Brown, Chairman

Eugene A. Soltero