Document:

EXHIBIT 10.1

 

 

WAIVER AND AMENDMENT NO. 5 TO LOAN AND
SECURITY AGREEMENT 

 

THIS WAIVER AND
AMENDMENT NO. 5 TO LOAN AND SECURITY AGREEMENT (this “Amendment”) dated as of February 29, 2012 (the
“Effective Date”), is by and among THERMO CREDIT, LLC, a Colorado limited liability company (together
with its successors and assigns, “Lender”), and TELETOUCH COMMUNICATIONS, INC., a Delaware
corporation (“TCI”), TELETOUCH LICENSES, INC., a Delaware corporation (“TLI”),
and PROGRESSIVE CONCEPTS, INC., a Texas corporation (“PCI”, collectively with TCI, TLI, and any
other Person identified or named from time to time as a “Debtor” under the Loan Documents, jointly and
severally “Debtors”), with respect to the Loan and Security Agreement entered into as of April 30, 2008
by the Lender and the Debtors (as the same has been amended and/or supplemented from time to time), and as the same may be further
amended, supplemented, restated, or otherwise modified from time to time (the “Agreement”). Capitalized terms used
herein and not otherwise defined herein shall have the meanings ascribed to such terms in the Agreement as amended hereby.

 

RECITALS

 

WHEREAS,
Debtor and Lender entered into the Agreement; and

 

WHEREAS, in
connection with the Agreement, Debtor executed and delivered to Lender that certain Promissory Note dated as of even date with
the Agreement, in the original principal amount of Five Million and no/100 Dollars ($5,000,000.00) which was subsequently
modified by (i) that certain Third Amendment to Loan and Security Agreement and Modification of Promissory Note dated effective
as of December 31, 2010 among the Debtors and the Lender to increase the maximum principal amount to Eighteen Million and no/100
Dollars ($18,000,000.00), and (ii) that certain Waiver and Amendment No. 4 to Loan and Security Agreement and Modification of Promissory
Note dated as of October 11, 2011 among the Debtors and the Lender to decrease the maximum principal amount to Twelve Million and
no/100 Dollars ($12,000,000.00), as amended, modified, and/or restated from time to time, the “Note”; and

 

WHEREAS, Lender
has made Loans to the Debtors pursuant to the terms of the Agreement in the aggregate principal amount of $10,391,153.25, as of
the Effective Date; and

 

WHEREAS, Debtors
have requested that Lender grant certain waivers under the Agreement, and Lender is willing to grant the waivers requested by Debtors
on the terms and conditions hereinafter set forth; and

 

WHEREAS, the
parties desire to amend the Agreement pursuant to the terms and conditions set forth herein;

 

NOW THEREFORE,
for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

 

    	 

    	 	

    
 

Section
1.     Waivers. Upon the date that this Amendment shall have been executed by each of the parties
hereto and all conditions set forth in Section 8 of this Amendment have been satisfied,
Lender agrees to grant the following waivers under the Agreement:

 

(a)     Lender
hereby waives any and all (i) Events of Default existing under the Agreement as of the Effective Date other than those arising
under Section 9 of the Agreement; and (ii) Events of Default arising under Section 9 of the Agreement (a “Financial Covenant
Default”), during period ending as of the Effective Date (collectively, the “Existing Defaults”);

 

(b)     Lender
hereby prospectively waives any Financial Covenant Defaults that may arise during the period from the Effective Date through and
including May 31, 2012, and will take no action to accelerate collection of the Note on account of a Financial Covenant Default
prior to May 31, 2012; and

 

(c)     Lender
will not take any action under Section 2(e) of the Agreement to exclude or reevaluate any Property included in the Borrowing Base
or any other action related to the Borrowing Base that would result in the Indebtedness under the Agreement being accelerated (a
“Borrowing Base Action”) prior to May 31, 2012.

 

Debtor acknowledges
and agrees that the foregoing provisions of this Section 1 relate solely to Financial Covenant Defaults through
May 31, 2012, and shall in no way be deemed or construed as a waiver by Lender of any other default or Event of Default occurring
under this Amendment, the Agreement or any other Loan Document at any time after the Effective Date. Lender expressly reserves
the full extent of its rights under this Amendment, the Agreement, the other Loan Documents, and applicable law, other than
Borrowing Base Actions, in respect of (i) any default or Event of Default other than a Financial Covenant
Default occurring after the Effective Date, and (ii) any default or Event of Default, including a Financial Covenant Default, occurring
after May 31, 2012, absent the conditions in Section 2 below being satisfied.

 

Section 2.     Conditional
Future Waiver. Lender will prospectively waive any Financial Covenant Default that may occur during the period from June
1, 2012 through August 31, 2012 and will take no action to accelerate collection of the Note on account of a Financial Covenant
Default prior to August 31, 2012, and will take no Borrowing Base Action prior to August 31, 2012 if, and only if, the Debtors
meet and satisfy in all respects the following conditions:

 

(a)     Debtors
will achieve the financial performance during their fourth quarter, ended May 31, 2012, as set forth in the financial projections
attached as Exhibit “A” to this Amendment. Debtors will provide Lender unaudited financial statements for the months
ending March 31, 2012 and April 30, 2012 and the fiscal quarter ending May 31, 2012 by the 20th day of the month following
the operating period to which they pertain. Debtors’ actual Adjusted EBITDA for the fiscal quarter ending May 31, 2012 shall
be not less than 75% of the projected Adjusted EBITDA for that same period, as set forth in Exhibit A hereto (the “EBITDA
Covenant”). Debtor shall provide Lender with draft, unaudited financial statements for the May 31, 2012 fiscal quarter no
later than June 10, 2012, and Debtors’ compliance with the EBITDA Covenant shall be tested by reference to those draft financials.
Debtors’ final unaudited financials for the fiscal quarter ending May 31, 2012 shall not differ in any material respect from
the draft financials provided to Lender; and

 

(b)     Debtors
will obtain two or more term sheets for refinancing the existing loans encumbering the Eligible Real Estate from unrelated third-party
lenders on or before April 30, 2012; and

 

(c)     Debtors
will obtain a commitment for refinancing the existing loans encumbering the Eligible Real Estate from an unrelated third-party
lender on or before May 31, 2012, which commitment will provide that a closing of the refinancing will occur within 45 days; and

 

(d)     Debtors
will close the refinancing of the existing loans encumbering the Eligible Real Estate on or before July 15, 2012 and Lender shall
have received a principal payment of not less than $1.4 million at that closing.

 

    	 

    	 	

    
 

Debtor acknowledges
and agrees that the foregoing provisions of this Section 2 relate solely to the conditional future waiver of any
Financial Covenant Default and any Borrowing Base Action as specified in Section 2 hereof and such waivers shall
be granted and will remain in effect only if Sections 2 (a), (b), (c) and (d) hereof are satisfied, and shall in
no way be deemed or construed as a waiver by Lender of any other default or Event of Default under the Agreement or any other Loan
Document occurring subsequent to the Effective Date. Lender expressly reserves the full extent of its rights under this Amendment,
the Agreement, the other Loan Documents, and applicable law, other than Borrowing Base Actions, in
respect of (i) any default or Event of Default other than a Financial Covenant Default occurring after the Effective Date; and
(ii) any Financial Covenant Default occurring after May 31, 2012, if the conditions in Section 2(a), (b), (c), or (d)
hereof are not satisfied.

 

Section 3.     Maturity
Date. Section 2(c) of the Agreement is hereby amended to provide that the Revolving Credit Maturity Date shall occur on
August 31, 2012, whereupon all Indebtedness shall be due and payable in full.

 

Section 4. Commitment Fee. Section
2(h)(vi) of the Agreement is hereby amended and restated in its entirety as follows:

 

(vi)     A
monthly commitment fee (“Commitment Fee C”) equal to .0625% of the amount set forth in clause (A) of
the first sentence of Section 2(c). Commitment Fee C will be deemed earned and be due and payable to Lender monthly beginning
February 1, 2012 and continuing on the first day of each month thereafter through the date that the outstanding Indebtedness is
paid in full by Debtor.

 

Section 5.     Payment.
As an express condition precedent to this Amendment becoming effective and enforceable against Lender, Debtor shall pay to Lender
TWO MILLION AND NO/100 DOLLARS ($2,000,000.00) in immediately available funds (the “Payment”) upon execution
of this Amendment, which payment shall be applied by Lender to the Indebtedness in the manner provided in the Agreement.

 

Section 6.     No
Further Obligation to Lend. Debtors acknowledge and agree that in consideration of, among other things, the waivers and
the conditional future waiver contained in this Amendment, Lender shall have no further obligation under Section 2(c) of the Agreement
or otherwise to lend or advance any additional funds whatsoever to the Debtors.

 

Section 7.     Representations
and Warranties. The Debtors, jointly and severally, hereby represent and warrant to the Lender that:

 

(a)     after
waiver of the Existing Defaults, no default or Event of Default has occurred and is continuing on and as of the date hereof;

 

    	 

    	 	

    
 

(b)     `the
representations and warranties of each of the Debtors contained in the Agreement and the other Loan Documents are true and correct
on and as of the date hereof as if made on and as of the date hereof, except to the extent that such representations and warranties
expressly relate to a different date; and

 

(c)     the
execution and delivery by the Debtors of this Amendment and the performance by the Debtors of all of their respective agreements
and obligations under this Amendment and the Agreement as amended hereby, and the other Loan Documents, respectively, are within
the power and authority of the Debtors and have been duly authorized by all necessary action on the part of the Debtors, and the
execution and delivery by the Debtors of this Amendment, and the performance by them of the transactions contemplated hereby, do
not and will not contravene any term or condition set forth in any agreement or instrument to which any Debtor is a party or by
which any Debtor is bound.

 

Section 8.     Effectiveness
and Conditions Precedent. This Amendment shall become effective upon the Lender’s receipt of (a) counterparts of
this Amendment executed and delivered by the Debtors; (b) evidence in form and substance satisfactory to Lender that the officer(s)
of each Debtor whose signature(s) appear below have the necessary authority to execute and deliver this Amendment on behalf of
each Debtor; and (c) the Payment.

 

Section 9.     Status
of Loan Documents; Additional Representations and Warranties.

 

(a)     This
Amendment is limited solely for the purposes and to the extent expressly set forth herein, and the terms, provisions, and conditions
of the Loan Documents, and the Liens granted under the Loan Documents, shall continue in full force and effect and are hereby ratified
and confirmed in all respects. The Debtors and Lender expressly reaffirm all of the Loan Documents and the debts and other obligations
thereunder, the Debtors and Lender agree that nothing contained herein shall operate to release any of the Debtors, the Lender,
or any other Person from liability to keep and perform the provisions, conditions, obligations, and agreements contained in the
Loan Documents, except as may be herein modified, and the Debtors and Lender hereby reaffirm that each and every provision, condition,
obligation, and agreement in such documents shall continue in full force and effect, except as may be herein modified. The validity,
priority, and perfection of all security interests and other liens granted or created by the Loan Documents are hereby acknowledged
and confirmed by the Debtors, and the Debtors agree that such documents shall continue to secure the advances and the other Indebtedness,
as the same may be amended by this Amendment, without any change, loss, or impairment of the priority of such security interests
or other liens.

 

    	 

    	 	

    
 

(b)     No
waiver of any terms or provisions of the Agreement made hereunder shall relieve the Debtors or the Lender from complying with any
other term or provision of the Agreement or any of the other Loan Documents.

 

(c)     No
action taken by the Lender or the Debtors prior to, on, or after the date hereof shall constitute a waiver of or modification of
any term or condition of any of the Loan Documents, except as specifically set forth herein, or prejudice any rights which the
Lender or the Debtors may now have as of the date hereof or may have in the future under or in connection with the Loan Documents,
including, without limitation, all rights and remedies in connection with defaults, Events of Default (other than the Existing
Defaults and Financial Covenant Defaults to the extent waived in this Amendment), and failures of conditions precedent to the making
of advances that have occurred and are continuing, all of which rights and remedies the Lender hereby expressly reserves.

 

(d)     The
Debtors, jointly and severally, hereby represent and warrant to the Lender that except as heretofore disclosed in writing by the
Debtors to the Lender or as disclosed by Debtor in any public filing with the Securities and Exchange Commission or in any press
release made publicly available by Debtor, as of the date hereof there is no pending or, to the knowledge of any Debtor, threatened
action, suit, proceeding, governmental investigation, or arbitration against or affecting any Debtor or any property of any Debtor.

 

Section
10.     Amendment Default.     Debtors acknowledge and agree that
their failure to satisfy any one or more of the conditions set forth in Sections 2(a), (b), (c) or (d) above shall
constitute an Event of Default entitling Lender to exercise all of its rights and remedies under the Agreement, the other Loan
Documents and/or applicable law without prior or further notice to the Debtors.

 

Section 11.     Miscellaneous.

 

(a)     No
Waiver, Cumulative Remedies. No failure or delay or course of dealing on the part of the Lender in exercising any right,
power, or privilege hereunder shall operate as an express or implied waiver thereof, nor shall any single or partial exercise of
any such right, power, or privilege preclude any other or further exercise thereof or the exercise of any other right, power, or
privilege hereunder. The rights, powers, and remedies herein expressly provided are cumulative and not exclusive of any rights,
powers, or remedies which the Lender would otherwise have. No notice to or demand on any Debtor in any case shall entitle any Debtor
to any other or further notice or demand in similar or other circumstances or constitute a waiver of the rights of the Lender to
any other or further action in any circumstances without notice or demand.

 

(b)     Ratification,
Etc. Except as expressly provided for herein, the Agreement, the Note, and all documents, instruments, and agreements related
thereto, including, but not limited to, the other Loan Documents, are hereby ratified and confirmed in all respects and shall continue
in full force and effect. The Agreement and this Amendment shall be read and construed as a single agreement. This Amendment shall
constitute one of the Loan Documents. All references in the Agreement, the Note, the Loan Documents, or any related agreement or
instrument to the Agreement shall hereafter refer to both the Agreement and the Note as amended hereby.

 

(c)     Expenses.
The Debtors agree to pay and reimburse the Lender for costs and expenses (including costs and expenses of legal counsel) in connection
with this Amendment not to exceed Ten-Thousand and no/100 dollars ($10,000.00), and such costs and expenses shall constitute Indebtedness
for all purposes under the Loan Documents.

 

    	 

    	 	

    
 

(d)     Bankruptcy;
Insolvency. The Debtors hereby represent and warrant that, on and as of the date hereof: no proceeding has been filed or
commenced by or against any Debtor for dissolution, termination, or liquidation; nor does there exist insolvency of any Debtor,
nor does any Debtor fail to pay its debts as they become due in the ordinary course of business; nor has a creditor’s committee
been appointed for the business of any Debtor; nor has any Debtor made an assignment for the benefit of creditors, or filed a petition
in bankruptcy or for reorganization or to effect a plan of arrangement with creditors; nor has any Debtor applied for or permitted
the appointment of a receiver or trustee for any or all of its property, assets, or rights; nor is any Debtor aware of any such
receiver or trustee being appointed for any or all of its property, assets, or rights.

 

(e)     Headings
Descriptive. The headings of the several Sections and subsections of this Amendment are inserted for convenience only and
shall not in any way affect the meaning or construction of any provision.

 

(f)     Severability.
In case any provision in or obligation under this Amendment shall be invalid, illegal, or unenforceable in any jurisdiction, the
validity, legality, and enforceability of the remaining provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby.

 

(g)     Counterparts;
Execution. This Amendment may be executed and delivered in any number of counterparts and by the different parties hereto
on separate counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute
one and the same instrument. The exchange of copies of this Amendment and of signature pages by facsimile or electronic mail transmission
shall constitute effective execution and delivery of this Amendment as to the parties and may be used in lieu of the original Amendment
for all purposes. Signatures of the parties transmitted by facsimile or electronic mail shall be deemed to be their original signatures
for all purposes.

 

(h)     Modification.
No amendment or waiver of any provision of this Amendment shall be effective unless the same shall be in writing and signed by
the Lender and the Debtors, and then any such waiver or consent shall be effective only in the specific instance and for the specific
purpose for which given.

 

Section 11.     Governing
Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF LOUISIANA WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THAT WOULD REQUIRE THE APPLICATION OF ANY OTHER LAW.

 

[Signatures on following page]

 

    	 

    	 	

    
 

IN WITNESS WHEREOF,
the parties have caused this Amendment to be duly executed as of the date first above written.

 

	LENDER:	 	ADDRESS:
	THERMO CREDIT, LLC	 	639 Loyola Avenue, Suite 2565
	 	 	 	 
	By:	/s/ Seth Block	 	 
	Name:	Seth Block	 	 
	Title:	Executive Vice President	 	 
	DEBTOR:	 	ADDRESS
	TELETOUCH COMMUNICATIONS, INC.	 	5718 Airport Freeway
	 	 	 	 
	By:	/s/ Thomas A. Hyde, Jr.	 	 
	Name:	Thomas A. Hyde, Jr.	 	 
	Title:	President and Chief Operating Officer	 	 
	TELETOUCH LICENSES, INC.	 	5718 Airport Freeway
	 	 	 	Ft. Worth, TX 76117
	By:	/s/ Thomas A. Hyde, Jr.	 	 
	Name:	Thomas A. Hyde, Jr.	 	 
	Title:	President	 	 
	PROGRESSIVE CONCEPTS, INC.	 	5718 Airport Freeway
	 	 	 	Ft. Worth, TX 76117
	By:	/s/ Thomas A. Hyde, Jr.	 	 
	Name:	Thomas A. Hyde, Jr.	 	 
	Title:	President and Chief Executive OfficerExhibit 10.1

 

ZION OIL & GAS INC.

 

March 19, 2012

 

 

Mr. Victor G. Carrillo

Address

 

Re: Employment Agreement

 

Dear Victor:

 

We previously entered
into an Employment Agreement dated January 13, 2011 and wish to restate and amend the same in accordance with this Agreement.

 

Restatement of Original Employment Agreement.
With effect from the date first written above, the noted previous employment agreement is hereby amended and restated in its entirety
so that your continuing duties and obligations to Zion Oil & Gas Inc., a Delaware corporation (the "Company")
shall henceforth be governed by the terms contained herein (as so amended and restated, the "Letter Agreement"). You
acknowledge and agree that the Company has satisfied in full all of its obligations to you contained under the said previous employment
agreement. Following the effective date of this Agreement, you agree that the previous employment agreement as originally executed
by the parties, shall have no force or effect.

 

The terms of this Letter
Agreement are as set forth below:

 

1.Position.
Commencing October 18, 2011 you shall serve as the Company's President and Chief Operating Officer. Your responsibilities in this
position shall be determined by the Company's Board of Directors and you will report directly to the Chief Executive Officer of
the Company. You shall devote your full time, attention and ability to the business of the Company and shall well and faithfully
serve the Company and shall use your best efforts to promote the interests of the Company. You appreciate that your duties may
involve significant travel from your place of employment (both within and outside the country in which that place is located),
and you agree to travel as reasonably required in order to fulfill your duties.

 

2.Compensation
In connection with your employment, the Company will pay you the following salary and other compensation:

 

(a)Salary.
You will be paid a base salary at the annual rate of $250,000 (your "Base Salary"), payable in accordance
with the Company's standard payroll practices less applicable withholdings. The Board of Directors will review your Base Salary
annually and, in its sole discretion, consider any increases it deems warranted at that time.

 

    	1

    	 

    
 

 

In addition, upon signing of this Letter
Agreement you shall be paid a signing bonus of $25,000.

 

(b)Other Compensation.
You will be eligible to participate in the benefit plans established for Company employees who are located in Texas. The Company
will contribute $1,700 per month towards your family health, dental and vision coverage and disability and term life insurance.
The Company will also contribute $1,000 per month towards term life insurance for you personally.

 

(c)Right to
Change Plans. Nothing in this letter will be construed to limit, condition or otherwise encumber the Company's right to amend,
discontinue, substitute or maintain any employee benefits plan, program or perquisite.

 

(d)Paid
Time Off (PTO) / Paid Holidays. You shall accrue PTO at the rate of 20 days for each calendar year, prorated as applicable
for any partial calendar year and subject to the terms of the Company's vacation policy. PTO is meant to include all vacation,
personal and sick days. You shall not be entitled to any additional PTO. You shall be compensated at the usual rate of base compensation
for any PTO. You shall also be entitled to paid Company Holidays as generally given by the Company. Company Holidays are currently
defined as: New Year's Day, Memorial Day, Independence Day, Labor Day, Thanksgiving Day and the day after Thanksgiving Day, Christmas
Eve and Christmas Day.

 

(e)Options.
During each year that this Letter Agreement is in effect, you shall be granted fully vested options to purchase up to 25,000
shares of common stock of the Company at a per share exercise price of $0.01(“Vested Options”). The Vested options
shall be issued at the earlier of (a) at any time in December or (b) the date of termination or expiry of this Letter Agreement;
provided that, if with respect to any year wherein you have been employed under this Letter Agreement for less than 12 months,
then you shall be issued a pro rata portion of the Vested Options based on the number of months that
this Letter Agreement was actually in effect. All Options are subject to the terms of the written stock option agreement(s)
issued by the Company.

 

(f)Motor Vehicle.
The Company shall provide you with use of an automobile and the Company shall pay for registration, reasonable gas expenses, maintenance
and insurance.

 

(g)Cell Phone.
The Company shall provide you with a cell phone and pay the service provider directly for its maintenance and reasonable use charges.

 

(h)Professional
Fees. The Company shall pay for or reimburse Employee professional license fees and taxes paid to the State Bar of Texas, Texas
Board of Professional Geoscientists, and the American Association of Petroleum Geologists, etc.

 

    	2

    	 

    
 

 

(i)Executive
Assistant. The Company agrees that the role of President and Chief Operating Officer requires a dedicated executive assistant
and will provide such person, whether full-time or part-time.

 

3.Expense
Reimbursement. You shall be entitled to reimbursement for ordinary, necessary and reasonable out-of-pocket trade or business
expenses which you incur in connection with performing your duties under this Letter Agreement. The reimbursement of all such expenses
shall be made upon presentation of evidence reasonably satisfactory to the Company of the amounts and nature of such expenses and
shall be subject to the reasonable approval of the Company's executive officers or Board of Directors. The Company will reimburse
you for up to $5,000 in relocation expenses to Dallas, Texas. The Company will authorize business class travel when flying on overseas
flights.

 

4.Additional
Agreements; Non-compete; Non-solicitation. As a Company Executive, you will be expected to abide by Company rules and regulations
including insider trading policies and underwriter lock ups, from time to time in force which are brought to your notice. You will
be specifically required to sign an acknowledgement that you have read and understand the Company rules of conduct which will be
included in a handbook which the Company will soon complete and distribute. You will be expected to sign (if you have not already
done so) and comply with the Employment, Non-competition, Confidential Information and Intellectual Property Assignment Agreement
attached as Exhibit B, which requires, among other things, the assignment of your rights to any intellectual
property made during your association with the Company, and non-disclosure of proprietary information.

 

5.Term.
Your employment with the Company will be for a period to continue until December 31, 2013 (the “Initial Term”)
and shall renew automatically for two additional one year periods unless either Party advises the other at least 30 days prior
to any renewal that this Agreement is being terminated at the end of the then current term.

 

(a)Death.
Your employment terminates on the date of your death, and the Company will pay your Base Salary to the end of the month during
which you died and other Accrued Obligations through the date of termination.

 

(b)Termination
for Cause. The Company may terminate your employment at any time for Cause. As used herein, "Cause"
is defined to mean (I) you have been convicted of, or have pleaded guilty or nolo contendere to, any felony or a crime involving
moral turpitude; (II) you have engaged in willful misconduct or materially failed or refused to perform the duties assigned to
you or have performed such duties with gross negligence or have breached any terms or conditions of your agreements with the Company,
and, following 10 days written notice of such conduct, have failed to cure it; or (III) you have committed any fraud, embezzlement,
misappropriation of funds, breach of fiduciary duty or other act of dishonesty against the Company. Upon termination for Cause,
the Company will pay you your (i) Base Salary accrued through the date of termination, (ii) accrued and unused vacation through
the date of termination, (iii) any unreimbursed business expenses incurred through the date of termination (and otherwise payable
in accordance with the Company's expense reimbursement policy), and (iv) all benefits accrued and vested through the date of termination
pursuant to the Company's employee benefit plans in which you then participate (the "Accrued Obligations")
up to the date of the notice of termination, which date shall be for all purposes of this Letter Agreement the date of termination
of your employment. The Company will not have any other compensation obligations to you.

 

    	3

    	 

    
 

 

(c)Termination
other than by Death or Cause. The Company may terminate your employment for any reason not described in Section 5(a) or (b)
above at any time by giving you written notice thereof, and the date on which you received such notice will be your date of termination.
Upon such a termination, the Company will provide you with the compensation described in Section 6.

 

(d)Voluntary Termination.
You may terminate your employment at any time for a reason, and the effective date of your termination will be the date on which
such notice is received by the Company. The Company will pay you your Accrued Obligations through the date of termination. The
Company will have no other obligations to you.

 

6.Severance
Compensation. Notwithstanding the above, if you are terminated anytime by the Company without Cause, the Company will provide
you the following compensation:

 

(a)The Company will
pay you (i) your Accrued Obligations through the date of termination, and (ii) your continued Base Salary for a period
of three months following the date of termination if during the Initial Term and six months Base Salary following the date of termination
if during a renewal term.

 

(b)The provision
of the foregoing severance is conditioned upon receipt from you of a signed a general release and non-disparagement agreement (the
"Waiver and Release of Claims" in the form attached hereto as Exhibit
A) and your continued compliance with the terms of this Agreement.

 

7.Outside
Activities During Employment; No Conflicting Obligations. In addition to any obligations contained in the Employment, Non-competition,
Confidential Information and Intellectual Property Assignment Agreement attached as Exhibit B so long as you
render services to the Company, you will not assist any person or organization in competing with the Company, or in preparing to
compete with the Company. You represent and warrant to the Company that you are under no obligations or commitments, whether contractual
or otherwise, that are inconsistent with this obligation under this Letter Agreement. You
represent and warrant that you will not use or disclose, in connection with your employment with the Company, any trade secrets
or other proprietary information or intellectual property in which you or any other person has any right, title or interest and
that your employment will not infringe or violate the rights of any other person.  You represent and warrant to the Company
that you have returned all property and confidential information belonging to any prior employer.

 

The Company acknowledges that Mr. Carrillo
currently serves on the Board of Directors of Magnum Hunter Resources Corporation and that such service in no way conflicts with
the obligations to the Company.

 

    	4

    	 

    
 

 

8.Withholding
Taxes. All forms of compensation referred to in this Letter Agreement are subject to reduction to reflect applicable withholding
and payroll taxes.

 

9.Entire
Agreement. This Letter Agreement and the agreements referred to in this Letter Agreement contain all of the terms of your
employment with the Company and supersede any prior understandings or agreements, whether oral or written, between you and the
Company.

 

10.Amendment
and Governing Law. This Letter Agreement may not be amended or modified except by an express written agreement signed by
you and a duly authorized officer of the Company. The terms of this Letter Agreement and the resolution of any disputes will be
governed in and by the laws of the State of Texas. For the purposes of all legal proceedings this Letter Agreement shall be deemed
to have been performed in the State of Texas and the courts of Dallas County shall have jurisdiction to entertain any action arising
under this Letter Agreement.

 

This Letter Agreement
shall be deemed effective when signed below.

 

 

	 	Very truly yours,
	 	 
	 	ZION OIL & GAS INC.
	 	 
	 	 
	 	By: 	/s/ Richard Rinberg
	 	 	 
	 	Name:	Richard Rinberg
	 	 	 
	 	Title:	Chief Executive Officer

 

	I have read and accept this employment offer:	 
	 	 	 	 	 
	 	 	 	 	 
	/s/ Victor G. Carrillo	 	 	 	 
	Victor G. Carrillo	 	 	 	 
	 	 	 	 	 
	Dated: March 19, 2012	 	 	 	 

 

    	5

    	 

    

 

EXHIBIT A

 

ZION
OIL & GAS Inc. 

 

Waiver and Release of Claims

 

 

I understand that
this Release Agreement (“Release”), constitutes the complete, final and exclusive embodiment of the entire agreement
between Zion Oil & Gas Inc. (the “Company”) and me with regard to the subject matter hereof. I am not relying on
any promise or representation by the Company that is not expressly stated herein.

 

In consideration of
benefits I will receive under my employment agreement with the Company, I hereby release, acquit and forever discharge the Company,
its parents and subsidiaries, and their officers, directors, agents, servants, employees, shareholders, attorneys, successors,
assigns and affiliates, of and from any and all claims, liabilities, demands, causes of action, costs, expenses, attorneys fees,
damages, indemnities and obligations of every kind and nature, in law, equity, or otherwise, known and unknown, suspected and unsuspected,
disclosed and undisclosed (other than any claim for indemnification I may have as a result of any third party action against me
based on my employment with, or service as a director of, the Company), arising out of or in any way related to agreements, events,
acts or conduct at any time prior to and including the date I execute this Release, including, but not limited to: all such claims
and demands directly or indirectly arising out of or in any way connected with my employment with the Company or the termination
of my employment, including but not limited to, claims of intentional and negligent infliction of emotional distress, any and all
tort claims for personal injury, claims or demands related to salary, bonuses, commissions, stock, stock options, or any other
equity or ownership interests in the Company, vacation pay, fringe benefits, expense reimbursements, severance pay, or any other
form of compensation; claims pursuant to any federal, state or local law or cause of action.

 

I acknowledge and understand
that certain State Civil Codes provide as follows and which may apply to me: “A general release does not extend to claims
which the creditor does not know or suspect to exist in his favor at the time of executing the release, which if known by him must
have materially affected his settlement with the debtor.” I hereby expressly waive and relinquish all rights and benefits
under that section and any law of any jurisdiction of similar effect with respect to my release of any claims I may have against
the Company, its affiliates, and the entities and persons specified above.

 

	 	 
	 	Employee
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	Date: 	 
	 	 	 

 

    	1

    	 

    

 

EXHIBIT B

 

ZION
OIL & GAS Inc. 

 

Employment, Non-Competition, Confidential
Information and Intellectual Property Assignment Agreement

 

As a condition of my
employment with Zion Oil & Gas Inc., its subsidiaries, affiliates, successors or assigns (together, the “Company”),
and in consideration of my employment with the Company and my receipt of the compensation now and hereafter paid to me by Company,
I agree to the following terms under this Employment, Confidential Information and Intellectual Property Assignment Agreement (the ”Intellectual Property Agreement”):

 

1.Employment.

 

(a) I acknowledge that this employment
relationship may be terminated at any time, with or without good cause or for any or no cause, at the option either of the Company
or myself, with or without notice.

 

(b)I agree that, during the term of
my employment with the Company, I will not engage in any other employment, occupation, consulting or other business activity related
to the business in which the Company is now involved or becomes involved during the term of my employment.

 

(c) “Competitive Business” means
any business that engages in oil and gas exploration and production in Israel or which the Company was engaged in or contemplating
engaging in when I was employed by the Company.

 

“Employment Period” means the period during which
I was employed by the Company.

 

“Termination Date” means the date that my employment
with the Company is terminated, for any reason, in accordance with the Letter Agreement.

 

“Territory” means the State of Israel and the Palestinian
territory.

 

Non-Competition. I acknowledge that
employment by the Company will give me access to the Confidential Information, and that my knowledge of the Confidential Information
will enable the me to put the Company at a significant competitive disadvantage if I am employed or engaged by or becomes involved
in a Competitive Business. Accordingly, during the Employment Period and for 1 year after the Termination Date I will not, directly
or indirectly, individually or in partnership or in conjunction with any other Person:

 

(i) be engaged, directly or indirectly,
in any manner whatsoever, including, without limitation, either individually or in partnership, jointly or in conjunction with
any other person, or as an employee, consultant, adviser, principal, agent, member or proprietor in any Competitive Business in
the Territory;

 

    	2

    	 

    
 

 

(ii) be engaged, directly or indirectly,
in any manner whatsoever, including, without limitation, either individually or in partnership, jointly or in conjunction with
any other person, or as an employee, consultant, adviser, principal, agent, member or proprietor in any Competitive Business in
the Territory in a capacity in which the loyal and complete fulfilment of my duties to that Competitive Business would (i) inherently
require that I use, copy or transfer Confidential Information, or (ii) make beneficial any use, copy or transfer of Confidential
Information; or

 

(iii) advise, invest in, lend money
to, guarantee the debts or obligations of, or otherwise have any other financial or other interest (including an interest by way
of royalty or other compensation arrangements) in or in respect of any Person which carries on a Competitive Business in the Territory.

 

The restriction in this Subsection 1(c ) will not prohibit me
from holding not more than 5% of the issued shares of a public company listed on any recognized stock exchange or traded on any
bona fide “over the counter” market anywhere in the world.

 

2.Confidential
Information.

 

(a)Company Information.
I agree at all times during the term of my employment (my ”Relationship with the Company”)
and thereafter to hold in strictest confidence, and not to use except for the benefit of the Company or to disclose to any person,
firm or corporation without written authorization of the Board of Directors of the Company, any Confidential Information of the
Company. I understand that “Confidential Information” means any Company proprietary
information, technical data, trade secrets or know-how, including, but not limited to, research, product plans, products, services,
customer lists and customers (including, but not limited to, customers and suppliers of the Company on whom I called or with whom
I became acquainted during the term of my Relationship with the Company), markets, works of original authorship, photographs, negatives,
digital images, software, computer programs, know-how, ideas, developments, inventions (whether or not patentable), processes,
formulas, technology, designs, drawings, engineering, hardware configuration information, forecasts, strategies, marketing, finances
or other business information disclosed to me by the Company either directly or indirectly in writing, orally or by drawings or
observation or inspection of parts or equipment. Notwithstanding the foregoing, I further understand that Confidential Information
will not include any information which (i) was publicly known and made generally available in the public domain prior to the
time of disclosure by the disclosing party; (ii) becomes publicly known and made generally available after disclosure by the
Company to the Second Party through no action or inaction of the Second Party; (iii) is already in the possession of the Second
Party at the time of disclosure as shown by the Second Party’s files and records prior to the time of disclosure; (iv) is
obtained by the Second Party from a third party without a breach of such third party’s obligations of confidentiality; (v) is
independently developed by the Second Party without use of or reference to the Company’s Confidential Information, as shown
by documents and other competent evidence in the Second Party’s possession; or (vi) is required by law to be disclosed by
the Second Party, provided that such party will give the Company written notice of such requirement prior to disclosing so that
the Company may seek a protective order or other appropriate relief.

 

    	3

    	 

    
 

 

(b)Other Employer Information.
I agree that I will not, during my Relationship with the Company, improperly use or disclose any proprietary information or trade
secrets of any former or concurrent employer or other person or entity and that I will not bring onto the premises of the Company
any unpublished document or proprietary information belonging to any such employer, person or entity unless consented to in writing
by such employer, person or entity.

 

(c)Third Party Information.
I recognize that the Company has received and in the future will receive from third parties their confidential or proprietary information
subject to a duty on the Company’s part to maintain the confidentiality of such information and to use it only for certain
limited purposes. I agree to hold all such confidential or proprietary information in the strictest confidence and not to disclose
it to any person, firm or corporation or to use it except as necessary in carrying out my work for the Company consistent with
the Company’s agreement with such third party.

 

(d)Return of Confidential Information.
I agree that, upon first request by the Company or on the Termination Date, I will deliver to the Company (and will not keep in
my possession, custody or control) Confidential Information including all analyses, compilations, notes, studies, memoranda or
other documents prepared by me to the extent that the same contain, reflect or derive from Confidential Information and so far
as it is practicable to do so (but, in any event, without prejudice to the obligations of confidentiality contained herein), expunge
any Confidential Information from any computer, word processor or other device in my possession or under my custody and control.

 

3.Intellectual
Property.

 

(a)Assignment of Intellectual
Property. I agree that I will promptly make full written disclosure to the Company, will hold in trust for the sole right
and benefit of the Company, and hereby assign to the Company, or its designee, all my right, title, and interest in and to any
original works of authorship, inventions, concepts, improvements or trade secrets, whether or not patentable or registrable under
copyright or similar laws, which I may solely or jointly conceive or develop or reduce to practice, or cause to be conceived or
developed or reduced to practice, during the period of time I am in the service of the Company (collectively referred to as “Intellectual Property”)
and which (i) are developed using the equipment, supplies, facilities or Confidential Information of the Company, (ii) result
from or are suggested by work performed by me for the Company, or (iii) relate to the business, or to the actual or demonstrably
anticipated research or development of the Company. The Intellectual Property will be the sole and exclusive property of the Company.
I further acknowledge that all original works of authorship which are made by me (solely or jointly with others) within the scope
of and during the period of my Relationship with the Company and which are protectable by copyright are “works made for hire,”
as that term is defined in the United States Copyright Act. To the extent any Intellectual Property is not deemed to be work for
hire, then I will and hereby do assign all my right, title and interest in such Intellectual Property to the Company, except as
provided in Section 3(e).

 

    	4

    	 

    
 

 

(b)Patent and Copyright Registrations.
I agree to assist the Company, or its designee, at the Company’s expense, in every proper way to secure the Company’s
rights in the Intellectual Property and any copyrights, patents or other intellectual property rights relating thereto in any and
all countries, including the disclosure to the Company of all pertinent information and data with respect thereto, the execution
of all applications, specifications, oaths, assignments and all other instruments which the Company shall deem necessary in order
to apply for and obtain such rights and in order to assign and convey to the Company, its successors, assigns, and nominees the
sole and exclusive rights, title and interest in and to such Intellectual Property, and any copyrights, patents or other intellectual
property rights relating thereto. I further agree that my obligation to execute or cause to be executed, when it is in my power
to do so, any such instrument or papers shall continue after the termination of this Intellectual Property Agreement. If the Company
is unable because of my mental or physical incapacity or for any other reason to secure my assistance in perfecting the rights
transferred in this Intellectual Property Agreement, then I hereby irrevocably designate and appoint the Company and its duly authorized
officers and agents as my agent and attorney in fact, to act for and in my behalf and stead to execute and file any such applications
and to do all other lawfully permitted acts to further the prosecution and issuance of letters patent or copyright registrations
thereon with the same legal force and effect as if executed by me. The designation and appointment of the Company and its duly
authorized officers and agents as my agent and attorney in fact shall be deemed to be coupled with an interest and therefore irrevocable.

 

(e)Exception to Assignments.
I understand that the provisions of this Intellectual Property Agreement requiring assignment of Intellectual Property to the Company
do not apply to any intellectual property that (i) I develop entirely on my own time; and (ii) I develop without
using Company equipment, supplies, facilities, or trade secret information; and (iii) do not result from any work performed
by me for the Company; and (iv) do not relate at the time of conception or reduction to practice to the Company’s
current or anticipated business, or to its actual or demonstrably anticipated research or development. Any such intellectual property
will be owned entirely by me, even if developed by me during the time period in which I am employed by the Company. I will advise
the Company promptly in writing of any intellectual property that I believe meet the criteria for exclusion set forth herein.

 

(f)Return of Company Documents.
I agree that, upon first request by the Company or at the time of leaving the employ of the Company, I will deliver to the Company
(and will not keep in my possession, recreate or deliver to anyone else) any and all works of original authorship, photographs,
negatives, digital images, devices, records, data, notes, reports, proposals, lists, correspondence, specifications, drawings blueprints,
sketches, materials, equipment, other documents or property, or reproductions of any aforementioned items developed by me pursuant
to my Relationship with the Company or otherwise belonging to the Company, its successors or assigns. In the event of the termination
of my Relationship with the Company, I agree to sign and deliver the “Termination Certificate” attached
hereto as Appendix A.

 

4.Notification
of New Employer. In the event that I leave the employ of the Company, I hereby grant consent to notification by the Company
to my new employer or consulting client about my rights and obligations under this Intellectual Property Agreement.

 

5.No
Solicitation of Employees. In consideration for my Relationship with the Company and other valuable consideration, receipt
of which is hereby acknowledged, I agree that during the period of my Relationship with the Company as an Executive, officer and/or
director and for a period of twelve (12) months thereafter I shall not solicit the employment of any person who shall then be employed
by the Company (as an employee or consultant) or who shall have been employed by the Company (as an employee or consultant) within
the prior twelve (12) month period, on behalf of myself or any other person, firm, corporation, association or other entity, directly
or indirectly.

 

    	5

    	 

    
 

 

6.Representations.
I represent that my performance of all the terms of this Intellectual Property Agreement will not breach any agreement to keep
in confidence proprietary information acquired by me in confidence or in trust prior to my Relationship with the Company. I have
not entered into, and I agree I will not enter into, any oral or written agreement in conflict herewith. I agree to execute any
proper oath or verify any proper document required to carry out the terms of this Intellectual Property Agreement.

 

7.Arbitration
and Equitable Relief.

 

(a)Arbitration. Except
as provided in Section (b) below, I agree that any dispute or controversy arising out of or relating to any interpretation, construction,
performance or breach of this Intellectual Property Agreement, shall be settled by arbitration to be held in Dallas, Texas, in
accordance with the rules then in effect of the American Arbitration Association, provided however, the parties will be entitled
to full and liberal evidentiary discovery in accordance with the rules governing civil litigation in courts of the same jurisdiction.
The arbitrator may grant injunctions or other relief in such dispute or controversy. The decision of the arbitrator shall be final,
conclusive and binding on the parties to the arbitration. Judgment may be entered on the arbitrator’s decision in any court
having jurisdiction. The Company will pay the costs and expenses of such arbitration, and each of us shall separately pay our counsel
fees and expenses.

 

(b)Equitable Remedies.
Each of the Company and I agree that disputes relating to or arising out of a breach of the covenants contained in this Intellectual
Property Agreement would likely require injunctive relief to maintain the status quo of the parties pending the appointment of
an arbitrator pursuant to this Intellectual Property Agreement. The parties hereto also agree that it would be impossible or inadequate
to measure and calculate the damages from any breach of the covenants contained in this Intellectual Property Agreement prior to
resolution of any dispute pursuant to arbitration. Accordingly, if either party claims that the other party has breached any covenant
of this Intellectual Property Agreement, that party will have available, in addition to any other right or remedy, the right to
obtain an injunction from a court of competent jurisdiction restraining such breach or threatened breach and/or to specific performance
of any such provision of this Intellectual Property Agreement pending resolution of the dispute through arbitration. The parties
further agree that no bond or other security shall be required in obtaining such equitable relief and hereby consents to the issuance
of such injunction and to the ordering of specific performance. However, upon appointment of an arbitrator, the arbitrator shall
review any interim, injunctive relief granted by a court of competent jurisdiction and shall have the discretion, jurisdiction,
and authority to continue, expand, or dissolve such relief pending completion of the arbitration of such dispute or controversy.
The parties agree that any orders issued by the arbitrator may be enforced by any court of competent jurisdiction if necessary
to ensure compliance by the parties.

 

    	6

    	 

    
 

 

8.General Provisions.

 

(a)Governing Law; Consent to
Personal Jurisdiction. This Intellectual Property Agreement will be governed by the laws of the State of Delaware as they
apply to contracts entered into and wholly to be performed within such State. Without derogating from the obligations to arbitrate
under Section 7 herein, I hereby expressly consent to the nonexclusive personal jurisdiction and venue of the state and federal
courts located in Dallas, Texas for any lawsuit filed there by either party arising from or relating to this Intellectual Property
Agreement.

 

(b)Entire Agreement.
This Intellectual Property Agreement sets forth the entire agreement and understanding between the Company and me relating to the
subject matter herein and merges all prior discussions between us. No modification of or amendment to this Intellectual Property
Agreement, nor any waiver of any rights under this Intellectual Property Agreement, will be effective unless in writing signed
by the party to be charged. Any subsequent change or changes in my duties, salary or compensation will not affect the validity
or scope of this Intellectual Property Agreement.

 

(c)Severability. If one
or more of the provisions in this Intellectual Property Agreement are deemed void by law, then the remaining provisions will continue
in full force and effect.

 

Successors and Assigns. This
Intellectual Property Agreement will be binding upon my heirs, executors, administrators and other legal representatives and will
be for the benefit of the Company, its successors, and its assigns.

 

IN WITNESS WHEREOF, the undersigned has executed this Employment,
Confidential Information and Intellectual Property Assignment Agreement as of January 13, 2011.

 

 

	 	 
	 	 	 
	 	 	By: VICTOR G. CARRILLO
	 	 	Address

 

 

	WITNESS	 	 	 	 
	 	 	 	 	 	 
	 	 	 	 	 	 
	By:	 	 	 	 	 
	Name:	 	 	 	 	 
	Address:	 	 	 	 	 
	 	 	 	 	 	 

 

    	7

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