Document:

[EXHIBIT 10.2]                    Exhibit C To The Securities Purchase Agreement
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                          REGISTRATION RIGHTS AGREEMENT
                          -----------------------------

     REGISTRATION  RIGHTS  AGREEMENT  (this  "Agreement"),  dated as of April 1,
                                              ---------
2004, by and between RAPTOR NETWORKS  TECHNOLOGY,  INC., a Colorado  corporation
(the  "Company"),  and each of the entities  whose names appear on the signature
       -------
pages hereof.  Such  entities are each referred to herein as an "Investor"  and,
                                                                 --------
collectively, as the "Investors".
                      ---------

     The  Company has agreed,  on the terms and  subject to the  conditions  set
forth in the  Securities  Purchase  Agreement,  dated as of April 1,  2004  (the
"Securities  Purchase  Agreement"),  to issue  and sell to each  Investor  named
 -------------------------------
therein (i) shares (the "Shares") of the Company's common stock, par value $.001
                         ------
per share (the "Common Stock"),  (ii) a Series A Warrant in the form attached to
                ------------
the  Securities  Purchase  Agreement  as Exhibit A (a  "Series A  Warrant"  and,
                                         ---------      -----------------
collectively,  the "Series A Warrants") and (iii) a Series B Warrant in the form
                    -----------------
attached to the Securities Purchase Agreement as Exhibit B (a "Series B Warrant"
                                                 ---------     ----------------
and,  collectively,  the  "Series B  Warrants").  The Series A Warrants  and the
                           ------------------
Series B Warrants are collectively referred to herein as the "Warrants".
                                                              --------

     The shares of Common  Stock into which the  Warrants  are  exercisable  are
referred to herein as the "Warrant Shares".
                           --------------

     In order to induce  each  Investor  to enter into the  Securities  Purchase
Agreement,  the Company has agreed to provide certain  registration rights under
the  Securities  Act of 1933,  as  amended  (the  "Securities  Act"),  and under
                                                   ---------------
applicable  state  securities  laws.  Capitalized  terms  used  herein  and  not
otherwise defined shall have the respective meanings set forth in the Securities
Purchase Agreement.

     In  consideration  of each Investor  entering into the Securities  Purchase
Agreement,   and  other  good  and  valuable  consideration,   the  receipt  and
sufficiency of which are hereby acknowledged, the parties agree as follows:

     DEFINITIONS.
     -----------

     For purposes of this Agreement, the following terms shall have the meanings
specified:

          ()   "Effective  Date"  means  the  date  on  which  the  Registration
                ---------------
Statement is declared  effective by the Securities and Exchange  Commission (the
"Commission");
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          (b)  "Filing   Deadline"  means  the  thirtieth  (30th)  calendar  day
                -----------------
following the Closing Date;

          (c)  "Holder"  means any person owning or having the right to acquire,
                ------

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including  without  limitation  through  exercise of the  Warrants,  Registrable
Securities,  including  initially  each  Investor and  thereafter  any permitted
assignee thereof;

          (d)  "Outstanding  Registrable  Securities"  means,  at any time,  all
                ------------------------------------
Registrable Securities outstanding at such time.

          (e)  "Registrable  Securities" means the Shares and the Warrant Shares
                -----------------------
and any other  shares of Common Stock  issuable  pursuant to the exercise of the
Warrants (without regard to any limitation on such exercise),  and any shares of
capital  stock issued or issuable  from time to time (with any  adjustments)  in
replacement  of, in exchange  for or  otherwise  in respect of the Shares or the
Warrant Shares;  provided,  however,  that  "Registrable  Securities"  shall not
include  any such  shares  that  have  been sold  pursuant  to the  Registration
Statement or Rule 144;

          (f)  "Registration  Deadline"  means  the one  hundred  and  twentieth
                ----------------------
(120th) calendar day following the Closing Date;

          (g)  "Registration Period" has the meaning set forth in paragraph 2(b)
                -------------------
below; and

          (h)  "Registration  Statement" means the Registration  Statement to be
                -----------------------
filed hereunder relating to resales of the Registrable Securities.

     REGISTRATION.
     ------------

          ()   Registration  Statement.  On or before the Filing  Deadline,  the
               -----------------------
Company shall prepare and file with the Commission a  Registration  Statement on
Form  SB-2  as a  "shelf"  registration  statement  under  Rule  415  under  the
Securities  Act ("Rule 415") covering the resale of a number of shares of common
                  --------
stock  equal to the number of shares  required  to be  reserved  pursuant to the
Securities Purchase Agreement as of the Closing Date. The Registration Statement
shall state, to the extent  permitted by Rule 416 under the Securities Act, that
it also covers such indeterminate number of additional shares of Common Stock as
may  become  issuable  upon the  exercise  of the  Warrants  in order to prevent
dilution resulting from stock splits,  stock dividends or similar events. In the
event that the Company  becomes  eligible to use Form S-3 to register the resale
of  Registrable  Securities  by the  Holders,  the  Company  shall  use its best
efforts, as soon as practicable  following the date on which it becomes eligible
to use Form S-3 (but in no event  later than ten (10)  Business  Days after such
date),  to  convert  the  Registration  Statement  to a Form S-3,  or file a new
registration  statement on such form,  covering the greater of (i) the number of
shares of Common  Stock  covered by the  Registration  Statement  and  remaining
unsold thereunder and (ii) the number of Outstanding Registrable Securities.

          (b)  Effectiveness.  The Company  shall use its best  efforts to cause
               -------------
the Registration  Statement to become effective as soon as practicable following
the filing thereof,  but in no event later than the Registration  Deadline.  The
Company shall respond  promptly to any and all comments made by the staff of the
Commission on the  Registration  Statement,  and shall submit to the Commission,

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<PAGE>

within  one (1)  Business  Day after the  Company  learns  that no review of the
Registration  Statement  will be made by the staff of the Commission or that the
staff of the Commission has no further comments on the  Registration  Statement,
as the case may be, a  request  for  acceleration  of the  effectiveness  of the
Registration  Statement to a time and date not later than two (2) Business  Days
after the submission of such request; provided that at any time prior to the end
of  the   Registration   Deadline,   the  Company  may  delay  its  request  for
effectiveness  for a period of up to ten days if the Company is required to file
an  Exchange  Act report  within such ten (10) day period in  connection  with a
proposed merger,  reorganization or similar  transaction  involving the Company,
The Company will maintain the effectiveness of the Registration  Statement until
the earlier to occur of (i) the date on which all of the Registrable  Securities
eligible for resale  thereunder  have been  publicly sold pursuant to either the
Registration  Statement  or Rule  144 and  (ii)  the  date on  which  all of the
Registrable Securities remaining to be sold under the Registration Statement (in
the reasonable  opinion of counsel to the Holder) may be immediately sold to the
public under Rule 144(k) or any successor provision (the period beginning on the
Closing  Date and  ending on the  earlier  to occur of (i) or (ii)  above  being
referred to herein as the "Registration Period").
                           -------------------

          (c)  Registration  Default.  If (A) the Registration  Statement is not
               ---------------------
filed on or before the Filing  Deadline or declared  effective by the Commission
on or before the Registration Deadline, (B) after the Registration Statement has
been  declared  effective  by the  Commission  and  during a period  in which an
Allowed Delay (as  hereinafter  defined) is not in effect,  sales of Registrable
Securities  cannot be made by a Holder under the Registration  Statement for any
reason  not  within  the  exclusive  control  of such  Holder  (other  than such
Registrable  Securities as are then freely saleable pursuant to Rule 144(k)), or
(C) an amendment to the Registration Statement, or a new registration statement,
required to be filed  pursuant to the terms of paragraph 4(k) below is not filed
on or before the date  required  by such  paragraph,  (each of (A),  (B) and (C)
being referred to herein as a  "Registration  Default"),  the Company shall make
                                ---------------------
cash payments to each Holder equal to one percent  (1.0%) of the Purchase  Price
for the  Securities  then held by such Holder for each thirty (30) day period in
which a Registration Default occurs (prorated for any period of less than thirty
days).  Each such payment shall be made within five (5) Business Days  following
the last day of the calendar month in which a Registration  Default occurs.  Any
such payment shall be in addition to any other remedies available to each Holder
at law or in  equity,  whether  pursuant  to the terms  hereof,  the  Securities
Purchase Agreement, or otherwise.

          (d)  Allowed  Delay.  The Company may delay the disclosure of material
               --------------
non-public  information,  and  suspend  the  availability  of  the  Registration
Statement,  for no more than (i) five (5)  consecutive  Business Days (each such
five Business Day period to be separated by at least five Business Days from the
next such  period,  and such period,  together  with any other days on which the
availability of the  Registration  Statement is suspended,  not to exceed twenty
(20)  calendar  days in the  aggregate in any twelve (12) month  period) or (ii)
twenty (20)  calendar  days in any twelve (12) month  period,  in the event of a
proposed merger, reorganization or similar transaction involving the Company, as
long as its board of directors (A) has  determined,  upon the advice of counsel,
that  such  information  would  be  required  to be  disclosed  in  an  offering
registered under the Securities Act and (B) reasonably deems it in the Company's
best interests not to disclose such information  publicly (an "Allowed  Delay").
                                                               --------------

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<PAGE>

In addition, until the Company becomes eligible to file a registration statement
on Form S-3,  each time the  Company  files a  post-effective  amendment  to the
Registration Statement for the purpose of updating the Registration Statement in
connection with the public filing by the Company of any report or other document
with the Commission (such post-effective  amendment,  an "Updating  Amendment"),
                                                          -------------------
the Company may also  suspend the  availability  of the  Registration  Statement
until such  Updating  Amendment is declared  effective  and any such  suspension
shall also be deemed an Allowed Delay for all purposes  under this  Agreement as
long as such Updating Amendment is filed within five (5) Business Days following
the event or  circumstance  requiring  such  amendment and the Company  promptly
responds  to any  comments  made  thereon  by the staff of the  Commission.  The
Company  shall  promptly  (i) notify each Holder in writing of the  existence of
material  non-public  information  giving  rise to an  Allowed  Delay (but in no
event,  without  the prior  written  consent of such  Holder,  shall the Company
disclose to such Holder any material non-public  information),  (ii) advise each
Holder in writing to cease all sales under the Registration  Statement until the
termination  of the  Allowed  Delay  and (iii)  notify  each  Holder in  writing
immediately upon the termination or expiration of an Allowed Delay.

          (e)  Allocation  of  Warrant  Shares.  The  initial  number of Warrant
               -------------------------------
Shares  included in any  Registration  Statement and each increase in the number
thereof  included therein shall be allocated pro rata among the Holders based on
the aggregate number of Outstanding  Registrable  Securities held by each Holder
at  the  time  the  Registration  Statement  covering  such  initial  number  of
Registrable  Securities  or  increase  thereof  is  declared  effective  by  the
Commission  (without  regard to any  restriction  on the  ability of a Holder to
exercise  such  Holder's  Warrants as of such date).  In the event that a Holder
sells or otherwise transfers any of such Holder's Registrable  Securities,  each
transferee  shall be  allocated  the  portion  of the then  remaining  number of
Registrable  Securities included in such Registration Statement allocable to the
transferor.   Any  portion  of  the  Registrable  Securities  included  in  such
Registration Statement and allocated to a Holder or other Person which no longer
holds any Registrable  Securities shall be reallocated to the remaining  Holders
pro rata based on the number of Outstanding Registrable Securities.

          (f)  Registration of Other Securities.  During the period beginning on
               --------------------------------
the date hereof and ending sixty (60) days after the Effective Date, the Company
shall  refrain from filing any new  registration  statement  (other than (i) the
Registration Statement or (ii) a registration statement on Form S-8 with respect
to stock option  plans and  agreements  and stock plans  currently in effect and
disclosed  pursuant to the terms of the Securities  Purchase  Agreement).  In no
event  shall the  Company  include  any  securities  other than the  Registrable
Securities on the Registration  Statement or on any registration statement filed
by the Company on behalf of the Holders pursuant to the terms hereof.

     PIGGYBACK REGISTRATION.
     ----------------------

     If at any time prior to the date that is 180 days after the  expiration  of
the Registration  Period,  (i) the Company proposes to register shares of Common
Stock under the  Securities Act in connection  with the public  offering of such
shares for cash (a "Proposed  Registration") other than a registration statement
                    ----------------------
on Form S-8 or Form S-4 or any successor or other forms  promulgated for similar
purposes  and  (ii) a  Registration  Statement  covering  the sale of all of the
Registrable  Securities is not then effective and available for sales thereof by
the Holders,  the Company shall, at such time, promptly give each Holder written
notice of such Proposed  Registration.  Each Holder shall have ten (10) Business
Days from its receipt of such notice to deliver to the Company a written request

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<PAGE>

specifying the amount of Registrable Securities that such Holder intends to sell
and such Holder's intended method of distribution. Upon receipt of such request,
the Company shall use its best efforts to cause all Registrable Securities which
the Company has been requested to register to be registered under the Securities
Act to the  extent  necessary  to  permit  their  sale or other  disposition  in
accordance with the intended methods of distribution specified in the request of
such  Holder;  provided,  however,  that the  Company  shall  have the  right to
               --------   -------
postpone or  withdraw  any  registration  effected  pursuant  to this  Section 3
without obligation to the Holder. If, in connection with any underwritten public
offering for the account of the Company or for  stockholders of the Company that
have  contractual  rights to require the  Company to  register  shares of Common
Stock,  the managing  underwriter(s)  thereof  shall impose a limitation  on the
number of  shares  of Common  Stock  which  may be  included  in a  registration
statement because,  in the judgment of such  underwriter(s),  marketing or other
factors dictate such  limitation is necessary to facilitate such offering,  then
the Company  shall be obligated to include in the  registration  statement  only
such limited  portion of the  Registrable  Securities with respect to which each
Holder has requested inclusion  hereunder as such  underwriter(s)  shall permit.
Any exclusion of Registrable Securities shall be made pro rata among the Holders
seeking  to include  Registrable  Securities  in a  registration  statement,  in
proportion to the number of Registrable Securities sought to be included by such
Holders;  provided,  however, that the Company shall not exclude any Registrable
Securities unless the Company has first excluded all outstanding securities, the
holders  of which  are not  entitled  to  inclusion  of such  securities  in the
registration  statement  or are not  entitled  to pro  rata  inclusion  with the
Registrable Securities; and provided,  further, that, after giving effect to the
immediately preceding proviso, any exclusion of Registrable  Securities shall be
made pro rata with holders of other securities  having the right to include such
securities in the registration statement.

     OBLIGATIONS OF THE COMPANY.
     --------------------------

     In addition to performing  its  obligations  hereunder,  including  without
limitation  those pursuant to paragraphs  2(a),  (b) and (c) above,  the Company
shall:

          ()   prepare  and  file  with  the  Commission   such  amendments  and
supplements to the Registration  Statement and the prospectus used in connection
with  the  Registration  Statement  as may  be  necessary  to  comply  with  the
provisions  of  the  Securities  Act or to  maintain  the  effectiveness  of the
Registration  Statement during the  Registration  Period (subject to any Allowed
Delays),  or as may be reasonably  requested by a Holder in order to incorporate
information   concerning  such  Holder  or  such  Holder's  intended  method  of
distribution;

          (b)  after the Common  Stock has been  listed on the  Nasdaq  National
Market,  the Nasdaq SmallCap Market,  the New York Stock Exchange,  the American
Stock  Exchange,  or any other  market or  exchange,  secure the  listing of all
Registrable  Securities on such market of exchange, and provide each Holder with
reasonable evidence thereof;

          (c)  upon the effectiveness of the Registration Statement,  furnish to
each Holder such number of copies of the prospectus included in the Registration
Statement,   including  a  preliminary   prospectus,   in  conformity  with  the

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<PAGE>

requirements  of the Securities Act, and such other documents as such Holder may
reasonably  request in order to  facilitate  the  disposition  of such  Holder's
Registrable Securities;

          (d)  use all  commercially  reasonable  efforts to register or qualify
the  Registrable  Securities  under the  securities  or "blue  sky" laws of such
jurisdictions  within  the United  States as shall be  reasonably  requested  in
writing  from time to time by a Holder,  and do any and all other acts or things
which may be  necessary or  advisable  to enable such Holder to  consummate  the
public  sale  or  other  disposition  of  the  Registrable  Securities  in  such
jurisdictions;  provided  that the Company  shall not be required in  connection
therewith  or as a  condition  thereto to qualify  to do  business  or to file a
general consent to service of process in any such jurisdiction;

          (e)  in  the  event  of  an   underwritten   public  offering  of  the
Registrable  Securities,  enter into  (together  with all Holders  proposing  to
distribute  Registrable  Securities  through such  underwriting) and perform its
obligations  under an  underwriting  agreement,  in  usual  and  customary  form
reasonably  acceptable  to the Company,  with the managing  underwriter  of such
offering;

          (f)  notify  each  Holder  immediately  after  becoming  aware  of the
occurrence  of any event (but shall not,  without the prior  written  consent of
such  Holder,  disclose to such Holder any facts or  circumstances  constituting
material non-public information) as a result of which the prospectus included in
the Registration  Statement,  as then in effect, contains an untrue statement of
material fact or omits to state a material fact required to be stated therein or
necessary  to make  the  statements  therein  not  misleading  in  light  of the
circumstances then existing, and (except during an Allowed Delay) as promptly as
practicable  prepare,  and file with the Commission and furnish to each Holder a
reasonable  number of copies of a supplement or an amendment to such  prospectus
as may be necessary so that such prospectus does not contain an untrue statement
of material fact or omit to state a material fact required to be stated  therein
or  necessary  to make the  statements  therein not  misleading  in light of the
circumstances then existing;

          (g)  use all commercially  reasonable  efforts to prevent the issuance
of  any  stop  order  or  other  order  suspending  the   effectiveness  of  the
Registration Statement and, if such an order is issued, to obtain the withdrawal
thereof at the earliest  possible time and to notify each Holder of the issuance
of such order and the resolution thereof;

          (h)  furnish  to  each  Holder,  on the  date  that  the  Registration
Statement,  or any successor registration  statement,  becomes effective,  (x) a
letter,  dated such date, from the Company addressed to such Holder,  confirming
such effectiveness and, to the knowledge of the Company, the absence of any stop
order, and (y) in the case of an underwriting,  (A) a copy of an opinion,  dated
such date, of such outside counsel, in such form and substance as is required to
be given to the underwriters,  and (B) a copy of a letter, dated such date, from
the  Company's  independent  certified  public  accountants,  in such  form  and
substance  as is required  to be given by the  Company's  independent  certified
public accountants to such underwriters;

          (i)  provide to each Holder and its  representatives,  upon reasonable
prior notice and execution of a reasonable  non-disclosure  agreement by Holder,

                                        6
<PAGE>

the opportunity to conduct a reasonable  inquiry of the Company's  financial and
other records  during normal  business hours and make available its officers for
questions  regarding  information  which such Holder may  reasonably  request in
order to fulfill any due diligence obligation on its part;

          (j)  permit  counsel  for  each  Holder  to  review  the  Registration
Statement and all amendments and supplements  thereto,  and any comments made by
the staff of the  Commission  concerning  such  Holder  and/or the  transactions
contemplated by the Transaction  Documents and the Company's  responses thereto,
within a reasonable period of time (but in no event less than three (3) Business
Days after such Holder has received such documents)  prior to the filing thereof
with the  Commission  (or,  in the  case of  comments  made by the  staff of the
Commission,  within a reasonable period of time following the receipt thereof by
the Company); and

          (k)  in the event that,  at any time,  the number of shares  available
under the  Registration  Statement is  insufficient  to cover one hundred twenty
five  percent  125% of the number of  Outstanding  Registrable  Securities,  the
Company  shall  promptly  amend  the  Registration   Statement  or  file  a  new
registration statement, in any event as soon as practicable,  but not later than
the tenth (10th) day  following  notice from a Holder of the  occurrence of such
event, so that the Registration Statement or such new registration statement, or
both,  covers no less than one hundred  fifty  percent  (150%) of such number of
Outstanding  Registrable  Securities.  The Company shall use its best efforts to
cause such amendment  and/or new  Registration  Statement to become effective as
soon as practicable  following the filing thereof.  Any  Registration  Statement
filed pursuant to this paragraph 4(k) shall state that, to the extent  permitted
by Rule 416 under the Securities  Act, such  Registration  Statement also covers
such  indeterminate  number of  additional  shares of Common Stock as may become
issuable  upon exercise of the Warrants in order to prevent  dilution  resulting
from stock  splits,  stock  dividends or similar  events.  Unless and until such
amendment or new Registration  Statement  becomes  effective,  each Holder shall
have the rights described in Section 2(c) above.

     OBLIGATIONS OF EACH HOLDER.
     --------------------------

     In connection with the registration of Registrable Securities pursuant to a
Registration Statement, each Holder shall:

          ()   timely  furnish  to  the  Company  in  writing  such  information
regarding  itself and the intended  method of  disposition  of such  Registrable
Securities  as the  Company  shall  reasonably  request  in order to effect  the
registration thereof;

          ()   upon  receipt of any notice from the Company of the  happening of
any  event  of the  kind  described  in  paragraphs  4(f) or  4(g),  immediately
discontinue  any  sale  or  other  disposition  of such  Registrable  Securities
pursuant to such  Registration  Statement  until the filing of an  amendment  or
supplement  as  described  in  paragraph  4(f) or  withdrawal  of the stop order
referred  to in  paragraph  4(g),  and,  if such Holder has agreed in writing to
receive material, non-public information, to use commercially reasonable efforts
to maintain the confidentiality of such notice and its contents;

                                        7
<PAGE>

          ()   in the  event of an  underwritten  offering  of such  Registrable
Securities in which such Holder participates pursuant to Section 3 hereof, enter
into a customary and  reasonable  underwriting  agreement and execute such other
documents  as the Company and the  managing  underwriter  for such  offering may
reasonably request;

          ()   to the extent required by applicable law, deliver a prospectus to
the purchaser of Registrable Securities sold under the Registration Statement;

          ()   notify  the  Company  when  it has  sold  all of the  Registrable
Securities held by it; and

          (f)  notify the Company in the event that any information  supplied by
such Holder in writing for inclusion in such  Registration  Statement or related
prospectus  is untrue or omits to state a material  fact  required  to be stated
therein or necessary to make such  information  not  misleading  in light of the
circumstances  then  existing;   immediately   discontinue  any  sale  or  other
disposition  of  such  Registrable  Securities  pursuant  to  such  Registration
Statement  until the filing of an amendment or supplement to such  prospectus as
may be necessary so that such prospectus does not contain an untrue statement of
material fact or omit to state a material fact required to be stated  therein or
necessary  to make  the  statements  therein  not  misleading  in  light  of the
circumstances then existing; and use commercially  reasonable efforts to provide
the  Company  with  updates  information  as may be  appropriate  to  make  such
amendment or supplement effective for such purpose.

     INDEMNIFICATION.
     ---------------

     In the event that any Registrable Securities are included in a Registration
Statement under this Agreement:

                                        8
<PAGE>

          ()   To the extent  permitted by law, the Company shall  indemnify and
hold  harmless  each Holder,  the  officers,  directors,  employees,  agents and
representatives  of such  Holder,  and each person,  if any,  who controls  such
Holder within the meaning of the Securities  Act or the Securities  Exchange Act
of 1934, as amended (the "Exchange Act"), against any losses,  claims,  damages,
                          ------------
liabilities  or reasonable  out-of-pocket  expenses  (whether  joint or several)
(collectively,   including  legal  or  other  expenses  reasonably  incurred  in
connection with investigating or defending same, "Losses"),  insofar as any such
                                                  ------
Losses arise out of or are based upon (i) any untrue statement or alleged untrue
statement of a material fact contained in such Registration Statement, including
any  preliminary  prospectus  or  final  prospectus  contained  therein  or  any
amendments or supplements  thereto,  or (ii) the omission or alleged omission to
state  therein a material fact  required to be stated  therein,  or necessary to
make the statements therein, in light of the circumstances under which they were
made, not  misleading.  Subject to the  provisions of paragraph 6(c) below,  the
Company will reimburse such Holder, and each such officer,  director,  employee,
agent,   representative   or  controlling   person,   for  any  legal  or  other
out-of-pocket  expenses as  reasonably  incurred by any such entity or person in
connection with investigating or defending any Loss; provided, however, that the
foregoing indemnity shall not apply to amounts paid in settlement of any Loss if
such  settlement is effected  without the consent of the Company  (which consent
shall not be  unreasonably  withheld),  nor shall the  Company be  obligated  to
indemnify any person for any Loss to the extent that such Loss is (i) based upon
and is in conformity with written information furnished by such person expressly
for use in such Registration Statement or (ii) based on a failure of such person
to  deliver  or cause to be  delivered  the final  prospectus  contained  in the
Registration  Statement and made  available by the Company,  if such delivery is
required by applicable law.

          ()   To the extent  permitted by law, each Holder who is named in such
Registration  Statement  as a  selling  stockholder,  acting  severally  and not
jointly, shall indemnify and hold harmless the Company, the officers, directors,
employees,  agents and representatives of the Company,  and each person, if any,
who  controls  the  Company  within  the  meaning of the  Securities  Act or the
Exchange Act, against any Losses to the extent (and only to the extent) that any
such Losses are based upon and in conformity with written information  furnished
by such Holder expressly for use in such Registration Statement.  Subject to the
provisions  of paragraph  6(c) below,  such Holder will  reimburse  any legal or
other  expenses as  reasonably  incurred  by the  Company and any such  officer,
director, employee, agent, representative,  or controlling person, in connection
with  investigating  or defending  any such Loss;  provided,  however,  that the
                                                   --------   -------
foregoing  indemnity  shall not apply to amounts paid in  settlement of any such
Loss if such  settlement  is effected  without the consent of such Holder (which
consent shall not be unreasonably withheld); and provided,  further, that, in no
                                                 --------   -------
event shall any  indemnity  under this  subsection  6(b) exceed the net proceeds
resulting from the sale of the Registrable  Securities sold by such Holder under
such Registration Statement.

          ()   Promptly after receipt by an indemnified party under this Section
6 of  notice of the  commencement  of any  action  (including  any  governmental
action),  such  indemnified  party will, if a claim in respect  thereof is to be
made  against  any  indemnifying  party  under this  Section  6,  deliver to the
indemnifying  party  a  written  notice  of the  commencement  thereof  and  the
indemnifying  party  shall  have the right to  participate  in and to assume the

                                        9
<PAGE>

defense thereof with counsel  mutually  satisfactory  to the parties;  provided,
however,  that an  indemnified  party  shall  have the right to  retain  its own
counsel,  with the reasonably incurred fees and expenses of one such counsel for
all indemnified  parties to be paid by the indemnifying party, if representation
of such  indemnified  party by the counsel  retained by the  indemnifying  party
would be inappropriate under applicable standards of professional conduct due to
actual or potential conflicting interests between such indemnified party and any
other  party  represented  by such  counsel in such  proceeding.  The failure to
deliver written notice to the indemnifying party within a reasonable time of the
commencement  of any such action,  to the extent  prejudicial  to its ability to
defend such action,  shall relieve such  indemnifying  party of any liability to
the indemnified party under this Section 6 with respect to such action,  but the
omission so to deliver written notice to the indemnifying party will not relieve
it of any liability  that it may have to any  indemnified  party  otherwise than
under this Section 6 or with respect to any other action unless the indemnifying
party is materially prejudiced as a result of not receiving such notice.

          ()   In the event that the indemnity  provided in paragraph (a) or (b)
of this Section 6 is unavailable or insufficient to hold harmless an indemnified
party for any  reason,  the Company and each  Holder  agree,  severally  and not
jointly,  to  contribute  to the  aggregate  Losses to which the Company or such
Holder  may be subject  in such  proportion  as is  appropriate  to reflect  the
relative fault of the Company and such Holder in connection  with the statements
or omissions which resulted in such Losses;  provided,  however, that in no case
shall such Holder be  responsible  for any amount in excess of the net  proceeds
resulting  from  the sale of the  Registrable  Securities  sold by it under  the
Registration  Statement.  Relative  fault shall be  determined  by  reference to
whether any alleged untrue statement or omission relates to information provided
by the Company or by such  Holder.  The  Company  and each Holder  agree that it
would not be just and  equitable if  contribution  were  determined  by pro rata
allocation or any other method of allocation  which does not take account of the
equitable  considerations  referred to above.  Notwithstanding the provisions of
this paragraph (d), no person guilty of fraudulent misrepresentation (within the
meaning  of  Section  11(f)  of  the  Securities   Act)  shall  be  entitled  to
contribution   from  any   person   who  is  not   guilty  of  such   fraudulent
misrepresentation.  For  purposes of this  Section 6, each person who controls a
Holder within the meaning of either the  Securities  Act or the Exchange Act and
each officer,  director,  employee, agent or representative of such Holder shall
have the same  rights  to  contribution  as such  Holder,  and each  person  who
controls  the  Company  within the meaning of either the  Securities  Act or the
Exchange Act and each officer,  director,  employee,  agent or representative of
the Company shall have the same rights to contribution  as the Company,  subject
in each case to the applicable terms and conditions of this paragraph (d).

          (e)  Notwithstanding the foregoing,  to the extent that the provisions
on  indemnification  and  contribution  contained in an  underwriting  agreement
entered into in connection with an underwritten  public offering are in conflict
with the foregoing  provisions,  the  provisions in the  underwriting  agreement
shall control.

          (f)  Unless otherwise superceded by an underwriting  agreement entered
into in connection with an underwritten public offering,  the obligations of the
Company and each Holder under this  Section 6 shall  survive the exercise of the
Warrants  in  full,  the  completion  of any  offering  or sale  of  Registrable

                                       10
<PAGE>

Securities  pursuant  to a  Registration  Statement  under  this  Agreement,  or
otherwise.

     REPORTS.
     -------

     With a view to making  available  to each  Holder the  benefits of Rule 144
under the  Securities  Act ("Rule 144") and any other similar rule or regulation
                             --------
of the Commission  that may at any time permit such Holder to sell securities of
the Company to the public without registration, the Company agrees to:

          ()   make and keep public  information  available,  as those terms are
understood and defined in Rule 144;

          ()   file with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act;

          ()   furnish  to  such  Holder,  so  long  as  such  Holder  owns  any
Registrable Securities, promptly upon written request (i) a written statement by
the Company,  if true,  that it has complied with the reporting  requirements to
enable such Holder to rely on Rule 144(c),  and that it has also  complied  with
the reporting  requirements  of the Securities Act and the Exchange Act, (ii) to
the extent not publicly  available  through the Commission's  EDGAR database,  a
copy of the most recent annual or quarterly report of the Company and such other
reports and documents so filed by the Company,  and (iii) such other information
as may be reasonably  requested by such Holder in connection  with such Holder's
compliance  with any rule or  regulation  of the  Commission  which  permits the
selling of any such securities without registration; and

          (d)  not at any time disclose material non-public  information to such
Holder without first receiving such Holder's written consent to such disclosure.

     MISCELLANEOUS.
     -------------

          ()   Expenses of  Registration.  Except as  otherwise  provided in the
               -------------------------
Securities Purchase Agreement,  all reasonable expenses, other than underwriting
discounts and commissions and fees and expenses of counsel and other advisors to
each  Holder,  incurred  in  connection  with  the  registrations,   filings  or
qualifications    described   herein,   including   (without   limitation)   all
registration,  filing and qualification fees, printers' and accounting fees, the
fees  and   disbursements  of  counsel  for  the  Company,   and  the  fees  and
disbursements  incurred in connection  with the opinion and letter  described in
paragraph 4(h) hereof, shall be borne by the Company.

          ()   Amendment;  Waiver. Except as expressly provided herein,  neither
               ------------------
this Agreement nor any term hereof may be amended or waived except pursuant to a
written  instrument  executed  by  the  Company  and  the  Holders  of at  least
two-thirds  (2/3) of the  number  of  Outstanding  Registrable  Securities.  Any
amendment or waiver  effected in accordance with this paragraph shall be binding
upon each Holder, each future Holder and the Company.

                                       11
<PAGE>

          (c)  Notices.  Any notice,  demand or request required or permitted to
               -------
be given by the Company or an Investor  pursuant to the terms of this  Agreement
shall be in writing and shall be deemed delivered (i) when delivered  personally
or by verifiable facsimile  transmission,  unless such delivery is made on a day
that is not a Business  Day,  in which case such  delivery  will be deemed to be
made on the next  succeeding  Business  Day, (ii) on the next Business Day after
timely  delivery to an overnight  courier and (iii) on the Business Day actually
received if deposited in the U.S. mail  (certified or  registered  mail,  return
receipt requested, postage prepaid), addressed as follows:

          If to the Company:

          Raptor Networks Technology, Inc.
          65 Enterprise Road, Suite 420
          Aliso Viejo, CA 92656
          Attn: Tom Wittenschlaeger
          Tel:  (949) 330-6540
          Fax:  (949) 330-6579

          with a copy to:

          Eugene M. Kennedy, Esq.
          517 S.W. First Avenue
          Ft. Lauderdale, FL 33301
          Tel:  (954) 524-4155
          Fax:  (954) 524-4169

and if to a Holder,  to such  address as shall be  designated  by such Holder in
writing to the Company.

          (d)  Assignment.  Upon the  transfer  of any  Warrant  or  Registrable
               ----------
Securities by a Holder, the rights of such Holder hereunder with respect to such
securities so  transferred  shall be assigned  automatically  to the  transferee
thereof,  and such  transferee  shall  thereupon  be deemed to be a "Holder" for
purposes of this Agreement,  as long as: (i) the Company is, within a reasonable
period of time  following  such  transfer,  furnished with written notice of the
name and address of such transferee,  (ii) the transferee agrees in writing with
the Company to be bound by all of the provisions hereof, and (iii) such transfer
is made  in  accordance  with  the  applicable  requirements  of the  Securities
Purchase Agreement;  provided,  however, that the registration rights granted in
                     --------   -------
this  Agreement  shall not be  transferred to any person or entity that receives
any Warrant or  Registrable  Securities in a public  transaction  pursuant to an
effective  registration  statement  under the Securities Act or pursuant to Rule
144(k).

          (e)  Counterparts.  This  Agreement  may be executed in  counterparts,
               ------------
each of which shall be deemed an original,  and all of which  together  shall be
deemed one and the same  instrument.  This Agreement,  once executed by a party,
may be delivered to any other party hereto by facsimile transmission.

          (f)  Governing Law. This Agreement  shall be governed by and construed
               -------------
in  accordance  with the laws of the State of New York  applicable  to contracts
made and to be performed entirely within the State of New York.

                                       12
<PAGE>

          (g)  Holder of Record. A person is deemed to be a Holder whenever such
               ----------------
person owns or is deemed to own of record any Warrant or Registrable Securities.

          (h)  Entire  Agreement.   This  Agreement,   the  Securities  Purchase
               -----------------
Agreement,  the Warrants,  and the other  Transaction  Documents  constitute the
entire  agreement  among the parties  hereto with respect to the subject  matter
hereof  and  thereof.  There  are  no  restrictions,   promises,  warranties  or
undertakings, other than those set forth or referred to herein and therein. This
Agreement,  the  Securities  Purchase  Agreement,  the  Warrants,  and the other
Transaction  Documents  supersede all prior agreements and understandings  among
the parties hereto with respect to the subject matter hereof and thereof.

          (i)  Headings.  The headings in this Agreement are for  convenience of
               --------
reference only and shall not limit or otherwise affect the meaning hereof.

          (j)  Third Party  Beneficiaries.  This  Agreement  is intended for the
               --------------------------
benefit of the parties  hereto and their  respective  permitted  successors  and
assigns, and is not for the benefit of, nor may any provision hereof be enforced
by, any other person.

[Signature Pages to Follow]

                                       13
<PAGE>

     IN WITNESS WHEREOF,  the undersigned have executed this Agreement as of the
date first-above written.

RAPTOR NETWORKS TECHNOLOGY, INC.

By:
    ---------------------------
    Name:
    Title:

SATELLITE STRATEGIC FINANCE ASSOCIATES, LLC

By:
    ---------------------------
    Name:
    Title:

                                       14
<PAGE>

IN WITNESS WHEREOF,  the undersigned have executed this Agreement as of the date
first-above written.

RAPTOR NETWORKS TECHNOLOGY, INC.

By:
    ---------------------------
    Name:
    Title:

--------------------------------
        Name of Investor

By:
    ---------------------------
    Name:
    Title:

                                       15EXHIBIT 10

 

 

 

 

 

 

 

EXHIBIT 10.2

EMPLOYMENT AGREEMENTS WITH EXECUTIVE OFFICERS

 

 

	
(i)
	
Employment Agreement dated as of January 1, 2004, between Zion Oil & Gas, Inc. and John M. Brown

	
(ii)
	
Employment Agreement dated as of January 1, 2004, between Zion Oil & Gas, Inc. and Eugene A. Soltero

	
(iii)
	
Employment Agreement dated as of January 1, 2004, between Zion Oil & Gas, Inc. and Glen H. Perry

	
(iv)
	
Retention Agreement dated as of January 1, 2004, between Zion Oil & Gas, Inc. and Philip L. Mandelker

EXHIBIT 10.2 (i)

Personal Employment Agreement (John Brown)

This Personal Employment Agreement (the "Agreement") is entered into as of the 1st day of January 2004 (the "Effective Date"), by and among Zion Oil & Gas, Inc., a Delaware corporation with offices at 6510 Abrams Road, Suite 300, Dallas, Texas, (in its own name and as successor in interest of Zion Oil & Gas, Inc., a Florida Corporation, the "Company") and John M. Brown of 600 St. Emelion Ct., Irving, Texas, (the "Employee").

WHEREAS, the Company was established in April 2000 by the Employee for the purpose of engaging in oil and gas exploration and production in Israel; and

WHEREAS, since its establishment, the Employee has been serving as Chairman and Chief Executive Officer of the Company at the pleasure of the Board of Directors of the Company (the "Board") and on terms set from time to time by resolution of the Board; and

WHEREAS, the terms of retention of the Employee for the five-year period commencing on the effective date hereof were incorporated in a letter of intent dated September 2, 2003 and ratified by the Board on November 10, 2003; and

WHEREAS, the Company and Employee desire to regularize their relationship and, in that context, the Company desires to continue to engage the Employee and the Employee desires to continue to serve the Company in the capacity of Chairman and Chief Executive Officer in accordance with the terms and conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the mutual promises, covenants, conditions, representations and warranties set forth herein, and intending to be legally bound hereby, the parties agree as follows:

1.  Appointment; Extent and Nature of Duties

1.1  Appointment and Duties. The Employee shall be employed as Chairman and Chief Executive Officer of the Company. The Employee shall perform the duties, undertake the responsibilities and exercise the authority customarily performed, undertaken and exercised by persons situated in a similar capacity. The Employee shall be under the direct supervision, and comply with the directives, of the Board of the Company.

1.2  Extent of Services. The Employee shall be employed on a full-time basis and shall devote his entire business time, attention and efforts to the performance of his duties and responsibilities under this Agreement and the business and affairs of the Company. 

1.3  Charitable Trusts. The Company has initiated the establishment of two charitable trusts or equivalent not-for-profit entities, one to be established in Israel and one to be established in the United States or such other jurisdiction as may be determined by the Board (the "Charitable Trusts"), to each of which the Company intends to assign or transfer the equivalent of a 3% overriding royalty or equivalent net profits interest. The Employee shall bear direct executive responsibility for and represent the Company in all matters concerning the establishment and organization of the Charitable Trusts. In establishing the Charitable Trusts, the Company shall take all steps necessary to appoint the Employee as the Chairman of the board of trustees or board of directors or equivalent governing body as may be established to supervise the activities of the Charitable Trusts (the "Governing Bodies"). Nothing in the Agreement shall be deemed to estop the Employee from receiving compensation from either or both of the Charitable Trusts in such manner and amounts as shall be determined in accordance with the organizational documentation of each of the Charitable Trusts. The Employee's term as Chairman of the Governing Bodies shall not be coextensive with the Term of this Agreement, as defined below, and the Company shall take all steps in connection with establishing the Charitable Trusts to provide in their organizational documents that the Employee's appointment as Chairman of the Governing Bodies shall be for such 

period as he is competent, physically and mentally, to serve as Chairman, and is not guilty of willful misconduct of any nature that would disqualify him to serve in the capacity of chairman or a member of the governing body of a not-for-profit, charitable organization.

2.  Term and Termination

2.1  Term. The initial term of employment under this Agreement shall be for the period commencing on the Effective Date and ending on December 31, 2008 (the "Initial Term"). Thereafter, the term of Employee's employment under this Agreement shall automatically be extended for additional periods of one (1) year (each an "Additional Term") at the end of the Initial Term and of each Additional Term, unless either party has given notice to the other of its intention not to extend at least one hundred eighty (180) days prior to the expiration of the Initial Term or any Additional Term; provided, however, that following the Employee's having attained the age of seventy (70), the Term of this Agreement, if still in effect, shall not be automatically extended upon the expiration of the applicable Additional Term, but shall be extended for additional one year terms only upon the mutual agreement of the Company and the Employee annually no later than ninety (90) days prior to the end of the Additional Term then in effect. (The Initial Term and, if the Initial Term is extended, any and all Additional Terms, the "Term").

2.2  Termination by the Company. Notwithstanding the aforesaid, the Employee's employment may be terminated under the following circumstances:

2.2.1  For Disability. The Company may, upon ninety (90) days prior written notice, terminate Employee's employment after having established the Employee's Disability. For purposes of this Agreement, "Disability" means a physical or mental infirmity which impairs the Employee's ability to substantially perform his duties pursuant to this Agreement which infirmity continues for a period of at least 120 days in any 365 day period. Upon termination for disability, the Company shall continue to pay Employee all salary and benefits hereunder for the remainder of the Term, less any disability insurance payments received by Employee.

2.2.2.    For  Cause. The Company may terminate the Employee's employment for Cause upon written notice to the Employee in which notice the basis for termination shall be set forth. A termination for "Cause" is a termination due to a serious breach of trust, including, but not limited to, theft, embezzlement, self-dealing, prohibited disclosure to unauthorized persons or entities of confidential or propriety information of or relating to the Company or the engaging by Employee in any prohibited business competitive with the business of the Company and its subsidiaries, affiliates or associated entities. No termination for Cause shall be effective except subject to the final, non-appealable judgment of a court of competent jurisdiction to the effect that Employee has committed a serious breach of trust as aforesaid. Except if and to the extent otherwise determined by a court of competent jurisdiction, the Employee shall be entitled to the compensation and benefits provided for under this Agreement for the period prior to the termination of the Employee's employment under this section.

2.2.3  Termination Other Than For Cause. The Company may terminate the employment of the Employee other than for Cause at its discretion and at any time on ninety (90) days prior written notice.

2.3  Termination by Employee. Employee may terminate this Agreement and his employment relationship with the Company at his discretion and at any time on ninety (90) days prior written notice.

2.4  Relationship during Notice Period

2.4.1  For purposes hereof, the term "Notice Period" shall mean the period between the giving of any Notice of Termination and the effective date of such notice as provided by sections 2.2 and 2.3 above or between the date of notice of intent not to extend the Term and the date of termination of the Term as provided for in section 2.1 above.

2.4.2  During any Notice Period pursuant to section 2.2.3 above, the Employee shall continue to work and fulfill his duties, hereunder, as an Employee of the Company; provided, however, that the Company shall 

have the right in its discretion to ask the Employee to cease working at the premises of the Company or to cease to work during all or any part of the Notice Period, in which case and without derogating from the Employee's right to Compensation pursuant to sections 2.5.1 and 2.5.2 below to the extent applicable, the Company shall redeem such portion of the Notice Period for which the Company shall have waived its right to the services of the Employee (the "Waived Period") by payment to Employee of an amount equal to Employee's Salary for the Waived Period, plus such amounts to which the Company is obligated pursuant to sections 4 and 5 below.

2.4.3  In the event Employee continues to work during the Notice Period, he shall cooperate with the Company to ensure an orderly transfer of his responsibilities.

2.4.4  In the event the Employee gives notice of termination pursuant to section 2.3 above or of his intention not to extend the Term pursuant to section 2.1 above, and does not continue to work during all or any part of the Notice Period, the Employee shall forfeit his salary for said portions of the Notice Period during which he does not work. The Company shall have the right to deduct such amount from all and any monies due and owing the Employee from the Company.

2.5  Compensation in the Event of Termination

2.5.1  Termination Other Than for Cause or Disability. Without derogating from the rights of the Employee to compensation during the Notice Period as provided in section 2.4 above, the Employee shall be entitled to compensation in the event of (a) termination or of (b) failure to extend the Term of this Agreement by the Company prior to the Employee's attaining the age of seventy (70), other than for Cause or due to Disability, in an amount equal to:

(a)  all sums, including Salary pursuant to section 3 below and  Employee Benefits as provided in section 4.1 below, to which Employee would otherwise have been entitled if he had remained in the employ of the Company for the portion of the Term during which this Agreement would have remained in effect but for its termination as aforesaid, and 

(b)  an amount equal to six (6) monthly Base Salaries, as defined in section 3 below.

2.5.2  Change of Control. In the event of (a) termination or of (b) failure to extend the Term of this Agreement prior to the Employee's attaining the age of seventy (70), other than for Cause or due to Disability, within one (1) year of the completion of a Business Combination as defined in Article Tenth of the Company's Amended and Restated Certificate of Incorporation, then in addition to any rights of the Employee during the Notice Period as provided in section 2.4 and pursuant to section 2.5.1 above, the Employee shall be entitled to compensation in an amount equal to thirty six (36) monthly Base Salaries.

3.  Salary

As compensation for the Employee's services hereunder, the Company shall pay the Employee a monthly gross salary (the "Salary") of US $10,000 (US $120,000 annually) (as such may be increased from time to time by decision of the Board, the "Base Salary"), payable to Employee on the first business day of each month during the term of the Employee's engagement hereunder in arrears for the month just ended.

4.  Employee Benefits

4.1  Insurance. Commencing January 1, 2004, the Company shall purchase or participate in the purchase for the benefit of the Employee an insurance package consisting of medical insurance, life insurance and long term disability insurance of such nature and providing such coverage as the Employee may request, provided that in no event shall the cost to the Company of the premiums for such insurance exceed US $2,000 per month. Except if the Employee specifically requests otherwise, the Company may fulfill its obligations hereunder by providing insurance coverage of the Employee in any group life or group health plan maintained by the Company for its employees based in the United States.

4.2  Vacation. The Employee shall be entitled to an annual vacation of twenty three (23) working days at full pay. Vacation days may be accumulated for two (2) years, after which they must be used or redeemed; provided that accumulation of vacation days in excess of forty six  (46) days may be approved by the Board in its discretion.

4.3  Sick Pay

(a)  The Employee shall be entitled to up to thirty (30) days per year of fully paid sick leave, against a doctor's confirmation, which leave can be accumulated for a period of up to a maximum of five (5) years; provided, however, that the Employee shall not be entitled to sick leave payment to the extent already covered by any insurance component of any plan established by or for the benefit of the Employee pursuant to section 4.1 above. 

(b)  The Employee shall not for any reason or in any circumstances be entitled to redeem any accumulated but unused sick leave upon termination of his employment under this Agreement.

5.  Additional Benefits

5.1  Cellular Phone. Commencing January 1, 2004, the Company shall provide Employee with a Company cellular phone for Company business. Until such time as the Company purchases or leases cellular phones on its own account, the Company shall reimburse the Employee his expenses in maintaining and using one cellular phone (one number). 

5.2  Organizational Dues. Commencing January 1, 2004, the Company shall reimburse Employee periodic membership dues for the professional and other organizations and societies the maintenance of which is hereby acknowledged to be connected with and necessary for the proper performance of the Employee's duties under this Agreement, including: 

(a)  One businessman's luncheon club

(b)  One golf or fitness club

(c)  The Dallas International Chamber of Commerce

(d)  additional as may from time to time be approved by the Board.

 

5.3  Expenses. The Employee shall be entitled to be reimbursed for all reasonable expenses incurred by him in connection with the performance of his duties hereunder in accordance with the expense reimbursement policy adopted by the Board or with the prior approval of the Company's Management Executive Committee.

6.  Long-Term Management Incentive Plan

The Company has resolved to establish a long-term management incentive plan, which may be structured as an employee's royalty pool, to be funded by the equivalent of a 1.5% overriding royalty or equivalent net profits interest (after pay-out calculated on a well by well basis) (the "Plan"). Upon its establishment, the Employee shall be granted a 10% (ten percent) interest in Plan income attributable to wells drilled (no matter when drilled) on any oil and gas property acquired by the Company prior to the end of the Term, or earlier termination of this Agreement, subject to the terms and conditions of the Plan.  To the extent less than 100% of the interests in the Plan with respect to a single well have been awarded at the time the well is spudded, Employee shall share pro-rata with the other Plan participants in the excess unawarded amounts.

7.  Propriety Information

7.1  The Employee acknowledges and agrees that, in the course of his employment by the Company, he will have access to confidential and propriety information of the Company regarding, without limitation, the business, financial, research, exploratory, engineering, production, marketing and sales activities of the 

Company. Such information, whether documentary, written, oral or computer generated, shall be deemed to be and referred to as "Proprietary Information".

7.2  Proprietary Information shall be deemed to include any and all proprietary information disclosed by or on behalf of the Company and irrespective of form, but excluding information that: (i) was known to the Employee prior to his association with the Company and can be so proven; (ii) shall have appeared in any printed publication or patent or shall have become a part of the public knowledge except as a result of a breach of this Agreement by the Employee; (iii) shall have been received by the Employee from a third party having no obligation to the Company; (iv) reflects general skills and experience gained during the Employee's engagement by the Company; or (v) reflects information and data generally known within the industries or trades in which the Company transacts business.

7.3  The Employee agrees and declares that all Proprietary Information, patents and other rights in connection therewith shall be the sole property of the Company and its assigns. At all times, both during his engagement by the Company and for a period of five (5) years after its termination, the Employee will keep in confidence and trust all Proprietary Information, and the Employee will not use or disclose any Proprietary Information or anything relating to it without the written consent of the Company, except as may be necessary in the ordinary course of performing the Employee's duties hereunder and in the best interests of the Company.

7.4  Upon termination of his employment with the Company, the Employee will promptly deliver to the Company all documents and materials of any nature pertaining to his work with the Company, and he will not take with him any documents or materials or copies thereof containing any Proprietary Information.

7.5  The Employee recognizes that the Company received and will receive confidential or proprietary information from third parties 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. At all times, both during his employment and after its termination, the Employee undertakes to keep and hold all such information in strict confidence and trust, and he will not use or disclose any of such information without the prior written consent of the Company, except as may be necessary to perform his duties as an employee of the Company and consistent with the Company's agreement with such third party. Upon termination of his employment with the Company, Employee shall act with respect to such information as set forth in Section 7.4 mutatis mutandis.

7.6  The Employee's undertakings in this section 7 shall remain in full force and effect in accordance with their terms after termination of this Agreement or any renewal thereof.

8.  Non-Competition

8.1  The Employee agrees and undertakes that he will not, so long as he is employed by the Company and for a period of six (6)  months following termination of his employment for whatever reason, directly or indirectly, as owner, partner, joint venturer, stockholder, employee, broker, agent, principal, corporate officer, director, licensor or in any other capacity whatever engage in, become financially interested in, be employed by, or have any connection with any business or venture that is engaged in any activities competing with the Company in the field of petroleum exploration, production and marketing in Israel or any other region or territory in which the Company is conducting petroleum exploration, production or marketing activities; provided, however, that the Employee may own securities of any corporation or other entity which is engaged in such business and is publicly owned and traded but in an amount not to exceed at any one time one percent (1%) of any class of stock or securities of such entity so long as he has no active role therein as director, employee, consultant or otherwise, unless otherwise specifically approved by the Board.

8.2  The Employee agrees and undertakes that during the period of his employment and for a period of twelve (12) months following termination, he will not, directly or indirectly, including personally or in any business in which he is an officer, director or shareholder, for any purpose or in any place, employ any 

person employed by the Company or retained by the Company as a consultant on the date of such termination or during the preceding six (6) months.

8.3  If any one or more of the terms contained in this section 8 shall for any reason be held to be excessively broad with regard to time, geographic scope or activity, the term shall be construed in a manner to enable it to be enforced to the extent compatible with applicable law.

9.  Indemnification and Insurance

9.1  The Company shall indemnify the Employee against, and hold him harmless, from any and all judgments, penalties (including excise and similar taxes), fines, settlements and expenses (including attorney's fees and court costs) actually and reasonably incurred by him in connection with any action, suit or proceeding whether civil, criminal, administrative, arbitrative or investigative, any appeal in such an action, suit or proceeding whether or not by or in the right of the Company to which Employee is or may be made a party or is or shall be threatened to be made a party by reason of the fact that the Employee is an officer, employee or agent of the Company or is or was serving at the request of the Company as a director, officer, partner, venturer, proprietor, trustee, employee, agent or similar functionary of another corporation, partnership, joint venture, sole proprietorship, trust, nonprofit entity, employee benefit plan or other enterprise, to the fullest extent permitted by any applicable law, and such indemnity shall inure to the benefit of the heirs, executors and administrators of the Employee.

9.2  The right to indemnification under this section 9 shall include the Employee's right to be paid by the Company the expenses incurred in defending any such proceeding in advance of its disposition; provided, however, that, if the applicable law requires, the payment of such expenses incurred by the Employee in advance of the final disposition of a proceeding shall be made only upon delivery to the Company of an undertaking, by or on behalf of the Employee, to repay all amounts so advanced if it shall ultimately be determined that the Employee is not entitled to be indemnified under this section 9 or otherwise.

9.3  The Company shall purchase and maintain insurance coverage in an amount to be determined from time to time by the Board taking into account the nature and extent of the Company's activities and the cost of coverage, but in no event less than that maintained by the Company for any other director or executive officer of the Company, on behalf of the Employee both in his capacity as an officer, director and employee of the Company and, if he so serves at the request of the Company, as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against any legally insurable liability asserted against the Employee and incurred by the Employee in any such capacity, or arising out of the Employee's status as such.

10.  Taxes

Any and all taxes, fees and other liabilities (as may apply from time to time) in connection with the Salary (section 3 above) or with Employee Benefits (section 4 above) or with the Additional Benefits (section 5 above) or with any other payment to which the Employee is entitled under this Agreement will be borne by the Employee and, except as otherwise expressly set out in this Agreement, the Employee shall be solely liable for all such taxes, fees and other liabilities.

11.  Mutual Representations

11.1  The Employee represents and warrants to the Company that the execution and delivery of this Agreement and the fulfillment of the terms hereof (i) will not constitute a default under or conflict with any agreement or other instrument to which he is a party or by which he is bound, and (ii) do not require the consent of any person or entity.

11.2  The Company represents and warrants to the Employee that this Agreement has been duly authorized, executed and delivered by the Company and that the fulfillment of the terms hereof (i) will not 

constitute a default under or conflict with any agreement or other instrument to which it is a party or by which it is bound, and (ii) do not require the consent of any person or entity.

11.3  Each party hereto warrants and represents to the other that this Agreement constitutes the valid and binding obligation of such party enforceable against such party in accordance with its terms subject to applicable bankruptcy, insolvency, moratorium and similar laws affecting creditors' rights generally, and subject, as to enforceability, to general principles of equity (regardless if enforcement is sought in proceeding in equity or at law).

12.  Notice; Addresses

12.1  The addresses of the parties for purposes of this Agreement shall be the addresses set forth above, or any other address which shall be provided by due notice given in accordance with the provisions of section 12.2 below.

12.2  All notices in connection with this Agreement shall be sent by registered mail or delivered by hand or courier service to the addresses set forth above, and shall be deemed to have been delivered to the other party at the earlier of the following two dates: (a) if sent by registered mail or courier service, as aforesaid, three (3) business days from the date of mailing; and (b) if delivered by hand - upon actual delivery or proffer of delivery (in the event of a refusal to accept it) at the address of the addressee. Delivery by cable, telex, facsimile or other electronic communication shall be sufficient and be deemed to have occurred upon electronic confirmation of receipt, with copy sent by first class mail.

13.  Miscellaneous

13.1  Headings are included for reference purposes only and are not to be used in interpreting this Agreement.

13.2  No failure, delay or forbearance of either party in exercising any power or right hereunder shall in any way restrict or diminish such party's rights and powers under this Agreement, or operate as a waiver of any breach or nonperformance by either party of any terms or conditions hereof.

13.3  No determination of the invalidity or unenforceability of any provision of this Agreement shall affect the remaining provisions hereof unless the business purpose of this Agreement is substantially frustrated thereby.

13.4  This Agreement is personal and non-assignable by the Employee. It shall inure to the benefit of any corporation or other entity with which the Company shall merge or consolidate or to which the Company shall lease, sell or otherwise transfer all or substantially all of its assets, and may be assigned by the Company to any affiliate of the Company or to any corporation or entity with which such affiliate shall merge or consolidate or which shall lease or acquire all or substantially all of the assets of such affiliate. Any assignee must assume all the obligations of the Company hereunder, but such assignment and assumption shall not serve as a release of the Company.

13.5  This Agreement is the only agreement between the parties on the subject matter of this Agreement and supersedes and replaces all other agreements, whether written or oral, between the parties, concerning the subject matter of this Agreement, including without limitation that certain letter dated September 2, 2003 from the Company to the Employee "Re. "Executive Employment Agreement"; provided, however, that nothing herein shall be deemed to affect the rights of either of the parties hereto with respect to the services rendered by the Employee to or on behalf of the Company during any period prior to the Effective Date.

13.6    It is hereby agreed between the parties that the laws of the State of Texas shall apply to this Agreement and that the sole and exclusive place of jurisdiction in any matter arising out of or in connection with this Agreement shall be in the courts of appropriate jurisdiction in the County of Dallas, Texas.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

	
ZION OIL & GAS, INC.
	
	

	
                                                
	
	
/s/ John M. Brown                

	
By:
	
/s/ E A Soltero          
	
	
John M. Brown

	
Name:
	
Eugene Soltero        
	
	

	
Title:
	
President                  
	
	

 

EXHIBIT 10.2 (ii)

Personal Employment Agreement (Eugene Soltero)

This Personal Employment Agreement (the "Agreement") is entered into as of the 1st day of January 2004 (the "Effective Date"), by and among Zion Oil & Gas, Inc., a Delaware corporation with offices at 6510 Abrams Road, Suite 300, Dallas, Texas, U.S.A. (in its own name and as successor in interest of Zion Oil & Gas, Inc., a Florida Corporation, the "Company") and Eugene A. Soltero of 7127 Hillgreen Dr., Dallas, Texas, U.S.A. (the "Employee").

WHEREAS, the Company was established in April 2000 for the purpose of engaging in oil and gas exploration and production in Israel; and

WHEREAS, since October 2001, the Employee has been serving as President and Chief Operating Officer of the Company at the pleasure of the Board of Directors of the Company (the "Board") and on terms set from time to time by resolution of the Board; and

WHEREAS, the terms of retention of the Employee for the five-year period commencing on the effective date hereof were incorporated in a letter of intent dated September 2, 2003 and ratified by the Board on November 10, 2003; and 

WHEREAS, the Company and Employee desire to regularize their relationship and, in that context, the Company desires to continue to engage the Employee and the Employee desires to continue to serve the Company in the capacity of President, Chief Operating Officer and, on an interim basis, Chief Financial Officer in accordance with the terms and conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the mutual promises, covenants, conditions, representations and warranties set forth herein, and intending to be legally bound hereby, the parties agree as follows:

1.  Appointment; Extent and Nature of Duties

1.1  Appointment and Duties. The Employee shall be employed as President and Chief Operating Officer of the Company. Until such time as the Company retains the services of a Chief Financial Officer, the Employee shall also serve in such capacity. The Employee shall perform the duties, undertake the responsibilities and exercise the authority customarily performed, undertaken and exercised by persons situated in a similar capacity and as may be further defined from time to time by the Board or Chief Executive Officer. The Employee shall be under the direct supervision, and comply with the directives of, the Chief Executive Officer and the Board of the Company.

1.2  Extent of Services. The Employee shall be employed on a full-time basis and shall devote his entire business time, attention and efforts to the performance of his duties and responsibilities under this Agreement and the business and affairs of the Company. 

2.  Term and Termination

2.1  Term. The initial term of employment under this Agreement shall be for the period commencing on the Effective Date and ending on December 31, 2008 (the "Initial Term"). Thereafter, the term of Employee's employment under this Agreement shall automatically be extended for additional periods of one (1) year (each an "Additional Term") at the end of the Initial Term and of each Additional Term, unless either party has given notice to the other of its intention not to extend at least one hundred eighty (180) days prior to the expiration of the Initial Term or any Additional Term; provided, however, that following the Employee's having attained the age of seventy (70), the Term of this Agreement, if still in effect, shall not be automatically extended upon the expiration of the then applicable Additional Term, but shall be extended for additional one (1) year terms only upon the mutual agreement of the Company and the Employee annually no later than ninety (90) days prior to the end of the Additional Term then in effect. (The Initial Term and, if the Initial Term is extended, any and all Additional Terms,  the "Term").

2.2  Termination by the Company. Notwithstanding the aforesaid, the Employee's employment may be terminated under the following circumstances:

2.2.1  For Disability. The Company may, upon ninety (90) days prior written notice, terminate Employee's employment after having established the Employee's Disability. For purposes of this Agreement, "Disability" means a physical or mental infirmity which impairs the Employee's ability to substantially perform his duties pursuant to this Agreement which infirmity continues for a period of at least 120 days in any 365 day period.  Upon termination for disability, the Company shall continue to pay Employee all salary and benefits hereunder for the remainder of the Term, less any disability insurance payments received by Employee.

2.2.2  For  Cause. The Company may terminate the Employee's employment for Cause upon written notice to the Employee in which notice the basis for termination shall be set forth. A termination for "Cause" is a termination due to a serious breach of trust, including, but not limited to, theft, embezzlement, self-dealing, prohibited disclosure to unauthorized persons or entities of confidential or propriety information of or relating to the Company or the engaging by Employee in any prohibited business competitive with the business of the Company and its subsidiaries, affiliates or associated entities. No termination for Cause shall be effective except subject to the final, non-appealable judgment of a court of competent jurisdiction to the effect that Employee has committed a serious breach of trust as aforesaid. Except if and to the extent otherwise determined by a court of competent jurisdiction, the Employee shall be entitled to the compensation and benefits provided for under this Agreement for the period prior to the termination of the Employee's employment under this section.

2.2.3  Termination Other Than For Cause. The Company may terminate the employment of the Employee other than for Cause at its discretion and at any time on ninety (90) days prior written notice.

2.3  Termination by Employee. Employee may terminate this Agreement and his employment relationship with the Company at his discretion and at any time on ninety (90) days prior written notice.

2.4  Relationship during Notice Period

2.4.1  For purposes hereof, the term "Notice Period" shall mean the period between the giving of any Notice of Termination and the effective date of such notice as provided by sections 2.2 and 2.3 above or between the date of notice of intent not to extend the Term and the date of termination of the Term as provided for in section 2.1 above.

2.4.2  During any Notice Period pursuant to section 2.2.3 above, the Employee shall continue to work and fulfill his duties, hereunder, as an Employee of the Company; provided, however, that the Company shall have the right in its discretion to ask the Employee to cease working at the premises of the Company or to cease to work during all or any part of the Notice Period, in which case and without derogating from the Employee's right to Compensation pursuant to sections 2.5.1 and 2.5.2 below to the extent applicable, the Company shall redeem such portion of the Notice Period for which the Company shall have waived its right to the services of the Employee (the "Waived Period") by payment to Employee of an amount equal to Employee's Salary for the Waived Period, plus such amounts to which the Company is obligated pursuant to sections 4 and 5 below.

2.4.3  In the event Employee continues to work during the Notice Period, he shall cooperate with the Company to ensure an orderly transfer of his responsibilities.

2.4.4  In the event the Employee gives notice of termination pursuant to section 2.3 above or of his intention not to extend the Term pursuant to section 2.1 above, and does not continue to work during all or any part of the Notice Period, the Employee shall forfeit his salary for said portions of the Notice Period 

during which he does not work. The Company shall have the right to deduct such amount from all and any monies due and owing the Employee from the Company.

2.5  Compensation in the Event of Termination

2.5.1  Termination Other Than for Cause or Disability. Without derogating from the rights of the Employee to compensation during the Notice Period as provided in section 2.4 above, the Employee shall be entitled to compensation in the event of (a) termination or of (b) failure to extend the Term of this Agreement by the Company prior to the Employee's attaining the age of seventy (70), other than for Cause or due to Disability, in an amount equal to:

(a)  all sums, including Salary pursuant to section 3 below and  Employee Benefits as provided in section 4.1 below, to which Employee would otherwise have been entitled if he had remained in the employ of the Company for the portion of the Term during which this Agreement would have remained in effect but for its termination as aforesaid, and 

(b)  an amount equal to six (6) monthly Base Salaries, as defined in section 3 below.

2.5.2  Change of Control. In the event of (a) termination or of (b) failure to extend the Term of this Agreement prior to the Employee's attaining the age of seventy (70), other than for Cause or due to Disability within one (1) year of the completion of a Business Combination as defined in Article Tenth of the Company's Amended and Restated Certificate of Incorporation, then in addition to any rights of the Employee during the Notice Period as provided in section 2.4 and pursuant to section 2.5.1 above, the Employee shall be entitled to compensation in an amount equal to thirty six (36) monthly Base Salaries.  

3.  Salary

As compensation for the Employee's services hereunder, the Company shall pay the Employee a monthly gross salary (the "Salary") of US $16,667 (US $200,000 annually) (as such may be increased from time to time by decision of the Board, the "Base Salary"), payable to Employee on the first business day of each month during the term of the Employee's engagement hereunder in arrears for the month just ended.

4.  Employee Benefits

4.1  Insurance. Commencing January 1, 2004, the Company shall purchase or participate in the purchase for the benefit of the Employee an insurance package consisting of medical insurance, life insurance and long term disability insurance of such nature and providing such coverage as the Employee may request, provided that in no event shall the cost to the Company of the premiums for such insurance exceed US $2,000 per month. Except if the Employee specifically requests otherwise, the Company may fulfill its obligations hereunder by providing insurance coverage of the Employee in any group life or group health plan maintained by the Company for its employees based in the United States.

 

4.2  Vacation. The Employee shall be entitled to an annual vacation of twenty- three (23) working days at full pay. Vacation days may be accumulated for two (2) years, after which they must be used or redeemed; provided that accumulation of vacation days in excess of forty six (46) days may be approved by the Chief Executive Officer of the Company in his discretion.

4.3  Sick Pay

(a)  The Employee shall be entitled to up to thirty (30) days per year of fully paid sick leave, against a doctor's confirmation, which leave can be accumulated for a period of up to a maximum of five (5) years; provided, however, that the Employee shall not be entitled to sick leave payment to the extent already covered by any insurance component of any plan established by or for the benefit of the Employee pursuant to section 4.1 above. 

(b)  The Employee shall not for any reason or in any circumstances be entitled to redeem any accumulated but unused sick leave upon termination of his employment under this Agreement.

5.  Additional Benefits

5.1  Cellular Phone. Commencing January 1, 2004, the Company shall provide Employee with a Company cellular phone for Company business. Until such time as the Company purchases or leases cellular phones on its own account, the Company shall reimburse the Employee his expenses in maintaining and using one cellular phone (one number). 

5.2  Professional Fees. Commencing January 1, 2004, the Company shall reimburse Employee professional license fees and periodic membership dues for the professional societies and business/social organizations the maintenance of which is hereby acknowledged to be connected with and necessary for the proper performance of the Employee's duties under this Agreement, including:

(a)  State of Texas - Registered Professional Engineer

(b)  American Society of Petroleum Engineers

(c)  Dallas Petroleum Club

(d)    One local golf or country club (e.g. Royal Oaks Country Club).

(e)  additional as may from time to time be approved by the Chief Executive Officer.

 

5.3  Expenses. The Employee shall be entitled to be reimbursed for all reasonable expenses incurred by him in connection with the performance of his duties hereunder in accordance with the expense reimbursement policy adopted by the Board or with the prior approval of the Chief Executive Officer of the Company.

6.  Long-Term Management Incentive Plan

The Company has resolved to establish a long-term management incentive plan, which may be structured as an employee's royalty pool, to be funded by the equivalent of a 1.5% overriding royalty or equivalent net profits interest (after pay-out calculated on a well by well basis) (the "Plan"). Upon its establishment, the Employee shall be granted a 10% (ten percent) interest in Plan income attributable to wells drilled (no matter when drilled) on any oil and gas property acquired by the Company prior to the end of the Term or earlier termination of this Agreement, subject to the terms and conditions of the Plan.  To the extent less than 100% of the interests in the Plan with respect to a single well have been awarded at the time the well is spudded, Employee shall share pro-rata with the other Plan participants in the excess unawarded amounts.

7.  Propriety Information

7.1  The Employee acknowledges and agrees that, in the course of his employment by the Company, he will have access to confidential and propriety information of the Company regarding, without limitation, the business, financial, research, exploratory, engineering, production, marketing and sales activities of the Company. Such information, whether documentary, written, oral or computer generated, shall be deemed to be and referred to as "Proprietary Information".

7.2  Proprietary Information shall be deemed to include any and all proprietary information disclosed by or on behalf of the Company and irrespective of form, but excluding information that: (i) was known to the Employee prior to his association with the Company and can be so proven; (ii) shall have appeared in any printed publication or patent or shall have become a part of the public knowledge except as a result of a breach of this Agreement by the Employee; (iii) shall have been received by the Employee from a third party having no obligation to the Company; (iv) reflects general skills and experience gained during the Employee's engagement by the Company; or (v) reflects information and data generally known within the industries or trades in which the Company transacts business.

7.3  The Employee agrees and declares that all Proprietary Information, patents and other rights in connection therewith shall be the sole property of the Company and its assigns. At all times, both during his engagement by the Company and for a period of five (5) years after its termination, the Employee will 

keep in confidence and trust all Proprietary Information, and the Employee will not use or disclose any Proprietary Information or anything relating to it without the written consent of the Company, except as may be necessary in the ordinary course of performing the Employee's duties hereunder and in the best interests of the Company.

7.4  Upon termination of his employment with the Company, the Employee will promptly deliver to the Company all documents and materials of any nature pertaining to his work with the Company, and he will not take with him any documents or materials or copies thereof containing any Proprietary Information.

7.5  The Employee recognizes that the Company received and will receive confidential or proprietary information from third parties 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. At all times, both during his employment and after its termination, the Employee undertakes to keep and hold all such information in strict confidence and trust, and he will not use or disclose any of such information without the prior written consent of the Company, except as may be necessary to perform his duties as an employee of the Company and consistent with the Company's agreement with such third party. Upon termination of his employment with the Company, Employee shall act with respect to such information as set forth in Section 7.4 mutatis mutandis.

7.6  The Employee's undertakings in this section 7 shall remain in full force and effect in accordance with their terms after termination of this Agreement or any renewal thereof.

8.  Non-Competition

8.1  The Employee agrees and undertakes that he will not, so long as he is employed by the Company and for a period of six (6) months following termination of his employment for whatever reason, directly or indirectly, as owner, partner, joint venturer, stockholder, employee, broker, agent, principal, corporate officer, director, licensor or in any other capacity whatever engage in, become financially interested in, be employed by, or have any connection with any business or venture that is engaged in any activities competing with the Company in the field of petroleum exploration, production and marketing in Israel or any other region or territory in which the Company is conducting petroleum exploration, production or marketing activities; provided, however, that the Employee may own securities of any corporation or other entity which is engaged in such business and is publicly owned and traded but in an amount not to exceed at any one time one percent (1%) of any class of stock or securities of such entity so long as he has no active role therein as director, employee, consultant or otherwise, unless otherwise specifically approved by the Board.

8.2  The Employee agrees and undertakes that during the period of his employment and for a period of twelve (12) months following termination, he will not, directly or indirectly, including personally or in any business in which he is an officer, director or shareholder, for any purpose or in any place, employ any person employed by the Company or retained by the Company as a consultant on the date of such termination or during the preceding six (6) months.

8.3  If any one or more of the terms contained in this section 8 shall for any reason be held to be excessively broad with regard to time, geographic scope or activity, the term shall be construed in a manner to enable it to be enforced to the extent compatible with applicable law.

9.  Indemnification and Insurance

9.1  The Company shall indemnify the Employee against, and hold him harmless, from any and all judgments, penalties (including excise and similar taxes), fines, settlements and expenses (including attorney's fees and court costs) actually and reasonably incurred by him in connection with any action, suit or proceeding whether civil, criminal, administrative, arbitrative or investigative, any appeal in such an action, suit or proceeding whether or not by or in the right of the Company to which Employee is or may be made a party or is or shall be threatened to be made a party by reason of the fact that the Employee is an officer, employee or agent of the Company or is or was serving at the request of the Company as a 

director, officer, partner, venturer, proprietor, trustee, employee, agent or similar functionary of another corporation, partnership, joint venture, sole proprietorship, trust, nonprofit entity, employee benefit plan or other enterprise, to the fullest extent permitted by any applicable law, and such indemnity shall inure to the benefit of the heirs, executors and administrators of the Employee.

9.2  The right to indemnification under this section 9 shall include the Employee's right to be paid by the Company the expenses incurred in defending any such proceeding in advance of its disposition; provided, however, that, if the applicable law requires, the payment of such expenses incurred by the Employee in advance of the final disposition of a proceeding shall be made only upon delivery to the Company of an undertaking, by or on behalf of the Employee, to repay all amounts so advanced if it shall ultimately be determined that the Employee is not entitled to be indemnified under this section 9 or otherwise.

9.3  The Company shall purchase and maintain insurance coverage in an amount to be determined from time to time by the Board taking into account the nature and extent of the Company's activities and the cost of coverage, but in no event less than that maintained by the Company for any other director or executive officer of the Company, on behalf of the Employee, both in his capacity as an officer, director and employee of the Company and, if he so serves at the request of the Company, as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against any legally insurable liability asserted against the Employee and incurred by the Employee in any such capacity or arising out of Employee's status as such.

10.  Taxes

Any and all taxes, fees and other liabilities (as may apply from time to time) in connection with the Salary (section 3 above) or with Employee Benefits (section 4 above) or with the Additional Benefits (section 5 above) or with any other payment to which the Employee is entitled under this Agreement will be borne by the Employee and, except as otherwise expressly set out in this Agreement, the Employee shall be solely liable for all such taxes, fees and other liabilities.

11.  Mutual Representations

11.1  The Employee represents and warrants to the Company that the execution and delivery of this Agreement and the fulfillment of the terms hereof (i) will not constitute a default under or conflict with any agreement or other instrument to which he is a party or by which he is bound, and (ii) do not require the consent of any person or entity.

11.2  The Company represents and warrants to the Employee that this Agreement has been duly authorized, executed and delivered by the Company and that the fulfillment of the terms hereof (i) will not constitute a default under or conflict with any agreement or other instrument to which it is a party or by which it is bound, and (ii) do not require the consent of any person or entity.

11.3  Each party hereto warrants and represents to the other that this Agreement constitutes the valid and binding obligation of such party enforceable against such party in accordance with its terms subject to applicable bankruptcy, insolvency, moratorium and similar laws affecting creditors' rights generally, and subject, as to enforceability, to general principles of equity (regardless if enforcement is sought in proceeding in equity or at law).

12.  Notice; Addresses

12.1  The addresses of the parties for purposes of this Agreement shall be the addresses set forth above, or any other address which shall be provided by due notice given in accordance with the provisions of section 12.2 below.

12.2  All notices in connection with this Agreement shall be sent by registered mail or delivered by hand or courier service to the addresses set forth above, and shall be deemed to have been delivered to the 

other party at the earlier of the following two dates: (a) if sent by registered mail or courier service, as aforesaid, three (3) business days from the date of mailing; and (b) if delivered by hand - upon actual delivery or proffer of delivery (in the event of a refusal to accept it) at the address of the addressee. Delivery by cable, telex, facsimile or other electronic communication shall be sufficient and be deemed to have occurred upon electronic confirmation of receipt, with copy sent by first class mail.

13.  Miscellaneous

13.1  Headings are included for reference purposes only and are not to be used in interpreting this Agreement.

13.2  No failure, delay or forbearance of either party in exercising any power or right hereunder shall in any way restrict or diminish such party's rights and powers under this Agreement, or operate as a waiver of any breach or nonperformance by either party of any terms or conditions hereof.

13.3  No determination of the invalidity or unenforceability of any provision of this Agreement shall affect the remaining provisions hereof unless the business purpose of this Agreement is substantially frustrated thereby.

13.4  This Agreement is personal and non-assignable by the Employee. It shall inure to the benefit of any corporation or other entity with which the Company shall merge or consolidate or to which the Company shall lease, sell or otherwise transfer all or substantially all of its assets, and may be assigned by the Company to any affiliate of the Company or to any corporation or entity with which such affiliate shall merge or consolidate or which shall lease or acquire all or substantially all of the assets of such affiliate. Any assignee must assume all the obligations of the Company hereunder, but such assignment and assumption shall not serve as a release of the Company.

13.5  This Agreement is the only agreement between the parties on the subject matter of this Agreement and supersedes and replaces all other agreements, whether written or oral, between the parties, concerning the subject matter of this Agreement, including without limitation that certain letter dated September 2, 2003 from the Company to the Employee "Re: Executive Employment Agreement"; provided, however, that nothing herein shall be deemed to affect the rights of either of the parties hereto with respect to the services rendered by the Employee to or on behalf of the Company during any period prior to the Effective Date.

13.6  It is hereby agreed between the parties that the laws of the State of Texas  shall apply to this Agreement and that the sole and exclusive place of jurisdiction in any matter arising out of or in connection with this Agreement shall be in the courts of appropriate jurisdiction in the county of Dallas, Texas.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

	
ZION OIL & GAS, INC.
	
	

	
                                                
	
	
/s/ E A Soltero                 

	
By:
	
/s/ John Brown        
	
	
Eugene A. Soltero

	
Name:
	
John Brown             
	
	

	
Title:
	
Chairman & CEO    
	
	

 

EXHIBIT 10.2 (iii) 

Personal Employment Agreement (Glen Perry)

This Personal Employment Agreement (the "Agreement") is entered into as of the 1st day of January 2004 (the "Effective Date"), by and among Zion Oil & Gas, Inc., a Delaware corporation with offices at 6510 Abrams Road, Suite 300, Dallas, Texas, U.S.A. (in its own name and as successor in interest of Zion Oil & Gas, Inc., a Florida Corporation, the "Company") and Glen H. Perry of 3600 Rock Prairie Rd., College Station, TX. 77845, U.S.A. (the "Employee").

WHEREAS, the Company was established in April 2000 for the purpose of engaging in oil and gas exploration and production in Israel; and

WHEREAS, since its establishment, the Employee has been serving as Executive Vice President of the Company at the pleasure of the Board of Directors of the Company (the "Board") and on terms set from time to time by resolution of the Board; and

WHEREAS, the terms of retention of the Employee for the five-year period commencing on the effective date hereof were incorporated in a letter of intent dated September 2, 2003 and ratified by the Board on November 10, 2003; and 

WHEREAS, the Company and Employee desire to regularize their relationship and, in that context, the Company desires to continue to engage the Employee and the Employee desires to continue to serve the Company in the capacity of Executive Vice President in accordance with the terms and conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the mutual promises, covenants, conditions, representations and warranties set forth herein, and intending to be legally bound hereby, the parties agree as follows:

1.  Appointment; Extent and Nature of Duties

1.1  Appointment and Duties. The Employee shall be employed as Executive Vice President of the Company and General Manager of Israeli Operations, with supervisory responsibility for all activities of the Israeli Branch. The Employee shall perform the duties, undertake the responsibilities and exercise the authority customarily performed, undertaken and exercised by persons situated in a similar capacity as may be further defined from time to time by the Board or Chief Executive Officer. The Employee shall serve under the direct supervision, and comply with the directives of, the Chief Operating Officer of the Company, and in his absence, of the Chief Executive Officer of the Company.

1.2  Extent of Services. The Employee shall be employed on a full-time basis and shall devote his entire business time, attention and efforts to the performance of his duties and responsibilities under this Agreement and the business and affairs of the Company. 

2.  Term and Termination

2.1  Term. The initial term of employment under this Agreement shall be for the period commencing on the Effective Date and ending on December 31, 2008 (the "Initial Term"). Thereafter, the term of Employee's employment under this Agreement shall automatically be extended for additional periods of one (1) year (each an "Additional Term") at the end of the Initial Term and of each Additional Term, unless either party has given notice to the other of its intention not to extend at least one hundred eighty (180) days prior to the expiration of the Initial Term or any Additional Term; provided, however, that following the Employee's having attained the age of seventy (70), the Term of this Agreement, if still in effect, shall not be automatically extended upon the expiration of the then applicable Additional Term, but shall be extended for additional one (1) year terms only upon the mutual agreement of the Company and the Employee annually no later than ninety (90) days prior to end of the then applicable Additional Term. (The Initial Term and, if the Initial Term is extended, any and all Additional Terms, the "Term").

2.2  Termination by the Company. Notwithstanding the aforesaid, the Employee's employment may be terminated under the following circumstances:

2.2.1  For Disability. The Company may, upon ninety (90) days prior written notice, terminate Employee's employment after having established the Employee's Disability. For purposes of this Agreement, "Disability" means a physical or mental infirmity which impairs the Employee's ability to substantially perform his duties pursuant to this Agreement which infirmity continues for a period of at least 120 days in any 365 day period. Upon termination for disability, the Company shall continue to pay Employee all salary and benefits hereunder for the remainder of the Term, less any disability insurance payments received by Employee.
2.2.2  For  Cause. The Company may terminate the Employee's employment for Cause upon written notice to the Employee in which notice the basis for termination shall be set forth. A termination for "Cause" is a termination due to a serious breach of trust, including, but not limited to, theft, embezzlement, self-dealing, prohibited disclosure to unauthorized persons or entities of confidential or propriety information of or relating to the Company or the engaging by Employee in any prohibited business competitive with the business of the Company and its subsidiaries, affiliates or associated entities. No termination for Cause shall be effective except subject to the final, non-appealable judgment of a court of competent jurisdiction to the effect that Employee has committed a serious breach of trust as aforesaid. Except if and to the extent otherwise determined by a court of competent jurisdiction, the Employee shall be entitled to the compensation and benefits provided for under this Agreement for the period prior to the termination of the Employee's employment under this section.

2.2.3  Termination Other Than For Cause. The Company may terminate the employment of the Employee other than for Cause at its discretion and at any time on ninety (90) days prior written notice.

2.3  Termination by Employee. Employee may terminate this Agreement and his employment relationship with the Company at his discretion and at any time on ninety (90) days prior written notice.

2.4  Relationship during Notice Period

2.4.1  For purposes hereof, the term "Notice Period" shall mean the period between the giving of any Notice of Termination and the effective date of such notice as provided by sections 2.2 and 2.3 above or between the date of notice of intent not to extend the Term and the date of termination of the Term as provided for in section 2.1 above.

2.4.2  During any Notice Period pursuant to section 2.2.3 above, the Employee shall continue to work and fulfill his duties, hereunder, as an Employee of the Company; provided, however, that the Company shall have the right in its discretion to ask the Employee to cease working at the premises of the Company or to cease to work during all or any part of the Notice Period, in which case and without derogating from the Employee's right to Compensation pursuant to sections 2.5.1 and 2.5.2 below to the extent applicable, the Company shall redeem such portion of the Notice Period for which the Company shall have waived its right to the services of the Employee (the "Waived Period") by payment to Employee of an amount equal to Employee's Salary for the Waived Period, plus such amounts to which the Company is obligated pursuant to sections 4 and 5 below.

2.4.3  In the event Employee continues to work during the Notice Period, he shall cooperate with the Company to ensure an orderly transfer of his responsibilities.

2.4.4  In the event the Employee gives notice of termination pursuant to section 2.3 above or of his intention not to extend the Term pursuant to section 2.1 above, and does not continue to work during all or any part of the Notice Period, the Employee shall forfeit his salary for said portions of the Notice Period during which he does not work. The Company shall have the right to deduct such amount from all and any monies due and owing the Employee from the Company.

2.5  Compensation in the Event of Termination

2.5.1  Termination Other Than for Cause or Disability. Without derogating from the rights of the Employee to compensation during the Notice Period as provided in section 2.4 above, the Employee shall be entitled to compensation in the event of (a) termination or of (b) failure to extend the Term of the Agreement by the Company prior to the Employee's attaining the age of seventy (70), other than for Cause or due to Disability, in an amount equal to:

(a)  all sums, including Salary pursuant to section 3 below and  Employee Benefits as provided in section 4.1 below, to which Employee would otherwise have been entitled if he had remained in the employ of the Company for the portion of the Term during which this Agreement would have remained in effect but for its termination as aforesaid, and 

(b)  an amount equal to six (6) monthly Base Salaries, as defined in section 3 below.

2.5.2  Change of Control. In the event of (a) termination or of (b) failure to extend the Term of this Agreement prior to the Employee's attaining the age of seventy (70), other than for Cause or due to Disability within one (1) year of the completion of a Business Combination as defined in Article Tenth of the Company's Amended and Restated Certificate of Incorporation, then in addition to any rights of the Employee during the Notice Period as provided in section 2.4 and pursuant to section 2.5.1 above, the Employee shall be entitled to compensation in an amount equal to thirty six (36) monthly Base Salaries.

3.  Salary

As compensation for the Employee's services hereunder, the Company shall pay the Employee a monthly gross salary (the "Salary") of US $16,667 (US $200,000 annually) (as such may be increased from time to time by decision of the Board, the "Base Salary"), payable to Employee on the first business day of each month during the term of the Employee's engagement hereunder in arrears for the month just ended.

4.  Employee Benefits

4.1  Insurance. 

Commencing January 1, 2004, the Company shall purchase or participate in the purchase for the benefit of the Employee an insurance package consisting of medical insurance, life insurnace and long term disability insurance of such nature and providing such coverage as the Employee may request, provided that in no event shall the cost to the Company of the premiums for such insurance exceed US $2,000 per month. Except if the Employee specifically requests otherwise, the Company may fulfill its obligations hereunder by providing insurance coverage of the Employee in any group life or group health plan maintained by the Company for its employees based in the United States.

4.2  Vacation. The Employee shall be entitled to an annual vacation of twenty three (23) working days at full pay. Vacation days may be accummulated for two (2) years, after which they must be used or redeemed; provided that accummulation of vacation days in excess of forty six (46) days may be approved by the Chief Executive Officer of the Company in his discretion.

4.3  Sick Pay

(a)  The Employee shall be entitled to up to thirty (30) days per year of fully paid sick leave, against a doctor's confirmation, which leave can be accummulated for a period of up to a maximum of five (5) years; provided, however, that the Employee shall not be entitled to sick leave payment to the extent already covered by any insurance component of any plan established by or for the benefit of the Employee pursuant to section 4.1 above. 

(b)  The Employee shall not for any reason or in any circumstances be entitled to redeem any accumulated but unused sick leave upon termination of his employment under this Agreement.

(c)  It is agreed that payment on account of sick leave as provided herein shall be deemed in full compliance with the Company's obligations to Employee under any applicable law.

5.  Additional Benefits

5.1  Cellular Phone. Commencing January 1, 2004, the Company shall provide Employee with a Company cellular phone for Company business. Until such time as the Company purchases or leases cellular phones on its own account, the Company shall reimburse the Employee his expenses in maintaining and using one cellular phone (one number). 

5.2  Professional Fees. Commencing January 1, 2004, the Company shall reimburse Employee professional license fees and periodic membership dues for the professional societies and business/social organizations the maintenance of which is hereby acknowledged to be connected with and necessary for the proper performance of the Employee's duties under this Agreement, including:

(a)  American Society of Petroleum Engineers

(b)  One golf or fitness club

(d)  additional as may from time to time be approved by the Chief Executive Officer.

5.3  Expenses. The Employee shall be entitled to be reimbursed for all reasonable expenses incurred by him in connection with the performance of his duties hereunder in accordance with the expense reimbursement policy adopted by the Board or with the prior approval of the Chief Executive Officer or the President of the Company.

6.  Long-Term Management Incentive Plan

The Company has resolved to establish a long-term management incentive plan, which may be structured as an employee's royalty pool, to be funded by the equivalent of a 1.5% overriding royalty or equivalent net profits interest (after pay-out calculated on a well by well basis) (the "Plan"). Upon its establishment, the Employee shall be granted a 10% (ten percent) interest in Plan income attributable to wells drilled (no matter when drilled) on any oil and gas property acquired by the Company prior to the end of the Term or earlier termination of this Agreement, subject to the terms and conditions of the Plan. To the extent less than 100% of the interests in the Plan with respect to a single well have been awarded at the time the well is spudded, Employee shall share pro-rata with the other Plan participants in the excess unawarded amounts.

7.  Relocation

7.1  Obligation to Relocate. At the Company's request, which may be given in the Company's sole discretion (a "Relocation Notice"), the Employee shall relocate to Israel for such period as the Company shall deem in its best interests. 

7.2  Employee Benefits in the Event of Relocation. Upon relocation to Israel as aforesaid and during the period of Employee's employment in Israel, Employee  and Company will seek the advice of a competent tax authority to determine the best combination status and benefits for both the Employee and Company.  The total compensation cost to the Company for such package shall be equal to or less than the cost to the Company for the package of salary, benefits and other compensation set forth in Sections 7.3 through 7.5 below.

7.3  An Israeli Managers Insurance Policy ("Bituach Mnahalim") providing for:

(i)  allocation and payment by the Company to a Provident Fund ("Kupat Gemel") (as defined in Section 47 of the Israeli Income Tax Ordinance) (the "Fund") a sum equal to 131⁄3% of the Employee's Salary as it may be from time to time  (such sum, the "Company's Contribution"), to be allocated as follows" (X) 81⁄3% towards Severance Pay (Pitzuei Piturim"); and (Y) 5% to pension benefits ("Tagmulim");

(ii)  payment by the Company of an amount equal to 21/2% of the Employee's Salary towards the purchase of disability insurance for the Employee; and

(iii)  deduction by the Company of an amount equal to 5% of the Employee's Salary (the "Employee's Contribution") and deposit of such sum in the fund to be allocated to pension benefits (Tagmulim);

(iv)  in the event of the termination or failure to extend the term of this Agreement for any reason whether at the Company's or the Employee's instance, release to the Employee's benefit all funds that have accrued to the Employee's benefit; provided that in the event of termination of this Agreement by the Company for Cause or by the Employee in circumstances under which the Company would have the right to deny the Employee severance pay ("Pitzuei Piturim") pursuant to the provisions of the Israeli Severance Pay Law, 5723-1953, in whole or in part, the Employee shall be entitled to the release of only such sums as accrued in the Fund attributable to the Employee's Contribution.
(v)  That part of the Company's Contribution allocated as provided in clause (i)(X) of this Section 7.3 above, together with all income thereon of whatever nature, shall be on account of Severance Pay that shall be due, if due, to Employee pursuant to the provisions of clause (iv) of this Section 7.3 or pursuant to the Israeli Severance Pay Law, 5723-1953.

7.4  Additional Employee Benefits. Additional benefits providing for:

(a)  Recuperation Allowance ("Dmei Havra'ah") of ten (10) days per year at a rate provided from time to time by applicable Israeli law. The Recuperation Allowance shall be paid semi-annually at the rate of five (5) days per each semi-annual period together with payment of the Employee's June and December Salaries; and

(b)  provided that the Employee has a driver's license valid for driving in Israel he shall have the full-time use one four-wheel drive vehicle on a regular basis due to the 24 hour nature of his responsibilities, the expenses of which shall be paid by the Company; and

(c)  the Company shall arrange for parking for the Employee at his place of work and shall reimburse him for his parking expenses based on receipts he shall produce to the Company.

7.4  Currency and Tax Payments. Following the Employee's relocation to Israel, such part of Employee's Salary shall be paid in Israel in NIS at the Representative Rate of the U.S.Dollar as against the NIS last published by the Bank of Israel and known at the time of payment (the "Representative Rate") and such part in United States Dollars outside of Israel as Employee may request, provided that (a) the Company withhold and pay to the Israeli Income Tax, National Insurance and other relevant authorities, if any, whether in Israel or the United States, in timely manner all amounts as may be due from time to time on Employee's Salary in full and associated payments under applicable Israeli law, and (b) pursuant to section 7.3 above, the Company make payments thereunder as provided in accordance with the terms of the Manager's Insurance Policy purchased on the basis of the Employee's Salary as such may be from time to time.

8.  Propriety Information

8.1  The Employee acknowledges and agrees that, in the course of his employment by the Company, he will have access to confidential and propriety information of the Company regarding, without limitation, the business, financial, research, exploratory, engineering, production, marketing and sales activities of the Company. Such information, whether documentary, written, oral or computer generated, shall be deemed to be and referred to as "Proprietary Information".

8.2  Proprietary Information shall be deemed to include any and all proprietary information disclosed by or on behalf of the Company and irrespective of form, but excluding information that: (i) was known to the Employee prior to his association with the Company and can be so proven; (ii) shall have appeared in any printed publication or patent or shall have become a part of the public knowledge except as a result of a breach of this Agreement by the Employee; (iii) shall have been received by the Employee from a third party having no obligation to the Company; (iv) reflects general skills and experience gained during the Employee's engagement by the Company; or (v) reflects information and data generally known within the industries or trades in which the Company transacts business.

8.3  The Employee agrees and declares that all Proprietary Information, patents and other rights in connection therewith shall be the sole property of the Company and its assigns. At all times, both during his engagement by the Company and for a period of five (5) years after its termination, the Employee will keep in confidence and trust all Proprietary Information, and the Employee will not use or disclose any 

Proprietary Information or anything relating to it without the written consent of the Company, except as may be necessary in the ordinary course of performing the Employee's duties hereunder and in the best interests of the Company.
8.4  Upon termination of his employment with the Company, the Employee will promptly deliver to the Company all documents and materials of any nature pertaining to his work with the Company, and he will not take with him any documents or materials or copies thereof containing any Proprietary Information.

8.5  The Employee recognizes that the Company received and will receive confidential or proprietary information from third parties 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. At all times, both during his employment and after its termination, the Employee undertakes to keep and hold all such information in strict confidence and trust, and he will not use or disclose any of such information without the prior written consent of the Company, except as may be necessary to perform his duties as an employee of the Company and consistent with the Company's agreement with such third party. Upon termination of his employment with the Company, Employee shall act with respect to such information as set forth in Section 8.4 mutatis mutandis.

8.6  The Employee's undertakings in this section 8 shall remain in full force and effect in accordance with their terms after termination of this Agreement or any renewal thereof.

9.  Non-Competition

9.1  The Employee agrees and undertakes that he will not, so long as he is employed by the Company and for a period of six (6) months following termination of his employment for whatever reason, directly or indirectly, as owner, partner, joint venturer, stockholder, employee, broker, agent, principal, corporate officer, director, licensor or in any other capacity whatever engage in, become financially interested in, be employed by, or have any connection with any business or venture that is engaged in any activities competing with the Company in the field of petroleum exploration, production and marketing in Israel or any other region or territory in which the Company is conducting or considering the conduct of petroleum exploration, production or marketing activities; provided, however, that the Employee may own securities of any corporation or other entity which is engaged in such business and is publicly owned and traded but in an amount not to exceed at any one time one percent (1%) of any class of stock or securities of such entity so long as he has no active role therein as director, employee, consultant or otherwise, unless otherwise specifically approved by the Board.

9.2  The Employee agrees and undertakes that during the period of his employment and for a period of twelve (12) months following termination, he will not, directly or indirectly, including personally or in any business in which he is an officer, director or shareholder, for any purpose or in any place, employ any person employed by the Company or retained by the Company as a consultant on the date of such termination or during the preceding six (6) months.

9.3  If any one or more of the terms contained in this section 9 shall for any reason be held to be excessively broad with regard to time, geographic scope or activity, the term shall be construed in a manner to enable it to be enforced to the extent compatible with applicable law.

10.  Indemnification and Insurance

10.1  The Company shall indemnify the Employee against, and hold him harmless, from any and all judgments, penalties (including excise and similar taxes), fines, settlements and expenses (including attorney's fees and court costs) actually and reasonably incurred by him in connection with any action, suit or proceeding whether civil, criminal, administrative, arbitrative or investigative, any appeal in such an action, suit or proceeding whether or not by or in the right of the Company to which Employee is or may be made a party or is or shall be threatened to be made a party by reason of the fact that the Employee is an officer, employee or agent of the Company or is or was serving at the request of the Company as a director, officer, partner, venturer, proprietor, trustee, employee, agent or similar functionary of another corporation, partnership, joint venture, sole proprietorship, trust, nonprofit entity, employee benefit plan or 

other enterprise, to the fullest extent permitted by any applicable law, and such indemnity shall inure to the benefit of the heirs, executors and administrators of the Employee.
10.2  The right to indemnification under this section 10 shall include the Employee's right to be paid by the Company the expenses incurred in defending any such proceeding in advance of its disposition; provided, however, that, if the applicable law requires, the payment of such expenses incurred by the Employee in advance of the final disposition of a proceeding shall be made only upon delivery to the Company of an undertaking, by or on behalf of the Employee, to repay all amounts so advanced if it shall ultimately be determined that the Employee is not entitled to be indemnified under this section 9 or otherwise.

10.3  The Company shall purchase and maintin insurance coverage in an amount to be determined from time to time by the Board taking into account the nature and extent of the Company's activities and the cost of coverage, but in no event less than that maintained by the Company for any other director or executive officer of the Company, on behalf of the Employee both in his capacity as an officer, director and employee of the Company and if be so serves at the request of the Company, as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterise, against any legally insurable liability asserted against the Employee and incurred by the Employee in any such capacity, or arising out of the Employee's status as such.

11.  Taxes

Any and all taxes, fees and other liabilities (as may apply from time to time) in connection with the Salary (section 3 above) or with the Social Insurance and Employee Benefits (section 4 above) or with the Additional Benefits (section 5 above) or with any other payment to which the Employee is entitled under this Agreement will be borne by the Employee and, except as otherwise expressly set out in this Agreement, the Employee shall be solely liable for all such taxes, fees and other liabilities.

12.  Mutual Representations

12.1  The Employee represents and warrants to the Company that the execution and delivery of this Agreement and the fulfillment of the terms hereof (i) will not constitute a default under or conflict with any agreement or other instrument to which he is a party or by which he is bound, and (ii) do not require the consent of any person or entity.

12.2  The Company represents and warrants to the Employee that this Agreement has been duly authorized, executed and delivered by the Company and that the fulfillment of the terms hereof (i) will not constitute a default under or conflict with any agreement or other instrument to which it is a party or by which it is bound, and (ii) do not require the consent of any person or entity.

12.3  Each party hereto warrants and represents to the other that this Agreement constitutes the valid and binding obligation of such party enforceable against such party in accordance with its terms subject to applicable bankruptcy, insolvency, moratorium and similar laws affecting creditors' rights generally, and subject, as to enforceability, to general principles of equity (regardless if enforcement is sought in proceeding in equity or at law).

13.  Notice; Addresses

13.1  The addresses of the parties for purposes of this Agreement shall be the addresses set forth above, or any other address which shall be provided by due notice given in accordance with the provisions of section 13.2 below.

13.2  All notices in connection with this Agreement shall be sent by registered mail or delivered by hand or courier service to the addresses set forth above, and shall be deemed to have been delivered to the other party at the earlier of the following two dates: (a) if sent by registered mail or courier service, as aforesaid, three (3) or, if the Employee has been relocated to Israel and changed his address for notice purposes to an address in Israel, five (5) business days from the date of mailing; and (b) if delivered by hand - upon actual delivery or proffer of delivery (in the event of a refusal to accept it) at the address of the addressee. Delivery by cable, telex, facsimile or other electronic communication shall be sufficient 

and be deemed to have occurred upon electronic confirmation of receipt, with copy sent by first class mail.
14.  Miscellaneous

14.1  Headings are included for reference purposes only and are not to be used in interpreting this Agreement.

14.2  The provisions of this Agreement are in lieu of the provisions of any collective bargaining agreement or arrangement and, therefore, no collective bargaining agreement or arrangement shall apply with respect to the relationship between the parties hereto (subject to the applicable provisions of law).

14.3  No failure, delay or forbearance of either party in exercising any power or right hereunder shall in any way restrict or diminish such party's rights and powers under this Agreement, or operate as a waiver of any breach or nonperformance by either party of any terms or conditions hereof.

14.4  No determination of the invalidity or unenforceability of any provision of this Agreement shall affect the remaining provisions hereof unless the business purpose of this Agreement is substantially frustrated thereby.

14.5  This Agreement is personal and non-assignable by the Employee. It shall inure to the benefit of any corporation or other entity with which the Company shall merge or consolidate or to which the Company shall lease, sell or otherwise transfer all or substantially all of its assets, and may be assigned by the Company to any affiliate of the Company or to any corporation or entity with which such affiliate shall merge or consolidate or which shall lease or acquire all or substantially all of the assets of such affiliate. Any assignee must assume all the obligations of the Company hereunder, but such assignment and assumption shall not serve as a release of the Company.

14.6  This Agreement is the only agreement between the parties on the subject matter of this Agreement and supersedes and replaces all other agreements, whether written or oral, between the parties, concerning the subject matter of this Agreement, including without limitation that certain letter dated September 2, 2003 from the Company to the Employee "Re: Executive Employment Agreement"; provided, however, that nothing herein shall be deemed to affect the rights of either of the parties hereto with respect to the services rendered by the Employee to or on behalf of the Company during any period prior to the Effective Date.

14.7  It is hereby agreed between the parties that the laws of the State of Texas shall apply to this Agreement and that the sole and exclusive place of jurisdiction in any matter arising out of or in connection with this Agreement shall be in the courts of appropriate jurisdiction in the County of Dallas, Texas.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

 

	
ZION OIL & GAS, INC.
	
	

	
                                                
	
	
/s/ Glen H. Perry               

	
By:
	
/s/ John Brown        
	
	
Glen H. Perry

	
Name:
	
John Brown             
	
	

	
Title:
	
Chairman & CEO     
	
	

EXHIBIT 10.2 (iv)

RETENTION AGREEMENT (MANDELKER)

ZION OIL & GAS, INC.

6510 Abrams Road, Dallas, TX 75231

214-221-4610

 

As of January 1, 2004

Mr. Philip Mandelker,

44 Tagore Street

Tel Aviv, Israel

Re: Retention Agreement

Dear Mr. Mandelker,

This letter serves to confirm our agreement with you to retain your services as outside General Counsel and Corporate Secretary of Zion Oil & Gas, Inc. (the "Company").  Such services shall include: (i) oversight responsibility for administrative and financial matters of the Company's Israeli Branch, reporting to the Executive Vice-President and General Manager of Israeli Operations; and (ii) legal oversight responsibility for the corporation, reporting to the President and Chief Operating Officer.   In consideration for your services, you shall receive a monthly retainer as follows:

  

During the period commencing January 1, 2004 the NIS equivalent of $12,500 per month, plus out of pocket disbursements, plus VAT. 

In addition, the Company shall pay the law firm with which you are associated a monthly office services fee of the NIS equivalent $2,000, plus VAT.  Commencing January 1, 2004, the Company shall also bear the cost of a cell phone (one line) and your professional fees and insurance related to the performance of your duties.

As soon as practicable following the date upon which the Company shall have closed $8,000,000 in subscriptions of its initial public offering as currently on file with the U.S. Securities and Exchange Commission, the Company shall employ you as its Executive Vice President and General Counsel pursuant to the attached Executive Employment Agreement.  

Very truly yours,

ZION OIL & GAS, INC.

/s/ John M. Brown

John M. Brown, Chairman and CEO

 

ACCEPTED AND AGREED:

_/s/ Philip Mandelker

Philip Mandelker

Personal Employment Agreement

(Attached to and made a part of that certain Retention Agreement dated as of January 1, 2004)

This Personal Employment Agreement (the "Agreement") is entered into as of the ___ day of _______ 2004 (the "Effective Date"), by and among Zion Oil & Gas, Inc., a Delaware corporation with offices at 6510 Abrams Road, Suite 300, Dallas, Texas, U.S.A. (in its own name and as successor in interest of Zion Oil & Gas, Inc., a Florida Corporation, the "Company") and Philip Mandelker of 44 Tagore St., Tel-Aviv, 69341, Israel (the "Employee").

WHEREAS, the Company was established in April 2000 for the purpose of engaging in oil and gas exploration and production in Israel; and

WHEREAS, since the establishment of the Company, the Employee, an attorney in private legal practice, has been serving as General Counsel of the Company and, since 2002 as the corporate Secretary of the Company at the pleasure of the Board of Directors of the Company (the "Board") and on terms set from time to time by resolution of the Board; and

WHEREAS, the terms of retention of the Employee's services for the period commencing January 1, 2004 were fixed in a written retention agreement effective as of January 1, 2004 (the "Retention Agreement"); and 

WHEREAS, the Company and Employee desire to restructure their relationship so that the Employee join the Company as a full time employee and continue to serve the Company in the capacity of Executive Vice President and General Counsel of the Company in accordance with the terms and conditions set forth in this Agreement

NOW, THEREFORE, in consideration of the mutual promises, covenants, conditions, representations and warranties set forth herein, and intending to be legally bound hereby, the parties agree as follows:

1.  Appointment; Extent and Nature of Duties; Termination of Retainer Agreement

1.1  Appointment and Duties. The Employee shall be employed as Executive Vice President and General Counsel of the Company. Until such time as the Board shall appoint another person to serve as Secretary of the Company, the Employee shall also fill the duties of Secretary of the Company. The Employee shall perform the duties, undertake the responsibilities and exercise the authority customarily performed, undertaken and exercised by persons situated in a similar Employee capacity, with such responsibilities to include those of Chief Compliance Officer of the Company and officer with executive oversight responsibilities for administrative, financial and legal activities of the Company's Israeli Branch, and as may be further defined by the Board. Insofar as his executive oversight responsibilities for administrative, financial and legal activities of the Company's Israeli Branch are concerned, Employee shall be under supervision of the General Manager of Israeli Operations.  Insofar as all his other responsibilities are concerned, including (but not limited to) responsibilities of General Counsel and Chief Compliance Officer, Employee shall be under the direct supervision of the President and Chief Operating Officer. Nothing herein shall derogate from Employee's obligations in fulfilling his duties as General Counsel and Chief Compliance Officer to the Board and any committee thereof.

1.2  Extent of Services. The Employee shall be employed on a full-time basis and shall devote his entire business time, attention and efforts to the performance of his duties and responsibilities under this Agreement and the business and affairs of the Company. The Employee acknowledges hereby that the terms of his employment, the circumstances thereof, and the nature of his work require an unusual amount of personal trust as set out in the Israeli Hours of Employment and Rest Law, 5711-1951, and therefore, the said law shall not apply to the Employee's employment with the Company.

1.3  Termination of Retainer Agreement and Ancillary Arrangements

1.3.1  As of the Effective Date, the Retainer Agreement shall terminate.

1.3.2  Upon the termination of the Retainer Agreement and the entry into effect of this Agreement, the Company shall pay (a) to the Employee all monies, including Value Added Tax ("VAT"), at the applicable rate due and owing to the Employee on account of services rendered and disbursements incurred on behalf of the Company and (b) to the law firms with which the Employee was associated during the period commencing January 1, 2003 and through the Effective Date all monies, including VAT thereon, due and owing to the said law firms for the services, including office support services, rendered by those law firms as provided by the Retainer Agreement.

 1.3.3  If the Effective Date is after January 1, 2004 (such period between January 1, 2004 and the Effective Date, the "Benefits Compensation Period"), then, at the Employee's option, notified to the Company no later than fifteen (15) days following the Effective Date, the Company shall:

	in the context of the manager's insurance plan ("Bituach Menahalim") to be established for the Employee pursuant to section 4.1 below, purchase on behalf of the Employee coverage for the Benefits Compensation Period at rates  calculated on the basis of the Base Salary, as defined below, to the same extent as if the Effective Date were January 1, 2004; or

	pay to Employee a cash payment in the amount of 131⁄3% plus an additional 21/2% (in total 155/6%) of the total retainer payments to which Employee was entitled pursuant to the Retainer Agreement for the Benefits Compensation Period, plus VAT thereon. If Employee shall choose this option (b), the Company shall pay to Employee the amounts due hereunder no later than thirty (30) days following the Effective Date against receipt of a VAT tax invoice and receipt from Employee

2.  Term and Termination

2.1  Term. The initial term of employment under this Agreement shall be for the period commencing on the Effective Date and ending on December 31, 2008 (the "Initial Term"). Thereafter, the term of Employee's employment under the Agreement shall automatically be extended for additional periods of one (1) year (each an "Additional Term") at the end of the Initial Term and of each Additional Term unless either party has given notice to the other of its intention not to extend at least one hundred eighty (180) days prior to the expiration of the Initial Term or any Additional Term; provided, however, that following the Employee's having attained the age of seventy (70), the Term of the Agreement, if still in effect, shall not be automatically extended upon the expiration of the then applicable Additional Term, but shall be extended only upon the mutual agreement of the Company and the Employee annually no later than ninety (90) days prior to the end of the applicable Additional Term. (The Initial Term and, if the Initial Term is extended, any and all Additional Terms, the "Term").

2.2  Termination by the Company. Notwithstanding the aforesaid, the Employee's employment may be terminated under the following circumstances:

2.2.1  For Disability. The Company may, upon ninety (90) days prior written notice, terminate Employee's employment after having established the Employee's Disability. For purposes of this Agreement, "Disability" means a physical or mental infirmity which impairs the Employee's ability to substantially perform his duties pursuant to this Agreement which infirmity continues for a period of at least 120 days in any 365 day period. Upon termination for disability, the Company shall continue to pay Employee all salary and benefits hereunder for the remainder of the Term, less any disability insurance payments received by Employee.

2.2.2  For  Cause. The Company may terminate the Employee's employment for Cause upon written notice to the Employee in which notice the basis for termination shall be set forth.  A termination for "Cause" is a termination due to a serious breach of trust, including, but not limited to, theft, embezzlement, self-dealing, prohibited disclosure to unauthorized persons or entities of confidential or propriety information of or relating to the Company or the engaging by Employee in any prohibited business competitive with the business of the Company and its subsidiaries, affiliates or associated entities. No termination for Cause shall be effective except subject to the final, non-appealable judgment of a court of competent jurisdiction 

to the effect that Employee has committed a serious breach of trust as aforesaid. Except if and to the extent otherwise determined by a court of competent jurisdiction, the Employee shall be entitled to the compensation and benefits provided for under this Agreement for the period prior to the termination of the Employee's employment under this section.

2.2.3  Termination Other Than For Cause. The Company may terminate the employment of the Employee other than for Cause at its discretion and at any time on ninety (90) days prior written notice.

2.3  Termination by Employee. Employee may terminate this Agreement and his employment relationship with the Company at his discretion and at any time on ninety (90) days prior written notice.

2.4  Relationship during Notice Period

2.4.1  For purposes hereof, the term "Notice Period" shall mean the period between the giving of any Notice of Termination and the effective date of such notice as provided in sections 2.2 and 2.3 above or between the date of the notice of intent not to extend the Term and the date of the termination of the Term as provided for in section 2.1 above.

2.4.2  During any Notice Period pursuant to section 2.2.3 or 2.3 above, the Employee shall continue to work and fulfill his duties, hereunder, as an employee of the Company; provided, however, that the Company shall have the right in its discretion to ask the Employee to cease working at the premises of the Company or to cease to work during all or any part of the Notice Period, in which case and without derogating from the Employee's right to Compensation pursuant to sections 2.5.1 - 2.5.3 below to the extent applicable, the Company shall redeem such portion of the Notice Period for which the Company shall have waived its right to the services of the Employee (the "Waived Period") by payment to Employee of an amount equal to Employee's Salary for the Waived Period, plus such amounts to which the Company is obligated pursuant to sections 4 and 5 below.

2.4.3  In the event Employee continues to work during the Notice Period, he shall cooperate with the Company to ensure an orderly transfer of his responsibilities.

2.4.4  In the event the Employee gives notice of termination pursuant to section 2.3 above or of his intention not to extend the Term pursuant to section 2.1 above, and does not continue to work during all or any part of the Notice Period, the Employee shall pay to the Company as liquidated damages an amount equal to his salary for said portions of the Notice Period during which he does not work. The Company shall have the right to deduct such amount from all and any monies due and owing the Employee from the Company.

2.5  Compensation in the Event of Termination

2.5.1  Termination Other Than for Cause or Disability. Without derogating from the rights of the Employee to compensation during the Notice Period as provided in section 2.4 above, the Employee shall be entitled to compensation in the event of (a) termination or of (b) failure to extend the Term of the Agreement by the Company prior to the Employee's attaining the age of seventy (70), other than for Cause or due to Disability, in an amount equal to:

	all sums, including Salary pursuant to section 3 below, Social Insurance and Employee Benefits as provided in section 4.1 - 4.3 below, to which Employee would otherwise have been entitled if he had remained in the employ of the Company for the portion of the Term during which this Agreement would have remained in effect but for its termination as aforesaid, and 

	an amount equal to six (6) monthly Base Salaries, as defined in section 3 below.

2.5.2  Change of Control. In the event of (a) termination or of (b) failure to extend the Term of this Agreement prior to the Employee's attaining the age of seventy (70), other than for Cause or due to Disability, within one (1) year of the completion of a Business Combination as defined in Article Tenth of 

the Company's Amended and Restated Certificate of Incorporation, then in addition to any rights of the Employee during the Notice Period as provided in section 2.4 above, and pursuant to section 2.5.1 above and to section 2.5.3  below, the Employee shall be entitled to compensation in an amount equal to thirty six (36) monthly Base Salaries.

2.5.3  Release of Social Benefit Funds. In the event of the termination or the failure to extend the term of this Agreement for any reason whether at the Company's or the Employee's instance, the Company shall release to the benefit of the Employee all funds that have accrued to the Employee's benefit in the severance pay and pension funds established pursuant to section 4.1 below; provided that in the event of termination of this Agreement by the Company for Cause or by the Employee in circumstances under which the Company has the right to deny the Employee severance pay ("Pitzuei Piturim") pursuant to the provisions of the Israeli Severance Pay Law, 5723-1953 ("Severance Pay"), in whole or in part, the Employee shall be entitled to the release only of such sums as accrued in the funds attributable to the Employee's Contributions pursuant to section 4.1(d) below.

3.  Salary

As compensation for the Employee's services hereunder, the Company shall pay the Employee a monthly gross salary (the "Salary") in an amount in New Israeli Shekelim (NIS) as follows:

for the period commencing the Effective Date, US $16,667 (US $200,000 annually) (as such may be increased from time to time by decision of the Board, the "Base Salary"),

calculated at the representative rate of the US Dollar as against the NIS, last published by the Bank of Israel and known at the time of payment (the "Representative Rate"), payable to Employee in NIS on the first business day of each month during the term of the Employee's engagement hereunder in arrears for the month just ended.

4.  Social Insurance and Employee Benefits

4.1  Severance Pay and Pension Benefits. 

	The Company shall allocate and pay to a Provident Fund ("Kupat Gemel") (as defined in Section 47 of the Israeli Income Tax Ordinance) (such Provident Fund, the "Fund") in the framework of a manager's insurance plan ("Bituach Mnahalim") or in such other framework, at the option of the Employee and subject to the consent of the Company, a sum equal to 131⁄3% of the Employee's Salary as it may be from time to time (such sum, the "Company's Contribution").

	The Company's Contribution shall be allocated as follows:

	81⁄3% towards Severance Pay; and

	5% to pension benefits ("Tagmulim").

	The Company shall also pay an amount equal to 21/2% of Employee's Salary towards the purchase of disability insurance for the Employee.

	The Company shall deduct from the Employee's Salary as it may be from time to time an amount equal to 5% of the Salary (the "Employee's Contribution") and deposit such sum in the Fund. The Employee's Contribution shall be allocated in full to pension benefits (Tagmulim).

	That part of the Company's Contribution allocated as provided in clause (b)(i) of this section 4.1 above, together with all income thereon of whatever nature, shall be on account of Severance Pay  that shall be due, if due, to Employee pursuant to the provisions of section 2.5.3 above or pursuant to the Israeli Severance Pay Law, 5723-1953.

4.2  Vacation. The Employee shall be entitled to an annual vacation of twenty three (23) working days at full pay. Vacation days may be accummulated for two years, after which they must be used or redeemed; provided that accummulation of vacation days in excess of forty six (46) days may be approved by the Chief Executive Officer of the Company in his discretion.

4.3  Recuperation Allowance. Employee shall be entitled to Recuperation Allowance ("Dmei Havra'ah") of ten (10) days per year at the rate provided from time to time by applicable law. The Recuperation Allowance shall be paid semi-annually at the rate of five (5) days per each semi-annual period  together with payment of the Employee's June and December Salaries.

4.4  Sick Pay

	The Employee shall be entitled to up to thirty (30) days per year of fully paid sick leave, against a doctor's confirmation, which leave can be accummulated for a period of up to a maximum of five (5) years; provided, however, that the Employee shall not be entitled to sick leave payment to the extent already covered by any insurance component of any plan purchased by or for the benefit of the Employee pursuant to section 4.1 above. 

	The Employee shall not for any reason or in any circumstances be entitled to redeem any accumulated but unused sick leave upon termination of his employment under this Agreement.

	It is agreed that payment on account of sick leave as provided herein shall be deemed in full compliance with the Company's obligations to Employee under the Israeli Sick Pay Law, 5736-1976.

5.  Additional Benefits

5.1  Vehicle Expenses and Parking. 

	Commencing January 1, 2004 and provided that the Employee has a valid driver's license and valid vehicle license, the Company shall pay the Employee monthly a vehicle maintenance allowance in an amount in NIS equal to US $150 (US Dollars One Hundred and Fifty)  (calculated at the Representative Rate). This amount shall be paid as the Company's participation in the Employee's expenses in maintaining his vehicle so that it is available for use by the Employee in connection with Company business, including travel between his residence and his place of work. 

	The Company shall arrange for parking for the Employee at his place of work and shall reimburse him for his parking expenses based on receipts he shall produce to the Company.

5.2  Cellular Phone. Commencing January 1, 2004, the Company shall provide Employee with a Company cellular phone for Company business. Until such time as the Company purchases or leases cellular phones on its own account, the Company shall reimburse the Employee his expenses in maintaining and using one cellular phone (one number). 

5.3  Professional Fees. Commencing for calendar year 2004, the Company shall reimburse Employee professional license and professional liability fees and periodic membership dues for the professional societies and social/business organizations the maintenance of which is hereby acknowledged to be connected with and necessary for the proper performance of the Employee's duties under this Agreement, including:

	Israel Chamber of Advocates (National and District Committees).

	State of New York Attorney Registration Fee.

	American Bar Association.

	Professional Liability Insurance as provided by the Israel Chamber of Advocates in connection with its annual license/membership fee.

	One golf, boating or fitness club

	Additional as may from time to time be approved by the Chief Executive Officer

5.4  Expenses. The Employee shall be entitled to be reimbursed for all reasonable expenses incurred by him in connection with the performance of his duties hereunder in accordance with the expense reimbursement policy adopted by the Board or with the prior approval of the Chief Executive Officer or the President of the Company.

6.  Long-Term Management Incentive Plan

The Company has resolved to establish a long-term management incentive plan, which may be structured as an employee's royalty pool, to be funded by the equivalent of a 1.5% overriding royalty or net profits interest (after pay-out calculated on a well by well basis) (the "Plan"). Upon its establishment, the Employee shall be granted a 10% (ten percent) interest in Plan income attributable to wells drilled on any oil and gas property acquired by the Company prior to the end of the Term or earlier termination of this Agreement, subject to the terms and conditions of the Plan.  To the extent less than 100% of the interests in the Plan with respect to a single well have been awarded at the time the well is spudded, Employee shall share pro-rata with the other Plan participants in the excess unawarded amounts.

7.  Propriety Information

7.1  The Employee acknowledges and agrees that, in the course of his employment by the Company, he will have access to confidential and propriety information of the Company regarding, without limitation, the business, financial, research, exploratory, engineering, production, marketing and sales activities of the Company. Such information, whether documentary, written, oral or computer generated, shall be deemed to be and referred to as "Proprietary Information".

7.2  Proprietary Information shall be deemed to include any and all proprietary information disclosed by or on behalf of the Company and irrespective of form, but excluding information that: (i) was known to the Employee prior to his association with the Company and can be so proven; (ii) shall have appeared in any printed publication or patent or shall have become a part of the public knowledge except as a result of a breach of this Agreement by the Employee; (iii) shall have been received by the Employee from a third party having no obligation to the Company; (iv) reflects general skills and experience gained during the Employee's engagement by the Company; or (v) reflects information and data generally known within the industries or trades in which the Company transacts business.

7.3  The Employee agrees and declares that all Proprietary Information, patents and other rights in connection therewith shall be the sole property of the Company and its assigns. At all times, both during his engagement by the Company and for a period of five (5) years after its termination, the Employee will keep in confidence and trust all Proprietary Information, and the Employee will not use or disclose any Proprietary Information or anything relating to it without the written consent of the Company, except as may be necessary in the ordinary course of performing the Employee's duties hereunder and in the best interests of the Company.

7.4  Upon termination of his employment with the Company, the Employee will promptly deliver to the Company all documents and materials of any nature pertaining to his work with the Company, and he will not take with him any documents or materials or copies thereof containing any Proprietary Information.

7.5  The Employee recognizes that the Company received and will receive confidential or proprietary information from third parties 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. At all times, both during his employment and after its termination, the Employee undertakes to keep and hold all such information in strict confidence and trust, and he will not use or disclose any of such information without the prior written consent of the Company, except as may be necessary to perform his duties as an employee of the Company and consistent with the Company's agreement with such third party. Upon termination of his employment with the Company, Employee shall act with respect to such information as set forth in Section 7.4 mutatis mutandis.

7.6  The Employee's undertakings in this section 7 shall remain in full force and effect in accordance with their terms after termination of this Agreement or any renewal thereof.

8.  Non-Competition

8.1  The Employee agrees and undertakes that he will not, so long as he is employed by the Company and for a period of six (6)  months following termination of his employment for whatever reason, directly or indirectly, as owner, partner, joint venturer, stockholder, employee, broker, agent, principal, corporate officer, director, licensor or in any other capacity whatever engage in, become financially interested in, be employed by, or have any connection with any business or venture that is engaged in any activities competing with the Company in the field of petroleum exploration, production and marketing in Israel or any other region or territory in which the Company is conducting or considering the conduct of petroleum exploration, production or marketing activities; provided, however, that the Employee may own securities of any corporation or other entity which is engaged in such business and is publicly owned and traded but in an amount not to exceed at any one time one percent (1%) of any class of stock or securities of such entity so long as he has no active role therein as director, employee, consultant or otherwise, unless otherwise specifically approved by the Board.

8.2  The Employee agrees and undertakes that during the period of his employment and for a period of twelve (12) months following termination, he will not, directly or indirectly, including personally or in any business in which he is an officer, director or shareholder, for any purpose or in any place, employ any person employed by the Company or retained by the Company as a consultant on the date of such termination or during the preceding six (6) months.

8.3  If any one or more of the terms contained in this section 8 shall for any reason be held to be excessively broad with regard to time, geographic scope or activity, the term shall be construed in a manner to enable it to be enforced to the extent compatible with applicable law.

9.  Indemnification and Insurance

9.1  The Company shall indemnify the Employee against, and hold him harmless, from any and all judgments, penalties (including excise and similar taxes), fines, settlements and expenses (including attorney's fees and court costs) actually and reasonably incurred by him in connection with any action, suit or proceeding whether civil, criminal, administrative, arbitrative or investigative, any appeal in such an action, suit or proceeding whether or not by or in the right of the Company to which Employee is or may be made a party or is or shall be threatened to be made a party by reason of the fact that the Employee is an officer, employee or agent of the Company or is or was serving at the request of the Company as a director, officer, partner, venturer, proprietor, trustee, employee, agent or similar functionary of another corporation, partnership, joint venture, sole proprietorship, trust, nonprofit entity, employee benefit plan or other enterprise, to the fullest extent permitted by any applicable law, and such indemnity shall inure to the benefit of the heirs, executors and administrators of the Employee.

9.2  The right to indemnification under this section 9 shall include the Employee's right to be paid by the Company the expenses incurred in defending any such proceeding in advance of its disposition; provided, however, that, if the applicable law requires, the payment of such expenses incurred by the Employee in advance of the final disposition of a proceeding shall be made only upon delivery to the Company of an undertaking, by or on behalf of the Employee, to repay all amounts so advanced if it shall ultimately be determined that the Employee is not entitled to be indemnified under this section 9 or otherwise.

9.3  The Company shall purchase and maintain insurance coverage in an amount to be determined from time to time by the Board taking into account the nature and extent of the Company's activities and the cost of coverage, but in no event less than that maintained by the Company for any other director or executive officer of the Company, on behalf of the Employee, both in his capacity as an officer, director and employer of the Company and, if he so serves at the request of the Company, as a director, officer, 

employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against any legally insurable liability asserted against the Employee and incurred by the Employee in any such capacity or arising out of Employee's status as such.

10.  Taxes

Any and all taxes, fees and other liabilities (as may apply from time to time) in connection with the Salary (section 3 above) or with the Social Insurance and Employee Benefits (section 4 above) or with the Additional Benefits (section 5 above) or with any other payment to which the Employee is entitled under this Agreement will be borne by the Employee and, except as otherwise expressly set out in this Agreement, the Employee shall be solely liable for all such taxes, fees and other liabilities.

11.  Mutual Representations

11.1  The Employee represents and warrants to the Company that the execution and delivery of this Agreement and the fulfillment of the terms hereof (i) will not constitute a default under or conflict with any agreement or other instrument to which he is a party or by which he is bound, and (ii) do not require the consent of any person or entity.

11.2  The Company represents and warrants to the Employee that this Agreement has been duly authorized, executed and delivered by the Company and that the fulfillment of the terms hereof (i) will not constitute a default under or conflict with any agreement or other instrument to which it is a party or by which it is bound, and (ii) do not require the consent of any person or entity.

11.3  Each party hereto warrants and represents to the other that this Agreement constitutes the valid and binding obligation of such party enforceable against such party in accordance with its terms subject to applicable bankruptcy, insolvency, moratorium and similar laws affecting creditors' rights generally, and subject, as to enforceability, to general principles of equity (regardless if enforcement is sought in proceeding in equity or at law).

12.  Notice; Addresses

12.1  The addresses of the parties for purposes of this Agreement shall be the addresses set forth above, or any other address which shall be provided by due notice given in accordance with the provisions of section 12.2 below.

12.2  All notices in connection with this Agreement shall be sent by registered airmail or delivered by hand or international courier service to the addresses set forth above, and shall be deemed to have been delivered to the other party at the earlier of the following two dates: (a) if sent by registered airmail or international courier service, as aforesaid, five (5) business days from the date of mailing; and (b) if delivered by hand - upon actual delivery or proffer of delivery (in the event of a refusal to accept it) at the address of the addressee. Delivery by cable, telex, facsimile or other electronic communication shall be sufficient and be deemed to have occurred upon electronic confirmation of receipt, with copy sent by first class airmail.

13.  Miscellaneous

13.1  The preamble to this Agreement constitutes an integral part hereof. 

13.2  Headings are included for reference purposes only and are not to be used in interpreting this Agreement.

13.3  The provisions of this Agreement are in lieu of the provisions of any collective bargaining agreement or arrangement and, therefore, no collective bargaining agreement or arrangement shall apply with respect to the relationship between the parties hereto (subject to the applicable provisions of law).

13.4  No failure, delay or forbearance of either party in exercising any power or right hereunder shall in any way restrict or diminish such party's rights and powers under this Agreement, or operate as a waiver of any breach or nonperformance by either party of any terms or conditions hereof.

13.5  No determination of the invalidity or unenforceability of any provision of this Agreement shall affect the remaining provisions hereof unless the business purpose of this Agreement is substantially frustrated thereby.

13.6  This Agreement is personal and non-assignable by the Employee. It shall inure to the benefit of any corporation or other entity with which the Company shall merge or consolidate or to which the Company shall lease, sell or otherwise transfer all or substantially all of its assets, and may be assigned by the Company to any affiliate of the Company or to any corporation or entity with which such affiliate shall merge or consolidate or which shall lease or acquire all or substantially all of the assets of such affiliate. Any assignee must assume all the obligations of the Company hereunder, but such assignment and assumption shall not serve as a release of the Company.

13.7  This Agreement is the only agreement between the parties on the subject matter of this Agreement and supersedes and replaces all other agreements, whether written or oral, between the parties, concerning the subject matter of this Agreement, including that certain letter dated September 2, 2003 from the Company to Employee "Re: Executive Employment Agreement"; provided, however, that nothing herein shall be deemed to affect the rights of either of the parties hereto with respect to the services rendered by the Employee to or on behalf of the Company during any period prior to the Effective Date, including without limitation those services rendered prior to the Effective Date pursuant to the Retainer Agreement.

13.8  It is hereby agreed between the parties that the laws of the State of Israel shall apply to this Agreement and that the sole and exclusive place of jurisdiction in any matter arising out of or in connection with the Agreement shall be the courts of appropriate jurisdiction in Tel Aviv - Jaffa.

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first above written.

	
ZION OIL & GAS, INC.
	
	

	
                                                
	
	
                                                

	
By:
	
                                
	
	
Philip Mandelker

	
Name:
	
                                
	
	

	
Title:

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