agreement

EXHIBIT 10.3

N E T W O R K 1 F I N A N C I A L
S E C U R I T I E S, I N C.

August 9,2006

Zion Oil & Gas, Inc.
6510 Abrams Road, Suite 300
Dallas, TX 75231

                Re:          Fifth Amended and Restated Underwriting Agreement

Gentlemen:

This agreement amends and restates that certain amended and restated underwriting agreement originally dated December 2, 2005 and amended March 15, April 24, May 23, and July 19, 2006 between Zion Oil & Gas, Inc. (the "Company"), a Delaware corporation, and us (the "Underwriter") in connection with the offering and sale through Network 1 Financial Services, Inc. (the "Underwriter") and other broker-dealers ("Placement Agents") of up to 2,000,000 shares of the Company's $.01 par value common stock (the "Shares") for $7.00 per Share. The offering of the Shares is further described in the Registration Statement on Form SB-2 filed on January 25, 2006 (as subsequently amended) with the Securities and Exchange Commission (the "SEC").     

1. Registration Statement. The Registration Statement, including the Prospectus, together with exhibits (collectively, the "Registration Statement") for the registration of the Shares will be amended by the Company and filed with the SEC and the applicable state authorities. The Registration Statement will also register: (i) up to 150,000 shares of the Company (the "Gift Shares") that executive officers of the Company propose to give (out of their personal holdings) to at least 840 but no more than 1,000 gift recipients; and (ii) up to 521,200 shares of the Company (the "Warrant Shares") underlying currently issued and outstanding warrants of the Company. The Registration Statement, any amendment thereto, and all documents filed by the Company with the SEC shall conform in all material respects with the requirements of the Securities Act of 1933, as amended (the "Act") and the Rules and Regulations promulgated under the Act. All financial statements contained in the Registration Statement and any amendment thereto shall have been reported on by independent certified public accountants acceptable to the Underwriter, it being agreed that each of Lane gorman Trubitt, LLP and KPMG-Somekh Chaikin, the Company's previous and current independent auditors, are acceptable to Underwriter.

Neither the Registration Statement nor the other material to be filed with the SEC will contain any untrue statements of material facts nor will there be any omissions of material fact required to be stated therein or that are necessary to make the statements therein not misleading, except that, as between the parties, this covenant will not apply to any statement or omissions made in reliance upon or in conformity with information furnished to the Company by and with respect to Underwriter or any Placement Agent expressly for use in the Registration Statement or any amendment or supplement thereto.

All amendments and supplements to the Registration Statement shall be submitted to the Underwriter at least five days prior to the date that such amendments are intended to be filed with the SEC, which time period may be waived by mutual consent of the parties. The content of any verbal comments and copies of all comment letters received from the SEC shall immediately be supplied to Underwriter. The Company will deliver to Underwriter as many copies of the manually executed and conformed Registration Statement and each amendment thereto (including exhibits), as Underwriter reasonably shall request and at the same time as such documents are filed with the SEC. The Company will not allow the Registration Statement to become effective without prior written consent of the Underwriter, which consent shall not be unreasonably withheld.

2. Representations, Warranties and Covenants of the Company. In order to induce you to enter into this Agreement, the Company represents, warrants and covenants as follows:

(a) The Company has obtained a CUSIP number for its common stock (989696 10 9) and the Company will use its best efforts to register or qualify (or exempt from registration/qualification) the Shares for offering in every state, territory or possession of the United States (including the District of Columbia, hereinafter referred to as a "State") in which it plans to offer the Shares for sale. The materials filed or to be filed with any State will not contain any untrue statements of material fact nor are there or will there be any omissions of material facts required to be stated therein or that are necessary to make the statements therein not misleading, except that, as between the parties, this covenant will not apply to any statement or omission made in reliance upon or in conformity with information furnished to the Company by and with respect to Underwriter or any Placement Agent expressly for use in the materials filed with the State.

(b) The outstanding capital stock of the Company has been duly and validly authorized, issued and is fully paid and non-assessable and will conform to all statements made in the Registration Statement and Prospectus with respect thereto. The Shares have been duly and validly authorized and, when issued and delivered against payment as provided in this Agreement, will be validly issued, fully paid and non-assessable. The Shares, upon issue, will not be subject to the preemptive rights of any shareholders of the Company and will conform to all statements in the Registration Statement and Prospectus.

(c) The Company has been legally incorporated and is now, and always during the period of the offering will be, a validly existing corporation under the laws of the State of Delaware, lawfully qualified to conduct the business for which is was organized and which it proposes to conduct. The Company will always during the period of the offering be qualified to conduct business as a foreign corporation in each jurisdiction where the nature of its business requires such qualification.

(d) The Company's certificate of incorporation provides for the authorization of 20,000,000 shares of common stock ($.01 par value). There are no outstanding options, warrants or other rights to purchase securities of the Company except as will be described in the Registration Statement.

(e) The Company has no subsidiaries nor contemplates acquiring subsidiaries or engaging in mergers with or the acquisition of any companies.

(f) The financial statements, together with related schedules and notes, to be included in the Registration Statement will present fairly the financial condition of the Company and will be reported upon by independent public accountants according to generally accepted accounting principles and as required by the rules and regulations of the Commission.

(g) The Company's securities are not subject to preemptive rights.

(h) The Company has the legal right and authority to enter into this Underwriting Agreement, to effect the proposed sale of the Shares, and to effect all other transactions contemplated by this Agreement.

(i) The Company is eligible to use Form SB-2 for the offering of the Shares.

(j) The Company possesses adequate certificates and permits issued by the appropriate federal, state and local regulatory authorities necessary to conduct its business and to retain possession of its properties. The Company has not received any notice of any proceeding relating to the revocation or modification of any of these certificates or permits.

(k) The Company has filed all tax returns required to be filed and is not in default in the payment of any taxes that have become due pursuant to any law or any assessment.

(l) All of the contracts, leases, licenses, permits and agreements under which the Company operates as will be described in the Registration Statement are in full force and effect. The Company is not in default under any of the material terms or provisions of any such contracts, leases, licenses, permits or agreements.

(m) All original documents and other information relating to the Company's business are and will continue to be made available upon request to the Placement Agents and their counsel at the offices of the Company, and copies of any such documents will be furnished upon request to the Underwriter or its counsel.

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(n) The Company shall appoint Registrar and Transfer Company, Cranford, NJ, or another firm reasonably acceptable to the Underwriter, as the Company's transfer agent. The Company will continue to retain a transfer agent reasonably satisfactory to the Underwriter for so long as the Company is subject to the reporting requirements under Section 12(g) or Section 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). The Company will make arrangements to have available at the office of the transfer agent sufficient quantities of the Company's common stock certificates as may be needed for the quick and efficient transfer of the Shares.

(o) The Company will use the proceeds from the sale of the Shares as will be set forth in the Registration Statement and Prospectus.

(p) There are no contracts or other documents required to be described in the Registration Statement or to be filed as exhibits to the Registration Statement that will not be described or filed as required.

All of the above representations and warranties shall survive the performance or termination of this Agreement.

3. Representations, Warranties and Covenants of the Underwriter. The Underwriter represents, warrants and covenants as follows:

(a) It is registered as a broker-dealer with the Commission, and is registered to the extent registration is required with the appropriate governmental agency in each State in which it offers or sells the Shares, and is a member of the National Association of Securities Dealers, Inc. ("NASD") and will use its best efforts to maintain such registrations, qualifications and memberships throughout the term of the offering.

(b) To the knowledge of the Underwriter, no action or proceeding is pending against the Underwriter or any of its officers or directors concerning the Underwriter's activities as a broker or dealer that would affect the Company's offering of the Shares.

(c) The Underwriter will offer the Shares only in those states and in the quantities that are identified in the Blue Sky Memoranda from the Company's counsel to the Underwriter that the offering of the Shares has been registered or qualified (or exempt from registration/qualification) for sale under the applicable State statutes and regulations. The Underwriter, however, may offer the Shares in other states if (i) the transaction is exempt from the registration requirements in that State, (ii) the Company's counsel has received notice ten days prior to the proposed sale, and (iii) the Company's counsel does not object within such ten-day period.

(d) The Underwriter, in connection with the offer and sale of the Shares and in the performance of its duties and obligations under this Agreement, agrees to use its best efforts to comply with all applicable federal laws; the laws of the states or other jurisdictions in which the Shares are offered and sold; and the Rules and current written interpretations and policies of the NASD.

(e) The Underwriter is a corporation duly organized, validly existing and in good standing under the laws of the State of Texas with all requisite power and authority to enter into this Agreement and to carry out its obligations hereunder.

(f) This Agreement has been duly authorized, executed and delivered by the Underwriter and is a valid agreement on the part of the Underwriter.

(g) Neither the execution of this Agreement nor the consummation of the transactions contemplated hereby will result in any breach of any of the terms or conditions of, or constitute a default under, the articles of incorporation or bylaws of the Underwriter or any indenture, agreement or other instrument to which the Underwriter is a party or violate any order directed to the Underwriter of any court or any federal or State regulatory body or administrative agency having jurisdiction over the Underwriter or its affiliates.

(h) No person acting by, through or under the Underwriter will be entitled to receive from the Underwriter or from the Company finder's fees or similar payments, except as set forth in this agreement.

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(i) The Underwriter will, reasonably promptly after any closing date, supply the Company with all information required from the Underwriter for the completion of Form SR (Application of Proceeds) and such additional information as the Company may reasonably request to be supplied to the securities commissions of such States in which the Shares have been qualified for sale.

All of the above representations and warranties shall survive the performance or termination of this Agreement.

4. Employment of the Underwriter. In reliance upon the representations and warranties and subject to the terms and conditions of this Agreement:

(a) The Company employs the Underwriter as its agent to sell for the Company's account the Shares, on a cash basis only, at a price of $7.00 per Share. The Underwriter agrees to use its best efforts, as agent for the Company, to sell the Shares subject to the terms and conditions set forth in this Agreement. It is understood between the parties that there is no firm commitment by the Underwriter to purchase any or all of the Shares.

(b) The obligation of the Underwriter to offer the Shares is subject to receipt by it of written advice from the SEC that the Registration Statement is effective, is subject to the Shares being registered or qualified (or exempt from registration/qualification) for offering under applicable laws in the States as may be reasonably designated, is subject to the absence of any prohibitory action by any governmental body, agency or official, and is subject to the terms and conditions contained in this Agreement and in the Registration Statement.

(c) The Company and the Underwriter agree that unless a minimum of 350,000 of the Shares to be offered (the "Minimum Offering") are subscribed on or within 90 days (or such lesser number of days as may be required by the American Stock Exchange) after the effective date of the offering (which period may be extended by the Company for an additional period or periods of up to 120 days, if approved by the American Stock Exchange), the agency between the Company and the Underwriter will terminate. In such an event, the full proceeds that have been paid for the Shares shall be returned to the purchasers within ten (10) business days. Prior to the sale of all of the Shares to be offered, all proceeds received from the sale of the Shares will be deposited into an interest bearing escrow account entitled "Zion Oil & Gas Escrow Account" (the "Escrow Account") with Sterling Trust Company (the "Escrow Agent").

(d) The Underwriter, the Company and the Escrow Agent have entered into a fund escrow agreement ("Escrow Agreement") as set forth in Exhibit 10.3 to the Registration Statement. The Company agrees to faithfully perform its obligations under the Escrow Agreement. The Underwriter will promptly deliver the funds into the Escrow Account in accordance with Rule 15c2-4 of the Exchange Act of 1934, but in any event not later than noon the next business day after receipt of such funds. The Underwriter will promptly deliver a copy of each subscription agreement received to the executive offices of the Company, to the attention of the Company's Assistant Treasurer. In accordance with the requirements of Rules 15c2-4 and 10b-9 of the Exchange Act, in the event that the minimum offering amount is not met, the funds paid into the Escrow Account shall be promptly returned to each individual subscriber by the Escrow Agent, and not returned to the Underwriter or the Company for delivery to such subscribers. Any pro rata interest on the escrowed funds shall not be paid to the Underwriter, but shall be paid to the subscribers on a pro rata basis.

(e) Subject to the closing of the sale by the Company of the Minimum Offering, the Company agrees to pay to the Underwriter immediately upon the release to the Company in such closing (the "Initial Closing") of the investors' funds deposited into the Escrow Account, and upon release to the Company of the investors' funds in each closing thereafter:

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(f) The Company shall advance the Underwriter $35,000 towards its non-accountable expense allowance, payable in the following manner: (i) $20,000 upon the approval of this Agreement by the Company's board of directors as provided in para. 14 below and (ii) $15,000 no later than sixty (60) days after said approval; which retainer amounts shall be credited against the amounts payable to the Underwriter pursuant to clause (e)(ii) of this para. 4 upon the Initial Closing.

(g) The offering shall terminate on a date (the "Final Closing Date") that is the earlier of: (i) the date on which maximum number of Shares have been sold; or (ii) up to 240 days following the effective date.

(h) The Company shall be responsible for all of its selling expenses incident to the offering (other than underwriters' commissions and other compensation set forth in para. (e) of this Section 4) which are customarily incurred, paid, or borne by or on behalf of issuers in connection with the sale of securities, even though such expenses are paid through the Underwriter. Such selling expenses include, but are not limited to, the following: (1) the cost of preparing, printing, and filing registration applications, registration statements, prospectuses, offering circulars, and other documents used in registering securities, including any registration fees and other expenses associated therewith; (2) the amount of any attorney's fees and expenses (except those charged by an underwriter's counsel) incurred or paid in connection with the offering; (3) the amount of any accountant's or auditor's fees and expenses incurred or paid in connection with the offering; (4) the amount of the fees and charges of any transfer agents, registrars, indenture trustees, escrow agents, depositories, engineers, appraisers, or other professional or technical experts; (5) the cost of authorizing, preparing, and printing certificates for securities and other documents relating thereto, including taxes and stamps; (6) the amount of all printing, advertising, traveling expenses, and expenses in connection with meetings and presentations for informational or promotional purposes (e.g., "road show") incurred or paid by the Company or, at the request of or with the prior approval of the Company, which approval shall not be unreasonably withheld, by the Underwriter, in registering or selling securities, (except "road show" or meeting expenses traditionally borne by an underwriter); and (7) any other costs (including staffing or other additional administrative costs) directly or indirectly borne by the Company in respect of the sale of the securities being offered, that are not selling costs for the offering.

5. Further Agreements of the Company. The Company further agrees with the Underwriter as follows:

(a) The Company will use its best efforts to register or qualify the sale of the Shares in such States as shall be reasonably requested by the Underwriter.

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(b) The Company will deliver to the Underwriter as many copies of the preliminary Prospectus as the Underwriter may reasonably request during the period following the filing of the Registration Statement and each amendment thereto. The Company will deliver to the Underwriter as many copies of the final Prospectus and each post-effective amendment of the Registration Statement, as the Underwriter may reasonably request during the period of the offering and for ninety (90) days after the Final Closing Date,

(c) The Company agrees to notify the Underwriter immediately during the period of the offering and within the ninety (90) day period after the Final Closing Date of any event that materially affects the Company or its securities and that should be set forth in an amendment or supplement to the Prospectus in order to make the statements made therein not misleading. Similarly, the Company agrees to as soon as possible thereafter prepare and furnish to the Underwriter as many copies of an amended Prospectus or a supplement to the Prospectus in order that the Prospectus as amended or supplemented will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or that is necessary in order to make the statements made therein not misleading.

(d) The Company will file with the Commission the required reports on Form SR and will file with the appropriate State securities commissioners any sales and other reports required by the rules and regulations of such agencies and will supply copies to the Underwriter, if requested.

(e) The Company will notify the Underwriter a reasonable amount of time in advance of any additional issuance of shares following a successful closing, for a period of two years following the final closing, except upon the issuance of shares underlying warrants outstanding on the Final Termination Date and shares issued pursuant to any duly adopted directors or employees stock or stock option or equivalent plan, the issuance of which Company will notify the Underwriter within five business days following such issuance..

(f) Omitted

(g) If at any time during the period that the Underwriter's Warrants may be exercised, the Company intends to file a registration statement for an underwritten offering (a "Piggyback Registration") of the sale of shares of its common stock on a form suitable for registering the shares underlying the Underwriter's Warrants (the "Registrable Shares"), the Company will notify Underwriter of its intention at least 30, but no more than 60 days prior to the filing of such registration statement. Within 20 days of such notice, Underwriter, on its own behalf and on behalf of all holders of Underwriter's Warrants (collectively, "Holders") may elect (by written notice to the Company) to include among the registered shares in the Piggyback Registration any specific number of Registrable Shares. If the Underwriter is not the managing underwriter of the Piggyback Registration, all Holders shall be subject to cut-back and lock-in provisions as required by the managing underwriter of the offering in order to effect an orderly distribution of th