UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 

FORM 10-K/A
Amendment No. 1
 
 
  Mark one:
 
x
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED DECEMBER 31, 2011
   
 r  
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
COMMISSION FILE NUMBER: 0-12500

ISRAMCO, INC.
(Exact name of registrant as specified in its charter)
 
Delaware
13-3145265
 (State or Other Jurisdiction   of Incorporation)
   (IRS Employer Identification No.)

2425 West Loop South Suite 810 Houston Texas 77027
(Address of Principal Executive Offices)

713-621-3882
(Registrant's Telephone Number, including Area Code)

Securities registered under Section 12(b) of the Exchange Act: None

Securities registered under Section 12(g) of the Exchange Act:
Common Stock, par value $0.01
(Title of Class)

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes  r No  x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes  r No  x

Indicate by check mark whether the issuer (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  x Yes  r No

Indicate by check mark if disclosure of delinquent filers in response to Item 405 of Regulation S-K is not contained in this Form, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. r

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer“ ,“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer  r                           Accelerated filer  x                        Non-accelerated filer  r                        Smaller Reporting Company r

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act). Yes  r  No  x

As of December 20,, 2012, there were 2,717,691 shares of the Registrant's common stock par value $0.01 per share ("Common Stock") outstanding. The aggregate market value of the Common Stock held by non-affiliates of the Registrant at December 20, 2012, based on the last sale price of such equity reported on the NASDAQ market, was approximately $99.5 million.
 
 
 
 
EXPLANATORY NOTE
 
Isramco, Inc. (“we”, “our” and “us”) is filing this Amendment No. 1 on Form 10-K/A to amend its Annual Report on Form 10-K for the year ended December 31, 2011, filed on March 23, 2012. The purpose of this Form 10-K/A, Amendment No. 1, is to include information required in Part III (Items 10, 11, 12, 13 and 14), that was to be incorporated by reference from our definitive proxy statement pursuant to Regulation 14A of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).
 
Other than the furnishing of the information identified above, this report does not modify or update the disclosure in the Form 10-K in any way. In addition, as required by Rule 12b-15 under the Exchange Act, new certifications by our principal executive officer and principal financial officer are filed as exhibits to this Form 10-K/A under Item 15 of Part IV hereof.
 
 
 
 
TA BLE OF CONTENTS
 
PART III
             
Page
Item
   
10.
          4
                     
     
11.
          9
                     
     
12.
          10
                     
     
13.
          12
                     
     
14.
          14
                     
PART IV
   
15.
          15
                     
      17
                     
Certifications
       

 
 
 
PART III
 
It em 10. Directors, Executive Officers and Corporate Governance.

Our directors, their age, positions, the dates of their initial election or appointment as directors, and the expiration of their terms are as follows:
 
NAME
 
AGE
  Served Since  
POSITION
Haim Tsuff
 
54       
  1996  
Chairman of the Board, Chief Executive
Officer and Director
           
 
Joseph From
 
57         
  2011  
Director
             
Max Pridgeon
 
45         
  2001  
Director
             
Asaf Yarkoni
 
37         
  2010  
Director
             
Frans Sluiter
  44            2011  
Director
             
Itai Ram
 
33         
  2011  
Director
 
All directors hold office until the annual meeting next following their election and/or until their successors are elected and qualified. Officers serve at the discretion of the Board of Directors. Information with respect to the business experience and affiliation of our directors is set forth below:
 
Haim Tsuff has been a director of the Company since January 1996 and the Chairman of the Board of Directors and Chief Executive Officer since May 1996.Mr. Tsuff was also appointed President in 2012. Mr. Tsuff is the sole director and owner of United Kingsway Ltd. and Chairman of YHK General Manager Ltd. (which entity effectively controls Equital, J.O.E.L., Naphtha Petroleum and Naphtha Holdings) and may be deemed to control the Company. Mr. Tsuff brings to our Board significant experience in international business, including the energy industry and finance.  
 
Joseph From was appointed to the Company’s Board of Directors on June 29, 2010. Mr. From is employed as a drilling manager at Star Energy, a UK based energy company with a primary focus on gas storage development and the UK’s second largest onshore oil producer, a position that he has held since June 2007. Prior to joining Star Energy, from August 1998 to April 2007, Mr. From served as General Manger at Equital, an affiliate of the Company, where he was in charge of oil and gas activities and operations, including drilling and production and economic evaluation of oil and gas projects. From 1997 through 1998, he served as Chief Engineer (Oil and Gas division) at the Company where he oversaw drilling on onshore wells in Israel. Mr. From’s petroleum industry background and experience provides the Board with the experience and breadth needed to consider the options that are available in determining drilling/exploration issues.
  
Max Pridgeon has been a director of the Company since April 2001. Since December 2002, Mr. Pridgeon has served as a director and executive officer of Griffin Decorations, a business which he founded. From March 1995 through December 2002, he served as director of MAXIM Wholesale and Marketing Co., a company which he founded. Concurrently, from February 1999, Mr. Pridgeon has also served as a manager of sales for Europe and the Middle East for Blenfin XI, Netherlands, a company that engages in the distribution of wooden picture frames. From April 1996 through January 1999, Mr. Pridgeon served as a property acquisitions consultant to M.A. Realistic Estate, Netherlands, a company engaged in the ownership and management of hotels in the Netherlands. From September 1989 through March 1995, Mr. Pridgeon served as account manager and then export manager at VERNO Holland, a company engaged in the marketing and distribution of oil paintings. Mr. Pridgeon’s experience in managing and overseeing a diversified business practice equip him with the skill set needed by our Board.
 
Itai Ram was elected to the board in 2011.  Mr. Ram is the Director of Mobile Products at Paperless Post Inc., a consumer Internet startup that provides delivery services of social paperless stationeries, a position he has held since May 2012.  Prior to joining Paperless Post Inc., Mr. Ram was employed by Apple, Inc., in the positions of Software Engineering Program Manager, iPhone/iPad OS from  2011 to 2012, Program Manager, iPad from  2009 to  2011, and Program Manager, iMac  from 2009 to  2011.  Prior to joining Paperless Post, Inc, Mr. Ram was employed by Intel Corporation’s Mobile Wireless Group, in the positions of Mobile Systems Engineer from 2006 to  2007, Wi-Fi Algorithms and Design Engineer from  2005 to 2006, and Wi-Fi Logic Design Engineer from 2003 to 2005.  Mr. Ram is also a co-founder of Delengo LLC, an early stage e-commerce consumer Internet startup built on top of web and mobile geo-social networks, started in 2009.

Frans Sluiter was elected to the board in 2011.  Mr. Sluiter is employed as a Senior Manager at Accenture, a position he has held since December 2006.  Prior to joining Accenture, Mr. Sluiter was a Partner and Project Manager at Singularity, LLC, responsible for overseeing SAP process integration.  From 2003 to 2006, he served at Intelligroup, from 2004 onwards as Senior Vice President responsible for business development and project delivery for onsite and offshore SAP services. Throughout his career, Mr. Sluiter has acquired extensive experience working with clients in a variety of industries, including Oil and Gas. His broad corporate experience and connections in the industry add to the value he brings to the board. 

 
Asaf Yarkoni   was appointed to the Company’s Board of Directors on December 28, 2011.  Mr. Yarkoni is a certified public accountant with over four years of experience with a “Big Four” accounting firm.  He is currently the M&A Integration manager of IBM Israel. His last position was the Chief Financial Officer of Storwize, a start-up company involved in the provision of data compression services that was acquired by IBM in 2010.  Mr. Yarkoni has experience in public accounting and is familiar with the reporting requirements applicable to public companies, both in Israel and in the United States.  Mr. Yarkoni brings significant financial and accounting knowledge and expertise to the Corporation and qualifies to serve as an “audit committee financial expert” under the rules of the SEC.  Mr. Yarkoni’s experience as a certified public accountant was instrumental in his appointment to stand for election to the Board and is expected to provide our board with a critical accounting perspective.
 
The following individuals are not directors but serve as executive officers of the Company and its subsidiaries as of December 31, 2011. Our executive officers, their age, positions, the dates of their initial election or appointment as executive officers, are as follows:
 
Name
  Age  
Capacities in
Which Served
 
In Current
Position Since
Edy Francis
  35  
Chief Financial Officer
  2007
       
 
   
Curt L. Warnock
 
58
 
Legal Counsel and Secretary
  2011
 
Edy Francis was appointed Chief Financial Officer on August 2, 2007.  From December 2003 through August 2007, Mr. Francis was affiliated with the Tel Aviv based office of Brightman Almagor & Co., Certified Public Accountants and a member firm of Deloitte Touche Tohmatsu where his areas of practice included auditing publicly traded companies, auditing internal controls and preparing tax assessments.
 
Curt L. Warnock is Legal Counsel and Secretary and joined the company in October, 2011.  From May 2009 to September 2011 he was a partner in the law firm of Warnock & Caskey, Houston, Texas. From June 2001 to May 2009 he served as Senior Vice President and General Counsel for Integrated Electrical Services, Inc. an integrated communications and electrical contracting company.  From 1986 until 2001 he served as Senior Counsel for Burlington Resources Oil & Gas Company, a large oil and gas company. Prior to that he was Senior Counsel for Pogo Producing Company from 1981-1986, another oil and gas exploration and production company. Prior to that he practiced law with the lawfirm of Culpepper and Conway in Houston, Texas.
 
INFORMATION ABOUT THE BOARD OF DIRECTORS
 
INDEPENDENCE AND MEETINGS
 
During the fiscal year ended December 31, 2011, the Board met on four occasions. During the fiscal year ended December 31, 2011, each Board member attended 75% or more of the aggregate of the meetings of the Board and of the committees on which he served, held during the period for which he was a director or committee member, respectively.
 
The Board does not have a formal policy with respect to Board members attendance at annual stockholder meetings, though it encourages directors to attend such meetings. None of the directors attended the 2011 annual meeting of shareholders.
 
The Board of Directors reviewed the independence of each of the Company's directors on the basis of the standards adopted by NASDAQ During this review, the Board considered transactions and relationships between the Company, on the one hand, and each director, members of his or her immediate family, and other entities with which he or she is affiliated, on the other hand. The purpose of this review was to determine which of such transactions or relationships were inconsistent with a determination that the director is independent under the NASDAQ rules. As a result of this review, the Board of Directors affirmatively determined that each of the Company's directors, other than Haim Tsuff and Joseph From are, and "independent directors" within the meaning of the NASDAQ rules.

BOARD LEADERSHIP STRUCTURE
 
Mr. Tsuff has served as Chief Executive Officer and Chairman since 1996.  The Board of Directors believes that its current leadership structure, in which the positions of Chairman and Chief Executive Officer are held by Mr. Tsuff, is appropriate at this time and provides the most efficient and effective leadership for Isramco.  Combining the chairman and chief executive officer roles fosters clear accountability, effective decision-making and alignment on corporate strategy.  We believe that any risks inherent in that structure are balanced by the oversight of our Board of Directors, a majority of who are independent.  Given Mr. Tsuff’s past performance in the roles of Chairman of the Board and Chief Executive Officer, at this time the Board believes that combining the positions continues to be the appropriate leadership structure for our Company and does not impair our ability to continue to practice good corporate governance.  The Board does have a lead independent director, Max Pridgeon.  The Board of Directors believes that Mr. Tsuff’s significant holdings in the Company is sufficient motivation to minimize excessive risk taking and aligns his interest in the best interest of the stockholders.  The structure of Board also serves as oversight to all activities of the company. The Conflict Committee was specifically created to review all related company transactions.  The Audit Committee reviews all claims and litigation each quarter as part of their quarterly review of financials.
 
 
Our Board recognizes that no single leadership model is right for all companies and at all times and that, depending on the circumstances, other leadership models, such as a separate independent chairperson of the board, might be appropriate and the Board reviews company and board structure annually.

GOVERNANCE, BOARD OF DIRECTORS AND BOARD COMMITTEE CHANGES

The Board of Directors and the Committees of the Board of Directors made significant changes in governance and structure during 2012.  Among the changes, discussed below, new bylaws (included as an Exhibit to the Company’s most recent report on Form 10-Q), establishment of a new nominating committee and corporate governance committee (“Nominating and Corporate Governance Committee”) and the adoption of new Corporate Governance Guidelines  ,included in Appendix B to the Company’s definitive proxy statement for its 2012 Annual Meeting of Shareholders (the “2012 Proxy Statement”) and  a Nominating and Corporate Governance Charter (included as Appendix C to the 2012 Proxy Statement), adoption of a new Audit Committee Charter (included as Appendix D to the 2012 Proxy Statement” adoption of a new Compensation Committee Charter (included as Appendix A to the 2012 Proxy Statement) and establishment of conflict committee (the “Conflict Committee”) which does not have a specific charter as well as other governance changes discussed below.
 
BOARD OF DIRECTORS
 
The Board of Directors established guidelines requiring a majority of directors to be independent, as determined in accordance with the bylaws of the Company and applicable rules of the NASDAQ exchange.  Under such standards, four of the six directors have been determined to be independent directors.  Directors have also certified their belief that they meet such independence standards and that they will annually attend at least one Board meeting in person unless specifically excused by the Chairman of the Board. Directors may only serve on a maximum of two other boards subject to SEC reporting.  Directors have participated in an initial orientation and continuing education thereafter.

LEAD INDEPENDENT DIRECTOR

In 2012 the Board of Directors first elected a “Lead Independent Director” as such term is defined in the Company’s bylaws and Nominating and Corporate Governance Committee Charter.  In 2012, Max Pridgeon was elected to this position.  The Lead Independent Director chairs the executive sessions of the Board and is the principle liaison between the independent directors and Chief Executive Officer.  The Lead Independent Director also is responsible for or required to participate in timing and agenda for Board and Committee meetings, requesting for and providing information to the independent directors, receive reports from the Nominating and Governance Committee and evaluation, along with the Compensation Committee and the Board the performance of the Chief Operating Officer.
  
The Board of Directors has established four standing committees: the Audit Committee, the Compensation Committee, the Conflict Committee, and Nominating and Corporate Governance Committee.  The Board of Directors also retains a temporary special investigative committee (the “Special Investigative Committee”).
 
AUDIT COMMITTEE
 
The members of the Audit Committee are Max Pridgeon, Frans Sluiter and Asaf Yarkoni.  The Board of Directors has determined that Mr. Pridgeon, Mr. Sluiter and Mr. Yarkoni met the independence criteria set out in Rule 5605(a)(2) of the NASDAQ Marketplace Rules.  The Board determined that Mr. Yarkoni, the committee financial expert" as defined by the rules of would qualify as an independent director and an audit committee financial expert if elected. The Audit Committee met five times in 2011.
 
In 2012 the Board adopted a new charter governing the duties and responsibilities of the Audit Committee (Appendix D to the 2012 Proxy Statement) The Audit Committee’s primary duties and responsibilities are to:
 
(a)  
Monitor and review the accuracy and fairness of the Corporation’s financial reports and monitor and ensure the adequacy of the Corporation’s systems of internal controls regarding finance, accounting, and legal compliance.
 
(b)  
Monitor the independence and performance of the Corporation’s independent auditors.
 
(c)  
Provide an avenue of communication between the independent auditors, management, accountants and the Board of Directors.
 
The Audit Committee has the authority to conduct or authorize investigations into any matter within the scope of its responsibilities and it shall have direct access to the independent auditors as well as anyone in the organization.
 
 
THE NOMINATING AND CORPORATE GOVERNANCE COMMITTEE
 
The current members of the Nominating and Corporate Governance Committee are Max Pridgeon, Asaf Yarkoni and Haim Tsuff. By reason of Mr. Tsuff’s service on the Nominating Committee all of the members of the Nominating Committee were not independent directors within the meaning of the NASDAQ Rules. Rule 5615 of the NASDAQ rules allows a “Controlled Company” to have a nominating committee that does not consist solely of independent directors. The Company believes that it was a “Controlled Company” in 2011 and continues to be a “Controlled Company” within the meaning of the NASDAQ rules. This is because at all times during 2011through the date of this Amendment, a majority of its shares are controlled by Haim Tsuff. The Company maintains a Nominating Committee that does not consist solely of independent directors in reliance upon Rule 5615.
 
The Nominating and Corporate Governance Committee met once in 2011.  In 2012 the Board adopted a new charter governing the duties and responsibilities of the Nominating and Corporate Governance Committee (attached Appendix C).
 
The Nominating Committee considers many factors when evaluating candidates for the nomination to the Board of Directors, with the goal of fostering a Board of Directors comprised of directors with a variety of experience and backgrounds. Important factors considered as part of the Nominating Committee's evaluation include (without limitation) (i) roles and contributions valuable to the business community, (ii) personal qualities of leadership, character and judgment, and whether the candidate possesses and maintains throughout service on the Board a reputation in the community at large of integrity, trust, respect, competence and adherence to high ethical standards, (iii) relevant knowledge and diversity of Board members’ background and experience (iv) whether the candidate has the time required for preparation, participation and attendance at meetings, and (v) requirements relating to Board and Board committee composition under applicable law and NASDAQ listing standards. Depending upon the Company's then-current needs, certain factors may be weighed more or less heavily. In considering candidates for the Board of Directors, the Nominating Committee will consider the entirety of each candidate's credentials and does not have any specific minimum qualifications that must be met. However, the Nominating Committee does believe that all members of the Board of Directors should have the highest character and integrity and sufficient time to devote to Company matters.   
 
In addition to considering candidates proposed by officers or other directors of the Company as candidates for nomination as a director, the Nominating Committee considers persons recommended by Stockholders.  In evaluating candidates proposed by Stockholders the Nominating Committee uses the same selection criteria as it uses to evaluate other potential nominees. Recommendations should be submitted to the Secretary of the Company. Each recommendation should include a personal biography of the suggested candidate, an indication of the background or experience that qualifies such person for consideration, and a statement that such person has agreed to serve if nominated and elected. Stockholders who wish to nominate a person for election to the Board of Directors themselves, rather than recommending a candidate to the Nominating Committee for potential nomination by the Board of Directors, must comply with applicable law.
   
While the Nominating Committee does not have a formal policy with respect to diversity, the Board and the Committee believe that it is essential that Board members represent diverse business backgrounds and experience. A background in or experience with the oil & gas industry is desirable, but not a precondition to nomination.  In considering candidates for the Board, the Nominating Committee considers the entirety of each candidate’s credentials in the context of these standards.  We believe that the backgrounds and qualifications of our directors, considered as a group, should and do provide a composite mix of experience, knowledge and abilities that will allow the Board of Directors to fulfill its responsibilities.
 
 In addition the Nominating and Governance Committee reviews the advisability of a director’s continued service on the Board when the director’s principal occupation or business association changes, or when circumstances arise which may raise questions about the director’s continuing qualifications in relation to the Board membership criteria referred to above. In addition, the Committee will:
 
Review the resignation of any director.
 
Review the Board’s committee structure and recommend to the Board the appointment of committee members and chairs.
 
Define and articulate the Corporation’s overall corporate governance structures, including the development and recommendation to the Board of Directors of the Isramco Corporate Governance Guidelines.
 
Review Guidelines periodically, recommending changes as necessary to reflect sound governance practices.
 
Review the Corporation’s position and practices on significant issues of corporate public responsibility such as protection of the environment, and philanthropic contributions.
 
CONFLICT COMMITTEE
 
The Conflict Committee consists of Asaf Yarkoni and Frans Sluiter, two independent directors.  Although the Conflict Committee does not have a written charter, before any transaction between the Company and any officer or director or between the Company and any entity controlled by an officer or director,  it must be submitted for approval by the Conflict Committee.  The Conflict Committee, except as may be otherwise specified by the Board of Directors by unanimous written consent, all the power and authority of the Board of Directors in connection with approving and authorizing proposed transactions between the Company and any officer or director or entity controlled by any officer or director.  In that role the Conflict Committee has reviewed and approved sales of affiliated company stock all affiliated company financing. The Conflict Committee was created in 2012 and thus met no times in 2011.

 
COMPENSATION COMMITTEE
 
The Compensation Committee consists of Max Pridgeon, Itai Ram and Joseph From and is responsible for reviewing the compensation arrangements in effect for the Company's executive officers. By reason of Joseph From service on the Compensation Committee, all of the members of the Compensation Committee are not independent directors within the meaning of the NASDAQ rules.  Rule 5615 of the NASDAQ rules allows a “Controlled Company” to have a compensation committee that does not consist solely of independent directors. The Company believes that it was a “Controlled Company” in 2011 and continues to be a “Controlled Company” within the meaning of the NASDAQ rules. This is because at all times during 2010 through the date of this filing, a majority of its shares are controlled by Haim Tsuff. The Company maintains a Compensation Committee that does not consist solely of independent directors in reliance upon Rule 5615. The Compensation Committee met twice in 2011.
 
The Compensation Committee sets compensation policy and administers the Company’s compensation programs for the purpose of attracting and retaining skilled executives who will promote the Company’s business goals and build stockholder value. The Committee is also responsible for reviewing and making recommendations to the Board regarding all forms of compensation to be provided to the Company’s named executive officers, including stock compensation and bonuses. A charter for the Compensation Committee was adopted in 2012 and is attached as Appendix A to the 2012 Proxy Statement.
 
The Compensation Committee reviews and recommends to the Board for approval compensation arrangements for our executive officers, key employees and non-employee directors. The Compensation Committee recommends all incentive compensation awards, which are then subject to board review and approval.  The Chief Executive Officer recommends to the Compensation Committee the goals, objectives and compensation for all executive officers and key employees, except himself, and responds to requests for information from the Compensation Committee. Our Chief Executive Officer has no role in approving his own compensation. The Compensation Committee periodically reviews and recommends the compensation of non-executive directors. The Compensation Committee does not delegate its authority and has the sole responsibility of retaining outside counsel or other consultants for the purpose of executing its mandate.

TRADING COMPLIANCE CONTROL COMMITTEE

The Board of Directors has also appointed a committee consisting or Edy F. Francis and Curt L. Warnock, both non-directors, as responsible for ensuring compliance with the Company’s stock trading and market communication policy.  This is not a committee of the board but a monitoring and reporting function to the Board.

CODE OF BUSINESS ETHICS AND CONDUCT
 
The Company has adopted a Code of Business Ethics and Conduct (the " Code of Conduct ") that applies to all of its employees. A copy of the Code of Conduct was filed as an exhibit to the Company's Annual Report on Form 10-K for the year ended December 31, 2005. If the Company makes any substantive amendment to the Code of Conduct or grants any waiver from a provision of the Code of Conduct to any executive officer or director, the Company will promptly disclose the nature of the amendment or waiver.
 
STOCKHOLDER COMMUNICATIONS WITH THE BOARD OF DIRECTORS
 
Although the Company does not have formal procedures for Stockholder communication with the Board of Directors, Stockholders of the Company are encouraged to communicate directly with the members of the Board. Persons interested in communicating their concerns or issues to the independent directors may address correspondence to a particular director, or to the independent directors generally in care of the President, Chief Executive Officer and Chairman of the Board, Mr. Haim Tsuff. If no particular director is named, letters will be forwarded, depending on the subject matter, to the Chairman of the Audit Committee. Company personnel will not screen or edit such communications and will forward them directly to the intended member of the Board.
 
BOARD’S ROLE IN RISK OVERSIGHT

Management is responsible for the day-to-day management of risks the Company faces, while the Board of Directors, as a whole and through its committees, has the ultimate responsibility for the oversight of risk management.  Senior officers attend meetings of the Board of Directors, provide presentations on operations, and are available to address any questions or concerns raised by the Board of Directors, its committees, or any individual director.  Additionally, our Board committees are charged with assisting the Board of Directors in fulfilling its oversight responsibilities in certain areas of risk.  The Audit Committee coordinates the Board of Directors’ oversight of the Company’s internal control over financial reporting, disclosure controls and procedures and code of conduct.  Management regularly reports to the Audit Committee on these areas.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
 
Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") requires the Company's executive officers, directors and persons who beneficially own more than 10% of a registered class of the Company's equity securities (collectively, the "Reporting Persons") to file certain reports regarding ownership of, and transactions in, the Company's securities with the Securities and Exchange Commission (the "SEC").  These officers, directors and stockholders are also required by SEC rules to furnish the Company with copies of all Section 16(a) reports that they file with the SEC. Based solely on review of the copies of such forms received by the Company with respect to 2011, the Company believes that all of the filing obligations of officers, directors and 10% stockholders under Section 16 (a) during 2011 have been fulfilled

 
CODE OF BUSINESS ETHICS AND CONDUCT
 
The Company has adopted a Code of Business Ethics and Conduct (the "Code of Conduct") that applies to all of its employees.  The code may be obtained free of charge by writing to Ethics Code, c/o Isramco, Inc., 2425 West Loop South, Suite 810, Houston, Texas 77027.

It em 11. Executive Compensation
 
Summary Compensation
 
The following table sets forth information for the fiscal years ended December 31, 2009, December 31, 2010, and December 31, 2011 and concerning compensation of the Named Executive Officers:

Summary Compensation Table
 
Name and Principal Position
 
Year
   
Salary
   
Cash
Bonus
   
Stock
Awards
   
All Other
Compensation
   
Total
 
Haim Tsuff
   
2011
  
 
$
360,000
   
$
0
   
$
0
   
$
0
  
 
$
360,000
 
Chairman, Chief Executive Officer, President
   
2010
     
360,000
     
0
     
0
     
0
  
   
360,000
 
   
2009
  
   
360,000
     
0
     
0
     
0
  
   
360,000
 
             
Yossi Levy (1)
   
2011
  
   
0
     
0
     
0
     
0
  
   
0
 
President
   
2010
  
   
0
     
0
     
0
     
0
  
   
0
 
   
2009
  
   
0
     
0
     
0
     
0
     
0
 
             
Edy Francis
   
2011
  
   
84,600
     
75,000
     
0
     
 47,698
  
   
207,298
 
Senior Vice President, Chief Financial Officer and Chief Accounting Officer
   
2010
     
81,350
     
50,000
     
0
     
 45,412
  
   
176,762
 
   
2009
  
   
71,600
     
5,000
     
0
     
 30,302
  
   
106,902
 
             
Jim Hutchinson
   
2011
  
   
37,500
     
0
     
0
     
0
  
   
37,5000
 
Vice President and Counsel
   
2010
  
   
150,000
     
4,000
     
0
     
 11,702
  
   
165,702
 
   
2009
  
   
150,000
     
1,500
     
0
     
8,469
  
   
159,969
 
             
Curt L. Warnock
Legal Counsel and Corporate Secretary
   
2011
     
26,154
    $
750
     
0
     
0
  
   
26,903
 
 
(1)
 
Mr. Levy was the General Manager of Equital, an affiliate of the Company which described above.  The Company and Equital had an arrangement pursuant to which the Company paid Equital $120,000 during 2009 and 2010 for management services.   Mr. Levy, an employee of Equital, provided these services to Isramco.  Isramco made no direct payment to Mr. Levy in respect of fiscal 2009, 2010, or 2011.  Mr. Haim Tsuff, our Chairman of the Board, Chief Executive Officer, and President, may be deemed to control Equital.
 
EMPLOYMENT/CONSULTING AGREEMENTS
 
On November 17, 2008, the Company) and Goodrich Global Ltd. (“ Goodrich ”), a company owned and controlled by Mr. Haim Tsuff, the Company's Chairman of the Board, Chief Executive Officer and President, entered into an Amended and Restated Agreement, as subsequently amended on November 24, 2008 (“ Goodrich Agreement ”).  The Goodrich Agreement replaced the consulting agreement entered into in May 1996 between the Company and Goodrich which terminated on May 31, 2008, pursuant to which the Company paid $240,000 per annum in installments of $20,000 per month.  Under the Goodrich Agreement, as of June 1, 2008, the Company pays Goodrich $360,000 per annum in installments of $30,000 per month in addition to reimbursing Goodrich for all reasonable expenses incurred in connection with services rendered to the Company.  The Goodrich Agreement had an initial term through May 31, 2012, and automatically extended by its terms for an additional three-year period The Goodrich Agreement contains certain customary confidentiality and non-compete provisions.  If the Goodrich Agreement is terminated by the Company prior to the expiration of the initial term, other than for cause, then Goodrich is entitled to receive the equivalent of payments due through the then remaining term of the agreement.
 
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL
 
Except as described under the Employment/Consulting Agreement, above, there are no payments or other obligations in the event of termination or change-in-control.
 
 
DIRECTOR COMPENSATION:
 
The following table sets forth information concerning the compensation of our directors for the fiscal year ended December 31, 2011

   
FEES PAID
   
OPTION
       
   
IN CASH
   
AWARDS
   
TOTAL
 
NAME (1)
 
($)
   
($) (2)
   
($)
 
Michelle R. Cinnamon-Flores
 
$
0
     
--
   
$
0
 
Joseph From
 
$
0
     
--
   
$ 
0
 
Marc E. Kalton
 
$ 
9,750
     
--
   
$ 
9,750
 
Max Pridgeon
 
$
9,750
     
--
   
$ 
9,750
 
Itai Ram
 
$ 
0
     
--
   
$ 
0
 
Asaf Yarkoni
 
$ 
0
     
--
   
$ 
0
 
Frans Sluiter
 
$ 
0
     
--
   
$ 
0
 
 
Stockholder Matters.

It em 12. SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS

The following table sets forth certain information, as of the December 20, 2012, concerning the ownership of the Common Stock by (a) each of the Company's directors, (b) the Company’s Chief Executive Officer, Chief Financial Officer, former Vice President and General Counsel and a key employee  (the “ Named Executive Officers ), (c) all current directors, executive officers of the Company as a group; and (d) each person who beneficially owns more than five percent of the Company’s Common Stock.
 
Name of Beneficial Owner (1)
 
Number of Shares
Beneficially Owned (2)
     
Percent of
Common Stock (2)
 
Haim Tsuff, Chairman, CEO, and President
   
1,794,320
 
(3) (4) (5) (6) (7)
   
66.02
%
                   
Naphtha Holding Ltd.
   
1,732,641
 
(4)
   
63.75
%
                   
Naphtha Israel Petroleum Corp.
   
1,732,641
 
(4)
   
63.75
%
                   
United Kingsway Ltd.
   
1,732,641
 
(4)
   
63.75
%
                   
YHK Investment L.P.
   
1,732,641
 
(4)
   
63.75
%
                   
J.O.E.L. Jerusalem Oil Exploration Ltd.
   
1,732,641
 
(4)
   
63.75
%
                   
Equital Ltd.
   
1,732,641
 
(4)
   
63.75
%
                   
Naphtha Exploration LP
   
7,804
 
(5)
   
*
 
                   
Israel Oil Company, Ltd
   
74,500
 
(6)
   
 2.74%
 
                   
Joseph From, Director
      -  
 
   
-
 
     
-
           
Max Pridgeon, Director
   
-
       
-
 
                   
Itai Ram, Director
   
-
       
-
 
                   
Frans Sluiter, Director
                 
                   
Asaf Yarkoni, Director
   
-
       
-
 
                   
Edy Francis, Chief Financial Officer
                 
     
-
       -
 
Jim Hutchinson, Vice President and General Counsel (7)                
                 
Yossi Levy, Manager (8)
               
                   
Curt L. Warnock, Legal Counsel and Corporate Secretary(9)
                 
                   
All directors and executive officers as a group (8 persons)
   
1,794,320
 
(1-10)
   
66.02
%

 
(1) Unless otherwise specified, the address of such person is c/o Isramco, Inc., 2425 West Loop South, Suite 810, Houston, Texas 77027.

(2) Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission (the " SEC ") and generally includes voting or investment power with respect to securities.  In accordance with SEC rules, shares of Common Stock issuable upon the exercise of options or warrants which are currently exercisable or which become exercisable within 60 days of the December 20, 2012 are deemed to be beneficially owned by, and outstanding with respect to, the holder of such option or warrant.  Except as indicated by footnote, and subject to community property laws where applicable, to the knowledge of the Company, each person listed is believed to have sole voting and investment power with respect to all shares of Common Stock owned by such person.

(3) Haim Tsuff, the Company’s Chairman of the Board, Chief Executive Officer and President, holds directly 61,679 shares of the Company.  In addition, as described in Notes 4, 5, 6 and 7 below, he may be deemed to control an additional 1,732,641 shares of Common Stock.

(4) Naphtha Israel Petroleum Corp. (“ Naphtha Petroleum ”), an Israeli public company whose shares are traded on the Tel Aviv Exchange, holds all of the outstanding voting shares of Naphtha Holdings Ltd. (“ Naphtha Holdings ”), a private Israeli company.  Haim Tsuff, the Company’s Chairman of the Board, Chief Executive Officer and President, may be deemed to beneficially own any shares held by Naphtha Holdings within the meaning of Rule 13d-3 of the Exchange Act, by virtue of the control that he exercises over Naphtha Petroleum.  The nature Mr. Tsuff’s control over Naphtha Petroleum is described in the succeeding paragraphs.

Mr. Tsuff holds all of the outstanding voting shares of United Kingsway Limited (“ United Kingsway ”), a BVI private company.  He also serves as the sole director of United Kingsway.  United Kingsway holds 74% of the outstanding membership interests in each of YHK Investment L.P (“ YHK LP ”), an Israeli limited partnership and YHK General Manager Ltd. (“ YHK Manager ”), a private Israeli company that serves as the general partner of YHP LP.   YHK LP holds 44.5% of the outstanding voting securities of Equital Ltd. (“ Equital ”), an Israeli public company listed on the Tel Aviv Exchange.

Equital holds 37% of the outstanding voting securities of  J.O.E.L. - Jerusalem Oil Exploration Ltd. (“ J.O.E.L .”), a public company Israeli company.

J.O.E.L. holds 65% of the outstanding voting securities Naphtha Petroleum which, as noted above, holds all of the outstanding voting securities of Naphtha Holdings.

The 1,429,949 shares of Common Stock referred to in the table above are held solely in the name of Naphtha Holdings.  None of United Kingsway, YHP LP, YHK Manager, Equital or J.O.E.L. holds, directly, any shares of the Company’s Common Stock.

(5) Haim Tsuff, the Company’s Chairman of the Board, Chief Executive Officer and President, may be deemed to control the shares held directly by Naphtha Exploration LP., an Israeli limited partnership listed on the Tel Aviv Exchange (“ Naphtha Exploration ”), through control of its general partner, Naphtha Partnerships Management Ltd. The ownership is reported under Naphtha Holding Ltd. and included in the 1,732,641 listed in the table above as they are under common control.

(6)  Haim Tsuff, the Company’s Chairman of the Board, Chief Executive Officer and President, may be deemed to control the shares held directly by I.O.C. Israel Oil Company Ltd., an Israeli private company (“ I.O.C.”) through control of Jerusalem Oil Exploration Ltd and Naphtha Israel Corp Ltd Petroleum which owns 99.99% of I.O.C. The ownership is reported under Naphtha Holding Ltd. and included in the 1,732,641 listed in the table above as they are under common control.
 
(7) Mr. Hutchinson resigned in March of 2011.

(8)  Mr. Levy was a key employee and resigned 2011.
 
(9)  Curt L. Warnock joined the Company in October 28, 2011.
 
(10) See Notes 3 through 7 above.

EQUITY COMPENSATION PLAN INFORMATION

The 1993 Stock Option Plan (the 1993 Plan) was approved at the annual meeting of shareholders held in August 1993. As of December 31, 2009, 20,050 shares of common stock were reserved for issuance under the 1993 Plan. Options granted under the 1993 Plan may be either incentive stock options under the Internal Revenue Code or options that do not qualify as incentive stock options. Options granted under the 1993 Plan may be exercised for a period of up to ten years from the grant date. The exercise price for an incentive stock option may not be less than 100% of the fair market value of Isramco's common stock on the date of grant. All the options granted under the 1993 Plan to date were fully vested on the date of grant. The administrator of the 1993 Plan may set the exercise price for a nonqualified stock option at less than 100% of the fair market value of Isramco's common stock on the date of grant.

 
On December 30, 2011, the shareholders approved the 2011 Stock Incentive Plan.  The aggregate number of shares of common stock which may be issued or used for reference purposes under the 2011 Stock Incentive Plan (“2011 Plan”) or with respect to which awards may be granted is 200,000 shares.

Independent members of our board of directors, as well as employees of, and consultants to, us or any of our subsidiaries and affiliates, are eligible to receive awards under the 2011 Plan. The selection of participants is within the sole discretion of the Compensation Committee.
 
Our Compensation Committee may grant nonqualified stock options to purchase shares of our common stock to any eligible participant and incentive stock options to purchase shares of our common stock only to eligible employees. The Compensation Committee determines the number of shares of our common stock subject to each option, the term of each option, which may not exceed ten years, or five years in the case of an incentive stock option granted to a 10.0% shareholder, the exercise price, the vesting schedule, if any, and the other material terms of each option.
 
The Compensation Committee may also award shares of restricted stock and subject to limitations under applicable law, make a grant of such other stock-based awards, including, without limitation, performance units, dividend equivalent units, stock equivalent units, restricted stock units and deferred stock units under the 2011 Plan that are payable in cash or denominated or payable in or valued by shares of our common stock or factors that influence the value of such shares.
 
The following table sets forth information as of December 31, 2011 with respect to the Company's equity compensation plan that has been approved by its stockholders.
 
Plan Category
 
Number of Securities to be issued upon exercise of outstanding options, warrants and rights
(a)
   
Weighted-average exercise price of
outstanding options, warrants and rights
(b)
   
Number of Securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column
(c)
 
Equity compensation plan approved by security holders
    -       -       220,050  
                         
Equity compensation plans not approved by  security holders
    -       -       220,050  
 
The Company has two plans, the 1993 Stock Option Plan and the 2011 Plan, each of which was approved by stockholders.  There are no other equity compensation plans outstanding

It em 13.  Certain Relationships and Related Transactions, and Director Independence.
 
Loans:

In 2007 and 2008, the Company borrowed money from related parties in order to obtain the funds necessary to purchase the oil and gas properties in the transactions with Five States Energy (in 2007) and GFB Acquisition – 1, L.P and TransRepublic Resources (in 2008).  Specifically:

A.            In order to obtain the funds necessary to consummate the Company’s February 2007 purchase of oil and gas properties from Five States Energy, the Company obtained loans in the totaling $42 million from Naphtha Petroleum (and subsidiaries thereof) as below:

i)              Pursuant to a Loan Agreement dated as of February 27, 2007 (the " First Naphtha Loan Agreement "), the Company obtained an $18.5 million loan from Naphtha Petroleum.  The loan bears interest at per annum rate equal to the LIBOR plus 5.5%, not to exceed 11% per annum.  Interest is payable at the end of each loan year.  Principal plus any accrued and unpaid interest is due and payable on February 26, 2014.  Interest after the maturity date accrues at the per annum rate of LIBOR plus 12% until paid in full.  As specified in the Loan Agreement, the interest payable to Naphtha Petroleum is subject to and limited in all cases to the maximum legal rate of interest that may be paid under the laws of the State of Texas. The loan may be prepaid at any time, in whole or in part, without penalty or prepayment.  In December 2007, the Company prepaid approximately $13.9 million in respect of principal and interest for 2007 and we made additional payments aggregating approximately $6.3 million in respect to principal and interest for 2008.  No payments were made in 2009. Approximately $138,000 in interest was paid in 2011.  In 2012 the full remaining balance of approximately $1 million was paid and the loan was fully paid.

ii)             Pursuant to a Loan Agreement dated as of February 27, 2007 (the " Second Naphtha Loan Agreement ") the Company obtained a loan from Naphtha Petroleum in the principal amount of $11.5 million, payable at the end of seven years.  Interest accrues at a rate of LIBOR plus 6%, per annum.  As specified in the Second Naphtha Loan Agreement, the interest payable to Naphtha Petroleum is subject to and limited in all cases to the maximum legal rate of interest that may be paid under the laws of the State of Texas. The Company can make prepayments without premium or penalty.  This loan is unsecured.  The other material terms of the Second Naphtha Loan Agreement are identical to the terms of the First Naphtha Loan Agreement.  The Company paid approximately $1.3 million in interest for 2008 and made no payments in 2009 or 2010 and paid approximately $1.2 million in interest in 2011.  As of November 30, 2012, approximately $11.5 million remains outstanding.  Effective February 1, 2009, the Second Naphtha Loan Agreement was amended and restated to extend the payment deadlines arising on and after February, 2009, by two years.

 
iii)            Pursuant to another Loan Agreement, also dated as of February 27, 2007 the Company obtained a loan from I.O.C. – Israel Oil Company, Ltd. in the principal amount of $12 million, repayable after five years.  Interest on this loan accrues at LIBOR plus 6% per annum.  As specified in the Loan Agreement, the interest payable to I.O.C. is subject to and limited in all cases to the maximum legal rate of interest that may be paid under the laws of the State of Texas. The Company can make prepayments without premium or penalty.  This loan is unsecured.   The Company paid approximately $1.3 million in interest only for fiscal year 2008 and made no payments in 2009 or 2010.  As of November 30, 2012, approximately $12 million remains outstanding. The original Maturity date on the loan was February 26, 2014.  Effective February 1, 2009, the loan agreement was amended and restated to extend the payment deadlines arising on and after February, 2009, by two years.

iv)            Pursuant to a Loan Agreement dated as of February 26, 2007 the Company obtained a loan from J.O.E.L in the principal amount of $7 million bearing interest at the rate of 5.36% per annum.  This loan was originally repayable at the end of three months.  On July 2007, the Company and J.O.E.L. reached an agreement to revise the term of the Loan to seven years and to revise the interest rate to LIBOR plus 6% per annum.  , The interest payable to J.O.E.L is subject to and limited in all cases to the maximum legal rate of interest that may be paid under the laws of the State of Texas.  The Company paid approximately $840,000 in interest for 2008. In 2009 we paid J.O.E.L. $7,701,491 representing the entire outstanding principal balance of the loan and all accrued interest.  Jackob Maimon, who was Isramco's President and a director at the time of this loan, was also a director of J.O.E.L.  Haim Tsuff, Isramco's Chairman of the Board, Chief Executive Officer and President, is a controlling shareholder of J.O.E.L. As of December 31, 2009, this loan was fully paid.

B.             In order to obtain the funds necessary to consummate the March 2008 purchase of oil and gas properties from GFB Acquisition – I, L.P. and TransRepublic Resources, the Company obtained loans from J.O.E.L., a related party, in the aggregate principal amount of $48.9 million.  These loans were initially repayable at the end of 4 months and bore interest at a rate of LIBOR plus 1.25% per annum. On May 25, 2008, the Company entered into an Amended and Restated Loan Agreement with J.O.E.L. (the “ J.O.E.L. Loan Agreement ”) that revised the terms of these loans and, among other things, extended the maturity date for an additional seven years.  Under the J.O.E.L. Loan Agreement, interest accrues at a rate equal to the London Inter-bank Offered Rate (“ LIBOR ”) plus 6% per annum. However, as specified in the J.O.E. L. Loan Agreement, the interest payable to J.O.E.L. is subject to and limited in all cases to the maximum legal rate of interest that may be paid under the laws of the State of Texas. Principal and interest are due and payable in four equal annual installments, commencing on June 30, 2012.   The loan can be prepaid in whole or in part without premium or penalty.  The loan is unsecured except to the extent of any accounts of the Company held by J.O.E.L. which were not material in amount.  In 2008 and 2009, the Company paid J.O.E.L. approximately $2.3 million in interest.  In 2011 the Company paid $3,856,178 in interest and $7,038,948 in principal.  Through November 30, 2012, the Company had paid $2,424,242 in interest.  As of November 30, 2012, approximately $41.9 million remains outstanding.  Haim Tsuff, Isramco’s Chairman of the Board, Chief Executive Officer and President, is a controlling shareholder of J.O.E.L. and Jackob Maimon, a former president and director of Isramco, was a director of J.O.E.L.
 
C.             In July 2009 we entered into a loan transaction with I.O.C., a related party, pursuant to which the Company borrowed $6 million (the “ I.O.C. Loan ”).  The purpose of the I.O.C. Loan was to provide funds to Isramco Resources, LLC, which in turn paid this amount to Bank of Nova Scotia, as administrative agent, and Capital One, N.A., as a syndication agent, under the Senior Credit Agreement between the parties.  This payment reduced the outstanding balance below the borrowing base and avoided the requirement that imposition of additional interest under the Senior Credit Agreement.  Amounts outstanding under the Loan with I.O.C. bear interest at LIBOR plus 6.0%. The interest payable to I.O.C. limited in all cases, to the maximum legal rate of interest that may be paid under the laws of the State of Texas.  The Loan matures in five years, with accrued interest payable annually on each anniversary date of the loan.  The Loan may be prepaid at any time without penalty.  This Loan is unsecured.  I.O.C. is fully owned by Naphtha Petroleum.  Naphtha Petroleum is the sole shareholder of Naphtha Holdings, Ltd., which is the record holder of approximately 63.75% of our outstanding Common Stock and which may be deemed to be controlled by Haim Tsuff, the Chairman of the Board, Chief Executive Officer and President of Isramco.  As of November 30, 2012, approximately $6,000,000 in principal amount remains outstanding and the Company had paid no interest.

 D.           In March 2009 we entered into a loan transaction with I.O.C., a related party, pursuant to which the Company borrowed $11 million (the “ Second I.O.C. Loan ”).  The purpose of the Second I.O.C. Loan was to provide funds to Isramco Resources, LLC, which in turn used the proceed to pay all amounts due under the Credit Facility and then existing hedges with Wells Fargo Bank National Association and other corporate purposes   Amounts outstanding under the Loan with I.O.C. bear interest at LIBOR plus 6.0%. The interest payable to I.O.C. is limited in all cases, to the maximum legal rate of interest that may be paid under the laws of the State of Texas.  The Loan matures March 2012.  The Loan may be prepaid at any time without penalty.  This Loan is unsecured.  I.O.C. is fully owned by Naphtha Petroleum.  Naphtha Petroleum is the sole shareholder of Naphtha Holdings, Ltd., which is the record holder of approximately 48.39% of our outstanding Common Stock and which may be deemed to be controlled by Haim Tsuff, the Chairman of the Board, Chief Executive Officer and President of Isramco.  In 2011 we made payments of approximately $4.5 million in principal and $552,000 in interest.  As of November 30, 2012, approximately $6,456,000 in principal amount remains outstanding.  The Second IOC Loan agreement was renegotiated in October 2012 extending the maturity date from March 2012 to September 2012 and reducing the interest rate from LIBOR plus 6.0% to LIBOR plus 5.5%.
 
E.             On March 29, 2012, the Company entered into a Loan Agreement with I.O.C. pursuant to which it borrowed $3,500,000. The loan bears interest at a rate of Libor + 5.5% per annum and matures on March 29, 2013, when all accrued interest and principal is due and payable. The loan may be prepaid at any time without penalty or premium. The loan is unsecured. The purpose of the loan was to provide funds to Isramco for the payment of amounts were due to the Lenders under the Senior Credit Facility.

F.             On April 29, 2012, the Company entered into another Loan Agreement with I.O.C., pursuant to which it borrowed $10,000,000. The loan bears interest of Libor + 5.5% per annum and matures on April 30, 2013, when all accrued interest and principal is due and payable. The loan may be prepaid at any time without penalty or premium. The loan was funded by IOC in three monthly installments starting April 2012. The loan is unsecured. The purpose of the loan was to provide funds to Isramco for the payment of amounts that were due to the Lenders under the Senior Credit Facility that was paid in full June 29, 2012.

Review, Approval or Ratification of Transaction with Related Persons
 
Our entire Board of Directors reviews and approves all related party transactions on an ongoing basis.  On January 11, 2012 the Board of Directors established a Conflict Committee consisting of two independent directors Frans Sluiter and Asaf Yarkoni to review and approve all related party transactions.
 
 
The Conflict Committee has the authority to exercise, except as may be otherwise specified by the Board of Directors by unanimous written consent or otherwise, all the power and authority of the Board of Directors in connection with approving and authorizing proposed transactions between the Corporation and any director or officer of the Corporation (or any entity controlled by any director or officer of the Corporation) (each, a “ Conflict Transaction ”).  With respect to any Conflict Transaction that is required to be submitted to the stockholders of the Corporation for approval, the Conflict Committee shall have the authority to propose to the entire board of directors, for its consideration, what action, if any, should be taken by the Corporation with respect to such Conflict Transaction.
 
Director Independence

The Board of Directors has determined that each of the Company's directors other than Messrs. Haim Tsuff and Joseph From are "independent directors" within the meaning of the NASDAQ rules.

Ite m 14.  Principal Accounting Fees and Services.

AUDIT FEES
 
The following table presents fees for professional audit services rendered by M&B for the audit of the Company's annual financial statements for fiscal years 2011 and 2009 and fees billed for other services rendered during 2011 and 2009.
 
Type of Service/Fee
 
Fiscal 2011
   
Fiscal 2010
 
Audit Fees (1)
  $ 344,000     $ 341,000  
                 
Audit Related Fees (2)
  $ -       -  
                 
Tax Fees (3)
  $ -          
                 
All Other Fees (4)
    -       -  
 
(1) Audit Fees consist of fees for professional services rendered for the audit of the Company's consolidated financial statements included in its Annual Report on Form 10-K and the review of the interim financial statements included in its Quarterly Reports on Form 10-Q, and for the services that are normally provided in connection with regulatory filings or engagements.

(2) Includes fees associated with assurance and related services that are reasonably related to the performance of the audit or review of the Company's financial statements.  This category includes fees related to consultation regarding generally accepted accounting principles.

(3) Tax Fees consist of fees for tax compliance, tax advice and tax planning.

(4) All Other Fees consist of fees for products and services not included in the above categories.

The Audit Committee reviewed the non-audit services rendered for fiscal 2011 and fiscal 2010 as set forth in the above table and concluded that such services were compatible with maintaining the public accounting firm's independence.  The Audit Committee's policy is to pre-approve all audit services and all non-audit services that Company's independent public accounting firm is permitted to perform for Company under applicable federal securities regulations.  As permitted by the applicable regulations, the Audit Committee's policy utilizes a combination of specific pre-approval on a case-by-case basis of individual engagements of the independent public accounting firm and general pre-approval of certain categories of engagements up to predetermined dollar thresholds that are reviewed annually by the Audit Committee.  Specific pre-approval is mandatory for the annual financial statement audit engagement, among others.  None of the fees paid to the independent public accounting firm under the categories Audit-Related Fees, Tax and All Other Fees described above were approved by the Audit Committee after services were rendered pursuant to the de minimis exception established by the SEC.
(1) Audit Fees consist of fees for professional services rendered for the audit of the Company's consolidated financial statements included in its Annual Report on Form 10-K and the review of the interim financial statements included in its Quarterly Reports on Form 10-Q, and for the services that are normally provided in connection with regulatory filings or engagements.

(2) Includes fees associated with assurance and related services that are reasonably related to the performance of the audit or review of the Company's financial statements.  This category includes fees related to consultation regarding generally accepted accounting principles.

(3) Tax Fees consist of fees for tax compliance, tax advice and tax planning.

(4) All Other Fees consist of fees for products and services not included in the above categories.

The Audit Committee reviewed the non-audit services rendered for fiscal 2011 and fiscal 2010 as set forth in the above table and concluded that such services were compatible with maintaining the public accounting firm's independence.  The Audit Committee's policy is to pre-approve all audit services and all non-audit services that Company's independent public accounting firm is permitted to perform for Company under applicable federal securities regulations.  As permitted by the applicable regulations, the Audit Committee's policy utilizes a combination of specific pre-approval on a case-by-case basis of individual engagements of the independent public accounting firm and general pre-approval of certain categories of engagements up to predetermined dollar thresholds that are reviewed annually by the Audit Committee.  Specific pre-approval is mandatory for the annual financial statement audit engagement, among others.  None of the fees paid to the independent public accounting firm under the categories Audit-Related Fees, Tax and All Other Fees described above were approved by the Audit Committee after services were rendered pursuant to the de minimis exception established by the SEC.
 

Part IV

I TEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a) Exhibits
 
3.1
 
Certificate of Incorporation of Registrant with all amendments filed as an Exhibit to the S-l Registration Statement, File No. 2-83574.
     
3.2
 
Amendment to Certificate of Incorporation filed March 17, 1993, filed as an Exhibit with the S-l Registration Statement, File No. 33-57482.
     
3.3
 
By-laws of Registrant filed as Exhibit 3(ii) to the 8-k filed January 18, 2012 and incorporated herein by reference.
     
4.1
 
First Amended and Restated Promissory Note dated as of February 27, 2007, issued to NAPHTHA ISRAEL PETROLEUM CORP., LTD. in the principal amount of $18,500,000 filed as an Exhibit to the 10-K for the year ended December 31, 2010 and incorporated herein by reference.
     
4.2
 
First Amended and Restated Promissory Note dated as of February 27, 2007, issued to NAPHTHA ISRAEL PETROLEUM CORP., LTD. in the principal amount of $11,500,000 filed as an Exhibit to the 10-K for the year ended December 31, 2010 and incorporated herein by reference.
     
4.3
 
First Amended and Restated Promissory Note dated as of February 27, 2007, issued to and I.O.C. ISRAEL OIL COMPANY, LTD. in the principal amount of $12,000,000 filed as an Exhibit to the 10-K for the year ended December 31, 2010 and incorporated herein by reference.
     
4.4
 
Promissory Note dated as of February 27, 2007, issued to and J.O.E.L JERUSALEM OIL EXPLORATION, LTD. in the principal amount of $7,000,000, filed as an Exhibit to the 10-Q for the quarter ended March 31, 2007 and incorporated herein by reference.
     
4.5
 
Promissory Note dated as of May 25, 2009, issued to and J.O.E.L JERUSALEM OIL EXPLORATION, LTD. in the principal amount of $48,900,000 filed as an Exhibit to the 10-K for the year ended December 31, 2010 and incorporated herein by reference.
     
10.1
 
Purchase and Sale Agreement, dated as of February 16, 2007, among Five States Energy Company, L.L.C. and each of the other parties listed as a party "Seller" on the signature pages thereof and ISRAMCO, Inc., filed as an Exhibit to the 10-Q for the quarter ended March 31, 2007 and incorporated herein by reference.
     
10.2
 
LOAN AGREEMENT, dated as of February 27, 2007, between ISRAMCO, INC., and NAPHTHA ISRAEL PETROLEUM CORP., LTD., filed as an Exhibit to the 10-Q for the quarter ended March 31, 2007 and incorporated herein by reference.
     
10.3
 
LOAN AGREEMENT, dated as of February 27, 2007, between ISRAMCO, INC., and NAPHTHA ISRAEL PETROLEUM CORP., LTD., filed as an Exhibit to the 10-Q for the quarter ended March 31, 2007 and incorporated herein by reference.
     
10.4
 
LOAN AGREEMENT, dated as of February 27, 2007, Between ISRAMCO, INC., and I.O.C. ISRAEL OIL COMPANY, LTD., filed as an Exhibit to the 10-Q for the quarter ended March 31, 2007 and incorporated herein by reference.
     
10.5
 
LOAN AGREEMENT, dated as of February 26, 2007, between ISRAMCO, INC., and J.O.E.L JERUSALEM OIL EXPLORATION, LTD., filed as an Exhibit to the 10-Q for the quarter ended March 31, 2007 and incorporated herein by reference.
     
10.6
 
CREDIT AGREEMENT dated as of March 2, 2007 among ISRAMCO ENERGY, L.L.C., each of the lenders that is a signatory hereto or which becomes a signatory hereto; and WELLS FARGO BANK, N. A., a national banking association, as agent for the Lenders., filed as an Exhibit to the 10-Q for the quarter ended March 31, 2007 and incorporated herein by reference.
10.7
 
GUARANTY AGREEMENT, dated as of March 2, 2007 by ISRAMCO, Inc. in favor of Wells Fargo Bank, N.A., as administrative agent (the "ADMINISTRATIVE AGENT") for the lenders that are or become parties to the Credit Agreement referred to in Item 10.6., filed as an Exhibit to the 10-Q for the quarter ended March 31, 2007 and incorporated herein by reference.
     
10.8
 
PLEDGE AGREEMENT, dated as of March 2, 2007 by Isramco, Inc. in favor of Wells Fargo Bank, N.A., as administrative agent for itself and the lenders (the "LENDERS") which are parties to the Credit Agreement referred to in Item 10.6, filed as an Exhibit to the 10-Q for the quarter ended March 31, 2007 and incorporated herein by reference.
 
 
10.9
 
Employment Agreement dated as of September 1, 2007 between Isramco Inc. and Edy Francis, filed as an Exhibit to the 10-Q for the quarter ended September 30, 2007 and incorporated herein by reference.+
     
10.10
 
Agreement dated as of December 31, 2007 between Isramco Inc. and I.O.C. Israel Oil Company Ltd and addendum dated January 1, 2008, filed as an Exhibit to the 10-Q for the quarter ended March 31, 2008 and incorporated herein by reference.
     
10.11
 
Amended and restated credit agreement dated on April 28, 2008 between Isramco Resources, LLC and The Bank of Nova Scotia and Capital One, N.A., filed as an Exhibit to the 10-Q for the quarter ended March 31, 2008 and incorporated herein by reference.
     
10.12
 
Amended and Restated Loan Agreement dated as of May 25, 2008 between Isramco Inc. and J.O.E.L. Jerusalem Oil Explorations Ltd. filed as an Exhibit to the 10-K for the year ended December 31, 2009 and incorporated herein by reference.
     
10.13
 
Amended and Restated Agreement dated as of November 17, 2008 between Isramco Inc. and Goodrich Global Ltd. filed as an Exhibit to the 10-K for the year ended December 31, 2009 and incorporated herein by reference.
     
10.14
 
First Amendment to Loan Agreement dated as of February 1, 2009, between Isramco, Inc. and I.O.C. Israel Oil Company, Ltd.($18.5 million) filed as an Exhibit to the 10-K for the year ended December 31, 2009 and incorporated herein by reference.
     
10.15
 
First Amendment to Loan Agreement dated as of February 1, 2009, between Isramco, Inc, and Naphtha Israel Petroleum Corp., Ltd.($11.5 million) filed as an Exhibit to the 10-K for the year ended December 31, 2009 and incorporated herein by reference.
     
10.16
 
Loan Agreement dated as of July 14, 2009 between Isramco, Inc. and I.O.C. – Israel Oil Company, Ltd.($6.0 million) filed as an Exhibit to the 10-K for the year ended December 31, 2009 and incorporated herein by reference.
     
10.17
 
First Amendment to Loan Agreement dated as of February 1, 2009 between Isramco, Inc. and I.O.C. Israel Oil Company, Ltd.($12.0 million) filed as an Exhibit to the 10-K for the year ended December 31, 2009 and incorporated herein by reference.
     
10.18
 
Loan Agreement dated as of March 3, 2011 between Isramco, Inc. and I.O.C. – Israel Oil Company, Ltd.($11.0 million) filed as an Exhibit to the 10-K for the year ended December 31, 2010 and incorporated herein by reference.
     
 10.19*
 
     
10.20**
 
2011 Stock Incentive Plan
     
14.1
 
Code of Ethics, filed as an Exhibit to Form 10-K for the year ended December 31, 2003.
     
23.1**
 
Consent of Cawley, Gillespie & Associates, Inc.
     
23.2**
 
Consent of Netherland, Sewell & Associates, Inc.
     
31.1*
 
     
31.2*
 
     
32.1*
 
     
32.2*
 
     
99.1**
 
Cawley, Gillespie & Associates, Inc. Reserves Report
     
99.2**
 
Netherland, Sewell & Associates, Inc. Reserves Report
__________________________
+ Management Agreement 
   
 
*    Filed herewith
 
**  Incorporated by reference to the Registrants Annual Report on Form 10-K for the year ended December 31, 2011, as filed with the Commission on March 23, 2012.
 
 
SI GNATURES

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
/S/ HAIM TSUFF                                                                                     
HAIM TSUFF,  
CHAIRMAN OF THE BOARD,
CHIEF EXECUTIVE OFFICER
(PRINCIPAL EXECUTIVE OFFICER)
 
Date: December 20, 2012
 
 
 
/S/ EDY FRANCIS                                                                                  
EDY FRANCIS,
CHIEF FINANCIAL OFFICER
(PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER)
 
Date: December 20, 2012
 
EXHIBIT 10.19
 
LOAN AGREEMENT
 
THIS LOAN AGREEMENT, dated as of March 26, 2012 is made and entered into by and between ISRAMCO, INC., a Delaware corporation (the “Borrower”) and I.O.C. - ISRAEL OIL COMPANY LTD. (the “Lender”).
 
WITNESSETH:
 
WHEREAS, the Borrower desires to obtain a loan in the amount of Three Million Five Hundred Thousand Dollars ($3,500,000) (“Loan”) from the Lender for purposes of repayment on an outstanding loan amount due to The Bank of Nova Scotia.; and
 
WHEREAS, the Lender is willing to make such a loan.
 
NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and other good and valuable consideration, receipt of which is acknowledged by the parties hereto, the parties agree, as follows:
 
ARTICLE I
 
CERTAIN DEFINITIONS
 
When used herein, the following terms shall have the following meanings:
 
1.1   Business Day shall mean a day other than a Saturday, Sunday or a day upon which banks in the State of Texas are closed to business generally; provided that when used in connection with a Libor Loan, the term shall also exclude any day on which banks are not open for dealings in dollar deposits in the London interbank market.
 
1.2   Default Rate shall mean the Stated Rate plus 12 percentage points (12%) per annum.
 
1.3   Effective Date shall mean March 29, 2012.
 
1.4   Event of Default shall mean any of the events specified in Section 7.1 of this Agreement, and Default shall mean any event, which together with any lapse of time or giving of any notice, or both, would constitute an Event of Default.
 
1.5   Governmental Authority shall include the country, the state, county, city and political subdivisions in which any Person or such Person’s property is located or which exercises valid jurisdiction over any such Person or such Person’s property, and any Tribunal of any of them, including monetary authorities, which exercises valid jurisdiction over any such Person or such Person’s property.  Unless otherwise specified, all references to Governmental Authority herein shall mean a Governmental Authority having jurisdiction over, where applicable, Borrower, any of its Subsidiaries, any of Borrower’s properties or the Lender.
 
 
 
 
 
1.6   Governmental Requirement shall mean any Law, or other directive or requirement (whether or not having the force of law), including, without limitation, environmental laws, energy regulations and occupational, safety and health standards or controls, of any Governmental Authority.
 
1.7   Hereby , herein , hereof , hereunder and similar such terms shall mean and refer to this Agreement as a whole and not merely to the specific section, paragraph or clause in which the respective word appears.
 
1.8   Highest Lawful Rate shall mean on any day, the maximum nonusurious rate of interest permitted for that day by whichever of applicable federal or Texas laws permits the higher interest rate, stated as a rate per annum.  On each day, if any, that the Texas Finance Code establishes the “Ceiling Rate”, the Ceiling Rate shall be the “weekly ceiling” (as defined in the Texas Finance Code) for that day.  Lender may, from time to time, as to current and future balances, implement any other ceiling under the Texas Finance Code by notice to Borrower, if and to the extent permitted by the Texas Finance Code.  Without notice to Borrower or any other person or entity, the Ceiling Rate shall automatically fluctuate upward and downward as and in the amount by which such maximum nonusurious rate of interest permitted by applicable law fluctuates.
 
1.9   Indebtedness shall mean any and all: (i) indebtedness, obligations and liabilities of the Borrower to the Lender  incurred or which may be incurred hereafter pursuant to the terms of this Agreement or any of the other Loan Documents, and any extensions, renewals, substitutions, amendments and increases in amount thereof, including such amounts as may be evidenced by the Note and all lawful interest thereon and other charges, and all reasonable costs and expenses incurred by the Lender in connection with the preparation, filing and recording of the Loan Documents, including attorneys fees; (ii) all reasonable costs and expenses, including attorneys’ fees, paid or incurred by the Lender in enforcing or attempting to enforce collection of any Indebtedness and in enforcing or realizing upon or attempting to enforce or realize upon any collateral or security for any Indebtedness and in protecting and preserving the Lender’s interest in the Indebtedness or any collateral or security for any Indebtedness in any bankruptcy or reorganization proceeding, including interest on all sums so expended by the Lender accruing from the date upon which such expenditures are made until paid, at an annual rate equal to the Default Rate; and (iii) sums expended by the Lender in curing any Event of Default or Default of the Borrower under the terms of this Agreement, the other Loan Documents or any other security agreement or other writing evidencing or securing the payment of the Indebtedness described herein, including the Note.
 
1.10   Interest Period shall mean shall mean the period commencing on the Effective Date and ending on the numerically corresponding day each three (3) calendar months thereafter.
 
1.11   Law(s ) shall mean all statutes, laws, ordinances, regulations, orders, rules, codes, permits, franchises, licenses, certificates, writs, injunctions, or decrees of the United States, any state or commonwealth, any municipality, any foreign country, any territory or possession, or any Tribunal.
 
1.12   Libor shall mean, at any time of determination, the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on Dow Jones Market Service Page 3750 (or any successor page) as the London interbank offered rate for deposits in Dollars at approximately 11:00 a.m. (London time) two (2) Business Days prior to the first day of such Interest Period for a term comparable to such Interest Period.  If for any reason such rate is not available, the term “LIBOR” shall mean the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on Reuters Screen LIBOR Page as the London interbank offered rate for deposits in Dollars at approximately 11:00 a.m. (London time) two (2) Business Days prior to the first day of such Interest Period for a term comparable to such Interest Period; provided , however , if more than one rate is specified on Reuters Screen LIBOR Page, the applicable rate shall be the arithmetic mean of all such rates.  In the event that such rate does not appear on either Dow Jones Market Service Page 3750 or Reuters Screen LIBOR Page, “LIBOR” shall be the rate per annum at which deposits in Dollars are offered by leading reference banks in the London interbank market to Wells Fargo Bank, N.A. at approximately 11:00 a.m. (London time) two (2) Business Days prior to the first day of the applicable Interest Period for a period equal to such Interest Period and in an amount substantially equal to the amount of this Loan.
 
 
 
 
 
1.13   Loan shall mean the funds loaned to the Borrower by the Lender pursuant to this Agreement.
 
1.14   Loan Documents means, on any date, this Agreement, the Note and all other agreements relating to this Agreement entered into from time to time between Borrower and the Lender and all other documents and certificates executed and delivered to the Lender by the Borrower in connection with any of the foregoing, as from time to time amended, supplemented, amended and restated, or otherwise modified and in effect on such date.
 
1.15   Material Adverse Effect shall mean any material and adverse effect on (i) the assets, liabilities, financial condition, business, operations, prospects or affairs of the Borrower and its Subsidiaries taken as a whole or (ii) the ability of the Borrower and its Subsidiaries, taken as a whole, to carry out their business on and after the Effective Date or as proposed as of the Effective Date to be conducted or meet its obligations under the Loan Documents on a timely basis.
 
1.16   Maturity Date shall mean, unless the Note is sooner accelerated pursuant to this Agreement, March 29, 2013.
 
1.17   Maximum Rate shall mean at any particular in question, the maximum rate of interest which under applicable law may then be charged.  If such maximum rate changes after the date hereof, the Maximum Rate shall be automatically increased or decreased, as the case may be, without notice to Borrower from time to time as the effective date of each change in such maximum rate period.
 
1.18   Note shall mean the Note as described and defined in Article II of this Agreement, together with each and every extension, renewal, modification, replacement, substitution and change in form thereof which may be from time to time and for any term or terms effected.
 
 
 
 
 
1.19   Person shall mean and include an individual, a partnership, a limited partnership, a limited liability company, a joint venture, a corporation, a trust, an unincorporated organization, and a government or any department, agency or political subdivision thereof.
 
1.20   Responsible Officer shall mean the chief executive officer, chief operating officer, chief financial officer, president or managing director of the Borrower.
 
1.21   Stated Rate shall mean a rate per annum equal to LIBOR plus five and one half percent  (5.5%), not to exceed eleven percent (11%); provided, however, that if the Stated Rate ever exceeds the Highest Lawful Rate, the Stated Rate shall then and thereafter be fixed at a rate per annum equal to the Highest Lawful Rate then and from time to time thereafter in effect until the total amount of interest accrued at the Stated Rate on the unpaid balance of this Note equals the total amount of interest which would have accrued at the Highest Lawful Rate from time to time in effect.
 
1.22   Taxes shall mean all taxes, assessments, fees, or other charges or levies from time to time or at any time imposed by any Laws or by any Tribunal as hereafter defined.
 
1.23   Tribunal shall mean any municipal, state, commonwealth, Federal, foreign, territorial or other sovereign, governmental entity, governmental department, court, commission, board, bureau, agency or instrumentality.
 
1.24   Other Definitional Provisions . References to Sections, subsections, Exhibits and Schedules shall be to Sections, subsections, Exhibits and Schedules, respectively, of this Agreement unless otherwise specifically provided.  Any of the terms defined in Article I may, unless the content otherwise requires, be used in the singular or the plural depending on the reference.  In this Agreement, words importing any gender include the other genders; the words including, includes and include shall be deemed to be followed by the words without limitation; references to agreements and other contractual instruments shall be deemed to include subsequent amendments, assignments, and other modifications thereto, but only to the extent such amendments, assignments and other modifications are not prohibited by the terms of this Agreement or any other Loan Document; references to Persons include their respective permitted successors and assigns or, in the case of governmental Persons, Persons succeeding to the relevant functions of such Persons; and all references to statutes and related regulations shall include any amendments of same and any successor statutes and regulations.
 
 
 
 
 
ARTICLE II
 
LOAN
 
2.1   Loan .  Upon the terms and subject to the conditions hereinafter set forth, the Lender agrees to loan to Borrower the sum of Three Million Five Hundred Thousand and NO/100 U.S. Dollars (US $3,500,000.00) (the “Loan”).  The Loan will be funded on or before the Effective Date.  The unpaid principal balance and all accrued interest of the Loan is due and payable on the Maturity Date.
 
2.2   Payments by Lender.   The Lender shall fund the Loan to Borrower, as requested by Borrower, by wire transfer of immediately available funds by 11:00 a.m. Houston, Texas time to the account of the Borrower as designated by the Borrower for such purpose by written notice to the Lender.
 
2.3   Note .  The Borrower shall execute and deliver to the order of the Lender a promissory note in the original principal amount the Loan, the form of which is annexed hereto as Exhibit A and hereby made a part hereof (hereinafter referred to as the “Note”).  The Note shall be dated as of the Effective Date, and shall provide for three quarterly payment of interest only on the same date of the month on the third, sixth and ninth month following funding of the loan until the Maturity Date.  The unpaid and outstanding principal balance of the Note, together with accrued but unpaid interest thereon, shall be due and payable in full at the Maturity Date.  The Note shall bear interest on the unpaid balance of principal from time to time outstanding and on any past due interest at an annual interest rate determined pursuant to Section 2.6 hereof, but in no event at a rate greater than permitted by applicable Law.  All payments received shall be applied first to accrued interest and then to the outstanding principal amount owing on the Note.  All payments and prepayments shall be made in lawful money of the United States of America.  After maturity (whether by acceleration or otherwise) the Note shall bear interest at the Default Rate, payable on demand.  Interest shall be calculated on the basis of a year of 365 days, but assessed for the actual number of days elapsed in each Interest Period.
 
2.4   Proceeds of Loan.   Proceeds of the Loan shall be used only for the purposes repayment of the outstanding loan to The Bank of Nova Scotia.
 
2.5    Responsible Officer .  A Responsible Officer may, from time to time, notify the Lender in writing of a change in the Responsible Officers.  From and after the Lender’s receipt of such written notice, the Lender may rely on any such request or certificate purportedly signed by any individual who has been so designated as a Responsible Officer pursuant to this Agreement unless or until it receives written notice from a Responsible Officer of the deletion of a Responsible Officer.
 
2.6   Interest Rates .
 
(a)            Interest Prior to Maturity .  Subject to the provisions and limitations hereof, the outstanding principal balance of the Loan hereunder shall accrue interest at the Stated Rate.
 
 
 
 
 
(b)            Interest After Maturity .  After the outstanding principal amount of the Loan shall have become past due (by acceleration or past the stated maturity date), such Loans shall bear interest for each day until paid (before and after judgment) at the Default Rate.
 
2.7   Prepayments .  Borrower shall have the right at its option, from time to time, to prepay the Loan in whole or part without premium or penalty at any time.
 
2.8   Payments From Borrower .  All payments shall be payable to the Lender on the day when due without presentment, demand, protest or notice of any kind, all of which are hereby expressly waived, and an action therefor shall immediately accrue if not timely paid within applicable grace or curative periods herein specified.  Such payments shall be made to the Lender at such location as Lender may from time to time designate in writing in U.S. Dollars in funds immediately available at such office without set off, counterclaim or other deduction of any nature.  To the extent permitted by law, after there shall have become due (by acceleration or otherwise) interest or any other amounts due from the Borrower hereunder or under the Note (excluding overdue principal, which shall bear interest as described in Section 2.6(b) hereof), such amounts shall bear interest for each day until paid (before and after judgment), payable on demand, at the Default Rate.
 
2.9   Full Payment .  All outstanding principal and accrued but unpaid interest on the Note shall be due and payable at the Maturity Date.
 
ARTICLE III
 
CONDITIONS PRECEDENT TO LOANS
 
3.1   Conditions Precedent to Funding.   The effectiveness of this Agreement and the obligation of the Lender to make the Loan are subject to the satisfaction of all of the following conditions on or prior to the Effective Date (in addition to the other terms and conditions set forth herein):
 
(a)  
Representations and Warranties .  The covenants, representations and warranties set forth herein and in the other Loan Documents shall be true and correct in all material respects on and as of the Effective Date, with the same effect as though made on and as of the Effective Date.
 
(b)  
Note. The Borrower shall have executed and delivered to the Lender the Note payable to the order of the Lender.
 
(c)  
 Other Information .  The Lender shall have received such other information, documents and assurances as shall be reasonably requested by the Lender.
 
 
 
 
 
ARTICLE IV
 
AFFIRMATIVE COVENANTS
 
The Borrower covenants and agrees with the Lender that from the date hereof and so long as this Agreement is in effect (by extension, amendment or otherwise) and until payment in full of all Indebtedness and the performance of all other obligations of the Borrower under this Agreement, unless the Lender shall otherwise consent in writing:
 
4.1   Payment of Taxes and Claims .  The Borrower will pay and discharge or cause to be paid and discharged all Taxes imposed upon the income or profits of the Borrower or upon the property, real, personal or mixed, or upon any part thereof, belonging to Borrower before the same shall be in default, and all lawful claims for labor, rentals, materials and supplies which, if unpaid, might become a Lien upon its property or any part thereof; provided, however, that the Borrower shall not be required to pay and discharge or cause to be paid or discharged any such Tax, assessment or claim so long as the validity thereof shall be contested in good faith by appropriate proceedings, and adequate book reserves shall be established with respect thereto, and the Borrower shall pay such Tax, charge or claim before any property subject thereto shall become subject to levy of attachment or execution.
 
4.2   Maintenance of Existence .  The Borrower will do or cause to be done all things necessary to preserve and keep in full force and effect its organizational existence, rights and franchises and good standing in the State of Delaware and as a foreign corporation qualified in such other jurisdiction(s) in which the failure to maintain such qualification would have a Material Adverse Effect.
 
4.3   Preservation of Property .  The Borrower will at all times maintain, preserve and protect all of the Borrower’s properties which are used or useful in the conduct of the Borrower’s businesses whether owned in fee or otherwise, or leased, in good repair and operating condition and comply with all material leases to which it is a party or under which it occupies property so as to prevent any material loss or forfeiture thereunder.
 
4.4   Payment of Indebtedness/Performance of Obligations .  The Borrower will pay the obligations under the Note according to the reading, tenor and effect thereof and the Borrower hereby agrees to pay, when due and owing, all Indebtedness, whether or not evidenced by the Note.
 
4.5   Operation of Properties and Equipment .
 
(a)  
The Borrower will maintain and operate, and will cause each of its Affiliates (if any) to maintain and operate, their respective properties in a good and workmanlike manner, except to the extent a failure to so observe and comply is not reasonably expected to have a Material Adverse Effect.
 
(b)  
The Borrower will comply, and will cause each of its Affiliates (if any) to comply, in all respects with all contracts and agreements applicable to or relating to their respective properties, except to the extent a failure to so comply is not reasonably expected to have a Material Adverse Effect.
 
 
 
 
 
ARTICLE V
 
NEGATIVE COVENANTS
 
The Borrower covenants and agrees with the Lender that from the date hereof and so long as this Agreement is in effect (by extension, amendment or otherwise) and until payment in full of all Indebtedness, unless the Lender shall otherwise consent in writing:
 
5.1   Sale of Assets .  The Borrower will not sell, lease, assign, transfer, or otherwise dispose of, any of its now owned or hereafter acquired assets (including, without limitation, shares of stock, receivables, and leasehold interests) in excess of $250,000 in the aggregate during any twelve (12) consecutive month period of time, except: (1) inventory disposed of or leased in the ordinary course of business; (2) the sale or other disposition of other assets no longer used or useful in the conduct of its business; and (3) as otherwise expressly permitted pursuant to this Agreement.
 
5.2   Use of Loan Proceeds .  The Borrower shall not use any proceeds of the Loan for any purpose other than those expressly permitted and contemplated by this Agreement, and in no event shall any loan proceeds be used for any purpose that would create or cause a breach, violation or default or event of default hereunder or under any of the other Loan Documents or violation of Regulations T, U or X or any other regulation of the Board of Governors of the Federal Reserve System or to violate Section 7 of the Securities Exchange Act of 1934 or any rule or regulation thereunder, in each case as now in effect or as the same may hereinafter be in effect.
 
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
 
To induce the Lender to enter into this Agreement and to make the Loan to the Borrower under the provisions hereof, and in consideration thereof, the Borrower represents, warrants and covenants as follows:
 
6.1   Good Standing, and Due Qualification .  The Borrower (a) is a limited liability company duly formed, validly existing, and in good standing under the laws of the State of Delaware; (b) has the power and authority to own its assets and to transact the business in which it is now engaged or in which it is proposed to be engaged; and (c) is duly qualified as a foreign corporation and in good standing under the laws of each other jurisdiction in which such qualification is required, except where the failure to so qualify could not reasonably be expected to have a Material Adverse Effect.  The initial Responsible Officer of the Borrower has all necessary corporate power and authority to execute and deliver this Agreement, the Note, and the other Loan Documents to the Lender.
 
6.2   Litigation .  There is no action, suit, investigation or proceeding threatened or pending before any Tribunal against or affecting the Borrower or any properties or rights of the Borrower, which, if adversely determined, would result in any material adverse change in the business or condition, financial or otherwise, of the Borrower, or otherwise materially adversely affect the ability of the Borrower to perform its obligations under this Agreement.  The Borrower is not in default with respect to any judgment, order, writ, injunction, decree, rule or regulation of any Tribunal.
 
 
 
 
 
6.3   Conflicting Agreements and Other Matters .  To the best of Borrower’s knowledge and belief, the Borrower is not in default in the performance of any material obligation, covenant, or condition in any material agreement to which it is a party or by which it is bound.  Neither the execution nor delivery of any of the Loan Documents, nor fulfillment of, nor compliance with their respective terms and provisions will conflict with, or result in a material breach of the terms, conditions or provisions of, or constitute a default under, or result in any material violation of, or result in the creation of any Lien (except those created by the Loan Documents) upon any of the properties or assets of the Borrower pursuant to, or require any consent, approval or other action by or any notice to or filing with any Tribunal (other than routine filings after the Effective Date with the Securities and Exchange Commission, any securities exchange and/or state blue sky authorities) pursuant to any award of any arbitrator, or any agreement, instrument or Laws to which the Borrower is subject.
 
6.4   Title to Properties, Authority .  The Borrower has full power, authority and legal right to own and operate the properties which it now owns and operates, and to carry on the lines of business in which it is now engaged, and, to the knowledge of Borrower, has good and defensible title to all of its assets. The Borrower has full power, authority and legal right to execute and deliver and to perform and observe the provisions of this Agreement and the other Loan Documents and the Loan Documents constitute the legal, valid and binding obligations of the Borrower, enforceable against it in accordance with their respective terms, subject only to applicable bankruptcy, insolvency or similar laws and general principles of equity.
 
6.5   Corporate Authorization .  The Borrower has duly authorized the execution and delivery of each of the Loan Documents and the performance of their respective terms.  No other authorizations, approvals, consents or actions of any other Person are required as a prerequisite to the validity and enforceability of the Loan Document.
 
ARTICLE VII
 
EVENTS OF DEFAULT
 
7.1   Events of Default .  The occurrence of any one or more of the following events shall constitute an Event of Default (whether such occurrence shall be voluntary or involuntary or come about or be effected by operation of Law or otherwise):
 
(a)  
Borrower shall fail to make any monthly or other payment due on the Note, or fail to pay any other fee, charge or assessment within five (5) days after the same shall become due and payable (whether by extension, renewal, acceleration, maturity or otherwise); or
 
 
 
 
 
(b)  
Any representation, warranty or certification of the Borrower made herein, or in any other writing furnished in connection with or pursuant to any of the Loan Documents shall have been incorrect, false or misleading in any material respect on the date when made; or
 
(c)  
The Borrower shall fail to duly observe, perform or comply with any covenant, agreement or term (other than payment provisions which are governed by subparagraph (a) hereof) contained in this Agreement or any of the Loan Documents and such default or breach shall have not been cured or remedied within thirty (30) days following the date the Lender first notifies the Borrower in writing; or
 
(d)  
Any of the following: (i) the Borrower shall be unable to pay its debts as they mature, or shall make an assignment for the benefit of creditors or admit in writing its inability to pay its debts generally as they become due or fail generally to pay its debts as they mature; or (ii) an order, judgment or decree is entered adjudicating the Borrower insolvent or an order for relief under the United States Bankruptcy Code is entered with respect to the Borrower; or (iii) the Borrower shall petition or apply to any Tribunal for the appointment of a trustee, receiver, custodian or liquidator of the Borrower or of any substantial part of the assets of the Borrower or shall commence any proceedings relating to the Borrower under any bankruptcy, reorganization, compromise, arrangement, insolvency, readjustment of debts, dissolution, or liquidation Law of any jurisdiction, whether now or hereafter in effect; or (iv) any such petition or application shall be filed, or any such proceedings shall be commenced, against the Borrower and the Borrower by any act shall indicate its approval thereof, consent thereto or acquiescence therein, or an order, judgment or decree shall be entered appointing any such trustee, receiver, custodian or liquidator, or approving the petition in any such proceedings, and such order, judgment or decree shall remain unstayed and in effect for more than thirty (30) days; or (v) the Borrower shall fail to make timely payment or deposit of any amount of tax required to be withheld by such Borrower and paid to or deposited to or to the credit of the United States of America pursuant to the provisions of the Internal Revenue Code of 1986, as amended, in respect of any and all wages and salaries paid to employees of the Borrower; or
 
(e)  
Any default or event of default under any of the other Loan Documents following the lapse of any applicable curative or grace period provided therein; or
 
(f)  
the Lender’s or Jay’s criminal indictment or conviction under any law pursuant to which such indictment or conviction could lead to a forfeiture by the Lender or Jay of any of the properties securing the Loan or guaranty thereof.
 
7.2   Remedies .  Upon the occurrence of any Event of Default referred to in Section 7.1, the Note and all other Indebtedness shall be immediately due and payable, without notice of any kind.  Upon the occurrence of any other Event of Default, and without prejudice to any right or remedy of the Lender under this Agreement or the Loan Documents or under applicable Law or under any other instrument or document delivered in connection herewith, the Lender may declare the Note and the Indebtedness, or any part thereof, to be forthwith due and payable, whereupon the Note and the other Indebtedness, or such portion as is designated by the Lender shall forthwith become due and payable, without presentment, demand, notice or protest of any kind, all of which are hereby expressly waived by the Borrower.  No delay or omission on the part of the Lender in exercising any power or right hereunder or under the Note, the Loan Documents or under applicable law shall impair such right or power or be construed to be a waiver of any default or any acquiescence therein, nor shall any single or partial exercise by Lender of any such power or right preclude other or further exercise thereof or the exercise of any other such power or right by such Person.  In the event that all or part of the Indebtedness becomes or is declared to be forthwith due and payable as herein provided, Lender shall have the right to set off the amount of all the Indebtedness of the Borrower owing to such Person against, and shall have a lien upon and security interest in, all property of the Borrower in such Person’s possession at or subsequent to such default, regardless of the capacity in which such property is held, including but not limited to any balance or share of any deposit, demand, collection or agency account.  At any time after the occurrence of any Event of Default, the Lender may, at its option, cause an audit of any and/or all of the books, records and documents of the Borrower to be made by auditors satisfactory to the Lender at the expense of the Borrower.  The Lender also shall have, and may exercise, each and every right and remedy granted to it for default under the terms of the other Loan Documents.
 
 
 
 
 
7.3   Application of Proceeds .  After the exercise of remedies provided for in Section 7.2 (or after the Indebtedness automatically becomes immediately due and payable as set forth in Section 7.2), any amounts received on account of such Indebtedness shall be applied in the following order:
 
First :  to payment of that portion of the Indebtedness constituting fees, indemnities, expenses or other amounts (other than principal and interest) payable to the Lender (including fees, charges and disbursements of counsel);
 
Second :  to payment of accrued and unpaid interest on the Indebtedness;
 
Third :  to payment of unpaid principal of the Indebtedness;
 
and
 
Last : the balance, if any, after all of the Indebtedness has been indefeasibly paid in full, to Borrower or as otherwise required by applicable Laws.
 
 
 
 
 
ARTICLE VIII
 
MISCELLANEOUS
 
8.1   Notices .  Unless otherwise provided herein, all notices, requests, consents and demands shall be in writing and shall be either hand-delivered (by courier or otherwise), mailed by certified mail, postage prepaid, or transmitted via telex or facsimile to the respective addresses specified below, or, as to any party, to such other address as may be designated by it in written notice to the other parties:
 
If to the Borrower, to:

Isramco, Inc.
2425 West Loop South, Suite 810
Houston, TX 77027
Telephone No.:  (713) 621 -3882
Facsimile No.:  (713) 621 – 3988
e – mail:  edyf@isramco-jay.com

If to the Lender, to:

I.O.C. - ISRAEL OIL COMPANY LTD.
8 Granit St.
P.O.B. 10188
Petach-Tikva 49002
Israel
Phone:  972-3-922-922-5

All notices, requests, consents and demands hereunder will be effective when hand-delivered or transmitted by telecopier or sent, answer-back received, respectively, by the Lender to the notice address of the Borrower, or two (2) Business Days after the date when mailed by certified mail, postage prepaid, in each case given or addressed as aforesaid by either party hereto.
 
8.2   Place of Payment .  All sums payable hereunder shall be paid in immediately available funds, at such location as may be designated from time to time in writing by Lender.  If any interest, principal or other payment falls due on a date other than a Business Day, then (unless otherwise provided herein) such due date shall be extended to the next succeeding Business Day, and such extension of time will, in such case, be included in computing interest, if any, in connection with such payment.
 
8.3   Survival of Agreements .  All covenants, agreements, representations and warranties made herein shall survive the execution and the delivery of Loan Documents.
 
8.4   Parties in Interest .  All covenants, agreements and obligations contained in this Agreement shall bind and inure to the benefit of the parties hereto and the respective successors and permitted assigns of the parties hereto, except that the Borrower may not assign any of its rights or obligations hereunder or under the Note without the prior written consent of the Lender.
 
 
 
 
 
8.5   Governing Law .  This Agreement and the Note shall be deemed to have been made or incurred under the Laws of the State of Texas and shall be construed and enforced in accordance with and governed by the Laws of Texas except only where the applicable remedial or procedural laws of the other jurisdictions are situated are applicable thereto
 
8.6   Interest .  It is the intention of the parties hereto that the Lender shall conform strictly to usury laws applicable to them.  Accordingly, if the transactions contemplated hereby would be usurious as to the Lender under laws applicable to it (including the laws of the United States of America or any other jurisdiction whose laws may be mandatorily applicable the Lender notwithstanding the other provisions of this Agreement), then, in that event, notwithstanding anything to the contrary in any of the Loan Documents, it is agreed as follows:  (i) the aggregate of all consideration which constitutes interest under law applicable to the Lender that is contracted for, taken, reserved, charged or received by the Lender under any of the Loan Documents or agreements or otherwise in connection with the Note shall under no circumstances exceed the Maximum Rate, and any excess shall be canceled automatically and if theretofore paid shall be credited by such Lender on the principal amount of the Indebtedness (or, to the extent that the principal amount of the Indebtedness shall have been or would thereby be paid in full, refunded by any Lender to the Borrower); and (ii) in the event that the maturity of the Note is accelerated by reason of an election of the holder thereof resulting from any Event of Default under this Agreement or otherwise, or in the event of any required or permitted prepayment, then such consideration that constitutes interest under law applicable to the Lender may never include interest greater than the Maximum Rate, and excess interest, if any, provided for in this Agreement or otherwise shall be canceled automatically as of the date of such acceleration or prepayment and, if theretofore paid, shall be credited by the Lender on the principal amount of the Indebtedness (or, to the extent that the principal amount of the Indebtedness shall have been or would thereby be paid in full, refunded by the Lender to the Borrower).  All sums paid or agreed to be paid to the Lender for the use, forbearance or detention of sums due hereunder shall, to the extent permitted by law, be amortized, prorated, allocated and spread throughout the full term of the Loans evidenced by the Note until payment in full so that the rate or amount of interest on account of any Loans hereunder does not exceed the Maximum Rate.  If at any time and from time to time (i) the amount of interest payable to the Lender on any date shall be computed at the highest lawful rate applicable to the Lender pursuant to this Section 8.6; and (ii) in respect of any subsequent interest computation period the amount of interest otherwise payable to Lender would be less than the amount of interest payable to the Lender computed at the highest lawful rate applicable to the Lender, then the amount of interest payable to the Lender in respect of such subsequent interest computation period shall continue to be computed at the highest lawful rate applicable to the Lender until the total amount of interest payable to the Lender shall equal the total amount of interest which would have been payable to the Lender if the total amount of interest had been computed without giving effect to this Section 8.6.  To the extent that the Texas Credit Title (V.T.C.A., Texas Finance Code §§ 301.001 et seq.) is relevant to the Lender for the purpose of determining the highest lawful rate, the Lender hereby elects to determine the applicable ceiling rate under the Texas Credit Title by the weekly ceiling from time to time in effect.
 
8.7   No Waiver, Cumulative Remedies .  No failure to exercise, and no delay in exercising, on the part of the Lender, any right, power or privilege hereunder or under any other Loan Document or applicable Law shall preclude any other or further exercise thereof or the exercise of any other right, power or privilege of the Lender.  The rights and remedies herein provided are cumulative and not exclusive of any other rights or remedies provided by any other instrument or by law.  No notice to or demand on the Borrower in any case shall entitle the Borrower to any other or further notice or demand in similar or other circumstances.
 
8.8   Costs .  The Borrower agrees to pay to the Lender on demand all recording fees and filing costs, all reasonable attorneys fees and reasonable legal expenses incurred or accrued by the Lender in connection with and preparation, negotiation, closing, administration, perfection, enforcement, refinancing, renegotiation, restructuring, amendment, waiver or other modifications of this Agreement and the Loan Documents or any amendment, waiver, consent or modification to and of the Loan Documents.  In any action to enforce or construe the provisions of this Agreement or any of the Loan Documents, the Lender shall be entitled to recover its reasonable attorneys’ fees, disbursements of counsel and all costs and expenses related thereto.
 
8.9   Right of Set - Off .  The Borrower hereby grants to the Lender a lien, security interest and right of setoff as security for all Indebtedness and obligations of the Borrower upon and against all deposits, credit, and property of the Borrower, now or hereafter in the possession, custody, safekeeping or control of such Person; and upon (a) the occurrence and during the continuance of any Event of Default; and (b) the decision by the Lender to declare the Note due and payable pursuant to the provisions of Article VII, the Lender is hereby authorized at any time and from time to time, to set off and otherwise apply any and all deposits (general or special, time or demand, provisional or final, other than trust funds) at any time held and other indebtedness at any time owing by the Lender to or for the credit or the account of the Borrower against any and all of the Indebtedness of the Borrower now or hereafter existing under this Agreement and the Note, irrespective of whether demand under this Agreement or the Note shall have been made and although such Indebtedness may be unmatured.  The Lender shall promptly notify the Borrower after any such set off and application; provided , however , that the failure to give such notice shall not affect the validity of such setoff and application.  The rights of the Lender under this Section are in addition to other rights and remedies (including, without limitation, other rights of set-off) that such Persons may have at law, in equity or otherwise.
 
 
 
 
 
8.10   Headings .  The article and section headings of this Agreement are for convenience of reference only and shall not constitute a part of the text hereof nor alter or otherwise affect the meaning or interpretation of any provision hereof.
 
8.11   Severability .  The unenforceability or invalidity as determined by a Tribunal of competent jurisdiction, of any provision or provisions of this Agreement shall not render unenforceable or invalid any other provision or provisions hereof.
 
8.12   Confidentiality .  In the event that the Borrower provides to the Lender written confidential information belonging to the Borrower, the Lender shall thereafter maintain such information in confidence in accordance with the standards of care and diligence that each utilizes in maintaining its own confidential information.  This obligation of confidence shall not apply to such portions of the information which (i) are in the public domain; (ii) hereafter become part of the public domain, without the Lender breaching its obligation of confidence to the Borrower; (iii) are previously known by the Lender from some source other than the Borrower; (iv) are hereafter developed by the Lender without using the Borrower’s information; (v) are hereafter obtained by the Lender from a third party who owes no obligation of confidence to the Borrower with respect to such information; (vi) are disclosed with the Borrower’s consent; (vii) must be disclosed either pursuant to any Governmental Requirement or to Persons regulating the activities of the Lender; or (viii) as may be required by law or regulation or order of any Governmental Authority in any judicial, arbitration or governmental proceeding.  Further, the Lender may disclose any such information to consultants, any independent certified public accountants or any legal counsel employed by such Persons in connection with this Agreement, including without limitation, the enforcement or exercise of all rights and remedies thereunder, or any assignee or participant (including prospective assignees and participants) in the Loan; provided, however, that the Lender imposes on the Person to whom such information is disclosed the same obligation to maintain the confidentiality of such information as is imposed upon it hereunder.  Notwithstanding anything to the contrary provided herein, this obligation of confidence shall cease two (2) years from the date the information was furnished, unless the Borrower requests in writing at least thirty (30) days prior to the expiration of such two (2) year period, to maintain the confidentiality of such information for an additional two (2) year period.  The Lender agrees not to issue or cause to be issued any tombstone or other publicly published announcement of the lending facilities established by this Agreement without the Borrower’s review and approval thereof, which such approval will not be unreasonably withheld.
 
8.13   Survival .  To the extent that any payments on the Indebtedness are subsequently invalidated, declared to be fraudulent or preferential, set aside or required to be repaid to a trustee, debtor-in-possession, receiver or other Person under any bankruptcy law, common law or equitable cause, then to such extent, the Indebtedness so satisfied shall be revived and continue as if such payment or proceeds had not been received and the Liens, security interests, rights, powers and remedies under this Agreement shall continue in full force and effect.
 
NO ORAL AGREEMENTS .  THE LOAN DOCUMENTS EMBODY THE ENTIRE AGREEMENT AND UNDERSTANDING BETWEEN THE PARTIES AND SUPERSEDE ALL OTHER AGREEMENTS AND UNDERSTANDINGS BETWEEN SUCH PARTIES RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF THE LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
 
8.14   Counterparts .  This Agreement may be executed in any number of counterparts, all of which taken together shall constitute one and the same instrument and any of the parties hereto may execute this Agreement by signing any such counterpart.  Delivery of an executed counterpart of a signature page to this Agreement by telecopier shall be as effective as delivery of a manually executed counterpart of this Agreement.
 
 
 
 
 
8.15   Amendments .  No amendment or waiver of any provision of this Agreement, the Note, or any other Loan Document to which the Borrower is a party, nor any consent to any departure by the Borrower therefrom, shall in any event be effective unless the same shall be agreed or consented to by the Lender and the Borrower, and each such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given; provided, that no amendment, waiver, or consent shall, unless in writing and signed by the Lender and the Borrower, do any of the following:  (a) reduce the principal of, or interest on, the Note or any fees or other amounts payable hereunder; (b) postpone any date fixed for any payment of principal of, or interest on, the Note or any fees or other amounts payable hereunder; (c) change the percentage of the Commitment or of the aggregate unpaid principal amount of the Note; or (d) change any provision contained in this Section 8.16.
 
8.16    Successors and Assigns .  This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.  The Borrower may not assign or transfer any of its rights or obligations hereunder without the prior written consent of the Lender.  The Borrower and the Lender agree that the Lender may at any time assign to one or more assignees all, or a proportionate part of all, of its rights and obligations under this Agreement and the other Loan Documents.
 
IN WITNESS WHEREOF, the Borrower has caused this Agreement to be executed and delivered to the Lender, effective as of the day and year first above written by the undersigned duly authorized corporate officer of the Borrower.
 
BORROWER:

ISRAMCO, INC.
A Delaware corporation

By:                                                                        


LENDER:

I.O.C. - ISRAEL OIL COMPANY LTD.

By:                                                                 
 
 
 
 
 

EXHIBIT 31.1
 
RULE 13A-14(A) / 15D-14(A) CERTIFICATIONS
I, Haim Tsuff, certify that:

1. I have reviewed this Form 10-K/A (Amendment No. 1) of Isramco, Inc. for the year ended December 31, 2011;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in the in the Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting  to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of the internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons fulfilling the equivalent function):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: December 20, 2012        
 
 /s/ HAIM TSUFF                                       
HAIM TSUFF
CHIEF EXECUTIVE OFFICER
(PRINCIPAL EXECUTIVE OFFICER)
EXHIBIT 31.2
 
RULE 13A-14(A) / 15D-14(A) CERTIFICATIONS
I, Edy Francis, certify that:

1. I have reviewed this annual report on Form 10-K/A (Amendment No. 1) of Isramco, Inc. for the year ended December 31, 2011;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in the in the Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting  to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of the internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's board of directors (or persons fulfilling the equivalent function):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: December 20, 2012          
 
/s/ EDY FRANCIS                                                                             
EDY FRANCIS
CHIEF FINANCIAL OFFICER
(PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER)
EXHIBIT 32.1
 
 

CERTIFICATION BY CHIEF EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Isramco, Inc. (the "Company") on Form 10-K/A (Amendment No. 1) for the year ended December 31, 2011 (the "Report") filed with the Securities and Exchange Commission, I, Haim Tsuff, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Company's Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

December 20, 2012          
 
/s/ HAIM TSUFF                                        
HAIM TSUFF
CHIEF EXECUTIVE OFFICER
(PRINCIPAL EXECUTIVE OFFICER)


A SIGNED ORIGINAL OF THIS STATEMENT REQUIRED BY SECTION 906 HAS BEEN PROVIDED TO ISRAMCO, INC. AND WILL BE RETAINED BY ISRAMCO, INC. AND FURNISHED TO THE SECURITIES AND EXCHANGE COMMISSION OR ITS STAFF UPON REQUEST.
 
EXHIBIT 32.2
 

CERTIFICATION BY CHIEF EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Isramco, Inc. (the "Company") on Form 10-K/A (Amendment No. 1) for the year ended December 31, 2011 (the "Report") filed with the Securities and Exchange Commission, I, Edy Francis, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1) The Company's Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

December 20, 2012           
 
/s/ EDY FRANCIS                                                                         
EDY FRANCIS
CHIEF FINANCIAL OFFICER
(PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER)


A SIGNED ORIGINAL OF THIS STATEMENT REQUIRED BY SECTION 906 HAS BEEN PROVIDED TO ISRAMCO, INC. AND WILL BE RETAINED BY ISRAMCO, INC. AND FURNISHED TO THE SECURITIES AND EXCHANGE COMMISSION OR ITS STAFF UPON REQUEST.