Document:

Exhibit 4.1

 

FIRST SUPPLEMENTAL INDENTURE

 

between

 

MEDLEY CAPITAL CORPORATION

 

and

 

U.S. BANK NATIONAL ASSOCIATION,

 

as Trustee

 

Dated as of March 21, 2012

 

 

FIRST SUPPLEMENTAL INDENTURE

 

THIS FIRST SUPPLEMENTAL INDENTURE (this
“First Supplemental Indenture”), dated as of March 21, 2012, is between Medley Capital Corporation, a Delaware corporation
(the “Company”), and U.S. Bank National Association, as trustee (the “Trustee”). All capitalized terms
used herein shall have the meaning set forth in the Base Indenture (as defined below).

 

RECITALS OF THE COMPANY

 

The Company and the Trustee executed and
delivered an Indenture, dated as of February 7, 2012 (the “Base Indenture” and, as supplemented by this First Supplemental
Indenture, the “Indenture”), to provide for the issuance by the Company from time to time of the Company’s unsecured
debentures, notes or other evidences of indebtedness (the “Securities”), to be issued in one or more series as provided
in the Indenture.

 

The Company desires to issue and sell up
to $40,000,000 aggregate principal amount of the Company’s 7.125% Senior Notes due 2019 (the “Notes”).

 

Sections 901(5) and 901(7) of the Base Indenture
provide that without the consent of Holders of the Securities of any series issued under the Indenture, the Company, when authorized
by or pursuant to a Board Resolution, and the Trustee, at any time and from time to time, may enter into one or more indentures
supplemental to the Base Indenture to (i) change or eliminate any of the provisions of the Indenture when there is no Security
Outstanding of any series created prior to the execution of the supplemental indenture that is entitled to the benefit of such
provision and (ii) establish the form or terms of Securities of any series as permitted by Section 201 and Section 301 of the Base
Indenture.

 

The Company desires to establish the form
and terms of the Notes and to modify, alter, supplement and change certain provisions of the Base Indenture for the benefit of
the Holders of the Notes (except as may be provided in a future supplemental indenture to the Indenture (“Future Supplemental
Indenture”)).

 

    	 

    	 

    

 

The Company has duly authorized the execution
and delivery of this First Supplemental Indenture to provide for the issuance of the Notes and all acts and things necessary to
make this First Supplemental Indenture a valid, binding, and legal obligation of the Company and to constitute a valid agreement
of the Company, in accordance with its terms, have been done and performed.

 

NOW, THEREFORE, for and in consideration
of the premises and the purchase of the Notes by the Holders thereof, it is mutually agreed, for the equal and proportionate benefit
of all Holders of the Notes, as follows:

 

ARTICLE
I

TERMS
OF THE NOTES

 

Section 101      Terms
of the Notes. The following terms relating to the Notes are hereby established:

 

(a)          The
Notes shall constitute a series of Senior Securities having the title “7.125% Senior Notes due 2019.” The Notes shall
bear a CUSIP number of 58503F205 and an ISIN number of US58503F2056.

 

(b)          The
aggregate principal amount of the Notes that may be initially authenticated and delivered under the Indenture (except for Notes
authenticated and delivered upon registration of, transfer of, or in exchange for, or in lieu of, other Notes pursuant to Sections
304, 305, 306, 906, 1107 or 1305 of the Base Indenture, and except for any Securities that, pursuant to Section 303 of the Base
Indenture, are deemed never to have been authenticated and delivered under the Indenture) shall be up to $40,000,000 . Under a
Board Resolution, Officers’ Certificate pursuant to Board Resolutions or an indenture supplement, the Company may from time
to time, without the consent of the Holders of Notes, issue additional Notes (in any such case “Additional Notes”)
having the same ranking and the same interest rate, maturity and other terms as the Notes. Any Additional Notes and the existing
Notes will constitute a single series under the Indenture and all references to the relevant Notes herein shall include the Additional
Notes unless the context otherwise requires.

 

(c)          The
entire outstanding principal of the Notes shall be payable on March 30, 2019.

 

(d)          The
rate at which the Notes shall bear interest shall be 7.125% per annum (the “Applicable Interest Rate”). The date from
which interest shall accrue on the Notes shall be March 21, 2012, or the most recent Interest Payment Date to which interest has
been paid or provided for; the Interest Payment Dates for the Notes shall be March 30, June 30, September 30 and December 30 of
each year, commencing June 30, 2012 (if an Interest Payment Date falls on a day that is not a Business Day, then the applicable
interest payment will be made on the next succeeding Business Day and no additional interest will accrue as a result of such delayed
payment); the initial interest period will be the period from and including March 21, 2012, to, but excluding, the initial Interest
Payment Date, and the subsequent interest periods will be the periods from and including an Interest Payment Date to, but excluding,
the next Interest Payment Date or the Stated Maturity, as the case may be; the interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date, will be paid to the Person in whose name the Note (or one or more Predecessor Notes)
is registered at the close of business on the Regular Record Date for such interest, which shall be March 15, June 15, September
15 or December 15 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. Payment of principal
of (and premium, if any, on) and any such interest on the Notes will be made at the Corporate Trust Office of the Trustee in Boston,
Massachusetts in such coin or currency of the United States of America as at the time of payment is legal tender for payment of
public and private debts; provided, however, that at the option of the Company payment of interest may be made by check mailed
to the address of the Person entitled thereto as such address shall appear in the Security Register. Interest on the Notes will
be computed on the basis of a 360-day year of twelve 30-day months.

 

    	2

    	 

    

 

(e)          The
Notes shall be initially issuable in global form (each such Note, a “Global Note”). The Global Notes and the Trustee’s
certificate of authentication thereon shall be substantially in the form of Exhibit A to this First Supplemental Indenture. Each
Global Note shall represent the outstanding Notes as shall be specified therein and each shall provide that it shall represent
the aggregate amount of outstanding Notes from time to time endorsed thereon and that the aggregate amount of outstanding Notes
represented thereby may from time to time be reduced or increased, as appropriate, to reflect exchanges and redemptions. Any endorsement
of a Global Note to reflect the amount of any increase or decrease in the amount of outstanding Notes represented thereby shall
be made by the Trustee or the Security Registrar, in accordance with Sections 203 and 305 of the Base Indenture.

 

(f)          The
depositary for such Global Notes (the “Depositary”) shall be The Depository Trust Company, New York, New York. The
Security Registrar with respect to the Global Notes shall be the Trustee.

 

(g)          The
Notes shall be defeasible pursuant to Section 1402 or Section 1403 of the Base Indenture. Covenant defeasance contained in Section
1403 of the Base Indenture shall apply to the covenants contained in Sections 1006, 1007, 1008 and 1009 of the Indenture.

 

(h)          The
Notes shall be redeemable pursuant to Section 1101 of the Base Indenture and as follows:

 

(i)          The
Notes will be redeemable in whole or in part at any time or from time to time, at the option of the Company, on or after March
30, 2015, at a redemption price of $25 per Note plus accrued and unpaid interest payments otherwise payable for the then-current
quarterly interest period accrued to, but excluding, the date fixed for redemption.

 

(ii)         Notice
of redemption shall be given in writing and mailed, first-class postage prepaid or by overnight courier guaranteeing next-day delivery,
to each Holder of the Notes to be redeemed, not less than thirty (30) nor more than sixty (60) days prior to the Redemption Date,
at the Holder’s address appearing in the Security Register. All notices of redemption shall contain the information set forth
in Section 1104 of the Base Indenture.

 

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(iii)        Any
exercise of the Company’s option to redeem the Notes will be done in compliance with the Investment Company Act to the extent
applicable.

 

(iv)        If
the Company elects to redeem only a portion of the Notes, the Trustee will determine the method for selecting the particular Notes
to be redeemed, in accordance with the Investment Company Act to the extent applicable.

 

(v)         Unless
the Company defaults in payment of the Redemption Price, on and after the Redemption Date, interest will cease to accrue on the
Notes called for redemption hereunder.

 

(i)          The
Notes shall not be subject to any sinking fund pursuant to Section 1201 of the Base Indenture.

 

(j)          The
Notes shall be issuable in denominations of $25 and integral multiples of $25 in excess thereof.

 

(k)          Holders
of the Notes will not have the option to have the Notes repaid prior to the Stated Maturity.

 

(l)          The
Notes are hereby designated as “Senior Securities” under the Indenture.

 

ARTICLE
II

DEFINITIONS
AND OTHER PROVISIONS OF GENERAL APPLICATION

 

Section 201      Except
as may be provided in a Future Supplemental Indenture, for the benefit of the Holders of the Notes but no other series of Securities
under the Indenture, whether now or hereafter issued and Outstanding, Article I of the Base Indenture shall be amended by adding
the following defined terms to Section 101 in appropriate alphabetical sequence, as follows:

 

“‘Exchange Act’
means the Securities Exchange Act of 1934, as amended, and any statute successor thereto.”

 

“‘GAAP’ means generally
accepted accounting principles in the United States set forth in the opinions and pronouncements of the Accounting Principles Board
of the American Institute of Certified Public Accountants, the opinions and pronouncements of the Public Company Accounting Oversight
Board and the statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other
entity as have been approved by a significant segment of the accounting profession in the United States, which are in effect from
time to time.”

 

“‘Investment Company Act’
means the Investment Company Act of 1940, as amended, and the rules, regulations and interpretations promulgated thereunder, to
the extent applicable, and any statute successor thereto.”

 

    	4

    	 

    

 

ARTICLE
III

COVENANTS

 

Section 301      Except
as may be provided in a Future Supplemental Indenture, for the benefit of the Holders of the Notes but no other series of Securities
under the Indenture, whether now or hereafter issued and Outstanding, Article X of the Base Indenture shall be amended by adding
the following new Sections 1007, 1008 and 1009 thereto, each as set forth below:

 

“Section 1007 Section 18(a)(1)(A) of the
Investment Company Act.

 

The Company hereby agrees that
for the period of time during which Notes are Outstanding, the Company will not violate, whether or not it is subject to, Section
18(a)(1)(A) as modified by Section 61(a)(1) of the Investment Company Act or any successor provisions thereto of the Investment
Company Act.”

 

“Section 1008 Section 18(a)(1)(B) of the
Investment Company Act.

 

The Company hereby agrees that
for the period of time during which Notes are Outstanding, pursuant to Section 18(a)(1)(B) as modified by Section 61(a)(1) of the
Investment Company Act or any successor provisions thereto of the Investment Company Act, the Company will not declare any dividend
(except a dividend payable in stock of the issuer), or declare any other distribution, upon a class of the capital stock of the
Company, or purchase any such capital stock, unless, in every such case, at the time of the declaration of any such dividend or
distribution, or at the time of any such purchase, the Company has an asset coverage (as defined in the Investment Company Act)
of at least 200 per centum after deducting the amount of such dividend, distribution or purchase price, as the case may be.”

 

“Section 1009 Commission Reports and Reports
to Holders.

 

If, at any time, the Company is
not subject to the reporting requirements of Sections 13 or 15(d) of the Exchange Act to file any periodic reports with the Securities
and Exchange Commission, the Company agrees to furnish to the Holders of Notes and the Trustee for the period of time during which
the Notes are Outstanding: (i) within 90 days after the end of the each fiscal year of the Company, audited annual consolidated
financial statements of the Company and (ii) within 45 days after the end of each fiscal quarter of the Company (other than the
Company’s fourth fiscal quarter), unaudited interim consolidated financial statements of the Company. All such financial
statements shall be prepared, in all material respects, in accordance with GAAP.”

 

ARTICLE
IV

MEETINGS
OF HOLDERS OF SECURITIES

 

Section 401      Except
as may be provided in a Future Supplemental Indenture, for the benefit of the Holders of the Notes but no other series of Sections
under the Indenture, whether now or hereafter issued and Outstanding, Section 15 of the Base Indenture shall be amended by replacing
clause (c) thereof with the following:

 

    	5

    	 

    

 

“(c)          At
any meeting of Holders, each Holder of a Security of such series or proxy shall be entitled to one vote for each $25.00 principal
amount of the Outstanding Securities of such series held or represented by such Holder; provided, however, that no
vote shall be cast or counted at any meeting in respect of any Security challenged as not Outstanding and ruled by the chairman
of the meeting to be not Outstanding. The chairman of the meeting shall have no right to vote, except as a Holder of a Security
of such series or proxy.

 

ARTICLE
V

MISCELLANEOUS

 

Section 501      This
First Supplemental Indenture and the Notes shall be governed by and construed in accordance with the law of the State of New York,
without regard to principles of conflicts of laws. This First Supplemental Indenture is subject to the provisions of the Trust
Indenture Act that are required to be part of the Indenture and shall, to the extent applicable, be governed by such provisions.

 

Section 502      In
case any provision in this First Supplemental Indenture or in the Notes shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.

 

Section 503      This
First Supplemental Indenture may be executed in counterparts, each of which will be an original, but such counterparts will together
constitute but one and the same First Supplemental Indenture. The exchange of copies of this First Supplemental Indenture and of
signature pages by facsimile, .pdf transmission, email or other electronic means shall constitute effective execution and delivery
of this First Supplemental Indenture for all purposes. Signatures of the parties hereto transmitted by facsimile, .pdf transmission,
email or other electronic means shall be deemed to be their original signatures for all purposes.

 

Section 504      The
Base Indenture, as supplemented and amended by this First Supplemental Indenture, is in all respects ratified and confirmed, and
the Base Indenture and this First Supplemental Indenture shall be read, taken and construed as one and the same instrument with
respect to the Notes. All provisions included in this First Supplemental Indenture supersede any conflicting provisions included
in the Base Indenture with respect to the Notes, unless not permitted by law. The Trustee accepts the trusts created by the Base
Indenture, as supplemented by this First Supplemental Indenture, and agrees to perform the same upon the terms and conditions of
the Base Indenture, as supplemented by this First Supplemental Indenture.

 

Section 505      The
provisions of this First Supplemental Indenture shall become effective as of the date hereof.

 

Section 506      Notwithstanding
anything else to the contrary herein, the terms and provisions of this First Supplemental Indenture shall apply only to the Notes
and shall not apply to any other series of Securities under the Indenture and this First Supplemental Indenture shall not and does
not otherwise affect, modify, alter, supplement or change the terms and provisions of any other series of Securities under the
Indenture, whether now or hereafter issued and Outstanding.

 

    	6

    	 

    

 

Section 507      The
recitals contained herein and in the Notes shall be taken as the statements of the Company, and the Trustee assumes no responsibility
for their correctness. The Trustee makes no representations as to the validity or sufficiency of this First Supplemental Indenture,
the Notes or any Additional Notes, except that the Trustee represents that it is duly authorized to execute and deliver this First
Supplemental Indenture, authenticate the Notes and any Additional Notes and perform its obligations hereunder. The Trustee shall
not be accountable for the use or application by the Company of the Notes or any Additional Notes or the proceeds thereof.

 

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

 

	 	MEDLEY CAPITAL CORPORATION
	 	 
	 	By:	/s/ Richard T. Allorto Jr.
	 	Name:	Richard T. Allorto, Jr.
	 	Title:	Chief Financial Officer
	 	 
	 	U.S. BANK NATIONAL ASSOCIATION, as Trustee
	 	 
	 	By:	/s/ Daniel Scully
	 	Name:	Daniel Scully
	 	Title:	Vice President

 

[Signature page to First Supplemental
Indenture]

 

    	8

    	 

    

 

Exhibit A – Form of Global
Note 

 

This Security is a Global Note within the meaning of the
Indenture hereinafter referred to and is registered in the name of The Depository Trust Company or a nominee thereof. This Security
may not be exchanged in whole or in part for a Security registered, and no transfer of this Security in whole or in part may be
registered, in the name of any Person other than The Depository Trust Company or a nominee thereof, except in the limited circumstances
described in the Indenture.

 

Unless this certificate is presented by an authorized representative
of The Depository Trust Company to the issuer or its agent for registration of transfer, exchange or payment and such certificate
issued in exchange for this certificate is registered in the name of Cede & Co., or such other name as requested by an authorized
representative of The Depository Trust Company, any transfer, pledge or other use hereof for value or otherwise by or to any person
is wrongful, as the registered owner hereof, Cede & Co., has an interest herein.

 

Medley Capital Corporation

 

	No.	$
	 	CUSIP No. 58503F205
	 	ISIN No. US58503F2056

 

7.125% Senior Notes due 2019

 

Medley Capital Corporation, a corporation
duly organized and existing under the laws of Delaware (herein called the “Company”, which term includes any successor
Person under the Indenture hereinafter referred to), for value received, hereby promises to pay to Cede & Co., or registered
assigns, the principal sum of                    U.S.
DOLLARS (U.S.$           ) on March 30, 2019, and to pay interest thereon
from March 21, 2012 or from the most recent Interest Payment Date to which interest has been paid or duly provided for, quarterly
on March 30, June 30, September 30 and December 30 in each year, commencing June 30, 2012, at the rate of 7.125% per annum, until
the principal hereof is paid or made available for payment. The interest so payable, and punctually paid or duly provided for,
on any Interest Payment Date will, as provided in such Indenture, be paid to the Person in whose name this Security is registered
at the close of business on the Regular Record Date for such interest, which shall be March 15, June 15, September 15 and December
15 (whether or not a Business Day), as the case may be, next preceding such Interest Payment Date. Any such interest not so punctually
paid or duly provided for will forthwith cease to be payable to the Holder on such Regular Record Date and may either be paid to
the Person in whose name this Security is registered at the close of business on a Special Record Date for the payment of such
Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to Holders of Securities of this series not less than
10 days prior to such Special Record Date, or be paid at any time in any other lawful manner not inconsistent with the requirements
of any securities exchange on which the Securities of this series may be listed, and upon such notice as may be required by such
exchange, all as more fully provided in said Indenture. This Security may be issued as part of a series.

 

    	1

    	 

    

 

Payment of the principal of (and premium,
if any, on) and any such interest on this Security will be made at the Corporate Trust Office of the Trustee in Boston, Massachusetts
in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private
debts; provided, however, that at the option of the Company payment of interest may be made by check mailed to the
address of the Person entitled thereto as such address shall appear in the Security Register.

 

Reference is hereby made to the further
provisions of this Security set forth on the reverse hereof, which further provisions shall for all purposes have the same effect
as if set forth at this place.

 

Unless the certificate of authentication
hereon has been executed by the Trustee referred to on the reverse hereof by manual signature, this Security shall not be entitled
to any benefit under the Indenture or be valid or obligatory for any purpose.

    	2

    	 

    

 

IN WITNESS WHEREOF, the Company has caused
this instrument to be duly executed.

 

Dated:

 

	 	MEDLEY CAPITAL CORPORATION
	 	 
	 	By:	 
	 	 	Name: Richard T. Allorto Jr.
	 	 	Title:   Chief Financial Officer

 

    	3

    	 

    

 

This is one of the Securities of the series
designated therein referred to in the within-mentioned Indenture.

 

Dated:

 

	 	U.S. BANK NATIONAL ASSOCIATION as Trustee
	 	 
	 	By:	 
	 	 	Authorized Signatory

 

    	4

    	 

    

 

Medley Capital Corporation

7.125%
Senior Notes due 2019 

 

This Security is one of a duly authorized
issue of Senior Securities of the Company (herein called the “Securities”), issued and to be issued in one or more
series under an Indenture, dated as of February 7, 2012 (herein called the “Base Indenture”, which term shall have
the meaning assigned to it in such instrument), between the Company and U.S. Bank National Association, as Trustee (herein called
the “Trustee”, which term includes any successor trustee under the Base Indenture), and reference is hereby made to
the Base Indenture for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company,
the Trustee, and the Holders of the Securities and of the terms upon which the Securities are, and are to be, authenticated and
delivered, as supplemented by the First Supplemental Indenture relating to the Securities, dated March 21, 2012, by and between
the Company and the Trustee (herein called the “First Supplemental Indenture”, the First Supplemental Indenture and
the Base Indenture collectively are herein called the “Indenture”). In the event of any conflict between the Base Indenture
and the First Supplemental Indenture, the First Supplemental Indenture shall govern and control.

 

This Security is one of the series designated
on the face hereof, initially limited in aggregate principal amount to $                    .  Under
a Board Resolution, Officers’ Certificate pursuant to Board Resolutions or an indenture supplement, the Company may from
time to time, without the consent of the Holders of Securities, issue additional Securities of this series (in any such case “Additional
Securities”) having the same ranking and the same interest rate, maturity and other terms as the Securities. Any Additional
Securities and the existing Securities will constitute a single series under the Indenture and all references to the relevant Securities
herein shall include the Additional Securities unless the context otherwise requires. The aggregate amount of outstanding Securities
represented hereby may from time to time be reduced or increased, as appropriate, to reflect exchanges and redemptions.

 

The Securities of this series are subject
to redemption in whole or in part at any time or from time to time, at the option of the Company, on or after March 30, 2015, at
a redemption price of $25 per security plus accrued and unpaid interest payments otherwise payable for the then-current quarterly
interest period accrued to the date fixed for redemption.

 

Notice of redemption shall be given in writing
and mailed, first-class postage prepaid or by overnight courier guaranteeing next-day delivery, to each Holder of the Securities
to be redeemed, not less than thirty (30) nor more than sixty (60) days prior to the Redemption Date, at the Holder’s address
appearing in the Security Register. All notices of redemption shall contain the information set forth in Section 1104 of the Base
Indenture.

 

Any exercise of the Company’s option
to redeem the Securities will be done in compliance with the Investment Company Act, to the extent applicable.

 

If the Company elects to redeem only a portion
of the Securities, the Trustee will determine the method for selecting the particular Securities to be redeemed, in accordance
with the Investment Company Act, to the extent applicable. In the event of redemption of this Security in part only, a new Security
or Securities of this series and of like tenor for the unredeemed portion hereof will be issued in the name of the Holder hereof
upon the cancellation hereof.

 

    	5

    	 

    

 

 

Unless the Company defaults in payment of
the Redemption Price, on and after the Redemption Date, interest will cease to accrue on the Notes called for redemption.

 

Holders of Securities do not have the option
to have the Securities repaid prior to March 30, 2019.

 

The Indenture contains provisions for defeasance
at any time of the entire indebtedness of this Security or certain restrictive covenants and Events of Default with respect to
this Security, in each case upon compliance with certain conditions set forth in the Indenture.

 

If an Event of Default with respect to Securities
of this series shall occur and be continuing, the principal of the Securities of this series may be declared due and payable in
the manner and with the effect provided in the Indenture.

 

The Indenture permits, with certain exceptions
as therein provided, the amendment thereof and the modification of the rights and obligations of the Company and the rights of
the Holders of the Securities of each series to be affected under the Indenture at any time by the Company and the Trustee with
the consent of the Holders of not less than a majority in principal amount of the Securities at the time Outstanding of each series
to be affected. The Indenture also contains provisions permitting the Holders of specified percentages in principal amount of the
Securities of each series at the time Outstanding, on behalf of the Holders of all Securities of such series, to waive compliance
by the Company with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any
such consent or waiver by the Holder of this Security shall be conclusive and binding upon such Holder and upon all future Holders
of this Security and of any Security issued upon the registration of transfer hereof or in exchange herefor or in lieu hereof,
whether or not notation of such consent or waiver is made upon this Security.

 

As provided in and subject to the provisions
of the Indenture, the Holder of this Security shall not have the right to institute any proceeding with respect to the Indenture
or for the appointment of a receiver or trustee or for any other remedy thereunder, unless such Holder shall have previously given
the Trustee written notice of a continuing Event of Default with respect to the Securities of this series, the Holders of not less
than 25% in principal amount of the Securities of this series at the time Outstanding shall have made written request to the Trustee
to institute proceedings in respect of such Event of Default as Trustee and offered the Trustee reasonable indemnity against the
costs, expenses and liabilities to be incurred in compliance with such request, and the Trustee shall not have received from the
Holders of a majority in principal amount of Securities of this series at the time Outstanding a direction inconsistent with such
request, and shall have failed to institute any such proceeding, for sixty (60) days after receipt of such notice, request and
offer of indemnity. The foregoing shall not apply to any suit instituted by the Holder of this Security for the enforcement of
any payment of principal hereof or any premium or interest hereon on or after the respective due dates expressed herein.

 

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No reference herein to the Indenture and
no provision of this Security or of the Indenture shall alter or impair the obligation of the Company, which is absolute and unconditional,
to pay the principal of and any premium and interest on this Security at the times, place and rate, and in the coin or currency,
herein prescribed.

 

As provided in the Indenture and subject
to certain limitations therein set forth, the transfer of this Security is registrable in the Security Register, upon surrender
of this Security for registration of transfer at the office or agency of the Company in any place where the principal of and any
premium and interest on this Security are payable, duly endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing,
and thereupon one or more new Securities of this series and of like tenor, of authorized denominations and for the same aggregate
principal amount, will be issued to the designated transferee or transferees.

 

The Securities of this series are issuable
only in registered form without coupons in denominations of $25 and any integral multiples of $25 in excess thereof. As provided
in the Indenture and subject to certain limitations therein set forth, Securities of this series are exchangeable for a like aggregate
principal amount of Securities of this series and of like tenor of a different authorized denomination, as requested by the Holder
surrendering the same.

 

No service charge shall be made for any
such registration of transfer or exchange, but the Company or Trustee may require payment of a sum sufficient to cover any tax
or other governmental charge payable in connection therewith.

 

Prior to due presentment of this Security
for registration of transfer, the Company, the Trustee and any agent of the Company or the Trustee may treat the Person in whose
name this Security is registered as the owner hereof for all purposes, whether or not this Security be overdue, and neither the
Company, the Trustee nor any such agent shall be affected by notice to the contrary.

 

All terms used in this Security which are
defined in the Indenture shall have the meanings assigned to them in the Indenture.

 

The Indenture and this Security shall be
governed by and construed in accordance with the laws of the State of New York, without regard to principles of conflicts of laws.

 

    	7Exhibit 10.1

 

THIRD AMENDED &
RESTATED EMPLOYMENT AGREEMENT

 

THIS THIRD AMENDED AND RESTATED EMPLOYMENT
AGREEMENT is entered into as of the 29th day of April 2012 by and between, Ilan
Sheena Israel Identity # 055366454, resident at 22 Levin Street, Herzliya 46781, Israel (the "Employee")
and Zion Oil & Gas, Inc. (the "Company").

 

W    I    T    N    E    S    S    E    T    H

 

WHEREAS, the Company and Employee
are parties to that certain Employment Agreement (the “Original Employment Agreement”) entered into as of October 25,
2009 pursuant to which the Employee was employed as “Vice President of Finance” of the Company's Caesarea, Israel,
branch office;

 

WHEREAS, the Company and Employee
entered into an Amended and Restated Employment Agreement as of January 1, 2010 and a Second Amended & Restated Employment
Agreement as of April 1, 2011 (“Second Restated Agreement”);

 

WHEREAS, the term of employment in
the Second Restated Agreement is scheduled to terminate on March 31, 2012;

 

WHEREAS, the
Company and Employee desire to amend and restate the Second Restated Agreement in its entirety, all on the terms and conditions
set forth herein.

 

NOW, THEREFORE,
in consideration of the agreements and covenants contained herein, the Employee and the Company hereby agree as follows:

 

ARestatement of Original Employment
Agreement. With effect from the date first written above, the Second Restated Agreement is hereby amended and restated in its
entirety so that Employee's continuing duties and obligations to the Company shall henceforth be governed by the terms contained
herein (as so amended and restated, the "Third Restated Agreement"). Employee acknowledges and agrees that the Company
has satisfied in full all of its obligations to Employee contained under the Second Restated Agreement. Following the effective
date of this Third Restated Agreement, Employee agrees that the Second Restated Agreement, as originally executed by the parties,
shall have no force or effect.

 

1. Employment

 

1.1With effect
from the Effective Date (as defined in Section 2), the Company employs Employee and Employee accepts employment with the Company
as Chief Financial Officer, Chief Accounting Officer and Managing Director of the Israel Branch of Company
upon the terms and conditions set forth herein.

 

1.2The Employee's
authority shall be subject to the authority of the Chief Executive Officer of the Company.

 

1.3Rules
and Regulations. The Employee shall be bound by and shall faithfully observe and abide by all the rules and regulations of
the Company from time to time in force which are brought to his notice and supervisor instructions from time to time. Employee
shall sign simultaneously with this Agreement the Company’s ‘Code
of Business Conduct and Ethics'.

 

 

    	 

    	 	

    

 

1.4Extent
of Services. The Employee shall be employed on a full-time basis and shall devote his entire business time, attention and efforts
to the performance of his duties and responsibilities under this Agreement and the business and affairs of the Company. The Employee
acknowledges hereby that the terms of his employment, the circumstances thereof, and the nature of his work require an unusual
amount of personal trust as set out in the Israeli Hours of Employment and Rest Law, 5711-1951, and the Employee is employed in
a senior managerial position and therefore, the said law shall not apply to the Employee’s employment with the Company.

 

 

2.Term; Termination. 

 

2.1 Term.
Employee's employment under this Agreement shall commence on the date first noted above (the “Effective Date”) and
continue until terminated in accordance with the provisions herein. The Company and the Employee are entitled to terminate
Employee's employment under this Agreement at any time subject to prior written notice to the other party as required pursuant
to the Prior Notice For Dismissal and Resignation Law-2001.

 

2.2Termination
by Employee. The Employee may terminate this Agreement upon 60 Business Days prior written notice given by the Employee to
the Company. The Company, at its sole discretion, may instruct the Employee not to come to Company offices or do any work hereunder
during such notice period. Upon the termination of employment by the Employee under this Section 2.2 the Company shall pay to the
Employee all Gross Salary, bonuses and other benefits earned or accrued up to the date of termination (including all amounts in
Bituach Menahalim fund and other amounts under Sections 3 & 4), but otherwise all obligations of the Company under this Agreement
shall end.

 

2.3Termination
by Company for Cause. The Company may terminate this Agreement and the employment hereunder upon the occurrence of any of the
following (each being “Cause”): (i) Employee breaches any of the terms or conditions of this Agreement; (ii) Employee
substantially fails to perform the Employee's areas of responsibility set forth herein, (iii) Employee engages in willful misconduct
or acts in bad faith with respect to the Company, in connection with and related to the employment hereunder, (iv) Employee is
convicted of a felony, (v) Employee fails to comply with the instructions of the person to whom Employee reports or (vi) Employee
commits any other act which under applicable law would give rise to termination for cause and in such circumstances the Employee
shall not be entitled to prior notice or payment of severance.

 

2.4Termination by the Company without
Cause. The Company may terminate this Agreement at any time for other than Cause by written notice to Employee. Company shall
pay to Employee upon termination without Cause (i) severance pay in accordance with the Severance Pay Law- 1963, and (ii) all Gross
Salary, bonuses and other benefits earned or accrued up to the date of termination (including all amounts in Bituach Menahalim
fund and other amounts under Sections 3 & 4) and (iii) three months Gross Salary.

 

2.5Upon termination of employment
for whatever reason, Employee shall remit back to the Company all Company property then in his possession or control.

 

2.6In order to
be eligible for the payments as set forth herein upon termination Employee must (i) execute and deliver to the Company a general
release, in a form satisfactory to the Company, and (ii) be and remain in full compliance with his obligations under this Agreement.

 

    	 

    	 	

    

 

3.Compensation 

 

3.1(i) During the term hereof,
and subject to the performance of the services required to be performed hereunder by Employee, the Company shall pay to the Employee
for all services rendered hereunder, as salary, once per month, and no later than the seventh calendar day with respect to the
prior calendar month, a monthly gross amount of NIS 56,400 (the "Gross Salary"). The Employee shall be entitled to a
cost of living allowance, pursuant to extension orders issued by the Labor and Welfare Minister, published from time to time.

 

(ii) Signing Bonus. Immediately after the
Parties execute this Third Restated Agreement, the Employee shall be paid a signing bonus of NIS 75,000 less withholding taxes
required under law. This signing bonus shall not be considered as Gross Salary for the purposes of this Third Restated Agreement.

 

 

3.2Cell Phone.
The Company shall provide Employee with a cell phone and pay the service provider directly for its maintenance and reasonable use
charges. The taxable benefits on this item will be grossed up in the monthly salary “gilum hatavah”.

 

3.3Car.
Company shall provide Employee with use of a leased automobile with a monthly gross cost up to NIS 4,000 and Company shall pay
for gas. The taxable benefits on this item will be grossed up in the monthly salary “gilum hatavah”.

 

3.4Professional
Fees. The Company shall reimburse Employee professional license fees paid to the Institute of Certified
Public Accountants in Israel. In the event that employment hereunder is terminated for any reason the Employee shall reimburse
the Company for the pro rata portion of the said fees, if any, for the period after such termination.

 

3.5Stock
Options. Without derogating from any stock options previously awarded to the Employee, subject to the Employee entering
into the Company's standard Employee Stock Option agreement, for services required to be performed hereunder by Employee, the Employee
shall be entitled to participate in an employee stock option plan of the Company. The Company shall grant to Employee, so long
as Employee remains in the employ of the Company, on the last day of each calendar quarter, commencing June 30, 2012, penny
options for 2,500 shares of Common Stock of the Company, under Company’s 2011 Incentive Stock Option Plan
(or such other plan as may then be in force). All options granted pursuant to this Section 3.5 shall be fully vested when granted
and shall be exercisable until December 4, 2021

 

4.Social and Accompanying Benefits

 

4.1Vacation. Employee shall
be entitled to annual vacation of 22 Working Days (“Annual Leave Quota”), to be taken at times as agreed upon by the
parties, taking into account the employees reasonable needs. Employee shall not be entitled to accrue unused Annual Leave Quota
without the prior written consent of the Company, provided however, that if Employee has been unable to use any part of the Annual
Leave Quota due to demands of the Company, such unused days shall be redeemed by the Company and paid to the Employee.

 

In the event of termination
of employment, for any reason, Employee shall be entitled to redemption of annual leave solely in accordance with and subject to
the provisions of the Annual Leave Law of 1951.

 

4.2Sick Leave.
Employee shall be entitled to sick leave in accordance with the provisions of the Sickness Pay Law - 1976.

 

    	 

    	 	

    

4.3Recreation
Pay. Employee shall be entitled to annual recreation pay (Dmey Havra’a) in an amount to be determined in
accordance with Israeli regulations as in effect from time to time with respect to such pay.

 

4.4Withholding
Tax Company shall withhold, or charge Employee with, all taxes and other compulsory payments as required under applicable law
with respect to all payments, benefits and/or other compensation paid to Employee in connection with his employment with Company.

 

4.5Offset.
Company shall be entitled to offset from any and/or all payments to which Employee shall be entitled thereof, any and/or all amounts
to which Company shall be entitled from Employee at such time.

 

4.6Army Service.
The Employee if required by Israeli law, may be absent from work to fulfill army reserve obligations (Miluim). Employee shall immediately
upon receipt of notice regarding any up-coming Miluim, inform Employer. Employee shall provide Employer timely, with appropriate
and necessary documentation, corresponding to days absent for Miluim, so that Employer may claim reimbursement or payment from
Bituach Leumi.

 

4.7Bituach
Menahalim. The Company and the Employee will obtain and maintain Manager's Insurance (Bituach Menahalim) under Israeli law
for the benefit of the Employee in the customary form in Israel. Each of the Company and the Employee shall contribute toward the
premiums payable in respect of such insurance those amounts which would be recognized under applicable law, but in no event shall
such contributed amounts be more than thirteen and one third percent (13 1/3%) and up to two and a half per cent (2.5%) for work
disability cover of each monthly Gross Salary payment from the Company and five percent (5 %) of such amount from the Employee
(which Company shall deduct automatically from Gross Salary). It is hereby agreed that in the event
that Employee's employment hereunder is terminated by the Company for any reason other than "cause", the amount payable
under such insurance policy in respect of severance pay shall be in lieu and final substitution of the amount of severance pay,
if any, payable under Israeli law, and the Company shall not be duty-bound to pay any other amounts in respect of severance pay
or in respect of the termination of employment (except as otherwise set forth herein). 

 

4.8 Keren Heshtamlut.
The Company and the Employee shall maintain an advancement fund under Israeli law (Keren Heshtamlut) for exclusive benefit of the
Employee. The Company shall contribute to such fund an amount equal to 7-1/2% of each monthly Gross Salary payment and the employee
shall contribute to such fund an amount equal to 2-1/2% of each monthly Gross Salary payment. The Employee hereby instructs the
Company to transfer to such advancement fund the amount of the Employee's and the Company's contribution from each monthly Gross
Salary payment. The employee can elect to receive any part of the employer contribution in cash
should this be more efficient for tax purposes at the employees election. Any cost whatsoever associated with receipt by Employee
of employer contribution in cash will be borne solely by the Employee (tax or otherwise). On termination of the employment, Employee
will be eligible to receive all amounts accrued to him in the fund.

 

5.Development Rights. The Employee
agrees and declares that all proprietary information including but not limited to trade secrets, know-how, patents and other rights
in connection therewith developed by or with the contribution of Employee's efforts during his employment with the Company shall
be the sole property of the Company. Employee shall keep and maintain adequate and current records (in the form of notes, sketches,
drawings and in any other form that may be required by the Company) of all such proprietary information developed by Employee.
Upon the Company's request (whenever made), Employee shall execute and assign to the Company all the rights in such proprietary
information. It is hereby acknowledged and agreed that the Gross Salary payable under this Agreement also constitutes sufficient
consideration for the Employee's obligation hereunder. The Employee hereby irrevocably waives all moral rights arising under statute
in any jurisdiction or under common law which the employee may have now or in the future with respect to any developments.

 

    	 

    	 	

    

6.Secrecy and Nondisclosure

 

6.1Employee acknowledges
and understands that in his capacity as Employee, he will have access to the Company’s confidential and proprietary information
(whether or not so marked) including without limitation, business, financial, marketing, technology, research and development and
product information in various media and forms including without limitation written and oral (“Proprietary and Confidential
Information”). Proprietary and Confidential Information shall not include information that has become part of the public
knowledge except as a result of breach of this Agreement by the Employee.

 

6.2Employee agrees
to hold in trust and confidence all Proprietary and Confidential Information disclosed to Employee and further agrees not to exploit
or disclose the Proprietary and Confidential Information to any other person or entity or use the Proprietary and Confidential
Information directly or indirectly for any purpose other than for Employee’s work with the Company.

 

6.3The Employee
acknowledges and agrees that the Proprietary and Confidential Information furnished hereunder is and shall remain proprietary to
the Company.

 

6.4Unless otherwise
required by statute or government rule or regulation, all copies of the Proprietary and Confidential Information, shall be returned
to the Company immediately upon request without retaining copies thereof.

 

6.5The Employee
acknowledges that the Company has received and in the future will receive from third parties confidential or proprietary information
(whether or not so marked) (“Third Party Information”) subject to a duty on the Company’s part to maintain the
confidentiality of such information and to use it only for certain limited purposes. The Employee shall hold Third Party Information
in the strictest confidence and will not disclose to anyone (other than Company personnel who need to know such information in
connection with their work for the Company) or use, except in connection with his work for the Company, Third Party Information
unless expressly authorized by an officer of the Company in writing.

 

6.6It is hereby acknowledged and
agreed that the Law of Commercial Torts shall apply to the Employee's undertaking hereunder.

 

7.Poaching

 

7.1The Employee
shall not at any time during the period from the termination of this Agreement or any extension hereof, to the expiry of one (1)
year, employ or attempt to employ or solicit or endeavor to entice away from or discourage from being employed by the Company any
person who is, or shall at any time until the termination of this Agreement or any extension hereof, one of the employees of the
Company or was an employee anytime in the previous 6 months.

 

8.Miscellaneous

 

8.1Assignment.
Company may assign or transfer this Agreement or any right, claim or obligation provided herein, provided however that none of
Employee’s rights under this Agreement are thereby diminished.

 

8.2No Waiver
Company’s failure or delay in enforcing any of the provisions of this Agreement shall not, in any way, be construed as a
waiver of any such provisions, or prevent Company thereafter from enforcing each and every other provision of this Agreement which
were previously not enforced.

 

    	 

    	 	

    

8.3Employee
Representations. The Employee represents and warrants to the Company that the execution and delivery of this Agreement and
the fulfillment of the terms hereof (i) will not constitute a breach of any agreement or other instrument to which he is party,
(ii) does not require the consent of any person, and (iii) shall not utilize during the term of her employment any proprietary
information of any third party, including prior employers of the Employee.

 

8.4Entire Agreement.
 This Agreement and Schedules hereto constitutes the entire understanding and agreement between the parties and supersedes
any and all prior discussions and agreement and correspondence, and may not be amended or modified in any respect except by a subsequent
writing executed by both parties unless agreed otherwise herein.

 

8.5Notices.
All notices or other communications required or desired to be sent to either Party shall be in writing and shall be sent by
hand or by Registered or Certified mail, postage prepaid, return receipt requested, or sent by telegram or facsimile to the address
set forth in the Preamble to this Agreement or to such other address as the recipient may designate by notice in accordance with
the provisions of this Clause. Any such notice shall have been deemed to have been delivered if served by hand when delivered,
if by Registered or Certified Mail 48 hours after posting if within the same country or 14 days if posted from another country,
and by telex or facsimile transmission when dispatched and receipt confirmed by recipient party.

 

8.6Severability.
Any term or provision of this Agreement which is found by a court, tribunal or arbitration panel to be invalid or unenforceable
shall be ineffective to the extent of such invalidity or unenforceability without rendering invalid or unenforceable the remaining
terms or provisions of this Agreement or affecting the validity or enforceability of any of the other terms or provisions of this
Agreement. In the event that any term or provision of this Agreement is found to be unenforceable or ineffective, then the reviewing
court, tribunal or arbitration panel may modify such term or provision to the extent necessary to render it enforceable and the
parties agree to be bound by and perform this Agreement as modified.

 

8.7Applicable
Law. This Agreement and the performance hereof shall be construed and governed in accordance with the internal laws of Israel,
without reference to principles of conflict of laws. Each party hereby irrevocably consents to the jurisdiction of the appropriate
court venue in Tel-Aviv for any dispute or action relating to this Agreement.

 

IN WITNESS WHEREOF,
the parties have caused this Agreement to be duly signed by the date stated above.

	 	 	Zion Oil & Gas, Inc.
	 	 	 
	 	 	 
	/s/ Ilan Sheena	 	/s/ Richard Rinberg
	Ilan Sheena	 	Richard Rinberg
	 	 	Chief Executive Officer

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