LEGEND OIL AND GAS, LTD. 8-K 



Exhibit 10.2


 






SECURITIES EXCHANGE AGREEMENT


This SECURITIES EXCHANGE
AGREEMENT (this “Agreement”) is made and entered into effective as of the 21st day of October, 2015, by
and between LEGEND OIL AND GAS, LTD., a Colorado corporation (the “Company”), and HILLAIR CAPITAL INVESTMENTS, L.P.
(the “Exchanging Holder”).


W I T N
E S S E T H :


WHEREAS, the Exchanging
Holder is the record holder of those certain Debentures set forth on Exhibit A hereto (the “Debentures”); as
set forth on Exhibit A.


WHEREAS, the Exchanging
Holder is willing to accept 9,643 shares of the Company’s Series B Convertible Preferred Stock, the terms of which are set
forth in the Company’s Certificate of Designation of Terms attached hereto as Exhibit B (the “Securities”),
and the promissory note in the form attached hereto as Exhibit C (the “Note”), in exchange for and in satisfaction
of the face value, and premium to principal, of the Debentures, as set forth on Exhibit A; and


WHEREAS, the Company
and the Exchanging Holder desire to enter into this Agreement to evidence and set forth the terms of the exchange of the Securities
and the Note for and in satisfaction of the Debentures;


NOW, THEREFORE, in
consideration of the mutual covenants herein contained, and intending to be legally bound hereby, the parties hereto, being duly
sworn, do covenant, agree and certify as follows:


1.


Recitals.
The parties hereto acknowledge and agree that the foregoing recitals are true and accurate and constitute part of this Agreement
to the same extent as if contained in the body hereof.


2.


Definitions.
In addition to the terms defined elsewhere in this Agreement: (a) capitalized terms that are not otherwise defined herein have
the meanings given to such terms in the Debentures (as defined herein), and (b) the following terms have the meanings set forth
in this Section 1.1:


“Action”
shall have the meaning ascribed to such term in Section 4(j).


“Affiliate”
means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common
control with a Person, as such terms are used in and construed under Rule 405 under the Securities Act.


“Board of
Directors” means the board of directors of the Company.


“Business
Day” means any day except any Saturday, any Sunday, any day which is a federal legal holiday in the United States or
any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to
close.






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“Commission”
means the United States Securities and Exchange Commission.


“Common Stock”
means the common stock of the Company, par value $0.001 per share, and any other class of securities into which such securities
may hereafter be reclassified or changed.


“Common Stock
Equivalents” means any securities of the Company or the Subsidiaries which would entitle the holder thereof to acquire
at any time Common Stock, including, without limitation, any debt, preferred stock, right, option, warrant or other instrument
that is at any time convertible into or exercisable or exchangeable for, or otherwise entitles the holder thereof to receive, Common
Stock.


“Evaluation
Date” shall have the meaning ascribed to such term in Section 4(r).


“Exchange
Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.


“FCPA”
means the Foreign Corrupt Practices Act of 1977, as amended.


“GAAP”
shall have the meaning ascribed to such term in Section 4(h).


“Indebtedness”
shall have the meaning ascribed to such term in Section 4(aa).


“Intellectual
Property Rights” shall have the meaning ascribed to such term in Section 4(o).


“Liens”
means a lien, charge, pledge, security interest, encumbrance, right of first refusal, preemptive right or other restriction.


“Material
Adverse Effect” shall have the meaning assigned to such term in Section 4(b).


“Material
Permits” shall have the meaning ascribed to such term in Section 4(m).


“Note”
means that certain promissory note attached hereto as Exhibit C, which shall be for a principal amount equal to 20% of the
principal amount of Debentures exchanged hereunder, or $1,928,740.


“Person”
means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.


“Proceeding”
means an action, claim, suit, investigation or proceeding (including, without limitation, an informal investigation or partial
proceeding, such as a deposition), whether commenced or threatened.


“Required
Approvals” shall have the meaning ascribed to such term in Section 4(e).






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“Rule 144”
means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or
any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule.


“SEC Reports”
shall have the meaning ascribed to such term in Section 4(h).


“Securities”
has the meaning set forth in the Preamble of this Agreement.


“Securities
Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.


Short Sales”
means all “short sales” as defined in Rule 200 of Regulation SHO under the Exchange Act (but shall not be deemed to
include the location and/or reservation of borrowable shares of Common Stock).


“Subsidiary”
means any subsidiary of the Company as set forth in the SEC Reports and shall, where applicable, also include any direct or indirect
subsidiary of the Company formed or acquired after the date hereof.


“Trading Day”
means a day on which the principal Trading Market is open for trading.


“Trading Market”
means any of the following markets or exchanges on which the Common Stock is listed or quoted for trading on the date in question:
the NYSE MKT, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange
or the OTC Bulletin Board (or any successors to any of the foregoing).


3.


Exchange and
Satisfaction. The principal of the Debentures are hereby surrendered by the Exchanging Holder and exchanged for the Securities
and the Note. The Company hereby acknowledges receipt of the Debentures and the Exchanging Holder hereby acknowledges receipt of
the Securities and the Note.


4.


Representations
and Warranties of the Company. The Company hereby makes the following representations and warranties to Exchanging Holder:


(a)


Subsidiaries.
All of the direct and indirect subsidiaries of the Company are set forth in the SEC Reports. The Company owns, directly or indirectly,
all of the capital stock or other equity interests of each Subsidiary free and clear of any Liens, and all of the issued and outstanding
shares of capital stock of each Subsidiary are validly issued and are fully paid, non-assessable and free of preemptive and similar
rights to subscribe for or purchase securities.


(b)


Organization
and Qualification. The Company and each of the Subsidiaries is an entity duly incorporated or otherwise organized, validly
existing and in good standing under the laws of the jurisdiction of its incorporation or organization, with the requisite power
and authority to own and use its properties and assets and to carry on its business as currently conducted. Neither the Company
nor any Subsidiary is in violation or default of any of the provisions of its respective certificate or articles of incorporation,
bylaws or other organizational or charter documents. Each of the Company and the Subsidiaries is duly qualified to conduct business
and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted
or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as
the case may be, could not have or reasonably be expected to result in: (i) a material adverse effect on the legality, validity
or enforceability of this Agreement and the Note, (ii) a material adverse effect on the results of operations, assets, business,
prospects or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) a material adverse
effect on the Company’s ability to perform in any material respect on a timely basis its obligations under this Agreement
and the Note (any of (i), (ii) or (iii), a “Material Adverse Effect”) and no Proceeding has been instituted
in any such jurisdiction revoking, limiting or curtailing or seeking to revoke, limit or curtail such power and authority or qualification.






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(c)


Authorization;
Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate the transactions contemplated
by this Agreement and otherwise to carry out its obligations hereunder. The execution and delivery of this Agreement and the Note
by the Company and the consummation by it of the transactions contemplated hereby and thereby have been duly authorized by all
necessary action on the part of the Company and no further action is required by the Company, the Board of Directors or the Company’s
stockholders in connection herewith or therewith other than in connection with the Required Approvals. This Agreement and the Note
have been (or upon delivery will have been) duly executed by the Company and, when delivered in accordance with the terms hereof
and thereof, will constitute the valid and binding obligations of the Company enforceable against the Company in accordance with
their terms, except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium
and other laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating
to the availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification
and contribution provisions may be limited by applicable law.


(d)


No Conflicts.
The execution, delivery and performance by the Company of this Agreement and the Note, the issuance and sale of the Securities
and the consummation by it of the transactions contemplated hereby and thereby do not and will not: (i) conflict with or violate
any provision of the Company’s or any Subsidiary’s certificate or articles of incorporation, bylaws or other organizational
or charter documents, (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would
become a default) under, result in the creation of any Lien upon any of the properties or assets of the Company or any Subsidiary,
or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or
both) of, any agreement, credit facility, debt or other instrument (evidencing a Company or Subsidiary debt or otherwise) or other
understanding to which the Company or any Subsidiary is a party or by which any property or asset of the Company or any Subsidiary
is bound or affected, or (iii) subject to the Required Approvals, conflict with or result in a violation of any law, rule, regulation,
order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company or a Subsidiary
is subject (including federal and state securities laws and regulations), or by which any property or asset of the Company or
a Subsidiary is bound or affected; except in the case of each of clauses (ii) and (iii), such as could not have or reasonably
be expected to result in a Material Adverse Effect.






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(e)


Filings,
Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization or order of, give any notice
to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other
Person in connection with the execution, delivery and performance by the Company of this Agreement or the Note, other than: (i)
the filing of a Current Report on Form 8-K with respect to this Agreement and (ii) the filing of Form D with the Commission and
such filings as are required to be made under applicable state securities laws (collectively, the “Required Approvals”).


(f)


Issuance
of the Securities. The Securities are duly authorized and, when issued and paid for in accordance with this Agreement, will
be duly and validly issued, fully paid and nonassessable, free and clear of all Liens imposed by the Company. The shares of Common
Stock underlying the Securities, when issued in accordance with the terms of the Securities, will be validly issued, fully paid
and nonassessable, free and clear of all Liens imposed by the Company other than restrictions on transfer required by law.


(g)


Capitalization.
The capitalization of the Company is as set forth in the SEC Reports. The Company has not issued any capital stock since its most
recently filed periodic report under the Exchange Act, other than pursuant to the exercise of employee stock options under the
Company’s stock option plans, the issuance of shares of Common Stock to employees pursuant to the Company’s employee
stock purchase plans and pursuant to the conversion and/or exercise of Common Stock Equivalents outstanding as of the date of the
most recently filed periodic report under the Exchange Act. No Person has any right of first refusal, preemptive right, right of
participation, or any similar right to participate in the transactions contemplated by this Agreement. Except as a result of the
issuance of the Securities, there are no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities, rights or obligations convertible into or exercisable or exchangeable for, or
giving any Person any right to subscribe for or acquire any shares of Common Stock, or contracts, commitments, understandings or
arrangements by which the Company or any Subsidiary is or may become bound to issue additional shares of Common Stock or Common
Stock Equivalents. The issuance and sale of the Securities will not obligate the Company to issue shares of Common Stock or other
securities to any Person (other than the Exchanging Holder) and will not result in a right of any holder of Company securities
to adjust the exercise, conversion, exchange or reset price under any of such securities. All of the outstanding shares of capital
stock of the Company are duly authorized, validly issued, fully paid and nonassessable, have been issued in compliance with all
federal and state securities laws, and none of such outstanding shares was issued in violation of any preemptive rights or similar
rights to subscribe for or purchase securities. No further approval or authorization of any stockholder, the Board of Directors
or others is required for the issuance and sale of the Securities. There are no stockholders agreements, voting agreements or other
similar agreements with respect to the Company’s capital stock to which the Company is a party or, to the knowledge of the
Company, between or among any of the Company’s stockholders.






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(h)


SEC Reports;
Financial Statements. The Company has filed all reports, schedules, forms, statements and other documents required to be filed
by the Company under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the two
years preceding the date hereof (or such shorter period as the Company was required by law or regulation to file such material)
(the foregoing materials, including the exhibits thereto and documents incorporated by reference therein, being collectively referred
to herein as the “SEC Reports”) on a timely basis or has received a valid extension of such time of filing
and has filed any such SEC Reports prior to the expiration of any such extension. As of their respective dates, the SEC Reports
complied in all material respects with the requirements of the Securities Act and the Exchange Act, as applicable, and none of
the SEC Reports, when filed, contained any untrue statement of a material fact or omitted to state a material fact required to
be stated therein or necessary in order to make the statements therein, in the light of the circumstances under which they were
made, not misleading. The Company has never been an issuer subject to Rule 144(i) under the Securities Act. The financial statements
of the Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules
and regulations of the Commission with respect thereto as in effect at the time of filing. Such financial statements have been
prepared in accordance with United States generally accepted accounting principles applied on a consistent basis during the periods
involved (“GAAP”), except as may be otherwise specified in such financial statements or the notes thereto and
except that unaudited financial statements may not contain all footnotes required by GAAP, and fairly present in all material
respects the financial position of the Company and its consolidated Subsidiaries as of and for the dates thereof and the results
of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial,
year-end audit adjustments.


(i)


Material
Changes; Undisclosed Events, Liabilities or Developments. Since the date of the latest audited financial statements included
within the SEC Reports, except as specifically disclosed in a subsequent SEC Report filed prior to the date hereof: (i) there has
been no event, occurrence or development that has had or that could reasonably be expected to result in a Material Adverse Effect,
(ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses
incurred in the ordinary course of business consistent with past practice and (B) liabilities not required to be reflected in the
Company’s financial statements pursuant to GAAP or disclosed in filings made with the Commission, (iii) the Company has not
altered its method of accounting, (iv) the Company has not declared or made any dividend or distribution of cash or other property
to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock and (v)
the Company has not issued any equity securities to any officer, director or Affiliate, except pursuant to existing Company stock
option plans. The Company does not have pending before the Commission any request for confidential treatment of information. Except
for the issuance of the Securities contemplated by this Agreement, no event, liability, fact, circumstance, occurrence or development
has occurred or exists or is reasonably expected to occur or exist with respect to the Company or its Subsidiaries or their respective
businesses, properties, operations, assets or financial condition, that would be required to be disclosed by the Company under
applicable securities laws at the time this representation is made or deemed made that has not been publicly disclosed at least
1 Trading Day prior to the date that this representation is made.






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(j)


Litigation.
There is no action, suit, inquiry, notice of violation, proceeding or investigation pending or, to the knowledge of the Company,
threatened against or affecting the Company, any Subsidiary or any of their respective properties before or by any court, arbitrator,
governmental or administrative agency or regulatory authority (federal, state, county, local or foreign) (collectively, an “Action”)
which (i) adversely affects or challenges the legality, validity or enforceability of the Securities or the Note, (ii) could, if
there were an unfavorable decision, have or reasonably be expected to result in a Material Adverse Effect. Neither the Company
nor any Subsidiary, nor any director or officer thereof, is or has been the subject of any Action involving a claim of violation
of or liability under federal or state securities laws or a claim of breach of fiduciary duty. There has not been, and to the knowledge
of the Company, there is not pending or contemplated, any investigation by the Commission involving the Company or any current
or former director or officer of the Company. The Commission has not issued any stop order or other order suspending the effectiveness
of any registration statement filed by the Company or any Subsidiary under the Exchange Act or the Securities Act.


(k)


Labor
Relations. No labor dispute exists or, to the knowledge of the Company, is imminent with respect to any of the employees of
the Company, which could reasonably be expected to result in a Material Adverse Effect. None of the Company’s or its Subsidiaries’
employees is a member of a union that relates to such employee’s relationship with the Company or such Subsidiary, and neither
the Company nor any of its Subsidiaries is a party to a collective bargaining agreement, and the Company and its Subsidiaries
believe that their relationships with their employees are good. To the knowledge of the Company, no executive officer of the Company
or any Subsidiary, is, or is now expected to be, in violation of any material term of any employment contract, confidentiality,
disclosure or proprietary information agreement or non-competition agreement, or any other contract or agreement or any restrictive
covenant in favor of any third party, and the continued employment of each such executive officer does not subject the Company
or any of its Subsidiaries to any liability with respect to any of the foregoing matters. The Company and its Subsidiaries are
in compliance with all U.S. federal, state, local and foreign laws and regulations relating to employment and employment practices,
terms and conditions of employment and wages and hours, except where the failure to be in compliance could not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect.






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(l)


Compliance.
Neither the Company nor any Subsidiary: (i) is in default under or in violation of (and no event has occurred that has not been
waived that, with notice or lapse of time or both, would result in a default by the Company or any Subsidiary under), nor has the
Company or any Subsidiary received notice of a claim that it is in default under or that it is in violation of, any indenture,
loan or credit agreement or any other agreement or instrument to which it is a party or by which it or any of its properties is
bound (whether or not such default or violation has been waived), (ii) is in violation of any judgment, decree or order of any
court, arbitrator or other governmental authority or (iii) is or has been in violation of any statute, rule, ordinance or regulation
of any governmental authority, including without limitation all foreign, federal, state and local laws relating to taxes, environmental
protection, occupational health and safety, product quality and safety and employment and labor matters, except in each case as
could not have or reasonably be expected to result in a Material Adverse Effect.


(m)


Regulatory
Permits. The Company and the Subsidiaries possess all certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities necessary to conduct their respective businesses as described in the SEC Reports,
except where the failure to possess such permits could not reasonably be expected to result in a Material Adverse Effect (“Material
Permits”), and neither the Company nor any Subsidiary has received any notice of proceedings relating to the revocation
or modification of any Material Permit.


(n)


Title to
Assets. Except as set forth in the SEC Reports or any widely disseminated press release of the Company, the Company and the
Subsidiaries have good and marketable title in fee simple to all real property owned by them and good and marketable title in all
personal property owned by them that is material to the business of the Company and the Subsidiaries, in each case free and clear
of all Liens, except for (i) Liens as do not materially affect the value of such property and do not materially interfere with
the use made and proposed to be made of such property by the Company and the Subsidiaries and (ii) Liens for the payment of federal,
state or other taxes, for which appropriate reserves have been made therefor in accordance with GAAP and, the payment of which
is neither delinquent nor subject to penalties. Any real property and facilities held under lease by the Company and the Subsidiaries
are held by them under valid, subsisting and enforceable leases with which the Company and the Subsidiaries are in compliance.


(o)


Intellectual
Property. The Company and the Subsidiaries have, or have rights to use, all patents, patent applications, trademarks, trademark
applications, service marks, trade names, trade secrets, inventions, copyrights, licenses and other intellectual property rights
and similar rights as described in the SEC Reports as necessary or required for use in connection with their respective businesses
and which the failure to so have could have a Material Adverse Effect (collectively, the “Intellectual Property Rights”).
None of, and neither the Company nor any Subsidiary has received a notice (written or otherwise) that any of, the Intellectual
Property Rights has expired, terminated or been abandoned, or is expected to expire or terminate or be abandoned, within two (2)
years from the date of this Agreement. Neither the Company nor any Subsidiary has received, since the date of the latest audited
financial statements included within the SEC Reports, a written notice of a claim or otherwise has any knowledge that the Intellectual
Property Rights violate or infringe upon the rights of any Person, except as could not have or reasonably be expected to not have
a Material Adverse Effect. To the knowledge of the Company, all such Intellectual Property Rights are enforceable and there is
no existing infringement by another Person of any of the Intellectual Property Rights. The Company and its Subsidiaries have taken
reasonable security measures to protect the secrecy, confidentiality and value of all of their intellectual properties, except
where failure to do so could not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.






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(p)


Insurance.
The Company and the Subsidiaries are insured by insurers of recognized financial responsibility against such losses and risks and
in such amounts as are prudent and customary in the businesses in which the Company and the Subsidiaries are engaged, including,
but not limited to, directors and officers insurance coverage at least equal to the face value of the Debentures. Neither the Company
nor any Subsidiary has any reason to believe that it will not be able to renew its existing insurance coverage as and when such
coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business without a significant
increase in cost.


(q)


Transactions
With Affiliates and Employees. Except as set forth in the SEC Reports, none of the officers or directors of the Company or
any Subsidiary and, to the knowledge of the Company, none of the employees of the Company or any Subsidiary is presently a party
to any transaction with the Company or any Subsidiary (other than for services as employees, officers and directors), including
any contract, agreement or other arrangement providing for the furnishing of services to or by, providing for rental of real or
personal property to or from providing for the borrowing of money from or lending of money to, or otherwise requiring payments
to or from any officer, director or such employee or, to the knowledge of the Company, any entity in which any officer, director,
or any such employee has a substantial interest or is an officer, director, trustee, stockholder, member or partner, in each case
in excess of $120,000 other than for: (i) payment of salary or consulting fees for services rendered, (ii) reimbursement for expenses
incurred on behalf of the Company and (iii) other employee benefits, including stock option agreements under any stock option plan
of the Company.


(r)


Sarbanes-Oxley;
Internal Accounting Controls. The Company and the Subsidiaries are in compliance with any and all applicable requirements of
the Sarbanes-Oxley Act of 2002 that are effective as of the date hereof, and any and all applicable rules and regulations promulgated
by the Commission thereunder that are effective as of the date hereof and as of the Closing Date. The Company and the Subsidiaries
maintain a system of internal accounting controls sufficient to provide reasonable assurance that: (i) transactions are executed
in accordance with management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain asset accountability, (iii) access to assets is permitted
only in accordance with management’s general or specific authorization, and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences. The
Company and the Subsidiaries have established disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) for the Company and the Subsidiaries and designed such disclosure controls and procedures to ensure that information
required to be disclosed by the Company in the reports it files or submits under the Exchange Act is recorded, processed, summarized
and reported, within the time periods specified in the Commission’s rules and forms. The Company’s certifying officers
have evaluated the effectiveness of the disclosure controls and procedures of the Company and the Subsidiaries as of the end of
the period covered by the most recently filed periodic report under the Exchange Act (such date, the “Evaluation Date”).
The Company presented in its most recently filed periodic report under the Exchange Act the conclusions of the certifying officers
about the effectiveness of the disclosure controls and procedures based on their evaluations as of the Evaluation Date. Since the
Evaluation Date, there have been no changes in the internal control over financial reporting (as such term is defined in the Exchange
Act) of the Company and its Subsidiaries that have materially affected, or is reasonably likely to materially affect, the internal
control over financial reporting of the Company and its Subsidiaries.






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(s)


Certain
Fees. No brokerage or finder’s fees or commissions are or will be payable by the Company or any Subsidiaries to any broker,
financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions
contemplated by this Agreement. The Exchanging Holder shall have no obligation with respect to any fees or with respect to any
claims made by or on behalf of other Persons for fees of a type contemplated in this Section that may be due in connection with
the transactions contemplated by this Agreement.


(t)


Private
Placement. Assuming the accuracy of the Exchanging Holder’s representations and warranties set forth in Section 4, no
registration under the Securities Act is required for the offer and sale of the Securities by the Company to the Exchanging Holder
as contemplated hereby. The issuance and sale of the Securities hereunder does not contravene the rules and regulations of the
Trading Market.


(u)


Investment
Company. The Company is not, and is not an Affiliate of, and immediately after receipt of payment for the Securities, will
not be or be an Affiliate of, an “investment company” within the meaning of the Investment Company Act of 1940, as
amended. The Company shall conduct its business in a manner so that it will not become an “investment company” subject
to registration under the Investment Company Act of 1940, as amended.


(v)


Registration
Rights. No Person has any right to cause the Company to effect the registration under the Securities Act of any securities
of the Company or any Subsidiaries.


(w)


Listing
and Maintenance Requirements. The Common Stock is registered pursuant to Section 12(b) or 12(g) of the Exchange Act, and the
Company has taken no action designed to, or which to its knowledge is likely to have the effect of, terminating the registration
of the Common Stock under the Exchange Act nor has the Company received any notification that the Commission is contemplating terminating
such registration. The Company has not, in the 12 months preceding the date hereof, received notice from any Trading Market on
which the Common Stock is or has been listed or quoted to the effect that the Company is not in compliance with the listing or
maintenance requirements of such Trading Market. The Company is, and has no reason to believe that it will not in the foreseeable
future continue to be, in compliance with all such listing and maintenance requirements. The Common Stock is currently eligible
for electronic transfer through the Depository Trust Company or another established clearing corporation and the Company is current
in payment of the fees to the Depository Trust Company (or such other established clearing corporation) in connection with such
electronic transfer.






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(x)


Application
of Takeover Protections. The Company and the Board of Directors have taken all necessary action, if any, in order to render
inapplicable any control share acquisition, business combination, poison pill (including any distribution under a rights agreement)
or other similar anti-takeover provision under the Company’s certificate of incorporation (or similar charter documents)
or the laws of its state of incorporation that is or could become applicable to the Exchanging Holder as a result of the Exchanging
Holder and the Company fulfilling their obligations or exercising their rights under this agreement, including without limitation
as a result of the Company’s issuance of the Securities and the Note and the Exchanging Holder’s ownership of the Securities
and the Note.


(y)


Disclosure.
Except with respect to the material terms and conditions of the transactions contemplated by this Agreement, the Company confirms
that neither it nor any other Person acting on its behalf has provided the Exchanging Holder or its agents or counsel with any
information that it believes constitutes or might constitute material, non-public information. The Company understands and confirms
that the Exchanging Holder will rely on the foregoing representation in effecting transactions in securities of the Company. All
of the disclosure furnished by or on behalf of the Company to the Exchanging Holder regarding the Company and its Subsidiaries,
their respective businesses and the transactions contemplated hereby is true and correct and does not contain any untrue statement
of a material fact or omit to state any material fact necessary in order to make the statements made therein, in light of the circumstances
under which they were made, not misleading. The press releases disseminated by the Company during the twelve months preceding the
date of this Agreement taken as a whole do not contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they
were made and when made, not misleading. The Company acknowledges and agrees that the Exchanging Holder does not make or has made
any representations or warranties with respect to the transactions contemplated hereby other than those specifically set forth
in Section 3.2 hereof.


(z)


No Integrated
Offering. Assuming the accuracy of the Exchanging Holder’s representations and warranties set forth in Section 4, neither
the Company, nor any of its Affiliates, nor any Person acting on its or their behalf has, directly or indirectly, made any offers
or sales of any security or solicited any offers to buy any security, under circumstances that would cause this offering of the
Securities to be integrated with prior offerings by the Company for purposes of (i) the Securities Act which would require the
registration of any such securities under the Securities Act, or (ii) any applicable shareholder approval provisions of any Trading
Market on which any of the securities of the Company are listed or designated.






    	11 



    	 



    

  


(aa)


Solvency.
Based on the consolidated financial condition of the Company as of the Closing Date, after giving effect to the receipt by the
Company of the proceeds from the sale of the Securities hereunder: (i) the fair saleable value of the Company’s assets exceeds
the amount that will be required to be paid on or in respect of the Company’s existing debts and other liabilities (including
known contingent liabilities) as they mature, (ii) the Company’s assets do not constitute unreasonably small capital to carry
on its business as now conducted and as proposed to be conducted including its capital needs taking into account the particular
capital requirements of the business conducted by the Company, consolidated and projected capital requirements and capital availability
thereof, and (iii) the current cash flow of the Company, together with the proceeds the Company would receive, were it to liquidate
all of its assets, after taking into account all anticipated uses of the cash, would be sufficient to pay all amounts on or in
respect of its liabilities when such amounts are required to be paid. The Company does not intend to incur debts beyond its ability
to pay such debts as they mature (taking into account the timing and amounts of cash to be payable on or in respect of its debt).
The Company has no knowledge of any facts or circumstances which lead it to believe that it will file for reorganization or liquidation
under the bankruptcy or reorganization laws of any jurisdiction within one year from the Closing Date. The SEC Reports set forth
as of the date hereof all outstanding secured and unsecured Indebtedness of the Company or any Subsidiary, or for which the Company
or any Subsidiary has commitments. For the purposes of this Agreement, “Indebtedness” means (x) any liabilities
for borrowed money or amounts owed in excess of $50,000 (other than trade accounts payable incurred in the ordinary course of business),
(y) all guaranties, endorsements and other contingent obligations in respect of indebtedness of others, whether or not the same
are or should be reflected in the Company’s consolidated balance sheet (or the notes thereto), except guaranties by endorsement
of negotiable instruments for deposit or collection or similar transactions in the ordinary course of business; and (z) the present
value of any lease payments in excess of $50,000 due under leases required to be capitalized in accordance with GAAP. Neither the
Company nor any Subsidiary is in default with respect to any Indebtedness.


(bb)


Tax Status.
Except for matters that would not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse
Effect, the Company and its Subsidiaries each (i) has made or filed all United States federal, state and local income and all foreign
income and franchise tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has paid all
taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns,
reports and declarations and (iii) has set aside on its books provision reasonably adequate for the payment of all material taxes
for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material
amount claimed to be due by the taxing authority of any jurisdiction, and the officers of the Company or of any Subsidiary know
of no basis for any such claim.


(cc)


No General
Solicitation. Neither the Company nor any person acting on behalf of the Company has offered or sold any of the Securities
by any form of general solicitation or general advertising. The Company has offered the Securities only to the Exchanging Holder.


(dd)


Foreign
Corrupt Practices. Neither the Company nor any Subsidiary, nor to the knowledge of the Company or any Subsidiary, any agent
or other person acting on behalf of the Company or any Subsidiary, has: (i) directly or indirectly, used any funds for unlawful
contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity, (ii) made any
unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns
from corporate funds, (iii) failed to disclose fully any contribution made by the Company or any Subsidiary (or made by any person
acting on its behalf of which the Company is aware) which is in violation of law or (iv) violated in any material respect any
provision of FCPA.






    	12 



    	 



    

 


(ee)


Accountants.
The Company’s accounting firm is set forth in the SEC Reports. To the knowledge and belief of the Company, such accounting
firm: (i) is a registered public accounting firm as required by the Exchange Act and (ii) shall express its opinion with respect
to the financial statements to be included in the Company’s Annual Report for the fiscal year ended December 31, 2015.


(ff)


Seniority.
As of the Closing Date, no Indebtedness or other claim against the Company is senior to the Debentures in right of payment, whether
with respect to interest or upon liquidation or dissolution, or otherwise, other than indebtedness secured by purchase money security
interests (which is senior only as to underlying assets covered thereby) and capital lease obligations (which is senior only as
to the property covered thereby).


(gg)


No Disagreements
with Accountants and Lawyers. There are no disagreements of any kind presently existing, or reasonably anticipated by the Company
to arise, between the Company and the accountants and lawyers formerly or presently employed by the Company and the Company is
current with respect to any fees owed to its accountants and lawyers which could affect the Company’s ability to perform
any of its obligations under the Securities or the Note.


(hh)


Acknowledgment
Regarding Issuance of Securities. The Company acknowledges and agrees that the Exchanging Holder is acting solely in the capacity
of an arm’s length purchaser with respect to this Agreement and the Note. The Company further acknowledges that the Exchanging
Holder is not acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to the transactions
contemplated thereby and any advice given by any Exchanging Holder or any of their respective representatives or agents in connection
with the transactions contemplated thereby is merely incidental to the issuance of the Securities to the Exchanging Holder. The
Company further represents to Exchanging Holder that the Company’s decision to enter into this Agreement and to issue the
Note has been based solely on the independent evaluation of the transactions contemplated hereby by the Company and its representatives.


(ii)


Acknowledgment
Regarding Exchanging Holder’s Trading Activity. Anything in this Agreement or elsewhere herein to the contrary notwithstanding,
it is understood and acknowledged by the Company that: (i) Exchanging Holder has not been asked by the Company to agree, nor has
Exchanging Holder agreed, to desist from purchasing or selling, long and/or short, securities of the Company, or “derivative”
securities based on securities issued by the Company or to hold the Securities for any specified term, (ii) past or future open
market or other transactions by Exchanging Holder, specifically including, without limitation, Short Sales or “derivative”
transactions, before or after the closing of this or future private placement transactions, may negatively impact the market price
of the Company’s publicly-traded securities, (iii) Exchanging Holder, and counter-parties in “derivative” transactions
to which Exchanging Holder is a party, directly or indirectly, may presently have a “short” position in the Common
Stock and (iv) Exchanging Holder shall not be deemed to have any affiliation with or control over any arm’s length counter-party
in any “derivative” transaction. The Company further understands and acknowledges that (y) Exchanging Holder may engage
in hedging activities at various times during the period that the Securities are outstanding, and (z) such hedging activities (if
any) could reduce the value of the existing stockholders' equity interests in the Company at and after the time that the hedging
activities are being conducted.  The Company acknowledges that such aforementioned hedging activities do not constitute a
breach of this Agreement.






    	13 



    	 



    

 


(jj)


Regulation
M Compliance.  The Company has not, and to its knowledge no one acting on its behalf has, (i) taken, directly or indirectly,
any action designed to cause or to result in the stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of any of the Securities, (ii) sold, bid for, purchased, or paid any compensation for soliciting
purchases of, any of the Securities, or (iii) paid or agreed to pay to any Person any compensation for soliciting another to purchase
any other securities of the Company, other than, in the case of clauses (ii) and (iii), compensation paid to the Company’s
placement agent in connection with the placement of the Securities.


(kk)


Stock Option
Plans. Each stock option granted by the Company under the Company’s stock option plan was granted (i) in accordance with
the terms of the Company’s stock option plan and (ii) with an exercise price at least equal to the fair market value of the
Common Stock on the date such stock option would be considered granted under GAAP and applicable law. No stock option granted under
the Company’s stock option plan has been backdated. The Company has not knowingly granted, and there is no and has been no
Company policy or practice to knowingly grant, stock options prior to, or otherwise knowingly coordinate the grant of stock options
with, the release or other public announcement of material information regarding the Company or its Subsidiaries or their financial
results or prospects.


(ll)


Office
of Foreign Assets Control. Neither the Company nor any Subsidiary nor, to the Company's knowledge, any director, officer, agent,
employee or affiliate of the Company or any Subsidiary is currently subject to any U.S. sanctions administered by the Office of
Foreign Assets Control of the U.S. Treasury Department (“OFAC”).


(mm)


U.S. Real
Property Holding Corporation. The Company is not and has never been a U.S. real property holding corporation within the meaning
of Section 897 of the Internal Revenue Code of 1986, as amended, and the Company shall so certify upon the Exchanging Holder’s
request.


(nn)


Bank Holding
Company Act. Neither the Company nor any of its Subsidiaries or Affiliates is subject to the Bank Holding Company Act of 1956,
as amended (the “BHCA”) and to regulation by the Board of Governors of the Federal Reserve System (the “Federal
Reserve”). Neither the Company nor any of its Subsidiaries or Affiliates owns or controls, directly or indirectly, five
percent (5%) or more of the outstanding shares of any class of voting securities or twenty-five percent or more of the total equity
of a bank or any entity that is subject to the BHCA and to regulation by the Federal Reserve. Neither the Company nor any of its
Subsidiaries or Affiliates exercises a controlling influence over the management or policies of a bank or any entity that is subject
to the BHCA and to regulation by the Federal Reserve.






    	14 



    	 



    

 


(oo)


Money Laundering.
The operations of the Company and its Subsidiaries are and have been conducted at all times in compliance with applicable financial
record-keeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, applicable
money laundering statutes and applicable rules and regulations thereunder (collectively, the “Money Laundering Laws”),
and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving
the Company or any Subsidiary with respect to the Money Laundering Laws is pending or, to the knowledge of the Company or any Subsidiary,
threatened.


5.


Representations
and Warranties of the Exchanging Holder. Exchanging Holder hereby represents and warrants as of the date hereof and as of the
Closing Date to the Company as follows (unless as of a specific date therein):


(a)


Organization;
Authority. Exchanging Holder is an entity duly incorporated or formed, validly existing and in good standing under the laws
of the jurisdiction of its incorporation or formation with full right, corporate, partnership, limited liability company or similar
power and authority to enter into and to consummate the transactions contemplated by this Agreement and otherwise to carry out
its obligations hereunder and thereunder. The delivery and satisfaction of the Debentures and performance by the Exchanging Holder
of the transactions contemplated by this Agreement have been duly authorized by all necessary corporate, partnership, limited
liability company or similar action, as applicable, on the part of such Exchanging Holder. The Debentures have been duly delivered
and satisfied by the Exchanging Holder, and when delivered by the Exchanging Holder in accordance with the terms hereof, will
constitute the valid and legally binding obligation of such Exchanging Holder, enforceable against it in accordance with its terms,
except: (i) as limited by general equitable principles and applicable bankruptcy, insolvency, reorganization, moratorium and other
laws of general application affecting enforcement of creditors’ rights generally, (ii) as limited by laws relating to the
availability of specific performance, injunctive relief or other equitable remedies and (iii) insofar as indemnification and contribution
provisions may be limited by applicable law.


(b)


Own Account.
Exchanging Holder understands that the Securities are “restricted securities” and have not been registered under the
Securities Act or any applicable state securities law and is acquiring the Securities as principal for its own account and not
with a view to or for distributing or reselling such Securities or any part thereof in violation of the Securities Act or any applicable
state securities law, has no present intention of distributing any of such Securities in violation of the Securities Act or any
applicable state securities law and has no direct or indirect arrangement or understandings with any other persons to distribute
or regarding the distribution of such Securities in violation of the Securities Act or any applicable state securities law (this
representation and warranty not limiting such Exchanging Holder’s right to sell the Securities pursuant to the Registration
Statement or otherwise in compliance with applicable federal and state securities laws). The Exchanging Holder is acquiring the
Securities hereunder in the ordinary course of its business.






    	15 



    	 



    

 


(c)


Exchanging
Holder’s Status. At the time the Exchanging Holder was offered the Securities, it was, and as of the date hereof it is,
an “accredited investor” as defined in Rule 501(a)(1), (a)(2), (a)(3), (a)(7) or (a)(8) under the Securities Act.


(d)


Experience
of Exchanging Holder. Exchanging Holder, either alone or together with its representatives, has such knowledge, sophistication
and experience in business and financial matters so as to be capable of evaluating the merits and risks of the prospective investment
in the Securities, and has so evaluated the merits and risks of such investment. Such Exchanging Holder is able to bear the economic
risk of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment.


(e)


General
Solicitation. Such Exchanging Holder is not purchasing the Securities as a result of any advertisement, article, notice or
other communication regarding the Securities published in any newspaper, magazine or similar media or broadcast over television
or radio or presented at any seminar or any other general solicitation or general advertisement.


(f)


Certain
Transactions and Confidentiality. Other than consummating the transactions contemplated hereunder, such Exchanging Holder has
not directly or indirectly, nor has any Person acting on behalf of or pursuant to any understanding with such Exchanging Holder,
executed any purchases or sales, including Short Sales, of the securities of the Company during the period commencing as of
the time that such Exchanging Holder first received a term sheet (written or oral) from the Company or any other Person representing
the Company setting forth the material terms of the transactions contemplated hereunder and ending immediately prior to the execution
hereof. Other than to other Persons party to this Agreement, Exchanging Holder has maintained the confidentiality of all disclosures
made to it in connection with this transaction (including the existence and terms of this transaction). Notwithstanding the foregoing,
for avoidance of doubt, nothing contained herein shall constitute a representation or warranty, or preclude any actions, with respect
to the identification of the availability of, or securing of, available shares to borrow in order to effect Short Sales or similar
transactions in the future.


The Company acknowledges and agrees
that the representations contained in Section 4.2 shall not modify, amend or affect the Exchanging Holder’s right to rely
on the Company’s representations and warranties contained in this Agreement or any other document or instrument executed
and/or delivered in connection with this Agreement or the consummation of the transaction contemplated hereby.




    	16 



    	 



    

6.


Release.
The Exchanging Holder acknowledges and agrees that it shall have no further rights or interest in, and shall not receive any further
consideration, payment or distribution of any kind with respect to, the Debentures. In such regard, the Exchanging Holder hereby
waives, relinquishes, remises and releases all rights, claims, interests or liabilities, known and unknown, of any nature whatsoever
in law or equity which the Exchanging Holder may previously have had or may now or hereafter have as against or to receive from
the Company arising out of, resulting from or relating to the Debentures or any rights or interest of the Exchanging Holder with
respect thereto; provided, however, that this release shall not extend in any way to the obligations of the Company
to the Exchanging Holders as it relates to certain newly issued debentures (and the Security Documents which such debentures (the
“Newly Issued Debentures”) shall be subject to) issued pursuant to that certain Securities Purchase Agreement
entered into on the date hereof and which obligations, including the obligations under the Security Documents, shall be fully enforceable
by the Exchanging Holders against the Company. The parties hereby acknowledge and agree that the Newly Issued Debenture were issued
and outstanding prior to the exchange of Debentures under this Agreement.


7.


Further Assurances.
The Exchanging Holder shall hereafter, without further consideration, execute and deliver promptly to the Company such further
consents, waivers, assignments, endorsements and other documents and instruments, and to take all such further actions, as the
Company may from time to time reasonably request with respect to the exchange and satisfaction of the Debentures Interest and the
consummation in full thereof.


8.


Successors and
Assigns. This Agreement is binding upon, and shall inure to the benefit of, the parties hereto and their respective successors
and assigns.


9.


Counterparts.
This Agreement may be executed in multiple counterparts, each of which shall be deemed an original and all of which, when taken
together, shall constitute one and the same instrument.


IN WITNESS WHEREOF,
the parties hereto have affixed their hands and seals by signing this Agreement as of the day and year first above written.


 


 


[Signatures on Following Page]




    	17 



    	 



    

 


	 	 	Company:
	 	 	 
	 	 	LEGEND OIL AND GAS, LTD.
	 	 	 
	 	 	 
	 	 	By:	 
	 	 	 	Warren S. Binderman
	 	 	 	President, Chief Financial Officer and
	 	 	 	Secretary/Treasurer
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	 	 
	 	 	Exchanging Holder:
	 	 	 
	 	 	HILLAIR CAPITAL INVESTMENT, L.P.
	 	 	 
	 	 	 
	 	 	By:	 
	 	 	 	 


 




    	18 



    	 



    

EXHIBIT A 


Debentures





	 	 	 	 	 	Face Value	 		Maturity

Date
	 	 	 	 	 	 	 		 
	Legend Oil and Gas, Ltd.	 	8.5% Senior Secured Debenture	 	$	5,347,725	 	 	3/1/2016
	 	 	 	 	 	 	 	 	 
	Legend Oil and Gas, Ltd.	 	8.5% Senior Secured Debenture	 	 	400,000	 	 	3/1/2016
	 	 	 	 	 	 	 	 	 
	Legend Oil and Gas, Ltd.	 	OID Senior Secured Debenture	 	 	2,499,975	 	 	5/16/2016
	 	 	 	 	 	 	 	 	 
	Legend Oil and Gas, Ltd.	 	OID Senior Secured Convertible Debenture	 	 	840,000	 	 	5/16/2016
	 	 	 	 	 	 	 	 	 
	Legend Oil and Gas, Ltd.	 	OID Senior Secured Convertible Debenture	 	 	340,000	 	 	3/1/2016
	 	 	 	 	 	 	 	 	 
	Legend Oil and Gas, Ltd.	 	OID Senior Secured Convertible Debenture	 	 	216,000	 	 	3/1/2016
	 	 	 	 	 	 	 	 	 
	Prepayment Premium:	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	 	 	$1,928,740	 	 	 	 	 	 



 




    	19 



    	 



    

EXHIBIT B


 Certificate of Designation
of Terms of Series B Convertible Preferred Stock


 (attached)


 


 


 


 


 




    	20 



    	 



    

EXHIBIT C


 Promissory Note


 (attached)




 


 


 


 


 


 






    21