General Security Agreement



 Exhibit 10.2 
 Execution Copy 
 GENERAL SECURITY AGREEMENT 

GENERAL SECURITY AGREEMENT (this “Agreement”) dated as of May 11, 2012, by LEGEND OIL AND GAS, LTD., a Colorado
corporation having an address at 1420 5th Avenue, Suite 2200, Seattle, WA 98101 (“Debtor”), in favor of NATIONAL BANK OF CANADA, having an address at 311 – 6th Avenue SW, Suite 1800, Calgary, Alberta, Canada T2P 3H2
(“Secured Party”). 
 For good and valuable consideration, the receipt and sufficiency of which is
acknowledged, and intending to be legally bound, Debtor agrees with Secured Party as follows: 
 1. Definitions; Security Interest.

 1.1 UCC Definitions. As used in this Agreement, each of the following terms has at any time the meaning given it at
such time for purposes of Article 9 of the UCC: (i) “accession”, (ii) “account”, (iii) “chattel paper”, (iv) “commercial tort claim”, (v) “deposit account”,
(vi) “document”, (vii) “equipment”, (viii) “farm product”, (ix) “fixture”, (x) “general intangible”, (xi) “goods”, (xii) “health-care-insurance
receivable”, (xiii) “instrument”, (xiv) “inventory”, (xv) “investment property”, (xvi) “issuer”, (xvii) “letter-of-credit right”, (xviii) “payment
intangible”, (xix) “proceeds”, (xx) “products”, (xxi) “promissory note”, (xxii) “record”, (xxiii) “software”, and (xxiv) “supporting obligation”.

 1.2 Other Definitions. As used in this Agreement, the following terms shall have the following meanings (terms defined
in the singular shall have the same meaning when used in the plural and vice versa): 
 “Collateral” means all
personal property and fixtures of Debtor, wherever located, whether now existing or owned or hereafter arising or acquired, whether or not subject to the UCC, and whether or not affixed to any realty, including, without limitation: (i) all
accounts (including, but not limited to, health-care-insurance receivables), chattel paper, investment property, deposit accounts, documents, goods (including, but not limited to, equipment, farm products, fixtures and inventory), general
intangibles (including, but not limited to, Intellectual Property (as hereinafter defined), payment intangibles, software, licenses, franchises and customer information), instruments (including, but not limited to, promissory notes), investment
property, letter-of-credit rights (whether or not the related letter of credit is in writing), letters of credit (whether or not in writing), money and other personal property regardless of kind or nature (including, but not limited to, agreements,
instruments and other records not constituting chattel paper or a document, general intangible or instrument, tort claims not constituting a commercial tort claim, contract rights not constituting an account or general intangible, rights to payment
of any money not constituting or evidenced by an account, commercial tort claim, deposit account, general intangible, investment property, letter-of-credit right, letter of credit, chattel paper or instrument and insurance policies, claims and
proceeds not constituting a health-care-insurance receivable or proceeds); (ii) to the extent not referred to in clause (i) of this sentence, (A) all additions to, accessions to, substitutions for, replacements of, supporting
obligations and Incidental Property Rights (as hereinafter defined) incident to, arising or accruing pursuant to or otherwise relating to any of the things referred to in clause (i) of this sentence, whether arising or accruing from any action
taken by the Debtor or Secured Party or otherwise, (B) proceeds, other proceeds and products of any of the things referred to in clauses (i) and (ii)(A) of this sentence, including, without limitation, insurance proceeds, and
(C) records relating to any of the things referred to in clauses (i) and (ii)(A) and (B) of this sentence. 

“Incidental Property Right” means, whether arising or accruing pursuant to applicable law or any agreement, instrument
or other record or otherwise, (i) any direct or indirect addition to, 







 
extension, renewal, refinancing or other modification or replacement of, increase in or earnings, profit, interest, dividend or distribution of cash or other property or other income or payment
on account of any property, (ii) any direct or indirect proceeds or other proceeds of any replacement, release, surrender, discharge, exchange, conversion, redemption, assignment or other transfer, collection or sale, lease or other disposition
of any property, whether voluntary or involuntary or arising or accruing pursuant to any dissolution, liquidation or merger, consolidation or other absorption or otherwise, or (iii) any direct or indirect right, privilege, power or claim
relating to any property (including, but not limited to, any right to any of the things referred to in clauses (i) and (ii) of this sentence, any option or warrant, any right of subscription, registration, conversion or redemption, any
management right or any right to vote or give any consent, ratification or other approval or authorization (including, but not limited to, any right to vote or give any consent, ratification or other approval or authorization for any replacement of
any of the directors, officers and managers of, amendment of any certificate or articles of incorporation or organization, by-laws, operating or partnership agreement or other charter, organizational or other governing document of, dissolution,
liquidation or merger, consolidation or other absorption of or sale, lease or other disposition of all or substantially all of the assets of any issuer of any general intangible or investment property)). 

“Intellectual Property” means, regardless of kind or nature and wherever in the world existing, used, issued or pending,
(i) any patent or invention disclosed or claimed in any patent, (ii) any copyright, copyright registration or tangible personal property embodying any copyright, (iii) any trademark, service mark, trade style or trade dress
(including, but not limited to, any trade, company, fictitious or other business or other name, logo or other source or business identifier), whether registered in any public office or not so registered, (iv) any trade secret (including, but
not limited to, any know-how, technology, procedure, product formulation or other product or manufacturing specification or standard) or other confidential or proprietary business or technical data or other information, (v) any unpatented
invention, whether or not patentable, (vi) any industrial or other design or design application, (vii) any domain name or domain name registration, (viii) any software or software source code, (ix) any other intellectual or
similar property, (x) any license, franchise agreement or other agreement, whether embodied in any record or otherwise, providing for the grant by or to any Person of any right to manufacture, use, sell, distribute or otherwise exploit any of
the things referred to in clauses (i) through (ix) of this sentence or (xi) any registration or recording of, application for, reissue, renewal, continuation or extension of, goodwill symbolized by, incident to, associated with or
otherwise relating to or incidental property right, record or license relating to any of the things referred to in clauses (i) through (ix) of this sentence. 
 “Obligations” means any and all indebtedness or other obligations of Debtor to Secured Party in any capacity, now existing or hereafter incurred, however created or evidenced, regardless
of kind, class or form, whether direct, indirect, absolute or contingent (including obligations pursuant to any guaranty, endorsement, other assurance of payment or otherwise), whether joint or several, whether from time to time reduced and
thereafter increased, or entirely extinguished and thereafter reincurred, together with all extensions, renewals and replacements thereof, and all interest, fees, charges, costs or expenses which accrue on or in connection with the foregoing,
including, without limitation, (i) all obligations of Debtor to Secured Party under that certain Letter of Guarantee dated May 11, 2012, and (ii) any indebtedness or obligations (A) not yet outstanding but contracted for,
or with regard to which any other commitment by Secured Party exists; (B) arising prior to, during or after any pendency of any bankruptcy, insolvency, receivership or other similar proceeding, regardless of whether allowed or allowable in such
proceeding; (C) owed by Debtor to others and which Secured Party obtained, or may obtain, by assignment or otherwise; or (D) payable under this Agreement. 
 “UCC” means the Uniform Commercial Code, as the same may be in effect in the State of New York, as amended from time to time.Terms not otherwise defined in this Agreement shall have the
meanings attributed to such terms in the UCC. 

  
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 1.3 Grant. As security for the prompt and complete payment and performance when due
of the Obligations, Debtor does hereby grant to Secured Party a continuing security interest (“Security Interest”) in all right, title and interest of the Debtor in and to the Collateral. Debtor acknowledges and agrees that the
definition of “Collateral” in this Agreement is intended to cover all assets of Debtor. 
 1.4 Security Interest
Absolute. All rights of Secured Party hereunder, the Security Interest and all obligations of Debtor hereunder shall be absolute and unconditional irrespective of (i) any filing by or against Debtor of any petition in bankruptcy or any
action under federal or state law for the relief of debtors or the seeking or consenting to of the appointment of an administrator, receiver, custodian or similar officer for the wind up of its business; (ii) any lack of validity or
enforceability of any agreement with respect to any of the Obligations, (iii) any change in the time, manner or place of payment of, or in any other term of, all or any of the Obligations, or any other amendment or waiver of or any consent to
any departure from any agreement or instrument with respect to the Obligations, (iv) any exchange, release or non-perfection of any lien or any release or amendment or waiver of or consent under or departure from any guarantee, securing or
guaranteeing all or any of the Obligations, or (v) any other circumstance that might otherwise constitute a defense available to, or a discharge of, Debtor in respect of the Obligations or this Agreement. If, after receipt of any payment of all
or any part of the Obligations, Secured Party is for any reason compelled to surrender such payment to any person or entity, because such payment is determined to be void or voidable as a preference, impermissible setoff, or a diversion of trust
funds, or for any other reason, such payment shall be reinstated as part of the Obligations and this Agreement shall continue in full force notwithstanding any contrary action which may have been taken by Secured Party in reliance upon such payment,
and any such contrary action so taken shall be without prejudice to Secured Party’s rights under this Agreement and shall be deemed to have been conditioned upon such payment having become final and irrevocable. 

2. Covenants. Debtor covenants and agrees as follows: 
 2.1 Perfection of Security Interest. This Agreement creates a valid security interest in the Collateral securing the payment and performance of the Obligations. Debtor shall execute and deliver to
Secured Party such financing statements, control agreements or other documents, in form and content satisfactory to Secured Party, as Secured Party may from time to time request to perfect and continue the Security Interest. Upon the request of
Secured Party, Debtor shall deliver to Secured Party any and all instruments, chattel paper, negotiable documents or other documents evidencing or constituting any part of the Collateral properly endorsed or assigned, in a manner satisfactory to
Secured Party. Until such delivery, Debtor shall hold such portion of the Collateral in trust for Secured Party. Debtor shall pay all expenses for the preparation, filing, searches and related costs in connection with the grant and perfection of the
Security Interest. Debtor authorizes (both prospectively and retroactively) Secured Party to file financing statements, and any continuations and amendments thereof, with respect to the Collateral without Debtor’s signature. Debtor shall
cooperate with Secured Party in obtaining appropriate waivers or subordinations of interests from such third parties in any Collateral and Debtor shall cooperate with Secured Party in obtaining control of Collateral consisting of deposit accounts,
investment property, letter-of-credit rights or electronic chattel paper (as defined in the UCC). In the event that Secured Party requests, Debtor shall instruct its account debtors to remit payments directly to Secured Party or to Secured
Party’s designee. Debtor will perform any and all steps that Secured Party may request to perfect Secured Party’s security interest in inventory, including, but without limitation, placing and maintaining signs, appointing custodians,
filing financing or continuation statements in form and substance satisfactory to Secured Party, maintaining stock records and transferring of inventory to warehouses. If 

  
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any inventory is in the possession or control of any third party other than a purchaser in the ordinary course of business or a public warehouseman where the warehouse receipt is in the name of
or held by Debtor, Debtor shall notify such person of Secured Party’s security interest therein and, instruct such person or persons to hold all such inventory for the account and benefit of Secured Party and subject to Secured Party’s
instructions. Debtor will deliver to Secured Party warehouse receipts covering any inventory located in warehouses showing Secured Party as the beneficiary thereof and will also deliver to the warehouseman such agreements relating to the release of
warehouse inventory as Secured Party may request. 
 2.2 Negative Pledge; Disposition of Collateral. Debtor shall not
grant or allow the imposition of any lien, security interest or encumbrance on, or assignment of, the Collateral unless consented to in writing by Secured Party. Debtor shall not make or permit to be made any sale, transfer or other disposition of
the Collateral; provided, however, prior to the occurrence of an Event of Default, Debtor may in the ordinary course of business consistent with its past practices and with prudent and standard practices used in the industry that is the same or
similar to that in which Debtor is engaged: (i) dispose of any Collateral consisting of equipment that is obsolete or worn-out; (ii) sell or exchange any Collateral consisting of equipment in connection with the acquisition of other
equipment that is at least as valuable as such equipment, that Debtor intends to use for substantially the same purposes as such equipment and that is not subject to any security interest or other lien or encumbrance; (iii) collect Collateral
consisting of accounts or assign such Collateral for purposes of collection; or (iv) sell or lease Collateral consisting of inventory. A sale, lease or other transfer of such Collateral consisting of inventory in the ordinary course of
Debtor’s business does not include a transfer in partial or complete satisfaction of any liability or obligation or any bulk sale. 
 2.3 Condition of Collateral; Impermissible Use. Debtor shall keep the Collateral consisting of goods in good condition and shall not commit or permit damage or destruction (other than ordinary wear
and tear) to such Collateral. Debtor shall not permit any Collateral consisting of goods (i) to be used in such a manner that would violate any insurance policy or warranty covering the Collateral or that would violate any applicable law of any
governmental authority (including any environmental law) now or hereafter in effect; (ii) to become fixtures on any real property on which Secured Party does not have a first priority mortgage lien (unless Secured Party has been provided with
an acceptable landlord/mortgagee waiver) or become an accession to any goods not included in the Collateral; or (iii) to be placed in any warehouse that may issue a negotiable document with regard to such Collateral. 

2.4 Modification to Collateral. Debtor shall not, without Secured Party’s prior written consent, grant any extension on,
compound, settle for less than the full amount of, release (in whole or in part), modify, cancel, or allow for any substitution, credit or adjustment on Collateral consisting of accounts, chattel paper, general intangibles, instruments, documents or
investment property, except that in the absence of an Event of Default, Debtor may grant to account debtors, or other persons obligated with respect to the Collateral, extensions, credits, discounts, compromises or settlements in the ordinary course
of business consistent with its past practices and consistent with prudent and standard practices used in the industries that are the same or similar to those in which Debtor is engaged. 

2.5 Titled Goods. Debtor shall cause all goods included in the Collateral to be properly titled and registered to the extent
required by applicable law. Upon the request of Secured Party, Debtor shall cause the interest of Secured Party to be properly indicated on any certificate of title relating to such goods and deliver to Secured Party each such certificate, and any
additional evidence of ownership, certificates of origin or other documents evidencing any interest in such goods. 
 2.6
Insurance. Debtor shall, at its own expense and at all times, maintain effective insurance policies covering damage to persons and against fire, flood, theft and all other risks to which the


  
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Collateral may be subject, all in such amounts, with such deductibles and issued by such insurance company as shall be satisfactory to Secured Party. Such insurance policies shall have all
endorsements that Secured Party may require and shall further (i) name Secured Party, exclusively, as the additional insured on the casualty insurance and the lender’s loss payee and/or mortgagee on the hazard insurance; (ii) provide
that Secured Party shall receive a minimum of thirty (30) days prior written notice of any amendment or cancellation; and (iii) insure Secured Party notwithstanding any act or neglect of Debtor or other owner of the property described in
such insurance. If Debtor fails to obtain the required insurance as provided herein, Secured Party may, but is not obligated, to obtain such insurance as Secured Party may deem appropriate, including, without limitation, if Secured Party so chooses,
“single interest insurance” which will cover only Secured Party’s interest in the Collateral. Debtor shall pay or reimburse to Secured Party the cost of such insurance. Secured Party shall have the option, in its sole discretion, to
hold insurance proceeds as part of the Collateral, apply any insurance proceeds toward the Obligations or allow the Debtor to apply the insurance proceeds towards repair or replacement of the item of Collateral in respect of which such proceeds were
received. Upon the request of Secured Party, Debtor shall from time to time deliver to Secured Party such insurance policies, or other evidence of such policies satisfactory to Secured Party, and such other related information Secured Party may
request. 
 2.7 Collateral Information. Debtor shall provide all information, in form and substance satisfactory to
Secured Party, that Secured Party shall from time to time request to (i) identify the nature, extent, value, age and location of any of the Collateral, or (ii) identify any account debtor or other party obligated with respect to any
chattel paper, general intangible, instrument, investment property, document or deposit account included in the Collateral. 

2.8 Financial Information. Debtor shall furnish to Secured Party financial statements in such form (e.g., audited, reviewed,
compiled) and at such intervals as Secured Party shall request from time to time plus any additional financial information that Secured Party may request. All such financial statements shall be in conformity with generally accepted accounting
principles consistently applied. 
 2.9 Taxes; Licenses; Compliance with Laws. Before the end of any applicable grace
period, Debtor shall pay each tax, assessment, fee and charge imposed by any governmental authority upon the Collateral, the ownership, disposition or use of any of the Collateral, this Agreement or any instrument evidencing any of the Obligations.
Debtor shall maintain in full force and effect each license, franchise or other authorization needed for any ownership, disposition or use of the Collateral and the conduct of its business, operations or affairs. Debtor shall comply with all
applicable law of any governmental authority (including any environmental law), now or hereafter in effect, applicable to the ownership, disposition or use of the Collateral or the conduct of its business, operations or affairs. 

2.10 Records; Legend. Debtor shall maintain accurate and complete books and records relating to the Collateral in conformity with
generally accepted accounting principles consistently applied. At Secured Party’s request, Debtor will legend, in form and manner satisfactory to Secured Party, its books and records to indicate the Security Interest. 

2.11 Additional Collateral. If at any time the liquidation value of any of the Collateral is unsatisfactory to Secured Party,
then, on demand of Secured Party, Debtor shall immediately (i) furnish such additional collateral satisfactory to Secured Party to be held by Secured Party as if originally pledged hereunder and execute such additional security agreements,
financing statements or other agreements as requested by Secured Party, or (ii) repay the Obligations to bring the outstanding amount of the Obligations to within a satisfactory relationship to the liquidation value of the Collateral.

 2.12 Notifications of Change. Immediately upon acquiring knowledge or reason to know of any of the following, Debtor
shall notify Secured Party of the occurrence or existence of (i) any Event of 

  
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Default; (ii) any event or condition that, after notice, lapse of time or after both notice and lapse of time, would constitute an Event of Default; (iii) any account or general
intangible that arises out of a contract with any governmental authority (including the United States); (iv) any event or condition that has or (so far as can be foreseen) will or might have any material adverse effect on the Collateral
(including a material loss, destruction or theft of, or of any damage to, the Collateral, material decline in value of the Collateral or a material default by an account debtor or other party’s performance of obligations with respect to the
Collateral), on Debtor or its business, operations, affairs or condition (financial or otherwise). 
 2.13 Lien Law. If
any account or general intangible included in the Collateral represents money owing pursuant to any contract for the improvement of real property or for a public improvement for purposes of the Lien Law of the State of New York (the “Lien
Law”), Debtor shall (i) give Secured Party notice of such fact; (ii) receive and hold any money advanced by Secured Party with respect to such account or general intangible as a trust fund to be first applied to the payment of
trust claims as such term and/or concept is defined in the Lien Law (in Section 71 thereof, or otherwise); and (iii) until such trust claim is paid, not use or permit the use of any such money for any purpose other than the payment of such
trust claims. 
 2.14 Protection of Collateral; Further Assurances. Debtor shall, at its own cost, faithfully preserve,
defend and protect the Security Interest as a prior perfected security interest in the Collateral under the UCC and other applicable law, superior and prior to the rights of all third parties (other than those permitted pursuant to Section 3.1
of this Agreement) and shall defend the Collateral against all setoffs, claims, counterclaims, demands and defenses. At the request of Secured Party, Debtor shall do, obtain, make, execute and deliver all such additional and further acts, things,
deeds, assurances and instruments as Secured Party may deem necessary or advisable from time to time in order to attach, continue, preserve, perfect or protect the Security Interest and Secured Party’s rights hereunder, including, without
limitation: (i) obtaining waivers (in form and content acceptable to Secured Party) from landlords, warehousemen and mortgagees; (ii) maintaining books and records relating to the Collateral satisfactory to Secured Party and shall allow
Secured Party or its representatives access to such records and the Collateral at all reasonable times for the purpose of examination, inspection, verification, copying, extracting and other reasonable purposes as Secured Party may require;
(iii) maintaining the Collateral and the books and records relating to the Collateral at Debtor’s address indicated above or at such other address as Secured Party shall permit, in its sole discretion, upon the written request to Secured
Party from Debtor; (iv) executing and delivering to Secured Party such other and further documentation necessary to evidence, effectuate or perfect its security interest in the Collateral; (v) defending the Collateral against all claims
and demands of third parties at any time claiming the same or any interest therein, except buyers of inventory in the ordinary course of Debtor’s business; and (vi) notifying Secured Party in the event of material loss or damage to the
Collateral or of any material adverse change in Debtor’s business, financial condition or the Collateral, or of any other occurrences which could materially and adversely affect the security of Secured Party. Debtor hereby irrevocably appoints
Secured Party, its officers, employees and agents, or any of them, as attorneys-in-fact for Debtor with full power and authority in the place and stead of Debtor and in the name of Debtor or its own name from time to time in Secured Party’s
discretion, to perform all acts which Secured Party deems appropriate to attach, continue, preserve or perfect and continue the Security Interest, including signing for Debtor (to the extent such signature may be required by applicable law) UCC-1
financing statements, UCC-3 amendment or other instruments and documents to accomplish the purposes of this Agreement. This power of attorney, being coupled with an interest, is irrevocable and shall not be affected by the subsequent disability or
incompetence of Debtor. 

  
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 3. Representations and Warranties. Debtor represents, warrants and agrees as follows: 

3.1 Title. Debtor holds good and marketable title to the Collateral free and clear from any security interest or other lien or
encumbrance of any party, other than the Security Interest or such liens, security interests or other liens or encumbrances specifically permitted by Secured Party and set forth on Exhibit A hereto, if any (“Permitted Liens”).
Debtor has not made any prior sale, pledge, encumbrance, assignment or other disposition of any of the Collateral except for the Permitted Liens. 
 3.2 Authority. If Debtor is a business entity, it is duly organized, validly existing and in good standing under the laws of the above-named state of organization. Debtor has the full power and
authority to grant the Security Interest and to execute, deliver and perform its obligations in accordance with this Agreement. The execution and delivery of this Agreement will not (i) violate any applicable law of any governmental authority
or any judgment or order of any court, other governmental authority or arbitrator; (ii) violate any agreement governing Debtor or to which Debtor is a party; or (iii) result in a security interest or other lien or encumbrance on any of
Debtor’s assets, except in favor of Secured Party. Debtor’s certificate of incorporation, by-laws or other organizational documents do not prohibit any term or condition of this Agreement. Each authorization, approval or consent from, each
registration and filing with, each declaration and notice to, and each other act by or relating to, any party required as a condition of Debtor’s execution, delivery or performance of this Agreement (including any shareholder or board of
directors or similar approvals) has been duly obtained and is in full force and effect. Debtor has the power and authority to transact the business in which it is engaged and is duly licensed or qualified and in good standing in each jurisdiction in
which the conduct of its business or ownership of property requires such licensing or such qualifications. 
 3.3 Judgments
and Litigation. Except as otherwise disclosed by Debtor to Secured Party, there is no pending or threatened claim, audit, investigation, action or other legal proceeding or judgment or order of any court, agency or other governmental authority
or arbitrator which involves Debtor or the Collateral and which might have a material adverse effect upon the Collateral, the Debtor, its business, operations, affairs or condition (financial or otherwise), or threaten the validity of this Agreement
or any related document or action. Debtor will immediately notify Secured Party upon acquiring knowledge of the foregoing. 

3.4 Enforceability of Collateral. Instruments, chattel paper, accounts or documents which constitute any part of the Collateral
are genuine and enforceable in accordance with their terms, comply with the applicable law of any governmental authority concerning form, content, manner of preparation and execution, and all persons appearing to be obligated on such Collateral have
authority and capacity to contract and are in fact obligated as they appear to be on such Collateral. There are no restrictions on any assignment or other transfer or grant of the Security Interest by Debtor. Each sum represented by Debtor from time
to time as owing on accounts, instruments, deposit accounts, chattel paper and general intangibles constituting any part of the Collateral by account debtors and other parties with respect to such Collateral is the sum actually and unconditionally
owing by account debtors and other parties with respect thereto at such time, except for applicable normal cash discounts. None of the Collateral is subject to any defense, set-off, claim or counterclaim of a material nature against Debtor except as
to which Debtor has notified Secured Party in writing. 
 3.5 Location of Chief Executive Office, Records, Collateral.
The locations of the following are listed on page one of this Agreement or, if different or additional, on Exhibit A hereto: (i) Debtor’s residence, principal place of business and chief executive office; (ii) the office in which
Debtor maintains its books or records relating to the Collateral; (iii) the facility (including any storage facility) at which now owned or subsequently acquired inventory, equipment and fixtures constituting any part of the Collateral shall be
kept; and (iv) the real property on which any crop included in the Collateral is growing 

  
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or is to be grown, or on which any timber constituting any part of the Collateral is or is to be standing. Debtor will not effect or permit any change in any of the foregoing locations (or remove
or permit the removal of the records or Collateral therefrom, except for mobile equipment included in the Collateral which may be moved to another location for not more than thirty (30) days) without thirty (30) days prior written notice
to Secured Party and all actions deemed necessary by Secured Party to maintain the Security Interest intended to be granted hereby at all times fully perfected and in full force and effect have been taken. All of the locations listed on page one or
Exhibit A are owned by Debtor, or if not, by the party(ies) identified on Exhibit A. 
 3.6 Structure; Name.
Debtor’s organizational structure, state of registration and organizational identification number (if any) are stated accurately on page one of this Agreement, and its full legal name and any trade name used to identify it are stated accurately
on page one of this Agreement, or if different or additional are listed on Exhibit A hereto. Debtor will not change its name, any trade names or its identity, its organizational structure, state of registration or organizational identification
number without thirty (30) days prior written notice to Secured Party. All actions deemed necessary by Secured Party to maintain the Security Interest intended to be granted hereby at all times fully perfected and in full force and effect have
been taken. 
 4. Performance and Expenditures by Secured Party. If Debtor fails to perform or comply with any of the terms hereof,
Secured Party, at its option, but without any obligation so to do, may perform or comply, or otherwise cause performance or compliance, with such terms including the payment or discharge of all taxes, fees, security interest or other liens,
encumbrances or claims, at any time levied or placed on the Collateral. An election to make expenditures or to take action or perform an obligation of Debtor under this Agreement, after Debtor’s failure to perform, shall not affect Secured
Party’s right to declare an Event of Default and to exercise its remedies. Nor shall the provisions of this Section relieve Debtor of any of its obligations hereunder with respect to the Collateral or impose any obligation on Secured Party to
proceed in any particular manner with respect to the Collateral. 
 5. Duty of Secured Party. Secured Party’s sole duty with respect
to the custody, safekeeping and physical preservation of the Collateral in its possession shall be to deal with it in the same manner as Secured Party deals with similar property for its own account. Neither Secured Party nor its directors,
officers, employees or agents shall be liable for failure to demand, collect or realize upon the Collateral or for any delay in doing so or shall be under any obligation to sell or otherwise dispose of the Collateral upon the request of Debtor or
any other person or to take any other action whatsoever with regard to the Collateral. The powers conferred on Secured Party hereunder are solely to protect Secured Party’s interests in the Collateral and shall not impose any duty upon any
Secured Party to exercise any such powers. Secured Party shall be accountable only for amounts that it actually receives as a result of the exercise of its powers under this Agreement, and neither it nor its officers, directors, employees or agents
shall be responsible to Debtor for any act or failure to act hereunder, except for its own gross negligence or willful misconduct. 
 6.
Certain Rights and Remedies. 
 6.1 Inspection; Verification. Secured Party, and such persons as it may designate,
shall have the right from time to time to (i) audit and inspect (a) the Collateral, (b) all books and records related thereto (and make extracts and copies from such records), and (c) the premises upon which any of the Collateral
or books and records may be located; (ii) discuss Debtor’s business, operations, affairs or condition (financial or otherwise) with its officers, accountants; and (iii) verify the validity, amount, quality, quantity, value, condition
and status of, or any other matter relating to the Collateral in any manner and through any medium Secured Party may consider appropriate (including contacting account debtors or third party possessing the Collateral for purpose of making such
verification). Debtor shall furnish all assistance and information and perform any acts Secured Party may require regarding thereto. Debtor shall bear the cost and expense of any such inspection and verification. 

  
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 6.2 Notification of Security Interest. Secured Party may notify any or all account
debtors and other person obligated with respect to the Collateral of the Security Interest therein. Upon the request of Secured Party, Debtor agrees to enter into such warehousing, lockbox or other custodial arrangement with respect to any of the
Collateral that Secured Party shall deem necessary or desirable. 
 6.3 Application of Proceeds. Secured Party may apply
the proceeds from the sale, lease or other disposition or realization upon the Collateral to the Obligations in such order and manner and at such time as Secured Party shall, in its sole discretion, determine. Debtor shall remain liable for any
deficiency if the proceeds of any sale, lease or other disposition or realization upon the Collateral are insufficient to pay the Obligations. Any proceeds received by Debtor from the Collateral after an Event of Default shall (i) be held by
Debtor in trust for Secured Party in the same medium in which received; (ii) not be commingled with any assets of Debtor; and (iii) be delivered to Secured Party in the form received, properly indorsed to permit collection. After an Event
of Default, Debtor shall promptly notify Secured Party of the return to or repossession by Debtor of goods constituting part of the Collateral, and Debtor shall hold the same in trust for Secured Party and shall dispose of the same as Secured Party
directs. 
 6.4 Income and Proceeds of Instruments and Investment Property. Until the occurrence of an Event of Default,
Debtor reserves the right to request to receive all cash income or cash distribution (whether in cash or evidenced by check) payable on account of any instrument or investment property constituting part of the Collateral (collectively, “Cash
Distribution”). Until actually paid, all rights in the foregoing shall remain subject to the Security Interest. Any other income, dividend, distribution, increase in or profits (including any stock issued as a result of any stock split or
dividend, any capital distributions and the like) on account of any instrument or investment property constituting part of the Collateral and, upon the occurrence of an Event of Default, all Cash Distributions, shall be delivered to Secured Party
immediately upon receipt, in the exact form received and without commingling with other property which may be received by, paid or delivered to Debtor or for Debtor’s account, whether as an addition to, in discharge of, in substitution of, or
in exchange of the Collateral. Until delivery, such Collateral shall be held in trust for Secured Party. 
 6.5 Registered
Holder of the Collateral. Secured Party shall have the right to transfer to or register (with or without reference to this Agreement) in the name of Secured Party or its nominee any investment property, general intangible, instrument or deposit
account constituting part of the Collateral, other than the shares of Legend Energy Canada Ltd. owned by the Debtor, so that Secured Party or such nominee shall appear as the sole owner of record thereof; provided, however, that so long as no Event
of Default has occurred, Secured Party shall deliver to Debtor all notices, statements or other communications received by it or its nominee as such registered owner, and upon demand and receipt of payment of necessary expenses thereof, shall give
to Debtor or its designee a proxy or proxies to vote and take all action with respect to such Collateral. After the occurrence of any Event of Default, the shares of Legend Energy Canada Ltd. shall also be subject to the above right to transfer or
register and the Debtor waives all rights to be advised of or to receive any notices, statements or communications received by Secured Party or its nominee as such record owner, and agrees that no proxy or proxies given by Secured Party to Debtor or
its designee as aforesaid shall thereafter be effective. 
 7. Default. 

7.1 Events of Default. Any of the following events or conditions shall constitute an “Event of Default”:
(i) failure by Debtor to pay when due (whether at the stated maturity, by acceleration, upon 

  
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demand or otherwise) the Obligations, or any part thereof, or there occurs any event or condition which after notice, lapse of time or after both notice and lapse of time will permit acceleration
of any Obligation; (ii) default by Debtor in the performance of any obligation, term or condition of this Agreement or any other agreement with Secured Party or any of its affiliates or subsidiaries (collectively,
“Affiliates”); (iii) failure by Debtor to pay when due (whether at the stated maturity, by acceleration, upon demand or otherwise) any indebtedness or obligation owing to any third party or any Affiliate, the occurrence of any
event which could result in acceleration of payment of any such indebtedness or obligation or the failure to perform any agreement with any third party or any affiliate; (iv) Debtor is dissolved, becomes insolvent, generally fails to pay or
admits in writing its inability generally to pay its debts as they become due; (v) Debtor makes a general assignment, arrangement or composition agreement with or for the benefit of its creditors or makes, or sends notice of any intended, bulk
sale; the sale, assignment, transfer or delivery of all or substantially all of the assets of Debtor to a third party; or the cessation by Debtor as a going business concern; (vi) Debtor files a petition in bankruptcy or institutes any action
under federal or state law for the relief of debtors or seeks or consents to the appointment of an administrator, receiver, custodian or similar official for the wind up of its business (or has such a petition or action filed against it and such
petition action or appointment is not dismissed or stayed within forty-five (45) days); (vii) the reorganization, merger, consolidation or dissolution of Debtor (or the making of any agreement therefor); (viii) the entry of any
judgment or order of any court, other governmental authority or arbitrator against Debtor; (ix) falsity, omission or inaccuracy of facts submitted to Secured Party or any Affiliate (whether in a financial statement or otherwise); (x) an
adverse change in the Collateral, Debtor, its business, operations, affairs or condition (financial or otherwise) from the status shown on any financial statement or other document submitted to Secured Party, and which change Secured Party
determines will have a material adverse effect on (a) Debtor, its business, operations or condition (financial or otherwise), or (b) the ability of Debtor to pay or perform the Obligations; (xi) the occurrence of any event described
in Section 7.1(i) through and including 7.1(x) with respect to any endorser, guarantor or any other party liable for, or whose assets or any interest therein secures, payment of any of the Obligations. 

7.2 Rights and Remedies Upon Default. Upon the occurrence of any Event of Default, Secured Party without demand of performance or
other demand, presentment, protest, advertisement or notice of any kind (except any notice required by law) to or upon Debtor or any other person (all and each of which demands, presentments, protests, advertisements and notices are hereby waived),
may exercise all rights and remedies of a secured party under the UCC, under other applicable law, in equity or otherwise or available under in this Agreement including: 
 7.2.1 Obligations Immediately Due; Termination of Lending. Secured Party may declare all or any part of any Obligations not payable on demand to be immediately due and payable without demand or
notice of any kind. All or any part of any Obligations whether or not payable on demand, shall be immediately due and payable automatically upon the occurrence of an Event of Default in Section 7.1(vi) of this Agreement. The provisions hereof
are not intended in any way to affect any rights of Secured Party with respect to any Obligations which may now or hereafter be payable on demand. Secured Party may terminate any obligation it may have to grant any additional loan, credit or other
financial accommodation to Debtor. 
 7.2.2 Access to Collateral. Secured Party, or its agents, may peaceably retake
possession of the Collateral with or without notice or process of law, and for that purpose may enter upon any premises where the Collateral is located and remove the same. At Secured Party’s request, Debtor shall assemble the Collateral and
deliver it to Secured Party or any place designated by Secured Party, at Debtor’s expense. 
 7.2.3 Sell Collateral.
Secured Party shall have the right to sell, lease or otherwise dispose of the Collateral in one or more parcels at public or private sale or sales upon such terms and conditions as it 

  
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may deem advisable and at such prices as it may deem best, for cash or on credit or for future delivery without assumption of any credit risk. Each purchaser at any such sale shall hold the
property sold absolutely, free from any claim or right on the part of Debtor. Debtor hereby waives (to the extent permitted by law) all rights of redemption, stay and appraisal which Debtor now has or may at any time in the future have under any
applicable law now existing or hereafter enacted. Secured Party shall have the right to use Debtor’s premises and any materials or rights of Debtor (including any intellectual property rights) without charge for such sales or disposition of the
Collateral or the completion of any work in progress for such times as Secured Party may see fit. Without in any way requiring notice to be given in the following time and manner, Debtor agrees that with respect to any notice by Secured Party of any
sale, lease or other disposition or realization or other intended action hereunder or in connection herewith, whether required by the UCC or otherwise, such notice shall be deemed reasonable and proper if given at least five (5) days before
such action in the manner described in Section 10.2 of this Agreement. 
 7.2.4 Collect Revenues. Secured Party may
either directly or through a receiver (i) demand, collect and sue on any Collateral consisting of accounts or any other Collateral including notifying account debtors or any other persons obligated on the Collateral to make payment on the
Collateral directly to Secured Party; (ii) file any claim or to take any other action or proceeding in any court of law or equity or otherwise deemed appropriate by Secured Party with respect to the Collateral or to enforce any other right in
respect of the Collateral; (iii) take control, in any manner, of any payment or proceeds from the Collateral; (iv) prosecute or defend any suit, action or proceeding brought against Debtor with respect to the Collateral; (v) settle,
compromise or adjust any and all claims arising under the Collateral or, to give such discharges or releases as Secured Party may deem appropriate; (vi) receive and collect all mail addressed to Debtor, direct the place of delivery thereof to
any location designated by Secured Party; to open such mail; to remove all contents therefrom; to retain all contents thereof constituting or relating to the Collateral; (vii) execute, sign or endorse any and all claims, endorsements,
assignments, checks or other instruments with respect to the Collateral; or (viii) generally, use, sell, transfer, pledge and make any agreement with respect to or otherwise deal with any of the Collateral; and Debtor hereby irrevocably
appoints Secured Party, its officers, employees and agents, or any of them, as attorneys-in-fact for Debtor with full power and authority in the place and stead of Debtor and in the name of Debtor or in its own name from time to time in Secured
Party’s discretion, to take any and all appropriate action Secured Party deems necessary or desirable to accomplish any of the foregoing or otherwise to protect, preserve, collect or realize upon the Collateral or to accomplish the purposes of
this Agreement. Debtor revokes each power of attorney (including any proxy) heretofore granted by Debtor with regard to the Collateral. This power of attorney, being coupled with an interest, is irrevocable and shall not be affected by the
subsequent disability or incompetence of Debtor. 
 7.2.5 Setoff. Secured Party may place an administrative hold on and
set off against the Obligations any property held in a deposit or other account with Secured Party or any of its Affiliates or otherwise owing by Secured Party or any of its Affiliates in any capacity to Debtor. Such set-off shall be deemed to have
been exercised immediately at the time Secured Party or such Affiliate elects to do so. 
 8. Expenses. Debtor shall pay to Secured Party
on demand all costs and expenses (including all reasonable fees and disbursements of all counsel retained for advice, suit, appeal or other proceedings or purpose and of any experts or agents it may retain), which Secured Party may incur in
connection with (i) the administration of this Agreement, including any administrative fees Secured Party may impose for the preparation of discharges, releases or assignments to third-parties; (ii) the custody or preservation of, or the
sale, lease or other disposition or realization on the Collateral; (iii) the enforcement and collection of any Obligations or any guaranty thereof; (iv) the exercise, performance ,enforcement or protection of any of the rights of Secured
Party hereunder; or (v) the failure of Debtor to perform or observe any provisions hereof. After such demand for payment of any cost, expense or fee under this Section or elsewhere under this Agreement, Debtor shall pay interest at the highest
default rate specified in any instrument evidencing 
 any of the Obligations from the date payment is demanded by Secured Party to the date
reimbursed by Debtor. All such costs, expenses or fees under this Agreement shall be added to the Obligations. 

  
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 9. Indemnification. Debtor shall indemnify Secured Party and its Affiliates and each officer,
employee, accountant, attorney and other agent thereof (each such person being an “Indemnified Party”) on demand, without any limitation as to amount, against each liability, cost and expense (including all reasonable fees and
disbursements of all counsel retained for advice, suit, appeal or other proceedings or purpose, and of any expert or agents an Indemnified Party may retain) heretofore or hereafter imposed on, incurred by or asserted against any Indemnified Party
(including any claim involving any allegation of any violation of applicable law of any governmental authority (including any environmental law or criminal law)), however asserted and whether now existing or hereafter arising, arising out of any
ownership, disposition or use of any of the Collateral; provided, however, the foregoing indemnity shall not apply to liability, cost or expense solely attributable to an Indemnified Party’s gross negligence or willful misconduct. This
indemnity agreement shall survive the termination of this Agreement. Any amounts payable under this or any other section of this Agreement shall be additional Obligations secured hereby. 
 10. Miscellaneous. 
 10.1 Remedies Cumulative; Preservation of Rights;
Waivers. The rights and remedies herein are cumulative, may be exercised singly or concurrently and are not exclusive of any other rights or remedies which Secured Party may have under other agreements now or hereafter in effect between Debtor
and Secured Party, at law (including under the UCC) or in equity. No failure or delay of Secured Party in exercising any power or right hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power,
or any abandonment or discontinuance of steps to enforce such a right or power, preclude any other or further exercise thereof or the exercise of any other right or power. Debtor expressly disclaims any reliance on any course of dealing or usage of
trade or oral representation of Secured Party including representations to make loans to Debtor. No notice to or demand on Debtor in any case shall entitle Debtor to any other or further notice or demand in similar or other circumstances. Debtor
expressly waives notice of nonpayment, demand, presentment, protest or notice of protest in relation to the Obligations or the Collateral.  
 10.2 Notices. Any notice required to be given under this Agreement shall be given in writing, and shall be effective when actually delivered, when actually received by facsimile (unless otherwise
required by law), when deposited with a nationally recognized overnight courier, or, if mailed, when deposited in the United States mail, as first class, certified or registered mail postage prepaid, directed to the addresses shown near the
beginning of this Agreement. Any party may change its address for notices under this Agreement by giving formal written notice to the other parties, specifying that the purpose of the notice is to change the party’s address. For notice
purposes, Debtor agrees to keep Secured Party informed at all times of Debtor’s current address. Unless otherwise provided or required by law, if there is more than one Debtor, any notice given by Secured Party to any Debtor is deemed to be
notice given to all Debtors. 
 10.3 Governing Law. This Agreement will be governed by federal law applicable to Secured
Party and, to the extent not preempted by federal law, the laws of the State of New York without regard to its conflicts of law provisions. 
 10.4 Joint and Several; Successors and Assigns. If there is more than one Debtor, each of them shall be jointly and severally liable for all amounts, which become due, and the performance of all
obligations under this Agreement and the term “Debtor” shall include each as well as all of them. This Agreement shall be binding upon Debtor and upon its heirs and legal representatives, its successors and


  
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assignees, and shall inure to the benefit of, and be enforceable by, Secured Party, its successors and assignees and each direct or indirect assignee or other transferee of any of the
Obligations; provided, however, that this Agreement may not be assigned by Debtor without the prior written consent of Secured Party. 
 10.5 Entire Agreement; Waivers; Changes in Writing. This Agreement (including the Exhibits and Schedules thereto) supersedes, with respect to its subject matter, all prior and contemporaneous
agreements, understandings, inducements or conditions between Debtor and Secured Party, whether express or implied, oral or written. No course of dealing or other conduct, no oral agreement or representation made by Secured Party or usage of trade
shall operate as a waiver of any right or remedy of Secured Party. No waiver of any provision of this Agreement or consent to any departure by Debtor therefrom shall in any event be effective unless made specifically in writing by Secured Party and
then such waiver or consent shall be effective only in the specific instance and for the purpose for which given. No modification to any provision of this Agreement shall be effective unless made in writing in an agreement signed by Debtor and
Secured Party. 
 10.6 Interpretation; Severability of Provisions. Unless the context otherwise clearly requires,
references to plural includes the singular and references to the singular include the plural; the word “or” has the inclusive meaning represented by the phrase “and/or”; the word “including”, “includes” and
“include” shall be deemed to be followed by the words “without limitation”; and captions or section headings are solely for convenience and not part of the substance of this Agreement. Any representation, warranty, covenant or
agreement herein shall survive execution and delivery of this Agreement and shall be deemed continuous. Each provision of this Agreement shall be interpreted as consistent with existing law and shall be deemed amended to the extent necessary to
comply with any conflicting law. If any provision nevertheless is held invalid, the other provisions shall remain in effect. Debtor agrees that in any legal proceeding, a photocopy of this Agreement kept in Secured Party’s course of business
may be admitted into evidence as an original. The terms and language of this Agreement were the result of negotiations between the parties, and, as a result, there shall be no prescription that any ambiguities in this Agreement shall be resolved
against either party. Any controversy over the construction of this Agreement shall be decided mutually without regard to events of authorship or negotiation. 
 10.7 Waiver of Jury Trial. DEBTOR HEREBY KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVES ANY RIGHT TO TRIAL BY JURY DEBTOR MAY HAVE IN ANY ACTION OR PROCEEDING, IN LAW OR IN EQUITY, IN
CONNECTION WITH THIS AGREEMENT OR ANY TRANSACTIONS RELATED HERETO. DEBTOR REPRESENTS AND WARRANTS THAT NO REPRESENTATIVE OR AGENT OF SECURED PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SECURED PARTY WILL NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THIS JURY TRIAL WAIVER. 
 -balance of page left intentionally blank- 

  
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 IN WITNESS WHEREOF, Debtor caused this Agreement to be executed by its officers thereunto
duly authorized, as of the date first above written. 
  

			
	 Debtor:

	
	LEGEND OIL AND GAS, LTD.
		
	 By:
	 	 /s/ Marshall Diamond-Goldberg

	 Name:
	 	Marshall Diamond-Goldberg
	 Title:
	 	President



  
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 Exhibit A 
  

	1.	Permitted Liens (§3.1) 

  

	2.	Residence, principal place of business or chief executive office (§3.5(i)) 


 

	3.	Location of Books and Records (§3.5(ii)) 

  

	4.	Location of Inventory, Equipment, Fixtures, Crops or Timber (§3.5(iii) and §3.5(iv)) 


 

	5.	Locations Not Owned by Debtor and Name of Record Owner (§3.5) 

  

	6.	Trade Name, “Doing Business As” Name or Assumed Name (§3.6)