Document:

World Moto, Inc.: Exhibit 10.2 - Filed by newsfilecorp.com

WORLD MOTO, INC 

CONVERTIBLE DEBENTURE

	$105,000.00 	September 24, 2014 

THIS DEBENTURE HAS NOT BEEN REGISTERED PURSUANT TO THE
SECURITIES ACT OF 1933 (THE "ACT") OR ANY STATE SECURITIES LAW AND MAY NOT BE
SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AS TO THIS DEBENTURE OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED. 

THE PRINCIPAL SUM DUE TO LENDER SHALL BE PRORATED BASED ON THE
CONSIDERATION ACTUALLY PAID BY LENDER. THE ORIGINAL ISSUE DISCOUNT IS PRORATED
BASED ON THE CONSIDERATION ACTUALLY PAID BY THE LENDER AS WELL AS ANY OTHER
INTEREST OR FEES. THE BORROWER IS ONLY REQUIRED TO REPAY THE AMOUNT FUNDED PLUS
THE PRORATED ORIGINAL ISSUE DISCOUNT, ACCRUED INTEREST AND APPLICABLE FEES.

     FOR VALUE RECEIVED, the
undersigned, World Moto, Inc, a Nevada corporation (the "Company"), hereby
promises to pay to Macallan Partners, LLC (the "Lender"), or its registered
assigns, the principal sum of ONE HUNDRED FIVE THOUSAND dollars ($105,000.00)
(or so much thereof as shall have been advanced by the Lender to the Company
hereunder subject to an approximate Original Issue Discount of 4.76%, together
with interest (computed on the basis of a three hundred sixty (360) day year of
twelve (12) thirty (30) day months) on the unpaid principal balance of this
Debenture from the date of this Debenture until paid, at the rate of Eight
percent (8%) per annum. 

1. PAYMENT. 

     (a) Payments of the principal of
and interest on this Debenture shall be made in lawful money of the United
States of America at the current address of the registered holder of this
Debenture as recorded in the Company’s books.

     (b) Interest accruing on the
outstanding principal balance of this Debenture during the term of this
Debenture shall be paid at the Maturity Date, which shall be September 30, 2015.
Upon the occurrence of any Event of Default (as such term is defined
hereinafter) and acceleration of the indebtedness hereunder, or after the
Maturity Date (including without limitation any time from and after the entry of
a judgment for sums due), any unpaid principal of this Indenture shall bear
interest at the rate of eighteen percent (18%) per annum until paid. There shall
be a 10 day grace period for payments to be made hereunder (but interest shall
be computed to the actual date of payment).

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  (c) The outstanding principal balance of this Debenture, together with all accrued but unpaid interest thereon, may be prepaid, at the Company's option at any time prior to the Maturity Date, provided that the Company shall give written notice of
any such prepayment to the registered holder of this Debenture no later than ten (10) days prior to the date filed for prepayment (the “Prepayment Date”). Upon the Prepayment Date the Company shall pay a prepayment penalty on the
outstanding principal balance plus all accrued and unpaid interest thereon and any applicable fees and expenses. (the “Prepayment Penalty”). Upon the Prepayment Date the Company shall pay a prepayment penalty based upon the following
schedule: If prepayment is made within 60 days from the date of this debenture then 125% of the outstanding principal balance plus all accrued and unpaid interest thereon, if prepayment is made between 61-120 days from the date of this debenture
then 135% of the outstanding principal balance plus all accrued and unpaid interest thereon, if prepayment is made between 121 days from the date of this debenture and the maturity date then 150% of the outstanding principal balance plus all accrued
and unpaid interest thereon, (the “Prepayment”).

2. REGISTRATION AND TRANSFER. 

     (a) The Company shall maintain at its principal executive offices a register for this Debenture, in which the Company shall record the name and address of the person in whose name this Debenture has been issued and the
name and address of each transferee and prior owner thereof. The Company may deem and treat the person in whose name this Debenture is so registered as the holder and owner thereof for all purposes and all notices hereunder to the registered holder
may be to the address indicated on such register. 

     (b) This Debenture may be transferred only by the surrendering thereof for registration of transfer duly endorsed, or accompanied by a written instrument of transfer duly executed, by the registered holder. The Company
may condition its registration of such transfer upon (a) the opinion of counsel reasonably acceptable to the Company that the transfer of this Debenture does not violate the Act or any state securities or blue sky laws, and (b) the payment to it of
a sum sufficient to cover any stamp tax or other governmental charge imposed in respect of such transfer. 

3. COMMON STOCK CONVERSION RIGHTS AND SHARE RESERVATION
RIGHTS. 

     (a) The Lender has the right, at any time after the Effective Date, at its election, to convert all or part of the outstanding and unpaid Principal Sum and accrued interest (and any other fees) under any convertible
balance due by the Company, into fully paid and non-assessable shares of common stock of the Company as per this conversion formula: Number of shares receivable upon conversion equals the dollar conversion amount divided by the Conversion Price.
The Conversion price is equal to the lower of: 50% of the lowest traded price during the 20 trading days prior to the election to convert or 50% of the bid price on the day of the conversion notice. If conversion shares are not deliverable by
DWAC then an additional 5% discount will apply to the conversion price. If the shares are ineligible for deposit into the DTC system for any reason and only eligible for “X clearing” then an additional 10% discount will apply to the
conversion price. Notice of Lender’s conversion may
be delivered to Borrower by method of Lender’s choice (including but not limited to email, facsimile, mail, overnight courier, or personal delivery), and all conversions shall be cashless and not require further payment from the Lender. If no
objection is delivered from Borrower to Lender regarding calculations in the conversion notice within 24 hours of delivery of the conversion notice, the Company shall have been thereafter deemed to have irrevocably confirmed and irrevocably ratified
such conversion notice and waived any objection thereto. The Company shall deliver the shares from any conversion to Lender (in any name directed by Lender) within 2 (two) business days of conversion notice delivery. At no time will the lender
convert any amount of the debenture into common stock that would result in the lender owning more than 4.99% of the company’s common stock outstanding.

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     (a) The Borrower shall irrevocably place 35,000,000 shares of the Company’s common stock on reserve with the Company’s Transfer Agent to ensure that there are sufficient shares available for the
conversion of this Debenture. So long as any of the Notes are outstanding, the Company shall take all action necessary to reserve and keep available out of its authorized and unissued Common Stock, solely for the purpose of effecting the conversion
of the Notes, a number of shares of Common Stock equal to, at minimum, 4 times (4x) the value of the outstanding principal and interest of the note as shall from time to time be necessary to effect the conversion of all of the Notes then outstanding
(without regard to any limitations on conversions) (the “Required Reserve Amount”). 

     (b) Insufficient Authorized Shares. If, notwithstanding Section 3(b), and not in limitation thereof, at any time while any of the Notes remain outstanding the Company does not have a sufficient number of
authorized and unreserved shares of Common Stock to satisfy its obligation to reserve for issuance upon conversion of the Notes at least a number of shares of Common Stock equal to the Required Reserve Amount (an “Authorized Share
Failure”), then the Company shall immediately take all action necessary to increase the Company’s authorized shares of Common Stock to an amount sufficient to allow the Company to reserve the Required Reserve Amount for the Notes
then outstanding. Without limiting the generality of the foregoing sentence, as soon as practicable after the date of the occurrence of an Authorized Share Failure, but in no event later than twenty (20) days after the occurrence of such Authorized
Share Failure, the Company shall hold a meeting of its stockholders for the approval of an increase in the number of authorized shares of Common Stock. In connection with such meeting, the Company shall provide each stockholder with a proxy
statement and shall use its reasonable best efforts to solicit its stockholders’ approval of such increase in authorized shares of Common Stock and to cause its board of directors to recommend to the stockholders that they approve such
proposal.

     (c) In the event that the outstanding shares of the common stock subject to the conversion are changed into or exchanged for a different number or kind of shares of the Company or other securities of the Company by
reason of merger, consolidation, re-capitalization, re-classification, stock split, stock dividend or combination of shares, the Company shall make an appropriate and equitable adjustment in the number and kind of shares as to which the conversion
shall be applicable, to the end that after such event the Lender’s proportionate interest is preserved after the occurrence of such event.

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     (d) If Borrower fails to deliver shares in accordance with the timeframe stated this Section; the Lender, at any time prior to selling all of those shares, may rescind any portion, in whole or in part, of that
particular conversion attributable to the unsold shares and have the rescinded conversion amount returned to the Principal Sum with the rescinded conversion shares returned to the Company (under Lender’s and Borrower’s expectations that
any returned conversion amounts will tack back to the original date of this Debenture). In addition, for each conversion, in the event that shares are not delivered by the fourth business day (inclusive of the day of conversion), a penalty of
$2,000 per day will be assessed for each day after the third business day (inclusive of the day of the conversion) until share delivery is made; and such penalty will be added to the Principal Sum of this Debenture (under Lender’s and
Borrower’s expectations that any penalty amounts will tack back to the original date of this Debenture). 

4. ADJUSTMENT FOR CAPITAL CHANGES; MERGER OR
CONSOLIDATION; NON-DILUTION PROVISIONS. 

     (a) In the event of a stock dividend, stock split, recapitalization, combination, subdivision or other similar corporate change with respect to the capital stock of the Company, the Board of Directors of the Company
shall make an appropriate and proportional adjustment in the aggregate number of shares of Common Stock into which this Debenture is convertible and/or the Conversion Price per share of Common Stock. 

     (b) If any merger or consolidation of the Company or the sale of all or substantially all of its assets shall occur, then, as a condition to such merger, consolidation or sale, lawful and adequate provision shall be
made whereby the registered holder of this Debenture shall thereafter have the right to receive upon the basis and upon the terms and conditions specified herein (including without limitation payment of the applicable Conversion Price) and in lieu
of the shares of Common Stock of the Company immediately theretofore receivable upon conversion of this Debenture, such shares of stock, securities or assets as may be issued or payable with respect to or in exchange for such shares of Common Stock
immediately theretofore receivable by such holder had such merger or consolidation not taken place.  The Company shall not effect any such consolidation or merger, unless prior to or simultaneously with the consummation thereof, the successor (if
other than the Company) resulting from such consolidation or merger shall assume, by written instrument executed and delivered to the holder, the obligation to deliver to the holder such shares of stock, securities or assets as, in accordance with
the foregoing provisions, the holder may be entitled to receive.

     (c) The Conversion Price shall be subject to automatic adjustment from time to time as follows: 

(1) If the Company shall at any time or from time to time hereafter issue (an “Issuance”) any Common Stock,
options or other securities of the Company convertible into or exchangeable for Common Stock without consideration or for a consideration per share less than the Conversion Price then in effect for this Debenture
immediately prior to such issuance, the Conversion Price shall forthwith be adjusted to a price equal to: 

(i) an amount equal to the sum of: 

(A) (i) The total number of shares of Common Stock  outstanding immediately prior to such Issuance, plus the
maximum amount of all additional Common Stock issuable upon conversion of this Debenture, multiplied by (ii) the Conversion Price in effect immediately prior to such Issuance, and 

(B)  the aggregate consideration received or receivable by the
Company on account of the Issuance, divided by 

(ii) the total number of shares of Common Stock outstanding immediately after the Issuance (including for such purpose the maximum amount of additional Common Stock issuable upon conversion of
this Debenture plus the maximum amount of Common Stock issued or issuable pursuant to the Issuance). 

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     For purposes of the above calculations, the number of shares of Common Stock outstanding immediately prior to the Issuance shall not include any additional Common Stock issuable solely as a result of the adjustment of
the Conversion Price resulting from the application of the foregoing provisions.

     (2) For the purposes of any adjustment of the Conversion Price as set forth above: (i) In the case of the issuance of Common Stock for cash, the consideration shall be deemed to be the amount of cash paid therefor. 

(ii) In the case of the issuance of Common Stock for a consideration in whole or in part other than cash, the consideration other than cash shall be deemed to be the fair market value thereof, as determined in good faith by the Board of Directors.

  (d) In the event of the occurrence of any event or transaction not specifically provided for herein that would equitably require an adjustment to the Conversion Price to remain consistent with the anti-dilution intent and purpose of this Article,
then the Board of Directors of the Company shall make such adjustment to the Conversion Price as they shall deem reasonable and consistent with the intentions and purposes of this Article. 

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     (e)  Upon any adjustment of the Conversion Price, the Company shall give written notice to the registered holder of this Debenture, which notice shall state the Conversion Price resulting from such adjustment, setting
forth in reasonable detail the method of calculation and the facts upon which such calculation is based. 

     (f)  The Company will at all times reserve and keep available out of its authorized Common Stock, for the purpose of issuance upon conversion of this Debenture as herein provided, the maximum number of shares of Common
Stock as shall then be issuable upon the exercise of the conversion privileges set forth herein. The Company covenants that all shares which shall be so issuable shall, upon the conversion of this Debenture as herein provided, be duly and validly
issued and fully paid and nonassessable by the Company. 

5. EVENTS OF DEFAULT. 

     (a) If one or more of the following events of default shall occur (an “Event of Default”):    (i) the Company shall fail to pay any principal under this Debenture when due and payable (or payable by
conversion) thereunder; or

   (ii) the Company shall fail to pay any interest or any other amount under this Debenture when due and payable (or payable by conversion) thereunder; or

   (iii) a receiver, trustee or other similar official shall be appointed over the Company or a material part of its assets and such appointment shall remain uncontested for twenty (20) days or shall not be dismissed or discharged within sixty (60)
days; or

   (iv) the Company shall become insolvent or generally fails to pay, or admits in writing its inability to pay, its debts as they become due, subject to applicable grace periods, if any; or

   (v) the Company shall make a general assignment for the benefit of creditors; or

   (vi) the Company shall file a petition for relief under any bankruptcy, insolvency or similar law (domestic or foreign); or

   (vii) an involuntary insolvency proceeding shall be commenced or filed against the Company; or

   (viii) the Company shall lose its status as “DTC Eligible” or the Company’s shareholders shall lose the ability to deposit (either electronically or by physical certificates, or otherwise) shares into the DTC System; or the
shares of the Company no longer allow for DWAC transfer for the shares; or

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   (ix) the Company shall become delinquent in its filing requirements as a fully-reporting issuer registered with the SEC,

(x) the company shall fail to maintain sufficient common shares authorized and available to satisfy the lender’s conversions for as long as this debenture remains unpaid in whole or in part. 

then during the
continuance of any such Event of Default, the registered holder of this Debenture may declare by written notice all the then unpaid principal amount of this Debenture to be due and payable as if a Prepayment Penalty was to be enforced, upon which
the same shall forthwith become due and payable, together with the interest accrued thereon, without presentation, demand, protest or notice of dishonor, all of which the Company hereby waives. In the event of any default, the outstanding principal
amount of this Debenture, plus accrued but unpaid interest, liquidated damages, fees and other amounts owing in respect thereof shall be accelerated and shall become, at the Lender’s election, immediately due and payable in cash at the
Mandatory Default Amount. The Mandatory Default Amount means the greater of (i) the outstanding principal amount of this Debenture, plus all accrued and unpaid interest, liquidated damages, fees and other amounts hereon, divided by the Conversion
Price on the date the Mandatory Default Amount is either demanded or paid in full, whichever has a lower Conversion Price, multiplied by the VWAP (volume weighted average price) on the date the Mandatory Default Amount is either demanded or paid in
full, whichever has a higher VWAP, or (ii) 150% of the outstanding principal amount of this Debenture, plus 100% of the accrued and unpaid interest, liquidated damages, fees and other amounts hereon. Commencing five (5) days after the occurrence of
any event of default that results in the acceleration of this Debenture, a default interest rate shall be applicable to all borrowings. The default interest rate shall accrue at an interest rate equal to the lesser of 18% per annum or the maximum
rate permitted under applicable law. In connection with such acceleration described herein, the Lender need not provide, and the Company hereby waives, any presentment, demand, protest or other notice of any kind, and the Lender may immediately and
without expiration of any grace period enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable law. Such acceleration may be rescinded and annulled by Lender at any time prior to payment
hereunder and the Lender shall have all rights as a holder of the note until such time, if any, as the Lender receives full payment pursuant to this Section 10. No such rescission or annulment shall affect any subsequent event of default or impair
any right consequent thereon. Nothing herein shall limit Lender’s right to pursue any other remedies available to it at law or in equity including, without limitation, a decree of specific performance and/or injunctive relief with respect to
the Company’s failure to timely deliver certificates representing shares of Common Stock upon conversion of this Debenture as required pursuant to the terms hereof. 

     (b) Should the indebtedness represented by this Debenture or any part thereof be collected in any proceeding or placed in the hands of attorneys for collection, the Company agrees to pay, in addition to the principal
and interest due and payable hereon, all costs of collecting this Debenture, including reasonable attorneys' fees and expenses. 

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6. MISCELLANEOUS. 

     (a) If the date of any payment required by this Debenture be Saturday, Sunday or a bank holiday, such payment shall be payable on the first business day following such date. 

     (b) The Company hereby expressly waives presentment, demand, protest or any other notice whatsoever. 

       
  (c) Borrower shall have the right to enter into secured or unsecured borrowings from commercial banks and comparable commercial credit institutions for the purpose of financing inventory and fixed assets, upon approval of the Board of Directors of
the Company (“Permitted Borrowings”). Permitted Borrowings shall not require the prior approval of the Lender.  All other borrowings by the Company shall be subject to the prior written approval of the Lender. 

      (d)  This Debenture shall be binding upon and shall inure to the benefit of the parties hereto, their successors, heirs and assigns. 

      (e) The invalidity or partial invalidity of any provision of this Debenture shall affect only such provision or part thereof and the balance of this Debenture shall remain in effect. 

      (f) It is understood and agreed that no failure or delay in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any right, power or privilege hereunder. 

7.  CHOICE OF LAW & VENUE 

     (a)  All questions concerning the construction, validity, enforcement and interpretation of this Debenture shall be governed by and construed and enforced in accordance with the internal laws of the State of Delaware,
without regard to the principles of conflicts of law thereof. Any claim or controversy arising out of or relating to the interpretation, application or enforcement of any provision of this Agreement, shall be submitted for resolution to a court of
competent jurisdiction in New York. The parties hereby consent to personal jurisdiction and venue in New York. 

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     IN WITNESS WHEREOF, the Company
has caused this Debenture to be executed, sealed and delivered on the date first
above written. 

	 	World Moto, Inc 
	 	  
	 	By:
  
	 	       Name: Paul Giles
  
	 	       Title: CEO 
	 	  
	 	Macallan Partners LLC. 
	 	  
	 	By:
  
	 	       Name: Adam Didia
  
	 	       Title: Member
  

9Legend Oil and Gas, Ltd. 8-K

 

Exhibit 4.1

 

Original Issue Date: November 13, 2014

 

$6,060,000.00

 

8.5%
SENIOR SECURED DEBENTURE

DUE
March 1, 2016

 

THIS 8.5% SENIOR SECURED
DEBENTURE is one of a series of duly authorized and validly issued 8.5% Senior Secured Debentures of LEGEND OIL AND GAS, LTD.,
a Colorado corporation (the “Company”), having its principal place of business at 555 North Point Center East,
Suite 400, Alpharetta, Georgia 30022, designated as its 8.5% Senior Secured Debentures due March 1, 2016 (the “Debenture”
and, collectively with the other debentures of such series, if any, the “Debentures”). The Company has issued
this Debenture to the Holder in exchange for the Existing Debentures held by the Holder and the payment of additional cash consideration.

 

FOR VALUE RECEIVED, the
Company promises to pay to HILLAIR CAPITAL INVESTMENTS L.P. or its registered assigns (the “Holder”), or shall
have paid pursuant to the terms hereunder, the principal sum of $6,060,000.00 on March 1, 2016 (the “Maturity Date”)
or such earlier date as this Debenture is required or permitted to be repaid as provided hereunder, and to pay interest to the
Holder on the aggregate then outstanding principal amount of this Debenture in accordance with the provisions hereof. This Debenture
is subject to the following additional provisions:

 

Section 1.        Definitions.
For the purposes hereof, in addition to the terms defined elsewhere in this Debenture or in the Purchase Agreement or the Transaction
Documents (as defined in the Purchase Agreement), the following terms shall have the following meanings:

 

“Amended
Mortgages” means the Amended Mortgages as defined in the Purchase Agreement.

 

“Bankruptcy
Event” means any of the following events: (a) the Company or any Subsidiary thereof commences a case or other proceeding
under any bankruptcy, reorganization, arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or liquidation
or similar law of any jurisdiction relating to the Company or any Subsidiary thereof, (b) there is commenced against the Company
or any Subsidiary thereof any such case or proceeding that is not dismissed within 60 days after commencement, (c) the Company
or any Subsidiary thereof is adjudicated insolvent or bankrupt or any order of relief or other order approving any such case or
proceeding is entered, (d) the Company or any Subsidiary thereof suffers any appointment of any custodian or the like for it or
any substantial part of its property that is not discharged or stayed within 60 calendar days after such appointment, (e) the Company
or any Subsidiary thereof makes a general assignment for the benefit of creditors, (f) the Company or any Subsidiary thereof calls
a meeting of its creditors with a view to arranging a composition, adjustment or restructuring of its debts or (g) the Company
or any Subsidiary thereof, by any act or failure to act, expressly indicates its consent to, approval of or acquiescence in any
of the foregoing or takes any corporate or other action for the purpose of effecting any of the foregoing.

 

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“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.

 

“Change
of Control Transaction” means the occurrence after the date hereof of any of (a) an acquisition after the date hereof
by an individual or legal entity or “group” (as described in Rule 13d-5(b)(1) promulgated under the Exchange Act) of
effective control (whether through legal or beneficial ownership of capital stock of the Company, by contract or otherwise) of
in excess of 33% of the voting securities of the Company, (b) the Company merges into or consolidates with any other Person, or
any Person merges into or consolidates with the Company and, after giving effect to such transaction, the stockholders of the Company
immediately prior to such transaction own less than 66% of the aggregate voting power of the Company or the successor entity of
such transaction, (c) the Company sells or transfers all or substantially all of its assets to another Person and the stockholders
of the Company immediately prior to such transaction own less than 66% of the aggregate voting power of the acquiring entity immediately
after the transaction, (d) a replacement at one time or within a three year period of more than one-half of the members of the
Board of Directors which is not approved by a majority of those individuals who are members of the Board of Directors on the Original
Issue Date (or by those individuals who are serving as members of the Board of Directors on any date whose nomination to the Board
of Directors was approved by a majority of the members of the Board of Directors who are members on the date hereof), or (e) the
execution by the Company of an agreement to which the Company is a party or by which it is bound, providing for any of the events
set forth in clauses (a) through (d) above.

 

“Event
of Default” shall have the meaning set forth in Section 6(a).

 

“Existing
Mortgages” means (1) the Mortgage, Security Agreement and Financing Statement, dated July 10, 2013, between the Company
and the Purchasers in which the Company granted a lien in certain oil and gas mining leases and leasehold estates in Kansas to
the Purchasers as described therein, which mortgage has been filed in the Register of Deeds of Woodson County in Kansas on July
11, 2013 and recorded in Book M115 at Page 89, (2) the Mortgage, Security Agreement and Financing Statement, dated November 26,
2013, between the Company and the Purchasers in which the Company granted a lien in certain oil and gas mining leases and leasehold
estates in Kansas to the Purchasers as described therein, as such may have been amended from time to time, which mortgage has been
filed in the Register of Deeds in Crawford County in Kansas on December 2, 2013 and recorded in Book 0612 at Page 0023, (3) the
New and Amended Mortgage, Security Agreement and Financing Statement, dated May 29, 2014, pursuant to which the Company conveyed
a mortgage to the Creditor (as defined therein) on certain leases and leasehold estates in Kansas, which mortgage has been filed
in the Register of Deeds in Woodson County in Kansas on June 5, 2014 and recorded in Book M117 at Page 97 and the Register of Deeds
in Crawford County in Kansas and recorded at Book 0614 at Page 0277, and (4) Mortgage, Fixture Filing, Assignment of As-Extracted
Collateral, Security Agreement and Financing Statement, dated as of September 4, 2014, pursuant to which the Company conveyed a
mortgage to the Lender (as defined therein) on certain leases and leasehold estates in Kansas, which mortgage has been filed in
the Register of Deeds in Wilson County in Kansas on October 20, 2014 and recorded in Book 374 at Page 712.

 

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“Existing
Security Agreements” means (i) the Security Agreement, dated as of July 10, 2013, by and between the Company and the
Purchasers and (ii) the Security Agreement, dated as of November 26, 2013, by and between the Company and the Purchasers, pursuant
to which the Company granted security interests in certain property including, without limitation, personal property, as-extracted
collateral and proceeds thereof to the Purchasers as further described therein.

 

“Indebtedness”
means, with respect to the Company, (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.

 

“Mandatory
Default Amount” means the sum of (a) 130% of the outstanding principal amount of this Debenture, (b) 100% of accrued
and unpaid interest hereon, and (c) all other amounts, costs, expenses and liquidated damages due in respect of this Debenture.

 

“Mortgages”
means, collectively, the Existing Mortgages and the Amended Mortgages.

 

“New
York Courts” shall have the meaning set forth in Section 8(d).

 

“Optional
Redemption” shall have the meaning set forth in Section 4.

 

“Optional
Redemption Amount” means the sum of (a) 120% of the then outstanding principal amount of the Debenture, (b) accrued but
unpaid interest on the Debenture and (c) all liquidated damages and other amounts due in respect of the Debenture.

 

“Optional
Redemption Date” shall have the meaning set forth in Section 4.

 

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“Optional
Redemption Notice” shall have the meaning set forth in Section 4.

 

“Optional
Redemption Notice Date” shall have the meaning set forth in Section 4.

 

“Original
Issue Date” means the date of the first issuance of the Debentures, regardless of any transfers of any Debenture and
regardless of the number of instruments which may be issued to evidence such Debentures.

 

“Permitted
Indebtedness” means (a) the indebtedness evidenced by the Debentures, (b) the Indebtedness existing on the Original Issue
Date, and (c) lease obligations and purchase money indebtedness of up to $100,000, in the aggregate, incurred in connection with
the acquisition of capital assets and lease obligations with respect to newly acquired or leased assets.

 

“Permitted
Lien” means the individual and collective reference to the following: (a) Liens for taxes, assessments and other governmental
charges or levies not yet due or Liens for taxes, assessments and other governmental charges or levies being contested in good
faith and by appropriate proceedings for which adequate reserves (in the good faith judgment of the management of the Company)
have been established in accordance with GAAP, (b) Liens imposed by law which were incurred in the ordinary course of the Company’s
business, such as carriers’, warehousemen’s and mechanics’ Liens, statutory landlords’ Liens, and other
similar Liens arising in the ordinary course of the Company’s business, and which (x) do not individually or in the aggregate
materially detract from the value of such property or assets or materially impair the use thereof in the operation of the business
of the Company and its consolidated Subsidiaries or (y) are being contested in good faith by appropriate proceedings, which proceedings
have the effect of preventing for the foreseeable future the forfeiture or sale of the property or asset subject to such Lien,
and (c) Liens incurred in connection with Permitted Indebtedness under clause (c) thereunder, provided that such Liens are not
secured by assets of the Company or its Subsidiaries other than the assets so acquired or leased.

 

“Purchase
Agreement” means the Securities Purchase and Exchange Agreement, dated as of November 13, 2014, between the Company and
the Holder.

 

“Security
Documents” means (i) the Existing Security Agreements and (ii) the Mortgages.

 

“Transaction
Documents” means the Purchase Agreement, this Debenture, the Existing Security Agreements, the Existing Mortgages, the
Amended Mortgages, the Certificate of Designation, and all documents executed in connection therewith and herewith.

 

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Section 2.        Interest.

 

a)       Payment
of Interest. The Company shall pay interest to the Holder on the aggregate then outstanding principal amount of this Debenture
at the rate of 8.5% per annum, payable quarterly on March 1, June 1, September 1 and December 1, beginning on June 1, 2015, on
each Optional Redemption Date (as to that principal amount then being optionally redeemed) and on the Maturity Date (each such
date, an “Interest Payment Date”) (if any Interest Payment Date is not a Business Day, then the applicable payment
shall be due on the next succeeding Business Day), in cash.

 

b)       Interest
Calculations. Interest shall be calculated on the basis of a 360-day year, consisting of twelve 30 calendar day periods, and
shall accrue daily commencing on the Original Issue Date until payment in full of the outstanding principal, together with all
accrued and unpaid interest, and other amounts which may become due hereunder, has been made.

 

c)       Late
Fee. All overdue accrued and unpaid interest to be paid hereunder shall entail a late fee at an interest rate equal to the
lesser of 18% per annum or the maximum rate permitted by applicable law (the “Late Fees”) which shall accrue
daily from the date such interest is due hereunder through and including the date of actual payment in full.

 

d)       Prepayment.
Except as otherwise set forth in this Debenture, the Company may not prepay any portion of the principal amount of this Debenture
without the prior written consent of the Holder.

 

Section 3.        Registration
of Transfers and Exchanges. This Debenture is exchangeable for an equal aggregate principal amount of Debentures of different
authorized denominations, as requested by the Holder surrendering the same. No service charge will be payable for such registration
of transfer or exchange.

 

Section
4.        Optional Redemption at Election of Company. Subject to the
provisions of this Section 4, the Company may deliver a notice to the Holder (an “Optional Redemption
Notice” and the date such notice is deemed delivered hereunder, the “Optional Redemption Notice
Date”) of its irrevocable election to redeem some or all of the then outstanding principal amount of this Debenture
for cash in an amount equal to the Optional Redemption Amount on the 10th Business Day following the Optional Redemption
Notice Date (such date, the “Optional Redemption Date” and such redemption, the
“Optional Redemption”). The Optional Redemption Amount is payable in full on the Optional Redemption Date.
The Company may not deliver an Optional Redemption Notice if there is an existing Event of Default or an existing event
which, with the passage of time or giving of notice, would constitute an Event of Default. If any portion of the payment
pursuant to an Optional Redemption shall not be paid by the Company on the applicable due date, interest shall accrue thereon
at an interest rate equal to the lesser of 18% per annum or the maximum rate permitted by applicable law until such amount is
paid in full. Notwithstanding anything herein contained to the contrary, if any portion of the Optional Redemption Amount
remains unpaid after such date, the Holder may elect, by written notice to the Company given at any time thereafter,
to invalidate such Optional Redemption, ab initio, and, with respect to the Company’s failure to honor the
Optional Redemption, the Company shall have no further right to exercise such Optional Redemption.

 

    	5

    	 

    

 

Section 5.        Negative
Covenants. As long as any portion of this Debenture remains outstanding, unless the holders of 100% in principal amount of
the then outstanding Debentures shall have otherwise given prior written consent, the Company shall not, and shall not permit any
of the Subsidiaries to, directly or indirectly:

 

a)       other than
Permitted Indebtedness, enter into, create, incur, assume, guarantee or suffer to exist any indebtedness for borrowed money of
any kind, including, but not limited to, a guarantee, on or with respect to any of its property or assets now owned or hereafter
acquired or any interest therein or any income or profits therefrom;

 

b)       other than
Permitted Liens, enter into, create, incur, assume or suffer to exist any Liens of any kind, on or with respect to any of its property
or assets now owned or hereafter acquired or any interest therein or any income or profits therefrom;

 

c)       amend its
charter documents, including, without limitation, its certificate of incorporation and bylaws, in any manner that materially and
adversely affects any rights of the Holder;

 

d)       repay,
repurchase or offer to repay, repurchase or otherwise acquire more than a de minimis number of shares of its Common
Stock or Common Stock Equivalents other than as to repurchases of Common Stock or Common Stock Equivalents of departing officers
and directors of the Company, provided that such repurchases shall not exceed an aggregate of $10,000 for all officers and directors
during the term of this Debenture;

 

e)       repay,
repurchase or offer to repay, repurchase or otherwise acquire any Indebtedness, other than the Debentures if on a pro-rata basis;

 

f)       pay cash
dividends or distributions on any equity securities of the Company;

 

g)      enter into
any transaction with any Affiliate of the Company which would be required to be disclosed in any public filing with the Commission,
unless such transaction is made on an arm’s-length basis and expressly approved by a majority of the disinterested directors
of the Company (even if less than a quorum otherwise required for board approval); or

 

h)      enter into
any agreement with respect to any of the foregoing.

 

    	6

    	 

    

 

                Section 6.         Events of Default.

 

a)         “Event
of Default” means, wherever used herein, any of the following events (whatever the reason for such event and whether
such event shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any
court, or any order, rule or regulation of any administrative or governmental body):

 

i.        any default
in the payment of (A) the principal amount of any Debenture or (B) interest, liquidated damages and other amounts owing to a Holder
on any Debenture, as and when the same shall become due and payable (whether on an Optional Redemption Date, the Maturity Date
or by acceleration or otherwise) which default, solely in the case of an interest payment or other default under clause (B) above,
is not cured within 3 Business Days;

 

ii.       the Company
shall fail to observe or perform any other covenant or agreement contained in the Debentures which failure is not cured, if possible
to cure, within the earlier to occur of (A) 5 Business Days after notice of such failure sent by the Holder or by any other Holder
to the Company or (B) 10 Business Days after the Company has become or should have become aware of such failure;

 

iii.      a default
or event of default (subject to any grace or cure period provided in the applicable agreement, document or instrument) shall occur
under (A) any of the Transaction Documents or (B) any other material agreement, lease, document or instrument to which the Company
or any Subsidiary is obligated (and not covered by clause (vi) below);

 

iv.      any representation
or warranty made in this Debenture, any Transaction Documents, any written statement pursuant hereto or thereto or any other report,
financial statement or certificate made or delivered to the Holder or any other Holder shall be untrue or incorrect in any material
respect as of the date when made or deemed made;

 

v.       the Company
or any Subsidiary shall be subject to a Bankruptcy Event;

 

vi.      the Company
or any Subsidiary shall default on any of its obligations under any mortgage, credit agreement or other facility, indenture agreement,
factoring agreement or other instrument under which there may be issued, or by which there may be secured or evidenced, any indebtedness
for borrowed money or money due under any long term leasing or factoring arrangement that (a) involves an obligation greater than
$150,000, whether such indebtedness now exists or shall hereafter be created, and (b) results in such indebtedness becoming or
being declared due and payable prior to the date on which it would otherwise become due and payable;

 

    	7

    	 

    

 

vii.      the Agreement,
dated on or about May 20, 2014, between the Company and Northpoint Energy Partners LLC (“Northpoint”) with respect
to the retention of Northpoint’s officer, Andrew Reckles, as Chief Restructuring Officer, is not in full force and effect
or Andy Reckles shall not continue to serve as Chief Restructuring Officer;

 

viii.     the Company
shall be a party to any Change of Control Transaction or shall agree to sell or dispose of all or in excess of 33% of its assets
in one transaction or a series of related transactions (whether or not such sale would constitute a Change of Control Transaction);
or

 

ix.        any monetary
judgment, writ or similar final process shall be entered or filed against the Company, any subsidiary or any of their respective
property or other assets for more than $50,000, and such judgment, writ or similar final process shall remain unvacated, unbonded
or unstayed for a period of 45 calendar days.

 

b)          Remedies
Upon Event of Default. If any Event of Default occurs, the outstanding principal amount of this Debenture, plus accrued but
unpaid interest, liquidated damages and other amounts owing in respect thereof through the date of acceleration, shall become,
at the Holder’s election, immediately due and payable in cash at the Mandatory Default Amount. Commencing 5 days after the
occurrence of any Event of Default that results in the eventual acceleration of this Debenture, the interest rate on this Debenture
shall accrue at an interest rate equal to the lesser of 18% per annum or the maximum rate permitted under applicable law. Upon
the payment in full of the Mandatory Default Amount, the Holder shall promptly surrender this Debenture to or as directed by the
Company. In connection with such acceleration described herein, the Holder need not provide, and the Company hereby waives, any
presentment, demand, protest or other notice of any kind, and the Holder may immediately and without expiration of any grace period
enforce any and all of its rights and remedies hereunder and all other remedies available to it under applicable law. Such acceleration
may be rescinded and annulled by Holder at any time prior to payment hereunder and the Holder shall have all rights as a holder
of the Debenture until such time, if any, as the Holder receives full payment pursuant to this Section 6(b). No such rescission
or annulment shall affect any subsequent Event of Default or impair any right consequent thereon.

 

    	8

    	 

    

 

                Section 7.       Miscellaneous.

 

a)       Notices.
Any and all notices or other communications or deliveries to be provided by the Holder hereunder, shall be in writing and delivered
personally, by facsimile, or sent by a nationally recognized overnight courier service, addressed to the Company, at the address
set forth above, or such other facsimile number or address as the Company may specify for such purposes by notice to the Holder
delivered in accordance with this Section 7(a). Any and all notices or other communications or deliveries to be provided by the
Company hereunder shall be in writing and delivered personally, by facsimile, or sent by a nationally recognized overnight courier
service addressed to each Holder at the facsimile number, e-mail address or address of the Holder appearing on the books of the
Company, or if no such facsimile number or e-mail address or address appears on the books of the Company, at the principal place
of business of such Holder, as set forth in the Purchase Agreement. Any notice or other communication or deliveries hereunder shall
be deemed given and effective on the earliest of (i) the date of transmission, if such notice or communication is delivered via
facsimile or e-mail at the facsimile number or e-mail address set forth on the signature pages attached hereto prior to 5:30 p.m.
(New York City time) on any date, (ii) the next Business Day after the date of transmission, if such notice or communication is
delivered via facsimile or e-mail at the facsimile number or e-mail address set forth on the signature pages attached hereto on
a day that is not a Business Day or later than 5:30 p.m. (New York City time) on any Business Day, (iii) the second Business Day
following the date of mailing, if sent by U.S. nationally recognized overnight courier service or (iv) upon actual receipt by the
party to whom such notice is required to be given.

 

b)       Absolute
Obligation. Except as expressly provided herein, no provision of this Debenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of, liquidated damages and accrued interest, as applicable,
on this Debenture at the time, place, and rate, and in the coin or currency, herein prescribed. This Debenture is a direct debt
obligation of the Company. This Debenture ranks pari passu with all other Debentures now or hereafter issued under
the terms set forth herein.        

 

c)       Lost
or Mutilated Debenture. If this Debenture shall be mutilated, lost, stolen or destroyed, the Company shall execute and deliver,
in exchange and substitution for and upon cancellation of a mutilated Debenture, or in lieu of or in substitution for a lost, stolen
or destroyed Debenture, a new Debenture for the principal amount of this Debenture so mutilated, lost, stolen or destroyed, but
only upon receipt of evidence of such loss, theft or destruction of such Debenture, and of the ownership hereof, reasonably satisfactory
to the Company.

 

    	9

    	 

    

 

d)       Governing
Law. All questions concerning the construction, validity, enforcement and interpretation of this Debenture shall be governed
by and construed and enforced in accordance with the internal laws of the State of New York, without regard to the principles of
conflict of laws thereof. Each party agrees that all legal proceedings concerning the interpretation, enforcement and defense of
the transactions contemplated hereby (whether brought against a party hereto or its respective Affiliates, directors, officers,
shareholders, employees or agents) shall be commenced in the state and federal courts sitting in the City of New York, Borough
of Manhattan (the “New York Courts”). Each party hereto hereby irrevocably submits to the exclusive jurisdiction
of the New York Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated
hereby or discussed herein (including with respect to the enforcement of this Debenture, and hereby irrevocably waives, and agrees
not to assert in any suit, action or proceeding, any claim that it is not personally subject to the jurisdiction of such New York
Courts, or such New York Courts are improper or inconvenient venue for such proceeding. Each party hereby irrevocably waives personal
service of process and consents to process being served in any such suit, action or proceeding by mailing a copy thereof via registered
or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under
this Debenture and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by applicable law.
Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury
in any legal proceeding arising out of or relating to this Debenture or the transactions contemplated hereby. If any party shall
commence an action or proceeding to enforce any provisions of this Debenture, then the prevailing party in such action or proceeding
shall be reimbursed by the other party for its attorneys’ fees and other costs and expenses incurred in the investigation,
preparation and prosecution of such action or proceeding.

 

e)       Waiver.
Any waiver by the Company or the Holder of a breach of any provision of this Debenture shall not operate as or be construed to
be a waiver of any other breach of such provision or of any breach of any other provision of this Debenture. The failure of the
Company or the Holder to insist upon strict adherence to any term of this Debenture on one or more occasions shall not be considered
a waiver or deprive that party of the right thereafter to insist upon strict adherence to that term or any other term of this Debenture
on any other occasion. Any waiver by the Company or the Holder must be in writing.

 

f)       Severability.
If any provision of this Debenture is invalid, illegal or unenforceable, the balance of this Debenture shall remain in effect,
and if any provision is inapplicable to any Person or circumstance, it shall nevertheless remain applicable to all other Persons
and circumstances. If it shall be found that any interest or other amount deemed interest due hereunder violates the applicable
law governing usury, the applicable rate of interest due hereunder shall automatically be lowered to equal the maximum rate of
interest permitted under applicable law. The Company covenants (to the extent that it may lawfully do so) that it shall not at
any time insist upon, plead, or in any manner whatsoever claim or take the benefit or advantage of, any stay, extension or usury
law or other law which would prohibit or forgive the Company from paying all or any portion of the principal of or interest on
this Debenture as contemplated herein, wherever enacted, now or at any time hereafter in force, or which may affect the covenants
or the performance of this Debenture, and the Company (to the extent it may lawfully do so) hereby expressly waives all benefits
or advantage of any such law, and covenants that it will not, by resort to any such law, hinder, delay or impede the execution
of any power herein granted to the Holder, but will suffer and permit the execution of every such as though no such law has been
enacted.

 

    	10

    	 

    

 

g)       Remedies,
Characterizations, Other Obligations, Breaches and Injunctive Relief. The remedies provided in this Debenture shall be cumulative
and in addition to all other remedies available under this Debenture and any of the other Transaction Documents at law or in equity
(including a decree of specific performance and/or other injunctive relief), and nothing herein shall limit the Holder’s
right to pursue actual and consequential damages for any failure by the Company to comply with the terms of this Debenture. The
Company covenants to the Holder that there shall be no characterization concerning this instrument other than as expressly provided
herein. Amounts set forth or provided for herein with respect to payments and the like (and the computation thereof) shall be the
amounts to be received by the Holder and shall not, except as expressly provided herein, be subject to any other obligation of
the Company (or the performance thereof). The Company acknowledges that a breach by it of its obligations hereunder will cause
irreparable harm to the Holder and that the remedy at law for any such breach may be inadequate. The Company therefore agrees that,
in the event of any such breach or threatened breach, the Holder shall be entitled, in addition to all other available remedies,
to an injunction restraining any such breach or any such threatened breach, without the necessity of showing economic loss and
without any bond or other security being required. The Company shall provide all information and documentation to the Holder that
is requested by the Holder to enable the Holder to confirm the Company’s compliance with the terms and conditions of this
Debenture.

 

h)       Due
Authorization. This Debenture has been duly authorized, executed and delivered by the Company and is the legal obligation of
the Company, enforceable against the Company in accordance with its terms. No consent of any other party and no consent, license,
approval or authorization of, or registration or declaration with, any governmental authority, bureau or agency is required in
connection with the execution, delivery or performance by the Company, or the validity or enforceability of this Debenture other
than such as have been met or obtained. The execution, delivery and performance of this Debenture and all other agreements and
instruments executed and delivered or to be executed and delivered pursuant hereto or thereto will not violate any provision of
any existing law or regulation or any order or decree of any court, regulatory body or administrative agency or the certificate
of incorporation or by-laws of the Company or any mortgage, indenture, contract or other agreement to which the Company is a party
or by which the Company or any property or assets of the Company may be bound.

 

i)        Next
Business Day. Whenever any payment or other obligation hereunder shall be due on a day other than a Business Day, such payment
shall be made on the next succeeding Business Day.

 

j)        Headings.
The headings contained herein are for convenience only, do not constitute a part of this Debenture and shall not be deemed to limit
or affect any of the provisions hereof.

 

k)       Secured
Obligation. The obligations of the Company under this Debenture are secured by all assets of the Company and certain real property,
fixtures and other property of the Company pursuant to the Security Documents.

 

*********************

 

(Signature Page Follows)

 

    	11

    	 

    

 

IN WITNESS WHEREOF, the
Company has caused this Debenture to be duly executed by a duly authorized officer as of the date first above indicated.

 

	 	LEGEND OIL and GAS, LTD.    
	 	 
	 	By:	 
	 	 	Name:
	 	 	Title:
	 	 	 
	 	Facsimile No. for delivery of Notices: _________________
	 	 
	 	E-mail Address for delivery of Notice: _________________

 

12

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