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Exhibit 10.7

THIS NOTE, AND THE SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THIS NOTE
(THE “SECURITIES”) HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY AND MAY NOT
BE TRANSFERRED UNTIL (I) A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE “ACT” OR THE “SECURITIES ACT”) SHALL HAVE BECOME EFFECTIVE
WITH RESPECT THERETO OR (II) RECEIPT BY THE COMPANY OF AN OPINION OF COUNSEL
REASONABLY SATISFACTORY TO THE COMPANY TO THE EFFECT THAT REGISTRATION UNDER THE
ACT IS NOT REQUIRED IN CONNECTION WITH SUCH PROPOSED TRANSFER NOR IS IN
VIOLATION OF ANY APPLICABLE STATE SECURITIES LAWS. THIS LEGEND SHALL BE ENDORSED
UPON ANY NOTE ISSUED IN EXCHANGE FOR THIS NOTE AND ANY SECURITIES ISSUABLE UPON
CONVERSION OF THIS NOTE (EXCEPT AS OTHERWISE PROVIDED BELOW).

AMENDED AND RESTATED
SECURED SUBORDINATED PROMISSORY NOTE

 Danville, California
 Effective Date: January 1, 2015

This AMENDED AND RESTATED SECURED SUBORDINATED PROMISSORY NOTE (this “Note”) is
made and entered into on February 19, 2015, to be effective as of January 1,
2015 (the “Effective Date”), and amends, restates and supersedes in its entirety
that certain Amended and Restated Secured Subordinated Promissory Note, dated
March 25, 2013, with an effective date of November 1, 2012, as amended by that
First Amendment dated July 19, 2013, by Pacific Energy Development Corp., a
Nevada corporation (“PEDCO”) in favor of MIE Jurassic Energy Corporation (the
“Holder”); and such note and all obligations thereunder shall be referred to
herein as the “Prior Obligations”). This Amended and Restated Secured
Subordinated Promissory Note (this “Note”, “Promissory Note” or “Agreement”),
evidences Four Million Nine Hundred Twenty Five Thousand U.S. Dollars (the
“Principal”) owed to the Holder by PEDEVCO Corp. (the “Company”) a Texas
corporation, and the parent corporation of PEDCO.

1.           Definitions. In addition to other terms defined throughout this
Note, the following terms have the following meanings when used herein:
 
(a)           “Affiliate” means any other Person that (at the time when the
determination is made) directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control with,
such specified Person. As used in the foregoing sentence, the term “control”
(including, with correlative meaning, the terms “controlling,” “controlled by”
and “under common control with”) means the power to direct the management and/or
the policies of a Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise.
 
(b)           “Agreed Interest Rate” means ten percent per annum.

 
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PEDEVCO Corp. and MIE Jurassic Energy Corporation
Effective January 1, 2015

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(c)           “Business Day” shall mean any day banking transactions can be
conducted in New York City, New York and does not include any day which is a
federal or state holiday in such location.
 
(d)           “Cash Shortfall” shall mean that at the time a Subordinated
Interest Payment is due hereunder, the Company does not have sufficient cash on
hand to meet all of its current obligations set forth in the waterfall or
similar provisions of the Senior Note (if such Senior Note shall then be still
outstanding) and the New Senior Lending instruments, if any.
 
(e)           “Closing” means the closing of the Settlement Agreement.
 
(f)           “Closing Date” means the date of Closing of the transactions
contemplated by the Settlement Agreement.
 
(g)           “Closing Price” means, with respect to each share of Common Stock
for any day, (a) the last reported sale price regular way or, in case no such
sale takes place on such day, the average of the closing bid and asked prices
regular way, in either case as reported on the Principal Market or (b) if the
Common Stock is not listed or admitted for trading on, and the Principal Market
is not, any national securities exchange, the last reported sale price or, in
case no such sale takes place on such day, the average of the highest reported
bid and the lowest reported asked quotation for the Common Stock, in either case
as reported on the NASDAQ Capital Market or NASDAQ National Market, or if
applicable, the OTCQB market or the OTC Pink Sheet market, as applicable.
 
(h)           “Common Stock” means the common stock, $0.001 par value per share,
of the Company.
 
(i)           “Conversion Price” means the greater of (a) $0.30 (subject to
adjustment for Recapitalizations as defined in Section 10(g)) (the “Floor
Price”); and (b) eighty percent of the average Closing Price over the prior
sixty Trading Days from the date of any determination of such Conversion Price
(subject to adjustment for Recapitalizations (which for the sake of clarity
shall be calculated by totaling the Closing Prices for each Trading Day during
the prior sixty Trading Day period and dividing such aggregate sum by the total
number of Trading Days in such applicable sixty day period).
 
(j)           “Conversion Right Triggering Event” shall mean the extension of
the Original Maturity Date of this Note past March 8, 2017.
 
(k)           “Exchange Act” means the Securities Exchange Act of 1934, as
amended.
 
(l)           “Extension Conditions” means that (a) the amount of the
Replacement Lender Refinancing (as defined in Section 3(c)) shall not be greater
than the Maximum New Senior Lending Amount, and (b)(i) the Company shall have
undertaken commercially reasonable best efforts to provide for the Replacement
Lender Refinancing to include adequate provisions to permit the payment to the
Holder of all Interest accrued under this Note commencing as of March 8, 2017
(and quarterly thereafter, until such time as this Note is paid in full or
otherwise satisfied), provided that notwithstanding (b)(i) of this definition
and at a minimum (ii) the Replacement Lenders shall agree to the Company (or its
Subsidiaries) making the Subordinated Interest Payments, provided that any
amount of accrued Interest owed on this Note through the date of the payment of
the Subordinated Interest Payments, not paid in connection with the Subordinated
Interest Payments, and the remaining 5% of annual Interest due hereunder in
excess of the Subordinated Interest Payments, or such other remaining amounts
left after the Company (or its Subsidiaries) have paid the amount of
Subordinated Interest Payments which the Company has sufficient cash flow to pay
shall continue to remain outstanding and accrue until the Maturity Date of this
Note.
 
 
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PEDEVCO Corp. and MIE Jurassic Energy Corporation
Effective January 1, 2015

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(m)           “Financing” means any and all Indebtedness incurred by the Company
or any Subsidiary of the Company, regardless of its form, other than a pure
equity investment, and including without limitation, all principal and interest
(including such interest as may accrue after the initiation of bankruptcy
proceedings), and all premiums, fees and expenses owing by the Company or any
Subsidiary, to any such parties in respect of such Indebtedness. For the sake of
clarity, Indebtedness incurred in connection with a merger, acquisition or
combination transaction may also qualify as a “Financing”.
 
(n)           “Indebtedness” means, with respect to any Person, without
duplication: (a) indebtedness for borrowed money, whether current or funded,
short-term or long-term, secured or unsecured and whether or not contingent; (b)
obligations evidenced by bonds, notes, debentures, letters of credit, guarantees
or similar instruments; (c) all obligations, contingent or otherwise, of that
Person under acceptance, letter of credit or similar facilities, (d) any
investment into the Company other than a pure equity investment, and (e) all
accrued interest, premiums, penalties, fees, costs and other obligations
relating to the foregoing items described in (a) through (d) above.
 
(o)           “Investor Restructuring” means the refinancing, restructuring or
extension of the Senior Note by the Investors.
 
(p)           “Investors” means BRe BCLIC Primary, BRe BCLIC Sub, BRe WNIC 2013
LTC Primary, BRe WNIC 2013 LTC Sub and RJ Credit LLC and/or any one or more of
their Affiliates, provided that where and if applicable, references to the
approval or consent of the Investors below shall also, or alternatively, require
where and as applicable, the consent of BAM Administrative Services LLC, as
agent for the Investors.
 
(q)           “Liens” mean all mortgages, liens (statutory or otherwise),
pledges, security interests, charges, claims, restrictions, limitations,
options, easements, encroachments, rights of first refusal, preemptive rights,
conditional sale agreements, or other right to purchase, adverse claims or
restrictions or reservations of any kind, including restrictions on transfer or
other assignment, as security or otherwise, of or relating to use, quiet
enjoyment, voting transfer or any other encumbrance of any kind whatsoever.
 
(r)           “Material Adverse Effect” means any effect, change, event,
occurrence, circumstance or state of facts that would reasonably be expected to
(i) be materially adverse to the business, condition (financial or otherwise),
assets, liabilities, prospects or results of operations of the Company as a
whole, or (ii) materially adversely affect the ability of the Company to perform
its obligations hereunder and consummate the transactions contemplated hereby in
a timely manner.

 
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PEDEVCO Corp. and MIE Jurassic Energy Corporation
Effective January 1, 2015

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(s)           “Maturity Date” means the applicable maturity date of this Note,
which shall initially be the Original Maturity Date (as defined in Section 3(a))
and shall upon any Investor Restructuring, and subject to the terms and
conditions of Section 3(b), be the first business day immediately following the
Investor Restructuring Extended Maturity Date, or shall upon a Replacement
Lender Refinancing and subject to the terms and conditions of Section 3(c), be
the first business day immediately following the Replacement Lender Extended
Maturity Date (as defined in Section 3(c)), as applicable.
 
(t)           “Maximum New Senior Lending Amount” means (a) the amount as of the
Closing Date of the principal balance of and any unpaid interest due under the
terms of the Senior Note and any refinancing or replacement thereof; and (b) the
New Senior Lending (provided that if all or a portion of the New Senior Lending
reduces the amount of the Senior Note, (a) shall reflect such reduced Senior
Note balance), which in aggregate (a plus b) shall not exceed $95,000,000,
without the prior written consent of the Holder in its sole discretion.
 
(u)           “New Senior Lending” means (i) any and all funds advanced by one
or more Replacement Lenders in connection with a Financing separate from a
Replacement Lender Refinancing and/or (ii) any and all funds advanced or
Indebtedness incurred from one or more Investors in connection with a Financing
separate from a Replacement Lender Refinancing.
 
(v)           “Person” means any natural person, corporation, general
partnership, limited partnership, limited liability company, limited liability
partnership, proprietorship, business or statutory trust, trust, union,
association, instrumentality, governmental authority or other entity,
enterprise, authority or unincorporated entity.
 
(w)           “Principal Market” means initially the NYSE MKT, and shall also
include the New York Stock Exchange, NASDAQ Capital Market, the OTCQB market,
the NASDAQ National Market, or the OTC Pink Sheet market, whichever is at the
time the principal trading exchange or market for the Common Stock, based upon
share volume.
 
(x)           “Recapitalization” has the meaning given to such term in Section
10(g) of this Note.
 
(y)           “Replacement Lender Extended Maturity Date” means the automatic
extension of the Maturity Date of the Note in connection with a Replacement
Lender Refinancing as defined in Section 3(c) of this Note.
 
(z)           “Replacement Lenders” means one or more third party replacement
lenders, other than the Investors or any Affiliates of the Investors, who
participate in any New Senior Lending or the Replacement Lender Refinancing (as
described in Section 3(c)).
 
(aa)         “Securities Act” means the Securities Act of 1933, as amended.
 
(bb)         “Senior Note” means those certain Secured Promissory Notes issued
by the Company to each of the Investors, dated March 7, 2014, in the aggregate
amount of $35,499,059.74, and includes such Senior Note as refinanced,
restructured or extended in connection with an Investor Restructuring or
Replacement Lender Refinancing.

 
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PEDEVCO Corp. and MIE Jurassic Energy Corporation
Effective January 1, 2015

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(cc)           “Settlement Agreement” means that certain Settlement Agreement
dated as of even date herewith by and between the Holder, PEDCO and the Company.
 
(dd)           “Subordinated Interest Payments” means (i) quarterly interest
payments (starting March 31, 2017) of not less than 5% per annum of the Interest
accrued beginning March 31, 2017, under this Note; plus (ii) a one-time payment
of the amount of accrued Interest due hereunder (which shall in no event exceed
$500,000), which requirement to make such quarterly interest payments and such
one-time payment shall be subject to the Company not having a Cash Shortfall at
the time such Subordinated Interest Payment becomes due.
 
(ee)           “Subsidiary” means with respect to any Person, (i) any
corporation at least a majority of the outstanding voting stock of which is
owned, directly or indirectly, by such Person or by one or more of its
subsidiaries, or by such Person and one or more of its subsidiaries, (ii) any
general partnership, joint venture, limited liability company, statutory trust,
or other entity, at least a majority of the outstanding partnership, membership,
or other similar equity interests of which shall at the time be owned by such
Person, or by one or more of its subsidiaries, or by such Person and one or more
of its subsidiaries, and (iii) any limited partnership of which such Person or
any of its subsidiaries is a general partner. For the purposes of this
definition, “voting stock” means shares, interests, participations, or other
equivalents in the equity interest (however designated) in such Person having
ordinary voting power for the election of a majority of the directors (or the
equivalent) of such Person, other than shares, interests, participations, or
other equivalents having such power only by reason of the occurrence of a
contingency.
 
(ff)           “Trading Day” means any day on which the Principal Market on
which shares of Common Stock are listed, traded or quoted, as applicable, is
open for trading.
 
2.           Promise to Pay; Principal and Interest.
 
2.1           Promise to Pay. FOR VALUE RECEIVED, the Company, unconditionally
promises and agrees to pay, as herein provided, on the Maturity Date, to the
order of Holder, at such place in the United States of America as Holder may
hereinafter designate in writing to Company, in lawful money of the United
States of America, the principal sum of FOUR MILLION NINE HUNDRED TWENTY FIVE
THOUSAND U.S. DOLLARS, together with interest thereon as provided below, less
any amounts repaid by the Company prior to the Maturity Date, or converted into
Common Stock of the Company as provided herein.
 
2.2           Principal and Interest.  Interest on the Principal amount of this
Note shall accrue quarterly in arrears, beginning on the Effective Date, at the
Agreed Interest Rate (“Interest”), provided that the Company shall not be
required to pay any Principal or Interest on this Note until the Maturity Date
or except as required in connection with the Note Prepayment Requirements
(defined in Section 5).  Interest on any unpaid balance of this Note, including
accrued but unpaid, interest, shall be calculated on the basis of 30-day months
and a 360-day year.

 
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PEDEVCO Corp. and MIE Jurassic Energy Corporation
Effective January 1, 2015

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3.           Maturity Date; New Senior Lending; Refinancing; Automatic Extension
of Maturity Date.
 
(a)           The unpaid Principal and all accrued and unpaid Interest on this
Note shall be due and payable on March 8, 2017 (the “Original Maturity Date”).
 
(b)           Investor Restructuring.  In connection with an Investor
Restructuring of the Senior Note (but not otherwise), the Original Maturity Date
of this Note shall automatically and without requiring the consent or approval
of the Holder, and without any required action by any parties, be extended until
the first business day immediately following the maturity date of such
refinanced, restructured or extended Senior Note (or portion thereof) (the
“Investor Restructuring Extended Maturity Date”), provided that the Investor
Restructuring Extended Maturity Date shall be no later than March 8, 2019. Any
Investor Restructuring shall include payment provisions whereby the Holder shall
be paid all Interest and fees accrued on this Note as of March 8, 2018, no later
than March 8, 2018. The Investor Restructuring may take place as one transaction
or a series of transactions solely by any of the Investors and the Company (or
its Subsidiaries) and the Investor Restructuring Extended Maturity Date shall be
the latest such maturity date of the securities issued in connection with such
Investor Restructuring and/or the revised, restructured or extended maturity
date of the Senior Note (subject to such Investor Restructuring Extended
Maturity Date being no later than March87, 2019). For the sake of clarity and in
an abundance of caution, the Holder hereby confirms, consents and acknowledges
its approval of the New Senior Lending, and that such New Senior Lending shall
not require the approval or consent of the Holder.
 
(c)           Long-Term Financing.
 
(i)           In addition to and separate from the right of the Company to
obtain New Senior Lending as described in (d) below, the Holder hereby consents
to and approves the refinancing, restructuring or extension on a one-time only
basis (in the form of an amended Senior Note or notes, a new promissory note or
notes or any other form of Indebtedness), by the Company (and/or any of its
Subsidiaries) of the Senior Note with one or more Replacement Lenders
(collectively referred to herein as a “Replacement Lender Refinancing”). In the
event of any Replacement Lender Refinancing, the Company (on its own behalf and
on behalf of its Subsidiaries), shall undertake commercially reasonable best
efforts to cause the Replacement Lenders to simultaneously refinance both the
Senior Note and this Note (together with any outstanding Interest or fees due
hereon) as part of such Replacement Lender Refinancing. Despite such efforts,
should the Replacement Lenders be unable or unwilling to include the amount owed
under this Note in such financing, then the Replacement Lender Refinancing may
proceed without including the amount owed to the Holder under this Note, and
this Note may remain in place and shall be automatically subordinated, without
further consent or approval of the Holder, to such Replacement Lender
Refinancing, subject to the terms and limitations herein provided. Furthermore,
upon the occurrence of such Replacement Lender Refinancing, the Original
Maturity Date of this Note shall be automatically extended, without further
consent or approval of the Holder, and without any required action by any
parties, to the latest maturity date of the Indebtedness associated with the
Replacement Lender Refinancing (the “Replacement Lender Extended Maturity
Date”), provided that the Extension Conditions are met at the time of such
Replacement Lender Refinancing, and provided further that the Replacement Lender
Extended Maturity Date shall never exceed March 8, 2020, regardless of whether
the latest maturity date of such indebtedness associated with the Replacement
Lender Refinancing is later than March 8, 2020. In the event the Extension
Conditions are not met at the time of the closing of such Replacement Lender
Refinancing, the Maturity Date of this Note shall remain the Original Maturity
Date, provided that if in the future, such Extension Conditions are met,
following the closing date of such Replacement Lender Refinancing, the Maturity
Date of this Note shall automatically, and without any required action by the
Company or the Holder, and without any required action by any parties, be
extended until the Replacement Lender Extended Maturity Date. For the avoidance
of doubt, (i) the Subordinated Interest Payments shall be subordinated to the
Replacement Lender Refinancing and any New Senior Lending, as well as any amount
outstanding under the Senior Note, including any accrued and unpaid Interest
thereon, and should there be any Cash Shortfall at the time that any
Subordinated Interest Payments are due, the Company (or where applicable, one or
more of its Subsidiaries) shall first make payments scheduled under the Senior
Note (if such Senior Note remains outstanding) and the New Senior Lending prior
to making such Subordinated Interest Payments to the Holder, and (ii) regardless
of the Replacement Lender Extended Maturity Date or the extended tenor of the
Replacement Lender Refinancing as agreed by the Replacement Lenders, the
Maturity Date of this Note shall in no event exceed March 8, 2020.  If any
Subordinated Interest Payment is not made in full because of a Cash Shortfall,
the Company shall deliver a certificate to Holder at least five Business Days in
advance of the date such Subordinated Interest Payment is due setting forth the
calculation of such Cash Shortfall, including cash on hand and required payments
under the waterfall, in detail.
 
 
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Effective January 1, 2015

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(ii)           For the sake of clarity and in an abundance of caution, the
Holder hereby confirms, consents and acknowledges its approval of the
Replacement Lender Refinancing, if any, and that such Replacement Lender
Refinancing shall not require the approval or consent of the Holder.
 
(d)           From time to time after the Effective Date, any of the Investors
and any Replacement Lenders may provide New Senior Lending (in one or a series
of transactions) to the Company (or its Subsidiaries).
 
(e)           No repayments on this Note shall occur or be made by the Company
if there exists any event of default under the Senior Note or New Senior
Lending.  In the event any of the Investors agree to accrue interest on a
portion of the Senior Note or New Senior Lending owed to the Investors in order
to accommodate a Replacement Lender that only wants to replace a portion of the
outstanding Senior Note or New Senior Lending owed to the Investors in
connection with a Replacement Lender Refinancing, this Note and the terms and
conditions hereof, shall automatically become subject to the same interest
accrual terms of such Senior Note or New Senior Lending, as applicable,
including, but not limited to the Subordinated Interest Payments, in the event
such interest accrual terms are more favorable to the Company (or any of the
Company’s Subsidiaries) than the terms and conditions of this Note.
 
(f)           The amount of Principal and accrued Interest owed under this Note
shall automatically, and without further consent from the Holder, be
subordinated in every way to the Senior Note and any New Senior Lending, and
such New Senior Lending shall have the same rights and preferences as the Senior
Note, subject to the Maximum New Senior Lending Amount, as herein provided. This
Section 3(f) shall not in any way limit or reduce the terms and conditions of
Sections 6 and 7 hereof.
 
(g)           The Company will reimburse the Holder for any costs reasonably
incurred by the Holder in connection with any New Senior Lending.
 
 
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PEDEVCO Corp. and MIE Jurassic Energy Corporation
Effective January 1, 2015

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4.           Optional Prepayments; Forgiveness of Principal.
 
(a)           This Note may be repaid in whole or in part by the Company, from
time to time, at any time without penalty or premium (“Optional Prepayments”).
Any Optional Prepayments shall be applied first to any accrued Interest and then
to any Principal amount outstanding.
 
(b)           In the event the Company repays this Note in full pursuant to an
Optional Prepayment or Optional Prepayments and/or pursuant to an Excess
Financing Amount Mandatory Prepayment (as defined in Section 5(b))(provided that
for the sake of clarity the amount required to be repaid by the Company pursuant
to this Section 4(b) shall be reduced by the 2015 Forgiven Amount defined below)
on or before December 31, 2015 (the “2015 Early Prepayment Date”), twenty
percent (20%) of the original Principal amount of this Note shall be
automatically forgiven by the Holder, the result of which shall be that the
Company shall only be required to pay the Holder an aggregate of (i) eighty
percent (80%) of the original Principal amount of this Note (such remaining
twenty percent (20%) of the original Principal amount of this Note shall be
defined herein as the “2015 Forgiven Amount”); and (ii) any and all accrued
Interest on this Note through the date of repayment in full and complete
satisfaction of all amounts owed to Holder under this Note.
 
(c)           In the event the Company repays this Note in full pursuant to an
Optional Prepayment or Optional Prepayments and/or pursuant to an Excess
Financing Amount Mandatory Prepayment (as defined in Section 5(b))(provided that
for the sake of clarity the amount required to be repaid by the Company pursuant
to this Section 4(c) shall be reduced by the 2016 Forgiven Amount defined below)
on or before December 31, 2016 (the “2016 Early Prepayment Date” and
collectively with the 2015 Early Prepayment Date as applicable, each an “Early
Prepayment Date”), fifteen percent (15%) of the original Principal amount of
this Note shall be automatically forgiven by the Holder, the result of which
shall be that the Company shall only be required to pay the Holder an aggregate
of (i) eighty-five percent (85%) of the original Principal amount of this Note
(such remaining fifteen percent (15%) of the original Principal amount of this
Note shall be defined herein as the “2016 Forgiven Amount” and together with the
2015 Forgiven Amount, each a “Forgiven Amount”); and (ii) any and all accrued
Interest on this Note through the date of repayment in full and complete
satisfaction of all amounts owed to Holder under this Note (the reduced amount
of Principal owed to the Holder in connection with a complete Optional
Prepayment pursuant to the terms and conditions of this Section 4(c) and Section
4(b), above, each as applicable “Reduced Payment Amount”).
 
 
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Effective January 1, 2015

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(d)           The Holder agrees that the payment by the Company of the
applicable Reduced Payment Amount pursuant to Section 4(b) or 4(c) above, will
completely satisfy the amount owed to Holder under and in connection with this
Note, and upon payment in full of such applicable Reduced Payment Amount: (i)
this Note shall be considered paid in full; (ii) the applicable Forgiven Amount
shall be considered waived and forgiven by Holder in its entirety; (iii) the
Company shall be released from any further obligation under or in connection
with this Note, including, but not limited to in connection with the applicable
Forgiven Amount; and (iv) this Note shall be considered terminated and cancelled
(collectively, the “Note Satisfaction Confirmations”).
 
5.           Mandatory Prepayments.
 
(a)           Should the Company or any of its Subsidiaries enter into any
single Financing or acquisition or any series of Financings or acquisitions
(each an “Additional Transaction”, whether one or more) that results in the
Company or any of its Subsidiaries raising New Senior Lending of at least
$20,000,000 in excess of the principal balance of the Senior Note as of the date
the parties enter into this Note (the “Original Senior Note Balance”), then, the
Holder shall have the right to be paid all Interest and fees that have accrued
on this Note each and every time, as applicable, that an Additional Transaction
or series of Additional Transactions reaches or exceeds the $20 million
threshold (a “Mandatory Prepayment of Interest”). This right shall repeat each
time a new Additional Transaction or series of Additional Transactions results
in the Company or its Subsidiaries raising $20 million in New Senior Lending in
excess of (i) the Original Senior Note Balance; or (ii) the amount previously
raised which triggered the prior Mandatory Prepayment of Interest, as
applicable.
 
(b)           Should the Company or any of its Subsidiaries obtain any Financing
which exceeds the Maximum New Senior Lending Amount, the amount of such
Financing which exceeds the Maximum New Senior Lending Amount shall be paid (i)
first to the Holder, as a mandatory pre-payment of this Note, until the amount
of this Note (both Principal and accrued Interest due hereunder) is paid in
full; and (ii) thereafter to Company and/or its Affiliates (an “Excess Financing
Amount Mandatory Prepayment”). For the sake of clarity, the receipt of Financing
by the Company (or any Subsidiary) in excess of the Maximum New Senior Lending
Amount shall not trigger an Event of Default or default hereunder, and the
Holder shall not have any rights to approve or consent to the terms of any such
Financing, provided that the requirements of the Company to make the Excess
Financing Amount Mandatory Prepayment are complied with hereunder.  To the
extent the amount of any Excess Financing Amount Mandatory Prepayment fully
satisfies the Reduced Payment Amount of this Note as described in Section 4, on
or prior to the applicable Early Prepayment Date, such repayment shall be
subject to the terms and conditions of Sections 4(b) or 4(c) hereof as
applicable, and the Company shall only be required to repay the Reduced Payment
Amount of this Note.

 
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Effective January 1, 2015

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(c)           Except for (a) the Mandatory Prepayment of Interest, if and as
required pursuant to Section 5(a), above, (b) the Excess Financing Amount
Mandatory Prepayment requirement, if and as required pursuant to Section 5(b),
above, and (c) the payment of Subordinated Interest Payments which come due and
are payable as provided in Section 3(c), hereof in the event of a Replacement
Lender Refinancing (collectively, the “Note Prepayment Requirements”), no
payments whatsoever of Principal or Interest hereunder shall be required to be
made by the Company prior to the Maturity Date.
 
6.           Security Interest.
 
(a)           The Company and the Company’s Subsidiaries hereby grant to the
Holder a continuing second priority security interest in and Lien on, second
only to the Liens of Investors under the Senior Note and any New Senior Lending
and if applicable, the Replacement Lenders in connection with any New Senior
Lending or the Replacement Lender Refinancing or in connection with a
Replacement Lender Refinancing, all of the properties, assets, and rights of the
Company and its Subsidiaries, wherever located and whether now owned or
hereafter acquired or arising, and all proceeds and products thereof, subject to
the requirements and terms and provisions of Section 7 hereof (all such
properties, assets, rights, proceeds and products hereinafter sometimes called,
collectively, the “Collateral” and such security interest defined herein as the
“Security Interest”).
 
(b)           At the reasonable request of the Holder, the Company and if
applicable, its Subsidiaries, will join with the Holder in executing one or more
financing statements pursuant to the Uniform Commercial Code (the “Code”) in a
form reasonably satisfactory to the Holder. The Company on its behalf and on
behalf of its Subsidiaries, hereby authorizes the Holder to file a financing
statement signed only by the Holder in all places where necessary to perfect the
Holder’s Security Interest in the Collateral in all jurisdictions where such
authorization is permitted by the Code. Without limiting the foregoing the
Company agrees that whenever the Code requires the Company or any of the
Company’s Subsidiaries to sign a financing statement for filing purposes, the
Company (on its own behalf and on behalf of each of its Subsidiaries) hereby
appoints the Holder or any of the Holder’s representatives as the Company’s (and
its Subsidiaries’) attorney and agent, with full power of substitution, to sign
or endorse the Company’s (or any of the Company’s Subsidiaries’) name on any
such financing statement or other document and authorizes the Holder to file
such a financing statement in all places where necessary to perfect the Holder’s
Security Interest in the Collateral; and the Company ratifies all acts of the
Holder and said representatives and agrees to hold the Holder and said
representatives harmless from all acts of commission or omission or any error of
judgment or mistake of fact or law pertaining thereto. A carbon, photographic or
other reproduction of this Note or of a financing statement is sufficient as a
financing statement. Upon full payment or satisfaction of all obligations under
this Note, the Lien or charge created hereby or resulting herefrom, shall cease
to exist and the Holder shall promptly file all termination statements requested
by the Company necessary to accomplish this purpose. Notwithstanding the above,
the Holder hereby authorizes the Company and each of its Subsidiaries to file a
termination statement under the Code in any and all jurisdictions that the
Company or any of its Subsidiaries deem necessary or warranted, without the
prior consent or approval of the Holder, at such time as this Note has been
satisfied in full.
 

 
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(c)           Upon any disposition of any of the Collateral, the Holder hereby
authorizes the Company or any of its Subsidiaries to file termination statements
under the Code with respect to any financing statements in favor of the Holder
with respect to the Company, the Company’s Subsidiaries and the Collateral, and
the Holder agrees, if requested by the Company, to execute and immediately
deliver any and all other releases, terminations and other documents or
agreements which the Company deems necessary to accomplish a disposition of the
Collateral free of the Security Interest; provided that the Holder shall retain
its Security Interest in the proceeds of the Collateral so disposed of as
described above.
 
(d)           Notwithstanding Sections 6(a) or 6(b), above, the Holder has and
shall have no control over the cash flow of the Company or any of the Company’s
Subsidiaries, nor shall the Company, any of the Company’s Subsidiaries, the
Investors, or the Replacement Lenders, be required to obtain the consent of the
Holder regarding the disposition, sale, or use of any assets of the Company or
its Subsidiaries which form a part of the Collateral at any time in the future.
 
(e)           Holder will not, without the prior written consent of the
Investors and/or the Replacement Lenders (a) transfer or assign, or attempt to
enforce or collect the amounts owed to Holder pursuant to the terms of this
Note, (b) take any additional collateral security from the Company or any of the
Company’s Subsidiaries for any amounts owed to the Holder under this Note, it
being agreed by Holder that any security interest of Holder in any such
collateral security shall be subordinate and of junior priority to the
Investors’, and/or the Replacement Lenders’, security interest therein, or (c)
commence, or join with any other creditor in commencing, any bankruptcy,
reorganization or insolvency proceedings with respect to the Company or any of
its Subsidiaries.
 
(f)           Should any such Additional Transactions or New Senior Lending
result in the acquisition of new assets after the Effective Date, the Holder
shall be granted a subordinate lien on all such acquired assets.
 
7.           Subordination of this Note.
 
(a)           Except as expressly provided herein, Holder agrees that, until
such time as all amounts owing by the Company under the Senior Note and any New
Senior Lending have been paid and satisfied in full, (i) the repayment of this
Note (including Principal, Interest and any fees or other amounts due
hereunder), whether upon the occurrence of an Event of Default (as defined in
Section 14), or otherwise; and (ii) any Lien it may acquire against any assets
or property of the Company to secure any obligations of the Company to Holder in
connection herewith, including, but not limited to the Security Interest, shall
be subordinate, junior and inferior to [A] the payment in full by the Company
(or any of its Subsidiaries) of all amounts (including principal, interest, fees
or other expenses due) to the Investors and/or the Replacement Lenders under the
terms of the Senior Note and/or New Senior Lending; and [B] the Liens of the
Investors and/or any Replacement Lenders, under the Senior Note and/or New
Senior Lending. The priorities set forth in this section are applicable
irrespective of the order or time of attachment, or the order, time or manner of
perfection, or the order or time of filing or recordation of any document or
instrument, or other method of perfecting the Holder’s Lien or Security
Interest, and notwithstanding any conflicting terms or conditions which may be
contained in the Senior Note or any New Senior Lending or any other documents.

 
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(b)           The Holder hereby waives notice of acceptance of the subordination
provisions and requirements of this Section 7 (the “Subordination Requirements”)
by the Investors and/or any Replacement Lenders, and further waives notice of
and consent to the making, amount and terms of any Investor Restructuring of the
Senior Note and/or any New Senior Lending, which may exist or be created from
time to time and any renewal, extension, amendment or modification thereof, and
any other lawful action which the Investors and/or Replacement Lenders in their
sole and absolute discretion may take or omit to take with respect thereto.
Notwithstanding the above, the Subordination Requirements shall not modify or
affect the Note Prepayment Requirements set forth herein. The Holder hereby also
waives notice of the existence or creation or non-payment of the Senior Note or
New Senior Lending or the occurrence of any events of default thereunder.
 
(c)           No payments or other distributions whatsoever in respect of the
amounts owed to Holder under this Note, whether upon the occurrence of an Event
of Default (as defined in Section 14), or otherwise, shall be made, nor shall
any property or assets of the Company or any of the Company’s Subsidiaries be
applied, directly or indirectly, to the purchase or other acquisition or
retirement of any amounts owed under this Note except as expressly set forth
herein. Otherwise, the Investors and/or the Replacement Lenders shall be
entitled to receive and retain all such payments. Until the amounts owed under
the Senior Note and any New Senior Lending shall have been paid in full and
satisfied, Holder shall not take any action to enforce the Security Interest
provided for hereunder.
 
(d)            In the event of any dissolution, winding-up, liquidation,
readjustment, reorganization or other similar proceedings relating to the
Company or any of its Subsidiaries, or to all or substantially all its or any of
its Subsidiary’s property (whether voluntary or involuntary, partial or
complete, and whether in bankruptcy, insolvency or receivership, or upon an
assignment for the benefit of creditors, or any other marshaling of the assets
and liabilities of the Company, or any sale of all or substantially all of the
assets of the Company, or otherwise), the Senior Note and if applicable, the New
Senior Lending, shall first be paid in full before Holder shall be entitled to
receive and to retain any further payment or distribution in respect of this
Note, and, in order to implement the foregoing, (a) all payments and
distributions of any kind or character in respect to this Note to which Holder
would be entitled if this Note were not subordinated, or subordinated and
pledged or assigned, pursuant to this Note shall be made directly to the
applicable Investors and/or the Replacement Lenders, as applicable, (b) Holder
shall promptly file a claim or claims, in the form required in such proceedings,
for the full outstanding amount of this Note, and shall cause said claim or
claims to be approved and all payments and other distributions in respect
thereof to be made directly to the applicable Investors and/or the Replacement
Lenders, as applicable, and (c) Holder hereby irrevocably agrees that the
Investors and/or the Replacement Lenders, as applicable, may, at their sole
discretion, during the continuance of an Event of Default, in the name of Holder
or otherwise, demand, sue for, collect and receive any and all such payments or
distributions, and file, prove, and vote or consent in any such proceedings with
respect to, any and all claims of Holder relating to this Note. Any excess
remaining after the satisfaction in full of the amounts owed under the Senior
Note or New Senior Lending, as applicable, will be remitted to Holder.
 

 
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(e)           The Holder agrees to promptly enter into a subordination agreement
or subordination agreements from time to time to evidence and document the
requirements set forth in this Section 7, according to standard industry terms
and conditions and including those terms and conditions that are reasonably
requested by the Company, the applicable Investors and/or any Replacement
Lenders (as applicable, “Subordination Agreements”). The Holder shall not
unreasonably delay, condition or withhold its approval and execution of the
Subordination Agreements. The Holder agrees and confirms that the terms and
conditions of the Subordination Agreements will supersede and take preference
over the terms and conditions of this Section 7.
 
8.           Representations and Warranties of the Company. The Company
represents and warrants to the Holder as follows:
 
(a)           The execution and delivery by the Company of this Note (i) are
within the Company’s corporate power and authority, and (ii) have been duly
authorized by all necessary corporate action. Further, the undersigned is a duly
authorized representative of the Company and has been authorized by a resolution
of the Board of Directors of the Company to exercise any and all documents
necessary to effectuate the transaction contemplated hereby.
 
(b)           This Note is a legally binding obligation of the Company,
enforceable against the Company in accordance with the terms hereof, except to
the extent that (i) such enforceability is limited by bankruptcy, insolvency,
reorganization, moratorium or other laws relating to or affecting generally the
enforcement of creditors’ rights, and (ii) the availability of the remedy of
specific performance or in injunctive or other equitable relief is subject to
the discretion of the court before which any proceeding therefore may be
brought.
 
(c)           The Company agrees to pay or reimburse the Holder for all
reasonable costs and expenses associated with the Exchange Act Filings (as
defined in Section 9(l), below), upon receipt of documented evidence thereof.
 
(d)           If at any time after the earlier of (a) the date of the Company’s
2015 annual meeting of stockholders; and (b) December 31, 2015, the maximum
number of shares of Common Stock issuable to the Holder hereunder, pursuant to
the terms and conditions of Section 10 hereof, would, in the reasonable
determination of the Board of Directors of the Company, exceed the Share Cap (as
defined in Section 10(k) below), the Company shall seek Shareholder Approval (as
defined in Section 10(k), below) at the Company’s next regularly scheduled
annual meeting of stockholders (the “Annual Meeting”), pursuant to applicable
rules and regulations of the NYSE MKT and the Securities and Exchange Commission
(the “Shareholder Approval Requirement”). For the sake of clarity and in an
abundance of caution, it shall not be deemed to be a default, or Event of
Default under this Note in the event the Company’s stockholders do not provide
the Shareholder Approval at the Annual Meeting, provided that the Board of
Directors of the Company shall recommend that the stockholders approve such
Shareholder Approval and shall not take any action which in the reasonable
determination of the Holder, would discourage any stockholder from approving
such Shareholder Approval. In the event the Shareholder Approval is not obtained
at the Annual Meeting, the Company shall re-submit such proposal for Shareholder
Approval at each subsequent annual meeting of stockholders of the Company until
such time as this Note has been repaid or satisfied in full. The Shareholder
Approval requirement may be waived by the Holder at any time in writing.

 
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9.           Representations, Warranties and Covenants of Holder. Holder
represents and warrants to the Company, and agrees, as follows (collectively the
“Representations”):
 
(a)           The execution and delivery by the Holder of this Note (i) are
within the Holder’s corporate power and authority, and (ii) have been duly
authorized by all necessary corporate action. Further, the undersigned is a duly
authorized representative of the Holder and has been authorized by a resolution
of the Board of Directors of the Holder to exercise any and all documents
necessary to effectuate the transaction contemplated hereby.
 
(b)           This Note is a legally binding obligation of the Holder,
enforceable against the Holder in accordance with the terms hereof, except to
the extent that (i) such enforceability is limited by bankruptcy, insolvency,
reorganization, moratorium or other laws relating to or affecting generally the
enforcement of creditors’ rights, and (ii) the availability of the remedy of
specific performance or in injunctive or other equitable relief is subject to
the discretion of the court before which any proceeding therefore may be
brought.
 
(c)           This Note and any Conversion Shares (as such term is defined in
Section 10(a) hereof) issuable upon conversion of this Note are being acquired
by Holder for its own account for investment and not with a view to, or for sale
in connection with, a distribution, as that term is used in Section 2(a)(11) of
the Securities Act, in a manner which would require registration under the
Securities Act or any state securities laws, or for sale in connection with, any
distribution thereof.
 
(d)           Holder is familiar with Regulation D of the Securities Act and
confirms and certifies that it is an “accredited investor” as defined in
Regulation D under the Securities Act.
 
(e)           Holder recognizes that this Note and the Conversion Shares
issuable upon conversion hereof have not been registered under the Securities
Act, nor under the securities laws of any state and, therefore, cannot be resold
unless the resale of this Note and the Conversion Shares issuable upon
conversion hereof is registered under the Securities Act or unless an exemption
from registration is available.
 
(f)           Holder has carefully considered and has, to the extent it believes
such discussion necessary, discussed with its professional, legal, tax and
financial advisors, the suitability of an investment in this Note and the
Conversion Shares issuable upon conversion hereof for its particular tax and
financial situation and its advisers, if such advisors were deemed necessary,
have determined that this Note and the Conversion Shares issuable upon
conversion hereof (as and if applicable) is a suitable investment for it.

 
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(g)           Holder has not been offered this Note and the Conversion Shares
issuable upon conversion hereof by any form of general solicitation or
advertising, including, but not limited to, advertisements, articles, notices or
other communications published in any newspaper, magazine, or other similar
media or television or radio broadcast or any seminar or meeting where, to
Holder’s knowledge, those individuals that have attended have been invited by
any such or similar means of general solicitation or advertising.
 
(h)           Holder has had an opportunity to ask questions of and receive
satisfactory answers from the Company, or persons acting on behalf of the
Company, concerning the terms and conditions of this Note, the Conversion Shares
issuable upon conversion hereof and the Company, and all such questions have
been answered to the full satisfaction of Holder.
 
(i)           Company has not supplied Holder any information regarding this
Note or the Conversion Shares issuable upon conversion hereof or an investment
in this Note or the Conversion Shares issuable upon conversion hereof other than
as contained in this Note, and Holder is relying on its own investigation and
evaluation of the Company and this Note and the Conversion Shares issuable upon
conversion hereof and not on any other information.
 
(j)           Holder understands that this Note and any Conversion Shares
converted pursuant hereto have not been registered under the Securities Act or
registered or qualified under any of the securities laws of any state or other
jurisdiction, are “restricted securities”, and cannot be resold or otherwise
transferred unless they are registered under the Securities Act, and registered
or qualified under any other applicable securities laws, or an exemption from
such registration and qualification is available. Except in cases in which such
shares have become unrestricted and freely tradable under Rule 144A, prior to
any proposed transfer of this Note or any Conversion Shares, Holder shall, among
other things, give written notice to the Company of its intention to effect such
transfer, identifying the transferee and describing the manner of the proposed
transfer and, if requested by the Company, accompanied by (i) investment
representations by the transferee similar to those made by Holder in this
Section 9 and (ii) an opinion of counsel satisfactory to the Company to the
effect that the proposed transfer may be effected without registration under the
Securities Act and without registration or qualification under applicable state
or other securities laws. Each certificate issued to evidence any Conversion
Shares shall bear a legend as follows (subject, where and if applicable, to a
Legend Removal as described in Section 10(j)):
 
“The securities represented by this certificate have not been registered under
the Securities Act of 1933 or any state securities act. The securities have been
acquired for investment and may not be sold, transferred, pledged or
hypothecated unless (i) they shall have been registered under the Securities Act
of 1933 and any applicable state securities act, or (ii) the corporation shall
have been furnished with an opinion of counsel, satisfactory to counsel for the
corporation, that registration is not required under any such acts.”

 
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(k)           The Holder has read and reviewed, and been provided an opportunity
to ask questions regarding, the Company’s periodic and current report filings
(Form 10-Qs, Form 10-Ks and Form 8-Ks) on the Securities and Exchange
Commission’s EDGAR webpage at www.sec.gov, including, but not limited to, the
risk factors, results of operations, description of business operations,
executive compensation information, plan of operations, management’s discussion
and analysis of results of operations and audited and unaudited financial
statements included therein.
 
(l)           Holder agrees to make any and all filings required by Holder under
the Exchange Act in connection with the receipt by the Holder of this Note
within the time period required for such filings, and its right to receive the
Conversion Shares issuable upon Conversion hereof (each as defined in Section
10, below), upon the occurrence of any Conversion Right Triggering Event (the
“Exchange Act Filings”). Holder further agrees and confirms that all Exchange
Act Filings are the sole obligation of Holder.
 
10.           Holder’s Option to Convert this Note After A Conversion Right
Triggering Event. 
 
(a)           At any time after a Conversion Right Triggering Event has
occurred, prior to the payment in full by the Company of all Principal and
Interest due pursuant to the terms of this Note, and subject to the Share Cap
(as defined in Section 10(k), below), the Holder shall have the Option to
convert all or a portion of the unpaid Principal due under the terms of this
Note, together with all accrued Interest hereunder, into shares of Common Stock
of the Company (the “Conversion Shares” and the “Conversion Option” or the
“Option”) at the Conversion Price (a “Conversion”). For the sake of clarity,
Holder shall have no right to affect a Conversion of this Note until or unless a
Conversion Right Triggering Event has occurred hereunder.  Holder may exercise
this right as many times as it so elects, so long as some portion of the
outstanding Principal and Interest hereunder have not been paid in full.
 
(b)           In order to exercise this Conversion Option, the Holder shall
surrender this Note to the Company, accompanied by written notice of its
intentions to exercise this Conversion Option, which notice shall set forth the
Principal amount and accrued Interest of this Note to be converted, and the
calculation of the applicable Conversion Price, and shall be in the form of
Exhibit A, attached hereto (the “Notice of Conversion”). Within five (5)
business days of the Company’s receipt of the Notice of Conversion and this
Note, the Company shall deliver or cause to be delivered to the Holder, written
confirmation that the Shares have been issued in the name of the Holder (or the
Holder’s assign, as permitted pursuant to applicable law and as described in the
Notice of Conversion).
 
(c)           In the event of the exercise of the Conversion Option, the Holder
shall cooperate with the Company to promptly take any and all additional actions
required to make Holder a stockholder of the Company including, without
limitation, in connection with the issuance of the Conversion Shares, such
representations as to financial condition, investment intent and sophisticated
investor status as are reasonably required by counsel for the Company.
 

 
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(d)           The Company shall at all times take any and all additional actions
as are necessary to maintain the required authority to issue the Conversion
Shares to the Holder, in the event the Holder exercises its rights under the
Conversion Option, subject in all cases to the Share Cap (as defined in Section
10(k), below and the Shareholder Approval Requirements set forth in Section
8(d).
 
(e)           Payment by the Company of the entire Principal and Interest owed
pursuant to the terns of this Note prior to Holder’s delivery of a Notice of
Conversion shall terminate Holder’s Option to convert.
 
(f)           Conversion calculations pursuant to this Section 10 shall be
rounded to the nearest whole share of Common Stock, and no fractional shares
shall be issuable by the Company upon conversion of this Note.
 
(g)           If the Company at any time, from time to time, on or after the
Closing Date (i) effects a subdivision of its outstanding Common Stock, the
Conversion Price then in effect immediately before that subdivision shall be
proportionately decreased, and (ii) conversely, if the Company at any time or
from time to time on or after the Closing Date combines its outstanding shares
of Common Stock into a smaller number of shares, the Conversion Price then in
effect immediately before the combination shall be proportionately increased,
provided that (iii) the Board of Directors of the Company shall also make
equitable adjustments in the Conversion Price upon the occurrence of any other
event which in their good faith reasonable determination requires an adjustment
of such Conversion Price to maintain the purpose and intent of the Conversion
Price as set forth herein (each a “Recapitalization”).
 
(h)           All Conversion Shares of Common Stock which may be issued upon
Conversion of this Note will, upon issuance by the Company in accordance with
the terms of this Note, be validly issued, free from all taxes and liens with
respect to the issuance thereof (other than those created by the holders), free
from all pre-emptive or similar rights and be fully paid and non-assessable.
 
(i)           On the date of any Conversion, all rights of any Holder with
respect to the amount of this Note converted, will terminate, except only for
the rights of any such Holder to receive certificates (if applicable) for the
number of Conversion Shares which this Note has been Converted.
 
(j)           Upon Conversion of any part of this Note by the Holder, the
Company shall promptly take any and all commercially reasonable action necessary
to ensure the removal of restrictive legends from the Conversion Shares issuable
upon such Conversion (or where and if applicable, to issue such Conversion
Shares without restrictive legend) pursuant to the Company’s and the Holder’s
compliance with Rule 144 of the Securities Act and upon provision to the Company
or its legal counsel by the Holder of usual and customary representations and
warranties in connection therewith (or, if the requisite holding period under
Rule 144 of the Securities Act has not yet lapsed with respect to the Conversion
Shares issuable upon a Conversion, then immediately after such applicable
holding period has been satisfied)(as applicable, a “Legend Removal”).

 
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(k)           The maximum number of Conversion Shares to be issued upon
Conversion of this Note or otherwise hereunder, subject to NYSE MKT rules, shall
not (i) exceed 19.9% of the outstanding shares of Common Stock of the Company on
the date the transactions contemplated herein were first binding on the parties
hereto, calculated in accordance with applicable NYSE MKT rules, or (ii) exceed
19.9% of the combined voting power of the then outstanding voting securities of
Common Stock on the date the transactions contemplated herein were first binding
on the parties hereto, calculated in accordance with applicable NYSE MKT rules,
in each of subsections (i) and (ii) before taking into account any Conversion
Shares issuable upon Conversion of this Note, or (iii) otherwise exceed such
number of shares of Common Stock that would violate applicable listing rules of
the NYSE MKT in the event the Company’s stockholders do not approve the issuance
of the Conversion Shares upon Conversion hereof (the “Share Cap”). In the event
the number of Conversion Shares to be issued to the Holder upon conversion of
this Note exceeds the Share Cap, then the Note shall cease being convertible
until such time, if ever, as the Company has received shareholder approval for
the issuance of the same in accordance with NYSE MKT rules (“Shareholder
Approval”). Notwithstanding anything to the contrary herein, issuance of any
Common Stock upon conversion of the Note shall be subject to NYSE MKT approval
(where and as applicable).
 
(l)           The Company shall bear all reasonable costs and expenses
associated with securities laws and stock market approvals regarding conversion
and Legend Removal of the Conversion Shares.
 
(m)           The Company agrees that it will include a proposal in its proxy
materials for its 2016 Annual Meeting of Shareholders authorizing the issuance
of the maximum number of Conversion Shares issuable upon exercise of the
Conversion Option (assuming full Conversion by the Holder at the Floor Price
(the “Conversion Proposal”) and use its best efforts to cause its shareholders
to authorize, approve and adopt the Conversion Proposal. In the event the
Conversion Proposal fails to pass at the 2016 Annual Meeting of Shareholders,
the Company shall thereafter take all commercially reasonable action (including,
without limitation, the engagement of a national proxy solicitor) to procure
approval of the Conversion Proposal no later than at its 2017 Annual Meeting of
Shareholders. In all cases, and notwithstanding anything contained in this
Section 10(m) to the contrary, (A) the Company shall take all reasonable actions
as may be necessary to procure any approvals of any Principal Market with
respect to the issuance of Conversion Shares (before the issuance of such
Conversion Shares) or the Conversion Proposal, and (B) if the Company reasonably
concludes that shareholder approval for the issuance of some or all of the
Conversion Shares would not be required for purposes of its 2016 Annual Meeting
of Shareholders, it may request a waiver of such obligation from the Holder,
which may be granted, conditioned or denied by Holder in its sole and absolute
discretion.
 
11.           No Usury. This Note is hereby expressly limited so that in no
event whatsoever, whether by reason of deferment or advancement of loan
proceeds, acceleration of maturity of the loan evidenced hereby, or otherwise,
shall the amount paid or agreed to be paid to the Holder hereunder for the loan,
use, forbearance or detention of money exceed the maximum interest rate
permitted by the laws of any applicable jurisdiction. If at any time the
performance of any provision involves a payment exceeding the limit of the price
that may be validly charged for the loan, use, forbearance or detention of money
under applicable law, then automatically and retroactively, ipso facto, the
obligation to be performed shall be reduced to such limit, it being the specific
intent of the Company and the Holder hereof that all payments under this Note
are to be credited first to interest as permitted by law, but not in excess of
(i) the agreed rate of interest hereunder, or (ii) that permitted by law,
whichever is the lesser, and the balance toward the reduction of principal.

 
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Effective January 1, 2015

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12.           Attorneys’ Fees. If the indebtedness represented by this Note or
any part hereof is collected in bankruptcy, receivership or other judicial
proceedings or if this Note is placed in the hands of attorneys for collection
after default, the Company agrees to pay, in addition to the principal and
interest payable hereunder, reasonable attorneys’ fees and costs incurred by the
Holder.
 
13.           Successors and Assigns. The rights and obligations of the Company
and the Holder will be binding upon and inure to the benefit of the successors,
permitted assigns, administrators and permitted transferees of the parties
hereto. Neither the Company nor the Holder may assign their rights or
obligations hereunder without the prior written consent of the non-assigning
party, whether by operation of law or otherwise, and any such assignment shall
be null and void, provided that no consent shall be required in connection with
the assignment of this Note or the rights hereunder by the Holder or the Company
to any successor entity of the assets, operations or securities of such assignor
or the assignment of this Note from the Holder to any Affiliate of the Holder.
Upon any such permitted or approved assignment, which shall be effective in the
case of a permitted assignment, upon notice thereof to the non-assigning party,
and upon any approved assignment, upon approval thereof by the non-assigning
party, all references herein to the “Company” and the “Holder” as applicable,
shall refer to the assignee of this Note, as applicable.
 
14.           Events of Default.
 
(a)           General. If an Event of Default (as defined below) occurs, the
Holder may declare the principal amount then outstanding of, and the accrued but
unpaid Interest on, this Note to be immediately due and payable by providing
written notice to the Company.
 
(b)           Definition. For purposes of this Note, an “Event of Default“ is
any of the following occurrences:
 
(i)           The Company shall fail to pay when due pursuant to the terms of
this Note (A) the outstanding Principal and all accrued but unpaid Interest
under this Note on the Maturity Date; and (B) any amounts required to be paid
pursuant to the applicable Note Prepayment Requirements set forth herein;
 
(ii)           The failure of the Company to observe or perform any other
covenant under this Note if such failure continues for seven Business Days
without cure after the first to occur of (i) written notice of the failure to
observe or perform any such covenant has been provided by the Holder to the
Company or (ii) the Company having become aware of such failure to observe or
perform such covenant;

 
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(iii)           Any representation or warranty made by the Company herein shall
prove to have been untrue or misleading as of the time made and the fact, event
or circumstance that gave rise to such inaccuracy has had or could reasonably be
expected to result in a material adverse effect on the Company’s ability to pay
this Note on the Maturity Date;
 
(iv)           The Company shall: (A) become insolvent or take any action which
constitutes its admission of inability to pay its debts as they mature; (B) make
an assignment for the benefit of creditors, file a petition in bankruptcy,
petition or apply to any tribunal for the appointment of a custodian, receiver
or a trustee for it or a substantial portion of its assets; (C) commence any
proceeding under any bankruptcy, reorganization, arrangement, readjustment of
debt, dissolution or liquidation or statute of any jurisdiction, whether now or
hereafter in effect; (D) have filed against it any such petition or application
in which an order for relief is entered or which remains undismissed for a
period of ninety (90) days or more; (E) indicate its consent to, approval of or
acquiescence in any such petition, application, proceeding or order for relief
or the appointment of a custodian, receiver or trustee for it or a substantial
portion of its assets; or (F) suffer any such custodianship, receivership or
trusteeship to continue undischarged for a period of ninety (90) days or more;
or
 
(v)           Any event or series of events occurs which has or is reasonably
likely to have a Material Adverse Effect as reasonably determined by Holder.
 
(c)           Remedies on Default. In case any one or more Events of Default
shall occur and be continuing, the Holder may proceed to protect and enforce its
rights by an action at law, suit in equity or other appropriate proceeding,
whether for the specific performance of any agreement contained herein, or for
an injunction against a violation of any of the terms hereof, or in aid of the
exercise of any power granted hereby or by law or otherwise. In case of a
default in the payment of any principal of or interest on this Note, or the
failure by the Company to observe or perform any other covenant under this Note
(to the extent such failure constitutes an Event of Default as defined above),
the Company will pay to the Holder such further amount as shall be sufficient to
cover the cost and expenses of collection, including, without limitation,
reasonable attorneys’ fees, expenses and disbursements. No course of dealing and
no delay on the part of the Holder in exercising any right, power or remedy
shall operate as a waiver thereof or otherwise prejudice the Holder’s rights,
powers or remedies. No right, power or remedy conferred by this Note upon the
Holder shall be exclusive of any other right, power or remedy referred to herein
or now or hereafter available at law, in equity, by statute or otherwise.
 
(d)           Subrogation Upon Default. Notwithstanding the terms and provisions
of this Section 14, all rights of the Holder to enforce its rights hereunder in
the event of the occurrence of an Event of Default (including, but not limited
to pursuant to Section 14(c)), shall be subject to and limited by, the
subrogation requirements set forth in Section 7, above.
 
15.           Notices. Any notice, demand, request, waiver or other
communication required or permitted to be given hereunder shall be in writing
and shall be effective (a) upon hand delivery by telecopy or facsimile at the
address or number designated below (if delivered on a Business Day during normal
business hours where such notice is to be received), or the first Business Day
following such delivery (if delivered other than on a Business Day during normal
business hours where such notice is to be received) or (b) on the second
Business Day following the date of mailing by express courier service, fully
prepaid, addressed to such address, or upon actual receipt of such mailing,
whichever shall first occur. The addresses for such communications shall be:

 
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(a)           If to the Company:

Pacific Energy Development Corp.
4125 Blackhawk Plaza Circle, Suite 201
Danville, California 94506
Tel: (855) 733-3826
Fax: (925) 403-0703
Attention: Clark R. Moore, General Counsel and Chief Financial Officer
Email: cmoore@pacificenergydevelopment.com

(b)           With a copy to:

The Loev Law Firm, PC
Attn: David M. Loev
6300 West Loop South, Suite 280
Bellaire, Texas 77401
Tel: (713) 524-4110
Email: dloev@loevlaw.com

(c)           If to Holder:

MIE Jurassic Energy Corporation
Suite 1501, Block C, Grand Palace
5 Hui Zhong Road, Chaoyang District,
Beijing 100101 P.R. China
Fax: 86-10-51238223
Email: harper@mienergy.us

(d)           With a copy to:
 
Jones Walker, LLP
Attn: Steve Miller
10001 Woodloch Forest Drive,
The Woodlands, TX 77
Tel: (281) 296-4400
Email:  smiller@joneswalker.com

 
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16.           Waivers and Amendments. The Company hereby waives presentment,
demand for performance, notice of non-performance, protest, notice of protest
and notice of dishonor. No delay on the part of the Holder in exercising any
right hereunder shall operate as a waiver of such right or any other right. Any
term of this Note may be amended or waived only with the written consent of the
Company and the Holder.

17.           Construction. When used in this Note, unless a contrary intention
appears: (i) a term has the meaning assigned to it; (ii) “or” is not exclusive;
(iii) “including” means including without limitation; (iv) words in the singular
include the plural and words in the plural include the singular, and words
importing the masculine gender include the feminine and neuter genders; (v) any
agreement, instrument or statute defined or referred to herein or in any
instrument or certificate delivered in connection herewith means such agreement,
instrument or statute as from time to time amended, modified or supplemented and
includes (in the case of agreements or instruments) references to all
attachments thereto and instruments incorporated therein; (vi) the words
“hereof”, “herein” and “hereunder” and words of similar import when used in this
Note shall refer to this Note as a whole and not to any particular provision
hereof; (vii) references contained herein to Article, Section, Schedule and
Exhibit, as applicable, are references to Articles, Sections, Schedules and
Exhibits in this Note unless otherwise specified; (viii) references to “writing”
include printing, typing, lithography and other means of reproducing words in a
visible form, including, but not limited to email; (ix) references to “dollars”,
“Dollars” or “$” in this Note shall mean United States dollars; (x) reference to
a particular statute, regulation or Law means such statute, regulation or Law as
amended or otherwise modified from time to time; (xi) any definition of or
reference to any agreement, instrument or other document herein shall be
construed as referring to such agreement, instrument or other document as from
time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth herein);
(xii) unless otherwise stated in this Note, in the computation of a period of
time from a specified date to a later specified date, the word “from” means
“from and including” and the words “to” and “until” each mean “to but
excluding”; (xiii) references to “days” shall mean calendar days; and (xiv) the
paragraph headings contained in this Note are for convenience only, and shall in
no manner be construed as part of this Note.
 
18.           Cooperation/Further Assurances. From and after the date hereof,
the Holder and the Company each hereby agree: i) to fully cooperate with the
other in preparing and filing any notices, applications, reports and other
instruments and documents and ii) to execute, acknowledge, deliver, file and/or
record, or cause such other parties to the extent permitted by law to execute,
acknowledge, deliver, file and/or record such other documents, which may be
required by this Note or which are desirable in the reasonable opinion of any of
the parties hereto, or their respective legal counsel, to consummate the
transactions contemplated by this Note, which shall include, but not be limited
to the Holder, where and when applicable, executing any documents, agreements or
confirmations necessary for the Company to confirm the Note Satisfaction
Confirmations, where and if applicable, the Holder’s ability to rely on Rule 144
for the sale of the Conversion Shares, and the Subordination Agreements.

 
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19.           Severability. If any term or other provision of this Note is
invalid, illegal or incapable of being enforced by any rule of law, or public
policy, all other conditions and provisions of this Note shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner adverse to
any party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Note so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the greatest extent possible.
 
20.           Entire Agreement. This Note and the agreements referred to herein
constitute the entire agreement, and supersede all prior agreements and
undertakings, both written and oral, among the parties, or any of them, with
respect to the subject matter hereof and thereof, including, but not limited to
the Prior Obligations.
 
21.           Specific Performance. The Company and the Holder acknowledge and
agree that irreparable damage would occur in the event that any of the
provisions of this Note were not performed in accordance with their specific
terms or were otherwise breached. It is accordingly agreed that the parties
shall be entitled to an injunction or injunctions to prevent or cure breaches of
the provisions of this Note and to enforce specifically the terms and provisions
hereof or thereof, this being in addition to any other remedy to which any of
them may be entitled by law or equity, without the need to post any bond.
 
22.           Review of Note; Voluntarily Entering Into Note. Each party herein
expressly represents and warrants to all other parties hereto that (a) before
executing this Note, said party has fully informed itself of the terms,
contents, conditions and effects of this Note; (b) said party has relied solely
and completely upon its own judgment in executing this Note; (c) said party has
had the opportunity to seek and has obtained the advice of its own legal, tax
and business advisors before executing this Note; (d) said party has acted
voluntarily and of its own free will in executing this Note; and (e) this Note
is the result of arm’s length negotiations conducted by and among the parties
and their respective counsel.
 
23.           No Presumption from Drafting. This Note has been negotiated at
arm’s-length between persons knowledgeable in the matters set forth within this
Note. Accordingly, given that all parties have had the opportunity to draft,
review and/or edit the language of this Note, no presumption for or against any
party arising out of drafting all or any part of this Note will be applied in
any action relating to, connected with or involving this Note. In particular,
any rule of law, legal decisions, or common law principles of similar effect
that would require interpretation of any ambiguities in this Note against the
party that has drafted it, is of no application and is hereby expressly waived.
 
24.           Counterparts. This Note and any signed agreement or instrument
entered into in connection with this Note, and any amendments hereto or thereto,
may be executed in one or more counterparts, all of which shall constitute one
and the same instrument.
 

 
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Effective January 1, 2015

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25.           Governing Law; Jurisdiction. This Note is being delivered in, and
shall be governed by and construed in accordance with, the laws of the State of
New York, without regard to conflicts of laws provisions thereof. The parties
hereby consent and agree that, in any actions predicated upon this Note, venue
is properly laid in New York and that the Circuit Court in and for New York, New
York, shall have full subject matter and personal jurisdiction over the parties
to determine all issues arising out of or in connection with the execution and
enforcement of this Note.
 

[Remainder of page left intentionally blank. Signature page follows.]

 
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IN WITNESS WHEREOF, the Company and the Holder have executed this Amended and
Restated Secured Subordinated Promissory Note as of the date first set forth
above.

 
THE COMPANY
 
PEDEVCO Corp.
 
 
            /s/Frank C. Ingriselli                                          
Frank C. Ingriselli
Chairman and
Chief Executive Officer
 

THE HOLDER

MIE Jurassic Energy Corporation

By:   /s/Andrew
Harper                                                                                    
    Andrew Harper
    Chief Executive Officer

 
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EXHIBIT A

Conversion Election Form
____________, 20 _

PEDEVCO Corp.

Re:           Conversion of Amended and Restated Secured Subordinated Promissory
Note

Gentlemen:

You are hereby notified that, 1) a Conversion Right Triggering Event has
occurred and 2) pursuant to, and upon the terms and conditions of that certain
Amended and Restated Secured Subordinated Promissory Note of PEDEVCO Corp. (the
“Company”), in the original principal amount of $4,925,000 (the “Note”), held by
me (us), I (we) hereby elect to exercise my (our) Conversion Option (as such
term is defined in Section 10 of the Note), in connection with $__________ of
the amount currently owed under the Note (including $___________ of Principal
and $__________ of accrued Interest), effective as of the date of this writing,
which amount will convert into ________________ shares of the Company’s Common
Stock (the “Conversion”) based on the Conversion Price of $________ per share,
the calculation of which is described in the materials attached hereto. In
connection with the Conversion, I (we) hereby re-certify, re-confirm and
re-warrant the Representations, as such Representations are defined in Section 9
of the Note.

Please issue certificate(s) for the applicable shares of the Company’s Common
Stock issuable upon the Conversion, in the name of the person provided below.

 
Very truly yours,
 
 
 
___________________________
 
Name:

 
Please issue certificate(s) for Common Stock as follows:
______________________________________________
Name

If Entity:
Entity Name ___________________________

Signatory’s Position With Entity ________________________
 
______________________________________________
Address
______________________________________________
Social Security No. of Shareholder (if applicable)

Please send the certificate(s) evidencing the Common Stock to:

Attn:______________________ Address:__________________________________

 
 
 
A-1 

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