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Exhibit 10.2
 
 
THE SECURITY REPRESENTED BY THIS CONTINGENT UNSECURED PROMISSORY NOTE (THIS
“SECURITY”) HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE “SECURITIES ACT”) OR ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT
AND UNDER APPLICABLE STATE SECURITIES LAWS OR UNLESS DOME ENERGY AB SHALL HAVE
RECEIVED AN OPINION OF COUNSEL THAT REGISTRATION OF THIS SECURITY UNDER THE
SECURITIES ACT AND UNDER THE PROVISIONS OF APPLICABLE STATE SECURITIES LAWS IS
NOT REQUIRED.
 
CONTINGENT UNSECURED PROMISSORY NOTE

 

Issuance Date:  November 19, 2015    
 Principal Amount: up to US$1,410,000.00

 
 
For value received, effective upon the Effective Date (as defined below), DOME
ENERGY AB, a Swedish corporation (the “Maker”), hereby promises to pay to the
order of Red Hawk Petroleum, LLC, a company incorporated under the laws of the
State of Nevada (together with its successors, representatives, and assigns, the
“Holder”), in accordance with the terms hereinafter provided and if, but only
if, the Contingent Event occurs, the aggregate unpaid principal amount together
with interest (if any) on such principal amount and all other obligations
outstanding hereunder.
 
Upon the Effective Date, the principal amount due under this Contingent
Unsecured Promissory Note (this “Note”) shall be calculated as described herein
and shall not exceed US$1,410,000.00.
 
Any payments under or pursuant to this Note shall be made in United States
Dollars in immediately available funds to the Holder at the address of the
Holder first set forth on the signature page or at such other place as the
Holder may designate from time to time in writing to the Maker or by wire
transfer of funds to the Holder’s account, instructions for which are attached
hereto as Exhibit A.  The payment obligations due under this Note shall be
contingent upon, and this Note shall only become effective upon, and shall be
due and payable within 30 days after, the earliest to occur of the following
events (collectively the “Contingent Event”):  (i) the termination of that
certain Agreement and Plan of Reorganization, dated May 21, 2015, as amended, by
and among the Holder, PEDEVCO Acquisition Subsidiary, Inc., a wholly-owned
subsidiary of the Holder, the Maker, and Dome Energy, Inc. a wholly-owned
subsidiary of the Holder (the “Merger Agreement”) pursuant to Article IX
therein; (ii) upon the Closing Date (as defined in the Merger Agreement, the
“Merger Closing Date”) if all of the Wells have been drilled and completed and
both the Wellbore Assignments and Wellbore Revenues (each as defined under the
Letter Agreement, defined below) have not been contributed by Holder to VistaTex
(as defined below) on or before the Merger Closing Date; and (iii) the
acceleration of all obligations and indebtedness hereunder in accordance with 0,
in the case of clauses (i), (ii) or (iii) above,  before the completion of the
Merger Agreement (the earlier to occur of (i), (ii) and (iii), the “Effective
Date”, and 30 days thereafter the “Maturity Date”).
 
If the transactions as currently contemplated by the Merger Agreement are
consummated and the Wellbore Assignments and Wellbore Revenues have been
contributed to VistaTex on or before the Merger Closing Date, then the
Contingent Event shall become an impossibility, and this Note shall be
immediately and automatically cancelled in full, with no obligations due or
owing hereunder.
 
 
 

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For the avoidance of doubt, and so long as any Obligation (as defined in the
Credit Agreement) is outstanding, this Note shall not become effective and shall
in no event become due and payable if all of the Wellbore Assignments have not
been conveyed to Maker.
 
ARTICLE I
TERMS OF NOTE
 
Section 1.1            Letter Agreement.  This Note has been executed and
delivered pursuant to that certain Letter Agreement, dated of even date
herewith, entered into by and among the Holder, PEDEVCO Corp., the Maker, Dome
Energy, Inc. (“Dome US”), a direct wholly-owned subsidiary of Maker, and
VistaTex Energy LLC (“VistaTex”), a direct wholly-owned subsidiary of Dome
US.  For purposes of this Note, the term “Letter Agreement” shall include all
Wellbore Assignments made thereunder.
 
Section 1.2             Interest.  Interest on the outstanding principal amount
of this Note shall accrue commencing as of the Effective Date, in arrears, at a
rate of 0.43% per annum and shall be due and payable on the Maturity
Date.  Furthermore, upon the occurrence and during the continuance of an Event
of Default (as defined below), the Maker will pay additional default rate
interest to the Holder, payable on demand, at a rate equal to the lesser of one
percent (1%) per month (prorated for partial months) and the maximum applicable
legal rate per annum, computed on the basis of a 360-day year of twelve (12)
thirty-day months on the outstanding principal balance of this Note and on all
other amounts due under this Note.
 
Section 1.3              Payment of Principal; No Prepayment. If the Effective
Date occurs, the principal amount of the note shall be equal to the product of
0.14 multiplied by (A) the difference of (1) the PV10 of the properties included
in the Wellbore Assignments (the “Properties”) as of the Effective Date less (2)
the drilling costs incurred through the Effective Date, provided that the total
principal amount outstanding under this Note shall not exceed $1,410,000 or be
less than $250,000. The “PV10” as of the Effective Date shall be calculated in
accordance with calculations and methodologies agreed upon by the Maker and the
Holder as of the date of the Letter Agreement, and the drilling costs in item
(2) above shall be equal to the amounts invoiced by Bonanza Creek with respect
to the Properties and received by the Maker, commencing in the July 2015
operating month and ending on the Effective Date.  The outstanding principal
balance plus all outstanding interest and all other amounts due and owing
hereunder shall be paid in full on the Maturity Date.  Any amount of principal
repaid hereunder may not be reborrowed.  The Maker may not prepay all or any
portion of the principal amount of this Note without the written consent of the
Holder, which may be denied or withheld in the Holder’s sole discretion.
 
Section 1.4              Payment on Non-Business Days.  Whenever any payment to
be made shall be due on a Saturday, Sunday or a public holiday under the laws of
the State of Texas, such payment shall be due on the next succeeding Business
Day and such next succeeding day shall be included in the calculation of the
amount of accrued interest payable on such date.
 
 
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Section 1.5              Transfer.  This Note may be transferred or sold, and
may also be pledged, hypothecated or otherwise granted as security, by the
Holder; provided, however, that any transfer or sale of this Note must be in
compliance with any applicable securities laws.
 
Section 1.6               Replacement.  Upon receipt of a duly executed,
notarized and unsecured written statement from the Holder with respect to the
loss, theft or destruction of this Note (or any replacement hereof) and a
standard indemnity, or, in the case of a mutilation of this Note, upon surrender
and cancellation of such Note, the Maker shall issue a new Note, of like tenor
and amount, in lieu of such lost, stolen, destroyed or mutilated Note.
 
Section 1.7                Unsecured.  This Note is an unsecured obligation of
the Maker.
 

ARTICLE II
EVENTS OF DEFAULT; REMEDIES
 
Section 2.1                Events of Default.  The occurrence of any of the
following events shall be an “Event of Default” under this Note:
 
(a)           any failure to make any payment of the principal, interest or any
other monetary obligation under this Note by the third Business Day after the
same shall be due and payable (whether on the Maturity Date or by acceleration
or otherwise); or
 
(b)           in the event the Wellbore Assignments are made to Dome US or
VistaTex, the failure to promptly pay all revenues received by Maker with
respect to the same to Dome US or VistaTex, as applicable; or
 
(c)           the Maker shall i) apply for or consent to the appointment of, or
the taking of possession by, a receiver, custodian, trustee or liquidator of
itself or of all or a substantial part of its property or assets, ii) make a
general assignment for the benefit of its creditors, iii) commence a voluntary
case under the United States Bankruptcy Code (as now or hereafter in effect) or
under the comparable laws of any jurisdiction (foreign or domestic), iv) file a
petition seeking to take advantage of any bankruptcy, insolvency, moratorium,
reorganization or other similar law affecting the enforcement of creditors’
rights generally, v) acquiesce in writing to any petition filed against it in an
involuntary case under United States Bankruptcy Code (as now or hereafter in
effect) or under the comparable laws of any jurisdiction (foreign or domestic),
vi) issue a notice of bankruptcy or winding down of its operations or issue a
press release regarding same, or vii) take any action under the laws of any
jurisdiction (foreign or domestic) analogous to any of the foregoing; or
 
(d)           a proceeding or case shall be commenced in respect of the Maker in
any court of competent jurisdiction, seeking viii) the liquidation,
reorganization, moratorium, dissolution, winding up, or composition or
readjustment of its debts, ix) the appointment of a trustee, receiver,
custodian, liquidator or the like of the Maker, or of all or any substantial
part of the Maker’s assets or x) similar relief in respect of it under any law
providing for the relief of debtors, and such proceeding or case described in
clause viii), ix) or x) shall continue undismissed, or unstayed and in effect,
for a period of sixty (60) days or any order for relief shall be entered in an
involuntary case under United States Bankruptcy Code (as now or hereafter in
effect) or under the comparable laws of any jurisdiction (foreign or domestic)
against the Maker or action under the laws of any jurisdiction (foreign or
domestic) analogous to any of the foregoing shall be taken with respect to the
Maker and shall continue undismissed, or unstayed and in effect for a period of
sixty (60) days.
 
 
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Section 2.2                Remedies Upon An Event of Default.  If an Event of
Default shall have occurred and shall be continuing, the Holder may at any time
at its option: (i) declare the entire unpaid principal balance of this Note,
together with all interest accrued hereon, and all fees and expenses, due and
payable, and thereupon, the same shall be accelerated and so due and payable,
without presentment, demand, protest, or notice, all of which are hereby
expressly unconditionally and irrevocably waived by the Maker; provided,
however, that upon the occurrence of an Event of Default described in 1)a)i) or
1)a)viii), the outstanding principal balance and accrued interest hereunder, and
all fees and expenses, shall be immediately and automatically due and payable,
and/or (ii) exercise or otherwise enforce any one or more of the Holder’s
rights, powers, privileges, remedies and interests under this Note, the Letter
Agreement, or applicable law.  No course of delay on the part of the Holder
shall operate as a waiver thereof or otherwise prejudice the right of the
Holder.  No remedy conferred hereby shall be exclusive of any other remedy
referred to herein or now or hereafter available at law, in equity, by statute
or otherwise.  Upon the occurrence and during the continuance of an Event of
Default, all amounts payable under this Note shall bear interest at the default
rate set forth in 0.
 
ARTICLE III
MISCELLANEOUS
 
Section 3.1                 Notices.  Any notice, demand, request, waiver or
other communication required or permitted to be given hereunder shall be in
writing and shall be effective b) upon hand delivery, telecopy or facsimile at
the address or number designated on the applicable signature page 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 c) 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.
 
Section 3.2                 Governing Law.  This Note shall be governed by and
construed in accordance with the internal laws of the State of Texas, without
giving effect to any of the conflicts of law principles which would result in
the application of the substantive law of another jurisdiction.  This Note shall
not be interpreted or construed with any presumption against the party causing
this Note to be drafted.
 
Section 3.3                 Headings.  Article and section headings in this Note
are included herein for purposes of convenience of reference only and shall not
constitute a part of this Note for any other purpose.
 
 
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Section 3.4                 Remedies, Characterizations, Other Obligations,
Breaches and Injunctive Relief.  Except as otherwise stated, the remedies
provided in this Note shall be cumulative and in addition to all other remedies
available under this Note and the Letter Agreement, at law or in equity
(including, without limitation, a decree of specific performance and/or other
injunctive relief), no remedy contained herein shall be deemed a waiver of
compliance with the provisions giving rise to such remedy and nothing herein
shall limit a holder’s right to pursue actual damages for any failure by the
Maker to comply with the terms of this Note.  Amounts set forth or provided for
herein with respect to payments, conversion 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 Maker
(or the performance thereof).  The Maker acknowledges that a breach by it of its
obligations hereunder will cause irreparable and material harm to the Holder and
that the remedy at law for any such breach may be inadequate. Therefore the
Maker agrees that, in the event of any such breach or threatened breach, the
Holder shall be entitled, in addition to all other available rights and
remedies, at law or in equity, to seek and obtain such equitable relief,
including but not limited to an injunction restraining any such breach or
threatened breach, without the necessity of showing economic loss and without
any bond or other security being required.
 
Section 3.5                 Enforcement Expenses.  The Maker agrees to pay all
costs and expenses incurred from time to time by the Holder with respect to any
modification, consent or waiver of the provisions of this Note or the Letter
Agreement and any enforcement of this Note and the Letter Agreement, including,
without limitation, attorneys’ reasonable fees and expenses.
 
Section 3.6                  Amendments.
 
(a)           This Note may not be modified or amended in any manner except in
writing executed by the Maker and the Holder.
 
Section 3.7                  Compliance with Securities Laws.
 
(a)           The Holder acknowledges that this Note is being acquired solely
for the Holder’s own account and not as a nominee for any other party, and for
investment, and that the Holder shall not offer, sell or otherwise dispose of
this Note except in accordance with applicable law.
 
(b)           The Holder is an “accredited investor” (as defined in Rule 501 of
Regulation D under the Securities Act), and the Holder has such experience in
business and financial matters that it is capable of evaluating the merits and
risks of an investment in this Note.  The Holder is not required to be
registered as a broker-dealer under Section 15 of the Exchange Act and it is not
a broker-dealer.  The Holder acknowledges that an investment in this Note is
speculative and involves a high degree of risk.
 
 
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Section 3.8                    Consent to Jurisdiction.  Each of the Maker and
the Holder d) hereby irrevocably submits to the exclusive jurisdiction of the
United States District Court sitting in the Southern District of Texas and the
courts of the State of Texas located in Harris County for the purposes of any
suit, action or proceeding arising out of or relating to this Note and e) hereby
waives, and agrees not to assert in any such suit, action or proceeding, any
claim that it is not personally subject to the jurisdiction of such court, that
the suit, action or proceeding is brought in an inconvenient forum or that the
venue of the suit, action or proceeding is improper.  Each of the Maker and the
Holder consents to process being served in any such suit, action or proceeding
by mailing a copy thereof to such party at the address in effect for notices to
it under the Purchase Agreement and agrees that such service shall constitute
good and sufficient service of process and notice thereof.  Nothing in this 1)d)
shall affect or limit any right to serve process in any other manner permitted
by law.
 
Section 3.9                    Binding Effect.  This Note shall be binding upon,
inure to the benefit of and be enforceable by the Maker, the Holder and their
respective successors and permitted assigns.  The Maker shall not delegate,
assign or transfer this Note or any obligations or undertakings contained in
this Note.
 
Section 3.10                   Failure or Indulgence Not Waiver.  No failure or
delay on the part of the Holder in the exercise of any power, right or privilege
hereunder, or course of conduct relating hereto, shall operate as a waiver
thereof, nor shall any single or partial exercise of any such power, right or
privilege preclude other or further exercise thereof or of any other right,
power or privilege.  No waiver by the Holder of any power, right or privilege
hereunder on any one occasion shall not be deemed a waiver of the same power,
right or privilege on any future occasion.
 
Section 3.11                    Maker Waivers; Dispute Resolution.
 
(a)           Except as otherwise specifically provided herein, the Maker and
all others that may become liable for all or any part of the obligations
evidenced by this Note, hereby waive presentment, demand, notice of nonpayment,
protest and all other demands and notices in connection with the delivery,
acceptance, performance and enforcement of this Note, and do hereby consent to
any number of renewals of extensions of the time or payment hereof and agree
that any such renewals or extensions may be made without notice to any such
persons and without affecting their liability herein and do further consent to
the release of any person liable hereon, all without affecting the liability of
the other persons, firms or Maker liable for the payment of this Note, AND DO
HEREBY WAIVE TRIAL BY JURY.
 
(b)           THE MAKER ACKNOWLEDGES THAT THE TRANSACTION OF WHICH THIS NOTE IS
A PART IS A COMMERCIAL TRANSACTION, AND TO THE EXTENT ALLOWED BY APPLICABLE LAW,
HEREBY WAIVES ITS RIGHT TO NOTICE AND HEARING WITH RESPECT TO ANY PREJUDGMENT
REMEDY WHICH THE HOLDER OR ITS SUCCESSORS OR ASSIGNS MAY DESIRE TO USE.
 
Section 3.12                    Definitions.  Capitalized terms used herein and
not defined shall have the meanings set forth in the Letter Agreement.  For the
purposes hereof, the following terms shall have the following meanings:
 
“Business Day” (whether or not capitalized) shall mean any day banking
transactions can be conducted in Houston, Texas and does not include any day
which is a federal or state holiday in such location.
 
“Credit Agreement” shall mean that certain Credit Agreement dated as of August
8, 2014, as amended or otherwise modified from time to time, by and among Dome
US, Société Générale, as administrative agent, and the other lenders from time
to time party thereto.
 
 
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“Person” means an individual or a corporation, partnership, trust, incorporated
or unincorporated association, joint venture, limited liability company, joint
stock company, government (or an agency or political subdivision thereof) or
other entity of any kind.
 

[Signature appears on following page]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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IN WITNESS WHEREOF, the Maker has caused this Note to be duly executed by its
duly authorized officer as of the date first above indicated.
 

MAKER
 
DOME ENERGY AB
 
/s/ Paul Morch
Paul Morch
President and
Chief Executive Officer
 

ACCEPTED AND AGREED TO:

HOLDER

 
RED HAWK PETROLEUM, LLC

/s/ Michael L. Peterson
Michael L. Peterson
President and Chief Financial Officer

 
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