Blueprint





  Exhibit 10.2











 



STOCK PURCHASE



AGREEMENT


 


THIS STOCK PURCHASE AGREEMENT, dated as
of August 1, 2018 (the “Agreement”), is by and
among Pacific Energy Development Corp. (“Buyer”), a Nevada
corporation and wholly-owned subsidiary of PEDEVCO Corp., a Texas
corporation, and Hunter Oil Production Corp., a Florida corporation
(the “Shareholder”).


 


RECITALS:


 


WHEREAS, the
Shareholder owns all of the issued and outstanding shares of stock
of 
Ridgeway Arizona Oil Corp., an Arizona corporation
(“RAOC”), and EOR Operating
Company, a Texas corporation (“EOR”) (RAOC and EOR are
sometimes referred to collectively as the “Companies” or separately
as a “Company”);


 


WHEREAS, Buyer,
Milnesand Mineral, Inc., a Delaware corporation
(“MMI”),
and Chaveroo Minerals, Inc., a Delaware corporation
(“CMI”), have entered into
that certain Purchase and Sale Agreement dated the date hereof (the
“PSA”)
concerning the purchase of certain oil and gas assets (the
“Assets”);


 


WHEREAS, Buyer
desires to acquire all of shares of stock of the Companies from the
Shareholder; and


 


WHEREAS,
Shareholder, MMI, CMI, Buyer, and Doherty & Doherty LLP (the
“Escrow
Agent”) have entered into that certain Escrow
Agreement dated the date hereof (the “Escrow Agreement”);
and


 


NOW,
THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements contained
herein, the parties hereto, intending to be legally bound, agree as
follows:






 



ARTICLE I



THE TRANSACTION

 

Section
1.1. Closing. The
closing (the “Closing”) of the
transaction contemplated herein (the “Transaction”) is
conditioned upon the closing of the transactions contemplated in
the PSA, and will occur simultaneously therewith. Termination of
the PSA in accordance with section 7.4 thereof shall, except as
provided in the Escrow Agreement, terminate this Agreement and the
parties shall have no liability or obligation hereunder except and
to the extent such termination results from the willful breach by a
party of any of its covenants or agreements hereunder, in which
case the non-breaching party shall have the right to seek all
remedies available at law or in equity, including specific
performance, for such willful breach.

 

Section
1.2. Purchase. At
the Closing, Buyer will acquire from the Shareholder 10 shares of
the common stock of RAOC and 300 shares of the common stock of EOR
(collectively, the “Shares”), in each case
representing all of the issued and outstanding equity stock of the
respective Company. The purchase provided for pursuant to this
Section 1.2 shall be effective as of the effective date of the
transactions contemplated in the PSA (the “Effective
Time”).

 

Section
1.3.     Purchase
Price. At the Closing, as consideration for the purchase of
the Shares pursuant to the terms hereof, Buyer will pay the
Shareholder $2,815,636 in cash (the “Stock Purchase Price”) by
wire transfer in clear funds to the account designed in Exhibit
A.

 


 




 

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Section
1.4.     Taking of Necessary
Action; Further Action. At and after the Closing,
each of the Parties will take all such reasonable and lawful action
as may be necessary or appropriate in order to effectuate the
Transaction in accordance with this Agreement as promptly as
possible. The Transaction shall be effective as of the Effective
Time.

 


Section
1.5.     Definitions.
The definitions of certain capitalized terms are set forth in
Section 6.2.

 



ARTICLE II


REPRESENTATIONS


AND WARRANTIES OF
BUYER

 


Buyer
represents and warrants to the Shareholder as follows:

 

Section
2.1.     Authority; Non
Contravention; Approvals.

 


(a)             The
execution and delivery of this Agreement by Buyer and the
consummation by Buyer of the Transaction does not and will not
violate or result in a breach of any provision of, or constitute a
default (or an event which, with notice or lapse of time or both,
would constitute a default) under, or result in the termination of,
or accelerate the performance required by, or result in a right of
termination or acceleration under, or result in the creation of any
Lien upon any of the properties or assets of Buyer under any of the
terms, conditions or provisions of (i) the charter or bylaws of
Buyer, (ii) any statute, law, ordinance, rule, regulation,
judgment, decree, order, injunction, writ, permit or license of any
court or Governmental Authority applicable to Buyer or any of its
properties or assets, or (iii) any note, bond, mortgage, indenture,
deed of trust, license, franchise, permit, concession, contract,
lease or other instrument, obligation or agreement of any kind to
which Buyer is now a party or by which Buyer or any of their
properties or assets may be bound or affected.

 


(b)             No
declaration, filing or registration with, or notice to, or
authorization, consent or approval of, any Governmental Authority
is necessary for the execution and delivery of this Agreement by
Buyer or the consummation by Buyer of the Transaction.

 


Section
2.2      No Brokers.
Buyer has incurred no obligation or liability for brokers’ or
finders’ fees relating to the matters provided for in this
Agreement which will be the responsibility of Shareholder, and any
such obligation or liability that might exist shall be the sole
obligation of Buyer.

 


Section
2.2      No
Distribution. Buyer is acquiring the Shares for its own
account and not with the intent to make a distribution in violation
of the Securities Act of 1933 as amended (and the rules and
regulations pertaining thereto) or in violation of any other
applicable securities laws, rules or regulations.

 


Section
2.3      Knowledge and
Experience. Buyer has (and had prior to negotiations
regarding the Shares) such knowledge and experience in the
ownership and the operation of oil and gas companies and financial
and business matters as to be able to evaluate the merits and risks
of an investment in the Assets. Purchaser is able to bear the risks
of an investment in the Shares and understands the risks of, and
other considerations relating to, a purchase of the
Shares.

 



ARTICLE III


REPRESENTATIONS
AND WARRANTIES


OF THE
SHAREHOLDER

 


Shareholder
represents and warrants to Buyer that as of the date hereof and as
of the Closing:

 




 

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Section
3.1. Organization
and Qualification. The Shareholder and each Company is a
corporation duly organized, validly existing and in good standing
under the laws of their state of formation indicated in this
Agreement and each has the requisite corporate power and authority
to own, lease and operate its assets and properties and to carry on
its business as it is now being conducted. The Companies are duly
qualified to do business as a foreign corporation and is in good
standing in each jurisdiction in which the properties owned,
leased, or operated by it or the nature of the business conducted
by it makes such qualification necessary, each of which
jurisdiction is listed in Schedule 3.1. True, accurate and complete
copies of the Charter Documents of the Companies, in each case as
in effect on the date hereof, including all amendments thereto,
have heretofore been delivered to Buyer.

 


Section
3.2. Capitalization.
The Shareholder owns the Shares, free and clear of Liens. The
Shares are duly and validly issued, fully paid, and nonassessable.
The Shares are the only issued and outstanding equity stock of the
Companies. Neither the Companies nor the Shareholder are a party to
any option, warrant, purchase right, conversion right, commitment
or other Contract that could require the Companies or the
Shareholder to issue, sell, transfer, or otherwise dispose of any
shares of stock of the Companies. There is no voting trust, proxy,
or other agreement or understanding with respect to the voting of
any stock of the Companies. Notwithstanding any other provision of
this Agreement to the contrary, Seller and the Companies may enter
into such re-capitalization transactions as are necessary to
reorganize the Companies and eliminate inter-company liabilities
provided that the re-capitalization transactions shall not be
detrimental to the financial position of the Companies or otherwise
to the Purchaser.

 


Section
3.3. Subsidiaries.
Neither Company owns any stock or equity interests in any other
entity.

 


Section
3.4. Authority; Non
Contravention; Approvals.

 


(a) The Shareholder has
full power and authority to execute and deliver this Agreement and
to consummate the Transaction. This Agreement has been duly
executed and delivered by the Shareholder, and, assuming the due
authorization, execution and delivery hereof by Buyer, constitutes
a valid and legally binding agreement of Shareholder, enforceable
against him in accordance with its terms, except that such
enforcement may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting or
relating to enforcement of creditors’ rights generally and
(ii) general equitable principles.

 


(b) The execution and
delivery of this Agreement by Shareholder and the consummation by
Shareholder of the Transaction does not and will not violate or
result in a breach of any provision of, or constitute a default (or
an event which, with notice or lapse of time or both, would
constitute a default) under, or result in the termination of, or
accelerate the performance required by, or result in a right of
termination or acceleration under, or result in the creation of any
Lien, upon any of the properties or assets of Companies under any
of the terms, conditions or provisions of (i) the Charter Documents
of the Companies entity, (ii) any statute, law, ordinance, rule,
regulation, judgment, decree, order, injunction, writ, permit or
license of any court or Governmental Authority applicable to the
Companies or any of their respective properties or assets, or (iii)
any note, bond, mortgage, indenture, deed of trust, license,
franchise, permit, concession, or any Operating
Agreement.

 


Section
3.5. Limited
Activity. Neither Company owns
any real estate. The only Liabilities of the Companies as at the
date hereof are listed on Schedule 3.5. The only activity of each
Company is to act as a bonded operator with the Bureau of Land
Management, New Mexico State Land Office, or the New Mexico Oil
Conservation Division of oil and gas properties whose record title
interests are owned by MMI and CMI.

 




 

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Section
3.6. Personal
Property.

 


(a) Schedule 3.6(a)
lists each material item of equipment, machinery, furniture,
trucks, trailers and other rolling stock and each other item of
tangible personal property (the “Personal
Property”).

 


(b) Except as set forth
on Schedule 3.6(b), (i) the Companies have good title to all
Personal Property free and clear of all Liens, and (ii) the
Personal Property is in good operating condition, free of any
defects.

 



Section 3.7. Labor, Benefit and
Employment Agreements. The Companies do not have any
employees.

 


Section
3.8. Litigation.
There are no claims, suits, actions, investigations, or proceedings
pending or, to the Knowledge of the Shareholder, threatened against
or relating to the Companies, before any court, Governmental
Authority, or any arbitrator. Neither the Shareholder nor the
Companies are subject to any judgment, decree, injunction, rule or
order of any court or Governmental Authority.

 


Section
3.9. No Violation of
Law. Neither Company is in violation, in any material
respect, of or has not been given written notice or been charged
with any violation of, any law, statute, order, rule, regulation,
ordinance or judgment (including, without limitation, any
applicable Environmental Law, as hereinafter defined) of any
Governmental Authority. No investigation or review by any
Governmental Authority with respect to either Company is pending or
threatened, nor has any Governmental Authority indicated an
intention to conduct the same. The Companies have all permits
(including without limitation environmental Permits, licenses,
franchises, variances, exemptions, orders and other governmental
authorizations, necessary to conduct its business as presently
conducted (collectively, the “Company Permits”).
Neither Company is in violation, in any material respect, of the
terms of any Company Permits. The consummation of the Transaction
will not cause the Companies to lose for any period its right or
ability to conduct its business pursuant to the Company
Permits.

 


Section
3.10.   Insurance
Policies. Schedule 3.10 sets forth a true and accurate list
and summary of current insurance coverage or information concerning
any self-insurance program with respect to either of the Companies.
The Companies have not received written notice from any current
insurance carrier of the intention of such carrier (a) to
discontinue any material insurance coverage afforded to the
Companies, or (b) to materially increase the premium costs of such
insurance.

 


Section
3.11.   Taxes.
Except as disclosed on Schedule 3.11:

 


(a) all Tax Returns
required to be filed by the Companies have been duly and timely
filed with the appropriate Governmental Authority and all such Tax
Returns are correct and complete in all material
respects;

 


(b) all Taxes for which
the Companies have liability have been timely paid in full and all
Tax withholding and deposit requirements imposed on or with respect
to the Companies (including with respect to any payments to its
employees) have been satisfied;

 


(c) no assessment,
deficiency or adjustment has been asserted, proposed or threatened
in writing with respect to any Taxes due from or Tax Returns
required to be filed by the Companies; the Companies are not
currently under audit or examination by any Governmental Authority
with respect to any Taxes or Tax Returns; there are no Liens on any
of the Company Assets that arose in connection with any failure (or
alleged failure) to pay any Tax; and no claim has ever been made by
a Governmental Authority in a jurisdiction in which the Companies
do not file Tax Returns that it is or may be required to file a Tax
Return in that jurisdiction; and

 




 

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(d) true, correct and
complete copies of all Tax Returns filed by the Companies during
the past three years, and all correspondence to the Companies from,
or from the Companies to, a Governmental Authority relating to such
Tax Returns or Taxes due from the Companies, have been made
available to Buyer.

 


Section
3.12. Contracts.
Schedule 3.12 lists the agreements pursuant to which either of the
Companies is operating the oil and gas assets of other parties (the
“Operating
Agreements”). There are no agreements to which the
Companies are a party with respect to which any party thereto
(including the Companies), is subject to any performance
obligations subsequent to the Closing other that the Operating
Agreements. True and complete copies (including all amendments) of
each Operating Agreement have been provided to Buyer. Except as
disclosed on Schedule 3.12: (i) each Operating Agreement is the
legal, valid obligation of the Companies and, to the Knowledge of
the Shareholder, each other Person party thereto, binding and
enforceable against the Companies and, to the Knowledge of the
Shareholder, each other Person party thereto except as limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance and transfer, and similar laws affecting the rights and
remedies of creditors generally and general principles of equity,
regardless of whether such enforceability is considered in a
proceeding at law or in equity; (ii) no Operating Agreement has
been terminated, and neither the Companies nor, to the Knowledge of
the Shareholder, any other Person is in material breach or default
thereunder, and, to the Knowledge of the Shareholder, no event has
occurred that with notice or lapse of time, or both, would
constitute a material breach or default, or permit termination,
modification in any manner adverse to the Companies or acceleration
thereunder; (iii) no party to any Operating Agreement has asserted
or has any right to offset, discount or otherwise abate any amount
owing under any Operating Agreement except as expressly set forth
in such Operating Agreement; and (iv) there are no waivers
regarding any Operating Agreement that have not been disclosed in
writing to Buyer.

 


Section
3.13. Bank
Accounts. Schedule
3.13 sets forth each bank, savings institution and other financial
institution with which the Companies have an account, credit card,
or safe deposit box and the names of all persons authorized to draw
thereon or to have access thereto. Except as disclosed on Schedule
3.13, the Companies have not given any revocable or irrevocable
powers of attorney or similar grant of authority to any Person
relating to its business for any purpose whatsoever.

 



Section 3.14. Restricted
Cash. As at the date hereof the Company has $2,315,636 in
the accounts listed on Schedule 3.14-1 (the “Restricted Cash”). The
balance of the Restricted Cash at Closing will at least equal such
amount. The restrictions and encumbrances that are applicable to
the Restricted Cash are set forth on Schedule 3.14-2.

 


Section
3.15. Disclosure.
No representation or warranty made by the Shareholder in this
Article III contains any untrue statement of a material fact, or
omits to state a material fact necessary to make such
representation or warranty, in light of the circumstances in which
it is made, not misleading.

 



ARTICLE IV



POST CLOSING ADJUSTMENT


 


Section
4.1.      Amount of
Adjustments. The purchase price payable pursuant to Section
2.1 of the PSA and the Stock Purchase Price (in the aggregate, the
“Total Purchase
Price”) shall be subject to adjustment as
follows:


 




 

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(a) The Total Purchase
Price shall be adjusted upward by the following:

 


(i) The amount of
expenditures made by the Companies, MMI, and CMI (the
“Seller
Parties”) that are attributable to the Assets after
the Effective Time including royalties, rentals and similar charges
and expenses billed under applicable operating agreements and all
prepaid expenses related to the Wells (as defined in the
PSA);

 


(ii) An
amount equal to the value of all Seller Parties’ net revenue
interest in the hydrocarbons in storage above the pipeline
connections, exclusive of tank bottoms, at the Effective Time, that
is credited to the Wells and which stored hydrocarbons have not
been sold by Seller Parties, calculated using the actual pricing
received by Seller as posted and set
forth in the Phillips 66 Sales Statements for July
2018;

 


(iii) The
amount of cash, other than the Restricted Cash, in the bank
accounts of the Companies as of the Effective Time;
and

 


(iv) The
receivables of the Companies as of the Effective Time with respect
to products produced from the Assets sold before the Effective
Time.

 


(b) The Total Purchase
Price shall be adjusted downward by the following:

 


(i)           The
amount of the proceeds received by Seller Parties, if any, that are
attributable to the Assets after the Effective Time (net of any
royalties and any production, severance, sales or other similar
taxes not reimbursed to Seller by the purchaser of
production);


 


(ii)           The
accounts payable and other liabilities of the Seller Parties
attributable to periods prior to the Effective Time;
and


 


(iii)           Seller’s
estimated share of ad valorem taxes for 2018 through the Effective
Time pursuant to Section 10.1 of the PSA.


 


Section 4.2.    
Post-Closing
Settlement Statement. Within sixty (60) days following
Closing, Seller shall prepare and deliver to Purchaser a final,
post-closing settlement statement consistent with the provisions of
Section 4.1. Purchaser and Seller will in good faith negotiate to
resolve all disputes associated with the post-closing settlement
statement within ninety (90) days following Closing, and any
adjustments from the Purchase Price paid at Closing shall be paid
to the appropriate party by the obligated party. Notwithstanding the foregoing, however, amounts
owed to the Seller Parties (i) pursuant to Section 4.1(a)(ii) of
this Agreement shall be paid within three business days of Closing
and (ii) amounts owed to the Seller Parties pursuant to Section
4.1(a) (iv) of this Agreement shall be paid within three business
days of the receipt by the Companies of the payment for the
purchase of August 2018 production, based on the actual product
prices applicable thereto at the time of sale in August 2018 as
posted and set forth in the Phillips 66 Sales Statements for August
2018.


 



ARTICLE V



SURVIVAL; INDEMNIFICATION

 


Section
5.1.      Indemnification by
the Shareholder. The Shareholder shall indemnify Buyer, and
its Affiliates (including its respective officers, directors,
employees and agents) (a “Buyer Indemnified Party”)
against, and hold each of them harmless from and against, any
Damages suffered, paid, or incurred by the Buyer Indemnified Party
as a result of (a) any inaccuracy or breach of any of the
representations and warranties made by or on behalf of the
Shareholder in Article III of this Agreement (in each case without regard to any
qualification as to materiality) (the “Representation
Indemnity”), (b) any violation or breach by
Shareholder of or default by a Shareholder under the terms of this
Agreement, (c) Pre-Closing Taxes, and (d) Liabilities arising from
the operations of the Companies prior to the Effective
Time.

 


 




 

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Section
5.2.      Indemnification by
Buyer. Buyer will indemnify, protect and defend each
Shareholder against, and hold the Shareholder harmless from and
against, any and all Damages suffered, paid, or incurred by such
Shareholder as a result of (a) any inaccuracy or breach of the
representations and warranties made by or on behalf of Buyer in
Article II of this Agreement (in each case without regard to any
qualification as to materiality), (b) any violation or breach by
Buyer of or default by Buyer under the terms of this Agreement, and
(c) Liabilities arising from the operations of the Companies after
the Effective Time.

 


Section
5.3.      Limitations. The
representations and warranties of Shareholder set forth in Article
III shall survive Closing for a period of two years. Shareholder
shall have no liability pursuant to the Representation Indemnity
until the aggregate amount of damages suffered as a result of all
breaches of representations and warranties exceeds $25,000 (the
“Threshold”), in which case indemnification shall be made by
Shareholder including damages up to that amount. The maximum
liability of Shareholder pursuant to the Representation Indemnity
shall be $1,000,000 (the “Cap”). The Threshold and
Cap shall be reduced to the extent damages are paid by MMI or CMI
pursuant to the Article IV of the PSA.


 


Section
5.4.      Assumption of
Liability. From and after the Effective Time, Purchaser
agrees to and will assume all surface, plugging and abandonment,
and other Environmental Liabilities of whatsoever kind and nature
as to the Assets whether from ownership, operation, use or
contract. Purchaser acknowledges that there may exist obligations
to surface owners or tenants of the surface, such as grazing
lessees, of the subject lands to negotiate and execute a surface
use and compensation agreement in compliance with the New Mexico
Surface Owner’s Protection Act, which obligation may include
providing notice of Purchaser’s oil and gas operations and
non-oil and gas operations. After the Effective Time, SHAREHOLDER
GIVES NO WARRANTY AS TO ITS COMPLIANCE WITH STATE OR FEDERAL
GOVERNMENTAL ENTITIES OR REGULATIONS PERTAINING TO ENVIRONMENTAL
COMPLIANCE OR PLUGGING LIABILITY AND ADDITIONALLY GIVES NO WARRANTY
AS TO THE CONDITION OF THE SURFACE OR OTHER ENVIRONMENTAL
LIABILITIES AND PURCHASER ACKNOWLEDGES IT IS ACQUIRING THE ASSETS
IN AN EXISTING “AS IS” AND “WHERE IS”
CONDITION.


 


Section
5.5       Indemnification.
NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT TO THE
CONTRARY, FROM AND AFTER THE
EFFECTIVE TIME PURCHASER AGREES TO AND WILL INDEMNIFY,
DEFEND AND HOLD HARMLESS SHAREHOLDER FROM AND AGAINST ANY AND ALL
CLAIMS, LIABILITIES, LOSSES, COSTS AND EXPENSES (INCLUDING COURT
COSTS AND REASONABLE ATTORNEYS’ FEES) THAT ARE ATTRIBUTABLE
TO (I) ENVIRONMENTAL LIABILITIES ARISING FROM SELLER’S
OWNERSHIP, OPERATION, OR USE OF THE ASSETS COVERED BY THE PSA, (II)
PLUGGING AND ABANDONING ALL WELLS NOW OR HEREAFTER LOCATED ON THE
LANDS INCLUDED IN THE ASSETS, (III) ANY AND ALL COSTS INCIDENT TO
SUCH PLUGGING AND ABANDONMENT, (IV) ANY ASSET RETIREMENT
OBLIGATIONS ASSOCIATED WITH THE ASSETS, AND (V) ALL CLAIMS
PERTAINING TO RESTORATION OF THE SURFACE OR ENVIRONMENTAL CLAIMS.
THIS SECTION 5.5 SHALL SURVIVE THE EFFECTIVE TIME. THE DEFENSE,
INDEMNIFICATION, HOLD HARMLESS AND RELEASE PROVISIONS PROVIDED FOR
IN THIS AGREEMENT SHALL BE APPLICABLE WHETHER OR NOT THE
LIABILITIES, COSTS, EXPENSES AND DAMAGES IN QUESTION AROSE OR
RESULTED SOLELY OR IN PART FROM THE GROSS, SOLE, ACTIVE, PASSIVE,
CONCURRENT OR COMPARATIVE NEGLIGENCE, STRICT LIABILITY OR OTHER
FAULT OR VIOLATION OF LAW OF OR BY ANY INDEMNIFIED PARTY. SELLER
AND PURCHASER ACKNOWLEDGE THAT THIS STATEMENT COMPLIES WITH THE
EXPRESS NEGLIGENCE RULE AND IS CONSPICUOUS.

 


 




 

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ARTICLE VI


DEFINITIONS AND
RULES OF CONSTRUCTION

 


Section
6.1.      Definitions; Rules
of Construction.

 

(a) All article,
section, schedule and exhibit references used in this Agreement are
to articles, sections, schedules and exhibits to this Agreement
unless otherwise specified. The schedules and exhibits attached to
this Agreement constitute a part of this Agreement and are
incorporated herein for all purposes.

 

(b) If a term is
defined as one part of speech (such as a noun), it shall have a
corresponding meaning when used as another part of speech (such as
a verb). Terms defined in the singular have the corresponding
meanings in the plural, and vice versa. Unless the context of this
Agreement clearly requires otherwise, words importing the masculine
gender shall include the feminine and neutral genders and vice
versa. The term “includes” or “including”
shall mean “including without limitation.” The words
“hereof,” “hereto,” “hereby,”
“herein,” “hereunder” and words of similar
import, when used in this Agreement, shall refer to this Agreement
as a whole and not to any particular section or article in which
such words appear.

 

(c) The Parties
acknowledge that each Party and its attorney has reviewed this
Agreement and that any rule of construction to the effect that any
ambiguities are to be resolved against the drafting Party, or any
similar rule operating against the drafter of an agreement, shall
not be applicable to the construction or interpretation of this
Agreement.

 

(d) The captions in
this Agreement are for convenience only and shall not be considered
a part of or affect the construction or interpretation of any
provision of this Agreement.

 

(e) Except as
specifically provided otherwise in this Agreement, all accounting
terms used herein that are not specifically defined shall have the
meanings customarily given them pursuant to GAAP.

 


Section
6.2.     Definitions.
For purposes of this Agreement:

 


“Affiliates” means a
Person controlling, controlled by, or under common control with,
the Person to whom the reference is made.

 


“Business Days” means any
day other than a Saturday, Sunday or legal holiday under the laws
of the United States or the State of Texas.

 


“Charter Documents” means,
with respect to a Person, the organizational documents that govern
such Person pursuant to its jurisdiction of formation or
organization, including as applicable, certificates or articles of
incorporation, certificates or articles of formation, bylaws,
limited liability company operating agreements, regulations,
partnership or limited partnership agreements, and similar
instruments.

 


“Claim” means any and all
claims, causes of action, demands, lawsuits, suits, proceedings,
governmental investigations or audits and administrative
orders.

 


“Company Assets” means all
of the assets, whether real, personal (tangible or intangible) or
mixed, owned or leased by the Companies.


 




 

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“Contract” means any
legally binding obligation or agreement, whether or not reduced to
writing, and specifically including, without limitation, any client
or customer agreement, note, bond, mortgage, lease of real or
personal property (including, without limitation, automobile,
vehicle and other equipment leases), license and other
instrument.

 


“Damages” means any loss,
damage, injury, Liability, claim, demand, settlement, judgment,
award, fine, penalty, Tax, fee (including any reasonable legal fee,
expert fee, accounting fee or advisory fee), charge, cost
(including any cost of investigation) or expense of any nature, but
will not include (i) any consequential damages, (ii) any exemplary
or speculative damages, or (iii) any punitive damages except, in
the case of clauses “(i)” through “(iii)”
of this definition, such damages relate to or arise out of a
Third-Party Claim in which case, such damages shall constitute
“Damages.”

 


“Environmental
Laws” shall mean any and all applicable laws, rules
and regulations pertaining to the safety, health or conservation or
protection of the Assets, the environment, wildlife, or natural
resources in effect in any and all jurisdictions in which the
Assets are located, including, without limitation, the Clean Air
Act, as amended, the Federal Water Pollution Control Act, as
amended, the Safe Drinking Water Act, as amended, the Comprehensive
Environmental Response, Compensation and Liability Act, as amended
(“CERCLA”), the Superfund
Amendments and Reauthorization Act of 1986, as amended
(“SARA”), the Resource
Conservation and Recovery Act, as amended (“RCRA”), the Hazardous and
Solid Waste Amendments Act of 1984, as amended, the Toxic
Substances Control Act, as amended, the Occupational Safety and
Health Act, as amended (“OSHA”), and any
applicable state, tribal, or local counterparts

 


“Environmental
Liabilities” means any condition that exists with
respect to the air, land, soil, surface, subsurface strata, surface
water, ground water or sediments which causes an Asset to be
subject to fine, liability, clean-up or remediation under any of
the Environmental Laws.

 


“GAAP” means generally
accepted accounting principles, consistently applied, of the United
States of America, as applicable.

 


“Governmental Authority”
means any nation, province, state or political subdivision thereof,
and any agency, natural Person or other entity exercising
executive, legislative, regulatory or administrative functions of
or pertaining to government.

 


“Knowledge of the
Shareholder” means (i) the actual knowledge of the
Shareholder, and/or (ii), the knowledge that the Shareholder would
be expected to have if he had conducted a reasonable inquiry of
those individuals within the Company who had responsibility over
the subject matter at issue.

 


“Liabilities” means all
damages, liabilities or obligations of any nature whatsoever,
whether absolute or contingent, due or to become due, accrued or
unaccrued, known or unknown, or otherwise, including indebtedness
for money borrowed, accounts payable, liabilities imposed by law
and/or Governmental Authorities BUT SPECIFICALLY EXCLUDES all
Environmental Liabilities.

 


“Liens” means all
mortgages, restrictions, liens, pledges, charges, claims, options,
calls, or encumbrance of any nature whatsoever.

 


“Party” means any one of
the Parties.

 


“Parties” means Buyer and
the Shareholder.

 




 

9








 






 


“Person” means any natural
person, firm, general or limited partnership, association,
corporation, limited liability company, company, trust, other
organization (whether or not a legal entity), public body or
government, including any Governmental Authority.

 


“Pre-Closing Taxes” means
any Taxes of the Companies attributable to any Pre-Closing Taxable
Period. In the case of any Taxes that are payable with respect to
any Straddle Period, the portion of any such Taxes that are
attributable to the Pre-Closing Taxable Period is (i) in the
case of any property or ad valorem Taxes or other Taxes determined
without regard to income, receipts or transactions occurring on a
specific date, deemed to be the amount of such Tax for the entire
Straddle Period multiplied by a fraction, the numerator of which is
the number of days in the portion of the Straddle Period up to and
including the Closing Date and the denominator of which is the
number of days in the entire Straddle Period, and (ii) in the
case of all other Taxes, deemed equal to the amount which would be
payable as computed on a “closing-of-the-books” basis
if the relevant Straddle Period ended on and included the Closing
Date; provided,
however, that
exemptions, allowances or deductions that are calculated on an
annual basis (including depreciation and amortization deductions)
shall be allocated between the portion of the Straddle Period up to
and including the Closing Date and the remainder of such Straddle
Period in proportion to the number of days in each period. Any
franchise Tax or other Tax providing the right to do business for a
specified period shall be allocated to the taxable period during
which the income, operations, assets or capital comprising the base
of such Tax is measured, regardless of whether the right to do
business for another period is obtained by the payment of such
Tax.

 


“Pre-Closing Taxable
Period” means any taxable period ending on or before
the Closing Date and that portion of any Straddle Period up to and
including the Closing Date.

 


“Straddle Period” means
any Tax period beginning on or before and ending after the Closing
Date.

 


“Tax” or
“Taxes”
means any federal, state, local, or foreign income, gross receipts,
license, payroll, employment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including taxes under
Code Section 59A), customs duties, capital stock, franchise,
profits, withholding, social security (or similar), unemployment,
disability, real property, personal property, sales, use, transfer,
registration, value added, alternative or add-on minimum,
estimated, or other tax of any kind whatsoever, whether computed on
a separate or consolidated, unitary or combined basis or in any
other manner, including any interest, penalty, or addition thereto,
whether disputed or not.

 


“Tax Return” means a
return, declaration of estimated Tax, Tax report or information
return relating to any Taxes with respect to the applicable Person
or their income, assets or operations.

 



ARTICLE VII



MISCELLANEOUS

 


Section
7.1.     Remedies. If
any legal action or other proceeding is brought for the enforcement
of this Agreement, or because of an alleged dispute, breach,
default or misrepresentation in connection with any of the
provisions of this Agreement, the successful or prevailing Party or
Parties shall be entitled to recover reasonable attorneys’
fees and other costs incurred in that action or proceeding in
addition to any other relief to which it or he may be entitled at
law or equity.

 




 

10








 






 


Section
7.2.    Notices. All
notices, consents, demands or other communications required or
permitted to be given pursuant to this Agreement shall be deemed
sufficiently given: (i) when delivered personally during a business
day to the appropriate location described below or telefaxed to the
telefax number indicated below (with confirmation of transmission),
or (ii) five (5) Business Days after the posting thereof by United
States first class, registered or certified mail, return receipt
requested, with postage fee prepaid and addressed:

 


	

If to
Buyer:

	

Pacific
Energy Development Corp.


4125
Blackhawk Plaza Circle, Suite 201


Danville,
CA 94506


Attention:
Clark Moore


Fax:
(510) 743-4262


Email:
cmoore@pacificenergydevelopment.com


 


	

With a
copy to:

	

Casey
W. Doherty, Sr.


	
 

	

Doherty
& Doherty LLP


	
 

	

1717
St. James Place, Suite 520


	
 

	

Houston,
Texas 77056


	
 

	

Fax:
(713) 572-1001


	
 

	
 


	

If to
the Shareholder:

	

Hunter
Oil Production Corp.


	
 

	


1040 West Georgia Street Suite 940



Suite 940



Vancouver, B.C. V6E 4H1 CA


	
 

	

Attention:
Corporate Secretary


Fax:
(604) 485-8509


Email:
corpsec@hunteroil.com







 


Section
7.3.     Successors.
This Agreement shall be binding upon each of the Parties upon their
execution, and inure to the benefit of the Parties and their
respective successors and assigns. Specifically, but not by way of
limitation, Buyer shall be permitted to assign and transfer all or
any portion of its rights hereunder to any Affiliate of Buyer
provided that Buyer continues to be an obligor with respect to such
assigned obligations following such assignments.

 


Section
7.4.     Severability.
In the event that any one or more of the provisions contained in
this Agreement or in any other instrument referred to herein,
shall, for any reason, be held to be invalid, illegal, or
unenforceable in any respect, such invalidity, illegality, or
unenforceability shall not affect any other provision of this
Agreement or any such other instrument.

 


Section
7.5.     Section
Headings. The section headings used herein are descriptive
only and shall have no legal force or effect whatsoever. Except to
the extent the context specifically indicates otherwise, all
references to articles and sections refer to articles and sections
of this Agreement, and all references to the exhibits and schedules
refer to exhibits and schedules attached hereto, each of which is
made a part hereof for all purposes.

 


Section
7.6.     Gender.
Whenever the context so requires, the masculine shall include the
feminine and neuter, and the singular shall include the plural and
conversely.


 




 

11








 






 


Section
7.7.     Governing
Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas, U.S.A., applicable
to agreements and contracts executed and to be wholly performed
there, without giving effect to the conflicts of laws principles
thereof. Exclusive venue for any legal or equitable action relating
to this Agreement or the Transaction shall lie in Harris County,
Texas.

 


Section
7.8.     Multiple
Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an
original.

 


Section
7.9      Waiver. Any
waiver by any Party to be enforceable must be in writing and no
waiver by any Party shall constitute a continuing
waiver.


 


Section
7.10.   Entire
Agreement. This Agreement and the other agreements referred
to herein set forth the entire understanding of the Parties
relating to the subject matter hereof and thereof and supersede all
prior agreements and understandings among or between any of the
Parties relating to the subject matter hereof and
thereof..

 


Section
7.11.   Termination.
The obligations of the Parties to close the Transaction shall
terminate upon the termination of the obligations of the parties to
the PSA to close the transactions contemplated
thereunder.

 



[SIGNATURE PAGE FOLLOWS]

 


 

 


 

 


 

 




 

12








 






 


IN
WITNESS WHEREOF, the Parties have executed this Agreement as of the
date and year first set forth above.

 


BUYER:


 


PACIFIC
ENERGY DEVELOPMENT CORP.


 



By:            


/s/ Simon Kukes







Name:              



Dr. Simon
Kukes







Title:                



Chief Executive
Officer






 


 


SHAREHOLDER:


 


HUNTER
OIL PRODUCTION CORP.


 



By:            


/s/ Al. H. Denson







Name:      



Al H.
Denson







Title:             



President






 


 



Signature page to Stock Purchase Agreement


 




 

13








 






 



EXHIBIT A


 


Attached
to and made a part of that certain Share Purchase Agreement dated
as of August 1, 2018, by and between Milnesand Minerals Inc. and
Chaveroo Minerals Inc., collectively, Seller, and Pacific Energy
Development Corp., as Purchaser.


 


 



WIRE INSTRUCTIONS


 


 



- redacted -


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 



Exhibit A to Stock Purchase Agreement


 




 

14








 






 



Schedule 3.1


 


Attached
to and made a part of that certain Share Purchase Agreement dated
as of August 1, 2018, by and between Hunter Oil Production Corp, as
Seller, and Pacific Energy Development Corp., as
Purchaser.


 



JURISDICTIONS


 



- redacted -


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 




 

15








 






 



Schedule 3.5


 


Attached
to and made a part of that certain Share Purchase Agreement dated
as of August 1, 2018, by and between Hunter Oil Production Corp, as
Seller, and Pacific Energy Development Corp., as
Purchaser.


 



LIABILITIES


 



- redacted -


 






 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 

 




 




 

16








 






 



Schedule 3.6(a)


 


Attached
to and made a part of that certain Share Purchase Agreement dated
as of August 1, 2018, by and between Hunter Oil Production Corp, as
Seller, and Pacific Energy Development Corp., as
Purchaser.


 



TANGIBLE PERSONAL PROPERTY


 



- redacted -


 






 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 

 




 




 

17








 






 



Schedule 3.6(b)


 


Attached
to and made a part of that certain Share Purchase Agreement dated
as of August 1, 2018, by and between Hunter Oil Production Corp, as
Seller, and Pacific Energy Development Corp., as
Purchaser.


 



ENCUMBRANCES


 



- redacted -


 






 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 

 




 




 

18








 






 



Schedule 3.10


 


Attached
to and made a part of that certain Share Purchase Agreement dated
as of August 1, 2018, by and between Hunter Oil Production Corp, as
Seller, and Pacific Energy Development Corp., as
Purchaser.


 



INSURANCE POLICIES


 



- redacted -


 






 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 

 




 




 

19








 






 



Schedule 3.11


 


Attached
to and made a part of that certain Share Purchase Agreement dated
as of August 1, 2018, by and between Hunter Oil Production Corp, as
Seller, and Pacific Energy Development Corp., as
Purchaser.


 



TAXES


 



- redacted -






 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 

 



 



 




 

20








 






 



Schedule 3.12


 


Attached
to and made a part of that certain Share Purchase Agreement dated
as of August 1, 2018, by and between Hunter Oil Production Corp, as
Seller, and Pacific Energy Development Corp., as
Purchaser.


 



OPERATING AGREEMENTS


 


 



- redacted -


 


 



OTHER AGREEMENTS


 



- redacted -


 






 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 

 




 




 

21








 






 



Schedule 3.13


 


Attached
to and made a part of that certain Share Purchase Agreement dated
as of August 1, 2018, by and between Hunter Oil Production Corp, as
Seller, and Pacific Energy Development Corp., as
Purchaser.


 



BANK ACCOUNTS


 



- redacted -


 






 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 

 




 




 

22








 






 



Schedule 3.14-1


 


Attached
to and made a part of that certain Share Purchase Agreement dated
as of August 1, 2018, by and between Hunter Oil Production Corp, as
Seller, and Pacific Energy Development Corp., as
Purchaser.


 



RESTRICTED CASH ACCOUNTS


 



- redacted -


 






 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 

 




 




 

23