Document:

ex10-17.htm

Exhibit 10.17

 

MEMBERSHIP INTEREST PURCHASE AGREEMENT

 

This MEMBERSHIP INTEREST PURCHASE AGREEMENT dated as of March 7, 2014 (this “Agreement”), by and between Pacific Energy Development Corp., a Nevada corporation (the “Seller”), and RJ Resources Corp., a Delaware corporation (the “Buyer”).

 

W I T N E S S E T H :

 

WHEREAS, PEDEVCO Corp. (“PEDEVCO”) is the owner of all of the issued and outstanding capital stock of the Seller;

 

WHEREAS, PEDEVCO is party to that certain Note Purchase Agreement dated as of the date hereof (as amended, amended and restated, supplemented, or otherwise modified from time to time, the “Purchase Agreement”) by and between PEDEVCO, the Buyer and the other investors party thereto (collectively, the “Investors”) and BAM Administrative Services LLC, as agent for the Investors, pursuant to which the Investors agreed to extend loans to PEDEVCO in the principal amount of up to $50,000,000 (the “Loans”);

 

WHEREAS, in order to induce the Buyer to enter into the Purchase Agreement and to extend a portion of the Loans to PEDEVCO pursuant to the Purchase Agreement, and in consideration thereof, the Seller has agreed to execute and deliver this Agreement;

 

WHEREAS, the aforesaid Loans will be beneficial to the Seller inasmuch as the proceeds of the Loans to PEDEVCO will directly benefit the Seller;

 

WHEREAS, the Seller is the sole member of PEDCO MSL Merger Sub LLC, LLC, a Nevada limited liability company (“Merger Sub”), and has agreed to convey to the Buyer fifty percent (50%) of the limited liability company interests issued by Merger Sub (the “Purchased Units”) upon the terms and subject to the conditions set forth herein.

 

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements herein contained, and intending to be legally bound hereby, the parties hereto do hereby agree as follows:

 

1.   Purchase and Sale.

 

1.1.        Purchase and Sale of Purchased Units.  Subject to the terms and conditions set forth in this Agreement and in reliance upon the representations, warranties, covenants and conditions herein contained, on the Closing Date (as hereinafter defined in Section 7), the Seller shall sell, convey, assign, transfer and deliver to the Buyer and the Buyer shall purchase, the Purchased Units, free and clear of any and all liens, adverse claims, options, security interests, restrictions, pledges, mortgages, charges, encumbrances and third party rights of any kind or nature whatsoever, whether arising by Contract, operation of law or otherwise (collectively, “Liens”).  For purposes of this Agreement, (a) “Contracts”, when described as being those of or applicable to any Person, shall mean any and all contracts, agreements, commitments, arrangements or other undertakings, whether formal or informal, written or oral, including any amendment and other modifications thereto, to which such Person is a party or by which such Person or its properties or assets is subject or bound, and (b) “Person” shall mean any individual, sole proprietorship, joint venture, partnership, corporation, limited liability company, association, joint stock company, unincorporated organization, cooperative, trust, estate, government entity or authority (including any branch, subdivision or agency thereof), administrative or regulatory authority, or any other entity of any kind or nature whatsoever.

 

  

 

  

2.   Consideration.  The extension by the Buyer of a portion of the Loans to PEDEVCO pursuant to the Purchase Agreement shall be deemed to be consideration for the sale, transfer, conveyance and delivery of the Purchased Units by the Seller to the Buyer.

 

3.   Representations and Warranties of the Seller.  The Seller represents and warrants to the Buyer as follows:

 

3.1.    Organization, Standing and Power.

 

  (a)    The Seller is a corporation duly organized, validly existing and in good standing under the laws of the State of Nevada.  The Seller has the requisite corporate power and authority to own and operate its properties and to execute and deliver, and perform its obligations under, this Agreement and each of the other Transaction Documents to which the Seller is (or is to be) a party.  For purposes of this Agreement, “Transaction Documents” shall mean (i) this Agreement, (ii) the operating agreement of Merger Sub and (iii) all other documents, instruments and certificates delivered pursuant hereto or thereto or in connection herewith or therewith.

 

  (b)    Merger Sub is a limited liability company duly formed, validly existing and in good standing under the laws of the State of Nevada.

 

3.2.    Authority; Binding Agreement.  The execution and delivery by the Seller of this Agreement and each of the other Transaction Documents to which the Seller is (or is to be) a party, the performance by the Seller of its obligations hereunder and thereunder have been duly and validly authorized by all necessary action on the part of the Seller and the Seller has all necessary power and authority with respect thereto.  Each of the Transaction Documents to which the Seller is (or is to be) a party will be when executed and delivered by the Seller the legal, valid and binding obligations of the Seller, enforceable against the Seller in accordance with their respective terms, except as the same may be limited by bankruptcy, insolvency, reorganization, moratorium or other laws affecting the rights of creditors generally and subject to the rules of law governing (and all limitations on) specific performance, injunctive relief, and other equitable remedies (collectively, “Enforceability Exceptions”).

 

3.3.    Noncontravention.  Neither the execution and delivery by the Seller of the Transaction Documents to which the Seller is (or is to be) a party, nor the performance by the Seller of its obligations thereunder will (nor with the giving of notice or the lapse of time or both would) (a) conflict with or result in a breach of any provision of (i) any Contract to which the Seller or Merger Sub is a party or bound or any other obligation of the Seller or Merger Sub to any Person, or (ii) the certificate of incorporation, by-laws or other organizational documents of the Seller or Merger Sub, in each case as amended to date, (b) obligate the Seller, Merger Sub or the Buyer to pay any compensation to any Person, (c) result in the creation or imposition, or permit the enforcement, of any Lien upon the Purchased Units or any assets of Merger Sub, or (d) constitute a violation of any Legal Requirement (as defined below) applicable to the Seller or Merger Sub, except in the case of clauses (a)(i) and (d), for such conflicts, breaches and violations as would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the Seller or PED  MSL or impair the ability of the Seller to perform its obligations as set out in the Transaction Documents to which it is (or is to be) a party.  For purposes of this Agreement, (a) “Legal Requirements” shall mean any and all laws (statutory, judicial or otherwise), ordinances, regulations, judgments, orders, directives, injunctions, writs, decrees or awards of, and any Contracts with, any Governmental Authority (as defined in Section 3.4) and (b) “Affiliate” of any Person means any Person which, directly or indirectly controls or is controlled by that Person, or is under common control with that Person, and “control” (including, with correlative meaning, the terms “controlled by” and “under common control with”), as used with respect to any Person, shall mean the possession, directly or indirectly of the power to direct or cause the direction of the management and policies of such Person, whether through ownership of voting securities or by contract or otherwise.

 

  

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3.4.    Consents.  No consent, approval, waiver, notice, order, or authorization of, or registration, qualification, designation, declaration, recording or filing with, any federal, state, local, municipal or foreign governmental authority, quasi-governmental authority (including any trademark registry or office or other governmental agency, commission, public authority, branch, department or official, and any court or other tribunal) or body exercising, or entitled to exercise, any governmentally derived administrative, executive, judicial, legislative, police, regulatory or taxing authority, or any self-regulatory organization, administrative or regulatory agency, commission, tribunal or authority (each, a “Governmental Authority”) or any other Person is required in connection with the execution and delivery by the Seller of the Transaction Documents to which the Seller is (or is to be) a party, the performance by the Seller of its obligations thereunder or the consummation by the Seller of the transactions contemplated thereby (including the sale by the Seller of the Purchased Units).

 

3.5.    No Actions.  No claim, action, suit, arbitration, inquiry, litigation or investigation or other proceeding is pending or, to the Seller’s knowledge, threatened against the Seller or Merger Sub (a) which questions the validity of the Transaction Documents to which the Seller is (or is to be) a party or the right of the Seller to enter into any Transaction Document to which it is (or is to be) a party or to perform its obligations thereunder, or (b) which would, either individually or in the aggregate, reasonably be expected to have a material adverse effect on the Seller or Merger Sub or impair the ability of the Seller to perform its obligations under any of the Transaction Documents to which the Seller is (or is to be) a party.  Neither the Seller nor Merger Sub is a party to or subject to any writ, order, decree, injunction or judgment of any Governmental Authority that would materially adversely affect the Seller or Merger Sub or the performance by the Seller of its obligations under any of the Transaction Documents to which it is (or is to be) a party.  There is no action or proceeding pending or contemplated to dissolve the Seller or Merger Sub.  Neither the Seller nor Merger Sub is insolvent or otherwise unable to pay its debts as they fall due and no proceedings against the Seller or Merger Sub are pending or, to the best knowledge of the Seller, contemplated under applicable bankruptcy, insolvency, reorganization and moratorium laws and principles of equity, affecting enforcement of creditors rights generally.

 

  

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3.6.    Merger Sub.  The Purchased Units (a) have been duly and validly issued to the Seller and are fully paid and nonassessable and (b) are legally and beneficially owned by the Seller, free and clear of all Liens.  The Seller is the sole member of Merger Sub and has the right to transfer legal and beneficial title to the Purchased Units.  There there are no options, warrants or other rights (including conversion or preemptive rights) or Contracts of any character relating to the Purchased Units or obligating Merger Sub to issue or sell any additional units of or other equity interests in Merger Sub.  Except for the transactions contemplated by this Agreement, there are no outstanding Contracts of the Seller or Merger Sub to (a) repurchase, redeem or otherwise reacquire any units of or other equity interests in Merger Sub (or any interest therein), (b) issue or distribute to any Person (as defined below) any units of or other equity interests in Merger Sub or (c) issue or distribute to any Person any evidences of indebtedness, cash or other assets of Merger Sub or to create any Liens on the assets of Merger Sub.  Neither the Seller nor Merger Sub is a party or subject to any agreements or understandings of any kind, and there are no agreements or understandings of any kind between any Persons, which affect or relate to the acquisition, disposition or voting or giving of written consents with respect to any units of or other equity interests in Merger Sub Company.  The operating agreement of Merger Sub is the only constitutional document in force in relation to Merger Sub and there are no other documents or agreements that will bind the Buyer in its capacity as member of Merger Sub or which contain rights, restrictions or obligations with respect to the equity or debt capital of Merger Sub.

 

3.7.    Brokerage.  No investment banker, broker, finder or other intermediary was engaged by or dealt with the Seller in connection with any of the transactions contemplated by this Agreement that would impose a cost or liability on or have an adverse effect on Merger Sub or the Buyer.

 

3.8.    Compliance with Laws.  Each of the Seller and Merger Sub is in compliance with applicable Legal Requirements, except for such non-compliance as would not, individually or in the aggregate, reasonably be expected to have a material adverse effect on the Seller or Merger Sub or impair the ability of the Seller to perform its obligations as set out in the Transaction Documents to which it is a party, and has not received any allegation to the contrary.

 

4.      Representation and Warranty of the Buyer.  The Buyer represents and warrants to the Seller that the Buyer understands that the Purchased Units have not been registered under the Securities Act of 1933, as amended (the “Act”), and that the Purchased Units may not be sold, transferred or otherwise disposed of, without registration under the Act and any other applicable state securities laws (“Other Securities Laws”), or pursuant to an exemption therefrom.  The Buyer is an “accredited investor” within the meaning of Rule 501(a) of Regulation D promulgated under the Act.  The Buyer has substantial experience in evaluating investments such as the Purchased Units and is capable of evaluating the merits and risks of an investment in the Purchased Units.  The Buyer is acquiring the Purchased Units for its own account for investment and not with a view to the resale or distribution of any part thereof within the meaning of the Act or any Other Securities Laws.

 

5.   Indemnification by the Seller.  From and after the date hereof, the Seller shall indemnify and defend and hold harmless the Buyer, its Affiliates and their respective officers, directors, shareholders, members, employees, advisors, agents and controlling persons (the “Buyer Indemnified Parties”) from and against any and all losses, obligations, deficiencies, liabilities, claims (whether actual or threatened), damages, costs and expenses (including, without limitation, the amount of any settlement entered into pursuant hereto, and all reasonable legal fees and other expenses incurred in connection with the investigation, prosecution or defense of any matter indemnified pursuant hereto) (“Losses”) which the Buyer Indemnified Parties may sustain, suffer or incur and which arise out of, are caused by, relate to, or result or occur from or in connection with (a) any breach of or inaccuracy in any representation or warranty made by the Seller in any Transaction Document to which the Seller is a party, (b) any breach or default in performance by the Seller of any covenant or agreement of the Seller in any Transaction Document to which the Seller is a party or (c) any matter, fact, act, omission or circumstance associated with the Purchased Units arisig prior to the Closing.

 

  

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6.   Cooperation/Further Assurances.  From and after the date hereof, each of the parties hereto hereby agrees:  (a) to fully cooperate with the other party hereto in preparing and filing any notices, applications, reports and other instruments and documents and (b) 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 Agreement 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 Agreement.

 

7.   The Closing.  The closing of the transactions contemplated by this Agreement (the “Closing”) will take place at 10:00 A.M. (New York time) at the offices of Blank Rome LLP, 405 Lexington Avenue, New York, New York on the date hereof, or at such other time, place and date as the Buyer and the Seller shall mutually agree in writing.  The date upon which the Closing occurs is referred to herein as the “Closing Date”.

 

7.1.    Conditions Precedent.  The obligation of the Buyer to consummate the transactions contemplated hereby is subject to the satisfaction or waiver by the Buyer, on or before the Closing, of the following conditions precedent:

 

  (a)    No preliminary or permanent injunction or other order shall have been issued by any court or by any governmental or regulatory agency, body or authority and remain in effect at the Closing Date which prohibits, and no preliminary or permanent injunction or other order shall be pending or threatened which would prohibit, the consummation of the transactions contemplated by the Transaction Documents or which has or would have the effect of making the transactions contemplated by the Transaction Documents illegal (each party agreeing to use its commercially reasonable efforts to have any such issued injunction or order lifted).

 

  (b)    No statute, rule, regulation, executive order, decree or order of any kind shall have been enacted, entered, promulgated or enforced by any Governmental Authority which prohibits the consummation of the transactions contemplated by the Transaction Documents or has the effect of making the transactions contemplated by the Transaction Documents illegal.

 

  

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  (c)    All representations and warranties of the Seller contained herein shall be true and correct as of the Closing Date with the same force and effect as if made on such dates, except to the extent such representations and warranties are as of another date, in which case, such representations and warranties shall be true and correct as of such other date.

 

  (d)    The Seller shall have performed in all material respects all obligations and agreements, and complied in all material respects with all covenants and conditions, contained in this Agreement to be performed or complied with prior to the Closing Date.

 

  (e)    All consents, approvals and other actions by, all notices to any Person and all notices and filings with all Governmental Authorities that are required to have been obtained, taken or made to consummate the transactions contemplated by this Agreement shall have been obtained, undertaken or made, except for such consents, approvals, notices and filings, the failure to obtain which would not have a material adverse effect on Merger Sub after giving effect to the transactions contemplated hereby.

 

  (f)    The Seller shall have delivered or cause to be delivered to the Buyer a certificate representing the Purchased Units.

 

  (g)    The merger of Pacific Energy Development MSL, LLC with and into Merger Sub shall have been consummated and Merger Sub renamed Pacific Energy Development MSL, LLC on terms and conditions reasonably acceptable to the Buyer.

 

  (h)    The Buyer shall have received such other documents as may be required by this Agreement and as the Buyer or its counsel may reasonably request in order to document and carry out the transactions contemplated by this Agreement.

 

8.   General Provisions.

 

8.1.    Fees and Expenses.  The Seller shall pay the costs, fees and expenses of the Buyer incurred in connection with the transactions contemplated by this Agreement.  In addition, the Seller shall pay all reasonable fees and expenses incurred by the Buyer in connection with the administration and enforcement of this Agreement, including, without limitation, all reasonable attorneys’ fees and expenses.

 

8.2.    Publicity.  The Seller agrees that it will not disclose, and will not include in any public announcement, the names of the Buyer without the consent of the Buyer, which consent shall not be unreasonably withheld or delayed, or unless and until such disclosure is required by law, rule or applicable regulation and then only to the extent of such requirement, provided that the Buyer acknowledges that PEDEVCO may be required to file a Form 8-K following the Closing and that the Form 8-K rules require the disclosure of the Buyer’s name in such Form 8-K.

 

8.3.    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.  For purposes of this Agreement, “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.The addresses for such communications shall be:

 

  

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If to the Seller:

	
Pacific Energy Development Corp.

4125 Blackhawk Plaza Circle, Suite 201

Danville, California  94506

Tel:  (855) 733-3826

Fax:  (925) 403-0703

Attention:  General Counsel and Chief Financial Officer

	  	  
	
with copies to:

	
The Loev Law Firm, PC

6300 West Loop South; Suite 280

Bellaire, Texas 77401

Tel:  (713) 524-4110

Fax:  (713) 524-4122

Attention:  David M. Loev

	  	  
	
If to the Buyer:

	
RJ Resources Corp.

152 West 57th Street, 4th Floor

New York, NY 10019

Tel:  (212) 582-2222

Fax:  (212) 582-2424

Attention:  David Steinberg

	  	  
	
with copies to:

	
Blank Rome LLP

405 Lexington Avenue

New York, NY 10174

Tel:  (212) 885-5431

Fax:  (917) 332-3065

Attention:  Eliezer M. Helfgott, Esq.

8.4.    Amendment.  This Agreement may not be amended except by an instrument in writing signed by each of the parties hereto.

 

8.5.    Severability.  If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of law, or public policy, all other conditions and provisions of this Agreement 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 Agreement 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.

 

  

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8.6.    Entire Agreement.  This Agreement 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.

 

8.7.    No Assignment.  This Agreement shall not be assigned by any party hereto, whether by operation of law or otherwise, and any such assignment shall be null and void, unless the non-assigning party consents to such assignment in writing; provided that the Buyer may, without the consent of the Seller assign this Agreement to an Affiliate of the Buyer.

 

8.8.    Headings.  Headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose.

 

8.9.    Governing Law.  This Agreement shall be governed by and construed in accordance with the internal laws of the State of New York, 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 Agreement shall not be interpreted or construed with any presumption against the party causing this Agreement to be drafted.

 

8.10.  Specific Performance; Consent to Jurisdiction; Venue.

 

  (a)    The Seller and the Buyer acknowledge and agree that irreparable damage would occur in the event that any of the provisions of this Agreement or the other Transaction Documents 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 Agreement or the other Transaction Documents 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.

 

  (b)       The parties agree that venue for any dispute arising under this Agreement will lie exclusively in the state or federal courts located in New York County, New York, and the parties irrevocably waive any right to raise forum non conveniens or any other argument that New York is not the proper venue.  The parties irrevocably consent to personal jurisdiction in the state and federal courts of the state of New York.  The Seller and the Buyer consent 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 this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof.  Nothing in this Section 8.10(b) shall affect or limit any right to serve process in any other manner permitted by law.  The parties hereby waive all rights to a trial by jury.

 

8.11.  Gender and Number.  Where appropriate, the masculine gender shall be deemed to include the feminine, the feminine gender shall be deemed to include the masculine, the singular number shall be deemed to include the plural, and the plural number shall be deemed to include the singular.

 

  

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8.12.  Counterparts.  This Agreement may be executed in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original, but all of which taken together shall constitute one and the same agreement.  Telefacsimile transmissions of any executed original document and/or retransmission of any executed telefacsimile transmission shall be deemed to be the same as the delivery of an executed original.  At the request of any party hereto, the other parties hereto shall confirm telefacsimile transmissions by executing duplicate original documents and delivering the same to the requesting party or parties.

 

-Signature Page Follows-

 

 

 

  

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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the date first written above.

 

 

	  	
PACIFIC ENERGY DEVELOPMENT CORP.

	  	  
	  	  
	  	
By:  /s/ Frank C. Ingriselli

	  	
Name: Frank C. Ingriselli

	  	
Title: President and CEO

	  	  
	  	
RJ RESOURCES CORP.

	  	  
	  	  
	  	
By:  /s/ David Steinberg

	  	
David Steinberg

	  	
Authorized Signatory

 

 

  

  

10ex10-18.htm

Exhibit 10.18

 

NEITHER THIS WARRANT NOR ANY OF THE SECURITIES ISSUABLE UPON ITS EXERCISE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 AND SUCH SECURITIES MAY NOT BE TRANSFERRED UNLESS COVERED BY AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT, OR AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY SUCH TRANSFER IS EXEMPT FROM SUCH REGISTRATION.

 

	
Warrant No.

	
CS-___

	
Number of Shares: 1,000,000

	
Warrant Date:

	
March 7, 2014

	  

 

PEDEVCO CORP.

FORM OF WARRANT

FOR THE PURCHASE OF

COMMON STOCK

 

1.           Issuance.  For value received, the receipt of which is hereby acknowledged by PEDEVCO Corp., a Texas corporation (the “Company”), CASIMIR CAPITAL LP, or registered assigns (the “Holder”), is hereby granted the right to purchase, at any time until the close of business on MARCH 7, 2019 (the “Expiration Date”), ONE MILLION (1,000,000) fully paid and nonassessable shares of the Company’s Common Stock, par value US$0.001 per share (the “Common Stock”), at an exercise price of US$2.50 per share (the “Exercise Price”).

 

2.           Procedure for Exercise.  Upon surrender of this Warrant with the annexed Notice of Exercise Form in the form attached as Exhibit A, duly executed, together with payment of the Exercise Price for the shares of Common Stock purchased, the Holder shall be entitled to receive a certificate or certificates for the shares of Common Stock so purchased.  This Warrant may be exercised in whole or in part.

 

(a)           Net Issues Exercise.  Notwithstanding any provisions herein to the contrary, if the fair market value of one share of Common Stock is greater than the Exercise Price (at the date of calculation as set forth below), in lieu of exercising this Warrant for cash, the Holder may elect to receive shares equal to the value (as determined below) of this Warrant (or the portion thereof being canceled) by surrender of this Warrant at the principal office of the Company together with the properly endorsed Notice of Exercise Form and notice of such election in which event the Company shall issue to the Holder a number of shares of Common Stock computed using the following formula:

 

	
X =

	
Y (A-B)

	
A

Where        X =     the number of shares of Common Stock to be issued to the Holder

 

	
  

	
Y =

	
the number of shares of Common Stock purchasable under this Warrant or, if only a portion of this Warrant is being exercised, the portion of this Warrant being canceled (at the date of such calculation)

 

	
  

	
A =

	
the fair market value of one share of the Company’s Common Stock (at the date of such calculation)

 

	
  

	
B =

	
Exercise Price (as adjusted to the date of such calculation)

 

  

 

  

For purposes of the above calculation, fair market value of one share of Common Stock shall be equal to the last closing trade price for such security on the Principal Market (as defined below) as reported by Bloomberg Financial Markets (“Bloomberg”), or, if the Principal Market begins to operate on an extended hours basis and does not designate the closing trade price, then the last trade price at 4:00 p.m., New York City Time (or such other time as the Principal Market publicly announces is the official close of trading), as reported by Bloomberg, or, if the foregoing do not apply, the last closing trade price of such security in the over-the-counter market on the electronic bulletin board for such security as reported by Bloomberg, or, if no closing trade price is reported for such security by Bloomberg, the last closing ask price for such security as reported by Bloomberg, or, if no last closing ask price is reported for such security by Bloomberg, the average of the highest bid price and the lowest ask price of any market makers for such security.  If the fair market value cannot be calculated for that security on that date on any of the foregoing bases, or if the security is not publicly traded and is not listed on a Principal Market, the fair market value of such security on such date shall be determined by the Company’s Board of Directors in good faith.  “Principal Market” for purposes of this Warrant means any national U.S. stock exchange (including any market that is part of the Nasdaq Stock Market), the OTC Bulletin Board, and/or on the OTCQX or OTCQB levels of the OTC Markets Group.

 

3.           Reservation of Shares.  The Company hereby agrees that at all times during the term of this Warrant there shall be reserved for issuance upon exercise of this Warrant such number of shares of Common Stock as shall be required for issuance upon exercise hereof (the “Warrant Shares”).  Any shares issuable upon exercise of this Warrant will be duly and validly issued, fully paid and free of all liens and charges and not subject to any preemptive rights.

 

4.           Mutilation or Loss of Warrant.  Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and (in the case of loss, theft or destruction) receipt of reasonably satisfactory indemnification, and (in the case of mutilation) upon surrender and cancellation of this Warrant, the Company will execute and deliver a new warrant of like tenor and date and any such lost, stolen, destroyed or mutilated Warrant shall thereupon become void.

 

5.           No Rights as Shareholder.  The Holder shall not, by virtue hereof, be entitled to any rights of a shareholder of the Company, either at law or in equity, and the rights of the Holder are limited to those expressed in this Warrant and are not enforceable against the Company except to the extent set forth herein.

 

6.           Effect of Certain Transactions

 

6.1           Adjustments for Stock Splits, Stock Dividends Etc.  If the number of outstanding shares of Common Stock of the Company are increased or decreased by a stock split, reverse stock split, stock dividend, stock combination, recapitalization or the like, the Exercise Price and the number of shares purchasable pursuant to this Warrant shall be adjusted proportionately so that the ratio of (i) the aggregate number of shares purchasable by exercise of this Warrant to (ii) the total number of shares outstanding immediately following such stock split, reverse stock split, stock dividend, stock combination, recapitalization or the like shall remain unchanged, and the aggregate purchase price of shares issuable pursuant to this Warrant shall remain unchanged.

 

6.2           Expiration Upon Certain Transactions.  If at any time the Company plans to sell all or substantially all of its assets or engage in a merger or consolidation of the Company in which the Company will not survive and in which holders of the Common Stock will receive consideration at or above the Exercise Price, as adjusted (other than a merger or consolidation with or into a wholly- or partially-owned subsidiary of the Company), the Company will give the Holder of this Warrant advance written notice.  Upon the occurrence of any such event, this Warrant shall automatically be deemed to be exercised in full without any action required on the part of the Holder.

 

  

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6.3           Adjustments for Reorganization, Mergers, Consolidations or Sales of Assets.  If at any time there is a capital reorganization of the Common Stock (other than a recapitalization, combination, or the like provided for elsewhere in this Section 6) or merger or consolidation of the Company with another corporation (other than one covered by Section 6.2), or the sale of all or substantially all of the Company’s properties and assets to any other person, then, as a part of such reorganization, merger, consolidation or sale, provision shall be made so that the Holder shall thereafter be entitled to receive upon exercise of this Warrant (and only to the extent this Warrant is exercised), the number of shares of stock or other securities or property of the Company, or of the successor corporation resulting from such merger or consolidation or sale, to which a holder of Common Stock, or other securities, deliverable upon the exercise of this Warrant would otherwise have been entitled on such capital reorganization, merger, consolidation or sale.  In any such case, appropriate adjustments shall be made in the application of the provisions of this Section 6 (including adjustment of the Exercise Price then in effect and number of Warrant Shares purchasable upon exercise of this Warrant) which shall be applicable after such events.

 

7.           Notices.  Any notice or other communication required or permitted hereunder shall be in writing and shall be delivered personally or sent by certified, registered or express mail, postage pre-paid.  Any such notice shall be deemed given when so delivered personally, or if mailed, two days after the date of deposit in the United States mails, as follows:

 

If to the Company, to:

 

PEDEVCO Corp.

4125 Blackhawk  Plaza Circle, Suite 201

Danville, CA 94506

Attention:  Chief Executive Officer and General Counsel

 

With a copy to:

 

The Loev Law Firm, PC

6300 West Loop South, Suite 280

Bellaire, Texas 77401

Attention:  David M. Loev

 

If to the Holder, to his address appearing on the Company’ records.

 

Any party may designate another address or person for receipt of notices hereunder by notice given to the other parties in accordance with this Section.

 

8.           Supplements and Amendments; Whole Agreement.  This Warrant may be amended or supplemented only by an instrument in writing signed by the parties hereto.  This Warrant contains the full understanding of the parties hereto with respect to the subject matter hereof, and there are no representations, warranties, agreements or understandings other than expressly contained herein.

 

9.           Governing Law.  This Warrant shall be deemed to be a contract made under the laws of the State of California and for all purposes shall be governed by and construed in accordance with the laws of such State applicable to contracts to be made and performed entirely within such State.

 

10.           Counterparts.  This Warrant may be executed in any number of counterparts and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument.

 

  

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11.           Descriptive Headings.  Descriptive headings of the several Sections of this Warrant are inserted for convenience only and shall not control or affect the meaning or construction of any of the provisions hereof.

 

12.           Transfer and Assignability.  

 

12.1           Transfer.  This Warrant, or any portion thereof, and all rights hereunder are transferable.  The Holder upon transfer of the Warrant must deliver to the Company a duly executed Warrant Assignment in the form of Exhibit B and upon surrender of this Warrant to the Company, the Company shall execute and deliver a new Warrant or Certificate in the form of this Warrant with appropriate changes to reflect such Warrant Assignment, in the name or names of the assignee or assignees specified in the Warrant Assignment or other instrument of assignment and, if the Holder’s entire interest is not being transferred or assigned, in the name of the Holder, and upon the Company’s execution and delivery of such new Warrant or Warrants, this Warrant shall promptly be cancelled; and provided that any assignee shall have all of the rights of the initial Holder hereunder.  The Holder shall pay any transfer tax imposed in connection with such assignment (if any).  Any transfer or exchange of this Warrant shall be without charge to the Holder (except as provided above with respect to transfer taxes, if any) and any new Warrant ore Warrants issued shall be dated the date hereof.  Any transfer of this Warrant shall be in compliance with the other provisions hereof.

 

12.2           Limitations on Transfer of the Warrants and the Warrant Shares.  If, at the time of any transfer of this Warrant or any Warrant Shares, this Warrant or such Warrant Shares, as the case may be, are not registered under the Securities Act, the Company may require as a condition precedent to allowing such transfer that the holder or transferee of this Warrant or such Warrant Shares furnish to the Company such information as, in the reasonable opinion of counsel to the Company, is necessary in order to establish that such transfer or exchange may be made without registration under the Securities Act, including a written statement that the Holder or any transferee will not sell or otherwise dispose of this Warrant or such Warrant Shares purchased or acquired by it in any transaction which would violate the Securities Act or any the securities laws of any other jurisdiction.

 

12.3           Successors and Assigns.  All the provisions of this Warrant by or for the benefit of the Company or the Holder shall bind and inure to the benefit of their respective successors and assigns.

 

  

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IN WITNESS WHEREOF, the parties hereto have executed this Warrant as of the Warrant Date set forth above.

 

	  	
PEDEVCO CORP.

 

 

By:                                                                    

Name:

Title:

 

HOLDER:

CASIMIR CAPITAL LP

 

By:                                                                    

Name:

Title:

	  	  

 

 

 

  

5

  

EXHIBIT A

 

NOTICE OF EXERCISE OF WARRANT

 

The undersigned hereby irrevocably elects to exercise the right, represented by the Warrant dated as of March __, 2014, to purchase _____________ shares of the Common Stock of PEDEVCO Corp., and (x) tenders herewith payment in accordance with the first paragraph of Section 2 of the Warrant or (y) elects to exercise the Warrant for the purchase of _______ shares of Common Stock, pursuant to the provisions of Section 2(a) of the Warrant.

 

Please deliver the stock certificate to:

 

______________________________________

 

______________________________________

 

______________________________________

 

 

Dated:           ___________________

 

 

By:                                                                    

Name:

Title:

 

 

  

6

  

EXHIBIT B

 

Form of Warrant Assignment

 

Reference is made to the Common Stock Purchase Warrant dated March __, 2014, issued by PEDEVCO Corp. (the “Company”).  Terms defined therein are used herein as therein defined.

 

FOR VALUE RECEIVED ____________________ (the “Assignor”) hereby sells, assigns and transfers all of the rights of the Assignor as set forth in such Common Stock Purchase Warrant, with respect to the number of Warrant Shares covered thereby as set forth below, to the Assignee(s) as set forth below:

 

	
Name(s) of Assignee(s)

	
Address(es)

	
Number of Warrant Shares

	  	  	  
	  	  	  

 

All notices to be given by the Company to the Assignor as Holder shall be sent to the Assignee(s) at the above listed address(es), and, if the number of shares being hereby assigned is less than all of the shares covered by the Warrant held by the Assignor, then also to the Assignor.

 

In accordance with Section 12 of the Warrant, the Assignor requests that the Company execute and deliver a new Warrant or Warrants in the name or names of the assignee or assignees, as is appropriate, or, if the number of shares being hereby assigned is less than all of the shares covered by the Warrant held by the Assignor, new Warrant in the name or names of the assignee or the assignees, as is appropriate, and in the name of the Assignor.

 

The undersigned represents that the Assignee has represented to the Assignor that the Assignee is acquiring the Warrant for its own account or the account of an affiliate for investment purposes and not with the view to any sale or distribution, and that the Assignee will not offer, sell or otherwise dispose of the Warrant or the Warrant Shares except under circumstances as will not result in a violation of applicable securities laws.

 

Dated:  _________________, 20___

 

[NAME OF ASSIGNOR]

By                                                                           

Name:

Title:

[ADDRESS OF ASSIGNOR]

 

 

 7

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