UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934

DATE OF REPORT: September 1, 2015
DATE OF EARLIEST EVENT REPORTED: August 28, 2015

001-35922
(Commission file number)
 
PEDEVCO CORP.
(Exact name of registrant as specified in its charter)
 
Texas
22-3755993
(State or other jurisdiction of
incorporation or organization)
(IRS Employer Identification
No.)
 
4125 Blackhawk Plaza Circle, Suite 201
Danville, California 94506
 (Address of principal executive offices)
 
(855) 733-2685
(Issuer’s telephone number)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

x
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
   
x
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
   
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
   
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))


 
 
 
 
ITEM 1.01   ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.

Debt Restructuring and Deferrals
 
On August 28, 2015, PEDEVCO Corp. (the “ Company ”), entered into Letter Agreements (the “ Letter Agreements ”) with Senior Health Insurance Company of Pennsylvania (“ SHIP ”) (as successor-in-interest to BRe BCLIC Primary), BRe BCLIC Sub, BRe WINIC 2013 LTC Primary, BRe WNIC 2013 LTC Sub, HEARTLAND Bank, and RJ Credit LLC (“ RJC ”) (collectively, the “ Lenders ”), and BAM Administrative Services LLC (the “ Agent ”), as agent for the Lenders.  The Lenders are parties to that certain Note Purchase Agreement, dated March 7, 2014 (the “ NPA ”), by and among the Company, the Lenders and the Agent, pursuant to which the Company issued Senior Secured Promissory Notes to each of the Lenders (collectively, the “ Senior Notes ”), and RJC is also a party to that certain Note and Security Agreement, dated April 10, 2014, as amended on February 23, 2015, issued by the Company to RJ Credit LLC (the “ RJC Junior Note ,” and together with the Senior Notes, the “ Notes ”).
 
Pursuant to the Letter Agreements, (i) all Lenders agreed to defer until the maturity date of their Senior Notes the mandatory principal payments that would otherwise be due and payable by the Company to them on payment dates occurring during the six month period of August 1, 2015 through January 31, 2016, (ii) HEARTLAND Bank agreed to change the frequency of payment of accrued interest and mandatory principal repayments from monthly to semi-annually, with the next interest payment due February 1, 2016 and the next mandatory principal repayment due August 3, 2016, and with the Company agreeing to place an amount equal to 1/6 th of the semi-annual principal and interest payments due into a sinking fund which the Company shall pay to HEARTLAND Bank every six months when due and owing, (iii) RJC agreed to defer all interest payments otherwise due and payable by the Company to RJC under its Notes during the period commencing on August 1, 2015 through January 31, 2016 (the “ Waiver Period ”), which deferred interest is capitalized monthly during the Waiver Period, (iv) SHIP, BRe BCLIC Sub, BRe WINIC 2013 LTC Primary, and BRe WNIC 2013 LTC Sub agreed to (a) defer until the maturity date of their Senior Notes 12/17 ths of the interest payments that would otherwise be due and payable by the Company to them on payment dates occurring during the six month period of August 1, 2015 through January 31, 2016; and (b) have the Company pay in cash 5/17 ths of such interest payments per month, with all deferred interest being capitalized until the maturity date of the Senior Notes, and (v) SHIP, BRe BCLIC Sub, BRe WINIC 2013 LTC Primary, BRe WNIC 2013 LTC Sub and RJC agreed to increase the interest rate under their Senior Notes from 15% to 17% per annum on all outstanding principal under the Senior Notes during the Waiver Period.  These deferrals agreed upon with Lenders will reduce the Company’s monthly cash interest payments and mandatory principal repayments from approximately $600,000 per month under the Notes prior to entry into the Letter Agreements, to approximately $100,000 per month during the Waiver Period after giving effect to the changes agreed upon under the Letter Agreements, thereby providing the Company with an estimated $500,000 per month in additional cash flow during the Waiver Period.
 
The purpose of these deferrals is to provide the Company with the financial resources and runway it believes it needs to fully-focus and execute upon the acquisition transaction contemplated pursuant to that certain Agreement and Plan of Reorganization, dated May 21, 2015 (as amended to date, the “ Dome Agreement ”), by and among the Company, PEDEVCO Acquisition Subsidiary, Inc., Dome AB, and Dome Energy Inc. (the “ Dome Transaction ”), as more fully described in the Company’s Current Reports on Form 8-K filed with the Securities and Exchange Commission on May 26, 2015 and July 20, 2015.  The Company and Dome Energy continue to move forward with the transactions contemplated by the Dome Agreement, provided that because the closing of the transactions contemplated by the Dome Agreement is subject to various closing conditions, described in greater detail in the May 26, 2015, Form 8-K, no assurance can be made that the transactions contemplated by the Dome Agreement will be completed.
 
As additional consideration for the Lenders’ entry into the Letter Agreements and related note amendments and deferrals, no later than September 18, 2015, the Company is obligated to grant warrants (the “ Warrants ”) exercisable on a cash-only basis for an aggregate of 1.2 million shares of Company common stock to SHIP, BRe BCLIC Sub, BRe WINIC 2013 LTC Primary, BRe WNIC 2013 LTC Sub and RJC (the “ Warrant Recipients ”), proportionately based on their individual principal under the Notes, which grants are subject to NYSE MKT additional listing approval.  The Warrants will have a three (3) year term and will be immediately exercisable on a cash-only basis at a price of $0.75 per share.  In addition, in the event the aggregate total of principal and interest deferred by the Warrant Recipients exceeds $900,000 over the Wavier Period, within thirty (30) days of February 1, 2016, and subject to NYSE MKT additional listing approval, the Company will proportionately grant to the Warrant Recipients additional Warrants such that the total aggregate number of shares of Company common stock exercisable under all Warrants granted to the Warrant Recipients will equal (x) the total principal and interest deferred by such Lenders divided by (y) $0.75.

 
2
 
In addition, the Company agreed to prepare and deliver to RJC a monthly budget in form and substance reasonably satisfactory to RJC, and such financial statements as RJC may reasonably request.  The monthly budget is required to include a cash flow forecast and detail of all anticipated non-recurring expenses and non-cash budget items, and the Company is required to comply with the budgeted expenses set forth therein in all material respects, provided, however, that a variance of less than 10% with respect to the expenses, on an aggregate basis, is permitted.

It is anticipated that the Senior Notes and the RJC Junior Note will all be satisfied in full in connection with the closing of the Dome Transaction, at which point further interest and principal deferrals will cease.  However, if all the Senior Notes and the RJC Junior Note remain outstanding without principal reduction prior to February 1, 2016, the Company estimates that up to an aggregate of approximately $2.95 million in total interest and principal payments may be deferred pursuant to the Letter Agreements, in which event Warrants exercisable solely on a cash basis for approximately an additional 2.7 million shares of Company common stock at an exercise price of $0.75 per share will be granted pro rata to each of the Lenders (other than HEARTLAND Bank) in February 2016.

In the event the Company does not consummate either the Dome Transaction, or an alternate transaction approved by the Lenders in their sole discretion on or before February 1, 2016, unless the Company resumes full and prompt payment when due of all interest and principal repayments as required pursuant to the Notes commencing on February 1, 2016, then the Company agreed that it would cooperate with the Lenders in exploring opportunities to repay the Notes in full as soon as possible after such date.

The foregoing description of the Letter Agreements and the Warrants do not purport to be complete and are qualified in their entirety by reference to the Letter Agreements and form of Warrant, copies of which are attached as Exhibits 10.1, 10.2 and 10.3 , respectively, to this Current Report on Form 8-K and incorporated herein by reference.
 
Dome Energy Reorganization Agreement Amendment
 
On August 28, 2015, we entered into an Amendment No. 2 to Agreement and Plan of Reorganization (the “ Amendment ”) with Exchange Sub and Dome Energy.  In order to provide Dome Energy additional time to prepare and deliver necessary disclosure schedules and audited financial statements, the parties entered into the Amendment, which further extended the deadline from August 17, 2015 to August 31, 2015 for delivery of copies of the parties’ disclosure schedules and Dome US’s audited financial statements as contemplated by the Dome Agreement.  The parties agreed further that the Company, in its sole and absolute discretion, may from time to time, further extend the deadline in the event that Dome Energy is using good faith efforts to prepare its audited financial statements, to no later than September 30, 2015.
 
 
3
 
The Dome Agreement is disclosed in greater detail in a Current Reports on Form 8-K filed by the Company with the Securities and Exchange Commission on May 26, 2015 and July 20, 2015.
 
The Company and Dome Energy continue to move forward with the transactions contemplated by the Dome Agreement, as amended, including the preparation of a registration statement containing a proxy statement/prospectus with the Securities and Exchange Commission (the “ SEC ”), provided that because the closing of the transactions contemplated by the Dome Agreement is subject to various closing conditions, described in greater detail in the May 26, 2015, Form 8-K, no assurance can be made that the transactions contemplated by the Dome Agreement, as amended, will be completed.
 
The foregoing description of the Amendment is not complete and is qualified in its entirety by reference to the Amendment, which is filed herewith as Exhibit 2.1 and incorporated by reference herein.
 
ITEM 3.02 UNREGISTERED SALES OF EQUITY SECURITIES.
 
We claim an exemption from registration pursuant to Section 4(a)(2) and/or Rule 506 of Regulation D of the Securities Act of 1933, as amended (the “ Securities Act ”), for the offer and sale of the Warrants, described above in Item 1.01 , due to the fact that the foregoing offer and sale will not involve a public offering, the recipients will take the securities for investment and not resale, the Company has taken appropriate measures to restrict transfer, and the recipients (a) are “ accredited investors, ” and (b) have access to similar documentation and information as would be required in a Registration Statement under the Securities Act.  In the event the Warrants agreed to be granted in August 2015 are exercised in full, a maximum of an aggregate of 1.2 million shares of Company common stock would be issuable to the warrant holders.

ITEM 7.01 REGULATION FD DISCLOSURE.

On September 1, 2015, the Company issued a press release announcing the debt facility restructuring agreed upon with the Lenders under the Letter Agreements and related matters as described above in Item 1.01 .   A copy of the press release is furnished as Exhibit 99.1 hereto.

The information responsive to Item 7.01 of this Form 8-K and Exhibit 99.1 attached hereto, shall not be deemed “ filed ” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (“ Exchange Act ”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act, or the Exchange Act, except as expressly set forth by specific reference in such a filing.

ITEM 9.01
  FINANCIAL STATEMENTS AND EXHIBITS.
(d) Exhibits.
 
Exhibit No.
Description
2.1*
Amendment No. 2 to Agreement and Plan of Reorganization dated as of August 28, 2015, by and among PEDEVCO Corp., PEDEVCO Acquisition Subsidiary, Inc., Dome Energy, Inc. and Dome Energy AB
10.1*
Letter Agreement, dated August 28, 2015, by and among PEDEVCO Corp., BAM Administrative Services LLC, Senior Health Insurance Company of Pennsylvania, BRE BCLIC Sub, BRE WNIC 2013 LTC Primary, BRE WNIC 2013 LTC Sub, HEARTLAND Bank, and RJ Credit LLC
10.2*
Letter Agreement, dated August 28, 2015, by and among PEDEVCO Corp. and HEARTLAND Bank
10.3*
Form of Common Stock Warrant
99.1**
Press Release, dated September 1, 2015

* Filed herewith. 
**Furnished herewith.

Important Information
 
In connection with the proposed business combination between PEDEVCO Corp. (“ PEDEVCO ”) and Dome Energy, Inc., a wholly-owned subsidiary of DOME Energy AB (“ Dome Energy ”), PEDEVCO currently intends to file a registration statement containing a proxy statement/prospectus with the Securities and Exchange Commission (the “ SEC ”). This communication is not a substitute for any proxy statement, registration statement, proxy statement/prospectus or other document PEDEVCO may file with the SEC in connection with the proposed transaction. Prospective investors are urged to read the registration statement and the proxy statement/prospectus, when filed as it will contain important information. Any definitive proxy statement(s) (if and when available) will be mailed to stockholders of PEDEVCO and Dome Energy (as applicable). Prospective investors may obtain free copies of the registration statement and the proxy statement/prospectus, when filed, as well as other filings containing information about PEDEVCO, without charge, at the SEC’s website (www.sec.gov). Copies of PEDEVCO’s SEC filings may also be obtained from PEDEVCO without charge at PEDEVCO’s website (www.pacificenergydevelopment.com) or by directing a request to PEDEVCO at (855) 733-3826. This document does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.
 
 
4
 
INVESTORS SHOULD READ THE PROSPECTUS/PROXY STATEMENT AND OTHER DOCUMENTS TO BE FILED WITH THE SEC CAREFULLY BEFORE MAKING A DECISION CONCERNING THE MERGER.
 
Participants in Solicitation
 
PEDEVCO and its directors and executive officers and other members of management and employees are potential participants in the solicitation of proxies in respect of the proposed merger. Information regarding PEDEVCO’s directors and executive officers is available in PEDEVCO’s Annual Report on Form 10-K for the year ended December 31, 2014, filed with the SEC on March 31, 2015 and PEDEVCO Corp.’s definitive proxy statement on Schedule 14A, filed with the SEC on May 16, 2014. Additional information regarding the interests of such potential participants will be included in the registration statement and proxy statement/prospectus to be filed with the SEC by PEDEVCO and Dome Energy in connection with the proposed combination transaction and in other relevant documents filed by PEDEVCO with the SEC. These documents can be obtained free of charge from the sources indicated above. Additional information regarding the participants in the proxy solicitations and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the proxy statement/prospectus and other relevant materials to be filed with the SEC when they become available.
 
Forward Looking Statements
 
Certain statements in this communication regarding the proposed transaction between PEDEVCO and Dome Energy are “ forward-looking ” statements. The words “ anticipate, ” “ believe, ” “ ensure, ” “ expect, ” “ if, ” “ intend, ” “ estimate, ” “ probable, ” “ project, ” “ forecasts, ” “ predict, ” “ outlook, ” “ aim, ” “ will, ” “ could, ” “ should, ” “ would, ” “ potential, ” “ may, ” “ might, ” “ anticipate, ” “ likely ” “ plan, ” “ positioned, ” “ strategy, ” and similar expressions, and the negative thereof, are intended to identify forward-looking statements. These forward-looking statements, which are subject to risks, uncertainties and assumptions about PEDEVCO and Dome Energy, may include projections of their respective future financial performance, their respective anticipated growth strategies and anticipated trends in their respective businesses. These statements are only predictions based on current expectations and projections about future events. There are important factors that could cause actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements, including the risk factors set forth in PEDEVCO’s most recent reports on Form 10-K, Form 10-Q and other documents on file with the SEC and the factors given below:
 
•  termination of the proposed combination by either party subject to the terms of the Agreement and Plan of Reorganization;

•  failure to obtain the approval of the shareholders of PEDEVCO or Dome in connection with the proposed transaction;
 
•  the failure to consummate or delay in consummating the proposed transaction for other reasons;
 
•  the timing to consummate the proposed transaction;
 
•  the risk that a condition to closing of the proposed transaction may not be satisfied;

 
5
 
•  the risk that PEDEVCO will be required to pay a $1 million termination fee;
 
•  the risk that a regulatory approval that may be required for the proposed transaction is delayed, is not obtained, or is obtained subject to conditions that are not anticipated;
 
•  PEDEVCO’s ability to achieve the synergies and value creation contemplated by the proposed transaction;
 
•  the ability of PEDEVCO to effectively integrate Dome’s operations; and
 
•  the diversion of management time on transaction-related issues.
 
PEDEVCO’s forward-looking statements are based on assumptions that PEDEVCO believes to be reasonable but that may not prove to be accurate. PEDEVCO cannot guarantee future results, level of activity, performance or achievements. Moreover, PEDEVCO does not assume responsibility for the accuracy and completeness of any of these forward-looking statements. PEDEVCO assumes no obligation to update or revise any forward-looking statements as a result of new information, future events or otherwise, except as may be required by law. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date hereof.
 
SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
 
 
PEDEVCO CORP.
 
       
Date: September 1, 2015
By:
/s/Frank C. Ingriselli
 
   
Frank C. Ingriselli
 
   
Chairman and Chief Executive Officer
 
       

EXHIBIT INDEX

Exhibit No.
Description
2.1*
Amendment No. 2 to Agreement and Plan of Reorganization dated as of August 28, 2015, by and among PEDEVCO Corp., PEDEVCO Acquisition Subsidiary, Inc., Dome Energy, Inc. and Dome Energy AB
10.1*
Letter Agreement, dated August 28, 2015, by and among PEDEVCO Corp., BAM Administrative Services LLC, Senior Health Insurance Company of Pennsylvania, BRE BCLIC Sub, BRE WNIC 2013 LTC Primary, BRE WNIC 2013 LTC Sub, HEARTLAND Bank, and RJ Credit LLC
10.2*
Letter Agreement, dated August 28, 2015, by and among PEDEVCO Corp. and HEARTLAND Bank
10.3*
Form of Common Stock Warrant
99.1**
Press Release, dated September 1, 2015

* Filed herewith. 
**Furnished herewith.

 
6
 
Exhibit 2.1
 
 
AMENDMENT NO. 2 TO
 
AGREEMENT AND PLAN OF REORGANIZATION
 
THIS AMENDMENT NO. 2 TO AGREEMENT AND PLAN OF REORGANIZATION (the “ Amendment ”) is executed as of this August 28, 2015 and effective as of August 17, 2015 (the “ Effective Date ”) by and among DOME ENERGY, INC., a Texas corporation (the “ Company ”), DOME ENERGY AB, a Swedish corporation and the sole shareholder of the Company (“ DOME AB ”), PEDEVCO CORP., a Texas corporation (“ PEDEVCO ”), and PEDEVCO ACQUISITION SUBSIDIARY, INC., a Texas corporation and wholly-owned subsidiary of PEDEVCO (“ Acquisition Subsidiary ”).  Capitalized terms used below and otherwise not defined herein shall have the meanings given to them in the Reorganization Agreement (as defined below).
 
W I T N E S S E T H
 
WHEREAS, on May 21, 2015, the Company, DOME AB, PEDEVCO and Acquisition Subsidiary entered into that certain Agreement and Plan of Reorganization (the “ Reorganization Agreement ”), which agreement contemplates, among other things, the acquisition by PEDEVCO of substantially all of the assets of Dome AB through an exchange of certain of the shares of PEDEVCO’s common stock for 100% of the outstanding shares of the Company (the “ Exchange ”);
 
WHEREAS , pursuant to Amendment No. 1 to the Reorganization Agreement (“ Amendment No. 1 ”), the Parties agreed to extend the date to deliver to each other true, accurate and complete copies of their respective Disclosure Schedules and, in the case of the Company, the Company GAAP Financial Statements to on or prior to August 17, 2015;
 
WHEREAS, due to unforeseen delays, the Company was unable to deliver the Company GAAP Financial Statements and the Company Disclosure Schedules by August 17, 2015; and
 
WHEREAS, the Parties desire to further amend the Reorganization Agreement to provide additional time for the Parties to deliver their respective Disclosure Schedules, and in the case of the Company, the Company GAAP Financial Statement.
 
NOW THEREFORE , in consideration of the premises and the mutual promises and covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound, the parties hereto agree as follows:
 
1.             Amendment to Section 7.15(a) of the Reorganization Agreement .  The reference to “July 15, 2015” as set forth in the first sentence of Section 7.15(a) of the Reorganization Agreement as amended by Amendment No. 1 shall be further amended and restated to read “August 31, 2015.”  For the sake of clarity and in an abundance of caution, the definition of “Due Diligence Delivery Deadline” as set forth in Section 7.15(a) of the Reorganization Agreement is amended to read “August 31, 2015” (provided that “Due Diligence Delivery Date” as used in the Reorganization Agreement shall similarly refer to the same extended date).
 
2.             Amendment to Section 7.15(a) of the Reorganization Agreement .  The following provision shall be added as new language at the end of Section 7.15(a) of the Reorganization Agreement:
 
“Notwithstanding the above, PEDEVCO in its sole and absolute discretion, may from time to time, extend the Due Diligence Delivery Deadline, in the event that the Company is using good faith efforts to prepare such Company GAAP Financial Statements, to no later than September 30, 2015, which date or dates, as extended, shall automatically become the Due Diligence Delivery Deadline for the purposes of this Agreement.”
 
 
 
 
3.             Limited Effect .  Except as amended hereby, the Reorganization Agreement and Amendment No. 1 shall remain in full force and effect, and the valid and binding obligation of the Parties thereto.
 
4.             Consideration .  Each of the Parties agrees and confirms by signing below that they have received valid consideration in connection with this Amendment and the transactions contemplated herein.
 
5.             Effect of Amendment . Upon the effectiveness of this Amendment, each reference in the Reorganization Agreement to “Agreement,” “hereunder,” “hereof,” “herein” or words of like import shall mean and be a reference to such Reorganization Agreement as modified or amended hereby.
 
6.             Reconfirmation of Reorganization Agreement . The Parties hereby reaffirm all terms and conditions made in the Reorganization Agreement, to the extent the same are not amended hereby.
 
7.             Governing Law .  THIS AMENDMENT, AND ANY DISPUTES ARISING OUT OF OR RELATING TO THIS AMENDMENT OR THE PARTIES’ RELATIONSHIP TO EACH OTHER, SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF TEXAS, REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE PRINCIPLES OF CONFLICTS OF LAW THEREOF.
 
8.             Counterparts . This Amendment may be executed in two or more counterparts, each of which shall be deemed to be an original, but all of which shall constitute one and the same agreement.
 
9.             Delivery by Facsimile or in .pdf Format . This Amendment and any signed agreement or instrument entered into in connection with this Amendment, and any amendments hereto or thereto, to the extent signed and delivered by means of a facsimile machine or in .pdf format, shall be treated in all manner and respects as an original agreement or instrument and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person. At the request of any Party hereto or to any such agreement or instrument, each other Party hereto or thereto shall re-execute original forms thereof and deliver them to all other Parties. No Party hereto or to any such agreement or instrument shall raise the delivery of an agreement or signature by facsimile machine or in .pdf format as a defense to the formation of a contract and each such Party forever waives any such defense.
 
10.             Further Assurances . The Parties agree that, from time to time, each of them will take such other action and to execute, acknowledge and deliver such contracts, deeds, or other documents as may be reasonably requested and necessary or appropriate to carry out the purposes and intent of this Amendment and the transactions contemplated herein.
 
[Signature Pages Follow]
 

 
 
 
IN WITNESS WHEREOF, the parties hereto, have caused this Amendment to Agreement and Plan of Reorganization to be duly executed and delivered as of the date first written above.
 
   
“ Company ”
 
DOME ENERGY, INC.
 
By: /s/ Paul Morch  
 
Name: Paul Morch  
 
Title: CEO  
 

“ Dome AB ”

DOME ENERGY AB
 
By: /s/ Paul Morch  
 
Name: Paul Morch  
 
Title: CEO  
 
100% Shareholder of the Company
 
“ PEDEVCO ”
 
PEDEVCO CORP.
 
By: /s/ Clark R. Moore  
 
Name: Clark R. Moore  
 
Title: Executive Vice President  
 
“ Acquisition Subsidiary ”
 
PEDEVCO ACQUISITION SUBSIDIARY, INC.
 
By: /s/ Clark R. Moore  
 
Name: Clark R. Moore  
 
Title: Executive Vice President  
       
Signature Page to Amendment No. 2 to Agreement and Plan of Reorganization
 
 
 
 
Exhibit 10.1
 


 
August 28, 2015


BAM Administrative Services LLC
1370 Avenue of the Americas, 32 nd Floor
New York, New York 10019
Attention:  Daniel Saks

RJ Credit LLC
250 West 55 th Street, 14 th Floor
New York, New York 10019
Attention:  David Steinberg

Blank Rome LLP
405 Lexington Avenue
New York, New York 10174
Attention:  Eliezer M. Helfgott, Esq.

 
Re:
Consent and Agreement

Dear Messrs. Saks and Steinberg:

Reference is made to that certain Note Purchase Agreement, dated March 7, 2014 (the “ NPA ”), by and among BRe BCLIC Primary, BRe BCLIC Sub (“ BCLIC Sub ”), BRe WNIC 2013 LTC Primary (“ WNIC Primary ”), BRe WNIC 2013 LTC Sub (“ WNIC Sub ”), Heartland Bank (“ Heartland ”) and RJ Credit LLC (“ RJC ”) (collectively, the “ Purchasers ”), BAM Administrative Services LLC, as agent for the Investors (the “ Agent ”), and PEDEVCO Corp. (the “ Company ”), pursuant to which the Company issued Senior Secured Promissory Notes to each of the Investors (collectively, but excluding the Heartland Note as defined below, the “ Notes ”).  On March 19, 2015, BRe WNIC 2013 LTC Primary transferred a portion of its Note to Heartland and the Company reissued a replacement note to Heartland (the “ Heartland Note ”).  On April 1, 2015, BRe BCLIC Primary transferred the entirety of its Note to Senior Health Insurance Company of Pennsylvania (“ SHIP ” and, collectively with the Purchasers and Heartland, the “ Investors ”).  Reference is also made to that certain Note and Security Agreement, dated April 10, 2014, as amended on February 23, 2015, issued by the Company to RJC (the “ RJC Junior Note ”).  To the extent not defined herein, capitalized terms shall have the meaning ascribed to them in the NPA.

Each of BCLIC Sub, WNIC Primary, WNIC Sub, SHIP and RJC (collectively, the “ Original Investors ”) hereby agree, subject to effectiveness of the Increased Rate (as defined below), to (i) defer until the Maturity Date, 12/17 ths of the interest payments (and 17/17 ths with respect to RJC only) otherwise due and payable by the Company to the Original Investors under the Notes on payment dates occurring during the six (6) month period of August 1, 2015 through January 31, 2016 (the “ Original Investor’s Interest Deferral ”), it being understood and agreed by the Company that 5/17 ths of the interest payments otherwise due and payable by the Company to the applicable Original Investors under each of the Notes (except RJC, which shall receive no cash payment and shall defer 17/17 ths of the interest payments) during such same period shall nonetheless be paid in cash on the first Business Day of each month in accordance with the terms of the Notes, and (ii) defer until the Maturity Date the mandatory principal payments that are otherwise due and payable by the Company to the Original Investors under the Notes on payment dates occurring during the six (6) month period of August 1, 2015 through January 31, 2016 (the “ Original Investor’s Principal Repayment Deferral ”).  RJC hereby agrees to defer until the Maturity Date, all interest payments otherwise due and payable by the Company to RJC under the RJC Junior Note on payment dates occurring during the six (6) month period of August 1, 2015 through January 31, 2016 (the “ RJC Junior Note Interest Deferral ”).
 
 

 
 
 
 
Consent and Agreement
Page 2
 
 
 
For good and valuable consideration, the Investors and the Company hereby agree that (i) during the period commencing on July 1, 2015 through and including December 31, 2015 the interest rate under each of the Notes shall be increased by 2% to accrue at a rate of 17% per annum on all outstanding principal under the Notes together with all interest that is subject to the Interest Deferral (the “ Increased Rate ”) and (ii) on January 1, 2016, immediately following the end of the period commencing on July 1, 2015 through and including December 31, 2015 (the “ Waiver Period ”), the interest rate under each of the Notes shall return to 15% per annum, and the interest rate under the RJC Junior Note shall return to 12% cash pay per annum, but such interest shall continue to accrue on all outstanding principal plus all interest subject to the Original Investor’s Interest Deferral and RJC Junior Note Interest Deferral described above, as applicable.  For avoidance of doubt, nothing hereunder shall amend or otherwise modify the terms and conditions of the Heartland Note, which the Original Investors agree and acknowledge is being modified pursuant to a separate written agreement between Heartland and the Company on or about the date hereof (the “ Heartland Amendment ”).

Furthermore, on the date hereof and on a monthly basis hereafter, the Company shall prepare and deliver to RJC (or their agent) (i) a Monthly Budget (as defined below), in form and substance reasonably satisfactory to RJC at least five (5) business days prior to the commencement of each reporting month and (ii) such financial statements with respect thereto as Investors (or their agent) may reasonably request.  The Company shall comply with the budgeted expenses set forth in each Monthly Budget in all respects; provided, however, that a variance of less than ten (10%) percent with respect to the expenses, on an aggregate basis, as set forth in any Monthly Budget shall be permitted during the term of the Notes.  For purposes hereof, the term “ Monthly Budget ” shall mean each monthly cash flow forecast prepared by the Company, in form and substance satisfactory to RJC (or their agent), as updated from time to time with the consent of the RJC (or their agent), which Monthly Budget shall specify in detail all non-recurring expenses anticipated during such reporting month, as well as include all anticipated non-cash budget items.

As additional consideration of each Investors’ agreements as described herein, within thirty (30) days of August 1, 2015 (regardless of whether the Obligations under the Notes or the RJC Junior Note have been indefeasibly paid in full), and subject to NYSE MKT additional listing approval, the Company shall issue to each Investor (other than Heartland) a warrant (each, an “ Initial Warrant ”) with a three (3) year term (the “ Term ”) immediately exercisable during such Term at a price of $0.75 per share (cash exercise only) for a number of shares of common stock of the Company (the “ Initial Warrant Shares ”) calculated with respect to each Investor as follows:


A = B *
C
 
D

Where:

A =
the number of Initial Warrant Shares, rounded up to the nearest whole share
B =
1,200,000
C =
the aggregate total principal amount due under the Note(s) and/or RJC Junior Note held by the applicable Investor as of August 1, 2015 (the “ Investor’s Principal ”)
D =
the aggregate total principal amount due under all of the Notes and the RJC Junior Note held by all the Investors as of August 1, 2015 (the “ Aggregate Principal ”).
 

 
 
 
 
Consent and Agreement
Page 3
 
 
 
As additional consideration of each Investors’ agreements as described herein, within thirty (30) days of February 1, 2016 (regardless of whether the Obligations under the Notes or RJC Junior Note have been indefeasibly paid in full), and subject to NYSE MKT additional listing approval, the Company shall issue to each Investor (other than Heartland) an additional warrant (each, a “ Subsequent Warrant ”) with the same Term and immediately exercisable during such Term at a price of $0.75 per share (cash exercise only) for a number of shares of common stock of the Company (the “ Subsequent Warrant Shares ”) calculated with respect to each Investor as follows:


E = ((F/0.75) – B) *
G
 
H

Where:

E =
the number of Subsequent Warrant Shares, rounded up to the nearest whole share
F =
the actual aggregate amount of the interest and principal payments deferred under the Original Investor’s Interest Deferral and Original Investor’s Principal Repayment Deferral under all Notes and the RJC Junior Note Interest Deferral under the RJC Junior Note under this letter agreement (the “ Actual Deferral Total ”).  In the event the Actual Deferral Total is less than or equal to the value of B (defined above), no Subsequent Warrant Shares shall be issuable.
G =
the Investor’s Principal (defined above)
H =
the Aggregate Principal (defined above)

The Initial Warrants and the Subsequent Warrants shall be issued pursuant to the form of Warrant attached hereto as Exhibit A .  The Company hereby agrees to use its reasonable best efforts to (i) obtain NYSE MKT additional listing approval with respect to the Initial Warrant Shares and issue the Initial Warrants no later than September 18, 2015, and (ii) obtain NYSE MKT additional listing approval with respect to the Subsequent Warrant Shares and issue the Subsequent Warrants as promptly as possible following the date that the number of Subsequent Warrant Shares is determined and to further provide the Agent upon its request all copies of all correspondence and other documentation submitted by the Company in support of its efforts to secure such listing approval of the Initial and Subsequent Warrant Shares (the “ Listing Covenant ”).  In the event that the NYSE MKT does not approve the additional listing of the Initial Warrant Shares and the Agent shall reasonably determine that the Company shall have failed to use its reasonable best efforts to satisfy the Listing Covenant above, an Event of Default under the NPA, the Notes and the RJC Junior Note shall automatically arise thirty (30) days following the Company’s receipt of written notice of such breach; provided that the Company shall not have cured such breach within such thirty (30) day period.

The Investors hereby consent and agree that neither the Original Investor’s Interest Deferral, the RJC Interest Deferral, the Original Investor’s Principal Repayment Deferral, the Heartland Amendment nor the RJC Principal Repayment Deferral as contemplated and described hereunder (or, with respect to the Heartland Amendment, as contemplated and described thereunder) shall give rise to a breach or an event of default under the NPA, the Notes, the Heartland Note, the RJC Junior Note, or any other Transaction Documents, or otherwise trigger any right to prepayment under the NPA, the Notes, the Heartland Note, the RJC Junior Note, or any of the other Transaction Documents.  Except as expressly described herein (and with respect to the Heartland Note, as expressly described in the Heartland Amendment), nothing contained herein shall (a) limit in any manner whatsoever the Company’s obligation to comply with, and each Investors’ right to insist on the Company’s compliance with, each and every term of each Note, the Heartland Note, the RJC Junior Note, the NPA and each other Transaction Document, or  (b) constitute a waiver of any event of default or any right or remedy available to any Investor, or of the Company’s or any other person’s obligation to pay and perform all of its obligations, in each case whether arising under the Notes, the Heartland Note, the NPA, the RJC Junior Note, or any other Transaction Document, applicable law and/or in equity, all of which rights and remedies howsoever arising are hereby expressly reserved, are not waived and may be exercised by Investors at any time, and none of which obligations are waived.

In the event the Company does not consummate either (i) the acquisition transaction contemplated pursuant to that certain Agreement and Plan of Reorganization, dated May 21, 2015 (as the same may be amended or supplemented, the “ Acquisition Agreement ”), by and among the Company, PEDEVCO Acquisition Subsidiary, Inc., Dome AB, and Dome Energy Inc. (the “ Dome Transaction ”), or (ii) an Alternate Transaction (as defined below) on or before February 1, 2016, unless the Company resumes full and prompt payment when due of all interest and principal repayments as required pursuant to the Notes, the Heartland Note and the RJC Junior Note, as applicable, commencing on February 1, 2016, then the Company agrees that it shall cooperate with the Investors in exploring opportunities to repay the Notes, the Heartland Note and the RJC Junior Note in full as soon as possible following February 1, 2016.  For purposes of this Consent and Agreement, an “ Alternate Transaction ” shall be any transaction approved by the Investors in their sole discretion as an acceptable alternative to the Dome Transaction.
 

 
 
 
 
Consent and Agreement
Page 4
 
 
 
The Company hereby represents and warrants to the Agent and each of the Investors that on the date hereof and after giving effect to this Consent and Agreement, (i) each of the representations and warranties of the Company and the Subsidiaries in the NPA and the other Transaction Documents are and shall be true and correct in all material respects, except for representations and warranties that speak as of a particular date, which shall be true and correct in all material respects as of such date and (ii) no Default or Event of Default has occurred and is continuing or will occur as a result of the consummation of this Consent and Agreement.

Company hereby further confirms and agrees, on behalf of itself and each of its direct and indirect subsidiaries, that all security interests and liens granted to Agent and Investors pursuant to the Transaction Documents continue in full force and effect and shall continue to secure the Obligations (as defined in the Security Agreement), including all liabilities and obligations (primary, secondary, direct, contingent, sole, joint or several) due or to become due, or that are now or may be hereafter contracted or acquired, or owing, under the Notes, the Heartland Note, the RJC Junior Note and any other instruments, agreements or other documents executed and/or delivered in connection herewith or therewith, in each case, whether now or hereafter existing, voluntary or involuntary, direct or indirect, absolute or contingent, liquidated or unliquidated, whether or not jointly owed with others, and whether or not from time to time decreased or extinguished and later increased, created or incurred, and all or any portion of such obligations or liabilities that are paid, to the extent all or any part of such payment is avoided or recovered directly or indirectly from Investors as a preference, fraudulent transfer or otherwise as such obligations may be amended, supplemented, converted, extended or modified from time to time.

Subject in each case to any other prior and still effective intercreditor agreements among the Investors that relate to payment priority, each of the Investors hereby further agrees that on and after the occurrence of an Event of Default and/or in connection with the distribution of proceeds from the sale or transfer of all or substantially all of the assets or equity of the Company, all accrued and unpaid interest deferred by any Investor pursuant to the Interest Deferral shall be repaid in full prior to repayment of any other indebtedness of the Company held by any other Investor.



[Signature Pages Follow]
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consent and Agreement
Page 5
 
 
 

Except as specifically set forth herein, all terms and conditions of the NPA, the Notes, the RJC Junior Note and other Transaction Documents shall remain in full force and effect.

 
   
Regards,

/s/ Clark R. Moore                                                             
Clark R. Moore
Executive Vice President and General Counsel
PEDEVCO Corp.
       
       
 

Consented and Agreed:

BAM ADMINISTRATIVE SERVICES LLC

By:   /s/ Daniel Saks                                                                 

Name:   Daniel Saks                                                                 

Title:   Authorized Signatory                                                                            

Date:  August 28, 2015

SENIOR HEALTH INSURANCE COMPANY OF PENNSYLVANIA
By: B Asset Manager, LP, its investment manager

By:   /s/ Daniel Saks                                                                 

Name:   Daniel Saks                                                                 

Title:   Authorized Signatory                                                                            

Date:  August 28, 2015

BRE BCLIC SUB

By:   /s/ David B.  Young                                                                            

Name:   David B. Young                                                                            

Title:   Vice President                                                                 

Date:  August 28, 2015

BRE WNIC 2013 LTC PRIMARY

By:   /s/ David B.  Young                                                                            

Name:   David B. Young                                                                            

Title:   Vice President                                                                 

Date:  August 28, 2015

 
 
 
Consent and Agreement
Page 6
 
 
 
BRE WNIC 2013 LTC SUB

By:   /s/ David B.  Young                                                                            

Name:   David B. Young                                                                            

Title:   Vice President                                                                 

Date:  August 28, 2015

RJ CREDIT LLC

By:   /s/ David Steinberg                                                                            

Name:   David Steinberg                                                                            

Title:   Authorized Signatory                                                                            

Date:  August 27, 2015



HEARTLAND BANK ACKNOWLEDGES AND AGREES TO THE ENTRY INTO, AND PERFORMANCE IN ACCORDANCE WITH, THIS CONSENT AND AGREEMENT BY THE PARTIES SIGNING ABOVE:

HEARTLAND BANK

By:   /s/ Mark Hoffpauir                                                                            

Name:   Mark Hoffpauir                                                                            

Title:   CCO                    
 
Date:  August 27, 2015
                                             

 
 
 
Consent and Agreement
Page 7
 
 
 
EXHIBIT A
FORM OF WARRANT
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Exhibit 10.2
 


 
August 28, 2015

HEARTLAND Bank
One Information Way, Suite 300
Little Rock, AR 72202
Attn:  Greg White

 
Re:
Consent and Agreement

Dear Mr. White:

Reference is made to that certain Note Purchase Agreement, dated March 7, 2014 (the “ NPA ”), by and among BRe BCLIC Primary, BRe BCLIC Sub (“ BCLIC Sub ”), BRe WNIC 2013 LTC Primary (“ WNIC Primary ”), BRe WNIC 2013 LTC Sub (“ WNIC Sub ”) and RJ Credit LLC (“ RJC ”) (collectively, the “ Purchasers ”), BAM Administrative Services LLC, as agent for the Investors (the “ Agent ”), and PEDEVCO Corp. (the “ Company ”), pursuant to which the Company issued Senior Secured Promissory Notes to each of the Purchasers (collectively, but excluding the Heartland Note as defined below, the “ Notes ”).  On March 19, 2015, BRe WNIC 2013 LTC Primary transferred a portion of its Note to Heartland Bank (“ Heartland ”) and the Company reissued a replacement note to Heartland (the “ Heartland Note ”).  On April 1, 2015, BRe BCLIC Primary transferred the entirety of its Note to Senior Health Insurance Company of Pennsylvania (“ SHIP ” and, collectively with the Purchasers and Heartland, the “ Investors ”).  Reference is also made to that certain Note and Security Agreement, dated April 10, 2014, as amended on February 23, 2015, issued by the Company to RJC (the “ RJC Junior Note ”).  To the extent not defined herein, capitalized terms shall have the meaning ascribed to them in the NPA.

For good and valuable consideration, Heartland hereby agrees that, commencing with the month of August 2015, (a) no mandatory principal payments shall be due and payable under Section 3.2 of the Heartland Note for the six month period commencing August 1, 2015 (the “ Mandatory Principal Repayment Waiver ”), (b) all mandatory principal repayments otherwise due and payable monthly after February 1, 2016 under Section 3.2 of the Heartland Note shall instead accrue and be due and payable each six (6) month period thereafter, such that the mandatory principal repayments due and payable on the Heartland Note for the six (6) month period commencing on February 1, 2016 shall be due and payable by the Company on the third Business Day of August 2016, with mandatory principal repayments accruing thereafter due and payable every six (6) months (the “ Mandatory Principal Repayment Amendment ”), and (c) all interest accruing under the Heartland Note shall compound and be due and payable each six (6) month period thereafter, such that interest due and payable on the Heartland Note for the six month period commencing August 1, 2015 shall be due and payable by the Company on February 1, 2016, with interest accruing thereafter due and payable every six (6) months (the “ Semi-Annual Payment Term Amendment ”).  In addition, beginning on March 1, 2016 and continuing every month thereafter, the Company covenants and agrees that the Company shall place an amount equal to 1/6 th of the semi-annual principal and interest payments due under the Heartland Note into a sinking fund which shall be paid to Heartland every six (6) months when due and owing thereunder.  For avoidance of doubt, nothing hereunder shall amend or otherwise modify the terms and conditions of the Notes held by any Investors except for Heartland (the “ Other Investors ”), which Notes Heartland agrees and acknowledges are being modified pursuant to a separate written agreement by and between the Other Investors and the Company on or about the date hereof, a final copy of which has been provided to Heartland (the “ Other Investors’ Notes Amendment ”).

Heartland hereby consents and agrees that neither the Mandatory Principal Repayment Waiver, the Mandatory Principal Repayment Amendment, the Semi-Annual Payment Term Amendment, nor the Other Investors’ Notes Amendment as contemplated and described hereunder (and with respect to the Other Investors’ Notes, as contemplated and described under the Other Investors’ Notes Amendment), shall give rise to a breach or an event of default under the NPA, the Notes, the Heartland Note, the RJC Junior Note, or any other Transaction Documents, or otherwise trigger any right to prepayment under the NPA, the Notes, the Heartland Note, the RJC Junior Note, or any of the other Transaction Documents.  Except as expressly described herein, nothing contained herein shall (a) limit in any manner whatsoever the Company’s obligation to comply with, and Heartland’s right to insist on the Company’s compliance with, each and every term of the Heartland Note, the NPA and each other Transaction Document, or  (b) constitute a waiver of any event of default or any right or remedy available to Heartland, or of the Company’s or any other person’s obligation to pay and perform all of its obligations, in each case whether arising under the Heartland Note, the NPA, or any other Transaction Document, applicable law and/or in equity, all of which rights and remedies howsoever arising are hereby expressly reserved, are not waived and may be exercised by Heartland at any time, and none of which obligations are waived.

 
 
 
Consent and Agreement
Page 2
 
 
In the event the Company does not consummate either (i) the acquisition transaction contemplated pursuant to that certain Agreement and Plan of Reorganization, dated May 21, 2015 (as the same may be amended or supplemented, the “ Acquisition Agreement ”), by and among the Company, PEDEVCO Acquisition Subsidiary, Inc., Dome AB, and Dome Energy Inc. (the “ Dome Transaction ”), or (ii) an Alternate Transaction (as defined below) on or before February 1, 2016, unless the Company resumes full and prompt payment when due of all interest and principal repayments as required pursuant to the Notes, the Heartland Note and the RJC Junior Note, as applicable, commencing on February 1, 2016, then the Company agrees that it shall cooperate with the Investors in exploring opportunities to repay the Notes, the Heartland Note and the RJC Junior Note in full as soon as possible following February 1, 2016.  For purposes of this Consent and Agreement, an “ Alternate Transaction ” shall be any transaction approved by the Investors in their sole discretion as an acceptable alternative to the Dome Transaction.

The Company hereby represents and warrants to Heartland that on the date hereof and after giving effect to this Consent and Agreement, (i) each of the representations and warranties of the Company and the Subsidiaries in the NPA and the other Transaction Documents are and shall be true and correct in all material respects, except for representations and warranties that speak as of a particular date, which shall be true and correct in all material respects as of such date and (ii) no Default or Event of Default has occurred and is continuing or will occur as a result of the consummation of this Consent and Agreement.

Company hereby further confirms and agrees, on behalf of itself and each of its direct and indirect subsidiaries, that all security interests and liens granted to Agent and Investors pursuant to the Transaction Documents continue in full force and effect and shall continue to secure the Obligations (as defined in the Security Agreement), including all liabilities and obligations (primary, secondary, direct, contingent, sole, joint or several) due or to become due, or that are now or may be hereafter contracted or acquired, or owing, under the Notes, the Heartland Note, the RJC Junior Note and any other instruments, agreements or other documents executed and/or delivered in connection herewith or therewith, in each case, whether now or hereafter existing, voluntary or involuntary, direct or indirect, absolute or contingent, liquidated or unliquidated, whether or not jointly owed with others, and whether or not from time to time decreased or extinguished and later increased, created or incurred, and all or any portion of such obligations or liabilities that are paid, to the extent all or any part of such payment is avoided or recovered directly or indirectly from Investors as a preference, fraudulent transfer or otherwise as such obligations may be amended, supplemented, converted, extended or modified from time to time.

Subject in each case to any other prior and still effective intercreditor agreements among the Investors that relate to payment priority, each of the Investors hereby further agrees that on and after the occurrence of an Event of Default and/or in connection with the distribution of proceeds from the sale or transfer of all or substantially all of the assets or equity of the Company, all accrued and unpaid interest deferred by any Investor pursuant to the Interest Deferral shall be repaid in full prior to repayment of any other indebtedness of the Company held by any other Investor.



[Signature Pages Follow]
 
 
 
 
 
 
 
 
 
 
 
Consent and Agreement
Page 3
 

 
Except as specifically set forth herein, all terms and conditions of the NPA, the Notes, the RJC Junior Note and other Transaction Documents shall remain in full force and effect.


 
   
Regards,

/s/ Clark R. Moore                                                             
Clark R. Moore
Executive Vice President and General Counsel
PEDEVCO Corp.
       
       
 

Consented and Agreed:

HEARTLAND BANK

By:   /s/ Mark Hoffpauir                                                                            

Name:   Mark Hoffpauir                                                                            

Title:   CCO                                                                 

Date:  August 27, 2015
 
 
 

 
 
 
Exhibit 10.3
 
 
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 REASONABLY SATISFACTORY TO THE ISSUER TO THE EFFECT THAT ANY SUCH TRANSFER IS EXEMPT FROM SUCH REGISTRATION.
 
Warrant No.
 
CSW-___
Number of Shares: _________
Warrant Date:
 
_________________, 2015
 

PEDEVCO CORP.
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”), ___________________________ , or registered assigns (the “Holder”), is hereby granted the right to purchase, at any time until the close of business on ____________________, 2018 (the “Expiration Date”), _________________________________ ( __________________ ) 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$0.75 per share (the “Exercise Price”).
 
2.            Procedure for Exercise .  Upon surrender of this Warrant with the annexed Notice of Exercise Form duly executed, together with payment in cash, by wire transfer or by certified check 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 within five business days of the Company’s receipt of the Notice of Exercise and Exercise Price.  This Warrant may be exercised in whole or in part. On any such partial exercise, provided the Holder has surrendered the original Warrant, the Company promptly will issue and deliver to the order of the Holder a new Warrant of like tenor, in the name of the Holder, for the whole number of shares of Common Stock for which such Warrant may still be exercised.
 
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.
 
 
1
 
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 or a migratory merger to establish a new state of incorporation), 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.
 
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, but no such adjustment shall increase the aggregate Exercise Price under this Warrant) which shall be applicable after such events.
 
7.            Transfer to Comply with the Securities Act .  This Warrant has not been registered under the Securities Act of 1933, as amended, (the “Securities Act”) and has been issued to the Holder for investment and not with a view to the distribution of either this Warrant or the Warrant Shares.  Neither this Warrant nor any of the Warrant Shares or any other security issued or upon exercise of this Warrant may be sold, transferred, pledged or hypothecated in the absence of (a) an effective registration statement under the Act relating to such security, or (b) an opinion of counsel reasonably satisfactory to the Company that registration is not required under the Act.  Each certificate for this Warrant, the Warrant Shares and any other security issued or issuable upon exercise of this Warrant shall contain a legend in form and substance satisfactory to counsel for the Company, setting forth the restrictions on transfer contained in this Section.
 
8.            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
 
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.
 
 
2
 
9.            Supplements and Amendments; Whole Agreement .  This Warrant may be amended or supplemented only by an instrument in writing signed by the Company and the Holder hereof.  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.
 
10.            Governing Law .  This Warrant shall be deemed to be a contract made under the laws of the State of New York 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. Any action brought by either party against the other concerning the transactions contemplated by this Warrant shall be brought only in the state courts of New York or in the federal courts located in Southern District of New York.  The parties to this Warrant hereby irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens . Each party hereby irrevocably waives personal service of process and consents to process being served in any suit, action or proceeding in connection with this Warrant by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Warrant and agrees that such service shall constitute good and sufficient service of process and notice thereof.  Nothing contained herein shall be deemed to limit in any way any right to serve process in any other manner permitted by law.
 
11.            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.
 
12.            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.
 
13.            Assignability .  This Warrant or any part hereof may only be hereafter assigned by the Holder to an affiliate thereof executing documents reasonably required by the Company.  Any such assignment shall be binding on the Company and shall inure to the benefit of any such assignee.
 
 
 
 
 
3
 
IN WITNESS WHEREOF, the parties hereto have executed this Warrant as of the Warrant Date set forth above.
 
 
PEDEVCO CORP.
 
 
By:   ____________________________________
Name:  Frank C. Ingriselli
Title:  Chairman and CEO
 
HOLDER:
 
_________________________________________
 
By:     ____________________________________       
 
 
Name:   ___________________________________            
 
Title:  _____________________________________  
   
 
 
 
 
 
 
 
 
 
4
 
 
 
NOTICE OF EXERCISE OF WARRANT
 

The undersigned hereby irrevocably elects to exercise the right, represented by the Warrant dated as of ____________________, 2015, to purchase _____________ shares of the Common Stock of PEDEVCO Corp., pursuant to Section 2 of the Warrant and tenders herewith payment in accordance with Section 2 of the Warrant.
 
Please deliver the stock certificate to:
 
______________________________________
 
______________________________________
 
______________________________________
 

Dated:                      ___________________
 
 
By:_______________________

 
 
 
 
 
 
 
5
 
Exhibit 99.1
 
Pacific Energy Development Announces Restructuring of Debt Facilities in Anticipation of Previously Announced Merger
 
Danville, CA, Tuesday, September 1, 2015 – PEDEVCO Corp. d/b/a Pacific Energy Development   (NYSE MKT: PED) is pleased to announce today that it has successfully restructured its approximately $35 million senior debt facility and its approximately $8.35 million subordinated debt facility.  The restructuring includes the following changes:
 
 
·
discontinue principal repayments for six months under all the Company’s senior debt
 
·
on approximately $5 million of the Company’s senior debt, change the frequency of interest payments from monthly to semi-annually, with the next interest payment due February 2016
 
·
on approximately $24 million of the Company’s senior debt, reduce the monthly cash pay portion of interest to 5% from 15% per annum and defer until maturity (March 2017) interest payments accruing at 12% per annum during the six month period ending January 31, 2016
 
·
on approximately $6 million of the Company’s senior debt, eliminate the cash pay portion and defer until maturity (March 2017) all interest payments accruing at 17% per annum during the six month period ending January 31, 2016
 
·
on the approximately $8.35 million subordinated debt, defer until maturity (December 2017) all interest payments accruing at 12% per annum during the six month period ending January 31, 2016
 
The Company’s lenders have agreed to restructure these debt facilities in order to provide the Company with additional liquidity in order to execute the pending combination with Dome Energy, which contemplates the repayment of the Company’s senior debt in full at closing.  This restructuring will provide the Company with an estimated $500,000 per month in additional cash flow during the six month waiver period, although the Company anticipates that the combination with Dome Energy will close, and its senior debt repaid in full, before the conclusion of the six month period.  More details regarding the debt restructuring, including a description of warrant consideration issued to the lenders and other covenants, can be found in the Company’s Current Report on Form 8-K filed by the Company with the Securities and Exchange Commission today.
 
Commenting on this significant debt restructuring, Frank C. Ingriselli, Chairman and CEO of the Company, stated, "We are very pleased that we have been able to beneficially restructure our debt facilities with our lenders in order to free up cash during this period of depressed crude oil prices as we work to finalize our pending merger with Dome Energy. We are currently working closely and expeditiously with Dome Energy to assist them in the completion of the audit of their financial statements for the previous two years, which we anticipate will be completed and delivered to us this week, and then incorporated into the shareholder approval documentation we are working to complete for submission to the SEC this month."  Mr. Ingriselli continued, stating, “These have been difficult times with the slide in the price of oil coupled with the volatility in the equity markets; however, we believe that with this restructuring, we will significantly strengthen our Company, have the capital necessary to develop our assets, and roll out a new and improved company poised to take advantage of these depressed markets and the opportunities they present.”
 
 
 
 
 
About Pacific Energy Development (PEDEVCO Corp.)
 
PEDEVCO Corp, d/b/a Pacific Energy Development (NYSE MKT:  PED), is a publicly-traded energy company engaged in the acquisition and development of strategic, high growth energy projects, including shale oil and gas assets, in the United States. The Company’s principal asset is its D-J Basin Asset located in the D-J Basin in Colorado. Pacific Energy Development is headquartered in Danville, California, with an operations office in Houston, Texas.
 
Cautionary Statement Regarding Forward Looking Statements
 
All statements in this press release that are not based on historical fact are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 and the provisions of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. While management has based any forward-looking statements contained herein on its current expectations, the information on which such expectations were based may change. These forward-looking statements rely on a number of assumptions concerning future events and are subject to a number of risks, uncertainties, and other factors, many of which are outside of the Company's control, that could cause actual results to materially differ from such statements. Such risks, uncertainties, and other factors include, but are not necessarily limited to, those set forth under Item 1A "Risk Factors" in the Company's Annual Report on Form 10-K for the year ended December 31, 2014 and the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015.  The Company operates in a highly competitive and rapidly changing environment, thus new or unforeseen risks may arise. Accordingly, investors should not place any reliance on forward-looking statements as a prediction of actual results. The Company disclaims any intention to, and undertakes no obligation to, update or revise any forward-looking statements. Readers are also urged to carefully review and consider the other various disclosures in the Company's public filings with the SEC.
 
Important Information
 
In connection with the proposed business combination between PEDEVCO Corp. (" PEDEVCO ") and Dome Energy, Inc., a wholly-owned subsidiary of DOME Energy AB (" Dome "), PEDEVCO currently intends to file a registration statement containing a proxy statement/prospectus with the Securities and Exchange Commission (the " SEC "). This communication is not a substitute for any proxy statement, registration statement, proxy statement/prospectus or other document PEDEVCO may file with the SEC in connection with the proposed transaction. Prospective investors are urged to read the registration statement and the proxy statement/prospectus, when filed as it will contain important information. Any definitive proxy statement(s) (if and when available) will be mailed to stockholders of PEDEVCO and Dome (as applicable). Prospective investors may obtain free copies of the registration statement and the proxy statement/prospectus, when filed, as well as other filings containing information about PEDEVCO, without charge, at the SEC's website ( www.sec.gov ). Copies of PEDEVCO's SEC filings may also be obtained from PEDEVCO without charge at PEDEVCO's website ( www.pacificenergydevelopment.com ) or by directing a request to PEDEVCO at (855) 733-3826. This document does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction.
 
 
 
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INVESTORS SHOULD READ THE PROSPECTUS/PROXY STATEMENT AND OTHER DOCUMENTS TO BE FILED WITH THE SEC CAREFULLY BEFORE MAKING A DECISION CONCERNING THE MERGER.
 
Participants in Solicitation
 
PEDEVCO and its directors and executive officers and other members of management and employees are potential participants in the solicitation of proxies in respect of the proposed merger. Information regarding PEDEVCO's directors and executive officers is available in PEDEVCO's Annual Report on Form 10-K for the year ended December 31, 2014, filed with the SEC on March 31, 2015 and PEDEVCO Corp.'s definitive proxy statement on Schedule 14A, filed with the SEC on May 16, 2014. Additional information regarding the interests of such potential participants will be included in the registration statement and proxy statement/prospectus to be filed with the SEC by PEDEVCO and Dome in connection with the proposed combination transaction and in other relevant documents filed by PEDEVCO with the SEC. These documents can be obtained free of charge from the sources indicated above. Additional information regarding the participants in the proxy solicitations and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the proxy statement/prospectus and other relevant materials to be filed with the SEC when they become available.
 
Contacts
 
Bonnie Tang
Pacific Energy Development
1-855-733-3826 ext. 21 (Media)
PR@pacificenergydevelopment.com
 
Investor Relations:
 
Stonegate, Inc. 
Casey Stegman
1-214-987-4121
casey@stonegateinc.com
 
 
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