EXHIBIT 10.2
FORM OF CONVERTIBLE NOTE

THIS NOTE AND THE COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED.  THIS NOTE AND THE
COMMON SHARES ISSUABLE UPON CONVERSION OF THIS NOTE MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO THIS NOTE UNDER SAID ACT OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO HOLDER THAT SUCH REGISTRATION IS NOT REQUIRED.
 
Principal Amount $__________
Issue Date: August 2, 2016

 
ROYALE ENERGY, INC.
CONVERTIBLE NOTE

FOR VALUE RECEIVED, Royale Energy, Inc., a California corporation (the
“Borrower”), hereby promises to pay to the order of _______________________ or
his, her or its registered assigns (“Holder”) the amount set out above as the
Principal Amount (as reduced pursuant to the terms hereof pursuant to conversion
or otherwise, the “Principal”) one year from the above stated issue date (the
“Maturity Date”), or upon acceleration, conversion or otherwise (in each case in
accordance with the terms hereof) and to pay interest (“Interest”) on any
outstanding Principal Amount (the “Principal”), if it is due, upon the Maturity
Date, but in no event to exceed the maximum rate of nonusurious interest allowed
from time to time by law until the same becomes due and payable, whether upon
the Maturity Date or acceleration or otherwise (in each case in accordance with
the terms hereof).

This Note has been entered into pursuant to the terms of a subscription
agreement between the Borrower and the Holder, dated of even date herewith (the
“Subscription Agreement”), and shall be governed by the terms of such
Subscription Agreement.  Unless otherwise separately defined herein, all
capitalized terms used in this Note shall have the same meaning as is set forth
in the Subscription Agreement.  This Note is accompanied by a Warrant to
purchase up to three shares for every ten shares of Common Stock of the Issuer,
if converted at an exercise price of $0.80 per share, subject to adjustment as
provided therein, as set forth in the Subscription Agreement.  The following
terms shall apply to this Note:

ARTICLE 1
INTEREST
 
1.1          Interest; Interest Rate.  Interest on this Note shall accrue at the
rate of 10% per annum (the “Interest Rate”) on the outstanding Principal and
shall be payable, if at all, on the Maturity Date in accordance with the terms
of this Note. From and after the occurrence and during the continuance of any
Event of Default, the Interest Rate shall automatically be increased to fifteen
percent (15%). In the event that such Event of Default is subsequently cured,
the automatic increase referred to in the preceding sentence shall cease to be
effective as of the date of such cure, provided that the Interest as calculated
and unpaid at such increased rate during the continuance of such Event of
Default shall continue to apply to the extent relating to the days
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after the occurrence of such Event of Default through and including the date of
such cure of such Event of Default.
ARTICLE 2 
CONVERSION
2.1          Automatic Conversion.  Immediately upon approval of the conversion
of this Note by a majority of the then-current shareholders of Borrower at a
meeting of its shareholders, the outstanding Principal on this Note shall be
automatically converted into fully paid and nonassessable shares of the
Borrower's Common Stock, no par value per share (“Common Stock”) at the
conversion price set forth in Section 2.2, and all Interest shall be cancelled
and forgiven.
2.2          Conversion Price.  Subject to adjustment as provided in Section 2.3
hereof, the Conversion Price per share shall be $0.40.
2.3           Adjustment.  The Conversion Price and number and kind of shares or
other securities to be issued upon conversion determined pursuant to Section
2.2, shall be subject to adjustment from time to time upon the occurrence of
certain events while this conversion right remains outstanding, as follows:
2.3.1          Merger, Sale of Assets, etc.  If the Borrower at any time shall
consolidate with or merge into or sell or convey all or substantially all its
assets to any other corporation, this Note, as to the unpaid principal portion
thereof and accrued interest thereon, shall thereafter be deemed to evidence the
right to purchase such number and kind of shares or other securities and
property as would have been issuable or distributable on account of such
consolidation, merger, sale or conveyance, upon or with respect to the
securities subject to the conversion or purchase right immediately prior to such
consolidation, merger, sale or conveyance.  The foregoing provision shall
similarly apply to successive transactions of a similar nature by any such
successor or purchaser.  Without limiting the generality of the foregoing, the
anti-dilution provisions of this Section shall apply to such securities of such
successor or purchaser after any such consolidation, merger, sale or conveyance.
2.3.2          Reclassification, etc.  If the Borrower at any time shall, by
reclassification or otherwise, change the Common Stock into the same or a
different number of securities of any class or classes that may be issued or
outstanding, this Note, as to the unpaid principal portion thereof and accrued
interest thereon, shall thereafter be deemed to evidence the right to purchase
an adjusted number of such securities and kind of securities as would have been
issuable as the result of such change with respect to the Common Stock
immediately prior to such reclassification or other change.
2.3.3          Stock Splits, Combinations and Dividends.  If the shares of
Common Stock are subdivided or combined into a greater or smaller number of
shares of Common Stock, or if a dividend is paid on the Common Stock in shares
of Common Stock, the Conversion Price shall be proportionately reduced in case
of subdivision of shares or stock dividend or proportionately increased in the
case of combination of shares, in each such case by the ratio
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which the total number of shares of Common Stock outstanding immediately after
such event bears to the total number of shares of Common Stock outstanding
immediately prior to such event..
2.4          Notice of Adjustment.  Whenever the Conversion Price is adjusted
pursuant to Section 2.3 above, the Borrower shall promptly mail to the Holder a
notice setting forth the Conversion Price after such adjustment and setting
forth a statement of the facts requiring such adjustment.
2.5          Reservation of Shares.  Until conversion of this Note, Borrower
will reserve from its authorized and unissued Common Stock a sufficient number
of shares to provide for the issuance of Common Stock issuable upon the full
conversion of this Note.  Borrower represents that upon issuance, such shares
will be duly and validly issued, fully paid and non-assessable.  Borrower agrees
that its issuance of this Note shall constitute full authority to its officers,
agents, and transfer agents who are charged with the duty of executing and
issuing stock certificates to execute and issue the necessary certificates for
shares of Common Stock upon the conversion of this Note.
ARTICLE 3
DEFAULT
The Borrower shall promptly notify the Holder in writing of the occurrence of
any of the following events of default ("Event of Default") or the existence and
substance of any event or condition which with the passage of time or the giving
of notice, or both, would become an Event of Default.   Upon the occurrence of
an Event of Default, whether or not notice has been provided by Borrower, the
holder hereof may at any time thereafter at its option by written notice to the
Borrower declare the entire principal amount of, and all accrued interest on,
this Note to be immediately due and payable, without presentment, demand,
protest or notice, all of which are hereby waived by the Borrower shall, at the
option of the Holder hereof, make all sums of Principal and Interest then
remaining unpaid hereon and all other amounts payable hereunder immediately due
and payable, upon demand, without presentment, or grace period, all of which
hereby are expressly waived, except as set forth below:

3.1          Failure to Pay Principal or Interest.  The Borrower fails to pay
the Principal and Interest due under this Note at Maturity and such failure
continues for a period of ten (10) days after the due date.
3.2          Failure to Maintain Asset Coverage.  The Borrower fails to maintain
unpledged, proved reserves reported by an independent petroleum engineer,
prepared in accordance with the definitions and guidelines of the U.S.
Securities and Exchange Commission, to have value, discounted at an annual rate
of 10 percent to determine its present worth, equal to at least 200% of the
unpaid Principal on the Note.
3.3          Pledge of Assets.  The Borrower pledges any of its assets which are
unpledged on the date of execution of this Note to secure any obligation or
indebtedness other than this Note.
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3.4          Breach of Other Covenants.  The Borrower breaches any material
covenant or other term or condition of the Subscription Agreement or this Note
in any material respect and such breach, if subject to cure, continues for a
period of ten (10) business days after written notice to the Borrower from the
Holder.
3.5          Receiver or Trustee.  The Borrower shall make an assignment for the
benefit of creditors, or apply for or consent to the appointment of a receiver
or trustee for it or for a substantial part of its property or business; or such
a receiver or trustee shall otherwise be appointed.
3.6          Bankruptcy.  Bankruptcy, insolvency, reorganization or liquidation
proceedings or other proceedings or relief under any bankruptcy law or any law,
or the issuance of any notice in relation to such event, for the relief of
debtors shall be instituted by or against the Borrower and if instituted against
Borrower are not dismissed within 45 days of initiation.
3.7          Failure to Deliver Common Stock or Replacement Note.  Borrower's
failure to timely deliver Common Stock to the Holder pursuant to and in the form
required by this Note, or, if required, a replacement Note.
3.8          Reservation Default.   Failure by the Borrower to have reserved for
issuance upon conversion of the Note the amount of Common stock as set forth in
this Note and the Subscription Agreement.
3.9          Cross Default.  A default by the Borrower of a material term,
covenant, warranty or undertaking of any other agreement to which the Borrower
and Holder are parties, or the occurrence of a material event of default under
any such other agreement which is not cured after any required notice and/or
cure period.
ARTICLE 4
MISCELLANEOUS
4.1          Failure or Indulgence Not Waiver.  No failure or delay on the part
of Holder hereof in the exercise of any power, right or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such power, right or privilege preclude other or further exercise thereof or
of any other right, power or privilege.  All rights and remedies existing
hereunder are cumulative to, and not exclusive of, any rights or remedies
otherwise available.
4.2          Notices.  All notices, demands, requests, consents, approvals, and
other communications required or permitted hereunder shall be in writing and,
unless otherwise specified herein, shall be (i) personally served, (ii)
deposited in the mail, registered or certified, return receipt requested,
postage prepaid, (iii) delivered by reputable air courier service with charges
prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed
as set forth below or to such other address as such party shall have specified
most recently by written notice.  Any notice or other communication required or
permitted to be given hereunder shall be deemed effective (a) upon hand delivery
or delivery by email, at the address designated below (if delivered on a
business day during normal business hours where such notice is to be received),
or
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the first business day following such delivery (if delivered other than on a
business day during normal business hours where such notice is to be received)
or (b) on the second business day following the date of mailing by express
courier service, fully prepaid, addressed to such address, or upon actual
receipt of such mailing, whichever shall first occur.  The addresses for such
communications shall be:
If to the Borrower:

Royale Energy, Inc.
3777 Willow Glen Drive
El Cajon, California 92019
Attention:  Stephen M. Hosmer, CFO
Email:  hosmer@royl.com

If to the Holder:
 
_____________________
_____________________
_____________________
_____________________

4.3          Amendment Provision.  The term "Note" and all reference thereto, as
used throughout this instrument, shall mean this instrument as originally
executed, or if later amended or supplemented, then as so amended or
supplemented.
4.4          Assignability.  This Note shall be binding upon the Borrower and
its successors and assigns, and shall inure to the benefit of the Holder and its
successors and assigns.  The Borrower may not assign any of its obligations
under this Note without the consent of the Holder.
4.5          Cost of Collection.  If default is made in the payment of this
Note, Borrower shall pay the Holder hereof reasonable costs of collection,
including reasonable attorneys' fees.
4.6          Governing Law.  This Note shall be governed by and construed in
accordance with the laws of the State of California.  Any action brought by
either party against the other concerning the transactions contemplated by this
Agreement shall be brought only in the state courts of California or in the
federal courts located in the State of California.  Both parties and the
individual signing this Agreement on behalf of the Borrower agree to submit to
the jurisdiction of such courts.  The prevailing party shall be entitled to
recover from the other party its reasonable attorney's fees and costs.
4.7          Usury.  Nothing contained herein shall be deemed to establish or
require the payment of a rate of interest or other charges in excess of the
maximum permitted by applicable law.  In the event that the rate of interest
required to be paid or other charges hereunder exceed the maximum permitted by
such law, any payments in excess of such maximum shall be credited against
amounts owed by the Borrower to the Holder and thus refunded to the Borrower.
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4.8          Shareholder Status.  The Holder shall not have rights as a
shareholder of the Borrower with respect to unconverted portions of this Note. 
However, the Holder will have all the rights of a shareholder of the Borrower
with respect to the shares of Common Stock to be received by Holder after
delivery by the Holder of a Conversion Notice to the Borrower.

IN WITNESS WHEREOF, Borrower has caused this Note to be signed in its name by an
authorized officer as of the 2nd day of August, 2016.

ROYALE ENERGY, INC.

By: ________________________________
Name:   Stephen Hosmer
Title:     Chief Financial Officer

 
 
 
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