Exhibit 10.5
MASTER SERVICES AGREEMENT
 
This MASTER SERVICES AGREEMENT (this “Agreement”) is made and entered into as of
April __, 2018 by and between RMX RESOURCES, LLC, a Texas limited liability
company (the “Company”), and ROYALE ENERGY, INC., a Delaware corporation
(“Royale”).
W I T N E S S E T H:
WHEREAS, on the date hereof, Royale and CIC RMX LP (“CIC”), Royale Energy Funds,
Inc. and Matrix Oil Management Corporation are entering into the Limited
Liability Company Agreement of the Company (the “Company Agreement”); and
WHEREAS, the Company desires to engage Royale to provide the Services (as
hereinafter defined) in connection with the business of the Company, and Royale
is willing to provide the Services, in each case upon the terms and conditions
set forth herein;
NOW, THEREFORE, in consideration of the terms and conditions contained herein,
the mutual benefits to be gained from the performance thereof and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1          Certain Definitions.  As used in this Agreement, the
following terms shall have the meanings set forth below:
“Audited Financial Statements” means annual financial statements of the Company
for each fiscal year of the Company beginning the year ended December 31, 2018,
presented in accordance with GAAP, including a balance sheet and statements of
operations, Company equity and cash flows, which have been audited by a firm of
independent public accountants selected by the Company.
“Bankruptcy Event” means the occurrence of any of the following events with
respect to Royale: (i) voluntarily filing a petition in bankruptcy or making an
assignment for the benefit of the creditors, (ii) filing a petition or answer
seeking, consenting to or acquiescing in any reorganization, arrangement,
readjustment, liquidation, dissolution or similar relief under any statute, law
or regulation relating to bankruptcy or insolvency, or (iii) taking any action
seeking, consenting to or acquiescing in the appointment of a trustee, receiver
or liquidator or any substantial part of its properties and assets.
“Contributed Assets” has the meaning set forth in that certain Subscription and
Contribution Agreement of even date herewith among the Company, on the one hand,
and CIC RMX LP, Royale, Royale Energy Funds, Inc. and Matrix Oil Management
Corporation, as the Purchasers on the other.
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“Employment Agreement” means that certain Employment Agreement dated as of March
29, 2018 by and between the Company and Jonathan Gregory and all amendments,
modifications, renewals, extensions and restatements thereof.
“Retained Office Rent” means the rent and other charges by the landlord incurred
by the Company arising from the lease of commercial office space currently
occupied by the Company (i) at 459 West Road, La Habra Heights, California and
(ii) in the Sansinena Field.
“Operations Real Estate Costs” means all costs, charges, taxes and liabilities
associated with the lease or use of real property currently utilized by the
Company (including but not limited to commercial office space in Pismo,
California and Denver, Colorado), other than amounts owed to lessors of oil and
gas property under customary leases of minerals.
“Reserve Report” means a report, in form and substance satisfactory to the
Company, dated as of December 31 of each year beginning December 31, 2018,
prepared by an independent third party engineering firm acceptable to the
Company in its sole discretion, addressed to the Company with respect to all oil
and gas properties owned by the Company which report shall (a) specify the
location, quantity, and type of the estimated proven reserves attributable to
such properties, (b) contain a projection of the rate of production of such
properties, (c) contain an estimate of the net operating revenues to be derived
from the production and sale of hydrocarbons from such proven reserves based on
product price and cost escalation assumptions specified by the Company and
(d) contain such other information as is customarily obtained from and provided
in such reports or is otherwise reasonably requested by the Company.
“Services” means
i)
accounting and other back office services, including, without limitation,
billing and invoicing, books and record keeping, payroll, revenue and royalty
distribution;

 
ii)
contract administration, financial reporting;

 
iii)
full time services of Robert Rainbolt or another qualified oil and gas landman
approved by Company;

 
iv)
full time services of a controller reasonably satisfactory to the Company
dedicated to providing the Services;

 
v)
information technology and data processing services, regulatory and compliance
support;

 
vi)
providing office supplies and other consumables which are reasonably or
ordinarily necessary for the foregoing;

 
vii)
miscellaneous administration and overhead services and support necessary or
reasonably convenient to support management of the Contributed Assets by the

 
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Chief Executive Officer of the Company  and his subordinates consistent with
past practice; and

 
viii)
arranging for  and engaging, at the expense and for the benefit of the Company,
such accountants, attorneys, technical consultants, independent engineering
firms,  banks, transfer agents, custodians, underwriters, insurance companies
and other Persons as may from time to time be reasonably necessary for the
conduct of the business of the Company associated with the Contributed Assets,
including, without limitation, the completion and delivery of the Audited
Financial Statements and the Reserve Report; and

 
ix)
maintenance of books and records, preparing reports and reviewing and validating
or certifying any other information which Royale reasonably requires of the
Company, as an affiliates of Royale, by virtue of Royale’s status as a company
with securities registered under the Securities Exchange Act of 1934, as
amended.

“Termination Event” means any of the following events: (i) a reasonable
determination by the Board that Royale has (x) engaged in conduct in connection
with the performance of the Services that constitutes gross negligence, fraud or
willful misconduct or (y) committed a material breach of any of the terms of
this Agreement, which breach shall not have been either cured within 30 days
after notice thereof shall have been given to Royale or waived by the Board,
(ii) the occurrence of a Bankruptcy Event with respect to Royale(iii) material
breach by the Company of any of the terms of this Agreement, which breach shall
not have been either cured within 30 days after notice thereof shall have been
given to the Company or waived by Royale, or (iv) any date on or after March 31,
2019 as designated by either party to the other party in not less than 90 days’
written notice to Royale.
SECTION 1.2          Other Defined Terms.  Each of the terms in the table below
has the meaning set forth in the provision of this Agreement identified opposite
such term in such table.  All other capitalized terms used herein without
definition have the respective meanings assigned to them in the Company
Agreement.
Term
 
Provision
Agreement
 
Introductory Paragraph
Audit Right
 
Article VIII
Royale
 
Introductory Paragraph
Royale Indemnitees
 
Section 5.2
Company
 
Introductory Paragraph
Company Agreement
 
Recitals
Company Indemnitees
 
Section 5.1
Indemnitee
 
Section 5.3(a)
Indemnitor
 
Section 5.3(a)
Term
 
Section 7.1

 
SECTION 1.3          Company Elections.  CIC shall have sole, absolute and
exclusive power, authority and discretion to approve or direct actions to be
taken by or on behalf of the Company with respect to any claims or other
remedies that the Company may be entitled to assert against
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Royale pursuant to this Agreement.  Any direction or decisions by CIC with
respect to such matters shall not require the vote of the Board but instead
shall be made by CIC in the best interests of the Company, as determined in
CIC’s sole reasonable discretion.
ARTICLE II 
SERVICES
SECTION 2.1          General Responsibilities; Standard of Care.
(a)            Services. During the Term of this Agreement, Royale shall provide
the Services and all personnel, office facilities, consumables and other
resources and services necessary to perform the Services other than direct field
level and other joint interest billable charges incurred under the Joint
Operating Agreement.
(b)          Standard of Care.  All Services shall be performed by Royale
promptly and using the degree of care, diligence, skill and prudence that would
be expected from a prudent and experienced management services provider under
the same or similar circumstances.  In addition, Royale shall perform the
Services in conformity with any oral or written directions provided to it from
time to time by the Board that are not inconsistent with the provisions of this
Agreement or the Company Agreement or the provisions of applicable Law.  Nothing
in this Agreement shall affect (whether by increasing or diminishing or
otherwise altering) any obligations of Royale to the Company or its Members
arising under or in connection with the Company Agreement.
(c)          Personnel.  In addition to the services of specific individuals
described in Section 1.1 above, Royale shall assure that personnel in sufficient
numbers and with sufficient professional skills are available to perform the
Services promptly and in a professional manner consistent with industry
practices.  In addition, during the Term of this Agreement, Royale shall assure
that Stephen Hosmer is reasonably available during normal business hours for
consultation with the Company and to provide advice and assistance to the
Company relating to its obligations hereunder, except for times during which Mr.
Hosmer is absent from the office for vacation and personal days, consistent with
past practice.  In the event that the Company shall request, Royale shall
promptly replace any personnel performing the Services who the Company
reasonably believes lack sufficient skills or commitment to perform the Services
in a manner consistent with this Agreement.
(d)          Nondiscrimination.  Royale shall perform the Services as first
priority and without discrimination with respect to attending to its own
business.
(e)          Payment.  To the extent that providing the Services requires that
Royale advance funds to the Company or any third party, it shall do so promptly,
provided that total advances which have not been reimbursed by the Company do
not exceed $20,000 in any calendar month.
SECTION 2.2          Commingling of Assets and Avoidance of Liens.  Royale shall
separately maintain and not commingle the properties and assets of the Company
with the properties and assets of Royale or any other Person.  Royale shall not
permit, by its action or inaction, to exist any Liens against the Company Assets
by reason of claims of mechanics, materialmen or similar
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claimants for work, labor or materials furnished to or on behalf of the Company,
unless such Liens are incurred in good faith in the ordinary course of business
and secure obligations that are not overdue for a period of more than 30 days or
that are being contested in good faith by appropriate Proceedings; provided,
however, that Royale shall promptly provide written notice to the Company of any
such contested Liens.  If the Company has available funds in an amount
sufficient to satisfy a Lien described in the preceding sentence, then Royale
shall take appropriate steps to cause the amounts due to be paid and to
otherwise remove promptly such Lien from the Company Assets pursuant to the
requirements of applicable Law.
SECTION 2.3          Internal Controls. As part of the Services, Royale shall
design and maintain a process to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements
of the Company for external purposes in accordance with GAAP including those
policies that (i) pertain to the maintenance of records that in reasonable
detail accurately and fairly reflect the transactions and dispositions of the
assets of the Company; (ii) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in
accordance with GAAP, and that receipts and expenditures of the Company are
being made only in accordance with authorizations of officers and the Board of
Managers of the Company (as applicable); and (iii) provide reasonable assurance
regarding prevention or timely detection of unauthorized acquisition, use or
disposition of the Company’s assets that could have a material effect on the
Company’s financial statements.
SECTION 2.4          Further Assurances.  The Company shall take or cause to be
taken all actions and to, or cause to be done all such things as Royale may
reasonably request in connection with the provision of the Services including,
without limitation, providing all information and data reasonably requested by
Royale in connection with the delivery and preparation of the Audited Financial
Statements and the Reserve Report.
ARTICLE III
COMPENSATION, REAL ESTATE COSTS, SETOFF
SECTION 3.1          Fees and Compensation, Special Setoff Rights.  In
consideration of all of the Services to be provided by Royale hereunder, the
Company agrees to pay to Royale, for each calendar month during the Term, an
amount equal to $180,000 per month during the first twelve months of the Term
and $150,000 per month thereafter. Amounts payable pursuant to the preceding
sentence shall be due and payable on the thirtieth day following the completion
of each calendar month during the Term. Notwithstanding anything to the contrary
set forth in this Agreement and without relieving Royale from any obligation
hereunder, the Company, at its election, may deduct from any amounts owing
Royale all costs and expenses incurred by the Company for the preparation and
delivery of the Audited Financial Statements and the Reserve Report, and any
other document, report or certification required of the Company as a result of
Royale’s status as a company with equity securities registered under the
Exchange Act, and 25% of the monthly payment due and owing by the Company
pursuant to the Employment Agreement or otherwise payable to the Chief Executive
Officer of the Company (if such payment is not directly paid by Royale to the
Chief Executive Officer. Notwithstanding any provision of this Agreement to the
contrary, the parties hereby acknowledge and agree that, in addition to any
other right hereunder or otherwise, the Company shall have the right, but not
the obligation, from time to time to set off against any amounts due and owing
under this Agreement to Royale any
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amounts owed at such time by Royale or any of its Affiliates to the Company or
CIC pursuant to this Agreement or any other agreement to which Royale or its
Affiliates is a party.
SECTION 3.2          Office Rental and Other Real Estate Expenses.  Royale shall
be responsible for all Operations Real Estate Costs other than the Retained
Office Rent and shall pay such costs directly or, at the Company’s election, to
the Company upon invoice therefor or as a set off under Section 3.1 above.  At
the Company’s request, Royale shall take such steps as are commercially
reasonable to assume any leases, contracts or other agreements and any
associated liabilities, (and relieve the Company of any liabilities associated
therewith) relating to or arising from the Operations Real Estate Costs other
than the Retained Office Rent.  This Section 3.2 shall survive the termination
of this Agreement.
ARTICLE IV 
REPRESENTATIONS AND WARRANTIES
SECTION 4.1          Representations and Warranties of Royale.  Royale
represents and warrants to and agrees with the Company as follows:
(a)          Organization.  Royale is a corporation duly organized and validly
existing under the Laws of the State of Delaware and is or will be qualified to
conduct business in each jurisdiction in which such qualification is necessary
to perform its obligations hereunder.
(b)          Authority; Enforceability.  Royale has all requisite power and
authority to enter into this Agreement and perform its obligations hereunder. 
The Agreement has been duly executed and delivered by Royale and constitutes a
valid and binding obligation of Royale, enforceable in accordance with its
terms.
(c)          No Conflicts.  The execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby and the compliance by
Royale with the terms of this Agreement do not and will not conflict with or
result in a breach of any terms of, or constitute a default under, the
Certificate of Incorporation and Bylaws, each as amended, of Royale or any other
material agreement, instrument, writ, order, judgment or decree to which Royale
is a party or is subject or by which it is bound.
(d)          No Defaults or Claims.  Except as disclosed on Schedule 4.1, Royale
is not in default under any applicable Laws or under any order of any
Governmental Authority and there are no Claims or Proceedings, pending or
threatened, against Royale at law or in equity, or before or by any Governmental
Authority.  Royale has not received notice of any Claim or Proceeding, whether
pending or threatened, which could reasonably be expected to be material to
Royale or to affect in any material respect the performance of its obligations
hereunder.  There is no Claim or Proceeding, administrative or judicial that is
pending or, to the knowledge of Royale, threatened, which seeks to restrain or
seeks damages in connection with the consummation of the transactions
contemplated herein.
(e)          Personnel.  Royale has, and at all times during the term of this
Agreement shall have in its employ or available to it, personnel sufficient for
it to perform the Services and fulfill its other duties and obligations
hereunder.
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SECTION 4.2          Representations and Warranties of the Company.  The Company
represents and warrants to Royale as follows:
(a)          Organization.  The Company is a limited liability company duly
organized and constituted and existing under the Laws of the State of Delaware
and is or will be qualified to conduct business in each jurisdiction in which
such qualification is necessary to perform its obligations hereunder.
(b)          Authority; Enforceability.  The Company has all requisite power and
authority to enter into this Agreement and perform its obligations hereunder. 
The Agreement has been duly executed and delivered by the Company and
constitutes a valid and binding obligation of the Company in accordance with its
terms.
(c)          No Conflicts.  The execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby and the compliance by the
Company with the terms of this Agreement do not and will not conflict with or
result in a breach of any terms of, or constitute a default under, the
Certificate of Formation or the Company Agreement, or any other material
agreement, instrument, writ, order, judgment or decree to which the Company is a
party or is subject or by which it is bound.
(d)          No Defaults or Claims.  The Company is not in default under any
applicable Laws or under any order of any Governmental Authority and there are
no Claims or Proceedings, pending or threatened, against the Company at law or
in equity, or before or by any Governmental Authority.  The Company has not
received notice of any Claim or Proceeding, whether pending or threatened, which
could reasonably be expected to be material to the Company or to affect in any
material respect the performance of its obligations hereunder.  There is no
Claim or Proceeding, administrative or judicial that is pending or, to the
knowledge of the Company, threatened, which seeks to restrain or seeks damages
in connection with the consummation of the transactions contemplated herein.
ARTICLE V 
INDEMNIFICATION
SECTION 5.1          Indemnification by Royale.  Royale hereby agrees to defend,
indemnify and hold harmless the Company and its members, officers, managers or
members of the Board, partners, employees, agents and Affiliates (collectively,
the “Company Indemnitees”) from any and all threatened or actual Claims
(including, for purposes of this Article V, all costs and expenses of any
nature, including attorneys’ fees and court costs) or Proceedings asserted or
brought against, and all losses, damages and liabilities (whether or not
asserted by a third party) sustained or incurred by, the Company Indemnitees
arising from or based, to the extent so arising or based, upon (i) a breach of
this Agreement by Royale, (ii) any conduct on the part of Royale in connection
with the performance of the Services that constitutes gross negligence, fraud or
willful misconduct, (iii) any actions taken by Royale that are in contravention
of the terms of the Company Agreement or (iv) any business activities of Royale
not relating to the Services pursuant to the terms hereof or any activities of
Royale that violate any non-competition, non-disclosure or other similar
covenant or agreement with a third party.  Royale likewise hereby agrees to
defend, indemnify and hold harmless the Company Indemnitees from any and all
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Claims arising from the employment relationship between Royale and any of its
officers or employees.
SECTION 5.2          Indemnification by the Company.  The Company hereby agrees
to defend, indemnify and hold harmless Royale and its stockholders, officers,
directors, employees, agents and Affiliates (collectively, the “Royale
Indemnitees”) from any and all threatened or actual Claims or Proceedings
asserted or brought against, and all losses, damages and liabilities (whether or
not asserted by a third party) sustained or incurred by, the Royale Indemnitees
arising from or based upon, to the extent so arising or based, a breach of this
Agreement by the Company (other than a breach caused by any conduct or action of
Royale) and other than any Claim or Proceeding for which Royale has indemnified
the Company.
SECTION 5.3          Indemnification Procedures.  The following procedures shall
be applicable with respect to the indemnification obligations of a party
hereunder in respect of any Claims, asserted or brought by any third parties,
including any present or former employees of any party.
(a)          Promptly after receipt by the party or other Person seeking
indemnification hereunder (the “Indemnitee”) of written notice of the assertion
or the commencement of any Claim, whether by legal process or otherwise, with
respect to any matter within the scope of Section 5.1 or Section 5.2, the
Indemnitee shall give written notice thereof to the party from whom
indemnification is to be sought hereunder (the “Indemnitor”); provided, however,
that the failure of the Indemnitee to give the Indemnitor prompt notice as
provided herein shall not relieve the Indemnitor of its indemnification
obligations hereunder, unless such failure results in (i) a default judgment,
(ii) the expiration of the time to answer a complaint or (iii) material
prejudice to the Indemnitor’s defense of such Claim.  In the case of any such
Claim brought against any Indemnitee, the Indemnitor shall be entitled to assume
the defense thereof at its own cost and expense, with counsel reasonably
satisfactory to the Indemnitee, by giving the Indemnitee written notice of its
election to do so within 30 days after receipt of the notice provided for in
this paragraph (a); provided, however, that the Indemnitor shall not be entitled
to assume the defense if the Indemnitee shall have been advised by its counsel
that there are one or more legal defenses available to it that are in addition
to or in conflict with those available to the Indemnitor.  If the Indemnitor
assumes the defense of any such Claim, it shall not settle such Claim without
the prior written consent of the Indemnitee, unless such settlement does not
require any payment or other action on the part of the Indemnitee and includes
an unconditional release of the Indemnitee from all liability arising out of
such Claim.  Notwithstanding the assumption by the Indemnitor of the defense of
any Claim as provided in this Section 5.3, the Indemnitee shall be permitted to
participate in the defense of such Claim, but the costs and expenses incurred in
so participating (including fees and disbursements of counsel to the Indemnitee)
shall be for the account of the Indemnitee.
(b)          If the Indemnitor shall fail to notify the Indemnitee of its
election to assume the defense of any such Claim within the prescribed period of
time, or shall not be entitled to assume the defense of any such Claim, then the
Indemnitee shall control and conduct the defense of any such Claim, at the cost
and expense of the Indemnitor, in which event it may do so in such manner as it
may deem appropriate; provided, however, that the Indemnitee shall not settle
any Claim which would give rise to liability on the part of the Indemnitor under
this Article V without the prior written consent of the Indemnitor, which shall
not be unreasonably
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withheld. The Indemnitor shall be permitted to participate in the defense of
such Claim, but the costs and expenses incurred in so participating (including
fees and disbursements of counsel to the Indemnitor) shall be for the account of
the Indemnitor.
ARTICLE VI 
CONFIDENTIALITY
Royale shall maintain the confidentiality of all Confidential Information in
accordance with the terms of the Company Agreement as fully and to the same
extent as if such terms were set forth herein.  Royale acknowledges that any
Confidential Information furnished to it is for the sole and exclusive purpose
of enabling it to perform the Services, and the Confidential Information may not
be used by it for any purpose other than as described in the Company Agreement. 
The provisions of this Article VI shall survive the termination of this
Agreement.
ARTICLE VII
TERM AND TERMINATION
SECTION 7.1          Term; Termination.  The term of this Agreement (the “Term”)
will commence on the date hereof and will end on the earlier of (i) the
completion of the final liquidation of the Company in accordance with Company
Agreement and the provisions of applicable Law or (ii) notice from the Company
to Royale at any time after the occurrence of a Termination Event.
SECTION 7.2          Effect of Termination.  Upon termination of this Agreement,
neither party shall have any further obligations hereunder except for
obligations accruing prior to the date of termination, including (i) obligations
or liabilities of a party arising from any breach occurring prior to termination
and (ii) obligations or covenants set forth herein that are expressly made to
extend beyond the Term, which provisions shall survive the expiration or
termination of this Agreement.  Upon the expiration or termination of this
Agreement for any reason or cause whatsoever, Royale shall for a period of up to
30 days after the effective date of termination provide all reasonable
assistance requested by the Board to transition the management of the Company
from Royale and, to the extent that it is the operator of record of any of the
oil and gas properties of the Company, Royale shall upon request by the Board
relinquish its role as operator of record to such Person as shall be specified
by the Board if this Agreement is terminated by the them as a result of a
Termination Event or for any other reason.
ARTICLE VIII 
AUDIT RIGHTS
The Company shall have the right, at its sole cost and expense, at any
reasonable time during the Term and at reasonable intervals, to audit, examine
and make copies of or extracts from any of the books and records of Royale
relating to the performance of the Services and, to the extent necessary to
verify the performance by Royale of its obligations under this Agreement, any
other books and records of Royale (the “Audit Right”); provided, however that
the Company shall, and shall cause its agents to, hold any identified
confidential, proprietary or privileged information of Royale reviewed in any
such audit in confidence and shall refrain from disclosure thereof except as may
be required by applicable law or process or law or as necessary to enforce
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this Agreement.  The Company may exercise the Audit Right through such auditors
as the Company may determine in its sole discretion.  The Company (i) may
exercise the Audit Right only upon reasonable notice to Royale and (ii) must use
reasonable efforts to conduct the Audit Right in such a manner as to minimize
the inconvenience and disruption to Royale.
ARTICLE IX          
MISCELLANEOUS PROVISIONS
SECTION 9.1          Notices.  All notices and other communications under this
Agreement or in connection herewith shall be in writing and shall be given by
delivery in person or by overnight courier, by registered or certified mail
(return receipt requested and with postage prepaid thereon) or by Electronic
Transmission.  All notices and other communications that are addressed as
provided in or pursuant to this Section 9.1 shall be deemed duly and validly
given (a) if delivered in person or by overnight courier, upon delivery, (b) if
delivered by registered or certified mail (return receipt requested and with
postage paid thereon), 72 hours after being placed in a depository of the United
States mails and (c) if delivered by Electronic Transmission, upon transmission
and receipt thereof.  Notices shall be delivered to the parties at the addresses
set forth below:
if to the Company:
RMX Resources, LLC
3789 Maple Avenue, Ste. 400
Dallas, Texas  75219
Attention:  Jonathan Gregory, CEO
Fax:  214-880-4491
With a copy to:
RMX Resources, LLC
459 West Roay  75219
La Habra Heights, California
Fax:
Attention:  Jonathan Gregory, CEO

if to Royale:
Royale Energy, Inc.
1870 Cordell Ct., Ste 210
El Cajon, CA.  92020
Attention: Stephen Hosmer, CFO
Fax:  619-383-6699
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Any party may from time to time change its address or designee for notification
purposes by giving the other party prior notice in the manner specified above of
the new address or the new designee and the subsequent date upon which the
change shall be effective.
SECTION 9.2          Relationship of the Parties.  In performing the Services
hereunder, Royale shall have the status of an independent contractor.  Employees
or other persons whose services are made available by Royale hereunder shall be
solely employees or agents of Royale, and shall be under the sole and exclusive
direction and control of Royale for all purposes.
SECTION 9.3          Amendment; Waivers.  This Agreement may be amended only by
a written instrument duly executed and delivered by (i) Royale and (ii) CIC. 
Compliance with any term or provision hereof may be waived only by a written
instrument executed by each party entitled to the benefits of the same (which
instrument shall, in the case of a waiver by the Company, be approved by CIC). 
No failure to exercise any right, power or privilege granted hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege granted hereunder.
SECTION 9.4          Parties in Interest; Assignment.  This Agreement shall be
binding upon the parties and their respective successors and assigns and shall
inure to the benefit of the parties and, in the case of Article V, any Persons
entitled to indemnification under the terms of Article V and their respective
successors, assigns and legal representatives.  Neither this Agreement nor any
rights or obligations hereunder may be assigned by any party without the prior
written consent of the other parties hereto.
SECTION 9.5          No Third Party Beneficiaries.  Nothing in this Agreement is
intended or shall be construed to give any Person, other than the parties hereto
and the Persons who are entitled to indemnification under the terms of Article
V, any legal or equitable right, remedy or Claim under or in respect of this
Agreement or any provision contained herein.
SECTION 9.6          Severability.  In the event that any one or more of the
terms or provisions contained in this Agreement shall be held to be invalid,
illegal or unenforceable for any reason, the validity, legality or
enforceability of all other terms and provisions of this Agreement shall not be
affected.
SECTION 9.7          Rules of Construction.  The Article and Section headings in
this Agreement are for convenience of reference only, do not constitute a part
of this Agreement and shall not limit, extend or otherwise affect the meaning or
interpretation of the terms and provisions of this Agreement.  In this
Agreement, unless the context otherwise requires, words in the singular number
or in the plural number shall each include the singular number and the plural
number, as the context may require.  All references herein to dollar amounts are
in United States dollars.  The terms “herein,” “hereunder,” “hereto” and similar
terms refer to this Agreement generally and not to any one Article or Section of
this Agreement, unless the context otherwise requires, and the terms “include,”
“including” or similar derivations are without limitation.  Each of the parties
acknowledges that it has been represented by independent counsel of its choice
throughout all negotiations that have preceded the execution of this Agreement
and that it has executed the same with consent and upon the advice of said
independent counsel.  Each party and its counsel cooperated in the drafting and
preparation of this Agreement and the documents
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referred to herein, and any and all drafts relating thereto shall be deemed the
work product of the parties and may not be construed against any party by reason
of its preparation.  Accordingly, any rule of law or any legal decision that
would require interpretation of any ambiguities in this Agreement against any
party that drafted it shall be of no application and is hereby expressly waived.
SECTION 9.8          Entire Agreement.  This Agreement, the Company Agreement
and other documents referred to herein and therein constitute the entire
agreement and understanding between the parties with respect to the transactions
contemplated hereby and thereby and cancel, merge and supersede all prior and
contemporaneous oral or written agreements, representations and warranties,
arrangements and understandings relating to the subject matter hereof and
thereof.
SECTION 9.9          Governing Law.  This Agreement shall be governed by, and
construed in accordance with, the Laws of the State of Texas, without regard to
any principles of conflicts of laws that would require the application of the
Laws of any other jurisdiction.
SECTION 9.10          Specific Performance.  The parties hereto agree that
irreparable damage would occur in the event that any of the provisions of this
Agreement were not performed in accordance with the terms thereof.  Accordingly,
the parties agree that each of them shall be entitled to injunctive relief to
prevent breaches of the terms and provisions of this Agreement and to obtain
specific performance of such terms, in addition to any other remedy now or
hereafter available at law or in equity or otherwise.
SECTION 9.11          Counterparts.  This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.  In the event that any
signature is delivered by Electronic Transmission of a facsimile thereof
(including a “.pdf” format data file), such signature shall create a valid and
binding obligation of the party executing with the same force and effect as if
such facsimile were an original signature.
[Remainder of page intentionally left blank]

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IN WITNESS WHEREOF, the undersigned have executed this Agreement as of the date
first set forth above.
COMPANY:
RMX RESOURCES, LLC
By:                                                      
Name:                                                         
Title:                                                            
ROYALE:
ROYALE ENERGY, INC.
By:                                                               
Name:                                                         
Title:                                                   
         
 
Signature Page to Master Services Agreement

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Schedule 4.1

1.
On February 28, 2018, Royale entered into a settlement agreement with Joe
Paquette in which Royale agreed to pay $1,900,000 to settle a claim made by
Paquette for repayment of an outstanding obligation on a promissory note.  The
settlement amount is unpaid and is expected to be paid from the proceeds of the
contribution being made by CIC.

2.
By letter dated March 15, 2018, attorneys for Baker Hughes Oilfield Operations
LLC made written demand on Matrix Oil Corporation, a subsidiary of the Company,
for payment of $483,929.82 (including interest of $11,139.75) for unpaid
oilfield services.

3.
During 2011 and 2012, special interest groups had filed three cases to oppose
the Matrix Whittier Main Drilling Project by filing against the City of Whittier
and Los Angeles County related to the issuance of the Company’s development
permit (Conditional Use Permit issued by the City of Whittier) for the Whittier
Main Drilling Project. During 2012 and 2013 the cases were resolved via
settlement. There are three settlement agreements, a master settlement among all
parties, a confidential attorneys’ fees settlement agreement and a final
settlement between the petitioners and the City of Whittier and Los Angeles
County. Currently, appeal proceedings are in process regarding the settlements. 
Currently, the Company’s development plans for the Whittier Main are on hold
until the Company and the City of Whittier agree upon a new lease.