Exhibit 10.3

AGREEMENT AND PLAN OF EXCHANGE
BY AND AMONG
ROYALE ENERGY HOLDINGS, INC.
AND
THE PARTNERS OF
OF
MATRIX PERMIAN INVESTMENTS, LP

February 28, 2018

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TABLE OF CONTENTS
 
ARTICLE I DEFINITIONS
1
   
ARTICLE II AGREEMENT FOR EXCHANGE; CLOSING
17
Section 2.01
Exchange of MI LP Interests for the Exchange Consideration
17
Section 2.02
Aggregate Consideration from Parent
17
Section 2.03
Payment of Exchange Consideration
17
Section 2.04
No Fractional Shares
17
Section 2.05
Dissenting Shares
17
Section 2.06
Non-Survival of Representations and Warranties
18
ARTICLE III
ESCROW; CLOSING
18
Section 3.01
Escrow Closing
18
Section 3.02
Delivery of MI LP Interest
18
Section 3.03
Exchange Closing
19
     
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PARTNERS
19
Section 4.01
MI LP Interest Ownership
19
Section 4.02
Authority
19
Section 4.03
No Conflicts; Consents
20
Section 4.04
Capitalization
21
Section 4.05
Subsidiaries
22
Section 4.06
Financial Statements
22
Section 4.07
Undisclosed Liabilities
22
Section 4.08
Absence of Certain Changes, Events and Conditions
23
Section 4.09
Material Contracts
23
Section 4.10
Properties and Assets
23
Section 4.11
Intellectual Property
26
Section 4.12
Reserved
27
Section 4.13
Reserved
27
Section 4.14
Reserved
27
Section 4.15
Insurance
27
Section 4.16
Legal Proceedings; Governmental Orders
27
Section 4.17
Compliance With Laws; Permits
28
Section 4.18
Environmental Laws
28
Section 4.19
Employee Benefit Matters
28
Section 4.20
Employment Matters
31
Section 4.21
Taxes
31
Section 4.22
Books and Records
34
Section 4.23
Related Party Transactions
34

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Section 4.24
Brokers
34
Section 4.25
Legal Proceedings
34
Section 4.26
Proxy Statement
34
Section 4.27
No Other Representations or Warranties
34
     
ARTICLE V REPRESENTATIONS AND WARRANTIES OF ROYALE AND THE PARENT
35
Section 5.01
Organization and Qualification of the Royale Parties
35
Section 5.02
Authority; Board Approval
35
Section 5.03
No Conflicts; Consents
36
Section 5.04
Capitalization
37
Section 5.05
No Prior Operations; No Subsidiaries
38
Section 5.06
SEC Reports; Financial Statements
38
Section 5.07
Undisclosed Liabilities
39
Section 5.08
Absence of Certain Changes, Events and Conditions
39
Section 5.09
Royale Material Contracts
39
Section 5.10
Properties and Assets
40
Section 5.11
Intellectual Property
42
Section 5.12
Insurance
43
Section 5.13
Legal Proceedings; Governmental Orders
43
Section 5.14
Compliance With Laws; Permits
44
Section 5.15
Environmental Laws
44
Section 5.16
Employee Benefit Matters
44
Section 5.17
Employment Matters
46
Section 5.18
Taxes
47
Section 5.19
Books and Records
49
Section 5.20
Related Party Transactions
50
Section 5.21
Brokers
50
Section 5.22
Legal Proceedings
50
Section 5.23
Registration Statement
50
Section 5.24
Opinion of Financial Advisor
50
Section 5.25
No Other Representations or Warranties
50
     
ARTICLE VI CERTAIN COVENANTS AND AGREEMENTS OF PARENT, ROYALE AND THE PARTNERS
51
Section 6.01
Conduct of Business Prior to the Closing
51
Section 6.02
Access to Information; Confidentiality; No-Shop
53
Section 6.03
Registration Statement; Approval by Royale’s Stockholders
53
Section 6.04
Approval of the Partnership and the Partners
55
Section 6.05
Certain Pre-Merger Actions of Royale Parties
55
Section 6.06
Notice of Certain Events
55

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Section 6.07
Public Announcements
57
Section 6.08
Governmental Approvals and Consents
57
Section 6.09
Closing Conditions
58
Section 6.10
Subsequent Filings
58
Section 6.11
Stockholder Litigation
59
Section 6.12
Takeover Statutes
59
Section 6.13
Listing on National Securities Exchange
59
Section 6.14
Further Assurances
59
Section 6.15
Reserved.
59
Section 6.16
Certain Tax Matters
59
Section 6.17
Matrix Senior Indebtedness
61
Section 6.18
Consents to Transfer of MI LP Interests
61
Section 6.19
Partner Indebtedness and Receivables
61
Section 6.20
Release to be Effective upon Closing
61
     
ARTICLE VII TAX MATTERS
62
Section 7.01
Tax Covenants
62
Section 7.02
Termination of Existing Tax Sharing Agreements
63
Section 7.03
Tax Returns
63
Section 7.04
Straddle Period
64
Section 7.05
Contests
64
Section 7.06
Cooperation and Exchange of Information
64
     
ARTICLE VIII CONDITIONS TO CLOSING
65
Section 8.01
Conditions to Obligations of All Parties
65
Section 8.02
Conditions to Obligations of Royale and Parent
66
Section 8.03
Conditions to Obligations of Matrix
67
Section 8.04
Closing Deliverables
69
     
ARTICLE IX TERMINATION
71
Section 9.01
Termination
71
Section 9.02
Effect of Termination
72
     
ARTICLE X MISCELLANEOUS
73
Section 10.01
Expenses
73
Section 10.02
Notices
73
Section 10.03
Interpretation
74
Section 10.04
Headings
74
Section 10.05
Severability
74
Section 10.06
Entire Agreement
74
Section 10.07
Successors and Assigns
75

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Section 10.08
Amendment and Modification; Waiver
75
Section 10.09
Governing Law; Submission to Jurisdiction; Waiver of Jury Trial
75
Section 10.10
Specific Performance
76
Section 10.11
Counterparts
76
           
Exhibits
         
Exhibit A
List of Partners
 
Exhibit B
Exchange Consideration
 
Exhibit C
Intentionally Omitted
 
Exhibit D
Letter of Transmittal from Partners
 
Exhibit E
Form of Section 351 Plan of Merger and Exchange
 

 

 
 
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AGREEMENT AND PLAN OF EXCHANGE
This AGREEMENT AND PLAN OF EXCHANGE (this “Agreement”) made effective as of
February 28, 2018, by and among ROYALE ENERGY, INC., a California corporation
(“Royale”), ROYALE ENERGY HOLDINGS, INC., a Delaware corporation (the “Parent”),
and EACH OF THE UNDERSIGNED PERSONS (the “Partners”), who, collectively, are all
of the limited and general partners of MATRIX PERMIAN INVESTMENTS, LP, a Texas
limited partnership (the “Partnership”).  Defined terms used herein have the
respective meanings set forth in ARTICLE I.
WHEREAS, Parent and the Partners desire to provide for the transfer by the
Partners to Parent of the outstanding limited partnership interest of the
Partnership in exchange for common stock of Parent (the “Exchange”), with Matrix
Oil Management Corporation, a California corporation sole general partner of the
Partnership (“Matrix”), remaining as the sole general partner of the Partnership
following the Exchange;
WHEREAS, the Exchange is one of several related transactions involving the
assignment of partnership interests of the Partnership to Parent in exchange for
common stock of Parent (“Parent Common Stock”) as part of an overall plan to
capitalize Parent; and for federal income tax purposes, it is intended that this
Exchange and the other related exchange transactions with Parent shall qualify
as exchanges under the provisions of Section 351 of the IRC;
WHEREAS, the parties to the Exchange desire to conclude the Exchange
concurrently with and conditioned upon successful completion of certain other
exchange transactions as well as successful completion of the merger of Matrix
Merger Sub, Inc., a California corporation and a direct, wholly-owned Subsidiary
of Parent (“Matrix Merger Sub”), with and into Matrix, with Matrix as the
surviving corporation and a wholly-owned subsidiary of Parent (the “Matrix
Merger”).
NOW, THEREFORE, in consideration of the premises and the representations,
warranties and agreements herein contained, and intending to be legally bound
hereby, the parties agree as follows:
ARTICLE I
Definitions
The following terms have the meanings specified or referred to in this ARTICLE
I:
“Action” means any claim, action, cause of action, demand, lawsuit, arbitration,
inquiry, audit, notice of violation, proceeding, litigation, citation, summons,
subpoena or investigation of any nature, civil, criminal, administrative,
regulatory or otherwise, whether at law or in equity.
“Affiliate” of a Person means any other Person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common control with, such Person. The term “control” (including the terms
“controlled by” and “under common control with”) means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.
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“Agreement” has the meaning set forth in the preamble.
“Ancillary Documents” means:
A.
The Preferred Exchange Agreement with the holders of all preferred limited
partnership interests of Matrix Investments, L.P., in substantially the form
attached as Exhibit A to the Merger Agreement (the “Preferred Exchange
Agreement”);

 
B.
The Certificate of Designation of Series B Preferred Stock in substantially the
form attached as Exhibit B to the Merger Agreement;

 
C.
The LP Exchange Agreement with the holders of all limited partnership interests
(other than the Matrix Preferred Interests) of Matrix Investments L.P., a
California limited partnership in substantially the form attached as Exhibit C
to the Merger Agreement (the “Matrix Investments LP Exchange Agreement”);

 
D.
The LP Exchange Agreement with the holders of all limited partnership interests
of Matrix Las Cienegas Limited Partnership, a California limited partnership in
substantially the form attached as Exhibit D to the Merger Agreement (the
“Matrix Las Cienegas LP Exchange Agreement”);

 
E.
This Agreement;

 
F.
The Matrix Operator Stock Exchange Agreement with the holders of all outstanding
common stock of Matrix Oil Corporation, a California corporation in
substantially the form attached as Exhibit F to the Merger Agreement (the
“Matrix Operator Stock Exchange Agreement”);

 
G.
Employment Agreements between Parent and Jonathan Gregory, Donald Hosmer,
Stephen Hosmer, Johnny Jordan, Joe Paquette and Jay Sheevel, all in a form
reasonably acceptable to Royale and Matrix; and

 
H.
The Section 351 Plan in substantially the form attached hereto as Exhibit E.

“Applicable Effective Time” has the meaning set forth in Section 2.05.
“Audited Financial Statements” has the meaning set forth in Section 4.06.
“Balance Sheet” has the meaning set forth in Section 4.06.
“Balance Sheet Date” has the meaning set forth in Section 4.06.
“Business Day” means any day except Saturday, Sunday or any other day on which
commercial banks located in California are authorized or required by Law to be
closed for business.
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“Capital Stock Consideration” means, collectively, the shares of Parent Common
Stock to be issued as the Royale Merger Consideration, the Matrix Merger
Consideration, the Exchange Consideration, the other Matrix LP Exchange
Consideration and the Matrix Operator Stock Exchange Consideration and the
shares of the Series B Preferred Stock to be issued in connection with the
Preferred Exchange Consideration.
 “CCC” means the California Corporations Code.
“Closing” has the meaning set forth in Section 3.03.
“Closing Date” has the meaning set forth in Section 3.03.
 “Contracts” means all contracts, leases, deeds, mortgages, licenses,
instruments, notes, commitments, undertakings, indentures, joint ventures and
all other agreements, commitments and legally binding arrangements, whether
written or oral.
“Contributions” has the meaning set forth in Section 6.16.
“DGCL” means the Delaware General Corporation Law, as amended from time to time.
“Disclosure Schedules” means the Disclosure Schedules delivered by Matrix and
Royale concurrently with the execution and delivery of this Agreement.
“DWI Business” means the business of Royale in connection with the sale of
working interests by Royale in certain Royale Interests in order to finance the
drilling and development costs of such Royale Interests.
“Employee Benefit Plan” is defined in Section 4.19(j)(i).
“Employee Pension Benefit Plan” is defined in Section 4.19(j)(i).
“Employee Welfare Benefit Plan” is defined in Section 4.19(j)(i).
“Encumbrance” means any charge, claim, community property interest, pledge,
condition, equitable interest, lien (statutory or other), option, security
interest, mortgage, easement, encroachment, right of way, right of first
refusal, or restriction of any kind, including any restriction on use, voting,
transfer, receipt of income or exercise of any other attribute of ownership.
“Environmental Law” means any applicable Law, and any Governmental Order or
binding agreement with any Governmental Authority: (a) relating to pollution (or
the cleanup thereof) or the protection of natural resources, endangered or
threatened species, human health or safety, or the environment (including
ambient air, soil, surface water or groundwater, or subsurface strata); or (b)
concerning the presence of, exposure to, or the management, manufacture, use,
containment, storage, recycling, reclamation, reuse, treatment, generation,
discharge, transportation, processing, production, disposal or remediation of
any Hazardous Materials. The term “Environmental Law” includes, without
limitation, the following (including their implementing regulations and any
state analogs): the Comprehensive Environmental
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Response, Compensation, and Liability Act of 1980, as amended by the Superfund
Amendments and Reauthorization Act of 1986, 42 U.S.C. §§ 9601 et seq.; the Solid
Waste Disposal Act, as amended by the Resource Conservation and Recovery Act of
1976, as amended by the Hazardous and Solid Waste Amendments of 1984, 42 U.S.C.
§§ 6901 et seq.; the Federal Water Pollution Control Act of 1972, as amended by
the Clean Water Act of 1977, 33 U.S.C. §§ 1251 et seq.; the Toxic Substances
Control Act of 1976, as amended, 15 U.S.C. §§ 2601 et seq.; the Emergency
Planning and Community Right-to-Know Act of 1986, 42 U.S.C. §§ 11001 et seq.;
the Clean Air Act of 1966, as amended by the Clean Air Act Amendments of 1990,
42 U.S.C. §§ 7401 et seq.; and the Occupational Safety and Health Act of 1970,
as amended, 29 U.S.C. §§ 651 et seq.
“ERISA Affiliate” means, with respect to a Person, all employers (whether or not
incorporated) that would be treated together with such Person or any of its
Affiliates as a “single employer” within the meaning of Section 414 of the IRC.
“Escrow Agent” has the meaning set forth in Section 3.01.
“Escrow Closing” has the meaning set forth in Section 3.01.
“Exchange” has the meaning set forth in first recital of this Agreement.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“Exchange Consideration” has the meaning set forth in Section 2.02.
 “Exchanges” means the Exchange and the Other Exchanges. The Exchanges are
related transactions involving the assignment of property to Parent in exchange
for common or preferred stock of Parent as part of an overall plan to capitalize
Parent, and for federal income tax purposes, it is intended that the Mergers and
the Exchanges shall qualify as exchanges under the provisions of Section 351 of
the IRC.
“Financial Statements” has the meaning set forth in Section 4.06.
“GAAP” means has the meaning set forth in Section 5.06.
“Governing Documents” means, with respect to any business entity, all documents
by which such entity established its legal existence, was authorized to conduct
business in its jurisdiction of organization or which govern its internal
affairs, including, without limitation, its articles of incorporation, articles
of organization, limited partnership agreement, operating agreement, limited
liability company agreement, bylaws and any other governing document, as
applicable, of such entity.
“Governmental Authority” means any federal, state, local or foreign government
or political subdivision thereof, or any agency or instrumentality of such
government or political subdivision, or any self-regulated organization or other
non-governmental regulatory authority or quasi-governmental authority (to the
extent that the rules, regulations or orders of such organization or authority
have the force of Law), or any arbitrator, court or tribunal of competent
jurisdiction.
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“Governmental Order” means any order, writ, judgment, injunction, decree,
stipulation, determination or award entered by or with any Governmental
Authority.
“Hazardous Materials” means: (a) any material, substance, chemical, waste,
product, derivative, compound, mixture, solid, liquid, mineral or gas, in each
case, whether naturally occurring or manmade, that is hazardous, acutely
hazardous, toxic, or words of similar import or regulatory effect under
Environmental Laws; and (b) any petroleum or petroleum-derived products, radon,
radioactive materials or wastes, asbestos in any form, lead or lead-containing
materials, urea formaldehyde foam insulation, and polychlorinated biphenyls.
“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended.
“Hydrocarbons” means oil, natural gas, condensate, liquefied natural gas, NGL
and other liquids or gaseous hydrocarbons or other substances (including
minerals) produced or associated therewith, combinations or constituents thereof
and extractions therefrom.
“Indebtedness” means, with respect to a Person and without duplication, all (a)
indebtedness for borrowed money; (b) obligations for the deferred purchase price
of property or services, (c) long or short-term obligations evidenced by notes,
bonds, debentures or other similar instruments; (d) obligations under any
interest rate, currency swap or other hedging agreement or arrangement; (e)
capital lease obligations; (f) reimbursement obligations under any letter of
credit, banker’s acceptance or similar credit transactions; (g) guarantees made
by such Person on behalf of any third party in respect of obligations of the
kind referred to in the foregoing clauses (a) through (f); and (h) any unpaid
interest, prepayment penalties, premiums, costs and fees that would arise or
become due as a result of the prepayment of any of the obligations referred to
in the foregoing clauses (a) through (g).
“Independent Accountant” has the meaning set forth in Section 7.03.
 “Intellectual Property” means all intellectual property and all rights,
interests and protections that are associated with, similar to, or required for
the exercise of, any of the foregoing, however arising, pursuant to the Laws of
any jurisdiction throughout the world, whether registered or unregistered,
including any and all: (a) trademarks, service marks, trade names, brand names,
logos, trade dress, design rights and other similar designations of source,
sponsorship, association or origin, together with the goodwill connected with
the use of and symbolized by, and all registrations, applications and renewals
for, any of the foregoing; (b) internet domain names, whether or not trademarks,
registered in any top-level domain by any authorized private registrar or
Governmental Authority, web addresses, web pages, websites and related content,
accounts with Twitter, Facebook and other social media companies and the content
found thereon and related thereto, and URLs; (c) works of authorship,
expressions, designs and design registrations, whether or not copyrightable,
including copyrights, author, performer, moral and neighboring rights, and all
registrations, applications for registration and renewals of such copyrights;
(d) inventions, discoveries, trade secrets, business and technical information
and know-how, databases, data collections and other confidential and proprietary
information and all rights therein; (e) patents (including all reissues,
divisionals, provisionals, continuations and continuations-in-part,
re-examinations, renewals, substitutions and extensions
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thereof), patent applications, and other patent rights and any other
Governmental Authority-issued indicia of invention ownership (including
inventor’s certificates, petty patents and patent utility models); and (f)
software and firmware, including data files, source code, object code,
application programming interfaces, architecture, files, records, schematics,
computerized databases and other related specifications and documentation.
“Interim Balance Sheet” has the meaning set forth in Section 4.06.
“Interim Balance Sheet Date” has the meaning set forth in Section 4.06.
“Interim Financial Statements” has the meaning set forth in Section 4.06.
“IRC” means the U.S. Internal Revenue Code of 1986, as amended.
“Knowledge” means, (i) when used with respect to Matrix, the actual or
constructive knowledge of any director or executive officer of Matrix, after
reasonable inquiry with any Person directly reporting to any such director or
executive officer, (ii) when used with respect to Royale, the actual or
constructive knowledge of any director or executive officer of Royale, after
reasonable inquiry with any Person directly reporting to any such director or
executive officer and (iii) when used with respect to the Partnership, the
actual or constructive knowledge of any director or executive officer of the
General Partner, after reasonable inquiry with any Person directly reporting to
any such director or executive officer.
“Law” means any statute, law, ordinance, regulation, rule, code, order,
constitution, treaty, common law, judgment, decree, other requirement or rule of
law of any Governmental Authority.
“Letter of Intent” has the meaning set forth in Section 6.02(b).
“Letter of Transmittal” has the meaning set forth in Section 8.04
“Liabilities” has the meaning set forth in Section 4.07.
“LP Exchange” means the exchange of all limited partnership interests (other
than the Matrix Preferred Interests) in the respective Matrix LPs for shares of
common stock of Parent concurrently with the consummation of the Matrix Merger.
“LP Exchange Agreement” means the applicable agreement and plan of exchange
concerning the exchange of all limited partnership interests (other than the
Matrix Preferred Interests) of the specified Matrix LP for shares of common
stock of Parent concurrently with the consummation of the Matrix Merger.
“Material Contract” means, with respect to a Person, any of the following:
A.
Any Contract that requires future expenditures by such Person in excess of
$100,000 in any twelve (12) month period, or that provide for payments to such
Person in excess of $100,000;

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B.
Each Contract for Leased Real Property and each Contract or other right pursuant
to which such Person uses or possesses any Personal Property (other than
Personal Property owned by such Person), in each case that provide for aggregate
payments by or to such Person in excess of $100,000 during any twelve (12) month
period, provided that any such Contracts related to the Matrix Interests (with
respect to Matrix) or the Royale Interests (with respect to Royale) need not be
listed on the applicable Disclosure Schedule;

 
C.
Each Contract pursuant to which such Person licenses or uses any Intellectual
Property (other than standard licenses for non-custom, commercially available
off-the-shelf software, for which the annual amounts owed by such Person do not
exceed $5,000 individually), in each case that provide for aggregate payments by
such Person in excess of $100,000 during any twelve (12) month period;

 
D.
Any Contract relating to Indebtedness for borrowed money, any outstanding
reimbursement obligation of such Person with respect to letters of credit,
bankers’ acceptances or similar facilities issued for the account of such Person
or granting a lien on any of such Person’s assets to any Person, in each case in
excess of $100,000, other than (i) accounts receivable and payable, and (ii)
loans to direct or indirect wholly owned Subsidiaries of such Person;

 
E.
Any Contract creating or guaranteeing any surety bond in favor of such Person or
supporting any of its Contracts or customers, together with a list of each such
outstanding surety bond and the amount thereof, in each case in excess of
$100,000;

 
F.
Any Contract with any 5% stockholder, director or executive officer of such
Person, or any member of his or her immediate family, or any Affiliate of any of
such Persons, including any Contract providing for the furnishing of services
by, rental of real or personal property from or otherwise requiring payments to
or for the benefit of any such Person;

 
G.
Any Contract containing any covenant (x) materially limiting the right of such
Person to engage in any line of business, make use of any Intellectual Property
or compete with any Person in any line of business; (y) granting any exclusive
distribution or supply rights; or (z) otherwise restricting, in any material
respect, such Person from freely engaging in the business of selling,
distributing or manufacturing any products or services;

 
H.
Any Contract granting an option or first refusal, first offer or similar
preferential right to purchase or acquire any of such Person’s assets to any
other Person (other than the purchase of inventory pursuant to customer
contracts entered into in the ordinary course of business consistent with

 
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past practice), in each case that provide for aggregate payments by or to such
Person in excess of $100,000 during any twelve (12) month period;
I.
Any Contract pursuant to which payments are required or acceleration of benefits
is required upon a change of control of such Person or similar event, in each
case that provide for aggregate payments by or to such Person in excess of
$100,000 during any twelve (12) month period;

 
J.
Any Contract that is material to such Person or any of its assets and that
requires the consent or waiver of a third party prior to such Person
consummating the transactions contemplated hereby, in each case that provide for
aggregate payments by or to such Person in excess of $100,000 during any twelve
(12) month period; or

 
K.
Any Contract that constitutes a partnership or joint venture agreement
(excluding any tax partnership).

“Matrix” has the meaning set forth in the first recital.
“Matrix Board” means the board of directors of Matrix.
“Matrix Common Stock” means the common stock, no par value per share, of Matrix,
including all shares of common stock into which outstanding shares of Matrix’s
preferred stock are convertible and which are issuable upon exercise outstanding
warrants and options to purchase Matrix’s common stock.
“Matrix Consolidated Entities” has the meaning set forth in Section 4.06.
“Matrix Disclosure Schedules” means the Disclosure Schedules submitted by or on
behalf of the Partners regarding Matrix and the other Matrix Consolidated
Entities (if applicable) in connection with this Agreement.
“Matrix Interests” means, with respect to Matrix and its Subsidiaries and the
Matrix LPs (a) direct and indirect interests in and rights with respect to
Hydrocarbons and related properties and assets of any kind and nature, direct or
indirect, including working and leasehold interests and operating rights and
royalties, overriding royalties, production payments, net profit interests,
carried interests, and other non-working interests and non-operating interests
in the oil, gas and mineral fee or leasehold estate; (b) all  rights with
respect to Hydrocarbons or revenues therefrom; (c) all Contracts in connection
therewith and the leasehold estates created thereby and the lands covered by the
Contracts relating to the Hydrocarbons or included in units with which such
Contracts may have been pooled or united; (d) surface interests, fee interests,
reversionary interests, reservations and concessions; (e) all easements, surface
use agreements, rights of way, licenses and permits, in each case, in connection
with leases, the drilling of wells or the processing, storage, disposition,
transportation or sale of Hydrocarbons, (f) all interests in machinery,
equipment (including wells, well equipment and machinery), oil and gas
production, gathering, transmission, treating, processing and storage facilities
(including tanks, tank batteries, pipelines, flow lines, gathering systems and
metering equipment) pumps, water plants, electric plants, gasoline and gas
platforms, processing plans, compressor stations, separation
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plants, refineries, testing and monitoring equipment, in each case, in
connection with any leases, the drilling of wells or the production, gathering,
processing, storage, disposition, transportation or sale of Hydrocarbons, and
(g) all other interests of any kind or character associated with, appurtenant
to, or necessary for the operation of any of the foregoing.
“Matrix Investments LP Exchange Agreement” has the meaning set forth in the
definition of “Ancillary Documents”.
“Matrix Las Cienegas LP Exchange Agreement” has the meaning set forth in the
definition of “Ancillary Documents”.

“Matrix LP Exchange Consideration” means the aggregate number of shares of
Parent Common Stock the Matrix LP Holders will receive pursuant to the LP
Exchange Agreements.
“Matrix LP Holders” means the holders of all limited partnership interests
(other than the Matrix Preferred Interests) of the Matrix LPs.
“Matrix LPs” means, collectively, Matrix Investments L.P., a California limited
partnership, Matrix Las Cienegas Limited Partnership, a California limited
partnership, and Matrix Permian Investments, LP, a Texas limited partnership.
“Matrix Merger” has the meaning set forth in the recitals.
“Matrix Merger Consideration” means the number of shares of Parent Common Stock
into which Matrix common stock converts in connection with the Matrix Merger
determined in accordance with the Merger Agreement.
“Matrix Merger Effective Time” means the time the Matrix Merger shall become
effective as such certificates of merger have been duly filed with the Secretary
of State of the State of California and the Secretary of State of the State of
Delaware, respectively, or at such later date or time as may be agreed by Matrix
and Royale in writing and specified in the respective certificates of merger in
accordance with the requirements of the CCC and DGCL.
“Matrix Merger Sub” has the meaning set forth in the recitals.
“Matrix Merger Sub Shares” has the meaning set forth in Section 5.04(d).
“Matrix Operator” means Matrix Oil Corporation, a California corporation.
“Matrix Operator Holders” means the holders of all outstanding shares of capital
stock of Matrix Operator.
“Matrix Operator Stock Exchange Agreement” has the meaning set forth in the
definition of “Ancillary Documents”.
“Matrix Operator Stock Exchange Consideration” means the aggregate number of
shares of Parent Common Stock the Matrix Operator Holders will receive pursuant
to the Matrix Operator Stock Exchange Agreement.
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“Matrix Pipeline” has the meaning set forth in Section 4.06.
“Matrix Preferred Interests” means all of the preferred limited partnership
interest of Matrix Investments, L.P.
 “Matrix Royalty” has the meaning set forth in Section 4.06.
“Matrix Senior Indebtedness” has the meaning set forth in Section 6.17.
“Matrix Shares” means shares of capital stock of Matrix Oil Management
Corporation, a California corporation.
“Matrix Stockholder” means a holder of Matrix Common Stock.
“Mergers” means, collectively, the Matrix Merger and the Royale Merger.
“Merger Agreement” means the Agreement and Plan of Merger dated as of November
30, 2016, among the Royale Parties and Matrix, as amended.
“MI LP Interests” has the meaning set forth in Section 2.01.
“Other Exchanges” means (i) the exchange of Parent Common Stock for (A) all
limited partnership interests of Matrix Las Cienegas Limited Partnership
pursuant to the Matrix Las Cienegas LP Exchange Agreement, (B) all limited
partnership interests of Matrix Investments L.P. pursuant to the Matrix
Investments LP Exchange Agreement, (C) all capital stock of Matrix Operator
pursuant to the Matrix Operator Stock Exchange Agreement, and (ii) the exchange
of all Series B Preferred Stock for all Matrix Preferred Interests. The Other
Exchanges are all of the Exchanges other than the Exchange (which concerns
Parent and Matrix Permian Investments, LP, a Texas limited partnership).
“Other Exchange Approvals” means the Requisite Exchange Approvals other than
those required for the Exchange.
“Outside Date” has the meaning set forth in Section 9.01.
“Parent” has the meaning set forth in the preamble.
“Parent Common Stock” has the meaning set forth in the recitals.
“Parent Shares” means shares of capital stock of Royale Energy Holdings, Inc., a
Delaware corporation.
“Parent Stockholder” means a holder of Parent Common Stock or Series B Preferred
Stock.
“Partner Related Document” has the meaning set forth in Section 4.02.
“Partner Representative” has the meaning set forth in Section 7.03.
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“Partners” has the meaning set forth in the preamble.
“Partnership” has the meaning set forth in the preamble.
“Partnership Benefit Plans” has the meaning set forth in Section 4.18.
“Partnership Insurance Policies” has the meaning set forth in Section 4.14.
“Partnership Charter Documents” means the documents by which the Partnership and
its respective subsidiaries established their legal existence, were authorized
to conduct business in their jurisdiction of organization or which govern their
internal affairs, including, without limitation, any articles of incorporation,
articles of association, operating agreement, partnership agreement, bylaws or
similar documents.
“Partnership Material Adverse Effect” means any event, occurrence, fact,
condition or change that is, or would reasonably be expected to become,
individually or in the aggregate, materially adverse to (i) the business,
results of operations, prospects, condition (financial or otherwise), or assets
of the Partnership and its Subsidiaries, taken as a whole, or (ii) the ability
of the Partners or the Partnership  to consummate the transactions contemplated
hereby on a timely basis; provided, however, that, for the purposes of clause
(i), a Partnership Material Adverse Effect shall not be deemed to include
events, occurrences, facts, conditions or changes arising out of, relating to or
resulting from: (a) changes generally affecting the economy, financial or
securities markets; (b) the announcement of the transactions contemplated by
this Agreement; (c) any outbreak or escalation of war or any act of terrorism;
or (d) general conditions in the industry in which the Partnership and its
Subsidiaries operate; provided further, however, that any event, change and
effect referred to in clauses (a), (c) or (d) immediately above shall be taken
into account in determining whether a Partnership Material Adverse Effect has
occurred or would reasonably be expected to occur to the extent that such event,
change or effect has a disproportionate effect on the Partnership and its
Subsidiaries, taken as a whole, compared to other participants in the industries
in which the Partnership and its Subsidiaries conduct their businesses.
“Partnership Related Documents” has the meaning set forth in Section 4.02.
“Percentage Interest” means, at any time, the percentage of the aggregate MI LP
Interests held by any holder as determined by the Partnership in accordance with
the Partnership Charter Documents.
“Permitted Liens” means (a) statutory liens for current Taxes or other
governmental charges not yet due and payable or the amount or validity of which
is being contested in good faith (provided appropriate reserves required
pursuant to GAAP have been made in respect thereof), (b) mechanics’, carriers’,
workers’, repairers’ and similar statutory liens arising or incurred in the
ordinary course of business for amounts which are not delinquent or which are
being contested by appropriate proceedings (provided appropriate reserves
required pursuant to GAAP have been made in respect thereof), (c) zoning,
entitlement, building and other land use regulations imposed by Governmental
Entities having jurisdiction over such Person’s owned or leased real property,
which are not violated by the current use and operation of such real property,
(d) covenants, conditions, restrictions, easements and other similar
non-monetary
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matters of record affecting title to such Person’s owned or leased real
property, which do not materially impair the occupancy or use of such real
property for the purposes for which it is currently used in connection with such
Person’s businesses, (e) any right of way or easement related to public roads
and highways, which do not materially impair the occupancy or use of such real
property for the purposes for which it is currently used in connection with such
Person’s businesses, (f) liens securing capital lease obligations, equipment
leases or other purchase money Indebtedness, provided that the obligations
secured by such lien are secured only by the property leased or purchased under
such capital lease, equipment lease or purchase money Indebtedness and such
obligations are not increased in amount, (g) liens to operators and
non-operators under joint operating agreements, unitization and pooling
agreements arising in the ordinary course of the business to secure amounts
owing, which amounts are not yet due or are being contested in good faith by
appropriate proceedings, provided that such reserve as may be required by GAAP
shall have been made therefor and that, despite the existence of such reserves,
to the extent that any such liens relate to the Matrix Interests, with respect
to Matrix, or the Royale Interests, with respect to Royale, such liens would not
be reasonably be expected to materially impair the use of, or proceeds derived
from, such Matrix Interests or Royale Interests, as applicable, (h) Production
Burdens, and (i) liens arising under workers’ compensation, unemployment
insurance, social security, retirement and similar legislation.
“Permits” means all permits, licenses, franchises, approvals, authorizations,
registrations, certificates, variances and similar rights obtained, or required
to be obtained, from Governmental Authorities.
“Person” means an individual, corporation, partnership, joint venture, limited
liability company, Governmental Authority, unincorporated organization, trust,
association or other entity.
“Pre-Closing Taxes” means Taxes of Matrix for any pre-closing Tax period.
“Preferred Exchange” means the exchange of all Matrix Preferred Interests by the
holders thereof for shares of the Parent’s Series B Preferred Stock pursuant to
terms of certain definitive exchange agreements providing for execution of such
exchange concurrently with consummation of the Mergers.
“Preferred Exchange Consideration” means each $10.00 of Matrix Preferred
Interests (based on adjusted capital accounts of the holders) of Matrix
Investments, L.P. outstanding immediately prior to the Matrix Merger Effective
Time shall be exchanged for one validly issued, fully paid and nonassessable
share of Series B Preferred Stock of Parent.
“Preferred Exchange Agreement” has the meaning set forth in the definition of
“Ancillary Documents”.
 “Production Burden” means all royalty interests, overriding royalty interests,
production payments, net profit interests or other similar interests that
constitute a burden on, and are measure by or are payable out of, the production
of Hydrocarbons or the proceeds realized from the sale or other disposition
thereof.
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“Property Interests” means, with respect to Matrix and its Subsidiaries and the
Matrix LPs (a) direct and indirect interests in and rights with respect to
Hydrocarbons and related properties and assets of any kind and nature, direct or
indirect, including working and leasehold interests and operating rights and
royalties, overriding royalties, production payments, net profit interests,
carried interests, and other non-working interests and non-operating interests
in the oil, gas and mineral fee or leasehold estate; (b) all  rights with
respect to Hydrocarbons or revenues therefrom; (c) all Contracts in connection
therewith and the leasehold estates created thereby and the lands covered by the
Contracts relating to the Hydrocarbons or included in units with which such
Contracts may have been pooled or united; (d) surface interests, fee interests,
reversionary interests, reservations and concessions; (e) all easements, surface
use agreements, rights of way, licenses and permits, in each case, in connection
with leases, the drilling of wells or the processing, storage, disposition,
transportation or sale of Hydrocarbons, (f) all interests in machinery,
equipment (including wells, well equipment and machinery), oil and gas
production, gathering, transmission, treating, processing and storage facilities
(including tanks, tank batteries, pipelines, flow lines, gathering systems and
metering equipment) pumps, water plants, electric plants, gasoline and gas
platforms, processing plans, compressor stations, separation plants, refineries,
testing and monitoring equipment, in each case, in connection with any leases,
the drilling of wells or the production, gathering, processing, storage,
disposition, transportation or sale of Hydrocarbons, and (g) all other interests
of any kind or character associated with, appurtenant to, or necessary for the
operation of any of the foregoing.
“Proxy Statement/Prospectus” means the filing with the SEC of Royale’s proxy
statement relating to a special meeting of the Royale shareholders to consider
and vote on this Agreement and the transactions contemplated in the Merger
Agreement.
“Registration Statement” means a registration statement on Form S-4 under the
Securities Act filed by Royale on behalf of Parent, with respect to the
transactions contemplated in the Merger Agreement.
“Representative” means, with respect to any Person, any and all directors,
officers, employees, consultants, financial advisors, counsel, accountants and
other agents of such Person.
“Requisite Exchange Approvals” mean, in the case of consummation of the Merger,
receipt of the Requisite Matrix Vote, and with respect to the Exchanges, all
consents, approvals or waivers required from the Matrix LP Holders, Matrix
Operator Holders, the respective general partners of each Matrix LP and the
holders of all Matrix Preferred Interests, to consummate each of the respective
Exchanges.
“Requisite Matrix Vote” has the meaning set forth in Section 4.02(a).
“Requisite Partners’ Consent” has the meaning set forth in Section 6.04.
“Requisite Royale Vote” has the meaning set forth in Section 5.02(a).
“Right of Way” is defined in Section 4.10.
“Royale” has the meaning set forth in the preamble.
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“Royale Benefit Plans” has the meaning set forth in Section 5.16.
“Royale Charter Documents” means the Governing Documents of each of the Royale
Parties, respectively.
“Royale Common Stock” means the common stock, no par value per share, of Royale,
including all shares of common stock into which outstanding shares of Royale’s
preferred stock are convertible and which are issuable upon exercise outstanding
warrants and options to purchase Royale’s common stock.
“Royale Convertible Notes” has the meaning set forth in Section 8.03.
“Royale Disclosure Schedules” means the Disclosure Schedules submitted by or on
behalf of the Royale and Parent regarding the Royale Parties in connection with
this Agreement.
“Royale Financial Statements” has the meaning set forth in Section 5.06.
“Royale Insurance Policies” has the meaning set forth in Section 5.12.
“Royale Intellectual Property” means all Intellectual Property that is owned or
held for use by Royale.
“Royale Interests” means, with respect to Royale and its Subsidiaries (a) direct
and indirect interests in and rights with respect to Hydrocarbons and related
properties and assets of any kind and nature, direct or indirect, including
working and leasehold interests and operating rights and royalties, overriding
royalties, production payments, net profit interests, carried interests, and
other non-working interests and non-operating interests in the oil, gas and
mineral fee or leasehold estate; (b) all rights with respect to Hydrocarbons or
revenues therefrom; (c) all Contracts in connection therewith and the leasehold
estates created thereby and the lands covered by the Contracts relating to the
Hydrocarbons or included in units with which such Contracts may have been pooled
or united; (d) surface interests, fee interests, reversionary interests,
reservations and concessions; (e) all easements, surface use agreements, rights
of way, licenses and permits, in each case, in connection with leases, the
drilling of wells or the processing, storage, disposition, transportation or
sale of Hydrocarbons, (f) all interests in machinery, equipment (including
wells, well equipment and machinery), oil and gas production, gathering,
transmission, treating, processing and storage facilities (including tanks, tank
batteries, pipelines, flow lines, gathering systems and metering equipment)
pumps, water plants, electric plants, gasoline and gas platforms, processing
plans, compressor stations, separation plants, refineries, testing and
monitoring equipment, in each case, in connection with any leases, the drilling
of wells or the production, gathering, processing, storage, disposition,
transportation or sale of Hydrocarbons, and (g) all other interests of any kind
or character associated with, appurtenant to, or necessary for the operation of
any of the foregoing.
“Royale IP Registrations” means all Royale Intellectual Property that is subject
to any issuance registration, application or other filing by, to or with any
Governmental Authority or authorized private registrar in any jurisdiction,
including registered trademarks, domain names and copyrights, issued and
reissued patents and pending applications for any of the foregoing.
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“Royale Material Adverse Effect” means any event, occurrence, fact, condition or
change that is, or would reasonably be expected to become, individually or in
the aggregate, materially adverse to (i) the business, results of operations,
prospects, condition (financial or otherwise), or assets of  the Royale Parties,
taken as a whole, or (ii) the ability of the Royale Parties to consummate the
transactions contemplated hereby on a timely basis; provided, however, that, for
the purposes of clause (i), a Royale Material Adverse Effect shall not be deemed
to include events, occurrences, facts, conditions or changes arising out of,
relating to or resulting from: (a) changes generally affecting the economy,
financial or securities markets; (b) the announcement of the transactions
contemplated by this Agreement; (c) any outbreak or escalation of war or any act
of terrorism; (d) changes in the price or trading volume of Royale Common Stock;
or (e) general conditions in the industry in which the Royale Parties operate;
provided further, however, that any event, change and effect referred to in
clauses (a), (c) or (d) immediately above shall be taken into account in
determining whether a Royale Material Adverse Effect has occurred or would
reasonably be expected to occur to the extent that such event, change or effect
has a disproportionate effect on the Royale Parties, taken as a whole, compared
to other participants in the industries in which Royale Parties conduct their
businesses.
“Royale Merger” means Royale Merger Sub shall be merged with and into Royale
with Royale as the surviving corporation and a wholly-owned Subsidiary of
Parent.
“Royale Merger Consideration” means the number of shares of Parent Common Stock
into which Royale Common Stock converts in connection with the Royale Merger
determined in accordance with the Merger Agreement.
 “Royale Merger Effective Time” means the time the Royale Merger shall become
effective as such certificates of merger have been duly filed with the Secretary
of State of the State of California and the Secretary of State of the State of
Delaware, respectively, or at such later date or time as may be agreed by Matrix
and Royale in writing and specified in the respective certificates of merger in
accordance with the requirements of the CCC and DGCL.
“Royale Merger Sub” means Royale Merger Sub, Inc., a California corporation and
direct, wholly-owned Subsidiary of Parent.
“Royale Merger Sub Shares” has the meaning set forth in Section 5.04(c).
“Royale Parties” means Royale, Parent, Royale Merger Sub, Inc., a California
corporation and a direct, wholly-owned Subsidiary of Parent and Matrix Merger
Sub, Inc., a California corporation and a direct, wholly-owned Subsidiary of
Parent, together with each of their respective Subsidiaries.
“Royale Preferred Stock” means the Series AA Convertible Preferred Stock of
Royale.
“Royale Shares” means shares of capital stock of Royale Energy, Inc. a
California corporation.
“Royale Stockholder” means a holder of Royale Common Stock or Royale Preferred
Stock.
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“Royale Stockholders Meeting” has the meaning set forth in Section 6.03(d).
“SEC” has the meaning set forth in Section 6.03.
“SEC Reports” has the meaning set forth in Section 5.06.
“Securities Act” means the Securities Act of 1933, as amended.
“Section 351 Plan” means the Section 351 Plan of Merger and Exchange in the form
attached hereto as Exhibit E.
“Series B Preferred Stock” means Series B 3.5% Convertible Preferred Stock of
Parent.
“Shares” means Royale Shares or Matrix Shares or shares of capital stock of any
Constituent Corporation as the context may require.
“Stockholder” means a Matrix Stockholder, a Royale Stockholder or a Parent
Stockholder, as the context shall require.
“Straddle Period” has the meaning set forth in Section 7.04.
“Subsidiary” means, when used with respect to any party, any corporation or
other organization, whether incorporated or unincorporated, a majority of the
securities or other interests of which having by their terms ordinary voting
power to elect a majority of the board of directors or others performing similar
functions with respect to such corporation or other organization is directly or
indirectly owned or controlled by such party or by any one or more of its
subsidiaries, or by such party and one or more of its subsidiaries.
“Tax Claim” has the meaning set forth in Section 7.05.
“Taxes” means all federal, state, local, foreign and other income, gross
receipts, sales, use, production, ad valorem, transfer, franchise, registration,
profits, license, lease, service, service use, withholding, payroll, employment,
unemployment, estimated, excise, severance, environmental, stamp, occupation,
premium, property (real or personal), real property gains, windfall profits,
customs, duties or other taxes, fees, assessments or charges of any kind
whatsoever, together with any interest, additions or penalties with respect
thereto and any interest in respect of such additions or penalties.
“Tax Return” means any return, declaration, report, claim for refund,
information return or statement or other document relating to Taxes, including
any schedule or attachment thereto, and including any amendment thereof.
“TBOC” means the Texas Business Organizations Code, as amended from time to
time.
 “Union” has the meaning set forth in Section 4.19(b).
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ARTICLE II
Agreement For Exchange; Closing
Section 2.01          Exchange of MI LP Interests for the Exchange
Consideration.  The Partners hereby agree to assign, transfer and deliver to
Parent all right, title and interest in and to all of the outstanding limited
partnership interests of the Partnership (“MI LP Interests”) at Closing in
exchange for the Exchange Consideration (as defined below) to be delivered by
Parent.  Parent hereby agrees to pay, assign, transfer and deliver the Exchange
Consideration to the Partners at Closing in accordance with this Agreement and
such Exchange Consideration shall be allocated among the Partners in proportion
to the respective Percentage Interest owned by each Partner as set forth in
Exhibit B hereto.
Section 2.02          Aggregate Consideration from Parent.  The aggregate
consideration to be delivered to the Partners by the Parent shall be the
aggregate number of shares of Parent Common Stock, $0.001 par value per share,
as set forth on an Exhibit B hereto for all of the MI LP Interests, which shall
be allocated among the Partners in proportion to their Percentage Interest as
set forth and provided on Exhibit B hereto (as applicable, the “Exchange
Consideration”).
Section 2.03          Payment of Exchange Consideration.  Parent shall deliver
100% of the Exchange Consideration payable to each respective Partner against
delivery by such Partner of a Letter of Transmittal together with all
certificates representing such Partner’s MI LP Interest, conveying all of such
Partner’s MI LP Interest to Parent at Closing.
Section 2.04          No Fractional Shares.  Notwithstanding the foregoing, no
fractional shares of Parent Common Stock will be issued pursuant to this Section
2.04.  If any Partner would otherwise be entitled hereunder to receive a
fractional share of Parent Common Stock but for this paragraph, then the
aggregate number of shares of Parent Common Stock that such Partner is entitled
to receive will be (i) rounded up to the next applicable whole share, if the
aggregate number of fractional shares of Parent Common Stock to which a Partner
would otherwise be entitled under this Agreement would be equal to or greater
than one-half (0.5) of one share, or (ii) rounded down to the next applicable
whole share, if the aggregate number of fractional shares of Parent Common Stock
to which a Partner would otherwise be entitled under this Agreement would be
less than one-half (0.5) of one share, and such Partner will not receive cash or
any other compensation in lieu of such fractional share of Parent Common Stock.
Section 2.05          Dissenting Shares.  Notwithstanding any provision of this
Agreement to the contrary, in connection with the Royale Merger, Royale Shares
issued and outstanding immediately prior to the Closing Date or Royale Merger
Effective Time (other than Excluded Royale Shares under Section 3.01(b) of the
Merger Agreement) which are held by a holder who has not voted in favor of
adoption of this Agreement or the Merger Agreement and who has properly
exercised appraisal rights of such Shares in accordance with Section 1301 of the
CCC (such Shares being referred to collectively as the “Dissenting Shares” until
such time as such holder fails to perfect or otherwise loses such holder’s
appraisal rights under the CCC with respect to such Shares) shall not be
converted into a right to receive the Royale Merger Consideration, but instead
shall be entitled to only such rights as are granted by Section 1300 of the CCC;
provided, however, that if, after the Royale Merger Effective Time or Closing
Date, as
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applicable (the “Applicable Effective Time”), such holder fails to perfect,
withdraws or loses such holder’s right to appraisal pursuant to Section 1301 of
the CCC or if a court of competent jurisdiction shall determine that such holder
is not entitled to the relief provided by Section 1300 of the CCC, such Shares
shall be treated as if they had been converted as of the Applicable Effective
Time into the Royale Merger Consideration to the extent, if any, which such
holder is entitled pursuant to Section 3.01 of the Merger Agreement without
interest thereon. Royale shall provide the Partners with prompt written notice
(which notice may be provided to Matrix on behalf of the Partners) of any
demands which they receive for appraisal of any of their outstanding Shares in
connection with the Mergers, any withdrawal of any such demand and any other
demand, notice or instrument delivered to them prior to the Applicable Effective
Time pursuant to the CCC that relates to such demand.
Section 2.05          Non-Survival of Representations and Warranties.  Absent
actual fraud, and any intentional, willful and material breach of any
representation or warranty contained in this Agreement by the Partnership or any
Royale Party, as applicable, none of the representations and warranties
contained in this Agreement or in any instrument delivered under this Agreement
will survive the Closing of the Exchange. This Section 2.06 does not limit any
covenant of the parties to this Agreement which, by its terms, contemplates
performance after the Closing of the Exchange.
ARTICLE III
Escrow; Closing
Section 3.01          Escrow Closing.  A closing into Escrow (“Escrow Closing”)
will take place immediately prior to the Closing (as defined below); provided
that each of the conditions precedent to the obligations of the parties to
effect the Closing other than completion of the Matrix Merger are then satisfied
or waived by the applicable party. At the Escrow Closing, the parties will
deliver or cause to be delivered into escrow with the Corporate Secretary of
Parent (“Escrow Agent”) the documents described in Section 8.04 below.  The
parties may agree in writing on another date, time or place for the Escrow
Closing.
Section 3.02          Delivery of MI LP Interest.  Prior to the Closing, the
Parent will deliver to each of the Partners a Letter of Transmittal, in
substantially the form attached hereto as Exhibit D, to be used by each Partner
for surrendering to Parent certificates, if any, representing all the such
Partner’s MI LP Interest in exchange for the right to receive the Exchange
Consideration.  On the Escrow Closing Date, certificates for all of the MI LP
Interest held by each Partner will be delivered by such Partner to the Escrow
Agent for the benefit of the Parent together with properly completed and
executed Letters of Transmittal.
(a)          It is agreed that no assignment, transfer or other disposition of
record or beneficial ownership of any MI LP Interest may be made on or after the
date hereof other than as provided herein.
(b)          The delivery of the Exchange Consideration to the Partners with
respect to their respective Percentage Interests shall be deemed to be payment
in full satisfaction of all rights, title and interests in and pertaining to the
outstanding MI LP Interests.
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Section 3.03          Exchange Closing.  Closing of the Exchange (the “Closing”)
will occur concurrently with the Matrix Merger and as soon as practicable after
the special meeting of Matrix shareholders to consider and vote upon the Matrix
Merger (the “Closing Date”); provided that each of the conditions precedent to
the obligations of the parties to effect the Closing are then satisfied or
waived by the applicable party.  The parties may agree in writing on another
date, time or place for the Closing.  At the Closing, the parties will release
or cause the Escrow Agent to release the escrowed documents from escrow to the
parties designated to receive such documents under this Agreement, and Parent
shall pay and deliver the Exchange Consideration to the Partners as prescribed
in this Agreement.
ARTICLE IV
Representations And Warranties Of The Partners
Each Partner separately, and with respect only to his matters and circumstances,
hereby represents and warrants to Royale and the Parent that the following
statements are true and correct.
Section 4.01          MI LP Interest Ownership.  Exhibit A accurately sets forth
the names of each Partner, the Percentage Interest owned by each Partner and the
aggregate MI LP Interest.  Each Partner owns, beneficially and of record, with
full power to vote, transfer and assign such Partner’s Percentage Interest set
forth beside such Partner’s name on Exhibit A and such MI LP Interest so held by
the Partners is free and clear of all liens, encumbrances and adverse claims
whatsoever except as set forth on Exhibit A.
Section 4.02          Authority.
(a)          Partnership Authority.  The Partnership has the requisite corporate
power or entity power and authority to enter into and perform its obligations
under this Agreement and all documents and instruments referred to herein or
contemplated hereby to be executed, delivered and/or performed by the Company
(the “Partnership Related Documents”) and to consummate the transactions
contemplated hereby and thereby. The execution, delivery and performance by the
Partnership of this Agreement and each Partnership Related Document to which it
is a party and the consummation by the Partnership of the transactions
contemplated hereby and thereby have been duly authorized by all requisite
corporate action on the part of the Partnership.  Matrix has the requisite
corporate power or entity power and authority to enter into and perform its
obligations under the Merger Agreement and the Ancillary Documents to which it
is a party and, subject to adoption of the Merger Agreement by the affirmative
vote or consent of holders of two-thirds of the outstanding shares of Matrix
common stock (“Requisite Matrix Vote”), to consummate the transactions
contemplated hereby.  No corporate, limited partnership or other proceedings on
the part of the Partners or the Partnership are necessary to authorize the
execution, delivery and performance of this Agreement or to consummate the
Exchange and the other transactions contemplated hereby other than the Requisite
Partners’ Consent and execution and delivery of the Partner Related Documents.
This Agreement and each Partnership Related Document has been duly executed and
delivered by the Partnership, and (assuming due authorization, execution and
delivery by each other party hereto) this Agreement constitutes a legal, valid
and binding obligation of the Partnership enforceable against the Partnership in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization,
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moratorium and similar Laws affecting creditors’ rights and remedies generally,
and subject, as to enforceability, to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at Law or in equity). When each
Partnership Related Document to which the Partnership is or will be a party has
been duly executed and delivered by the Partnership (assuming due authorization,
execution and delivery by each other party thereto), such Partnership Related
Document will constitute a legal and binding obligation of the Partnership
enforceable against it in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and similar Laws affecting
creditors’ rights and remedies generally, and subject, as to enforceability, to
general principles of equity, including principles of commercial reasonableness,
good faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at Law or in equity).
(b)          Recommendation of the Corporate General Partner.  The Matrix Board,
as the board of directors of the sole general partner of the Partnership,
pursuant to resolutions duly adopted by unanimous vote at a meeting of all
directors of Matrix duly called and held and not subsequently rescinded or
modified, has, as of the date hereof (i) determined that this Agreement and the
transactions contemplated hereby, including the Exchange, are advisable and in
the best interests of, the Partners, (ii) approved and adopted, subject to the
terms hereof, the Section 351 Plan, (iii) approved and declared advisable the
“Agreement and Plan of Exchange” contained in this Agreement and the
transactions contemplated by this Agreement, including the Exchange, in
accordance with the CCC, (iv) directed that the “Agreement and Plan of Exchange”
contained in this Agreement be submitted to all limited partners of the
Partnership for consideration and approval with the recommendation of the
general partner that the limited partners of the Partnership adopt and approve
the “Agreement and Plan of Exchange” set forth in this Agreement.
(c)          Partner Authority.  Each Partner has full right, power, legal
capacity and authority to (i) execute, deliver and perform this Agreement, and
all other documents and instruments referred to herein or contemplated hereby to
be executed, delivered and/or performed by the Partners (each a “Partner Related
Document”) and (ii) consummate the transactions contemplated herein and
thereby.  This Agreement has been duly executed and delivered by each Partner
and constitutes, and each Partner Related Document, when duly executed and
delivered by each Partner who is a party thereto will constitute, legal, valid
and binding obligations of such Partner enforceable against such Partner in
accordance with their respective terms and conditions, except as such
enforcement may be limited by bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting the enforcement of creditors’ rights generally
and by general principles of equity (whether applied in a proceeding at law or
in equity).
Section 4.03          No Conflicts; Consents.  The execution, delivery and
performance by the Partnership and the Partners of this Agreement, the
Partnership Related Documents and the Partner Related Documents to which they
are a party, and the consummation of the transactions contemplated hereby and
thereby, do not and will not: (a) conflict with or result in a violation or
breach of, or default under, any provision of the articles of organization, the
limited partnership agreement or other Partnership Charter Documents, or any
provision of the certificate of incorporation, by-laws or other organizational
documents of the corporate general partner of the
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Partnership; (b) conflict with or result in a violation or breach of any
provision of any Law or Governmental Order applicable to the Partnership; or (c)
except as set forth in Section 4.03 of the Disclosure Schedules, require the
consent, notice or other action by any Person under any Contract to which the
Partnership is a party, other than, in the case of clauses (b) and (c) of this
Section 4.03, such conflicts, violations, breaches, consents, notices or other
actions that would not have and would not reasonably be expected to have a the
Partnership Material Adverse Effect. No consent, approval, Permit, Governmental
Order, declaration or filing with, or notice to, any Governmental Authority is
required by or with respect to the Partnership or any Partner in connection with
the execution, delivery and performance of this Agreement, the Partnership
Related Documents and the Partner Related Documents, or in connection with the
consummation of the transactions contemplated hereby and thereby.
Section 4.04          Capitalization.
(a)          Registered Owners of MI LP Interests. Section 4.04 of the
Disclosure Schedules set forth, as of the date hereof, the name of each Person
that is the registered owner of any MI LP Interests and the Percentage Interest
owned by such Person. Except for the general partnership interest held by Matrix
and the MI Partnership Interests held by the other Partners, there are no
outstanding partnership interests of any kind, and no other equity interest or
ownership rights whatsoever, with respect to the Partnership which are held by
any Person; and
(b)          No Outstanding Options, Warrants or Rights. Except as disclosed on
Section 4.04(b) of the Disclosure Schedules, (i) no subscription, warrant,
option, convertible or exchangeable security, or other right (contingent or
otherwise) to purchase or otherwise acquire equity securities of the Partnership
is authorized or outstanding, and (ii) there is no commitment by the Partnership
to issue shares, subscriptions, warrants, options, convertible or exchangeable
securities, or other such rights or to distribute to holders of any of its
equity securities any evidence of indebtedness or asset, to repurchase or redeem
any securities of the Partnership or to grant, extend, accelerate the vesting
of, change the price of, or otherwise amend any warrant, option, convertible or
exchangeable security or other such right. There are no declared or accrued
unpaid distributions or dividends payable with respect to any MI LP Interests.
(c)          Due Authorization; No Encumbrances. All issued and outstanding MI
LP Interests are (i) duly authorized, validly issued, fully paid and
non-assessable; (ii) not subject to any preemptive rights created by statute,
Partnership Charter Documents or any agreement to which the Partnership is a
party; and (iii) free of any Encumbrances created by the Partners or the
Partnership in respect thereof, other than restrictions as may exist under
applicable securities Law and liens in favor of the Partnership’s lenders as
listed on Section 4.04(c) of the Disclosure Schedules. All issued and
outstanding MI LP Interests were issued in compliance with applicable Law.
(d)          No Purchase, Participation or Phantom Interest Rights. No
outstanding MI LP Interests are subject to vesting or forfeiture rights or
repurchase by the Partnership. There are no outstanding or authorized
partnership interest appreciation rights, distribution or dividend equivalent
rights, phantom stock or partnership interest rights, profit participation
rights or other similar rights with respect to the Partnership or any of its
securities.
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(e)          Compliance of Prior Distributions and Redemptions. All
distributions, dividends, repurchases and redemptions of the capital stock (or
other equity interests) of the Partnership were undertaken in compliance with
the Partnership Charter Documents then in effect, any agreement to which the
Partnership then was a party and in compliance with applicable Law.
(f)          No Amounts Due from Partners. No amounts are due or payable to the
Partnership from any of the Partners that will not be satisfied pursuant to
Section 6.19.
Section 4.05          Subsidiaries.  Section 4.05 of the Disclosure Schedules
sets forth a list of Persons in which the Partnership has or owns any interest
in any shares or has an ownership interest.
Section 4.06          Financial Statements.  Complete copies of Matrix’s
consolidated audited financial statements consisting of the consolidated balance
sheets of Matrix, the Matrix LPs, Matrix Operator, Matrix Pipeline, LP (“Matrix
Pipeline”), a California limited partnership and Subsidiary of Matrix Operator
as the general partner and Matrix Las Cienegas Limited Partnership as the sole
limited partner, and Matrix Royalty, LP, a Texas limited partnership and entity
excluded from the transactions contemplated by the Merger Agreement (“Matrix
Royalty” and, together with Matrix, the Matrix LPs, Matrix Operator and Matrix
Pipeline, the “Matrix Consolidated Entities”), as at December 31, 2015 and 2014,
and the related consolidated statements of operations, stockholders’ equity and
cash flows for the years then ended (the “Audited Financial Statements”), and
unaudited financial statements consisting of the balance sheets of the Matrix
Consolidated Entities as at September 30, 2016, and the related statements of
income and retained earnings, stockholders’ equity and cash flow for the 
six-month period then ended (the “Interim Financial Statements” and together
with the Audited Financial Statements, the “Financial Statements”) have been
delivered to Royale. The Financial Statements have been prepared in accordance
with GAAP applied on a consistent basis throughout the period involved, subject,
in the case of the Interim Financial Statements, to normal and recurring
year-end adjustments (the effect of which will not be materially adverse) and
the absence of notes. The Financial Statements are based on the books and
records of the Matrix Consolidated Entities, and present fairly, in all material
respects, the financial position of Matrix as of the respective dates they were
prepared and the results of the operations of Matrix for the periods indicated.
The balance sheet of the Matrix Consolidated Entities as of December 31, 2015,
is referred to in this Agreement as the “Balance Sheet” and the date thereof as
the “Balance Sheet Date” and the balance sheet of the Matrix Consolidated
Entities as of September 30, 2016, is referred to herein as the “Interim Balance
Sheet” and the date thereof as the “Interim Balance Sheet Date”. Matrix
maintains a standard system of accounting established and administered in
accordance with GAAP.
Section 4.07          Undisclosed Liabilities.  The Partnership has no
liabilities, obligations or commitments of any nature whatsoever, asserted or
unasserted, known or unknown, absolute or contingent, accrued or unaccrued,
matured or unmatured or otherwise (“Liabilities”), except, in the case of the
Partnership (a)  those which are accrued, adequately reflected or reserved
against in the Financial Statements, (b) those which have been incurred in the
ordinary course of business consistent with past practice since the Interim
Balance Sheet Date, (c) those which would not reasonably be expected,
individually or in the aggregate, to have a Partnership Material Adverse Effect,
(d) those which have been discharged or paid in full prior to the date
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hereof in the ordinary course of business, or (e) those which are of a nature
not required to be reflected on a balance sheet prepared in accordance with GAAP
consistently applied.
Section 4.08          Absence of Certain Changes, Events and Conditions.  Since
the Balance Sheet Date, except in connection with the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby, the
business of the Partnership and each of its Subsidiaries has been conducted in
the ordinary course of business and there has not been or occurred:
(a)          any Partnership Material Adverse Effect or any event, condition,
change or effect that could reasonably be expected to have, individually or in
the aggregate, a Partnership Material Adverse Effect; or
(b)          except as disclosed on Section 4.08 of the Disclosure Schedules,
any event, condition, action or effect that, if taken during the period from the
date of this Agreement through the Closing Date, would constitute a breach of
Section 6.01.
Section 4.09          Material Contracts.  Section 4.09 of the Disclosure
Schedules sets forth a list of all Material Contracts to which the Partnership
is party as of the date hereof, including the name of the parties thereto, the
date of each such Material Contract and each amendment thereto.  All Material
Contracts of the Partnership are valid, enforceable and in full force and
effect, subject to applicable bankruptcy, insolvency, reorganization, moratorium
and similar Laws affecting creditors’ rights and remedies generally, and
subject, as to enforceability, to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at Law or in equity).  Other
than as described in Section 4.09 of the Disclosure Schedules, the Partnership
is not, and the Partnership has no Knowledge that any other party thereto is, in
material default under any such Material Contract, no material payments or other
obligations are past due except for amounts being contested in good faith, and
no circumstance exists that, with notice, the passage of time or both, would
constitute a default under any Material Contract of the Partnership by the
Partnership or, to the Knowledge of the Partnership, by any other party
thereto.  The Partnership has not received any written notice of a default,
alleged failure to perform or any offset or counterclaim with respect to any
Material Contract of the Partnership that has not been fully remedied and
withdrawn.
Section 4.10          Properties and Assets.
(a)          Except as would not reasonably be expected to have a Partnership
Material Adverse Effect, the Partnership or a Subsidiary of the Partnership each
respectively owns and has either good and valid title in fee or a valid
leasehold interest, Right of Way (defined below) or other rights to the land,
mineral and other subsurface rights, buildings, structures and other
improvements thereon and fixtures thereto necessary to permit it to conduct its
business as currently conducted, in each case free and clear of all liens
(except in all cases for Permitted Liens).  Except as would not reasonably be
expected to have a Partnership Material Effect, all leases, Rights of Way or
other agreements under which the Partnership or any of its Subsidiaries lease,
access or use any real property are valid, binding and are in force and effect
against the Partnership or any of its Subsidiaries and, to the Knowledge of the
Partnership, the
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counterparties thereto, in accordance with their respective terms, and neither
the Partnership nor any of its Subsidiaries are in default under any such
leases, Rights of Way or other agreements.
(b)          Each of the Partnership and its Subsidiaries has such consents,
easements, rights of way, permits and licenses (collectively, “Rights of Way”)
from each person as are sufficient to conduct its business as currently
conducted, except for such Rights of Way the absence of which have not had and
would not reasonably be expected to have a Partnership Material Adverse Effect. 
Each of the Partnership and its Subsidiaries has fulfilled and performed all its
material obligations with respect to such Rights of Way and conducts their
business in a manner that does not violate any of the Rights of Way, and no
event has occurred that allows, or after notice or lapse of time would allow,
revocation or termination thereof or would result in any impairment of the
rights of the holder of any such Rights of Way, except for such revocations,
terminations and impairments that have not had and would not reasonably be
expected to have a Partnership Material Adverse Effect.  All pipelines owned or
operated by the Partnership are subject to Rights of Way, there are no
encroachments or other encumbrances on the Rights of Way that materially affect
the use thereof and there are no gaps (including any gap arising as a result of
any breach by the Partnership, Matrix Operator, Matrix or any of its
Subsidiaries of the terms of any Rights of Way) in the Rights of Way other than
gaps that would not have and would not reasonably be expected to have a
Partnership Material Adverse Effect.
(c)          Except as would not reasonably be expected to have a Partnership
Material Adverse Effect, the Partnership and its Subsidiaries, as applicable,
have defensible title to all of the Property Interests forming the basis for the
reserves reflected in the Audited Financial Statements except for such Property
Interests sold, used, farmed out or otherwise disposed of since December 31,
2015, in the ordinary course of business, free and clear of all liens and
Production Burdens other than Production Burdens not yet earned, due or payable
and Permitted Liens (other than Production Burdens).  Except as would not
reasonably be expected to have a Partnership Material Adverse Effect or as set
forth on Section 4.10(c) of the Disclosure Schedules, (i) none of the proceeds
from the sale of Hydrocarbons produced from the Property Interests in any
producing well are being held in suspense for any reason, and (ii) there are no
calls on production or, preferential rights to purchase Hydrocarbons and neither
the Partnership nor any of its Subsidiaries is obligated to deliver Hydrocarbons
or proceeds from the sale thereof at a future point in time without receiving
payment therefor at or after the time of delivery (other than gas balancing
arrangements), except for the rights of any lessor to take free gas under the
terms of any applicable lease for its use on the lands covered by such lease. 
Except as would not reasonably be expected to have a Partnership Material
Adverse Effect, the Partnership and each applicable Subsidiary (A) are in
compliance with all valuation agreements, and settlement agreements with respect
to Production Burdens, and (B) have paid or will cause to be paid when due all
Production Burdens with respect to the Property Interests and each other
royalty, Tax or similar payment, except for such amounts that are being held in
suspense as permitted pursuant to applicable Law or the terms of the applicable
Contract or as reserved against in the Financial Statements.
(d)          All of the wells owned, leased, operated or used by the Partnership
and its Subsidiaries and all water, carbon dioxide or injection wells located on
any property owned, leased, operated or used by the Partnership and its
Subsidiaries or otherwise associated with the Property Interests have been
drilled, completed and operated within the limits permitted by the
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applicable Contract granting such rights and applicable Law, and all drilling
and completion (and plugging and abandonment) of such wells and all related
development, production and other operations have been conducted in compliance
with all applicable Laws except, in each case, as would not reasonably be
expected to have a Partnership Material Adverse Effect.  No well owned, leased,
operated or used by the Partnership or any of its Subsidiaries are subject to
material penalties on allowables because of overproduction or violation of any
applicable Law.
(e)          All Property Interests operated by the Partnership and its
Subsidiaries have been operated in accordance with reasonable, prudent field
practices and in compliance with the applicable Contracts, except where the
failure to so operate would not reasonably be expected to have a Partnership
Material Adverse Effect. None of the Interests of the Partnership or its
Subsidiaries is subject to any preferential purchase, consent or similar right
that would become operative as a result of the Transactions, except for any such
preferential purchase, consent or similar rights that would not reasonably be
expected to have a Partnership Material Adverse Effect.  Except as set forth on
Section 4.10(e) of Disclosure Schedules, none of the Property Interests are
subject to any Tax partnership agreement or provisions requiring a partnership
income Tax Return.
(f)          There are no material inaccuracies in the Summary Projection of
Reserves and Revenues as of March 31, 2016, of the Partnership, with run date
June 10, 2016, a correct and complete copy of which the Partnership has made
available to Royale prior to the date of this Agreement.
(g)          Except as set forth on Section 4.10(g) of the Disclosure Schedules,
the Partnership is not engaged in any oil, natural gas or other futures or
options trading in respect of which it has any material future liability, nor is
it a party to any price swaps, hedges, futures or similar instruments.  Section
4.10(g) of the Disclosure Schedules sets forth obligations of the Partnership
for the delivery of Hydrocarbons attributable to any of the Property Interests
in the future on account of prepayment, advance payment, take-or-pay or similar
obligations without then or thereafter being entitled to receive full value
therefor.  Except as set forth on Section 4.10(g) of the Disclosure Schedules,
as of the date hereof, the Partnership is not bound by futures, hedge, swap,
collar, put, call, floor, cap, option or other Contracts that are intended to
benefit from, relate to or reduce or eliminate the risk of fluctuations in the
price of commodities, including Hydrocarbons, or securities.
(h)          Except as provided in Section 4.10(h) of the Disclosure Schedules,
there are no mandatory drilling or completion obligations and there are no
pending or, to the Knowledge of the Partnership, expected proposals or elections
for drilling, completing, recompleting, reworking, facilities or similar
activities that would require such commitment on behalf of the Partnership or
any of its Subsidiaries within one year of the Closing Date in any of the
Property Interests or any of the contracts governing any of the Property
Interests.
(i)          Except as set forth on Section 4.10(i) of the Disclosure Schedules,
none of the Contracts in respect of gathering, processing, storage or
transportation of the production of Hydrocarbons from the Property Interests
contain any minimum volume or throughput provisions or require the Partnership
or any of its Subsidiaries to pay for services regardless of
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whether the Partnership or any of its Subsidiaries delivers such production for
use of the services provided for under any such Contract.
(j)          Except as set forth in Section 4.10(j) of the Disclosure Schedules,
none of the Contracts relating to the Property Interests (including all oil, gas
and mineral leases and similar Contracts) contain any provision (i) requiring
the lessee to pay royalties on hedges, (ii) causing the oil, gas or mineral
lease or contract to terminate without advance notice and the opportunity to
cure resulting in a loss, in whole or in part, of any of the Property Interests
for lessee’s failure to pay royalties or for lessee’s breach of any covenant
thereunder, (iii) requiring lessor’s consent to the consummation of the
transactions of the type contemplated under this Agreement, or (iv) is expected
to result in a mandatory payment or expenditure not otherwise disclosed in
Section 4.10(i) of the Disclosure Schedules.
Section 4.11          Intellectual Property.
(a)          Section 4.11(a) of the Disclosure Schedules lists all (i)
Partnership IP Registrations. All required filings and fees related to
Partnership IP Registrations have been timely filed with and paid to the
relevant Governmental Authorities and authorized registrars, and all Partnership
IP Registrations are otherwise in good standing, except as would not reasonably
be expected to have a Partnership Material Adverse Effect.
(b)          The consummation of the transactions contemplated hereunder will
not result in the loss or impairment of or payment of any additional amounts
with respect to, nor require the consent of any other Person in respect of, the
Partnership’s right to own, use or hold for use any material Intellectual
Property as owned, used or held for use in the conduct of the Partnership’s
business or operations as currently conducted.
(c)          The Partnership’s rights in Partnership Intellectual Property are
valid, subsisting and enforceable, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar Laws affecting creditors’ rights and
remedies generally, and subject, as to enforceability, to general principles of
equity, including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding at Law or
in equity) and except as would not reasonably be expected to have a Partnership
Material Adverse Effect. The Partnership has taken all commercially reasonable
steps to maintain Partnership Intellectual Property and to protect and preserve
the confidentiality of all material trade secrets included in the Partnership
Intellectual Property, except as would not reasonably be expected to have a
Partnership Material Adverse Effect.
(d)          To the Knowledge of the Partnership, the conduct of the
Partnership’s business as currently and formerly conducted does not infringe,
misappropriate or otherwise violate the Intellectual Property or other rights of
any Person, except as would not reasonably be expected to have a Partnership
Material Adverse Effect. To the Knowledge of the Partnership, no Person is
currently infringing, misappropriating, diluting or otherwise violating, any
Partnership Intellectual Property in a way as would be expect to have a
Partnership Material Adverse Effect.
(e)          There are no Actions (including any oppositions, interferences or
re-examinations) pending or, to the Knowledge of the Partnership, threatened:
(i) alleging any
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infringement, misappropriation, dilution or violation of the Intellectual
Property of any Person by the Partnership; (ii) challenging the validity,
enforceability, registrability or ownership of any Partnership Intellectual
Property or the Partnership’s rights with respect to any Partnership
Intellectual Property; or (iii) by the Partnership or any other Person alleging
any infringement, misappropriation, dilution or violation by any Person of
Partnership Intellectual Property.  The Partnership is not subject to any
outstanding Governmental Order (including any motion or petition therefor) that
does or would restrict or impair the use of any material Partnership
Intellectual Property.
Section 4.12          Reserved.
Section 4.13          Reserved.
Section 4.14          Reserved.
Section 4.15          Insurance  Section 4.15 of the Disclosure Schedules sets
forth a true and complete list of all current policies or binders of fire,
liability, product liability, umbrella liability, real and personal property,
workers’ compensation, vehicular, directors’ and officers’ liability, fiduciary
liability and other casualty and property insurance maintained by the
Partnership and relating to the assets, business, operations, employees,
officers and directors of the Partnership (collectively, the “Partnership
Insurance Policies”) and true and complete copies of the Partnership Insurance
Policies have been made available to Royale. The Partnership Insurance Policies
are in full force and effect with respect to the period covered. The Partnership
has not received any written notice of cancellation of or materially adverse
alteration of coverage under, any of such Partnership Insurance Policies. All
premiums or installment payments of premiums due on such Partnership Insurance
Policies have either been paid or, if due and payable prior to Closing, will be
paid prior to Closing in accordance with the payment terms of Partnership
Insurance Policy. All such Partnership Insurance Policies are valid and binding
in accordance with their terms. Except as set forth on Section 4.15 of the
Disclosure Schedules, there are no material claims related to the business of
the Partnership pending under any Partnership Insurance Policies as to which
coverage has been questioned, denied or disputed or in respect of which there is
an outstanding reservation of rights. The Partnership is not in material default
under, and has not otherwise failed to comply with, in any material respect, any
provision contained in any such Partnership Insurance Policy.
Section 4.16          Legal Proceedings; Governmental Orders.
(a)           Except as set forth in Section 4.16(a) of the Disclosure
Schedules, there are no Actions pending or, to the Partnership’s Knowledge,
threatened (a) against or by the Partnership affecting any of its properties or
assets; or (b) against or by the Partnership that challenges or seeks to
prevent, enjoin or otherwise delay the transactions contemplated by this
Agreement. No event has occurred or circumstances exist that may give rise to,
or serve as a basis for, any such Action. Except as set forth in Section 4.16(a)
of the Disclosure Schedules, there are no outstanding Governmental Orders and no
unsatisfied judgments, penalties or awards against or affecting the Partnership
or any of its properties or assets. The Partnership is in compliance with the
terms of each Governmental Order set forth in Section 4.16(a) of the Disclosure
Schedules.
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No event has occurred or circumstances exist that may constitute or result in
(with or without notice or lapse of time) a violation of any such Governmental
Order.
Section 4.17          Compliance With Laws; Permits.
(a)          Except as set forth in Section 4.17(a) of the Disclosure Schedules,
the Partnership has complied, and is now complying, with all Laws applicable to
it or its business, properties or assets, in each case, except as would not
reasonably be expected to have a Partnership Material Adverse Effect.
(b)          All material Permits required for the Partnership to conduct its
business have been obtained by it and are valid and in full force and effect.
The Partnership is in compliance, in all material respects, with the terms of
such material Permits. No event has occurred that, with or without notice or
lapse of time or both, would reasonably be expected to result in the revocation,
suspension, lapse or limitation of any material Permit, except as would not
reasonably be expected to have a Partnership Material Adverse Effect.
Section 4.18          Environmental Laws.  The Partnership and its Subsidiaries
(i) are in compliance with all Environmental Laws, (ii) have received all
permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (iii) are in
compliance with all terms and conditions of any such permit, license or approval
where, in each of the foregoing clauses (i), (ii) and (iii), the failure to so
comply could be reasonably expected to have, individually or in the aggregate, a
Partnership Material Adverse Effect.
Section 4.19          Employee Benefit Matters.  Section 4.19 of the Disclosure
Schedules lists each Employee Benefit Plan that the Partnership or any ERISA
Affiliate maintains or to which the Partnership or any ERISA Affiliate
contributes or is a participating employer (collectively, the “Partnership
Benefit Plans”).  With respect to each Partnership Benefit Plan, the Partnership
has delivered to Royale true and complete copies of all plan documents and
summary plan descriptions, the most recent determination letter (or opinion
letter) received from the Internal Revenue Service, the most recent Form 5500
Annual Reports, and all related trust agreements associated with such
Partnership Benefit Plan.
(a)          Each Partnership Benefit Plan (and each related trust, insurance
contract or fund) has been administered and operated in material compliance with
the terms of the applicable controlling documents and with the applicable
provisions of ERISA, the IRC and all other Applicable Laws, except as would not
reasonably be expected to have a Partnership Material Adverse Effect.  Each
Partnership Benefit Plan (including any material amendments thereto) that is
capable of approval by, or registration for or qualification for special tax
status with, the appropriate taxation, social security or supervisory
authorities in the relevant jurisdiction has received such approval,
registration or qualification or there remains a period of time in which to
obtain such approval, registration or qualification retroactive to the date of
any material amendment that has not previously received such approval,
registration or qualification.
(b)          Except as would not reasonably be expected to have a Partnership
Material Adverse Effect, all required reports, descriptions and disclosures have
been filed or distributed
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appropriately and in accordance with applicable Law with respect to each
Partnership Benefit Plan.  The requirements of Part 6 of Subtitle B of Title I
of ERISA and of Section 4980B of the IRC have been met with respect to each
Partnership Benefit Plan that is a group health plan.
(c)          All contributions (including all employer contributions and
employee salary reduction contributions) that are due and owing have been paid
to each Partnership Benefit Plan (or related trust or held in the general assets
of the Partnership or one or more ERISA Affiliates or accrued, as appropriate),
and all contributions for any period ending on or before the Closing Date that
are not yet due have been paid to each Partnership Benefit Plan or accrued in
accordance with the past custom and practice of the Partnership and the ERISA
Affiliates.  All premiums or other payments for all periods ending on or before
the Closing Date have been paid with respect to each Partnership Benefit Plan
that is an Employee Welfare Benefit Plan.
(d)          Each Partnership Benefit Plan that is an Employee Pension Benefit
Plan and that is intended to meet the requirements of a “qualified plan” under
Section 401(a) of the IRC meets such requirements and has either received or
applied for (or has time remaining to apply for) a favorable determination
letter (or, in the case of a prototype plan, an opinion letter) from the
Internal Revenue Service within the applicable remedial amendment periods.
(e)          No Partnership Benefit Plan, or Employee Benefit Plan maintained,
sponsored or contributed to by the Partnership or any ERISA Affiliate in the six
year period preceding the Closing Date is or has been subject to the minimum
funding requirements of Section 412 of the IRC or subject to Title IV of ERISA.
(f)          None of the Partnership Benefit Plans promises or provides retiree
medical, health or life insurance or other welfare type benefits for current or
future retired or terminated employees, their spouses or their dependents (other
than in accordance with Section 4980B of the IRC) that cannot be unilaterally
terminated by the Partnership or an ERISA Affiliate.
(g)          Each Partnership Benefit Plan has been administered in accordance
with its terms, except as would not reasonably be expected to have a Partnership
Material Adverse Effect.  Neither the Partnership nor any ERISA Affiliate has
entered into any agreement, arrangement or understanding, whether written or
oral, with any trade union, works council or other employee representative body
or any number or category of its employees that would prevent, restrict or
impede the implementation of any layoff, redundancy, severance or similar
program within its or their respective workforces (or any part of them).
(h)          There are no unresolved claims or disputes under the terms of, or
in connection with, any Partnership Benefit Plan (other than routine undisputed
claims for benefits), and no action, legal or otherwise, has been commenced with
respect to any such claim or dispute, except, in each case, as would not
reasonably be expected to have a Partnership Material Adverse Effect.
(i)          With respect to each Partnership Benefit Plan that the Partnership
or any ERISA Affiliate maintains or to which any of them contributes:
(i) To the Knowledge of the Partnership, there have been no “prohibited
transaction,” as such term is defined in Section 406 of ERISA or Section
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4975 of the IRC, with respect to any such Partnership Benefit Plan that would
subject the Partnership or any ERISA Affiliate to a tax or penalty imposed
pursuant to Section 4975 of the IRC or Section 502(c), (i) or (l) of ERISA.
(ii) Neither the Partnership nor, to the Knowledge of the Partnership, any ERISA
Affiliate (by way of indemnification, directly or otherwise) has any liability
or penalty under Sections 4976 through 4980 of the IRC or Title I of ERISA with
respect to any Partnership Benefit Plan.
(iii) No action, suit, proceeding, hearing or investigation with respect to the
administration or the investment of the assets of any Partnership Benefit Plan
(other than routine claims for benefits) is pending or, to the Knowledge of the
Partnership, threatened, and to the Knowledge of the Partnership, there is no
basis for any such action, suit, proceeding, hearing or investigation, except,
in each case, as would not reasonably be expected to have a Partnership Material
Adverse Effect.
(iv) Neither the execution and delivery of this Agreement or any other
Transaction Document to which the Partnership is a party nor the Matrix Merger
will (i) result in any payment (including severance, unemployment compensation,
golden parachute, bonus or otherwise) becoming due to any officer, director or
employee of the Partnership; (ii) materially increase any benefits otherwise
payable by the Partnership; or (iii) result in the acceleration of the time of
payment or vesting of any such benefits.
(v) No Partnership Benefit Plan is funded with or allows for payments or
distributions in any employer security of the Partnership, including, but not
limited to, employer securities as defined in Section 407(d)(1) of ERISA, or
employer real property as defined in Section 407(d)(2) or ERISA.
(j)          For purposes of this Agreement, the following terms will have the
respective meanings indicated below:
(i) “Employee Benefit Plan” means, with respect to any Person, the following,
whether written or oral:  (A) any nonqualified deferred compensation or
retirement plan or arrangement that is an Employee Pension Benefit Plan, (B) any
qualified defined contribution retirement plan or arrangement that is an
Employee Pension Benefit Plan, (C) any qualified defined benefit retirement plan
or arrangement that is an Employee Pension Benefit Plan, (D) any Employee
Welfare Benefit Plan or fringe benefit plan or program, or (E) any profit
sharing, bonus, stock option, stock purchase, severance or incentive plan,
agreement or arrangement that is sponsored, maintained or contributed to by such
Person or any ERISA Affiliate of such Person for the benefit of the employees,
former employees, independent contractors or agents of such Person or any ERISA
Affiliate or has been so sponsored, maintained or contributed to at any time
prior to the Closing Date.
(ii) “Employee Pension Benefit Plan” has the meaning set forth in Section 3(2)
of ERISA.
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(iii) “Employee Welfare Benefit Plan” has the meaning set forth in Section 3(1)
of ERISA.
Section 4.20          Employment Matters.
(a)          Section 4.20(a) of the Disclosure Schedules contains a list of all
persons who are employees of the Partnership as of the date hereof, including
any employee who is on a leave of absence of any nature, paid or unpaid,
authorized or unauthorized, and sets forth for each such individual the
following: (i) name; (ii) title or position (including whether full or part
time); (iii) hire date; (iv) current annual base compensation rate; (v)
commission, bonus or other incentive-based compensation; and (vi) a description
of the fringe benefits provided to each such individual as of the date hereof.
(b)          Except as set forth in Section 4.20(b) of the Disclosure Schedules,
the Partnership is not, and has not been for the past three (3) years, a party
to, bound by, or negotiating any collective bargaining agreement or other
Contract with a union, works council or labor organization (collectively,
“Union”), and there is not, and has not been for the past three (3) years, any
Union representing or purporting to represent any employee of the Partnership,
and, to the Partnership’s Knowledge, no Union or group of employees is seeking
to organize employees for the purpose of collective bargaining. Except as set
forth in Section 4.20(b) of the Disclosure Schedules, to the Knowledge of the
Partnership, there has been no threat of  any strike, slowdown, work stoppage,
lockout, concerted refusal to work overtime or other similar labor disruption or
dispute affecting the Partnership or any of its employees.
(c)          Except as would not reasonably be expected to have a Partnership
Material Adverse Effect, the Partnership is in compliance with all applicable
Laws pertaining to employment and employment practices to the extent they relate
to employees of the Partnership, including all Laws relating to labor relations,
equal employment opportunities, fair employment practices, employment
discrimination, harassment, retaliation, reasonable accommodation, disability
rights or benefits, immigration, wages, hours, overtime compensation, child
labor, hiring, promotion and termination of employees, working conditions, meal
and break periods, privacy, health and safety, workers’ compensation, leaves of
absence and unemployment insurance. All individuals characterized and treated by
the Partnership as independent contractors or consultants are properly treated
as independent contractors under all applicable Laws, except as would not
reasonably be expected to have a Partnership Material Adverse Effect. All
employees of the Partnership classified as exempt under the Fair Labor Standards
Act and state and local wage and hour laws are properly classified, except as
would not reasonably be expected to have a Partnership Material Adverse Effect.
Except as set forth in Section 4.20(c) of the Disclosure Schedules, there are no
Actions against the Partnership pending, or to the Partnership’s Knowledge,
threatened to be brought or filed, by or with any Governmental Authority or
arbitrator in connection with the employment of any current or former applicant,
employee, consultant or independent contractor of the Partnership, including,
without limitation, any claim relating to unfair labor practices, employment
discrimination, harassment, retaliation, equal pay, wage and hours or any other
employment-related matter arising under applicable Laws.
Section 4.21          Taxes.  Except as set forth in Section 4.21 of the
Disclosure Schedules:
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(a)          All Tax Returns required to be filed on or before the Closing Date
by the Partnership have been, or will be, timely filed. All Taxes due and owing
by the Partnership (whether or not shown on any Tax Return) have been, or will
be, timely paid.
(b)          The Partnership has withheld and paid each Tax required to have
been withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, customer, shareholder or other party, and
complied with all information reporting and backup withholding provisions of
applicable Law.
(c)          No claim has been made by any taxing authority in any jurisdiction
where the Partnership does not file Tax Returns that it is, or may be, subject
to Tax by that jurisdiction.
(d)          No extensions or waivers of statutes of limitations have been given
or requested with respect to any Taxes of the Partnership.
(e)          The amount of the Partnership’s Liability for unpaid Taxes for all
periods ending on or before December 31, 2015, does not, in the aggregate,
exceed the amount of accruals for Taxes (excluding any accrual for Taxes with
respect to timing differences between financial accounting income and taxable
income) reflected on the Financial Statements. The amount of the Partnership’s
Liability for unpaid Taxes for all periods following the end of the recent
period covered by the Financial Statements shall not, in the aggregate, exceed
the amount of accruals for Taxes (excluding any accrual for Taxes with respect
to timing differences between financial accounting income and taxable income) as
adjusted for the passage of time in accordance with the past custom and practice
of the Partnership (and which accruals shall not exceed comparable amounts
incurred in similar periods in prior years).
(f)          Section 4.21(f) of the Disclosure Schedules sets forth:
(i) the taxable years of the Partnership as to which the applicable statutes of
limitations on the assessment and collection of Taxes have not expired;
(ii) those years for which examinations by the taxing authorities have been
completed; and
(iii) those taxable years for which examinations by taxing authorities are
presently being conducted.
(g)          All deficiencies asserted, or assessments made, in writing against
the Partnership as a result of any examinations by any taxing authority have
been fully paid or otherwise finally resolved.
(h)          The Partnership is not a party to any Action by any taxing
authority. There are no pending or threatened Actions by any taxing authority.
(i)          The Partnership has delivered to Royale copies of all federal,
state, local and foreign income, franchise and similar Tax Returns, examination
reports, and statements of deficiencies assessed against, or agreed to by, the
Partnership for all Tax periods ending after January 1, 2014.
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(j)          There are no Encumbrances for Taxes (other than for current Taxes
not yet due and payable) upon the assets of the Partnership.
(k)          The Partnership is not a party to, or bound by, any Tax indemnity,
Tax sharing or Tax allocation agreement (other than any agreement entered into
in the ordinary course of business with incidental tax provisions, such as loan
agreements, leases, and hedging contracts).
(l)          No private letter rulings, technical advice memoranda or similar
agreement or rulings have been requested, entered into or issued by any taxing
authority with respect to the Partnership.
(m)          The Partnership has not been a member of an affiliated, combined,
consolidated or unitary Tax group for Tax purposes.  The Partnership has no
Liability for Taxes of any Person (other than the Partnership) under Treasury
Regulations Section 1.1502-6 (or any corresponding provision of state, local or
foreign Law), as transferee or successor, by contract or otherwise.
(n)          The Partnership will not be required to include any item of income
in, or exclude any item or deduction from, taxable income for taxable period or
portion thereof ending after the Closing Date as a result of:
(i) any change in a method of accounting under Section 481 of the IRC (or any
comparable provision of state, local or foreign Tax Laws), or use of an improper
method of accounting, for a taxable period ending on or prior to the Closing
Date;
(ii) an installment sale or open transaction occurring on or prior to the
Closing Date;
(iii) a prepaid amount received on or before the Closing Date;
(iv) any closing agreement under Section 7121 of the IRC, or similar provision
of state, local or foreign Law; or
(v) any election under Section 108(i) of the IRC.
(o)          The Partnership has not been a “distributing corporation” or a
“controlled corporation” in connection with a distribution described in Section
355 of the IRC.
(p)          The Partnership is not, and has not been, a party to, or a promoter
of, a “reportable transaction” within the meaning of Section 6707A(c)(1) of the
IRC and Treasury Regulations Section 1.6011-4(b).
(q)          Within the last three (3) years, the Partnership has not owned any
material assets located outside the United State or conducted a material trade
or business outside the United States.
(r)          The Partnership is not an investment company as defined in Section
351(e)(1) of the IRC.
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(s)          The Partnership is not under the jurisdiction of a court in a title
11 or similar case within the meaning of Sections 351(e)(2) and 368(a)(3)(A) of
the IRC.
Section 4.22          Books and Records.  The minute books and stock record
books of the Partnership, all of which have been made available to Royale, are
complete and correct and have been maintained in accordance with sound business
practices. The minute books of the Partnership contain accurate and complete
records of all meetings, and actions taken by written consent of, the partners
of the Partnership, the Matrix Board or committee thereof when acting on behalf
of the Partnership as general partner of the Partnership, and no meeting, or
action taken by written consent, of any such partners, Matrix Board or committee
has been held for which minutes have not been prepared and are not contained in
such minute books. At the Escrow Closing and at the Closing, all of those books
and records will be in the possession of the Partnership.
Section 4.23          Related Party Transactions.  Section 4.23 of the
Disclosure Schedules lists all Contracts between the Partnership and any
executive officer or director of the Partnership, any executive officer or
director of any general partner of the Partnership or any person owning 5% or
more of the MI LP Interests (or any of such person’s immediate family members or
Affiliates of such person) or by which any executive officer or director of the
Partnership, any executive officer or director of any general partner of the
Partnership or any person owning 5% or more of the MI LP Interests (or any of
such person’s immediate family members or Affiliates) has any interest in any
property owned by the Partnership.
Section 4.24          Brokers.  No broker, finder or investment banker is
entitled to any brokerage, finder’s or other fee or commission in connection
with the transactions contemplated by this Agreement or any Partnership Related
Document based upon arrangements made by or on behalf of the Partnership.
Section 4.25          Legal Proceedings.  There are no Actions pending or, to
the Partnership’s Knowledge, threatened against or by the Partnership or any of
its Subsidiaries that challenge or seek to prevent, enjoin or otherwise delay
the transactions contemplated by this Agreement. To the Knowledge of the
Partnership, no event has occurred or circumstances exist that may give rise or
serve as a basis for any such Action.
Section 4.26          Proxy Statement.  None of the information with respect to
the Partnership that the Partnership or any of its Representatives furnishes in
writing to Royale expressly for use in the Registration Statement, will, at the
date the Registration Statement is first mailed to Royale’s stockholders or at
the time of the Royale Stockholders Meeting or at the time of any amendment or
supplement thereof, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements made therein, in light of the circumstances under which they
were made, not misleading. Notwithstanding the foregoing, no representation or
warranty is made by the Partnership with respect to any other statements made or
incorporated by reference in the Registration Statement.
Section 4.27          No Other Representations or Warranties  Except for the
representations and warranties contained in this ARTICLE IV (giving effect to
the Matrix Disclosure Schedules) and in the Letter of Transmittal submitted by
each Partner in connection with the
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Exchange, neither the Partners nor the Partnership makes any representation or
warranty, express or implied on behalf of or concerning the Partnership or any
of its affiliates in connection with this Agreement or the transactions
contemplated hereby.
ARTICLE V
Representations and Warranties of Royale and the Parent
Except as set forth in the correspondingly numbered Section of the Royale
Disclosure Schedules, Royale and Parent, jointly and severally represent and
warrant to the Partners that the statements contained in this are true and
correct as of the date hereof.
Section 5.01          Organization and Qualification of the Royale Parties. 
Each Royale Party is a corporation duly organized, validly existing and in good
standing under the Laws of its respective state of organization and has the
requisite corporate power and authority to own, operate or lease the properties
and assets now owned, operated or leased by it and to carry on its business as
it has been and is currently conducted. Section 5.01 of the Royale Disclosure
Schedules sets forth each jurisdiction in which each Royale Party is licensed or
qualified to do business, and each Royale Party is duly licensed or qualified to
do business and is in good standing in each jurisdiction in which the properties
owned or leased by it or the operation of its business as currently conducted
makes such licensing or qualification necessary, except where the failure to be
so licensed, qualified or in good standing would not individually or in the
aggregate, have a Royale Material Adverse Effect.
Section 5.02          Authority; Board Approval.
(a)          Each Royale Party has the requisite corporate power and authority
to enter into and perform its obligations under this Agreement, the Merger
Agreement and the Ancillary Documents to which it is a party and, subject to, in
the case of the consummation of the Mergers, adoption of the Merger Agreement by
the affirmative vote or consent of holders of (i) two-thirds of the outstanding
Shares of Royale Common Stock, (ii) two-thirds of the outstanding shares of
common stock of each of Royale Merger Sub and Matrix Merger Sub, and (iii) a
majority of the outstanding shares of common stock of Parent (“Requisite Royale
Vote”), to consummate the transactions contemplated hereby and thereby. The
execution, delivery and performance by the Royale Parties of this Agreement, the
Merger Agreement and any Ancillary Document to which they are a party and the
consummation by the Royale Parties of the transactions contemplated hereby and
thereby have been duly authorized by all requisite corporate action on the part
of each Royale Party and no other corporate proceedings on the part of the
Royale Parties are necessary to authorize the execution, delivery and
performance of this Agreement or to consummate the Exchange, the Mergers and the
other transactions contemplated hereby and thereby, subject only, in the case of
consummation of the Mergers, to the receipt of the Requisite Royale Vote. The
Requisite Royale Vote is the only vote or consent of the holders of any class or
series of Royale’s capital stock required to approve and adopt this Agreement,
the Mergers and the Ancillary Documents, and to approve and consummate the
Exchange, the Mergers and the other transactions contemplated hereby. This
Agreement has been duly executed and delivered by the Royale Parties, and
(assuming due authorization, execution and delivery by each other party hereto)
this Agreement constitutes a legal, valid and binding obligation of the Royale
Parties enforceable against each Royale Party in accordance with its terms,
subject to applicable
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bankruptcy, insolvency, reorganization, moratorium and similar Laws affecting
creditors’ rights and remedies generally, and subject, as to enforceability, to
general principles of equity, including principles of commercial reasonableness,
good faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at Law or in equity). When the Merger Agreement and each Ancillary
Document to which each Royale Party is or will be a party has been duly executed
and delivered by the Royale Parties (assuming due authorization, execution and
delivery by each other party thereto), such Ancillary Document will constitute a
legal and binding obligation of each Royale Party enforceable against it in
accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar Laws affecting creditors’ rights and
remedies generally, and subject, as to enforceability, to general principles of
equity, including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding at Law or
in equity).
(b)          The respective boards of directors of each Royale Party, by
resolutions duly adopted by unanimous vote at a meeting of all directors of each
of such corporations duly called and held and not subsequently rescinded or
modified in any way, has, as of the date hereof each such corporation has (i)
determined that the Merger Agreement and the transactions contemplated hereby
and thereby, including the Exchange and the Mergers, are advisable and in the
best interests of the respective stockholders, (ii) approved and adopted the
Mergers, subject to the terms hereof, the Section 351 Plan, (iii) directed that
the “agreement of merger” contained in the Merger Agreement be submitted to its
respective stockholders for adoption, and (iv) resolved to recommend that its
respective stockholders adopt the “agreement of merger” set forth in the Merger
Agreement and directed that such matter be submitted for consideration of the
Stockholders.  In addition, the respective boards of directors of each of Royale
and Parent have, by resolutions duly adopted by unanimous vote at a meeting of
all directors of each of such corporations duly called and held and not
subsequently rescinded or modified in any way, (w) determined that this
Agreement and the transactions contemplated hereby, including the Exchange, are
advisable and in the best interests of its respective stockholders, (x) approved
and adopted this Agreement, subject to the terms hereof, the Section 351 Plan,
(y) approved and declared advisable the “Agreement and Plan of Exchange”
contained in this Agreement and the transactions contemplated by this Agreement,
including the Exchange, in accordance with the CCC, and (z) directed that the
“Agreement and Plan of Exchange” contained in this Agreement be submitted to its
respective stockholders for consideration and approval with the recommendation
of the respective board of directors that such stockholders adopt and approve
the “Agreement and Plan of Exchange” set forth in this Agreement.
Section 5.03          No Conflicts; Consents.  The execution, delivery and
performance by the Royale Parties of this Agreement and the Ancillary Documents
to which each is a party, and the consummation of the transactions contemplated
hereby and thereby, do not and will not: (a) conflict with or result in a
violation or breach of, or default under, any provision of the Royale Charter
Documents; (b) conflict with or result in a violation or breach of any provision
of any Law or Governmental Order applicable to any Royale Party; or (c) except
as set forth in Section 5.03 of the Royale Disclosure Schedules, require the
consent, notice or other action by any Person under any Contract to which any
Royale Party is a party, other than, in the case of clauses (b) and (c) of this
Section 5.03, such conflicts, violations, breaches, consents, notices or other
actions that would not have and would not reasonably be expected to have a
Royale Material Adverse Effect. No consent, approval, Permit, Governmental
Order, declaration or filing with, or
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notice to, any Governmental Authority is required by or with respect to each
Royale Party in connection with the execution, delivery and performance of this
Agreement and the Ancillary Documents and the consummation of the transactions
contemplated hereby and thereby, except for (i) the filing of the certificate of
merger with the Secretary of State of California, (ii) the filing of the
certificate of merger with the Secretary of State of Delaware, (iii) the filing
of the Registration Statement with the SEC, and (iv) such filings as may be
required under the HSR Act.
Section 5.04          Capitalization.
(a)          The authorized Parent Shares consist of 280,000,000 shares of
common stock, par value $0.001 per share and 10,000,000 shares of preferred
stock, par value $0.001 per share, of which no Parent Shares are issued and
outstanding as of the close of business on the date of this Agreement.
(b)          The authorized capital stock of Royale consists of (i) 30,000,000
shares of Royale Common Stock, of which 21,850,185 shares are issued and
outstanding as of February 15, 2018, and (ii) 10,000,000 shares of Royale
Preferred Stock, of which no shares are issued and outstanding as of the close
of business on the date of this Agreement.
(c)          The authorized capital stock of Royale Merger Sub consists of
1,000,000 shares of common stock, no par value (the “Royale Merger Sub Shares”),
of which no Royale Merger Sub Shares are issued and outstanding as of the close
of business on the date of this Agreement.
(d)          The authorized capital stock of Matrix Merger Sub consists of
1,000,000 shares of common stock, no par value (the “Matrix Merger Sub Shares”),
of which no Matrix Merger Sub Shares are issued and outstanding as of the close
of business on the date of this Agreement.
(e)          Section 5.04(e) of the Royale Disclosure Schedules set forth, as of
the date hereof, the name of each Person that is the registered owner of any
Parent Shares, Royale Preferred Stock, Royale Merger Sub Shares, or Matrix
Merger Sub Shares and the number of such shares owned by such Person.
(f)          Except as set forth in Section 5.04(f) of the Royale Disclosure
Schedules, the Royale Parties have not issued any capital stock since its most
recently filed periodic report under the Exchange Act.
(g)          Except as set forth in Section 5.04(g) of the Royale Disclosure
Schedules, (i) no subscription, warrant, option, convertible or exchangeable
security, or other right (contingent or otherwise) to purchase or otherwise
acquire equity securities of any Royale Party is authorized or outstanding, and
(ii) there is no commitment by any Royale Party to issue shares, subscriptions,
warrants, options, convertible or exchangeable securities, or other such rights
or to distribute to holders of any of its equity securities any evidence of
indebtedness or asset, to repurchase or redeem any securities of the Royale
Parties or to grant, extend, accelerate the vesting of, change the price of, or
otherwise amend any warrant, option, convertible or exchangeable security or
other such right. There are no declared or accrued unpaid dividends with respect
to any shares of Royale Common Stock.
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(h)          All issued and outstanding shares of Royale Common Stock, Parent
Shares, Royale Merger Sub Shares and Matrix Merger Sub Shares are (i) duly
authorized, validly issued, fully paid and non-assessable; (ii) not subject to
any preemptive rights created by statute, Royale Charter Documents or any
agreement to which any Royale Party is a party; and (iii) free of any
Encumbrances created by any Royale Party in respect thereof, other than
restrictions as may exist under applicable securities Law and liens in favor of
the Royale Parties’ lenders as listed on Section 5.04(h) of the Royale
Disclosure Schedules. All issued and outstanding shares of Royale Common Stock,
Parent Shares, Royale Merger Sub Shares and Matrix Merger Sub Shares were issued
in compliance with applicable Law.
(i)          No outstanding Royale Common Stock, Parent Shares, Royale Merger
Sub Shares or Matrix Merger Sub Shares are subject to vesting or forfeiture
rights or repurchase by the Royale Parties. There are no outstanding or
authorized stock appreciation, dividend equivalent, phantom stock, profit
participation or other similar rights with respect to the Royale Parties or any
of their securities.
(j)          All distributions, dividends, repurchases and redemptions of the
capital stock (or other equity interests) of the Royale Parties were undertaken
in compliance with the Royale Charter Documents then in effect, any agreement to
which any Royale Party was then was a party and in compliance with applicable
Law.
Section 5.05          No Prior Operations; No Subsidiaries.  Each of Parent,
Matrix Merger Sub and Royale Merger Sub was formed solely for the purpose of
effecting the Merger and has not engaged in any business activities or conducted
any operations other than in connection with the transactions contemplated
hereby.  Other than Parent, Royale Merger Sub and Matrix Merger Sub, the Royale
Parties have no Subsidiaries.
Section 5.06          SEC Reports; Financial Statements.  Except as set forth in
Section 5.06 of the Royale Disclosure Schedules, Royale has filed all reports,
schedules, forms, statements and other documents required to be filed by Royale
under the Securities Act and the Exchange Act, including pursuant to Section
13(a) or 15(d) thereof, for the two years preceding the date hereof (the
foregoing materials, including the exhibits thereto and documents incorporated
by reference therein, being collectively referred to herein as the “SEC
Reports”) on a timely basis or has received a valid extension of such time of
filing and has filed any such SEC Reports prior to the expiration of any such
extension.  As of their respective dates, the SEC Reports complied in all
material respects with the requirements of the Securities Act and the Exchange
Act, as applicable, and none of the SEC Reports, when filed, contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading. 
Royale has never been an issuer subject to Rule 144(i) under the Securities Act.
The financial statements of Royale included in the SEC Reports (the “Royale
Financial Statements”) comply in all material respects with applicable
accounting requirements and the rules and regulations of the Commission with
respect thereto as in effect at the time of filing.  Such financial statements
have been prepared in accordance with United States generally accepted
accounting principles applied on a consistent basis during the periods involved
(“GAAP”), except as may be otherwise specified in such financial statements or
the notes thereto and except that unaudited financial statements may not contain
all footnotes required by
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GAAP, and present fairly, in all material respects, the financial position of
Royale as of and for the dates thereof and the results of operations and cash
flows for the periods then ended, subject, in the case of unaudited statements,
to normal, immaterial, year-end audit adjustments.
Section 5.07          Undisclosed Liabilities.  The Royale Parties have no
Liabilities, except (a) those which are accrued, adequately reflected or
reserved against in the Royale Financial Statements, (b) those which have been
incurred in the ordinary course of business consistent with past practice since
September 30, 2016, (c) those which would not reasonably be expected,
individually or in the aggregate, to have a Royale Material Adverse Effect, (d)
those which have been discharged or paid in full prior to the date hereof in the
ordinary course of business, or (e) those which are of a nature not required to
be reflected on a balance sheet prepared in accordance with GAAP consistently
applied.
Section 5.08          Absence of Certain Changes, Events and Conditions.  Since
the Balance Sheet Date, except in connection with the execution and delivery of
this Agreement and the consummation of the transactions contemplated hereby, the
business of the Royale Parties has been conducted in the ordinary course of
business and there has not been or occurred:
(a)          any Royale Material Adverse Effect or any event, condition, change
or effect that could reasonably be expected to have, individually or in the
aggregate, a Royale Material Adverse Effect; or
(b)          except as disclosed on Section 5.08 of the Royale Disclosure
Schedules, any event, condition, action or effect that, if taken during the
period from the date of this Agreement through the Closing Date, would
constitute a breach of Section 6.01.
Section 5.09          Royale Material Contracts.  Section 5.09 of the Royale
Disclosure Schedules sets forth a list of all Material Contracts to which each
Royale Party is party as of the date hereof, including the name of the parties
thereto, the date of each such Material Contract and each amendment thereto. 
All Material Contracts of each Royale Party are valid, enforceable and in full
force and effect, subject to applicable bankruptcy, insolvency, reorganization,
moratorium and similar Laws affecting creditors’ rights and remedies generally,
and subject, as to enforceability, to general principles of equity, including
principles of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at Law or in equity).  Other
than as described in Section 5.09 of the Royale Disclosure Schedules, the Royale
Parties are not, and have no Knowledge that any other party thereto is,  in
material default under any such Material Contract, no material payments or other
obligations are past due except for amounts being contested in good faith, and
no circumstance exists that, with notice, the passage of time or both, would
constitute a default under any Material Contract of each Royale Party by any
Royale Party or, to the Knowledge of each Royale Party, by any other party
thereto.  The Royale Parties have not received any written notice of a default,
alleged failure to perform or any offset or counterclaim with respect to any
Material Contract of each Royale Party that has not been fully remedied and
withdrawn.
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Section 5.10          Properties and Assets.
(a)          Except as would not reasonably be expected to have a Royale
Material Adverse Effect, the Royale Parties and their Subsidiaries own and have
either good and valid title in fee or a valid leasehold interest, Right of Way
or other rights to the land, mineral and other subsurface rights, buildings,
structures and other improvements thereon and fixtures thereto necessary to
permit it to conduct its business as currently conducted, in each case free and
clear of all liens (except in all cases for Permitted Liens).  Except as would
not reasonably be expected to have a Royale Material Effect, all leases, Rights
of Way or other agreements under which any Royale Party or any of their
Subsidiaries lease, access or use any real property are valid, binding and are
in force and effect against the Royale Parties or any of their Subsidiaries and,
to the Knowledge of each Royale Party, the counterparties thereto, in accordance
with their respective terms, and neither the Royale Parties nor any of their
Subsidiaries are in default under any such leases, Rights of Way or other
agreements.
(b)          Each Royale Party and its Subsidiaries has such Rights of Way from
each person as are sufficient to conduct its business as currently conducted,
except for such Rights of Way the absence of which have not had and would not
reasonably be expected to have a Royale Material Adverse Effect.  Each Royale
Party and its Subsidiaries has fulfilled and performed all its obligations with
respect to such Rights of Way and conducts their business in a manner that does
not violate any of the Rights of Way, and no event has occurred that allows, or
after notice or lapse of time would allow, revocation or termination thereof or
would result in any impairment of the rights of the holder of any such Rights of
Way, except for such revocations, terminations and impairments that have not had
and would not reasonably be expected to have a Royale Material Adverse Effect. 
All pipelines owned or operated by the Royale Parties and their Subsidiaries are
subject to Rights of Way, there are no encroachments or other encumbrances on
the Rights of Way that affect the use thereof and there are no gaps (including
any gap arising as a result of any breach by a Royale Party or any of their
Subsidiaries of the terms of any Rights of Way) in the Rights of Way other than
gaps that would not have and would not reasonably be expected to have a Royale
Material Adverse Effect.
(c)          Except as would not reasonably be expected to have a Royale
Material Adverse Effect, the Royale Parties and their Subsidiaries, as
applicable, have defensible title to all of the Royale Interests forming the
basis for the reserves reflected in the Royale Financial Statements except for
such Royale Interests sold, used, farmed out or otherwise disposed of since
December 31, 2015, in the ordinary course of business, free and clear of all
liens and Production Burdens other than Production Burdens not yet earned, due
or payable and Permitted Liens (other than Production Burdens).  Except as would
not reasonably be expected to have a Royale Material Adverse Effect or as set
forth on Section 5.10(c) of the Royale Disclosure Schedules, (i) none of the
proceeds from the sale of Hydrocarbons produced from the Royale Interests in any
producing well are being held in suspense for any reason, and (ii) there are no
calls on production or preferential rights to purchase Hydrocarbons and the
Royale Parties nor any of their Subsidiaries are not obligated to deliver
Hydrocarbons or proceeds from the sale thereof at a future point in time without
receiving payment therefor at or after the time of delivery (other than gas
balancing arrangements), except for the rights of any lessor to take free gas
under the terms of any applicable lease for its use on the lands covered by such
lease.  Except as would not reasonably be expected to have a Royale Material
Adverse Effect, the Royale Parties and each applicable
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Subsidiary (A) are in compliance with all valuation agreements, and settlement
agreements with respect to Production Burdens, and (B) have paid or will cause
to be paid when due all Production Burdens with respect to the Royale Interests
and each other royalty, Tax or similar payment, except for such amounts that are
being held in suspense as permitted pursuant to applicable Law or the terms of
the applicable Contract or as reserved against in the Royale Financial
Statements.
(d)          All of the wells owned, leased, operated or used by the Royale
Parties and their Subsidiaries and all water, carbon dioxide or injection wells
located on any property owned, leased, operated or used by the Royale Parties
and their Subsidiaries or otherwise associated with the Royale Interests have
been drilled, completed and operated within the limits permitted by the
applicable Contract granting such rights and applicable Law, and all drilling
and completion (and plugging and abandonment) of such wells and all related
development, production and other operations have been conducted in compliance
with all applicable Laws except, in each case, as would not reasonably be
expected to have a Royale Material Adverse Effect.  No well owned, leased,
operated or used by any Royale Party or any of their Subsidiaries are subject to
material penalties on allowables because of overproduction or violation of any
applicable Law.
(e)          All Royale Interests operated by the Royale Parties and their
Subsidiaries have been operated in accordance with reasonable, prudent field
practices and in compliance with the applicable Contracts, except where the
failure to so operate would not reasonably be expected to have a Royale Material
Adverse Effect.  None of the Interests of the Royale Parties or their
Subsidiaries is subject to any preferential purchase, consent or similar right
that would become operative as a result of the Transactions, except for any such
preferential purchase, consent or similar rights that would not reasonably be
expected to have a Royale Material Adverse Effect.  Except as set forth on
Section 5.10(e) of Royale Disclosure Schedules, none of the Royale Interests are
subject to any Tax partnership agreement or provisions requiring a partnership
income Tax Return.
(f)          There are no material inaccuracies in the report of Netherland,
Sewell & Associates, Inc. as of December 31, 2015, and dated February 1, 2016.
(g)          Except as set forth on Section 5.10(g) of the Royale Disclosure
Schedules, no Royale Party is engaged in any oil, natural gas or other futures
or option trading in respect of which it has any material future liability, nor
is any Royale Party a party to any price swaps, hedges, futures or similar
instruments.  Section 5.10(g) of the Royale Disclosure Schedules sets forth
obligations of each Royale Party for the delivery of Hydrocarbons attributable
to any of the Royale Interests in the future on account of prepayment, advance
payment, take-or-pay or similar obligations without then or thereafter being
entitled to receive full value therefor.  Except as set forth on Section 5.10(g)
of the Royale Disclosure Schedules, as of the date hereof, no Royale Party is
bound by futures, hedge, swap, collar, put, call, floor, cap, option or other
Contracts that are intended to benefit from, relate to or reduce or eliminate
the risk of fluctuations in the price of commodities, including Hydrocarbons, or
securities.
(h)          Except as provided in Section 5.10(h) of the Royale Disclosure
Schedules, there are no mandatory drilling or completion obligations and there
are no pending or, to the Knowledge of each Royale Party, expected proposals or
elections for drilling, completing,
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recompleting, reworking, facilities or similar activities that would require
such commitment on behalf of the Royale Parties or any of their Subsidiaries
within one year of the Royale Merger Effective Time in any of the Royale
Interests or any of the contracts governing any of the Royale Interests.
(i)          Except as set forth on Section 5.10(i) of the Royale Disclosure
Schedules, none of the Contracts in respect of gathering, processing, storage or
transportation of the production of Hydrocarbons from the Royale Interests
contain any minimum volume or throughput provisions or require the Royale
Parties or any of their Subsidiaries to pay for services regardless of whether
the Royale Parties or any of their Subsidiaries deliver such production for use
of the services provided for under any such Contract.
(j)          Except as set forth in Section 5.10(j) of the Royale Disclosure
Schedules, none of the Contracts relating to the Royale Interests (including all
oil, gas and mineral leases and similar Contracts) contain any provision (i)
requiring the lessee to pay royalties on hedges, (ii) causing the oil, gas or
mineral lease or contract to terminate without advance notice and the
opportunity to cure resulting in a loss, in whole or in part, of any of the
Royale Interests for lessee’s failure to pay royalties or for lessee’s breach of
any covenant thereunder, (iii) requiring lessor’s consent to the consummation of
the transactions of the type contemplated under this Agreement, or (iv) is
expected to result in a mandatory payment or expenditure not otherwise disclosed
in Section 5.10(i) of the Royale Disclosure Schedules.
Section 5.11          Intellectual Property.
(a)          Section 5.11(a) of the Royale Disclosure Schedules lists all (i)
Royale IP Registrations. All required filings and fees related to Royale IP
Registrations have been timely filed with and paid to the relevant Governmental
Authorities and authorized registrars, and all Royale IP Registrations are
otherwise in good standing, except as would not reasonably be expected to have a
Royale Material Adverse Effect.
(b)          The consummation of the transactions contemplated hereunder will
not result in the loss or impairment of or payment of any additional amounts
with respect to, nor require the consent of any other Person in respect of, each
Royale Party’s right to own, use or hold for use any material Intellectual
Property as owned, used or held for use in the conduct of any Royale Party’s
business or operations as currently conducted.
(c)          Each Royale Party’s rights in Royale Intellectual Property are
valid, subsisting and enforceable, subject to applicable bankruptcy, insolvency,
reorganization, moratorium and similar Laws affecting creditors’ rights and
remedies generally, and subject, as to enforceability, to general principles of
equity, including principles of commercial reasonableness, good faith and fair
dealing (regardless of whether enforcement is sought in a proceeding at Law or
in equity) and except as would not reasonably be expected to have a Royale
Material Adverse Effect. The Royale Parties have taken all commercially
reasonable steps to maintain Royale Intellectual Property and to protect and
preserve the confidentiality of all material trade secrets included in the
Royale Intellectual Property, except as would not reasonably be expected to have
a Royale Material Adverse Effect.
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(d)          To the Knowledge of each Royale Party, the conduct of Royale’s
business as currently and formerly conducted does not infringe, misappropriate
or otherwise violate the Intellectual Property or other rights of any Person,
except as would not reasonably be expected to have a Royale Material Adverse
Effect. To the Knowledge of each Royale Party, no Person is currently
infringing, misappropriating, diluting or otherwise violating, any Royale
Intellectual Property in a way as would be expect to have a Royale Material
Adverse Effect.
(e)          There are no Actions (including any oppositions, interferences or
re-examinations) pending or, to the Knowledge of each Royale Party, threatened:
(i) alleging any infringement, misappropriation, dilution or violation of the
Intellectual Property of any Person by the Royale Parties; (ii) challenging the
validity, enforceability, registrability or ownership of any Royale Intellectual
Property or the Royale Parties’ rights with respect to any Royale Intellectual
Property; or (iii) by the Royale Parties or any other Person alleging any
infringement, misappropriation, dilution or violation by any Person of Royale
Intellectual Property. The Royale Parties are not subject to any outstanding
Governmental Order (including any motion or petition therefor) that does or
would restrict or impair the use of any material Royale Intellectual Property.
Section 5.12          Insurance.  Section 5.12 of the Royale Disclosure
Schedules sets forth a true and complete list of all current policies or binders
of fire, liability, product liability, umbrella liability, real and personal
property, workers’ compensation, vehicular, directors’ and officers’ liability,
fiduciary liability and other casualty and property insurance maintained by the
Royale Parties and relating to the assets, business, operations, employees,
officers and directors of each Royale Party (collectively, the “Royale Insurance
Policies”) and true and complete copies of Royale Insurance Policies have been
made available to Matrix. The Royale Insurance Policies are in full force and
effect with respect to the period covered. The Royale Parties have not received
any written notice of cancellation of or materially adverse alteration of
coverage under, any of such Royale Insurance Policies. All premiums or
installment payments of premiums due on such Royale Insurance Policies have
either been paid or, if due and payable prior to Closing, will be paid prior to
Closing in accordance with the payment terms of the Royale Insurance Policy. All
such Royale Insurance Policies are valid and binding in accordance with their
terms. Except as set forth on Section 5.12 of the Royale Disclosure Schedules,
there are no material claims related to the business of any Royale party pending
under any Royale Insurance Policies as to which coverage has been questioned,
denied or disputed or in respect of which there is an outstanding reservation of
rights. The Royale Parties are not in material default under, and have not
otherwise failed to comply with, in any material respect, any provision
contained in any such Royale Insurance Policy.
Section 5.13          Legal Proceedings; Governmental Orders.
(a)          There are no Actions pending or, to each Royale Party’s Knowledge,
threatened (a) against or by the Royale Parties affecting any of its properties
or assets; or (b) against or by the Royale Parties that challenges or seeks to
prevent, enjoin or otherwise delay the transactions contemplated by this
Agreement. No event has occurred or circumstances exist that may give rise to,
or serve as a basis for, any such Action.
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(b)          There are no outstanding Governmental Orders and no unsatisfied
judgments, penalties or awards against or affecting any Royale Party or any of
their properties or assets. The Royale Parties are in compliance with the terms
of each Governmental Order set forth in Section 5.13(b) of the Royale Disclosure
Schedules.  No event has occurred or circumstances exist that may constitute or
result in (with or without notice or lapse of time) a violation of any such
Governmental Order.
Section 5.14          Compliance With Laws; Permits.
(a)          Except as set forth in Section 5.14(a) of the Royale Disclosure
Schedules, the Royale Parties have complied, and are now complying, with all
Laws applicable to it or its business, properties or assets, in each case,
except as would not reasonably be expected to have a Royale Material Adverse
Effect.
(b)          All material Permits required for the Royale Parties to conduct
their business have been obtained by it and are valid and in full force and
effect. The Royale Parties are in compliance, in all material respects, with the
terms of such material Permits No event has occurred that, with or without
notice or lapse of time or both, would reasonably be expected to result in the
revocation, suspension, lapse or limitation of any material Permit except as
would not reasonably be expected to have a Royale Material Adverse Effect.
Section 5.15          Environmental Laws.  The Royale Parties and their
Subsidiaries (i) are in compliance with all Environmental Laws, (ii) have
received all permits, licenses or other approvals required of them under
applicable Environmental Laws to conduct their respective businesses and (iii)
are in compliance with all terms and conditions of any such permit, license or
approval where, in each of the foregoing clauses (i), (ii) and (iii), the
failure to so comply could be reasonably expected to have, individually or in
the aggregate, a Royale Material Adverse Effect.
Section 5.16          Employee Benefit Matters.
(a)          Section 5.16 of the Royale Disclosure Schedules lists each Employee
Benefit Plan that each Royale Party or any ERISA Affiliate maintains or to which
each Royale Party or any ERISA Affiliate contributes or is a participating
employer (collectively, the “Royale Benefit Plans”).  With respect to each
Royale Benefit Plan, the Royale Parties have delivered to Royale true and
complete copies of all plan documents and summary plan descriptions, the most
recent determination letter (or opinion letter) received from the Internal
Revenue Service, the most recent Form 5500 Annual Reports, and all related trust
agreements associated with such Royale Benefit Plan.
(b)          Each Royale Benefit Plan (and each related trust, insurance
contract or fund) has been administered and operated in material compliance with
the terms of the applicable controlling documents and with the applicable
provisions of ERISA, the IRC and all other Applicable Laws, except as would not
reasonably be expected to have a Royale Material Adverse Effect.  Each Royale
Benefit Plan (including any material amendments thereto) that is capable of
approval by, or registration for or qualification for special tax status with,
the appropriate taxation, social security or supervisory authorities in the
relevant jurisdiction has received such
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approval, registration or qualification or there remains a period of time in
which to obtain such approval, registration or qualification retroactive to the
date of any material amendment that has not previously received such approval,
registration or qualification.
(c)          Except as would not reasonably be expected to have a Royale
Material Adverse Effect, all required reports, descriptions and disclosures have
been filed or distributed appropriately and in accordance with applicable Law
with respect to each Royale Benefit Plan.  The requirements of Part 6 of
Subtitle B of Title I of ERISA and of Section 4980B of the IRC have been met
with respect to each Royale Benefit Plan that is a group health plan.
(d)          All contributions (including all employer contributions and
employee salary reduction contributions) that are due and owing have been paid
to each Royale Benefit Plan (or related trust or held in the general assets of
any Royale Party or one or more ERISA Affiliates or accrued, as appropriate),
and all contributions for any period ending on or before the Closing Date that
are not yet due have been paid to each Royale Benefit Plan or accrued in
accordance with the past custom and practice of the Royale Parties and the ERISA
Affiliates.  All premiums or other payments for all periods ending on or before
the Closing Date have been paid with respect to each Royale Benefit Plan that is
an Employee Welfare Benefit Plan.
(e)          Each Royale Benefit Plan that is an Employee Pension Benefit Plan
and that is intended to meet the requirements of a “qualified plan” under
Section 401(a) of the IRC meets such requirements and has either received or
applied for (or has time remaining to apply for) a favorable determination
letter (or, in the case of a prototype plan, an opinion letter) from the
Internal Revenue Service within the applicable remedial amendment periods.
(f)          No Royale Benefit Plan, or Employee Benefit Plan maintained,
sponsored or contributed to by any Royale Party or ERISA Affiliate in the six
year period preceding the Closing Date is or has been subject to the minimum
funding requirements of Section 412 of the IRC or subject to Title IV of ERISA.
(g)          None of the Royale Benefit Plans promises or provides retiree
medical, health or life insurance or other welfare type benefits for current or
future retired or terminated employees, their spouses or their dependents (other
than in accordance with Section 4980B of the IRC) that cannot be unilaterally
terminated by a Royale Party or an ERISA Affiliate.
(h)          Each Royale Benefit Plan has been administered in accordance with
its terms, except as would not reasonably be expected to have a Royale Material
Adverse Effect.  No Royale Party nor any ERISA Affiliate has entered into any
agreement, arrangement or understanding, whether written or oral, with any trade
union, works council or other employee representative body or any number or
category of its employees that would prevent, restrict or impede the
implementation of any layoff, redundancy, severance or similar program within
its or their respective workforces (or any part of them).
(i)          There are no unresolved claims or disputes under the terms of, or
in connection with, any Royale Benefit Plan (other than routine undisputed
claims for benefits), and no action, legal or otherwise, has been commenced with
respect to any such claim or dispute, except, in each case, as would not
reasonably be expected to have a Royale Material Adverse Effect.
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(j)          With respect to each Royale Benefit Plan that Royale or any ERISA
Affiliate maintains or to which any of them contributes:
(i) To the Knowledge of each Royale Party, there have been no “prohibited
transaction,” as such term is defined in Section 406 of ERISA or Section 4975 of
the IRC, with respect to any such Royale Benefit Plan that would subject any
Royale Party or ERISA Affiliate to a tax or penalty imposed pursuant to Section
4975 of the IRC or Section 502(c), (i) or (l) of ERISA.
(ii) No Royale Party nor, to the Knowledge of any Royale Party, any ERISA
Affiliate (by way of indemnification, directly or otherwise) has any liability
or penalty under Sections 4976 through 4980 of the IRC or Title I of ERISA with
respect to any Royale Benefit Plan.
(iii) No action, suit, proceeding, hearing or investigation with respect to the
administration or the investment of the assets of any Royale Benefit Plan (other
than routine claims for benefits) is pending or, to the Knowledge of any Royale
Party, threatened, and to the Knowledge of any Royale Party, there is no basis
for any such action, suit, proceeding, hearing or investigation, except, in each
case, as would not reasonably be expected to have a Royale Material Adverse
Effect.
(k)          Neither the execution and delivery of this Agreement or any
Ancillary Document to which the Royale Parties are a party, nor the Merger, the
Exchange or any Other Exchange will (i) result in any payment (including
severance, unemployment compensation, golden parachute, bonus or otherwise)
becoming due to any officer, director or employee of any Royale Party; (ii)
materially increase any benefits otherwise payable by the Royale Parties; or
(iii) result in the acceleration of the time of payment or vesting of any such
benefits.
(l)          No Royale Benefit Plan is funded with or allows for payments or
distributions in any employer security of the Royale Parties, including, but not
limited to, employer securities as defined in Section 407(d)(1) of ERISA, or
employer real property as defined in Section 407(d)(2) or ERISA.
Section 5.17          Employment Matters.
(a)          Section 5.17(a) of the Royale Disclosure Schedules contains a list
of all persons who are employees of the Royale Parties as of the date hereof,
including any employee who is on a leave of absence of any nature, paid or
unpaid, authorized or unauthorized, and sets forth for each such individual the
following: (i) name; (ii) title or position (including whether full or part
time); (iii) hire date; (iv) current annual base compensation rate; (v)
commission, bonus or other incentive-based compensation; and (vi) a description
of the fringe benefits provided to each such individual as of the date hereof.
(b)          Except as set forth in Section 5.17(b) of the Royale Disclosure
Schedules, the Royale Parties are not, and have not been for the past three (3)
years, a party to, bound by, or negotiating any collective bargaining agreement
or other Contract with a Union, and there is not, and has not been for the past
three (3) years, any Union representing or purporting to represent any employee
of the Royale Parties, and, to each Royale Party’s Knowledge, no Union or group
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of employees is seeking to organize employees for the purpose of collective
bargaining. Except as set forth in Section 5.17(b) of the Royale Disclosure
Schedules, to the Knowledge of each Royale Party, there has been no threat of
any strike, slowdown, work stoppage, lockout, concerted refusal to work overtime
or other similar labor disruption or dispute affecting the Royale Parties or any
of their employees.
(c)          Except as would not reasonably be expected to have a Royale
Material Adverse Effect, the Royale Parties are in compliance with all
applicable Laws pertaining to employment and employment practices to the extent
they relate to employees of the Royale Parties, including all Laws relating to
labor relations, equal employment opportunities, fair employment practices,
employment discrimination, harassment, retaliation, reasonable accommodation,
disability rights or benefits, immigration, wages, hours, overtime compensation,
child labor, hiring, promotion and termination of employees, working conditions,
meal and break periods, privacy, health and safety, workers’ compensation,
leaves of absence and unemployment insurance. All individuals characterized and
treated by the Royale Parties as independent contractors or consultants are
properly treated as independent contractors under all applicable Laws, except as
would not reasonably be expected to have a Royale Material Adverse Effect. All
employees of the Royale Parties classified as exempt under the Fair Labor
Standards Act and state and local wage and hour laws are properly classified,
except as would not reasonably be expected to have a Royale Material Adverse
Effect. Except as set forth in Section 5.17(c) of the Royale Disclosure
Schedules, there are no Actions against any Royale Party pending, or to each
Royale Party’s Knowledge, threatened to be brought or filed, by or with any
Governmental Authority or arbitrator in connection with the employment of any
current or former applicant, employee, consultant or independent contractor of
the Royale Parties, including, without limitation, any claim relating to unfair
labor practices, employment discrimination, harassment, retaliation, equal pay,
wage and hours or any other employment-related matter arising under applicable
Laws.
Section 5.18          Taxes.  Except as set forth in Section 5.18 of the Royale
Disclosure Schedules:
(a)          All Tax Returns required to be filed on or before the Closing Date
by the Royale Parties have been, or will be, timely filed. All Taxes due and
owing by the Royale Parties (whether or not shown on any Tax Return) have been,
or will be, timely paid.
(b)          The Royale Parties have withheld and paid each Tax required to have
been withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, customer, shareholder or other party, and
complied with all information reporting and backup withholding provisions of
applicable Law.
(c)          No claim has been made by any taxing authority in any jurisdiction
where Royale or any of its Subsidiaries do not file Tax Returns that it is, or
may be, subject to Tax by that jurisdiction.
(d)          No extensions or waivers of statutes of limitations have been given
or requested with respect to any Taxes of Royale or any of its Subsidiaries.
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(e)          The amount of the Royale’s Liability for unpaid Taxes for all
periods ending on or before December 31, 2015, does not, in the aggregate,
exceed the amount of accruals for Taxes (excluding any accrual for Taxes with
respect to timing differences between financial accounting income and taxable
income) reflected on the Royale Financial Statements. The amount of the Royale’s
Liability for unpaid Taxes for all periods following the end of the recent
period covered by the Royale Financial Statements shall not, in the aggregate,
exceed the amount of accruals for Taxes (excluding any accrual for Taxes with
respect to timing differences between financial accounting income and taxable
income) as adjusted for the passage of time in accordance with the past custom
and practice of Royale (and which accruals shall not exceed comparable amounts
incurred in similar periods in prior years).
(f)          Section 5.18(f) of the Royale Disclosure Schedules sets forth:
(i) the taxable years of  Royale as to which the applicable statutes of
limitations on the assessment and collection of Taxes have not expired;
(ii) those years for which examinations by the taxing authorities have been
completed; and
(iii) those taxable years for which examinations by taxing authorities are
presently being conducted.
(g)          All deficiencies asserted, or assessments made, in writing against
the Royale Parties as a result of any examinations by any taxing authority have
been fully paid or otherwise finally resolved.
(h)          The Royale Parties are not a party to any Action by any taxing
authority. There are no pending or threatened Actions by any taxing authority.
(i)          The Royale Parties have delivered to Matrix copies of all federal,
state, local and foreign income, franchise and similar Tax Returns, examination
reports, and statements of deficiencies assessed against, or agreed to by,
Royale or any of its Subsidiaries for all Tax periods ending after January 1,
2014.
(j)          There are no Encumbrances for Taxes (other than for current Taxes
not yet due and payable) upon the assets of the Royale Parties.
(k)          The Royale Parties are not a party to, or bound by, any Tax
indemnity, Tax sharing or Tax allocation agreement (other than any agreement
entered into in the ordinary course of business with incidental tax provisions,
such as loan agreements, leases, and hedging contracts).
(l)          No private letter rulings, technical advice memoranda or similar
agreement or rulings have been requested, entered into or issued by any taxing
authority with respect to the Royale Parties.
(m)          Royale has not been a member of an affiliated, combined,
consolidated or unitary Tax group for Tax purposes. Royale has no Liability for
Taxes of any Person (other than the Royale Parties) under Treasury Regulations
Section 1.1502-6 (or any corresponding provision of
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state, local or foreign Law), as transferee or successor, by contract or
otherwise (other than pursuant to any agreement entered into in the ordinary
course of business with incidental tax provisions, such as loan agreements,
leases, and hedging contracts).
(n)          The Royale Parties will not be required to include any item of
income in, or exclude any item or deduction from, taxable income for taxable
period or portion thereof ending after the Closing Date as a result of:
(i) any change in a method of accounting under Section 481 of the IRC (or any
comparable provision of state, local or foreign Tax Laws), or use of an improper
method of accounting, for a taxable period ending on or prior to the Closing
Date;
(ii) an installment sale or open transaction occurring on or prior to the
Closing Date;
(iii) a prepaid amount received on or before the Closing Date;
(iv) any closing agreement under Section 7121 of the IRC, or similar provision
of state, local or foreign Law; or
(v) any election under Section 108(i) of the IRC.
(o)          Royale has not been a “distributing corporation” or a “controlled
corporation” in connection with a distribution described in Section 355 of the
IRC.
(p)          Each Royale Party is not, and has not been, a party to, or a
promoter of, a “reportable transaction” within the meaning of Section
6707A(c)(1) of the IRC and Treasury Regulations Section 1.6011-4(b).
(q)          Within the last three (3) years, Royale has not owned any material
assets located outside the United State or conducted a material trade or
business outside the United States.
(r)          Each Royale Party is not an investment company as defined in
Section 351(e)(1) of the IRC.
(s)          Each Royale Party is not under the jurisdiction of a court in a
title 11 or similar case within the meaning of Sections 351(e)(2) and
368(a)(3)(A) of the IRC.
(t)          None of the Royale Stockholders owning more than 5% of the number
of shares of Royale Common Stock outstanding immediately before the Royale
Merger is a “foreign person” within the meaning of Treasury Regulation Section
1.1445-2(b).
Section 5.19          Books and Records.  The minute books and stock record
books of the Royale Parties, all of which have been made available to Matrix,
are complete and correct and have been maintained in accordance with sound
business practices. The minute books of the Royale Parties contain accurate and
complete records of all meetings, and actions taken by written consent of, the
Royale Stockholders, the Royale Board and any committees of the Royale
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Board, and no meeting, or action taken by written consent, of any such Royale
Stockholders, Royale Board or committee has been held for which minutes have not
been prepared and are not contained in such minute books. At the Closing, all of
those books and records will be in the possession of the Royale Parties.
Section 5.20          Related Party Transactions.  Section 5.20 of the Royale
Disclosure Schedules lists all Contracts between the Royale Parties and any
executive officer or director of the Royale Parties or any person owning 5% or
more of the Royale Common Stock (or any of such person’s immediate family
members or Affiliates of such person) or by which any executive officer or
director of a Royale Party or any person owning 5% or more of the Royale Common
Stock (or any of such person’s immediate family members or Affiliates) has any
interest in any property owned by the Royale Parties.
Section 5.21          Brokers.  Except for any fee which may become due to
Northland Capital Markets on completion of the Merger, no broker, finder or
investment banker is entitled to any brokerage, finder’s or other fee or
commission in connection with the transactions contemplated by this Agreement or
any Ancillary Document based upon arrangements made by or on behalf of the
Royale Parties.
Section 5.22          Legal Proceedings.  There are no Actions pending or, to
the Royale Parties’ Knowledge, threatened against or by any Royale Party or any
of their respective Affiliates that challenge or seek to prevent, enjoin or
otherwise delay the transactions contemplated by this Agreement. To the
Knowledge of each Royale Party, no event has occurred or circumstances exist
that may give rise or serve as a basis for any such Action.
Section 5.23          Registration Statement.  None of the information included
or incorporated by reference in the Registration Statement to be filed pursuant
to Section 6.03, its letter to the stockholders, notice of meeting, proxy
statement and forms of proxy, to be filed with the SEC in connection with the
Merger, will, at the date it is first mailed to Royale’s stockholders or at the
time of Royale Stockholders Meeting or at the time of any amendment or
supplement thereof, contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements made therein,
in the light of the circumstances under which they were made, not misleading.
Notwithstanding the foregoing, no representation or warranty is made by the
Royale Parties with respect to statements made or incorporated by reference
therein based on information supplied by Matrix expressly for inclusion or
incorporation by reference in the Registration Statement. The Registration
Statement will comply as to form in all material respects with the requirements
of the Exchange Act.
Section 5.24          Opinion of Financial Advisor.  Royale has received the
opinion of Northland Capital Markets, dated as of the date of this Agreement, to
the effect that, as of such date, and subject to the various assumptions and
qualifications set forth therein, the terms of the Mergers are fair from a
financial point of view to Royale and its shareholders, and such opinion has not
been rescinded or revoked.
Section 5.25          No Other Representations or Warranties.  Except for the
representations and warranties contained in this ARTICLE V (giving effect to the
Royale Disclosure Schedules), neither Royale nor Parent makes any representation
or warranty, express
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or implied on behalf of any Royale Party or any of its affiliates in connection
with this Agreement or the transactions contemplated hereby.
ARTICLE VI
Certain Covenants and Agreements of Parent, Royale and the Partners
The Partnership and the Partners further agree with the Parent and Royale, and
Royale and Parent further agree with the Partnership and the Partners, that from
the date hereof through the Closing Date:
Section 6.01          Conduct of Business Prior to the Closing.  From the date
hereof until the Closing, except as otherwise provided in this Agreement or
consented to in writing by the parties (which consent shall not be unreasonably
withheld or delayed), each of Parent, Royale and their respective Subsidiaries,
Matrix, the Partnership and its Subsidiaries, shall (x) conduct their respective
businesses in the ordinary course of business consistent with past practice; and
(y) use reasonable best efforts to maintain and preserve intact the current
organization, business and franchise of each of their respective business
organizations and to preserve the rights, franchises, goodwill and relationships
of the respective employees, customers, lenders, suppliers, regulators and
others having business relationships with such business organizations. Without
limiting the foregoing, from the date hereof until the Closing Date, each of
Parent, Royale and their respective Subsidiaries, Matrix, the Partnership and
its Subsidiaries, shall:
(a)          preserve and maintain all of its Permits;
(b)          pay its debts, Taxes and other obligations when due;
(c)          maintain the properties and assets owned, operated or used by it in
the same condition as they were on the date of this Agreement, subject to
reasonable wear and tear;
(d)          not (i) amend or propose to amend the Partnership Charter
Documents, with respect to The Partnership, or the Royale Charter Documents,
with respect to Royale, (ii)  split, combine, subdivide or reclassify any their
outstanding capital stock, partnership interest or any other securities, (iii)
declare, set aside or pay any dividend or distribution payable in cash, stock,
property or otherwise, or make any other distribution in respect of any
securities, except for (A) dividends by a direct or wholly-owned Subsidiary of
the applicable Person to its parent, (B) with respect to the Partnership,
distributions in the amount necessary for any Tax obligations of the Partners,
or (iv) repurchase, redeem or otherwise acquire, or modify or amend, any capital
stock, partnership interest or any other securities or any rights, warrants or
options to acquire any such securities except, with respect to each of the
foregoing, the issuance of securities upon the exercise of outstanding options,
warrants, rights, or upon the conversion of outstanding securities;
(e)          not, nor shall it permit any of its Subsidiaries to (i) redeem,
purchase, acquire or offer to purchase or acquire any of its or their capital
stock, partnership interest or any other securities or any options, warrants or
rights to acquire any of its or their securities or any security convertible
into or exchangeable for its or their securities, (ii) make any acquisition of
any capital stock, assets or businesses of any other Person other than
expenditures for current assets in the ordinary course of business consistent
with past practice and expenditures for fixed or
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capital assets in the ordinary course of business consistent with past practice,
(iii) sell, pledge, dispose of or encumber any assets or businesses that are
material to the Royale or the Partnership, as applicable, or their respective
Subsidiaries, except, with respect to each of the foregoing, (A) sales, leases,
rentals and licenses in the ordinary course of business consistent with past
practice, (B) pursuant to Contracts that are in force at the date of this
Agreement and are disclosed in the Disclosure Schedules, (C) dispositions of
obsolete or worthless assets, and (D) the transfer of legal title to direct
working interests in oil and gas or mineral properties held by Royale for the
benefit of third parties to Royale’s wholly owned Subsidiary, Royale DWI
Interests, LLC, or (iv) enter into any Contract with respect to any of the
foregoing items (i) through (iii);
(f)          not, nor shall it permit any of its Subsidiaries to (i) issue,
sell, pledge, grant or dispose of, or agree to issue, sell, pledge, grant or
dispose of, any equity awards under any Partnership Benefit Plans, with respect
to the Partnership, or Royale Benefit Plans, with respect to Royale, incentive
plans, or any additional capital stock, partnership interest or any other
securities (except, with respect to Royale, shares issuable to officers and
directors as compensation for services pursuant to the agreements described in
the registration statement on Form S-8 filed with the SEC by Royale on April 16,
2016), or any options, warrants or rights of any kind to acquire any securities,
or of any debt or equity securities convertible into or exchangeable for its
capital stock, partnership interest or any other securities, or (ii) incur or
assume any indebtedness for borrowed money or guarantee any indebtedness or
issue or sell any debt securities or options, warrants, calls or other rights to
acquire any debt securities of the Partnership or Royale, respectively, or any
of its applicable Subsidiaries; except each of Royale and the Partnership may
from time to time, borrow, repay and reborrow under its revolving credit
facility, and pledge their properties, issue debt securities and amend, modify,
increase, extend, replace or refinance such bank credit facility;
(g)          not pay, discharge or satisfy any material claims, material
liabilities or material obligations (absolute, accrued, asserted or unasserted,
contingent or otherwise), other than the payment, discharge or satisfaction (i)
of any such material claims, material liabilities or material obligations in the
ordinary course of business consistent with past practice or (ii) of material
claims, material liabilities or material obligations reflected or reserved
against in, or contemplated by, the Matrix Financial Statements (or the notes
thereto) or the Royale Financial Statements (or the notes thereto);
(h)          not enter into, amend, modify or renew any employment, consulting,
severance or similar contract with, pay any bonus or grant any material increase
in salary, wage or other compensation or any increase in any employee benefit
to, any of its directors, officers or employees, except in each such case (i) as
may be required by applicable Law, or (ii) to satisfy obligations existing as of
the date hereof pursuant to the terms of contracts that are in effect on the
date hereof;
(i)          except in the ordinary course of business, not materially modify or
amend, or terminate any Material Contract, or waive, relinquish, release or
terminate any material right or material claim, or enter into any contract that
would have been a Material Contract if it had been in existence at the time of
the execution of this Agreement;
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(j)          continue in full force and effect without modification all
Insurance Policies, except as required by applicable Law;
(k)          defend and protect its properties and assets from infringement or
usurpation;
(l)          perform all of its obligations under all Contracts relating to or
affecting its properties, assets or business;
(m)          maintain its books and records in accordance with past practice;
(n)          comply in all material respects with all applicable Laws; and
(o)          not take or permit any action that would cause any of the changes,
events or conditions described in Section 4.08, with respect to Partnership, or
described in Section 5.08, with respect to Royale, to occur.
Section 6.02          Access to Information; Confidentiality; No-Shop.
(a)          Subject to applicable Law relating to the exchange of information,
the parties shall afford to each other and the other’s accountants, counsel,
financial advisors, and sources of financing reasonable access during normal
business hours with reasonable notice, throughout the period from the date
hereof until the Closing, to all of their respective properties, books,
contracts and records (including, but not limited to, Tax Returns) and, during
such period, shall furnish promptly (i) a copy of each report, schedule and
other document filed or received by any of them pursuant to the requirements of
federal or state securities Laws or filed by any of them with the SEC in
connection with the transactions contemplated by this Agreement, such other
information concerning its businesses, properties and personnel as any party
shall reasonably request, and will use reasonable efforts to obtain the
reasonable cooperation of its officers, employees, counsel, accountants,
consultants and financial advisors in connection with the review of such other
information by the parties and their respective representatives.
(b)          Royale, Matrix and the Partnership shall comply with, and shall
cause their respective Representatives to comply with, their respective
obligations under the letter of intent dated July 20, 2016, between Royale and
Matrix (the “Letter of Intent”) with respect to the treatment of Confidential
Information (as defined in the Letter of Intent).  During the Exclusive Period
(as defined in the Letter of Intent), the Partnership will comply with its
obligations under the no-shop provisions of Section 2 thereof, and Royale will
comply with its obligations under the no-shop provisions of Section 3 thereof;
provided that following public announcement of a proposed Transaction (as
defined in the Letter of Intent) involving Royale and the Partnership, the
provisions of the Letter of Intent restricting disclosure of the fact that the
parties are in discussions regarding a Transaction shall no longer apply.
Section 6.03          Registration Statement; Approval by Royale’s Stockholders.
(a)          Royale shall file with the Securities and Exchange Commission (the
“SEC”) and any state securities regulatory agency where required a Registration
Statement on Form S-4 to register the common stock of Royale to be issued as
Exchange Consideration and to provide Proxy Statement/Prospectus to Royale’s
stockholders seeking approval of the Merger.  Royale,
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with the cooperation of the Partnership, shall use its reasonable best efforts
to make effective the Registration Statement on Form S-4, and once effective use
the Proxy Statement/Prospectus to solicit proxies and conduct a meeting of
Royale’s stockholders to obtain the approval of its shareholders for the Merger
and the Exchange.
(b)          Without limiting the generality of the foregoing, the Partnership
and Matrix will furnish Royale the information relating to it required by the
Securities Act and the Exchange Act and the rules and regulations promulgated
thereunder to be set forth in the Registration Statement. Royale shall not file
the Registration Statement or any amendment or supplement thereto without
providing the Partnership a reasonable opportunity to review and comment thereon
(which comments shall be reasonably considered by Royale).  Each of the parties
shall use reasonable best efforts to cause the Registration Statement and the
Proxy Statement/Prospectus to comply with the applicable rules and regulations
promulgated by the SEC, to respond promptly to any comments of the SEC or its
staff and to have the Registration Statement declared effective under the
Securities Act as promptly as practicable after it is filed with the SEC.
(c)          Each party hereto shall promptly furnish to the other party all
information concerning such party and such party’s stockholders or partners, as
applicable, that may be required or reasonably requested in connection with any
action contemplated by this Section 6.03. Royale shall use its reasonable best
efforts to resolve, and each party agrees to consult and cooperate with the
other party in resolving, all SEC comments with respect to the Registration
Statement as promptly as practicable after receipt thereof and to cause the
Registration Statement in definitive form to be cleared by the SEC and mailed to
Royale’s stockholders as promptly as reasonably practicable following filing
with the SEC. Royale shall as soon as reasonably practicable (i) notify the
Partnership of the receipt of any comments from the SEC with respect to the
Registration Statement and any request by the SEC for any amendment to the
Registration Statement or for additional information and (ii) provide the
Partnership with copies of all written correspondence between Royale and its
Representatives, on the one hand, and the SEC, on the other hand, with respect
to the Registration Statement. Each of the parties shall use reasonable best
efforts to cause the Proxy Statement/Prospectus to be mailed to the stockholders
of Royale and the Partners as promptly as practicable after the date on which
the Registration Statement is declared effective under the Securities Act.
(d)          Subject to the terms set forth in this Agreement, Royale shall take
all action necessary to duly call, give notice of, convene and hold a special
meeting of Royale stockholders to consider and vote on this Agreement, the
Mergers and related transactions (the “Royale Stockholders Meeting”) as soon as
reasonably practicable after the date of this Agreement, and, in connection
therewith, Royale shall mail the Proxy Statement/Prospectus to the holders of
Royale Common Stock and Royale Preferred Stock, if any, in advance of such
meeting. Royale shall use reasonable best efforts to (i) solicit from the
holders of Royale Common Stock and the Royale Preferred Stock proxies, in
compliance with all applicable laws, in favor of the adoption of this Agreement
and approval of the Merger and (ii) take all other actions necessary or
advisable to secure the vote or consent of the holders of Royale Common Stock
and Royale Preferred Stock, if any, required by applicable Law to obtain such
approval. The Proxy Statement/Prospectus shall notify such Stockholders of their
dissent and appraisal rights pursuant to Chapter 13 of the CCC and include a
copy of Sections 1300, 1302, 1303 and 1304 of the CCC
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and all such other information as the Partnership shall reasonably request, and
shall be sufficient in form and substance to start the thirty (30) day period
during which a Stockholder must demand appraisal of such Stockholder’s capital
stock as contemplated by Section 1301 of the CCC. All materials submitted to the
Stockholders in accordance with this Section 6.03(d) shall be subject to advance
review and reasonable approval by Matrix as general partner on behalf of the
Partnership.  Royale shall keep the Partnership updated with respect to proxy
solicitation results as requested by Matrix.  Notwithstanding anything contained
herein to the contrary, Royale shall not be required to hold Royale Stockholders
Meeting if this Agreement is terminated before the meeting is held.
Section 6.04          Approval of the Partnership and the Partners.
(a)          Subject to the terms set forth in this Agreement, the Partnership
and Matrix shall take all action necessary to seek the written consent of the
Partners to approve this Agreement and related transactions (the “Requisite
Partners’ Consent”) in accordance with the requirements of the Partnership
Charter Documents and the TBOC on or before the time of the Royale Stockholders
Meeting, and, in connection therewith, the Partnership shall mail the Proxy
Statement/Prospectus to the Partners as soon as reasonably practicable after the
date of this Agreement. The Partnership shall use reasonable best efforts to (i)
solicit consents from the Partners, in compliance with all applicable laws, in
favor of the adoption of this Agreement and approval of the Exchange, and (ii)
take all other actions necessary or advisable to secure the vote or consent of
the holders of the Partners required by applicable Law to obtain such approval.
All materials submitted to the Stockholders in accordance with this Section
6.04(a) shall be subject to Royale’s advance review and reasonable approval. 
The Partnership and Matrix shall keep Royale updated with respect to the consent
solicitation results as requested Royale.  Notwithstanding anything contained
herein to the contrary, the Partnership shall not be required to deliver or
continue solicitation of consents from the Partners if this Agreement is
terminated before the Royale Stockholders Meeting is held.
Section 6.05          Certain Pre-Merger Actions of Royale Parties.
(a)          Parent and Royale.  Royale will take all action necessary to cause
each of Parent, Royale and each of their Subsidiaries to perform its obligations
under this Agreement and to consummate the Exchange on the terms and conditions
set forth in this Agreement. Until the Closing, Parent will not carry on any
business or conduct any operations other than the execution of this Agreement,
the Merger Agreement and the performance of its obligations reasonably related
to such agreements.
(b)          Royale Energy Direct Working Interest Trust.  Prior to the Merger,
Royale will cause certain assets and liabilities related to the ownership of
direct working interests in oil and gas properties which are held for the
benefit of third parties to be transferred to a separate, wholly owned
subsidiary of Royale for the benefit of the third party working interest
holders.
Section 6.06          Notice of Certain Events.
(a)          From the date hereof until the Closing, the Partnership shall
promptly notify Royale in writing of:
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(i) any fact, circumstance, event or action the existence, occurrence or taking
of which (A) has had, or could reasonably be expected to have, individually or
in the aggregate, a Partnership Material Adverse Effect, (B) has resulted in, or
could reasonably be expected to result in, any representation or warranty made
by the Partners hereunder not being true and correct, or (C) has resulted in, or
could reasonably be expected to result in, the failure of any of the conditions
set forth in Section 8.01 or 8.02 to be satisfied;
(ii) any notice or other communication from any Person alleging that the consent
of such Person is or may be required in connection with the transactions
contemplated by this Agreement;
(iii) any notice or other communication from any Governmental Authority in
connection with the transactions contemplated by this Agreement; and
(iv) any Actions commenced or, to Matrix’s Knowledge, threatened against,
relating to or involving or otherwise affecting Matrix that, if pending on the
date of this Agreement, would have been required to have been disclosed pursuant
to would have been required to have been disclosed pursuant to Section 4.16 or
that relates to the consummation of the transactions contemplated by this
Agreement.
(b)          From the date hereof until the Closing, Royale shall promptly
notify the Partnership in writing of:
(i) any fact, circumstance, event or action the existence, occurrence or taking
of which (A) has had, or could reasonably be expected to have, individually or
in the aggregate, a Royale Material Adverse Effect, (B) has resulted in, or
could reasonably be expected to result in, any representation or warranty made
by any of the Royale Parties hereunder not being true and correct, or (C) has
resulted in, or could reasonably be expected to result in, the failure of any of
the conditions set forth in Section 8.01 or 8.03 to be satisfied;
(ii) any notice or other communication from any Person alleging that the consent
of such Person is or may be required in connection with the transactions
contemplated by this Agreement;
(iii) any notice or other communication from any Governmental Authority in
connection with the transactions contemplated by this Agreement; and
(iv) any Actions commenced or, to the Knowledge of any of the Royale Parties, is
threatened against, relating to or involving or otherwise affecting any of the
Royale Parties that, if pending on the date of this Agreement, would have been
required to have been disclosed pursuant to Section 5.13 or that relates to the
consummation of the transactions contemplated by this Agreement.
(c)          The receipt of information by any Party pursuant to this Section
6.06 shall not operate as a waiver or otherwise affect any representation,
warranty or agreement given or made
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by any other Party in this Agreement  and shall not be deemed to amend or
supplement the Disclosure Schedules.
Section 6.07          Public Announcements.  In connection with the execution
and delivery of this Agreement, Royale and Matrix shall issue a joint press
release mutually agreed to by Matrix (on behalf of itself, the Partnership and
certain other Matrix LPs) and Royale.  Royale, in its discretion, shall be
entitled to convene an investor conference call in conjunction with the issuance
of such press release.  Except for the press release and such conference call,
no party shall issue or cause the publication of any press release or other
public announcement (to the extent not previously issued or made in accordance
with this Agreement) with respect to this Agreement, the Mergers, the Ancillary
Documents, the Exchanges, or the other transactions contemplated hereby without
the prior written consent of the other parties (which consent shall not be
unreasonably withheld or delayed), except as may be required by Law, including
applicable SEC requirements, applicable fiduciary duties or by any applicable
listing agreement with a mutually agreed national securities exchange (in which
case such party shall not issue or cause the publication of such press release
or other public statement without prior consultation with the other party).
Section 6.08          Governmental Approvals and Consents.
(a)          Each party hereto shall, as promptly as possible, (i) make, or
cause or be made, all filings and submissions  required under any Law applicable
to such party or any of its Affiliates; and (ii) use reasonable best efforts to
obtain, or cause to be obtained, all consents, authorizations, orders and
approvals from all Governmental Authorities that may be or become necessary for
its execution and delivery of this Agreement and the performance of its
obligations pursuant to this Agreement and the Ancillary Documents. Each party
shall cooperate fully with the other party and its Affiliates in promptly
seeking to obtain all such consents, authorizations, orders and approvals. The
parties hereto shall not willfully take any action that will have the effect of
delaying, impairing or impeding the receipt of any required consents,
authorizations, orders and approvals.
(b)          The Partnership and Royale shall use reasonable best efforts to
give all notices to, and obtain all consents from, all third parties that are
described in Section 4.03 and Section 5.03 of the Disclosure Schedules.
(c)          Without limiting the generality of the parties’ undertakings
pursuant to subsections (a) and (b) above, each of the parties hereto shall use
all reasonable best efforts to:
(i) respond to any inquiries by any Governmental Authority regarding antitrust
or other matters with respect to the transactions contemplated by this Agreement
or any Ancillary Document;
(ii) avoid the imposition of any order or the taking of any action that would
restrain, alter or enjoin the transactions contemplated by this Agreement or any
Ancillary Document; and
(iii) in the event any Governmental Order adversely affecting the ability of the
parties to consummate the transactions contemplated by this Agreement or
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any Ancillary Document has been issued, to have such Governmental Order vacated
or lifted.
(d)          All analyses, appearances, meetings, discussions, presentations,
memoranda, briefs, filings, arguments, and proposals made by or on behalf of
either party before any Governmental Authority or the staff or regulators of any
Governmental Authority, in connection with the transactions contemplated
hereunder (but, for the avoidance of doubt, not including any interactions
between Matrix or the Royale Parties and Governmental Authorities in the
ordinary course of business, any disclosure which is not permitted by Law or any
disclosure containing confidential information) shall be disclosed to the other
party hereunder in advance of any filing, submission or attendance, it being the
intent that the parties will consult and cooperate with one another, and
consider in good faith the views of one another, in connection with any such
analyses, appearances, meetings, discussions, presentations, memoranda, briefs,
filings, arguments, and proposals. Each party shall give notice to the other
party with respect to any meeting, discussion, appearance or contact with any
Governmental Authority or the staff or regulators of any Governmental Authority,
with such notice being sufficient to provide the other party with the
opportunity to attend and participate in such meeting, discussion, appearance or
contact.
(e)          Notwithstanding the foregoing, nothing in this Section 6.08 shall
require, or be construed to require, the Partnership or Royale or any of their
Affiliates to agree to (i) sell, hold, divest, discontinue or limit, before or
after the Closing Date, any assets, businesses or interests of Royale, the
Partnership or any of their respective Affiliates; (ii) any conditions relating
to, or changes or restrictions in, the operations of any such assets, businesses
or interests which, in either case, could reasonably be expected to result in a
Partnership Material Adverse Effect or a Royale Material Adverse Effect, or
which would materially and adversely impact the economic or business benefits to
Parent, Royale, Matrix, the Partnership or their respective stockholders or
partners, of the transactions contemplated by this Agreement; or (iii) any
material modification or waiver of the terms and conditions of this Agreement.
Section 6.09          Closing Conditions.  From the date hereof until the
Closing, each party hereto shall use reasonable best efforts to take such
actions as are necessary to expeditiously satisfy the closing conditions set
forth in ARTICLE VIII hereof.
Section 6.10          Subsequent Filings.  Until the earlier of the Closing Date
or the termination of this Agreement, Royale will timely file with the SEC each
form, report and document required to be filed by Royale under the Exchange
Act.  As of their respective dates, none of such reports shall contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.  The audited
consolidated financial statements and unaudited interim financial statements of
Royale included in such reports shall be prepared in accordance with United
States generally accepted accounting principles applied on a consistent basis
(except as may be indicated in the notes thereto) and shall present fairly, in
all material respects, the financial position of Royale and its consolidated
Subsidiaries as at the dates thereof and the results of their operations and
changes in financial position for the periods then ended.
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Section 6.11          Stockholder Litigation.  Royale shall promptly advise
Matrix orally and in writing of any shareholder litigation commenced against
Royale and/or its directors relating to this Agreement, the Royale Merger, the
Matrix Merger and/or the transactions contemplated by this Agreement or the
Ancillary Documents and shall keep the Partnership fully informed regarding any
such shareholder litigation. Royale shall give Matrix the opportunity to consult
with Royale regarding the defense or settlement of any such shareholder
litigation, shall give due consideration the advice of the Partnership with
respect to such shareholder litigation.
Section 6.12          Takeover Statutes.  If any “control share acquisition”,
“fair price”, “moratorium” or other anti-takeover Law becomes or is deemed to be
applicable to Matrix, the Partnership, any of the Royale Parties, this
Agreement, the Merger or any transaction contemplated by hereby or thereby, then
each of the Partnership and the Royale Parties shall grant such approvals and
take such actions as are necessary so that the transactions contemplated hereby
may be consummated as promptly as practicable on the terms contemplated hereby
and otherwise act to render such anti-takeover Law inapplicable to the
foregoing.
Section 6.13          Listing on National Securities Exchange.  Royale, Parent
and Matrix shall each use their reasonable best efforts to have the Parent
Common Stock to be issued in connection with the Exchange and the Merger ( as
well as the Parent Common Stock to be issued upon the other LP Exchanges,
conversion of the Series B Preferred Stock which is to be issued in connection
with the Preferred Exchange, and Parent Common Stock to be issued upon exercise
of outstanding warrants and options to purchase Royale Common Stock), upon
effectiveness of the Royale Merger, listed or approved for listing upon notice
of issuance on a national securities exchange.
Section 6.14          Further Assurances.  Each party shall, at any time and
from time to time after the date hereof, upon reasonable request by another
party and without further consideration, execute and deliver such instruments or
other documents and take such further action as may be reasonably required in
order to perfect any other undertaking made by the party hereunder, or to vest,
perfect or confirm of record or otherwise, the equity interests assigned in
connection with the Exchange.
Section 6.15          Reserved.
Section 6.16          Certain Tax Matters.
(a)          Parent, Royale, Matrix and the Partnership shall each use their
reasonable best efforts to cause the Mergers and Exchanges (“Contributions”) to
qualify as a tax-deferred capital contribution within the meaning of Section 351
of the I.R.C., and before or after the Closing, none of Parent, Royale, Matrix
or the Partnership shall knowingly take any action, cause any action to be
taken, fail to take any action or cause any action to fail to be taken which
action or failure to act could cause the Contributions to fail to qualify under
Section 351 of the I.R.C.
(b)          Parent, Royale, Matrix and the Partnership shall comply with the
record keeping and information reporting requirements set forth in U.S. Treasury
Regulation Section 1.351-3.
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(c)          Royale and the Partnership shall each use its reasonable best
efforts to obtain the Tax opinions set forth in Sections 7.02(g) and 7.03(f).
(d)          Officers of Royale and Matrix, as general partner of the
Partnership, shall execute and deliver, respectively, to Strasburger & Price,
LLP, Tax counsel for Royale, and Porter Hedges LLP, Tax counsel for Matrix,
certificates substantially in the form agreed to by the parties and such law
firms at such time or times as may reasonably be requested by such law firms,
including (i) prior to the time the Registration Statement is declared effective
by the SEC, (ii) prior to the Matrix Merger Effective Time and the Royale Merger
Effective Time, and (iii) prior to Closing (if not Closing does not occur
substantially concurrently with such merger effective times), in connection with
such Tax counsel’s respective delivery of opinions pursuant to Sections 7.02(g)
and 7.03(f).  Each of Royale and Matrix shall use its reasonable best efforts
not to take or cause to be taken any action that would cause to be untrue (or
fail to take or cause not to be taken any action which would cause to be untrue)
any of the certifications and representations included in the certificates
described in this Section 6.16.
(e)          For federal income tax purposes, Parent, Royale, Matrix and the
Partnership shall treat:
(i) the Matrix Stockholders as the owners of the Matrix Common Stock surrendered
by them in the Matrix Merger through the close of the day on which the Matrix
Merger Effective Time occurs;
(ii) the Royale Stockholders as the owners of the Royale Shares surrendered by
them in the Royale Merger through the close of the day on which the Royale
Merger Effective Time occurs;
(iii) the Matrix LP Holders (including the Partners) as the owners of their
respective limited partnership interests in the Matrix LPs surrendered by them
in the LP Exchanges through the close of the Closing Date for the applicable LP
Exchange Agreement;
(iv) the holders of the Matrix Preferred Interests as the owners of their
respective Matrix Preferred Interests surrendered by them in the Preferred
Exchange through the close of the Closing Date for the Preferred Exchange
Agreement;
(v) the Matrix Operator Holders as the owners of the shares of capital stock of
Matrix Operator surrendered by them in the Matrix Operator Stock Exchange
through the close of the Closing Date for the Matrix Operator Stock Exchange
Agreement;
(vi) each Matrix LP as terminating pursuant to Section 708 of the IRC as of the
close of the Closing Date for the applicable LP Exchange Agreement, and
(vii) the Matrix Operator as an S corporation through the close of the Closing
Date for the Matrix Operator Stock Exchange Agreement (on which date its taxable
year shall end ), and as a C corporation eligible to join in filing a
consolidated
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federal income tax return with Parent commencing at the beginning of the day
following such Closing Date.
Section 6.17          Matrix Senior Indebtedness.  Parent, Royale, Matrix and
the Partnership shall use reasonable best efforts to obtain the consent of the
agent and lenders under Matrix’s Term Loan Agreement, dated effective June 15,
2016 (the “Matrix Senior Indebtedness”, among Matrix, Matrix Operator and the
Matrix LPs (including the Partnership), as borrowers party thereto, the
administrative agent party thereto, and the lenders from time to time party
thereto, and any other consent under any related loan and security documents, to
the transactions contemplated by this Agreement, and to cause Parent to assume
all of the obligations of Matrix and the Partnership under the Matrix Senior
Indebtedness and any related loan and security documents.  In the alternative,
Parent, Royale, Matrix and the Partnership shall use reasonable best efforts to
cause all obligations with respect to the Matrix Senior Indebtedness to be paid
in full pursuant to the terms thereof; provided, however, that if the Matrix
Senior Indebtedness shall be refinanced under the terms of any form of new
senior Indebtedness, then such new senior Indebtedness shall be on terms and
conditions reasonably acceptable to Royale, Matrix and the Partnership.
Section 6.18          Consents to Transfer of MI LP Interests.  Each of the
Partners who, collectively, are all of the limited and general partners of the
Partnership, hereby consents to the sale, assignment and transfer of all of the
MI LP Interests pursuant to the terms of this Exchange Agreement and agrees that
the Parent, as transferee of all of the MI LP Interests, shall, upon
consummation of such assignment, be admitted as a substituted limited partner of
the Partnership, with all of the rights and privileges of each limited partner
assigning such interest to Parent, and each Partner hereby waives all notice,
rights of first offer or first refusal and all other rights whatsoever to deny,
object, delay, approve, or take any other action with respect to the assignment
of the MI LP Interests pursuant to the terms of this Exchange Agreement or the
admission of Parent as a limited partner of the Partnership.  Each Partner
further consents and agrees that the sale, assignment and transfer of all of the
MI LP Interests pursuant to the terms of this Exchange Agreement shall not cause
(and shall be deemed not to cause) the termination or dissolution of the
Partnership or to trigger the right of any person to elect the termination or
dissolution of the Partnership, and that the Partnership shall continue in full
force and effect following the Exchange in accordance with terms of its
Partnership Charter Documents, with Parent as substituted limited partner and
Matrix continuing as general partner of the Partnership.
Section 6.19          Partner Indebtedness and Receivables.  On or prior to
Closing the Partners shall cause to be paid in full in cash all accounts
payable, notes payable and advances payable by any Partner to the Partnership
and the Partnership shall pay in full in cash all accounts payable, notes
payable and advances payable by the Partnership to any Partner.
Section 6.20          Release to be Effective upon Closing.  Effective upon
Closing, and without further action on the part of any party or other person,
(a)          each Partner does hereby (i) release, acquit and forever discharge
the Partnership from any and all liabilities, obligations, claims, demands,
actions or causes of action arising from or relating to any event, occurrence,
act, omission or condition occurring or existing on or prior to the Closing
Date, including, without limitation, any claim for indemnity or contribution
from
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the Partnership in connection with the obligations or liabilities of the
Partners hereunder; (ii) waive all breaches, defaults or violations of any
agreement applicable to its MI LP Interest and agree that any and all such
agreements are terminated as of the Closing Date, and (iii) waive any and all
preemptive or other rights to acquire any partnership interest of the
Partnership and release any and all claims arising in connection with any prior
default, violation or failure to comply with or satisfy any such preemptive or
other rights.
(b)          the Partnership does hereby i) release, acquit and forever
discharge each Partner from any and all liabilities, obligations, claims,
demands, actions or causes of action arising from or relating to any event,
occurrence, act, omission or condition occurring or existing on or prior to the
Closing Date, including, without limitation, any claim for indemnity or
contribution from each Partner in connection with the obligations or liabilities
of the Partnership or any obligations or liabilities of the Partners to the
Partnership; (ii) waive all breaches, defaults or violations of any agreement
applicable to such Partner’s MI LP Interest and agrees that any and all such
agreements are terminated as of the Closing Date, and (iii) waive any and all
redemption, repurchase rights, rights of first refusal or other rights to
acquire any partnership interest of any Partner and releases any and all claims
arising in connection with any prior default, violation or failure to comply
with or satisfy any such rights.
ARTICLE VII
Tax Matters
Section 7.01          Tax Covenants.
(a)          Without the prior written consent of Royale, prior to the Closing,
the Partnership, its Representatives and the Partners shall not make, change or
rescind any Tax election, amend any Tax Return or take any position on any Tax
Return, take any action, omit to take any action or enter into any other
transaction that would have the effect of increasing the Tax liability or
reducing any Tax asset of the Partnership or Parent in respect of any
Post-Closing Tax Period.
(b)          Without the prior written consent of the Partnership, prior to the
Closing, Royale, its Representatives and the Royale Stockholders shall not make,
change or rescind any Tax election, amend any Tax Return or take any position on
any Tax Return, take any action, omit to take any action or enter into any other
transaction that would have the effect of increasing the Tax liability or
reducing any Tax asset of Royale or Parent in respect of any Post-Closing Tax
Period.
(c)          The Royale Parties and the Partnership shall cooperate in the
preparation, execution and filing of all Tax Returns or other documents with
respect to all transfer, documentary, sales, use, stamp, registration, value
added and other such Taxes and fees (including any penalties and interest)
incurred in connection with this Agreement and the Ancillary Documents
(including any real property transfer Tax and any other similar Tax) that are
required or permitted to be filed on or before the Closing.  Each of the Royale
Parties and the Partnership shall pay, without deduction from any amount payable
to the Partners or the Royale Stockholders and without reimbursement from the
other party, any such Taxes or fees imposed on it which become payable in
connection with the Mergers.
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Section 7.02          Termination of Existing Tax Sharing Agreements.  Any and
all existing Tax sharing agreements (whether written or not) binding upon the
Partnership shall be terminated as of the Closing Date. After such date neither
the Partnership nor any of its Representatives shall have any further rights or
liabilities thereunder.
Section 7.03          Tax Returns.
(a)          The Partnership shall prepare and timely file, or cause to be
prepared and timely filed, all Tax Returns required to be filed by it that are
due on or before the Closing Date (taking into account any extensions), and
shall timely pay all Taxes that are due and payable on or before the Closing
Date (taking into account any extensions). Any such Tax Return shall be prepared
in a manner consistent with past practice (unless otherwise required by Law).
(b)          Parent shall prepare and timely file, or cause to be prepared and
timely filed, all Tax Returns required to be filed by the Partnership after the
Closing Date with respect to a Pre-Closing Tax period and for any Straddle
Period. Any such Tax Return shall be prepared in a manner consistent with past
practice (unless otherwise required by Law) and, if it is an income or other
material Tax Return, shall be submitted by Parent to Partner Representative
(together with schedules, statements and, to the extent requested by Partner
Representative, supporting documentation) at least 50 days prior to the due date
(including extensions) of such Tax Return. If Partner Representative objects to
any item on any such Tax Return that relates to a Pre-Closing Tax Period, it
shall, within 20 days after delivery of such Tax Return, notify Parent in
writing that it so objects, specifying with particularity any such item and
stating the specific factual or legal basis for any such objection. If a notice
of objection shall be duly delivered, Parent and Partner Representative shall
negotiate in good faith and use their reasonable best efforts to resolve such
items. If Parent and Partner Representative are unable to reach such agreement
within ten days after receipt by Parent of such notice, the disputed items shall
be resolved by mutually acceptable nationally recognized accounting firm (the
“Independent Accountant”) and any determination by the Independent Accountant
shall be final. The Independent Accountant shall resolve any disputed items
within 30 days of having the item referred to it pursuant to such procedures as
it may require. If the Independent Accountant is unable to resolve any disputed
items before the due date for such Tax Return, the Tax Return shall be filed as
prepared by Parent and then amended to reflect the Independent Accountant’s
resolution. The costs, fees and expenses of the Independent Accountant shall be
borne by Parent. The preparation and filing of any Tax Return of the Partnership
that does not relate to a Pre-Closing Tax period or Straddle Period shall be
exclusively within the control of Parent.
(c)          For purposes of this ARTICLE VII, Johnny Jordan shall be the
“Partner Representative” unless he earlier resigns or retires from such
position, at which time a new Partner Representative shall be appointed by the
Partners formerly owning a majority of the  Percentage Interest in the
Partnership.
(d)          None of Parent, Royale, and the Partnership and their respective
Affiliates shall file any amended return, carryback claim, or other adjustment
request with respect to Royale, the Partnership, the Matrix LPs, the Matrix
Operator, or Matrix Pipeline, L.P. for any Pre-Closing Tax period unless such
action is required by Law or Governmental Order or unless such action is
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undertaken pursuant to the written consent of Royale and the Partner
Representative, which consent shall not be unreasonably withheld or delayed.
Section 7.04          Straddle Period.  In the case of Taxes that are payable
with respect to a taxable period that begins before and ends after the Closing
Date (each such period, a “Straddle Period”), the portion of any such Taxes that
are treated as Pre-Closing Taxes for purposes of this Agreement shall be:
(a)          in the case of Taxes (i) based upon, or related to, income,
receipts, profits, wages, capital or net worth, (ii) imposed in connection with
the sale, transfer or assignment of property, or (iii) required to be withheld,
deemed equal to the amount which would be payable if the taxable year ended with
the Closing Date; and
(b)          in the case of other Taxes, deemed to be the amount of such Taxes
for the entire period multiplied by a fraction the numerator of which is the
number of days in the period ending on the Closing Date and the denominator of
which is the number of days in the entire period.
Section 7.05          Contests.  Parent agrees to give written notice to Partner
Representative of the receipt of any written notice by the Partnership, Parent
or any of Royale’s Affiliates which involves the assertion of any claim, or the
commencement of any Action, with respect to Taxes for a Pre-Closing Tax period
(a “Tax Claim”).
Section 7.06          Cooperation and Exchange of Information. The Partner
Representative, the Partnership and Parent shall provide each other with such
cooperation and information as either of them reasonably may request of the
others in filing any Tax Return pursuant to this ARTICLE VII or in connection
with any audit or other proceeding in respect of Taxes of the Partnership. Such
cooperation and information shall include providing copies of relevant Tax
Returns or portions thereof, together with accompanying schedules, related work
papers and documents relating to rulings or other determinations by tax
authorities. Each of Partner Representative, the Partnership and Parent shall
retain all Tax Returns, schedules and work papers, records and other documents
in its possession relating to Tax matters of the Partnership for any taxable
period beginning before the Closing Date until the expiration of the statute of
limitations of the taxable periods to which such Tax Returns and other documents
relate, without regard to extensions except to the extent notified by any of the
other parties in writing of such extensions for the respective Tax periods.
Prior to transferring, destroying or discarding any Tax Returns, schedules and
work papers, records and other documents in its possession relating to Tax
matters of the Partnership for any taxable period beginning before the Closing
Date, Partner Representative, the Partnership or Parent (as the case may be)
shall provide the other parties with reasonable written notice and offer the
other parties the opportunity to take custody of such materials.
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ARTICLE VIII
Conditions to Closing
Section 8.01          Conditions to Obligations of All Parties.
The obligations of each party to consummate the transactions contemplated by
this Agreement shall be subject to the fulfillment, at or prior to the Closing,
of each of the following conditions:
(a)          This Agreement and the Exchange and shall have been duly adopted
and approved by the Requisite Partners’ Consent and the Other Exchanges shall
have been duly adopted and approved by the Other Exchange Approvals.
(b)          This Agreement, the Royale Merger, the Matrix Merger, the issuance
of Parent Common Stock pursuant to (i) the Royale Merger, (ii) the Matrix
Merger, (iii) the LP Exchange Agreements, (iv) the Matrix Operator Stock
Exchange Agreement, and the issuance of Series B Preferred Stock pursuant to the
Preferred Exchange Agreement, shall have been duly adopted and approved by the
Requisite Royale Vote, the Requisite Matrix Vote and the Requisite Exchange
Approvals in accordance with the CCC, TBOC and the DGCL, as applicable.
(c)          No Governmental Authority shall have enacted, issued, promulgated,
enforced or entered any Governmental Order which is in effect and has the effect
of making the transactions contemplated by this Agreement illegal, otherwise
restraining or prohibiting consummation of such transactions or causing any of
the transactions contemplated hereunder to be rescinded following completion
thereof.
(d)          the Registration Statement shall be declared effective under the
Securities Act, and no stop order suspending the effectiveness of the
Registration Statement shall have been issued by the SEC and no proceeding for
that purpose shall have been initiated by the SEC and not concluded or
withdrawn;
(e)          the issuance of the shares of Parent Common Stock to be issued as
the Capital Stock Consideration in connection with the Mergers and the
Exchanges, and the shares of Parent Common Stock issuable on conversion of the
Series B Preferred Stock to be issued in connection with the Preferred Exchange
Consideration, shall have been appropriately registered under the Securities Act
and registered, qualified or qualified for exemption under applicable state
securities Laws;
(f)          the Partnership shall have received all consents, authorizations,
orders and approvals from the Governmental Authorities referred to in Section
4.03 in form and substance reasonably satisfactory to Royale and Matrix, and no
such consent, authorization, order and approval shall have been revoked.
(g)          Royale shall have received all consents, authorizations, orders and
approvals from the Governmental Authorities referred to in Section 5.03, in each
case, in form and substance reasonably satisfactory to Royale and the
Partnership, and no such consent, authorization, order and approval shall have
been revoked.
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(h)          All conditions to the Mergers have been satisfied or waived by the
parties.
Section 8.02          Conditions to Obligations of Royale and Parent. The
obligations of Royale and Parent to consummate the transactions contemplated by
this Agreement shall be subject to the fulfillment or Royale’s waiver, at or
prior to the Closing, of each of the following conditions:
(a)          Other than the representations and warranties of the Partnership
contained in Section 4.01, Section 4.02(a), Section 4.03, Section 4.04, Section
4.05, Section 4.21, Section 4.24 and Section 4.25, the representations and
warranties of the Partnership contained in this Agreement, the Partner Related
Documents, the Partnership Related Documents and any certificate or other
writing delivered pursuant hereto shall be true and correct in all respects (in
the case of any representation or warranty qualified by materiality or
Partnership Material Adverse Effect) or in all material respects (in the case of
any representation or warranty not qualified by materiality or Partnership
Material Adverse Effect, as so qualified) on and as of the date hereof and on
and as of the Closing Date with the same effect as though made at and as of such
date (except those representations and warranties that address matters only as
of a specified date, the accuracy of which shall be determined as of that
specified date in all respects). The representations and warranties of the
Partnership contained in Section 4.01, Section 4.02(a), Section 4.03, Section
4.04, Section 4.05, Section 4.21, Section 4.24 and Section 4.25,, shall be true
and correct in all respects on and as of the date hereof and on and as of the
Closing Date with the same effect as though made at and as of such date (except
those representations and warranties that address matters only as of a specified
date, the accuracy of which shall be determined as of that specified date in all
respects).
(b)          The Partnership shall have duly performed and complied in all
material respects with all agreements, covenants and conditions required by this
Agreement and each of the Partnership Documents to be performed or complied with
by it prior to or on the Closing Date; provided, that, with respect to
agreements, covenants and conditions that are qualified by materiality, the
Partnership shall have performed such agreements, covenants and conditions, as
so qualified.
(c)          No Action shall have been commenced against any of the Royale
Parties, the Partnership or Matrix, which would prevent the Closing. No
injunction or restraining order shall have been issued by any Governmental
Authority, and be in effect, which restrains or prohibits any transaction
contemplated hereby.
(d)          All approvals, consents and waivers that are listed on Section 4.03
of the Partnership Disclosure Schedules shall have been received, and executed
counterparts thereof shall have been delivered to Royale at or prior to the
Closing.
(e)          From the date of this Agreement, there shall not have occurred any
Partnership Material Adverse Effect, nor shall any event or events have occurred
that, individually or in the aggregate, with or without the lapse of time, could
reasonably be expected to result in a Partnership Material Adverse Effect.
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(f)          The Royale Board shall have received an opinion from Northland
Capital Markets to the effect that, as of the date of this Agreement and based
upon and subject to the qualifications and assumptions set forth therein, the
terms of the Merger are fair, from a financial point of view, to Royale and its
shareholders, and such opinion shall not have been rescinded or revoked.
(g)          Royale shall have received the opinion of Strasburger & Price, LLP,
counsel to Royale, in form and substance reasonably satisfactory to Royale, on
the date on which the Registration Statement is filed and on the Closing Date,
in each case dated as of such respective date, rendered on the basis of facts,
representations and assumptions set forth in such opinion and the certificates
obtained from officers of Matrix, Royale and Parent, all of which are consistent
with the state of facts existing as of the date on which the Registration
Statement is filed and the Royale Merger Effective Time, as applicable, to the
effect that (i) the Royale Merger will qualify for nonrecognition of gain or
loss under  Section 351 of the IRC.  In rendering the opinion described in this
Section 8.02(g), Strasburger & Price, LLP shall have received and may rely upon
the certificates and representations referred to in Section 6.16.
(h)          The Partnership shall have delivered each of the closing
deliverables set forth in Section 8.04(a).
(i)          The lenders and the administrative agent who are party to the
Matrix Senior Indebtedness and any related loan and security documents shall
have consented to assumption of the Matrix Senior Indebtedness and any related
loan and security documents by the Parent or the Matrix Senior Indebtedness and
any related loan shall have been refinanced or paid off in accordance with
Section 6.17.
(j)          Holders of no more than 5.0% of the outstanding shares of Matrix
Common Stock as of immediately prior to the Matrix Merger Effective Time, in the
aggregate, shall have exercised, or remain entitled to exercise, statutory
appraisal rights pursuant to Section 1301 of the CCC with respect to such shares
of Matrix Common Stock in connection with the Matrix Merger.
Section 8.03          Conditions to Obligations of Matrix.  The obligations of
the Partnership to consummate the transactions contemplated by this Agreement
shall be subject to the fulfillment or the Partnership’s waiver, at or prior to
the Closing, of each of the following conditions:
(a)          Other than the representations and warranties of the Royale Parties
contained in Section 5.01, Section 5.02(a), Section 5.03, Section 5.04, Section
5.05, Section 5.18, Section 5.21 and Section 5.22, the representations and
warranties of the Royale Parties contained in this Agreement, the Ancillary
Documents and any certificate or other writing delivered pursuant hereto shall
be true and correct in all respects (in the case of any representation or
warranty qualified by materiality or Material Adverse Effect, as so qualified)
or in all material respects (in the case of any representation or warranty not
qualified by materiality or Material Adverse Effect) on and as of the date
hereof and on and as of the Closing Date with the same effect as though made at
and as of such date (except those representations and warranties that address
matters only as of a specified date, the accuracy of which shall be determined
as of that specified
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date in all respects). The representations and warranties of the Royale Parties
contained in Section 5.01, Section 5.02(a), Section 5.03, Section 5.04, Section
5.05, Section 5.18, Section 5.21 and Section 5.22 shall be true and correct in
all respects on and as of the date hereof and on and as of the Closing Date with
the same effect as though made at and as of such date (except those
representations and warranties that address matters only as of a specified date,
the accuracy of which shall be determined as of that specified date in all
respects).
(b)          The Royale Parties shall have duly performed and complied in all
material respects with all agreements, covenants and conditions required by this
Agreement and each of the Ancillary Documents to be performed or complied with
by them prior to or on the Closing Date; provided, that, with respect to
agreements, covenants and conditions that are qualified by materiality, the
Royale Parties shall have performed such agreements, covenants and conditions,
as so qualified, in all respects.
(c)          No injunction or restraining order shall have been issued by any
Governmental Authority, and be in effect, which restrains or prohibits any
material transaction contemplated hereby.
(d)          All approvals, consents and waivers that are listed on Section 5.03
of the Royale Disclosure Schedules shall have been received, and executed
counterparts thereof shall have been delivered to Matrix at or prior to the
Closing.
(e)          From the date of this Agreement, there shall not have occurred any
Royale Material Adverse Effect, nor shall any event or events have occurred
that, individually or in the aggregate, with or without the lapse of time, could
reasonably be expected to result in a Royale Material Adverse Effect.
(f)          Matrix shall have received the opinion of Porter Hedges LLP,
counsel to Matrix, in form and substance reasonably satisfactory to Matrix, on
the date on which the Registration Statement is filed and on the Closing Date,
in each case dated as of such respective date, rendered on the basis of facts,
representations and assumptions set forth in such opinion and the certificates
obtained from officers of Matrix, Royale and Parent, all of which are consistent
with the state of facts existing as of the date on which the Registration
Statement is filed and the Matrix Merger Effective Time, as applicable, to the
effect that (i) the Matrix Merger and the Exchanges will qualify for
nonrecognition of gain or loss under Section 351 of the IRC.  In rendering the
opinion described in this Section 8.03(f), Porter Hedges LLP shall have received
and may rely upon the certificates and representations referred to in Section
6.16.
(g)          Royale shall have delivered each of the closing deliverables set
forth in Section 8.04(b).
(h)          Royale shall have an aggregate cash balance in excess of 65% of its
deferred drilling obligation immediately prior to the Closing Date.
(i)          The lenders and the administrative agent who are party to the
Matrix Senior Indebtedness and any related loan and security documents shall
have consented to assumption of the Matrix Senior Indebtedness and any related
loan and security documents by the Parent or the
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Matrix Senior Indebtedness and any related loan shall have been paid off in
accordance with Section 6.17.
(j)          No later than the earlier of (i) the time of the Royale
Stockholders Meeting, (ii) the time of the next annual meeting of stockholders
of Royale, or (iii) August 2, 2017, a majority of the then-current stockholders
of Royale shall have approved the conversion of $1,580,000 aggregate principal
amount of the convertible notes of Royale issued on August 2, 2016 (the “Royale
Convertible Notes”), representing all of the aggregate principal amount of such
Royale Convertible Notes, into Royale Common Stock or Parent Common Stock, as
applicable, pursuant to the terms and conditions of the Royale Convertible
Notes.
(k)          Holders of no more than 5.0% of the outstanding shares of Royale
Common Stock as of immediately prior to the Royale Merger Effective Time, in the
aggregate, shall have exercised, or remain entitled to exercise, statutory
appraisal rights pursuant to Section 1301 of the CCC with respect to such shares
of Royale Common Stock in connection with the Royale Merger or any of the
Exchanges.
Section 8.04          Closing Deliverables.
(a)          At or prior to the Escrow Closing, the Partnership shall deliver to
Royale or, if otherwise provided below, to the Escrow Agent, the following, as
provided below:
(i) a certificate, dated the Closing Date and signed by a duly authorized
officer of the general partner of the Partnership that each of the conditions
set forth in Section 8.02(a) and Section 8.02(b) have been satisfied;
(ii) a certificate of the Secretary or an Assistant Secretary (or equivalent
officer) of the general partner of the Partnership certifying (1) all
resolutions adopted by the Matrix Board authorizing the execution, delivery and
performance of this Agreement by Matrix, as general partner of the Partnership,
and consummation of the transactions contemplated hereby, (2) that each of the
Partners has executed and delivered the Requisite Partners’ Consent, that all
resolutions of the Matrix Board and all authorizations provided by each Partner
in connection with the Requisite Partners’ Consent are in full force and effect
without modification or amendment;
(iii) a partnership certificate representing all of the outstanding MI LP
Interests and properly executed and completed Letters of Transmittal with
respect thereto, in the form attached to Exhibit D (“Letters of Transmittal”),
shall be delivered by the Partners to the Escrow Agent.  In addition, the
Partners shall execute and deliver to Royale, and shall cause the Partnership to
execute and deliver to Royale, the documents, certificates, opinions,
instruments and agreements required to be executed and delivered by the
Partnership or its Partners at the Closing as contemplated hereby or as may be
reasonably requested by the Parent and shall deliver or cause to be delivered
the documents and evidence required under this Agreement.
(iv) a certificate of the Secretary or an Assistant Secretary (or equivalent
officer) of the general partner of the Partnership certifying the names and
signatures of the officers of the general partner authorized to sign this
Agreement, the
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Partnership Related Documents and the other documents to be delivered hereunder
and thereunder;
(v) a good standing certificate (or its equivalent) from the secretary of state
or similar Governmental Authority of the jurisdiction under the Laws in which
the Partnership is organized;
(vi) the Section 351 Plan;
(vii) certificates of non-foreign status delivered by each Partner of the
Partnership under Section 1445 of the IRC; and
(viii) such other documents or instruments as Royale reasonably requests and are
reasonably necessary to consummate the transactions contemplated by this
Agreement.
(b)          At the Closing, Royale shall deliver to the Partnership (or such
other Person as may be specified herein) the following:
(i) instructions to Royale’s transfer agent to issue and deliver to the Partners
the Exchange Consideration to be issued as provided in ARTICLE II;
(ii) instructions to Royale’s transfer agent to issue and deliver to the holders
of Matrix Preferred Interests the Preferred Exchange Consideration;
(iii) evidence that the Matrix Senior Indebtedness shall have been assumed by
Parent or paid off as of the Closing Date in accordance with Section 6.17;
(iv) a certificate, dated the Closing Date and signed by a duly authorized
officer of each Royale Party, that each of the conditions set forth in Section
8.03(a) and Section 8.03(b) have been satisfied;
(v) a certificate of the Secretary or an Assistant Secretary (or equivalent
officer) of the Royale Parties certifying that attached thereto are true and
complete copies of all resolutions adopted by the board of directors of the
Royale Parties authorizing the execution, delivery and performance of this
Agreement and the Ancillary Documents and the consummation of the transactions
contemplated hereby and thereby, and that all such resolutions are in full force
and effect and are all the resolutions adopted in connection with the
transactions contemplated hereby and thereby;
(vi) a certificate of the Secretary or an Assistant Secretary (or equivalent
officer) of the Royale Parties certifying the names and signatures of the
officers of the Royale Parties authorized to sign this Agreement, the Ancillary
Documents and the other documents to be delivered hereunder and thereunder;
(vii) evidence of the establishment of a new Subsidiary and the transfer of all
of the assets related to the DWI Business of Royale (including assets held in
trust for its investors);
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(viii) the Section 351 Plan;
(ix) employment agreements executed by Parent and each of Jonathan Gregory,
Donald Hosmer,  Stephen Hosmer, Johnny Jordan, Joe Paquette and Jay Sheevel, all
in a form reasonably acceptable to Royale and Matrix;
(x) certificates or other evidence reasonably satisfactory to the Partnership
confirming that none of the Royale Stockholders owning more than 5% of the
number of shares of Royale Common Stock outstanding immediately before the
Royale Merger is a “foreign person” within the meaning of Treasury Regulation §
1445-2(b); and
(xi) such other documents or instruments as the Partnership reasonably requests
and are reasonably necessary to consummate the transactions contemplated by this
Agreement.
(c)          At the Closing, provided that (i) the conditions of this ARTICLE
VIII have been fulfilled to the reasonable satisfaction of each Party entitled
to satisfaction thereof, and(ii) each of the deliveries required by Section
8.04(a) and Section 8.04(b) have been made in accordance with such requirements,
Royale and the Partnership shall provide joint written instructions to the
Escrow Agent to release and deliver to Royale or its designee all of the Letters
of Transmittal and partnership certificates held in escrow by Escrow Agent
pursuant to this Agreement.
ARTICLE IX
Termination
Section 9.01          Termination.  This Agreement may be terminated at any time
prior to the Closing:
(a)          by the mutual written consent of the Partnership and Royale;
(b)          by Royale by written notice to the Partnership if:
(i) no Royale Party is then in material breach of any provision of this
Agreement and there has been a breach, inaccuracy in or failure to perform any
representation, warranty, covenant or agreement made by the Partnership pursuant
to this Agreement that would give rise to the failure of any of the conditions
specified in ARTICLE VIII and such breach, inaccuracy or failure has not been
cured by the Partnership within 30 days of the Partnership’s receipt of written
notice of such breach from Royale; or
(ii) any of the conditions set forth in Section 8.01 or Section 8.02 shall not
have been fulfilled by February 28, 2018 (the “Outside Date”), or if it becomes
impossible or extremely unlikely for any such conditions to be fulfilled by the
Outside Date, unless such failure shall be due to the failure of the Royale
Parties to perform or comply with any of the covenants, agreements or conditions
hereof to be performed or complied with by it prior to the Closing;
(c)          by the Partnership by written notice to Royale if:
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(i) the Partnership is not then in material breach of any provision of this
Agreement and there has been a breach, inaccuracy in or failure to perform any
representation, warranty, covenant or agreement made by any Royale Party
pursuant to this Agreement that would give rise to the failure of any of the
conditions specified in ARTICLE VIII and such breach, inaccuracy or failure has
not been cured by such Royale Party within 30 days of Royale’s receipt of
written notice of such breach from the Partnership; or
(ii) any of the conditions set forth in Section 8.01 or Section 8.03 shall not
have been fulfilled by the Outside Date, or if it becomes impossible or
extremely unlikely for any such conditions to be fulfilled by the Outside Date,
unless such failure shall be due to the failure of the Partnership to perform or
comply with any of the covenants, agreements or conditions hereof to be
performed or complied with by it prior to the Closing; or
(d)          by either Royale or the Partnership if:
(i) the Merger has not been consummated on or before the Outside Date; provided,
that the right to terminate this agreement pursuant to this subsection shall not
be available to any party whose breach of any representation, warranty, covenant
or agreement set forth in this Agreement has been the cause of, or resulted in,
the failure of the Closing to be consummated on or before the Outside Date.
(ii) there shall be any Law that makes consummation of the transactions
contemplated by this Agreement illegal or otherwise prohibited or any
Governmental Authority shall have issued a Governmental Order restraining or
enjoining the transactions contemplated by this Agreement, and such Governmental
Order shall have become final and non-appealable;
(iii) this Agreement has been submitted to the stockholders of Royale for
adoption at a duly convened Royale Stockholders Meeting and the Requisite Royale
Vote shall not have been obtained at such meeting (including any adjournment or
postponement thereof);
(iv) this Agreement has been submitted to the stockholders of Matrix for
adoption at a duly convened Matrix Stockholders Meeting (or as a written consent
in lieu of such meeting) and the Requisite Matrix Vote shall not have been
obtained at such meeting (including any adjournment or postponement thereof) or
by such written consent; or
(v) this Agreement has been submitted to the Partners of the Partnership for
adoption and the Requisite Partners’ Consent shall not have been obtained at
such meeting (including any adjournment or postponement thereof) or by a written
consent.
Section 9.02          Effect of Termination.  In the event of the termination of
this Agreement in accordance with this ARTICLE IX, written notice thereof shall
be given to the other party or parties, specifying the provision hereof pursuant
to which such termination is made, and there
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shall be no liability or further obligation under this Agreement on the part of
the Royale Parties or the Partnership, or their respective officers or
directors, and all obligations under this Agreement shall forthwith become void
and there shall be no liability on the part of any party hereto, except:
(a)          Royale and the Partnership shall comply with, and shall cause their
respective Representatives to comply with, all of their respective obligations
with respect to confidential information set forth in the Letter of Intent,
which obligations shall survive the termination of this Agreement in accordance
with the terms set forth therein;
(b)          as set forth in this ARTICLE IX, and ARTICLE X hereof; and
(c)          that nothing herein shall relieve any party hereto from liability
for fraud, or for any willful breach of any provision hereof.
ARTICLE X
Miscellaneous
Section 10.01          Expenses.  Except as otherwise expressly provided herein,
all costs and expenses, including, without limitation, fees and disbursements of
counsel, financial advisors and accountants, incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such costs and expenses, whether or not the Closing shall have
occurred; provided, however, Royale and Matrix shall be equally responsible for
all filing and other similar fees payable in connection with any filings or
submissions under the HSR Act.
Section 10.02          Notices.  All notices, requests, consents, claims,
demands, waivers and other communications hereunder shall be in writing and
shall be deemed to have been given (a) when delivered by hand (with written
confirmation of receipt); (b) when received by the addressee if sent by a
nationally recognized overnight courier (receipt requested); (c) on the date
sent by facsimile or e-mail of a PDF document (with confirmation of
transmission) if sent during normal business hours of the recipient, and on the
next Business Day if sent after normal business hours of the recipient or (d) on
the third day after the date mailed, by certified or registered mail, return
receipt requested, postage prepaid. Such communications must be sent to the
respective parties at the following addresses (or at such other address for a
party as shall be specified in a notice given in accordance with this Section
10.02):
If to the Partnership:
Matrix Oil Management Corporation
 
104 W. Anapamu Street, Suite C
 
Santa Barbara, CA 93101
 
E-mail: jjordan@matrixoil.com
 
Attention: Johnny Jordan, Executive Vice President
   
with a copy to:
Porter Hedges LLP
 
1000 Main Street, 36th Floor
 
Houston, Texas 77002
 
E-mail: edelpozo@porterhedges.com
 
Attention: Ephraim del Pozo
   

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If to Royale or Merger Sub:
Royale Energy, Inc.
 
1870 Cordell Court, Suite 210
 
El Cajon, California 92020
 
Email: Jonathan@royl.com
 
Attention:  Jonathan Gregory, Chief Executive Officer
   
with a copy to:
Strasburger & Price, LLP
 
720 Brazos Street, Suite 700
 
Austin, Texas 78701
 
Email:  lee.polson@strasburger.com
 
Attention:  Lee Polson

Section 10.03          Interpretation.  For purposes of this Agreement, (a) the
words “include,” “includes” and “including” shall be deemed to be followed by
the words “without limitation”; (b) the word “or” is not exclusive; and (c) the
words “herein,” “hereof,” “hereby,” “hereto” and “hereunder” refer to this
Agreement as a whole. Unless the context otherwise requires, references herein:
(x) to Articles, Sections, Disclosure Schedules and Exhibits mean the Articles
and Sections of, and Disclosure Schedules and Exhibits attached to, this
Agreement; (y) to an agreement, instrument or other document means such
agreement, instrument or other document as amended, supplemented and modified
from time to time to the extent permitted by the provisions thereof and (z) to a
statute means such statute as amended from time to time and includes any
successor legislation thereto and any regulations promulgated thereunder. This
Agreement shall be construed without regard to any presumption or rule requiring
construction or interpretation against the party drafting an instrument or
causing any instrument to be drafted. The Disclosure Schedules and Exhibits
referred to herein shall be construed with, and as an integral part of, this
Agreement to the same extent as if they were set forth verbatim herein.
Section 10.04          Headings.  The headings in this Agreement are for
reference only and shall not affect the interpretation of this Agreement.
Section 10.05          Severability.  If any term or provision of this Agreement
is invalid, illegal or unenforceable in any jurisdiction, such invalidity,
illegality or unenforceability shall not affect any other term or provision of
this Agreement or invalidate or render unenforceable such term or provision in
any other jurisdiction. Upon such determination that any term or other provision
is invalid, illegal or unenforceable, the parties hereto shall negotiate in good
faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in a mutually acceptable manner in order that the
transactions contemplated hereby be consummated as originally contemplated to
the greatest extent possible.
Section 10.06          Entire Agreement.  This Agreement and the Ancillary
Documents constitute the sole and entire agreement of the parties to this
Agreement with respect to the subject matter contained herein and therein, and
supersede all prior and contemporaneous understandings and agreements, both
written and oral, with respect to such subject matter. In the event of any
inconsistency between the statements in the body of this Agreement and those in
the
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Ancillary Documents, the Exhibits and Disclosure Schedules (other than an
exception expressly set forth as such in the Disclosure Schedules), the
statements in the body of this Agreement will control.
Section 10.07          Successors and Assigns.  This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns. Neither party may assign its rights or
obligations hereunder without the prior written consent of the other party,
which consent shall not be unreasonably withheld or delayed. No assignment shall
relieve the assigning party of any of its obligations hereunder.
Section 10.08          Amendment and Modification; Waiver.  This Agreement may
only be amended, modified or supplemented by an agreement in writing signed by
Royale, Parent and the Partners at any time prior to the Matrix Merger Effective
Time and the Royale Merger Effective Time; provided, however, that after each of
the Requisite Matrix Vote and the Requisite Royale Vote is obtained, there shall
be no amendment or waiver that, pursuant to applicable Law, requires further
approval of the Stockholders, without the receipt of such further approvals. Any
failure of any Royale Party, on the one hand, or the Partners, on the other
hand, to comply with any obligation, covenant, agreement or condition herein may
be waived by the Partners (with respect to any failure by any Royale Party) or
by the Royale Parties (with respect to any failure by the Partners),
respectively, only by a written instrument signed by the party granting such
waiver, but such waiver or failure to insist upon strict compliance with such
obligation, covenant, agreement or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure.
Section 10.09          Governing Law; Submission to Jurisdiction; Waiver of Jury
Trial.
(a)          This Agreement shall be governed by and construed in accordance
with the internal laws of the State of Delaware without giving effect to any
choice or conflict of law provision or rule (whether of the State of Delaware or
any other jurisdiction).
(b)          ANY LEGAL SUIT, ACTION OR PROCEEDING ARISING OUT OF OR BASED UPON
THIS AGREEMENT, THE ANCILLARY DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY
OR THEREBY MAY BE INSTITUTED IN THE FEDERAL COURTS OF THE UNITED STATES OF
AMERICA OR THE COURTS OF THE STATE OF CALIFORNIA IN EACH CASE LOCATED IN THE
CITY OF SAN DIEGO AND COUNTY OF SAN DIEGO, AND EACH PARTY IRREVOCABLY SUBMITS TO
THE EXCLUSIVE JURISDICTION OF SUCH COURTS IN ANY SUCH SUIT, ACTION OR
PROCEEDING. SERVICE OF PROCESS, SUMMONS, NOTICE OR OTHER DOCUMENT BY MAIL TO
SUCH PARTY’S ADDRESS SET FORTH HEREIN SHALL BE EFFECTIVE SERVICE OF PROCESS FOR
ANY SUIT, ACTION OR OTHER PROCEEDING BROUGHT IN ANY SUCH COURT. THE PARTIES
IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY OBJECTION TO THE LAYING OF VENUE OF
ANY SUIT, ACTION OR ANY PROCEEDING IN SUCH COURTS AND IRREVOCABLY WAIVE AND
AGREE NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH SUIT, ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
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(c)          EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY
ARISE UNDER THIS AGREEMENT OR THE ANCILLARY DOCUMENTS IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES AND, THEREFORE, EACH SUCH PARTY IRREVOCABLY AND
UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF
ANY LEGAL ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE ANCILLARY
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. EACH PARTY TO THIS
AGREEMENT CERTIFIES AND ACKNOWLEDGES THAT (A) NO REPRESENTATIVE OF ANY OTHER
PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT
SEEK TO ENFORCE THE FOREGOING WAIVER IN THE EVENT OF A LEGAL ACTION, (B) SUCH
PARTY HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (C) SUCH PARTY MAKES THIS
WAIVER VOLUNTARILY, AND (D) SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION 10.10(c).
Section 10.10          Specific Performance.  The parties agree that irreparable
damage would occur if any provision of this Agreement were not performed in
accordance with the terms hereof and that the parties shall be entitled to
specific performance of the terms hereof, in addition to any other remedy to
which they are entitled at law or in equity.
Section 10.11          Counterparts.  This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall be deemed to be one and the same agreement. A signed copy of this
Agreement delivered by facsimile, e-mail or other means of electronic
transmission shall be deemed to have the same legal effect as delivery of an
original signed copy of this Agreement.

[SIGNATURE PAGE FOLLOWS]
 
 
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IN WITNESS WHEREOF, this Agreement and Plan of Exchange has been duly executed
and delivered effective as of the date first hereinabove written.
PARENT:

Royale Energy Holdings, Inc.

By:  /s/ Jonathan Gregory
Name: Jonathan Gregory
Title:  Chief Executive Officer

ROYALE:

Royale Energy, Inc.

By:  /s/ Jonathan Gregory
Name: Jonathan Gregory
Title:  Chief Executive Officer

PARTNERSHIP:

Matrix Investments, L.P.
By: Matrix Oil Management Corporation

By: /s/ Michael McCaskey
Name:  Michael McCaskey
Title:  President

GENERAL PARTNER:
Matrix Oil Management Corporation

By:  By: /s/ Michael McCaskey
Name:  Michael McCaskey
Title:  President
 
[Signature Page to Agreement and Plan of Exchange – Matrix Permian Investments,
LP]

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By execution hereof, each Limited Partner acknowledges and agrees that it has
read the attached Confidential Supplement to the Joint Proxy
Statement/Prospectus in connection with the Joint Proxy Statement/Prospectus
dated as of October 15, 2017, filed with the Securities and Exchange Commission
and given Registration File No. 333-216055, and has considered its investment
decision contemplated by this Agreement and understands the risk and speculative
nature of the securities it is receiving pursuant to this Agreement.
LIMITED PARTNERS:

Walou Investments, LP
By:  Walou Corp.,
          its general partner

By:  /s/ Johnny Jordan
Name:  Johnny Jordan
Title:  President

Meeteetse Limited Partnership

By:  Hot Springs Ranch Corp.,
          its general partner

By:  /s/ Jeffrey Kerns
Name:  Jeffrey Kerns
Title:  Chief Financial Officer

PEM Resources Limited Partnership

By:  PEM Management Corporation,
its general partner

By:  /s/ Michael McCaskey
Name:  Michael McCaskey
Title:  President

Loren Enterprises, L.P.

By:  Sugar Shack Enterprises LLC,
its general partner

By:  /s/ George Loren
Name:  George Loren
Title:   President
 
[Signature Page to Agreement and Plan of Exchange – Matrix Permian Investments,
LP]

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By execution hereof, each Limited Partner acknowledges and agrees that it has
read the attached Confidential Supplement to the Joint Proxy
Statement/Prospectus in connection with the Joint Proxy Statement/Prospectus
dated as of October 15, 2017, filed with the Securities and Exchange Commission
and given Registration File No. 333-216055, and has considered its investment
decision contemplated by this Agreement and understands the risk and speculative
nature of the securities it is receiving pursuant to this Agreement.
LIMITED PARTNERS (CONT.):

GROVES INVESTMENTS, LP

By:  Groves Investments Corporation,
its general partner

By:  /s/ Randy Groves
Name:  Randy Groves
Title:   President

JRS ENERGY INVESTMENTS, LLC

By:  /s/ Jay Scheevel
Name:  Jay Scheevel
Title:    Manager

Oakview Investments LP
By:  OVE Inc.,
its general partner
By:  /s/ Joseph Paquette
Name:  Joseph Paquette
Title:   President
 
[Signature Page to Agreement and Plan of Exchange – Matrix Permian Investments,
LP]

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Exhibit A

LIST OF PARTNERS

Name
Percentage Interest
Walou Investments, LP
31.23%
Meeteetse Limited Partnership
31.23%
PEM Resources Limited Partnership
17.34%
Loren Enterprises, L.P.
5.20%
GROVES INVESTMENTS, LP
5.00%
JRS ENERGY INVESTMENTS, LLC
5.00%
Oakview Investments LP
5.00%
Matrix Oil Management Corporation1
0.00%
Total:
100.00%

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1 General Partner
 
[Exhibit A]

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Exhibit B

EXCHANGE CONSIDERATION

Name
Percentage Interest
Exchange Consideration
Walou Investments, LP
31.23%
807,402 shares of common stock of Parent
Meeteetse Limited Partnership
31.23%
807,402 shares of common stock of Parent
PEM Resources Limited Partnership
17.34%
448,298 shares of common stock of Parent
Loren Enterprises, L.P
5.20%
134,438 shares of common stock of Parent
GROVES INVESTMENTS, LP
5.00%
129,267 shares of common stock of Parent
JRS ENERGY INVESTMENTS, LLC
5.00%
129,267 shares of common stock of Parent
Oakview Investments LP
5.00%
129,267 shares of common stock of Parent

 
 
 
 
[Exhibit E]