Document:

Exhibit 10.6

CONSENT TO MERGER, JOINDER, WAIVER AND FOURTH AMENDMENT TO

TERM LOAN AGREEMENT

This CONSENT TO MERGER, JOINDER, WAIVER AND FOURTH AMENDMENT TO TERM LOAN AGREEMENT, dated as of February 28, 2018 (this “Amendment”), is entered into by and among: (i) MATRIX OIL CORPORATION, a California corporation (“MOC”); (ii) MATRIX PIPELINE LP, a California limited partnership (“MP”); (iii) MATRIX OIL MANAGEMENT CORPORATION, a California corporation (“MOMC”); (iv) MATRIX LAS CIENEGAS LIMITED PARTNERSHIP, a California limited partnership (“MLC”); (v) MATRIX INVESTMENTS, L.P., a California limited partnership (“MI”); (vi) MATRIX PERMIAN INVESTMENTS, LP, a Texas limited partnership (“MPI”); (vii) MATRIX ROYALTY, LP, a Texas limited partnership (“MR,” and MOC, MP, MOMC, MLC, MI, MPI and MR, each a “Matrix Entity”) and a “Borrower” and, collectively, the “Borrowers”); (viii) ROYALE ENERGY HOLDINGS, INC., a Delaware corporation (“Holdings”), (ix) ROYALE ENERGY, INC., a California corporation (“Royale”), (x) ARENA LIMITED SPV, LLC, a Delaware limited liability company, as administrative agent for the lenders party to or bound by the Loan Agreement referred to hereinafter, (in such capacity, together with its successors in such capacity pursuant to the terms hereof, the “Agent”), (xi) ARENA LIMITED SPV, LLC, a Delaware limited liability company (“Arena”), in its capacity as a lender, and (xii) CARGILL INCORPORATED, a Delaware corporation, in its capacity as a lender (“Cargill”; and collectively, Arena and Cargill are referred as the “Lenders”). Capitalized terms used herein shall have the respective meanings assigned to them in Section 1 below.

A. Borrowers and Agent are parties to the Term Loan Agreement dated as of June 15, 2016, as amended by the First Amendment to Term Loan Agreement dated as of June 30, 2016 and the Second Amendment and Joinder to Term Loan Agreement dated as of December 30, 2016 and the Third Amendment to Term Loan Agreement dated as of June 15, 2017 (as the same hereafter further may be amended, restated, supplemented or otherwise modified and in effect from time to time, the “Loan Agreement”), pursuant to which Agent made certain credit extensions to Borrowers.

B. Agent has extended credit to Borrowers for the purposes permitted in the Loan Agreement.

C. The parties to the Loan Agreement desire to amend the Loan Agreement on the terms and conditions in this Amendment.

D. Borrowers are in default under the Loan Agreement for (1) their failure to satisfy the Current Ratio financial covenant set forth in Section 6.21 of the Loan Agreement for the months ending November 30, 2017 and December 31, 2017 and (2) failure to eliminate unsecured Indebtedness more than sixty (60) days beyond the invoice date, as required under Sections 6.1 of the Loan Agreement, with the balance thereof and the invoice date identified on Schedule 6(b)(2), attached hereto (collectively, the “Existing Defaults”).

1

E. Borrowers informed Agent of their intent to enter into that certain Agreement and Plan of Merger attached hereto as Exhibit A (the “Merger Agreement”), by and among Borrowers, Holdings (“Holdings”), Royale Merger Sub, Inc., a California corporation and wholly-owned subsidiary of Holdings (“Royale Merger Sub”), Matrix Merger Sub, Inc., a California corporation and wholly-owned subsidiary of Holdings (“Matrix Merger Sub”), Royale, and MOMC, pursuant to which (i) MOMC merges with and into Matrix Merger Sub with MOMC as the survivor and a wholly-owned subsidiary of Holdings (the “Matrix/Holdings Merger”, (ii) Royale merges into Royale Merger Sub and survives as a wholly-owned subsidiary of Holdings (the “Royale Merger”) and together with the Matrix Merger, the “Merger”) and (iii) as a condition to and concurrently with the Merger, holders of all outstanding shares of MOC, and holders of all outstanding partnership interests of MI, MPI and MLC, will exchange 100% of their respective interests in such business organization with Holdings for shares of Holdings common stock or shares of Series B 3.5% Convertible Preferred Stock of Holdings (“Holdings Preferred Stock”) (collectively, the “Exchanges”), each pursuant to terms of its respective Exchange Agreement with Holdings substantially in the form attached to the Merger Agreement (collectively, the “Exchange Agreements”).

F. In connection with the Merger and the Exchanges, MOC will assign to MR GP, LLC, a Texas limited liability company (“MR GP”) its 0.00% general partnership interest in MR (the “Assignment”) pursuant to that certain Assignment of General Partnership Interest in Matrix Royalty, LP in the form attached hereto as Exhibit B (the “Assignment Agreement”).

G. Immediately following the Merger and the Exchanges, Royale will change its name to “Royale Energy Funds, Inc.” and Holdings will change its name to “Royale Energy, Inc.” (the “Name Change”).

H. Although Agent is under no obligation to do so, Agent is willing to (i) waive the Existing Defaults, (ii) consent to the Merger, the Exchanges and the Assignment, (iii) consent to the Assignment pursuant to the terms of the Assignment Agreement, and (iv) consent to the Name Change, but only to the extent, in each case, in accordance with the terms, subject to the conditions, and in reliance upon the representations and warranties set forth below.

NOW, THEREFORE, in consideration of the foregoing recitals and the mutual covenants herein contained, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound, the parties hereby agree as follows:

SECTION 1.       Definitions and Interpretations.

(a) Terms Defined in Loan Agreement.  Each term defined in the Loan Agreement and used herein without definition shall have the meaning assigned to such term in the Loan Agreement, unless expressly provided to the contrary.

(b) References.  References in this Amendment to Schedule, Exhibit, Article, or Section numbers shall be to Schedules, Exhibits, Articles, or Sections of this Amendment, unless expressly stated to the contrary.  References in this Amendment to “hereby,” “herein,” “hereinafter,” “hereinabove,” “hereinbelow,” “hereof,” “hereunder” and words of similar import 

2

shall be to this Amendment in its entirety and not only to the particular Schedule, Exhibit, Article, or Section in which such reference appears.  Specific enumeration herein shall not exclude the general and, in such regard, the terms “includes” and “including” used herein shall mean “includes, without limitation,” or “including, without limitation,” as the case may be, where appropriate.  Except as otherwise indicated, references in this Amendment to statutes, sections, or regulations are to be construed as including all statutory or regulatory provisions consolidating, amending, replacing, succeeding, or supplementing the statute, section, or regulation referred to.  References in this Amendment to “writing” include printing, typing, lithography, facsimile reproduction, and other means of reproducing words in a tangible visible form.  References in this Amendment to amendments and other contractual instruments shall be deemed to include all exhibits and appendices attached thereto and all subsequent amendments and other modifications to such instruments, but only to the extent such amendments and other modifications are not prohibited by the terms of this Amendment.  References in this Amendment to Persons include their respective successors and permitted assigns.

(c) Sections.  This Amendment, for convenience only, has been divided into Sections; and it is understood that the rights and other legal relations of the parties hereto shall be determined from this instrument as an entirety and without regard to the aforesaid division into Sections and without regard to headings prefixed to such Sections.

(d) Number and Gender.  Whenever the context requires, reference herein made to the single number shall be understood to include the plural; and likewise, the plural shall be understood to include the singular.  Definitions of terms defined in the singular or plural shall be equally applicable to the plural or singular, as the case may be, unless otherwise indicated.  Words denoting sex shall be construed to include the masculine, feminine and neuter, when such construction is appropriate; and specific enumeration shall not exclude the general but shall be construed as cumulative.

(e) Negotiated Transaction.  Each party to this Amendment affirms to the other that it has had the opportunity to consult, and discuss the provisions of this Amendment with, independent counsel and fully understands the legal effect of each provision.

SECTION 2.       Waiver.  Subject to the terms hereof, Agent hereby waives the Existing Defaults.  Except as provided in the above described defaults, Agent’s agreement to waive the Existing Defaults (a) in no way shall be deemed an agreement by the Agent to waive Borrowers’ compliance with the above-described covenant as of all other dates, to the extent applicable (b) shall not limit or impair Agent’s right to demand strict performance of the above-described covenant as of all other dates, and (c) shall not limit or impair Agent’s right to demand strict performance of all other covenants as of any date.

SECTION 3.       Consent.  Subject to the terms hereof, Agent hereby consents to (a) the Merger pursuant to the terms of the Merger Agreement, (b) each Exchange pursuant to terms of the respective Exchange Agreement, (c) the Assignment pursuant to the terms of the Assignment Agreement, and (d) the Name Change, so long as, at the time of the Merger, the Exchanges, the Assignment, and the Name Change, no Event of Default has occurred and is continuing or would exist after giving effect to the Merger, the Exchanges, the Assignment, and the Name Change (other than an Event of Default that would result solely because the Merger, any Exchange, the 

3

Assignment, and the Name Change is not permitted under Borrower’s covenants in the Loan Documents).  The consent set forth in Section 3 is effective for the purposes set forth herein and shall be limited precisely as written and shall not be deemed to (a) be a consent to any amendment, waiver or modification of any other term or condition of any Loan Document, or (b) otherwise prejudice any right or remedy which Agent or the Lenders may now have or may have in the future under or in connection with any Loan Document. This Amendment shall be construed in connection with and as part of the Loan Documents and all terms, conditions, covenants and agreements set forth in the Loan Documents, except as herein amended, are hereby ratified and confirmed and shall remain in full force and effect.

SECTION 4.       Joinder and Security Agreement.

(a) Joinder.  With effect as from the date hereof, the Loan Agreement shall henceforth be read and construed as if Holdings, Royale and MP GP were each party to the Loan Agreement having all the rights and obligations of a Borrower under the Loan Agreement, as amended by this Agreement.  Accordingly all references in any Loan Documents to (a) any “Borrower” shall be treated as including a reference to each of Holdings, Royale and MP GP, and (b) the Loan Agreement shall be treated as a reference to the Loan Agreement as supplemented by this Amendment to the intent that this Amendment and the Loan Agreement shall be read and construed together as one single agreement.  Each of Holdings, Royale and MP GP hereby unconditionally and irrevocably assumes all obligations as a borrower for payment in full and performance in full by each Borrower (other than itself) of the Obligations.

(b) Security Agreement.  To secure the Obligations, each of Holdings, Royale and MP GP hereby assumes all obligations under that certain Security Agreement dated June 15, 2016 (the “Security Agreement”; capitalized terms not otherwise defined herein for this section 3(b) only shall have the meanings set forth in the Security Agreement) by Borrowers to and for the benefit of Agent, as secured party thereunder, and agrees to observe and perform each obligation expressed to be observed or performed by it thereunder.  In this regard, to secure the Obligations, each of Holdings, Royale and MP GP hereby grants to Agent a continuing security interest in, a general lien upon, and a right of set-off against, the following described Property of Holdings, Royale and MP GP, as applicable:

(1)         all now existing and hereafter acquired or arising Accounts, Goods, General Intangibles, Payment Intangibles, Deposit Accounts, Securities Accounts, Chattel Paper (including, without limitation, Electronic Chattel Paper), Documents, Instruments, Software, Investment Property, letters of credit, Letter of Credit Rights, advices of credit, money, As-Extracted Collateral (including As-Extracted Collateral from Holdings’ or Royale’s, as applicable, present and future operations, regardless of whether such mineral or gas interests are presently owned or hereafter acquired by Holdings or Royale, as applicable), Commercial Tort Claims, Equipment, Inventory, Fixtures and Supporting Obligations, together with all products of and Accessions to any of the foregoing and all Proceeds of any of the foregoing (including, without limitation, all insurance policies and proceeds thereof) save and accept all now existing and hereafter acquired funds received from and held for the benefit of participants in turnkey drilling agreement arrangements and reported as Deferred Drilling Obligations by Royale (“DWI Funds”), and held in a segregated account at accounts as follows:  (x) Bank of Southern California: Drilling 2016-A MM Account # 502819677 and Drilling 2017 MM Account # 

4

501123148, and (y) Banner Bank: Royale Energy, Inc. 2016-A Drilling MM Account # 59810000121.  For avoidance of doubt, DWI Funds shall not be subject to a Deposit Account Control Agreement under the Security Agreement.

(2)        to the extent, if any, not included in clause (a) above, Holdings’ or Royale’s, as applicable, present and future contracts, agreements, arrangements or understandings (i) for the sale, supply, provision or disposition of any natural gas, casinghead gas, all other hydrocarbons not defined as oil, carbon dioxide, and helium or other substances of a gaseous nature (“Gas”), oil or other minerals by Holdings or Royale, as applicable, or any one or more of its agents, representatives, successors or assigns to any purchaser or acquirer thereof, and all products, replacements and proceeds thereof (including, without limitation, all Gas or oil sales contracts) and (ii) relating to the mining, drilling or recovery of any mineral, crude oil or gas reserves for the benefit of or on behalf of Holdings or Royale, as applicable, or any of their agents, representatives, successors or assigns (including, without limitation, all contract mining, drilling or recovery agreements and arrangements), and all products and Proceeds thereof and payments thereunder, together with all products and Proceeds (including, without limitation, all insurance policies and proceeds) of and any Accessions to any of the foregoing;

(3)        to the extent, if any, not included in above, all Gas, oil and other minerals severed or extracted from the ground (specifically including all “As-Extracted Collateral” of Holdings or Royale, as applicable and all severed or extracted Gas purchased, acquired or obtained from other parties), and all Accounts, General Intangibles and products and Proceeds thereof or related thereto, regardless of whether any such Gas, oil or other minerals are in raw form or processed for sale;

(4)        to the extent, if any, not included above, each and every other item of personal Property and fixtures, whether now existing or hereafter arising or acquired, including, without limitation, all licenses, contracts and agreements (including, without limitation, Commodity Hedge Agreements), and all collateral for the payment or performance of any contract or agreement, together with all products and Proceeds (including all insurance policies and proceeds) and any Accessions to any of the foregoing;

(5)        all present and future business records and information, including, without limitation, computer tapes and other storage media containing the same and computer programs and software (including, without limitation, source code, object code and related manuals and documentation and all licenses to use such software) for accessing and manipulating such information; and

(6)        any additional Property of Holdings or Royale, as applicable, from time to time delivered to or deposited with Secured Party as security for the Secured Obligations or otherwise pursuant to the terms of this Security Agreement.

(c) Representations and Warranties.  Each of Holdings and Royale agrees that the representations and warranties contained in the Security Agreement shall be true and correct as of the date hereof with regard to Holdings and Royale, as the case may be, without giving effect to provisions that would give effect to such representations and warranties relate as of an earlier date.

5

SECTION 5.       Amendments.  Effective as of the date first written above, the Loan Agreement is hereby amended as follows:

(a) Definitions.   Section 1.1 of the Loan Agreement is hereby amended by substituting the following definition in lieu of the version of such term contained in the Loan Agreement:

“Maturity Date” shall mean April 15, 2018.

“Contract Rate” shall mean a daily interest rate equal to the per annum interest rate equal to the Adjusted LIBO Rate for each relevant day, plus 14 percent (14%) converted to a daily rate on the basis of a year of 360 days and the rate so determined for each relevant day being applied on the basis of actual days elapsed (including the first day, but excluding the last day) during the period for which interest is payable at such rate, but in no event shall any such rate exceed, as to any Lender, the Highest Lawful Rate.

SECTION 6.       Conditions Precedent to Effectiveness of this Amendment. The effectiveness of this Amendment is subject to the fulfillment of the following conditions:

(a) Documents.  Borrowers shall have delivered, or caused to be delivered, to Agent all of the following agreements, documents, instruments and other deliverables, each of which shall be in form and substance satisfactory to Agent:

(1)        This Amendment executed by Borrowers;

(2)        The Pledge Agreement in the form attached hereto as Exhibit C, duly executed by Holdings, in favor of Agent, pledging all of Holdings’ assets;

(3)        All certificates or instruments representing or evidencing the equity interests of MOMC and of Royale owned by Holdings, along with duly executed instruments of transfer or assignments in blank, with signatures appropriately guaranteed.  To the extent the equity interests of MOMC or of Royale owned by Holdings are uncertificated as of the date hereof, (i) upon execution of this Amendment, Holdings shall have provided Agent with evidence that entries have been made in the books of Holdings to effect the pledge of the equity interests of MOMC and of Royale owned by Holdings to Agent, as provided in, and in accordance with, applicable provisions of the UCC, all in form and substance reasonably satisfactory to Agent such that Agent shall have “control” thereof (as defined in the UCC) as of the date hereof and (ii) promptly upon such equity interests being certificated, Holdings shall deliver such certificates or instruments representing or evidencing the equity interests of MOMC or of Royale, as the case may be, owned by Holdings to Agent, along with duly executed instruments of transfer or assignments in blank, with signatures appropriately guaranteed;

(4)        For each of Holdings, MOMC and Royale:  (a) a true and complete copy of its articles of incorporation and bylaws, and all amendments thereto, a certificate of incumbency of all of its officers who are authorized to execute or attest to this Amendment and to any of the Loan Documents, and a true and complete copy of resolutions approving the Loan Documents and authorizing the transactions contemplated in this Amendment and the other Loan 

6

Documents; (b) certificates of existence, good standing and qualification to do business issued by the appropriate governmental officials in the state of its formation; and (c) all certificates, resolutions, and consents required by Agent applicable to the foregoing;

(5)       (A) The executed legal opinion of Porter Hedges LLP, concerning certain legal matters with respect to the Matrix Entities, in substantially the form and substance provided to Agent in connection with closing pursuant to the Loan Documents, and (B) the executed legal opinion of Strasburger & Price, LLP, concerning certain legal matters with respect to the Holdings and Royale, in substantially the form and substance provided to Agent by Borrowers’ counsel in connection with closing pursuant to the Loan Documents; and

(6)        Such other documents, instruments and information as Agent may reasonably request.

(b) Representations and Warranties.  The representations and warranties contained herein shall be true and correct as of the date hereof and the representations and warranties contained in the Loan Agreement and the other Loan Documents shall be true and correct in all material respects (without duplication of any materiality qualifier contained therein) on and as of the date hereof as though made on and as of such date, except to the extent that such representations and warranties relate solely to an earlier date; and

(1)        with regard to Holdings and Royale, without giving effect to provisions that would give effect to such representations and warranties relate as of an earlier date; and

(2)        with regard to unsecured Indebtedness under Sections 6.1, excluding all unsecured accounts payable which are unpaid more than sixty (60) days beyond the invoice date, which such unsecured accounts payable, the balance thereof and the invoice date are identified on Schedule 6(b)(2), attached hereto; and

(3)        with regard to Indebtedness of Royale and Holdings under Section 6.1, excluding all obligations of Royale and Holdings to Joe Paquette and all Indebtedness in the form of accounts payable more than sixty (60) days past the invoice date, which such obligations and unsecured accounts payable, the balance thereof and the maturity date, regarding such obligations, or the invoice date, regarding such unsecured accounts payable, are identified on Schedule 6(b)(3), attached hereto.

(c) No Default or Event of Default. Each Borrower shall be in material compliance with all the terms and provisions set forth herein and in each Loan Document on its part to be observed or performed, and at the time of and immediately after giving effect to this Amendment, no Event of Default exists, has occurred and is continuing or would result from the execution, delivery or performance of this Amendment or the transaction contemplated hereby. In the event Agent determines to close the transactions contemplated by the Amendment, despite the existence of any Event of Default, such action shall not constitute a waiver by Agent of any such Event of Default, and Agent reserves all rights with respect thereto.

(c) Payment of Fees.  Borrowers shall have paid (i) a fully earned, non-refundable amendment fee to Agent in the amount of $200,000.00; provided, that such amendment fee shall be paid-in-kind and added to the principal balance of the Loan, rather than paid in cash, 

7

(ii) $57,750 to Jackson Walker L.L.P. for legal fees and expenses incurred in connection with the Agreement, the other Loan Documents and this Amendment, and (iii) all other fees, costs and expenses owed to or incurred by Agent and Lenders arising in connection with the Loan Agreement, the other Loan Documents, or this Amendment;

SECTION 7.       Conditions Subsequent. Borrowers shall cause the following conditions to be satisfied in full by March 15, 2018, the failure of any of which shall permit Agent to declare an Event of Default:

(a) Either (i) raise Two Million and No/100 Dollars ($2,000,000.00) of cash equity proceeds to be placed in the block account, or (ii) retain an asset advisor firm acceptable to Agent to initiate the sale of Borrowers, including, but not limited to MOMC, Holdings, and Royale as structured after giving effect to the Merger;

(b) Updated schedules to the Loan Agreement which shall be attached hereto as Exhibit D; and

(c) Such other documents as reasonably requested by Agent.

SECTION 8.       Effect on Loan Documents.

(a) The Loan Agreement, as amended hereby, and each of the other Loan Documents shall be and remain in full force and effect in accordance with their respective terms.  The execution, delivery, and performance of this Amendment shall not operate, except as expressly set forth herein, as a modification or waiver of any right, power or remedy of Agent under the Loan Agreement or any other Loan Document.  The consents and modifications herein are limited to the specifics hereof, shall not apply with respect to any facts or occurrences other than those on which the same are based, shall not excuse future non-compliance with the Loan Documents and shall not operate as a consent to any further or other matter under the Loan Documents. This Amendment shall constitute a Loan Document.

(b) To the extent that any terms and conditions in any of the Loan Documents shall contradict or be in conflict with any terms or conditions of the Loan Agreement, after giving effect to this Amendment, such terms and conditions are hereby deemed modified or amended accordingly to reflect the terms and conditions of the Loan Agreement as modified or amended hereby.

SECTION 9.       Representations and Warranties.  Each Borrower hereby confirms, represents and warrants to Agent that the representations and warranties set forth in the Loan Documents are true and correct in all material respects as if made as of the date hereof,

(1)        with regard to the Matrix Entities, to the extent that such representations and warranties relate solely to an earlier date, in which case such representations and warranties shall have been true and correct in all material respects as of such earlier date;

(2)        with regard to Holdings and Royale, without giving effect to provisions that would give effect to such representations and warranties relate as of an earlier date;

8

(3)        with regard to unsecured Indebtedness under Sections 6.1, excluding all unsecured accounts payable which are unpaid more than sixty (60) days beyond the invoice date, which such unsecured accounts payable, the balance thereof and the invoice date are identified on Schedule 6(b)(2), attached hereto; and

(4)        with regard to Indebtedness of Royale and Holdings under Section 6.1, excluding all obligations of Royale and Holdings to Joe Paquette and all Indebtedness in the form of accounts payable more than sixty (60) days past the invoice date, which such obligations and unsecured accounts payable, the balance thereof and the maturity date, regarding such obligations, or the invoice date, regarding such unsecured accounts payable, are identified on Schedule 6(b)(3), attached hereto.

Any default by any Borrower, Holdings or Royale in its warranties and representations made in this Amendment shall constitute an additional Event of Default under the Loan Agreement, as amended hereby. Each Borrower, Holdings and Royale further represents and warrants to Agent that:

(a) it has full corporate or company power and authority to execute and deliver this Amendment and the other agreements, documents and instruments entered into in connection herewith (collectively, the “Other Amendment Documents”), and to perform its obligations hereunder and thereunder;

(b) upon the execution and delivery of this Amendment, this Amendment and the  Loan Agreement are valid, binding and enforceable upon it in accordance with their respective terms, subject to bankruptcy, insolvency and similar laws affecting the enforceability of creditors’ rights generally and to general principles of equity;

(c) the execution, delivery and performance of this Amendment and/or the Other Amendment Documents do not and will not contravene, conflict with, violate or constitute a default under (i) the organizational documents of such Borrower or (ii) any applicable law, rule or regulation, or any judgment, decree or order or any agreement, indenture or instrument to which such Borrower is a party or is bound or which is binding upon or applicable to all or any portion of its property; and

(d) no Event of Default exists (after giving effect to this Amendment).

SECTION 10.    Costs and Expenses.  The Borrowers, Holdings and Royale shall reimburse Agent on demand for all reasonable costs and expenses incurred in the preparation, negotiation and execution of this Amendment and the documents contemplated hereby and the consummation of the transactions contemplated hereby and thereby, including, without limitation, the reasonable costs, expenses and fees of counsel for Agent.

SECTION 11.     Affirmation.  Each Borrower, Holdings and Royale hereby affirms, acknowledges and agrees that:

 (a) the execution, delivery and performance of this Amendment by Agent shall not be deemed or construed to be a satisfaction, restatement, novation, or release of the Loan Agreement or of any of the other Loan Documents or of the liabilities of Borrowers, Holdings or 

9

Royale to Agent.  Neither the execution, delivery and performance of this Amendment by Agent nor any actions taken or not taken by Agent prior to the execution of this Amendment or pursuant hereto or under the Loan Documents shall be deemed or construed as a waiver by Agent of any rights and remedies and Agent reserves all of its rights and remedies including those in connection with any existing defaults as of the date hereof.  None of the Borrowers, Holdings or Royale have any defenses, setoffs, claims, counterclaims or causes of action of any kind or nature whatsoever with respect to the Loan Documents or their liabilities thereunder to Agent, or with respect to any other documents or instruments now or heretofore evidencing, securing or in any way relating to any of such liabilities or the Loan Documents, or with respect to the administration or funding of any of the Obligations; and

(b) The Borrowers, Holdings and Royale each agree that no failure to exercise and no delay in exercising, on the part of Agent, any right, remedy, power or privilege hereunder or under the Loan Documents, shall operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder or thereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.  Each Borrower, Holdings and Royale further agrees that the rights, remedies, powers and privileges provided herein and in the Loan Documents are cumulative and not exclusive of any rights, remedies, powers and privileges provided by law.  Each Borrower, Holdings and Royale further agrees that no remedy conferred upon Agent under the Loan Documents or this Amendment is intended to be exclusive of any other remedy and each and every remedy shall be cumulative and shall be in addition to every other remedy given under the Loan Documents or this Amendment or now or hereafter existing at law or in equity or by statute or any other provision of law.

SECTION 12.    Ratification of Liability; Amendment.  Each Borrower, Holdings and Royale, as a debtor, grantor, pledgor, guarantor or assignor, or in any similar capacity in which it has granted Liens or acted as an accommodation party or guarantor, as the case may be, hereby ratifies, confirms and reaffirms its liabilities, its payment and performance obligations (contingent or otherwise) and its agreements under the Loan Documents to the extent such Person is a party thereto, all as amended by this Amendment, and the Liens granted, created and perfected thereby, and acknowledges that (a) it has no defenses, claims or set-offs to the enforcement of such liabilities, obligations and agreements, (b) Agent has fully performed all obligations to such Person which Agent may have had or have on and as of the date hereof, (c) the Obligations evidenced by the Note are secured under the Loan Documents (and, as necessary, such Loan Document shall be deemed to have been amended hereby to effectuate the foregoing), and (d) other than as specifically set forth herein, Agent does not waive, diminish or limit any term or condition contained in the Loan Documents.  Agent’s agreement to the terms of this Amendment or any future waiver and/or amendment of the Loan Agreement or any other Loan Document shall not be deemed to establish or create a custom or course of dealing among the Borrowers or Agent, or any of them.  This Amendment and the Other Amendment Documents contain the entire agreement among the Borrowers, Holdings and Royale and Agent contemplated by this Amendment.

SECTION 13.    Counterparts.  This Amendment may be executed in one or more counterparts, each of which shall be deemed an original, and all of which, when taken together, shall constitute one and the same instrument, and any facsimiled or photocopied signatures hereto shall be deemed original signatures hereto, all of which shall be equally valid.

10

SECTION 14.     Further Assurances.  Each Borrower, Holdings and Royale covenants and agrees that it will at any time and from time to time do, execute, acknowledge and deliver, or will cause to be done, executed, acknowledged and delivered, all such further acts, documents and instruments as reasonably may be required by the Agent in order to effectuate fully the intent of this Amendment.

SECTION 15.    Severability.  If any term or provision of this Amendment or the application thereof to any party or circumstance shall be held to be invalid, illegal or unenforceable in any respect by a court of competent jurisdiction, the validity, legality and enforceability of the remaining terms and provisions of this Amendment shall not in any way be affected or impaired thereby, and the affected term or provision shall be modified to the minimum extent permitted by law so as most fully to achieve the intention of this Amendment.

SECTION 16.     Captions.  The captions in this Amendment are inserted for convenience of reference only and in no way define, describe or limit the scope or intent of this Amendment or any of the provisions hereof.

SECTION 17.    Governing Law; Waiver of Jury Trial.  THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER THIS AMENDMENT AND THE OTHER AMENDMENT DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE GOVERNING OR CHOICE OF LAW PROVISIONS SET FORTH IN THE LOAN AGREEMENT AND SHALL BE SUBJECT TO THE WAIVER OF JURY TRIAL AND NOTICE PROVISIONS OF THE LOAN AGREEMENT.

SECTION 18.    Release.  (a)  Each Borrower, Holdings and Royale acknowledge that Agent would not enter into this Amendment without each Borrowers’, Holdings’, and Royale’s assurance hereunder.  Except for the obligations arising hereafter under this Amendment and the other Loan Documents, each Borrower, Holdings and Royale hereby absolutely discharge and release Agent, any lender under the Loan Documents, any Person that has obtained any interest from Agent or any lender under any Loan Document and each of Agent’s former and present partners, stockholders, officers, directors, employees, successors, assignees, affiliates, agents and attorneys (collectively, the “Releasees”) from any known or unknown claims which any Borrower, Holdings or Royale now has against Agent or any other Releasee of any nature arising out of or related to any Borrower or any of its Subsidiaries, any dealings with any Borrower, Holdings or Royale, any of the Loan Documents or any transactions pursuant thereto or contemplated thereby, any collateral of any Person that previously secured or now or hereafter secures any of the Obligations, or any negotiations for any modifications to or forbearance or concessions with respect to any of the Loan Documents, in each case whether founded in contract, in tort or pursuant to any other theory of liability; provided however that such release shall not be available as to any Releasee to the extent such claims resulted from the gross negligence or willful misconduct of such Releasee or a material breach of its obligations under the Loan Agreement by such Releasee.

 (b) The provisions, waivers and releases set forth in this section are binding upon Borrower, Holdings and Royale and such Person’s agents, employees, assigns and successors in 

11

interest, as well as the stockholders or other equityholders of any of the foregoing.  The provisions, waivers and releases of this section shall inure to the benefit of each Releasee.

(c) Borrowers, Holdings or Royale each hereby warrant and represent that they are the sole and lawful owner of all right, title and interest in and to all of the claims released hereby and none of any Borrower, Holdings or Royale has heretofore voluntarily, by operation of law or otherwise, assigned or transferred or purported to assign or transfer to any person any such claim or any portion thereof. Borrowers, Holdings or Royale shall indemnify and hold harmless Agent from and against any claim, demand, damage, debt, liability (including payment of attorneys’ fees and costs actually incurred whether or not litigation is commenced) based on or arising out of any assignment or transfer.

(d) The provisions of this section shall survive payment in full of the Obligations, full performance of all the terms of this Amendment, the Loan Agreement and each other Loan Document, and/or Agent’s actions to exercise any remedy available under the Loan Agreement and the other Loan Documents or otherwise.

 

[SIGNATURES APPEAR ON FOLLOWING PAGE]

12

IN WITNESS WHEREOF, each of the parties hereto has duly executed this Amendment as of the day and year first written above.

BORROWERS:

MATRIX OIL CORPORATION

By:  /s/ Johnny Jordan

 Johnny W. Jordan

 President

MATRIX PIPELINE L.P.

By:     Matrix Oil Corporation,

 its general partner

 By:  /s/ Johnny Jordan

 Johnny W. Jordan

 President

MATRIX OIL MANAGEMENT CORPORATION

By:  /s/ Johnny Jordan

 Johnny W. Jordan

 Vice President

MATRIX LAS CIENEGAS LIMITED PARTNERSHIP

By:      Matrix Oil Management Corporation,

 its general partner

By:  /s/ Johnny Jordan

 Johnny W. Jordan

 Vice President

[SIGNATURE PAGES CONTINUE]

13

MATRIX INVESTMENTS, L.P.

By:      Matrix Oil Management Corporation,

 its general partner

By:  /s/ Johnny Jordan

 Johnny W. Jordan

 Vice President

MATRIX PERMIAN INVESTMENTS, LP

By:      Matrix Oil Management Corporation,

 its general partner

By:  /s/ Johnny Jordan

 Johnny W. Jordan

 Vice President

MATRIX ROYALTY, LP

By:      Matrix Oil Management Corporation,

 its general partner

By:  /s/ Johnny Jordan

 Johnny W. Jordan

 Vice President

[SIGNATURE PAGES CONTINUE]

14

HOLDINGS

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

[SIGNATURE PAGES CONTINUE]

15

AGENT:

ARENA LIMITED SPV, LLC

 as Agent

By:                                                                          

Name:                                                                     

Title:                                                                        

LENDER:

ARENA LIMITED SPV, LLC

By:                                                                          

Name:                                                                     

Title:                                                                        

[SIGNATURE PAGES CONTINUE]

16

LENDER:

CARGILL INCORPORATED

By:                                                                          

Name:                                                                     

Title:                                                                        

[END OF SIGNATURE PAGES]

17Exhibit 10.7

          

PLEDGE AGREEMENT

BY

ROYALE ENERGY, INC.,

formerly known as Royale Energy Holdings, Inc.

AS DEBTOR

IN FAVOR OF

ARENA LIMITED SPV, LLC

AS SECURED PARTY

Effective

 February 28, 2018

         

TABLE OF CONTENTS

 

	
ARTICLE I DEFINED TERMS

	
1

	
1.1

	
Terms Defined in the Loan Agreement

	
1

	
1.2

	
Additional Defined Terms

	
2

	 	 	 
	
ARTICLE II PLEDGE

	
3

	 	 
	
ARTICLE III OBLIGATIONS SECURED

	
3

	 	 
	
ARTICLE IV WARRANTIES AND REPRESENTATIONS BY DEBTORS

	
3

	
4.1

	
Collateral

	
3

	
4.2

	
Prior Financing Statements

	
3

	
4.3

	
Jurisdiction of Formation or Principal Residence of Debtor

	
3

	 	 	 
	
ARTICLE V AGREEMENTS OF DEBTOR

	
3

	
5.1

	
Filings of Financing Statements

	
3

	
5.2

	
Transfer of Collateral

	
3

	
5.3

	
Defense of Claims

	
4

	
5.4

	
Payover

	
4

	
5.5

	
Power of Attorney

	
4

	
5.6

	
Delivery to Secured Party

	
4

	
5.7

	
Financing Statement Filings

	
4

	
5.8

	
Transfer or Pledge of Collateral

	
5

	
5.9

	
Expenses of Secured Party

	
5

	
5.10

	
Payments to Protect Collateral

	
5

	
5.11

	
Further Assurances

	
5

	 	 	 
	
ARTICLE VI EVENTS OF DEFAULT; RIGHTS AND REMEDIES OF SECURED PARTY

	
5

	
6.1

	
Events of Default

	
5

	
6.2

	
Remedies

	
5

	
6.3

	
Subrogation

	
6

	
6.4

	
Waivers

	
6

	
6.5

	
Negation of Liability

	
7

	 	 	 
	
ARTICLE VII MISCELLANEOUS

	
7

	
7.1

	
Assignment

	
7

	
7.2

	
Waiver

	
7

	
7.3

	
Release of Lien

	
7

	
7.4

	
Remedies Cumulative

	
7

	
7.5

	
Parties in Interest

	
7

	
7.6

	
Reasonable Notice

	
8

	
7.7

	
WAIVER OF RIGHTS TO JURY TRIAL

	
8

	
7.8

	
VENUE AND JURISDICTION

	
8

	
7.9

	
GOVERNING LAW

	
8

	
7.10

	
Notices

	
8

	
7.11

	
Invalidity of Certain Provisions

	
8

i

 

	
7.12

	
Counterparts

	
8

	
7.13

	
Controlling Agreement

	
9

	
7.14

	
No Oral Agreements

	
9

  

 

 

ii

PLEDGE AGREEMENT

This PLEDGE AGREEMENT (the “Agreement”) is executed effective as of February 28, 2018 (the “Effective Date”), by ROYALE ENERGY, INC., a Delaware corporation, formerly known as Royale Energy Holdings, Inc. (the “Debtor”), the address for which, for purposes hereof, is 104 West Anapamu, Suite C, Santa Barbara, California 93101, in favor of ARENA LIMITED SPV, LLC, a Delaware limited liability company, the address for which, for purposes hereof, is 405 Lexington Avenue, 59th Floor, New York, NY 10174, in its capacity as administrative agent (in such capacity, “Secured Party”) for the lenders (individually, a “Lender” and collectively, the “Lenders”) party to that certain Term Loan Agreement dated of even date hereof by and among (i) MATRIX OIL CORPORATION, a California corporation (“MOC”); (ii) MATRIX PIPELINE LP, a California limited partnership (“MP”); (iii) MATRIX OIL MANAGEMENT CORPORATION, a California corporation (“MOMC”); (iv) MATRIX LAS CIENEGAS LIMITED PARTNERSHIP, a California limited partnership (“MLC”); (v) MATRIX INVESTMENTS, L.P., a California limited partnership (“MI”); (vi) MATRIX PERMIAN INVESTMENTS, LP, a Texas limited partnership (“MPI”); (vii) MATRIX ROYALTY, LP, a Texas limited partnership (“MR,” and MOC, MP, MOMC, MLC, MI, MPI and MR, each a “Borrower” and, collectively, the “Borrowers”), such Lenders and Secured Party (as amended, supplemented restated or otherwise modified from time to time, the “Loan Agreement”), a copy of which has been provided to Debtor and Debtor hereby acknowledges receipt of a copy of the Loan Agreement.

RECITALS

WHEREAS, the execution and delivery of this Agreement by the Debtor is, among other conditions, a condition precedent under the Consent to Merger and Fourth Amendment to Term Loan Agreement dated as of the date hereof by and among Debtor, Borrowers, Royale Energy, Inc., and Secured Party;

WHEREAS, the Debtor owns all of the Pledged Equity (as such term is defined hereinafter); and

WHEREAS, to secure the Obligations under the Loan Agreement, and to induce Secured Party and the Lenders to execute the Loan Agreement, the Debtor has agreed to pledge the Pledged Equity to Secured Party;

NOW, THEREFORE, in consideration of the premises, the mutual promises and benefits contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Debtor and Secured Party hereby agree as follows:

ARTICLE I

DEFINED TERMS

1.1          Terms Defined in the Loan Agreement.  Any capitalized term used and not defined herein shall have the meaning assigned to such term in the Loan Agreement.

1.2          Additional Defined Terms.  The following terms, as used in this Agreement, shall have the meanings indicated below, unless the context otherwise requires:

(a)           “Collateral” shall mean all of the Debtor’s right, title and interest in and to the Pledged Equity (defined below), including, without limitation, (i) the Distributions (defined below), (ii) allocation of loss, gain, deduction, credit or similar items, (iii) property or rights issued in connection with, or as a result of a conversion of, or substitution or exchange thereof, (iv) all papers, documents, chattel paper, instruments and general intangibles relating to or evidencing all or any part of the interests described in clauses (i) through (iii) above, including, without limitation, certificates, if any, evidencing the Pledged Equity, (v) all proceeds, income, fees, moneys, salaries or other distributions made with respect to the Pledged Equity and (vi) any and all proceeds of or from any of the above.

(b)           “Distributions” shall mean (i) all rights to receive and payments of proceeds, income, dividends, distributions, returns or repayments of capital or loans, profits, and other sums, whether payable in cash or otherwise, attributable to the Pledged Equity, and (ii) all other payments paid or payable to the Debtor as a result of the Debtor’s ownership of the Pledged Equity.

(c)           “Event of Default” shall have the meaning assigned to such term in Section 6.1.

(d)           “Pledged Equity” shall mean all of Debtor’s shares or other ownership interest in and to the following entities:

(i) ROYALE ENERGY FUNDS, INC., a California corporation, formerly known as Royale Energy, Inc., a California corporation;

(ii) MATRIX OIL MANAGEMENT CORPORATION, a California corporation;

(iii) MATRIX OIL CORPORATION, a California corporation;

(iv) MATRIX LAS CIENEGAS LIMITED PARTNERSHIP, a California limited partnership;

(v) MATRIX INVESTMENTS, L.P., a California limited partnership;

(vi) MATRIX PERMIAN INVESTMENTS, LP, a Texas limited partnership.

Pledge Agreement – Royale Energy, Inc.

-2-

ARTICLE II

PLEDGE

The Debtor has pledged, and by these presents does pledge, unto Secured Party, and its successors and assigns, and the Debtor hereby grants to Secured Party, and its successors and assigns, a security interest in and to the Collateral, to the fullest extent the Collateral may be pledged or assigned pursuant to applicable law.

ARTICLE III

OBLIGATIONS SECURED

The pledge, security interest and other rights granted pursuant to Article II are granted to Secured Party to secure the Obligations.

ARTICLE IV

WARRANTIES AND REPRESENTATIONS BY DEBTORS

The Debtor warrants and represents to Secured Party, as follows:

4.1          Collateral.  The Debtor has good title to the Collateral and full power and authority to assign the Collateral to Secured Party.  No other Person has any right, title or interest in the Collateral.  Except for restrictions imposed by applicable state and federal laws, the Debtor is not bound by any indentures, contracts, agreements or other documents that could affect the Collateral, directly or indirectly, or which prohibit the execution and delivery of this Agreement or the performance of its terms.

4.2          Prior Financing Statements.  To the best of the Debtor’s knowledge, there are no financing statements or security instruments covering the Pledged Equity and there are no existing liens, adverse claims or options or other adverse interests with respect to the Pledged Equity except for the security interests granted herein in favor of Secured Party.

4.3          Jurisdiction of Formation or Principal Residence of Debtor.  The jurisdiction of formation or principal residence, as applicable, of the Debtor is the State of California.

ARTICLE V

AGREEMENTS OF DEBTOR

5.1          Filings of Financing Statements.  The Debtor shall not, until the Obligations have been paid in full, authorize the filing of any financing statement (or other evidence of any lien) covering the Collateral or any interest therein, except any financing statement filed or to be filed in respect of the security interest in favor of Secured Party as provided for in this Agreement.

5.2          Transfer of Collateral.  All certificates or instruments representing or evidencing the Pledged Equity shall be delivered to and held by Secured Party or a person or entity

Pledge Agreement – Royale Energy, Inc.

-3-

designated by Secured Party and shall be in suitable form for transfer by delivery, or shall be accompanied by duly executed instruments of transfer or assignments in blank, with signatures appropriately guaranteed.  To the extent such Equity Interests are uncertificated, Secured Party shall have been provided with evidence that entries have been made in the books of the relevant Borrower to effect the pledge of the Pledged Equity to Secured Party, as provided in, and in accordance with, applicable provisions of the UCC, all in form and substance reasonably satisfactory to Secured Party such that Secured Party shall have “control” thereof (as defined in the UCC) as of the Effective Date.

5.3          Defense of Claims.  The Debtor shall defend the Collateral against all claims and demands of all Persons at any time claiming the same or any interest therein adverse to Secured Party.

5.4          Payover.  Except as otherwise provided in the Loan Agreement, the Debtor shall deliver any funds attributable to the Collateral directly to the Lockbox.

5.5          Power of Attorney.  Subject to the further provisions of this Section 5.5, the Debtor hereby irrevocably appoints Secured Party as the Debtor’s true and lawful agent and attorney-in-fact, with full power of substitution, in the name of Secured Party or in the name of the Debtor, for the sole use and benefit of Secured Party, but at the cost and expense of the Debtor, to exercise all or any of the following powers and rights with respect to the Collateral (without any obligation on the part of Secured Party to exercise any of the following powers and rights): (a) to demand, receive, collect, sue and give acquittance for, settle, compromise, compound, prosecute or defend any action or proceeding with respect to the Collateral; (b) to endorse, collect, deposit and receipt for any checks, drafts or other means of payment thereof received from any source that constitutes all or part of the Collateral; (c) to receive, collect, and demand payment of all the sums due and payable to the Debtor with respect to the Pledged Equity; (d) to make payments thereon directly to Secured Party; and (e) to exercise, enforce, enjoy, carry out, receive and/or perform any and all rights, powers, duties, benefits and remedies of the Debtor with respect to and arising under the Collateral; provided, however, the exercise by Secured Party of or failure of Secured Party to exercise any such authority shall in no manner affect the liability of Debtor hereunder or the liability of the Borrowers under the Loan Agreement, and Secured Party shall be under no obligation or duty to exercise any of the powers hereby conferred upon it and shall be without liability for any act or failure to act in connection with the collection of, or the preservation of any rights under the Collateral.  The agency and authority hereby granted and created constitute an agency coupled with an interest and are irrevocable while this Agreement remains in force and effect.  Secured Party shall not be bound to take any steps necessary to preserve rights in any of the Collateral against other Persons.

5.6          Delivery to Secured Party.  Except as otherwise provided in the Loan Agreement, if any Collateral is received by the Debtor, the Debtor shall deliver, or cause to be delivered, to Secured Party such Collateral on the day received or promptly thereafter, with any checks being endorsed by the Debtor in favor of Secured Party.  The Debtor shall not commingle any such Collateral with any other funds, proceeds or monies of the Debtor.

5.7          Financing Statement Filings.  The Debtor authorizes Secured Party to file, with all appropriate jurisdictions, such financing statements describing the Collateral as Secured Party

Pledge Agreement – Royale Energy, Inc.

-4-

deems reasonably necessary, without the need for further authorization from the Debtor.  The Debtor shall pay the cost of filing such financing statements.

5.8          Transfer or Pledge of Collateral.  The Debtor shall not sell, assign, transfer, encumber, pledge, hypothecate or otherwise dispose of any interest in the Collateral, except as permitted hereunder or under the other Loan Documents.

5.9          Expenses of Secured Party.  The Debtor shall pay to Secured Party all expenses, including, without limitation, reasonable attorneys’ fees and legal expenses, incurred or paid by Secured Party in exercising or protecting its interests, rights and remedies under this Agreement.

5.10          Payments to Protect Collateral.  Except as otherwise provided in the Loan Agreement, the Debtor shall pay, prior to delinquency or any applicable period of grace granted by the relevant Governmental Authority all taxes, charges and other assessments, if any, against the Collateral.  Upon the Debtor’s failure to make such payments, Secured Party shall have the right, but not the obligation, to pay the same.  Any such payment made by Secured Party shall be payable by the Debtor to Secured Party upon demand, with interest from the date advanced by Secured Party at a rate equal to the Default Rate.

5.11          Further Assurances.  The Debtor shall make, procure, execute and deliver all acts, things, writings and assurances as Secured Party may at any time reasonably request, to protect, assure or enforce its interests, rights and remedies pursuant to this Agreement.

ARTICLE VI

EVENTS OF DEFAULT; RIGHTS AND REMEDIES OF SECURED PARTY

6.1          Events of Default.  The occurrence of an Event of Default under the Loan Agreement shall constitute an “Event of Default” under this Agreement.

6.2          Remedies.  Upon the occurrence and continuance of an Event of Default:

(a)           Secured Party shall have the rights and remedies provided in the UCC in force in the State of New York or other applicable jurisdiction;

(b)           Secured Party shall have the rights and remedies provided in the Loan Agreement, any other Loan Document and any security instruments or financing statements executed in connection therewith;

(c)           in addition to, or in conjunction with, the rights and remedies provided pursuant to clauses (a)-(b) of this Section 6.2, Secured Party may in accordance with applicable law:

(i) in its discretion, sell, assign, transfer and deliver the whole of the Collateral or any part thereof, or any additions thereto, or substitutes therefor, as a whole or in parcels, in such order as Secured Party may elect, at public or private sale, through brokers or otherwise,

Pledge Agreement – Royale Energy, Inc.

-5-

with such commercially reasonable notice or advertisement as may be required by the UCC;

(ii) bid and become purchaser at any public sale of the Collateral or any part thereof;

(iii) apply the net proceeds of disposition of all or any part of the Collateral available for application on the Obligations in the manner set for in the Loan Agreement, and the Debtor shall remain liable for any deficiency, but only if the Debtor is a Borrower;

(iv) demand, collect and receive all or any part of the Collateral thereafter due and payable to the Debtor;

(v) transfer to itself or to its nominee all or any part of the Collateral, and receive the monies, interest, income or benefits attributable or accruing to the Collateral, and hold the same as security for the Obligations, whether or not then due;

(d)           Secured Party shall be entitled to immediate possession of all books and records evidencing any Collateral and it or its representatives shall have the authority to enter upon any premises upon which any of the same, or any Collateral, may be situated and remove the same therefrom without liability; and

(e)           The Debtor specifically understands and agrees that any sale by Secured Party of all or part of the Collateral pursuant to the terms of this Agreement may be effected by Secured Party at times and in manners which could result in the proceeds of such sale being significantly and materially less than might have been received if such sale had occurred at different times or in different manners, and Debtor hereby releases Secured Party and its officers and representatives from and against any and all obligations and liabilities arising out of or related to the timing or manner of any such sale, except as may be caused through fraud, willful misconduct or gross negligence of Secured Party or any of its officers or representatives.

6.3          Subrogation.  Notwithstanding a foreclosure sale, transfer, assignment or other disposition of any of the Collateral hereunder or exercise of any other remedy by Secured Party in connection with an Event of Default, the Debtor shall not be subrogated to any rights of Secured Party against the Collateral or any other security for the Obligations, nor shall the Debtor be deemed to be the owner of any interest in any of the Obligations, nor shall the Debtor exercise any rights or remedies with respect to the Collateral or any other security for the Obligations until the Obligations have been paid in full.

6.4          Waivers.  The Debtor waives demand, notice, protest, notice of intent to acceleration, acceleration, and all demands and notices of any action taken by Secured Party under this Agreement except as is specifically elsewhere provided herein and except as to notices which are required, and which may not be waived, under the UCC.

Pledge Agreement – Royale Energy, Inc.

-6-

6.5          Negation of Liability.  Secured Party shall not be responsible in any way for any depreciation or diminution in the value or price of the Collateral, nor shall Secured Party have any duty or responsibility whatsoever to enforce collection of the Collateral by legal proceedings or otherwise, the sole duty of Secured Party being to receive collections, remittances and payments on the Collateral if and when tendered to Secured Party, and at Secured Party’s option to apply the amount or amounts so received, after deduction of any collection costs incurred, as payment upon the Obligations in the order and manner prescribed in Section 6.2.

ARTICLE VII

MISCELLANEOUS

7.1          Assignment.  The rights of Secured Party hereunder may be assigned at any time and from time to time, whether in whole or in part, and in such case the assignee shall be entitled to all of the rights, privileges and remedies granted in this Agreement.

7.2          Waiver.  No delay of Secured Party in exercising any power or right shall operate as a waiver thereof; nor shall any single or partial exercise of any power or right preclude other or further exercise thereof or the exercise of any other power or right.  No waiver by Secured Party of any right hereunder or of any default by the Debtor shall be binding upon Secured Party unless in writing, and no failure by Secured Party to exercise any power or right hereunder or waiver of any default by the Debtor shall operate as a waiver of any other or further exercise of such right or power or of any further default.  The exercise or beginning of the exercise by Secured Party of any one or more of such rights, powers or remedies shall not preclude the simultaneous or later exercise by Secured Party of any or all other such rights, powers or remedies.  No indulgence by Secured Party, or waiver of compliance with any provision hereof, shall be construed as a waiver of the right of Secured Party to subsequently require strict performance hereof by the Debtor.

7.3          Release of Lien.  After payment in full of the Obligations, within a reasonable time after the Debtor’s request and at the Debtor’s expense, Secured Party shall (a) execute and deliver release or termination instruments and (b) return to the Debtor all certificates and other instruments evidencing the Collateral in the possession or control of Secured Party, and take other reasonable action that the Debtor reasonably requests in order to release Secured Party’s security interest in the Collateral.

7.4          Remedies Cumulative.  Each right, power and remedy of Secured Party as provided for herein, at law or in equity or by statute or otherwise, shall be cumulative and in addition to every other such right, power or remedy, and the exercise of any one or more of the remedies provided for herein shall not be construed as a waiver of any of the other remedies of Secured Party.

7.5          Parties in Interest.  The terms “Secured Party” and “Debtor” as used in this instrument include the respective heirs, executors, administrators, successors, representatives, trustees and permitted assigns of such parties.

Pledge Agreement – Royale Energy, Inc.

-7-

7.6          Reasonable Notice.  Notice mailed to the Debtor’s address or to Debtor’s most recent changed address on file with Secured Party, at least ten (10) days prior to the related action, or if the UCC specifies a longer period, such longer period prior to the related action, shall be deemed reasonable.

7.7          Waiver Of Rights To Jury Trial.  The parties hereby knowingly, voluntarily, intentionally, irrevocably, and unconditionally waive all rights to trial by jury in any action, suit, proceeding, counterclaim, or other litigation based on, or arising out of, under or in connection with this Agreement or any document executed in connection with this Agreement, or any course of conduct, course of dealing, statements (whether verbal or written) or actions of any party with respect hereto.

7.8          Venue and Jurisdiction.  The parties agree that New York, New York County, New York is proper venue for any action or proceeding brought by either party under, in connection with, or relating to this Agreement, whether in contract, tort or otherwise.  Any action or proceeding must be brought in state or federal court in such county to the extent not prohibited by applicable law.  To the extent permitted by applicable law, each party hereto irrevocably (a) submits to the exclusive jurisdiction of such courts and (b) waives all objection and defenses he may now or hereafter have as to the venue of any such action or proceeding brought in any such court or that any such court is an inconvenient forum.

7.9          Governing Law.  This Agreement and any issues related to it (including, without limitation, the validity, enforceability, interpretation, and construction of this Agreement and any issues related to it) shall be governed by the laws of the state of New York (without regard to conflict of law rules) and the laws of the United States applicable to transactions in New York.

7.10          Notices.  All notices, demands, requests and other communications required or permitted hereunder shall be in writing and delivered in the manner set forth in the Loan Agreement.  For purposes hereof, the address for notice to the Debtor shall be as set forth in the preamble hereof and the address for notice to Secured Party shall be as set forth in the Loan Agreement.  The Debtor and Secured Party shall have the right to change its address by designating a new address in a written notice to the other as herein required.

7.11          Invalidity of Certain Provisions.  In the event any one or more of the provisions contained in this Agreement shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of this Agreement.

7.12          Counterparts.  This Agreement may be executed by the parties hereto in any number of separate counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same instrument.  In this regard, each of the parties hereto acknowledges that a counterpart of this Agreement containing a set of counterpart execution pages reflecting the execution of each party hereto shall be sufficient to reflect the execution of this Agreement by each party hereto and shall constitute one instrument.

Pledge Agreement – Royale Energy, Inc.

-8-

7.13          Controlling Agreement.  In the event of a conflict between any provision of this Agreement and a provision of the Loan Agreement, the provision of the Loan Agreement shall control; provided, however, the inclusion in this Agreement of a provision with respect to which there is no corresponding provision in the Loan Agreement shall not constitute a conflict with any provision of this Agreement.

7.14          No Oral Agreements.  This Agreement and the documents executed concurrently herewith represent the final agreement between the parties and may not be contradicted by evidence of prior, contemporaneous, or subsequent oral agreements of the parties.  There are no unwritten oral agreements between the parties.

(Signatures appear on following pages)

 

 

Pledge Agreement – Royale Energy, Inc.

-9-

IN WITNESS WHEREOF, Debtor and Secured Party have executed this Agreement as of the date first above written.

DEBTOR:

ROYALE ENERGY, INC.,

a Delaware corporation,

formerly known as Royale Energy Holdings, Inc.

By:  /s/ Jonathan Gregory

Name:  Jonathan Gregory

Title: Chief Executive Officer

(Signatures continue on following page)

 

 

 

Signature Page to Pledge Agreement – Royale Energy, Inc.19892023v.5

  

SECURED PARTY:

ARENA LIMITED SPV, LLC

By:                                                                           

Name:                                                                               

Title:                                                                        

         

Signature Page to Pledge Agreement – Royale Energy, Inc.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00280-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00280-of-00352.parquet"}]]