Document:

Exhibit 10.3

 

	
RECORDING REQUESTED BY AND

 WHEN RECORDED MAIL TO

 

	 
	
NAME

	
Sunny Frog Oil, LLC

 

	 
	
MAILING

 ADDRESS

	
1223 Wilshire Boulevard

Suite 1050

 

	 
	
CITY,

STATE

 ZIP CODE

	
Santa Monica, CA 90403

	
(SPACE ABOVE THIS LINE RESERVED FOR RECORDER’S USE)

	 	 
	
Documentary Transfer Tax $________

__Computed on value of interest conveyed.

__Computed on value of interest conveyed less liens and encumbrances remaining thereon at time of sale.

___________________________________________

 Declarant

	 

CONVEYANCE OF TERM OVERRIDING ROYALTY INTEREST

This Conveyance of Term Overriding Royalty Interest (this “Conveyance”) is made and entered into effective as of 6:59 a.m., Pacific Time, April 1, 2018, by and between SUNNY FROG OIL LLC, a Delaware limited liability company, whose address is 1223 Wilshire Boulevard, Suite #1050, Santa Monica, CA 90403 (“Grantor”), and SFO PRODUCTION PAYMENT LLC, a Delaware limited liability company, whose address is 1223 Wilshire Boulevard, Suite #1050, Santa Monica, CA 90403  (“Grantee”).  Capitalized terms used herein shall have the meanings given to them in Section 2.13 hereof unless otherwise defined herein.

WHEREAS, Grantor is the owner of the Net Oil and Gas Properties, and Grantor has agreed to convey to Grantee the following described term overriding royalty interest in and to the Net Oil and Gas Properties and the Crude Oil attributable thereto.

NOW, THEREFORE, KNOW ALL MEN BY THESE PRESENTS:

ARTICLE I

 CONVEYANCE OF TERM ORRI

Section 1.1          Conveyance.  For and in consideration of One Hundred Dollars ($100.00) and other good and valuable consideration paid by Grantee to Grantor, the receipt and sufficiency of which are hereby acknowledged, Grantor hereby GRANTS, BARGAINS, SELLS, CONVEYS, ASSIGNS, TRANSFERS, SETS OVER and DELIVERS unto Grantee, its successors, and assigns the Term ORRI.

-1-

(a)          As used herein:

(1) “Term ORRI” means an overriding royalty interest in and to the Net Oil and Gas Properties and in and to all Crude Oil that may be produced and saved or sold from or under the Net Oil and Gas Properties, equal to the Term Production Percentage of all Crude Oil produced from the Gross Oil and Gas Properties.

(2) “Term Production Percentage” means, in each case as a fractional interest in 8/8ths of all Crude Oil produced and saved or sold from the Gross Oil and Gas Properties, 2.75% in 2018, which percentage will increase thereafter by 1.00% annually, effective January 1 of each year, up to a maximum of 9.75% (in which year such percentage increase over the prior year will be 0.75% and not 1.00%); provided, however, in the event of any termination or attempted termination by Grantor of the Division Order prior to expiration of the Term that adversely affects the rights of Grantee to continue to receive the Term ORRI, or any portion thereof, at the then applicable Term Production Percentage, then the Term Production Percentage will be 9.75% for the duration of the Term.  For the avoidance of doubt, the Term Production Percentage will not be subject to proportionate reduction based on the Grantor owning less than the entire interest in the Gross Oil and Gas Properties.

(3) “Gross Oil and Gas Properties” means the 100% interest on an 8/8ths basis in, to, and under the following: (A) all fee interests in and to the Lands and in and to the Hydrocarbons and other minerals thereunder, including all right, title, and interest thereto under grant deeds, mineral deeds, conveyances, assignments, or other forms of transfer, all as described on Exhibit A (the “Fee Interests”); (B) all Hydrocarbon and mineral leases described in Exhibit A (the “Leases”), and all of the lands described by the Leases (the “Lands”) and, with respect to the those Leases located in the Sansinena Field, to the extent enclosed within the boundary of Exhibit A-1, together with all rights in any pooled or unitized or communitized acreage by virtue of the Fee Interests or Lands being a part thereof (“Units”), and all production from the Units allocable to any such Fee Interests or Lands and all properties and lands unitized, communitized, or pooled with the Fee Interests, Leases, Lands, or Units; (C) all Hydrocarbon wells located on the Lands or Units attributable to the Gross Oil and Gas Properties, including the wells described in Exhibit B and the pro-ration units associated therewith (the “Wells”); (D) all rights to produce, and rights in and to production of, all Hydrocarbons (including proceeds from the sale of such Hydrocarbons, including inventory Hydrocarbons) (1) produced after the Effective Date or allocable to the Gross Oil and Gas Properties or any of them on and after the Effective Date, or (2) located as of the Effective Date in pipelines or in tanks above the sales meter or upstream of the pipeline sales connection; and (E) all unitization, communitization and pooling declarations, orders, and agreements to the extent they relate to the Gross Oil and Gas Properties or any of them or the production of Hydrocarbons therefrom. Notwithstanding anything herein to the contrary, it is the intent of Grantor that the term Gross Oil and Gas Properties includes all 

-2-

interests as set forth above in the definition of Gross Oil and Gas Properties of each and every kind owned by Grantor, whether described or not described, known or unknown, situated in the East LA Oil Field, Lost Angeles County, California.

(4) “Net Oil and Gas Properties” means 100% of all of Grantor’s right, title, and interest in and to the Fee Interests, the Leases, the Lands, the Units, the Wells, and the other properties, assets, rights and interests described in clause (3) above out of which the Net Oil and Gas Properties are the whole or part.

(5) “Crude Oil” means the unrefined mixture of liquid hydrocarbons, of any grade or specific gravity, commonly known as petroleum or oil.

(6) “Effective Date” means April 4, 2018, which is the date on which the transactions contemplated in the Purchase Agreement (as such term is defined in the Assignment and Assumption Agreement, as defined below) are completed and closed.

(b) The Term ORRI shall, for the Term, be equal to the then applicable Term Production Percentage of the Crude Oil produced and saved or sold from (or, to the extent pooled or unitized, allocated to) the Gross Oil and Gas Properties, and neither the then applicable Term Production Percentage nor any later applicable Term Production Percentage shall be reduced for any reason including if (1) the undivided interest in a Net Oil and Gas Property is less than the entire interest in the applicable Gross Oil and Gas Property, or (2) if the interest in Hydrocarbons underlying such portion of the Lands which is covered by a Net Oil and Gas Property is less than the entire interest in the Hydrocarbons underlying such portion of the Lands.

(c) For the avoidance of doubt, notwithstanding the Term ORRI being hereby granted out of the Net Oil and Gas Properties, the amount of the Term ORRI is equal to the Term Production Percentage of Crude Oil produced from the Gross Oil and Gas Properties, but satisfied only out of Crude Oil produced from the Net Oil and Gas Properties.  By way of example only, if, in 2018, (i) the Term Production Percentage is 2.75%, (ii) the amount of Crude Oil produced and saved or sold from the Gross Oil and Gas Properties for the relevant period is 100 Barrels, and (iii) 50 Barrels of said 100 Barrels is attributable to the Net Oil and Gas Properties, the Term ORRI for the relevant period will be equal to 2.75 barrels (i.e., 2.75% multiplied against 100 Barrels), satisfied out of the 50 Barrels of Crude Oil attributable to the Net Oil and Gas Properties.

TO HAVE AND TO HOLD, the Term ORRI, together with all and singular rights and appurtenances thereto, unto Grantee, its successors and assigns, until the expiration of the Term, subject to the following terms, provisions, and conditions.

Section 1.2          Warranty.  Grantor hereby warrants title to the Net Oil and Gas Properties against every person whomsoever lawfully claiming or to claim the same or any part thereof by, through, or under Grantor but not otherwise.  EXCEPT AS PROVIDED IN THE PRECEDING 

-3-

SENTENCES OF THIS SECTION 1.2, GRANTOR MAKES NO REPRESENTATION OR WARRANTY, EXPRESS, IMPLIED, STATUTORY, OR OTHERWISE, WITH RESPECT TO GRANTOR’S TITLE TO THE NET OIL AND GAS PROPERTIES OR ANY OF THEM.

Section 1.3          Disclaimers.  EXCEPT AS EXPRESSLY AND SPECIFICALLY SET FORTH IN THIS CONVEYANCE, GRANTOR MAKES NO REPRESENTATION, WARRANTY, GUARANTEE, OR COVENANT, EITHER EXPRESS OR IMPLIED, OF ANY KIND, NATURE, OR TYPE WHATSOEVER, TO EITHER GRANTEE REGARDING THE TERM ORRI, INCLUDING THE PRESENT OR FUTURE VALUE THEREOF, THE AMOUNT, VALUE, OR MERCHANTABILITY OF THE HYDROCARBONS PRODUCED OR TO BE PRODUCED FROM THE NET OIL AND GAS PROPERTIES, THE REALIZATION OF ANY OF EITHER GRANTEE’S FINANCIAL OR OTHER EXPECTATIONS IN CONNECTION THEREWITH, OR OTHERWISE.  GRANTOR IS HEREBY CONVEYING THE TERM ORRI TO GRANTEE “AS IS, WHERE IS,” AND WITH ALL FAULTS.

Section 1.4          Disclosures to Grantee; Joinder.  Grantor will assign this Conveyance to RMX Resources, LLC, a Texas limited liability company (“Royale”), pursuant to the terms of that certain Assignment and Assumption Agreement (the “Assignment and Assumption Agreement”) entered into by and between Grantor and Royale dated effective as of the Effective Date.  Pursuant to the Assignment and Assumption Agreement, Royale will assume all of Grantor’s obligations, liabilities, and rights expressly set forth in this Conveyance.  Grantee hereby consents for all purposes to the assignment by Grantor of this Conveyance to Royale.  This Conveyance is hereby made subject to each of the terms and conditions of the Assignment and Assumption Agreement for all purposes, including specifically the rights of Grantor set forth in Section 2 thereof, and in the event of any conflict or ambiguity between this Conveyance and the Assignment and Assumption Agreement, the Assignment and Assumption Agreement shall govern such conflict or ambiguity.

Section 1.5          Term.

(a) The Term ORRI will remain in full force and effect until such time as Grantee has received and realized proceeds on 300,000 Barrels of Crude Oil from and after the Effective Date.  Such period of time during which the Term ORRI is in full force and effect is referred to herein as the “Term.”

(b) The effective time of the expiration of the Term shall be 11:59 p.m. Los Angeles, CA time on the day on which the 300,000th Barrel of Crude Oil attributable to the Term ORRI was delivered to (or gathered by) the first purchaser of such Crude Oil.  In the event Grantee receives any proceeds from the sale of Barrels of Crude Oil produced from or applicable to the Net Oil and Gas Properties at any time subsequent to such effective time of the expiration of the Term, Grantee shall immediately pay the full amount of all such proceeds to Grantor without any deduction therefrom.

(c) Following the expiration of the Term, all of Grantee’s rights, titles, and interests in and to the Term ORRI shall automatically terminate and vest in Grantor, and, upon request by Grantor, Grantee shall execute and deliver such instrument or 

-4-

instruments as Grantor reasonably determines to be necessary or desirable to evidence in the public record the termination of the Term ORRI and the vesting of the interests therein to Grantor.

(d) In the event any individual Net Oil and Gas Property (or portion thereof, as applicable) should terminate or expire before the expiration of the Term and not be extended, renewed or replaced, subject to Section 1.7 of this Conveyance, the Term ORRI no longer shall apply to that particular Net Oil and Gas Property (or such portion thereof, as applicable), but the Term ORRI shall remain in full force and effect and undiminished as to all remaining Net Oil and Gas Properties (and the remaining portion of such Oil and Gas Property, as applicable), and the Term Production Percentage and the Term shall not be reduced or diminished by reason of the termination or expiration of a Net Oil and Gas Property.

Section 1.6          Non-Operating, Non-Expense-Bearing Interest.

(a) The Term ORRI will be a non-operating, non-expense-bearing interest, and real property interest in and to each of the Net Oil and Gas Properties, free of all costs and expenses, including in connection with the risk and expense of production and operations. The Term ORRI will (1) be paid in the same manner by the first purchaser of oil produced from the Net Oil and Gas Properties as the existing royalties applying to the Net Oil and Gas Properties are paid, which existing royalties shall for all purposes include all “918” payments made by Grantor (collectively, the “Existing Royalties”), and (2) bear its proportionate share of Post Production Costs, but only if and only to the extent such costs are also deductible from any of the Existing Royalties.  As used herein, “Post Production Costs” means all costs related to, without limitation, the sale, marketing, transportation, delivery, shrinkage, processing, and other post-production costs and expenses incurred in connection with making such oil marketable, getting such oil to market, and sale of same to the first purchaser thereof; provided, however, Post Production Costs chargeable against the Term ORRI, if any, (i) shall not exceed the costs for similar services prevailing in the area where the Crude Oil subject to the Term ORRI are produced and (ii) shall not include any marketing cost or expense charged or chargeable by Grantor or its Affiliates, payment of which by Grantee would be for the sole and exclusive benefit of Grantor and/or its applicable Affiliate, with respect to the Barrels of Crude Oil attributable to the Term ORRI.

(b) Grantor will promptly invoice Grantee for Post Production Costs chargeable against the Term ORRI and which have previously been paid by Grantor on Grantee’s behalf.  Each invoice will be accompanied by the applicable vendor or other invoice and proof of payment, if applicable, and Grantor’s calculation of the Post Production Costs chargeable against the Term ORRI set forth in such invoice. Grantee will timely pay all undisputed invoices for Post Production Costs within thirty (30) days from the date of Grantee’s actual receipt thereof.  If Grantee pays Grantor for Post Production Costs incorrectly allocated to the Term ORRI, Grantor shall be obligated to promptly return such overpayment to Grantee at such time Grantor becomes aware of such overpayment.

-5-

(c) In the event Grantee, in good faith, disputes any previously paid or invoiced charges for Post Production Costs, Grantee will notify Grantor in writing within thirty (30) days of receipt of the invoice therefor of the charges being contested and the basis for Grantee’s good faith dispute thereof.  The Parties will each endeavor in good faith to resolve all such disputes. If a dispute has not been resolved by the Parties by the expiration of the ninetieth (90th) day from the date of Grantee’s written notice to Grantor of such dispute, Grantor or Grantee may commence a declaratory relief action seeking adjudication of the contested charges. The prevailing Party shall be entitled to recovery from the other Party of all court costs and fees (excluding, for the avoidance of doubt, legal fees and expenses) incurred by such Party in connection with such dispute.

Section 1.7          Renewals, Extensions, Etc. The Term ORRI shall apply to all renewals, extensions, modifications, and other similar arrangements of the Leases, or any portions thereof, taken or entered into during the Term by Grantor or any of its successors or assigns, or any of their respective affiliates, representative, agents, and/or employees. The Term ORRI shall also apply to every new lease or similar real property interest on or covering any portion of the Lands that is taken during the Term following the expiration, termination, or surrender of any of the Net Oil and Gas Properties, by Grantor or any of its successors or assigns or any of its or their respective affiliates, representatives, agents, and/or employees.  All such new leases or similar real property interests shall be Net Oil and Gas Properties for the purposes of this Conveyance. Additionally, the Term ORRI shall continue in force and effect during the Term and not be extinguished by reason of Grantor acquiring the mineral estate covered by a Lease and thereafter releasing such Lease.

Section 1.8          Marketing of Term ORRI Crude Oil. Subject to Grantee’s right under Section 1.9 of this Conveyance:

(a) if Grantor is the operator of the Wells, Grantor, as operator, shall market or shall cause to be marketed Grantee’s share of Crude Oil attributable to the Term ORRI in good faith and as a reasonably prudent oil and gas operator under the same or similar circumstances;

(b) if Grantor is not operator of the Wells, Grantor shall cause Grantee’s share of Crude Oil attributable to the Term ORRI to be marketed on terms no less than equal to the terms being received by Grantor for its share of oil produced from the Net Oil and Gas Properties; and

(c) Grantee’s share of Crude Oil attributable to the Term ORRI shall be delivered to the credit of Grantee into the facilities of the applicable first purchaser;

provided, however, as between Grantor and Grantee, Grantor shall be in exclusive control and possession of the Hydrocarbons produced from or attributable to the Net Oil and Gas Properties (including Grantee’s share of Crude Oil attributable to the Term ORRI deliverable hereunder) and responsible for any loss, damage, or injury caused thereby; provided, further, however, for the avoidance of doubt, Grantor shall bear no liability or responsibility to either Grantee for any loss, damage, or injury to either Grantee as a consequence of any failure of the first purchaser of the Crude Oil to fully and timely pay for such Crude Oil (including Grantee’s share of such 

-6-

Crude Oil attributable to the Term ORRI deliverable hereunder).  Furthermore, Grantor may not act for or bind Grantee on any matter, except the marketing and delivery of Grantee’s share of Crude Oil attributable to the Term ORRI as provided for under this Section 1.8.

Section 1.9          Grantee’s Take in Kind Rights. Notwithstanding anything herein to the contrary, Grantee shall have the right to take in kind its share of Crude Oil attributable to the Term ORRI, which right it may exercise at any time and from time to time in its sole discretion. During such time(s) as Grantee so elects to take in kind its share of Crude Oil attributable to the Term ORRI, Grantor and its successors and assigns shall take or cause to take all such actions as are reasonably necessary to permit Grantee to take in kind.

Section 1.10          Division Order. The Term ORRI will be the subject of a division order prepared and provided by the first purchaser of the Crude Oil produced from the Gross Oil and Gas Properties, in a customary form and substance reasonably acceptable to Grantee (the “Division Order”). If, after the Effective Date, the first purchaser of all or a portion of the Crude Oil produced from the Gross Oil and Gas Properties changes, Grantor will ensure that the Term ORRI will be subject to a division order with such new first purchaser (on no less than the same terms as offered to Grantor). The Division Order will direct such first purchaser to remit the Term ORRI payments to Grantee (to an account designated by Grantee) simultaneously with payment to Grantor for Grantor’s interest in the Crude Oil produced from the Gross Oil and Gas Properties.

Section 1.11          Royalties; Taxes. The Term ORRI shall be free of (and without deduction therefrom of) any and all royalties and other burdens on production (other than, for the avoidance of doubt, Post Production Costs subject to Section 1.6 of this Conveyance) and shall bear no part of same. Grantor’s portion of the Net Oil and Gas Properties shall be burdened with, and Grantor shall timely pay, all such royalties and other burdens on production, and Grantor shall defend, indemnify and hold Grantee harmless from and against any loss or claim with respect to any such royalties and other burdens on production or any claim by the owners or holders of such royalties and other burdens on production. Grantor will bear and pay all Taxes with respect to the Term ORRI other than Taxes that are actually deducted from the Existing Royalties or otherwise borne by the owners of the Existing Royalties.  Grantee will immediately reimburse, and indemnify, Grantor for, and from and against any claims related to or incurred in connection with, all amounts paid by or assessed against or charged to Grantor in connection with Grantee’s failure to pay when and as due the Taxes for which Grantee is responsible pursuant to the preceding sentence.

Section 1.12          Pooling and Unitization. During the Term, Grantor shall not voluntarily pool, communitize, or unitize the Term ORRI or the Net Oil and Gas Properties without the express written consent of Grantee, except to the extent required to satisfy applicable Legal Requirements, and any purported pooling, communitization or unitization in contravention of the preceding clause shall be null and void as to Grantee and shall not have the effect of pooling or affecting the Term ORRI.

Section 1.13          Information.

-7-

(a) Grantor will provide Grantee with a monthly report setting forth (1) the amount of Crude Oil production sold from the Net Oil and Gas Properties for the relevant month, and (2) Grantor’s estimate of the remaining Term of the Term ORRI (along with supporting information therefor to the extent not previously provided). For the avoidance of doubt, Grantor’s estimation of the remaining Term of the Term ORRI is not intended to be, nor shall be deemed to be, a representation or warranty to Grantee, and any errors in any of Grantor’s estimations shall not give rise to any claim or cause of action of any nature by Grantee.

(b) Grantee will provide Grantor with a copy of all run statements and checks received by Grantee from the first purchaser in connection with the Term ORRI.

Section 1.14          Limitations.

(a) Grantee will look solely to the Crude Oil produced and sold from or attributable to (or otherwise taken in kind in accordance with Section 1.9 of this Conveyance) the Net Oil and Gas Properties for satisfaction and discharge of the Term ORRI, and Grantor will not be personally liable under this Conveyance for the payment and discharge thereof (although Grantor will be personally liable for the performance of its other agreements herein).

(b) Grantor will own, use and, if applicable, operate the Net Oil and Gas Properties in accordance with the Leases, applicable Legal Requirements, and contracts and agreements to which the Net Oil and Gas Properties are bound and, in any event, as a reasonable and prudent operator of oil and gas properties located in the region in which the Gross Oil and Gas Properties are located.

(c) (1) Grantor will not mortgage, pledge or hypothecate the Net Oil and Gas Properties or create or allow to remain any lien or security interest thereon or on any Hydrocarbons produced therefrom, and (2) Grantor will not assign, sell, convey or otherwise transfer the Net Oil and Gas Properties or any part thereof, unless the transferee expressly agrees to assume and perform all of Grantor’s obligations under this Conveyance and the other documents executed in connection herewith (contingent, in the case of a mortgagee, upon taking possession), and such mortgage, pledge, hypothecation, lien, security interest, assignment, sale, conveyance, or other transfer is made and accepted expressly subject and subordinate to this Conveyance. Any purported mortgage, pledge, hypothecation, lien, security interest, assignment, sale, conveyance, or other transfer in violation hereof will be null and void. For the avoidance of doubt, Grantee may freely mortgage, pledge, or hypothecate and/or assign, sell, convey or otherwise transfer (in whole or part) its right, title, and interest in and to the Term ORRI (each, a “Grantee Transfer”); provided, however, Grantee may not mortgage, pledge, or hypothecate, and/or assign, sell, convey, or otherwise transfer (in whole or part) any of its right, title, or interest in or to the Term ORRI unless each such transferee expressly agrees in writing (contingent, in the case of a mortgagee, upon taking possession) to assume and perform all of Grantee’s obligations under this Conveyance and the other documents executed in connection herewith, including, for the avoidance of doubt, the Assignment and Assumption Agreement.

-8-

(d) If, at any time, Grantee desires to carry out a Grantee Transfer, Grantee shall have the right to request from Grantor (in which event, Grantor shall, subject to the terms of this Section 1.14(d), within ten (10) days of said request, deliver to Grantee) a copy of the most recent reserve report and/or reserve study (each and all of such reports and/or studies, the “Reserve Report”) prepared by Grantor, its Affiliates, and/or a consulting reservoir engineer, as the case may be, with respect to the Net Oil and Gas Properties, which such Reserve Report may be shared by Grantee with any bona fide proposed transferee (each and all, a “Proposed Transferee”) subject to such Proposed Transferee’s agreement to review the Reserve Report under a duty of confidentiality to Grantor.  In connection therewith, and for the avoidance of doubt, (i) any Reserve Report provided by Grantor to Grantee will be provided as a courtesy only, and (ii) any Reserve Report shared with Grantee shall not, nor be deemed to, in any manner constitute an express or implied representation or warranty of Grantor as to, without limitation, in each case in connection with the Term ORRI or otherwise, the quantity of Hydrocarbons recoverable or to be recovered, the rate of production of Hydrocarbons, the present or future value or price of produced Hydrocarbons, the accuracy or care in preparation of such report or any aspect thereof, or otherwise. To the fullest extent permitted by law, Grantee will indemnify, defend, and hold harmless Grantor, Grantor’s Affiliate if such prepared or had prepared the relevant Reserve Report, and their respective directors (or governing persons), shareholders, members, officers, employees, agents, and third party consulting reservoir engineers (each, an “Indemnified Party”) from and against any and all claims, demands, causes of action, losses, liabilities (including without limitation fines and penalties), costs, and expenses (including without limitation reasonable attorneys’ fees and other costs of defense) asserted against or suffered by any Indemnified Party in connection with any and all claims that arise out of or are incident to or are asserted by Grantee, any Proposed Transferee, and/or, including without limitation, the respective agents, representatives, financiers, or otherwise of Grantee or any Proposed Transferee, in connection with any such party’s use or disclosure of, or reliance on, any Reserve Report or any aspect of any such report, except to the extent such claims, demands, causes of actions, losses, liabilities, costs, or expenses are caused by or arise out of an Indemnified Party’s gross negligence or willful misconduct.

ARTICLE II

 MISCELLANEOUS

Section 2.1          Governing Law. This Conveyance, the obligations of the Parties under this Conveyance, and all other matters arising out of or relating to this Conveyance and the transactions it contemplates, will be governed by and construed in accordance with the laws of the State of California, without giving effect to any conflicts of law principles that would cause the laws of another jurisdiction to apply.  Any dispute arising out of or relating to this Conveyance which cannot be amicably resolved by the Parties, shall be brought in a federal or state court of competent jurisdiction sitting in Los Angeles County of the State of California and the Parties irrevocably submit to the jurisdiction of any such court solely for the purpose of any such suit, action or proceeding.

Section 2.2          Successors and Assigns. The provisions and conditions contained in this Conveyance shall run with the land and the respective interests of Grantor and Grantee and shall 

-9-

be binding upon and inure to the benefit of Grantor and Grantee and their respective successors and assigns.  All references herein to either Grantor or Grantee shall include their respective successors and assigns.

Section 2.3          Subrogation. Grantee is specially assigned and subrogated to warranties of title that Grantor may have from its predecessors in interest to the extent applicable with respect to the Term ORRI and to the extent Grantor may legally assign such rights and grant such subrogation.

Section 2.4          Counterpart Execution; Recordation. This Conveyance may be executed in multiple originals all of which shall constitute one and the same conveyance.

Section 2.5          Severability. Except as otherwise expressly stated herein, in the event any provision contained in this Conveyance shall for any reason be held invalid, illegal, or unenforceable by a court or regulatory agency of competent jurisdiction, such invalidity, illegality, or unenforceability shall not affect the remaining provisions of this Conveyance.

Section 2.6          Further Assurances. Grantor, at Grantee’s request, and Grantee at Grantor’s request, shall execute and deliver such further instruments and do such further acts as may be necessary to carry out the purposes of this Conveyance.

Section 2.7          Audit. At Grantee’s written request, subject to any applicable restrictions on disclosure of information, Grantor shall give Grantee and its designated representatives reasonable access to Grantor’s office during normal business hours to (a) all production data and sales documentation (including sales agreements) in Grantor’s or its Affiliates possession relating to the Gross Oil and Gas Properties, (b) all other information and supporting documentation relevant to revenues, expenditures and other amounts relevant to the calculation of the amounts payable with respect to the Term ORRI, and (c) all reserve reports and reserve studies in possession of Grantor or its Affiliates relating to the Net Oil and Gas Properties, whether prepared by Grantor, its Affiliates or consulting engineers.

Section 2.8          Present and Absolute Conveyance. It is the express intention of Grantor and Grantee that the Term ORRI is, and shall be construed for all purposes as, a present, fully-vested, and absolute conveyance of real property.

Section 2.9          Tax Treatment. The Parties intend that, for federal income tax purposes (and any comparable provisions of state and/or local law), the Term ORRI will be characterized as a retained production payment, as described at Section 636(b) of the Code.  The Parties will not take any position inconsistent with such characterization in any Tax return and/or examination/proceeding, unless otherwise required by law.

Section 2.10          Waiver. The failure of a Party to insist upon strict performance of any provision hereof shall not constitute a waiver of or estoppel against asserting the right to require the performance in the future, nor shall a waiver or estoppel in any one instance constitute a waiver or estoppel with respect to a later breach of a similar nature or otherwise.

Section 2.11          Construction. The Parties have participated jointly in the negotiation and drafting of this Conveyance. If an ambiguity or question of intent or interpretation arises, this 

-10-

Conveyance will be construed as if drafted jointly by the Parties and no presumption or burden of proof will arise favoring or disfavoring either Party because of the authorship of any provision of this Conveyance.  The Parties will treat the words “include,” “includes” and “including” as if followed by “without limitation.” Pronouns in masculine, feminine, and neuter genders will be construed to include any other gender, and words in the singular form will be construed to include the plural and vice versa, unless the context otherwise requires.

Section 2.12          Errors. It is the intent of Grantor to convey the Term ORRI regardless of any errors in the description of any Net Oil and Gas Property, any incorrect or misspelled names, or any transcribed or incorrect recording references contained in any exhibit to this Conveyance.

Section 2.13          Definitions.  As used herein and in the exhibits hereto, the following terms shall have the respective meanings ascribed to them below:

(a) “Affiliate” means any Person which (1) controls either directly or indirectly a Party, or (2) is controlled directly or indirectly by such Party, or (3) is directly or indirectly controlled by a Person which directly or indirectly controls such Party, for which purpose “control” means the right to exercise more than 50% of the voting rights in the appointment of the directors or similar representation of a Person.

(b) “Barrel” means 42 United States standard gallons at 60 degrees Fahrenheit.

(c) “Code” means the Internal Revenue Code of 1986, as amended.

(d) “Governmental Authority” means any entity or body exercising executive, legislative, judicial, regulatory, or administrative functions of or pertaining to United States federal, state, local, or municipal governments, foreign, international, multinational, or other government, including any department, commission, board, agency, bureau, subdivision, instrumentality, official, or other regulatory, administrative, or judicial authority thereof, and any non-governmental regulatory body to the extent that the rules and regulations or orders of such body have the force of law.

(e) “Hydrocarbons” means crude oil, gas, natural gas liquids, condensate, casinghead gas, and other liquid or gaseous hydrocarbons (or any combination or constituents thereof), produced and severed from, or allocable to, the Net Oil and Gas Properties.

(f) “Legal Requirement” means any requirement imposed pursuant to any statute, rule, regulation, order, permit or license of any applicable Governmental Authority or by any applicable court order.

(g) “Party” means either Grantor or Grantee, as the case may be, and “Parties” means both of them.

(h) “Person” means any individual, corporation (including a non-profit corporation), company, general or limited partnership, limited liability company, joint stock company, joint venture, business, estate, trust, association, incorporated or 

-11-

unincorporated organization, club, syndicate, firm, labor union, or other legal entity or Governmental Authority.

(i) “Taxes” means any and all taxes, levies, or other like assessments, including but not limited to income tax, franchise tax, profits tax, windfall profits tax, surtax, gross receipts tax, capital gains tax, remittance tax, withholding tax, sales tax, use tax, value added tax, goods and services tax, presumptive tax, net worth tax, special contribution, production tax, pipeline transportation tax, severance tax, excise tax, ad valorem tax, property tax (real, personal or intangible), inventory tax, transfer tax, premium tax, environmental tax (including taxes under Section 59A of the Code), customs duty, stamp tax or duty, capital stock tax, margin tax, occupation tax, payroll tax, employment tax, social security tax, unemployment tax, disability tax, alternative or add-on minimum tax, estimated tax, and any similar tax or assessment imposed by any Governmental Authority or other taxing authority, together with any interest, fine or penalty, or addition thereto, whether disputed or not.

Signature Page to Follow

 

-12-

IN WITNESS WHEREOF, the Parties have executed this Conveyance as of April 1, 2018.

GRANTOR:

SUNNY FROG OIL LLC

By:      Sunny Frog Investments LLC,

its manager

By:                                                                         

 Name: Cary Meadow

Title: Manager

GRANTEE:

SFO PRODUCTION PAYMENT LLC

By:      Sunny Frog Investments LLC,

its manager

By:                                                                             

Name: Cary Meadow

Title: Manager

Signature Page to

 Conveyance of Term Overriding Royalty Interest

STATE OF CALIFORNIA                     )

COUNTY OF __________________ )

On ______________________________________ before me, _____________________, a Notary Public, personally appeared Cary Meadow, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

Signature _______________________________

(Seal)

Acknowledgement Page to

 Conveyance of Term Overriding Royalty Interest

STATE OF CALIFORNIA                     )

COUNTY OF __________________ )

On ______________________________________ before me, _____________________, a Notary Public, personally appeared Cary Meadow, who proved to me on the basis of satisfactory evidence to be the person(s) whose name(s) is/are subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their authorized capacity(ies), and that by his/her/their signature(s) on the instrument the person(s), or the entity upon behalf of which the person(s) acted, executed the instrument.

I certify under PENALTY OF PERJURY under the laws of the State of California that the foregoing paragraph is true and correct.

WITNESS my hand and official seal.

Signature _______________________________

(Seal)

Acknowledgement Page to

 Conveyance of Term Overriding Royalty Interest

EXHIBIT A

Leases/Fee Interests

See attached.

EXHIBIT A-1

Property Boundary Wrap

 

See attached for Sansinena Field.

 

EXHIBIT B

Wells

 

See attached.Exhibit 10.4

EMPLOYMENT AGREEMENT

This Employment Agreement (the “Agreement”) is made and entered into as of April 3, 2018, by and between Jonathan Gregory (the “Executive”) and Royale Energy, Inc. (formerly known as Royale Energy Holdings, Inc.), a Delaware corporation (“Royale” or the “Company”).

WHEREAS, the Company desires to employ the Executive on the terms and conditions set forth herein; and

WHEREAS, the Executive desires to be employed by the Company on such terms and conditions.

NOW, THEREFORE, in consideration of the mutual covenants, promises, and obligations set forth herein, the parties agree as follows:

1.          Term. The Executive’s employment hereunder shall be effective as of April 4, 2018 (the “Effective Date”) and shall continue until March 31, 2019.  The period during which the Executive is employed by the Company hereunder is hereinafter referred to as the “Employment Term.”

2.          Position and Duties.

2.1 Position.  During the Employment Term, the Executive shall serve as the Chief Executive Officer of the Company, reporting to the Board of Directors of the Company (the “Board”).  As CEO, the Executive shall have such duties, authority, and responsibility as shall be determined from time to time by the Board, which duties, authority, and responsibility are consistent with the Executive’s position.  The Executive shall also serve as a member of the Board and, if requested, as an officer or director of any affiliate of the Company for no additional compensation.

2.2 Duties. During the Employment Term, except as permitted by Section 2.3 below, the Executive shall devote an average of 25% of his business time to the performance of the Executive’s duties hereunder.  With the exception of Section 2.3, Executive will not engage in any other business, profession, or occupation for compensation or otherwise which would conflict or interfere with the performance of such services either directly or indirectly without the prior written consent of the Board. Notwithstanding the foregoing, the Executive will be permitted to (a) with the prior written consent of the Board (which consent will not be unreasonably withheld or delayed) act or serve as a director, trustee, committee member, or principal of any type of business, civic, or charitable organization as long as such activities are disclosed in writing to the Board in accordance with the Company’s Conflict of Interest Policy; (b) purchase or own less than five percent (5%) of the publicly traded securities of any corporation; provided that, such ownership represents a passive investment and that the Executive is not a controlling person of, or a member of a group that controls, such corporation; provided further that, the activities described in clauses (a) and (b) do not interfere with the performance of the Executive’s duties and responsibilities to the 

1

Company as provided hereunder, including, but not limited to, the obligations set forth in Section 2 hereof.  A copy of Executive’s current involvement in other companies either as a partial owner or as a Board member is attached as “Exhibit A.”

2.3 RMX Resources, LLC.  In addition to the activities described on Exhibit A,  Executive shall be entitled to devote the remainder of his business time to service as the Chief Executive Officer and a member of the Board of Directors of RMX Resources, LLC, a Texas limited liability company (“RMX”).  The parties acknowledge that after September 30, 2018, upon the passage of 90 days of written notice from the RMX Board, but no later than March 31, 2019, the Executive shall resign from all positions as an officer or employee of Royale; provided that unless and until the RMX Board shall determine that such service presents conflicts of interest with the interests of the Company, Executive shall be entitled to remain a member of the Board of Directors of Royale during his employment term with RMX.  For so long as Executive is a member of the Board of Directors or an officer of Royale, Executive shall recuse himself from any transactions or dealings between RMX and Royale, and any deliberations of any Board of Directors or other governing body relating thereto.  Nothing in this Section 2.3 shall relieve Executive of any duty, fiduciary or otherwise, to Royale or RMX.  Executive shall candidly inform both Royale and RMX of any potentially Conflicting Activities (defined in RMX’s Limited Liability Company Agreement) that come to his attention.  In addition, in performing his duties to Royale, the Executive shall hold himself out as acting only on behalf of Royale, and not in any way as an officer or agent of RMX or its Affiliates with respect to such performance.  Likewise, in performing his duties to RMX, the Executive shall hold himself out as acting only on behalf of the RMX, and not in any way as an officer or agent of Royale or its Affiliates with respect to such performance.

3.          Compensation.

3.1 Base Salary. The Company shall pay the Executive an annual rate of base salary of $62,500 per year in periodic installments in accordance with the Company’s customary payroll practices and applicable wage payment laws, but no less frequently than monthly. The Executive’s base salary shall be reviewed at least annually by the Board and the Board may, but shall not be required to, increase the base salary during the Employment Term. Additionally, the Board may decrease the base salary during the Employment Term.  The Executive’s annual base salary, as in effect from time to time, is hereinafter referred to as “Base Salary.”

3.2 Vacation; Paid Time-Off. During the Employment Term, the Executive shall be entitled to vacation/paid-time-off under Royale’s vacation and paid-time off policy.  Any vacation/paid-time-off shall run concurrently with Executive’s vacation/paid time off from RMX.

3.3 Bonus/Incentive Plan.  At the sole discretion of the Board, Executive may be eligible to participate in the Company’s Bonus Plan and Long Term Incentive Plan by the Company.

2

3.4 Business Expenses. The Executive shall be entitled to reimbursement for all reasonable and necessary out-of-pocket business, entertainment, and travel expenses incurred by the Executive in connection with the performance of the Executive’s duties hereunder in accordance with the Company’s expense reimbursement policies and procedures.

3.5 Indemnification.  

(a) In the event that the Executive is made a party or threatened to be made a party to any action, suit, or proceeding, whether civil, criminal, administrative, or investigative (a “Proceeding”), other than any Proceeding initiated by the Executive or the Company related to any contest or dispute between the Executive and the Company or any of its affiliates with respect to this Agreement or the Executive’s employment hereunder, by reason of the fact that the Executive is or was a director or officer of the Company, or any affiliate of the Company, or is or was serving at the request of the Company as a director, officer, member, employee, or agent of another corporation or a partnership, joint venture, trust, or other enterprise, the Executive shall be indemnified and held harmless by the Company from and against any liabilities, costs, claims, and expenses, including all costs and expenses incurred in defense of any Proceeding (including attorneys’ fees). Costs and expenses incurred by the Executive in defense of such Proceeding (including attorneys’ fees) shall be paid by the Company in advance of the final disposition of such litigation upon receipt by the Company of: (i) a written request for payment; (ii) appropriate documentation evidencing the incurrence, amount, and nature of the costs and expenses for which payment is being sought; and (iii) an undertaking adequate under applicable law made by or on behalf of the Executive to repay the amounts so paid if it shall ultimately be determined that the Executive is not entitled to be indemnified by the Company under this Agreement.

(b) During the Employment Term and for a period of six (6) years thereafter, the Company or any successor to the Company shall purchase and maintain, at its own expense, directors’ and officers’ liability insurance providing coverage to the Executive on terms that are no less favorable than the coverage provided to other directors and similarly situated executives of the Company.

(c) Notwithstanding any other provision of this Agreement to the contrary, the Company shall have no obligation to indemnify and hold the Executive harmless from any liabilities, costs, claims, or expenses resulting from:

(i) For an accounting of profits in fact made from the purchase or sale by Indemnitee of securities of the Company within the meaning of Section 16 of the Securities Exchange Act of 1934, as amended, or similar provisions of any state law; or

(ii) Resulting from Indemnitee’s knowingly fraudulent, dishonest, or willful misconduct, or

3

(iii) The payment of which by the Company under this Agreement is not permitted by applicable law.

3.6 Clawback Provisions. Notwithstanding any other provisions in this Agreement to the contrary, any incentive-based compensation, or any other compensation, paid to the Executive pursuant to this Agreement or any other agreement or arrangement with the Company which is subject to recovery under any law, government regulation or stock exchange listing requirement, will be subject to such deductions and clawback as may be required to be made pursuant to such law, government regulation, or stock exchange listing requirement (or any policy adopted by the Company pursuant to any such law, government regulation or stock exchange listing requirement).

4.          Termination of Employment. The Employment Term and the Executive’s employment hereunder may be terminated at any time by the Company with or without Cause as stated below.  After September 30, 2018, Executive may terminate the Agreement upon request from the RMX Board and 90 days’ written notice.  Upon termination of the Executive’s employment during the Employment Term, the Executive shall be entitled to the compensation described in this Section 4 and shall have no further rights to any compensation or any other payments from the Company or any of its affiliates.

4.1 Expiration of the Term, for Cause or Voluntary Termination by Executive.  

(a) The Executive’s employment hereunder may be terminated upon expiration of the Employment Term, by the Company for Cause or Voluntary Termination by the Executive as described above.  If the Executive’s employment is terminated upon either expiration of the Employment Term, by the Company for Cause or Voluntary Termination by the Executive for any reason or no reason, the Executive shall be entitled to receive:

(i) a lump sum of the Executive’s any accrued but unpaid Base Salary and accrued but unpaid vacation pay, if any, which shall be paid on the pay date immediately following the Termination Date (as defined below) in accordance with the Company’s customary payroll procedures;

(ii) reimbursement for unreimbursed business expenses properly incurred by the Executive, which shall be subject to and paid in accordance with the Company’s expense reimbursement policy; and

(b) For purposes of this Agreement, “Cause” shall mean:

(i) the Executive’s willful failure to perform his duties to the Company or with respect to its business (other than any such failure resulting from incapacity due to physical or mental illness);

(ii) the Executive’s willful failure to comply with any valid and legal directive of the Board;

4

(iii) the Executive’s willful engagement in dishonesty, illegal conduct, or misconduct, which is, in each case, injurious to the Company or its affiliates;

(iv) the Executive’s embezzlement, misappropriation, or fraud, whether or not related to the Executive’s employment with the Company;

(v) the Executive’s conviction of or plea of guilty or nolo contendere to a crime that constitutes a felony (or state law equivalent) or a crime that constitutes a misdemeanor involving moral turpitude if such felony or other crime materially impairs the Executive’s ability to perform services for the Company or results in harm to the Company or its affiliates as determined by the Board;

(vi)  the Executive’s willful unauthorized disclosure of Confidential Information (as defined below);

(vii) the Executive’s material breach of any material obligation under this Agreement or any other written agreement between the Executive and the Company; or

For purposes of this provision, no act or failure to act on the part of the Executive shall be considered “willful” unless it is done, or omitted to be done, by the Executive in bad faith or without reasonable belief that the Executive’s action or omission was in the best interests of the Company. Any act, or failure to act, based upon authority given pursuant to a resolution duly adopted by the Board or upon the advice of counsel for the Company shall be conclusively presumed to be done, or omitted to be done, by the Executive in good faith and in the best interests of the Company.

Notwithstanding the foregoing, termination of the Executive’s employment shall not be deemed to be for Cause unless and until the Company delivers to the Executive a copy of a resolution duly adopted by the affirmative vote of not less than a three-quarters (3/4) of the Board (after reasonable written notice is provided to the Executive and the Executive is given an opportunity, together with counsel, to be heard before the Board), finding that the Executive has engaged in the conduct described in any of (i)-(vii) above. Except for a failure, breach, or refusal which, by its nature, cannot reasonably be expected to be cured, the Executive shall have ten (10) business days from the delivery of written notice by the Company within which to cure any acts constituting Cause; provided however, that, if the Company reasonably expects irreparable injury from a delay of ten (10) business days, the Company may give the Executive notice of such shorter period within which to cure as is reasonable under the circumstances, which may include the termination of the Executive’s employment without notice and with immediate effect. The Company may place the Executive on paid leave for up to thirty (30) days while it is determining whether there is a basis to terminate the Executive’s employment for Cause.

5

4.2 Termination by the Company Without Cause. The Employment Term and the Executive’s employment hereunder may be terminated by the Company Without Cause upon 60 days’ written notice. In the event of such termination, and subject to the Executive’s compliance with Sections 4, 5, 6, 7 and 8 of this Agreement and his execution of a release of claims in favor of the Company, its affiliates and their respective officers and directors in a form provided by the Company (the “Release”), the Executive shall be entitled to receive the following:

(a) the sum of one (1) year’s Base Salary and accrued but unpaid vacation pay, if any, payable in equal monthly installment payments and paid in accordance with the Company’s normal payroll practices, which shall begin within 30 days following the Termination Date; and

(b) reimbursement for unreimbursed business expenses properly incurred by the Executive, which shall be subject to and paid in accordance with the Company’s expense reimbursement policy.

4.3 Death or Disability.  

(a) The Executive’s employment hereunder shall terminate automatically upon the Executive’s death during the Employment Term, and the Company may terminate the Executive’s employment on account of the Executive’s Disability.

(b) If the Executive’s employment is terminated during the Employment Term on account of the Executive’s death or Disability, the Executive (or the Executive’s estate and/or beneficiaries, as the case may be) shall be entitled to receive the amounts provided under Section 4.1(a)(1)-(ii).

(c) For purposes of this Agreement, “Disability” shall mean Executive’s inability, due to physical or mental incapacity, to perform the essential functions of his job, with or without reasonable accommodation, for one hundred twenty (120) days; provided however, in the event that the Company temporarily replaces the Executive, or transfers the Executive’s duties or responsibilities to another individual on account of the Executive’s inability to perform such duties due to a mental or physical incapacity which is, or is reasonably expected to become, a Disability, then the Executive’s employment shall not be deemed terminated by the Company and the Executive shall not be able to resign with Good Reason as a result thereof.  Any question as to the existence of the Executive’s Disability as to which the Executive and the Company cannot agree shall be determined in writing by a qualified independent physician mutually acceptable to the Executive and the Company. If the Executive and the Company cannot agree as to a qualified independent physician, each shall appoint such a physician and those two physicians shall select a third who shall make such determination in writing. The determination of Disability made in writing to the Company and the Executive shall be final and conclusive for all purposes of this Agreement. 

6

4.4 Notice of Termination. Any termination of the Executive’s employment hereunder by the Company or by the Executive during the Employment Term (other than termination pursuant to Section 4.3(a) on account of the Executive’s death) shall be communicated by written notice of termination (“Notice of Termination”) to the other party hereto in accordance with Section 22. The Notice of Termination shall specify:

(a) The termination provision of this Agreement relied upon;

(b) To the extent applicable, the facts and circumstances claimed to provide a basis for termination of the Executive’s employment under the provision so indicated; and

(c) The applicable Termination Date.

4.5 Termination Date. The Executive’s “Termination Date” shall be:

(a) If the Executive’s employment hereunder terminates on account of the Executive’s death, the date of the Executive’s death;

(b) If the Executive’s employment hereunder is terminated on account of the Executive’s Disability, the date that it is determined that the Executive has a Disability;

(c) If the Company terminates the Executive’s employment hereunder for Cause, the date the Notice of Termination is delivered to the Executive;

(d) If the Company terminates the Executive’s employment hereunder without Cause, the date specified in the Notice of Termination, which shall be no less than 60 days following the date on which the Notice of Termination is delivered;

(e) If the Executive terminates his employment at the request of RMX Board, the date specified in the Executive’s Notice of Termination, which shall be no less than 90 days following the date on which the Notice of Termination is delivered to Royale; and

Notwithstanding anything contained herein, the Termination Date shall not occur until the date on which the Executive incurs a “separation from service” within the meaning of Section 409A.

4.6 Mitigation. In no event shall the Executive be obligated to seek other employment or take any other action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement and, any amounts payable pursuant to this Section 4 shall not be reduced by compensation the Executive earns on account of employment with a subsequent employer.

4.7 Resignation of All Other Positions. Upon termination of the Executive’s employment hereunder for any reason, the Executive agrees to resign, effective on the Termination Date and shall be deemed to have resigned from all positions that the Executive 

7

holds as an officer or member of the Board (or a committee thereof) of the Company or any of its affiliates.

4.8 Section 280G.  

(a)  If any of the payments or benefits received or to be received by the Executive (including, without limitation, any payment or benefits received in connection with the Executive’s termination of employment, whether pursuant to the terms of this Agreement or any other plan, arrangement, or agreement, or otherwise) (all such payments collectively referred to herein as the “280G Payments”) constitute “parachute payments” within the meaning of Section 280G of the Code and will be subject to the excise tax imposed under Section 4999 of the Code (the “Excise Tax”), the Company shall pay to the Executive, no later than the time such Excise Tax is required to be paid by the Executive or withheld by the Company, an additional amount equal to the sum of the Excise Tax payable by the Executive, plus the amount necessary to put the Executive in the same after-tax position (taking into account any and all applicable federal, state, and local excise, income, or other taxes at the highest applicable rates on such 280G Payments and on any payments under this Section 4.8 or otherwise) as if no Excise Tax had been imposed.

(b) All calculations and determinations under this Section 4.8 shall be made by an independent accounting firm or independent tax counsel appointed by the Company (the “Tax Counsel”) whose determinations shall be conclusive and binding on the Company and the Executive for all purposes. For purposes of making the calculations and determinations required by this Section 4.8, the Tax Counsel may rely on reasonable, good faith assumptions and approximations concerning the application of Section 280G and Section 4999 of the Code. The Company and the Executive shall furnish the Tax Counsel with such information and documents as the Tax Counsel may reasonably request in order to make its determinations under this Section 4.8. The Company shall bear all costs the Tax Counsel may reasonably incur in connection with its services.

5.          Cooperation. The parties agree that certain matters in which the Executive will be involved during the Employment Term may necessitate the Executive’s cooperation in the future.  Accordingly, following the termination of the Executive’s employment for any reason, to the extent reasonably requested by the Board, the Executive shall cooperate with the Company in connection with matters arising out of the Executive’s service to the Company; provided that, the Company shall make reasonable efforts to minimize disruption of the Executive’s other activities. The Company shall reimburse the Executive for reasonable expenses incurred in connection with such cooperation.

6.          Confidential Information. The Executive understands and acknowledges that during the Employment Term, he will be provided and have access to Confidential Information, as defined below.

6.1 Confidential Information.  

8

(a) Definition.

The Executive shall hold in a fiduciary capacity for the benefit of the Company all secret or confidential information, knowledge and data relating to the Company, and its affiliates, including without limitation any trade secrets, which shall have been obtained by the Executive during the Executive’s employment with the Company and which shall not be or have become public knowledge or known within the relevant trade or industry (other than by acts by the Executive or representatives of the Executive in violation of this Agreement).  For purposes of this Agreement, “Confidential Information” includes, but is not limited to, all information not generally known to the public, in spoken, printed, electronic or any other form or medium, relating directly or indirectly to: trade secrets, technical materials and information, geological and geophysical information and studies, seismic information and studies, reserve data, prospect data, maps and logs, bid data and transaction information, processes and technologies, compilations of information, engineering information, or specifications that are used or may eventually be used in the operation of the Company’s business; databases or information regarding the Company’s direct working interest program, practices, methods, policies, research, operations, services, strategies, techniques, agreements, transactions, potential transactions, know-how, records, material, customer information, prospective customer information, customer lists, prospective customer lists, supplier information, supplier lists, vendor information, vendor lists, financial information, marketing information, pricing information, market studies, sales information, revenue, communications, and product plans.

The Executive understands that the above list is not exhaustive, and that Confidential Information also includes other information that is marked or otherwise identified as confidential or proprietary, or that would otherwise appear to a reasonable person to be confidential or proprietary in the context and circumstances in which the information is known or used.

The Executive understands and agrees that Confidential Information includes information developed by him in the course of his employment by the Company as if the Company furnished the same Confidential Information to the Executive in the first instance. Confidential Information shall not include information that is generally available to and known by the public at the time of disclosure to the Executive; provided that, such disclosure is through no direct or indirect fault of the Executive or person(s) acting on the Executive’s behalf.

(b) Company Creation and Use of Confidential Information.

The Executive understands and acknowledges that the Company has invested, and continues to invest, substantial time, money, and specialized knowledge into developing its resources, creating a customer base, generating customer and potential customer lists, training its employees, and improving its offerings in the field of energy and oil and gas. The Executive understands and acknowledges that as a result of these efforts, the Company has created, and continues to use and create 

9

Confidential Information. This Confidential Information provides the Company with a competitive advantage over others in the marketplace.

(c) Disclosure and Use Restrictions.

The Executive agrees and covenants during the Employment Term and thereafter: (i) to treat all Confidential Information as strictly confidential; (ii) not to directly or indirectly disclose, publish, communicate, or make available Confidential Information, or allow it to be disclosed, published, communicated, or made available, in whole or part, to any entity or person whatsoever, including other employees of the Company not having a need to know and authority to know and use the Confidential Information in connection with the business of the Company and, in any event, not to anyone outside of the direct employ of the Company except as required in the performance of the Executive’s authorized employment duties to the Company or with the prior consent of Chairman of the Board acting on behalf of the Company in each instance (and then, such disclosure shall be made only within the limits and to the extent of such duties or consent); and (iii) not to access or use any Confidential Information, and not to copy any documents, records, files, media, or other resources containing any Confidential Information, or remove any such documents, records, files, media, or other resources from the premises or control of the Company, except as required in the performance of the Executive’s authorized employment duties to the Company or with the prior consent of the Chairman of the Board acting on behalf of the Company in each instance (and then, such disclosure shall be made only within the limits and to the extent of such duties or consent). Nothing herein shall be construed to prevent disclosure of Confidential Information as may be required by applicable law or regulation, or pursuant to the valid order of a court of competent jurisdiction or an authorized government agency, provided that the disclosure does not exceed the extent of disclosure required by such law, regulation, or order.

(d) Notice of Immunity Under the Economic Espionage Act of 1996, as amended by the Defend Trade Secrets Act of 2016 (“DTSA”). Notwithstanding any other provision of this Agreement:

(i) The Executive will not be held criminally or civilly liable under any federal or state trade secret law for any disclosure of a trade secret that:

(A)  is made (1) in confidence to a federal, state, or local government official, either directly or indirectly, or to an attorney; and (2) solely for the purpose of reporting or investigating a suspected violation of law; or

(B) is made in a complaint or other document filed under seal in a lawsuit or other proceeding.

(ii) If the Executive files a lawsuit for retaliation by the Company for reporting a suspected violation of law, the Executive may disclose the 

10

Company’s trade secrets to the Executive’s attorney and use the trade secret information in the court proceeding if the Executive:

(A)  files any document containing trade secrets under seal; and

(B) does not disclose trade secrets, except pursuant to court order.

The Executive understands and acknowledges that his obligations under this Agreement with regard to any particular Confidential Information shall commence immediately upon the Executive first having access to such Confidential Information (whether before or after he begins employment by the Company) and shall continue during and after his employment by the Company until such time as such Confidential Information has become public knowledge other than as a result of the Executive’s breach of this Agreement or breach by those acting in concert with the Executive or on the Executive’s behalf.

7.          Non-Solicitation.

7.1 While employed by the Company and for a period of one (1) year following the Termination Date, regardless of the reason for the termination:

(a) the Executive shall not, without the prior consent of the Board, directly or indirectly solicit, induce, or encourage any employee of Company or any of its respective affiliates who is employed on the Termination Date (or at any time within six months of such date) to terminate his or her employment with such entity; and

(b) while employed by the Company and thereafter, regardless of the reason for the termination, the Executive shall not, without the prior consent of the Board, use any Confidential Information to hire any employee of the Company.

7.2 The Company acknowledges that its employees may join entities with which the Executive is affiliated and that such event shall not constitute a violation of this Agreement if the Executive was not involved in the solicitation, hiring or identification of such employee as a potential recruit.

7.3 Should the Executive violate any of the terms of this Section 7, the obligation at issue will run from the first date on which the Executive ceases to be in violation of such obligation.

7.4 Irreparable Harm. In recognition of the facts that irreparable injury will result to the Company in the event of a breach by the Executive of his obligations under Sections 6.1 or 7.1(a)-(b) above, that monetary damages for such breach would not be readily calculable, and that the Company would not have an adequate remedy at law therefor, the Executive acknowledges, consents and agrees that, in the event of any such breach, or the threat thereof, the Company shall be entitled, in addition to any other legal remedies and damages available, to specific performance thereof and to temporary and permanent 

11

injunctive relief (without the necessity of posting a bond) to restrain the violation or threatened violation of such obligations by the Executive. In no event shall an asserted violation of the provisions of Section 6 or 7 constitute a basis for deferring or withholding any amounts otherwise payable to the Executive under this Agreement. 

7.5 Acknowledgement. The Executive acknowledges and agrees that the services to be rendered by him to the Company are of a special and unique character; that the Executive will obtain knowledge and skill relevant to the Company’s industry, methods of doing business and marketing strategies by virtue of the Executive’s employment; and that the restrictive covenants and other terms and conditions of this Agreement are reasonable and reasonably necessary to protect the legitimate business interest of the Company.

8.          Non-Disparagement. The Executive agrees and covenants that he will not at any time make, publish or communicate to any person or entity or in any public forum any defamatory or disparaging remarks, comments, or statements concerning the Company or its affiliates, or any of their employees, officers, or directors.

This Section 8 does not, in any way, restrict or impede the Executive from exercising protected rights to the extent that such rights cannot be waived by agreement or from complying with any applicable law or regulation or a valid order of a court of competent jurisdiction or an authorized government agency, provided that such compliance does not exceed that required by the law, regulation, or order.

9.          Remedies. In the event of a breach or threatened breach by the Executive of Section 6 or Section 7, or Section 8 of this Agreement, the Executive hereby consents and agrees that the Company shall be entitled to seek, in addition to other available remedies, a temporary or permanent injunction or other equitable relief against such breach or threatened breach from any court of competent jurisdiction, without the necessity of showing any actual damages or that money damages would not afford an adequate remedy, and without the necessity of posting any bond or other security. The aforementioned equitable relief shall be in addition to, not in lieu of, legal remedies, monetary damages, or other available forms of relief.

10.          Arbitration.

10.1  General.  Any controversy, dispute or claim between the Executive and Company, or any of its respective parents, subsidiaries, affiliates or any of their officers, directors, agents or other employees, relating to the Executive’s employment or the termination thereof, shall be resolved by final and binding arbitration, at the request of any party hereto. The arbitrability of any controversy, dispute or claim under this Agreement or any other agreement between the parties hereto shall be determined by application of the substantive provisions of the Federal Arbitration Act (9 U.S.C. sections 1 and 2) and by application of the procedural provisions of California law, except as provided herein. Arbitration shall be the exclusive method for resolving any dispute and all remedies available from a court of competent jurisdiction shall be available; provided, that either party may request provisional relief from a court of competent jurisdiction if such relief is not available in a timely fashion through arbitration. The claims which are to be arbitrated include, but are not limited to, any claim arising out of or relating to this Agreement or the 

12

employment relationship between the Executive and the Company, claims for wages and other compensation, claims for breach of contract (express or implied), claims for violation of public policy, wrongful termination, tort claims, claims for unlawful discrimination and/or harassment (including, but not limited to, race, religious creed, color, national origin, ancestry, physical disability, mental disability, gender identity or expression, medical condition, marital status, age, pregnancy, sex or sexual orientation) to the extent allowed by law, and claims for violation of any federal, state, or other government law, statute, regulation, or ordinance, except for claims for workers’ compensation and unemployment insurance benefits. This Agreement shall not be interpreted to provide for arbitration of any dispute that does not constitute a claim recognized under applicable law.  

10.2 Selection of Arbitrator. The Executive and the Company shall select a single neutral arbitrator by mutual agreement. If the Executive and the Company are unable to agree on a neutral arbitrator within thirty days of a demand for arbitration, either party may elect to obtain a list of arbitrators from the American Arbitration Association (“AAA”), and the arbitrator shall be selected by alternate striking of names from the list until a single arbitrator remains. The party initiating the arbitration shall be the first to strike a name. Any demand for arbitration must be in writing and must be made by the aggrieved party within the statute of limitations period provided under applicable state and/or federal law for the particular claim(s). Failure to make a written demand within the applicable statutory period constitutes a waiver of the right to assert that claim in any forum.

10.3 Venue; Process. Arbitration proceedings shall be held in San Diego County, California. The arbitrator shall apply applicable state and/or federal substantive law to determine issues of liability and damages regarding all claims to be arbitrated, and shall apply the Federal Rules of Evidence to the proceeding. The parties shall be entitled to conduct reasonable discovery and the arbitrator shall have the authority to determine what constitutes reasonable discovery. The arbitrator shall hear motions for summary judgment/adjudication as provided in the Federal Rules of Civil Procedure. Within thirty days following the hearing and the submission of the matter to the arbitrator, the arbitrator shall issue a written opinion and award which shall be signed and dated. The arbitrator’s award shall decide all issues submitted by the parties, but the arbitrator may not decide any issue not submitted. The opinion and award shall include factual findings and the reasons upon which the decision is based. The arbitrator shall be permitted to award only those remedies in law or equity which are requested by the parties and allowed by law. 

10.4 Costs.  The parties shall each bear their own costs and fees.

10.5 Waiver of Rights.  Both the Company and the Executive understand that, by agreeing to use arbitration to resolve disputes, they are giving up any right that they may have to a judge or jury trial with regard to all issues concerning employment or otherwise covered by this Section 10. 

11.          Proprietary Rights.

11.1 Work Product. The Executive acknowledges and agrees that all right, title, and interest in and to all writings, works of authorship, technology, inventions, discoveries, 

13

processes, techniques, methods, ideas, concepts, research, proposals, materials, and all other work product of any nature whatsoever, that are created, prepared, produced, authored, edited, amended, conceived, or reduced to practice by the Executive individually or jointly with others during the period of his employment by the Company and relate in any way to the business or contemplated business, products, activities, research, or development of the Company or result from any work performed by the Executive for the Company (in each case, regardless of when or where prepared or whose equipment or other resources is used in preparing the same), all rights and claims related to the foregoing, and all printed, physical and electronic copies, and other tangible embodiments thereof (collectively, “Work Product”), as well as any and all rights in and to United States and foreign (a) patents, patent disclosures and inventions (whether patentable or not), (b) trademarks, service marks, trade dress, trade names, logos, corporate names, and domain names, and other similar designations of source or origin, together with the goodwill symbolized by any of the foregoing, (c) copyrights, copyrightable works (including computer programs), and rights in data and databases, (d) trade secrets, know-how, and other confidential information, and (e) all other intellectual property rights, in each case whether registered or unregistered and including all registrations and applications for, and renewals and extensions of, such rights, all improvements thereto and all similar or equivalent rights or forms of protection in any part of the world (collectively, “Intellectual Property Rights”), shall be the sole and exclusive property of the Company.

For purposes of this Agreement, Work Product includes, but is not limited to, Company information, including plans, research, strategies, techniques, agreements, documents, know-how, computer programs, computer applications, software design, databases, developments, reports, market studies, formulas, product plans, inventions, original works of authorship, discoveries, experimental processes, experimental results, specifications, marketing information, advertising information, and sales information.

11.2 Work Made for Hire; Assignment. The Executive acknowledges that, by reason of being employed by the Company at the relevant times, to the extent permitted by law, all of the Work Product consisting of copyrightable subject matter is “work made for hire” as defined in 17 U.S.C. § 101 and such copyrights are therefore owned by the Company. To the extent that the foregoing does not apply, the Executive hereby irrevocably assigns to the Company, for no additional consideration, the Executive’s entire right, title, and interest in and to all Work Product and Intellectual Property Rights therein, including the right to sue, counterclaim, and recover for all past, present, and future infringement, misappropriation, or dilution thereof, and all rights corresponding thereto throughout the world. Nothing contained in this Agreement shall be construed to reduce or limit the Company’s rights, title, or interest in any Work Product or Intellectual Property Rights so as to be less in any respect than that the Company would have had in the absence of this Agreement.

11.3 Further Assurances; Power of Attorney. During and after his employment, the Executive agrees to reasonably cooperate with the Company to (a) apply for, obtain, perfect, and transfer to the Company the Work Product as well as any and all Intellectual Property Rights in the Work Product in any jurisdiction in the world; and (b) maintain, protect and enforce the same, including, without limitation, giving testimony and executing and 

14

delivering to the Company any and all applications, oaths, declarations, affidavits, waivers, assignments, and other documents and instruments as shall be requested by the Company. The Executive hereby irrevocably grants the Company power of attorney to execute and deliver any such documents on the Executive’s behalf in his name and to do all other lawfully permitted acts to transfer the Work Product to the Company and further the transfer, prosecution, issuance, and maintenance of all Intellectual Property Rights therein, to the full extent permitted by law, if the Executive does not promptly cooperate with the Company’s request (without limiting the rights the Company shall have in such circumstances by operation of law). The power of attorney is coupled with an interest and shall not be affected by the Executive’s subsequent incapacity.

11.4 No License. The Executive understands that this Agreement does not, and shall not be construed to grant the Executive any license or right of any nature with respect to any Work Product or Intellectual Property Rights or any Confidential Information, materials, software, or other tools made available to him by the Company.

12.          Security.

12.1 Security and Access. The Executive agrees and covenants (a) to comply with all Company security policies and procedures as in force from time to time including without limitation those regarding computer equipment, telephone systems, voicemail systems, facilities access, monitoring, key cards, access codes, Company intranet, internet, social media and instant messaging systems, computer systems, e-mail systems, computer networks, document storage systems, software, data security, encryption, firewalls, passwords and any and all other Company facilities, IT resources and communication technologies (“Facilities and Information Technology Resources”); (b) not to access or use any Facilities and Information Technology Resources except as authorized by the Company; and (iii) not to access or use any Facilities and Information Technology Resources in any manner after the termination of the Executive’s employment by the Company, whether termination is voluntary or involuntary. The Executive agrees to notify the Company promptly in the event he learns of any violation of the foregoing by others, or of any other misappropriation or unauthorized access, use, reproduction, or reverse engineering of, or tampering with any Facilities and Information Technology Resources or other Company property or materials by others.

12.2 Exit Obligations/Return of Company Property. Upon the termination of the Executive’s employment with the Employer for any reason, the Executive shall immediately return and deliver to the Employer any and all Company property, including keys, key cards, access cards, identification cards, security devices, employer credit cards, network access devices, computers, cell phones, smartphones, PDAs, equipment, manuals, reports, files, books, compilations, work product, e-mail messages, recordings, tapes, disks, thumb drives or other removable information storage devices, hard drives, and all Company documents and materials belonging to the Company and stored in any fashion, including but not limited to those that constitute or contain any Confidential Information or Work Product, that are in the possession or control of the Executive, whether they were provided to the Executive by the Company or any of its business associates or created by the Executive in connection with his employment by the Company.  If at any time after the Employment Period, the Executive 

15

determines that he has any Proprietary Information or other such materials in his possession or control, or any copy thereof, the Executive shall immediately return to the Employer all such information and materials, including all copies and portions thereof. Nothing herein shall prevent the Executive from retaining a copy of his personal papers, information or documentation relating to his compensation.

13.          Publicity. The Executive hereby irrevocably consents to any and all uses and displays, by the Company and its agents, representatives and licensees, of the Executive’s name, voice, likeness, image, appearance, and biographical information in, on or in connection with any pictures, photographs, audio and video recordings, digital images, websites, television programs and advertising, other advertising and publicity, sales and marketing brochures, books, magazines, other publications, CDs, DVDs, tapes, and all other printed and electronic forms and media throughout the world, at any time during or after the period of his employment by the Company, for all legitimate commercial and business purposes of the Company (“Permitted Uses”) without further consent from or royalty, payment, or other compensation to the Executive. The Executive hereby forever waives and releases the Company and its directors, officers, employees, and agents from any and all claims, actions, damages, losses, costs, expenses, and liability of any kind, arising under any legal or equitable theory whatsoever at any time during or after the period of his employment by the Company, arising directly or indirectly from the Company’s and its agents’, representatives’, and licensees’ exercise of their rights in connection with any Permitted Uses.

14.          Governing Law: Jurisdiction and Venue. This Agreement, for all purposes, shall be construed in accordance with the laws of California without regard to conflicts of law principles. Any action or proceeding by either of the parties to enforce this Agreement shall be brought only in San Diego County, California.

15.          Entire Agreement. Unless specifically provided herein, this Agreement contains all of the understandings and representations between the Executive and the Company pertaining to the subject matter hereof and supersedes all prior and contemporaneous understandings, agreements, representations and warranties, both written and oral, with respect to such subject matter. The parties mutually agree that the Agreement can be specifically enforced in court and can be cited as evidence in legal proceedings alleging breach of the Agreement.

16.          Modification and Waiver. No provision of this Agreement may be amended or modified unless such amendment or modification is agreed to in writing and signed by the Executive and Chairman of the Board of the Company. No waiver by either of the parties of any breach by the other party hereto of any condition or provision of this Agreement to be performed by the other party hereto shall be deemed a waiver of any similar or dissimilar provision or condition at the same or any prior or subsequent time, nor shall the failure of or delay by either of the parties in exercising any right, power, or privilege hereunder operate as a waiver thereof to preclude any other or further exercise thereof or the exercise of any other such right, power, or privilege.

17.          Severability. Should any provision of this Agreement be held by an arbitrator to be enforceable only if modified, or if any portion of this Agreement shall be held as unenforceable and thus stricken, such holding shall not affect the validity of the remainder of this Agreement, 

16

the balance of which shall continue to be binding upon the parties with any such modification to become a part hereof and treated as though originally set forth in this Agreement.

The parties further agree that an arbitrator is expressly authorized to modify any such unenforceable provision of this Agreement in lieu of severing such unenforceable provision from this Agreement in its entirety, whether by rewriting the offending provision, deleting any or all of the offending provision, adding additional language to this Agreement, or by making such other modifications as it deems warranted to carry out the intent and agreement of the parties as embodied herein to the maximum extent permitted by law.

The parties expressly agree that this Agreement as so modified by the arbitrator shall be binding upon and enforceable against each of them. In any event, should one or more of the provisions of this Agreement be held to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provisions hereof, and if such provision or provisions are not modified as provided above, this Agreement shall be construed as if such invalid, illegal, or unenforceable provisions had not been set forth herein.

18.          Captions. Captions and headings of the sections and paragraphs of this Agreement are intended solely for convenience and no provision of this Agreement is to be construed by reference to the caption or heading of any section or paragraph.

19.          Counterparts. This Agreement may be executed in separate counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument.

20.          Section 409A.

20.1 General Compliance. This Agreement is intended to comply with Section 409A of the Internal Revenue Code and the treasury promulgated thereunder (“Section 409A”) or an exemption thereunder and shall be construed and administered in accordance with Section 409A. Notwithstanding any other provision of this Agreement, payments provided under this Agreement may only be made upon an event and in a manner that complies with Section 409A or an applicable exemption. Any payments under this Agreement that may be excluded from Section 409A either as separation pay due to an involuntary separation from service or as a short-term deferral shall be excluded from Section 409A to the maximum extent possible. For purposes of Section 409A, each installment payment provided under this Agreement shall be treated as a separate payment. Any payments to be made under this Agreement upon a termination of employment shall only be made upon a “separation from service” under Section 409A. Notwithstanding the foregoing, the Company makes no representations that the payments and benefits provided under this Agreement comply with Section 409A, and in no event shall the Company be liable for all or any portion of any taxes, penalties, interest, or other expenses that may be incurred by the Executive on account of non-compliance with Section 409A.

20.2 Specified Employees. Notwithstanding any other provision of this Agreement, if any payment or benefit provided to the Executive in connection with his termination of employment is determined to constitute “nonqualified deferred compensation” within the 

17

meaning of Section 409A and the Executive is determined to be a “specified employee” as defined in Section 409A(a)(2)(b)(i), then such payment or benefit shall not be paid until the first payroll date to occur following the six-month anniversary of the Termination Date or, if earlier, on the Executive’s death (the “Specified Employee Payment Date”). The aggregate of any payments that would otherwise have been paid before the Specified Employee Payment Date and interest on such amounts calculated based on the applicable federal rate published by the Internal Revenue Service for the month in which the Executive’s separation from service occurs shall be paid to the Executive in a lump sum on the Specified Employee Payment Date and thereafter, any remaining payments shall be paid without delay in accordance with their original schedule.

20.3 Reimbursements. To the extent required by Section 409A and Treasury regulation Section 1.409A-3(i)(1)(iv), each reimbursement or in-kind benefit provided under this Agreement shall be provided in accordance with the following:

(a) the amount of expenses eligible for reimbursement, or in-kind benefits provided, during each calendar year cannot affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other calendar year;

(b) any reimbursement of an eligible expense shall be paid to the Executive on or before the last day of the calendar year following the calendar year in which the expense was incurred; and

(c) any right to reimbursements or in-kind benefits under this Agreement shall not be subject to liquidation or exchange for another benefit.

20.4 Tax Gross-ups. Any tax gross-up payments provided under this Agreement shall be paid to the Executive on or before December 31 of the calendar year immediately following the calendar year in which the Executive remits the related taxes.

21.          Successors and Assigns. This Agreement is personal to the Executive and shall not be assigned by the Executive. Any purported assignment by the Executive shall be null and void from the initial date of the purported assignment. The Company may assign this Agreement to any successor or assign (whether direct or indirect, by purchase, merger, consolidation, or otherwise) to all or substantially all of the business or assets of the Company. This Agreement shall inure to the benefit of the Company and permitted successors and assigns.

22.          Notice. Notices and all other communications provided for in this Agreement shall be in writing and shall be delivered personally or sent by registered or certified mail, return receipt requested, or by overnight carrier to the parties at the addresses set forth below (or such other addresses as specified by the parties by like notice):

If to the Company:

Royale Energy, Inc.

      1870 Cordell Court, Suite 210

      El Cajon, California 92020

Attention:  Chairman

18

If to the Executive:

Jonathan Gregory

127 Roy Street

Houston, Texas 77007

23.          Representations of the Executive. The Executive represents and warrants to the Company that the Executive’s acceptance of employment with the Company and the performance of his duties hereunder will not conflict with or result in a violation of, a breach of, or a default under any contract, agreement, or understanding to which he is a party or is otherwise bound.  The Executive’s acceptance of employment with the Company and the performance of his duties hereunder will not violate any non-solicitation, non-competition, or other similar covenant or agreement of a prior employer.

 

24.          Withholding. The Company shall have the right to withhold from any amount payable hereunder any Federal, state, and local taxes in order for the Company to satisfy any withholding tax obligation it may have under any applicable law or regulation.

25.          Survival. Upon the expiration or other termination of this Agreement, the respective rights and obligations of the parties hereto shall survive such expiration or other termination to the extent necessary to carry out the intentions of the parties under this Agreement.

26.          Acknowledgement of Full Understanding. THE EXECUTIVE ACKNOWLEDGES AND AGREES THAT HE HAS FULLY READ, UNDERSTANDS AND VOLUNTARILY ENTERS INTO THIS AGREEMENT. THE EXECUTIVE ACKNOWLEDGES AND AGREES THAT HE HAS HAD AN OPPORTUNITY TO ASK QUESTIONS AND CONSULT WITH AN ATTORNEY OF HIS CHOICE BEFORE SIGNING THIS AGREEMENT.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.

 

	
EXECUTIVE

	ROYALE ENERGY, INC.
	
______________________

	
By: ______________________

	
Jonathan Gregory

	
Name:  ___________________

	
 

	
Title: _____________________

  

 

19

Exhibit A

	
Company

	
Position

	
Ownership

	
3rd Noel Films, LLC

 127 Roy Street

 Houston, Texas 77007

 www.3rdnoelfilms.com

	
Manager

	
52.5%

	
Anvil Capital Partners

 546 5th Ave

 New York, New York 10036

 www.anvilcp.com

	
Credit Committee Advisor

	
0%

	
Mouton McCleon Resources LLC

 127 Roy Street

 Houston, Texas 77007

	
Managing Member

	
100%

	
Royale Energy, Inc.

 1870 Cordell Court, Suite 210

 El Cajon, CA 90820

 www.royl.com

	
CEO and Director

	
< 1%

20

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00281-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00281-of-00352.parquet"}]]