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ROYALE ENERGY, INC. WARRANT TO PURCHASE COMMON STOCK

Warrant Agreement

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ROYALE ENERGY INC

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Title: ROYALE ENERGY, INC. WARRANT TO PURCHASE COMMON STOCK
Governing Law: California     Date: 7/10/2008
Industry: Oil and Gas Operations     Sector: Energy

ROYALE ENERGY, INC. WARRANT TO PURCHASE COMMON STOCK, Parties: royale energy inc
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NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL TO THE HOLDER (IF REQUESTED BY THE COMPANY), IN A FORM REASONABLY ACCEPTABLE TO THE COMPANY, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD OR ELIGIBLE TO BE SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

 

Warrant No. 0002

Number of Shares of Common Stock: 32,877

Date of Issuance: June 10, 2008

 

ROYALE ENERGY, INC.

WARRANT TO PURCHASE COMMON STOCK

THIS CERTIFIES that, for value received, J.P.TURNER PARTNERS, LP., is entitled to purchase from ROYALE ENERGY, INC., a California corporation (the “ Corporation ”), subject to the terms and conditions hereof, 32,877 shares (the “ Warrant Shares ”) of common stock, no par value (the “ Common Stock ”). This warrant, together with all warrants hereafter issued in exchange or substitution for this warrant, is referred to as the “ Warrant ” and the holder of this Warrant (together with its successors and assigns) is referred to as the “ Holder .” The number of Warrant Shares is subject to adjustment as hereinafter provided. Notwithstanding anything to the contrary contained herein, this Warrant shall expire at 5:00pm CDT on June 10, 2011 (the “ Termination Date ”).

 

1. Exercise of Warrants . (a) The Holder may, at any time prior to the Termination Date, exercise this Warrant in whole or in part at an exercise price per share equal to $7.30 per share, subject to adjustment as provided herein (the “ Warrant Price ”), by the surrender of this Warrant (properly endorsed) at the principal office of the Corporation, or at such other agency or office of the Corporation in the United States of America as the Corporation may designate by notice in writing to the Holder at the address of such Holder appearing on the books of the Corporation, and by payment to the Corporation of the Warrant Price in lawful money of the United States by check or wire transfer for each share of Common Stock being purchased. Upon any partial exercise of this Warrant, there shall be executed and issued to the Holder a new Warrant in respect of the shares of Common Stock as to which this Warrant shall not have been exercised. In the event of the exercise of the rights represented by this Warrant, a certificate or certificates for the Warrant Shares so purchased, as applicable, registered in the name of the Holder, shall be delivered to the Holder hereof as soon as practicable after the rights represented by this Warrant shall have been so

 

 

Warrant –

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exercised.

 

(b)       If at any time more than one hundred eighty (180) days after the date of issuance set forth above, all of the Warrant Shares are not registered for sale on an effective Registration Statement under the Securities Act of 1933 (the “ Securities Act ”) (or the prospectus contained therein is not available for use, then this Warrant may also be exercised at such time by means of a “cashless exercise” in which, at any time prior to the Termination Date, the Holder of this Warrant may, at its option, exchange this Warrant, in whole or in part (a “ Warrant Exchange ”), into Warrant Shares by surrendering this Warrant at the principal office of the Corporation, accompanied by a notice stating such Holder’s intent to effect such exchange, the number of Warrant Shares to be exchanged and the date on which the Holder requests that such Warrant Exchange occur (the “ Notice of Exchange ”). The Warrant Exchange shall take place on the date specified in the Notice of Exchange or, if later, within five (5) days of the date the Notice of Exchange is received by the Corporation (the “ Exchange Date ”). Certificates for the Warrant Shares issuable upon such Warrant Exchange and, if applicable, a new Warrant of like tenor evidencing the balance of the Warrant Shares remaining subject to this Warrant, shall be issued as of the Exchange Date and delivered to the Holder within three (3) business days following the Exchange Date. In connection with any Warrant Exchange, this Warrant shall represent the receive upon such exercise the “ Net Number ” of shares of Common Stock determined according to the following formula (a “ Cashless Exercise ”):

 

 

Net Number = (A x B) - (A x C)

 

B

 

 

For purposes of the foregoing formula:

A= the total number of shares with respect to which this Warrant is then being exercised.

B= the Closing Sale Price of the Common Stock on the Trading Day immediately preceding the date of the Exercise Notice.

C= the Exercise Price then in effect for the applicable Warrant Shares at the time of such exercise.

 

2. Reservation of Warrant Shares . The Corporation agrees that, prior to the expiration of this Warrant, it will at all times have authorized and in reserve, and will keep available, solely for issuance or delivery upon the exercise of this Warrant, the number of Warrant Shares as from time to time shall be issuable by the Corporation upon the exercise of this Warrant.

 

3. No Stockholder Rights . This Warrant shall not entitle the holder hereof to any voting rights or other rights as a stockholder of the Corporation.

 

4. Transferability of Warrant . Prior to the Termination Date and subject to compliance with applicable laws, this Warrant and all rights hereunder are transferable, in whole or in part, at the office or agency of the Company by the Holder in person or by duly authorized attorney, upon

 

 

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surrender of this Warrant together with the Assignment Form annexed hereto properly endorsed for transfer.

 

5. Certain Adjustments . With respect to any rights that Holder has to exercise this Warrant and convert into shares of Common Stock, Holder shall be entitled to the following adjustments:

 

(a)        Merger or Consolidation . If at any time there shall be a merger, consolidation or sale of substantially all of the assets of the Corporation with or into another corporation when the Corporation is not the surviving corporation, then, as part of such merger or consolidation, lawful provision shall be made so that the holder hereof shall thereafter be entitled to receive upon exercise of this Warrant, during the period specified herein and upon payment of the aggregate Warrant Price then in effect, the number of shares of stock or other securities or property (including cash) of the successor corporation resulting from such merger or consolidation, to which the Holder hereof as the holder of the stock deliverable upon exercise of this Warrant would have been entitled in such merger or consolidation if this Warrant had been exercised immediately before such merger or consolidation. In any such case, appropriate adjustment shall be made in the application of the provisions of this Warrant wi


 
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