SECURITIESEXCHANGE AGREEMENT datedeffective as of June 10, 2015 byand among ROYALENERGY RESOURCES, INC. and G.S.ENERGY, LLC and IANGANZER and GARY GANZER

SECURITIES EXCHANGE AGREEMENT

dated effective as of June 10, 2015

by and among

ROYAL ENERGY RESOURCES, INC.

and

G.S. ENERGY, LLC

and

IAN GANZER and GARY GANZER

SECURITIES EXCHANGE AGREEMENT

THIS SECURITIES EXCHANGE AGREEMENT (the “Agreement”), dated effective as of June 10, 2015 (the “Effective Date”), is entered into by and among G.S. Energy, LLC, a West Virginia limited liability company (“GS Energy” or the “Company”) and Ian Ganzer and Gary Ganzer, the members of GS Energy (the “Members”), at 304 Waitman Street, Morgantown, West Virginia 26501, and Royal Energy Resources, Inc., a Delaware corporation (“Royal”), at 56 Broad Street, Suite 2, Charleston, South Carolina 29401. Certain capitalized terms used in this Agreement are defined in Section 8.3 hereof.

W I T N E S S E T H:

WHEREAS, as of the Effective Date, the Members were the sole owners of all outstanding membership interests in the Company (the “Member Interests”);

WHEREAS, the Company is the owner and lessee of that certain surface coal mine, located in the Bradshaw Area of the County of McDowell, State of West Virginia, encompassing approximately 6,000 net acres, more specifically described herein (the “Mine”), with licenses from and permits issued by the West Virginia Department of Environmental Protection (the “WVDEP”), with an estimated 28.7 millions tons of recoverable coal;

WHEREAS, Closing, as defined herein, shall be contingent on the execution of (i) a definitive agreement for the purchase of Blue Grove Coal, LLC (“Blue Grove”), such that Royal shall be the owner and operator of the Mine (the “Blue Grove Agreement”); and (ii) a management agreement with a Member, Ian Ganzer, or an entity selected by Member, for the continual operations of the Mine in its ordinary course (the “Management Agreement”);

WHEREAS, Royal proposes to acquire all of the Member Interests in exchange for (i) the issuance of shares of its common stock, $0.00001 par value, with an aggregate market value of $8,750,000 (the “Exchange”);

WHEREAS, the Boards of Directors of Royal and the Members of the Company have determined that it is desirable to effect a plan of reorganization pursuant to 26 U.S.C. §368(a)(1)(B).

NOW, THEREFORE, in consideration of the foregoing premises and the mutual covenants, agreements, representations and warranties contained herein, the parties hereto agree as follows:

ARTICLE I
ISSUANCE AND EXCHANGE OF SECURITIES

1.1 Issuance and Exchange. At the Closing (as defined in Section 2.1 below), to be held in accordance with the provisions of Article II below and subject to the terms and agreements set forth herein, Royal shall issue to the Members 1,750,000 shares of Royal common stock, $0.00001 par value (the “Royal Stock”).

ARTICLE II
CLOSING

2.1 Closing. The consummation of the Exchange by Royal and the Members (the “Closing”) shall occur at a time and place selected by Royal, subject to the satisfaction or waiver of all of the conditions to Closing, including the completion of a financial audit (the “Audit”), or at such other place as the parties may agree upon (the “Closing Date”).

2.2 Deliveries.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

OF THE MEMBERS AND THE COMPANY

The Company and the Members, jointly and severally, represents and warrant to Royal as follows (it being acknowledged that Royal is entering into this Agreement in material reliance upon each of the following representations and warranties, and that the truth and accuracy of each, as evidenced by their signature set forth on the signature page, constitutes a condition precedent to the obligations of Royal hereunder):

3.1 Ownership of Member Interests. The Members are the lawful owners of the Member Interests to be transferred to Royal free and clear of all preemptive or similar rights, Liens, and the delivery to Royal of the Member Interests pursuant to the provisions of this Agreement will transfer to Royal valid title thereto, free and clear of all Liens.

3.2 Organization, Standing and Power. The Company is duly organized, validly existing and in good standing under the laws of the State of West Virginia and has the requisite corporate power and authority to carry on its business as now being conducted. The Company is duly qualified or licensed to do business and is in good standing in each jurisdiction in which the nature of its business or the ownership or leasing of its properties makes such qualification or licensing necessary, other than in such jurisdictions where the failure to be so qualified or licensed (individually or in the aggregate) would not have a Material Adverse Effect. For purposes of this Agreement, the term “GS Energy Material Adverse Effect” means any Material Adverse Effect with respect to the Member or the Company, taken as a whole, or any change or effect that adversely, or is reasonably expected to adversely, affect the ability of the Members or the Company to consummate the transactions contemplated by this Agreement in any material respect or materially impairs or delays the Company’s ability to perform its obligations hereunder.

3.3 Authority to Execute and Perform Agreement; No Breach. The Members and the Company have the full legal right and power and all authority and approval required to enter into, execute and deliver this Agreement, and to sell, assign, transfer and convey the Member Interests and to perform fully the respective obligations hereunder. This Agreement has been duly executed and delivered by the Member and the Company, assuming due execution and delivery by, and enforceability against, Royal, constitutes the valid and binding obligation of the Members and Company enforceable in accordance with its terms, subject to the qualifications that enforcement of the rights and remedies created hereby is subject to (a) applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other laws of general application affecting the rights and remedies of creditors, and (b) general principles of equity (regardless of whether such enforcement is considered in a proceeding in equity or at law). No approval or consent of, or filing with, any Governmental Entity, and no approval or consent of, or filing, with any other Person is required to be obtained by the Member or the Company or in connection with the execution and delivery by the Members and the Company of this Agreement and consummation and performance by them of the transactions contemplated hereby.

3.4 No Violations. The execution, delivery and performance of this Agreement by the Members and the Company and the consummation of the transactions contemplated hereby, in accordance with the terms and conditions hereof, will not:

3.5 Securities Matters. The Members hereby represents, warrants and covenant to Royal as follows:

3.6 Capital Structure. As of the Effective Date, the Members are the sole owners of the Member Interests, which constitute all of the issued and outstanding membership interests of the Company. All such Member Interests have been duly authorized and validly issued, and are fully paid and nonassessable and not subject to preemptive or similar rights. No bonds, debentures, notes or other indebtedness of the Company having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) are issued or outstanding. The Company does not have and, at or after Closing will not have, any outstanding options, warrants, calls, subscriptions or other rights, agreements or commitments which either (a) obligates the Company to issue, sell or transfer, repurchase, redeem or otherwise acquire or vote any membership units of the Company, or (b) restricts the voting, disposition or transfer of the membership units of the Company. There are no outstanding appreciation rights or similar derivative securities or rights of the Company.

3.7 Subsidiaries. The Company does not own, directly or indirectly, any of the capital stock of any other corporation or any equity, profit sharing, participation or other interest in any corporation, partnership, joint venture or other entity.

3.8 Intellectual Property. The Company does not own or use any trademarks, trade names, service marks, patents, copyrights or any applications with respect thereto. Neither the Members nor the Company have Knowledge of any claim that, or inquiry as to whether, any product, activity or operation of the Company infringes upon or involves, or has resulted in the infringement of, any trademarks, trade names, service marks, patents, copyrights or other proprietary rights of any other Person, corporation or other entity; and no proceedings have been instituted, are pending or are threatened with respect thereto.

3.9 Books and Records. The books of account and other financial records of the Company, all of which have been made available to Royal, are complete and correct and represent actual, bona fide transactions.

3.10 No Employees or Benefit Plans. The Company has no (a) no employees, (b) non-qualified deferred or incentive compensation or retirement plans or arrangements, (c) qualified retirement plans or arrangements, (d) other employee compensation, severance or termination pay or welfare benefit plans, programs or arrangements or (e) any related trusts, insurance contracts or other funding arrangements maintained, established or contributed to by the Company.

3.11 Compliance with Applicable Laws. The Company has and after giving effect to the transactions contemplated hereby will have in effect all Permits necessary for it to own, lease or operate its properties and assets and to carry on its business as now conducted, and to the Knowledge of the Members and the Company, no default has occurred under any such Permit. A true and correct copy of the Permit to operate the Mine by the WVDEP is attached hereto and incorporated herein by this reference as Exhibit E (the “Mine Permit”). To the Members and the Company’s Knowledge, the Company is in compliance with, and has no liability or obligation under, any applicable statute, law, ordinance, rule, order or regulation of any Governmental Entity, including any liability or obligation to undertake any remedial action under Hazardous Substances Laws (as hereinafter defined), except for instances of non-compliance, liabilities or obligations, which individually or in the aggregate would not have a GS Energy Material Adverse Effect.

3.12 Insurance. The Company’s insurance policies in effect at the time of Closing, are attached hereto and incorporated herein by this reference as Exhibit F.

3.13 Litigation, etc. As of the Effective Date, (a) there is no suit, claim, action or proceeding (at law or in equity) pending or, to the Knowledge of the Members or the Company, threatened against the Company before any court or governmental or regulatory authority or body, and (b) the Company is not subject to any outstanding order, writ, judgment, injunction, order, decree or arbitration order that, in any such case described in clauses (a) and (b), (i) could reasonably be expected to have, individually or in the aggregate, a GS Energy Material Adverse Effect or (ii) involves an allegation of criminal misconduct or a violation of the Racketeer and Influenced Corrupt Practices Act. As of the Closing, there are no suits, actions, claims or proceedings pending or, to Members or the Company’s Knowledge, threatened, seeking to prevent, hinder, modify or challenge the transactions contemplated by this Agreement.

3.14 Environmental Matters. As of the Effective Date, neither the Members nor the Company has received any written notice from any Governmental Entity that there exists any violation of any Hazardous Substances Law (as hereinafter defined). Neither the Members nor the Company has any Knowledge (a) of any Hazardous Substances (as hereinafter defined) present on, under or about any of the GS Energy Mine, which are subject to the Operator Agreement, and to Knowledge of the Members or the Company, no discharge, spillage, uncontrolled loss, seepage or filtration of Hazardous Substances has occurred on, under or about any portion of the GS Energy Mine, (b) that GS Energy violates, or has at any time violated, any Hazardous Substance Laws, and (c) that there is a condition on any asset other than the GS Energy Mine, for which the Company has or had an obligation to undertake any remedial action pursuant to Hazardous Substance Laws. For purposes hereof, “Hazardous Substances” means, without limitation (i) those substances included within definitions of any one or more of the terms “Hazardous Substance,” and “Hazardous Waste,” “Toxic Substance” and “Hazardous Material” in the Comprehensive Environmental Response Compensation and Liability Act, 42 U.S.C. § 90,601, et seq., the Resource Conservation and Recovery Act, 42 U.S.C. § 6901, et seq., the Toxic Substances Control Act, 15 U.S.C. § 2601, et seq., the Hazardous Materials Transportation Act, 49 U.S.C. § 1801 et seq., the Occupational Safety and Health Act, 29 U.S.C. § 651, et seq., (insofar as it relates to employee health and safety in relation to exposure to Hazardous Substances) and any other local, state, federal or foreign laws or regulations related to the protection of public health or the environment (collectively, “Hazardous Substances Laws”); (ii) such other substances, materials or wastes as are or become regulated under, or as are classified as hazardous or toxic under Hazardous Substance Laws; and (iii) any materials, wastes or substances that can be defined as (v) petroleum products or wastes; (w) asbestos; (x) polychlorinated biphenyl; (y) flammable or explosive; or (z) radioactive.

3.15 Financial Statements of Company. The Members have previously delivered to the Royal the financial statements of the Company for the following periods: a balance sheet as of December 31, 2013 and 2014, and income statement for the periods ended December 31, 2013 and 2014 (the “Financial Statements”), which are incorporated herein by reference. The Financial Statements have been prepared in accordance with generally accepted accounting principles (“GAAP”) consistently applied and present fairly the financial position, assets and liabilities as of the dates thereof and the revenues, expenses, results of operations and cash flows of the Contributor for the periods covered then ended. The Financial Statements are in accordance with the books and records of the Company, and do not reflect any transactions which are not bona fide transactions. The Financial Statements make full and adequate disclosure of, and provision for, all obligations and liabilities of as of the date thereof. All of the Company’s revenues that have arisen in connection with the business and that are reflected on the Financial Statements shall have arisen only from bona fide transactions in the ordinary course of business.

3.16 Absence of Material Adverse Change. Except as disclosed in or reflected in the Financial Statements, if applicable, the Company has not (i) suffered any Material Adverse Effect, or (ii) suffered any damage, destruction or loss to any of their assets or properties (whether or not covered by insurance).

3.17 Disclosure. The representations and warranties and statements of fact made by the Members and the Company in this Agreement are, as applicable, accurate, correct and complete and do not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements and information contained herein not false or misleading.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES OF ROYAL

Royal hereby represents and warrants to the Members and the Company as follows (it being acknowledged that the Members and the Company are entering into this Agreement in material reliance upon each of the following representations and warranties, and that the truth and accuracy of each, as evidenced by the execution of this Agreement by a duly authorized officer of Royal, constitutes a condition precedent to the obligations of the Members and the Company hereunder):

4.1 Organization, Standing and Power. Royal is duly organized, validly existing and in good standing under the laws of the State of Delaware and has the requisite corporate power and authority to carry on its business as now being conducted. Royal is duly qualified or licensed to do business and is in good standing in each jurisdiction in which the nature of its business or the ownership or leasing of its properties makes such qualification or licensing necessary, other than in such jurisdictions where the failure to be so qualified or licensed (individually or in the aggregate) would not have a Royal Material Adverse Effect. For purposes of this Agreement, the term “Royal Material Adverse Effect” means any Material Adverse Effect with respect to Royal, taken as a whole, or any change or effect that adversely, or is reasonably expected to adversely, affect the ability of Royal to consummate the transactions contemplated by this Agreement in any material respect or materially impairs or delays Royal’s ability to perform its obligations hereunder. Royal has made available to the Members and the Company complete and correct copies of its charter documents and bylaws.

4.2 Capital Structure. As of the Effective Date, the authorized capital stock of Royal consists of 500,000,000 shares of common stock and 10,000,000 shares of preferred stock, of which 11,718,230 shares of common stock and 51,000 shares of preferred stock were issued and outstanding. All outstanding shares of capital stock of Royal will have been duly authorized and validly issued, and will be fully paid and nonassessable and not subject to preemptive or similar rights.

4.3 Authority; Noncontravention. Royal has the requisite corporate power and authority to enter into this Agreement and to consummate the transactions contemplated by this Agreement. The execution, delivery and performance of this Agreement by Royal and the consummation by Royal of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of Royal. This Agreement has been duly executed and delivered by Royal and, assuming this Agreement constitutes the valid and binding agreement of the Members and the Company, constitutes a valid and binding obligation of Royal, enforceable against Royal in accordance with its terms, subject to (a) applicable bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other laws of general application affecting the rights and remedies of creditors, and (b) general principles of equity (regardless of whether enforceability is considered in a proceeding at law or in equity). The execution and delivery of this Agreement do not, and the consummation of the transactions contemplated by this Agreement and compliance with the provisions hereof, will not, (x) conflict with any of the provisions of the charter documents or bylaws of Royal, (y) subject to the governmental filings and other matters referred to in the following sentence, conflict with, result in a breach of or default (with or without notice or lapse of time, or both) under, or give rise to a right of first refusal, termination, cancellation or acceleration of any obligation (including to pay any sum of money) or loss of a benefit under, or require the consent of any Person under, any indenture or other agreement, Permit, concession, ground lease or similar instrument or undertaking to which Royal is a party or by which Royal or any of its assets are bound or affected, result in the creation or imposition of a Lien against any material asset of Royal, which, singly or in the aggregate, would have a Royal Material Adverse Effect, or (z) subject to the governmental filings and other matters referred to in the following sentence, contravene any law, rule or regulation, or any order, writ, judgment, injunction, decree, determination or award binding on Royal currently in effect, which in the case of clauses (y) and (z) above, singly or in the aggregate, would have a Royal Material Adverse Effect. No consent, approval or authorization of, or declaration or filing with, or notice to, any Governmental Entity or any third party which has not been received or made is required by or with respect to Royal in connection with the execution and delivery of this Agreement by Royal or the consummation by Royal of the transactions contemplated hereby, except for consents, approvals, authorizations, declarations, filings and notices that, if not obtained or made, will not, individually or in the aggregate, result in a Royal Material Adverse Effect.

ARTICLE V

INDEMNIFICATION

5.1 Indemnification of the Members and the Company.

5.2 Indemnification of Royal.

ARTICLE VI

CONDITIONS PRECEDENT

6.1 Conditions to Each Party’s Obligation to Effect the Exchange. The respective obligation of each party to effect the Exchange is subject to the satisfaction or written waiver of the following conditions:

6.2 Conditions to Obligations of the Members and the Company. The obligations of the Members and the Company to effect the Exchange are further subject to the satisfaction or written waiver on or prior to the Closing of the following conditions:

6.3 Conditions to Obligations of Royal. The obligation of Royal to effect the Exchange is further subject to the satisfaction or written waiver on or prior to Closing of the following conditions:

ARTICLE VII

CONDITIONS SUBSEQUENT

7.1 Call Option.

7.2 Put Option. For and in consideration of $400,000.00, payable at the Closing, the Members hereby grants to Royal the right and option to sell the Member Interests (the “Put Option”), for a term of twenty-four (24) months, by delivery to the Members of the Membership Units. The Put Option may only be exercised by delivering a written notice of exercise of the Put Option to the Members at their executive offices, located at 304 Waitman Street, Morgantown, West Virginia 26501, or such other place as the Members may designate by written notice to Royal, together with the Membership Units, duly endorsed by Royal. The Put Option granted hereunder may only be exercised in whole. The Put Option may be exercised at any time, and for any reason in Royal’s sole discretion, during the period from the Closing Date and ending twenty-four (24) months after the Closing Date herein. To the extent Royal exercises its Put Option from ten (10) months after the Closing Date to and through sixteen (16) months after the Closing Date, the Members shall be entitled to retain five (5) percent of the Royal Stock, and from sixteen (16) months after the Closing Date to and through twenty-four (24) months after the Closing Date, ten percent (10%) of the Royal Stock issuable to the Members hereunder.

7.3 Surety Bonding. During the Exercise Term, the Members may request in writing that Royal replace that certain reclamation surety bond, in the cash amount of approximately $380,000.00 (the “Surety Bond”), posted with the WVDEP Division of Mining and Reclamation. To the extent Royal replaces the Surety Bond within a commercially reasonable time, not to exceed ninety (90) days, the Members hereby agree that the Call Option as provided herein will terminate. Further, to the extent the Call Option is not exercise within the Exercise Term, Royal agrees to replace the Surety Bond, within a commercially reasonable time, not to exceed ninety (90) days.

ARTICLE VIII

GENERAL PROVISIONS

8.1 Survival of Representations and Warranties. Except as otherwise contemplated herein, the representations and warranties in this Agreement and in any instrument delivered pursuant to this Agreement shall survive the Closing for a period of one year.

8.2 Fees and Expenses. Each party agrees to pay for its own expenses associated with this Agreement and the consummation of the transactions contemplated hereby.

8.3 Definitions. For purposes of this Agreement, and except as otherwise defined in this Agreement:

8.4 Usage. In this Agreement, unless a clear contrary intention appears:

8.5 Counterparts. This Agreement may be executed in two or more counterparts.

8.6 Entire Agreement; Third-Party Beneficiaries. This Agreement constitutes the entire agreement, and supersedes all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter of this Agreement. This Agreement is not intended to confer upon any Person other than the parties hereto and the third party beneficiaries referred to in the following sentence, any rights or remedies.

8.7 Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of West Virginia.

8.8 Assignment. Neither this Agreement nor any of the rights, interests or obligations under this Agreement shall be assigned, in whole or in part, by operation of law or otherwise by any of the parties without the prior written consent of the other parties, and any such assignment that is not consented to shall be null and void. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of, and be enforceable by, the parties and their respective successors and assigns.

8.9 Enforcement. The parties agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement in any court of the United States located in the State of Idaho, this being in addition to any other remedy to which they are entitled at law or in equity.

8.10 Severability. Whenever possible, each provision or portion of any provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law but if any provision or portion of any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party, such invalidity, illegality or unenforceability will not affect any other provision or portion of any provision in such jurisdiction, and this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision or portion of any provision had never been contained herein.

IN WITNESS WHEREOF, Royal and GS Energy have executed this Agreement to be effective as of the Effective Date.

EXHIBIT A

(“Employment Agreement”)

EXHIBIT B

(“Management Agreement”)

EXHIBIT C

(“Operating Agreement Amendment”)

EXHIBIT D

(“Operator Agreement”)

EXHIBIT E

(“Mine Permit”)

EXHIBIT F

(“Insurance”)