Exhibit 10.5

 

EXECUTION VERSION

 

REGISTRATION RIGHTS AGREEMENT

 

by and among

 

CUBIC ENERGY, INC.

 

and

 

THE INVESTORS THAT ARE PARTIES HERETO

 

Dated

 

October 2, 2013

 

--------------------------------------------------------------------------------

 

REGISTRATION RIGHTS AGREEMENT

 

THIS REGISTRATION RIGHTS AGREEMENT (this “Agreement”) is made as of the 2nd day
of October, 2013, by and among Cubic Energy, Inc., a Texas corporation (the
“Company”), and each of the investors listed on Schedule A hereto, each of which
is referred to in this Agreement as an “Investor”, and all of which are referred
to collectively as the “Investors”.

 

RECITALS

 

WHEREAS, concurrently with the execution and delivery of this Agreement, the
Investors are purchasing from the Company (i) certain senior secured notes of
the Company pursuant to a Note Purchase Agreement, dated as of the date hereof
(the “Note Purchase Agreement”), by and among the Company, the Investors and
other parties thereto and (ii) certain Warrants (as defined below) to purchase
shares of the common stock, par value $0.05 per share, of the Company (the
“Common Stock”) and certain shares of the Series B Voting Preferred Stock, par
value $0.01 per share, of the Company pursuant to a Warrant and Preferred Stock
Agreement, dated as of the date hereof (the “Warrant Agreement”), between the
Company and the Investors (such purchases of senior secured notes, warrants and
preferred stock, the “Investment”); and

 

WHEREAS, in connection with and as a condition to the Investment, the Company
agrees to provide certain registration and other rights with respect to, among
others, the shares of Common Stock issued or issuable upon the exercise of the
Warrants;

 

NOW, THEREFORE, the parties hereby agree as follows:

 

1.                                      Definitions.  For purposes of this
Agreement:

 

(a)                                 “Affiliate” means, with respect to any
Person, a Person that directly or indirectly controls, is controlled by or is
under direct or indirect common control with such Person.  For purposes of this
definition, “control” when used with respect to any Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise,
and the terms “controlling” and “controlled” have meanings correlative to the
foregoing.  For purposes of Section 2(n) of this Agreement, none of the Company
and any of its subsidiaries shall be deemed an Affiliate of any Holder.

 

(b)                                 “Agreement” shall have the meaning set forth
in the preamble.

 

(c)                                  “Closing” shall have the meaning set forth
in Section 2(a).

 

(d)                                 “Common Stock” shall have the meaning set
forth in the recitals.

 

(e)                                  “Company” shall have the meaning set forth
in the preamble.

 

--------------------------------------------------------------------------------

 

(f)                                   “Exchange Act” means the Securities
Exchange Act of 1934, as amended.

 

(g)                                  “Form S-1” means Form S-1 under the
Securities Act as in effect on the date hereof or any successor registration
form under the Securities Act subsequently adopted by the SEC.

 

(h)                                 “Form S-3” means Form S-3 under the
Securities Act as in effect on the date hereof or any registration form under
the Securities Act subsequently adopted by the SEC that permits incorporation of
substantial information by reference to other documents filed by the Company
with the SEC.

 

(i)                                     “Form S-8” means Form S-8 under the
Securities Act as in effect on the date hereof or any successor registration
form under the Securities Act subsequently adopted by the SEC.

 

(j)                                    “Holder” means any holder of Registrable
Securities who is or becomes a party to this Agreement and any transferee or
assign of such holder.

 

(k)                                 “Investment” shall have the meaning set
forth in the recitals.

 

(l)                                     “Investor” shall have the meaning set
forth in the preamble.

 

(m)                             “Note Purchase Agreement” shall have the meaning
set forth in the recitals.

 

(n)                                 “Person” means any individual, corporation,
partnership, joint venture, association, joint stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.

 

(o)                                 “Registrable Securities” means (i) the
shares of Common Stock issued or issuable upon any exercise of the Warrants and
(ii) any shares of capital stock issued or issuable with respect to, in exchange
for or in replacement of such shares of Common Stock, whether as a result of any
stock split or combination, stock dividend, recapitalization, reclassification,
exchange, merger, consolidation, reorganization or similar event or otherwise,
excluding in all cases, however, any Registrable Securities for which
registration rights have terminated pursuant to the terms of this Agreement.

 

(p)                                 “Registrable Securities then outstanding”
means, as of any date of determination, the number of shares determined by
adding the number of then outstanding shares of Common Stock (or, as applicable,
such other shares of capital stock) that are Registrable Securities and the
number of shares of Common Stock (or, as applicable, such other shares of
capital stock) issuable pursuant to the exercise of the then outstanding
Warrants.

 

2

--------------------------------------------------------------------------------

 

(q)                                 “Registration Default” shall have the
meaning set forth in Section 2(d).

 

(r)                                    “Registration Period” shall have the
meaning set forth in Section 2(c).

 

(s)                                   “Rule 144” means Rule 144 promulgated by
the SEC under the Securities Act, as the same may be amended from time to time.

 

(t)                                    “Rule 415” means Rule 415 promulgated by
the SEC under the Securities Act, as the same may be amended from time to time.

 

(u)                                 “SEC” means the United States Securities and
Exchange Commission.

 

(v)                                 “Securities Act” means the Securities Act of
1933, as amended.

 

(w)                               “Warrant Agreement” shall have the meaning set
forth in the recitals.

 

(x)                                 “Warrants” means the Class A Warrants and
the Class B Warrants of the Company issued from time to time pursuant to the
Warrant Agreement.

 

2.                                      Registration Rights.

 

(a)                                 Within 90 days after the closing of the
Investment (the “Closing”), the Company shall prepare and file with the SEC
pursuant to Rule 415 one or more registration statements on Form S-1, or such
other forms as may hereafter become available to the Company, including
Form S-3, and such other documents as may be necessary in the opinion of counsel
to the Company to permit the registered resale of all of the Registrable
Securities on a delayed or continuous basis, and shall use its commercially
reasonable efforts to have such registration statement or statements declared
effective within 180 days after the Closing.  The Company shall include in such
registration statement or statements (i) the information required under the
Securities Act and the rules and regulations promulgated thereunder to be so
included concerning the Investors, as provided by the Investors or any other
Holders, including any changes in such information, in writing to the Company
from time to time, and (ii) a section entitled “Plan of Distribution,”
substantially in the form of Exhibit I hereto (with such changes as the Holders
may request after the date hereof), that describes the various procedures that
may be used by the Holders in the sale of Registrable Securities.

 

(b)                                 In the event that the Company files a
registration statement or statements on Form S-1 pursuant to Section 2(a), no
later than five business days after the Company first meets the registration
eligibility and transaction requirements for the use of Form S-3 for
registration of the resale by the Holders of the Registrable Securities, the
Company shall file a registration statement on Form S-3 with respect to the
Registrable Securities covered by the

 

3

--------------------------------------------------------------------------------

 

registration statement or statements on Form S-1 filed pursuant to Section 2(a),
or convert the registration statement or statements on Form S-1 filed pursuant
to Section 2(a) to a registration statement on Form S-3 under the Securities
Act, and shall use its commercially reasonable efforts to cause such
registration statement (or such amendment) on Form S-3 to be declared effective
no later than thirty (30) calendar days after the filing thereof.  The Company
represents and warrants that, as of the date hereof, it meets the requirements
for the use of Form S-1 for the registration of the resale by the Holders of the
Registrable Securities.  The Company agrees to file all reports required to be
filed by the Company with the SEC in a timely manner and to use its commercially
reasonable efforts to take any other necessary actions so as to become eligible
and thereafter to maintain its eligibility for the use of Form S-3.

 

(c)                                  The Company shall keep any registration
statement or statements relating to the Registrable Securities effective until
the earliest to occur of (A) the date on which all of the Registrable Securities
have been disposed of by the Holders pursuant to such effective registration
statement or statements, (B) the date on which all of the Registrable Securities
then outstanding are eligible for resale by the Holders under Rule 144, without
any limitation within a three-month period, where no conditions of Rule 144 are
then applicable (other than any holding period requirement under Rule 144 so
long as such holding period requirement is satisfied at such time of
determination) or (C) the date on which no Registrable Securities are
outstanding (such period until the earliest to occur of (A), (B) or (C), the
“Registration Period”).  The obligations of the Company under this Section 2
(other than those obligations that by their terms survive such termination)
shall terminate upon the expiration of the Registration Period.

 

(d)                                 If (i) the registration statement or
statements on Form S-1 filed pursuant to Section 2(a) have not been declared
effective by the SEC within 180 days after the Closing, (ii) the registration
statement (or such amendment) on Form S-3 referred to in Section 2(b) has not
been declared effective by the SEC within thirty (30) calendar days after the
filing thereof or (iii) any such registration statement or statements have been
filed and declared effective pursuant to Section 2(a) or Section 2(b), but shall
thereafter cease to be effective for any reason at any time during the
Registration Period in violation of this Agreement (each such event referred to
in clauses (i) through (iii), a “Registration Default”), the Company shall pay
to each holder of the Notes the Registration Default Interest (as defined in the
Note Purchase Agreement) in accordance with the terms of the Note Purchase
Agreement.

 

(e)                                  The Company agrees not to include any
securities other than the Registrable Securities in any registration statement
covering the Registrable Securities without the prior written consent of the
Holders holding a majority of the Registrable Securities then outstanding, which
such Holders may withhold in their sole discretion. Furthermore, except as
required pursuant to any other registration rights agreement in effect as of the
Closing to which the Company is a party, the Company agrees not to file any
other registration statement (other than any registration statement on Form S-8)
for securities other than the Registrable Securities until at least 90 calendar
days after the registration statement covering the Registrable Securities is
declared effective by the SEC.

 

4

--------------------------------------------------------------------------------

 

(f)                                   Notwithstanding the foregoing provisions
of this Section 2, the Company may, upon prior written notice to each Holder,
voluntarily suspend the use of any such registration statement for a period not
exceeding 30 calendar days if the board of directors of the Company determines
in good faith, based on advice from outside counsel, that the offering of any
Registrable Securities pursuant to such registration statement would be
materially detrimental to the Company and its shareholders because such offering
would (i) materially interfere with a significant acquisition, corporate
reorganization, or other similar transaction involving the Company or
(ii) require premature disclosure of material information that the Company has a
bona fide business purpose for preserving as confidential; provided, however,
that the Company may not invoke this suspension right more than once in any
twelve-month period.  In addition, the Company may suspend the use of such
registration statement for the 15 calendar days following the filing of any
Form 8-K, Form 10-Q or Form 10-K, or other comparable form solely for purposes
of filing a post-effective amendment to the registration statement, plus any
period following such filing until the SEC declares such post-effective
amendment to be effective, to the extent that such filings are not automatically
incorporated by reference into the registration statement.  If any event occurs
that would cause any such registration statement to contain a material
misstatement or omission or not to be effective and usable during the period
that such registration statement is required to be effective and usable, subject
to the time periods set forth above, the Company shall promptly file an
amendment to the registration statement and use its commercially reasonable
efforts to cause such amendment to be declared effective as soon as practicable
thereafter.

 

(g)                                  If and whenever the Company is required by
the provisions of this Agreement to use its commercially reasonable efforts to
effect the registration of the Registrable Securities under the Securities Act
for the account of a Holder, the Company shall, as promptly as possible:

 

(i)                                     prepare and file with the SEC a
registration statement with respect to such securities and use its commercially
reasonable efforts to cause such registration statement to become and remain
effective, subject to the Company’s obligations to file post-effective
amendments to such registration statement;

 

(ii)                                  prepare and file with the SEC such
amendments and supplements to such registration statement and the prospectus
used in connection therewith as may be necessary to keep such registration
statement effective and to comply with the requirements of the Securities Act
and the rules and regulations promulgated by the SEC thereunder relating to the
sale or other disposition of the securities covered by such registration
statement;

 

(iii)                               include in each such document the names of
each Holder who continues to hold Registrable Securities, except for any Holder
who notifies the Company in writing that it does not wish to have their
Registrable Securities included in the registration statement;

 

5

--------------------------------------------------------------------------------

 

(iv)                              use its commercially reasonable efforts to
(i) register and qualify the Registrable Securities under such other securities
or “blue sky” laws of such states in the United States as any Holder reasonably
requests; (ii) prepare and file in those jurisdictions, such amendments
(including post-effective amendments) and supplements to such registrations and
qualifications as may be necessary to maintain the effectiveness thereof during
the Registration Period; (iii) take such other actions as may be necessary to
maintain such registrations and qualifications in effect at all times during the
Registration Period, and (iv) take all other actions reasonably necessary or
advisable to qualify the Registrable Securities for sale in such jurisdictions;

 

(v)                                 use its commercially reasonable efforts to
prevent the issuance of any stop order or other suspension of effectiveness of
the registration statement, or the suspension of the qualification of any of the
Registrable Securities for sale in any jurisdiction and, if such an order or
suspension is issued, to obtain the withdrawal of such order or suspension at
the earliest possible moment and to notify the Holders of the issuance of such
order and the resolution thereof or its receipt of actual notice of the
initiation or threat of any proceeding concerning the effectiveness of the
registration statement;

 

(vi)                              file pursuant to Rule 424(b) under the
Securities Act an amendment to the registration statement or amend, if required,
the registration statement and prospectus, in each case, to cover new Holders
upon at least seven business days’ prior written notice by such new Holders to
such effect; provided, however, that the Company shall not be required to make
any such filing to cover new Holders more often than once per calendar month;

 

(vii)                           give written notice to the Holders of
Registrable Securities covered by a registration statement:

 

(1)                                 when any registration statement or any
amendment thereto has been filed with the SEC and when such registration
statement or any post-effective amendment thereto has become effective;

 

(2)                                 of any request by the SEC for amendments or
supplements to any registration statement or the prospectus included therein or
for additional information;

 

(3)                                 of the issuance by the SEC of any stop order
suspending the effectiveness of any registration statement or the initiation of
any proceedings for that purpose;

 

(4)                                 of the receipt by the Company or its legal
counsel of any notification with respect to the suspension of the qualification
of the Registrable Securities for sale in any

 

6

--------------------------------------------------------------------------------

 

jurisdiction or the initiation or threatening of any proceeding for such
purpose; and

 

(5)                                 of the happening of any event that requires
the Company to make changes in any effective registration statement or the
prospectus in order to make the statements therein not misleading (which notice
shall be accompanied by an instruction to suspend the use of the prospectus
until the requisite changes have been made);

 

(viii)                        furnish to each Holder, without charge, such
numbers of copies of a prospectus, including a preliminary prospectus, complying
with the requirements of the Securities Act and the rules and regulations
promulgated thereunder, and such other documents as such Holder may reasonably
request in order to facilitate the public sale or other disposition of the
Registrable Securities owned by such Holder.

 

(h)                                 The Company shall provide the Holders, and
any legal counsel designated by the Holders, a reasonable opportunity to review
and comment upon any registration statement, any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereof, or any
“issuer free writing prospectus” as defined in Rule 433 under the Securities
Act, in each case prior to the filing thereof with the SEC.

 

(i)                                     If the Holders holding a majority of the
Registrable Securities then outstanding intend to distribute any Registrable
Securities by means of an underwritten offering, such Holders shall have the
right to appoint the managing underwriter or underwriters for such underwritten
offering, subject to the approval of the Company not to be unreasonably withheld
or delayed. The Company agrees to enter into and perform the Company’s
obligations under an underwriting agreement in the usual and customary form for
secondary offerings at the time of execution, including, without limitation,
indemnification and contribution obligations customary for issuers, and take
such other actions as are reasonably required in order to expedite or facilitate
the disposition of the Registrable Securities in such underwritten offering.

 

(j)                                    The Company shall hold in confidence and
not make any disclosure of information concerning the Holders unless
(i) disclosure of such information is necessary to comply with federal or state
securities laws, (ii) the disclosure of such information is necessary to avoid
or correct a misstatement or omission in any registration statement, (iii) the
release of such information is ordered pursuant to a subpoena or other final,
non-appealable order from a court or governmental body of competent
jurisdiction, or (iv) such information has been made generally available to the
public other than by disclosure in violation of this Agreement or any other
agreement. The Company agrees that it shall, upon learning that disclosure of
such information concerning the Holders is sought in or by a court or
governmental body of competent jurisdiction or through other means, give prompt
written notice to the Holders and allow the Holders to undertake appropriate
action to prevent disclosure of, or to obtain a protective order covering such
information.

 

7

--------------------------------------------------------------------------------

 

(k)                                 The Company shall use its commercially
reasonable efforts to maintain the listing or quotation of shares of Common
Stock on any national or regional securities exchange or quotation system
(including any over-the-counter market) on which shares of Common Stock are then
listed or quoted (or to seek such listing or quotation if shares of Common Stock
are not then listed or quoted but are eligible for such listing or quotation, as
may be requested by the Holders holding a majority of the Registrable Securities
then outstanding) and shall use its commercially reasonable efforts to cause all
of the Registrable Securities covered by any registration statement to be listed
or quoted, as soon as practicable following their issuance, on each such
securities exchange or quotation system (including any over-the-counter market),
as applicable.

 

(l)                                     Except as otherwise expressly provided
in this Agreement, any and all expenses incident to the performance of or
compliance with this Agreement, including without limitation: (a) all
registration and filing fees; (b) all fees and expenses associated with a
required listing or quotation of the Registrable Securities on any securities
exchange or quotation system (including any over-the-counter market); (c) fees
and expenses with respect to filings required to be made with an exchange or any
securities industry self-regulatory body; (d) fees and expenses of compliance
with securities or “blue sky” laws (including reasonable fees and disbursements
of counsel for the underwriters or holders of securities in connection with blue
sky qualifications of the securities and determination of their eligibility for
investment under the laws of such jurisdictions); (e) printing, messenger,
telephone and delivery expenses of the Company; (f) fees and disbursements of
counsel for the Company and customary fees and expenses for independent
certified public accountants retained by the Company (including the expenses of
any comfort letters, or costs associated with the delivery by independent
certified public accountants of a comfort letter or comfort letters, if such
comfort letter or comfort letters is required by the managing underwriter);
(g) premiums for any liability insurance; (h) all internal expenses of the
Company (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties); (i) the expenses
of any audit or review; (j) the fees and expenses of any Person, including
special experts, retained by the Company; and (k) reasonable fees and
disbursements of legal counsel to the Holders in connection with providing the
information with respect to the Holders that is required to be included in any
registration statements filed by the Company pursuant to this Agreement and in
connection with reviewing such information and such registration statement and
related documents filed with the SEC; provided that the Company shall not be
obligated in any way in connection with any registration pursuant to this
Section 2 for any selling commissions or discounts payable by any Holder to any
underwriter or broker of securities to be sold by such Holder.

 

(m)                             At any time when a prospectus relating to the
Registrable Securities is required to be delivered under the Securities Act, the
Company shall notify each Holder in writing of the happening of any event, upon
the awareness of such event by the Company, as a result of which the prospectus
included in such registration statement, as then in effect, includes an untrue
statement of material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances under which they were made.

 

8

--------------------------------------------------------------------------------

 

(n)                                 In the event of any registration of
Registrable Securities pursuant to this Section 2, the Company will indemnify
and hold harmless each Holder, its Affiliates and its and their respective
officers, directors, employees, counsel, investment advisors, agents and other
representatives and each underwriter of such securities, any Person who controls
such Holder or underwriter within the meaning of Section 15 of the Securities
Act and each other Person, if any, subject to liability because of his, her or
its connection with such Holder, against all claims, actions, losses, damages,
liabilities and expenses, joint or several, to which any of such Persons may
become subject under the Securities Act or otherwise, insofar as such losses,
claims, damages, liabilities or actions arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
any registration statement under which such securities were registered under the
Securities Act, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereof, any “issuer free writing
prospectus” as defined in Rule 433 under the Securities Act, or any “issuer
information” filed or required to be filed pursuant to Rule 433(d) under the
Securities Act, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse such
Holder, its Affiliates and its and their respective officers, directors,
employees, counsel, investment advisors, agents and other representatives and
each underwriter of such securities, any Person who controls such Holder or
underwriter within the meaning of Section 15 of the Securities Act and each
other Person, if any, subject to liability because of his, her or its connection
with such Holder for any legal and any other expenses reasonably incurred by
such Holder or such other Person in connection with investigating or defending
any such loss, claim, damage, liability, or action as such expenses are
incurred; provided, however, that the Company will not be liable in any such
case to the extent that any such loss, claim, damage, liability or action arises
directly out of or is based primarily upon an untrue statement or omission made
in said registration statement, said preliminary prospectus or said prospectus,
said amendment or supplement, or any “issuer free writing prospectus” in
reliance upon and in conformity with written information furnished to the
Company by such Holder or such underwriter specifically and expressly for use in
the preparation thereof.

 

(o)                                 In connection with each registration under
the Securities Act pursuant to this Section 2, each Holder agrees to indemnify
and hold harmless, severally and not jointly, the Company, its officers,
directors and any Person who controls the Company within the meaning of
Section 15 of the Securities Act, against any losses, claims, damages,
liabilities, or actions, joint or several, to which the Company, its officers,
directors, or such controlling Person or entity may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages,
liabilities, or actions arise out of or are based upon any untrue statement of
any material fact contained in any registration statement under which such
Registrable Securities were registered under the Securities Act, any preliminary
prospectus or final prospectus contained therein, or any amendment or supplement
thereto, or any “issuer free writing prospectus” as defined in Rule 433 under
the Securities Act, or arise out of or are based upon the omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent and only to the
extent that any such loss, claim, damage, liability, or action arises directly
out of or is based primarily upon an untrue

 

9

--------------------------------------------------------------------------------

 

statement or omission made in said registration statement, said preliminary
prospectus or said prospectus, said amendment or supplement, or any “issuer free
writing prospectus” in reliance upon and in conformity with written information
furnished to the Company by such Holder specifically and expressly for use in
the preparation thereof.  Notwithstanding anything to the contrary contained
herein, no Holder shall be liable under this Section 2(o) for any amount that
exceeds the net proceeds to such Holder as a result of the sale of Registrable
Securities pursuant to the relevant registration statement provided by this
Section 2.

 

(p)                                 If a claim for indemnification under
Section 2 is unavailable to an indemnified party because of a failure or refusal
of a governmental authority to enforce such indemnification in accordance with
its terms (by reason of public policy or otherwise), then each indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses, in
such proportion as is appropriate to reflect the relative fault of the
indemnifying party and indemnified party in connection with the actions,
statements or omissions that resulted in such losses as well as any other
relevant equitable considerations.  The relative fault of such indemnifying
party and indemnified party shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission of a material fact,
has been taken or made by, or relates to information supplied by, such
indemnifying party or indemnified party, and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such
action, statement or omission.  The amount paid or payable by a party as a
result of any such contribution shall be deemed to include any reasonable
attorneys’ or other reasonable fees or expenses incurred by such party in
connection with the defense of any losses to the extent such party would have
been indemnified for such fees or expenses if the indemnification provided for
under Section 2(n) or 2(o) was available to such party in accordance with its
terms.  Notwithstanding anything to the contrary contained herein, no Holder
shall be liable or required to contribute under this Section 2(p) for any amount
that exceeds the net proceeds to such Holder as a result of the sale of
Registrable Securities pursuant to the registration statement provided by this
Section 2.  The parties hereto agree that it would not be just and equitable if
contribution pursuant to this Section 2(p) were determined by pro rata
allocation or by any other method of allocation that does not take into account
the equitable considerations referred to in this paragraph.  No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation.  The indemnity and contribution
agreements contained in this Section 2 are in addition to any liability that the
indemnifying parties may have to the indemnified parties.

 

(q)                                 Any party entitled to indemnification
hereunder will (i) give prompt written notice to the indemnifying party of any
claim with respect to which it seeks indemnification and (ii) unless in such
indemnified party’s reasonable judgment a conflict of interest between such
indemnified and indemnifying parties exists with respect to such claim, permit
such indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party.  If such defense is assumed,
the indemnifying party will not be subject to any liability for any settlement
made by the indemnified party without its consent

 

10

--------------------------------------------------------------------------------

 

(which consent may not be unreasonably withheld).  An indemnifying party who is
not entitled to, or elects not to, assume the defense of a claim will not be
obligated to pay the fees and expenses of more than one counsel for all parties
indemnified by such indemnifying party with respect to such claim, unless in the
reasonable judgment of any indemnified party a conflict of interest exists
between such indemnified party and any other of such indemnified parties with
respect to such claim.

 

(r)                                    The indemnification and contribution
obligations under Sections 2(n), 2(o) and 2(p) shall survive any termination of
the Company’s obligations pursuant to Section 2(c).

 

(s)                                   With a view to making available to the
Holders the benefits of Rule 144, the Company agrees that it shall use its
commercially reasonable efforts to maintain registration of its Common Stock
under Section 12 or 15 of the Exchange Act.  The Company agrees, so long as it
is subject to the periodic reporting requirements of the Exchange Act, to use
its commercially reasonable efforts to: (i) make and keep public information
available, as those terms are understood and defined in Rule 144(c)(1) or any
similar or analogous rule promulgated under the Securities Act; (ii) file with
the SEC, in a timely manner, all reports and other documents required of the
Company under the Exchange Act; and (iii) so long as any Holder own any
Registrable Securities, furnish to such Holder forthwith upon request: a written
statement by the Company as to its compliance with the reporting requirements of
Rule 144 and of the Exchange Act; a copy of the most recent annual or quarterly
report of the Company; and such other reports and documents as any Investor or
Holder may reasonably request in availing itself of any rule or regulation of
the SEC allowing it to sell any such securities without registration.  At any
time when the Company is not subject to Section 13 or 15(d) of the Exchange Act,
the Company will promptly furnish or cause to be furnished to each Holder, upon
request, copies of the information required to be delivered to holders and
prospective purchasers of Registrable Securities pursuant to
Rule 144A(d)(4) under the Securities Act (or any successor provision thereto) in
order to permit compliance with Rule 144A in connection with resales by such
Holder of the Registrable Securities.

 

3.                                      Successors and Assigns.  The rights
under this Agreement may be assigned (but only with all related obligations) by
a Holder to a transferee or assign of Registrable Securities; provided, however,
that (i) the Company is, within a reasonable time after such transfer, furnished
with written notice of the name and address of such transferee or assign and the
Registrable Securities with respect to which such rights are being transferred
or assigned; and (ii) such transferee or assign agrees in a written instrument
delivered to the Company to be bound by and subject to the terms and conditions
of this Agreement.  The terms and conditions of this Agreement inure to the
benefit of and are binding upon the respective successors and assigns of the
parties.  Nothing in this Agreement, express or implied, is intended to confer
upon any party other than the parties hereto, any other Holders or their
respective successors and assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
herein (for the avoidance of doubt, the Persons entitled to indemnification or

 

11

--------------------------------------------------------------------------------

 

contribution under Sections 2(n), 2(o) and 2(p) pursuant to the terms thereof
shall be third-party beneficiaries thereof).

 

4.                                      Governing Laws.  This Agreement and the
rights and obligations of the parties hereunder (including, without limitation,
any claims sounding in contract law or tort law arising out of the subject
matter hereof and any determinations with respect to post-judgment interest)
shall be governed by, and shall be construed and enforced in accordance with,
the laws of the State of New York without regard to conflict of laws principles
thereof that would result in the application of any law other than the laws of
the State of New York. All actions and proceedings arising out of or relating to
this Agreement shall be heard and determined exclusively in any New York state
or federal court, in each case sitting in the Borough of Manhattan. The parties
hereto hereby (a) submit to the exclusive jurisdiction of any New York state or
federal court, in each case sitting in the Borough of Manhattan, for the purpose
of any action or proceeding arising out of or relating to this Agreement brought
by any party hereto, and (b) irrevocably waive, and agree not to assert by way
of motion, defense, or otherwise, in any such action or proceeding, any claim
that it is not subject personally to the jurisdiction of the above-named courts,
that its property is exempt or immune from attachment or execution, that the
action or proceeding is brought in an inconvenient forum, that the venue of the
action or proceeding is improper, or that this Agreement or the transactions
contemplated hereby may not be enforced in or by any of the above-named courts.

 

5.                                      Waiver of Jury Trial.  Each of the
parties hereto hereby waives to the fullest extent permitted by applicable law
any right it may have to a trial by jury with respect to any litigation directly
or indirectly arising out of, under or in connection with this Agreement or the
transactions contemplated hereby. Each of the parties hereto (a) certifies that
no representative, agent or attorney of any other party has represented,
expressly or otherwise, that such other party would not, in the event of
litigation, seek to enforce that foregoing waiver and (b) acknowledges that it
and the other parties hereto have been induced to enter into this Agreement and
the transactions contemplated hereby, as applicable, by, among other things, the
mutual waivers and certifications in this Section 5.

 

6.                                      Counterparts.  This Agreement may be
executed in two (2) or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.  Counterparts may be delivered via facsimile, electronic mail
(including pdf or any electronic signature complying with the U.S. federal ESIGN
Act of 2000, e.g., www.docusign.com) or other transmission method and any
counterpart so delivered shall be deemed to have been duly and validly delivered
and be valid and effective for all purposes.

 

7.                                      Titles and Subtitles.  The titles and
subtitles used in this Agreement are for convenience only and are not to be
considered in construing or interpreting this Agreement.

 

8.                                      Notices.  All notices and other
communications given or made pursuant to this Agreement shall be in writing and
shall be deemed effectively given upon the earlier of actual receipt or
(a) personal delivery to the party to be notified; (b) when sent, if sent by
electronic

 

12

--------------------------------------------------------------------------------

 

mail or facsimile during the recipient’s normal business hours, and if not sent
during normal business hours, then on the recipient’s next business day;
(c) five (5) days after having been sent by registered or certified mail, return
receipt requested, postage prepaid; or (d) one (1) business day after the
business day of deposit with a nationally recognized overnight courier, freight
prepaid, specifying next-day delivery, with written verification of receipt. 
All communications shall be sent to the respective parties at their addresses as
set forth on Schedule A hereto, or to the principal office of the Company and to
the attention of the Secretary, in the case of the Company, or to such email
address, facsimile number, or address as subsequently modified by written notice
given in accordance with this Section 8.  If notice is given to the Company, a
copy shall also be sent to:

 

David R. Earhart

Looper Reed & McGraw, PC

1601 Elm Street, Suite 4600

Dallas, Texas 75201

Email: dearhart@lrmlaw.com

Fax: 469-320-8041

 

9.                                      Amendments and Waivers.  Any term of
this Agreement may be amended and the observance of any term of this Agreement
may be waived (either generally or in a particular instance, and either
retroactively or prospectively) only with the written consent of the Company and
the Holders of a majority of the Registrable Securities then outstanding;
provided that the Company may in its sole discretion waive compliance with
Section 3; and provided further that any provision hereof may be waived by any
waiving party on such party’s own behalf, without the consent of any other
party.  Notwithstanding the foregoing, this Agreement may not be amended or
terminated and the observance of any term hereof may not be waived with respect
to any Holder without the written consent of such Holder, unless such amendment,
termination, or waiver applies to all Holders in the same fashion.  The Company
shall give prompt notice of any amendment or termination hereof or waiver
hereunder to any party hereto that did not consent in writing to such amendment,
termination, or waiver.  Any amendment, termination, or waiver effected in
accordance with this Section 9 shall be binding on all parties hereto,
regardless of whether any such party has consented thereto.  No waivers of or
exceptions to any term, condition, or provision of this Agreement, in any one or
more instances, shall be deemed to be or construed as a further or continuing
waiver of any such term, condition, or provision.

 

10.                               Severability.  In case any one or more of the
provisions contained in this Agreement is for any reason held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality, or
unenforceability shall not affect any other provision of this Agreement, and
such invalid, illegal, or unenforceable provision shall be reformed and
construed so that it will be valid, legal, and enforceable to the maximum extent
permitted by law.

 

11.                               Entire Agreement.  This Agreement (including
any Schedules and Exhibits hereto) constitutes the entire agreement and
supersede all prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter hereof.  In the event

 

13

--------------------------------------------------------------------------------

 

of any conflict, discrepancy, or ambiguity between the terms and conditions
contained in this Agreement and any schedules or attachments hereto, the terms
and conditions contained in this Agreement shall take precedence.

 

13.                               Delays or Omissions.  No delay or omission to
exercise any right, power, or remedy accruing to any party under this Agreement,
upon any breach or default of any other party under this Agreement, shall impair
any such right, power, or remedy of such nonbreaching or nondefaulting party,
nor shall it be construed to be a waiver of or acquiescence to any such breach
or default, or to any similar breach or default thereafter occurring, nor shall
any waiver of any single breach or default be deemed a waiver of any other
breach or default theretofore or thereafter occurring.  All remedies, whether
under this Agreement or by law or otherwise afforded to any party, shall be
cumulative and not alternative.

 

 [Remainder of Page Intentionally Left Blank]

 

14

--------------------------------------------------------------------------------

 

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

 

 

CUBIC ENERGY, INC.

 

 

 

 

 

By:

/s/ Calvin A. Wallen, III

 

 

 

 

Name:

Calvin A. Wallen, III

 

 

 

 

Title:

President

 

SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT

 

--------------------------------------------------------------------------------

 

 

INVESTORS:

 

 

 

ANCHORAGE ILLIQUID OPPORTUNITIES OFFSHORE MASTER III, L.P.

 

 

 

By:

Anchorage Capital Group, L.L.C., its Investment Manager

 

 

 

 

 

/s/ Michael Aglialoro

 

Name:

Michael Aglialoro

 

Title:

Executive Vice President

 

SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT

 

--------------------------------------------------------------------------------

 

 

ANCHORAGE ILLIQUID OPPORTUNITIES III (B), L.P.

 

 

 

By:

Anchorage Capital Group, L.L.C., its Investment Manager

 

 

 

 

 

s/ Michael Aglialoro

 

Name:

Michael Aglialoro

 

Title:

Executive Vice President

 

SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT

 

--------------------------------------------------------------------------------

 

 

AIO III AIV, L.P.

 

 

 

By:

Anchorage Capital Group, L.L.C., its Investment Manager

 

 

 

 

 

/s/ Michael Aglialoro

 

Name:

Michael Aglialoro

 

Title:

Executive Vice President

 

SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT

 

--------------------------------------------------------------------------------

 

 

CORBIN OPPORTUNITY FUND, L.P.

 

 

 

By:

Corbin Capital Partners Management, LLC, Its General Partner

 

 

 

 

By:

/s/ Daniel Friedman

 

 

Name:

Daniel Friedman

 

 

Title:

General Counsel

 

SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT

 

--------------------------------------------------------------------------------

 

 

O-CAP PARTNERS, L.P.

 

 

 

By:

O-CAP Advisors, LLC, Its General Partner

 

 

 

 

By:

/s/ Jared Sturdivant

 

 

Name:

Jared Sturdivant

 

 

Title:

Manager

 

SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT

 

--------------------------------------------------------------------------------

 

 

O-CAP OFFSHORE MASTER FUND, L.P.

 

 

 

By:

O-CAP Advisors, LLC, Its General Partner

 

 

 

 

By:

/s/ Jared Sturdivant

 

 

Name:

Jared Sturdivant

 

 

Title:

Manager

 

SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT

 

--------------------------------------------------------------------------------

 

SCHEDULE A

 

Investors

 

ANCHORAGE ILLIQUID OPPORTUNITIES OFFSHORE MASTER III, L.P.

Anchorage Capital Group, L.L.C.

610 Broadway, 6th Floor

New York, NY 10012

 

ANCHORAGE ILLIQUID OPPORTUNITIES III (B), L.P.

Anchorage Capital Group, L.L.C.

610 Broadway, 6th Floor

New York, NY 10012

 

AIO III AIV, L.P.

Anchorage Capital Group, L.L.C.

610 Broadway, 6th Floor

New York, NY 10012

 

CORBIN OPPORTUNITY FUND, L.P.

Corbin Capital Partners Management, LLC

590 Madison Avenue, 31st Fl

New York, NY 10022

 

O-CAP PARTNERS, L.P.

O-CAP Advisors, LLC

600 Madison Avenue, 14th FL

New York, NY 10022

Attention: Lloyd Jagain

 

O-CAP OFFSHORE MASTER FUND, L.P.

O-CAP Advisors, LLC

600 Madison Avenue, 14th FL

New York, NY 10022

Attention: Lloyd Jagain

 

--------------------------------------------------------------------------------

 

EXHIBIT I

 

Plan of Distribution

 

As of the date of this prospectus, we have not been advised by the selling
stockholders as to any plan of distribution.  Distributions of the shares by the
selling stockholders, or by their partners, pledgees, donees (including
charitable organizations), transferees or other successors in interest, may from
time to time be offered for sale either directly by such persons, or through
underwriters, dealers or agents or on any exchange on which the shares may from
time to time be traded, in the over-the-counter market, or in independently
negotiated transactions or otherwise.  The methods by which the shares may be
sold include:

 

·                                          a block trade (which may involve
crosses) in which the broker or dealer so engaged will attempt to sell the
securities as agent but may position and resell a portion of the block as
principal to facilitate the transaction;

 

·                                          purchases by a broker or dealer as
principal and resale by such broker or dealer for its own account pursuant to
this prospectus;

 

·                                          exchange distributions and/or
secondary distributions;

 

·                                          sales in the over-the-counter market;

 

·                                          underwritten transactions;

 

·                                          ordinary brokerage transactions and
transactions in which the broker solicits purchasers; and

 

·                                          privately negotiated transactions.

 

Such transactions may be effected by the selling stockholders at market prices
prevailing at the time of sale or at negotiated prices.  The selling
stockholders may effect such transactions by selling the Common Stock to
underwriters or to or through broker-dealers, and such underwriters or
broker-dealers may receive compensations in the form of discounts or commissions
from the selling stockholders and may receive commissions from the purchasers of
the Common Stock for whom they may act as agent.  The selling stockholders may
agree to indemnify any underwriter, broker-dealer or agent that participates in
transactions involving sales of the shares against certain liabilities,
including liabilities arising under the Securities Act.  We have agreed to
register the shares for sale under the Securities Act and to indemnify the
selling stockholders and each person who participates as an underwriter in the
offering of the shares against certain civil liabilities, including certain
liabilities under the Securities Act.

 

In connection with sales of the Common Stock under this prospectus, the selling
stockholders may enter into hedging transactions with broker-dealers, who may in
turn engage in short sales of the Common Stock in the course of hedging the
positions they assume.  The selling stockholders also may sell shares of Common
Stock short and deliver them to close out the short

 

--------------------------------------------------------------------------------

 

positions, or loan or pledge the shares of Common Stock to broker-dealers that
in turn may sell them.

 

The selling stockholders and any underwriters, dealers or agents that
participate in distribution of the shares may be deemed to be underwriters, and
any profit on sale of the shares by them and any discounts, commissions or
concessions received by any underwriter, dealer or agent may be deemed to be
underwriting discounts and commissions under the Securities Act.

 

There can be no assurances that the selling stockholders will sell any or all of
the shares offered under this prospectus.

 

--------------------------------------------------------------------------------