Exhibit 10.1

 

EXECUTION VERSION

 

AMENDMENT, FORBEARANCE AND WAIVER AGREEMENT

 

This AMENDMENT, FORBEARANCE AND WAIVER AGREEMENT (this “Agreement”) is entered
into on this 14th day of July 2014, by and among Cubic Energy, Inc. (the
“Company”), Cubic Asset, LLC (“Asset”), Cubic Asset Holding, LLC (“Asset
Holding”), Cubic Louisiana, LLC (“Louisiana”), Cubic Louisiana Holding, LLC
(“Louisiana Holding”, together with Asset, Asset Holding and Louisiana, the
“Guarantors”, and each a “Guarantor”) and the undersigned Series A Purchasers
and Series B Purchasers (collectively, the “Noteholders”) and, solely for
purposes of Sections 1, 5, 7 and 10.1-10.11 of this Agreement, the undersigned
registration rights holders (the “Registration Rights Holders”).  All terms
capitalized and not defined herein shall take the meanings assigned in the NPA
(as defined below).

 

RECITALS

 

WHEREAS, the Company, the Guarantors, the Noteholders, the Noteholder Agent, the
Company Collateral Agent, the New Asset Collateral Agent and the Old Asset
Collateral Agent are parties to that certain Note Purchase Agreement, dated
October 2, 2013 (as amended, amended and restated, supplemented or otherwise
modified from time to time in accordance with its terms, the “NPA”), pursuant to
which the Noteholders purchased 15.5% Senior Secured Notes due 2016 (the
“Notes”) in an original aggregate principal amount of $66,000,000 from the
Company;

 

WHEREAS, since October 2, 2013 and through March 31, 2014 the Company has issued
to the Noteholders an aggregate principal amount of $2,834,803.13 additional
Notes as payment of PIK Interest pursuant to Section 2.4 of the NPA;

 

WHEREAS, as security for all of the indebtedness and obligations due to
Noteholders under the NPA and the other Note Documents, the Company and the
Guarantors, as applicable, have (a) executed and delivered a (i) First Lien
Security Agreement, dated as of October 2, 2013, between Asset Holding, Asset
and Wilmington Trust, National Association, as collateral agent, (ii) Security
Agreement, dated as of October 2, 2013, between Louisiana Holding, Louisiana and
Wilmington Trust, National Association, as collateral agent, and (iii) Security
Agreement, dated as of October 2, 2013, between the Company and Wilmington
Trust, National Association, as collateral agent (each such agreement, as
amended, amended and restated, supplemented or otherwise modified from time to
time in accordance with its terms a “Security Agreement”, and collectively the
“Security Agreements”), in each case, granting to the collateral agent
thereunder on behalf of the Noteholders a security interest in the Collateral
and (b) executed and delivered certain other documents, made certain filings,
delivered certain certificates and instruments and took other actions to perfect
the security interest in the Collateral for the benefit of the Noteholders;

 

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WHEREAS, the Company and the Registration Rights Holders are parties to that
certain Registration Rights Agreement, dated October 2, 2013 (as amended,
amended and restated, supplemented or otherwise modified from time to time in
accordance with its terms, the “RRA”), pursuant to which the Company agreed to
provide the Registration Rights Holders with certain registration and other
rights with respect to, among others, the shares of Common Stock issuable upon
the exercise of the Warrants;

 

WHEREAS, as a condition precedent to the purchase of the Notes by the
Noteholders, the Guarantors each executed a guaranty, dated October 2, 2013
(each a “Guaranty”), unconditionally guaranteeing payment to the Noteholders of
the Guaranteed Obligations (as defined in the applicable Guaranty);

 

WHEREAS, the Noteholders and the Company previously entered into an Extension
and Waiver Agreement on February 21, 2014 (the “Extension Agreement”) with
respect to the Defaults set forth therein;

 

WHEREAS, the Company has continuing Defaults and Events of Defaults under the
NPA, the Extension Agreement and the RRA;

 

WHEREAS, the Company has identified certain Defaults and Event of Defaults in an
officer’s certificate, dated June 27, 2014, delivered by the Company to the
Noteholder Agent, the Noteholders and the Registration Rights Holders;

 

WHEREAS, the Company has requested that (i) the Noteholders agree to certain
amendments to the NPA, forbear from exercising certain rights and remedies
available under the Note Documents and at law and waive certain Defaults and
Events of Default under the NPA and (ii) the Registration Rights Holders agree
to certain amendments to the RRA; and

 

WHEREAS, in response to such request, the Noteholders and the Registration
Rights Holders desire to enter into this Agreement to make certain amendments to
the NPA and RRA, forbear from exercising certain rights and remedies under the
NPA and at law and waive certain Defaults and Events of Default under the NPA,
in each case, as set forth in this Agreement and subject to the terms and
conditions set forth in this Agreement.

 

NOW THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, the Company, the Guarantors, the Noteholders
and, solely for purposes of Sections 1, 5, 7 and 10.1-10.11 of this Agreement,
the Registration Rights Holders hereby agree as follows:

 

1.                                      Incorporation of Recitals.  The Company,
each of the Guarantors, each of the Noteholders and each of the Registration
Rights Holders agrees and acknowledges that the Recitals set forth above are
true and correct in all respects.

 

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2.                                      Company and Guarantor Confirmations.

 

2.1                               Confirmation of Amounts Owed.  (a)  The
Company and each Guarantor agrees and acknowledges that as of the date hereof
(i) the aggregate principal amount of Series A Notes that are outstanding is
$52,147,578.13, (ii) the aggregate principal amount of Series B Notes that are
outstanding is $16,687,225.00, (iii) the aggregate principal amount of all Notes
outstanding is $68,834,803.13, (iv) there is accrued and unpaid interest owed to
the Noteholders, (which includes Default Interest and Registration Default
Interest (the aggregate amount of such Default Interest and Registration Default
Interest owed, the “Default Amount”)) and (v) the foregoing amounts do not
include other fees, expenses and other amounts which are chargeable to or
otherwise reimbursable by the Company under the Note Documents.  The Company
acknowledges that it has an obligation to pay such amounts in accordance with
the terms of the Note Documents.

 

2.2                               Enforceability of Note Documents and Liens. 
(a) The Company and each Guarantor (i) ratifies and reaffirms the validity and
enforceability of the Note Documents and all obligations thereunder,
acknowledges and agrees that the Note Documents and all obligations thereunder
are legal, valid, binding and enforceable obligations against the Company and
the Guarantors in accordance with their terms and acknowledges and agrees that
they have no defense (whether legal or equitable) or right of set-off or
counterclaim with respect to the validity or enforceability of the Note
Documents or the payment or performance of any obligations thereunder,
(ii) ratifies and reaffirms the validity and enforceability of all liens and
security interests granted pursuant to the Note Documents and acknowledges and
agrees that each Collateral Agent on behalf of the Noteholders has a valid,
enforceable and perfected security interests in and liens on all the Collateral
with the priority required by the Note Documents and such liens and security
interests are not subject to any defense (whether legal or equitable) or right
of deduction, set-off or counterclaim and (iii) acknowledges and agrees that all
such liens and security interests and all Collateral pledged as security for
such indebtedness continues to be and remains collateral for such indebtedness
from and after the date hereof.

 

(a)                                 Each Guarantor hereby ratifies and
reaffirms: (i) the validity and enforceability of its respective Guaranty;
(ii) that its reaffirmation of its Guaranty is a material inducement for the
Noteholders to enter into this Agreement; and (iii) that its obligation under
its respective Guaranty will remain in full force and effect until all of the
Guaranteed Obligations (as defined in the applicable Guaranty) are paid-in-full
and such Guaranty otherwise terminates pursuant to its terms.

 

2.3                               Good Faith Actions by Noteholders.  The
Company and each Guarantor agree and acknowledge that the Noteholders have fully
and timely performed all of their obligations and duties in compliance with the
Note Documents and applicable law, and have acted reasonably, in good faith and
appropriately under the circumstances.

 

2.4                               Existence of Defaults and Events of Default
(a)  The Company and each Guarantor acknowledges and agrees that the following
Defaults and Event of Defaults have occurred and are continuing under, as
applicable, the NPA and the RRA (the “Specified Defaults”):

 

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(i)                                     the Company failed to retain an
Independent Public Accountant by June 1, 2014 as required by Section 7.1(a) of
the NPA and the Extension Agreement (the “Accounting Default”);

 

(ii)                                  the Company failed to deliver certain
Compliance Certificates prior to the date hereof that strictly adhered to the
provisions of Section 7.1(b) of the NPA;

 

(iii)                               the Company delivered certain Financial
Covenant Certificates prior to the date hereof that were executed by officers of
the Company other than the chief financial officer, as required by the
provisions of Section 7.1(c) of the NPA;

 

(iv)                              the Company failed to provide Noteholders with
3 Business Days notice of certain Noteholder conference calls conducted between
the Company and the Noteholders prior to the date hereof, as required by the
provisions of Section 7.2 of the NPA;

 

(v)                                 the Company failed to timely provide the
Noteholders with an Officer’s Certificate describing the Defaults and Events of
Default set forth in Section 2 of this Agreement as required by
Section 7.1(f) of the NPA;

 

(vi)                              the Company failed to comply with the
requirements of Section 7.12(c) of the NPA applicable to the Oil and Gas
Properties listed on Schedule 2.4(a)(vi) (such properties, the “Specified Oil
and Gas Properties”, and such Default, the “Oil and Gas Default”);

 

(vii)                           the Company failed to deliver a reserve report
within 45 days following the end of the fiscal quarter for the fiscal quarter
ended March 31, 2014 as required by Section 7.13(a) of the NPA;

 

(viii)                        the Company failed to timely deliver certain
Monthly Update Reports prior to the date hereof as required by Section 7.14 of
the NPA;

 

(ix)                              the Company failed to timely deliver certain
drilling activities reports prior to the date hereof as required by Section 7.15
of the NPA;

 

(x)                                 the Company failed to obtain key man
insurance for Calvin A. Wallen, III by May 1, 2014 as required by Section 7.17
of the NPA as extended pursuant to the Extension Agreement;

 

(xi)                              the Company took the actions identified to the
Noteholders in writing prior to the date hereof, in violation of the
requirements of Section 8.19 of the NPA to conduct the Company’s activities in
accordance with the Approved Development Plan;

 

(xii)                           the Company failed to designate information
delivered to the Noteholders as either “Private” or “Public” as required by
Section 10.4(b) of the NPA; and

 

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(xiii)                        the Company failed to cause the required
registration statement pursuant to Section 2.1(a) of the RRA to be declared
effective by April 2, 2014 as required by Section 2.1(d) of the RRA ((i)-(xiii),
collectively, the “Specified Defaults”).

 

(b)                                 The Company and the Guarantors acknowledge
and agree that as a result of the Specified Defaults, among other remedies
available to the Noteholders under the Note Documents or at law, the Noteholders
are permitted to declare all the Notes to be due and payable and upon such
declaration the principal of the Notes together with all accrued and unpaid
interest thereon and any unpaid accrued fees and Prepayment Premium and all
other Obligations of the Note Parties accrued under the NPA or under any other
Note Document shall become immediately due and payable.

 

2.5                               Acknowledgement Regarding Nomination of
Directors.  The Company and the Noteholders hereby acknowledge that although
Section 7.18 of the NPA requires that at all times following the effective date
of the NPA, three of the Company’s directors shall be nominees of the
Noteholders, the Noteholders have yet to nominate any persons to serve as a
director of the Company.

 

3.                                      Amendments, Forbearances and Waivers to
the NPA.  The Noteholders, the Company and the Guarantors agree, as applicable,
to the following amendments, waivers and forbearances, in each case, subject to
the satisfaction of the conditions set forth in Section 6 of this Agreement:

 

(a)                                 Extension Agreement.  Until July 31, 2014,
the Noteholders agree to forbear from exercising any of their rights or remedies
under the Note Documents solely as a result of the Accounting Default.  If by
July 31, 2014 the Company retains an Independent Public Accountant satisfying
the requirements of the NPA, the Noteholders shall be deemed as of the date of
such retention to have waived the Accounting Default.

 

(b)                                 Compliance Certificate.  The Noteholders
waive the default by the Company for failing to strictly adhere to the
requirements of Section 7.1(b) of the NPA.

 

(c)                                  Financial Covenant Certificate. The
Noteholders waive the default by the Company for delivering a Financial Covenant
Certificate that was executed by an officer of the Company other than the chief
financial officer as required by Section 7.1(c) of the NPA.

 

(d)                                 Notice of Noteholder Calls.  The Noteholders
waive the default by the Company for failing to provide 3 Business Days’ notice,
as required by Section 7.2 of the NPA, to the Noteholders of certain conference
calls subsequently conducted by the Company and the Noteholders.

 

(e)                                  Notices of Defaults and Events of Default: 
The Noteholders waive the default by the Company for failing to deliver in a
timely manner as required by Section 7.1(f) of the NPA notices of Defaults and
Events of Default with respect to, and only to the extent specified in Section 2
above and occurring prior to the date hereof, the Specified Defaults.

 

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(f)                                   Oil and Gas Properties.  (i) For a period
of sixty (60) days following the execution of this Agreement, the Noteholders
agree to forbear from exercising any of their rights or remedies under the Note
Documents solely due to the Oil and Gas Default.  If by September 12, 2014 the
Company complies in full with all the requirements of Section 7.12(c) applicable
to the Specified Oil and Gas Properties, the Noteholders shall have been deemed
on the date of such compliance to have waived the Oil and Gas Default.
(ii) Section 7.12(c) and (d) of the NPA are amended and restated in their
entirety to read as set forth below:

 

“(c) Without limitation of Section 7.12(b), upon the lease, license, sublicense
or other acquisition by a Note Party after the date hereof of any Oil and Gas
Property, then the Company shall, or shall cause the other Note Parties, within
thirty (30) days following the earlier of (i) the end of the Fiscal Year, or
(ii) the point in time when a Note Party leases, licenses, sublicenses or
acquires real property or properties or Oil and Gas Properties with an aggregate
fair market value in excess of $500,000, to grant to the applicable Collateral
Agent to secure the obligations under the Note Documents, a valid First Priority
Lien (provided that Permitted Liens or other Liens acceptable to the applicable
Collateral Agent and the Required Holders may exist) on such additional Oil and
Gas Property together with each of the Mortgage Related Documents related to
such Oil and Gas Property in form and substance satisfactory to the applicable
Collateral Agent and the Required Holders. The Mortgages or instruments related
thereto shall be duly recorded or filed in such manner and in such places as are
required by law to establish and perfect the Liens in favor of the applicable
Collateral Agent required to be granted pursuant to the Mortgages, and all
taxes, fees and other charges payable in connection therewith shall be paid in
full by such Note Party.

 

(d) Without limitation of Section 7.12(b), upon the purchase, lease, license,
sublicense or other acquisition by a Note Party after the date hereof of any fee
or leasehold interest in real property (other than an Oil and Gas Property),
then the Company shall, or shall cause the other Note Parties, within thirty
(30) days following the earlier of (i) the end of the Fiscal Year, or (ii) the
point in time when a Note Party leases, licenses, sublicenses or acquires real
property or properties (other than an Oil and Gas Property) with an aggregate
fair market value in excess of $500,000, to grant to the applicable Collateral
Agent to secure the obligations under the Note Documents, a valid First Priority
Lien (provided that Permitted Liens may exist) on such additional real property
asset, together with (i) each of the Mortgage Related Documents related to such
real property, in each case in form and substance reasonably satisfactory to the
Required Holders, (ii) ALTA mortgagee title insurance policies or unconditional
commitments therefor issued by one or more title companies reasonably
satisfactory to the Required Holders with respect to such real property, in
amounts not less than the fair market value of such real property, together with
a title report issued by a title company with respect thereto, dated not more
than thirty days prior to the effective date of such purchase, lease, license,
sublicense or other acquisition and copies of all recorded documents listed as
exceptions to title or otherwise referred to therein, each in form and substance
reasonably satisfactory to the Required Holders and evidence satisfactory to
each Purchaser that the

 

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Company has paid to the title company or to the appropriate Governmental
Authorities all expenses and premiums of the title company and all other sums
required in connection with the issuance of the title policy, (iii) a completed
Flood Certificate, (A) which Flood Certificate shall (x) be addressed to the
applicable Collateral Agent and (y) otherwise comply with the Flood Program; and
(B) if such real property is located in a Flood Zone and is located in a
community that participates in the Flood Program, evidence that the applicable
Note Party has obtained a policy of flood insurance that is in compliance with
all applicable requirements of the Flood Program; (iv) if such real property is
acquired by a Note Party in fee simple, ALTA surveys certified to the applicable
Collateral Agent and dated not more than thirty days prior to the effective date
of such purchase, lease, license, sublicense or other acquisition; and (v) if
such real property is a Leasehold Property, a Landlord Consent and evidence that
such Leasehold Property is a Recorded Leasehold Interest. The Mortgages or
instruments related thereto shall be duly recorded or filed in such manner and
in such places as are required by law to establish and perfect the Liens in
favor of the applicable Collateral Agent required to be granted pursuant to the
Mortgages, and all taxes, fees and other charges payable in connection therewith
shall be paid in full by such Note Party.”

 

(g)                                  Reserve Reports.  (i) The Noteholders waive
the default by the Company as a result of its failure to timely deliver a
reserve report within 45 days following the end of the fiscal quarter for the
fiscal quarter ended March 31, 2014 as required by Section 7.13 of the NPA. 
(ii) Section 7.13 of the NPA is amended and restated in its entirety to read as
set forth below:

 

“As soon as available but in any event no later than sixty (60) days after the
end of each June 30 and December 31 of each year, the Company shall deliver to
each Noteholder (a) a report, in form and substance satisfactory to the Required
Noteholders, prepared by Netherland, Sewell and Associates, or another
independent petroleum engineer or firm of engineers acceptable to the Required
Noteholders, which report shall set forth, as of June 30 and December 31,
respectively, projections of future net income from hydrocarbons classified as
Proved Reserves attributable to all of the Company’s and its Subsidiaries’ Oil
and Gas Properties and (b) such other information concerning the Company’s and
its Subsidiaries’ Oil and Gas Properties as any Noteholder may request,
including, without limitation, engineering, geological and performance data.”

 

(h)                                 Sales and Production Reports.  (i) The
Noteholders waive the default by the Company as a result of its failure to
timely deliver prior to the date hereof certain Monthly Update Reports as
required by Section 7.14 of the NPA.  (ii) The definition of “Monthly Update
Report” in Annex I of the NPA is amended and restated in its entirety to read as
set forth below:

 

“7.14 Sales and Production Reports. The Company shall deliver to each Holder
(i) as soon as available and in any event within three (3) Business Days after
each well of the Company or any of its Subsidiaries initially commences
producing, a Well Report for the first twenty-four

 

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(24) hours of production for such well and (ii) after each well of the Company
or any of its Subsidiaries has been producing for thirty (30) days, within three
(3) Business Days after such period a Well Report for the first thirty (30) days
that such well has been producing. The Company shall deliver to each Holder, as
soon as available and in any event within ninety (90) days after the end of each
calendar month, a Monthly Update Report.”

 

(i)                                     Oil and Gas Information.  (i) The
Noteholders waive the default by the Company as a result of its failure to
timely deliver prior to the date hereof reports regarding drilling activities as
required by Section 7.15 of the NPA.  (ii) Section 7.15 of the NPA is amended
and restated in its entirety to read as set forth below:

 

(j)                                    “The Company shall provide the Holders on
the Friday of each week with a weekly operational update for the previous week
in the same form as the weekly operational update provided to the Holders, dated
January 28, 2014, and, for the avoidance of doubt, the information in such
weekly operational updates relating to estimated capital expenditures and
estimated revenues shall be filled in (but deviation need not be filled in).”

 

(k)                                 Key Man Insurance.  (i) The Noteholders
waive the default by the Company as a result of its failure to obtain key man
insurance by May 1, 2014 in accordance with Section 7.17 of the NPA and the
Extension Agreement.  (ii) Section 7.17 of the NPA and Section 1(d) of the
Extension Agreement are each amended and restated in their entirety to read as
set forth below:

 

“[Reserved].”

 

(l)                                     Development Plan.  (i) The Noteholders
waive the default by the Company as a result of its taking the actions
identified in writing by the Company to the Noteholders prior to the date hereof
which were inconsistent with the Approved Development Plan in contravention of
Section 8.19 of the NPA. (ii)  The Approved Development Plan for Asset for 2014
is amended and restated in its entirety to read as set forth below:

 

“Without prior approval by the Required Noteholders, the Note Parties shall not
undertake (or continue to undertake) any projects after July 14, 2014 for the
development of any Oil and Gas Property if the aggregate cost of all such
projects will exceed $250,000.”

 

(m)                             Public and Private Information.  The Noteholders
waive the default by the Company as a result of its failure to appropriately
identify information provided by the Company to the Noteholders prior to the
date hereof as either “Public” or “Private” as required by Section 10.4(b) of
the NPA.

 

(n)                                 13 Week Cash Forecasts.  The NPA is amended
to add a new Section 7.20 as set forth below:

 

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“7.20 Weekly 13 Week Cash Forecasts.  (a) On or before July 31, 2014, the
Company shall deliver to the Noteholders a thirteen (13) week cash flow forecast
for the Company and its Subsidiaries, in form reasonably satisfactory to the
Required Noteholders and including among other information: (i) projected
aggregate weekly cash disbursements by the Company and its Subsidiaries and
(ii) projected aggregate weekly cash receipts of the Company and its
Subsidiaries (the “13-Week Forecast”).

 

(b) Not later than 5:00 p.m. (New York City time) on the Friday following the
end of each week after the delivery of the initial 13-Week Forecast pursuant to
Section 7.20(a), the Company shall deliver to the Noteholders: (i) an updated
13-Week Forecast which shall both update the immediately preceding 13-Week
Forecast and roll forward by one week from the immediately preceding 13-Week
Forecast and (ii) a report comparing, for the week immediately preceding the
first week of the 13-Week Forecast being so delivered, the actual cash
disbursements and receipts for the Company’s and its Subsidiaries to the
projected cash disbursements and receipts for such week as set forth in the in
the immediately preceding 13-Week Forecast.”

 

(o)                                 Strategic Transactions.  The NPA is amended
to add a new Section 7.21 as set forth below:

 

“7.21 Strategic Transactions.

 

(a) No later than July 18, 2014, the Company shall have entered into an
engagement letter in form and substance satisfactory to the Required Noteholders
under which the Company engages an investment bank (the identity of which is
satisfactory to the Required Noteholders) to pursue one or more Strategic
Transactions.

 

(b)  No later than July 31, 2014, the Company shall have distributed or caused
to have been distributed marketing materials for one or more Strategic
Transactions to potential counterparties.

 

(c)  No later than September 30, 2014, the Company shall have entered into a
letter of intent, (in form and substance and with a counterparty, in each case,
satisfactory to the Required Noteholders) with respect to a Strategic
Transaction.

 

(d) No later than October 17, 2014, the Company shall have either
(i) consummated a Strategic Transaction or (ii) entered into a binding
definitive agreement with a counterparty to consummate a Strategic Transaction
that is reasonably expected to be consummated no later than December 31, 2014.

 

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(e)  The Company shall inform the Noteholders, in reasonable detail and on a
reasonably current basis, of its activities with respect to a Strategic
Transaction.  Additionally, the Company shall provide updates on its activities
with respect to a Strategic Transaction upon reasonable notice and demand by any
Noteholder.

 

(f)  “Strategic Transaction”  shall mean a transaction either (i) which at
consummation results in the payment in full in cash of all amounts owing to the
Noteholders under the Note Purchase Agreement and the other Note Documents
(including, without limitation, the full principal amount of the Notes, all
accrued and unpaid interest (including any then owing Default Interest and
Registration Default Interest) and any Prepayment Premium) or (ii) such other
joint venture, strategic alliance or other transaction, the terms of which are
satisfactory to the Noteholders.”

 

(p)                                 Maximum Total Cap Ex Spend.  The table
setting forth “Maximum Capital Expenditures” in Section 9.6 of the NPA is
amended and restated in its entirety as set forth below:

 

Fiscal Year

 

Maximum Capital Expenditure
(on a consolidated basis)

 

2013

 

$9,500,000

 

 

 

 

 

2014 and every year thereafter

 

$2,300,000 or such greater amounts that may be agreed to by the Required Holders
in their sole discretion

 

 

4.                                      Interest Payments.  The Noteholders, the
Company and the Guarantors agree, as applicable, to the following amendments and
waivers, in each case, subject to the satisfaction (or waiver) of the conditions
set forth in Section 6 of this Agreement:

 

(a)                                 The Noteholders waive their right to
receive, and the Company’s obligation to pay, the Default Amount.

 

(b)                                 In consideration for the Noteholders’ entry
into this Agreement (and the related waivers, forbearances and amendments),
including the Noteholders’ agreement to no longer receive cash pay interest as
required by Section 2.4(b) of the NPA as in effect prior to the Effective Date,
the NPA is amended and restated as set forth in this Section 4(b).

 

(i) The definition of “Record Holders” is amended and restated in its entirety
to read as set forth below:

 

“  “Record Holders” means (i) prior to March 31, 2014, Holders of record of the
Notes as of 5:00 P.M. New York City time on December 15, March 15, June 15 and
September 15 with respect to the immediately succeeding Interest Payment

 

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Date and (ii) after March 31, 2014, the Holders of Record immediately preceding
the payment of interest on the Interest Payment Date.”

 

(ii) Section 2.4 of the NPA is amended and restated in its entirety to read as
set forth below:

 

“(a) (i) Prior to March 31, 2014, interest will accrue on the Notes and be
payable to the Record Holders at a rate of 15.5% per annum (of which 7 .0% per
annum shall be payable in cash and 8.5% per annum shall be payable in the form
of additional Notes (any interest paid in the form of additional Notes, “PIK
Interest”)) payable quarterly in arrears on each of December 31, March 31,
June 30 and September 30 of every calendar year to the Record Holders and
(ii) after March 31, 2014, interest will accrue on both the Notes and accrued
and unpaid interest at a rate of 20.5% per annum compounded quarterly on each of
December 31, March 31, June 30 and September 30 of every calendar year (in each
case, as may be adjusted pursuant to Sections 2.4(c) and (d), the “Interest
Rate”) and shall be payable in full to the Record Holders (without the action by
any person) on the earliest of (x) the Maturity Date, (y) the date on which the
Notes are due and payable in accordance with Article XI or (z) the date on which
any Prepayment Premium is due (in the case of clauses (i) and (ii), each date on
which interest is due, an “Interest Payment Date”).  For the avoidance of doubt,
accrued interest shall also be due and payable in cash as otherwise set forth in
this Agreement, including as set forth in Article VI.  If any Interest Payment
Date falls on a date that is not a Business Day, interest shall be paid on the
immediately preceding Business Day.  Interest will accrue from the date of
original issuance of the Notes.  All computations of interest shall be made on
the basis of a 360-day year and actual days elapsed (which results in more
interest being paid than if computed on the basis of a 365-day year).

 

(b) The Company shall pay PIK Interest by issuing on each Interest Payment Date
to each Record Holder an additional Note of the same series for which PIK
Interest had accrued during such interest period (“PIK Interest Note”).  The
principal amount of each PIK Interest Note shall equal the amount of PIK
Interest that accrued on the Note for which PIK Interest is being paid.  Each
PIK Interest Note shall be deemed a “Note” for all purposes hereunder.

 

(c)  At any time when a Registration Default exists and is continuing the
Interest Rate will be increased by 5.00% per annum (“Registration Default
Interest”).  Any Registration Default Interest will be payable in cash upon
demand by any Holder.

 

(d) At any time when a Default or Event of Default exists and is continuing or
any payment of principal, interest or Prepayment Premium, if any, is due on the
Notes and has not been paid, the Interest Rate will be adjusted so that during
such period

 

11

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the Interest Rate will equal the greater of (x) (i) prior to March 31, 2014,
18.0%  per annum plus any Registration Default Interest and (ii) after March 31,
2014, 23.5% per annum plus any Registration Default Interest and (y) (i) prior
to March 31, 2014, 15.0% per annum plus the interest rate on a 10-year United
States Treasury Note as of the date of such Default, Event of Default or
non-payment plus any Registration Default Interest and (ii) after March 31,
2014, 20.5% per annum plus the interest rate on a 10-year United States Treasury
Note as of the date of such Default, Event of Default or non-payment plus any
Registration Default Interest ((x) and (y), “Default Interest”).  For the
avoidance of doubt, such Default Interest shall accrue (including on the
Prepayment Premium) after the filing of any petition in bankruptcy or the
commencement of any insolvency, reorganization or similar proceeding, whether or
not a claim for post-filing or post-petition interest is allowed in any such
proceeding.  Default Interest shall be payable in cash upon demand by any Holder
.”

 

(ii) Section 11.1(a)-(b) of the NPA is amended and restated in its entirety to
read as set forth below:

 

“(a) the Company defaults in the payment when due of (i) the principal of, or
Prepayment Premium on, the Notes, including any amount due pursuant to
Article VI, (ii) any interest or fees on the Notes or (iii) other fees or
payments owed under this Agreement;

 

(b) [Reserved.]”

 

5.                                      Amendments to the RRA.  The Company and
Registration Rights Holders agree that subject to the satisfaction (or waiver)
of the conditions set forth in Section 6 of this Agreement Section 2(d)(i) of
the Registration Rights Agreement is amended so that “within 180 days after
Closing” is replaced with “by August 15, 2014”.

 

6.                                      Conditions Precedent.  This Agreement
shall become effective on the date on which each of the following conditions
shall have been satisfied (or waived) as determined by the Noteholders in their
sole discretion (such date, the “Effective Date”):

 

6.1                               Opinions of Counsel.  Each Noteholder shall
have received opinions in form and substance satisfactory to each Noteholder,
dated the Effective Date, from Dentons US, LLP, counsel for the Company,
covering the matters set forth on Exhibit A with respect to the Company and the
Guarantors, and such other matters as any Noteholder may reasonably request.

 

6.2                               Representations and Warranties.  (a) The
representations and warranties contained herein shall be true and correct in all
respects on and as of the date hereof and the Effective Date.  (b) Except as set
forth on Schedule 6.2(b), the representations and warranties contained in the
NPA and other Note Documents shall be true and correct in all respects on and as
of the date hereof and the Effective Date to the same extent as though made on
and as of such date, in each case, other than as a direct result of the
Specified Defaults; provided that to the

 

12

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extent such representations and warranties specifically relate to an earlier
date, such representations and warranties shall be true and correct in all
respects as of such earlier date.

 

6.3                               No Defaults or Events of Defaults.  As of the
date hereof and the Effective Date, no Default or Event of Default has occurred
and is continuing (other than the Specified Defaults) under the Note Documents.

 

6.4                               Delivery of Certain Documents.  The
Noteholders shall have received (and with respect to Section 6.4(v), the Agents
shall have received) from the Company and each Guarantor, as applicable, dated
as of the Effective Date and in sufficient number requested:

 

(i)                                     Agreement.  Copies of the this Agreement
originally executed and delivered by each party hereto.

 

(ii)                                  Officers’ Certificate.  A certificate
signed by a Responsible Officer of the Company certifying that the conditions
set forth in this Section 6 have been satisfied on and as of the Effective Date.

 

(iii)                               Secretary’s Certificate.  A certificate
signed by the Secretary of the Company and each Guarantor, certifying as to the
board and other resolutions and its Organizational Documents attached thereto
and as to all other corporate or other organizational proceedings relating to
the authorization, execution and delivery of this Agreement.

 

(iv)                              Evidence of Good Standing.  Evidence of good
standing of the Company and each Guarantor in its respective state of
incorporation or formation and in each jurisdiction in which the Company and
each Guarantor is qualified as a foreign corporation or other entity to do
business, each dated as of a recent date.

 

(v)                                 UCC Searches.  Copies of UCC lien searches
as of a recent date for the Company and each Guarantor in its respective
jurisdiction of incorporation or formation, in each case, such results being
satisfactory to the Noteholders.

 

(vi)                              Solvency Certificate.  A certificate signed by
the chief financial officer of the Company substantially in the form attached as
Exhibit B demonstrating that (i) the Company and the Guarantors (on a
consolidated basis) and (ii) the Non-Wells Loan Parties (on a consolidated
basis), in each case, are, as of the Effective Date, Solvent.

 

(vii)                           Other Documents.  Such other documents,
instruments or certificates as any Noteholder may reasonably request.

 

6.5                               Fees and Expenses.  Payment of all
out-of-pocket fees and expenses incurred by the Noteholders and the Registration
Rights Holders on or prior to the Effective Date in connection with the Note
Documents, the RRA, this Agreement or otherwise in connection with their
activities as Noteholders or Registration Rights Holders including the fees and

 

13

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expenses of their advisors and counsel (including Sullivan & Cromwell LLP).  In
addition, the Company shall deposit $100,000 in a bank account directed by the
Noteholders and the Noteholders shall be entitled to use such amount to pay fees
and expenses incurred by them and their counsel and advisors (including
Sullivan & Cromwell LLP) in connection with or relating to any of their
investments in the Company or any transaction or potential transaction or
activity related thereto.

 

6.6                               Effective Date.  The Effective Date shall have
occurred by July 28, 2014.

 

7.                                      Representations and Warranties.  The
Company and each Guarantor represents on and as of the date of this Agreement
and the Effective Date:

 

7.1                               Due Authorization.  The execution, delivery
and performance of this Agreement has been duly authorized by all necessary
corporate or limited liability company action, as applicable, on the part of
each Note Party.

 

7.2                               No Conflict.  The execution, delivery and
performance by each Note Party of this Agreement, does not and will not
(i) violate any Applicable Law or violate any Organizational Documents of such
Note Party, (ii) conflict with, result in a breach of or constitute (with due
notice or lapse of time or both) a default under any Material Contract or any
Note Document (including any Intercreditor Agreement), (iii) result in or
require the creation or imposition of any Lien upon any of the properties or
assets of any Note Party, (iv) require any approval of stockholders, partners or
members or any approval or consent of any Person under any Contractual
Obligation of any Note Party, except for such approvals or consents obtained on
or before the date hereof or (v) give rise to any preemptive rights, rights of
first refusal or other similar rights on behalf of any Person under any
Applicable Law or any provision of the Organizational Documents of the Company
or any Material Contract.

 

7.3                               Governmental Consents.  The execution,
delivery and performance by each Note Party of this Agreement does not and will
not require any Governmental Authorization by any Governmental Authority.

 

7.4                               Binding Obligations.  This Agreement has been
duly executed and delivered by each Note Party and is the legally valid and
binding obligation of such Note Party, enforceable against such Note Party in
accordance with its terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditors’
rights generally or by equitable principles relating to enforceability, whether
considered at law or equity.

 

7.5                               Solvency.  (i) The Note Parties (on a
consolidated basis) and (ii) the Non-Wells Loan Parties (on a consolidated
basis), in each case, are, as of the date hereof and the Effective Date,
Solvent.

 

7.6                               Accuracy of Disclosure.  All documents,
certificates and written statements furnished to any of the Noteholders by or on
behalf of any of the Note Parties in

 

14

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

 

connection with this Agreement and the documents filed by the Company with the
SEC, when taken together, do not contain any untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements
contained herein or therein not misleading in light of the circumstances in
which the same were made.

 

7.7                               Advice of Counsel.  The Note Parties have
freely and voluntarily entered into this Agreement with the advice of outside
legal counsel of their choosing.

 

8.                                      Release of Claims.  As part of the
consideration for each Noteholder’s and Registration Rights Holder’s execution
of this Agreement, the Company and each Guarantor, on behalf of themselves and
their successors, assigns, parents, subsidiaries, affiliates, officers,
directors, employees, agents and attorneys hereby forever, fully,
unconditionally and irrevocably waive and release the Noteholders, the
Registration Rights Holders and their successors, assigns, parents,
subsidiaries, limited partners, shareholder(s), affiliates, officers, directors,
employees, attorneys and agents (collectively, the “Releasees”) from any and all
claims, liabilities, obligations, debts, causes of action (whether at law or in
equity or otherwise), defenses, counterclaims, setoffs, of any kind, whether
known or unknown, whether liquidated or unliquidated, matured or unmatured,
fixed or contingent, directly or indirectly arising out of, connected with,
resulting from or related to any act or omission by any Noteholder, any
Registration Rights Holder or any other Releasee which arose or accrued on or
before the Effective Date (collectively, the “Claims”).  The Company and each
Guarantor further agree that they shall not commence, institute, or prosecute
any lawsuit, action or other proceeding, whether judicial, administrative or
otherwise, to collect or enforce any Claim.

 

9.                                                                                     
Miscellaneous.

 

9.1                               Notices.  Any notices with respect to this
Agreement shall be given in the manner provided for in Section 13.1 of the NPA.

 

9.2                               Assignments.  This Agreement may not be
assigned by any Note Party without the consent of all Noteholders and any
assignment without such consent shall be null and void.  This Agreement shall
inure to the benefit of and be binding upon the successors and permitted assigns
of each of the parties hereto.

 

9.3                               Amendment.  Section 13.3 of the NPA shall
apply, and shall be incorporated by reference in full into this Section 9.3 and
all references to the “Agreement” shall be deemed reference to this Agreement.

 

9.4                               Note Documents; Indemnity.  The Note Parties
and the Noteholder agree that the Agreement is a “Note Document” under the NPA
and that Section 10.2 of the NPA applies in full to this Agreement as a Note
Document.

 

9.5                               Counterparts.  This Agreement may be executed
in any number of counterparts and by the parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the

 

15

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

 

same agreement.  Delivery of an executed counterpart of a signature page to this
Agreement by facsimile or in electronic (i.e., “pdf” or “tif”) format shall be
effective as delivery of a manually executed counterpart of this Agreement.

 

9.6                               Headings  The headings in this Agreement are
for convenience of reference only and shall not limit or other affect the
meaning hereof.

 

9.7                               Full Force and Effect.  The Note Documents
shall remain unchanged, in full force and effect and continue to govern and
control the relationship between the parties hereto, except to the extent they
are inconsistent with, superseded or expressly modified herein, in which case,
this Agreement shall govern and control.

 

9.8                               GOVERNING LAW.  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 LAW OF THE STATE OF
NEW YORK.

 

9.9                               CONSENT TO JURISDICTION.  SUBJECT TO CLAUSE
(E) OF THE FOLLOWING SENTENCE, ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST ANY
PARTY ARISING OUT OF OR RELATING HERETO SHALL BE BROUGHT SOLELY IN ANY FEDERAL
COURT OF THE UNITED STATES OF AMERICA SITTING IN THE BOROUGH OF MANHATTAN OR, IF
THAT COURT DOES NOT HAVE SUBJECT MATTER JURISDICTION, IN ANY STATE COURT LOCATED
IN THE CITY AND COUNTY OF NEW YORK.  BY EXECUTING AND DELIVERING THIS AGREEMENT,
EACH NOTE PARTY, FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY
(A) ACCEPTS GENERALLY AND UNCONDITIONALLY THE EXCLUSIVE JURISDICTION AND VENUE
OF SUCH COURTS (OTHER THAN WITH RESPECT TO ACTIONS BY THE NOTEHOLDERS OR ANY
COLLATERAL AGENT IN RESPECT OF RIGHTS UNDER ANY SECURITY AGREEMENT WHICH EXPRESS
TO BE GOVERNED BY LAWS OTHER THAN THE LAWS OF THE STATE OF NEW YORK OR WITH
RESPECT TO ANY COLLATERAL SUBJECT THERETO); (B) WAIVES ANY DEFENSE OF FORUM NON
CONVENIENS; (C) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY
SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT
REQUESTED, TO THE APPLICABLE NOTE PARTY AT ITS ADDRESS PROVIDED IN ACCORDANCE
WITH SECTION 9.1; (D) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (C) ABOVE IS
SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER THE APPLICABLE NOTE PARTY IN ANY
SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE

 

16

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

 

CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; AND (E) AGREES THAT
EACH COLLATERAL AGENT, THE NOTEHOLDERS AND THE REGISTRATION RIGHTS HOLDERS
RETAIN THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO
BRING PROCEEDINGS AGAINST ANY NOTES PARTY IN THE COURTS OF ANY OTHER
JURISDICTION IN CONNECTION WITH THE EXERCISE OF ANY RIGHTS UNDER ANY COLLATERAL
DOCUMENT OR THE ENFORCEMENT OF ANY JUDGMENT.

 

9.10                        WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT
IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY
ARISING OUT OF OR RELATING TO THIS AGREEMENT (WHETHER BASED ON CONTRACT, TORT OR
ANY OTHER THEORY).  EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE,
AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE
THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO
HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

 

9.11                        Termination.  This Agreement shall automatically
terminate without action by any party if the Effective Date has not occurred by
July 28, 2014; provided that Sections 10.4, 10.8, 10.9, 10.10 and 10.12 shall
survive any such termination.

 

9.12                        Reimbursement of Costs and Expenses.  Without
limiting any reimbursement obligation of the Note Parties under the NPA or the
other Note Documents, the Company and the Guarantors agree to pay all costs,
fees and expenses, expended or incurred by the Noteholders in connection with
the negotiation, preparation, administration and enforcement of this Agreement,
the Note Documents, the Obligations, any of the Collateral and all fees, costs
and expenses incurred in connection with any bankruptcy or insolvency proceeding
(including, without limitation, any adversary proceeding, contested matter or
motion brought by an Agent or any other person).  Without in any way limiting
the foregoing, the Company hereby reaffirms its agreement under the applicable
Note Documents to pay or reimburse the Agents and Noteholders for all costs and
expenses incurred by the Agents and Noteholders.  The Company and Guarantors are
jointly and severally liable for their obligations under this Section 9.12.

 

[signature page follows]

 

17

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

 

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

 

COMPANY:

CUBIC ENERGY, INC.

 

 

 

By:

/s/ Calvin A. Wallen, III

 

Name:

Calvin A. Wallen, III

 

Title:

President

 

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

 

GUARANTORS:

CUBIC ASSET, LLC

 

 

 

By:

/s/ Calvin A. Wallen, III

 

Name:

Calvin A. Wallen, III

 

Title:

President

 

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

 

 

CUBIC ASSET HOLDING, LLC

 

 

 

By:

/s/ Calvin A. Wallen, III

 

Name:

Calvin A. Wallen, III

 

Title:

President

 

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

 

 

CUBIC LOUISIANA, LLC

 

 

 

 

By:

/s/ Calvin A. Wallen, III

 

Name:

Calvin A. Wallen, III

 

Title:

President

 

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

 

 

CUBIC LOUISIANA HOLDING, LLC

 

 

 

 

By:

/s/ Calvin A. Wallen, III

 

Name:

Calvin A. Wallen, III

 

Title:

President

 

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

 

SERIES A HOLDERS:

 

 

 

 

AIO III CE, L.P.

 

 

 

By : Anchorage Capital Group, L.L.C., its investment manager

 

 

 

 

 

 

 

By:

/s/ Daniel Allen

 

Name:

Daniel Allen

 

Title:

Senior Portfolio Manager

 

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

 

SERIES B HOLDERS:

 

 

 

 

 

 

CORBIN OPPORTUNITY FUND, L.P.

 

 

 

By: Corbin Capital Partners Management, LLC,

 

its general partner

 

 

 

By:

/s/ Daniel Friedman

 

Name:

Daniel Friedman

 

Title:

General Counsel

 

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

 

 

O-CAP PARTNERS, L.P.

 

 

 

By: O-Cap Advisors, LLC, its general partner

 

 

 

 

 

 

By:

/s/ Jared Sturdivant

 

Name:

Jared Sturdivant

 

Title:

Manager

 

 

 

 

 

 

O-CAP OFFSHORE MASTER FUND, L.P.

 

 

 

By: O-Cap Advisors, LLC, its general partner

 

 

 

By:

/s/ Jared Sturdivant

 

Name:

Jared Sturdivant

 

Title:

Manager

 

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

 

REGISTRATION RIGHTS HOLDERS:

 

 

 

 

AIO III AIV, L.P.

 

 

 

By: Anchorage Capital Group, L.L.C., its investment manager

 

 

 

 

 

 

By:

/s/ Daniel Allen

 

Name:

Daniel Allen

 

Title:

Senior Portfolio Manager

 

 

 

ANCHORAGE ILLIQUID OPPORTUNITIES III, L.P.

 

 

 

By: Anchorage Capital Group, L.L.C., its investment manager

 

 

 

 

By:

/s/ Daniel Allen

 

Name:

Daniel Allen

 

Title:

Senior Portfolio Manager

 

 

 

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

 

 

 

By: Anchorage Capital Group, L.L.C., its investment manager

 

 

 

 

 

 

By:

/s/ Daniel Allen

 

Name:

Daniel Allen

 

Title:

Senior Portfolio Manager

 

 

 

 

 

AIO III AIV 3, L.P

 

 

 

By : Anchorage Capital Group, L.L.C., its investment manager

 

 

 

 

By:

/s/ Daniel Allen

 

Name:

Daniel Allen

 

Title:

Senior Portfolio Manager

 

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

 

 

CORBIN OPPORTUNITY FUND, L.P.

 

 

 

By: Corbin Capital Partners Management, LLC,

 

its general partner

 

 

 

 

By:

/s/ Daniel Friedman

 

Name:

Daniel Friedman

 

Title:

General Counsel

 

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

 

 

O-CAP PARTNERS, L.P.

 

 

 

By: O-Cap Advisors, LLC, its general partner

 

 

 

 

By:

/s/ Jared Sturdivant

 

Name:

Jared Sturdivant

 

Title:

Manager

 

 

 

O-CAP OFFSHORE MASTER FUND, L.P.

 

 

 

By: O-Cap Advisors, LLC, its general partner

 

 

 

 

By:

/s/ Jared Sturdivant

 

Name:

Jared Sturdivant

 

Title:

Manager

 

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