Exhibit
10.6


 


AMENDED
AND RESTATED


REGISTRATION
RIGHTS AGREEMENT


 


THIS AMENDED AND RESTATED REGISTRATION RIGHTS
AGREEMENT (this “Agreement”) is entered into as of December 18,
2009 by and between Cubic Energy, Inc., a Texas corporation (the “Company”),
and Wells Fargo Energy Capital, Inc., a Texas corporation (the “Holder”),
and amends and restates that certain Registration Rights Agreement, dated March 5,
2007, by and between the parties to this Agreement.


 


WHEREAS, previously, (a) the Company
entered into that certain Credit Agreement (together with the amendments
described below collectively herein referred to as the “Credit Agreement”),
dated as of March 5, 2007, with the Holder pursuant to which the Holder
made loans, including a “Term Loan” (as defined in the Credit Agreement)
to the Company that is convertible into shares of the common stock, par value
$0.05 per share (the “Common Stock”), issued by the Company as provided
in Section 2.15 of the Credit Agreement, (b)  the Company issued to
the Holder that certain Warrant To Purchase Shares of Common Stock of Cubic
Energy, Inc. (the “Warrant”) to purchase shares of Common Stock as
provided therein, and (c) entered into the Registrations Rights Agreement,
dated March 5, 2007 and referenced above;


 


WHEREAS, on May 8, 2008, the Company and
the Holder executed a First Amendment to Credit Agreement, which, among other
things deleted the need for the Supplemental Warrant (as that term was defined
in the original Credit Agreement);


 


WHEREAS, contemporaneously with the execution
of this Agreement, the Company and the Holder have executed a Second Amendment
to Credit Agreement (the “Second Amendment”) of even date, pursuant to
which, amount other things, (a) the maturity of the Term Loan was extended
by the execution and delivery of a replacement Term Note , (b) the terms
of the Warrant were amended and restated by the execution and delivery of an
Amended and Restated Warrant To Purchase Shares of Common Stock of Cubic Energy, Inc.
(No. 2007-1A) (the “A&R Warrant”), and (c) the Company
issued to the Holder a second Warrant to Purchase Shares of Common Stock of
Cubic Energy, Inc. (No. 2009-1) (the “Second Warrant”);


 


WHEREAS, this Agreement provides a method for
the registration of the shares of Common Stock to be issued pursuant to Section 2.15
of the Credit Agreement and upon exercise of the A&R Warrant or the Second
Warrant or any of the foregoing (the “Shares”); and


 


WHEREAS, among other things, the Second
Amendment requires the simultaneous execution and delivery of this Agreement,
the A&R Warrant and the Second Warrant as conditions precedent to the
effectiveness of the Second Amendment;


 


NOW, THEREFORE, in consideration of the
foregoing, the mutual promises and agreements set forth herein, and other
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:


 


1.                                      Certain Definitions.


 


As used in this Agreement, in addition to the
other terms defined herein, the following capitalized defined terms shall have
the following meanings:


 

















 


“A&R Warrant” shall have the
meaning set forth in the recitals to this Agreement.


 


“Additional Shares” means shares or
other securities issued by the Company with respect to the Common Stock in
connection with any stock dividend, stock distribution, stock split or similar
issuance.


 


“Affiliate” shall mean, with respect
to any Person, a Person that directly, or indirectly though one or more
intermediaries, controls, is controlled by, or is under common control with the
first mentioned Person.


 


“Agreement” shall have the meaning set
forth in the preamble to this Agreement.


 


“Business Day” means any day other
than a day on which the SEC is closed.


 


“Common Stock” shall have the meaning
set forth in the recitals to this Agreement.


 


“Company” shall mean Cubic Energy, Inc.,
a Texas corporation.


 


“Credit Agreement” shall have the
meaning set forth in the recitals to this Agreement.


 


“Effective Time” means each of the
four (4) dates the Holder shall have given the Registration Notice.


 


“End of Suspension Notice” shall have
the meaning set forth in Section 3(b) hereof.


 


“Exchange Act” shall mean the
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder.


 


“Holder” has the meaning assigned in
the preamble and any other lawful assignee of the rights in this Agreement.


 


“Indemnitee” shall have the meaning
set forth in Section 9 hereof.


 


“NYSE Amex” shall mean the national
securities exchange operated by the NYSE Amex LLC on which the Common Stock is
admitted for trading.


 


“Person” shall mean an individual,
partnership, corporation, trust, or unincorporated organization, or a
government or agency or political subdivision thereof.


 


“Prospectus” shall mean the prospectus
included in a Registration Statement, including any preliminary prospectus, as
amended or supplemented by any prospectus supplement with respect to the terms
of the offering of any portion of the Registrable Shares covered by such
Registration Statement, and by all other amendments and supplements to such
prospectus, including post-effective amendments, and in each case including all
material incorporated by reference therein.


 


“Registrable Shares” shall mean all
Shares issued upon conversion of the Term Loan as provided in Section 2.15
of the Credit Agreement and upon exercise of the A&R Warrant or the Second
Warrant,, or any of the foregoing, or other securities issued or issuable in
respect of the Common Stock by way of spin-off, dividend or stock split or in
connection with a combination 


 


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of shares, reclassification,
merger, consolidation or reorganization; provided,
however, that “Registrable Shares” shall not include (i) Common
Stock for which a Registration Statement relating to the sale thereof shall
have become effective under the Securities Act and which have been disposed of,
as applicable, under such Registration Statement, (ii) Common Stock sold
pursuant to Rule 144, (iii) Common Stock
which otherwise have been transferred by Holder, for which the Company has
delivered a new certificate not bearing a legend restricting further transfer
(or registered such Common Stock in an uncertificated registration without
restriction on further transfers) and such Common Stock may be resold without
subsequent registration under the Securities Act or (iv) Common Stock
eligible for sale pursuant to Rule 144(k) (or any successor
provision) by the Holder.


 


“Registration Expenses” shall mean 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 of the
Registrable Shares on any securities exchange; (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) securities
acts liability insurance, if the Company so desires; (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
expense of any annual audit; (j) the fees and expenses of any Person,
including special experts, retained by the Company; and (k) the reasonable
out-of-pocket expenses of one legal
counsel (who shall be reasonably acceptable to the Company) for the Holders
in connection with providing the information with respect to the Holders that
is required to be included in the Registration Statements filed by the Company
pursuant to this Agreement and the review of that information in the
Registration Statement, in an amount not to exceed Five Thousand Dollars
($5,000.00) for each Registration Statement filed provided, however, that Registration Expenses shall not
include, and the Company shall not have any obligation to pay, any underwriting
fees, discounts or commissions attributable to the sale of such Registrable
Shares, or any legal fees and expenses of counsel to any Holder (except as specifically
provided above).


 


“Registration Notice” shall have the
meaning set forth in Section 2(a) hereof.


 


“Registration Statement” shall mean
any registration statement of the Company that covers the sale or resale of any
of the Registrable Shares under the Securities Act on an appropriate form, and
all amendments and supplements to such registration statement, including
post-effective amendments, in each case including the Prospectus contained
therein, all exhibits thereto and all materials incorporated by reference
therein.


 


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“Resale Shelf Registration Expiration Date”
shall have the meaning set forth in Section 2(b) hereof.


 


“Resale Shelf Registration Statement”
shall have the meaning set forth in Section 2(b) hereof.


 


“Rule 144” means Rule 144
under the Securities Act (or any successor provision).


 


“SEC” shall mean the Securities and
Exchange Commission.


 


“Second Amendment” shall have the
meaning set forth in the recitals to this Agreement.


 


“Second Warrant” shall have the
meaning set forth in the recitals to this Agreement.


 


“Securities Act” shall mean the
Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.


 


“Shares” shall have the meaning set
forth in the recitals of this Agreement.


 


“Subsequent Shelf Registration Statement”
shall have the meaning set forth in Section 3(d) hereof.


 


“Suspension Event” shall have the
meaning set forth in Section 3(a) hereof.


 


“Suspension Notice” shall have the
meaning set forth in Section 3(b) hereof.


 


“Term Loan” shall have the meaning
assigned in the recitals of this Agreement.


 


“Warrant” shall have the meaning
assigned in the recitals of this Agreement.


 


2.                                      Resale Registration Rights.


 


(a)           Registration Notice. At any time
that the Holder is the holder of Registrable Shares, the Holder may give a
notice (the “Registration Notice”) stating that the Holder is exercising the
right granted in Section 2(b) of this Agreement and stating the
number of Registrable Shares to be registered, which shall be no less than (i) in
the case of the first, second and third exercises under this Section 2,
One Million (1,000,000) Shares, and (ii) in the case of the fourth
exercise, the lesser of One Million (1,000,000) Shares or all of the
Registrable Shares then held by the Holder.


 


(b)           Registration Statement
Covering Resale of Registrable Shares.  As soon as practicable, but in no event more
than forty-five (45) days, after each Effective Time, the Company shall (i) file
with the SEC, or (ii) have filed
with the SEC prior to the Effective Time a shelf Registration
Statement (the “Resale Shelf Registration Statement”) pursuant to Rule 415
under the Securities Act pursuant to which all of the Registrable Shares to be
registered shall be included (on the initial filing or by supplement thereto)
to enable the public resale on a delayed or continuous basis of such
Registrable Shares by the Holder. The Company shall file the Resale Shelf
Registration Statement on such form as the Company may then utilize under the rules of
the SEC and use its commercially reasonable efforts to have the Resale Shelf
Registration Statement declared effective under the Securities Act as soon as
practicable. The Company 


 


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agrees to use its
commercially reasonable efforts to maintain the effectiveness of the Resale
Shelf Registration Statement, including by filing any necessary post-effective
amendments and prospectus supplements, or, alternatively, by filing new
registration statements relating to the Registrable Shares as required by Rule 415
under the Securities Act, continuously until the date (the “Resale Shelf
Registration Expiration Date”) that is the earlier of (i) two (2) years
following the date of effectiveness of the Resale Shelf Registration Statement
or (ii) the date on which the Holder no longer holds any Registrable
Shares covered by such Resale Shelf Registration Statement.  The Company shall not be obligated to file
more than four (4) Resale Shelf Registration Statements pursuant to this Section 2(b).


 


(c)           Notification and
Distribution of Materials.  The
Company shall notify the Holder of the effectiveness of any Registration
Statement applicable to the Registrable Shares and shall furnish to the
Holders, without charge, such number of copies of the Registration Statement
(including any amendments, supplements and exhibits), the Prospectus contained
therein (including each preliminary prospectus and all related amendments and
supplements) and any documents incorporated by reference in the Registration
Statement or such other documents as the Holder may reasonably request in order
to facilitate the sale of the Registrable Shares in the manner described in the
Registration Statement.


 


(d)           Amendments and Supplements.  Subject to Section 3, (i) the
Company shall promptly prepare and file with the SEC from time to time such
amendments and supplements to each Registration Statement and Prospectus used
in connection therewith as may be necessary to keep that Registration Statement
effective and to comply with the provisions of the Securities Act with respect
to the disposition of all the Registrable Shares so registered until the Resale
Shelf Registration Expiration Date and (ii) upon five (5) Business
Days’ notice, the Company shall file any supplement or post-effective amendment
to the Registration Statement with respect to the plan of distribution or the
Holder’s ownership interests in his, her or its Registrable Shares that is
reasonably necessary to permit the sale of the Holder’s Registrable Shares
pursuant to the Registration Statement. 
Notwithstanding anything herein to the contrary, any period of time
during which any Resale Shelf Registration Statement and Prospectus is not
available for use by the Holders because of action taken pursuant to clause (ii) of
the preceding sentence shall not be considered with respect to the calculation
of any other period of time referred to herein.


 


(e)           Notice of Certain Events.  The Company shall promptly and in any event
within three (3) Business Days notify the Holders of, and confirm in
writing, any request by the SEC for any amendment or supplement to, or
additional information in connection with, any Registration Statement required
to be prepared and filed hereunder (or Prospectus relating thereto). The
Company shall promptly and in any event within three (3) Business Days
notify each Holder of, and confirm in writing, the filing of the Registration
Statement or any Prospectus, amendment or supplement related thereto or any
post-effective amendment to the Registration Statement and the effectiveness of
any post-effective amendment.


 


(f)            Stop Orders.  During the period referred to in Section 2(b),
the Company shall use its commercially reasonable efforts to avoid the issuance
of, or if issued, to obtain the withdrawal of, any order enjoining or
suspending the use or effectiveness of a Registration 


 


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Statement or suspending the
qualification (or exemption from qualification) of any of the Registrable
Shares for sale in any jurisdiction, as promptly as practicable.


 


(g)           Eligibility for Form S-3
or S-1; Conversion to Form S-3.  The Company represents and warrants that it
meets the requirements for the use of SEC Form S-3 or S-1 for the registration
of the sale by the Holders of the Registrable Shares.  The Company agrees to file all reports
required to be filed by the Company with the SEC in a timely manner so as to
remain eligible or become eligible, as the case may be, and thereafter to maintain
its eligibility, for the use of Form S-3. 
If the Company is not currently eligible to use SEC Form S-3, not
later than five (5) business days after the Company first meets the
registration eligibility and transaction requirements for the use of Form S-3
(or any successor form) for registration of the offer and sale by the Holders
of the Registrable Shares, the Company shall file a Registration Statement on Form S-3
(or such successor form) with respect to the Registrable Shares covered by the
Registration Statement on Form S-1, filed pursuant to this Section 2
(and include in such Registration Statement on Form S-3 the information
required by Rule 429 under the Securities Act) or convert the Registration
Statement on Form S-1, whichever is applicable, filed pursuant to this Section 2
to a Form S-3 pursuant to Rule 429 under the Securities Act and cause
such Registration Statement (or such amendment) to be declared effective no
later than thirty (30) days after filing.


 


(h)           Underwriter.  In the event Holders holding a
majority-in-interest of the Registrable Shares being registered determine to
engage the services of an underwriter, 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 Shares included in
the registration statement.


 


3.                                      Suspension of Registration Requirement; Restriction on Sales.


 


(a)           As promptly as practicable
after becoming aware of such event, the Company shall notify each Holder of the
happening of any event (a “Suspension Event”), of which the Company has
knowledge, as a result of which the prospectus included in any Resale Shelf
Registration Statement, as then in effect, includes an untrue statement of a
material fact or omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, and use its
best efforts promptly to prepare a supplement or amendment to any Registration
Statement to correct such untrue statement or omission, and deliver such number
of copies of such supplement or amendment to each Holder as such Holder may
reasonably request; provided, however, that, for not more than
fifteen (15) consecutive trading days (or a total of not more than thirty (30)
trading days in any twelve (12) month period), the Company may delay the
disclosure of material non-public information concerning the Company (as well
as prospectus or Resale Shelf Registration Statement updating) the disclosure
of which at the time is not, in the good faith opinion of the Company, in the
best interests of the Company; provided, further, that, if the
Resale Shelf Registration Statement was not filed on Form S-3, such number
of days shall not include the fifteen (15) calendar days following the filing
of any Form 8-K, Form 10-Q or Form 10-K, or other comparable
form, for purposes of filing a post-effective amendment to the Resale Shelf
Registration Statement.


 


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(b)           Upon a Suspension Event, the
Company shall give written notice (a “Suspension Notice”) to each
Holder to suspend sales of the Registrable Shares,
and such notice shall state that such suspension shall continue only for so
long as the Suspension Event or its effect is continuing and the Company is pursuing
with reasonable diligence the completion of the matter giving rise to the
Suspension Event or otherwise taking all reasonable steps to terminate
suspension of the effectiveness or use of the Registration Statement within the
time limits contemplated pursuant to Section 3(a).  In no event shall the
Company, without the prior written consent of a Holder, disclose to the Holder
any of the facts or circumstances giving rise to the Suspension Event. The
Holder shall not effect any sales of the Registrable Shares pursuant to such
Registration Statement (or such filings) at any time after it has received a
Suspension Notice and prior to receipt of an End of Suspension Notice.  The Holder may resume effecting sales of the
Registrable Shares under the Registration Statement (or such filings) following
further notice to such effect (an “End of Suspension Notice”) from the
Company.  This End of Suspension Notice
shall be given by the Company to the Holder in the manner described above
promptly following the conclusion of any Suspension Event and its effect.


 


(c)           Notwithstanding any
provision herein to the contrary, if the Company gives a Suspension Notice
pursuant to this Section 3 with respect to the Resale Shelf
Registration Statement, the Company shall extend the period during which such
Resale Shelf Registration Statement shall be maintained effective under this
Agreement by the number of days during the period from the date of the giving
of the Suspension Notice to and including the date when Holders shall have
received the End of Suspension Notice and copies of the supplemented or amended
Prospectus necessary to resume sales; provided, however, such period of
time shall not be extended beyond the date that the Shares are no longer
Registrable Shares.


 


(d)           If any Additional Shares are
issued or distributed to the Holder after the later of (i) the
effectiveness of the Resale Shelf Registration Statement or (ii) the
Effective Time, or such Additional Shares were otherwise not included in a
prior Registration Statement, then the Company shall as soon as practicable, at
the option of the Company and subject to compliance with Section 2(b) with
respect to the Holder of the Registrable Shares with respect to which such
Additional Shares are issued, either (A) file an additional shelf
Registration Statement (including the Prospectus, amendments and supplements to
such Registration Statement or Prospectus, including pre- and post-effective
amendments, all exhibits thereto and all material incorporated by reference or
deemed to be incorporated by reference, if any, in such registration statement,
a “Subsequent Shelf Registration Statement”) covering such Additional
Shares on behalf of the Holders thereof in the same manner, and subject to the
same provisions in this Agreement as the Resale Shelf Registration Statement or
(B) file a supplement to the Resale Shelf Registration Statement to
include therein and cover such Additional Shares on behalf of the Holders.


 


4.                                      Holder’s Obligations.  In connection with the
registration of the Registrable Securities, each Holder shall have the
following obligations:


 


(a)           It shall be a condition
precedent to the obligations of the Company to complete each registration
pursuant to this Agreement with respect to the Registrable Shares that each
Holder shall have furnished to the Company such information regarding itself,
the Registrable Shares held by it and the intended method of disposition of the
Registrable Shares held by it as shall be reasonably required to effect the
registration of such Registrable Shares and 


 


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shall execute such
questionnaires addressing these matters in connection with a registration as
the Company may reasonably request. 
At least five (5) Business Days prior to the first anticipated
filing date of any Registration Statement (and any other amendments) hereunder,
the Company shall notify each Holder of the information the Company requires
from each such Holder.


 


(b)           Each Holder agrees that,
upon receipt of any Suspension Notice, such Holder will immediately discontinue
disposition of Registrable Shares pursuant to the Registration Statement
covering such Registrable Shares until such Holder’s receipt of the End of
Suspension Notice and, if so directed by the Company, such Holder shall deliver
to the Company (at the expense of the Company) or destroy all copies in such
Holder’s possession, of the prospectus covering such Registrable Shares current
at the time of receipt of the Suspension Notice.


 


(c)           In the event Holder(s) holding
a majority-in-interest of the Registrable Shares being registered determine to
engage the services of an underwriter, each Holder agrees to enter into and
perform such Holder’s obligations under an underwriting agreement, in usual and
customary form for secondary offerings, at the time of execution, including,
without limitation, indemnification and contribution obligations customary for
selling security holders, and take such other actions as are reasonably
required in order to expedite or facilitate the disposition of the Registrable
Shares, unless such Holder has notified the Company in writing of such Holder’s
election to exclude all of such Holder’s Registrable Shares from such
Registration Statement.


 


(d)           No Holder may participate in
any underwritten registration hereunder unless such Holder (i) agrees to
sell such Holder’s Registrable Shares on the basis provided in any underwriting
arrangements entered into by the Company, in usual and customary form, (ii) completes
and executes all questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents reasonably required under the terms of such
underwriting arrangements, and (iii) agrees to pay its pro rata
share of all underwriting discounts and commissions and any expenses in excess
of those payable by the Company pursuant to Section 8 below.


 


5.                                      Rule 144 Reporting and Other Covenants.  The Company covenants and agrees with each
Holder, that:


 


(a)           Exchange
Act Filings.  For so long as
a Holder holds Registrable Shares and may not sell those shares pursuant to Rule 144(b)(1)(i), the Company
agrees:


 


(i)           to make and keep
public information available, as those terms are understood and defined in Rule 144(c);


 


(ii)          to use its
commercially reasonable efforts to file with the SEC in a timely manner all
reports and other documents required to be filed by the Company under the
Exchange Act so long as the Company has a class of securities outstanding that
is registered under Section 12(b) or 12(g) of the Exchange Act
and the filing of reports and other documents is required for the provisions of
Rule 144 applicable to the Holder’s sale of the Shares; and


 


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(iii)         to furnish to any
Holder promptly upon request a written statement by the Company as to its
compliance in all material respects with the reporting requirements of Rule 144
and of the Exchange Act, furnish or make available to any Holder a copy of the
most recent annual or quarterly report of the Company, and such other reports
and documents of the Company, and take such reasonable further actions
consistent with this Section 5, as a Holder may reasonably request
in availing itself of any rule or regulation of the SEC allowing a Holder
to sell any such Registrable Shares under Rule 144 without registration.


 


(b)           Other
Financial Information.  If  at any time after the date hereof the
Company is not subject to the requirements of Section 13 or 15(d) of
the Exchange Act and the Holder holds Registrable Shares, the Company shall
provide or cause to be provided to the Holder all of the following, in form and
detail satisfactory to the Holder:


 


(i) not later than 90 days after and as of the end of each fiscal
year, an audited financial statement of the Company, audited by an independent
accounting firm, to include consolidated balance sheets and consolidated
statements of income, retained earnings and cash flow, in accordance with
generally accepted accounting principles, together with an opinion of such
auditors on the financial statements;


 


(ii) not later than 45 days after and as of the end of each
calendar quarter, a financial statement of the Company, prepared by the
Company, to include consolidated balance sheets and consolidated statements of
income, retained earnings and cash flow, in accordance with generally accepted
accounting principles, certified by a senior financial officer; and


 


(iii) from time to time such other information as the holder may
reasonably request.


 


(c)           Transactions
with Affiliates.  For so long as
either the A&R Warrant or the Second Warrant is outstanding, the Company
shall not, and shall not permit any of its Subsidiaries to, (i) enter into
any transaction, including without limitation, any purchase, sale, lease or
exchange of property or the rendering of any service, with any Affiliate of the
Company unless such transactions are in the ordinary course of its business or
are upon fair and reasonable terms no less favorable to it than the Company
would obtain in a comparable arm’s-length transaction with a person not an
Affiliate, or (ii) other than issuances pursuant to the Plan or the
additional 2,000,000 shares of Common Stock contemplated by the A&R Warrant
and the Second Warrant to be issued as incentive compensation, issue, or agree
to issue, any shares of capital stock (including rights or warrants with
respect thereto) or stock appreciation rights, stock benefit plans, phantom
stock rights or plans or any similar plans or rights or other rights measured
by earnings, profits, or revenues of the Company or its Subsidiaries to any
Affiliate including shareholders, directors and officers and their respective
Affiliates, unless such transaction is fair to the Company.  If a transaction referred to in subsection (i) or
(ii) hereof is approved by a majority of Independent Directors (for
example, if the Company has four directors — two of whom are Independent
Directors and two of whom are not — and a transaction is approved by a majority
of the directors including both Independent Directors, that approval constitutes
a majority of Independent Directors), that approval shall be presumptive
evidence that such transaction complies with the provisions of this Section. As
used herein, an Independent Director shall mean any director who does not have
an economic interest in the


 


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proposed transaction and who
is not related by blood or marriage to any person who has an economic interest.
As used herein, “Affiliate” means any person controlled by, controlling or
under common control with another person; provided
however, the Holder and its direct and indirect wholly-owned
subsidiaries and the Persons that directly or indirectly own the Holder shall
not be deemed Affiliates of the Company. 
Notwithstanding anything herein to the contrary, the consummation of the
transactions described in the Company’s Current Report on Form 8-K filed
with the SEC on December 1, 2009 shall be deemed not to violate the
provisions hereof.


 


(d)                                 Restrictions
on Dividend Payments. For so long as either the A&R Warrant or
the Second Warrant is outstanding, the Company shall not pay any dividends with
respect to its Common Stock (other than dividends payable in shares of its
Common Stock) out of its surplus or otherwise or return any capital to its
stockholders as such or authorize or make any other distribution, payment or
delivery of property or cash to its holders of Common Stock as such, or redeem,
retire, purchase or otherwise acquire, directly or indirectly, for a
consideration (otherwise than in exchange for, or from the proceeds of the
substantially concurrent sale of, other shares of capital stock of the
Company), any shares of any class of its Common Stock now or hereafter
outstanding, unless the Company has provided notice to the Holder not less than
five (5) business days prior to the record date thereof.


 


6.                                      State Securities Laws.  Subject to the conditions set forth in this
Agreement, the Company shall, in connection with the filing of any Registration
Statement hereunder, file such documents as may be necessary to register or
qualify the Registrable Shares under the securities or “blue sky” laws of such
states as the Holders may reasonably request in connection with the offer and
sale of Registrable Shares pursuant to the intended methods of disposition by
the Holders as set forth in the applicable Registration Statement, and the
Company shall use its commercially reasonable efforts to cause such filings to
become effective in a timely manner; provided,
however,  that the Company shall not be required in connection
therewith or as a condition thereto to (a) qualify to do business in any
jurisdiction where it would not otherwise be required to qualify but for this Section 6,
(b) subject itself to general taxation in any such jurisdiction, (c) file
a general consent to service of process in any such jurisdiction (other than
customary consents to service of process filed with state securities
administrators), (d) provide any undertakings that are not customary in
similar registrations of securities and cause the Company undue expense or
burden, or (e) make any change in its charter or bylaws, which in each
case the Board of Directors of the Company determines to be contrary to the
best interests of the Company and its shareholders. Once effective, the Company shall use its
commercially reasonable efforts to keep such filings effective until the
earlier of (x) such time as all of the Registrable Shares so registered
have been disposed of in accordance with the intended methods of disposition by
the Holders as set forth in the applicable Registration Statement, (y) in
the case of a particular state, the applicable Holders have notified the
Company that they no longer require an effective filing in such state in
accordance with their original request for filing or (z) the date on which
the applicable Registration Statement ceases to be effective.


 


7.                                      Listing.  The Company’s Common Stock is currently listed for trading on the NYSE
Amex, and the Company has listed all of the Registrable Shares for trading on
the NYSE Amex, other than the Registrable Shares issuable upon exercise of the
Second Warrant which the Company shall cause to be listed for trading on the
NYSE Amex within sixty (60) days after the execution of this Agreement.  Should the Common Stock be listed or otherwise
eligible for full 


 


10

















 


trading
privileges on any other securities exchange,, the Company shall, not later than
ten (10) Business Days after the date on which the Registrable Shares are
issued by the Company to the Holder, cause the Registrable Shares to be listed
for trading.  The Company will use its
commercially reasonable efforts to continue the listing or trading privilege
for all Registrable Shares on the NYSE Amex and any such exchange or market for
so long as such listing or trading privileges are generally available to the
Common Stock. The Company will as promptly as practicable notify the Holder of,
and confirm in writing, the delisting of the Common Stock by such exchange or
market.


 


8.                                      Expenses.  The Company
shall bear all Registration Expenses incurred in connection with the
registration of the Registrable Shares pursuant to this Agreement and the
Company’s performance of its other obligations under the terms of this
Agreement. The Holder shall bear all underwriting fees, discounts or
commissions attributable to the sale of securities by the Holder, or any legal
fees and expenses of counsel to the Holder (except those expenses included in
Registration Expenses and as otherwise specifically provided herein) and all
other expenses incurred by the Holder in connection with the performance by the
Holder of its obligations, and exercise of its rights, under the terms of this
Agreement.


 


9.                                      Indemnification by the Company.  The Company agrees to indemnify the Holder
and, if a Holder is a Person other than an individual, such Holder’s officers,
directors, employees, agents, representatives and Affiliates, and each Person,
if any, that controls a Holder within the meaning of the Securities Act, and
each other Person, if any, subject to liability because of his, her or its
connection with a Holder (each, an “Indemnitee”), against any and all losses,
claims, damages, actions, liabilities, costs and expenses (including without
limitation reasonable fees, expenses and disbursements of attorneys and other
professionals), joint or several, arising out of or based upon any violation by
the Company of any rule or regulation promulgated under the Securities Act
applicable to the Company and relating to action or inaction required of the
Company under the terms of this Agreement or in connection with any
Registration Statement or Prospectus, or upon any untrue or alleged untrue
statement of material fact contained in any Registration Statement or any
Prospectus, or any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading; provided, however, that the Company shall not be liable to
such Indemnitee or any Person who participates as an underwriter in the
offering or sale of Registrable Shares or any other Person, if any, who
controls such underwriter within the meaning of the Securities Act, in any such
case to the extent that any such loss, claim, damage, liability (or action or
proceeding in respect thereof) or expense arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission (a) made
in such Registration Statement or in any such Prospectus in reliance upon and
in conformity with information regarding such Indemnitee or its plan of
distribution or ownership interests which was furnished in writing to the
Company pursuant to an investor questionnaire or otherwise expressly for use in
connection with such Registration Statement or the Prospectus contained therein
by such Indemnitee; (b) made in any preliminary prospectus if the Holder
failed to deliver or make available a copy of the Prospectus with or prior to
delivery of written confirmation of the sale by the Holder to the party
asserting the claim and such Prospectus would have corrected such untrue
statement or admission; or (c) made in any Prospectus if any untrue
statement or omission was corrected in an amendment or supplement to such
Prospectus delivered to the Holder prior to the sale of Registrable Shares and 


 


11

















 


the Holder failed to deliver
or make available such amendment or supplement prior to or concurrently with
the sale of Registrable Shares to the party asserting the claim.  The indemnity provided for herein shall
remain in full force and effect regardless of any investigation made by or on
behalf of any Indemnitee.


 


10.                               Covenants
of Holder.  The Holder
hereby agrees (a) to cooperate with the Company and to furnish to the
Company all such information (including customary investor questionnaires)
concerning its plan of distribution and ownership interests with respect to its
Registrable Shares in connection with the preparation of each Registration
Statement with respect to the Holder’s Registrable Shares and any filings with
any state securities commissions as the Company may reasonably request, (b) to
indemnify the Company, its officers, directors, employees, agents,
representatives and Affiliates, and each Person, if any, who controls the
Company within the meaning of the Securities Act, and each other Person, if
any, subject to liability because of his, her or its connection with the
Company, against any and all losses, claims, damages, actions, liabilities,
costs and expenses (including without limitation reasonable fees, expenses and
disbursements of attorneys and other professionals), joint or several, arising
out of or based upon any untrue statement or alleged untrue statement of
material fact contained in any such Registration Statement or the Prospectus
contained therein, or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, if and only to the extent that such statement or omission occurs
from reliance upon and in conformity with written information regarding the
Holder, his, her or its plan of distribution or his, her or its ownership
interests, that was furnished to the Company in writing by the Holder pursuant
to an investor questionnaire or otherwise expressly for use therein unless such
statement or omission was corrected in writing to the Company prior to the date
one day prior to the date of the final Prospectus (as supplemented or amended,
as the case may be).


 


11.                               Indemnification
Procedures.  Any Person
entitled to indemnification under this Agreement shall notify promptly the
indemnifying party in writing of the commencement of any action or proceeding
with respect to which a claim for indemnification may be made hereunder, but
the failure of any indemnified party to provide such notice shall not relieve
the indemnifying party of its obligations hereunder, except to the extent the
indemnifying party is materially prejudiced thereby and shall not relieve the
indemnifying party from any liability which it may have to any indemnified
party otherwise than hereunder. In case any action or proceeding is brought
against an indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, unless in the reasonable opinion of outside counsel to the
indemnified party a conflict of interest between such indemnified and
indemnifying parties may exist in respect of such claim, to assume the defense
thereof (alone or jointly with any other indemnifying party similarly
notified), to the extent that it chooses, with counsel reasonably satisfactory
to such indemnified party, and after notice from the indemnifying party to such
indemnified party that it so chooses (provided that in connection with such
assumption the indemnifying parties provide the indemnified parties a full
release of any costs or other expenses in connection therewith), the
indemnifying party shall not be liable to such indemnified party for any legal
or other expenses subsequently incurred by such indemnified party in connection
with the defense thereof; provided, however, that (a) if the indemnifying
party fails to take reasonable steps necessary to defend diligently the action
or proceeding within twenty (20) Business Days after receiving 


 


12

















 


notice from such indemnified
party that the indemnified party believes it has failed to do so; or (b) if
such indemnified party who is a defendant in any action or proceeding that is
also brought against the indemnifying party shall have reasonably concluded,
based on the advice of counsel, that there may be one or more legal defenses
available to such indemnified party which are not available to the indemnifying
party; or (c) if representation of both parties by the same counsel is
otherwise inappropriate under applicable standards of professional conduct,
then, in any such case, the indemnified party shall have the right to assume or
continue its own defense as set forth above (but with no more than one firm of
counsel for all indemnified parties in each jurisdiction) and the indemnifying
party shall be liable for any expenses therefor.  No indemnifying party shall, without the
written consent of the indemnified party (which shall not be unreasonably
withheld), effect the settlement or compromise of, or consent to the entry of
any judgment with respect to, any pending or (to the knowledge of the
indemnifying party) threatened action or claim in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified party is an actual or potential party to such action or claim)
unless such settlement, compromise or judgment (x) includes an
unconditional release of the indemnified party from all liability arising out
of such action or claim, (y) does not include a statement as to or an
admission of fault, culpability or a failure to act, by or on behalf of any
indemnified party and (z) does not and is not likely to materially
adversely affect the indemnified party.


 


12.                               Limitations
on Registration Rights. 
Neither the Company nor any of its security holders (other than the
Holders acting pursuant to this Agreement) may include securities of the
Company in any Registration Statement filed pursuant to this Agreement other
than Registrable Securities.


 


13.                               Contribution.


 


(a)                                  If the
indemnification provided for in Section 9 or Section 10
is unavailable to an indemnified party with respect to any losses, claims,
damages, actions, liabilities, costs or expenses referred to therein or is
insufficient to hold the indemnified party harmless as contemplated therein,
then the 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, claims, damages, actions, liabilities, costs or expenses
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party, on the one hand, and the indemnified party, on the other
hand, in connection with the statements or omissions which resulted in such
losses, claims, damages, actions, liabilities, costs or expenses as well as any
other relevant equitable considerations. The relative fault of the indemnifying
party, on the one hand, and of the indemnified party, on the other hand, shall
be determined by reference to, among other factors, whether the untrue or
alleged untrue statement of a material fact or omission to state a material
fact relates to information supplied by the indemnifying party or by the
indemnified party and the parties’ relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission; provided,
however, that in no event shall the obligation of any
indemnifying party to contribute under this Section 13 exceed the
amount that such indemnifying party would have been obligated to pay by way of
indemnification if the indemnification provided for under Section 9
or Section 10 hereof had been available under the circumstances.


 


13

















 


(b)                                 The Company and
the Holders agree that it would not be just and equitable if contribution
pursuant to this Section 13 were determined by pro  rata
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to in the immediately preceding
paragraph.


 


(c)                                  Notwithstanding
the provisions of this Section 13, the Holder shall not be required
to contribute any amount in excess of the amount by which the gross proceeds
from the sale of Registrable Shares exceeds the amount of any damages that the
Holder has otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission. No indemnified party that has made a fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any indemnifying party who
was not guilty of such fraudulent misrepresentation.


 


14.                               Amendments
and Waivers.  The
provisions of this Agreement may not be amended, modified, or supplemented or
waived without the prior written consent of the Company and the Holders.


 


15.                               Notices.  Any notice required or permitted to be given
under or in connection with this Agreement or any of the other Loan Documents
(except as may otherwise be expressly required therein) shall be in writing and
shall be mailed by certified mail, return receipt requested, postage prepaid,
or sent by telex, telegram, telecopy, facsimile, electronically by e-mail or
other similar form of rapid transmission confirmed by mailing (by certified
mail, return receipt requested, postage prepaid) written confirmation at substantially
the same time as such rapid transmission, or personally delivered to an officer
of the receiving party.  All such
communications shall be mailed, sent, delivered, faxed or e-mailed,


 


(a)                                  if to the
Company to:


 


Cubic Energy, Inc.


9870 Plano Road


Dallas,
Texas 75238


Attn: Larry G. Badgley


Telephone: (972) 681-8047


Fax: (972) 681-9687


e-mail: larry@cubicenergyinc.com


 


or to such other address or
to such individual’s or department’s attention as the Borrower may have
furnished the Lender in writing; and


 


14

















 


(b) if to the Holder to:


 


Wells Fargo Energy Capital, Inc.


1000 Louisiana


9th Floor


MAC T5002-090


Houston, Texas 77002


Attn: Gary Milavec


Telephone: (713) 319-1612


Fax:  (713) 652-5874


e-mail: 
milavega@wellsfargo.com


 


or to such other address or to such individual’s or
department’s attention as the Lender may have furnished the Borrower in
writing.


 


16.                               Successors
and Assigns; Third Party Beneficiaries.  Neither the Company, or Holder shall be
entitled to assign any of its rights or obligations under this Agreement
without, in the case of the Company, the consent of a majority of the aggregate
number of the outstanding Registrable Shares or, in the case of the Holder,
upon the prior written consent of the Company (which consent the Company may
withhold in its sole discretion); provided,
however, the Holder may assign its rights hereunder pro rata to any
subsequent transferee of Registrable Shares. This Agreement shall inure to the
benefit of and be binding upon the successors and permitted assigns of each of
the parties hereto and shall inure to the benefit of each Holder.  The Indemnities shall be third-party
beneficiaries of Section 9, Section 10, Section 11,
Section 12 and Section 13 of this Agreement, but no
other Person not a party hereto shall have any rights under this Agreement.


 


17.                               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 same agreement.


 


18.                               Governing
Law.  This Agreement shall be
governed by and construed in accordance with the laws of the State of Texas
applicable to contracts made and to be performed wholly within said State.


 


19.                               Severability.  In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstances,
is held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions contained herein shall not be in any
way impaired thereby, it being intended that all of the rights and privileges
of the parties hereto shall be enforceable to the fullest extent permitted by
law.


 


20.                               Entire
Agreement.  This
Agreement is intended by the parties as a final expression of their agreement
and intended to be the complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject matter contained
herein. There are no restrictions, promises, warranties or undertakings, other
than those set forth 


 


15

















 


or referred to herein, with
respect to such subject matter. This Agreement supersedes all prior agreements
and understandings between the parties with respect to such subject matter.


 


21.                               Survival.  The indemnification and contribution
obligations under Section 9, Section 10, Section 11
and Section 13 shall survive the completion or termination of the
Company’s obligations under Section 2.


 


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


 


	
   

  	
  CUBIC ENERGY, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  WELLS FARGO ENERGY CAPITAL,
  INC.

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  



 


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