Exhibit 10.1


 


THIRD AMENDMENT TO


CREDIT AGREEMENT


 


THIS
THIRD AMENDMENT TO CREDIT AGREEMENT (the “Third Amendment”) made and
entered into the 30th day of August, 2010, by and between CUBIC ENERGY, INC.,
a Texas corporation, and WELLS FARGO ENERGY CAPITAL, INC.,
a Texas corporation.


 


W  I  T  N  E
S  S  E  T  H:


 


WHEREAS,
the above named parties did execute and exchange counterparts of that certain
Credit Agreement dated as of March 5, 2007 as amended by that certain
First Amendment to Credit Agreement dated May 8, 2008 and that certain
Second Amendment to Credit Agreement dated December 18, 2009 (collectively
the “Agreement”) to which reference is here made for all purposes;


 


WHEREAS,
the above named parties are desirous of amending the Agreement and certain
related agreements and instruments in the particulars hereinafter set forth;


 


NOW
THEREFORE, in consideration of the mutual covenants and agreements of the
parties hereto as set forth in this Third Amendment, the parties hereto agree
as follows:


 


ARTICLE I


DEFINITIONS


 


As
used herein, each term defined in the Agreement shall have the meaning assigned
thereto in the Agreement and terms defined herein shall be incorporated into
the Agreement unless expressly provided to the contrary.


 


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ARTICLE II


AMENDMENTS


 


2.01        The Agreement is hereby amended to add
the following defined terms to Section 1.1 of the Agreement:


 


“Second Amended and Restated Registration Rights Agreement”
means the Second Amended and Restated Registration Rights Agreement in the form
attached as Exhibit XXI, executed by the Borrower and the Lender
superseding the Amended and Restated Registration Rights Agreement.


 


“Third Warrant” means the Stock Purchase
Warrant issued by the Borrower to the Lender in the form attached as Exhibit XXII.


 


2.02        The Agreement is hereby amended to
substitute for the definition of “Loan Documents” the following:


 


“Loan Documents”
means this Agreement, the Notes, the Security Documents, the assignments of Net
Profits Interests, all agreements, documents and instruments governing or
related to Derivative Contracts entered into between the Borrower and the
Lender or any Affiliate of the Lender, the Warrant, the Supplemental Warrants,
the Registration Rights Agreement, the Amended and Restated Registration Rights
Agreement, the Second Amended and Restated Registration Rights Agreement, the
Amended and Restated Warrant, the Second Warrant, the Third Warrant and all
other notes, mortgages, deeds of trust, restatements, ratifications and
amendments of mortgages, deeds of trust, financing statements, guaranties,
security agreements, pledge agreements, documents, instruments and other
agreements now or hereafter delivered pursuant to the terms of, or in
connection with, this Agreement, the Obligations and/or the Collateral, and all
renewals, extensions and restatements of, and amendments and supplements to any
or all of the foregoing.


 


2.03        The Agreement is hereby amended to
substitute for Subsection 2.6(a) of the Agreement the following:


 


(a)  During the period from and after August 30, 2010 until
the next redetermination of the Borrowing Base scheduled for March 1, 2011



 


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in
accordance with this Section 2.6, the amount of the Borrowing Base shall
be $30,000,000.00; provided, however, nothing in this Subsection 2.6(a) shall
be construed to limit the right of the Lender or the Borrower to cause an
interim redetermination of the Borrowing Base pursuant to Subsection 2.6(d).


 


2.04        The Agreement is hereby amended to add
the following paragraph to the end of Section 2.10 of the Agreement:


 


Notwithstanding anything to the contrary in this Section 2.10, for
the increase in the Borrowing Base from $25,000,000.00 to $30, 000,000.00
effective August 30, 2010 the Borrower shall pay to the Lender $100,000.00
as the fee for such increase in the Borrowing Base.


 


2.05        The Agreement is hereby amended to
substitute for Subsections 2.15 (d) and (e) of the Agreement the
following:


 


(d)  Registration Rights.  The shares of Common Stock issued to the
Lender pursuant to this Section 2.15, along with any shares of Common
Stock issued upon exercise of the Amended and Restated Warrant, the Second
Warrant or the Third Warrant, shall be entitled to the registration rights set
forth in the Second Amended and Restated Registration Rights Agreement.


 


(e)  Compliance with Other Provisions.  The Borrower shall comply with its covenants
and agreements contained in the Second Amended and Restated Registration Rights
Agreement, the Amended and Restated Warrant, the Second Warrant and the Third
Warrant, as if those provisions were included in this Agreement.  Notwithstanding anything herein to the
contrary, the obligation provided in this Subsection 2.15(e) and in
Subsection 2.15(f) shall remain in force and effect so long has the Lender
is holder of the Amended and Restated Warrant, the Second Warrant, the Third
Warrant or shares of Common Stock issued to it pursuant to this
Section 2.15 or shares of Common Stock issued upon exercise of the Amended
and Restated Warrant, the Second Warrant or the Third Warrant.


 


(f)   Listing of Shares
Issuable.  To the extent the Common
Stock is listed on the NYSE Amex LLC or other national securities exchange, the
Borrower shall at all times cause to be listed for trading on the NYSE Amex LLC
or any other national securities exchange that is the principal market for the
trading of the Common Stock (a) all of the shares of Common Stock issuable
if the Term Note is converted in full pursuant to 


 


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Section 2.15
of the Agreement, as that number of shares may be adjusted from time to time
pursuant to the Antidilution Provisions, (b) all of the shares of Common
Stock to be issued if the Amended and Restated Warrant is exercised in full and
(c) all of the shares of Common Stock to be issued if the Second Warrant
is exercised in full. In addition, to the extent the Common Stock is listed on
the NYSE Amex LLC or other national securities exchange, within sixty (60) days
after the issuance of the Third Warrant, the Borrower shall cause all of the
shares issuable upon the exercise in full of the Third Warrant to be listed for
trading on the NYSE Amex LLC or such other national securities exchange that is
the principal market for the trading of the Common Stock.


 


2.06        The Agreement is hereby amended to
substitute for Section 2.16 of the Agreement the following:


 


2.16        Warrants.   As consideration for the Loans made
by the Lender pursuant to this Agreement, the Borrower (a) has previously
executed and delivered to the Lender the Amended and Restated Warrant and the
Second Warrant and (b) in connection with the execution and delivery of the
Third Amendment to Credit Agreement dated August 30, 2010 by and between
the Borrower and the Lender, shall execute and deliver to the Lender the Third
Warrant and the Second Amended and Restated Registration Rights Agreement.  The Borrower shall comply with the terms and
provisions of the Amended and Restated Warrant, the Second Warrant, the Third
Warrant and the Second Amended and Restated Registration Rights Agreement so
long as those instruments and that agreement remain in force and effect.


 


2.07        The Agreement is hereby amended to
substitute the second sentence of Section 5.24 of the Agreement the
following:


 


This
obligation shall be in addition to the Borrower’s obligation to reserve shares
of Common Stock for exercise of the Amended and Restated Warrant, the Second
Warrant and the Third Warrant as provided in those respective instruments.


 


2.08        The Agreement is hereby amended by the
addition of the following section to Article 5 of the Agreement:


 


5.25        Notice
of Price Adjustment.  At least two
Business Days prior to the occurrence, the Borrower shall give notice to the
Lender of any 


 


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event
that would cause either (a) an adjustment to the Conversion Price pursuant
to the Antidilution Provisions, or (b) an adjustment to the exercise price
provided in the Amended and Restated Warrant, the Second Warrant or the Third
Warrant pursuant to Sections 4 or 5 of those instruments.


 


ARTICLE III


CONDITIONS


 


This
Third Amendment shall not be effective until the following conditions have been
satisfied, with all documents to be delivered to the Lender to be in form and
substance satisfactory to the Lender:


 


(a)       The Lender shall have received the
following documents, appropriately executed and acknowledged and in multiple
counterparts as requested by the Lender:


 


(1)                                 This Third Amendment
executed by each party hereto;


 


(2)                                 A copy of the certificate of
formation of the Borrower and all amendments thereto, accompanied by a
certificate issued by the secretary of the Borrower that such copies are
correct and complete;


 


(3)                                 A copy of the by-laws of the
Borrower and all amendments thereto, accompanied by a certificate issued by the
secretary of the Borrower that such copies are correct and complete;


 


(4)                                 A copy of the corporate
resolutions of the Borrower, approving this Third Amendment and the related Loan
Documents to which it is a party and authorizing the transactions contemplated
therein, duly adopted by its board of directors and accompanied by a
certificate of the secretary of the Borrower to the effect that such copy is a
true and correct copy of resolutions duly adopted by written consent or at a
meeting of the board of directors, that such resolutions constitute all the
resolutions adopted with respect to such transactions, and that 


 


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such
resolutions have not been amended, modified or revoked in any respect, and are
in full force and effect as of the date of this Third Amendment;


 


(5)                             the Third Warrant executed
by the Borrower;


 


(6)                                 the Second Amended and
Restated Registration Rights Agreement executed by the Borrower and the Lender;
and


 


(7)                                 Such other agreements,
documents, instruments, opinions, certificates, waivers, consents, and evidence
as the Lender may reasonably request in compliance with or to accomplish the
terms and provisions of any of the Loan Documents; and


 


(b)       The Lender shall have received the fee
for the increase in the Borrowing Base pursuant to Section 2.10.


 


ARTICLE IV


REPRESENTATIONS AND WARRANTIES


 


The
Borrower hereby expressly remakes in favor of the Lender all of the representations
and warranties set forth in ARTICLE 4 of the Agreement, as amended hereby,
and represents and warrants that all such representations and warranties remain
true and unbreached, except as affected by the transactions contemplated in the
Agreement.


 


ARTICLE V


RATIFICATION


 


Each
of the parties hereto does hereby adopt, ratify and confirm the Agreement, in
all things in accordance with the terms and provisions thereof, as modified or
amended by this Third Amendment.


 


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ARTICLE VI


MISCELLANEOUS


 


6.01        All references to the Agreement in any
document heretofore or hereafter executed in connection with the transactions
contemplated in the Agreement shall be deemed to refer to the Agreement as
amended by this Third Amendment.


 


6.02        This Third Amendment may be executed in
two or more counterparts and multiple originals of such counterparts, and it
shall not be necessary that the signatures of all parties hereto be contained
on any one counterpart hereof.  Any executed
Third Amendment or any counterpart thereof shall be deemed an original, but all
of which together shall constitute one and the same instrument.


 


6.03        THE CREDIT AGREEMENT (AS
AMENDED BY THIS THIRD AMENDMENT) AND THE OTHER LOAN DOCUMENTS REPRESENT THE
FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OR PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES.


 


THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.


 


6.04        THIS THIRD AMENDMENT SHALL
BE DEEMED TO BE A CONTRACT MADE UNDER, AND SHALL BE CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF TEXAS.


 


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IN
WITNESS WHEREOF, this Third Amendment to Credit Agreement is executed as of the
date first above written.


 


	
   

  	
  BORROWER:

  
	
   

  	
   

  
	
   

  	
  CUBIC
  ENERGY, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/Calvin
  A. Wallen III

  
	
   

  	
   

  	
  Calvin
  A. Wallen III

  
	
   

  	
   

  	
  Chief
  Executive Officer and President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  LENDER:

  
	
   

  	
   

  
	
   

  	
  WELLS
  FARGO ENERGY CAPITAL, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/Chris
  Carter

  
	
   

  	
   

  	
  Chris
  Carter

  
	
   

  	
   

  	
  Director

  



 


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