Document:

Exhibit 10.1

                               CUBIC ENERGY, INC.

                 SUBSCRIPTION AND REGISTRATION RIGHTS AGREEMENT

     This  Subscription  and Registration  Rights Agreement (this  "Agreement"),
dated as of November 21, 2006, by and between Cubic Energy, Inc. (the "Company")
and (the  "Subscriber"),  is  intended  to set  forth  certain  representations,
covenants and agreements between the Company and the Subscriber, with respect to
the offering (the  "Offering")  for sale by the Company of units (the  "Units"),
each of which  consists of one share of Common Stock,  par value $0.05 per share
(the "Common  Stock") at the Offering Price (as defined below) , together with a
warrant to purchase  one-half of a share of Common Stock at an initial  exercise
price per share of  Common  Stock at $0.70,  the terms of which are set forth in
the form of Warrant Agreement attached hereto as Exhibit D hereto. The shares of
Common Stock  included in Units  purchased  hereby are referred to herein as the
"Shares," the warrants  included in the Units  purchased  hereby are referred to
herein as the  "Warrants"  and the shares of Common Stock issuable upon exercise
of the Warrants are referred to herein as the "Exercise Shares." The Shares, the
Warrants  and the  Exercise  Shares are  collectively  referred to herein as the
"Securities."  The Shares and  Warrants  are  immediately  separable  and may be
transferred separately in compliance with the restrictions on transfer set forth
herein and in the terms of the Warrant, as applicable.

     1. Subscription. Subject to the terms and conditions hereof, the Subscriber
hereby  irrevocably  subscribes  for and agrees to purchase from the Company the
number of Units set forth  under the  Subscriber's  name on the  signature  page
hereto at a purchase  price of $0.50 per Unit (the  "Offering  Price"),  and the
Company  agrees to sell such  Units to the  Subscriber  at the  Offering  Price,
subject to the Company's  right to sell to the Subscriber  such lesser number of
Units as the Company may, in its sole discretion, deem necessary or desirable.

     2. Delivery of Subscription Amount; Acceptance of Subscription; Delivery of
Units.  Subscriber understands and agrees that this subscription is made subject
to the following terms and conditions:

         (a) Subscriber  understands that separate subscription  agreements will
be executed  with other  investors  for the remainder of the Units to be sold in
the Offering;

         (b)   Contemporaneously   with  the  execution  and  delivery  of  this
Agreement,  Subscriber  shall execute and deliver the  Certificate of Accredited
Investor  Status  attached  hereto as Exhibit  B, and shall wire to the  Company
immediately available funds in the amount equal to the Offering Price multiplied
by  the  number  of  Units  for  which  the  Subscriber   has  subscribed   (the
"Subscription  Amount") in accordance with the instructions set forth on Exhibit
A hereto.  The  subscription  for Units shall be deemed to be accepted only when
this Agreement has been signed by an authorized officer of the Company;

         (c) The Company  shall have the right to reject this  subscription,  in
whole or in part, and shall have the right to allocate  Units among  subscribers
in any manner it may desire;  provided, that no subscriber shall be obligated to
purchase more than the number of Units set forth under its name on the signature
page hereto without its prior written consent;

<PAGE>

         (d)  The  payment  of the  Subscription  Amount  (or,  in the  case  of
rejection of a portion of the Subscriber's subscription, the part of the payment
relating to such rejected portion) will be returned,  without  interest,  (1) if
Subscriber's  subscription  is  rejected  in  whole  or in  part,  or (2) if the
Offering is withdrawn or canceled;

         (e)  Certificates  representing  the  Shares and the  Warrants  will be
issued in the name of each  Subscriber  at Closing as set forth under  Section 3
hereof;

         (f) The  representations  and  warranties of the Company and Subscriber
set forth  herein  shall be true and  correct  as of the date  that the  Company
accepts this subscription.

     3. Terms of Subscription.

         (a) The subscription period will begin as of November 17, 2006 and will
terminate at 4:59 p.m.,  Central time, on November 30, 2006,  unless extended by
the Company, on one or more occasions, for up to an additional fifteen (15) days
(the "Termination  Date").  Such extension may be effected without notice to the
Subscribers.  The  purchase and sale of the Units (the  "Closing"),  and funding
thereof,  shall  occur  as soon  as  practicable  after  the  execution  of this
Agreement by the Company and each of the  Subscribers  in the Offering at a time
and  location  (the  "Closing   Date")  agreed  upon  by  the  Company  and  the
Subscribers,  and in no event later than 4:59 pm,  Central time, on December 15,
2006.  Immediately  after the Closing Date, the Company will deliver or cause to
be  delivered,  one  or  more  physical  certificates  representing  the  Shares
purchased by each Subscriber.

         (b) If the  Subscriber is not a United States  person,  the  Subscriber
hereby  represents that it has satisfied itself as to the full observance of the
laws of its  jurisdiction in connection with any invitation to subscribe for the
Units or any use of this Agreement,  including (i) the legal requirements within
its  jurisdiction  for the  purchase  of the Units,  (ii) any  foreign  exchange
restrictions  applicable  to such  purchase,  (iii)  any  governmental  or other
consents  that may need to be  obtained,  and (iv) the  income tax and other tax
consequences, if any, that may be relevant to the purchase, holding, redemption,
sale or transfer of the Securities.  The  Subscriber's  subscription and payment
for, and his or her  continued  beneficial  ownership of any of the  Securities,
will not violate any  applicable  securities  or other laws of the  Subscriber's
jurisdiction.

     4. Registration Rights.

         (a) Subscriber  acknowledges that it is acquiring the Units for its own
account  and  for  the  purpose  of  investment  and  not  with  a  view  to any
distribution or resale thereof within the meaning of the Securities Act of 1933,
as amended,  (the "Securities  Act"). The Subscriber further agrees that it will
not sell,  assign or  transfer  any  Security  at any time in  violation  of the
Securities Act and acknowledges that, in taking unregistered securities, it must
continue to bear the economic risk of its investment for an indefinite period of
time  because of the fact that  Securities  have not been  registered  under the
Securities  Act, and further  realizes that none of the  Securities  can be sold
unless  subsequently  registered  under the  Securities Act or an exemption from
such  registration  is available.  The Subscriber  further  recognizes  that the
Company is not  assuming  any  obligation  to register  any  Security  except as
expressly set forth herein.  The Subscriber also  acknowledges  that appropriate

                                       2
<PAGE>

legends  reflecting the status of the Securities under the Securities Act may be
placed on the face of the  certificates  for each such  Security  at the time of
their transfer and delivery to the holder thereof.

         (b) No Security may be transferred  except in a transaction which is in
compliance with the Securities Act. Except as provided hereafter with respect to
registration of the Shares and the Exercise  Shares,  it shall be a condition to
any such transfer that the Company shall be furnished with an opinion of counsel
to the holder of such Security,  reasonably  satisfactory to the Company, to the
effect that the proposed  transfer  would be in compliance  with the  Securities
Act.

         (c) Within 60 days after the Closing (the "Filing  Date"),  the Company
shall use its best efforts to prepare and file with the  Securities and Exchange
Commission  (the  "SEC"),  one or more  registration  statements  and such other
documents as may be necessary in the opinion of counsel for the Company, and use
its commercially reasonable efforts to have such registration statement declared
effective  within  120 days after the  Filing  Date in order to comply  with the
provisions of the Securities  Act so as to permit the  registered  resale of the
Shares,  for a period of two (2)  years  following  the  Closing  Date,  and the
registered  resale  of the  Exercise  Shares,  for so long as the  Warrants  are
outstanding. The Shares and Exercise Shares that are registered for resale under
such registration statement are referred to herein as the "Offering Securities,"
and the Subscriber,  together with its affiliates and transferees, are hereafter
referred to as "Offering Holders." The Company will include in such registration
statement  (i)  the  information  required  under  the  Securities  Act to be so
included concerning the Offering Holders, as provided by the Offering Holders at
the  reasonable   request  of  the  Company,   including  any  changes  in  such
information,  or  information  provided  by new  Offering  Holders,  that may be
provided by the  Offering  Holders in writing to the Company  from time to time,
and (ii) a section entitled "Plan of Distribution," substantially in the form of
Exhibit C hereto,  that describes the various procedures that may be used by the
Offering  Holders in the sale of Shares or Exercise Shares;  provided,  however,
that no holder of Shares or Exercise  Shares (other than a Subscriber)  shall be
entitled  to have  the  securities  held  by it  covered  by  such  registration
statement unless such holder agrees in writing to be bound by all the provisions
of this Agreement applicable to such holder.

         (d)  Notwithstanding  the  foregoing  provisions of this Section 4, the
Company may voluntarily suspend the use of any such registration statement for a
limited time,  which in no event shall be longer than 60 days in any three month
period and no longer than 100 days in any twelve  month  period,  if the Company
has been advised in writing by counsel or  underwriters  to the Company that the
offering of any Offering Securities pursuant to the registration statement would
materially  adversely  affect,  or would  be  improper  in view of (or  improper
without  disclosure in a prospectus),  a proposed  financing,  a reorganization,
recapitalization,  merger,  consolidation,  or similar transaction involving the
Company.  In  addition,  the Company  may  suspend the use of such  registration
statement  for the 15 business  days  following the filing of any Form 8-K, Form
10-QSB  or Form  10-KSB,  or other  comparable  form for  purposes  of  filing a
post-effective amendment to the registration statement. If any event occurs that
would cause any such registration  statement to contain a material  misstatement
or  omission  or not to be  effective  and usable  during  the period  that such
registration  statement is required to be effective  and usable,  subject to the
time periods set forth above,  the Company  shall  promptly file an amendment to
the registration statement and use its commercially  reasonable efforts to cause

                                       3
<PAGE>

such  amendment  to be declared  effective  as soon as  practicable  thereafter.
Notwithstanding  any provision  contained herein to the contrary,  the Company's
obligation to include,  or continue to include,  Offering Securities in any such
registration  statement  under this Section 4 shall terminate to the extent such
securities  are  eligible  for resale  under Rule 144(k)  promulgated  under the
Securities Act.

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

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

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

                  (iii)  include  in  each  such  document  the  names  of  each
         Subscriber who continues to hold Offering Securities,  except for those
         Subscribers who designate on the signature page hereto that they do not
         wish to have their securities  included in the registration  statement,
         and the names of any new Offering  Holders who have  delivered  written
         notice to the Company at least three  business days prior to the filing
         thereof that they propose to sell Offering  Securities  pursuant to the
         registration statement as selling securityholders;

                  (iv) file pursuant to Rule 424(b) under the  Securities Act an
         amendment  to the  registration  statement or amend,  if required,  the
         registration  statement  and  prospectus,  in each  case,  to cover new
         Offering  Holders  upon at least seven  business  days'  prior  written
         notice by such new Offering Holders to such effect; provided,  however,
         that (A) in no event shall the Company be required to file  pursuant to
         Rule 424(b) under the Securities  Act a supplement to the  registration
         statement  to  cover  new  Offering  Holders  other  than on the  third
         Thursday of each calendar  month  following the calendar month in which
         the  registration  statement is declared  effective and (B) in the case
         where a  post-effective  amendment is  required,  in no event shall the
         Company be required  to file a  post-effective  amendment  to cover new
         Offering  Holders  other than on the third  Thursday  of the third full
         calendar month  following the calendar month in which the  registration
         statement  is  declared  effective  and  the  third  Thursday  of  each
         subsequent  third month  thereafter;  any delay in  effectiveness  as a
         result of the foregoing shall be excluded from the periods set forth in
         subsection (e) above; and

                                       4
<PAGE>

                  (v) furnish to each Offering  Holder such numbers of copies of
         a prospectus,  including a preliminary  prospectus,  complying with the
         requirements  of the Securities  Act, and such other  documents as such
         Offering  Holder  may  reasonably  request in order to  facilitate  the
         public sale or other  disposition of the Offering  Securities  owned by
         such Offering Holder, but such Offering Holder shall not be entitled to
         use any  selling  materials  other  than a  prospectus  and such  other
         materials as may be approved by the Company, which approval will not be
         unreasonably withheld.

         (f) Except as provided  below in this Section 4, the expenses  incurred
by the Company in  connection  with  action  taken by the Company to comply with
this Section 4, including, without limitation, all registration and filing fees,
printing and delivery  expenses,  accounting  fees,  fees and  disbursements  of
counsel to the  Company,  consultant  and expert fees,  premiums  for  liability
insurance,  if the  Company  chooses  to  obtain  such  insurance,  obtained  in
connection with a registration statement filed to effect such compliance and all
expenses,  including  counsel fees, of complying with any state  securities laws
("State Acts"),  shall be paid by the Company. All fees and disbursements of any
counsel,  experts, or consultants employed by any Offering Holder shall be borne
by such  Offering  Holder.  The  Company  shall not be  obligated  in any way in
connection  with any  registration  pursuant  to this  Section 4 for any selling
commissions or discounts  payable by any Offering  Holder to any  underwriter or
broker of securities to be sold by such Offering  Holder.  Subscriber  agrees to
pay all expenses required to be borne by such Offering Holder.

         (g) In the event of any registration of Offering Securities pursuant to
this Section 4, the Company  will  indemnify  and hold  harmless  each  Offering
Holder,  its officers,  directors,  investment  advisors and each underwriter of
such securities, and any person who controls such Offering Holder or underwriter
within the  meaning of Section 15 of the  Securities  Act,  against  all claims,
actions,  losses, damages,  liabilities and expenses, joint or several, to which
any of such persons may become  subject under the  Securities  Act or otherwise,
insofar as such losses, claims, damages,  liabilities or actions arise out of or
are based  upon any untrue  statement  of any  material  fact  contained  in any
registration  statement under which such  securities  were registered  under the
Securities  Act,  any  preliminary  prospectus  or  final  prospectus  contained
therein,  or any amendment or supplement  thereof,  or arise out of or are based
upon the omission to state therein a material fact required to be stated therein
or necessary to make the statements  therein not misleading,  and will reimburse
such Offering  Holder,  its officers,  directors  and each  underwriter  of such
securities,  and each such  controlling  person or entity  for any legal and any
other expenses reasonably incurred by such Offering Holder, such underwriter, or
such controlling  person or entity in connection with investigating or defending
any such loss, action, claim, damage,  liability, or action; provided,  however,
that the Company will not be liable in any such case to the extent that any such
loss,  claim,  damage,  liability or action  arises  directly out of or is based
primarily  upon an  untrue  statement  or  omission  made  in said  registration
statement,  said preliminary prospectus or said prospectus, or said amendment or
supplement in reliance upon and in conformity with written information furnished
to the Company by such Offering Holder or such underwriter  specifically for use
in the preparation thereof.

         (h) At any time when a prospectus  relating to the Offering  Securities
is required to be delivered  under the  Securities  Act, the Company will notify
the Offering  Holder of the  happening of any event,  upon the  notification  or

                                       5
<PAGE>

awareness of such event by an executive  officer of the Company,  as a result of
which the prospectus included in such registration statement, as then in effect,
includes an untrue  statement of material fact or omits to state a material fact
required to be stated  therein or necessary to make the  statements  therein not
misleading in light of the circumstances then existing.

         (i) In the event of any  registration of any Offering  Securities under
the  Securities  Act pursuant to this Section 4, the Offering  Holder  agrees to
indemnify and hold harmless the Company, its officers,  directors and any person
who controls the Company within the meaning of Section 15 of the Securities Act,
against any losses, claims, damages,  liabilities, or actions, joint or several,
to which the Company,  its officers,  directors,  or such controlling  person or
entity may become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages,  liabilities, or actions arise out of or are based upon
any  untrue  statement  of any  material  fact  contained  in  any  registration
statement  under  which  such  Offering  Securities  were  registered  under the
Securities  Act,  any  preliminary  prospectus  or  final  prospectus  contained
therein,  or any amendment or supplement  thereto,  or arise out of or are based
upon the omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading,  in each case to the
extent and only to the extent that any such loss, claim, damage,  liability,  or
action  arises out of or is based upon an untrue  statement or omission  made in
said registration  statement,  said preliminary prospectus or said prospectus or
said  amendment or supplement  in reliance  upon and in conformity  with written
information  furnished to the Company by such  Offering  Holder or any affiliate
(as defined in the Securities Act) of such Offering Holder  specifically for use
in the preparation thereof.

         (j) If a claim for indemnification under Section 4 is unavailable to an
indemnified party because of a failure or refusal of a governmental authority to
enforce such  indemnification  in accordance with its terms (by reason of public
policy or otherwise), then each indemnifying party, in lieu of indemnifying such
indemnified  party,  shall  contribute  to the  amount  paid or  payable by such
indemnified  party  as a  result  of  such  Losses,  in  such  proportion  as is
appropriate  to  reflect  the  relative  fault  of the  indemnifying  party  and
indemnified  party in connection with the actions,  statements or omissions that
resulted in such Losses as well as any other relevant equitable  considerations.
The relative fault of such  indemnifying  party and  indemnified  party shall be
determined by reference to, among other things,  whether any action in question,
including any untrue or alleged untrue  statement of a material fact or omission
or alleged omission of a material fact, has been taken or made by, or relates to
information  supplied by, such indemnifying  party or indemnified party, and the
parties'  relative intent,  knowledge,  access to information and opportunity to
correct or prevent  such  action,  statement  or  omission.  The amount  paid or
payable  by a party as a result  of any such  contribution  shall be  deemed  to
include any reasonable  attorneys' or other reasonable fees or expenses incurred
by such party in  connection  with the  defense of any Losses to the extent such
party   would  have  been   indemnified   for  such  fees  or  expenses  if  the
indemnification  provided for under  Section 4(h) or 4(j) was  available to such
party in  accordance  with its terms.  Notwithstanding  anything to the contrary
contained  herein,  no Offering Holder shall be liable or required to contribute
under this  Section  4(k) for any amount that  exceeds the net  proceeds to such
Offering Holder as a result of the sale of Shares or Exercise Shares pursuant to
the registration  statement provided by this Section 4. The parties hereto agree
that it would not be just and equitable if contribution pursuant to this Section
4(k) were determined by pro rata allocation or by any other method of allocation
that does not take into account the equitable considerations referred to in this

                                       6
<PAGE>

paragraph. No person guilty of fraudulent  misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to  contribution  from
any  person  who  was  not  guilty  of such  fraudulent  misrepresentation.  The
indemnity  and  contribution  agreements  contained  in  this  Section  4 are in
addition  to any  liability  that  the  indemnifying  parties  may  have  to the
indemnified parties.

         (k) Any  party  entitled  to  indemnification  hereunder  will (i) give
prompt  written  notice to the  indemnifying  party of any claim with respect to
which it seeks  indemnification  and (ii)  unless  in such  indemnified  party's
reasonable  judgment  a  conflict  of  interest  between  such  indemnified  and
indemnifying parties exists with respect to such claim, permit such indemnifying
party to assume the defense of such claim with counsel  reasonably  satisfactory
to the indemnified  party. If such defense is assumed,  the  indemnifying  party
will not be subject to any liability for any settlement  made by the indemnified
party without its consent (which consent may not be unreasonably  withheld).  An
indemnifying  party who is not entitled to, or elects not to, assume the defense
of a claim will not be  obligated  to pay the fees and expenses of more than one
counsel for all parties  indemnified by such indemnifying  party with respect to
such  claim,  unless  in the  reasonable  judgment  of any  indemnified  party a
conflict of interest exists between such indemnified party and any other of such
indemnified parties with respect to such claim.

         (l) With a view to making available to the Offering Holder the benefits
of Rule 144  promulgated  under the  Securities  Act, the Company agrees that it
will use its  commercially  reasonable  efforts to maintain  registration of its
Common Stock under Section 12 or 15 of the  Securities  Exchange Act of 1934, as
amended,  (the "Exchange  Act"), and to file with the SEC in a timely manner all
reports  and other  documents  required  to be filed by an issuer of  securities
registered  under the Exchange Act so as to maintain  the  availability  of Rule
144.  Upon the request of any record  owner,  the Company  will  deliver to such
owner a written  statement  as to whether  it has  complied  with the  reporting
requirements of Rule 144. At any time when the Company is not subject to Section
13 or 15(d) of the Exchange Act, the Company will  promptly  furnish or cause to
be furnished to the Offering  Holders,  upon request,  copies of the information
required to be delivered to holders and prospective purchasers of the Securities
pursuant to Rule 144A(d)(4) under the Securities Act (or any successor provision
thereto) in order to permit compliance with Rule 144A in connection with resales
by such holders of the Securities.

     5.  Representations  and Warranties of the  Subscriber.  Subscriber  hereby
represents and warrants to the Company as follows:

         (a)  Subscriber  is  acquiring  the  Units  for  its own  account,  for
investment  and not  with a view to,  or for  resale  in  connection  with,  any
distribution  or public  offering  thereof  within the meaning of the Securities
Act, and applicable state securities laws.

         (b) The  Subscriber  understands  that (A) the  Units (1) have not been
registered  under the Securities Act or any state  securities  laws, (2) will be
issued in  reliance  upon an  exemption  from the  registration  and  prospectus
delivery  requirements  of the  Securities  Act  pursuant to Section 4(2) and/or
Regulation D thereof and (3) will be issued in reliance upon exemptions from the
registration and prospectus delivery requirements of state securities laws which

                                       7
<PAGE>

relate to private  offerings,  and (B) the  Subscriber  must  therefore bear the
economic risk of such investment  indefinitely  unless a subsequent  disposition
thereof is registered  under the Securities Act and applicable  state securities
laws or is exempt therefrom. Subscriber further understands that such exemptions
depend upon, among other things,  the bona fide nature of the investment  intent
of the Subscriber  expressed herein.  Pursuant to the foregoing,  the Subscriber
acknowledges that the certificates representing each of the Shares, the Warrants
and the  Exercise  Shares  shall  bear a  restrictive  legend  substantially  as
follows:

         "THE  SECURITIES  REPRESENTED BY THIS  CERTIFICATE ARE SUBJECT TO
         RESTRICTIONS  ON TRANSFER  UNDER THE  SECURITIES  ACT OF 1933, AS
         AMENDED,  AND STATE  SECURITIES  LAWS, AND MAY NOT BE OFFERED FOR
         SALE, SOLD, ASSIGNED, TRANSFERRED,  PLEDGED OR OTHERWISE DISPOSED
         OF UNLESS (I) REGISTERED UNDER THE APPLICABLE  SECURITIES LAWS OR
         (II) AN OPINION OF  COUNSEL,  WHICH  OPINION AND COUNSEL ARE BOTH
         REASONABLY SATISFACTORY TO THE COMPANY, HAS BEEN DELIVERED TO THE
         COMPANY  AND  SUCH  OPINION  STATES  THAT THE  SECURITIES  MAY BE
         TRANSFERRED WITHOUT SUCH REGISTRATION."

         (c) The Subscriber  has  knowledge,  skill and experience in financial,
business and  investment  matters  relating to an investment of this type and is
capable of evaluating the merits and risks of such investment and protecting the
Subscriber's  interest in  connection  with the  acquisition  of the Units.  The
Subscriber  understands  that the  acquisition  of the  Units  is a  speculative
investment and involves substantial risks and that the Subscriber could lose the
Subscriber's  entire  investment in the Units. To the extent deemed necessary by
the  Subscriber,  the  Subscriber has retained,  at its own expense,  and relied
upon,  appropriate  professional advice regarding the investment,  tax and legal
merits and consequences of purchasing and owning the Share, the Warrants and the
Exercise  Shares.  The  Subscriber has the ability to bear the economic risks of
the  Subscriber's  investment  in the Company,  including a complete loss of the
investment, and the Subscriber has no need for liquidity in such investment.

         (d) The Subscriber  has been  furnished by the Company all  information
(or provided  access to all  information)  regarding  the business and financial
condition of the Company, its expected plans for future business activities, the
attributes  of the  Securities  and the merits and risks of an investment in the
Securities which the Subscriber has requested or otherwise needs to evaluate the
investment in the Company.

         (e) Subscriber is in receipt of and has carefully read and  understands
the following items:

                  (i) Annual Report on Form 10-KSB for the period ended June 30,
         2006 filed by the Company with the SEC;

                  (ii)  Quarterly  Report on Form  10-QSB for the  period  ended
         September 30, 2006 filed by the Company with the SEC;

                                       8
<PAGE>

                  (iii)  Current  Reports on Form 8-K filed by the Company  with
         the SEC on June 28, 2006;

                  (iv) Confidential Private Placement Memorandum, dated November
         14, 2006 (together with the exhibits thereto,  collectively,  items (i)
         through (iv), the "Disclosure Documents").

         (f) In making the  proposed  investment  decision,  the  Subscriber  is
relying solely on  investigations  made by the  Subscriber and the  Subscriber's
representatives.  The Subscriber  acknowledges  that documents listed in Section
5(e) are the only information provided to the Subscriber by the Company and that
the  Subscriber is not relying on any other  information  in making the proposed
investment  decision.  The  offer  to sell the  Units  was  communicated  to the
Subscriber in such a manner that the Subscriber was able to ask questions of and
receive  answers from the  management  of the Company  concerning  the terms and
conditions of the proposed  transaction  and that at no time was the  Subscriber
presented  with or  solicited  by or through  any  leaflet,  public  promotional
meeting,  television  advertisement  or any  other  form of  general  or  public
advertising or solicitation.

         (g) The  Subscriber  acknowledges  that the Subscriber has been advised
that:

                  (i) The Units,  and the  Securities  that  comprise the Units,
         offered  hereby have not been approved or disapproved by the SEC or any
         state  securities  commission  nor has the SEC or any state  securities
         commission passed upon the accuracy or adequacy of any  representations
         by the  Company.  Any  representation  to the  contrary  is a  criminal
         offense.

                  (ii) In making an investment  decision,  the  Subscriber  must
         rely  on its own  examination  of the  Company  and  the  terms  of the
         Offering,  including the merits and risks involved.  The Units, and the
         Securities  that comprise the Units,  have not been  recommended by any
         federal  or  state  securities   commission  or  regulatory  authority.
         Furthermore,  the foregoing authorities have not confirmed the accuracy
         or determined the adequacy of any representation. Any representation to
         the contrary is a criminal offense.

                  (iii) The Shares and the  Warrants are and,  when issued,  the
         Exercise Shares will be, "Restricted  Securities" within the meaning of
         Rule 144 under the  Securities  Act,  are  subject to  restrictions  on
         transferability  and resale and may not be transferred or resold except
         as permitted under the Securities Act and applicable  state  securities
         laws, pursuant to registration or exemption  therefrom.  The Subscriber
         is aware that the  Subscriber  may be  required  to bear the  financial
         risks of this investment for an indefinite period of time.

         (h) The Subscriber  acknowledges and is aware that there has never been
any  representation,  guarantee or warranty  made by the Company or any officer,
director,  employee or agent or representative  of the Company,  expressly or by
implication,  as to (i)  the  approximate  or  exact  length  of time  that  the
Subscriber  will be  required  to  remain  an  owner of any  Security;  (ii) the
percentage of profit and/or amount of or type of  consideration,  profit or loss
to be  realized,  if any,  as a result  of this  investment;  or (iii)  that the

                                       9
<PAGE>

limited past performance or experience on the part of the Company, or any future
expectations  will in any way indicate the predictable  results of the ownership
of any Security or of the overall financial performance of the Company.

         (i) The Subscriber agrees to furnish the Company such other information
as the Company  may  reasonably  request in order to verify the  accuracy of the
information contained herein and agrees to notify the Company immediately of any
material  change in the  information  provided  herein that occurs  prior to the
Company's acceptance of this Agreement.

         (j) The Subscriber  further represents and warrants that the Subscriber
is an "accredited investor" within the meaning of Rule 501 of Regulation D under
the Securities  Act, and  Subscriber has executed the  Certificate of Accredited
Investor Status, attached hereto as Exhibit B.

         (k) As of the date of this  Agreement the Subscriber and its affiliates
do not have,  and during the 30-day  period prior to the date of this  Agreement
the  Subscriber and its  affiliates  have not entered into, any "put  equivalent
position"  as such term is defined in Rule 16a-1 under the Exchange Act or short
sale  positions  with  respect to the  Common  Stock of the  Company.  Until the
registration  statement referred to in Section 4(c) is declared  effective,  the
Subscriber  hereby  agrees not to, and will cause its  affiliates  not to, enter
into any such "put equivalent position" or short sale position.

The foregoing  representations  and warranties and  undertakings are made by the
Subscriber  with  the  intent  that  they  be  relied  upon in  determining  its
suitability  as  an  investor  and  the  Subscriber   hereby  agrees  that  such
representations and warranties shall survive its purchase of the Units.

     6.  Representations  and  Warranties  of the  Company.  The Company  hereby
represents and warrants to the Subscriber as follows:

         (a) Each of the  Company  and its  subsidiaries  is duly  incorporated,
validly  existing  and  in  good  standing  under  the  laws  of  its  state  of
incorporation,  and is duly qualified to do business as a foreign corporation in
all  jurisdictions  in which the failure to be so qualified would materially and
adversely affect the business or financial  condition,  properties or operations
of the  Company.  Each of the Company  and its  subsidiaries  has all  requisite
corporate  power and authority (i) to own and lease the properties and assets it
currently  owns and leases (if any) and it  contemplates  owning and leasing and
(ii) to  conduct  its  activities  as such  activities  (if any)  are  currently
conducted and as currently contemplated to be conducted.

         (b) The  authorized  capital of the  Company  immediately  prior to the
Closing will consist of 100,000,000  shares of common stock, par value $0.05 and
10,000,000 shares of preferred stock, par value $0.01.

         (c) The  Company  has  duly  authorized  the  issuance  and sale of the
Shares,  the Warrants and the Exercise  Shares in  accordance  with the terms of
this  Agreement  (as  described  herein)  by  all  requisite  corporate  action,
including the  authorization of the Company's Board of Directors of the issuance
and  sale  of  the  Shares  and  the  Warrants  in  accordance   herewith,   the
authorization  and reservation of the Exercise Shares for issuance upon exercise
of the Warrants,  the issuance and sale of the Exercise  Shares upon exercise of

                                       10
<PAGE>

the Warrants and the execution, delivery and performance of any other agreements
and instruments  executed in connection herewith.  This Agreement  constitutes a
valid and legally binding  obligation of the Company,  enforceable in accordance
with its terms,  except (i) as limited  by  applicable  bankruptcy,  insolvency,
reorganization,  moratorium,  and other  laws of general  application  affecting
enforcement of creditors' rights generally,  (ii) as limited by laws relating to
the availability of specific  performance,  injunctive relief or other equitable
remedies and (iii) to the extent the indemnification provisions contained herein
may be limited by applicable federal or state securities laws.

         (d) The  Shares,  when  issued  and paid for in  accordance  with  this
Agreement,  and the Exercise Shares, when issued and paid for in accordance with
the terms of the Warrants,  will represent validly  authorized,  duly issued and
fully paid and  nonassessable  shares of Common  Stock of the  Company,  and the
issuance  thereof will not conflict with the articles of incorporation or bylaws
of  the  Company  and,  subject  to the  accuracy  of  the  representations  and
warranties of Subscriber herein, will be in full compliance with all federal and
state securities laws applicable to such issuance and sale.

         (e) The execution and delivery of this  Agreement,  the  fulfillment of
the terms set forth herein and the consummation of the transactions contemplated
hereby will not conflict with, or constitute a breach of or default  under,  any
agreement,  indenture  or  instrument  by which the Company is bound or any law,
administrative rule,  regulation or decree of any court or any governmental body
or administrative agency applicable to the Company.

         (f) As of the date of this Agreement,  the Disclosure  Documents do not
contain any untrue  statement  of a material  fact or omit to state any material
fact required to be stated  therein or necessary in order to make the statements
therein,  in the light of the  circumstances  under  which they were  made,  not
misleading.

         (g) The Disclosure  Documents that have been filed with the SEC, at the
time they were filed with the SEC,  complied in all material  respects  with the
requirements  of the Exchange  Act,  and,  when read together and with the other
information in the Disclosure Documents, do not contain an untrue statement of a
material fact or omit to state a material fact required to be stated  therein or
necessary  in  order  to  make  the  statements  therein,  in the  light  of the
circumstances under which they were made, not misleading.

         (h)  Subsequent  to the dates as of which  information  is given in the
Disclosure  Documents,  except  as  described  therein,  there  has not been any
material  adverse  change  with regard to the assets or  properties,  results of
operations or financial condition of the Company.

     7. Survival; Indemnification. All representations, warranties and covenants
contained in this Agreement and the indemnification  contained in this Section 7
shall survive (i) the acceptance of this Agreement by the Company,  (ii) changes
in the  transactions,  documents and instruments  described herein which are not
material  or which  are to the  benefit  of  Subscriber,  and (iii) the death or
disability  of  Subscriber.   Subscriber  acknowledges  the  meaning  and  legal
consequences  of the  representations,  warranties  and  covenants  in Section 5
hereof and that the Company has relied upon such representations, warranties and
covenants in determining Subscriber's  qualification and suitability to purchase

                                       11
<PAGE>

the Units.  Subscriber hereby agrees to indemnify,  defend and hold harmless the
Company,  its officers,  directors,  employees,  agents and controlling persons,
from and against  any and all losses,  claims,  damages,  liabilities,  expenses
(including  attorneys'  fees and  disbursements),  judgments  or amounts paid in
settlement  of  actions  arising  out of or  resulting  from the  untruth of any
representation  of  Subscriber  herein or the breach of any warranty or covenant
herein by Subscriber. Notwithstanding the foregoing, however, no representation,
warranty,  covenant or  acknowledgment  made herein by  Subscriber  shall in any
manner be deemed to  constitute  a waiver of any rights  granted to it under the
Securities Act or state securities laws.

     8. Notices. All notices and other communications  provided for herein shall
be in  writing  and  shall be  deemed  to have  been  duly  given  if  delivered
personally or sent by registered or certified  mail,  return receipt  requested,
postage prepaid:

         (a) if to the Company, to the following address:

             Cubic Energy, Inc.
             9870 Plano Road
             Dallas, Texas 75238
             Attn: Mr. Jon S. Ross
             Telephone: (972) 681-8047

         (b) if to  Subscriber,  to the address set forth on the signature  page
hereto.

         (c) or at such other  address  as any party  shall  have  specified  by
notice in writing to the others.

     9.  Notification of Changes.  Subscriber agrees and covenants to notify the
Company  immediately  upon the occurrence of any event prior to the consummation
of this  Offering  that would cause any  representation,  warranty,  covenant or
other  statement  contained in this Agreement to be false or incorrect or of any
change in any statement made herein  occurring prior to the consummation of this
Offering.

     10. Assignability.  This Agreement is not assignable by the Subscriber, and
may not be modified,  waived or  terminated  except by an  instrument in writing
signed by the party against whom  enforcement  of such  modification,  waiver or
termination is sought.

     11. Binding Effect.  Except as otherwise  provided  herein,  this Agreement
shall be binding  upon and inure to the benefit of the parties and their  heirs,
executors,  administrators,  successors,  legal  representatives  and  permitted
assigns,  and the agreements,  representations,  warranties and  acknowledgments
contained  herein  shall be deemed to be made by and be binding upon such heirs,
executors,  administrators,  successors,  legal  representatives  and  permitted
assigns.

     12.  Obligations  Irrevocable.  The obligations of the Subscriber  shall be
irrevocable,  except with the consent of the Company,  until the consummation or
termination of the Offering.

                                       12
<PAGE>

     13. Entire  Agreement.  This Agreement  constitutes the entire agreement of
the  Subscriber  and the  Company  relating  to the  matters  contained  herein,
superseding all prior contracts or agreements, whether oral or written.

     14.  Governing  Law. This  Agreement  shall be governed by and construed in
accordance with the laws of the State of Texas, without regard to the principles
of conflicts of law thereof that would  require the  application  of the laws of
any jurisdiction other than Texas.

     15.  Severability.  If any provision of this  Agreement or the  application
thereof to Subscriber or any circumstance shall be held invalid or unenforceable
to any extent,  the  remainder of this  Agreement  and the  application  of such
provision to other  subscriptions or circumstances shall not be affected thereby
and shall be enforced to the greatest extent permitted by law.

     16.  Headings.  The headings in this Agreement are inserted for convenience
and identification only and are not intended to describe,  interpret,  define or
limit the scope, extent or intent of this Agreement or any provision hereof.

     17.  Counterparts.  This  Agreement  may  be  executed  in  any  number  of
counterparts, each of which when so executed and delivered shall be deemed to be
an  original  and all of which  together  shall be deemed to be one and the same
agreement.

                           [Signature Page to follow]

                                       13
<PAGE>

     IN  WITNESS  WHEREOF,   Subscriber  has  executed  this   Subscription  and
Registration Rights Agreement as of November ____, 2006.

                                         SUBSCRIBER

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

                                         Number of Units:
                                         Offering Price per Unit:  $0.50
                                         Subscription Amount:

                                         By:
                                             -----------------------------------
                                         Name:
                                              ----------------------------------
                                         Title:
                                               ---------------------------------
                                         Address:
                                                 -------------------------------

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

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

     The Company hereby accepts the foregoing  subscription subject to the terms
and conditions hereof as of November ____, 2006.

                                         Cubic Energy, Inc
                                         a Texas corporation

                                         By:
                                            ------------------------------------
                                         Name:
                                              ----------------------------------
                                         Title:
                                               ---------------------------------

                                       14
<PAGE>

                                                                       Exhibit A
                                                                       ---------

                                HOW TO SUBSCRIBE

     (1) If you are subscribing for the purchase of Units,  please date and sign
the signature page to this Subscription and Registration Rights Agreement in the
applicable  spaces.  Please  signify the amount of Units you are  purchasing  by
inserting  such amount in the space  provided for on the  signature  page to the
Agreement.

     (2) Complete and sign the accompanying  Certificate of Accredited  Investor
Status.

     (3) Send all completed  documents to: Cubic Energy,  Inc., ATTN: Jay Busby,
9870 Plano Rd., Dallas, Texas 75238, (972) 686-0369, (972) 681-9687 facsimile.

     (4)  Transmit  funds in an  amount  equal to the  number  of Units  you are
purchasing multiplied by the Offering Price via wire to the following account:

          Domestic
          --------

          American National Bank
          2865 Ridge Rd.
          Rockwall, Texas 75032
          Wire Dept. Fax No. (214) 863-6153
          Phone (214) 863-6224
          Account No. 300021912
          Routing No. 111901519

          For Further Credit To:

          Foreign
          -------

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

          For Further Credit To:

ATTENTION SUBSCRIBERS: NO SUBSCRIPTION WILL BE ACCEPTED UNLESS ALL DOCUMENTATION
PRESCRIBED HEREIN IS FULLY COMPLETED AND EXECUTED.  ANY MATERIALS  RECEIVED THAT
ARE INCOMPLETE IN ANY RESPECT WILL BE RETURNED BY THE COMPANY.

                                      A-1
<PAGE>

                                                                       Exhibit B
                                                                       ---------

                    CERTIFICATE OF ACCREDITED INVESTOR STATUS

     Except as may be indicated by the undersigned  below, the undersigned is an
individual  "accredited investor," as that term is defined in Regulation D under
the Securities Act of 1933, as amended (the  "Securities  Act"). The undersigned
has checked the box below  indicating the basis on which he is representing  his
status as an "accredited investor":

[_]  a bank as defined in Section  3(a)(2) of the Securities Act, or any savings
     and loan association or other institution as defined in Section  3(a)(5)(A)
     of the  Securities  Act  whether  acting  in its  individual  or  fiduciary
     capacity;  a broker or dealer  registered  pursuant  to  Section  15 of the
     Securities  Exchange  Act of 1934,  as amended  (the  "Securities  Exchange
     Act");  an insurance  company as defined in Section 2(13) of the Securities
     Act; an investment  company  registered under the Investment Company Act of
     1940 or a business  development  company as defined in Section  2(a)(48) of
     that Act; a small business  investment  company  licensed by the U.S. Small
     Business  Administration  under Section 301(c) or (d) of the Small Business
     Investment Act of 1958; a plan  established and maintained by a state,  its
     political subdivisions,  or any agency or instrumentality of a state or its
     political subdivisions, for the benefit of its employees, and such plan has
     total assets in excess of $5,000,000;  an employee  benefit plan within the
     meaning of the Employee  Retirement  Income  Security  Act of 1974,  if the
     investment  decision  is made by a plan  fiduciary,  as  defined in Section
     3(21) of such Act,  which is either a bank,  savings and loan  association,
     insurance company,  or registered  investment  adviser,  or if the employee
     benefit  plan  has  total  assets  in  excess  of   $5,000,000   or,  if  a
     self-directed  plan, with investment  decisions made solely by persons that
     are "accredited investors";

[_]  a private business  development company as defined in Section 202(a)(22) of
     the Investment Advisers Act of 1940;

[_]  an  organization  described in Section  501(c)(3)  of the Internal  Revenue
     Code, corporation, Massachusetts or similar business trust, or partnership,
     not formed for the specific  purpose of acquiring the  securities  offered,
     with total assets in excess of $5,000,000;

[_]  a natural person whose  individual  net worth,  or joint net worth with the
     undersigned's spouse, at the time of this purchase exceeds $1,000,000;

[_]  a natural person who had an individual income in excess of $200,000 in each
     of the two most recent years or joint income with the undersigned's  spouse
     in  excess  of  $300,000  in  each of  those  years  and  has a  reasonable
     expectation of reaching the same income level in the current year;

[_]  a trust  with  total  assets in excess of  $5,000,000,  not  formed for the
     specific  purpose of acquiring the  securities  offered,  whose purchase is
     directed by a person who has such knowledge and experience in financial and
     business  matters that he is capable of evaluating  the merits and risks of
     the prospective investment; or

                                      B-1
<PAGE>

[_]  an entity in which all of the equity holders are "accredited  investors" by
     virtue of their meeting one or more of the above standards.

[_]  an individual who is a director or executive officer of _______________.

     IN WITNESS  WHEREOF,  the  undersigned  has executed  this  Certificate  of
Accredited Investor Status effective as of November ____, 2006.

                                      Name of Subscriber

                                      By:
                                         ---------------------------------------
                                      Name:
                                           -------------------------------------
                                      Title:
                                            ------------------------------------

                                      B-2
<PAGE>

                                                                       Exhibit C
                                                                       ---------

                              PLAN OF DISTRIBUTION

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

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

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

     o    exchange distributions and/or secondary distributions;

     o    sales in the over-the-counter market;

     o    underwritten transactions;

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

     o    privately negotiated transactions.

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

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

                                      C-1
<PAGE>

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

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

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

                                      C-2
<PAGE>

                                                                       Exhibit D
                                                                       ---------

                            Form of Warrant Agreement

                                      D-1Exhibit 10.2

                                     WARRANT
                       TO PURCHASE SHARES OF COMMON STOCK
                                       OF
                               CUBIC ENERGY, INC.

THE  WARRANTS  REPRESENTED  BY THIS  CERTIFICATE  AND THE SHARES OF COMMON STOCK
ISSUABLE  UPON  EXERCISE  OF THIS  WARRANT  HAVE NOT BEEN  REGISTERED  UNDER THE
SECURITIES  ACT OF 1933 (THE  "ACT"),  NOR HAS IT BEEN  APPROVED  BY THE  UNITED
STATES SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES REGULATORY AUTHORITY
OF ANY STATE. NEITHER THESE WARRANTS NOR ANY INTEREST THEREIN MAY BE OFFERED FOR
SALE, SOLD, MORTGAGED, PLEDGED, TRANSFERRED,  HYPOTHECATED OR OTHERWISE DISPOSED
OF WITHOUT REGISTRATION UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS OR AN
OPINION OF COUNSEL  ACCEPTABLE  TO THE  COMPANY  THAT SUCH  REGISTRATION  IS NOT
REQUIRED.

No. 2006-4A                                   Warrant to Purchase [INSERT HERE ]
                                                                  --------------
                                                                          Shares
December 15, 2006                     of Common Stock, $0.05 Par Value Per Share

                        WARRANT TO PURCHASE COMMON STOCK
                                       of
                               CUBIC ENERGY, INC.,
                               a Texas corporation
           Void after the date set forth in the first paragraph hereof

     This  certifies  that,  for  value  received,  _________________,   or  its
registered assigns ("Holder") is entitled, subject to the terms set forth below,
to purchase  from Cubic  Energy,  Inc.,  a Texas  corporation  (the  "Company"),
[INSERT HERE] shares of Common Stock,  $0.05 par value per share, of the Company
(such class of stock being referred to herein as "Common Stock"), as constituted
on December  15, 2006 (the "Issue  Date"),  upon  compliance  with the  exercise
provisions  set forth in Section 1 hereof,  at the price of $0.70 per share (the
"Exercise  Price").  This Warrant  must be  exercised,  if at all,  prior to the
earlier to occur of 5:00 p.m.,  Dallas,  Texas time on November  30,  2011.  The
shares of Common  Stock  issued or issuable  upon  exercise of this  Warrant are
sometimes  referred to as the  "Warrant  Shares."  The term  "Warrants"  as used
herein shall include this Warrant and any warrants  delivered in substitution or
exchange therefor as provided herein.

     Section 1.  Exercise of Warrant.  This Warrant may be exercised at any time
or from time to time, on any business day, for all or part of the full number of
Warrant Shares during the period of time described  above,  by (i) delivery of a
written  notice,  in the form of the  subscription  notice  attached hereto or a

<PAGE>

reasonable  facsimile  thereof  (the  "Exercise  Notice"),  to the  Company,  of
Holder's  election to exercise  all or a portion of this  Warrant,  which notice
shall specify the number of Warrant Shares to be purchased,  (ii) (A) payment to
the Company of an amount equal to the Exercise Price multiplied by the number of
Warrant  Shares as to which this  Warrant  is being  exercised  (the  "Aggregate
Exercise  Price") in cash or delivery of a certified check or bank draft payable
to the order of the Company or wire transfer of immediately available funds, and
(iii) the surrender of this Warrant to a common  carrier for overnight  delivery
to the Company on the date the  Exercise  Notice is delivered to the Company (or
evidence  of lost  Warrant,  in  accordance  with  Section  7). No other form of
consideration  shall be acceptable  for the exercise of this Warrant.  A Warrant
shall be  deemed  to have  been  exercised  immediately  prior  to the  close of
business  on the date of  delivery  of the  Exercise  Notice,  this  Warrant and
Aggregate  Exercise Price  referred to in clause  (ii)(A) above,  and the person
entitled to receive the shares of Common Stock issuable upon such exercise shall
be treated for all purposes as the record  holder of such shares as of the close
of business on such date. As soon as  practicable  on or after such date, and in
any event  within 10 days  thereof,  the Company  shall issue and deliver to the
person or persons entitled to receive the same a certificate or certificates for
the  number of shares of Common  Stock  issuable  upon such  exercise.  Upon any
partial  exercise,  the  Company  will issue and deliver to Holder a new Warrant
with  respect to the Warrant  Shares not  previously  purchased.  No  fractional
shares of Common  Stock shall be issued upon  exercise of a Warrant.  In lieu of
any  fractional  share to which  Holder  would be entitled  upon  exercise,  the
Company shall pay cash equal to the product of such  fraction  multiplied by the
then current fair market value of one share of Common  Stock,  as  determined in
good faith by the Company.

     Section 2.  Payment of Taxes.  All shares of Common  Stock  issued upon the
exercise of a Warrant shall be duly authorized,  validly issued and outstanding,
fully paid and non-assessable. Holder shall pay all taxes and other governmental
charges that may be imposed in respect of the issue or delivery  thereof and any
tax or other charge  imposed in  connection  with any  transfer  involved in the
issue of any  certificate for shares of Common Stock in any name other than that
of the  registered  Holder of the Warrant  surrendered  in  connection  with the
purchase of such shares,  and in such case the Company  shall not be required to
issue or deliver any stock  certificate  until such tax or other charge has been
paid or it has been  established  to the Company's  satisfaction  that no tax or
other charge is due.

     Section 3. Transfer and Exchange.  Subject to the restrictions set forth in
Section  10(a)(iv),  this Warrant and all rights hereunder are transferable,  in
whole or in part. This Warrant is transferable  only on the books of the Company
maintained  for such purpose at its  principal  office by Holder in person or by
duly authorized  attorney,  upon surrender of this Warrant properly endorsed and
upon payment of any necessary transfer tax or other governmental  charge imposed
upon such transfer.

     Section 4. Certain Adjustments.

     (a) In order to prevent  dilution  of the  rights  granted  hereunder,  the
Exercise  Price shall be subject to  adjustment  from time to time in accordance

                                       2
<PAGE>

with this  Section 4. For purposes of this Section 4, the term "Number of Common
Shares Deemed  Outstanding" at any given time shall mean the number of shares of
Common Stock  outstanding at such time on a fully diluted  basis,  including all
options,  warrants and securities convertible into or exchangeable for shares of
Common Stock and, without duplication,  the number of shares of the Common Stock
deemed to be outstanding  under paragraphs  4(b)(1) to (9),  inclusive,  at such
time but  excluding  the  issuance,  from time to time of shares of Common Stock
issuable as  equity-based  compensation  to certain of the Company's  directors,
executive  officers or employees under the Company's equity incentive plans that
have been approved by the Company's stockholders.

     (b)  Except as  provided  in  Section  4(c),  4(d) or 4(e)  hereof,  if and
whenever  after the date  hereof the Company  shall  issue or sell,  or shall in
accordance with paragraphs 4(b)(1) to (9),  inclusive,  be deemed to have issued
or sold any shares of its Common Stock for a  consideration  per share less than
the Current Market Price in effect  immediately  prior to the time of such issue
or sale, then forthwith upon such issue or sale (the "Triggering  Transaction"),
the Exercise Price shall, subject to paragraphs (1) to (9) of this Section 4(b),
be reduced to an adjusted Exercise Price (calculated to the nearest hundredth of
a cent) determined by multiplying the Exercise Price  immediately  preceding the
new share issuance by a fraction:

          (i) the  numerator of which shall be an amount equal to the sum of (x)
     the Number of Common Shares Deemed  Outstanding  immediately  prior to such
     Triggering Transaction plus (y) the quotient of the consideration,  if any,
     received by the Company upon  consummation  of the  Triggering  Transaction
     divided by the Current Market Price  immediately  prior to the time of such
     issue or sale; and

          (ii) the  denominator  of which  shall be the Number of Common  Shares
     Deemed  Outstanding  immediately prior to such Triggering  Transaction plus
     (y) the number of shares of Common  Stock issued (or deemed to be issued in
     accordance  with  paragraphs   4(b)(1)  to  (9))  in  connection  with  the
     Triggering Transaction.

     "Current  Market  Price" on any date  specified  herein,  means the average
daily Market Price during the period of the most recent 20 consecutive  business
days,  ending on the business day  immediately  prior to such date, on which the
national  securities  exchanges were open for trading,  except that if no Common
Stock is then listed or admitted to trading on any national  securities exchange
or quoted in the over-the-counter  market, the Current Market Price shall be the
Market Price on such date.  "Market Price" on any date specified  herein,  means
the amount per share of the  Common  Stock,  equal to (a) the last sale price of
such Common Stock,  regular way, on such date or, if no such sale takes place on
such date, the average of the closing bid and asked prices thereof on such date,
in  each  case as  officially  reported  on the  principal  national  securities
exchange  on which such Common  Stock is then listed or admitted to trading,  or
(b) if such  Common  Stock is not then  listed or  admitted  to  trading  on any
national  securities  exchange but is  designated  as a national  market  system
security by the NASD,  the last trading  price of the Common Stock on such date,
or (c) if there  shall have been no trading on such date or if the Common  Stock
is not so  designated,  the average of the  closing bid and asked  prices of the

                                       3
<PAGE>

Common  Stock on such date as shown by the NASD  automated  quotation  system or
over-the-counter  market,  or (d) if such  Common  Stock is not then  listed  or
admitted to trading on any national  exchange or quoted in the  over-the-counter
market,  the  fair  value  thereof  determined  in good  faith  by the  Board of
Directors  of the Company as of a date which is within 20 days of the date as of
which the determination is to be made.

     For purposes of determining the adjusted  Exercise Price under this Section
4(b), the following paragraphs (1) to (9), inclusive, shall be applicable:

          (1) In case the Company at any time shall in any manner grant (whether
     directly or by assumption in a merger or otherwise) any rights to subscribe
     for or to purchase, or any options for the purchase of, Common Stock or any
     stock or other securities convertible into or exchangeable for Common Stock
     other than options (and the  securities  issued in exercise  thereof)  with
     respect to the  3,750,000  shares of Common  Stock (as  adjusted  for stock
     splits,  reverse  stock  splits  and stock  dividends)  issuable  under the
     Company's 2005 Stock Option Plan so long as the option price on the initial
     date of grant equals or exceeds the then Current  Market Price (such rights
     or  options  being  herein  called   "Options"  and  such   convertible  or
     exchangeable   stock  or  securities   being  herein  called   "Convertible
     Securities"),  whether  or not such  Options  or the  right to  convert  or
     exchange any such  Convertible  Securities are immediately  exercisable and
     the price per share for which the Common Stock is issuable  upon  exercise,
     conversion or exchange  (determined  by dividing (x) the total  amount,  if
     any,  received  or  receivable  by the  Company  as  consideration  for the
     granting of such Options,  plus the minimum  aggregate amount of additional
     consideration payable to the Company upon the exercise of all such Options,
     plus, in the case of such Options which relate to  Convertible  Securities,
     the minimum aggregate amount of additional  consideration,  if any, payable
     upon  the  issue  or sale of  such  Convertible  Securities  and  upon  the
     conversion or exchange  thereof,  by (y) the total maximum number of shares
     of  Common  Stock  issuable  upon  the  exercise  of  such  Options  or the
     conversion or exchange of such Convertible  Securities)  shall be less than
     the Exercise Price in effect  immediately prior to the time of the granting
     of such Option, then the total maximum amount of Common Stock issuable upon
     the  exercise  of such  Options or in the case of Options  for  Convertible
     Securities,  upon the conversion or exchange of such Convertible Securities
     shall  (as of the  date  of  granting  of such  Options)  be  deemed  to be
     outstanding  and to have been issued and sold by the Company for such price
     per share.  No  adjustment  of the  Exercise  Price  shall be made upon the
     actual issue of such shares of Common Stock or such Convertible  Securities
     upon  the  exercise  of such  Options,  except  as  otherwise  provided  in
     paragraph (3) below.

          (2) In case the Company at any time shall in any manner issue (whether
     directly or by assumption in a merger or otherwise) or sell any Convertible
     Securities, whether or not the rights to exchange or convert thereunder are
     immediately exercisable,  and the price per share for which Common Stock is
     issuable upon such  conversion or exchange  (determined by dividing (x) the

                                       4
<PAGE>

     total amount received or receivable by the Company as consideration for the
     issue or sale of such Convertible  Securities,  plus the minimum  aggregate
     amount of additional consideration, if any, payable to the Company upon the
     conversion or exchange  thereof,  by (y) the total maximum number of shares
     of Common  Stock  issuable  upon the  conversion  or  exchange  of all such
     Convertible  Securities)  shall be less than the  Exercise  Price in effect
     immediately prior to the time of such issue or sale, then the total maximum
     number of shares of Common Stock  issuable  upon  conversion or exchange of
     all such Convertible  Securities shall (as of the date of the issue or sale
     of such  Convertible  Securities) be deemed to be  outstanding  and to have
     been issued and sold by the Company for such price per share. No adjustment
     of the  Exercise  Price shall be made upon the actual  issue of such Common
     Stock  upon  exercise  of the  rights to  exchange  or  convert  under such
     Convertible  Securities,  except as  otherwise  provided in  paragraph  (3)
     below.

          (3) If the purchase price  provided for in any Options  referred to in
     paragraph  (1),  the  additional  consideration,  if any,  payable upon the
     conversion  or  exchange  of  any  Convertible  Securities  referred  to in
     paragraphs  (1) or (2),  or the rate at which  any  Convertible  Securities
     referred to in paragraphs (1) or (2) are  convertible  into or exchangeable
     for Common Stock shall change at any time (other than under or by reason of
     provisions  designed to protect  against  dilution of the type set forth in
     Section  4(d)),  the  Exercise  Price in effect at the time of such  change
     shall  forthwith be readjusted to the Exercise  Price which would have been
     in effect at such time had such  Options or  Convertible  Securities  still
     outstanding   provided  for  such  changed   purchase   price,   additional
     consideration or conversion rate, as the case may be, at the time initially
     granted, issued or sold.

          (4) On the expiration of any Option or the termination of any right to
     convert or exchange any Convertible Securities,  the Exercise Price then in
     effect  hereunder  shall forthwith be increased to the Exercise Price which
     would have been in effect at the time of such expiration or termination had
     such  Option  or  Convertible   Securities,   to  the  extent   outstanding
     immediately prior to such expiration or termination, never been issued.

          (5) In case any Options shall be issued in  connection  with the issue
     or sale  of  other  securities  of the  Company,  together  comprising  one
     integral  transaction  in which no specific  consideration  is allocated to
     such Options by the parties  thereto,  such Options shall be deemed to have
     been issued without consideration.

          (6) In case  any  shares  of  Common  Stock,  Options  or  Convertible
     Securities  shall be issued  or sold or deemed to have been  issued or sold
     for cash,  the  consideration  received  therefor shall be deemed to be the
     amount  received  by the  Company  therefor.  In case any  shares of Common
     Stock,  Options  or  Convertible  Securities  shall be issued or sold for a
     consideration  other than cash, the amount of the consideration  other than
     cash received by the Company shall be the fair value of such  consideration
     as determined  in good faith by the Board of Directors.  In case any shares

                                       5
<PAGE>

     of Common  Stock,  Options  or  Convertible  Securities  shall be issued in
     connection   with  any  merger  in  which  the  Company  is  the  surviving
     corporation, the amount of consideration therefor shall be deemed to be the
     fair  value  of  such  portion  of  the  net  assets  and  business  of the
     non-surviving  corporation as shall be  attributable  to such Common Stock,
     Options or Convertible Securities, as the case may be as determined in good
     faith by the Board of Directors.

          (7) The number of shares of Common Stock outstanding at any given time
     shall  not  include  shares  owned  or held by or for  the  account  of the
     Company,  and the  disposition  of any  shares  so owned  or held  shall be
     considered an issue or sale of Common Stock for the purpose of this Section
     4(b).

          (8) In case the  Company  shall  declare a dividend  or make any other
     distribution   upon  the  stock  of  the  Company  payable  in  Options  or
     Convertible  Securities,  then in such  case  any  Options  or  Convertible
     Securities,  as the case may be,  issuable  in payment of such  dividend or
     distribution   shall  be  deemed  to  have  been  issued  or  sold  without
     consideration.

          (9) For purposes of this Section  4(b), in case the Company shall take
     a record of the holders of its Common  Stock for the  purpose of  entitling
     them (x) to  receive a  dividend  or other  distribution  payable in Common
     Stock,  Options or in  Convertible  Securities,  or (y) to subscribe for or
     purchase Common Stock, Options or Convertible Securities,  then such record
     date  shall be deemed to be the date of the issue or sale of the  shares of
     Common  Stock  deemed to have been issued or sold upon the  declaration  of
     such dividend or the making of such other  distribution  or the date of the
     granting of such right or subscription or purchase, as the case may be.

     (c) In the event the Company shall declare a dividend upon the Common Stock
(other than a dividend  payable in Common Stock)  payable  otherwise than out of
earnings or earned  surplus,  determined in accordance  with generally  accepted
accounting  principles,  including  the  making of  appropriate  deductions  for
minority interests,  if any, in subsidiaries (herein referred to as "Liquidating
Dividends"),  then, as soon as possible after the exercise of this Warrant,  the
Company shall pay to the person  converting  this Warrant an amount equal to the
aggregate  value at the time of such  exercise of all  Liquidating  Dividends to
which such holder  would have been  entitled if such holder had  converted  this
Warrant to Common Stock prior to the declaration of the  Liquidating  Dividends,
at the then applicable  Exercise Price. For the purposes of this Section 4(c), a
dividend  other than in cash shall be  considered  payable  out of  earnings  or
earned  surplus  only to the extent  that such  earnings  or earned  surplus are
charged an amount equal to the fair value of such dividend as determined in good
faith by the Board of Directors.

     (d) In case the Company  shall at any time (i)  subdivide  the  outstanding
Common Stock or (ii) issue a dividend on its outstanding Common Stock payable in
shares of Common  Stock,  the  number of shares of Common  Stock  issuable  upon
exercise of the Warrant shall be proportionately  increased by the same ratio as
the subdivision or dividend (with appropriate  adjustments to the Exercise Price
in  effect  immediately  prior to such  subdivision  or  dividend).  In case the
Company shall at any time combine its  outstanding  Common Stock,  the number of
shares  issuable  upon  exercise  of  this  Warrant  immediately  prior  to such

                                       6
<PAGE>

combination  shall  be  proportionately  decreased  by  the  same  ratio  as the
combination  (with  appropriate  adjustments  to the  Exercise  Price in  effect
immediately prior to such combination).

     (e) In the event that:

          (1) The Company shall declare any cash dividend upon its Common Stock,
     or

          (2) The Company  shall  declare  any  dividend  upon its Common  Stock
     payable in stock or make any special dividend or other  distribution to the
     holders of its Common Stock, or

          (3) The Company shall offer for  subscription  pro rata to the holders
     of its Common  Stock any  additional  shares of stock of any class or other
     rights, or

          (4) there shall be any capital  reorganization or  reclassification of
     the capital stock of the Company,  including any subdivision or combination
     of its outstanding  shares of Common Stock, or  consolidation  or merger of
     the Company  with,  or sale of all or  substantially  all of its assets to,
     another corporation, or

          (5) there shall be a voluntary or involuntary dissolution, liquidation
     or winding up of the Company;

     then, in connection with such event,  the Company shall give to the holders
of this Warrant:

          (i) at least 20 days  prior  written  notice  of the date on which the
     books  of the  Company  shall  close or a  record  shall be taken  for such
     dividend,  distribution or subscription rights or for determining rights to
     vote   in   respect   of   any   such   reorganization,   reclassification,
     consolidation, merger, sale, dissolution, liquidation or winding up; and

          (ii)  in  the  case  of  any  such  reorganization,  reclassification,
     consolidation,  merger,  sale,  dissolution,  liquidation or winding up, at
     least 20 days  prior  written  notice of the date when the same  shall take
     place.

     Such notice in accordance with the foregoing clause (i) shall also specify,
in the case of any such dividend,  distribution or subscription rights, the date
on which the holders of Common Stock shall be entitled thereto,  and such notice
in  accordance  with the  foregoing  clause (ii) shall also  specify the date on
which the holders of Common  Stock shall be  entitled to exchange  their  Common
Stock for securities or other  property  deliverable  upon such  reorganization,
reclassification,  consolidation,  merger,  sale,  dissolution,  liquidation  or
winding up, as the case may be. Each such written notice shall be given by first
class mail,  postage  prepaid,  addressed  to the holders of this Warrant at the
address of each such holder as shown on the books of the Company.

                                       7
<PAGE>

     (f) If at any time or from time to time after the date  hereof the  Company
shall grant,  issue or sell any  Options,  Convertible  Securities  or rights to
purchase property (the "Purchase  Rights") pro rata to the record holders of any
class of Common  Stock and such  grants,  issuances or sales do not result in an
adjustment of the Exercise Price under Section 4(b) hereof,  then each holder of
a Warrant shall be entitled to acquire  (within thirty (30) days after the later
to occur of the initial exercise date of such Purchase Rights or receipt by such
holder of the notice  concerning  Purchase  Rights to which such holder shall be
entitled under Section 4(g)) upon the terms  applicable to such Purchase  Rights
either:

          (i) the  aggregate  Purchase  Rights  which  such  holder  could  have
     acquired  if it had held the  number of shares of Common  Stock  acquirable
     upon exercise of the Warrant immediately before the grant, issuance or sale
     of  such  Purchase  Rights;  provided  that  if any  Purchase  Rights  were
     distributed  to holders of Common Stock  without the payment of  additional
     consideration  by such  holders,  corresponding  Purchase  Rights  shall be
     distributed to the holders of the Warrants as soon as possible and it shall
     not be necessary for the exercising holder of the Warrants  specifically to
     request delivery of such rights; or

          (ii) in the event that any such Purchase  Rights shall have expired or
     shall expire  prior to the end of said 30 day period,  the number of shares
     of Common  Stock or the amount of  property  which such  holder  could have
     acquired  upon  such  exercise  at the time or times at which  the  Company
     granted, issued or sold such expired Purchase Rights.

     (g) If any  event  occurs  as to  which,  in the  opinion  of the  Board of
Directors  of the  Company,  the  provisions  of this Section 6 are not strictly
applicable or if strictly  applicable would not fairly protect the rights of the
holders of the Warrants in accordance  with the essential  intent and principles
of such provisions,  then the Board of Directors shall make an adjustment in the
application of such  provisions,  in accordance  with such essential  intent and
principles, so as to protect such rights as aforesaid, but in no event shall any
adjustment  have the  effect  of  increasing  the  Exercise  Price as  otherwise
determined  pursuant to any of the  provisions  of this  Section 4 except in the
case of a combination  of shares of a type  contemplated  in Section 4(d) hereof
and then in no event to an amount  larger  than the  Exercise  Price as adjusted
pursuant to Section 4(d) hereof.

     Section  5.  Reorganization,  Reclassification,  Merger,  Consolidation  or
Disposition of Assets.  If the Company shall reorganize its capital,  reclassify
its capital  stock,  consolidate  or merge with or into another  corporation  or
entity (where the Company is not the surviving  corporation  or where there is a
change in or  distribution  with  respect to the  shares of Common  Stock of the
Company) or sell,  transfer or otherwise dispose of all or substantially all its
property,  assets or  business  to another  corporation  or other  entity  (such
successor or acquiring  corporation  or entity,  an  "Acquiring  Entity"),  and,
pursuant  to  the  terms  of  such  reorganization,   reclassification,  merger,
consolidation or disposition of assets,  common shares of the Acquiring  Entity,
or any cash,  shares of stock or other  securities  or  property  of any  nature
whatsoever  (including  warrants or other  subscription  or purchase  rights) in

                                       8
<PAGE>

addition  to or in  lieu  of  common  shares  of the  Acquiring  Entity  ("Other
Property"),  are to be received by or distributed to the holders of Common Stock
of the Company,  then the holder of this Warrant shall have the right thereafter
to  receive in lieu of the Common  Stock  described  in Section 1, the number of
shares of common stock of the  Acquiring  Entity or Common Stock of the Company,
if it is the surviving  corporation,  and Other Property receivable upon or as a
result  of  such  reorganization,  reclassification,  merger,  consolidation  or
disposition  of assets by a holder of the number of shares of Common  Stock that
the Holder of this  Warrant  would have owned or been  entitled  to receive  had
Common Stock been issued to such Holder under Section 1 on full exercise of this
Warrant  immediately  prior to such event.  In case of any such  reorganization,
reclassification,  merger, consolidation or disposition of assets, the Acquiring
Entity (if other than the Company) shall  expressly  assume all the  obligations
and liabilities of the Company  hereunder,  subject to such modifications as may
be deemed appropriate (as determined in good faith by resolution of the board of
directors  of the  Company)  in order to provide  for  adjustments  of shares of
Common Stock  issuable  under  Section 1 which shall be as nearly  equivalent as
practicable to the  adjustments  provided for in Section 4. For purposes of this
Section 5, "common shares of the Acquiring Entity" shall include shares or other
ownership interests of such Acquiring Entity of any class which is not preferred
as to  dividends  or  assets  over any other  class of stock or other  ownership
interests of such  Acquiring  Entity and which is not subject to redemption  and
shall also include any  evidences of  indebtedness,  shares or other  securities
which  are  convertible  into or  exchangeable  for any  such  shares  or  other
ownership interests,  either immediately or upon the arrival of a specified date
or the  happening  of a  specified  event and any  warrants  or other  rights to
subscribe  for or  purchase  any such stock or other  ownership  interests.  The
foregoing  provisions  of this  Section 5 shall  similarly  apply to  successive
reorganizations,   reclassifications,  mergers,  consolidations,  spin-offs,  or
dispositions of assets.

     Section 6. Certain  Notices,  Etc.  Whenever  the  Exercise  Price shall be
adjusted as provided in Section 4 hereof,  the Company shall  forthwith  file at
each office designated for the exercise of Warrants, a statement,  signed by the
Chairman of the Board,  the  President,  any Vice  President or Treasurer of the
Company,  showing in reasonable  detail the facts  requiring such adjustment and
the Exercise  Price that will be effective  after such  adjustment.  The Company
shall also cause a notice setting forth any such adjustments to be sent by mail,
first class,  postage prepaid,  to each record holder of a Warrant at his or its
address appearing on the stock register. If such notice relates to an adjustment
resulting from an event referred to in Section 4(f) hereof, such notice shall be
included  as part of the notice  required to be mailed and  published  under the
provisions of Section 4(f) hereof.

     Section 7. Loss or  Mutilation.  Upon  receipt by the  Company of  evidence
satisfactory  to it (in the exercise of reasonable  discretion) of the ownership
of and the loss,  theft,  destruction  or  mutilation of any Warrant and (in the
case of loss,  theft or  destruction)  of indemnity  satisfactory  to it (in the
exercise  of  reasonable  discretion),  and (in the  case  of  mutilation)  upon
surrender and cancellation thereof, the Company will execute and deliver in lieu
thereof a new Warrant of like tenor.

                                       9
<PAGE>

     Section 8.  Reservation  of Common  Stock.  The Company  shall at all times
reserve and keep available out of its  authorized but unissued  shares of Common
Stock,  solely for the purpose of effecting  the  exercise of the Warrant,  such
number of its shares of Common Stock as shall from time to time be sufficient to
effect exercise of the Warrant;  and if at any time the number of authorized but
unissued shares of Common Stock shall not be sufficient to effect such exercise,
the  Company  will take such  corporate  action as may,  in the  opinion  of its
counsel,  be necessary to increase its authorized but unissued  shares of Common
Stock to such number of shares as shall be sufficient  for such purpose.  Before
taking any action that would cause an  adjustment  reducing the  Exercise  Price
below the then par value of the shares of Common Stock issuable upon exercise of
the  Warrants,  the  Company  will take any  corporate  action  that may, in the
opinion of its  counsel,  be necessary in order that the Company may validly and
legally issue fully-paid and  nonassessable  shares of such Common Stock at such
adjusted exercise price.

     Section 9.  Notices of Record  Date.  In the event of (i) any taking by the
Company of a record of the holders of any class of securities for the purpose of
determining  the  holders  thereof who are  entitled to receive any  dividend or
other  distribution,  or (ii) any capital  reorganization  of the  Company,  any
reclassification or  recapitalization  of the capital stock of the Company,  any
merger or consolidation of the Company with or into any other corporation (other
than a merger of a wholly owned subsidiary into the Company), or any transfer of
all or substantially all of the assets of the Company to any other person or any
voluntary or involuntary dissolution,  liquidation or winding up of the Company,
the Company shall provide to the Holder,  at least twenty (20) days prior to the
record date  specified  therein,  a notice  specifying (1) the date on which any
such record is to be taken for the purpose of such dividend or distribution  and
a description of such dividend or  distribution,  (2) the date on which any such
reorganization,  reclassification, transfer, consolidation, merger, dissolution,
liquidation or winding up is expected to become effective,  and (3) the date, if
any,  that is to be fixed,  as to when the holders of record of Common Stock (or
other securities) shall be entitled to exchange their shares of Common Stock (or
other  securities)  for  securities  or other  property  deliverable  upon  such
reorganization,  reclassification, transfer, consolidation, merger, dissolution,
liquidation or winding up.

     Section 10. Investment Representation and Restriction on Transfer.

     (a) Securities Law Requirements.

          (i) By its  acceptance of this Warrant,  Holder hereby  represents and
     warrants to the Company  that this  Warrant and the Warrant  Shares will be
     acquired for investment for its own account, not as a nominee or agent, and
     not with a view to the sale or distribution  of any part thereof,  and that
     it has no present  intention  of  selling,  granting  participations  in or
     otherwise  distributing  the same. By  acceptance  of this Warrant,  Holder
     further  represents  and  warrants  that it does  not  have  any  contract,
     undertaking,  agreement or arrangement with any person to sell, transfer or
     grant  participations  to any person,  with  respect to this Warrant or the
     Warrant Shares.

                                       10
<PAGE>

          (ii) By its acceptance of this Warrant,  Holder  understands that this
     Warrant is not, and the Warrant  Shares will not be,  registered  under the
     Securities  Act,  on the basis that the  issuance  of this  Warrant and the
     Warrant  Shares are exempt  from  registration  under the Act  pursuant  to
     Section 4(2) thereof,  and that the Company's reliance on such exemption is
     predicated on Holder's representations and warranties set forth herein.

          (iii) By its acceptance of this Warrant,  Holder  understands that the
     Warrant and the Warrant Shares may not be sold,  transferred,  or otherwise
     disposed of without  registration under the Act, or an exemption therefrom,
     and that in the absence of an effective registration statement covering the
     Warrant and the Warrant Shares or an available  exemption from registration
     under  the  Act,   the  Warrant  and  the  Warrant   Shares  must  be  held
     indefinitely.  In  particular,  Holder is aware  that the  Warrant  and the
     Warrant Shares may not be sold pursuant to Rule 144  promulgated  under the
     Act  unless  all of the  conditions  of Rule 144 are  satisfied.  Among the
     conditions for use of Rule 144 are the availability of current  information
     about the  Company to the public,  prescribed  holding  periods  which will
     commence only upon Holder's payment for the securities  being sold,  manner
     of sale restrictions, volume limitations and certain other restrictions. By
     its acceptance of this Warrant, Holder represents and warrants that, in the
     absence of an effective  registration statement covering the Warrant or the
     Warrant Shares, it will sell,  transfer or otherwise dispose of the Warrant
     and the Warrant Shares only in a manner consistent with its representations
     and  warranties  set  forth  herein  and then only in  accordance  with the
     provisions of Section 10(a)(iv).

          (iv) By its acceptance of this Warrant, Holder agrees that in no event
     will it  transfer or dispose of any of the  Warrants or the Warrant  Shares
     other than pursuant to an effective  registration  statement under the Act,
     unless and until (i) Holder shall have notified the Company of the proposed
     disposition  and shall have  furnished  the Company with a statement of the
     circumstances  surrounding  the  disposition,  and (ii) if requested by the
     Company,  at the  expense  of the  Holder  or  transferee,  it  shall  have
     furnished to the Company an opinion of counsel,  reasonably satisfactory to
     the  Company,  to  the  effect  that  such  transfer  may be  made  without
     registration under the Act.

          (v) Holder represents and warrants that it is an "accredited investor"
     as defined in Rule 501 of  Regulation D  promulgated  under the  Securities
     Act.

     (b) Legends; Stop Transfer.

          (i) All certificates evidencing the Warrant Shares shall bear a legend
     in substantially the following form:

          THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
          REGISTERED  UNDER  THE  SECURITIES  ACT OF 1933 OR UNDER ANY
          STATE  SECURITIES  LAWS. THESE SECURITIES HAVE BEEN ACQUIRED

                                       11
<PAGE>

          FOR INVESTMENT AND NOT WITH A VIEW TO  DISTRIBUTION  AND MAY
          NOT  BE  OFFERED  FOR  SALE,  SOLD,   PLEDGED  OR  OTHERWISE
          TRANSFERRED  IN THE  ABSENCE  OF AN  EFFECTIVE  REGISTRATION
          STATEMENT FOR SUCH  SECURITIES  UNDER THE  SECURITIES ACT OF
          1933 AND APPLICABLE  STATE  SECURITIES LAWS OR AN OPINION OF
          COUNSEL  REASONABLY  SATISFACTORY IN FORM AND CONTENT TO THE
          ISSUER THAT SUCH  REGISTRATION  IS NOT  REQUIRED  UNDER SUCH
          ACT.

          (ii) The  certificates  evidencing  the Warrant Shares shall also bear
     any legend required by any applicable state securities law.

          (iii) In addition, the Company shall make, or cause its transfer agent
     to make, a notation regarding the transfer  restrictions of the Warrant and
     the  Warrant  Shares in its stock  books,  and the  Warrant and the Warrant
     Shares shall be transferred on the books of the Company only if transferred
     or  sold  pursuant  to  an  effective   registration  statement  under  the
     Securities Act covering the same or pursuant to and in compliance  with the
     provisions of Section 4 and Section 10(a)(iv).

     Section 11. Notices.  All notices and other communications from the Company
to the Holder of this Warrant shall be mailed by hand  delivery,  by telecopier,
by courier  guaranteeing  overnight  delivery  or by  first-class  mail,  return
receipt  requested,  and shall be deemed  given (i) when  made,  if made by hand
delivery, (ii) upon confirmation,  if made by telecopier, (iii) one (1) Business
Day after being  deposited  with such courier,  if made by overnight  courier or
(iv) on the date  indicated  on the notice of  receipt,  if made by  first-class
mail.

     Section 12. Change; Waiver. Neither this Warrant nor any term hereof may be
changed,  waived,  discharged or terminated orally, but only by an instrument in
writing  signed by the party against which  enforcement  of the change,  waiver,
discharge or termination is sought.

     Section 13.  Headings.  The  headings in this  Warrant are for  purposes of
convenience  in  reference  only,  and shall not be deemed to  constitute a part
hereof.

     Section 14.  Governing Law. This Warrant shall be construed and enforced in
accordance with and governed by the internal laws, and not the law of conflicts,
of the State of Texas.

                                                     CUBIC ENERGY, INC.,
                                                     a Texas corporation

                                                     By:
                                                        ------------------------
                                                        Jon S. Ross
                                                        Secretary

                                       12
<PAGE>

                               SUBSCRIPTION NOTICE
                 (To be executed only upon exercise of Warrant)

     The undersigned,  registered owner of this Warrant,  irrevocably  exercises
this Warrant and purchases ____________ of the number of shares of Common Stock,
$0.05 par value per share  ("Warrant  Shares"),  of Cubic Energy,  Inc., a Texas
corporation  (the  "Company"),   purchasable  with  the  attached  Warrant  (the
"Warrant").  Holder  shall pay the sum of  $________________  to the  Company in
accordance with the terms of the Warrant.  Capitalized terms used herein and not
otherwise defined shall have the respective meanings set forth in the Warrant.

DATED:  ______________

                                             -----------------------------------
                                             (Signature of Holder)

                                             -----------------------------------
                                             (Street Address)

                                             -----------------------------------
                                             (City) (State) (Zip)

<PAGE>

                               FORM OF ASSIGNMENT

     FOR VALUE  RECEIVED  the  undersigned,  registered  owner of this  Warrant,
hereby  sells,  assigns and transfers  unto the Assignee  named below all of the
rights of the undersigned  under the within Warrant,  with respect to the number
of shares of Common Stock, $0.05 par value per share, set forth below:

  Name of Assignee                  Address                        No. of Shares
  ----------------                  -------                        -------------

and does hereby  irrevocably  constitute  and appoint  _________________________
_________________________________________________ Attorney to make such transfer
on the books of Cubic  Energy,  Inc., a Texas  corporation,  maintained  for the
purpose, with full power of substitution in the premises.

DATED:  ___________________

                                   ---------------------------------------------
                                   (Signature)

                                   ---------------------------------------------
                                   (Witness)

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00115-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00115-of-00352.parquet"}]]