Exhibit 10.2
Execution Copy
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REGISTRATION RIGHTS AGREEMENT
by and among
Cubic Energy, Inc.
and
Certain Purchasers Identified Herein
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Dated as of December 12, 2005
TABLE OF CONTENTS
Page
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ARTICLE I. DEFINITIONS.........................................................1
ARTICLE II. REGISTRATION.......................................................2
Section 2.1 Mandatory Registration..........................................2
Section 2.2 Underwritten Offering...........................................2
Section 2.3 Payments by the Company.........................................2
Section 2.4 Piggy-Back Registrations........................................3
Section 2.5 Eligibility for Form X-0, XX-0 or S-1; Conversion to Form S-3...4
ARTICLE III. OBLIGATIONS OF THE COMPANY........................................4
Section 3.1 Registration Procedures.........................................4
ARTICLE IV. OBLIGATIONS OF THE PURCHASERS......................................9
Section 4.1 Purchasers Obligations..........................................9
ARTICLE V. EXPENSES OF REGISTRATION...........................................10
Section 5.1 Expenses.......................................................10
ARTICLE VI. INDEMNIFICATION...................................................11
Section 6.1 Indemnity......................................................11
ARTICLE VII. CONTRIBUTION.....................................................13
Section 7.1 Contribution...................................................13
ARTICLE VIII. REPORTS UNDER THE 1934 ACT......................................13
Section 8.1 1934 Act Reports...............................................13
ARTICLE IX. ASSIGNMENT OF REGISTRATION RIGHTS.................................14
Section 9.1 Assignment.....................................................14
ARTICLE X. AMENDMENT OF REGISTRATION RIGHTS...................................14
Section 10.1 Amendment, Termination or Waiver...............................14
ARTICLE XI. MISCELLANEOUS.....................................................14
Section 11.1 Holder. 14
Section 11.2 Notices. 14
Section 11.3 No Waiver......................................................15
Section 11.4 Governing Law..................................................15
Section 11.5 Severability...................................................16
Section 11.6 Entire Agreement...............................................16
Section 11.7 Assigns. 16
Section 11.8 Headings.......................................................16
Section 11.9 Counterparts...................................................16
Section 11.10 Further Assurances.............................................16
Section 11.11 Purchasers' Actions............................................16
Section 11.12 Specific Performances..........................................16
Section 11.13 No Strict Construction.........................................17
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement"), is dated as of
December 12, 2005, and is entered into by and among Cubic Energy, Inc., a Texas
corporation (the "Company"), and the parties identified on the signature pages
to this Agreement and their respective affiliates and any assignee or transferee
of their respective rights hereunder (the "Purchasers").
WHEREAS:
Pursuant to that certain Securities Purchase Agreement by and among the
Company and the Purchasers, dated as of December 12, 2005 (the "Securities
Purchase Agreement"), the Company issued and sold to the Purchasers 2,500,000
shares (the "Purchased Shares") of its common stock, $0.05 par value per share
("Common Stock"), and warrants (the "Warrants") to purchase an aggregate of
1,000,000 shares of Common Stock; and
To induce the Purchasers to execute and deliver the Securities Purchase
Agreement, the Company agreed to provide certain registration rights under the
Securities Act of 1933, as amended, and the rules and regulations thereunder, or
any similar successor statute (collectively, the "1933 Act"), and applicable
state securities laws.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and each
of the Purchasers hereby agree as follows:
ARTICLE I.
DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings:
"Purchasers" has the meaning set forth in the first paragraph of this
Agreement and also includes any transferee or assignee who agrees to become
bound by the provisions of this Agreement in accordance with Section 9 hereof.
"register," "registered," and "registration" refer to a registration
effected by preparing and filing a Registration Statement or Statements in
compliance with the 1933 Act and pursuant to Rule 415 under the 1933 Act or any
successor rule providing for offering securities on a continuous basis ("Rule
415"), and the declaration or ordering of effectiveness of such Registration
Statement by the United States Securities and Exchange Commission (the "SEC").
"Registrable Securities" means (i) the Purchased Shares, (ii) the
Warrant Shares (as that term is defined in the Warrants) issuable, upon exercise
or otherwise pursuant to the Warrants, (iii) the shares of Common Stock or other
securities issuable upon exercise of the Default Warrants, (iv) the shares of
Common Stock or other securities issuable upon exercise of the Default Warrants,
and (v) any shares of capital stock issued or issuable as a dividend on or in
exchange for or otherwise with respect to any of the foregoing.
"Registration Statement" means a registration statement of the Company
under the 1933 Act.
Capitalized terms used herein and not otherwise defined herein shall
have the respective meanings ascribed to them in the Securities Purchase
Agreement or the Warrants.
ARTICLE II.
REGISTRATION
Section 2.1 Mandatory Registration. The Company shall prepare, and, on
or prior to March 9, 2006 (the "Filing Date"), shall file a Registration
Statement that shall cover the resale of all of the Registrable Securities and
any other securities of the Company as the Company may determine to include
therein, which Registration Statement, to the extent allowable under the 1933
Act and the rules and regulations promulgated thereunder (including Rule 416),
shall state that such Registration Statement also covers such indeterminate
number of additional shares of Common Stock as may become issuable upon
conversion of or otherwise pursuant to the Notes and Warrants to prevent
dilution resulting from stock splits, stock dividends or similar transactions.
The Company acknowledges that the number of shares to be included in the
Registration Statement represents a good faith estimate of the maximum number of
shares issuable upon exercise of the Warrants.
Section 2.2 Underwritten Offering. If any offering pursuant to a
Registration Statement pursuant to Section 2.1 hereof involves an underwritten
offering, the Purchasers who hold a majority in interest of the Registrable
Securities subject to such underwritten offering shall have the right to select
one legal counsel and an investment banker or bankers and manager or managers to
administer the offering, which investment banker or bankers or manager or
managers shall be reasonably satisfactory to the Company.
Section 2.3 Payments by the Company. The Company shall use its best
efforts to obtain effectiveness of the Registration Statement as soon as
practicable. If (i) the Registration Statement covering the Registrable
Securities required to be filed by the Company pursuant to Section 2.1 hereof is
not filed by the Filing Date or the Registration Statement is not declared
effective by the SEC on or prior to one hundred thirty-five days from the date
of the Securities Purchase Agreement, or (ii) after the Registration Statement
has been declared effective by the SEC, the Registration Statement ceases for
any reason to remain continuously effective as to all Registrable Securities for
which it is required to be effective, or the Purchasers are not permitted to
resell their Registrable Securities for more than 15 consecutive calendar days,
but no more than an aggregate of 30 calendar days during any 12-month period
(which need not be consecutive calendar days, provided that such number of days
shall not include the 15 calendar 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), or (iii) the Common
Stock is not listed or included for quotation on the Nasdaq National Market
("Nasdaq"), the Nasdaq SmallCap Market, the New York Stock Exchange, the
American Stock Exchange or the Over-the-Counter Bulletin Board (the "OTCBB")
after being so listed or included for quotation, or (iv) the Common Stock ceases
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to be traded on the OTCBB or any equivalent replacement exchange, then, in
addition to any rights that a Purchaser may have as a holder of a Warrant, the
Company will issue warrants to purchase Common Stock to the Purchasers in such
amounts and at such times as shall be determined pursuant to this Section 2.3 as
partial relief for the damages to the Purchasers by reason of any such delay in
or reduction of their ability to sell the Registrable Securities (which remedy
shall not be exclusive of any other remedies available at law or in equity).
Upon and after any failure by the Company described in the immediately
preceding sentence (a "Default"), the Company shall be required to issue to the
holders of Registrable Securities, warrants to purchase a number of shares of
Common Stock equal to 100,000 shares of Common Stock for each month or part
thereof (appropriately prorated), during which a default exists (the "Default
Warrants"). The Default Warrants shall be in the form of Exhibit C to the
Securities Purchase Agreement, shall have an exercise price of $1.00 and an
expiration date five years from the date of the issuance. Such warrants shall be
issued on the last day of each month (or part thereof) during which a Default
occurred or was continuing. Each Holder of Registrable Securities shall be
issued Default Warrants on the last day of each month equal to 100,000
(appropriately prorated for partial months) multiplied by a fraction, the
numerator of which is the number of Registrable Securities owned by such Holder
and the denominator of which is the total number of Registrable Securities,
which shall be rounded up to the next whole share. All shares of Common Stock
issuable pursuant to such Default Warrants shall be duly authorized, fully paid
and non-assumable shares of Common Stock.
Section 2.4 Piggy-Back Registrations. Subject to the last sentence of
this Section 2.4, if at any time prior to the expiration of the Registration
Period (as hereinafter defined) the Company shall determine to file with the SEC
a Registration Statement relating to an offering for its own account or the
account of others under the 1933 Act of any of its equity securities (other than
on Form S-4 or Form S-8 or their then equivalents relating to equity securities
to be issued solely in connection with any acquisition of any entity or business
or equity securities issuable in connection with stock option or other bona
fide, employee benefit plans), the Company shall send to each Purchaser who is
entitled to registration rights under this Agreement written notice of such
determination and, if within fifteen days after the effective date of such
notice, such Purchaser shall so request in writing, the Company shall include in
such Registration Statement all or any part of the Registrable Securities such
Purchaser requests to be registered, except that if, in connection with any
underwritten public offering for the account of the Company the managing
underwriter(s) thereof shall impose a limitation on the number of shares of
Common Stock which may be included in the Registration Statement because, in
such underwriter(s)' judgment, marketing or other factors dictate such
limitation is necessary to facilitate public distribution, then the Company
shall be obligated to include in such Registration Statement only such limited
portion of the Registrable Securities with respect to which such Purchaser has
requested inclusion hereunder as the underwriter shall permit. Any exclusion of
Registrable Securities shall be made pro rata among the Purchasers seeking to
include Registrable Securities in proportion to the number of Registrable
Securities sought to be included by such Purchasers; provided, however, that the
Company shall not exclude any Registrable Securities unless the Company has
first excluded all outstanding securities, the holders of which are not entitled
to inclusion of such securities in such Registration Statement or are not
entitled to pro rata inclusion with the Registrable Securities; and provided,
further, however, that, after giving effect to the immediately preceding
proviso, any exclusion of Registrable Securities shall be made pro rata with
holders of other securities having the right to include such securities in the
Registration Statement other than holders of securities entitled to inclusion of
their securities in such Registration Statement by reason of demand registration
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rights. No right to registration of Registrable Securities under this Section
2.4 shall be construed to limit any registration required under Section 2.1
hereof. If an offering in connection with which a Purchaser is entitled to
registration under this Section 2.4 is an underwritten offering, then each
Purchaser whose Registrable Securities are included in such Registration
Statement shall, unless otherwise agreed by the Company, offer and sell such
Registrable Securities in an underwritten offering using the same underwriter or
underwriters and, subject to the provisions of this Agreement, on the same terms
and conditions as other shares of Common Stock included in such underwritten
offering. Notwithstanding anything to the contrary set forth herein, the
registration rights of the Purchasers pursuant to this Section 2.4 shall only be
available in the event the Company fails to timely file, obtain effectiveness or
maintain effectiveness of any Registration Statement to be filed pursuant to
Section 2.1 in accordance with the terms of this Agreement.
Section 2.5 Eligibility for Form X-0, XX-0 or S-1; Conversion to Form
S-3. The Company represents and warrants that it meets the requirements for the
use of Form X-0, XX-0 or S-1 for the registration of the sale by the Purchasers
of the Registrable Securities. The Company agrees to file all reports required
to be filed by the Company with the SEC in a timely manner so as to remain
eligible or become eligible, as the case may be, and thereafter to maintain its
eligibility, for the use of Form S-3. If the Company is not currently eligible
to use Form S-3, not later than five (5) business days after the Company first
meets the registration eligibility and transaction requirements for the use of
Form S-3 (or any successor form) for registration of the offer and sale by the
Purchasers of the Registrable Securities, the Company shall file a Registration
Statement on Form S-3 (or such successor form) with respect to the Registrable
Securities covered by the Registration Statement on Form SB-2 or Form S-1,
whichever is applicable, filed pursuant to Section 2.1 (and include in such
Registration Statement on Form S-3 the information required by Rule 429 under
the Securities Act) or convert the Registration Statement on Form SB-2 or Form
S-1, whichever is applicable, filed pursuant to Section 2.1 to a Form S-3
pursuant to Rule 429 under the Securities Act and cause such Registration
Statement (or such amendment) to be declared effective no later than thirty (30)
days after filing. In the event of a breach by the Company of the provisions of
this Section 2.5, the Company will be required to make payments pursuant to
Section 2.3 hereof.
ARTICLE III.
OBLIGATIONS OF THE COMPANY
Section 3.1 Registration Procedures. In connection with the
registration of the Registrable Securities, the Company shall have the following
obligations:
(a) The Company shall prepare promptly, and file with the SEC not later
than the Filing Date, a Registration Statement that covers all of the
Registrable Securities, as provided in Section 2.1, and thereafter use its best
efforts to cause such Registration Statement relating to Registrable Securities
to become effective as soon as possible after such filing but in no event later
than one hundred thirty-five days from the date of this Agreement, and keep the
Registration Statement effective pursuant to Rule 415 at all times until such
date as is the earlier of (i) the date on which all of the Registrable
Securities have been sold and (ii) the date on which the Registrable Securities
(in the opinion of counsel to the Purchasers) may be immediately sold to the
public without registration or restriction (including, without limitation, as to
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volume by each holder thereof) under the 1933 Act (the "Registration Period"),
which Registration Statement (including any amendments or supplements thereto
and prospectuses contained therein) shall not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein, or
necessary to make the statements therein not misleading.
(b) The Company shall prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to the Registration
Statements and the prospectus used in connection with the Registration
Statements as may be necessary to keep the Registration Statements effective at
all times during the Registration Period, and, during such period, comply with
the provisions of the 1933 Act with respect to the disposition of all
Registrable Securities of the Company covered by the Registration Statements
until such time as all of such Registrable Securities have been disposed of in
accordance with the intended methods of disposition by the seller or sellers
thereof as set forth in the Registration Statements. In the event the number of
shares available under a Registration Statement filed pursuant to this Agreement
is insufficient to cover all of the Registrable Securities, the Company shall
amend the Registration Statement, or file a new Registration Statement (on the
short form available therefor, if applicable), or both, so as to cover all of
the Registrable Securities, in each case, as soon as practicable, but in any
event within fifteen (15) days after the necessity therefor arises. The Company
shall use its best efforts to cause such amendment and/or new Registration
Statement to become effective as soon as practicable following the filing
thereof, but in any event within thirty (30) days after the date on which the
Company reasonably first determines (or reasonably should have determined) the
need therefor.
(c) The Company shall furnish to each Purchaser whose Registrable
Securities are included in a Registration Statement and its legal counsel (i)
promptly (but in no event more than two (2) business days) after the same is
prepared and publicly distributed, filed with the SEC, or received by the
Company, one copy of each Registration Statement and any amendment thereto, each
preliminary prospectus and prospectus and each amendment or supplement thereto,
and, in the case of the Registration Statement referred to in Section 2.1, each
letter written by or on behalf of the Company to the SEC or the staff of the
SEC, and each item of correspondence from the SEC or the staff of the SEC, in
each case relating to such Registration Statement (other than any portion of any
thereof which contains information for which the Company has sought confidential
treatment), and (ii) promptly (but in no event more than two (2) business days)
after the Registration Statement is declared effective by the SEC, such number
of copies of a prospectus, including a preliminary prospectus, and all
amendments and supplements thereto and such other documents as such Purchaser
may reasonably request in order to facilitate the disposition of the Registrable
Securities owned by such Purchaser. The Company will immediately notify each
Purchaser by facsimile of the effectiveness of each Registration Statement or
any post-effective amendment. The Company will promptly (but in no event more
than ten (10) business days) respond to any and all comments received from the
SEC (which comments shall promptly be made available to the Purchasers upon
request), with a view towards causing each Registration Statement or any
amendment thereto to be declared effective by the SEC as soon as practicable,
shall promptly file an acceleration request as soon as practicable (but in no
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event more than two (2) business days) following the resolution or clearance of
all SEC comments or, if applicable, following notification by the SEC that any
such Registration Statement or any amendment thereto will not be subject to
review and shall promptly file with the SEC a final prospectus as soon as
practicable (but in no event more than two (2) business days) following receipt
by the Company from the SEC of an order declaring the Registration Statement
effective. In the event of a breach by the Company of the provisions of this
Section 3.1(c), the Company will be required to make payments pursuant to
Section 2.3 hereof.
(d) The Company shall use its best efforts to (i) register and qualify
the Registrable Securities covered by the Registration Statements under such
other securities or "blue sky" laws of such jurisdictions in the United States
as the Purchasers who hold a majority-in-interest of the Registrable Securities
being offered reasonably request, (ii) prepare and file in those jurisdictions
such amendments (including post-effective amendments) and supplements to such
registrations and qualifications as may be necessary to maintain the
effectiveness thereof during the Registration Period, (iii) take such other
actions as may be necessary to maintain such registrations and qualifications in
effect at all times during the Registration Period, and (iv) take all other
actions reasonably necessary or advisable to qualify the Registrable Securities
for sale in such jurisdictions; provided, however, that the Company shall not be
required in connection therewith or as a condition thereto to (a) qualify to do
business in any jurisdiction where it would not otherwise be required to qualify
but for this Section 3.1(d), (b) subject itself to general taxation in any such
jurisdiction, (c) file a general consent to service of process in any such
jurisdiction, (d) provide any undertakings that cause the Company undue expense
or burden, or (e) make any change in its charter or bylaws, which in each case
the Board of Directors of the Company determines to be contrary to the best
interests of the Company and its shareholders.
(e) In the event Purchasers who hold a majority-in-interest of the
Registrable Securities being offered in the offering select underwriters for the
offering, the Company shall enter into and perform its obligations under an
underwriting agreement, in usual and customary form, including, without
limitation, customary indemnification and contribution obligations, with the
underwriters of such offering.
(f) As promptly as practicable after becoming aware of such event, the
Company shall notify each Purchaser of the happening of any event, of which the
Company has knowledge, as a result of which the prospectus included in any
Registration Statement, as then in effect, includes an untrue statement of a
material fact or omission to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, and use its best
efforts promptly to prepare a supplement or amendment to any Registration
Statement to correct such untrue statement or omission, and deliver such number
of copies of such supplement or amendment to each Purchaser as such Purchaser
may reasonably request; provided that, for not more than fifteen (15)
consecutive trading days (or a total of not more than thirty (30) trading days
in any twelve (12) month period), the Company may delay the disclosure of
material non-public information concerning the Company (as well as prospectus or
Registration Statement updating) the disclosure of which at the time is not, in
the good faith opinion of the Company, in the best interests of the Company (an
"Allowed Delay"); provided, that such number of days shall not include the 15
calendar 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; provided, further, that the Company shall promptly
(i) notify the Purchasers in writing of the existence of (but in no event,
without the prior written consent of a Purchaser, shall the Company disclose to
such Purchaser any of the facts or circumstances regarding) material non-public
information giving rise to an Allowed Delay and (ii) advise the Purchasers in
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writing to cease all sales under such Registration Statement until the end of
the Allowed Delay. Upon expiration of the Allowed Delay, the Company shall again
be bound by the first sentence of this Section 3.1(f) with respect to the
information giving rise thereto.
(g) The Company shall use its best efforts to prevent the issuance of
any stop order or other suspension of effectiveness of any Registration
Statement, and, if such an order is issued, to obtain the withdrawal of such
order at the earliest possible moment and to notify each Purchaser who holds
Registrable Securities being sold (or, in the event of an underwritten offering,
the managing underwriters) of the issuance of such order and the resolution
thereof.
(h) The Company shall permit a single firm of counsel designated by the
Purchasers (the "Purchaser Counsel") to review such Registration Statement and
all amendments and supplements thereto (as well as all requests for acceleration
or effectiveness thereof) a reasonable period of time prior to their filing with
the SEC, and not file any document in a form to which Purchaser Counsel
reasonably objects and will not request acceleration of such Registration
Statement without prior notice to Purchaser Counsel. The sections of such
Registration Statement covering information with respect to the Purchasers, the
Purchaser's beneficial ownership of securities of the Company or the Purchasers
intended method of disposition of Registrable Securities shall conform to the
information provided to the Company by each of the Purchasers.
(i) The Company shall make generally available to its security holders
as soon as practicable, but not later than ninety days after the close of the
period covered thereby, an earnings statement (in form complying with the
provisions of Rule 158 under the 0000 Xxx) covering a twelve-month period
beginning not later than the first day of the Company's fiscal quarter next
following the effective date of the Registration Statement.
(j) At the request of any Purchaser, the Company shall furnish, on the
date that Registrable Securities are delivered to an underwriter, if any, for
sale in connection with any Registration Statement or, if such securities are
not being sold by an underwriter, on the date of effectiveness thereof (i) an
opinion, dated as of such date, from counsel representing the Company for
purposes of such Registration Statement, in form, scope and substance as is
customarily given in an underwritten public offering, addressed to the
underwriters, if any, and the Purchasers and (ii) a letter, dated such date,
from the Company's independent certified public accountants in form and
substance as is customarily given by independent certified public accountants to
underwriters in an underwritten public offering, addressed to the underwriters,
if any, and the Purchasers.
(k) The Company shall make available for inspection by (i) any
Purchaser, (ii) any underwriter participating in any disposition pursuant to a
Registration Statement, (iii) one firm of attorneys and one firm of accountants
or other agents retained by the Purchasers, and (iv) one firm of attorneys
retained by all such underwriters (collectively, the "Inspectors") all pertinent
financial and other records, and pertinent corporate documents and properties of
the Company, including without limitation, records of conversions by other
holders of convertible securities issued by the Company and the issuance of
stock to such holders pursuant to the conversions (collectively, the "Records"),
as shall be reasonably deemed necessary by each Inspector to enable each
Inspector to exercise its due diligence responsibility, and cause the Company's
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officers, directors and employees to supply all information which any Inspector
may reasonably request for purposes of such due diligence; provided, however,
that each Inspector shall hold in confidence and shall not make any disclosure
(except to a Purchaser) of any Record or other information which the Company
determines in good faith to be confidential, and of which determination the
Inspectors are so notified, unless (a) the disclosure of such Records is
necessary to avoid or correct a misstatement or omission in any Registration
Statement, (b) the release of such Records is ordered pursuant to a subpoena or
other order from a court or government body of competent jurisdiction, or (c)
the information in such Records has been made generally available to the public
other than by disclosure in violation of this or any other agreement. The
Company shall not be required to disclose any confidential information in such
Records to any Inspector until and unless such Inspector shall have entered into
confidentiality agreements (in form and substance satisfactory to the Company)
with the Company with respect thereto, substantially in the form of this Section
3.1(k). Each Purchaser agrees that it shall, upon learning that disclosure of
such Records is sought in or by a court or governmental body of competent
jurisdiction or through other means, give prompt notice to the Company and allow
the Company, at its expense, to undertake appropriate action to prevent
disclosure of, or to obtain a protective order for, the Records deemed
confidential. Nothing herein (or in any other confidentiality agreement between
the Company and any Purchaser) shall be deemed to limit the Purchaser's ability
to sell Registrable Securities in a manner which is otherwise consistent with
applicable laws and regulations.
(l) The Company shall hold in confidence and not make any disclosure of
information concerning a Purchaser provided to the Company unless (i) disclosure
of such information is necessary to comply with federal or state securities
laws, (ii) the disclosure of such information is necessary to avoid or correct a
misstatement or omission in any Registration Statement, (iii) the release of
such information is ordered pursuant to a subpoena or other order from a court
or governmental body of competent jurisdiction, or (iv) such information has
been made generally available to the public other than by disclosure in
violation of this or any other agreement. The Company agrees that it shall, upon
learning that disclosure of such information concerning a Purchaser is sought in
or by a court or governmental body of competent jurisdiction or through other
means, give prompt notice to such Purchaser prior to making such disclosure, and
allow the Purchaser, at its expense, to undertake appropriate action to prevent
disclosure of, or to obtain a protective order for, such information.
(m) The Company shall (i) cause all the Registrable Securities covered
by the Registration Statement to be listed on each national securities exchange
on which securities of the same class or series issued by the Company are then
listed, if any, if the listing of such Registrable Securities is then permitted
under the rules of such exchange, or (ii) to the extent the securities of the
same class or series are not then listed on a national securities exchange,
secure the designation and quotation, of all the Registrable Securities covered
by the Registration Statement on Nasdaq or, if not eligible for Nasdaq, on
Nasdaq SmallCap or, if not eligible for Nasdaq or Nasdaq SmallCap, on the OTCBB
and, without limiting the generality of the foregoing, to use its commercially
reasonable efforts to arrange for at least two market makers to register with
the National Association of Securities Dealers, Inc. ("NASD") as such with
respect to such Registrable Securities.
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(n) The Company shall provide a transfer agent and registrar, which may
be a single entity, for the Registrable Securities not later than the effective
date of the Registration Statement.
(o) The Company shall cooperate with the Purchasers who hold
Registrable Securities being offered and the managing underwriter or
underwriters, if any, to facilitate the timely preparation and delivery of
certificates (not bearing any restrictive legends) representing Registrable
Securities to be offered pursuant to a Registration Statement and enable such
certificates to be in such denominations or amounts, as the case may be, as the
managing underwriter or underwriters, if any, or the Purchasers may reasonably
request and registered in such names as the managing underwriter or
underwriters, if any, or the Purchasers may request.
(p) At the request of the holders of a majority-in-interest of the
Registrable Securities, the Company shall prepare and file with the SEC such
amendments (including post-effective amendments) and supplements to a
Registration Statement and any prospectus used in connection with the
Registration Statement as may be necessary in order to change the plan of
distribution set forth in such Registration Statement.
(q) Other than those security holders to be included as selling
security holders in the Registration Statement pursuant to registration rights
disclosed in the Company's Disclosure Schedule, if any, from and after the date
of this Agreement, the Company shall not, and shall not agree to, allow the
holders of any securities of the Company to include any of their securities in
any Registration Statement under Section 2.1 hereof or any amendment or
supplement thereto under Section 3.1(b) hereof without the consent of the
holders of a majority-in-interest of the Registrable Securities; provided,
however, that such consent shall automatically be deemed to be granted by a
majority-in-interest of the Registrable Securities at any time following the
repayment in full of all outstanding obligations of the Company under the Notes.
(r) The Company shall take all other reasonable actions necessary to
expedite and facilitate disposition by the Purchasers of Registrable Securities
pursuant to a Registration Statement.
ARTICLE IV.
OBLIGATIONS OF THE PURCHASERS
Section 4.1 Purchasers Obligations. In connection with the registration
of the Registrable Securities, the Purchasers shall have the following
obligations:
(a) It shall be a condition precedent to the obligations of the Company
to complete the registration pursuant to this Agreement with respect to the
Registrable Securities of a particular Purchaser that such Purchaser shall
furnish to the Company such information regarding itself, the Registrable
Securities held by it and the intended method of disposition of the Registrable
Securities held by it as shall be reasonably required to effect the registration
of such Registrable Securities and shall execute such documents in connection
with such registration as the Company may reasonably request. At least three
9
business days prior to the first anticipated Filing Date of the Registration
Statement (and any other amendments), the Company shall notify each Purchaser of
the information the Company requires from each such Purchaser.
(b) Each Purchaser, by such Purchaser's acceptance of the Registrable
Securities, agrees to cooperate with the Company as reasonably requested by the
Company in connection with the preparation and filing of any Registration
Statements hereunder, unless such Purchaser has notified the Company in writing
of such Purchaser's election to exclude all of such Purchaser's Registrable
Securities from such Registration Statements.
(c) In the event Purchasers holding a majority-in-interest of the
Registrable Securities being registered determine to engage the services of an
underwriter, each Purchaser agrees to enter into and perform such Purchaser's
obligations under an underwriting agreement, in usual and customary form,
including, without limitation, customary indemnification and contribution
obligations, with the managing underwriter of such offering and take such other
actions as are reasonably required in order to expedite or facilitate the
disposition of the Registrable Securities, unless such Purchaser has notified
the Company in writing of such Purchaser's election to exclude all of such
Purchaser's Registrable Securities from such Registration Statement.
(d) Each Purchaser agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 3.1(f) or
Section 3.1(g), such Purchaser will immediately discontinue disposition of
Registrable Securities pursuant to the Registration Statement covering such
Registrable Securities until such Purchaser's receipt of the copies of the
supplemented or amended prospectus contemplated by Section 3.1(f) or Section
3.1(g) and, if so directed by the Company, such Purchaser shall deliver to the
Company (at the expense of the Company) or destroy (and deliver to the Company a
certificate of destruction) all copies in such Purchaser's possession, of the
prospectus covering such Registrable Securities current at the time of receipt
of such notice.
(e) No Purchaser may participate in any underwritten registration
hereunder unless such Purchaser (i) agrees to sell such Purchaser's Registrable
Securities on the basis provided in any underwriting arrangements in usual and
customary form entered into by the Company, (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements, and (iii) agrees to pay its pro rata share of all underwriting
discounts and commissions and any expenses in excess of those payable by the
Company pursuant to Section 5.1 below.
ARTICLE V.
EXPENSES OF REGISTRATION
Section 5.1 Expenses. All reasonable expenses incurred in connection
with registrations, filings or qualifications pursuant to Sections 2 and 3,
including, without limitation, all registration, listing and qualification fees,
printers and accounting fees, the fees and disbursements of counsel for the
Company, and the reasonable fees and disbursements of one counsel selected by
the Purchasers pursuant to Sections 2.2 and 3(h) hereof shall be borne by the
Company.
10
ARTICLE VI.
INDEMNIFICATION
Section 6.1 Indemnity. In the event any Registrable Securities are
included in a Registration Statement under this Agreement:
(a) To the extent permitted by law, the Company will indemnify, hold
harmless and defend (i) each Purchaser who holds such Registrable Securities,
(ii) the directors, officers, partners, employees, agents and each person who
controls any Purchaser within the meaning of the 1933 Act or the Securities
Exchange Act of 1934, as amended (the "1934 Act"), if any, (iii) any underwriter
(as defined in the 0000 Xxx) for the Purchasers, and (iv) the directors,
officers, partners, employees and each person who controls any such underwriter
within the meaning of the 1933 Act or the 1934 Act, if any (each, an
"Indemnified Person"), against any joint or several losses, claims, damages,
liabilities or expenses (collectively, together with actions, proceedings or
inquiries by any regulatory or self-regulatory organization, whether commenced
or threatened, in respect thereof, "Claims") to which any of them may become
subject insofar as such Claims arise out of or are based upon: (i) any untrue
statement or alleged untrue statement of a material fact in a Registration
Statement or the omission or alleged omission to state therein a material fact
required to be stated or necessary to make the statements therein not
misleading; (ii) any untrue statement or alleged untrue statement of a material
fact contained in any preliminary prospectus if used prior to the effective date
of such Registration Statement, or contained in the final prospectus (as amended
or supplemented, if the Company files any amendment thereof or supplement
thereto with the SEC) or the omission or alleged omission to state therein any
material fact necessary to make the statements made therein, in light of the
circumstances under which the statements therein were made, not misleading; or
(iii) any violation or alleged violation by the Company of the 1933 Act, the
1934 Act, any other law, including, without limitation, any state securities
law, or any rule or regulation thereunder relating to the offer or sale of the
Registrable Securities (the matters in the foregoing clauses (i) through (iii)
being, collectively, "Violations"). Subject to the restrictions set forth in
Section 6(c) with respect to legal counsel, the Company shall reimburse the
Indemnified Person, promptly as such expenses are incurred and are due and
payable, for any reasonable legal fees or other reasonable expenses incurred by
them in connection with investigating or defending any such Claim.
Notwithstanding anything to the contrary contained herein, the indemnification
agreement contained in this Section 6.1(a): (i) shall not apply to a Claim
arising out of or based upon a Violation which occurs in reliance upon and in
conformity with information furnished in writing to the Company by any
Indemnified Person or underwriter for such Indemnified Person expressly for use
in connection with the preparation of such Registration Statement or any such
amendment thereof or supplement thereto, if such prospectus was timely made
available by the Company pursuant to Section 3.1(c) hereof; (ii) shall not apply
to amounts paid in settlement of any Claim if such settlement is effected
without the prior written consent of the Company, which consent shall not be
unreasonably withheld; and (iii) with respect to any preliminary prospectus,
shall not inure to the benefit of any Indemnified Person if the untrue statement
or omission of material fact contained in the preliminary prospectus was
corrected on a timely basis in the prospectus, as then amended or supplemented,
such corrected prospectus was timely made available by the Company pursuant to
11
Section 3.1(c) hereof, and the Indemnified Person was promptly advised in
writing not to use the incorrect prospectus prior to the use giving rise to a
Violation and such Indemnified Person, notwithstanding such advice, used it.
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Indemnified Person and shall survive
the transfer of the Registrable Securities by the Purchasers pursuant to Section
9.1.
(b) In connection with any Registration Statement in which a Purchaser
is participating, each such Purchaser agrees severally and not jointly to
indemnify, hold harmless and defend, to the same extent and in the same manner
set forth in Section 6.1(a), the Company, each of its directors, each of its
officers who signs the Registration Statement, each person, if any, who controls
the Company within the meaning of the 1933 Act or the 1934 Act, any underwriter
and any other shareholder selling securities pursuant to the Registration
Statement or any of its directors or officers or any person who controls such
shareholder or underwriter within the meaning of the 1933 Act or the 1934 Act
(collectively and together with an Indemnified Person, an "Indemnified Party"),
against any Claim to which any of them may become subject, under the 1933 Act,
the 1934 Act or otherwise, insofar as such Claim arises out of or is based upon
any Violation by such Purchaser, in each case to the extent (and only to the
extent) that such Violation occurs in reliance upon and in conformity with
written information furnished to the Company by such Purchaser expressly for use
in connection with such Registration Statement; and subject to Section 6.1(c)
such Purchaser will reimburse any legal or other expenses (promptly as such
expenses are incurred and are due and payable) reasonably incurred by them in
connection with investigating or defending any such Claim; provided, however,
that the indemnity agreement contained in this Section 6.1(b) shall not apply to
amounts paid in settlement of any Claim if such settlement is effected without
the prior written consent of such Purchaser, which consent shall not be
unreasonably withheld; provided, further, however, that the Purchaser shall be
liable under this Agreement (including this Section 6.1(b) and Section 7.1) for
only that amount as does not exceed the net proceeds to such Purchaser as a
result of the sale of Registrable Securities pursuant to such Registration
Statement. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of such Indemnified Party and shall
survive the transfer of the Registrable Securities by the Purchasers pursuant to
Section 9.1. Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6.1(b) with respect to any
preliminary prospectus shall not inure to the benefit of any Indemnified Party
if the untrue statement or omission of material fact contained in the
preliminary prospectus was corrected on a timely basis in the prospectus, as
then amended or supplemented.
(c) Promptly after receipt by an Indemnified Person or Indemnified
Party under this Section 6.1 of notice of the commencement of any action
(including any governmental action), such Indemnified Person or Indemnified
Party shall, if a Claim in respect thereof is to be made against any
indemnifying party under this Section 6.1, deliver to the indemnifying party a
written notice of the commencement thereof, and the indemnifying party shall
have the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
control of the defense thereof with counsel mutually satisfactory to the
12
indemnifying party and the Indemnified Person or the Indemnified Party, as the
case may be; provided, however, that an Indemnified Person or Indemnified Party
shall have the right to retain its own counsel with the fees and expenses to be
paid by the indemnifying party, if, in the reasonable opinion of counsel
retained by the indemnifying party, the representation by such counsel of the
Indemnified Person or Indemnified Party and the indemnifying party would be
inappropriate due to actual or potential differing interests between such
Indemnified Person or Indemnified Party and any other party represented by such
counsel in such proceeding. The indemnifying party shall pay for only one
separate legal counsel for the Indemnified Persons or the Indemnified Parties,
as applicable, and such legal counsel shall be selected by Purchasers holding a
majority-in-interest of the Registrable Securities included in the Registration
Statement to which the Claim relates, if the Purchasers are entitled to
indemnification hereunder, or the Company, if the Company is entitled to
indemnification hereunder, as applicable. The failure to deliver written notice
to the indemnifying party within a reasonable time of the commencement of any
such action shall not relieve such indemnifying party of any liability to the
Indemnified Person or Indemnified Party under this Section 6.1, except to the
extent that the indemnifying party is actually prejudiced in its ability to
defend such action. The indemnification required by this Section 6.1 shall be
made by periodic payments of the amount thereof during the course of the
investigation or defense, as such expense, loss, damage or liability is incurred
and is due and payable.
ARTICLE VII.
CONTRIBUTION
Section 7.1 Contribution. To the extent any indemnification by an
indemnifying party is prohibited or limited by law, the indemnifying party
agrees to make the maximum contribution with respect to any amounts for which it
would otherwise be liable under Section 6 to the fullest extent permitted by
law; provided, however, that (i) no contribution shall be made under
circumstances where the maker would not have been liable for indemnification
under the fault standards set forth in Section 6, (ii) no seller of Registrable
Securities guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the 0000 Xxx) shall be entitled to contribution from any seller of
Registrable Securities who was not guilty of such fraudulent misrepresentation,
and (iii) contribution (together with any indemnification or other obligations
under this Agreement) by any seller of Registrable Securities shall be limited
in amount to the net amount of proceeds received by such seller from the sale of
such Registrable Securities.
ARTICLE VIII.
REPORTS UNDER THE 1934 ACT
Section 8.1 1934 Act Reports. Whether, with a view to making available
to the Purchasers the benefits of Rule 144 promulgated under the 1933 Act or any
other similar rule or regulation of the SEC that may at any time permit the
Purchasers to sell securities of the Company to the public without registration
("Rule 144") or otherwise, the Company agrees to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the 1933 Act and the 1934 Act so long as
the Company remains subject to such requirements and the filing of such reports
and other documents is required for the applicable provisions of Rule 144; and
(c) furnish to each Purchaser so long as such Purchaser owns
Registrable Securities, promptly upon request, (i) a written statement by the
Company that it has complied with the reporting requirements of Rule 144, the
13
1933 Act and the 1934 Act, (ii) a copy of the most recent annual or quarterly
report of the Company and such other reports and documents so filed by the
Company, and (iii) such other information as may be reasonably requested to
permit the Purchasers to sell such securities pursuant to Rule 144 without
registration.
ARTICLE IX.
ASSIGNMENT OF REGISTRATION RIGHTS
Section 9.1 Assignment. The rights under this Agreement shall be
automatically assignable by the Purchasers to any transferee of all or any
portion of Registrable Securities if: (i) the Purchaser agrees in writing with
the transferee or assignee to assign such rights, and a copy of such agreement
is furnished to the Company within a reasonable time after such assignment, (ii)
the Company is, within a reasonable time after such transfer or assignment,
furnished with written notice of (a) the name and address of such transferee or
assignee, and (b) the securities with respect to which such registration rights
are being transferred or assigned, (iii) following such transfer or assignment,
the further disposition of such securities by the transferee or assignee is
restricted under the 1933 Act and applicable state securities laws, (iv) at or
before the time the Company receives the written notice contemplated by clause
(ii) of this sentence, the transferee or assignee agrees in writing with the
Company to be bound by all of the provisions contained herein, (v) such transfer
shall have been made in accordance with the applicable requirements of the
Securities Purchase Agreement, and (vi) such transferee shall be an "accredited
investor" as that term defined in Rule 501 of Regulation D promulgated under the
1933 Act.
ARTICLE X.
AMENDMENT OF REGISTRATION RIGHTS
Section 10.1 Amendment, Termination or Waiver. Any term of this
Agreement may be terminated or amended and the observance of any term of this
Agreement may be waived (either generally or in a particular instance and either
retroactively or prospectively) only with the written consent of the Company and
the holders of a majority-in-interest of the Registrable Securities. Any
termination, amendment or waiver effected in accordance with this paragraph
shall be binding upon each holder of the Registrable Securities, each future
holder of the Registrable Securities, their successors and assigns, and the
Company.
ARTICLE XI.
MISCELLANEOUS
Section 11.1 Holder. A person or entity is deemed to be a holder of
Registrable Securities whenever such person or entity owns of record such
Registrable Securities. If the Company receives conflicting instructions,
notices or elections from two or more persons or entities with respect to the
same Registrable Securities, the Company shall act upon the basis of
instructions, notice or election received from the registered owner of such
Registrable Securities.
Section 11.2 Notices. Any notices required or permitted to be given
under the terms hereof shall be sent by certified or registered mail (return
receipt requested) or delivered personally or by courier (including a recognized
14
overnight delivery service) or by facsimile and shall be effective five days
after being placed in the mail, if mailed by regular United States mail, or upon
receipt, if delivered personally or by courier (including a recognized overnight
delivery service) or by facsimile, in each case addressed to a party. The
addresses for such communications shall be:
If to the Company:
------------------
Cubic Energy, Inc.
0000 Xxxxx Xxxx
Xxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
If to a Purchaser:
------------------
to the address set forth immediately below such Purchaser's name on
Exhibit A to the Securities Purchase Agreement.
With a copy to:
Xxxxxx and Xxxxx, LLP
0000 XxXxxxxx Xx., Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attn:
Facsimile: (000) 000-0000
Section 11.3 No Waiver. Failure of any party to exercise any right or
remedy under this Agreement or otherwise, or delay by a party in exercising such
right or remedy, shall not operate as a waiver thereof.
Section 11.4 Governing Law. This Agreement shall be enforced, governed
by and construed in accordance with the laws of the State of Texas applicable to
agreements made and to be performed entirely within such state, without regard
to the principles of conflict of laws. The parties hereto hereby submit to the
exclusive jurisdiction of the United States Federal Courts located Dallas, Texas
with respect to any dispute arising under this Agreement, the agreements entered
into in connection herewith or the transactions contemplated hereby or thereby.
All parties irrevocably waive the defense of an inconvenient forum to the
maintenance of such suit or proceeding. The parties further agree that service
of process upon a party mailed by first class mail shall be deemed in every
respect effective service of process upon the party in any such suit or
proceeding. Nothing herein shall affect any party's right to serve process in
any other manner permitted by law. The parties agree that a final non-appealable
judgment in any such suit or proceeding shall be conclusive and may be enforced
in other jurisdictions by suit on such judgment or in any other lawful manner.
The party which does not prevail in any dispute arising under this Agreement
shall be responsible for all fees and expenses, including attorneys' fees,
incurred by the prevailing party in connection with such dispute.
15
Section 11.5 Severability. In the event that any provision of this
Agreement is invalid or unenforceable under any applicable statute or rule of
law, then such provision shall be deemed inoperative to the extent that it may
conflict therewith and shall be deemed modified to conform to such statute or
rule of law. Any provision hereof which may prove invalid or unenforceable under
any law shall not affect the validity or enforceability of any other provision
hereof.
Section 11.6 Entire Agreement. This Agreement constitutes the entire
agreement among the parties hereto with respect to the subject matter hereof.
There are no restrictions, promises, warranties or undertakings, other than
those set forth or referred to herein. This Agreement supersedes the Original
Agreement and all other prior agreements and understandings among the parties
hereto with respect to the subject matter hereof.
Section 11.7 Assigns. Subject to the requirements of Section 9.1
hereof, this Agreement shall be binding upon and inure to the benefit of the
parties and their successors and assigns.
Section 11.8 Headings. The headings in this Agreement are for
convenience of reference only and shall not form part of, or affect the
interpretation of, this Agreement.
Section 11.9 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original but all of which
shall constitute one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other party.
This Agreement, once executed by a party, may be delivered to the other party
hereto by facsimile transmission of a copy of this Agreement bearing the
signature of the party so delivering this Agreement.
Section 11.10 Further Assurances. Each party shall do and perform, or
cause to be done and performed, all such further acts and things, and shall
execute and deliver all such other agreements, certificates, instruments and
documents, as the other party may reasonably request in order to carry out the
intent and accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
Section 11.11 Purchasers' Actions. Except as otherwise provided herein,
all consents and other determinations to be made by the Purchasers pursuant to
this Agreement shall be made by Purchasers holding a majority-in-interest of the
Registrable Securities, determined as if all of the Notes and Warrants
outstanding have been converted into or exercised for Registrable Securities.
Section 11.12 Specific Performances. The Company acknowledges that a
breach by it of its obligations hereunder will cause irreparable harm to each
Purchaser by vitiating the intent and purpose of the transactions contemplated
hereby. Accordingly, the Company acknowledges that the remedy at law for breach
of its obligations under this Agreement will be inadequate and agrees, in the
event of a breach or threatened breach by the Company of any of the provisions
under this Agreement, that each Purchaser shall be entitled, in addition to all
other available remedies in law or in equity, and in addition to the penalties
assessable herein, to an injunction or injunctions restraining, preventing or
16
curing any breach of this Agreement and to enforce specifically the terms and
provisions hereof, without the necessity of showing economic loss and without
any bond or other security being required.
Section 11.13 No Strict Construction. The language used in this
Agreement will be deemed to be the language chosen by the parties to express
their mutual intent, and no rules of strict construction will be applied against
any party.
* * * * *
17
IN WITNESS WHEREOF, the Company and the undersigned Purchasers have
caused this Agreement to be duly executed as of the date first above written.
CUBIC ENERGY, INC.
By:____________________________
Name:__________________________
Title:_________________________
S-1
PURCHASERS:
LEVY FAMILY PARTNERS, LLC
By:____________________________
Name:__________________________
Title:_________________________
_______________________________
XXXXXXX XXXXXX
BARGUS PARTNERSHIP
By:____________________________
Name:__________________________
Title:_________________________
_______________________________
XXXXX X. XXXXXXX
_______________________________
XXXXXX XXXXXXX
PETRO CAPITAL HOLDINGS, LLC
By:____________________________
Name:__________________________
Title:_________________________
S-2
X-MEN, LLC
By:____________________________
Name:__________________________
Title:_________________________
XXXXX X. XXXX IRREVOCABLE TRUST
By:____________________________
Name:__________________________
Title:_________________________
_______________________________
XXXXX XXXXXXXXX
X-0
