0001104659-13-074706.txt : 20131009 0001104659-13-074706.hdr.sgml : 20131009 20131008181511 ACCESSION NUMBER: 0001104659-13-074706 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 20131009 DATE AS OF CHANGE: 20131008 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: CUBIC ENERGY INC CENTRAL INDEX KEY: 0000319156 STANDARD INDUSTRIAL CLASSIFICATION: DRILLING OIL & GAS WELLS [1381] IRS NUMBER: 870352095 STATE OF INCORPORATION: TX FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-52119 FILM NUMBER: 131142138 BUSINESS ADDRESS: STREET 1: 9870 PLANO ROAD STREET 2: 9870 PLANO ROAD CITY: DALLAS STATE: TX ZIP: 75238 BUSINESS PHONE: 972-681-8047 MAIL ADDRESS: STREET 1: 9870 PLANO ROAD STREET 2: 9870 PLANO ROAD CITY: DALLAS STATE: TX ZIP: 75238 FORMER COMPANY: FORMER CONFORMED NAME: ROSELAND OIL & GAS INC DATE OF NAME CHANGE: 19931025 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: WALLEN CALVIN III CENTRAL INDEX KEY: 0001051924 FILING VALUES: FORM TYPE: SC 13D/A MAIL ADDRESS: STREET 1: 9870 PLANO ROAD CITY: DALLAS STATE: TX ZIP: 75238 SC 13D/A 1 a13-21896_1sc13da.htm AMENDMENT

 

 

UNITED STATES

 

 

SECURITIES AND EXCHANGE COMMISSION

 

 

Washington, D.C. 20549

 

 

 

 

 

SCHEDULE 13D/A

 

 

Under the Securities Exchange Act of 1934
(Amendment No. 6)*

 

CUBIC ENERGY, INC.

(Name of Issuer)

 

Common Stock, par value $0.05 per share

(Title of Class of Securities)

 

229675103

(CUSIP Number)

 

David R. Earhart

Looper Reed & McGraw, P.C.

1601 Elm Street, Suite 4600

Dallas, Texas 75201

(214) 954-4135

(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)

 

Various

(Date of Event Which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §240.13d-1(e), §240.13d-1(f) or §240.13d-1(g), check the following box: o

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Rule 13d-7 for other parties to whom copies are to be sent.

* The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

 



 

CUSIP No. 229675103

 

 

1.

Names of Reporting Persons.
Calvin A. Wallen, III

 

 

2.

Check the Appropriate Box if a Member of a Group (See Instructions)

 

 

(a)

 x

 

 

(b)

 o

 

 

3.

SEC Use Only

 

 

4.

Source of Funds (See Instructions)
AF; WC; PF; 00

 

 

5.

Check if Disclosure of Legal Proceedings Is Required Pursuant to Items 2(d) or 2(e)     o

 

 

6.

Citizenship or Place of Organization
UNITED STATES

 

Number of
Shares
Beneficially
Owned by
Each
Reporting
Person With

7.

Sole Voting Power
-0-

 

8.

Shared Voting Power
50,131,548(1)

 

9.

Sole Dispositive Power
50,131,548(1)

 

10.

Shared Dispositive Power
-0-

 

 

11.

Aggregate Amount Beneficially Owned by Each Reporting Person
50,131,548 shares of common stock, including: (a) 16,333,548 shares directly held by the reporting person; (b) 500,000 shares held by the reporting person’s spouse, (c) 674,000 shares held by certain children of the reporting person; (d) 700,000 shares held by Tauren Exploration, Inc., a corporation wholly owned by the reporting person; (e) 3,600,000 shares issuable upon conversion of 1,800 shares of Series B Convertible Preferred Stock of the issuer held by Tauren; (f) 24,094,000 shares issuable upon conversion of 12,047 shares of Series B Convertible Preferred Stock of the issuer held by Langtry Mineral & Development, LLC, an entity controlled by the reporting person; and (g) 4,230,000 shares issuable upon conversion of 2,115 shares of Series B Convertible Preferred Stock of the issuer directly held by the reporting person. The Series B Convertible Preferred Stock votes with the common stock, on an as-converted basis. 

 

 

12.

Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions)   x (2)

 

 

13.

Percent of Class Represented by Amount in Row (11)
45.84%(3)

 

 

14.

Type of Reporting Person (See Instructions)
IN

 


(1)           Includes 31,924,000 shares of common stock issuable upon conversion of shares of Series B Convertible Preferred Stock beneficially owned by the reporting person.

(2)           Excludes shares of common stock issuable upon the exercise of the Warrants (as defined below) held by the Investors (as defined below), as described further in Items 5 and 6 of this Statement.

(3)           Based on 77,433,408 shares of common stock outstanding as of October 2, 2013.

 

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SCHEDULE 13D

 

This Amendment No. 6 to Schedule 13D (this “Statement”) is filed by Calvin A. Wallen, III, in his individual capacity and on behalf of Tauren and Langtry (as defined below).

 

Wallen is a party to a Voting Agreement, dated as of October 2, 2013 (the “Voting Agreement”), among Wallen and the Investors (as defined below), a copy of which is filed as Exhibit 2 hereto, and pursuant to which Wallen and the Investors have agreed to vote together with respect to certain matters submitted for a vote to the shareholders of Cubic Energy, Inc., a Texas corporation (the “Company”), as described further herein.  Wallen expressly affirms that he and the Investors constitute a “group” within the meaning of Section 13(d)(3) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and Rule 13d-5(b) thereunder, but Wallen otherwise disclaims any beneficial interest in any shares held by any of the Investors.

 

This Statement is not filed for or on behalf of any Investor.

 

Item 1.     Security and Issuer

 

This Statement relates to shares of the common stock, par value $0.05 per share (“Common Stock”), of the Company, and shares of Common Stock issuable upon conversion of shares of the Company’s Series B Convertible Preferred Stock, par value $0.01 per share with a stated value of $1,000 per share (the “Series B Convertible Preferred Stock”).  The address of the Company’s principal executive office is 9870 Plano Road, Dallas, Texas 75238.

 

Item 2.   Identity and Background

 

(a)                                 This Statement is filed by Calvin A. Wallen, III, in his individual capacity and on behalf of Tauren and Langtry.

 

(b)                                 The business address of Wallen is 9870 Plano Road, Dallas, Texas 75238.

 

(c)                                  Wallen is a director and Chairman of the Board of Directors of the Company and President and Chief Executive Officer of the Company, and President of each of Tauren Exploration, Inc. (“Tauren”) and Langtry Mineral & Development, LLC (“Langtry”), entities that are wholly owned by Wallen.

 

(d)                                 Wallen has not, during the last five years, been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors).

 

(e)                                  Wallen has not, during the last five years, been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree

 

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or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws.

 

(f)                                   Wallen is a citizen of the United States of America.

 

Item 3.                                                         Source and Amount of Funds or Other Consideration.

 

Pursuant to a Stock Purchase Agreement, dated as of December 10, 1997, by and among the Company, Wallen, Earthstock Resources, Inc. (an entity wholly owned by Wallen), and certain other parties thereto, (a) Wallen acquired 7,000,000 shares of Common Stock and (b) Earthstock acquired 2,500,000 shares of Common Stock. In exchange for the shares, Wallen and Earthstock contributed to the Company certain oil and gas properties owned by them, as well as their entire interest in any contracts, leases, records and insurance policies affecting such interests. The amount of the consideration was the result of arms-length negotiations between them and the Company. In December 2001, Earthstock transferred all of its shares of Common Stock to Wallen.

 

In April 2001, in a private transaction with the Company, Tauren acquired 736,504 shares of Common Stock in exchange for working interests and limited liability company interests, at fair market value. In March 2002, Tauren cancelled certain indebtedness of the Company in exchange for 856,712 shares of Common Stock. In April and May 2002, Tauren purchased 48,000 shares of Common Stock with working capital.

 

On or about January 11, 2005, the Company issued 468,339 shares of Common Stock to Wallen in exchange for a 0.0585424967 working interest in the Kraemer 24-1 Well in DeSoto Parish, Louisiana.

 

On February 6, 2006, the Company entered into a Purchase Agreement with Tauren with respect to the purchase by the Company of certain Cotton Valley leasehold interests (approximately 11,000 gross acres; 5,000 net acres) held by Tauren. Pursuant to the Purchase Agreement, the Company acquired from Tauren a 35% working interest in approximately 2,400 acres and a 49% working interest in approximately 8,500 acres located in DeSoto and Caddo Parishes, Louisiana, along with an associated Area of Mutual Interest (“AMI”) and the right to acquire at “cost” a working interest in all additional mineral leases obtained by Tauren in the AMI, in exchange for (a) $3,500,000 in cash, (b) 2,500,000 shares of Common Stock, (c) a short-term promissory note in the amount of $1,300,000, and (d) a drilling credit of $2,100,000. The foregoing consideration was determined based upon negotiations between Tauren and a Special Committee of the Company’s directors, excluding Wallen.

 

Between February 2006 and September 2006, Wallen purchased an aggregate of 319,000 shares of Common Stock in open-market transactions at prevailing market prices.

 

4



 

In January 2006, the Company issued Wallen 300,000 shares of Common Stock under the Company’s Director and Officer 2005 Stock Option Plan for services rendered to the Company by Wallen as President and Chief Executive Officer of the Company.

 

In January 2007, the Company issued Wallen 150,000 shares of Common Stock under the Company’s Director and Officer 2005 Stock Option Plan for services rendered to the Company by Wallen as President and Chief Executive Officer of the Company.

 

On February 4, 2008, the Company issued Wallen 150,000 shares of Common Stock under the Company’s Director and Officer 2005 Stock Option Plan for services rendered to the Company by Wallen as President and Chief Executive Officer of the Company.

 

On November 24, 2009, Wallen, Tauren and Langtry entered into a transaction under which the Company acquired $30,952,810 in pre-paid drilling credits (the “Drilling Credits”) applicable toward the development of its Haynesville Shale rights in Northwest Louisiana.  As consideration for the Drilling Credits, the Company issued to Langtry 10,350,000 shares of Common Stock on March 16, 2010 and 103,500 shares of the Company’s Series A Convertible Preferred Stock, par value $0.01 with a stated value of $100 per share (the “Series A Convertible Preferred Stock”), on March 17, 2010.  Following the transaction, Langtry transferred its 10,350,000 shares of common stock to Wallen.  Subsequently, the Company issued an aggregate of 16,968 additional shares of Series A Convertible Preferred Stock to Langtry in lieu of cash dividends on the Series A Convertible Preferred Stock.

 

On October 2, 2013, pursuant to the terms of a Conversion and Preferred Stock Purchase Agreement (the “Conversion Agreement”), which is filed as Exhibit 4 hereto, the Company issued (a) 12,047 shares of Series B Convertible Preferred Stock to Langtry in exchange for the cancellation of all of the issued and outstanding shares of Series A Convertible Preferred Stock held by Langtry and (b) 2,115 shares of Series B Convertible Preferred Stock to Wallen in exchange for Wallen’s cancellation of a promissory note payable by the Company to Wallen in the principal amount of $2.0 million, plus accrued and unpaid interest of $114,986.  The promissory note provided for interest at the prime rate of interest, plus 1%, per annum.  The Conversion Agreement was entered into in connection with certain other transactions more fully described in the Company’s Current Report on Form 8-K dated September 27, 2013.

 

On October 2, 2013, pursuant to the terms of a Purchase and Sale Agreement (the “Purchase and Sale Agreement”), which is filed as Exhibit 3 hereto, the Company issued to Tauren 2,000 shares of Series B Convertible Preferred Stock, together with $4.0 million in cash, as consideration for certain fractional working interests in Louisiana.  Immediately following the issuance of the shares of Series B Convertible Preferred Stock to Tauren, Tauren transferred 200 of these shares in satisfaction of a pre-existing net profits interest obligation to a third party.

 

5



 

Item 4.                                 Purpose of Transaction.

 

The responses set forth in the last 2 paragraphs of Item 3 and in Item 6 are incorporated herein by reference in their entirety.

 

Other than as described in the last 2 paragraphs of Item 3 and in Item 6, the reporting person does not have any specific plans or proposals which relate to or would result in the acquisition or disposition of additional securities of the Company; any extraordinary corporate transaction, such as a merger, reorganization or liquidation, involving the Company or any of its subsidiaries; a sale or transfer of a material amount of assets of the Company or any of its subsidiaries; any change in the present board of directors or management of the Company; any material change in the present capitalization or dividend policy of the Company; any other material change in the Company’s business or corporate structure; any changes in the Company’s Certificate of Formation, By-laws or instruments corresponding thereto or other actions which may impede the acquisition of control of the Company by any person; causing a class of securities of the Company to be delisted from a national securities exchange or to cease to be authorized to be quoted in an inter-dealer quotation system of a registered national securities association; a class of securities of the Company becoming eligible for termination of registration pursuant to Section 12(g)(4) of the Exchange Act; or any action similar to any of those enumerated above; but such person reserves the right to propose or undertake or participate in any of the foregoing actions in the future.

 

Item 5.    Interest in Securities of the Issuer.

 

(a)                                 Wallen beneficially owns 50,131,548 shares, or 45.84% (as calculated pursuant to Rule 13d-3 under the Exchange Act), of the Common Stock, including: (a) 16,333,548 shares directly held by the reporting person; (b) 500,000 shares held by the reporting person’s spouse, (c) 674,000 shares held by certain children of the reporting person; (d) 700,000 shares held by Tauren; (e) 3,600,000 shares issuable upon conversion of 1,800 shares of Series B Convertible Preferred Stock of the issuer held by Tauren; (f) 24,094,000 shares issuable upon conversion of 12,047 shares of Series B Convertible Preferred Stock of the issuer held by Langtry; and (g) 4,230,000 shares issuable upon conversion of 2,115 shares of Series B Convertible Preferred Stock of the issuer held by Wallen. Holders of shares of the Series B Convertible Preferred Stock are entitled to vote, together with holders of Common Stock, as a single class with respect to all matters presented to holders of Common Stock of the Company, with the voting power of such shares of Series B Convertible Preferred Stock determined on an as-converted basis.

 

Wallen affirms that he and the Investors comprise a “group” within the meaning of Section 13(d)(3) of the Exchange Act and Rule 13d-5(b) thereunder.  Pursuant to the Warrant and Preferred Stock Agreement, dated as of October 2, 2013 (the “Warrant and Preferred Stock Agreement”), by and among the Investors and the Company, on October 2, 2013, the Company issued to the Investors certain warrants exercisable on or after April 2, 2014 for (a) shares of the Common Stock at an exercise price of $0.01 per share

 

6



 

(the “Class A Warrants”), and (b) shares of Common Stock, at an exercise price of $0.50 per share (the “Class B Warrants” and, together with the Class A Warrants, the “Warrants”).  Pursuant to the Warrant and Preferred Stock Agreement, on October 2, 2013, the Company also issued to the Investors certain shares of Series C Voting Preferred Stock, par value $0.01 per share, with a stated value of $0.01 per share (the “Series C Voting Preferred Stock”), which entitle each Investor to exercise immediate voting rights equal to the voting power of the shares of Common Stock that would be issuable upon the exercise of all Warrants held by such Investor.

 

The Anchorage Parties (as defined below) beneficially own, in the aggregate, 74,811,987 shares of the Common Stock, which constitute  approximately 49.14% of the Common Stock (as calculated pursuant to Rule 13d-3 under the Exchange Act), representing (a) an aggregate of 12,341,658 shares of Common Stock that would be issuable upon the exercise of Warrants held of record by Anchorage Illiquid Opportunities Offshore Master III, L.P., a Cayman Islands exempted limited partnership (“Anchorage IOOM III”); (b) an aggregate of 14,124,129 shares of Common Stock that would be issuable upon the exercise of Warrants held of record by Anchorage Illiquid Opportunities III (B), L.P., a Delaware limited partnership (“Anchorage IO III(B)”); and (c) an aggregate of 48,346,200 shares of Common Stock that would be issuable upon the exercise of Warrants held of record by AIO III AIV, L.P., a Delaware limited partnership (“AIO III” and, together with Anchorage IOOM III and Anchorage IO III(B), “Anchorage”).

 

O-CAP Partners, L.P., a Delaware limited partnership (“O-CAPLP”), beneficially owns 4,286,727 shares of Common Stock that would be issuable upon the exercise of Warrants held of record by it.  O-CAP Offshore Master Fund, L.P., a Cayman Islands exempted limited partnership (“O-CAPMF” and together with O-CAPLP, “O-CAP”), beneficially owns 3,194,472 shares of Common Stock that would be issuable upon the exercise of Warrants held of record by it.  O-CAP Management, L.P. (“O-CAPMGT”), as the investment advisor of each of O-CAPLP and O-CAPMF, and of certain managed accounts (the “O-CAP Managed Accounts”) for Corbin Opportunity Fund, L.P. (“Corbin” and together with Anchorage and O-CAP, the “Investors”), may be deemed to be the beneficial owner of an aggregate of 23,939,836 shares of Common Stock, representing (i) shares of Common Stock issuable upon the exercise of Warrants owned by O-CAPLP and O-CAPMF and (ii) shares of Common Stock issuable upon the exercise of Warrants issued to Corbin and held in the O-CAP Managed Accounts, which in the aggregate constitute approximately 23.62% of the Common Stock (as calculated pursuant to Rule 13d-3 under the Exchange Act).  Each of (i) O-CAP Advisors, LLC (“O-CAPADV”), as the general partner of each of O-CAPLP and O-CAPMF, (ii) O-CAP GP, LLC (“O-CAPGP”), as the general partner of each of O-CAPMGT and O-CAPADV and (iii) Messrs. Michael E. Olshan and Jared S. Sturdivant, as Portfolio Managers and Managing Partners of O-CAPMGT and the Managing Members of O-CAPGP and O-CAPADV may be deemed to be the beneficial owner of an aggregate of 23,939,836 shares of Common Stock owned by O-CAPLP and O-CAPMF and held in the O-CAP Managed Accounts, which constitute approximately 23.62% of the Common Stock (as calculated pursuant to Rule 13d-3 under the Exchange Act).

 

7



 

Corbin Capital Partners, L.P. (“Corbin Capital”), as the investment manager of Corbin, may be deemed to beneficially own 16,458,637 shares of Common Stock that would be issuable upon the exercise of Warrants held of record by Corbin, as Corbin Capital has the authority to terminate O-CAPMGT’s investment advisory agreement at any time and exercises supervisory authority over investments made by O-CAPMGT for the account of Corbin.  The 16,458,637 shares of Common Stock referred to above constitute approximately 17.53% of the Common Stock (as calculated pursuant to Rule 13d-3 under the Exchange Act).

 

Each of the foregoing percentages of outstanding Common Stock, as calculated pursuant to Rule 13d-3 of the Exchange Act, is based on 77,433,408 shares of Common Stock outstanding on October 2, 2013, as provided by the Company’s management.

 

(b)                                 With respect to all of the shares beneficially owned by Wallen and described in Item 5(a) above, Wallen has shared power to direct the vote and sole power to dispose or direct the disposition of such shares, subject to the restrictions set forth in the Voting Agreement as described under Item 6 below.  The responses set forth in the seventh paragraph of Item 6 below are incorporated herein by reference in their entirety.

 

Each of Anchorage Advisors Management, L.L.C., a Delaware limited liability company (“Management”), Anchorage Capital Group, L.L.C. (formerly Anchorage Advisors, L.L.C.), a Delaware limited liability company (“Capital Group”), and Messrs. Anthony L. Davis and Kevin M. Ulrich (together with Management and Capital Group, the “Anchorage Parties” and, the Anchorage Parties together with Anchorage IOOM III, Anchorage IO III(B) and AIO III, “Anchorage”) share power to vote or direct the vote, and the power to dispose or direct the disposition of, all shares of the Common Stock that is directly held by each of Anchorage IOOM III, Anchorage IO III(B) and AIO III and described in Item 5(a) above.  Management is the sole managing member of Capital Group.  Capital Group provides investment management services to each of Anchorage IOOM III, Anchorage IO III(B) and AIO III.  Mr. Davis is the President of Capital Group and a managing member of Management, and Mr. Ulrich is the Chief Executive Officer of Capital Group and the other managing member of Management.  All investment and voting decisions with respect to the Common Stock beneficially owned by the Anchorage Parties have been, and will continue to be, made by Capital Group.  Each of the Anchorage Parties disclaims beneficial ownership of such Common Stock except to the extent of its pecuniary interest therein.

 

By virtue of its position with each of O-CAPLP, O-CAPMF, and the O-CAP Managed Accounts, O-CAPMGT may be deemed to have shared power to vote and dispose of the shares of Common Stock directly held by O-CAPLP and O-CAPMF and held in the O-CAP Managed Accounts, and described in Item 5(a) above, respectively.  By virtue of its position as general partner of O-CAPLP and O-CAPMF, O-CAPADV may be deemed to have shared power to vote and dispose of the shares of Common Stock directly held by O-CAPLP and O-CAPMF and described in Item 5(a) above, respectively.  By virtue of their respective positions with O-CAPLP, O-CAPMF and O-CAPMGT, each of O-CAPGP and Messrs. Olshan and Sturdivant may

 

8



 

be deemed to have shared power to vote and dispose of the shares of Common Stock directly held by O-CAPLP and O-CAPMF, and held in the O-CAP Managed Accounts, and described in Item 5(a) above, respectively.

 

By virtue of its position with Corbin, Corbin Capital may be deemed to have shared dispositive and shared voting power with respect to the shares of Common Stock that would be issuable upon the exercise of the Warrants held of record by Corbin and described in Item 5(a) above.

 

(c)                                  Except as set forth in this Item 5 above, Wallen has not engaged in any transaction during the past 60 days involving the Company’s securities.

 

(d)                                 See Item 3 above.

 

(e)                                  Not applicable.

 

Item 6.         Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer.

 

As described in Item 3 above, on November 24, 2009, the Company entered into transactions with Langtry pursuant to which the Company issued to Langtry 10,350,000 shares of Common Stock and 103,500 shares of Series B Convertible Preferred Stock.  For a period of five years under the respective Subscription Agreements, Langtry has the right to require the Company to file with the Commission one or more registration statements so as to permit the resale of such shares of Common Stock and the Common Stock issuable upon conversion of the Series B Convertible Preferred Stock.

 

As described in Item 3 above, on October 2, 2013, pursuant to the terms of the Conversion Agreement, the Company issued (a) 12,047 shares of Series B Convertible Preferred Stock to Langtry in exchange for the cancellation of all of the issued and outstanding shares of Series A Convertible Preferred Stock held by Langtry and (b) 2,115 shares of Series B Convertible Preferred Stock to Wallen in exchange for Wallen’s cancellation of a promissory note payable by the Company to Wallen in the principal amount of $2.0 million, plus accrued and unpaid interest of $114,986.  The promissory note provided for interest at the prime rate of interest, plus 1% per annum.

 

As described in Item 3 above, on October 2, 2013, pursuant to the terms of a Purchase and Sale Agreement, the Company issued to Tauren 2,000 shares of Series B Convertible Preferred Stock as partial consideration for certain fractional working interests in Northwest Louisiana.  Immediately following the issuance of the shares of Series B Convertible Preferred Stock to Tauren, Tauren transferred 200 of these shares in satisfaction of a pre-existing net profits interest obligation to a third party.

 

As described in Item 3 and Item 5 above, on October 2, 2013, Wallen entered into the Voting Agreement with the Investors, pursuant to which Wallen and the Investors have agreed to vote together with respect to certain matters submitted for a vote to the shareholders of the Company, including to cause the election (or removal, upon the

 

9



 

Investors’ request) of any directors designated by the Investors in accordance with the Investment Agreement, dated as of October 2, 2013 (the “Investment Agreement”), between the Company and the Investors, which is filed as Exhibit 5 hereto.  Under the Investment Agreement, Anchorage has the right to designate two members and O-CAP and Corbin, collectively, have the right to designate one member (subject to adjustment for changes in board size) for election or appointment to the Company’s board of directors and certain information rights, veto rights, pre-emptive rights and sale rights, among others.

 

In addition, Wallen and the Investors have agreed, among other things, to vote together to increase the number of authorized shares of Common Stock from time to time to ensure that there are sufficient shares of Common Stock available to satisfy the exercise of outstanding Warrants; to ensure that provisions of the Company’s Certificate of Formation or By-laws (and similar organizational documents of any subsidiary of the Company) are adhered to and such provisions do not, at any time, facilitate transactions that are in conflict with the terms of the Investment Agreement or any other “Transaction Document” (as defined in the Voting Agreement); in favor of any “Sale of the Company” (as defined in the Investment Agreement) or the “Redemption” (as defined in the Investment Agreement), to the extent requested by the Investors; and against any action or agreement that would result in a breach of any representation, warranty, covenant or obligation of the Company in the Investment Agreement or any other Transaction Document.

 

Pursuant to the Voting Agreement, Wallen has designated and appointed each of Capital Group and O-CAPMGT, or any of their designees, with full power to vote (or cause to be voted) all shares beneficially owned by Wallen in conformity with the Voting Agreement with respect to the matters discussed above, as set forth in more detail in the Voting Agreement.

 

Pursuant to the Voting Agreement, Wallen may not transfer shares that are “Voting Securities” of the Company within the meaning of the Voting Agreement (which includes all shares of Common Stock beneficially owned by Wallen and described in Item 5(a) above) unless:  (i) Wallen provides prior written notice of the name and address of such transferee and the number of shares proposed to be transferred to the Investors and (ii) such transferee agrees, as a condition to the effectiveness of such transfer, to become a party to the Voting Agreement, except that Wallen is permitted to transfer certain shares of his Voting Securities without compliance with the foregoing clause (ii): (A) to a person that is already a party to the Voting Agreement (provided that such shares so transferred will be subject to the Voting Agreement); (B) to a person if, following the transfer to such person, Wallen continues to beneficially own, at all times during the term of the Voting Agreement, all shares of Voting Securities so transferred; and (C) to any other person or persons in an aggregate amount not to exceed the “Annual Limit” (as defined in the Voting Agreement) in any calendar year; provided that, at all times, the aggregate shares of Voting Securities beneficially owned by Wallen and subject to the Voting Agreement, when taken together with the aggregate shares of Voting Securities

 

10



 

beneficially owned by the Investors at such time, must represent at least 65% of the total shares of Voting Securities on a fully diluted basis.

 

The foregoing summary of agreements and transactions does not purport to be complete and is subject to, and qualified in its entirety by, the full text of those agreements that are being filed as exhibits hereto under Item 7 below, which are incorporated herein by reference.

 

Item 7.         Material to be Filed as Exhibits.

 

Exhibit 1 — Subscription and Common Stock Purchase Agreement, dated November 24, 2009, by and between the Company and Langtry Mineral & Development, LLC.  (previously filed as Exhibit 5 to Amendment No. 5 to this Schedule 13-D, and incorporated herein by reference)

 

Exhibit 2 — Voting Agreement, dated October 2, 2013, among the investors party thereto and Calvin A. Wallen, III

 

Exhibit 3 — Purchase and Sale Agreement, dated October 2, 2013, by and among Tauren Exploration, Inc. and Cubic Energy, Inc.

 

Exhibit 4 — Conversion and Preferred Stock Purchase Agreement dated October 2, 2013 among Cubic Energy, Inc., Langtry Mineral & Development, LLC and Calvin A. Wallen, III

 

Exhibit 5 — Investment Agreement, dated October 2, 2013, among the Company and the investors party thereto.

 

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SIGNATURE

 

After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this Statement is true, complete and correct.

 

 

Date:                  October 8, 2013

 

 

/s/ Calvin A. Wallen, III

 

Calvin A. Wallen, III

 

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EX-99.1 2 a13-21896_1ex99d1.htm EXHIBIT 2 - VOTING AGREEMENT

Exhibit 2

 

EXECUTION VERSION

 

VOTING AGREEMENT

 

DATED AS OF OCTOBER 2, 2013

 

AMONG

 

ANCHORAGE ILLIQUID OPPORTUNITIES OFFSHORE MASTER III, L.P.

 

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

 

AIO III AIV, L.P.

 

AND

 

CORBIN OPPORTUNITY FUND, L.P.

 

O-CAP PARTNERS, L.P.

 

O-CAP OFFSHORE MASTER FUND, L.P.

 

AND

 

CALVIN A. WALLEN, III

 



 

Table of Contents

 

 

Page

ARTICLE I

CERTAIN DEFINITIONS

 

Section 1.01

Certain Definitions

1

 

ARTICLE II

VOTING

 

Section 2.01

Voting

3

Section 2.02

Binding Effect

3

Section 2.03

Proxies

4

 

ARTICLE III

MISCELLANEOUS

 

Section 3.01

Termination

4

Section 3.02

Notices

4

Section 3.03

No Third Party Beneficiaries

5

Section 3.04

Governing Law

5

Section 3.05

Waiver of Jury Trial

6

Section 3.06

Specific Performance

6

Section 3.07

Counterparts

6

Section 3.08

Entire Agreement

6

Section 3.09

Assignment

6

Section 3.10

Amendment

7

Section 3.11

Severability

7

Section 3.12

Interpretation

7

Section 3.13

Construction

8

 

Exhibit A:

Form of Adherence Agreement

 

 



 

VOTING AGREEMENT

 

This VOTING AGREEMENT (this “Agreement”) is made and entered into on October 2, 2013, by and among Anchorage Illiquid Opportunities Offshore Master III, L.P., a Cayman Islands exempted limited partnership, Anchorage Illiquid Opportunities III (B), L.P., a Delaware limited partnership and AIO III AIV, L.P., a Delaware limited partnership (collectively, “Anchorage”), and Corbin Opportunity Fund, L.P., a Delaware limited partnership, O-CAP Partners, L.P., a Delaware limited partnership and O-CAP Offshore Master Fund, L.P., a Cayman Islands limited partnership (collectively, “O-Cap” and, together with Anchorage, the “Investors”) and Calvin A. Wallen, III (the “Major Shareholder” and, together with the Investors, the “Parties”).

 

RECITALS

 

WHEREAS, concurrently with the execution and delivery of this Agreement, (a) AIO III CE, L.P., a Cayman Islands limited partnership and an Affiliate of Anchorage, and O-Cap (together, the “Purchasers”) are purchasing from the Company certain senior secured notes of the Company pursuant to a Note Purchase Agreement, dated as of the date hereof, by and among Cubic Energy, Inc., a Texas corporation (the “Company”), the Purchasers and other parties thereto and (b) the Investors are purchasing from the Company certain Warrants to purchase shares of the common stock, par value $0.05 per share, of the Company (the “Common Stock”) and certain shares of Series C Voting Preferred Stock, par value $0.01 per share, of the Company, pursuant to a Warrant and Preferred Stock Agreement, dated as of the date hereof (the “Warrant Agreement”), between the Company and the Investors (such purchases of senior secured notes and Warrants, the “Investment”);

 

WHEREAS, concurrently with the execution and delivery of this Agreement, the Investors and the Company are entering into an Investment Agreement, dated as of the date hereof (the “Investment Agreement”); and

 

WHEREAS, in connection with the Investment, the Parties desire to enter into this Agreement in order to set forth their agreements and understandings with respect to the voting of shares of Voting Securities held by them and related matters;

 

NOW, THEREFORE, in consideration of the premises, the mutual covenants and agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:

 

ARTICLE I
CERTAIN DEFINITIONS

 

Section 1.01                             Certain Definitions.  As used in this Agreement, the following terms shall have the respective meanings set forth below.  Capitalized terms used but not defined herein shall have the respective meanings ascribed to them in the Investment Agreement.

 

Affiliate” means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, controls or is controlled by or is under common control with the Person specified; provided that Anchorage Capital Group, L.L.C., Corbin Capital Partners Management, LLC and O-CAP Capital Management, L.P. and any of their respective employees, partners, officers, directors,

 



 

funds or affiliates shall not be deemed Affiliates of the Company or any of its subsidiaries for all purposes hereunder.  For purposes of this definition, a Person shall be deemed to “control” or be “controlled by” a Person if such Person possesses, directly or indirectly, power to direct or cause the direction of the management and policies of such Person whether by contract or otherwise.

 

Anchorage” has the meaning set forth in the preamble.

 

Annual Limit” means (i) with respect to the period from the date hereof to December 31, 2013, 0.75% of the total shares of Voting Securities beneficially owned by the Major Shareholder as of the date hereof and (ii) with respect to calendar year 2014 and any subsequent calendar year, 3.0% of the total shares of Voting Securities beneficially owned by the Major Shareholder as of January 1 of such year.

 

Beneficial owner” (and the related terms “beneficially owned,” “beneficial owner” and “beneficial ownership”) has the meaning ascribed to such term in Rule 13d-3 under the Exchange Act.

 

Common Stock” has the meaning set forth in the recitals.

 

Company” has the meaning set forth in the recitals.

 

Full Physical Settlement” shall have the meaning ascribed to it in the Warrant Agreement.

 

Fully Diluted Basis” shall have the meaning ascribed to it in the Warrant Agreement.

 

Investment” has the meaning set forth in the recitals.

 

Investment Agreement” has the meaning set forth in the recitals.

 

Investors” has the meaning set forth in the preamble.

 

Major Shareholder” has the meaning set forth in the preamble.

 

O-Cap” has the meaning set forth in the preamble.

 

Parties” has the meaning set forth in the preamble.

 

Person” means any individual, corporation, partnership, joint venture, association, joint stock company, trust, unincorporated organization or government or any agency or political subdivision thereof.

 

Proxy” has the meaning set forth in Section 2.03.

 

Purchasers” has the meaning set forth in the preamble.

 

Transaction Documents” means this Agreement, the Investment Agreement, the Warrant Agreement and other Related Agreements (as defined in the Investment Agreement).

 

2



 

Voting Securities” means the Common Stock and any other securities of the Company of any kind or class having power generally to vote in the election of directors.

 

Warrants” shall have the meaning ascribed to it in the Warrant Agreement.

 

Warrant Agreement” has the meaning set forth in the recitals.

 

ARTICLE II
VOTING

 

Section 2.01                             VotingEach Party hereby agrees that, at any annual or special meeting of shareholders of the Company (however called), and any adjournment thereof, and in any written action by consent of shareholders of the Company, such Party shall vote or cause to be voted Voting Securities beneficially owned by such Party (to the extent such shares have the right to vote thereon):

 

(a)                                 to cause the election to the Board of all nominees for Investor Designated Directors that are duly nominated by the Investors pursuant to the terms of the Investment Agreement;

 

(b)                                 to cause the removal from the Board of any Investor Designated Director in the event the Investors request such Investor Designated Director’s removal;

 

(c)                                  to cause the election to the Board of any replacement Investor Designated Director that is duly nominated by the Investors pursuant to the terms of the Investment Agreement;

 

(d)                                 to increase the number of authorized shares of Common Stock from time to time to ensure that there will be sufficient shares of Common Stock available for issuance upon the exercise (on a Full Physical Settlement basis) of all of the Warrants outstanding at any given time;

 

(e)                                  to ensure that the provisions of the Certificate of Formation and the By-Laws (and similar organizational documents of any subsidiary of the Company) are adhered to and do not, at any time, facilitate transactions that are in conflict with the provisions of the Investment Agreement or any other Transaction Document;

 

(f)                                   in favor of any Sale of the Company or the Redemption, to the extent requested by the Investors pursuant to the terms of the Investment Agreement; and

 

(g)                                  against any action or agreement that would result in a breach of any representation, warranty, covenant or obligation of the Company in the Investment Agreement or any other Transaction Document.

 

Section 2.02                             Binding EffectEach Party hereby agrees and acknowledges that this Agreement constitutes a valid and binding voting agreement made in accordance with the Texas Business Organizations Code and has been noted conspicuously on any Voting Securities held by such Party or that this Agreement constitutes written notice from the Company thereof.

 

3



 

Each Party agrees that it shall not withdraw, contest, challenge or seek to withdraw, contest or challenge the validity or effectiveness of this Agreement.

 

Section 2.03                             Proxies.  Subject to the last two sentences of this Section 2.03, the Major Shareholder hereby irrevocably appoints each of Anchorage Capital Group, L.L.C. and O-CAP Capital Management, L.P., or any of their designees (each, a “Proxy”), with full power of substitution, as the Major Shareholder’s agent, attorney and proxy to vote (or cause to be voted) all shares of Voting Securities that are beneficially owned by the Major Shareholder and are entitled to vote, with respect to the matters set forth in Section 2.01.  This proxy is perpetual and irrevocable and coupled with an interest and is granted in consideration of the Investors entering into the Investment Agreement and the other Transaction Documents and consummating the Investment.  In the event that the Major Shareholder fails for any reason to vote the shares of Voting Securities it beneficially owns in accordance with the requirements of Section 2.01, then a Proxy shall have the right to vote such shares in accordance with the provisions of this Section 2.03.  The vote of such Proxy shall control in any conflict between the vote by such Proxy of such shares and a vote by the Major Shareholder of such shares.

 

ARTICLE III
MISCELLANEOUS

 

Section 3.01                             Termination.  This Agreement shall terminate, except for this Article III (other than the provisions of Section 3.09), which shall survive such termination, (a) upon the written agreement to that effect, signed by all Parties or (b) if at any time the Investors’ Aggregate Ownership Percentage is less than the Minimum Aggregate Ownership Percentage (as those terms are defined in the Investment Agreement).

 

Section 3.02                             Notices.  All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by telecopy or by recognized overnight courier service to the respective parties at the following addresses (or at such other address for a party as shall be specified by notice given in accordance with this Section 3.02):

 

If to the Investors (as applicable):

 

If to Anchorage:

 

Anchorage Capital Group, L.L.C.
610 Broadway, 6
th Floor
New York, NY 10012
Attention: Jessica Fainman

 

If to Corbin Opportunity Fund, L.P.:

 

Corbin Capital Partners Management, LLC
590 Madison Avenue, 31
st Floor
New York, NY 10022

 

4



 

Attention:  Daniel Friedman

 

If to O-CAP Partners, L.P. or O-CAP Offshore Master Fund, L.P.:

 

O-CAP Advisors, LLC
600 Madison Avenue, 14
th Floor
New York, NY 10022
Attention: Lloyd Jagai

 

In each case, with a copy to:

 

Sullivan & Cromwell LLP
125 Broad Street
New York, NY 10004
Fax:  (212) 558-3588
Attention:  Robert S. Risoleo

Ari B. Blaut

 

If to the Major Shareholder:

 

Calvin A. Wallen

9870 Plano Road

Dallas, TX 75201

Fax: (972) 681-9687

 

With a copy to:

Dentons US LLP

2000 McKinney Ave, Suite 1900

Dallas, TX 75201

Fax: (214) 259-0910

 

Section 3.03                             No Third Party Beneficiaries.  This Agreement shall be binding upon and inure solely to the benefit of the Parties and their respective successors and permitted assigns, and nothing herein, express or implied, is intended to or shall confer upon any other person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

 

Section 3.04                             Governing LawThis Agreement shall be governed by, and construed in accordance with, the laws of the State of Texas.  The Parties hereby (a) submit to the jurisdiction of any New York state or federal court, in each case sitting in the Borough of Manhattan, for the purpose of any action or proceeding arising out of or relating to this Agreement brought by any Party, and (b) irrevocably waive, and agree not to assert by way of motion, defense, or otherwise, in any such action or proceeding, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that the action or proceeding is brought in an inconvenient forum,

 

5



 

that the venue of the action or proceeding is improper, or that this Agreement or the transactions contemplated hereby may not be enforced in or by any of the above-named courts.

 

Section 3.05                             Waiver of Jury TrialEach of the Parties hereby waives to the fullest extent permitted by applicable law any right it may have to a trial by jury with respect to any litigation directly or indirectly arising out of, under or in connection with this Agreement or the transactions contemplated hereby.  Each of the Parties (a) certifies that no representative, agent or attorney of any other Party has represented, expressly or otherwise, that such other Party would not, in the event of litigation, seek to enforce that foregoing waiver and (b) acknowledges that it and the other Parties have been induced to enter into this Agreement by, among other things, the mutual waivers and certifications in this Section 3.05.

 

Section 3.06                             Specific PerformanceThe Parties agree that irreparable damage would occur in the event that any provision of this Agreement was not performed in accordance with the terms hereof and that the Parties shall be entitled to specific performance of the terms hereof, in addition to any other remedy at law or in equity.

 

Section 3.07                             CounterpartsThis Agreement may be executed and delivered (including by facsimile transmission) in one or more counterparts, and by the different Parties in separate counterparts, each of which when executed and delivered shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.

 

Section 3.08                             Entire AgreementThis Agreement constitutes the entire agreement among the Parties with respect to the subject matter hereof and supersedes all prior agreements and understandings, both written and oral, among the Parties, or any of them, with respect to the subject matter hereof.

 

Section 3.09                             Assignment; Transfer(a) This Agreement shall not be assigned by operation of law or otherwise without the express written consent of the Parties (which consent may be granted or withheld in the sole discretion of any Party) and any such assignment or attempted assignment without such consent shall be void; provided that each Investor may assign any or all of its rights under this Agreement to one or more of its Affiliates which purchase or hold any Warrants or shares of Common Stock; provided, further, that no such assignment shall relieve such Investor of any of its obligations hereunder and all Warrants and shares of Common Stock held by any Affiliate of such Investor shall be deemed to be held by such Investor for all purposes under this Agreement. Any Affiliate of an Investor that holds or acquires any Warrants or shares of Common Stock shall be subject to the obligations of such Investor hereunder and all Warrants and shares of Common Stock owned by such Investor and its Affiliates shall be aggregated and considered to be owned by such Investor for all purposes hereunder.

 

(b)  No shares of Voting Securities beneficially owned by the Major Shareholder may be transferred to any Person unless (i) the Major Shareholder shall, prior to the effectiveness of such transfer, furnish to each Investor written notice of the name and address of such transferee and the shares of Voting Securities that are proposed to be transferred, and (ii) such transferee shall, concurrently with and as a condition to the effectiveness of such transfer, become a party to this Agreement by executing an Adherence Agreement substantially in the

 

6



 

form of Exhibit A hereto for the benefit of all Parties; provided that the Major Shareholder may transfer shares of Voting Securities beneficially owned by him, without complying with the requirements of clause (ii) of this Section 3.09(b), (A) to a Person that is already a party to this Agreement; provided that the shares so transferred will be subject to this Agreement, (B) to a Person if, following the transfer to such Person, the Major Shareholder continues to beneficially own, at all times during the term of this Agreement, all shares of Voting Securities so transferred, and (C) to any other Person or Persons in an aggregate amount not to exceed the Annual Limit in any calendar year (or, in the case of calendar year 2013, the period from the date hereof to December 31, 2013); provided, further, that, notwithstanding the foregoing, the Major Shareholder may not transfer any shares of Voting Securities beneficially owned by him unless, following such proposed transfer, the shares of Voting Securities beneficially owned by him and subject to this Agreement, taken together with the aggregate shares of Voting Securities beneficially owned by the Investors at such time, shall represent at least 65% of the total shares of Voting Securities on a Fully Diluted Basis at such time.  Any transfer or attempted transfer by the Major Shareholder in violation of the requirements set forth in the immediately preceding sentence shall be void.

 

Section 3.10                             Amendment; WaiverThis Agreement may not be amended or modified, nor may any provision hereof be waived other than by a written instrument signed by the Parties. No failure or delay by any Party in exercising any right, power or privilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege.  The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law.

 

Section 3.11                             SeverabilityIf any term or other provision of this Agreement is held to be invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect for so long as the economic or legal substance of the transactions is not affected in any manner materially adverse to any Party.  Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the fullest extent possible.

 

Section 3.12                             Interpretation.  The words “hereof”, “herein” and “hereunder” and words of like import used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement.  When reference is made in this Agreement to an Article or a Section, such reference shall be to an Article or Section of this Agreement, unless otherwise indicated.  The table of contents, table of defined terms and headings contained in this Agreement are for convenience of reference only and shall not affect in any way the meaning or interpretation of this Agreement.  The language used in this Agreement shall be deemed to be the language chosen by the parties hereto to express their mutual intent, and no rule of strict construction shall be applied against any party.  Whenever the context may require, any pronouns used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns and pronouns shall include the plural, and vice versa.  Any reference to any federal, state, local or foreign statute or law shall be deemed also to refer to all

 

7



 

rules and regulations promulgated thereunder, unless the context requires otherwise.  Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.”

 

Section 3.13                             Construction.  Each Party acknowledges and agrees it has had the opportunity to draft, review and edit the language of this Agreement and that no presumption for or against any Party arising out of drafting all or any part of this Agreement will be applied in any controversy, claim or dispute relating to, in connection with or involving this Agreement.  Accordingly, the Parties hereby waive the benefit of any rule of law or any legal decision that would require, in cases of uncertainty, that the language of a contract should be interpreted most strongly against the Party who drafted such language.

 

[signature pages follow]

 

8



 

IN WITNESS WHEREOF, each Party has signed this Agreement, or caused this Agreement to be signed on its behalf, on the date first above written.

 

 

ANCHORAGE ILLIQUID OPPORTUNITIES OFFSHORE MASTER III, L.P.

 

 

 

By:

Anchorage Capital Group, L.L.C., its Investment Manager

 

 

 

 

By:

/s/ Michael Aglialoro

 

 

Name:

Michael Aglialoro

 

 

Title:

Executive Vice President

 



 

 

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

 

 

 

By:

Anchorage Capital Group, L.L.C., its Investment Manager

 

 

 

 

By:

/s/ Michael Aglialoro

 

 

Name:

Michael Aglialoro

 

 

Title:

Executive Vice President

 

2



 

 

AIO III AIV, L.P.

 

 

 

By:

Anchorage Capital Group, L.L.C., its Investment Manager

 

 

 

By:

/s/ Michael Aglialoro

 

 

Name:

Michael Aglialoro

 

 

Title:

Executive Vice President

 

3



 

 

CORBIN OPPORTUNITY FUND, L.P.

 

 

 

By:

Corbin Capital Partners Management, LLC,

 

 

Its General Partner

 

 

 

 

By:

/s/ Daniel Friedman

 

 

Name:

Daniel Friedman

 

 

Title:

General Counsel

 

4



 

 

O-CAP PARTNERS, L.P.

 

 

 

By:

O-CAP Advisors, LLC, Its

 

 

General Partner

 

 

 

 

By:

/s/ Jared Sturdivant

 

 

Name:

Jared Sturdivant

 

 

Title:

Manager

 



 

 

O-CAP OFFSHORE MASTER FUND, L.P.

 

 

 

By:

O-CAP Advisors, LLC, Its

 

 

General Partner

 

 

 

 

By:

/s/ Jared Sturdivant

 

 

Name:

Jared Sturdivant

 

 

Title:

Manager

 



 

 

THE MAJOR SHAREHOLDER

 

 

 

 

 

/s/ Calvin A. Wallen, III

 

Calvin A. Wallen, III

 

2



 

EXHIBIT A

 

FORM OF ADHERENCE AGREEMENT

 

This Adherence Agreement (this “Adherence Agreement”) is executed on                                       , 20    , by the undersigned (the “Holder”) pursuant to the terms of that certain Voting Agreement, dated as of October 2, 2013 (as may be amended from time to time, the “Voting Agreement”), by and among Anchorage Illiquid Opportunities Offshore Master III, L.P., a Delaware limited partnership, Anchorage Illiquid Opportunities III (B), L.P., a Delaware limited partnership and AIO III AIV LP, a Delaware limited partnership (collectively, “Anchorage”), and Corbin Opportunity Fund, L.P., a Delaware limited partnership, O-CAP Partners, L.P., a Delaware limited partnership and O-CAP Offshore Master Fund, L.P., a Cayman Islands limited partnership (collectively, “O-Cap” and, together with Anchorage, the “Investors”) and Calvin A. Wallen, III.  Capitalized terms used but not defined in this Adherence Agreement shall have the respective meanings ascribed to them in the Voting Agreement.  By the execution of this Adherence Agreement, the Holder agrees as follows:

 

1.             Acknowledgement.  The Holder acknowledges that the Holder is acquiring certain shares of Voting Securities (the “Stock”) in accordance with Section 3.09 of the Voting Agreement, as a transferee of such shares of Voting Securities from a party in such party’s capacity as the Major Shareholder bound by the Voting Agreement.

 

2.             Agreement.  The Holder hereby (a) agrees that the Stock shall be bound by and subject to the terms of the Voting Agreement and (b) adopts the Voting Agreement with the same force and effect as if the Holder were originally the Major Shareholder thereunder for all purposes of the Voting Agreement.

 

3.             Notice.  Any notice required or permitted by the Voting Agreement shall be given to the Holder at the address or facsimile number listed below the Holder’s signature hereto.

 

A-1



 

HOLDER:

ACCEPTED AND AGREED:

 

 

 

 

 

Anchorage Illiquid Opportunities

By:

 

 

Offshore Master III, L.P.

Name:

 

 

Title:

 

By:

Anchorage Capital Group, L.L.C.,

 

 

 

its Investment Manager

Address:

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

Facsimile Number:

 

 

 

 

 

 

 

 

 

Anchorage Illiquid Opportunities III (B), L.P.

 

 

 

 

 

 

By:

Anchorage Capital Group, L.L.C.

 

 

 

its Investment Manager

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

AIO III AIV, L.P.

 

 

 

 

 

 

By:

Anchorage Capital Group, L.L.C.,

 

 

 

its Investment Manager

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

 

 

Corbin Opportunity Fund, L.P.

 

 

 

 

 

 

By:

Corbin Capital Partnership

 

 

Management, LLC, its General Partner

 

 

 

 

 

 

By

 

 

 

 

Name:

 

 

 

Title:

 

A-2



 

 

 

O-CAP Partners, L.P.

 

 

 

 

 

 

By:

O-CAP Advisors, LLC, its General Partner

 

 

 

 

 

 

By

 

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

 

 

 

O-CAP Offshore Master Fund, L.P.

 

 

 

 

 

 

By:

O-CAP Advisors, LLC, its General Partner

 

 

 

 

 

 

By

 

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

 

 

 

 

 

Calvin A. Wallen, III

 

A-3


EX-99.2 3 a13-21896_1ex99d2.htm EXHIBIT 3 - PURCHASE AND SALE AGREEMENT

Exhibit 3

 

PURCHASE AND SALE AGREEMENT

 

THIS PURCHASE AND SALE AGREEMENT (the “Agreement”) is made and entered into this 30th day of September, 2013, by and among Cubic Asset, LLC, a Delaware limited liability company (“Buyer”), Cubic Energy, Inc., a Texas corporation (“Cubic”), and Tauren Exploration, Inc., a Texas corporation (“Seller”)(Buyer, Cubic and Seller, each a “Party” and collectively, the “Parties”), upon and subject to the following terms and conditions:

 

RECITALS

 

A.                                    Seller owns and desires to sell all of its interests in certain oil and gas properties, all as more particularly described below.

 

B.                                    Buyer is an entity which is controlled by Cubic, and desires to purchase all of Seller’s interest in the Properties (as defined below) pursuant to the terms of this Agreement.

 

C.                                    As partial consideration for the Properties, Cubic, for the benefit of Buyer, desires to issue the Preferred Stock (as defined below) to Seller.

 

D.                                    To accomplish the foregoing, the Parties desire to enter into this Agreement.

 

AGREEMENT

 

In consideration of the mutual promises contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Buyer, Cubic and Seller agree as follows:

 

1.                                      Purchase and Sale.  Subject to the terms and conditions herein set forth, Seller agrees to sell, assign, convey and deliver to Buyer, and Buyer agrees to purchase and acquire from Seller at the Closing (as hereinafter defined), all of Seller’s right, title and interest in and to the following:

 

(a)                                 Leases. The oil, gas and mineral leases and the leasehold estates created thereby described in the attached Exhibit A (collectively, the “Leases”), and all of the lands covered by said Leases (“Lands”), together with corresponding interests in and to all the property and rights incident thereto, including all rights in any pooled or unitized acreage by virtue of the Lands being a part thereof, all production from the pool or unit allocated to any such Lands; and all interests in any wells within the pool or unit associated with the Lands together with all other oil, gas or mineral rights and interests of any kind whatsoever owned or claimed by Seller in the Lands or any lands pooled or unitized therewith or any portion thereof, whether or not described on Exhibit A hereto.

 

(b)                                 Wells. All oil and gas wells, salt water disposal wells, injection wells, and water wells located on the Leases or lands pooled or unitized therewith, along with the proration, spacing or drilling units associated therewith (“Wells”) and all pipelines, personal property, equipment, fixtures, and improvements located on and appurtenant to the Leases and Lands or elsewhere insofar as they are used or obtained in connection with the operation of the Leases or

 



 

relate to the production, treatment, sale, or disposal of Hydrocarbons or water produced from the Leases or Lands or attributable thereto (the “Facilities”).

 

(c)                                  Contracts. Farmout and farmin agreements, operating agreements, production sales and purchase contracts, saltwater disposal agreements, surface leases, division and transfer orders, and to the extent transferable by Seller without material restrictions under third party agreements, all other contracts, contractual rights, interests and other agreements covering or affecting any or all of the interests described or referred to above (“Contracts”).

 

(d)                                 Easements. All easements, rights-of-way, licenses, authorizations, permits, and similar rights and interests applicable to, or used or useful in connection with, any or all of the above described interests (the “Easements”).

 

(e)                                  Hydrocarbons. All oil, condensate, natural gas, natural gas liquids, and other minerals produced after the Effective Date attributable to Seller’s interest in the Properties (the “Hydrocarbons”).

 

(f)                                   Permits. All environmental and other governmental (whether federal, state or local) permits, licenses, orders, authorizations, franchises and related instruments or rights relating to the ownership, operation or use of the Facilities (the “Permits”).

 

(g)                                  Records. To the extent transferable without material restriction or payment of a transfer or licensing fee under third party agreements, all of Seller’s right, title and interest in and to all books, files, records, correspondence, studies, surveys, reports, geologic, proprietary geophysical and seismic data (including, raw data and any interpretative data or information relating to such geologic, geophysical and seismic data) and other data in the actual possession or control of Seller and relating to the operation of the Leases, Lands and Facilities, including without limitation, all title records, customer lists, supplier lists, sales materials, promotional materials, operational records, technical records, production and processing records, division order and lease right-of-way files, accounting files and contract files (the “Records”).

 

(h)                                 The Properties. All of the above real and personal properties, rights, titles, and interests described in Sections (a) through (g) above, subject to the limitations and terms expressly set forth herein and in the Exhibit A attached hereto, and excluding the Excluded Interests described below, are hereinafter collectively called the “Properties” or, individually, the “Property”.

 

(i)                                     Excluded Interests. Seller hereby excepts and excludes from the Property, and reserves unto itself, the overriding royalty interest in and to the Leases owned by Seller and created under the terms of that certain Assignment of Overriding Royalty Interest effective October 1, 2009 from Cubic Energy, Inc. to Mortgagor recorded at File No. 673652 of the records of DeSoto Parish, Louisiana and at File No. 2263515 of the records of Caddo Parish, Louisiana (the “Excluded Interests”).

 

2.                                      Purchase  Price.  The total purchase price for all of Seller’s interest in the Properties shall be (i) a cash amount equal to FOUR MILLION DOLLARS AND NO/100 ($4,000,000.00) (the “Cash Purchase Price”) and (ii) 2000 shares of Preferred Stock issued pursuant to the terms of a Subscription Agreement and Preferred Stock Purchase Agreement, the form of which is attached hereto as Exhibit C (the “Subscription Agreement”) (collectively, the

 

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Purchase Price”), subject to the adjustments as provided for in Section 8 hereof.  For the purposes of this Agreement “Preferred Stock” shall mean 9.5% Series B convertible preferred stock of Cubic, convertible into common stock of Cubic at stock price of $0.50 per share and which is more fully described in the Subscription Agreement

 

3.                                      Effective Date and Closing.  The conveyance of the Properties by Seller to Buyer shall occur on October 2, 2013 (the “Closing” or “Closing Time”) unless extended by the written agreement of the parties, to be effective simultaneously with the Closing Time (the “Effective Date”).

 

4.                                      Representations and Warranties of Seller.  Seller represents and warrants to Buyer as of the date hereof and will represent and warrant to Buyer at the Closing as follows:

 

(a)                                 Authority.  Seller is duly organized, validly existing and in good standing under the laws of the State of Texas, and has all requisite power and authority to enter into, deliver and perform this Agreement and to carry out the transactions contemplated by this Agreement.

 

(b)                                 Valid Agreement.  This Agreement constitutes the legal, valid and binding agreement of Seller, and at Closing, all instruments required hereunder to be executed and delivered by Seller shall constitute legal, valid and binding obligations of Seller, subject to the effects of bankruptcy, insolvency, reorganization, moratorium and similar laws from time to time in effect, as well as general principles of equity.

 

(c)                                  Brokers.  Seller has incurred no obligation or liability, contingent or otherwise, for brokers or finders fees with respect to this transaction for which Buyer shall have any obligation or liability.

 

(d)                                 Obligation to Close.  Seller shall take or cause to be taken all actions necessary or advisable to consummate the transactions contemplated by this Agreement and to insure that as of the Closing Time, it will not be under any material corporate, legal, governmental or contractual restriction that would prohibit or delay the timely consummation of such transaction.

 

5.                                      Representations and Warranties of Buyer.  Buyer represents and warrants to Seller as of the date hereof and will represent and warrant to Seller at the Closing as follows:

 

(a)                                 Authority.  Buyer is duly organized, validly existing and in good standing under the laws of the State of Delaware and has all requisite power and authority to enter into, deliver and perform this Agreement and to carry out the transactions contemplated by this Agreement.

 

(b)                                 Valid Agreement.  This Agreement constitutes the legal, valid and binding agreement of Buyer, and at Closing, all instruments required hereunder to be executed and delivered by Buyer shall constitute legal, valid and binding obligations of Buyer, subject to the effects of bankruptcy, insolvency, reorganization, moratorium and similar laws from time to time in effect, as well as general principles of equity.

 

(c)                                  Brokers.  Buyer has incurred no obligation or liability, contingent or otherwise, for brokers or finders fees with respect to this transaction for which Seller shall have any obligation or liability.

 

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(d)                                 Obligation to Close.  Buyer shall take or cause to be taken all actions necessary or advisable to consummate the transactions contemplated by this Agreement and to insure that as of the Closing Time, it will not be under any material corporate, legal, governmental or contractual restriction that would prohibit or delay the timely consummation of such transaction.

 

6.                                      Conditions to Closing.

 

(a)                                             Seller’s Conditions to Closing.  The obligations of Seller under this Agreement are subject to each of the following conditions being met:

 

(i)                                     Representations True and Correct.  Each and every representation and warranty of Buyer under this Agreement shall be true and accurate in all material respects (except that those representations and warranties of Buyer that are qualified by materiality shall be true and correct in all respects) as of the date when made and shall be deemed to have been made again at and as of the time of Closing and shall at and as of such time of Closing be true and accurate in all material respects, except as to changes specifically contemplated by this Agreement or consented to by Seller.

 

(ii)                                  Legal Process.  No order, decree, ruling or other legal process has been entered by any court or governmental agency having jurisdiction over the Parties or the subject matter of this Agreement that seeks to enjoin or prohibit this transaction and that remains in effect at the time of Closing.

 

(b)                                             Buyer’s Conditions to Closing.  The obligations of Buyer under this Agreement are subject to each of the following conditions being met:

 

(i)                                     Representations True and Correct.  Each and every representation and warranty of Seller under this Agreement shall be true and accurate in all material respects (except that those representations and warranties of Seller that are qualified by materiality shall be true and correct in all respects) as of the date when made and shall be deemed to have been made again at and as of the time of Closing and shall at and as of such time of Closing be true and accurate in all material respects, except as to changes specifically contemplated by this Agreement or consented to by Buyer.

 

(ii)                                  Legal Process.  No order, decree, ruling or other legal process has been entered by any court or governmental agency having jurisdiction over the Parties or the subject matter of this Agreement that seeks to enjoin or prohibit this transaction and that remains in effect at the time of Closing.

 

(iii)                               Release of Liens.  At Closing, no liens, mortgages, security interests or any other encumbrance shall exist on any of the Properties.

 

(c)                                              Negative Covenants.  Until Closing, Seller shall not do any of the following with regard to the Properties without Buyer’s consent:

 

(i)                                     Release all or any portion of the Leases.

 

(ii)                                  Create any lien, security interest or other encumbrance on the Properties.

 

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(iii)                               Dispose of any Property or any part thereof.

 

7.                                      Closing.

 

(a)                                             Time and Place.  The Closing shall be held at the offices of Buyer’s counsel, Dentons US, LLP, whose address is 2000 McKinney Ave, Suite 1900, Dallas, Texas 75201 or at such other time and place as the Parties shall mutually agree.

 

(b)                                             Seller’s Deliveries.  At the Closing, Seller shall deliver the following:

 

(i)                                     a duly signed and acknowledged Assignment, Bill of Sale and Conveyance (the “Assignment”) in the form attached hereto as Exhibit B.

 

(ii)                                  a release of any liens encumbering the Properties, or any portion thereof, in a form reasonably acceptable to the Buyer.

 

(iii)                               a Subscription Agreement in the form attached hereto as Exhibit C.

 

(c)                                              Buyer’s Deliveries.  At the Closing, Buyer and Cubic shall deliver the following:

 

(i)                                     an Assignment, duly signed and acknowledged by Buyer.

 

(ii)                                  an amount equal to the Cash Purchase Price in immediately available funds pursuant to the wiring instructions provided by the Seller.

 

(iii)                               a Subscription Agreement in the form attached hereto as Exhibit C, duly signed by Cubic.

 

8.                                      Revenues Received Following ClosingBuyer agrees that Seller shall be entitled to retain and receive all revenue from the sale of Hydrocarbons from the Properties which are attributable to periods of time prior to the Effective Date.  Any such revenues received by Buyer shall be promptly paid over to Seller, and, in any event, not less than five (5) business days of receipt of same.

 

9.                                      Miscellaneous.

 

(a)                                 Further Assurances.  The Parties agree to execute any documents, whether before or after the Closing, to aid the other Party in fulfilling the purpose of this Agreement.

 

(b)                                 Entire Agreement.  This Agreement, together with the Exhibits attached hereto and the Assignment and other documents to be delivered pursuant to the terms hereof, shall constitute the complete agreement between the Parties hereto and shall supersede all prior agreements, whether written or oral, and any representations or conversations with respect to the purchase and sale of the Properties.

 

(c)                                  Notices.  All communications required or permitted under this Agreement shall be in writing and may be sent by facsimile.  Such communication shall be deemed made when actually received, or if mailed by registered or certified mail, postage prepaid, addressed as

 

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set forth below, shall be deemed made three days after such mailing.  Faxes will be deemed to be received at the time and day reflected in the fax confirmation sheet.  Either Party may, by written notice to the other, change the address for mailing such notices.

 

Notices to Buyer:

 

Cubic Asset, LLC

 

 

9870 Plano Road

 

 

Dallas, Texas 75232

 

 

Attn: Jon Ross

 

 

Telephone: 972-681-8047

 

 

Facsimile: 972-681-9687

 

 

 

Notices to Cubic:

 

Cubic Energy, Inc.

 

 

9870 Plano Road

 

 

Dallas, Texas 75232

 

 

Attn: Jon Ross

 

 

Telephone: 972-681-8047

 

 

Facsimile: 972-681-9687

 

 

 

Notices to Seller:

 

Tauren Exploration, Inc.

 

 

9870 Plano Road

 

 

Dallas, Texas 75232

 

 

Attn: Calvin A. Wallen, III

 

 

Telephone: 972-681-8047

 

 

Facsimile: 972-681-9687

 

 

 

With a copy to:

 

Barry F. Cannaday

 

 

Dentons US, LLP

 

 

2000 McKinney Ave., Suite 1900

 

 

Dallas, Texas 75201

 

 

Telephone: 214-259-1855

 

 

Facsimile: 214-259-0910

 

(d)                                 Binding Effect.  This Agreement shall be binding upon and shall inure to the benefit of the Parties hereto, and their successors and assigns.  No assignment of this Agreement by either Party shall be made without the prior, written consent of the other Party, provided, however, that Buyer may, without consent, assign its rights under this Agreement to any of the Buyer’s current and future financing sources and any agents for such financing sources.

 

(e)                                  Law Applicable; Jurisdiction and Venue.  This Agreement shall be governed by and construed in accordance with the laws of the State of Texas, without regard to its choice of law principles.  ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST THE PARTIES ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR ANY OBLIGATIONS HEREUNDER, SHALL BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN HARRIS COUNTY, TEXAS. BY EXECUTING AND DELIVERING THIS AGREEMENT, THE PARTIES IRREVOCABLY (I) ACCEPT GENERALLY AND UNCONDITIONALLY THE EXCLUSIVE JURISDICTION AND VENUE OF THESE COURTS; (II) WAIVE ANY OBJECTIONS WHICH SUCH PARTY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTIONS OR

 

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PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (I) ABOVE AND HEREBY FURTHER IRREVOCABLY WAIVE AND AGREE NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM; (III) AGREE THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO SUCH PARTY AT THEIR RESPECTIVE ADDRESSES PROVIDED IN ACCORDANCE WITH SECTION 9(c); AND (IV) AGREE THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER SUCH PARTY IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT.

 

(f)                                   Headings.  The headings of the articles and sections of this Agreement are for guidance and convenience of reference only and shall not limit or otherwise affect any of the terms and provisions of this Agreement.

 

(g)                                  Timing.  Time is of the essence in this Agreement.

 

(h)                                 Expenses.  All fees, costs and expenses incurred by the Parties in negotiating this Agreement and in consummating the transactions contemplated by this Agreement shall be paid by the Party that incurred such fees, costs and expenses.

 

(i)                                     Amendment and Waiver.  This Agreement may be altered, amended or waived only by a written agreement executed by Seller and Buyer.  No waiver of any provision of this Agreement shall be construed as a continuing waiver of the provision.

 

(j)                                    Parties in Interest.  This Agreement is binding upon and shall inure to the benefit of the Parties and, except where prohibited, their successors, representatives or assigns.

 

(k)                                 Third-Party Beneficiaries.  Unless expressly stated to the contrary, no third party is intended to have any rights, benefits or remedies under this Agreement.

 

(l)                                     Severance.  If any provision of this Agreement is found to be illegal or unenforceable, the other terms of this Agreement shall remain in effect and this Agreement shall be construed as if the illegal or unenforceable provision had not been included.

 

(m)                             No Special DamagesNotwithstanding anything herein to the contrary, neither party shall have any obligations with respect to this Agreement, or otherwise in connection herewith, for any special, consequential or punitive damages.

 

(n)                                 Counterpart Execution.  This Agreement may be executed in counterparts, all of which are identical and all of which constitute one and the same instrument.  It shall not be necessary for Seller and Buyer to sign the same counterpart. This Agreement may be executed with signature pages exchanged via facsimile or electronic transmission, which shall be as effective as originals.

 

[Signatures on following page]

 

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IN WITNESS WHEREOF the undersigned Parties have executed this Agreement as of the date hereinabove first written.

 

 

BUYER

 

 

 

 

 

CUBIC ASSET, LLC

 

 

 

 

 

 

By:

/s/ Calvin A. Wallen, III

 

 

Calvin A. Wallen, III

 

 

President

 

 

 

 

 

SELLER

 

 

 

 

 

TAUREN EXPLORATION, INC.

 

 

 

 

 

 

By:

/s/ Calvin A. Wallen, III

 

 

Calvin A. Wallen, III,

 

 

President

 

 

 

 

 

CUBIC

 

 

 

 

 

CUBIC ENERGY, INC.

 

 

 

 

 

 

By:

/s/ Jon S. Ross

 

 

Jon S. Ross

 

 

Secretary

 

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EX-99.3 4 a13-21896_1ex99d3.htm EXHIBIT 4 - CONVERSION AND PREFERRED STOCK PURCHASE AGREEMENT

Exhibit 4

 

CONVERSION AND PREFERRED STOCK PURCHASE AGREEMENT

 

This Conversion and Preferred Stock Purchase Agreement (this “Agreement”), dated as of October 2, 2013, is by and between Cubic Energy, Inc. (the “Company”), a Texas corporation, Langtry Mineral & Development, LLC, a Texas limited liability company (“Langtry”), and Calvin A. Wallen, III (“Wallen” and together with Langtry, the “Subscribers”).

 

1.                                      Subscription.  Subject to the terms and conditions hereof, (a) Langtry hereby irrevocably subscribes for and agrees to purchase from the Company 12,047 shares of Series B Convertible Preferred Stock, par value $0.01 per share (the “Preferred Stock”), and the Company agrees to sell such shares of Preferred Stock to Langtry, in exchange for the cancellation of 120,468 issued and outstanding shares of the Company’s Series A Convertible Preferred Stock held by Langtry, and (b) Wallen hereby irrevocably subscribes for and agrees to purchase from the Company 2,115 shares of Preferred Stock, and the Company agrees to sell such shares of Preferred Stock to Wallen, in exchange for the cancellation of that certain promissory note dated April 1, 2013 from the Company payable to Wallen in the principal amount of $2,000,000, plus accrued and unpaid interest thereon (the “Wallen Note”).  The foregoing shares of Preferred Stock are collectively referred to herein as the “Shares.”  The Preferred Stock is convertible into shares (the “Conversion Shares”) of Common Stock, par value $0.05 per share (the “Common Stock”), as provided in that Certificate of Designation Establishing Series of Preferred Stock, which sets forth the rights and preferences of the Preferred Stock (the “Certificate of Designation”).  The Conversion Shares and the Shares are referred to collectively herein as the “Securities.”

 

2.                                      Delivery of Consideration; Delivery of Certificates Representing Shares.  The Subscribers understand and agree that this subscription is made subject to the following terms and conditions:

 

(a)                                 Effective as of the Closing Date, (i) Langtry shall deliver to the Company for cancellation the certificates representing the Series A Convertible Preferred Stock as contemplated above and (ii) Wallen shall deliver to the Company for cancellation the Wallen Note; and

 

(b)                                 Certificates representing the Shares will be issued in the names of the Subscribers, as contemplated herein.

 

3.                                      Delivery of Shares.  The delivery of the Shares by the Company shall occur on the date first set forth above (the “Closing Date”).  On the Closing Date, the Company will deliver or cause to be delivered, physical certificates representing the Shares purchased by the Subscribers.

 

4.                                      Registration Rights.

 

(a)                                 The Subscribers each acknowledge that it/he is acquiring the Shares for its/his 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”).  Each Subscriber further agrees that it/he 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 be able to bear the economic risk of its/his investment for an indefinite period

 



 

of time because the 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.  Each Subscriber further recognizes that the Company is not assuming any obligation to register any security except as expressly set forth herein.  Each Subscriber also acknowledges that appropriate 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 Conversion 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 written request of either Subscriber (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 in order to comply with the provisions of the Securities Act so as to permit the registered resale of the Conversion Shares, for a period of five (5) years following the Closing Date.  The Conversion Shares that are registered for resale under such registration statement are referred to herein as the “Offering Securities,” and the Subscribers, together with their respective 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 A hereto, that describes the various procedures that may be used by the Offering Holders in the sale of Offering Securities; provided, however, that no holder of Securities (other than the Subscribers) shall be entitled to have the Conversion Shares, or the Conversion Shares issuable upon conversion of the Shares, 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 a holder of Offering Securities.

 

(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, 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 calendar days following the filing of any Form 8-K, Form 10-Q or Form 10-K, or other comparable form for purposes of filing a post-effective amendment

 

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to the registration statement, to the extent that such filings are not automatically incorporated by reference into the registration statement, and until such time as such post-effective amendment is declared effective.  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 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 without limitation on the amount of securities sold under Rule 144(e) 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 Conversion Shares 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 Offering Holder who continues to hold Securities, 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 prospectus contained in 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 prospectus 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

 

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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 (d) above; and

 

(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, or as may be needed to comply with the requirements of the Securities Act and the rules and regulations thereunder.

 

(f)                                   Except as provided below in this Section 4, the expenses incurred 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.  The applicable Offering Holder 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

 

4



 

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 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(g) or 4(i) was

 

5



 

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(j) for any amount that exceeds the net proceeds to such Offering Holder as a result of the sale of Conversion 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(j) 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 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 Shares.

 

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

 

(a)                                 It/he is acquiring the Shares for its/his 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.

 

6



 

(b)                                 It/he understands that (i) the Shares and the Conversion Shares (A) have not been registered under the Securities Act or any state securities laws, (B) 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 (C) will be issued in reliance upon exemptions from the registration and prospectus delivery requirements of state securities laws which relate to private offerings, and (ii) it/he 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.  It/he further understands that such exemptions depend upon, among other things, the bona fide nature of the investment intent of it/him expressed herein.  Pursuant to the foregoing, it/he acknowledges that the certificates representing each of the Shares and the Conversion 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)                                  Such 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 its interest in connection with the acquisition of the Shares.  Such Subscriber understands that the acquisition of the Shares is a speculative investment and involves substantial risks and that it/he could lose its/his entire investment in the Shares.  Such 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 Shares.  Such Subscriber has the ability to bear the economic risks of its/his investment in the Company, including a complete loss of the investment, and it/he has no need for liquidity in such investment.

 

(d)                                 Such 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 Shares and the Conversion Shares and the merits and risks of an investment in the Shares which it/he has requested or otherwise needs to evaluate the investment in the Company.

 

7



 

(e)                                  Such Subscriber is in receipt of, and Langtry’s officers have carefully read, the following items:

 

(i)                                     Annual Report on Form 10-K for the period ended June 30, 2012 filed by the Company with the SEC;

 

(ii)                                  Quarterly Report on Form 10-Q for the period ended September 30, 2012, December 31, 2012 and March 31, 2013, filed by the Company with the SEC; and

 

(iii)                               All Current Reports on Form 8-K filed by the Company with the SEC subsequent to June 30, 2013 (together with the exhibits thereto, collectively, along with items (i) and (ii) above, the “Disclosure Documents”).

 

(f)                                   In making the proposed investment decision, such Subscriber is relying solely on investigations made by it/him and their respective representatives.

 

(g)                                  Such Subscriber acknowledges that it/he has been advised that:

 

(i)                                     The Shares and the Conversion Shares to be issued to it/him 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, such Subscriber must rely on its/his own examination of the Company, including the merits and risks involved in an investment in the Shares and the Conversion Shares.  The Shares and the Conversion Shares 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 Conversion 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.  Such Subscriber is aware that it/he may be required to bear the financial risks of this investment for an indefinite period of time.

 

(h)                                 Such 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 it/he will be required to remain an owner of the Shares and the Conversion Shares; (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 limited past performance or experience on the part of the Company, or any future expectations will in any

 

8



 

way indicate the predictable results of the ownership of the Shares and the Conversion Shares or of the overall financial performance of the Company.

 

(i)                                     Such Subscriber represents and warrants that it/he is an “accredited investor” within the meaning of Rule 501 of Regulation D under the Securities Act.

 

(j)                                    As of the date of this Agreement, such Subscriber and its affiliates do not have, and during the 30-day period prior to the date of this Agreement, such 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.

 

6.                                      Representations and Warranties of the Company.  The Company hereby represents and warrants to the Subscribers 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 and all material government licenses, permits and approvals (i) to own and lease the properties and assets it currently owns and leases and it contemplates owning and leasing and (ii) to conduct its activities as such activities are currently conducted and as are currently contemplated to be conducted.

 

(b)                                 The authorized capital of the Company immediately prior to the Closing will consist of 200,000,000 shares of common stock, par value $0.05, 165,000 shares of Series A preferred stock, par value $0.01, 35,000 shares of Series B preferred stock, par value $0.01; and 98,751.824 shares of Series C preferred stock, par value $0.01.  The Certificate of Designation, in the form delivered to the Subscribers, will be filed with the Secretary of State of Texas prior to the Closing Date.

 

(c)                                  The Company has duly authorized the issuance and sale of the 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 in accordance 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, will represent validly authorized, duly issued and fully paid and nonassessable shares of Preferred Stock of the Company, and the issuance thereof will not conflict with the certificate of formation or bylaws of the Company and, subject to the accuracy of the representations and

 

9



 

warranties of the Subscribers 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)                                   The Disclosure Documents that have been filed with the SEC, at the time they were filed with the SEC, each complied in all material respects with the requirements of the Exchange Act, and, when read together, 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.

 

7.                                      Survival; Indemnification.  All representations, warranties and covenants contained in this Agreement and the indemnification contained in this Section 7 shall survive the Closing.  Each 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 such Subscriber’s qualification and suitability to purchase the Shares.  Each Subscriber, severally and not jointly, 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 such Subscriber herein or the breach of any warranty or covenant herein by such Subscriber.  Notwithstanding the foregoing, however, no representation, warranty, covenant or acknowledgment made herein by such 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: Jon S. Ross

Telephone: (972) 681-8047

 

(b)                                 if to Langtry or Wallen, to the following address:

 

9870 Plano Road

Dallas, Texas  75232

 

10



 

Attn:  Calvin A. Wallen, III

Telephone:  972-681-8047

Facsimile:  972-681-9687

 

With a copy (which shall not constitute notice) to:

 

Barry F. Cannaday

Dentons US, LLP

2000 McKinney Ave., Suite 1900

Dallas, Texas  75201

Telephone:  214-259-1855

Facsimile:  214-259-0910

 

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

 

9.                                      Assignability.  This Agreement is not assignable by the Subscribers, 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.

 

10.                               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.

 

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

 

12.                               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.

 

13.                               Severability.  If any provision of this Agreement or the application thereof to any 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.

 

14.                               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.

 

11



 

15.                               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]

 

12



 

IN WITNESS WHEREOF, the parties have executed this Conversion and Preferred Stock Purchase Agreement as of the date first set forth above.

 

 

LANGTRY MINERAL & DEVELOPMENT, LLC

 

 

 

 

 

By:

/s/ Calvin A. Wallen, III

 

 

Calvin A. Wallen, III

 

 

President

 

 

 

 

 

 

/s/ Calvin A. Wallen, III

 

 

Calvin A. Wallen, III

 

S-1



 

 

CUBIC ENERGY, INC.

 

 

 

 

 

By:

/s/ Jon S. Ross

 

 

Jon S. Ross

 

 

Secretary

 

S-2



 

Exhibit A

 

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:

 

·                                          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;

 

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

 

·                                          exchange distributions and/or secondary distributions;

 

·                                          sales in the over-the-counter market;

 

·                                          underwritten transactions;

 

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

 

·                                          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 of Common Stock short and deliver them to close out the short

 

A-1



 

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.

 

A-2


EX-99.4 5 a13-21896_1ex99d4.htm EXHIBIT 5 - INVESTMENT AGREEMENT

Exhibit 5

 

EXECUTION VERSION

 

INVESTMENT AGREEMENT

 

DATED AS OF OCTOBER 2, 2013

 

BETWEEN

 

CUBIC ENERGY, INC.

 

AND

 

ANCHORAGE ILLIQUID OPPORTUNITIES OFFSHORE MASTER III, L.P.

 

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

 

AIO III AIV, L.P.

 

AND

 

CORBIN OPPORTUNITY FUND, L.P.

 

O-CAP PARTNERS, L.P.

 

O-CAP OFFSHORE MASTER FUND, L.P.

 

AS INVESTORS

 



 

ARTICLE I

CERTAIN DEFINITIONS

 

 

 

SECTION 1.01

Certain Definitions

1

 

 

 

ARTICLE II

CORPORATE GOVERNANCE

 

 

 

SECTION 2.01

Composition of the Board

8

 

 

 

SECTION 2.02

Vacancies

8

 

 

 

SECTION 2.03

Committees; Subsidiary Boards

9

 

 

 

SECTION 2.04

Compensation and Benefits

9

 

 

 

SECTION 2.05

Termination

10

 

 

 

SECTION 2.06

Approval of the Investors Required for Certain Actions

10

 

 

 

SECTION 2.07

Redemption Upon Default

11

 

 

 

ARTICLE III

RIGHTS TO PURCHASE NEW SECURITIES

 

 

 

SECTION 3.01

Rights to Purchase New Securities

12

 

 

 

ARTICLE IV

RESTRICTIONS ON TRANSFERABILITY OF SECURITIES

 

 

 

SECTION 4.01

General

12

 

 

 

ARTICLE V

INFORMATION RIGHTS

 

 

 

SECTION 5.01

Furnishing of Information; Confidentiality

13

 

 

 

ARTICLE VI

SALE RIGHTS

 

 

 

SECTION 6.01

Initiation of Sale Process

14

 

 

 

SECTION 6.02

Specific Obligations

15

 

 

 

SECTION 6.03

Redemption Right

16

 

 

 

SECTION 6.04

Termination

16

 

i



 

ARTICLE VII

MISCELLANEOUS

 

 

 

SECTION 7.01

Termination Generally

17

 

 

 

SECTION 7.02

No Recourse

17

 

 

 

SECTION 7.03

Notices

17

 

 

 

SECTION 7.04

No Third Party Beneficiaries

19

 

 

 

SECTION 7.05

Expenses

19

 

 

 

SECTION 7.06

Governing Law

19

 

 

 

SECTION 7.07

Waiver of Jury Trial

19

 

 

 

SECTION 7.08

Specific Performance

19

 

 

 

SECTION 7.09

Counterparts

19

 

 

 

SECTION 7.10

Entire Agreement

20

 

 

 

SECTION 7.11

Assignment

20

 

 

 

SECTION 7.12

Amendment

20

 

 

 

SECTION 7.13

Waiver

20

 

 

 

SECTION 7.14

Severability

20

 

 

 

SECTION 7.15

No Partnership

21

 

 

 

SECTION 7.16

Delays or Omissions

21

 

 

 

SECTION 7.17

Interpretation

21

 

 

 

SECTION 7.18

Cumulative Remedies

21

 

 

 

SECTION 7.19

Construction

21

 

ii



 

INVESTMENT AGREEMENT

 

This Investment Agreement (this “Agreement”) is made as of October 2, 2013, between Cubic Energy, Inc., a Texas corporation (the “Company”), and Anchorage Illiquid Opportunities Offshore Master III, L.P., a Cayman Islands exempted limited partnership, Anchorage Illiquid Opportunities III (B), L.P., a Delaware limited partnership and AIO III AIV, L.P., a Delaware limited partnership (collectively, “Anchorage”), and Corbin Opportunity Fund, L.P., a Delaware limited partnership, O-CAP Partners, L.P., a Delaware limited partnership and O-CAP Offshore Master Fund, L.P., a Cayman Islands limited partnership (collectively, “O-Cap” and, together with Anchorage, the “Investors”).

 

WHEREAS, concurrently with the execution and delivery of this Agreement, (i) AIO III CE, L.P., a Cayman Islands limited partnership and an Affiliate of Anchorage, and O-Cap (together, the “Purchasers”) are purchasing from the Company certain senior secured notes of the Company pursuant to a Note Purchase Agreement, dated as of the date hereof (the “Note Purchase Agreement”), by and among the Company, the Purchasers and other parties thereto and (ii) the Investors are purchasing from the Company certain Warrants to purchase shares of the common stock, par value $0.05 per share, of the Company (the “Common Stock”) and certain shares of the Series C Voting Preferred Stock, par value $0.01 per share, of the Company pursuant to a Warrant and Preferred Stock Agreement, dated as of the date hereof (the “Warrant Agreement”), between the Company and the Investors (such purchases of senior secured notes, warrants and preferred stock, the “Investment”); and

 

WHEREAS, in connection with and as a condition to the Investment, the Company and the Investors desire to enter into this Agreement in order to set forth certain rights and obligations;

 

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants and agreements herein contained, and intending to be legally bound hereby, the Company and the Investors hereby agree as follows:

 

ARTICLE I
CERTAIN DEFINITIONS

 

SECTION 1.01                                      Certain DefinitionsAs used in this Agreement, the following terms shall have the following respective meanings:

 

Affiliate” means, with respect to a specified Person, another Person that directly, or indirectly through one or more intermediaries, controls or is controlled by or is under common control with the Person specified; provided that Anchorage Capital Group, L.L.C., Corbin Capital Partners Management, LLC and O-CAP Capital Management, L.P. and any of their respective employees, partners, officers, directors, funds or affiliates shall not be deemed Affiliates of the Company or any of its subsidiaries for any purpose hereunder.

 

Aggregate Ownership Percentage” means, with respect to all of the Investors collectively as of any date of determination, the percentage equal to the sum of the Ownership Percentage of each Investor as of such date.

 

Beneficial owner” (and the related terms “beneficially own,” “beneficial owner” and “beneficial ownership”) has the meaning ascribed to such term in Rule 13d-3 under the Exchange Act.

 

1



 

Board” means the Board of Directors of the Company.

 

By-Laws” means the By-Laws of the Company, as in effect on the date hereof and as may be amended from time to time.

 

Cause” means, with respect to any director, a conviction of, or a plea of nolo contendere to, a crime constituting (i) a felony under the laws of the United States or any state thereof or (ii) a misdemeanor for which a sentence of more than six months’ imprisonment is imposed.

 

Certificate of Formation” means the Amended and Restated Certificate of Formation of the Company, as amended to date and as may be further amended from time to time.

 

Closing” means the closing of the Investment as contemplated by the Note Purchase Agreement and the Warrant Agreement.

 

Commission” means the Securities and Exchange Commission.

 

Confidential Information” means any information obtained by an Investor pursuant to Section 5.01, except for any information that (a) is or becomes publicly available other than as a result of a disclosure by such Investor, (b) is already in such Investor’s possession (provided that such information was not known by such Investor to be subject to any legal or contractual obligation of confidentiality owed to the Company), (c) is or becomes available to such Investor on a non-confidential basis from a source other than the Company (provided that such source was not known by such Investor to be subject to any legal or contractual obligation to the Company to keep such information confidential), or (d) is independently developed by such Investor or on such Investor’s behalf without violating any of such Investor’s obligations under Section 5.01(d).

 

Control” means the possession, directly or indirectly, or as trustee or executor, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract, credit arrangement or otherwise, including the ownership, directly or indirectly, of securities having the power to elect a majority of the board of directors or similar body governing the affairs of such person.  The terms “controlling” and “controlled” have meanings correlative to the foregoing.

 

Encumbrance” (including correlative terms such as “Encumber”) means any security interest, pledge, mortgage, lien, charge, adverse claim of ownership or use, hypothecation, violation, condition or restriction of any kind or other encumbrance of any kind; provided that a Permitted Lien (as defined in the Note Purchase Agreement) shall not be considered to be an Encumbrance.

 

Exchange Act” means the Securities Exchange Act of 1934, as amended.

 

Fully Diluted Basis” shall have the meaning ascribed to it in the Warrant Agreement.

 

Group” means a “group” within the meaning of Section 13(d)(3) of the Exchange Act.

 

Independent Financial Expert” means a nationally recognized investment banking firm mutually agreed by the Company and the Majority Investors, which firm does not have a material financial interest or other material economic relationship with either the Company or any Investor or their respective Affiliates.  If the Company and the Majority Investors are unable to agree on an Independent Financial Expert for a valuation

 

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contemplated herein, each of them shall choose promptly a separate Independent Financial Expert and these two Independent Financial Experts shall choose promptly a third Independent Financial Expert to conduct such valuation.

 

Initial Ownership Percentage” means, with respect to an Investor, its Ownership Percentage immediately following the Closing.

 

Investor Designated Director” means such person as is so designated by the Investors, from time to time in accordance with this Agreement, to serve as a member of the Board.

 

Law” means any statute, law (including common law), ordinance, regulation, rule, code, executive order, injunction, judgment, decree or other order issued or promulgated by any national, supranational, state, federal, provincial, local or municipal government or any administrative, regulatory or self-regulatory body (including any securities exchange or quotation system) with authority therefrom with jurisdiction over the Company or an Investor, as the case may be (including any requirements under the Texas Business Organizations Code and the Exchange Act).

 

Majority Investors” means the Investor or Investors the sum of whose Ownership Percentages, as of any date of determination, is more than 50% of the Aggregate Ownership Percentage as of such date.

 

Market-Based Value” means, as of any date, in the case of shares of Common Stock, the product of (x) the average of the daily volume weighted average sale prices per share of Common Stock for the ten consecutive trading days immediately preceding the date as of which Market-Based Value is being determined, as reported on the New York Stock Exchange, or if shares of Common Stock are not listed on the New York Stock Exchange, as reported by the principal U.S. national or regional securities exchange or quotation system (including an over-the-counter market) on which such shares are then listed or quoted, and (y) 110%.

 

Minimum Aggregate Ownership Percentage” means 25%.

 

MNPI” means (i) material non-public information (within the meaning of United States federal, state or other applicable securities law) relating to the Company or any of its subsidiaries or any of their securities or (ii) non-public information that is of a type that would be required to be publicly disclosed in connection with the issuance by the Company or any of its subsidiaries of their debt or equity securities pursuant to a transaction registered with the Commission.

 

New Securities” means any capital stock of the Company, whether now authorized or not, and rights, options or warrants to purchase such capital stock, and securities of any type whatsoever (including convertible debt securities) that are, or may become, convertible into or exchangeable or exercisable for capital stock of the Company or any of its subsidiaries; provided that the term “New Securities” does not include (a) Qualifying Employee Stock (as defined in the Warrant Agreement), (b) securities of the Company issued to all then-existing holders of any class of securities of the Company in connection with any stock split, stock dividend, reclassification or recapitalization of the Company, (c) securities of the Company issued upon the exercise of warrants or conversion of shares of preferred stock that, in each case, are outstanding as of the date of this Agreement, (d) securities of the Company issued as a paid-in-kind dividend pursuant to the terms of the

 

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Series B Convertible Preferred Stock (as defined in the Warrant Agreement) and (e) securities of the Company issued in connection with a transaction of the type described in Rule 145 under the Securities Act.

 

Ownership Percentage” means, with respect to an Investor as of any date of determination, a fraction the numerator of which shall be the total number of shares of Common Stock which such Investor owns as of such date, and the denominator of which shall be the aggregate number of shares of Common Stock then outstanding, in each case on a Fully Diluted Basis (in each case, calculated assuming that all the then outstanding Warrants are exercised in Full Physical Settlement pursuant to the terms of the Warrant Agreement).

 

Person” means any individual, corporation, partnership, joint venture, association, joint stock company, trust, unincorporated organization or government or any agency or political subdivision thereof.

 

Purchasers” has the meaning set forth in the preamble.

 

Qualified Transferee” means any Person that, together with any of its Affiliates, acquires from Anchorage Warrants and/or shares of Common Stock representing in the aggregate an Ownership Percentage that is greater than one-half of the Initial Ownership Percentage of Anchorage.

 

register,” “registered” and “registration” refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act and the declaration or ordering of the effectiveness of such registration statement by the Commission.

 

Related Agreements” means the Note Purchase Agreement and the other Note Documents (as defined in the Note Purchase Agreement), the Warrant Agreement, the Registration Rights Agreement and the Voting Agreement.

 

Representative” means, as to any Person, such Person’s Affiliates and its and their directors, officers, employees, agents, advisors (including financial advisors, counsel and accountants) and such Person’s financing sources.

 

Required Director Number” means (i) three and (ii), to the extent the size of the Board is increased or decreased at any time after the Closing, a number equal to the product, rounded up to the nearest whole number, of (x) the total number of members that the Board is then composed of (assuming no vacancy) and (y) the Aggregate Ownership Percentage as of such time.

 

Required Holders” means the Investor or Investors the sum of whose Ownership Percentages, as of any date of determination, is at least equal to 66.67% of the Aggregate Ownership Percentage as of such date.

 

Sale” means any sale, assignment, transfer, distribution or other disposition of a security or of a participation therein, or other conveyance of legal or beneficial interest therein, or any short position in a security or any other action or position otherwise reducing risk related to ownership through hedging or other derivative instruments.

 

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Sale of the Company” means (A) a transaction or series of related transactions by which (i) any Person or group of Persons shall have acquired beneficial ownership, directly or indirectly, of thirty-five percent (35%) or more (by voting power) of the outstanding shares of Voting Securities, (ii) all or substantially all of the consolidated assets of the Company and its subsidiaries are sold, leased, exchanged or transferred to any Person or group of Persons, other than to one or more subsidiaries of the Company, or (iii) the Company is consolidated, merged, amalgamated, reorganized or otherwise enters into a similar transaction in which it is combined with another Person, unless the Persons who beneficially own the outstanding Voting Securities of the Company immediately before consummation of the transaction beneficially own a majority (by voting power) of the outstanding Voting Securities of the combined or surviving entity immediately thereafter, or (B) any other transaction or series of related transactions determined by the Unaffiliated Board, in the exercise of its fiduciary duties under applicable Law, to constitute a major change in the ownership and control of the assets previously held, and operations previously conducted, by the Company.

 

Securities Act” means the Securities Act of 1933, as amended.

 

Sell” and “Sold” means to complete a Sale.

 

subsidiary” or “subsidiaries” of any person means any corporation, partnership, limited liability company, joint venture, association or other legal entity of which such person (either alone or together with any other subsidiary) owns, directly or indirectly, more than 50% of the stock or other equity interests, the holders of which are generally entitled to vote for the election of the board of directors or other governing body of such corporation or other legal entity.

 

Texas Business Organizations Code” means the Business Organizations Code of the State of Texas, as in effect from time to time.

 

Unaffiliated Board” means (A) (a) a majority of the members of the Board other than those designated by, or otherwise Affiliated with, any party or prospective party to a proposed Sale of the Company and present at any meeting at which an action by such members is to be taken or (b) all of the members of the Board other than those designated by, or otherwise Affiliated with, any party or prospective party to a proposed Sale of the Company, if action is taken by written consent as permitted under the By-Laws, or (B) a special committee of the Board consisting solely of independent directors formed by the Board to consider a proposed Sale of the Company under applicable Law.

 

Voting Agreement” means the Voting Agreement, dated as of the date hereof, by and among the Investors and Calvin A. Wallen, III, as amended or supplemented from time.

 

Voting Securities” means the Common Stock and any other securities of the Company of any kind or class having power generally to vote in the election of directors.

 

Warrants” shall have the meaning ascribed to it in the Warrant Agreement.

 

Warrant Shares” means any shares of Common Stock issued or issuable upon the exercise of the Warrants.

 

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(a)                                 Each of the following terms is defined in the Section of this Agreement (or, if specified as such, a Related Agreement) set forth opposite such term:

 

Defined Term

 

Location of 
Definition

Affiliate Transaction

 

Note Purchase Agreement

Agreement

 

Preamble

Anchorage

 

Preamble

Asset Sale

 

Note Purchase Agreement

Business Day

 

Note Purchase Agreement

Company

 

Preamble

Capital Expenditures

 

Note Purchase Agreement

Common Stock

 

Recitals

Deal Counsel

 

§ 6.02(a)

Default Notice

 

§ 2.07

Financial Advisor

 

§ 6.02(a)

Full Physical Settlement

 

Warrant Agreement

Hydrocarbons

 

Note Purchase Agreement

Indebtedness

 

Note Purchase Agreement

Investment

 

Recitals

Investors

 

Preamble

Note Documents

 

Note Purchase Agreement

Note Purchase Agreement

 

Recitals

O-Cap

 

Preamble

Opt-In

 

§ 5.01(e)

Opt-Out

 

§ 5.01(e)

Permitted Indebtedness

 

Note Purchase Agreement

Permitted Lien

 

Note Purchase Agreement

Qualifying Employee Stock

 

Warrant Agreement

Redemption

 

§ 6.03

Redemption Notice

 

§ 6.03

Redemption Price

 

§ 6.03

Registration Rights Agreement

 

Recitals

 

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Defined Term

 

Location of 
Definition

Restricted Payments

 

Note Purchase Agreement

Sale Process

 

§ 6.01

Series B Convertible Preferred Stock

 

Warrant Agreement

Subsidiary Board

 

§ 2.03(c)

Warrant Agreement

 

Recitals

Valuation Date

 

§ 6.03

 

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ARTICLE II
CORPORATE GOVERNANCE

 

SECTION 2.01                                      Composition of the Board.

 

(a)                                 From and after the Closing, the Investors shall be entitled to designate the Required Director Number of individuals to serve as Investor Designated Directors, as follows (unless the Investors agree otherwise and notify the Company of such agreement):

 

(i)                                     Anchorage shall, for as long as its Ownership Percentage is at least 25% of its Initial Ownership Percentage, have the right to designate (x) two Investor Designated Directors or (y) its pro rata share of the Required Director Number of Investor Designated Directors (calculated based on Anchorage’s Ownership Percentage relative to the Ownership Percentage of O-Cap, and rounded to the nearest whole number), whichever is greater; and

 

(ii)                                  O-Cap shall, for as long as its Ownership Percentage is at least 75% of its Initial Ownership Percentage, have the right to designate (x) one Investor Designated Director or (y) its pro rata share of the Required Director Number of Investor Designated Directors (calculated based on its Ownership Percentage relative to the Ownership Percentage of Anchorage, and rounded to the nearest whole number), whichever is greater.

 

(b)                                 From and after the Closing, in connection with each annual or special shareholders’ meeting of the Company at which members of the Board will be elected (or in connection with any written consent of shareholders of the Company pursuant to which members of the Board will be elected), the Company shall include the individuals designated by the Investors, pursuant to this Section 2.01, to serve as directors in each slate of directors proposed, recommended or nominated for election by shareholders of the Company or the Board and shall recommend and use reasonable best efforts to cause the election of such designees.  Without limiting the foregoing, the Company shall use reasonable best efforts, in connection with each annual or special meeting of shareholders held to elect members of the Board, to solicit from its shareholders eligible to vote in the election of members of the Board proxies in favor of the election of each person designated for election as an Investor Designated Director in accordance with this Section 2.01, and against the election of any candidate whose election would adversely impact the election to, or the opportunity to serve on, the Board of any such Investor Designated Director.  In the absence of any designation from the Investors as specified in this Section 2.01(b), the Investor Designated Director or Directors previously designated by the Investors and then serving shall be nominated for re-election if still eligible to serve under applicable legal and governance requirements regarding service as a member of the Board.  Neither an Investor nor any Affiliate of an Investor shall have any liability as a result of designating an individual for election as a member of the Board for any act or omission by such designated individual in his or her capacity as a member of the Board.

 

SECTION 2.02                                      Vacancies.  From and after the Closing, in the event of any vacancy for any reason in any Board seat reserved for Investor Designated Director, the Investors shall have the sole right to nominate another person to serve as an Investor Designated Director in accordance with and subject to the requirements of Section 2.01, including the satisfaction of applicable legal and governance

 

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requirements regarding service as members of the Board. To the extent permitted by the Certificate of Formation and the By-Laws, the Company shall nominate such designees and shall take such further action as may be necessary to cause such designees to be elected or appointed to the Board as Investor Designated Directors as soon as possible after the occurrence of the nomination to fill such vacancy. No Investor Designated Director shall be removed as a member of the Board without Cause, without the approval of a majority of the other Investor Designated Directors (or, in the case where a total of two Investor Designated Directors serve on the Board, the other Investor Designated Director) then in office, but upon the request of the Investor or Investors that designated an Investor Designated Director to remove such Investor Designated Director as a member of the Board, the Company shall take such prompt action as may be necessary to effect such removal.

 

SECTION 2.03                                      Committees; Subsidiary Boards.

 

(a)                                 From and after the Closing, upon the request of the Investors and to the extent permitted by applicable Law, the Company shall take all actions necessary so that the Investors shall have the same proportional representation (rounded to the nearest whole number of directors, but in no event less than one) on each committee of the Board as it has on the Board.

 

(b)                                 To the extent that no Investor Designated Director is permitted under applicable Law to serve on a particular committee of the Board, the Company shall take all action necessary to permit at least one Investor Designated Director to attend each meeting of such committee as a non-voting observer, in each case to the extent permitted by applicable Law, and such observer shall be provided with such notice of the meeting and information regarding the meeting as is provided to members of such committee. Notwithstanding the foregoing, if the Board is to consider a transaction involving the Company, on the one hand, and any of the Investors and their respective Affiliates, on the other hand, and the Board establishes a special committee in connection with the consideration of such transaction, no Investor Designated Director shall be entitled to be a member of, and no Investor shall be entitled to attend the meetings of, such special committee.

 

(c)                                  Subject to applicable Law, if the Company forms or acquires any subsidiary, then upon the request of the Investor or Investors that designated an Investor Designated Director, the Company shall take all actions necessary so that the composition of the board of directors, managers, general partner, managing member (or controlling committee thereof) or any other board or committee serving a similar function with respect to each such subsidiary (each, a “Subsidiary Board”) and each committee of each Subsidiary Board shall be proportionate to the composition requirements of the Board and of each committee thereof, such that such Investor or Investors shall have the same proportional representation (rounded to the nearest whole number of directors, but in no event less than one) on each Subsidiary Board and committee thereof as it has on the Board and committees thereof.

 

SECTION 2.04                                      Compensation and Benefits.  Each Investor Designated Director will be entitled to receive similar compensation, benefits, reimbursement, indemnification and insurance coverage for their service as members of the Board as the other outside members of the Board. The Company shall maintain customary directors liability insurance, in form and substance reasonably satisfactory to the Investor Designated Directors, and shall include each Investor Designated Director as an “insured” for all purposes under such insurance policy for so long as such Investor Designated Director is a member of the Board and for the same

 

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period as for other former members of the Board when such Investor Designated Director ceases to be a member of the Board.

 

SECTION 2.05                                      Termination.  All obligations of the Company pursuant to Sections 2.01 through 2.04 shall terminate with respect to an Investor or Investors (as the case may be) and, upon request by the Company, such Investor or Investors shall cause all of the Investor Designated Directors designated by such Investor or Investors to resign promptly from the Board, when (i) in the case of Anchorage, its Ownership Percentage or the Ownership Percentage of a Qualified Transferee to whom Anchorage has assigned its rights in accordance with Section 7.11, is less than 25% of Anchorage’s Initial Ownership Percentage and (ii) in the case of O-Cap, its Ownership Percentage is less than 75% of O-Cap’s Initial Ownership Percentage. In addition, upon request by the Company, the Investors shall cause any excess Investor Designated Directors to resign promptly at any time that there exist more Investor Designated Directors than the Investors are entitled to nominate or designate pursuant to Section 2.01.

 

SECTION 2.06                                      Approval of the Investors Required for Certain Actions.  From and after the Closing and for so long as the Aggregate Ownership Percentage is no less than the Minimum Aggregate Ownership Percentage, in addition to any approval by the Board required by the Certificate of Formation, the By-Laws or applicable Law, the prior written approval of the Required Holders shall be required in order for the Company to take, or the Board to approve, authorize or effect (subject to any fiduciary duties of members of the Board under applicable Law), any of the following:

 

(a)                                 the creation (by reclassification or otherwise) or issuance of any new class or series of shares of capital stock of the Company (or securities convertible into or exercisable or exchangeable for shares of capital stock of the Company);

 

(b)                                 any amendment to the Certificate of Formation or the By-Laws, or the adoption of or amendment to the certificate of incorporation or by-laws (or similar constituent documents) of any subsidiary of the Company;

 

(c)                                  any action to repurchase, retire, redeem or otherwise acquire any equity securities (or securities convertible into or exercisable or exchangeable for equity securities) of the Company or any subsidiary of the Company, pursuant to self-tender offers, stock repurchase programs, open market transactions, privately-negotiated purchases or otherwise;

 

(d)                                 the approval of or amendment to any employee stock option, share purchase, share bonus or other equity incentive plans, agreements or arrangements, or other benefit plans of the Company or any of its subsidiaries;

 

(e)                                  any increase or decrease in the authorized number of members of the Board or the board of directors (or similar governing body) of any subsidiary of the Company, or the creation of any committee thereof;

 

(f)                                   any incurrence, issuance, guarantee, reclassification, sale, repurchase and/or redemption of any Indebtedness (as defined in the Note Purchase Agreement), except for Permitted Indebtedness (as defined in the Note Purchase Agreement);

 

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(g)                                  any Capital Expenditures (as defined in the Note Purchase Agreement) (on a consolidated basis) in an amount exceeding, individually or in the aggregate with other Capital Expenditures (on a consolidated basis), $52.5 million during any fiscal year, unless such expenditure is made pursuant to the then current business plan duly approved by the Investors;

 

(h)                                 the making of any Restricted Payments (as defined in the Note Purchase Agreement);

 

(i)                                     the acquisition of assets with a value, individually or in the aggregate with any other acquisition, in excess of $1.0 million in the aggregate during any fiscal year (other than acquisitions of inventory and equipment (for the avoidance of doubt, excluding any oil and gas wells, leases or similar oil and gas exploration and production assets) in the ordinary course of business);

 

(j)                                    any Asset Sale (as defined in the Note Purchase Agreement);

 

(k)                                 any merger, scheme of arrangement, amalgamation, consolidation or similar transaction of the Company or any of its subsidiaries with any Person, or the sale, lease, exchange, transfer, contribution, Encumbrance or other disposition of all or substantially all of the assets of the Company or any of its subsidiaries (whether in an individual transaction or a series of related transactions), or the effectuation of any recapitalization, reclassification, reorganization, split-off or spin-off with respect to the Company or any of its subsidiaries;

 

(l)                                     the occurrence of any gas imbalances, take-or-pay or other prepayments that would require the Company or its subsidiaries to deliver Hydrocarbons (as defined in the Note Purchase Agreement) in the future, without then or thereafter receiving full payment therefor with a value in excess of $50,000 in the aggregate;

 

(m)                             any change in principal business activities of the Company or any of its subsidiaries;

 

(n)                                 any Affiliate Transaction (as defined in the Note Purchase Agreement), other than those permitted under Section 8.9 of the Note Purchase Agreement;

 

(o)                                 the approval of or material amendment to any quarterly or annual budget, business plan or operating plan (including any capital expenditure budget, operating budget and financial plan); or

 

(p)                                 any authorization of, or entering into an agreement for, or the commitment to agree to take, any of the foregoing actions.

 

For the avoidance of doubt, no approval by the Required Holders under this Section 2.06 shall constitute an approval, consent or waiver of any nature by any of the Required Holders, any other Investor or any of their respective Affiliates (whether in its capacity as a Holder of the Notes (each as defined under the Note Purchase Agreement) or otherwise) under any Related Agreement.

 

SECTION 2.07                                      Redemption Upon Default.  If the Company shall default in the compliance with any of its obligations in Section 2.06, the Required Holders may deliver a notice to the Company specifying the default and that such notice is a “Default Notice”.  If the default (if capable of being cured) shall not be cured within 10 Business Days following the delivery of the Default Notice by the Required

 

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Holders, then any Investor shall be entitled to require the Company, upon written notice by such Investor to the Company, to redeem all of the Warrants and all shares of Common Stock held by such Investor at a price equal to the Redemption Price specified in Section 6.03, applied as though the Redemption Date is the date that is 10 Business Days following the date of delivery of such redemption notice by such Investor, and otherwise on the terms specified in Section 6.03.

 

ARTICLE III
RIGHTS TO PURCHASE NEW SECURITIES

 

SECTION 3.01                                      Rights to Purchase New Securities.   (a)    If at any time after the Closing, the Company makes any public or non-public offering of New Securities, each Investor shall be afforded the opportunity to acquire from the Company for the same price (before adding any underwriting discounts or sales commissions) and on the same terms as such New Securities are proposed to be offered to others, up to the amount of New Securities required to enable such Investor to maintain its proportionate interest in the Company as represented by its Ownership Percentage at the time of such offering. The amount of New Securities that an Investor shall be entitled to purchase shall be determined by multiplying (x) the total number of such offered New Securities by (y) the Ownership Percentage of such Investor at the time of such offering, in each case before giving effect to such issuance. An Investor must exercise its rights under this Section 3.01 within ten Business Days of its receipt of written notice from the Company of the Company’s intent to make such a public or non-public offering, which notice shall also contain the material terms (including price terms) of such offering.

 

(b)                                 If any Investor elects not to purchase its pro rata share of such New Securities in full pursuant to Section 3.01(a), the Company shall, upon the expiration of the ten business day period referred to in Section 3.01(a) for the exercise of such right by the Investors, send a second written notice to all of the Investors that have elected to purchase in full their respective pro rata shares of such New Securities, setting forth the total number of shares of New Securities that have not been subscribed for and each such Investor’s pro rata share of such remaining New Securities (calculated based on each such Investor’s Ownership Percentage at such time).  Each such Investor shall then have ten business days after the receipt of the second written notice to elect to purchase up to such Investor’s pro rata share of the remaining New Securities.

 

(c)                                  The provisions of this Section 3.01 shall terminate with respect to (i) Anchorage when its Ownership Percentage or the Ownership Percentage of a Qualified Transferee to whom Anchorage has assigned its rights in accordance with Section 7.11 is less than 25% of Anchorage’s Initial Ownership Percentage, and (ii) O-Cap when its Ownership Percentage is less than 75% of O-Cap’s Initial Ownership Percentage.

 

ARTICLE IV
RESTRICTIONS ON TRANSFERABILITY OF SECURITIES

 

SECTION 4.01                                      General.  The shares of Common Stock, including the Warrant Shares, owned by an Investor shall not be subject to transfer restrictions, except as pursuant to applicable Law or expressly provided in this Agreement or any other Related Agreement.

 

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ARTICLE V
INFORMATION RIGHTS

 

SECTION 5.01                                      Furnishing of Information; Confidentiality.  (a)  The Company shall furnish or make available to each Investor and its Representatives, promptly after such information becomes available to the Company:

 

(i)                                     annual budget, business plans and financial forecasts;

 

(ii)                                  following the end of each fiscal quarter and fiscal year of the Company, consolidated financial statements and operations reports of the Company (including audit reports with respect to fiscal years);

 

(iii)                               following the end of each calendar month, internal management financial and operations reports regarding the Company’s financial results and operations;

 

(iv)                              all information that is provided to members of the Board in their capacity as such; and

 

(v)                                 such other financial, management and operations reports reasonably requested by such Investor (including audited annual and unaudited quarterly financial statements in the event the Company is no longer obligated to provide such information in filings with the Commission).

 

(b)                                 The Company shall, and shall cause its subsidiaries (if any) and the officers, directors, employees, auditors and agents of the Company and its subsidiaries to, afford each Investor and its Representatives reasonable access at all reasonable times to the officers, employees, agents, properties, offices and other facilities, books and records of the Company and each such subsidiary.

 

(c)                                  Each Investor Designated Director, subject to Section 5.01(d) and such Investor Designated Director’s fiduciary duties under applicable Law, is entitled to share any information obtained by such Investor Designated Director as a member of the Board (or any committee thereof), whether through written materials provided to such Investor Designated Director or the participation of such Investor Designated Director in meetings of the Board (or any committee thereof) or otherwise, with any Investor.

 

(d)                                 Each Investor shall hold all Confidential Information in accordance with such Investor’s customary procedures for handling confidential information of this nature, it being understood and agreed by the Company that in any event an Investor may make disclosures (a) to its and its Affiliates’ directors, members, managing partners, officers, employees and agents, including accountants, legal counsel, auditors and other advisors, (b) to the extent requested by any governmental authority, (c) to the extent required by applicable Laws or by any subpoena or similar legal process, (d) in connection with the exercise of any remedies hereunder or any suit, action or proceeding relating to this Agreement or the enforcement of rights hereunder, (e) subject to an agreement containing provisions substantially the same as those of this Section 5.01(d), to any assignees of, or any prospective assignee of, any of its rights or obligations under this Agreement, (f) with the consent of the Company, (g) to the extent such information (A) is or becomes publicly available other than as a result of a breach of this Section 5.01(d)

 

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or (B) becomes available to such Investor on a nonconfidential basis from a source other than the Company or (h) to any nationally recognized rating agency that requires access to information about an Investor’s or its Affiliates’ investment portfolio in connection with ratings issued with respect to such Investor or its Affiliates; provided that, unless specifically prohibited by applicable Law or court order, each Investor shall promptly notify to the extent permissible the Company of any request by any governmental authority or representative thereof (other than any such request in connection with any audit, regulatory examination or examination of the financial condition of such Investor by such governmental authority) for disclosure of any such non-public information; and provided, further, that in no event shall any Investor be obligated or required to return any materials furnished by the Company or any of its subsidiaries.  Each Investor and their Representatives acknowledge that any information provided to such Investor or their Representatives by the Company pursuant to this Section 5.01 may constitute material non-public information and that its possession of such information may subject such Investor or their Representatives to the restrictions under the Securities Act and/or the Exchange Act.

 

(e)                                  The Company shall mark all materials delivered to the Investors and their Representatives hereunder conspicuously on the first page as either “PUBLIC” (i.e., does not contain MNPI) or “PRIVATE” (i.e., contains MNPI).  An Investor may, by written notice to the Company, opt out of receiving any “PRIVATE” materials (“Opt-Out”).  Once an Investor has elected to Opt-Out, the Company will only deliver to such Investor “PUBLIC” materials and will use its best efforts to create “PUBLIC” versions of all documents redacting the minimum amount of information so that the materials may be distributed to such Investor without the benefit of any MNPI; provided that the Company shall continue to provide such materials containing “PRIVATE” information to the Investors not electing to Opt-Out.  Any Investor that has elected to Opt-Out may subsequently deliver a notice to the Company opting to receive “PRIVATE” materials, at which point and going forward the Company will provide “PRIVATE” materials to such Investor (“Opt-In”).  There are no limits on the number of times an Investor can Opt-In or Opt-Out.

 

(f)                                   An Investor may suspend the provisions of this Article V at any time by delivery of a written notice to such effect to the Company. The provisions of this Article V shall terminate with respect to (i) Anchorage when its Ownership Percentage or the Ownership Percentage of a Qualified Transferee to whom Anchorage has assigned its rights in accordance with Section 7.11 is less than 25% of Anchorage’s Initial Ownership Percentage, and (ii) O-Cap when its Ownership Percentage is less than 75% of O-Cap’s Initial Ownership Percentage.

 

ARTICLE VI
SALE RIGHTS

 

SECTION 6.01                                       Initiation of Sale Process.  Upon written notice delivered to the Company by the Majority Investors at any time beginning on the fourth anniversary of the Closing, the Company shall initiate a process (the “Sale Process”), in accordance with this Article VI (but subject to Section 6.02(d)), intended to result in the entry, within 105 days after the date of such notice, into definitive agreements relating to a Sale of the Company.  Each of the Investors and the Company agrees to use its commercially reasonable efforts, in consultation with the Financial Advisor (as defined below) and the Deal Counsel (as defined below), to facilitate a Sale of the Company.  In furtherance of the foregoing, upon receipt of the notice described above, the Company shall, and shall cause its Representatives to, take the actions set forth in Section 6.02  below.

 

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SECTION 6.02                                       Specific Obligations.

 

(a)                                 Advisors.  The Company shall engage an investment bank (the “Financial Advisor”) and a law firm (the “Deal Counsel”) reasonably satisfactory to the Majority Investors to assist with the Sale Process.  The Financial Advisor and the Deal Counsel, as well as any other advisors engaged pursuant to this Section 6.02, shall represent the Company, and only the Company, in the Sale Process, and the costs, fees and expenses of such advisors shall be paid by the Company pursuant to the terms of engagement letters that are approved by the Majority Investors (such approval not to be unreasonably withheld, conditioned or delayed).  None of the Financial Advisor, the Deal Counsel or any other advisors selected in accordance with this Section 6.02 shall be terminated by the Company without the written consent of the Majority Investors.

 

(b)                                 Cooperation With Sale Process.  Without limiting the generality of the provisions of Section 6.01, the Company shall, and shall cause its Representatives to:

 

(i)                                     assist the Financial Advisor in creating a list of potential acquirers;

 

(ii)                                  set up and maintain a virtual or actual data room containing due diligence materials customarily provided in connection with transactions of the nature of a Sale of the Company, along with any other due diligence materials requested by the Majority Investors or reasonably requested by any potential acquirer;

 

(iii)                               execute customary non-disclosure agreements with potential acquirers;

 

(iv)                              provide incentive compensation to members of the Company’s management, and in an amount and form, all as determined by the Majority Investors to be necessary or helpful to the successful consummation of the Sale of the Company;

 

(v)                                 prepare, or assist the Financial Advisor with the preparation of, any marketing, financial or other materials deemed by the Majority Investors or the Financial Advisor to be necessary or helpful in connection with a Sale of the Company;

 

(vi)                              attend and participate in any meetings, conference calls, or presentations regarding the Company and its business with potential acquirers;

 

(vii)                           execute a letter of intent or term sheet on terms reasonably acceptable to the Majority Investors with one or more potential acquirers;

 

(viii)                        subject to approval by the Board under Section 6.02(c), perform the Company’s obligations contained in any definitive agreements relating to a Sale of the Company entered into with the potential acquirer or acquirers; and

 

(ix)                              communicate regularly and promptly with each of the Financial Advisor, the Deal Counsel and the Majority Investors regarding the Sale Process.

 

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(c)                                  Approval of the Terms and Conditions of a Proposed Sale of the Company.

 

The Company shall cause its management, together with the Financial Advisor and the Deal Counsel, to deliver regular updates to the Board regarding material developments in the Sale Process and summarizing the status of the negotiation of the terms and conditions of the Sale of the Company.  The Company shall, upon request of the Majority Investors, either call a meeting of the Board or seek the written consent of the Board approving the Sale of the Company and the entering into of the definitive agreements relating thereto.

 

(d)                                 Fiduciary Duties of the Board.

 

Nothing under this Article VI shall require the Board to take any action that the Board determines in good faith, after consultation with outside counsel, would reasonably be expected to cause the Board to breach its fiduciary duties under applicable Law.

 

SECTION 6.03                                      Redemption Right.  In the event that the Board approval described in Section 6.02(c) has not been obtained within 135 days after the date of the notice referred to in Section 6.01 or a Sale of the Company has not been completed within 165 days after the date of such notice, the Majority Investors shall have the right by written notice (the “Redemption Notice”) to require the Company to redeem all of the Warrants and shares of Common Stock then held by the Investors, in each case at a price equal to the applicable Redemption Price for each such Warrant or share redeemed (the “Redemption”).  The “Redemption Price” for purposes of this Section 6.03 shall equal (x) in the case of a Warrant, the fair value of the Warrant as of a date (the “Valuation Date”) that is no earlier than the fifth business day prior to the date of payment of the Redemption Price, as determined by an Independent Financial Expert (using standard option pricing models for American style options, such as the Cox-Rubinstein binomial model, taking into account the intrinsic and option value of the Warrant but assuming annualized volatility of 110% over the Warrant’s remaining term), and (y) in the case of a share of Common Stock, the higher of (a) the fair value of such share of Common Stock as of the Valuation Date, as determined by the Independent Financial Expert (using one or more valuation methods that the Independent Financial Expert in its best professional judgment determines to be most appropriate, assuming the shares of Common Stock then held by the Investors are fully distributed and are to be sold in an arm’s-length transaction and there was no compulsion on the part of any party to such sale to buy or sell and taking into account all relevant factors), and (b) the Market-Based Value as of the Valuation Date, in each case of (x) and (y) plus interest thereon from the Valuation Date to the date of payment of the Redemption Price at the rate of 5.0% per annum.

 

The Redemption Price shall be due and payable on or before the later to occur of (a) the tenth Business Day after the date of the delivery of the Redemption Notice and (b) the fifth Business Day after the Redemption Price has been determined by the Independent Financial Expert, and if not timely paid, shall bear interest thereafter at a default interest rate equal to 5.0% compounded monthly and payable upon demand.

 

SECTION 6.04                                      Termination.  All obligations of the Company and rights of the Investors under this Article VI shall terminate if at any time the Aggregate Ownership Percentage of the Investors is less than the Minimum Aggregate Ownership Percentage.

 

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ARTICLE VII
MISCELLANEOUS

 

SECTION 7.01                                      Termination Generally.  Except as otherwise specifically provided herein, this Agreement shall terminate, except for this Article VII, which shall survive such termination, (a) upon the written agreement to that effect, signed by all parties hereto or all parties then possessing any rights hereunder or (b) upon the date when the Investors cease to own any share of Common Stock and any Warrant.

 

SECTION 7.02                                      No Recourse.  Notwithstanding anything that may be expressed or implied in this Agreement, the Company and each Investor covenant, agree and acknowledge that no recourse under this Agreement, or any documents or instruments delivered in connection with this Agreement, shall be had against any current or future director, officer, employee, shareholder, partner or member of an Investor or of any of its Affiliates, or their assignees or transferees, whether by the enforcement of any assessment or by any legal or equitable proceeding, or by virtue of any applicable Law, it being further expressly agreed and acknowledged that no personal liability whatsoever shall attach to, be imposed on or otherwise be incurred by any current or future director, officer, employee, shareholder, partner or member of an Investors or of any of its Affiliates, or their assignees or transferees for any obligations of the Investors under this Agreement, or any documents or instruments delivered in connection with this Agreement, for any claim based on, in respect of, or by reason of, such obligations or their creation.

 

SECTION 7.03                                      Notices.  All notices, requests, claims, demands and other communications hereunder shall be in writing and shall be given (and shall be deemed to have been duly given upon receipt) by delivery in person, by telecopy or by recognized overnight courier service to the respective parties at the following addresses (or at such other address for a party as shall be specified by notice given in accordance with this Section 7.03):

 

(a)                                 if to the Company:

 

Cubic Energy, Inc.

9870 Plano Road

Dallas, Texas 75201

Fax: (972) 681-9687

Attention: Larry Badgley, Chief Financial Officer

 

with copies to each of:

 

Dentons US LLP

2000 McKinney Avenue

Suite 1900

Dallas, Texas 75201-1858

Fax: (214) 259-0910

Attention: Barry F. Cannaday

 

and

 

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Looper Reed & McGraw

1601 Elm Street, Suite 4600

Dallas, TX 75201

Fax: (469) 320-6841

Attention: David Earhart

 

(b)                                 if to the Investors:

 

If to Anchorage:

 

Anchorage Capital Group, L.L.C.

610 Broadway, 6th Floor

New York, NY 10012

Attention: Jessica Fainman

 

If to Corbin Opportunity Fund, L.P.:

 

Corbin Capital Partners Management, LLC

590 Madison Avenue, 31st Fl

New York, NY 10022

Attention: Daniel Friedman

 

If to O-CAP Partners, L.P. or O-CAP Offshore Master Fund, L.P.:

 

O-CAP Advisors, LLC

600 Madison Avenue, 14th FL

New York, NY 10022

Attention: Lloyd Jagai

 

In each case, with a copy to:

 

Sullivan & Cromwell LLP

125 Broad Street

New York, New York 10004

Fax: (212) 558-3588

Attention: Robert S. Risoleo

Ari B. Blaut

 

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SECTION 7.04                                      No Third Party Beneficiaries. This Agreement shall be binding upon and inure solely to the benefit of each party hereto and, to the extent permitted by this Agreement, their respective successors and permitted assigns, and nothing herein, express or implied, is intended to or shall confer upon any other person any right, benefit or remedy of any nature whatsoever under or by reason of this Agreement.

 

SECTION 7.05                                      Expenses. Upon demand by the Investors from time to time, the Company shall promptly reimburse the Investors for, or shall promptly pay directly on behalf of the Investors or their respective Affiliates, all out-of-pocket costs, fees and expenses (including, without limitation, costs associated with due diligence, travel and background checks, fees and expenses of counsel, consultants and other advisors, search fees, filing and recording fees, and financial and accounting examination and collateral appraisal fees) reasonably incurred by the Investors and their respective Affiliates, or on their behalf, in connection with or related to the preparation, negotiation, execution, syndication, distribution and enforcement of this Agreement and the Related Agreements and other documentation related hereto and thereto, the investigation and consideration of the Company and the transactions contemplated by such agreements and documentation, and the consummation of the transactions contemplated by such agreements and documentation.

 

SECTION 7.06                                      Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York, except as to matters governed by the internal corporation laws of the State of Texas. All actions and proceedings arising out of or relating to this Agreement shall be heard and determined exclusively in any New York state or federal court, in each case sitting in the Borough of Manhattan. The parties hereto hereby (a) submit to the exclusive jurisdiction of any New York state or federal court, in each case sitting in the Borough of Manhattan, for the purpose of any action or proceeding arising out of or relating to this Agreement brought by any party hereto, and (b) irrevocably waive, and agree not to assert by way of motion, defense, or otherwise, in any such action or proceeding, any claim that it is not subject personally to the jurisdiction of the above-named courts, that its property is exempt or immune from attachment or execution, that the action or proceeding is brought in an inconvenient forum, that the venue of the action or proceeding is improper, or that this Agreement or the transactions contemplated hereby may not be enforced in or by any of the above-named courts.

 

SECTION 7.07                                      Waiver of Jury Trial. Each of the parties hereto hereby waives to the fullest extent permitted by applicable Law any right it may have to a trial by jury with respect to any litigation directly or indirectly arising out of, under or in connection with this Agreement or the transactions contemplated hereby. Each of the parties hereto (a) certifies that no representative, agent or attorney of any other party has represented, expressly or otherwise, that such other party would not, in the event of litigation, seek to enforce that foregoing waiver and (b) acknowledges that it and the other parties hereto have been induced to enter into this Agreement and the transactions contemplated hereby, as applicable, by, among other things, the mutual waivers and certifications in this Section 7.07.

 

SECTION 7.08                                      Specific Performance. The parties hereto agree that irreparable damage would occur in the event that any provision of this Agreement was not performed in accordance with the terms hereof and that the parties hereto shall be entitled to specific performance of the terms hereof, in addition to any other remedy at law or in equity.

 

SECTION 7.09                                      Counterparts. This Agreement may be executed and delivered (including by facsimile transmission) in one or more counterparts, and by the different parties hereto in separate

 

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counterparts, each of which when executed and delivered shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.

 

SECTION 7.10                                      Entire Agreement. This Agreement and the Related Agreements constitute the entire agreement among the parties with respect to the subject matter hereof and thereof and supersede all prior agreements and understandings, both written and oral, among the parties, or any of them, with respect to the subject matter hereof and thereof.

 

SECTION 7.11                                      Assignment. This Agreement shall not be assigned by operation of law or otherwise without the express written consent of the parties hereto (which consent may be granted or withheld in the sole discretion of any party) and any such assignment or attempted assignment without such consent shall be void; provided that (i) each Investor may assign any or all of its rights under this Agreement to one or more of its Affiliates which purchase or hold any Warrants or shares of Common Stock; provided, further, that no such assignment shall relieve such Investor of any of its obligations hereunder and all Warrants and shares of Common Stock held by any Affiliate of such Investor shall be deemed to be held by such Investor for all purposes under this Agreement; and (ii) Anchorage may assign any or all of its rights under Sections 2.01 through 2.05 of this Agreement to a Qualified Transferee that agrees in writing to assume the related obligations of Anchorage. Any Affiliate of an Investor that holds or acquires any Warrants or shares of Common Stock shall be subject to the obligations of such Investor hereunder and all Warrants and shares of Common Stock owned by such Investor and its Affiliates shall be aggregated and considered to be owned by such Investor for all ownership thresholds hereunder.

 

SECTION 7.12                                      Amendment. This Agreement may not be amended or modified except (a) by an instrument in writing signed by, or on behalf of, the Company and each Investor (to the extent such Investor then owns any Warrants or shares of Common Stock) or (b) by a waiver in accordance with Section 7.13.

 

SECTION 7.13                                      Waiver. Any party to this Agreement may (a) extend the time for the performance of any of the obligations or other acts of the other party or (c) waive compliance with any of the agreements of the other party or conditions to such party’s obligations contained herein. Any such extension or waiver shall be valid only if set forth in an instrument in writing signed by the party to be bound thereby. Any waiver of any term or condition shall not be construed as a waiver of any subsequent breach or a subsequent waiver of the same term or condition, or a waiver of any other term or condition of this Agreement. Any waiver of any term or condition hereunder by an Investor shall not be construed as a waiver of the same term or condition, or a waiver of any other term or condition of this Agreement, by another Investor.  The failure of any party hereto to assert any of its rights hereunder shall not constitute a waiver of any of such rights. All rights and remedies existing under this Agreement are cumulative to, and not exclusive of, any rights or remedies otherwise available.

 

SECTION 7.14                                      Severability. If any term or other provision of this Agreement is held to be invalid, illegal or incapable of being enforced by any rule of Law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect for so long as the economic or legal substance of the transactions is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as

 

20



 

closely as possible in a mutually acceptable manner in order that the transactions contemplated hereby be consummated as originally contemplated to the fullest extent possible.

 

SECTION 7.15                                      No Partnership. No partnership, joint venture or joint undertaking is intended to be, or is, formed among the parties hereto or any of them by reason of this Agreement or the transactions contemplated herein.

 

SECTION 7.16                                      Delays or Omissions. It is agreed that no delay or omission to exercise any right, power or remedy accruing to any party, upon any breach, default or noncompliance by another party under this Agreement, shall impair any such right, power or remedy, nor shall it be construed to be a waiver of any such breach, default or noncompliance, or any acquiescence therein, or of or in any similar breach, default or noncompliance thereafter occurring. It is further agreed that any waiver, permit, consent or approval of any kind or character on the Investors’ part of any breach, default or noncompliance under this Agreement or any waiver on such party’s part of any provisions or conditions of this Agreement, must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement, by law, or otherwise afforded to any party, shall be cumulative and not alternative.

 

SECTION 7.17                                      Interpretation. The words “hereof”, “herein” and “hereunder” and words of like import used in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement. When reference is made in this Agreement to an Article or a Section, such reference shall be to an Article or Section of this Agreement, unless otherwise indicated. The table of contents, table of defined terms and headings contained in this Agreement are for convenience of reference only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the context may require, any pronouns used in this Agreement shall include the corresponding masculine, feminine or neuter forms, and the singular form of nouns and pronouns shall include the plural, and vice versa. Any reference to any federal, state, local or foreign statute or law shall be deemed also to refer to all rules and regulations promulgated thereunder, unless the context requires otherwise. Whenever the words “include,” “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.”

 

SECTION 7.18                                      Cumulative Remedies. The rights and remedies provided by this Agreement are cumulative and the use of any one right or remedy by any party shall not preclude or waive its right to use any or all other remedies. Said rights and remedies are given in addition to any other rights the parties may have by Law or otherwise.

 

SECTION 7.19                                      Construction. Each party hereto acknowledges and agrees it has had the opportunity to draft, review and edit the language of this Agreement and that no presumption for or against any party arising out of drafting all or any part of this Agreement will be applied in any controversy, claim or dispute relating to, in connection with or involving this Agreement. Accordingly, the parties hereto hereby waive the benefit of any rule of Law or any legal decision that would require, in cases of uncertainty, that the language of a contract should be interpreted most strongly against the party who drafted such language.

 

[signature pages follow]

 

21



 

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

 

 

COMPANY:

 

 

 

CUBIC ENERGY, INC.

 

 

 

By:

/s/ Calvin A. Wallen, III

 

Name:

Calvin A. Wallen, III

 

Title:

President

 

Signature Page to Investment Agreement

 



 

 

INVESTORS:

 

 

 

ANCHORAGE ILLIQUID OPPORTUNITIES OFFSHORE MASTER III, L.P.

 

 

 

By:

Anchorage Capital Group, L.L.C., its Investment Manager

 

 

 

 

 

/s/ Michael Aglialoro

 

Name:

Michael Aglialoro

 

Title:

Executive Vice President

 

Signature Page to Investment Agreement

 



 

 

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

 

 

 

 

By:

Anchorage Capital Group, L.L.C., its Investment Manager

 

 

 

 

 

/s/ Michael Aglialoro

 

Name:

Michael Aglialoro

 

Title:

Executive Vice President

 

Signature Page to Investment Agreement

 



 

 

AIO III AIV, L.P.

 

 

 

 

By:

Anchorage Capital Group, L.L.C., its Investment Manager

 

 

 

 

 

/s/ Michael Aglialoro

 

Name:

Michael Aglialoro

 

Title:

Executive Vice President

 

Signature Page to Investment Agreement

 



 

 

CORBIN OPPORTUNITY FUND, L.P.

 

 

 

By:

Corbin Capital Partners Management, LLC,

 

 

Its General Partner

 

 

 

By:

/s/ Daniel Friedman

 

 

Name:

Daniel Friedman

 

 

Title:

General Counsel

 

Signature Page to Investment Agreement

 



 

 

O-CAP PARTNERS, L.P.

 

 

 

By:

O-CAP Advisors, LLC, Its General Partner

 

 

 

 

By:

/s/ Jared Sturdivant

 

 

Name:

Jared Sturdivant

 

 

Title:

Manager

 

Signature Page to Investment Agreement

 



 

 

O-CAP OFFSHORE MASTER FUND, L.P.

 

 

 

 

By:

O-CAP Advisors, LLC, Its General Partner

 

 

 

 

By:

/s/ Jared Sturdivant

 

 

Name:

Jared Sturdivant

 

 

Title:

Manager

 

Signature Page to Investment Agreement