CALL OPTION AGREEMENT
This Call Option
Agreement (the "Agreement") is entered into this 10th day
of April, 1996, by and between THE BEARD
COMPANY, an Oklahoma corporation
("Beard"), and Richard R. Dunning, Larry D.
Hartzog, and Michael C. Black (with
said individuals being hereafter referred
to collectively as the
"Shareholders"). Beard hereby grants to
Shareholders an option (the "Option") to
purchase One Hundred Forty-Four Thousand
(144,000) shares of the voting common
stock (the "Shares") of Cibola Corporation,
a Wyoming corporation ("Cibola"),
which Shares are currently owned by Beard
and represent Eighty Percent (80%) of
the issued and outstanding voting common
stock of Cibola, at the price and on
the terms set forth herein.
NOW, THEREFORE,
in consideration of the mutual agreements contained herein,
the sum of One Thousand Dollars ($1,000) in
cash paid by the Shareholders (in
the aggregate) to Beard, and other good and
valuable consideration, the receipt
of which is hereby acknowledged, the
parties agree as follows:
1. Date of
Grant; Term of Option. The Option is granted as of April 10,
1996, and it may not be exercised later
than June 29, 2006 unless extended by
the mutual agreement of Beard and
Shareholders.
2. Option
Exercise Price. Shareholders may exercise the Option by paying
to
Beard the following amounts: (i) an amount
equal to the greater of (A) the
then-outstanding balance of principal and
accrued interest on that certain
Nonrecourse Secured Promissory Note, dated
April 10, 1996, and payable by Beard
to Cibola (the "Note") or (B) the then fair
market value of the Shares,
determined with reference to the amount to
which the holder of the Shares would
be entitled in the event Cibola was
liquidated on the effective date of the
exercise of the Option, taking into account
all amounts necessary to pay all
debts of Cibola and make all required
liquidating distributions to preferred
shareholders of Cibola; and (ii) all
amounts owed by Cibola to Beard on any
other agreements between the parties
hereto, to the extent such amounts are due
and payable within six months after the
Option exercise date.
3. Exercise of
Option. The Option shall be exercisable during its term only
in accordance with the provisions of this
Agreement, as follows:
(a) Right to Exercise. Shareholders shall be entitled to exercise
the
Option provided
herein upon the occurrence of any one or more of the
following:
(i) If Beard ceases to file consolidated income tax returns for
federal income tax purposes, or if Beard notifies Cibola of its
intent
to either cease filing such consolidated returns or voluntarily
take
any action which would preclude the filing of such consolidated
returns; notwithstanding any other provision of this Agreement, or
any
other agreement between the parties hereto, Beard hereby agrees
to
notify Cibola of its intent to cease filing, or to take any
action
that would cause Beard
to cease qualifying to file, consolidated
federal income tax returns on or before that date which is six
(6)
months prior to the last day of the final consolidated return year
of
Beard that includes the results of Cibola's operations;
(ii) If a Change of Control occurs with regard to Beard; for
this
purpose, "Change of Control" shall mean (A) the acquisition, in one
or
more transactions, by any "person" (as that term is used for
purposes
of Sections 13(d) or 14(d) of the Securities Exchange Act of 1934,
as
amended) of the beneficial ownership of 50% or more of the
combined
voting power of Beard's then-outstanding voting securities, or
(B)
approval by shareholders of Beard of a merger, reorganization
or
consolidation involving Beard if the shareholders of Beard
immediately
before such merger, reorganization or consolidation do not or will
not
directly or indirectly, immediately following such merger,
reorganization or consolidation, own more than 50% of the
combined
voting power of the outstanding voting securities of Beard
resulting
from or surviving such merger, reorganization or consolidation, or
(C)
approval by shareholders of Beard of a complete liquidation or
dissolution of Beard, or (D) approval by shareholders of Beard of
an
agreement for the sale or other disposition of all or
substantially
all of the assets of Beard, or (E) acceptance by shareholders of
Beard
of shares in a reorganization or share exchange pursuant to
which
shareholders of Beard imme
