PROMISSORY NOTE
$200,000.00 Dated: December 1, 2004
Oklahoma City, Oklahoma
FOR VALUE RECEIVED, The Beard Company, an Oklahoma corporation (the
"Borrower"), unconditionally promises to pay to the order of Cibola Corporation
(together with any assignees or successors-in-interest, the "Lender"), the
principal sum of Two Hundred Thousand Dollars ($200,000.00), plus interest
accruing on the principal amount outstanding hereunder from time to time as
further set forth below.
1. Payment Terms/Interest Rate.
(a) Interest Rate. The Borrower shall pay interest to the Lender on the
outstanding and unpaid principal amount due hereunder at a rate equal
to fifteen percent (15%) per annum.
(b) Maturity Date Payment. Any unpaid principal and all accrued, unpaid
interest thereon shall be due and payable in full to the Lender on the
Maturity Date. The Maturity Date of this Note shall be the earlier of
(i) July 31, 2005, or (ii) the date this Note is accelerated pursuant
to the terms hereof.
(c) Prepayment. This Note may be prepaid at any time, in whole or in part,
without premium or penalty, and any such prepayment shall be applied
first to accrued interest and then to principal in inverse order of
payments due.
2. Payments. Payments of principal and interest are to be made at the office
of the Lender located at 1131 13th Street, Suite 206, Cody, Wyoming 82414,
in lawful money of the United States of America. All payments hereunder
shall be applied first to interest due and the balance shall reduce the
principal balance.
3. Default. Each of the following shall constitute a default under this Note
(individually, a "Default"):
(a) Nonpayment. The Borrower fails to pay when due any principal of or
interest on this Note.
(b) Breach of Representations. If any representation or warranty of the
undersigned herein is false or misleading in any material respect.
(c) Bankruptcy, Insolvency, Etc. The Borrower becomes insolvent or
generally fails to pay, or admits in writing its inability to pay
debts as they become due; or applies for, consents to, or acquiesces
in the appointment of a trustee, receiver or other custodian for the
Borrower or any of its property, or makes a general assignment for the
benefit of creditors or, in the absence of such application, consent
or acquiescence, a trustee, receiver or other custodian is appointed
for the Borrower or for a substantial part of its property; or any
bankruptcy, reorganization or debt arrangement, or other case or
proceeding under any bankruptcy or insolvency law, or any dissolution
or liquidation proceeding is commenced in respect of the Borrower and,
if such case or proceeding is not commenced by the Borrower, it is
consented to or acquiesced in by the Borrower; or the Borrower takes
any action to authorize, or in furtherance of, any of the foregoing.
(d) Adverse Judgments. Entry by any court of a final nonappealable
judgment against the Borrower in an amount of $10,000 or greater which
is not satisfied within thirty (30) days, or an attachment of any
material part of the Borrower's assets.
4. Effect of Default. If any Default shall occur, this Note shall become
immediately due and payable at the option of the Lender, and the Lender
shall have all rights and remedies to which it is entitled under this Note
or applicable law. While any Default exists hereunder, all sums herein
promised to be paid shall bear interest at the rate equal to eighteen
percent (18%) per annum, accrued from the date of Default to the date on
which such Default is cured to the satisfaction of the holder hereof. All
past due sums will be paid at the time of and as a condition precedent to
the curing of any Default hereunder. During the existence of any such
Default, the holder of this Note may apply payments received on any amount
due hereunder or under the terms of any instrument now or hereafter
evidencing or securing any said indebtedness as said holder may determine.
5. Remedies Separate. The Lender may pursue any rights or remedies as the
holder of this Note independently or concurrently. All rights, remedies, or
powers herein conferred upon the Lender shall, to the extent not prohibited
by law, be deemed cumulative and not exclusive of any others thereof, or of
any other rights, remedies, or powers available to the Lender. No delay or
omission of the Lender to exercise any right, remedy, or power shall impair
the same or be construed to be a waiver of any Default or an acquiescence
thereto. No waiver of any Default shall extend to or affect any subsequent
Default or impair any rights, remedies, or powers available to the Lender.
No single or partial exercise of any right, remedy, or power shall preclude
other or future exercise thereof by the Lender.
6. Collection Expenses. In addition to and not in limitation of the foregoing,
the Borrower further agrees to pay all expenses, including but not limited
to reasonable attorneys' fees and legal expenses, incurred by the Lender in
endeavoring to collect any amounts payable hereunder that are not paid when
due, whether by acceleration or otherwise.
7. Waivers. The Borrower, endorsers, sureties, guarantors and all other
persons who may become liable for all or any part of the obligations
referenced herein, whether primarily or secondarily, severally waive notice
of default, notice of dishonor, notice of acceleration, presentment for
payment, protest and notice of nonpayment. Said parties consent to any
extension of time (whether one or more) for payment hereof, any release of
all or any part of the security for the payment hereof, if any, or any
release of any party liable for payment of this obligation. Any such
extension or release may be made without notice to any such party and
without discharging said party's liability hereunder.
8. Lawful Rate. Nothing contained in this Note shall be deemed to require the
payment of interest by the Borrower in excess of the amount which the
Lender may lawfully charge under the applicable usury laws. In the event
that the interest provided herein shall exceed such lawful charge, then the
amount of interest payable hereunder by the undersigned shall be reduced to
the maximum amount of such lawful charge.
9. Representations of the Borrower. The Borrower hereby warrants and
represents as follows:
(a) This Note is the legal, valid and binding obligation of the Borrower
enforceable in accordance with its terms.
(b) The Borrower is not a party to or otherwise subject to any contract or
agreement that restricts or otherwise affects its right or ability to
execute this Note or to perform any of its terms. Neither the
execution nor delivery of this Note, nor fulfillment of nor compliance
with its terms and provisions will conflict with, or result in a
breach of the terms, conditions or provisions of, or result in the
creation of any lien upon any of the properties or assets of the
Borrower pursuant to, or require any consent, approval or other action
pursuant to any agreement, instrument or laws to which the Borrower is
subject.
10. Governing Law. This Note shall be governed by and construed in accordance
with the laws of the State of Oklahoma.
11. Right of Offset. Either before or after the occurrence of a Default
hereunder, any amounts due from the Lender to the Borrower such as, but not
limited to, those certain quarterly estimated tax payments historically
made by the Lender to the Borrower, are pledged to secure payment of this
Note and any other obligation to the Lender by the Borrower, and may at any
time while the whole or any part of the obligations hereunder remain
unpaid, either before or after the Maturity Date, and with or without
notice, be appropriated, held or applied toward the payment of this Note or
any other obligation to the Lender by the Borrower.
IN WITNESS WHEREOF, the undersigned has executed this Note effective as of
the date first above written.
THE BEARD COMPANY
By: /s/ Herb Mee, Jr.
Herb Mee, Jr., President