Exhibit 10.12

AMENDED AND RESTATED BUSINESS LOAN AGREEMENT

THIS AGREEMENT is made effective as of December 8, 2008, by and among THE BEARD
COMPANY, an Oklahoma corporation, having an address of Harvey Parkway, 301 NW
63rd Street, Suite 400, Oklahoma City, Oklahoma 73116 (“Borrower”) and FIRST
FIDELITY BANK. N.A., a national banking association, whose address is 5100 North
Classen, Oklahoma City, Oklahoma 73118 (“Lender”).

WHEREAS, the Borrower and the Lender entered into a Business Loan Agreement
dated June 8, 2007 pursuant to which Borrower executed a $1,500,000.00
Promissory Note # 72818 dated June 8, 2007 (the “2007 Lender Note”) secured by a
June 8, 2007 Amended and Restated Deed of Trust, Assignment of Production,
Security Agreement and Financing Statement (the “2007 Lender Deed of Trust”);
and

WHEREAS, on October 11, 2007, The Borrower and Lender executed a Change in Terms
Agreement which modified the terms of the 2007 Lender Note; and

WHEREAS, on March 25, 2008, the Borrower and Lender executed a second Change in
Terms Agreement which again modified the terms of the 2007 Lender Note (as so
modified, the “2008 Lender Note”) and which is secured by a March 25, 2008
Amended and Restated Deed of Trust, Assignment of Production, Security Agreement
and Financing Statement (the “2008 Lender Deed of Trust”); and

WHEREAS, on the effective date of this Agreement, the principal balance owed
under the 2008 Lender Note is $650,000.00; and

WHEREAS, the Borrower will execute a promissory note dated December 8, 2008 in
the original principal amount of $1,000,000.00 (the “Note”) in renewal and
extension of the unpaid balance of indebtedness evidenced by the 2008 Lender
Note which shall be subject to the terms and conditions of this Agreement and,
therefore, in consideration of the mutual covenants and agreements herein
contained, the parties hereto agree as follows:

1.          Definitions. Terms used in this Agreement with their initial letters
capitalized shall have the meanings set forth in Section 11 of this Agreement,
except where the context otherwise requires.

2.  Loan. Subject to the terms and conditions hereof, and the terms and
conditions of the other Loan Documents, the Lender agrees to extend credit to
the Borrower and the Borrower agrees to such extension of credit from the
Lender, in the maximum principal amount of $1,000,000.00, but not to exceed the
Reducing Commitment Amount. Such extension of credit shall be evidenced by and
payable in accordance with the terms and conditions of the Note.

3.  Conditions of Lending. The obligation of the Lender to perform this
Agreement and to extend the Loan as described herein is subject to the
performance of the following conditions precedent: (i) this Agreement, the Note,
the Loan Documents, and all other documents required by the Lender shall have
been duly executed, acknowledged (where appropriate) and delivered to the
Lender, all in form and substance satisfactory to the Lender; (ii) Borrower and
any Guarantor shall have furnished to the Lender such financial statements and
other information as the Lender shall have requested; (iii) no Events of Default
shall have occurred and be continuing under this Agreement or the Loan Documents
and all representations and warranties contained herein shall be true and
correct; (iv) Borrower shall have delivered to the Lender such authorizations
and other documents reasonably required by Lender to authorize the execution,
delivery and performance of the Loan Documents, all in form and substance
satisfactory to the Lender; (v) Lender shall have received satisfactory evidence
that no litigation, investigation or proceeding before or by an arbitrator,
administrative agency or court is continuing or threatened against the Borrower,
any Guarantor or the Collateral; (vi) Borrower shall have provided to the Lender
evidence satisfactory to Lender of the existence of insurance on Borrower’s
properties, assets and business in such amounts and against such risks as Lender
shall deem appropriate in its sole discretion, with endorsements to all such
insurance policies of the Borrower naming Lender as a loss payee or an
additional insured as Lender’s interest may appear; (vii) Borrower shall have
paid all of the Lender’s costs and expenses, including reasonable fees of legal

 

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counsel, incurred in the preparation of the Loan Documents and in closing and
perfecting the Liens and rights of the Lender under the Loan Documents; and
(viii) Borrower shall have provided Lender with any such other information as
Lender might reasonably request.

3.1Real Estate and Oil and Gas Secured Loan. The Lender shall have received such
of the following items as may be indicated, all of which shall be satisfactory
to Lender after reasonable opportunity for review by Lender and its
representatives:

 

(a)

Title Evidence.  The Lender shall have received satisfactory evidence of the
Borrower’s ownership interest in the Oil and Gas Properties described in the
attached Exhibit _____.

 

(b)

Engineering Information. The Lender shall have received satisfactory engineering
reports and other information concerning the production capabilities of the Oil
and Gas Properties.

 

(c)

Division Orders, Evidence of Production Payments, Division Order Title Opinions.
Lender shall have received copies of all division orders, evidence of production
payments, and division order title opinions applicable to the Oil and Gas
Properties, review of which must be acceptable to Lender.

 

(d)

Environmental Information.  The Lender shall have received, reviewed and
approved environmental information with respect to the Oil and Gas Properties,
the results of which shall be satisfactory to the Lender.

 

(e)

UCC and Lien Search. The Lender shall have received a UCC and lien search with
respect to the Borrower, the results of which shall be satisfactory to the
Lender.

 

(f)

Inspections.  At the Lender's sole election, the Lender may conduct such
physical inspections of the Collateral as the Lender deems necessary, the
results of which shall be satisfactory to the Lender.

 

(g)

Loan Documents.  The Lender shall have received all of the Loan Documents fully
executed by Borrower.

 

(h)

Other Information.  The Borrower shall have provided the Lender with any such
other information concerning the Borrower or Collateral as the Lender might
reasonably require.

 

(i)

No Default.  No Event of Default shall have occurred and be continuing under any
of the Loan Documents.

 

4.  Representations and Warranties. To induce the Lender to extend the Loan and
enter into this Agreement, the Borrower represents and warrants to the Lender
during the term of the Loan and any and all renewals and extensions thereof, as
follows: (i) this Agreement and the Loan Documents, when duly executed and
delivered, will constitute legal, valid, and binding obligations of the
Borrower, fully enforceable in accordance with their respective terms; (ii) all
financial statements and information which have been or may hereafter be
furnished to the Lender in connection herewith, do or shall fairly represent the
financial condition of the Borrower and any Guarantor as of the dates and the
results of operations for the periods for which the same are furnished, and
shall be accurate, correct and complete; (iii) there is no action, suit,
investigation or proceeding pending or threatened against the Borrower, any
Guarantor or any of the Collateral; (iv) Borrower and any Guarantors have timely
filed all tax returns that are required to be filed and have paid all taxes due
pursuant to such returns or pursuant to any assessment received by the Borrower
or any Guarantor; (v) except for Permitted Liens, all of the Collateral is free
and clear of all Liens, and Borrower (or any other party for whom Lender has
been provided proper evidence of ownership) has good and marketable title to
such Collateral; (vi) there is no material fact that Borrower has not disclosed
to Lender which could have a material adverse effect on the properties,
business, prospects or condition (financial or otherwise) of Borrower or any
Guarantor; (vii) Borrower and all Guarantors are not in violation of any law,
rule, regulation, order or decree which is applicable to Borrower, any Guarantor
or their properties; (viii) the Collateral is insured in accordance with the
coverages approved by Lender, with the Lender named as a loss payee or an
additional insured to the extent of its interest therein and Borrower and all
other applicable parties are in full compliance with all such insurance
contracts, the same are in full force and effect and are enforceable in
accordance with their terms; and (ix) no Event of Default has occurred and is
continuing

4.1Survival of Representations. All of the representations and warranties made
by the Borrower herein will survive the delivery of the Loan Documents and any
renewal and extension of the Loan hereunder. All statements contained in any
certificate or other instrument delivered by or on behalf of the

 

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Borrower or any Guarantor under or pursuant to this Agreement or in connection
with the transactions contemplated hereby shall constitute representations and
warranties made by the Borrower hereunder as applicable.

5.  Security. The Loan shall be secured by first and prior Liens on the
Collateral in favor of the Lender pursuant to the Loan Documents, subject only
to Permitted Liens and such other exceptions or other liens or encumbrances as
may be consented to by the Lender in writing. From time to time during the term
of this Agreement, the Lender may reasonably require the Borrower to execute and
deliver other and further Loan Documents to confirm and further secure the
interest of the Lender in the Collateral, which Borrower agrees it will so
execute and deliver upon request.

6.  Affirmative Covenants. Until payment in full of the Loan, the Borrower
agrees, unless the Lender shall otherwise consent in writing, to perform or
cause to be performed the following agreements:

6.1Financial Statements and Information. Borrower shall provide, or cause to be
provided, to Lender within the time limits designated, the following financial
statements and other information:

 

(a)

Annual Audited Financial Statements of Borrower within 100 days of the end of
Borrower’s fiscal year beginning with the year ending December 31, 2008.

 

(b)

Borrower’s 10K due within 100 days of Borrower’s fiscal year end.

 

(c)

Borrower’s 10Q filing due within 60 days of each quarter end beginning with
March 31, 2009.

 

(d)

Quarterly production information for the Oil and Gas Properties (including but
not limited to McElmo Dome Unit revenue and expenses) as may be requested by
Lender and in form and substance satisfactory to Lender, due within 60 days of
each quarter end beginning with December 31, 2008.

 

(e)

Quarterly compliance certificate detailing Borrower’s compliance with the
requirements described in this paragraph 6.3, due within 60 days of each quarter
end beginning with December 31, 2008.

6.2Expenses. The Borrower shall pay all costs and expenses required to satisfy
the conditions of this Agreement. Without limitation of the generality of the
foregoing Borrower will pay: (i) all of the reasonable fees and expenses of
counsel employed by the Lender in connection with preparing and perfecting the
loan documentation as well as the closing of this transaction; (ii) all of the
fees, expenses and costs of perfecting the Liens on the Collateral; (iii) all
reasonable costs and expenses of Lender (including, without limitation, the
reasonable attorneys’ fees of Lender’s legal counsel) incurred by Lender in
connection with the preservation and enforcement of this Agreement, the Note,
and/or the other Loan Documents; (iv) all reasonable costs and expenses,
including any reasonable fees and expenses of counsel employed by the Lender, in
regard to any litigation arising out of or relating to this transaction and all
other reasonable costs, fees and expenses involved in the enforcement or defense
of this Agreement, the Loan Documents or any instrument executed pursuant
hereto; and (v) all fees associated with any third party analysis of the
engineering reports and related information with respect to Borrower’s Oil and
Gas Properties.

6.3Financial Covenants.      The Borrower shall at all times hereunder maintain
a minimum debt service ratio of 1.25:1 measured on a quarterly basis beginning
with the quarter ending December 31, 2008. The ratio will be calculated as the
sum of Borrower’s gross revenues from the McElmo Dome Unit for the quarter, less
severance taxes and lease operating expenses for the quarter, divided by the sum
of the Reducing Commitment Amount required for the respective quarter.  

7.  Negative Covenants. Until payment in full of the Loan, the Borrower shall
not, unless the Lender shall otherwise consent in writing, violate or cause to
be violated the following:

7.1Limitation on Liens.  Borrower shall not create, incur, permit or suffer to
exist any Lien upon any of the Collateral, except Permitted Liens.

7.2Sale or Disposition of Collateral. Borrower shall not sell, assign, lease,
dispose or otherwise transfer any of the Collateral to any other person or
entity without the Lender’s prior written permission.

 

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8.  Events of Default. The following shall constitute Events of Default
hereunder and under each of the Loan Documents: (i) default in payment when due
of any principal or interest due and owing on any Note after five (5) days
written notice thereof; (ii) default in payment when due of any other amount
payable to the Lender under the terms of this Agreement or the Loan Documents;
(iii) default by the Borrower in the performance or observance of any covenant
or agreement contained in this Agreement, the Loan Documents, or any agreement
made in connection therewith, or under the terms of any other instrument
delivered to the Lender in connection with this Agreement, and the continuance
of such default without cure for a period of thirty (30) calendar days after the
occurrence of such default; (iv) any representation or warranty herein or under
any Loan Document, or any representation, statement, certificate, schedule or
report made or furnished to the Lender on behalf of the Borrower or any
Guarantor proves to be false or erroneous in any material respect at the time of
making thereof or any warranty ceases to be complied with in any material
respect; (v) Borrower or any Guarantor shall: (a) apply for or consent to the
appointment of a receiver, trustee or liquidator of their respective properties;
(b) admit in writing their inability to pay debts as they mature; (c) make a
general assignment for the benefit of creditors; or (d) any material part of
their assets or properties shall be placed in the hands of a receiver, trustee
or other officers or representatives of a court or of creditors; (vi) Borrower
or any Guarantor shall be adjudged bankrupt or any voluntary proceeding shall be
instituted by Borrower or any Guarantor in insolvency or bankruptcy or for
readjustment, extension or composition of debts or for any other relief of
debtors; (vii) any involuntary proceeding shall be instituted against Borrower
or any Guarantor in insolvency or for readjustment, extension, or composition of
debts, which proceeding is not dismissed within thirty (30) days after the
filing of the commencement of the same; (viii) entry by any court of a final
judgment against Borrower or any Guarantor, or the institution of any levy,
attachment, garnishment or charging order against the Borrower or any Guarantor
which has a material adverse effect as determined by Lender on the financial
condition of the Borrower or any Guarantor; or (ix) a Lien other than that of
this Lender appears on the Collateral.

9.  Remedies. Upon the occurrence of any Event of Default, which has not been
timely cured, the Lender may, at its option: (i) declare the Note and all sums
outstanding under the Loan Documents to be immediately due and payable, and the
Lender will be entitled to proceed to selectively and successively enforce the
Lender’s rights under the Note and all Loan Documents; (ii) terminate any of the
Lender’s obligations hereunder, (iii) exercise any right of offset, (iv) without
notice of default or demand, pursue and enforce any of the Lender’s rights and
remedies under the Loan Documents, or otherwise provided under or pursuant to
any applicable law or agreement, or (v) exercise any other remedy at law or in
equity. Lender may waive any Event of Default in writing, and, in such event,
the Lender and the Borrower will be restored to their respective former
positions, rights and obligations hereunder. Any Event of Default so waived will
for all purposes of this Agreement be deemed to have been cured and not to be
continuing; but no such waiver will extend to any subsequent or other Event of
Default or impair any consequence of such subsequent or other Event of Default.

10.General Conditions. The following conditions shall be applicable throughout
the term of this Agreement:

10.1          Waiver; Modification.  No failure to exercise, and no delay in
exercising, on the part of Lender, any right hereunder or under any Loan
Document 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. The rights of Lender hereunder and under the Loan Documents
shall be in addition to all other rights provided by law. No modification or
waiver of any provision of this Agreement, any Note or any Loan Document, nor
consent to departure therefrom, shall be effective unless in writing signed by
Lender and no such consent or waiver shall extend beyond the particular case and
purpose involved. No notice or demand given in any case shall constitute a
waiver of the right to take other action in the same, similar or other instances
without such notice or demand.

10.2          Notices.  Any notices or other communications required or
permitted to be given by this Agreement or any other Loan Documents must be
(i) given in writing, and (ii) personally delivered or mailed by prepaid mail or
overnight courier, to the address of such party as provided at the beginning of
this Agreement. Any such notice or other communication shall be deemed to have
been given (whether actually received or not) on the day three days after it is
mailed by prepaid certified or registered mail, one day after sent by over night
courier, or on the day it is personally delivered as aforesaid, and otherwise
when actually received. Any party may, for purposes of the Loan Documents,
change its address or the person to whom a notice or other communication is
marked to the attention of, by giving notice of such change to the other parties
pursuant hereto.

 

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10.3          Governing Law; Choice of Forum.  This Agreement has been executed
and delivered in the State of Oklahoma, and the substantive laws of Oklahoma and
the applicable federal laws of the United States shall govern the validity,
construction, enforcement and interpretation of this Agreement and all of the
Loan Documents. Any suit, action or proceeding against Borrower with respect to
this Agreement or any Loan Document may be brought in the courts of Oklahoma
County, Oklahoma, or in the United States courts located in Oklahoma County,
Oklahoma as Lender in its sole discretion may elect and Borrower hereby submits
to the non-exclusive jurisdiction of such courts for the purpose of any such
suit, action or proceeding. Borrower hereby irrevocably waives any objections
which Borrower may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement or any Loan
Document brought in the courts located in Oklahoma County, Oklahoma, and hereby
further irrevocably waives any claim that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum.

10.4          No Oral Agreements; Invalid Provisions; Multiple
Counterparts.  THIS WRITTEN LOAN AGREEMENT REPRESENTS THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS OF THE PARTIES.  If any provision of any Loan Document
is held to be illegal, invalid or unenforceable under present or future laws
during the term of this Agreement, such provision shall be fully severable; such
Loan Document shall be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part of such Loan Document; and
the remaining provisions of such Loan Document shall remain in full force and
effect and shall not be affected by the illegal, invalid or unenforceable
provisions or by its severance from such Loan Document. This Agreement may be
executed in any number of counterparts, all of which taken together shall
constitute one and the same agreement, and any of the parties hereto may execute
this Agreement by signing any such counterpart.

10.5          Binding Effect; No Third-Party Beneficiary.  The Loan Documents
shall be binding upon and inure to the benefit of Borrower and Lender and their
respective successors, assigns and legal representatives; provided, however,
that Borrower may not, without the prior written consent of Lender, assign any
rights, powers, duties or obligations thereunder.   Nothing contained in the
Loan Documents, nor any conduct or course of conduct by any or all of the
parties hereto, before or after signing this Agreement or any other Loan
Document, shall be construed as creating any right, claim or cause of action
against Lender, or any of its officers, directors, agents or employees, in favor
of any materialman, supplier, contractor, subcontractor, purchaser or lessee of
any property owned by Borrower, nor to any other person or entity.

11.Definitions. As used in this Agreement, the following terms with their
initial letters capitalized shall have the following meanings except where the
context otherwise requires:

“Agreement” shall mean this Amended and Restated Business Loan Agreement, as
amended, supplemented or modified from time to time.

“Collateral” means: i) all of Borrower’s right, title and interest in and to all
of the Oil and Gas Properties, ii) Borrower’s 5% stock ownership interest in
Geohedral, Inc. and, and such other property as may be described in any other
Loan Document made and delivered as security for the Loan.

“GAAP” means the generally accepted accounting principles, practices and
procedures, set forth by the Accounting Principles Board and the American
Institute of Certified Public Accountants and the Financial Accounting Standards
Board, which are applicable as of the date of the end of the fiscal quarter
immediately preceding such date of determination.

“Guarantor” shall mean any guarantor of the Loan who may hereafter execute a
Guaranty.

“Guaranty” shall mean any unconditional and absolute guaranty of the Loan by a
Guarantor pursuant to a guaranty agreement in form satisfactory to the Lender.

 

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“Lien” means any lien, mortgage, deed of trust, security interest, tax lien,
pledge, encumbrance, conditional sale or title retention arrangement, or any
other interest in property designed to secure the repayment of debt, whether
arising by agreement or under any statute or law, or otherwise.

“Loan” means any loan or credit extensions contemplated by this Agreement or
that may be evidenced by a Note or any other Loan Document.

“Loan Documents” collectively means this Agreement, any Note, any Guaranty, all
mortgages, deeds of trust, security agreements, assignments, and financing
statements securing the Loan, and all other promissory notes, guaranties,
agreements and all other documents, agreements, certificates and instruments
executed and delivered in connection with the Loan described herein and any
renewals, amendments, supplements or modifications thereof or thereto.

“Note” means any Promissory Note from the Borrower payable to the order of the
Lender, whether now or hereafter made and delivered to Lender, together with all
renewals, extensions, modifications and substitutions thereto and therefor.

“Oil and Gas Properties” means the oil, gas and mineral interests and properties
described on Exhibit “A” attached hereto and made a part hereof.

“Permitted Liens” means any Lien designated as a Permitted Lien under any Loan
Document and any other Lien approved in writing by Lender.

“Reducing Commitment Amount” shall mean (i) the initial principal amount of
$1,000,000.00, and (ii) on January 31, 2009, and on the last day of each month
thereafter, the principal amount resulting from the reduction of $50,000.00 per
month throughout the term of the Note.

“Uniform Commercial Code” means the Uniform Commercial Code of the State of
Oklahoma (12A O.S. §1-101 et. seq.), inclusive of Uniform Commercial Code –
Secured Transactions of the State of Oklahoma (12A O.S. §1-9-101 et. seq.), as
amended from time to time.

12.Conflicts. In the event of a conflict between the terms and conditions of
this Agreement and any other Loan Document, this Agreement shall prevail.

IN WITNESS WHEREOF, the undersigned have executed this Agreement as of day and
year first above written.

 

 

“BORROWER”

THE BEARD COMPANY,

 

an Oklahoma corporation

 

 

By:   

/s/ Herb Mee, Jr.

 

Herb Mee, Jr., President

 

 

“LENDER”

FIRST FIDELITY BANK, N.A.,

 

a national banking association

 

 

By:  

/s/ Danny Lawson

 

Danny Lawson, Executive Vice President

 

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EXHIBIT A

 

 

 

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