Exhibit 10.3

 

May 6, 2009

RESTATED AND AMENDED

LETTER LOAN AGREEMENT

 

The Beard Company

Harvey Parkway

301 N.W. 63rd Street, Suite 400

Oklahoma City, Oklahoma 73116

 

Gentlemen:

 

This Restated and Amended Letter Loan Agreement (this “Agreement”) amends and
restates the previous Restated and Amended Letter Loan Agreement between the
parties hereto dated March 26, 2004, as amended by the parties on June 25, 2004,
and as further restated and amended by the parties on April 1, 2005, on March 3,
2006, on June 13, 2007, and on March 25, 2008.

 

This Agreement sets forth the terms and conditions under which we have agreed to
extend the maturity date of the current unpaid balance of $2,250,000.00 of the
loan previously made to you in the principal amount of $3,000,000.00 (the
“Loan”), which is no longer a revolving loan. Accordingly, as payments are made
on the Loan, additional advances will no longer be permitted.

 

1.     LENDER:

The William M. Beard and Lu Beard

1988 Charitable Unitrust (the “Unitrust”).

 

2.  

BORROWER:

The Beard Company (the “Company”).

 

3.     AMOUNT:

$2,250,000.00. The Loan shall be evidenced by a promissory note in the amount of
$2,250,000.00 dated as of this date (the “Note”). The Borrower shall be
permitted to make prepayments without penalty up to the amount of the Note.

 

4.  

INTEREST RATE:

A fixed rate of 10.00%.

 

5.     REPAYMENT:

The outstanding principal balance (the “Indebtedness”) plus unpaid accrued
interest shall be due and payable on April 1, 2011.

 

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6.  

COLLATERAL:

None.

 

Prior to the date of this Agreement, the Loan has been secured by various Deeds
of Trust in favor of Lender and other lenders (collectively, the “Lenders”)
covering Borrower’s working and overriding royalty interests in the McElmo Dome
Unit in Montezuma and Dolores Counties of Colorado (the “Interests”). Effective
as of this date the Borrower has sold all of its rights, title and interest in
and to the Interests, and Lenders have agreed to release such Deeds of Trust.
Borrower and Lender have now agreed that Borrower shall henceforth be unsecured.

 

7.     COVENANT:

Until the Indebtedness has been paid in full, the Borrower will not sell,
transfer, convey or otherwise dispose of, all or a substantial portion of its
assets now owned or hereafter acquired, whether pursuant to a single transaction
or a series of transactions, and the Borrower will not merge or consolidate with
any person or entity or permit any such merger or consolidation with the
Borrower. This paragraph specifically excludes (i) asset sales incurred in the
normal course of business and (ii) the sale of the Interests being made by
Borrower concurrently herewith.

 

It is the desire of Lender that the Indebtedness be converted to an amortizing
loan when Borrower has demonstrated the financial capability to commence
periodic payments of principal and interest totaling at least $100,000 per
quarter. Accordingly, Borrower has agreed that it will meet with Lender annually
to review Borrower’s financial progress. No amortization will be required until
both parties have agreed to same. The sole purpose of this paragraph is to
recognize Lender’s desire that, at some point, a meaningful amortization of the
Loan is desired.

 

8.

EVENTS OF

 

DEFAULT:

If any of the following conditions or events (“Events of Default”) shall occur
and be continuing:

 

 

A.

Failure of the Borrower to pay when due any amounts, including principal or
interest on the Note (whether at the stated maturity, upon acceleration or
otherwise).

 

 

B.

Any Event of Default as specified in the Note

 

 

C.

Any default or breach in the performance of any covenant, obligation,
representation, warranty or provision contained in this Agreement, or in the
Note or in any other note or obligation of Borrower to the Unitrust.

 

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D.

The Borrower shall: (i) apply for or consent to the appointment of a custodian,
receiver, trustee or liquidator of the Borrower or any of its properties, (ii)
admit in writing the inability to pay, or generally fail to pay, its debts when
they come due, (iii) make a general assignment for the benefit of creditors,
(iv) commence any proceeding relating to the bankruptcy, reorganization,
liquidation, receivership, conservatorship, insolvency, readjustment of debt,
dissolution or liquidation of the Borrower, or if corporate action should be
taken by the Borrower for the purpose of effecting any of the foregoing, (v)
suffer any such appointment or commencement of a proceeding as described in
clause (i) or (iv) of this paragraph, which appointment or proceeding is not
terminated or discharged within 60 days, or (vi) become insolvent.

 

THEN upon the occurrence of any Event of Default described in the foregoing
paragraphs the unpaid principal amount of and accrued interest on the Loan shall
automatically become immediately due and payable, without presentment, demand,
protest or other requirements of any kind, all of which are hereby expressly
waived by Borrower.

 

If the foregoing terms and conditions are acceptable to you, please acknowledge
your agreement by signing below and returning one copy of this Letter Loan
Agreement to us.

 

Sincerely,

 

LENDER:

 

 

 

THE WILLIAM M. BEARD AND LU BEARD 1988 CHARITABLE UNITRUST

 

 

 

/s/  William M. Beard

/s/  Lu Beard

William M. Beard, Trustee

Lu Beard, Trustee

 

Accepted effective this 6th day of May, 2009

 

BORROWER:

 

THE BEARD COMPANY

/s/ Herb Mee, Jr.  

Herb Mee, Jr., President