Document:

Exhibit 10.2

                     SECURITY AND COLLATERAL AGENT AGREEMENT

     THIS SECURITY AND COLLATERAL AGENT AGREEMENT is made as of January 26,
2005, by Investrust, N.A., a nationally chartered trust company (including any
successor thereto, the "Collateral Agent"), The Beard Company, an Oklahoma
corporation (the "Borrower"), and Beard Technologies, Inc., an Oklahoma
corporation ("BTI"), for the benefit of the holders (the "Note Holders") of
Borrower's 12% Convertible Subordinated Notes due February 15, 2010 (the
"Notes"). All terms used but not otherwise defined in this Agreement have the
same meanings as set forth in the Notes.

     The parties agree as follows:

     1. Appointment of Collateral Agent. In the Notes each of the Note Holders
appointed Collateral Agent to serve as collateral agent on the terms in this
Agreement and for the benefit of the Note Holders. Collateral Agent accepts this
appointment.

     2. Grant of Security Interest.

     (a) BTI grants to Collateral Agent, for the benefit of the Note Holders, a
security interest in all equipment of BTI now owned or hereafter acquired and
all additions and accessions thereto (the "Collateral").

     (b) This Agreement secures the following (the "Obligations"):

          (i) Borrower's obligations under the Notes and this Agreement;

          (ii) The repayment of (a) any amounts that Collateral Agent may
     advance or spend for the maintenance or preservation of the Collateral and
     (b) any other expenditures that Collateral Agent may make under this
     Agreement or for the benefit of the Note Holders;

          (iii) All amounts owed by Borrower or BTI under any modifications,
     renewals, or extensions of any of the foregoing obligations; and

          (iv) Any of the foregoing that arise after the filing of a petition by
     or against Borrower or BTI under the U.S. Bankruptcy Code, even if the
     obligations do not accrue because of the automatic stay under ss. 362 of
     the Bankruptcy Code or otherwise.

     3. Perfection of Security Interest. BTI authorizes Collateral Agent to
file, and ratifies any filing by the Collateral Agent prior to the execution of
this Agreement of, any financing statements, continuation statements,
certificates, and other documents requested by Collateral Agent to perfect or
renew the security interest created by this Agreement. BTI will execute and
deliver to Collateral Agent financing statements, certificates, and other
documents requested by Collateral Agent to perfect the security interest in any
Collateral now owned or hereafter acquired by Borrower or in any replacements or
proceeds of the Collateral.

     4. Termination of Security Interest. The Security Interest shall terminate
upon Borrower's delivery of a certificate (the "Termination Notice") signed by
an officer of Borrower certifying to Collateral Agent that Borrower has obtained
capital (by any combination of USDA-guaranteed financing, bank financing,
additional equity or debt offerings, the proceeds from the Notes, or a sale of
an equity interest in Borrower's subsidiary formed to perform the Pinnacle
Project) in an amount not less than $7,400,000 to finance the pond fines
recovery project in West Virginia for Pinnacle Mining Company, LLC (the
"Pinnacle Project"). Upon delivery of the Termination Notice, this Agreement
shall terminate and Collateral Agent shall cause the secured party of record for
any financing statements filed pursuant to this Agreement to promptly file a
termination statement for any financing statements so filed.

     5. Possession. BTI shall have possession of the Collateral, except where
expressly otherwise provided in this Agreement. Where Collateral is in the
possession of a third party, BTI will join with Collateral Agent in notifying
the third party of Collateral Agent's security interest and obtaining an
acknowledgment in an authenticated record from the third party that it is
holding the Collateral for the benefit of Collateral Agent.

     6. Covenants Concerning BTI and Collateral.

     (a) Inspection. Collateral Agent may inspect the Collateral at any time
upon reasonable notice.

     (b) No Disposition. Except as approved in writing by Collateral Agent, BTI
shall not sell, transfer, lease, or otherwise dispose of any item of Collateral,
other than replacing such items in the ordinary course of business, or grant any
other security interest in any of the Collateral.

     (c) Risk of Loss and Insurance. BTI has the risk of loss of the Collateral.
Collateral Agent is not responsible for any injury to, loss to, or loss in value
of the Collateral. BTI will continuously maintain insurance on the Collateral
with types and amounts of coverages no less than the lesser of (a) the types and
amounts as of the execution of this Agreement, and (b) such types and amounts as
are usual and customary in BTI's industry, with Collateral Agent named as loss
payee and as an additional insured. BTI will, upon request by Collateral Agent,
deliver to Collateral Agent certificates evidencing such coverage and evidence
of the payment of all premiums.

     (d) Maintenance. BTI will maintain the Collateral in operating condition,
ordinary wear and tear and casualty excepted.

     (e) Taxes. BTI will pay before delinquency any tax or other governmental
charge on the Collateral.

     (f) Existence. BTI shall preserve its corporate existence and not, in one
transaction or a series of related transactions, merge into or consolidate with
any other entity or sell all or substantially all of its assets. BTI shall not
change the state of its incorporation and shall not change its corporate name
without providing Collateral Agent with 30 days prior notice.

     (g) Personal Property. BTI will not affix any Collateral to any real
property in any manner that would change the nature of the property from that of
personal property.

     (h) Liens. BTI will not create, incur or permit to exist on the Collateral
any security interest, mortgage, pledge, lien, claim, charge, or encumbrance,
whether statutory, consensual, or otherwise (collectively, "Liens") and shall
defend the Collateral and Collateral Agent's first priority security interest in
the Collateral against the claims of all other persons.

     (i) Use. BTI shall use the Collateral and operate its business in
compliance with all applicable laws, regulations, and ordinances.

     7. BTI's Representations and Warranties. BTI represents and warrants to
Collateral Agent that:

     (a) Title. BTI owns the Collateral free and clear of all Liens. There is no
financing statement covering or purporting to cover any interest of BTI in the
Collateral filed in any jurisdiction.

     (b) State of Organization and Name. BTI is and has always been a
corporation organized and in good standing under the laws of the State of
Oklahoma. BTI's exact legal name is as stated in the introductory paragraph of
this Agreement. Prior to April 1994, BTI's legal name was White Eagle, Inc.
Since April 1994 BTI has never had or done business under any name other than
its current name.

     (c) Company Authorization. The execution, delivery, and performance by BTI
of this Agreement are within BTI's corporate powers, have been duly authorized
by all necessary corporate action, require no action by or in respect of, or
filing with, any governmental authority, and do not contravene, or constitute a
default under, any provision of applicable law or regulation or of the
certificate of incorporation or bylaws of BTI or of any judgment, injunction,
order, or decree or any indenture, mortgage, deed of trust, credit agreement, or
loan agreement, or any other material agreement or material instrument binding
upon BTI, or result in the creation or imposition of any Lien on any of the
Collateral.

     (d) Litigation. There is no action, suit, or proceeding pending against, or
to the knowledge of BTI threatened against or affecting, BTI before any court or
arbitrator or any governmental authority.

     (e) Collateral. All of the Collateral is and will be in operating condition
and not subject to any licensing, patent, royalty, trademark, trade name, or
copyright agreements with any third parties or any infringement claims, and the
use, sale, or other disposition of any of the Inventory by Collateral Agent
after an Event of Default shall not require the consent of any person and shall
not constitute a breach or default under any contract or agreement to which BTI
is a party or to which any of the Collateral is subject.

     8. Default. BTI will be in default under this Agreement if any of the
following (each an "Event of Default") occurs:

     (a) Default under Notes. Any Event of Default by Borrower under the Notes;

     (b) Unauthorized Transfer. BTI fails to perform any obligation under this
Agreement or any of BTI's representations or warranties in this Agreement are or
become inaccurate in any respect and such default or inaccuracy continues after
[30] days notice from Collateral Agent;

     (c) Attachment. Any of the Collateral becomes subject to attachment,
execution or levy;

     (d) Bankruptcy. Borrower or BTI voluntarily files a petition for bankruptcy
or reorganization; a petition in bankruptcy is filed against Borrower or BTI; a
receiver or other representative is appointed for Borrower or BTI or its
business or assets; or Borrower or BTI makes an assignment for the benefit of
its creditors; and

     (e) Evidence of Lack of Priority. Collateral Agent's security interest in
the Collateral is or becomes not prior to all other security interests.

     9. Remedies Upon Event of Default. Upon the written demand by Note Holders
holding a majority of the aggregate outstanding principal amounts of the Notes
(the "Majority Holders"), upon an Event of Default:

     9.1 General. Collateral Agent may preserve any remedy at law (including
those available to secured parties under the Uniform Commercial Code) or in
equity to collect, enforce, or satisfy any obligations.

     9.2 Specific. Collateral Agent may pursue any of the following remedies
separately, successively, or simultaneously:

     (a) File suit and obtain judgment and, in conjunction with any action, seek
any ancillary remedies provided by law, including levy of attachment and
garnishment.

     (b) Take possession of any Collateral if not already in its possession
without demand and without legal process. Upon Collateral Agent's demand, BTI
shall assemble and make the Collateral available to Collateral Agent as it
directs. BTI grants to Collateral Agent the right to enter into or on any
premises where Collateral may be located.

     (c) Without taking possession, sell, lease or otherwise dispose of the
Collateral at any public or private sale in accordance with the Uniform
Commercial Code.

     10. Foreclosure Procedures.

     10.1 No Waiver. No delay or omission by Collateral Agent to exercise any
right or remedy accruing upon any event of default shall impair any right or
remedy, waive any default or operate as an acquiescence to any Event of Default,
or affect any subsequent Event of Default of the same or a different nature.

     10.2 Notices. Collateral Agent shall give BTI such notice of any private or
public sale as may be required by the Uniform Commercial Code.

     10.3 Condition of Collateral. Collateral Agent has no obligation to clean
up or otherwise prepare the Collateral for sale.

     10.4 No Obligation to Pursue Others. Collateral Agent has no obligation to
attempt to satisfy the Obligations by collecting them from any other person
liable for them. Collateral Agent may release, modify, or waive any Collateral
provided by any other person to secure any of the Obligations, all without
affecting Collateral Agent's rights against BTI or Borrower. Borrower and BTI
waive any right they may have to require Collateral Agent to pursue any third
person for any of the Obligations.

     10.5 Compliance with Other Laws. Collateral Agent may comply with any
applicable state or federal law requirements in connection with the disposition
of the Collateral and compliance shall not be considered adversely to affect the
commercial reasonableness of any sale of the Collateral.

     10.6 Warranties. Collateral Agent may sell the Collateral without giving
any warranties as to the Collateral. Collateral Agent may specifically disclaim
any warranties of title or the like. This procedure shall not be considered
adversely to affect the commercial reasonableness of any sale of the Collateral.

     10.7 No Marshaling. Collateral Agent shall have no obligation to marshal
any assets in favor of BTI or against or in payment of the Notes, any of the
other Obligations, or any other obligation owed to Collateral Agent or the Note
Holders by Borrower, BTI, or any other person.

     11. Limitation on Note Holders' Action Against Borrower. Until termination
of the security interest in the Collateral, Collateral Agent shall have the
exclusive authority to enforce this Agreement and the Notes on behalf of the
Note Holders, and no Note Holder may take any action against Borrower, BTI, or
the Collateral with respect to the Obligations under the Notes, including,
without limitation, sending notices of defaults or events of default,
instituting legal proceedings, and exercising any right of set-off or
counterclaim.

     12. Duties and Obligations of Collateral Agent.

     12.1 Performance. In performing its duties, Collateral Agent shall exercise
the same care and skill as it would exercise in dealing with loans for its own
account. Neither Collateral Agent nor any of its directors, officers, employees
or other agents shall be liable for any action taken or omitted to be taken by
it or them under or in connection with this Agreement or the Notes except for
its or their own gross negligence or willful misconduct, as finally determined
by a court of competent jurisdiction. Without limiting the generality of the
foregoing, Collateral Agent: (a) may consult with legal counsel and other
experts selected by it and shall not be liable for any action taken or omitted
to be taken by it in good faith and in accordance with the advice of counsel or
such experts; (b) makes no representation or warranty to any Note Holder as to,
and shall not be responsible to any Note Holder for, any recital, statement,
representation or warranty made in or in connection with this Agreement, any
Notes or in any written or oral statement (including a financial or other such
statement), instrument or other document delivered in connection herewith or
therewith or furnished to any Note Holder by or on behalf of Borrower or BTI;
(c) shall have no duty to ascertain or inquire into the performance or
observance by Borrower or BTI of any of the covenants or conditions in this
Agreement or to inspect any of the Collateral or other property (including the
books and records) of Borrower or BTI or inquire into the use of the proceeds of
the Notes or to inquire into the existence or possible existence of any Event of
Default; (d) shall not be responsible for the due execution, legality, validity,
enforceability, effectiveness, genuineness, sufficiency, collectibility or value
of this Agreement or the Notes or any instrument or document executed or issued
pursuant hereto or in connection herewith, except to the extent that such may be
dependent on the due authorization and execution by Collateral Agent itself; (e)
shall have no duty or responsibility, either initially or on a continuing basis,
to provide to any Note Holder any credit or other information with respect to
Borrower or BTI; (f) shall be entitled to rely and act upon, any notice,
consent, certificate or other instrument or writing (which may be by facsimile
or other electronic means) believed by it to be genuine and correct and to have
been signed or sent by the proper party or parties; (g) may execute or file any
and all financing or similar statements or notices, amendments, renewals,
supplements, documents, instruments, proofs of claim, notices and other written
agreements with respect to this Agreement or any of the Notes; and (h) may
perform, exercise, and enforce any and all other rights and remedies of the Note
Holders with respect to the Notes, the Obligations, this Agreement, or otherwise
related to any of same to the extent reasonably incidental to the exercise by
the Collateral Agent of the rights and remedies specifically authorized to be
exercised by the Collateral Agent by the terms of this Agreement or any of the
Notes. As to any matters not expressly provided for by this Agreement and the
Notes (including, without limitation, enforcement or collection of the
Obligations), Collateral Agent shall not be required to exercise any discretion
or take any action, but shall be required to act or to refrain from acting (and
shall be fully protected in so acting or refraining from acting) upon the
instructions of the Majority Holders. Instructions of the Majority Holders shall
be binding upon all Note Holders. Collateral Agent shall not be required to take
any action that, in the reasonable opinion of the Collateral Agent, exposes the
Collateral Agent to liability or that is contrary to this Agreement, the Notes,
or applicable law.

     12.2 Apportionment of Collections. After the occurrence and during the
existence of any Event of Default, Collateral Agent shall apply and disburse all
collections of the Obligations and proceeds of the Collateral in the following
order: (a) first, to amounts due to Collateral Agent under this Agreement,
including, without limitation, Collateral Agent Advances, until they are paid in
full; and (b) second, to each Note Holder, pro rata on the basis of the ratio of
the outstanding principal amounts under its Note to the total principal amount
outstanding under all of the Notes.

     13. Fees and Expenses of Collateral Agent.

     13.1 Collateral Advances. Collateral Agent may from time to time make such
disbursements and advances ("Collateral Agent Advances") that Collateral Agent,
in its sole discretion, deems necessary or desirable to preserve, protect,
prepare for sale or lease or dispose of the Collateral or protect or enforce the
security interest in the Collateral. Collateral Agent Advances shall bear
interest at the highest rate set forth in the Note and shall be payable on
demand. Collateral Agent shall notify each Note Holder, and the Borrower in
writing of each such Collateral Agent Advance. Each notice shall include a
description of the purpose of the Collateral Agent Advance. Borrower and BTI
shall upon demand reimburse Collateral Agent for each Collateral Agent Advance
and pay the interest accrued thereon.

     13.2 Indemnification. Borrower and BTI shall indemnify and hold harmless
Collateral Agent and its directors, officers, agents and employees against any
and all claims, damages, losses, liabilities, or expenses (including, but not
limited to, reasonable attorneys' fees, court costs, and costs of investigation)
of any kind or nature whatsoever arising out of or in connection with this.

     13.3 Survival. The obligations of Borrower and BTI to reimburse and pay
interest on Collateral Advances and to indemnify Collateral Agent shall survive
the termination of the security interest and this Agreement and the earlier
resignation or removal of Collateral Agent. When Collateral Agent incurs
expenses or renders services in connection with proceedings under the U.S.
Bankruptcy Code or any other applicable federal or state bankruptcy, insolvency
or other similar law, or in case of any other comparable judicial proceedings
relative to Borrower or BTI, such expenses (including the fees and expenses of
Collateral Agent's counsel and agents) and the compensation for such services
are intended to constitute expenses of administration under any bankruptcy law
or law relating to creditors rights generally.

     14. Resignation by and Removal of Collateral Agent; Successor Collateral
Agent.

     (a) Collateral Agent may at any time resign and terminate its obligations
under this Agreement upon at least 60 days prior written notice to Borrower. No
resignation shall be effective until a successor Collateral Agent shall have
been appointed and accepted its appointment. Promptly after receipt of notice of
Collateral Agent's proposed resignation, Borrower shall appoint, by written
instrument, a successor Collateral Agent and notify the Note Holders thereof. If
a successor Collateral Agent is not appointed in accordance with the foregoing
procedures, Collateral Agent may petition a court of competent jurisdiction to
appoint a successor Collateral Agent. One original counterpart of such
instrument of appointment shall be delivered to each of Collateral Agent,
Borrower, BTI, and the successor Collateral Agent.

     (b) The Majority Holders, upon at least 60 days written notice to
Collateral Agent may remove and discharge Collateral Agent (or any successor
Collateral Agent thereafter appointed) from the performance of its obligations
under this Agreement. Promptly after the giving of notice of removal of
Collateral Agent, the Majority Holders shall appoint, by written instrument, a
successor Collateral Agent and notify the Note Holders thereof. One original
counterpart of the instrument of appointment shall be delivered to the
Collateral Agent, Borrower, BTI, the Note Holders, and the successor Collateral
Agent. The removal shall become effective until all outstanding amounts due and
owing to Collateral Agent are paid in full.

     (c) In the event of any such resignation or removal, Collateral Agent shall
cooperate with Borrower and the successor Collateral Agent to facilitate the
continued perfection and priority of the security interest in the Collateral.

     15. Limitations of Liability.

     (a) Collateral Agent shall not be liable to Borrower, BTI, any Note Holder,
or any other person with respect to any action taken or not taken by Collateral
Agent in good faith in the performance of its obligations under this Agreement.
The obligations of Collateral Agent shall be determined solely by the express
provisions of this Agreement. No representation, warranty, covenant, agreement,
obligation or duty of Collateral Agent shall be implied with respect to this
Agreement or Collateral Agent's services hereunder.

     (b) Collateral Agent may conclusively rely, and shall be fully protected in
acting or refraining from acting, upon and need not verify the accuracy of any
written instruction, notice, order, request, direction, certificate, opinion or
other instrument or document believed by Collateral Agent to be genuine and to
have been signed and presented by the proper party or parties.

     (c) No provision of this Agreement shall require Collateral Agent to expend
or risk its own funds or otherwise incur financial liability in the performance
of its duties under this Agreement if Collateral Agent has reasonable grounds
for believing that repayment or adequate indemnity is not assured.

     (d) Collateral Agent may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents, attorneys,
custodians or nominees appointed with due care, and shall not be responsible for
any willful misconduct or negligence on the part of any agent, attorney,
custodian or nominee so appointed.

     16. Notices. All demands, notices and communications relating to this
Agreement shall be in writing and shall be deemed to have been duly given when
received by the other party at the addresses shown below whether by personal
delivery, express delivery or facsimile, or such other address as may hereafter
be furnished to the other party or parties by like notice. Any such demand,
notice or communication hereunder shall be deemed to have been received on the
date delivered to or received at the premises of the addressee.

         If to Borrower:

         The Beard Company
         5600 N. May Avenue, Suite 320
         Oklahoma City, OK 73112
         Attention: Herb Mee, Jr.

         If to Collateral Agent:

         Investrust, N.A.
         Attn: C.A Hartwig
         5101 N. Classen Blvd., Suite 620
         Oklahoma City, OK 73118

         If to Note Holders:

         To the addresses specified by each Note Holder in the
         Subscription Agreement executed by each Note Holder
         subscribing for the Notes.

     17. Governing Law; Venue; Consent to Jurisdiction.

     (a) The laws of the State of Oklahoma, without giving effect to its choice
of law principles, shall govern all matters arising under or relating to this
Agreement.

     (b) The parties agree that any legal proceeding arising out of this
Agreement or the transactions contemplated hereby, including any legal
proceeding by a third party beneficiary to this Agreement, may be brought and
litigated only in the United States District Court for the Western District of
Oklahoma, to the extent that it has subject matter jurisdiction and otherwise in
the state courts sitting in Oklahoma City, Oklahoma, and each party hereto
agrees and consents to such jurisdiction. The parties agree that service of
process may be made upon them in any legal proceeding relating to this Agreement
by any means allowed under Oklahoma or federal law. The parties hereby waive and
agree not to assert, by way of motion, as a defense or otherwise, that any
proceeding is brought in an inconvenient forum or that the venue thereof is
improper, and further agree to a transfer of any such proceeding to the United
States District Court for the Western District of Oklahoma, to the extent that
it has subject matter jurisdiction, and otherwise in the state courts sitting in
Oklahoma City, Oklahoma.

     18. Final Agreement; Amendment. This is the final expression of the entire
agreement of the parties regarding the subject matter of this Agreement. The
parties may amend this Agreement only by a written agreement that identifies
itself as an amendment to this Agreement. Collateral Agent and the Note Holders
may amend this Agreement with respect to their duties and obligations to each
other without the consent of Borrower or BTI.

     EXECUTED as of the day and year first written above.

BTI:                              BEARD TECHNOLOGIES, INC., an Oklahoma
                                  corporation

                                           /s/ Herb Mee, Jr.
                                  By:  ----------------------------------------
                                           Herb Mee, Jr., Vice President

BORROWER:                         THE BEARD COMPANY, an Oklahoma corporation

                                               /s/ Herb Mee, Jr.
                                  By:  ----------------------------------------
                                           Herb Mee, Jr., President

COLLATERAL AGENT:                 INVESTRUST, N.A., a nationally chartered trust
                                  company

                                              /s/ C. A. Hartwig
                                  By:  ----------------------------------------
                                               C. A. Hartwig, Vice PresidentExhibit 10.3

THE WARRANTS AND THE ORDINARY SHARES TO BE ISSUED PURSUANT TO THIS WARRANT HAVE
NOT BEEN REGISTERED UNDER ANY FEDERAL OR STATE SECURITIES LAWS AND MAY NOT BE
SOLD, TRANSFERRED, ASSIGNED OR OTHERWISE DISPOSED OF ABSENT REGISTRATION UNDER
THE SECURITIES ACT OF 1933 AND ANY APPLICABLE STATE SECURITIES LAWS UNLESS AND
UNTIL THE HOLDER HEREOF PROVIDES (i) INFORMATION REASONABLY NECESSARY TO CONFIRM
THAT SUCH REGISTRATION IS NOT REQUIRED OR (ii) AN OPINION OF COUNSEL TO THE
EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED.

                              WARRANT NO. 2005-___

________________, 2005              For the  Purchase of ___________ shares of
                                    Common Stock of The Beard Company

     FOR VALUE RECEIVED, THE BEARD COMPANY, an Oklahoma corporation (the
"Corporation"), hereby grants to _________________________, or his registered
assigns (collectively the "Holder"), the right (the "Warrants") to purchase at
any time before the Expiration Date (as hereafter defined)
__________________________ (________) duly authorized, validly issued, fully
paid and non-assessable shares (the "Warrant Shares") of the Corporation's
Common Stock, $.0006665 par value (the "Common Stock"), at the Exercise Price
(as hereafter defined) and on the terms and conditions herein set forth. The
number of Warrant Shares and the Exercise Price will be subject to adjustment as
provided in this Warrant. The Warrants are being issued pursuant to the terms of
the Confidential Private Placement Memorandum in connection with the Company's
offering of $2,100,000 of 12% Convertible Subordinated Notes due February 15,
2010, as Amended December 29, 2004.

     This Warrant is issued subject to the following terms and conditions:

1. Exercise of Warrant. The Warrants are exercisable at the option of the Holder
in whole or in part at any time prior to the Expiration Date by the delivery to
the Corporation of written notice of the exercise of the Warrants specifying the
number of Warrant Shares to be acquired, surrender of this Warrant to the
Corporation and satisfaction of the Exercise Price for the Warrant Shares to be
acquired through such exercise. The Warrants will be deemed exercised
immediately prior to the close of business on the day that all of the foregoing
requirements for the exercise of the Warrants are completed and the person
entitled to receive the Warrant Shares will be treated for all purposes as the
holder of record of such Warrant Shares at such time including, without implied
limitation, the right to vote, receive dividends and to receive distributions
for which the record date falls on or after such date. As promptly as possible
after such date (in any event within five (5) business days) the Corporation
will deliver to the Holder a stock certificate evidencing the Warrant Shares
covered by the exercise. In the case of an exercise for less than all the
Warrant Shares the Corporation will cancel this Warrant on the surrender hereof
and will execute and deliver a new Warrant of like tenor for the balance of the
unexercised Warrant Shares within such five (5) day period. If an exercise of
all or part of the Warrants is to be made in connection with a registered public
offering or a transaction described in paragraph 10 of this Warrant, the
exercise of the Warrants may, at the election of the Holder, be conditioned on
the consummation of the public offering or other transaction under paragraph 10
of this Warrant. In that case the exercise will not be deemed to be effective
until the consummation of the specified condition.

2. Term. The Warrants may be exercised in full or in part at any time on or
before 11:59 p.m. Oklahoma City, Oklahoma, time on ______________, 2010 (the
"Expiration Date"). To the extent not exercised prior to the Expiration Date,
the Warrants and all of the rights of the Holder hereunder will expire and
terminate on such date without any action or notice by the Corporation.

3. Exercise Price. On the exercise of the Warrants, the Holder agrees to pay to
the Corporation for the Warrant Shares purchased by the Holder pursuant to the
terms of this Warrant an amount (the "Exercise Price") multiplied by the number
of Warrant Shares at the time of determination. The Exercise Price is $1.00 per
Warrant Share (as hereafter defined). The Exercise Price is subject to
adjustment pursuant to the terms of this Warrant. The Exercise Price shall be
paid in lawful money of the United States of America.

4. Representations, Warranties and Covenants. The Corporation represents to and
warrants, covenants and agrees with the Holder as follows:

     4.1  Reservation of Shares. At all times while the Warrants are outstanding
          the Corporation will reserve out of the Corporation's authorized but
          unissued shares of Common Stock, free from preemptive rights and
          solely for the purpose of effecting the exercise of the Warrants, a
          sufficient number of shares of Common Stock to provide for the
          exercise of the Warrants and all other options, warrants and
          convertible securities of the Corporation. The Corporation will take
          all such actions necessary to assure that all such Warrant Shares may
          be issued without violation of any applicable law, governmental
          regulation or requirements of any domestic securities exchange or
          automated quotation system on which the shares of Common Stock are
          listed or quoted (except for official notice of issuance, which will
          be immediately delivered by the Corporation upon each such issuance).
          The Corporation will take all necessary actions to assure that all of
          the Warrant Shares are authorized, approved for and listed on any
          national securities exchange or quotation system on which the
          Corporation's shares of Common Stock are listed or quoted. The
          Corporation will not take any action that would cause the number of
          authorized but unissued shares of Common Stock to be less than the
          number of shares of Common Stock required to be reserved for issuance
          on exercise of the Warrants.

     4.2  Valid Issuance. All Warrant Shares that may be issued on exercise of
          the Warrants will be duly and validly issued, fully paid and
          nonassessable and free from all taxes, liens, charges and encumbrances
          on issuance by the Corporation. The Corporation will not take any
          action or fail to take any action that will cause a contrary result
          (including, without limitation, any action that would cause the
          Exercise Price then in effect to be less than the par value of the
          Common Stock).

     4.3  Cooperation. The Corporation will: (a) not close its books against the
          transfer of the Warrants or of any Warrant Shares in any manner which
          interferes with the timely exercise of the Warrants; (b) assist and
          cooperate with the Holder should the Holder be required to make any
          governmental filings or obtain any governmental approvals prior to or
          in connection with any exercise of the Warrants (including, without
          limitation, making any filings required to be made by the
          Corporation).

     4.4  Authority. The Corporation has taken all necessary action to authorize
          the execution and delivery of this Warrant and the issuance of the
          Warrant Shares on the exercise of the Warrants. This Warrant is a
          valid, binding and enforceable obligation of the Corporation subject
          to applicable bankruptcy, insolvency, fraudulent conveyance,
          moratorium and similar laws now or hereafter in effect relating to
          creditors' rights and remedies generally. The execution, delivery and
          performance of this Warrant will not violate: (a) any provision of the
          organizational documents or charter of the Corporation; (b) any order,
          writ, injunction or decree of any court, administrative agency or
          governmental body applicable to the Corporation or the Common Stock;
          or (c) any contract, lease, note, bond, mortgage or other agreement to
          which the Corporation is a party, by which the Corporation is bound or
          to which any of the Corporation's assets are subject.

     4.5  Capitalization. As of the date of this Warrant: the Corporation's
          authorized capital stock consists of fifteen million (15,000,000)
          shares of Common Stock, par value $0.0006665 per share, and five
          million (5,000,000) shares of preferred stock, par value $1.00 per
          share. As of the date of this Warrant the only shares of capital stock
          issued and outstanding are 4,969,565 fully paid and non-assessable
          shares of Common Stock and 27,838 shares of Preferred Stock.

     4.6  Office. The Corporation will maintain an office for the purposes
          specified in this Warrant (the "Warrant Office"). The Warrant Office
          will initially be the Corporation's offices at Suite 320, 5600 North
          May Avenue, Oklahoma City, Oklahoma 73112 and may subsequently be any
          other office of the Corporation or any transfer agent for the Common
          Stock in the continental United States as to which written notice has
          previously been given to the Holder. The Corporation will maintain at
          the Warrant Office a register for the Warrants in which the
          Corporation will record the name and address of the person in whose
          name this Warrant has been issued. The Holder will be able to take any
          action permitted in this Warrant including, without implied
          limitation, the exercise or transfer of the Warrants.

5. Restrictive Legend. The Warrants are being acquired and any Warrant Shares to
be acquired by the Holder pursuant to this Warrant (collectively, "Securities")
will be acquired for investment for the Holder's own account and not with a view
to, or for resale in connection with, any distribution of such Securities within
the meaning of the Securities Act of 1933, as amended (the "Securities Act").
The Securities will not be sold, transferred or otherwise disposed of without
registration under the Securities Act and state securities laws or qualification
for exemptions therefrom. The Holder agrees that each certificate evidencing the
Warrant Shares may be inscribed with a legend to the foregoing effect, which
legend will be as follows:

          THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED SOLELY
          FOR INVESTMENT PURPOSES AND HAVE NOT BEEN REGISTERED UNDER THE
          SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY
          STATE. THE SHARES MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR OTHERWISE
          DISPOSED OF UNLESS AND UNTIL SUCH SHARES ARE FIRST REGISTERED UNDER
          THE SECURITIES ACT OF 1933, ALL APPLICABLE STATE SECURITIES LAWS AND
          ALL RULES AND REGULATIONS PROMULGATED THEREUNDER OR UNLESS AND UNTIL
          THE HOLDER HEREOF PROVIDES (i) INFORMATION REASONABLY NECESSARY TO
          CONFIRM THAT SUCH REGISTRATION IS NOT REQUIRED OR (ii) AN OPINION OF
          COUNSEL TO THE EFFECT THAT SUCH REGISTRATION IS NOT REQUIRED.

The Holder agrees that the Corporation may place a stop transfer order with the
Corporation's transfer agent, if any, with respect to any noncomplying transfer
of the certificates representing any Warrant Shares, which stop transfer order
will be removed by the Corporation on compliance with the foregoing.

6. Registration Rights. The Holder and any other holder of Warrant Shares will
have the registration rights provided for in Exhibit A hereto.

7. Anti-Dilution Adjustments. In order to prevent dilution of the rights granted
with respect to the Warrants, the Exercise Price and the number of Warrant
Shares obtainable on the exercise of a Warrant are subject to adjustment from
time to time as follows:

     7.1  Issuance of Common Stock. If and whenever on or after the date of this
          Warrant the Corporation issues or sells, or in accordance with
          paragraph 7.2 of this Warrant is deemed to have issued or sold, any
          shares of Common Stock for a consideration per share less than the
          Exercise Price in effect immediately prior to such time, then
          immediately on such issuance or sale the Exercise Price will be
          reduced to the new Exercise Price determined by dividing:

          7.1.1 the sum of (a) the product derived by multiplying the Exercise
               Price in effect immediately prior to such issue or sale times the
               number of shares of Common Stock Deemed Outstanding (as hereafter
               defined) immediately prior to such issue or sale, plus (b) the
               consideration, if any, received by the Corporation on such
               issuance or sale, divided by

          7.1.2 the number of shares of Common Stock Deemed Outstanding
               immediately after such issuance or sale.

     7.2  Effect on Exercise Price of Certain Events. For purposes of
          determining the adjusted Exercise Price under paragraph 7.1 of this
          Warrant, the following will be applicable:

          7.2.1 Issuance of Rights or Options. If the Corporation in any manner
               grants, issues or sells any Options (as hereafter defined), other
               than the Corporation's employee or director benefit plans, and
               the price per share for which shares of Common Stock are issuable
               on the exercise of such Options (or on the conversion or exchange
               of any Convertible Securities (as hereafter defined) issuable on
               the exercise of such Options) is less than the Exercise Price in
               effect immediately prior to the time of the grant, issuance or
               sale of such Options, then the total maximum number of shares of
               Common Stock issuable on the exercise of such Options (or on the
               conversion or exchange of the total maximum amount of such
               Convertible Securities issuable on the exercise of such Options)
               will be deemed to be outstanding and to have been issued and sold
               by the Corporation at the time of the granting or sale of such
               Options for such price per share. For purposes of this paragraph,
               the "price per share for which shares of Common Stock are
               issuable on exercise of such Options or on the conversion or
               exchange of any Convertible Securities" is determined by dividing
               (a) the total amount, if any, received or receivable by the
               Corporation as consideration for the granting or sale of such
               Options, plus the minimum aggregate amount of additional
               consideration payable to the Corporation on the exercise of all
               such Options, plus in the case of such Options which relate to
               Convertible Securities, the minimum aggregate amount of
               additional consideration, if any, payable to the Corporation on
               the issuance or sale of such Convertible Securities and the
               conversion or exchange thereof, by (b) the total maximum number
               of shares of Common Stock issuable on exercise of such Options or
               on the conversion or exchange of all such Convertible Securities
               issuable on the exercise of such Options. No further adjustment
               of the Exercise Price will be made on the actual issuance of such
               shares of Common Stock or of such Convertible Securities on the
               exercise of such Options or on the actual issuance of shares of
               Common Stock as a result of the conversion or exchange of such
               Convertible Securities.

          7.2.2 Issuance of Convertible Securities. If the Corporation in any
               manner issues or sells any Convertible Securities and the price
               per share for which shares of Common Stock are issuable on
               conversion or exchange thereof is less than the Exercise Price in
               effect immediately prior to the time of such issue or sale, then
               the maximum number of shares of Common Stock issuable on
               conversion or exchange of such Convertible Securities will be
               deemed to be outstanding and to have been issued and sold by the
               Corporation at the time of the issue or sale of such Convertible
               Securities for such price per share. For the purposes of this
               paragraph, the "price per share for which shares of Common Stock
               are issuable on conversion or exchange thereof" is determined by
               dividing (a) the total amount received or receivable by the
               Corporation as consideration for the issue or sale of such
               Convertible Securities, plus the minimum aggregate amount of
               additional consideration, if any, payable to the Corporation on
               the conversion or exchange thereof, by (b) the total maximum
               number of shares of Common Stock issuable on the conversion or
               exchange of all such Convertible Securities. No further
               adjustment of the Exercise Price will be made on the actual issue
               of such shares of Common Stock on conversion or exchange of such
               Convertible Securities, and if any such issue or sale of such
               Convertible Securities is made on exercise of any Options for
               which adjustments of the Exercise Price had been or are to be
               made pursuant to other provisions of this paragraph 7.2, no
               further adjustment of the Exercise Price will be made by reason
               of such issue or sale.

          7.2.3 Change in Option Price or Conversion Rate. If the purchase price
               provided for in any Options, the additional consideration, if
               any, payable on the issue, conversion or exchange of any
               Convertible Securities, or the rate at which any Convertible
               Securities are convertible into or exchangeable for shares of
               Common Stock changes at any time, the Exercise Price in effect at
               the time of such change will be adjusted immediately to the
               Exercise Price which would have been in effect at such time had
               such Options or Convertible Securities still outstanding provided
               for such changed purchase price, additional consideration or
               changed conversion rate, as the case may be, at the time
               initially granted, issued or sold and the number of shares of
               Common Stock issuable hereunder will be correspondingly adjusted.
               For purposes of this paragraph 7.2, if the terms of any Option or
               Convertible Security which was outstanding as of the date of this
               Warrant are changed in the manner described in the immediately
               preceding sentence, then such Option or Convertible Security and
               the shares of Common Stock deemed issuable on exercise,
               conversion or exchange thereof will be deemed to have been issued
               as of the date of such change. Notwithstanding the foregoing no
               such change will at any time cause the Exercise Price hereunder
               to be increased.

          7.2.4 Expired Options and Securities. On the expiration of any Option
               or the termination of any right to convert or exchange any
               Convertible Securities without the exercise of such Option or
               right, the Exercise Price then in effect and the number of shares
               of Common Stock acquirable hereunder will be adjusted immediately
               to the Exercise Price and the number of shares which would have
               been in effect at the time of such expiration or termination had
               such Option or Convertible Securities, to the extent outstanding
               immediately prior to such expiration or termination, never been
               issued. For purposes of this paragraph 7.2, the expiration or
               termination of any Option or Convertible Security which was
               outstanding on or before the date of execution of this Warrant
               will not cause the Exercise Price hereunder to be adjusted
               unless, and only to the extent that, a change in the terms of
               such Option or Convertible Security caused it to be deemed to
               have been issued after the date of this Warrant.

          7.2.5 Calculation of Consideration Received. If any shares of Common
               Stock, Options or Convertible Securities are issued or sold or
               deemed to have been issued or sold for cash, the consideration
               received therefor will be deemed to be the amount received by the
               Corporation therefor. In case any shares of Common Stock, Options
               or Convertible Securities are issued or sold for consideration
               other than cash, the amount of the consideration other than cash
               received by the Corporation will be the fair value of such
               consideration, except where such consideration consists of
               securities, in which case the amount of consideration received by
               the Corporation will be the Current Market Price thereof as of
               the date of receipt. In case any shares of Common Stock, Options
               or Convertible Securities are issued to the owners of the
               non-surviving entity in connection with any merger in which the
               Corporation is the surviving entity the amount of consideration
               therefor will be deemed to be the fair value of such portion of
               the net assets and business of the non-surviving entity as is
               attributable to such shares of Common Stock, Options or
               Convertible Securities, as the case may be. The fair value of any
               consideration other than cash or securities will be determined at
               the reasonable discretion of the board of directors of the
               Corporation consistent with the value assigned for generally
               accepted accounting principles for purposes of financial
               reporting. Notice of such determination will be given to the
               Holder.

          7.2.6 Integrated Transactions. In case any Option or Convertible
               Security is issued in connection with the issue or sale of other
               securities of the Corporation, together comprising one integrated
               transaction in which no specific consideration is allocated to
               such Options or Convertible Security by the parties thereto, the
               Options or Convertible Security will be deemed to have been
               issued for consideration determined at the reasonable discretion
               of the board of directors of the Corporation consistent with the
               value assigned for purposes of generally accepted accounting
               principles. Notice of such determination will be given to the
               Holder.

          7.2.7 Treasury Shares. The number of shares of Common Stock
               outstanding at any given time will not include shares of Common
               Stock owned or held by or for the account of the Corporation or
               any subsidiary, and any issuance or disposition of any shares of
               Common Stock so owned or held will be considered an issuance or
               sale of shares of Common Stock.

          7.2.8 Record Date. If the Corporation takes a record of the holders of
               shares of Common Stock for the purpose of entitling them (a) to
               receive a dividend or other distribution payable in shares of
               Common Stock, Options or in Convertible Securities or (b) to
               subscribe for or purchase shares of Common Stock, Options or
               Convertible Securities, then such record date will be deemed to
               be the date of the issue or sale of the shares of Common Stock
               deemed to have been issued or sold on the declaration of such
               dividend or the making of such other distribution or the date of
               the granting of such right of subscription or purchase, as the
               case may be.

     7.3  Stock Splits and Reverse Splits. In the event that the Corporation at
          any time after the date of this Warrant subdivides its outstanding
          shares of Common Stock into a greater number of shares (by stock
          split, stock dividend, recapitalization or otherwise), the Exercise
          Price in effect immediately prior to such subdivision will be
          proportionately reduced and the number of Warrant Shares purchasable
          on the exercise of the Warrants immediately prior to such subdivision
          will be proportionately increased. Conversely, in the event that the
          outstanding shares of Common Stock at any time are combined into a
          smaller number of shares (by reverse stock split or otherwise), the
          Exercise Price in effect immediately prior to such combination will be
          proportionately increased and the number of Warrant Shares purchasable
          on the exercise of the Warrants immediately prior to such combination
          will be proportionately reduced.

     7.4  Certain Events. If any event occurs of the type contemplated by the
          provisions of this paragraph 7 but not expressly provided for by such
          provisions (including, without limitation, the granting of stock
          appreciation rights, phantom stock rights or other rights with equity
          features, other than the Corporation's employee or director benefit
          plans), then the Corporation's board of directors will make an
          appropriate adjustment in the Exercise Price and the number of shares
          of Common Stock obtainable on exercise the Warrants so as to protect
          the rights of the holders of the Warrants. Notwithstanding anything
          herein to the contrary, no such adjustment will increase the Exercise
          Price or decrease the number of shares of Common Stock as otherwise
          determined pursuant to this paragraph 7.

     7.5  Notice of Adjustment. Whenever the Exercise Price or the number of
          Warrant Shares issuable on the exercise of the Warrants will be
          adjusted as herein provided, or the rights of the Holder hereof will
          change by reason of other events specified herein, the Corporation
          will compute the adjusted Exercise Price and the adjusted number of
          Warrant Shares in accordance with the provisions hereof and will
          prepare an Officer's Certificate setting forth the adjusted Exercise
          Price and the adjusted number of Warrant Shares issuable on the
          exercise of the Warrants or specifying the other shares of stock,
          securities or assets receivable as a result of such change in rights,
          and showing in reasonable detail the facts and calculations on which
          such adjustments or other changes are based. The Corporation will
          promptly cause to be mailed to the Holder copies of such Officer's
          Certificate together with a notice stating that the Exercise Price and
          the number of Warrant Shares purchasable on exercise of the Warrants
          have been adjusted and setting forth the adjusted Exercise Price and
          the adjusted number of Warrant Shares purchasable on the exercise of
          the Warrants.

     7.6  Exceptions to Anti-Dilution Adjustment. Notwithstanding anything to
          the contrary contained in this Warrant, there will be no adjustment in
          the Exercise Price or the number of Warrant Shares obtainable on
          exercise of the Warrants as a consequence of the issuance by the
          Corporation of: (a) any option, warrant, convertible security or other
          right to acquire shares of Common Stock outstanding or in effect as of
          the date of this Warrant and not amended after the date of this
          Warrant; (b) any options, stock purchase rights or other rights to
          acquire shares of Common Stock of the Corporation on exercise of
          options granted or that may be granted under the Corporation's
          compensatory stock option plans at an exercise price no less than the
          Current Market Price on the date of issuance; or (c) the issuance of
          shares of Common Stock as a result of the exercise of any of the
          foregoing.

     7.7  Definitions. For purposes of this Warrant the following terms will
          have the designated meanings: (a) "shares of Common Stock Deemed
          Outstanding" means at any given time, the number of shares of Common
          Stock actually outstanding at such time, plus the number of shares of
          Common Stock deemed to be outstanding pursuant to paragraph 7 hereof
          regardless of whether the Options or Convertible Securities are
          actually exercisable at such time; (b) "Convertible Securities" means
          any stock or securities (directly or indirectly) convertible into or
          exchangeable for shares of Common Stock; and (c) "Options" means any
          rights or options to subscribe for or purchase shares of Common Stock
          or Convertible Securities.

     7.8  Current Market Price. For purposes of this Warrant the "Current Market
          Price" means: (a) with respect to a security which is traded on an
          organized national exchange or market the average of the last bid and
          asked prices as quoted on the applicable exchange or market for the
          immediately preceding twenty (20) trading days; and (b) if the
          security is not traded on such an organized exchange or market, the
          price per share of the security as determined in good faith by the
          Corporation's board of directors and set forth in a notice of such
          valuation to the Holder.

8. Reorganizations and Asset Sales. If any recapitalization, reorganization or
reclassification of the capital stock of the Corporation, or any consolidation,
merger or share exchange of the Corporation with another person, or the sale,
transfer or other disposition of all or substantially all of its assets to
another person will be effected in such a way that a holder of shares of Common
Stock of the Corporation will be entitled to receive capital stock, securities
or assets with respect to or in exchange for shares of Common Stock, then the
following provisions will apply:

     8.1  Replacement Instrument. As a condition of such recapitalization,
          reorganization, reclassification, consolidation, merger, share
          exchange, sale, transfer or other disposition (except as otherwise
          provided below in paragraph 8.2) lawful and adequate provisions in
          form and substance reasonably satisfactory to the holders of a
          majority of the Warrants will be made whereby the holders of Warrants
          will thereafter have the right to purchase and receive on the terms
          and conditions specified in this Warrant and in lieu of or addition to
          (as the case may be) the Warrant Shares immediately theretofore
          receivable on the exercise of the rights represented hereby, such
          shares of capital stock, securities or assets as may be issued or
          payable with respect to or in exchange for a number of outstanding
          shares of such shares of Common Stock equal to the number of Warrant
          Shares immediately theretofore so receivable had such
          recapitalization, reorganization, reclassification, consolidation,
          merger, share exchange or sale not taken place. In any such case
          appropriate provision (in form and substance reasonably satisfactory
          to the holders of majority of the Warrants) will be made with respect
          to the rights and interests of the holders of the Warrants to the end
          that the provisions hereof (including, without limitation, in the case
          of any such consolidation, merger or sale in which the successor
          entity or purchasing entity is other than the Corporation, an
          immediate adjustment of the Exercise Price to the value for the shares
          of Common Stock reflected by the terms of such consolidation, merger
          or sale, and a corresponding immediate adjustment in the number of
          shares of Common Stock acquirable and receivable on exercise of the
          Warrants, if the value so reflected is less than the Exercise Price in
          effect immediately prior to such consolidation, merger or sale) will
          thereafter be applicable, as nearly as possible, in relation to any
          shares of capital stock, securities or assets thereafter deliverable
          on the exercise of the Warrants.

     8.2  Assumption. The Corporation will not effect any such consolidation,
          merger, share exchange, sale, transfer or other disposition unless
          prior to or simultaneously with the consummation thereof the successor
          person (if other than the Corporation) resulting from such
          consolidation, share exchange or merger or the person purchasing or
          otherwise acquiring such assets will have assumed by written
          instrument executed and mailed or delivered to the Holder hereof at
          the last address of the Holder appearing on the books of the
          Corporation, (a) the obligation to deliver to the Holder such shares
          of capital stock, securities or assets as, in accordance with the
          foregoing provisions, the Holder may be entitled to receive, and (b)
          all other liabilities and obligations of the Corporation hereunder.
          The foregoing will be performed by issuing a new warrant identical to
          the terms of this Warrant revised to reflect the new parties thereto,
          a provision indicating the replacement nature of the new warrant and
          any modifications in Exercise Price and number of shares of stock or
          equity interests obtainable on the exercise of the new warrant as
          provided herein.

9. Notices to Holder. If at any time the Corporation proposes to:

     9.1  declare any dividend on its shares of Common Stock payable in capital
          stock or make any dividend or other distribution (including cash
          dividends) to the holders of the shares of Common Stock;

     9.2  offer for subscription pro rata to all of the holders of the shares of
          Common Stock any additional shares of capital stock of any class or
          other rights other than the Series A Notes or Series A Warrants;

     9.3  effect any capital reorganization, or reclassification of the capital
          stock of the Corporation, or consolidation, merger or share exchange
          of the Corporation with another person, or sale, transfer or other
          disposition of all or substantially all of its assets; or

     9.4  effect a voluntary or involuntary dissolution, liquidation or winding
          up of the Corporation,

     then, as a condition to taking any one or more of the foregoing actions and
     in addition to any other obligation under this Warrant, the Corporation
     will give the Holder: (a) at least thirty (30) days (but not more than 90
     days) prior written notice of the date on which the books of the
     Corporation will close or a record will be taken for such dividend,
     distribution or subscription rights or for determining rights to vote in
     respect of such issuance, recapitalization, reorganization,
     reclassification, consolidation, merger, share exchange, sale, transfer,
     disposition, dissolution, liquidation or winding up, and (b) in the case of
     any such issuance, recapitalization, reorganization, reclassification,
     consolidation, merger, share exchange, sale, transfer, disposition,
     dissolution, liquidation or winding up, at least thirty (30) days (but not
     more than 90 days) prior written notice of the date when the same will take
     place. Any notice under foregoing clause (a) will specify the date on which
     the holders of shares of Common Stock will be entitled to any such
     dividend, distribution or subscription rights, and any notice under
     foregoing clause (b) will specify the date on which the holders of shares
     of Common Stock will be entitled to exchange their shares of Common Stock,
     as the case may be, for securities or other property deliverable on such
     reorganization, reclassification, consolidation, merger, share exchange,
     sale, transfer, disposition, dissolution, liquidation or winding up.

10. Fractional Shares. Fractional shares will not be issued on the exercise of
the Warrants. If the Holder would be entitled to receive a fractional share, the
Corporation will pay to the Holder an amount equal to the fractional share
multiplied by the Current Market Price for one share of shares of Common Stock
less the Exercise Price.

11. Fully Paid Stock; Taxes. The Corporation covenants and agrees that the
shares of stock represented by each and every certificate for its shares of
Common Stock to be delivered on the exercise of the Warrants will be duly
authorized, validly issued and outstanding, fully paid, nonassessable and free
from all taxes, liens, charges and encumbrances. The Corporation agrees to pay
when due and payable any and all federal and state taxes (including, without
limitation, all documentary, stamp, transfer or other transactional taxes but
excluding income taxes) which may be payable in respect of the Warrants, any
Warrant Shares or certificates therefor on the exercise of the Warrants.

12. Notices. Any notice, demand or communication required or permitted to be
given by any provision of this Warrant will be in writing and will be deemed to
have been given and received when delivered personally or by telefacsimile to
the party designated to receive such notice, or on the date following the day
sent by overnight courier, or on the third (3rd) business day after the same is
sent by certified mail, postage and charges prepaid, directed to the following
addresses or to such other or additional addresses in the continental United
States of America as any party might designate by written notice to the other
parties:

        To the Corporation:          Herb Mee, Jr., President
                                     The Beard Company
                                     5600 North May Avenue, Suite 320
                                     Oklahoma City, Oklahoma  73112
                                     Phone: (405) 842-2333
                                     Fax: (405) 842-9901

        To the Holder:               ___________________________
                                     ___________________________
                                     ___________________________
                                     ___________________________
                                     ___________________________
                                     ___________________________
                                     Phone:  ____________________
                                     Fax:  ______________________

13. Assignment. Subject to conditions set forth herein, this Warrant and all
rights hereunder are transferable, in whole or in part, on the books of the
Corporation to be maintained for such purpose, on surrender of this Warrant at
the office of the Corporation maintained for such purpose, together with a
written assignment of this Warrant duly executed by the Holder and payment of
funds sufficient to pay any stock transfer taxes payable on the making of such
transfer. On such surrender and payment, the Corporation will, subject to
conditions set forth herein, execute and deliver a new Warrant or Warrants in
the name of the assignee or assignees and in the denominations specified in such
instrument of assignment, and this Warrant will promptly be canceled. The
conditions to transferability specified in this Warrant are intended to ensure
compliance with the provisions of the Securities Act and applicable state
securities laws in respect of the transfer of any Warrant or any Warrant Shares
and are to be strictly construed.

14. Governing Law. This Warrant is being delivered and is intended to be
performed in Oklahoma and will be construed and enforced in accordance with, and
the rights of the parties will be governed by, the law of such state.

15. Headings. The headings of the paragraphs of this Warrant are inserted for
convenience only and will not be deemed to constitute a part of this Warrant.

16. Lost, Stolen, Destroyed or Mutilated Warrant. In case this Warrant is
mutilated, lost, stolen or destroyed, the Corporation agrees to issue a new
Warrant of like date, tenor and denomination and deliver the same in exchange
and substitution for and on surrender and cancellation of this mutilated
Warrant, or in lieu of this Warrant being lost, stolen or destroyed, on receipt
of evidence reasonably satisfactory to the Corporation of the loss, theft or
destruction of this Warrant and on receipt of indemnity satisfactory to the
Corporation.

17. Consent to Amendments; Waivers. The provisions of this Warrant may be
amended or waived at any time only by the written agreement of the Corporation
and the Holder. Any waiver, permit, consent or approval of any kind or character
on the part of the Holder of any provisions or conditions of this Warrant must
be made in writing and will be effective only to the extent specifically set
forth in such writing. No course of dealing between the Corporation and the
Holder and no delay in exercising any right, remedy, or power conferred hereby
or now or hereafter existing at law or under equity, by statute or otherwise,
will operate as a waiver of or otherwise prejudice any such right, power or
remedy.

18. Warrant Holder Not Shareholder. This Warrant does not confer on the Holder
hereof any right to vote or to consent as a shareholder of the Corporation, as
such, in respect of any matters whatsoever, or any other rights or liabilities
as a shareholder, prior to the exercise hereof as hereinbefore provided.

19. Severability. Should any part of this Warrant for any reason be declared
invalid, such decision will not affect the validity of any remaining portion,
which remaining portion will remain in full force and effect as if this Warrant
had been executed with the invalid portion thereof eliminated, and it is hereby
declared the intention of the parties hereto that they would have executed and
accepted the remaining portion of this Warrant without including therein any
such part, parts or portion which may, for any reason, be hereafter declared
invalid.

     IN WITNESS WHEREOF, this Warrant has been executed effective the _____ day
of _____________, 2005.

                                     (the "Corporation")

                                     THE BEARD COMPANY, an Oklahoma corporation

                                     By______________________________________
                                                      Herb Mee, Jr., President

                                     (the "Holder")

                                     _______________________________

                                     _______________________________

                                     By_____________________________

                                     Title:___________________________
<PAGE>
                                    EXHIBIT A

                          REGISTRATION RIGHTS AGREEMENT

     1.   Definitions

     As used in this Agreement, the following capitalized terms shall have the
following meanings:

     Affiliate: With respect to any Person, any other Person directly or
indirectly controlling, controlled by or under common control with such Person.

     Board: The board of directors of the Company.

     Common Stock: The common stock, par value $0.0006665 per share, of the
Company.

     Exchange Act: The Securities Exchange Act of 1934, as amended from time to
time.

     Holder: Any party hereto (other than the Company) and any holder of
Registrable Securities who agrees in writing to be bound by the provisions of
this Agreement.

     Initial Notice: See Section 3(a) hereof.

     Investor: Investor and any of its Affiliates which hold Registrable
Securities, collectively.

     NASD: National Association of Securities Dealers, Inc.

     Person: An individual, partnership, limited liability company, joint
venture, corporation, trust or unincorporated organization, a government or any
department, agency or political subdivision thereof or other entity.

     Piggyback Notice: See Section 3(a) hereof.

     Piggyback Registration: A registration pursuant to Section 3 hereof.

     Prospectus: The prospectus included in any Registration Statement, as
amended or supplemented by any prospectus supplement with respect to the terms
of the offering of any portion of the Registrable Securities covered by such
Registration Statement and by all other amendments and supplements to the
prospectus, including post-effective amendments and all material incorporated by
reference in such prospectus.

     Registrable Securities: All shares of Common Stock issued or issuable on
exercise of the Warrant and any securities of the Company which may be issued or
distributed with respect to, or in exchange or substitution for, or conversion
of, such Common Stock and such other securities pursuant to a stock dividend,
stock split or other distribution, merger, consolidation, recapitalization or
reclassification or otherwise; provided, however, that any Registrable
Securities shall cease to be Registrable Securities when (i) a Registration
Statement with respect to the sale of such Registrable Securities has been
declared effective under the Securities Act and such Registrable Securities have
been disposed of in accordance with the plan of distribution set forth in such
Registration Statement, (ii) such Registrable Securities are distributed
pursuant to Rule 144 (or any similar provision then in force) promulgated under
the Securities Act, (iii) such Registrable Securities shall have been otherwise
transferred to a Person other than an Investor and new certificates for such
securities that do not bear a legend restricting further transfer under the
Securities Act shall have been delivered by the Company, or (iv) such
Registrable Securities have been held for a period of one (1) year. Any
securities that have ceased to be Registrable Securities cannot thereafter
become Registrable Securities and any security that is issued or distributed in
respect of securities that have ceased to be Registrable Securities is not a
Registrable Security.

     Registration: A Piggyback Registration.

     Registration Expenses: See Section 6 hereof.

     Registration Statement: Any registration statement of the Company which
covers any of the Registrable Securities pursuant to the provisions of this
Agreement, including the Prospectus, amendments and supplements to such
registration statement, including post-effective amendments, all exhibits and
all material incorporated by reference in such registration statement.

     SEC: The Securities and Exchange Commission.

     Securities Act: The Securities Act of 1933, as amended from time to time.

     Underwritten Registration or Underwritten Offering: A sale of securities of
the Company to an underwriter for reoffering to the public.

     Warrant: The Warrants issued by the Company pursuant to the Confidential
Private Placement Memorandum as Amended December 29, 2004.

     2. Securities Subject to this Agreement The securities entitled to the
benefits of this Agreement are the Registrable Securities.

     3. Piggyback Registrations

     (a) Participation. Subject to Section 3(b) hereof, if at any time after the
date hereof the Company proposes to file a Registration Statement (other than a
registration on Form S-4 or S-8 or any successor form to such Forms or any
registration of securities as it relates to an offering and sale to management
of the Company pursuant to any employee stock plan or other employee benefit
plan arrangement) with respect to an offering that includes any shares of Common
Stock, then the Company shall give notice of the proposed filing (the "Piggyback
Notice") to the Holders as promptly as practicable (but in no event less than
fifteen (15) days before the anticipated filing date). The Piggyback Notice
shall offer the Holders the opportunity to register such number of shares of
Registrable Securities as the Holders may request and shall set forth (i) the
anticipated filing date of such Registration Statement and (ii) the number of
shares of Common Stock that is proposed to be included in such Registration
Statement. The Company shall include in such Registration Statement such shares
of Registrable Securities for which it has received written requests to register
such shares within 10 days after the Piggyback Notice has been given.

     (b) Underwriter's Cutback. Notwithstanding the foregoing, if a Registration
pursuant to this Section 3 involves an Underwritten Offering and the managing
underwriter or underwriters of such proposed Underwritten Offering delivers an
opinion to the Holders that the total or kind of securities which such Holders
and any other persons or entities intend to include in such offering are
reasonably likely to adversely affect the price, timing or distribution of the
securities offered in such offering, then the Company shall include in such
Registration;

          (i) If such Registration was a primary registration by the Company of
     its securities, the Company will include in such Registration to the extent
     of the number of securities which the managing underwriter advises can be
     sold in such Underwritten Offering: first, the securities proposed by the
     Company to be sold for its own account; second, any Registrable Securities
     requested to be included in such Registration by the Holders, pro rata on
     the basis of the number of securities sought to be sold by the requesting
     Holders; and third, other securities of the Company proposed to be included
     in such Registration, allocated among the Company and the holders thereof
     in accordance with the priorities then existing among the Company and such
     holders.

          (ii) If such Registration was requested other than by the Holders or
     the Company, the Company will include in such Registration to the extent of
     the number of securities which the managing underwriter advises can be sold
     in such Underwritten Offering: first, the securities proposed to be sold by
     the security holder initiating the Registration; second, any Registrable
     Securities requested to be included in such Registration, pro rata on the
     basis of the number of securities sought to be sold by the requesting
     Holders; third, any securities of the Company proposed by any other Persons
     to be included in such Registration, pro rata on the basis of the number of
     securities proposed to be sold by the requesting Persons; and fourth the
     securities proposed by the Company to be sold for its own account.

     (c) Expenses. The Company will pay all Registration Expenses in connection
with each registration of Registrable Securities requested pursuant to this
Section 3.

     (d) Company Control. The Company may decline to file a Registration
Statement after giving the Initial Notice or the Piggyback Notice, or withdraw a
Registration Statement after filing and after such Piggyback Notice, but prior
to the effectiveness of the Registration Statement, provided that the Company
shall promptly notify each Holder in writing of any such action and provided
further that the Company shall bear all reasonable expenses incurred by such
Holder or otherwise in connection with such withdrawn Registration Statement.

     4. Hold-Back Agreements

     (a) Restrictions on Public Sale by Holder of Registrable Securities. Each
Holder whose Registrable Securities are covered by a Registration Statement
filed pursuant to Section 3 hereof agrees, if requested by the managing
underwriters in an Underwritten Offering, not to effect any public sale or
distribution of securities of the Company the same as or similar to those being
registered, or any securities convertible into or exchangeable or exercisable
for such securities, in such Registration Statement, including a sale pursuant
to Rule 144 under the Securities Act (except as part of such Underwritten
Registration), during the 10-day period prior to, and during the 90-day period
(or such longer period of up to 180 days as may be required by such underwriter
of all Persons whose securities are covered by such Registration Statement)
beginning on, the effective date of any Registration Statement in which such
Holders are participating (except as part of such Registration) or the
commencement of the public distribution of securities, to the extent timely
notified in writing by the Company or the managing underwriters.

     (b) Restrictions on Public Sale by the Company and Others. If and to the
extent requested by the managing underwriter, the Company agrees: (a) not to
effect any public or private sale or distribution of its equity securities, or
any securities convertible into or exchangeable or exercisable for such equity
securities, during the 10 day period prior to and the 90 day period (or such
longer period of up to 180 days as may be required by such underwriter) after
the effective date of the Registration Statement filed in connection with an
Underwritten Offering made pursuant to a Piggyback Registration (or for such
shorter period of time as is sufficient and appropriate, in the opinion of the
managing underwriter (except as part of such Underwritten Registration and
except pursuant to registrations on Form S-4 or Form S-8 promulgated by the
Commission or any successor or similar forms thereto; and (b) to cause each
officer, director, 10% shareholder and holder of its equity securities (or of
any securities convertible into or exchangeable or exercisable for such
securities) purchased from the Company at any time after the date of this
Agreement (other than in a public offering), to agree, to the extent permitted
by law, not to effect any such public or private sale or distribution of such
securities (including a sale under Rule 144), during such period, except as part
of such underwritten registration.

     (c) Exclusions. Notwithstanding the foregoing provisions, this section will
not prevent the grant of compensatory stock options or similar grants to
employees of the Company pursuant to the Company's stock based incentive plans
and will not prevent the exercise, conversion or exchange of any securities
pursuant to the terms of such securities.

     5. Registration Procedures

     In connection with the Company's Registration obligations pursuant to
Section 3 hereof, the Company will use its best efforts to effect such
Registration to permit the sale of such Registrable Securities in accordance
with the intended method or methods of distribution thereof, and pursuant
thereto the Company will as expeditiously as possible:

     (a) prepare and file with the SEC a Registration Statement relating to the
Piggyback Registration including all exhibits and financial statements required
by the SEC to be filed therewith; prepare and file with the SEC such amendments
and post-effective amendments to the Registration Statement as may be necessary
to keep the Registration Statement effective for a period of 90 days (or such
shorter period which will terminate when all Registrable Securities covered by
such Registration Statement have been sold or withdrawn), or, if such
Registration Statement relates to an Underwritten Offering, such longer period
as in the opinion of counsel for the underwriters a Prospectus is required by
law to be delivered in connection with sales of Registrable Securities by an
underwriter or dealer; cause the Prospectus to be supplemented by any required
Prospectus supplement, and as so supplemented to be filed pursuant to Rule 424
under the Securities Act; and comply with the provisions of the Securities Act,
the Exchange Act, and the rules and regulations promulgated thereunder with
respect to the disposition of all securities covered by such Registration
Statement during the applicable period in accordance with the intended method or
methods of distribution by the sellers thereof set forth in such Registration
Statement or supplement to the Prospectus;

     (b) notify the selling Holders and the managing underwriters, if any, and
(if requested) confirm such advice in writing, as soon as practicable after
notice thereof is received by the Company (i) when the Registration Statement or
any amendment thereto has been filed or becomes effective, the Prospectus or any
amendment or supplement to the Prospectus has been filed, and, to furnish such
selling Holders and managing underwriters with copies thereof, (ii) of any
request by the SEC for amendments or supplements to the Registration Statement
or the Prospectus or for additional information, (iii) of the issuance by the
SEC of any stop order suspending the effectiveness of the Registration Statement
or any order preventing or suspending the use of any preliminary Prospectus or
Prospectus or the initiation or threatening of any proceedings for such
purposes, (iv) if at any time the representations and warranties of the Company
contemplated by paragraph (l) below cease to be true and correct and (v) of the
receipt by the Company of any notification with respect to the suspension of the
qualification of the Registrable Securities for offering or sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose;

     (c) (i) promptly notify the selling Holders and the managing underwriters,
if any, at any time during the period contemplated by a paragraph (a) above,
when the Company becomes aware of the happening of any event as a result of
which the Prospectus included in such Registration Statement (as then in effect)
contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statements therein (in the case of the Prospectus and
any preliminary Prospectus, in light of the circumstances under which they were
made) when such Prospectus was delivered not misleading or, if for any other
reason it shall be necessary during such time period to amend or supplement the
Prospectus in order to comply with the Securities Act and, (ii) in either case
as promptly as practicable thereafter, prepare and file with the SEC, and
furnish without charge to the selling Holders and the managing underwriters, if
any, a supplement or amendment to such Prospectus which will correct such
statement or omission or effect such compliance;

     (d) make every reasonable effort to prevent the entry, or obtain the
withdrawal, of any stop order or other order suspending the use of any
preliminary Prospectus or Prospectus or suspending any qualification of the
Registrable Securities;

     (e) if requested by the managing underwriter or underwriters or a Holder of
Registrable Securities being sold in connection with an Underwritten Offering,
promptly incorporate in a Prospectus supplement or post-effective amendment such
information as the managing underwriters and the Holders of a majority of the
Registrable Securities being sold agree should be included therein relating to
the plan of distribution with respect to such Registrable Securities, including,
without limitation, information with respect to the number of Registrable
Securities being sold to such underwriters, the purchase price being paid
therefor by such underwriters and with respect to any other terms of the
Underwritten (or best efforts underwritten) Offering of the Registrable
Securities to be sold in such offering; and make all required filings of such
Prospectus supplement or post-effective amendment as soon as notified of the
matters to be incorporated in such Prospectus supplement or post-effective
amendment;

     (f) furnish to each selling Holder and each managing underwriter, without
charge, one executed copy and as many conformed copies as they may reasonably
request, of the Registration Statement and any post-effective amendment thereto,
including financial statements and schedules, all documents incorporated therein
by reference and all exhibits (including those incorporated by reference);

     (g) deliver to each selling Holder and the underwriters, if any, without
charge, as many copies of the Prospectus (including each preliminary Prospectus)
and any amendment or supplement thereto as such Persons may reasonably request
(it being understood that the Company consents to the use of the Prospectus or
any amendment or supplement thereto by each of the selling Holders and the
underwriters, if any, in connection with the offering and sale of the
Registrable Securities covered by the Prospectus or any amendment or supplement
thereto) and such other documents as such selling Holder may reasonably request
in order to facilitate the disposition of the Registrable Securities by such
Holder;

     (h) on or prior to the date on which the Registration Statement is declared
effective, use its best efforts to register or qualify, and cooperate with the
selling Holders, the managing underwriter, if any, and their respective counsel
in connection with the registration or qualification of such Registrable
Securities for offer and sale under the securities or blue sky laws of each
state and other jurisdiction of the United States as any such seller,
underwriter reasonably requests in writing and do any and all other acts or
things reasonably necessary or advisable to keep such registration or
qualification in effect for so long as such Registration Statement remains in
effect and so as to permit the continuance of sales and dealings therein for as
long as may be necessary to complete the distribution of the Registrable
Securities covered by the Registration Statement; provided that the Company will
not be required to qualify generally to do business in any jurisdiction where it
is not then so qualified or to take any action which would subject it to general
service of process in any such jurisdiction where it is not then so subject;

     (i) cooperate with the selling Holders and the managing underwriter, if
any, to facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be sold and not bearing any restrictive
legends; and enable such Registrable Securities to be in such denominations and
registered in such names as the managing underwriters may request at least two
business days prior to any sale of Registrable Securities to the underwriters;

     (j) use its best efforts to cause the Registrable Securities covered by the
applicable Registration Statement to be registered with or approved by such
other U.S. governmental agencies or authorities as may be necessary to enable
the seller or sellers thereof or the underwriters, if any, to consummate the
disposition of such Registrable Securities;

     (k) not later than the effective date of the applicable Registration,
provide a CUSIP number for all Registrable Securities and provide the applicable
trustee or transfer agent with printed certificates for the Registrable
Securities;

     (l) make such representations and warranties to the Holders of Registrable
Securities being registered, and the underwriters, if any, in form, substance
and scope as are customarily made by issuers in primary underwritten public
offerings;

     (m) enter into such customary agreements (including an underwriting
agreement) and take all such other actions as the Holders of a majority of the
Registrable Securities being sold or the managing underwriter, if any,
reasonably request in order to expedite or facilitate the Registration and
disposition of such Registrable Securities;

     (n) obtain for delivery to the Holders of Registrable Securities being
registered and to the underwriter an opinion or opinions from counsel for the
Company, upon consummation of the sale of such Registrable Securities to the
underwriters (the "Closing Date") in customary form and in form, substance and
scope reasonably satisfactory to such Holders and their counsel, and the
underwriters and their counsel;

     (o) obtain for delivery to the Company and the underwriter, with copies to
the Holders, a cold comfort letter from the Company's independent public
accountants in customary form and covering such matters of the type customarily
covered by cold comfort letters as the managing underwriter or the Holders of a
majority of the Registrable Securities being sold reasonably request, dated the
effective date of the Registration Statement and brought down to the Closing
Date;

     (p) cooperate with each seller of Registrable Securities and each
underwriter participating in the disposition of such Registrable Securities and
their respective counsel in connection with any filings required to be made with
the NASD;

     (q) make available for inspection by a representative of the Holders of a
majority of the Registrable Securities, any underwriter participating in any
disposition pursuant to such Registration, and any attorney or accountant
retained by such Holders or underwriter, all financial and other records,
pertinent corporate documents and properties of the Company, and cause the
Company's officers, directors and employees to supply all information reasonably
requested by any such representative, underwriter, attorney or accountant in
connection with such Registration; provided that any records, information or
documents that are designated by the Company in writing as confidential shall be
kept confidential by such Persons unless disclosure of such records, information
or documents is required by law;

     (r) use its best efforts to comply with all applicable rules and
regulations of the SEC and make generally available to its security holders, as
soon as reasonably practicable (but not more than eighteen months) after the
effective date of the Registration Statement, an earnings statement satisfying
the provisions of Section 11 (a) of the Securities Act and the rules and
regulations promulgated thereunder;

     (s) as promptly as practicable after filing with the SEC of any document
which is incorporated by reference into the Registration Statement or the
Prospectus, provide copies of such document to counsel for the selling Holders
and to the managing underwriters, if any;

     (t) provide and cause to be maintained a transfer agent and registrar for
all Registrable Securities covered by such Registration Statement from and after
a date not later than the effective date of such Registration Statement;

     (u) use its best efforts to list (if such Registrable Securities are not
already listed) all Registrable Securities covered by such Registration
Statement on the principal stock exchange or market on which the Company's
Common Stock is then listed; and

     (v) Take such further actions as are reasonably requested by the Holders in
order to expedite or facilitate the disposition of the Registrable Securities.

     The Company may require each Holder of Registrable Securities as to which
any Registration is being effected to furnish to the Company such information
regarding the distribution of such securities and such other information
relating to such Holder and its ownership of Registrable Securities as the
Company may from time to time reasonably request in writing. Each Holder agrees
to furnish such information to the Company and to cooperate with the Company as
necessary to enable the Company to comply with the provisions of this Agreement.

     Each Holder agrees by acquisition of such Registrable Securities that, upon
receipt of any notice from the Company of the happening of any event of the kind
described in Section 5(c)(i) hereof, such Holder will forthwith discontinue
disposition of Registrable Securities pursuant to such Registration Statement
until such Holder's receipt of the copies of the supplemented or amended
Prospectus contemplated by Section 5(c)(ii) hereof, or until it is advised in
writing by the Company that the use of the Prospectus may be resumed, and has
received copies of any additional or supplemental filings which are incorporated
by reference in the Prospectus, and, if so directed by the Company, such Holder
will deliver to the Company (at the Company's expense) all copies, other than
permanent file copies then in such Holder's possession, of the Prospectus
covering such Registrable Securities current at the time of receipt of such
notice. In the event that the Company shall give such notice, the Company shall
extend the period during which such registration statement shall be maintained
effective by the number of days during the period from and including the date of
the giving of notice pursuant to Section 5(c)(i) hereof to the date when the
Company shall make available to the Holders a Prospectus supplemented or amended
to conform with the requirements of Section 5(c)(ii) hereof.

     6. Registration Expenses

     All expenses incident to the Company's performance of or compliance with
this Agreement, including without limitation (i) all registration and filing
fees, and any other fees and expenses associated with filings required to be
made with any stock exchange, the SEC and the NASD (including, if applicable,
the fees and expenses of any "qualified independent underwriter" and its counsel
as may be required by the rules and regulations of the NASD), (ii) all fees and
expenses of compliance with state securities or blue sky laws (including fees
and disbursements of counsel for the underwriters or selling Holders in
connection with blue sky qualifications of the Registrable Securities and
determination of their eligibility for investment under the laws of such
jurisdictions as the managing underwriters or the Holders of a majority of the
Registrable Securities being sold may designate), (iii) all printing and related
messenger and delivery expenses (including expenses of printing certificates for
the Registrable Securities and of printing Prospectuses), (iv) all fees and
disbursements of counsel for the Company and of all independent certified public
accountants of the Company (including the expenses of any special audit and
"cold comfort" letters required by or incident to such performance), (v)
Securities Act liability insurance if the Company so desires or the underwriters
so require, (vi) all fees and expenses incurred in connection with the listing
of the Registrable Securities on any securities exchange and all rating agency
fees, (vii) all reasonable fees and disbursements of one counsel selected by the
Holders of the Registrable Securities being registered to represent such Holders
in connection with such registration, up to a maximum of $15,000, (viii) all
fees and disbursements of underwriters customarily paid by the issuers or
sellers of securities, excluding underwriting discounts and commissions and
transfer taxes, if any, and fees and disbursements of counsel to underwriters
(other than such fees and disbursements incurred in connection with any
registration or qualification of Registrable Securities under the securities or
blue sky laws of any state), and (ix) fees and expenses of other Persons
retained by the Company (all such expenses being herein called "Registration
Expenses"), will be borne by the Company, regardless of whether the Registration
Statement becomes effective. The Company will, in any event, pay its internal
expenses (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the expense of
any audit and the fees and expenses of any Person, including special experts,
retained by the Company.

     7. Indemnification

     (a) Indemnification by Company. The Company agrees to indemnify and hold
harmless, to the full extent permitted by law, each Holder and each Person who
controls such Holder (within the meaning of the Securities Act), and each of
their respective partners, members, officers, directors, employees and agents
(collectively, the "Company Indemnified Persons"), against any and all losses,
claims, damages, liabilities, reasonable attorneys fees, costs or expenses and
costs and expenses of investigating and defending any such claim (collectively,
"Damages"), joint or several, and any action in respect thereof to which any
such Company Indemnified Person may become subject under the Securities Act or
otherwise, insofar as such Damages (or proceedings in respect thereof) arise out
of, or are based upon, any untrue or alleged untrue statement of a material fact
contained in any Registration Statement, Prospectus or preliminary Prospectus or
any omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except insofar as the same are caused by or contained in any information
furnished in writing to the Company by such Holder expressly for use therein,
and shall promptly reimburse each Company Indemnified Person for any legal and
other expenses reasonably incurred by that Company Indemnified Person in
investigating or defending or preparing to defend against any such Damages or
proceedings; provided, however, that the Company shall not be liable in any such
case to the extent that any such Damages arise out of or are based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in any such preliminary Prospectus if (i) such offering does not involve an
underwriter, (ii) such Holder failed to deliver or cause to be delivered a copy
of the Prospectus to the Person asserting such loss, claim, damage, liability or
expense after the Company had timely furnished such Holder with a sufficient
number of copies of the same and (iii) the Prospectus completely corrected in a
timely manner such untrue statement or omission; and provided, further, that the
Company shall not be liable in any such case to the extent that any such Damages
arise out of or are based upon an untrue statement or alleged untrue statement
or omission or alleged omission in the Prospectus, if (x) such offering does not
involve an underwriter, (y) such untrue statement or alleged untrue statement,
omission or alleged omission is completely corrected in an amendment or
supplement to the Prospectus and (z) the Holder thereafter fails to deliver such
Prospectus as so amended or supplemented prior to or concurrently with the sale
of the Registrable Securities to the Person asserting such loss, claim, damage,
liability or expense after the Company had furnished such Holder with a
sufficient number of copies of the same. The Company also agrees to indemnify
underwriters, selling brokers, dealer managers and similar securities industry
professionals participating in the distribution, their officers and directors
and each Person who controls such Persons (within the meaning of the Securities
Act) to the same extent as provided above with respect to the indemnification of
the Holders.

     (b) Indemnification by Selling Holder of Underlying Securities. In
connection with each Registration, each selling Holder will furnish to the
Company in writing such information and affidavits as the Company reasonably
requests for use in connection with any Registration Statement or Prospectus and
agrees to indemnify and hold harmless, to the full extent permitted by law, the
Company and each Person who controls the Company (within the meaning of the
Securities Act), and each of their respective directors, officers, employees and
agents, against any and all Damages resulting from any untrue statement of a
material fact or any omission of a material fact required to be stated in the
Registration Statement or Prospectus or preliminary Prospectus or necessary to
make the statements therein not misleading, to the extent, but only to the
extent, that such untrue statement or omission is contained in any information
or affidavit so furnished in writing by such selling Holder to the Company
specifically for inclusion in such Registration Statement or Prospectus and has
not been corrected in a subsequent writing prior to or concurrently with the
sale of the Registrable Securities to the Person asserting such Damages. In no
event shall the liability of any selling Holder hereunder be greater in amount
than the dollar amount of the proceeds received by such Holder upon the sale of
the Registrable Securities giving rise to such indemnification obligation. The
Company shall be entitled to receive indemnities from underwriters, selling
brokers, dealer managers and similar securities industry professionals
participating in the distribution, to the same extent as provided above with
respect to information so furnished in writing by such Persons specifically for
inclusion in any Prospectus or Registration Statement.

     (c) Conduct of Indemnification Proceedings. Any Person entitled to
indemnification hereunder will (i) give prompt (but in any event within 30 days
after such Person has actual knowledge of the facts constituting the basis for
indemnification) written notice to the indemnifying party of any claim with
respect to which it seeks indemnification and (ii) permit such indemnifying
party to assume the defense of such claim with counsel reasonably satisfactory
to the indemnified party; provided, however, that any delay or failure to so
notify the indemnifying party shall relieve the indemnifying party of its
obligations hereunder only to the extent, if at all, that it is prejudiced by
reason of such delay or failure; provided further, however, that any Person
entitled to indemnification hereunder shall have the right to select and employ
separate counsel and to participate in the defense of such claim, but the fees
and expenses of such counsel shall be at the expense of such Person unless (a)
the indemnifying party has agreed in writing to pay such fees or expenses, or
(b) the indemnifying party shall have failed to assume the defense of such claim
within a reasonable time after receipt of notice of such claim from the Person
entitled to indemnification hereunder and employ counsel reasonably satisfactory
to such Person or (c) in the reasonable judgment of any such Person, based upon
advice of its counsel, a conflict of interest may exist between such Person and
the indemnifying party with respect to such claims (in which case, if the Person
notifies the indemnifying party in writing that such Person elects to employ
separate counsel at the expense of the indemnifying party, the indemnifying
party shall not have the right to assume the defense of such claim on behalf of
such Person). If such defense is not assumed by the indemnifying party, the
indemnifying party will not be subject to any liability for any settlement made
without its consent (but such consent will not be unreasonably withheld),
provided that an indemnified party shall not be required to consent to any
settlement involving the imposition of equitable remedies or involving the
imposition of any material obligations on such indemnified party other than
financial obligations for which such indemnified party will be indemnified
hereunder. No indemnifying party will be required to consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such indemnified party
of a release from all liability in respect to such claim or litigation. Whenever
the indemnified party or the indemnifying party receives a firm offer to settle
a claim for which indemnification is sought hereunder, it shall promptly notify
the other of such offer. If the indemnifying party refuses to accept such offer
within 20 business days after receipt of such offer (or of notice thereof), such
claim shall continue to be contested and, if such claim is within the scope of
the indemnifying party's indemnity contained herein, the indemnified party shall
be indemnified pursuant to the terms hereof. If the indemnifying party notifies
the indemnified Party in writing that the indemnifying party desires to accept
such offer, but the indemnified party refuses to accept such offer within 20
business days after receipt of such notice, the indemnified party may continue
to contest such claim and, in such event, the total maximum liability of the
indemnifying party to indemnify or otherwise reimburse the indemnified party
hereunder with respect to such claim shall be limited to and shall not exceed
the amount of such offer, plus reasonable out-of-pocket costs and expenses
(including reasonable attorneys' fees and disbursements) to the date of notice
that the indemnifying party desires to accept such offer, provided that this
sentence shall not apply to any settlement of any claim involving the imposition
of equitable remedies or to any settlement imposing any material obligations on
such indemnified party other than financial obligations for which such
indemnified party will be indemnified hereunder. 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 in any one
jurisdiction, unless in the written opinion of counsel to the indemnified party,
reasonably satisfactory to the indemnifying party, use of one counsel would be
expected to give rise to a conflict of interest between such indemnified party
and any other of such indemnified parties with respect to such claim, in which
event the indemnifying party shall be obligated to pay the fees and expenses of
one such additional counsel.

     (d) Contribution. If for any reason the indemnification provided for in the
preceding clauses (a) and (b) is unavailable to an indemnified party or
insufficient to hold it harmless as contemplated by the preceding clauses (a)
and (b), then the indemnifying party shall contribute to the amount paid or
payable by the indemnified party as a result of such Damages in such proportion
as is appropriate to reflect not only the relative benefits received by the
indemnified party and the indemnifying party, but also the relative fault of the
indemnified party and the indemnifying party, as well as any other relevant
equitable considerations, provided that no selling Holder shall be required to
contribute in an amount greater than the dollar amount of the proceeds received
by such selling Holder with respect to the sale of any securities. 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. Each selling Holder's
obligation to contribute pursuant to this Section 7(d) is several and not joint.
The provisions of this Section 8 shall survive, notwithstanding any transfer of
the Registrable Securities by any Holder or any termination of this Agreement.

     8. Rule 144.

     The Company covenants that it will file the reports required to be filed by
it under the Securities Act and the Exchange Act and the rules and regulations
adopted by the SEC thereunder, and it will take such further action as any
Holder may reasonably request, all to the extent required from time to time to
enable such Holder to sell Registrable Securities without registration under the
Securities Act within the limitation of the exemption provided by (a) Rule 144
under the Securities Act, as such Rule may be amended from time to time, or (b)
any similar rule or regulation hereafter adopted by the SEC. Upon the request of
any Holder, the Company will deliver to such Holder a written statement as to
whether it has complied with such information and requirements.

     9. Participation in Underwritten Registrations

     No Person may participate in any underwritten registration hereunder unless
such Person (a) agrees to sell such Person's securities on the basis provided in
any underwriting arrangements approved by the Persons entitled hereunder to
approve such arrangements, and (b) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
reasonably required under the terms of such underwriting arrangements and this
Agreement; provided that (i) no selling Holder shall be required to make any
representations or warranties except those which relate solely to such selling
Holder and its intended method of distribution, and (ii) the liability of each
selling Holder to any underwriter under such underwriting agreement will be
limited to liability arising from misstatements or omissions regarding such
selling Holder and its intended method of distribution and any such liability
shall not exceed an amount equal to the amount of net proceeds such selling
Holder derives from such registration; provided, however, that in an offering by
the Company in which any Holder requests to be included in a Piggyback
Registration, the Company shall use its reasonable best efforts to arrange the
terms of the offering such that the provisions set forth in clauses (i) and (ii)
of this Section 9 are true; provided further, that if the Company fails in its
reasonable best efforts to so arrange the terms, the Holder may withdraw all or
any part of its Registrable Securities from the Piggyback Registration and the
Company shall reimburse such Holder for all reasonable out-of-pocket expenses
(including counsel fees and expenses) incurred prior to such withdrawal.

     10. Miscellaneous

     (a) Remedies. Each Holder, in addition to being entitled to exercise all
rights provided herein or granted by law, including recovery of damages, will be
entitled to specific performance of its rights under this Agreement. The Company
agrees that monetary damages would not be adequate compensation for any loss
incurred by reason of a breach by it of the provisions of this Agreement and
hereby agrees to waive the defense in any action for specific performance that a
remedy at law would be adequate. Remedies for breach by any Holder of its
obligations under this Agreement shall be as set forth in Section 8.

     (b) Term. This Agreement shall terminate on the earlier to occur of (i) the
first anniversary of the date of exercise of the Warrant or (ii) the first date
on which there are no longer any Registrable Securities.

     (c) Amendments and Waivers. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given
unless the Company has obtained the written consent of the Holders of a majority
of the outstanding Registrable Securities; provided, however, that the Company
and the Investor together may amend, modify or supplement the provisions of this
Agreement and may waive or consent to departures from the provisions hereof,
without the consent of the Holders of a majority of the outstanding Registrable
Securities so long as such amendment, modification, supplement, waiver or
consent does not adversely affect the rights of Holders of Registrable
Securities hereunder or so long as such amendment, modification, supplement,
waiver or consent affects the rights of the Investor and other Holders of
Registrable Securities hereunder equally.

     (d) Notices. All notices, requests, consents and other communications
hereunder shall be in writing, shall be mailed (A) if within the United States
by nationally recognized overnight express courier, postage prepaid, or by
facsimile, or (B) if delivered from outside the United States, by International
Federal Express or facsimile, and shall be deemed given (i) if delivered by
nationally recognized overnight carrier, one (1) business day after so mailed,
(ii) if delivered by International Federal Express, two (2) business days after
so mailed, and (iii) if delivered by facsimile, upon electric confirmation of
receipt and shall be delivered as addressed as follows:

          (x) if to a Holder, at the most current address given by such Holder
     to the Company in accordance with the provisions of this Section 10(d); and

          (y) if to the Company, initially at the address set forth below and
     thereafter at such other address, notice of which is given in accordance
     with the provisions of this Section 10(d): The Beard Company, 5600 North
     May Avenue, Suite 320, Oklahoma City, Oklahoma 73112.

     (e) Successors and Assigns. This Agreement shall inure to the benefit of
and be binding upon the successors and assigns of each of the parties,
including, without limitation, and without the need for an express assignment
subsequent Holders of Registrable Securities.

     (f) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.

     (g) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.

     (h) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Oklahoma, without regard to the
principles of conflicts of laws.

     (i) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.

     (j) Entire Agreement. This Agreement is intended by the parties as a final
expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted by the Company with respect to
the securities issued pursuant to the Warrant. This Agreement supersedes all
prior agreements and understandings between the parties with respect to such
subject matters.

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