SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to
Section 240.14a-11(c) or Section 240.14a-12
The Beard Company
(Name of Registrant as Specified in its Charter)
_______________________________
(Name of Person(s) Filing Proxy Statement
if other than the Registrant)
Payment of Filing Fee (check the appropriate box):
[x] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
Title of each class of securities to which transaction applies:
_________________________________________________
Aggregate number of securities to which transaction applies:
_________________________________________________
Per unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
_________________________________________________
Proposed maximum aggregate value of transaction:
_________________________________________________
Total fee paid: ________________________________
[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset by Exchange Act Rule 0-11(a)(2)
and identify the filing for which the offsetting fee was paid previously.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.
Amount previously paid:________________
Form, Schedule or Registration Statement No.:__________________
Filing Party:_________________________________
Date Filed:_______________________________
NOTICE OF
ANNUAL MEETING
OF STOCKHOLDERS
TO BE HELD
JULY 31, 2003
AND PROXY STATEMENT
THE BEARD COMPANY
THE BEARD COMPANY
Enterprise Plaza, Suite 320
5600 North May Avenue
Oklahoma City, Oklahoma 73112
June 20, 2003
Dear Stockholders:
We invite you to attend the annual meeting of stockholders of The Beard
Company (the "Company") which will be held in Oklahoma City on Thursday, July
31, 2003. The matters to be considered at the meeting are described in the
formal notice and proxy statement on the following pages.
After completing the business of the meeting, including the election of one
director, we will discuss fiscal year 2002 activities and the current outlook
for the Company. There will be a period for questions and for discussion with
your directors and officers.
If you plan to be present, please notify the Secretary of the Company so
that the necessary arrangements can be made for your attendance. Regardless of
whether you plan to personally attend, it is important that your shares be
represented at this meeting. Please date, sign and return your proxy card in the
enclosed envelope at your earliest convenience.
W. M. BEARD HERB MEE, JR.
Chairman President
THE BEARD COMPANY
Enterprise Plaza, Suite 320
5600 North May Avenue
Oklahoma City, Oklahoma 73112
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Thursday, July 31, 2003
TO THE STOCKHOLDERS OF THE BEARD COMPANY:
You are hereby notified that the Annual Meeting of Stockholders of The
Beard Company (the "Company") will be held on July 31, 2003 at 9:00 a.m. in the
Oklahoma III Room of the Hilton Inn Northwest, located at 2945 Northwest
Expressway, Oklahoma City, Oklahoma 73112, for the purpose of considering and
voting upon the following matters:
(1) The election of two (2) directors of the Company for three (3) year terms.
(2) Approval of the adoption of The Beard Company 2003 Deferred Stock
Compensation Plan.
(3) Ratification of the appointment of Cole & Reed, P.C. as independent
auditors of the Company for fiscal year 2003.
(4) Such other business as may properly come before the meeting or any
adjournment thereof.
The transfer books will not be closed, but only stockholders of record at
the close of business on June 6, 2003 will be entitled to notice of and to vote
at the meeting. A complete list of the stockholders entitled to vote at the
meeting shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for ten days prior to
the meeting, at the offices of the Company, Enterprise Plaza, Suite 320, 5600
North May Avenue, Oklahoma City, Oklahoma 73112.
You are cordially invited to attend the meeting. Even if you plan to
attend, you are requested to date, sign and return the enclosed proxy at your
earliest convenience in the enclosed envelope. You may revoke your proxy at any
time prior to exercise.
By Order of the Board of Directors
REBECCA G WITCHER
Rebecca G. Witcher
Secretary
Oklahoma City, Oklahoma
Dated June 20, 2003
THE BEARD COMPANY
Enterprise Plaza, Suite 320
5600 North May Avenue
Oklahoma City, Oklahoma 73112
PROXY STATEMENT
This Proxy Statement is furnished to the stockholders of The Beard Company
("Beard" or the "Company") in connection with the solicitation of proxies to be
used in voting at the Annual Meeting of Stockholders to be held July 31, 2003.
It is first being mailed to stockholders on or about June 20, 2003. THE ENCLOSED
PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE COMPANY.
A person giving the enclosed proxy has the power to revoke it by giving
notice to the Secretary in person, or by written notification actually received
by the Secretary, or by subsequently granting a later dated proxy relating to
the same shares, at any time prior to its being exercised.
The Company will bear the cost of soliciting proxies, including the charges
and expenses of brokerage firms and others for forwarding solicitation material
to beneficial owners of stock. It is possible that further solicitation of
proxies will be made by telephone or oral communication with some stockholders
of the Company following the original solicitation. All such further
solicitations will be made by regular employees of the Company who will not be
additionally compensated therefor, and the cost will be borne by the Company.
THE COMPANY'S ANNUAL REPORT ON SECURITIES AND EXCHANGE COMMISSION FORM 10-K
(THE "FORM 10-K") INCLUDING THE FINANCIAL STATEMENTS AND SCHEDULES THERETO, FOR
THE FISCAL YEAR ENDED DECEMBER 31, 2002, IS INCLUDED HEREWITH.
VOTING SECURITIES OUTSTANDING
As of June 6, 2003, 2,178,845 shares of common stock and 27,838 shares of
preferred stock of the Company had been issued and were outstanding. Each share
of common stock is entitled to one vote on all matters presented at the meeting.
Each share of preferred stock (i) became convertible into Beard common stock on
January 1, 2003, (ii) was convertible into 4.58945942 (127,761) shares on the
record date, and (iii) is entitled to one vote for each full share of common
stock into which it was convertible. Accordingly, a total of 2,306,606 votes are
entitled to be cast at the meeting, and the holder of the preferred stock is
entitled to cast 15.69% of such votes. Only holders of common stock and
preferred stock of record at the close of business on June 6, 2003, will be
entitled to vote at the meeting.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The table on the next page sets forth information, as of June 6, 2003, with
respect to the beneficial ownership of shares of the Company by each person who
is known to the Company to be the owner of five percent of the outstanding stock
of the Company, by each director or nominee for director, by each of the
executive officers named in the Compensation Table contained at page 10 hereof,
and by all directors and executive officers as a group. Unless otherwise noted,
the person named has sole voting and investment power over the shares reflected
opposite his name.
Options, Total Shares
Warrants and Beneficially
Benefit Owned Percent of
Outstanding Plan Shares Assuming Shares
Shares Exercisable Exercise of Percent of Entitled
Beneficially Within 60 Column (B) Beneficial to Vote at the
Name Owned Days Shares Ownership (11) Meeting (12)
- ---- ----- ---- ------ -------------- ------------
(A) (B) (C)
--- --- ---
John Hancock Financial Services,
Inc.("Hancock")............................. 361,791 (1) None 361,791 (1) 13.35% 15.69%
57th Floor
200 Clarendon Street
Boston, Massachusetts 02117
The William M. Beard and Lu Beard
1988 Charitable Unitrust ("Unitrust")....... 240,779 (2) 18,000 (2) 258,779 (2) 9.55% 10.44%
Enterprise Plaza, Suite 320
5600 North May Avenue
Oklahoma City, OK 73112
The Beard Group 401(k) Trust
c/o InvesTrust, N.A. ("InvesTrust"),
Trustee..................................... 199,298 (3) None 199,298 (3) 7.35% 8.64%
5101 N. Classen, Suite 620
Oklahoma City, OK 73118
W. M. Beard................................. 903,775 (4) 75,244 (4) 979,019 (4) 36.35% 39.18%
Enterprise Plaza, Suite 320
5600 North May Avenue
Oklahoma City, OK 73112
Lu Beard.................................... 242,038 (5) 18,000 (5) 260,038 (5) 9.60% 10.49%
Enterprise Plaza, Suite 320
5600 North May Avenue
Oklahoma City, OK 73112
Herb Mee, Jr................................ 334,356 (6) 44,823 (6) 379,179 (6) 13.99% 14.50%
Enterprise Plaza, Suite 320
5600 North May Avenue
Oklahoma City, OK 73112
Allan R. Hallock............................ 54,711 (7) 32,346 (7) 87,057 (7) 3.21% 2.37%
Ford C. Price............................... 54,297 (8) 2,332 (8) 56,629 (8) 2.09% 2.35%
Harlon E. Martin, Jr........................ 28,506 (9) 2,348 (9) 30,854 (9) 1.14% 1.24%
All directors and executive officers
as a group (8 in number)............... 1,254,544 (10) 171,218 (10) 1,425,762 (10) 52.61% 54.39%
_______________
<FN>
(1) Includes 234,030 common shares and 27,838 preferred shares which were convertible into 127,761 common shares on June 6,
2003. All shares are owned directly and are held by Hancock on behalf of itself and affiliated entities.
(2) Includes 240,779 shares owned directly and 18,000 shares subject to presently exercisable warrants held by the Unitrust, of
which Mr. Beard and his wife, Lu Beard, serve as co-trustees and share voting and investment power.
(3) Represents shares owned by The Beard Group 401(k) Trust (the "401(k) Trust"). Shares held by the 401(k) Trust are owned by
the participating employees, each of whom has sole voting and investment power over the shares held in his or her account.
Investrust has the sole discretion to vote shares for which it has received no directions from the participants. Includes
53,899 and 127,744 shares held for the accounts of Messrs. Beard and Mee, respectively.
(4) Includes 436,351 shares owned directly by Mr. Beard as to which he has sole voting and investment power; 240,779 shares
owned directly and 18,000 shares subject to presently exercisable warrants held by the Unitrust as described in footnote
(2) above; 36,214 shares held by the William M. Beard Irrevocable Trust "A," 51,324 shares held by the William M. Beard
Irrevocable Trust "B," and 62,661 shares held by the William M. Beard Irrevocable Trust "C" (collectively, the "Beard
Irrevocable Trusts") of which Messrs. Beard and Herb Mee, Jr. are trustees and share voting and investment power; 5,053
shares each held by the John Mason Beard II Trust and by the Joseph G. Beard Trust as to which Mr. Beard is the trustee and
has sole voting and investment power; 2,442 shares held by the Rebecca Banner Beard Lilly Living Trust as to which Mr.
Beard is a co-trustee and shares voting and investment power with his daughter; 53,899 shares held by (the 401(k) Trust for
the account of Mr. Beard as to which he has sole voting and investment power; and 9,999 shares held by B & M Limited, a
general partnership ("B&M"), of which Mr. Beard is a general partner and shares voting and investment power with Mr. Mee.
Also includes 9,375 shares subject to presently exercisable options; 12,000 shares subject to presently exercisable
warrants held by the Unitrust; 5,000 shares subject to presently exercisable warrants held by B&M; and 48,869 shares
reserved in Mr. Beard's account in the Company's 2003 Deferred Stock Compensation Plan (the "2003 DSC Plan") which will be
distributed upon his death, disability, retirement or termination or upon Plan termination. Excludes 1,259 shares owned by
his wife as to which Mr. Beard disclaims beneficial ownership.
(5) Includes 240,779 shares and 18,000 presently exercisable warrants owned by the Unitrust, of which Mr. and Mrs. Beard serve
as co-trustees and share voting and investment power. Also includes 1,259 shares owned directly by Mrs. Beard as to which
she has sole voting and investment power.
(6) Includes 27,392 shares owned directly by Mr. Mee as to which he has sole voting and investment power; 14,422 shares held by
Mr. Mee and Marlene W. Mee, his wife, as joint tenants as to which he shares voting and investment power with Mrs. Mee,
4,600 shares held by Mee Investments, Inc., as to which Mr. Mee has sole voting and investment power; 9,999 shares and
5,000 shares subject to presently exercisable warrants held by B&M as to all of which Mr. Mee shares voting and
investment power with Mr. Beard but as to which Mr. Mee has no present economic interest; and 127,744 shares held by the
401(k) Trust for the account of Mr. Mee as to which he has sole voting and investment power. Also includes 150,199 shares
held by the Beard Irrevocable Trusts as to which Mr. Mee is a co-trustee and shares voting and investment power with Mr.
Beard but as to which Mr. Mee has no pecuniary interest and disclaims beneficial ownership. Also includes 18,371 shares
subject to presently exercisable options and 21,452 shares reserved in Mr. Mee's account in the 2003 DSC Plan which will be
distributed upon his death, disability, retirement or termination or upon Plan termination. Excludes 33 shares owned by
Mrs. Mee, as to which Mr. Mee disclaims beneficial ownership.
(7) Includes 35,093 shares held directly by Mr. Hallock as to which he has sole voting and investment power; 19,618 shares
owned directly and 30,000 shares subject to presently exercisable warrants held by A. R. Hallock & Co., a nominee
partnership for estate planning purposes as to which Mr. Hallock shares voting and investment powers with his wife; and
2,346 shares reserved in Mr. Hallock's account in the 2003 DSC Plan which will be distributed upon his death, disability,
retirement or termination or upon Plan termination.
(8) Includes 34,197 shares held directly by Mr. Price as to which he has sole voting and investment power; 17,651 shares held
by the FCP Trust as to which Mr. Price has shared voting and investment power, 2,449 shares held by an IRA for the benefit
of Mr. Price as to which he has sole voting and investment power, and 2,332 shares reserved in Mr. Price's account in the
2003 DSC Plan which will be distributed upon his death, disability, retirement or termination or upon Plan termination.
(9) Includes 28,506 shares held directly by Mr. Martin as to which he has sole voting and investment power, and 2,348 shares
reserved in Mr. Martin's account in the 2003 DSC Plan which will be distributed upon his death, disability, retirement or
termination or upon Plan termination.
(10) Includes 917,652 shares as to which directors and executive officers have sole voting and investment power and 497,110
shares as to which they share voting and investment power with others. Shares reflect the applicable ownership of Column
(C) shares.
(11) In addition to the Company's outstanding common and preferred stock, there were 40,871 presently exercisable options,
285,000 presently outstanding warrants, and a total of 77,347 shares reserved in the Participants' accounts in the
Company's 2003 DSC Plan that were deemed to be exercisable as of June 6, 2003, for a total of 2,709,667 shares deemed to be
outstanding on such date. Percentages represent the percent of Column (C) Shares.
(12) Percentages represent the percent of Column (A) Shares.
</FN>
ELECTION OF DIRECTORS
(Proposal No. 1)
The Company's Certificate of Incorporation (the "Certificate") provides for
a Board of Directors of not more than nine nor less than three directors,
including one director elected by the preferred stockholders, as determined from
time to time by the Board. The Certificate also provides that the portion of the
Board of Directors which is elected by the Beard common stockholders shall be
divided into three classes as nearly equal in number as possible, with the term
of office of one class expiring each year.
At the meeting, two directors are to be elected by the common stockholders
for a three-year term expiring at the date of the Annual Meeting of Stockholders
in 2006. The terms of Messrs. Allan R. Hallock and Ford C. Price expire this
year, and they will be the two nominees for terms expiring in 2006. The Beard
preferred stockholders filled the directorship vacancy which they were entitled
to fill in February 1994 by the election of Michael E. Carr, who resigned
effective February 1, 2002. To date the sole remaining preferred stockholder has
not elected to fill such vacancy.
It is the intention of the persons named in the accompanying form of Proxy
to vote Proxies for the election of the above-named nominees. Each nominee has
served continuously as director of the Company or of its predecessors since
first elected. In the event that any of the nominees should for some reason,
presently unknown, fail to stand for election, the resulting vacancy would be
filled at such time as the board finds a suitable candidate. The election of
directors at this meeting will be by plurality vote. The directors elected at
the Annual Meeting will serve for three-year terms and until their respective
successors are elected and qualified, in accordance with the provisions of the
Certificate and the Company's By-Laws.
Certain information with respect to the nominees for director and three
directors whose terms do not expire this year is as follows:
Nominees for Election for a Term of Three Years Expiring in 2006:
Nominee (age), year first became a Director of Beard or Beard Oil:
Allan R. Hallock (74), 1986
Allan R. Hallock was elected a director of Beard in July 1993. He served as
a director of Beard Oil from December 1986 until October 1993. Mr. Hallock is
currently an independent consulting geologist. He served as Vice President and
Exploration Manager of Gemini Corporation from 1970 until December 1986.
Ford C. Price (66), 1988
Ford C. Price was elected a director of Beard in July 1993. He served as a
director of Beard Oil from June 1987 until October 1993. From 1961 until 1986
Mr. Price served in various capacities with The Economy Company, a
privately-held schoolbook publishing company, last serving as its Chairman of
the Board and Chief Executive Officer. Mr. Price is a private investor.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE ABOVE
NOMINEES.
Directors to Continue in Office with Terms Expiring in 2004:
Harlon E. Martin, Jr. (55), 1997
Harlon E. Martin, Jr. was elected a director of Beard in October 1997 to
fill the directorship vacancy created by the death of W. R. Plugge. Mr. Martin
has served as the principal of H. E. Martin & Company, a Houston investment
banking firm, since its founding in 1990. He was a co-founder of GTM Securities
Corp. in 1985 and served as a principal of such firm until 1989. H. E. Martin &
Company is not a parent, subsidiary, or other affiliate of Beard.
Herb Mee, Jr. (75), 1974
Herb Mee, Jr. has served as Beard's President since October 1989 and as its
Chief Financial Officer since June 1993. He has served as President of Beard Oil
Company ("Beard Oil"), the predecessor to Beard, since its incorporation, and as
its Chief Financial Officer since June 1993. He has also served as a director of
Beard and Beard Oil since their incorporation. Mr. Mee served as President of
Woods Corporation, a New York Stock Exchange diversified holding company, from
1968 to 1972 and as its Chief Executive Officer from 1970 to 1972.
Director to Continue in Office with Term Expiring in 2005:
W. M. Beard (74), 1974
W.M. Beard has served Beard as its Chairman of the Board and Chief
Executive Officer since December 1992. He previously served as Beard's President
and Chief Executive Officer from the Company's incorporation in October 1974
until January 1985. He has served Beard Oil as its Chairman of the Board and
Chief Executive Officer since its incorporation. He has also served as a
director of Beard and Beard Oil since their incorporation. Mr. Beard has been
actively involved since 1952 in all management phases of Beard and Beard Oil
from their inception, and as a partner of their predecessor company.
There is no family relationship between any of the directors or executive
officers of the Company.
Board Meetings:
The Board of Directors met four times in 2002. All of the directors
attended more than 75% of the aggregate of all meetings of the Board of
Directors and committees on which they served during 2002.
Committees of the Board of Directors
The Company has standing Audit and Compensation Committees. Mr. Price
serves as chairman and Messrs. Hallock and Martin serve as members of the Audit
Committee which met five times in 2002. Mr. Hallock serves as chairman and
Messrs. Martin and Price serve as members of the Compensation Committee which
met once in 2002.
The principal functions and requirements of the Company's Committee are as
follows:
Audit Committee:
o Selects the independent auditors and evaluates their qualifications,
performance and independence.
o Reviews and evaluates the integrity of the financial statements of the
Company.
o Considers and reviews the effectiveness of the Company's internal
controls and independent auditors.
o Monitors the compliance by the Company with legal and regulatory
requirements.
o Each member of the Audit Committee is independent pursuant to
applicable laws and listing standards.
o Reports on a regular basis to the Board concerning all matters under
its jurisdiction.
Compensation Committee:
o Reviews the objectives, structure, cost and administration of the
Company's major compensation and benefit policies and programs.
o Reviews and makes recommendations concerning remuneration arrangements
for senior management, including the specific relationship of
corporate performance to executive compensation.
o Reviews the Company's performance versus the CEO's compensation and
establishes measures of the Company's performance upon which the CEO's
compensation is based.
o Administers the Company's compensation, benefit and incentive plans
The Company does not have a Nominating Committee; the Board of Directors
has nominated the directors to stand for election at the annual meeting. Each of
the persons nominated presently serves as a director.
Compensation of Outside Directors
Messrs. Hallock, Martin and Price received $8,000 each of deferred fees
under the Company's Deferred Stock Compensation Plan (the "Plan") as
compensation for services rendered in 2002. Under the Plan, the electing
officers and directors can defer fees and compensation until termination of
service or termination of the Plan, at which time the accounts will be settled
by distribution of a number of shares of the Company's common stock equal to the
number of Units credited under the Plan. A Unit is equal to the amount deferred
divided by the fair market value of a share of common stock on the date of
deferral. In 2002 the non-management directors each received $500 per month for
their services, and also received the following fees for directors' meetings
which they attended: annual and 1-1/2 day meetings -- $750; regular meeting --
$500; telephone meeting -- $100 to $300 depending upon length of meeting.
Messrs. Hallock, Martin and Price received $2,000 each for such attendance in
2002. Messrs. Hallock, Martin and Price also receive a small year-end bonus
depending upon their length of service as directors of Beard and Beard Oil. Such
bonus amounted to $700 each for Messrs. Hallock and Price and $250 for Mr.
Martin in 2002. All of the directors deferred their monthly fees, attendance
fees and year-end bonuses pursuant to the Plan. Beard also provides life, health
and accident insurance benefits for its non-management directors who are not
otherwise covered and the value of these benefits is included in the above
compensation amounts. Messrs. Hallock, Price and Martin received $4,478, $453
and $202, respectively, of such compensation during the year. None of the
directors received additional compensation in 2002 for their committee
participation. Outside directors also receive reimbursement of out-of-pocket
expenses incurred in connection with attendance at meetings.
REPORT OF THE AUDIT COMMITTEE
The following is the report of the Audit Committee (the "Committee") with
respect to the Company's audited financial statements for the year ended
December 31, 2002.
The Committee is comprised of the three independent directors listed below
and operates under a written charter adopted by the Board on June 14, 2000 and
amended on May 23, 2003 (see Exhibit "B" attached). In its corporate oversight
role, the Committee reviews the Company's financial reporting process on behalf
of the Board. Management has the primary responsibility for the financial
statements and the reporting process, including the system of internal controls.
The Committee held five meetings during 2002. The meetings were designed to
facilitate open communication between the Committee, management and the
Company's independent public accountants, Cole & Reed, P.C. ("C&R"). At such
meetings the Committee reviewed and discussed with C&R and management the
Company's audited consolidated financial statements and, when applicable, its
unaudited interim financial statements.
The Committee approves, in advance, all auditing services and permitted
non-audit services to be performed for the Company by its independent auditor,
subject to the de minimus exceptions for permitted non-audit services described
in Section 10A(i)(1)(B) of the Exchange Act which are approved by the Committee
prior to the completion of the audit. The Committee has delegated authority to
the Committee Chairman, when appropriate, to grant advance approvals of audit
and permitted non-audit services, with the proviso that such decisions be
presented to the full Committee at its next scheduled meeting.
The Committee discussed with C&R the matters required to be discussed by
Statement of Auditing Standards No. 61, Communication with Audit Committees. C&R
also provided to the Committee the written disclosures and the letter required
by Independence Standards Board No. 1, Independence Discussions with Audit
Committees, and the Committee has discussed with C&R its independence from the
Company.
The Committee reviews fees paid by the Company to its independent auditor.
For the audit of the Company's annual financial statements for the fiscal year
ended December 31, 2002, and the reviews of the financial statements included in
the Company's Forms 10-Q for the first, second and third quarters of that year
the Company paid the following fees to Cole & Reed, P.C.:
Financial Information Systems Design
Audit Fees and Implementation Fees All Other Fees
---------- ----------------------- --------------
$42,000 (A) $-0- $8,800 (B)
_______________
<FN>
(A) Includes $9,000 for services rendered in 2002 and $33,000 for services
rendered in 2003.
(B) Includes $2,300 for tax and other consulting services and $6,500 for audit
services related to the Company's 401(k) plan.
</FN>
In fulfilling its duties for the 2002 fiscal year, the Committee has done
each of the following:
o reviewed the Company's audited financial statements for 2002 and
discussed the financial statements with the Company's management;
o discussed with C&R the matters required to be discussed by Statement
of Auditing Standards No. 61, Communication with Audit Committees;
o received written disclosure from C&R about any relationships between
C&R and the Company which the auditor believes may affect its
independence;
o received a confirmation letter from C&R that the auditor is
independent of the Company; and
o discussed C&R's independence with the auditor.
Based on the review and discussions above, the Committee recommended to the
Board that the audited financial statements for 2002 be included in the
Company's Annual Report on Form 10-K filed with the Securities and Exchange
Commission for the year ended December 31, 2002.
All of the members of the Audit Committee are independent under the
definitions of the rules as defined in Rule 4200(a)(15) of the NASD's listing
standards.
The Committee has considered the services rendered by the Company's
principal accountant for the most recent fiscal year as described above and has
concluded that the provision of such services is compatible with maintaining the
principal accountant's independence.
By the Audit Committee:
Ford C. Price, Chairman
Allan R. Hallock
Harlon E. Martin, Jr.
EXECUTIVE OFFICERS
Certain information concerning the executive officers of the Company is set
forth below:
In addition to W. M. Beard, the Company's Chairman and Chief Executive
Officer, and Herb Mee, Jr., the Company's President and Chief Financial Officer,
the following are considered to be executive officers of the Company:
Marc A. Messner, age 41, has served as President and Chief Executive
Officer of starpay. com, l.l.c. (and its predecessor) since April 1999. He has
also served as Vice President - Corporate Development of Beard since August
1998. Mr. Messner is the inventor of starpay's proprietary payment system
technology. From 1993 to 1998 he served as President of Horizontal Drilling
Technologies, Inc., a company he founded in 1993 which was acquired by Beard in
1996.
Jack A. Martine, age 54, was elected as Controller, Chief Accounting
Officer and Tax Manager of Beard in October 1996. Mr. Martine served as tax
manager for Beard from June 1989 until October 1993 at which time he joined
Sensor Oil & Gas, Inc. in a similar capacity. Mr. Martine is a certified public
accountant. Sensor Oil & Gas, Inc. is not a parent, subsidiary, or other
affiliate of Beard.
Rebecca G. Witcher, age 43, has served as Corporate Secretary of the
Company and Beard Oil since October 1993, and has served as Treasurer of such
companies since July 1997.
All executive officers serve at the pleasure of the Board of Directors.
Significant Employees
Philip R. Jamison, age 65, has served as President of Beard Technologies,
Inc. since August 1994. Mr. Jamison has been associated with the coal industry
since 1960, working in various positions. From 1972 to 1977 he served as Vice
President Operations for International Carbon and Minerals and as President and
CEO of all its coal producing subsidiaries. From 1979 to 1988 he served as CEO
of four small companies which were engaged in the production and sale of coal.
Riza E. Murteza, age 73, has served as President and Chief Executive
Officer of Beard Sino-American Resources Co., Inc. since November 1998. He was
appointed Senior Advisor to the United Nations Development Project for China,
residing in China for one year (1996-1997), assisting large Chinese enterprises
move to a market economy. Prior to that he served as General Manager and Project
Manager for two large projects in Indonesia and a large project in the Soviet
Union for periods totaling nine years.
Section 16(a) Beneficial Ownership Reporting Compliance.
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent
(10%) of a registered class of the Company's equity securities (collectively
"reporting persons"), to file with the Securities and Exchange Commission
initial reports of ownership and reports of changes in ownership of common stock
and other equity securities of the Company. Reporting persons are required by
the SEC regulations to furnish the Company with copies of all Section 16(a)
forms they file.
To the Company's knowledge, based solely on a review of Forms 3, 4 and 5
furnished to the Company and information received from each reporting person
which includes written representations that no reports were required during the
fiscal year ended December 31, 2002, all Section 16(a) filing requirements
applicable to its reporting persons were complied with, except as follows:
Because the Company had the erroneous understanding that grants of Stock Units
under the Company's Deferred Stock Compensation Plan were to be reported on Form
5 at year-end rather than as transactions occurred, Mr. Beard inadvertently
failed to file 10 reports disclosing 10 transactions, Mr. Mee inadvertently
failed to file one report disclosing one transaction, and Messrs. Hallock,
Martin and Price each inadvertently failed to file six reports disclosing six
transactions. All of such transactions were reported on the Forms 5 for the
respective individuals at year-end.
Compensation of Executive Officers
The table below sets forth sets forth the compensation paid or accrued
during each of the last three fiscal years by the Company and its subsidiaries
to the Company's Chief Executive Officer and each of the Company's other most
highly compensated executive officers (hereafter referred to as the named
executive officers), whose aggregate salary and bonus exceeded $100,000, for any
of the fiscal years ended December 31, 2002, 2001 and 2000:
SUMMARY COMPENSATION TABLE
Long Term
Compensation
----------------------------------
Annual Compensation Awards Payouts
--------------------------------------------------------- -------- ---------
Securities
Underlying All Other
Name and Options/ LTIP Compen-
Principal Salary (A) Bonus (B) SAR's Payouts sation (C)
Position Year ($) ($) (#) ($) ($)
-------- ---- --- --- --- --- ---
W. M. Beard 2002 44,275(D) -0-(D) -0- 90,175(D) 1,788(D)(F)
Chairman & CEO 2001 66,000(D) -0-(D) -0- 68,400(D) 3,300(D)
2000 118,250(D) -0-(D) -0- 16,100(D) 5,913(D)
Herb Mee, Jr. 2002 132,000 -0-(E) -0- 1,450(E) 3,505(F)
President & CFO 2001 132,000 -0-(E) -0- 1,400(E) 6,670(E)
2000 132,000 -0-(E) -0- 1,350(E) 6,600(E)
_______________
<FN>
(A) Amounts shown include cash compensation earned and received by the named executive officers as well
as amounts earned but deferred pursuant to the Company's 401(k) Plan at the election of those
officers. Amounts shown exclude cash compensation earned but deferred pursuant to the Company's
Deferred Stock Compensation Plan (the "DSC Plan").
(B) Bonus for length of service with Beard or Beard Oil.
(C) Consists of the Company's contribution to the Company's 401(k) Plan.
(D) In 2002 Mr. Beard deferred 50% ($35,750) of his salary during the first 6-1/2 months of the year, 85%
($51,975) of his salary during the last 5-1/2 months of the year and all ($2,450) of his length of
service bonus for the year; in 2001 Mr. Beard deferred one-half ($66,000) of his salary and all
($2,400) of his length of service bonus for the year; and in 2000 he deferred one-half ($13,750) of
his salary for 2-1/2 months and all ($2,350) of his length of service bonus for the year pursuant to
the DSC Plan.
(E) In 2002 Mr. Mee deferred all ($1,450) of his length of service bonus for the year; in 2001 Mr. Mee
deferred all ($1,400) of his length of service bonus for the year; and in 2000 he deferred all
($1,350) of his length of service bonus for the year pursuant to the DSC Plan.
(F) Beginning July 16, 2002, the Company suspended its 100% matching contribution (up to a cap of 5% of
gross salary) under its 401(k) Plan. Although there is no firm commitment to do so, the Company has
indicated its intention to reinstate the match when future conditions permit.
</FN>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table provides information, with respect to the named
executive officers, concerning the exercise of options during the Company's last
fiscal year and unexercised options held as of the end of the last fiscal year:
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options at
FY-End (#) FY-End ($)
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise (#) Realized ($) Unexercisable Unexercisable
---- --------------- ------------ ------------- -------------
W. M. Beard -0- $ -0- 9,375/-0- $-0-/-0-
Herb Mee, Jr. -0- $ -0- 18,371/-0- $-0-/-0-
RELATED PARTY TRANSACTIONS
Unitrust Credit Lines. In April 2000, William M. Beard and Lu Beard, as
trustees of the William M. Beard and Lu Beard 1988 Charitable Unitrust (the
"Trustees") provided a $1,000,000 revolving line of credit to the Company. The
original loan by the Trustees provided for a term of 15 months, 10% interest and
was subject to the terms of a promissory note and a letter loan agreement of
corresponding dates. The line of credit was increased to $1,500,000 in October
2000, and the maturity was extended to April 1, 2002. The credit line was
increased to $1,750,000 in March 2001, to $2,000,000 in June 2001, to $2,250,000
in September 2001, to $2,500,000 in January 2002 and to $3,000,000 in October
2002. The interest rate remains at 10% and the loan now matures on January 3,
2005. As of December 31, 2002, the line of credit had been fully utilized. In
November 2002, the Unitrust provided a supplemental $150,000 revolving line of
credit maturing on October 31, 2003. As of May 31, 2003, $120,000 of the
supplemental line of credit had been utilized. The supplemental line is also at
10% interest and is subject to the terms of a promissory note and a supplemental
letter loan agreement of corresponding date. In May 2002, the Unitrust also
purchased $120,000 of 10% Subordinated Notes due September 30, 2003 in
connection with a private placement of notes and warrants by the Company.
Borrowings from Other Related Entities. Three affiliates of the Company's
Chairman loaned $100,000 to the Company in 2001, also at 10% interest, under
notes maturing on April 1, 2003. These loans were paid in full in April 2002.
One of these affiliates purchased a $50,000 10% subordinated note in connection
with the private placement of notes and warrants by the Company in February
2003.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee (the "Committee") of the Board of Directors (the
"Board") establishes the general compensation policies of the Company. The
Committee meets once each year to establish specific compensation levels for the
chairman/chief executive officer ("CEO") and the president/chief financial
officer ("CFO") and to review the executive officers' compensation generally.
(The compensation for executive officers other than the CEO and CFO is actually
determined by the CEO and CFO).
The Committee's goal in setting executive compensation is to motivate,
reward and retain management talent who support the Company's goals of
increasing shareholder value. This goal is to provide competitive levels of
compensation that relate to the Company's long-term performance goals and
objectives, reward outstanding corporate performance and recognize individual
initiative and achievement. The Committee endeavors to achieve these objectives
through a combination of base salary, cash bonuses and stock options.
The Committee believes that the total compensation of its CEO, CFO and
other executive officers should be tied to the Company's success in achieving
long-term growth in earnings, cash flow and stock price per share. The Committee
also believes that the total cash compensation of such officers should, to the
extent possible, be similar to the total cash compensation of similarly situated
executives of peer group public companies. To date neither the Company nor the
Committee has been able to establish a peer group which they feel is comparable
enough in size, financial structure and diversity of operations to establish a
valid comparison.
No executive officer's compensation for 2002 exceeded the $1 million
deduction limit under Section 162(m) of the Internal Revenue Code, as amended,
and the same result is anticipated for 2003. The Committee does not anticipate
that any executive officer's compensation would approach the threshold level in
the foreseeable future.
Base Salaries. No salary increases have been granted to the Company's top
two executive officers since September of 1990. Because of the poor financial
results in 2000, 2001 and 2002, no changes in base salary are currently under
consideration for any of the executive officers. Because of the Company's
deteriorating cash position, (i) the Chairman elected to defer one-half of his
salary effective October 16, 2000 and increased such deferral to 85% effective
July 16, 2002 and (ii) the President elected to defer 40% of his salary
effective February 1, 2003.
Cash Bonuses. All employees and directors of the Company receive a small
year-end bonus depending upon their length of service as employees of Beard or
Beard Oil. Because of the overall financial results, no other cash bonuses have
been paid to executive officers during the last three fiscal years. The
Chairman, the President and all of the directors elected to defer all of their
year-end bonuses for calendar years 2000, 2001 and 2002.
Beard Group 401(k) Plan. One of the Company's principal benefits has been
its 401(k) Plan, which included a 100% match (up to a cap of 5% of gross salary)
in order to encourage participation. Due to the Company's deteriorating cash
position the Company on July 8, 2002 notified all Participants that it was
suspending the 100% match effective July 16, 2002 until further notice. One of
the investment options available under the Company's 401(k) Plan is the option
for each participant to invest all or part of his investment account in Company
common stock ("The Beard Company Stock Fund Investment Option"). The Committee
feels that this option is important because it enables key management members to
increase their ownership in the Company, further aligning their interests with
those of the shareholders.
Stock Options. The Committee desires to reward long-term strategic
management practices and enhancement of shareholder value through the award of
stock options. The Committee believes that stock options encourage increased
performance by the Company's key employees by providing incentive to employees
to elevate the long-term value of the Company's common stock, thus aligning the
interests of the Company's employees with the interests of its shareholders.
Additionally, stock options build stock ownership and provide employees with a
long-term focus. However, because of their conviction that management should not
reap the benefit of a low option grant price until the Company's performance has
achieved a recognizable turnaround, the Committee has not granted any stock
options since April of 1997.
Deferred Stock Compensation Plan. This Plan was adopted in 1995 to provide
a means to promote ownership by officers and directors of a greater proprietary
interest in the Company, thereby aligning such interests more closely with the
interests of the shareholders. The Plan became increasingly important during
2001-2002 as a mechanism to conserve the Company's cash until the anticipated
McElmo Dome Settlement has been received. Upon termination of the Plan on
January 31, 2003, the 2003 DSC Plan was adopted by the Board, subject to
shareholder approval, to facilitate the continuing conservation of cash.
CEO Compensation
W. M. Beard has been Chairman and CEO of the Company and its predecessors
since 1974. Mr. Beard's 2002 base salary was $132,000, and has not increased
since 1990. He receives, along with all other Beard employees, a small year-end
bonus based on length of service. The 1994 stock option grant of 50,000 shares
to Mr. Beard reflected the Committee's desire to provide significant incentives
which link long-term executive compensation to long-term growth in equity for
all shareholders, as described above. The award also reflected Mr. Beard's
position and level of responsibility within the Company, the Committee's
qualitative analysis of his performance in managing the Company, and the
importance of the role he plays in determining the Company's strategic
direction. Based on the Company's profitability, the granting of any additional
stock options to Mr. Beard or other key management members was not considered by
the Committee in 2002. A significant portion of the Company's outstanding
options were exercised in 1998, including 75% of his outstanding option by Mr.
Beard. The Committee may consider the awarding of additional options to key
management members, including Mr. Beard, in 2004 and subsequent years. Any such
grants will depend upon the Company's profitability at such time, the outlook
for its various businesses and the Committee's determination of the need to
provide additional incentives to management.
By the Compensation Committee:
Allan R. Hallock, Chairman:
Harlon E. Martin, Jr.
Ford C. Price
STOCK PERFORMANCE
The following performance graph compares The Beard Company's cumulative
total stockholder return on its common stock against the cumulative total return
of the NASDAQ Market Index and the SIC Code Index of the Bituminous Coal,
Surface Mining Industry compiled by Media General Financial Services for the
period from December 31, 1997 through December 31, 2002. The performance graph
assumes that the value of the investment in The Beard Company stock and each
index was $100 on December 31, 1997 and that any dividends were reinvested. The
Beard Company has never paid dividends on its common stock.
December December December December December December
1997 1998 1999 2000 2001 2002
------------- ------------- ------------- ------------- ------------- -------------
The Beard Company 100.00 61.90 35.71 6.67 13.33 4.38
------------- ------------- ------------- ------------- ------------- -------------
Bituminous Coal, Surface
Mining Industry Index 100.00 61.99 44.26 84.45 96.95 95.21
------------- ------------- ------------- ------------- ------------- -------------
NASDAQ Market Index 100.00 141.04 248.76 156.35 124.64 86.94
------------- ------------- ------------- ------------- ------------- -------------
The Industry Index chosen consists of the following companies: Arch Coal,
Inc., Consol Energy, Inc., Headwaters Inc., Peabody Energy Corp., Westmoreland
Coal Co. and Yanzhou Coal Mining Co.
APPROVAL OF ADOPTION OF
THE BEARD COMPANY
2003 DEFERRED STOCK COMPENSATION PLAN
(Proposal No. 2)
On January 31, 2003, the total number of Shares that had been credited to
the Participants' Stock Unit Accounts in The Beard Company Deferred Stock
Compensation Plan (the "Plan") had reached the maximum number of Shares
(350,000) that had been authorized for issuance under the Plan and accordingly
the Plan terminated under the terms thereof. 350,000 Shares of the Company's
common stock were distributed to the five Participants in the Plan. 295,053 of
such Shares were issued from treasury shares and 54,947 Shares were issued from
authorized but unissued shares.
Upon the recommendation of management, the Board of Directors of the
Company took action as of that same date to adopt The Beard Company 2003
Deferred Stock Compensation Plan (the "2003 Plan") and to authorize the issuance
of a maximum of 150,000 Shares of the Company's common stock that may be
distributed in settlement of Stock Unit Accounts under such Plan. The 2003 Plan
provides that it will become effective January 31, 2003 subject to approval of
the shareholders of the Company by the affirmative vote of a majority of shares
of the Company present, or represented, and entitled to vote on the subject
matter, at the 2003 Annual Meeting of Shareholders of the Company at which a
quorum is present or by a written consent of the holders of a majority of the
Company's then outstanding shares.
The 2003 Plan is intended to advance the interests of the Company and its
shareholders by providing a means to attract and retain highly-qualified persons
to serve as Officers and Directors and to promote ownership by Officers and
Directors of a greater proprietary interest in the Company, thereby aligning
such interests more closely with the interests of shareholders of the Company.
A copy of the 2003 Plan is attached to this Proxy Statement as Exhibit A
and the description contained herein is qualified in its entirety by reference
to the complete text of the 2003 Plan. Capitalized terms used below not
otherwise defined herein shall have the meaning ascribed to them in the 2003
Plan.
As of May 31, 2003, the Compensation and Fees which had been credited to
the individual Participants' Stock Unit Accounts in the 2003 Plan and which will
ultimately be converted into Beard common stock, totaled 77,349.977. Management
believes that the number of shares available for issuance under the 2003
Plan will be sufficient to meet the Company's needs until the McElmo Dome
Settlement is received. At that point the Company's Chairman and President, who
are currently deferring 85% and 40% of their respective salaries in order to
conserve the Company's cash, have indicated that they will cease all or most of
such deferrals.
The 2003 Plan enables Officers and Directors of the Company to defer
Compensation and Fees in cash and to elect payments of such Compensation and
Fees in Beard common stock. All Officers and Directors are automatically
entitled to participate in the 2003 Plan. There are currently eight individuals
eligible for the 2003 Plan. Directors may elect to defer a minimum of 25% of
their Compensation and Fees or a greater amount in 25% increments and Officers
may elect to defer a minimum of 10% of Compensation and Fees or a greater amount
in 5% increments. All Compensation and/or Fees deferred under the 2003 Plan will
be credited to the individual Participant's Stock Unit Account and will then be
converted into Beard common stock by dividing the amount of Compensation and
Fees deferred by the Fair Market Value of one Share of common stock as of the
date the Compensation or Fees would have otherwise been paid. Once a person
ceases to be an Officer or Director, their participation in the 2003 Plan
automatically terminates. The 2003 Plan complies with the requirements of Rule
16b-3 of the Exchange Act. Following shareholder approval, a maximum of 150,000
Shares of Beard common stock may be issued under the 2003 Plan.
The Shares received by the Participant in lieu of Compensation and Fees
will be maintained in each Participant's Stock Unit Account until (i) the
Participant ceases to be an Officer or Director, for any reason, or (ii)
termination of the 2003 Plan upon the earlier of the following events: (a) no
Shares remain available under the 2003 Plan, (b) June 30, 2013, or (c) action of
the Board of Directors terminating the 2003 Plan. Upon any of these events, the
Shares of common stock in each Participant's Stock Unit Account will be
distributed. The Participants will not have shareholder rights with respect to
these Shares until this distribution.
The 2003 Plan may be amended or terminated without shareholder vote or
consent of the Participants, unless required by Federal or state law or
regulation or the rules of any stock exchange or automated quotation system on
which the Shares are listed or quoted. If a vote is required it will be taken at
the next shareholders' meeting after such amendment or modification.
The Plan is administered by the Compensation Committee (the "Committee"),
which is composed of not less than two members of the Board of Directors. No
Participant shall make any determination relating solely or primarily to his or
her own Shares or Stock Unit Account. The Committee makes all determinations
necessary to administer the Plan, but each Participant solely has the right an
authority to make an election to defer Compensation and Fees pursuant to the
Plan.
Approval of the adoption of the 2003 Plan requires the affirmative vote of
a majority of the Company's outstanding common and preferred stock present in
person or represented at the meeting and entitled to vote.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL TO APPROVE THE
ADOPTION OF THE BEARD COMPANY 2003 DEFERRED STOCK COMPENSATION PLAN.
RATIFICATION OF THE APPOINTMENT OF INDEPENDENT ACCOUNTANTS
(Proposal No. 3)
On May 23, 2003 the Audit Committee appointed Cole & Reed, P.C. independent
accountants to audit and report on the consolidated financial statements of the
Company for 2003. Cole & Reed, P.C. audited and reported on the Company's
consolidated financial statements for 2001 and 2002. Although not formally
required, stockholders' ratification of such appointment is requested. To the
knowledge of management, such accountants do not have any direct, or material
indirect, financial interest in the Company and its subsidiaries, nor have they
had any connection during the past three (3) years with the Company or any of
its subsidiaries in the capacity of promoter, underwriter, voting trustee,
director, officer or employee.
Representatives of Cole & Reed, P.C., are expected to be present at the
meeting. They will have the opportunity to make a statement if they so desire
and are expected to be available to respond to appropriate questions.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL TO RATIFY THE
APPOINTMENT OF COLE & REED, P.C.
In the event the appointment of Cole & Reed, P.C. should not be ratified by
the stockholders, the Audit Committee will make another appointment, to be
effective at the earliest feasible time.
VOTE REQUIRED
The holders of shares entitled to cast a majority of the votes, present in
person or by proxy, constitute a quorum for the transaction of business at the
meeting. The affirmative vote of holders of the Company's stock entitled to cast
a majority of the votes represented at the annual meeting will be required for
the ratification of the appointment of Cole & Reed, P.C., as independent
auditors of the Company for 2003. The election of directors shall be by a
plurality of the vote of the shares present in person or represented by proxy at
the meeting and entitled to vote on the election of directors.
The office of the Company's Secretary appoints an inspector of election to
tabulate all votes and to certify the results of all matters voted upon at the
annual meeting. Neither the corporate law of the State of Oklahoma, the state in
which the Company is incorporated, nor the Company's Certificate of
Incorporation or By-Laws have any specific provisions regarding the treatment of
abstentions and broker non-votes. It is the Company's policy to count
abstentions or broker non-votes for purposes of determining the presence of a
quorum at the meeting; to treat abstentions as votes not cast but to treat them
as shares represented at the meeting for determining results on actions
requiring a majority vote; and to consider neither abstentions or broker
non-votes in determining results of plurality votes.
STOCKHOLDER PROPOSALS
The Board of Directors anticipates that next year's annual meeting will be
held during the first week of June 2004. Any proposals of stockholders intended
to be presented at the 2004 Annual Meeting of Stockholders must be received by
the Company not later than February 6, 2004 in order for the proposals to be
included in the proxy statement and proxy card relating to such meeting. For any
other proposal that a shareholder wishes to have considered at the 2004 annual
meeting, the Company must receive written notice of such proposal not later than
April 4, 2004. Proposals that are not received by this date will be considered
untimely. In addition, proposals must comply with the Company's bylaws and the
rules and regulations of the Securities and Exchange Commission. It is suggested
that proponents submit their proposals by certified mail, return receipt
requested. No stockholder proposals were received for inclusion in this Proxy
Statement.
OTHER MATTERS
Management knows of no other matters to be brought before the Annual
Meeting of Stockholders; however, if any additional matters are properly brought
before the meeting, the persons named in the enclosed proxy will vote the
proxies in their discretion in the manner they believe to be in the best
interest of the Company.
The accompanying form of proxy has been prepared at the direction of the
Company, of which you are a stockholder, and is sent to you at the request of
the Board of Directors. The proxies named herein have been designated by your
Board of Directors.
Management urges you, even if you presently plan to attend the meeting in
person, to execute the enclosed proxy and mail it as indicated immediately. If a
proxy is properly signed and is not revoked by the shareholder, the shares it
represents will be voted according to the instructions of the shareholder;
provided, however, if no specific instructions are given, the shares will be
voted as recommended by the Board of Directors. A shareholder may revoke his or
her proxy any time before it is voted at the meeting. A shareholder who attends
the meeting and wishes to vote in person may revoke his or her proxy at the
meeting. Otherwise, a shareholder must advise the secretary of the Company in
writing of revocation of his or her proxy.
THE BEARD COMPANY
By Order of the Board of Directors
REBECCA G. WITCHER
Rebecca G. Witcher
Secretary
Oklahoma City, Oklahoma
June 20, 2003
Exhibit "A"
THE BEARD COMPANY
2003 DEFERRED STOCK COMPENSATION PLAN
Adopted: January 31, 2003
THE BEARD COMPANY
2003 DEFERRED STOCK COMPENSATION PLAN
Page
----
ARTICLE I Purpose and Effective Date................................... 1
ARTICLE II Definitions.................................................. 1
ARTICLE III Shares Available Under the Plan.............................. 3
ARTICLE IV Administration............................................... 3
ARTICLE V Eligibility.................................................. 3
ARTICLE VI Deferral Elections In Lieu of Cash Payments.................. 3
ARTICLE VII Settlement of Stock Units.................................... 4
ARTICLE VIII Unfunded Status.............................................. 5
ARTICLE IX Designation of Beneficiary................................... 5
ARTICLE X Adjustment Provisions........................................ 5
ARTICLE XI Compliance with Rule 16b-3................................... 6
ARTICLE XII General Provisions........................................... 6
THE BEARD COMPANY
2003 DEFERRED STOCK COMPENSATION PLAN
ARTICLE I
PURPOSE AND EFFECTIVE DATE
1.1 Purpose. The Beard Company 2003 Deferred Stock Compensation Plan (the
"Plan") is intended to advance the interests of the Company and its shareholders
by providing a means to attract and retain highly-qualified persons to serve as
Officers and Directors and to promote ownership by Officers and Directors of a
greater proprietary interest in the Company, thereby aligning such interests
more closely with the interests of shareholders of the Company.
1.2 Effective Date. This Plan shall become effective January 31, 2003
subject to approval of the shareholders of the Company by the affirmative vote
of a majority of shares of the Company present, or represented, and entitled to
vote on the subject matter, at the 2003 Annual Meeting of Shareholders of the
Company at which a quorum is present or by a written consent of the holders of a
majority of the Company's then outstanding shares.
ARTICLE II
DEFINITIONS
The following terms shall be defined as set forth below:
2.1 "Board" means the Board of Directors of the Company.
2.2 "Compensation" means all or part of the cash remuneration payable to an
Officer in his or her capacity as an Officer.
2.3 "Committee" means the Compensation Committee of the Board.
2.4 "Company" means The Beard Company, an Oklahoma corporation, or any
successor thereto.
2.5 "Deferral Date" means the date Fees or Compensation would otherwise
have been paid to the Participant.
2.6 "Director" means any individual who is a member of the Board.
2.7 "Exchange Act" means the Securities Exchange Act of 1934, as amended.
References to any provision of the Exchange Act include rules thereunder and
successor provisions and rules thereto.
2.8 "Fair Market Value" means the "Market Price" as defined in the
Certificate of Designations for the Company's outstanding Series A Convertible
Preferred Stock (the "Certificate"); provided, however, that in the event that
Fair Market Value is less than the "Conversion Price" as defined in the
Certificate, then the Fair Market Value shall be the average of (i) the last
sale of such security on any day there are sales of such securities on the OTC
Bulletin Board(R), or (ii) if there have been no sales on the OTC Bulletin
Board(R) on any day, the best asked price at the end of such day, in each such
case averaged over a period of 21 days consisting of the day as of which "Market
Price" is being determined and the 20 consecutive business days prior to such
day.
2.9 "Fees" means all or part of any retainer and/or fees payable to a
Director in his or her capacity as a Director.
2.10 "Officer" means any person so designated by the Board.
2.11 "Participant" means a Director or Officer who defers Fees or
Compensation under Article VI of this Plan.
2.12 "Reconciliation Events" means certain events which cause the amount of
Fees or Compensation actually paid during a period to differ from the amount of
Fees credited pursuant to Section 6.4, including, but not limited to, the
following: an increase or decrease in Fees paid, additional meetings held,
missed attendance at certain meetings, newly elected directors and Terminations
of Service.
2.13 "Secretary" means the Corporate Secretary or any Assistant Corporate
Secretary of The Beard Company.
2.14 "Shares" means shares of the common stock of The Beard Company, par
value $.001333 per share, or of any successor corporation or other legal entity
adopting this Plan.
2.15 "Stock Units" means the credits to a Participant's Stock Unit Account
under Article VI of this Plan, each of which represents the right to receive one
Share upon settlement of the Stock Unit Account.
2.16 "Stock Unit Account" means the bookkeeping account established by the
Company pursuant to Section 6.4.
2.17 "Termination Date" means the date the Plan terminates pursuant to
Section 12.8.
2.18 "Termination of Service" means termination of service as a Director or
Officer in any of the following circumstances:
(a) Where the Participant voluntarily resigns or retires;
(b) Where a Director is not re-elected (or elected in the case of an
appointed Director) to the Board by the shareholders, or an Officer is not
re-elected as an Officer by the Board; or
(c) Where the Participant dies.
ARTICLE III
SHARES AVAILABLE UNDER THE PLAN
Subject to adjustment as provided in Article X, the maximum number of
Shares that may be distributed in settlement of Stock Unit Accounts under this
Plan shall not exceed 150,000. Such Shares may include authorized but unissued
Shares or treasury Shares.
ARTICLE IV
ADMINISTRATION
4.1 This Plan shall be administered by the Board's Compensation Committee,
or such other committee or individual as may be designated by the Board.
Notwithstanding the foregoing, no Director who is a Participant under this Plan
shall participate in any determination relating solely or primarily to his or
her own Shares, Stock Units or Stock Unit Account.
4.2 It shall be the duty of the Committee to administer this Plan in
accordance with its provisions and to make such recommendations of amendments or
otherwise as it deems necessary or appropriate.
4.3 The Committee shall have the authority to make all determinations it
deems necessary or advisable for administering this Plan, subject to the
limitations in Section 4.1 and other explicit provisions of this Plan.
ARTICLE V
ELIGIBILITY
Each Director and Officer of the Company shall be eligible to defer Fees
and Compensation under Article VI of this Plan.
ARTICLE VI
DEFERRAL ELECTIONS IN LIEU OF CASH PAYMENTS
6.1 General Rule. Each Director or Officer may, in lieu of receipt of Fees
or Compensation, defer such Fees or Compensation in accordance with this Article
VI.
6.2 Timing of Election. Each eligible Director or Officer who wishes to
defer Fees or Compensation under this Plan must make an irrevocable written
election at least six (6) months prior to the beginning of the date on which the
Fees or Compensation would otherwise be paid; provided, however, that with
respect to any election made by a newly-elected or appointed Director or Officer
("New Participant Elections"), the Company shall hold such deferred Fees or
Compensation (without interest) and credit them pursuant to Section 6.4 on or as
of the date which follows by six months such deferral election. An election by a
Director or an Officer previously in effect January 31, 2003 shall be deemed to
be continuing and therefore applicable to Fees or Compensation to be paid in
periods unless the Director or Officer revokes or changes such election by
filing a new election form thirty (30) days prior to the next payment date for
Fees or Compensation.
6.3 Form of Election. An election shall be made in a manner satisfactory to
the Secretary. Generally, an election shall be made by completing and filing the
specified election form with the Secretary of the Company within the period
described in Section 6.2. At minimum, the form shall require the Director or
Officer to specify the following:
(a) a percentage (for Directors in 25% increments, and for Officers
not less than 10% and in 5% increments thereafter), not to exceed an
aggregate of 100% of the Fees or Compensation to be deferred under this
Plan; and
(b) the manner of settlement in accordance with Section 7.2.
6.4 Establishment of Stock Unit Account. The Company will establish a Stock
Unit Account for each Participant. All Fees or Compensation deferred pursuant to
this Article VI shall be credited to the Participant's Stock Unit Account as of
the Deferral Date and converted to Stock Units as follows: The number of Stock
Units shall equal the deferred Fees or Compensation divided by the Fair Market
Value of a Share on the Deferral Date, with fractional units calculated to three
(3) decimal places.
6.5 Credit of Dividend Equivalents. As of each dividend payment date with
respect to Shares, each Participant shall have credited to his or her Stock Unit
Account an additional number of Stock Units equal to: the per-share cash
dividend payable with respect to a Share on such dividend payment date
multiplied by the number of Stock Units held in the Stock Unit Account as of the
close of business on the record date for such dividend divided by the Fair
Market Value of a Share on such dividend payment date. If dividends are paid on
Shares in a form other than cash, then such dividends shall be notionally
converted to cash, if their value is readily determinable, and credited in a
manner consistent with the foregoing and, if their value is not readily
determinable, shall be credited "in kind" to the Participant's Stock Unit
Account.
6.6 Reconciliations. The Company shall record all Reconciliation Events
and, as soon as reasonably practicable after the end of each calendar quarter or
after a Termination of Service, make appropriate adjustments to each
Participant's Stock Unit Account to reflect such Reconciliation Events;
provided, however, the Fair Market Value used to determine such adjustments
shall be the same Fair Market Value used to determine the number of Stock Units
credited to such Participant's Stock Unit Account.
ARTICLE VII
SETTLEMENT OF STOCK UNITS
7.1 Settlement of Account. The Company will settle a Participant's Stock
Unit Account in the manner described in Section 7.2 as soon as administratively
feasible following the earlier of (i) notification of such Participant's
Termination of Service or (ii) the Termination Date.
7.2 Payment Options. An election filed under Article VI shall specify
whether the Participant's Stock Unit Account is to be settled by delivering to
the Participant (or his or her beneficiary) the number of Shares equal to the
number of whole Stock Units then credited to the Participant's Stock Unit
Accounts, in (a) a lump sum, or (b) substantially equal annual installments over
a period not to exceed ten (10) years. If, upon lump sum distribution or final
distribution of an installment, less than one whole Stock Unit is credited to a
Participant's Stock Unit Account, cash will be paid in lieu of fractional shares
on the date of such distribution.
7.3 Continuation of Dividend Equivalents. If payment of Stock Units is
deferred and paid in installments, the Participant's Stock Unit Account shall
continue to be credited with dividend equivalents as provided in Section 6.5.
7.4 In Kind Dividends. If any "in kind" dividends were credited to the
Participant's Stock Unit Account under Section 6.5, such dividends shall be
payable to the Participant in full on the date of the first distribution of
Shares under Section 7.2.
ARTICLE VIII
UNFUNDED STATUS
The interest of each Participant in any Fees or Compensation deferred under
this Plan (and any Stock Units or Stock Unit Account relating thereto) shall be
that of a general creditor of the Company. Stock Unit Accounts, and Stock Units
(and, if any, "in kind" dividends) credited thereto, shall at all times be
maintained by the Company as bookkeeping entries evidencing unfunded and
unsecured general obligations of the Company.
ARTICLE IX
DESIGNATION OF BENEFICIARY
Each Participant may designate, on a form provided by the Committee, one or
more beneficiaries to receive the Shares described in Section 7.2 in the event
of such Participant's death. The Company may rely upon the beneficiary
designation last filed with the Committee, provided that such form was executed
by the Participant or his or her legal representative and filed with the
Committee prior to the Participant's death.
ARTICLE X
ADJUSTMENT PROVISIONS
In the event any recapitalization, reorganization, merger, consolidation,
spin-off, combination, repurchase, exchange of shares or other securities of the
Company, stock split or reverse split, or similar corporate transaction or event
affects Shares such that an adjustment is determined by the Board or Committee
to be appropriate to prevent dilution or enlargement of Participants' rights
under this Plan, then the Board or Committee will, in a manner that is
proportionate to the change to the Shares and is otherwise equitable, adjust the
number or kind of Shares to be delivered upon settlement of Stock Unit Accounts
under Article VII.
ARTICLE XI
COMPLIANCE WITH RULE 16b-3
Subject to Section 6.2, it is the intent of the Company that this Plan
comply in all respects with applicable provisions of Rule 16b-3 under the
Exchange Act in connection with the deferral of Fees and Compensation.
ARTICLE XII
GENERAL PROVISIONS
12.1 No Right to Continue as an Officer or Director. Nothing contained in
this Plan will confer upon any Participant any right to continue to serve as an
Officer or Director.
12.2 No Shareholder Rights Conferred. Nothing contained in this Plan will
confer upon any Participant any rights of a shareholder of the Company unless
and until Shares are in fact issued or transferred to such Participant in
accordance with Article VII.
12.3 Change to the Plan. The Board may amend, alter, suspend, discontinue,
extend, or terminate the Plan without the consent of shareholders or
Participants, except that any such action will be subject to the approval of the
Company's shareholders at the next annual meeting of shareholders having a
record date after the date such action was taken if such stockholder approval is
required by any federal or state law or regulation or the rules of any stock
exchange or automated quotation system on which the Shares may then be listed or
quoted, or if the Board determines in its discretion to seek such shareholder
approval; provided, however, that, without the consent of an affected
Participant, no such action may materially impair the rights of such Participant
with respect to any Stock Units credited to his or her Stock Unit Account.
12.4 Consideration; Agreements. The consideration for Shares issued or
delivered in lieu of payment of Fees or Compensation will be the service of the
Officer or Director during the period to which the Fees or Compensation paid in
the form of Shares related.
12.5 Compliance with Laws and Obligations. The Company will not be
obligated to issue or deliver Shares in connection with this Plan in a
transaction subject to the registration requirements of the Securities Act of
1933, as amended, or any other federal or state securities law, any requirement
under any listing agreement between the Company and any national securities
exchange or automated quotation system or any other laws, regulations, or
contractual obligations of the Company, until the Company is satisfied that such
laws, regulations, and other obligations of the Company have been complied with
in full. Certificates representing Shares delivered under the Plan will be
subject to such stop-transfer orders and other restrictions as may be applicable
under such laws, regulations, and other obligations of the Company, including
any requirement that a legend or legends be placed thereon.
12.6 Limitations on Transferability. Stock Units and any other right under
the Plan that may constitute a "derivative security" as generally defined in
Rule 16a-1(c) under the Exchange Act will not be transferable by a Participant
except by will or the laws of descent and distribution (or to a designated
beneficiary in the event of a Participant's death); provided, however, that such
rights may be transferred to one or more trusts or other beneficiaries during
the lifetime of the Participant in connection with the Participant's estate
planning, but only if and to the extent then permitted under Rule 16b-3 and
consistent with the registration of the offer and sale of Shares on Form S-8 or
a successor registration form of the Securities and Exchange Commission. Stock
Units and other rights under the Plan may not be pledged, mortgaged,
hypothecated, or otherwise encumbered, and shall not be subject to the claims of
creditors.
12.7 Governing Law. The validity, construction, and effect of the Plan and
any agreement hereunder will be determined in accordance with the laws of the
State of Oklahoma, without giving effect to principles of conflicts of laws, and
applicable federal law.
12.8 Plan Termination. Unless earlier terminated by action of the Board or
Executive Committee of the Board, the Plan will remain in effect until the
earlier of (i) such time as no Shares remain available for delivery under the
Plan and the Company has no further rights or obligations under the Plan or (ii)
June 30, 2013.
Exhibit "B"
THE BEARD COMPANY
AUDIT COMMITTEE CHARTER
(As Amended May 23, 2003)
Purpose and Authority
The Audit Committee (the "Committee") is appointed by the Board of Directors.
The Committee's primary purposes are to:
o Monitor the integrity of the Company's financial reporting process and
systems of internal controls.
o Monitor the independence and performance of the Company's independent
auditors.
o Provide an avenue of communication among the independent auditors,
management and the Board of Directors.
o Review areas of potential significant financial risk to the Company.
The Committee has the authority to conduct any investigation appropriate to
fulfilling its responsibilities. At all times, the Committee shall have direct
access to the independent auditors as well as anyone in the Company.
Composition
o Committee members shall meet the requirements of the Securities and
Exchange Commission and any other applicable law or regulation. The
Committee shall be comprised of three or more members, each of whom
shall meet the "independence" requirements of applicable law or
regulation and shall be free from any relationship that would
interfere with the exercise of his or her independent judgment. At
least one member of the Committee shall be a "financial expert" as
defined by the Securities and Exchange Commission. All members of the
Committee shall be able to read and understand financial statements at
the time of their appointment.
The Committee members shall by approved by the Board, and may be
replaced by the Board.
Meetings
o The Committee shall meet at least four times annually, or more
frequently as circumstances dictate. The Committee should meet
periodically with management and the independent auditor in separate
executive sessions and as a committee to discuss any matters that the
Committee or any of these groups believes should be discussed. The
Committee may request any officer or employee of the Company or the
Company's outside counsel or independent auditor to attend a meeting
of the Committee or to meet with any members of the Committee. The
Committee may also act by unanimous written consent without a meeting.
Authority and Responsibilities
The Committee shall:
o Have the sole authority and responsibility to appoint or replace the
independent auditor (or to nominate the independent auditor to be
proposed for shareholder approval in any proxy statement). The
Committee shall be directly responsible for the compensation and
oversight of the work of the independent auditor (including resolution
of disagreements between management and the independent auditor
regarding financial reporting) for the purpose of preparing or issuing
an audit report or related work. The independent auditor shall report
directly to the Committee.
o Approve, in advance, all auditing services and permitted non-audit
services to be performed for the Company by its independent auditor,
subject to the de minimus exceptions for permitted non-audit services
described in Section 10A(i)(1)(B) of the Exchange Act which are
approved by the Committee prior to the completion of the audit. The
Committee has delegated authority to the Committee Chairman, when
appropriate, to grant advance approvals of audit and permitted
non-audit services, provided that any such decisions shall be
presented to the full Committee at its next scheduled meeting. The
Committee shall have the authority, to the extent it deems necessary
or appropriate, to retain independent legal, accounting or other
advisors. The Company shall provide for appropriate funding for
payment of compensation to the independent advisor.
o Make regular reports to the Board of the actions taken by the
Committee. The Committee shall review and reassess the adequacy of
this Charter annually and submit the Charter to the Board for
approval. The Committee shall make certain that the document is
included as an exhibit to the proxy statement at least every three
years.
In meeting its responsibilities the Committee shall:
Financial Statement and Disclosure Matters
o Review and discuss with management and the independent auditor the
annual audited financial statements, including disclosures made in
management's discussion and analysis, and recommend to the Board
whether the audited financial statements should be included in the
Company's Form 10-K.
o Review and discuss with management and the independent auditor, as
necessary, the Company's quarterly financial statements prior to the
filing of its Form 10-Q, including the results of the independent
auditor's review of the quarterly financial statements. The Committee
Chairman may represent the entire Committee for purposes of this
review and shall consult with the other members of the Committee as he
or she deems necessary.
o Review and discuss with management and the independent auditor
significant financial reporting issues and judgments made in
connection with the preparation of the Company's financial statements,
including any significant changes in the Company's selection or
application of accounting principles, any major issues as to the
adequacy of the Company's internal controls and any special steps
adopted in light of material control deficiencies.
o Review and discuss quarterly reports from the independent auditors on:
a. All critical accounting policies and practices to be used.
b. All alternative treatments of financial information within
generally accepted accounting principles that have been discussed
with management, ramifications of the use of such alternative
disclosures and treatments, and the treatment preferred by the
independent auditor.
c. Other material written communications between the independent
auditor and management, such as any management letter or schedule
of unadjusted differences.
o Discuss with management the Company's earnings press releases, as well
as financial information and earnings guidance provided to analysts.
o Discuss with management and the independent auditor the effect of
regulatory and accounting initiatives as well as off-balance sheet
structures on the Company's financial statements.
o Discuss with management the Company's major financial risk exposures
and the steps management has taken to monitor and control such
exposures.
o Discuss with the independent auditor the matters required to be
discussed by Statement on Auditing Standards No. 61 relating to the
conduct of the audit, including any difficulties encountered in the
course of the audit work, any restrictions on the scope of activities
or access to requested information, and any significant disagreements
with management.
o Review disclosures made to the Audit Committee by the Company's CEO
and CFO during their certification process for the Form 10-K and Form
10-Q about any significant deficiencies in the design or operation of
internal controls or material weaknesses therein and any fraud
involving management or other employees who have a significant role in
the Company's internal controls.
Oversight of the Company's Relationship with the Independent Auditor
o Obtain and review a report from the independent auditor annually
regarding: (a) the independent auditor's internal quality-control
procedures, (b) any material issues raised by the most recent internal
quality-control review, or peer review, of the firm or by any inquiry
or investigation by governmental or professional authorities within
the preceding five years respecting one or more independent audits
carried out by the firm, (c) any steps taken to deal with any such
issues, and (d) all relationships between the independent auditor and
the Company.
o Consider and review with the external auditors:
a. The adequacy of the Company's internal controls.
b. Any related significant findings and recommendations of the
external auditors together with management's responses thereto.
o Evaluate the qualifications, performance and independence of the
independent auditor, including considering whether the auditor's
quality controls are adequate and the provision of permitted non-audit
services is compatible with maintaining the auditor's independence,
and taking into account the opinion of management. The Committee shall
present its conclusions with respect to the independent auditor to the
Board.
o Ensure the rotation of the lead audit partner having primary
responsibility for the audit and the audit partner responsible for
reviewing the audit as required by applicable law or listing standards
o Meet with the independent auditor prior to the audit to discuss the
planning, scope and staffing of the audit to assure completeness of
coverage, elimination of redundant efforts, and the effective use of
audit resources.
Compliance Oversight Responsibilities
o Obtain reports from management and the independent auditor that the
Company and its subsidiary/foreign affiliated entities are in
conformity with applicable legal requirements and the Company's Code
of Ethics (as implemented under applicable law listing standards), and
advise the Board whether or not the Company is in compliance. Review
reports and disclosures of insider and affiliated party transactions.
o Review and approve all related party transactions between the Company
and its officers and directors as required by applicable law and
listing standards.
o Establish procedures for the receipt, retention and treatment of
complaints received by the Company regarding accounting, internal
accounting controls or auditing matters, and the confidential,
anonymous submission by employees of concerns regarding questionable
accounting or auditing matters.
o Discuss with management and the independent auditor any correspondence
with regulators or governmental agencies any published reports which
raise material issues regarding the Company's financial statements or
accounting policies.
o Discuss with the Company's General Counsel any legal or regulatory
matters that may have a material impact on the Company's financial
statements or compliance policies.
o Annually prepare a report to shareholders for inclusion in the
Company's proxy and information statements.
Limitation on Committee's Role
While the Committee has the responsibilities and powers set forth in this
Charter, it is not the duty of the Committee to plan or conduct audits or to
determine that the Company's financial statements and disclosures are complete
and accurate and are in compliance with generally accepted accounting principles
and applicable rules and regulations. Management has the responsibility for the
financial statements and disclosures. The independent auditor has the
responsibility for planning and conducting the audits.
The duties and responsibilities of a member of the Committee are in addition to
those duties set out for a member of the Board of Directors.
PROXY
THE BEARD COMPANY
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR STOCKHOLDERS MEETING ON JULY 31, 2003
The undersigned stockholder of The Beard Company, an Oklahoma corporation,
hereby appoints W. M. Beard and Herb Mee, Jr. or either of them, with full power
of substitution, as true and lawful agents and proxies to represent the
undersigned and vote all shares of stock of The Beard Company owned by the
undersigned in all matters coming before the 2003 Annual Meeting of Stockholders
(or any adjournment thereof) of The Beard Company to be held in the Oklahoma III
Room of the Hilton Inn Northwest, located at 2945 N. W. Expressway, Oklahoma
City, Oklahoma 73112, on Thursday, July 31, 2003 at 9:00 a.m. local time. The
Board of Directors recommends a vote "FOR" the following matters, all as more
specifically set forth in the Proxy Statement:
1. Election of Directors. FOR the nominees listed below
WITHHOLD AUTHORITY to vote for the nominees listed below:
Allan R. Hallock - three year term expiring in 2006
Ford C. Price - three year term expiring in 2006
2. Approval of Adoption of The Beard Company 2003 Deferred Stock Compensation
Plan, a copy of which is attached to the accompanying Proxy Statement as
Exhibit A.
FOR AGAINST ABSTAIN
3. Ratification of Appointment of Cole & Reed, P.C. as independent certified
public accountants for fiscal 2003.
FOR AGAINST ABSTAIN
4. In their discretion, the Proxies are authorized to vote with respect to any
other matters that may come before the Meeting or any adjournment thereof,
including matters incident to its conduct.
I/WE RESERVE THE RIGHT TO REVOKE THE PROXY AT ANY TIME BEFORE THE EXERCISE
THEREOF. WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED IN THE MANNER
SPECIFIED ABOVE BY THE STOCKHOLDER. TO THE EXTENT CONTRARY SPECIFICATIONS
ARE NOT GIVEN, THIS PROXY WILL BE VOTED "FOR" ITEMS 2 AND 3 AND "FOR" THE
ELECTION OF THE DIRECTORS NOMINATED.
Dated____________________________________________, 2003
______________________________________________________
(Signature)
______________________________________________________
(Signature if held jointly)
Please sign exactly as your name appears on your stock
certificate indicating your official position or
representative capacity, if applicable; if shares are held
jointly, each owner should sign.
IMPORTANT: PLEASE SIGN, DATE AND RETURN THIS PROXY BEFORE
THE DATE OF THE ANNUAL MEETING IN THE ENCLOSED ENVELOPE.