Exhibit 10(b)
June 6, 2003
SUPPLEMENTAL
LETTER LOAN AGREEMENT
The Beard Company
5600 N. May Avenue, Suite 320
Oklahoma City, Oklahoma 73112
Gentlemen:
This Supplemental Letter Loan Agreement supplements the previous Supplemental
Letter Loan Agreement between the parties hereto dated November 7, 2002.
This Supplemental Letter Loan Agreement sets forth the terms and conditions
under which we have agreed to supplement your existing $3,000,000 long-term line
of credit with a short-term revolving loan to you in the principal amount of
$300,000.00 (the "Loan").
1. LENDER: The William M. Beard and Lu Beard 1988 Charitable
Unitrust (the "Unitrust").
2. BORROWER: The Beard Company.
3. AMOUNT: Such amounts as the Borrower may request from time to time up
to $300,000.00. The Loan shall be evidenced by a promissory note
in the amount of $300,000.00 dated as of today (the "Note"). The
Borrower shall be permitted to obtain advances, make prepayments,
and obtain additional advances, up to the amount of the Note.
4. INTEREST A fixed rate of 10.00%.
RATE:
5. REPAYMENT: The outstanding principal balance (the "Indebtedness")plus unpaid
accrued interest shall be due and payable on October 31, 2003.
The parties agree that any payments made by Borrower to Lender
shall be applied first to this Loan.
6. COLLATERAL: The Lender, together with certain Note Holders, have previously
filed a Deed of Trust, Assignment of Production, and Financing
Statement of record (a "Lien") on its working and overriding
royalty interests in the McElmo Dome Unit in Montezuma and
Dolores Counties of Colorado ("Interests"). The Borrower will not
sell, transfer, convey or otherwise dispose of any of the
Interests, whether pursuant to a single transaction or a series
of transactions.
7. COVENANT: Until the Indebtedness has been paid in full, the Borrower will
not sell, transfer, convey or otherwise dispose of, all or a
substantial portion of its assets now owned or hereafter
acquired, whether pursuant to a single transaction or a series of
transactions, and the Borrower will not merge or consolidate with
any person or entity or permit any such merger or consolidation
with the Borrower. This paragraph specifically excludes asset
sales incurred in the normal course of business.
8. EVENTS OF
DEFAULT: If any of the following conditions or events ("Events of
Default") shall occur and be continuing:
A. Failure of the Borrower to pay when due any amounts, including
principal or interest on the Note (whether at the stated
maturity, upon acceleration or otherwise).
B. Any Event of Default as specified in the Note.
C. Any default or breach in the performance of any covenant,
obligation, representation, warranty or provision contained
in this Letter Loan Agreement or in the Note or in any other
note or obligation of Borrower to the Unitrust.
D. The Borrower shall: (i) apply for or consent to the
appointment of a custodian, receiver, trustee or liquidator of
the Borrower or any of its properties, (ii) admit in writing
the inability to pay, or generally fail to pay, its debts when
they come due, (iii) make a general assignment for the benefit
of creditors, (iv) commence any proceeding relating to the
bankruptcy, reorganization, liquidation, receivership, con-
servatorship, insolvency, readjustment of debt, dissolution
or liquidation of the Borrower, or if corporate action should
be taken by the Borrower for the purpose of effecting any of
the foregoing, (v) suffer any such appointment or commencement
of a proceeding as described in clause (i) or (iv) of this
paragraph, which appointment or proceeding is not terminated
or discharged within 60 days, or (vi) become insolvent.
THEN upon the occurrence of any Event of Default described in the
foregoing paragraphs the unpaid principal amount of and accrued
interest on the Loan shall automatically become immediately due and
payable, without presentment, demand, protest or other requirements of
any kind, all of which are hereby expressly waived by Borrower.
If the foregoing terms and conditions are acceptable to you, please acknowledge
your agreement by signing below and returning one copy of this Letter Loan
Agreement to us.
Sincerely,
LENDER:
THE WILLIAM M. BEARD AND LU BEARD
1988 CHARITABLE UNITRUST
WILLIAM M. BEARD LU BEARD
- ---------------------------- -------------------------
William M. Beard, Trustee Lu Beard, Trustee
Accepted effective this 6th day of June, 2003.
BORROWER:
THE BEARD COMPANY
HERB MEE, JR.
- ---------------------------
Herb Mee, Jr., President