REPLACEMENT
RENEWAL AND EXTENSION
PROMISSORY NOTE
$2,782,900.59 Oklahoma City, Oklahoma
February 14, 2005
For value received, the undersigned, The Beard Company, an Oklahoma
corporation (the "Maker"), agrees to all of the terms of this Promissory Note
(this "Note") and promises to pay to the order of William M. Beard and Lu Beard
as Trustees of the William M. Beard and Lu Beard 1988 Charitable Unitrust
(individually and collectively called the "Holder"), at Enterprise Plaza, Suite
320, 5600 N. May, Oklahoma City, Oklahoma 73112, or at such other place as may
be designated in writing by the Holder of this Note, the principal sum of Two
Million Seven Hundred Eighty-Two Thousand Nine Hundred and 59/100ths Dollars
($2,782,900.59) plus all interest accruing thereon. This Note will be payable as
follows:
Prior to Default the unpaid principal balance of this Note will bear
interest at the rate of ten percent (10%) (the "Applicable Rate").
Interest will commence to accrue on the unpaid principal balance of
this Note on the date hereof and thereafter until this Note is paid in
full. Interest will be computed for the actual number of days elapsed
at a per diem charge based on a year consisting of three hundred sixty
(360) days. All payments will be applied first to any accrued interest
on this Note and the remainder to the principal balance of the Note.
The outstanding principal balance plus unpaid accrued interest are due
and payable on April 1, 2007.
Except as otherwise defined herein, all terms defined in the Restated
and Amended Letter Loan Agreement dated April 1, 2005, between the Maker and the
Holder (the "Loan Agreement") will have the same meanings as therein, and the
Holder recognizes that it is subject to all of the provisions set forth in the
Amendment to Restated and Amended Letter Loan Agreement dated June 25, 2004 (the
"Amended Loan Agreement). Both principal and interest owing pursuant to the
terms of this Note are payable in the lawful currency of the United States of
America and in immediately available funds. All payments made on this Note will
be applied to this Note when received by the Holder hereof in collected funds.
Any sum not paid when due will bear interest at the rate equal to the Applicable
Rate plus five percent (5.0%) and will be paid at the time of, and as a
condition precedent to, the curing of any Event of Default. During the existence
of any Event of Default, the Holder of this Note may apply payments received on
any amount due hereunder or under the terms of any instrument hereafter
evidencing or securing said indebtedness as the Holder may determine.
----------------------
Page 1 of 3 Pages
The Maker agrees that if, and as often as, this Note is placed in the
hands of an attorney for collection or to defend or enforce any of the Holder's
rights hereunder, the Maker will pay to the Holder all reasonable attorney's
fees and all expenses incurred by the Holder in connection therewith.
THIS NOTE IS GIVEN BY THE MAKER AND ACCEPTED BY THE HOLDER PURSUANT TO
A LENDING TRANSACTION CONTRACTED, CONSUMMATED, AND TO BE PERFORMED IN OKLAHOMA
CITY, OKLAHOMA COUNTY, OKLAHOMA, AND THIS NOTE SHALL BE CONSTRUED ACCORDING TO
THE LAWS OF THE STATE OF OKLAHOMA. In the event of any Event of Default, the
Holder may request, and the Maker agrees to furnish to the Holder, agreeable
collateral and such security agreements as the Maker may reasonably require to
secure the indebtedness.
This Note is issued subject to the terms of the Loan Agreement and the
Amended Loan Agreement (collectively, the "Loan Agreements"). On the breach of
any provision of this Note, or any provision of the Loan Agreements at the
option of the Holder, the entire unpaid indebtedness evidenced by this Note will
become due, payable and collectible then or thereafter as the Holder may elect,
regardless of the date of maturity of this Note. Notice of the exercise of such
option is hereby expressly waived. Failure by the Holder to exercise such option
will not constitute a waiver of the right to exercise the same in the event of
any subsequent default.
The failure of the Holder to exercise any of the remedies or options
set forth in this Note, or in any instrument securing payment hereof, upon the
occurrence of one or more Events of Default, shall not constitute a waiver of
the right to exercise the same or any other remedy at any subsequent time in
respect to the same or any other Event of Default. The acceptance by the Holder
of any payment which is less than the total of all amounts due and payable at
the time of such payment shall not constitute a waiver of the right to exercise
any of the foregoing remedies or options at that time or any subsequent time, or
nullify any prior exercise of such remedy or option, without the express consent
of the Holder.
Time is of the essence of each obligation of the Maker hereunder.
The makers, endorsers, sureties, guarantors and all other persons who
may become liable for all or any part of this obligation severally waive
presentment for payment, protest, demand and notice of nonpayment. Said parties
consent to any extension of time (whether one or more) of payment hereof, the
modification (whether one or more) of payment hereof, release or substitution of
all or part of the security for the payment hereof or release of any party
liable for payment of this obligation. Any such extension or release may be made
without notice to any such party and without discharging such party's liability
hereunder.
The Maker has the right to prepay this Note in whole or in part at any
time and from time to time without premium or penalty, but with accrued interest
to the date of the prepayment on the amount prepaid.
------------------------
Page 2 of 3 Pages
The Maker waives presentment for payment, protest and notice of
nonpayment.
IN WITNESS WHEREOF, the Maker has executed this instrument effective on
the date first above written.
ATTEST: THE BEARD COMPANY
/s/ Rebecca V. Voth /s/ Herb Mee, Jr.
- --------------------------- -----------------------------------
Rebecca G. Voth, Secretary Herb Mee, Jr., President
-------------------------
Page 3 of 3 Pages