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.
(1) Title of each class of securities to which transaction applies:
_________________________________________________
(2) Aggregate number of securities to which transaction applies:
_________________________________________________
(3) Per unit price or other underlying value of transaction computed pur-
suant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
_________________________________________________
(4) Proposed maximum aggregate value of transaction:
_________________________________________________
(5) 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:_______________________________
<PAGE>
NOTICE OF
ANNUAL MEETING
OF STOCKHOLDERS
TO BE HELD
JUNE 4, 1998
AND PROXY STATEMENT
THE BEARD COMPANY
<PAGE>
THE BEARD COMPANY
Enterprise Plaza, Suite 320
5600 North May Avenue
Oklahoma City, Oklahoma 73112
April 30, 1998
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, June
4, 1998. 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 election of
directors, we will discuss fiscal year 1997 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.
W. M. Beard Herb Mee, Jr.
Chairman President
<PAGE>
THE BEARD COMPANY
Enterprise Plaza, Suite 320
5600 North May Avenue
Oklahoma City, Oklahoma 73112
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
June 4, 1998
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 June 4, 1998 at 10:00 a.m. in the
Board Room of Bank One, in the Bank One Tower, 100 North Broadway, Oklahoma
City, Oklahoma, for the purpose of considering and voting upon the following
matters:
(1) The election of two (2) directors of the Company for three year terms.
(2) Amendment to The Beard Company 1993 Stock Option Plan.
(3) The approval of the appointment of KPMG Peat Marwick LLP as independent
auditors of the Company for fiscal year 1998.
(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 April 17, 1998 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.
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 April 30, 1998
<PAGE>
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 June 4, 1998.
It is first being mailed to stockholders on or about April 30, 1998. 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, 1997, IS INCLUDED HEREWITH.
VOTING SECURITIES OUTSTANDING
As of April 17, 1998, 2,528,239 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 is entitled to one vote for each full
share of common stock into which it would have been convertible had it been
convertible on the record date (5.129425 shares). Accordingly, a total of
2,671,031 votes are entitled to be cast at the meeting, and the holders of the
preferred stock are entitled to cast 5.35% of such votes. The preferred
stockholders also own common stock entitling them to cast 11.68% of the vote.
Only holders of common stock and preferred stock of record at the close of
business on April 17, 1998 will be entitled to vote at the meeting.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth the name and address of each shareholder
who is known to the Company to own beneficially more than 5% of Beard's
outstanding common stock or preferred stock, the number of shares beneficially
owned by each and the percentage of outstanding common or preferred stock so
owned as of March 31, 1998. Unless otherwise noted, the person named has sole
voting and investment powers over the shares reflected opposite his name.
<TABLE>
<CAPTION>
Number of Number of Combined
Preferred Common Common and
Shares and Shares and Preferred
Nature of Percent Nature of Percent Voting
Name and Address Ownership of Class Ownership of Class Percentage
---------------- ---------- -------- ----------- -------- ------------
<S> <C> <C> <C> <C> <C>
John Hancock Mutual Life
Insurance Company ("Hancock") 27,838 100.00% 312,040<F1><F2> 11.68%<F2> 17.03%
57th Floor
200 Clarendon Street
Boston, Massachusetts 02117
The Beard Group 401(k) Plan
("Plan") (c/o Bank One Oklahoma,
N.A., Trustee None 0.00% 311,757<F3> 12.33% 11.67%
100 N. Broadway Avenue
Oklahoma City, OK 73102
W. M. Beard None 0.00% 833,324<F4> 32.48% 31.20%
Enterprise Plaza, Suite 320
5600 North May Avenue
Oklahoma City, OK 73112
Lu Beard None 0.00% 240,198<F5> 9.50% 8.99%
Enterprise Plaza, Suite 320
5600 North May Avenue
Oklahoma City, OK 73112
Herb Mee, Jr. None 0.00% 236,339<F6> 9.21% 8.85%
Enterprise Plaza, Suite 320
5600 North May Avenue
Oklahoma City, OK 73112
- - ----------------
<FN>
<F1> Shares are held by Hancock on behalf of itself and affiliated
entities.
<F2> Excludes the Beard preferred shares which will collectively become
convertible into 5.35% of the outstanding common stock (after
conversion) on January 1, 2003 to the extent not previously redeemed or
converted.
<F3> Shares held by the Plan are owned by the participating
employees, each of whom has sole voting and investment power over the
shares held in his or her account. Includes 101,819.76 and 122,392.33
shares held for the accounts of Messrs. Beard and Mee, respectively.
<F4> Includes 368,685 shares owned directly by Mr. Beard as to
which he has sole voting and investment power; 238,519 shares (or
9.43%) owned by the William M. Beard and Lu Beard 1988 Charitable
Unitrust (the "1988 Unitrust"), of which Mr. Beard and his wife, Lu
Beard, serve as co-trustees and share voting and investment power;
16,666 shares each held by the William M. Beard Irrevocable Trust "A,"
the William M. Beard Irrevocable Trust "B," and 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; 6,738 shares each held by the John Mason Beard II
Trust, the Joseph G. Beard Trust and the Rebecca Banner Beard Trust as
to which Mr. Beard is the trustee and has sole voting and investment
power; 3,256 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; 101,819.76 shares held by The Beard Group
401(k) Trust (the "401(k) Trust") for the account of Mr. Beard as to
which he has sole voting and investment power; and 13,333 shares held
by B & M Limited, a general partnership, of which Mr. Beard is a
general partner and shares voting and investment power with Mr. Mee.
Also includes 37,500 shares subject to presently exercisable options.
Excludes 1,679 shares owned by his wife as to which Mr. Beard disclaims
beneficial ownership. Also excludes 41,226 shares held by four
separate trusts for the benefit of Mr. Beard's children as to which Mr.
Beard disclaims beneficial ownership.
<F5> Represents 238,519 shares owned by the 1988 Unitrust, of
which Mr. Beard and Mrs. Beard serve as co-trustees and share voting
and investment power. Also includes 1,679 shares owned directly by
Mrs. Beard as to which she has sole voting and investment power.
<F6> Includes 6,450 shares owned directly by Mr. Mee as to which
he has sole voting and investment power; 6,666 shares held by Mee
Investments, Inc., as to which Mr. Mee has sole voting and investment
power; 13,333 shares held by B & M Limited as to which Mr. Mee shares
voting and investment power with Mr. Beard but as to which Mr. Mee has
no present economic interest; and 122,392.33 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 16,666 shares each 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
37,500 shares subject to presently exercisable options. Excludes 45
shares owned by his wife, Marlene W. Mee, as to which Mr. Mee disclaims
beneficial ownership.
<F7> All percentages reflected above exclude 303,890 common shares
held by the Company as treasury stock.
</FN>
</TABLE>
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth certain information regarding the
number of shares of Beard common stock beneficially owned by each
director and nominee, the Chief Executive Officer ("CEO"), each named
executive officer and by all directors and executive officers as a
group and the percentage of outstanding common stock so owned as of
March 31, 1998.
Amount and
Nature of
Beneficial Percent
Name and Address Ownership of Class
---------------- ----------- --------
W. M. Beard 833,324(1) 32.48%
Herb Mee, Jr. 236,339(2) 9.21%
Allan R. Hallock 41,158(3) 1.63%
Michael E. Carr 28,643 1.13%
Ford C. Price 18,665(4) ---(6)
Harlon E. Martin, Jr. 1,000 ---(6)
All directors and executive
officers as a group (8 in number) 1,101,054(5) 42.24%
_________
(1) See footnote (4) to table "Security Ownership of Certain Beneficial
Owners."
(2) See footnote (6) to table "Security Ownership of Certain Beneficial
Owners."
(3) Includes 2,500 shares owned directly by Mr. Hallock as to which he has
sole voting and investment power and 38,658 shares owned by A. R.
Hallock & Co., a partnership, as to which Mr. Hallock shares voting
and investment power with his wife.
(4) Includes 10,399 shares owned directly by Mr. Price and 3,266 shares
held by an IRA for the benefit of Mr. Price, as to all of which he
has sole voting and investment power, and 5,000 shares held by the
FCP Trust as to which he has shared voting and investment power.
(5) Includes 752,290 shares as to which directors and executive officers
have sole voting and investment power and 348,764 shares as to which
they share voting and investment power with others.
(6) Reflects ownership of less than one (1) percent.
(7) See footnote (7) to table "Security Ownership of Certain Beneficial
Owners."
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 three-year terms expiring at the date of the Annual
Meeting of Stockholders in 2001. The terms of Messrs. Harlon E. Martin,
Jr. and Herb Mee, Jr. expire this year, and they will be the two
nominees for terms expiring in 2001. 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 will continue to
serve in such capacity until his successor has been elected.
It is the intention of the persons named in the accompanying form
of Proxy to vote Proxies for the election of the two 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. Election of each director
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
four directors whose terms do not expire this year is as follows:
Nominees for Election for Terms of Three Years Expiring in 2001:
Nominee (age), year first became a Director of Beard or Beard Oil:
Harlon E. Martin, Jr. (50), 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. Mr. Martin is a certified public
accountant and a licensed securities principal with the NASD. However,
Mr. Martin's license with the NASD is now inactive as a result of
becoming a board member of a public corporation.
Herb Mee, Jr. (69), 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.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE SHAREHOLDERS VOTE FOR THE
ABOVE NOMINEES.
Director to Continue in Office with Term Expiring in 1999:
W. M. Beard (69), 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.
Directors to Continue in Office with Terms Expiring in 2000:
Allan R. Hallock (68), 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 (60), 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.
Director Elected to Represent the Class of Preferred Stockholders
Michael E. Carr (60), 1994
MICHAEL E. CARR was elected in February 1994 by the preferred
stockholders to fill the directorship vacancy which they are entitled
to fill. He served as Senior Vice President of Beard Oil from December
1986 until October 1993. He served as President of Sensor Oil & Gas,
Inc. ("Sensor") from October 1993 until August 1996. He presently
serves as President of Mica Energy Corp.
Mr. Carr will serve as a director of the Company until his
successor has been elected and has qualified in such office or until
such time as all of the preferred stock has been converted or redeemed.
There is no family relationship between any of the directors or
executive officers of the Company.
Committees of the Board of Directors
The Company has standing Audit and Compensation Committees. Mr.
Price serves as chairman and Messrs. Hallock, Martin and Carr serve as
members of the Audit Committee which met twice in 1997. Mr. Hallock
serves as chairman and Messrs. Martin, Price and Carr serve as members
of the Compensation Committee which also met twice in 1997. During
1997, the Board of Directors met seven times. 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 1997.
The principal functions of the Company's Audit Committee are: (1)
to annually review the selection of independent auditors and to
recommend for Board approval and stockholder ratification the
appointment of independent auditors; (2) to consult with the
independent auditors of the Company with regard to the plan of audit;
(3) to review the results of the annual audit and request additional
reviews and audit procedures if necessary; and (4) to review and
approve internal audit objectives, accounting and control policies and
procedures to determine that a reliable system of internal controls is
functioning.
The principal functions of the Company's Compensation Committee
are: (1) to review the objectives, structure, cost and administration
of the Company's major compensation and benefit policies and programs;
(2) to review and make recommendations concerning remuneration
arrangements for senior management, including the specific relationship
of corporate performance to executive compensation; (3) to review the
Company's performance versus the CEO's compensation and establish
measures of the Company's performance upon which the CEO's compensation
is based; and (4) to administer 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.
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:
Jack A. Martine, age 48, 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 in a similar capacity. Mr. Martine
is a certified public accountant.
Rebecca G. Witcher, age 38, 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.
Compliance with SEC Reporting Requirements
Section 16 of the Securities Exchange Act of 1934 requires
directors and executive officers of the Company to file reports with
the Securities and Exchange Commission reflecting transactions by such
persons in the Company's common stock. During 1997, to the knowledge
of the Company, or based on information provided by such persons to the
Company, all executive officers and directors of the Company subject to
such filing requirements fully complied with such requirements.
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 $100,000, for any of the fiscal
years ended December 31, 1997, 1996, and 1995:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long Term
Compensation
--------------------------------
Annual Compensation Awards Payouts
-------------------------------------------------- ------ -------
(a) (b) (c) (d) (g) (h) (i)
Securities
Underlying All Other
Options/ LTIP Compen-
Name and Salary<F1> Bonus<F2> SAR's Payouts sation<F3>
Principal Position Year ($) ($) (#) ($) ($)
<S> <C> <C> <C> <C> <C> <C>
W. M. Beard 1997 99,000<F4> 18,750<F4><F5> -0- 41,450<F4> 5,501<F4>
Chairman & CEO 1996 99,000<F4> -0-<F4> -0- 35,150<F4> 5,031<F4>
1995 129,250<F4> -0-<F4> -0- 4,850<F4> 6,462<F4>
Herb Mee, Jr. 1997 132,000 25,000<F5> -0- -0- 7,285
President & CFO 1996 132,000 1,150 -0- -0- 6,658
1995 132,000 1,100 -0- -0- 6,655
C. H. Collen, Jr. 1997 180,769 -0-<F6> -0- -0- 7,174
President - 1996 100,000 63,216<F6> -0- -0- 5,688
Carbonic Reserves 1995 103,134 13,883<F6> -0- -0- 5,179
- - --------------
<FN>
<F1> Amounts shown include cash compensation earned and received by
executive officers as well as amounts earned but deferred pursuant
to the Company's 401(k) Plan at the election of those officers.
<F2> Bonus for length of service with Beard or Beard Oil.
<F3> Consists of the Company's contribution to the Company's 401(k) Plan.
<F4> In 1997 Mr. Beard deferred one-fourth ($33,000) of his salary and all
($2,200) of his regular bonus for the year; in 1996 Mr. Beard
deferred one-fourth ($33,000) of his salary and all ($2,150) of his
regular bonus for the year; in 1995 he deferred one-fourth ($2,750)
of his December salary and all ($2,100) of his regular bonus for the
year pursuant to the Company's Deferred Stock Compensation Plan.
<F5> In 1997 Messrs. Beard and Mee each received a special bonus of $25,000,
of which $12,500 was paid in 1997 and $12,500 in 1998. Mr. Beard
deferred one-fourth of such bonus in both 1997 ($3,125) and 1998
($3,125).
<F6> Mr. Collen earned $80,769 in income. Additionally, Mr Collen had an
employment agreement with Carbonics under the terms of which Collen
was entitled to receive payment of one year's salary upon the sale
of substantially of the assets of Carbonics. In satisfaction of all
contractual rights with the Company and Carbonics, Collen received
$100,000 following the closing of the asset sale in October, 1997.
Mr. Collen also earned bonuses totaling $63,216 in 1996 of which
$500 was paid in 1996 and $62,716 in 1997. He earned bonuses
totaling $13,883 in 1995, of which $633 was paid in 1995 and $13,250
in 1996.
</FN>
</TABLE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
The following table provides information, with respect to the
named executive officers, concerning the exercise of options during the
Company's last fiscal year and unexercised options held as of the end
of the last fiscal year:
<TABLE>
<CAPTION>
(a) (b) (c) (d) (e)
Number of
Securities Value of
Underlying Unexercised
Unexercised In-the-Money
Options at Options at
FY-End (#) FY-End ($)
Shares Acquired Value Exercisable/ Exercisable/
Name on Exercise (#) Realized ($) Unexercisable Unexercisable
<S> <C> <C> <C> <C>
W. M. Beard -0- $ -0- 37,500/12,500 $120,703/$40,234
Herb Mee, Jr. -0- $ -0- 37,500/12,500 $121,875/$40,625
</TABLE>
Compensation of Directors
Mr. Carr received compensation of $8,600.00 for services rendered
during 1997 as a director of Beard. Messrs. Hallock, Price and Martin
received $11,948, $11,276 and $1,500, respectively, of deferred fees under
the Company's Deferred Stock Compensation Plan (the "Plan"). Currently, the
non-management directors each receive $500 per month for their services, and
also receive the following fees for directors' meetings which they attend:
annual and 1-1/2 day meetings -- $750; regular meeting -- $500; telephone
meeting -- $100 to $300 depending upon length of meeting. The non-
management directors also receive a small year-end bonus depending upon
their length of service as directors of Beard and Beard Oil. Accordingly,
Messrs. Hallock, Martin, Price, and Carr received $450, $50, $450 and $150,
respectively, in 1997. All of the directors except Mr. Carr and Mr. Martin
deferred such bonuses pursuant to the Plan. Beard also provides 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. None of the directors received additional
compensation in 1997 for their committee participation.
The two eligible non-management directors (Messrs. Hallock and Price)
were each granted 5,000 phantom stock units (the "Units") under the
Company's 1994 Phantom Stock Units Plan on November 1, 1994. Mr. Carr was
awarded 5,000 Units when he became eligible on February 22, 1995. All of
these awards were based on an award price of $2.00* per share and vest over
a five year period at the rate of 20% per year. Messrs. Hallock, Martin,
Price and Carr were each granted 5,000 Units on October 23, 1997 at an award
price of $5.00 per share, the market value of the stock on such date. The
1997 awards vest over a four year period at the rate of 25% per year. Each
participant has the option of receiving payment for his award: (i) as it
vests; (ii) at the conclusion of the award period; or (iii) 50% as it vests,
with the other 50% deferred to the conclusion of the award period. Payments
are based upon appreciation in the market value of the Company's common
stock during the appropriate time interval selected. Mr. Carr received a
cash payment of $3,046 in 1998 for 1,000 Units which vested on February 22,
1998 and $3,808 in 1997 for 2,000 Units which vested on February 22, 1997.
- - ----------------
*The market value on November 1, 1994 was $1.875 per share; on
February 22, 1995 it was $1.75 per share.
Compensation Committee Interlocks and Insider Participation
Michael E. Carr, who has been elected by the preferred shareholders to
serve as their representative on the Board of Directors, was elected to
serve as a member of the Compensation Committee on April 26, 1994. Mr. Carr
served as Senior Vice President of Beard Oil from December 1986 until
October 1993.
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 chief executive officer ("CEO") and the president ("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. However, the Committee has noted that, through March 31, 1997,
the Company's per share stock price has grown at a compound rate of over 20%
since the Company's common shares commenced trading on October 27, 1993,
following the major restructure (the "1993 Restructure") which occurred on
October 26, 1993.
No executive officer's compensation for 1997 exceeded the $1 million
deduction limit under Section 162(m) of the Internal Revenue Code, as
amended, and the same result is anticipated for 1998. The Committee does
not anticipate that any executive officer's compensation would approach the
threshold level in the foreseeable future.
BASE SALARIES. Because of the extremely poor financial results
achieved by the Company during 1990-1992, no salary increases have been
granted to present executive officers since September of 1990 (except for a
performance increase granted to the Secretary-Treasurer in 1997).
Management totally restructured the Company in 1993-1996. As a result there
was a significant improvement in financial results which restored the
Company to profitability in 1993 and 1994. 1995 and 1996 were not
profitable. 1997 was highly profitable due to the sale of substantially all
of the assets of the Company's largest subsidiary, Carbonic Reserves
("Carbonics"). Despite the progress that has been made during the past four
years, no increases have been made in the base salaries of the CEO or CFO
since 1990 and no changes are currently under consideration.
CASH BONUSES. All employees 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 present executive officers, except for a special bonus paid to
all employees of the parent company for their efforts related to the
Carbonics sale. Such bonus included $25,000 each paid to Messrs. Beard and
Mee, and $17,175 paid to other executive officers of the Company.
BEARD GROUP 401(K) PLAN. One of the investment options available under
the Company's 401(k) Plan (the "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"). Because
the bank trustee of this portion of the 401(k) Plan was having difficulty
purchasing sufficient shares of such stock in the open market, the 401(k)
Plan was amended in September of 1995 to permit the bank to purchase
authorized shares of Beard common stock directly from the Company, and the
Company reserved 150,000 shares of its authorized but unissued common stock
for such purpose. The Committee felt that this step was extremely important
because it has enabled key management members to significantly increase
their ownership in the Company, further aligning their interests with those
of the shareholders. Since the amendment was approved, the bank trustee has
purchased 88,300 shares from the Company, with more than 75% of such shares
being purchased for the accounts of executive officers of the Company.
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.
The Committee and the Board have placed particular emphasis upon stock
options in structuring the compensation package for senior management, in
the belief that an aggressive program to acquire profitable companies is
essential in order to maximize shareholder value during the next several
years and enable the Company to utilize as much as possible of its
substantial net operating loss carryforwards. Both management and the
Committee fully recognize this goal and are desirous that the interests of
senior management and the Company's shareholders be as closely aligned as
possible.
CEO Compensation
W. M. Beard has been Chairman and CEO of the Company and its
predecessors since 1974. Mr. Beard's 1997 base salary was $132,000, and has
not increased since 1990. He received $25,000 (25% of which he elected to
defer) as part of a special 1997 bonus paid to all employees of the parent
company for their efforts related to the Carbonics sale. Moreover, he
elected to defer one-fourth of his salary and all of his year-end bonus
beginning in December 1995 pursuant to the Company's Deferred Stock
Compensation Plan. 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 is expected to play in the Company's
future acquisition efforts. Despite the Company's earnings performance, the
granting of any additional stock options to Mr. Beard or other key
management members was not considered by the Committee in 1997, with the
exception of a small award to one executive officer due to a promotion and
increased responsibilities. However, the Committee will consider the
awarding of additional options to key management members in 1998 and
subsequent years, depending upon the Company's profitability and the outlook
for its various businesses.
COMPENSATION COMMITTEE
Allan R. Hallock, Chairman
Harlon E. Martin, Jr.
Ford C. Price
Michael E. Carr
<PAGE>
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 American Stock Exchange Market Value
Index and the SIC Code Index of the Water, Sewer, Pipeline and Power
Line Construction Industry compiled by Media General Financial
Services for the period which commenced on October 27, 1993 (date of
initial trading of the Company's shares) and ended on December 31,
1997. The October 27 date was used since, as a result of the 1993
Restructure, The Beard Company's shares were initially distributed to
shareholders as of that date and commenced trading on the Exchange on
October 27, 1993. The performance graph assumes that the value of the
investment in The Beard Company stock and each index was $100 on
October 27, 1993 and that any dividends were reinvested. The Beard
Company has never paid dividends on its common stock.
<TABLE>
COMPARE 5-YEAR CUMULATIVE TOTAL RETURN
AMONG THE BEARD COMPANY,
AMEX MARKET INDEX AND SIC CODE INDEX
Assumes $100 Invested on October 27, 1993
Assumes Dividend Reinvested
Fiscal Year Ending December 31, 1997
<CAPTION>
October December December December December December
1993 1993 1994 1995 1996 1997
<S> <C> <C> <C> <C> <C> <C>
The Beard Company 100.00 87.50 81.25 106.25 143.75 262.50
Water, Sewer, Pipeline and
Pipeline Construction
Industry Index 100.00 154.37 112.45 144.14 215.46 282.46
AMEX Market Index 100.00 102.50 90.55 116.71 123.16 148.19
</TABLE>
The Industrial Index chosen consists of the following companies:
Amerilink Corp., BFC Construction Corp., Dycom Industries Inc., ETS
International Inc., Euroweb Internat Corp., Grupo Tribasa as De CV,
Insituform Technols Cl A, Kimmins Environmental, Mastec Inc., McDermott
J. Ray S. A., MYR Group Inc., Specialty Teleconstruct, Utilx Corp.,
Westower Corp., and The Beard Company.
AMENDMENT TO THE BEARD COMPANY
1993 STOCK OPTION PLAN
(Proposal No. 2)
At a special meeting of the shareholders held on August 27, 1993,
the shareholders authorized The Beard Company 1993 Stock Option Plan
(the "Plan") which is intended to provide a means to attract, retain
and motivate highly qualified persons to serve as key management,
directors or key professional employees and promote ownership of a
greater proprietary interest in the Company, thereby aligning their
interests more closely with the interests of shareholders of the
Company.
Upon the recommendation of management, the Board of Directors of
the Company voted on Apri1 10, 1998, subject to stockholder approval,
to amend the Plan to increase the number of shares of common stock
authorized for issuance thereunder from 175,000 to 275,000. Since the
Plan was originally adopted options to purchase 162,500 shares have
been granted, 32,500 options have been exercised and 5,000 options have
been cancelled, leaving 17,500 shares presently available for issuance
under the Plan. Management does not believe the remaining shares are
sufficient to meet the Company's needs. The Board concurs with
management's recommendation, and believes that the proposed increase in
the number of shares available for issuance under the Plan will enable
the Company to continue its policy of motivating and retaining key
management, directors and key employees by giving them the opportunity
to participate in the future growth of the Company.
A copy of the Plan, as proposed to be amended, 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
Plan. Capitalized terms used below not otherwise defined herein shall
have the meaning ascribed to them in the Plan.
The Plan permits the Compensation Committee (the "Committee") to
grant either non-qualified stock options ("NQO Options") or incentive
stock options ("ISO Options") under the features provided for by the
Internal Revenue Code of 1986, as amended (the "Code"). The Plan is
administered by the Committee, which is composed of not less than two
members of the Board of Directors. No member of the Committee is
eligible to receive or hold options under the Plan while he is a
member, and no person may become a member who has been eligible to
receive options under the Plan or under any other stock option purchase
or similar plan of the Company during the year preceding his
appointment. The Committee is authorized and has complete discretion
to formulate policies and to establish rules and regulations for the
administration of the Plan and to make determinations under the
interpretations of the Plan and the NQO Options and ISO Options granted
thereunder.
Under the terms of the Plan, either NQO Options or ISO Options may
be granted any time prior to midnight, August 26, 2003, for the
purchase of shares of Beard Common Stock from the shares which have
been set aside for such purpose. The Committee may grant either NQO
Options or ISO Options for such number of shares to key employees of
the Company and its subsidiaries, and only NQO Options to directors of
the Company, as the Committee from time to time shall determine and
designate. Shares involved in the unexercised portion of any
terminated or lapsed NQO Options or ISO Options may again be subject to
option.
The Committee is vested with discretion in determining the terms,
restrictions and conditions of each NQO Option and ISO Option. The
option price of the Beard Common Stock to be issued under the Plan with
respect to NQO Options shall be determined by the Committee for options
granted to all participants, but in no event shall such option price be
less than 75% of the fair market value of a share of the Beard Common
Stock on the date of the grant or the par value of the Common Stock.
The option price for ISO Options will be as determined by the
Committee, provided such price may not be less than the greater of (a)
100% of the fair market value of the Beard Common Stock on the date of
grant, or 110% in the case of the grantee who holds more than 10% of
the combined voting power of the Company's outstanding securities (a
"principal shareholder") or (b) the par value of the shares subject to
the ISO Option. The fair market value of the shares of Beard Common
Stock will be determined by averaging the highest and lowest sales
price on the date of the grant as reported by the American Stock
Exchange or such other primary exchange upon which the stock is listed.
With respect to ISO Options, the aggregate fair market value
(determined at the time the ISO Option is granted) of the stock for
which any participant may first have the right to acquire pursuant to
the exercise of ISO Options in any calendar year (under all incentive
stock option plans of the Company qualified under the Code) may not
exceed $100,000.
Upon the exercise of an NQO Option or an ISO Option, the price
must be paid in full, in cash or in common stock of the Company or a
combination of cash and common stock of the Company. In addition, the
Plan has a "cashless exercise" feature which permits a participant to
exercise an NQO Option or ISO Option by delivering to the Company an
irrevocable instruction to deliver the stock certificate issued in the
name of the participant representing the shares subject to the option
to a broker authorized to trade in the Beard Common Stock. The broker
may then sell the stock or a portion thereof and deliver to the Company
the portion of the sales proceeds to cover the option price and the
withholding taxes, if any. As an alternative means of facilitating the
exercise of an option, the broker may arrange for a loan to the
participant upon receipt of the exercise notice in advance of receipt
of the actual stock certificate.
In the case of termination of employment with the Company and to
the extent otherwise exercisable, options may be exercised at any time
within three months after the occurrence of such event, or within
twelve months if employment terminated as a result of disability. The
personal representative of a decreased participant shall have twelve
months from the date of death (but not beyond the option expiration
date) to exercise the exercisable portion of such option to the extent
that it has accrued on the date of death. With the consent of the
Committee, any then unexercisable options may be exercised in the event
of the retirement, disability or death of the participant. No option
may be exercisable more than ten years after the date of the grant (or
five years in the case of an ISO Option granted to a principal
shareholder). Subject to such conditions, options will become
exercisable by the optionees in such amounts and at such times as shall
be determined by the Committee in each individual grant. Options are
not transferable except by will or by the laws of descent and
distribution.
It is impossible at this time to determine whom among the
eligible employees and directors may be selected to receive NQO Options
or ISO Options under the Plan or the number of shares of the Beard
Common Stock which may be optioned to any employee, nor can the Company
determine the amount of options which would have been received by any
employee or director during the last fiscal year had the Plan been in
effect. It is expected that these determinations will be made on the
basis of the employee's or director's responsibilities and present and
potential contributions to the success of the Company as indicated by
the Committee's evaluation of the position such employee or director
occupies.
The total number of shares of the Beard Common Stock which may be
purchased through all classes of option under the Plan and the number
of shares subject to outstanding options and the related option prices
will be adjusted in the case of changes in capital structure resulting
from any recapitalization, stock split, stock dividend or similar
transaction.
In the event of a "change of control" of the Company as defined
in the Plan, all ISO Options and NQO Options will become automatically
fully vested and immediately exercisable, with such acceleration to
occur without the requirement of any further act by the Company or
the participant.
The Plan terminates as of midnight, August 26, 2003, but prior
thereto may be altered, changed, modified, amended or terminated by
written amendment approved by the Board of Directors. However, no
action of the Board of Directors, may, without the approval of the
shareholders, increase the total amount of Beard Common Stock which may
be purchased under options granted under the Plan; amend or alter the
option price; materially increase the benefit accruing to participants
under the Plan; materially modify the requirements as to eligibility
for participation in the Plan; or amend the Plan in any manner, which
would impair the applicability of Rule 16b-3 as promulgated under the
Securities Exchange Act of 1934 to the Plan. No amendment, modification
or termination of the Plan shall in any manner adversely affect any
option theretofore granted under the Plan without the consent of the
optionee, except as described in the Plan.
The approval and adoption of this proposed amendment requires the
affirmative vote by 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
AMEND THE BEARD COMPANY 1993 STOCK OPTION PLAN TO INCREASE THE NUMBER
OF SHARES AUTHORIZED FOR ISSUANCE THEREUNDER FROM 175,000 TO 275,000.
APPROVAL OF INDEPENDENT PUBLIC ACCOUNTANTS
(Proposal No. 3)
KPMG Peat Marwick LLP ("KPMG"), Independent Certified Public
Accountants, have been independent auditors of the Company and Beard
Oil since its incorporation in 1974. Although not formally required,
stockholders' approval 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 KPMG 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
APPROVE THE APPOINTMENT OF KPMG.
In the event the appointment of KPMG should not be approved by the
stockholders, the Board of Directors 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 approval of (1) the
amendment to the 1993 Stock Option Plan and (2) the appointment of KPMG
as independent auditors of the Company for 1998. 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.
CERTAIN TRANSACTIONS
In September 1995, William M. Beard and Lu Beard, as trustees of
the William M. Beard and Lu Beard 1988 Charitable Unitrust (the
"Unitrust") agreed to loan the Company up to $250,000 under a revolving
loan arrangement for a period of one year. In March 1996, the Unitrust
extended the maturity of such note to October 1997. In October 1996
the credit line was increased to $500,000 and the maturity was extended
to March 1998. In February 1997 the maturity was extended to February
1999. In March 1997 the amount of the credit line was increased to
$1,000,000. All of the loans under the credit line were unsecured and
bore interest at the rate of 10% per annum. Various advances and
repayments were made under such arrangement. All loans were paid in
full on October 14, 1997, and the line of credit was retired on such
date.
In December 1995 the William M. Beard Irrevocable Trust "B" and
the William M. Beard Irrevocable Trust "C" agreed to loan $130,000 and
$95,000, respectively, to the Company for a period of one year. In
March 1996, the Trusts extended the maturity of such notes to October
1997. In February 1997 the maturity was extended to February 1999 and
the principal amount of the loans were increased to $140,000 and
$105,000, respectively. The loans, which were unsecured and bore
interest at the rate of 10% per annum, were paid in full on October 14,
1997.
In February 1997 the Unitrust provided a Guaranty to support a
$164,000 irrevocable standby letter of credit issued by a bank to an
insurance company to support three performance bonds totaling $821,000
in connection with three water main, water line and water distributions
system jobs to be performed by a subsidiary of the Company for the City
of Wichita, Kansas. The Company indemnified and held the Unitrust
harmless for providing such Guaranty and also agreed to pay the Trust
10% per annum for furnishing the collateral. The Unitrust was released
of its Guaranty in February 1998.
STOCKHOLDER PROPOSALS
The Board of Directors anticipates that next year's annual meeting
will be held during the first week of June 1999. Any proposals of
stockholders intended to be presented at the 1999 Annual Meeting of
Stockholders must be received by the Company not later than December
31, 1998 in order for the proposals to be included in the proxy
statement and proxy card relating to such meeting. 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
April 30, 1998
<PAGE>
AMENDMENT NO. ONE
TO
THE BEARD COMPANY
1993 STOCK OPTION PLAN
Adopted: August 27, 1993
Amended: June 4, 1998
<PAGE>
AMENDMENT NO. ONE
TO
THE BEARD COMPANY
1993 STOCK OPTION PLAN
PAGE
ARTICLE I General Provisions
1.1 Purpose
1.2 General
1.3 Administration of the Plan
1.4 Shares Subject to Plan
1.5 Participation in the Plan
1.6 Determination of Fair Market
Value
1.7 Grants of Options Under Stock
Option Agreement
1.8 Amendment and Termination of the
Plan
1.9 Effective Date
1.10 Securities Law Requirements
1.11 Separate Certificates
1.12 Payment for Stock
1.13 Stock Options and ISO
Options Granted Separately
1.14 Use of Proceeds
1.15 Non-Transferability of Options
1.16 Additional Documents on Death
of Participant
1.17 Changes in Employment
1.18 Shareholder Rights
1.19 Adjustments Upon Changes in
Capitalization
1.20 Payment of Withholding Taxes
1.21 Assumption of Outstanding
Options
1.22 Retirement and Disability
ARTICLE II Stock Options
2.1 General Terms
2.2 Grant and Terms for Stock Options
ARTICLE III ISO Options
3.1 General Terms
3.2 Grant and Terms of ISO Options
ARTICLE IV Acceleration of Options on Change of
Control
ARTICLE V Options Not Qualifying as Incentive Stock
Options
<PAGE>
AMENDMENT NO. ONE
TO
THE BEARD COMPANY
1993 STOCK OPTION PLAN
ARTICLE I
GENERAL PROVISIONS
1.1 PURPOSE. The purpose of THE BEARD COMPANY 1993 STOCK OPTION PLAN, as
amended (the "Plan"), shall be to attract, retain and motivate key management,
directors or key professional employees (the "Participants") of The Beard
Company (the "Company") and subsidiaries by way of granting (i) nonqualified
stock options ("Stock Options") and (ii) incentive stock options ("ISO
Options"). For purposes of this Plan, Stock Options and ISO Options are
sometimes collectively herein called "Options." The ISO Options to be granted
under the Plan are intended to be qualified pursuant to Section 422 of the
Internal Revenue Code of 1986, as amended (the "Code"); and, the Stock Options
to be granted are intended to be "nonqualified stock options" as described in
Sections 83 and 421 of the Code. Further, under the Plan, the terms "parent"
and "subsidiary" shall have the same meaning as set forth in Subsections (e),
(f) and (g) of Section 424 of the Code unless the context herein clearly
indicates to the contrary.
1.2 GENERAL. The terms and provisions of this Article I shall be applicable
to Stock Options and ISO Options unless the context herein clearly indicates to
the contrary.
1.3 ADMINISTRATION OF THE PLAN. The Plan shall be administered by the
Compensation and Stock Option Committee ("Committee") appointed by the Board of
Directors ("Board") of the Company and consisting of not less than two members
from the Board. The members of the Committee shall serve at the pleasure of
the Board and such members shall be ineligible to participate under the Plan
during their service as members of the Committee. Committee membership shall
be limited to only those members of the Board who have not, during the year
preceding their appointment, been granted or awarded any "equity securities"
(as such term is defined in Rule 16a-1(d) promulgated under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") (or any successor rule)
pursuant to the Plan or any other plan of the Company or any of its affiliates
except for participation in plans permitted by Rule 16a-3(c)(2)(i) promulgated
under the Exchange Act (or any successor rule). The Committee shall have the
power where consistent with the general purpose and intent of the Plan to (i)
modify the requirements of the Plan to conform with the law or to meet special
circumstances not anticipated or covered in the Plan, (ii) suspend or
discontinue the Plan, (iii) establish policies and (iv) adopt rules and
regulations and prescribe forms for carrying out the purposes and provisions of
the Plan including the form of any "stock option agreements" ("Stock Option
Agreements"). Unless otherwise provided in the Plan, the Committee shall have
the authority to interpret and construe the Plan, and determine all questions
arising under the Plan and any agreement made pursuant to the Plan. Any
interpretation, decision or determination made by the Committee shall be final,
binding and conclusive. A majority of the Committee shall constitute a quorum,
and an act of the majority of the members present at any meeting at which a
quorum is present shall be the act of the Committee.
1.4 SHARES SUBJECT TO THE PLAN. Shares of stock ("Stock") covered by Stock
Options and ISO Options shall consist of Two Hundred Seventy Five Thousand
(275,000) shares of the voting common stock, par value $.001, of the Company.
Either authorized and unissued shares or treasury shares may be delivered
pursuant to the Plan. If any Option for shares of Stock granted to a
Participant lapses, or is otherwise terminated, the Committee may grant Stock
Options or ISO Options for such shares of Stock to other Participants.
1.5 PARTICIPATION IN THE PLAN. The Committee shall determine from time to
time those Participants who are to be granted Stock Options and ISO Options and
the number of shares of Stock covered thereby. Provided, however, those
directors who are not key management employees of the Company, its parent or
subsidiaries of the Company shall only be eligible to be granted Stock Options
under this Plan.
1.6 DETERMINATION OF FAIR MARKET VALUE. As used in the Plan, "fair market
value" shall mean the average of the highest and lowest sales prices of the
common stock of the Company as reported by the American Stock Exchange, or
other primary exchange upon which the stock is listed, as of the granting date,
exercise date, or other relevant date.
1.7 GRANTS OF OPTIONS UNDER STOCK OPTION AGREEMENT. Each stock Option or
ISO Option granted under this Plan shall be evidenced by the minutes of a
meeting of the Committee or by the written consent of the Committee and by a
written Stock Option Agreement effective on the date of grant and executed by
the Company and the Participant. Each Option granted hereunder shall contain
such terms, restrictions and conditions as the Committee may determine, which
terms, restrictions and conditions may or may not be the same in each case.
1.8 AMENDMENT AND TERMINATION OF THE PLAN. The Plan shall terminate at
midnight, August 26, 2003, but prior thereto may be altered, changed, modified,
amended or terminated by written amendment approved by the Board. Provided,
that no action of the Board may, without the approval of the holders of a
majority of the securities of the Company entitled to vote thereon, increase
the aggregate number of shares of Stock which may be purchased under Stock
Options or ISO Options granted under the Plan; amend or alter the Option Price
or the ISO Price, as applicable; materially increase the benefit accruing to
Participants under the Plan, materially modify the requirements as to
eligibility for participation in the Plan; or amend the Plan in any manner
which would impair the applicability of Rule 16b-3 as promulgated under the
Exchange Act (or any successor rule) to the Plan. Except as provided in this
Article I, no amendment, modification or termination of the Plan shall in any
manner adversely affect any Stock Option or ISO Option theretofore granted
under the Plan without the consent of the affected Participant.
1.9 EFFECTIVE DATE. The Plan has been approved by written consent of the
board of directors and the sole shareholder of the Company on August 27, 1993,
and is therefore effective as of August 27, 1993. Amendment No. One to the
Plan has been approved by the board of directors and, on June 4, 1998, by the
shareholders of the Company.
1.10 SECURITIES LAW REQUIREMENTS. The Company shall have no obligation to
issue any Stock hereunder unless such shares are listed on the applicable stock
exchange(s), if any, on which the Company's shares of Stock are listed at the
time and the issuance of such shares would comply with any applicable federal
or state securities laws or any other applicable law or regulations thereunder.
1.11 SEPARATE CERTIFICATES. Separate certificates representing the common
stock of the Company to be delivered to a Participant upon the exercise of any
Stock Options or ISO Options will be issued to such Participant.
1.12 PAYMENT FOR STOCK. Payment for shares of Stock purchased under this
Plan shall be made in full and in cash or by check, Stock of the Company or a
combination thereof, at the time of exercise of the Options as a condition
thereof, and no loan or advance shall be made by the Company for the purpose of
financing, in whole or in part, the purchase of Stock. In the event that
common stock of the Company is utilized as consideration for the purchase of
Stock upon the exercise of a Stock Option or an ISO Option, then, such common
stock shall be valued at the "fair market value" as defined in Section 1.6 of
the Plan. In addition to the foregoing procedure which may be available for
the exercise of any Stock Option or ISO Option, the Participant may deliver to
the Company a notice of exercise including an irrevocable instruction to the
Company to deliver the stock certificate issued in the name of the Participant
representing the shares subject to an Option to a broker authorized to trade in
the common stock of the Company. Upon receipt of such notice, the Company will
acknowledge receipt of the executed notice of exercise and forward this notice
to the broker. Upon receipt of the copy of the notice which has been
acknowledged by the Company, and without waiting for issuance of the actual
stock certificate with respect to the exercise of the Option, the broker may
sell the Stock or any portion thereof. Upon receipt of the notice to exercise
from the Company, the broker will deliver directly to the Company that portion
of the sales proceeds to cover the Option Price and any withholding taxes, if
any. Further, the broker may also facilitate a loan to the Participant upon
receipt of the notice of exercise in advance of the issuance of the actual
stock certificate as an alternative means of financing and facilitating the
exercise of any Option. For all purposes of effecting the exercise of an
Option, the date on which the Participant gives the notice of exercise to the
Company will be the date he becomes bound contractually to take and pay for the
shares of Stock underlying the Option. The Committee may also adopt such other
procedures which it desires for the payment of the purchase price upon the
exercise of a Stock Option or ISO Option which are not inconsistent with the
applicable provisions of the Code which relate to Stock Options and ISO
Options.
1.13 STOCK OPTIONS AND ISO OPTIONS GRANTED SEPARATELY. Since the Committee
is authorized to grant Stock Options and ISO Options to Participants, the
grants thereof and Stock Option Agreements relating thereto will be made
separately and totally independent of each other. Except as it relates to the
total number of shares of Stock which may be issued under the Plan, the grant
or exercise of a Stock Option shall in no manner affect the grant and exercise
of any ISO Options. Similarly, the grant and exercise of an ISO Option shall
in no manner affect the grant and exercise of any Stock Options.
1.14 USE OF PROCEEDS. The proceeds received by the Company from the sale of
Stock pursuant to the exercise of Options granted under the Plan shall be added
to the Company's general funds and used for general corporate purposes.
1.15 NON-TRANSFERABILITY OF OPTIONS. Except as otherwise herein provided,
any Option granted shall not be transferable otherwise than by will or the laws
of descent and distribution, and the Option may be exercised, during the
lifetime of the Participant, only by him. More particularly (but without
limiting the generality of the foregoing), the Option shall not be assigned,
transferred (except as provided above), pledged or hypothecated in any way
whatsoever, shall not be assignable by operation of law and shall not be
subject to execution, attachment, or similar process. Any attempted
assignment, transfer, pledge, hypothecation, or other disposition of the Option
contrary to the provisions hereof shall be null and void and without effect.
1.16 ADDITIONAL DOCUMENTS ON DEATH OF PARTICIPANT. No transfer of an Option
by the Participant by will or the laws of descent and distribution shall be
effective to bind the Company unless the Company shall have been furnished with
written notice and an authenticated copy of the will and/or such other evidence
as the Committee may deem necessary to establish the validity of the transfer
and the acceptance by the successor to the Option of the terms and conditions
of such Option.
1.17 CHANGES IN EMPLOYMENT. So long as the Participant shall continue to be
an employee of the Company or its parent or one of its subsidiaries, any Option
granted to him shall not be affected by any change of duties or position.
Nothing in the Plan or in any Stock Option Agreement which relates to the Plan
shall confer upon any Participant any right to continue in the employ of the
Company or its parent or any of its subsidiaries, or interfere in any way with
the right of the Company or its parent or any of its subsidiaries to terminate
his employment at any time.
1.18 SHAREHOLDER RIGHTS. No Participant shall have a right as a shareholder
with respect to any shares of Stock subject to an Option prior to the purchase
of such shares of Stock by exercise of the Option.
1.19 ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. The aggregate number of
shares of Stock under Stock Options and ISO Options granted under the Plan, the
Option Price and the ISO Price and the total number of shares of Stock which
may be purchased by a Participant on exercise of a Stock Option and an ISO
Option shall be appropriately adjusted or modified by the Committee to reflect
any recapitalization, stock split, merger, consolidation, reorganization,
combination, liquidation, stock dividend or similar transaction involving the
Company. Provided, any such adjustment shall be made in such a manner as to
not constitute a modification as defined in Section 424(h) of the Code.
1.20 PAYMENT OF WITHHOLDING TAXES. Except as provided in Section 1.12
herein, no exercise of any Option shall be permitted, nor shall any Stock be
issued to any Participant until the Company receives full payment for the Stock
purchased which shall include any required state and federal withholding taxes.
Further, upon the exercise of any Stock Option, the Participant may direct the
Company to retain from the shares of Stock to be issued upon exercise of the
Stock Option that number of initial shares of Stock (based on fair market
value) that would be necessary to satisfy the requirements for withholding any
amounts of taxes due upon the exercise of such Stock Option. In the event that
the Participant disposes of any Stock acquired by the exercise of an ISO Option
within the two-year period following grant, or within the one-year period
following exercise, of the ISO Option, the Company shall have the right to
require the Participant to remit to the Company an amount sufficient to satisfy
all federal, state and local withholding tax requirements.
1.21 ASSUMPTION OF OUTSTANDING OPTIONS. To the extent permitted by the then
applicable provisions of the Code, any successor to the Company succeeding to,
or assigned the business of, the Company as the result of or in connection with
a corporate merger, consolidation, combination, reorganization, liquidation or
other corporate transaction shall assume Options outstanding under the Plan or
issue new Options in place of outstanding Options under the Plan with such
assumption to be made on a fair and equivalent basis in accordance with the
applicable provisions of Section 424(a) of the Code; provided, in no event will
such assumption result in a modification of any Option as defined in Section
424(h) of the Code.
1.22 RETIREMENT AND DISABILITY. For the purpose of this Plan, "Retirement"
shall mean the voluntary termination of employment of a Participant with the
Company, its parent or any of its subsidiaries after attaining at least 55
years of age; and, "Disability" shall mean termination of employment of a
Participant after incurring a "disability" as defined in Section 22(e)(3) of
the Code.
ARTICLE II
STOCK OPTIONS
2.1 GENERAL TERMS. With respect to Stock Options granted on or after the
effective date of the Plan, the following provisions of this Article II shall
apply. The Stock Options granted under this Article II are intended to be
"nonqualified stock options" as described in Sections 83 and 421 of the Code.
2.2 GRANT AND TERMS FOR STOCK OPTIONS. Stock Options shall be granted on
the following terms and conditions. Stock Options shall only be granted to key
management employees, directors or key professional employees of the Company,
its parent or any subsidiary of the Company. No Stock Option shall be
exercisable more than ten (10) years from the date of grant. Subject to such
limitations, the Committee shall have the discretion to fix the period ("Option
Period") during which Stock Options may be exercised. At all times during the
period commencing with the date a Stock Option is granted to a Participant and
ending on the earlier of the expiration of the Option Period applicable to such
Stock Option or the date which is three (3) months prior to the date the Stock
Option is exercised by such Participant, such Participant must be an employee
or a director of either (i) the Company, (ii) a parent or a subsidiary
corporation of the Company, or (iii) a corporation or parent or a subsidiary
corporation of such corporation issuing or assuming a Stock Option in a
transaction to which Section 424(a) of the Code applies. Provided, in the case
of a Participant who has incurred a Disability, the aforesaid three (3) month
period shall mean a one (1) year period. Provided further, in the event a
Participant's employment or director's position is terminated by reason of his
death, his personal representative may exercise any unexercised Stock Option
granted to the Participant under the Plan at any time within one (1) year after
the Participant's death but in any event not after the expiration of the Option
Period applicable to such Stock Option.
(a) OPTION PRICE. The option price ("Option Price") for shares of Stock
subject to any Stock Option shall be determined by the Committee, but in no
event shall such Option Price be less than 75% of the "fair market value" of
the Stock on the date of grant. Provided further, in no event shall the Option
Price be less than the par value of the Stock.
(b) ACCELERATION OF OTHERWISE UNEXERCISABLE STOCK OPTIONS ON RETIREMENT,
DEATH, DISABILITY OR OTHER SPECIAL CIRCUMSTANCES. The Committee, in its sole
discretion, may permit (i) a Participant who terminates employment due to
Retirement, (ii) a Participant who terminates employment due to a Disability,
(iii) the personal representative of a deceased Participant, or (iv) any other
Participant who terminates employment or his director's position upon the
occurrence of special circumstances (as determined by the Committee) to
purchase (within three (3) months of such date of termination of employment or
one (1) year in the case of a deceased Participant or a Participant suffering a
Disability) all or any part of the shares subject to any Stock Option on the
date of the Participant's Retirement, Disability, death, or as the Committee
otherwise so determines, notwithstanding that all installments, if any, with
respect to such Stock Option, had not yet accrued on such date.
(c) NUMBER OF STOCK OPTIONS GRANTED. Participants may be granted more than
one Stock Option. In making any such determination, the Committee shall obtain
the advice and recommendation of the officers of the Company, its parent, or a
subsidiary of the Company which have supervisory authority over such
Participants. The granting of a Stock Option under the Plan shall not affect
any outstanding Stock Option previously granted to a Participant under the Plan
(or any other plans of the Company).
(d) NOTICE TO EXERCISE STOCK OPTION. Upon exercise of a Stock Option, a
Participant shall give written notice to the Secretary or Personnel Manager of
the Company, or other officer designated by the Committee, at the Company's
principal office. No Stock shall be issued to any Participant until the
Company receives full payment for the Stock purchased under the Stock Option,
including any required state and federal withholding taxes; provided, however,
nothing herein shall be construed as requiring payment of withholding taxes at
the time of exercise if payment of taxes is deferred pursuant to any provision
of the Code, and actions are taken which are designed to reasonably insure
payment of withholding taxes when due.
ARTICLE III
ISO OPTIONS
3.1 GENERAL TERMS. With respect to ISO Options granted on or after the
effective date of the Plan the following provisions in this Article III shall
apply to the exclusion of any inconsistent provision in any other Article in
this Plan since the ISO Options to be granted under the Plan are intended to
qualify as "incentive stock options" as defined in Section 422 of the Code.
3.2 GRANT AND TERMS OF ISO OPTIONS. ISO Options may be granted only to key
management or key professional employees of the Company, its parent or any
subsidiary of the Company. No ISO Options shall be granted to any person who
is not eligible to receive "incentive stock options" as provided in Section 422
of the Code. No ISO Options shall be granted to any key management or key
professional employee if, immediately before the grant of an ISO Option, such
employee owns more than 10% of the total combined voting power of all classes
of stock of the Company, its parent or its subsidiaries (as determined in
accordance with the stock attribution rules contained in Section 422 and
Section 424(d) of the Code). Provided, the preceding sentence shall not apply
if, at the time the ISO Option is granted, the ISO Price (as defined below) is
at least 110% of the "fair market value" of the Stock subject to the ISO
Option, and such ISO Option by its terms is exercisable no more than five (5)
years from the date such ISO Option is granted.
(a) ISO OPTION PRICE. The option price for shares of Stock subject to an
ISO Option ("ISO Price") shall be determined by the Committee, but in no event
shall such ISO Price be less than the greater of (a) the "fair market value" of
the Stock on the date of grant or (b) the par value of the Stock.
(b) ANNUAL ISO OPTION LIMITATION. With respect to ISO Options granted, in
no event during any calendar year will the aggregate "fair market value"
(determined as of the time the ISO Option is granted) of the Stock for which
the Participant may first have the right to exercise under an ISO Option
granted under all "incentive stock option" plans qualified under Section 422 of
the Code which are sponsored by the Company, its parent and its subsidiary
corporations exceed $100,000. For purposes of this Section 3.2(b), "incentive
stock options," as defined under Section 422 (and its predecessor Section 422A)
of the Code, granted prior to January 1, 1987, shall be disregarded when
calculating the foregoing $100,000 limitation.
(c) TERMS OF ISO OPTIONS. ISO Options shall be granted on the following
terms and conditions: No ISO Option shall be exercisable more than ten (10)
years from the date of grant. Subject to such limitations, the Committee shall
have the discretion to fix the period (the "ISO Period") during which any ISO
Option may be exercised. ISO Options granted shall not be transferable except
by will or by laws of descent and distribution. At all times during the period
commencing with the date an ISO Option is granted to a Participant and ending
on the earlier of the expiration of the ISO Period applicable to such ISO
Options or the date which is three (3) months prior to the date the ISO Option
is exercised by such Participant, such Participant must be an employee of
either (i) the Company, (ii) a parent or a subsidiary corporation of the
Company, or (iii) a corporation or a parent or a subsidiary corporation of such
corporation issuing or assuming an ISO Option in a transaction to which Section
424(a) of the Code applies. Provided, in the case of a Participant who incurs
a Disability, the aforesaid three (3) month period shall mean a one (1) year
period. Provided further, in the event a Participant's employment is
terminated by reason of his death, his personal representative may exercise any
unexercised ISO Option granted to the Participant under the Plan at any time
within one (1) year after the Participant's death but in any event not after
the expiration of the ISO Period applicable to such ISO Option.
(d) ACCELERATION OF OTHERWISE UNEXERCISABLE ISO OPTIONS ON RETIREMENT,
DEATH, DISABILITY OR OTHER SPECIAL CIRCUMSTANCES. The Committee, in its sole
discretion, may permit (i) a Participant who terminates employment due to
Retirement, (ii) a Participant who terminates employment due to a Disability,
(iii) the personal representative of a deceased Participant, or (iv) any other
Participant who terminates employment upon the occurrence of special
circumstances (as determined by the Committee) to purchase (within three (3)
months of such date of termination of employment or one (1) year in the case of
a deceased Participant or a Participant suffering a Disability) all or any part
of the shares subject to any ISO Option on the date of the Participant's
Retirement, Disability, death, or as the Committee otherwise so determines,
notwithstanding that all installments, if any, had not accrued on such date.
(e) NUMBER OF ISO OPTIONS GRANTED. Subject to the applicable limitations
contained in the Plan with respect to ISO Options, Participants may be granted
more than one ISO Option. In making any such determination, the Committee
shall obtain the advice and recommendation of the officers of the Company, its
parent or a subsidiary of the Company which have supervisory authority over
such Participants. Further, the granting of an ISO Option under the Plan shall
not affect any outstanding ISO Option previously granted to a Participant under
the Plan.
(f) NOTICE TO EXERCISE ISO OPTION. Upon exercise of an ISO Option, a
Participant shall give written notice to the Secretary of the Company, or other
officer designated by the Committee, at the Company's main office in Oklahoma
City, Oklahoma. No Stock shall be issued to any Participant until the Company
receives full payment for Stock purchased under the ISO Option.
ARTICLE IV
ACCELERATION OF OPTIONS ON CHANGE OF CONTROL
4.1 ACCELERATION OF OPTIONS UPON CHANGE OF CONTROL. In the event that a
Change of Control (as defined herein) has occurred with respect to the Company,
any and all ISO Options and Stock Options become automatically fully vested and
immediately exercisable with such acceleration to occur without the requirement
of any further act by either the Company or the Participant. For the purposes
of this Section 4.1, the term "Change of Control" shall mean:
(i) The acquisition in a transaction or a series of transactions by any
person, entity or "group," within the meaning of Section 13(d)(3) or 14(d)(2)
of the Securities Exchange Act of 1934 (the "Exchange Act"), of beneficial
ownership, of 30% or more of either the then outstanding shares of common stock
or the combined voting power of the Company's then outstanding voting
securities; provided, however, that any acquisition of beneficial ownership of
common stock or voting securities of the Company which is less than 30% of
either the then outstanding shares of common stock or the combined voting power
of the Company's then outstanding voting securities shall be deemed to be a
"change of control" for the purposes of this Agreement if a majority of the
Incumbent Board determines that such acquisition has caused a change of control
to occur;
(ii) Individuals who, as of the date hereof, constitute the Board of
Directors of the Company (as of the date hereof the "Incumbent Board") cease
for any reason to constitute at least a majority of the Board, provided that
any person becoming a director subsequent to the date hereof whose election, or
nomination for election by the Company's shareholders, was approved by a vote
of at least a majority of the directors comprising the Incumbent Board (other
than an election or nomination of an individual whose initial assumption of
office is in connection with an actual or threatened election contest relating
to the election of the Directors of the Company, as such terms are used in Rule
14a-11 of Regulation 14A promulgated under the Exchange Act) shall be, for
purposes of this Agreement, considered as though such person were a member of
the Incumbent Board; or
(iii) Approval by the stockholders of the Company of (A) a
reorganization, merger or consolidation, in each case with respect to which the
stockholders of the Company will not, immediately after consummation thereof,
own more than 50% of the combined voting power of the then outstanding voting
securities of either (a) the consolidated company or the surviving company in
the reorganization or merger, or (b) any company which prior to the
consolidation, reorganization or merger owned 50% or more of the combined
voting power of its then outstanding voting securities; provided, however, no
Change of Control shall be deemed to have occurred if members of the Incumbent
Board will, immediately thereafter, constitute at least a majority of the board
of directors of the consolidated or surviving company, or any company which
owns, directly or indirectly, at least a majority of the voting power of the
consolidated or surviving company's outstanding voting securities, and the
Incumbent Board has determined, prior to such shareholder approval, that a
Change of Control shall not be deemed to result from such transaction; or (B) a
liquidation or dissolution of the Company or the sale of all or substantially
all of the assets of the Company.
ARTICLE V
OPTIONS NOT QUALIFYING AS INCENTIVE STOCK OPTIONS
With respect to all or any portion of any Option granted under the Plan not
qualifying as an "incentive stock option" under Section 422 of the Code, such
Option shall be considered as a Stock Option granted under this Plan for all
purposes. Further, this Plan and any ISO Options granted hereunder shall be
deemed to have incorporated by reference all the provisions and requirements of
Section 422 of the Code (and the Treasury Regulations issued thereunder) which
are required to provide that all ISO Options granted hereunder shall be
"incentive stock options" described in Section 422 of the Code.
<PAGE>
PROXY
THE BEARD COMPANY
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR STOCKHOLDERS MEETING ON JUNE 4, 1998
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 1998 Annual Meeting
of Stockholders (or any adjournment thereof) of The Beard Company to be held in
the Board Room of Bank One, Oklahoma, N. A. in the Bank One Tower, 100 North
Broadway, Oklahoma City, Oklahoma, on Thursday, June 4, 1998 at 10:00 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 all nominees listed below _ WITHHOLD AUTHORITY to vote for all
nominees listed below
Harlon E. Martin, Jr. - three year term expiring in 2001
Herb Mee, Jr. - three year term expiring in 2001
2. Approval of the amendment to the 1993 Stock Option Plan, a copy of which is
attached to the accompanying Proxy Statement as Exhibit A.
_ FOR _ AGAINST _ ABSTAIN
3. Approval of Appointment of KPMG Peat Marwick LLP as independent certified
public accountants for fiscal 1998.
_ FOR _ AGAINST _ ABSTAIN
<PAGE>
(Continued from other side)
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: ______________________________________, 1998
_________________________________________________.
(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.
