WARRANT NO. 2010-__

WARRANT NO. 2010-__

______________, 2010

For the Purchase of ___,000 shares of Common Stock of The Beard Company

4.1  

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

4.2  

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

4.3  

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

4.4  

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

4.5  

Capitalization.  As of the date of this Warrant:  the Corporation's authorized capital stock consists of thirty million (30,000,000) shares of Common Stock, par value $0.00033325 per share, and five million (5,000,000) shares of preferred stock, stated value $100.00 per share.  As of the date of this Warrant the only shares of capital stock issued and outstanding are 19,971,622 fully paid and non-assessable shares of Common Stock and 27,838 shares of Preferred Stock.

4.6  

Office.  The Corporation will maintain an office for the purposes specified in this Warrant (the “Warrant Office”).  The Warrant Office will initially be the Corporation's offices at 301 N.W. 63rd Street, Suite 400, Oklahoma City, Oklahoma 73116 and may subsequently be any other office of the Corporation or any transfer agent for the Common Stock in the continental United States as to which written notice has previously been given to the Holder. The Corporation will maintain at the Warrant Office a register for the Warrants in which the Corporation will record the name and address of the person in whose name this Warrant has been issued.  The Holder will be able to tak e any action permitted in this Warrant including, without implied limitation, the exercise or transfer of the Warrants.

6.1  

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

6.1.1  

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

6.1.2  

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

6.2  

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

6.2.1  

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

6.2.2  

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

6.2.3  

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

6.2.4  

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

6.2.5  

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

6.2.6  

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

6.2.7  

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

6.2.8  

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

6.3  

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

6.4  

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

6.5  

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

6.6  

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

6.7  

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

6.8  

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

7.1  

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

7.2  

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

8.1  

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

8.2  

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

8.3  

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

8.4  

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

To the Corporation:

Herb Mee, Jr., President

The Beard Company

301 N.W. 63rd Street, Suite 400

Oklahoma City, Oklahoma  73116

Phone: (405) 842-2333

Fax: (405) 842-9901

To the Holder:

                                                      

                                                      

                                                      

Phone:                                          

(the “Corporation”)

THE BEARD COMPANY, an Oklahoma corporation

By

Herb Mee, Jr., President

(the “Holder”)

By

Name: