<PAGE>
===============================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1994
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from_____to_____
Commission file number: 0-7062
NOBLE AFFILIATES, INC.
(Exact name of registrant as specified in its charter)
Delaware 73-0785597
(State of incorporation) (I.R.S. employer identification number)
110 West Broadway
Ardmore, Oklahoma 73401
(Address of principal executive offices) (Zip Code)
(405) 223-4110
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
----- -----
Number of shares of common stock outstanding as of August 2, 1994:
49,981,221
Page 1 of 12 pages
===============================================================================
<PAGE>
FORM 10-Q
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
NOBLE AFFILIATES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEET
(Dollars in Thousands)
<TABLE>
<CAPTION>
(Unaudited)
June 30, December 31,
1994 1993
--------- ------------
<S> <C> <C>
ASSETS:
Current Assets:
Cash and short-term cash investments ....... $ 21,044 $ 176,432
Accounts receivable-trade .................. 67,654 66,314
Materials and supplies inventories ......... 3,193 3,302
Other current assets ....................... 13,424 10,516
---------- ----------
Total Current Assets ....................... 105,315 256,564
---------- ----------
Property, Plant and Equipment ................... 1,548,431 1,487,068
Less: accumulated depreciation,
depletion and amortization ......... (738,181) (692,463)
---------- ----------
810,250 794,605
Other Assets ................................... 27,080 16,827
---------- ----------
Total Assets .............................. $ 942,645 $1,067,996
---------- ----------
---------- ----------
LIABILITIES AND SHAREHOLDERS' EQUITY:
Current Liabilities:
Accounts payable .......................... $ 53,641 $ 29,354
Other current liabilities ................. 19,106 19,241
Short-term borrowing ...................... 95,600
Income taxes .............................. 1,269 2,343
---------- ----------
Total Current Liabilities ................. 74,016 146,538
---------- ----------
Deferred Income Taxes .......................... 55,525 45,108
Other Deferred Credits and
Noncurrent Liabilities .................... 11,381 7,158
Long-term Debt ................................. 376,938 453,760
Shareholders' Equity:
Common stock .............................. 171,669 171,535
Capital in excess of par value ............ 141,123 140,703
Retained earnings ......................... 127,411 118,612
---------- ----------
440,203 430,850
Less common stock in treasury
(at cost, 1,524,900 shares) .......... (15,418) (15,418)
---------- ----------
Total Shareholders' Equity ................ 424,785 415,432
---------- ----------
Total Liabilities and Shareholders'
Equity ............................... $ 942,645 $1,067,996
---------- ----------
---------- ----------
</TABLE>
See notes to consolidated condensed financial statements.
Page 2
<PAGE>
FORM 10-Q
NOBLE AFFILIATES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended June 30,
-------------------------
1994 1993
---- ----
<S> <C> <C>
REVENUES:
Oil and gas sales and royalties ................ $161,895 $131,017
Gathering, marketing and processing revenues ... 8,483
Other income ................................... 5,195 5,164
-------- --------
175,573 136,181
-------- --------
COSTS AND EXPENSES:
Oil and gas operations ......................... 36,497 36,888
Oil and gas exploration ........................ 17,570 18,522
Gathering, marketing and processing costs ...... 8,385
Depreciation, depletion and amortization ....... 64,440 42,532
Selling, general and administrative ............ 18,851 16,502
Interest expense ............................... 14,290 9,187
Interest capitalized ........................... (4,186) (551)
-------- --------
155,847 123,080
-------- --------
INCOME BEFORE INCOME TAXES .......................... 19,726 13,101
INCOME TAX PROVISION ................................ 6,932 (1) 4,611 (1)
-------- --------
NET INCOME .......................................... $ 12,794 $ 8,490
-------- --------
-------- --------
NET INCOME PER SHARE ................................ $ .26 (2) $ .18 (2)
-------- --------
-------- --------
</TABLE>
See notes to consolidated condensed financial statements.
Page 3
<PAGE>
FORM 10-Q
NOBLE AFFILIATES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended June 30,
---------------------------
1994 1993
---- ----
<S> <C> <C>
REVENUES:
Oil and gas sales and royalties ............... $80,993 $64,129
Gathering, marketing and processing revenues .. 8,483
Other income .................................. 2,556 2,198
------- -------
92,032 66,327
------- -------
COSTS AND EXPENSES:
Oil and gas operations ........................ 18,286 19,541
Oil and gas exploration ....................... 13,575 8,293
Gathering, marketing and processing costs ..... 8,385
Depreciation, depletion and amortization ...... 30,888 20,783
Selling, general and administrative ........... 9,618 7,800
Interest expense .............................. 6,695 4,092
Interest capitalized .......................... (2,163) (302)
------- -------
85,284 60,207
------- -------
INCOME BEFORE INCOME TAXES ......................... 6,748 6,120
INCOME TAX PROVISION ............................... 2,371 (1) 2,118 (1)
------- -------
NET INCOME ......................................... $ 4,377 $ 4,002
------- -------
------- -------
NET INCOME PER SHARE ............................... $ .09 (2) $ .08 (2)
------- -------
------- -------
</TABLE>
See notes to consolidated condensed financial statements.
Page 4
<PAGE>
FORM 10-Q
NOBLE AFFILIATES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
Six Months Ended June 30,
-------------------------
1994 1993
---- ----
<S> <C> <C>
Cash Flows from Operating Activities:
Net income .......................................... $ 12,794 $ 8,490
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation, depletion and amortization ....... 64,440 42,532
Amortization of undeveloped lease costs, net ... 3,290 7,444
Change in deferred credits ..................... 14,640 (1,010)
Change in other noncash items, net ............. (10,210) 3,947
Changes in working capital, not including cash:
(Increase) decrease in accounts receivable ..... (1,340) 9,313
(Increase) decrease in other current assets .... (2,446) (1,618)
Increase (decrease) in accounts payable ........ 24,287 3,707
Increase (decrease) in other current
liabilities ................................. (1,209) 2,769
--------- --------
Net Cash Provided by Operating Activities ................ 104,246 75,574
--------- --------
Cash Flows From Investing Activities:
Capital expenditures ................................ (84,972) (37,686)
Proceeds from sale of property, plant and
equipment ........................................ 1,380 9,998
--------- --------
Net Cash Provided by (Used in) Investing Activities ...... (83,592) (27,688)
--------- --------
Cash Flows From Financing Activities:
Retirement of long-term debt ........................ (125,000)
Retirement of short-term debt for property
acquisition ...................................... (95,600)
Proceeds from line of credit borrowings ............. 48,000
Exercise of stock options ........................... 554 2,226
Cash dividends ...................................... (3,996) (3,776)
Retirement of convertible debt ...................... (1,845)
--------- --------
Net Cash Used in Financing Activities .................... (176,042) (3,395)
--------- --------
Increase (Decrease) in Cash and Short-term Cash
Investments ........................................... (155,388) 44,491
Cash and Short-term Cash Investments at Beginning of
Period ................................................ 176,432 118,726
--------- --------
Cash and Short-term Cash Investments at End of Period .... $ 21,044 $163,217
--------- --------
--------- --------
Supplemental Disclosures of Cash Flow Information:
Cash paid during the period for:
Interest (net of amount capitalized) ................ $ 11,752 $ 5,893
Income taxes ........................................ $ 5,000 $ 4,550
</TABLE>
See notes to consolidated condensed financial statements.
Page 5
<PAGE>
FORM 10-Q
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
In the opinion of the Company, the accompanying unaudited consolidated
condensed financial statements contain all adjustments, consisting only of
necessary and normal recurring adjustments, necessary to present fairly the
Company's financial position as of June 30, 1994 and December 31, 1993, and the
results of operations for the three month and six month periods ended June 30,
1994 and 1993 and the cash flows for the six month periods ended June 30, 1994
and 1993. These consolidated condensed financial statements should be read in
conjunction with the financial statements and the notes thereto incorporated
in the Company's annual report on Form 10-K for the year ended December 31,
1993.
(1) INCOME TAX PROVISION
For the six months ended June 30:
<TABLE>
<CAPTION>
(In thousands)
------------------
1994 1993
---- ----
<S> <C> <C>
Current ............................... $(3,485) $ 5,963
Deferred .............................. 10,417 (1,352)
------- -------
$ 6,932 $ 4,611
------- -------
------- -------
</TABLE>
For the three months ended June 30:
<TABLE>
<CAPTION>
(In thousands)
------------------
1994 1993
---- ----
<S> <C> <C>
Current ............................... $(1,192) $ 2,530
Deferred .............................. 3,563 (412)
------- -------
$ 2,371 $ 2,118
------- -------
------- -------
</TABLE>
(2) NET INCOME PER SHARE
The earnings per share of common stock was computed using the weighted
average number of shares of common stock outstanding during the period as
follows:
<TABLE>
<CAPTION>
(In thousands)
------------------
1994 1993
---- ----
<S> <C> <C>
For the six months ended June 30: ..... 49,948 46,301
For the three months ended June 30: ... 49,955 47,945
</TABLE>
Page 6
<PAGE>
FORM 10-Q
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
Net cash provided by operating activities increased to $104.2 million in
the six months ended June 30, 1994 from $75.6 million in the same period of
1993. Cash and short-term cash investments decreased from $176.4 million at
December 31, 1993 to $21 million at June 30, 1994.
In January 1994, the Company repaid $95.6 million of short-term debt which
was issued in October 1993 to acquire a producing property. On June 1, 1994,
the Company redeemed all of its outstanding 10 1/8% Notes Due June 1, 1997,
being $125 million aggregate principal amount. The Company used its available
cash plus borrowed $48 million from its bank credit line to complete the
redemption. The Company expects to reduce its annual interest expense by
approximately $7.5 million as a result of this redemption.
The Company expended approximately $85 million of its $190.5 million
capital budget through June 30, 1994 and currently plans to expend all of its
remaining capital budget in the remainder of the year. The Company plans to
maintain an active drilling program and will also continue to evaluate reserve
acquisition opportunities for the remainder of 1994. The Company believes it
can fund internally its remaining exploration budget. Acquisitions which might
exceed the Company's ability to fund from its internal cash flow would require
external sources of financing, such sources which the Company believes would be
available.
The Company's current ratio (current assets divided by current liabilities)
was 1.4 at June 30, 1994 compared to 1.7 at December 31, 1993. The company's
ratio of long-term debt to book capital (defined as the Company's long-term debt
plus its equity) at June 30, 1994 was 47 percent compared to 52 percent at
December 31, 1993.
The Company follows an entitlements method of accounting for its gas
imbalances. The Company's gas imbalance receivables were $13.8 million at June
30, 1994 and $12.9 million at December 31, 1993. Gas imbalance liabilities were
$10.8 million at June 30, 1994 and $7.6 million at December 31, 1993. These
imbalances are valued at the amount which is expected to be received or paid to
settle the imbalances. The settlement of the imbalances can occur either over
the life or at the end of the life of a well, on a volume basis or by cash
settlement. The Company does not expect that a significant portion of the
settlements will occur in any one year. Thus, the Company believes the
settlement of gas imbalances will have little impact on its liquidity.
RESULTS OF OPERATIONS
During the second quarter of 1994, the Company recorded net income of
$4.4 million, or 9 cents per share, compared to net income of $4.0 million, or
8 cents per share, in the second quarter of 1993. During the first six months of
1994, the Company recorded net income of $12.8 million, or 26 cents per share,
compared to net income of $8.5 million, or 18 cents per share, in the first six
months of 1993.
The increased income for the six months ended June 30, 1994 compared to
1993 resulted from higher natural gas prices and increased production volumes
primarily as a result of the acquisition of producing properties from
Freeport-McMoRan Inc. effective October 1, 1993. The effect of the increased
production volumes of both oil and gas during the second quarter of 1994
compared to the same period of 1993 was offset by higher exploration expenses.
Noble Gas Marketing, Inc. (NGM), a wholly owned subsidiary of the Company,
markets the Company's natural gas. In addition, in June 1994, NGM sold $8.5
million of third party gas. NGM's business plan calls for it to sell gas
directly to end-users, gas marketers, industrial users, interstate and
intrastate gas pipelines and local distribution companies. The Company records
all of NGM's sales as gathering, marketing and processing revenues. All
intercompany sales from Samedan Oil Corporation, a wholly owned subsidiary of
the Company engaged in oil and gas exploration and production, to NGM are
eliminated.
Page 7
<PAGE>
FORM 10-Q
Gas sales, excluding third party sales by NGM, increased 41 percent and 45
percent, respectively, for the three months and six months ended June 30, 1994.
The increase in sales is primarily due to a 39 percent and 35 percent increase,
respectively, in average daily production and a 1 percent and 8 percent
increase, respectively, in average gas price.
Oil sales increased 12 percent for the three months ended June 30, 1994,
compared to the same period of 1993. The increase in sales is primarily due to a
23 percent increase in average daily production offset in part by an 11 percent
decrease in average oil price.
Oil sales decreased 1 percent for the six months ended June 30, 1994,
compared to the same period of 1993. Average daily oil production increased 24
percent but was more than offset by an average oil price decrease of 21 percent.
The Company had no oil or gas hedges in place, or any hedge related
deposits, at June 30, 1994 or at December 31, 1993. The marketing of natural
gas to end users at fixed prices while purchasing gas at fluctuating index
prices exposes NGM to price risk. It is anticipated that NGM will be controlling
these price risks by utilizing various hedging techniques.
Certain selected gas and oil operating statistics follow:
<TABLE>
<CAPTION>
For the Three Months For the Six Months
Ended June 30, Ended June 30,
-------------------- ------------------
1994 1993 1994 1993
---- ---- ---- ----
<S> <C> <C> <C> <C>
Gas revenues (in thousands) ..... $ 46,131 $ 32,673 $100,176 $ 69,178
Average daily gas -- MCFS ........ 253,941 182,731 261,826 194,318
Average gas price per MCF ........ $ 2.04 $ 2.02 $ 2.15 $ 2.00
Oil revenues (in thousands) ...... $ 32,619 $ 29,199 $ 57,387 $ 58,089
Average daily oil -- BBLS ........ 22,923 18,703 22,849 18,428
Average oil price per BBL ........ $ 15.67 $ 17.55 $ 13.96 $ 17.76
<FN>
BBLS -- barrels
MCF -- thousand cubic feet
</TABLE>
Oil and gas operations expense decreased $1.29 and $.98 respectively on a
barrel of oil equivalent basis (converting gas to oil on the basis of 6 MCF per
barrel) for the three months and six months ended June 30, 1994, as compared to
the same periods of 1993. The Freeport-McMoRan Inc. acquisition increased oil
and gas operations expense for the first six months of 1994 by approximately
$3.2 million, compared to the same period of 1993, expensed workovers in 1994
decreased oil and gas operations expense approximately $1.2 million compared to
the same period of 1993, the sale of non-core properties in 1993 decreased oil
and gas operations expense in 1994 by $.5 million compared to the same period of
1993, and oil and gas operations expenses on foreign properties decreased $1.8
million in 1994 compared to the first six months of 1993.
Oil and gas exploration expense increased 64 percent, or $5.3 million, for
the three months ended June 30, 1994, compared to the same period in 1993. The
increase resulted in part from a $4.8 million increase in dry hole expense and
a $1.7 million increase in seismic expense offset by a $1.7 million decrease in
undeveloped lease impairment. Notwithstanding such increase in the 1994 second
quarter, oil and gas exploration expense for the first six months of 1994 was
nearly flat with the first six months of 1993.
Depreciation, depletion and amortization (DD&A) expense increased 49
percent and 52 percent, respectively, for the three months and six months ended
June 30, 1994, compared to the same periods in 1993. The increase is due
primarily to higher production volumes and higher unit rates on properties
acquired effective October 1, 1993. The unit rate of DD&A per equivalent barrel,
converting gas to oil on the basis of 6 MCF per barrel, was $5.35 for the first
six months of 1994 compared to $4.62 for the same period of 1993. The Company
has recorded, through charges to DD&A, a reserve for future liabilities related
to dismantlement and reclamation costs for offshore facilities. This reserve is
based on the best estimates of Company engineers of such costs to be incurred in
future years.
Page 8
<PAGE>
FORM 10-Q
Interest expense increased 64 percent and 56 percent, respectively, for the
three months and six months ended June 30, 1994, compared to the same periods of
1993 as a result of the increase in long-term debt incurred in connection with
the October 1, 1993 acquisition.
Interest capitalized increased $1.8 million for the three months ended June
30, 1994 and $3.6 million for the six months ended June 30, 1994, when compared
to the same periods in 1993. This increase is primarily due to the increase in
the capitalization of interest on the development of properties in the Gulf of
Mexico.
FUTURE TRENDS
Both oil and gas production in the three months and six months ended June
30, 1994 were higher than the same periods a year ago. This increase is due in
part to volumes of oil and gas produced from properties acquired from Freeport-
McMoRan Inc. on October 1, 1993. The Company anticipates its oil and gas
production volumes will continue to increase in 1994 as compared to 1993 as a
result of the properties acquired from Freeport-McMoRan Inc. as well as new oil
and gas properties commencing production in 1994.
Management believes that the Company is well positioned with its balanced
reserves of oil and gas to take advantage of future price increases that may
occur. However, the uncertainty of oil and gas prices continues to affect the
domestic oil and gas industry. Due to the volatility of oil and gas prices, the
Company, from time to time, uses hedging and may do so in the future as a means
of controlling its exposure to price changes. The Company cannot predict the
extent to which its revenues will be affected by inflation, government
regulation, or changing prices.
Page 9
<PAGE>
FORM 10-Q
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The information required by this Item 6 (a) is set forth in the Index to
Exhibits accompanying this quarterly report and is incorporated herein by
reference.
(b) The Company did not file any reports on Form 8-K during the three months
ended June 30, 1994.
Page 10
<PAGE>
FORM 10-Q
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NOBLE AFFILIATES, INC.
--------------------------------
(Registrant)
Date August 12, 1994 WM. D. DICKSON
- ----------------------- --------------------------------
WM. D. DICKSON, Vice President-Finance
and Treasurer
(Principal Financial Officer
and Authorized Signatory)
Page 11
<PAGE>
INDEX TO EXHIBITS
-----------------
Sequentially
Exhibit Numbered
Number Exhibit Page
- ------- ------- ------------
10.1 Amendment No. 2 to the 1988 NonQualified Stock Option
Plan For Non-Employee Directors of the Registrant
effective as of July 1, 1993.
10.2 Amendment No. 1 to the Noble Affiliates, Inc. 1992 Stock
Option and Restricted Stock Plan dated as of July 27, 1993.
E-1
<PAGE>
AMENDMENT NO. 2 TO THE
1988 NONQUALIFIED STOCK OPTION PLAN
FOR NON-EMPLOYEE DIRECTORS
OF
NOBLE AFFILIATES, INC.
Pursuant to the provisions of Section 6.02 thereof, the 1988
Nonqualified Stock Option Plan for Non-Employee Directors of Noble
Affiliates, Inc., as amended and restated effective March 17, 1989, and as
further amended effective April 28, 1992 (the "Plan"), is hereby amended in
the following respects only.
FIRST: Recital B of the Plan is hereby amended by restatement in its
entirety to read as follows:
B. The purposes of the Plan are to provide to each of the directors
of the Company who is not also either an employee or an officer of the
Company added incentive to continue in the service of the Company and a more
direct interest in the future success of the operations of the Company by
granting to such directors options (the "Options", or individually, the
"Option") to purchase shares of the Company's common stock, $3.33-1/3 par
value (the "Common Stock"), subject to the terms and conditions described
below.
SECOND: Article II of the Plan is hereby amended by restatement in its
entirety to read as follows:
ARTICLE II
ADMINISTRATION
The Plan shall be administered by the Board of Directors. The Board of
Directors shall have no authority, discretion or power to select the
participants who will receive Options, to set the number of shares to be
covered by each Option, or to set the exercise price or the period within
which the options may be exercised, or to alter any other terms or
conditions specified herein, except in the sense of administering the Plan
subject to the express provisions of the Plan and except in accordance with
Sections 3.02(a) and 6.02 hereof. Subject to the foregoing limitations, the
Board of Directors shall have authority and power to adopt such rules and
regulations and to take such action as it shall consider necessary or
advisable for the administration of the Plan, and to construe, interpret
and administer the Plan. The decisions of the Board of Directors relating
to the Plan shall be final and binding upon the Company, the Holders, as
defined hereinafter, and all other persons. No member of the Board of
Directors shall incur any liability by reason of any action or
determination made in good faith with respect to the Plan or any stock
option agreement entered into pursuant to the Plan.
THIRD: Article IV of the Plan is hereby deleted in its entirety.
FOURTH: Section 5.01 of the Plan is hereby amended by
<PAGE>
restatement in its entirety to read as follows:
5.01 Common Stock. The total number of shares of Common Stock as to
which options may be granted pursuant to the Plan shall be 250,000, in the
aggregate, except as such number of shares shall be adjusted from and after
the Effective Date in accordance with the provisions of Section 5.02
hereof. If any outstanding Option under the Plan shall expire or be
terminated for any reason before the end of the Option Period, the share's
of Common Stock allocable to the unexercised portion of such Option may
again be subject to the Plan. The Company shall, at all times during the
life of any outstanding Options, retain as authorized and unissued Common
Stock at least the number of shares from time to time included in the
outstanding options or otherwise assure itself of its ability to perform
its obligation under the Plan.
FIFTH: Section 5.02 of the Plan is hereby amended by restatement in its
entirety to read as follows:
Section 5.02 Adjustments Upon Changes in Common Stock. In the event
the Company shall effect a split of the Common Stock or dividend payable
in Common Stock, or in the event the outstanding Common Stock shall be
combined into a smaller number of shares, the maximum number of shares as
to which Options may be granted under the Plan shall be increased or
decreased proportionately. In the event that before delivery by the
Company of all of the shares of Common Stock in respect of which any
Option has been granted under the Plan, the Company shall have effected
such a split, dividend or combination, the shares still subject to the
Option shall be increased or decreased proportionately and the purchase
price per share shall be increased or decreased proportionately so that
the aggregate purchase price for all the then optioned shares shall
remain the same as immediately prior to such split, dividend or combination.
In the event of a reclassification of the Common Stock not covered by
the foregoing, or in the event of a liquidation or reorganization, including
a merger, consolidation or sale of assets, the Board of Directors of the
Company shall make such adjustments, if any, as it may deem appropriate in
the number, purchase price and kind of shares covered by the unexercised
portions of Options theretofore granted under the Plan. The provisions of
this Section 5.02 shall only be applicable if, and only to the extent that,
the application thereof does not conflict with any valid governmental
statute, regulation or rule.
SIXTH: Section 6.01 of the Plan is hereby amended by restatement in its
entirety to read as follows:
6.01 Termination of Plan. The Plan shall terminate whenever the Board
of Directors adopts a resolution to that effect. If not sooner terminated
under the preceding sentence, the Plan shall wholly cease and expire at
the close of business on July 25, 1998. After termination of the Plan, no
Options shall be granted under this Plan, but the Company shall continue to
recognize Options previously granted.
SEVENTH: Section 6. 02 of the Plan is hereby amended
<PAGE>
by restatement in its entirety to read as follows:
6.02 Amendment of Plan. Subject to the limitations set forth in this
Section 6.02, the Board of Directors may from time to time amend, modify,
suspend or terminate the Plan. No such amendment, modification,
suspension or termination shall (a) impair any options theretofore
granted under the Plan or deprive any Holder of any shares of Common Stock
which he might have acquired through or as a result of the Plan, or (b) be
made without the approval of the shareholders of the Company where such
change would (i) increase the total number of shares of Common Stock
which may be granted under the Plan or decrease the purchase price under
the Plan (other than as provided in Section 5.02 hereof), (ii) materially
alter the class of persons eligible to be granted options under the Plan
(iii) materially increase the benefits accruing to Holders under the Plan
or (iv) extend the term of the Plan or the Option Period. Notwithstanding
any other provision of this Section 6.02, in accordance with Rule
16b-3(c)(2)(ii)(B), the provisions of the Plan governing the matters
described in Rule 16b-3(c)(2)(ii)(A) shall not be amended more than once
every six months, other than to comport with changes in the Code, the
Employee Retirement Income Security Act of 1974, as amended, or the rules
thereunder.
EIGHTH: Section 6.04 of the Plan is hereby amended by restatement in its
entirety to read as follows:
6.04 Effectiveness. This Plan shall become effective as of the
Effective Date, subject to the conditions stated in the following sentence.
This Plan and each Option granted or to be granted hereunder is conditional
on and shall be of no force and effect, and no Option shall be exercised,
unless and until, (a) shareholder approval of the Plan by the affirmative
votes of the holders of a majority of the shares of Common Stock present,
or represented, and entitled to vote at a meeting of shareholders duly
held not later than the date of the next annual meeting of shareholders
and (b) receipt by the Company of a favorable response from the staff of
the Securities and Exchange Commission to the Company's position to the
effect that (i) the Plan will meet the requirements of Rule 16b-3 and (ii)
the receipt of Options under the Plan by non-employee directors will not
prohibit them from continuing to be "disinterested persons" within the
meaning of paragraphs (b) and (d)(3) of Rule 16b-3 with respect to the
Company's employee stock option plans.
IN WITNESS WHEREOF, this Amendment has been executed this 27th day of
July, 1993, to be effective as of July 1, 1993.
NOBLE AFFILIATES, INC.
By:
Robert Kelley
Chairman of the Board
President and Chief
Executive officer
<PAGE>
AMENDMENT NO. 1 TO THE
NOBLE AFFILIATES, INC.
1992 STOCK OPTION AND
RESTRICTED STOCK PLAN
Pursuant to the provisions of Section 15 thereof, the Noble Affiliates,
Inc., 1992 Stock Option and Restricted Stock Plan (the "Plan"), is hereby
amended in the following respects only:
FIRST: Section 9(a)(i) of the Plan is hereby amended by restatement in
its entirety to read as follows:
(i) All rights to exercise an Option and any SARs that relate to such
option shall, subject to the provisions of subsection (c) of this Section 9,
terminate three months after the date the Optionee ceases to be employed
by at least one of the employers in the group of employers consisting of
the Company and its Affiliates, for any reason other than death or
becoming disabled (within the meaning of Section 22(e)(3) of the Code),
except that, in the event of the termination of employment of the
Optionee on account of (a) fraud or intentional misrepresentation, or (b)
embezzlement, misappropriation or conversion of assets or opportunities
of the Company or its Affiliates, the Option and any SARs that relate to
such Option shall thereafter be null and void for all purposes.
Employment shall not be deemed to have ceased by reason of the transfer
of employment, without interruption of service, between or among the
Company and any of its Affiliates.
SECOND: Section 9(a) of the Plan is hereby amended by deleting clause (iii)
thereof.
THIRD: Section 10 of the Plan is hereby amended by restatement in its
entirety to read as follows:
Section 10. Options and SARs Not Transferable. No Option or any SARs
that relate to such Option shall be transferable by the Optionee otherwise
than by will or the applicable laws of descent and distribution or
pursuant to a qualified domestic relations order as defined by the Code
or Title I of the Employee Retirement Income Security Act of 1974, as
amended, or the rules thereunder.
FOURTH: Section 20(a) of the Plan is hereby amended by restatement in its
entirety to read as follows:
(a) Subject to the provisions of Section 14 of the Plan, the
Committee may from time to time, in its sole and absolute discretion,
award Shares of Restricted Stock to such persons as it shall select from
among those persons who are eligible under Section 5 of the Plan to
receive awards of Restricted Stock. Any award of Restricted Stock shall
be made from shares subject hereto as provided in Section 4 of the Plan.
IN WITNESS WHEREOF, this Amendment has been executed this 27th day of July,
1993.
<PAGE>
NOBLE AFFILIATES, INC.
By:
Robert Kelley
Chairman of the Board
President and Chief
Executive Officer
