##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, DC 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended September 30, 2007
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 Commission File Number 001-32563
 Orchids Paper Products Company
  Delaware
    
    23-2956944(State or Other Jurisdiction of 
Incorporation or Organization)
    
    (I.R.S. Employer
Identification No.)
 4826 Hunt Street
Pryor, Oklahoma 74361
 (918) 825-0616
 þ o
  o o þ
 o þ




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##### 



ORCHIDS PAPER PRODUCTS COMPANY
TABLE OF CONTENTS
QUARTERLY REPORT ON FORM 10-Q
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2007
 PagePART I. FINANCIAL INFORMATIONITEM 1. Financial StatementsBalance Sheets as of September 30, 2007 (Unaudited) and December 31, 2006
    
    
    3Statements of Income for the three months ended September 30, 2007
and 2006 (Unaudited) and the nine months ended September 30, 2007
and 2006 (Unaudited)
    
    
    4Statements of Cash Flows for the nine months ended September 30, 2007 and 2006 (Unaudited)
    
    
    5Notes to Unaudited Interim Financial Statements
    
    
    6ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    10ITEM 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    25ITEM 4. Controls and Procedures
    
    
    25PART II. OTHER INFORMATIONITEM 1. Legal Proceedings
    
    
    25ITEM 1A. Risk Factors
    
    
    25ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    26ITEM 3. Defaults Upon Senior Securities
    
    
    26ITEM 4. Submission of Matters to a Vote of Security Holders
    
    
    26ITEM 5. Other Information
    
    
    26ITEM 6. Exhibits
    
    
    26Signatures
    
    
    27Amendment One to Second Amended and Restated Agented Credit Agreement302 Certification of Chief Executive Officer302 Certification of Chief Financial Officer906 Certification of Chief Executive Officer906 Certification of Chief Financial Officer
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PART I. FINANCIAL INFORMATION
 
 ITEM 1. Financial Statements
 ORCHIDS PAPER PRODUCTS COMPANY
 
 BALANCE SHEETS
(Dollars in thousands, except share data)
 As ofSeptember 30,
    
    
    December 31,2007
    
    
    2006(unaudited)ASSETSCurrent assets:Cash
    
    $
    3
    
    
    $
    3Accounts receivable, net of allowance of
$123 in 2007 and $100 in 2006
    
    
    6,049
    
    
    
    5,089Inventories, net
    
    
    4,863
    
    
    
    4,379Restricted certificate of deposit
    
    
    
    
    
    
    1,500Income taxes receivable
    
    
    24
    
    
    
    1,242Prepaid expenses
    
    
    472
    
    
    
    306Deferred income taxes
    
    
    346
    
    
    
    346Total current assets
    
    
    11,757
    
    
    
    12,865Property, plant and equipment
    
    
    63,558
    
    
    
    63,081Accumulated depreciation
    
    
    (7,290
    )
    
    
    (5,042
    )Net property, plant and equipment
    
    
    56,268
    
    
    
    58,039Deferred debt issuance costs, net of accumulated
amortization of $561 in 2007 and $424 in 2006
    
    
    131
    
    
    
    124Total assets
    
    $
    68,156
    
    
    $
    71,028LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    4,027
    
    
    $
    3,772Accrued liabilities
    
    
    2,323
    
    
    
    1,805Current portion of long-term debt
    
    
    2,299
    
    
    
    2,263Total current liabilities
    
    
    8,649
    
    
    
    7,840Long-term debt, net of unamortized discount of $51
in 2007 and $74 in 2006
    
    
    25,569
    
    
    
    31,575Deferred income taxes
    
    
    7,155
    
    
    
    6,909Stockholders equity:Common stock, $.001 par value, 25,000,000 and 10,000,000
shares authorized in 2007 and 2006, respectively, 6,234,346
shares issued and outstanding
    
    
    6
    
    
    
    6Additional paid-in capital
    
    
    21,470
    
    
    
    21,139Common stock warrants
    
    
    141
    
    
    
    141Retained earnings
    
    
    5,166
    
    
    
    3,418Total stockholders equity
    
    
    26,783
    
    
    
    24,704Total liabilities and stockholders equity
    
    $
    68,156
    
    
    $
    71,028
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ORCHIDS PAPER PRODUCTS COMPANY
 
 STATEMENTS OF INCOME
 Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006(unaudited)
    
    
    (unaudited)
    
    
    (unaudited)
    
    
    (unaudited)(Dollars in thousands, except share and per share data)Net sales
    
    $
    19,218
    
    
    $
    15,154
    
    
    $
    54,370
    
    
    $
    42,928Cost of sales
    
    
    15,802
    
    
    
    13,297
    
    
    
    46,136
    
    
    
    38,502Gross profit
    
    
    3,416
    
    
    
    1,857
    
    
    
    8,234
    
    
    
    4,426Selling, general and administrative expenses
    
    
    1,491
    
    
    
    1,124
    
    
    
    4,053
    
    
    
    3,653Operating income
    
    
    1,925
    
    
    
    733
    
    
    
    4,181
    
    
    
    773Interest expense
    
    
    635
    
    
    
    836
    
    
    
    2,216
    
    
    
    1,126Other (income) expense, net
    
    
    (2
    )
    
    
    (17
    )
    
    
    (29
    )
    
    
    (80
    )Income (loss) before income taxes
    
    
    1,292
    
    
    
    (86
    )
    
    
    1,994
    
    
    
    (273
    )Provision (benefit) for income taxes:Current
    
    
    0
    
    
    
    55
    
    
    
    0
    
    
    
    (54
    )Deferred
    
    
    156
    
    
    
    10
    
    
    
    246
    
    
    
    43156
    
    
    
    65
    
    
    
    246
    
    
    
    (11
    )Net income (loss)
    
    $
    1,136
    
    
    $
    (151
    )
    
    $
    1,748
    
    
    $
    (262
    )Net income (loss) per share:Basic
    
    $
    0.18
    
    
    $
    (0.02
    )
    
    $
    0.28
    
    
    $
    (0.04
    )Diluted
    
    $
    0.18
    
    
    $
    (0.02
    )
    
    $
    0.27
    
    
    $
    (0.04
    )Shares used in calculating net income (loss) per share:Basic
    
    
    6,234,346
    
    
    
    6,234,346
    
    
    
    6,234,346
    
    
    
    6,234,346Diluted
    
    
    6,421,111
    
    
    
    6,234,346
    *
    
    
    6,425,527
    
    
    
    6,234,346
    *
 
 *
    
    Due to net loss, option and warrant shares are anti-dilutive and thus not
considered.  -4-




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ORCHIDS PAPER PRODUCTS COMPANY
 
 STATEMENTS OF CASH FLOWS
 Nine Months Ended September 30,2007
    
    
    2006(unaudited)
    
    
    (unaudited)(Dollars in thousands)Cash Flows From Operating ActivitiesNet income (loss)
    
    $
    1,748
    
    
    $
    (262
    )Adjustments to reconcile net income (loss) to net cash
provided by operating activities:Depreciation and amortization
    
    
    2,404
    
    
    
    1,641Provision for doubtful accounts
    
    
    15
    
    
    
    45Deferred income taxes
    
    
    246
    
    
    
    43Stock option plan expense
    
    
    331
    
    
    
    201Foreign currency transaction loss
    
    
    
    
    
    
    35Gain on foreign currency exchange contracts
    
    
    
    
    
    
    (74
    )Changes in cash due to changes in operating assets
and liabilities:Accounts receivable
    
    
    (975
    )
    
    
    (762
    )Inventories
    
    
    (484
    )
    
    
    (317
    )Prepaid expenses
    
    
    (166
    )
    
    
    12Income taxes receivable
    
    
    1,218
    
    
    
    (155
    )Accounts payable
    
    
    255
    
    
    
    2,457Accrued liabilities
    
    
    518
    
    
    
    (376
    )Net cash provided by operating activities
    
    
    5,110
    
    
    
    2,488Cash Flows From Investing ActivitiesPurchases of property, plant and equipment
    
    
    (477
    )
    
    
    (17,268
    )Proceeds from the sale of restricted certificate of deposit
    
    
    1,500
    
    
    
    Net cash provided by (used in) investing activities
    
    
    1,023
    
    
    
    (17,268
    )Cash Flows From Financing ActivitiesBorrowings on long-term debt
    
    
    26,500
    
    
    
    Retirement of borrowings on long-term debt
    
    
    (25,866
    )
    
    
    Principal payments on long-term debt
    
    
    (1,720
    )
    
    
    (1,130
    )Net borrowings (repayments) on revolving credit line
    
    
    (4,903
    )
    
    
    535Borrowings under construction loan
    
    
    
    
    
    
    15,000Deferred debt issuance cost
    
    
    (144
    )
    
    
    Net cash provided by (used in) financing activities
    
    
    (6,133
    )
    
    
    14,405Net change in cash
    
    
    
    
    
    
    (375
    )Cash, beginning
    
    
    3
    
    
    
    378Cash, ending
    
    $
    3
    
    
    $
    3Supplemental Disclosure:Interest paid, net of amounts capitalized
    
    $
    2,117
    
    
    $
    834Income taxes paid
    
    $
    
    
    
    $
    221
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ORCHIDS PAPER PRODUCTS COMPANY
 
 NOTES TO UNAUDITED INTERIM FINANCIAL STATEMENTS
 Note 1  Basis of Presentation
    Note 2  Purchase Commitment and Foreign Currency Derivatives
   -6-




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Note 3  Capitalized Interest
  Note 4  Credit Agreements
  
    
    a $6.0 million revolving credit facility with a three-year term; ($0
outstanding at September 30, 2007). In addition, $157,000 of bank
overdrafts are included with long-term debt at September 30, 2007.
The borrowing base for the revolving credit facility is determined by
adding qualified receivables and inventory. At September 30, 2007,
the borrowing base for the revolving credit facility was $6.6 million,
limited to the $6.0 million amount of the facility;
    
    a $10.0 million term loan A with a ten-year term that has no principal
repayments for the first 24 months of the loan and then will be
amortized as if the loan had an 18-year life ($10.0 million
outstanding at September 30, 2007);
    
    a $16.5 million term loan B with a four-year term that is being
amortized as if the loan had a six-year life ($15.6 million
outstanding at September 30, 2007); and
    
    a $3.0 million capital expenditures facility with a four-year term
that will be amortized as if the loan had a five-year life ($0
outstanding at September 30, 2007).
  -7-




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Note 5  Earnings per Share
  Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2007
    
    
    2006
    
    
    2007
    
    
    2006Net income (loss)  ($ thousands)
    
    $
    1,136
    
    
    $
    (151
    )
    
    $
    1,748
    
    
    $
    (262
    )Weighted average shares outstanding
    
    
    6,234,346
    
    
    
    6,234,346
    
    
    
    6,234,346
    
    
    
    6,234,346Effect of stock options
    
    
    84,819
    
    
    
    
    
    
    
    90,999
    
    
    
    Effect of dilutive warrants
    
    
    101,946
    
    
    
    
    
    
    
    100,182
    
    
    
    Weighted average shares outstanding  assuming dilution
    
    
    6,421,111
    
    
    
    6,234,346
    
    
    
    6,425,527
    
    
    
    6,234,346Earnings (loss) per common share:Basic
    
    $
    0.18
    
    
    $
    (0.02
    )
    
    $
    0.28
    
    
    $
    (0.04
    )Diluted
    
    $
    0.18
    
    
    $
    (0.02
    ) *
    
    $
    0.27
    
    
    $
    (0.04
    ) *
 
 *
    
    Due to net loss, option and warrant shares of 329,623 and 363,793 for the three and nine months ended September 30, 2006, respectively,
are anti-dilutive and thus not considered. Note 6  Stock Incentive Plan
  -8-




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Grant
    
    Number
    
    Exercise
    
    Risk-Free
    
    Estimated
    
    Dividend
    
    Forfeiture
    
    ExpectedDate
    
    of Shares
    
    Price
    
    Interest Rate
    
    Volatility
    
    Yield
    
    Rate
    
    LifeFeb-06
    
    3,750
    
    $     7.61
    
    4.56%
    
    41%
    
    None
    
    0%
    
    5 yearsJun-06
    
    11,250
    
    $   10.05
    
    4.97%
    
    40%
    
    None
    
    0%
    
    5 yearsFeb-07
    
    3,750
    
    $     8.58
    
    4.83%
    
    40%
    
    None
    
    0%
    
    5 yearsJun-07
    
    28,750
    
    $     5.18
    
    5.09%
    
    38%
    
    None
    
    0%
    
    5 yearsAug-07
    
    225,000
    
    $     6.81
    
    4.63%
    
    40%
    
    None
    
    0%
    
    5-7 years
   Note 7  Major Customers and Concentration of Credit Risk
  Note 8  New Accounting Standards
  -9-




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ITEM 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
 Forward-Looking Information
  
    
    our business strategy;
    
    the market opportunity for our products, including expected demand for our products;
    
    our estimates regarding our capital requirements; and
 
    
    any of our other plans, objectives, and intentions contained in this report that are not
historical facts.
   -10-




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
    
    we face intense competition in our market and our
profitability would be reduced if aggressive pricing by our competitors forces us to decrease our prices;
    
    a substantial percentage of our finished goods revenues are attributable to three large customers which may decrease or
cease purchases at any time;
    
    we have significant indebtedness which limits our free cash flow and subjects us to restrictive covenants relating to the
operation of our business;
    
    the availability of and prices for energy could significantly affect our business;
    
    our exposure to variable interest rates may affect our financial health;
    
    the disruption in supply or cost of waste paper;
    
    the loss of key personnel;
    
    labor interruptions;
    
    natural disaster or other disruption to our facility;
    
    ability to finance the capital requirements of our business;
    
    cost to comply with government regulations; and
    
    failure to maintain an effective system of internal controls necessary to accurately report our financial results and
prevent fraud.
  Overview
  -11-




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® ®
  
    
    the market price of our product;
    
    the cost of recycled paper used in producing paper;
    
    the efficiency of operations in both our paper mill and converting plant; and
    
    energy costs.
   Comparative Three-Month Periods Ended September 30, 2007 and 2006
 Net Sales
 Three Months Ended September 30,2007
    
    2006(in thousands, except price per ton and tons)Net sales
    
    $
    19,218
    
    
    $
    15,154Total tons shipped
    
    
    13,390
    
    
    
    10,574Average price per ton
    
    $
    1,435
    
    
    $
    1,433
  -12-




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Cost of Sales
 Three Months Ended September 30,2007
    
    
    2006(in thousands, except gross profit margin %)Cost of paper
    
    $
    9,819
    
    
    $
    7,755Non-paper materials, labor, supplies, etc.
    
    
    5,233
    
    
    
    4,845Sub-total
    
    
    15,052
    
    
    
    12,600Depreciation
    
    
    750
    
    
    
    697Cost of sales
    
    $
    15,802
    
    
    $
    13,297Gross Profit
    
    $
    3,416
    
    
    $
    1,857Gross Profit Margin %
    
    
    17.8
    %
    
    
    12.3
    %
   -13-




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Three Months Ended September 30,2007
    
    
    2006Paper usage (tons)Converted-internal
    
    
    10,151
    
    
    
    9,255Converted-purchased
    
    
    237
    
    
    
    732Total converted
    
    
    10,388
    
    
    
    9,987Third-party parent roll sales
    
    
    3,002
    
    
    
    587Paper costs per tonCost per ton produced internally
    
    $
    726
    
    
    $
    703Cost per ton purchased from
third parties
    
    $
    1,140
    
    
    $
    1,142Total cost per ton consumed
    
    $
    733
    
    
    $
    733Total paper costs (in thousands)Cost of internally produced paper
    
    $
    9,549
    
    
    $
    6,919Cost of
paper purchased from third parties
    
    
    270
    
    
    
    836Total paper costs
    
    $
    9,819
    
    
    $
    7,755
  Gross Profit
  Selling, General and Administrative Expenses
 Three Months Ended September 30,2007
    
    
    2006(In thousands, except SG&A as a % of net sales)Commission expense
    
    $
    224
    
    
    $
    188Other S,G&A expenses
    
    
    1,267
    
    
    
    936Selling, General & Adm exp
    
    $
    1,491
    
    
    $
    1,124SG&A as a % of net sales
    
    
    7.8
    %
    
    
    7.4
    %
  -14-




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Operating Income
  Interest and Other Expense
 Three Months Ended September 30,2007
    
    2006(In thousands)Interest expense
    
    $
    635
    
    
    $
    836Other (income) expense, net
    
    $
    (2
    )
    
    $
    (17
    )
   Income (Loss) Before Income Taxes
  Income Tax Provision (Benefit)
  -15-




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Comparative Nine-Month Periods Ended September 30, 2007 and 2006
 Net Sales
 Nine Months Ended September 30,2007
    
    2006(in thousands, except price per ton and tons)Net sales
    
    $
    54,370
    
    
    $
    42,928Total tons shipped
    
    
    37,367
    
    
    
    28,548Average price per ton
    
    $
    1,455
    
    
    $
    1,504
  Cost of Sales
 Nine Months Ended September 30,2007
    
    
    2006(in thousands, except gross profit margin %)Cost of paper
    
    $
    27,926
    
    
    $
    23,136Non-paper materials, labor, supplies, etc.
    
    
    15,962
    
    
    
    13,883Sub-total
    
    $
    43,888
    
    
    
    37,019Depreciation
    
    
    2,248
    
    
    
    1,483Cost of sales
    
    $
    46,136
    
    
    $
    38,502Gross Profit
    
    $
    8,234
    
    
    $
    4,426Gross Profit Margin %
    
    
    15.1
    %
    
    
    10.3
    %
   -16-




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Nine Months Ended September 30,2007
    
    
    2006Paper usage (tons)Converted-internal
    
    
    29,104
    
    
    
    21,513Converted-purchased
    
    
    1,023
    
    
    
    6,448Total converted
    
    
    30,127
    
    
    
    27,961Third-party parent roll sales
    
    
    7,240
    
    
    
    587Paper costs per tonCost per ton produced internally
    
    $
    736
    
    
    $
    740Cost per ton purchased from
third parties
    
    $
    1,151
    
    
    $
    1,053Total cost per ton consumed
    
    $
    747
    
    
    $
    810Total paper costs (in thousands)Cost of internally produced paper
    
    $
    26,749
    
    
    $
    16,344Cost of paper purchased from
third parties
    
    
    1,177
    
    
    
    6,792Total paper costs
    
    $
    27,926
    
    
    $
    23,136
  Gross Profit
  -17-




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Selling, General and Administrative Expenses
 Nine Months Ended September 30,2007
    
    
    2006(In thousands, except SG&A as a % of net sales)Commission expense
    
    $
    702
    
    
    $
    579Other S,G&A expenses
    
    
    3,351
    
    
    
    3,074Selling, General & Adm exp
    
    $
    4,053
    
    
    $
    3,653SG&A as a % of net sales
    
    
    7.5
    %
    
    
    8.5
    %
  Operating Income
  Interest and Other Expense
 Nine Months Ended September 30,2007
    
    2006(In thousands)Interest expense
    
    $
    2,216
    
    
    $
    1,126Other (income) expense, net
    
    $
    (29
    )
    
    $
    (80
    )
   -18-




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Income (Loss) Before Income Taxes
  Income Tax Provision (Benefit)
  Liquidity and Capital Resources
    -19-




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Nine Months Ended September 30,2007
    
    2006(in thousands)Cash flow provided by (used in):Operating activities
    
    $
    5,110
    
    
    $
    2,488Investing activities
    
    $
    1,023
    
    
    $
    (17,268
    )Financing activities
    
    $
    (6,133
    )
    
    $
    14,405
        
    
    a $6.0 million revolving credit facility with a three-year term ($0
outstanding at September 30, 2007. In addition, $157,000 of bank
overdrafts were included in the long-term debt section of the balance
sheet at September 30, 2007). The borrowing base for the revolving
credit facility is determined by adding qualified receivables and
inventory.
 -20-




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At September 30, 2007, the borrowing base for the
revolving credit facility was $6.6 million, limited to the $6.0
million amount of the facility;
 
    
    a $10.0 million term loan A with a ten-year term that has no principal
repayments for the first 24 months of the loan and then will be
amortized as if the loan had an 18-year life ($10.0 million
outstanding at September 30, 2007);
    
    a $16.5 million term loan B with a four-year term that is being
amortized as if the loan had a six-year life ($15.6 million
outstanding at September 30, 2007); and
    
    a $3.0 million capital expenditures facility with a four-year term
that will be amortized as if the loan had a five-year life ($0
outstanding at September 30, 2007).
    -21-




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Critical Accounting Policies and Estimates
  Accounts Receivable
 Inventory.
 -22-




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New Accounting Pronouncements
    Non-GAAP Discussion
   -23-




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
    
    it does not reflect our cash expenditures for capital assets;
    
    it does not reflect changes in, or cash requirements for, our working capital requirements;
    
    it does not reflect the interest expense, or the cash requirements
necessary to service interest or principal payments on our
indebtedness;
    
    although depreciation and amortization are non-cash charges, the
assets being depreciated and amortized will often have to be replaced
in the future, and EBITDA does not reflect cash requirements for such
replacements; and
    
    other companies, including other companies in our industry, may
calculate these measures differently than we do, limiting their
usefulness as a comparative measure.
   Three Months Ended September 30,2007
    
    
    2006(In thousands, except % of net sales)Net income (loss)
    
    $
    1,136
    
    
    $
    (151
    )Plus: Interest expense
    
    
    635
    
    
    
    836Plus: Income tax expense
    
    
    156
    
    
    
    65Plus: Depreciation
    
    
    750
    
    
    
    697EBITDA
    
    $
    2,677
    
    
    $
    1,447% of net sales
    
    
    13.9
    %
    
    
    9.5
    %
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##### Table of Contents



Nine Months Ended September 30,2007
    
    
    2006(In thousands, except % of net sales)Net income (loss)
    
    $
    1,748
    
    
    $
    (262
    )Plus: Interest expense, net
    
    
    2,216
    
    
    
    1,126Plus: Income tax (benefit) expense
    
    
    246
    
    
    
    (11
    )Plus: Depreciation
    
    
    2,248
    
    
    
    1,483EBITDA
    
    $
    6,458
    
    
    $
    2,336% of net sales
    
    
    11.9
    %
    
    
    5.4
    %
  
 ITEM 3. Quantitative and Qualitative Disclosures about Market Risk
  
 ITEM 4. Controls and Procedures
  
 PART II. OTHER INFORMATION
 
 ITEM 1. Legal Proceedings
  
 ITEM 1A. Risk Factors
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##### Table of Contents



ITEM 2. Unregistered Sales of Equity Securities and Use of Proceeds
 (a) Unregistered Sales of Equity Securities
  (b) Initial Public Offering and Use of Proceeds from the Sale of Registered Securities
  (c) Repurchases of Equity Securities
  
 ITEM 3. Defaults Upon Senior Securities
  
 ITEM 4. Submission of Matters to a Vote of Security Holders
  
 ITEM 5. Other Information
  
 ITEM 6. Exhibits
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##### Table of Contents



SIGNATURES
  ORCHIDS PAPER PRODUCTS COMPANY
 Date: November 5, 2007
    
    By:
    
    /s/ Keith R. SchroederKeith R. SchroederChief Financial Officer(On behalf of the registrant andas Chief Accounting Officer)
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##### Table of Contents



Exhibit Index
 Exhibit
    
    Description3.1
    
    Amended and Restated Certificate of Incorporation of the
Registrant incorporated by reference to Exhibit 3.1 to the
Registrants Registration Statement on Form S-1 (File No.
333-124173) filed with the Securities and Exchange Commission on
April 19, 2005.3.1.1
    
    Amendment to the Amended and Restated Certificate of Incorporation
of the Registrant incorporated by reference to the Form 10-Q
filed with the Securities and Exchange Commission on August 14,
2007.3.2
    
    Amended and Restated Bylaws of the Registrant incorporated by
reference to Exhibit 3.2 to the Registrants Registration
Statement on Form S-1 (File No. 333-124173) filed with the
Securities and Exchange Commission on April 19, 2005.10.1
    
    Employment Agreement dated August 20, 2007, between Robert A.
Snyder and the Registrants incorporated by reference to Exhibit
10.2 to the Form 8-K filed with the Securities and Exchange
Commission on August 22, 2007.10.2
    
    Amendment One to Second Amended and
Restated Agented Credit Agreement dated October 25, 2007, among the Registrant, Bank of
Oklahoma, N.A., Bancfirst and Commerce Bank, N.A.31.1
    
    Certification of Chief Executive Officer Pursuant to Section 302.31.2
    
    Certification of Chief Financial Officer Pursuant to Section 302.32.1
    
    Certification of Chief Executive Officer Pursuant to Section 906.32.2
    
    Certification of Chief Financial Officer Pursuant to Section 906.
 -28-