SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
Commission File No. 33-_______________
Flex Acquisitions Corporation
(Exact name of registrant as specified in its charter)
Texas
(State of Incorporation)
___________
(Primary Standard Industrial Classification Code Number)
76-0498636
(I.R.S. Employer Identification Number)
770 S. Post Oak Lane, Suite 515
Houston, TX 77056
713/840-7500
Facsimile: 713/840-7554
(Address and telephone number of registrant's
principal executive offices)
Michael T. Fearnow, President
770 S. Post Oak Lane, Suite 515
Houston, TX 77056
713/840-7500
Facsimile: 713/840-7554
(Name, address and telephone number of agent for service)
Copies to:
M. Stephen Roberts, Esq.
770 S. Post Oak Lane, Suite 515
Houston, TX 77056
713/961-2696
Facsimile: 713/961-1148
Explanatory Note
This Registration Statement covers the registration of (i)up to 100,000
units ("Units"), each Unit consisting of 100,000 shares of its $.001 par value
common stock, 200,000 Class A Warrants and 200,000 Class B Warrants for sale
by the Company in an underwritten public offering and (ii) the distribution
of 20,000 shares of common stock owned by the sole shareholder of the
Registrant, its corporate parent, to its shareholders as a stock dividend
("Dividend Distribution").
The complete Prospectus relating to the underwritten offering follows
immediately after this Explanatory Note. Following the Prospectus for the
underwritten offering are pages of the Dividend Distribution Prospectus
relating solely to the Dividend Distribution, including alternative front
cover pages and a section entitled "Concurrent Offering" to be used in lieu of
the section entitled "Underwriting" in the Prospectus relating to the
underwritten offering. Certain sections of the Prospectus for the
underwritten offering, such as "Use of Proceeds" and "Dilution," will not be
used in the Prospectus relating to the Dividend Distribution.
Approximate date of commencement of proposed sale of securities to the
public: As soon as practicable after the Registration Statement becomes
effective.
<PAGE>
If the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box [X]
<TABLE>
<CAPTION>
CALCULATION OF REGISTRATION FEE
=====================================================================================================
PROPOSED PROPOSED
MAXIMUM MAXIMUM
TITLE OF EACH CLASS OF OFFERING AGGREGATE AMOUNT OF
SECURITIES TO BE AMOUNT BEING PRICE OFFERING REGISTRATION
REGISTERED REGISTERED PER SECURITY(1) PRICE(1) FEE
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Units, each consisting of one share
of common stock, $.001 par value,
two Class B Warrants and two Class C
Warrants(2)
Common Stock ($.001) 100,000 $ 5.70 $ 570,000 $ 172.71
- -----------------------------------------------------------------------------------------------------
Class B Warrants(3) 200,000 $ .10 $ 20,000 $ 6.06
- -----------------------------------------------------------------------------------------------------
Common Stock Underlying Class B Warrants 200,000 $ 6.25 $1,250,000 $ 378.75
- -----------------------------------------------------------------------------------------------------
Class C Warrants(3) 200,000 $ .05 $ 10,000 $ 3.03
- -----------------------------------------------------------------------------------------------------
Common Stock Underlying Class C Warrants 200,000 $ 10.00 $2,000,000 $ 606.00
- -----------------------------------------------------------------------------------------------------
Common Stock (4) 20,000 $ 0.04 $ 800 $ 0.24
- -----------------------------------------------------------------------------------------------------
TOTAL $ 1,166.79
=====================================================================================================
<FN>
(1) Estimated solely for the purpose of calculating the registration fee pursuant to Rule 457.
(2) The actual Unit is not being registered as a security, as such Unitonly represents a minimum
purchase amount.
(3) The registration statement also covers any additional securities which may become issuable
pursuant to anti-dilution provisions of the warrants.
(4) These 20,000 shares are owned by the sole shareholder of the Registrant,its corporate parent, and
are to be distributed by the sole shareholder to its shareholders as a stock dividend. The
registration fee is based upon the book value of the Registrant as of July 31,1996.
</TABLE>
The registrant hereby amends this registration statement on such
date or dates as may be necessary to delay its effective date until the
registrant shall file a further amendment which specifically states that this
registration statement shall thereafter become effective in accordance with
section 8(a) of the Securities Act of 1933 or until the registration statement
shall become effective on such date as the Commission acting pursuant to said
section 8(a) may determine.
<PAGE>
PROSPECTUS
FLEX ACQUISITIONS CORPORATION
(a Texas corporation)
100,000 Units, Each Unit Consisting of One Share of Common Stock,
Two Class B Warrants and Two Class C Warrants
Flex Acquisitions Corporation ("Company") is offering 100,000 Units, each
Unit consisting of one share of common stock, $.001 par value ("Common
Stock"), and four Common Stock purchase warrants ("Class B Warrants" and
"Class C Warrants", collectively, the "Warrants"). The shares of Common Stock
and Warrants included in the Units are immediately detachable, separately
transferable and separately tradeable as of the date of this Prospectus. The
Units will not be tradeable. All Units offered hereby are being sold by the
Company.
Each Class B Warrant and each Class C Warrant is presently exercisable
and entitles the holder thereof to purchase one share of Common Stock at an
exercise price of $6.25 and $10.00, respectively. The Warrants expire on
January 1, 2001, unless extended by the Company's Board of Directors. Each
Class B Warrant may be redeemed by the Company at any time after January 1,
1997 at a price of $0.05 per warrant if the reported closing bid price of the
Common stock is at least $7.50 per share (132% of the initial public offering
price of the Common Stock) for a period of 20 consecutive trading days
immediately prior to the date of the notice of redemption to warrant holders.
Each Class c Warrant may be redeemed by the Company at any time after January
1, 1997 at a price of $0.05 per warrant if the reported closing bid price of
the Common stock is at least $12.00 per share (222% of the initial public
offering price of the Common Stock) for a period of 20 consecutive trading
days immediately prior to the date of the notice of redemption to warrant
holders. Notice of the redemption will be mailed to all Warrant holders at
least 30 days before the date on which the Warrants have been called. See
"DESCRIPTION OF SECURITIES-Redeemable Common Stock Purchase Warrants."
Concurrently with the offering of the Units, the Company is
registering, by means of a separate prospectus, 20,000 shares of Common stock
to be distributed by American NorTel Communications, Inc. ("American NorTel"),
the corporate parent of the Company, to its shareholders by dividend (the
"Spinoff"). Any closing of the Units offering is conditioned upon the
consummation of certain transactions, including the merger of the Company and
another corporation with a similar name, Flex Financial Group, Inc. ("Flex
Financial"). The proposed Merger is being registered with the Securities and
Exchange Commission ("the SEC") simultaneously with the registration of the
offering of Units and the Spinoff described herein. See "SUMMARY OF PROPOSED
TRANSACTIONS."
Prior to this offering, there has been no public market for the Common
Stock or Warrants and there can be no assurance that such a market will
develop after the completion of this offering or, if developed, that it will
be sustained. The initial public offering price of the Shares and the
Warrants and the exercise price and other terms of the Warrants have been
arbitrarily determined by the Company and will not necessarily be related to
the assets, book value or any other established criterion of value. See "RISK
FACTORS" and "UNDERWRITING".
- ------------------------------------------------------------------------------
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK. SEE "RISK
FACTORS."
<PAGE>
____________________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
____________________________________
<TABLE>
<CAPTION>
- -------------------- ----------- -------------- ----------------
Underwriting Proceeds to
Price to Discounts and Issuer or
Recipient Commissions Other Person(1)
- -------------------- ----------- -------------- ----------------
<S> <C> <C> <C>
Per Unit $ 6.00 $ .60 $ 5.40
- -------------------- ----------- -------------- ----------------
Total: 100,000 Units $600,000.00 $ 60,000.00 $ 540,000.00
- -------------------- ----------- -------------- ----------------
<FN>
(1) Before deducting expenses, other than underwriting discounts and
commissions, payable by the Company, estimated to be $56,250.
</TABLE>
The Units are being offered by the Underwriter, as agent for the Company,
on a "best efforts all or none basis" as to 20,000 Units and on a "best
efforts basis" as to the remaining 80,000 Units. The offering will terminate
upon the later of (i) 120 days after the date of this Prospectus or (ii) if
extended by the Company, 180 days after the date of this Prospectus. The
minimum subscription is 1,000 Units.
When collected, subscription funds will be held in an interest-bearing
escrow account with Southwest Bank of Texas, N.A., Houston, Texas ("Escrow
Agent"). Upon receipt of subscriptions for 20,000 Units, the net proceeds
will be released from escrow to the Company ("Initial closing").
Subscriptions for additional Units will be placed in escrow, and released to
the Company every 30 days ("Interim Closings") until the termination of the
offering, when any remaining funds in escrow will be released to the Company
("Final Closing"). The Company reserves the right to reject orders for the
purchase of Units in whole or in part, and if a subscription is rejected, the
subscriber's funds will returned without interest within three business days
after rejection. Within 30 days following the Initial, each Interim and Final
Closing, a subscriber's security certificates will be mailed by first class
mail.
The Company is not a "reporting company," as such term is employed in the
Securities Exchange Act of 1934. It is not listed on any exchange, and its
Common Stock is not eligible for quotation on the NASDAQ Small-Cap Market
("NADSAQ"). There presently is no public market for the Common Stock of the
Company, and there can be no assurance that such a market will develop or can
be sustained should there be a completion of the proposed Merger. Should the
proposed Merger not be effected, there will be no public market for the
securities of the Company because of the above-described escrow arrangement.
See "SUMMARY OF PROPOSED TRANSACTIONS - The Escrow Arrangement."
The date of this Prospectus is _________________, 1996
<PAGE>
ADDITIONAL INFORMATION
Registration Statement. The Company has filed with the Securities and
-----------------------
Exchange Commission in Washington, D.C. a Registration Statement under the
Securities Act of 1933, as amended, with respect to the Common Stock offered
by this Prospectus. For further information with respect to the Company and
the Common Stock offered hereby, reference is made to the Registration
Statement and the exhibits listed in the Registration Statement. The
Registration Statement can be examined at the Public Reference Room of the
Securities and Exchange Commission at 450 Fifth Street, N.W., Washington, D.C.
20549, and copies may be obtained upon payment of the prescribed fees.
Reports to Shareholders. The Company I ntends to furnish shareholders
-------------------------
with annual reports containing financial statements audited by independent
certified public accountants and such other periodic reports as it may deem
appropriate or as required by law.
Stock Certificates. It is expected that certificates for the
-------------------
securities comprising the Units offered hereby will be ready for delivery
within 30 days after the date of any closing of subscriptions and within two
weeks with respect to the 20,000 Shares to be distributed by American NorTel
to the escrow agent (see "The Escrow Arrangement").
Post-Effective Amendment and Prospectus Stickers Concerning Proposed
-------------------------------------------------------------------------
Merger. Should the proposed Merger described herein be approved by the
- ------
requisite shareholder vote of Flex Financial and become effective, the Company
will file a post-effective amendment to the Registration Statement described
above and cause stickers to be placed on the front cover page of all copies of
the Prospectus, which amendment and stickers will describe the results of the
vote and the effective date of the merger.
Private Securities Litigation Reform Act Safe Harbor Statement. When
-----------------------------------------------------------------
used in the Prospectus, the words "estimate", "project", "intend", "expect",
and similar expressions are intended to identify forward-looking statements.
Such statements are subject to risks and uncertainties that could cause actual
results to differ materially. For a discussion of such risks, see "RISK
FACTORS". Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date hereof. The
Company does not undertake any obligation to publicly release any revisions to
these forward-looking statements to reflect events or circumstances after the
date hereof or to reflect the occurrence of unanticipated events.
UNTIL _____________________, 1996 (90 DAYS AFTER THE REGISTERED SECURITIES ARE
RELEASED FROM ESCROW PURSUANT TO RULE 419 UNDER THE SECURITIES ACT OF 1933)
ALL DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES MAY BE
REQUIRED TO DELIVER A PROSPECTUS.
<PAGE>
TABLE OF CONTENTS
Page
ADDITIONAL INFORMATION
INTRODUCTION
SUMMARY OF PROPOSED TRANSACTION
The Three Companies
Flex Acquisitions Corporation
Flex Financial Group, Inc.
American NorTel Communications, Inc.
The Spinoff
The Proposed Merger
The Escrow Arrangement
Consequences Should the Merger Not Occur
Degree of Management Control of Vote on Merger
Dissenters' Rights of Appraisal
Compliance with Governmental Regulations
Tax Consequences of the transaction
Risk Factors
RISK FACTORS
CAPITALIZATION
DILUTION
USE OF PROCEEDS
TERMS OF THE TRANSACTION
Terms of the Merger
Reasons for the Merger and Spinoff
Accounting Treatment of Proposed Merger
Plan of Merger
Description of Securities
Common Stock
Voting Rights
Dividend Rights
Liquidation Rights
Preemptive Rights
Registrar and Transfer Agent
Dissenters' Rights
Redeemable Common Stock Purchase Warrants
Class B Warrants
Class C Warrants
Preferred Stock
Other Securities of the Company
Class A Common Stock Purchase Options
Unit Purchase Options
Class B and Class C Warrants
Federal Income Tax Consequences
The Merger
The Spinoff
Shareholders of American NorTel
Pro Forma Financial Information and Dilution
Material Contacts Among the Companies
Reoffering by Party Deemed to be an Underwriter
Interest of Counsel
Special Provisions of the Articles of
Incorporation and Texas Law
INFORMATION ABOUT THE COMPANY
Description of Business and Properties
Course of Business Should the Merger Not Occur
Legal Proceedings
<PAGE>
Market for the Company's Common Sock and Related
Stockholder Matters
Rule 144 and rule 145 restrictions on Trading
Financial Statements
Independent Auditor' Reports
Balance Sheet
Statement of Operations
Statement of changes in Stockholder's Equity
Statement of Cash Flows
Notes to Financial Statement
INFORMATION ABOUT FLEX FINANCIAL
Management's Plan of Operation
Liquidity and Capital Resources
Plan of Operation
Business Objectives
Business Experience of Principals
Business Plan
1. General
2. Subordination and Bridge Loans
3. Long Term Investment Opportunities
Investment Transactions
4. Long Term Investment Opportunities
Business Combinations
5. Miscellaneous Matters
Description of Business Properties
Legal Proceedings
Financial Statements
Independent Auditor's Report
Balance Sheet
Statement of Operations
Statement of Changes in Stockholders' Equity
Statement of Cash Flows
Notes to Financial Statements
MANAGEMENT INFORMATION
Security Ownership of Certain Beneficial Owners
The Company
Flex Financial
Directors, Executive Officers and Significant
Employees
Remuneration of Directors and Officers
The Company
Flex Financial
Stock Options
Interest of Management and Others
In Certain transactions
Parents
UNDERWRITING
PLAN OF MERGER
<PAGE>
INTRODUCTION
Securities Issued in Initial Public Offering
The Company is issuing 100,000 Units, each Unit consisting of one share
of Common Stock, two Class B Warrants and two Class C Warrants, at a price of
$6.00 per Unit. The shares of Common Stock and Warrants included in the Units
are immediately detachable, separately transferable and separately tradeable
as of the date of this Prospectus. The Units will not be tradeable. All
Units offered hereby are being sold by the Company. See "USE OF PROCEEDS."
Securities Issued in Other Transactions Being Registered
Concurrently with the offering of the Units, the Company is registering,
by means of a separate prospectus, 20,000 shares of Common stock to be
distributed by American NorTel Communications, Inc. ("American NorTel"), the
corporate parent of the Company, to its shareholders by dividend (the
"Spinoff"). The Units offering is conditioned upon the consummation of
certain transactions including the merger of the Company and another
corporation with a similar name, Flex Financial Group, Inc. ("Flex
Financial"). The proposed Merger is being registered with the Securities and
Exchange Commission ("the SEC") simultaneously with the registration of the
offering of Units and the Spinoff described herein. See "SUMMARY OF PROPOSED
TRANSACTION."
Any closing of the Units offering is conditioned upon the consummation of
the merger of the Company and Flex Financial by filing Articles of Merger with
the Secretary of State of Texas.
SUMMARY OF PROPOSED TRANSACTION
The transaction discussed herein is a distribution by a corporation of a
dividend to its shareholders, the dividend consisting of all the capital stock
of a wholly-owned subsidiary corporation. The distributing corporation,
American NorTel Communications, Inc. ("American NorTel"), organized and owns
all 20,000 issued and outstanding shares ("the Shares") of Common Stock of the
Registrant, Flex Acquisitions Corporation ("the Company"). American NorTel
proposes to distribute the Shares ("the Spinoff") to its approximately 780
shareholders residing in 31 states and Canada on the basis of one share of
Common Stock of the Company for each 588 shares of common stock of American
NorTel held of record by its shareholders on September 30, 1996; provided that
only American NorTel shareholders entitled to at least five shares will be
eligible for the dividend distribution.
The Spinoff is being done with reference to a proposed merger ("the
Merger") between the Company and another corporation with a similar name, Flex
Financial Group, Inc. ("Flex Financial"). The proposed Merger is being
registered with the Securities and Exchange Commission ("the SEC")
simultaneously with the registration of the Spinoff described herein. The
proposed Merger will be submitted to the shareholders of Flex Financial for
their approval or rejection. American NorTel will approve the proposed Merger
before the Spinoff occurs, but there can be, and is, no assurance that the
shareholders of Flex Financial will approve the proposed Merger.
Should the Merger be approved by the shareholders of Flex Financial and
be effected, the Company and Flex Financial will merge, with the Company being
the surviving corporation. The shareholders of Flex Financial will exchange
all their capital stock in Flex Financial for 94,000 shares of Common Stock of
the Company, and the officers and directors of Flex Financial will become the
officers and directors of the Company.
<PAGE>
The Three Companies.
- ---------------------
Three companies and their shareholders are affected by the Spinoff and
Merger transactions described in this Prospectus.
Flex Acquisitions Corporation(the "Company"). The Company was
-----------------------------------------------
incorporated under the laws of the State of Texas on March 21, 1996 for the
purpose of merging with Flex Financial Group, Inc. ("Flex Financial") should
the Merger transaction described herein be approved. The Company has no
business operations or significant capital and has no present intention of
engaging in any active business until and unless it merges with Flex
Financial.
The business office of the Company is located at 770 S. Post Oak Lane,
Suite 515, Houston, TX 77056. Its telephone number is 713/840-7500.
Flex Financial Group. Inc. ("Flex Financial"). Flex Financial was
--------------------------------------------------
incorporated under the business corporation laws of the State of Texas on
August 16, 1995.
General. Flex Financial was formed in August, 1995 to participate in
-------
certain short-term financing opportunities (terms of less than one year) in
the underwriting segment of the securities industry and to participate in
certain long-term financing and investment opportunities (terms of greater
than one year) in transactions with operating businesses with significant
growth potential ("Target Businesses"). The Company has no business
operations or significant capital and has no present intention of engaging in
any active business until and unless it completes the public offering of its
securities described herein.
Business Plan. The Company intends to participate in short term
--------------
financing opportunities by (i) providing and/or participating in equity
subordination loans to selected underwriters requiring additional excess net
capital for underwriting specific issues on a firm commitment basis
("Subordination Loans") and (ii) providing and/or participating in bridge
loans to selected issuers meeting the Company's due diligence standards in
connection with initial public offerings and secondary financing ("Bridge
Loans"). By reason of its participation in Subordination and Bridge Loans,
the Company may be in a position to take advantage of long-term financing and
investment opportunities to effect exchanges of its assets for cash and/or
securities not involving acquiring control share positions ("Investment
Transactions") and to effect mergers, exchanges of capital stock, asset
acquisitions, joint ventures or other similar business combinations involving
acquiring control share positions ("Business Acquisitions") with Target
Businesses. The Company also intends to engage in "spinoff" activities such
as are described herein, such spinoffs to involve the distribution, by way of
stock dividends or otherwise, of registered shares of stock of other public
companies. The Company initially undertook a private placement of its
securities ("Private Placement") primarily to provide the capital to commence
the investigation, negotiation and participation in Subordination and Bridge
Loans.
Management of the Company believes that financing opportunities will
become available to the Company due primarily to the liquidity of its assets,
its future status as a publicly-held company, and its flexibility in
structuring and participating in financing opportunities.
The Company maintains its offices at 770 S. Post Oak Lane, Suite 515,
Houston, Texas 77056 where its telephone number is 713/ 840-7500.
The business office of Flex Financial is 770 S. Post Oak Lane, Suite 515,
Houston, TX 77056. Its telephone number is 713/840-7500.
<PAGE>
American NorTel Communications Inc. American NorTel Communications
-------------------------------------
Inc. ("American NorTel") filed its Certificate of Registration and Articles of
Continuance with the Secretary of State of the State of Wyoming and became a
Wyoming corporation effective February 9, 1993. The company was originally
incorporated in British Columbia, Canada on May 17, 1979. American NorTel's
common stock has been listed for trading on the Vancouver Stock Exchange since
September 18, 1980. In conjunction with a one for five consolidation, the
company's name was changed to Coldsprings Resources Ltd. on June 4, 1987. In
conjunction with a one for ten consolidation, its name was changed to
Islehaven Capital Corporation on July 14, 1987. The company changed its name
to NorTel Communications Inc. on June 17, 1991. In conjunction with a one
for ten consolidation, the company's name was changed to American NorTel
Communications Inc. on May 11, 1992.
American NorTel currently operates only in the telecommunications
business, providing long distance telephone service in combination with
additional related services in the United States and a number of foreign
countries, including Argentina, Brazil, Mexico, Canada, and Costa Rica. Until
the end of 1993, the Company was also in the mining development and
exploration business in Costa Rica and Canada, and has divested of its
remaining mining assets.
In 1987, American NorTel was inactive and was classified as dormant under
the rules of the Vancouver Stock Exchange. The then current management
organized a reverse take-over by a number of limited partnerships and private
companies which were engaged in the mining development and exploration
business and who, on July 14, 1987, transferred all of their assets into the
company for Treasury shares. The company is no longer active in the mining
development and exploration business. In 1990, American NorTel became active
in the long distance telecommunications business, which is now its only
business.
American NorTel has approximately 780 shareholders. The company seeks to
diversify its business opportunities and investment potential to its
shareholders by engaging in "spinoff" activities such as are described herein,
such spinoffs to involve the distribution, by way of stock dividends or
otherwise, of registered shares of stock of other companies. American NorTel
organized the Company and, prior to the date of this Prospectus, has been the
controlling shareholder of the Company.
American NorTel's address is 7201 E. Camelback Road, Suite 320,
Scottsdale, Arizona 85251. Its telephone number is 602/945-1266.
The Spinoff.
- ------------
American NorTel purchased 20,000 Shares of Common Stock of the Company
for a cash consideration of $1,000 and proposes to distribute to the
shareholders of American NorTel, as a stock dividend, these 20,000 Shares on
the basis of one share of the Company for every 588 shares of American NorTel
held of record on September 30, 1996; provided that only American NorTel
shareholders entitled to at least five shares will be eligible for the
dividend distribution ("the Spinoff"). See "Terms of the Transaction."
The Proposed Merger.
- ---------------------
Upon the effectiveness both of the registration statement of which this
Prospectus is a part and the registration statement describing the Merger for
the benefit of the Flex Financial shareholders, the shareholders of the
Company and of Flex Financial will each vote to approve or reject a proposed
merger of Flex Financial into the Company on the following terms:
<PAGE>
<TABLE>
<CAPTION>
Number of Shares of Capital Stock(1)
----------------------------------------
Before Merger After Merger
------------------------ --------------
Beneficial Owners Company Flex Financial The Company(2)
- ----------------- ------- --------------- --------------
<S> <C> <C> <C>
Flex Shareholders 0 94,000(3) 94,000(4)
American NorTel 20,000 0 0(5)
American NorTel's
Shareholders 0 0 20,000(5)
------- --------------- --------------
20,000 94,000(3) 114,000(4)
<FN>
(1) All shares of capital stock of the Company are shares of Common Stock.
All shares of capital stock of Flex Financial are shares of Common Stock.
(2) The surviving corporation of the Merger will be the Company but Flex
Financial's management and directors shall become the management and directors
of the Company.
(3) In addition to these shares, there are reserved 185,332 shares of Flex
Financial Common Stock issuable upon the exercise of outstanding options and
warrants.
(4) In addition to these shares, there will be reserved 185,332 shares of
the Company's Common Stock issuable upon the exercise of the presently issued
and outstanding Flex Financial options and warrants.
(5) American NorTel will distribute its 20,000 Shares to its approximately
780 shareholders ("the Spinoff" - see definition of this on page 2 under
"American NorTel Communications Inc.") prior to the vote on the Merger by the
Flex Financial stockholders. This distribution initially shall be made to an
escrow agent. See "The Escrow Arrangement" immediately below. After
allocating 1 share of Common Stock of the Company for each 588 shares of
common stock of American NorTel according to the terms of the Spinoff,
American NorTel will have an uncertain number of Spinoff Shares representing
undistributed whole and fractional share interests not allocated as a result
of the rounding down. It is likely that such Shares, accordingly, will remain
with American NorTel and not be distributed.
</TABLE>
The Escrow Arrangement.
- ------------------------
A vote to approve the Merger by the sole shareholder of the Company is
assured, after which vote American NorTel shall declare a dividend to its
shareholders of the 20,000 shares of Common Stock of the Company held by it
("the Spinoff Shares"). Certificates representing the Spinoff Shares shall be
distributed by American NorTel to Southwest Bank of Texas NA ("the Escrow
Agent") to be held in escrow for distribution by it to American NorTel's
approximately 780 shareholders at such time as (i) the Merger is effected,
(ii) this Prospectus is supplemented to indicate that the Merger has been
effected and the date of such effectiveness, and (iii) information concerning
the Company in its post-merger form shall have been made available to market
makers of the Company's stock and also published in Moody's OTC Industrial
Manual. After certificates representing the Spinoff Shares have been
delivered to the Escrow Agent, the shareholders of Flex Financial shall vote
to approve or disapprove the Merger. Should they approve the Merger, Articles
of Merger must be filed with the Secretary of State of Texas, which filing and
recording would cause the Company and Flex Financial to be merged, with the
Company as the surviving corporation.
<PAGE>
Upon the legal effectiveness of the Merger, the Company shall then (i)
file a post-effective amendment to the Registration Statement and supplement
this Prospectus to indicate the fact and date of the Merger and (ii) cause
information concerning the Company in its post-merger form to be made
available to market makers of the Company's stock and also published in
Moody's OTC Industrial Manual. At that time, the Company shall provide to the
Escrow Agent the Company's representation that the requirements of Securities
and Exchange Commission Regulation 230.419(e) have been met, and the Escrow
Agent shall distribute the escrowed certificates representing the Spinoff
Shares to the owners of such Shares. Effectiveness of the Merger is a
condition to a closing of the Units offering.
The present management of Flex Financial shall become the management of
the Company after the Merger should the Merger become effective, but no
assurance can be given that it shall become effective.
Consequences Should the Merger Not occur.
- ---------------------------------------------
There can be no assurance that the proposed Merger between the Company
and Flex Financial will occur, since a favorable shareholder vote of Flex
Financial's shareholders must be obtained, and Flex Financial's management
does not hold voting power over a majority of any of its Common Stock, which
two thirds vote is required for Flex Financial to approve the Merger.
Should the Merger not become effective, (i) Flex Financial will continue
as a closely-held company with its existing assets and business, (ii) the
Company will have no significant assets or business, and there will be no
trading market for its Common Stock, because the stock certificates
representing all its issued and outstanding shares of capital stock will still
be held in escrow by the Escrow Agent, and (iii) tis offering will not be
effected. As long as this escrow continues, no transfer or other disposition
of the Shares held in escrow shall be permitted other than by will or the laws
of descent and distribution or pursuant to a qualified domestic relations
order as defined by the Internal Revenue Code of 1986, as amended, or Title 1
of the Employee Retirement Income Security Act or the rules thereunder. The
Company's management has no specific plans for an alternative to a rejection
of the proposed Merger but would seek to acquire a business or assets that
would constitute a business, using funds contributed by management to pay the
costs of such search. Upon execution of any agreement for the acquisition of
a business or assets that would constitute a business, the Company shall file
a post effective amendment to the Registration Statement and shall supplement
this Prospectus to disclose information about the alternative business or
assets acquisition, including financial statements and other information
required by the Securities and Exchange Commissions's Rule 419. Upon the
legal effectiveness of the acquisition described in the amended registration
statement and supplemented Prospectus, an additional post-effective amendment
to the registration statement would be filed, and upon the effectiveness of
such post-effective amendment filed with the Commission, the Escrow Agent
would distribute the stock certificates held in escrow. Should no alternative
to the Merger be effected within 18 months after the effective date of the
Registration Statement of which this Prospectus is a part, Flex Financial has
agreed to convert its $4,000 Note according to its terms into common stock
representing 80% of the outstanding voting shares of the Company's Common
Stock and will have the voting rights to cause a dissolution of the Company.
Flex Financial has indicated its intentions to so exercise these voting
rights to that effect at that time. See "Summary of Proposed Transaction The
Escrow Arrangement."
Degree of Management Control of Vote on Merger.
- -----------------------------------------------------
The Merger must be approved by a vote of a two-thirds (2/3's) vote of the
outstanding shares of Common Stock of each of the Company and Flex Financial.
With respect to such companies, the percentage of outstanding shares entitled
to vote and held by officers, directors and their affiliates are as follows:
the Company - 0%; and Flex Financial - Common Stock - 43%.
<PAGE>
Dissenters' Rights of Appraisal.
- ----------------------------------
Those shareholders of Flex Financial who vote against the Merger have the
right to dissent and to exercise certain rights of appraisal, which, if
exercised, and if the Merger is effected, would cause Flex Financial to pay
these dissenters the appraised value of their shareholdings. See "Voting and
Management Information - Dissenters' Rights of Appraisal."
Compliance with Governmental Regulations.
- -------------------------------------------
No federal or state regulatory requirements, other than securities laws
and regulations, must be complied with or federal or state approval obtained
in connection with the Spinoff and Merger, other than the filing of articles
of merger with the Secretary of State of Texas after a favorable vote might be
obtained on the proposed merger.
Tax Consequences of the Transaction.
- ---------------------------------------
The Merger should be a "tax-free" reorganization under Section 368(a)(1)
of the Internal Revenue Code. The Spinoff is a taxable distribution for both
American NorTel and American NorTel's shareholders, but the value of the
Spinoff Shares for taxable purposes is believed by American NorTel to be
$0.001 per Share. See "Terms of the Transaction Federal Income Tax
Consequences."
Risk Factors.
- -------------
Ownership of the Common Stock of the Company is speculative and involves
a high degree of risk, whether the Merger with Flex Financial be effected or
not. See "Risk Factors" below.
RISK FACTORS
The shareholders of Flex Financial, all of whom shall be asked to vote on
the proposed Merger, are making an investment decision that involves a high
degree of risk and should carefully consider the following factors in
evaluating the Merger, the surviving corporation, and its business in
determining whether to approve the Merger.
This Prospectus contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933. Such forward-looking statements
may be found in this section and under "Prospectus Summary," "Use of
Proceeds," "Management's Discussion and Analysis of Financial Condition and
Results of Operations" and Business and Properties." Actual events or results
could differ materially from those discussed in the forward-looking statements
as a result of various factors including, without limitation, the risk factors
set forth below and elsewhere in this Prospectus. In addition to the other
information contained in this Prospectus, the following risk factors should be
considered when evaluating an investment in the shares of Common Stock offered
hereby.
1. Financial Condition of the Company . The Company was recently
----------------------------------
organized and has no operating history, revenues from operations, or assets
other than cash from the initial sale of stock. The Company faces all of the
risks of a new business and those risks specifically inherent in the
investigation, participation, or investment in financings of the type sought
by the Company. Purchase of the securities in this offering must be regarded
as placing funds at a high risk in a new or "start-up" venture with all of the
unforeseen costs, expenses, problems, and difficulties to which such ventures
are subject. There is no assurance that the Company will close the initial
public offering necessary for it to implement its business plan, or if it
does, that the Company will be able to locate and participate in financing and
investment opportunities. In addition, even if the Company becomes involved
in a financing or investment opportunity, there is no assurance that it will
generate revenues or profits, nor that the value or market price of the
Company's Common Stock would be increased thereby.
<PAGE>
2. No Operating History. The Company was incorporated in the State
--------------------
of Texas on March 21, 1996. The Company has conducted only organizational
business and has no operating history. Although the Company's management has
considerable business experience, there can be no assurance that the Company's
activities will be profitable.
3. No Assurance of a Public Market and Likelihood of a Volatile
----------------------------------------------------------------
Market. While the shares of Common Stock of the Company to be issued or
- ------
distributed pursuant to this Prospectus will be free of restrictions on
transferability for all persons except "affiliates" of the Company and Flex
Financial (and with respect to such "affiliates" such shares may be
transferred subject to certain restrictions), there is presently no public
market for the Common Stock of the Company and there is no assurance that a
public market for such securities will develop after the occurrence of the
Merger described in this Prospectus, or, if one develops, that it will be
sustained. It is likely that any market that develops for the Common Stock,
should it develop, will be highly volatile and that the trading volume in such
market will be limited.
4. Market Restrictions on Broker-Dealers. The Company's common
---------------------------------------
stock is covered by a Securities and Exchange Commission rule that imposes
additional sales practice requirements on broker-dealers who sell such
securities to persons other than established customers and accredited
investors (generally institutions with assets in excess of $5 million or
individuals with net worth in excess of $1 million or annual income exceeding
$200,000 or $300,000 jointly with their spouse). For transactions covered by
the rule, the broker-dealer must make a special suitability determination for
the purchaser and receive the purchaser's written agreement to the transaction
prior to the sale. Consequently, the rule may affect the ability of
broker-dealers to sell the Company's securities and also may affect the
ability of persons receiving shares in this offering to sell their shares in
the secondary market. Further, the Company's Common Stock, after the Merger,
will initially be quoted on an NASD inter-dealer system called "the Bulletin
Board," will not have $4 million in assets or $2 million in stockholders'
equity which are both required for it to qualify for quotation on NASDAQ, and
may not be expected to command a market price of $5 per share, the price
required for a non-NASDAQ-quoted security to escape the trading severities
imposed by the Securities and Exchange Commission on so-called "penny stocks."
These trading severities tend to reduce broker-dealer and investor interest in
penny stocks and could operate (i) to inhibit the ability of the Company's
stock to reach a $3 per share trading price that would make it eligible for
quotation on NASDAQ even should it otherwise qualify for quotation on NASDAQ
and (ii) to inhibit the ability of the Company to use its stock for business
acquisition purposes. See "Information About the Company - Market for the
Company's Common Stock and Related Stockholders Matters."
5. Management Control. Should the proposed Merger be approved and
------------------
effected, after the Merger the Company's officers and directors and their
affiliates will own approximately 25 percent of the common stock of the
Company and thereby may be able to determine the outcome of any vote affecting
the control of the Company. The Board of Directors has complete discretion in
making all business decisions. Accordingly, no person should purchase
Securities in the Company unless he is willing to entrust all business
decisions to the Board of Directors.
<PAGE>
6. Dependence on Key Personnel. The affairs of the surviving
-----------------------------
company, should the Merger be approved, shall be conducted by the present
management of Flex Financial. The loss of the services of any of these
persons and other key employees, for any reason, may have a materially adverse
effect on the prospects of the emergent company. There are no employment
contracts with management or key personnel of the Company. See "Voting and
Management Information - Directors, Executive Officers and Significant
Employees." The Company will be heavily dependent on the skills, talents, and
abilities of its management and consultants to successfully implement its
business plan. Although management has experience in seeking, investigating
and participating in financing and investment opportunities, management will
generally depend on their general business expertise in making decisions
regarding the Company's operations. Because investors will not be able to
evaluate the merits of possible business opportunities by the Company, they
should critically assess the information concerning the Company's management.
The success of the emergent Company is dependent upon, among other things,
the services of Michael T. Fearnow, President of Flex Financial, and of M.
Stephen Roberts, who will provide certain financial and legal consulting
services to the Company. The Company has not entered into employment
agreements with any of its officers. Flex Financial does not have, nor does
it or the Company presently intend to obtain, key man life insurance (with
proceeds payable to the Company) on the life of Mr. Fearnow. The loss of the
services of Messrs. Fearnow and Roberts for any reason, may have a material
adverse effect on the prospects of the Company.
7. Dependence on Outside Consultants and Advisers. The Company
-------------------------------------------------
intends to retain the services of Financial Public Relations, Ltd. on a
non-exclusive long-term basis to provide financial consulting services to the
company. The services to be provided by Financial Public Relations, Ltd. will
be provided primarily by M. Stephen Roberts and Michael T. Fearnow who have
extensive experience in the securities industry and particularly with respect
to small firm underwritings. The Company expects to appoint through the board
of directors an advisory committee composed of persons employed in the
securities industry to provide ongoing advice and consultation to the board
with respect to business opportunities and the business activities of the
Company. During the investigation of a possible business opportunity and in
order to supplement the business experience of management, the Company may
employ accountants, technical experts, appraisers, attorneys, or other
consultants and advisers. The selection of any advisers will be made by
management and without any control from stockholders. Furthermore, it is
anticipated that advisers may be engaged by the Company on an independent
basis without a continuing fiduciary or other obligation to the Company.
8. Substantial Management Conflicts; Time and Compensation. The
----------------------------------------------------------
officers and directors of the Company and its consultants are currently
engaged in other businesses and positions and will devote only a portion of
their time to the business affairs of the Company. The salaried, hourly and
other compensation for remuneration of management and its consultants is in
the sole discretion of the board of directors, but in any case will not be
determined at arms' length. In addition, in the face of competing demands for
their time, the officers, directors and other consultants may grant priority
to their other business engagements rather than to the Company.
Certain conflicts of interest may exist between the Company and its
management and consultants, and conflicts may develop in the future. In
particular, members of management will face a conflict of interest with regard
to their possible future participation in other business relationships with
companies to which the Company may provide financing. In such cases, members
of management may have interests that conflict with those of the Company.
Although Company management will attempt to resolve any conflicts in favor of
the Company, there is no assurance that this will be the case. The Company
has not established procedures for the resolution of conflicts of interest.
<PAGE>
9. Impracticability of Exhaustive Investigation. The Company's
---------------------------------------------
limited funds and the lack of full-time management will likely make it
impracticable to conduct a complete and exhaustive investigation and analysis
of a financing opportunity before the Company commits its capital or other
resources. Management decisions may be made without detailed due diligence,
feasibility studies, independent analysis, market surveys, and the like which,
if the Company had more funds available, would be desirable. Management
decisions will be particularly dependent on information provided by the
issuer, underwriter, their principals, or others associated with the business
opportunity seeking the Company's participation.
10. No Arrangements. The Company has no understanding or
----------------
arrangement for participation in any specific financing opportunity, nor will
the proceeds of this offering provide sufficient funds for said purpose.
11. Competition. The search for potentially profitable business
-----------
opportunities is intensely competitive. The Company expects to be at a
disadvantage when competing with firms which have substantially greater
financial and management resources and capabilities than the Company. There
can be no assurance that other companies and individuals with significantly
greater financial, marketing or other resources than the Company will not
prove competitive. Accordingly, there can be no assurance that the Company
will be able to successfully compete in the financing market.
12. Lack of Profitability. The Company has conducted no operations
---------------------
and no assurance can be given that the Company will be able to operate
profitably in the future and no representation in such regard is herein made
or intended. Any financial projections included herewith are merely
management's estimation of revenues and expenses using the most favorable
assumptions regarding the Company's business prospects.
13. Lack of Formal Marketing Strategy. The Company's marketing
----------------------------------
strategy will be based primarily on personal relationships with a wide variety
of clients and the Company has not developed a formal marketing strategy. The
Company is in the process of formulating and implementing a more formal
marketing strategy.
14. Lack of Firm Commitment to Purchase Securities. There is no
----------------------------------------------
firm commitment on the part of anyone to purchase all or any part of the
Securities being offered hereby; consequently, the Company can give no
assurance that all or any part of the offered Securities will be sold.
15. Adverse Effect of Sale of Less than Total Offering. In the
----------------------------------------------------
event less than the total number of Securities being offered hereby should be
sold, the proposed operations of the Company would be adversely affected and
therefore reduced. The Company's operations may require additional financing
for which the Company has not arranged and no assurance can be offered that
such financing would be available.
16. General Factors. The Company's business may be affected from
---------------
time to time by such matters as changes in general economic, industrial, and
international conditions; changes in taxes, prices and costs; and other
factors of a general nature which may have an adverse affect on the Company's
business.
17. Debt Financing. The Company does not presently intend to seek
--------------
debt financing. However, it may in the future seek debt financing where
necessary for its operations. Such borrowing can expose stockholders to
greater risk of loss in the event the Company does not succeed.
<PAGE>
18. Additional Financing may be Required. Even if all of the
-------------------------------------
securities offered hereby are sold, the funds available to the Company may not
be adequate for its proposed business activities. Accordingly, the ultimate
success of the Company may depend upon its ability to raise additional
capital.
19. Capital Requirements. There can be no assurance that the
---------------------
proceeds of this Offering and of proposed subsequent offerings will raise
sufficient capital to enable the Company to obtain a level of business capable
of sustaining profitable operations.
20. Cumulative Voting and Pre-Emptive Rights. There are no
---------------------------------------------
pre-emptive rights in connection with the Company's capital stock. Therefore,
holders and purchasers of the Company's common stock may be further diluted in
their percentage ownership of the Company in the event additional shares are
issued by the Company in the future. Cumulative voting in the election of
directors is not allowed. Accordingly, the holders of a majority of the
shares of capital stock, present in person or by proxy, will be able to elect
all of the Company's Board of Directors.
21. Use of Proceeds not Specific. The proceeds of this Offering have
----------------------------
been allocated only generally. The specific uses of investor's funds will
depend upon the business judgment of management, upon which the investors must
rely, with only limited information about management's specific intentions.
22. Absence of Business and Marketing Data. Although the Company
--------------------------------------
has spent considerable time and effort in developing a business plan for which
it believes a market exists, it has not undertaken any business or marketing
studies to determine the feasibility of its business or marketing plan or to
determine the feasibility of the products and service it expects to provide.
23. Tax Consequences. The anticipated favorable tax consequences
-----------------
of the proposed Merger and Spinoff to the Company and its shareholders (see
"Terms of the Transaction - Federal Income Tax Consequences") are not
supported by an advance ruling by the Treasury Department but are based upon
an opinion of M. Stephen Roberts, Esq., in his capacity as tax counselor to
the Company (which tax opinion is one of the exhibits to the registration
statement of which this Prospectus is a part). Should the actual income tax
consequences be different than as represented herein by the Company,
significant gain or loss might be recognized and reportable by any of the
Company, American NorTel, or American NorTel's approximately 780 shareholders
to whom will be distributed the 20,000 Spinoff Shares should the Merger be
effected.
24. Dividends Not Likely. Should the Merger be effected, for the
--------------------
foreseeable future it is anticipated that any earnings which may be generated
from operations of the emergent company will be used to finance the growth of
such company, and cash dividends will not be paid to holders of the Common
Stock.
25. Possible Future Dilution. In addition to the Shares registered
------------------------
for the proposed Merger and for the Spinoff, the Company has registered
2,000,000 shares to be available for issuance in possible business
combinations or asset acquisitions, the issuance of which would dilute the
percentage ownership and could dilute the net tangible book value per share of
shareholders of the surviving company.
USE OF PROCEEDS
The net proceeds to the Company from the sale of the Units offered
by it hereby, assuming a public offering price of $6.00 per Unit and after
deducting underwriting discounts and estimated offering expenses are estimated
to be approximately $500,000, if the maximum offering amount is sold. If the
minimum offering amount is sold the net proceeds are estimated to be $84,000.
<PAGE>
If the maximum offering amount is sold, the Company anticipates that it
will use approximately $57,500 of the net proceeds to pay the principal and
interest on Bridge Loans and the balance of the net proceeds are expected to
be used for working capital and general corporate purposes. If the minimum
offering amount is sold the net proceeds are expected to be used primarily to
pay the principal and interest on Bridge Loans.
The Company has not determined the exact amounts it plans to expend with
respect to working capital and general corporate purposes. The amounts
actually expended for each such use, if any, are at the discretion of the
Company and may vary significantly depending upon a number of factors,
including future revenue growth, the amount of cash generated by the Company's
operations, and changing competitive conditions. The Company reserves the
right, in the exercise of prudent business judgment, to allocate the proceeds
and the priority of the use of the proceeds, provided however, that the
Company warrants that no more than 20% of the proceeds of this Offering will
be used for overhead or general and administrative expenses. See "Risk
Factors -- Broad Discretion in Application of Proceeds."
Pending use of the net proceeds for the above purposes, the Company
intends to invest such funds in short-term, investment-grade, interest-bearing
obligations. The Company believes that the proceeds from the sale of Common
Stock and Warrants offered hereby will enable the Company to satisfy its
anticipated financing needs for a period of at least 12 months following this
offering. However, the capital requirements relating to implementation of the
Company's business plan will be significant. Based on the Company's current
assumptions relating to implementation of its business plan (including the
timetable of, and cost associated with, making subordination and bridge
loans), the Company will seek to participate in up to six subordination and/or
bridge loans during the 12 months following consummation of this offering.
If the Company's plans change, its assumptions prove to be inaccurate, or the
capital resources available to the Company otherwise prove to be insufficient
to implement its business plan (as a result of unanticipated expenses,
problems or difficulties, or otherwise), the Company would be required to seek
additional financing or curtail its activities. There can be no assurance
that the Company will have sufficient capital resources to permit the Company
to participate in subordination and bridge loans of the number, amount and in
the timing proposed in its business plan or to otherwise implement such plan.
CAPITALIZATION
The following table sets forth the capitalization of the Company at July
31, 1996, (i) on a pro forma basis giving effect to the Merger and (ii) as
adjusted to reflect the sale of the 100,000 Shares of Common Stock, 200,000
Class B Warrants and 200,000 Class C Warrants offered by the Company hereby
(at an initial public offering price of $5.70 per share of Common Stock, $.10
per Class B Warrant and $.05 per Class C Warrant), and the application of the
net proceeds therefrom. See "USE OF PROCEEDS."
<TABLE>
<CAPTION>
July 31, 1996
--------------------------
Pro Forma
Post Merger As Adjusted
------------ ------------
<S> <C> <C>
SHAREHOLDERS' EQUITY: $ 960 $ 1,060
Common Stock, $0.001 par value. Authorized
10,000,000 shares; issued and outstanding
114,000 shares (1)
Additional Paid-in capital 82,240 598,240
------------ ------------
Total shareholders' equity 21,909 599,300
------------ ------------
Total Capitalization $ 21,909 $ 599,300
============ ============
<FN>
(1)Does not include 185,332 shares of Common Stock subject to warrants
and options outstanding at July 31, 1996 nor to 400,000 shares of common Stock
subject to warrants to be issued in this offering if the maximum number of
Units are sold.
</TABLE>
<PAGE>
DILUTION
The pro forma net tangible book value of the Company basis giving effect
to the Merger as of July 31, 1996 was approximately $21,909 or $0.19 per share
of Common Stock. Net tangible book value per share represents the amount of
total tangible assets of the Company less total liabilities, divided by the
number of shares of Common Stock outstanding. After giving effect to the sale
of the 100,000 shares of Common Stock, 200,000 Class B Warrants and 200,000
Class C Warrants offered hereby at an initial public offering price of $5.70
per share, $.10 per Class B Warrant and $.05 per Class C Warrant,
respectively, and the receipt by the Company of the net proceeds therefrom,
the pro forma net tangible book value of the Company as of July 31, 1996 would
have been $599,300 or $2.80 per share. This represents an immediate increase
in pro forma net tangible book value of $2.61 per share to existing
shareholders and an immediate dilution of $2.90 per share to new investors
("New Investors") purchasing shares of Common Stock in this Offering. The
following table illustrates this per share dilution:
Assumed initial public offering price per share $5.70
Net tangible book value per share before offering $0.19
Increase in net tangible book value per share attributable $2.61
to New Investors
Pro Forma net tangible book value per share after offering $2.80
Dilution per share to New Investors $2.90
The following table summarizes, as of July 31, 1996 the number of shares
of Common Stock purchased from the Company, the total cash consideration paid,
and the average price per share paid by existing shareholders and to be paid
by purchasers of shares of Common Stock offered hereby at an initial offering
price of $5.70 (before deducting the underwriting discounts and commissions
and estimated offering expenses):
<TABLE>
<CAPTION>
Shares Purchased Total Cash Consideration
Number Percentage Amount Percentage
<S> <C> <C> <C> <C>
Existing Shareholders 114,000 53.3% 83,200 12.7%
New Investors 100,000 46.7% 570,000 87.3%
Total 214,000 100% 653,200 100%
</TABLE>
______________________
<PAGE>
TERMS OF THE TRANSACTION
The Company and Flex Financial, pursuant to approval by their respective
boards of directors, have entered into an agreed plan of merger, a copy of
which is included herein (see "Plan of Merger). In order for the merger
contemplated by the Plan of Merger to become effective, it is necessary that
each of the following occur:
(i) a registration statement covering the 20,000 Spinoff Shares
offered herein and a registration statement covering the 94,000 Merger shares
(for distribution to Flex Financial's shareholders) (a) must be filed with the
Securities and Exchange Commission and with appropriate state securities
regulatory agencies and (b) must become effective;
(ii) the shareholders of each of the Company and of Flex
Financial must, by a requisite vote of the shares outstanding, approve the
merger contemplated by the Plan of Merger; and
(iii) certain documents evidencing the approved merger must be
prepared and filed with the appropriate state authority in the State of Texas.
Terms of the Merger.
- ----------------------
The terms of the proposed merger ("the Merger") are as follows:
l. Flex Financial shall merge into the Company, a Texas corporation.
2. Upon the effectiveness of the Merger, all the issued and
outstanding shares of capital stock of Flex Financial shall be converted into
94,000 shares of Common Stock of the Company.
3. Fractional shares shall not be issued but shall be rounded up or
down to the nearest whole number. The Company shall reserve 185,332
additional shares of its Common Stock for possible issuance upon the exercise
of Company options and warrants to be issued to replace presently outstanding
and unexercised Flex Financial options and warrants.
4. The business of Flex Financial shall be conducted, after the
Merger, by the Company, into which Flex Financial shall have merged, but Flex
Financial's management and directors shall become the management and directors
of the Company.
5. American NorTel shall distribute to its shareholders ("the
Spinoff"), on a basis proportionate to their shareholdings in American NorTel,
20,000 Shares ("the Spinoff Shares") of Common Stock of the Company now held
by American NorTel. Each American NorTel shareholder shall receive one share
of the Company for each 588 shares of American NorTel held of record on
September 30, 1996; provided that only American NorTel shareholders entitled
to at least five shares will be eligible for the dividend distribution.
Fractional shares shall be rounded up or down to the nearest whole number;
provided, that in no event shall the number of Shares to be distributed to
American NorTel's shareholders exceed 20,000.
6. There shall also be registered as part of the Merger registration
statement filed with the Securities and Exchange Commission, 2 million
additional shares of Common Stock of the Company ("the Shelf Shares"), which
Shelf Shares shall be available after the Merger for issuance, upon the filing
of post-effective amendments to the Merger registration statement, in
subsequent, possible mergers or acquisitions with companies engaged in
business activities of types related or similar to those now conducted by Flex
Financial. Management of Flex Financial (who shall become the management of
the Company after the Merger) has no current plans, arrangements or
understandings with respect to possible merger, acquisitions or business
combinations for which the Shelf Shares would be used.
<PAGE>
7. Should the Merger not be approved by the requisite vote of persons
holding a majority of the issued and outstanding shares of Common Stock of
Flex Financial, none of Flex Financial, the Company, or American NorTel shall
be liable to any of the others, the sole obligation of each being to pay its
expenses relating to the registration of the Shares described herein.
8. The historical financial statements of the post-Merger Company
shall be those of Flex Financial.
Reasons for the Merger and Spinoff.
- ---------------------------------------
The managements of the Company and of Flex Financial believe that Flex
Financial's shareholders will benefit from receiving shares that have been
registered under the Securities Act in exchange for their shares of capital
stock of Flex Financial. Further, the managements of the Company and of Flex
Financial believe that the distribution of Shares to the stockholders of
American NorTel in the Spinoff increases the possibility that a public market
will develop for the Shares held by Flex Financial stockholders. No assurance
can be given, however, that a market will develop for the Common Stock or, if
it develops, that it will be sustained. See "Risk Factors - No Assurance of a
Public Market and Likelihood of a Volatile Market.
Accounting Treatment of Proposed Merger.
- -------------------------------------------
Because the Company is only a corporate shell and not an operating
entity, the proposed Merger will be accounted for as if Flex Financial
recapitalized.
Plan of Merger.
- ----------------
The complete Plan of Merger among the Company, Flex Financial, and
American NorTel is included in this Prospectus-Proxy Statement. See "Plan of
Merger."
Description of Securities.
- ---------------------------
Common Stock. The Company is authorized to issue 10 million shares of
Common Stock, $0.001 par value. As of the date of this Prospectus the Company
had 20,000 shares of Common Stock issued and outstanding.
Voting rights. Holders of the shares of Common Stock are entitled
-------------
to one vote per share on all matters submitted to a vote of the shareholders.
Shares of Common Stock do not have cumulative voting rights, which means that
the holders of a majority of the shares voting for the election of the board
of directors can elect all members of the board of directors.
Dividend rights. Holders of record of shares of Common Stock are
----------------
entitled to receive dividends when and if declared by the board of directors
out of funds of the Company legally available therefor.
Liquidation rights. Upon any liquidation, dissolution or winding
-------------------
up of the Company, holders of shares of Common Stock are entitled to receive
pro rata all of the assets of the company available for distribution to
shareholders, subject to the prior satisfaction of the liquidation rights of
the holders of outstanding shares of Preferred Stock.
<PAGE>
Preemptive rights. Holders of Common Stock do not have any
------------------
preemptive rights to subscribe for or to purchase any stock, obligations or
other securities of the Company.
Registrar and transfer agent. Registrar and Transfer Company, 10
-----------------------------
Commerce Drive, Cranford, New Jersey 07016-3572 serves as the transfer agent
and registrar of the Company.
Dissenter's rights. Under current Texas law, a shareholder is
-------------------
afforded dissenters' rights which if properly exercised may require the
corporation to repurchase its shares. Dissenters' rights commonly arise in
extraordinary transactions such as mergers, consolidations, reorganizations,
substantial asset sales, liquidating distributions, and certain amendments to
the company's certificate of incorporation.
Redeemable Common Stock Purchase Warrants. Pursuant to this
---------------------------------------------
Prospectus, the Company is offering 200,000 Class B Redeemable Common Stock
Purchase Warrants ("Class B Warrants") and 200,000 Class C Redeemable Common
Stock Purchase Warrants ("Class B Warrants")to purchase an aggregate of
400,000 shares of Common Stock.
Class B Warrants. The Class B Warrants are being issued under a
------------------
Warrant Agreement dated November 15, 1995 between the Company and Warrant
Holders. Each Class B Warrant will be exercisable immediately upon its
acquisition and until January 1, 2001, at an exercise price of $6.25 per
Warrant, and shall entitle the holder thereof to receive one (1) share of
Stock for each B Warrant exercised. Fractional shares of Stock will not be
required to be issued upon exercise of the B Warrants. A B Warrant may be
exercised by surrendering a B Warrant certificate with an executed form of
election to purchase shares attached to the certificate, and paying to the
Company the full exercise price for the B Warrants being exercised. Holders
of B Warrants will not be entitled (by virtue of being B Warrant holders) to
receive dividends, vote, receive notices of shareholders' meetings or
otherwise have any rights of shareholders of the Company.
The Class B Warrants are redeemable, at the option of the
Company, at a price of $0.05 per B Warrant at any time after January 1, 1997
upon not less than 30 days prior written notice, provided that there is a
public trading market for the Common Stock and that the reported high bid
price of the Common Stock equals or exceeds $7.50 per share for the 20
consecutive trading days immediately prior to the date of the notice of
redemption to warrant holders.
The exercise price, number and kind of shares of Common Stock
to be obtained by the exercise of the B Warrants is subject to adjustment in
the event of a split of the Common Stock or in the event of the reorganization
or recapitalization of the Company or of the merger or consolidation of the
Company.
The Company will reserve from the authorized and unissued
shares a sufficient number of shares of Common Stock for issuance upon the
exercise of the Class B Warrants.
Class C Warrants. The Class C Warrants are being issued under a
------------------
Warrant Agreement dated November 15, 1995 between the Company and Warrant
Holders. Each Class C Warrant will be exercisable immediately upon its
acquisition and until January 1, 2001, at an exercise price of $10.00 per
Warrant, and shall entitle the holder thereof to receive one (1) share of
Stock for each C Warrant exercised. Fractional shares of Stock will not be
required to be issued upon exercise of the C Warrants. A C Warrant may be
exercised by surrendering a C Warrant certificate with an executed form of
election to purchase shares attached to the certificate, and paying to the
Company the full exercise price for the C Warrants being exercised. Holders
of C Warrants will not be entitled (by virtue of being C Warrant holders) to
receive dividends, vote, receive notices of shareholders' meetings or
otherwise have any rights of shareholders of the Company.
<PAGE>
The Class C Warrants are redeemable, at the option of the
Company, at a price of $0.05 per C Warrant at any time after January 1, 1997
upon not less than 30 days prior written notice, provided that there is a
public trading market for the Common Stock and that the reported high bid
price of the Common Stock equals or exceeds $12.00 per share for the 20
consecutive trading days immediately prior to the date of the notice of
redemption to warrant holders.
The exercise price, number and kind of shares of Common Stock
to be obtained by the exercise of the C Warrants is subject to adjustment in
the event of a split of the Common Stock or in the event of the reorganization
or recapitalization of the Company or of the merger or consolidation of the
Company.
The Company will reserve from the authorized and unissued
shares a sufficient number of shares of Common Stock for issuance upon the
exercise of the Class C Warrants.
Preferred Stock. The Company is authorized to issue 10 million shares
----------------
of Preferred Stock, $0.001 par value. The preferences, rights and attributes
of the Preferred Stock, which may be set forth in series, shall be determined
by the board of directors at such times as series are authorized to be issued.
As of the date of this Prospectus, the Company has not issued any shares of
its authorized Preferred Stock.
Other Securities of the Company. Under the terms of the Merger, all
-------------------------------
warrants and options of Flex Financial which are outstanding on the Effective
Date shall be canceled and converted into warrants and options of the Company
of equivalent tenor. Therefore upon the Effective Date of the Merger, the
Company will have pursuant to the Merger the following additional securities
outstanding.
Class A Common Stock Purchase Options. In September, 1995 Flex
----------------------------------------
Financial authorized the issuance of 80,000 Class A Common Stock Purchase
Options ("Class A Options") in connection with a private placement of 80,000
shares of common stock to its founding shareholders. As of the date of this
Prospectus, all of such Class A Options continue to be owned by the original
subscribers and are outstanding. The Class A Options are currently
exercisable and will terminate on August 31, 2000 and may be exercised at a
price of $.50 per share.
Unit Purchase Options. In connection with an IPO Bridge Loan,
-----------------------
Flex Financial issued $50,000 principal amount of 10% subordinated notes
("Notes") and Unit Purchase Options ("Option Units"). The Option Units
entitle the holders to purchase such number of equivalent units of Flex
Financial's securities as may be offered in an initial public offering at an
aggregate offering price of at least $60,000 pursuant to an effective
registration statement filed under the Securities Act that closes prior to
June 30, 1996. The number of equivalent units purchasable at a price of $.50
per unit is determined by dividing the IPO unit offering price into the
principal amount of Notes. Under the terms of this offering, holders of the
Option Units are entitled to purchase 8,333 equivalent units. By mutual
consent, the applicable IPO closing date and expiration date for exercise was
extended to March 31, 1997 and the holders were granted an additional 4,000
Option Units. As of the date of this Prospectus, all of such Class A Options
continue to be owned by the original subscribers and are outstanding.
Class B and Class C Warrants. As of the date of this Prospectus
------------------------------
Flex Financial had 28,000 Class B Warrants and 28,000 Class C Warrants
outstanding to purchase an aggregate of 56,000 shares of common stock. These
warrants were issued in a private placement that closed in April, 1996 and are
identical to those purchasable in this offering.
Federal Income Tax Consequences.
- ----------------------------------
The Merger. The Merger should qualify as a type "A" reorganization
-----------
under Section 368(a)(1) of the Internal Revenue Code. However, when
consideration is given to the fact that the Company is newly organized, the
"step transaction doctrine" might be applied and, accordingly, the Company
might be considered a continuation of Flex Financial with only a change of
name or place of incorporation, a type "F" reorganization under Section
368(a)(1). Whether the Merger be characterized as a type "A" or "F"
reorganization, the Company believes that there should be no recognition of
taxable gain or loss to the shareholders of the Company by reason of the
Merger.
The Spinoff. It is anticipated that the distribution by American
------------
NorTel to its shareholders of the 20,000 Spinoff Shares will be a taxable
event to American NorTel and to each of its shareholders receiving any of the
Spinoff Shares. Gain (but not loss) would be recognized by American NorTel
under Section 311 of the Internal Revenue Code for any excess of the fair
market value of the Company's stock on the date of actual distribution over
the tax basis to American NorTel of such stock.
Shareholders of American NorTel. As for American NorTel's shareholders
-------------------------------
who receive Spinoff Shares of the Company, the Spinoff shall occur prior to
the vote by Flex Financial's shareholders to accept or reject the Merger.
Since the result of the vote by Flex Financial's shareholders cannot be
forecast, and since the Merger cannot and shall not become effective until
after a favorable vote is obtained on the Merger, American NorTel takes the
view that the fair market value of the Spinoff Shares on the date of the
Spinoff should not have increased over the $0.05 price paid by American NorTel
for the 20,000 Spinoff Shares.
American NorTel has no current or accumulated earnings, and the
distribution is being made from excess capital. Each shareholder of American
NorTel should reduce the adjusted basis of his American NorTel stock by the
fair market value of the distribution to him, and any remaining portion will
be treated as capital gain in the same manner as a sale or exchange of the
stock. This fair market value is assumed to be $0.05 per share. American
NorTel undertakes to advise its shareholders in early 1997 should it deem the
fair market value of the distributed Spinoff Shares on the date of
distribution to have been different than $0.05 per share or should it have had
earnings in 1996, which would cause the distribution, to the extent of such
earnings, to be taxed as a dividend and as ordinary income.
The above discussion is not based upon an advance ruling by the Treasury
Department but upon an opinion of M. Stephen Roberts, Esq., in his capacity as
tax counselor to the Company (which tax opinion is one of the exhibits to the
registration statement of which this Prospectus is a part). See "Risk Factors
- - Tax Consequences."
Pro Forma Financial Information and Dilution.
- -------------------------------------------------
Due to the fact that the Company has no substance or operating history -
it was organized as a shell to accommodate the desire of Flex Financial's
management to provide for the issuance of securities registered under the
Securities Act to Flex Financial's shareholders, pro forma financial
information giving effect to the Merger would not vary in any significant
respect from the financial information of Flex Financial.
<PAGE>
Essentially, the effect of the Spinoff and Merger is to dilute by
approximately 17 percent the equity of the shareholders of Flex Financial by
transferring this equity to the shareholders of American NorTel. The effect
of the Merger and Spinoff on the net tangible book value a share of the
Company's Common Stock and Flex Financial's Common Stock is as follows:
<TABLE>
<CAPTION>
Before After
Merger-Spinoff Merger-Spinoff
<S> <C> <C>
Company's Common Stock $ 0.04 $ 0.19
Flex Financial s Common Stock $ 0.23 $ 0.19
</TABLE>
Material Contacts Among the Companies.
- -----------------------------------------
Other than the proposed Spinoff and Merger described herein, there have
been no material contracts, arrangements, understandings, relationships,
negotiations or transactions among Flex Financial, the Company, and American
NorTel during the periods for which financial statements appear herein.
Reoffering by Party Deemed to be an Underwriter.
- ------------------------------------------------------
The Shares described herein are to be redistributed by the owner of such
Shares, American NorTel, who might be deemed to be an underwriter by reason of
its intent to distribute such Shares. (see "Terms of the Merger" above).
After the distribution by American NorTel of the Spinoff Shares to its
shareholders, American NorTel will no longer own any shares of capital stock
of the Company, except to the extent that an uncertain number of Spinoff
Shares representing undistributed fractional an whole share interests, would
not be allocated in the rounding down process (see "Terms of the Merger").
A consequence to American NorTel, should it be deemed to be an
underwriter of the Shares to be distributed to its shareholders, is that any
person who purchases the registered Shares within 3 years after the
distribution could assert a claim against American NorTel under Section 11 of
the Securities Act of 1933. The purchase could be in the open market as long
as the shares purchased can be traced to the registered Shares American NorTel
distributes to its shareholders. Such a claim, to be successful, must be
based upon a showing that statements in the registration statement were false
or misleading with respect to a material fact or that the registration
statement omitted material information required to be included therein.
Open market purchasers may have to prove reliance upon the alleged
misstatement or omission, but reliance may not necessarily require a showing
that the purchaser actually read the registration statement but, instead, that
the misstatements or omissions in the registration statement were a
substantial factor in the purchase of the shares.
Interest of Counsel.
- ---------------------
M. Stephen Roberts, Esq., counsel to the Company, is named in this
Prospectus as having given an opinion on the validity of the securities being
registered, upon certain income tax consequences of the Merger and the
Spinoff, and upon other legal matters concerning the registration or offering
of the securities described herein. Mr. Roberts is the beneficial owner of
43% of the issued and outstanding shares of Common Stock of Flex Financial and
is the beneficial owner of less than .5% of the issued and outstanding shares
of Common Stock of American NorTel and, by reason of this ownership, shall
become the beneficial owner of 40,102 Shares of the Company by way of the
merger and American NorTel's distribution of the 20,000 Spinoff Shares to its
shareholders.
<PAGE>
Special Provisions of the Articles of Incorporation and Texas Law.
- --------------------------------------------------------------------------
The provisions of the Articles of Incorporation and the Company's Bylaws,
as amended (the "Bylaws"), summarized in the succeeding paragraphs, may be
deemed to have an anti-takeover effect or may delay, defer or prevent a tender
offer or takeover attempt that a shareholder might consider in such
shareholder's best interest, including those attempts that might result in a
premium over the market price for the shares held by a shareholder.
Pursuant to the Articles of Incorporation, the Board of Directors may, by
resolution, establish one or more series of preferred stock, having such
number of shares, designation, relative voting rights, dividend rates,
liquidation or other rights, preferences and limitations as may be fixed by
the Board of Directors without any further shareholder approval. Such rights,
preferences privileges and limitations as may be established could have the
effect of impeding or discouraging the acquisition of control of the Company.
Limitation of Director Liability. Texas law authorizes a Texas
-----------------------------------
corporation to eliminate or limit the personal liability of a director to the
Company and its shareholders for monetary damages for breach of certain
fiduciary duties as a director. The Company believes that such a provision is
beneficial in attracting and retaining qualified directors, and accordingly,
its Articles of Incorporation include a provision eliminating a director's
liability for monetary damages for any breach of fiduciary duly as a director,
except: (i) for any breach Of the duty of loyalty to the Company or its
shareholders; (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law; (iii) for any
transaction from which the director derived an improper personal benefit; or
(iv) for certain other actions. Thus, pursuant to Texas law, the Company's
directors are not insulated from liability for breach of their duty of loyalty
(requiring that, in making a business decision, directors act in good faith
and in the honest belief that the action was taken in the best interest of the
Company), or for claims arising under the federal securities laws. The
foregoing provisions of the Company's Articles of Incorporation may reduce the
likelihood of derivative litigation against directors and may discourage or
deter shareholders or management from bringing a lawsuit against directors for
breaches of their fiduciary duties, even though such an action, if successful
might otherwise have benefitted the Company and its shareholders. Further,
the Company may, but has no present intent to, execute indemnity agreements
with present and future directors and officers for the indemnification of and
advancement of expenses to such persons to the full extent permitted by law.
Indemnification. To the maximum extent permitted by law, the Articles
---------------
of Incorporation and the Bylaws provide for mandatory indemnification of
directors, officers, employees and agents of the Company against all expense,
liability and loss to which they may become subject or which they may incur as
a result of being or having been a director, officer, employee or agent of the
Company. In addition, the Company must advance or reimburse directors and
officers and may advance or reimburse employees and agents for expenses
incurred by them in connection with indemnifiable claims. The Company
believes that such a provision is beneficial in attracting and retaining
qualified directors.
<PAGE>
Under Texas corporation law, a corporation is authorized to indemnify
officers, directors, employees and agents who are made or threatened to be
made parties to any civil, criminal, administrative or investigative suit or
proceeding by reason of the fact that they are or were a director, officer,
employee or agent of the corporation or are or were acting in the same
capacity for another entity at the request of the corporation. Such
indemnification includes expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by such
persons if they acted in good faith and in a manner reasonably believed to be
in or not opposed to the best interests of the corporation or, with respect to
any criminal action or proceeding, if they had no reasonable cause to believe
their conduct was unlawful. In the case of any action or suit by or in the
right of the corporation against such persons, the corporation is authorized
to provide similar indemnification, provided that, should any such persons be
adjudged to be liable for negligence or misconduct in the performance of
duties to the corporation, the court conducting the proceeding must determine
that such persons are nevertheless fairly and reasonably entitled to
indemnification.
The Articles of Incorporation include a provision eliminating liability
for monetary damages for any breach of fiduciary duty as a director, except:
(1) for any breach of the duty of loyalty to the Company or its stockholders;
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law; (iii) for any transaction from which
the director derived an improper personal benefit; or (iv) for certain other
actions. Thus, pursuant to Texas law, directors of the Company are not
insulated from liability for breach of their duty of loyalty (requiring that,
in making a business decision, directors act in good faith and in the honest
belief that the action was taken in the best interest of the corporation), or
for claims arising under the federal securities laws. The foregoing
provisions of the Articles of Incorporation may reduce the likelihood of
derivative litigation against directors and may discourage or deter
stockholders or management from bringing a lawsuit against directors for
breaches of their fiduciary duties, even though such an action, if successful,
might otherwise have benefitted the Company and its stockholders. Further,
the Company may, but has no present intent to, execute indemnity agreements
with present and future directors and officers for the indemnification of and
advancing of expenses to such persons to the full extent permitted by law.
To the extent any such indemnified persons are successful on the merits
in defense of any such action, suit or proceeding, Texas law provides that
they shall be indemnified against reasonable expenses, including attorney
fees. A corporation is authorized to advance anticipated expenses for such
suits or proceedings upon an undertaking by the person to whom such advance is
made to repay such advances if it is ultimately determined that such person is
not entitled to be indemnified by the corporation. Indemnification and
payment of expenses provided by Texas law are not deemed exclusive of any
other rights by which an officer, director, employee or agent may seek
indemnification or payment of expenses or may be entitled to under any by-law,
agreement, or vote of shareholders or disinterested directors. In such
regard, a Texas corporation is empowered to, and may, purchase and maintain
liability insurance on behalf of any person who is or was a director, officer,
employee or agent of the corporation. As a result of such corporation law,
the Company may, at some future time, be legally obligated to pay judgments
(including amounts paid in settlement) and expenses in regard to civil or
criminal suits or proceedings brought against one or more of its officers,
directors, employees or agents, as such, with respect to matters involving the
proposed Merger or, should the Merger be effected, matters that occurred prior
to the Merger with respect to Flex Financial.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Company pursuant to the foregoing provisions, or otherwise, the Company
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities
Act of 1933 and is, therefore, unenforceable.
<PAGE>
INFORMATION ABOUT THE COMPANY
The Company was incorporated under the laws of the State of Texas on
March 21, 1996. It has no business or significant assets and was organized
for the purpose of entering into the Merger proposed herein (see "Terms of the
Transaction - Terms of the Merger"). It has no employees; its management will
serve without pay until the Merger should become effective.
Description of Business and Properties
- ------------------------------------------
Should the Merger be approved and effected, the Company shall be the
surviving company, but the Company's management (see "Voting and Management
Information - Directors, Executive Officers, and Significant Employees") shall
not remain as the management of the Company. Control of the Company, through
the voting power to elect the entire board of directors and thereby to replace
management, shall pass to the present shareholders of Flex Financial, and Flex
Financial's present directors and officers shall become the directors and
officers of the Company.
It is the intention of Flex Financial's present management (i) to
continue the business of Flex Financial as the business of the Company (see
"Information about Flex Financial - Description of Business and Properties")
after the Merger and (ii) to seek opportunities to engage in additional,
related business activities, primarily through acquisitions of existing
businesses.
The Company's present management consists of one person, Michael T.
Fearnow. Prior to October 1, 1996, M. Stephen Roberts, Esq., served as the
Company's management. Mr. Roberts is an attorney who was employed to
incorporate the Company, prepare merger documents needed for the registration
statement filed for the proposed merger and serve as management of the Company
pending the Merger.
Course of Business Should the Merger Not occur.
- -----------------------------------------------------
Should the Merger not be approved and effected, the Company will be
without any property or business. The Company's management has no present
plans for this contingency but would seek to acquire, in exchange for stock of
the Company, a business or assets that would constitute a business. Should no
acquisition that would cause the Company to become a going concern be made
within 18 months after the date of the Registration Statement of which this
Prospectus is a part, the holders of the majority of the issued and
outstanding shares of Common Stock will have the voting power to cause a
dissolution of the Company, and persons who would be the holders of a majority
of these shares have indicated their intention to do so.
Legal Proceedings
- ------------------
Neither the Company nor its property is a party to or the subject of
pending legal proceedings.
Market for the Company's Common Stock and Related Stockholder Matters.
- ---------------------------------------------------------------------------
There is no public trading market for the Company's Common Stock. As of
the date of this Prospectus, there is one holder of record of the Company's
20,000 shares of issued and outstanding capital stock. After the Spinoff (see
"Terms of the Transaction - Terms of the Merger") these 20,000 shares of stock
shall be owned of record by American NorTel's approximately 780 shareholders
(except to the extent that an uncertain number of Spinoff Shares representing
undistributed whole and fractional share interests would not be allocated to
American NorTel shareholders in the rounding down process).
<PAGE>
Should the Merger be approved and effected, (i) the Escrow Agent will
release from escrow the certificates representing the ownership of the 20,000
Spinoff Shares, which certificates would be delivered to the approximately 780
persons owning the Spinoff Shares, and (ii) the 11 shareholders of Flex
Financial will receive 94,000 shares of Common Stock of the Company in
exchange for all the issued and outstanding shares of capital stock of Flex
Financial. An additional 185,332 shares of Common Stock of the Company will
be reserved for issuance against the exercise of Company options and warrants
that would replace existing options and warrants of Flex Financial.
There can be, and is, no assurance that market makers will make or
maintain a market in the stock or that, even if a market is made and
maintained in the stock, that the stock will trade at prices deemed attractive
or reasonable to the shareholders of the Company.
The Company's stock will not be eligible for quotation on the NASDAQ
Small Cap Market ("NASDAQ") (i) until it trades at a price of $3 per share or
higher and (ii) unless it meets other NASDAQ requirements regarding assets and
shareholders' equity, which it will not yet meet even if the Merger is
approved and effected. No assurance can be made that the Common Stock will
ever become eligible for quotation on NASDAQ.
The Company's stock is expected to be quoted on an NASD interdealer
system called "the Bulletin Board." While some Bulletin Board stocks are
actively traded, they do not draw the interest of the NASD brokerage community
held by NASDAQ stocks or exchange-listed stocks. The eligibility requirements
for listing the Company's stock on exchanges are generally as high or higher
than the requirements for eligibility for quotation on NASDAQ, and the Company
has no present plans to list its stock on an exchange. Hence, the plans of
the Company to use its stock for business acquisition purposes are likely to
be adversely affected unless and until its stock becomes eligible for
quotation on NASDAQ.
Further, holders of the Shares offered herein face the prospect, should
the Merger be approved and effected, of an indefinite period during which the
Shares will be subject to trading severities imposed on Bulletin Board,
so-called "penny stocks" (stocks that trade at less than $5 per share) by
regulations of the Securities and Exchange Commission. The effect of these
trading severities is to reduce broker-dealer and investor interest in trading
or owning "penny stocks" and, hence, could inhibit the ability of the
Company's stock to reach a trading level of $3 per share or higher and thereby
become eligible for quotation on NASDAQ even if the Company meets NASDAQ's
assets and shareholders' equity requirements in the future.
Flex Financial has obtained agreements from the beneficial owners of at
least 50 percent of their presently outstanding shares of capital stock to the
effect that these owners will not sell any of their shares of post-Merger
Company stock (without first obtaining the written authorization of Flex
Financial's president) for the following periods after the Merger becomes
effective and information about the Company is published in Moody's OTC
Industrial Manual: Flex Financial's shareholders - 180 days.
Rule 144 and Rule 145 Restrictions on Trading.
- ----------------------------------------------------
Should the Merger and Spinoff transaction described herein be approved
and effected, all issued and outstanding shares of Common Stock of the Company
shall have been issued or distributed pursuant to registration with the
Commission. Nevertheless, some of the Shares, even though deemed not to be
"restricted securities," as such term is used by the Commission, will be
subject to certain restrictions on their transfer for value.
<PAGE>
Holders of the Shares who are deemed to be affiliates of Flex Financial
at the time of the vote on the Merger, in order to sell their Shares, must
either register them for sale or comply with the resale provisions set forth
in paragraph (d) of the Commission's Rule 145, unless some other
exemption-from-registration provision is available. The resale provisions of
paragraph (d) of Rule 145 refer to certain provisions of the Commission's Rule
144 which require that:
- there must be available, to the public, current information about the
Company of a quality meeting certain Commission requirements,
- transfers for value by such affiliates can occur only either through
broker transactions not involving the solicitation of buyers or
directly to market-makers, and
- each such affiliate can transfer for value, during a 90-day period, no
more Shares than the greater of one percent of all issued and outstanding
shares of Common Stock of the Company (20,000 Shares immediately after
the Merger) or the average weekly volume of trading in such Common Stock
reported through the automated quotation system of NASDAQ during the
four calendar weeks prior to placing the sell order with a broker-dealer.
The above described resale provisions of Rule 145 shall continue, for
persons who are affiliates of Flex Financial at the time of the vote on the
Merger, for 2 years after the Merger, at which time only the current public
information requirement shall continue. At such time as any such affiliate
has ceased to be an affiliate of the post-merger company for at least 3
months, and provided at least 3 years have elapsed since the date of the
Merger, then even the current public information requirement will no longer be
required for such a former affiliate to sell any of the Shares acquired in the
Merger.
The Company believes that none of the 20,000 Spinoff Shares will be
subject to any restrictions on trading or transfers for value, by reason of
these Shares' being registered for the Spinoff. Further, none of the 94,000
Shares of the Company to be distributed in the Merger to Flex Financial
shareholders other than to Flex Financial officers and directors and to
affiliates of Flex Financial prior to the Merger will be subject to any
restrictions on transfer. Accordingly, after the effective date of the Merger
and the redistribution of the Spinoff Shares, there shall be 114,000 Shares in
the "public float," i.e., subject to no Rule 144 or other applicable
securities law restrictions on their being traded or transferred for value.
It is estimated that in excess of 300 persons will own these Shares of record,
the offering of which for sale could have a materially adverse effect on the
market price of the Company's stock. However, for a period of 180 days after
the Merger should become effective and information about the post-Merger
Company has been published in Moody's OTC Industrial Manual, at least half of
the Flex Financial outstanding Shares are subject to restrictions on trading
by reason of agreements among the shareholders owning these Shares. See
"Information about the Company - Market for the Company's Common Stock and
Related Stockholder Matters."
There is no equity of the Company subject to outstanding options or
warrants to purchase, or securities convertible into, equity of the Company.
However, under the terms of the Merger, all warrants and options of Flex
Financial which are outstanding on the Effective Date shall be canceled and
converted into warrants and options of the Company to buy an equivalent number
of shares. See "DESCRIPTION OF SECURITIES - Other Securities of the Company".
<PAGE>
The Company has had no operations or earnings and has declared no
dividends on its capital stock. Should the Merger be approved and effected,
there are no restrictions that would, or are likely to, limit the ability of
the Company to pay dividends on its Common Stock, but the Company has no plans
to pay dividends in the foreseeable future and intends to use earnings for
business expansion purposes (see "Information about the Company - Description
of Business and Properties").
Financial Statements.
- ---------------------
Set forth below are the independent auditor's report dated September 25,
1996 with respect to the Company's financial statements as of July 31, 1996,
and the notes to the financial statements.
<PAGE>
FLEX ACQUISITIONS CORPORATION
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
JULY 31, 1996
<PAGE>
--ooOoo--
C 0 N T E N T S
---------------
Page
------
Independent Auditor's Report FI-2
Balance Sheet FI-3
Statement of Operations FI-4
Statement of Changes in Stockholder's Equity. FI-5
Statement of Cash Flows FI-6
Notes to Financial Statements FI-7-8
--ooOoo--
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Stockholder and Directors of
Flex Acquisitions Corporation
(A Development Stage Company)
Houston, Texas
We have audited the accompanying balance sheet of Flex Acquisitions
Corporation (A Development Stage Company) as of July 31, 1996, and the related
statements of operations, changes in stockholder's equity and cash flows for
the period March 22, 1996 (date of inception) through July 31, 1996. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Flex Acquisitions Corporation
(A Development Stage Company) at July 31, 1996, and the results of its
operations and its cash flows for the period then ended in conformity with
generally accepted accounting principles.
Houston, Texas
September 25, 1996
FI-2
<PAGE>
<TABLE>
<CAPTION>
FLEX ACQUISITIONS CORPORATION
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
JULY 31, 1996
ASSETS
<S> <C>
OTHER ASSETS
Start-up costs $ 4,992
=========
LIABILITIES AND STOCKHOLDER'S EQUITY
------------------------------------
CURRENT LIABILITIES
Accounts payable $ 134
Interest payable 134
---------
TOTAL CURRENT LIABILITIES 268
---------
LONG-TERM NOTE PAYABLE, RELATED PARTY 4,000
---------
STOCKHOLDER'S EQUITY
Preferred stock, no par value, 10,000,000 shares
authorized, none issued and outstanding, rights,
preferences, qualifications, limitations and
restrictions and any other benefits to be
determined by the Board of Directors as provided
in the corporation's Articles of Incorporation -0-
Common stock, $.001 par value, 10,000,000 shares
authorized, 20,000 shares sold and to be issued 20
Additional paid-in capital 980
Deficit accumulated during the development stage (276)
---------
724
---------
$ 4,992
=========
</TABLE>
See accompanying notes.
FI-3
<PAGE>
<TABLE>
<CAPTION>
FLEX ACQUISITIONS CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
MARCH 22, 1996 (Date of Inception) THROUGH JULY 31, 1996
<S> <C>
EXPENSES
Interest expense $ 134
Outside services 80
Bank service charges 54
Postage and delivery 8
---------
276
---------
NET LOSS $ (276)
=========
LOSS PER COMMON SHARE $ (.01)
=========
SHARES USED IN COMPUTING LOSS PER SHARE $ 20,000
=========
</TABLE>
See accompanying notes.
FI-4
<PAGE>
<TABLE>
<CAPTION>
FLEX ACQUISITIONS CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN STOCKHOLDER'S EQUITY
MARCH 22, 1996 (Date of Inception) THROUGH JULY 31, 1996
Additional
Preferred Common Paid-In Retained
Stock Stock Capital (Deficit) Total
---------- --------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Sale of Common
Stock $ -0- $ 20 $ 980 $ -0- $ 1,000
Net Loss -0- -0- -0- (276) (276)
---------- --------- --------- ---------- ----------
Balance -
July 31, 1996 $ -0- $ 20 $ 980 $ (276) $ 724
========== ========= ========= ========== ==========
</TABLE>
See accompanying notes.
FI-5
<PAGE>
<TABLE>
<CAPTION>
FLEX ACQUISITIONS CORPORATION
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
MARCH 22, 1996 (Date of Inception) THROUGH JULY 31, 1996
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (276)
---------
Adjustments to reconcile net loss to net
cash used by operating activities:
Change in operating assets and liabilities:
Accounts payable 134
Interest payable 134
---------
Total Adjustments 268
---------
Net Cash Used by Operating Activities (8)
---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Start-up costs (4,992)
---------
Net Cash Used by Investing Activities (4,992)
---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Long-term note payable, related party 4,000
Proceeds from issuance of common stock 1,000
---------
Net Cash Provided by Financing Activities 5,000
---------
NET INCREASE IN CASH -0-
CASH AT BEGINNING OF PERIOD -0-
---------
CASH AT END OF PERIOD $ -0-
=========
</TABLE>
See accompanying notes.
FI-6
<PAGE>
FLEX ACQUISITIONS CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1996
NOTE A BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Flex Acquisitions Corporation (A Development Stage Company) (Acquisitions) a
wholly owned Texas subsidiary of American NorTel Communications, Inc.
(American Nortel) was incorporated on March 21, 1996 for the purpose of; (a)
merging with Flex Financial Group, Inc. (Flex Financial), an entity related by
common control, and (b) a proposed filing of a registration statement with the
Securities and Exchange Commission. Simultaneously with these transactions,
it is anticipated that American Nortel will then distribute its shares of the
Company to American Nortel shareholders. The newly formed public Company will
then engage in the business of participating in certain short-term financing
opportunities (terms of less than one year) in the underwriting segment of the
securities industry and in certain long-term financing and investment
opportunities (terms of greater than one year) in transactions with operating
businesses with significant growth potential.
The Company has no business operations or significant capital and has no
intention of engaging in any active business until it merges with Flex
Financial. Should the merger not occur, the Company would seek other business
opportunities and if none were found, would be dissolved within eighteen
months by a vote of the majority of its common stockholders.
Merger Spin-Off - The Company agreed to merge with Flex Financial on July 1,
- ---------------
1996. Flex Financial is a developmental stage company formed to participate
in certain short-term financing opportunities (terms of less than one year) in
the underwriting segment of the securities industry and to participate in
certain long-term financing and investment opportunities (terms of greater
than one year) in transactions with operating businesses with significant
growth potential. The Company will be the surviving corporation (Survivor)
but Flex Financial will elect all directors and officers of the Survivor. All
currently outstanding stock of Flex Financial will be canceled and converted
into 94,000 shares of the Company's common stock. Flex Financial has options
and warrants currently outstanding which will be canceled and options and
warrants on the Company's common stock will be issued according to the plan of
merger.
The merger is contingent upon the effectiveness of the registration
statements, and upon the shareholders of the Company and of Flex Financial
approving the proposed merger.
Management's Estimates - Management uses estimates and assumptions in
- -----------------------
preparing financial statements in accordance with generally accepted
accounting principles. These estimates and assumptions affect the reported
amounts of assets and liabilities, the disclosure of contingent assets and
liabilities, and the reported revenues and expenses. Actual results could
vary from the estimates that were used.
Fair Value of Financial Instruments - Management is of the opinion that the
- ------------------------------------
carrying value of all financial instruments is substantially equal to fair
value at July 31, 1996.
Continued
FI-7
<PAGE>
FLEX ACQUISITIONS CORPORATION
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1996
NOTE A BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
Loss Per Common Share - Loss per common share is computed using the weighted
average number of shares of common stock outstanding during the period.
Income Taxes - For the year ended July 31, 1996, the Company incurred a net
operating loss amounting to $276. This net operating loss carryforward will
expire in the year 2011, if not previously utilized.
No tax benefit for the loss carryforward has been reported in the financial
statements. Accordingly, the tax benefit of approximately $94 resulting from
the utilization of the loss carryforward has been offset by a valuation
allowance of the same amount.
Start-up Costs - Represents legal and other costs associated with the
organization of the Company and services in connection with the anticipated
merger/spinoff with American Nortel Communications, Inc. and Flex Financial
Group, Inc. These costs will be amortized over a five year period upon
commencement of operations.
NOTE B LONG-TERM NOTE PAYABLE, RELATED PARTY
Long-term note payable, related party consists of the following at July 31,
1996:
Flex Financial Group, Inc. - 10% note, convertible
into common stock as provided for by the
agreement, subordinated, redeemable note
payable due March 31, 1998, renewable for an
additional two year term, interest payable
at maturity; unsecured $ 4,000
Less current portion -0-
----------
Long-term portion $ 4,000
==========
NOTE C RELATED PARTY TRANSACTIONS AND BALANCES
Transactions and balances with related individuals and entities related by
common control are as follows:
Flex Financial Group, Inc.
Interest expense/payable $ 134
==========
Roberts - Attorney at Law;
initial registered agent
Start-up costs $ 4,992
==========
FI-8
<PAGE>
INFORMATION ABOUT FLEX FINANCIAL
Flex Financial Group, Inc. ("Flex Financial") was incorporated under the
Business Corporation Law of the State of Texas on August 17, 1995.
Management's Plan of Operation
- ---------------------------------
The following should be read in conjunction with the Financial Statements
of Flex Financial and the Notes thereto, and the other financial and other
information included elsewhere in this Prospectus. This Prospectus contains
certain statements regarding future trends which are subject to various risks
and uncertainties. Such trends, and their anticipated impact on Flex
Financial, could differ materially from those discussed in this Prospectus.
Factors that could cause or contribute to such differences include, but are
not limited to, those discussed in "Risk Factors" and elsewhere in this
Prospectus.
Flex Financial was organized in August, 1995 and is in the development
stage. Flex Financial has not yet commenced operations, has not generated any
revenues from operations to date, and will not generate any revenues from
operations until after the company completes a concurrent public offering of
its common stock, which the company anticipates will occur in January, 1997.
There can be no assurance that the Company will be able to successfully
generate meaningful revenue or achieve profitable operations.
Since inception, Flex Financial has developed a business plan; developed
and disseminated promotional material to prospective clients of its business
services; identified and commenced negotiations with potential clients with
respect to its services; developed a marketing strategy; and raised an
aggregate of $137,200 in gross proceeds through private equity and debt
offerings.
Liquidity and Capital Resources. As of the date of this Prospectus,
----------------------------------
Flex Financial has approximately $30,000 in cash and cash equivalents. It is
anticipated that the Company will realize $500,000 in net proceeds from the
sale of the Common Stock and Warrants offered in the Concurrent Public
Offering. The net proceeds of the concurrent Public Offering will be used to
commence full business operations and investment in Bridge Loans,
subordination Loans and Investment Transactions.
Flex Financial is dependent upon the proceeds of the Concurrent Public
Offering, existing cash, and cash flow from operations, if any, or other
financing to implement its proposed business plan. Management believes that
the proceeds from the sale of the Common Stock and Warrants offered in the
Concurrent Public Offering will enable Flex Financial to satisfy its
anticipated financing needs for a period of at least 12 months following the
Effective Date. However, the capital requirements relating to implementation
of the Company's business plan will be significant. There can be no assurance
that Flex Financial will have sufficient capital resources to permit it to
fully implement its business plan.
Plan of Operation
- -------------------
<PAGE>
Business Objectives. The Company was formed in August, 1995 primarily
--------------------
to serve as a vehicle to invest in short-term financing opportunities in the
underwriting segment of the securities industry. The Company intends to
participate in short-term financing opportunities by (i) providing equity
subordination loans to underwriters requiring additional excess net capital
for underwriting specific issues on a firm commitment basis ("Subordination
Loans") and (ii) providing bridge loans to selected issuers to connection with
initial public offerings and secondary financing ("Bridge Loans"). The
Company expects to be in a position to take advantage of a long-term financing
and investment opportunities to effect Investment Transactions and Business
Acquisitions with Target Businesses. The business objectives of the Company
are to (i) provide Subordination Loans to selected underwriters for specific
issues on terms suiting the Company's investment requirements, (ii) provide
Bridge Loans on a highly selective basis within established guidelines to
issuers meeting the Company's due diligence standards, and (iii) to effect
Investment Transactions on negotiated terms favorable to the Company. The
Company also intends to engage in "spinoff" activities such as are described
herein, such spinoffs to involve the distribution, by way of stock dividends
or otherwise, of registered shares of stock of other companies. The Company
intends to use the proceeds of this offering primarily to provide the capital
to commence the investigation, negotiation and participation in Subordination,
Bridge Loans and Investment Transactions. By reason of its participation in
Subordination and Bridge Loans, the Company may be presented a longer-term
investment opportunity to effect a Business Acquisition with a Target
Business. The Company will not use the proceeds of this offering to fund such
an acquisition. The Company will participate in a Business Acquisition
requiring a significant commitment of cash only through a Secondary Public
Offering in which the Target Business is identified. The Company does not
intend to participate in a "blind pool/blank check" offering to participate in
a Business Acquisition. Some portion of the proceeds of this offering may be
allocated and used to defray the front end expenses of a Secondary.
The Company believes that financing opportunities will become available
to the Company due primarily to the contacts of its officers, directors and
consultants with entities and individuals participating in various segments of
the securities industry, liquidity of its assets, its future status as a
publicly-held company, and its flexibility in structuring and participating in
financing opportunities. The Company has no agreement or understanding to
participate in any financing opportunity, nor does it currently have any
opportunity under investigation. Decisions as to which financing
opportunities to participate in will be made by management of the Company,
which will in all probability act without the consent, vote, or approval of
the Company's stockholders except when required by applicable law.
Business Experience of Principals. The present executive officer and
-----------------------------------
director and certain consultants who have been retained by the Company have
business experience which has provided them with certain skills which the
Company believes will be helpful in identifying and evaluating potential
Bridge Loan and Subordination Loan candidates and Target Businesses and in
negotiating the terms of Bridge Loans, Subordination Loans, Investment
Transactions and Business Combinations. They have had significant experience
in a variety of business transactions, including providing investment banking,
underwritings, bridge loans and general business consulting to public and
private companies in the $5 million to $10 million asset range. The Company
expects to actively recruit board members with extensive management, financial
and entrepreneurial backgrounds to assist in these endeavors. The Company
expects that future directors will have similar experience and/or extensive
business management and financial management experience. In addition, the
Board of Directors may establish an advisory committee (the "Advisory
Committee") consisting of up to eight (8) persons to assist in finding and
evaluating potential candidates for Bridge Loans, Subordination Loans and
Target Businesses. Members of the Advisory Committee will have significant
experience in the securities industry primarily in areas of business interest
to the Company. The Advisory Committee will not have any role in the
management of the business of the Company, but will be available, to the
extent management may require, to consult with management as to potential
candidates for Bridge Loans, Subordination Loans, Investment Transactions and
Business Combinations.
Business Plan.
--------------
1. General.
The Company was organized to provide Subordination Loans to selected
underwriters requiring short term additional net capital to underwrite
specific issues on a firm commitment basis; to provide Bridge Loans on a
highly selective basis within established guidelines to selected issuers
meeting the Company's due diligence standards to facilitate initial public
offerings or secondary financing; and to engage in "spinoff" activities in
which the Company serves as a vehicle or facility for private operating
companies to effect public status.
<PAGE>
The Company will generally use the proceeds of the Concurrent Public
Offering to investigate and, if warranted, participate in a financing
opportunity with immediate short-term earnings potential. Because of the
Company's limited financial, managerial, and other resources, the number of
suitable potential financing opportunities which will be available to it under
its criteria will be extremely limited. The Company currently has no
commitment or arrangement to participate in any financing opportunity and
cannot now predict what type of opportunity may become available to it. It is
emphasized that the business objectives discussed herein are extremely general
and are not intended to be restrictive upon the discretion of the Company's
management.
Management of the Company has virtually unlimited discretion in searching
out and participating in a financing opportunity. The Company is unable to
predict when it may become engaged in a financing opportunity. It expects,
however, that review and analysis of specific proposals and the selection of a
financing opportunity will likely take several weeks or more following the
successful completion of this offering. There can be no assurance as to when
a financing opportunity will become available, however, management is
confident that such opportunities will become available on a regular basis.
Management anticipates that the Company may be able to participate in
numerous and ongoing financing opportunities. This diversification should
enable the Company to reduce its risks by offsetting potential losses from one
financing against gains from another.
2. Subordination and Bridge Loans
Subordination Loans. The Company intends to provide Subordination
--------------------
Loans to selected underwriters to facilitate the underwriting of specific
issues on a firm commitment basis. Small underwriters seek short-term equity
subordinated underwriting loans to meet excess net capital requirements for
firm commitment underwritings. The Company intends to participate in
Subordination Loans that can be structured with the following general terms.
Subordination Loans will typically be very short term loans (maximum term of
30 to 45 days) made to an underwriter for the purpose of meeting excess net
capital requirements for a specific firm commitment underwriting. Principals
of the underwriter will in most cases be required to personally guarantee
repayment of the loan. The terms of the loan will normally require that loan
proceeds be maintained in a segregated account invested in short term money
market or similar securities. The underwriter will normally be expected to
pay a minimum of 2% of the amount of the underwriting for the loan, yielding a
return of 7% to 10% to the Company. The Company expects to make up to six
Subordination Loans a year in amounts ranging from $50,000 to $200,000 each,
yielding a return in excess of 50% per year.
Bridge Loans. The Company intends to provide Bridge Loans to selected
-------------
issuers to facilitate an issuer's initial public offering or secondary public
financing. Bridge Loans are typically short term loans (maximum term of one
year with mandatory prepayment out of the proceeds of the underwriting) made
to an issuer for the purpose of providing funds to pay underwriting costs and
to a lesser extent general corporate expenses relating to the underwriting.
The Company intends to participate in Bridge Loans that can be structured with
the following general terms. In the typical transaction the Company would
expect the loan to be repaid from the proceeds of the underwriting within 4 to
6 months of the loan. The loan would typically range in amount from $50,000
to $200,000 and normally carry an interest rate of 3 to 5 points above prime.
The Company will require an equity enhancement in the form of warrants or
cheap stock designed to provide a return of 200% to 300% of the loan amount
within 12 to 18 months of the loan. In connection with equity enhancements,
the Company will require demand and piggy back registration rights with
expenses paid by the issuer. Principals of the issuer will be expected to
personally guarantee repayment of the loan and in most cases the loan will
collateralized by some assets of the issuer.
<PAGE>
Typical Scenarios. Although the Company cannot predict the exact terms
-----------------
and structure of any financing transaction in which it may participate, the
following represents the type of transaction structures that the Company will
attempt to negotiate.
With respect to a typical scenario for a Subordination Loan, the Company
intends to seek situations in which a small underwriter with net capital of
$500,000 or less wants to underwrite an entire issue of $4 million to $10
million on a firm commitment basis. NASD and SEC rules and regulations
require the underwriter to have excess net capital of 30% of the retention
less underwriting fees. A $5 million firm commitment underwriting would
require $5,000,000 X .90 = $4,500,000 X .30 = $1,350,000 in excess net
capital. An underwriter requiring another $850,000 in excess net capital to
underwrite the issue would require additional underwriters or a subordinated
underwriting loan to provide the additional $850,000 in excess net capital.
The Company would expect to participate in such a subordinated loan in the
amount of $270,000 which would underwrite $1 million of the issue. The
underwriter would expect to pay a minimum of 2% of the underwritten amount or
$20,000 for the loan, yielding a return to the Company of 7% to 10% over a 30
to 45 day period.
With respect to a typical scenario for a Bridge Loan transaction, the
Company will expect to make a one year $200,000 Bridge Loan to an issuer to
facilitate the issuer's initial public offering to be priced at $5.00 per
share. The loan would bear interest at 13% per annum with mandatory
prepayment from the proceeds of the underwriting at closing. The loan will be
personally guaranteed by the issuer's principals and collateralized by
available assets of the issuer. The Company would expect to receive a stock
purchase warrant to buy 100,000 shares of the issuer's common stock at $2.00
per share as an equity enhancement. Six months after the loan the
underwriting closes and the Company would expect to be repaid $200,000
principal and $13,000 in interest. Twelve months after the underwriting (18
months after the loan) assuming the issuer's stock is trading at $6.00, the
value of the warrants would be $400,000 or 200% of the original loan. The
results and return on the equity enhancement would of course be completely
dependent upon the performance of the issuer's publicly traded securities and
in some cases may be of no value. Normally, the securities representing the
equity enhancement is registered in the issuer's initial public offering.
General Considerations. Management intends to participate in a
-----------------------
portfolio of subordinated loans and bridge loans that will provide prudent
risk and diversification. The amount of and timing of each transaction will
be determined by management taking into account the liquid assets and net
worth of the Company, and the ongoing general and administrative costs of the
Company. Whenever possible management will further diversify by participating
with other investors in its financing opportunities.
3. Long Term Investment Opportunities - Investment Transactions
General. By reason of its participation in Subordination and Bridge
-------
Loans, the Company expects to be presented an investment opportunity or an
opportunity to acquire a non-controlling equity interest in a Target Business
which the Company believes has growth potential. These opportunities are
expected to be in the form of "spinoff" transactions.
Investment Transactions. The Company expects to use a portion of the
------------------------
Proceeds of this offering to investigate and, if warranted, enter into a
definitive agreement to exchange its assets for cash and/or securities of a
Target Business. The Company does not expect to acquire more than a 10%
equity interest in a Target Business in an Investment Transaction.
<PAGE>
Method of Participation. It is impossible to predict exactly how the
-------------------------
Company may participate in an investment opportunity, but generally speaking,
the Company intends to use its assets, including cash provided through this
offering, to acquire equity interests in Target Businesses. Although the
Company cannot predict the exact terms and structure of any Investment
Transaction in which it may participate, the following represents the type of
transaction structures that the Company will attempt to negotiate. The
Company will attempt, for example, to identify a Target Business requiring
certain assets or cash of the Company. Subject to a letter of intent, the
Company may agree to form a wholly-owned subsidiary to be capitalized with
those certain assets and/or cash. The Company through its subsidiary may then
enter into a definitive agreement under which the Target Business merges into
the subsidiary with the Company retaining a negotiated equity interest in the
surviving subsidiary (expected to be 10% of issued and outstanding shares).
The Company may then use the shares for, among other things, distribution as a
dividend to its shareholders, sale for cash, exchange for other assets, or
retention for investment purposes.
Typical Scenarios. In a typical scenario, the Company expects to be
------------------
approached by a company that wishes to become publicly held ("Target
Business"). The Company will enter into an agreement with the Target Business
for a proposed merger-spinoff transaction which would create a public market
for the Target's stock. The proposed merger-spinoff would be effected by the
Company forming a new subsidiary which would be thinly capitalized with the
Company as its sole shareholder. The Target would merge into the subsidiary
with the Target shareholders receiving approximately 90% of the issued and
outstanding shares of the subsidiary and the Company retaining 10% of the
shares. Subsequent to the merger, the Company will distribute some or all of
the subsidiary's shares to its shareholders (expected at that time to exceed
300 in number). Contemporaneously with the merger-spinoff, the subsidiary
would file a registration statement on Form S-4 with the Securities and
Exchange Commission ("SEC") to register the merger shares and file a
registration statement on Form SB-2 with the SEC to register the spinoff
shares. The subsidiary may in connection with the filing of the S-4 register
shelf shares for future issuance in association with possible acquisitions and
may in connection with the filing of the SB-2 register the sale of additional
shares to provide working capital or register the resale of shares for the
account of its shareholders. As a result of the transaction, the Target
Business becomes a publicly held company with the Company or its shareholders
owning 10% of the public company.
4. Long Term Investment Opportunities - Business Combinations
General. By reason of its participation in Subordination and Bridge
-------
Loans, the Company expects to be presented an opportunity to acquire
significant or control equity in a Target Business which the Company believes
has growth potential.
Method of Participation or Acquisition. It is impossible to predict
--------------------------------------
exactly how the Company may participate in a business opportunity, but
generally speaking, the Company intends to acquire a business opportunity by
using cash provided through a Secondary Public Offering and seller financing.
It is the Company's intent that designees of its present management and its
shareholders have a majority position on the board of directors of the Company
following any reorganization or other acquisition transaction. As part of
such a transaction, all or a majority of the Company's directors will be
expected to continue in office.
Business Combinations. The Company may use a portion of the proceeds
----------------------
of this offering to investigate and, if warranted, enter into a definitive
agreement to acquire control equity in a Target Business. If the Company
enters into a definitive purchase agreement with a Target, the Company intends
to undertake a secondary public offering specifically for the purpose of
providing any cash equity required to consummate the long term investment or
acquisition. The Company does not intend to enter into any definitive
purchase or long term investment agreement with a Target that requires cash
payments by the Company unless such agreement is conditioned upon the Company
successfully closing a secondary public offering pursuant to an effective
registration statement filed under the Act for an aggregate offering price of
at least $5,000,000 ("Secondary"). The Secondary will specifically identify
the Target Business and will be undertaken specifically for the purpose of
providing the funds for acquiring the Target Business. The Company intends to
undertake the Secondary specifically for the purpose of providing the cash
equity to consummate the acquisition of an identified Target Business. The
Company does not anticipate undertaking a "Blind Pool/Blank Check"
underwriting to acquire an unspecified Target Business. In connection with
such an acquisition, the Company may provide a Subordination Loan to the
underwriter and a Bridge Loan to the Target.
<PAGE>
5. Miscellaneous Matters
Sources of Opportunities. The principals of the Company have extensive
------------------------
experience in working with small underwriters and in providing investment
banking, underwritings, bridge loans, and general business and financial
consulting to smaller public and private companies. The Company anticipates
that financing opportunities will be referred by various sources, including
its officers and directors, professional advisers, securities broker-dealers,
members of the financial community, and others who may present unsolicited
proposals. The Company may agree to pay a finder's fee or other compensation
for services provided by unaffiliated persons who submit a financing
opportunity in which the Company participates. No guideline or policy has
been adopted by the Company concerning the circumstances under which a
finder's fee will be paid or the amount of such fee.
The Company will seek potential financing opportunities from all known
sources, but will rely principally on personal contacts of its officers,
directors and consultants as well as indirect associations between them and
other business and professional people. In some instances, the Company may
publish notices or advertisements seeking a potential financing opportunity in
financial or trade publications.
Criteria. Subordination Loans will only be made to underwriters
--------
acceptable to the Company and in connection with specific underwritings for
issuers acceptable to the Company. Bridge Loans will only be made to
companies that can pass an extensive due diligence review of the company's
management, business, deal structure, underwriter, and public relations firm.
The Company may require representation on the issuer's board and will require
substantial penalties for a loan default. Any participation by the Company
will be subject to the issuer executing a firm commitment underwriting letter
of intent with an underwriter approved by the Company.
The Company may enter into an Investment Transaction or Business
Combination with a business in any industry and in any stage of development,
including an established business which needs additional funding or a firm
which is in need of additional capital to overcome financial problems or
difficulties, but does not intend to enter into such transaction with a "start
up" or new company. The Company may enter into an Investment Transaction or
Business Combination with a Target Business in various stages of its life. It
is impossible to predict the status of any investment in which the Company may
become engaged.
The analysis of financing opportunities will be undertaken by or under
the supervision of the officers and directors. Certain of the Company's
officers, directors and consultants have extensive business experience in the
securities industry, particularly regarding small public underwritings, and
are primarily engaged in the business of analyzing businesses for underwriting
suitability and negotiating, participating in and advising as to Bridge Loans
and Subordination Loans. In analyzing prospective financing opportunities,
management will consider the following factors regarding an issuer: available
technical, financial, and managerial resources, working capital and other
financial requirements; history of operations, if any; quality and experience
of management services which may be available and the depth of that
management; capability of effecting an underwriting, including quality of
underwriter and professional advisers; and other relevant factors.
<PAGE>
The Company will analyze all available factors and make a determination
based upon a composite of available facts, without reliance on any single
factor.
Procedures. A thorough evaluation of an issuer prior to a Bridge Loan
----------
will be difficult. The Company will have limited time and funds available in
its search for and analysis of financing opportunities and will not be able to
expend significant funds on a complete and exhaustive investigation of any
financing opportunity. However, the Company will investigate, to an extent
believed reasonable by its management, such potential opportunities by
obtaining financial and other information reasonably available concerning the
issuer and/or underwriter; conducting meetings and interviews with management
and underwriter; reviewing experience and other financial factors; and other
reasonable methods.
As part of the Company's investigation, officers and directors may meet
personally with management and key personnel of the firm sponsoring the
investment opportunity, visit and inspect material facilities, obtain
independent analysis or verification of certain information provided, check
references of management and key personnel, and conduct other reasonable
measures, to the extent allowed by the Company's limited financial resources
and management and technical expertise.
The Company will participate in a financing opportunity only pursuant to
negotiation and execution of a written agreement. Although the terms cannot
be predicted, agreements generally require specific representations and
warranties by all of the parties thereto and specify certain events of
default.
The investigation of specific financing opportunities and the
negotiation, drafting and execution of relevant agreements, disclosure
documents, and other instruments may require substantial management time and
attention and substantial costs for accountants, attorneys, and others. If a
decision is made not to participate in a specific financing opportunity, the
costs previously incurred in the related investigation would not be
recoverable. Furthermore, even if an agreement is reached for the
participation in a specific financing opportunity, the failure to consummate
that transaction may result in the loss to the Company of the related costs
incurred.
Competition. The Company expects to encounter competition in its efforts
to locate opportunities for the employment of its capital. The primary
competition for desirable investments is expected to come from other small
companies organized and funded for similar purposes, small venture capital
partnerships and corporations, small business investment companies, and
individuals with unlimited financial resources. Many of these entities may
have significantly greater experience, resources, and managerial capabilities
than the Company and will, therefore, be in a better position than the Company
to obtain access to business opportunities. However, the Company believes
that it has sufficient expertise and contacts to compete successfully in this
market.
Description of Business Properties.
- -------------------------------------
Flex Financial currently shares a portion of approximately 3,000 square
feet of office space in premises occupied by Focus-Tech Investments, Inc. and
Financial Public Relations, Ltd. at 770 S. Post Oak Lane, Suite 515, Houston,
Texas 77056. Mr. Fearnow is a principal of Focus-Tech Investments, Inc.
("Focus-Tech"), a Nevada corporation, that provides investment banking
consulting services to FPR. Flex Financial believes that such space and
services will be adequate for the business of Flex Financial into the
foreseeable future. The cost for such space is included in a $4,000 per-month
fee charged by Focus-Tech for general and administrative services for calendar
year 1996. Upon closing of the Concurrent Public Offering Flex Financial has
agreed to pay Focus-Tech for general and administrative services which will
include the cost of the use of office space, facilities and equipment used by
it on a monthly basis. Focus-Tech has agreed to make this space available as
long as required for the use of Flex Financial.
<PAGE>
Legal Proceedings.
- ------------------
Neither Flex Financial nor any of its property is a party to or the
subject of any pending legal proceedings.
Financial Statements.
- ---------------------
Set forth below are the independent auditor's report dated September 9,
1996, except for Note D, which the date is November 4, 1996, with respect to
the Company's financial statements as of July 31, 1996, and the notes to the
financial statements.
<PAGE>
FLEX FINANCIAL GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
JULY 31, 1996
<PAGE>
--ooOoo--
C 0 N T E N T S
Page
--------
Independent Auditor's Report FII-2
Balance Sheet FBI-3
Statement of Operations FBI-4
Statement of Changes in Stockholders' Equity FBI-5
Statement of Cash Flows FBI-6
Notes to Financial Statements FBI-7-11
--ooOoo--
<PAGE>
INDEPENDENT AUDITOR'S REPORT
To the Stockholders and Directors of
Flex Financial Group, Inc.
(A Development Stage Company)
Houston, Texas
We have audited the accompanying balance sheet of Flex Financial Group, Inc.
(A Development Stage Company) as of July 31, 1996, and the related statements
of operations, changes in stockholders' equity and cash flows for the period
August 17, 1995 (date of inception) through July 31, 1996. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Flex Financial Group, Inc. (A
Development Stage Company) at July 31, 1996, and the results of its operations
and its cash flows for the period then ended in conformity with generally
accepted accounting principles.
Houston, Texas
September 9, 1996, except for Note D,
which the date is November 4, 1996
FBI-2
<PAGE>
<TABLE>
<CAPTION>
FLEX FINANCIAL GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
JULY 31, 1996
ASSETS
------
<S> <C>
CURRENT ASSETS
Cash $ 42,220
Interest receivable 1,486
Notes receivable, related parties 25,000
Note receivable 10,000
Loan origination costs, net 1,250
-----------
TOTAL CURRENT ASSETS 79,956
-----------
OTHER ASSETS
Long-term note receivable, related party 4,000
-----------
$ 83,956
===========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES
Accounts payable $ 58
Notes payable 50,000
Interest payable 3,822
Accrued overhead, related party 8,891
-----------
TOTAL CURRENT LIABILITIES 62,771
-----------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock, no par value, 10,000,000 shares
authorized, none issued and outstanding, rights,
preferences, qualifications, limitations and
restrictions and any other benefits to be
determined by the Board of Directors as provided
in the corporation's Articles of Incorporation -0-
Common stock, $.01 par value, 10,000,000 shares
authorized, 94,000 shares sold and to be issued 940
Additional paid-in capital 81,260
Deficit accumulated during the development stage (61,015)
-----------
21,185
-----------
$ 83,956
===========
</TABLE>
See accompanying notes.
FBI-3
<PAGE>
<TABLE>
<CAPTION>
FLEX FINANCIAL GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS
AUGUST 17, 1995 (Date of Inception) THROUGH JULY 31, 1996
<S> <C>
INTEREST INCOME $ 2,278
-----------
EXPENSES
Advertising 2,564
Consulting expenses 16,902
Filing fees 510
Interest expense 7,572
Legal and professional fees 6,100
Other expenses 350
Printing 1,295
Overhead allocation - related party 19,109
Accrued overhead - related party 8,891
-----------
63,293
-----------
NET LOSS $ (61,015)
===========
LOSS PER COMMON SHARE $ (.71)
===========
SHARES USED IN COMPUTING LOSS PER SHARE 85,833
===========
</TABLE>
See accompanying notes.
FBI-4
<PAGE>
<TABLE>
<CAPTION>
FLEX FINANCIAL GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
AUGUST 17, 1995 (Date of Inception) THROUGH JULY 31, 1996
Additional
Preferred Common Paid-In Retained
Stock Stock Capital (Deficit) Total
---------- --------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Sale of Common
Stock $ -0- $ 940 $ 81,260 $ -0- $ 82,200
Net Loss -0- -0- -0- (61,015) (61,015)
---------- --------- ----------- ---------- ----------
Balance -
July 31, 1996 $ -0- $ 940 $ 81,260 $ (61,015) $ 21,185
========== ========= =========== ========== ==========
</TABLE>
See accompanying notes.
FBI-5
<PAGE>
<TABLE>
<CAPTION>
FLEX FINANCIAL GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
AUGUST 17, 1995 (Date of Inception) THROUGH JULY 31, 1996
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (61,015)
-----------
Adjustments to reconcile net loss to net
cash used by operating activities:
Amortization of loan origination costs, net 3,750
Change in operating assets and liabilities:
Interest receivable (1,486)
Accounts payable 58
Interest payable 3,822
Accrued overhead, related party 8,891
-----------
Total Adjustments 15,035
-----------
Net Cash Used by Operating Activities (45,980)
-----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Loan origination costs (5,000)
Notes receivable, related parties (35,000)
Note receivable (10,000)
Long-term note receivable, related party (4,000)
Collection of note receivable, related party 10,000
-----------
Net Cash Used by Investing Activities (44,000)
-----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Notes payable 50,000
Proceeds from issuance of common stock 87,200
Stock issuance costs (5,000)
-----------
Net Cash Provided by Financing Activities 132,200
-----------
NET INCREASE IN CASH 42,220
CASH AT BEGINNING OF YEAR -0-
-----------
CASH AT END OF YEAR $ 42,220
===========
</TABLE>
See accompanying notes.
FBI-6
<PAGE>
FLEX FINANCIAL GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1996
NOTE A BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
Flex Financial Group, Inc. (A Development Stage Company) (the Company) was
incorporated in August 1995 for the purpose of engaging in the business of
providing loans to companies going public; subordinated equity loans to
underwriters; and providing a platform for taking companies public through a
merger/spinoff transaction. It is anticipated by management that the Company
will become a publicly owned corporation within the near future.
Merger-Spinoff - On June 30, 1996, the Company entered into an agreement
- --------------
with American Nortel Communications, Inc. (American Nortel), a public
corporation engaged in providing long distance telephone services and owned by
approximately 780 individuals, for a proposed merger-spinoff transaction which
would create a public market for the Company's stock. The proposed
merger-spinoff would be effected by American Nortel capitalizing a recently
formed subsidiary (Flex Acquisitions Corporation) which would sell 20,000
shares of $.001 par value common stock to American Nortel for $1,000. Flex
Acquisitions, a company related by common control, has authorized 10 million
shares of Common Stock with a par value of $.001 per share and 10 million
shares of Preferred Stock with no par value. The preferences, rights, and
qualities of each series of the Preferred Stock will be set by future
resolutions of Flex Acquisitions Board of Directors. All currently
outstanding stock of the Company will be canceled and converted into 94,000
shares of common authorized but unissued of Flex Acquisitions. The Company
has options and warrants currently outstanding which will be canceled and
options and warrants on Flex Acquisitions' common stock will be issued
according to the plan of merger. Subsequent to the merger, American Nortel
will distribute to its shareholders the 20,000 shares of common stock of Flex
Acquisitions previously held by American Nortel. Contemporaneously with the
merger-spinoff, Flex Acquisitions will file a registration statement on Form
S-4 with the Securities and Exchange Commission (SEC) to register 2,094,000
shares of Common Stock and file a registration statement on Form SB-2 with the
SEC to register the spin-off of the 20,000 shares by American Nortel and the
sale of 100,000 shares of common stock by Flex Acquisitions. Of the 2,094,000
shares of Common Stock, 2,000,000 will be considered shelf shares for future
issuance in association with possible acquisitions.
Management's Estimates - Management uses estimates and assumptions in
- -----------------------
preparing financial statements in accordance with generally accepted
accounting principles. These estimates and assumptions affect the reported
amounts of assets and liabilities, the disclosure of contingent assets and
liabilities, and the reported revenues and expenses. Actual results could
vary from the estimates that were used.
Concentrations of Credit - Substantially all of the Company's loans have
- --------------------------
been granted to related entities and a third party customer of the Company.
The concentrations of credit by type of loan are set forth in Notes B and C.
Continued
FBI-7
<PAGE>
FLEX FINANCIAL GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1996
NOTE A BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
Interest Rate Risk - The Company is principally engaged in providing
- --------------------
short-term commercial loans with fixed interest rates. These loans have been
primarily funded through short-term notes payable and the sale of the
Company's stock.
Notes Receivable - Notes receivable are reported at the principal amount
- -----------------
outstanding. Management is of the opinion that all notes are fully
collectible, therefore, no allowance for possible credit losses is deemed
necessary.
Allowance for Possible Credit Losses - When deemed necessary, an allowance
- --------------------------------------
for possible credit losses is established to provide a valuation allowance for
losses expected to be incurred on loans and other commitments to extend
credit. All losses are charged to the allowance for possible credit losses
when the loss actually occurs or when a determination is made that a loss is
likely to occur. Recoveries are credited to the allowance at the time of
recovery.
Throughout the year, management estimates the likely level of losses to
determine whether the allowance for possible credit losses, when deemed
necessary, is adequate to absorb anticipated losses in the existing portfolio.
Based on these estimates, an amount is charged to the provision for possible
credit losses and credited to the allowance for possible credit losses in
order to adjust the allowance to a level determined to be adequate to absorb
losses.
Management's judgment as to the level of losses on existing loans involves the
consideration of current and anticipated economic conditions and their
potential effects on specific borrowers; an evaluation of the existing
rela-tionships among loans, potential loan losses, and the present level of
the allowance; and management's internal review of the loan portfolio. In
determining the collectibility of certain loans, management also considers the
fair value of any underlying collateral. The amounts ultimately realized may
differ from the carrying value of these assets because of economic, operating
or other conditions beyond the Company's control.
Statement of Cash Flows - For purposes of reporting cash flows, cash and
- --------------------------
cash equivalents includes only cash on hand and in demand deposit accounts
with a bank.
Fair Value of Financial Instruments - Management is of the opinion that the
- ------------------------------------
carrying value of all financial instruments is substantially equal to fair
value at July 31, 1996.
Loss Per Common Share - Loss per common share is computed using the weighted
- ---------------------
average number of shares of common stock outstanding during the period.
Continued
FBI-8
<PAGE>
FLEX FINANCIAL GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1996
NOTE A BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
Income Taxes - For the year ended July 31, 1996, the Company incurred a net
- -------------
operating loss amounting to $61,015. This net operating loss carryforward
will expire in the year 2011, if not previously utilized.
No tax benefit for the loss carryforward has been reported in the financial
statements. Accordingly, the tax benefit of approximately $21,000 resulting
from the utilization of the loss carryforward has been offset by a valuation
allowance of the same amount.
Common Stock - Common stock sold is subject to a subscription agreement
- -------------
which provides for, among other things; (1) each purchaser is sold "units" at
a price of $4,800 which includes 1,000 shares of common stock, 2000 Class B
warrants and 2,000 Class C warrants collectively referred to as offered
securities; and (2) purchaser of offered securities will not be able to resell
them until and unless the securities are registered pursuant to a registration
statement and properly qualified for sale in each jurisdiction. The Class B
and Class C redeemable warrants entitle the holders to purchase one share of
common stock for each warrant held at $6.25 and $10.00, respectively.
80,000 shares of the 94,000 common shares sold and to be issued were sold to
"Founders", subject to a separate subscription agreement at a price of $.25
per share. This subscription agreement provides the subscribers with the
option to purchase up to an additional 80,000 common shares at a per share
price of $.50. The option for the purchase of additional shares expires
August 31, 1998, if not previously exercised.
NOTE B NOTES RECEIVABLE, RELATED PARTIES
Notes receivable, related parties are due from entities related by common
shareholders consist of the following at July 31, 1996.
Flex Acquisition Corporation - 10% note,
convertible into common stock as provided for
by the agreement, subordinated, redeemable
note receivable, due March 31, 1998, renewable
for an additional two year term, interest
due at maturity; unsecured $ 4,000
Financial Public Relations, Ltd. - 10% demand
note receivable, interest due at maturity;
secured by warrant to purchase 24,000 shares
of common stock of Industrial Holdings, Inc. 10,000
Continued
FBI-9
<PAGE>
FLEX FINANCIAL GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1996
NOTE B NOTES RECEIVABLE, RELATED PARTIES (CONTINUED)
Financial Public Relations, Ltd. - 10% demand
note receivable, interest due at maturity;
secured by warrant to purchase 24,000 shares
of common stock of Industrial Holdings, Inc. 10,000
Focus-Tech Investments, Inc. - two 10% demand
notes receivable, interest due at maturity;
secured by warrant to purchase 24,000 shares
of common stock of Industrial Holdings, Inc. 5,000
--------
29,000
Less current portion 25,000
--------
Long-term note receivable, related party $ 4,000
========
NOTE C NOTE RECEIVABLE
Note receivable consists of the following at July 31, 1996.
CARETECH, Inc. - 10% unsecured demand note
receivable, interest due at maturity $ 10,000
========
NOTE D NOTES PAYABLE
Notes payable consist of the following at July 31, 1996:
Two 10% unsecured, subordinated notes payable
on the earlier of (1) October 15, 1996, or
(2) the closing of a public offering of the
Company's securities pursuant to the Securities
Act of 1933, as amended, representing gross
proceeds of not less than $60,000; the notes
are subject to subscription and option agreements $ 50,000
========
Effective October 15, 1996, these notes and other agreements were amended to
increase the number of options available and to extend maturity dates to March
31, 1997.
FBI-10
<PAGE>
FLEX FINANCIAL GROUP, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
JULY 31, 1996
NOTE E RELATED PARTY TRANSACTIONS AND BALANCES
Transactions and balances with related individuals and entities related by
common shareholders are as follows:
Flex Acquisition Corporation
Interest income/receivable $ 134
Financial Public Relationship, Ltd.
Interest income $ 1,709
Interest receivable 917
Consulting expense 5,000
Focus-Tech Investments, Inc.
Interest income/receivable $ 48
Overhead allocation -
allocation covers rent, telephone,
fax, office supplies and expenses,
postage, repairs, use of furniture,
and equipment and administration
management as needed $19,109
Accrual of overhead 8,891
Consulting expense 2,500
M. Stephen Roberts - Attorney at Law;
initial registered agent
Legal fees, various corporate matters $13,550
FBI-11
<PAGE>
MANAGEMENT INFORMATION
Security Ownership of Certain Beneficial Owners and Management.
- ---------------------------------------------------------------------
The Company. The following table shows information as of September
30, 1996 with respect to each beneficial owner of more than 5% of Common Stock
of the Company and to each of the officers and directors of the Company
individually and as a group:
<TABLE>
<CAPTION>
Common Stock Beneficially Owned
-----------------------------------
Before Merger(1) After Merger(2)
---------------- -----------------
Name & Address of No. of Percent No. of Percent
Beneficial Owner Shares of Class Shares of Class
- ------------------------- ------ -------- ------ ---------
<S> <C> <C> <C> <C>
American NorTel 20,000 100 0 0 (3)
Communications, Inc.
7201 East Camelback Road
Suite 320
Scottsdale, AZ 85251
Officers and Directors 0 0 0 0 (3)
as a Group (1 person
before Merger, 0 persons
after Merger)
<FN>
__________________________
(1) Before the proposed Merger, all 20,000 shares of the issued and
outstanding shares of Common Stock of the Company are held of record and
beneficially owned by American NorTel Communications Inc.
(2) After giving effect to the Merger and Spinoff.
(3) After allocating 1 share of Common Stock of the Company for each 588
shares of common stock of American NorTel only to those American NorTel
shareholders entitled to at least five shares, American NorTel will have an
unspecified number of the 20,000 Shares remaining representing undistributed
whole and fractional share interests. It is likely that some of such Shares
will remain with American NorTel and not be distributed.
__________________________
</TABLE>
Flex Financial. The following table describes what would be the effect
--------------
of the Merger between the Company and Flex Financial on the security ownership
of any person who is known to the Company to be a person who would be the
beneficial owner of more than 5 percent of the Common Stock of the Company,
the chief executive officer, the directors, and the directors and executive
officers as a group:
<PAGE>
<TABLE>
<CAPTION>
Common Stock Beneficially Owned
--------------------------------------
Before Merger(1) After Merger(2)
------------------ ------------------
Name and Address No. of Percent of No. of Percent of
of Beneficial Owner Shares Class Shares Class
- --------------------------------- ------ ---------- ------ ----------
<S> <C> <C> <C> <C>
Financial Public Relations, Ltd. 40,000 43 40,000 35
770 S. Post Oak Lane, Suite 515
Houston, TX 77056
Ruth Shepley 20,000 21 20,000 17.5
7617 Del Monte
Houston, TX 77063
Lighthouse Resources Inc. 20,000 21 20,000 17.5
43 Bluewater Dr.
Eureka Springs, AK 72632
Officers and Directors 0 0 0 0
As group (0 persons)
<FN>
(1) The ownership is of record unless otherwise noted.
(2) After the Merger, Mr. Roberts would be the record owner of 40,000
shares of Common Stock of the Company, would be deemed to be the beneficial
owner of 40,000 shares of Common Stock of the Company that would be owned of
record by Financial Public Relations, Ltd. and would be deemed the beneficial
owner of and hold Class A Options to purchase an additional 40,000 shares of
Common Stock of the Company.
(3) After the Merger, Ms. Shepley would own 20,000 shares of the Company's
Common Stock of record and would hold Class A Options to purchase an
additional 20,000 shares.
(4) After the Merger, Lighthouse Resources Inc., an unrelated entity,
would own 20,000 shares of the Company's Common Stock of record and would hold
Class A Options to purchase an additional 20,000 shares.
</TABLE>
Directors, Executive Officers and Significant Employees.
- ------------------------------------------------------------
Set forth below are the names, ages, and terms of office of each of the
directors, executive officers and significant employees of both the Company
and Flex Financial and a description of the business experience of each.
<TABLE>
<CAPTION>
Office Held Term of
Person Office Since Office
- --------------------------- ------------- ----------- -------
<S> <C> <C> <C>
Flex Financial:
- ---------------------------
Michael T. Fearnow, 52 Director, 1995 10-97
President and 1995 10-97
Secretary 1995 10-97
The Company:
- ---------------------------
Michael T. Fearnow, 52 Director, 1996 3-97
President and 1996 3-97
Secretary 1996 3-97
</TABLE>
<PAGE>
Michael T. Fearnow. Mr. Fearnow has been an independent securities
--------------------
consultant to small to medium-sized growth companies in the field of
investment banking transactions, financial and broker relations, and publicly
underwritten securities since 1987. Mr. Fearnow obtained a degree in Business
Administration from the University of Kansas in 1967. He began his investment
banking career as an account executive with Merrill Lynch in 1972 and by 1978
had become a Senior Account Executive and Product Manager for new issues
underwriting. In 1978 Mr. Fearnow was a co-founder of Porcari, Fearnow &
Associates, Inc., a full service NASD broker-dealer. He served as chairman
from 1978 to 1987 and structured and participated in financing numerous
private placements, public underwritings, venture capital transactions and
tax-sheltered investments and specialized in areas of financial planning and
due diligence.
M. Stephen Roberts. Mr. Roberts is an attorney licensed to practice
--------------------
in Texas and Louisiana and has been engaged in the private practice of law as
a sole practitioner since 1968. He obtained a B.A. in Economics from
Louisiana State University, a Juris Doctor from the Louisiana State University
Law School and an L.L.M. in taxation from the Southern Methodist University
Law School. Since 1977, Mr. Roberts' practice has been concentrated in
corporate, tax, securities and investment banking related fields; syndication
of general and limited partnership interests and corporate securities,
including financing involving private placements, initial public offerings and
capital restructures; corporate, securities law, accounting, financing and
business aspects of acquisitions including mergers and purchases of assets and
stock; and the acquisition, development, use and disposition of interests in
real property.
Remuneration of Directors and Officers.
- ------------------------------------------
The Company.
------------
Mr. Fearnow, the sole officer and director of the Company, is receiving
no compensation during 1996 for his services for the Company. No compensation
is proposed to be paid to any officer or director of the Company prior to the
proposed Merger with Flex Financial.
Flex Financial.
Mr. Fearnow, the sole officer and director of the Company, received
no compensation during 1995 for his services for the Company. He is receiving
no compensation during 1996 for his services for the Company. No compensation
is proposed to be paid to any officer or director of the Company prior to the
proposed Merger with Flex Financial. Should the Merger be effected, he shall
become the director of the post-Merger Company. There are no present plans,
arrangements, or understandings concerning any change in compensation for him
after the Merger, should the Merger be effected.
The following sets forth the 1995 remuneration of the chief
executive officer of Flex Financial and the 1996 remuneration payments
proposed to be made to the three highest paid persons who are officers of Flex
Financial, among whom the president is one:
<TABLE>
<CAPTION>
Name of Securities
Individual Underlying
or group Capacity Year Salary Stock Options
- ------------------ --------- ---- ------- -------------
<S> <C> <C> <C> <C>
Michael T. Fearnow President 1995 $ 0.00 0
</TABLE>
___________________________
<PAGE>
Stock Options.
--------------
The Company has granted no stock options.
Interest of Management and Others in Certain Transactions.
- ----------------------------------------------------------------
The Company has entered into a financial consulting agreement with
Financial Public Relations, Ltd. pursuant to which FPR will render investment
banking consulting services to the Company. Mr. Roberts is the general
partner and owner of FPR. Mr. Fearnow is a principal of Focus-Tech
Investments, Inc., a Nevada corporation, that provides investment banking
consulting services to FPR. Under the terms of the agreement, the Company
paid FPR an initial retainer of $5,000 plus certain fees, commissions and
carried interests in transactions entered into by the Company. The services
rendered to the Company by FPR will be primarily for the services of and
provided through Messrs. Roberts and Fearnow.
Flex Financial currently shares a portion of approximately 3,000 square
feet of office space in premises occupied by Focus-Tech Investments, Inc. at
770 S. Post Oak Lane, Suite 515, Houston, Texas 77056. Mr. Fearnow is a
principal of Focus-Tech Investments, Inc., a Nevada corporation, that provides
investment banking consulting services to FPR. Flex Financial believes that
such space and services will be adequate for the business of the Flex
Financial into the foreseeable future. The cost for such space is included in
a $4,000 per-month fee charged by Focus-Tech for general and administrative
services. Upon closing of the Concurrent Public Offering Flex Financial has
agreed to pay Focus-Tech the direct costs attributed to its use of office
space, facilities and equipment. Focus-Tech will invoice Flex Financial for
such direct costs. Focus-Tech has agreed to make this space, facilities and
equipment available as long as required for the use of the Flex Financial.
Focus-Tech, Mr. Fearnow and FPR have agreed that the aggregate amount of cash
compensation and considerations described in this paragraph payable out of the
proceeds of the Concurrent Public Offering shall not exceed 20% of the net
proceeds of the Offering unless payable out of the Company's earnings.
In connection with organizing the Company, FPR, a Texas limited
partnership wholly controlled by Mr. Roberts, paid an aggregate of $10,000 to
purchase a total of 40,000 shares of Common Stock at an average sales price of
$.25 per share. FPR delivered its promissory note in the principal sum of
$10,000, payable on demand and bearing interest at 10%, to the Company in
payment for the shares. On July 31, 1996 FPR paid all principle and interest
due on said note.
In February and March 1996 FPR borrowed $20,000 from Flex Financial
evidenced by two promissory notes bearing interest at 10% and secured by
marketable securities valued in excess of $100,000. Both notes were repaid
with interest on November 15, 1996.
From February through August 1996 Focus-Tech borrowed $13,000 from Flex
Financial evidenced by four promissory notes bearing interest at 10% and
secured by marketable securities valued in excess of $100,000. All four notes
were repaid with interest on November 15, 1996.
<PAGE>
The Company and Flex Financial has retained Mr. Roberts for various
securities matters relating to its contemplated IPO for which it paid an
initial retainer of $5,000 plus hourly fees ranging form $50 to $150 per hour.
The Company believes that these services will be rendered on terms at least
as favorable as it could obtain from unaffiliated persons. In addition, Mr.
Roberts has and will act as corporate general counsel and has and will render
legal services regarding various corporate matters related thereto.
Parents.
- -------
The direct parent of the Company is American NorTel Communications Inc.,
which owns all the issued and outstanding stock of the Company. No
shareholder of American NorTel owns sufficient stock to exercise control over
Flex Financial through stock ownership.
The parents of Flex Financial are its board of directors. No shareholder
of Flex Financial owns sufficient stock to exercise control over Flex
Financial through stock ownership.
UNDERWRITING
The Underwriting Agreement, a copy of which has been filed with the
Securities and Exchange Commission as an exhibit to the Registration Statement
provides in part as follows:
The Company has agreed to pay ________________ (the "Underwriter" or
"Representative") a nonaccountable expense allowance of 3% of the sales price
of all Units sold in this offering from referrals by the Company and a
commission of 10% and a nonaccountable expense allowance of 3% of the sales
price of all other Units sold in this offering. The nonaccountable expense
allowance is limited to a maximum of $18,000 on all Units sold.
The obligation of the Underwriter to offer Units described herein is
subject to (a) the accuracy of the representations and warranties of the
Company contained in the Underwriting Agreement, (b) performance by the
Company of its obligations contained herein, (c) approval of certain legal
matters by the Underwriter or counsel for the Underwriter and (d) the
condition, among others, that a Registration Statement on Form SB-2 shall have
become effective with the U.S. Securities and Exchange Commission. The
Underwriter has agreed to cross-indemnify the Company regarding certain
matters. In the opinion of the Securities and Exchange Commission, such
indemnification is contrary to public policy and therefore, unenforceable.
The Company is offering a minimum of 20,000 Units and a maximum of
100,000 Units at a purchase price of $6.00 per Unit. The Company has entered
into an Underwriting Agreement with ________________________. The Underwriter
has made no commitment to sell any of the Units offered hereby and no
assurance is given than any of the Units offered hereby will be sold. The
Underwriter has agreed to use its "best efforts" to sell the Units offered
hereby.
The Underwriter has the option to utilize other broker-dealers to assist
in the underwriting of this issue. At the date hereof, the Underwriter has
not organized a group to conduct selling efforts with respect to the Company's
Units. In the event such group is formed, the Underwriter intends to reallow
participating broker-dealers 100% of the full 10% underwriting commission,
i.e. $0.60 per Unit.
The proceeds from the sale of Units will be held in an Escrow Account at
Southwest Bank of Texas, N.A., Houston, Texas, until a minimum of 20,000 Units
have been sold. If at least 20,000 Units are not sold by 120 days from the
date of this Prospectus, which date may be extended for an additional period
of 60 days by the Company and Underwriter, the proceeds received from
investors will be promptly refunded to the investors in full without interest
thereon and or deduction of any kind therefrom, such as sales commissions or
expenses of the offering. Until the proceeds from the sale of at least 20,000
Units are deposited in escrow investors will not be security holders nor able
to demand return of their subscription proceeds.
<PAGE>
All purchasers' checks should be made payable to "Flex Acquisitions
Corporation -Escrow Account." Certificates evidencing Common Stock and
Warrants will be issued to purchasers only if the proceeds from the sale of at
least 20,000 Units are actually deposited in escrow and released to the
Company pursuant to the Escrow Agreement. Until such time as the proceeds are
actually received by the Company and the certificates delivered to the
purchasers thereof, such purchasers will be deemed subscribers and not
security holders of the Company. During the selling period, purchasers will
have no right to demand return of their subscription proceeds. If the minimum
proceeds are successfully obtained, the Offering will be continued until
completed, until the maximum period of the Offering has elapsed or until the
Offering is terminated by the Company and Underwriter, whichever occurs first.
The foregoing is a summary of some of the terms of the Underwriting
Agreement which summary does not purport to be complete, and is deemed
amplified in all respects by reference to the Underwriting Agreement, copies
of which may be examined in the offices of the Company, the Underwriter and
the Securities and Exchange Commission, Washington, D.C. See "Additional
Information."
PLAN OF MERGER
Set forth below is a copy of the Plan of Merger between the Company and
Flex Financial Group, Inc.:
PLAN AND AGREEMENT OF MERGER
PLAN AND AGREEMENT OF MERGER, dated as of July 1, 1996, between FLEX
ACQUISITIONS CORPORATION, a Texas corporation ("FAC") and FLEX FINANCIAL
GROUP, INC., a Texas corpora-tion ("FLEX FINANCIAL"); (all collectively called
the "Constituent Corporations").
The Boards of Directors of the Constituent Corporations deem it advisable
for the general welfare of the Constituent Corpora-tions and their respective
stockholders that the Constituent Cor-porations merge into a single
corporation pursuant to this Agree-ment and the Texas Business Corporation
Act.
The parties hereby agree as follows:
1. MERGER AND MODE OF CARRYING IT INTO EFFECT
-------------------------------------------------
1.1 Merger. The Constituent Corporations will be at the
------
Effective Date in the manner authorized and prescribed by the Texas Business
Corporation Act, merged into a single corporation, which corporation is FAC
(hereinafter sometimes called the "Surviving Corporation"), and the parties
hereby adopt the agreements, terms and conditions relating to the Merger and
the mode of carrying the same into ef-fect, which the parties covenant to
observe, keep and perform, set forth in this Agreement.
<PAGE>
1.2 Effecting the Merger. This Agreement will be consummated and
--------------------
the Merger effected by the filing of Articles of Merger as required by Texas
law, with the Secretary of State of the State of Texas, whereupon as of the
Effective Date the separate corporate existence of Flex Financial will cease
and Flex Financial will be merged with and into the Surviving Corporation.
1.3 Effective Date. As used in this Agreement, the term
--------------
"Effective Date" means the date Articles of Merger will have been filed with
the Secretary of State of the State of Texas, after satisfaction of the
requirements of the applicable law of such state prerequi-site to such filing.
1.4 Articles of Merger. Upon the approval of the merger by the
------------------
shareholders of FAC and by the shareholders of Flex Financial, the officers of
FAC shall file with the Secretary of State of the State of Texas Articles of
Merger pursuant to the provisions of Article 5.04 of the Texas Business
Corporation Act; provided, however, that at any time prior to the filing of
such Articles of Merger with the Secretary of State of Texas, the Plan may be
terminated by the board of directors of Flex Financial notwithstanding
approval of this Agreement by the stockholders of Flex Financial or of FAC.
2. ARTICLES OF INCORPORATION; BYLAWS; DIRECTORS AND OFFICERS
---------------------------------------------------------
2.1 Articles of Incorporation. The Articles of Incorporation of
-------------------------
FAC in effect on the date of this Agreement and the Effective Date will be the
Articles of Incorporation of the Surviving Corporation until altered or
amended as provided therein and by the laws of the State of Texas.
2.2 Bylaws. The bylaws of FAC on the Effective Date of the merger
------
shall be the bylaws of the Surviving Corporation.
2.3 Directors. The entire Board of Directors of the Surviving
---------
Corporation will consist of those persons who comprise the Board of Directors
of FAC on the Effective Date; who, subject to the provisions of the bylaws of
the Surviving Corporation and the laws of the State of Texas will hold office
until the first an-nual meeting of stockholders of the Surviving Corporation
held subsequent to the Effective Date or until their respective suc-cessors
are elected and qualified.
2.4 Officers. The principal officers of the Surviving
--------
Corporation, from and after the Effective Date of the merger shall be the
persons acting as the principal officers of FAC on the Effective Date; who,
subject to the provisions of the bylaws of the Surviving Corporation and the
laws of the State of Texas, will hold office until the first meeting of the
Board of Directors following the first annual meeting of stockholders of the
Surviving Corporation held subsequent to the Effective Date or until their
respective successors are elected and qualified.
3. APPROVAL OF MERGER
------------------
<PAGE>
3.1 Stockholder Approvals. This Agreement shall be submitted
---------------------
separately to the shareholders of the Constituent Corporations in the manner
provided by the laws of the State of Texas for approval and pursuant to any
applicable federal securities laws.
4. CONVERSION AND ISSUE OF SECURITIES.
----------------------------------
The manner of converting the shares of each of the Constituent
Corporations into securities of the Surviving Corporation and re-lated
provisions are as follows:
A. All shares of capital stock of Flex Financial which shall be
issued and outstanding on the Effective Date shall, on the Effective Date, be
canceled and shall be converted into that number of shares of Common Stock,
par value $0.001 per share, of FAC.
B. All 20,000 shares of Common Stock, par value $0.001 per share, of
FAC which shall be outstanding immediately prior to the Effective Date shall,
on the Effective Date, continue to be outstanding.
C. All warrants and options of Flex Financial which shall be
outstanding on the Effective Date shall, on the Effective Date, be canceled
and shall be converted into warrants and options of FAC of equivalent tenor.
5. CERTAIN EFFECTS OF THE MERGER
-----------------------------
At the Effective Date, the separate existence and corporate organization
of Flex Financial, except insofar as it may be continued by statute, shall
cease and FAC shall continue as the Surviving Corporation, which shall
succeed, without other transfer or further act or deed whatsoever, to all the
rights, property and assets of the Constituent Corporations and shall be
subject to and liable for all the debts and liabilities of each; otherwise,
its identity, existence, purposes, rights, immunities, properties, liabilities
and obligations shall be unaffected and unimpaired by the Merger except as
expressly provided herein.
6. TAX TREATMENT
-------------
The merger of FAC and Flex Financial shall be accomplished as a tax-free
reorganization as defined in Section 368(a)(1)(A) of the Internal Revenue Code
of 1986, as amended.
Executed on the 1st day of July, 1996, at Houston, Texas.
FLEX FINANCIAL GROUP, INC.
By: /S/ Michael T. Fearnow
----------------------
MICHAEL T. FEARNOW, President
FLEX ACQUISITIONS CORPORATION
By: /S/ M. Stephen Roberts
----------------------
M. Stephen Roberts, President
<PAGE>
ALTERNATE PROSPECTUS
FLEX ACQUISITIONS CORPORATION
(a Texas corporation)
20,000 Shares of Common Stock
(Par Value, $0.001 per Share)
(These 20,000 Shares are for the account of a Distributing Shareholder)
Flex Acquisitions Corporation ("Company") is registering, by means of
this prospectus, 20,000 shares of Common stock to be distributed by American
NorTel Communications, Inc. ("American NorTel"), the corporate parent of the
Company, to its shareholders by dividend (the "Spinoff"). Any closing of the
Units offering is conditioned upon the consummation of certain transactions,
including the merger of the Company and another corporation with a similar
name, Flex Financial Group, Inc. ("Flex Financial"). The proposed Merger is
being registered with the Securities and Exchange Commission ("the SEC")
simultaneously with the registration of the offering of Units and the Spinoff
described herein. See "SUMMARY OF PROPOSED TRANSACTIONS."
Concurrently with the Spinoff, the Company is offering, by means of a
separate prospectus, 100,000 Units, each Unit consisting of one share of
common stock, $.001 par value ("Common Stock"), and four Common Stock purchase
warrants ("Class B Warrants" and "Class C Warrants", collectively, the
"Warrants"). The shares of Common Stock and Warrants included in the Units
are immediately detachable, separately transferable and separately tradeable
as of the date of this Prospectus. The Units will not be tradeable. All
Units offered hereby are being sold by the Company. See "_____________"
Prior to this offering, there has been no public market for the Common
Stock or Warrants and there can be no assurance that such a market will
develop after the completion of this offering or, if developed, that it will
be sustained. The initial public offering price of the Shares and the
Warrants and the exercise price and other terms of the Warrants have been
arbitrarily determined by the Company and will not necessarily be related to
the assets, book value or any other established criterion of value. See "Risk
Factors" and "Underwriting".
- ------------------------------------------------------------------------------
THE SECURITIES OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK. SEE "RISK
FACTORS."
____________________________________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION
OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
____________________________________
<TABLE>
<CAPTION>
- -------------------------------------------------------------------
Underwriting Proceeds to
Price to Discounts and Issuer or
Recipient Commissions Other Person(1)
- -------------------- ----------- -------------- ----------------
<S> <C> <C> <C>
Per Share $ .04(2) $ 0 $ .04
- -------------------- ----------- -------------- ----------------
Total: 20,000 Shares $ 800.00(3) $ 0 $ 800.00
- -------------------- ----------- -------------- ----------------
<FN>
(Continued on next page)
<PAGE>
The date of this Prospectus is _________________, 1996
(1)The estimated expenses of the transaction described herein are $10,000 all
of which is being borne by Flex Financial Group, Inc. ("Flex Financial"), a
corporation with whom the Company proposes to merge. These expenses are
primarily federal and state registration fees and legal fees.
(2)Based upon the book value of Flex Financial on July 31, 1996.
(3)These 20,000 Shares are owned by American NorTel Communications, Inc.
("American NorTel"), a shareholder of the Company. These Shares will be
distributed to an escrow agent (the "Spinoff") for distribution to the
approximately 780 shareholders of American NorTel at such time as (i) a
proposed merger (the "Merger") between the Company and Flex Financial Group,
Inc., a Texas corporation ("Flex Financial") should be effected, (ii) this
Prospectus is supplemented to indicate the date the Merger was effected, and
(iii) information concerning the surviving Company shall have been made
available to the public and the National Association of Securities Dealers
member firms. See "The Escrow Arrangement."
</TABLE>
The Company is not a "reporting company," as such term is employed in the
Securities Exchange Act of 1934. It is not listed on any exchange, and its
Common Stock is not eligible for quotation on the NASDAQ Small-Cap Market
("NADSAQ"). There presently is no public market for the Common Stock of the
Company, and there can be no assurance that such a market will develop or can
be sustained should there be a completion of the proposed Merger. Should the
proposed Merger not be effected, there will be no public market for the
securities of the Company because of the above-described escrow arrangement.
See "Summary of Proposed Transaction - The Escrow Arrangement."
<PAGE>
ALTERNATE PROSPECTUS PAGE
CONCURRENT OFFERING
The Registration Statement, of which this Prospectus form a part,
contains a separate prospectus with respect to a concurrent offering (the
"Concurrent Offering") by the Company of 100,000 Units, each Unit consisting
of one share of common stock, $.001 par value ("Common Stock"), and four
Common Stock purchase warrants ("Class B Warrants" and "Class C Warrants",
collectively, the "Warrants").
<PAGE>
PART II
Other Expenses of Issuance and Distribution.
- ------------------------------------------------
The following table sets forth the costs and expenses, other than
underwriting commissions and the nonaccountable expense allowance. None of
the expenses are being paid by the distributing security holder, American
NorTel Communications, Inc. All expenses are being paid by Flex Financial
Group, Inc., the Company with which the Registrant proposes to Merger.
Item Amount
---- ------
Registration fees $ 3,000
Escrow agent's fee 1,750
Stock transfer agent's fee 4,000
Printing and engraving 5,000 (1)
Postage 4,000 (1)
Legal 35,000
Accounting 10,000
Moodys publication fee 3,500
$66,250
(1) Estimate
Indemnification of Directors and Officers.
- ---------------------------------------------
There is set forth in the Prospectus under "Terms of the Transaction -
Indemnification for Securities Act Liabilities" a description of the laws of
Texas with respect to the indemnification of officers, directors, and agents
of corporations incorporated in Texas.
The Company has charter provisions and bylaw provisions that insure or
indemnify, to the full extent allowed by the laws of Texas, directors,
officers, employees, agents or persons serving in similar capacities in other
enterprises at the request of the Company.
To the extent of the indemnification rights provided by the Texas
statutes and provided by the Company's charter and bylaws, and to the extent
of the Company's abilities to meet such indemnification obligations, the
officers, directors and agents of the Company would be beneficially affected.
Recent Sales of Unregistered Securities.
- -------------------------------------------
On March 31, 1996, the Registrant issued its convertible subordinated
redeemable note ("Flex Note") in the principal sum of $4,000 to Flex
Financial. The Flex Note bears 10% interest with principal and interest due
March 31, 1998 and is convertible into Common Stock at a conversion price of
$.05 per share. If the Merger is consummated the Flex Note be eliminated as
part of the transaction. If the Merger or any other merger is not effected
within 18 months of the effective date of the S-4 registration statement, Flex
Financial has agreed to convert the Flex Note into Common Stock of the Company
and exercise its voting rights to cause a dissolution of the Company.
<PAGE>
On September 1, 1996 the Registrant issued 20,000 shares of its Common
Stock to its corporate parent, American NorTel Communications, Inc., a Wyoming
corporation, for a cash consideration of $1,000 received on April 12, 1996.
This is the only issuance of Common Stock by the Registrant, which remains a
wholly-owned subsidiary of American NorTel Communications, Inc.
There was no underwriter, and the securities were not offered to any
person other than American NorTel Communications, Inc.
The securities were not registered under the Securities Act of 1933 in
reliance upon the exemption from registration provided by Section 4(2) of the
Securities Act. It is believed that Congress never intended, in enacting the
Securities Act, that a corporation needs the protection of the registration
provisions of the Securities Act when it organizes a wholly-owned subsidiary
corporation whose directions and policies will be established and governed by
the corporate parent.
The following is a summary of the transactions by Flex Financial since
its incorporation on August 17, 1995, involving sales of its securities that
were not registered under the Securities Act of 1933, as amended (the
"Securities Act"):
In October, 1995, the founding shareholders of Flex Financial (Financial
Public Relations, Ltd., Ruth Shepley and Lighthouse Resources Inc.) received
80,000 shares of Common Stock for a consideration of $.25 per share. The
issuance of these 80,000 shares was deemed exempt from registration under the
Securities Act in reliance on Section 4(2) of such Act. In addition, the
recipients of the 80,000 shares of founders' Common Stock represented their
intentions to acquire the securities for investment only and not with a view
to or for sale in connection with any distribution thereof and appropriate
legends were affixed to the share certificates.
On or about October 31, 1995, Flex Financial closed a $50,000 bridge loan
with two investors. Flex Financial issued $50,000 principal amount of 10%
subordinated notes ("Notes") and Unit Purchase Options ("Option Units"). The
Option Units entitle the holders to purchase such number of equivalent units
of the Company's securities as may be offered in an initial public offering at
an aggregate offering price of a t least $60,000 pursuant to an effective
registration statement filed under the Securities Act and that closes prior to
June 30, 1996. The number of equivalent units purchasable at a price of $.50
per unit is determined by dividing the IPO unit offering price into the
principal amount of Notes. Effective October 15, 1996, the Notes and other
agreements were amended to increase the number of Option Units available and
to extend maturity dates to March 31, 1997. Issuance of the Notes and Option
Units were deemed exempt from registration under the Securities Act in
reliance on Section 4(2) of such Act. In addition, the recipients of the
notes and options represented their intentions to acquire the securities for
investment only and not with a view to or for sale in connection with any
distribution thereof and appropriate legends were affixed to the securities.
On or about April 21, 1996, Flex Financial closed a $67,200 offering of
14,000 Units, each Unit consisting of 1 share of Common Stock, 2 Class B
Warrants and 2 Class C Warrants. The issuance of the 14,000 shares of Common
Stock at $4.80 per share were deemed exempt from registration under the
Securities Act in reliance on Rule 506 promulgated under the Securities Act.
All recipients had adequate access to information about the Flex
Financial, and the recipients represented their intentions to acquire the
securities for investment only and not with a view to or for sale in
connection with any distribution thereof and appropriate legends were affixed
to the share certificates. Flex Financial believes that all of the purchasers
of the Common Stock in this offering at $4.80 per Unit were accredited
investors as defined in Rule 501 promulgated under the Securities Act.
<PAGE>
Exhibits and Financial Statement Schedules.
- ----------------------------------------------
Separately bound but filed as part of this Form SB-2 Registration
Statement are the following exhibits. There are no financial statement
schedules required by Regulation S-B.
<TABLE>
<CAPTION>
Exhibit Item
- ------------
<C> <S>
1.1 - Form of Underwriting Agreement(1)
2.1 - Agreement of Merger of July 1, 1996 between Flex
Acquisitions Corporation And Flex Financial Group, Inc.
2.2 - Business Combination-Spinoff Agreement of June 30, 1996
among Flex Acquisitions Corporation; Flex Financial Group,
Inc.; and American NorTel Communications, Inc.
3.1 - Certificate of Incorporation of Flex Acquisitions
Corporation
3.2 - Certificate of Incorporation of Flex Financial Group, Inc.
and amendments thereto.
3.3 - Bylaws of Flex Acquisitions Corporation
3.4 - Bylaws of Flex Financial Group, Inc.
4.1 - Form of Class B Redeemable Common Stock Purchase
Warrant(1)
4.2 - Form of Class C Redeemable Common Stock Purchase
Warrant(1)
4.3 - Form of Class A Unit Purchase Options(1)
4.4 - Form of Common Stock Purchase Options(1)
5.1 - Opinion of M. Stephen Roberts, Esq., as to the legality
of the securities covered by the Form S-4 and Form SB-2
Registration Statements(1)
8.1 - Opinion of M. Stephen Roberts, Esq., as to tax matters and
tax consequences to the shareholders(1)
10.1 - Escrow Agreement among Flex Acquisitions Corporation;
American NorTel Communications, Inc., and Southwest Bank
of Texas N.A.
10.2 - Agreement of Flex Financial relating to compliance with
S.E.C. Rule 419(1)
23.1 - Consent of M. Stephen Roberts, Esq., to the reference to
him as an attorney who has passed upon certain information
contained in the Prospectus Statement
23.2 - Consent of Harper & Pearson Company, independent auditors
of Flex Acquisitions Corporation
23.3 - Consent of Harper & Pearson Company, independent auditors
of Flex Financial Group, Inc.
27.1 - Financial Data Schedule
<FN>
(1) To be filed by amendment.
</TABLE>
<PAGE>
UNDERTAKINGS
Flex Acquisitions Corporation will:
1. File, during any period in which it offers or sells
securities, a post-effective amendment to this registration statement to:
i) include any prospectus required by Section 10(a)(3) of
the Securities Act;
ii) reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the information in
the registration statement; and
iii) include any additional or changed material information
on the plan of distribution.
2. For determining liability under this Securities Act, treat
each post-effective amendment as a new registration statement of the
securities offered, and the offering of the securities at that time to be the
initial bona fide offering.
3. File a post-effective amendment to remove from registration
any of the securities that remain unsold at the end of the offering.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 ("the Act") may be permitted to directors, officers and
controlling persons of Flex Acquisitions Corporation pursuant to the foregoing
provisions, or otherwise, Flex Acquisitions Corporation has been advised that
in the opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Act and is, therefore,
unenforceable.
In the event that a claim for indemnification against such liabilities
(other than the payment by Flex Acquisitions Corporation of expenses incurred
or paid by a director, officer or controlling person of Flex Acquisitions
Corporation in the successful defense of any action, suit or proceeding) is
asserted by such director, officer or controlling person in connection with
the securities being registered, Flex Acquisitions Corporation will, unless in
the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act and will be governed by the final adjudication of such issue.
Flex Acquisitions Corporation hereby undertakes to respond to requests
for information that is incorporated by reference into the Prospectus-Proxy
Statement pursuant to Item 4 of this Form, within one business day of receipt
of such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through
the date of responding to the request.
Flex Acquisitions Corporation hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant has duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in Houston, Texas on
November 26, 1996.
FLEX ACQUISITIONS CORPORATION
By: /S/ Michael T. Fearnow
Michael T. Fearnow, President
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
FLEX ACQUISITIONS CORPORATION
By: /S/ Michael T. Fearnow
Michael T. Fearnow, President
Director and Principal Financial
Officer
Date: November 26, 1996
<PAGE>
<TABLE>
<CAPTION>
FLEX ACQUISITIONS CORPORATION
EXHIBIT INDEX
TO
FORM SB-2
REGISTRATION STATEMENT
Exhibit No. Description Page
<C> <S> <C>
1.1 Form of Underwriting Agreement(1)
2.1 Agreement of Merger of July 1, 1996 between Flex
Acquisitions Corporation And Flex Financial Group, Inc.
2.2 Business Combination-Spinoff Agreement of June 30, 1996
among Flex Acquisitions Corporation; Flex Financial Group,
Inc.; and American NorTel Communications, Inc.
3.1 Certificate of Incorporation of Flex Acquisitions
Corporation
3.2 Certificate of Incorporation of Flex Financial Group, Inc.
and amendments thereto.
3.3 Bylaws of Flex Acquisitions Corporation
3.4 Bylaws of Flex Financial Group, Inc.
4.1 Form of Class B Redeemable Common Stock Purchase
Warrant(1)
4.2 Form of Class C Redeemable Common Stock Purchase
Warrant(1)
4.3 Form of Class A Unit Purchase Options(1)
4.4 Form of Common Stock Purchase Options(1)
5.1 Opinion of M. Stephen Roberts, Esq., as to the legality of
the securities covered by the Form S-4 and Form SB-2
Registration Statements(1)
8.1 Opinion of M. Stephen Roberts, Esq., as to tax matters and
tax consequences to the shareholders(1)
10.1 Escrow Agreement among Flex Acquisitions Corporation;
American NorTel Communications, Inc., and Southwest Bank
of Texas N.A.
10.2 Agreement of Flex Financial relating to compliance with
S.E.C. Rule 419(1)
23.1 Consent of M. Stephen Roberts, Esq., to the reference to
him as an attorney who has passed upon certain information
contained in the Prospectus
23.2 Consent of Harper & Pearson Company, independent auditors
of Flex Acquisitions Corporation
23.3 Consent of Harper & Pearson Company, independent auditors
of Flex Financial Group, Inc.
27.1 Financial Data Schedule
<FN>
(1)To be filed by amendment.
</TABLE>
<PAGE>
EXHIBIT 2.1
PLAN AND AGREEMENT OF MERGER
PLAN AND AGREEMENT OF MERGER, dated as of July 1, 1996, between FLEX
ACQUISITIONS CORPORATION, a Texas corporation ("FAC") and FLEX FINANCIAL
GROUP, INC., a Texas corpora-tion ("FLEX FINANCIAL"); (all collectively called
the "Constituent Corporations").
The Boards of Directors of the Constituent Corporations deem it
advisable for the general welfare of the Constituent Corpora-tions and their
respective stockholders that the Constituent Cor-porations merge into a single
corporation pursuant to this Agree-ment and the Texas Business Corporation
Act.
The parties hereby agree as follows:
1. MERGER AND MODE OF CARRYING IT INTO EFFECT
-------------------------------------------------
1.1 Merger. The Constituent Corporations will be at the
------
Effective Date in the manner authorized and prescribed by the Texas Business
Corporation Act, merged into a single corporation, which corporation is FAC
(hereinafter sometimes called the "Surviving Corporation"), and the parties
hereby adopt the agreements, terms and conditions relating to the Merger and
the mode of carrying the same into ef-fect, which the parties covenant to
observe, keep and perform, set forth in this Agreement.
1.2 Effecting the Merger. This Agreement will be consummated and
--------------------
the Merger effected by the filing of Articles of Merger as required by Texas
law, with the Secretary of State of the State of Texas, whereupon as of the
Effective Date the separate corporate existence of Flex Financial will cease
and Flex Financial will be merged with and into the Surviving Corporation.
1.3 Effective Date. As used in this Agreement, the term
---------------
"Effective Date" means the date Articles of Merger will have been filed with
the Secretary of State of the State of Texas, after satisfaction of the
requirements of the applicable law of such state prerequi-site to such filing.
1.4 Articles of Merger. Upon the approval of the merger by the
------------------
shareholders of FAC and by the shareholders of Flex Financial, the officers of
FAC shall file with the Secretary of State of the State of Texas Articles of
Merger pursuant to the provisions of Article 5.04 of the Texas Business
Corporation Act; provided, however, that at any time prior to the filing of
such Articles of Merger with the Secretary of State of Texas, the Plan may be
terminated by the board of directors of Flex Financial notwithstanding
approval of this Agreement by the stockholders of Flex Financial or of FAC.
2. ARTICLES OF INCORPORATION; BYLAWS; DIRECTORS AND OFFICERS
---------------------------------------------------------------
2.1 Articles of Incorporation. The Articles of Incorporation of
-------------------------
FAC in effect on the date of this Agreement and the Effective Date will be the
Articles of Incorporation of the Surviving Corporation until altered or
amended as provided therein and by the laws of the State of Texas.
2.2 Bylaws. The bylaws of FAC on the Effective Date of the merger
------
shall be the bylaws of the Surviving Corporation.
2.3 Directors. The entire Board of Directors of the Surviving
---------
Corporation will consist of those persons who comprise the Board of Directors
of FAC on the Effective Date; who, subject to the provisions of the bylaws of
the Surviving Corporation and the laws of the State of Texas will hold office
until the first an-nual meeting of stockholders of the Surviving Corporation
held subsequent to the Effective Date or until their respective suc-cessors
are elected and qualified.
<PAGE>
2.4 Officers. The principal officers of the Surviving
--------
Corpora-tion, from and after the Effective Date of the merger shall be the
persons acting as the principal officers of FAC on the Effective Date; who,
subject to the provisions of the bylaws of the Surviving Corporation and the
laws of the State of Texas, will hold office until the first meeting of the
Board of Direc-tors following the first annual meeting of stockholders of the
Surviving Corporation held subsequent to the Effective Date or until their
respective successors are elected and qualified.
3. APPROVAL OF MERGER
--------------------
3.1 Stockholder Approvals. This Agreement shall be submitted
----------------------
separately to the shareholders of the Constituent Corporations in the manner
provided by the laws of the State of Texas for approval and pursuant to any
applicable federal securities laws.
4. CONVERSION AND ISSUE OF SECURITIES.
--------------------------------------
The manner of converting the shares of each of the Constituent
Corporations into securities of the Surviving Corporation and re-lated
provisions are as follows:
A. All shares of capital stock of Flex Financial which shall be
issued and outstanding on the Effective Date shall, on the Effective Date, be
canceled and shall be converted into that number of shares of Common Stock,
par value $0.001 per share, of FAC.
B. All 20,000 shares of Common Stock, par value $0.001 per share, of
FAC which shall be outstanding immediately prior to the Effective Date shall,
on the Effective Date, continue to be outstanding.
C. All warrants and options of Flex Financial which shall be
outstanding on the Effective Date shall, on the Effective Date, be canceled
and shall be converted into warrants and options of FAC of equivalent tenor.
5. CERTAIN EFFECTS OF THE MERGER
---------------------------------
At the Effective Date, the separate existence and corporate organization
of Flex Financial, except insofar as it may be continued by statute, shall
cease and FAC shall continue as the Surviving Corporation, which shall
succeed, without other transfer or further act or deed whatsoever, to all the
rights, property and assets of the Constituent Corporations and shall be
subject to and liable for all the debts and liabilities of each; otherwise,
its identity, existence, purposes, rights, immunities, properties, liabilities
and obligations shall be unaffected and unimpaired by the Merger except as
expressly provided herein.
6. TAX TREATMENT
--------------
The merger of FAC and Flex Financial shall be accomplished as a tax-free
reorganization as defined in Section 368(a)(1)(A) of the Internal Revenue Code
of 1986, as amended.
Executed on the 1st day of July, 1996, at Houston, Texas.
FLEX FINANCIAL GROUP, INC.
By: /S/ Michael T. Fearnow
--------------------------------
MICHAEL T. FEARNOW, President
FLEX ACQUISITIONS CORPORATION
By: /S/ M. Stephen Roberts
--------------------------------
M. Stephen Roberts, President
<PAGE>
EXHIBIT 2.2
FLEX FINANCIAL GROUP, INC.
770 S. Post Oak Lane, Suite 515
Houston, Texas 77056
(713) 840-7500
June 30, 1996
William P. Williams, Jr., President and CEO
American NorTel Communications, Inc.
7201 East Camelback Road, Suite 320
Scottsdale, AZ 85251
Dear Mr. Williams:
This letter will evidence our agreement regarding a proposed
merger/spinoff transaction by and between Flex Financial Group, Inc., a Texas
corporation ("Flex Financial"), and American NorTel Communications, Inc., a
Wyoming corporation ("American NorTel").
In consideration of the following representations, promises and
undertakings, the parties agree as follows:
1. Representations by Flex Financial. Flex Financial is a
----------------------------------
Houston, Texas-based company whose operations and financial statements are
described in a Private Placement Memorandum dated October 15, 1995; a copy of
which has been delivered by Flex Financial to American NorTel. Flex Financial
has completed and closed the private placement described in such Memorandum
and seeks a public market for its securities under circumstances that may
require the simultaneous raising of additional capital.
2. Representations by American NorTel. American NorTel is a
-----------------------------------
Wyoming corporation owned by approximately 770 persons that was originally
incorporated in British Columbia, Canada on May 17, 1979. The Company filed
its Certificate of Registration and Articles of Continuance with the Secretary
of State of the State of Wyoming and became a Wyoming corporation effective
February 9, 1993. American NorTel currently operates in the telecommunications
business, providing long distance telephone service in combination with
additional related services in the United States and a number of foreign
countries, including Argentina, Brazil, Mexico, Canada, and Costa Rica.
American NorTel seeks to diversify its business opportunities and
investment potential to its shareholders by engaging in "spinoff" activities
such as are described herein, such spinoffs to involve the distribution, by
way of stock dividends or otherwise, of registered shares of stock of other
companies. American NorTel's shareholder base is described in a letter dated
May 31, 1996 from American NorTel's president, William P. Williams, Jr. to
Michael T. Fearnow, Flex Financial's president.
3. Proposed merger-spinoff. The parties agree to commence
------------------------
taking the steps required to bring to a vote, by the shareholders of Flex
Financial, a proposed spinoff-merger such as is described in letters of May
30, 1996 and June 4, 1996 from M. Stephen Roberts, Esq. To Bill Williams of
American NorTel, copies of which are attached hereto ("the Spinoff Letters").
4. Terms of the merger-spinoff. The terms of the merger-spinoff
---------------------------
will be as follows:
4.1 The American NorTel subsidiary to be created and which will
be the issuer of the shares of stock that will survive the merger will be
named any name designated by Flex Financial and will be incorporated in any
state designated by Flex Financial. Herein, this American NorTel subsidiary
will be called "Flex Acquisitions." On the effective date of the merger, it
will change its name to Flex Financial Group, Inc., if required to do so by
Flex Financial.
<PAGE>
4.2 Flex Acquisitions will sell 20,000 of its shares to American
NorTel for $200, or $0.001 per share, the Common Stock's par value. Unless a
different authorized capital is specified by Flex Financial, Flex Acquisitions
will have authorized capital of 10 million shares of Common Stock, par value
$0.001 per share, and 10 million shares of Preferred Stock, no par value, the
preferences, rights and qualities of each series of the Preferred Stock to be
set by resolutions of Flex Acquisitions's board of directors.
4.3 Flex Acquisitions's counsel, M. Stephen Roberts, will be
responsible for drafting the S-4 Registration Statement to be filed with the
Securities and Exchange Commission ("the SEC"), the Wyoming Securities
Commission, the Texas Securities Commission and, if required, any other state
securities regulatory agency.
4.4 The Registration Statement(s) will register (i) 94,000 Flex
Acquisitions shares of Common Stock, to be distributed to the Flex Financial
shareholders in proportion to their Flex Financial shareholdings upon the
effectiveness of the proposed merger, (ii) the distribution by American NorTel
to its shareholders of the 20,000 Flex Acquisitions shares of Common Stock it
earlier purchased, (iii) Flex Acquisitions' warrants, the number and tenor of
which Flex Acquisitions' warrants shall be the same as the Flex Financial
warrants that are issued and outstanding as of the date of this agreement, all
as set forth in Exhibit A attached hereto; (iv) Flex Acquisitions shares and
warrants underlying Class A Stock Options and Unit Purchase Options; (v)
shares of Flex Acquisitions Common Stock to underlie the before-described Flex
Acquisitions warrants, stock options, and unit purchase options; (vi) up to
1,200,000 shares of Common Stock "for the shelf" to be used for possible
acquisitions; and (vii) in the sole discretion of Flex Financial, shares and
warrants underlying up to 100,000 units, each unit consisting of 1 share of
common stock, 2 Class B Warrants and 2 Class C Warrants, at an aggregate
offering price of $6.00 per unit. Exhibit A attached hereto more fully
describes the securities set forth in (iii), (iv) and (v) above.
4.5 Flex Financial's auditors, must provide their written
consent to the filing of the Registration Statement and any amendments thereto
before they will be filed with the SEC. The auditors may review but express
no opinion on the interim period, unaudited financial statements and any pro
forma financial statements that will appear in the Registration Statement.
All financial statement materials provided by Flex Financial must meet the
requirements of Item 310 of the SEC's Regulation S-B and of its S-4
Registration Statement.
5. Abandonment of transaction by Flex Financial. Flex Financial
---------------------------------------------
is free to abandon this proposed merger-spinoff at any time, subject only to
its paying all expenses incurred by American NorTel or Flex Acquisitions at
that time. Flex Financial is not obligated to obtain the approval by its
shareholders of the proposed merger with Flex Acquisitions.
6. Costs of the transaction. Flex Financial will pay all costs
------------------------
of the proposed transaction. An estimate of these costs is set forth in the
schedule attached hereto, which schedule also sets forth target completion
dates for the proposed transaction. The estimates are not firm prices but are
made in good faith after inquiry and reflection. American NorTel's and Flex
Acquisitions's attorney, M. Stephen Roberts, will bill his time at $150 per
hour. Should the transaction be abandoned or should the transaction be
completed before the $35,000 attorney's fee, required to be deposited in
Roberts' law firm's trust account, be earned, the balance will be returned to
Flex Financial. Should the $35,000 prove to be less than is earned, the
shortfall will be paid by Flex Financial to Roberts upon the approval of his
statements. No estimate is included in the attached schedule of Flex
Financial's own attorney's fees.
<PAGE>
7. Market stabilization. After the merger-spinoff should be
---------------------
effected and for the periods set forth below, Flex Financial will obtain, from
the beneficial owners of at least 80% of its presently outstanding shares of
capital stock, an agreement that each such shareholder will not sell any of
his, her or its shares of post-merger Flex Acquisitions stock without first
obtaining the written authorization of the president of Flex Financial, which
authorization shall be given only for pressing, economic reasons deemed
satisfactory to Flex Financial's president: 90 days, unless Flex
Acquisitions's stock has traded at an average price of $7.50/share for a
period of 45 days.
8. Governing law. The effect and interpretation of this
--------------
Agreement will be governed by the laws of Texas.
FLEX FINANCIAL GROUP, INC.
By: /S/ Michael T. Fearnow
Michael T. Fearnow, President
AMERICAN NORTEL COMMUNICATIONS, INC.
By:/S/ W. T. Williams, Jr.
William P. Williams, Jr., President
<PAGE>
EXHIBIT A
Flex Acquisitions' securities issuable for and
convertible from Flex Financial securities
<TABLE>
<CAPTION>
===============================================================
TITLE OF EACH CLASS OF
SECURITIES TO BE AMOUNT TO BE
REGISTERED REGISTERED
- ---------------------------------------------------------------
<S> <C>
Unit Purchase Options - Bridge Loan
Units issuable upon exercise of the Unit
Purchase Options
Common Stock issuable upon exercise of the Unit
Purchase Options 8,333
- ---------------------------------------------------------------
Class B Warrants issuable upon exercise of the
Unit Purchase Options 16,666
- ---------------------------------------------------------------
Common Stock issuable upon exercise of Class B
Bridge Loan warrants which underlie the Unit
Purchase Options 16,666
- ---------------------------------------------------------------
Class C Warrants issuable upon exercise of the
Unit Purchase Options 16,666
- ---------------------------------------------------------------
Common Stock issuable upon exercise of Class C
Bridge Loan warrants which underlie the Unit
Purchase Options 16,666
- ---------------------------------------------------------------
Units, each consisting of one share of common
stock, $.001 par value, two Class B Warrants and
two Class C Warrants
Common Stock ($.001 par value) 14,000
- ---------------------------------------------------------------
Class B Warrants 28,000
- ---------------------------------------------------------------
Common Stock Underlying Class B Warrants 28,000
- ---------------------------------------------------------------
Class C Warrants 28,000
- ---------------------------------------------------------------
Common Stock Underlying Class C Warrants 28,000
- ---------------------------------------------------------------
Founders' Common Stock 80,000
- ---------------------------------------------------------------
Class A Options 80,000
- ---------------------------------------------------------------
Common Stock Underlying Class A Options 80,000
TOTAL
===============================================================
</TABLE>
<PAGE>
EXHIBIT 3.1
ARTICLES OF INCORPORATION
OF
FLEX ACQUISITIONS CORPORATION
ARTICLE I
---------
The name of the Corporation is FLEX ACQUISITIONS CORPORATION.
ARTICLE II
----------
The Corporation shall have perpetual existence.
ARTICLE III
-----------
The purpose of the Corporation is to engage in any lawful act or activity
for which a corporation may be organized under the Texas Business Corporation
Act, as amended ("TBCA"), of the State of Texas.
ARTICLE IV
----------
The Corporation will not commence business until it has received, for the
issuance of shares, consideration of $1,000.00.
ARTICLE V
---------
(A) The maximum number of shares of all classes of stock which the
Corporation is authorized to have outstanding at any one time is 20,000,000
shares, of which 10,000,000 shares shall be issuable in one or more series,
without par value ("Preferred Stock"), and 10,000,000 shares shall be common
stock, $.001 par value per share ("Common Stock"). All or any part of the
Common Stock and Preferred Stock may be issued by the Corporation from time to
time and for such consideration as the Board of Directors may determine. All
of such shares, if and when issued, and upon receipt of such consideration by
the Corporation, shall be fully paid and non-assessable.
(B) The Board of Directors is authorized at any time and from time to
time to divide the Preferred Stock into one or more series and to fix and
determine the relative rights, preferences, qualifications, limitations and
restrictions of the shares of any series so established. All shares of any
one series of Preferred Stock shall be identical, except as to the dates of
issue and the dates from which dividends on shares of the series issued on
different dates will cumulate, if cumulative. The Board of Directors is
hereby expressly authorized to adopt a resolution establishing and designing
each such series, determining the number of shares which shall constitute such
series, and determining the relative rights, preferences, qualifications,
limitations and restrictions thereof, which relative rights, preferences,
qualifications, limitations and restrictions may differ with respect to each
series as to:
(I) The rate or manner of dividends, including whether and to the
extent such dividends shall be cumulative, participating, or both, the
conditions and dates upon which such dividends shall be payable, and the
preference or relation which such dividends shall bear to the dividends
payable on any other class or classes of stock or any other series of any
class or classes of stock of the Corporation;
(ii) Whether the shares of such series shall be subject to redemption
by the Corporation and, if so, the redemption price, the time or times of
redemption and the terms and conditions of redemption, which price, times of
redemption and terms and conditions may differ in the event of mandatory
redemption or permissive redemption;
<PAGE>
(iii) The amount payable upon shares of such series in the event of
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation;
(iv) Sinking fund provisions, if any, for the redemption or purchase
of shares of such series;
(v) Whether the shares of such series shall be convertible into or
exchangeable for shares of any other class or classes of stock or any other
series of any class or classes of stock of the Corporation, and, if provision
be made for conversion or exchange, the times, prices, rates, adjustments and
other terms and conditions of such conversion or exchange;
(vi) The restrictions, if any, on the issue of any additional shares
or reissue of shares of such series of Preferred Stock;
(vii) Voting rights, if any; and
(viii) Any other such relative rights, preferences, qualifications,
limitations or restrictions for such series which Texas law now or hereafter
empowers or permits the Board of Directors to determine.
Except as the TBCA requires or may hereafter be amended to require separate
voting by classes of stock or by series of any class of stock of the
Corporation or as otherwise required by these Articles of Incorporation, the
holders of any series of Preferred Stock with voting rights, if any, and the
holders of Common Stock shall vote together as a single class on any matters
submitted to vote of the stockholders of the Corporation.
(C) Except as otherwise required by law, each holder of Common Stock
shall be entitled to one (1) vote for each share of such Common Stock standing
in his name on the books of the Corporation. Subject to the rights and
preferences of the Preferred Stock, if any is outstanding, holders of the
Common Stock are entitled to such dividends as may be declared by the Board of
Directors out of funds lawfully available therefor. Upon liquidation,
dissolution or winding up of the affairs of the Corporation, whether voluntary
or involuntary, holders of the Common Stock are entitled to receive pro rata
the remaining assets of the Corporation after the holders of the Preferred
Stock have been paid in full the sums to which they are entitled.
ARTICLE VI
----------
No stockholder of the Corporation shall, by reason of his holding shares
of any class of stock or series of any class of stock, have any preemptive or
preferential right to purchase or subscribe for any shares of capital stock of
the Corporation, now or hereafter authorized, any notes, debentures, bonds or
other securities convertible into or carrying warrants, rights or options to
purchase, shares of any class of stock or series of any class of stock of the
Corporation, now or hereafter authorized, or any warrants, rights or options
to purchase, subscribe to or otherwise acquire any such new or additional
shares of any class of stock or series of any class of stock of the
Corporation, now or hereafter authorized, whether or not the issuance of such
shares, such notes, debentures, bonds or other securities, or such warrants,
rights or options would adversely affect the dividend, voting or any other
rights of such stockholder.
ARTICLE VII
-----------
Cumulative voting for the election of directors shall not be permitted.
<PAGE>
ARTICLE VIII
------------
The holders of any bonds, debentures or other obligations outstanding or
hereafter issued by the Corporation shall have no power to vote in respect to
corporate affairs and management of the Corporation by reason thereof, nor
shall such holders by reason thereof have any right of inspection of the
books, accounts and other records of the Corporation and any other rights
which the stockholders of the Corporation have by reason of the TBCA of the
State of Texas as the same exists or may hereafter be amended.
ARTICLE IX
----------
(A) These Articles of Incorporation shall not be amended unless, in
addition to any other requirements therefor imposed by law, the holders of at
least two-thirds of the shares of stock of the Corporation entitled to vote
thereon shall have voted in favor of the proposed amendment.
(B) The Board of Directors is expressly authorized to alter, amend or
repeal the Bylaws of the Corporation or to adopt new Bylaws.
ARTICLE X
---------
The Board of Directors of the Corporation may, if it deems advisable,
oppose a tender or other offer for the Corporation's securities, whether the
offer is in cash or in the securities of another corporation or otherwise.
When considering whether to oppose an offer, the Board of Directors may, but
is not legally obligated to, consider any pertinent issues; by way of
illustration, but not of limitation, the Board of Directors may, but shall not
be legally obligated to, consider all or any of the following:
(i) Whether the offer price is acceptable based on the historical and
present operating results or financial condition of the Corporation;
(ii) Whether a more favorable price could be obtained for the
Corporation's securities in the future;
(iii) The impact which an acquisition of the Corporation would have
on the employees, customers, suppliers and creditors of the Corporation and
its subsidiaries and the communities which they serve;
(iv) The reputation and business practices of the offeror and its
management and affiliates as they would affect the employees, customers,
suppliers and creditors of the Corporation and its subsidiaries and the future
value of the Corporation's stock by the value of the securities, if any, that
the offeror is offering in exchange for the Corporation's securities, based on
an analysis of the worth of the Corporation as compared to the offeror or any
other entity whose securities are being offered, and the financial condition
of the offeror or such other entity; and
(v) Any antitrust or other legal or regulatory issues that are raised
by the offer.
ARTICLE XI
----------
(A) No director of the Corporation shall be liable to the Corporation or
any of its stockholders for monetary damages for an act or omission in the
director's capacity as a director; provided that this Article XI shall not
eliminate or limit the liability of a director of the Corporation:
<PAGE>
(i) for any breach of such director's duty of loyalty to the
Corporation or its stockholders;
(ii) for acts or omissions not in good faith that constitute a breach
of duty of the director to the Corporation or that involve intentional
misconduct or a knowing violation of law;
(iii) for any transaction from which such director derived an
improper personal benefit, whether the benefit resulted from an action taken
within the scope of the director's office; or
(iv) for an act or omission for which liability of a director is
expressly provided by an applicable statute.
(B) If Article 1302-7.06 of the Texas Miscellaneous Corporation Laws Act
("TMCLA") hereafter is amended to authorize the further elimination or
limitation of the liability of directors of the Corporation, then the
liability of a director of the Corporation shall be limited to the fullest
extent permitted by the TMCLA, as so amended, and such limitation of liability
shall be in addition to, and not in lieu of, the limitation on the liability
of a director of the Corporation provided by the foregoing provisions of this
Article XI.
(C) Any repeal of or amendment to this Article XI shall be prospective
only and shall not adversely affect any limitation on the liability of a
director of the Corporation existing at the time of such repeal or amendment.
ARTICLE XII
-----------
The Corporation shall indemnify every director or officer, their heirs,
executors and administrators, to the full extent as provided by, and in
accordance with, Article 2.02-1 of the TBCA, as it presently exists and as it
is amended, against expenses actually and reasonably incurred by him, as well
as any amount paid upon a judgment in connection with any action, suit or
proceeding, civil or criminal, to which he may be made a party by reason of
his being or having been a director or officer of the Corporation, or at the
request of the Corporation, having been a director or officer of any other
corporation of which the Corporation was at such time a shareholder or
creditor and from which other corporation he is not entitled to be
indemnified, except in relation to matters as to which he is found liable on
the basis that personal benefit was improperly received by him, or in which he
shall be found liable to the Corporation. In the event of a settlement,
indemnification shall be provided only in connection with such matters covered
by the settlement as to which the Corporation is advised by its special legal
counsel that the person to be indemnified did not commit such a breach of
duty. The foregoing shall not be exclusive of other rights to which the
officer or director may be entitled.
ARTICLE XIII
------------
No contract or other transaction between the Corporation and any other
corporation shall be affected by the fact that one (1) or more of the
directors or officers of this Corporation is interested in or is a director or
officer of such other corporation and any director or officer individually may
be a party to or may be interested in any contract or transaction of this
Corporation. No contract or transaction of this Corporation with any person
or persons, firm or association shall be affected by the fact that any
director or officer of this Corporation is a party or interested in such
contract or transaction, or in any way connected with such person or persons,
firm or association, provided that the interest in any such contract or other
transaction of any such director or officer shall be fully disclosed and that
such contract or other transaction shall be authorized or ratified by the vote
of a sufficient number of Directors of the Corporation not so interested. In
the absence of fraud, no director or officer having such adverse interest
shall be liable to the Corporation or to any shareholder or creditor thereof,
or to any other person for any loss incurred by it under or by reason of such
contract or transaction, nor shall any such director or officer be accountable
for any gains or profits realized thereon. In any case described in this
Article XIII any such director may be counted in determining the existence of
a quorum at any meeting of the board of directors which shall authorize or
ratify any such contract or transaction.
<PAGE>
ARTICLE XIV
-----------
The address of the initial registered office of the Corporation is 770 S.
Post Oak Lane, Suite 515, Houston, Texas 77056. The name of the initial
registered agent of the Corporation at such address is M. Stephen Roberts.
ARTICLE XV
----------
The number of directors of the Corporation shall be no fewer than one nor
more than seven. The exact number of directors shall be fixed from time to
time by this Article or by a controlling bylaw, or by the Board of Directors.
The initial Board of Directors shall consist of one director. The person
who is to serve as a director until the first annual meeting of shareholders
or until their successors are elected and qualified is:
M. Stephen Roberts
770 S. Post oak Lane, Suite 515
Houston, Texas 77056
ARTICLE XVI
-----------
Special meetings of the shareholders may be called by (i) the president,
the board of directors, or (ii) the holders of not less than fifty percent
(50%) of shares entitled to vote at the proposed special meeting.
ARTICLE XVII
------------
Any action required by the TBCA to be taken at any annual or special
meeting of shareholders, or any action which may be taken at any annual or
special meeting of shareholders, may be taken without a meeting, without prior
notice, and without a vote, if a consent or consents in writing, setting forth
the action so taken, shall be signed by the holder or holders of shares
bearing not less than the minimum number of votes that would be necessary to
take such action at a meeting at which the holders of all shares entitled to
vote on the actions were present and voted.
ARTICLE XVIII
-------------
The name and address of the incorporator of the Corporation
is as follows:
M. Stephen Roberts
770 S. Post Oak Lane, Suite 515
Houston, Texas 77056
IN WITNESS WHEREOF, the undersigned, being the incorporator designated in
Article XVIII, executes these Articles of Incorporation and certifies to the
truth of the facts stated therein this the 19th day of March, 1996.
/S/ M. Stephen Roberts
-------------------------
M. STEPHEN ROBERTS
<PAGE>
EXHIBIT 3.2
ARTICLES OF INCORPORATION
OF
FLEX FINANCIAL GROUP, INC.
ARTICLE I
---------
The name of the Corporation is FLEX FINANCIAL GROUP, INC.
ARTICLE II
----------
The Corporation shall have perpetual existence.
ARTICLE III
-----------
The purpose of the Corporation is to engage in any lawful act or activity
for which a corporation may be organized under the Texas Business Corporation
Act, as amended ("TBCA"), of the State of Texas.
ARTICLE IV
----------
The Corporation will not commence business until it has received, for the
issuance of shares, consideration of $1,000.00.
ARTICLE V
---------
(A) The maximum number of shares of all classes of stock which the
Corporation is authorized to have outstanding at any one time is 20,000,000
shares, of which 10,000,000 shares shall be issuable in one or more series,
without par value ("Preferred Stock"), and 10,000,000 shares shall be common
stock, $.01 par value per share ("Common Stock"). All or any part of the
Common Stock and Preferred Stock may be issued by the Corporation from time to
time and for such consideration as the Board of Directors may determine. All
of such shares, if and when issued, and upon receipt of such consideration by
the Corporation, shall be fully paid and non-assessable.
(B) The Board of Directors is authorized at any time and from time to
time to divide the Preferred Stock into one or more series and to fix and
determine the relative rights, preferences, qualifications, limitations and
restrictions of the shares of any series so established. All shares of any
one series of Preferred Stock shall be identical, except as to the dates of
issue and the dates from which dividends on shares of the series issued on
different dates will cumulate, if cumulative. The Board of Directors is
hereby expressly authorized to adopt a resolution establishing and designing
each such series, determining the number of shares which shall constitute such
series, and determining the relative rights, preferences, qualifications,
limitations and restrictions thereof, which relative rights, preferences,
qualifications, limitations and restrictions may differ with respect to each
series as to:
(i) The rate or manner of dividends, including whether and to the
extent such dividends shall be cumulative, participating, or both, the
conditions and dates upon which such dividends shall be payable, and the
preference or relation which such dividends shall bear to the dividends
payable on any other class or classes of stock or any other series of any
class or classes of stock of the Corporation;
<PAGE>
(ii) Whether the shares of such series shall be subject to redemption
by the Corporation and, if so, the redemption price, the time or times of
redemption and the terms and conditions of redemption, which price, times of
redemption and terms and conditions may differ in the event of mandatory
redemption or permissive redemption;
(iii) The amount payable upon shares of such series in the event of
voluntary or involuntary liquidation, dissolution or winding up of the
Corporation;
(iv) Sinking fund provisions, if any, for the redemption or purchase
of shares of such series;
(v) Whether the shares of such series shall be convertible into or
exchangeable for shares of any other class or classes of stock or any other
series of any class or classes of stock of the Corporation, and, if provision
be made for conversion or exchange, the times, prices, rates, adjustments and
other terms and conditions of such conversion or exchange;
(vi) The restrictions, if any, on the issue of any additional shares
or reissue of shares of such series of Preferred Stock;
(vii) Voting rights, if any; and
(viii) Any other such relative rights, preferences, qualifications,
limitations or restrictions for such series which Texas law now or hereafter
empowers or permits the Board of Directors to determine.
Except as the TBCA requires or may hereafter be amended to require separate
voting by classes of stock or by series of any class of stock of the
Corporation or as otherwise required by these Articles of Incorporation, the
holders of any series of Preferred Stock with voting rights, if any, and the
holders of Common Stock shall vote together as a single class on any matters
submitted to vote of the stockholders of the Corporation.
(C) Except as otherwise required by law, each holder of Common Stock
shall be entitled to one (1) vote for each share of such Common Stock standing
in his name on the books of the Corporation. Subject to the rights and
preferences of the Preferred Stock, if any is outstanding, holders of the
Common Stock are entitled to such dividends as may be declared by the Board of
Directors out of funds lawfully available therefor. Upon liquidation,
dissolution or winding up of the affairs of the Corporation, whether voluntary
or involuntary, holders of the Common Stock are entitled to receive pro rata
the remaining assets of the Corporation after the holders of the Preferred
Stock have been paid in full the sums to which they are entitled.
ARTICLE VI
----------
No stockholder of the Corporation shall, by reason of his holding shares
of any class of stock or series of any class of stock, have any preemptive or
preferential right to purchase or subscribe for any shares of capital stock of
the Corporation, now or hereafter authorized, any notes, debentures, bonds or
other securities convertible into or carrying warrants, rights or options to
purchase, shares of any class of stock or series of any class of stock of the
Corporation, now or hereafter authorized, or any warrants, rights or options
to purchase, subscribe to or otherwise acquire any such new or additional
shares of any class of stock or series of any class of stock of the
Corporation, now or hereafter authorized, whether or not the issuance of such
shares, such notes, debentures, bonds or other securities, or such warrants,
rights or options would adversely affect the dividend, voting or any other
rights of such stockholder.
<PAGE>
ARTICLE VII
-----------
Cumulative voting for the election of directors shall not be permitted.
ARTICLE VIII
------------
The holders of any bonds, debentures or other obligations outstanding or
hereafter issued by the Corporation shall have no power to vote in respect to
corporate affairs and management of the Corporation by reason thereof, nor
shall such holders by reason thereof have any right of inspection of the
books, accounts and other records of the Corporation and any other rights
which the stockholders of the Corporation have by reason of the TBCA of the
State of Texas as the same exists or may hereafter be amended.
ARTICLE IX
----------
(A) These Articles of Incorporation shall not be amended unless, in
addition to any other requirements therefor imposed by law, the holders of at
least two-thirds of the shares of stock of the Corporation entitled to vote
thereon shall have voted in favor of the proposed amendment.
(B) The Board of Directors is expressly authorized to alter, amend or
repeal the Bylaws of the Corporation or to adopt new Bylaws.
ARTICLE X
---------
The Board of Directors of the Corporation may, if it deems advisable,
oppose a tender or other offer for the Corporation's securities, whether the
offer is in cash or in the securities of another corporation or otherwise.
When considering whether to oppose an offer, the Board of Directors may, but
is not legally obligated to, consider any pertinent issues; by way of
illustration, but not of limitation, the Board of Directors may, but shall not
be legally obligated to, consider all or any of the following:
(i) Whether the offer price is acceptable based on the historical and
present operating results or financial condition of the Corporation;
(ii) Whether a more favorable price could be obtained for the
Corporation's securities in the future;
(iii) The impact which an acquisition of the Corporation would have
on the employees, customers, suppliers and creditors of the Corporation and
its subsidiaries and the communities which they serve;
(iv) The reputation and business practices of the offeror and its
management and affiliates as they would affect the employees, customers,
suppliers and creditors of the Corporation and its subsidiaries and the future
value of the Corporation's stock by the value of the securities, if any, that
the offeror is offering in exchange for the Corporation's securities, based on
an analysis of the worth of the Corporation as compared to the offeror or any
other entity whose securities are being offered, and the financial condition
of the offeror or such other entity; and
<PAGE>
(v) Any antitrust or other legal or regulatory issues that are raised
by the offer.
ARTICLE XI
----------
(A) No director of the Corporation shall be liable to the Corporation or
any of its stockholders for monetary damages for an act or omission in the
director's capacity as a director; provided that this Article XI shall not
eliminate or limit the liability of a director of the Corporation:
(i) for any breach of such director's duty of loyalty to the
Corporation or its stockholders;
(ii) for acts or omissions not in good faith that constitute a breach
of duty of the director to the Corporation or that involve intentional
misconduct or a knowing violation of law;
(iii) for any transaction from which such director derived an
improper personal benefit, whether the benefit resulted from an action taken
within the scope of the director's office; or
(iv) for an act or omission for which liability of a director is
expressly provided by an applicable statute.
(B) If Article 1302-7.06 of the Texas Miscellaneous Corporation Laws Act
("TMCLA") hereafter is amended to authorize the further elimination or
limitation of the liability of directors of the Corporation, then the
liability of a director of the Corporation shall be limited to the fullest
extent permitted by the TMCLA, as so amended, and such limitation of liability
shall be in addition to, and not in lieu of, the limitation on the liability
of a director of the Corporation provided by the foregoing provisions of this
Article XI.
(C) Any repeal of or amendment to this Article XI shall be prospective
only and shall not adversely affect any limitation on the liability of a
director of the Corporation existing at the time of such repeal or amendment.
ARTICLE XII
-----------
The Corporation shall indemnify every director or officer, their heirs,
executors and administrators, to the full extent as provided by, and in
accordance with, Article 2.02-1 of the TBCA, as it presently exists and as it
is amended, against expenses actually and reasonably incurred by him, as well
as any amount paid upon a judgment in connection with any action, suit or
proceeding, civil or criminal, to which he may be made a party by reason of
his being or having been a director or officer of the Corporation, or at the
request of the Corporation, having been a director or officer of any other
corporation of which the Corporation was at such time a shareholder or
creditor and from which other corporation he is not entitled to be
indemnified, except in relation to matters as to which he is found liable on
the basis that personal benefit was improperly received by him, or in which he
shall be found liable to the Corporation. In the event of a settlement,
indemnification shall be provided only in connection with such matters covered
by the settlement as to which the Corporation is advised by its special legal
counsel that the person to be indemnified did not commit such a breach of
duty. The foregoing shall not be exclusive of other rights to which the
officer or director may be entitled.
<PAGE>
ARTICLE XIII
------------
No contract or other transaction between the Corporation and any other
corporation shall be affected by the fact that one (1) or more of the
directors or officers of this Corporation is interested in or is a director or
officer of such other corporation and any director or officer individually may
be a party to or may be interested in any contract or transaction of this
Corporation. No contract or transaction of this Corporation with any person
or persons, firm or association shall be affected by the fact that any
director or officer of this Corporation is a party or interested in such
contract or transaction, or in any way connected with such person or persons,
firm or association, provided that the interest in any such contract or other
transaction of any such director or officer shall be fully disclosed and that
such contract or other transaction shall be authorized or ratified by the vote
of a sufficient number of Directors of the Corporation not so interested. In
the absence of fraud, no director or officer having such adverse interest
shall be liable to the Corporation or to any shareholder or creditor thereof,
or to any other person for any loss incurred by it under or by reason of such
contract or transaction, nor shall any such director or officer be accountable
for any gains or profits realized thereon. In any case described in this
Article XIII any such director may be counted in determining the existence of
a quorum at any meeting of the board of directors which shall authorize or
ratify any such contract or transaction.
ARTICLE XIV
-----------
The address of the initial registered office of the Corporation is 770 S.
Post Oak Lane, Suite 515, Houston, Texas 77056. The name of the initial
registered agent of the Corporation at such address is M. Stephen Roberts.
ARTICLE XV
----------
The number of directors of the Corporation shall be no fewer than one nor
more than seven. The exact number of directors shall be fixed from time to
time by this Article or by a controlling bylaw, or by the Board of Directors.
The initial Board of Directors shall consist of one director. The person
who is to serve as a director until the first annual meeting of shareholders
or until their successors are elected and qualified is:
M. Stephen Roberts
770 S. Post oak Lane, Suite 515
Houston, Texas 77056
ARTICLE XVI
-----------
Special meetings of the shareholders may be called by (i) the president,
the board of directors, or (ii) the holders of not less than fifty percent
(50%) of shares entitled to vote at the proposed special meeting.
ARTICLE XVII
------------
Any action required by the TBCA to be taken at any annual or special
meeting of shareholders, or any action which may be taken at any annual or
special meeting of shareholders, may be taken without a meeting, without prior
notice, and without a vote, if a consent or consents in writing, setting forth
the action so taken, shall be signed by the holder or holders of shares
bearing not less than the minimum number of votes that would be necessary to
take such action at a meeting at which the holders of all shares entitled to
vote on the actions were present and voted.
<PAGE>
ARTICLE XVIII
-------------
The name and address of the incorporator of the Corporation
is as follows:
M. Stephen Roberts
770 S. Post Oak Lane, Suite 515
Houston, Texas 77056
IN WITNESS WHEREOF, the undersigned, being the incorporator designated in
Article XVIII, executes these Articles of Incorporation and certifies to the
truth of the facts stated therein this the 14th day of August, 1995.
/S/ M. Stephen Roberts
------------------------------
M. STEPHEN ROBERTS
<PAGE>
EXHIBIT 3.3
_________________________________________________________________
BYLAWS
OF
FLEX ACQUISITIONS CORPORATION
_________________________________________________________________
<PAGE>
TABLE OF CONTENTS
-----------------
Article 1: Offices
1.01 Registered Office & Agent
1.02 Other Offices
Article 2: Shareholders
2.01 Place of Meetings
2.02 Annual Meetings
2.03 Voting List
2.04 Special Meetings
2.05 Notice
2.06 Quorum
2.07 Majority Vote; Withdrawal of Quorum
2.08 Method of Voting
2.09 Record Date; Closing of Transfer Books
2.10 Action Without Meeting
2.11 Telephone and Similar Meetings
2.12 Order of Business at Meetings
Article 3: Directors
3.01 Management
3.02 Number; Qualification; Election; Term
3.03 Change in Number
3.04 Removal
3.05 Vacancies
3.06 Election of Directors
3.07 Place of Meetings
3.08 First Meetings
3.09 Regular Meetings
3.10 Special Meetings
3.11 Quorum; Majority Vote
3.12 Compensation
3.13 Procedure
3.14 Action without Meeting
3.15 Telephone and Similar Meetings
3.16 Interested Directors; Officers and Shareholders
Article 4: Executive Committee
4.01 Designation
4.02 Number; Qualification; Term
4.03 Authority
4.04 Change in Number
4.05 Removal
4.06 Vacancies
4.07 Meetings
4.08 Quorum; Majority Vote
4.09 Compensation
4.10 Procedure
4.11 Action Without Meeting
4.12 Telephone and Similar Meetings
4.13 Responsibility
Article 5: Notice
5.01 Method
5.02 Waiver
<PAGE>
Article 6: Officers & Agents
6.01 Number; Qualification; Election; Term
6.02 Removal
6.03 Vacancies
6.04 Authority
6.05 Compensation
6.06 President
6.07 Vice President
6.08 Secretary
6.09 Assistant Secretary
6.10 Treasurer
6.11 Assistant Treasurer
Article 7: Certificates and Shareholders
7.01 Certificates
7.02 Issuance
7.03 Payment for Shares
7.04 Subscriptions
7.05 Lien
7.06 Lost, Stolen or Destroyed Certificates
7.07 Registration of Transfer
7.08 Registered Owner
7.09 Pre-Emptive Rights
Article 8: General Provisions
8.01 Dividends and Reserves
8.02 Books and Records
8.03 Annual Statement
8.04 Checks and Notes
8.05 Fiscal Year
8.06 Seal
8.07 Indemnification; Insurance
8.08 Resignation
8.09 Amendment of Bylaws
8.10 Construction
8.11 Table of Contents; Headings
8.12 Relation to Articles of Incorporation
<PAGE>
ARTICLE 1: OFFICES
1.01 Registered Office & Agent. The registered office of the
corporation shall be at such address within the State of Texas as may be
specified from time to time by the board of directors. The name of the
registered agent at such address shall be designated from time to time by the
board of directors.
1.02 Other Offices. The corporation may also have offices at such
other places both within and without the State of Texas as the board of
directors may from time to time determine or the business of the corporation
may require.
ARTICLE 2: SHAREHOLDERS
2.01 Place of Meetings. Meetings of shareholders shall be held at
-----------------
the time and place, within or without the State of Texas, stated in the notice
of the meeting or in a waiver of notice.
2.02 Annual Meetings. An annual meeting of the shareholders shall
---------------
be held each year at 10 a.m. on a day during the fourth month of the
corporation's fiscal year to be selected by the board of directors. If such a
day is a legal holiday, then the meeting shall be on the next business day
following. At the meeting, the shareholders shall elect directors and transact
such other business as may properly be brought before the meeting.
2.03 Voting List. At least ten days before each meeting of
------------
shareholders, a complete list of the shareholders entitled to vote at the
meeting, arranged in alphabetical order, with the address of each and the
number of voting shares held by each, shall be prepared by the officer or
agent having charge of the stock transfer books. The list, for a period of ten
days prior to the meeting, shall be kept on file at the principal office of
the corporation and shall be subject to inspection by any shareholder at any
time during usual business hours. The list shall also be produced and kept
open at the time and place of the meeting during the whole time thereof, and
shall be subject to the inspection of any shareholder during the whole time of
the meeting.
2.04 Special Meetings. Special meetings of the shareholders, for
----------------
any purpose or purposes, unless otherwise prescribed by statute or by the
articles of incorporation, or by these bylaws, may be called by the president,
the board of directors, or the holders of not less than one-tenth of all the
shares entitled to vote at the meetings. Business transacted at a special
meeting shall be confined to the purposes stated in the notice of the meeting.
2.05 Notice. Written or printed notice stating the place, day and
------
hour of the meeting and, in case of a special meeting, the purpose or purposes
for which the meeting is called, shall be delivered not less than ten nor more
than fifty days before the date of the meeting, either personally or by mail,
by or at the direction of the president, the secretary, or the officer or
person calling the meeting, to each shareholder of record entitled to vote at
the meeting. If mailed, such notice shall be deemed to be delivered when
deposited in the United States mail addressed to the shareholder at his
address as it appears on the stock transfer books of the corporation, with
postage thereon prepaid. (See also Bylaws 5.01 and 5.02.)
2.06 Quorum. The holders of a majority of the shares issued and
------
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall be requisite and shall constitute a quorum at meetings of the
shareholders for the transaction of business except as otherwise provided by
statute, by the articles of incorporation or by these bylaws. If a quorum is
not present or represented at a meeting of the shareholders, the shareholders
entitled to vote, present in person or represented by proxy, shall have power
to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum is present or represented. At an
adjourned meeting at which a quorum is present or represented, any business
may be transacted which might have been transacted at the meeting as
originally notified.
<PAGE>
2.07 Majority Vote; Withdrawal of Quorum. When a quorum is
---------------------------------------
present at a meeting, the vote of the holders of a majority of the shares
having voting power, present in person or represented by proxy, shall decide
any question brought before the meeting, unless the question is one on which,
by express provision of the statutes, the articles of incorporation, or these
bylaws, a higher vote is required in which case the express provision shall
govern. The shareholders present at a duly constituted meeting may continue to
transact business until adjournment, despite the withdrawal of enough
shareholders to leave less than a quorum.
2.08 Method of Voting. Each outstanding share, regardless of
----------------
class, shall be entitled to one vote on each matter submitted to a vote at a
meeting of shareholders, except to the extent that the voting rights of the
shares of any class or classes are limited or denied by the articles of
incorporation. At any meeting of the shareholders, every shareholder having
the right to vote may vote either in person, or by proxy executed in writing
by the shareholder or by his duly authorized attorney-in-fact. No proxy shall
be valid after eleven months from the date of its execution, unless otherwise
provided in the proxy. Each proxy shall be revocable unless expressly provided
therein to be irrevocable and unless otherwise made irrevocable by law. Each
proxy shall be filed with the secretary of the corporation prior to or at the
time of the meeting. Voting for directors shall be in accordance with Section
3.06 of these bylaws. Any vote may be taken by voice or by show of hands
unless someone entitled to vote objects, in which case written ballots shall
be used.
2.09 Record Date, Closing Transfer Books. The board of directors
-----------------------------------
may fix in advance a record date for the purpose of determining shareholders
entitled to notice of or to vote at a meeting of the shareholders, the record
date to be not less than ten nor more than fifty days prior to the meeting; or
the board of directors may close the stock transfer books for such purpose for
a period of not less than ten nor more than fifty days prior to such meeting.
In the absence of any action by the board of directors, the date upon which
the notice of the meeting is mailed shall be the record date.
2.10 Action Without Meeting. Any action required by statute to be
----------------------
taken at a meeting of the shareholders, or any action which may be taken at a
meeting of the shareholders, may be taken without a meeting if a consent in
writing setting forth the action so taken, shall be signed by all of the
shareholders entitled to vote with respect to the subject matter thereof and
such consent shall have the same force and effect as a unanimous vote of the
shareholders. The signed consent, or a signed copy shall be placed in the
minute book.
2.11 Telephone and Similar Meetings. Shareholders, directors and
--------------------------------
committee members may participate in and hold a meeting by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other. Participation in such a
meeting shall constitute presence in person at the meeting, except where a
person participates in the meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.
2.12 Order of Business at Meetings. The order of business at
-----------------------------
annual meetings and so far as practicable at other meetings of shareholders
shall be as follows unless changed by the board of directors:
(1) call to order
(2) proof of due notice of meeting
(3) determination of quorum and examination of proxies
(4) announcement of availability of voting list
(See Bylaw 2.03)
(5) announcement of distribution of annual statement
(See Bylaw 8.03)
(6) reading and disposing of minutes of last meeting of shareholders
(7) reports of officers and committees
(8) appointment of voting inspectors
<PAGE>
(9) unfinished business
(10) new business
(11) nomination of directors
(12) opening of polls for voting
(13) recess
(14) reconvening; closing of polls
(15) report of voting inspectors
(16) other business
(17) adjournment
ARTICLE 3: DIRECTORS
3.01 Management. The business and affairs of the corporation
----------
shall be managed by the board of directors who may exercise all such powers of
the corporation and do all such lawful acts and things as are not (by statute
or by the articles of incorporation or by these bylaws) directed or required
to be exercised or done by the shareholders.
3.02 Number; Qualification; Election; Term. The board of
------
directors shall consist of one (1) person; provided however, that the board of
directors may, in its discretion, increase or decrease the number of directors
constituting the board of directors to not less than one (1) person nor more
than nine (9) persons, who need not be a shareholder or resident of any
particular state. The director named in the Articles of Incorporation shall
hold office until the first annual meeting of shareholders and until his
successors are elected and qualified, either at an annual or a special meeting
of shareholders. Directors other than those named in the Articles of
Incorporation shall hold office until the next annual meeting and until their
successors are elected and qualified.
3.03 Change in Number. The number of directors may be increased
----------------
or decreased from time to time by amendment to these bylaws but no decrease
shall have the effect of shortening the term of any incumbent director. Any
directorship to be filled by reason of an increase in the number of directors
shall be filled by election at an annual meeting or at a special meeting of
shareholders called for that purpose.
3.04 Removal. Any director may be removed either for or without
-------
cause at any special or annual meeting of shareholders, by the affirmative
vote of a majority in number of shares of the shareholders present, in person
or by proxy, at such meeting and entitled to vote for the election of such
director if notice of intention to act upon such matter shall have been given
in the notice calling such meeting.
3.05 Vacancies. Any vacancy occurring in the board of directors
---------
(by death, resignation, removal or otherwise) may be filled by an affirmative
vote of a majority of the remaining directors though less than a quorum of the
board of directors. A director elected to fill a vacancy shall be elected for
the unexpired term of his predecessor in office.
3.06 Election of Directors. Directors shall be elected by
-----------------------
plurality vote. Cumulative voting shall not be permitted.
3.07 Place of Meetings. Meetings of the board of directors,
------------------
regular or special, may be held either within or without the State of Texas.
3.08 First Meetings. The first meeting of a newly elected board
--------------
shall be held without further notice immediately following the annual meeting
of shareholders, and at the same place, unless by unanimous consent of the
directors then elected and serving the time or place is changed.
3.09 Regular Meetings. Regular meetings of the board of directors
----------------
may be held without notice at such time and place as shall from time to time
be determined by the board.
<PAGE>
3.10 Special Meetings. Special meetings of the board of directors
----------------
may be called by the president on three days' notice to each director, either
personally or by mail or by telegram. Special meetings shall be called by the
president or secretary in like manner and on like notice on the written
request of two directors. Except as otherwise expressly provided by statute,
articles of incorporation, or these bylaws, neither the business to be
transacted at, nor the purpose of, any special meeting need be specified in a
notice or waiver of notice.
3.11 Quorum; Majority Vote. At meetings of the board of directors
---------------------
a majority of the number of directors fixed by these bylaws shall constitute a
quorum for the transaction of business; provided however, that in the event
there are vacancies occurring in the board that are not filled then a majority
of the directors then serving shall constitute a quorum for the transaction of
business. The act of a majority of the directors present at a meeting at which
a quorum is present shall be the act of the board of directors, except as
otherwise specifically provided by statute, the articles of incorporation, or
these bylaws. If a quorum is not present at a meeting of the board of
directors, the directors present may adjourn the meeting from time to time,
without notice other than announcement at the meting, until a quorum is
present.
3.12 Compensation. By resolution of the board of directors, the
------------
directors may be paid their expenses, if any, of attendance at each meeting of
the board of directors and may be paid a fixed sum for attendance at each
meeting of the board of directors or a stated salary as director. No such
payment shall preclude any director from serving the corporation in any other
capacity and receiving compensation therefor. Members of the executive
committee or of special or standing committees may, by resolution of the board
of directors, be allowed like compensation for attending committee meetings.
3.13 Procedure. The board of directors shall keep regular minutes
---------
of its proceedings. The minutes shall be placed in the minute book of the
corporation.
3.14 Action Without Meeting. Any action required or permitted to
----------------------
be taken at a meeting of the board of directors may be taken without a meeting
if a consent in writing, setting forth the action so taken, is signed by all
of the members of the board of directors. Such consent shall have the same
force and effect as a unanimous vote at a meeting. The signed consent, or a
signed copy, shall be placed in the minute book.
3.15 Telephone and Similar Meetings. Directors and committee
------------------------------
members may participate in and hold a meeting by means of conference telephone
or similar communications equipment by means of which all persons
participating in the meeting can hear each other. Participation in such a
meeting shall constitute presence in person at the meeting, except where a
person participates in the meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.
3.16 Interested Directors; Officers and Security Holders.
-------------------------------------------------------
(A) Validity. If paragraph (B) is satisfied, no contract or other
--------
transaction between the corporation and any of its directors, officers or
security holders, or any corporation or firm in which any of them are directly
or indirectly interested, shall be invalid solely because of this relationship
or because of the presence of the director, officer or security holder at the
meeting authorizing the contract or transaction, or his participation or vote
in the meeting or authorization.
(B) Disclosure, Approval; Fairness. Paragraph (A) shall apply
------------------------------
only if:
(l) the material facts of the relationship or interest of each such
director, officer or security holder are known or disclosed:
<PAGE>
(a) to the board of directors and it nevertheless authorizes or
ratifies the contract or transaction by a majority of the directors present,
each such interested director to be counted in determining whether a quorum is
present but not in calculating the majority necessary to carry the vote; or
(b) to the shareholders and they nevertheless authorize or ratify the
contract or transaction by a majority of the shares present, each such
interested person to be counted for quorum and voting purposes; or
(2) the contract or transaction is fair to the corporation as of the
time it is authorized or ratified by the board of directors or the
shareholders.
(C) Non-Exclusive. This provision shall not be construed to invalidate
-----------------
a contract or transaction which would be valid in the absence of this
provision.
ARTICLE 4: EXECUTIVE COMMITTEE
4.01 Designation. The board of directors may, by resolution
-----------
adopted by a majority of the whole board, designate an executive committee.
4.02 Number; Qualification; Term. The executive committee shall
---------------------------
consist of one or more directors, one of whom shall be the president. The
executive committee shall serve at the pleasure of the board of directors.
4.03 Authority. The executive committee, to the extent provided
---------
in such resolution, shall have and may exercise all of the authority of the
board of directors in the management of the business and affairs of the
corporation, including authority over the use of the corporate seal. However,
the executive committee shall not have the authority of the board in reference
to:
(a) amending the articles of incorporation;
(b) approving a plan of merger or consolidation;
(c) recommending to the shareholders the sale, lease or exchange of all or
substantially all of the property and assets of the corporation
otherwise than in the usual and regular course of its business;
(d) recommending to the shareholders a voluntary dissolution of the
corporation or a revocation thereof;
(e) amending, altering, or repealing these bylaws or adopting new bylaws;
(f) filling vacancies in or removing members of the board of directors or
of any committee appointed by the board of directors;
(g) fixing the compensation of any member of such committee;
(h) altering or repealing any resolution of the board of directors which
by its terms provides that it shall not be so amendable or repealable;
(i) declaring a dividend; or
(j) authorizing the issuance of shares of the corporation.
4.04 Change in Number. The number of executive committee members
----------------
may be increased or decreased from time to time by resolution adopted by a
majority of the whole board of directors.
4.05 Removal. Any member of the executive committee may be
-------
removed by the board of directors by the affirmative vote of a majority of the
whole board, whenever in its judgment the best interests of the corporation
will be served thereby.
4.06 Vacancies. A vacancy occurring in the executive committee
---------
(by death, resignation, removal or otherwise) may be filled by the board of
directors in the manner provided for original designation in Bylaw 4.01.
<PAGE>
4.07 Meetings. Time, place and notice, (if any) of executive
--------
committee meetings shall be determined by the executive committee.
4.08 Quorum; Majority Vote. At meetings of the executive
-----------------------
committee, a majority of the number of members designated by the board of
directors shall constitute a quorum for the transaction of business. The act
of a majority of the members present at any meeting at which a quorum is
present shall be the act of the executive committee, except as otherwise
specifically provided by statute, the articles of incorporation, or these
bylaws. If a quorum is not present at a meeting of the executive committee,
the members present may adjourn the meeting from time to time, without notice
other than an announcement at the meeting, until a quorum is present.
4.09 Compensation. By resolution of the board of directors, the
------------
members of the executive committee may be paid their expenses, if any, of
attendance at each meeting of the executive meeting and may be paid a fixed
sum for attendance at each meeting of the executive committee or a stated
salary as member. No such payment shall preclude any member from serving the
corporation in any other capacity and receiving compensation therefor.
4.10 Procedure. The executive committee shall keep regular
---------
minutes of its proceedings and report the same to the board of directors when
required. The minutes of the proceedings of the executive committee shall be
placed in the minute book of the corporation.
4.11 Action Without Meeting. Any action required or permitted to
----------------------
be taken at a meeting of the executive committee may be taken without a
meeting if a consent in writing, setting forth the action so taken, is signed
by all the members of the executive committee. Such consent shall have the
same force and effect as a unanimous vote at a meeting. The signed consent, or
a signed copy, shall be placed in the minute book.
4.12 Telephone and Similar Meetings. Committee members may
--------------------------------
participate in and hold a meeting by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other. Participation in such a meeting shall constitute
presence in person at the meeting, except where a person participates in the
meeting for the express purpose of objecting to the transaction of any
business on the ground that the meeting is not lawfully called or convened.
4.13 Responsibility. The designation of an executive committee
--------------
and the delegation of authority to it shall not operate to relieve the board
of directors, or any member thereof, of any responsibility imposed upon it or
him by law.
ARTICLE 5: NOTICE
5.01 Method. Whenever by statute, the articles of incorporation,
------
these bylaws, or otherwise, notice is required to be given to a director,
committee member, or security holder, and no provision is made as to how the
notice shall be given, it shall not be construed to mean personal notice, but
any such notice may be given: (a) in writing, by mail, postage prepaid,
addressed to the director, committee member, or security holder at the address
appearing on the books of the corporation; or (b) in any other method
permitted by law. Any notice required or permitted to be given by mail shall
be deemed given at the time when the same is thus deposited in the United
States mails.
5.02 Waiver. Whenever, by statute or the articles of
------
incorporation or these bylaws, notice is required to be given to a security
holder, a committee member, or director, a waiver thereof in writing signed by
the person or persons entitled to such notice, whenever before or after the
time stated in such notice, shall be equivalent to the giving of such notice.
Attendance at a meeting shall constitute a waiver of notice of such meeting,
except where a person attends for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.
<PAGE>
ARTICLE 6: OFFICERS AND AGENTS
6.01 Number; Qualification; Election; Term.
----------------------------------------
(a) The corporation shall have: (l) a president, a vice president, a
secretary and a treasurer; and (2) such other officers (including a chairman
of the board and additional vice presidents) and assistant officers and agents
as the board of directors may think necessary.
(b) No officer or agent need be a shareholder, a director or a
resident of any particular state.
(c) Officers named in Bylaw 6.01(a)(1) shall be elected by the board
of directors on the expiration of an officer's term or whenever a vacancy
exists. Officers and agents named in Bylaw 6.01(a)(2) may be elected by the
board of any meeting.
(d) Unless otherwise specified by the board at the time of election
or appointment, or in an employment contract approved by the board, each
officer's and agent's term shall end at the first meeting of directors after
the next annual meeting of shareholders. He shall serve until the end of his
term or, if earlier, his death, resignation, or removal.
(e) Any two or more offices may be held by the same person, except
that the president and the secretary shall not be the same person.
6.02 Removal. Any officer or agent elected or appointed by the
-------
board of directors may be removed by the board of directors whenever in its
judgment the best interests of the corporation will be served thereby. Such
removal shall be without prejudice to the contract rights, if any, of the
person so removed. Election or appointment of an officer or agent shall not of
itself create contract rights.
6.03 Vacancies. Any vacancy occurring in any office of the
---------
corporation (by death, resignation, removal or otherwise) may be filled by the
board of directors.
6.04 Authority. Officers and agents shall have such authority and
---------
perform such duties in the management of the corporation as are provided in
these bylaws or as may be determined by resolution of the board of directors
not inconsistent with these bylaws.
6.05 Compensation. The compensation of officers and agents shall
------------
be fixed from time to time by the board of directors.
6.06 President. The president shall be the chief executive
---------
officer of the corporation; he shall preside at all meetings of the
shareholders and the board of directors, shall have general and active
management of the business and affairs of the corporation, shall see that all
orders and resolutions of the board are carried into effect. He shall perform
such other duties and have such other authority and powers as the board of
directors may from time to time prescribe.
6.07 Vice President. The vice presidents in the order of their
--------------
seniority, unless otherwise determined by the board of directors, shall, in
the absence or disability of the president, perform the duties and have the
authority and exercise the powers of the president. They shall perform such
other duties and have such other authority and powers as the board of
directors may from time to time prescribe or as the president may from time to
time delegate.
6.08 Secretary.
---------
<PAGE>
(a) The secretary shall attend all meetings of the board of directors
and all meetings of the shareholders and record all votes, actions and the
minutes of all proceedings in a book to be kept for that purpose and shall
perform like duties for the executive and other committees when required.
(b) He shall give, or cause to be given, notice of all meetings of
the shareholders and special meetings of the board of directors.
(c) He shall keep in safe custody the seal of the corporation and,
when authorized by the board of directors or the executive committee, affix it
to any instrument requiring it. When so affixed, it shall be attested by his
signature or by the signature of the treasurer or an assistant secretary.
(d) He shall be under the supervision of the president. He shall
perform such other duties and have such other authority and powers as the
board of directors may from time to time prescribe or as the president may
from time to time prescribe.
6.09 Assistant Secretary. The assistant secretaries in the order
-------------------
of their seniority, unless otherwise determined by the board of directors,
shall, in the absence or disability of the secretary, perform the duties and
have the authority and exercise the powers of the secretary. They shall
perform such other duties and have such other powers as the board of directors
may from time to time prescribe or as the president may from time to time
prescribe.
6.10 Treasurer.
---------
(a) The treasurer shall have the custody of the corporate funds and
securities and shall keep full and accurate accounts of receipts and
disbursements of the corporation and shall deposit all moneys and other
valuables in the name and to the credit of the corporation in depositories
designated by the board of directors.
(b) He shall disburse the funds of the corporation as ordered by the
board of directors, and prepare financial statements as they direct.
(c) If required by the board of directors, he shall give the
corporation a bond (in such form, in such sum, and with such surety or
sureties as shall be satisfactory to the board) for the faithful performance
of the duties of his office and for the
restoration to the corporation, in case of his death, resignation, retirement
or removal from office, of all books, papers, vouchers, money and other
property of whatever kind in his possession or under his control belonging to
the corporation.
(d) He shall perform such other duties and have such other authority
and powers as the board of directors may from time to time prescribe or as the
president may from time to time delegate.
6.11 Assistant Treasurers. The assistant treasurers in the order
--------------------
of their seniority, unless otherwise determined by the board of directors,
shall, in the absence or disability of the treasurer, perform the duties and
have the authority and exercise the powers of the treasurer. They shall
perform such other duties and have such other powers as the board of directors
may from time to time prescribe or the president may from time to time
delegate.
ARTICLE 7: CERTIFICATES AND SHAREHOLDERS
<PAGE>
7.01 Certificates. Certificates in the form determined by the
------------
board of directors shall be delivered representing all shares to which
shareholders are entitled. Certificates shall be consecutively numbered and
shall be entered in the books of the corporation as they are issued. Each
certificate shall state on its face the holder's name, the number and class of
shares, the par value of shares or a statement that such shares are without
par value, and such other matters as may be required by law. It shall be
signed by the president or a vice president and such other officer or officers
as the board of directors shall designate, and may be sealed with the seal of
the corporation or a facsimile thereof. If a certificate is countersigned by a
transfer agent, or an assistant transfer agent or registered by a registrar
(either of which is other than the corporation or an employee of the
corporation), the signature of any officer may be facsimile.
7.02 Issuance. Shares (both treasury and authorized but unissued)
--------
may be issued for such consideration (not less than par value) and to such
persons as the board of directors may determine from time to time. Shares may
not be issued until the full amount of the consideration, fixed as provided by
law, has been paid.
7.03 Payment for Shares.
--------------------
(a) Kind. The consideration for this issuance of shares shall
----
consist of money paid, labor done, (including services actually performed for
the corporation), property (tangible or intangible) actually received,
promissory notes or the promise of future services.
(b) Valuation. In the absence of fraud in the transaction, the
---------
judgment of the board of directors as to the value of consideration received
shall be conclusive.
(c) Effect. When consideration, fixed as provided by law, has
------
been paid, the shares shall be deemed to have been issued and shall be
considered fully paid and nonassessable.
(d) Allocation of Consideration. The consideration received for
---------------------------
shares shall be allocated by the board of directors, in accordance with law,
between stated capital and capital surplus accounts.
7.04 Subscription. Unless otherwise provided in the subscription
------------
agreement, subscriptions for shares, whether made before or after organization
of the corporation, shall be paid in full at such time or in such installments
and at such times as shall be determined by the board of directors. Any call
made by the board of directors for payment on subscriptions shall be uniform
as to all shares of the same series. In case of default in the payment on any
installment or call when payment is due, the corporation may proceed to
collect the amount due in the same manner as any debt due to the corporation.
7.05 Lien. For any indebtedness of a shareholder to the
----
corporation, the corporation shall have a first and prior lien on all shares
of its stock owned by him and on all dividends or other distributions declared
thereon.
7.06 Lost, Stolen or Destroyed Certificates. The corporation
--------------------------------------
shall issue a new certificate in place of any certificate for shares
previously issued if the registered owner of the certificate:
(a) Claim. Makes proof in affidavit form that it has been lost,
-----
destroyed or wrongfully taken; and
(b) Timely Request. Requests the issuance of a new certificate
-----------------
before the corporation has notice that the certificate has been acquired by a
purchaser for value in good faith and without notice of an adverse claim; and
(c) Bond. Gives a bond in such form, and with such surety or
----
sureties, with fixed or open penalty, as the corporation may direct, to
indemnify the corporation (and its transfer agent and registrar, if any)
against any claim that may be made on account of the alleged loss,
destruction, or theft of the certificate; and
<PAGE>
(d) Other Requirements. Satisfies any other reasonable
-------------------
requirements imposed by the corporation. When a certificate has been lost,
apparently destroyed or wrongfully taken, and the holder of record fails to
notify the corporation within a reasonable time after he has notice of it, and
the corporation registers a transfer of the shares represented by the
certificate before receiving such notification, the holder of record is
precluded from making any claim against the corporation for the transfer or
for a new certificate.
7.07 Registration of Transfer. The corporation shall register the
------------------------
transfer of a certificate for shares presented to it for transfer if:
(a) Endorsement. The certificate is properly endorsed by the
-----------
registered owner or by his duly authorized attorney; and
(b) Guarantee and Effectiveness of Signature. The signature of
----------------------------------------
such person has been guaranteed by a national banking association or member of
New York Stock Exchange, and reasonable assurance is given that such
endorsements are effective; and
(c) Adverse Claims. The corporation has no notice of an adverse
--------------
claim or has discharged any duty to inquire into such a claim; and
(d) Collection of Taxes. Any applicable law relating to the
--------------------
collection of taxes has been complied with.
7.08 Registered Owner. Prior to due presentment for registration
----------------
of transfer of a certificate for shares, the corporation may treat the
registered owner as the person exclusively entitled to vote, to receive
notices and otherwise to exercise all the rights and powers of a shareholder.
7.09 Pre-Emptive Rights. No shareholder or other person shall
------------------
have any pre-emptive right whatsoever.
ARTICLE 8: GENERAL PROVISIONS
8.01 Dividends and Reserves.
------------------------
(a) Declaration and Payment. Subject to statute and the articles
-----------------------
of incorporation, dividends may be declared by the board of directors at any
regular or special meeting and may be paid in cash, in property, or in shares
of the corporation. The declaration and payment shall be at the discretion of
the board of directors.
(b) Record Date. The board of directors may fix in advance a
-----------
record date for the purpose of determining shareholders entitled to receive
payment of any dividend, the record date to be not more than fifty days prior
to the payment date of such dividend, or the board of directors may close the
stock transfer books for such purpose for a period of not more than fifty days
prior to the payment date of such dividend. In the absence of any action by
the board of directors, the date upon which the board of directors adopts the
resolution declaring the dividend shall be the record date.
(c) Reserves. By resolution the board of directors may create
--------
such reserve or reserves out of the earned surplus of the corporation as the
directors from time to time, in their discretion, think proper to provide for
contingencies, or to equalize dividends, or to repair or maintain any property
of the corporation, or for any other purpose they think beneficial to the
corporation. The directors may modify or abolish any such reserve in the
manner in which it was created.
<PAGE>
8.02 Books and Records. The corporation shall keep correct and
-----------------
complete books and records of account and shall keep minutes of the
proceedings of its shareholders and board of directors, and shall keep at its
registered office or principal place of business, or at the office of its
transfer agent or registrar, a record of its shareholders, giving the names
and addresses of all shareholders and the number and class of the shares held
by each.
8.03 Annual Statement. The board of directors shall mail to each
----------------
shareholder of record, at least 10 days before each annual meeting, a full and
clear statement of the business and condition of the corporation, including a
reasonably detailed balance sheet, income statement, surplus statement, and
statement of changes in financial position, for the last fiscal year and for
the prior fiscal year, all prepared in conformity with generally accepted
accounting principles applied on a consistent basis and certified by
independent public accountants.
8.04 Checks and Notes. All checks or demands for money and notes
----------------
of the corporation shall be signed by such officer or officers or such other
person or persons as the board of directors may from time to time designate.
8.05 Fiscal Year. The fiscal year of the corporation shall be
-----------
fixed by resolution of the board of directors.
8.06 Seal. The corporation seal (of which there may be one or
----
more exemplars) shall contain the name of the corporation and the name of the
state of incorporation. The seal may be used by impressing it or reproducing a
facsimile of it, or otherwise.
8.07 Indemnification; Insurance.
---------------------------
(a) Persons. The corporation shall indemnify, to the extent
provided in paragraphs (b), (d) or (f):
(l) any person who is or was director, officer, agent or employee of
the corporation, and
(2) any person who serves or served at the corporation's request as a
director, officer, agent, employee, partner or trustee of another corporation
or of a partnership, joint venture, trust or other enterprise.
(b) Extent--Derivative Suits. In case of a suit by or in the
------------------------
right of the corporation against a person named in paragraph (a) by reason of
his holding a position named in paragraph (a), the corporation shall indemnify
him if he satisfies the standard in paragraph (c), for expenses (including
attorneys' fees but excluding amounts paid in settlement) actually and
reasonably incurred by him in connection with the defense or settlement of the
suit.
(c) Standard--Derivative Suits. In case of a suit by or in the
--------------------------
right of the corporation, a person named in paragraph (a) shall be indemnified
only if:
(l) he is successful on the merits or otherwise, or
(2) he acted in good faith in the transaction which is the subject of
the suit, and in a manner he reasonably believed to be in, or not opposed to,
the best interests of the corporation. However, he shall not be indemnified in
respect of any claim, issue or matter as to which he has been adjudged liable
for negligence or misconduct in the performance of his duty to the corporation
unless (and only to the extent that) the court in which the suit was brought
shall determine, upon application, that despite the adjudication but in view
of all the circumstances, he is fairly and reasonably entitled to indemnity
for such expenses as the court shall deem proper.
<PAGE>
(d) Extent--Nonderivative Suits. In case of a suit, action or
---------------------------
proceeding, (whether civil, criminal, administrative or investigative), other
than a suit by or in the right of the corporation, together hereafter referred
to as a nonderivative suit, against a person named in paragraph (a) by reason
of his holding a position named in paragraph (a), the corporation shall
indemnify him if he satisfies the standard in paragraph (e), for amounts
actually and reasonably incurred by him in connection with the defense or
settlement of the nonderivative suit as
(1) expenses (including attorney's fees),
(2) amounts paid in settlement,
(3) judgments, and
(4) fines.
(e) Standard--Non-derivative Suits. In case of a non-derivative
------------------------------
suit, a person named in paragraph (a) shall be indemnified only if:
(l) he is successful on the merits or otherwise, or
(2) he acted in good faith in the transaction which is the subject of
the non-derivative suit, and in a manner he reasonably believed to be in, or
not opposed to, the best interests of the corporation and, with respect to any
criminal action or proceeding, he had no reason to believe his conduct was
unlawful. The termination of a non-derivative suit by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent
shall not, of itself, create a presumption that the person failed to satisfy
the standard of this paragraph (e)(2).
(f) Determination That Standard Has Been Met. A determination
----------------------------------------
that the standard of paragraph (c) or (e) has been satisfied may be made by a
court. Or, except as stated in paragraph (c)(2)(2nd sentence), the
determination may be made by:
(l) a majority of the directors of the corporation (whether
or not a quorum) who were not parties to the action, suit or proceeding, or
(2) independent legal counsel (appointed by a majority of the
directors of the corporation, whether or not a quorum, or elected by the
shareholders of the corporation) in a written opinion, or
(3) the shareholders of the corporation.
(g) Proration. Anyone making a determination under paragraph (f)
---------
may determine that a person has met the standards as to some matters but not
as to others, and may reasonably prorate amounts to be indemnified.
(h) Advance Payment. The corporation may pay in advance any
----------------
expenses (including attorneys' fees) which may become subject to
indemnification under paragraphs (a)-(g) if:
(l) the board of directors authorizes the specific payment, and
(2) the person receiving the payment undertakes in writing to repay
unless it is ultimately determined that he is entitled to indemnification by
the corporation under paragraphs (a)-(g).
(i) Nonexclusive. The indemnification provided by paragraphs
------------
(a)-(g) shall not be exclusive of any other rights to which a person may be
entitled by law, bylaw, agreement, vote of shareholders or disinterested
directors, or otherwise.
(j) Continuation. The indemnification and advance payment
------------
provided by paragraphs (a)-(g) shall continue as to a person who has ceased to
hold a position named in paragraph (a) and shall inure to his heirs, executors
and administrators.
<PAGE>
(k) Insurance. The corporation may purchase and maintain
---------
insurance on behalf of any person who holds or who has held any position named
in paragraph (a), against any liability incurred by him in any such position,
or arising out of his status as such, whether or not the corporation would
have power to indemnify him against such liability under paragraphs (a)-(h).
(l) Reports. Indemnification payments, advance payments, and
-------
insurance purchases and payments made under paragraphs (a)-(k) shall be
reported in writing to the shareholders of the corporation with the next
notice of annual meeting, or within six months, whichever is sooner.
8.08 Resignation. Any director, committee member, officer or
-----------
agent may resign by giving written notice to the president or the secretary.
The resignation shall take effect at the time specified therein, or
immediately if no time is specified. Unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.
8.09 Amendment of Bylaws.
---------------------
(a) These bylaws may be altered, amended, or repealed at any meeting
of the board of directors at which a quorum is present, by the affirmative
vote of a majority of the directors present at such meeting, provided notice
of the proposed alteration, amendment, or repeal is contained in the notice of
the meeting.
(b) These bylaws may also be altered, amended, or repealed at any
meeting of the shareholders at which a quorum is present or represented, by
the affirmative vote of the holders of a majority of the shares present or
represented at the meeting and entitled to vote thereat, provided notice of
the proposed alteration, amendment or repeal is contained in the notice of the
meeting.
8.10 Construction. Whenever the context so requires, the
------------
masculine shall include the feminine and neuter, and the singular shall
include the plural, and conversely. If any portion of these bylaws shall be
invalid or inoperative, then, so far as is reasonable and possible:
(a) The remainder of these bylaws shall be considered valid and
operative, and
(b) Effect shall be given to the intent manifested by the portion
held invalid or inoperative.
8.11 Table of Contents; Headings. The table of contents and
----------------------------
headings are for organization, convenience and clarity. In interpreting these
bylaws, they shall be subordinated in importance to the other written
material.
8.12 Relation to Articles of Incorporation. These bylaws are
-------------------------------------
subject to and governed by, the articles of incorporation.
<PAGE>
We the undersigned, president and secretary of the Corporation do hereby
certify that the foregoing bylaws are the true and legal bylaws of FLEX
ACQUISITIONS CORPORATION, a Texas Corporation, and that the same were adopted
unanimously by Action of Board of Directors Without Organizational Meeting on
the 22nd day of March, 1996
/S/ M. Stephen Roberts
_____________________________________
M. Stephen Roberts, President
ATTEST:
/S/ M. Stephen Roberts
_______________________________
M. Stephen Roberts, Secretary
<PAGE>
EXHIBIT 3.4
_________________________________________________________________
BYLAWS
OF
FLEX FINANCIAL GROUP, INC.
_________________________________________________________________
<PAGE>
TABLE OF CONTENTS
-----------------
Article 1: Offices
1.01 Registered Office & Agent
1.02 Other Offices
Article 2: Shareholders
2.01 Place of Meetings
2.02 Annual Meetings
2.03 Voting List
2.04 Special Meetings
2.05 Notice
2.06 Quorum
2.07 Majority Vote; Withdrawal of Quorum
2.08 Method of Voting
2.09 Record Date; Closing of Transfer Books
2.10 Action Without Meeting
2.11 Telephone and Similar Meetings
2.12 Order of Business at Meetings
Article 3: Directors
3.01 Management
3.02 Number; Qualification; Election; Term
3.03 Change in Number
3.04 Removal
3.05 Vacancies
3.06 Election of Directors
3.07 Place of Meetings
3.08 First Meetings
3.09 Regular Meetings
3.10 Special Meetings
3.11 Quorum; Majority Vote
3.12 Compensation
3.13 Procedure
3.14 Action without Meeting
3.15 Telephone and Similar Meetings
3.16 Interested Directors; Officers and Shareholders
Article 4: Executive Committee
4.01 Designation
4.02 Number; Qualification; Term
4.03 Authority
4.04 Change in Number
4.05 Removal
4.06 Vacancies
4.07 Meetings
4.08 Quorum; Majority Vote
4.09 Compensation
4.10 Procedure
4.11 Action Without Meeting
4.12 Telephone and Similar Meetings
4.13 Responsibility
Article 5: Notice
5.01 Method
5.02 Waiver
<PAGE>
Article 6: Officers & Agents
6.01 Number; Qualification; Election; Term
6.02 Removal
6.03 Vacancies
6.04 Authority
6.05 Compensation
6.06 President
6.07 Vice President
6.08 Secretary
6.09 Assistant Secretary
6.10 Treasurer
6.11 Assistant Treasurer
Article 7: Certificates and Shareholders
7.01 Certificates
7.02 Issuance
7.03 Payment for Shares
7.04 Subscriptions
7.05 Lien
7.06 Lost, Stolen or Destroyed Certificates
7.07 Registration of Transfer
7.08 Registered Owner
7.09 Pre-Emptive Rights
Article 8: General Provisions
8.01 Dividends and Reserves
8.02 Books and Records
8.03 Annual Statement
8.04 Checks and Notes
8.05 Fiscal Year
8.06 Seal
8.07 Indemnification; Insurance
8.08 Resignation
8.09 Amendment of Bylaws
8.10 Construction
8.11 Table of Contents; Headings
8.12 Relation to Articles of Incorporation
<PAGE>
ARTICLE 1: OFFICES
1.01 Registered Office & Agent. The registered office of the
-------------------------
corporation shall be at such address within the State of Texas as may be
specified from time to time by the board of directors. The name of the
registered agent at such address shall be designated from time to time by the
board of directors.
1.02 Other Offices. The corporation may also have offices at such
-------------
other places both within and without the State of Texas as the board of
directors may from time to time determine or the business of the corporation
may require.
ARTICLE 2: SHAREHOLDERS
2.01 Place of Meetings. Meetings of shareholders shall be held at
-----------------
the time and place, within or without the State of Texas, stated in the notice
of the meeting or in a waiver of notice.
2.02 Annual Meetings. An annual meeting of the shareholders shall
---------------
be held each year at 10 a.m. on a day during the fourth month of the
corporation's fiscal year to be selected by the board of directors. If such a
day is a legal holiday, then the meeting shall be on the next business day
following. At the meeting, the shareholders shall elect directors and transact
such other business as may properly be brought before the meeting.
2.03 Voting List. At least ten days before each meeting of
------------
shareholders, a complete list of the shareholders entitled to vote at the
meeting, arranged in alphabetical order, with the address of each and the
number of voting shares held by each, shall be prepared by the officer or
agent having charge of the stock transfer books. The list, for a period of ten
days prior to the meeting, shall be kept on file at the principal office of
the corporation and shall be subject to inspection by any shareholder at any
time during usual business hours. The list shall also be produced and kept
open at the time and place of the meeting during the whole time thereof, and
shall be subject to the inspection of any shareholder during the whole time of
the meeting.
2.04 Special Meetings. Special meetings of the shareholders, for
----------------
any purpose or purposes, unless otherwise prescribed by statute or by the
articles of incorporation, or by these bylaws, may be called by the president,
the board of directors, or the holders of not less than one-tenth of all the
shares entitled to vote at the meetings. Business transacted at a special
meeting shall be confined to the purposes stated in the notice of the meeting.
2.05 Notice. Written or printed notice stating the place, day and
------
hour of the meeting and, in case of a special meeting, the purpose or purposes
for which the meeting is called, shall be delivered not less than ten nor more
than fifty days before the date of the meeting, either personally or by mail,
by or at the direction of the president, the secretary, or the officer or
person calling the meeting, to each shareholder of record entitled to vote at
the meeting. If mailed, such notice shall be deemed to be delivered when
deposited in the United States mail addressed to the shareholder at his
address as it appears on the stock transfer books of the corporation, with
postage thereon prepaid. (See also Bylaws 5.01 and 5.02.)
2.06 Quorum. The holders of a majority of the shares issued and
------
outstanding and entitled to vote thereat, present in person or represented by
proxy, shall be requisite and shall constitute a quorum at meetings of the
shareholders for the transaction of business except as otherwise provided by
statute, by the articles of incorporation or by these bylaws. If a quorum is
not present or represented at a meeting of the shareholders, the shareholders
entitled to vote, present in person or represented by proxy, shall have power
to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum is present or represented. At an
adjourned meeting at which a quorum is present or represented, any business
may be transacted which might have been transacted at the meeting as
originally notified.
<PAGE>
2.07 Majority Vote; Withdrawal of Quorum. When a quorum is
-------------------------------------
present at a meeting, the vote of the holders of a majority of the shares
having voting power, present in person or represented by proxy, shall decide
any question brought before the meeting, unless the question is one on which,
by express provision of the statutes, the articles of incorporation, or these
bylaws, a higher vote is required in which case the express provision shall
govern. The shareholders present at a duly constituted meeting may continue to
transact business until adjournment, despite the withdrawal of enough
shareholders to leave less than a quorum.
2.08 Method of Voting. Each outstanding share, regardless of
----------------
class, shall be entitled to one vote on each matter submitted to a vote at a
meeting of shareholders, except to the extent that the voting rights of the
shares of any class or classes are limited or denied by the articles of
incorporation. At any meeting of the shareholders, every shareholder having
the right to vote may vote either in person, or by proxy executed in writing
by the shareholder or by his duly authorized attorney-in-fact. No proxy shall
be valid after eleven months from the date of its execution, unless otherwise
provided in the proxy. Each proxy shall be revocable unless expressly provided
therein to be irrevocable and unless otherwise made irrevocable by law. Each
proxy shall be filed with the secretary of the corporation prior to or at the
time of the meeting. Voting for directors shall be in accordance with Section
3.06 of these bylaws. Any vote may be taken by voice or by show of hands
unless someone entitled to vote objects, in which case written ballots shall
be used.
2.09 Record Date, Closing Transfer Books. The board of directors
-----------------------------------
may fix in advance a record date for the purpose of determining shareholders
entitled to notice of or to vote at a meeting of the shareholders, the record
date to be not less than ten nor more than fifty days prior to the meeting; or
the board of directors may close the stock transfer books for such purpose for
a period of not less than ten nor more than fifty days prior to such meeting.
In the absence of any action by the board of directors, the date upon which
the notice of the meeting is mailed shall be the record date.
2.10 Action Without Meeting. Any action required by statute to be
----------------------
taken at a meeting of the shareholders, or any action which may be taken at a
meeting of the shareholders, may be taken without a meeting if a consent in
writing setting forth the action so taken, shall be signed by all of the
shareholders entitled to vote with respect to the subject matter thereof and
such consent shall have the same force and effect as a unanimous vote of the
shareholders. The signed consent, or a signed copy shall be placed in the
minute book.
2.11 Telephone and Similar Meetings. Shareholders, directors and
------------------------------
committee members may participate in and hold a meeting by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other. Participation in such a
meeting shall constitute presence in person at the meeting, except where a
person participates in the meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.
2.12 Order of Business at Meetings. The order of business at
-----------------------------
annual meetings and so far as practicable at other meetings of shareholders
shall be as follows unless changed by the board of directors:
(1) call to order
(2) proof of due notice of meeting
(3) determination of quorum and examination of proxies
(4) announcement of availability of voting list
(See Bylaw 2.03)
(5) announcement of distribution of annual statement
(See Bylaw 8.03)
(6) reading and disposing of minutes of last meeting of shareholders
(7) reports of officers and committees
(8) appointment of voting inspectors
<PAGE>
(9) unfinished business
(10) new business
(11) nomination of directors
(12) opening of polls for voting
(13) recess
(14) reconvening; closing of polls
(15) report of voting inspectors
(16) other business
(17) adjournment
ARTICLE 3: DIRECTORS
3.01 Management. The business and affairs of the corporation
----------
shall be managed by the board of directors who may exercise all such powers of
the corporation and do all such lawful acts and things as are not (by statute
or by the articles of incorporation or by these bylaws) directed or required
to be exercised or done by the shareholders.
3.02 Number; Qualification; Election; Term. The board of
----------------------------------------
directors shall consist of one (1) person; provided however, that the board of
directors may, in its discretion, increase or decrease the number of directors
constituting the board of directors to not less than one (1) person nor more
than nine (9) persons, who need not be a shareholder or resident of any
particular state. The director named in the Articles of Incorporation shall
hold office until the first annual meeting of shareholders and until his
successors are elected and qualified, either at an annual or a special meeting
of shareholders. Directors other than those named in the Articles of
Incorporation shall hold office until the next annual meeting and until their
successors are elected and qualified.
3.03 Change in Number. The number of directors may be increased
----------------
or decreased from time to time by amendment to these bylaws but no decrease
shall have the effect of shortening the term of any incumbent director. Any
directorship to be filled by reason of an increase in the number of directors
shall be filled by election at an annual meeting or at a special meeting of
shareholders called for that purpose.
3.04 Removal. Any director may be removed either for or without
-------
cause at any special or annual meeting of shareholders, by the affirmative
vote of a majority in number of shares of the shareholders present, in person
or by proxy, at such meeting and entitled to vote for the election of such
director if notice of intention to act upon such matter shall have been given
in the notice calling such meeting.
3.05 Vacancies. Any vacancy occurring in the board of directors
---------
(by death, resignation, removal or otherwise) may be filled by an affirmative
vote of a majority of the remaining directors though less than a quorum of the
board of directors. A director elected to fill a vacancy shall be elected for
the unexpired term of his predecessor in office.
3.06 Election of Directors. Directors shall be elected by
-----------------------
plurality vote. Cumulative voting shall not be permitted.
3.07 Place of Meetings. Meetings of the board of directors,
------------------
regular or special, may be held either within or without the State of Texas.
3.08 First Meetings. The first meeting of a newly elected board
--------------
shall be held without further notice immediately following the annual meeting
of shareholders, and at the same place, unless by unanimous consent of the
directors then elected and serving the time or place is changed.
3.09 Regular Meetings. Regular meetings of the board of directors
----------------
may be held without notice at such time and place as shall from time to time
be determined by the board.
<PAGE>
3.10 Special Meetings. Special meetings of the board of directors
----------------
may be called by the president on three days' notice to each director, either
personally or by mail or by telegram. Special meetings shall be called by the
president or secretary in like manner and on like notice on the written
request of two directors. Except as otherwise expressly provided by statute,
articles of incorporation, or these bylaws, neither the business to be
transacted at, nor the purpose of, any special meeting need be specified in a
notice or waiver of notice.
3.11 Quorum; Majority Vote. At meetings of the board of directors
---------------------
a majority of the number of directors fixed by these bylaws shall constitute a
quorum for the transaction of business; provided however, that in the event
there are vacancies occurring in the board that are not filled then a majority
of the directors then serving shall constitute a quorum for the transaction of
business. The act of a majority of the directors present at a meeting at which
a quorum is present shall be the act of the board of directors, except as
otherwise specifically provided by statute, the articles of incorporation, or
these bylaws. If a quorum is not present at a meeting of the board of
directors, the directors present may adjourn the meeting from time to time,
without notice other than announcement at the meting, until a quorum is
present.
3.12 Compensation. By resolution of the board of directors, the
------------
directors may be paid their expenses, if any, of attendance at each meeting of
the board of directors and may be paid a fixed sum for attendance at each
meeting of the board of directors or a stated salary as director. No such
payment shall preclude any director from serving the corporation in any other
capacity and receiving compensation therefor. Members of the executive
committee or of special or standing committees may, by resolution of the board
of directors, be allowed like compensation for attending committee meetings.
3.13 Procedure. The board of directors shall keep regular minutes
---------
of its proceedings. The minutes shall be placed in the minute book of the
corporation.
3.14 Action Without Meeting. Any action required or permitted to
----------------------
be taken at a meeting of the board of directors may be taken without a meeting
if a consent in writing, setting forth the action so taken, is signed by all
of the members of the board of directors. Such consent shall have the same
force and effect as a unanimous vote at a meeting. The signed consent, or a
signed copy, shall be placed in the minute book.
3.15 Telephone and Similar Meetings. Directors and committee
-----------------------------
members may participate in and hold a meeting by means of conference telephone
or similar communications equipment by means of which all persons
participating in the meeting can hear each other. Participation in such a
meeting shall constitute presence in person at the meeting, except where a
person participates in the meeting for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.
3.16 Interested Directors; Officers and Security Holders.
-------------------------------------------------------
(A) Validity. If paragraph (B) is satisfied, no contract or other
--------
transaction between the corporation and any of its directors, officers or
security holders, or any corporation or firm in which any of them are directly
or indirectly interested, shall be invalid solely because of this relationship
or because of the presence of the director, officer or security holder at the
meeting authorizing the contract or transaction, or his participation or vote
in the meeting or authorization.
(B) Disclosure, Approval; Fairness. Paragraph (A) shall apply
------------------------------
only if:
(l) the material facts of the relationship or interest of each such
director, officer or security holder are known or disclosed:
<PAGE>
(a) to the board of directors and it nevertheless authorizes or
ratifies the contract or transaction by a majority of the directors present,
each such interested director to be counted in determining whether a quorum is
present but not in calculating the majority necessary to carry the vote; or
(b) to the shareholders and they nevertheless authorize or ratify the
contract or transaction by a majority of the shares present, each such
interested person to be counted for quorum and voting purposes; or
(2) the contract or transaction is fair to the corporation as of the
time it is authorized or ratified by the board of directors or the
shareholders.
(C) Non-Exclusive. This provision shall not be construed to invalidate
-------------
a contract or transaction which would be valid in the absence of this
provision.
ARTICLE 4: EXECUTIVE COMMITTEE
4.01 Designation. The board of directors may, by resolution
-----------
adopted by a majority of the whole board, designate an executive committee.
4.02 Number; Qualification; Term. The executive committee shall
---------------------------
consist of one or more directors, one of whom shall be the president. The
executive committee shall serve at the pleasure of the board of directors.
4.03 Authority. The executive committee, to the extent provided
---------
in such resolution, shall have and may exercise all of the authority of the
board of directors in the management of the business and affairs of the
corporation, including authority over the use of the corporate seal. However,
the executive committee shall not have the authority of the board in reference
to:
(a) amending the articles of incorporation;
(b) approving a plan of merger or consolidation;
(c) recommending to the shareholders the sale, lease or exchange of all or
substantially all of the property and assets of the corporation otherwise
than in the usual and regular course of its business;
(d) recommending to the shareholders a voluntary dissolution of the
corporation or a revocation thereof;
(e) amending, altering, or repealing these bylaws or adopting new bylaws;
(f) filling vacancies in or removing members of the board of directors or of
any committee appointed by the board of directors;
(g) fixing the compensation of any member of such committee;
(h) altering or repealing any resolution of the board of directors which by
its terms provides that it shall not be so amendable or repealable;
(i) declaring a dividend; or
(j) authorizing the issuance of shares of the corporation.
4.04 Change in Number. The number of executive committee members
----------------
may be increased or decreased from time to time by resolution adopted by a
majority of the whole board of directors.
4.05 Removal. Any member of the executive committee may be
-------
removed by the board of directors by the affirmative vote of a majority of the
whole board, whenever in its judgment the best interests of the corporation
will be served thereby.
4.06 Vacancies. A vacancy occurring in the executive committee
---------
(by death, resignation, removal or otherwise) may be filled by the board of
directors in the manner provided for original designation in Bylaw 4.01.
<PAGE>
4.07 Meetings. Time, place and notice, (if any) of executive
--------
committee meetings shall be determined by the executive committee.
4.08 Quorum; Majority Vote. At meetings of the executive
-----------------------
committee, a majority of the number of members designated by the board of
directors shall constitute a quorum for the transaction of business. The act
of a majority of the members present at any meeting at which a quorum is
present shall be the act of the executive committee, except as otherwise
specifically provided by statute, the articles of incorporation, or these
bylaws. If a quorum is not present at a meeting of the executive committee,
the members present may adjourn the meeting from time to time, without notice
other than an announcement at the meeting, until a quorum is present.
4.09 Compensation. By resolution of the board of directors, the
------------
members of the executive committee may be paid their expenses, if any, of
attendance at each meeting of the executive meeting and may be paid a fixed
sum for attendance at each meeting of the executive committee or a stated
salary as member. No such payment shall preclude any member from serving the
corporation in any other capacity and receiving compensation therefor.
4.10 Procedure. The executive committee shall keep regular
---------
minutes of its proceedings and report the same to the board of directors when
required. The minutes of the proceedings of the executive committee shall be
placed in the minute book of the corporation.
4.11 Action Without Meeting. Any action required or permitted to
----------------------
be taken at a meeting of the executive committee may be taken without a
meeting if a consent in writing, setting forth the action so taken, is signed
by all the members of the executive committee. Such consent shall have the
same force and effect as a unanimous vote at a meeting. The signed consent, or
a signed copy, shall be placed in the minute book.
4.12 Telephone and Similar Meetings. Committee members may
--------------------------------
participate in and hold a meeting by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other. Participation in such a meeting shall constitute
presence in person at the meeting, except where a person participates in the
meeting for the express purpose of objecting to the transaction of any
business on the ground that the meeting is not lawfully called or convened.
4.13 Responsibility. The designation of an executive committee
--------------
and the delegation of authority to it shall not operate to relieve the board
of directors, or any member thereof, of any responsibility imposed upon it or
him by law.
ARTICLE 5: NOTICE
5.01 Method. Whenever by statute, the articles of incorporation,
------
these bylaws, or otherwise, notice is required to be given to a director,
committee member, or security holder, and no provision is made as to how the
notice shall be given, it shall not be construed to mean personal notice, but
any such notice may be given: (a) in writing, by mail, postage prepaid,
addressed to the director, committee member, or security holder at the address
appearing on the books of the corporation; or (b) in any other method
permitted by law. Any notice required or permitted to be given by mail shall
be deemed given at the time when the same is thus deposited in the United
States mails.
5.02 Waiver. Whenever, by statute or the articles of
------
incorporation or these bylaws, notice is required to be given to a security
holder, a committee member, or director, a waiver thereof in writing signed by
the person or persons entitled to such notice, whenever before or after the
time stated in such notice, shall be equivalent to the giving of such notice.
Attendance at a meeting shall constitute a waiver of notice of such meeting,
except where a person attends for the express purpose of objecting to the
transaction of any business on the ground that the meeting is not lawfully
called or convened.
<PAGE>
ARTICLE 6: OFFICERS AND AGENTS
6.01 Number; Qualification; Election; Term.
----------------------------------------
(a) The corporation shall have: (l) a president, a vice president, a
secretary and a treasurer; and (2) such other officers (including a chairman
of the board and additional vice presidents) and assistant officers and agents
as the board of directors may think necessary.
(b) No officer or agent need be a shareholder, a director or a
resident of any particular state.
(c) Officers named in Bylaw 6.01(a)(1) shall be elected by the board
of directors on the expiration of an officer's term or whenever a vacancy
exists. Officers and agents named in Bylaw 6.01(a)(2) may be elected by the
board of any meeting.
(d) Unless otherwise specified by the board at the time of election
or appointment, or in an employment contract approved by the board, each
officer's and agent's term shall end at the first meeting of directors after
the next annual meeting of shareholders. He shall serve until the end of his
term or, if earlier, his death, resignation, or removal.
(e) Any two or more offices may be held by the same person, except
that the president and the secretary shall not be the same person.
6.02 Removal. Any officer or agent elected or appointed by the
-------
board of directors may be removed by the board of directors whenever in its
judgment the best interests of the corporation will be served thereby. Such
removal shall be without prejudice to the contract rights, if any, of the
person so removed. Election or appointment of an officer or agent shall not of
itself create contract rights.
6.03 Vacancies. Any vacancy occurring in any office of the
---------
corporation (by death, resignation, removal or otherwise) may be filled by the
board of directors.
6.04 Authority. Officers and agents shall have such authority and
---------
perform such duties in the management of the corporation as are provided in
these bylaws or as may be determined by resolution of the board of directors
not inconsistent with these bylaws.
6.05 Compensation. The compensation of officers and agents shall
------------
be fixed from time to time by the board of directors.
6.06 President. The president shall be the chief executive
---------
officer of the corporation; he shall preside at all meetings of the
shareholders and the board of directors, shall have general and active
management of the business and affairs of the corporation, shall see that all
orders and resolutions of the board are carried into effect. He shall perform
such other duties and have such other authority and powers as the board of
directors may from time to time prescribe.
6.07 Vice President. The vice presidents in the order of their
--------------
seniority, unless otherwise determined by the board of directors, shall, in
the absence or disability of the president, perform the duties and have the
authority and exercise the powers of the president. They shall perform such
other duties and have such other authority and powers as the board of
directors may from time to time prescribe or as the president may from time to
time delegate.
6.08 Secretary.
---------
<PAGE>
(a) The secretary shall attend all meetings of the board of directors
and all meetings of the shareholders and record all votes, actions and the
minutes of all proceedings in a book to be kept for that purpose and shall
perform like duties for the executive and other committees when required.
(b) He shall give, or cause to be given, notice of all meetings of
the shareholders and special meetings of the board of directors .
(c) He shall keep in safe custody the seal of the corporation and,
when authorized by the board of directors or the executive committee, affix it
to any instrument requiring it. When so affixed, it shall be attested by his
signature or by the signature of the treasurer or an assistant secretary.
(d) He shall be under the supervision of the president. He shall
perform such other duties and have such other authority and powers as the
board of directors may from time to time prescribe or as the president may
from time to time prescribe.
6.09 Assistant Secretary. The assistant secretaries in the order
-------------------
of their seniority, unless otherwise determined by the board of directors,
shall, in the absence or disability of the secretary, perform the duties and
have the authority and exercise the powers of the secretary. They shall
perform such other duties and have such other powers as the board of directors
may from time to time prescribe or as the president may from time to time
prescribe.
6.10 Treasurer.
---------
(a) The treasurer shall have the custody of the corporate funds and
securities and shall keep full and accurate accounts of receipts and
disbursements of the corporation and shall deposit all moneys and other
valuables in the name and to the credit of the corporation in depositories
designated by the board of directors.
(b) He shall disburse the funds of the corporation as ordered by the
board of directors, and prepare financial statements as they direct.
(c) If required by the board of directors, he shall give the
corporation a bond (in such form, in such sum, and with such surety or
sureties as shall be satisfactory to the board) for the faithful performance
of the duties of his office and for the
restoration to the corporation, in case of his death, resignation, retirement
or removal from office, of all books, papers, vouchers, money and other
property of whatever kind in his possession or under his control belonging to
the corporation.
(d) He shall perform such other duties and have such other authority
and powers as the board of directors may from time to time prescribe or as the
president may from time to time delegate.
6.11 Assistant Treasurers. The assistant treasurers in the order
--------------------
of their seniority, unless otherwise determined by the board of directors,
shall, in the absence or disability of the treasurer, perform the duties and
have the authority and exercise the powers of the treasurer. They shall
perform such other duties and have such other powers as the board of directors
may from time to time prescribe or the president may from time to time
delegate.
ARTICLE 7: CERTIFICATES AND SHAREHOLDERS
7.01 Certificates. Certificates in the form determined by the
------------
board of directors shall be delivered representing all shares to which
shareholders are entitled. Certificates shall be consecutively numbered and
shall be entered in the books of the corporation as they are issued. Each
certificate shall state on its face the holder's name, the number and class of
shares, the par value of shares or a statement that such shares are without
par value, and such other matters as may be required by law. It shall be
signed by the president or a vice president and such other officer or officers
as the board of directors shall designate, and may be sealed with the seal of
the corporation or a facsimile thereof. If a certificate is countersigned by a
transfer agent, or an assistant transfer agent or registered by a registrar
(either of which is other than the corporation or an employee of the
corporation), the signature of any officer may be facsimile.
<PAGE>
7.02 Issuance. Shares (both treasury and authorized but unissued)
--------
may be issued for such consideration (not less than par value) and to such
persons as the board of directors may determine from time to time. Shares may
not be issued until the full amount of the consideration, fixed as provided by
law, has been paid.
7.03 Payment for Shares.
--------------------
(a) Kind. The consideration for this issuance of shares shall
----
consist of money paid, labor done, (including services actually performed for
the corporation), property (tangible or intangible) actually received,
promissory notes or the promise of future services.
(b) Valuation. In the absence of fraud in the transaction, the
---------
judgment of the board of directors as to the value of consideration received
shall be conclusive.
(c) Effect. When consideration, fixed as provided by law, has
------
been paid, the shares shall be deemed to have been issued and shall be
considered fully paid and nonassessable.
(d) Allocation of Consideration. The consideration received for
---------------------------
shares shall be allocated by the board of directors, in accordance with law,
between stated capital and capital surplus accounts.
7.04 Subscription. Unless otherwise provided in the subscription
------------
agreement, subscriptions for shares, whether made before or after organization
of the corporation, shall be paid in full at such time or in such installments
and at such times as shall be determined by the board of directors. Any call
made by the board of directors for payment on subscriptions shall be uniform
as to all shares of the same series. In case of default in the payment on any
installment or call when payment is due, the corporation may proceed to
collect the amount due in the same manner as any debt due to the corporation.
7.05 Lien. For any indebtedness of a shareholder to the
----
corporation, the corporation shall have a first and prior lien on all shares
of its stock owned by him and on all dividends or other distributions declared
thereon.
7.06 Lost, Stolen or Destroyed Certificates. The corporation
--------------------------------------
shall issue a new certificate in place of any certificate for shares
previously issued if the registered owner of the certificate:
(a) Claim. Makes proof in affidavit form that it has been lost,
-----
destroyed or wrongfully taken; and
(b) Timely Request. Requests the issuance of a new certificate
--------------
before the corporation has notice that the certificate has been acquired by a
purchaser for value in good faith and without notice of an adverse claim; and
(c) Bond. Gives a bond in such form, and with such surety or
----
sureties, with fixed or open penalty, as the corporation may direct, to
indemnify the corporation (and its transfer agent and registrar, if any)
against any claim that may be made on account of the alleged loss,
destruction, or theft of the certificate; and
<PAGE>
(d) Other Requirements. Satisfies any other reasonable
-------------------
requirements imposed by the corporation. When a certificate has been lost,
apparently destroyed or wrongfully taken, and the holder of record fails to
notify the corporation within a reasonable time after he has notice of it, and
the corporation registers a transfer of the shares represented by the
certificate before receiving such notification, the holder of record is
precluded from making any claim against the corporation for the transfer or
for a new certificate.
7.07 Registration of Transfer. The corporation shall register the
------------------------
transfer of a certificate for shares presented to it for transfer if:
(a) Endorsement. The certificate is properly endorsed by the
-----------
registered owner or by his duly authorized attorney; and
(b) Guarantee and Effectiveness of Signature. The signature of
----------------------------------------
such person has been guaranteed by a national banking association or member of
New York Stock Exchange, and reasonable assurance is given that such
endorsements are effective; and
(c) Adverse Claims. The corporation has no notice of an adverse
--------------
claim or has discharged any duty to inquire into such a claim; and
(d) Collection of Taxes. Any applicable law relating to the
--------------------
collection of taxes has been complied with.
7.08 Registered Owner. Prior to due presentment for registration
----------------
of transfer of a certificate for shares, the corporation may treat the
registered owner as the person exclusively entitled to vote, to receive
notices and otherwise to exercise all the rights and powers of a shareholder.
7.09 Pre-Emptive Rights. No shareholder or other person shall
------------------
have any pre-emptive right whatsoever.
ARTICLE 8: GENERAL PROVISIONS
8.01 Dividends and Reserves.
------------------------
(a) Declaration and Payment. Subject to statute and the articles
-----------------------
of incorporation, dividends may be declared by the board of directors at any
regular or special meeting and may be paid in cash, in property, or in shares
of the corporation. The declaration and payment shall be at the discretion of
the board of directors.
(b) Record Date. The board of directors may fix in advance a
-----------
record date for the purpose of determining shareholders entitled to receive
payment of any dividend, the record date to be not more than fifty days prior
to the payment date of such dividend, or the board of directors may close the
stock transfer books for such purpose for a period of not more than fifty days
prior to the payment date of such dividend. In the absence of any action by
the board of directors, the date upon which the board of directors adopts the
resolution declaring the dividend shall be the record date.
(c) Reserves. By resolution the board of director s may create
--------
such reserve or reserves out of the earned surplus of the corporation as the
directors from time to time, in their discretion, think proper to provide for
contingencies, or to equalize dividends, or to repair or maintain any property
of the corporation, or for any other purpose they think beneficial to the
corporation. The directors may modify or abolish any such reserve in the
manner in which it was created.
<PAGE>
8.02 Books and Records. The corporation shall keep correct and
-----------------
complete books and records of account and shall keep minutes of the
proceedings of its shareholders and board of directors, and shall keep at its
registered office or principal place of business, or at the office of its
transfer agent or registrar, a record of its shareholders, giving the names
and addresses of all shareholders and the number and class of the shares held
by each.
8.03 Annual Statement. The board of directors shall mail to each
----------------
shareholder of record, at least 10 days before each annual meeting, a full and
clear statement of the business and condition of the corporation, including a
reasonably detailed balance sheet, income statement, surplus statement, and
statement of changes in financial position, for the last fiscal year and for
the prior fiscal year, all prepared in conformity with generally accepted
accounting principles applied on a consistent basis and certified by
independent public accountants.
8.04 Checks and Notes. All checks or demands for money and notes
----------------
of the corporation shall be signed by such officer or officers or such other
person or persons as the board of directors may from time to time designate.
8.05 Fiscal Year. The fiscal year of the corporation shall be
-----------
fixed by resolution of the board of directors.
8.06 Seal. The corporation seal (of which there may be one or
----
more exemplars) shall contain the name of the corporation and the name of the
state of incorporation. The seal may be used by impressing it or reproducing a
facsimile of it, or otherwise.
8.07 Indemnification; Insurance.
---------------------------
(a) Persons. The corporation shall indemnify, to the extent
-------
provided in paragraphs (b), (d) or (f):
(l) any person who is or was director, officer, agent or employee of
the corporation, and
(2) any person who serves or served at the corporation's request as a
director, officer, agent, employee, partner or trustee of another corporation
or of a partnership, joint venture, trust or other enterprise.
(b) Extent--Derivative Suits. In case of a suit by or in the
------------------------
right of the corporation against a person named in paragraph (a) by reason of
his holding a position named in paragraph (a), the corporation shall indemnify
him if he satisfies the standard in paragraph (c), for expenses (including
attorneys' fees but excluding amounts paid in settlement) actually and
reasonably incurred by him in connection with the defense or settlement of the
suit.
(c) Standard--Derivative Suits. In case of a suit by or in the
--------------------------
right of the corporation, a person named in paragraph (a) shall be indemnified
only if:
(l) he is successful on the merits or otherwise, or
(2) he acted in good faith in the transaction which is the subject of
the suit, and in a manner he reasonably believed to be in, or not opposed to,
the best interests of the corporation. However, he shall not be indemnified in
respect of any claim, issue or matter as to which he has been adjudged liable
for negligence or misconduct in the performance of his duty to the corporation
unless (and only to the extent that) the court in which the suit was brought
shall determine, upon application, that despite the adjudication but in view
of all the circumstances, he is fairly and reasonably entitled to indemnity
for such expenses as the court shall deem proper.
<PAGE>
(d) Extent--Nonderivative Suits. In case of a suit, action or
---------------------------
proceeding, (whether civil, criminal, administrative or investigative), other
than a suit by or in the right of the corporation, together hereafter referred
to as a nonderivative suit, against a person named in paragraph (a) by reason
of his holding a position named in paragraph (a), the corporation shall
indemnify him if he satisfies the standard in paragraph (e), for amounts
actually and reasonably incurred by him in connection with the defense or
settlement of the nonderivative suit as
(1) expenses (including attorney's fees),
(2) amounts paid in settlement,
(3) judgments, and
(4) fines.
(e) Standard--Non-derivative Suits. In case of a non-derivative
------------------------------
suit, a person named in paragraph (a) shall be indemnified only if:
(l) he is successful on the merits or otherwise, or
(2) he acted in good faith in the transaction which is the subject of
the non-derivative suit, and in a manner he reasonably believed to be in, or
not opposed to, the best interests of the corporation and, with respect to any
criminal action or proceeding, he had no reason to believe his conduct was
unlawful. The termination of a non-derivative suit by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent
shall not, of itself, create a presumption that the person failed to satisfy
the standard of this paragraph (e)(2).
(f) Determination That Standard Has Been Met. A determination
----------------------------------------
that the standard of paragraph (c) or (e) has been satisfied may be made by a
court. Or, except as stated in paragraph (c)(2)(2nd sentence), the
determination may be made by:
(l) a majority of the directors of the corporation (whether
or not a quorum) who were not parties to the action, suit or proceeding, or
(2) independent legal counsel (appointed by a majority of the
directors of the corporation, whether or not a quorum, or elected by the
shareholders of the corporation) in a written opinion, or
(3) the shareholders of the corporation.
(g) Proration. Anyone making a determination under paragraph (f)
---------
may determine that a person has met the standards as to some matters but not
as to others, and may reasonably prorate amounts to be indemnified.
(h) Advance Payment. The corporation may pay in advance any
expenses (including attorneys' fees) which may become subject to
indemnification under paragraphs (a)-(g) if:
(l) the board of directors authorizes the specific payment, and
(2) the person receiving the payment undertakes in writing to repay
unless it is ultimately determined that he is entitled to indemnification by
the corporation under paragraphs (a)-(g).
(i) Nonexclusive. The indemnification provided by paragraphs
------------
(a)-(g) shall not be exclusive of any other rights to which a person may be
entitled by law, bylaw, agreement, vote of shareholders or disinterested
directors, or otherwise.
(j) Continuation. The indemnification and advance payment
------------
provided by paragraphs (a)-(g) shall continue as to a person who has ceased to
hold a position named in paragraph (a) and shall inure to his heirs, executors
and administrators.
<PAGE>
(k) Insurance. The corporation may purchase and maintain
---------
insurance on behalf of any person who holds or who has held any position named
in paragraph (a), against any liability incurred by him in any such position,
or arising out of his status as such, whether or not the corporation would
have power to indemnify him against such liability under paragraphs (a)-(h).
(l) Reports. Indemnification payments, advance payments, and
-------
insurance purchases and payments made under paragraphs (a)-(k) shall be
reported in writing to the shareholders of the corporation with the next
notice of annual meeting, or within six months, whichever is sooner.
8.08 Resignation. Any director, committee member, officer or
-----------
agent may resign by giving written notice to the president or the secretary.
The resignation shall take effect at the time specified therein, or
immediately if no time is specified. Unless otherwise specified therein, the
acceptance of such resignation shall not be necessary to make it effective.
8.09 Amendment of Bylaws.
---------------------
(a) These bylaws may be altered, amended, or repealed at any meeting
of the board of directors at which a quorum is present, by the affirmative
vote of a majority of the directors present at such meeting, provided notice
of the proposed alteration, amendment, or repeal is contained in the notice of
the meeting.
(b) These bylaws may also be altered, amended, or repealed at any
meeting of the shareholders at which a quorum is present or represented, by
the affirmative vote of the holders of a majority of the shares present or
represented at the meeting and entitled to vote thereat, provided notice of
the proposed alteration, amendment or repeal is contained in the notice of the
meeting.
8.10 Construction. Whenever the context so requires, the
------------
masculine shall include the feminine and neuter, and the singular shall
include the plural, and conversely. If any portion of these bylaws shall be
invalid or inoperative, then, so far as is reasonable and possible:
(a) The remainder of these bylaws shall be considered valid and
operative, and
(b) Effect shall be given to the intent manifested by the portion
held invalid or inoperative.
8.11 Table of Contents; Headings. The table of contents and
----------------------------
headings are for organization, convenience and clarity. In interpreting these
bylaws, they shall be subordinated in importance to the other written
material.
8.12 Relation to Articles of Incorporation. These bylaws are
-------------------------------------
subject to and governed by, the articles of incorporation.
We the undersigned, president and secretary of the Corporation do hereby
certify that the foregoing bylaws are the true and legal bylaws of FLEX
FINANCIAL GROUP, INC., a Texas Corporation, and that the same were adopted
unanimously by Action of Board of Directors Without Organizational Meeting on
the 17th day of August, 1995.
/S/ Michael t. Fearnow
Michael T. Fearnow, President
ATTEST:
/S/ Michael t. Fearnow
Michael T. Fearnow, Secretary
<PAGE>
EXHIBIT 10.1
ESCROW AGREEMENT
WHEREAS, Flex Acquisitions Corporation, a Texas corporation, and American
Nortel Communications, a Wyoming corporation, have caused or will cause
certain shares to be deposited in escrow with SOUTHWEST BANK OF TEXAS N.A., a
national banking corporation ("Escrow Agent"), on terms and conditions more
particularly described herein.
NOW, THEREFORE, in consideration of the premises, the undersigned hereby
agree as follows:
ARTICLE I
TERMS AND CONDITIONS
1.1 Establishment of Fund. The undersigned have caused or will cause
to be deposited with the Escrow Agent 20,000 spin-off shares of FAC common
stock (the balance thereof remaining from time to time being referred to
herein as the "Fund").
1.2 Representation. Southwest Bank of Texas represents that it is an
"insured depository institution" as that term is defined in Section 3(c) (2)
of the Federal Deposit Insurance Act.
1.3 Treatment of Fund. The 20,000 spinoff shares shall be escrowed
with Southwest Bank of Texas pursuant to the following terms and conditions:
A. After declaration by American Nortel of the dividend to its
shareholders of the 20,000 spinoff shares, either American Nortel or its
registrar-transfer agent shall deliver to Escrow Agent stock certificates
representing the spinoff shares, which certificates shall evidence on their
faces the identity of the owners of the shares represented by each
certificate.
B. Escrow agent shall hold the escrowed certificates solely for
the benefit of the owners of the shares represented by such certificates,
which owners shall have all voting rights with respect to such shares as are
provided by Texas law. However, no transfer or other disposition of the
escrowed securities or any interest related to such securities shall be
permitted by FAC or recognized by Escrow Agent other than by will or the law
of descent and distribution, or pursuant to a qualified domestic relations
order as defined by the Internal Revenue Code of 1986 as amended or to Title I
of the Employee Retirement Income Security Act.
1.4 Escrow Procedure and Payment Instruction. The Fund shall be held
and disbursed in accordance with the terms of this Escrow Agreement as
follows:
The certificates placed in escrow with Escrow Agent shall be
released from escrow and delivered by Escrow Agent to FAC's registrar-transfer
agent for delivery by it to the owners of the certificates at such time as or
after Escrow Agent has received a signed representation from FAC as documented
in Exhibit A, together with any other evidence acceptable to Escrow Agent,
that the conditions and requirements set forth in either paragraph 1.4.A. or
1.4.B. below have been met.
A. Should the merger described in the Agreement of Merger be
approved by the shareholders of both FAC and Flex Financial, and should the
necessary merger documents be filed with the Secretary of State of Texas, FAC
shall so represent this to Escrow Agent and shall state the date the merger
became effective.
B. Should the proposed merger described in the Agreement of Merger
not be approved and effected, FAC proposes to search for a merger partner or
for a suitable business or assets to be acquired. At such time as FAC should
execute an agreement of merger or for the acquisition of a business or assets
that would constitute the business of FAC, FAC shall file a post-effective
amendment to the S-4 disclosing the information specified by the S-4
registration statement form and Industry Guides, including financial
statements of FAC and the company to be acquired, and the registration
statement must become effective at the Commission. Then, the alternative
merger or acquisition of a business or assets must be approved and legally
effected, at which time FAC shall represent to Escrow Agent that this has
occurred and that all requirements of the Commission for the release from
escrow of the certificates have been met.
<PAGE>
1.5 Termination. This Escrow Agreement shall terminate upon the first
to occur of any of the following events:
A. The disbursement of the balance of the Fund in accordance with
the provisions of Section 1.4 hereof.
B. The expiration of 18 months after the effective date of the
initial S-4, unless certificates have been earlier released from escrow
according to the provisions in Section 1.4. above. Should no release from
escrow have occurred by the termination date, Escrow Agent shall deliver, for
cancellation, all escrowed stock certificates to FAC's stock
registrar-transfer agent.
ARTICLE II
PROVISIONS AS TO ESCROW AGENT
2.1 Limitation of Escrow Agent's Capacity.
A. This Escrow Agreement expressly and exclusively sets forth the
duties of Escrow Agent with respect to any and all matters pertinent hereto,
and no implied duties or obligations shall be read into this Escrow Agreement
against Escrow Agent. This Escrow Agreement constitutes the entire agreement
between the Escrow Agent and the other parties hereto in connection with the
subject matter of this escrow, and no other agreement entered into between the
parties, or any of them, shall be considered as adopted or binding, in whole
or in part, upon the Escrow Agent notwithstanding that any such other
agreement may be deposited with Escrow Agent or the Escrow Agent may have
knowledge thereof.
B. Escrow Agent acts hereunder as a depository only, and is not
responsible or liable in any manner whatsoever for the sufficiency,
correctness, genuineness or validity of the subject matter of this Escrow
Agreement or any part thereof, or for the form of execution thereof, or for
the identity or authority of any person executing or depositing such subject
matter. Escrow Agent shall in no way be responsible for notifying, nor shall
it be its duty to notify, any party hereto or any other party interested in
this Escrow Agreement of any payment required or maturity occurring under this
Escrow Agreement or under the terms of any instrument deposited herewith.
2.2 Authority to Act.
A. Escrow Agent is hereby authorized and directed by the
undersigned to deliver the subject matter of this Escrow Agreement only in
accordance with the provisions of Article I of this Escrow Agreement.
B. Escrow Agent shall be protected in acting upon any written
notice, request, waiver, consent, certificate, receipt, authorization, power
of attorney or other paper or document which Escrow Agent in good faith
believes to be genuine and what it purports to be, including, but not limited
to, items directing investment or non investment of funds, items requesting or
authorizing release, disbursement or retainage of the subject matter of this
Escrow Agreement and items amending the terms of this Escrow Agreement.
C. Escrow Agent may consult with legal counsel in the event of any
dispute or question as to the construction of any of the provisions hereof or
its duties hereunder, and it shall incur no liability and shall be fully
protected in acting in accordance with the advice of such counsel.
<PAGE>
D. In the event of any disagreement between any of the parties to
this Escrow Agreement, or between any of them and any other person, resulting
in adverse claims or demands being made in connection with the matters covered
by this Escrow Agreement, or in the event that Escrow Agent, in good faith, be
in doubt as to what action it should take hereunder, Escrow Agent may, at its
option, refuse to comply with any claims or demands on it, or refuse to take
any other action hereunder, so long as such disagreement continues or such
doubt exists, and in any such event, Escrow Agent shall not be or become
liable in any way or to any person for its failure or refusal to act, and
Escrow Agent shall be entitled to continue so to refrain from acting until (i)
the rights of all interested parties shall have been fully and finally
adjudicated by a court of competent jurisdiction, or (ii) all differences
shall have been adjudged and all doubt resolved by agreement among all of the
interested persons, and Escrow Agent shall have been notified thereof in
writing signed by all such persons. Notwithstanding the foregoing, Escrow
Agent may in its discretion obey the order, judgment, decree or levy of any
court, whether with or without jurisdiction, or of any agency of the United
States or any political subdivision thereof, or of any agency of the State of
Texas or of any political subdivision thereof, and Escrow Agent is hereby
authorized in its sole discretion, to comply with and obey any such orders,
judgments, decrees or levies. The right of Escrow Agent under this
sub-paragraph are cumulative of all other rights which it may have by law or
otherwise.
E. In the event that any controversy should arise among the
parties with respect to the Escrow Agreement, or should the Escrow Agent
resign and the parties fail to select another Escrow Agent to act in its
stead, the Escrow Agent shall have the right to institute a bill of
interpleader in any court of competent jurisdiction to determine the rights of
the parties.
2.3 Compensation/Indemnification.
A. Escrow Agent shall be entitled to reasonable compensation as
well as reimbursement for its reasonable costs and expenses incurred in
connection with the performance by it of service under this Escrow Agreement
(including reasonable fees and expenses of Escrow Agent's counsel). The
parties hereto agree that escrow fees in the amount of $750.00 will be
deducted from the Fund upon the commencement of the escrow and on each
anniversary date thereafter.
B. The parties to this Escrow Agreement (other than Escrow Agent)
hereby jointly and severally agree to indemnify and hold Escrow Agent harmless
from all losses, costs, claims, demands, expenses, damages, and attorney's
fees suffered or incurred by Escrow Agent as a result of anything which it may
do or refrain from doing in connection with this Escrow Agreement or any
litigation or cause of action arising from or in conjunction with this Escrow
Agreement or involving the subject matter hereof or Escrow Funds or monies
deposited hereunder or for any interest upon any such monies. This indemnity
shall include, but not be limited to, all costs incurred in conjunction with
any interpleader which the Escrow Agent may enter into regarding this Escrow
Agreement.
2.4 Miscellaneous.
A. Escrow Agent shall make no disbursement, investment or other
use of funds until and unless it has collected funds. Escrow Agent shall not
be liable for collection items until the proceeds of the same in actual cash
have been received or the Federal Reserve has given Escrow Agent credit for
the funds.
B. Escrow Agent may resign at any time by giving written notice to
the parties hereto, whereupon the parties hereto will immediately appoint a
successor Escrow Agent. Until a successor Escrow Agent has been named and
accepts its appointment or until another disposition of the subject matter of
this Escrow Agreement has been agreed upon by all parties hereto, Escrow Agent
shall be discharged of all of its duties hereunder save to keep the subject
matter whole.
C. All representations, covenants, and indemnifications contained
in this Article II shall survive the termination of this Escrow Agreement.
<PAGE>
ARTICLE III
GENERAL PROVISIONS
3.2 Discharge of Escrow Agent. Upon the delivery of all of the
subject matter or monies pursuant to the terms of this Escrow Agreement, the
duties of Escrow Agent shall terminate and Escrow Agent shall be discharged
from any further obligation hereunder.
3.3 Escrow Instructions. Where directions or instructions from more
than one of the undersigned are required, such directions or instructions may
be given by separate instruments of similar tenor. Any of the undersigned may
act hereunder through an agent or attorney-in fact, provided satisfactory
written evidence of authority is first furnished to any party relying on such
authority.
3.4 Notice. Any payment, notice, request for consent, report, or any
other communication required or permitted in this Escrow Agreement shall be in
writing and shall be deemed to have been given when personally delivered to
the party hereunder specified or when placed in the United States mail,
registered or certified, with return receipt requested, postage prepaid and
addressed as follows:
If to Escrow Agent:
Southwest Bank of Texas, N.A.
4295 San Felipe
P. O. Box 27459
Houston, Texas 77227-7459
Attn: Jenifer Stepanik/Vice President
If to Flex Acquisitions Corporation:
770 S. Post Oak Lane
Suite 515
Houston TX 7 77056
Attn: William K. Roberts
If to American Nortel:
7201 E. Camelback Road
Suite 320
Scottsdale AZ 85251
Attn: Bill Williams, CEO
Any party may unilaterally designate a different address by giving notice
of each such change in the manner specified above to each other party.
3.5 Governing Law. This Escrow Agreement is being made in and is
intended to be construed according to the laws of the State of Texas. It shall
inure to and be binding upon the parties hereto and their respective
successors. heirs and assigns.
3.6 Construction. Words used in the singular number may include the
plural and the plural may include the singular. The section headings appearing
in this instrument have been inserted for convenience only and shall be given
no substantive meaning or significance whatsoever in construing the terms and
conditions of the Escrow Agreement.
3.7 Amendment. The terms of this Escrow Agreement may be altered,
amended, modified or revoked only by an instrument in writing signed by the
undersigned and Escrow Agent.
<PAGE>
EXECUTED as of the dates set forth below.
American Nortel Communications, Inc.
Date: August 8, 1996
<PAGE>
By: /S/ W. P. Williams, Jr.
Name: William P. Williams
Title: President/CEO
Flex Acquisitions Corporation
Date: 8-15-96 By: /S/ M. Stephen Roberts
Name: M. Stephen Roberts
Title: President
SOUTHWEST BANK OF TEXAS, N.A., Escrow Agent, hereby accepts its
appointment as Escrow Agent as described in the foregoing Escrow Agreement,
subject to the terms and conditions set forth therein.
SOUTHWEST BANK OF TEXAS, N.A.
Date: 8/21/96 By: /S/ David C. Farries
Name: David C Farries
Title: EVP/Chief Financial Officer
<PAGE>
ACKNOWLEDGMENT OF RECEIPT
The undersigned hereby acknowledge receipt from and/or disbursement by
Southwest Bank, N.A., Escrow Agent under the foregoing Escrow Agreement, of
the subject matter of the Escrow Agreement as described in such Escrow
Agreement; the undersigned acknowledge a faithful and proper performance by
said Escrow Agent of its duties under said Escrow Agreement, and in
consideration of such disbursement hereby release and discharge said Escrow
Agent from all further responsibility or liability as Escrow Agent under said
Escrow Agreement.
Executed this _____ day of ____________, 199__.
By:
Name:
Title:
<PAGE>
EXHIBIT A
Ms. Jenifer Stepanik
Southwest Bank of Texas, N.A.
As Escrow Agent
P.O. Box 27459
Houston, TX 77227-7459
Re: Escrow Agreement: ___________________ and _______________________
Dear Ms. Stepanik:
Reference is made to the escrow agreement dated _____________________________
among ________________________________,
_______________________________________, and Southwest Bank of Texas, N.A.
(the " Escrow Agreement"). We represent that the requirements of paragraph
(e)(1) and(e)(2) of SEC Rule 419 have been met and hereby instruct you,
pursuant to Section 1.4 of the Escrow Agreement to return the fund to:
_____________________________
_____________________________
_____________________________
_____________________________
By:
Name:
Title:
By:
Name:
Title:
<PAGE>
EXHIBIT 23.1
Law Offices of
M. Stephen Roberts
770 South Post Oak Lane, Suite 515
Houston, Texas 77056
Telephone: (713) 961-2696
Fax Number: (713) 961-1148
M. Stephen Roberts
(Texas, Louisiana)
Michael T. Fearnow, President
Flex Acquisitions Corporation
770 S. Post Oak Lane, Suite 515
Houston, TX 77056
Dear Mr. Fearnow:
The undersigned is named in the Form S-4 and Form SB-2 Registration
Statements of "Flex Acquisitions Corporation" (the "Company"), a Texas
corporation, which registration statements are to be filed contemporaneously
and simultaneously with the Securities and Exchange Commission in connection
with a proposed merger with Flex Financial Group, Inc. , a Texas corporation,
a distribution by American NorTel Communications, Inc., a Wyoming corporation,
of certain of the shares of Common Stock of the Company to the shareholders of
American NorTel Communications, Inc., and a public offering of securities
("Units") of the Company. The capacity in which the undersigned is named in
such Registration Statement is that of counsel to the Company and as a person
who has given an opinion on the validity of the securities being registered
and upon other legal matters concerning the registration or offering of the
securities described therein.
The undersigned hereby consents to being named in such Registration Statements
in the capacity therein described.
Yours very truly,
/S/ M. Stephen Roberts
M. Stephen Roberts
November 27, 1996
<PAGE>
EXHIBIT 23.2
Flex Acquisitions Corporation:
We consent to the use of our report dated September 25, 1996 for the period
ended July 31, 1996 in Form SB-2 and Form S-4 filed on behalf of Flex
Acquisitions Corporation.
/S/ Harper & Pearson Company
Harper & Pearson Company
Houston, Texas
November 22, 1996
<PAGE>
EXHIBIT 23.3
Flex Financial Group, Inc.:
We consent to the use of our report dated September 29, 1996, except for Note
D dated November 4, 1996, for the period ended July 31, 1996 in Form SB-2 and
Form S-4 filed on behalf of Flex Acquisitions Corporation.
/S/ Harper & Pearson Company
Harper & Pearson Company
Houston, Texas
November 22, 1996
<TABLE> <S> <C>
<S> <C>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
FINANCIAL STATEMENTS FOR FISCAL YEAR ENDING JULY 31, 1996 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS AND THE NOTES THERETO.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUL-31-1996
<PERIOD-START> MAR-21-1996
<PERIOD-END> JUL-31-1996
<CASH> 0
<SECURITIES> 0
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 4,992
<CURRENT-LIABILITIES> 268
<BONDS> 4,000
<COMMON> 1,000
0
0
<OTHER-SE> (276)
<TOTAL-LIABILITY-AND-EQUITY> 4,992
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> (276)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (276)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (276)
<EPS-PRIMARY> (.01)
<EPS-DILUTED> 0
</TABLE>
